SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________
Commission file number 1-9210
---------------------
OCCIDENTAL PETROLEUM CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 95-4035997
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10889 WILSHIRE BOULEVARD
LOS ANGELES, CALIFORNIA 90024
(Address of principal executive offices) (Zip Code)
(310) 208-8800
(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 [ ]
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Class Outstanding at March 31, 2000
--------------------------- -----------------------------
Common stock $.20 par value 368,624,676 shares
<PAGE>
OCCIDENTAL PETROLEUM CORPORATION AND SUBSIDIARIES
CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Balance Sheets--
March 31, 2000 and December 31, 1999 2
Consolidated Condensed Statements of Operations--
Three months ended March 31, 2000 and 1999 4
Consolidated Condensed Statements of Cash Flows--
Three months ended March 31, 2000 and 1999 5
Notes to Consolidated Condensed Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11
Item 3. Quantitative and Qualitative Disclosures About Market Risk 15
PART II OTHER INFORMATION
Item 1. Legal Proceedings 16
Item 4. Submission of Matters to a Vote of Security-Holders 16
Item 6. Exhibits and Reports on Form 8-K 17
</TABLE>
1
<PAGE>
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
OCCIDENTAL PETROLEUM CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
MARCH 31, 2000 and DECEMBER 31, 1999
(Amounts in millions)
<TABLE>
<CAPTION>
2000 1999
================================================================================= =========== ============
<S> <S> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 128 $ 214
Receivables, net 745 774
Inventories 486 503
Prepaid expenses and other 188 197
----------- ------------
Total current assets 1,547 1,688
LONG-TERM RECEIVABLES, net 183 168
EQUITY INVESTMENTS 1,794 1,754
PROPERTY, PLANT AND EQUIPMENT, at cost, net of
accumulated depreciation, depletion and amortization of $7,856
at March 31, 2000 and $7,675 at December 31, 1999 9,953 10,029
OTHER ASSETS 866 486
----------- ------------
$ 14,343 $ 14,125
================================================================================= =========== ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
OCCIDENTAL PETROLEUM CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
MARCH 31, 2000 and December 31, 1999
(Amounts in millions)
<TABLE>
<CAPTION>
2000 1999
================================================================================= =========== ============
<S> <C> <C>
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt and capital lease liabilities $ 16 $ 5
Notes payable 38 29
Accounts payable 706 812
Accrued liabilities 894 953
Domestic and foreign income taxes 192 168
----------- ------------
Total current liabilities 1,846 1,967
----------- ------------
LONG-TERM DEBT, net of current maturities and unamortized discount 4,513 4,368
----------- ------------
DEFERRED CREDITS AND OTHER LIABILITIES
Deferred and other domestic and foreign income taxes 1,053 995
Obligation under natural gas delivery commitment 380 411
Other 2,086 2,123
----------- ------------
3,519 3,529
----------- ------------
MINORITY INTEREST 264 252
----------- ------------
OCCIDENTAL OBLIGATED MANDATORILY REDEEMABLE
TRUST PREFERRED SECURITIES OF A SUBSIDIARY
TRUST HOLDING SOLELY SUBORDINATED NOTES OF
OCCIDENTAL 479 486
------------ -------------
STOCKHOLDERS' EQUITY
Common stock, at par value 74 73
Additional paid-in capital 3,710 3,787
Retained earnings (deficit) (15) (286)
Accumulated other comprehensive income (47) (51)
----------- ------------
3,722 3,523
----------- ------------
$ 14,343 $ 14,125
================================================================================= =========== ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
OCCIDENTAL PETROLEUM CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(Amounts in millions, except per-share amounts)
<TABLE>
<CAPTION>
Three Months Ended
March 31
----------------------------
2000 1999
================================================================================= =========== ===========
<S> <C> <C>
REVENUES
Net sales
Oil and gas operations $ 1,527 $ 746
Chemical operations 981 598
----------- -----------
2,508 1,344
Interest, dividends and other income 37 43
Gains on disposition of assets, net 4 3
Income (loss) from equity investments 33 (8)
----------- -----------
2,582 1,382
----------- -----------
COSTS AND OTHER DEDUCTIONS
Cost of sales 1,721 1,087
Selling, general and administrative and other operating expenses 154 160
Exploration expense 6 16
Minority interest 30 9
Interest and debt expense, net 104 126
----------- -----------
2,015 1,398
----------- -----------
Income (loss) before taxes 567 (16)
Provision for domestic and foreign income and other taxes 296 41
----------- -----------
Income (loss) before effect of changes in accounting principles 271 (57)
Cumulative effect of changes in accounting principles, net -- (13)
----------- -----------
NET INCOME (LOSS) 271 (70)
Preferred dividends -- (4)
Effect of repurchase of Trust Preferred Securities 1 --
----------- -----------
EARNINGS (LOSS) APPLICABLE TO COMMON STOCK $ 272 $ (74)
=========== ===========
BASIC EARNINGS PER COMMON SHARE
Income (loss) before effect of changes in accounting principles $ .74 $ (.17)
Cumulative effect of changes in accounting principles, net -- (.04)
----------- -----------
Basic earnings (loss) per common share $ .74 $ (.21)
=========== ===========
DILUTED EARNINGS PER COMMON SHARE
Income (loss) before effect of changes in accounting principles $ .74 $ (.17)
Cumulative effect of changes in accounting principles, net -- (.04)
----------- -----------
Diluted earnings (loss) per common share $ .74 $ (.21)
=========== ===========
DIVIDENDS PER COMMON SHARE $ .25 $ .25
=========== ===========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 368.1 347.8
================================================================================= =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
OCCIDENTAL PETROLEUM CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(Amounts in millions)
<TABLE>
<CAPTION>
2000 1999
========================================================================================= ========= =========
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES
Net income (loss) before effect of changes in accounting principles $ 271 $ (57)
Adjustments to reconcile income to net cash provided by operating activities:
Depreciation, depletion and amortization of assets 185 197
Deferred income tax provision 67 23
Other noncash charges (credits) to income 19 (6)
Gains on disposition of assets, net (4) (3)
(Income) loss from equity investments (33) 8
Exploration expense 6 16
Changes in operating assets and liabilities (116) (62)
Other operating, net (47) (41)
--------- ---------
Net cash provided by operating activities 348 75
--------- ---------
CASH FLOW FROM INVESTING ACTIVITIES
Capital expenditures (122) (132)
Sale of businesses and disposal of property, plant and equipment, net 23 2
Collection of note receivable -- 1,395
Purchase of businesses, net (including deposits) (375) (13)
Other investing, net (13) 47
--------- ---------
Net cash provided (used) by investing activities (487) 1,299
--------- ---------
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from long-term debt -- 792
Net proceeds from (payments on) commercial paper and revolving credit
agreements 156 (2,107)
Proceeds from issuance of trust preferred securities -- 508
Repurchase of trust preferred securities (6) --
Purchases for gas delivery commitment (28) --
Payments on long-term debt and capital lease liabilities (1) (5)
Proceeds from issuance of common stock 16 6
Proceeds (payments) of notes payable 9 (3)
Cash dividends paid (92) (91)
Other financing, net (1) 1
--------- ---------
Net cash provided (used) by financing activities 53 (899)
--------- ---------
Increase (decrease) in cash and cash equivalents (86) 475
Cash and cash equivalents--beginning of period 214 96
--------- ---------
Cash and cash equivalents--end of period $ 128 $ 571
========================================================================================= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
OCCIDENTAL PETROLEUM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
March 31, 2000
1. General
The accompanying unaudited consolidated condensed financial statements have
been prepared by Occidental Petroleum Corporation (Occidental) pursuant to
the rules and regulations of the Securities and Exchange Commission.
Certain information and disclosures normally included in notes to
consolidated financial statements have been condensed or omitted pursuant
to such rules and regulations, but resultant disclosures are in accordance
with generally accepted accounting principles as they apply to interim
reporting. The consolidated condensed financial statements should be read
in conjunction with the consolidated financial statements and the notes
thereto in Occidental's Annual Report on Form 10-K for the year ended
December 31, 1999 (1999 Form 10-K).
In the opinion of Occidental's management, the accompanying consolidated
condensed financial statements contain all adjustments (consisting only of
normal recurring adjustments) necessary to present fairly Occidental's
consolidated financial position as of March 31, 2000, and the consolidated
results of operations and cash flows for the three months then ended. The
results of operations and cash flows for the period ended March 31, 2000,
are not necessarily indicative of the results of operations or cash flows
to be expected for the full year.
Certain financial statements and notes for the prior year have been changed
to conform to the 2000 presentation.
Reference is made to Note 1 to the consolidated financial statements in the
1999 Form 10-K for a summary of significant accounting policies.
2. Comprehensive Income
The following table presents Occidental's comprehensive income items (in
millions):
<TABLE>
<CAPTION>
Three Months Ended March 31, 2000 1999
=================================================== ========= =========
<S> <C> <C>
Net income (loss) $ 271 $ (70)
Other comprehensive income items
Foreign currency translation adjustments 4 (8)
--------- ---------
Other comprehensive income, net of tax 4 (8)
--------- ---------
Comprehensive income (loss) $ 275 $ (78)
========= =========
</TABLE>
6
<PAGE>
3. Asset Acquisitions and Dispositions
Reference is made to Note 3 to the consolidated financial statements in the
1999 Form 10-K for a description of asset acquisitions and dispositions.
In December 1999, Occidental entered into an agreement to sell its
producing properties in Peru to Pluspetrol. The transaction, which was
subject to governmental approval, closed on May 8, 2000. In connection with
this transaction, Occidental recorded an after-tax charge of approximately
$29 million in December 1999 to write-down the properties to their fair
values.
4. Supplemental Cash Flow Information
Cash payments during the three months ended March 31, 2000 and 1999
included federal, foreign and state income taxes of approximately $109
million and $25 million, respectively. Interest paid (net of interest
capitalized) totaled approximately $96 million and $90 million for the
three months ended March 31, 2000 and 1999, respectively.
5. Cash and Cash Equivalents
Cash equivalents consist of highly liquid money-market mutual funds and
bank deposits with maturities of three months or less when purchased. Cash
equivalents totaled $58 million and $162 million at March 31, 2000, and
December 31, 1999, respectively.
6. Inventories
A portion of inventories is valued under the LIFO method. The valuation of
LIFO inventory for interim periods is based on management's estimates of
year-end inventory levels and costs. Inventories consist of the following
(in millions):
<TABLE>
<CAPTION>
Balance at March 31, 2000 December 31, 1999
======================== ==================== =====================
<S> <C> <C>
Raw materials $ 80 $ 60
Materials and supplies 134 167
Work in process 8 7
Finished goods 262 294
-------- --------
484 528
LIFO adjustment 2 (25)
-------- --------
Total $ 486 $ 503
======== ========
</TABLE>
7. Property, Plant and Equipment
Reference is made to the consolidated balance sheets and Note 1 thereto in
the 1999 Form 10-K for a description of investments in property, plant and
equipment.
7
<PAGE>
8. Trust Preferred Securities
Reference is made to Note 12 to the consolidated financial statements in
the 1999 Form 10-K for a description of the Trust Preferred Securities. The
Trust Preferred Securities balances reflected in the consolidated financial
statements at March 31, 2000, and December 31, 1999, are net of issue costs
and also reflect amortization of a portion of the issue costs, and the
repurchase during 2000 and 1999 of 298,373 shares and 937,436 shares with
liquidation values of $7.5 million and $23.4 million, respectively.
9. Retirement Plans and Postretirement Benefits
Reference is made to Note 14 to the consolidated financial statements in
the 1999 Form 10-K for a description of the retirement plans and
postretirement benefits of Occidental and its subsidiaries.
10. Lawsuits, Claims, Commitments, Contingencies and Related Matters
Occidental and certain of its subsidiaries have been named as defendants or
as potentially responsible parties in a substantial number of lawsuits,
claims and proceedings, including governmental proceedings under the
Comprehensive Environmental Response, Compensation and Liability Act
(CERCLA) and corresponding state acts. These governmental proceedings seek
funding, remediation and, in some cases, compensation for alleged property
damage, punitive damages and civil penalties, aggregating substantial
amounts. Occidental is usually one of many companies in these proceedings,
and has to date been successful in sharing response costs with other
financially sound companies. Occidental has accrued reserves at the most
likely cost to be incurred in those proceedings where it is probable that
Occidental will incur remediation costs which can be reasonably estimated.
In December 1998, David Croucher and others filed a purported class action
suit in the Federal District Court in Houston, Texas on behalf of persons
claiming to have been beneficiaries of the MidCon Employee Stock Ownership
Plan (ESOP). The plaintiffs allege that each of the U.S. Trust Company of
California (the ESOP Trustee) and the MidCon ESOP Administrative Committee
breached its fiduciary duty to the plaintiffs by failing to properly value
the securities held by the ESOP, and allege that Occidental actively
participated in such conduct. The plaintiffs claim that, as a result of
this alleged breach, the ESOP participants are entitled to an additional
aggregate distribution of at least $200 million and that Occidental has
been unjustly enriched and is liable for failing to make that distribution.
During the course of its operations, Occidental is subject to audit by
taxing authorities for varying periods in various tax jurisdictions.
Occidental has certain other commitments under contracts, guarantees and
joint ventures, and certain other contingent liabilities.
It is impossible at this time to determine the ultimate liabilities that
Occidental and its subsidiaries may incur resulting from the foregoing
lawsuits, claims and proceedings, audits, commitments, contingencies and
related matters. Several of these matters may involve substantial amounts,
and if these were to be ultimately resolved unfavorably to the full amount
of their maximum potential exposure, an event not currently anticipated, it
is possible that such event could have a material adverse effect upon
Occidental's consolidated financial position or results of operations.
However, in management's opinion, after taking into account reserves, it is
unlikely that any of the foregoing matters will have a material adverse
effect upon Occidental's consolidated financial position or results of
operations.
Reference is made to Note 9 to the consolidated financial statements in the
1999 Form 10-K for information concerning Occidental's long-term purchase
obligations for certain products and services.
8
<PAGE>
11. Income Taxes
The provision for taxes based on income for the 2000 and 1999 interim
periods was computed in accordance with Interpretation No. 18 of APB
Opinion No. 28 on reporting taxes for interim periods and was based on
projections of total year pretax income.
At December 31, 1999, Occidental had, for U.S. federal income tax return
purposes, an alternative minimum tax credit carryforward of $60 million
available to reduce future income taxes. The alternative minimum tax credit
carryforward does not expire.
12. Investments
Investments in entities, other than oil and gas exploration and production
companies, in which Occidental has a voting stock interest of at least 20
percent, but not more than 50 percent, and certain partnerships are
accounted for on the equity method. At March 31, 2000, Occidental's equity
investments consisted primarily of a 29.5 percent interest in Equistar
acquired in May 1998, an investment of 29.2 percent in the common shares of
Canadian Occidental Petroleum Ltd. (CanOxy) and various chemical
partnerships and joint ventures. The following table presents Occidental's
proportionate interest in the summarized financial information of its
equity method investments (in millions):
<TABLE>
<CAPTION>
Three Months Ended March 31, 2000 1999
================================== =========== ===========
<S> <C> <C>
Revenues $ 689 $ 504
Costs and expenses 656 512
----------- -----------
Net income (loss) $ 33 $ (8)
=========== ===========
</TABLE>
13. Industry Segments
The following table presents Occidental's interim industry segment
disclosures (in millions):
<TABLE>
<CAPTION>
Oil and Gas Chemical Corporate Total
================================================ ============= ============= ============= =============
<S> <C> <C> <C> <C>
Quarter ended March 31, 2000
Net sales $ 1,527 $ 981 $ -- $ 2,508
============= ============= ============= =============
Pretax operating profit (loss) $ 542 $ 149 $ (124)(a) $ 567
Income taxes (148) (6) (142)(b) (296)
------------- ------------- ------------- -------------
Net income (loss) $ 394 $ 143 $ (266) $ 271
================================================ ============= ============= ============= =============
Quarter ended March 31, 1999
Net sales $ 746 $ 598 $ -- $ 1,344
============= ============= ============= =============
Pretax operating profit (loss) $ 113 $ 14 $ (143)(a) $ (16)
Income taxes (48) (2) 9 (b) (41)
Cumulative effect of changes in
accounting principles, net -- -- (13) (13)
------------- ------------- ------------- -------------
Net income (loss) $ 65 $ 12 $ (147) $ (70)
================================================ ============= ============= ============= =============
</TABLE>
(a) Includes unallocated net interest expense, administration expense and other
items.
(b) Includes unallocated income taxes.
9
<PAGE>
14. Subsequent Events
On April 18, 2000, Occidental completed the sale of its 29.2 percent stake
in CanOxy for gross proceeds of approximately $1.2 billion Canadian,
following approval of the sale by CanOxy stockholders. Of Occidental's 40.2
million shares of CanOxy, 20.2 million were sold to the Ontario Teachers
Pension Plan Board and 20 million to CanOxy. In addition, Occidental and
CanOxy exchanged their respective 15 percent interests in joint businesses
of approximately equal value, resulting in Occidental owning 100 percent of
an oil and gas operation in Ecuador and CanOxy owning 100 percent of a
sodium chlorate operation in Canada and Louisiana.
On April 19, 2000, Occidental completed its acquisition of all of the
common interest in Altura, the largest oil producer in Texas. Occidental,
through its subsidiaries, paid approximately $1.2 billion to the sellers,
affiliates of BP Amoco plc and Shell Oil Company, to acquire the common
limited partnership interest and control of the general partner which
manages, operates and controls 100 percent of the Altura assets. The
partnership borrowed approximately $2.4 billion, which has recourse only to
the Altura assets. The partnership also loaned approximately $2.0 billion
to affiliates of the sellers, evidenced by two notes, which provide credit
support to the partnership. The sellers retained a preferred limited
partnership interest of approximately $2.0 billion and are entitled to
certain distributions from the partnership. The acquisition is valued at
approximately $3.6 billion.
On April 24, 2000, Occidental completed the acquisition of ARCO Long Beach
Inc., owner of the Long Beach Unit's operating contractor, THUMS, for
approximately $57 million.
On April 25, 2000, Occidental announced that it will call for redemption on
June 1, 2000, all of its outstanding 11-1/8% Senior Debentures due June 1,
2019, at a redemption price of 100% of the principal amount thereof. The
outstanding aggregate principal amount is $75 million; the Debentures were
issued on May 15, 1989.
10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
Occidental Petroleum Corporation (Occidental) reported net income for the first
quarter of 2000 of $271 million, on net sales of $2.5 billion, compared with a
net loss of $70 million, on net sales of $1.3 billion, for the same period of
1999. Basic earnings per common share were income of $.74 for the first quarter
of 2000, compared with a loss of $.21 for the same period of 1999.
Earnings before special items were $264 million for the first quarter of 2000,
compared with a loss before special items of $68 million for the first quarter
of 1999. The first quarter of 1999 included an after-tax charge of $13 million,
reflecting the cumulative effect of adopting accounting principles changes
mandated by the American Institute of Certified Public Accountants and the
Emerging Issues Task Force of the Financial Accounting Standards Board.
The increase in net sales in the first quarter of 2000, compared with the same
period in 1999, primarily reflected higher oil and gas prices and higher prices
and sales volume for most of Occidental's chemical products. Minority interest
includes distributions on the Trust Originated Preferred Securities (Trust
Preferred Securities) and the minority interest in the net income of
subsidiaries and partnerships. The income from equity investments for the three
months ended March 31, 2000 compared with losses from equity investments for the
same period in 1999, was the result of higher worldwide crude oil prices and
improved export prices for vinyl chloride monomer (VCM). The provision for
income taxes increased to $296 million for the first quarter of 2000, compared
with $41 million for the same period in 1999, primarily due to higher earnings
in 2000.
The following table sets forth the sales and earnings of each industry segment
and corporate items (in millions):
<TABLE>
<CAPTION>
First Quarter
--------------------------
2000 1999
========== ==========
<S> <C> <C>
DIVISIONAL NET SALES
Oil and gas $ 1,527 $ 746
Chemical 981 598
---------- ----------
NET SALES $ 2,508 $ 1,344
========== ==========
DIVISIONAL EARNINGS
Oil and gas $ 394 $ 65
Chemical 143 12
---------- ----------
537 77
UNALLOCATED CORPORATE ITEMS
Interest expense, net (99) (116)
Income taxes, administration and other (167) (18)
---------- ----------
INCOME (LOSS) BEFORE EFFECT OF CHANGES IN
ACCOUNTING PRINCIPLES 271 (57)
Cumulative effect of changes in
accounting principles, net -- (13)
---------- ----------
NET INCOME (LOSS) $ 271 $ (70)
========== ==========
</TABLE>
Oil and gas earnings for the first quarter of 2000 were $394 million, compared
with $65 million for the same period of 1999. Higher worldwide crude oil and
natural gas prices contributed to an increase in quarterly earnings for oil and
gas. Operating and overhead costs were also lower in 2000. However, lower
production volumes, mainly resulting from the pending agreement to sell
producing assets in Peru, partially offset the overall improvement in earnings
from the prior year.
11
<PAGE>
Chemical earnings for the first quarter of 2000 were $143 million, compared with
$12 million for the same period of 1999. The increased earnings in 2000 resulted
primarily from higher prices and higher sales volume for VCM, ethylene
dichloride (EDC), polyvinyl chloride (PVC) resins and chlorine. Partially
offsetting these increases were higher raw material costs.
Divisional earnings include credits in lieu of U.S. federal income taxes. In the
first quarter of 2000 and 1999, divisional earnings benefited by $5 million and
$6 million, respectively, from credits allocated. This included credits of $1
million and $4 million at oil and gas and chemical, respectively, in the first
quarter of 2000 and $2 million and $4 million at oil and gas and chemical,
respectively, for the first quarter of 1999.
Occidental and certain of its subsidiaries have been named as defendants or as
potentially responsible parties in a substantial number of lawsuits, claims and
proceedings, including governmental proceedings under the Comprehensive
Environmental Response, Compensation and Liability Act (CERCLA) and
corresponding state acts. These governmental proceedings seek funding,
remediation and, in some cases, compensation for alleged property damage,
punitive damages and civil penalties, aggregating substantial amounts.
Occidental is usually one of many companies in these proceedings, and has to
date been successful in sharing response costs with other financially sound
companies. Occidental has accrued reserves at the most likely cost to be
incurred in those proceedings where it is probable that Occidental will incur
remediation costs which can be reasonably estimated.
During the course of its operations, Occidental is subject to audit by taxing
authorities for varying periods in various tax jurisdictions. Occidental has
certain other commitments under contracts, guarantees and joint ventures, and
certain other contingent liabilities.
It is impossible at this time to determine the ultimate liabilities that
Occidental and its subsidiaries may incur resulting from the foregoing lawsuits,
claims and proceedings, audits, commitments, contingencies and related matters.
Several of these matters may involve substantial amounts, and if these were to
be ultimately resolved unfavorably to the full amount of their maximum potential
exposure, an event not currently anticipated, it is possible that such event
could have a material adverse effect upon Occidental's consolidated financial
position or results of operations. However, in management's opinion, after
taking into account reserves, it is unlikely that any of the foregoing matters
will have a material adverse effect upon Occidental's consolidated financial
position or results of operations.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
Occidental's net cash provided by operating activities was $348 million for the
first quarter of 2000, compared with $75 million for the same period of 1999.
The 2000 amount is primarily attributed to higher net income before special
items. The improved earnings reflected the impact of higher oil and gas and
chemical prices. Changes in operating assets and liabilities reflected higher
net working capital usage in 2000 compared with 1999.
Occidental's net cash used by investing activities was $487 million for the
first quarter of 2000, compared with net cash provided of $1.299 billion for the
same period of 1999. The 2000 amount included a $375 million deposit for the
acquisition of the Altura Energy Ltd. Partnership (Altura) described below,
which was recorded in other assets. The 1999 amount included the proceeds from a
$1.4 billion note receivable received in connection with the sale of MidCon,
Occidental's natural gas pipeline subsidiary.
Financing activities provided net cash of $53 million in the first quarter of
2000, compared with cash used of $899 million for the same period of 1999. The
1999 amount reflected the use of the proceeds from the $1.4 billion note
receivable to repay approximately $1.3 billion in debt and for the payment of
dividends of $91 million. The 1999 amount also reflected net proceeds of $508
million from the issuance of the Trust Preferred Securities.
On April 24, 2000, Occidental completed the acquisition of ARCO Long Beach Inc.,
owner of the Long Beach Unit's operating contractor, THUMS, for approximately
$57 million. The acquisition adds approximately 95 million barrels of net oil
reserves and approximately 27,000 barrels per day of net oil production to
Occidental's growing California operations.
12
<PAGE>
On April 19, 2000, Occidental completed its acquisition of all of the common
interest in Altura, the largest oil producer in Texas. Occidental, through its
subsidiaries, paid approximately $1.2 billion to the sellers, affiliates of BP
Amoco plc and Shell Oil Company, to acquire the common limited partnership
interest and control of the general partner which manages, operates and controls
100 percent of the Altura assets. The partnership borrowed approximately $2.4
billion, which has recourse only to the Altura assets. The partnership also
loaned approximately $2.0 billion to affiliates of the sellers, evidenced by two
notes, which provide credit support to the partnership. The sellers retained a
preferred limited partnership interest of approximately $2.0 billion and are
entitled to certain distributions from the partnership. As a result of the
acquisition, which is valued at approximately $3.6 billion, Occidental's
worldwide oil and gas production is expected to increase by approximately
135,000 barrels per day of oil equivalent and Occidental's worldwide production
is expected to increase by 13 percent to an average of approximately 480,000
barrels of oil equivalent per day this year versus 425,000 barrels per day in
1999. Proved reserves at Altura were 850 million barrels of oil equivalent at
December 31, 1999. This acquisition will bring Occidental's proved reserves to
approximately 2.2 billion barrels of oil equivalent.
On April 18, 2000, Occidental completed the sale of its 29.2 percent stake in
Canadian Occidental Petroleum Ltd. (CanOxy) for gross proceeds of approximately
$1.2 billion Canadian, following approval of the sale by CanOxy stockholders. Of
Occidental's 40.2 million shares of CanOxy, 20.2 million were sold to the
Ontario Teachers Pension Plan Board and 20 million to CanOxy. In addition,
Occidental and CanOxy exchanged their respective 15 percent interests in joint
businesses of approximately equal value, resulting in Occidental owning 100
percent of an oil and gas operation in Ecuador and CanOxy owning 100 percent of
a sodium chlorate operation in Canada and Louisiana. Approximately $750 million
of combined after-tax proceeds from the CanOxy disposition and the disposition
of the Peru producing operations was applied to the acquisition of the Altura
and THUMS properties.
In December 1999, Occidental and EOG Resources, Inc. (EOG) exchanged certain oil
and gas assets. Occidental received producing properties and exploration acreage
in its expanding California asset base, as well as producing properties in the
western Gulf of Mexico near existing operations in exchange for oil and gas
production and reserves in east Texas. Occidental also farmed out Oklahoma
panhandle properties to EOG and retained a carried interest.
In December 1999, Occidental entered into an agreement to sell its producing
properties in Peru to Pluspetrol. The transaction, which was subject to
governmental approval, closed on May 8, 2000. In connection with this
transaction, Occidental recorded an after-tax charge of approximately $29
million in December 1999 to write-down the properties to their fair values.
In the third quarter of 1999, pursuant to a series of transactions, Occidental
indirectly acquired the remaining ownership of INDSPEC Chemical Corporation
(INDSPEC) through the issuance of approximately 3.2 million shares of Occidental
common stock at an estimated value of approximately $68 million and the
assumption of approximately $80 million of bank debt. As a result of the
transactions, Occidental owns 100 percent of the stock of INDSPEC.
In the third quarter of 1999, Occidental acquired Unocal International
Corporation's (UNOCAL) oil and gas interests in Yemen and UNOCAL acquired
Occidental's properties in Bangladesh.
Effective April 30, 1999, Occidental and The Geon Company (Geon) formed two
partnerships. Occidental has a 76 percent interest in the PVC commodity resin
partnership, OxyVinyls, LP (OxyVinyls), which is larger of the partnerships, and
a 10 percent interest in a PVC powder compounding partnership. OxyVinyls also
has entered into long-term agreements to supply PVC resin to Geon and VCM to
Occidental and Geon. In addition, as part of the transaction, Occidental sold
its pellet compounding plant in Pasadena, Texas and its vinyl film assets in
Burlington, New Jersey to Geon.
On April 25, 2000, Occidental announced that it will call for redemption on June
1, 2000, all of its outstanding 11-1/8% Senior Debentures due June 1, 2019, at a
redemption price of 100% of the principal amount thereof. The outstanding
aggregate principal amount is $75 million; the Debentures were issued on May 15,
1989.
13
<PAGE>
In February 1999, Occidental issued $450 million of 7.65 percent senior notes
due 2006 and $350 million of 8.45 percent senior notes due 2029 for net proceeds
of approximately $792 million.
In January 1999, a subsidiary of Occidental issued $525 million of 8.16 percent
Trust Preferred Securities due in 2039, for net proceeds of $508 million. The
net proceeds were used to repay commercial paper. The Trust Preferred Securities
balances reflected in the consolidated financial statements at March 31, 2000
and December 31, 1999 are net of issue costs and also reflect amortization of a
portion of the issue costs, and the repurchase during 2000 and 1999 of 298,373
shares and 937,436 shares with liquidation values of $7.5 million and $23.4
million, respectively.
Occidental expects to have sufficient cash in 2000 for its operating needs,
capital expenditure requirements, dividend payments and debt repayments.
Occidental currently expects to spend $950 million on its capital spending
program in 2000. Available but unused lines of committed bank credit totaled
approximately $2.0 billion at March 31, 2000, compared with $2.1 billion at
December 31, 1999. Subsequent to March 31, Occidental borrowed substantial
amounts to fund the Altura acquisition partially offset by proceeds from asset
dispositions.
YEAR 2000 COMPLIANCE
The Y2K program employed a five-step process consisting of: 1) conducting a
company-wide inventory; 2) assessing Y2K compliance; 3) remediating
non-compliant software and hardware, particularly hardware that employs embedded
chips such as process controls; 4) testing remediated hardware and software; and
5) certifying Y2K compliance.
The inventory and assessment activities continued throughout the Y2K program as
changes occurred. Overall remediation efforts were completed on schedule and
there were no significant adverse Y2K events.
Costs for Y2K efforts were not accumulated separately and much of the cost was
accounted for as part of normal operations. Overall, the costs were
approximately $29 million. The costs did not have a significant effect on
Occidental's consolidated financial position or results of operations.
Contingency plans that addressed a reasonably likely worst case scenario were
put in place. These plans also addressed and analyzed the resources necessary to
restore operations in the event an interruption occurred. No interruptions
caused by third parties occurred.
Because of these company-wide efforts, Occidental believes it took appropriate
actions to minimize the risk associated with Y2K to its operations and financial
condition. Occidental's operations moved into the year 2000 without interruption
and the Y2K program was considered a success.
ENVIRONMENTAL MATTERS
Occidental's operations in the United States are subject to stringent federal,
state and local laws and regulations relating to improving or maintaining the
quality of the environment. Foreign operations also are subject to varied
environmental protection laws. Costs associated with environmental compliance
have increased over time and may continue to rise in the future.
The laws which require or address environmental remediation apply retroactively
to previous waste disposal practices. And, in many cases, the laws apply
regardless of fault, legality of the original activities or ownership or control
of sites. Occidental is currently participating in environmental assessments and
cleanups under these laws at federal Superfund sites, comparable state sites and
other remediation sites, including Occidental facilities and previously owned
sites.
Occidental does not consider the number of Superfund and comparable state sites,
at which it has been notified that it has been identified as being involved, to
be a relevant measure of exposure. Although the liability of a potentially
responsible party (PRP), and in many cases its equivalent under state law, may
be joint and several, Occidental is
14
<PAGE>
usually one of many companies cited as a PRP at these sites and has, to date,
been successful in sharing cleanup costs with other financially sound companies.
As of March 31, 2000, Occidental had been notified by the Environmental
Protection Agency (EPA) or equivalent state agencies or otherwise had become
aware that it had been identified as being involved at 125 Superfund or
comparable state sites. (This number does not include those sites where
Occidental has been successful in resolving its involvement). The 125 sites
include 34 former Diamond Shamrock Chemical sites as to which Maxus Energy
Corporation has retained all liability. Of the remaining 91 sites, Occidental
has denied involvement at 10 sites and has yet to determine involvement in 20
sites. With respect to the remaining 61 of these sites, Occidental is in various
stages of evaluation, and the extent of liability retained by Maxus Energy
Corporation is disputed at 2 of these sites. For 54 of these sites, where
environmental remediation efforts are probable and the costs can be reasonably
estimated, Occidental has accrued reserves at the most likely cost to be
incurred. The 54 sites include 11 sites as to which present information
indicates that it is probable that Occidental's aggregate exposure is
immaterial. In determining the reserves, Occidental uses the most current
information available, including similar past experiences, available technology,
regulations in effect and the timing of remediation and cost-sharing
arrangements. For the remaining 7 of the 61 sites being evaluated, Occidental
does not have sufficient information to determine a range of liability, but
Occidental does have sufficient information on which to base the opinion
expressed above under the caption "Results of Operations."
