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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 1-9971
BURLINGTON RESOURCES INC.
5051 WESTHEIMER, SUITE 1400, HOUSTON, TEXAS 77056
TELEPHONE: (713) 624-9500
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INCORPORATED IN THE STATE OF DELAWARE EMPLOYER IDENTIFICATION NO. 91-1413284
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SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
COMMON STOCK, PAR VALUE $.01 PER SHARE
PREFERRED STOCK PURCHASE RIGHTS
THE ABOVE SECURITIES ARE REGISTERED ON THE NEW YORK STOCK EXCHANGE.
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE
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 by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
State the aggregate market value of the voting stock held by non-affiliates
of the registrant: Common Stock aggregate market value as of December 31, 1998:
$6,352,244,802
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date. Class: Common Stock,
par value $.01 per share, on December 31, 1998, Shares Outstanding: 177,375,073
DOCUMENTS INCORPORATED BY REFERENCE
List hereunder the following documents if incorporated by reference and the
Part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is
incorporated:
Burlington Resources Inc. 1998 Annual Report to stockholders, which is
incorporated by reference into Part I and Part II of this Form 10-K.
Burlington Resources Inc. definitive proxy statement, to be filed not later
than 120 days after the end of the fiscal year covered by this report, is
incorporated by reference into Part III.
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BURLINGTON RESOURCES INC.
TABLE OF CONTENTS
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PART I
Items One and Two
Business and Properties................................ 1
Employees.............................................. 2
Item Three
Legal Proceedings...................................... 2
Item Four
Submission of Matters to a Vote of Security Holders.... 4
PART II
Item Five
Market for Registrant's Common Equity and Related
Stockholder Matters................................... 4
Item Six
Selected Financial Data................................ 4
Item Seven and Seven A
Management's Discussion and Analysis of Financial
Condition and Results of Operations and Quantitative
and Qualitative Disclosures About Market Risk......... 4
Item Eight
Financial Statements and Supplementary Financial
Information........................................... 7
Item Nine
Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure................... 7
PART III
Items Ten and Eleven
Directors and Executive Officers of the Registrant and
Executive Compensation................................ 7
Item Twelve
Security Ownership of Certain Beneficial Owners and
Management............................................ 7
Item Thirteen
Certain Relationships and Related Transactions......... 8
PART IV
Item Fourteen
Exhibits, Financial Statement Schedules and Reports on
Form 8-K.............................................. 8
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PART I
ITEMS ONE AND TWO
BUSINESS AND PROPERTIES
Burlington Resources Inc. ("BR") is a holding company engaged, through its
principal subsidiaries, Burlington Resources Oil & Gas Company and The Louisiana
Land and Exploration Company ("LL&E"), acquired October 22, 1997, and their
affiliated companies (collectively the "Company"), in the exploration,
development, production and marketing of oil and gas.
For additional information concerning Items One and Two, see pages 6
through 19 of the BR 1998 Annual Report, which information is incorporated
herein by reference.
OTHER MATTERS
Competition. The Company actively competes for reserve acquisitions,
exploration leases and sales of oil and gas, frequently against companies with
substantially larger financial and other resources. In its marketing activities,
the Company competes with numerous companies for the sale of oil, gas and
natural gas liquids ("NGLs"). Competitive factors in the Company's business
include price, contract terms, quality of service, pipeline access,
transportation discounts and distribution efficiencies.
Regulation of Oil and Gas Production, Sales and Transportation. The oil
and gas industry is subject to regulation by numerous national, state and local
governmental agencies and departments in the countries in which the Company
operates, compliance with which is often difficult and costly and some of which
carry substantial noncompliance penalties and risks. Statutes, rules,
regulations or guidelines require drilling permits, drilling bonds and operating
reports. Most jurisdictions in which the Company operates also have statutes,
rules, regulations or guidelines governing conservation matters, including the
unitization or pooling of oil and gas properties and the establishment of
maximum rates of production from oil and gas wells. Many jurisdictions also
limit production to the market demand for oil and gas. Such statutes, rules,
regulations or guidelines may limit the rate at which oil and gas could
otherwise be produced from the Company's properties. All of the Company's sales
of its domestic gas are deregulated.
The Company operates various gathering systems. The United States
Department of Transportation and certain state agencies regulate, under various
statutes, rules or regulations, the safety and operating aspects of the
transportation and storage activities of these facilities by prescribing
standards.
The Federal Energy Regulatory Commission ("FERC") has implemented policies,
subject to court review, allowing interstate pipeline companies to negotiate
their rates with individual shippers. The FERC is also considering allowing the
interstate pipeline companies to negotiate tariffed terms and conditions of
service. The Company will monitor the effects of these programs on its marketing
efforts but does not expect that these actions will have a material adverse
effect on the consolidated financial position or results of operations of the
Company.
Environmental Regulation. Various federal, state and local laws and
regulations relating to the protection of the environment, including the
discharge of materials into the environment, may affect the Company's domestic
operations and costs as a result of their effect on oil and gas exploration,
development and production operations. In addition, certain of the Company's
international operations are subject to environmental regulations administered
by foreign governments, including political subdivisions thereof, or by
international organizations.
Offshore oil and gas operations in the United States ("U.S.") are subject
to regulations of the U.S. Department of the Interior which currently imposes
absolute liability upon the lessee under a federal lease for the cost of
pollution cleanup resulting from the lessee's operations and could subject the
lessee to possible liability for pollution damages. In the event of a serious
incident of pollution, the U.S.
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Department of the Interior may require a lessee under a federal lease to suspend
or cease operations in the affected area.
The Company believes it is in substantial compliance with applicable
environmental laws and regulations. The Company does not anticipate that it will
be required under current environmental laws and regulations to expend amounts
that will have a material adverse effect on the consolidated financial position
or results of operations of the Company.
Filings of Reserve Estimates With Other Agencies. During 1998, the Company
filed estimates of oil and gas reserves for the year 1997 with the Department of
Energy. These estimates were not materially different from the reserve data
presented. For information concerning proved oil and gas reserves, see page 48
of the BR 1998 Annual Report, which information is incorporated herein by
reference.
EMPLOYEES
The Company had 1,678 and 1,819 employees at December 31, 1998 and 1997,
respectively. Currently, the Company has no union employees.
ITEM THREE
LEGAL PROCEEDINGS
The Company is involved in several proceedings challenging payment of
royalties for its crude oil and natural gas production.
On November 20, 1997, the Company and numerous other defendants entered
into a settlement agreement in a lawsuit styled as The McMahon Foundation, et
al. v. Amerada Hess Corporation, et al. This lawsuit is a proposed class action
consisting of both working interest owners and royalty owners against numerous
defendants, all of which are oil companies and/or purchasers of oil from oil
companies, including Burlington Resources Oil & Gas Company, formerly known as
Meridian Oil Inc. ("BROG") and LL&E. The plaintiffs allege that the defendants
conspired to fix, depress, stabilize and maintain at artificially low levels the
prices paid for oil by, among other things, setting their posted prices at
arbitrary levels below competitive market prices. Cases involving similar
allegations have been filed in federal courts in other states. On January 14,
1998, the United States Judicial Panel on Multidistrict Litigation issued an
order consolidating these cases and transferring the McMahon case to the United
States District Court for the Southern District of Texas in Corpus Christi. The
Company and other defendants have entered into a Settlement Agreement which
received preliminary approval by the Court on October 28, 1998. The Court has
set a hearing to finally determine the fairness, accuracy and reasonableness of
the Settlement Agreement beginning in April 1999.
The Company is also involved in several governmental proceedings relating
to the payment of royalties. Various administrative proceedings are pending
before the Minerals Management Service ("MMS") of the United States Department
of the Interior with respect to the proper valuation of oil and gas produced on
federal and Indian lands for purposes of paying royalties on production sold by
BROG to its affiliate, Burlington Resources Trading Inc. ("BRTI"), or gathered
by its affiliate, Burlington Resources Gathering Inc. In general, these
proceedings stem from regular MMS audits of the Company's royalty payments over
various periods of time and involve the interpretation of the relevant federal
regulations. Most of these administrative proceedings currently have been
suspended pending negotiations between the Company and the MMS to resolve their
disputes regarding the appropriate valuation methodology or pending resolution
of the federal False Claims Act litigation as hereinafter described.
In late February 1998, the Company and numerous other oil and gas companies
received a complaint filed in the United States District Court for the Eastern
District of Texas in Lufkin in a lawsuit styled as United States of America ex
rel J. Benjamin Johnson, Jr., et al. v. Shell Oil Company, et
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al. alleging violations of the civil False Claims Act. The United States has
intervened in this lawsuit as to some of the defendants, including the Company,
and has filed a separate complaint. This suit alleges that the Company underpaid
royalties for crude oil produced on federal and Indian lands through the use of
below-market posted prices in the sale of oil from BROG to BRTI. The suit
alleges that royalties paid by BROG based on these posted prices were lower than
the royalties allegedly required to be paid under federal regulations, and that
the forms filed by BROG with the MMS reporting the royalties paid were false,
thereby violating the civil False Claims Act. The Company and others have also
received document subpoenas and other inquiries from the Department of Justice
relating to the payment of royalties to the federal government for natural gas
production. These requests and inquiries have been made in the context of one or
more other False Claims Act cases brought by individuals which remain under seal
and are now being investigated by the Civil Division of the Department of
Justice. The Company has responded and continues to respond to these requests
and inquiries, but the Company does not know what action, if any, the Department
of Justice will take with regard to these other cases. If the government chooses
not to intervene and pursue these cases, the individuals who initially brought
these cases are free to pursue them in return for a share, if any, of any final
settlement or judgment. In addition, the Company has been advised that it is a
target of a criminal investigation by the United States Attorney for the
District of Wyoming into the alleged underpayment of oil and gas royalties. The
Company has responded to numerous grand jury document subpoenas in connection
with an investigation and is otherwise cooperating with the investigation.
Management cannot predict when the investigation will be completed or its
ultimate outcome.
Based on the Company's present understanding of the various governmental
proceedings relating to royalty payments, descibed in the preceding two
paragraphs, the Company believes that it has substantial defenses to these
claims and intends to vigorously assert such defenses. However, in the event
that the Company is found to have violated the civil False Claims Act or is
indicted or convicted on criminal charges, the Company could be subjected to a
variety of sanctions, including treble damages, substantial monetary fines,
civil and/or criminal penalties and a temporary suspension from entering into
future federal mineral leases and other federal contracts for a defined period
of time. While the ultimate outcome and impact on the Company cannot be
predicted with certainty, management believes that the resolution of these
proceedings will have a material adverse effect on the consolidated financial
position of the Company, although results of operations and cash flows could be
significantly impacted in the reporting periods in which such matters are
resolved.
In addition to the foregoing, the Company and its subsidiaries are named
defendants in numerous other lawsuits and named parties in numerous governmental
and other proceedings arising in the ordinary course of business. While the
outcome of these other lawsuits and proceedings cannot be predicted with
certainty, management believes these matters, other than the above-described
proceedings, will not have a material adverse effect on the consolidated
financial position, results of operations or cash flows of the Company.
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ITEM FOUR
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
ITEM FIVE
MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
The Company's Common Stock is traded on the New York Stock Exchange under
the symbol "BR." At December 31, 1998, the number of common stockholders was
21,538.
For information concerning common stock prices and quarterly dividends, see
page 50 of the BR 1998 Annual Report, which information is incorporated herein
by reference.
ITEM SIX
SELECTED FINANCIAL DATA
For information concerning Item Six, see page 21 of the BR 1998 Annual
Report, which information is incorporated herein by reference.
ITEM SEVEN AND SEVEN A
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS AND QUANTITATIVE AND
QUALITATIVE DISCLOSURES ABOUT MARKET RISK
For information concerning Item Seven, see pages 22, through 25 of the BR
1998 Annual Report, which information is incorporated herein by reference.
FORWARD-LOOKING STATEMENTS
The Company, in discussions of its future plans, objectives and expected
performance in periodic reports filed by the Company with the Securities and
Exchange Commission (or documents incorporated by reference therein) and in
written and oral presentations made by the Company, may include projections or
other forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 or Section 21E of the Securities Exchange Act of 1934, as
amended. Such projections and forward-looking statements are based on
assumptions which the Company believes are reasonable, but are by their nature
inherently uncertain. In all cases, there can be no assurance that such
assumptions will prove correct or that projected events will occur, and actual
results could differ materially from those projected. Some of the important
factors that could cause actual results to differ from any such projections or
other forward-looking statements follow.
Commodity Pricing and Demand. Substantially all of the Company's crude oil
and natural gas production is sold on the spot market or under short-term
contracts at market sensitive prices. Spot market prices for domestic crude oil
and natural gas are subject to volatile trading patterns in the commodity
futures markets, including among others, the New York Mercantile Exchange
("NYMEX"), because of seasonal weather patterns, national supply and demand
factors and general economic conditions. Crude oil prices are also affected by
quality differentials, by worldwide political developments and by actions of the
Organization of Petroleum Exporting Countries. Although the futures markets
provide some indication of crude oil and natural gas prices for the subsequent
12 to 18 months, prices in the futures markets are subject to substantial
changes in relatively short periods of time.
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There is also a difference between the NYMEX futures contract price for a
particular month and the actual cash price received for that month in a U.S.
producing basin or at a U.S. market hub, which is referred to as the "basis
differential." Basis differentials, like the underlying commodity prices, can be
volatile because of regional supply and demand factors, including seasonal
factors and the availability and price of transportation to consuming areas.
In the ordinary course and conduct of its business, the Company utilizes
futures contracts traded on the NYMEX and the Kansas City Board of Trade, and
over-the-counter price and basis swaps and options with major crude oil and
natural gas merchants and financial institutions to hedge its price risk
exposure related to the Company's U.S. production. The gains and losses realized
as a result of these derivatives transactions are substantially offset in the
cash market when the hedged commodity is delivered. In order to accommodate the
needs of its customers, the Company also uses price swaps to convert gas sold
under fixed price contracts to market prices.
The Company uses a sensitivity analysis technique to evaluate the
hypothetical effect that changes in the market value of crude oil and natural
gas may have on the fair value of the Company's derivative instruments. At
December 31, 1998, the potential decrease in fair value of commodity derivative
instruments assuming a 10 percent adverse movement in the underlying commodities
would result in an 89% decrease in the net deferred amount.
For purposes of calculating the hypothetical change in fair value, the
relevant variables are the type of commodity (crude oil or natural gas), the
commodity futures prices, the volatility of commodity prices and the basis and
quality differentials. The hypothetical change in fair value is calculated by
multiplying the difference between the hypothetical price (adjusted for any
basis or quality differentials) and the contractual price by the contractual
volumes.
Changes in crude oil and natural gas prices (including basis differentials)
from those assumed in preparing projections and forward-looking statements could
cause the Company's actual financial results to differ materially from projected
financial results and can also impact the Company's determination of proved
reserves and the standardized measure of discounted future net cash flows
relative to crude oil and natural gas reserves. In addition, periods of sharply
lower commodity prices could affect the Company's production levels and/or cause
it to curtail capital spending projects and delay or defer exploration,
exploitation or development projects.
Projections relating to the price received by the Company for natural gas
also rely on assumptions regarding the availability and pricing of
transportation to the Company's key markets. In particular, the Company has
contractual arrangements for the transportation of natural gas from the San Juan
Basin eastward to Eastern and Midwestern markets or to market hubs in Texas,
Oklahoma and Louisiana. The natural gas price received by the Company could be
adversely affected by any constraints in pipeline capacity to serve these
markets.
Exploration and Production Risks. The Company's business is subject to all
of the risks and uncertainties normally associated with the exploration for and
development and production of crude oil and natural gas.
Reserves which require the use of improved recovery techniques for
production are included in proved reserves if supported by a successful pilot
project or the operation of an installed program. The process of estimating
quantities of proved reserves is inherently uncertain and involves subjective
engineering and economic determinations. In this regard, changes in the economic
conditions (including commodity prices) or operating conditions (including,
without limitation, exploration, development and production costs and expenses
and drilling results from exploration and development activity) could cause the
Company's estimated proved reserves or production to differ from those included
in any such forward-looking statements or projections.
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Projecting future crude oil and natural gas production is imprecise.
Producing oil and gas reservoirs eventually have declining production rates.
Projections of production rates rely on certain assumptions regarding historical
production patterns in the area or formation tests for a particular producing
horizon. Actual production rates could differ materially from such projections.
Production rates depend on a number of additional factors, including commodity
prices, market demand and the political, economic and regulatory climate.
Another major factor affecting the Company's production is its ability to
replace depleting reservoirs with new reserves through acquisition, exploration
or development programs. Exploration success is extremely difficult to predict
with certainty, particularly over the short term where the timing and extent of
successful results vary widely. Over the long term, the ability to replace
reserves depends not only on the Company's ability to locate crude oil and
natural gas reserves, but on the cost of finding and developing such reserves.
Moreover, development of any particular exploration or development project may
not be justified because of the commodity price environment at the time or
because of the Company's finding and development costs for such project. No
assurances can be given as to the level or timing of success that the Company
will be able to achieve in acquiring or finding and developing additional
reserves.
Projections relating to the Company's production and financial results rely
on certain assumptions about the Company's continued success in its acquisition
and asset rationalization programs and in its cost management efforts.
The Company's drilling operations are subject to various hazards common to
the oil and gas industry, including explosions, fires, and blowouts, which could
result in damage to or destruction of oil and gas wells or formations,
production facilities and other property and injury to people. They are also
subject to the additional hazards of marine operations, such as capsizing,
collision and damage or loss from severe weather conditions.
Development Risk. A significant portion of the Company's development plans
involve large projects in the Gulf of Mexico and other areas. A variety of
factors affect the timing and outcome of such projects including, without
limitation, approval by the other parties owning working interests in the
project, receipt of necessary permits and approvals by applicable governmental
agencies, the availability of the necessary drilling equipment, delivery
schedules for critical equipment and arrangements for the gathering and
transportation of the produced hydrocarbons.
Foreign Operations Risk. The Company's operations outside of the U.S. are
subject to risks inherent in foreign operations, including, without limitation,
the loss of revenue, property and equipment from hazards such as expropriation,
nationalization, war, insurrection and other political risks, increases in taxes
and governmental royalties, renegotiation of contracts with governmental
entities, changes in laws and policies governing operations of foreign-based
companies, currency restrictions and exchange rate fluctuations and other
uncertainties arising out of foreign government sovereignty over the Company's
international operations. Laws and policies of the U.S. affecting foreign trade
and taxation may also adversely affect the Company's international operations.
The Company's ability to market oil and natural gas discovered or produced
in its foreign operations, and the price the Company could obtain for such
production, depends on many factors beyond the Company's control, including
ready markets for oil and natural gas, the proximity and capacity of pipelines
and other transportation facilities, fluctuating demand for oil and natural gas,
the availability and cost of competing fuels, and the effects of foreign
governmental regulation of oil and gas production and sales. Pipeline and
processing facilities do not exist in certain areas of exploration and,
therefore, any actual sales of the Company's production could be delayed for
extended periods of time until such facilities are constructed.
Competition. The Company actively competes for property acquisitions,
exploration leases and sales of crude oil and natural gas, frequently against
companies with substantially larger financial and other resources. In its
marketing activities, the Company competes with numerous companies for gas
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purchasing and processing contracts and for natural gas and NGLs at several
steps in the distribution chain. Competitive factors in the Company's business
include price, contract terms, quality of service, pipeline access,
transportation discounts and distribution efficiencies.
Political and Regulatory Risk. The Company's operations are affected by
national, state and local laws and regulations such as restrictions on
production, changes in taxes, royalties and other amounts payable to governments
or governmental agencies, price or gathering rate controls and environmental
protection regulations. Changes in such laws and regulations, or interpretations
thereof, could have a significant effect on the Company's operations or
financial results.
Potential Environmental Liabilities. The Company's operations are subject
to various national, state and local laws and regulations covering the discharge
of material into, and protection of, the environment. Such regulations affect
the costs of planning, designing, operating and abandoning facilities. The
Company expends considerable resources, both financial and managerial, to comply
with environmental regulations and permitting requirements. Although the Company
believes that its operations and facilities are in general compliance with
applicable environmental laws and regulations, risks of substantial costs and
liabilities are inherent in crude oil and natural gas operations. Moreover, it
is possible that other developments, such as increasingly strict environmental
laws, regulations and enforcement, and claims for damage to property or persons
resulting from the Company's current or discontinued operations, could result in
substantial costs and liabilities in the future.
ITEM EIGHT
FINANCIAL STATEMENTS AND SUPPLEMENTARY FINANCIAL INFORMATION
For information concerning Item Eight, see pages 26 through 50 of the BR
1998 Annual Report, which information is incorporated herein by reference.
ITEM NINE
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None
PART III
ITEMS TEN AND ELEVEN
DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT AND EXECUTIVE COMPENSATION
A definitive proxy statement for the 1999 Annual Meeting of Stockholders of
BR will be filed no later than 120 days after the end of the fiscal year with
the Securities and Exchange Commission. The information set forth therein under
"Election of Directors" and "Executive Compensation" is incorporated herein by
reference. Executive Officers of the Company are listed on page 51 of the BR
1998 Annual Report and this information is incorporated herein by reference.
ITEM TWELVE
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information required is set forth under the caption "Election of Directors"
in the Proxy Statement for the 1999 Annual Meeting of Stockholders and is
incorporated herein by reference.
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ITEM THIRTEEN
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information required is set forth under the caption "Election of Directors"
in the Proxy Statement for the 1999 Annual Meeting of Stockholders and is
incorporated herein by reference.
PART IV
ITEM FOURTEEN
EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
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FINANCIAL STATEMENTS AND SUPPLEMENTARY FINANCIAL INFORMATION
Consolidated Statement of Income.......................... **
Consolidated Balance Sheet................................ **
Consolidated Statement of Cash Flows...................... **
Consolidated Statement of Stockholders' Equity............ **
Notes to Consolidated Financial Statements................ **
Report of Independent Accountants......................... **
Supplemental Oil and Gas Disclosures -- Unaudited......... **
Quarterly Financial Data -- Unaudited..................... **
AMENDED EXHIBIT INDEX....................................... A-1
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REPORTS ON FORM 8-K
The Company has filed no reports on Form 8-K.
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** Included in Annual Report and incorporated herein by reference.
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SIGNATURES REQUIRED FOR FORM 10-K
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Burlington Resources Inc. has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
BURLINGTON RESOURCES INC.
By BOBBY S. SHACKOULS
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Bobby S. Shackouls
Chairman of the Board, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of Burlington
Resources Inc. and in the capacities and on the dates indicated.
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By BOBBY S. SHACKOULS Chairman of the Board, January 13, 1999
----------------------------------------------------- President and Chief
Bobby S. Shackouls Executive Officer
JOHN E. HAGALE Executive Vice President and January 13, 1999
- -------------------------------------------------------- Chief Financial Officer
John E. Hagale
PHILIP W. COOK Vice President, January 13, 1999
- -------------------------------------------------------- Controller and Chief
Philip W. Cook Accounting Officer
H. LEIGHTON STEWARD Vice Chairman of the Board January 13, 1999
- --------------------------------------------------------
H. Leighton Steward
JOHN V. BYRNE Director January 13, 1999
- --------------------------------------------------------
John V. Byrne
S. PARKER GILBERT Director January 13, 1999
- --------------------------------------------------------
S. Parker Gilbert
LAIRD I. GRANT Director January 13, 1999
- --------------------------------------------------------
Laird I. Grant
JOHN T. LAMACCHIA Director January 13, 1999
- --------------------------------------------------------
John T. LaMacchia
JAMES F. MCDONALD Director January 13, 1999
- --------------------------------------------------------
James F. McDonald
KENNETH W. ORCE Director January 13, 1999
- --------------------------------------------------------
Kenneth W. Orce
DONALD M. ROBERTS Director January 13, 1999
- --------------------------------------------------------
Donald M. Roberts
JOHN F. SCHWARZ Director January 13, 1999
- --------------------------------------------------------
John F. Schwarz
WALTER SCOTT, JR. Director January 13, 1999
- --------------------------------------------------------
Walter Scott, Jr.
WILLIAM E. WALL Director January 13, 1999
- --------------------------------------------------------
William E. Wall
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BURLINGTON RESOURCES INC.
AMENDED EXHIBIT INDEX
The following exhibits are filed as part of this report.
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EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
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3.1 Certificate of Incorporation of Burlington Resources Inc. as
amended January 4, 1999.....................................
3.2 By-Laws of Burlington Resources Inc. amended as of January
13, 1999....................................................
4.1 Form of Rights Agreement dated as of December 16, 1998,
between Burlington Resources Inc. and The First National
Bank of Boston which includes, as Exhibit A thereto, the
form of Certificate of Designation specifying terms of the
Series A Junior Participating Preferred Stock and, as
Exhibit B thereto, the form of Rights Certificate (Exhibit 1
to Form 8-A, filed December 1998)........................... *
4.2 Indenture, dated as of June 15, 1990, between the registrant
and Citibank, N.A., including Form of Debt Securities
(Exhibit 4.2 to Form 8, filed February 1992)................ *
4.3 Indenture, dated as of October 1, 1991, between the
registrant and Citibank, N.A., including Form of Debt
Securities (Exhibit 4.3 to Form 8, filed February 1992)..... *
4.4 Indenture, dated as of April 1, 1992, between the registrant
and Citibank, N.A., including Form of Debt Securities
(Exhibit 4.4 to Form 8, filed March 1993)................... *
4.5 Indenture dated as of June 15, 1992 among the Registrant and
Texas Commerce Bank National Association (as Trustee)
(Exhibit 4.1 LL&E's Form S-3, as amended, filed November
1993)....................................................... *
10.1 The 1988 Burlington Resources Inc. Stock Option Incentive
Plan as amended (Exhibit 10.4 to Form 8, filed March
1993)....................................................... *
+10.2 Burlington Resources Inc. Incentive Compensation Plan as
amended and restated (Exhibit 10.2 to Form 10-K, filed
February 1997).............................................. *
+10.3 Burlington Resources Inc. Senior Executive Survivor Benefit
Plan dated as of January 1, 1989 (Exhibit 10.11 to Form 8,
filed February 1989)........................................ *
+10.4 Burlington Resources Inc. Deferred Compensation Plan as
amended and restated (Exhibit 10.4 to Form 10-K, filed
February 1997).............................................. *
+10.5 Burlington Resources Inc. Supplemental Benefits Plan as
amended and restated (Exhibit 10.5 to Form 10-K, filed
February 1997).............................................. *
+10.6 Employment Contract between Burlington Resources Inc. and
Bobby S. Shackouls (Exhibit 10.7 to Form 10-K, filed
February 1996).............................................. *
Amendment to Employment Contract between Burlington
Resources Inc. and Bobby S. Shackouls, dated July 9, 1997
(Exhibit 10.6 to Form 10-K, filed February 1998)............ *
+10.7 Employment Contract between Burlington Resources Inc. and H.
Leighton Steward, dated October 22, 1997 (Exhibit 10.7 to
Form 10-K, filed February 1998)............................. *
+10.8 Burlington Resources Inc. Compensation Plan for Non-Employee
Directors as amended and restated (Exhibit 10.8 to Form
10-K, filed February 1997).................................. *
+10.9 Burlington Resources Inc. Key Executive Severance Protection
Plan as amended June 8, 1989 (Exhibit 10.20 to Form 8, filed
February 1992).............................................. *
+10.11 Burlington Resources Inc. Retirement Income Plan for
Directors (Exhibit 10.21 to Form 8, filed February 1991).... *
+10.12 Burlington Resources Inc. Phantom Stock Plan for
Non-Employee Directors, effective March 21, 1996 (Exhibit
10.12 to Form 10-K, filed February 1996).................... *
+10.13 Burlington Resources Inc. 1991 Director Charitable Award
Plan, dated as of January 16, 1991 (Exhibit 10.22 to Form 8,
filed February 1991)........................................ *
</TABLE>
A-1
<PAGE> 13
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
- ------- ----------- ------
<S> <C> <C>
10.14 Master Separation Agreement and documents related thereto
dated January 15, 1992 by and among Burlington Resources
Inc., El Paso Natural Gas Company and Meridian Oil Holding
Inc., including exhibits (Exhibit 10.24 to Form 8, filed
February 1992).............................................. *
+10.15 Burlington Resources Inc. 1992 Stock Option Plan for
Non-employee Directors (Exhibit 28.1 of Form S-8, No.
33-46518, filed March 1992)................................. *
+10.16 Burlington Resources Inc. Key Executive Retention Plan and
Amendments No. 1 and 2 (Exhibit 10.20 to Form 8, filed March
1993)....................................................... *
Amendments No. 3 and 4 to the Burlington Resources Inc. Key
Executive Retention Plan (Exhibit 10.17 to Form 10-K, filed
February 1994).............................................. *
+10.17 Burlington Resources Inc. 1992 Performance Share Unit Plan
as amended and restated (Exhibit 10.17 to Form 10-K, filed
February 1997).............................................. *
+10.18 Burlington Resources Inc. 1993 Stock Incentive Plan (Exhibit
10.22 to Form 10-K, filed February 1994).................... *
+10.20 Burlington Resources Inc. 1994 Restricted Stock Exchange
Plan (Exhibit 10.23 to Form 10-K, filed February 1995)...... *
+10.21 Burlington Resources Inc. 1997 Performance Share Unit Plan,
(Exhibit 10.21 to Form 10-K, filed February 1997)........... *
10.22 $400 million Short-term Revolving Credit Agreement, dated as
of February 25, 1998, as Amended and Restated February 23,
1999 between Burlington Resources Inc. and Chase Bank of
Texas, N.A., as agent, dated as of February 23, 1999........
10.23 $600 million Long-term Revolving Credit Agreement, dated as
of February 25, 1998, between Burlington Resources Inc. and
Morgan Guaranty Trust Company of New York as agent..........
Amendment and Restatement Agreement dated as of February 23,
1999 in respect of the Long-Term Credit Agreement...........
+10.24 Form of Termination Agreement with Certain Senior Management
Personnel as amended (Exhibit 10(a)(i) to LL&E's Form 10-K,
filed March 1996)........................................... *
+10.25 Pension Agreement, dated as of December 27, 1994 (Exhibit
10(e) to LL&E's Form 10-K filed March 1995)................. *
+10.26 Form of The Louisiana Land and Exploration Company Deferred
Compensation Arrangement for Selected Key Employees (Exhibit
10(g) to LL&E's Form 10-K filed March 1991)................. *
Amendment to the LL&E Deferred Compensation Arrangement for
Selected Key Employees dated December 21, 1998..............
+10.27 The LL&E Supplemental Excess Plan (Exhibit 10(j) to LL&E's
Form 10-K filed March 1993)................................. *
13.1 Burlington Resources Inc. 1998 Annual Report................
21.1 Subsidiaries of the Registrant..............................
23.1 Consent of Independent Accountants..........................
27.1 Financial Data Schedule..................................... **
</TABLE>
- ---------------
*Exhibit incorporated herein by reference as indicated.
**Exhibit required only for filings made electronically using the Securities and
Exchange Commission's EDGAR System.
+Exhibit constitutes a management contract or compensatory plan or arrangement
required to be filed as an exhibit to this report pursuant to Item 14(c) of
Form 10-K.
A-2
<PAGE> 1
BURLINGTON
RESOURCES
CERTIFICATE OF INCORPORATION
OF
BURLINGTON RESOURCES INC.
As Amended Through January 4, 1999
<PAGE> 2
CERTIFICATE OF INCORPORATION
OF
BURLINGTON RESOURCES INC.
ARTICLE 1. NAME
The name of this corporation is Burlington Resources Inc.
ARTICLE 2. REGISTERED OFFICE AND AGENT
The address of the initial registered office of this corporation is
Corporation Trust Center, 1209 Orange Street, Wilmington, County of New Castle,
State of Delaware 19081, and the name of its initial registered agent at such
address is The Corporation Trust Company.
ARTICLE 3. PURPOSES
The purpose of this corporation is to engage in any lawful act or activity
for which corporations may be organized under the General Corporation Law of
Delaware.
ARTICLE 4. SHARES
4.1 Authorized Capital. The total authorized stock of this corporation shall
consist of 325,000,000 shares of common stock having a par value of $.01 per
share and 75,000,000 shares of preferred stock having a par value of $.01 per
share.
4.2 Issuance of Preferred Stock in Series. The preferred stock may be issued
from time to time in one or more series, the shares of each series to have such
voting powers, full or limited, or no voting powers, and such designations,
preferences and relative, participating, optional or other special rights and
qualifications, limitations or restrictions thereof as are stated and expressed
herein or in the resolution or resolutions providing for the issue of such
series adopted by the Board of Directors.
4.3 Authority of the Board of Directors. Authority is hereby expressly
granted to the Board of Directors of this corporation, subject to the provisions
of this Article 4 and to the limitations prescribed by law, to authorize the
issue of one or more series of preferred stock, and with respect to each such
series to fix by resolution or resolutions providing for the issue of such
series the number of shares of such series, the voting powers, full or limited,
if any, of the shares of such series and the designations, preferences and
relative, participating, optional or other special rights and the
qualifications, limitations or restrictions thereof. The authority of the Board
of Directors with respect to each series of preferred stock shall include, but
not be limited to, the determination or fixing of the following:
(a) The number of shares of such series;
(b) The designation of such series;
(c) The dividend on the shares of such series, the conditions and dates
upon which such dividends shall be payable, the relation which such
dividends shall bear to the dividends payable on any other class or
classes or on any other series of any class or classes of stock of this
corporation and whether such dividends shall be cumulative or
noncumulative;
1
<PAGE> 3
(d) Whether the shares of such series shall be subject to redemption by
this corporation and, if made subject to such redemption, the times,
prices, rates, adjustments, and other terms and conditions of such
redemption;
(e) The terms and amounts of any sinking fund provided for the purchase
or redemption of the shares of such series;
(f) Whether or not the shares of such series shall be convertible into
or exchangeable for shares of any other class or classes or of any other
series of any class or classes of stock of this corporation and, if
provision be made for conversion or exchange, the times, prices, rates,
adjustments, and other terms and conditions of such conversion or
exchange;
(g) The extent, if any, to which the holders of the shares of such
series shall be entitled to vote with respect to the election of directors
or otherwise, including the right to elect a specified number or class of
directors, the extent, if any, to which the holders of the shares of such
series shall have (i) separate voting rights with respect to the matters
solely affecting the preferences, rights or powers of such series but not
so affecting the common stock or the entire class of preferred stock and
(ii) on a pro rata basis with other shares of preferred stock having
voting rights, voting rights with respect to matters solely affecting the
preferences, rights or powers of the entire class of preferred stock but
not so affecting the common stock, the number or percentage of votes
required for certain actions, and the extent to which a vote by class or
series shall be required for certain actions;
(h) The restrictions, if any, on the issue or reissue of any preferred
stock;
(i) The amount or amounts payable upon the shares of such series in the
event of voluntary or involuntary liquidation, dissolution or winding up
of the corporation prior to any payment or distribution of the assets of
the corporation to any class or classes of stock of the corporation
ranking junior to the preferred stock;
(j) Whether, and the extent to which, any of the voting powers,
designations, preferences, rights and qualifications, limitations or
restrictions of any such series may be made dependent upon facts
ascertainable outside this Certificate of Incorporation or of any
amendment hereto, or outside the resolution or resolutions providing for
the issuance of such series adopted by the Board of Directors, provided
that the manner in which such facts shall operate upon the voting powers,
designations, preferences, rights and qualifications, limitations or
restrictions of such series is clearly and expressly set forth in the
resolution or resolutions providing for the issuance of such series
adopted by the Board of Directors;
(k) The extent, if any, to which any committee of the Board of
Directors may fix the designations and any of the preferences, privileges
and powers and relative, participating, optional or other special rights
and qualifications, limitations or restrictions of the shares of such
series relating to dividends, redemption, dissolution, any distribution of
assets of this corporation or the conversion into or exchange of such
shares for shares of any other class or classes of stock of this
corporation or any other series of the same or any other class or classes
of stock of this corporation, or fix the number of shares of any such
series or authorize the increase or decrease in the shares of such series;
and
2
<PAGE> 4
(1) Any other preferences, privileges and powers and relative,
participating, optional or other special rights and qualifications,
limitations or restrictions of such series, as the Board of Directors may
deem advisable, which shall not adversely affect any other class or series
of preferred stock at the time outstanding and which shall not be
inconsistent with the provisions hereof.
4.4 Dividends. Subject to any preferential rights granted to any series of
preferred stock, the holders of shares of the common stock shall be entitled to
receive dividends, out of the funds of this corporation legally available
therefor, at the rate and at the time or times, whether cumulative or
noncumulative, as may be provided by the Board of Directors. The holders of
shares of the preferred stock shall be entitled to receive dividends to the
extent provided by the Board of Directors in designating the particular series
of preferred stock. The holders of shares of the common stock shall not be
entitled to receive any dividends thereon other than the dividends referred to
in this section.
4.5 Voting. The holders of shares of the common stock, on the basis of one
vote per share, shall have the right to vote for the election of members of the
Board of Directors of this corporation and the right to vote on all other
matters, except those matters on which the holders of a separate class or series
of this corporation's stock are entitled to vote separately by class or series.
To the extent provided by resolution or resolutions of the Board of Directors
providing for the issue of a series of preferred stock, the holders of each such
series of preferred stock shall have the right to vote for the election of
members of the Board of Directors of this corporation and the right to vote on
all other matters, except those matters on which the holders of a separate class
or series of this corporation's stock are entitled to vote separately by class
or series.
ARTICLE 5. INCORPORATOR
The name and mailing address of the incorporator are as follows:
Andrew Bor
1900 Washington Building
Seattle, Washington 98101
ARTICLE 6. DIRECTORS
The powers of the incorporator shall terminate upon the filing of this
Certificate of Incorporation with the Secretary of State of the State of
Delaware. The names and mailing addresses of the persons whom are to serve as
Directors until the first annual meeting of stockholders or until their
successors are elected and qualify are:
James W. Becker 999 Third Avenue
Seattle, Washington 98101
Luino Dell'Osso, Jr. 999 Third Avenue
Seattle, Washington 98101
3
<PAGE> 5
ARTICLE 7. BY-LAWS
The Board of Directors shall have the power to adopt, amend or repeal the
By-Laws of this corporation, subject to the power of the stockholders to amend
or repeal such By-Laws. The stockholders having voting power shall also have the
power to adopt, amend or repeal the By-Laws for this corporation.
ARTICLE 8. ELECTION OF DIRECTORS
Except as may be otherwise required by the By-Laws, written ballots are not
required in the election of Directors.
ARTICLE 9. PROVISIONS FOR A COMPROMISE OR ARRANGEMENT
Whenever a compromise or arrangement is proposed between this corporation
and its creditors or any class of them and/or between this corporation and its
stockholders or any class of them, any court of equitable jurisdiction within
the State of Delaware may, on the application in a summary way of this
corporation or of any creditor or stockholder thereof or on the application of
any receiver or receivers appointed for this corporation under the provisions of
section 291 of Title 8 of the Delaware Code or on the application of trustees in
dissolution or of any receiver or receivers appointed for this corporation under
the provisions of section 279 of Title 8 of the Delaware Code order a meeting of
the creditors or class of creditors, and/or of the stockholders or class of
stockholders of this corporation, as the case may be, to be summoned in such
manner as the said court directs. If a majority in number representing
three-fourths in value of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of this corporation, as the case may be,
agree to any compromise or arrangement and to any reorganization of this
corporation as a consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of this corporation, as the case may be, and also on this
corporation.
ARTICLE 10. PREEMPTIVE RIGHTS
No preemptive rights shall exist with respect to shares of stock or
securities convertible into shares of stock of this corporation.
ARTICLE 11. CUMULATIVE VOTING
The right to cumulate votes in the election of Directors shall not exist
with respect to shares of stock of this corporation.
ARTICLE 12. AMENDMENTS TO CERTIFICATE OF INCORPORATION
This corporation reserves the right to amend or repeal any of the provisions
contained in this Certificate of Incorporation in any manner now or hereafter
permitted by law, and the rights of the stockholders of this corporation are
granted subject to this reservation.
4
<PAGE> 6
ARTICLE 13. LIMITATION OF DIRECTOR LIABILITY
To the full extent that the Delaware General Corporation Law, as it exists
on the date hereof or may hereafter be amended, permits the limitation or
elimination of the liability of directors, a director of this corporation shall
not be liable to this corporation or its stockholders for monetary damages for
breach of fiduciary duty as a director. Any amendment to or repeal of this
Article 13 shall not adversely affect any right or protection of a director of
this corporation for or with respect to any acts or omissions of such director
occurring prior to such amendment or repeal.
ARTICLE 14. ACTION BY STOCKHOLDERS WITHOUT A MEETING
Any action by stockholders of this corporation shall be taken at a meeting
of stockholders and no action may be taken by written consent of stockholders
entitled to vote upon such action.
ARTICLE 15. SPECIAL VOTING REQUIREMENTS
In addition to any affirmative vote required by law, this Certificate of
Incorporation, any agreement with any national securities exchange or otherwise,
any "Business Combination" (as hereinafter defined) involving this corporation
shall be subject to approval in the manner set forth in this Article 15.
15.1 Definitions
For the purposes of this Article 15:
(a) "Affiliate" and "beneficial owner" are used herein as defined in Rule
12b-2 and Rule 13d-3, respectively, under the Securities Exchange Act of
1934 as in effect on May 25, 1988 (the "1934 Act"). The term "Affiliate" as
used herein shall exclude this corporation, but shall include the definition
of "Associate" as contained in said Rule 12b-2.
(b) An "Interested Stockholder" is a person other than (i) the corporation
or (ii) Burlington Northern Inc., a Delaware corporation ("BNI"), as long as
BNI continues to own at least a majority of the stock of this corporation
entitled to vote for the election of directors ("Voting Stock") and there
has been no Change in Control of BNI since May 25, 1988, who is (A) the
beneficial owner of ten percent or more of the Voting Stock or (B) an
Affiliate of this corporation which (1) at any time within a two-year period
prior to the record date for the vote on a Business Combination was the
beneficial owner of ten percent or more of the Voting Stock, or (2) at the
completion of the Business Combination will be the beneficial owner of ten
percent or more of the Voting Stock.
(c) A "Person" is a natural person or a legal entity of any kind, together
with any Affiliate of such person or entity, or any person or entity with
whom such person, entity or any Affiliate has any agreement or understanding
relating to acquiring, voting or holding Voting Stock.
(d) A "Disinterested Director" is a member of the Board of Directors of this
corporation (other than the Interested Stockholder) who was a director prior
to the time the Interested Stockholder became an Interested Stockholder, or
any director who was recommended for election by the
5
<PAGE> 7
Disinterested Directors. Any action to be taken by the Disinterested
Directors shall require the affirmative vote of at least two-thirds of the
Disinterested Directors.
(e) A "Business Combination" is (i) a merger or consolidation of this
corporation or any of its subsidiaries with an Interested Stockholder; (ii)
the sale, lease, exchange, pledge, transfer or other disposition (A) by this
corporation or any of its subsidiaries of all or a Substantial Part of the
corporation's Assets to an Interested Stockholder, or (B) by an Interested
Stockholder of any of its assets, except in the ordinary course of business,
to this corporation or any of its subsidiaries; (iii) the issuance of stock
or other securities of this corporation or any of its subsidiaries to an
Interested Stockholder, other than on a pro rata basis to all holders of
Voting Stock of the same class held by the Interested Stockholder pursuant
to a stock split, stock dividend or distribution of warrants or rights; (iv)
the adoption of any plan or proposal for the liquidation or dissolution of
this corporation proposed by or on behalf of an Interested Stockholder; (v)
any reclassification of securities, recapitalization, merger or
consolidation or other transaction which has the effect, directly or
indirectly, of increasing the proportionate share of any Voting Stock
beneficially owned by an Interested Stockholder; or (vi) any agreement,
contract or other arrangement providing for any of the foregoing
transactions.
(f) A "Substantial Part of the corporation's Assets" shall mean assets of
this corporation or any of its subsidiaries in an amount equal to twenty
percent or more of the fair market value, as determined by the Disinterested
Directors, of the total consolidated assets of this corporation and its
subsidiaries taken as a whole as of the end of its most recent fiscal year
ended prior to the time the determination is made.
(g) A "Change in Control" shall be deemed to occur (i) if any Person is or
becomes the "beneficial owner" (as defined in Rule 13d-3 of the 1934 Act),
directly or indirectly, of securities of BNI representing twenty percent or
more of the stock of BNI entitled to vote for directors of BNI, (ii) upon
the first purchase of BNI's common stock pursuant to a tender or exchange
offer (other than a tender or exchange offer made by BNI), (iii) upon the
approval by BNI's stockholders of a merger or consolidation, a sale or
disposition of all or substantially all of BNI's assets or a plan of
liquidation or dissolution of BNI, or (iv) if, during any period of two
consecutive years, individuals who at the beginning of such period
constitute the BNI board of directors cease for any reason to constitute at
least a majority thereof, unless the election or nomination for the election
by BNI's stockholders of each new director was approved by a vote of at
least two-thirds of the directors then still in office who were directors at
the beginning of the period.
15.2 Vote Required for Business Combinations
The affirmative vote of not less than fifty-one percent of the Voting Stock,
excluding the Voting Stock of an Interested Stockholder who is a party to the
Business Combination, shall be required for the adoption or authorization of a
Business Combination, unless the Disinterested Directors determine that:
(a) The Interested Stockholder is the beneficial owner of not less than
eighty percent of the Voting Stock and has declared its intention to vote
in favor of or to approve such Business Combination: or
(b) (i) The fair market value of the consideration per share to be
received or retained by the holders of each class or series of stock of
this corporation in a Business Combination is equal to or greater than the
consideration per share (including brokerage commissions and soliciting
dealer's
6
<PAGE> 8
fees) paid by such Interested Stockholder in acquiring the largest number
of shares of such class of stock previously acquired in any one
transaction or series of related transactions, whether before or after the
Interested Stockholder became an Interested Stockholder and (ii) the
Interested Stockholder shall not have received the benefit, directly or
indirectly (except proportionately as a stockholder), of any loans,
advances, guarantees, pledges or other financial assistance provided by
this corporation, whether in anticipation of or in connection with such
Business Combination or otherwise.
15.3 Information Requirements
In the event any vote of holders of Voting Stock is required for the
adoption or approval of any Business Combination, a proxy or information
statement describing the Business Combination and complying with the
requirements of the 1934 Act shall be mailed at a date determined by the
Disinterested Directors to all stockholders of this corporation whether or not
such statement is required under the 1934 Act. The statement shall contain any
recommendations as to the advisability of the Business Combination which the
Disinterested Directors, or any of them, may choose to state and, if deemed
advisable by the Disinterested Directors, an opinion of an investment banking
firm as to the fairness of the terms of such Business Combination. Such firm
shall be selected by the Disinterested Directors and be paid a fee for its
services by this corporation as approved by the Disinterested Directors.
15.4 Amendment
No amendment to this Certificate of Incorporation shall amend, alter, change
or repeal any of the provisions of Article 14 or of this Article 15 unless such
amendment shall receive the affirmative vote of not less than fifty-one percent
of the Voting Stock, excluding the Voting Stock of any Interested Stockholder as
defined in Section 15.1 of this Article 15.
OTHER AMENDMENTS
Section 1. Designation and Amount. There shall be a series of
Preferred Stock, par value $.01 per share, of the Company which shall be
designated as "Series A Junior Participating Preferred Stock," par value $.01
per share, and the number of shares constituting such series shall be 3,250,000.
Such number of shares may be increased or decreased by resolution of the Board
of Directors; provided, that no decrease shall reduce the number of shares of
Series A Junior Participating Preferred Stock to a number less than that of the
shares then outstanding plus the number of shares issuable upon exercise of
outstanding rights, options or warrants or upon conversion of outstanding
securities issued by the Company.
Section 2. Dividends and Distributions.
(A) Subject to the prior and superior rights of the holders of
any shares of any series of Preferred Stock ranking prior and superior to the
Series A Junior Participating Preferred Stock with respect to dividends, the
holders of shares of Series A Junior Participating Preferred Stock in preference
to the holders of shares of Common Stock, par value $.01 per share (the "Common
Stock"), of the Company and any other junior stock, shall be entitled to
receive, when, as and if declared by the Board of Directors out of funds legally
available for the purpose, quarterly dividends payable in cash on the first day
of January, April, July, and October in each year (each such date being referred
to
7
<PAGE> 9
herein as a "Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a share or fraction
of a share of Series A Junior Participating Preferred Stock in an amount per
share (rounded to the nearest cent) equal to the greater of (a) $25, or (b)
subject to the provision for adjustment hereinafter set forth, 100 times the
aggregate per share amount of all cash dividends, and 100 times the aggregate
per share amount (payable in kind) of all non-cash dividends or other
distributions other than a dividend payable in shares of Common Stock or a
subdivision of the outstanding shares of Common Stock (by reclassification or
otherwise), declared on the Common Stock since the immediately preceding
Quarterly Dividend Payment Date, or, with respect to the first Quarterly
Dividend Payment Date, since the first issuance of any share or fraction of a
share of Series A Junior Participating Preferred Stock. In the event the Company
shall at any time after December 16, 1998 (the "Rights Declaration Date") (i)
declare any dividend on Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding Common Stock, or (iii) combine the outstanding Common
Stock into a smaller number of shares, then in each such case the amount to
which holders of shares of Series A Junior Participating Preferred Stock were
entitled immediately prior to such event under clause (b) of the preceding
sentence shall be adjusted by multiplying such amount by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
(B) The Company shall declare a dividend or distribution on
the Series A Junior Participating Preferred Stock as provided in paragraph (A)
above immediately after it declares a dividend or distribution on the Common
Stock (other than a dividend payable in shares of Common Stock); provided that,
in the event no dividend or distribution shall have been declared on the Common
Stock during the period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $25 per share on the
Series A Junior Participating Preferred Stock shall nevertheless be payable on
such subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Junior Participating Preferred Stock from the
Quarterly Dividend Payment Date next preceding the date of issue of such shares
of Series A Junior Participating Preferred Stock unless the date of issue of
such shares is prior to the record date for the first Quarterly Dividend Payment
Date, in which case dividends on such shares shall begin to accrue from the date
of issue of such shares, or unless the date of issue is a Quarterly Dividend
Payment Date or is a date after the record date for the determination of holders
of shares of Series A Junior Participating Preferred Stock entitled to receive a
quarterly dividend and before such Quarterly Dividend Payment Date in either of
which events such dividends shall begin to accrue and be cumulative from such
Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear
interest. Dividends paid on the shares of Series A Junior Participating
Preferred Stock in an amount less than the total amount of such dividends at the
time accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The Board of
Directors may fix a record date for the determination of holders of shares of
Series A Junior Participating Preferred Stock entitled to receive payment of a
dividend or distribution declared thereon, which record date shall be no more
than 60 days prior to the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series A Junior
Participating Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth,
each share of Series A Junior Participating Preferred Stock shall entitle the
holder thereof to 100 votes on all matters
8
<PAGE> 10
submitted to a vote of the stockholders of the Company. In the event the Company
shall at any time after the Rights Declaration Date (i) declare any dividend on
Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding
Common Stock, or (iii) combine the outstanding Common Stock into a smaller
number of shares, then in each such case the number of votes per share to which
holders of shares of Series A Junior Participating Preferred Stock were entitled
immediately prior to such event shall be adjusted by multiplying such number by
a fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
(B) Except as otherwise provided herein or by law, the holders of
shares of Series A Junior Participating Preferred Stock and the holders of
shares of Common Stock shall vote together as one class on all matters submitted
to a vote of shareholders of the Company.
(C) (i) If at any time dividends on any Series A Junior
Participating Preferred Stock shall be in arrears in an amount equal to six (6)
quarterly dividends thereon, the occurrence of such contingency shall mark the
beginning of a period (herein called a "default period") which shall extend
until such time when all accrued and unpaid dividends for all previous quarterly
dividend periods and for the current quarterly dividend period on all shares of
Series A Junior Participating Preferred Stock then outstanding shall have been
declared and paid or set apart for payment. During each default period, all
holders of Preferred Stock (including holders of the Series A Junior
Participating Preferred Stock) with dividends in arrears in an amount equal to
six (6) quarterly dividends thereon, voting as a class, irrespective of series,
shall have the right to elect two (2) Directors.
(ii) During any default period, such voting right of the holders of
Series A Junior Participating Preferred Stock may be exercised
initially at a special meeting called pursuant to subparagraph
(iii) of this Section 3(C) or at any annual meeting of
shareholders, and thereafter at annual meetings of stockholders,
provided that neither such voting right nor the right of the
holders of any other series of Preferred Stock, if any, to increase
in certain cases, the authorized number of Directors shall be
exercised unless the holders of ten percent (10%) in number of
shares of Preferred Stock outstanding shall be present in person or
by proxy. The absence of a quorum of the holders of Common Stock
shall not affect the exercise by the holders of Preferred Stock of
such voting right. At any meeting at which the holders of Preferred
Stock shall exercise such voting right initially during an existing
default period, they shall have the right, voting as a class, to
elect Directors to fill such vacancies, if any, in the Board of
Directors as may then exist up to two (2) Directors or, if such
right is exercised at an annual meeting, to elect two (2)
Directors. If the number which may be so elected at any special
meeting does not amount to the required number, the holders of the
Preferred Stock shall have the right to make such increase in the
number of Directors as shall be necessary to permit the election by
them of the required number. After the holders of the Preferred
Stock shall have exercised their right to elect Directors in any
default period and during the continuance of such period, the
number of Directors shall not be increased or decreased except by
vote of the holders of Preferred Stock as herein provided or
pursuant to the rights of any equity securities ranking senior to
or pari passu with the Series A Junior Participating Preferred
Stock.
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<PAGE> 11
(iii) Unless the holders of Preferred Stock shall, during an
existing default period, have previously exercised their right to
elect Directors, the Board of Directors may order, or any
stockholder or stockholders owning in the aggregate not less than
ten percent (10%) of the total number of shares of Preferred Stock
outstanding, irrespective of series, may request, the calling of a
special meeting of the holders of Preferred Stock, which meeting
shall thereupon be called by the Chairman of the Board or the
President and Chief Executive Officer of the Company. Notice of
such meeting and of any annual meeting at which holders of
Preferred Stock are entitled to vote pursuant to this paragraph
(C)(iii) shall be given to each holder of record of Preferred Stock
by mailing a copy of such notice to him at his last address as the
same appears on the books of the Company. Such meeting shall be
called for a time not earlier than 10 days and not later than 60
days after such order or request or in default of the calling of
such meeting within 60 days after such order or request, such
meeting may be called on similar notice by any stockholder or
stockholders owning in the aggregate not less than ten percent
(10%) of the total number of shares of Preferred Stock outstanding.
Notwithstanding the provisions of this paragraph (C)(iii), no such
special meeting shall be called during the period within 60 days
immediately preceding the date fixed for the next annual meeting of
the stockholders.
(iv) In any default period, the holders of Common Stock, and other
classes of stock of the Company if applicable, shall continue to be
entitled to elect the whole number of Directors until the holders
of Preferred Stock shall have exercised their right to elect two
(2) Directors voting as a class, after the exercise of which right
(x) the Directors so elected by the holders of Preferred Stock
shall continue in office until their successors shall have been
elected by such holders or until the expiration of the default
period, and (y) any vacancy in the Board of Directors may (except
as provided in paragraph (C)(ii) of this Section 3) be filled by
vote of a majority of the remaining Directors theretofore elected
by the holders of the class of stock which elected the Director
whose office shall become vacant. References in this paragraph (C)
to Directors elected by the holders of a particular class of stock
shall include Directors elected by such Directors to fill vacancies
as provided in clause (y) of the foregoing sentence.
(v) Immediately upon the expiration of a default period, (x) the
right of the holders of Preferred Stock as a class to elect
Directors shall cease, (y) the term of any Directors elected by the
holders of Preferred Stock as a class shall terminate, and (z) the
number of Directors shall be such number as may be provided for in
the Restated Certificate of Incorporation or By-laws irrespective
of any increase made pursuant to the provisions of paragraph
(C)(ii) of this Section 3 (such number being subject, however, to
change thereafter in any manner provided by law or in the Restated
Certificate of Incorporation or By-laws). Any vacancies in the
Board of Directors effected by the provisions of clause (y) and (z)
in the preceding sentence may be filled by a majority of the
remaining Directors.
(D) Except as set forth herein, holders of Series A Junior
Participating Preferred Stock shall have no special voting rights and their
consent shall not be required (except to the extent they are entitled to vote
with holders of Common Stock as set forth herein) for taking any corporate
action.
10
<PAGE> 12
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Junior Participating Preferred Stock as
provided in Section 2 are in arrears, thereafter and until all accrued and
unpaid dividends and distributions, whether or not declared, on shares of Series
A Junior Participating Preferred Stock outstanding shall have been paid in full,
the Company shall not:
(i) Declare or pay dividends on, make any other distributions on,
or redeem or purchase or otherwise acquire for consideration any
shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Junior
Participating Preferred Stock;
(ii) Declare or pay dividends on or make any other distributions on
any shares of stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the Series A
Junior Participating Preferred Stock except dividends paid ratably
on the Series A Junior Participating Preferred Stock and all such
parity stock on which dividends are payable or in arrears in
proportion to the total amounts to which the holders of all such
shares are then entitled;
(iii) Redeem or purchase or otherwise acquire for consideration
shares of any stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the Series A
Junior Participating Preferred Stock provided that the Company may
at any time redeem, purchase or otherwise acquire shares of any
such parity stock in exchange for shares of any stock of the
Company ranking junior (either as to dividends or upon dissolution,
liquidation or winding up) to the Series A Junior Participating
Preferred Stock; or
(iv) Purchase or otherwise acquire for consideration any shares of
Series A Junior Participating Preferred Stock or any shares of
stock ranking on a parity with the Series A Junior Participating
Preferred Stock except in accordance with a purchase offer made in
writing or by publication (as determined by the Board of Directors)
to all holders of such shares upon such terms as the Board of
Directors, after consideration of the respective annual dividend
rates and other relative rights and preferences of the respective
series and classes, shall determine in good faith will result in
fair and equitable treatment among the respective series or
classes.
(B) The Company shall not permit any subsidiary of the Company to
purchase or otherwise acquire for consideration any shares of stock of the
Company unless the Company could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series A Junior
Participating Preferred Stock purchased or otherwise acquired by the Company in
any manner whatsoever shall be retired and cancelled promptly after the
acquisition thereof. All such shares shall upon their cancellation become
authorized but unissued shares of Preferred Stock and may be reissued as part of
a new series of Preferred Stock to be created by resolution or resolutions of
the Board of Directors, subject to the conditions and restrictions on issuance
set forth herein.
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<PAGE> 13
Section 6. Liquidation, Dissolution or Winding Up.
(A) Upon any liquidation (voluntary or otherwise), dissolution or
winding up of the Company, no distribution shall be made to the holders of
shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Junior Participating Preferred Stock
unless, prior thereto, the holders of shares of Series A Junior Participating
Preferred Stock shall have received per share, the greater of 100 times $200 or
100 times the payment made per share of Common Stock, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not declared,
to the date of such payment (the "Series A Liquidation Preference"). Following
the payment of the full amount of the Series A Liquidation Preference, no
additional distributions shall be made to the holders of shares of Series A
Junior Participating Preferred Stock unless, prior thereto, the holders of
shares of Common Stock shall have received an amount per share (the "Common
Adjustment") equal to the quotient obtained by dividing (i) the Series A
Liquidation Preference by (ii) 100 (as appropriately adjusted as set forth in
subparagraph C below to reflect such events as stock splits, stock dividends and
recapitalizations with respect to the Common Stock) (such number in clause (ii),
the "Adjustment Number"). Following the payment of the full amount of the Series
A Liquidation Preference and the Common Adjustment in respect of all outstanding
shares of Series A Junior Participating Preferred Stock and Common Stock,
respectively, holders of Series A Junior Participating Preferred Stock and
holders of shares of Common Stock shall receive their ratable and proportionate
share of the remaining assets to be distributed in the ratio of the Adjustment
Number to 1 with respect to such Preferred Stock and Common Stock, on a per
share basis, respectively.
(B) In the event there are not sufficient assets available to
permit payment in full of the Series A Liquidation Preference and the
liquidation preferences of all other series of Preferred Stock, if any, which
rank on a parity with the Series A Junior Participating Preferred Stock then
such remaining assets shall be distributed ratably to the holders of such parity
shares in proportion to their respective liquidation preferences. In the event
there are not sufficient assets available to permit payment in full of the
Common Adjustment, then such remaining assets shall be distributed ratably to
the holders of Common Stock.
(C) In the event the Company shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such case
the Adjustment Number in effect immediately prior to such event shall be
adjusted by multiplying such Adjustment Number by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. If the Company shall enter
into any consolidation, merger, combination or other transaction in which the
shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property then in any such event the shares of
Series A Junior Participating Preferred Stock shall at the same time be
similarly exchanged or changed in an amount per share (subject to the provision
for adjustment hereinafter set forth) equal to 100 times the aggregate amount of
stock, securities, cash and/or any other property (payable in kind), as the case
may be, into which or for which each share of Common Stock is changed or
exchanged. In the event the Company shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then
12
<PAGE> 14
in each such case the amount set forth in the preceding sentence with respect to
the exchange or change of shares of Series A Junior Participating Preferred
Stock shall be adjusted by multiplying such amount by a fraction the numerator
of which is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common Stock
that are outstanding immediately prior to such event.
Section 8. Redemption. The shares of Series A Junior Participating
Preferred Stock shall not be redeemable.
Section 9. Ranking. The Series A Junior Participating Preferred
Stock shall rank junior to all other series of the Company's Preferred Stock as
to the payment of dividends and the distribution of assets, unless the terms of
any such series shall provide otherwise.
Section 10. Fractional Shares. Series A Junior Participating
Preferred Stock may be issued in fractions of a share which shall entitle the
holder, in proportion to such holder's fractional shares, to exercise voting
rights, receive dividends, participate in distributions and to have the benefit
of all other rights of holders of Series A Junior Participating Preferred Stock.
13
<PAGE> 1
BY-LAWS
OF
BURLINGTON RESOURCES INC.
AS AMENDED THROUGH JANUARY 13, 1999
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C> <C> <C> <C>
ARTICLE I OFFICES................................................................................. 1
Section 1 Registered Office and Agent........................................................ 1
Section 2 Other Offices...................................................................... 1
ARTICLE II STOCKHOLDERS............................................................................ 1
Section 1 Annual Meetings.................................................................... 1
Section 2 Special Meetings................................................................... 1
Section 3 Place of Meetings.................................................................. 2
Section 4 Notice of Meetings................................................................. 2
Section 5 Fixing of Record Date for Determining Stockholders................................. 2
Section 6 Quorum............................................................................. 3
Section 7 Organization....................................................................... 3
Section 8 Voting............................................................................. 4
Section 9 Inspectors......................................................................... 4
Section 10 List of Stockholders............................................................... 5
Section 11 Notice of Nominations and Business ................................................ 5
ARTICLE III BOARD OF DIRECTORS...................................................................... 7
Section 1 Number, Qualification and Term of Office........................................... 7
Section 2 Vacancies.......................................................................... 8
Section 3 Resignations....................................................................... 8
Section 4 Removals........................................................................... 8
Section 5 Place of Meetings; Books and Records............................................... 8
Section 6 Annual Meeting of the Board........................................................ 8
Section 7 Regular Meetings................................................................... 9
Section 8 Special Meetings................................................................... 9
Section 9 Quorum and Manner of Acting........................................................ 9
Section 10 Organization....................................................................... 9
Section 11 Consent of Directors in Lieu of Meeting............................................ 10
Section 12 Telephonic Meetings................................................................ 10
Section 13 Compensation....................................................................... 10
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
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<S> <C> <C> <C> <C>
ARTICLE IV COMMITTEES OF THE BOARD OF DIRECTORS.................................................... 10
Section 1 Executive Committee................................................................ 10
Section 2 Finance Committee.................................................................. 11
Section 3 Audit Committee.................................................................... 11
Section 4 Compensation and Nominating Committee.............................................. 12
Section 5 Committee Chairman, Books and Records.............................................. 12
Section 6 Alternates......................................................................... 13
Section 7 Other Committees................................................................... 13
Section 8 Quorum and Manner of Acting........................................................ 13
ARTICLE V OFFICERS................................................................................ 13
Section 1 Number............................................................................. 13
Section 2 Election, Term of Office and Qualifications........................................ 14
Section 3 Resignations....................................................................... 14
Section 4 Removals........................................................................... 14
Section 5 Vacancies.......................................................................... 14
Section 6 Compensation of Officers........................................................... 14
Section 7 Chairman of the Board.............................................................. 14
Section 8 Vice Chairman of the Board......................................................... 15
Section 9 President.......................................................................... 15
Section 10 Chief Executive Officer ........................................................... 15
Section 11 Chief Financial Officer ........................................................... 16
Section 12 Secretary.......................................................................... 17
Section 13 Treasurer.......................................................................... 17
Section 14 Absence or Disability of Officers.................................................. 17
ARTICLE VI STOCK CERTIFICATES AND TRANSFER THEREOF................................................. 18
Section 1 Stock Certificates................................................................. 18
Section 2 Transfer of Stock.................................................................. 18
Section 3 Transfer Agent and Registrar....................................................... 18
Section 4 Additional Regulations............................................................. 19
Section 5 Lost, Destroyed or Mutilated Certificates.......................................... 19
ARTICLE VII DIVIDENDS, SURPLUS, ETC................................................................. 19
ARTICLE VIII SEAL.................................................................................... 19
</TABLE>
ii
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<TABLE>
<CAPTION>
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<S> <C> <C> <C> <C>
ARTICLE IX FISCAL YEAR............................................................................. 20
ARTICLE X INDEMNIFICATION......................................................................... 20
Section 1 Right to Indemnification........................................................... 20
Section 2 Right of Indemnitee to Bring Suit.................................................. 20
Section 3 Nonexclusivity of Rights........................................................... 21
Section 4 Insurance, Contracts and Funding................................................... 21
Section 5 Definition of Director and Officer................................................. 22
Section 6 Indemnification of Employees and Agents of the Corporation......................... 22
ARTICLE XI CHECKS, DRAFTS, BANK ACCOUNTS, ETC...................................................... 22
Section 1 Checks, Drafts, Etc.; Loans........................................................ 22
Section 2 Deposits........................................................................... 22
ARTICLE XII AMENDMENTS.............................................................................. 23
</TABLE>
iii
<PAGE> 5
BY-LAWS
OF
BURLINGTON RESOURCES INC.
ARTICLE I
OFFICES
SECTION 1. REGISTERED OFFICE AND AGENT.
The registered office of the corporation is located at Corporation
Trust Center, 1209 Orange Street in the City of Wilmington, County of New
Castle, State of Delaware, and the name of its registered agent at such address
is The Corporation Trust Company.
SECTION 2. OTHER OFFICES.
The corporation may have offices at such other places both within and
without the State of Delaware as the Board of Directors may from time to time
determine or the business of the corporation may require.
ARTICLE II
STOCKHOLDERS
SECTION 1. ANNUAL MEETINGS.
A meeting of the stockholders for the purpose of electing directors and
for the transaction of such other business as may properly be brought before the
meeting shall be held annually at ten (10) o'clock A.M. on the third Thursday of
April, or at such other time on such other day as shall be fixed by resolution
of the Board of Directors. If the day fixed for the annual meeting shall be a
legal holiday such meeting shall be held on the next succeeding business day.
SECTION 2. SPECIAL MEETINGS.
Special meetings of the stockholders for any purpose or purposes may be
called only by a majority of the Board of Directors, the Chairman of the Board,
or the President. (Amended February 22, 1989)
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<PAGE> 6
SECTION 3. PLACE OF MEETINGS.
The annual meeting of the stockholders of the corporation shall be held
at the general offices of the corporation in the City of Houston, State of
Texas, or at such other place in the United States as may be stated in the
notice of the meeting. All other meetings of the stockholders shall be held at
such places within or without the State of Delaware as shall be stated in the
notice of the meeting. (Amended December 6, 1995)
SECTION 4. NOTICE OF MEETINGS.
4.1 Giving of Notice. Except as otherwise provided by statute, written
notice of each meeting of the stockholders, whether annual or special, shall be
given not less than ten nor more than sixty days before the date of the meeting
to each stockholder entitled to vote at such meeting. If mailed, notice shall be
given when deposited in the United States mails, postage prepaid, directed to
such stockholder at his or her address as it appears in the stock ledger of the
corporation. Each such notice shall state the place, date and hour of the
meeting, and, in the case of a special meeting, the purpose or purposes for
which the meeting is called.
4.2 Notice of Adjourned Meetings. When a meeting is adjourned to
another time and place, notice of the adjourned meeting need not be given if the
time and place thereof are announced at the meeting at which the adjournment is
given. If the adjournment is for more than thirty days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.
4.3 Waiver of Notice.
4.3.1 Whenever any notice is required to be given to any stockholder
under the provisions of these By-Laws, the Certificate of Incorporation or the
General Corporation Law of Delaware, a waiver thereof in writing, signed by the
person or persons entitled to such notice, whether before or after the time
stated therein, shall be deemed equivalent to the giving of such notice.
4.3.2 The attendance of a stockholder at a meeting shall constitute a
waiver of notice of such meeting, except when a stockholder attends a meeting
for the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened.
SECTION 5. FIXING OF RECORD DATE FOR DETERMINING STOCKHOLDERS.
5.1 Meetings. For the purpose of determining stockholders entitled to
notice of or to vote at any meeting of stockholders or any adjournment thereof,
the Board may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the Board, and
which record date shall not be more than sixty nor less than ten days before the
date of such meeting. If no record date is fixed by the Board, the record date
for
2
<PAGE> 7
determining stockholders shall be at the close of business on the day next
preceding the day on which notice is given, or, if notice is waived, at the
close of business on the day next preceding the day on which the meeting is
held. A determination of stockholders of record entitled to notice of or to vote
at the meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board may fix a new record date for the adjourned
meeting.
5.2 Dividends, Distributions and Other Rights. For the purpose of
determining stockholders entitled to receive payment of any dividend or other
distribution or allotment of any rights or the stockholders entitled to exercise
any rights in respect of any change, conversion or exchange of stock, or for the
purpose of any other lawful action, the Board may fix a record date, which
record date shall not precede the date upon which the resolution fixing the
record date is adopted, and which record date shall be not more than sixty days
prior to such action. If no record date is fixed, the record date for
determining stockholders for any such purpose shall be at the close of business
on the day on which the Board adopts the resolution relating thereto.
SECTION 6. QUORUM.
A majority of the outstanding shares of stock of the corporation
entitled to vote, present in person or represented by proxy, shall constitute a
quorum at a meeting of the stockholders; provided that where a separate vote by
a class or classes or by a series of a class is required, a majority of the
outstanding shares of such class or classes or of such series of a class,
present in person or represented by proxy at the meeting, shall constitute a
quorum entitled to take action with respect to the vote on that matter. If less
than a majority of the outstanding shares entitled to vote are represented at a
meeting, a majority of the shares so represented may adjourn the meeting from
time to time without further notice. If a quorum is present or represented at a
reconvened meeting following such an adjournment, any business may be transacted
that might have been transacted at the meeting as originally called. The
stockholders present at a duly organized meeting may continue to transact
business until adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum.