SAFE HARBOR STATEMENT REGARDING OUTLOOK AND FORWARD-LOOKING INFORMATION
Portions of this report contain forward-looking statements and involve risks and
uncertainties that could significantly affect expected results of operations,
liquidity and cash flows. Factors that could cause results to differ materially
include, but are not limited to: global commodity pricing fluctuations;
competitive pricing pressures; higher than expected costs including feedstocks;
the supply/demand considerations for Occidental's products; any general economic
recession domestically or internationally; regulatory uncertainties; and not
successfully completing any development of new fields, expansion, capital
expenditure, efficiency improvement, acquisition or disposition. Forward-looking
statements are generally accompanied by words such as "estimate", "project",
"predict", "believes" or "expect", that convey the uncertainty of future events
or outcomes. Occidental undertakes no obligation to publicly update or revise
any forward-looking statements, whether as a result of new information or
otherwise. In light of these risks, uncertainties and assumptions, the
forward-looking events discussed might not occur.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There were no material changes in the information provided under Item 305 of
Regulation S-X included under the caption "Management's Discussion and Analysis
of Financial Condition and Results of Operations (Incorporating Item 7A) -
Derivative Activities" in Occidental's 1999 Annual Report on Form 10-K for the
period ended March 31, 2000.
15
<PAGE>
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
GENERAL
There is incorporated by reference herein the information regarding legal
proceedings in Note 10 to the consolidated condensed financial statements in
Part I hereof.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
Occidental's 2000 Annual Meeting of Stockholders (the Annual Meeting) was held
on April 28, 2000. The following actions were taken at the Annual Meeting, for
which proxies were solicited pursuant to Regulation 14A under the Securities
Exchange Act of 1934, as amended:
1. The eleven nominees proposed by the Board of Directors were elected as
directors by the following votes:
<TABLE>
<CAPTION>
Name For Withheld
------------------------------- ----------------------- -----------------------
<S> <C> <C>
Dr. Ray R. Irani 319,272,792 6,838,953
Dr. Dale R. Laurance 319,831,619 6,280,126
Ronald W. Burkle 319,590,655 6,521,090
John S. Chalsty 318,463,798 7,647,947
Edward P. Djerejian 321,291,537 4,820,208
John E. Feick 321,388,874 4,722,871
J. Roger Hirl 319,806,221 6,305,524
Irvin W. Maloney 319,430,529 6,681,216
Rodolfo Segovia 321,338,167 4,773,578
Aziz D. Syriani 319,889,761 6,221,984
Rosemary Tomich 318,079,108 8,032,637
</TABLE>
2. A proposal to ratify the selection of Arthur Andersen LLP as
Occidental's independent public accountants for 2000 was approved by a
vote of 323,088,056 for versus 1,552,414 against. There were 1,471,273
abstentions and 2 broker non-votes.
3. A proposal to amend Occidental's 1996 Restricted Stock Plan for
Non-Employee Directors (the Plan) to increase, among other things, the
number of shares of Common Stock available for issuance under the Plan
was approved by a vote of 306,833,212 for versus 16,762,430 against.
There were 2,516,097 abstentions and 6 broker non-votes.
4. A stockholder proposal to maximize value by selling Occidental was
defeated by a vote of 19,005,552 for versus 247,840,546 against. There
were 10,226,544 abstentions and 49,039,103 broker non-votes.
5. A stockholder proposal to have prepared and distribute a risk analysis
was defeated by a vote of 15,686,039 for versus 238,272,189 against.
There were 23,115,714 abstentions and 49,037,803 broker non-votes.
16
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
4.1 Credit Agreement, dated as of April 19, 2000, among Occidental
Permian Ltd., Chase Securities Inc., as Arranger, Bank of
America, N.A., as Syndication Agent, Morgan Guaranty Trust
Company of New York and UBS AG, as Documentation Agents, and The
Chase Manhattan Bank, as Administrative Agent.
10.1 Occidental Petroleum Corporation 1996 Restricted Stock Plan for
Non-Employee Directors (as amended April 28, 2000).
11 Statement regarding the computation of earnings per share for the
three months ended March 31, 2000 and 1999.
12 Statement regarding the computation of total enterprise ratios of
earnings to fixed charges for the three months ended March 31,
2000 and 1999 and the five years ended December 31, 1999.
27 Financial data schedule for the three month period ended March
31, 2000 (included only in the copy of this report filed
electronically with the Securities and Exchange Commission).
(b) Reports on Form 8-K
During the quarter ended March 31, 2000, Occidental filed the
following Current Reports on Form 8-K:
1. Current Report on Form 8-K dated January 25, 2000 (date of
earliest event reported), filed on January 26, 2000, for the
purpose of reporting, under Item 5, Occidental's results of
operations for the fourth quarter and fiscal year ended December
31, 1999.
2. Current Report on Form 8-K dated March 1, 2000 (date of earliest
event reported), filed on March 2, 2000, for the purpose of
reporting, under Item 5, the sale of Occidental's interest in
Canadian Occidental Petroleum Ltd.
3. Current Report on Form 8-K dated March 7, 2000 (date of earliest
event reported), filed on March 15, 2000, for the purpose of
reporting, under Items 2 and 7, the acquisition by Occidental of
all the common partnership interest in Altura Energy Ltd.
From March 31, 2000 to the date hereof, Occidental filed the following
Current Reports on Form 8-K:
1. Current Report on Form 8-K dated April 19, 2000 (date of earliest
event reported), filed on April 2, 2000, for the purpose of
reporting, under Item 5, Occidental's results of operations for
the first quarter ended March 31, 2000.
2. Current Report on Form 8-K dated March 15, 2000 (date of earliest
event reported), filed on May 12, 2000, for the purpose of
reporting, under Item 7, certain financial statements and pro
forma financial information.
17
<PAGE>
SIGNATURES
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.
OCCIDENTAL PETROLEUM CORPORATION
DATE: May 15, 2000 S. P. Dominick, Jr.
----------------------------------------
S. P. Dominick, Jr., Vice President and
Controller (Chief Accounting and Duly
Authorized Officer)
18
<PAGE>
EXHIBIT INDEX
EXHIBITS
- --------
4.1 Credit Agreement, dated as of April 19, 2000, among Occidental Permian
Ltd., Chase Securities Inc., as Arranger, Bank of America, N.A., as
Syndication Agent, Morgan Guaranty Trust Company of New York and UBS
AG, as Documentation Agents, and The Chase Manhattan Bank, as
Administrative Agent.
10.1 Occidental Petroleum Corporation 1996 Restricted Stock Plan for
Non-Employee Directors (as amended April 28, 2000).
11 Statement regarding the computation of earnings per share for the
three months ended March 31, 2000 and 1999.
12 Statement regarding the computation of total enterprise ratios of
earnings to fixed charges for the three months ended March 31, 2000
and 1999 and the five years ended December 31, 1999.
27 Financial data schedule for the three month period ended March 31,
2000 (included only in the copy of this report filed electronically
with the Securities and Exchange Commission).
EXHIBIT 4.1
================================================================================
OCCIDENTAL PERMIAN LTD.
--------------------
CREDIT AGREEMENT
dated as of
April 19, 2000
$2,440,000,000
------------------
CHASE SECURITIES INC.
as Arranger
BANK OF AMERICA, N.A.
as Syndication Agent
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
UBS AG
As Documentation Agents
and
THE CHASE MANHATTAN BANK
as Administrative Agent
================================================================================
[CS&M Ref. # 6701-071]
<PAGE>
i
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. Definitions....................................................2
Accumulated Funding Deficiency...............................2
Acquisition..................................................2
Administrative Agent.........................................2
Administrative Questionnaire.................................2
Affected Bank................................................2
Affiliate....................................................2
Agreement....................................................2
Allocable Share..............................................3
Alternate Base Rate..........................................3
Alternate Base Rate Loan.....................................3
Applicable Margin............................................3
Assenting Bank...............................................4
Asset Disposition............................................4
Assignment and Acceptance....................................5
Bank.........................................................5
Banks........................................................5
Board........................................................5
Borrower.....................................................5
Borrowing....................................................5
BP Amoco Guarantee...........................................5
BP Amoco Loan................................................5
BP Amoco Loan Agreement......................................5
BP Amoco Note................................................5
Business Day.................................................5
Calendar Quarter.............................................5
Capital Adequacy Change......................................5
Capital Adequacy Rule........................................5
Capital Lease Obligations....................................6
Cash Management Demand Loans.................................6
Code.........................................................6
Commitment...................................................6
Commitments..................................................6
Confidential Information.....................................6
Consolidated EBITDA..........................................6
Consolidated EBT.............................................6
Consolidated Indebtedness....................................6
Consolidated Interest Expense................................6
Consolidated Interest Expense Coverage Ratio.................7
Consolidated Subsidiary......................................7
Control......................................................7
Demand Loans.................................................7
<PAGE>
ii
Distributions................................................7
Dollars......................................................7
Domestic Loans...............................................7
Domestic Loan................................................7
Eligible Assignee............................................7
Employee Benefit Plan........................................7
ERISA........................................................7
Eurodollar Loan..............................................7
Eurodollar Rate..............................................8
Event of Default.............................................8
Guarantee Agreement..........................................8
Guarantee Requirement........................................8
Increased Cost Change........................................8
Indebtedness.................................................8
Indemnified Liabilities......................................9
Indemnitees..................................................9
Indemnitee...................................................9
Interest Payment Date.......................................10
Interest Period.............................................10
Interest Rate...............................................10
Interest Rate Election......................................10
Lien........................................................10
Loans and Loan..............................................10
Material Subsidiary.........................................10
Maturity Date...............................................11
Maximum Indebtedness Amount.................................11
Moody's.....................................................11
Multiemployer Plan..........................................11
Net Proceeds................................................11
Non-Cash Management Demand Loans............................11
Occidental..................................................11
Officers' Certificate.......................................11
Participants and Participant................................11
Partners....................................................11
Partnership Agreement.......................................12
PBGC........................................................12
Permitted Restricted Payment Amount.........................12
Person......................................................12
Plan........................................................12
Plan Administrator..........................................12
Plan Sponsor................................................12
Prohibited Transaction......................................12
Proportional Share..........................................12
Purchase and Sale Agreement.................................13
Ratings.....................................................13
Reference Banks.............................................13
Reference Bank..............................................13
Register....................................................13
Regulation D................................................13
Regulation U................................................13
Regulation X................................................13
<PAGE>
iii
Replacement Lender..........................................13
Reportable Event............................................13
Required Banks..............................................13
Restricted Payment..........................................13
Shell Guarantee.............................................13
Shell Loan..................................................14
Shell Loan Agreement........................................14
Shell Note..................................................14
S&P.........................................................14
Subsidiary..................................................14
Taxes.......................................................14
Total Commitment............................................14
Transferee..................................................14
Unmatured Event of Default..................................14
Voting Securities...........................................14
SECTION 1.02. Accounting Terms..............................................14
ARTICLE II
LOAN PROVISIONS
SECTION 2.01. Loans.........................................................15
SECTION 2.02. General Terms Relating to the Loans...........................16
SECTION 2.03. Repayment of Loans; Evidence of Debt..........................17
SECTION 2.04. Reserve Requirements; Change in Circumstances.................18
SECTION 2.05. Pro Rata Treatment............................................22
SECTION 2.06. Payments......................................................22
SECTION 2.07. Payments on Business Days.....................................22
SECTION 2.08. Net Payments..................................................23
SECTION 2.09. Failed, Credit-Impaired and Non-Consenting Banks..............25
ARTICLE III
INTEREST PROVISIONS
SECTION 3.01. Interest on Loans.............................................27
SECTION 3.02. Interest on Overdue Amounts...................................27
SECTION 3.03. Inability to Determine Eurodollar Rate........................28
SECTION 3.04. Indemnity.....................................................28
SECTION 3.05. Rate Determination Conclusive.................................29
ARTICLE IV
PREPAYMENTS
SECTION 4.01. Optional Prepayments..........................................29
SECTION 4.02. Prepayments with Asset Disposition Proceeds...................29
SECTION 4.03. Prepayment of Loans of Affected Banks.........................30
<PAGE>
iv
ARTICLE V
REPRESENTATIONS AND WARRANTIES
SECTION 5.01. Representations and Warranties of the Borrower................32
ARTICLE VI
COVENANTS
SECTION 6.01. Affirmative Covenants of the Borrower.........................36
SECTION 6.02. Negative Covenants of the Borrower............................40
ARTICLE VII
CONDITIONS OF CREDIT............................45
ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.01. Events of Default.............................................47
SECTION 8.02. Limitations on Exercise of Certain Remedies...................49
ARTICLE IX
THE ADMINISTRATIVE AGENT AND THE BANKS
SECTION 9.01. Appointment and Powers of the Administrative Agent............50
SECTION 9.02. Exculpatory Provisions........................................50
SECTION 9.03. Reliance by the Administrative Agent..........................50
SECTION 9.04. Notice of Default.............................................51
SECTION 9.05. Indemnification...............................................51
SECTION 9.06. Nonreliance on the Administrative Agent and Other Banks.......52
SECTION 9.07. The Administrative Agent in its Individual Capacity...........52
SECTION 9.08. Excess Payments...............................................52
SECTION 9.09. Obligations Several...........................................52
SECTION 9.10. Resignation by the Administrative Agent.......................53
SECTION 9.11. Letter Agreement..............................................53
SECTION 9.12. Agents........................................................53
<PAGE>
v
ARTICLE X
MISCELLANEOUS
SECTION 10.01. No Waiver; Modifications in Writing...........................53
SECTION 10.02. Confidentiality...............................................54
SECTION 10.03. Notices, etc..................................................55
SECTION 10.04. Costs, Expenses and Taxes.....................................55
SECTION 10.05. Confirmations.................................................56
SECTION 10.06. Successors and Assigns; Participations........................56
SECTION 10.07. Indemnification...............................................61
SECTION 10.08. Reference Banks...............................................62
SECTION 10.09. Headings......................................................62
SECTION 10.10. Circumstances Requiring Consultation..........................62
SECTION 10.11. Execution in Counterparts.....................................63
SECTION 10.12. GOVERNING LAW.................................................63
SECTION 10.13. CONSENT TO JURISDICTION AND SERVICE OF
PROCESS; WAIVER OF JURY TRIAL...............................63
SECTION 10.14. Severability of Provisions....................................64
SECTION 10.15. Maximum Interest..............................................64
SECTION 10.16. Limitation on Recourse........................................64
<PAGE>
vi
Schedules
I Commitments
II Addresses, Telecopier and Telephone Numbers
Exhibits
A Form of Interest Rate Election
B-1 Form of Article VII(c) Certificate of the Borrower
B-2 Form of Article VII(c) Certificate of Occidental Petroleum Corporation
C Form of Assignment and Acceptance
D-1 Form of Opinion of Scott A. King, Esq., Assistant General Counsel of
Occidental Petroleum Corporation
D-2 Form of Opinion of Vinson & Elkins L.L.P.,
Special Counsel to Occidental Petroleum Corporation
E Form of Opinion of Cravath, Swaine & Moore, Special Counsel to the
Administrative Agent
F Form of Administrative Questionnaire
G-1 BP Amoco Loan Agreement
G-2 Shell Loan Agreement
H-1 BP Amoco Guarantee
H-2 Shell Guarantee
I Form of Guarantee Agreement
J Form of Letter Agreement
<PAGE>
CREDIT AGREEMENT
THIS AGREEMENT, dated as of April 19, 2000, is among
OCCIDENTAL PERMIAN LTD., a Texas limited partnership
(hereinafter called the "Borrower"), the BANKS (as defined
below), BANK OF AMERICA, N.A., as syndication agent, MORGAN
GUARANTY TRUST COMPANY OF NEW YORK and UBS AG, as
documentation agents, and THE CHASE MANHATTAN BANK, and THE
BANK OF NOVA SCOTIA, as administrative agents (collectively,
in such capacities, together with any successors thereto in
such capacities, the "Administrative Agents", with
references herein to "the Administrative Agent" in the
singular being construed as provided in the definition of
such term in Section 1.01 hereof).
W I T N E S S E T H
WHEREAS, pursuant to the Purchase and Sale Agreement (such term and each
other capitalized term used and not otherwise defined herein having the meaning
assigned to it in Article I), OXY Oil Partners, Inc., a Delaware corporation and
a wholly owned Subsidiary of Occidental, is acquiring a 28.9955050% limited
partnership interest in the Borrower, and OXY USA, Inc., a Delaware corporation
and a wholly owned Subsidiary of Occidental, is acquiring a 49% equity interest
in Occidental Permian Manager LLC, a Delaware limited liability company and the
sole general partner of the Borrower, in each case from Affiliates of BP Amoco
p.l.c. and Shell Oil Company (the "Acquisition");
WHEREAS, on the Second Closing Date (as defined in the Purchase and Sale
Agreement), Occidental will purchase an additional 49% equity interest in
Occidental Permian Manager LLC from an Affiliate of BP Amoco p.l.c.;
WHEREAS, at the closing of the Acquisition, the Borrower will (a) make cash
distributions to Affiliates of BP Amoco p.l.c. and Shell Oil Company in an
aggregate amount of $619,820,332 (the "Distributions"), (b) make a loan to BP
International Limited pursuant to the BP Amoco Loan Agreement in a principal
amount of $1,134,991,060 (the "BP Amoco Loan") and (c) make a loan to Midstream
Finance Company LLC pursuant to the Shell Loan Agreement in a principal amount
of $832,857,170 (the "Shell Loan");
WHEREAS, in order to obtain funds for the Distributions and the making of
the BP Amoco Loan and the Shell Loan, and to pay related costs and expenses, the
Borrower has requested that the Banks make available to it a $2,440,000,000
committed term credit facility;
WHEREAS the Banks are willing to provide such credit facility to the
Borrower on the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the parties hereto agree as follows:
<PAGE>
2
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. Definitions. As used in this Agreement, and unless the
context requires a different meaning, the following terms have the meanings
indicated (the meanings given to terms defined herein being equally applicable
to both the singular and plural forms of such terms):
"Accumulated Funding Deficiency" has the meaning assigned to that term in
Section 412 of the Code.
"Acquisition" has the meaning assigned to that term in the recitals hereto.
"Administrative Agent" means (a) for purposes of Article II (other than
Section 2.01(b) and (c) thereof), Article III, Article IV and Sections 10.06
(other than paragraph (a) and clause (vi) of paragraph (d) thereof), Sections
10.08 and 10.10 and the first sentence of Section 10.13 of this Agreement, and
for purposes of the definitions set forth in this Section 1.01 insofar as such
definitions are used in such Article and such Sections, The Bank of Nova Scotia,
in its capacity as administrative agent for the Banks, and its successors in
such capacity; (b) for purposes of Section 5.01, paragraph (g) of Article VII,
paragraph (b) of Section 8.01, Article IX (other than Section 9.11), the first
two sentences and the second proviso to the third sentence of Section 10.01 and
Sections 10.02, 10.04, 10.06(a) and (d)(vi), 10.07 and 10.13 (other than the
first sentence thereof) of this Agreement, and for purposes of the definitions
set forth in this Section 1.01 insofar as such definitions are used in such
Articles and Sections, each of The Chase Manhattan Bank and The Bank of Nova
Scotia, in their capacities as administrative agents for the Banks, and their
respective successors in such capacities, with all of such provisions to apply
separately to each such administrative agent; and (c) for purposes of all other
provisions of this Agreement, including the definitions set forth in this
Section 1.01 insofar as such definitions are used in such provisions, The Chase
Manhattan Bank, in its capacity as administrative agent for the Lenders, and its
successors in such capacity.
"Administrative Questionnaire" means an Administrative Questionnaire
substantially in the form of Exhibit G hereto, which each Bank shall complete
and provide to the Administrative Agent.
"Affected Bank" means, respectively, (i) any Bank or Participant affected
by the events described in Section 2.04(a), Section 2.04(b), Section 2.04(f) or
Section 2.08 hereof, (ii) any Bank affected by the events described in Section
2.09 hereof, or (iii) any Bank affected by the events described in Section
4.03(a) hereof, as the case may be, but, in the case of the foregoing clauses
(i), (ii) and (iii), only for any period during which such Bank or Participant
shall be affected by such events.
"Affiliate" means, as to any person, another person Controlling, Controlled
by or under common Control with such Person.
"Agreement" means this Agreement, as the same may at any time be amended or
modified and in effect.
<PAGE>
3
"Allocable Share" means, when used with reference to any Assenting Bank at
the time any determination thereof is to be made, in the case of the Loans of an
Affected Bank, a fraction, the numerator of which shall be the aggregate
principal amount of the Loans of such Affected Bank that such Assenting Bank
shall have agreed to acquire or refinance and the denominator of which shall be
the aggregate principal amount of the Loans of such Affected Bank that all the
Assenting Banks shall have agreed to acquire or refinance.
"Alternate Base Rate" means for any day, a rate per annum equal to the
higher of (a) the Prime Rate in effect on such day and (b) the Federal Funds
Effective Rate in effect for such day plus 1/2 of 1% per annum.
For purposes hereof, "Prime Rate" means the rate per annum announced by the
Administrative Agent from time to time as its base rate in effect at its
principal office in the City of New York; each change in the Prime Rate shall be
effective on the date such change is announced as effective.
For purposes hereof, "Federal Funds Effective Rate" means, for any day, an
interest rate per annum equal to the weighted average of the rates in effect on
such day for overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published on the succeeding
Business Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day which is a Business Day, the average of the quotations for
the day of such transactions received by the Administrative Agent from three
Federal funds brokers of recognized standing selected by it.
For purposes hereof, any change in the Alternate Base Rate due to a change
in the Federal Funds Effective Rate shall be effective on the effective date of
such change. If for any reason the Administrative Agent shall have determined
(which determination shall be conclusive absent manifest error) that it is
unable to ascertain the Federal Funds Effective Rate for any reason, including,
without limitation, the inability or failure of the Administrative Agent to
obtain sufficient bids or publications in accordance with the terms hereof, the
Alternate Base Rate shall be the Prime Rate until the circumstances giving rise
to such inability no longer exist.
"Alternate Base Rate Loan" means any Loan with respect to which the
Interest Rate is based on the Alternate Base Rate.
"Applicable Margin" means, on any date, with respect to any Eurodollar
Loan, the applicable spread set forth below based upon the Borrower's Ratings in
effect on such date:
<TABLE>
<CAPTION>
LEVEL 1 LEVEL 2 LEVEL 3 LEVEL 4 LEVEL 5 LEVEL 6
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
S&P AA or better A or better BBB+ or BBB BBB- BB+ or below
Moody's Aa2 or better A2 or better better Baa1 Baa2 Baa3 Ba1 or below
or better
Spread .625% .750% .875% 1.000% 1.250% 2.000%
</TABLE>
<PAGE>
4
For purposes hereof, (i) if the Ratings established (or deemed to have been
established, as provided in clause (ii) below) by Moody's and S&P shall fall
within different Levels, the rating in the inferior Level shall be disregarded,
unless the Ratings are not in adjacent Levels, in which case the Applicable
Margin will be based on the intermediate Level (or (A) if there are two
intermediate Levels, the higher of the spreads corresponding to the intermediate
Levels and (B) if there are more than two intermediate Levels, the average of
the spreads corresponding to the intermediate Levels), (ii) if Moody's or S&P
shall not have in effect a Rating (other than (a) because such rating agency
shall no longer be in the business of rating credit facilities or (b) as a
result of a change in the rating system of Moody's or S&P), then such rating
agency will be deemed to have established a Rating for the Borrower in Level 6
and (iii) if any Rating established (or deemed to have been established, as
provided in clause (ii) above) by Moody's or S&P shall be changed (other than as
a result of a change in the rating system of Moody's or S&P), such change shall
be effective as of the date on which it is first publicly announced by the
applicable rating agency. Each change in the Applicable Margin shall apply
during the period commencing on the effective date of such change and ending on
the date immediately preceding the effective date of the next such change. If
the rating system of Moody's or S&P shall change, or if either such rating
agency shall cease to be in the business of rating credit facilities, the
Borrower and the Banks (acting through the Administrative Agent) shall negotiate
in good faith to amend the references to specific Ratings in this definition to
reflect such changed rating system or the non-availability of Ratings from such
rating agency and, pending the effectiveness of such amendment, the Applicable
Margin shall be determined by reference to the Rating most recently in effect
prior to such change or cessation.
"Assenting Bank" has the meaning assigned to that term in Section
2.04(e)(i) hereof.
"Asset Disposition" means (a) any sale, transfer or other disposition
(including pursuant to a sale and leaseback transaction) of any property or
asset of the Borrower or any Subsidiary of the Borrower, other than sales of
inventory (including, without limitation, crude oil, condensate, natural gas
liquids and/or natural gas) or sales or other dispositions of used or surplus
equipment, in each case in the ordinary course of business; or (b) any casualty
or other insured damage to, or any taking under power of eminent domain or by
condemnation or similar proceeding of, any property or asset of the Borrower or
any Subsidiary of the Borrower, but only to the extent that the Net Proceeds
therefrom have not been applied to repair, restore or replace the property or
asset so damaged or taken within 180 days after such event, provided that the
following shall not be considered an "Asset Disposition": (a) any transfer,
distribution, reduction, cancelation, discharge or payment of the BP Amoco Note
or the Shell Note, or the transfer of such note and the distribution of the
proceeds thereof, permitted by the terms hereof, (b) mergers and consolidations,
and sales, leases, transfers and dispositions of assets, in each case to the
extent permitted under Sections 6.02(a)(i) through (vi) hereof, (c) Restricted
Payments that may be made or declared under the provisions of Section 6.02(d)
hereof, and (d) Liens described in clauses (i) through (xii) of Section 6.02(b)
hereof.
<PAGE>
5
"Assignment and Acceptance" means an instrument substantially in the form
of Exhibit C hereto.
"Bank" and "Banks" mean, respectively, (i) each bank or financial
institution which becomes a party to this Agreement by signing on the signature
pages hereto or pursuant to Section 10.06(c) hereof, and (ii) all such banks and
financial institutions.
"Board" means the Board of Governors of the Federal Reserve System of the
United States.
"Borrower" has the meaning assigned to that term in the introduction to
this Agreement.
"Borrowing" means a Borrowing (a) pursuant to Section 2.01(a) hereof
consisting of simultaneous Loans from each of the Banks in accordance with their
respective Proportional Shares of such Borrowing, or (b) made as a result of the
operation of Section 2.04(e)(i), Section 2.04(e)(ii), Section 2.08(c)(i),
Section 2.09(i), or Section 4.03(b)(i) hereof.
"BP Amoco Guarantee" means the Guaranty Agreement dated as of April 19,
2000, between BP Amoco p.l.c. and the Borrower, a copy of which is attached as
Exhibit H-1 hereto.
"BP Amoco Loan" has the meaning assigned to that term in the recitals to
this Agreement.
"BP Amoco Loan Agreement" means the Term Loan Agreement dated as of April
19, 2000, between BP International Limited, a wholly owned Subsidiary of BP
Amoco p.l.c., and the Borrower, a copy of which is attached as Exhibit G-1
hereto.
"BP Amoco Note" means the promissory note of BP International Limited in
the principal amount of $1,134,991,060 issued under, and in the form attached as
Schedule A to, the BP Amoco Loan Agreement.
"Business Day" means any day not a Saturday, Sunday or legal holiday in the
State of New York and on which banks and the Federal Reserve Bank of New York
are open for business in New York City; provided, however, that when used in
connection with a Eurodollar Loan, the term "Business Day" shall also exclude
any day on which banks are not open for dealings in Dollar deposits in the
London Interbank Market.
"Calendar Quarter" means a calendar quarter ending on the last day of any
March, June, September or December.
"Capital Adequacy Change" has the meaning assigned to that term in Section
2.04(b) hereof.
"Capital Adequacy Rule" has the meaning assigned to that term in Section
2.04(b) hereof.
<PAGE>
6
"Capital Lease Obligations" means obligations of the Borrower and its
Subsidiaries as lessee under leases that, in accordance with GAAP, should be
recorded as capital leases.
"Cash Management Demand Loans" means Demand Loans that are made to allow
excess cash to be temporarily invested with Occidental until needed to meet the
Borrower's obligations.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time and in effect.
"Commitment" means, when used with reference to any Bank, the amount of
such Bank's commitment hereunder to extend credit to the Borrower as set forth
in Section 2.01(a) hereof, which Commitment, subject to Section 8.01 hereof,
shall be the amount set forth opposite the name of such Bank on Schedule I
hereto, as such commitment may from time to time be adjusted under Section
2.04(e)(i), Section 2.08(c)(i), Section 2.09(i) or Section 4.03(b)(i) hereof,
reduced by the amount of any permanent reduction(s) in such amount made pursuant
to Section 4.01 or Section 4.03 hereof.
"Commitments" means each Commitment, collectively.
"Confidential Information" has the meaning assigned to that term in Section
10.02 hereof.
"Consolidated EBITDA" means, with respect to any period for which
Consolidated EBITDA is to be calculated, consolidated net income for such period
plus (a) without duplication and to the extent deducted in determining such
consolidated net income, the sum of (i) Consolidated Interest Expense for such
period, (ii) consolidated income tax expense for such period, (iii) all amounts
attributable to depreciation, depletion and impairment, amortization of
leaseholds and intangibles and other non-cash expenses for such period and (iv)
all extraordinary losses for such period, plus (b) without duplication, prepaid
royalty income to the extent actually received in cash for such period, minus
(c) without duplication and to the extent included in determining such
consolidated net income, any extraordinary gains for such period, all determined
on a consolidated basis in accordance with generally accepted accounting
principles.
"Consolidated EBT" means the aggregate amount of consolidated net income
before consolidated income tax expense of the Borrower and its Subsidiaries,
computed on a consolidated basis in accordance with generally accepted
accounting principles.
"Consolidated Indebtedness" means the sum of, without duplication, (a) the
aggregate amount of all Indebtedness of the Borrower and its Subsidiaries other
than Indebtedness referred to in clause (d) of the definition of such term,
computed on a consolidated basis in accordance with generally accepted
accounting principles, and (b) obligations reflected for financial reporting
purposes as deferred credits for revenue from sales of future production of the
Borrower and its Subsidiaries.
"Consolidated Interest Expense" means, for any period, the interest expense
(including imputed interest expense in respect of Capital Lease Obligations, and
not
<PAGE>
7
reduced by interest income) of the Borrower and the Subsidiaries for such
period, determined on a consolidated basis in accordance with generally accepted
accounting principles.
"Consolidated Interest Expense Coverage Ratio" means, for any period, the
ratio of (a) Consolidated EBITDA for such period to (b) Consolidated Interest
Expense for such period.
"Consolidated Subsidiary" means any Subsidiary of the Borrower included in
the financial statements of the Borrower and its Subsidiaries prepared on a
consolidated basis in accordance with generally accepted accounting principles.
"Control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise.
"Controlling" and "Controlled" have meanings correlative thereto.
"Demand Loans" means each demand loan to Occidental under that certain
Demand Promissory Note dated as of April 19, 2000, executed by Occidental and
payable to the order of the Borrower, in the form heretofore delivered to the
Administrative Agent, provided that the terms of such note may not be amended
without the consent of the Required Banks and shall at all times provide that
(a) the amount of such loan or note may not be compromised, settled, subject to
offset or otherwise reduced and (b) such loan and all other Indebtedness under
such note shall become immediately due and payable upon the maturity of the
Loans hereunder, whether at the scheduled maturity date or by acceleration or
otherwise.
"Distributions" has the meaning assigned to that term in the recitals
hereto.
"Dollars" and the symbol "$" mean the lawful currency of the United States
of America.
"Domestic Loans" and "Domestic Loan" mean, respectively, (a) any Loans
during any period in which such Loans bear Interest Rates determined with
reference to the Alternate Base Rate and (b) a single such Loan during any such
period.
"Eligible Assignee" means a commercial bank having total assets in excess
of $8,000,000,000 or any other financial institution mutually acceptable to the
Borrower and the Administrative Agent.
"Employee Benefit Plan" has the meaning assigned to the term "employee
benefit plan" in Section 3(3) of ERISA.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time and in effect.
"Eurodollar Loan" means any Loan with respect to which the Borrower shall
have selected an Interest Rate based on the Eurodollar Rate in accordance with
the provisions of Article II hereof.
<PAGE>
8
"Eurodollar Rate" means, for any Interest Period with respect to any
Eurodollar Loan, an interest rate per annum equal to the rate per annum
reported, on the date two Business Days prior to the first day of such Interest
Period, on page 3750 of the Telerate Screen for one, two, three or six month
LIBO, as the Borrower may elect, provided that if the Telerate Screen shall
cease to be publicly available, or if under the provisions of the definition of
the term "Interest Period" set forth herein, the Administrative Agent and the
Borrower shall agree to an Interest Period of other than one, two, three or six
months, then, in either such event, the term "Eurodollar Rate" shall mean, for
any Interest Period with respect to any Eurodollar Loan, the rate per annum
which is equal to the arithmetic average (as determined by the Administrative
Agent (subject to Section 10.08 hereof) on the basis of quotations, if any,
received by the Administrative Agent from the Reference Banks, with such average
expressed as a percentage and rounded, if necessary, to the nearest 1/10,000 of
one percent) of the average rate per annum at which each Reference Bank is
offered deposits in Dollars by prime banks in the London Interbank Eurodollar
market as of 11:00 a.m., London time, on the day which is two (2) Business Days
prior to the beginning of such Interest Period, for settlement on the first day
of such Interest Period and for the approximate number of days comprised
therein, in an amount comparable to the amount of such Reference Bank's portion
of the principal amount of the Borrowing of which such Eurodollar Loan forms a
part.
"Event of Default" has the meaning assigned to that term in Section 8.01
hereof.
"Guarantee Agreement" means a Guarantee Agreement in the form of Exhibit I
hereto.
"Guarantee Requirement" means, at any time, the requirement that each
Material Subsidiary (if any) shall have executed and delivered to the
Administrative Agent either (i) a counterpart of each of the Guarantee Agreement
or (ii) in the case of any Person that becomes a Material Subsidiary after the
date hereof, a supplement to each such agreement, in the form specified therein.
"Increased Cost Change" has the meaning assigned to that term in Section
2.04(a) hereof.
"Indebtedness" means, with respect to any Person, as of the date on which
Indebtedness is to be determined, (a) all items (except items of capital stock
or of surplus or of deferred credits and other liabilities combined with
deferred credits for financial reporting purposes or minority interests in
Subsidiaries of such Person) which in accordance with generally accepted
accounting principles applied in the preparation of the financial statements of
the Borrower and its Consolidated Subsidiaries would be included in determining
total liabilities as shown on the liability side of a balance sheet of such
Person, (b) all indebtedness secured by any mortgage on, or other security
interest in, any property or asset owned or held by such Person subject thereto,
whether or not the indebtedness secured thereby shall have been assumed by such
Person, (c) all indebtedness of others which such Person has directly or
indirectly guaranteed, endorsed (otherwise than for collection or deposit in the
ordinary course of business), discounted with recourse, agreed (contingently or
otherwise) to purchase or repurchase or otherwise acquire, or in respect of
which such Person has otherwise become directly or indirectly liable (including
through any letter of credit, letter of guarantee or similar arrangement), and
(d) all payments that such Person would have to make in the event of an early
<PAGE>
9
termination, on the date Indebtedness of such Person is being determined, in
respect of outstanding interest rate protection agreements, foreign currency
exchange agreements, oil and gas futures and other hedging arrangements. For the
purpose of computing the Indebtedness of any Person, there shall be excluded any
particular Indebtedness which meets any of the following categories:
(i) Indebtedness with respect to which sufficient cash or cash equivalents
or securities shall have been deposited in trust to provide for the full
payment, redemption or satisfaction of the principal of, premium, if any, and
interest to accrue on, such Indebtedness to the stated maturity thereof or to
the date of prepayment thereof, as the case may be, and as a result of such
deposit such particular Indebtedness, in accordance with generally accepted
accounting principles, shall no longer be required to be reported on a balance
sheet of such Person as a liability, and such cash or cash equivalents or
securities shall not be required to be reported as an asset;
(ii) Indebtedness which is not classified as Indebtedness under clause (a)
of the definition of Indebtedness and which is payable solely out of certain
property or assets of such Person, or is secured by a mortgage on, or other
security interest in, certain property or assets owned or held by such Person,
in either case without any further recourse to or liability of such Person, to
the extent such Indebtedness exceeds (x) if such Person records such property or
assets on its books, the value for such property or assets recorded on such
books or (y) if such Person does not record such property or assets on its
books, (1) if such Indebtedness is a general obligation of the entity which does
record such property or assets on its books, the net investment in or advances
to such entity as recorded on the books of such Person or (2) if such
Indebtedness is payable solely out of certain property or assets of such entity,
the lesser of the value for such property or assets recorded on the books of
such entity or the net investment in or advances to such entity as recorded on
the books of such Person, in each case determined in accordance with generally
accepted accounting principles;
(iii) accounts payable (for the purchase price of property or services)
from time to time incurred in the ordinary course of business and guarantees by
such Person or any of its Subsidiaries of any such obligations incurred by any
other Subsidiary of such Person;
(iv) obligations for taxes and assessments that are not yet due or are
being contested in compliance with Section 6.01(b); or
(v) (A) obligations to sell or purchase hydrocarbons, (B) obligations with
pipelines for firm transportation of natural gas of such Person, and (C) oil and
gas balancing agreements, take or pay agreements or other prepayment obligations
in respect of hydrocarbons, in each case, incurred in the ordinary course of
business and which are customary in the oil and gas industry.
"Indemnified Liabilities" has the meaning assigned to that term in Section
10.07 hereof.
"Indemnitees" and "Indemnitee" have the respective meanings assigned to
those terms in Section 10.07 hereof.
<PAGE>
10
"Interest Payment Date" means (a) with respect to Alternate Base Rate
Loans, the last day of each Calendar Quarter, commencing with the first of such
dates to occur after the date of this Agreement, and the Maturity Date, and (b)
with respect to any Eurodollar Loan, the last day of the Interest Period
applicable thereto and, in the case of a Eurodollar Loan with an Interest Period
of 6 months, also the day that would have been the Interest Payment Date for
such Loan had an Interest Period of 3 months been applicable to such Loan.
"Interest Period" means (a) as to any Eurodollar Loan, the period
commencing on the date of such Loan or on the last day of the immediately
preceding Interest Period, as the case may be, and ending on the numerically
corresponding day (or if there is no such corresponding day, the last day) in
the calendar month that is 1, 2, 3 or 6 months later, as the Borrower may elect
(or at the end of any other period requested by the Borrower and agreed to by
the Administrative Agent; provided that deposits in Dollars with a maturity
equal to such period are available to all the Banks in the London interbank
market) and (b) as to any Alternate Base Rate Loan, the period commencing on the
date of such Loan or on the last day of the immediately preceding Interest
Period, as the case may be, and ending 30 days later or, if earlier, on the date
of prepayment of such Loan; provided, however, that (i) if any Interest Period
would end on a day which shall not be a Business Day, such Interest Period shall
be extended to the next succeeding Business Day unless, with respect to
Eurodollar Loans only, such next succeeding Business Day would fall in the next
calendar month, in which case such Interest Period shall end on the next
preceding Business Day, and (ii) no Interest Period may be selected that ends
later than the Maturity Date.
"Interest Rate" means the rate or rates of interest to be determined as
provided in Article III hereof.
"Interest Rate Election" has the meaning assigned to that term in Section
2.02(a) hereof.
"Lien" means and includes any mortgage, pledge, lien, security interest,
production payment agreement, conditional sale or other title retention
agreement or other similar encumbrance.
"Loans" and "Loan" mean, respectively, all loans made by the Banks or a
single Bank (as the context may indicate) to the Borrower pursuant to this
Agreement (including any such loan made as a result of the operation of Section
2.04(e)(i), Section 2.04(e)(ii), Section 2.08(c)(i), Section 2.09(i), Section
4.03(b)(i) or Section 4.03(b)(ii) hereof, as the case may be).
"Material Subsidiary" means any Subsidiary of the Borrower (i) the
consolidated revenues of which for the most recent period of four fiscal
quarters for which financial statements have been delivered pursuant to Section
6.01 were greater than 5% of the Borrower's consolidated revenues for such
period or (ii) the consolidated assets of which as of the end of such period
were greater than 5% of the Borrower's consolidated assets as of the end of such
period; provided that if at any time the aggregate amount of the consolidated
revenues or consolidated assets of all Subsidiaries of the Borrower that are not
Material Subsidiaries for or at the end of any period of four fiscal quarters
exceeds 10% of the Borrower's
<PAGE>
11
consolidated revenues for such period or 10% of the Borrower's consolidated
tangible assets as of the end of such period, the Borrower (or, in the event the
Borrower has failed to do so within 10 days, the Administrative Agent) shall
designate sufficient Subsidiaries of the Borrower as "Material Subsidiaries" to
eliminate such excess, and such designated Subsidiaries shall for all purposes
of this Agreement constitute Material Subsidiaries.
"Maturity Date" means April 19, 2005.
"Maximum Indebtedness Amount" means, on any date, (a) $2,640,000,000 minus
(b) the product of (i) $100,000,000 and (ii) the number of anniversaries of the
date hereof that shall have occurred on or prior to such date.
"Moody's" means Moody's Investors Service, Inc. or any successor thereto.
"Multiemployer Plan" has the meaning assigned to the term "multiemployer
plan" in Section 3(37) of ERISA.
"Net Proceeds" means, as to any Asset Disposition, cash proceeds of such
Asset Disposition (or, if (i) such Asset Disposition is permitted under Section
6.02(a)(vii) and (ii) less than 90% of the aggregate consideration received for
such Asset Disposition shall consist of cash, an amount equal to the cash
proceeds of such Asset Disposition plus the difference between 90% of such
aggregate consideration and the amount of such cash proceeds), net of (a) the
direct costs relating to such Asset Disposition excluding amounts payable of
such direct costs to the Borrower or any Subsidiary, (b) sales, use or other
transaction taxes, (c) amounts required to be applied to repay principal,
interest and prepayment premiums and penalties on purchase money Indebtedness
secured by a Lien on the asset which is the subject of the Asset Disposition,
(d) amounts required to pay all foreign income taxes and (e) any withholding
taxes associated with repatriation of such amounts to the United States.
"Non-Cash Management Demand Loans" means all Demand Loans that are not Cash
Management Demand Loans.
"Occidental" means Occidental Petroleum Corporation, a Delaware
corporation.
"Officers' Certificate" means a certificate executed on behalf of the
Borrower by OXY USA Inc., the Class A Member and Manager of Occidental Permian
Manager LLC, the general partner of the Borrower, by its President or one of its
Vice Presidents and by one of its other Vice Presidents or its Treasurer or one
of its Assistant Treasurers or its Controller or one of its Assistant
Controllers.
"Participants" and "Participant" mean, respectively, (a) the banks and
other entities referred to in Section 10.06(b) hereof, and (b) any one of such
banks or other entities.
"Partners" means Occidental Permian Manager LLC, as general partner of the
Borrower, and Amoco X.T. Company, Amoco Y.T. Company, OXY Oil Partners, Inc.,
SWEPI LP, Shell K2, Inc. and Shell Everest, Inc., as limited partners of the
Borrower, and their respective permitted successors and assigns in such
capacities.
<PAGE>
12
"Partnership Agreement" means the Amended and Restated Agreement of Limited
Partnership of the Borrower dated as of April 19, 2000, among Occidental Permian
Manager LLC, as general partner, and Amoco X.T. Company, Amoco Y.T. Company, OXY
Oil Partners, Inc., SWEPI LP, Shell K2, Inc. and Shell Everest, Inc., each as a
limited partner.
"PBGC" means the Pension Benefit Guaranty Corporation established pursuant
to Subtitle A of Title IV of ERISA.
"Permitted Restricted Payment Amount" means, with respect to any period of
four consecutive fiscal quarters (or such lesser number of fiscal quarters as
shall have elapsed after the date of this Agreement), (a) if the Consolidated
Interest Expense Coverage Ratio for such period is greater than or equal to 4.00
to 1.00, 65% of Consolidated EBT for such period, (b) if the Consolidated
Interest Expense Coverage Ratio for such period is less than 4.00 to 1.00 but
greater than or equal to 3.00 to 1.00, 35% of Consolidated EBT for such period
and (c) if the Consolidated Interest Expense Coverage Ratio for such period is
less than 3.00 to 1.00, zero.
"Person" means a corporation, an association, a partnership, a limited
liability company, an organization, a business, an individual, a government or a
political subdivision thereof or a governmental agency.
"Plan" means (a) with respect to the Borrower, any plan described in
Section 4021(a) of ERISA and not excluded pursuant to Section 4021(b) thereof,
under which the Borrower or any Subsidiary of the Borrower has contributed, and
(b) with respect to any other Person, any employee benefit plan or other plan
established or maintained by such Person for the benefit of such Person's
employees and to which Title IV of ERISA applies.
"Plan Administrator" has the meaning assigned to the term "administrator"
in Section 3(16)(A) of ERISA.
"Plan Sponsor" has the meaning assigned to the term "plan sponsor" in
Section 3(16)(B) of ERISA.
"Prohibited Transaction" has the respective meanings assigned to that term
in Section 4975 of the Code and in Section 406 of ERISA.
"Proportional Share" means, at the time any determination thereof is to be
made and when used with reference to any Bank and any described aggregate or
total amount, an amount equal to the result obtained by multiplying such
described aggregate or total amount by a fraction, the numerator of which shall
be such Bank's Commitment (or (i) after the Commitments shall have terminated,
the aggregate principal amount of such Bank's outstanding Loans and (ii) after
the Loans shall have been repaid or prepaid in full, the aggregate principal
amount of such Bank's outstanding Loans immediately prior to such repayment or
prepayment) at such time and the denominator of which shall be the Total
Commitment (or (i) after the Commitments shall have terminated, the aggregate
principal amount of the Banks' outstanding Loans and (ii) after the Loans shall
have been repaid or prepaid in full, the aggregate principal amount of the
Banks' outstanding Loans immediately prior to such repayment or prepayment) at
such time.
<PAGE>
13
"Purchase and Sale Agreement" means the Purchase and Sale Agreement dated
as of March 7, 2000 among Amoco D.T. Company, Amoco X.T. Company, Amoco Y.T.
Company, SWEPI LP, Shell Land & Energy Company, Shell Onshore Ventures, Inc.,
Shell K2, Inc., and Shell Everest, Inc., as sellers, and Occidental Petroleum
Corporation, as buyer.
"Ratings" means the ratings of the credit facility provided for in this
Agreement by S&P and Moody's (or such other ratings as may be agreed upon
pursuant to the last sentence of the definition of "Applicable Margin").
"Reference Banks" and "Reference Bank" mean, respectively, (a) the
following Persons: The Chase Manhattan Bank, Bank of America, N.A. and The Bank
of Nova Scotia, or any other Person hereafter appointed as a Reference Bank
pursuant to Section 10.08 hereof, and (b) any one of such Persons.
"Register" has the meaning assigned to that term in Section 10.06(e)
hereof.
"Regulation D" means Regulation D of the Board, as the same may at any time
be amended or modified and in effect.
"Regulation U" means Regulation U of the Board, as the same may at any time
be amended or modified and in effect.
"Regulation X" means Regulation X of the Board, as the same may at any time
be amended or modified and in effect.
"Replacement Lender" means a lending institution designated by the Borrower
pursuant to Section 2.04(e)(iii), Section 2.08(c)(ii), Section 2.09(ii), or
Section 4.03(b)(iii) hereof, which, at the time of such designation, is not a
Bank.
"Reportable Event" means a "reportable event" described in Section 4043(b)
of ERISA.
"Required Banks" means, at the time any determination thereof is to be
made, Banks whose Commitments or outstanding Loans aggregate at least 51% of the
aggregate Commitments or outstanding Loans.
"Restricted Payment" means any dividend or other distribution (whether paid
in cash, securities or other property, by the cancelation of Indebtedness or by
any other means) with respect to any equity interests in the Borrower or any
Subsidiary of the Borrower, or any payment (whether in cash, securities or other
property, by the cancelation of Indebtedness or by any other means) on account
of the purchase, redemption, retirement, acquisition, cancelation or termination
of any equity interests in the Borrower or any Subsidiary of the Borrower.
"Shell Guarantee" means the Guaranty Agreement dated as of April 19, 2000,
between Shell Oil Company and the Borrower, a copy of which is attached as
Exhibit H-2 hereto.
<PAGE>
14
"Shell Loan" has the meaning assigned to that term in the recitals to this
Agreement.
"Shell Loan Agreement" means the Term Loan Agreement dated as of April 19,
2000, between Midstream Finance Company LLC, a Person designated by Shell Oil
Company, and the Borrower, a copy of which is attached as Exhibit G-2 hereto.
"Shell Note" means the promissory note of Midstream Finance Company LLC in
the principal amount of $832,857,170 issued under, and in the form attached as
Schedule A to, the Shell Loan Agreement.
"S&P" means Standard & Poor's Ratings Group or any successor thereto.
"Subsidiary" means, with respect to any Person, any corporation,
association, partnership, limited liability corporation or other business entity
(but excluding any joint venture or unit that in either case is organized under
any unitization, communitization or pooling declaration, order or agreement or
joint operating agreement), a majority (by number of votes) of the Voting
Securities of which is at the time owned by such Person or by one or more of its
Subsidiaries or by such Person and one or more of its Subsidiaries. Except as
indicated, each reference to a Subsidiary is a reference to a Subsidiary of the
Borrower.
"Taxes" has the meaning assigned to that term in Section 2.08(a) hereof.
"Total Commitment" means at any time the determination thereof is to be
made, the aggregate amount of the Commitments of the Banks, as in effect at such
time.
"Transferee" has the meaning assigned to that term in Section 10.06(g)
hereof.
"Unmatured Event of Default" means an event, act or occurrence which with
the giving of notice or the lapse of time (or both) would become an Event of
Default.
"Voting Securities" means stock or partnership interests of any class or
classes (however designated), the holders of which are at the time entitled, as
such holders, to vote for the election of a majority of the directors (or
persons performing similar functions) of the corporation, association,
partnership or other business entity (but excluding any joint venture or unit
that in either case is organized under any unitization, communitization or
pooling declaration, order or agreement or joint operating agreement) in
question, other than stock or partnership interests having the right so to vote
solely by reason of the happening of a contingency.
SECTION 1.02. Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with generally accepted
accounting principles as in effect from time to time, including, without
limitation, applicable statements, bulletins and interpretations issued by the
Financial Accounting Standards Board and bulletins, opinions, interpretations
and statements issued by the American Institute of Certified Public Accountants
or its committees. In the event that an actual or anticipated change (which term
for all purposes of this Agreement includes, without limitation, the adoption of
a new statement of financial accounting standards) in generally accepted
accounting principles would affect the computation of any dollar amounts or
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15
ratios referred to in the financial covenants herein, the parties to the
Agreement will, promptly upon request, enter into negotiations in good faith in
an effort to agree upon amendments which will most nearly preserve the original
intent of such financial covenants. Pending agreement on such amendments, such
financial covenants will remain in effect but will be measured by reference to
generally accepted accounting principles as in effect immediately prior to such
change. When used herein, the term "financial statements" shall include the
notes and schedules thereto, but need not include such notes or schedules when
used with reference to such statements of any Person as of any date other than
the end of a fiscal year of such Person.
ARTICLE II
LOAN PROVISIONS
SECTION 2.01. Loans. (a) Subject to the terms and conditions of this
Agreement, each Bank, severally and not jointly, agrees to make a term loan to
the Borrower on the date hereof in a principal amount not to exceed the amount
of the Commitment of such Bank. The amount of the Loan of each Bank shall equal
such Bank's Proportional Share of the aggregate amount of the Loans; provided,
however, that the failure of any Bank to make any Loan shall not in itself
relieve any other Bank of its obligation to lend hereunder. The Loans shall
initially be Alternate Base Rate Loans and/or Eurodollar Loans, as the Borrower
shall have requested not later than 12:00 noon, New York City time, three
Business Days prior to the initial Borrowing hereunder, in the case of
Eurodollar Loans, or one Business Day prior to the initial Borrowing, in the
case of Alternate Base Rate Loans, with such initial Interest Periods as shall
have been specified in such request with respect to any requested Eurodollar
Loans. Amounts repaid or prepaid in respect of the Loans may not be reborrowed.
The Commitments shall automatically and permanently terminate immediately
following the making of the Loans on the date hereof.
(b) Each Bank shall make available its portion of the Borrowing on the date
hereof by paying the amount required to the Administrative Agent in New York,
New York, in Dollars, in immediately available funds not later than 11:00 a.m.,
New York City time, and the Administrative Agent shall by 1:00 p.m., New York
City time, credit the amounts so received (or, subject to Section 2.01(c)
hereof, its own funds but, in either case, in Dollars in immediately available
funds) to such account of the Borrower as it shall designate in writing to the
Administrative Agent or, if Loans are not made on the date hereof because any
condition precedent to a Borrowing herein specified shall not have been met,
promptly return the amounts so received to the respective Banks.
(c) Unless the Administrative Agent shall have been notified by a Bank
prior to 12:00 noon, New York City time, on the date hereof that such Bank does
not intend to make available to the Administrative Agent such Bank's portion of
the Borrowing to be made on the date hereof, the Administrative Agent may assume
that such Bank has made such proceeds available to the Administrative Agent, and
the Administrative Agent may in reliance upon such assumption (but shall not be
required to) make available to the Borrower a corresponding amount. If, and only
if, such notice is not given and such corresponding amount is not in fact made
available to the Administrative Agent by such Bank, the Administrative Agent
shall be entitled to recover such amount on demand from
<PAGE>
16
such Bank (or, if such Bank fails to pay such amount forthwith upon such demand,
from the Borrower) together with interest thereon in respect of each day during
the period commencing on the date such amount was made available to the Borrower
and ending on (but excluding) the date the Administrative Agent recovers such
amount at a rate per annum equal to (i) in the case of such Bank, the Federal
Funds Effective Rate and (ii) in the case of the Borrower, the applicable
Interest Rate in respect of such Loan.
SECTION 2.02. General Terms Relating to the Loans. (a) Not later than 12:00
noon, New York City time, three Business Days before the end of each Interest
Period applicable to a Borrowing (unless the Borrower shall have determined to
prepay the Loans comprising such Borrowing at the end of such Interest Period
and shall have delivered the notice required under Article IV hereof), the
Borrower shall give the Administrative Agent notice (by telephone (confirmed
promptly in writing) or telecopier), substantially in the form of Exhibit A
hereto (an "Interest Rate Election"), specifying whether the Loans comprising
such Borrowing are to be Eurodollar Loans or Alternate Base Rate Loans following
the end of the expiring Interest Period and the Interest Period or Interest
Periods to be in effect for such Loans following the end of such Interest
Period; provided, however, notwithstanding anything herein to the contrary, so
long as the Class A Limited Partnership Interests and the Class B Limited
Partnership Interests are outstanding, the Alternate Base Rate option shall not
be available under this Agreement except for time periods of not more than
thirty (30) days that, in the reasonable judgment of the Borrower, are necessary
or appropriate to avoid the payment by the Borrower of amounts under Section
3.04, and except to the extent that the Eurodollar Rate option is at any time
unavailable to the Borrower. Each Borrowing resulting from a notice given by the
Borrower pursuant to this Section 2.02(a) shall be in a minimum principal amount
of $10,000,000 and shall consist of Loans of the Banks in amounts equal to their
respective Proportional Shares of such Borrowing. If the Borrower shall not have
given notice of its intention to prepay the Loans comprising any Borrowing in
accordance with the applicable provisions of Article IV hereof and shall not
have given notice in accordance with the preceding sentence with respect to such
Loans, the Borrower shall be deemed to have elected for such Loans to be
Eurodollar Loans with an Interest Period of one month. The Administrative Agent
shall promptly advise the other Banks by telecopier of any election made or
deemed made pursuant to this Section 2.02(a), and the Interest Period elected or
deemed elected for such Loans shall commence on the last day of the expiring
Interest Period.
(b) Each Bank may at its option make any Eurodollar Loan by causing a
foreign branch or affiliate of such Bank to make such Loan; provided, however,
that (i) any exercise of such option shall not affect the obligation of the
Borrower to repay such Loan to such Bank in accordance with the terms of this
Agreement, (ii) such Bank shall promptly advise the Borrower of the exercise of
such option, the name and address of such foreign branch or affiliate and such
other information with respect to such branch or affiliate as the Borrower may
reasonably request, and (iii) the exercise of such option, as of the time of
such exercise, shall not materially increase the amounts which would have been
payable by the Borrower to such Bank under this Agreement. Loans of more than
one interest rate option may be outstanding at the same time; provided, however,
that, unless the Administrative Agent and the Borrower shall otherwise agree,
the Borrower shall not be entitled to request any Loan which, if made, would
result in an aggregate of more than ten separate Eurodollar Loans of any Bank
being outstanding hereunder at any one time. For purposes of the foregoing,
Loans having different Interest Periods,
<PAGE>
17
regardless of whether they commence on the same date, shall be considered
separate Loans.
SECTION 2.03. Repayment of Loans; Evidence of Debt. (a) The Borrower agrees
to repay the Borrowings on each date set forth below in the aggregate principal
amount set forth opposite such date:
Date Amount
- ---- ------
December 31, 2000 $200,000,000
December 31, 2001 $200,000,000
December 31, 2002 $200,000,000
December 31, 2003 $300,000,000
December 31, 2004 $300,000,000
To the extent not previously paid, the principal amount of each Loan shall be
due and payable in full on the Maturity Date.
(b) Any prepayment of the Borrowings shall be applied to reduce the
subsequent scheduled repayments of the Borrowings in the direct order of such
scheduled repayments.
(c) Each Bank shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness of the Borrower to such Bank
resulting from each Loan made by such Bank, including the amounts of principal
and interest payable and paid to such Bank from time to time hereunder.
(d) The Administrative Agent shall maintain accounts in which it shall
record (i) the amount of each Loan made hereunder, (ii) the Interest Rate
applicable to each such Loan, (iii) the Interest Period applicable to each such
Loan, (iv) the amount of any principal or interest due and payable or to become
due and payable from the Borrower to each Bank hereunder and (v) the amount of
any sum received by the Administrative Agent hereunder for the account of the
Banks and each Bank's share thereof.
(e) The failure of any Bank or the Administrative Agent to maintain the
accounts referred to in Section 2.03(b) or Section 2.03(c) hereof or any error
therein shall not in any manner affect the obligation of the Borrower to repay
the Loans or to pay interest thereon in accordance with the terms of this
Agreement.
(f) Any Bank may request that Loans made by it be evidenced by a promissory
note. In such event, the Borrower shall prepare, execute and deliver to such
Bank a promissory note payable to the order of such Bank (or, if requested by
such Bank, to such Bank and its registered assigns) and in a form approved by
the Administrative Agent. Thereafter, the Loans evidenced by such promissory
note and interest thereon shall at all times be represented by one or more
promissory notes in such form payable to the order of the payee named therein
(or, if such promissory note is a registered note, to such payee and its
registered assigns). Any assignment of such promissory note shall be made in
accordance with the provisions of Section 10.06 hereof.
<PAGE>
18
(g) The Borrower also agrees to prepay the Borrowings in accordance with
Section 6.02(b)(ix) hereof.
SECTION 2.04. Reserve Requirements; Change in Circumstances. (a) If after
the date of this Agreement any change in applicable law or regulation or in the
interpretation or administration thereof by any governmental authority charged
with the interpretation or administration thereof (whether or not having the
force of law but with respect to which similarly situated banks generally
comply) (any such change, an "Increased Cost Change") (i) shall change the basis
of taxation of payments to any Bank of the principal of or interest on any
Eurodollar Loan made by such Bank or any other fees or amounts payable hereunder
(other than (x) taxes imposed on the overall net income of such Bank by the
jurisdiction in which such Bank has its principal or lending office or by any
political subdivision or taxing authority therein (or any tax which is enacted
or adopted by such jurisdiction, political subdivision or taxing authority as a
direct substitute for any such taxes) or (y) any tax, assessment, or other
governmental charge that would not have been imposed but for the failure of any
Bank to comply with any certification, information, documentation, or other
reporting requirement), or (ii) shall impose, modify or deem applicable any
reserve, special deposit or similar requirement against assets of, deposits with
or for the account of, or credit extended by, such Bank or (iii) shall impose on
such Bank or on the London Interbank Market any other condition affecting this
Agreement or any Eurodollar Loan made by such Bank, and the result of any of the
foregoing shall be to increase the cost to such Bank of making or maintaining
any Eurodollar Loan or to reduce the amount of any sum received or receivable by
such Bank hereunder (whether of principal, interest or otherwise) in respect
thereof by an amount deemed in good faith by such Bank to be material, then,
subject to Section 2.04(d) hereof, such additional amount or amounts as will
compensate such Bank for such increase or reduction will be paid by the Borrower
to such Bank as provided in Section 2.04(c) hereof. Any such amount determined
pursuant to this Section 2.04(a) shall be computed on the basis of the net
effect of any Increased Cost Changes incurred by such Bank from time to time
after the date of this Agreement.
(b) If any Bank shall have determined in good faith that the adoption or
issuance, after the date of this Agreement, of any applicable law, rule,
regulation, guideline, request or directive regarding capital adequacy (whether
or not having the force of law but with respect to which similarly situated
banks generally comply) (a "Capital Adequacy Rule"), 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 (any such adoption, issuance or change of a Capital
Adequacy Rule being called a "Capital Adequacy Change"), or compliance therewith
by any Bank (or any lending office of such Bank), has the net effect of reducing
the rate of return on such Bank's capital as a consequence of its commitment to
make, or the making or maintaining of, any Loans hereunder to a level below that
which such Bank would have achieved but for such adoption, change or compliance
(taking into consideration such Bank's policies with respect to capital adequacy
and any Capital Adequacy Rule in effect as of the date of this Agreement) by an
amount deemed by such Bank to be material, then from time to time the Borrower
shall, subject to Section 2.04(d) hereof, pay to such Bank such additional
amount or amounts as will compensate such Bank for such reduction as provided in
Section 2.04(c) hereof; provided, however, that to the extent (i) a Bank shall
increase its level of capital above the level maintained by such Bank on the
date of this Agreement and there has not been a Capital Adequacy Change,
<PAGE>
19
or (ii) there has been a Capital Adequacy Change and a Bank shall increase its
level of capital by an amount greater than the increase attributable (taking
into consideration the same variables taken into consideration in determining
the level of capital maintained by such Bank on the date of this Agreement) to
such Capital Adequacy Change, the Borrower shall not be required to pay any
amount or amounts under this Agreement with respect to any such increase in
capital. Thus, for example, a Bank which is "adequately capitalized" (as such
term or any similar term is used by any applicable bank regulatory agency having
authority with respect to such Bank) may not require the Borrower to make
payments in respect of increases in such Bank's level of capital made under the
circumstances described in clause (i) or (ii) above which improve its capital
position from "adequately capitalized" to "well capitalized" (as such term or
any similar term is used by any applicable bank regulatory agency having
authority with respect to such Bank).
(c) A certificate of each Bank setting forth such amount or amounts as
shall be necessary to compensate such Bank (or Participant pursuant to Section
10.06(b) hereof) as specified in paragraph (a) or (b) of this Section 2.04, as
the case may be, shall be delivered to the Borrower at the end of each Calendar
Quarter during which such Bank is an Affected Bank and upon the taking by the
Borrower in respect of such Bank of one of the actions described in paragraph
(e)(i) or (e)(iii) of this Section 2.04 and shall, if submitted in good faith,
be conclusive absent manifest error; provided that any certificate delivered by
a Bank pursuant to this Section 2.04(c) shall (i) in the case of a certificate
in respect of amounts payable pursuant to paragraph (a) of this Section 2.04,
set forth in reasonable detail the basis for and the calculation of such
amounts, and (ii) in the case of a certificate in respect of amounts payable
pursuant to paragraph (b) of this Section 2.04, (A) set forth at least the same
amount of detail in respect of the calculation of such amount as such Bank
provides in similar circumstances to other similarly situated borrowers from
such Bank, and (B) include a statement by such Bank that it has allocated to its
Commitment or outstanding Loans a proportionately equal amount of any reduction
of the rate of return on such Bank's capital due to a Capital Adequacy Rule as
it has allocated to each of its other commitments to lend or to each of its
other outstanding loans that are affected similarly by such Capital Adequacy
Rule. The Borrower shall pay each Bank the amount shown as due on any such
certificate upon the earlier of (i) the date on which the Borrower takes one of
the actions in respect of any such Bank described in paragraph (e)(i) or
(e)(iii) of this Section 2.04 and (ii) 30 days after receipt by the Borrower of
such certificate.