SECTION 7. ORGANIZATION.
At each meeting of the stockholders, the Chairman of the Board, or in
his or her absence such person as shall have been designated by the Board of
Directors, or in the absence of such designation a person elected by the holders
of a majority in number of shares of stock present in person or represented by
proxy and entitled to vote, shall act as Chairman of the meeting.
The Secretary, or in his or her absence or in the event he or she shall
be presiding over the meeting in accordance with the provisions of this Section,
an Assistant Secretary or, in the absence of the Secretary and all of the
Assistant Secretaries, any person appointed by the Chairman of the meeting,
shall act as Secretary of the meeting.
3
<PAGE> 8
SECTION 8. VOTING.
8.1 Generally. Unless otherwise provided in the Certificate of
Incorporation or a resolution of the Board of Directors creating a series of
stock, at each meeting of the stockholders, each holder of shares of any series
or class of stock entitled to vote at such meeting shall be entitled to one vote
for each share of stock having voting power in respect of each matter upon which
a vote is to be taken, standing in his or her name on the stock ledger of the
corporation on the record date fixed as provided in these By-Laws for
determining the stockholders entitled to vote at such meeting. In all matters
other than the election of Directors, if a quorum is present, the affirmative
vote of the majority of the shares present in person or represented by proxy at
the meeting and entitled to vote on the subject matter shall be the act of the
stockholders, unless the vote of a greater number is required by these By-Laws,
the Certificate of Incorporation or the General Corporation Law of Delaware.
Where a separate vote by a class or classes or by a series of a class is
required, if a quorum is present, the affirmative vote of the majority of shares
of such class or classes or series of a class present in person or represented
by proxy at the meeting shall be the act of such class or classes or series of a
class.
8.2 Voting for Directors. At each election of Directors the voting
shall be by ballot. Directors shall be elected by a plurality of the votes of
the shares present in person or represented by proxy at the meeting and entitled
to vote on the election of Directors.
8.3 Shares Held or Controlled by the Corporation. Shares of its own
capital stock belonging to the corporation, or to another corporation if a
majority of the shares entitled to vote in the election of directors of such
other corporation is held by the corporation, shall neither be entitled to vote
nor counted for quorum purposes.
8.4 Proxies. A stockholder may vote by proxy executed in writing by the
stockholder or by his or her attorney-in-fact. Alternatively, a stockholder may
vote by proxy by means of electronic transmission, including, but not limited
to, electronic mail, telephonic transmission or telegram; provided that any such
means of electronic transmission must set forth information from which it can be
determined that such electronic transmission was authorized by the stockholder.
Such written or electronically transmitted proxy shall be filed with the
Secretary of the corporation before or at the time of the meeting. A proxy shall
become invalid three years after the date of its execution, unless otherwise
provided in the proxy. A proxy with respect to a specified meeting shall entitle
the holder thereof to vote at any reconvened meeting following adjournment of
such meeting but shall not be valid after the final adjournment thereof.
(Amended July 8, 1998)
SECTION 9. INSPECTORS.
Prior to each meeting of stockholders, the Board of Directors shall
appoint one or more Inspectors who are not directors, candidates for directors
or officers of the corporation, who shall receive and determine the validity of
proxies and the qualifications of voters, and receive, inspect, count and report
to the meeting in writing the votes cast on all matters submitted to a vote at
such meeting. In case of failure of the Board of Directors to make such
appointments or
4
<PAGE> 9
in case of failure of any Inspector so appointed to act, the Chairman of the
Board shall make such appointment or fill such vacancies. Each Inspector,
immediately before entering upon his or her duties, shall subscribe to an oath
or affirmation faithfully to execute the duties of Inspector at such meeting
with strict impartiality and according to the best of his or her ability.
(Amended July 8, 1998)
SECTION 10. LIST OF STOCKHOLDERS.
The Secretary or other officer or agent having charge of the stock
ledger of the corporation shall prepare and make, at least ten days before every
meeting of stockholders, a complete list of the stockholders entitled to vote at
said meeting, arranged in alphabetical order and showing the address of each
stockholder and the number of shares of each class and series registered in the
name of each such stockholder. Such list shall be open to the examination of any
stockholder, for any purpose germane to the meeting, during ordinary business
hours, for a period of at least ten days prior to the meeting, either at a place
within the city where the meeting is to be held, which place shall be specified
in the notice of the meeting, or, if not so specified, at the place where the
meeting is to be held. Such list shall also be produced and kept at the time and
place of the meeting during the whole time thereof, and may be inspected by any
stockholder who is present. The stock ledger shall be the only evidence as to
who are the stockholders entitled to examine the stock ledger, the list required
by this section, or the books of the corporation, or to vote in person or by
proxy at any such meeting.
SECTION 11. NOTICE OF NOMINATIONS AND BUSINESS.
11.1 Generally. Nominations of persons for election to the Board of
Directors and the proposal of business to be transacted by the stockholders may
be made at an annual meeting of the stockholders (a) pursuant to the
corporation's notice with respect to such meeting, (b) by or at the direction of
the Board or (c) by any stockholder of record of the corporation who was a
stockholder of record at the time of the giving of the notice provided for in
Section 11.2, who is entitled to vote at the meeting and who has complied with
the notice procedures set forth in this Section 11. A stockholder proceeding
under this Section 11 shall also comply with all applicable requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and the rules
and regulations thereunder with respect to matters set forth in this Section 11.
Nothing in this Section 11 shall be deemed to affect any rights of stockholders
to request inclusion of proposals in the corporation's proxy statement pursuant
to Rule 14a-8 under the Exchange Act.
11.2 Procedures.
11.2.1 For nominations or other business to be properly brought before
an annual meeting of the stockholders by a stockholder pursuant to Section 11.1
(c), (1) the stockholder must have given timely notice thereof in writing to the
Secretary, (2) such business must be a proper matter for stockholder action
under the General Corporation Law of Delaware, (3) if the stockholder, or the
beneficial owner on whose behalf any such proposal or nomination is made, has
provided the corporation with a Solicitation Notice, as that term is defined in
subclause (c)(iii) of this Section 11.2, such stockholder or beneficial owner
must, in the case of a proposal,
5
<PAGE> 10
have delivered a proxy statement and form of proxy to holders of at least the
percentage of the corporation's voting shares required under applicable law to
carry any such proposal, or, in the case of a nomination or nominations, have
delivered a proxy statement and form of proxy to holders of a percentage of the
corporation's voting shares reasonably believed by such stockholder or
beneficial holder to be sufficient to elect the nominee or nominees proposed to
be nominated by such stockholder, and must, in either case, have included in
such materials the Solicitation Notice, and (4) if no Solicitation Notice
relating thereto has been timely provided pursuant to this Section 11, the
stockholder or beneficial owner proposing such business or nomination must not
have solicited a number of proxies sufficient to have required the delivery of
such a Solicitation Notice under this Section 11. To be timely, a stockholder's
notice shall be delivered to the Secretary at the principal executive offices of
the corporation in the City of Houston, State of Texas, not less than 60 days
prior to the first anniversary (the "Anniversary") of the date on which the
corporation first mailed its proxy materials for the preceding year's annual
meeting of the stockholders. However, that if the date of the annual meeting is
advanced more than 30 days prior to or delayed by more than 30 days after the
Anniversary of the preceding year's annual meeting, notice by the stockholder to
be timely must be so delivered not later than the close of business on the later
of (i) the 90th day prior to such annual meeting or (ii) the 10th day following
the day on which public announcement of the date of such meeting is first made.
Such stockholder's notice shall set forth (a) as to each person whom the
stockholder proposes to nominate for election or reelection as a director all
information relating to such person as would be required to be disclosed in
solicitations of proxies for the election of such nominees as directors pursuant
to Regulation 14A the Exchange Act, and such person's written consent to serve
as a director if elected; (b) as to any other business that the stockholder
proposes to bring before the annual meeting of the stockholders, a brief
description of such business, the reasons for conducting such business at the
annual meeting and any material interest in such business of such stockholder
and the beneficial owner, if any, on whose behalf the proposal is made; (c) as
to the stockholder giving the notice and the beneficial owner, if any, on whose
behalf the nomination or proposal is made, (i) the name and address of such
stockholder, as they appear on the corporation's books, and of such beneficial
owner, (ii) the class and number of shares of the corporation that are owned
beneficially and of record by such stockholder and such beneficial owner, and
(iii) whether either such stockholder or beneficial owner intends to deliver a
proxy statement and form of proxy to holders of, in the case of a proposal, at
least the percentage of the corporation's voting shares required under
applicable law to carry the proposal or, in the case of a nomination or
nominations, a sufficient number of holders of the corporation's voting shares
to elect such nominee or nominees (an affirmative statement of such intent, a
"Solicitation Notice").
11.2.2 If the number of directors to be elected to the Board is
increased and there is no public announcement naming all of the nominees for
director or specifying the size of the increased Board made by the corporation
at least 70 days prior to the Anniversary, this Section 11.2.2 shall govern. In
this case a stockholder's notice required by these By-Laws shall also be
considered timely, but only with respect to nominees for any new positions
created by such increase, if it shall be delivered to the Secretary at the
principal executive offices of the corporation in the City of Houston, State of
Texas not later than the close of business on the 10th day following the day on
which such public announcement is first made by the corporation.
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11.2.3 Only such business shall be conducted at a special meeting of
the stockholders as shall have been brought before the special meeting pursuant
to the corporation's notice of meeting. Nominations of persons for election to
the Board may be made at a special meeting of the stockholders at which
directors are to be elected pursuant to the corporation's notice of meeting (a)
by or at the direction of the Board or (b) by any stockholder of record at the
time of giving of notice provided for in this paragraph, who shall be entitled
to vote at the special meeting and who complies with the notice procedures set
forth in this Section 11. Nominations by stockholders of persons for election to
the Board may be made at such a special meeting of the stockholder if the
stockholder's notice required by the second paragraph of this Section 11 shall
be delivered to the later than the close of business on the later of the 90th
day prior to such special meeting or the 10th day following the day on which
public announcement is first made of the date of the special meeting and of the
nominees proposed by the Board to be elected at such special meeting.
11.2.4 Only persons nominated in accordance with the procedures set
forth in this Section 11 shall be eligible to serve as directors and only such
business shall be conducted at an annual meeting of the stockholders as shall
have been brought before the annual meeting in accordance with the procedures
set forth in this Section. The Chairman of the meeting shall have the power and
the duty to determine whether a nomination or any business proposed to be
brought before the annual meeting has been made in accordance with the
procedures set forth in these By-Laws and, if any proposed nomination or
business is not in compliance with these By-Laws, to declare that such defective
proposed business or nomination shall not be presented for stockholder action at
the annual meeting and shall be disregarded.
11.3 For purposes of this Section, "public announcement" shall mean
disclosure in a press release reported by the Dow Jones News Service, Associated
Press or a comparable national news service or in a document publicly filed by
the corporation with the Securities and Exchange Commission pursuant to Section
13, 14 or 15(d) of the Exchange Act. (Added January 13, 1999)
ARTICLE III
BOARD OF DIRECTORS
SECTION 1. NUMBER, QUALIFICATION AND TERM OF OFFICE.
The business, property and affairs of the corporation shall be managed
by a Board consisting of not less than one Director. The Board of Directors
shall from time to time by a vote of a majority of the Directors then in office
fix the specific number of Directors to constitute the Board. At each annual
meeting of stockholders a Board of Directors shall be elected by the
stockholders for a term of one year. Each Director shall serve until his or her
successor is elected and shall qualify.
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SECTION 2. VACANCIES.
Vacancies in the Board of Directors and newly created directorships
resulting from any increase in the authorized number of Directors may be filled
by a majority of the Directors then in office, although less than a quorum, or
by a sole remaining Director, at any regular or special meeting of the Board of
Directors.
SECTION 3. RESIGNATIONS.
Any Director may resign at any time upon written notice to the
Secretary of the corporation. Such resignation shall take effect on the date of
receipt of such notice or at any later date specified therein; and the
acceptance of such resignation, unless required by the terms thereof, shall not
be necessary to make it effective. When one or more Directors shall resign
effective at a future date, a majority of the Directors then in office,
including those who have resigned, shall have power to fill such vacancy or
vacancies to take effect when such resignation or resignations shall become
effective.
SECTION 4. REMOVALS.
Any Director may be removed, with cause, at any special meeting of the
stockholders called for that purpose, by the affirmative vote of the holders of
a majority in number of shares of the corporation entitled to vote for the
election of such Director, and the vacancy in the Board caused by any such
removal may be filled by the stockholders at such a meeting.
SECTION 5. PLACE OF MEETINGS; BOOKS AND RECORDS.
The Board of Directors may hold its meetings, and have an office or
offices, at such place or places within or without the State of Delaware as the
Board from time to time may determine.
The Board of Directors, subject to the provisions of applicable
statutes, may authorize the books and records of the corporation, and offices or
agencies for the issue, transfer and registration of the capital stock of the
corporation, to be kept at such place or places outside of the State of Delaware
as, from time to time, may be designated by the Board of Directors.
SECTION 6. ANNUAL MEETING OF THE BOARD.
The first meeting of each newly elected Board of Directors, to be known
as the Annual Meeting of the Board, for the purpose of electing officers,
designating committees and the transaction of such other business as may come
before the Board, shall be held as soon as practicable after the adjournment of
the annual meeting of stockholders, and no notice of such meeting shall be
necessary to the newly elected Directors in order legally to constitute the
meeting, provided a quorum shall be present. In the event such meeting is not
held due to the absence of a quorum, the meeting may be held at such time and
place as shall be specified in a
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notice given as hereinafter provided for special meetings of the Board of
Directors, or as shall be specified in a written waiver signed by all of the
newly elected Directors.
SECTION 7. REGULAR MEETINGS.
The Board of Directors shall, by resolution, provide for regular
meetings of the Board at such times and at such places as it deems desirable.
Notice of regular meetings need not be given.
SECTION 8. SPECIAL MEETINGS.
Special meetings of the Board of Directors may be called by the
Chairman of the Board or the President and shall be called by the Secretary on
the written request of five Directors on such notice as the person or persons
calling the meeting shall deem appropriate in the circumstances. Notice of each
such special meeting shall be mailed to each Director or delivered to him or her
by telephone, telegraph or any other means of electronic communication, in each
case addressed to his or her residence or usual place of business, or delivered
to him or her in person or given to him or her orally. The notice of meeting
shall state the time and place of the meeting but need not state the purpose
thereof. Whenever any notice is required to be given to any Director under the
provisions of these By-Laws, the Certificate of Incorporation or the General
Corporation Law of Delaware, a waiver thereof in writing, signed by the person
or persons entitled to such notice, whether before or after the time stated
therein, shall be deemed equivalent to the giving of such notice. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the Board or any committee appointed by the Board need be specified in the
waiver of notice of such meeting. Attendance of a Director at any meeting shall
constitute a waiver of notice of such meeting except when a Director attends a
meeting for the express purpose of objecting to the transaction of any business
because the meeting was not lawfully called or convened.
(Amended July 7, 1992 and October 22, 1997)
SECTION 9. QUORUM AND MANNER OF ACTING.
Except as otherwise provided by statute, the Certificate of
Incorporation, or these By-Laws, the presence of a majority of the total number
of Directors shall constitute a quorum for the transaction of business at any
regular or special meeting of the Board of Directors, and the act of a majority
of the Directors present at any such meeting at which a quorum is present shall
be the act of the Board of Directors. In the absence of a quorum, a majority of
the Directors present may adjourn the meeting, from time to time, until a quorum
is present. Notice of any such adjourned meeting need not be given.
SECTION 10. ORGANIZATION.
At every meeting of the Board of Directors, the Chairman of the Board
or in his or her absence the President or, if both of the said officers are
absent, a Chairman chosen by a majority of the Directors present shall act as
Chairman of the meeting. The Secretary, or in his or her absence, an Assistant
Secretary, or in the absence of the Secretary and all the Assistant
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Secretaries, any person appointed by the Chairman of the meeting, shall act as
Secretary of the meeting. (Amended July 7, 1992)
SECTION 11. CONSENT OF DIRECTORS IN LIEU OF MEETING.
Unless otherwise restricted by the Certificate of Incorporation or by
these By-Laws, any action required or permitted to be taken at any meeting of
the Board of Directors, or any committee designated by the Board, may be taken
without a meeting if all members of the Board or committee consent thereto in
writing, and such written consent is filed with the minutes of the proceedings
of the Board or committee.
SECTION 12. TELEPHONIC MEETINGS.
Members of the Board of Directors, or any committee designated by the
Board of Directors, may participate in a meeting of the Board or committee by
means of conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other, and
participation in such a meeting shall constitute presence in person at such
meeting.
SECTION 13. COMPENSATION.
Each Director, who is not a full-time salaried officer of the
corporation or any of its wholly owned subsidiaries, when authorized by
resolution of the Board of Directors, may receive as a Director a stated salary
or an annual retainer and in addition may be allowed a fixed fee and his or her
reasonable expenses for attendance at each regular or special meeting of the
Board of any Committee thereof.
ARTICLE IV
COMMITTEES OF THE BOARD OF DIRECTORS
SECTION 1. EXECUTIVE COMMITTEE.
The Board of Directors may, in its discretion, designate annually an
Executive Committee consisting of not less than five Directors as it may from
time to time determine. The Committee shall have and may exercise such powers
and authority of the Board of Directors in the management of the business and
affairs of the corporation as the Board of Directors may from time to time
prescribe and may authorize the seal of the corporation to be affixed to all
papers which may require it, but the Committee shall have no power or authority
to amend the Certificate of Incorporation (except that the Committee may, to the
extent authorized in the resolution or resolutions providing for the issuance of
shares of stock adopted by the Board of Directors, fix the designations and any
of the preferences or rights of such shares relating to dividends, redemption,
dissolution, any distribution of assets of the corporation or the conversion
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into, or the exchange of such shares for, shares of any other class or classes
or any other series of the same or any other class or classes of stock of the
corporation or fix the number of shares of any series of stock or authorize the
increase or decrease of the shares of any series), adopt an agreement of merger
or consolidation, recommend to the stockholders the sale, lease or exchange of
all or substantially all of the corporation's property and assets, recommend to
the stockholders a dissolution of the corporation or a revocation of a
dissolution, amend the By-Laws of the corporation, elect officers or fill
vacancies on the Board of Directors or any Committee of the Board, declare a
dividend or authorize the issuance of stock. (Amended October 22, 1997)
SECTION 2. FINANCE COMMITTEE.
The Board of Directors may, in its discretion, designate annually a
Finance Committee, consisting of such number of Directors as the Board of
Directors may from time to time determine. The Committee shall monitor, review,
appraise and recommend to the Board of Directors appropriate action with respect
to the corporation's capital structure, its source of funds and its financial
position; review and recommend appropriate delegations of authority to
management on expenditures and other financial commitments; review terms and
conditions of financing plans; develop and recommend dividend policies and
recommend to the Board specific dividend payments; review the performance of the
trustee of the corporation's pension trust fund, and any proposed change in the
investment policy of the trustee with respect to such fund; and such other
duties, functions and powers as the Board may from time to time prescribe.
SECTION 3. AUDIT COMMITTEE.
The Board of Directors shall designate annually an Audit Committee
consisting of not less than three Directors as it may from time to time
determine, none of whom shall be officers of the corporation. The Committee
shall recommend to the Board the selection, retention or termination of the
corporation's independent accountants; review the scope of other professional
services provided by the independent accountants and consider the possible
effect of the performance of such services on the independence of the
accountants; review with management and the independent accountants the proposed
overall scope of the annual audit, the adequacy of the corporation's system of
internal accounting controls and the corporation's financial statements, basic
accounting and financial policies and practices, standard and special tests used
in verifying the corporation's statements of account and in determining the
soundness of the corporation's financial condition and report to the Board the
results of such reviews; review the policies and practices pertaining to
publication of quarterly and annual statements to assure consistency with
audited results and the implementing of policies and practices recommended by
the independent accountants; ensure that suitable independent audits are made of
the operations and results of subsidiary corporations and affiliates; review
with management and the independent accountants the corporation's policies
prohibiting unethical or illegal activities by the corporation's employees and
monitoring compliance with the corporation's code of business conduct; and such
other duties, functions and powers as the Board may from time to time prescribe.
(Amended January 13, 1999)
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SECTION 4. COMPENSATION AND NOMINATING COMMITTEE.
The Board of Directors shall designate annually a Compensation and
Nominating Committee consisting of such number of Directors as the Board of
Directors may from time to time determine. The Committee shall review, report
and make recommendations to the Board of Directors on the following matters:
(a) The compensation of the Chief Executive Officer and all senior
officers of the corporation and its principal operating
subsidiaries reporting directly to the Chief Executive Officer
following an annual review of management's recommendations for
the individuals involved. If circumstances involving individuals
require a salary adjustment between such reviews, a
recommendation may be made directly to the Board of Directors by
the Chief Executive Officer without the necessity of a meeting of
the Compensation and Nominating Committee.
(b) The size and composition of the Board and nominees for Directors;
evaluate the performance of the officers of the corporation and
together with management, select and recommend to the Board
appropriate individuals for election, appointment and promotion
as officers of the corporation and ensure the continuity of able
capable management.
(c) Any proposed stock option plans, stock purchase plans, retirement
plans, and any other plans, systems and practices of the
corporation relating to the compensation of any employees of the
corporation and any proposed plans of any subsidiary company
involving the issuance or purchase of capital stock of the
corporation.
(d) Such other matters as the Board may from time to time prescribe.
The Committee shall carry out the duties assigned to the Committee
under any existing stock option plans or other existing compensation or benefit
plans; and shall perform such other duties and have such other powers as the
Board of Directors may from time to time prescribe. (Amended July 7, 1992 and
December 6, 1995)
SECTION 5. COMMITTEE CHAIRMAN, BOOKS AND RECORDS.
Each Committee shall elect a Chairman to serve for such term as it may
determine, shall fix its own rules of procedure and shall meet at such times and
places and upon such call or notice as shall be provided by such rules. It shall
keep a record of its acts and proceedings, and all action of the Committee shall
be reported to the Board of Directors at the next meeting of the Board.
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SECTION 6. ALTERNATES.
Alternate members of the Committees prescribed by this Article IV may
be designated by the Board of Directors from among the Directors to serve as
occasion may require. Whenever a quorum cannot be secured for any meeting of any
such Committee from among the regular members thereof and designated alternates,
the member or members of such Committee present at such meeting and not
disqualified from voting, whether or not he or she or they constitute a quorum,
may unanimously appoint another member of the Board to act at the meeting in the
place of such absent or disqualified member.
Alternative members of such Committees shall receive a reimbursement
for expenses and compensation at the same rate as regular members of such
Committees.
SECTION 7. OTHER COMMITTEES.
The Board of Directors may designate such other Committees, each to
consist of two or more Directors, as it may from time to time determine, and
each such Committee shall serve for such term and shall have and may exercise,
during intervals between meetings of the Board of Directors, such duties,
functions and powers as the Board of Directors may from time to time prescribe.
SECTION 8. QUORUM AND MANNER OF ACTING.
At each meeting of any Committee the presence of a majority of the
members of such Committee, whether regular or alternate, shall be necessary to
constitute a quorum for the transaction of business, and if a quorum is present
the concurrence of a majority of those present shall be necessary for the taking
of any action; provided, however, that no action may be taken by the Executive
Committee or the Finance Committee when two or more officers of the corporation
are present as members at a meeting of either such Committee unless such action
shall be concurred in by the vote of two or more members of such Committee who
are not officers of the corporation.
ARTICLE V
OFFICERS
SECTION 1. NUMBER.
The officers of the corporation shall be a Chairman of the Board, a
President, a Chief Executive Officer, one or more Vice Chairmen of the Board, a
Chief Financial Officer, a Secretary, a Treasurer, and such other officers as
may be elected or appointed by the Board of
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Directors. Any number of offices may be held by the same person. (Amended July
7, 1992, December 6, 1995, October 22, 1997 and July 8, 1998)
SECTION 2. ELECTION, TERM OF OFFICE AND QUALIFICATIONS.
The officers of the corporation shall be elected annually by the Board
of Directors. Each officer elected by the Board of Directors shall hold office
until his or her successor shall have been duly elected and qualified, or until
he or she shall have died, resigned or been removed in the manner hereinafter
provided.
SECTION 3. RESIGNATIONS.
Any officer may resign at any time upon written notice to the Secretary
of the corporation. Such resignation shall take effect at the date of its
receipt, or at any later date specified therein; and the acceptance of such
resignation, unless required by the terms thereof, shall not be necessary to
make it effective.
SECTION 4. REMOVALS.
Any officer elected or appointed by the Board of Directors may be
removed, with or without cause, by the Board of Directors at a regular meeting
or special meeting of the Board. Any officer or agent appointed by any officer
or committee may be removed, either with or without cause, by such appointing
officer or committee.
SECTION 5. VACANCIES.
Any vacancy occurring in any office of the corporation shall be filled
for the unexpired portion of the term in the same manner as prescribed in these
By-Laws for regular election or appointment to such office.
SECTION 6. COMPENSATION OF OFFICERS.
The compensation of all officers elected by the Board of Directors
shall be approved or authorized by the Board of Directors or by the Chief
Executive Officer when so authorized by the Board of Directors or these By-Laws.
(Amended July 7, 1992, December 6, 1995 and July 8, 1998)
SECTION 7. CHAIRMAN OF THE BOARD.
The Chairman of the Board shall, when present, preside at all meetings
of the stockholders and of the Board of Directors; have authority to call
special meetings of the stockholders and of the Board of Directors; have
authority to sign and acknowledge in the name and on behalf of the corporation
all stock certificates, contracts or other documents and instruments except when
the signing thereof shall be expressly delegated to some other officer or agent
by the Board of Directors or required by law to be otherwise signed or executed
and, unless
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otherwise provided by law or by the Board of Directors, may authorize any
officer, employee or agent of the corporation to sign, execute and acknowledge
in his or her place and stead all such documents and instruments. He or she
shall consult with the President regarding the strategic direction and business
and affairs of the corporation and shall have such other powers and perform such
other duties as from time to time may be assigned to him or her by the Board of
Directors or the Executive Committee. (Amended July 7, 1992, December 6, 1995
and July 8, 1998)
SECTION 8. VICE CHAIRMAN OF THE BOARD
The Vice Chairman of the Board shall, in the absence of the Chairman of
the Board, preside at all meetings of the stockholders and of the Board. He or
she shall have such other powers and perform such other duties as from time to
time may be assigned to him or her by the Board of Directors, the Chairman of
the Board, or the President. (Amended October 22, 1997 and July 8, 1998)
SECTION 9. PRESIDENT.
The President shall, in the absence of the Chairman of the Board and
the Chief Executive Officer, preside at all meetings of the stockholders and of
the Board and have authority to call special meetings of the stockholders and of
the Board and have authority to call special meetings of the stockholders and of
the Board. The President shall have authority to sign and acknowledge in the
name and on behalf of the corporation all stock certificates, contracts or other
documents and instruments, except when the signing thereof shall be expressly
delegated to some other officer or agent by the Board, the Chairman of the Board
or the Chief Executive Officer, or required by law to be otherwise signed or
executed and, unless otherwise provided by law or by the Board, may authorize
any officer, employee or agent of the corporation to sign, execute and
acknowledge in his place and stead all such documents and instruments. He shall
have such other powers and perform such other duties as from time to time may be
assigned to him by the Board of Directors, the Executive Committee, the Chairman
of the Board or the Chief Executive Officer. The President shall have such power
and authority as is usual, customary and desirable to perform the duties of the
office. (Amended July 8, 1998)
SECTION 10. CHIEF EXECUTIVE OFFICER.
The Chief Executive Officer shall have general authority over the
property, business and affairs of the corporation, and over all other officers,
agents and employees of the corporation, subject to the control and direction of
the Board of Directors and the Executive Committee, including the power to sign
and acknowledge in the name and on behalf of the corporation all stock
certificates, contracts or other documents and instruments except when the
signing thereof shall be expressly delegated to some other officer or agent by
the Board of Directors or required by law to be otherwise signed or executed
and, unless otherwise provided by law or by the Board of Directors, may
authorize any officer, employee or agent of the corporation to sign, execute and
acknowledge in his or her place and stead all such documents and instruments; he
or she shall fix the compensation of officers of the corporation other than his
or her own compensation
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and that of the senior officers of the corporation and its principal operating
subsidiaries reporting directly to him or her; and he or she shall approve
proposed employee compensation and benefit plans of subsidiary companies not
involving the issuance or purchase of capital stock of the corporation.
The Chief Executive Officer is hereby authorized, without further
approval of the Finance Committee or the Board of Directors:
(a) To approve any expenditure by the corporation of up to $20
million for those expenditure categories presented to the Board
of Directors in the annual budget and up to $10 million for any
expenditure categories not presented, including investments,
leases, options to purchase or lease assets, business
acquisitions and land purchases.
(b) To approve individual cost overruns of up to 10% of any amounts
approved by or presented to the Board of Directors.
(c) To approve disposition of assets and interests in securities of
subsidiaries or related commitments, provided that the aggregate
market value of the assets being disposed of in any one such
transaction does not exceed $10 million.
(d) To enter into leases or extensions thereof and other agreements
with respect to the assets of the corporation, including
interests in minerals and real estate, for a term of not more
than 10 years or for an unlimited term if the aggregate initial
rentals, over the term of the lease, including renewal options,
do not exceed $3 million.
(e) To approve increases in the capital budgets of the corporation's
operating subsidiaries provided such increases in the aggregate
do not exceed 10% of the corporation's capital budget for the
fiscal year.
(f) To approve in emergency situations commitments in excess of the
above-described limits provided they are in the interests of the
corporation.
The above delegation of authority does not authorize the corporation or its
subsidiaries to make a significant change in its business or to issue the
corporation's capital stock without the specific approval of the Board of
Directors. Notwithstanding these limitations, the Chief Executive Officer shall
have such power and authority as is usual, customary and desirable to perform
all the duties of the office. (Amended July 7, 1992, December 6, 1995, October
22, 1997 and July 8, 1998)
SECTION 11. CHIEF FINANCIAL OFFICER.
The Chief Financial Officer shall have responsibility for development
and administration of the corporation's financial plans and all financial
arrangements, its insurance programs, its
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cash deposits and short term investments, its accounting policies, and its
federal and state tax returns. Such officer shall also be responsible for the
corporation's internal control procedures and for its relationship with the
financial community. (Amended July 7, 1992, December 6, 1995 and July 8, 1998)
SECTION 12. SECRETARY.
The Secretary shall record the proceedings of the meetings of the
stockholders and directors, in one or more books kept for that purpose; see that
all notices are duly given in accordance with the provisions of the By-Laws or
as required by law; have charge of the corporate records and of the seal of the
corporation; affix the seal of the corporation or a facsimile thereof, or cause
it to be affixed, to all certificates for shares prior to the issue thereof and
to all documents the execution of which on behalf of the corporation under its
seal is duly authorized by the Board of Directors or otherwise in accordance
with the provisions of the By-Laws; keep a register of the post office address
of each stockholder, director or member, sign with the Chairman of the Board or
the President, certificates for shares of stock of the corporation, the issuance
of which shall have been duly authorized by resolution of the Board of
Directors; have general charge of the stock transfer books of the corporation;
and in general, perform all duties incident to the office of Secretary and such
other duties as from time to time may be assigned to him or her by the Board of
Directors, the Executive Committee, the Chairman of the Board, the President, or
the corporation's legal counsel. (Amended July 7, 1992, December 6, 1995 and
July 8, 1998)
SECTION 13. TREASURER.
The Treasurer shall have the responsibility for the custody and
safekeeping of all funds of the corporation and shall have charge of their
collection, receipt and disbursement; shall receive and have authority to sign
receipts for all monies paid to the corporation and shall deposit the same in
the name and to the credit of the corporation in such banks or depositories as
the Board of Directors shall approve; shall endorse for collection on behalf of
the corporation all checks, drafts, notes and other obligations payable to the
corporation; shall sign or countersign all notes, endorsements, guaranties and
acceptances made on behalf of the corporation when and as directed by the Board
of Directors; shall give bond for the faithful discharge of his or her duties in
such sum and with such surety or sureties as the Board of Directors may require;
shall have the responsibility for the custody and safekeeping of all securities
of the corporation; and in general shall have such other powers and perform such
other duties as are incident to the office of Treasurer and as from time to time
may be prescribed by the Board of Directors or be delegated to him or her by the
Chairman of the Board, the President or the Chief Financial Officer. (Amended
July 7, 1992, December 6, 1995 and July 8, 1998)
SECTION 14. ABSENCE OR DISABILITY OF OFFICERS.
In the absence or disability of the Chairman of the Board, any Vice
Chairman of the Board or the President, the Board of Directors may designate, by
resolution, individuals to
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perform the duties of those absent or disabled. The Board of Directors may also
delegate this power to a committee or to a senior corporate officer. (Amended
July 7, 1992 and October 22, 1997)
ARTICLE VI
STOCK CERTIFICATES AND TRANSFER THEREOF
SECTION 1. STOCK CERTIFICATES.
Except as otherwise permitted by statute, the Certificate of
Incorporation or resolution or resolutions of the Board of Directors, every
holder of stock in the corporation shall be entitled to have a certificate,
signed by or in the name of, the corporation by the Chairman of the Board, the
President, or a Vice President, and by the Treasurer or an Assistant Treasurer,
or the Secretary or an Assistant Secretary of the corporation, certifying the
number of shares, and the class and series thereof, owned by him or her in the
corporation. Any and all of the signatures on the certificate may be a
facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the corporation with the same effect as if he or she
were such officer, transfer agent or registrar at the date of issue.
(Amended July 7, 1992)
SECTION 2. TRANSFER OF STOCK.
Transfer of shares of the capital stock of the corporation shall be
made only on the books of the corporation by the holder thereof, or by his or
her attorney duly authorized, and on surrender of the certificate or
certificates for such shares. A person in whose name shares of stock stand on
the books of the corporation shall be deemed the owner thereof as regards the
corporation, and the corporation shall not, except as expressly required by
statute, be bound to recognize any equitable or other claim to, or interest in,
such shares on the part of any other person whether or not it shall have express
or other notice thereof.
SECTION 3. TRANSFER AGENT AND REGISTRAR.
The corporation shall at all times maintain a transfer office or agency
in the Borough of Manhattan, The City of New York, in charge of a transfer agent
designated by the Board of Directors (who shall have custody, subject to the
direction of the Secretary, of the original stock ledger and stock records of
the corporation), where the shares of the capital stock of the corporation of
each class shall be transferable, and also a registry office in the Borough of
Manhattan, The City of New York, other than its transfer office or agency in
said city, in charge of a registrar designated by the Board of Directors, where
its stock of each class shall be registered. The corporation may, in addition to
the said offices, if and whenever the Board of Directors shall so determine,
maintain in such place or places as the Board shall determine, one or more
additional transfer offices or agencies, each in charge of a transfer agent
designated by the Board, where the shares of capital stock of the corporation of
any class or classes shall be transferable, and also one
18
<PAGE> 23
or more additional registry offices, each in charge of a registrar designated by
the Board of Directors, where such shares of stock of any class or classes shall
be registered. Except as otherwise provided by resolution of the Board of
Directors in respect of temporary certificates, no certificates for shares of
capital stock of the corporation shall be valid unless countersigned by a
transfer agent and registered by a registrant authorized as aforesaid.
SECTION 4. ADDITIONAL REGULATIONS.
The Board of Directors may make such additional rules and regulations
as it may deem expedient concerning the issue, transfer and registration of
certificates for shares of the capital stock of the corporation.
SECTION 5. LOST, DESTROYED OR MUTILATED CERTIFICATES.
The Board of Directors may provide for the issuance of new certificates
of stock to replace certificates of stock lost, stolen, mutilated or destroyed,
or alleged to be lost, stolen, mutilated or destroyed, upon such terms and in
accordance with such procedures as the Board of Directors shall deem proper and
prescribe.
ARTICLE VII
DIVIDENDS, SURPLUS, ETC.
Except as otherwise provided by statute or the Certificate of
Incorporation, the Board of Directors may declare dividends upon the shares of
its capital stock either (1) out of its surplus, or (2) in case there shall be
no surplus, out of its net profits for the fiscal year, whenever, and in such
amounts as, in its opinion, the condition of the affairs of the corporation
shall render it advisable. Dividends may be paid in cash, in property, or in
shares of the capital stock of the corporation.
ARTICLE VIII
SEAL
The Board of Directors shall adopt a suitable corporate seal which
shall be in the form imprinted hereon. The seal may be used by causing it or a
facsimile thereof to be impressed or affixed or in any other manner reproduced.
19
<PAGE> 24
ARTICLE IX
FISCAL YEAR
The fiscal year of the corporation shall begin on the first day of
January of each year.
ARTICLE X
INDEMNIFICATION
SECTION 1. RIGHT TO INDEMNIFICATION.
Each person who was or is made a party or is threatened to be made a
party to or is involved (including, without limitation, as a witness) in any
actual or threatened action, suit or proceeding, whether civil, criminal,
administrative or investigative (hereinafter a "proceeding"), by reason of the
fact that he or she is or was a Director or officer of the corporation or is or
was serving at the request of the corporation as a director, officer, employee
or agent of another corporation or of a partnership, joint venture, trust or
other enterprise, including service with respect to an employee benefit plan
(hereinafter an "indemnitee"), whether the basis of such proceeding is alleged
action in an official capacity as a Director, officer, employee or agent or in
any other capacity while serving as such a director, officer, employee or agent,
shall be indemnified and held harmless by the corporation to the full extent
authorized by the Delaware General Corporation Law, as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to the extent
that such amendment permits the corporation to provide broader indemnification
rights than said law permitted the corporation to provide prior to such
amendment), or by other applicable law as then in effect, against all expense,
liability and loss (including attorneys' fees, judgments, fines, ERISA excise
taxes or penalties and amounts to be paid in settlement) actually and reasonably
incurred or suffered by such indemnitee in connection therewith and such
indemnification shall continue as to an indemnitee who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
indemnitee's heirs, executors and administrators, provided, however, that except
as provided in Section 2 of this Article with respect to proceedings seeking to
enforce rights to indemnification, the corporation shall indemnify any such
indemnitee seeking indemnification in connection with a proceeding (or part
thereof) initiated by such indemnitee only if such proceeding (or part thereof)
was authorized by the Board of Directors of the corporation. The right to
indemnification conferred in this Section shall be a contract right and shall
include the right to be paid by the corporation the expenses incurred in
defending any such proceeding in advance of its final disposition (hereinafter
an "advancement of expenses"); provided, however, that, if the Delaware General
Corporation Law requires, an advancement of expenses incurred by an indemnitee
in his or her capacity as a Director or officer (and not in any other capacity
in which service was or is rendered by such indemnitee while a Director or
officer, including, without limitation, service to an employee benefit plan)
shall be made only upon delivery to the corporation of an undertaking, by or on
behalf of such indemnitee, to repay all amounts so advanced if it shall
ultimately be determined that such indemnitee is not entitled to be indemnified
under this Section 1, or otherwise.
20
<PAGE> 25
SECTION 2. RIGHT OF INDEMNITEE TO BRING SUIT.
If a claim under Section 1 of this Article is not paid in full by the
corporation within sixty days after a written claim has been received by the
corporation, except in the case of a claim for an advancement of expenses, in
which case the applicable period shall be twenty days, the indemnitee may at any
time thereafter bring suit against the corporation to recover the unpaid amount
of the claim and, to the extent successful in whole or in part, the indemnitee
shall be entitled to be paid also the expense of prosecuting such suit. The
indemnitee shall be presumed to be entitled to indemnification under this
Article upon submission of a written claim (and, in an action brought to enforce
a claim for an advancement of expenses, where the required undertaking, if any
is required, has been tendered to the corporation), and thereafter the
corporation shall have the burden of proof to overcome the presumption that the
indemnitee is not so entitled. Neither the failure of the corporation (including
its Board of Directors, independent legal counsel, or its stockholders) to have
made a determination prior to the commencement of such suit that indemnification
of the indemnitee is proper in the circumstances nor an actual determination by
the corporation (including its Board of Directors, independent legal counsel or
its stockholders) that the indemnitee is not entitled to indemnification shall
be a defense to the suit or create a presumption that the indemnitee is not so
entitled.
SECTION 3. NONEXCLUSIVITY OF RIGHTS.
The rights to indemnification and to the advancement of expenses
conferred in this Article shall not be exclusive of any other right which any
person may have or hereafter acquire under any statute, provision of the
Certificate of Incorporation, By-Law, agreement, vote of stockholders or
disinterested Directors or otherwise.
SECTION 4. INSURANCE, CONTRACTS AND FUNDING.
The corporation may maintain insurance, at its expense, to protect
itself and any Director, officer, employee or agent of the corporation or
another corporation, partnership, joint venture, trust or other enterprise
against any expense, liability or loss, whether or not the corporation would
have the power to indemnify such person against such expense, liability or loss
under the Delaware General Corporation Law. The corporation may enter into
contracts with any indemnitee in furtherance of the provisions of this Article
and may create a trust fund, grant a security interest or use other means
(including, without limitation, a letter of credit) to ensure the payment of
such amounts as may be necessary to effect indemnification as provided in this
Article.
21
<PAGE> 26
SECTION 5. DEFINITION OF DIRECTOR AND OFFICER.
Any person who is or was serving as a Director or officer of a wholly
owned subsidiary of the corporation shall be deemed, for purposes of this
Article only, to be a Director or officer of the corporation entitled to
indemnification under this Article.
SECTION 6. INDEMNIFICATION OF EMPLOYEES AND AGENTS OF THE
CORPORATION.
The corporation may, by action of the Board of Directors from time to
time, grant rights to indemnification and advancement of expenses to employees
and agents of the corporation with the same scope and effect as the provisions
of this Article with respect to the indemnification and advancement of expenses
of Directors and officers of the corporation.
ARTICLE XI
CHECKS, DRAFTS, BANK ACCOUNTS, ETC.
SECTION 1. CHECKS, DRAFTS, ETC.; LOANS.
All checks, drafts or other orders for the payment of money, notes or
other evidences of indebtedness issued in the name of the corporation shall be
signed by such officer or officers, agent or agents of the corporation and in
such manner as shall, from time to time, be determined by resolution of the
Board of Directors. No loans shall be contracted on behalf of the corporation
unless authorized by the Board of Directors. Such authority may be general or
confined to specific circumstances. (Amended July 7, 1992)
SECTION 2. DEPOSITS.
All funds of the corporation shall be deposited, from time to time, to
the credit of the corporation in such banks, trust companies or other
depositories as the Board of Directors may select, or as may be selected by any
officer or officers, agent or agents of the corporation to whom such power may,
from time to time, be delegated by the Board of Directors; and for the purpose
of such deposit, the Chairman of the Board, the President, any Vice President,
the Treasurer or any Assistant Treasurer, the Secretary or any Assistant
Secretary, or any other officer or agent to whom such power may be delegated by
the Board of Directors, may endorse, assign and deliver checks, drafts and other
order for the payment of money which are payable to the order of the
corporation.
22
<PAGE> 27
ARTICLE XII
AMENDMENTS
These By-Laws may be altered or repealed and new By-Laws may be made by
the affirmative vote, at any meeting of the Board, of a majority of the whole
Board of Directors, subject to the rights of the stockholders of the corporation
to amend or repeal By-Laws made or amended by the Board of Directors by the
affirmative vote of the holders of record of a majority in number of shares of
the outstanding stock of the corporation present or represented at any meeting
of the stockholders and entitled to vote thereon, provided that notice of the
proposed action be included in the notice of such meeting.
(Amended February 22, 1989, July 7, 1992, December 6, 1995, October 22,
1997, July 8, 1998 and January 13, 1999)
23
<PAGE> 1
CONFORMED COPY
- --------------------------------------------------------------------------------
BURLINGTON RESOURCES INC.
------------------------------------
$400,000,000
SHORT-TERM REVOLVING CREDIT AGREEMENT
Dated as of February 25, 1998
As Amended and Restated as of February 23, 1999
------------------------------------
CHASE BANK OF TEXAS, N.A.,
as Administrative Agent
THE CHASE MANHATTAN BANK,
as Auction Administrative Agent
CITIBANK, N.A.,
as Syndication Agent
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Documentation Agent
BANKBOSTON, N.A.,
as Documentation Agent
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
ARTICLE 1 DEFINITIONS AND ACCOUNTING TERMS
<S> <C> <C>
SECTION 1.01. Certain Defined Terms.............................................................1
SECTION 1.02. Computation of Time Periods......................................................18
SECTION 1.03. Accounting and Other Terms.......................................................18
SECTION 1.04. References.......................................................................18
ARTICLE 2 AMOUNTS AND TERMS OF THE ADVANCES
SECTION 2.01. (a) Revolving A Advances.........................................................19
(b) Term A Advances..............................................................19
SECTION 2.02. Making the A Advances............................................................20
SECTION 2.03. Fees.............................................................................22
SECTION 2.04. Reduction of the Commitments.....................................................23
SECTION 2.05. Repayment of A Advances..........................................................23
SECTION 2.06. Interest on A Advances...........................................................23
SECTION 2.07. Additional Interest on Eurodollar
Rate Advances.............................................................................25
SECTION 2.08. Interest Rate Determination......................................................25
SECTION 2.09. Voluntary Conversion of A Advances...............................................27
SECTION 2.10. Prepayments......................................................................28
SECTION 2.11. Increased Costs..................................................................28
SECTION 2.12. Increased Capital................................................................30
SECTION 2.13. Illegality.......................................................................31
SECTION 2.14. Payments and Computations........................................................31
SECTION 2.15. Taxes............................................................................33
SECTION 2.16. Sharing of Payments, Etc.........................................................37
SECTION 2.17. Evidence of Debt.................................................................37
SECTION 2.18. Use of Proceeds..................................................................38
SECTION 2.19. The B Advances...................................................................38
SECTION 2.20. Increase of Commitments..........................................................42
SECTION 2.21. Extension of Stated Termination Date.............................................45
SECTION 2.22. Replacement of Lenders...........................................................47
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
ARTICLE 3 CONDITIONS OF EFFECTIVENESS AND LENDING
SECTION 3.01. Conditions Precedent to
Effectiveness of the Amendment and
Restatement of this Agreement.............................................................48
SECTION 3.02. Conditions Precedent to Each A
Borrowing.................................................................................49
SECTION 3.03. Conditions Precedent to Each B
Borrowing.................................................................................50
ARTICLE 4 REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of
the Borrower..............................................................................51
ARTICLE 5 COVENANTS OF THE BORROWER
SECTION 5.01. Affirmative Covenants............................................................54
SECTION 5.02. Negative Covenants...............................................................56
SECTION 5.03. Reporting Requirements...........................................................61
ARTICLE 6 EVENTS OF DEFAULT
SECTION 6.01. Events of Default................................................................64
ARTICLE 7 THE ADMINISTRATIVE AGENT
SECTION 7.01. Authorization and Action.........................................................68
SECTION 7.02. Administrative Agent's Reliance,
Etc.......................................................................................69
SECTION 7.03. Chase and Affiliates.............................................................69
SECTION 7.04. Lender Credit Decision...........................................................70
SECTION 7.05. Indemnification..................................................................70
SECTION 7.06. Successor Administrative Agent...................................................71
SECTION 7.07 Auction Administrative Agent.......................................................71
ARTICLE 8 MISCELLANEOUS
SECTION 8.01. Amendments, Etc..................................................................72
SECTION 8.02. Notices, Etc.....................................................................72
</TABLE>
<PAGE> 4
<TABLE>
<S> <C> <C>
SECTION 8.03. No Waiver; Remedies..............................................................73
SECTION 8.04. Costs and Expenses; Indemnity....................................................74
SECTION 8.05. Right of Set-off.................................................................75
SECTION 8.06. Binding Effect...................................................................75
SECTION 8.07. Assignments and Participations...................................................76
SECTION 8.08. Confidentiality..................................................................81
SECTION 8.09. Consent to Jurisdiction..........................................................82
SECTION 8.10. Governing Law....................................................................83
SECTION 8.11. Execution in Counterparts........................................................83
SECTION 8.12. WAIVER OF JURY TRIAL.............................................................83
</TABLE>
Schedule I -- Material Subsidiaries
Schedule II -- Pricing Grid
Exhibit A Form of Note
Exhibit B Form of Notice of A Borrowing
Exhibit C Form of Notice of B Borrowing
Exhibit D Form of Assignment and Acceptance
Exhibit E Form of New Lender Agreement
Exhibit F Form of Commitment Increase Agreement
Exhibit G Form of Extension Request
Exhibit H Form of Opinion of Senior Vice President, Law
for Borrower
Exhibit I Form of Opinion of Jones, Day, Reavis &
Pogue, New York Counsel for Borrower
Exhibit J Form of Designation Agreement
<PAGE> 5
SHORT-TERM REVOLVING CREDIT AGREEMENT
Dated as of February 25, 1998
As Amended and Restated as of February 23, 1999
BURLINGTON RESOURCES INC., a Delaware corporation (the "Borrower"), the
financial institutions (the "Initial Lenders") listed on the signature pages
hereof, Chase Bank of Texas, N.A., as administrative agent for the Lenders
hereunder (in such capacity, the "Administrative Agent"), The Chase Manhattan
Bank, as auction administrative agent for the Lenders (in such capacity, the
"Auction Administrative Agent"), Citibank, N.A., as syndication agent for the
Lenders (in such capacity, the "Syndication Agent"), and Bank of America
National Trust and Savings Association and BankBoston, N.A., as documentation
agents for the Lenders (in such capacity, individually, a "Documentation Agent"
and, collectively, the "Documentation Agents"), agree as follows:
ARTICLE 1
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1. Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"A ADVANCE" means an advance by a Lender to the Borrower as part of an
A Borrowing, and refers to a Base Rate Advance or a Eurodollar Rate Advance
(each of which shall be a "TYPE" of A Advance).
"A BORROWING" means a borrowing consisting of A Advances of the same
Type made on the same day by the Lenders pursuant to Section 2.01 and, in the
case of Eurodollar Rate Advances, having Interest Periods of
<PAGE> 6
the same duration, it being understood that there may be more than one A
Borrowing on a particular day.
"ADMINISTRATIVE QUESTIONNAIRE" means, with respect to each Lender, an
administrative questionnaire in the form prepared by the Administrative Agent
and submitted to the Administrative Agent (with a copy to the Borrower) duly
completed by such Lender.
"ADVANCE" means an A Advance or a B Advance.
"AFFILIATE" means, as to any Person, any other Person that, directly or
indirectly, controls, is controlled by or is under common control with such
Person or is a director or officer of such Person. The term "CONTROLS"
(including the terms "CONTROLLED BY" or "UNDER COMMON CONTROL WITH") means, with
respect to any Person, the possession, direct or indirect, of the power to vote
10% or more (or in the case of an "AFFILIATE" of any Lender, 5% or more) of the
securities having ordinary voting power for the election of directors of such
Person or to direct or cause the direction of the management and policies of
such Person, whether through ownership of voting securities or by contract or
otherwise. Neither a director nor an officer of the Borrower, in such capacity,
shall be deemed, for purposes of this Agreement, an Affiliate.
"AGREEMENT" means this Short-Term Revolving Credit Agreement, together
with all exhibits and schedules hereto, as may be amended or otherwise modified
from time to time pursuant to the terms hereof.
"APPLICABLE LENDING OFFICE" means, with respect to each Lender, (i) in
the case of an A Advance, such Lender's Domestic Lending Office in respect of
Base Rate Advances and such Lender's Eurodollar Lending Office in respect of
Eurodollar Rate Advances and (ii) in the case of a B Advance, the office of such
Lender notified by such Lender to the Administrative Agent as its Applicable
Lending Office with respect to such B Advance.
2
<PAGE> 7
"ARRANGER" means Chase Securities Inc.
"ASSIGNMENT AND ACCEPTANCE" means an assignment and acceptance entered
into by a Lender (other than a Designated Bidder) and an Eligible Assignee, and
accepted by the Administrative Agent, in substantially the form of Exhibit D
hereto.
"B ADVANCE" means an advance by a Lender to the Borrower as part of a B
Borrowing resulting from the auction bidding procedure described in Section
2.19.
"B BORROWING" means a borrowing consisting of simultaneous B Advances
to the Borrower from each of the Lenders whose offer to make one or more B
Advances as part of such borrowing has been accepted by the Borrower under the
auction bidding procedure described in Section 2.19, it being understood that
there may be more than one B Borrowing on a particular day.
"B REDUCTION" has the meaning specified in Section 2.01(a).
"BASE RATE" means, for each day in any period, a fluctuating interest
rate per annum as shall be in effect from time to time which rate per annum
shall at all times for such day be equal to the higher of:
(i) The rate of interest announced publicly by the Administrative
Agent in the United States with respect to loans made in the United States, from
time to time, as the Administrative Agent's base or prime rate as in effect for
such day; and
(ii) 0.50% per annum above the Effective Federal Funds Rate for such
day.
"BASE RATE ADVANCE" means an A Advance which bears interest as provided
in Section 2.06(a)(i).
"BORROWING" means an A Borrowing or a B Borrowing.
"BUSINESS DAY" means a day of the year on which banks are not required
or authorized to close in New York, New York and, if the applicable Business Day
relates to any Eurodollar Rate Advances, on which dealings are carried on in the
London interbank market.
3
<PAGE> 8
"BUSINESS ENTITY" means a partnership, corporation (including a
business trust), limited liability company, joint stock company, trust,
unincorporated association, joint venture or other entity.
"CAPITALIZATION" means the sum (without duplication) of (i)
consolidated Debt of the Borrower and its consolidated Subsidiaries, plus (ii)
the aggregate amount of Guaranties by the Borrower or its consolidated
Subsidiaries, plus (iii) the sum of the preferred stock and common stockholders'
equity of the Borrower, plus (iv) the cumulative amount by which Consolidated
Tangible Net Worth shall have been reduced by reason of non-cash write-downs of
long-term assets subsequent to December 31, 1997 (but excluding any such amount
with respect to assets of Project Finance Subsidiaries), minus (v) to the extent
otherwise included in determining the amounts computed under clause (iii) above,
the aggregate investment (net of any Project Financing) of the Borrower and its
consolidated Subsidiaries in Project Finance Subsidiaries.
"CHASE" means Chase Bank of Texas, N.A., and its successors.
"CLAM" means CLAM Petroleum B.V., a Netherlands company, and CLAM's
successors.
"CLAM CREDIT AGREEMENT" means the Amended and Restated Credit Agreement
dated as of July 25, 1985, among MaraLou Netherlands Partnership, CLAM, the
banks parties thereto and Morgan, as agent for such banks, as amended and
restated as of August 15, 1997, or any successor credit agreement entered into
for the purpose of refinancing such Amended and Restated Credit Agreement, in
each case, as amended, restated, extended or otherwise modified from time to
time.
"COMMITMENT" has the meaning specified in Section 2.01(a).
4
<PAGE> 9
"COMMITMENT EXPIRATION DATE" has the meaning specified in Section
2.21(a).
"COMMITMENT INCREASE NOTICE" has the meaning specified in Section
2.20(a).
"COMMITMENT INCREASE AGREEMENT" has the meaning specified in Section
2.20(c).
"COMMITMENT PERCENTAGE" means as to any Lender at any time, the
percentage that such Lender's Commitment then constitutes of the aggregate
Commitments (or, at any time after the Commitments shall have expired or
terminated, the percentage that the aggregate principal amount of such Lender's
Advances then outstanding constitutes of the aggregate principal amount of the
Advances then outstanding).
"CONSOLIDATED TANGIBLE NET WORTH" means, on a consolidated basis, the
excess of (i) the sum of (x) the preferred stock and common stockholders' equity
of the Borrower and (y) the cumulative amount by which Consolidated Tangible Net
Worth shall have been reduced by reason of non-cash write-downs of long-term
assets subsequent to December 31, 1997, over (ii) the intangible assets of the
Borrower and its consolidated Subsidiaries.
"CONTINGENT GUARANTY" has the meaning specified in the definition of
the term "Guaranty" contained in this Section 1.01.
"CONVERT", "CONVERSION" and "CONVERTED" each refers to a conversion of
A Advances of one Type into A Advances of another Type pursuant to Section 2.08,
2.09 or 2.13.
"DEBT" of any Person means, without duplication (i) indebtedness of
such Person for borrowed money, (ii) obligations of such Person (other than any
portion of any trade payable obligation of such Person which shall not have
remained unpaid for 91 days or more from the later of (A) the original due date
of such portion and (B) the customary payment date in the industry and relevant
market for such portion) to pay the deferred
5
<PAGE> 10
purchase price of property or services, (iii) obligations of such Person as
lessee under leases which shall have been or should be, in accordance with
generally accepted accounting principles, recorded as capital leases, and (iv)
Overdue Reimbursement Obligations; provided, however, that where any such
indebtedness or obligation of such Person is made jointly, or jointly and
severally, with any third party or parties, which are not the Borrower or any of
its consolidated Subsidiaries, the amount thereof for the purposes of this
definition only shall be the pro rata portion thereof payable by such Person, so
long as such third party or parties have not defaulted on its or their joint and
several portions thereof, and provided, further, that the following shall not at
any time constitute Debt: (1) obligations of such Person to reimburse a bank or
other Person in respect of amounts paid under a letter of credit or similar
instrument that are not Overdue Reimbursement Obligations, (2) Project
Financing, (3) the Morgan Gold Loans unless, at such time, for any reason
whatsoever, (A) no royalty income shall have accrued under the Royalty Agreement
dated as of December 5, 1984 between Copper Range Company, a Michigan
corporation, and LL&E during the three consecutive fiscal quarters of LL&E most
recently ended prior to such time or (B) any payment required to have been made
to LL&E under such agreement prior to such time shall not have been paid on, or
within 30 days after, the date such payment is due and (4) amounts borrowed by
the Borrower and its Subsidiaries under life insurance policies issued to one or
more of the foregoing and covering employees or former employees of one or more
of the foregoing not in excess of the cash surrender value of such policies.
"DESIGNATED BIDDER" means (i) an Affiliate of a Lender or (ii) a
special purpose corporation that is engaged in making, purchasing or otherwise
investing in commercial loans in the ordinary course of its business and that
issues (or the parent of which issues) commercial paper rated at least "Prime-1"
by Moody's or "A-1" by S&P or a comparable rating from the successor of either
of them, that, in the case of either clause (i) or (ii) above, (1) is organized
under the laws of
6
<PAGE> 11
the United States or any state thereof, (2) shall have become a party hereto
pursuant to subsections (e), (f) and (g) of Section 8.07, and (3) is not
otherwise a Lender. Notwithstanding the foregoing, each Designated Bidder shall
be subject to the written consent of the Borrower and the Administrative Agent,
such consent not to be unreasonably withheld.
"DESIGNATION AGREEMENT" means a designation agreement entered into by
the Borrower, a Lender (other than a Designated Bidder) and a Designated Bidder,
and accepted by the Administrative Agent, in substantially the form of Exhibit K
hereto.
"DOMESTIC LENDING OFFICE" means, with respect to any Lender, the office
of such Lender specified as its "Domestic Lending Office" in its Administrative
Questionnaire, or in the Assignment and Acceptance or New Lender Agreement
pursuant to which it became a Lender, or such other office of such Lender as
such Lender may from time to time specify to the Borrower and the Administrative
Agent.
"EFFECTIVE DATE" means the date on which the conditions precedent set
forth in Section 3.01 have been satisfied (or compliance therewith shall have
been waived by the Lenders), which date the Administrative Agent will promptly
confirm to the Borrower and the Lenders in writing, and which date shall be no
earlier than February 23, 1999.
"EFFECTIVE FEDERAL FUNDS RATE" means, for any day, the weighted average
of the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding 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 such day on such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
7
<PAGE> 12
"ELIGIBLE ASSIGNEE" means, with respect to any particular assignment
under Section 8.07, any bank or other financial institution approved in writing
by the Borrower expressly with respect to such assignment and, except as to such
an assignment by Chase so long as Chase is the Administrative Agent hereunder,
the Administrative Agent as an Eligible Assignee for purposes of this Agreement,
provided that neither the Administrative Agent's nor the Borrower's approval
shall be unreasonably withheld, and provided further that no such approval shall
be necessary if (i) the assignee is an Affiliate of the assigning Lender and
such assignment constitutes 100% of the assigning Lender's Commitment, the A
Advances owing to it and the Note or Notes held by it, (ii) the assignee was a
Lender immediately prior to such assignment or (iii) if an Event of Default
shall then be continuing.
"EQUITY INTERESTS" means any capital stock, partnership, joint venture,
member or limited liability company interest, beneficial interest in a trust or
similar entity or other equity interest or investment of whatever nature.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated and rulings issued
from time to time thereunder.
"ERISA AFFILIATE" means any Person who is a member of the Borrower's
controlled group within the meaning of Section 4001(a)(14)(A) of ERISA.
"EUROCURRENCY LIABILITIES" has the meaning assigned to that term in
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
"EURODOLLAR LENDING OFFICE" means, with respect to each Lender, the
office of such Lender specified as its "Eurodollar Lending Office" in its
Administrative Questionnaire or in the Assignment and Acceptance or Commitment
Increase Agreement pursuant to which it became a Lender (or, if no such office
is specified,
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its Domestic Lending Office) or such other office of such Lender as such Lender
may from time to time specify to the Borrower and the Administrative Agent.
"EURODOLLAR RATE" means, for any Interest Period for each Eurodollar
Rate Advance comprising part of the same A Borrowing, the interest rate per
annum equal to the average (rounded upward to the nearest whole multiple of 1/16
of 1% per annum, if such average is not such a multiple) of the rate per annum
at which deposits in U.S. dollars are offered by the principal office of each of
the Reference Banks in London, England, to prime banks in the London interbank
market at 11:00 A.M. (London, England time) two Business Days before the first
day of such Interest Period in an amount comparable to the amount of such A
Borrowing and for a period equal to such Interest Period. The Eurodollar Rate
for the Interest Period for each Eurodollar Rate Advance comprising part of the
same A Borrowing shall be determined by the Administrative Agent on the basis of
applicable rates furnished to and received by the Administrative Agent from the
Reference Banks two Business Days before the first day of such Interest Period,
subject, however, to the provisions of Section 2.08.
"EURODOLLAR RATE ADVANCE" means an A Advance which bears interest
determined by reference to the Eurodollar Rate, as provided in Section
2.06(a)(ii).
"EURODOLLAR RATE MARGIN" means for any date the percentage per annum
applicable on such date as set forth in the row labeled "LIBOR Applicable
Margin" on Schedule II hereto, which is based on the ratings (or lack thereof)
by Moody's or S&P or both of the public long-term senior unsecured debt
securities of the Borrower.
"EURODOLLAR RESERVE PERCENTAGE" of any Lender for any Interest Period
for any Eurodollar Rate Advance means the reserve percentage applicable during
such Interest Period under regulations issued from time to time by the Board of
Governors of the Federal Reserve System (or if more than one such percentage
shall be so
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applicable, the daily average of such percentages for those days in such
Interest Period during which any such percentage shall be so applicable) for
determining the maximum reserve requirement (including any emergency,
supplemental or other marginal reserve requirement) for such Lender with respect
to liabilities or assets consisting of or including Eurocurrency Liabilities
having a term equal to such Interest Period.
"EVENTS OF DEFAULT" has the meaning specified in Section 6.01.
"EXTENSION REQUEST" means each request by the Borrower made pursuant to
Section 2.21 for the Lenders to extend the Stated Termination Date, which shall
contain the information in respect of such extension specified in Exhibit G and
shall be delivered to the Administrative Agent in writing.
"FACILITY FEE PERCENTAGE" means for any date the percentage per annum
applicable on such date as set forth in the row labeled "Facility Fee" on
Schedule II hereto, which is based on the ratings (or lack thereof) by Moody's
or S&P or both of the public long-term senior unsecured debt securities of the
Borrower.
"FINAL MATURITY DATE" means the first anniversary of the Stated
Termination Date or, if such day is not a Business Day, the next preceding
Business Day.
"GUARANTY", "GUARANTEED" and "GUARANTEEING" each means any act by which
a Person assumes, guarantees, endorses or otherwise incurs direct or contingent
liability in connection with, or agrees to purchase or otherwise acquire or
otherwise assures a creditor against loss in respect of, any Debt or Project
Financing of any Person other than the Borrower or any of its consolidated
Subsidiaries (excluding (i) any liability by endorsement of negotiable
instruments for deposit or collection or similar transactions in the ordinary
course of business, (ii) any liability in connection with obligations of the
Borrower or any of its consolidated Subsidiaries, including obligations
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under any conditional sales agreement, equipment trust financing or equipment
lease, (iii) any liability or other act of the Borrower or any of its
Subsidiaries under arrangements entered into in connection with the CLAM Credit
Agreement, and (iv) any such act in connection with a Project Financing that
either (A) guarantees to the provider of such Project Financing or any other
Person performance of the acquisition, improvement, installation, design,
engineering, construction, development, completion, maintenance or operation of,
or otherwise affects any such act in respect of, all or any portion of the
project that is financed by such Project Financing or performance by a Project
Financing Subsidiary of certain obligations to Persons other than the provider
of such Project Financing, except during any period, and then only to the
extent, that such guaranty is a direct guaranty of payment of such Project
Financing (other than a guaranty of payment of the type referred to in subclause
(B) below) or (B) is contingent upon, or the obligation to pay or perform under
which is contingent upon, the occurrence or existence of any event or condition
other than or in addition to (1) the passage of time, (2) any Project Financing
becoming due, (3) the commencement of bankruptcy, insolvency or similar
proceedings by the obligor on any Project Financing or (4) the failure of the
obligor on any Project Financing to satisfy a financial ratio, covenant or other
similar financial measurement test, but only during such period as such act is
not by its terms presently enforceable, or if so enforceable, there is not a
reasonable probability that the guarantor will be called upon to perform
thereunder (or to make capital contributions in lieu of performance thereunder)
(any such act referred to in this clause (iv) being a "CONTINGENT GUARANTY"));
provided, however, that for the purposes of this definition the liability of the
Borrower or any of its Subsidiaries with respect to any obligation as to which a
third party or parties are jointly, or jointly and severally, liable as a
guarantor or otherwise as contemplated hereby and have not defaulted on its or
their portions thereof, shall be only its pro rata portion of such obligation.
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"INDEMNIFIED PARTY" means any or all of the Lenders, the Arranger and
the Administrative Agent.
"INSUFFICIENCY" means, with respect to any Plan, the amount, if any, of
its unfunded benefit liabilities, as defined in Section 4001(a)(18) of ERISA.
"INTEREST PERIOD" means, for each Eurodollar Rate Advance comprising
part of the same A Borrowing, the period beginning on the date of such Advance
or the date of the Conversion of any Advance into such Advance and ending on the
last day of the period selected by the Borrower pursuant to the provisions below
and, thereafter, each subsequent period commencing on the last day of the
immediately preceding Interest Period and ending on the last day of the period
selected by the Borrower pursuant to the provisions below. The duration of each
such Interest Period for a Eurodollar Rate Advance shall be (i) one, two, three
or six months upon notice received by the Administrative Agent not later than
12:00 noon (New York City time) on the third Business Day prior to the first day
of such Interest Period, or (ii) subject to availability to each Lender, nine or
twelve months upon notice received by the Administrative Agent not later than
12:00 noon (New York City time) on the fourth Business Day prior to the first
day of such Interest Period, in each case as the Borrower may select; provided,
however, that:
(A) the duration of any Interest Period which commences before the
Termination Date and would otherwise end after the Termination Date shall end on
the Termination Date and the duration of any Interest Period which would
otherwise end after the Final Maturity Date shall end on the Final Maturity
Date;
(B) if the last day of such Interest Period would otherwise occur on
a day which is not a Business Day, such last day shall be extended to the next
succeeding Business Day, except if such extension would cause such last day to
occur in a new calendar month, then such last day shall occur on the next
preceding Business Day;
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(C) Interest Periods commencing on the same date for A Advances
comprising the same A Borrowing shall be of the same duration; and
(D) any Interest Period which begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding day
in the calendar month at the end of such Interest Period) shall, subject to
clause (A) above, end on the last Business Day of a calendar month.
"LENDERS" means the Initial Lenders, each bank or other financial
institution that shall become a party hereto pursuant to Section 2.20, each
Eligible Assignee that shall become a party hereto pursuant to Section 8.07(a),
(b) and (d) and, except when used in reference to an A Advance, an A Borrowing,
a Commitment or a term related to any of the foregoing, each Designated Bidder.
"LIEN" means any lien, security interest or other charge or
encumbrance, or any assignment of the right to receive income, or any other type
of preferential arrangement, in each case to secure any Debt or any Guaranty of
any Person; provided that (i) the creation of interests in property of the
character commonly referred to as a "royalty interest" or "overriding royalty
interest", farmouts, joint operating or unitization agreements, or other similar
transactions in the ordinary course of business and (ii) borrowings under life
insurance policies as described in clause (4) of the proviso to the definition
of "Debt" shall not be deemed to create a Lien.
"LL&E" means The Louisiana Land and Exploration Company, a Maryland
corporation and a wholly-owned Subsidiary of the Borrower.
"LONG-TERM REVOLVING CREDIT AGREEMENT" means the Long-Term Revolving
Credit Agreement dated as of February 25, 1998 as amended and restated as of
February 23, 1999 among the Borrower, the financial institutions party thereto,
Chase, as administrative agent for such financial institutions, The Chase
Manhattan Bank, as auction administrative agent for such financial institutions,
Citibank, N.A., as
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syndication agent for such financial institutions, and Bank of America National
Trust and Savings Association and BankBoston, N.A., as documentation agents for
such financial institutions.
"MAJORITY LENDERS" means at any time Lenders holding at least 51% of
the then aggregate unpaid principal amount of the Notes held by Lenders, or, if
no such principal amount is then outstanding, Lenders having at least 51% of the
Commitments.
"MARGIN STOCK" means "margin stock" as defined in Regulation U of the
Board of Governors of the Federal Reserve System, as in effect from time to
time.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on the
financial condition or operations of the Borrower and its consolidated
Subsidiaries on a consolidated basis.
"MATERIAL PLAN" means any Plan the assets of which exceed $50,000,000
or the liabilities of which for unfunded vested benefits determined on a plan
termination basis (in accordance with Title IV of ERISA) exceed $10,000,000.
"MATERIAL SUBSIDIARY" means, from time to time, any Subsidiary of the
Borrower (other than a Project Financing Subsidiary) then owning assets
(determined on a consolidated basis) that equal or exceed 10% of the book value
of the consolidated assets of the Borrower and its consolidated Subsidiaries at
such time.
"MOODY'S" means Moody's Investors Service.
"MORGAN" means Morgan Guaranty Trust Company of New York, and its
successors.
"MORGAN GOLD LOANS" means the obligations of LL&E under the respective
Credit Agreements dated as of December 23, 1994 and March 31, 1995 between LL&E
and Morgan, or under any additional credit agreements on substantially similar
terms, in each case, as amended, restated, extended or otherwise modified from
time to time, provided that the aggregate outstanding amount
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<PAGE> 19
borrowed thereunder shall at no time exceed 35,000 ounces of gold.