(d) Subject to the following provisions of this Section 2.04(d), failure on
the part of any Bank to demand compensation for any amounts payable pursuant to
paragraphs (a) or (b) of this Section 2.04 with respect to any Interest Period
shall not constitute a waiver of such Bank's rights to demand compensation for
any such amounts with respect to any other Interest Period. In the case of any
Increased Cost Change which is given retroactive effect to a date prior to the
adoption thereof, a Bank shall be entitled to seek compensation in respect
thereof pursuant to paragraph (a) of this Section 2.04 for the period commencing
on such retroactive effective date and ending on the date on which the Borrower
takes one of the actions in respect of such Bank described in paragraph (e)(i)
or (e)(iii) of this Section 2.04; provided, however, that (i) if such Bank shall
fail to notify the Borrower within 30 days after the date of official
promulgation of such Increased Cost Change that it will demand such
compensation, the period for which such Bank shall be entitled to seek
compensation in respect thereof shall commence on the date which is 30 days
prior to such Bank's notice that it will demand compensation,
<PAGE>
20
and (ii) if any Increased Cost Change is given retroactive effect to a date
which is more than three months prior to the date of adoption thereof, the
Borrower's liability to pay compensation to such Bank in respect thereof for any
period prior to the date which is three months prior to the adoption thereof
shall, subject to the foregoing clause (i) of this proviso, be equal to 50% of
the amount required to compensate such Bank in respect of such Increased Cost
Change with respect to such period. In the case of any Increased Cost Change
which is given only prospective effect, a Bank shall be entitled to seek
compensation in respect thereof pursuant to paragraph (a) of this Section 2.04
for the period commencing on the later of (A) the date on which such Increased
Cost Change becomes effective and (B) the date 30 days prior to the notice by
such Bank that it will demand such compensation, and ending on the date on which
the Borrower takes one of the actions in respect of such Bank described in
paragraph (e)(i) or (e)(iii) of this Section 2.04. In the case of any Capital
Adequacy Change, a Bank shall be entitled to seek compensation in respect
thereof pursuant to paragraph (b) of this Section 2.04 only with respect to
costs or reductions commencing on the later of (A) the date on which such
Capital Adequacy Rule becomes effective and (B) the date 45 days prior to the
notice by such Bank that it will demand such compensation, and ending on the
date on which the Borrower takes one of the actions in respect of such Bank
described in paragraph (e)(i) or (e)(iii) of this Section 2.04.
(e) In the event that any Affected Bank shall have given notice that it is
entitled to claim compensation pursuant to this Section 2.04, the Borrower may
exercise any one or more of the following options:
(i) The Borrower may request one or more of the non-Affected Banks to take
over all (but not part) of each or any Affected Bank's then outstanding Loan(s)
and to assume all (but not part) of each or any Affected Bank's obligations
hereunder. If one or more Banks shall so agree in writing (in this Section
2.04(e)(i), in Section 2.08(c)(i) hereof, in Section 2.09(i) hereof and in
Section 4.03(b)(i) hereof, collectively called the "Assenting Banks" and
individually called an "Assenting Bank") with respect to an Affected Bank, (x)
the obligations of such Assenting Bank under this Agreement shall be increased
by its respective Allocable Share of the obligations of such Affected Bank under
this Agreement, and (y) each Assenting Bank shall make Loans to the Borrower,
according to such Assenting Bank's respective Allocable Share, in an aggregate
principal amount equal to the outstanding principal amount of the Loan(s) of
such Affected Bank, on a date mutually acceptable to the Assenting Banks and the
Borrower. The proceeds of such Loans, together with funds of the Borrower, shall
be used to prepay the Loan(s) of such Affected Bank, together with all interest
accrued thereon and all other amounts owing to such Affected Bank hereunder
(including any amounts payable pursuant to Section 3.04 hereof in connection
with such prepayment), and, upon such assumption by the Assenting Bank and
prepayment by the Borrower, such Affected Bank shall cease to be a "Bank" for
purposes of this Agreement and shall no longer have any obligations hereunder
(except as provided in Section 2.08(b), Section 10.02 and Section 10.07 hereof).
(ii) Upon notice (by telephone (confirmed in writing promptly thereafter)
or telecopier) to the Administrative Agent (which shall advise each Bank thereof
as soon as practicable thereafter), the Borrower may terminate the obligations
of the Banks to maintain Loans as Eurodollar Loans and, in such event, the
Borrower shall, prior to the time any prepayment pursuant to Section 4.03(a)
hereof is required to be made, convert
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21
all of the Eurodollar Loans with Domestic Loans, or prepay such Eurodollar
Loans, in the manner contemplated by and pursuant to Section 2.02(a) or Section
4.01 hereof, respectively.
(iii) (A) The Borrower may designate one or more Replacement Lenders
mutually acceptable to the Borrower and the Administrative Agent (whose consent
shall not be unreasonably withheld) to assume the obligations of any such
Affected Bank hereunder, and to purchase the outstanding Loans of such Affected
Bank and such Affected Bank's rights hereunder and with respect thereto, without
recourse upon, or warranty by, or expense to, such Affected Bank, for a purchase
price equal to the outstanding principal amount of the Loan(s) of such Affected
Bank plus all interest accrued and unpaid thereon and all other amounts owing to
such Affected Bank hereunder (including the amount which would be payable to
such Affected Bank pursuant to Section 3.04 hereof if the purchase of its Loans
constituted a prepayment thereof contemplated by clause (ii) of the first
sentence of Section 3.04 hereof), and upon such assumption and purchase by the
Replacement Lenders, each such Replacement Lender shall be deemed to be a "Bank"
for purposes of this Agreement and such Affected Bank shall cease to be a "Bank"
for purposes of this Agreement and shall no longer have any obligations
hereunder (except as provided in Section 2.08(b), Section 10.02 and Section
10.07 hereof).
(B) As an alternative, the Borrower may designate one or more Replacement
Lenders mutually acceptable to the Borrower and the Administrative Agent (whose
consent shall not be unreasonably withheld) which shall upon a date mutually
agreed upon by the Borrower and such Replacement Lenders assume the obligations
of such Affected Bank under this Agreement and shall upon such date make Loans
to the Borrower in an aggregate principal amount equal to the outstanding
principal amount of the Loan(s) of such Affected Bank. The proceeds of such
Loans, together with funds of the Borrower, shall be used to prepay the Loan(s)
of such Affected Bank, together with all interest accrued thereon and all other
amounts owing to such Affected Bank hereunder (including any amounts payable
pursuant to Section 3.04 hereof in connection with such prepayment), and, upon
such Replacement Lenders making such Loans and such prepayment by the Borrower,
such Replacement Lenders shall be deemed to be "Banks" for purposes of this
Agreement and such Affected Bank shall cease to be a "Bank" for purposes of this
Agreement and shall no longer have any obligations hereunder (except as provided
in Section 2.08(b), Section 10.02 and Section 10.07 hereof). Each such
Replacement Lender shall execute and deliver to the Administrative Agent such
documentation to evidence its status as a "Bank" hereunder as shall be mutually
acceptable to the Borrower and the Administrative Agent. The making of such
Loans by such Replacement Lenders and the prepayment by the Borrower of the
Loan(s) of such Affected Bank shall be deemed to have occurred simultaneously
for all purposes hereof.
(f) If in respect of any Interest Period for a Eurodollar Loan such Bank
shall be required to maintain reserves against "Eurocurrency liabilities" under
Regulation D, the Borrower shall pay to such Bank in accordance with this
Section 2.04(f) an additional amount representing such Bank's actual costs, if
any, incurred during such Interest Period as a result of the applicability of
the foregoing reserves to such Eurodollar Loan, which amount (i) shall be based
on the effective rate at which such reserve requirements are imposed on such
Bank for such Interest Period, (ii) shall be allocated to the Borrower in no
proportionately greater amount than such Bank would allocate such costs to its
other
<PAGE>
22
borrowers of Eurodollars to which such costs are applicable if the provisions of
this Section 2.04(f) applied to all such borrowers, and (iii) in any event shall
not exceed the product of the following for each day of such Interest Period:
(A) the principal amount of the Eurodollar Loan outstanding on such day
made by such Bank to which such Interest Period relates; and
(B) a percentage equal to (x) the result obtained by dividing the
Eurodollar Rate applicable to such Eurodollar Loan by the number one minus the
maximum rate (expressed as a decimal) at which such reserve requirements are
imposed by the Board on such date, minus (y) the Eurodollar Rate applicable to
such Eurodollar Loan; and
(C) a fraction the numerator of which is one and the denominator of which
is 360.
To be entitled to compensation pursuant to this Section 2.04(f) in respect of
any Interest Period, such Bank must notify the Borrower of its demand for such
compensation within 30 days after the end of such Interest Period. A certificate
of such Bank setting forth in reasonable detail the basis for and the
calculation of such amount necessary to compensate such Bank pursuant to this
Section 2.04(f) shall be delivered to the Borrower with such notice and shall be
conclusive absent manifest error. In no event shall the Borrower be obligated to
make any payment to any Bank pursuant to this Section 2.04(f) if such payment
would result in a duplication of payments pursuant to this Section 2.04(f) and
any other provision of this Section 2.04.
(g) In the event that any Affected Bank shall have given notice that it is
entitled to claim compensation pursuant to paragraph (f) of this Section 2.04,
the Borrower may exercise any one or more of the options set forth in Section
2.04(e) hereof.
(h) In the event that the Borrower shall take any of the actions
contemplated by Section 2.04(e)(i) or Section 2.04(e)(iii) hereof, Schedule I
and Schedule II hereto shall be deemed amended to reflect the addition of any
Replacement Lender.
SECTION 2.05. Pro Rata Treatment. Except as permitted under Section 2.04,
Section 2.08, Section 2.09 and Section 4.03 hereof, each payment by the Borrower
on account of principal of and interest on the Loans shall be made pro rata
according to the respective amounts due and owing.
SECTION 2.06. Payments. Except for payments made directly to a Bank or
Banks under other provisions of this Agreement, the Borrower shall make each
payment hereunder and under any instrument delivered hereunder not later than
12:00 noon (New York City time) on the day when due, in Dollars, to the
Administrative Agent at its offices for the account of the Banks, in immediately
available funds. The Administrative Agent shall promptly distribute to each Bank
its proper share of each payment so received.
SECTION 2.07. Payments on Business Days. Whenever any payment to be made
hereunder shall be due on a day which is not a Business Day, then such payment
shall be made on the next succeeding Business Day (unless, with respect to a
payment relating to a Eurodollar Loan, such day would fall in another calendar
month, in which event payment shall be made on the next preceding Business Day).
<PAGE>
23
SECTION 2.08. Net Payments. (a) All payments under this Agreement shall be
made without setoff or counterclaim and in such amounts as may be necessary in
order that all such payments (after deduction or withholding for or on account
of any present or future taxes, levies, imposts, duties or other charges of
whatsoever nature imposed by any government or any political subdivision or
taxing authority thereof (herein collectively called the "Taxes") other than any
Taxes on or measured by the net income, net worth or shareholders' capital of a
Bank or a Participant pursuant to the income tax laws of the jurisdiction where
such Bank's principal or lending office is located or where such Participant's
principal or participating office is located) shall not be less than the amounts
otherwise specified to be paid under this Agreement; provided that if any Bank
or any Participant fails to comply with the applicable provisions of Section
10.06(g) hereof or paragraph (b) of this Section 2.08, as the case may be, then,
all such payments to such Bank or to any Bank which has sold a participation
pursuant to Section 10.06(b) hereof shall be net of any amounts the Borrower is
required to withhold under applicable law. For a Bank to be entitled to
compensation pursuant to this Section 2.08, (i) in the case of compensation for
United States Federal income or withholding Taxes in respect of any Interest
Period, such Bank must notify the Borrower within 30 days after the end of such
Interest Period and (ii) in the case of compensation for any United States Tax
other than a United States Federal income or withholding Tax in respect of any
Interest Period, such Bank must notify the Borrower within 30 days after such
Bank receives a written claim for such Tax from any government, political
subdivision or taxing authority with respect to such Interest Period. A
certificate as to any additional amounts payable to any Bank under this Section
2.08 submitted to the Borrower by such Bank shall show in reasonable detail the
amount payable and the calculations used to determine such amount and shall be
conclusive and binding upon the parties hereto, in the absence of manifest
error. With respect to each deduction or withholding for or on account of any
Taxes, the Borrower shall promptly (and in any event not later than 45 days
thereafter) furnish to each Bank such certificates, receipts and other documents
as may be required (in the reasonable judgment of such Bank) to establish any
tax credit to which such Bank may be entitled.
(b) Each Bank that is not incorporated under the laws of the United States
or any State thereof agrees to file with the Administrative Agent and the
Borrower, in duplicate, (i) on or before the later of (A) the date hereof and
(B) the date such Bank becomes a Bank under this Agreement and (ii) thereafter,
for each taxable year of such Bank (in the case of a Form W-8ECI) or for each
third taxable year of such Bank (in the case of any other form) during which
interest or fees arising under this Agreement are received, unless not legally
able to do so as a result of a change in United States income tax law enacted,
or treaty promulgated, after the date specified in the preceding clause (i), on
or prior to the immediately following due date of any payment by the Borrower
hereunder (or at any other time as required under United States income tax law),
a properly completed and executed copy of either Internal Revenue Service Form
W-8ECI or Internal Revenue Service Form W-8BEN or Internal Revenue Service Form
W-9 and any additional form necessary for claiming complete exemption from
United States withholding taxes (or such other form as is required to claim
complete exemption from United States withholding taxes), if and as provided by
the Code, regulations or other pronouncements of the United States Internal
Revenue Service, and the Bank warrants to the Borrower that the form so filed
will be true and complete; provided that such Bank's failure to complete and
execute such Form W-8ECI or Form W-8BEN, or Form W-9, as the case may be, and
any such additional form (or any successor form or forms) shall not
<PAGE>
24
relieve the Borrower of any of its obligations under this Agreement, except as
otherwise provided in this Section 2.08. In the event that the Borrower is
required, or has been notified by the relevant taxing authority that it will be
required, to either withhold or make payment of Taxes with respect to any
payments to be made by the Borrower under this Agreement to any transferor Bank
and such requirement or notice arises as a result of the sale of a participation
by such transferor Bank pursuant to Section 10.06(b) hereof, such transferor
Bank shall, upon request by the Borrower, accompanied by a certificate setting
forth in reasonable detail the basis for such request, provide to the Borrower
copies of all tax forms required to be provided to such transferor Bank pursuant
to Section 10.06(g) hereof by the Participant which purchased such
participation. The obligation of each transferor Bank to provide to the Borrower
such tax forms shall survive the termination of this Agreement or, if earlier,
the termination of the Commitment of such transferor Bank.
(c) In the event that any Affected Bank shall have given notice that it is
entitled to claim compensation pursuant to this Section 2.08, the Borrower may
at any time thereafter exercise any one or more of the following options:
(i) The Borrower may request one or more of the non-Affected Banks to take
over all (but not part) of each or any Affected Bank's then outstanding Loan(s)
and to assume all (but not part) of each or any Affected Bank's obligations
hereunder. If one or more Banks shall so agree in writing with respect to an
Affected Bank, (x) the obligations of such Assenting Bank under this Agreement
shall be increased by its respective Allocable Share of the obligations of such
Affected Bank under this Agreement, and (y) each Assenting Bank shall make Loans
to the Borrower, according to such Assenting Bank's respective Allocable Share,
in an aggregate principal amount equal to the outstanding principal amount of
the Loan(s) of such Affected Bank, on a date mutually acceptable to the
Assenting Banks and the Borrower. The proceeds of such Loans, together with
funds of the Borrower, shall be used to prepay the Loan(s) of such Affected
Bank, together with all interest accrued thereon, and all other amounts owing to
such Affected Bank hereunder (including any amounts payable pursuant to Section
3.04 hereof in connection with such prepayment), and, upon such assumption by
the Assenting Banks and prepayment by the Borrower, such Affected Bank shall
cease to be a "Bank" for purposes of this Agreement and shall no longer have any
obligations hereunder (except as provided in Section 2.08(b), Section 10.02 and
Section 10.07 hereof).
(ii) (A) The Borrower may designate one or more Replacement Lenders
mutually acceptable to the Borrower and the Administrative Agent (whose consent
shall not be unreasonably withheld) to assume the obligations of any such
Affected Bank hereunder, and to purchase the outstanding Loans of such Affected
Bank and such Affected Bank's rights hereunder and with respect thereto, without
recourse upon, or warranty by, or expense to, such Affected Bank, for a purchase
price equal to the outstanding principal amount of the Loan(s) of such Affected
Bank plus all interest accrued thereon and all other amounts owing to such
Affected Bank hereunder (including the amount which would be payable to such
Affected Bank pursuant to Section 3.04 hereof if the purchase of its Loans
constituted a prepayment thereof contemplated by clause (ii) of the first
sentence of Section 3.04 hereof), and upon such assumption and purchase by the
Replacement Lenders, each such Replacement Lender shall be declared to be a
"Bank" for purposes of this Agreement and such Affected Bank shall cease to be a
"Bank" for purposes of this Agreement and shall no longer have any obligations
<PAGE>
25
hereunder (except as provided in Section 2.08(b), Section 10.02 and Section
10.07 hereof).
(B) As an alternative, the Borrower may designate one or more Replacement
Lenders mutually acceptable to the Borrower and the Administrative Agent (whose
consent shall not be unreasonably withheld) which shall upon a date mutually
agreed upon by the Borrower and such Replacement Lenders assume the obligations
of such Affected Bank under this Agreement and shall upon such date make Loans
to the Borrower in an aggregate principal amount equal to the outstanding
principal amount of the Loan(s) of such Affected Bank. The proceeds of such
Loans, together with funds of the Borrower, shall be used to prepay the Loan(s)
of such Affected Bank, together with all interest accrued thereon and all other
amounts owing to such Affected Bank hereunder (including any amounts payable
pursuant to Section 3.04 hereof in connection with such prepayment), and, upon
such Replacement Lenders making such Loans and such prepayment by the Borrower,
such Replacement Lenders shall be deemed to be "Banks" for purposes of this
Agreement and such Affected Bank shall cease to be a "Bank" for purposes of this
Agreement and shall no longer have any obligations hereunder (except as provided
in Section 2.08(b), Section 10.02 and Section 10.07 hereof). Each such
Replacement Lender shall execute and deliver to the Administrative Agent such
documentation to evidence its status as a "Bank" hereunder as shall be mutually
acceptable to the Borrower and the Administrative Agent. The effectiveness of
each Replacement Lender's Commitment, the making of such Loans by such
Replacement Lenders and the prepayment by the Borrower of the Loan(s) of such
Affected Bank shall be deemed to have occurred simultaneously for all purposes
hereof.
(d) In the event the Borrower shall take any of the actions contemplated by
Section 2.08(c)(i) or Section 2.08(c)(ii) hereof, Schedule I and Schedule II
hereto shall be deemed amended to reflect the addition of any Replacement
Lender.
SECTION 2.09. Failed, Credit-Impaired and Non-Consenting Banks. If (a) a
Bank shall be adjudged bankrupt or insolvent, or if a receiver of a Bank or of
its property shall be appointed, or if any public officer shall take charge or
control of a Bank or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation, or if a Bank shall default in
respect of its obligation to make Loans hereunder, (b) any of Moody's, S&P or
Thomson BankWatch, Inc. shall assign a rating to a Bank or its senior,
unsecured, non-credit-enhanced, long-term indebtedness for borrowed money which
shall be classified by such rating agency as below investment grade, or, in the
case of Thomson BankWatch, Inc., such rating shall be below C/D, (c) the
Borrower shall deliver to the Administrative Agent a notice stating, as to any
Bank which has senior, unsecured, non-credit-enhanced, long-term indebtedness
for borrowed money which is not rated by any of the rating agencies referred to
in the preceding clause (b), that it reasonably believes such Bank will become
subject to any of the events referred to in clause (a) above or become unable to
perform its obligations as a Bank hereunder or (d) a Bank shall refuse to
execute any amendment, modification, supplement, termination, waiver, release or
consent under this Agreement that requires the signature of each Bank in order
to be effective under Section 10.01 hereof and other Banks with Commitments
and/or outstanding Loans representing at least 75% of the Total Commitment and
the aggregate outstanding Loans shall have executed such amendment,
modification, supplement, termination, waiver or consent, then the Borrower may
at any time thereafter, subject to applicable law, exercise any one or more of
the following options:
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26
(i) The Borrower may request one or more of the non-Affected Banks to take
over all (but not part) of each or any Affected Bank's then outstanding Loan(s)
and to assume all (but not part) of each or any Affected Bank's obligations
hereunder. If one or more Banks shall so agree in writing with respect to an
Affected Bank, (x) the obligations of such Assenting Bank under this Agreement
shall be increased by its respective Allocable Share of the obligations of such
Affected Bank under this Agreement, and (y) each Assenting Bank shall make Loans
to the Borrower, according to such Assenting Bank's respective Allocable Share,
in an aggregate principal amount equal to the outstanding principal amount of
the Loan(s) of such Affected Bank, on a date mutually acceptable to the
Assenting Banks and the Borrower. The proceeds of such Loans, together with
funds of the Borrower, shall be used to prepay the Loan(s) of such Affected
Bank, together with all interest accrued thereon and all other amounts owing to
such Affected Bank hereunder (excluding, in the case of an event referred to in
clause (a) of Section 2.09, any amounts payable pursuant to Section 3.04 hereof
in connection with such prepayment), and, upon such assumption by the Assenting
Bank and prepayment by the Borrower, such Affected Bank shall cease to be a
"Bank" for purposes of this Agreement and shall no longer have any obligations
hereunder (except as provided in Section 2.08(b), Section 10.02 and Section
10.07 hereof).
(ii) (A) The Borrower may designate one or more Replacement Lenders
mutually acceptable to the Borrower and the Administrative Agent (whose consent
shall not be unreasonably withheld) to assume the obligations of any such
Affected Bank hereunder, and to purchase the outstanding Loans of such Affected
Bank and such Affected Bank's rights hereunder and with respect thereto, without
recourse upon, or warranty by, or expense to, such Affected Bank, for a purchase
price equal to the outstanding principal amount of the Loan(s) of such Affected
Bank plus all interest accrued and unpaid thereon and all other amounts owing to
such Affected Bank hereunder (including the amount which would be payable to
such Affected Bank pursuant to Section 3.04 hereof if the purchase of its Loans
constituted a prepayment thereof contemplated by clause (ii) of the first
sentence of Section 3.04 hereof), and upon such assumption and purchase by the
Replacement Lenders, each such Replacement Lender shall be deemed to be a "Bank"
for purposes of this Agreement and such Affected Bank shall cease to be a "Bank"
for purposes of this Agreement and shall no longer have any obligations
hereunder (except as provided in Section 2.08(b), Section 10.02 and Section
10.07 hereof).
(B) As an alternative, the Borrower may designate one or more Replacement
Lenders mutually acceptable to the Borrower and the Administrative Agent (whose
consent shall not be unreasonably withheld) which shall upon a date mutually
agreed upon by the Borrower and such Replacement Lenders assume the obligations
of such Affected Bank under this Agreement and shall upon such date make Loans
to the Borrower in an aggregate principal amount equal to the outstanding
principal amount of the Loan(s) of such Affected Bank. The proceeds of such
Loans, together with funds of the Borrower, shall be used to prepay the Loan(s)
of such Affected Bank, together with all interest accrued thereon and all other
amounts owing to such Affected Bank hereunder (including any amounts payable
pursuant to Section 3.04 hereof in connection with such prepayment), and, upon
such Replacement Lenders making such Loans and such prepayment by the Borrower,
such Replacement Lenders shall be deemed to be "Banks" for purposes of this
Agreement and such Affected Bank shall cease to be a "Bank" for
<PAGE>
27
purposes of this Agreement and shall no longer have any obligations hereunder
(except as provided in Section 2.08(b), Section 10.02 and Section 10.07 hereof).
Each such Replacement Lender shall execute and deliver to the Administrative
Agent such documentation to evidence its status as a "Bank" hereunder as shall
be mutually acceptable to the Borrower and the Administrative Agent. The
effectiveness of each Replacement Lender's Commitment, the making of such Loans
by such Replacement Lenders and the prepayment by the Borrower of the Loan(s) of
such Affected Bank shall be deemed to have occurred simultaneously for all
purposes hereof.
In the event the Borrower shall take any of the actions contemplated by
Section 2.09(i) or Section 2.09(ii) hereof, Schedule I and Schedule II hereto
shall be deemed amended to reflect the addition of any Replacement Lender.
ARTICLE III
INTEREST PROVISIONS
SECTION 3.01. Interest on Loans. (a) Subject to the provisions of Section
3.02 hereof, each Eurodollar Loan shall bear interest at a rate per annum
(computed on the basis of the actual number of days elapsed over a year of 360
days) equal to the Eurodollar Rate for the Interest Period in effect for such
Loan plus the Applicable Margin. Interest on each Eurodollar Loan shall be
payable on each Interest Payment Date applicable thereto.
(b) Subject to the provisions of Section 3.02 hereof, each Alternate Base
Rate Loan shall bear interest at a rate per annum (computed on the basis of the
actual number of days elapsed (i) over a year of 365 or 366 days, as the case
may be, if the Alternate Base Rate is based on the Prime Rate, and (ii) over a
year of 360 days if the Alternate Base Rate is based on the Federal Funds
Effective Rate) equal to the Alternate Base Rate. Interest on each Alternate
Base Rate Loan shall be payable on each Interest Payment Date applicable
thereto.
(c) Interest on each Loan shall accrue from and including the first day of
the Interest Period with respect to such Loan to but excluding the last day of
such Interest Period.
SECTION 3.02. Interest on Overdue Amounts. If the Borrower shall default in
the payment when due of the principal of any Loan or of any other amount due
hereunder, the Borrower shall on demand from time to time pay interest, to the
extent permitted by law, on such defaulted amount from the date such amount
shall have become due up to (but not including) the date of actual payment
thereof (x) for other than Eurodollar Loans, accruing on a daily basis, at a
rate per annum (computed on the basis of a year of 365 or 366 days, as the case
may be, if the Alternate Base Rate is based on the Prime Rate or on the basis of
a year of 360 days if the Alternate Base Rate is based on the Federal Funds
Effective Rate) which is equal to the sum of (i) the Alternate Base Rate from
time to time in effect, plus (ii) two percent (2%) per annum, or (y) for
Eurodollar Loans, accruing on a daily basis at a rate per annum (computed on the
basis of a year of 360 days) which is two and one-half percent (2-1/2%) per
annum in excess of the rate determined by the
<PAGE>
28
Administrative Agent two (2) Business Days prior to the beginning of periods of
one day, one week, one month, two months or three months (as the Administrative
Agent shall select in its sole discretion from time to time during the
continuation of such default), the first of which periods shall commence on the
date such amount shall have become due, as the rate at which the Administrative
Agent is offered deposits in Dollars as of 11:00 a.m., London time, by prime
banks in the London Interbank Eurodollar market for delivery on the first day of
any such period and for the approximate number of days comprised therein, in an
amount comparable to the aggregate amount due.
SECTION 3.03. Inability to Determine Eurodollar Rate. In the event, and on
each occasion, that the Borrower has submitted an Interest Rate Election for
Eurodollar Loans and, on or before the date on which the Eurodollar Rate for the
Interest Period relating to such Loans is to be determined, the Administrative
Agent shall have determined that by reason of circumstances affecting the London
Interbank Eurodollar market or affecting the position of any Reference Bank (if
such Reference Bank is then participating in the determination of the Eurodollar
Rate) in such market, adequate and fair means do not exist for ascertaining the
Interest Rate applicable to such Loans during such Interest Period, then, and in
any such event, the Administrative Agent shall promptly notify the Borrower of
such determination, and the Borrower, the Administrative Agent and the Banks
shall promptly enter into good faith negotiations with respect to a substitute
economically equivalent interest rate and, until such time as a substitute
economically equivalent interest rate has been agreed upon, the Borrower shall
be deemed to have requested Alternate Base Rate Loans. The Administrative Agent
shall immediately give notice of such determination by telephone (confirmed by
telecopier) to the Borrower and the Banks. Each such determination by the
Administrative Agent shall be conclusive and binding upon the parties hereto in
the absence of manifest error.
SECTION 3.04. Indemnity. The Borrower shall compensate each Bank, upon
written request by such Bank (which request shall set forth the basis for
requesting such amounts), for all reasonable losses and expenses in respect of
any interest paid by such Bank (or its lending branch or affiliate) to lenders
of funds borrowed by it or deposited with it to make or maintain its Loans
(other than Alternate Base Rate Loans) which such Bank (or its lending branch or
affiliate) may sustain, to the extent not otherwise compensated for hereunder
and not mitigated by the reemployment of such funds: (i) if for any reason
(other than a default by such Bank) a Borrowing of any Loan does not occur on
the date hereof, or a conversion of a Loan to or a continuation of a Loan as a
Eurodollar Loan does not occur on a date specified therefor in an Interest Rate
Election delivered pursuant to Article II hereof, (ii) if any prepayment (other
than a prepayment under Section 2.09(i) resulting from an event referred to in
clause (a) of Section 2.09 hereof) or repayment of its Loans (other than
Alternate Base Rate Loans) occurs on a date which is not the expiration date of
the relevant Interest Period, (iii) if any prepayment of its Loans (other than
Alternate Base Rate Loans) is not made on any date specified in a notice of
prepayment given by the Borrower, or (iv) as a consequence of any default by the
Borrower under this Agreement. Without prejudice to the foregoing, the Borrower
shall indemnify each Bank against any loss or expense which such Bank (or its
lending branch or affiliate) may sustain or incur as a consequence of the
default by the Borrower in payment of principal of or interest on any Loan
(other than any Alternate Base Rate Loan), or any part thereof, or of any amount
due under this Agreement, including, but not limited to, any premium or penalty
incurred by such Bank (or its lending branch or affiliate), in respect of funds
borrowed by it or deposited with it for the purpose of
<PAGE>
29
making or maintaining such Loan (other than any Alternate Base Rate Loan), as
determined by such Bank in the exercise of its sole discretion. A certificate as
to any such loss or expense (including calculations, in reasonable detail,
showing how such Bank computed such loss or expense) shall be promptly submitted
by such Bank to the Borrower (with a copy to the Administrative Agent) and
shall, in the absence of manifest error, be conclusive and binding as to the
amount thereof.
SECTION 3.05. Rate Determination Conclusive. The applicable Interest Rate
for each Interest Period with respect to each Loan shall be determined by the
Administrative Agent and shall be conclusive and, subject to Section 3.03 and
Section 4.03 hereof, binding upon the parties hereto, in the absence of manifest
error. The Administrative Agent shall, at the request in writing of the Borrower
or any Bank, deliver to the Borrower or such Bank a statement showing the
computations used by the Administrative Agent in determining any Interest Rate
in respect of the Loans payable by the Borrower.
ARTICLE IV
PREPAYMENTS
SECTION 4.01. Optional Prepayments. (a) The Borrower may from time to time,
upon at least (i) two (2) Business Days' prior notice (in the event such notice
pertains to Domestic Loans) or (ii) three (3) Business Days' prior notice (in
the event such notice pertains to Eurodollar Loans) (by telephone (confirmed in
writing promptly thereafter) or telecopier) received by the Administrative Agent
(prior to 12:00 noon, New York City time, in the event such notice pertains to
Domestic Loans) (which shall advise each Bank thereof as soon as practicable
thereafter), prepay any Borrowing in whole or in part, without, except as
provided in Section 3.04 hereof, premium or penalty (such prepayment to be pro
rata to the Banks according to the respective unpaid principal amounts of the
Loans owing to them); provided, however, that each such prepayment shall be in
an aggregate amount of $10,000,000 or an integral multiple of $5,000,000 in
excess of $10,000,000.
(b) Each notice of prepayment shall specify the Borrowing to be prepaid,
the prepayment date and the aggregate principal to be prepaid, and shall be
irrevocable. All prepayments under this Section 4.01 shall be accompanied by
accrued interest on the principal amount being prepaid to the date of
prepayment.
SECTION 4.02. Prepayments with Asset Disposition Proceeds. (a) In the event
and on each occasion that any Net Proceeds are received by or on behalf of the
Borrower or any Subsidiary in respect of any Asset Disposition, the Borrower
shall, on the first to occur of (i) the next day that is the last day of an
Interest Period for Eurodollar Loans and that occurs not fewer than five
Business Days after the receipt of such Net Proceeds and (ii) the 60th day after
the receipt of such Net Proceeds, prepay Borrowings in an aggregate amount equal
to (A) 50% of such Net Proceeds, in the case of the first $100,000,000 of such
Net Proceeds received after the date hereof, (B) 80% of such Net Proceeds, in
the case of the next $100,000,000 of such Net Proceeds and (C) 100% of such Net
Proceeds, in the case of any further Net Proceeds. Notwithstanding the
foregoing, no prepayment shall be required to be made under this paragraph until
the sum
<PAGE>
30
of the amounts of the prepayments that would have been required but for this
sentence shall equal $10,000,000, at which time all such amounts shall be
prepaid in accordance with the preceding sentence. Any prepayment under this
Section 4.02 shall, except as provided in Section 3.04 hereof, be without
premium or penalty.