"MULTIEMPLOYER PLAN" means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate is making or
accruing an obligation to make contributions, or has within any of the preceding
five plan years made or accrued an obligation to make contributions, such plan
being maintained pursuant to one or more collective bargaining agreements.
"MULTIPLE EMPLOYER PLAN" means a single employer plan, as defined in
Section 4001(a)(15) of ERISA, which (i) is maintained for employees of the
Borrower or an ERISA Affiliate and at least one Person other than the Borrower
and its ERISA Affiliates or (ii) was so maintained and in respect of which the
Borrower or an ERISA Affiliate could have liability under Section 4064 or 4069
of ERISA in the event such plan has been or were to be terminated.
"NEW LENDER" has the meaning specified in Section 2.20(b).
"NEW LENDER AGREEMENT" has the meaning specified in Section 2.20(b).
"NOTE" means a promissory note of the Borrower payable to the order of
any Lender, in substantially the form of Exhibit A hereto, evidencing the
aggregate indebtedness of the Borrower to such Lender resulting from the
Advances made by such Lender.
"NOTICE OF A BORROWING" has the meaning specified in Section 2.02(a).
"NOTICE OF B BORROWING" has the meaning specified in Section 2.19(a).
"OBJECTING LENDERS" has the meaning specified in Section 2.21(a).
"OFFERED INCREASE AMOUNT" has the meaning specified in Section 2.20(a).
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"ORIGINAL EFFECTIVE DATE" means February 25, 1998.
"OVERDUE REIMBURSEMENT OBLIGATIONS" means with respect to any Person
non-contingent obligations of such Person to reimburse a bank or other Person in
respect of amounts paid under a letter of credit or similar instrument that are
not paid on or prior to the fifth Business Day after the due date therefor.
"PBGC" means the Pension Benefit Guaranty Corporation (or any
successor).
"PERMITTED ASSETS" means (i) hydrocarbon or other reserves (including
proved, probable, possible or speculative reserves), (ii) properties, assets,
rights or business related to reserves (including real property, gathering
systems, plants, pipelines, equipment and processing and treatment facilities),
(iii) other fixed or operating assets and (iv) Equity Interests in any and all
Business Entities that are or become Subsidiaries of the Borrower owning assets
referred to in any of the foregoing clauses.
"PERMITTED LIENS" means
(i) inchoate Liens and charges imposed by law and incidental to
construction, maintenance, development or operation of properties, or the
operation of business, in the ordinary course of business if payment of the
obligation secured thereby is not yet overdue or if the validity or amount of
which is being contested in good faith by the Borrower or any Subsidiary of the
Borrower;
(ii) Liens for taxes, assessments, obligations under workers'
compensation or other social security legislation or other governmental
requirements, charges or levies, in each case not yet overdue;
(iii) Liens reserved in any oil, gas or other mineral lease entered
into in the ordinary course of business for rent, royalty or delay rental under
such lease and for compliance with the terms of such lease;
(iv) easements, servitudes, rights-of-way and other rights, exceptions,
reservations, conditions, limitations, covenants and other restrictions which do
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not materially interfere with the operation, value or use of the properties
affected thereby;
(v) conventional provisions contained in any contracts or agreements
affecting properties under which the Borrower or a Subsidiary of the Borrower is
required immediately before the expiration, termination or abandonment of a
particular property to reassign to the Borrower's or a Subsidiary's predecessor
in title all or a portion of the Borrower's or such Subsidiary's rights, titles
and interests in and to all or a portion of such property;
(vi) any Lien reserved in a grant or conveyance in the nature of a
farm-out or conditional assignment to the Borrower or any of its Subsidiaries
entered into in the ordinary course of business on reasonable terms to secure
undertakings of the Borrower or such Subsidiary in such grant or conveyance;
(vii) any Lien consisting of (A) statutory landlord's liens under
leases to which the Borrower or any Subsidiary of the Borrower is a party or
other Liens on leased property reserved in leases thereof for rent or for
compliance with the terms of such leases, (B) rights reserved to or vested in
any municipality or governmental, statutory or public authority to control or
regulate any property of the Borrower or any of its Subsidiaries or to use such
property in any manner which does not materially impair the use of such property
for the purposes for which it is held by the Borrower or any such Subsidiary,
(C) obligations or duties to any municipality or public authority with respect
to any franchise, grant, license, lease or permit and the rights reserved or
vested in any governmental authority or public utility to terminate any such
franchise, grant, license, lease or permit or to condemn or expropriate any
property, and (D) zoning laws and ordinances and municipal regulations;
(viii) Liens on Equity Interests in, or Debt or other obligations of,
CLAM owned by the Borrower or any of its Subsidiaries, which Liens secure Debt
of CLAM; and
(ix) any Lien on any assets (including Equity Interests and other
obligations) securing Debt incurred or assumed for the purpose of financing all
or any part of the cost of acquiring, improving, installing,
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designing, engineering, developing (including drilling), or constructing such
assets, provided that such Lien attaches to such assets concurrently with or
within 360 days after the acquisition or completion of development, construction
or installation thereof or improvement thereto.
"PERSON" means an individual, a Business Entity, or a country or any
political subdivision thereof or any agency or instrumentality of such country
or subdivision.
"PLAN" means a Single Employer Plan or a Multiple Employer Plan.
"PROJECT FINANCING" means any Debt incurred to finance or refinance the
acquisition, improvement, installation, design, engineering, construction,
development, completion, maintenance or operation of, or otherwise in respect
of, all or any portion of any project, or any asset related thereto, and any
Guaranty with respect thereto, other than any portion of such Debt or Guaranty
permitting or providing for recourse against the Borrower or any of its
Subsidiaries other than (i) recourse to the Equity Interests in, Debt or other
obligations of, or assets of, one or more Project Financing Subsidiaries, and
(ii) such recourse as exists under any Contingent Guaranty.
"PROJECT FINANCING SUBSIDIARY" means any Subsidiary of the Borrower
whose principal purpose is to incur Project Financing, or to become a direct or
indirect partner, member or other equity participant or owner in a Business
Entity so created, and substantially all the assets of which Subsidiary or
Business Entity are limited to those assets being financed (or to be financed),
or the operation of which is being financed (or to be financed), in whole or in
part by a Project Financing or to Equity Interests in, or Debt or other
obligations of, one or more other such Subsidiaries or Business Entities.
"RE-ALLOCATION DATE" has the meaning specified in Section 2.20(e).
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"REFERENCE BANKS" means The Chase Manhattan Bank, Citibank, N.A. and
Bank of America National Trust and Savings Association.
"REGISTER" has the meaning specified in Section 8.07(c).
"REQUIRED LENDERS" means Lenders (i) that are not Objecting Lenders
with respect to any previous Extension Request and (ii) that have Commitment
Percentages aggregating at least 51% of the aggregate Commitment Percentages of
such non-Objecting Lenders.
"REVOLVING A ADVANCE" means an A Advance made or to be made by a Lender
pursuant to Section 2.01(a).
"S&P" means Standard and Poor's Ratings Group, a division of
McGraw-Hill, Inc. on the Original Effective Date.
"SINGLE EMPLOYER PLAN" means a single employer plan, as defined in
Section 4001(a)(15) of ERISA, that (i) is maintained for employees of the
Borrower or an ERISA Affiliate and no Person other than the Borrower and its
ERISA Affiliates or (ii) was so maintained and in respect of which the Borrower
or an ERISA Affiliate could have liability under Section 4069 of ERISA in the
event such plan has been or were to be terminated.
"STATED TERMINATION DATE" means February 21, 2000, or such later date
as shall be determined pursuant to the provisions of Section 2.21 with respect
to non-Objecting Lenders, provided that if such date is not a Business Day, the
Stated Termination Date shall be the next preceding Business Day.
"SUBSIDIARY" means, as to any Person, any Business Entity of which
shares of stock or other Equity Interests having ordinary voting power (other
than stock or such other Equity Interests having such power only by reason of
the happening of a contingency) to elect a majority of the board of directors or
other managers of such Business Entity are at the time owned, directly or
indirectly through one or more Subsidiaries, or both, by such Person. Unless
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otherwise qualified, all references to a "Subsidiary" or to "Subsidiaries" in
this Agreement shall refer to a Subsidiary or Subsidiaries of the Borrower.
"TERMINATION DATE" means the earlier of (i) the Stated Termination Date
and (ii) the date of termination in whole of the Commitments pursuant to Section
2.04 or 6.01.
"TERMINATION EVENT" means (i) a "reportable event," as such term is
described in Section 4043 of ERISA (other than a "reportable event" not subject
to the provision for 30-day notice to the PBGC), or an event described in
Section 4062(e) of ERISA, or (ii) the withdrawal of the Borrower or any ERISA
Affiliate from a Multiple Employer Plan during a plan year in which it was a
"substantial employer," as such term is defined in Section 4001(a)(2) of ERISA,
or the incurrence of liability by the Borrower or any ERISA Affiliate under
Section 4064 of ERISA upon the termination of a Multiple Employer Plan, or (iii)
the filing of a notice of intent to terminate a Plan or the treatment of a Plan
amendment as a termination under Section 4041 of ERISA, or (iv) the institution
of proceedings to terminate a Plan by the PBGC under Section 4042 of ERISA, or
(v) the conditions set forth in Section 302(f)(1)(A) and (B) of ERISA to the
creation of a lien upon property or rights to property of the Borrower or any
ERISA Affiliate for failure to make a required payment to a Plan are satisfied,
or (vi) the adoption of an amendment to a Plan requiring the provision of
security to such Plan, pursuant to Section 307 of ERISA, or (vii) any other
event or condition which might constitute grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any Plan.
"TERM A ADVANCE" means an A Advance made or to be made by a Lender
pursuant to Section 2.01(b).
"TYPE" has the meaning specified in the definition of "A Advance".
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"WITHDRAWAL LIABILITY" shall have the meaning given such term under
Part I of Subtitle E of Title IV of ERISA.
SECTION 1.2. Computation of Time Periods. Unless otherwise stated in
this Agreement, in the computation of a period of time from a specified date to
a later specified date, the word "from" means "from and including" and the words
"to" and "until" each means "to but excluding."
SECTION 1.3. Accounting and Other Terms. All accounting terms not
specifically defined herein shall be construed in accordance with generally
accepted accounting principles either (i) consistent with those principles
applied in the preparation of the annual financial statements referred to in
Section 4.01(e), or (ii) not so materially inconsistent with such principles
that a covenant contained in Section 5.01 or 5.02 would be calculated or
construed in a materially different manner or with materially different results
than if such covenant were calculated or construed in accordance with clause (i)
of this Section 1.03. "INCLUDE", "INCLUDES" and "INCLUDING" shall be deemed to
be followed by "without limitation" whether or not they are in fact followed by
such words or words of like import. References to any agreement or contract are
to such agreement or contract as amended, modified or supplemented from time to
time in accordance with the terms hereof and thereof.
SECTION 1.4. References. The words "HEREOF", "HEREIN" and "HEREUNDER"
and words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement, and
Article, Section, Schedule and Exhibit references are to this Agreement unless
otherwise specified.
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ARTICLE 2
AMOUNTS AND TERMS OF THE ADVANCES
SECTION 2.1. (a Revolving A Advances. Each Lender severally agrees, on
the terms and conditions hereinafter set forth, to make A Advances to the
Borrower from time to time on any Business Day during the period from the
Effective Date to and including the Termination Date in an aggregate amount not
to exceed at any time outstanding the amount set forth opposite such Lender's
name on the signature pages hereof under the caption "COMMITMENTS", or, if such
Lender has entered into any Assignment and Acceptance or Commitment Increase
Agreement or a New Lender Agreement, set forth for such Lender in the Register
maintained by the Administrative Agent pursuant to Section 8.07(c), as such
amount may be reduced pursuant to Section 2.04 (such Lender's "COMMITMENT"),
provided that the aggregate amount of the Commitments of the Lenders shall be
deemed used from time to time to the extent of the aggregate amount of the B
Advances then outstanding and such deemed use of the aggregate amount of such
Commitments shall be applied to all the Lenders ratably according to their
respective Commitments (such deemed use of the aggregate amount of the
Commitments being a "B REDUCTION"). Each A Borrowing consisting of Revolving A
Advances shall be in an aggregate amount of $10,000,000 in the case of an A
Borrowing comprised of Base Rate Advances and $25,000,000 in the case of an A
Borrowing comprised of Eurodollar Rate Advances, or, in either case an integral
multiple of $1,000,000 in excess thereof (or, in the case of an A Borrowing of
Base Rate Advances, the aggregate unused Commitments, if less) and shall consist
of A Advances of the same Type made on the same day by the Lenders ratably
according to their respective Commitments. Within the limits of each Lender's
Commitment, the Borrower may make more than one Borrowing on any Business Day
and may borrow, prepay pursuant to Section 2.10, and reborrow under this Section
2.01(a).
(b) Term A Advances. Each Lender severally agrees, at the option of the
Borrower and on the terms and conditions set forth in this Agreement, to make an
A Advance to the Borrower on the Stated Termination Date in an aggregate amount
up to but not exceeding the amount of its Commitment. Each A Borrowing
consisting
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of Term A Advances shall be in an aggregate amount of $10,000,000 in the case of
an A Borrowing comprised of Base Rate Advances and $25,000,000 in the case of an
A Borrowing comprised of Eurodollar Rate Advances, or, in either case an
integral multiple of $1,000,000 in excess thereof and shall consist of A
Advances of the same Type made on the Stated Termination Date by the Lenders
ratably according to their respective Commitments.
SECTION 2.2. Making the A Advances.
(a Each A Borrowing shall be made on notice by the Borrower to the
Administrative Agent (a "NOTICE OF A BORROWING") received by the Administrative
Agent, (i) in the case of a proposed A Borrowing comprised of Base Rate
Advances, not later than 10:00 A.M. (New York City time) on the Business Day of
such proposed A Borrowing, and (ii) in the case of a proposed A Borrowing
comprised of Eurodollar Rate Advances, not later than 12:00 noon (New York City
time) on the third Business Day prior to the date of such proposed A Borrowing.
Each Notice of A Borrowing shall be by telecopy, telefax or other
teletransmission or by telephone (and if by telephone, confirmed promptly by
telecopier, telefax or other teletransmission), in substantially the form of
Exhibit B hereto, specifying therein the requested (w) date of such A Borrowing,
(x) Type of A Advances comprising such A Borrowing and, additionally, whether
such A Borrowing consists of Revolving A Advances or Term A Advances, (y)
aggregate amount of such A Borrowing, and (z) in the case of an A Borrowing
comprised of Eurodollar Rate Advances, the initial Interest Period for each such
A Advance. Each Lender shall, before 1:00 p.m. (New York City time) on the date
of such A Borrowing, make available for the account of its Applicable Lending
Office to the Administrative Agent in care of The Chase Manhattan Bank, Agency
Services, One Chase Manhattan Plaza, 8th Floor, New York, NY 10081, Attention:
Muniram Appanna, Reference: Burlington Resources Inc., or at such other location
designated by notice from the Administrative Agent to the Lenders pursuant to
Section 8.02, in same day funds, such Lender's ratable portion of such
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A Borrowing. Immediately after the Administrative Agent's receipt of such funds
and upon fulfillment of the applicable conditions set forth in Article 3, the
Administrative Agent will make such funds available to the Borrower at The Chase
Manhattan Bank, One Chase Manhattan Plaza, 8th Floor, New York, NY 10081, or at
any account of the Borrower maintained by the Administrative Agent (or any
successor Administrative Agent) designated by the Borrower and agreed to by the
Administrative Agent (or such successor Administrative Agent), in same day
funds.
(b Each Notice of A Borrowing shall be irrevocable and binding on the
Borrower. In the case of any A Borrowing which the related Notice of A Borrowing
specified is to be comprised of Eurodollar Rate Advances, if such A Advances are
not made as a result of any failure to fulfill on or before the date specified
for such A Borrowing the applicable conditions set forth in Article 3, the
Borrower shall indemnify each Lender against any loss, cost or expense incurred
by such Lender as a result of such failure, including any loss, cost or expense
incurred by reason of the liquidation or reemployment of deposits or other funds
acquired by such Lender to fund the A Advance to be made by such Lender as part
of such A Borrowing.
(c If any Lender makes a Term A Advance to the Borrower hereunder on a
day on which the Borrower is to repay all or any part of an outstanding
Revolving A Advance from such Lender, such Lender shall apply the proceeds of
its Term A Advance to make such repayment and only an amount equal to the
difference (if any) between the amount being borrowed and the amount being
repaid shall be made available by such Lender to the Administrative Agent as
provided in subsection 2.02(a), or remitted by the Borrower to the
Administrative Agent as provided in Section 2.14, as the case may be.
(d Unless the Administrative Agent shall have received notice from a
Lender prior to the date of any A Borrowing that such Lender will not make
available to the Administrative Agent such Lender's ratable portion of such A
Borrowing, the Administrative Agent may assume that such Lender has made such
portion available to the Administrative Agent on the date of such
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A Borrowing in accordance with subsections (a) and (c) of this Section 2.02 and
the Administrative Agent may, in reliance upon such assumption, make available
to the Borrower on such date a corresponding amount. If and to the extent such
Lender shall not have so made such ratable portion available to the
Administrative Agent, such Lender and the Borrower severally agree to repay to
the Administrative Agent forthwith on demand such corresponding amount together
with interest thereon, for each day from the date such amount is made available
to the Borrower until the date such amount is repaid to the Administrative
Agent, at the Effective Federal Funds Rate for such day. If such Lender shall
repay to the Administrative Agent such corresponding amount, such amount so
repaid shall constitute such Lender's A Advance to the Borrower as part of such
A Borrowing for purposes of this Agreement.
(e The failure of any Lender to make the A Advance to be made by it as
part of any A Borrowing shall not relieve any other Lender of its obligation, if
any, hereunder to make its A Advance on the date of such A Borrowing, but no
Lender shall be responsible for the failure of any other Lender to make the A
Advance to be made by such other Lender on the date of any A Borrowing.
SECTION 2.3. Fees.
(a FACILITY FEE. The Borrower agrees to pay to the Administrative Agent
for the account of each Lender (other than a Designated Bidder) a facility fee
on the average daily amount of such Lender's Commitment, whether or not used or
deemed used, from the Effective Date in the case of each Initial Lender and from
the effective date specified in the Assignment and Acceptance or Commitment
Increase Agreement pursuant to which it became a Lender in the case of each
other Lender, in each case until the Termination Date, payable quarterly in
arrears on the last day of each March, June, September and December during the
term of such Lender's Commitment and on the Termination Date, at a rate per
annum equal to the Facility Fee Percentage in effect from time to time.
(b UTILIZATION FEE. The Borrower agrees to pay to the Administrative
Agent for the account of each
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Lender a utilization fee of 0.25% per annum on the average daily amount of such
Lender's Advances during any period (each such period, a "Utilization Fee
Period") during the term of this Agreement commencing on the Effective Date or
on a subsequent January 1, April 1, July 1 or October 1 and ending in each case
on the earliest to occur of the next succeeding March 31, June 30, September 30
or December 31 and the Termination Date, if during such Utilization Fee Period
the average daily outstanding amount of all Advances was greater than 25% of the
average daily amount of all Commitments. If a utilization fee is owing in
respect of any Utilization Fee Period, such fee shall be payable on the last day
of such Utilization Fee Period.
(c AGENCY FEE. The Borrower agrees to pay to the Administrative Agent,
for its own account, such agency fees as may be separately agreed to in writing
by the Borrower and the Administrative Agent, such fees to be in the amounts and
payable on the dates as may be so agreed to.
(d ARRANGEMENT FEE. The Borrower agrees to pay to the Administrative
Agent, for its own account, an arrangement fee in the amount and payable on the
date separately agreed to in writing by the Administrative Agent and the
Borrower.
SECTION 2.4. Reduction of the Commitments. The Borrower shall have the
right, upon at least three Business Days' notice to the Administrative Agent, to
terminate in whole or reduce ratably in part the unused portions of the
Commitments of the Lenders (being the amount by which such Commitments exceed
the aggregate outstanding principal amount of all Advances), provided that each
partial reduction shall be in the aggregate amount of $20,000,000 or any whole
multiple of $1,000,000 in excess thereof.
SECTION 2.5. Repayment of A Advances. (a) The Borrower shall repay to
each Lender on the Termination Date the aggregate principal amount of the
Revolving A Advances, together with accrued interest thereon, then owing to such
Lender.
(b) The Borrower shall repay to each Lender on the Final Maturity Date
the aggregate principal amount of
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the Term A Advances, together with accrued interest thereon, then owing to such
Lender.
SECTION 2.6. Interest on A Advances.
(a ORDINARY INTEREST. The Borrower shall pay interest on the unpaid
principal amount of each A Advance owing to each Lender from the date of such A
Advance until such principal amount is due (whether at stated maturity, by
acceleration or otherwise), at the following rates:
(i BASE RATE ADVANCES. During such periods as such A Advance
is a Base Rate Advance, a rate per annum equal at all times to the Base
Rate in effect from time to time plus, in the case of any Term A
Advance, as additional interest in lieu of the facility fee, the
Facility Fee Percentage in effect from time to time, payable quarterly
in arrears on the last day of each March, June, September and December
during such periods and on the date such Base Rate Advance shall be
Converted or due (whether at stated maturity, by acceleration or
otherwise).
(ii EURODOLLAR RATE ADVANCES. During such periods as such A
Advance is a Eurodollar Rate Advance, a rate per annum equal at all
times during each Interest Period for such A Advance to the sum of the
Eurodollar Rate for such Interest Period plus the Eurodollar Rate
Margin in effect from time to time plus, in the case of any Term A
Advance, as additional interest in lieu of the facility fee, the
Facility Fee Percentage in effect from time to time, payable on the
last day of each such Interest Period and, if any such Interest Period
has a duration of more than three months, on each day which occurs
during such Interest Period every three months from the first day of
such Interest Period and, if such A Advance is Converted into a Base
Rate Advance on any date other than the last day of any Interest Period
for such A Advance, on the date of such Conversion or, if later, the
Business Day on which the Borrower shall have received at least one
Business Day's prior notice from the Administrative Agent or the
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applicable Lender of the amount of unpaid interest accrued on such A
Advance to the date of such Conversion.
(iii ADDITIONAL INTEREST ON TERM A ADVANCES. In addition to
amounts payable under clause (i) or (ii) above in respect of any Term A
Advance, the Borrower shall pay to each Lender hereunder as additional
interest an amount in lieu of the utilization fee equal to 0.25% per
annum on the average daily amount of such Lender's Term A Advances
during any period (each such period, an "Additional Interest Period")
during the term of this Agreement commencing on the Termination Date or
on a subsequent January 1, April 1, July 1 or October 1 and ending in
each case on the earliest to occur of the next succeeding March 31,
June 30, September 30 or December 31 and the Final Maturity Date, if
during such Additional Interest Period the average daily outstanding
amount of all Term A Advances was greater than 25% of the aggregate
amount of all the Commitments on the Termination Date. If additional
interest is owing in respect of any Additional Interest Period, such
amount shall be payable on the last day of such Additional Interest
Period.
(b DEFAULT INTEREST. The Borrower shall pay interest on the unpaid
principal amount of each Advance that is not paid when due (whether at stated
maturity, by acceleration or otherwise) from the date on which such amount is
due until such amount is paid in full, payable on demand, at a rate per annum
equal at all times (i) from such due date to the last day of the then existing
Interest Period therefor, in the case of each Eurodollar Rate Advance, to 1% per
annum above the interest rate per annum required to be paid on such A Advance
immediately prior to the date on which such amount became due and (ii) from and
after the last day of the then existing Interest Period therefor, in the case of
each Eurodollar Rate Advance, and at all times in the case of each Base Rate
Advance or B Advance, to 1% per annum above the Base Rate in effect from time to
time.
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SECTION 2.7. Additional Interest on Eurodollar Rate Advances. If any
Lender shall determine in good faith that reserves under regulations of the
Board of Governors of the Federal Reserve System are required to be maintained
by it in respect of, or a portion of its costs of maintaining reserves under
such regulations is properly attributable to, one or more of its Eurodollar Rate
Advances, the Borrower shall pay to such Lender additional interest on the
unpaid principal amount of each such Eurodollar Rate Advance payable on the same
day or days on which interest is payable on such A Advance, at an interest rate
per annum up to but not exceeding at all times during each Interest Period for
such A Advance the excess of (i) the rate obtained by dividing the Eurodollar
Rate for such Interest Period by a percentage equal to 100% minus the Eurodollar
Reserve Percentage, if any, for such Lender for such Interest Period over (ii)
the Eurodollar Rate for such Interest Period. Any Lender wishing to require
payment of such additional interest (x) shall so notify the Borrower and the
Administrative Agent, in which case such additional interest on the Eurodollar
Rate Advances of such Lender shall be payable to such Lender at the place
indicated in such notice with respect to each Interest Period commencing at
least five Business Days after the giving of such notice and (y) shall furnish
to the Borrower at least five Business Days prior to each date on which interest
is payable on the Eurodollar Rate Advances an officer's certificate setting
forth the amount to which such Lender is then entitled under this Section, which
certificate shall be conclusive and binding for all purposes, absent manifest
error.
SECTION 2.8. Interest Rate Determination.
(a Each Reference Bank agrees to furnish to the Administrative Agent
timely information for the purpose of determining each Eurodollar Rate. If any
one or more of the Reference Banks shall not furnish such timely information to
the Administrative Agent for the purpose of determining any such interest rate,
the Administrative Agent shall determine such interest rate
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on the basis of timely information furnished by the remaining Reference Banks.
(b The Administrative Agent shall give prompt notice to the Borrower
and the Lenders of the applicable interest rate determined by the Administrative
Agent for purposes of Section 2.06(a)(i) or (ii), and the applicable rate, if
any, furnished by each Reference Bank for the purpose of determining the
applicable interest rate under Section 2.06(a)(ii).
(c If fewer than two Reference Banks furnish timely information to the
Administrative Agent for determining the Eurodollar Rate for any applicable A
Advances,
(i the Administrative Agent shall give the Borrower and each
Lender prompt notice by telephone (confirmed in writing) that the
interest rate cannot be determined for such applicable A Advances,
(ii each such A Advance that is a Eurodollar Rate Advance will
automatically, on the last day of the then existing Interest Period
therefor, Convert into a Base Rate Advance (or if such A Advance is
then a Base Rate Advance, will continue as a Base Rate Advance), and
(iii the obligations of the Lenders to make, or to Convert A
Advances into, Eurodollar Rate Advances, as the case may be, shall be
suspended until the Administrative Agent shall notify the Borrower and
the Lenders that the circumstances causing such suspension no longer
exist.
(d If, with respect to any Eurodollar Rate Advances, the Majority
Lenders determine and give notice to the Administrative Agent that as a result
of conditions in or generally affecting the relevant market, the rates of
interest determined on the basis of the Eurodollar Rate for any Interest Period
for such A Advances will not adequately reflect the cost to such Majority
Lenders of making, funding or maintaining their respective Eurodollar Rate
Advances for such Interest Period, the Administrative Agent shall forthwith so
notify the Borrower and the Lenders, whereupon,
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(i each such Eurodollar Rate Advance will automatically, on
the last day of the then existing Interest Period therefor, Convert
into a Base Rate Advance, and
(ii the obligation of the Lenders to make, or to Convert A
Advances into, Eurodollar Rate Advances shall be suspended until the
Administrative Agent shall notify the Borrower and the Lenders that the
circumstances causing such suspension no longer exist.
(e If the Borrower shall fail to select the duration of any Interest
Period for any Eurodollar Rate Advances in accordance with the provisions
contained in the definition of "Interest Period" in Section 1.01, the
Administrative Agent will forthwith so notify the Borrower and the Lenders and
such Eurodollar Rate Advances will automatically, on the last day of the then
existing Interest Period therefor, Convert into Base Rate Advances.
(f On the date on which the aggregate unpaid principal amount of A
Advances comprising any A Borrowing shall be reduced, by payment or prepayment
or otherwise, to less than $10,000,000, such A Advances shall, if they are
Eurodollar Rate Advances, automatically Convert into Base Rate Advances, and on
and after such date the right of the Borrower to Convert such A Advances into
Eurodollar Rate Advances shall terminate; provided, however, that if and so long
as each such A Advance shall be, or be elected to be Converted to, Eurodollar
Rate Advances having the same Interest Period as Eurodollar Rate Advances
comprising another A Borrowing or other A Borrowings, and the aggregate unpaid
principal amount of all such Eurodollar Rate Advances shall, or upon such
Conversion will, equal or exceed $20,000,000, the Borrower shall have the right
to continue all such Eurodollar Rate Advances as, or to Convert all such A
Advances into, Eurodollar Rate Advances having such Interest Period.
SECTION 2.9. Voluntary Conversion of A Advances. The Borrower may on
any Business Day, upon notice given to the Administrative Agent, not later than
12:00 noon (New York City time) on the third Business Day prior to the date of
the proposed Conversion, and
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subject to the provisions of Section 2.08, 2.11 and 2.13, Convert all A Advances
of one Type comprising the same A Borrowing into A Advances of the other Type;
provided, however, that any Conversion of any Eurodollar Rate Advances into Base
Rate Advances made on any day other than the last day of an Interest Period for
such Eurodollar Rate Advances shall be subject to the provisions of Section
8.04(b). Each such notice of a Conversion shall, within the restrictions
specified above, specify (i) the date of such Conversion, (ii) the A Advances to
be Converted, and (iii) if such Conversion is into Eurodollar Rate Advances, the
duration of the Interest Period for each such Eurodollar Rate Advance.
SECTION 2.10. Prepayments. The Borrower may, upon (i) in the case of
Eurodollar Rate Advances, at least three Business Days notice or (ii) in the
case of Base Rate Advances, telephonic notice not later than 12:00 noon (New
York City time) on the date of prepayment, to the Administrative Agent which
specifies the proposed date and aggregate principal amount of the prepayment and
the Type of A Advances to be prepaid, and if such notice is given the Borrower
shall, prepay the outstanding principal amounts of the A Advances comprising the
same A Borrowing in whole or ratably in part, together with accrued interest to
the date of such prepayment on the amount prepaid; provided, however, that (x)
each partial prepayment shall be in an aggregate principal amount not less than
$10,000,000 or an integral multiple of $1,000,000 in excess thereof and (y) in
the event of any such prepayment of Eurodollar Rate Advances on any day other
than the last day of an Interest Period for such Eurodollar Rate Advances, the
Borrower shall be obligated to reimburse the Lenders in respect thereof pursuant
to, and to the extent required by, Section 8.04(b); provided, further, however,
that the Borrower will use its best efforts to give notice to the Administrative
Agent of the proposed prepayment of Base Rate Advances on the Business Day prior
to the date of such proposed prepayment.
SECTION 2.11. Increased Costs.
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(a If, due to either (i) the introduction after the Original
Effective Date of or any change after the Original Effective Date (including any
change by way of imposition or increase of reserve requirements or assessments
other than those referred to in the definition of "Eurodollar Reserve
Percentage" contained in Section 1.01) in or in the interpretation of any law or
regulation or (ii) the compliance with any guideline or request issued or made
after the Original Effective Date from or by any central bank or other
governmental authority (whether or not having the force of law), in each case
above other than those referred to in Section 2.12, there shall be any increase
in the cost to any Lender of agreeing to make, fund or maintain, or of making,
funding or maintaining, Eurodollar Rate Advances funded in the interbank
Eurodollar market, then the Borrower shall from time to time, upon demand by
such Lender (with a copy of such demand to the Administrative Agent), pay to the
Administrative Agent for the account of such Lender additional amounts
sufficient to reimburse such Lender for all such increased costs (except those
incurred more than 60 days prior to the date of such demand; for the purposes
hereof any cost or expense allocable to a period prior to the publication or
effective date of such an introduction, change, guideline or request shall be
deemed to be incurred on the later of such publication or effective date). Each
Lender agrees to use its best reasonable efforts promptly to notify the Borrower
of any event referred to in clause (i) or (ii) above, provided that the failure
to give such notice shall not affect the rights of any Lender under this Section
2.11(a) (except as otherwise expressly provided above in this Section 2.11(a)).
A certificate as to the amount of such increased cost, submitted to the Borrower
and the Administrative Agent by such Lender, shall be conclusive and binding for
all purposes, absent manifest error. After one or more Lenders have notified the
Borrower of any increased costs pursuant to this Section 2.11, the Borrower may
specify by notice to the Administrative Agent and the affected Lenders that,
after the date of such notice whenever the election of a Eurodollar Rate Advance
by the
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Borrower for an Interest Period or portion thereof would give rise to such
increased costs, such election shall not apply to the A Advances of such Lender
or Lenders during such Interest Period or portion thereof, and, in lieu thereof,
such A Advances shall during such Interest Period or portion thereof be Base
Rate Advances. Each Lender agrees to use its best reasonable efforts (including
a reasonable effort to change its Applicable Lending Office or to transfer its
affected A Advances to an Affiliate of such Lender) to avoid, or minimize the
amount of, any demand for payment from the Borrower under this Section 2.11,
provided that such avoidance would not, in the reasonable judgment of such
Lender, be otherwise disadvantageous to such Lender.
(b In the event that any Lender shall change its Eurodollar Lending
Office and such change results (at the time of such change) in increased costs
to such Lender, the Borrower shall not be liable to such Lender for such
increased costs incurred by such Lender to the extent, but only to the extent,
that such increased costs shall exceed the increased costs which such Lender
would have incurred if the Eurodollar Lending Office of such Lender had not been
so changed, but, subject to subsection (a) of this Section 2.11 and to Section
2.13, nothing herein shall require any Lender to change its Eurodollar Lending
Office for any reason.
SECTION 2.12. Increased Capital. If either (i) the introduction of or
any change in or in the interpretation of any law or regulation or (ii)
compliance by any Lender with any guideline or request from any central bank or
other governmental authority (whether or not having the force of law) affects or
would affect the amount of capital required or expected to be maintained by such
Lender or any corporation controlling such Lender (including any determination
after the Original Effective Date by any such central bank, governmental
authority or comparable agency that, for purposes of capital adequacy
requirements, the Commitments hereunder do not constitute commitments with an
original maturity of one year or less) and such Lender determines that the
amount of such capital is increased by or based upon
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the existence of such Lender's commitment to lend hereunder and other
commitments of this type, then, within ten days after demand, and delivery to
the Borrower of the certificate referred to in the last sentence of this Section
2.12 by such Lender (with a copy of such demand to the Administrative Agent),
the Borrower shall pay to the Administrative Agent for the account of such
Lender, from time to time as specified by such Lender, additional amounts
sufficient to compensate such Lender or such corporation in the light of such
circumstances, to the extent that such Lender reasonably determines such
increase in capital to be allocable to the existence of such Lender's commitment
to lend hereunder (except any such increase in capital incurred more than, or
compensation attributable to the period before, 90 days prior to the date of
such demand; for the purposes hereof any increase in capital allocable to, or
compensation attributable to, a period prior to the publication or effective
date of such an introduction, change, guideline or request shall be deemed to be
incurred on the later of such publication or effective date). Each Lender agrees
to use its best reasonable efforts promptly to notify the Borrower of any event
referred to in clause (i) or (ii) above, provided that the failure to give such
notice shall not affect the rights of any Lender under this Section 2.12 (except
as otherwise expressly provided above in this Section 2.12). A certificate in
reasonable detail as to the basis for, and the amount of, such compensation
submitted to the Borrower and the Administrative Agent by such Lender shall, in
the absence of manifest error, be conclusive and binding for all purposes.
SECTION 2.13. Illegality. Notwithstanding any other provision of this
Agreement, if the introduction of or any change in or in the interpretation of
any law or regulation shall make it unlawful, or any central bank or other
governmental authority shall assert that it is unlawful, for any Lender or its
Applicable Lending Office to perform its obligations hereunder to make
Eurodollar Rate Advances or to continue to fund or maintain such Advances
hereunder, such Lender may, by notice to the Borrower and the Administrative
Agent, suspend the right of the Borrower to elect Eurodollar
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Rate Advances from such Lender and, if necessary in the reasonable opinion of
such Lender to comply with such law or regulation, Convert all such Eurodollar
Rate Advances of such Lender to Base Rate Advances at the latest time permitted
by the applicable law or regulation, and such suspension and, if applicable,
such Conversion shall continue until such Lender notifies the Borrower and the
Administrative Agent that the circumstances making it unlawful for such Lender
to perform such obligations no longer exist (which such Lender shall promptly do
when such circumstances no longer exist). So long as the obligation of any
Lender to make Eurodollar Rate Advances has been suspended under this Section
2.13, all Notices of A Borrowing specifying A Advances of such Type shall be
deemed, as to such Lender, to be requests for Base Rate Advances. Each Lender
agrees to use its best reasonable efforts (including a reasonable effort to
change its Applicable Lending Office or to transfer its affected A Advances to
an affiliate) to avoid any such illegality, provided that such avoidance would
not, in the reasonable judgment of such Lender, be otherwise disadvantageous to
such Lender.
SECTION 2.14. Payments and Computations.
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(a The Borrower shall make each payment hereunder (including under
Section 2.03, 2.05, 2.06 or 2.19) and under the Notes, whether the amount so
paid is owing to any or all of the Lenders or to the Administrative Agent, not
later than 1:00 P.M. (New York City time) without setoff, counterclaim, or any
other deduction whatsoever, on the day when due in U.S. dollars to the
Administrative Agent in care of The Chase Manhattan Bank, Agency Services, One
Chase Manhattan Plaza, 8th Floor, New York, NY 10081, Attention: Muniram
Appanna, Reference: Burlington Resources Inc., or at such other location
designated by notice to the Borrower from the Administrative Agent and agreed to
by the Borrower, in same day funds. Each such payment made by the Borrower for
the account of any Lender hereunder, when so made to the Administrative Agent,
shall be deemed duly made for all purposes of this Agreement and the Notes,
except that if at any time any such payment is rescinded or must otherwise be
returned by the Administrative Agent or any Lender upon the bankruptcy,
insolvency or reorganization of the Borrower or otherwise, such payment shall be
deemed not to have been so made. The Administrative Agent will promptly
thereafter cause to be distributed like funds relating to the payment of
principal or interest or fees ratably (other than amounts payable pursuant to
Section 2.07, 2.11, 2.12, 2.13, 2.15, 2.19 or 8.04(b)) to the Lenders for the
account of their respective Applicable Lending Offices, and like funds relating
to the payment of any other amount payable to any Lender to such Lender for the
account of its Applicable Lending Office, in each case to be applied in
accordance with the terms of this Agreement. Upon its acceptance of an
Assignment and Acceptance and recording of the information contained therein in
the Register pursuant to Section 8.07(d), from and after the effective date
specified in such Assignment and Acceptance, the Administrative Agent shall make
all payments hereunder and under the Notes in respect of the interest assigned
thereby to the Lender assignee thereunder, and the parties to such Assignment
and Acceptance shall make all appropriate adjustments in such payments for
periods prior to such effective date directly between themselves.
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(b All computations of interest based on the Base Rate and of facility
fees and utilization fees (or amounts in lieu thereof) shall be made by the
Administrative Agent on the basis of a year of 365 or 366 days, as the case may
be, and all computations of interest based on the Eurodollar Rate, or the
Effective Federal Funds Rate shall be made by the Administrative Agent, and all
computations of interest pursuant to Section 2.07 shall be made by each Lender
with respect to its own Eurodollar Rate Advances, on the basis of a year of 360
days, in each case for the actual number of days (including the first day but
excluding the last day) occurring in the period for which such interest or fees
are payable. Each determination by the Administrative Agent (or, in the case of
Section 2.07, 2.11, 2.12, 2.13, 2.15, 2.19 or 8.04(b), by each Lender with
respect to its own Advances) of an interest rate or an increased cost, loss or
expense or increased capital or of illegality or taxes hereunder shall be
conclusive and binding for all purposes if made reasonably and in good faith.
(c Whenever any payment hereunder or under the Notes shall be stated to
be due on a day other than a Business Day, such payment shall be made on the
next succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest or facility fees, as the case
may be; provided, however, if such extension would cause payment of interest on
or principal of Eurodollar Rate Advances to be made in the next following
calendar month, such payment shall be made on the next preceding Business Day.
(d Unless the Administrative Agent shall have received notice from the
Borrower prior to the date on which any payment is due to the Lenders hereunder
that the Borrower will not make such payment in full, the Administrative Agent
may assume that the Borrower has made such payment in full to the Administrative
Agent on such date and the Administrative Agent may, in reliance upon such
assumption, cause to be distributed to each Lender on such due date an amount
equal to the amount then due such Lender. If and to the extent the Borrower
shall not have so made such payment in full to
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the Administrative Agent, each Lender shall repay to the Administrative Agent
forthwith on demand such amount distributed to such Lender together with
interest thereon, for each day from the date such amount is distributed to such
Lender until the date such Lender repays such amount to the Administrative
Agent, at a rate equal to the Effective Federal Funds Rate for such day.
SECTION 2.15. Taxes.
(a Any and all payments by the Borrower hereunder or under the Notes
shall be made in accordance with Section 2.14, free and clear of and without
deduction for any and all present or future taxes, levies, imposts, deductions,
charges or withholdings, and all liabilities with respect thereto, excluding in
the case of each Indemnified Party, (i) all taxes, levies, imposts, deductions,
charges, or withholdings, and all liabilities with respect thereto, imposed on
or determined by reference to its income or profits, and all franchise taxes,
and (ii) all other taxes, levies, imposts, deductions, charges, or withholdings
in effect at the time that such Indemnified Party executed this Agreement or
otherwise became an "Indemnified Party" hereunder, and liabilities with respect
thereto, imposed on it by reason of the jurisdiction in which such Indemnified
Party is organized, domiciled, resident or doing business, or any political
subdivision thereof, or by reason of the jurisdiction of its Applicable Lending
Office or any other office from which it makes or maintains any extension of
credit hereunder or any political subdivision thereof (all such non-excluded
taxes, levies, imposts, deductions, charges, withholdings and liabilities in
respect of payments under this Agreement or under the Notes being herein
referred to as "TAXES"). If the Borrower shall be required by law to deduct any
Taxes from or in respect of any sum payable hereunder or under any Note to any
Indemnified Party, (i) the sum payable shall be increased as may be necessary so
that after making all required deductions (including deductions applicable to
additional sums payable under
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this Section 2.15) such Indemnified Party receives an amount equal to the sum it
would have received had no such deductions been made, (ii) the Borrower (or the
Administrative Agent, as applicable) shall make such deductions at the
applicable statutory rate and (iii) the Borrower (or the Administrative Agent,
as applicable) shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law, provided that
the Borrower shall not be required to pay any additional amount (and shall be
relieved of any liability with respect thereto) pursuant to this subsection (a)
(or pursuant to Section 2.15(c), except to the extent Section 2.15(c) relates to
Other Taxes) to any Indemnified Party that either (x) on the date such
Indemnified Party executed this Agreement or otherwise became an "Indemnified
Party" hereunder, both (A) was not entitled to submit a U.S. Internal Revenue
Service form 1001 (relating to such Indemnified Party, and entitling it to a
complete exemption from withholding on all amounts to be received by such
Indemnified Party, including fees, pursuant to this Agreement or the Advances)
or a U.S. Internal Revenue Service form 4224 (relating to all amounts to be
received by such Indemnified Party, including fees, pursuant to this Agreement
and the Advances) and (B) is not a United States person (as such term is defined
in Section 7701(a)(30) of the Internal Revenue Code), or (y) has failed to
submit any form or certificate that it was required to file or provide pursuant
to subsection (d) of this Section 2.15 and is entitled to file or give, as
applicable, under applicable law, provided, further, that should an Indemnified
Party become subject to Taxes because of its failure to deliver a form required
hereunder, the Borrower shall take such administrative steps as such Indemnified
Party shall reasonably request to assist such Indemnified Party to recover such
Taxes, and provided further, that each Indemnified Party, with respect to
itself, agrees to indemnify and hold harmless the Borrower from any taxes,
penalties, interest and other expenses, costs and losses incurred or payable by
the Borrower as a result of the failure of the Borrower to
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comply with its obligations under clauses (ii) or (iii) above in reliance on any
form or certificate provided to it by such Indemnified Party pursuant to this
Section 2.15. If any Indemnified Party receives a net credit or refund in
respect of such Taxes or amounts so paid by the Borrower, it shall promptly
notify the Borrower of such net credit or refund and shall promptly pay such net
credit or refund to the Borrower, provided that the Borrower agrees to return
such net credit or refund if the Indemnified Party to which such net credit or
refund is applicable, is required to repay it.
(b) In addition, the Borrower agrees to pay any present or future stamp
or documentary taxes or any other excise or property taxes, charges or similar
levies which arise from any payment made hereunder or under the Notes or from
the execution, delivery or registration of, or otherwise with respect to, this
Agreement or the Notes (hereinafter referred to as "OTHER TAXES").
(c) The Borrower will indemnify each Indemnified Party for the full
amount of Taxes or Other Taxes (including any Taxes or Other Taxes imposed by
any jurisdiction on amounts payable under this Section 2.15) paid by such
Indemnified Party and any liability (including penalties, interest and expenses)
arising therefrom or with respect thereto except as a result of the gross
negligence (which shall in any event include the failure of such Indemnified
Party to provide to the Borrower any form or certificate that it was required to
provide pursuant to subsection (d) below) or willful misconduct of such
Indemnified Party, whether or not such Taxes or Other Taxes were correctly or
legally asserted. This indemnification shall be made within 30 days from the
date such Indemnified Party makes written demand therefor.
(d) On or prior to the date on which each Indemnified Party that is
not a United States person (as such term is defined in Section 7701(a)(30) of
the Internal Revenue Code) executes this Agreement or otherwise becomes an
"Indemnified Party" hereunder, such Indemnified Party shall provide the Borrower
and
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the Administrative Agent with U.S. Internal Revenue Service form 1001 or 4224,
as appropriate, or any successor form prescribed by the U.S. Internal Revenue
Service, certifying that such Indemnified Party is fully exempt from United
States withholding taxes with respect to all payments to be made to such
Indemnified Party hereunder, or other documents satisfactory to the Borrower
indicating that all payments to be made to such Indemnified Party hereunder are
fully exempt from such taxes. Thereafter and from time to time, each such
Indemnified Party shall submit to the Borrower and the Administrative Agent such
additional duly completed and signed copies of one or the other of such forms
(or such successor forms as shall be adopted from time to time by the relevant
United States taxing authorities) as may be (i) notified by the Borrower to such
Indemnified Party and (ii) required under then-current United States law or
regulations to avoid United States withholding taxes on payments in respect of
all amounts to be received by such Indemnified Party pursuant to this Agreement
or the Notes, including fees. Upon the request of the Borrower from time to
time, each Indemnified Party that is a United States person (as such term is
defined in Section 7701(a)(30) of the Internal Revenue Code) shall submit to the
Borrower a certificate to the effect that it is such a United States person. If
any Indemnified Party determines, as a result of any change in applicable law,
regulation or treaty, or in any official application or interpretation thereof,
that it is unable to submit to the Borrower any form or certificate that such
Indemnified Party is obligated to submit pursuant to this subsection (d), or
that such Indemnified Party is required to withdraw or cancel any such form or
certificate previously submitted, such Indemnified Party shall promptly notify
the Borrower and the Administrative Agent of such fact.
(e) Any Indemnified Party claiming any additional amounts payable
pursuant to this Section 2.15 shall use its best reasonable efforts (consistent
with its internal policy and legal and regulatory restrictions) to change the
jurisdiction of its Applicable Lending Office if the making of such a change
would avoid the
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need for, or reduce the amount of, any such additional amounts which may
thereafter accrue and would not, in the reasonable judgment of such Indemnified
Party, be otherwise disadvantageous to such Indemnified Party.
(f) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower and each
Indemnified Party contained in this Section 2.15 shall survive the payment in
full of principal and interest hereunder and under the Notes.
SECTION 2.16. Sharing of Payments, Etc. If any Lender shall obtain any
payment (whether voluntary, involuntary, through the exercise of any right of
set-off, or otherwise) on account of the A Advances made by it (other than
pursuant to Section 2.07, 2.11, 2.12, 2.13, 2.15 or 8.04(b)) in excess of its
ratable share of payments on account of the A Advances obtained by all the
Lenders, such Lender shall forthwith purchase from the other Lenders such
participations in the A Advances made by them as shall be necessary to cause
such purchasing Lender to share the excess payment ratably with each of them,
provided, however, that if all or any portion of such excess payment is
thereafter recovered from such purchasing Lender, such purchase from each Lender
shall be rescinded and each Lender shall repay to the purchasing Lender the
purchase price to the extent of such Lender's ratable share (according to the
proportion of (i) the amount of the participation purchased from such Lender as
a result of such excess payment to (ii) the total amount of such excess payment)
of such recovery together with an amount equal to such Lender's ratable share
(according to the proportion of (A) the amount of such Lender's required
repayment to (B) the total amount so recovered from the purchasing Lender) of
any interest or other amount paid or payable by the purchasing Lender in respect
of the total amount so recovered. The Borrower agrees that any Lender so
purchasing a participation from another Lender pursuant to this Section may, to
the fullest extent permitted by law, exercise all its rights of payment
(including the right of set-off) with respect to such participation as fully
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as if such Lender were the direct creditor of the Borrower in the amount of such
participation.
SECTION 2.17. Evidence of Debt. The indebtedness of the Borrower to
each Lender in respect of principal of and interest on the Advances shall be
evidenced by a Note payable to the order of such Lender and delivered hereunder
by the Borrower. Notwithstanding the provisions of the Notes for notations to be
made on the grid attached thereto, any Lender may maintain in accordance with
its usual practice an account or accounts evidencing the indebtedness of the
Borrower resulting from Advances and payments made from time to time hereunder
and under the Note payable to its order. In any legal action or proceeding in
respect of this Agreement or such Note, the entries made in such account or
accounts shall be conclusive evidence of the existence and amounts of the
obligations of the Borrower therein recorded, absent manifest error.
SECTION 2.18. Use of Proceeds. Proceeds of the Advances may be used for
general corporate purposes of the Borrower and its Subsidiaries, including for
acquisitions and for payment of commercial paper issued by the Borrower.
SECTION 2.19. The B Advances. (a) Each Lender severally agrees that the
Borrower may make B Borrowings under this Section 2.19 from time to time on any
Business Day during the period from the Effective Date until the earlier of (I)
the Termination Date or (II) the date falling 30 days prior to the Stated
Termination Date, in the manner set forth below; provided that (x) each B
Borrowing shall be in an aggregate amount of $25,000,000 or an integral multiple
of $5,000,000 in excess thereof and (y) following the making of each B
Borrowing, the aggregate number of outstanding B Borrowings shall not exceed
seven and the aggregate amount of all Advances then outstanding shall not exceed
the aggregate amount of the Commitments of the Lenders (computed without regard
to any B Reduction).
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(i) The Borrower may request a B Borrowing under this Section
2.19 by delivering to the Administrative Agent, by telecopy, telefax or
other teletransmission, a notice of a B Borrowing (a "NOTICE OF B
BORROWING"), in substantially the form of Exhibit C hereto, specifying
the date and aggregate amount of the proposed B Borrowing, the maturity
date for repayment of each B Advance to be made as part of such B
Borrowing (which maturity date may not be earlier than the date
occurring 30 days after the date of such B Borrowing or later than the
earlier of (x) 180 days after the date of such B Borrowing or (y) the
Stated Termination Date), the interest payment date or dates relating
thereto, and any other terms to be applicable to such B Borrowing, not
later than 10:00 A.M. (New York City time) (A) at least one Business
Day prior to the date of the proposed B Borrowing, if the Borrower
shall specify in the Notice of B Borrowing that the rates of interest
to be offered by the Lenders shall be fixed rates per annum and (B) at
least four Business Days prior to the date of the proposed B Borrowing,
if the Borrower shall instead specify in the Notice of B Borrowing the
basis to be used by the Lenders in determining the rates of interest to
be offered by them. The Administrative Agent shall in turn promptly
notify each Lender of each request for a B Borrowing received by it
from the Borrower by sending such Lender a copy of the related Notice
of B Borrowing.
(ii) Each Lender may, if in its sole and absolute discretion it
elects to do so, irrevocably offer to make one or more B Advances to
the Borrower as part of such proposed B Borrowing at a rate or rates of
interest specified by such Lender in its sole discretion, by notifying
the Administrative Agent (which shall give prompt notice thereof to the
Borrower), before 10:00 A.M. (New York City time) (x) on the date of
such proposed B Borrowing in the case of a Notice of B Borrowing
delivered pursuant to clause
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(A) of paragraph (i) above, and (y) three Business Days before the date
of such proposed B Borrowing in the case of a Notice of B Borrowing
delivered pursuant to clause (B) of paragraph (i) above, of the maximum
amount of each B Advance which such Lender would be willing to make as
part of such proposed B Borrowing (which amount may, subject to clause
(y) of the proviso to the first sentence of this Section 2.19(a),
exceed such Lender's Commitment), the rate or rates of interest
therefor and such Lender's Applicable Lending Office with respect to
such B Advance; provided that if the Administrative Agent or an
Affiliate thereof in its capacity as a Lender shall, in its sole
discretion, elect to make any such offer, it shall notify the Borrower
of such offer before 9:45 A.M. (New York City time) on the date on
which notice of such election is to be given to the Administrative
Agent by the other Lenders. If any Lender shall elect not to make such
an offer, such Lender shall so notify the Administrative Agent, before
10:00 A.M. (New York City time) on the date on which notice of such
election is to be given to the Administrative Agent by the other
Lenders, and such Lender shall not be obligated to, and shall not, make
any B Advance as part of such B Borrowing; provided that the failure by
any Lender to give such notice shall not cause such Lender to be
obligated to make any B Advance as part of such proposed B Borrowing.
(iii) The Borrower shall, in turn, before 11:00 A.M. (New York
City time) (x) on the date of such proposed B Borrowing, in the case of
a Notice of B Borrowing delivered pursuant to clause (A) of paragraph
(i) above and (y) three Business Days before the date of such proposed
B Borrowing in the case of a Notice of B Borrowing delivered pursuant
to clause (B) of paragraph (i) above, either
(A) cancel such B Borrowing by giving the
Administrative Agent notice to that effect, or
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(B) accept one or more of the offers made by any
Lender or Lenders pursuant to paragraph (ii) above, in order
of the lowest to highest rates of interest or margins (or, if
two or more Lenders bid at the same rates of interest, and the
amount of accepted offers is less than the aggregate amount of
such offers, the amount to be borrowed from such Lenders as
part of such B Borrowing shall be allocated among such Lenders
pro rata on the basis of the maximum amount offered by such
Lenders at such rates or margin in connection with such B
Borrowing), in any aggregate amount up to the aggregate amount
initially requested by the Borrower in the relevant Notice of
B Borrowing, by giving notice to the Administrative Agent of
the amount of each B Advance (which amount shall be equal to
or greater than the minimum amount, and equal to or less than
the maximum amount, notified to the Borrower by the
Administrative Agent on behalf of such Lender for such B
Advance pursuant to paragraph (ii) above) to be made by each
Lender as part of such B Borrowing, and reject any remaining
offers made by Lenders pursuant to paragraph (ii) above by
giving the Administrative Agent notice to that effect.
(iv) If the Borrower notifies the Administrative Agent that
such B Borrowing is cancelled pursuant to paragraph (iii)(A) above, the
Administrative Agent shall give prompt notice thereof to the Lenders
and such B Borrowing shall not be made.
(v) If the Borrower accepts one or more of the offers made by
any Lender or Lenders pursuant to paragraph (iii)(B) above, the
Administrative Agent shall in turn promptly notify (A) each Lender that
has made an offer as described in paragraph (ii) above, of the date and
aggregate amount of such B Borrowing and whether or not any offer or
offers made by such Lender pursuant to paragraph (ii) above have been
accepted by the
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Borrower, (B) each Lender that is to make a B Advance as part of such B
Borrowing, of the amount of each B Advance to be made by such Lender as
part of such B Borrowing, and (C) each Lender that is to make a B
Advance as part of such B Borrowing, upon receipt, that the
Administrative Agent has received forms of documents appearing to
fulfill the applicable conditions set forth in Article 3. Each Lender
that is to make a B Advance as part of such B Borrowing shall, before
12:00 noon (New York City time) on the date of such B Borrowing
specified in the notice received from the Administrative Agent pursuant
to clause (A) of the preceding sentence or any later time when such
Lender shall have received notice from the Administrative Agent
pursuant to clause (C) of the preceding sentence, make available for
the account of its Applicable Lending Office to the Administrative
Agent at its address referred to in Section 8.02 such Lender's portion
of such B Borrowing, in same day funds. Upon fulfillment of the
applicable conditions set forth in Article 3 and after receipt by the
Administrative Agent of such funds, the Administrative Agent will make
such funds available to the Borrower at the Administrative Agent's
aforesaid address. Promptly after each B Borrowing the Administrative
Agent will notify each Lender of the amount of the B Borrowing, the
consequent B Reduction and the dates upon which such B Reduction
commenced and will terminate.
(b) Within the limits and on the conditions set forth in this Section
2.19, the Borrower may from time to time borrow under this Section 2.19, repay
or prepay pursuant to subsection (c) below, and reborrow under this Section
2.19.
(c) The Borrower shall repay to the Administrative Agent for the
account of each Lender which has made a B Advance, or each other holder of a
Note, on the maturity date of each B Advance (such maturity date being that
specified by the Borrower for repayment in the related Notice of B Borrowing and
provided in the Note evidencing such B Advance), the then unpaid
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principal amount of such B Advance. The Borrower shall have no right to prepay
any B Advance unless, and then only on the terms, specified by the Borrower for
such B Advance in the related Notice of B Borrowing delivered pursuant to
Section 2.19(a)(i) and set forth in the Note evidencing such B Advance or unless
the holder of such B Advance otherwise consents in writing to such prepayment.
(d) The Borrower shall pay interest on the unpaid principal amount of
each B Advance from the date of such B Advance to the date the principal amount
of such B Advance is repaid in full at the rate of interest for such B Advance
specified by the Lender making such B Advance in its notice delivered pursuant
to subsection (a)(ii) above on the interest date or dates specified by the
Borrower for such B Advance in the related Notice of B Borrowing and set forth
in the Note evidencing such B Advance, subject to Section 2.06(b).
(e) Each time that the Borrower gives a Notice of B Borrowing, the
Borrower shall pay to the Administrative Agent for its own account such fee as
may be agreed between the Borrower and the Administrative Agent from time to
time, whether or not any B Borrowing is in fact made.
(f) Following the making of each B Borrowing, the Borrower agrees that
it will be in compliance with the limitations set forth in clause (y) of the
proviso to the first sentence of Section 2.19(a).
(g) The failure of any Lender to make the B Advance to be made by it as
part of any B Borrowing shall not relieve any other Lender of its obligation, if
any, hereunder to make its B Advance on the date of such B Borrowing, but no
Lender shall be responsible for the failure of any other Lender to make the B
Advance to be made by such other Lender on the date of any B Borrowing. If any
Designated Bidder fails to make the B Advance to be made by it as part of any B
Borrowing, such Designated Bidder shall not thereafter have the right to offer
to make any B Advance without the prior written consent of the Borrower and the
Administrative Agent.
SECTION 2.20. Increase of Commitments. (a) At any time after the
Effective Date, provided that no Event
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of Default shall have occurred and be continuing, the Borrower may request an
increase of the aggregate Commitments by notice to the Administrative Agent in
writing of the amount (the "OFFERED INCREASE AMOUNT") of such proposed increase
(such notice, a "COMMITMENT INCREASE NOTICE"). Any such Commitment Increase
Notice must offer each Lender the opportunity to subscribe for its pro rata
share of the increased Commitments. If any portion of the increased Commitments
is not subscribed for by the Lenders, the Borrower may, in its sole discretion,
but with the consent of the Administrative Agent as to any Person that is not at
such time a Lender (which consent shall not be unreasonably withheld), offer to
any existing Lender or to one or more additional banks or financial institutions
the opportunity to participate in all or a portion of such unsubscribed portion
of the increased Commitments pursuant to paragraph (b) or (c) below, as
applicable.
(b) Any additional bank or financial institution that the Borrower
selects to offer participation in the increased Commitments, and that elects to
become a party to this Agreement and obtain a Commitment, shall execute a New
Lender Agreement with the Borrower and the Administrative Agent, substantially
in the form of Exhibit E (a "NEW LENDER AGREEMENT"), whereupon such bank or
financial institution (a "NEW LENDER") shall become a Lender for all purposes
and to the same extent as if originally a party hereto and shall be bound by and
entitled to the benefits of this Agreement, and the signature pages hereof shall
be deemed to be amended to add the name and Commitment of such New Lender,
provided that the Commitment of any such New Lender shall be in an amount not
less than $10,000,000.
(c) Any Lender that accepts an offer to it by the Borrower to increase
its Commitment pursuant to this Section 2.20 shall, in each case, execute a
Commitment Increase Agreement with the Borrower and the Administrative Agent,
substantially in the form of Exhibit F (a "COMMITMENT INCREASE AGREEMENT"),
whereupon such Lender shall be bound by and entitled to the benefits of this
Agreement with respect to the full amount of its Commitment as so increased, and
the
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signature pages hereof shall be deemed to be amended to so increase the
Commitment of such Lender.
(d) The effectiveness of any New Lender Agreement or Commitment
Increase Agreement shall be contingent upon receipt by the Administrative Agent
of such corporate resolutions of the Borrower and legal opinions of counsel to
the Borrower as the Administrative Agent shall reasonably request with respect
thereto, in each case, in form and substance satisfactory to the Administrative
Agent.
(e) If any bank or financial institution becomes a New Lender pursuant
to Section 2.20(b) or any Lender's Commitment is increased pursuant to Section
2.20(c), additional A Advances made on or after the effectiveness thereof (the
"RE-ALLOCATION DATE") shall be made pro rata based on the Commitment Percentages
in effect on and after such Re-Allocation Date (except to the extent that any
such pro rata borrowings would result in any Lender making an aggregate
principal amount of A Advances in excess of its Commitment, in which case such
excess amount will be allocated to, and made by, such New Lender and/or Lenders
with such increased Commitments to the extent of, and pro rata based on, their
respective Commitments), and continuations of Eurodollar Rate Advances
outstanding on such Re-Allocation Date shall be effected by repayment of such
Eurodollar Rate Advances on the last day of the Interest Period applicable
thereto and the making of new Eurodollar Rate Advances pro rata based on such
new Commitment Percentages. In the event that on any such Re-Allocation Date
there is an unpaid principal amount of Base Rate Advances, the Borrower shall
make prepayments thereof and borrowings of Base Rate Advances so that, after
giving effect thereto, the Base Rate Advances outstanding are held pro rata
based on such new Commitment Percentages. In the event that on any such
Re-Allocation Date there is an unpaid principal amount of Eurodollar Rate
Advances, such Eurodollar Rate Advances shall remain outstanding with the
respective holders thereof until the expiration of their respective Interest
Periods (unless the applicable Borrower elects to prepay any thereof in
accordance with the applicable provisions of this
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Agreement), and interest on and repayments of such Eurodollar Rate Advances will
be paid thereon to the respective Lenders holding such Eurodollar Rate Advances
pro rata based on the respective principal amounts thereof outstanding.
(f) Notwithstanding anything to the contrary in this Section 2.20, (i)
no increase pursuant to this Section 2.20 shall be effective without the consent
of the Required Lenders, (ii) no Lender shall have any obligation to increase
its Commitment unless it agrees to do so in its sole discretion and (iii) the
aggregate amount by which the Commitments hereunder are increased pursuant to
this Section 2.20 shall not exceed $120,000,000.
(g) The Borrower shall execute and deliver a Note to each new bank or
other financial institution becoming a Lender.
SECTION 2.21. Extension of Stated Termination Date. (a) Not earlier
than 65 days prior to and not later than 45 days prior to the Stated Termination
Date then in effect, provided that no Event of Default shall have occurred and
be continuing, the Borrower may request an extension of such Stated Termination
Date by submitting to the Administrative Agent an Extension Request containing
the information in respect of such extension specified in Exhibit G, which the
Administrative Agent shall promptly furnish to each Lender. Each Lender shall,
by the later of (i) the date 30 days after its receipt from the Administrative
Agent of the applicable Extension Request and (ii) the date 30 days prior to the
Stated Termination Date, notify the Borrower and the Administrative Agent of its
election to extend or not extend the Stated Termination Date as requested in
such Extension Request. If the Required Lenders shall approve in writing the
extension of the Stated Termination Date requested in such Extension Request,
and unless the Borrower shall elect to give notice for a Term A Advance pursuant
to Section 2.01(b), the Stated Termination Date shall automatically and without
any further action by any Person be extended for an additional 364 days provided
that the Commitment of any Lender that does not consent in writing within the
period specified above (an
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"OBJECTING LENDER") shall, unless earlier terminated in accordance with this
Agreement, expire on the Stated Termination Date in effect on the date of such
Extension Request (such Stated Termination Date, if any, referred to as the
"COMMITMENT EXPIRATION DATE" with respect to such Objecting Lender). If, within
the period specified above, the Required Lenders shall not approve in writing
the extension of the Stated Termination Date requested in an Extension Request,
the Stated Termination Date shall not be extended pursuant to such Extension
Request. The Administrative Agent shall promptly notify (y) the Lenders and the
Borrower of any extension of the Stated Termination Date pursuant to this
Section 2.21 and (z) the Borrower of any Lender that becomes an Objecting
Lender.
(b) A Advances owing to any Objecting Lender on the Commitment
Expiration Date, together with accrued interest thereon, any amounts payable
pursuant to Sections 2.06, 2.07, 2.11, 2.12, 2.15 and 8.04(b) and any accrued
and unpaid facility fee or utilization fee or other amounts payable with respect
to such Lender shall be repaid in full on or before such Commitment Expiration
Date.
(c) The Borrower shall have the right, so long as no Event of Default
has occurred and is then continuing, upon giving notice to the Administrative
Agent and the Objecting Lenders in accordance with Section 2.10, to prepay in
full the A Advances of the Objecting Lenders, together with accrued interest
thereon, any amounts payable pursuant to Sections 2.06, 2.07, 2.11, 2.12, 2.15
and 8.04(b) and any accrued and unpaid facility fee or utilization fee or other
amounts payable to the Objecting Lenders hereunder and, upon giving not less
than three Business Days' notice to the Objecting Lenders and the Administrative
Agent, to cancel the whole or part of the Commitments of the Objecting Lenders.
(d) Notwithstanding the foregoing, if any Lender becomes an Objecting
Lender, the Borrower may, at its own expense and in the sole discretion and
prior to the then Stated Termination Date, require such Lender (and each related
Designated Bidder (as defined herein or in the Long-Term Revolving Credit
Agreement)) to transfer
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or assign, in whole or in part, without recourse (in accordance with Section
8.07), all or part of its interests, rights and obligations under this Agreement
and the Long-Term Revolving Credit Agreement to an Eligible Assignee (provided
that the Borrower, with the full cooperation of such Lender, can identify an
Eligible Assignee that is ready, willing and able to be an assignee with respect
thereto) which shall assume such assigned obligations (which assignee may be
another Lender, if such assignee Lender accepts such assignment); provided that
(A) the assignee or the Borrower, as the case may be, shall have paid to such
Lender in immediately available funds the principal of and interest accrued to
the date of such payment on the Advances made by it hereunder and the "Advances"
made by it under, and as defined in, the Long-Term Revolving Credit Agreement
and all other amounts owed to it hereunder and thereunder, including any amounts
owing pursuant to Section 8.04(b) (or the comparable provision of the Long-Term
Revolving Credit Agreement) and any amounts that would be owing under such
Section (or comparable provision) if such Advances and "Advances" (as so
defined) were prepaid on the date of such assignment, and (B) such assignment
does not conflict with any law, rule or regulation or order of any governmental
authority. Any assignee that becomes a Lender as a result of such an assignment
made pursuant to this paragraph (d) shall be deemed to have consented to the
applicable Extension Request and, therefore, shall not be an Objecting Lender.
SECTION 2.22. Replacement of Lenders. If any Lender requests
compensation under Sections 2.07, 2.11 or 2.12 or if the Borrower is required to
pay any additional amount to any Lender or any taxing authority or other
authority for the account of any Lender pursuant to Section 2.15, or if any
Lender suspends the right of the Borrower to elect Eurodollar Rate Advances from
such Lender pursuant to Section 2.13, or if any Lender defaults in its
obligation to fund Advances hereunder, then the Borrower may, at its sole
expense and effort, upon notice to such Lender and the Administrative Agent,
require such Lender to assign and delegate, without recourse (in accordance with
and
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subject to the restrictions contained in Section 8.07), all its interests,
rights and obligations under this Agreement (other than any outstanding B
Advances held by it) and the Long-Term Revolving Credit Agreement (other than "B
Advances" under, and as defined in, the Long-Term Revolving Credit Agreement) to
an assignee that shall assume such obligations (which assignee may be another
Lender, if a Lender accepts such assignment); provided that (i) the Borrower
shall have received the prior written consent of the Administrative Agent, which
consent shall not unreasonably be withheld, (ii) such Lender shall have received
payment of an amount equal to the outstanding principal of its Advances (other
than B Advances) hereunder and its "Advances" (other than "B Advances") (each as
defined in the Long-Term Revolving Credit Agreement), accrued interest thereon,
accrued fees, accrued costs in connection with compensation under Sections 2.07,
2.11 or 2.12 or payments required to be made pursuant to Section 2.15, if any,
and all other amounts payable to it hereunder and thereunder, from the assignee
(to the extent of such outstanding principal and accrued interest and fees) or
the Borrower (in the case of all other amounts) and (iii) in the case of any
such assignment resulting from a claim for compensation under Sections 2.07,
2.11 or 2.12 or payments required to be made pursuant to Section 2.15, such
assignment will result in a reduction in such compensation or payments. A Lender
shall not be required to make any such assignment and delegation if, prior
thereto, as a result of a waiver by such Lender or otherwise, the circumstances
entitling the Borrower to require such assignment and delegation cease to apply.
ARTICLE 3
CONDITIONS OF EFFECTIVENESS AND LENDING
SECTION 3.1. Conditions Precedent to Effectiveness of the Amendment and
Restatement of this Agreement. The amendment and restatement of this Agreement
as of
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the Effective Date shall become effective when (i) it shall have been executed
by the Borrower, the Administrative Agent and Morgan, in its capacity as
Administrative Agent under this Agreement immediately prior to the effectiveness
of the amendment and restatement of this Agreement, (ii) the Administrative
Agent and the Borrower either shall have been notified by each Initial Lender
that such Initial Lender has executed it or shall have received a counterpart of
this Agreement executed by such Initial Lender, and (iii) the Administrative
Agent shall have received the following, each dated the date of delivery thereof
unless otherwise specified below (which date shall be selected by the Borrower
and be the same for all documents and all Lenders), in form and substance
satisfactory to the Administrative Agent and (except for the Notes) in
sufficient copies for each Lender:
(a) The Notes, to the order of the Lenders, respectively.
(b) Certified copies of the resolutions of the Board of Directors of
the Borrower approving the borrowings contemplated hereby and authorizing the
execution of this Agreement and the Notes, and of all documents evidencing other
necessary corporate action and governmental approvals, if any, with respect to
this Agreement and the Notes.
(c) A certificate of the Secretary or an Assistant Secretary of the
Borrower (i) certifying names and true signatures of officers of the Borrower
authorized to sign this Agreement and the Notes and the other documents to be
delivered hereunder and (ii) if the Effective Date is other than February 23,
1999, certifying that the representations and warranties contained in Section
4.01 are true and correct as of the Effective Date.
(d) A favorable opinion of the Borrower's Senior Vice President, Law,
in substantially the form of Exhibit H hereto.
(e) A favorable opinion of Jones, Day, Reavis & Pogue, New York
counsel to the Borrower, in substantially the form of Exhibit I hereto.
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(f) Evidence satisfactory to the Administrative Agent of payment of
any loans outstanding under this Agreement immediately prior to the
effectiveness of such amendment and restatement, together with all accrued
interest and fees thereunder.
The Borrower and the Initial Lenders agree that upon the effectiveness of such
amendment and restatement the "Commitments" of the Initial Lenders shall be as
set forth on the signature pages hereof under the caption "Commitments" and the
Borrower and the Initial Lenders (for this purpose constituting the "Majority
Lenders" under this Agreement immediately prior to such effectiveness) further
agree that the Commitments of each Lender not continuing as an Initial Lender
upon such effectiveness shall terminate automatically upon the Effective Date
without further action by any party.
SECTION 3.2. Conditions Precedent to Each A Borrowing. The obligation
of each Lender to make an A Advance (including the initial A Advance) on the
occasion of any A Borrowing shall be subject to the further conditions precedent
that on or before the date of such A Borrowing this Agreement shall have become
effective pursuant to Section 3.01 and that on the date of such A Borrowing,
before and immediately after giving effect to such A Borrowing and to the
application of the proceeds therefrom, the following statements shall be true
and correct, and the giving by the Borrower of the applicable Notice of A
Borrowing and the acceptance by the Borrower of the proceeds of such A Borrowing
shall constitute its representation and warranty that on and as of the date of
such A Borrowing, before and immediately after giving effect thereto and to the
application of the proceeds therefrom, the following statements are true and
correct:
(a) Each representation and warranty contained in Section 4.01 is
correct in all material respects as though made on and as of such date (or, if
such representation and warranty is stated to be made as at a specific date or
for a specific period, as at the
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original specified date or with respect to the original specified period);
(b) No event has occurred and is continuing, or would result from such
A Borrowing, which constitutes an Event of Default or would constitute an Event
of Default but for the requirement that notice be given or time elapse or both;
and
(c) The aggregate amount of the borrowings under this Agreement
(including such A Borrowing) and under other agreements or facilities or
evidenced by other instruments or documents is not in excess of the aggregate
amount of such borrowings approved as of such date by the Board of Directors of
the Borrower.
SECTION 3.3. Conditions Precedent to Each B Borrowing. The obligation
of each Lender which is to make a B Advance on the occasion of any B Borrowing
(including the initial B Borrowing) shall be subject to the further conditions
precedent that (i) at or before the time required by paragraph (iii) of Section
2.19(a), the Administrative Agent shall have received the written confirmatory
notice of such B Borrowing contemplated by such paragraph, (ii) on or before the
date of such B Borrowing this Agreement shall have become effective pursuant to
Section 3.01, and (iii) on the date of such B Borrowing, before and immediately
after giving effect to such B Borrowing and to the application of the proceeds
therefrom, the following statements shall be true and correct, and the giving by
the Borrower of the applicable Notice of B Borrowing and the acceptance by the
Borrower of the proceeds of such B Borrowing shall constitute its representation
and warranty that on and as of the date of such B Borrowing, before and
immediately after giving effect thereto and to the application of the proceeds
therefrom, the following statements are true and correct:
(a) Each representation and warranty contained in Section 4.01 is
correct in all material respects as though made on and as of such date (or, if
such representation and warranty is stated to be made as at a specific date or
for a specific period, as at the original specified date or with respect to the
original specified period);
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(b) No event has occurred and is continuing, or would result from such
B Borrowing, which constitutes an Event of Default or would constitute an Event
of Default but for the requirement that notice be given or time elapse or both;
and
(c) The aggregate amount of the borrowings under this Agreement
(including such B Borrowing) and under other agreements or facilities or
evidenced by other instruments or documents is not in excess of the aggregate
amount of such borrowings approved as of such date by the Board of Directors of
the Borrower.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
SECTION 4.1. Representations and Warranties of the Borrower. The
Borrower represents and warrants as follows:
(a) The Borrower is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware. Each Material
Subsidiary is duly incorporated, validly existing and in good standing in the
jurisdiction of its incorporation. The Borrower and each Material Subsidiary
possess all corporate powers and all other authorizations and licenses necessary
to engage in its business and operations as now conducted, the failure to obtain
or maintain which would have a Material Adverse Effect. Each Subsidiary which
is, on and as of the Effective Date, a Material Subsidiary is listed on Schedule
I hereto.
(b) The execution, delivery and performance by the Borrower of this
Agreement and the Notes are within the Borrower's corporate powers, have been
duly authorized by all necessary corporate action, and do not contravene (i) the
Borrower's certificate of incorporation or by-laws or (ii) law or any
contractual restriction binding on or affecting the Borrower.
(c) No authorization or approval or other action by, and no notice to
or filing with, any governmental authority or regulatory body is required for
the due
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execution, delivery and performance by the Borrower of this Agreement or the
Notes which has not been duly made or obtained, except those (i) required in the
ordinary course to comply with ongoing covenant obligations of the Borrower
hereunder the performance of which is not yet due and (ii) that will, in the
ordinary course of business in accordance with this Agreement, be duly made or
obtained on or prior to the time or times the performance of such obligations
shall be due.
(d) This Agreement constitutes, and the Notes when delivered hereunder
shall constitute, legal, valid and binding obligations of the Borrower
enforceable against the Borrower in accordance with their respective terms,
except as may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors rights generally or by
general principles of equity.
(e) The consolidated balance sheet of the Borrower and its
consolidated Subsidiaries as at December 31, 1997 and the related consolidated
statements of income and cash flow for the fiscal year then ended, reported on
by PricewaterhouseCoopers LLC, independent public accountants, and the
consolidated balance sheet of the Borrower and its consolidated subsidiaries as
at September 30, 1998 and the related consolidated statements of income and cash
flow for the nine-month period then ended, certified by the chief financial
officer of the Borrower, copies of each of which have been furnished to the
Administrative Agent and the Initial Lenders, fairly present the consolidated
financial condition of the Borrower and such Subsidiaries as at December 31,
1997, and September 30, 1998, respectively, and the consolidated results of
their operations for such fiscal periods, subject in the case of the September
30, 1998, statements to normal year-end adjustments, all in accordance with
generally accepted accounting principles consistently applied. From September
30, 1998 to and including the Effective Date there has been no material adverse
change in such condition or results of operations.
(f) As at the Effective Date, there is no action, suit or proceeding
pending, or to the knowledge of the
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Borrower threatened, against or involving the Borrower or any Material
Subsidiary in any court, or before any arbitrator of any kind, or before or by
any governmental body, which in the reasonable judgment of the Borrower (taking
into account the exhaustion of all appeals) would have a material adverse effect
on the consolidated financial condition of the Borrower and its consolidated
Subsidiaries taken as a whole, or which purports to affect the legality,
validity, binding effect or enforceability of this Agreement or the Notes.
(g) The Borrower and each consolidated Subsidiary have duly filed all
tax returns required to be filed, and duly paid and discharged all taxes,
assessments and governmental charges upon it or against its properties now due
and payable, the failure to file or pay which, as applicable, would have a
Material Adverse Effect, unless and to the extent only that the same are being
contested in good faith and by appropriate proceedings by the Borrower or the
appropriate Subsidiary.
(h) Except to the extent permitted pursuant to Section 5.02(e),
neither the Borrower nor any Material Subsidiary is subject to any contractual
restrictions which limit the amount of dividends payable by any Subsidiary.
(i) No Termination Event has occurred or is reasonably expected to
occur with respect to any Plan which, with the giving of notice or lapse of
time, or both, would constitute an Event of Default under Section 6.01(g).
(j) Neither the Borrower nor any ERISA Affiliate has incurred, or is
reasonably expected to incur, any Withdrawal Liability to any Multiemployer Plan
that, when aggregated with all other amounts required to be paid to
Multiemployer Plans in connection with Withdrawal Liability (as of the date of
determination), exceeds 5% of the Consolidated Tangible Net Worth of the
Borrower.
(k) Neither the Borrower nor any ERISA Affiliate has received any
notification that any Multiemployer Plan is in reorganization or has been
terminated, within the meaning of Title IV of ERISA, and no
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Multiemployer Plan is reasonably expected to be in reorganization or to be
terminated within the meaning of Title IV of ERISA the effect of which
reorganization or termination would be the occurrence of an Event of Default
under Section 6.01(i).
(l) The Borrower is not an "investment company" or a "company"
controlled by an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
(m) The Borrower is not 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", or a "public utility" within the
meaning of the Public Utility Holding Company Act of 1935, as amended.
(n) Any reprogramming required to permit the proper functioning, in and
following the year 2000, of (i) the computer systems of the Borrower and its
Subsidiaries and (ii) equipment containing embedded microchips (including
systems and equipment supplied by others or with which the Borrower's systems
interface) and the testing of all such systems and equipment, as so
reprogrammed, will be completed by June 30, 1999, except any such reprogramming
or testing of systems or equipment where the failure to so complete would not
reasonably be expected to have a Material Adverse Effect. The cost to the
Borrower and its Subsidiaries of such reprogramming and testing and of the
reasonably foreseeable consequences of year 2000 to the Borrower and its
Subsidiaries (including reprogramming errors and the failure of others' systems
or equipment) will not result in an Event of Default or constitute an Event of
Default but for the requirement that notice be given or time elapse or both and
would not reasonably be expected to have a Material Adverse Effect. Except for
such of the reprogramming referred to in the preceding sentence as may be
necessary, the computer and management information systems of the Borrower and
its Subsidiaries are reasonably expected to be and, with ordinary course
upgrading and maintenance, are reasonably expected to continue for the term of
this Agreement to be, sufficient to permit the Borrower to conduct its
businesses without Material Adverse Effect.
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All representations and warranties made by the Borrower herein or made in any
certificate delivered pursuant hereto shall survive the making of the Advances
and the execution and delivery to the Lenders of this Agreement and the Notes.
ARTICLE 5
COVENANTS OF THE BORROWER
SECTION 5.1. Affirmative Covenants. So long as any Note or other amount
payable by the Borrower hereunder shall remain unpaid or any Lender shall have
any Commitment hereunder, the Borrower will, unless the Majority Lenders shall
otherwise consent in writing:
(a) PRESERVATION OF CORPORATE EXISTENCE, ETC. Preserve and maintain,
and cause each Material Subsidiary to preserve and maintain, its corporate
existence, rights (charter and statutory) and material franchises, except as
otherwise permitted by Section 5.02(c) or 5.02(d).
(b) COMPLIANCE WITH LAWS, ETC. Comply, and cause each Subsidiary to
comply, in all material respects, with all applicable laws, rules, regulations
and orders (including all environmental laws and laws requiring payment of all
taxes, assessments and governmental charges imposed upon it or upon its property
except to the extent contested in good faith by appropriate proceedings) the
failure to comply with which would have a Material Adverse Effect.
(c) VISITATION RIGHTS. At such reasonable times and intervals as the
Administrative Agent or any of the Lenders (other than Designated Bidders) may
desire, permit the Administrative Agent or any of the Lenders (other than
Designated Bidders) to visit the Borrower and to discuss the affairs, finances,
accounts and mineral reserve performance of the Borrower and any of its
Subsidiaries with officers of the Borrower and independent certified public
accountants of the Borrower and any of its Subsidiaries, provided that if an
Event of Default, or an event which with the giving
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of notice or the passage of time, or both, would become an Event of Default, has
occurred and is continuing, the Administrative Agent or any Lender may, in
addition to the other provisions of this subsection (c) and at such reasonable
times and intervals as the Administrative Agent or any of the Lenders may
desire, visit and inspect, under guidance of officers of the Borrower, any
properties significant to the consolidated operations of the Borrower and its
Subsidiaries, and to examine the books and records of account (other than with
respect to any mineral reserve information that the Borrower determines to be
confidential) of the Borrower and any of its Subsidiaries and to discuss the
affairs, finances and accounts of any of the Borrower's Subsidiaries with any of
the officers of such Subsidiary.
(d) BOOKS AND RECORDS. Keep, and cause each of its Subsidiaries to
keep, proper books of record and account, in which full and correct entries
shall be made of all financial transactions and the assets and business of the
Borrower and each Subsidiary in accordance with generally accepted accounting
principles either (i) consistently applied or (ii) applied in a changed manner
that does not, under generally accepted accounting principles or public
reporting requirements applicable to the Borrower, either require disclosure in
the consolidated financial statements of the Borrower and its consolidated
Subsidiaries or require the consent of the accountants which (as required by
Section 5.03(b)) report on such financial statements for the fiscal year in
which such change shall have occurred, or (iii) applied in a changed manner not
covered by clause (ii) above provided such change shall have been disclosed to
the Administrative Agent and shall have been consented to by the accountants
which (as required by Section 5.03(b)) report on the consolidated financial
statements of the Borrower and its consolidated Subsidiaries for the fiscal year
in which such change shall have occurred, provided that if any change referred
to in clause (ii) or (iii) above would not meet the standard set forth in clause
(i) or (ii) of Section 1.03, the Administrative Agent, the Lenders and
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the Borrower agree to amend the covenants contained in Section 5.01 and 5.02 so
that the relative protection afforded thereby to the Lenders and the relative
flexibility afforded thereby to the Borrower will in substance be retained after
such amendment, provided, however, that until such amendment becomes effective
hereunder, the covenants as set forth herein shall remain in full force and
effect and those accounting principles applicable to the Borrower and its
consolidated Subsidiaries which do meet the standards set forth in clause (i) or
(ii) of Section 1.03 shall be applied to determine whether or not the Borrower
is in compliance with such covenants.
(e) MAINTENANCE OF PROPERTIES, ETC. Maintain and preserve, and cause
each Material Subsidiary to maintain and preserve, all of its properties which
are used in the conduct of its business in good working order and condition,
ordinary wear and tear excepted, to the extent that any failure to do so would
have a Material Adverse Effect.
(f) MAINTENANCE OF INSURANCE. Maintain, and cause each Material
Subsidiary to maintain, insurance with responsible and reputable insurance
companies or associations in such amounts and covering such risks as is usually
carried by companies engaged in similar businesses and owning similar properties
in the same general areas in which the Borrower or such Subsidiary operates.
SECTION 5.2. Negative Covenants. So long as any Note or other amount
payable by the Borrower hereunder shall remain unpaid or any Lender shall have
any Commitment hereunder, the Borrower will not, unless the Majority Lenders
shall otherwise consent in writing:
(a) LIENS, ETC. (i) Create, assume or suffer to exist, or permit any
Material Subsidiary to create, assume or suffer to exist, any Liens upon or with
respect to any of the Equity Interests in any Material Subsidiary, whether now
owned or hereafter acquired, or (ii) create or assume, or permit any Material
Subsidiary to create or assume, any Liens upon or with respect to any other
assets material to the consolidated operations of the Borrower and its
consolidated Subsidiaries taken as a whole securing the
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payment of Debt and Guaranties in an aggregate amount (determined without
duplication of amount (so that the amount of a Guaranty will be excluded to the
extent the Debt Guaranteed thereby is included in computing such aggregate
amount)) exceeding the greater of (x) $250,000,000 and (y) 10% of Consolidated
Tangible Net Worth as at the date of such creation or assumption; provided,
however, that this subsection (a) shall not apply to:
(A) Liens on assets acquired by the Borrower or any
of its Subsidiaries after the Original Effective Date to the
extent that such Liens existed at the time of such acquisition
and were not placed thereon by or with the consent of the
Borrower in contemplation of such acquisition;
(B) Liens on Equity Interests acquired after the
Original Effective Date in a Business Entity which has become
or becomes a Subsidiary of the Borrower, or on assets of any
such Business Entity, to the extent that such Liens existed at
the time of such acquisition and were not placed thereon by or
with the consent of the Borrower in contemplation of such
acquisition;
(C) Liens on Margin Stock;
(D) Liens on the Equity Interests in, or Debt or
other obligations of, or assets of, any Project Financing
Subsidiary (or any Equity Interests in, Debt or other
obligations of any Business Entity which are owned by any
Project Financing Subsidiary) securing the payment of a
Project Financing and related obligations;
(E) Permitted Liens;
(F) Liens arising out of the refinancing, extension,
renewal or refunding of any Debt or Guaranty secured by any
Lien permitted by any of the foregoing clauses of this
Section, provided that the principal amount of such Debt or
Guaranty is not
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increased (except by the amount of costs reasonably incurred
in connection with the issuance thereof) and such Debt or
Guaranty is not secured by any additional assets that would
not have been permitted by this Section to secure the Debt or
Guaranty refinanced, extended, renewed or refunded; and
(G) Liens on products and proceeds (including
dividend, interest and like payments on, and insurance and
condemnation proceeds and rental, lease, licensing and similar
proceeds) of, and property evidencing or embodying, or
constituting rights or other general intangibles relating to,
and accessions and improvements to, collateral subject to
Liens permitted by this Section 5.02.
(b) DEBT, ETC. Create, assume or suffer to exist, or permit any of its
consolidated Subsidiaries to create, assume or suffer to exist, any Debt or any
Guaranty unless, immediately after giving effect to such Debt or Guaranty and
the receipt and application of any proceeds thereof or value received in
connection therewith,
(1) the sum (without duplication) of (i)
consolidated Debt of the Borrower and its consolidated
Subsidiaries plus (ii) the aggregate amount (determined on a
consolidated basis) of Guaranties by the Borrower and its
consolidated Subsidiaries is less than 60% of Capitalization,
provided that Debt for borrowed money either maturing within
one year and evidenced by instruments commonly known as
commercial paper, or evidenced by variable demand notes or
other similar short-term financing instruments issued to
commercial banks and trust companies (other than Debt incurred
pursuant to this Agreement or the Long-Term Revolving Credit
Agreement or any replacement therefor), shall not exceed the
aggregate of the Borrower's unused bank lines of credit and
unused credit available to the Borrower
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under financing arrangements with banks or other financial
institutions; and
(2) with respect to any such Debt created or assumed
by a consolidated Subsidiary that is either a Subsidiary of
the Borrower as of the Original Effective Date or a Subsidiary
of the Borrower acquired or created after the Original
Effective Date and owning a material portion of the
consolidated operating assets existing at the Original
Effective Date of the Borrower and its Subsidiaries, the
aggregate amount of Debt of the consolidated Subsidiaries of
the Borrower referred to above in this paragraph (2) owing to
Persons other than the Borrower and its consolidated
Subsidiaries is less than the greater of (i) $500,000,000
(exclusive of public Debt of LL&E existing at the time LL&E
became a Subsidiary, the principal amount of which at such
time was approximately $400,000,000, and any refinancing of
such Debt, in a principal amount not to exceed the principal
amount refinanced) and (ii) 30% of Consolidated Tangible Net
Worth as at the date of incurrence or creation of such Debt.
(c) SALE, ETC. OF ASSETS. Sell, lease or otherwise transfer, or permit
any Material Subsidiary to sell, lease or otherwise transfer (in either case,
whether in one transaction or in a series of transactions, and except, in either
case, to the Borrower or an entity which after giving effect to such transfer
will be or become a Material Subsidiary in which the Borrower's direct or
indirect Equity Interests will be at least as great as its direct or indirect
Equity Interests in the transferor immediately prior thereto, and except as
permitted by Section 5.02(d)), assets constituting all or substantially all of
the consolidated assets of the Borrower and its Material Subsidiaries, provided
that, notwithstanding the foregoing, the Borrower or any Material Subsidiary may
sell, lease or otherwise transfer any Permitted Assets constituting all or
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substantially all of the consolidated assets of the Borrower and its Material
Subsidiaries, so long as (A) such Permitted Assets are sold, leased or otherwise
transferred in exchange for other Permitted Assets and/or (B) the proceeds from
such sale, lease or other transfer, or an amount equal to the proceeds thereof,
are (x) reinvested within one year in Permitted Assets and/or the development of
Permitted Assets and/or (y) used to repay Debt the proceeds of which were or are
being used for investment in, and/or the development of, Permitted Assets;
provided further that, no such sale, lease or other transfer shall be permitted
by the foregoing proviso unless either (1) after giving effect to such sale,
lease or other transfer, no Event of Default, and no event which with lapse of
time or the giving of notice, or both, would constitute an Event of Default,
shall have occurred and be continuing or (2) the Borrower or the relevant
Material Subsidiary, as the case may be, was contractually obligated, prior to
the occurrence of such Event of Default or event, to consummate such sale, lease
or other transfer.
(d) MERGERS, ETC. Merge or consolidate with any Person, or permit any
of its Material Subsidiaries to merge or consolidate with any Person, except
that (i) such a Subsidiary may merge or consolidate with (or liquidate into) any
other Subsidiary or may merge or consolidate with (or liquidate into) the
Borrower, provided that (A) if such Material Subsidiary merges or consolidates
with (or liquidates into) the Borrower, the Borrower shall be the continuing or
surviving corporation, (B) if any such Material Subsidiary merges or
consolidates with (or liquidates into) any other Subsidiary of the Borrower, one
of such Subsidiaries is the surviving corporation and, if either such Subsidiary
is not wholly-owned by the Borrower, such merger or consolidation is on an arm's
length basis and (C) as a result of such merger or consolidation, no Event of
Default, and no event which with lapse of time or the giving of notice, or both,
would constitute an Event of Default, shall have occurred and be continuing, and
(ii) the Borrower or any Material Subsidiary may merge or consolidate with any
other
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corporation (that is, in addition to the Borrower or any Subsidiary of the
Borrower), provided that (A) if the Borrower merges or consolidates with any
such other corporation, the Borrower is the surviving corporation, (B) if any
Material Subsidiary merges or consolidates with any such other corporation, the
surviving corporation is a wholly-owned Material Subsidiary of the Borrower, and
(C) if either the Borrower or any Material Subsidiary merges or consolidates
with any such other corporation, after giving effect to such merger or
consolidation no Event of Default, and no event which with lapse of time or the
giving of notice, or both, would constitute an Event of Default, shall have
occurred and be continuing.
(e) DIVIDEND RESTRICTIONS. Create, or consent or agree to, or permit
any of its Material Subsidiaries existing on the Original Effective Date or any
of its Subsidiaries thereafter created or acquired and owning a material portion
of the consolidated operating assets existing at the Original Effective Date of
the Borrower and its Subsidiaries, to create, or consent or agree to, any
restrictions, contained in any agreement or instrument relating to or evidencing
Debt, on any such Subsidiary's ability to pay dividends or to make advances to
the Borrower or any Subsidiary of the Borrower; provided, however, that this
subsection (e) shall not apply to any such restrictions (including any
extensions of the term of any thereof (by amendment, or continuation thereof in
any refinancing of the Debt to which such restriction relates, or otherwise))
applicable to the Equity Interests in any Subsidiary of the Borrower the Equity
Interests in which are acquired by the Borrower after the Original Effective
Date and which restrictions are existing at the time such Subsidiary first
becomes a Subsidiary of the Borrower and are not placed thereon by or with the
consent of the Borrower in contemplation of such acquisition by the Borrower.
SECTION 5.3. Reporting Requirements. So long as any Note shall remain
unpaid or any Lender shall have any Commitment hereunder, the Borrower will
furnish to each Lender in such reasonable quantities as shall from time to time
be requested by such Lender:
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(a) within 60 days after the end of each of the first three quarters
of each fiscal year of the Borrower, a consolidated balance sheet of the
Borrower and its consolidated Subsidiaries as of the end of such quarter, and
consolidated statements of income and cash flow of the Borrower and its
consolidated Subsidiaries each for the period commencing at the end of the
previous fiscal year and ending with the end of such quarter, certified (subject
to normal year-end adjustments) as to fairness and utilization of generally
accepted accounting principles by the chief financial officer of the Borrower
and accompanied by a certificate of such officer stating (i) that such
statements of income and cash flow and such balance sheet have been prepared in
accordance with generally accepted accounting principles, (ii) whether or not
such officer has knowledge of the occurrence of any Event of Default which is
continuing hereunder or of any event not theretofore remedied which with notice
or lapse of time or both would constitute such an Event of Default and, if so,
stating in reasonable detail the facts with respect thereto, (iii) all relevant
facts in reasonable detail to evidence, and the computations as to, whether or
not the Borrower is in compliance with the requirements set forth in subsection
(b) of Section 5.02, and (iv) a listing of all Material Subsidiaries and
consolidated Subsidiaries of the Borrower showing the extent of its direct and
indirect holdings of their Equity Interests;
(b) within 120 days after the end of each fiscal year of the Borrower,
a copy of the annual report for such year for the Borrower and its consolidated
Subsidiaries containing financial statements for such year reported on by
nationally recognized independent public accountants acceptable to the Lenders,
accompanied by (i) a report signed by said accountants stating that such
financial statements have been prepared in accordance with generally accepted
accounting principles and (ii) a letter from such accountants stating that in
making the investigations necessary for such report they obtained no knowledge,
except as specifically stated therein, of any Event of Default which is
continuing hereunder or of any event
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not theretofore remedied which with notice or lapse of time or both would
constitute such an Event of Default;
(c) within 120 days after the close of each of the Borrower's fiscal
years, a certificate of the chief financial officer of the Borrower stating (i)
whether or not such officer has knowledge of the occurrence of any Event of
Default which is continuing hereunder or of any event not theretofore remedied
which with notice or lapse of time or both would constitute such an Event of
Default and, if so, stating in reasonable detail the facts with respect thereto,
(ii) all relevant facts in reasonable detail to evidence, and the computations
as to, whether or not the Borrower is in compliance with the requirements set
forth in subsection (b) of Section 5.02 and (iii) a listing of all Material
Subsidiaries and consolidated Subsidiaries of the Borrower showing the extent of
its direct and indirect holdings of their Equity Interests;
(d) promptly upon their distribution, copies of all financial
statements, reports and proxy statements which the Borrower or any Material
Subsidiary shall have sent to its public Equity Interest holders;
(e) promptly upon their becoming publicly available, all regular and
periodic financial reports and registration statements which the Borrower or any
Material Subsidiary shall file with the Securities and Exchange Commission or
any national securities exchange other than registration statements relating to
employee benefit plans and to registration statements of securities for selling
security holders;
(f) promptly in writing, notice of all litigation and of all
proceedings before any governmental or regulatory agencies against or involving
the Borrower or any Material Subsidiary, except any litigation or proceeding
which in the reasonable judgment of the Borrower (taking into account the
exhaustion of all appeals) is not likely to have a material adverse effect on
the consolidated financial condition of the Borrower and its consolidated
Subsidiaries taken as a whole;
(g) within three Business Days after an executive officer of the
Borrower obtains knowledge of the occurrence of any Event of Default which is
continuing
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or of any event not theretofore remedied which with notice or lapse of time, or
both, would constitute an Event of Default, notice of such occurrence together
with a detailed statement by a responsible officer of the Borrower of the steps
being taken by the Borrower or the appropriate Subsidiary to cure the effect of
such event;
(h) as soon as practicable and in any event (i) within 30 days after
the Borrower or any ERISA Affiliate knows or has reason to know that any
Termination Event described in clause (i) of the definition of Termination Event
with respect to any Plan has occurred and (ii) within 10 days after the Borrower
or any ERISA Affiliate knows or has reason to know that any other Termination
Event with respect to any Plan has occurred, a statement of the chief financial
officer of the Borrower describing such Termination Event and the action, if
any, which the Borrower or such ERISA Affiliate proposes to take with respect
thereto;
(i) promptly and in any event within two Business Days after receipt
thereof by the Borrower or any ERISA Affiliate, copies of each notice received
by the Borrower or any ERISA Affiliate from the PBGC stating its intention to
terminate any Plan or to have a trustee appointed to administer any Plan;
(j) promptly and in any event within 30 days after the filing thereof
with the Internal Revenue Service, copies of each Schedule B (Actuarial
Information) to the annual report (Form 5500 Series) with respect to each Plan;
(k) promptly and in any event within five Business Days after receipt
thereof by the Borrower or any ERISA Affiliate from the sponsor of a
Multiemployer Plan, a copy of each notice received by the Borrower or any ERISA
Affiliate concerning (i) the imposition of Withdrawal Liability by a
Multiemployer Plan, (ii) the determination that a Multiemployer Plan is, or is
expected to be, in reorganization within the meaning of Title IV of ERISA, (iii)
the termination of a Multiemployer Plan within the meaning of Title IV of ERISA,
or (iv) the amount of liability incurred, or expected to be incurred, by the
Borrower or any ERISA
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Affiliate in connection with any event described in clause (i), (ii) or (iii)
above; and
(l) as soon as practicable but in any event within 60 days of any
notice of request therefor, such other information respecting the financial
condition and results of operations of the Borrower or any Subsidiary as any
Lender through the Administrative Agent may from time to time reasonably
request.
Each balance sheet and other financial statement furnished pursuant to
subsections (a) and (b) of this Section 5.03 shall contain comparative
information which conforms to the presentation required in Form 10-Q and Form
10-K, as appropriate, under the Securities Exchange Act of 1934, as amended.
ARTICLE 6
EVENTS OF DEFAULT
SECTION 6.1. Events of Default. If any of the following events
("EVENTS OF DEFAULT") shall occur and be continuing:
(a) The Borrower shall fail to pay any principal of any Note within
two Business Days after the same shall be due, or any interest on any Note or
any other amount payable hereunder within five Business Days after the same
shall be due; or
(b) Any representation or warranty made or deemed made by the Borrower
herein or by the Borrower (or any of its officers) in connection with this
Agreement shall prove to have been incorrect in any material respect when made
or deemed made; or
(c) The Borrower shall fail to perform or observe any other term,
covenant or agreement contained in this Agreement on its part to be performed or
observed and any such failure shall remain unremedied for 30 days after written
notice thereof shall have been given to the Borrower by the Administrative Agent
or by any Lender with a copy to the Administrative Agent; or
(d) The Borrower or any Material Subsidiary shall fail to pay any Debt
or Guaranty (excluding Debt
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evidenced by the Notes) of the Borrower or such Subsidiary (as the case may be)
in an aggregate principal amount in excess of the greater of (i) $100,000,000
and (ii) 3% of Consolidated Tangible Net Worth at such time, or any installment
of principal thereof or interest or premium thereon, when due (whether by
scheduled maturity, required prepayment, acceleration, demand or otherwise) and
such failure shall continue after the applicable grace period, if any, specified
in the agreement or instrument relating to such Debt or Guaranty; or any other
default under any agreement or instrument relating to any such Debt, or any
other event, shall occur and shall continue after the applicable grace period,
if any, specified in such agreement or instrument, if the effect of such default
or event is to accelerate the maturity of such Debt; provided that,
notwithstanding any provision contained in this subsection (d) to the contrary,
to the extent that pursuant to the terms of any agreement or instrument relating
to any Debt referred to in this subsection (d), any sale, pledge or disposal of
Margin Stock, or utilization of the proceeds thereof would result in a breach of
any covenant contained therein or otherwise give rise to a default or event of
default thereunder and/or acceleration of the maturity of the Debt extended
pursuant thereto and as a result of such terms or of such sale, pledge,
disposal, utilization, breach, default, event of default or acceleration, or the
provisions hereof relating thereto, this Agreement or any Advance hereunder
would otherwise be subject to the margin requirements or any other restriction
under Regulation U issued by the Board of Governors of the Federal Reserve
System, then such breach, default, event of default or acceleration shall not
constitute a default or Event of Default under this subsection (d); or
(e) (i) The Borrower or any Material Subsidiary shall (A) generally
not pay its debts as such debts become due; or (B) admit in writing its
inability to pay its debts generally; or (C) make a general assignment for the
benefit of creditors; or (ii) any proceeding shall be instituted or consented to
by the Borrower or any such Subsidiary seeking to adjudicate
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it a bankrupt or insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief, or composition of it or its debts
under any law relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of an order for relief or the appointment of a
receiver, trustee, or other similar official for it or for any substantial part
of its property; or (iii) any such proceeding shall have been instituted against
the Borrower or any such Subsidiary and either such proceeding shall not be
stayed or dismissed for 60 consecutive days or any of the actions referred to
above sought in such proceeding (including the entry of an order for relief
against it or the appointment of a receiver, trustee, custodian or other similar
official for it or any substantial part of its property) shall occur; or (iv)
the Borrower or any such Subsidiary shall take any corporate action to authorize
any of the actions set forth above in this subsection (e); or
(f) Any judgment or order for the payment of money in excess the
greater of (i) $100,000,000 and (ii) 3% of Consolidated Tangible Net Worth at
such time shall be rendered against the Borrower or any Material Subsidiary and
either (i) enforcement proceedings shall have been commenced and are continuing
or have been completed by any creditor upon such judgment or order (other than
any enforcement proceedings consisting of the mere obtaining and filing of a
judgment lien or obtaining of a garnishment or similar order so long as no
foreclosure, levy or similar process in respect of such lien, or payment over in
respect of such garnishment or similar order, has commenced and is continuing or
has been completed) or (ii) there shall be any period of 30 consecutive days
during which a stay of execution or enforcement proceedings (other than those
referred to in the parenthesis in clause (i) above) in respect of such judgment
or order, by reason of a pending appeal, bonding or otherwise, shall not be in
effect; or
(g) Any Termination Event with respect to a Material Plan shall have
occurred and, 30 days after notice thereof shall have been given to the Borrower
by the Lender, (i) such Termination Event shall still
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exist and (ii) the sum (determined as of the date of occurrence of such
Termination Event) of the Insufficiency of such Plan and the Insufficiency of
any and all other Plans with respect to which a Termination Event shall have
occurred and then exist (or in the case of a Plan with respect to which a
Termination Event described in clause (ii) of the definition of Termination
Event shall have occurred and then exist, the liability related thereto), in
each case in respect of which the Borrower or any ERISA Affiliate has liability,
is equal to or greater than $50,000,000; or
(h) The Borrower or any ERISA Affiliate shall have been notified by
the sponsor of a Multiemployer Plan that it has incurred Withdrawal Liability to
such Multiemployer Plan in an amount which, when aggregated with all other
amounts required to be paid to Multiemployer Plans in connection with Withdrawal
Liabilities (determined as of the date of such notification), exceeds
$50,000,000; or
(i) The Borrower or any ERISA Affiliate shall have been notified by
the sponsor of a Multiemployer Plan that such Multiemployer Plan is in
reorganization or is being terminated, within the meaning of Title IV of ERISA,
if as a result of such reorganization or termination the aggregate annual
contributions of the Borrower and its ERISA Affiliates to all Multiemployer
Plans which are then in reorganization or being terminated have been or will be
increased over the amounts contributed to such Multiemployer Plans for the
respective plan years which include the Original Effective Date by an amount
exceeding $50,000,000; or
(j) Upon completion of, and pursuant to, a transaction, or a series of
transactions (which may include prior acquisitions of capital stock of the
Borrower in the open market or otherwise), involving a tender offer (i) a
"person" (within the meaning of Section 13(d) of the Securities Exchange Act of
1934) other than the Borrower, a Subsidiary of the Borrower or any employee
benefit plan maintained for employees of the Borrower and/or any of its
Subsidiaries or the trustee therefor, shall have acquired direct or indirect
ownership of and paid for in excess of 50% of the outstanding capital stock of
the Borrower entitled
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to vote in elections for directors of the Borrower and (ii) at any time before
the later of (x) six months after the completion of such tender offer and (y)
the next annual meeting of the shareholders of the Borrower following the
completion of such tender offer more than half of the directors of the Borrower
consists of individuals who (a) were not directors before the completion of such
tender offer and (b) were not appointed, elected or nominated by the Board of
Directors in office prior to the completion of such tender offer (other than any
such appointment, election or nomination required or agreed to in connection
with, or as a result of, the completion of such tender offer); or
(k) Any "Event of Default" as defined in the Long-Term Revolving
Credit Agreement shall occur and be continuing;
then, and in any such event, the Administrative Agent shall at the request, or
may with the consent, of the Majority Lenders, by notice to the Borrower, (i)
declare the obligation of each Lender to make Advances to be terminated,
whereupon the same shall forthwith terminate, and (ii) declare the Notes, all
interest thereon and all other amounts payable under this Agreement to be
forthwith due and payable, whereupon the Notes, all such interest and all such
amounts shall become and be forthwith due and payable, without presentment,
demand, protest or further notice of any kind, all of which are hereby expressly
waived by the Borrower; provided, however, that if an Event of Default under
subsection (e) of this Section 6.01 (except under clause (i)(A) thereof) shall
occur, (A) the obligation of each Lender to make Advances shall automatically be
terminated and (B) the Notes, all interest thereon and all other amounts payable
under this Agreement shall automatically become and be forthwith due and
payable, without presentment, demand, protest or any notice of any kind, all of
which are hereby expressly waived by the Borrower.
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ARTICLE 7
THE ADMINISTRATIVE AGENT
SECTION 7.1. Authorization and Action. Each Lender hereby 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. As to any matters not expressly provided for by
this Agreement (including enforcement of this Agreement or collection of the
Notes), the Administrative Agent shall not be required to exercise any
discretion or take any action, but shall be required to act or to refrain from
acting (and shall be fully protected in so acting or refraining from acting)
upon the instructions of the Majority Lenders, and such instructions shall be
binding upon all Lenders and all holders of Notes; provided, however, that the
Administrative Agent shall not be required to take any action which exposes the
Administrative Agent to personal liability or which is contrary to this
Agreement or applicable law. The Administrative Agent agrees to give to each
Lender prompt notice of each notice given to it by the Borrower pursuant to the
terms of this Agreement.
SECTION 7.2. Administrative Agent's Reliance, Etc.. Neither the
Administrative Agent nor any of its directors, officers, agents or employees
shall be liable for any action taken or omitted to be taken by it or them under
or in connection with this Agreement, except for its or their own gross
negligence or willful misconduct. Without limitation of the generality of the
foregoing, the Administrative Agent: (i) may treat the payee of any Note as the
holder thereof until the Administrative Agent receives and accepts an Assignment
and Acceptance entered into by the Lender which is the payee of such Note, as
assignor, and an Eligible Assignee, as assignee, as provided in Section 8.07;
(ii) may consult with legal counsel (including counsel for the Borrower),
independent public accountants and other experts selected by it and shall not be
liable for any action taken or omitted to be taken in good
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faith by it in accordance with the advice of such counsel, accountants or
experts; (iii) makes no warranty or representation to any Lender and shall not
be responsible to any Lender for any statements, warranties or representations
(whether written or oral) made in or in connection with this Agreement; (iv)
shall not have any duty to ascertain or to inquire as to the performance or
observance of any of the terms, covenants or conditions of this Agreement on the
part of the Borrower or to inspect the property (including the books and
records) of the Borrower; (v) shall not be responsible to any Lender for the due
execution, legality, validity, enforceability, genuineness, sufficiency or value
of this Agreement or any other instrument or document furnished pursuant hereto;
and (vi) shall incur no liability under or in respect of this Agreement by
acting upon any notice, consent, certificate or other instrument or writing
(which may be by telegram, telecopy, cable or telex) believed by it to be
genuine and signed or sent by the proper party or parties.
SECTION 7.3. Chase and Affiliates. With respect to its Commitments, the
Advances made by it and the Notes issued to it, Chase shall have the same rights
and powers under this Agreement as any other Lender and may exercise the same as
though it were not the Administrative Agent; and the term "Lender" or "Lenders"
shall, unless otherwise expressly indicated, include Chase in its individual
capacity. Chase and its affiliates may accept deposits from, lend money to, act
as trustee under indentures of, and generally engage in any kind of business
with, the Borrower, any of its Subsidiaries and any Person who may do business
with or own securities of the Borrower or any Subsidiary, all as if Chase were
not the Administrative Agent and without any duty to account therefor to the
other Lenders.
SECTION 7.4. Lender Credit Decision. Each Lender acknowledges that it
has, independently and without reliance upon the Administrative Agent or any
other Lender and based on the financial statements referred to in Section 4.01
and such other documents and
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information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon the Administrative Agent or any
other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement.
SECTION 7.5. Indemnification. THE LENDERS (OTHER THAN THE DESIGNATED
BIDDERS) AGREE TO INDEMNIFY THE ADMINISTRATIVE AGENT (TO THE EXTENT NOT
REIMBURSED BY THE BORROWER), RATABLY ACCORDING TO THE RESPECTIVE PRINCIPAL
AMOUNTS OF THE NOTES THEN HELD BY EACH OF THEM (OR IF NO NOTES ARE AT THE TIME
OUTSTANDING OR IF ANY NOTES ARE HELD BY PERSONS WHICH ARE NOT LENDERS, RATABLY
ACCORDING TO THE RESPECTIVE AMOUNTS OF THEIR COMMITMENTS OR THE RESPECTIVE
AMOUNTS OF THEIR COMMITMENTS IMMEDIATELY PRIOR TO TERMINATION IF THE COMMITMENTS
HAVE BEEN TERMINATED), FROM AND AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS,
LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES AND
DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER WHICH MAY BE IMPOSED ON, INCURRED
BY, OR ASSERTED AGAINST THE ADMINISTRATIVE AGENT IN ANY WAY RELATING TO OR
ARISING OUT OF THIS AGREEMENT, ANY OF THE NOTES OR ANY OTHER INSTRUMENT OR
DOCUMENT FURNISHED PURSUANT HERETO OR IN CONNECTION HEREWITH, OR ANY ACTION
TAKEN OR OMITTED BY THE ADMINISTRATIVE AGENT UNDER THIS AGREEMENT, OR ANY OF THE
NOTES OR ANY OTHER INSTRUMENT OR DOCUMENT FURNISHED PURSUANT HERETO OR IN
CONNECTION HEREWITH; PROVIDED THAT NO LENDER SHALL BE LIABLE FOR ANY PORTION OF
SUCH LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS,
SUITS, COSTS, EXPENSES OR DISBURSEMENTS RESULTING FROM THE ADMINISTRATIVE
AGENT'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. Without limitation of the
foregoing, each Lender (other than the Designated Bidders) agrees to reimburse
the Administrative Agent promptly upon demand for such Lender's ratable share of
any reasonable out-of-pocket expenses (including counsel fees) incurred by the
Administrative Agent in connection with the preparation, execution, delivery,
administration,
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modification, amendment or enforcement (whether through negotiations, legal
proceedings, in bankruptcy or insolvency proceedings, or otherwise) of, or legal
advice in respect of rights or responsibilities under, this Agreement, any of
the Notes or any other instrument or document furnished pursuant hereto or in
connection herewith to the extent that the Administrative Agent acts in its
capacity as Administrative Agent and is not reimbursed for such expenses by the
Borrower.
SECTION 7.6. Successor Administrative Agent. The Administrative Agent
may resign at any time by giving written notice thereof to the Lenders and the
Borrower and may be removed at any time with or without cause by the Majority
Lenders. Upon any such resignation or removal, the Majority Lenders shall have
the right to appoint a successor Administrative Agent. If no successor
Administrative Agent shall have been so appointed by the Majority Lenders, and
shall have accepted such appointment, within 30 days after the retiring
Administrative Agent's giving of notice of resignation or the Majority Lenders'
removal of the retiring Administrative Agent, then such retiring Administrative
Agent may, on behalf of the Lenders, appoint a successor Administrative Agent,
which shall be a commercial bank organized, or authorized to conduct a banking
business, under the laws of the United States of America or of any State thereof
and having a combined capital and surplus of at least $500,000,000. Upon the
acceptance of any appointment as Administrative Agent hereunder by a successor
Administrative Agent, such successor Administrative Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Administrative Agent, and the retiring Administrative Agent
shall be discharged from its duties and obligations under this Agreement. After
any retiring Administrative Agent's resignation or removal hereunder as
Administrative Agent, the provisions of this Article 7 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent under this Agreement.
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SECTION 7.7. Auction Administrative Agent. The Administrative Agent
shall until such time as it so notifies the Borrower and the Lenders discharge
its duties under Section 2.19 through the Auction Administrative Agent and all
references to the "Administrative Agent" or to Chase relating to such duties or
made in this Article 7 shall be deemed to also refer to the Auction
Administrative Agent and any Affiliate of Chase serving in such capacity. All
payments to be made to or by the Auction Administrative Agent shall be made
through the Administrative Agent.
ARTICLE 8
MISCELLANEOUS
SECTION 8.1. Amendments, Etc. An amendment or waiver of any provision
of this Agreement or the Notes, or a consent to any departure by the Borrower
therefrom, shall be effective against the Lenders and all holders of the Notes
if, but only if, it shall be in writing and signed by the Majority Lenders or,
where so specified, the Required Lenders (except any amendment to give effect to
increased Commitments and New Lenders, as contemplated by Section 2.20), and
then such a waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given; provided, however, that no such
amendment, waiver or consent shall, unless in writing and signed by all the
Lenders (other than the Designated Bidders), be effective to: (a) waive any of
the conditions specified in Article 3, (b) except as contemplated by Section
2.20, increase the Commitments of the Lenders or subject the Lenders to any
additional obligations, (c) reduce the principal of, or interest on, the Notes
or any facility fees or utilization fees hereunder, (d) except as contemplated
by Section 2.21, postpone any date fixed for any payment of principal of, or
interest on, the Notes or any facility fees or utilization fees hereunder, (e)
change the percentage of the Commitments or of the aggregate unpaid principal
amount of the Notes, which shall be required for the Lenders or any
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of them to take any action under this Agreement, or (f) amend this Section 8.01;
and, provided further that no amendment, waiver or consent shall, unless in
writing and signed by the Administrative Agent in addition to the Lenders
required hereinabove to take such action, affect the rights or duties of the
Administrative Agent under this Agreement or any Note.
SECTION 8.2. Notices, Etc. Except as otherwise provided in Section
2.02(a) or 2.10(ii), all notices and other communications provided for hereunder
shall be in writing and mailed by certified mail, return receipt requested and
postage prepaid, or telecopied, telefaxed or otherwise teletransmitted, or
delivered, if to the Borrower, at 5051 Westheimer, Suite 1400, Houston, Texas
77056, Attention: Treasurer, Telefax: (713) 624-9627; if to any Initial Lender,
at its Domestic Lending Office set forth in such Initial Lender's Administrative
Questionnaire; if to any other Lender at its Domestic Lending Office specified
in the Assignment and Acceptance or Commitment Increase Agreement pursuant to
which it became a Lender or at the address for notices specified in the
Designation Agreement pursuant to which it became a party hereto; if to the
Administrative Agent, in care of The Chase Manhattan Bank, Agency Services, One
Chase Manhattan Plaza, 8th Floor, New York, NY 10081, Attention: Muniram
Appanna, Telefax: (212) 552-7940, with a copy to Chase Bank of Texas, N.A., at
600 Travis Street, 20th Floor, Houston, TX 77002, Attention: Russell Johnson,
Telefax: (713) 216-8870; and if to the Auction Administrative Agent, at The
Chase Manhattan Bank, Agency Services, at One Chase Manhattan Plaza, 8th Floor,
New York, NY 10081, Attention: Christopher Consomer, Telefax: (212) 552-5627;
or, as to each party, at such other address as shall be designated by such party
in a written notice to the other parties. All such notices and communications
shall be effective, (a) in the case of any notice or communication given by
certified mail, when receipted for, (b) in the case of any notice or
communication given by telecopy, telefax or other teletransmission, when
confirmed by appropriate answerback, in each case addressed as aforesaid, and
(c) in the case of any notice or
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communication delivered by hand or courier, when so delivered, except that
notices and communications to the Administrative Agent pursuant to Article 2 or
7 shall not be effective until received by the Administrative Agent. A notice
received by the Administrative Agent or a Lender by telephone pursuant to
Section 2.02(a) or 2.10(ii) shall be effective if the Administrative Agent or
Lender believes in good faith that it was given by an authorized representative
of the Borrower and acts pursuant thereto, notwithstanding the absence of
written confirmation or any contradictory provision thereof.
SECTION 8.3. No Waiver; Remedies. No failure on the part of any Lender
or the Administrative Agent to exercise, and no delay in exercising, any right
hereunder or under any Note shall operate as a waiver thereof; nor shall any
single or partial exercise of any right hereunder or under any Note preclude any
other or further exercise thereof or the exercise of any other right. The
remedies herein provided are cumulative and not exclusive of any remedies
provided by law.
SECTION 8.4. Costs and Expenses; Indemnity.
(a) The Borrower agrees to pay on demand (i) all reasonable fees and
out-of-pocket expenses of counsel for the Administrative Agent in connection
with the preparation, execution and delivery of this Agreement, the Notes and
the other documents to be delivered hereunder and with respect to advising the
Administrative Agent as to its rights and responsibilities under this Agreement,
(ii) all reasonable costs and expenses incurred by the Administrative Agent and
its Affiliates in initially syndicating all or any portion of the Commitments
hereunder, including the related reasonable fees and out-of-pocket expenses of
counsel for the Administrative Agent or its Affiliates, travel expenses,
duplication and printing costs and courier and postage fees, and excluding any
syndication fees paid to other parties joining the syndicate and (iii) all
out-of-pocket costs and expenses, if any, of the
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Administrative Agent and the Lenders (including reasonable counsel fees and
expenses and the allocated costs of in-house counsel), in connection with the
enforcement (whether through negotiations, legal proceedings, in bankruptcy or
insolvency proceedings, or otherwise) of this Agreement, the Notes and the other
documents to be delivered hereunder and thereunder.
(b) If any payment of principal of, or Conversion of, any Eurodollar
Rate Advance is made by the Borrower to or for the account of a Lender on any
day other than the last day of the Interest Period for such Advance, as a result
of a prepayment pursuant to Section 2.10 or a Conversion pursuant to Section
2.08(f) or Section 2.09 or due to acceleration of the maturity of the Notes
pursuant to Section 6.01 or due to any other reason attributable to the
Borrower, or if the Borrower shall fail to borrow, convert, continue or prepay
any Eurodollar Rate Advance on the date specified in any notice delivered
pursuant hereto, the Borrower shall, upon demand by such Lender (with a copy of
such demand to the Administrative Agent), pay to the Administrative Agent for
the account of such Lender any amounts required to compensate such Lender for
any additional losses, costs or expenses which it may reasonably incur as a
result of such payment or Conversion, including any loss (excluding loss of
anticipated profits), cost or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by any Lender to fund or
maintain such Advance.
(c) THE BORROWER AGREES TO INDEMNIFY AND HOLD HARMLESS THE
ADMINISTRATIVE AGENT, THE ARRANGER AND EACH LENDER FROM AND AGAINST ANY AND ALL
CLAIMS, DAMAGES, LIABILITIES AND EXPENSES (INCLUDING FEES AND DISBURSEMENTS OF
COUNSEL) WHICH MAY BE INCURRED BY OR ASSERTED AGAINST THE ADMINISTRATIVE AGENT,
THE ARRANGER OR SUCH LENDER IN CONNECTION WITH OR ARISING OUT OF ANY
INVESTIGATION, LITIGATION, OR PROCEEDING (WHETHER OR NOT THE ADMINISTRATIVE
AGENT, THE ARRANGER OR SUCH LENDER IS PARTY THERETO) RELATED TO ANY ACQUISITION
OR PROPOSED ACQUISITION BY THE BORROWER, OR BY ANY SUBSIDIARY OF THE BORROWER,
OF ALL OR ANY PORTION OF THE EQUITY INTERESTS IN, OR SUBSTANTIALLY ALL THE
86
<PAGE> 91
ASSETS OF, ANY PERSON OR ANY USE OR PROPOSED USE OF THE ADVANCES BY THE BORROWER
(EXCLUDING ANY CLAIMS, DAMAGES, LIABILITIES OR EXPENSES INCURRED BY REASON OF
THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE PARTY TO BE INDEMNIFIED OR ITS
EMPLOYEES OR ADMINISTRATIVE AGENTS, OR BY REASON OF ANY USE OR DISCLOSURE OF
INFORMATION RELATING TO ANY SUCH ACQUISITION OR USE OR PROPOSED USE OF THE
PROCEEDS BY THE PARTY TO BE INDEMNIFIED OR ITS EMPLOYEES OR ADMINISTRATIVE
AGENTS).
SECTION 8.5. Right of Set-off. Upon the declaration of the Notes as due
and payable pursuant to the provisions of Section 6.01, each Lender is hereby
authorized at any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other indebtedness at any
time owing by such Lender to or for the credit or the account of the Borrower
against any and all of the obligations of the Borrower now or hereafter existing
under this Agreement and any Note held by such Lender, irrespective of whether
or not such Lender shall have made any demand under this Agreement or such Note
and although such obligations may be unmatured. Each Lender agrees promptly to
notify the Borrower after any such set-off and application made by such Lender,
provided that the failure to give such notice shall not affect the validity of
such set-off and application. The rights of each Lender under this Section 8.05
are in addition to other rights and remedies (including other rights of set-off)
which such Lender may have.
SECTION 8.6. Binding Effect. This Agreement shall become effective in
accordance with the provisions of Section 3.01, and thereafter shall be binding
upon and inure to the benefit of the Borrower, the Administrative Agent, the
Arranger and each Lender and their respective successors and assigns, except
that the Borrower shall not have the right to assign its rights hereunder or any
interest herein without the prior written consent of all of the Lenders.
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<PAGE> 92
SECTION 8.7. Assignments and Participations.
(a) Each Lender (other than a Designated Bidder) may assign to one or
more banks or other financial institutions all or a portion of its rights and
obligations under this Agreement (including all or a portion of its Commitment,
the A Advances owing to it and the Note or Notes held by it); provided, however,
that (i) each such assignment shall be of a constant, and not a varying,
percentage of all such Lender's rights and obligations under this Agreement
(other than any right to make B Advances, any B Advances or any Notes) and the
same constant percentage of all such Lender's rights and obligations under the
Long-Term Revolving Credit Agreement, if any, unless the Long-Term Revolving
Credit Agreement has been terminated, shall be contemporaneously assigned by
such assigning Lender to the same assignee pursuant to Section 8.07(a) of the
Long-Term Revolving Credit Agreement, (ii) the sum of (x) the amount of the
Commitment of the assigning Lender being assigned to the assignee pursuant to
each such assignment (determined as of the date of the Assignment and Acceptance
with respect to such assignment) plus (y) the amount of the "Commitment" of the
assigning Lender under the Long-Term Revolving Credit Agreement
contemporaneously assigned by such assigning Lender to such assignee as
contemplated by clause (i) of this sentence must be equal to or greater than
$25,000,000, or if less, the entire amount of such assigning Lender's
"Commitment" (unless the Borrower and the Administrative Agent shall otherwise
consent, which consent may be withheld for any reason) and must be an integral
multiple of $1,000,000, (iii) each such assignment shall be to an Eligible
Assignee, and (iv) 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, together with any Note or Notes subject to such
assignment and a processing and recordation fee of $3,000, and shall send to the
Borrower an executed counterpart of such Assignment and Acceptance. Upon such
execution, delivery, acceptance and recording, from and after the effective date
specified in each Assignment and Acceptance, (x) the assignee thereunder
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<PAGE> 93
shall be a party hereto and, to the extent that rights and obligations hereunder
have been assigned to it pursuant to such Assignment and Acceptance, have the
rights and obligations of a Lender hereunder and (y) the Lender assignor
thereunder shall, to the extent that rights and obligations hereunder have been
assigned by it pursuant to such Assignment and Acceptance, relinquish its rights
and be released from its obligations under this Agreement (and, in the case of
an Assignment and Acceptance covering all or the remaining portion of an
assigning Lender's rights and obligations under this Agreement, such Lender
shall cease to be a party hereto, provided, however, such assigning Lender shall
retain any claim with respect to any fee, interest, cost, expense or indemnity
which accrues, or relates to an event that occurs, prior to the date of such
assignment pursuant to Section 2.03, 2.06, 2.07, 2.11, 2.12, 2.15 or 8.04).
(b) By executing and delivering an Assignment and Acceptance, each
Lender assignor thereunder and the assignee thereunder confirm to and agree with
each other and the other parties hereto as follows: (i) other than as provided
in such Assignment and Acceptance, such assigning Lender makes no representation
or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or any other instrument or document furnished pursuant
hereto; (ii) such assigning Lender 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 any of its
obligations under this Agreement or any other instrument or document furnished
pursuant hereto; (iii) such assignee confirms that it has received a copy of
this Agreement, together with copies of the financial statements referred to in
Section 4.01 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; (iv) such assignee will,
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<PAGE> 94
independently and without reliance upon the Administrative Agent, such assigning
Lender or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement; (v) such assignee confirms
that it is (subject to approval in writing by the Borrower and the
Administrative Agent to the extent required) an Eligible Assignee; (vi) such
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; and (vii) such assignee agrees that
it will perform in accordance with their terms all of the obligations which by
the terms of this Agreement are required to be performed by it as a Lender.
(c) The Administrative Agent shall maintain at its address referred to
in Section 8.02 a copy of each Assignment and Acceptance, each Designation
Agreement, each New Lender Agreement and each Commitment Increase Agreement
delivered to and accepted by it and a register for the recordation of the names
and addresses of the Lenders and, with respect to Lenders other than Designated
Bidders, the Commitment of, and principal amount of the A Advances owing to,
each Lender from time to time (the "REGISTER"). The entries in the Register
shall be conclusive and binding for all purposes, absent manifest error, and the
Borrower, the Administrative Agent and the Lenders may treat each Person whose
name is recorded in the Register as a Lender hereunder for all purposes of this
Agreement. The Register shall be available for inspection by the Borrower or any
Lender at any reasonable time and from time to time upon reasonable prior
notice.
(d) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an assignee representing that it is an Eligible Assignee,
together with any Note or Notes subject to such assignment, the Administrative
Agent shall, if such Assignment and Acceptance has been completed and is in
substantially the form of Exhibit D hereto, (i) accept
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<PAGE> 95
such Assignment and Acceptance, (ii) record the information contained therein in
the Register and (iii) give prompt notice thereof to the Borrower. Within five
Business Days after its receipt of such notice and its receipt of an executed
counterpart of such Assignment and Acceptance, the Borrower, at its own expense,
shall execute and deliver to the Administrative Agent in exchange for the
surrendered Note or Notes a new Note to the order of such Eligible Assignee and,
if the assigning Lender has retained a Commitment hereunder, a new Note to the
order of the assigning Lender. Such new Note or Notes shall be dated the
effective date of such Assignment and Acceptance and shall otherwise be in
substantially the form of Exhibit A hereto.
(e) Each Lender (other than a Designated Bidder) may designate one or
more banks or other entities to have a right to make B Advances as a Lender
pursuant to Section 2.19; provided that (i) such Lender shall have obtained the
written consent of the Administrative Agent and the Borrower, such consent not
to be unreasonably withheld, (ii) no such Lender shall be entitled to make more
than two such designations, (iii) each such Lender making one or more of such
designations shall retain the right to make B Advances as a Lender pursuant to
Section 2.19, (iv) each such designation shall be to a Designated Bidder and (v)
the parties to each such designation shall execute and deliver to the
Administrative Agent, for its acceptance and recording in the Register, a
Designation Agreement. Upon such execution, delivery, acceptance and recording,
from and after the effective date specified in each Designation Agreement, the
designee thereunder shall be a party hereto with a right to make B Advances as a
Lender pursuant to Section 2.19 and the obligations related thereto.
(f) By executing and delivering a Designation Agreement, the Lender
making the designation thereunder and its designee thereunder confirm and agree
with each other and the other parties hereto as follows: (i) such Lender makes
no representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection
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<PAGE> 96
with this Agreement or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement or any other instrument or
document furnished pursuant hereto, (ii) such Lender 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 any of its
obligations under this Agreement or any other instrument or document furnished
pursuant hereto; (iii) such designee confirms that it has received a copy of
this Agreement, together with copies of the financial statements referred to in
Section 4.01 and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into the
Designation Agreement; (iv) such designee will, independently and without
reliance upon the Administrative Agent, such designating Lender or any other
Lender and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
action under this Agreement; (v) such designee confirms that it is a Designated
Bidder; (vi) such designee 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, and (vii) such
designee agrees that it will perform in accordance with their terms all of the
obligations which by the terms of this Agreement are required to be performed by
it as a Lender.
(g) Upon its receipt of a Designation Agreement executed by a
designating Lender and a designee representing that it is a Designated Bidder,
the Administrative Agent shall, if such Designation Agreement has been completed
and is substantially in the form of Exhibit K hereto, (i) accept such
Designation Agreement, (ii) record the information contained therein in the
Register and (iii) give prompt notice thereof to the Borrower.
(h) Each Lender may sell participations to one or more banks or other
entities in or to all or a portion
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<PAGE> 97
of its rights and obligations under this Agreement (including all or a portion
of its Commitment, and the Advances owing to it and the Note or Notes held by
it); provided, however, that (i) such Lender's obligations under this Agreement
(including its Commitment to the Borrower hereunder) shall remain unchanged,
(ii) such Lender shall remain solely responsible to the other parties hereto for
the performance of such obligations, (iii) such Lender shall remain the holder
of any such Note for all purposes of this Agreement, (iv) the Borrower, the
Administrative Agent and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement, (v) such Lender shall continue to be able to
agree to any modification or amendment of this Agreement or any waiver hereunder
without the consent, approval or vote of any such participant or group of
participants, other than modifications, amendments and waivers which (A)
postpone any date fixed for any payment of, or reduce any payment of, principal
of or interest on such Lender's Note or any facility fees or utilization fees
payable under this Agreement, or (B) increase the amount of such Lender's
Commitment in a manner which would have the effect of increasing the amount of a
participant's participation, or (C) reduce the interest rate payable under this
Agreement and such Lender's Note, or (D) consent to the assignment or the
transfer by the Borrower of any of its rights and obligations under the
Agreement, and (vi) except as contemplated by the immediately preceding clause
(v), no participant shall be deemed to be or to have any of the rights or
obligations of a "Lender" hereunder.
(i) Any Lender may, in connection with any assignment, designation or
participation or proposed assignment, designation or participation pursuant to
this Section 8.07, disclose to the assignee, designee or participant or proposed
assignee, designee or participant, any information relating to the Borrower
furnished to such Lender by or on behalf of the Borrower; provided that, prior
to any such disclosure, the assignee, designee or participant or proposed
assignee, designee or participant shall agree in
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<PAGE> 98
writing for the benefit of the Borrower to preserve the confidentiality of any
confidential information relating to the Borrower received by it from such
Lender in a manner consistent with Section 8.08.
(j) Anything in this Agreement to the contrary notwithstanding, any
Lender may at any time create a security interest in all or any portion of its
rights under this Agreement (including the Advances owing to it) and the Notes
issued to it hereunder in favor of any Federal Reserve Bank in accordance with
Regulation A of the Board of Governors of the Federal Reserve System (or any
successor regulation) and the applicable operating circular of such Federal
Reserve Bank.
SECTION 8.8. Confidentiality. Each Lender and the Administrative Agent
(each, a "PARTY") agrees that it will use its best reasonable efforts not to
disclose, without the prior consent of the Borrower (other than to its, or its
Affiliates, employees, auditors, accountants, counsel or other representatives,
whether existing at the Original Effective Date or any subsequent time), any
information with respect to the Borrower which is furnished pursuant to this
Agreement, provided that any party may disclose any such information (i) as has
become generally available to the public, (ii) as may be required or appropriate
in any report, statement or testimony submitted to any municipal, state or
Federal regulatory body having or claiming to have jurisdiction over such party
or to the Board of Governors of the Federal Reserve System or the Federal
Deposit Insurance Corporation or similar organizations (whether in the United
States or elsewhere) or their successors, (iii) as may be required or
appropriate in response to any summons or subpoena or in connection with any
litigation or regulatory proceeding, (iv) in order to comply with any law,
order, regulation or ruling applicable to such party, or (v) to any prospective
assignee, designee or participant in connection with any contemplated assignment
of any rights or obligations hereunder, any designation or any sale of any
participation therein, by such party pursuant to Section 8.07, if such
prospective assignee, designee or participant, as the case may be, executes an
agreement with the Borrower
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<PAGE> 99
containing provisions substantially similar to those contained in this Section
8.08; provided, however, that the Borrower acknowledges that the Administrative
Agent has disclosed and may continue to disclose such information as the
Administrative Agent in its sole discretion determines is appropriate to the
Lenders from time to time.
SECTION 8.9. Consent to Jurisdiction.
(a) The Borrower hereby irrevocably submits to the jurisdiction of any
New York State or Federal court sitting in New York City and any appellate court
from any thereof in any action or proceeding by the Administrative Agent, the
Arranger, any Lender or the holder of any Note in respect of, but only in
respect of, any claims or causes of action arising out of or relating to this
Agreement or the Notes (such claims and causes of action, collectively, being
"PERMITTED CLAIMS"), and the Borrower hereby irrevocably agrees that all
Permitted Claims may be heard and determined in such New York State court or in
such Federal court. The Borrower hereby irrevocably waives, to the fullest
extent it may effectively do so, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any aforementioned court in respect
of Permitted Claims. Service of the summons and complaint and any other process
which may be served by the Administrative Agent, the Arranger, any Lender or the
holder of any Note on the Borrower in any such action or proceeding in any
aforementioned court in respect of Permitted Claims may be made by delivering
separate copies of such process to the Borrower by courier and by certified mail
(return receipt requested), fees and postage prepaid at the Borrower's address
specified pursuant to Section 8.02, to the attention of each of the Treasurer
and the Executive Vice President, Law. The Borrower agrees that a final judgment
in any such action or proceeding shall be conclusive and may be enforced in
other jurisdictions by suit on the judgment or in any other manner provided by
law.
(b) Nothing in this Section 8.09 (i) shall affect the right of the
Arranger, the Borrower, any Lender, the holder of any Note or the Administrative
Agent to
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<PAGE> 100
serve legal process in any other manner permitted by law or affect any right
otherwise existing of the Borrower, any Lender, the Arranger, the holder of any
Note or the Administrative Agent to bring any action or proceeding in the courts
of other jurisdictions or (ii) shall be deemed to be a general consent to
jurisdiction in any particular court or a general waiver of any defense or a
consent to jurisdiction of the courts expressly referred to in subsection (a)
above in any action or proceeding in respect of any claim or cause of action
other than Permitted Claims.
SECTION 8.10. Governing Law. This Agreement and the Notes shall be
governed by, and construed in accordance with, the laws of the State of New
York.
SECTION 8.11. Execution in Counterparts. This Agreement may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
Delivery to the Administrative Agent of a counterpart executed by a Lender shall
constitute delivery of such counterpart to all of the Lenders.
SECTION 8.12. WAIVER OF JURY TRIAL. THE BORROWER, THE ADMINISTRATIVE
AGENT, AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY AND ALL
RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT, ANY OF THE NOTES OR ANY OTHER INSTRUMENT OR DOCUMENT FURNISHED
PURSUANT HERETO OR IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
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<PAGE> 101
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.
BURLINGTON RESOURCES INC.
By: /s/ Suzanne V. Baer
--------------------------------------
Name: Suzanne V. Baer
Title: Vice President &
Treasurer
CHASE BANK OF TEXAS, N.A., as
Administrative Agent
By: /s/ Russell A. Johnson
--------------------------------------
Name: Russell A. Johnson
Title: Vice President
THE CHASE MANHATTAN BANK, as
Auction Administrative Agent
By: /s/ Christopher Consomer
--------------------------------------
Name: Christopher Consomer
Title: AVP
CITIBANK, N.A., as Syndication
Agent
By: /s/ David B. Gorte
--------------------------------------
Name: David B. Gorte
Title: Attorney-In-Fact
<PAGE> 102
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as
Documentation Agent
By: /s/ Paul Squires
--------------------------------------
Name: Paul Squires
Title: Senior Vice President
BANKBOSTON, N.A., as
Documentation Agent
By: /s/ Terrence Ronan
--------------------------------------
Name: Terrence Ronan
Title: Director
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Original
Administrative Agent
By: /s/ Stacey L. Haimes
--------------------------------------
Name: Stacey L. Haimes
Title: Vice President
<PAGE> 103
Commitments The Initial Lenders
- ----------- -------------------
$45,000,000 CHASE BANK OF TEXAS, N.A.
By: /s/ Russell A. Johnson
--------------------------------------
Name: Russell A. Johnson
Title: Vice President
$45,000,000 CITIBANK, N.A.
By: /s/ David B. Gorte
--------------------------------------
Name: David B. Gorte
Title: Attorney-In-Fact
$45,000,000 BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By: /s/ Paul A. Squires
--------------------------------------
Name: Paul A. Squires
Title: Senior Vice
President
$45,000,000 BANKBOSTON, N.A.
By: /s/ Terrence Ronan
--------------------------------------
Name: Terrence Ronan
Title: Director
<PAGE> 104
$30,000,000 MELLON BANK, N.A.
By: /s/ Roger E. Howard
--------------------------------------
Name: Roger E. Howard
Title: Vice President
$30,000,000 WELLS FARGO BANK
By: /s/ Ann M. Rhoads
--------------------------------------
Name: Ann M. Rhoads
Title: Vice President
$20,000,000 THE BANK OF NEW YORK
By: /s/ Peter W. Keller
--------------------------------------
Name: Peter W. Keller
Title: Vice President
$20,000,000 THE BANK OF TOKYO-MITSUBISHI, LTD.
By: /s/ Michael G. Meiss
--------------------------------------
Name: Michael G. Meiss
Title: Vice President
$20,000,000 THE NORTHERN TRUST COMPANY
By: /s/ John E. Burda
--------------------------------------
Name: John E. Burda
Title: Vice President
<PAGE> 105
$20,000,000 WACHOVIA BANK, N.A.
By: /s/ Steven M. Takei
--------------------------------------
Name: Steven M. Takei
Title: Senior Vice
President
$20,000,000 BANK OF MONTREAL
By: /s/ J.B. Whitmore
--------------------------------------
Name: J.B. Whitmore
Title: Director
$20,000,000 BANKERS TRUST COMPANY
By: /s/ Calli S. Hayes
--------------------------------------
Name: Calli S. Hayes
Title: Managing Director
$20,000,000 BARCLAYS BANK PLC
By: /s/ J. Onischuk
--------------------------------------
Name: J. Onischuk
Title: Associate Director
<PAGE> 106
$20,000,000 PARIBAS
By: /s/ Marian Livingston
--------------------------------------
Name: Marian Livingston
Title: Vice President
By: /s/ John H. Roberts
--------------------------------------
Name: John H. Roberts
Title: Vice President
Total Commitments
=================
$ 400,000,000
<PAGE> 107
SCHEDULE I
MATERIAL SUBSIDIARIES
Louisiana Land and Exploration Company
Burlington Resources Oil & Gas Company
<PAGE> 108
SCHEDULE II
PRICING GRID
<TABLE>
<CAPTION>
- -------------------- ------------------ ----------------- ------------------ ------------------ ----------------- ------------------
LEVEL I LEVEL II LEVEL III LEVEL IV LEVEL V LEVEL VI
- -------------------- ------------------ ----------------- ------------------ ------------------ ----------------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Basis for Pricing If the If the If the If the If the If Levels I-V do
Borrower's Borrower's Borrower's Borrower's Borrower's not apply.
senior unsecured senior senior unsecured senior unsecured senior
long term debt unsecured long long term debt long term debt unsecured long
is rated at term debt is is rated at is rated at term debt is
least A by S&P rated at least least BBB+ by least BBB by S&P rated at least
or A2 by Moody's. A- by S&P or A3 S&P or Baa1 by or Baa2 by BBB- by S&P or
by Moody's. Moody's. Moody's. Baa3 by Moody's.