(b) The Borrower shall notify the Administrative Agent of any prepayment
under this Section 4.02 at least (i) two (2) Business Days' prior to the date of
such prepayment (in the event such notice pertains to Domestic Loans) or (ii)
three (3) Business Days' prior to the date of such prepayment (in the event such
notice pertains to Eurodollar Loans) (by telephone (confirmed in writing
promptly thereafter) or telecopier) received by the Administrative Agent (prior
to 12:00 noon, New York City time, in the event such notice pertains to Domestic
Loans). Each notice of prepayment shall specify the Borrowing to be prepaid, the
prepayment date, the aggregate principal to be prepaid and a reasonably detailed
calculation of the amount of such prepayment, and shall be irrevocable. All
prepayments under this Section 4.02 shall be accompanied by accrued interest on
the principal amount being prepaid to the date of prepayment.
SECTION 4.03. Prepayment of Loans of Affected Banks. (a) In the event that
at any time any Affected Bank shall have reasonably determined in good faith
(which determination shall be conclusive and binding upon the parties hereto, in
the absence of manifest error) that its Eurodollar Loans have become unlawful
under any applicable law, governmental rule, requirement, regulation, guideline
or order, then, and in any such event, such Affected Bank shall as soon as
practicable give notice (by telephone (confirmed in writing promptly thereafter)
or telecopier) to the Borrower and to the Administrative Agent (which shall
transmit such notice to each of the other Banks as soon as practicable
thereafter), of such determination. Thereupon, the obligation of such Affected
Bank to maintain its Loan(s) shall be terminated and the Borrower shall
forthwith, and in any event no later than the earlier of (x) the next succeeding
Interest Payment Date with respect to such Loan(s) or (y) ten (10) days after
receipt of notice from such Affected Bank under this Section 4.03(a), prepay the
outstanding Loan(s) of such Affected Bank without premium or penalty, together
with all interest accrued thereon and all other amounts owing to such Affected
Bank hereunder (including any amounts payable pursuant to Section 3.04 hereof in
connection with such prepayment).
(b) In lieu of prepaying the Loan(s) of the Affected Bank as required by
Section 4.03(a) hereof, the Borrower may exercise any one or more of the
following options:
(i) The Borrower may request one or more of the non-Affected Banks to take
over all (but not part) of each Affected Bank's then outstanding Loan(s) and to
assume all (but not part) of each Affected Bank's obligations hereunder. If one
or more Banks shall so agree in writing with respect to an Affected Bank, (x)
the obligations of such Assenting Bank under this Agreement shall be increased
by its respective Allocable Share of the obligations of such Affected Bank under
this Agreement, and (y) each Assenting Bank shall make Loans to the Borrower,
according to such Assenting Bank's respective Allocable Share, in an aggregate
principal amount equal to the outstanding principal amount of the Loan(s) of
such Affected Bank, on a date mutually acceptable to the Assenting Banks, such
Affected Bank and the Borrower. The proceeds of such Loans, together with funds
of the Borrower, shall be used to prepay the Loan(s) of such Affected Bank,
together with all interest accrued thereon, and all other amounts owing to such
<PAGE>
31
Affected Bank hereunder (including any amounts payable pursuant to Section 3.04
hereof in connection with such prepayment), and, upon such assumption by the
Assenting Banks and prepayment by the Borrower, such Affected Bank shall cease
to be a "Bank" for purposes of this Agreement and shall no longer have any
obligations hereunder (except as provided in Section 2.08(b), Section 10.02 and
Section 10.07 hereof). Any such prepayment shall occur prior to the time any
prepayment pursuant to Section 4.03(a) hereof is required to be made.
(ii) Upon notice (by telephone (confirmed in writing promptly thereafter)
or telecopier) to the Administrative Agent (which shall advise each Bank thereof
as soon as practicable thereafter), the Borrower may terminate the obligations
of the Banks to maintain Loans as Eurodollar Loans and, in such event, the
Borrower, the Administrative Agent and the Banks shall promptly enter into good
faith negotiations with respect to a substitute economically equivalent rate
that will not be unlawful and, from and after the time any prepayment pursuant
to Section 4.03(a) hereof is required to be made and until such time as a
substitute economically equivalent rate has been agreed upon, all of the
Eurodollar Loans shall be converted to and shall remain Domestic Loans unless
and until such Eurodollar Loans are prepaid in the manner contemplated by and
pursuant to Section 4.01 hereof.
(iii) (A) The Borrower may designate one or more Replacement Lenders
mutually acceptable to the Borrower and the Administrative Agent (whose consent
shall not be unreasonably withheld) to assume the obligations of each such
Affected Bank hereunder, and to purchase, prior to the time any prepayment
pursuant to Section 4.03(a) hereof is required to be made, the outstanding Loans
of such Affected Bank and such Affected Bank's rights hereunder and with respect
thereto, without recourse upon, or warranty by, or expense to, such Affected
Bank, for a purchase price equal to the outstanding principal amount of the
Loan(s) of such Affected Bank plus all interest accrued thereon and all other
amounts owing to such Affected Bank hereunder (including the amount which would
be payable to such Affected Bank pursuant to Section 3.04 hereof if the purchase
of its Loans constituted a prepayment thereof contemplated by clause (ii) of the
first sentence of Section 3.04 hereof), and upon such assumption and purchase by
the Replacement Lenders, each such Replacement Lender shall be deemed to be a
"Bank" for purposes of this Agreement and such Affected Bank shall cease to be a
"Bank" for purposes of this Agreement and shall no longer have any obligations
hereunder (except as provided in Section 2.08(b), Section 10.02 and Section
10.07 hereof).
(B) As an alternative, the Borrower may designate one or more Replacement
Lenders mutually acceptable to the Borrower and the Administrative Agent (whose
consent shall not be unreasonably withheld) which shall upon a date mutually
agreed upon by the Borrower and such Replacement Lenders assume the obligations
of such Affected Bank under this Agreement and shall upon such date make Loans
to the Borrower in an aggregate principal amount equal to the outstanding
principal amount of the Loan(s) of such Affected Bank. The proceeds of such
Loans, together with funds of the Borrower, shall be used to prepay the Loan(s)
of such Affected Bank, together with all interest accrued thereon and all other
amounts owing to such Affected Bank hereunder (including any amounts payable
pursuant to Section 3.04 hereof in connection with such prepayment), and, upon
such Replacement Lenders making such Loans and such prepayment by the Borrower,
such Replacement Lenders shall be deemed to be "Banks"
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32
for purposes of this Agreement and such Affected Bank shall cease to be a "Bank"
for purposes of this Agreement and shall no longer have any obligations
hereunder (except as provided in Section 2.08(b), Section 10.02 and Section
10.07 hereof). Each such Replacement Lender shall execute and deliver to the
Administrative Agent such documentation to evidence its status as a "Bank"
hereunder as shall be mutually acceptable to the Borrower and the Administrative
Agent. The making of such Loans by such Replacement Lenders and the prepayment
by the Borrower of the Loan(s) of such Affected Bank shall be deemed to have
occurred simultaneously for all purposes hereof.
In the event the Borrower shall take any of the actions contemplated by
Section 4.03(b)(i) or Section 4.03(b)(iii) hereof, Schedule I and Schedule II
hereto shall be deemed amended to reflect the addition of any Replacement
Lender.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
SECTION 5.01. Representations and Warranties of the Borrower. As of the
date of this Agreement and, if different, the date of the initial Borrowing
hereunder (and not on any other date) the Borrower represents and warrants to
the Banks and the Administrative Agent as follows:
(a) Borrower's Organization; Partnership Power. The Borrower is a limited
partnership duly organized, validly existing and in good standing under the laws
of the State of Texas; the Borrower is duly qualified or licensed and in good
standing as a foreign limited partnership authorized to do business in New
Mexico; and the Borrower has all requisite partnership power and authority (i)
to own its assets and to carry on the business in which it is engaged, (ii) to
execute, deliver and perform its obligations under this Agreement, (iii) to
borrow in the manner and for the purpose contemplated by this Agreement, and
(iv) to execute, deliver and perform its obligations under all other agreements
and instruments executed and delivered by the Borrower pursuant to or in
connection with this Agreement.
(b) Subsidiaries. The Borrower has no Subsidiaries.
(c) Borrower's Partnership Authority; No Conflict. The execution and
delivery by the Borrower of this Agreement, the performance by the Borrower of
its obligations under this Agreement, the Borrowings by the Borrower in the
manner and for the purpose contemplated by this Agreement, the execution and
delivery by the Borrower of all other agreements and instruments which shall
have been executed and delivered by the Borrower pursuant hereto or in
connection herewith, and the performance by the Borrower of its obligations
under all other agreements and instruments which shall have been executed and
delivered by the Borrower pursuant hereto or in connection herewith, have been
duly authorized by all necessary partnership action (including any necessary
partner action) on the part of the Borrower, and do not and will not (i) violate
any provision of any law, rule or regulation (including, without limitation,
Regulation U and Regulation X) presently in effect having applicability to the
Borrower, or of any order, writ, judgment, decree, determination or award (which
is, individually or in the aggregate, material to the consolidated financial
condition, business or operations of the
<PAGE>
33
Borrower) presently in effect having applicability to the Borrower or of the
partnership agreement, charter, by-laws or other organizational documents of the
Borrower, or (ii) result in a breach of or constitute a default under any
indenture or loan or credit agreement, or result in a breach of or constitute a
default under any other agreement or instrument (which is, individually or in
the aggregate, material to the consolidated financial condition, business or
operations of the Borrower), to which the Borrower is a party or by which the
Borrower or its properties may be bound or affected, or (iii) result in, or
require, the creation or imposition of any Lien of any nature upon or with
respect to any of the properties now owned by the Borrower (other than any right
of setoff or banker's lien or attachment that any Bank or other holder of a Loan
may have under applicable law), and the Borrower is not in default under or in
violation of its partnership agreement.
(d) Valid and Binding Obligations of the Borrower. This Agreement
constitutes, and each other agreement or instrument executed and delivered by
the Borrower pursuant hereto or in connection herewith will each constitute, the
legal, valid and binding obligation of the Borrower, enforceable against the
Borrower in accordance with its respective terms, except as enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally and by general
principles of equity, including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing and the possible unavailability of
specific performance or injunctive relief (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(e) Borrower's Financial Condition. The audited balance sheets of the
Borrower as of December 31, 1997, 1998 and 1999, and the related audited
statements of income, changes in partners' capital and cash flows for the ten
month or fiscal year, as applicable, then ended (the "Financial Statements")
fairly present the financial position, results of operations, partners' capital
and cash flows for the Borrower as of the dates and for the periods covered
thereby, in each case in accordance with United States generally accepted
accounting principles, consistently applied, except as described in the
footnotes to each of such Financial Statements. Since December 31, 1999 to and
including the date hereof, there has been no material adverse change in the
consolidated financial condition, business or operations of the Borrower (it
being agreed that the Distributions and the other transactions contemplated by
the recitals to this Agreement will not be taken into account in determining
whether a material adverse change has occurred).
(f) Litigation with Respect to the Borrower. No litigation (including,
without limitation, derivative actions), arbitration proceedings or governmental
proceedings are pending or, to the knowledge of the Borrower, threatened against
the Borrower which are likely (to the extent not covered by insurance)
materially and adversely to affect the consolidated financial condition of the
Borrower or materially to impair the Borrower's ability to perform its
obligations under this Agreement, except as disclosed in writing to the Banks
prior to the date hereof and except as disclosed in Exhibit C-1 to the Purchase
and Sale Agreement.
(g) Regulatory Approvals with Respect to This Agreement. No authorization,
consent, approval, license or formal exemption from, nor any filing, declaration
or registration with, any court, governmental agency or regulatory authority
(Federal, state, local or foreign), including, without limitation, the
Securities and Exchange Commission,
<PAGE>
34
or with any securities exchange, is or will be required in connection with the
execution and delivery by the Borrower of this Agreement, the performance by the
Borrower of its obligations under this Agreement, or the Borrowings by the
Borrower in the manner and for the purpose contemplated by this Agreement
(except for such authorizations, consents, approvals, licenses, exemptions,
filings, declarations or registrations, if any, which may be required to be
obtained or made subsequent to the date hereof, as to which the Borrower has no
reason to believe such will not be duly obtained as and when required and be
sufficient for all purposes thereof and be in full force and effect when
required).
(h) ERISA. No material liability to the PBGC has been, or, to the knowledge
of the Borrower, is expected by the Borrower to be, incurred by the Borrower. No
Reportable Event which presents a material risk of termination of any Plan
maintained by the Borrower has occurred and is continuing. No Plan maintained by
the Borrower had an Accumulated Funding Deficiency, whether or not waived, as of
the last day of the most recent fiscal year of such Plan ending prior to the
date hereof. The Borrower has not engaged in a Prohibited Transaction prior to
the date hereof.
(i) Investment Company Act. The Borrower is not an "investment company" or
a company "controlled" by an "investment company" under the Investment Company
Act of 1940, as amended.
(j) Public Utility Holding Company Act. The Borrower is not subject to, or
is exempt from, regulation as a "holding company" or a "subsidiary company" of a
"holding company", or an "affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company", within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
(k) Regulation U; Regulation X. The Borrower is not engaged principally, or
as one of its important activities, in the business of extending, or arranging
for the extension of, credit for the purpose of purchasing or carrying any
margin stock within the meaning of Regulation U, and no part of the proceeds of
any Loan will be used for any purpose which would be in violation of such
regulation or in violation of Regulation X.
(l) Borrower's Tax Returns and Tax Liability. The Borrower has filed all
tax returns required to be filed by it and has paid or provided adequate
reserves or obtained adequate indemnity for the payment of all taxes and
assessments payable by it which have become due, other than (i) those not yet
delinquent, (ii) those the nonpayment of which would not be reasonably likely to
result in a material adverse effect on the consolidated financial condition of
the Borrower, (iii) those being contested in good faith and (iv) those involving
foreign taxes and assessments which are involved in a good faith dispute.
(m) Environmental and Public and Employee Health and Safety Matters. The
Borrower has complied with all applicable Federal, state, and other laws, rules
and regulations relating to environmental pollution or to environmental
regulation or control or to public or employee health or safety, except (i) to
the extent that the failure to so comply would not be reasonably likely to
result in a material and adverse effect on the consolidated financial condition
of the Borrower or (ii) as disclosed in writing to the Banks prior to the date
hereof. The Borrower's facilities do not manage any hazardous
<PAGE>
35
wastes, hazardous substances, hazardous materials, toxic substances or toxic
pollutants regulated under the Resource Conservation and Recovery Act, the
Comprehensive Environmental Response, Compensation and Liability Act, the
Hazardous Materials Transportation Act, the Toxic Substances Control Act, the
Clean Air Act, the Clean Water Act, or any other applicable law relating to
environmental pollution or public or employee health and safety, in violation of
any such law, or any rules or regulations promulgated pursuant thereto, except
(A) for violations that would not be reasonably likely to result in a material
and adverse effect on the consolidated financial condition of the Borrower or
(B) as disclosed in writing to the Banks prior to the date hereof. The Borrower
is aware of no events, conditions or circumstances involving environmental
pollution or contamination or public or employee health or safety, in each case
applicable to it, that would be reasonably likely to result in a material and
adverse effect on the consolidated financial condition of the Borrower except as
disclosed in writing to the Banks prior to the date hereof.
(n) True and Complete Disclosure. To the Borrower's knowledge and belief,
all factual information heretofore or contemporaneously furnished by or on
behalf of the Borrower or any Subsidiary of the Borrower to any Bank or the
Administrative Agent for purposes of or in connection with this Agreement or any
transaction contemplated hereby is true and accurate in all material respects
(taken as a whole) on the date as of which such information is dated or
certified and not incomplete by omitting to state any material fact necessary to
make such information (taken as a whole) not misleading at such time, except (i)
for any inaccuracy or incompleteness not involving the failure to disclose
events or circumstances that could reasonably be expected to result in a
material adverse change in the consolidated financial condition, business or
operations of the Borrower, (ii) that as to financial projections delivered to
the Banks and the Administrative Agent, the Borrower represents only that such
projections were prepared in good faith based on assumptions believed to be
reasonable at the time of such preparation and (iii) as to engineering reports
and audits thereof, the Borrower represents only that, to the best knowledge of
the Borrower, there are no statements or conclusions in any engineering report
(or audit thereof) 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 each engineering report (and audit thereof) is
necessarily based upon professional opinions, estimates and projections and that
the Borrower does not warrant that such opinions, estimates and projections will
ultimately prove to have been accurate.
ARTICLE VI
COVENANTS
SECTION 6.01. Affirmative Covenants of the Borrower. So long as any Loan
shall remain unpaid or any Bank shall have any Commitment hereunder, the
Borrower will, and will cause each of the Subsidiaries to, unless the Required
Banks shall have otherwise consented in writing:
(a) Reports, Certificates and Other Information. Furnish to each Bank:
(i) Interim Reports. Within 60 days after the end of each of the first
three quarterly fiscal periods in each fiscal year of the Borrower, a
consolidated balance
<PAGE>
36
sheet of the Borrower as at the end of such period (setting forth in
comparative form the consolidated figures as of the end of the previous
fiscal year), the related consolidated statement of operations for such
period and (in the case of the second and third quarterly periods) for the
period from the beginning of the current fiscal year to the end of such
quarterly period (setting forth in each case in comparative form the
consolidated figures for the corresponding periods of the previous fiscal
year) and the related consolidated statement of cash flows for the period
from the beginning of the current fiscal year to the end of such quarterly
period (setting forth in comparative form the consolidated figures from the
corresponding period of the previous fiscal year), all in reasonable detail
and certified, subject to changes resulting from year-end audit
adjustments, by a financial officer of the Borrower.
(ii) Annual Reports. Within 120 days after the end of each fiscal year
of the Borrower, a consolidated balance sheet of the Borrower as at the end
of such year, and the related consolidated statements of operations and
cash flows for such year, setting forth in each case in comparative form
the consolidated figures for the previous fiscal year, accompanied by the
opinion thereon of independent public accountants of recognized national
standing selected by the Borrower, which opinion shall be prepared in
accordance with generally accepted auditing standards relating to reporting
and shall be based upon an audit by such accountants of the relevant
accounts.
(iii) Officers' Certificates. Together with each delivery of financial
statements pursuant to Sections 6.01(a)(i) and 6.01(a)(ii) hereof, an
Officers' Certificate (A) stating that the signers have reviewed the
relevant terms of this Agreement and have made, or caused to be made under
their supervision, a review of the transactions and condition of the
Persons covered by such financial statements during the accounting period
in question, and that such review has not disclosed the existence during
such accounting period, and that the signers do not otherwise have
knowledge of the existence as at the date of such Officers' Certificate, of
any Event of Default or Unmatured Event of Default, or, if any such Event
of Default or Unmatured Event of Default existed or exists, specifying the
nature and period of existence thereof and what action the Borrower has
taken or is taking or proposes to take with respect thereto and (B)
demonstrating in reasonable detail compliance during such accounting period
with Sections 6.02(b)(xii), 6.02(c) and 6.02(d) hereof (and setting forth
the Consolidated Interest Expense Coverage Ratio for the period of four
consecutive fiscal quarters ending on the date of the balance sheet
included in such financial statements).
(iv) Accountants' Certificates. Together with each delivery of
financial statements pursuant to Section 6.01(a)(ii) hereof, a certificate
signed by the independent public accountants reporting thereon (A) briefly
setting forth the scope of their examination (which shall include a review
of this Section 6.01(a) and of Sections 6.02(b)(xii), 6.02(c), 6.02(d) and
6.02(e) hereof), (B) stating whether or not their examination has disclosed
the existence, during the fiscal year covered by such financial statements,
of any Event of Default or Unmatured Event of Default and, if their
examination has disclosed such an Event of Default or Unmatured Event of
Default, specifying the nature and period of existence
<PAGE>
37
thereof, and (C) stating that they have examined the Officers' Certificate
delivered therewith pursuant to Section 6.01(a)(iii) hereof.
(v) Reports to SEC. Promptly upon their becoming publicly available,
copies of any regular and periodic reports filed by the Borrower or any of
its Subsidiaries with the Securities and Exchange Commission or any
governmental authority succeeding to any of its functions, which in each
case have not been delivered under paragraph (a)(i) or (a)(ii) of this
Section 6.01.
(vi) Officers' Certificates as to Status of Material Subsidiaries. As
soon as practicable after the determination that a Person is a Material
Subsidiary or, at the option of the Borrower, together with the next
delivery of any financial statements to the Banks pursuant to Section
6.01(a)(i) or Section 6.01(a)(ii) hereof, an Officers' Certificate
confirming the same.
(vii) Engineering Reports. Not later than 60 days after the Borrower's
fiscal year end, (A) an engineering report prepared by the Borrower for the
preceding fiscal year, together with an audit report in form and scope
reasonably satisfactory to the Administrative Agent by Netherland, Sewell
and Associates, Inc., or another firm reasonably acceptable to the
Administrative Agent and the Borrower on such engineering report or (B) at
the Borrower's election, an engineering report prepared by a third party
reasonably acceptable to the Administrative Agent for the preceding year.
(viii) Notice of Default. Forthwith upon any principal officer of the
Borrower obtaining knowledge of the occurrence of an Event of Default or an
Unmatured Event of Default, an Officers' Certificate specifying the nature
and period of existence thereof and what action the Borrower has taken or
is taking or proposes to take with respect thereto.
(ix) Other Information. With reasonable promptness, such other
information and data with respect to the Borrower or any of its
Subsidiaries as from time to time may be reasonably requested by any Bank.
(b) Taxes. Pay or provide adequate reserves or obtain adequate indemnity
for the payment of, and cause each Subsidiary to pay or provide adequate
reserves or obtain adequate indemnity for the payment of, all taxes and
assessments payable by it which become due, other than (i) those not yet
delinquent, (ii) those the nonpayment of which would not be reasonably likely to
result in a material adverse effect on the consolidated financial condition of
the Borrower and its Consolidated Subsidiaries, (iii) those being contested in
good faith and (iv) those involving foreign taxes and assessments which are
involved in a good faith dispute with respect to tax or other matters.
(c) Preservation of Existence, etc. Subject to Section 6.02(a) hereof, do
or cause to be done all things necessary to preserve and keep in full force and
effect the existence and the material rights (contractual, statutory or
otherwise) of the Borrower and each Subsidiary; provided, however, that the
Borrower shall not be required to preserve any such right or franchise if the
Borrower shall determine that the preservation thereof is no longer desirable in
the conduct of the business of the Borrower or any Subsidiary and that the loss
thereof is not disadvantageous in any material respect to the Banks under this
<PAGE>
38
Agreement, and provided, further that the Borrower may terminate, transition or
modify those agreements set forth in Exhibit K hereto.
(d) Inspections; Discussions. Permit any authorized representatives
designated by a Bank, at such Bank's expense, to make reasonable inspections of
any of the properties of the Borrower or any of its Subsidiaries, including its
and their books of account, and to discuss its and their affairs, finances and
accounts with its and their officers, all at such reasonable times and as often
as may be reasonably requested by such Bank; provided that (i) if required by
the Borrower, any such Bank shall, as a condition to being permitted to make any
such inspection, certify to the Borrower that the same is being made solely in
order to assist such Bank in evaluating its extension of credit to the Borrower
under this Agreement, (ii) notwithstanding the provisions of Section 10.07
hereof, the Administrative Agent or the Bank making such inspection and
visitation hereby releases the Borrower, its Affiliates, and their officers,
directors, employees, and agents against any claim for injury to the
Administrative Agent or such Bank (or the representatives thereof) during such
inspection and visitation, and (iii) neither the Borrower nor any of its
Subsidiaries shall be required to disclose to the Administrative Agent, any bank
or any agents or representatives thereof any information which is the subject of
attorney-client privilege or attorney's work-product privilege properly asserted
by the applicable Person to prevent the loss of such privilege in connection
with such information.
(e) Books and Records. Maintain, and cause each of its Consolidated
Subsidiaries to maintain, a system of accounting established and administered in
accordance with generally accepted accounting principles applied on a consistent
basis, and set aside, and cause each of its Consolidated Subsidiaries to set
aside, on its books all such proper reserves as shall be required by generally
accepted accounting principles.
(f) Maintenance of Properties. Cause all properties used or useful in the
conduct of its business or the business of a Subsidiary to be maintained and
kept in good condition, repair and working order and supplied with all necessary
equipment, and cause to be made all necessary repairs, renewals, replacements,
betterments and improvements thereof, all as in the judgment of the Borrower may
be necessary so that the business carried on in connection therewith may be
properly and advantageously conducted at all times; provided, however, that
nothing in this Section 6.01(f) shall prevent the Borrower from discontinuing
the operation or maintenance, or both the operation and maintenance, of any of
such properties if such discontinuance is, in the judgment of the Borrower,
desirable in the conduct of its business or the business of any Subsidiary and
not disadvantageous in any material respect to the Banks under this Agreement.
(g) Maintenance of Insurance. Insure and keep insured, and cause each
Subsidiary to insure and keep insured, with reputable insurance companies, so
much of its respective properties, to such an extent and against such risk
(including fire), as companies engaged in similar businesses and of similar size
customarily insure properties of a similar character; or, in lieu thereof, in
the case of itself or of any one or more of its Subsidiaries, maintain or cause
to be maintained a system or systems of self-insurance which will accord with
the approved practices of companies owning or operating properties of a similar
character in maintaining such systems.
<PAGE>
39
(h) Compliance with Laws, etc. Not violate any laws, rules, regulations, or
governmental orders to which it is subject (including any such laws, rules,
regulations or governmental orders relating to the protection of the environment
or to public or employee health or safety), which violation would be reasonably
likely to result in a material adverse effect on the consolidated financial
condition of the Borrower and its Consolidated Subsidiaries; and not permit any
Subsidiary of the Borrower to violate any laws, rules, regulations, or
governmental orders of Federal, state or local governmental entities within the
United States to which it is subject (including any such laws, rules,
regulations or governmental orders relating to the protection of the environment
or to public or employee health or safety), which violation would be reasonably
likely to result in a material adverse effect on the consolidated financial
condition of the Borrower and its Consolidated Subsidiaries.
(i) Delivery of Certain Documentation with Respect to Plans. (i) As soon as
possible and in any event within 30 days after it knows or has reason to know
that, regarding any Plan with respect to the Borrower or a Subsidiary of the
Borrower, a Prohibited Transaction or a Reportable Event which presents a
material risk of termination of any Plan maintained by the Borrower or a
Subsidiary of the Borrower has occurred (whether or not the requirement for
notice of such Reportable Event has been waived by the PBGC), deliver to the
Administrative Agent and each Bank a certificate of a responsible officer of the
Borrower setting forth the details of such Prohibited Transaction or Reportable
Event, (ii) upon request of the Administrative Agent or any Bank made from time
to time after the occurrence of any such Prohibited Transaction or Reportable
Event, deliver to the Administrative Agent and each Bank a copy of the most
recent actuarial report and annual report completed with respect to any Plan
maintained by the Borrower or a Subsidiary of the Borrower, and (iii) as soon as
possible, and in any event within 10 days, after it knows or has reason to know
that any of the following have occurred with respect to any Plan maintained by
the Borrower or a Subsidiary of the Borrower: (A) any such Plan has been
terminated, (B) the Plan Sponsor intends to terminate any such Plan, (C) the
PBGC has instituted or will institute proceedings under Section 4042 of ERISA to
terminate any such Plan, or (D) the Borrower or any Subsidiary of the Borrower
withdraws from any such Plan, deliver to the Administrative Agent and each Bank
a written notice thereof. For purposes of this Section 6.01(i), the Borrower
shall be deemed to have knowledge of all facts known by the Plan Administrator
of any Plan or Employee Benefit Plan of which the Borrower or any Subsidiary of
the Borrower is the Plan Sponsor.
(j) Contributions to Plans. Pay, and use its best efforts to cause each
Subsidiary of the Borrower to pay, when due, all contributions required to meet
the minimum funding standards set forth in Sections 302 through 308 of ERISA
with respect to each Plan maintained by the Borrower or a Subsidiary of the
Borrower.
(k) Use of Proceeds. Use the proceeds of the Loans for the purposes
referred to in the recitals to this Agreement, and not for any purpose which is
in violation of Regulation U or Regulation X.
(l) Guarantee Requirement. Cause the Guarantee Requirement to be satisfied
at all times.
<PAGE>
40
SECTION 6.02. Negative Covenants of the Borrower. So long as any Loan shall
remain unpaid or any Bank shall have any Commitment hereunder, the Borrower will
not, and will not permit any Subsidiary to, without the prior written consent of
the Required Banks:
(a) Mergers, Consolidations, Sales. Consolidate with or merge into any
other Person or convey or transfer its properties substantially as an entirety
to any Person, or sell, transfer, lease or otherwise dispose of any substantial
portion of its assets in one transaction or a series of related transactions,
except:
(i) (A) any merger, consolidation or sale of its assets substantially
as an entirety in which the Person formed by such consolidation or into
which the Borrower is merged or the Person which acquires by conveyance or
transfer the properties and assets of the Borrower substantially as an
entirety, shall be a corporation, partnership or limited liability company
organized and existing under the laws of the United States or any state or
the District of Columbia, and shall expressly assume the due and punctual
payment of the principal of and interest on all the Loans and the
performance of every covenant of this Agreement on the part of the Borrower
to be performed or observed, and immediately after giving effect to such
transaction, no Event of Default or Unmatured Event of Default shall have
occurred and be continuing, (B) any merger of a Subsidiary into the
Borrower in a transaction in which the Borrower is the surviving Person,
(C) any merger of a Subsidiary into another Subsidiary in a transaction in
which the surviving Person is a wholly owned Subsidiary, (D) any sales,
transfers, leases or dispositions by a Subsidiary of its assets to the
Borrower or to another wholly owned Subsidiary;
(ii) sales of inventory (including, without limitation, crude oil,
condensate, natural gas liquids and/or natural gas) and used or surplus
equipment in the ordinary course of business;
(iii) Restricted Payments permitted under Section 6.02(d) hereof;
(iv) loans made by the Borrower to Occidental as permitted under
Section 6.02(e) hereof;
(v) sales, transfers, conveyances and other dispositions described in
Section 6.02(b)(ix);
(vi) like-kind exchanges of interests in hydrocarbon producing
properties; and
(vii) other sales, transfers and other dispositions of assets (other
than equity interests in any Subsidiary); provided that all such sales,
transfers and other dispositions shall be made for fair market value and
for at least 80% cash consideration.
Upon any consolidation or merger by the Borrower with or into any other Person,
or any conveyance or transfer by the Borrower of its properties and assets
substantially as an entirety to any Person, which is permitted by this Section
6.02(a), the successor formed by such consolidation or into which the Borrower
is merged or to which such conveyance
<PAGE>
41
or transfer is made shall succeed to, and be substituted for, and may exercise
every right and power of, the Borrower under this Agreement with the same effect
as if such successor had been named as the Borrower herein; and, in the event of
such conveyance or transfer, the Borrower (which term shall for this purpose
mean the Person named as the "Company" in the introduction to this Agreement or
any successor corporation which shall theretofore become such in the manner
described in this Section 6.02(a)) shall be discharged from all obligations and
covenants under this Agreement and may be dissolved and liquidated.