- -------------------- ------------------ ----------------- ------------------ ------------------ ----------------- ------------------
Facility Fee .050% .060% .080% .100% .125% .200%
Percentage
- -------------------- ------------------ ----------------- ------------------ ------------------ ----------------- ------------------
LIBOR Applicable .175% .190% .220% .250% .325% .550%
Margin
- -------------------- ------------------ ----------------- ------------------ ------------------ ----------------- ------------------
</TABLE>
The applicable pricing level shall change on the date of any relevant change in
the rating by S&P or Moody's of any public long term senior unsecured debt
securities of the Borrower. In the case of split ratings from S&P and Moody's,
the rating to be used to determine the applicable pricing level is the higher of
the two (e.g., A-/Baa1 results in Level II pricing), provided that in the event
the split is more than one full category, the average (or the higher of two
intermediate ratings) shall be used (e.g., A-/Baa2 results in Level III pricing,
as does A-/Baa3).
<PAGE> 109
EXHIBIT A
FORM OF
NOTE
New York, New York
February 23, 1999
For value received, Burlington Resources Inc., a Delaware corporation
(the "BORROWER"), promises to pay to the order of ______________________ (the
"LENDER"), for the account of its Applicable Lending Office, the unpaid
principal amount of each Advance made by the Lender to the Borrower pursuant to
the Credit Agreement referred to below on the maturity date provided for in the
Credit Agreement. The Borrower promises to pay interest on the unpaid principal
amount of each such Advance on the dates and at the rate or rates provided for
in the Credit Agreement. All such payments of principal and interest shall be
made in lawful money of the United States in Federal or other immediately
available funds at the office of The Chase Manhattan Bank, Agency Services, One
Chase Manhattan Plaza, 8th Floor, New York, NY 10081, Attention: Muniram
Appanna.
All Advances made by the Lender, the respective types thereof and all
repayments of the principal thereof shall be recorded by the Lender and, if the
Lender so elects in connection with any transfer or enforcement hereof,
appropriate notations to evidence the foregoing information with respect to each
such Advance then outstanding may be endorsed by the Lender on the schedule
attached hereto, or on a continuation of such schedule attached to and made a
part hereof; provided that the failure of the Lender to make (or any error in
making) any such recordation or endorsement shall not affect the Borrower's
obligations hereunder or under the Credit Agreement.
<PAGE> 110
This note is one of the Notes referred to in the Credit Agreement dated
as of February 25, 1998, as amended and restated as of February 23, 1999 among
Burlington Resources Inc., the Lenders party thereto, Chase Bank of Texas, N.A.,
as Administrative Agent for the Lenders thereunder, The Chase Manhattan Bank, as
Auction Administrative Agent for the Lenders, Citibank, N.A., as Syndication
Agent for the Lenders, and Bank of America National Trust and Savings
Association and BankBoston, N.A., as Documentation Agents for the Lenders (as
the same may be amended from time to time, the "CREDIT AGREEMENT"). Terms
defined in the Credit Agreement are used herein with the same meanings.
Reference is made to the Credit Agreement for provisions for the prepayment
hereof and the acceleration of the maturity hereof.
BURLINGTON RESOURCES INC.
By:
--------------------------------------
Name:
Title:
<PAGE> 111
ADVANCES AND PAYMENTS OF PRINCIPAL
<TABLE>
<CAPTION>
- ------------------- ----------------- ---------------- ------------------- -----------------------------------------
AMOUNT OF AMOUNT OF
DATE ADVANCE TYPE OF ADVANCE PRINCIPAL REPAID NOTATION MADE BY
- ------------------- ----------------- ---------------- ------------------- -----------------------------------------
<S> <C> <C> <C> <C>
- ------------------- ----------------- ---------------- ------------------- -----------------------------------------
- ------------------- ----------------- ---------------- ------------------- -----------------------------------------
- ------------------- ----------------- ---------------- ------------------- -----------------------------------------
- ------------------- ----------------- ---------------- ------------------- -----------------------------------------
- ------------------- ----------------- ---------------- ------------------- -----------------------------------------
- ------------------- ----------------- ---------------- ------------------- -----------------------------------------
- ------------------- ----------------- ---------------- ------------------- -----------------------------------------
- ------------------- ----------------- ---------------- ------------------- -----------------------------------------
- ------------------- ----------------- ---------------- ------------------- -----------------------------------------
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</TABLE>
<PAGE> 112
EXHIBIT B
FORM OF
NOTICE OF A BORROWING
Date ___________
The Chase Manhattan Bank
Agency Services
One Chase Manhattan Plaza, 8th Floor
New York, NY 10081
Attention: Muniram Appanna
Tel: (212) 552-7943
Fax: (212) 552-7940
copy to:
Chase Bank of Texas, N.A.,
as Administrative Agent under the Credit Agreement referred to below
600 Travis Street, 20th Floor
Houston, TX 77002
Attention: Russell Johnson
Tel: (713) 216-5617
Fax: (713) 216-8870
Ladies and Gentlemen:
The undersigned, Burlington Resources Inc. (the "BORROWER"), refers to
the Short-Term Credit Agreement dated as of February 25, 1998, as amended and
restated as of February 23, 1999 (as the same may be amended from time to time,
the "CREDIT AGREEMENT", the terms defined therein being used herein as therein
defined), among the Borrower, the Lenders parties thereto, Chase Bank of Texas,
N.A., as Administrative Agent, The Chase Manhattan Bank as Auction
Administrative Agent, Citibank, N.A., as Syndication Agent, and Bank of America
National Trust and Savings Association and BankBoston, N.A., as Documentation
Agents. Pursuant to Section 2.02(a) of the Credit Agreement, the Borrower hereby
gives you notice of and requests an A Borrowing under the Credit Agreement (the
"PROPOSED A BORROWING"), and in that connection sets forth below the information
relating to such A Borrowing:
<PAGE> 113
1. The Business Day of the Proposed A Borrowing is _________ __,
_____.
2. The Type of A Advances comprising the Proposed A Borrowing is
[Base Rate Advances] [Eurodollar Rate Advances].
3. The aggregate amount of the Proposed A Borrowing is $_______.
4.(1) The Interest Period for each Eurodollar Rate Advance made as
part of the Proposed A Borrowing is [__] month[s].
5. The Proposed A Borrowing shall consist of [Revolving A
Advances] [Term A Advances].
The undersigned hereby certifies that the following statements are true
on the date hereof, and will be true on the date of the Borrowing, before and
immediately after giving effect thereto and to the application of the proceeds
therefrom:
(a) each representation and warranty contained in Section 4.01 is
correct in all material respects as though made on and as of such date (or, if
such representation and warranty is stated to be made as at a specific date or
for a specific period, as at the original specified date or with respect to the
original specified period);
(b) no event has occurred and is continuing, or would result from such
A Borrowing, which constitutes an Event of Default or would constitute an Event
of Default but for the requirement that notice be given or time elapse or both;
and
(c) the aggregate amount of the borrowings under the Credit Agreement
(including the Proposed A Borrowing) and under other agreements or facilities or
evidenced by other instruments or documents is not in excess of the aggregate
amount of such borrowings approved as of such date by the Board of Directors of
the Borrower.
- -----------------------------
(1) To be used for Eurodollar Rate Advances only.
<PAGE> 114
BURLINGTON RESOURCES INC.
By:
--------------------------------------
Name:
Title:
<PAGE> 115
EXHIBIT C
FORM OF
NOTICE OF B BORROWING
Date ___________
The Chase Manhattan Bank
Agency Services
One Chase Manhattan Plaza, 8th floor
New York, NY 10081
Attention: Christopher Consomer
Tel: (212) 552-7259
Fax: (212) 552-5627
copy to:
Chase Bank of Texas, N.A.,
as Administrative Agent under the Credit Agreement referred to below
600 Travis Street, 20th floor
Houston, Texas 77002
Attention: Russell Johnson
Tel: (713) 216-5617
Fax: (713) 216-8870
Ladies and Gentlemen:
The undersigned, Burlington Resources Inc. (the "BORROWER"), refers to
the Short-Term Credit Agreement dated as of February 25, 1998, as amended and
restated as of February 23, 1999 (as the same may be amended from time to time,
the "CREDIT AGREEMENT", the terms defined therein being used herein as therein
defined), among the Borrower, the Lenders parties thereto, Chase Bank of Texas,
N.A., as Administrative Agent, The Chase Manhattan Bank, as Auction
Administrative Agent, Citibank, N.A., as Syndication Agent, and Bank of America
National Trust and Savings Association and BankBoston, N.A., as Documentation
Agents. Pursuant to Section 2.19 of the Credit Agreement, the Borrower hereby
gives you notice of and requests a B Borrowing under the Credit Agreement (the
"PROPOSED B BORROWING"), and in
<PAGE> 116
that connection sets forth the terms on which such B Borrowing is requested to
be made:
1. Date of B Borrowing ____________________
2. Proposed Amount of B Borrowing ____________________
3. Maturity Date ____________________
4. Interest Rate Basis ____________________
5. Interest Payment Date(s) ____________________
7. [Other Terms] ____________________
The undersigned hereby certifies that the following statements are true
on the date hereof, and will be true on the date of the Borrowing, before and
immediately after giving effect thereto and to the application of the proceeds
therefrom:
(a) each representation and warranty contained in Section 4.01 is
correct in all material respects as though made on and as of such date (or, if
such representation and warranty is stated to be made as at a specific date or
for a specific period, as at the original specified date or with respect to the
original specified period);
(b) no event has occurred and is continuing, or would result from
such A Borrowing, which constitutes an Event of Default or would constitute an
Event of Default but for the requirement that notice be given or time elapse or
both; and
(c) the aggregate amount of the borrowings under the Credit Agreement
(including the Proposed A Borrowing) and under other agreements or facilities or
evidenced by other instruments or documents is not in excess of the aggregate
amount of such borrowings approved as of such date by the Board of Directors of
the Borrower.
BURLINGTON RESOURCES INC.
By
---------------------------------------
Name:
Title:
<PAGE> 117
EXHIBIT D
FORM OF
ASSIGNMENT AND ACCEPTANCE
Dated: _________, 19__
Reference is made to the Short-Term Revolving Credit Agreement dated as
of February 25, 1998, amended and restated as of February 23, 1999 (such
agreement, as in effect on the date hereof and as it may hereafter be amended,
modified or supplemented from time to time, the "CREDIT AGREEMENT") among
Burlington Resources Inc., a Delaware corporation (the "BORROWER"), the Lenders
party thereto (the "LENDERS"), Chase Bank of Texas, N.A., as Administrative
Agent for the Lenders (the "ADMINISTRATIVE AGENT"), The Chase Manhattan Bank, as
Auction Administrative Agent for the Lenders, Citibank, N.A., as Syndication
Agent for the Lenders, and Bank of America National Trust and Savings
Association and BankBoston, N.A., as Documentation Agents. Terms defined in the
Credit Agreement are used herein with the same meaning.
The "Assignor" and the "Assignee" referred to on Schedule 1 hereto
agree as follows:
SECTION (A). The Assignor hereby sells and assigns to the Assignee,
without recourse, and the Assignee hereby purchases and assumes from the
Assignor, that interest in and to all of the Assignor's rights and obligations
under the Credit Agreement as of the date hereof (other than in respect of B
Advances) which represents the percentage interest specified on Schedule 1
hereto of all outstanding rights and obligations under the Credit Agreement
(other than in respect of B Advances), including such interest in the Assignor's
Commitment, the A Advances owing to the Assignor, and the Note[s] held by the
Assignor. After giving effect to such sale and assignment, the Assignee's
Commitment and the amount of the A Advances owing to the Assignee will be as set
forth in Section 2 of Schedule 1 hereof.
SECTION (B). The Assignor (i) represents and warrants that it is the
legal and beneficial owner of the interest being assigned by it hereunder and
that such interest is free and clear
<PAGE> 118
of any adverse claim; (ii) represents and warrants that it has made or is
contemporaneously making herewith, to the Assignee as contemplated by Section
8.07 of the Credit Agreement, an assignment under the Long-Term Revolving Credit
Agreement, unless the Long-Term Revolving Credit Agreement has been terminated;
(iii) makes no representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in or in
connection with the Credit Agreement or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Credit Agreement or any
other instrument or document furnished pursuant thereto; (iv) 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 any of its obligations under the Credit Agreement or any other
instrument or document furnished pursuant thereto; [and (v) requests that the
Administrative Agent arrange for the issuance of a new Note or Notes payable to
the order of the Assignee].
SECTION (C). The Assignee (i) confirms that it has received a copy of
the Credit Agreement, together with copies of the financial statements referred
to in Section 4.01 thereof and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
this Assignment and Acceptance; (ii) confirms that it has entered into or is
contemporaneously herewith entering into, with the Assignor as contemplated by
Section 8.07 of the Credit Agreement, an assignment under the Long-Term
Revolving Credit Agreement, unless the Long-Term Revolving Credit Agreement has
been terminated; (iii) agrees that it will, independently and without reliance
upon the Administrative Agent, the Assignor or any other Lender and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
the Credit Agreement; (iv) confirms that it is (subject to approval in writing
by the Borrower and the Administrative Agent to the extent required) an Eligible
Assignee; (v) appoints and authorizes the Administrative Agent to take such
action as agent on its behalf and to exercise such powers under the Credit
Agreement as are delegated to the Administrative Agent by the terms thereof,
together with such powers as are reasonably incidental thereto; (vi) agrees that
it will perform in accordance with their terms all of the obligations which by
the terms of the Credit Agreement are required to be performed by it
<PAGE> 119
as a Lender; [and] (vii) specifies as its Domestic Lending Office (and address
for notices) and Eurodollar Lending Office the offices set forth beneath its
name on the signature pages hereof [;and (viii) attaches the forms prescribed by
the Internal Revenue Service of the United States certifying as to the
Assignee's status for purposes of determining exemption from United States
withholding taxes with respect to all payments to be made to the Assignee under
the Credit Agreement and the Notes or such other documents as are necessary to
indicate that all such payments are subject to such rates at a rate reduced by
an applicable tax treaty](1).
SECTION (D). Following the execution of this Assignment and Acceptance
by the Assignor and the Assignee, it will be delivered to the Administrative
Agent for acceptance and recording by the Administrative Agent. The effective
date for this Assignment and Acceptance shall be at least five Business Days
after the execution and delivery thereof to the Administrative Agent, unless
otherwise specified on Schedule 1 hereto (the "EFFECTIVE DATE").
SECTION (E). Upon such acceptance and recording by the Administrative
Agent, as of the Effective Date, (i) the Assignee shall be a party to the Credit
Agreement and, to the extent provided in this Assignment and Acceptance, have
the rights and obligations of a Lender thereunder and (ii) the Assignor shall,
to the extent provided in this Assignment and Acceptance, relinquish its rights
and be released from its obligations under the Credit Agreement, provided,
however, such assigning Lender shall retain any claim with respect to any fee,
interest, cost, expense or indemnity which accrues, or relates to an event that
occurs, prior to the date of such assignment pursuant to Section 2.03, 2.06,
2.07, 2.11, 2.12, 2.15 or 8.04 of the Credit Agreement.
SECTION (F). Upon such acceptance and recording by the Administrative
Agent, from and after the Effective Date, the Administrative Agent shall make
all payments under the Credit Agreement and the Notes in respect of the interest
assigned hereby (including all payments of principal, interest and commitment
fees with respect thereto) to the Assignee. The Assignor and Assignee shall make
all appropriate adjustments in
- ----------------------
(1) If the Assignee is not a United States person (as such term is
defined in Section 7701(a)(30) of the Internal Revenue Code).
<PAGE> 120
payments under the Credit Agreement and the Notes for periods prior to the
Effective Date directly between themselves.
SECTION (G). This Assignment and Acceptance shall be governed by, and
construed in accordance with, the laws of the State of New York.
IN WITNESS WHEREOF, the parties have caused this Assignment and
Acceptance to be executed by their respective officers thereunto duly authorized
as of the date specified thereon.
<PAGE> 121
Schedule 1
to
Assignment and Acceptance
Dated __________
Section 1.
Percentage Interest
assigned: ________%
Section 2.
Assignee's Commitment:
Aggregate Outstanding
Principal $_________
Amount of [A Advances]
owing to the
Assignee: $_________
Section 3.
Effective Date(2):
[NAME OF ASSIGNOR]
By
---------------------------------------
Title:
[NAME OF ASSIGNEE]
By
---------------------------------------
Title:
Domestic Lending Office:
- -----------------------
(2) This date should be no earlier than at least five Business Days
after the execution and delivery thereof to the Administrative
Agent.
<PAGE> 122
[Address]
Eurocurrency Lending Office:
[Address]
Accepted and Consented to
this __ day of __________, ____:
CHASE BANK OF TEXAS, N.A.,
as Administrative Agent
By
---------------------------------
Name:
Title:
Consented to this
__ day of __________, ____:
BURLINGTON RESOURCES INC.
By
---------------------------------
Name:
Title:
<PAGE> 123
EXHIBIT E
FORM OF
NEW LENDER AGREEMENT
This New Lender Agreement dated as of ___________, ____ (this
"AGREEMENT") is by and among (i) Burlington Resources Inc., a Delaware
corporation (the "BORROWER"), (ii) Chase Bank of Texas, N.A., in its capacity as
administrative agent (the "ADMINISTRATIVE AGENT") under the Short-Term Revolving
Credit Agreement dated as of February 25, 1998, as amended and restated as of
February 23, 1999 (as may be amended or otherwise modified from time to time,
the "CREDIT AGREEMENT", capitalized terms that are defined in the Credit
Agreement and not defined herein are used herein as therein defined) among the
Borrower, the lenders party thereto, the Administrative Agent, The Chase
Manhattan Bank, as auction administrative agent, Citibank, N.A., as syndication
agent, and Bank of America National Trust and Savings Association and
BankBoston, N.A., as documentation agents, and (iii) _________ ("NEW LENDER").
Preliminary Statements
A. Pursuant to Section 2.20 of the Credit Agreement, the Borrower
has the right, subject to the terms and conditions thereof, to
effectuate from time to time an increase in the total
Commitments under the Credit Agreement by adding to the Credit
Agreement one or more banks or other financial institutions.
B. The Borrower has given notice to the Administrative Agent of
its intention to increase the total Commitments pursuant to
such Section 2.20 by adding the New Lender to the Credit
Agreement as a Lender with a Commitment of $___________, and
the Administrative Agent is willing to consent thereto.
Accordingly, the parties hereto agree as follows:
SECTION 1. Addition of New Lender. Pursuant to Section 2.20 of the
Credit Agreement, the New Lender is hereby added to the Credit Agreement as a
Lender with a Commitment of $________________. The New Lender specifies as its
Domestic Lending Office and Eurodollar Lending Office the following:
<PAGE> 124
Domestic Lending Address:
Office:
Attention:
Telephone:
Telecopy:
Eurodollar Lending Address:
Office:
Attention:
Telephone:
Telecopy:
SECTION 2. New Note. The Borrower agrees to promptly execute and
deliver to the New Lender a Note ("NEW NOTE").
SECTION 3. Consent. The Administrative Agent and the Borrower hereby
consent to the increase in the Commitments and addition of the New Lender
effectuated hereby.
SECTION 4. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.
SECTION 5. Execution in Counterparts. This Agreement may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
SECTION 6. Lender Credit Decision. The New Lender acknowledges that it
has, independently and without reliance upon the Administrative Agent or any
other Lender and based on the financial statements referred to in Section 4.01
and such other documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement and to agree to
the various matters set forth herein. The New Lender also acknowledges that it
will, independently and without reliance upon the Administrative Agent or any
other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit
<PAGE> 125
decisions in taking or not taking action under the Credit Agreement.
SECTION 7. Representations and Warranties of the Borrower. The
Borrower represents and warrants as follows:
(a) The execution, delivery and performance by the Borrower of this
Agreement and the New Note are within the Borrower's corporate powers, have been
duly authorized by all necessary corporate action, and do not contravene (i) the
Borrower's certificate of incorporation or by-laws or (ii) law or any
contractual restriction binding on or affecting the Borrower.
(b) No authorization or approval or other action by, and no notice to
or filing with, any governmental authority or regulatory body is required for
the due execution, delivery and performance by the Borrower of this Agreement or
the New Note which has not been duly made or obtained.
(c) This Agreement constitutes, and the New Note when delivered
hereunder shall constitute, legal, valid and binding obligations of the Borrower
enforceable against the Borrower in accordance with their respective terms,
except as may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors rights generally or by
general principles of equity.
(d) The aggregate amount by which the Commitments under the Credit
Agreement have been increased does not exceed $120,000,000.
(e) No event has occurred and is continuing which constitutes an Event
of Default.
(f) Unless the Long-Term Revolving Credit Agreement has been
terminated, the Borrower has caused, or is simultaneously causing, the New
Lender to become a party to the Long-Term Revolving Credit Agreement pursuant to
Section 2.20 thereof with a "Commitment" (under and as defined in the Long-Term
Revolving Credit Agreement) that constitutes the same percentage of all
"Commitments" thereunder as the percentage that the New Lender's Commitment
under the Credit Agreement constitutes of all Commitments under the Credit
Agreement.
(g) Prior to the increase in Commitment pursuant to this Agreement,
the Borrower has offered the Lenders the right to participate in such increase
by increasing their respective Commitments.
(h) Attached hereto are resolutions duly adopted by the Board of
Directors of the Borrower sufficient to authorize this
<PAGE> 126
Agreement and the New Note, and such resolutions are in full force and effect.
SECTION 8. Default. Without limiting any other event that may
constitute an Event of Default, in the event any representation or warranty set
forth herein shall prove to have been incorrect in any material respect when
made, such event shall constitute an "Event of Default" under the Credit
Agreement.
SECTION 9. Expenses. The Borrower agrees to pay on demand all costs and
expenses of the Administrative Agent in connection with the preparation,
negotiation, execution and delivery of this Agreement and the New Note,
including, without limitation, the reasonable fees and out-of-pocket expenses of
counsel for the Administrative Agent with respect thereto.
SECTION 10. Effectiveness. When, and only when, the Administrative
Agent shall have received counterparts of, or telecopied signature pages of,
this Agreement executed by the Borrower, the Administrative Agent and the New
Lender, this Agreement shall become effective as of the date first written
above.
<PAGE> 127
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.
BORROWER:
BURLINGTON RESOURCES INC.
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
ADMINISTRATIVE AGENT:
CHASE BANK OF TEXAS, N.A., as
Administrative Agent
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
NEW LENDER:
-----------------------------------------
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
<PAGE> 128
EXHIBIT F
FORM OF
COMMITMENT INCREASE AGREEMENT
This Commitment Increase Agreement dated as of ___________, ____ (this
"AGREEMENT") is by and among (i) Burlington Resources Inc., a Delaware
corporation (the "BORROWER"), (ii) Chase Bank of Texas, N.A., in its capacity as
administrative agent (the "ADMINISTRATIVE AGENT") under the Short-Term Revolving
Credit Agreement dated as of February 25, 1998, as amended and restated as of
February 23, 1999 (as the same may be amended or otherwise modified from time to
time, the "CREDIT AGREEMENT", capitalized terms that are defined in the Credit
Agreement and not defined herein are used herein as therein defined) among the
Borrower, the lenders party thereto, the Administrative Agent, The Chase
Manhattan Bank, as Auction Administrative Agent, Citibank, N.A., as syndication
agent, and Bank of America National Trust and Savings Association and
BankBoston, N.A., as documentation agents, and (iii) _________ ("INCREASING
LENDER").
Preliminary Statements
A. Pursuant to Section 2.20 of the Credit Agreement, the Borrower
has the right, subject to the terms and conditions thereof, to
effectuate from time to time an increase in the total
Commitments under the Credit Agreement by agreeing with a
Lender to increase that Lender's Commitment.
B. The Borrower has given notice to the Administrative Agent of
its intention to increase the total Commitments pursuant to
such Section 2.20 by increasing the Commitment of the
Increasing Lender from $_______ to $________, and the
Administrative Agent is willing to consent thereto.
Accordingly, the parties hereto agree as follows:
SECTION 1. Increase of Commitment. Pursuant to Section 2.20 of the
Credit Agreement, the Commitment of the Increasing Lender is hereby increased
from $________ to $__________.
<PAGE> 129
SECTION 2. Consent. The Administrative Agent hereby consents to the
increase in the Commitment of the Increasing Lender effectuated hereby.
SECTION 3. Governing Law. This Agreement shall be governed by, and
construed in accordance with the laws of the State of New York.
SECTION 4. Execution in Counterparts. This Agreement may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
SECTION 5. Lender Credit Decision. The Increasing Lender acknowledges
that it has, independently and without reliance upon the Administrative Agent or
any other Lender and based on the financial statements referred to in Section
4.01 and such other documents and information as it has deemed appropriate, made
its own credit analysis and decision to enter into this Agreement and to agree
to the various matters set forth herein. The Increasing Lender also acknowledges
that it will, independently and without reliance upon the Administrative Agent
or any other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Credit Agreement.
SECTION 6. Representations and Warranties of the Borrower. The
Borrower represents and warrants as follows:
(a) The execution, delivery and performance by the Borrower of this
Agreement are within the Borrower's corporate powers, have been duly authorized
by all necessary corporation action, and do not contravene (i) the Borrower's
certificate of incorporation or by-laws or (ii) law or any contractual
restriction binding on or affecting the Borrower.
(b) No authorization or approval or other action by, and no notice to
or filing with, any governmental authority or regulatory body is required for
the due execution, delivery and performance by the Borrower of this Agreement
which has not been duly made or obtained.
(c) This Agreement constitutes legal, valid and binding obligations of
the Borrower enforceable against the Borrower in
<PAGE> 130
accordance with their respective terms, except as may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors rights generally or by general principles of equity.
(d) The aggregate amount by which the Commitments under the Credit
Agreement have been increased does not exceed $120,000,000.
(e) No event has occurred and is continuing which constitutes an Event
of Default.
(f) Unless the Long-Term Revolving Credit Agreement has been
terminated, the Borrower has caused, or is simultaneously causing, the
Increasing Lender's "Commitment" (as defined in the Long-Term Revolving Credit
Agreement) to be increased pursuant to Section 2.20 thereof by the same
percentage as the Increasing Lender's Commitment under the Credit Agreement is
being increased pursuant to Section 2.20 of the Credit Agreement.
(g) Attached hereto are resolutions duly adopted by the Board of
Directors of the Borrower sufficient to authorize this Agreement, and such
resolutions are in full force and effect.
SECTION 7. Default. Without limiting any other event that may
constitute an Event of Default, in the event any representation or warranty set
forth herein shall prove to have been incorrect in any material respect when
made, such event shall constitute an "Event of Default" under the Credit
Agreement.
SECTION 8. Expenses. The Borrower agrees to pay on demand all costs and
expenses of the Administrative Agent in connection with the preparation,
negotiation, execution and delivery of this Agreement, including, without
limitation, the reasonable fees and out-of-pocket expenses of counsel for the
Administrative Agent with respect thereto.
SECTION 9. Effectiveness. When, and only when, the Administrative Agent
shall have received counterparts of, or telecopied signature pages of, this
Agreement executed by the Borrower, the Administrative Agent and the Increasing
Lender, this Agreement shall become effective as of the date first written
above.
<PAGE> 131
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.
BORROWER:
BURLINGTON RESOURCES INC.
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
ADMINISTRATIVE AGENT:
CHASE BANK OF TEXAS, N.A., as
Administrative Agent
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
INCREASING LENDER:
-----------------------------------------
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
<PAGE> 132
EXHIBIT G
FORM OF
EXTENSION REQUEST
The Chase Manhattan Bank
Agency Services
One Chase Manhattan Plaza, 8th Floor
New York, NY 10081
Attention: Muniram Appanna
Tel: (212) 552-7943
Fax: (212) 552-7940
copy to:
Chase Bank of Texas, N.A.,
as Administrative Agent under the Credit Agreement referred to below
600 Travis Street, 20th Floor
Houston, TX 77002
Attention: Russell Johnson
Tel: (713) 216-5617
Fax: (713) 216-8870
Ladies and Gentlemen:
The undersigned, Burlington Resources Inc. (the "BORROWER"), refers to
the Short-Term Credit Agreement dated as of February 25, 1998, as amended and
restated as of February 23, 1999 (as the same may be amended from time to time,
the "CREDIT AGREEMENT", the terms defined therein being used herein as therein
defined), among the Borrower, the Lenders parties thereto, Chase Bank of Texas,
N.A., as Administrative Agent, The Chase Manhattan Bank, as Auction
Administrative Agent, Citibank, N.A., as Syndication Agent, and Bank of America
National Trust and Savings Association and BankBoston, N.A., as Documentation
Agents. Pursuant to Section 2.21(a) of the Credit Agreement, the Borrower hereby
gives you notice of and requests an extension of the Stated Termination Date
under the Credit Agreement, and in that connection sets forth below the
information relating to such extension:
<PAGE> 133
The requested Stated Termination Date is _______________ __, ____.(1)
The undersigned hereby certifies that the following statements are true
on the date hereof, and will be true on the date the Stated Termination Date is
extended:
(a) this Extension Request is being made not earlier than 65 days
prior to and not later than 45 days prior to the Stated Termination Date now in
effect;
(b) no event has occurred and is continuing which constitutes an
Event of Default.
BURLINGTON RESOURCES INC.
By:
--------------------------------------
Name:
Title:
- --------------------------
(1) Such requested Stated Termination Date shall be 364 days from the
presently effective Stated Termination Date.
<PAGE> 134
EXHIBIT H
FORM OF
OPINION OF SENIOR VICE PRESIDENT, LAW FOR BORROWER
February 23, 1999
To each of the Lenders and the Agents
Referred to Below
c/o Chase Bank of Texas, N.A.
600 Travis Street, 20th Floor
Houston, TX 77002
Ladies and Gentlemen:
This opinion is furnished to you pursuant to Section 3.01(d) of the Short-Term
Revolving Credit Agreement, dated as of February 25, 1998, as amended and
restated as of February 23, 1999 (the "Credit Agreement"), among Burlington
Resources Inc., a Delaware corporation (the "Borrower"), the financial
institutions party thereto (each a "Lender," and together the "Lenders"), Chase
Bank of Texas, N.A., as Administrative Agent for the Lenders, The Chase
Manhattan Bank, as Auction Administrative Agent, Citibank, N.A., as Syndication
Agent, and Bank of America National Trust and Savings Association and
BankBoston, N.A., as Documentation Agents. Unless the context otherwise
requires, all capitalized terms used herein without definition shall have the
meanings ascribed to them in the Credit Agreement.
I am Senior Vice President, Law of the Borrower, and I, or attorneys over whom I
exercise supervision, have acted as counsel for the Borrower in connection with
the preparation, execution and delivery of the Credit Agreement.
In that connection, I or such attorneys have examined:
(1) The Credit Agreement, executed by the parties thereto;
<PAGE> 135
(2) The Notes executed by the Borrower; and
(3) The other documents furnished by the Borrower pursuant to
Section 3.01 of the Credit Agreement.
I, or attorneys over whom I exercise supervision, have also examined the
originals, or copies certified to our satisfaction, of the agreements,
instruments and other documents, and all of the orders, writs, judgments,
awards, injunctions and decrees, which affect or purport to affect the
Borrower's ability to perform the Borrower's obligations under the Credit
Agreement or the Notes (collectively referred to herein as the "Documents"). In
addition, I, or attorneys over whom I exercise supervision, have examined the
originals, or copies certified to our satisfaction, of such other corporate
records of the Borrower, certificates of public officials and of officers of the
Borrower, and agreements, instruments and other documents, as I have deemed
necessary as a basis for the opinions hereinafter expressed. In all such
examinations, I, or attorneys over whom I exercise supervision, have assumed the
legal capacity of all natural persons executing documents, the genuineness of
all signatures on original or certified, conformed or reproduction copies of
documents of all parties (other than, with respect to the Documents, the
Borrower), the authenticity of original and certified documents and the
conformity to original or certified copies of all copies submitted to such
attorneys or me as conformed or reproduction copies. As to various questions of
fact relevant to the opinions expressed herein, I have relied upon, and assume
the accuracy of, representations and warranties contained in the Credit
Agreement and certificates and oral or written statements and other information
of or from public officials, officers and/or representatives of the Borrower and
others.
To the extent it may be relevant to the opinions expressed herein, I have
assumed that the parties to the Documents other than the Borrower have the power
to enter into and perform such documents and that such documents have been duly
authorized, executed and delivered by, and constitute legal, valid and binding
obligations of, such parties.
The opinions expressed below are limited to the federal laws of the United
States and, to the extent relevant hereto, the General Corporation Law of the
State of Delaware, as currently in effect. I assume no obligation to supplement
this opinion if any
<PAGE> 136
applicable laws change after the date hereof or if I become aware of any facts
that might change the opinions expressed herein after the date hereof.
Based upon the foregoing and upon such investigation as I have deemed necessary,
and subject to the limitations, qualifications and assumptions set forth herein,
I am of the following opinion:
1. The Borrower (i) is a corporation duly incorporated and existing in
good standing under the laws of the State of Delaware, and (ii)
possesses all the corporate powers and all other authorizations and
licenses necessary to engage in its business and operations as now
conducted, the failure to obtain or maintain which would have a
Material Adverse Effect.
2. The execution, delivery and performance by the Borrower of the
Documents are within the Borrower's corporate powers and have been duly
authorized by all necessary corporate action in respect of or by the
Borrower (except to the extent that the Borrower seeks to exercise its
right under Section 2.20 of the Credit Agreement to effect an increase
of Commitments), and do not contravene (i) the Borrower's Certificate
of Incorporation or By-Laws, in each case as amended, (ii) any federal
law, rule or regulation applicable to the Borrower (excluding
provisions of federal law expressly referred to in and covered by the
opinion of Jones, Day, Reavis & Pogue delivered to you in connection
with the transactions contemplated hereby), or (iii) any contractual
restriction binding on or affecting the Borrower. The Documents have
been duly executed and delivered on behalf of the Borrower.
3. No authorization or approval or other action by, and no notice to or
filing with, any federal governmental authority or regulatory body
(including, without limitation, the Federal Energy Regulatory
Commission) is required for the due execution, delivery and performance
by the Borrower of the Documents, except those required in the ordinary
course of business in connection with the performance by the Borrower
of its obligations under certain covenants and warranties contained in
the Documents.
4. To the best of my knowledge, there is no action, suit or proceeding
pending or overtly threatened against or involving
<PAGE> 137
the Borrower or any of its Material Subsidiaries, which, in my
reasonable judgment (taking into account the exhaustion of all
appeals), would have a material adverse effect upon the consolidated
financial condition of the Borrower and its consolidated Subsidiaries
taken as a whole, or which purports to affect the legality, validity,
binding effect or enforceability of any Document.
These opinions are given as of the date hereof and are solely for your benefit
in connection with the transactions contemplated by the Credit Agreement. These
opinions may not be relied upon by you for any other purpose or relied upon by
any other person for any purpose without my prior written consent.
Very truly yours,
L. David Hanower
Senior Vice President, Law
<PAGE> 138
EXHIBIT I
FORM OF
OPINION OF JONES, DAY, REAVIS & POGUE, NEW YORK
COUNSEL FOR BORROWER
February 23, 1999
To Each of the Lenders and the Administrative Agent
Referred to Below
c/o Chase Bank of Texas, N.A.
600 Travis Street, 20th Floor
Houston, TX 77002
Re: Short-Term Revolving Credit Agreement, dated as of February 25, 1998, and
amended and restated as of February 23, 1999
Ladies and Gentlemen:
We have acted as special New York counsel for Burlington Resources
Inc., a Delaware corporation (the "Company"), in connection with the Short-Term
Revolving Credit Agreement, dated as of February 25, 1998, and amended and
restated as of February 23, 1999 (as so amended and restated, the "Credit
Agreement"), among the Company, the financial institutions party thereto (each a
"Lender," and together the "Lenders"), Chase Bank of Texas, N.A., as
Administrative Agent for the Lenders, Citibank, N.A., as Syndication Agent for
the Lenders, Bank of America National Trust and Savings Association and
BankBoston, N.A., as Documentation Agents for the Lenders, and The Chase
Manhattan Bank, as Auction Administrative Agent for the Lenders. This opinion is
delivered to you pursuant to Section 3.01(e) of the Credit Agreement.
Capitalized terms used herein and not otherwise defined herein have the meanings
assigned to such terms in the Credit Agreement. The Uniform Commercial Code, as
amended and in effect in the State of New York, is referred to herein as the "NY
UCC." With your permission, all assumptions and statements of reliance herein
have been made without any independent investigation or verification on our part
except to the extent otherwise expressly stated, and we express no opinion with
respect to the subject matter or accuracy of such assumptions or items upon
which we have relied.
<PAGE> 139
In connection with the opinions expressed herein, we have examined such
documents, records and matters of law as we have deemed necessary or appropriate
for the purposes of this opinion. We have examined, among other documents, the
following:
(a) A facsimile of an executed copy of the Credit Agreement;
(b) A facsimile of an executed copy of each of the Notes; and
(c) A facsimile of the Officer's Certificate of the Company delivered
to us in connection with this opinion, a copy of which is attached
hereto as Annex A.
The documents referred to in items (a) and (b) above are referred to herein
collectively as the "Documents."
In all such examinations, we have assumed the legal capacity of all
natural persons executing documents, the genuineness of all signatures, the
authenticity of original and certified documents and the conformity to original
or certified copies of all copies submitted to us as conformed or reproduction
copies. As to various questions of fact relevant to the opinions expressed
herein, we have relied upon, and assume the accuracy of, representations and
warranties contained in the Documents and certificates and oral or written
statements and other information of or from representatives of the Company and
others and assume compliance on the part of all parties to the Documents with
their covenants and agreements contained therein. With respect to the opinions
expressed in paragraph (a) below, our opinions are limited (x) to our actual
knowledge of the Company's specially regulated business activities and
properties based solely upon an officer's certificate in respect of such matters
and without any independent investigation or verification on our part and (y) to
our review of only those laws and regulations that, in our experience, are
normally applicable to transactions of the type contemplated by the Documents.
To the extent it may be relevant to the opinions expressed herein, we
have assumed that the parties to the Documents other
<PAGE> 140
than the Company have the power to enter into and perform such documents and to
consummate the transactions contemplated thereby and that such documents have
been duly authorized, executed and delivered by, and constitute legal, valid and
binding obligations of, such parties.
Based upon the foregoing, and subject to the limitations,
qualifications and assumptions set forth herein, we are of the opinion that:
(a) The execution and delivery to the Administrative Agent and the
Lenders by the Company of the Documents and the performance by the Company of
its obligations thereunder (i) do not require under present law any filing or
registration by the Company with, or approval or consent to the Company of, any
governmental agency or authority of the State of New York, except those, if any,
required in the ordinary course of business in connection with the performance
by the Company of its obligations under certain covenants contained in the
Documents and (ii) do not violate any present law, or present regulation of any
governmental agency or authority, of the State of New York applicable to the
Company or its property.
(b) Each of the Documents constitutes an enforceable obligation of the
Company in accordance with its terms.
(c) The borrowings by the Borrower under the Credit Agreement and the
applications of the proceeds thereof as provided in the Credit Agreement will
not violate Regulation T, U or X of the Board of Governors of the Federal
Reserve System.
The opinions set forth above are subject to the following
qualifications:
(A) We express no opinion as to:
(i) the effect of any law of any jurisdiction other than
the State of New York wherein the Administrative Agent or any Lender
may be located or wherein enforcement of any document referred to above
may be sought that limits the rates of interest legally chargeable or
collectible; and
<PAGE> 141
(ii) any filing, registration, approval or consent of the
Federal Energy Regulatory Commission or any other United States federal
agency or authority needed in connection with the execution, delivery
and performance by the Company of the Documents, the consummation of
the transactions contemplated thereby and compliance with the terms and
conditions thereof.
(B) Our opinions above are subject to (i) applicable bankruptcy,
insolvency, reorganization, fraudulent transfer, voidable preference, moratorium
or similar laws, and related judicial doctrines, from time to time in effect
affecting creditors' rights and remedies generally, (ii) general principles of
equity (including, without limitation, standards of materiality, good faith,
fair dealing and reasonableness, equitable defenses and limits on the
availability of equitable remedies), whether such principles are considered in a
proceeding at law or in equity and (iii) the qualification that certain other
provisions of the Documents may be unenforceable in whole or in part under the
laws (including judicial decisions) of the State of New York or the United
States of America, but the inclusion of such provisions does not affect the
validity as against the Company of the Documents as a whole, and the Documents
contain adequate provisions for enforcing payment of the obligations governed
thereby, subject to the other qualifications contained in this letter.
(C) We express no opinion as to the enforceability of any provision in
the Documents:
(i) permitting the Administrative Agent, any Lender or any
other person or entity to enforce any right or remedy thereunder,
except in compliance with the NY UCC and other applicable federal,
state, local and foreign laws; or
(ii) relating to indemnification, contribution or
exculpation in connection with violations of any securities laws or
statutory duties or public policy, or in connection with willful,
reckless or unlawful acts or gross negligence of the indemnified or
exculpated party or the party receiving contribution; or
<PAGE> 142
(iii) relating to exculpation of any party in connection
with its own negligence that a court would determine in the
circumstances under applicable law to be unfair or insufficiently
explicit; or
(iv) providing that any Lender or other person or entity
may exercise set-off rights other than in accordance with and pursuant
to applicable law; or
(v) relating to forum selection to the extent the forum
is a federal court; or
(vi) relating to forum selection to the extent that the
enforceability of any such provision is to be determined by any court
other than a court of the State of New York; or
(vii) relating to choice of governing law to the extent
that the enforceability of any such provision is to be determined by
any court other than a court of the State of New York; or
(viii) specifying that provisions thereof may be waived
only in writing, to the extent that an oral agreement or an implied
agreement by trade practice or course of conduct has been created that
modifies any provision of such Documents; or
(ix) giving any person or entity the power to accelerate
obligations without any notice to the obligor.
(D) Our opinions as to enforceability are subject to the effect of
generally applicable rules of law that:
(i) provide that forum selection clauses in contracts are
not necessarily binding on the court(s) in the forum selected; and
(ii) limit the availability of a remedy under certain
circumstances when another remedy has been elected; and
(iii) may, where less than all of a contract may be
unenforceable, limit the enforceability of the balance of
<PAGE> 143
the contract to circumstances in which the unenforceable portion is not
an essential part of the agreed exchange; and
(iv) govern and afford judicial discretion regarding the
determination of damages and entitlement to attorneys' fees and other
costs.
(E) We express no opinion as to the enforceability of any purported
waiver, release, variation, disclaimer, consent or other agreement to similar
effect (all of the foregoing, collectively, a "Waiver") by the Company under any
of the Documents to the extent limited by provisions of applicable law
(including judicial decisions), or to the extent that such a Waiver applies to a
right, claim, duty, defense or ground for discharge otherwise existing or
occurring as a matter of law (including judicial decisions), except to the
extent that such a Waiver is effective under and is not prohibited by or void or
invalid under applicable law (including judicial decisions).
(F) For purposes of our opinions above, insofar as they relate to the
Company, we have assumed that (i) the Company is a corporation validly existing
in good standing in its jurisdiction of incorporation, has all requisite power
and authority, and has obtained all requisite corporate, shareholder, third
party and governmental authorizations, consents and approvals, and made all
requisite filings and registrations, necessary to execute, deliver and perform
the Documents (except to the extent noted in paragraph (a) above), and that such
execution, delivery and performance will not violate or conflict with any law,
rule, regulation, order, decree, judgment, instrument or agreement binding upon
or applicable to it or its properties (except to the extent noted in paragraph
(a) above, and (ii) the Documents have been duly executed and delivered by the
Company.
(G) For purposes of the opinions set forth in paragraph (c) above, we
have assumed that (i) neither the Administrative Agent nor any of the Lenders
has or will have the benefit of any agreement or arrangement (excluding the
Documents) pursuant to which any Advances are directly or indirectly secured by
Margin Stock, (ii) neither the Administrative Agent nor any of the Lenders nor
any of their respective affiliates has extended or will extend any other credit
to the Company directly or indirectly secured by Margin Stock and (iii) neither
the
<PAGE> 144
Administrative Agent nor any of the Lenders has relied or will rely upon any
Margin Stock as collateral in extending or maintaining any Advances pursuant to
the Credit Agreement.
We express no opinion as to the effect of the compliance or
noncompliance of each of the addressees with any state or federal laws or
regulations applicable to each of them by reason of their status as or
affiliation with a federally insured depository institution, except as expressly
set forth in paragraph (c) above.
The opinions expressed herein are limited to the federal laws of the
United States of America (in the case of the matters covered in paragraph (c)
above) and the laws of the State of New York (in the case of the matters covered
in paragraphs (a) and (b) above), as currently in effect. Our opinions are
limited to those expressly set forth herein, and we express no opinions by
implication.
The opinions expressed herein are solely for the benefit of the
Administrative Agent and the Lenders and may not be relied on in any manner or
for any purpose by any other person or entity.
Very truly yours,
JONES, DAY, REAVIS & POGUE
<PAGE> 145
EXHIBIT J
FORM OF
DESIGNATION AGREEMENT
Dated ___________
Reference is made to the Short-Term Revolving Credit Agreement dated as
of February 25, 1998, as amended and restated as of February 23, 1999 (such
agreement, as in effect on the date hereof and as it may hereafter be amended,
modified or supplemented from time to time, being the "CREDIT AGREEMENT") among
Burlington Resources Inc., a Delaware corporation (the "BORROWER"), the Lenders
party thereto (the "LENDERS"), Chase Bank of Texas, N.A., as Administrative
Agent for the Lenders (the "ADMINISTRATIVE AGENT"), The Chase Manhattan Bank, as
Auction Administrative Agent, Citibank, N.A., as Syndication Agent for the
Lenders, and Bank of America National Trust and Savings Association and
BankBoston, N.A., as Documentation Agents. Terms defined in the Credit Agreement
are used herein with the same meaning.
______________ (the "DESIGNATOR"), ____________ (the "DESIGNEE"), and
Burlington Resources Inc., a Delaware corporation (the "BORROWER"), agree as
follows:
1. The Designator designates the Designee, and the Designee hereby
accepts such designation, to have a right to make B Advances pursuant to Section
2.19 of the Credit Agreement.
2. The Designator makes no representations or warranties and assumes
no responsibility with respect to (i) any statements, warranties or
representations made in or in connection with the Credit Agreement or the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of the Credit Agreement or any other instrument or document furnished pursuant
thereto and (ii) the financial condition of the Borrower or the performance or
observance by the Borrower of any of its obligations under the Credit Agreement
or any other instrument or document furnished pursuant thereto.
3. The Designee (i) confirms that it has received a copy of the
Credit Agreement, together with copies of the financial statements referred to
in Section 4.01 thereof and such other
<PAGE> 146
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Designation Agreement; (ii) agrees that
it will, independently and without reliance upon the Administrative Agent, the
Designator or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Credit Agreement; (iii) confirms that it
is a Designated Bidder; (iv) appoints and authorizes the Administrative Agent to
take such action as agent on its behalf and to exercise such powers under the
Credit Agreement as are delegated to the Administrative Agent by the terms
thereof, together with such powers as are reasonably incidental thereto; (v)
agrees that it will perform in accordance with their terms all of the
obligations which by the terms of the Credit Agreement are required to be
performed by it as a Lender; and (vi) specifies as its Applicable Lending Office
with respect to B Advances (and address for notices) the offices set forth
beneath its name on the signature pages hereof.
4. Following the execution of this Designation Agreement by the
Designator, the Designee and the Borrower, it will be delivered to the
Administrative Agent for acceptance and recording by the Administrative Agent.
The effective date of this Designation Agreement shall be the date of acceptance
thereof by the Administrative Agent, unless otherwise specified on the signature
page hereto (the "EFFECTIVE DATE").
5. Upon such acceptance and recording by the Administrative Agent, as
of the Effective Date, the Designee shall be a party to the Credit Agreement
with a right to make B Advances as a Lender pursuant to Section 2.19 of the
Credit Agreement and the rights and obligations of a Lender related thereto.
6. This Designation Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York.
IN WITNESS WHEREOF, the parties have caused this Designation Agreement
to be executed by their respective officers thereunto duly authorized, as of the
date first above written.
Effective Date:(2)
_______________, 19___
- -------------------------
(2) This date should be no earlier than the date of acceptance by the
Administrative Agent.
<PAGE> 147
[NAME OF DESIGNATOR]
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
[NAME OF DESIGNEE]
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
Applicable Lending Office
(and addresses for notices)
[Address
BURLINGTON RESOURCES INC.
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
Accepted and Approved this
____ day of ___________, 19__
CHASE BANK OF TEXAS, N.A.,
as Administrative Agent
By:
--------------------------------
Name:
Title:
<PAGE> 1
CONFORMED COPY
- -------------------------------------------------------------------------------
BURLINGTON RESOURCES INC.
---------------------------------
$600,000,000
LONG-TERM REVOLVING CREDIT AGREEMENT
Dated as of February 25, 1998
---------------------------------
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Administrative Agent
CITIBANK, N.A.,
as Syndication Agent
CHASE BANK OF TEXAS, N.A.
as Co-Documentation Agent
NATIONSBANK OF TEXAS, N.A.,
as Co-Documentation Agent
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
ARTICLE 1 DEFINITIONS AND ACCOUNTING TERMS
<S> <C> <C>
SECTION 1.01. Certain Defined Terms.............................................................1
SECTION 1.02. Computation of Time Periods......................................................16
SECTION 1.03. Accounting and Other Terms.......................................................16
SECTION 1.04. References.......................................................................16
ARTICLE 2 AMOUNTS AND TERMS OF THE ADVANCES
SECTION 2.01. The A Advances...................................................................17
SECTION 2.02. Making the A Advances............................................................17
SECTION 2.03. Fees.............................................................................19
SECTION 2.04. Reduction of the Commitments.....................................................19
SECTION 2.05. Repayment of A Advances..........................................................20
SECTION 2.06. Interest on A Advances...........................................................20
SECTION 2.07. Additional Interest on Eurodollar Rate Advances..................................21
SECTION 2.08. Interest Rate Determination......................................................21
SECTION 2.09. Voluntary Conversion of A Advances...............................................23
SECTION 2.10. Prepayments......................................................................23
SECTION 2.11. Increased Costs..................................................................24
SECTION 2.12. Increased Capital................................................................25
SECTION 2.13. Illegality.......................................................................26
SECTION 2.14. Payments and Computations........................................................26
SECTION 2.15. Taxes............................................................................28
SECTION 2.16. Sharing of Payments, Etc.........................................................30
SECTION 2.17. Evidence of Debt.................................................................31
SECTION 2.18. Use of Proceeds..................................................................31
SECTION 2.19. The B Advances...................................................................31
SECTION 2.20. Increase of Commitments..........................................................35
SECTION 2.21. Extension of Stated Termination Date.............................................37
SECTION 2.22. Replacement of Lenders...........................................................39
ARTICLE 3 CONDITIONS OF EFFECTIVENESS AND LENDING
SECTION 3.01. Conditions Precedent to Effectiveness of this Agreement..........................40
SECTION 3.02. Conditions Precedent to Each A Borrowing.........................................41
SECTION 3.03. Conditions Precedent to Each B Borrowing.........................................42
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
ARTICLE 4 REPRESENTATIONS AND WARRANTIES
<S> <C> <C>
SECTION 4.01. Representations and Warranties of the Borrower...................................42
ARTICLE 5 COVENANTS OF THE BORROWER
SECTION 5.01. Affirmative Covenants............................................................45
SECTION 5.02. Negative Covenants...............................................................47
SECTION 5.03. Reporting Requirements...........................................................51
ARTICLE 6 EVENTS OF DEFAULT
SECTION 6.01. Events of Default................................................................53
ARTICLE 7 THE ADMINISTRATIVE AGENT
SECTION 7.01. Authorization and Action.........................................................57
SECTION 7.02. Administrative Agent's Reliance, Etc.............................................57
SECTION 7.03. Morgan and Affiliates............................................................58
SECTION 7.04. Lender Credit Decision...........................................................58
SECTION 7.05. Indemnification..................................................................58
SECTION 7.06. Successor Administrative Agent...................................................59
ARTICLE 8 MISCELLANEOUS
SECTION 8.01. Amendments, Etc..................................................................60
SECTION 8.02. Notices, Etc.....................................................................60
SECTION 8.03. No Waiver; Remedies..............................................................61
SECTION 8.04. Costs and Expenses; Indemnity....................................................61
SECTION 8.05. Right of Set-off.................................................................63
SECTION 8.06. Binding Effect...................................................................63
SECTION 8.07. Assignments and Participations...................................................63
SECTION 8.08. Confidentiality..................................................................68
SECTION 8.09. Consent to Jurisdiction..........................................................68
SECTION 8.10. Governing Law....................................................................69
SECTION 8.11. Execution in Counterparts........................................................69
SECTION 8.12. WAIVER OF JURY TRIAL.............................................................69
</TABLE>
ii
<PAGE> 4
Schedule I -- Material Subsidiaries
Schedule II -- Pricing Grid
Exhibit A Form of Note
Exhibit B Form of Notice of A Borrowing
Exhibit C Form of Notice of B Borrowing
Exhibit D Form of Assignment and Acceptance
Exhibit E Form of New Lender Agreement
Exhibit F Form of Commitment Increase Agreement
Exhibit G Form of Extension Request
Exhibit H Form of Opinion of Senior Vice President, Law for Borrower
Exhibit I Form of Opinion of Jones, Day, Reavis & Pogue, New York
Counsel for Borrower
Exhibit J Form of Opinion of Counsel for Administrative Agent
Exhibit K Form of Designation Agreement
iii
<PAGE> 5
LONG-TERM REVOLVING CREDIT AGREEMENT
Dated as of February 25, 1998
BURLINGTON RESOURCES INC., a Delaware corporation (the "Borrower"), the
financial institutions (the "Initial Lenders") listed on the signature pages
hereof, Morgan Guaranty Trust Company of New York, as administrative agent (in
such capacity, the "Administrative Agent") for the Lenders hereunder, Citibank,
N.A., as syndication agent for the Lenders (in such capacity, the "Syndication
Agent"), and Chase Bank of Texas, N.A. and NationsBank of Texas, N.A., as
co-documentation agents for the Lenders (in such capacity, individually, a
"Co-Documentation Agent" and, collectively, the "Co-Documentation Agents"),
agree as follows:
ARTICLE 1
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1. Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"A ADVANCE" means an advance by a Lender to the Borrower as part of an
A Borrowing, and refers to a Base Rate Advance or a Eurodollar Rate Advance
(each of which shall be a "TYPE" of A Advance).
"A BORROWING" means a borrowing consisting of A Advances of the same
Type made on the same day by the Lenders pursuant to Section 2.01 and, in the
case of Eurodollar Rate Advances, having Interest Periods of the same duration,
it being understood that there may be more than one A Borrowing on a particular
day.
"ADMINISTRATIVE QUESTIONNAIRE" means, with respect to each Lender, an
administrative questionnaire in the form prepared by the Administrative Agent
and submitted to the Administrative Agent (with a copy to the Borrower) duly
completed by such Lender.
"ADVANCE" means an A Advance or a B Advance.
<PAGE> 6
"AFFILIATE" means, as to any Person, any other Person that, directly or
indirectly, controls, is controlled by or is under common control with such
Person or is a director or officer of such Person. The term "CONTROLS"
(including the terms "CONTROLLED BY" or "UNDER COMMON CONTROL WITH") means, with
respect to any Person, the possession, direct or indirect, of the power to vote
10% or more (or in the case of an "AFFILIATE" of any Lender, 5% or more) of the
securities having ordinary voting power for the election of directors of such
Person or to direct or cause the direction of the management and policies of
such Person, whether through ownership of voting securities or by contract or
otherwise. Neither a director nor an officer of the Borrower, in such capacity,
shall be deemed, for purposes of this Agreement, an Affiliate.
"AGREEMENT" means this Long-Term Revolving Credit Agreement, together
with all exhibits and schedules hereto, as may be amended or otherwise modified
from time to time pursuant to the terms hereof.
"APPLICABLE LENDING OFFICE" means, with respect to each Lender, (i) in
the case of an A Advance, such Lender's Domestic Lending Office in respect of
Base Rate Advances and such Lender's Eurodollar Lending Office in respect of
Eurodollar Rate Advances and (ii) in the case of a B Advance, the office of such
Lender notified by such Lender to the Administrative Agent as its Applicable
Lending Office with respect to such B Advance.
"ARRANGER" means J.P. Morgan Securities Inc.
"ASSIGNMENT AND ACCEPTANCE" means an assignment and acceptance entered
into by a Lender (other than a Designated Bidder) and an Eligible Assignee, and
accepted by the Administrative Agent, in substantially the form of Exhibit D
hereto.
"B ADVANCE" means an advance by a Lender to the Borrower as part of a B
Borrowing resulting from the auction bidding procedure described in Section
2.19.
"B BORROWING" means a borrowing consisting of simultaneous B Advances
to the Borrower from each of the Lenders whose offer to make one or more B
Advances as part of such borrowing has been accepted by the Borrower under the
auction bidding procedure described in Section 2.19, it being understood that
there may be more than one B Borrowing on a particular day.
"B REDUCTION" has the meaning specified in Section 2.01.
2
<PAGE> 7
"BASE RATE" means, for each day in any period, a fluctuating interest
rate per annum as shall be in effect from time to time which rate per annum
shall at all times for such day be equal to the higher of:
(i) The rate of interest announced publicly by the Administrative
Agent in the United States with respect to loans made in the United States, from
time to time, as the Administrative Agent's base or prime rate as in effect for
such day; and
(ii) 0.50% per annum above the Effective Federal Funds Rate for such
day.
"BASE RATE ADVANCE" means an A Advance which bears interest as provided
in Section 2.06(a)(i).
"BORROWING" means an A Borrowing or a B Borrowing.
"BUSINESS DAY" means a day of the year on which banks are not required
or authorized to close in New York, New York and, if the applicable Business Day
relates to any Eurodollar Rate Advances, on which dealings are carried on in the
London interbank market.
"BUSINESS ENTITY" means a partnership, corporation (including a
business trust), limited liability company, joint stock company, trust,
unincorporated association, joint venture or other entity.
"CAPITALIZATION" means the sum (without duplication) of (i)
consolidated Debt of the Borrower and its consolidated Subsidiaries, plus (ii)
the aggregate amount of Guaranties by the Borrower or its consolidated
Subsidiaries, plus (iii) the sum of the preferred stock and common stockholders'
equity of the Borrower, plus (iv) the cumulative amount by which Consolidated
Tangible Net Worth shall have been reduced by reason of non-cash write-downs of
long-term assets subsequent to December 31, 1997 (but excluding any such amount
with respect to assets of Project Finance Subsidiaries), minus (v) to the extent
otherwise included in determining the amounts computed under clause (iii) above,
the aggregate investment (net of any Project Financing) of the Borrower and its
consolidated Subsidiaries in Project Finance Subsidiaries.
"CLAM" means CLAM Petroleum B.V., a Netherlands company, and CLAM's
successors.
"CLAM CREDIT AGREEMENT" means the Amended and Restated Credit Agreement
dated as of July 25, 1985, among MaraLou Netherlands Partnership, CLAM, the
banks parties thereto and Morgan, as agent for such banks, as
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<PAGE> 8
amended and restated as of August 15, 1997, or any successor credit agreement
entered into for the purpose of refinancing such Amended and Restated Credit
Agreement, in each case, as amended, restated, extended or otherwise modified
from time to time.
"COMMITMENT" has the meaning specified in Section 2.01.
"COMMITMENT EXPIRATION DATE" has the meaning specified in Section
2.21(a).
"COMMITMENT INCREASE NOTICE" has the meaning specified in Section
2.20(a).
"COMMITMENT INCREASE AGREEMENT" has the meaning specified in Section
2.20(c).
"COMMITMENT PERCENTAGE" means as to any Lender at any time, the
percentage that such Lender's Commitment then constitutes of the aggregate
Commitments (or, at any time after the Commitments shall have expired or
terminated, the percentage that the aggregate principal amount of such Lender's
Advances then outstanding constitutes of the aggregate principal amount of the
Advances then outstanding).
"CONSOLIDATED TANGIBLE NET WORTH" means, on a consolidated basis, the
excess of (i) the sum of (x) the preferred stock and common stockholders' equity
of the Borrower and (y) the cumulative amount by which Consolidated Tangible Net
Worth shall have been reduced by reason of non-cash write-downs of long-term
assets subsequent to December 31, 1997, over (ii) the intangible assets of the
Borrower and its consolidated Subsidiaries.
"CONTINGENT GUARANTY" has the meaning specified in the definition of
the term "Guaranty" contained in this Section 1.01.
"CONVERT", "CONVERSION" and "CONVERTED" each refers to a conversion of
A Advances of one Type into A Advances of another Type pursuant to Section 2.08,
2.09 or 2.13.
"DEBT" of any Person means, without duplication (i) indebtedness of
such Person for borrowed money, (ii) obligations of such Person (other than any
portion of any trade payable obligation of such Person which shall not have
remained unpaid for 91 days or more from the later of (A) the original due date
of such portion and (B) the customary payment date in the industry and relevant
market for such portion) to pay the deferred purchase price of property or
services, (iii) obligations of such Person as lessee under leases which shall
have
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<PAGE> 9
been or should be, in accordance with generally accepted accounting principles,
recorded as capital leases, and (iv) Overdue Reimbursement Obligations;
provided, however, that where any such indebtedness or obligation of such Person
is made jointly, or jointly and severally, with any third party or parties,
which are not the Borrower or any of its consolidated Subsidiaries, the amount
thereof for the purposes of this definition only shall be the pro rata portion
thereof payable by such Person, so long as such third party or parties have not
defaulted on its or their joint and several portions thereof, and provided,
further, that the following shall not at any time constitute Debt: (1)
obligations of such Person to reimburse a bank or other Person in respect of
amounts paid under a letter of credit or similar instrument that are not Overdue
Reimbursement Obligations, (2) Project Financing, (3) the Morgan Gold Loans
unless, at such time, for any reason whatsoever, (A) no royalty income shall
have accrued under the Royalty Agreement dated as of December 5, 1984 between
Copper Range Company, a Michigan corporation, and LL&E during the three
consecutive fiscal quarters of LL&E most recently ended prior to such time or
(B) any payment required to have been made to LL&E under such agreement prior to
such time shall not have been paid on, or within 30 days after, the date such
payment is due and (4) amounts borrowed by the Borrower and its Subsidiaries
under life insurance policies issued to one or more of the foregoing and
covering employees or former employees of one or more of the foregoing not in
excess of the cash surrender value of such policies.
"DESIGNATED BIDDER" means (i) an Affiliate of a Lender or (ii) a
special purpose corporation that is engaged in making, purchasing or otherwise
investing in commercial loans in the ordinary course of its business and that
issues (or the parent of which issues) commercial paper rated at least "Prime-1"
by Moody's or "A-1" by S&P or a comparable rating from the successor of either
of them, that, in the case of either clause (i) or (ii) above, (1) is organized
under the laws of the United States or any state thereof, (2) shall have become
a party hereto pursuant to subsections (e), (f) and (g) of Section 8.07, and (3)
is not otherwise a Lender. Notwithstanding the foregoing, each Designated Bidder
shall be subject to the written consent of the Borrower and the Administrative
Agent, such consent not to be unreasonably withheld.
"DESIGNATION AGREEMENT" means a designation agreement entered into by
the Borrower, a Lender (other than a Designated Bidder) and a Designated Bidder,
and accepted by the Administrative Agent, in substantially the form of Exhibit K
hereto.
"DOMESTIC LENDING OFFICE" means, with respect to any Lender, the office
of such Lender specified as its "Domestic Lending Office" in its Administrative
Questionnaire, or in the Assignment and Acceptance or New Lender Agreement
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<PAGE> 10
pursuant to which it became a Lender, or such other office of such Lender as
such Lender may from time to time specify to the Borrower and the Administrative
Agent.
"EFFECTIVE DATE" means the date on which the conditions precedent set
forth in Section 3.01 have been satisfied (or compliance therewith shall have
been waived by the Lenders), which date the Administrative Agent will promptly
confirm to the Borrower and the Lenders in writing.
"EFFECTIVE FEDERAL FUNDS RATE" means, for any day, the weighted average
of the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding 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 such day on such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
"ELIGIBLE ASSIGNEE" means, with respect to any particular assignment
under Section 8.07, any bank or other financial institution approved in writing
by the Borrower expressly with respect to such assignment and, except as to such
an assignment by Morgan so long as Morgan is the Administrative Agent hereunder,
the Administrative Agent as an Eligible Assignee for purposes of this Agreement,
provided that neither the Administrative Agent's nor the Borrower's approval
shall be unreasonably withheld, and provided further that no such approval shall
be necessary if (i) the assignee is an Affiliate of the assigning Lender and
such assignment constitutes 100% of the assigning Lender's Commitment, the A
Advances owing to it and the Note or Notes held by it, (ii) the assignee was a
Lender immediately prior to such assignment or (iii) if an Event of Default
shall then be continuing.
"EQUITY INTERESTS" means any capital stock, partnership, joint venture,
member or limited liability company interest, beneficial interest in a trust or
similar entity or other equity interest or investment of whatever nature.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated and rulings issued
from time to time thereunder.
"ERISA AFFILIATE" means any Person who is a member of the Borrower's
controlled group within the meaning of Section 4001(a)(14)(A) of ERISA.
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"EUROCURRENCY LIABILITIES" has the meaning assigned to that term in
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
"EURODOLLAR LENDING OFFICE" means, with respect to each Lender, the
office of such Lender specified as its "Eurodollar Lending Office" in its
Administrative Questionnaire or in the Assignment and Acceptance or Commitment
Increase Agreement pursuant to which it became a Lender (or, if no such office
is specified, its Domestic Lending Office) or such other office of such Lender
as such Lender may from time to time specify to the Borrower and the
Administrative Agent.
"EURODOLLAR RATE" means, for any Interest Period for each Eurodollar
Rate Advance comprising part of the same A Borrowing, the interest rate per
annum equal to the average (rounded upward to the nearest whole multiple of 1/16
of 1% per annum, if such average is not such a multiple) of the rate per annum
at which deposits in U.S. dollars are offered by the principal office of each of
the Reference Banks in London, England, to prime banks in the London interbank
market at 11:00 A.M. (London, England time) two Business Days before the first
day of such Interest Period in an amount comparable to the amount of such A
Borrowing and for a period equal to such Interest Period. The Eurodollar Rate
for the Interest Period for each Eurodollar Rate Advance comprising part of the
same A Borrowing shall be determined by the Administrative Agent on the basis of
applicable rates furnished to and received by the Administrative Agent from the
Reference Banks two Business Days before the first day of such Interest Period,
subject, however, to the provisions of Section 2.08.
"EURODOLLAR RATE ADVANCE" means an A Advance which bears interest
determined by reference to the Eurodollar Rate, as provided in Section
2.06(a)(ii).
"EURODOLLAR RATE MARGIN" means for any date the percentage per annum
applicable on such date as set forth in the row labelled "LIBOR Applicable
Margin" on Schedule II hereto, which is based on the ratings (or lack thereof)
by Moody's or S&P or both of the public long-term senior unsecured debt
securities of the Borrower.
"EURODOLLAR RESERVE PERCENTAGE" of any Lender for any Interest Period
for any Eurodollar Rate Advance means the reserve percentage applicable during
such Interest Period under regulations issued from time to time by the Board of
Governors of the Federal Reserve System (or if more than one such percentage
shall be so applicable, the daily average of such percentages for those days in
such Interest Period during which any such percentage shall be so applicable)
for determining the maximum reserve requirement (including any emergency,
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<PAGE> 12
supplemental or other marginal reserve requirement) for such Lender with respect
to liabilities or assets consisting of or including Eurocurrency Liabilities
having a term equal to such Interest Period.
"EVENTS OF DEFAULT" has the meaning specified in Section 6.01.
"EXISTING AGREEMENT" means the Second and Amended Restated Long-Term
Revolving Credit Agreement dated as of July 12, 1996 among the Borrower, the
Lenders parties thereto and Citibank, N.A., as Agent, as amended.
"EXTENSION REQUEST" means each request by the Borrower made pursuant to
Section 2.21 for the Lenders to extend the Stated Termination Date, which shall
contain the information in respect of such extension specified in Exhibit G and
shall be delivered to the Administrative Agent in writing.
"FACILITY FEE PERCENTAGE" means for any date the percentage per annum
applicable on such date as set forth in the row labelled "Facility Fee" on
Schedule II hereto, which is based on the ratings (or lack thereof) by Moody's
or S&P or both of the public long-term senior unsecured debt securities of the
Borrower.
"GUARANTY", "GUARANTEED" and "GUARANTEEING" each means any act by which
a Person assumes, guarantees, endorses or otherwise incurs direct or contingent
liability in connection with, or agrees to purchase or otherwise acquire or
otherwise assures a creditor against loss in respect of, any Debt or Project
Financing of any Person other than the Borrower or any of its consolidated
Subsidiaries (excluding (i) any liability by endorsement of negotiable
instruments for deposit or collection or similar transactions in the ordinary
course of business, (ii) any liability in connection with obligations of the
Borrower or any of its consolidated Subsidiaries, including obligations under
any conditional sales agreement, equipment trust financing or equipment lease,
(iii) any liability or other act of the Borrower or any of its Subsidiaries
under arrangements entered into in connection with the CLAM Credit Agreement,
and (iv) any such act in connection with a Project Financing that either (A)
guarantees to the provider of such Project Financing or any other Person
performance of the acquisition, improvement, installation, design, engineering,
construction, development, completion, maintenance or operation of, or otherwise
affects any such act in respect of, all or any portion of the project that is
financed by such Project Financing or performance by a Project Financing
Subsidiary of certain obligations to Persons other than the provider of such
Project Financing, except during any period, and then only to the extent, that
such guaranty is a direct guaranty of payment of such Project Financing (other
than a guaranty of payment of the type referred to in subclause (B) below) or
(B) is contingent upon, or the obligation to pay or perform under which is
contingent upon, the occurrence or existence of any event or condition other
than or in addition to (1) the passage of time, (2) any
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<PAGE> 13
Project Financing becoming due, (3) the commencement of bankruptcy, insolvency
or similar proceedings by the obligor on any Project Financing or (4) the
failure of the obligor on any Project Financing to satisfy a financial ratio,
covenant or other similar financial measurement test, but only during such
period as such act is not by its terms presently enforceable, or if so
enforceable, there is not a reasonable probability that the guarantor will be
called upon to perform thereunder (or to make capital contributions in lieu of
performance thereunder) (any such act referred to in this clause (iv) being a
"CONTINGENT GUARANTY")); provided, however, that for the purposes of this
definition the liability of the Borrower or any of its Subsidiaries with respect
to any obligation as to which a third party or parties are jointly, or jointly
and severally, liable as a guarantor or otherwise as contemplated hereby and
have not defaulted on its or their portions thereof, shall be only its pro rata
portion of such obligation.
"INDEMNIFIED PARTY" means any or all of the Lenders, the Arranger and
the Administrative Agent.
"INSUFFICIENCY" means, with respect to any Plan, the amount, if any, of
its unfunded benefit liabilities, as defined in Section 4001(a)(18) of ERISA.
"INTEREST PERIOD" means, for each Eurodollar Rate Advance comprising
part of the same A Borrowing, the period beginning on the date of such Advance
or the date of the Conversion of any Advance into such Advance and ending on the
last day of the period selected by the Borrower pursuant to the provisions below
and, thereafter, each subsequent period commencing on the last day of the
immediately preceding Interest Period and ending on the last day of the period
selected by the Borrower pursuant to the provisions below. The duration of each
such Interest Period for a Eurodollar Rate Advance shall be (i) one, two, three
or six months upon notice received by the Administrative Agent not later than
12:00 noon (New York City time) on the third Business Day prior to the first day
of such Interest Period, or (ii) subject to availability to each Lender, nine or
twelve months upon notice received by the Administrative Agent not later than
12:00 noon (New York City time) on the fourth Business Day prior to the first
day of such Interest Period, in each case as the Borrower may select; provided,
however, that:
(A) the duration of any Interest Period which commences before the
Termination Date and would otherwise end after the Termination Date shall end on
the Termination Date;
(B) if the last day of such Interest Period would otherwise occur on
a day which is not a Business Day, such last day shall be extended to the next
succeeding Business Day, except if such extension would cause such last day to
occur in a new calendar month, then such last day shall occur on the next
preceding Business Day;
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(C) Interest Periods commencing on the same date for A Advances
comprising the same A Borrowing shall be of the same duration; and
(D) any Interest Period which begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding day
in the calendar month at the end of such Interest Period) shall, subject to
clause (A) above, end on the last Business Day of a calendar month.
"LENDERS" means the Initial Lenders, each bank or other financial
institution that shall become a party hereto pursuant to Section 2.20, each
Eligible Assignee that shall become a party hereto pursuant to Section 8.07(a),
(b) and (d) and, except when used in reference to an A Advance, an A Borrowing,
a Commitment or a term related to any of the foregoing, each Designated Bidder.
"LIEN" means any lien, security interest or other charge or
encumbrance, or any assignment of the right to receive income, or any other type
of preferential arrangement, in each case to secure any Debt or any Guaranty of
any Person; provided that (i) the creation of interests in property of the
character commonly referred to as a "royalty interest" or "overriding royalty
interest", farmouts, joint operating or unitization agreements, or other similar
transactions in the ordinary course of business and (ii) borrowings under life
insurance policies as described in clause (4) of the proviso to the definition
of "Debt" shall not be deemed to create a Lien.
"LL&E" means The Louisiana Land and Exploration Company, a Maryland
corporation and a wholly-owned Subsidiary of the Borrower.
"MAJORITY LENDERS" means at any time Lenders holding at least 51% of
the then aggregate unpaid principal amount of the Notes held by Lenders, or, if
no such principal amount is then outstanding, Lenders having at least 51% of the
Commitments.
"MARGIN STOCK" means "margin stock" as defined in Regulation U of the
Board of Governors of the Federal Reserve System, as in effect from time to
time.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on the
financial condition or operations of the Borrower and its consolidated
Subsidiaries on a consolidated basis.
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"MATERIAL PLAN" means any Plan the assets of which exceed $50,000,000
or the liabilities of which for unfunded vested benefits determined on a plan
termination basis (in accordance with Title IV of ERISA) exceed $10,000,000.
"MATERIAL SUBSIDIARY" means, from time to time, any Subsidiary of the
Borrower (other than a Project Financing Subsidiary) then owning assets
(determined on a consolidated basis) that equal or exceed 10% of the book value
of the consolidated assets of the Borrower and its consolidated Subsidiaries at
such time.
"MOODY'S" means Moody's Investors Service.
"MORGAN" means Morgan Guaranty Trust Company of New York, and its
successors.
"MORGAN GOLD LOANS" means the obligations of LL&E under the respective
Credit Agreements dated as of December 23, 1994 and March 31, 1995 between LL&E
and Morgan, or under any amended or additional credit agreements on
substantially similar terms, provided that the aggregate outstanding amount
borrowed thereunder shall at no time exceed 35,000 ounces of gold.
"MULTIEMPLOYER PLAN" means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate is making or
accruing an obligation to make contributions, or has within any of the preceding
five plan years made or accrued an obligation to make contributions, such plan
being maintained pursuant to one or more collective bargaining agreements.
"MULTIPLE EMPLOYER PLAN" means a single employer plan, as defined in
Section 4001(a)(15) of ERISA, which (i) is maintained for employees of the
Borrower or an ERISA Affiliate and at least one Person other than the Borrower
and its ERISA Affiliates or (ii) was so maintained and in respect of which the
Borrower or an ERISA Affiliate could have liability under Section 4064 or 4069
of ERISA in the event such plan has been or were to be terminated.
"NEW LENDER" has the meaning specified in Section 2.20(b).
"NEW LENDER AGREEMENT" has the meaning specified in Section 2.20(b).
"NOTE" means a promissory note of the Borrower payable to the order of
any Lender, in substantially the form of Exhibit A hereto, evidencing the
aggregate indebtedness of the Borrower to such Lender resulting from the
Advances made by such Lender.
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"NOTICE OF A BORROWING" has the meaning specified in Section 2.02(a).
"NOTICE OF B BORROWING" has the meaning specified in Section 2.19(a).
"OBJECTING LENDERS" has the meaning specified in Section 2.21(a).
"OFFERED INCREASE AMOUNT" has the meaning specified in Section 2.20(a).
"ORIGINAL EFFECTIVE DATE" means February 25, 1998.
"OVERDUE REIMBURSEMENT OBLIGATIONS" means with respect to any Person
non-contingent obligations of such Person to reimburse a bank or other Person in
respect of amounts paid under a letter of credit or similar instrument that are
not paid on or prior to the fifth Business Day after the due date therefor.
"PBGC" means the Pension Benefit Guaranty Corporation (or any
successor).
"PERMITTED ASSETS" means (i) hydrocarbon or other reserves (including
proved, probable, possible or speculative reserves), (ii) properties, assets,
rights or business related to reserves (including real property, gathering
systems, plants, pipelines, equipment and processing and treatment facilities),
(iii) other fixed or operating assets and (iv) Equity Interests in any and all
Business Entities that are or become Subsidiaries of the Borrower owning assets
referred to in any of the foregoing clauses.
"PERMITTED LIENS" means
(i) inchoate Liens and charges imposed by law and incidental to
construction, maintenance, development or operation of properties, or the
operation of business, in the ordinary course of business if payment of the
obligation secured thereby is not yet overdue or if the validity or amount of
which is being contested in good faith by the Borrower or any Subsidiary of the
Borrower;
(ii) Liens for taxes, assessments, obligations under workers'
compensation or other social security legislation or other governmental
requirements, charges or levies, in each case not yet overdue;
(iii) Liens reserved in any oil, gas or other mineral lease entered
into in the ordinary course of business for rent, royalty or delay rental under
such lease and for compliance with the terms of such lease;
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(iv) easements, servitudes, rights-of-way and other rights,
exceptions, reservations, conditions, limitations, covenants and other
restrictions which do not materially interfere with the operation, value or use
of the properties affected thereby;
(v) conventional provisions contained in any contracts or agreements
affecting properties under which the Borrower or a Subsidiary of the Borrower is
required immediately before the expiration, termination or abandonment of a
particular property to reassign to the Borrower's or a Subsidiary's predecessor
in title all or a portion of the Borrower's or such Subsidiary's rights, titles
and interests in and to all or a portion of such property;
(vi) any Lien reserved in a grant or conveyance in the nature of a
farm-out or conditional assignment to the Borrower or any of its Subsidiaries
entered into in the ordinary course of business on reasonable terms to secure
undertakings of the Borrower or such Subsidiary in such grant or conveyance;
(vii) any Lien consisting of (A) statutory landlord's liens under
leases to which the Borrower or any Subsidiary of the Borrower is a party or
other Liens on leased property reserved in leases thereof for rent or for
compliance with the terms of such leases, (B) rights reserved to or vested in
any municipality or governmental, statutory or public authority to control or
regulate any property of the Borrower or any of its Subsidiaries or to use such
property in any manner which does not materially impair the use of such property
for the purposes for which it is held by the Borrower or any such Subsidiary,
(C) obligations or duties to any municipality or public authority with respect
to any franchise, grant, license, lease or permit and the rights reserved or
vested in any governmental authority or public utility to terminate any such
franchise, grant, license, lease or permit or to condemn or expropriate any
property, and (D) zoning laws and ordinances and municipal regulations;
(viii) Liens on Equity Interests in, or Debt or other obligations of,
CLAM owned by the Borrower or any of its Subsidiaries, which Liens secure Debt
of CLAM; and
(ix) any Lien on any assets (including Equity Interests and other
obligations) securing Debt incurred or assumed for the purpose of financing all
or any part of the cost of acquiring, improving, installing, designing,
engineering, developing (including drilling), or constructing such assets,
provided that such Lien attaches to such assets concurrently with or within 360
days after the acquisition or completion of development, construction or
installation thereof or improvement thereto.
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"PERSON" means an individual, a Business Entity, or a country or any
political subdivision thereof or any agency or instrumentality of such country
or subdivision.
"PLAN" means a Single Employer Plan or a Multiple Employer Plan.
"PROJECT FINANCING" means any Debt incurred to finance or refinance the
acquisition, improvement, installation, design, engineering, construction,
development, completion, maintenance or operation of, or otherwise in respect
of, all or any portion of any project, or any asset related thereto, and any
Guaranty with respect thereto, other than any portion of such Debt or Guaranty
permitting or providing for recourse against the Borrower or any of its
Subsidiaries other than (i) recourse to the Equity Interests in, Debt or other
obligations of, or assets of, one or more Project Financing Subsidiaries, and
(ii) such recourse as exists under any Contingent Guaranty.
"PROJECT FINANCING SUBSIDIARY" means any Subsidiary of the Borrower
whose principal purpose is to incur Project Financing, or to become a direct or
indirect partner, member or other equity participant or owner in a Business
Entity so created, and substantially all the assets of which Subsidiary or
Business Entity are limited to those assets being financed (or to be financed),
or the operation of which is being financed (or to be financed), in whole or in
part by a Project Financing or to Equity Interests in, or Debt or other
obligations of, one or more other such Subsidiaries or Business Entities.
"RE-ALLOCATION DATE" has the meaning specified in Section 2.20(e).
"REFERENCE BANKS" means Chase Bank of Texas, N.A., Morgan and Citibank,
N.A.
"REGISTER" has the meaning specified in Section 8.07(c).
"REQUIRED LENDERS" means Lenders (i) that are not Objecting Lenders
with respect to any previous Extension Request and (ii) that have Commitment
Percentages aggregating at least 51% of the aggregate Commitment Percentages of
such non-Objecting Lenders.
"S&P" means Standard and Poor's Ratings Group, a division of
McGraw-Hill, Inc. on the date hereof.
"SHORT-TERM REVOLVING CREDIT AGREEMENT" means the Short-Term Revolving
Credit Agreement dated as of February 25, 1998 among the Borrower, the financial
institutions party thereto, Morgan, as administrative agent for such financial
institutions, Citibank, N.A., as syndication agent for such financial
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<PAGE> 19
institutions, and Chase Bank of Texas, N.A. and NationsBank of Texas, N.A., as
co-documentation agents for such financial institutions.
"SINGLE EMPLOYER PLAN" means a single employer plan, as defined in
Section 4001(a)(15) of ERISA, that (i) is maintained for employees of the
Borrower or an ERISA Affiliate and no Person other than the Borrower and its
ERISA Affiliates or (ii) was so maintained and in respect of which the Borrower
or an ERISA Affiliate could have liability under Section 4069 of ERISA in the
event such plan has been or were to be terminated.
"STATED TERMINATION DATE" means February 24, 2003, or such later date
as shall be determined pursuant to the provisions of Section 2.21 with respect
to non-Objecting Lenders provided that if such date is not a Business Day, the
Stated Termination Date shall be the next preceding Business Day.
"SUBSIDIARY" means, as to any Person, any Business Entity of which
shares of stock or other Equity Interests having ordinary voting power (other
than stock or such other Equity Interests having such power only by reason of
the happening of a contingency) to elect a majority of the board of directors or
other managers of such Business Entity are at the time owned, directly or
indirectly through one or more Subsidiaries, or both, by such Person. Unless
otherwise qualified, all references to a "Subsidiary" or to "Subsidiaries" in
this Agreement shall refer to a Subsidiary or Subsidiaries of the Borrower.
"TERMINATION DATE" means the earlier of (i) the Stated Termination Date
and (ii) the date of termination in whole of the Commitments pursuant to Section
2.04 or 6.01.
"TERMINATION EVENT" means (i) a "reportable event," as such term is
described in Section 4043 of ERISA (other than a "reportable event" not subject
to the provision for 30-day notice to the PBGC), or an event described in
Section 4062(e) of ERISA, or (ii) the withdrawal of the Borrower or any ERISA
Affiliate from a Multiple Employer Plan during a plan year in which it was a
"substantial employer," as such term is defined in Section 4001(a)(2) of ERISA,
or the incurrence of liability by the Borrower or any ERISA Affiliate under
Section 4064 of ERISA upon the termination of a Multiple Employer Plan, or (iii)
the filing of a notice of intent to terminate a Plan or the treatment of a Plan
amendment as a termination under Section 4041 of ERISA, or (iv) the institution
of proceedings to terminate a Plan by the PBGC under Section 4042 of ERISA, or
(v) the conditions set forth in Section 302(f)(1)(A) and (B) of ERISA to the
creation of a lien upon property or rights to property of the Borrower or any
ERISA Affiliate for failure to make a required payment to a Plan are satisfied,
or (vi) the adoption of an amendment to a Plan requiring the provision of
security to such Plan, pursuant to Section 307 of ERISA, or (vii) any other
event or condition
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which might constitute grounds under Section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer, any Plan.
"TYPE" has the meaning specified in the definition of "A Advance".
"WITHDRAWAL LIABILITY" shall have the meaning given such term under
Part I of Subtitle E of Title IV of ERISA.
SECTION 1.2. Computation of Time Periods. Unless otherwise stated in
this Agreement, in the computation of a period of time from a specified date to
a later specified date, the word "from" means "from and including" and the words
"to" and "until" each means "to but excluding."
SECTION 1.3. Accounting and Other Terms. All accounting terms not
specifically defined herein shall be construed in accordance with generally
accepted accounting principles either (i) consistent with those principles
applied in the preparation of the annual financial statements referred to in
Section 4.01(e), or (ii) not so materially inconsistent with such principles
that a covenant contained in Section 5.01 or 5.02 would be calculated or
construed in a materially different manner or with materially different results
than if such covenant were calculated or construed in accordance with clause (i)
of this Section 1.03. "INCLUDE", "INCLUDES" and "INCLUDING" shall be deemed to
be followed by "without limitation" whether or not they are in fact followed by
such words or words of like import. References to any agreement or contract are
to such agreement or contract as amended, modified or supplemented from time to
time in accordance with the terms hereof and thereof.
SECTION 1.4. References. The words "HEREOF", "HEREIN" and "HEREUNDER"
and words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement, and
Article, Section, Schedule and Exhibit references are to this Agreement unless
otherwise specified.
ARTICLE 2
AMOUNTS AND TERMS OF THE ADVANCES
SECTION 2.1. The A Advances. Each Lender severally agrees, on the terms
and conditions hereinafter set forth, to make A Advances to the Borrower from
time to time on any Business Day during the period from the date hereof to and
including the Termination Date in an aggregate amount not to exceed at any time
outstanding the amount set forth opposite such Lender's name on the signature
pages hereof under the caption "COMMITMENTS", or, if such Lender has entered
into any Assignment and Acceptance or Commitment Increase Agreement
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or a New Lender Agreement, set forth for such Lender in the Register maintained
by the Administrative Agent pursuant to Section 8.07(c), as such amount may be
reduced pursuant to Section 2.04 (such Lender's "COMMITMENT"), provided that the
aggregate amount of the Commitments of the Lenders shall be deemed used from
time to time to the extent of the aggregate amount of the B Advances then
outstanding and such deemed use of the aggregate amount of such Commitments
shall be applied to all the Lenders ratably according to their respective
Commitments (such deemed use of the aggregate amount of the Commitments being a
"B REDUCTION"). Each A Borrowing shall be in an aggregate amount of $10,000,000
in the case of an A Borrowing comprised of Base Rate Advances and $25,000,000 in
the case of an A Borrowing comprised of Eurodollar Rate Advances, or, in either
case an integral multiple of $1,000,000 in excess thereof (or, in the case of an
A Borrowing of Base Rate Advances, the aggregate unused Commitments, if less)
and shall consist of A Advances of the same Type made on the same day by the
Lenders ratably according to their respective Commitments. Within the limits of
each Lender's Commitment, the Borrower may make more than one Borrowing on any
Business Day and may borrow, prepay pursuant to Section 2.10, and reborrow under
this Section 2.01.
SECTION 2.2. Making the A Advances.
(a) Each A Borrowing shall be made on notice by the Borrower to the
Administrative Agent (a "NOTICE OF A BORROWING") received by the Administrative
Agent, (i) in the case of a proposed A Borrowing comprised of Base Rate
Advances, not later than 10:00 A.M. (New York City time) on the Business Day of
such proposed A Borrowing, and (ii) in the case of a proposed A Borrowing
comprised of Eurodollar Rate Advances, not later than 12:00 noon (New York City
time) on the third Business Day prior to the date of such proposed A Borrowing.
Each Notice of A Borrowing shall be by telecopy, telefax or other
teletransmission or by telephone (and if by telephone, confirmed promptly by
telecopier, telefax or other teletransmission), in substantially the form of
Exhibit B hereto, specifying therein the requested (w) date of such A Borrowing,
(x) Type of A Advances comprising such A Borrowing, (y) aggregate amount of such
A Borrowing, and (z) in the case of an A Borrowing comprised of Eurodollar Rate
Advances, the initial Interest Period for each such A Advance. Each Lender
shall, before 1:00 p.m. (New York City time) on the date of such A Borrowing,
make available for the account of its Applicable Lending Office to the
Administrative Agent at its address at Morgan, 60 Wall Street, 22nd Floor, New
York, New York 10260, Reference: Burlington Resources Inc., or at such other
location designated by notice from the Administrative Agent to the Lenders
pursuant to Section 8.02, in same day funds, such Lender's ratable portion of
such A Borrowing. Immediately after the Administrative Agent's receipt of such
funds and upon fulfillment of the
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applicable conditions set forth in Article 3, the Administrative Agent will make
such funds available to the Borrower at Morgan, 60 Wall Street, 22nd Floor, New
York, New York 10260, or at any account of the Borrower maintained by the
Administrative Agent (or any successor Administrative Agent) designated by the
Borrower and agreed to by the Administrative Agent (or such successor
Administrative Agent), in same day funds.
(b Each Notice of A Borrowing shall be irrevocable and binding on the
Borrower. In the case of any A Borrowing which the related Notice of A Borrowing
specified is to be comprised of Eurodollar Rate Advances, if such A Advances are
not made as a result of any failure to fulfill on or before the date specified
for such A Borrowing the applicable conditions set forth in Article 3, the
Borrower shall indemnify each Lender against any loss, cost or expense incurred
by such Lender as a result of such failure, including any loss, cost or expense
incurred by reason of the liquidation or reemployment of deposits or other funds
acquired by such Lender to fund the A Advance to be made by such Lender as part
of such A Borrowing.
(c Unless the Administrative Agent shall have received notice from a
Lender prior to the date of any A Borrowing that such Lender will not make
available to the Administrative Agent such Lender's ratable portion of such A
Borrowing, the Administrative Agent may assume that such Lender has made such
portion available to the Administrative Agent on the date of such A Borrowing in
accordance with subsection (a) of this Section 2.02 and the Administrative Agent
may, in reliance upon such assumption, make available to the Borrower on such
date a corresponding amount. If and to the extent such Lender shall not have so
made such ratable portion available to the Administrative Agent, such Lender and
the Borrower severally agree to repay to the Administrative Agent forthwith on
demand such corresponding amount together with interest thereon, for each day
from the date such amount is made available to the Borrower until the date such
amount is repaid to the Administrative Agent, at the Effective Federal Funds
Rate for such day. If such Lender shall repay to the Administrative Agent such
corresponding amount, such amount so repaid shall constitute such Lender's A
Advance to the Borrower as part of such A Borrowing for purposes of this
Agreement.
(d The failure of any Lender to make the A Advance to be made by it
as part of any A Borrowing shall not relieve any other Lender of its obligation,
if any, hereunder to make its A Advance on the date of such A Borrowing, but no
Lender shall be responsible for the failure of any other Lender to make the A
Advance to be made by such other Lender on the date of any A Borrowing.
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SECTION 2.3. Fees.
(a FACILITY FEE. The Borrower agrees to pay to the Administrative
Agent for the account of each Lender (other than a Designated Bidder) a facility
fee on the average daily amount of such Lender's Commitment, whether or not used
or deemed used, from the date hereof in the case of each Initial Lender and from
the effective date specified in the Assignment and Acceptance or Commitment
Increase Agreement pursuant to which it became a Lender in the case of each
other Lender, in each case until the Termination Date, payable quarterly in
arrears on the last day of each March, June, September and December during the
term of such Lender's Commitment and on the Termination Date, at a rate per
annum equal to the Facility Fee Percentage in effect from time to time.
(b AGENCY FEE. The Borrower agrees to pay to the Administrative
Agent, for its own account, such agency fees as may be separately agreed to in
writing by the Borrower and the Administrative Agent, such fees to be in the
amounts and payable on the dates as may be so agreed to.
(c ARRANGEMENT FEE. The Borrower agrees to pay to the Administrative
Agent, for its own account, an arrangement fee in the amount and payable on the
date separately agreed to in writing by the Administrative Agent and the
Borrower.
SECTION 2.4. Reduction of the Commitments. The Borrower shall have the
right, upon at least three Business Days' notice to the Administrative Agent, to
terminate in whole or reduce ratably in part the unused portions of the
Commitments of the Lenders (being the amount by which such Commitments exceed
the aggregate outstanding principal amount of all Advances), provided that each
partial reduction shall be in the aggregate amount of $20,000,000 or any whole
multiple of $1,000,000 in excess thereof.
SECTION 2.5. Repayment of A Advances. The Borrower shall repay to each
Lender on the Termination Date the aggregate principal amount of the A Advances,
together with accrued interest thereon, then owing to such Lender.
SECTION 2.6. Interest on A Advances.
(a ORDINARY INTEREST. The Borrower shall pay interest on the unpaid
principal amount of each A Advance owing to each Lender from the date of such A
Advance until such principal amount is due (whether at stated maturity, by
acceleration or otherwise), at the following rates:
(i BASE RATE ADVANCES. During such periods as such A Advance
is a Base Rate Advance, a rate per annum equal at all times to the Base
Rate in effect from time to time, payable quarterly in arrears on
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the last day of each March, June, September and December during such
periods and on the date such Base Rate Advance shall be Converted or
due (whether at stated maturity, by acceleration or otherwise).
(ii Eurodollar Rate Advances. During such periods as such A
Advance is a Eurodollar Rate Advance, a rate per annum equal at all
times during each Interest Period for such A Advance to the sum of the
Eurodollar Rate for such Interest Period plus the Eurodollar Rate
Margin in effect from time to time, payable on the last day of each
such Interest Period and, if any such Interest Period has a duration of
more than three months, on each day which occurs during such Interest
Period every three months from the first day of such Interest Period
and, if such A Advance is Converted into a Base Rate Advance on any
date other than the last day of any Interest Period for such A Advance,
on the date of such Conversion or, if later, the Business Day on which
the Borrower shall have received at least one Business Day's prior
notice from the Administrative Agent or the applicable Lender of the
amount of unpaid interest accrued on such A Advances to the date of
such Conversion.
(b DEFAULT INTEREST. The Borrower shall pay interest on the unpaid
principal amount of each Advance that is not paid when due (whether at stated
maturity, by acceleration or otherwise) from the date on which such amount is
due until such amount is paid in full, payable on demand, at a rate per annum
equal at all times (i) from such due date to the last day of the then existing
Interest Period therefor, in the case of each Eurodollar Rate Advance, to 1% per
annum above the interest rate per annum required to be paid on such A Advance
immediately prior to the date on which such amount became due and (ii) from and
after the last day of the then existing Interest Period therefor, in the case of
each Eurodollar Rate Advance, and at all times in the case of each Base Rate
Advance or B Advance, to 1% per annum above the Base Rate in effect from time to
time.
SECTION 2.7. Additional Interest on Eurodollar Rate Advances. If any
Lender shall determine in good faith that reserves under regulations of the
Board of Governors of the Federal Reserve System are required to be maintained
by it in respect of, or a portion of its costs of maintaining reserves under
such regulations is properly attributable to, one or more of its Eurodollar Rate
Advances, the Borrower shall pay to such Lender additional interest on the
unpaid principal amount of each such Eurodollar Rate Advance payable on the same
day or days on which interest is payable on such A Advance, at an interest rate
per annum up to but not exceeding at all times during each Interest Period for
such A Advance the excess of (i) the rate obtained by dividing the Eurodollar
Rate for such Interest Period by a percentage equal to 100% minus the Eurodollar
Reserve Percentage, if any, for such Lender for such Interest Period over (ii)
the Eurodollar Rate for such Interest Period. Any Lender wishing to require
payment of such additional
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interest (x) shall so notify the Borrower and the Administrative Agent, in which
case such additional interest on the Eurodollar Rate Advances of such Lender
shall be payable to such Lender at the place indicated in such notice with
respect to each Interest Period commencing at least five Business Days after the
giving of such notice and (y) shall furnish to the Borrower at least five
Business Days prior to each date on which interest is payable on the Eurodollar
Rate Advances an officer's certificate setting forth the amount to which such
Lender is then entitled under this Section, which certificate shall be
conclusive and binding for all purposes, absent manifest error.
SECTION 2.8. Interest Rate Determination.
(a Each Reference Bank agrees to furnish to the Administrative Agent
timely information for the purpose of determining each Eurodollar Rate. If any
one or more of the Reference Banks shall not furnish such timely information to
the Administrative Agent for the purpose of determining any such interest rate,
the Administrative Agent shall determine such interest rate on the basis of
timely information furnished by the remaining Reference Banks.
(b The Administrative Agent shall give prompt notice to the Borrower
and the Lenders of the applicable interest rate determined by the Administrative
Agent for purposes of Section 2.06(a)(i) or (ii), and the applicable rate, if
any, furnished by each Reference Bank for the purpose of determining the
applicable interest rate under Section 2.06(a)(ii).
(c If fewer than two Reference Banks furnish timely information to
the Administrative Agent for determining the Eurodollar Rate for any applicable
A Advances,
(i the Administrative Agent shall give the Borrower and each
Lender prompt notice by telephone (confirmed in writing) that the
interest rate cannot be determined for such applicable A Advances,
(ii each such A Advance that is a Eurodollar Rate Advance will
automatically, on the last day of the then existing Interest Period
therefor, Convert into a Base Rate Advance (or if such A Advance is
then a Base Rate Advance, will continue as a Base Rate Advance), and
(iii the obligations of the Lenders to make, or to Convert A
Advances into, Eurodollar Rate Advances, as the case may be, shall be
suspended until the Administrative Agent shall notify the Borrower and
the Lenders that the circumstances causing such suspension no longer
exist.
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(d If, with respect to any Eurodollar Rate Advances, the Majority
Lenders determine and give notice to the Administrative Agent that as a result
of conditions in or generally affecting the relevant market, the rates of
interest determined on the basis of the Eurodollar Rate for any Interest Period
for such A Advances will not adequately reflect the cost to such Majority
Lenders of making, funding or maintaining their respective Eurodollar Rate
Advances for such Interest Period, the Administrative Agent shall forthwith so
notify the Borrower and the Lenders, whereupon,
(i each such Eurodollar Rate Advance will automatically, on
the last day of the then existing Interest Period therefor, Convert
into a Base Rate Advance, and
(ii the obligation of the Lenders to make, or to Convert A
Advances into, Eurodollar Rate Advances shall be suspended until the
Administrative Agent shall notify the Borrower and the Lenders that the
circumstances causing such suspension no longer exist.
(e If the Borrower shall fail to select the duration of any Interest
Period for any Eurodollar Rate Advances in accordance with the provisions
contained in the definition of "Interest Period" in Section 1.01, the
Administrative Agent will forthwith so notify the Borrower and the Lenders and
such Eurodollar Rate Advances will automatically, on the last day of the then
existing Interest Period therefor, Convert into Base Rate Advances.
(f On the date on which the aggregate unpaid principal amount of A
Advances comprising any A Borrowing shall be reduced, by payment or prepayment
or otherwise, to less than $10,000,000, such A Advances shall, if they are
Eurodollar Rate Advances, automatically Convert into Base Rate Advances, and on
and after such date the right of the Borrower to Convert such A Advances into
Eurodollar Rate Advances shall terminate; provided, however, that if and so long
as each such A Advance shall be, or be elected to be Converted to, Eurodollar
Rate Advances having the same Interest Period as Eurodollar Rate Advances
comprising another A Borrowing or other A Borrowings, and the aggregate unpaid
principal amount of all such Eurodollar Rate Advances shall, or upon such
Conversion will, equal or exceed $20,000,000, the Borrower shall have the right
to continue all such Eurodollar Rate Advances as, or to Convert all such A
Advances into, Eurodollar Rate Advances having such Interest Period.
SECTION 2.9. Voluntary Conversion of A Advances. The Borrower may on
any Business Day, upon notice given to the Administrative Agent, not later than
12:00 noon (New York City time) on the third Business Day prior to the date of
the proposed Conversion, and subject to the provisions of Section 2.08, 2.11
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and 2.13, Convert all A Advances of one Type comprising the same A Borrowing
into A Advances of the other Type; provided, however, that any Conversion of any
Eurodollar Rate Advances into Base Rate Advances made on any day other than the
last day of an Interest Period for such Eurodollar Rate Advances shall be
subject to the provisions of Section 8.04(b). Each such notice of a Conversion
shall, within the restrictions specified above, specify (i) the date of such
Conversion, (ii) the A Advances to be Converted, and (iii) if such Conversion is
into Eurodollar Rate Advances, the duration of the Interest Period for each such
Eurodollar Rate Advance.
SECTION 2.10. Prepayments. The Borrower may, upon (i) in the case of
Eurodollar Rate Advances, at least three Business Days notice or (ii) in the
case of Base Rate Advances, telephonic notice not later than 12:00 noon (New
York City time) on the date of prepayment, to the Administrative Agent which
specifies the proposed date and aggregate principal amount of the prepayment and
the Type of A Advances to be prepaid, and if such notice is given the Borrower
shall, prepay the outstanding principal amounts of the A Advances comprising the
same A Borrowing in whole or ratably in part, together with accrued interest to
the date of such prepayment on the amount prepaid; provided, however, that (x)
each partial prepayment shall be in an aggregate principal amount not less than
$10,000,000 or an integral multiple of $1,000,000 in excess thereof and (y) in
the event of any such prepayment of Eurodollar Rate Advances on any day other
than the last day of an Interest Period for such Eurodollar Rate Advances, the
Borrower shall be obligated to reimburse the Lenders in respect thereof pursuant
to, and to the extent required by, Section 8.04(b); provided, further, however,
that the Borrower will use its best efforts to give notice to the Administrative
Agent of the proposed prepayment of Base Rate Advances on the Business Day prior
to the date of such proposed prepayment.
SECTION 2.11. Increased Costs.
(a If, due to either (i) the introduction after the date of this
Agreement of or any change after the date of this Agreement (including any
change by way of imposition or increase of reserve requirements or assessments
other than those referred to in the definition of "Eurodollar Reserve
Percentage" contained in Section 1.01) in or in the interpretation of any law or
regulation or (ii) the compliance with any guideline or request issued or made
after the date of this Agreement from or by any central bank or other
governmental authority (whether or not having the force of law), in each case
above other than those referred to in Section 2.12, there shall be any increase
in the cost to any Lender of agreeing to make, fund or maintain, or of making,
funding or maintaining, Eurodollar Rate Advances funded in the interbank
Eurodollar market, then the Borrower shall from time to time, upon demand by
such Lender (with a copy of such demand to
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the Administrative Agent), pay to the Administrative Agent for the account of
such Lender additional amounts sufficient to reimburse such Lender for all such
increased costs (except those incurred more than 60 days prior to the date of
such demand; for the purposes hereof any cost or expense allocable to a period
prior to the publication or effective date of such an introduction, change,
guideline or request shall be deemed to be incurred on the later of such
publication or effective date). Each Lender agrees to use its best reasonable
efforts promptly to notify the Borrower of any event referred to in clause (i)
or (ii) above, provided that the failure to give such notice shall not affect
the rights of any Lender under this Section 2.11(a) (except as otherwise
expressly provided above in this Section 2.11(a)). A certificate as to the
amount of such increased cost, submitted to the Borrower and the Administrative
Agent by such Lender, shall be conclusive and binding for all purposes, absent
manifest error. After one or more Lenders have notified the Borrower of any
increased costs pursuant to this Section 2.11, the Borrower may specify by
notice to the Administrative Agent and the affected Lenders that, after the date
of such notice whenever the election of a Eurodollar Rate Advance by the
Borrower for an Interest Period or portion thereof would give rise to such
increased costs, such election shall not apply to the A Advances of such Lender
or Lenders during such Interest Period or portion thereof, and, in lieu thereof,
such A Advances shall during such Interest Period or portion thereof be Base
Rate Advances. Each Lender agrees to use its best reasonable efforts (including
a reasonable effort to change its Applicable Lending Office or to transfer its
affected A Advances to an Affiliate of such Lender) to avoid, or minimize the
amount of, any demand for payment from the Borrower under this Section 2.11,
provided that such avoidance would not, in the reasonable judgment of such
Lender, be otherwise disadvantageous to such Lender.
(b In the event that any Lender shall change its Eurodollar Lending
Office and such change results (at the time of such change) in increased costs
to such Lender, the Borrower shall not be liable to such Lender for such
increased costs incurred by such Lender to the extent, but only to the extent,
that such increased costs shall exceed the increased costs which such Lender
would have incurred if the Eurodollar Lending Office of such Lender had not been
so changed, but, subject to subsection (a) of this Section 2.11 and to Section
2.13, nothing herein shall require any Lender to change its Eurodollar Lending
Office for any reason.
SECTION 2.12. Increased Capital. If either (i) the introduction of or
any change in or in the interpretation of any law or regulation or (ii)
compliance by any Lender with any guideline or request from any central bank or
other governmental authority (whether or not having the force of law) affects or
would affect the amount of capital required or expected to be maintained by such
Lender or any corporation controlling such Lender and such Lender determines
that the
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amount of such capital is increased by or based upon the existence of such
Lender's commitment to lend hereunder and other commitments of this type, then,
within ten days after demand, and delivery to the Borrower of the certificate
referred to in the last sentence of this Section 2.12 by such Lender (with a
copy of such demand to the Administrative Agent), the Borrower shall pay to the
Administrative Agent for the account of such Lender, from time to time as
specified by such Lender, additional amounts sufficient to compensate such
Lender or such corporation in the light of such circumstances, to the extent
that such Lender reasonably determines such increase in capital to be allocable
to the existence of such Lender's commitment to lend hereunder (except any such
increase in capital incurred more than, or compensation attributable to the
period before, 90 days prior to the date of such demand; for the purposes hereof
any increase in capital allocable to, or compensation attributable to, a period
prior to the publication or effective date of such an introduction, change,
guideline or request shall be deemed to be incurred on the later of such
publication or effective date). Each Lender agrees to use its best reasonable
efforts promptly to notify the Borrower of any event referred to in clause (i)
or (ii) above, provided that the failure to give such notice shall not affect
the rights of any Lender under this Section 2.12 (except as otherwise expressly
provided above in this Section 2.12). A certificate in reasonable detail as to
the basis for, and the amount of, such compensation submitted to the Borrower
and the Administrative Agent by such Lender shall, in the absence of manifest
error, be conclusive and binding for all purposes.
SECTION 2.13. Illegality. Notwithstanding any other provision of this
Agreement, if the introduction of or any change in or in the interpretation of
any law or regulation shall make it unlawful, or any central bank or other
governmental authority shall assert that it is unlawful, for any Lender or its
Applicable Lending Office to perform its obligations hereunder to make
Eurodollar Rate Advances or to continue to fund or maintain such Advances
hereunder, such Lender may, by notice to the Borrower and the Administrative
Agent, suspend the right of the Borrower to elect Eurodollar Rate Advances from
such Lender and, if necessary in the reasonable opinion of such Lender to comply
with such law or regulation, Convert all such Eurodollar Rate Advances of such
Lender to Base Rate Advances at the latest time permitted by the applicable law
or regulation, and such suspension and, if applicable, such Conversion shall
continue until such Lender notifies the Borrower and the Administrative Agent
that the circumstances making it unlawful for such Lender to perform such
obligations no longer exist (which such Lender shall promptly do when such
circumstances no longer exist). So long as the obligation of any Lender to make
Eurodollar Rate Advances has been suspended under this Section 2.13, all Notices
of A Borrowing specifying A Advances of such Type shall be deemed, as to such
Lender, to be requests for Base Rate Advances. Each Lender agrees to use its
best
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reasonable efforts (including a reasonable effort to change its Applicable
Lending Office or to transfer its affected A Advances to an affiliate) to avoid
any such illegality, provided that such avoidance would not, in the reasonable
judgment of such Lender, be otherwise disadvantageous to such Lender.
SECTION 2.14. Payments and Computations.
(a The Borrower shall make each payment hereunder (including under
Section 2.03, 2.05 or 2.06) and under the Notes, whether the amount so paid is
owing to any or all of the Lenders or to the Administrative Agent, not later
than 1:00 P.M. (New York City time) without setoff, counterclaim, or any other
deduction whatsoever, on the day when due in U.S. dollars to the Administrative
Agent at Morgan, 60 Wall Street, 22nd Floor, New York, New York 10260,
Reference: Burlington Resources Inc., or at such other location designated by
notice to the Borrower from the Administrative Agent and agreed to by the
Borrower, in same day funds. Each such payment made by the Borrower for the
account of any Lender hereunder, when so made to the Administrative Agent, shall
be deemed duly made for all purposes of this Agreement and the Notes, except
that if at any time any such payment is rescinded or must otherwise be returned
by the Administrative Agent or any Lender upon the bankruptcy, insolvency or
reorganization of the Borrower or otherwise, such payment shall be deemed not to
have been so made. The Administrative Agent will promptly thereafter cause to be
distributed like funds relating to the payment of principal or interest or fees
ratably (other than amounts payable pursuant to Section 2.07, 2.11, 2.12, 2.13,
2.15, 2.19 or 8.04(b)) to the Lenders for the account of their respective
Applicable Lending Offices, and like funds relating to the payment of any other
amount payable to any Lender to such Lender for the account of its Applicable
Lending Office, in each case to be applied in accordance with the terms of this
Agreement. Upon its acceptance of an Assignment and Acceptance and recording of
the information contained therein in the Register pursuant to Section 8.07(d),
from and after the effective date specified in such Assignment and Acceptance,
the Administrative Agent shall make all payments hereunder and under the Notes
in respect of the interest assigned thereby to the Lender assignee thereunder,
and the parties to such Assignment and Acceptance shall make all appropriate
adjustments in such payments for periods prior to such effective date directly
between themselves.
(b All computations of interest based on the Base Rate and of
facility fees shall be made by the Administrative Agent on the basis of a year
of 365 or 366 days, as the case may be, and all computations of interest based
on the Eurodollar Rate, or the Effective Federal Funds Rate shall be made by the
Administrative Agent, and all computations of interest pursuant to Section 2.07
shall be made by each Lender with respect to its own Eurodollar Rate Advances,
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on the basis of a year of 360 days, in each case for the actual number of days
(including the first day but excluding the last day) occurring in the period for
which such interest or fees are payable. Each determination by the
Administrative Agent (or, in the case of Section 2.07, 2.11, 2.12, 2.13, 2.15,
2.19 or 8.04(b), by each Lender with respect to its own Advances) of an interest
rate or an increased cost, loss or expense or increased capital or of illegality
or taxes hereunder shall be conclusive and binding for all purposes if made
reasonably and in good faith.
(c Whenever any payment hereunder or under the Notes shall be stated
to be due on a day other than a Business Day, such payment shall be made on the
next succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest or facility fees, as the case
may be; provided, however, if such extension would cause payment of interest on
or principal of Eurodollar Rate Advances to be made in the next following
calendar month, such payment shall be made on the next preceding Business Day.
(d Unless the Administrative Agent shall have received notice from
the Borrower prior to the date on which any payment is due to the Lenders
hereunder that the Borrower will not make such payment in full, the
Administrative Agent may assume that the Borrower has made such payment in full
to the Administrative Agent on such date and the Administrative Agent may, in
reliance upon such assumption, cause to be distributed to each Lender on such
due date an amount equal to the amount then due such Lender. If and to the
extent the Borrower shall not have so made such payment in full to the
Administrative Agent, each Lender shall repay to the Administrative Agent
forthwith on demand such amount distributed to such Lender together with
interest thereon, for each day from the date such amount is distributed to such
Lender until the date such Lender repays such amount to the Administrative
Agent, at a rate equal to the Effective Federal Funds Rate for such day.
SECTION 2.15. Taxes.
(a Any and all payments by the Borrower hereunder or under the Notes
shall be made in accordance with Section 2.14, free and clear of and without
deduction for any and all present or future taxes, levies, imposts, deductions,
charges or withholdings, and all liabilities with respect thereto, excluding in
the case of each Indemnified Party, (i) all taxes, levies, imposts, deductions,
charges, or withholdings, and all liabilities with respect thereto, imposed on
or determined by reference to its income or profits, and all franchise taxes,
and (ii) all other taxes, levies, imposts, deductions, charges, or withholdings
in effect at the time that such Indemnified Party executed this Agreement or
otherwise became an "Indemnified Party" hereunder, and liabilities with respect
thereto, imposed on it by reason of the jurisdiction in which such Indemnified
Party is organized,
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domiciled, resident or doing business, or any political subdivision thereof, or
by reason of the jurisdiction of its Applicable Lending Office or any other
office from which it makes or maintains any extension of credit hereunder or any
political subdivision thereof (all such non-excluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities in respect of payments under
this Agreement or under the Notes being herein referred to as "TAXES"). If the
Borrower shall be required by law to deduct any Taxes from or in respect of any
sum payable hereunder or under any Note to any Indemnified Party, (i) the sum
payable shall be increased as may be necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 2.15) such Indemnified Party receives an amount equal to the sum it
would have received had no such deductions been made, (ii) the Borrower (or the
Administrative Agent, as applicable) shall make such deductions at the
applicable statutory rate and (iii) the Borrower (or the Administrative Agent,
as applicable) shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law, provided that
the Borrower shall not be required to pay any additional amount (and shall be
relieved of any liability with respect thereto) pursuant to this subsection (a)
(or pursuant to Section 2.15(c), except to the extent Section 2.15(c) relates to
Other Taxes) to any Indemnified Party that either (x) on the date such
Indemnified Party executed this Agreement or otherwise became an "Indemnified
Party" hereunder, both (A) was not entitled to submit a U.S. Internal Revenue
Service form 1001 (relating to such Indemnified Party, and entitling it to a
complete exemption from withholding on all amounts to be received by such
Indemnified Party, including fees, pursuant to this Agreement or the Advances)
or a U.S. Internal Revenue Service form 4224 (relating to all amounts to be
received by such Indemnified Party, including fees, pursuant to this Agreement
and the Advances) and (B) is not a United States person (as such term is defined
in Section 7701(a)(30) of the Internal Revenue Code), or (y) has failed to
submit any form or certificate that it was required to file or provide pursuant
to subsection (d) of this Section 2.15 and is entitled to file or give, as
applicable, under applicable law, provided, further, that should an Indemnified
Party become subject to Taxes because of its failure to deliver a form required
hereunder, the Borrower shall take such administrative steps as such Indemnified
Party shall reasonably request to assist such Indemnified Party to recover such
Taxes, and provided further, that each Indemnified Party, with respect to
itself, agrees to indemnify and hold harmless the Borrower from any taxes,
penalties, interest and other expenses, costs and losses incurred or payable by
the Borrower as a result of the failure of the Borrower to comply with its
obligations under clauses (ii) or (iii) above in reliance on any form or
certificate provided to it by such Indemnified Party pursuant to this Section
2.15. If any Indemnified Party receives a net credit or refund in respect of
such Taxes or amounts so paid by the Borrower, it shall promptly notify the
Borrower of such net credit or refund and shall promptly pay such net credit or
refund to the
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Borrower, provided that the Borrower agrees to return such net credit or refund
if the Indemnified Party to which such net credit or refund is applicable, is
required to repay it.
(b In addition, the Borrower agrees to pay any present or future
stamp or documentary taxes or any other excise or property taxes, charges or
similar levies which arise from any payment made hereunder or under the Notes or
from the execution, delivery or registration of, or otherwise with respect to,
this Agreement or the Notes (hereinafter referred to as "OTHER TAXES").
(c The Borrower will indemnify each Indemnified Party for the full
amount of Taxes or Other Taxes (including any Taxes or Other Taxes imposed by
any jurisdiction on amounts payable under this Section 2.15) paid by such
Indemnified Party and any liability (including penalties, interest and expenses)
arising therefrom or with respect thereto except as a result of the gross
negligence (which shall in any event include the failure of such Indemnified
Party to provide to the Borrower any form or certificate that it was required to
provide pursuant to subsection (d) below) or willful misconduct of such
Indemnified Party, whether or not such Taxes or Other Taxes were correctly or
legally asserted. This indemnification shall be made within 30 days from the
date such Indemnified Party makes written demand therefor.
(d On or prior to the date on which each Indemnified Party that is
not a United States person (as such term is defined in Section 7701(a)(30) of
the Internal Revenue Code) executes this Agreement or otherwise becomes an
"Indemnified Party" hereunder, such Indemnified Party shall provide the Borrower
and the Administrative Agent with U.S. Internal Revenue Service form 1001 or
4224, as appropriate, or any successor form prescribed by the U.S. Internal
Revenue Service, certifying that such Indemnified Party is fully exempt from
United States withholding taxes with respect to all payments to be made to such
Indemnified Party hereunder, or other documents satisfactory to the Borrower
indicating that all payments to be made to such Indemnified Party hereunder are
fully exempt from such taxes. Thereafter and from time to time, each such
Indemnified Party shall submit to the Borrower and the Administrative Agent such
additional duly completed and signed copies of one or the other of such forms
(or such successor forms as shall be adopted from time to time by the relevant
United States taxing authorities) as may be (i) notified by the Borrower to such
Indemnified Party and (ii) required under then-current United States law or
regulations to avoid United States withholding taxes on payments in respect of
all amounts to be received by such Indemnified Party pursuant to this Agreement
or the Notes, including fees. Upon the request of the Borrower from time to
time, each Indemnified Party that is a United States person (as such term is
defined in Section 7701(a)(30) of the Internal Revenue Code) shall submit to the
Borrower a
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certificate to the effect that it is such a United States person. If any
Indemnified Party determines, as a result of any change in applicable law,
regulation or treaty, or in any official application or interpretation thereof,
that it is unable to submit to the Borrower any form or certificate that such
Indemnified Party is obligated to submit pursuant to this subsection (d), or
that such Indemnified Party is required to withdraw or cancel any such form or
certificate previously submitted, such Indemnified Party shall promptly notify
the Borrower and the Administrative Agent of such fact.
(e Any Indemnified Party claiming any additional amounts payable
pursuant to this Section 2.15 shall use its best reasonable efforts (consistent
with its internal policy and legal and regulatory restrictions) to change the
jurisdiction of its Applicable Lending Office if the making of such a change
would avoid the need for, or reduce the amount of, any such additional amounts
which may thereafter accrue and would not, in the reasonable judgment of such
Indemnified Party, be otherwise disadvantageous to such Indemnified Party.
(f Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower and each
Indemnified Party contained in this Section 2.15 shall survive the payment in
full of principal and interest hereunder and under the Notes.
SECTION 2.16. Sharing of Payments, Etc.. If any Lender shall obtain any
payment (whether voluntary, involuntary, through the exercise of any right of
set-off, or otherwise) on account of the A Advances made by it (other than
pursuant to Section 2.07, 2.11, 2.12, 2.13, 2.15 or 8.04(b)) in excess of its
ratable share of payments on account of the A Advances obtained by all the
Lenders, such Lender shall forthwith purchase from the other Lenders such
participations in the A Advances made by them as shall be necessary to cause
such purchasing Lender to share the excess payment ratably with each of them,
provided, however, that if all or any portion of such excess payment is
thereafter recovered from such purchasing Lender, such purchase from each Lender
shall be rescinded and each Lender shall repay to the purchasing Lender the
purchase price to the extent of such Lender's ratable share (according to the
proportion of (i) the amount of the participation purchased from such Lender as
a result of such excess payment to (ii) the total amount of such excess payment)
of such recovery together with an amount equal to such Lender's ratable share
(according to the proportion of (A) the amount of such Lender's required
repayment to (B) the total amount so recovered from the purchasing Lender) of
any interest or other amount paid or payable by the purchasing Lender in respect
of the total amount so recovered. The Borrower agrees that any Lender so
purchasing a participation from another Lender pursuant to this Section may, to
the fullest extent permitted by law, exercise all its rights of payment
(including the right of set-off) with respect to such participation as fully as
if such Lender were the direct creditor of the Borrower in the amount of such
participation.
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SECTION 2.17. Evidence of Debt. The indebtedness of the Borrower to
each Lender in respect of principal of and interest on the Advances shall be
evidenced by a Note payable to the order of such Lender and delivered hereunder
by the Borrower. Notwithstanding the provisions of the Notes for notations to be
made on the grid attached thereto, any Lender may maintain in accordance with
its usual practice an account or accounts evidencing the indebtedness of the
Borrower resulting from Advances and payments made from time to time hereunder
and under the Note payable to its order. In any legal action or proceeding in
respect of this Agreement or such Note, the entries made in such account or
accounts shall be conclusive evidence of the existence and amounts of the
obligations of the Borrower therein recorded, absent manifest error.
SECTION 2.18. Use of Proceeds. Proceeds of the Advances may be used for
general corporate purposes of the Borrower and its Subsidiaries, including for
acquisitions and for payment of commercial paper issued by the Borrower.
SECTION 2.19. The B Advances. (a) Each Lender severally agrees that the
Borrower may make B Borrowings under this Section 2.19 from time to time on any
Business Day during the period from the date hereof until the earlier of (I) the
Termination Date or (II) the date falling 30 days prior to the Stated
Termination Date, in the manner set forth below; provided that (x) each B
Borrowing shall be in an aggregate amount of $25,000,000 or an integral multiple
of $5,000,000 in excess thereof and (y) following the making of each B
Borrowing, the aggregate number of outstanding B Borrowings shall not exceed
seven and the aggregate amount of all Advances then outstanding shall not exceed
the aggregate amount of the Commitments of the Lenders (computed without regard
to any B Reduction).
(i) The Borrower may request a B Borrowing under this Section
2.19 by delivering to the Administrative Agent, by telecopy, telefax or
other teletransmission, a notice of a B Borrowing (a "NOTICE OF B
BORROWING"), in substantially the form of Exhibit C hereto, specifying
the date and aggregate amount of the proposed B Borrowing, the maturity
date for repayment of each B Advance to be made as part of such B
Borrowing (which maturity date may not be earlier than the date
occurring 30 days after the date of such B Borrowing or later than the
earlier of (x) 180 days after the date of such B Borrowing or (y) the
Stated Termination Date), the interest payment date or dates relating
thereto, and any other terms to be applicable to such B Borrowing, not
later than 10:00 A.M. (New York City time) (A) at least one Business
Day prior to the date of the proposed B Borrowing, if the Borrower
shall specify in the
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Notice of B Borrowing that the rates of interest to be offered by the
Lenders shall be fixed rates per annum and (B) at least four Business
Days prior to the date of the proposed B Borrowing, if the Borrower
shall instead specify in the Notice of B Borrowing the basis to be used
by the Lenders in determining the rates of interest to be offered by
them. The Administrative Agent shall in turn promptly notify each
Lender of each request for a B Borrowing received by it from the
Borrower by sending such Lender a copy of the related Notice of B
Borrowing.
(ii) Each Lender may, if in its sole and absolute discretion it
elects to do so, irrevocably offer to make one or more B Advances to
the Borrower as part of such proposed B Borrowing at a rate or rates of
interest specified by such Lender in its sole discretion, by notifying
the Administrative Agent (which shall give prompt notice thereof to the
Borrower), before 10:00 A.M. (New York City time) (x) on the date of
such proposed B Borrowing in the case of a Notice of B Borrowing
delivered pursuant to clause (A) of paragraph (i) above, and (y) three
Business Days before the date of such proposed B Borrowing in the case
of a Notice of B Borrowing delivered pursuant to clause (B) of
paragraph (i) above, of the maximum amount of each B Advance which such
Lender would be willing to make as part of such proposed B Borrowing
(which amount may, subject to clause (y) of the proviso to the first
sentence of this Section 2.19(a), exceed such Lender's Commitment), the
rate or rates of interest therefor and such Lender's Applicable Lending
Office with respect to such B Advance; provided that if the
Administrative Agent in its capacity as a Lender shall, in its sole
discretion, elect to make any such offer, it shall notify the Borrower
of such offer before 9:45 A.M. (New York City time) on the date on
which notice of such election is to be given to the Administrative
Agent by the other Lenders. If any Lender shall elect not to make such
an offer, such Lender shall so notify the Administrative Agent, before
10:00 A.M. (New York City time) on the date on which notice of such
election is to be given to the Administrative Agent by the other
Lenders, and such Lender shall not be obligated to, and shall not, make
any B Advance as part of such B Borrowing; provided that the failure by
any Lender to give such notice shall not cause such Lender to be
obligated to make any B Advance as part of such proposed B Borrowing.
(iii) The Borrower shall, in turn, before 11:00 A.M. (New York
City time) (x) on the date of such proposed B Borrowing, in the case of
a Notice of B Borrowing delivered pursuant to clause (A) of paragraph
(i) above and (y) three Business Days before the date of such proposed
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B Borrowing in the case of a Notice of B Borrowing delivered pursuant
to clause (B) of paragraph (i) above, either
(A) cancel such B Borrowing by giving the
Administrative Agent notice to that effect, or
(B) accept one or more of the offers made by any
Lender or Lenders pursuant to paragraph (ii) above, in order
of the lowest to highest rates of interest or margins (or, if
two or more Lenders bid at the same rates of interest, and the
amount of accepted offers is less than the aggregate amount of
such offers, the amount to be borrowed from such Lenders as
part of such B Borrowing shall be allocated among such Lenders
pro rata on the basis of the maximum amount offered by such
Lenders at such rates or margin in connection with such B
Borrowing), in any aggregate amount up to the aggregate amount
initially requested by the Borrower in the relevant Notice of
B Borrowing, by giving notice to the Administrative Agent of
the amount of each B Advance (which amount shall be equal to
or greater than the minimum amount, and equal to or less than
the maximum amount, notified to the Borrower by the
Administrative Agent on behalf of such Lender for such B
Advance pursuant to paragraph (ii) above) to be made by each
Lender as part of such B Borrowing, and reject any remaining
offers made by Lenders pursuant to paragraph (ii) above by
giving the Administrative Agent notice to that effect.
(iv) If the Borrower notifies the Administrative Agent that
such B Borrowing is cancelled pursuant to paragraph (iii)(A) above, the
Administrative Agent shall give prompt notice thereof to the Lenders
and such B Borrowing shall not be made.
(v) If the Borrower accepts one or more of the offers made by
any Lender or Lenders pursuant to paragraph (iii)(B) above, the
Administrative Agent shall in turn promptly notify (A) each Lender that
has made an offer as described in paragraph (ii) above, of the date and
aggregate amount of such B Borrowing and whether or not any offer or
offers made by such Lender pursuant to paragraph (ii) above have been
accepted by the Borrower, (B) each Lender that is to make a B Advance
as part of such B Borrowing, of the amount of each B Advance to be made
by such Lender as part of such B Borrowing, and (C) each Lender that is
to make a B Advance as part of such B Borrowing, upon receipt, that the
Administrative Agent has received forms of documents appearing to
fulfill the applicable conditions set forth in Article 3. Each Lender
that is to
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make a B Advance as part of such B Borrowing shall, before 12:00 noon
(New York City time) on the date of such B Borrowing specified in the
notice received from the Administrative Agent pursuant to clause (A) of
the preceding sentence or any later time when such Lender shall have
received notice from the Administrative Agent pursuant to clause (C) of
the preceding sentence, make available for the account of its
Applicable Lending Office to the Administrative Agent at its address
referred to in Section 8.02 such Lender's portion of such B Borrowing,
in same day funds. Upon fulfillment of the applicable conditions set
forth in Article 3 and after receipt by the Administrative Agent of
such funds, the Administrative Agent will make such funds available to
the Borrower at the Administrative Agent's aforesaid address. Promptly
after each B Borrowing the Administrative Agent will notify each Lender
of the amount of the B Borrowing, the consequent B Reduction and the
dates upon which such B Reduction commenced and will terminate.
(b) Within the limits and on the conditions set forth in this Section
2.19, the Borrower may from time to time borrow under this Section 2.19, repay
or prepay pursuant to subsection (c) below, and reborrow under this Section
2.19.
(c) The Borrower shall repay to the Administrative Agent for the
account of each Lender which has made a B Advance, or each other holder of a
Note, on the maturity date of each B Advance (such maturity date being that
specified by the Borrower for repayment in the related Notice of B Borrowing and
provided in the Note evidencing such B Advance), the then unpaid principal
amount of such B Advance. The Borrower shall have no right to prepay any B
Advance unless, and then only on the terms, specified by the Borrower for such B
Advance in the related Notice of B Borrowing delivered pursuant to Section
2.19(a)(i) and set forth in the Note evidencing such B Advance or unless the
holder of such B Advance otherwise consents in writing to such prepayment.
(d) The Borrower shall pay interest on the unpaid principal amount of
each B Advance from the date of such B Advance to the date the principal amount
of such B Advance is repaid in full at the rate of interest for such B Advance
specified by the Lender making such B Advance in its notice delivered pursuant
to subsection (a)(ii) above on the interest date or dates specified by the
Borrower for such B Advance in the related Notice of B Borrowing and set forth
in the Note evidencing such B Advance, subject to Section 2.06(b)
(e) Each time that the Borrower gives a Notice of B Borrowing, the
Borrower shall pay to the Administrative Agent for its own account such fee as
may be agreed between the Borrower and the Administrative Agent from time to
time, whether or not any B Borrowing is in fact made.
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(f) Following the making of each B Borrowing, the Borrower agrees that
it will be in compliance with the limitations set forth in clause (y) of the
proviso to the first sentence of Section 2.19(a).
(g) The failure of any Lender to make the B Advance to be made by it as
part of any B Borrowing shall not relieve any other Lender of its obligation, if
any, hereunder to make its B Advance on the date of such B Borrowing, but no
Lender shall be responsible for the failure of any other Lender to make the B
Advance to be made by such other Lender on the date of any B Borrowing. If any
Designated Bidder fails to make the B Advance to be made by it as part of any B
Borrowing, such Designated Bidder shall not thereafter have the right to offer
to make any B Advance without the prior written consent of the Borrower and the
Administrative Agent.
SECTION 2.20. Increase of Commitments. (a) At any time after the
Effective Date, provided that no Event of Default shall have occurred and be
continuing, the Borrower may request an increase of the aggregate Commitments by
notice to the Administrative Agent in writing of the amount (the "OFFERED
INCREASE AMOUNT") of such proposed increase (such notice, a "COMMITMENT INCREASE
NOTICE"). Any such Commitment Increase Notice must offer each Lender the
opportunity to subscribe for its pro rata share of the increased Commitments. If
any portion of the increased Commitments is not subscribed for by the Lenders,
the Borrower may, in its sole discretion, but with the consent of the
Administrative Agent as to any Person that is not at such time a Lender (which
consent shall not be unreasonably withheld), offer to any existing Lender or to
one or more additional banks or financial institutions the opportunity to
participate in all or a portion of such unsubscribed portion of the increased
Commitments pursuant to paragraph (b) or (c) below, as applicable.
(b) Any additional bank or financial institution that the Borrower
selects to offer participation in the increased Commitments, and that elects to
become a party to this Agreement and obtain a Commitment, shall execute a New
Lender Agreement with the Borrower and the Administrative Agent, substantially
in the form of Exhibit E (a "NEW LENDER AGREEMENT"), whereupon such bank or
financial institution (a "NEW LENDER") shall become a Lender for all purposes
and to the same extent as if originally a party hereto and shall be bound by and
entitled to the benefits of this Agreement, and the signature pages hereof shall
be deemed to be amended to add the name and Commitment of such New Lender,
provided that the Commitment of any such New Lender shall be in an amount not
less than $10,000,000.
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(c) Any Lender that accepts an offer to it by the Borrower to increase
its Commitment pursuant to this Section 2.20 shall, in each case, execute a
Commitment Increase Agreement with the Borrower and the Administrative Agent,
substantially in the form of Exhibit F (a "COMMITMENT INCREASE AGREEMENT"),
whereupon such Lender shall be bound by and entitled to the benefits of this
Agreement with respect to the full amount of its Commitment as so increased, and
the signature pages hereof shall be deemed to be amended to so increase the
Commitment of such Lender.
(d) The effectiveness of any New Lender Agreement or Commitment
Increase Agreement shall be contingent upon receipt by the Administrative Agent
of such corporate resolutions of the Borrower and legal opinions of counsel to
the Borrower as the Administrative Agent shall reasonably request with respect
thereto, in each case, in form and substance satisfactory to the Administrative
Agent.
(e) If any bank or financial institution becomes a New Lender pursuant
to Section 2.20(b) or any Lender's Commitment is increased pursuant to Section
2.20(c), additional A Advances made on or after the effectiveness thereof (the
"RE-ALLOCATION DATE") shall be made pro rata based on the Commitment Percentages
in effect on and after such Re-Allocation Date (except to the extent that any
such pro rata borrowings would result in any Lender making an aggregate
principal amount of A Advances in excess of its Commitment, in which case such
excess amount will be allocated to, and made by, such New Lender and/or Lenders
with such increased Commitments to the extent of, and pro rata based on, their
respective Commitments), and continuations of Eurodollar Rate Advances
outstanding on such Re-Allocation Date shall be effected by repayment of such
Eurodollar Rate Advances on the last day of the Interest Period applicable
thereto and the making of new Eurodollar Rate Advances pro rata based on such
new Commitment Percentages. In the event that on any such Re-Allocation Date
there is an unpaid principal amount of Base Rate Advances, the Borrower shall
make prepayments thereof and borrowings of Base Rate Advances so that, after
giving effect thereto, the Base Rate Advances outstanding are held pro rata
based on such new Commitment Percentages. In the event that on any such
Re-Allocation Date there is an unpaid principal amount of Eurodollar Rate
Advances, such Eurodollar Rate Advances shall remain outstanding with the
respective holders thereof until the expiration of their respective Interest
Periods (unless the applicable Borrower elects to prepay any thereof in
accordance with the applicable provisions of this Agreement), and interest on
and repayments of such Eurodollar Rate Advances will be paid thereon to the
respective Lenders holding such Eurodollar Rate Advances pro rata based on the
respective principal amounts thereof outstanding.
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(f) Notwithstanding anything to the contrary in this Section 2.20, (i)
no increase pursuant to this Section 2.20 shall be effective without the consent
of the Required Lenders, (ii) no Lender shall have any obligation to increase
its Commitment unless it agrees to do so in its sole discretion and (iii) the
aggregate amount by which the Commitments hereunder are increased pursuant to
this Section 2.20 shall not exceed $180,000,000.
(g) The Borrower shall execute and deliver a Note to each new bank or
other financial institution becoming a Lender.
SECTION 2.21. Extension of Stated Termination Date. (a) Not later than
45 days prior to the Stated Termination Date then in effect, provided that no
Event of Default shall have occurred and be continuing, the Borrower may request
an extension of such Stated Termination Date by submitting to the Administrative
Agent an Extension Request containing the information in respect of such
extension specified in Exhibit G, which the Administrative Agent shall promptly
furnish to each Lender. Each Lender shall, no later than 30 days after receiving
from the Administrative Agent the applicable Extension Request, notify the
Borrower and the Administrative Agent of its election to extend or not extend
the Stated Termination Date as requested in such Extension Request. If the
Required Lenders shall approve in writing the extension of the Stated
Termination Date requested in such Extension Request, the Stated Termination
Date shall automatically and without any further action by any Person be
extended for the period specified in such Extension Request; provided that (i)
each extension pursuant to this Section 2.21 shall be for a maximum of one year,
(ii) the Commitment of any Lender that does not consent in writing within 30
days after receiving from the Administrative Agent the applicable Extension
Request (an "OBJECTING LENDER") shall, unless earlier terminated in accordance
with this Agreement, expire on the Stated Termination Date in effect on the date
of such Extension Request (such Stated Termination Date, if any, referred to as
the "COMMITMENT EXPIRATION DATE" with respect to such Objecting Lender) and
(iii) the Borrower may exercise no more than two extensions pursuant to this
Section 2.21, so that the Stated Termination Date shall not in any event extend
beyond the second anniversary of the initial Stated Termination Date hereunder.
If, within 30 days after receiving from the Administrative Agent the applicable
Extension Request, the Required Lenders shall not approve in writing the
extension of the Stated Termination Date requested in an Extension Request, the
Stated Termination Date shall not be extended pursuant to such Extension
Request. The Administrative Agent shall promptly notify (y) the Lenders and the
Borrower of any extension of the Stated Termination Date pursuant to this
Section 2.21 and (z) the Borrower of any Lender that becomes an Objecting
Lender.
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(b) A Advances owing to any Objecting Lender on the Commitment
Expiration Date, together with accrued interest thereon, any amounts payable
pursuant to Sections 2.06, 2.07, 2.11, 2.12, 2.15 and 8.04(b) and any accrued
and unpaid facility fee or other amounts payable with respect to such Lender
shall be repaid in full on or before such Commitment Expiration Date.
(c) The Borrower shall have the right, so long as no Event of Default
has occurred and is then continuing, upon giving notice to the Administrative
Agent and the Objecting Lenders in accordance with Section 2.10, to prepay in
full the A Advances of the Objecting Lenders, together with accrued interest
thereon, any amounts payable pursuant to Sections 2.06, 2.07, 2.11, 2.12, 2.15
and 8.04(b) and any accrued and unpaid facility fee or other amounts payable to
the Objecting Lenders hereunder and, upon giving not less than three Business
Days' notice to the Objecting Lenders and the Administrative Agent, to cancel
the whole or part of the Commitments of the Objecting Lenders.
(d) Notwithstanding the foregoing, if any Lender becomes an Objecting
Lender, the Borrower may, at its own expense and in the sole discretion and
prior to the then Stated Termination Date, require such Lender (and each related
Designated Bidder (as defined herein or in the Short-Term Revolving Credit
Agreement)) to transfer or assign, in whole or in part, without recourse (in
accordance with Section 8.07), all or part of its interests, rights and
obligations under this Agreement and the Short-Term Revolving Credit Agreement
to an Eligible Assignee (provided that the Borrower, with the full cooperation
of such Lender, can identify an Eligible Assignee that is ready, willing and
able to be an assignee with respect thereto) which shall assume such assigned
obligations (which assignee may be another Lender, if such assignee Lender
accepts such assignment); provided that (A) the assignee or the Borrower, as the
case may be, shall have paid to such Lender in immediately available funds the
principal of and interest accrued to the date of such payment on the Advances
made by it hereunder and the "Advances" made by it under, and as defined in, the
Short-Term Revolving Credit Agreement and all other amounts owed to it hereunder
and thereunder, including any amounts owing pursuant to Section 8.04(b) (or the
comparable provision of the Short-Term Revolving Credit Agreement) and any
amounts that would be owing under such Section (or comparable provision) if such
Advances and "Advances" (as so defined) were prepaid on the date of such
assignment, and (B) such assignment does not conflict with any law, rule or
regulation or order of any governmental authority. Any assignee that becomes a
Lender as a result of such an assignment made pursuant to this paragraph (d)
shall be deemed to have consented to the applicable Extension Request and,
therefore, shall not be an Objecting Lender.
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SECTION 2.22. Replacement of Lenders. If any Lender requests
compensation under Sections 2.07, 2.11 or 2.12 or if the Borrower is required to
pay any additional amount to any Lender or any taxing authority or other
authority for the account of any Lender pursuant to Section 2.15, or if any
Lender suspends the right of the Borrower to elect Eurodollar Rate Advances from
such Lender pursuant to Section 2.13, or if any Lender defaults in its
obligation to fund Advances hereunder, then the Borrower may, at its sole
expense and effort, upon notice to such Lender and the Administrative Agent,
require such Lender to assign and delegate, without recourse (in accordance with
and subject to the restrictions contained in Section 8.07), all its interests,
rights and obligations under this Agreement (other than any outstanding B
Advances held by it) and the Short-Term Revolving Credit Agreement (other than
"B Advances" under, and as defined in, the Short-Term Revolving Credit
Agreement) to an assignee that shall assume such obligations (which assignee may
be another Lender, if a Lender accepts such assignment); provided that (i) the
Borrower shall have received the prior written consent of the Administrative
Agent, which consent shall not unreasonably be withheld, (ii) such Lender shall
have received payment of an amount equal to the outstanding principal of its
Advances (other than B Advances) hereunder and its "Advances" (other than "B
Advances") (each as defined in the Short-Term Revolving Credit Agreement),
accrued interest thereon, accrued fees, accrued costs in connection with
compensation under Sections 2.07, 2.11 or 2.12 or payments required to be made
pursuant to Section 2.15, if any, and all other amounts payable to it hereunder
and thereunder, from the assignee (to the extent of such outstanding principal
and accrued interest and fees) or the Borrower (in the case of all other
amounts) and (iii) in the case of any such assignment resulting from a claim for
compensation under Sections 2.07, 2.11 or 2.12 or payments required to be made
pursuant to Section 2.15, such assignment will result in a reduction in such
compensation or payments. A Lender shall not be required to make any such
assignment and delegation if, prior thereto, as a result of a waiver by such
Lender or otherwise, the circumstances entitling the Borrower to require such
assignment and delegation cease to apply.
ARTICLE 3
CONDITIONS OF EFFECTIVENESS AND LENDING
SECTION 3.1. Conditions Precedent to Effectiveness of this Agreement.