(b) Restriction on Liens. Create, incur, assume or permit to exist, or
permit any Subsidiary to create, incur, assume or permit to exist, any Lien on
any property or asset now owned or hereafter acquired by it, except:
(i) Liens imposed by law for taxes or assessments that are not yet due
or are being contested in compliance with Section 6.01(b);
(ii) carriers', landlords', warehousemen's, mechanics', materialmen's,
repairmen's, maritime and other like Liens imposed by law, arising in the
ordinary course of business;
(iii) pledges and deposits made in the ordinary course of business in
compliance with workers' compensation, unemployment insurance and other
social security laws or regulations;
(iv) deposits to secure the performance of bids, trade contracts,
leases, statutory obligations, surety and appeal bonds, performance bonds
and other obligations of a like nature, in each case in the ordinary course
of business;
(v) minor irregularities in title, easements, zoning restrictions,
rights-of-way, restrictive covenants, servitudes, permits, reservations,
exceptions, conditions, covenants and similar encumbrances on property
imposed by law or arising in the ordinary course of business that do not
materially detract from the value of the affected property or materially
interfere with the ordinary conduct of business of the Borrower and the
Subsidiaries taken as a whole;
(vi) any Lien on any property or asset of the Borrower or any
Subsidiary existing on the date hereof (or an improvement or accession
thereto or proceeds therefrom); provided that (A) such Lien shall not apply
to any other property or asset of the Borrower or any Subsidiary and (B)
such Lien shall secure only those obligations which it secures on the date
hereof and extensions, renewals and replacements thereof that do not
increase the outstanding principal amount thereof;
(vii) any Lien existing on any property or asset prior to the
acquisition thereof by the Borrower or any Subsidiary or existing on any
property or asset of any Person that becomes a Subsidiary after the date
hereof prior to the time such Person becomes a Subsidiary; provided that
(A) such Lien is not created in contemplation of or in connection with such
acquisition or such Person becoming a Subsidiary, as the case may be, (B)
such Lien shall not apply to any other property or assets of the Borrower
or any Subsidiary other than improvements and
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42
accessions thereto and proceeds (including proceeds constituting
receivables and general intangibles) thereof and (C) such Lien shall secure
only those obligations which it secures on the date of such acquisition or
the date such Person becomes a Subsidiary, as the case may be, and
extensions, renewals and replacements thereof that do not increase the
outstanding principal amount thereof;
(viii) Liens on real property or equipment acquired, constructed or
improved by the Borrower or any of its Subsidiaries securing Indebtedness
incurred to finance such acquisition, construction or improvement; provided
that (A) such Liens and the Indebtedness secured thereby are incurred prior
to or within 90 days after such acquisition or the completion of such
construction or improvement, (B) the Indebtedness secured thereby does not
exceed the cost of acquiring, constructing or improving such fixed or
capital assets and (C) such Liens shall not apply to any other property or
assets of the Borrower or any of its Subsidiaries other than improvements
and accessions thereto and proceeds (including proceeds constituting
receivables and general intangibles) thereof;
(ix) Liens arising as a result of (A) the sale or transfer of (1) oil,
gas or other minerals in place for a period of time until, or in an amount
that, the purchaser will realize therefrom a specified amount of money
(however determined) or a specified amount of such minerals, or (2) any
other interest in property of the character commonly referred to as a
"production payment", or (B) any sale, transfer or other disposition of, or
obligation to deliver, crude oil, condensate, natural gas liquids, and/or
natural gas, in consideration of advance payments, pursuant to forward
sales arrangements, prepaid contracts or other similar arrangements,
provided that all the proceeds of any transaction described under this
clause (ix) shall have been applied to prepay Loans promptly following
receipt and that the aggregate amount of all the proceeds of all such
transactions described under this clause (ix) entered into after the date
hereof shall not exceed $1,000,000,000;
(x) any obligations or duties affecting any property of the Borrower
or its Subsidiaries to any municipality or public authority with respect to
any franchise, grant, license or permit that do not materially impair the
use of such property for the purposes for which it is held;
(xi) Liens resulting from operation of law with respect to any
judgments or orders not constituting an Unmatured Event of Default; and
(xii) other Liens securing obligations in an aggregate amount not in
excess of $5,000,000 at any time.
(c) Restriction on Indebtedness. Permit Consolidated Indebtedness at any
time to exceed the Maximum Indebtedness Amount or permit any Subsidiary to
incur, create, assume or permit to exist any Indebtedness other than
Indebtedness to the Borrower or to Material Subsidiaries that are guarantors
under the Guarantee Agreement.
(d) Restricted Payments. Declare or make, or permit any Subsidiary of the
Borrower to declare or make, directly or indirectly, any Restricted Payment, or
incur any obligation (contingent or otherwise) to do so, except that (i) the
Borrower may make the
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43
Distributions, (ii) Subsidiaries of the Borrower may declare and pay cash
dividends or distributions ratably with respect to their equity interests, and
(iii) so long as no Event of Default or Unmatured Event of Default shall have
occurred and be continuing or would result therefrom, (A) the Borrower may make
cash distributions to the Class A Limited Partners and the Class B Limited
Partners (such terms and all other capitalized terms used in this clause (A)
having the meanings assigned to them in the Partnership Agreement as in effect
on the date hereof) on any Distribution Date in an amount not greater than the
sum of the Class A Limited Partner Cumulative Priority Return and the Class B
Limited Partner Cumulative Priority Return as of such Distribution Date minus
all prior Distributions to the Class A Limited Partners and the Class B Limited
Partners pursuant to Section 6.2(a) of the Partnership Agreement prior to such
Distribution Date, (B) the Borrower may (1) acquire the Class A Limited
Partnership Interests and the Class B Limited Partnership Interests, to the
extent required under the Partnership Agreement, for consideration consisting
solely of a distribution of the BP Amoco Note and the Shell Note, respectively
(or, upon the occurrence of an event described in Section 10.1(a)(iv) of the
Partnership Agreement, for cash to the extent that, and only to the extent that,
the Company shall have received such cash from the makers of the BP Amoco Note
and the Shell Note, respectively, upon the maturity of such Notes), so long as
such distributions of such Notes (or cash as applicable) are permitted under the
terms of the letter agreement in the form of Exhibit J hereto (provided that in
the case of any surrender of Class B Limited Partnership Interests under Section
2(d) of the Shell Guarantee, the Borrower shall give the Administrative Agent
written notice of such surrender, and if the Borrower shall not have sold such
Interests within 5 Business Days of receipt thereof, the Administrative Agent
shall have the right on 5 Business Days' written notice to the Borrower, on
behalf of the Banks, to purchase or cause a designee to purchase such Interests
for fair value, which shall be deemed to equal the amount for which the
Administrative Agent determines, on the basis of offers received from one or
more unrelated third parties, such Interest can be resold to an unrelated third
party) or (2) with the consent of all the Banks or upon satisfaction of the
specified conditions required under the terms of the letter agreement in the
form of Exhibit J hereto, acquire Class A Limited Partnership Interests and
Class B Limited Partnership Interests (or incur any obligation, contingent or
otherwise, to do so) for consideration consisting solely of a reduction,
discharge, cancelation of the obligations under, or distribution of, the BP
Amoco Note and the Shell Note, respectively (or as required under the last
sentence of Section 10.1(d) or Section 11.3(d) of the Partnership Agreement, for
cash to the extent that, and only to the extent that, the Company shall have
received such cash from the makers of the BP Amoco Note and the Shell Note,
respectively, upon the maturity of such Notes), and (C) the Borrower may make
Non-Cash Management Demand Loans to Occidental and pay cash distributions in
respect of its equity interests (such cash distributions under this clause (C)
herein referred to as "Cash Equity Distributions"); provided that the amount of
each such Non-Cash Management Demand Loan or Cash Equity Distribution is not at
the time made greater than (x) the Permitted Restricted Payment Amount for the
four fiscal quarter period ending with the quarter in which such Non-Cash
Management Demand Loan or distribution is to be made (the "Applicable Period")
plus, at any time after March 31, 2001, (I) in the case of any Non-Cash
Management Demand Loan, the unused portion (herein referred to as the "Unused
Portion") of the Permitted Restricted Payment Amount for the period beginning on
the date hereof and ending on the date that is 12 months prior to the date on
which the Applicable Period will end or, (II) in the case of any Cash Equity
Distribution, the lesser of $50,000,000 and such Unused Portion, minus (y) the
aggregate amount of the
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44
distributions paid during the Applicable Period under the preceding clause (A)
and the Non-Cash Management Demand Loans and Cash Equity Distributions made
during the Applicable Period under this clause (C). For purposes of making the
determinations in clause (C) for any period ending prior to March 31, 2001, all
determinations of the Consolidated Interest Expense Coverage Ratio and the
Permitted Restricted Payment Amount will be made based solely upon the results
for fiscal quarters (or portion thereof in the case of the period ending June
30, 2000) ending after the date hereof and all related references to four fiscal
quarter periods shall be deemed references to periods comprised solely of such
quarters. The aggregate amount of Non-Cash Management Demand Loans made during
any period shall be deemed at any time equal to the greater at such time of (I)
zero and (II) the excess of (x) the aggregate amount of Non-Cash Management
Demand Loans made during such period over (y) the aggregate amount of repayments
of Non-Cash Management Demand Loans made during such period.
(e) Restriction on Loans and Advances to Partners. Make or permit to exist
any loan or advance (other than the BP Amoco Loan and the Shell Loan) to any
holder of any equity interest in the Borrower or a Subsidiary of the Borrower or
to any Affiliate of any such holder; provided that the Borrower may, from time
to time, make Non-Cash Management Demand Loans to the extent permitted under
Section 6.02(d)(iii)(C) and may in addition, without limit, make Cash Management
Demand Loans.
(f) Restriction on Dividends and Distributions from Subsidiaries. Enter
into any agreement, or permit any Subsidiary to enter into any agreement,
containing any provision which would limit or restrict the declaration or
payment of dividends or distributions by such Subsidiary.
(g) Amendment of Certain Documents. Except with the approval of all the
Banks as required under the terms of the letter agreement in the form of Exhibit
J hereto, or as otherwise expressly permitted by such letter agreement, sell,
assign, release or cancel, or amend or waive in any manner adverse in any
material respect to the interests of the Banks, the BP Amoco Loan Agreement, the
BP Amoco Guarantee, the BP Amoco Note, the Shell Loan Agreement, the Shell
Guarantee or the Shell Note, or permit or accept any prepayment of the BP Amoco
Note or the Shell Note.
(h) Change in Control. So long as the Borrower is a partnership, permit (a)
any Person other than Occidental Permian Manager LLC to be a general partner of
the Borrower, (b) Occidental and its Subsidiaries to own, beneficially and of
record, equity interests representing less than 49% of the equity represented by
all the outstanding equity interests of Occidental Permian Manager LLC, (c)
Occidental not to Control both the Borrower and Occidental Permian Manager LLC
or (d) Occidental and its Subsidiaries to own, beneficially and of record,
partnership interests representing less than 28.995505% of the equity of the
Borrower. In the event that, as a result of any transaction permitted under
Section 6.02(a) hereof, the Borrower shall become a corporation or a limited
liability company, permit (a) Occidental not to Control the Borrower or (b)
Occidental and its Subsidiaries to own, beneficially and of record, shares or
other equity interests representing less than 28.995505% of the equity of the
Borrower.
(i) Transactions with Affiliates. Except as expressly permitted by the
letter agreement attached hereto as Exhibit J, sell, lease or otherwise transfer
any property or
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45
assets to, or purchase, lease or otherwise acquire any property or assets from,
or otherwise engage in any other transactions with, any of its Affiliates,
except (a) immaterial transactions and transactions at prices and on terms and
conditions taken as a whole not less favorable to the Borrower or and the
Subsidiaries than could be obtained on an arm's-length basis from unrelated
third parties, (b) transactions between or among the Borrower and wholly owned
Subsidiaries not involving any other Affiliate, (c) transactions pursuant to the
Partnership Agreement or any other agreement as in effect on the date hereof,
(d) any Restricted Payment or Demand Loan permitted by Section 6.02(d) or (e)
and (e) transactions permitted pursuant to clauses (B), (C) and (D) of Section
6.02(a)(1).
ARTICLE VII
CONDITIONS OF CREDIT
The obligations of the Banks to make Loans hereunder are subject to the
satisfaction of the following conditions:
(a) The Administrative Agent shall have received (with a photocopy for each
Bank) copies of the Purchase and Sale Agreement and the Partnership Agreement,
each as in effect on the date hereof, certified by the Secretary of the Borrower
as being true and correct copies of such documents.
(b) The Administrative Agent shall have received (with a photocopy for each
Bank) a copy of the Certificate of Limited Partnership of the Borrower,
certified by the Secretary of State of the State of Texas as being a true and
correct copy of such document, together with a certificate of such Secretary of
State as to the valid existence of the Borrower.
(c) The Administrative Agent shall have received (with a photocopy for each
Bank) (i) the signed certificate of the Secretary or an Assistant Secretary of
OXY USA Inc., as manager of Occidental Permian Manager LLC, dated the date
hereof and in the form of Exhibit B-1 hereto (appropriately completed),
certifying, among other things, the incumbency and specimen signatures of
officers of OXY USA Inc. executing this Agreement on behalf of Occidental
Permian Manager LLC, as general partner of the Borrower and (ii) the signed
certificate of the Secretary or an Assistant Secretary of Occidental, dated the
date hereof and in the form of Exhibit B-2 hereto (appropriately completed),
certifying, among other things, the incumbency and specimen signatures of
officers of Occidental, executing the letter agreement referred to in paragraph
(l) of this Article VII.
(d) The Administrative Agent shall have received (with a photocopy for each
Bank) the signed opinions of Scott King, Esq., Assistant General Counsel of
Occidental, and Vinson & Elkins L.L.P., special counsel for Occidental, dated
the date hereof and given upon the express instructions of the Borrower, in the
form of Exhibit D-1 and Exhibit D-2 hereto, respectively, with such changes (if
any) therein as shall be acceptable to the Administrative Agent and special
counsel to the Administrative Agent, and as to such other matters as the
Administrative Agent may reasonably request.
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46
(e) The Administrative Agent shall have received (with a photocopy for each
Bank) the signed opinion of Cravath, Swaine & Moore, special counsel to the
Administrative Agent, dated the date hereof, in the form of Exhibit E hereto,
with such changes (if any) therein as shall be acceptable to the Administrative
Agent.
(f) The Administrative Agent shall have received (with a photocopy for each
Bank) such other instruments and documents as the Administrative Agent may have
reasonably requested.
(g) Each of the Administrative Agent, the Banks and the Borrower shall have
executed one or more counterparts of this Agreement.
(h) The representations and warranties on the part of the Borrower
contained in this Agreement shall be true and correct in all material respects
on and as of the date hereof, as though made on and as of such date.
(i) No Event of Default and no Unmatured Event of Default shall have
occurred and be continuing on the date hereof, or would result from the making
of the Loans.
(j) The Acquisition shall have been (or shall simultaneously be) completed
on terms such that the assets and liabilities of the Borrower shall be
substantially those reflected in the Borrower's consolidated balance sheet as of
December 31, 1999, referred to in Section 5.01(e), modified to give effect to
the Distributions, the making of the BP Amoco Loan and the Shell Loan and the
Borrowing hereunder on the date hereof.
(k) The BP Amoco Loan Agreement, the BP Amoco Guarantee, the Shell Loan
Agreement and the Shell Guarantee shall have been (or shall simultaneously be)
executed and delivered by the parties thereto, and the BP Amoco Note and the
Shell Note shall have been (or shall simultaneously be) issued and delivered to
the Borrower. The Borrower and the Administrative Agent shall have received
evidence confirming the corporate power and authority of BP Amoco, BP
International Limited, Shell Oil Company and the borrower under the Shell Loan
Agreement to execute, deliver and perform their respective obligations under,
and the due execution and delivery of, such agreements and instruments.
(l) The Administrative Agent shall have received the letter agreement in
the form of Exhibit J hereto, executed by Occidental.
The Borrowing by the Borrower on the date hereof shall be deemed to be a
representation and warranty by the Borrower that each of the conditions
contained in this Article VII has been satisfied.
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47
ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.01. Events of Default. If any of the following events, acts or
occurrences (herein called an "Event of Default") shall occur and be continuing:
(a) default, and continuance thereof for three (3) Business Days, in the
payment when due of any amount owing by the Borrower hereunder in respect of the
principal of, or interest on, any Loan; or
(b) any representation or warranty of the Borrower contained in this
Agreement or in any certificate, letter or other writing or instrument furnished
or delivered by or on behalf of the Borrower to any Bank or the Administrative
Agent pursuant hereto or in connection herewith, shall at any time prove to have
been incorrect in any material respect when made, deemed made or reaffirmed, as
the case may be; or
(c) the Borrower shall default in the performance or observance of any
term, covenant, condition or agreement on its part to be performed or observed
under Section 6.01(c), 6.01(k), 6.02(b), 6.02(c) or 6.02(d) hereof (other than a
default which would not have occurred or would not be continuing if the
calculations pursuant to the aforesaid Sections were made without giving effect
to changes in generally accepted accounting principles which require
implementation after the date hereof); or
(d) the Borrower shall default in any material respect in the performance
or observance of any other term, covenant, condition or agreement on its part to
be performed or observed hereunder (and not constituting an Event of Default
under any other clause of this Section 8.01), and such default shall continue
unremedied for thirty (30) days after written notice thereof shall have been
given to the Borrower by the Administrative Agent or any Bank; or
(e) either (i) the Borrower or any Material Subsidiary shall generally fail
to pay, or admit in writing its inability to pay, its debts as they become due,
or shall voluntarily commence any case or proceeding or file any petition under
any bankruptcy, insolvency or similar law or seeking dissolution, liquidation or
reorganization or the appointment of a receiver, trustee, custodian or
liquidator for itself or a substantial portion of its property, assets or
business or to effect a plan or other arrangement with its creditors (except the
voluntary dissolution, not under any bankruptcy or insolvency law, of a Material
Subsidiary), or shall file any answer admitting the jurisdiction of the court
and the material allegations of any involuntary petition filed against it in any
bankruptcy, insolvency or similar case or proceeding, or shall be adjudicated
bankrupt, or shall make a general assignment for the benefit of creditors, or
shall consent to, or acquiesce in the appointment of, a receiver, trustee,
custodian or liquidator for itself or a substantial portion of its property,
assets or business, or (ii) corporate action shall be taken by the Borrower or
any Material Subsidiary for the purpose of effectuating any of the foregoing; or
(f) involuntary proceedings or an involuntary petition shall be commenced
or filed against the Borrower or any Material Subsidiary under any bankruptcy,
insolvency or
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48
similar law or seeking the dissolution, liquidation or reorganization of the
Borrower or such Material Subsidiary (as the case may be) or the appointment of
a receiver, trustee, custodian or liquidator for the Borrower or such Material
Subsidiary (as the case may be) or of a substantial part of the property, assets
or business of the Borrower or such Material Subsidiary (as the case may be), or
any writ, judgment, warrant of attachment, execution or similar process shall be
issued or levied against a substantial part of the property, assets or business
of the Borrower or any Material Subsidiary, and such proceedings or petition
shall not be dismissed, or such writ, judgment, warrant of attachment, execution
or similar process shall not be released, vacated or fully bonded, within thirty
(30) days after commencement, filing or levy, as the case may be; or
(g) (i) the Borrower or any Material Subsidiary shall default (as principal
or guarantor or other surety) in the payment when due (subject to any applicable
notice or grace period), whether at stated maturity or otherwise, of any
principal of or interest on (howsoever designated) any indebtedness for borrowed
money, whether such indebtedness now exists or shall hereafter be created, or
(ii) an event of default (with respect to the Borrower or any Material
Subsidiary) as defined in any mortgage, indenture or instrument under which
there may be issued, or by which there may be secured or evidenced, any
indebtedness for borrowed money of, or guaranteed by, the Borrower or any
Material Subsidiary, whether such indebtedness now exists or shall hereafter be
created, shall occur and shall permit such indebtedness to become due and
payable prior to its stated maturity or due date; provided that no default under
this subsection (g) shall be deemed to exist as a result of a default or event
of default (as described in clause (i) or clause (ii) above) in respect of any
such indebtedness (1) which is payable solely out of the property or assets of a
partnership, joint venture or similar entity of which the Borrower or any
Material Subsidiary is a participant, or is secured by a mortgage on, or other
security interest in, the property or assets owned or held by such entity, in
either case without any further recourse to or liability of the Borrower or any
Material Subsidiary as a participant in such entity, or (2) if the principal of
and interest on such indebtedness, when added to the principal of and interest
on all other such indebtedness then in default (exclusive of indebtedness under
clause (1) above), does not exceed $100,000,000; or
(h) with respect to any Plan (other than a Multiemployer Plan) as to which
the Borrower or any Subsidiary of the Borrower may have any liability, there
shall exist an unfunded current liability under the Code which is material to
the consolidated financial condition of the Borrower and its Consolidated
Subsidiaries, and (x) steps are undertaken to terminate such Plan or (y) such
Plan is terminated or (z) any Reportable Event which presents a material risk of
termination with respect to such Plan shall occur; or
(i) there shall occur any Event of Default under the BP Amoco Loan
Agreement or the Shell Loan Agreement (after giving effect to any grace periods
provided for therein); or
(j) there shall occur any Liquidating Event (or other event dissolving and
liquidating the Borrower) under the Partnership Agreement as at any time in
effect;
then, and in any such event (x) if such event relates to the Borrower and is
described in clause (e) or clause (f) of this Section 8.01, (i) the Commitments
shall immediately terminate, and (ii) all sums then owing by the Borrower
hereunder (and, in the event
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49
payment is to be made on a day which is not the expiration date of the relevant
Interest Period, together with such amounts as will compensate each Bank in such
Bank's sole discretion for any losses incurred by it (or its lending branch or
affiliate) in respect of funds borrowed by it or deposited with it for the
purpose of making or maintaining its Loans hereunder) shall become and be
immediately due and payable, without presentment, demand, protest or notice of
any kind, all of which are hereby expressly waived by the Borrower, and (y) in
the case of any other such event, subject to Section 8.02 hereof, the
Administrative Agent shall, at the direction of the Required Banks, at the same
or different times, take one or more of the following actions: (i) declare the
Commitments to be terminated, whereupon the Commitments shall forthwith
terminate, or (ii) declare all sums then owing by the Borrower hereunder to be
forthwith due and payable, whereupon all such sums (and, in the event payment is
to be made on a day which is not the expiration date of the relevant Interest
Period, together with such amounts as will compensate each Bank in such Bank's
sole discretion for any losses incurred by it (or its lending branch or
affiliate) in respect of funds borrowed by it or deposited with it for the
purpose of making or maintaining its Loans hereunder) shall become and be
immediately due and payable without presentment, demand, protest or notice of
any kind, all of which are hereby expressly waived by the Borrower. Promptly
following the making of any such declaration, the Administrative Agent shall
give notice thereof to the Borrower and each Bank, but failure to do so or any
delay in so doing shall not impair the effect of such declaration.
SECTION 8.02. Limitations on Exercise of Certain Remedies. (a)
Notwithstanding the provisions of Section 8.01 hereof, the Administrative Agent
and the Required Banks will not exercise their remedies under clause (y) of such
Section 8.01 unless (i) 10 days shall have elapsed after the Administrative
Agent or the Required Banks shall have delivered a notice to each of BP Amoco
p.l.c. and Shell Oil Company stating that the Required Lenders have determined
that an Event of Default exists and describing such Event of Default in
reasonable detail and during such 10 day period the Administrative Agent shall
not have received from BP Amoco p.l.c. and/or Shell Oil Company a written
undertaking, reasonably satisfactory in form and substance to the Administrative
Agent, to cure such Event of Default (or, in the case of any Event of Default
that cannot be cured by a payment of money, to attempt in good faith to cure
such Event of Default) by the 20th day following the end of such 10 day period,
or (ii) the Administrative Agent shall have received the undertaking referred to
in the preceding clause (i) and the relevant Event of Default shall not have
been cured by the 20th day following the end of the 10 day period referred to in
such clause (i).
(b) The Administrative Agent and the Banks agree that they will not
exercise any right that they may have to sell or assign either such Note (or
institute legal proceedings by filing a petition, motion, application or other
such pleading seeking to in any way compel, request or require the sale or
assignment thereof by a trustee, receiver or other official in the course of a
proceeding referred to in clause (e) or (f) of Section 8.01 hereof (it being
understood that actions taken to preserve or protect rights in respect of the
Notes without expressly seeking the sale or assignment thereof do not violate
this paragraph)) unless (i) substantially all the other assets of the Borrower
shall have been liquidated and (ii) the BP Amoco Note and the Shell Note are
sold ratably. It is expressly understood that a sale or assignment of the BP
Amoco Note or the Shell Note by a trustee, receiver or other official in the
course of a proceeding referred to in clause (e) or clause (f) of Section
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50
8.01 hereof not in violation of the preceding sentence shall not constitute a
sale or assignment by the Administrative Agent or the Required Banks.
ARTICLE IX
THE ADMINISTRATIVE AGENT AND THE BANKS
SECTION 9.01. Appointment and Powers of the Administrative Agent. Each Bank
hereby irrevocably designates and appoints the Administrative Agent its agent
hereunder and hereby authorizes the Administrative Agent to take such action on
its behalf and to exercise such rights, remedies, powers and privileges
hereunder as are specifically authorized to be exercised by the Administrative
Agent by the terms hereof, together with such rights, remedies, powers and
privileges as are reasonably incidental thereto. The Administrative Agent may
execute any of its duties as Administrative Agent hereunder by or through agents
or attorneys-in-fact and shall be entitled to retain counsel and to act in
reliance upon the advice of such counsel concerning all matters pertaining to
the agency hereby created and its duties hereunder, and shall not be liable for
the negligence or misconduct of any agents or attorneys-in-fact selected by it
with reasonable care. The Administrative Agent shall have no duties or
responsibilities to any Bank, except those expressly set forth in this
Agreement, or any fiduciary relationship with any Bank, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into this Agreement or otherwise exist against the Administrative Agent.
SECTION 9.02. Exculpatory Provisions. Neither any Bank nor the
Administrative Agent nor any of their respective directors, officers or
employees shall be liable for any action taken or omitted to be taken by them
hereunder or in connection herewith, except for their own gross negligence or
wilful misconduct; nor shall any Bank or the Administrative Agent be responsible
in any manner to any Person for the representations, warranties or other
statements made by any other Person or for the due execution or delivery,
validity, effectiveness, genuineness, value, sufficiency or enforceability
against the Borrower or any other obligor of this Agreement or any other
document furnished pursuant thereto or in connection herewith. Neither the
Administrative Agent nor any of its officers shall be under any obligation to
any Bank to ascertain or to inquire as to the observance or performance of any
of the agreements contained in, or conditions of, this Agreement, or to inspect
the properties, books or records of the Borrower or any of its Subsidiaries.
SECTION 9.03. Reliance by the Administrative Agent. The Administrative
Agent shall be entitled to rely, and shall be fully protected in relying, upon
any writing, resolution, notice, consent, certificate, affidavit, letter,
cablegram, telegram, telecopy, telex or teletype message, statement, order or
other document or conversation believed by it to be genuine and correct and to
have been signed, sent or made by the proper Person or Persons and upon advice
and statements of legal counsel (including, without limitation, counsel to the
Borrower), independent accountants and other experts selected by the
Administrative Agent. The Administrative Agent shall be fully justified in
failing or refusing to take any action under this Agreement or any other
documents executed and delivered in connection herewith unless it shall first
receive such advice or concurrence of the Required Banks as it deems appropriate
or it shall first be indemnified to its
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51
satisfaction by the Banks against any and all liability and expense which may be
incurred by it by reason of taking or continuing to take any such action. The
Administrative Agent shall not be liable to any Bank for acting, or refraining
from acting, under this Agreement or any other documents executed and delivered
in connection herewith in accordance with a request of the Required Banks, and
such request and any action taken or failure to act pursuant thereto shall be
binding upon all the Banks and their respective successors and assigns.
SECTION 9.04. Notice of Default. The Administrative Agent shall not be
deemed to have knowledge or notice of the occurrence of any Event of Default or
Unmatured Event of Default hereunder unless it has received notice from a Bank
or the Borrower referring to this Agreement, describing such Event of Default or
Unmatured Event of Default and stating that such notice is a "notice of
default". In the event that the Administrative Agent receives such a notice, it
shall give notice thereof to the Banks. The Administrative Agent shall take such
action with respect to such Event of Default or Unmatured Event of Default as
shall be reasonably directed by the Required Banks; provided, however, that
unless and until the Administrative Agent shall have received such direction,
the Administrative Agent may (but shall not be obligated to) take such action,
or refrain from taking such action, with respect to such Event of Default or
Unmatured Event of Default as it shall deem advisable in the best interests of
the Banks; provided further that the Administrative Agent shall have the right,
power and authority to take the affirmative action specified in Section 8.01
hereof only upon the direction of the Required Banks.
SECTION 9.05. Indemnification. Each Bank hereby agrees, in the ratio that
such Bank's Commitment and outstanding Loans from time to time bear to the Total
Commitment and the aggregate outstanding Loans from time to time, to indemnify
and hold harmless the Administrative Agent, as agent hereunder, from and against
any and all losses, liabilities (including liabilities for penalties), actions,
suits, judgments, demands, damages, costs and expenses (including, without
limitation, attorneys' fees and expenses) incurred or suffered by the
Administrative Agent in such capacity as a result of any action taken or omitted
to be taken by the Administrative Agent in such capacity or otherwise incurred
or suffered by, made upon, or assessed against the Administrative Agent in such
capacity; provided that no Bank shall be liable for any portion of any such
losses, liabilities (including liabilities for penalties), actions, suits,
judgments, demands, damages, costs or expenses resulting from or attributable to
gross negligence or wilful misconduct on the part of the Administrative Agent or
its officers, employees or agents. Without limiting the generality of the
foregoing, each Bank hereby agrees, in the ratio aforesaid, to reimburse the
Administrative Agent promptly following its demand for any out-of-pocket
expenses (including, without limitation, attorneys' fees and expenses) incurred
by the Administrative Agent hereunder and not reimbursed to the Administrative
Agent by the Borrower. Each Bank's obligations under this paragraph shall
survive the termination of this Agreement or, if earlier, the termination of the
Commitment of such Bank, and the discharge of the Borrower's obligations
hereunder.
SECTION 9.06. Nonreliance on the Administrative Agent and Other Banks. Each
Bank expressly acknowledges that neither the Administrative Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or affiliates has made
any representations or warranties to it and that no act by the Administrative
Agent hereafter taken, including any review of the affairs of the Borrower,
shall be deemed to constitute
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52
any representation or warranty by the Administrative Agent to any Bank. Each
Bank represents to the Administrative Agent that it has, independently and
without reliance upon the Administrative Agent or any other Bank, and based on
such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, operations, property,
financial and other condition and creditworthiness of the Borrower and made its
own decision to make its Loans hereunder and enter into this Agreement. Each
Bank also represents that it will, independently and without reliance upon the
Administrative 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 analysis, appraisals and decisions in taking or not taking action under
this Agreement, and to make such investigation as it deems necessary to inform
itself as to the business, operations, property, financial and other condition
and creditworthiness of the Borrower.
SECTION 9.07. The Administrative Agent in its Individual Capacity. The
Administrative Agent and its affiliates may make loans to, accept deposits from
and generally engage in any kind of business with the Borrower as though the
Administrative Agent were not the Administrative Agent hereunder. With respect
to its Loans made or renewed by it, the Administrative Agent shall have the same
rights and powers under this Agreement as any Bank and may exercise the same as
though it were not the Administrative Agent, and the terms "Bank" and "Banks"
shall include the Administrative Agent in its individual capacity.
SECTION 9.08. Excess Payments. Except for payments made pursuant to Section
2.04, Section 2.08, Section 2.09 or Section 4.03 hereof, if any Bank shall
obtain any payment or other recovery (whether voluntary, involuntary, by
application of offset or otherwise) on account of principal of or interest on
any Loan in excess of its pro rata share of payments and other recoveries
obtained by all Banks or holders on account of principal of and interest on
Loans then owing to them, such Bank or other holder shall purchase from the
other Banks or holders such participation in the Loans owing to them as shall be
necessary to cause such purchasing Bank or holder to share the excess payment or
other recovery ratably with each of them; provided, however, that if all or any
portion of the excess payment or other recovery is thereafter recovered from
such purchasing Bank or holder, the purchase shall be rescinded and the purchase
price restored to the extent of such recovery, but without interest. The
Borrower agrees that any Bank or holder so purchasing a participation from
another Bank or holder pursuant to this Section 9.08 may, to the fullest extent
permitted by law, exercise all its rights of payment (including offset) with
respect to such participation as fully as if such Bank or holder were the direct
creditor of the Borrower in the amount of such participation.
SECTION 9.09. Obligations Several. The obligations of the Banks hereunder
are several, and neither any Bank nor the Administrative Agent shall be
responsible for the obligations of any other Person hereunder, nor will the
failure of any Bank to perform any of its obligations hereunder relieve the
Administrative Agent or any Bank from the performance of their respective
obligations hereunder. Nothing contained in this Agreement, and no action taken
by the Banks or the Administrative Agent pursuant hereto or in connection
herewith, shall be deemed to constitute the Banks, together or with the
Administrative Agent, a partnership, association, joint venture or other entity.
SECTION 9.10. Resignation by the Administrative Agent. The Administrative
Agent may resign as such at any time upon at least 30 days' prior notice to the
Borrower
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53
and the Banks. In the event of such resignation by the Administrative Agent, the
Required Banks (with the consent of the Borrower (which shall not be
unreasonably withheld) in the event that there then does not exist an Event of
Default or Unmatured Event of Default), shall as promptly as practicable appoint
a successor Administrative Agent.