This Agreement shall become effective when (i) it shall have been executed by
the Borrower and the Administrative Agent, (ii) the Administrative Agent and the
Borrower either shall have been notified by each Initial Lender that such
Initial Lender has executed it or shall have received a counterpart of this
Agreement
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executed by such Initial Lender, and (iii) the Administrative Agent shall have
received the following, each dated the date of delivery thereof unless otherwise
specified below (which date shall be selected by the Borrower and be the same
for all documents and all Lenders), in form and substance satisfactory to the
Administrative Agent and (except for the Notes) in sufficient copies for each
Lender:
(a) The Notes, to the order of the Lenders, respectively.
(b) Certified copies of the resolutions of the Board of Directors of
the Borrower approving the borrowings contemplated hereby and authorizing the
execution of this Agreement and the Notes, and of all documents evidencing other
necessary corporate action and governmental approvals, if any, with respect to
this Agreement and the Notes.
(c) A certificate of the Secretary or an Assistant Secretary of the
Borrower (i) certifying names and true signatures of officers of the Borrower
authorized to sign this Agreement and the Notes and the other documents to be
delivered hereunder and (ii) if the Effective Date is other than the date
hereof, certifying that the representations and warranties contained in Section
4.01 are true and correct as of the Effective Date.
(d) A favorable opinion of the Borrower's Senior Vice President, Law,
in substantially the form of Exhibit H hereto.
(e) A favorable opinion of Jones, Day, Reavis & Pogue, New York
counsel to the Borrower, in substantially the form of Exhibit I hereto.
(f) A favorable opinion of Davis Polk & Wardwell, counsel for the
Administrative Agent, in substantially the form of Exhibit J hereto.
(g) Evidence satisfactory to the Administrative Agent of payment of
any loans outstanding under the Existing Agreement, together with all accrued
interest and fees thereunder.
The Borrower and the Lenders (constituting the "Majority Lenders" as defined in
the Existing Agreement) hereby agree that the "Commitments" under the Existing
Agreement shall terminate automatically upon the Effective Date without further
action by any party to the Existing Agreement.
SECTION 3.2. Conditions Precedent to Each A Borrowing. The obligation
of each Lender to make an A Advance (including the initial A Advance) on the
occasion of any A Borrowing shall be subject to the further conditions precedent
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that on or before the date of such A Borrowing this Agreement shall have become
effective pursuant to Section 3.01 and that on the date of such A Borrowing,
before and immediately after giving effect to such A Borrowing and to the
application of the proceeds therefrom, the following statements shall be true
and correct, and the giving by the Borrower of the applicable Notice of A
Borrowing and the acceptance by the Borrower of the proceeds of such A Borrowing
shall constitute its representation and warranty that on and as of the date of
such A Borrowing, before and immediately after giving effect thereto and to the
application of the proceeds therefrom, the following statements are true and
correct:
(a) Each representation and warranty contained in Section 4.01 is
correct in all material respects as though made on and as of such date (or, if
such representation and warranty is stated to be made as at a specific date or
for a specific period, as at the original specified date or with respect to the
original specified period);
(b) No event has occurred and is continuing, or would result from such
A Borrowing, which constitutes an Event of Default or would constitute an Event
of Default but for the requirement that notice be given or time elapse or both;
and
(c) The aggregate amount of the borrowings under this Agreement
(including such A Borrowing) and under other agreements or facilities or
evidenced by other instruments or documents is not in excess of the aggregate
amount of such borrowings approved as of such date by the Board of Directors of
the Borrower.
SECTION 3.3. Conditions Precedent to Each B Borrowing. The obligation
of each Lender which is to make a B Advance on the occasion of any B Borrowing
(including the initial B Borrowing) shall be subject to the further conditions
precedent that (i) at or before the time required by paragraph (iii) of Section
2.19(a), the Administrative Agent shall have received the written confirmatory
notice of such B Borrowing contemplated by such paragraph, (ii) on or before the
date of such B Borrowing this Agreement shall have become effective pursuant to
Section 3.01, and (iii) on the date of such B Borrowing, before and immediately
after giving effect to such B Borrowing and to the application of the proceeds
therefrom, the following statements shall be true and correct, and the giving by
the Borrower of the applicable Notice of B Borrowing and the acceptance by the
Borrower of the proceeds of such B Borrowing shall constitute its representation
and warranty that on and as of the date of such B Borrowing, before and
immediately after giving effect thereto and to the application of the proceeds
therefrom, the following statements are true and correct:
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(a) Each representation and warranty contained in Section 4.01 is
correct in all material respects as though made on and as of such date (or, if
such representation and warranty is stated to be made as at a specific date or
for a specific period, as at the original specified date or with respect to the
original specified period);
(b) No event has occurred and is continuing, or would result from such
B Borrowing, which constitutes an Event of Default or would constitute an Event
of Default but for the requirement that notice be given or time elapse or both;
and
(c) The aggregate amount of the borrowings under this Agreement
(including such B Borrowing) and under other agreements or facilities or
evidenced by other instruments or documents is not in excess of the aggregate
amount of such borrowings approved as of such date by the Board of Directors of
the Borrower.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
SECTION 4.1. Representations and Warranties of the Borrower. The
Borrower represents and warrants as follows:
(a) The Borrower is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware. Each Material
Subsidiary is duly incorporated, validly existing and in good standing in the
jurisdiction of its incorporation. The Borrower and each Material Subsidiary
possess all corporate powers and all other authorizations and licenses necessary
to engage in its business and operations as now conducted, the failure to obtain
or maintain which would have a Material Adverse Effect. Each Subsidiary which
is, on and as of the date of this Agreement, a Material Subsidiary is listed on
Schedule I hereto.
(b) The execution, delivery and performance by the Borrower of this
Agreement and the Notes are within the Borrower's corporate powers, have been
duly authorized by all necessary corporate action, and do not contravene (i) the
Borrower's certificate of incorporation or by-laws or (ii) law or any
contractual restriction binding on or affecting the Borrower.
(c) No authorization or approval or other action by, and no notice to
or filing with, any governmental authority or regulatory body is required for
the due
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execution, delivery and performance by the Borrower of this Agreement or the
Notes which has not been duly made or obtained, except those (i) required in the
ordinary course to comply with ongoing covenant obligations of the Borrower
hereunder the performance of which is not yet due and (ii) that will, in the
ordinary course of business in accordance with this Agreement, be duly made or
obtained on or prior to the time or times the performance of such obligations
shall be due.
(d) This Agreement constitutes, and the Notes when delivered hereunder
shall constitute, legal, valid and binding obligations of the Borrower
enforceable against the Borrower in accordance with their respective terms,
except as may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors rights generally or by
general principles of equity.
(e) The consolidated balance sheet of the Borrower and its
consolidated Subsidiaries as at December 31, 1997 and the related consolidated
statements of income and cash flow for the fiscal year then ended, reported on
by Coopers & Lybrand, independent public accountants, copies of which have been
furnished to the Administrative Agent and the Initial Lenders prior to the date
hereof, fairly present the consolidated financial condition of the Borrower and
such Subsidiaries as at December 31, 1997 and the consolidated results of their
operations for such fiscal period, all in accordance with generally accepted
accounting principles consistently applied. From December 31, 1997 to and
including the Effective Date there has been no material adverse change in such
condition or results of operations.
(f) As at the Effective Date, there is no action, suit or proceeding
pending, or to the knowledge of the Borrower threatened, against or involving
the Borrower or any Material Subsidiary in any court, or before any arbitrator
of any kind, or before or by any governmental body, which in the reasonable
judgment of the Borrower (taking into account the exhaustion of all appeals)
would have a material adverse effect on the consolidated financial condition of
the Borrower and its consolidated Subsidiaries taken as a whole, or which
purports to affect the legality, validity, binding effect or enforceability of
this Agreement or the Notes.
(g) The Borrower and each consolidated Subsidiary have duly filed all
tax returns required to be filed, and duly paid and discharged all taxes,
assessments and governmental charges upon it or against its properties now due
and payable, the failure to file or pay which, as applicable, would have a
Material Adverse Effect, unless and to the extent only that the same are being
contested in good faith and by appropriate proceedings by the Borrower or the
appropriate Subsidiary.
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(h) Except to the extent permitted pursuant to Section 5.02(e),
neither the Borrower nor any Material Subsidiary is subject to any contractual
restrictions which limit the amount of dividends payable by any Subsidiary.
(i) No Termination Event has occurred or is reasonably expected to
occur with respect to any Plan which, with the giving of notice or lapse of
time, or both, would constitute an Event of Default under Section 6.01(g).
(j) Neither the Borrower nor any ERISA Affiliate has incurred, or is
reasonably expected to incur, any Withdrawal Liability to any Multiemployer Plan
that, when aggregated with all other amounts required to be paid to
Multiemployer Plans in connection with Withdrawal Liability (as of the date of
determination), exceeds 5% of the Consolidated Tangible Net Worth of the
Borrower.
(k) Neither the Borrower nor any ERISA Affiliate has received any
notification that any Multiemployer Plan is in reorganization or has been
terminated, within the meaning of Title IV of ERISA, and no Multiemployer Plan
is reasonably expected to be in reorganization or to be terminated within the
meaning of Title IV of ERISA the effect of which reorganization or termination
would be the occurrence of an Event of Default under Section 6.01(i).
(l) The Borrower is not an "investment company" or a "company"
controlled by an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
(m) The Borrower is not 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", or a "public utility" within the
meaning of the Public Utility Holding Company Act of 1935, as amended.
All representations and warranties made by the Borrower herein or made in any
certificate delivered pursuant hereto shall survive the making of the Advances
and the execution and delivery to the Lenders of this Agreement and the Notes.
ARTICLE 5
COVENANTS OF THE BORROWER
SECTION 5.1. Affirmative Covenants. So long as any Note or other amount
payable by the Borrower hereunder shall remain unpaid or any Lender
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shall have any Commitment hereunder, the Borrower will, unless the Majority
Lenders shall otherwise consent in writing:
(a) PRESERVATION OF CORPORATE EXISTENCE, ETC. Preserve and maintain,
and cause each Material Subsidiary to preserve and maintain, its corporate
existence, rights (charter and statutory) and material franchises, except as
otherwise permitted by Section 5.02(c) or 5.02(d).
(b) COMPLIANCE WITH LAWS, ETC. Comply, and cause each Subsidiary to
comply, in all material respects, with all applicable laws, rules, regulations
and orders (including all environmental laws and laws requiring payment of all
taxes, assessments and governmental charges imposed upon it or upon its property
except to the extent contested in good faith by appropriate proceedings) the
failure to comply with which would have a Material Adverse Effect.
(c) VISITATION RIGHTS. At such reasonable times and intervals as the
Administrative Agent or any of the Lenders (other than Designated Bidders) may
desire, permit the Administrative Agent or any of the Lenders (other than
Designated Bidders) to visit the Borrower and to discuss the affairs, finances,
accounts and mineral reserve performance of the Borrower and any of its
Subsidiaries with officers of the Borrower and independent certified public
accountants of the Borrower and any of its Subsidiaries, provided that if an
Event of Default, or an event which with the giving of notice or the passage of
time, or both, would become an Event of Default, has occurred and is continuing,
the Administrative Agent or any Lender may, in addition to the other provisions
of this subsection (c) and at such reasonable times and intervals as the
Administrative Agent or any of the Lenders may desire, visit and inspect, under
guidance of officers of the Borrower, any properties significant to the
consolidated operations of the Borrower and its Subsidiaries, and to examine the
books and records of account (other than with respect to any mineral reserve
information that the Borrower determines to be confidential) of the Borrower and
any of its Subsidiaries and to discuss the affairs, finances and accounts of any
of the Borrower's Subsidiaries with any of the officers of such Subsidiary.
(d) BOOKS AND RECORDS. Keep, and cause each of its Subsidiaries to
keep, proper books of record and account, in which full and correct entries
shall be made of all financial transactions and the assets and business of the
Borrower and each Subsidiary in accordance with generally accepted accounting
principles either (i) consistently applied or (ii) applied in a changed manner
that does not, under generally accepted accounting principles or public
reporting requirements applicable to the Borrower, either require disclosure in
the consolidated financial statements of the Borrower and its consolidated
Subsidiaries or require the consent of the accountants which (as required by
Section 5.03(b)) report on such
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financial statements for the fiscal year in which such change shall have
occurred, or (iii) applied in a changed manner not covered by clause (ii) above
provided such change shall have been disclosed to the Administrative Agent and
shall have been consented to by the accountants which (as required by Section
5.03(b)) report on the consolidated financial statements of the Borrower and its
consolidated Subsidiaries for the fiscal year in which such change shall have
occurred, provided that if any change referred to in clause (ii) or (iii) above
would not meet the standard set forth in clause (i) or (ii) of Section 1.03, the
Administrative Agent, the Lenders and the Borrower agree to amend the covenants
contained in Section 5.01 and 5.02 so that the relative protection afforded
thereby to the Lenders and the relative flexibility afforded thereby to the
Borrower will in substance be retained after such amendment, provided, however,
that until such amendment becomes effective hereunder, the covenants as set
forth herein shall remain in full force and effect and those accounting
principles applicable to the Borrower and its consolidated Subsidiaries which do
meet the standards set forth in clause (i) or (ii) of Section 1.03 shall be
applied to determine whether or not the Borrower is in compliance with such
covenants.
(e) MAINTENANCE OF PROPERTIES, ETC. Maintain and preserve, and cause
each Material Subsidiary to maintain and preserve, all of its properties which
are used in the conduct of its business in good working order and condition,
ordinary wear and tear excepted, to the extent that any failure to do so would
have a Material Adverse Effect.
(f) MAINTENANCE OF INSURANCE. Maintain, and cause each Material
Subsidiary to maintain, insurance with responsible and reputable insurance
companies or associations in such amounts and covering such risks as is usually
carried by companies engaged in similar businesses and owning similar properties
in the same general areas in which the Borrower or such Subsidiary operates.
SECTION 5.2. Negative Covenants. So long as any Note or other amount
payable by the Borrower hereunder shall remain unpaid or any Lender shall have
any Commitment hereunder, the Borrower will not, unless the Majority Lenders
shall otherwise consent in writing:
(a) LIENS, ETC. (i) Create, assume or suffer to exist, or permit any
Material Subsidiary to create, assume or suffer to exist, any Liens upon or with
respect to any of the Equity Interests in any Material Subsidiary, whether now
owned or hereafter acquired, or (ii) create or assume, or permit any Material
Subsidiary to create or assume, any Liens upon or with respect to any other
assets material to the consolidated operations of the Borrower and its
consolidated Subsidiaries taken as a whole securing the payment of Debt and
Guaranties in an aggregate amount (determined without duplication of amount (so
that the amount
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of a Guaranty will be excluded to the extent the Debt Guaranteed thereby is
included in computing such aggregate amount)) exceeding the greater of (x)
$250,000,000 and (y) 10% of Consolidated Tangible Net Worth as at the date of
such creation or assumption; provided, however, that this subsection (a) shall
not apply to:
(A) Liens on assets acquired by the Borrower or any
of its Subsidiaries after the Original Effective Date to the
extent that such Liens existed at the time of such acquisition
and were not placed thereon by or with the consent of the
Borrower in contemplation of such acquisition;
(B) Liens on Equity Interests acquired after the
Original Effective Date in a Business Entity which has become
or becomes a Subsidiary of the Borrower, or on assets of any
such Business Entity, to the extent that such Liens existed at
the time of such acquisition and were not placed thereon by or
with the consent of the Borrower in contemplation of such
acquisition;
(C) Liens on Margin Stock;
(D) Liens on the Equity Interests in, or Debt or
other obligations of, or assets of, any Project Financing
Subsidiary (or any Equity Interests in, Debt or other
obligations of any Business Entity which are owned by any
Project Financing Subsidiary) securing the payment of a
Project Financing and related obligations;
(E) Permitted Liens;
(F) Liens arising out of the refinancing, extension,
renewal or refunding of any Debt or Guaranty secured by any
Lien permitted by any of the foregoing clauses of this
Section, provided that the principal amount of such Debt or
Guaranty is not increased (except by the amount of costs
reasonably incurred in connection with the issuance thereof)
and such Debt or Guaranty is not secured by any additional
assets that would not have been permitted by this Section to
secure the Debt or Guaranty refinanced, extended, renewed or
refunded; and
(G) Liens on products and proceeds (including
dividend, interest and like payments on, and insurance and
condemnation proceeds and rental, lease, licensing and similar
proceeds) of, and
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property evidencing or embodying, or constituting rights or
other general intangibles relating to, and accessions and
improvements to, collateral subject to Liens permitted by this
Section 5.02.
(b) DEBT, ETC. Create, assume or suffer to exist, or permit any of its
consolidated Subsidiaries to create, assume or suffer to exist, any Debt or any
Guaranty unless, immediately after giving effect to such Debt or Guaranty and
the receipt and application of any proceeds thereof or value received in
connection therewith,
(1) the sum (without duplication) of (i)
consolidated Debt of the Borrower and its consolidated
Subsidiaries plus (ii) the aggregate amount (determined on a
consolidated basis) of Guaranties by the Borrower and its
consolidated Subsidiaries is less than 60% of Capitalization,
provided that Debt for borrowed money either maturing within
one year and evidenced by instruments commonly known as
commercial paper, or evidenced by variable demand notes or
other similar short-term financing instruments issued to
commercial banks and trust companies (other than Debt incurred
pursuant to this Agreement or the Short-Term Revolving Credit
Agreement or any replacement therefor), shall not exceed the
aggregate of the Borrower's unused bank lines of credit and
unused credit available to the Borrower under financing
arrangements with banks or other financial institutions; and
(2) with respect to any such Debt created or assumed
by a consolidated Subsidiary that is either a Subsidiary of
the Borrower as of the Original Effective Date or a Subsidiary
of the Borrower acquired or created after the Original
Effective Date and owning a material portion of the
consolidated operating assets existing at the Original
Effective Date of the Borrower and its Subsidiaries, the
aggregate amount of Debt of the consolidated Subsidiaries of
the Borrower referred to above in this paragraph (2) owing to
Persons other than the Borrower and its consolidated
Subsidiaries is less than the greater of (i) $500,000,000
(exclusive of public Debt of LL&E existing at the time LL&E
became a Subsidiary, the principal amount of which at such
time was approximately $400,000,000, and any refinancing of
such Debt, in a principal amount not to exceed the principal
amount refinanced) and (ii) 30% of Consolidated Tangible Net
Worth as at the date of incurrence or creation of such Debt.
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(c) SALE, ETC. OF ASSETS. Sell, lease or otherwise transfer, or permit
any Material Subsidiary to sell, lease or otherwise transfer (in either case,
whether in one transaction or in a series of transactions, and except, in either
case, to the Borrower or an entity which after giving effect to such transfer
will be or become a Material Subsidiary in which the Borrower's direct or
indirect Equity Interests will be at least as great as its direct or indirect
Equity Interests in the transferor immediately prior thereto, and except as
permitted by Section 5.02(d)), assets constituting all or substantially all of
the consolidated assets of the Borrower and its Material Subsidiaries, provided
that, notwithstanding the foregoing, the Borrower or any Material Subsidiary may
sell, lease or otherwise transfer any Permitted Assets constituting all or
substantially all of the consolidated assets of the Borrower and its Material
Subsidiaries, so long as (A) such Permitted Assets are sold, leased or otherwise
transferred in exchange for other Permitted Assets and/or (B) the proceeds from
such sale, lease or other transfer, or an amount equal to the proceeds thereof,
are (x) reinvested within one year in Permitted Assets and/or the development of
Permitted Assets and/or (y) used to repay Debt the proceeds of which were or are
being used for investment in, and/or the development of, Permitted Assets;
provided further that, no such sale, lease or other transfer shall be permitted
by the foregoing proviso unless either (1) after giving effect to such sale,
lease or other transfer, no Event of Default, and no event which with lapse of
time or the giving of notice, or both, would constitute an Event of Default,
shall have occurred and be continuing or (2) the Borrower or the relevant
Material Subsidiary, as the case may be, was contractually obligated, prior to
the occurrence of such Event of Default or event, to consummate such sale, lease
or other transfer.
(d) MERGERS, ETC. Merge or consolidate with any Person, or permit any
of its Material Subsidiaries to merge or consolidate with any Person, except
that (i) such a Subsidiary may merge or consolidate with (or liquidate into) any
other Subsidiary or may merge or consolidate with (or liquidate into) the
Borrower, provided that (A) if such Material Subsidiary merges or consolidates
with (or liquidates into) the Borrower, the Borrower shall be the continuing or
surviving corporation, (B) if any such Material Subsidiary merges or
consolidates with (or liquidates into) any other Subsidiary of the Borrower, one
of such Subsidiaries is the surviving corporation and, if either such Subsidiary
is not wholly-owned by the Borrower, such merger or consolidation is on an arm's
length basis and (C) as a result of such merger or consolidation, no Event of
Default, and no event which with lapse of time or the giving of notice, or both,
would constitute an Event of Default, shall have occurred and be continuing, and
(ii) the Borrower or any Material Subsidiary may merge or consolidate with any
other corporation (that is, in addition to the Borrower or any Subsidiary of the
Borrower), provided that (A) if the Borrower merges or consolidates with any
such other corporation, the Borrower is the surviving corporation, (B) if any
Material Subsidiary merges or
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consolidates with any such other corporation, the surviving corporation is a
wholly-owned Material Subsidiary of the Borrower, and (C) if either the Borrower
or any Material Subsidiary merges or consolidates with any such other
corporation, after giving effect to such merger or consolidation no Event of
Default, and no event which with lapse of time or the giving of notice, or both,
would constitute an Event of Default, shall have occurred and be continuing.
(e) DIVIDEND RESTRICTIONS. Create, or consent or agree to, or permit
any of its Material Subsidiaries existing on the Original Effective Date or any
of its Subsidiaries hereafter created or acquired and owning a material portion
of the consolidated operating assets existing at the Original Effective Date of
the Borrower and its Subsidiaries, to create, or consent or agree to, any
restrictions, contained in any agreement or instrument relating to or evidencing
Debt, on any such Subsidiary's ability to pay dividends or to make advances to
the Borrower or any Subsidiary of the Borrower; provided, however, that this
subsection (e) shall not apply to any such restrictions (including any
extensions of the term of any thereof (by amendment, or continuation thereof in
any refinancing of the Debt to which such restriction relates, or otherwise))
applicable to the Equity Interests in any Subsidiary of the Borrower the Equity
Interests in which shall be hereafter acquired by the Borrower and which
restrictions are existing at the time such Subsidiary first becomes a Subsidiary
of the Borrower and are not placed thereon by or with the consent of the
Borrower in contemplation of such acquisition by the Borrower.
SECTION 5.3. Reporting Requirements. So long as any Note shall remain
unpaid or any Lender shall have any Commitment hereunder, the Borrower will
furnish to each Lender in such reasonable quantities as shall from time to time
be requested by such Lender:
(a) within 60 days after the end of each of the first three quarters
of each fiscal year of the Borrower, a consolidated balance sheet of the
Borrower and its consolidated Subsidiaries as of the end of such quarter, and
consolidated statements of income and cash flow of the Borrower and its
consolidated Subsidiaries each for the period commencing at the end of the
previous fiscal year and ending with the end of such quarter, certified (subject
to normal year-end adjustments) as to fairness and utilization of generally
accepted accounting principles by the chief financial officer of the Borrower
and accompanied by a certificate of such officer stating (i) that such
statements of income and cash flow and such balance sheet have been prepared in
accordance with generally accepted accounting principles, (ii) whether or not
such officer has knowledge of the occurrence of any Event of Default which is
continuing hereunder or of any event not theretofore remedied which with notice
or lapse of time or both would constitute such an Event of Default and, if so,
stating in reasonable detail the facts
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with respect thereto, (iii) all relevant facts in reasonable detail to evidence,
and the computations as to, whether or not the Borrower is in compliance with
the requirements set forth in subsection (b) of Section 5.02, and (iv) a listing
of all Material Subsidiaries and consolidated Subsidiaries of the Borrower
showing the extent of its direct and indirect holdings of their Equity
Interests;
(b) within 120 days after the end of each fiscal year of the Borrower,
a copy of the annual report for such year for the Borrower and its consolidated
Subsidiaries containing financial statements for such year reported on by
nationally recognized independent public accountants acceptable to the Lenders,
accompanied by (i) a report signed by said accountants stating that such
financial statements have been prepared in accordance with generally accepted
accounting principles and (ii) a letter from such accountants stating that in
making the investigations necessary for such report they obtained no knowledge,
except as specifically stated therein, of any Event of Default which is
continuing hereunder or of any event not theretofore remedied which with notice
or lapse of time or both would constitute such an Event of Default;
(c) within 120 days after the close of each of the Borrower's fiscal
years, a certificate of the chief financial officer of the Borrower stating (i)
whether or not such officer has knowledge of the occurrence of any Event of
Default which is continuing hereunder or of any event not theretofore remedied
which with notice or lapse of time or both would constitute such an Event of
Default and, if so, stating in reasonable detail the facts with respect thereto,
(ii) all relevant facts in reasonable detail to evidence, and the computations
as to, whether or not the Borrower is in compliance with the requirements set
forth in subsection (g) of Section 5.01 and in subsection (b) of Section 5.02
and (iii) a listing of all Material Subsidiaries and consolidated Subsidiaries
of the Borrower showing the extent of its direct and indirect holdings of their
Equity Interests;
(d) promptly upon their distribution, copies of all financial
statements, reports and proxy statements which the Borrower or any Material
Subsidiary shall have sent to its public Equity Interest holders;
(e) promptly upon their becoming publicly available, all regular and
periodic financial reports and registration statements which the Borrower or any
Material Subsidiary shall file with the Securities and Exchange Commission or
any national securities exchange other than registration statements relating to
employee benefit plans and to registration statements of securities for selling
security holders;
(f) promptly in writing, notice of all litigation and of all
proceedings before any governmental or regulatory agencies against or involving
the Borrower
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or any Material Subsidiary, except any litigation or proceeding which in the
reasonable judgment of the Borrower (taking into account the exhaustion of all
appeals) is not likely to have a material adverse effect on the consolidated
financial condition of the Borrower and its consolidated Subsidiaries taken as a
whole;
(g) within three Business Days after an executive officer of the
Borrower obtains knowledge of the occurrence of any Event of Default which is
continuing or of any event not theretofore remedied which with notice or lapse
of time, or both, would constitute an Event of Default, notice of such
occurrence together with a detailed statement by a responsible officer of the
Borrower of the steps being taken by the Borrower or the appropriate Subsidiary
to cure the effect of such event;
(h) as soon as practicable and in any event (i) within 30 days after
the Borrower or any ERISA Affiliate knows or has reason to know that any
Termination Event described in clause (i) of the definition of Termination Event
with respect to any Plan has occurred and (ii) within 10 days after the Borrower
or any ERISA Affiliate knows or has reason to know that any other Termination
Event with respect to any Plan has occurred, a statement of the chief financial
officer of the Borrower describing such Termination Event and the action, if
any, which the Borrower or such ERISA Affiliate proposes to take with respect
thereto;
(i) promptly and in any event within two Business Days after receipt
thereof by the Borrower or any ERISA Affiliate, copies of each notice received
by the Borrower or any ERISA Affiliate from the PBGC stating its intention to
terminate any Plan or to have a trustee appointed to administer any Plan;
(j) promptly and in any event within 30 days after the filing thereof
with the Internal Revenue Service, copies of each Schedule B (Actuarial
Information) to the annual report (Form 5500 Series) with respect to each Plan;
(k) promptly and in any event within five Business Days after receipt
thereof by the Borrower or any ERISA Affiliate from the sponsor of a
Multiemployer Plan, a copy of each notice received by the Borrower or any ERISA
Affiliate concerning (i) the imposition of Withdrawal Liability by a
Multiemployer Plan, (ii) the determination that a Multiemployer Plan is, or is
expected to be, in reorganization within the meaning of Title IV of ERISA, (iii)
the termination of a Multiemployer Plan within the meaning of Title IV of ERISA,
or (iv) the amount of liability incurred, or expected to be incurred, by the
Borrower or any ERISA Affiliate in connection with any event described in clause
(i), (ii) or (iii) above; and
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(l) as soon as practicable but in any event within 60 days of any
notice of request therefor, such other information respecting the financial
condition and results of operations of the Borrower or any Subsidiary as any
Lender through the Administrative Agent may from time to time reasonably
request.
Each balance sheet and other financial statement furnished pursuant to
subsections (a) and (b) of this Section 5.03 shall contain comparative
information which conforms to the presentation required in Form 10-Q and Form
10-K, as appropriate, under the Securities Exchange Act of 1934, as amended.
ARTICLE 6
EVENTS OF DEFAULT
SECTION 6.1. Events of Default. If any of the following events ("EVENTS
OF DEFAULT") shall occur and be continuing:
(a) The Borrower shall fail to pay any principal of any Note within
two Business Days after the same shall be due, or any interest on any Note or
any other amount payable hereunder within five Business Days after the same
shall be due; or
(b) Any representation or warranty made or deemed made by the Borrower
herein or by the Borrower (or any of its officers) in connection with this
Agreement shall prove to have been incorrect in any material respect when made
or deemed made; or
(c) The Borrower shall fail to perform or observe any other term,
covenant or agreement contained in this Agreement on its part to be performed or
observed and any such failure shall remain unremedied for 30 days after written
notice thereof shall have been given to the Borrower by the Administrative Agent
or by any Lender with a copy to the Administrative Agent; or
(d) The Borrower or any Material Subsidiary shall fail to pay any Debt
or Guaranty (excluding Debt evidenced by the Notes) of the Borrower or such
Subsidiary (as the case may be) in an aggregate principal amount in excess of
the greater of (i) $100,000,000 and (ii) 3% of Consolidated Tangible Net Worth
at such time, or any installment of principal thereof or interest or premium
thereon, when due (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise) and such failure shall continue after the
applicable grace
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period, if any, specified in the agreement or instrument relating to such Debt
or Guaranty; or any other default under any agreement or instrument relating to
any such Debt, or any other event, shall occur and shall continue after the
applicable grace period, if any, specified in such agreement or instrument, if
the effect of such default or event is to accelerate the maturity of such Debt;
provided that, notwithstanding any provision contained in this subsection (d) to
the contrary, to the extent that pursuant to the terms of any agreement or
instrument relating to any Debt referred to in this subsection (d), any sale,
pledge or disposal of Margin Stock, or utilization of the proceeds thereof would
result in a breach of any covenant contained therein or otherwise give rise to a
default or event of default thereunder and/or acceleration of the maturity of
the Debt extended pursuant thereto and as a result of such terms or of such
sale, pledge, disposal, utilization, breach, default, event of default or
acceleration, or the provisions hereof relating thereto, this Agreement or any
Advance hereunder would otherwise be subject to the margin requirements or any
other restriction under Regulation U issued by the Board of Governors of the
Federal Reserve System, then such breach, default, event of default or
acceleration shall not constitute a default or Event of Default under this
subsection (d); or
(e) (i) The Borrower or any Material Subsidiary shall (A) generally
not pay its debts as such debts become due; or (B) admit in writing its
inability to pay its debts generally; or (C) make a general assignment for the
benefit of creditors; or (ii) any proceeding shall be instituted or consented to
by the Borrower or any such Subsidiary seeking to adjudicate it a bankrupt or
insolvent, or seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief, or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of debtors, or
seeking the entry of an order for relief or the appointment of a receiver,
trustee, or other similar official for it or for any substantial part of its
property; or (iii) any such proceeding shall have been instituted against the
Borrower or any such Subsidiary and either such proceeding shall not be stayed
or dismissed for 60 consecutive days or any of the actions referred to above
sought in such proceeding (including the entry of an order for relief against it
or the appointment of a receiver, trustee, custodian or other similar official
for it or any substantial part of its property) shall occur; or (iv) the
Borrower or any such Subsidiary shall take any corporate action to authorize any
of the actions set forth above in this subsection (e); or
(f) Any judgment or order for the payment of money in excess the
greater of (i) $100,000,000 and (ii) 3% of Consolidated Tangible Net Worth at
such time shall be rendered against the Borrower or any Material Subsidiary and
either (i) enforcement proceedings shall have been commenced and are continuing
or have been completed by any creditor upon such judgment or order (other than
any enforcement proceedings consisting of the mere obtaining and filing of a
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judgment lien or obtaining of a garnishment or similar order so long as no
foreclosure, levy or similar process in respect of such lien, or payment over in
respect of such garnishment or similar order, has commenced and is continuing or
has been completed) or (ii) there shall be any period of 30 consecutive days
during which a stay of execution or enforcement proceedings (other than those
referred to in the parenthesis in clause (i) above) in respect of such judgment
or order, by reason of a pending appeal, bonding or otherwise, shall not be in
effect; or
(g) Any Termination Event with respect to a Material Plan shall have
occurred and, 30 days after notice thereof shall have been given to the Borrower
by the Lender, (i) such Termination Event shall still exist and (ii) the sum
(determined as of the date of occurrence of such Termination Event) of the
Insufficiency of such Plan and the Insufficiency of any and all other Plans with
respect to which a Termination Event shall have occurred and then exist (or in
the case of a Plan with respect to which a Termination Event described in clause
(ii) of the definition of Termination Event shall have occurred and then exist,
the liability related thereto), in each case in respect of which the Borrower or
any ERISA Affiliate has liability, is equal to or greater than $50,000,000; or
(h) The Borrower or any ERISA Affiliate shall have been notified by
the sponsor of a Multiemployer Plan that it has incurred Withdrawal Liability to
such Multiemployer Plan in an amount which, when aggregated with all other
amounts required to be paid to Multiemployer Plans in connection with Withdrawal
Liabilities (determined as of the date of such notification), exceeds
$50,000,000; or
(i) The Borrower or any ERISA Affiliate shall have been notified by
the sponsor of a Multiemployer Plan that such Multiemployer Plan is in
reorganization or is being terminated, within the meaning of Title IV of ERISA,
if as a result of such reorganization or termination the aggregate annual
contributions of the Borrower and its ERISA Affiliates to all Multiemployer
Plans which are then in reorganization or being terminated have been or will be
increased over the amounts contributed to such Multiemployer Plans for the
respective plan years which include the date hereof by an amount exceeding
$50,000,000; or
(j) Upon completion of, and pursuant to, a transaction, or a series of
transactions (which may include prior acquisitions of capital stock of the
Borrower in the open market or otherwise), involving a tender offer (i) a
"person" (within the meaning of Section 13(d) of the Securities Exchange Act of
1934) other than the Borrower, a Subsidiary of the Borrower or any employee
benefit plan maintained for employees of the Borrower and/or any of its
Subsidiaries or
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the trustee therefor, shall have acquired direct or indirect ownership of and
paid for in excess of 50% of the outstanding capital stock of the Borrower
entitled to vote in elections for directors of the Borrower and (ii) at any time
before the later of (x) six months after the completion of such tender offer and
(y) the next annual meeting of the shareholders of the Borrower following the
completion of such tender offer more than half of the directors of the Borrower
consists of individuals who (a) were not directors before the completion of such
tender offer and (b) were not appointed, elected or nominated by the Board of
Directors in office prior to the completion of such tender offer (other than any
such appointment, election or nomination required or agreed to in connection
with, or as a result of, the completion of such tender offer); or
(k) Any "Event of Default" as defined in the Short-Term Revolving
Credit Agreement shall occur and be continuing;
then, and in any such event, the Administrative Agent shall at the request, or
may with the consent, of the Majority Lenders, by notice to the Borrower, (i)
declare the obligation of each Lender to make Advances to be terminated,
whereupon the same shall forthwith terminate, and (ii) declare the Notes, all
interest thereon and all other amounts payable under this Agreement to be
forthwith due and payable, whereupon the Notes, all such interest and all such
amounts shall become and be forthwith due and payable, without presentment,
demand, protest or further notice of any kind, all of which are hereby expressly
waived by the Borrower; provided, however, that if an Event of Default under
subsection (e) of this Section 6.01 (except under clause (i)(A) thereof) shall
occur, (A) the obligation of each Lender to make Advances shall automatically be
terminated and (B) the Notes, all interest thereon and all other amounts payable
under this Agreement shall automatically become and be forthwith due and
payable, without presentment, demand, protest or any notice of any kind, all of
which are hereby expressly waived by the Borrower.
ARTICLE 7
THE ADMINISTRATIVE AGENT
SECTION 7.1. Authorization and Action. Each Lender hereby 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. As to any matters not expressly provided for by
this Agreement (including enforcement of this Agreement or collection of the
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Notes), the Administrative Agent shall not be required to exercise any
discretion or take any action, but shall be required to act or to refrain from
acting (and shall be fully protected in so acting or refraining from acting)
upon the instructions of the Majority Lenders, and such instructions shall be
binding upon all Lenders and all holders of Notes; provided, however, that the
Administrative Agent shall not be required to take any action which exposes the
Administrative Agent to personal liability or which is contrary to this
Agreement or applicable law. The Administrative Agent agrees to give to each
Lender prompt notice of each notice given to it by the Borrower pursuant to the
terms of this Agreement.
SECTION 7.2. Administrative Agent's Reliance, Etc.. Neither the
Administrative Agent nor any of its directors, officers, agents or employees
shall be liable for any action taken or omitted to be taken by it or them under
or in connection with this Agreement, except for its or their own gross
negligence or willful misconduct. Without limitation of the generality of the
foregoing, the Administrative Agent: (i) may treat the payee of any Note as the
holder thereof until the Administrative Agent receives and accepts an Assignment
and Acceptance entered into by the Lender which is the payee of such Note, as
assignor, and an Eligible Assignee, as assignee, as provided in Section 8.07;
(ii) may consult with legal counsel (including counsel for the Borrower),
independent public accountants and other experts selected by it and shall not be
liable for any action taken or omitted to be taken in good faith by it in
accordance with the advice of such counsel, accountants or experts; (iii) makes
no warranty or representation to any Lender and shall not be responsible to any
Lender for any statements, warranties or representations (whether written or
oral) made in or in connection with this Agreement; (iv) shall not have any duty
to ascertain or to inquire as to the performance or observance of any of the
terms, covenants or conditions of this Agreement on the part of the Borrower or
to inspect the property (including the books and records) of the Borrower; (v)
shall not be responsible to any Lender for the due execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement or
any other instrument or document furnished pursuant hereto; and (vi) shall incur
no liability under or in respect of this Agreement by acting upon any notice,
consent, certificate or other instrument or writing (which may be by telegram,
telecopy, cable or telex) believed by it to be genuine and signed or sent by the
proper party or parties.
SECTION 7.3. Morgan and Affiliates. With respect to its Commitments,
the Advances made by it and the Notes issued to it, Morgan shall have the same
rights and powers under this Agreement as any other Lender and may exercise the
same as though it were not the Administrative Agent; and the term "Lender" or
"Lenders" shall, unless otherwise expressly indicated, include Morgan in its
individual capacity. Morgan and its affiliates may accept deposits from, lend
money to, act as trustee under indentures of, and generally engage in any kind
of
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business with, the Borrower, any of its Subsidiaries and any Person who may do
business with or own securities of the Borrower or any Subsidiary, all as if
Morgan were not the Administrative Agent and without any duty to account
therefor to the other Lenders.
SECTION 7.4. Lender Credit Decision. Each Lender acknowledges that it
has, independently and without reliance upon the Administrative Agent or any
other Lender and based on the financial statements referred to in Section 4.01
and such other documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement.
SECTION 7.5. Indemnification. THE LENDERS (OTHER THAN THE DESIGNATED
BIDDERS) AGREE TO INDEMNIFY THE ADMINISTRATIVE AGENT (TO THE EXTENT NOT
REIMBURSED BY THE BORROWER), RATABLY ACCORDING TO THE RESPECTIVE PRINCIPAL
AMOUNTS OF THE NOTES THEN HELD BY EACH OF THEM (OR IF NO NOTES ARE AT THE TIME
OUTSTANDING OR IF ANY NOTES ARE HELD BY PERSONS WHICH ARE NOT LENDERS, RATABLY
ACCORDING TO THE RESPECTIVE AMOUNTS OF THEIR COMMITMENTS OR THE RESPECTIVE
AMOUNTS OF THEIR COMMITMENTS IMMEDIATELY PRIOR TO TERMINATION IF THE COMMITMENTS
HAVE BEEN TERMINATED), FROM AND AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS,
LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES AND
DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER WHICH MAY BE IMPOSED ON, INCURRED
BY, OR ASSERTED AGAINST THE ADMINISTRATIVE AGENT IN ANY WAY RELATING TO OR
ARISING OUT OF THIS AGREEMENT, ANY OF THE NOTES OR ANY OTHER INSTRUMENT OR
DOCUMENT FURNISHED PURSUANT HERETO OR IN CONNECTION HEREWITH, OR ANY ACTION
TAKEN OR OMITTED BY THE ADMINISTRATIVE AGENT UNDER THIS AGREEMENT, OR ANY OF THE
NOTES OR ANY OTHER INSTRUMENT OR DOCUMENT FURNISHED PURSUANT HERETO OR IN
CONNECTION HEREWITH; PROVIDED THAT NO LENDER SHALL BE LIABLE FOR ANY PORTION OF
SUCH LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS,
SUITS, COSTS, EXPENSES OR DISBURSEMENTS RESULTING FROM THE ADMINISTRATIVE
AGENT'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
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Without limitation of the foregoing, each Lender (other than the Designated
Bidders) agrees to reimburse the Administrative Agent promptly upon demand for
such Lender's ratable share of any reasonable out-of-pocket expenses (including
counsel fees) incurred by the Administrative Agent in connection with the
preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings, in bankruptcy or
insolvency proceedings, or otherwise) of, or legal advice in respect of rights
or responsibilities under, this Agreement, any of the Notes or any other
instrument or document furnished pursuant hereto or in connection herewith to
the extent that the Administrative Agent acts in its capacity as Administrative
Agent and is not reimbursed for such expenses by the Borrower.
SECTION 7.6. Successor Administrative Agent. The Administrative Agent
may resign at any time by giving written notice thereof to the Lenders and the
Borrower and may be removed at any time with or without cause by the Majority
Lenders. Upon any such resignation or removal, the Majority Lenders shall have
the right to appoint a successor Administrative Agent. If no successor
Administrative Agent shall have been so appointed by the Majority Lenders, and
shall have accepted such appointment, within 30 days after the retiring
Administrative Agent's giving of notice of resignation or the Majority Lenders'
removal of the retiring Administrative Agent, then such retiring Administrative
Agent may, on behalf of the Lenders, appoint a successor Administrative Agent,
which shall be a commercial bank organized, or authorized to conduct a banking
business, under the laws of the United States of America or of any State thereof
and having a combined capital and surplus of at least $500,000,000. Upon the
acceptance of any appointment as Administrative Agent hereunder by a successor
Administrative Agent, such successor Administrative Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Administrative Agent, and the retiring Administrative Agent
shall be discharged from its duties and obligations under this Agreement. After
any retiring Administrative Agent's resignation or removal hereunder as
Administrative Agent, the provisions of this Article 7 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent under this Agreement.
ARTICLE 8
MISCELLANEOUS
SECTION 8.1. Amendments, Etc.. An amendment or waiver of any provision
of this Agreement or the Notes, or a consent to any departure by the
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Borrower therefrom, shall be effective against the Lenders and all holders of
the Notes if, but only if, it shall be in writing and signed by the Majority
Lenders or the Required Lenders, as applicable (except any amendment to give
effect to Increased Commitments and Additional Lenders, as contemplated by
Section 2.20), and then such a waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given; provided,
however, that no such amendment, waiver or consent shall, unless in writing and
signed by all the Lenders (other than the Designated Bidders), be effective to:
(a) waive any of the conditions specified in Article 3, (b) except as
contemplated by Section 2.20, increase the Commitments of the Lenders or subject
the Lenders to any additional obligations, (c) reduce the principal of, or
interest on, the Notes or any facility fees hereunder, (d) except as
contemplated by Section 2.21, postpone any date fixed for any payment of
principal of, or interest on, the Notes or any facility fees hereunder, (e)
change the percentage of the Commitments or of the aggregate unpaid principal
amount of the Notes, which shall be required for the Lenders or any of them to
take any action under this Agreement, or (f) amend this Section 8.01; and,
provided further that no amendment, waiver or consent shall, unless in writing
and signed by the Administrative Agent in addition to the Lenders required
hereinabove to take such action, affect the rights or duties of the
Administrative Agent under this Agreement or any Note.
SECTION 8.2. Notices, Etc.. Except as otherwise provided in Section
2.02(a) or 2.10(ii), all notices and other communications provided for hereunder
shall be in writing and mailed by certified mail, return receipt requested and
postage prepaid, or telecopied, telefaxed or otherwise teletransmitted, or
delivered, if to the Borrower, at 5051 Westheimer, Suite 1400, Houston, Texas
77056, Attention: Treasurer, Telefax: (713) 624-9621; if to any Initial Lender,
at its Domestic Lending Office set forth in such Initial Lender's Administrative
Questionnaire; if to any other Lender at its Domestic Lending Office specified
in the Assignment and Acceptance or Commitment Increase Agreement pursuant to
which it became a Lender or at the address for notices specified in the
Designation Agreement pursuant to which it became a party hereto; and if to the
Administrative Agent, at Morgan Guaranty Trust Company of New York, at 60 Wall
Street, 22nd Floor, New York, New York 10260, Attention: John Kowalczuk,
Telefax: (212) 648-5348; or, as to each party, at such other address as shall be
designated by such party in a written notice to the other parties. All such
notices and communications shall be effective, (a) in the case of any notice or
communication given by certified mail, when receipted for, (b) in the case of
any notice or communication given by telecopy, telefax or other
teletransmission, when confirmed by appropriate answerback, in each case
addressed as aforesaid, and (c) in the case of any notice or communication
delivered by hand or courier, when so delivered, except that notices and
communications to the Administrative Agent pursuant to Article 2 or 7 shall not
be effective until received by the
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Administrative Agent. A notice received by the Administrative Agent or a Lender
by telephone pursuant to Section 2.02(a) or 2.10(ii) shall be effective if the
Administrative Agent or Lender believes in good faith that it was given by an
authorized representative of the Borrower and acts pursuant thereto,
notwithstanding the absence of written confirmation or any contradictory
provision thereof.
SECTION 8.3. No Waiver; Remedies. No failure on the part of any Lender
or the Administrative Agent to exercise, and no delay in exercising, any right
hereunder or under any Note shall operate as a waiver thereof; nor shall any
single or partial exercise of any right hereunder or under any Note preclude any
other or further exercise thereof or the exercise of any other right. The
remedies herein provided are cumulative and not exclusive of any remedies
provided by law.
SECTION 8.4. Costs and Expenses; Indemnity.
(a) The Borrower agrees to pay on demand (i) all reasonable fees and
out-of-pocket expenses of counsel for the Administrative Agent in connection
with the preparation, execution and delivery of this Agreement, the Notes and
the other documents to be delivered hereunder and with respect to advising the
Administrative Agent as to its rights and responsibilities under this Agreement,
(ii) all reasonable costs and expenses incurred by the Administrative Agent and
its Affiliates in initially syndicating all or any portion of the Commitments
hereunder, including the related reasonable fees and out-of-pocket expenses of
counsel for the Administrative Agent or its Affiliates, travel expenses,
duplication and printing costs and courier and postage fees, and excluding any
syndication fees paid to other parties joining the syndicate and (iii) all
out-of-pocket costs and expenses, if any, of the Administrative Agent and the
Lenders (including reasonable counsel fees and expenses and the allocated costs
of in-house counsel), in connection with the enforcement (whether through
negotiations, legal proceedings, in bankruptcy or insolvency proceedings, or
otherwise) of this Agreement, the Notes and the other documents to be delivered
hereunder and thereunder.
(b) If any payment of principal of, or Conversion of, any Eurodollar
Rate Advance is made by the Borrower to or for the account of a Lender on any
day other than the last day of the Interest Period for such Advance, as a result
of a prepayment pursuant to Section 2.10 or a Conversion pursuant to Section
2.08(f) or Section 2.09 or due to acceleration of the maturity of the Notes
pursuant to Section 6.01 or due to any other reason attributable to the
Borrower, the Borrower shall, upon demand by such Lender (with a copy of such
demand to the Administrative Agent), pay to the Administrative Agent for the
account of such Lender any amounts required to compensate such Lender for any
additional
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<PAGE> 66
losses, costs or expenses which it may reasonably incur as a result of such
payment or Conversion, including any loss (excluding loss of anticipated
profits), cost or expense incurred by reason of the liquidation or reemployment
of deposits or other funds acquired by any Lender to fund or maintain such
Advance.
(c) THE BORROWER AGREES TO INDEMNIFY AND HOLD HARMLESS THE
ADMINISTRATIVE AGENT, THE ARRANGER AND EACH LENDER FROM AND AGAINST ANY AND ALL
CLAIMS, DAMAGES, LIABILITIES AND EXPENSES (INCLUDING FEES AND DISBURSEMENTS OF
COUNSEL) WHICH MAY BE INCURRED BY OR ASSERTED AGAINST THE ADMINISTRATIVE AGENT,
THE ARRANGER OR SUCH LENDER IN CONNECTION WITH OR ARISING OUT OF ANY
INVESTIGATION, LITIGATION, OR PROCEEDING (WHETHER OR NOT THE ADMINISTRATIVE
AGENT, THE ARRANGER OR SUCH LENDER IS PARTY THERETO) RELATED TO ANY ACQUISITION
OR PROPOSED ACQUISITION BY THE BORROWER, OR BY ANY SUBSIDIARY OF THE BORROWER,
OF ALL OR ANY PORTION OF THE EQUITY INTERESTS IN, OR SUBSTANTIALLY ALL THE
ASSETS OF, ANY PERSON OR ANY USE OR PROPOSED USE OF THE ADVANCES BY THE BORROWER
(EXCLUDING ANY CLAIMS, DAMAGES, LIABILITIES OR EXPENSES INCURRED BY REASON OF
THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE PARTY TO BE INDEMNIFIED OR ITS
EMPLOYEES OR ADMINISTRATIVE AGENTS, OR BY REASON OF ANY USE OR DISCLOSURE OF
INFORMATION RELATING TO ANY SUCH ACQUISITION OR USE OR PROPOSED USE OF THE
PROCEEDS BY THE PARTY TO BE INDEMNIFIED OR ITS EMPLOYEES OR ADMINISTRATIVE
AGENTS).
SECTION 8.5. Right of Set-off. Upon the declaration of the Notes as due
and payable pursuant to the provisions of Section 6.01, each Lender is hereby
authorized at any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other indebtedness at any
time owing by such Lender to or for the credit or the account of the Borrower
against any and all of the obligations of the Borrower now or hereafter existing
under this Agreement and any Note held by such Lender, irrespective of whether
or not such Lender shall have made any demand under this Agreement or such Note
and although such obligations may be unmatured. Each Lender agrees promptly to
notify the Borrower after any such set-off and application made by such Lender,
provided that the failure to give such notice shall not affect the validity of
such set-off and application. The rights of each Lender under this Section 8.05
are in addition to other rights and remedies (including other rights of set-off)
which such Lender may have.
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<PAGE> 67
SECTION 8.6. Binding Effect. This Agreement shall become effective in
accordance with the provisions of Section 3.01, and thereafter shall be binding
upon and inure to the benefit of the Borrower, the Administrative Agent, the
Arranger and each Lender and their respective successors and assigns, except
that the Borrower shall not have the right to assign its rights hereunder or any
interest herein without the prior written consent of all of the Lenders.
SECTION 8.7. Assignments and Participations.
(a) Each Lender (other than a Designated Bidder) may assign to one or
more banks or other financial institutions all or a portion of its rights and
obligations under this Agreement (including all or a portion of its Commitment,
the A Advances owing to it and the Note or Notes held by it); provided, however,
that (i) each such assignment shall be of a constant, and not a varying,
percentage of all rights and obligations under this Agreement (other than any
right to make B Advances, any B Advances or any Notes), and the same constant
percentage of all rights and obligations of such assigning Lender under the
Short-Term Revolving Credit Agreement, unless the Short-Term Revolving Credit
Agreement has been terminated, shall be contemporaneously assigned by such
assigning Lender to the same assignee pursuant to Section 8.07(a) of the
Short-Term Revolving Credit Agreement, (ii) the sum of (x) the amount of the
Commitment of the assigning Lender being assigned to the assignee pursuant to
each such assignment (determined as of the date of the Assignment and Acceptance
with respect to such assignment) plus (y) the amount of the "Commitment" of the
assigning Lender under the Short-Term Revolving Credit Agreement
contemporaneously assigned by such assigning Lender to such assignee as
contemplated by clause (i) of this sentence must be equal to or greater than
$25,000,000 (unless the Borrower and the Administrative Agent shall otherwise
consent, which consent may be withheld for any reason) and must be an integral
multiple of $1,000,000, (iii) each such assignment shall be to an Eligible
Assignee, and (iv) 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, together with any Note or Notes subject to such
assignment and a processing and recordation fee of $3,000, and shall send to the
Borrower an executed counterpart of such Assignment and Acceptance. Upon such
execution, delivery, acceptance and recording, from and after the effective date
specified in each Assignment and Acceptance, (x) the assignee thereunder shall
be a party hereto and, to the extent that rights and obligations hereunder have
been assigned to it pursuant to such Assignment and Acceptance, have the rights
and obligations of a Lender hereunder and (y) the Lender assignor thereunder
shall, to the extent that rights
63
<PAGE> 68
and obligations hereunder have been assigned by it pursuant to such Assignment
and Acceptance, relinquish its rights and be released from its obligations under
this Agreement (and, in the case of an Assignment and Acceptance covering all or
the remaining portion of an assigning Lender's rights and obligations under this
Agreement, such Lender shall cease to be a party hereto, provided, however, such
assigning Lender shall retain any claim with respect to any fee, interest, cost,
expense or indemnity which accrues, or relates to an event that occurs, prior to
the date of such assignment pursuant to Section 2.03, 2.06, 2.07, 2.11, 2.12,
2.15 or 8.04).
(b) By executing and delivering an Assignment and Acceptance, each
Lender assignor thereunder and the assignee thereunder confirm to and agree with
each other and the other parties hereto as follows: (i) other than as provided
in such Assignment and Acceptance, such assigning Lender makes no representation
or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or any other instrument or document furnished pursuant
hereto; (ii) such assigning Lender 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 any of its
obligations under this Agreement or any other instrument or document furnished
pursuant hereto; (iii) such assignee confirms that it has received a copy of
this Agreement, together with copies of the financial statements referred to in
Section 4.01 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; (iv) such assignee will, independently and without
reliance upon the Administrative Agent, such assigning Lender or any other
Lender and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
action under this Agreement; (v) such assignee confirms that it is (subject to
approval in writing by the Borrower and the Administrative Agent to the extent
required) an Eligible Assignee; (vi) such 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; and (vii) such assignee agrees that it will perform in accordance with
their terms all of the obligations which by the terms of this Agreement are
required to be performed by it as a Lender.
(c) The Administrative Agent shall maintain at its address referred to
in Section 8.02 a copy of each Assignment and Acceptance, each Designation
Agreement, each New Lender Agreement and each Commitment Increase Agreement
delivered to and accepted by it and a register for the recordation of the
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<PAGE> 69
names and addresses of the Lenders and, with respect to Lenders other than
Designated Bidders, the Commitment of, and principal amount of the A Advances
owing to, each Lender from time to time (the "REGISTER"). The entries in the
Register shall be conclusive and binding for all purposes, absent manifest
error, and the Borrower, the Administrative Agent and the Lenders may treat each
Person whose name is recorded in the Register as a Lender hereunder for all
purposes of this Agreement. The Register shall be available for inspection by
the Borrower or any Lender at any reasonable time and from time to time upon
reasonable prior notice.
(d) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an assignee representing that it is an Eligible Assignee,
together with any Note or Notes subject to such assignment, the Administrative
Agent shall, if such Assignment and Acceptance has been completed and is in
substantially the form of Exhibit D hereto, (i) accept such Assignment and
Acceptance, (ii) record the information contained therein in the Register and
(iii) give prompt notice thereof to the Borrower. Within five Business Days
after its receipt of such notice and its receipt of an executed counterpart of
such Assignment and Acceptance, the Borrower, at its own expense, shall execute
and deliver to the Administrative Agent in exchange for the surrendered Note or
Notes a new Note to the order of such Eligible Assignee and, if the assigning
Lender has retained a Commitment hereunder, a new Note to the order of the
assigning Lender. Such new Note or Notes shall be dated the effective date of
such Assignment and Acceptance and shall otherwise be in substantially the form
of Exhibit A hereto.
(e) Each Lender (other than a Designated Bidder) may designate one or
more banks or other entities to have a right to make B Advances as a Lender
pursuant to Section 2.19; provided that (i) such Lender shall have obtained the
written consent of the Administrative Agent and the Borrower, such consent not
to be unreasonably withheld, (ii) no such Lender shall be entitled to make more
than two such designations, (iii) each such Lender making one or more of such
designations shall retain the right to make B Advances as a Lender pursuant to
Section 2.19, (iv) each such designation shall be to a Designated Bidder and (v)
the parties to each such designation shall execute and deliver to the
Administrative Agent, for its acceptance and recording in the Register, a
Designation Agreement. Upon such execution, delivery, acceptance and recording,
from and after the effective date specified in each Designation Agreement, the
designee thereunder shall be a party hereto with a right to make B Advances as a
Lender pursuant to Section 2.19 and the obligations related thereto.
(f) By executing and delivering a Designation Agreement, the Lender
making the designation thereunder and its designee thereunder confirm and agree
with each other and the other parties hereto as follows: (i) such Lender makes
no
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<PAGE> 70
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other instrument or document
furnished pursuant hereto, (ii) such Lender 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 any of its
obligations under this Agreement or any other instrument or document furnished
pursuant hereto; (iii) such designee confirms that it has received a copy of
this Agreement, together with copies of the financial statements referred to in
Section 4.01 and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into the
Designation Agreement; (iv) such designee will, independently and without
reliance upon the Administrative Agent, such designating Lender or any other
Lender and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
action under this Agreement; (v) such designee confirms that it is a Designated
Bidder; (vi) such designee 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, and (vii) such
designee agrees that it will perform in accordance with their terms all of the
obligations which by the terms of this Agreement are required to be performed by
it as a Lender.
(g) Upon its receipt of a Designation Agreement executed by a
designating Lender and a designee representing that it is a Designated Bidder,
the Administrative Agent shall, if such Designation Agreement has been completed
and is substantially in the form of Exhibit K hereto, (i) accept such
Designation Agreement, (ii) record the information contained therein in the
Register and (iii) give prompt notice thereof to the Borrower.
(h) Each Lender may sell participations to one or more banks or other
entities in or to all or a portion of its rights and obligations under this
Agreement (including all or a portion of its Commitment, and the Advances owing
to it and the Note or Notes held by it); provided, however, that (i) such
Lender's obligations under this Agreement (including its Commitment to the
Borrower hereunder) shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(iii) such Lender shall remain the holder of any such Note for all purposes of
this Agreement, (iv) the Borrower, the Administrative Agent and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement, (v)
such Lender shall
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<PAGE> 71
continue to be able to agree to any modification or amendment of this Agreement
or any waiver hereunder without the consent, approval or vote of any such
participant or group of participants, other than modifications, amendments and
waivers which (A) postpone any date fixed for any payment of, or reduce any
payment of, principal of or interest on such Lender's Note or any facility fees
payable under this Agreement, or (B) increase the amount of such Lender's
Commitment in a manner which would have the effect of increasing the amount of a
participant's participation, or (C) reduce the interest rate payable under this
Agreement and such Lender's Note, or (D) consent to the assignment or the
transfer by the Borrower of any of its rights and obligations under the
Agreement, and (vi) except as contemplated by the immediately preceding clause
(v), no participant shall be deemed to be or to have any of the rights or
obligations of a "Lender" hereunder.
(i) Any Lender may, in connection with any assignment, designation or
participation or proposed assignment, designation or participation pursuant to
this Section 8.07, disclose to the assignee, designee or participant or proposed
assignee, designee or participant, any information relating to the Borrower
furnished to such Lender by or on behalf of the Borrower; provided that, prior
to any such disclosure, the assignee, designee or participant or proposed
assignee, designee or participant shall agree in writing for the benefit of the
Borrower to preserve the confidentiality of any confidential information
relating to the Borrower received by it from such Lender in a manner consistent
with Section 8.08.
(j) Anything in this Agreement to the contrary notwithstanding, any
Lender may at any time create a security interest in all or any portion of its
rights under this Agreement (including the Advances owing to it) and the Notes
issued to it hereunder in favor of any Federal Reserve Bank in accordance with
Regulation A of the Board of Governors of the Federal Reserve System (or any
successor regulation) and the applicable operating circular of such Federal
Reserve Bank.
SECTION 8.8. Confidentiality. Each Lender and the Administrative Agent
(each, a "PARTY") agrees that it will use its best reasonable efforts not to
disclose, without the prior consent of the Borrower (other than to its, or its
Affiliates, employees, auditors, accountants, counsel or other representatives,
whether existing at the date of this Agreement or any subsequent time), any
information with respect to the Borrower which is furnished pursuant to this
Agreement, provided that any party may disclose any such information (i) as has
become generally available to the public, (ii) as may be required or appropriate
in any report, statement or testimony submitted to any municipal, state or
Federal regulatory body having or claiming to have jurisdiction over such party
or to the
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<PAGE> 72
Board of Governors of the Federal Reserve System or the Federal Deposit
Insurance Corporation or similar organizations (whether in the United States or
elsewhere) or their successors, (iii) as may be required or appropriate in
response to any summons or subpoena or in connection with any litigation or
regulatory proceeding, (iv) in order to comply with any law, order, regulation
or ruling applicable to such party, or (v) to any prospective assignee, designee
or participant in connection with any contemplated assignment of any rights or
obligations hereunder, any designation or any sale of any participation therein,
by such party pursuant to Section 8.07, if such prospective assignee, designee
or participant, as the case may be, executes an agreement with the Borrower
containing provisions substantially similar to those contained in this Section
8.08; provided, however, that the Borrower acknowledges that the Administrative
Agent has disclosed and may continue to disclose such information as the
Administrative Agent in its sole discretion determines is appropriate to the
Lenders from time to time.
SECTION 8.9. Consent to Jurisdiction.
(a) The Borrower hereby irrevocably submits to the jurisdiction of any
New York State or Federal court sitting in New York City and any appellate court
from any thereof in any action or proceeding by the Administrative Agent, the
Arranger, any Lender or the holder of any Note in respect of, but only in
respect of, any claims or causes of action arising out of or relating to this
Agreement or the Notes (such claims and causes of action, collectively, being
"PERMITTED CLAIMS"), and the Borrower hereby irrevocably agrees that all
Permitted Claims may be heard and determined in such New York State court or in
such Federal court. The Borrower hereby irrevocably waives, to the fullest
extent it may effectively do so, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any aforementioned court in respect
of Permitted Claims. Service of the summons and complaint and any other process
which may be served by the Administrative Agent, the Arranger, any Lender or the
holder of any Note on the Borrower in any such action or proceeding in any
aforementioned court in respect of Permitted Claims may be made by delivering
separate copies of such process to the Borrower by courier and by certified mail
(return receipt requested), fees and postage prepaid at the Borrower's address
specified pursuant to Section 8.02, to the attention of each of the Treasurer
and the Executive Vice President, Law. The Borrower agrees that a final judgment
in any such action or proceeding shall be conclusive and may be enforced in
other jurisdictions by suit on the judgment or in any other manner provided by
law.
(b) Nothing in this Section 8.09 (i) shall affect the right of the
Arranger, the Borrower, any Lender, the holder of any Note or the Administrative
Agent to serve legal process in any other manner permitted by law or affect any
right
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<PAGE> 73
otherwise existing of the Borrower, any Lender, the Arranger, the holder of any
Note or the Administrative Agent to bring any action or proceeding in the courts
of other jurisdictions or (ii) shall be deemed to be a general consent to
jurisdiction in any particular court or a general waiver of any defense or a
consent to jurisdiction of the courts expressly referred to in subsection (a)
above in any action or proceeding in respect of any claim or cause of action
other than Permitted Claims.
SECTION 8.10. Governing Law. This Agreement and the Notes shall be
governed by, and construed in accordance with, the laws of the State of New
York.
SECTION 8.11. Execution in Counterparts. This Agreement may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
Delivery to the Administrative Agent of a counterpart executed by a Lender shall
constitute delivery of such counterpart to all of the Lenders.
SECTION 8.12. WAIVER OF JURY TRIAL. THE BORROWER, THE ADMINISTRATIVE
AGENT, AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY AND ALL
RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT, ANY OF THE NOTES OR ANY OTHER INSTRUMENT OR DOCUMENT FURNISHED
PURSUANT HERETO OR IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
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<PAGE> 74
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.
BURLINGTON RESOURCES INC.
By: /s/ Everett D. DuBois
----------------------------------
Title: Senior Vice President &
Treasurer
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK, as
Administrative Agent
By: /s/ John Kowalczuk
----------------------------------
Title: Vice President
CITIBANK, N.A., as Syndication Agent
By: /s/ Mark Stanfield Packard
----------------------------------
Title: Vice President
CHASE BANK OF TEXAS, N.A., as
Co-Documentation Agent
By: /s/ Sandra I. Aultman
----------------------------------
Title: Vice President
NATIONSBANK OF TEXAS, N.A., as
Co-Documentation Agent
By: /s/ Paul A. Squires
----------------------------------
Title: Senior Vice President
<PAGE> 75
Commitments The Initial Lenders
- ----------- -------------------
$ 75,000,000 MORGAN GUARANTY TRUST
COMPANY OF NEW YORK
By: /s/ John Kowalczuk
----------------------------------
Title: Vice President
$ 75,000,000 CITIBANK, N.A.
By: /s/ Mark Stanfield Packard
---------------------------------
Title: Vice President
$ 75,000,000 CHASE BANK OF TEXAS, N.A.
By: /s/ Sandra I. Aultman
---------------------------------
Title: Vice President
$ 75,000,000 NATIONSBANK OF TEXAS, N.A.
By: /s/ Paul A. Squires
---------------------------------
Title: Senior Vice President
$45,000,000 BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By: /s/ Ronald E. McKaig
----------------------------------
Title: Vice President
$45,000,000 BANKBOSTON, N.A.
By: /s/ Terrence Ronan
----------------------------------
Title: Vice President
<PAGE> 76
$ 45,000,000 MELLON BANK, N.A.
By: /s/ A. Gary Chace
----------------------------------
Title: Senior Vice President
$ 45,000,000 WELLS FARGO BANK
By: /s/ Theodore M. Nowak
----------------------------------
Title: Vice President
$ 30,000,000 THE BANK OF NEW YORK
By: /s/ Catherine G. Goff
----------------------------------
Title: Vice President
$ 30,000,000 THE BANK OF TOKYO-MITSUBISHI, LTD.
By: /s/ Michael G. Meiss
----------------------------------
Title: Vice President & Manager
$ 30,000,000 THE NORTHERN TRUST COMPANY
By: /s/ James F.T. Monhart
----------------------------------
Title: Vice President
<PAGE> 77
$ 30,000,000 WACHOVIA BANK, N.A.
By: /s/ R. S. Miles
----------------------------------
Title: Senior Vice President
Total Commitments
- --------------------
====================
$ 600,000,000
<PAGE> 78
SCHEDULE I
MATERIAL SUBSIDIARIES
Louisiana Land and Exploration Company
Burlington Resources Oil & Gas Company
<PAGE> 79
SCHEDULE II
PRICING GRID
<TABLE>
<CAPTION>
- -------------------- ------------------ ----------------- ------------------ ------------------ ----------------- -----------------
LEVEL I LEVEL II LEVEL III LEVEL IV LEVEL V LEVEL VI
- -------------------- ------------------ ----------------- ------------------ ------------------ ----------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Basis for If the If the If the If the If the If Levels I-V do
Pricing Borrower's Borrower's Borrower's Borrower's Borrower's not exist.
senior unsecured senior senior unsecured senior unsecured senior
long term debt unsecured long long term debt long term debt unsecured long
is rated at term debt is is rated at is rated at term debt is
least A by S&P rated at least least BBB+ by least BBB by S&P rated at least
or A2 by Moody's. A- by S&P or A3 S&P or Baa1 by or Baa2 by BBB- by S&P or
by Moody's. Moody's. Moody's. Baa3 by Moody's.
- -------------------- ------------------ ----------------- ------------------ ------------------ ----------------- -----------------
Facility Fee .070% .080% .090% .115% .150% .300%
Percentage
- -------------------- ------------------ ----------------- ------------------ ------------------ ----------------- -----------------
LIBOR .155% .170% .210% .235% .300% .450%
Applicable
Margin
- -------------------- ------------------ ----------------- ------------------ ------------------ ----------------- -----------------
</TABLE>
The applicable pricing level shall change on the date of any relevant change in
the rating by S&P or Moody's of any public long term senior unsecured debt
securities of the Borrower. In the case of split ratings from S&P and Moody's,
the rating to be used to determine the applicable pricing level is the higher of
the two (e.g., A-/Baa1 results in Level II pricing), provided that in the event
the split is more than one full category, the average (or the higher of two
intermediate ratings) shall be used (e.g., A-/Baa2 results in Level III pricing,
as does A-/Baa3).
<PAGE> 80
EXHIBIT A
FORM OF
NOTE
New York, New York
February 25, 1998
For value received, Burlington Resources Inc., a Delaware corporation
(the "BORROWER"), promises to pay to the order of ______________________ (the
"LENDER"), for the account of its Applicable Lending Office, the unpaid
principal amount of each Advance made by the Lender to the Borrower pursuant to
the Credit Agreement referred to below on the maturity date provided for in the
Credit Agreement. The Borrower promises to pay interest on the unpaid principal
amount of each such Advance on the dates and at the rate or rates provided for
in the Credit Agreement. All such payments of principal and interest shall be
made in lawful money of the United States in Federal or other immediately
available funds at the office of Morgan Guaranty Trust Company of New York, 60
Wall Street, New York, New York.
All Advances made by the Lender, the respective types thereof and all
repayments of the principal thereof shall be recorded by the Lender and, if the
Lender so elects in connection with any transfer or enforcement hereof,
appropriate notations to evidence the foregoing information with respect to each
such Advance then outstanding may be endorsed by the Lender on the schedule
attached hereto, or on a continuation of such schedule attached to and made a
part hereof; provided that the failure of the Lender to make (or any error in
making) any such recordation or endorsement shall not affect the Borrower's
obligations hereunder or under the Credit Agreement.
<PAGE> 81
This note is one of the Notes referred to in the Credit Agreement dated
as of February 25, 1998 among Burlington Resources Inc., the Lenders party
thereto, Morgan Guaranty Trust Company of New York, as Administrative Agent for
the Lenders thereunder, Citibank, N.A., as Syndication Agent for the Lenders,
and Chase Bank of Texas, N.A. and NationsBank of Texas, N.A., as
Co-Documentation Agents for the Lenders (as the same may be amended from time to
time, the "CREDIT AGREEMENT"). Terms defined in the Credit Agreement are used
herein with the same meanings. Reference is made to the Credit Agreement for
provisions for the prepayment hereof and the acceleration of the maturity
hereof.
BURLINGTON RESOURCES INC.