SECTION 9.11. Letter Agreement. Each Bank authorizes the Administrative
Agent to execute and deliver a letter agreement in the form of Exhibit J hereto
and agrees to observe the standards set forth in such letter agreement in
connection with any determination to be made by the Banks thereunder.
SECTION 9.12. Agents. Notwithstanding anything to the contrary herein, no
Bank identified herein as syndication agent or documentation agent shall have
any separate duties, rights, responsibilities, obligations or authority in such
capacity.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. No Waiver; Modifications in Writing. No failure or delay on
the part of the Administrative Agent or any Bank in exercising any right, power
or remedy hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right, power or remedy preclude any other or
further exercise thereof or the exercise of any other right, power or remedy.
The remedies provided for herein are cumulative and are not exclusive of any
remedies that may be available to the Administrative Agent or any Bank at law,
in equity or otherwise. Each request by the Borrower for any amendment,
modification, supplement, termination or waiver of or to any provision of this
Agreement shall be directed to the Administrative Agent, and no such amendment,
modification, supplement, termination or waiver of or to any provision of this
Agreement, nor consent to any departure by the Borrower therefrom, shall be
effective unless the same shall be in writing and signed by the Borrower and by
or on behalf of the Administrative Agent and the Required Banks; provided,
however, that no such amendment, modification, supplement, termination, waiver
or consent, as the case may be, which has the effect of (x) reducing the rate or
amount, or extending the stated maturity or due date, of any sum payable by the
Borrower to any Bank hereunder, or (y) except as provided in Section 2.04(e)(i),
Section 2.08(c)(i), Section 2.09(i), Section 4.03(b)(i) and Section 10.06(c)
hereof, increasing the amount, or extending the stated expiration or termination
date, of any Bank's Commitment hereunder, or (z) changing this Section 10.01,
Section 10.06 or Section 10.07 hereof or the definitions of the terms "Allocable
Share", "Applicable Margin", "Event of Default", "Proportional Share",
"Reference Bank", "Reference Banks", "Required Banks", "Commitment", "Total
Commitment" and "Unmatured Event of Default", or changing the designation of the
"Required Banks" as the Banks entitled to direct the Administrative Agent
pursuant to Section 8.01 hereof, or changing any provision that by its express
terms requires the consent of each Bank, or releasing any Subsidiary of the
Borrower from its obligations under the Guarantee Agreement, or permitting a
modification of the Demand Loans as a result of which they would not be payable
on demand, shall be effective unless the same shall be signed by or on behalf of
each Bank; provided further that no such amendment, modification, supplement,
termination, waiver or consent, as the case may be, which has
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54
the effect of (x) increasing the duties or obligations of the Administrative
Agent hereunder, or (y) increasing the standard of care or performance required
on the part of the Administrative Agent hereunder, or (z) reducing or
eliminating the indemnities or immunities to which the Administrative Agent is
entitled hereunder (including, without limitation, any amendment or modification
of this Section 10.01) shall be effective unless the same shall be signed by or
on behalf of the Administrative Agent. Any waiver of any provision of this
Agreement, and any consent to any departure by the Borrower from the terms of
any provision of this Agreement, shall be effective only in the specific
instance and for the specific purpose for which given. No notice to or demand on
the Borrower in any case shall entitle the Borrower to any other or further
notice or demand in similar or other circumstances.
SECTION 10.02. Confidentiality. The Administrative Agent and each Bank
shall maintain in confidence and not publish, disseminate or disclose in any
manner or to any Person and shall not use (x) any material, nonpublic
information relating to the Borrower and its Subsidiaries or (y) any technical,
nonfinancial information, data or know-how which is identified in writing as
confidential by the Borrower, in either case which may be furnished pursuant to
this Agreement, including any such information which may be furnished pursuant
to Article VI hereof (hereinafter collectively called "Confidential
Information"), subject to the Administrative Agent's and each Bank's (a)
obligation to disclose any such Confidential Information pursuant to a request
or order under applicable laws and regulations or pursuant to a subpoena or
other legal process, (b) right to disclose any such nontechnical or financial
Confidential Information to bank examiners, its affiliates, auditors, counsel,
other professional advisors, other Banks, and other banks or other entities in
connection with an offer by such Bank to sell a Participation to such other bank
or other entity or to make an assignment pursuant to Section 10.06(c) hereof,
(c) right to use any such Confidential Information in connection with the
transactions set forth herein, and (d) right to disclose any such Confidential
Information in connection with the transactions set forth herein or in
connection with any litigation or dispute involving the Administrative Agent,
the Banks and the Borrower or any of its Subsidiaries or any transfer or other
disposition by such Bank of any of its loans or other extensions of credit to
the Borrower or any of the Borrower's Subsidiaries; provided, however, that
Confidential Information disclosed pursuant to clause (b) or (d) of this
sentence shall be so disclosed subject to such procedures as are reasonably
calculated to maintain the confidentiality thereof; and provided further that
Confidential Information disclosed pursuant to applicable laws, regulations,
subpoenas or other legal process shall be so disclosed subject to such
confidentiality provisions, if any, as may be provided under applicable law. The
Administrative Agent and the Banks agree, to the extent permitted by applicable
law, to use their best efforts promptly to notify the Borrower in writing of
each order, subpoena or other legal process providing for the disclosure and/or
production of Confidential Information and shall, to the extent permitted by
applicable law, use their best efforts promptly to supply the Borrower with a
copy of such order, subpoena or other legal process, in order that the Borrower
may intervene in the relevant administrative or legal proceeding or take other
appropriate legal action to protect the confidentiality of such Confidential
Information. Notwithstanding the foregoing provisions of this Section 10.02, (i)
the foregoing obligation of confidentiality shall not apply to any such
Confidential Information that was known to such Bank or any of its affiliates
prior to the time it received such Confidential Information from the Borrower or
its Subsidiaries pursuant to this Agreement, other than as a result of the
disclosure thereof by a Person who, to the knowledge or reasonable
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55
belief of such Bank, was prohibited from disclosing it by any duty of
confidentiality arising (under this Agreement or otherwise) by contract or law,
and (ii) the foregoing obligation of confidentiality shall not apply to any such
Confidential Information that becomes part of the public domain independently of
any act of the Administrative Agent or such Bank not permitted hereunder
(through publication, the issuance of a patent disclosing such information or
otherwise) or when identical or substantially similar information is received by
the Administrative Agent or such Bank without restriction as to its disclosure
or use, from a Person who, to the knowledge or reasonable belief of the
Administrative Agent or such Bank, was not prohibited from disclosing it by any
duty of confidentiality arising (under this Agreement or otherwise) by contract
or law. The obligations of the Administrative Agent and each Bank under this
Section 10.02 shall survive the termination of this Agreement or, if earlier,
the termination of the Commitment of such Bank.
SECTION 10.03. Notices, etc. Except where telephonic instructions or
notices are authorized herein to be given, all notices, demands, instructions
and other communications required or permitted to be given to or made upon any
party hereto (or, in the case of notices pursuant to Section 8.02 hereof, to BP
Amoco p.l.c. or Shell Oil Company) shall be in writing and (except for financial
statements and other documents to be furnished pursuant to Article VI hereof
(with the exception of notices of the occurrence of an Event of Default or an
Unmatured Event of Default which is continuing), which may be sent by
first-class mail, postage prepaid) shall be personally delivered or sent by
registered or certified mail, postage prepaid, return receipt requested, or by
telecopier, and shall be deemed to be given for purposes of this Agreement on
the day that such writing is delivered or sent to the intended recipient thereof
in accordance with the provisions of this Section 10.03. Unless otherwise
specified in a notice sent or delivered in accordance with the foregoing
provisions of this Section 10.03, notices, demands, instructions and other
communications in writing shall be given to or made upon the respective parties
hereto (or BP Amoco p.l.c. or Shell Oil Company) at their respective addresses
(or to their respective telecopier numbers) indicated on Schedule II hereto,
and, in the case of telephonic instructions or notices, by calling the telephone
number or numbers indicated for such party on such Schedule. Any Person sending
a notice to The Chase Manhattan Bank, in its capacity or Administrative Agent
under this Agreement will send a copy of such notice to The Bank of Nova Scotia.
Anything herein to the contrary notwithstanding, notices from the Borrower
pursuant to Sections 2.01, 2.04, 2.08, 2.09, 4.01, 4.02 and 4.03 hereof shall be
effective, for the purposes of this Agreement, only when actually received by
all Persons to whom such notices are required to be sent or given.
SECTION 10.04. Costs, Expenses and Taxes. The Borrower agrees to pay all
costs and expenses of the Administrative Agent in connection with the
arrangement of the credit facility provided for herein and the negotiation,
preparation, printing, reproduction, execution and delivery of this Agreement,
any amendments or modifications of (or supplements to) any of the foregoing and
any and all other documents furnished in connection with the execution and
delivery of this Agreement, including the reasonable fees and out-of-pocket
expenses of outside counsel to the Agents relative thereto (limited, however, to
such fees and expenses of only one outside counsel who shall represent the
Administrative Agent), and all costs and expenses (whether of the Administrative
Agent or any Bank or otherwise and including, without limitation, attorneys'
fees and expenses),
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56
if any, in connection with the enforcement of this Agreement or any other
agreement furnished pursuant hereto or in connection herewith. In addition, the
Borrower shall pay all stamp, transfer and other transaction taxes payable or
determined to be payable in connection with the execution and delivery of this
Agreement, and the Borrower shall pay all such transaction taxes payable or
determined to be payable in connection with the making of any Loan by any Bank,
and the Borrower agrees to save and hold the Administrative Agent and each Bank
harmless from and against any and all liabilities with respect to or resulting
from any delay in paying or omission to pay such transaction taxes. If any
action, suit or proceeding arising from any of the foregoing is brought against
the Administrative Agent, any Bank, or any other Person indemnified or intended
to be indemnified pursuant to this Section 10.04, the Borrower, to the extent
and in the manner directed by the Person or Persons indemnified or intended to
be indemnified, will resist and defend such action, suit or proceeding or cause
the same to be resisted and defended by counsel designated by the Borrower
(which counsel shall be satisfactory to the Person or Persons indemnified or
intended to be indemnified). If the Borrower shall fail to do any act or thing
which it has covenanted to do hereunder or any representation or warranty on the
part of the Borrower contained herein shall be breached, the Administrative
Agent may (but shall not be obligated to) do the same or cause it to be done or
remedy any such breach, and may expend its funds for such purpose. Any and all
amounts so expended by the Administrative Agent shall be repayable to it by the
Borrower immediately upon the Administrative Agent's demand therefor, with
interest at a rate per annum (computed on the basis of a year consisting of 365
or, when appropriate, 366 days) equal to the sum of (i) the Alternate Base Rate
in effect from time to time during the period from and including the date so
expended by such Agent to the date of repayment, plus (ii) two percent (2%) per
annum. The obligations of the Borrower under this Section 10.04 shall survive
the termination of this Agreement and the discharge of the Borrower's other
obligations hereunder.
SECTION 10.05. Confirmations. The Borrower and each Bank agree from time to
time, upon written request received by one from the other, to confirm to the
other in writing the aggregate unpaid principal amount of the Loans of such Bank
then outstanding.
SECTION 10.06. Successors and Assigns; Participations. (a) This Agreement
shall be binding upon and inure to the benefit of the Borrower, the Banks, the
Administrative Agent, and their respective successors and permitted assigns;
provided, however, that any assignment or transfer by a Bank of any or all of
its rights hereunder shall not materially increase the amount which would have
been payable to the Bank making such assignment or transfer by the Borrower
under this Agreement in the absence of such assignment or transfer; and provided
further that except in accordance with the provisions of Section 6.02(a) hereof,
the Borrower may not assign its rights hereunder or in connection herewith or
any interest herein without the prior written consent of all of the Banks. This
Agreement shall not be construed so as to confer any right or benefit upon any
Person other than the parties to this Agreement and each of their respective
successors and permitted assigns.
(b) Any Bank may without the consent of the Borrower sell participations to
one or more banks or other entities that, in the ordinary course of their
business, regularly extend credit of the types and in the amounts extended by
Banks under this Agreement (such banks and other entities hereinafter referred
to, collectively, as "Participants") in all
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57
or a portion of its rights and obligations under this Agreement (including,
without limitation, all or a portion of its Commitment and the Loan or Loans
owing to it); provided, however, that (i) such Bank's obligations under this
Agreement shall remain unchanged, (ii) such Bank shall remain solely responsible
to the other parties hereto for the performance of such obligations, (iii) the
Participants shall be entitled to the cost protection provisions contained in
Section 2.04, Section 2.08, and Section 3.04 hereof (provided that no
Participant shall be entitled to receive any greater amount pursuant to such
provisions than the transferor Bank would have been entitled to receive in
respect of the amount of the participation transferred by such transferor Bank
to such Participant had no such transfer occurred and provided further that such
Participant shall have fully complied with the provisions of Section 10.06(g)
hereof) and the cost protection provisions of Section 2.08 hereof shall be
applied by assuming that such Bank did not sell any participation to any
Participant, (iv) the Borrower, the Administrative Agent and the other Banks
shall continue to deal solely and directly with such Bank in connection with
such Bank's rights and obligations under this Agreement and in connection with
the cost protection provisions of this Agreement to which any Participant is
entitled pursuant to this Section 10.06(b), (v) such Bank shall retain the sole
right and responsibility to enforce the obligations of the Borrower relating to
the Loans, (vi) such Bank shall not, except with respect only to changes in the
amount of the Commitment of such Bank, or the principal amount of its Loans
outstanding or the Interest Rate or Interest Period with respect thereto, or the
amount of any fees payable to it hereunder or extension of the Maturity Date,
enter into any agreement with any Participant that would require the consent of
such Participant with respect to the exercise by such Bank of its voting rights
under this Agreement, and (vii) each such sale shall be made in the ordinary
course of such Bank's commercial banking business and in compliance with all
applicable laws.
(c) Any Bank may assign, with the prior written consent of the Borrower, BP
Amoco p.l.c., Shell Oil Company and the Administrative Agent, which consent
shall not be unreasonably withheld by any of such Persons, to one or more
Eligible Assignees, or without the consent of the Borrower or the Administrative
Agent to one or more Banks, all or a portion of its interests, rights and
obligations under this Agreement (including, without limitation, all or a
portion of its Commitment and the same portion of the applicable Loan or Loans
at the time owing to it); provided, however, that (i) each such assignment shall
be of a constant, and not a varying, percentage of all the assigning Bank's
rights and obligations under this Agreement and the Loan or Loans at the time
owing to such assigning Bank, (ii) except in the case of an assignment of a
Bank's entire interest hereunder, the amount of the Commitment or outstanding
Loans of the assigning Bank which it retains shall be in a principal amount of
not less than $25,000,000 and the amount of such Commitment or outstanding Loans
which it assigns (determined as of the date the Assignment and Acceptance with
respect to such assignment is delivered to the Administrative Agent) shall be an
integral multiple of $5,000,000; (iii) the parties to each such assignment shall
execute and deliver to the Administrative Agent, for its acceptance and
recording in the Register, an Assignment and Acceptance with respect to such
assignment and a processing and recordation fee of (A) $1,000 in the case of an
assignment to any Bank and (B) $2,500 in all other cases (except that such fee
shall not be payable if the Eligible Assignee is an affiliate of the assignor
Bank), (iv) each such assignment shall be made in the ordinary course of the
assigning Bank's commercial banking business and in compliance with all
applicable laws, (v) no such assignment shall be effective unless the Eligible
Assignee to which such assignment is made has fully complied with the provisions
of Section 10.06(g) hereof and (vi) the Borrower shall have
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58
received a copy of the Assignment and Acceptance signed by the parties thereto.
Upon such execution, delivery, acceptance and recording, from and after the
effective date specified in each Assignment and Acceptance, which effective date
shall be at least five Business Days after the execution thereof, (x) the
Eligible Assignee thereunder shall be a party hereto and, to the extent provided
in such Assignment and Acceptance, have the rights and obligations of a Bank
hereunder, (y) the assignor Bank thereunder shall, to the extent provided in
such Assignment and Acceptance, be released (except as provided in Section
2.08(b), Section 10.02 and Section 10.07 hereof) from its obligations under this
Agreement (and, in the case of an Assignment and Acceptance covering all or the
remaining portion of an assigning Bank's rights and obligations under this
Agreement, such Bank shall cease to be a party hereto), and (z) Schedule I and
Schedule II hereto shall be deemed amended to reflect the addition of such
Eligible Assignee and the decrease in the Commitment or outstanding Loans of the
assignor Bank. Each assignee of an interest under this Agreement shall take such
interest subject to any request made, waiver or consent given or other action
taken hereunder prior to the effective date of the Assignment and Acceptance
related to such assignment, and, until the effective date of such Assignment and
Acceptance, the Administrative Agent and the Borrower shall be entitled
conclusively to assume that no assignment of any interest under this Agreement
has been made by any Bank or any assignee. Notwithstanding any other provision
of this Section 10.06, any Bank may at any time assign all or any portion of its
rights under this Agreement held by it to a Federal Reserve Bank; provided that
no such assignment shall release a Bank from any of its obligations hereunder.
(d) By executing and delivering an Assignment and Acceptance, the assignor
Bank and the Eligible Assignee thereunder confirm to and agree with each other
and the other parties hereto as follows: (i) the assignor Bank represents and
warrants that it is the legal and beneficial owner of the interest being
assigned thereby free and clear of any adverse claim, (ii) such assignor Bank
makes no representation or warranty, and assumes no responsibility with respect
to any statements, warranties or representations made by the Borrower, in or in
connection with this Agreement or with the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or any other
instrument or document furnished pursuant hereto, (iii) such assignor Bank makes
no representation or warranty and assumes no responsibility with respect to the
financial condition of the Borrower or the performance or observance by the
Borrower of its obligations under this Agreement or any other instrument or
document furnished pursuant hereto, (iv) such Eligible Assignee confirms that it
has received a copy of this Agreement together with copies of the financial
statements and other documents referred to in Section 5.01(e), Section
6.01(a)(i), Section 6.01(a)(ii) and Section 6.01(a)(v) hereof and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment and Acceptance, (v) such
Eligible Assignee will, independently and without reliance upon the
Administrative Agent, such assignor Bank 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 action under this
Agreement, (vi) such Eligible Assignee appoints and authorizes the
Administrative Agent to take such action as Agent on its behalf and to exercise
such powers under this Agreement as are delegated to the Administrative Agent by
the terms hereof, together with such powers as are reasonably incidental
thereto, (vii) such Eligible Assignee agrees that it will perform all of the
obligations, in accordance with the terms thereof, of the assignor Bank under
this
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Agreement which are assumed by such Eligible Assignee under such Assignment and
Acceptance, and (viii) such Eligible Assignee confirms that it is an Eligible
Assignee.
(e) The Administrative Agent shall maintain at its address listed on
Schedule II hereto a copy of each Assignment and Acceptance delivered to it and
a register for the recordation of the names and addresses of the Banks and the
Commitment of, and principal amount of the Loans owing to, each Bank from time
to time (the "Register"). The entries in the Register shall be conclusive, in
the absence of manifest error, and the Borrower, the Administrative Agent and
the Banks may treat each person whose name is recorded in the Register as a Bank
hereunder for all purposes of this Agreement. The Register shall be available
for inspection by the Borrower or any Bank at any reasonable time and from time
to time upon reasonable prior notice.
(f) Upon its receipt of an Assignment and Acceptance executed by an
assigning Bank and an Eligible Assignee, together with the written consent of
the Borrower, BP Amoco p.l.c., Shell Oil Company and the Administrative Agent to
such assignment, the Administrative Agent shall, if such Assignment and
Acceptance has been completed and is precisely in the form of Exhibit C hereto
(or as agreed upon by the Borrower and the Administrative Agent), (i) accept
such Assignment and Acceptance, (ii) record the information contained therein in
the Register, (iii) give prompt notice thereof to the Borrower, and (iv) deliver
a copy of such Assignment and Acceptance to the Borrower.
(g) If, pursuant to this Section 10.06, any interest in this Agreement or
any Loan is transferred to any Participant (a "Transferee") which is organized
under the laws of any jurisdiction other than the United States or any state
thereof, the transferor Bank shall cause such Transferee, concurrently with the
effectiveness of such transfer, (i) to represent to the transferor Bank (for the
benefit of the transferor Bank, the Administrative Agent and the Borrower) that
under applicable law and treaties no taxes will be required to be withheld by
the Administrative Agent, the Borrower or the transferor Bank with respect to
any payments to be made to such Transferee in respect of the Loans, (ii) to
furnish to the transferor Bank in duplicate, for each taxable year of such
Transferee during which interest arising under or in connection with this
Agreement is received, and before payment by the Borrower of any such interest
during such year (or at any other time as required under United States income
tax law), a properly completed and executed copy of either Internal Revenue
Service Form W-8ECI or Internal Revenue Service Form W-8BEN or Internal Revenue
Service Form W-9 and any additional form (or such other form) as is necessary to
claim complete exemption from United States withholding taxes (wherein such
Transferee claims entitlement to complete exemption from United States
withholding taxes on all payments hereunder), (iii) to agree (for the benefit of
the transferor Bank, the Administrative Agent and the Borrower) to provide to
the transferor Bank a new Internal Revenue Service Form W-8ECI or Internal
Revenue Service Form W-8BEN or Internal Revenue Service Form W-9 and any such
additional form (or any successor form or forms) upon the expiration or
obsolescence of any previously delivered form and comparable statements in
accordance with applicable United States laws and regulations and amendments
duly executed and completed by such Transferee, and to comply from time to time
with all applicable United States laws and regulations with regard to such
withholding tax exemption, and (iv) to represent to the transferor Bank (for the
benefit of the transferor Bank, the Administrative Agent and the Borrower) that
the form or forms so filed will be true and complete.
<PAGE>
60
(h) Notwithstanding anything to the contrary contained herein, any Bank (a
"Granting Bank" may grant to a special purpose funding vehicle that is organized
under the laws of the United States or any state thereof (an "SPC"), identified
as such in writing from time to time by the Granting Bank to the Administrative
Agent and the Borrower, the option to provide to the Borrower all or any part of
any Loan that such Granting Bank would otherwise provide to the Borrower
pursuant to this Agreement; provided that (i) nothing herein shall constitute a
commitment by any SPC to make any Loan, (ii) if an SPC elects not to exercise
such option or otherwise fails to provide all or any part of such Loan on a
timely basis, the Granting Bank shall be obligated to make such Loan pursuant to
the terms hereof, (iii) the SPC and any SPC Supporting Financial Institution (as
hereinafter defined and, together with the SPC, herein referred to as the "SPC
Entities") shall be entitled to the benefit of the cost protection provisions
contained in Section 2.04, Section 2.08, and Section 3.04 hereof (provided that
no SPC Entity shall be entitled to receive any greater amount pursuant to such
provisions than the Granting Bank would have been entitled to receive in respect
of the amount of the Loans funded by such SPC had the Granting Bank instead
funded such Loans) and the cost protection provisions of Section 2.08 hereof
shall be applied by assuming that such Granting Bank did not permit the SPC to
make such Loans, (iv) the Borrower, the Administrative Agent and the other Banks
shall continue to deal solely and directly with such Granting Bank in connection
with such Granting Bank's rights and obligations under this Agreement and in
connection with the cost protection provisions of this Agreement to which any
SPC Entity is entitled pursuant to this Section 10.06(h), (v) such Granting Bank
shall retain the sole right and responsibility to enforce the obligations of the
Borrower relating to the Loans and (vi) such Granting Bank shall not, except
with respect only to changes in the amount of the Commitment of such Bank, or
the principal amount of its Loans outstanding or the Interest Rate or Interest
Period with respect thereto, or the amount of any fees payable to it hereunder
or extension of the Maturity Date, enter into any agreement with any SPC Entity
that would require the consent of such SPC Entity with respect to the exercise
by such Granting Bank of its voting rights under this Agreement. The making of a
Loan by an SPC hereunder shall utilize the Commitment of the Granting Bank to
the same extent, and as if, such Loan were made by such Granting Bank. Each
party hereto hereby agrees that no SPC shall be liable for any indemnity or
similar payment obligation under this Agreement (all liability for which shall
remain with the Granting Bank). In furtherance of the foregoing, each party
hereto hereby agrees (which agreement shall survive the termination of this
Agreement) that, prior to the date that is one year and one day after the
payment in full of all outstanding commercial paper or other senior indebtedness
of any SPC, it will not institute against, or join any other person in
instituting against, such SPC any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings under the laws of the United States or any
State thereof. In addition, notwithstanding anything to the contrary in this
Section 10.04, any SPC may (i) with notice to the Borrower and the
Administrative Agent, assign (which assignment shall not require the consent of
the Borrower or the Administrative Agent) all or a portion of its interests in
any Loans to the Granting Bank or to any financial institutions (such financial
institutions herein referred to as the "SPC Supporting Financial Institutions")
providing liquidity and/or credit support to or for the account of such SPC to
support the funding or maintenance of Loans (without paying any processing fee
therefor to the extent any such assignment merely creates a security interest in
the interests of the SPC) and (ii) disclose on a confidential basis any
Confidential Information relating to its Loans to any rating agency, commercial
paper dealer or provider of any surety, guarantee or credit or liquidity
enhancement to such SPC; provided, however, that Confidential Information
<PAGE>
61
disclosed pursuant to this clause (ii) shall be so disclosed subject to such
procedures as are reasonably calculated to maintain the confidentiality thereof.
As this Section applies to any particular SPC, this section may not be amended
without the written consent of such SPC.
SECTION 10.07. Indemnification. In consideration of the execution and
delivery of this Agreement by the Banks and the agreement to extend and maintain
the credit provided hereunder, the Borrower hereby agrees to indemnify,
exonerate and hold each of the Banks, the Administrative Agent, and each of the
officers, directors, employees and agents of each of the Banks, the
Administrative Agent, and each Person, if any, who controls any such Bank or the
Administrative Agent, or any such officer, director, employee or agent, within
the meaning of the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended (herein collectively called the "Indemnitees"
and individually called an "Indemnitee"), free and harmless from and against any
and all actions, claims, causes of action, suits, losses, liabilities, damages
and expenses, including without limitation, reasonable attorneys' fees and
disbursements (herein collectively called the "Indemnified Liabilities"), which
may be incurred by or asserted against the Indemnitees or any Indemnitee as a
result of, or arising out of, or relating to, or in connection with, any
investigation, litigation or proceeding related to (i) any use made or proposed
to be made by the Borrower of the proceeds of any Loan, (ii) the consummation of
the transactions contemplated by any such use or proposed use, (iii) any untrue
statement or alleged untrue statement of any material fact made by the Borrower
in connection therewith, or (iv) the omission or alleged omission by the
Borrower to state in connection therewith a material fact required to be so
stated or necessary to make the statements made, in light of the circumstances
under which they were made, not misleading, whether or not any such Indemnitee
is a party thereto, and, to the extent that the foregoing undertaking may be
unenforceable for any reason, the Borrower hereby agrees to make the maximum
contribution to the payment and satisfaction of each of the Indemnified
Liabilities which is permissible under applicable law; provided, however, that
there shall be no right to indemnification or contribution under this Section
10.07 (a) for Indemnified Liabilities based upon or arising out of actions or
omissions by any Bank in a capacity other than that of a lender to the Borrower
or by the Administrative Agent in its capacity other than that as agent for the
Banks hereunder and (b) other than in respect of Indemnified Liabilities arising
from or to third parties, for Indemnified Liabilities based upon or arising out
of (i) the inaccuracy or incompleteness of any factual information furnished by
or on behalf of the Borrower not involving the failure to disclose events or
circumstances that could reasonably be expected to result in a material adverse
change in the consolidated financial condition, business or operations of the
Borrower or (ii) financial projections and estimates of oil and gas reserves
furnished by or on behalf of the Borrower to the extent that such projections or
estimates were prepared in good faith based on assumptions believed to be
reasonable at the time of such preparation. Each Indemnitee will use its best
efforts to promptly notify the Borrower of each event of which it has knowledge
which may give rise to a claim under the indemnification provisions of this
Section 10.07. If any action, suit or proceeding arising from any of the
foregoing is brought against the Administrative Agent, any Bank or any other
Person indemnified or intended to be indemnified pursuant to this Section 10.07,
the Borrower, to the extent and in the manner directed by the Person or Persons
indemnified or intended to be indemnified, will resist and defend such action,
suit or proceeding or cause the same to be resisted and defended by counsel
designated by the Borrower (which counsel shall be reasonably satisfactory to
the Person
<PAGE>
62
or Persons indemnified or intended to be indemnified). Each Indemnitee will use
its best efforts to cooperate in the defense of any such action, suit or
proceeding. If the Borrower shall fail to do any act or thing which it has
covenanted to do hereunder or any representation or warranty on the part of the
Borrower contained herein shall be breached, the Administrative Agent may (but
shall not be obligated to) do the same or cause it to be done or remedy any such
breach, and may expend its funds for such purpose. Any and all amounts so
expended by the Administrative Agent shall be repayable to it by the Borrower
immediately upon the Administrative Agent's demand therefor, with interest at a
rate per annum (computed on the basis of a year consisting of 365 or, when
appropriate, 366 days) equal to the sum of (i) the Alternate Base Rate in effect
from time to time during the period from and including the date so expended by
the Administrative Agent to the date of repayment, plus (ii) two percent (2%)
per annum. The Borrower shall have no obligation to any Indemnitee under this
Section 10.07 to the extent that Indemnified Liabilities result from gross
negligence or wilful misconduct on the part of such Indemnitee. The obligations
of the Borrower under this Section 10.07 shall survive the termination of this
Agreement and the discharge of the Borrower's other obligations hereunder. The
obligations of each Bank (and of each other Indemnitee with respect to such
Bank) under this Section 10.07 shall survive the termination of this Agreement
or, if earlier, the termination of the Commitment of such Bank.
SECTION 10.08. Reference Banks. Each Reference Bank agrees to use its best
efforts to furnish quotations to the Administrative Agent as contemplated hereby
by 10:30 a.m., New York City time, on the day such quotations are required to be
furnished hereunder. If any Reference Bank does not furnish a timely quotation,
the Administrative Agent shall determine the relevant Eurodollar Rate on the
basis of the quotations, if any, furnished by the remaining Reference Banks and,
in the event that all Reference Banks fail to so furnish a quotation, on the
basis of such other information as the Administrative Agent in its sole
discretion shall deem appropriate. If any Reference Bank assigns its Loans to an
unaffiliated institution, the Administrative Agent shall, in consultation with
the Borrower, and with the consent of the Required Banks, appoint another Bank
to act as a Reference Bank hereunder. If the Borrower is entitled to replace any
Bank (which is also a Reference Bank) as provided in Section 2.04(e), Section
2.08(c), Section 2.09 or Section 4.03(b) hereof, the Borrower may, in
consultation with the Administrative Agent, and with the consent of the Required
Banks, appoint a replacement Reference Bank.
SECTION 10.09. Headings. Article and Section headings used in this
Agreement are for convenience of reference only and shall not affect the
construction of this Agreement.
SECTION 10.10. Circumstances Requiring Consultation. In the event that (i)
additional amounts have become payable to an Affected Bank as a result of the
occurrence of circumstances referred to in Section 2.04 hereof, (ii) any
Affected Bank shall have made a determination pursuant to Section 4.03(a)
hereof, or (iii) additional amounts have become payable to any Bank or any
Participant pursuant to Section 2.08 hereof, then, and in any such event, such
Affected Bank, Bank or Participant, as the case may be, shall promptly consult
with the Administrative Agent and the Borrower in order to endeavor, and such
Affected Bank, Bank or Participant, as the case may be, shall use its best
efforts, to take such action as, in the good faith judgment of such Affected
Bank, Bank or Participant, is then reasonable and practicable under the
circumstances (including, without limitation, changing the location of its
lending office or participating
<PAGE>
63
office, as the case may be, in order to move the situs of such Affected Bank's
or Bank's Loans or such Participant's participation to another jurisdiction, if
possible without material liability, cost or expense to such Affected Bank, Bank
or Participant and without material reduction to such Affected Bank or Bank of
any amount otherwise receivable by such Affected Bank or Bank under this
Agreement or receivable by such Participant under its participation) to mitigate
or eliminate the effect of such event. In addition, in the event that (i) any
Bank or Participant shall, as a result of reserves maintained by such Bank or
Participant with any Federal Reserve Bank of the United States in connection
with any of the Loans or participations, be entitled to receive, and receive,
amounts from such Federal Reserve Bank (in the form of interest or otherwise) in
respect of such reserves, or (ii) any Bank or Participant shall receive any
similar (or other) benefit as a result of actions taken by such Bank or
Participant with respect to any Capital Adequacy Rule, then, and in any such
event, such Bank or Participant shall promptly consult with the Administrative
Agent and the Borrower in order to endeavor, and such Bank or Participant shall
use its best efforts, to take such action as, in the good faith judgment of such
Bank or Participant, is then reasonable and practicable under the circumstances
to give the benefit of such amounts or benefits to the Borrower.
SECTION 10.11. Execution in Counterparts. This Agreement may be executed in
any number of counterparts and by different parties hereto on separate
counterparts, each of which counterparts, when so executed and delivered, shall
be deemed to be an original and all of which counterparts, taken together, shall
constitute but one and the same Agreement.
SECTION 10.12. GOVERNING LAW. THIS AGREEMENT SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER THE LAWS OF THE STATE OF NEW YORK, AND FOR ALL PURPOSES
SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF SAID STATE WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW.
SECTION 10.13. CONSENT TO JURISDICTION AND SERVICE OF PROCESS; WAIVER OF
JURY TRIAL. ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST THE BORROWER WITH RESPECT
TO THIS AGREEMENT MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN THE CITY OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, THE BORROWER ACCEPTS, FOR ITSELF AND IN CONNECTION WITH ITS
PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE
AFORESAID COURTS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY FINAL JUDGMENT
RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT FROM WHICH NO APPEAL HAS BEEN
TAKEN OR IS AVAILABLE. THE BORROWER IRREVOCABLY AGREES THAT ALL PROCESS IN ANY
SUCH PROCEEDINGS IN ANY SUCH COURT MAY BE EFFECTED BY MAILING A COPY THEREOF BY
REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL),
POSTAGE PREPAID, TO IT AT ITS ADDRESS SET FORTH ON SCHEDULE II HERETO OR AT SUCH
OTHER ADDRESS OF WHICH THE ADMINISTRATIVE AGENT SHALL HAVE BEEN NOTIFIED
PURSUANT HERETO, SUCH SERVICE BEING HEREBY ACKNOWLEDGED BY THE BORROWER TO BE
EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT. EACH OF THE BORROWER, THE
<PAGE>
64
ADMINISTRATIVE AGENT AND THE BANKS IRREVOCABLY WAIVES, TO THE EXTENT PERMITTED
BY APPLICABLE LAW, TRIAL BY JURY AND ANY OBJECTION, INCLUDING, WITHOUT
LIMITATION, ANY OBJECTION OF THE LAYING OF VENUE OR BASED ON THE GROUNDS OF
FORUM NON CONVENIENS WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY
SUCH ACTION OR PROCEEDING IN ANY SUCH JURISDICTION. NOTHING HEREIN SHALL AFFECT
THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW OR
LIMIT THE RIGHT OF ANY BANK TO BRING PROCEEDINGS AGAINST THE BORROWER IN THE
COURT OF ANY OTHER COMPETENT JURISDICTION.
SECTION 10.14. Severability of Provisions. Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
SECTION 10.15. Maximum Interest. Nothing contained in this Agreement shall
be deemed to establish or require the payment of interest at a rate in excess of
the maximum rate permitted by applicable law. In the event that the rate of
interest required to be paid to any of the Banks under this Agreement exceeds
the maximum rate permitted by applicable law, the rate of interest required to
be paid to such Banks hereunder shall be automatically reduced to the maximum
rate permitted by applicable law.
SECTION 10.16. Limitation on Recourse. Notwithstanding anything to the
contrary contained in this Agreement or in any document executed in connection
herewith, none of the Partners (in their capacities as such) or their respective
Affiliates, or the respective properties of the Partners and their Affiliates,
shall be liable for the payment or reimbursement of any obligations under this
Agreement (including, without limitation, the Loans and interest thereon), and
neither shall such Partners or such Affiliates (or any of the respective
properties of such Partners or such Affiliates) be liable for damages resulting
from any Event of Default or Unmatured Event of Default or any breach of any
warranty, representation, covenant or agreement contained in or arising under
this Agreement or any document executed in connection herewith, provided,
however, that (a) the foregoing provisions shall not apply to the Borrower and
its Subsidiaries or any properties of the Borrower and its Subsidiaries, and (b)
the provisions of this Section 10.16 shall not reduce or limit the obligations
of any Partner or Affiliate of a Partner under any agreement or instrument
executed and delivered by it (including, without limitation, any agreement or
instrument attached as an exhibit hereto).
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized,
as of the date first above written.
<PAGE>
OCCIDENTAL PERMIAN, LTD.,
By OCCIDENTAL PERMIAN MANAGER LLC, its
General Partner,
By OXY USA INC., its Class A Member and
Manager,
by /s/ J.R. Havert
-----------------------------------
Name: J.R. Havert
Title: Vice President and Treasurer
<PAGE>
THE CHASE MANHATTAN BANK, as
Administrative Agent,
by /s/ Steven Wood
-------------------------------------
Name: Steven Wood
Title: Vice President
<PAGE>
THE BANK OF NOVA SCOTIA, in its
individual capacity and as
Administrative Agent,
by /s/ M. Van Otterloo
-------------------------------------
Name: M. Van Otterloo
Title: Managing Director, Corporate
<PAGE>
CHASE BANK OF TEXAS, N.A.,
by /s/ Beth Lawrence
-------------------------------------
Name: Beth Lawrence
Title: Managing Director
<PAGE>
BANK OF AMERICA, N.A.,
by /s/ Claire M. Liu
-------------------------------------
Name: Claire M. Liu
Title: Managing Director
<PAGE>
MORGAN GUARANTY TRUST COMPANY OF NEW
YORK,
by /s/ Robert Bottamed
-------------------------------------
Name: Robert Bottamed
Title: Vice Presdient
<PAGE>
UBS AG, STAMFORD BRANCH,
by /s/ Richard W. Fortney
-------------------------------------
Name: Richard W. Fortney
Title: Executive Director
by /s/ Dorothy McKinley
-------------------------------------
Name: Dorothy McKinley
Title: Director
Loan Portfolio Support, US
<PAGE>
ABN AMRO BANK N.V.,
by /s/ Paul K. Stimpfl
-------------------------------------
Name: Paul K. Stimpfl
Title: Group Vice President
by /s/ Mitsoo Iravani
-------------------------------------
Name: Mitsoo Iravani
Title: Assistant Vice President
<PAGE>
BANK ONE, NA,
by /s/ James P. Moore
-------------------------------------
Name: James P. Moore
Title: Senior Vice President
<PAGE>
BAYERISCHE LANDESBANK GIROZENTRALE,
by /s/ Alex Kohnert
-------------------------------------
Name: Alex Kohnert
Title: First Vice President
by /s/ James Boyle
-------------------------------------
Name: James Boyle
Title: Vice President
<PAGE>
COMMERZBANK AKTIENGESELLSCHAFT, NEW YORK
GRAND CAYMAN BRANCHES
by /s/ Christian Jagenberg
-------------------------------------
Name: Christian Jagenberg
Title: Senior Vice President &
Manager
by /s/ Andrew Lee
-------------------------------------
Name: Andrew Lee
Title: Assistant Treasurer
<PAGE>
CREDIT SUISSE FIRST BOSTON,
by /s/ James P. Moran
-------------------------------------
Name: James P. Moran
Title: Director
by /s/ William S. Lutkins
-------------------------------------
Name: William S. Lutkins
Title: Vice President
<PAGE>
THE DAI-ICHI KANGYO BANK, LTD.,
by /s/ Katsuya Noto
-------------------------------------
Name: Katsuya Noto
Title: Assistant Vice President
<PAGE>
BAYERISCHE HYPO-UND VEREINSBANK AG, NEW
YORK BRANCH,
by /s/ Yoram Dankner
-------------------------------------
Name: Yoram Dankner
Title: Managing Director
by /s/ Steven Atwell
-------------------------------------
Name: Steven Atwell
Title: Director
<PAGE>
THE INDUSTRIAL BANK OF JAPAN, LIMITED,
by /s/ Carl-Eroc Benzinger
-------------------------------------
Name: Carl-Eric Benzinger
Title: Senior Vice President &
Senior Deputy General Manager
<PAGE>
PARIBAS,
by /s/ Larry Robinson
-------------------------------------
Name: Larry Robinson
Title: Vice President
by /s/ Betsy Jocher
-------------------------------------
Name: Betsy Jocher
Title: Vice President
<PAGE>
CREDIT AGRICOLE INDOSUEZ,
by /s/ Michael R. Quiray
-------------------------------------
Name: Michael R. Quiray
Title: Vice President
Senior Relationship Manager
by /s/ Scott A. Schroeder
-------------------------------------
Name: Scott A. Schroeder
Title: Assistant Vice President
<PAGE>
FLEET NATIONAL BANK,
by /s/ Sarah P.Z. Dwyer
-------------------------------------
Name: Sarah P.Z. Dwyer
Title: Vice President
<PAGE>
KBC BANK,
by /s/ Robert Snauffer
-------------------------------------
Name: Robert Snauffer
Title: First Vice President
by /s/ Michael V. Curran
-------------------------------------
Name: Michael V. Curran
Title: Vice President
<PAGE>
SOCIETE GENERALE,
NEW YORK BRANCH,
by /s/ Bruce T. Spector
-------------------------------------
Name: Bruce T. Spector
Title: Director
<PAGE>
BANCA COMMERCIALE ITALIANA,
LOS ANGELES FOREIGN BRANCH,
by /s/ Edward Bermant
-------------------------------------
Name: Edward Bermant
Title: First Vice President & Deputy
Manager
by /s/ Charles Dougherty
-------------------------------------
Name: Charles Dougherty
Title: Vice President
<PAGE>
BANCA NAZIONALE DEL LAVORO SPA
NEW YORK BRANCH,
by /s/ Roberto Mancone
-------------------------------------
Name: Roberto Mancone
Title: Senior Loan Officer
by /s/ Leonardo Valentini
-------------------------------------
Name: Leonardo Valentini
Title: First Vice President
<PAGE>
THE BANK OF NEW YORK,
by /s/ Raymond J. Palmer
-------------------------------------
Name: Raymond J. Palmer
Title: Vice President
<PAGE>
Lloyds TSB Bank plc,
by /s/ Windsor R. Davies
-------------------------------------
Name: Windsor R. Davies
Title: Director, Corporate Banking,
USA
D061
by /s/ David Rodway
-------------------------------------
Name: David Rodway
Title: Assistant Director
R156
<PAGE>
TORONTO DOMINION (TEXAS), INC.,
by /s/ Sheila M. Conley
-------------------------------------
Name: Sheila M. Conley
Title: Vice President
<PAGE>
ARAB BANK PLC,
by /s/ Emmanuel Caravanos
-------------------------------------
Name: Emmanuel Caravanos
Title: Vice President
EXHIBIT 10.1
OCCIDENTAL PETROLEUM CORPORATION
1996 RESTRICTED STOCK PLAN FOR NON-EMPLOYEE DIRECTORS
(AS AMENDED APRIL 28, 2000)
1. Purpose. The purpose of the Occidental Petroleum Corporation 1996
Restricted Stock Plan for Non-Employee Directors (the "Plan") is to provide
ownership of Occidental Petroleum Corporation's ("Occidental") Common Stock to
non-employee directors in order to more closely align director and stockholder
interests, to provide a competitive compensation program for directors and to
enhance Occidental's ability to attract and retain top-quality directors.
2. Administration of the Plan.
(a) Members of the Committee. The Plan shall be administered by the
Compensation Committee of the Board (the "Committee"). Members of the Committee
shall be appointed from time to time by the Board and shall serve at the
pleasure of the Board. Any Committee member may resign at any time upon written
notice to the Board.
(b) Authority of the Committee. The Committee shall adopt such rules as
it may deem appropriate in order to carry out the purpose of the Plan. All
questions of interpretation, administration, and application of the Plan shall
be determined by a majority of the members of the Committee then in office,
except that the Committee may authorize any one or more of its members, or any
officer of Occidental, to execute and deliver documents on behalf of the
Committee. The determination of such majority shall be final and binding in all
matters relating to the Plan. Determinations made with respect to any individual
Non-Employee Director shall be made without participation by such Non-Employee
Director in such determination. No member of the Committee shall be liable for
any act done or omitted to be done by such member or by any other member of the
Committee in connection with the Plan, except for such member's own willful
misconduct or as expressly provided by statute.
3. Stock Reserved for the Plan. The number of shares of Common Stock
authorized for issuance under the Plan is 150,000, subject to adjustment
pursuant to Section 8 hereof. Shares of Common Stock delivered hereunder may be
Common Stock of original issuance or Common Stock held in treasury, or a
combination thereof.
4. Awards of Restricted Stock.
(a) Annual Awards. On the first business day following each annual
meeting commencing with the 1999 Annual Meeting, each Non-Employee Director who
is then a member of the Board shall be awarded two thousand five hundred (2,500)
whole shares of Restricted Stock.
(b) Special Awards. On the first business day following each annual
meeting, each Non-Employee Director who is then serving as a Chairman of one or
more committees of the Board or as Lead Independent Director shall be awarded
two hundred (200) whole shares of Restricted Stock with respect to each such
position, in addition to any Award he or she may be granted pursuant to Section
4(a) above.
(c) Interim Awards. If a Non-Employee Director is elected other than at
an annual meeting, then on the first business day following his or her election
as a member of the Board, such newly elected Non-Employee Director shall be
awarded the number of shares (rounded to the nearest whole share) of Restricted
Stock equal to two thousand five hundred (2,500) multiplied by a fraction, the
numerator of which is the number of regularly scheduled Board meetings remaining
between the date of his or her election and the next annual meeting and the
denominator of which is the number of regularly scheduled Board meetings between
the most recent annual meeting and the next annual meeting.
(d) Effectiveness of Awards. Notwithstanding anything in this Plan to
the contrary, no Award made pursuant to the Plan or any amendment to the Plan
shall be effective prior to the requisite approval of the Plan or such amendment
by the stockholders of Occidental. In the event requisite stockholder approval
is not obtained, the Plan, and any Award thereunder, shall be null and void.
<PAGE>
5. Terms and Conditions of Awards. Restricted Stock awarded to a
Non-Employee Director under the Plan shall be subject to the following
restrictions:
(a) During the period of the Director's service as a member of the
Board (the "Restriction Period"), any shares of Common Stock awarded under the
Plan shall not be sold, assigned, pledged, hypothecated or otherwise transferred
or encumbered. During the Restriction Period, the certificate representing such
shares of Common Stock shall contain a statement referring to the restrictions
contained in this Section 5(a) and such certificate shall be held by the
Company. Except as provided in Section 9, as soon as practicable after the lapse
of restrictions applicable to Restricted Stock, all shares of Restricted Stock
held by the Company for the benefit of a Non-Employee Director shall be given to
such Non-Employee Director, free and clear of any restrictions applicable
thereto during the Restriction Period.
(b) Whenever cash dividends are paid by Occidental on outstanding
Common Stock, each Non-Employee Director will receive in cash all dividends paid
on the Restricted Stock then held by the Company for the benefit of such
Non-Employee Director on the record date for the dividend. Common Stock
distributed in connection with a stock split or stock dividend, and other
property distributed as a dividend, shall be subject to restrictions to the same
extent as the Restricted Stock with respect to which such Common Stock or other
property has been distributed.
(c) Each Non-Employee Director hereunder may designate from time to
time any beneficiary or beneficiaries (who may be designated concurrently,
contingently or successively) to whom any shares of Restricted Stock and any
cash amounts are to be paid in case of the Non-Employee Director's death before
receipt of any part or all of such Restricted Stock and cash. Each designation
will revoke all prior designations by the Non-Employee Director, shall be in a
form prescribed by the Committee, and will be effective only when filed by the
Non-Employee Director, in writing, with the Secretary of Occidental. Reference
in the Plan to a Non-Employee Director's "beneficiary" at any date shall include
such persons designated as concurrent beneficiaries on the Non-Employee
Director's beneficiary designation form then in effect. In the absence of any
such designation, any shares of Restricted Stock being held by the Company for
the benefit of such Non-Employee Director at the time of his or her death may,
in the sole discretion of the Committee, be paid to such Non-Employee Director's
estate in a cash lump sum.
6. Foreign Participants. In order to facilitate the making of an Award,
the Board may provide for such special terms for Awards to Non-Employee
Directors who are foreign nationals, as the Board may consider necessary or
appropriate to accommodate differences in local law, tax policy or custom.
Moreover, the Board may approve such supplements to, or amendments, restatements
or alternative versions of, the Plan as it may consider necessary or appropriate
for such purposes without thereby affecting the terms of the Plan as in effect
for any other purpose, and the Secretary or other appropriate officer of
Occidental may certify any such document as having been approved and adopted in
the same manner as the Plan; provided that, no such supplements, amendments,
restatements or alternative versions shall include any provisions that are
inconsistent with the terms of the Plan, as then in effect, unless the Plan
could have been amended to eliminate the inconsistency without further approval
by the stockholders of Occidental.
7. Change in Control. Upon the occurrence of a Change in Control, all
restrictions affecting Restricted Shares shall lapse and such shares shall be
delivered to each Non-Employee Director as soon as practicable thereafter;
provided that, the Committee may, in its sole discretion authorize the payment
of cash, in lieu of the issuance of such shares.
8. Adjustments. The Board may make or provide for such adjustments in the
number of shares of Restricted Stock awarded under the Plan, as the Board may in
good faith determine to be required in order to prevent dilution or expansion of
the rights of Non-Employee Directors that otherwise would result from (i) any
stock dividend, stock split, combination of shares recapitalization or other
change in the capital structure of the Company or (ii) any merger,
consolidation, spin-off, spin-out, split-off, split-up, reorganization, partial
or complete liquidation or other distribution of assets, issuance of warrants or
other rights to purchase securities or any other corporate transaction or event
having an effect similar to any of the foregoing. In the event of any such
transaction or event, the Board may provide in substitution for any or all
outstanding Restricted Stock Awards under the Plan such alternative
consideration as it may in good
2
<PAGE>
faith determine to be appropriate under the circumstances and may require the
surrender of all Awards so replaced. Moreover, the Board may, on or after the
date of any Award, provide in the agreement evidencing such Award that the
Non-Employee Director may elect to receive an equivalent Award in respect of
securities of the surviving entity of any merger, consolidation or other
transaction or event having similar effect, or the Board may provide that the
Non-Employee Director will automatically be entitled to receive such an
equivalent Award. The Board may also provide for such adjustments in the maximum
number of shares of Common Stock specified in Section 3 as the Board, in good
faith, determines to be appropriate in order to reflect any transaction or event
described in this Section 8.
9. Withholding. Occidental shall defer making payments or deliveries under
the Plan until satisfactory arrangements have been made for the payment of any
federal, state, local or foreign taxes (whether or not required to be withheld)
with respect to such payment or delivery. At the discretion of the Committee,
any such arrangements may without limitation include relinquishment of a portion
of any such payment or benefit or the surrender of outstanding Common Stock, and
any agreement pertaining to an Award may make such relinquishment the mandatory
form of satisfying such taxes. The Committee may also make similar arrangements
with respect to the payment of any taxes with respect to which withholding is
not required.
10. Rights of Non-Employee Directors.
(a) Retention as Non-Employee Director. Nothing contained in the Plan
or with respect to any Award shall interfere with or limit in any way the right
of the stockholders of Occidental to remove any Non-Employee Director from the
Board, nor confer upon any Non-Employee Director any right to continue in the
service of Occidental as a Non-Employee Director.
(b) Nontransferability. No right or interest of any Non-Employee
Director in any Award shall be assignable or transferable during the lifetime of
the Non-Employee Director, either voluntarily or involuntarily, or subjected to
any lien, directly or indirectly, by operation of law, or otherwise, including
execution, levy, garnishment, attachment, pledge or bankruptcy. In the event of
a Non-Employee Director's death, a Non-Employee Director's rights and interests
in his or her Award shall be transferable by testamentary will or the laws of
descent and distribution. If in the opinion of the Committee a person entitled
to payments or to exercise rights with respect to the Plan is disabled from
caring for his or her affairs because of mental condition, physical condition or
age, payment due such person may be made to, and such rights shall be exercised
by, such person's guardian, conservator or other legal personal representative
upon furnishing the Committee with evidence satisfactory to the Committee of
such status.
(c) Except to the extent restricted under the terms of an agreement
evidencing a grant of Restricted Stock, a Non-Employee Director awarded such
stock shall have all of the rights of a stockholder, including, without
limitation, the right to vote Restricted Stock and the right to receive
dividends thereon.
11. Amendment; Termination. The Board may at any time and from time to time
alter, amend, suspend or terminate the Plan in whole or in part; provided that,
no amendment which requires stockholder approval shall be effective unless the
same shall be approved by the stockholders of Occidental entitled to vote
thereon. Notwithstanding the foregoing, no amendment shall affect adversely any
of the rights of any Non-Employee Director, without such Non-Employee Director's
consent.
12. General Restrictions.
(a) Regulations and Offer Approvals. The obligation of Occidental to
deliver Common Stock with respect to any Award under the Plan shall be subject
to all applicable laws, rules and regulations, including all applicable federal
and state securities laws, and the obtaining of all such approvals by
governmental agencies as may be deemed necessary or appropriate by the
Committee.
(b) Each Award granted under the Plan is subject to the requirement
that, if at any time the Committee determines, in its absolute discretion, that
the listing, registration or qualification of Common Stock issuable pursuant to
the Plan is required by any securities exchange or under any state or federal
law, or the consent or approval of any governmental regulatory body is necessary
or desirable as a condition of,
3
<PAGE>
or in connection with, such Award or the issuance of Common Stock, no such Award
or payment shall be made or Common Stock issued, in whole or in part, unless
listing, registration, qualification, consent or approval has been effected or
obtained free of any conditions not acceptable to the Committee. Nothing herein
shall be deemed to require Occidental to apply for or to obtain such listing,
registration or qualification.
(c) In the event that the disposition of Common Stock acquired pursuant
to the Plan is not covered by a then current registration statement under the
Securities Act and is not otherwise exempt from such registration, such Common
Stock shall be restricted against transfer to the extent required by the
Securities Act or regulations thereunder, and Occidental may require any
Non-Employee Director to whom Common Stock is granted, as a condition of
receiving such Common Stock, to give written assurances in substance and form
satisfactory to Occidental and its counsel to the effect that such person is
acquiring the Common Stock for his or her own account and not with any present
intention of selling or otherwise distributing the same, and to such other
effects as Occidental deems necessary or appropriate in order to comply with
federal and applicable state securities laws.
13. Governing Law. The Plan and all rights hereunder shall be construed in
accordance with and governed by the laws of the State of Delaware.
14. Plan Interpretation. The Plan is intended to comply with Rule 16b-3 and
shall be construed to so comply.
15. Headings. The headings of sections and subsections herein are included
solely for convenience of reference and shall not affect the meaning of any of
the provisions of the Plan.
16. Term of Plan. This Plan shall become effective on the Effective Date,
and shall remain in effect for ten (10) years from such date, unless sooner
terminated by the Board.
17. Definitions. For purposes of the Plan, the following terms shall have
the following meanings:
(a) "Award" means any award of Restricted Stock under the Plan.
(b) "Board" means the Board of Directors of Occidental.
(c) "Change in Control" means a change in control of Occidental, which
shall be deemed to have occurred if:
(i) any "person," as such term is used in Sections 13(d) and 14(d)
of the Exchange Act (other than the Company, any trustee or other fiduciary
holding securities under an employee benefit plan of Occidental or any company
owned, directly or indirectly, by the stockholders of Occidental in
substantially the same proportions as their ownership of the Common Stock of
Occidental), is or becomes, after the Effective Date of the Plan, the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of Occidental (not including in the securities
beneficially owned by such person any securities acquired directly from
Occidental or its affiliates) representing 50 percent (50%) or more of the
combined voting power of Occidental's then-outstanding securities; or
(ii) during any period of two consecutive years (not including any
period prior to the Effective Date), individuals who at the beginning of such
period constitute the Board, and any new director (other than a director
designated by a person who has entered into an agreement with Occidental to
effect a transaction described in clause (i), (iii), or (iv) of this definition)
whose election by the Board or nomination for election by Occidental's
stockholders was approved by a vote of at least two thirds (2/3) of the
directors then still in office who either were directors at the beginning of
such period or whose election or nomination for election was previously so
approved, cease for any reason to constitute at least a majority of the Board;
or
(iii) the stockholders of Occidental approve a merger or
consolidation of Occidental with any other corporation, other than (A) a merger
or consolidation which would result in the voting
4
<PAGE>
securities of Occidental outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity), in combination with the ownership of any
trustee or other fiduciary holding securities under any employee benefit plan of
Occidental, at least 50 percent of the combined voting power of the voting
securities of Occidental or such surviving entity outstanding immediately after
such merger or consolidation or (B) a merger or consolidation effected to
implement a recapitalization of Occidental (or similar transaction) in which no
person acquires more than 50 percent (50%) of the combined voting power of
Occidental's then-outstanding securities; or
(iv) the stockholders of Occidental approve a plan of complete
liquidation of Occidental or an agreement for the sale or disposition of all or
substantially all of Occidental's assets; provided that, prior to the occurrence
of any of the events described in clauses (i) through (iii) above, the Board may
determine that such an event shall not constitute a Change of Control for
purposes of the Plan.
(d) "Code" means the Internal Revenue Code of 1986, as amended from
time to time, or any successor thereto.
(e) "Common Stock" means shares of the common stock, par value $.20 per
share, of Occidental.
(f) "Company" means Occidental Petroleum Corporation and its
subsidiaries, collectively.
(g) "Effective Date" means April 26, 1996 or the date of approval of
the Plan by the stockholders of Occidental, whichever comes first.
(h) "Exchange Act" means the Securities Exchange Act of 1934, as now or
hereafter construed, interpreted and applied by regulations, rulings and cases.
(i) "Fair Market Value" means the per share fair market value of Common
Stock as determined by such methods or procedures as shall be established from
time to time by the Committee. Unless otherwise determined by the Committee in
good faith, the per share Fair Market Value of Common Stock as of a particular
date shall mean (i) the closing sales price per share of Common Stock on the
national securities exchange on which the Common Stock is principally traded,
for the last preceding date on which there was a sale of such Common Stock on
such exchange, or (ii) if the shares of Common Stock are then traded in an
over-the-counter market, the average of the closing bid and asked prices for the
shares of Common Stock in such over-the-counter market for the last preceding
date on which there was a sale of such Common Stock in such market, or (iii) if
the shares of Common Stock are not then listed on a national securities exchange
or traded in an over-the-counter market, such value as the Committee, in its
sole discretion, shall determine.
(j) "Non-Employee Director" means a member of the Board who is neither
an officer nor employee of the Company.
(k) "Plan" means this Occidental Petroleum Corporation 1996 Restricted
Stock Plan For Non-Employee Directors.
(l) "Restriction Period" means, in respect of Restricted Stock, the
period referenced in Section 5(a).
(m) "Restricted Stock" means a grant of shares of Common Stock, which
shares are subject to the restrictions on transfer described in Section 5(a).
(n) "Rule 16b-3" means Rule 16b-3, as promulgated and amended from
time to time by the Securities and Exchange Commission under the Exchange Act,
or any successor rule to the same effect.
5
EXHIBIT 11
OCCIDENTAL PETROLEUM CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(Amounts in thousands, except per-share amounts)
<TABLE>
<CAPTION>
Three Months Ended
March 31
-----------------------------
2000 1999
- --------------------------------------------------------------------------------- ----------- ------------
<S> <C> <C>
BASIC EARNINGS PER SHARE
Income (loss) $ 271,001 $ (56,400)
Effect of repurchase of Trust Preferred Securities 611 --
Preferred stock dividends -- (3,639)
----------- ------------
Earnings (loss) before effect of changes in accounting principles 271,612 (60,039)
Cumulative effect of changes in accounting principles, net -- (13,368)
----------- ------------
Earnings (loss) applicable to common stock $ 271,612 $ (73,407)
=========== ============
Weighted average common shares outstanding 368,125 347,839
=========== ============
Basic earnings per share
Income (loss) before effect of changes in accounting principles $ .74 $ (.17)
Cumulative effect of changes in accounting principles, net -- (.04)
----------- ------------
Basic earnings (loss) per common share $ .74 $ (.21)
=========== ============
DILUTED EARNINGS PER SHARE
Earnings (loss) from continuing operations applicable to common stock $ 271,612 $ (60,039)
Cumulative effect of changes in accounting principles, net -- (13,368)
----------- ------------
Earnings (loss) applicable to common stock $ 271,612 $ (73,407)
=========== ============
Weighted average common shares outstanding 368,125 347,839
Dilutive effect of exercise of options outstanding 111 --
----------- ------------
368,236 347,839
=========== ============
Diluted earnings per share
Income (loss) before effect of changes in accounting principles $ .74 $ (.17)
Cumulative effect of changes in accounting principles, net -- (.04)
----------- ------------
Diluted earnings (loss) per common share $ .74 $ (.21)
================================================================================= =========== ============
</TABLE>
The following items were not included in the computation of diluted earnings per
share because their effect was antidilutive (in thousands, except per-share
amounts):
<TABLE>
<CAPTION>
Three Months Ended March 31, 2000 1999
- ------------------------------------------------------ ------------------ ------------------
<S> <C> <C>
STOCK OPTIONS
Number of shares 4,969 4,404
Price range per share $19.875 -- $29.438 $17.750 -- $29.625
Expiration range 8/18/00 -- 7/8/08 8/20/99 -- 1/2/08
CONVERTIBLE PREFERRED STOCK $3.00
Number of shares -- 11,946
Dividends paid -- $3,639
- ------------------------------------------------------ ------------------ ---------------
</TABLE>
EXHIBIT 12
OCCIDENTAL PETROLEUM CORPORATION AND SUBSIDIARIES
COMPUTATION OF TOTAL ENTERPRISE RATIOS OF EARNINGS TO FIXED CHARGES
(Amounts in millions, except ratios)
<TABLE>
<CAPTION>
Three Months Ended
March 31 Year Ended December 31
--------------------- ---------------------------------------------------------
2000 1999 1999 1998 1997 1996 1995
- -------------------------------------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Income (loss) from continuing
operations(a) $ 276 $ (20) $ 699 $ 400 $ 245 $ 486 $ 325
--------- --------- --------- --------- --------- --------- ---------
Add:
Provision (credit) for taxes on
income (other than foreign
and gas taxes) 183 1 306 204 47 99 155
Interest and debt expense(b) 110 130 515 576 446 492 591
Portion of lease rentals
representative of the interest
factor 2 9 31 36 39 38 43
--------- --------- --------- --------- --------- --------- ---------
295 140 852 816 532 629 789
--------- --------- --------- --------- --------- --------- ---------
Earnings (loss) before fixed charges $ 571 $ 120 $ 1,551 $ 1,216 $ 777 $ 1,115 $ 1,114
========= ========= ========= ========= ========= ========= =========
Fixed charges
Interest and debt expense
including capitalized
interest(b) $ 110 $ 134 $ 522 $ 594 $ 462 $ 499 $ 595
Portion of lease rentals
representative of the interest
factor 2 9 31 36 39 38 43
--------- --------- --------- --------- --------- --------- ---------
Total fixed charges $ 112 $ 143 $ 553 $ 630 $ 501 $ 537 $ 638
========= ========= ========= ========= ========= ========= =========
Ratio of earnings to fixed charges 5.10 n/a(c) 2.80 1.93 1.55 2.08 1.75(c)
- -------------------------------------- ========= ========= ========= ========= ========= ========= =========
</TABLE>
(a) Includes (1) minority interest in net income of majority-owned subsidiaries
having fixed charges and (2) income from less-than-50-percent-owned equity
investments adjusted to reflect only dividends received.
(b) Includes proportionate share of interest and debt expense of
50-percent-owned equity investments.
(c) Not computed due to less than one-to-one coverage. Earnings were inadequate
to cover fixed charges by $23 million for the three months ended March 31,
1999.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIOD ENDED MARCH 31, 2000,
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 128
<SECURITIES> 0
<RECEIVABLES> 567
<ALLOWANCES> 24
<INVENTORY> 486
<CURRENT-ASSETS> 1,547
<PP&E> 17,809
<DEPRECIATION> 7,856
<TOTAL-ASSETS> 14,343
<CURRENT-LIABILITIES> 1,846
<BONDS> 4,539
0
0
<COMMON> 74
<OTHER-SE> 3,648
<TOTAL-LIABILITY-AND-EQUITY> 14,343
<SALES> 2,508
<TOTAL-REVENUES> 2,582
<CGS> 1,721
<TOTAL-COSTS> 1,721
<OTHER-EXPENSES> 6
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 104
<INCOME-PRETAX> 534
<INCOME-TAX> 296
<INCOME-CONTINUING> 271
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 271
<EPS-BASIC> 0.74
<EPS-DILUTED> 0.74
</TABLE>