By:
----------------------------------
Name:
Title:
<PAGE> 82
ADVANCES AND PAYMENTS OF PRINCIPAL
<TABLE>
<CAPTION>
- ------------------- ----------------- ---------------- ----------------- ----------------------------
AMOUNT OF AMOUNT OF
DATE ADVANCE TYPE OF ADVANCE PRINCIPAL REPAID NOTATION MADE BY
- ------------------- ----------------- ---------------- ----------------- ----------------------------
<S> <C> <C> <C> <C>
- ------------------- ----------------- ---------------- ----------------- ----------------------------
- ------------------- ----------------- ---------------- ----------------- ----------------------------
- ------------------- ----------------- ---------------- ----------------- ----------------------------
- ------------------- ----------------- ---------------- ----------------- ----------------------------
- ------------------- ----------------- ---------------- ----------------- ----------------------------
- ------------------- ----------------- ---------------- ----------------- ----------------------------
- ------------------- ----------------- ---------------- ----------------- ----------------------------
- ------------------- ----------------- ---------------- ----------------- ----------------------------
- ------------------- ----------------- ---------------- ----------------- ----------------------------
- ------------------- ----------------- ---------------- ----------------- ----------------------------
- ------------------- ----------------- ---------------- ----------------- ----------------------------
- ------------------- ----------------- ---------------- ----------------- ----------------------------
- ------------------- ----------------- ---------------- ----------------- ----------------------------
</TABLE>
<PAGE> 83
EXHIBIT B
FORM OF
NOTICE OF A BORROWING
Date ___________
Morgan Guaranty Trust Company of New York,
as Administrative Agent under the Credit Agreement referred to below
500 Stanton Christiana Road
Newark, DE 19713-2107
Attention: Sandra Doherty
tel: 302-623-8122
fax: 302-634-1094
Ladies and Gentlemen:
The undersigned, Burlington Resources Inc. (the "BORROWER"), refers to
the Long-Term Credit Agreement dated as of February 25, 1998 (as the same may be
amended from time to time, the "CREDIT AGREEMENT", the terms defined therein
being used herein as therein defined), among the Borrower, the Lenders parties
thereto, Morgan Guaranty Trust Company of New York, as Administrative Agent,
Citibank, N.A., as Syndication Agent, and Chase Bank of Texas, N.A. and
NationsBank of Texas, N.A., as Co-Documentation Agents. Pursuant to Section
2.02(a) of the Credit Agreement, the Borrower hereby gives you notice of and
requests an A Borrowing under the Credit Agreement (the "PROPOSED A BORROWING"),
and in that connection sets forth below the information relating to such A
Borrowing:
1. The Business Day of the Proposed A Borrowing is _________ __,
____.
2. The Type of A Advances comprising the Proposed A Borrowing is
[Base Rate Advances] [Eurodollar Rate Advances].
3. The aggregate amount of the Proposed A Borrowing is $_______.
4.(1) The Interest Period for each Eurodollar Rate Advance made as part
of the Proposed A Borrowing is [__] month[s].
The undersigned hereby certifies that the following statements are true
on the date hereof, and will be true on the date of the Borrowing, before and
immediately after giving effect thereto and to the application of the proceeds
therefrom:
- ------------
(1)To be used for Eurodollar Rate Advances only.
<PAGE> 84
(a) each representation and warranty contained in Section 4.01 is
correct in all material respects as though made on and as of such date (or, if
such representation and warranty is stated to be made as at a specific date or
for a specific period, as at the original specified date or with respect to the
original specified period);
(b) no event has occurred and is continuing, or would result from such
A Borrowing, which constitutes an Event of Default or would constitute an Event
of Default but for the requirement that notice be given or time elapse or both;
and
(c) the aggregate amount of the borrowings under the Credit Agreement
(including the Proposed A Borrowing) and under other agreements or facilities or
evidenced by other instruments or documents is not in excess of the aggregate
amount of such borrowings approved as of such date by the Board of Directors of
the Borrower.
BURLINGTON RESOURCES INC.
By:
----------------------------------
Name:
Title:
<PAGE> 85
EXHIBIT C
FORM OF
NOTICE OF B BORROWING
Date ___________
Morgan Guaranty Trust Company of New York,
as Administrative Agent under the Credit Agreement referred to below
500 Stanton Christiana Road
Newark, DE 19713-2107
Attention: Sandra Doherty
tel: 302-623-8122
fax: 302-634-1094
Ladies and Gentlemen:
The undersigned, Burlington Resources Inc. (the "BORROWER"), refers to
the Long-Term Credit Agreement dated as of February 25, 1998 (as the same may be
amended from time to time, the "CREDIT AGREEMENT", the terms defined therein
being used herein as therein defined), among the Borrower, the Lenders parties
thereto, Morgan Guaranty Trust Company of New York, as Administrative Agent,
Citibank, N.A., as Syndication Agent, and Chase Bank of Texas, N.A. and
NationsBank of Texas, N.A., as Co-Documentation Agents. Pursuant to Section 2.19
of the Credit Agreement, the Borrower hereby gives you notice of and requests a
B Borrowing under the Credit Agreement (the "PROPOSED B BORROWING"), and in that
connection sets forth the terms on which such B Borrowing is requested to be
made:
1. Date of B Borrowing ____________________
2. Proposed Amount of B Borrowing ____________________
3. Maturity Date ____________________
4. Interest Rate Basis ____________________
5. Interest Payment Date(s) ____________________
7. [Other Terms] ____________________
The undersigned hereby certifies that the following statements are true
on the date hereof, and will be true on the date of the Borrowing, before and
immediately after giving effect thereto and to the application of the proceeds
therefrom:
(a) each representation and warranty contained in Section 4.01 is
correct in all material respects as though made on and as of such date (or, if
such representation and warranty is stated to be made as at a specific date or
for a specific period, as at the original specified date or with respect to the
original specified period);
<PAGE> 86
(b) no event has occurred and is continuing, or would result from
such A Borrowing, which constitutes an Event of Default or would constitute an
Event of Default but for the requirement that notice be given or time elapse or
both; and
(c) the aggregate amount of the borrowings under the Credit Agreement
(including the Proposed A Borrowing) and under other agreements or facilities or
evidenced by other instruments or documents is not in excess of the aggregate
amount of such borrowings approved as of such date by the Board of Directors of
the Borrower.
BURLINGTON RESOURCES INC.
By
----------------------------------
Name:
Title:
<PAGE> 87
EXHIBIT D
FORM OF
ASSIGNMENT AND ACCEPTANCE
Dated: _________, 19__
Reference is made to the Long-Term Revolving Credit Agreement dated as
of February 25, 1998 (such agreement, as in effect on the date hereof and as it
may hereafter be amended, modified or supplemented from time to time, the
"CREDIT AGREEMENT") among Burlington Resources Inc., a Delaware corporation (the
"BORROWER"), the Lenders party thereto (the "LENDERS"), Morgan Guaranty Trust
Company of New York, as Administrative Agent for the Lenders (the
"ADMINISTRATIVE AGENT"), Citibank, N.A., as Syndication Agent for the Lenders,
and Chase Bank of Texas, N.A. and NationsBank of Texas, N.A., as
Co-Documentation Agents. Terms defined in the Credit Agreement are used herein
with the same meaning.
The "Assignor" and the "Assignee" referred to on Schedule 1 hereto
agree as follows:
SECTION (A). The Assignor hereby sells and assigns to the Assignee,
without recourse, and the Assignee hereby purchases and assumes from the
Assignor, that interest in and to all of the Assignor's rights and obligations
under the Credit Agreement as of the date hereof (other than in respect of B
Advances) which represents the percentage interest specified on Schedule 1
hereto of all outstanding rights and obligations under the Credit Agreement
(other than in respect of B Advances), including such interest in the Assignor's
Commitment, the A Advances owing to the Assignor, and the Note[s] held by the
Assignor. After giving effect to such sale and assignment, the Assignee's
Commitment and the amount of the A Advances owing to the Assignee will be as set
forth in Section 2 of Schedule 1 hereof.
SECTION (B). The Assignor (i) represents and warrants that it is the
legal and beneficial owner of the interest being assigned by it hereunder and
that such interest is free and clear of any adverse claim; (ii) represents and
warrants that it has made or is contemporaneously making herewith, to the
Assignee as contemplated by Section 8.07 of the Credit Agreement, an assignment
under the Short-Term Revolving Credit Agreement, unless the Short-Term Revolving
Credit Agreement has been terminated; (iii) makes no representation or warranty
and assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with the Credit Agreement or the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of the Credit Agreement or any other instrument or document furnished pursuant
thereto; (iv) 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 any of its obligations under the Credit Agreement
or any other instrument or document furnished pursuant thereto; [and (v)
requests that the Administrative Agent arrange for the issuance of a new Note or
Notes payable to the order of the Assignee].
<PAGE> 88
SECTION (C). The Assignee (i) confirms that it has received a copy of
the Credit Agreement, together with copies of the financial statements referred
to in Section 4.01 thereof and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
this Assignment and Acceptance; (ii) confirms that it has entered into or is
contemporaneously herewith entering into, with the Assignor as contemplated by
Section 8.07 of the Credit Agreement, an assignment under the Short-Term
Revolving Credit Agreement, unless the Short-Term Revolving Credit Agreement has
been terminated; (iii) agrees that it will, independently and without reliance
upon the Administrative Agent, the Assignor or any other Lender and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
the Credit Agreement; (iv) confirms that it is (subject to approval in writing
by the Borrower and the Administrative Agent to the extent required) an Eligible
Assignee; (v) appoints and authorizes the Administrative Agent to take such
action as agent on its behalf and to exercise such powers under the Credit
Agreement as are delegated to the Administrative Agent by the terms thereof,
together with such powers as are reasonably incidental thereto; (vi) agrees that
it will perform in accordance with their terms all of the obligations which by
the terms of the Credit Agreement are required to be performed by it as a
Lender; [and] (vii) specifies as its Domestic Lending Office (and address for
notices) and Eurodollar Lending Office the offices set forth beneath its name on
the signature pages hereof [;and (viii) attaches the forms prescribed by the
Internal Revenue Service of the United States certifying as to the Assignee's
status for purposes of determining exemption from United States withholding
taxes with respect to all payments to be made to the Assignee under the Credit
Agreement and the Notes or such other documents as are necessary to indicate
that all such payments are subject to such rates at a rate reduced by an
applicable tax treaty](1).
SECTION (D). Following the execution of this Assignment and Acceptance
by the Assignor and the Assignee, it will be delivered to the Administrative
Agent for acceptance and recording by the Administrative Agent. The effective
date for this Assignment and Acceptance shall be at least five Business Days
after the execution and delivery thereof to the Administrative Agent, unless
otherwise specified on Schedule 1 hereto (the "EFFECTIVE DATE").
SECTION (E). Upon such acceptance and recording by the Administrative
Agent, as of the Effective Date, (i) the Assignee shall be a party to the Credit
Agreement and, to the extent provided in this Assignment and Acceptance, have
the rights and obligations of a Lender thereunder and (ii) the Assignor shall,
to the extent provided in this Assignment and Acceptance, relinquish its rights
and be released from its obligations under the Credit Agreement, provided,
however, such assigning Lender shall retain any claim with respect to any fee,
interest, cost, expense or indemnity which accrues, or relates to an event that
occurs, prior to the date of such assignment pursuant to Section 2.03, 2.06,
2.07, 2.11, 2.12, 2.15 or 8.04 of the Credit Agreement.
- ---------------------------
(1) If the Assignee is not a United States person (as such term is
defined in Section 7701(a)(30) of the Internal Revenue Code).
<PAGE> 89
SECTION (F). Upon such acceptance and recording by the Administrative
Agent, from and after the Effective Date, the Administrative Agent shall make
all payments under the Credit Agreement and the Notes in respect of the interest
assigned hereby (including all payments of principal, interest and commitment
fees with respect thereto) to the Assignee. The Assignor and Assignee shall make
all appropriate adjustments in payments under the Credit Agreement and the Notes
for periods prior to the Effective Date directly between themselves.
SECTION (G). This Assignment and Acceptance shall be governed by, and
construed in accordance with, the laws of the State of New York
IN WITNESS WHEREOF, the parties have caused this Assignment and
Acceptance to be executed by their respective officers thereunto duly authorized
as of the date specified thereon.
<PAGE> 90
Schedule 1
to
Assignment and Acceptance
Dated __________
Section 1.
Percentage Interest assigned: ________%
Section 2.
Assignee's Commitment: $_________
Aggregate Outstanding Principal
Amount of [A Advances] owing to the
Assignee: $_________
Section 3.
Effective Date(2):
[NAME OF ASSIGNOR]
By
---------------------------------------
Title:
[NAME OF ASSIGNEE]
By
---------------------------------------
Title:
Domestic Lending Office:
[Address]
Eurocurrency Lending Office:
[Address]
- ---------------------------
(2) This date should be no earlier than at least five Business
Days after the execution and delivery thereof to the Administrative
Agent.
<PAGE> 91
Accepted and Consented to
this __ day of __________, ____:
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK, as
Administrative Agent
By
------------------------------
Name:
Title:
Consented to this
__ day of __________, ____:
BURLINGTON RESOURCES INC.
By
------------------------------
Name:
Title:
<PAGE> 92
EXHIBIT E
FORM OF
NEW LENDER AGREEMENT
This New Lender Agreement dated as of ___________, ____ (this
"AGREEMENT") is by and among (i) Burlington Resources Inc., a Delaware
corporation (the "BORROWER"), (ii) Morgan Guaranty Trust Company of New York in
its capacity as Administrative Agent (the "ADMINISTRATIVE AGENT") under the
Long-Term Revolving Credit Agreement dated as of February 25, 1998 (as may be
amended or otherwise modified from time to time, the "CREDIT AGREEMENT",
capitalized terms that are defined in the Credit Agreement and not defined
herein are used herein as therein defined) among the Borrower, the lenders party
thereto, the Administrative Agent, Citibank, N.A., as syndication agent, and
Chase Bank of Texas, N.A. and NationsBank of Texas, N.A., as co-documentation
agents, and (iii) _________ ("NEW LENDER").
Preliminary Statements
A. Pursuant to Section 2.20 of the Credit Agreement, the Borrower
has the right, subject to the terms and conditions thereof, to
effectuate from time to time an increase in the total
Commitments under the Credit Agreement by adding to the Credit
Agreement one or more banks or other financial institutions.
B. The Borrower has given notice to the Administrative Agent of
its intention to increase the total Commitments pursuant to
such Section 2.20 by adding the New Lender to the Credit
Agreement as a Lender with a Commitment of $___________, and
the Administrative Agent is willing to consent thereto.
Accordingly, the parties hereto agree as follows:
SECTION 1. Addition of New Lender. Pursuant to Section 2.20 of the
Credit Agreement, the New Lender is hereby added to the Credit Agreement as a
Lender with a Commitment of $________________. The New Lender specifies as its
Domestic Lending Office and Eurodollar Lending Office the following:
Domestic Lending Address:
Office:
Attention:
Telephone:
Telecopy:
Eurodollar Lending Address:
Office:
Attention:
Telephone:
Telecopy:
<PAGE> 93
SECTION 2. New Note. The Borrower agrees to promptly execute and
deliver to the New Lender a Note ("NEW NOTE").
SECTION 3. Consent. The Administrative Agent and the Borrower hereby
consent to the increase in the Commitments and addition of the New Lender
effectuated hereby.
SECTION 4. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.
SECTION 5. Execution in Counterparts. This Agreement may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
SECTION 6. Lender Credit Decision. The New Lender acknowledges that it
has, independently and without reliance upon the Administrative Agent or any
other Lender and based on the financial statements referred to in Section 4.01
and such other documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement and to agree to
the various matters set forth herein. The New Lender also acknowledges that it
will, independently and without reliance upon the Administrative Agent or any
other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Credit Agreement.
SECTION 7. Representations and Warranties of the Borrower. The
Borrower represents and warrants as follows:
(a) The execution, delivery and performance by the Borrower of this
Agreement and the New Note are within the Borrower's corporate powers, have been
duly authorized by all necessary corporate action, and do not contravene (i) the
Borrower's certificate of incorporation or by-laws or (ii) law or any
contractual restriction binding on or affecting the Borrower.
(b) No authorization or approval or other action by, and no notice to
or filing with, any governmental authority or regulatory body is required for
the due execution, delivery and performance by the Borrower of this Agreement or
the New Note which has not been duly made or obtained.
(c) This Agreement constitutes, and the New Note when delivered
hereunder shall constitute, legal, valid and binding obligations of the Borrower
enforceable against the Borrower in accordance with their respective terms,
except as may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors rights generally or by
general principles of equity.
<PAGE> 94
(d) The aggregate amount by which the Commitments under the Credit
Agreement have been increased does not exceed $180,000,000.
(e) No event has occurred and is continuing which constitutes an Event
of Default.
(f) Unless the Short-Term Revolving Credit Agreement has been
terminated, the Borrower has caused, or is simultaneously causing, the New
Lender to become a party to the Short-Term Revolving Credit Agreement pursuant
to Section 2.20 thereof with a "Commitment" (under and as defined in the
Short-Term Revolving Credit Agreement) that constitutes the same percentage of
all "Commitments" thereunder as the percentage that the New Lender's Commitment
under the Credit Agreement constitutes of all Commitments under the Credit
Agreement.
(g) Prior to the increase in Commitment pursuant to this Agreement,
the Borrower has offered the Lenders the right to participate in such increase
by increasing their respective Commitments.
(h) Attached hereto are resolutions duly adopted by the Board of
Directors of the Borrower sufficient to authorize this Agreement and the New
Note, and such resolutions are in full force and effect.
SECTION 8. Default. Without limiting any other event that may
constitute an Event of Default, in the event any representation or warranty set
forth herein shall prove to have been incorrect in any material respect when
made, such event shall constitute an "Event of Default" under the Credit
Agreement.
SECTION 9. Expenses. The Borrower agrees to pay on demand all costs and
expenses of the Administrative Agent in connection with the preparation,
negotiation, execution and delivery of this Agreement and the New Note,
including, without limitation, the reasonable fees and out-of-pocket expenses of
counsel for the Administrative Agent with respect thereto.
SECTION 10. Effectiveness. When, and only when, the Administrative
Agent shall have received counterparts of, or telecopied signature pages of,
this Agreement executed by the Borrower, the Administrative Agent and the New
Lender, this Agreement shall become effective as of the date first written
above.
<PAGE> 95
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.
BORROWER:
BURLINGTON RESOURCES INC.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
ADMINISTRATIVE AGENT:
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK, as
Administrative Agent
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
NEW LENDER:
-------------------------------------
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
<PAGE> 96
EXHIBIT F
FORM OF
COMMITMENT INCREASE AGREEMENT
This Commitment Increase Agreement dated as of ___________, ____ (this
"AGREEMENT") is by and among (i) Burlington Resources Inc., a Delaware
corporation (the "BORROWER"), (ii) Morgan Guaranty Trust Company of New York in
its capacity as Administrative Agent (the "ADMINISTRATIVE AGENT") under the
Long-Term Revolving Credit Agreement dated as of February 25, 1998 (as may be
amended or otherwise modified from time to time, the "CREDIT AGREEMENT",
capitalized terms that are defined in the Credit Agreement and not defined
herein are used herein as therein defined) among the Borrower, the lenders party
thereto, the Administrative Agent, Citibank, N.A., as syndication agent, and
Chase Bank of Texas, N.A. and NationsBank of Texas, N.A., as co-documentation
agents, and (iii) _________ ("INCREASING LENDER").
Preliminary Statements
A. Pursuant to Section 2.20 of the Credit Agreement, the Borrower
has the right, subject to the terms and conditions thereof, to
effectuate from time to time an increase in the total
Commitments under the Credit Agreement by agreeing with a
Lender to increase that Lender's Commitment.
B. The Borrower has given notice to the Administrative Agent of
its intention to increase the total Commitments pursuant to
such Section 2.20 by increasing the Commitment of the
Increasing Lender from $_______ to $________, and the
Administrative Agent is willing to consent thereto.
Accordingly, the parties hereto agree as follows:
SECTION 1. Increase of Commitment. Pursuant to Section 2.20 of the
Credit Agreement, the Commitment of the Increasing Lender is hereby increased
from $________ to $__________.
SECTION 2. Consent. The Administrative Agent hereby consents to the
increase in the Commitment of the Increasing Lender effectuated hereby.
SECTION 3. Governing Law. This Agreement shall be governed by, and
construed in accordance with the laws of the State of New York.
SECTION 4. Execution in Counterparts. This Agreement may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
<PAGE> 97
SECTION 5. Lender Credit Decision. The Increasing Lender acknowledges
that it has, independently and without reliance upon the Administrative Agent or
any other Lender and based on the financial statements referred to in Section
4.01 and such other documents and information as it has deemed appropriate, made
its own credit analysis and decision to enter into this Agreement and to agree
to the various matters set forth herein. The Increasing Lender also acknowledges
that it will, independently and without reliance upon the Administrative Agent
or any other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Credit Agreement.
SECTION 6. Representations and Warranties of the Borrower. The
Borrower represents and warrants as follows:
(a) The execution, delivery and performance by the Borrower of this
Agreement are within the Borrower's corporate powers, have been duly authorized
by all necessary corporation action, and do not contravene (i) the Borrower's
certificate of incorporation or by-laws or (ii) law or any contractual
restriction binding on or affecting the Borrower.
(b) No authorization or approval or other action by, and no notice to
or filing with, any governmental authority or regulatory body is required for
the due execution, delivery and performance by the Borrower of this Agreement
which has not been duly made or obtained.
(c) This Agreement constitutes legal, valid and binding obligations of
the Borrower enforceable against the Borrower in accordance with their
respective terms, except as may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors rights
generally or by general principles of equity.
(d) The aggregate amount by which the Commitments under the Credit
Agreement have been increased does not exceed $180,000,000.
(e) No event has occurred and is continuing which constitutes an Event
of Default.
(f) Unless the Short-Term Revolving Credit Agreement has been
terminated, the Borrower has caused, or is simultaneously causing, the
Increasing Lender's "Commitment" (as defined in the Short-Term Revolving Credit
Agreement) to be increased pursuant to Section 2.20 thereof by the same
percentage as the Increasing Lender's Commitment under the Credit Agreement is
being increased pursuant to Section 2.20 of the Credit Agreement.
(g) Attached hereto are resolutions duly adopted by the Board of
Directors of the Borrower sufficient to authorize this Agreement, and such
resolutions are in full force and effect.
SECTION 7. Default. Without limiting any other event that may
constitute an Event of Default, in the event any representation or warranty set
forth herein shall prove to have been incorrect
<PAGE> 98
in any material respect when made, such event shall constitute an "Event of
Default" under the Credit Agreement.
SECTION 8. Expenses. The Borrower agrees to pay on demand all costs and
expenses of the Administrative Agent in connection with the preparation,
negotiation, execution and delivery of this Agreement, including, without
limitation, the reasonable fees and out-of-pocket expenses of counsel for the
Administrative Agent with respect thereto.
SECTION 9. Effectiveness. When, and only when, the Administrative Agent
shall have received counterparts of, or telecopied signature pages of, this
Agreement executed by the Borrower, the Administrative Agent and the Increasing
Lender, this Agreement shall become effective as of the date first written
above.
<PAGE> 99
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.
BORROWER:
BURLINGTON RESOURCES INC.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
ADMINISTRATIVE AGENT:
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK, as
Administrative Agent
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
INCREASING LENDER:
-------------------------------------
By:
----------------------------------
Name:
-------------------------------
Title:
-------------------------------
<PAGE> 100
EXHIBIT G
FORM OF
EXTENSION REQUEST
Morgan Guaranty Trust Company of New York,
as Administrative Agent under the Credit Agreement referred to below
500 Stanton Christiana Road
Newark, DE 19713-2107
Attention: Sandra Doherty
tel: 302-623-8122
fax: 302-634-1094
Ladies and Gentlemen:
The undersigned, Burlington Resources Inc. (the "BORROWER"), refers to
the Long-Term Credit Agreement dated as of February 25, 1998 (as the same may be
amended from time to time, the "CREDIT AGREEMENT", the terms defined therein
being used herein as therein defined), among the Borrower, the Lenders parties
thereto, Morgan Guaranty Trust Company of New York, as Administrative Agent,
Citibank, N.A., as Syndication Agent, and Chase Bank of Texas, N.A. and
NationsBank of Texas, N.A., as Co-Documentation Agents. Pursuant to Section
2.21(a) of the Credit Agreement, the Borrower hereby gives you notice of and
requests an extension of the Stated Termination Date under the Credit Agreement,
and in that connection sets forth below the information relating to such
extension:
1. The requested Stated Termination Date is _______________ __, ____.(1)
2. This Extension Request constitutes the [first] [second] of the
Borrower's right to extend the Stated Termination Date.
The undersigned hereby certifies that the following statements are true
on the date hereof, and will be true on the date the Stated Termination Date is
extended:
(a) this Extension Request is being made not later than 45 days prior
to the Stated Termination Date now in effect;
(b) no event has occurred and is continuing which constitutes an Event
of Default.
BURLINGTON RESOURCES INC.
By:
----------------------------------
Name:
Title:
- ---------------------------
(1) Such requested Stated Termination Date shall be no more than
one year from the presently effective Stated Termination Date.
<PAGE> 101
EXHIBIT H
FORM OF
OPINION OF SENIOR VICE PRESIDENT, LAW FOR BORROWER
February ____, 1998
To each of the Lenders and the Agents
Referred to Below
c/o Morgan Guaranty Trust Company of New York
60 Wall Street, 22nd Floor
New York, New York 10260
Ladies and Gentlemen:
This opinion is furnished to you pursuant to Section 3.01(d) of the Long-Term
Revolving Credit Agreement, dated as of February 25, 1998 (the "Credit
Agreement"), among Burlington Resources Inc., a Delaware corporation (the
"Borrower"), the financial institutions party thereto (each a "Lender," and
together the "Lenders"), Morgan Guaranty Trust Company of New York, as
Administrative Agent for the Lenders, Citibank, N.A., as Syndication Agent, and
Chase Bank of Texas, N.A. and NationsBank of Texas, N.A., as Co-Documentation
Agents. Unless the context otherwise requires, all capitalized terms used herein
without definition shall have the meanings ascribed to them in the Credit
Agreement.
I am Senior Vice President, Law of the Borrower, and I, or attorneys over whom I
exercise supervision, have acted as counsel for the Borrower in connection with
the preparation, execution and delivery of the Credit Agreement. In that
connection, I or such attorneys have examined:
(1) The Credit Agreement, executed by the parties thereto;
(2) The Notes executed by the Borrower; and
(3) The other documents furnished by the Borrower pursuant
to Section 3.01 of the Credit Agreement.
I, or attorneys over whom I exercise supervision, have also examined the
originals, or copies certified to our satisfaction, of the agreements,
instruments and other documents, and all of the orders, writs, judgments,
awards, injunctions and decrees, which affect or purport to affect the
<PAGE> 102
Borrower's ability to perform the Borrower's obligations under the Credit
Agreement or the Notes (collectively referred to herein as the "Documents"). In
addition, I, or attorneys over whom I exercise supervision, have examined the
originals, or copies certified to our satisfaction, of such other corporate
records of the Borrower, certificates of public officials and of officers of the
Borrower, and agreements, instruments and other documents, as I have deemed
necessary as a basis for the opinions hereinafter expressed. In all such
examinations, I, or attorneys over whom I exercise supervision, have assumed the
legal capacity of all natural persons executing documents, the genuineness of
all signatures on original or certified, conformed or reproduction copies of
documents of all parties (other than, with respect to the Documents, the
Borrower), the authenticity of original and certified documents and the
conformity to original or certified copies of all copies submitted to such
attorneys or me as conformed or reproduction copies. As to various questions of
fact relevant to the opinions expressed herein, I have relied upon, and assume
the accuracy of, representations and warranties contained in the Credit
Agreement and certificates and oral or written statements and other information
of or from public officials, officers and/or representatives of the Borrower and
others.
To the extent it may be relevant to the opinions expressed herein, I have
assumed that the parties to the Documents other than the Borrower have the power
to enter into and perform such documents and that such documents have been duly
authorized, executed and delivered by, and constitute legal, valid and binding
obligations of, such parties.
The opinions expressed below are limited to the federal laws of the United
States and, to the extent relevant hereto, the General Corporation Law of the
State of Delaware, as currently in effect. I assume no obligation to supplement
this opinion if any applicable laws change after the date hereof or if I become
aware of any facts that might change the opinions expressed herein after the
date hereof.
Based upon the foregoing and upon such investigation as I have deemed necessary,
and subject to the limitations, qualifications and assumptions set forth herein,
I am of the following opinion:
1. The Borrower (i) is a corporation duly incorporated and existing in
good standing under the laws of the State of Delaware, and (ii)
possesses all the corporate powers and all other authorizations and
licenses necessary to engage in its business and operations as now
conducted, the failure to obtain or maintain which would have a
Material Adverse Effect.
2. The execution, delivery and performance by the Borrower of the
Documents are within the Borrower's corporate powers and have been duly
authorized by all necessary corporate action in respect of or by the
Borrower (except to the extent that the Borrower seeks to exercise its
right under Section 2.20 of the Credit Agreement to effect an increase
of Commitments), and do not contravene (i) the Borrower's Certificate
of Incorporation or By-Laws, in each case as amended, (ii) any federal
law, rule or regulation applicable to the Borrower (excluding
provisions of federal law expressly referred to in and covered by the
opinion of Jones, Day, Reavis & Pogue delivered to you in connection
with the transactions
<PAGE> 103
contemplated hereby), or (iii) any contractual restriction binding on
or affecting the Borrower. The Documents have been duly executed and
delivered on behalf of the Borrower.
3. No authorization or approval or other action by, and no notice to or
filing with, any federal governmental authority or regulatory body
(including, without limitation, the Federal Energy Regulatory
Commission) is required for the due execution, delivery and performance
by the Borrower of the Documents, except those required in the ordinary
course of business in connection with the performance by the Borrower
of its obligations under certain covenants and warranties contained in
the Documents.
4. To the best of my knowledge, there is no action, suit or proceeding
pending or overtly threatened against or involving the Borrower or any
of its Material Subsidiaries, which, in my reasonable judgment (taking
into account the exhaustion of all appeals), would have a material
adverse effect upon the consolidated financial condition of the
Borrower and its consolidated Subsidiaries taken as a whole, or which
purports to affect the legality, validity, binding effect or
enforceability of any Document.
These opinions are given as of the date hereof and are solely for your benefit
in connection with the transactions contemplated by the Credit Agreement. These
opinions may not be relied upon by you for any other purpose or relied upon by
any other person for any purpose without my prior written consent.
Very truly yours,
L. David Hanower
Senior Vice President, Law
----------------, -----
<PAGE> 104
EXHIBIT I
FORM OF
OPINION OF JONES, DAY, REAVIS & POGUE, NEW YORK
COUNSEL FOR BORROWER
February __, 1998
To Each of the Lenders and the Administrative Agent
Referred to Below
c/o Morgan Guaranty Trust Company of New York
60 Wall Street, 22nd Floor
New York, New York 10260
Re: Long-Term Revolving Credit Agreement, dated as of February 25, 1998
Ladies and Gentlemen:
We have acted as special New York counsel for Burlington Resources
Inc., a Delaware corporation (the "Borrower"), in connection with the Long-Term
Revolving Credit Agreement, dated as of February __, 1998 (the "Credit
Agreement"), among the Borrower, the financial institutions party thereto (each
a "Lender," and together the "Lenders"), and Morgan Guaranty Trust Company of
New York, as Administrative Agent for the Lenders, Citibank, N.A., as
Syndication Agent for the Lenders, and Chase Bank of Texas, N.A. and NationsBank
of Texas, N.A., as Co-Documentation Agents for the Lenders. This opinion is
delivered to you pursuant to Section 3.01(e) of the Credit Agreement. All
capitalized terms used herein that are defined in, or by reference in, the
Credit Agreement have the meanings assigned to such terms therein, or by
reference therein, unless otherwise defined herein. With your permission, all
assumptions and statements of reliance herein have been made without any
independent investigation or verification on our part except to the extent
otherwise expressly stated, and we express no opinion with respect to the
subject matter or accuracy of such assumptions or items relied upon.
In connection with this opinion, we have (i) investigated such
questions of law, (ii) examined originals or certified, conformed or
reproduction copies of such documents, and (iii) received such information from
officers and representatives of the Borrower as we have deemed necessary or
appropriate for the purposes of this opinion. We have examined, among other
documents, the following:
(a) A facsimile of an executed copy of the Credit Agreement;
(b) A facsimile of an executed copy of each of the __ Notes; and
(c) A facsimile of the Officer's Certificate of the Borrower delivered
to us in connection with this opinion, a copy of which is attached
hereto as Annex A.
<PAGE> 105
The documents referred to in items (a) and (b) above are referred to herein
collectively as the "Documents."
In all such examinations, we have assumed the legal capacity of all
natural persons executing documents, the genuineness of all signatures, the
authenticity of original and certified documents and the conformity to original
or certified copies of all copies submitted to us as conformed or reproduction
copies. As to various questions of fact relevant to the opinions expressed
herein, we have relied upon, and assume the accuracy of, representations and
warranties contained in the Documents and certificates and oral or written
statements and other information of or from representatives of the Borrower and
others. With respect to the opinions expressed in paragraph (a) below, our
opinions are limited (x) to our actual knowledge of the Borrower's specially
regulated business activities and properties based solely upon an officer's
certificate in respect of such matters and without any independent investigation
or verification on our part and (y) to our review of only those laws and
regulations that, in our experience, are normally applicable to transactions of
the type contemplated by the Documents.
To the extent it may be relevant to the opinions expressed herein, we
have assumed that the parties to the Documents other than the Borrower have the
power to enter into and perform such documents and that such documents have been
duly authorized, executed and delivered by, and constitute legal, valid and
binding obligations of, such parties.
Based upon the foregoing, and subject to the limitations,
qualifications and assumptions set forth herein, we are of the opinion that:
(a) The execution and delivery to the Administrative Agent and the
Lenders by the Borrower of the Documents and the performance by the Borrower of
its obligations thereunder (i) do not require under present law any filing or
registration by the Borrower with, or approval or consent to the Borrower of,
any governmental agency or authority of the State of New York, except those, if
any, required in the ordinary course of business in connection with the
performance by the Borrower of its obligations under certain covenants and
warranties contained in the Documents and (ii) do not violate any present law,
or present regulation of any governmental agency or authority, of the State of
New York applicable to the Borrower or its property.
(b) The Documents constitute the legal, valid and binding obligations
of the Borrower enforceable against the Borrower in accordance with their
respective terms.
(c) The borrowings by the Borrower under the Credit Agreement and the
applications of the proceeds thereof as provided in the Credit Agreement will
not violate Regulation G, T, U or X of the Board of Governors of the Federal
Reserve System.
The opinions set forth above are subject to the following
qualifications:
(A) We express no opinion as to:
<PAGE> 106
(i) the validity, binding effect or enforceability (a) of
any provision of the Documents relating to indemnification,
contribution or exculpation in connection with violations of any
securities laws or statutory duties or public policy, or in connection
with willful, reckless or criminal acts or gross negligence of the
indemnified or exculpated party or the party receiving contribution; or
(b) of any provision of any of the Documents relating to exculpation of
any party in connection with its own negligence that a court would
determine in the circumstances under applicable law to be unfair or
insufficiently explicit;
(ii) the validity, binding effect or enforceability of (a)
any purported waiver, release, variation, disclaimer, consent or other
agreement to similar effect (all of the foregoing, collectively, a
"Waiver") by the Borrower under the Documents to the extent limited by
provisions of applicable law (including judicial decisions), or to the
extent that such a Waiver applies to a right, claim, duty, defense or
ground for discharge otherwise existing or occurring as a matter of law
(including judicial decisions), except to the extent that such a Waiver
is effective under and is not prohibited by or void or invalid under
provisions of applicable law (including judicial decisions) or (b) any
provision of any Document relating to choice of governing law to the
extent that the validity, binding effect or enforceability of any such
provision is to be determined by any court other than a court of the
State of New York;
(iii) the enforceability of any provision in the Documents
specifying that provisions thereof may be waived only in writing, to
the extent that an oral agreement or an implied agreement by trade
practice or course of conduct has been created that modifies any
provision of the Documents;
(iv) the effect of any law of any jurisdiction other than
the State of New York wherein the Administrative Agent or any Lender
may be located or wherein enforcement of any document referred to above
may be sought that limits the rates of interest legally chargeable or
collectible; and
(v) any approval, consent or authorization of the Federal
Energy Regulatory Commission or any other United States federal agency
or authority needed in connection with the execution, delivery and
performance by the Borrower of the Documents, the consummation of the
transactions contemplated thereby and compliance with the terms and
conditions thereof.
(B) Our opinions above are subject to (i) applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer or similar laws from
time to time in effect affecting creditors' rights generally, (ii) general
principles of equity (including, without limitation, standards of materiality,
good faith, fair dealing and reasonableness), whether such principles are
considered in a proceeding at law or in equity and (iii) the qualification that
certain other provisions of the Documents may be unenforceable in whole or in
part under the laws (including judicial decisions) of the State of New York or
the United States of America, but the
<PAGE> 107
inclusion of such provisions does not affect the validity as against the
Borrower of the Documents as a whole, and the Documents contain adequate
provisions for enforcing payment of the obligations governed thereby, subject to
the other qualifications contained in this letter.
(C) For purposes of the opinions set forth in paragraph (c) above, we
have assumed that (i) neither the Administrative Agent nor any of the Lenders
has or will have the benefit of any agreement or arrangement (excluding the
Documents) pursuant to which any Advances are directly or indirectly secured by
Margin Stock, (ii) neither the Administrative Agent nor any of the Lenders nor
any of their respective affiliates has extended or will extend any other credit
to the Borrower directly or indirectly secured by Margin Stock and (iii) neither
the Administrative Agent nor any of the Lenders has relied or will rely upon any
Margin Stock as collateral in extending or maintaining any Advances pursuant to
the Credit Agreement.
(D) For purposes of our opinions above, insofar as they relate to the
Borrower, we have assumed that (i) the Borrower is a corporation validly
existing in good standing in its jurisdiction of incorporation, has all
requisite power and authority, and has obtained all requisite corporate,
shareholder, third party and governmental authorizations, consents and
approvals, and made all requisite filings and registrations, necessary to
execute, deliver and perform the Documents (except to the extent noted in
paragraph (a) above), and that such execution, delivery and performance will not
violate or conflict with any law, rule, regulation, order, decree, judgment,
instrument or agreement binding upon or applicable to the Borrower or its
properties (except to the extent noted in paragraph (a) above), and (ii) the
Documents have been duly executed and delivered by the Borrower.
We express no opinion as to the effect of the compliance or
noncompliance of each of the addressees with any state or federal laws or
regulations applicable to each of them by reason of their status as or
affiliation with a federally insured depository institution, except as expressly
set forth in paragraph (c) above.
The opinions expressed herein are limited to the federal laws of the
United States of America (in the case of the matters covered in paragraph (c)
above) and the laws of the State of New York (in the case of the matters covered
in paragraphs (a) and (b) above), as currently in effect.
The opinions expressed herein are solely for the benefit of the
Administrative Agent and the Lenders and may not be relied on in any manner or
for any purpose by any other person or entity.
Very truly yours,
Jones, Day, Reavis & Pogue
<PAGE> 108
EXHIBIT J
FORM OF
OPINION OF DAVIS POLK & WARDWELL,
SPECIAL COUNSEL FOR THE AGENT
----------------, -----
To the Lenders and the Agents
Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Administrative Agent
60 Wall Street
New York, New York 10260
Ladies and Gentlemen:
We have participated in the preparation of the Long-Term Credit
Agreement dated as of February 25, 1998 (the "CREDIT AGREEMENT") among
Burlington Resources Inc., a Delaware corporation (the "BORROWER"), the Lenders
party thereto, Morgan Guaranty Trust Company of New York, as Administrative
Agent, Citibank, N.A., as Syndication Agent and Chase Bank of Texas, N.A. and
NationsBank of Texas, N.A. as Co-Documentation Agents and have acted as special
counsel for the Administrative Agent for the purpose of rendering this opinion
pursuant to Section 3.01(f) of the Credit Agreement. Terms defined in the Credit
Agreement are used herein as therein defined.
We have examined originals or copies, certified or otherwise identified
to our satisfaction, of such documents, corporate records, certificates of
public officials and other instruments and have conducted such other
investigations of fact and law as we have deemed necessary or advisable for
purposes of this opinion.
Upon the basis of the foregoing, we are of the opinion that:
1. The execution, delivery and performance by the Borrower of the
Credit Agreement and the Notes are within the Borrower's corporate powers and
have been duly authorized by all necessary corporate action.
2. The Credit Agreement constitutes a valid and binding agreement of
the Borrower and each Note issued thereunder today constitutes a valid and
binding obligation of the Borrower, in each case enforceable in accordance with
its terms, subject to applicable bankruptcy, insolvency or similar laws
affecting creditors' rights generally and general principles of equity.
<PAGE> 109
We are members of the Bar of the State of New York and the foregoing
opinion is limited to the laws of the State of New York, the federal laws of the
United States of America and the General Corporation Law of the State of
Delaware. In giving the foregoing opinion, we express no opinion as to the
effect (if any) of any law of any jurisdiction (except the State of New York) in
which any Lender is located which limits the rate of interest that such Lender
may charge or collect.
This opinion is rendered solely to you in connection with the above
matter. This opinion may not be relied upon by you for any other purpose or
relied upon by any other Person without our prior written consent.
Very truly yours,
<PAGE> 110
EXHIBIT K
FORM OF
DESIGNATION AGREEMENT
Dated __________, 19__
Reference is made to the Long-Term Revolving Credit Agreement dated as
of February 25, 1998 (such agreement, as in effect on the date hereof and as it
may hereafter be amended, modified or supplemented from time to time, being the
"CREDIT AGREEMENT") among Burlington Resources Inc., a Delaware corporation (the
"BORROWER"), the Lenders party thereto (the "LENDERS"), Morgan Guaranty Trust
Company of New York, as Administrative Agent for the Lenders (the
"ADMINISTRATIVE AGENT"), Citibank, N.A., as Syndication Agent for the Lenders,
and Chase Bank of Texas, N.A. and NationsBank of Texas, N.A., as
Co-Documentation Agents. Terms defined in the Credit Agreement are used herein
with the same meaning.
______________ (the "DESIGNATOR"), ____________ (the "DESIGNEE"), and
Burlington Resources Inc., a Delaware corporation (the "BORROWER"), agree as
follows:
1. The Designator designates the Designee, and the Designee hereby
accepts such designation, to have a right to make B Advances pursuant to Section
2.19 of the Credit Agreement.
2. The Designator makes no representations or warranties and assumes no
responsibility with respect to (i) any statements, warranties or representations
made in or in connection with the Credit Agreement or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Credit
Agreement or any other instrument or document furnished pursuant thereto and
(ii) the financial condition of the Borrower or the performance or observance by
the Borrower of any of its obligations under the Credit Agreement or any other
instrument or document furnished pursuant thereto.
3. The Designee (i) confirms that it has received a copy of the Credit
Agreement, together with copies of the financial statements referred to in
Section 4.01 thereof and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Designation Agreement; (ii) agrees that it will, independently and without
reliance upon the Administrative Agent, the Designator or any other Lender and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under the Credit Agreement; (iii) confirms that it is a Designated Bidder; (iv)
appoints and authorizes the Administrative Agent to take such action as agent on
its behalf and to exercise such powers under the Credit Agreement as are
delegated to the Administrative Agent by the terms thereof, together with such
powers as are
<PAGE> 111
reasonably incidental thereto; (v) agrees that it will perform in accordance
with their terms all of the obligations which by the terms of the Credit
Agreement are required to be performed by it as a Lender; and (vi) specifies as
its Applicable Lending Office with respect to B Advances (and address for
notices) the offices set forth beneath its name on the signature pages hereof.
4. Following the execution of this Designation Agreement by the
Designator, the Designee and the Borrower, it will be delivered to the
Administrative Agent for acceptance and recording by the Administrative Agent.
The effective date of this Designation Agreement shall be the date of acceptance
thereof by the Administrative Agent, unless otherwise specified on the signature
page hereto (the "EFFECTIVE DATE").
5. Upon such acceptance and recording by the Administrative Agent, as
of the Effective Date, the Designee shall be a party to the Credit Agreement
with a right to make B Advances as a Lender pursuant to Section 2.19 of the
Credit Agreement and the rights and obligations of a Lender related thereto.
6. This Designation Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York.
IN WITNESS WHEREOF, the parties have caused this Designation Agreement
to be executed by their respective officers thereunto duly authorized, as of the
date first above written.
Effective Date:(2)
_______________, 19___
[NAME OF DESIGNATOR]
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
- ---------------------------
(2) This date should be no earlier than the date of acceptance by
the Administrative Agent.
<PAGE> 112
[NAME OF DESIGNEE]
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
Applicable Lending Office
(and addresses for notices)
[Address
BURLINGTON RESOURCES INC.
By:
----------------------------------
Name:
--------------------------------
Title:
--------------------------------
Accepted and Approved this
____ day of ___________, 19__
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK, as
Administrative Agent
By:
------------------------------
Name:
Title:
<PAGE> 113
CONFORMED COPY
AMENDMENT AND RESTATEMENT AGREEMENT dated as of
February 23, 1999 (this "Amendment and Restatement")
in respect of the LONG-TERM CREDIT AGREEMENT dated as
of February 25, 1998 (the "Credit Agreement"), among
BURLINGTON RESOURCES INC., a Delaware corporation
(the "Borrower"), the financial institutions (the
"Lenders") listed on the signature pages thereof,
Morgan Guaranty Trust Company of New York, as
administrative agent (in such capacity, the "Original
Administrative Agent") for the Lenders hereunder,
Citibank, N.A., as syndication agent for the Lenders,
and Chase Bank of Texas, N.A. ("Chase" and, in its
capacity as administrative agent for the Lenders, the
"Administrative Agent") and NationsBank of Texas,
N.A., as co-documentation agents for the Lenders.
The Borrower has advised the Lenders that the Short-Term
Revolving Credit Agreement is being amended and restated to, among other things,
extend the Stated Termination Date thereof an additional 364 days (the
"Short-Term Amendment and Restatement") and has requested in connection
therewith that the Credit Agreement be amended and restated as set forth in
Section 1 below and the parties hereto are willing so to amend the Credit
Agreement. Each capitalized term used but not defined herein has the meaning
assigned thereto in the Credit Agreement.
In consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereto hereby agree, on
the terms and subject to the conditions set forth herein, as follows:
SECTION 1. Amendment and Restatement. Upon the effectiveness
of this Amendment and Restatement as provided in Section 3 below, the Credit
Agreement shall be amended and restated in the form resulting from the following
revisions:
(a) Change of Agents. Chase shall replace Morgan as
Administrative Agent (and all references to "Morgan" or its Affiliates
in connection with its capacity as Administrative Agent shall be deemed
references instead to "Chase" and its Affiliates); Citibank, N.A.,
shall continue as Syndication Agent; Bank of America National Trust and
Savings Association and BankBoston, N.A. shall be Documentation Agents;
The Chase Manhattan Bank shall be Auction Administrative Agent; and no
other Lender shall have any title. Payments to the Administrative Agent
shall be made to it in care of The Chase Manhattan Bank, Agency
Services, One Chase Manhattan Plaza, 8th Floor, New York, NY 10081;
notices may be provided to the Administrative Agent at the same
address, Attention: Muniram Appanna, Telefax: (212) 552-7940, with a
copy to Chase Bank of Texas, N.A., 600 Travis Street, 20th Floor,
Houston, TX 77002, Attention: Russell Johnson, Telefax: (713) 216-8870;
and notices may be provided to the Auction Administrative Agent at The
Chase Manhattan Bank, Agency Services, One Chase Manhattan Plaza, 8th
Floor, New York, NY 10081, Attention: Christopher Consomer, Telefax:
(212) 552-5627; in each case as may be subsequently changed in
accordance with Section 8.02 of the Credit Agreement. The
Administrative Agent shall
<PAGE> 114
2
until such time as it so notifies the Borrower and the Lenders
discharge its duties under Section 2.19 through the Auction
Administrative Agent and all references to the "Administrative Agent"
or to Chase relating to such duties or made in Article 7 shall be
deemed to also refer to the Auction Administrative Agent or to any
Affiliate of Chase serving in such capacity. All payments to be made to
or by the Auction Administrative Agent shall be made through the
Administrative Agent.
(b) Change of Reference Bank. Bank of America National Trust
and Savings Association shall replace Morgan as a Reference Bank.
(c) Elimination of Pro Rata Requirement. Clause (i) of Section
8.07(a) of the Credit Agreement is hereby amended by (A) inserting the
phrase "such Lender's" between the phrases "percentage of all" and
"rights and obligations" in each of the two occasions such phrases
appear, (B) deleting the phrase "of such assigning Lender" and (C)
inserting the phrase "if any," immediately prior to the work "unless".
(d) Effective Date. The "Effective Date" shall mean the date
on which this Amendment and Restatement shall become effective in
accordance with Section 3 below and all references to "the date
hereof", "the date of this Agreement", "hereafter" or other words or
phrases of similar import, shall be deemed references to the Original
Effective Date.
(e) Conforming References. All references in the Credit
Agreement and the Exhibits to agents, to the Credit Agreement and to
the Short-Term Revolving Credit Agreement shall be conformed to reflect
this Amendment and Restatement and the Short-Term Amendment and
Restatement.
SECTION 2. Representations and Warranties. The Borrower
represents and warrants as of the effective date of this Amendment and
Restatement to each of the Lenders that:
(a) Before and after giving effect to this Amendment and
Restatement, the representations and warranties set forth in the Credit
Agreement are true and correct in all material respects with the same
effect as if made on the effective date hereof, except to the extent
such representations and warranties expressly relate to an earlier
date.
(b) Immediately before and after giving effect to this
Amendment and Restatement, no Event of Default or Default has occurred
and is continuing.
SECTION 3. Conditions to Effectiveness. This Amendment and
Restatement shall become effective as of the date hereof when Chase shall have
(a) received counterparts of this Amendment and Restatement that, when taken
together, bear the signatures of the Borrower, the Original Administrative
Agent, Chase and the Majority Lenders, and (b) been advised by the Borrower that
the Short-Term Amendment and Restatement has become effective.
SECTION 4. Agreement. Except as specifically stated herein,
the provisions of the Credit Agreement are and shall remain in full force and
effect. As used therein, the terms "Credit Agreement", "herein", "hereunder",
"hereinafter", "hereto", "hereof" and words of similar import shall, unless the
context otherwise requires, refer to the Credit Agreement as amended hereby.
<PAGE> 115
3
SECTION 5. APPLICABLE LAW. THIS AMENDMENT AND RESTATEMENT
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK.
SECTION 6. Counterparts. This Amendment and Restatement may be
executed in two or more counterparts, each of which shall constitute an original
but all of which when taken together shall constitute but one contract.
SECTION 7. Expenses. The Borrower agrees to reimburse the
Administrative Agent for all out-of-pocket expenses incurred by it in connection
with this Amendment and Restatement, including the reasonable fees, charges and
disbursements of Cravath, Swaine & Moore, counsel for the Administrative Agent.
<PAGE> 116
4
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed by their respective authorized officers as of the
day and year first written above.
BURLINGTON RESOURCES INC.
By: /s/ Suzanne V. Baer
------------------------------------
Name: Suzanne V. Baer
Title: Vice President & Treasurer
CHASE BANK OF TEXAS, N.A., as
Administrative Agent
By: /s/ Russell A. Johnson
------------------------------------
Name: Russell A. Johnson
Title: Vice President
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Original
Administrative Agent
By: /s/ Stacey L. Haimes
------------------------------------
Name: Stacey L. Haimes
Title: Vice President
CITIBANK, N.A., as Syndication Agent
By: /s/ David B. Gorte
------------------------------------
Name: David B. Gorte
Title: Attorney-In-Fact
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Documentation
Agent
By: /s/ Paul A. Squires
------------------------------------
Name: Paul A. Squires
Title: Senior Vice President
<PAGE> 117
5
BANKBOSTON, N.A., as Documentation Agent
By: /s/ Terrence Ronan
------------------------------------
Name: Terrence Ronan
Title: Director
The Lenders
CHASE BANK OF TEXAS, N.A.
By: /s/ Russell A. Johnson
---------------------------------------
Name: Russell A. Johnson
Title: Vice President
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK
By: /s/ Stacey L. Haimes
---------------------------------------
Name: Stacey L. Haimes
Title: Vice President
CITIBANK, N.A.
By: /s/ David B. Gorte
---------------------------------------
Name: David B. Gorte
Title: Attorney-In-Fact
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By: /s/ Paul A. Squires
---------------------------------------
Name: Paul A. Squires
Title: Senior Vice President
<PAGE> 118
6
BANKBOSTON, N.A.
By: /s/ Terrence Ronan
---------------------------------------
Name: Terrence Ronan
Title: Director
MELLON BANK, N.A.
By: /s/ Roger E. Howard
---------------------------------------
Name: Roger E. Howard
Title: Vice President
WELLS FARGO BANK
By: /s/ Ann M. Rhoads
---------------------------------------
Name: Ann M. Rhoads
Title: Vice President
THE BANK OF NEW YORK
By: /s/ Peter W. Keller
---------------------------------------
Name: Peter W. Keller
Title: Vice President
THE BANK OF TOKYO-MITSUBISHI, LTD.
By: /s/ Michael G. Meiss
---------------------------------------
Name: Michael G. Meiss
Title: Vice President
THE NORTHERN TRUST COMPANY
By: /s/ John E. Burda
---------------------------------------
Name: John E. Burda
Title: Vice President
<PAGE> 119
7
WACHOVIA BANK, N.A.
By: /s/ Steven M. Takei
---------------------------------------
Name: Steven M. Takei
Title: Senior Vice President
<PAGE> 1
AMENDMENT TO
THE LL&E DEFERRED COMPENSATION ARRANGEMENT
FOR SELECTED KEY EMPLOYEES
WHEREAS, The LL&E Deferred Compensation Arrangement for Selected Key
Employees (the "Plan") was adopted by The Louisiana Land and Exploration Company
(the "Company"); and
WHEREAS, the Company reserved the right to amend the Plan; and
WHEREAS, the Benefits Committee appointed by the Chief Executive
Officer of Burlington Resources Inc. is authorized to administer the Plan; and
WHEREAS, the Benefits Committee is authorized to act on behalf of the
Company in amending the Plan; and
WHEREAS, no deferrals will be allowed under the Plan with respect to
any period after December 31, 1998; and
WHEREAS, the Benefits Committee wishes to modify the terms of the
deferral arrangement with respect to participants in the employ of the Company
or any of its affiliates on January 1, 1999 and who did not become eligible to
retire under the Plan prior to January 1, 1999;
NOW, THEREFORE, the Plan is hereby amended effective as of January 1,
1999 (such amendment to apply to all deferrals under the Plan regardless of the
year of the deferral):
1. Section 3.1 is amended by adding the following sentence at the
end thereof:
"Anything in this Plan to the contrary notwithstanding, no
deferrals shall be allowed under this Plan with respect to
compensation for any period after December 31, 1998."
2. A new Article V-A is added, to read in its entirety as follows:
"ARTICLE V-A - REVISED DEFERRAL ARRANGEMENT
"Anything in this Plan to the contrary notwithstanding, the
benefits payable under this Plan in respect of any Participant in this
Plan who (i) is in the employ of the Company or any of its affiliates
January 1, 1999, and (ii) was not eligible for Retirement on December
31, 1998 (i.e., had not attained age 50 with 10 years of service on
December 31, 1998) (such a Participant being hereinafter referred to as
an 'Affected Participant,) shall be determined solely in accordance
with the provisions set forth below and such Affected Participant and
his or her Beneficiaries shall have no right to any benefit under this
Plan except as determined pursuant to the provisions set forth below:
<PAGE> 2
AMENDMENT LL&E
DEFERRED COMPENSATION
(1) The balance in the Participant's Compensation Deferral
Account ('Account') on December 31, 1998 shall be
determined under the provisions of the Plan as in effect
prior to January 1, 1999 utilizing the interest rate that
would have applied to the applicable deferral in the case
of Retirement.
(2) With respect to periods on and after January 1, 1999 up to
the date of the Participant's termination of employment,
the Participant's Account balance determined pursuant to
(1) above shall, except as provided below, accrue interest
at a rate determined from time to time by the Committee in
its sole discretion (the 'Interest Account'). Such interest
shall be credited to the Interest Account at the end of
each calendar quarter or such other periods as may be
determined by the Committee. In lieu of treating the
Account as invested in the Interest Account, a Participant
may request the Committee (or, with respect to a
Participant who is subject to Section 16(b) of the
Securities Exchange Act of 1934, as amended, the
Compensation and Nominating Committee of the Board of
Directors of Burlington Resources Inc.) to credit all or a
specified percentage of such Account in phantom or notional
shares of common stock of Burlington Resources Inc.
hereinafter called `Phantom Stock' (the 'Company Stock
Account'), in a notional sub-account credited with units in
a Standard & Poor's 500 Composite Stock Price Index fund or
in a mutual fund selected by the Committee, in its sole
discretion, that tracks such index (the 'S&P Account'), or
in any combination of the Interest Account, the Company
Stock Account and/or S&P Account; however, the Committee
(or Compensation Committee, as the case may be) shall not
be obligated to honor any such Participant's request. If
the Committee (or Compensation Committee, as the case may
be) elects to honor any such request, it shall establish a
separate notional sub-account(s) for such Participant under
his or her Account, which shall be credited (i) with
respect to the Company Stock Accounts, with whole and
fractional shares of Phantom Stock as of January 1, 1999
(or such other date as the Committee (or the Compensation
Committee) designates, and with phantom (notional)
dividends with respect to the Phantom Stock, which shall be
credited as being reinvested in additional shares of
Phantom Stock and (ii) with respect to the S&P Account,
with whole and fractional units in the S&P Account as of
January 1, 1999 and with any notional distributions on such
units, which
PAGE 2 OF 5
<PAGE> 3
AMENDMENT LL&E
DEFERRED COMPENSATION
shall be credited as being reinvested in additional units.
All credits and debits to the Company Stock Account shall
be made based on the Fair Market value per share of the
common stock of Burlington Resources Inc. on the applicable
date, unless otherwise authorized by the Committee (or the
Compensation Committee, as the case may be). For this
purpose, 'Fair Market Value' means, as applied to a
specific date, the mean between the highest and lowest
quoted selling prices at which common stock of Burlington
Resources Inc. was sold on such date as reported in the
NYSE-Corporate Transactions by The Wall Street Journal on
such date or, if no such common stock was traded on such
date, on the next preceding date on which such common stock
was so traded. If the Committee (or Compensation Committee,
as the case may be) chooses to not honor any Participant's
request to invest his or her Account in the Company Stock
Account or S&P Account, the Participant's Account
automatically shall be held in the interest Account. Each
Participant who has an Account under the Plan may request
that all or a specified percentage of his or her Account
balances as of any date be reinvested in the Interest
Account, Company Stock Account and/or S&P Account; however,
the Committee shall not be obligated to honor any such
request. This election shall be in such form as the
committee (or Compensation Committee, as the case may be)
shall establish and shall comply with all requirements of
Section 16(b) of the Securities Exchange Act of 1934, as
amended, to the extent applicable. A Participant shall not
possess any rights of a stockholder of Burlington Resources
Inc. with respect to a share of Phantom Stock.
(3) If a Participant had elected Option A with respect to any
deferrals to which such option was available, payments will
continue to be made in accordance with such Option A
election (unless the employment of the Participant
terminates prior to the date that payment would otherwise
be made, in which event subsection (4) below shall be
applicable); provided, however, that such payments pursuant
to Option A shall be made only to the extent that the
Participant's Account, as determined in accordance with the
foregoing provisions of this Article V-A, is sufficient to
make such payment. The Participant's Account balance shall
be reduced by any amounts so paid out pursuant to Option A.
(4) Upon the termination of the Participant's employment for
any reason, the Participant's Account balance calculated in
PAGE 3 OF 5
<PAGE> 4
AMENDMENT LL&E
DEFERRED COMPENSATION
accordance with this Article V-A as of such date of
termination of employment shall be paid out in a lump sum
in cash as soon as administratively practicable following
such date of termination of employment, unless the
Participant has elected in accordance with election
procedures established by the Committee to instead receive
distribution in the form of a 5-year or 10-year annuity. If
the Participant elects to receive distribution in the form
of a 5-year or 10-year annuity, the Participant will
receive his or her Account balance in 5 or 10 (as the case
may be) equal annual cash installments, with the first
installment being paid in January of the calendar year
following the calendar year of the Participant's
termination of employment and with the succeeding
installments being paid in January of each of the 4 or 9
(as the case may be) succeeding calendar years. The amount
of each such installment shall be determined based on the
assumption that his or her Account balance calculated in
accordance with the foregoing provisions of this Article
V-A as of the date of such termination of employment earns
interest after such date on the balance from time to time
(taking into account reductions in such balance by reason
of distributions) at a fixed rate equal to the average of
Moody's Corporate Bond Average rates for the prior 3 years
(unless the Committee designates a different rate in its
sole discretion) and shall be computed in such manner as to
cause (to the maximum extent possible) each such
installment to be equal. Such installments shall be paid to
the Participant or, in the event of his or her death before
receiving all such installments, the remaining installments
shall be paid to the Participant's Beneficiary.
--------------------
This Article V-A shall not apply to a Participant who is not an Affected
Participant."
PAGE 4 OF 5
<PAGE> 5
IN WITNESS WHEREOF, the Benefits Committee has caused this instrument
to be executed by its duly authorized officers on this 21st day of December
1998.
BENEFITS COMMITTEE
BY: /s/ WILLIAM B. USHER
------------------------------------
Vice President, Human Resources
& Administration
ATTEST:
/s/ FREDERICK J. PLAEGER, II
- ----------------------------------
Vice President, General Counsel
& Assistant Secretary
PAGE 5 OF 5
<PAGE> 1
1998 ANNUAL REPORT
BURLINGTON RESOURCES
[Photo Montage]
"We are a global super independent determined to build long-term shareholder
value through value-added growth and effective cost management."
<PAGE> 2
CONTENTS
Operational Highlights ............. 1
Shareholder Letter ................. 2
Review of Operations ............... 5
Financial Review ................... 20
BURLINGTON RESOURCES
[Photo of Oil Field Equipment]
Burlington Resources is engaged in the exploration, development, production and
marketing of oil and gas. The Company conducts activities in several strategic
areas, domestically and internationally, and ranks first among U.S. independent
oil and gas companies in terms of proved U.S. reserves. BR combines the
diverse global opportunities, critical mass and financial strength of a major
oil company with the entrepreneurial spirit, flexibility and responsiveness of
an independent operator. Our history dates to the 1800's and represents a
heritage of growth and success.
TERMS USED IN THIS REPORT
Bbls Barrels
BCF Billion Cubic Feet
BCFE Billion Cubic Feet of Gas Equivalent
MBbls Thousands of Barrels
MMBbls Millions of Barrels
MCF Thousand Cubic Feet
MMCF Million Cubic Feet
MCFE Thousand Cubic Feet of Gas Equivalent
MMCFE Million Cubic Feet of Gas Equivalent
MMBTU Million British Thermal Units
TCF Trillion Cubic Feet
TCFE Trillion Cubic Feet of Gas Equivalent
2-D Two Dimensional
3-D Three Dimensional
NGLs Natural Gas Liquids
DD&A Depreciation, Depletion and Amortization
BR Burlington Resources Inc.
LL&E The Louisiana Land and Exploration Company
Shelf Shallow Waters of the Outer Continental Shelf
in the Gulf of Mexico
Deep water Water Depths of 600 Feet or Greater
in the Gulf of Mexico
Proved reserves represent estimated quantities of oil and gas which geological
and engineering data demonstrate, with reasonable certainty, can be recovered in
future years from known reservoirs under existing economic and operating
conditions. Reservoirs are considered proved if shown to be economically
producible by either actual production or conclusive formation tests.
Proved developed reserves are the portion of proved reserves which can be
expected to be recovered through existing wells with existing equipment and
operating methods.
Proved undeveloped reserves are the portion of proved reserves which can be
expected to be recovered from new wells on undrilled proved acreage, or from
existing wells where a relatively major expenditure is required for completion.
Net acreage and net oil and gas wells are obtained by multiplying gross acreage
and gross oil and gas wells by the Company's working interest percentage in the
properties.
Oil is converted into cubic feet of gas equivalent based on 6 MCF of gas to one
barrel of oil.
<PAGE> 3
TABLES AND GRAPHS
NATURAL GAS RESERVES
December 31,
(TCF)
[Bar Graph]
6.2
6.4
6.4
NATURAL GAS PRODUCTION
Year Ended December 31,
(MMCF per day)
[Bar Graph]
1996 1,603
1997 1,669
1998 1,647
NATURAL GAS PRICES
Year Ended December 31,
($ per MCF)
[Bar Graph]
1996 $2.05
1997 $2.18
1998 $1.97
<PAGE> 4
OIL RESERVES
December 31,
(MMBbls)
[Bar Graph]
1996 305.8
1997 253.7
1998 273.2
OIL PRODUCTION
Year Ended December 31,
(MBbls per day)
[Bar Graph]
1996 91.1
1997 87.2
1998 82.7
OIL PRICES
Year Ended December 31,
($ per Bbl)
[Bar Graph]
1996 $20.39
1997 $19.24
1998 $13.28
CAPITAL EXPENDITURES*
Year Ended December 31,
($ Millions)
[Bar Graph]
1996 $804
1997 $1,245
1998 $1,165
RESERVE REPLACEMENT*
Year Ended December 31,
(Percent of Production)
[Bar Graph]
1996 115%
1997 188%
1998 123%
3 yr. avg. 142%
RESERVE REPLACEMENT COSTS*
Year Ended December 31,
($ per MCFE)
[Bar Graph]
1996 $.82
1997 $.77
1998 $1.10
3 yr. avg. $.88
*Includes Acquisitions
<PAGE> 5
[Map Graphic]
Permian
San Juan
Anadarko
Wind River
Williston
Deep Water
Onshore Gulf Coast
Shelf
[Globe Graphic] N. America
[Globe Graphic] Venezuela
Colombia
[Globe Graphic] North Sea
East Irish Sea
Egypt
Algeria
[Globe Graphic] Indonesia
STATISTICAL DATA
OPERATIONAL HIGHLIGHTS
<TABLE>
<CAPTION>
OPERATING DATA
1998 1997 1996
Year-end Proved Reserves
<S> <C> <C> <C>
Gas (BCF) 6,380 6,418 6,231
Oil (MMBbls) 273.2 253.7 305.8
Total (BCFE) 8,019 7,940 8,066
Production
Gas (MMCF per day) 1,647 1,669 1,603
Oil (MBbls per day) 82.7 87.2 91.1
Total (MMCFE per day) 2,143 2,192 2,150
Average Sales Price
Gas (per MCF) $ 1.97 $ 2.18 $ 2.05
Oil (per Bbl) $13.28 $19.24 $20.39
Average Production Costs (per MCFE) $ .49 $ .51 $ .54
Wells Drilled (Net) 361 317 241
Percentage Successful 88% 89% 90%
Gross Wells Drilling at Year end 30 55 77
Net Wells Drilling at Year end 17 29 32
</TABLE>
FINANCIAL DATA
<TABLE>
<CAPTION>
(In Millions, Except per Share Amounts) 1998 1997 1996
<S> <C> <C> <C>
Revenues $1,637 $2,000 $2,200
Operating Income 218 503 580
Net Income (a) 86 319 335
Basic Earnings per Common Share (a) $ .48 $ 1.80 $ 1.89
Weighted Average Common Shares 177 177 177
Cash Flows from Operations $ 770 $1,122 $ 995
Capital Expenditures 1,165 1,245 804
Total Assets 5,917 5,821 5,683
Long-term Debt 1,938 1,748 1,853
Stockholders' Equity $3,018 $3,016 $ 2,808
Long-term Debt to Capital Ratio 39% 37% 40%
Cash Dividends per Common Share $ .55 $ .46 $ .44
</TABLE>
(a) Included in 1997 is an $80 million pretax charge ($71 million after tax or
$.40 per share) related to the LL&E merger for severance and related exit costs,
and transaction costs. Also included in 1997 is a $50 million pretax gain ($31
million after tax or $.18 per share) related to the sales of oil and gas
properties associated with the divestiture program. Excluding these
non-recurring items, Basic Earnings per Share would have been $2.02 in 1997.
Excluding the non-recurring item related to the reorganization charge of $30
million ($18 million after tax or $.11 per share), Basic Earnings per Common
Share would have been $2.00 in 1996.
1
<PAGE> 6
"Even after a challenging year like 1998, BR's mission remains unchanged. Our
objective is to deliver long-term shareholder value through value-added growth
and effective cost management."
TO OUR FELLOW STOCKHOLDERS
SHAREHOLDER LETTER
Nineteen ninety-eight was a year which provided us all a vivid reminder of the
extremely cyclical nature of our business as the industry experienced
considerable volatility, uncertainty and turmoil. Although the year began with a
great deal of optimism, an unseasonably mild winter and economic difficulties in
key areas of the world led to extremely low oil prices and disappointing natural
gas prices by year end. In response to this collapse in commodity prices, the
industry's activity level - which began 1998 at record highs - ended the year
near historical lows. This environment is taking its toll on the industry,
causing many companies severe financial distress, forcing the sale of key
assets, necessitating capital spending curtailments and driving industry
consolidation.
Though BR's financial results have been negatively affected by lower commodity
prices, our solid balance sheet, high quality asset base and operational
efficiency have allowed us to remain profitable and focused on our long-term
value creation strategy. We have made prudent adjustments in our capital program
to keep spending levels in line with expected cash flows. However, we have
maintained funding for the programs and projects which we believe are key to our
goal of delivering sustained value growth over a longer time horizon.
Capital expenditures totaled $1.2 billion in 1998 leading to solid operating
results. We replaced 123% of 1998 production at a cost of $1.10 per MCFE.
Reserve additions included the first reserves bookings from our highly
successful Algerian exploration program, as well as substantial additions from
the San Juan Basin of New Mexico. During 1998, we continued the program we began
several years ago investing significant capital in geological and geophysical
activities and lease acquisitions, investments which form the basis for
substantial reserve additions in future years. In fact, over the past three
years, we have dedicated $477 million to this area of our business. We now
expect to begin to reap the benefits of these prior expenditures with a higher
percentage of our 1999 exploration program targeted for the drill bit.
[Oil and gas platform and other equipment Graphics]
During 1998, our production levels declined 2 percent from the previous year.
While we anticipated the decline in our oil volumes, our gas production for the
year was lower than expected for several reasons: unplanned mechanical
downtime, weather related production interruptions and accelerating decline
rates, primarily in our Gulf of Mexico operations.
Operationally, 1998 was highlighted by a number of successes domestically and
internationally. We achieved a record level of production from our San Juan
operations for the twelfth consecutive year. Development of the Madden Field
in Wyoming moved forward with a successful drilling program in the shallow Lance
and Lower Fort Union Formations, the increase in capacity at the Lost Cabin Gas
Plant and the initiation of production from our third successful Deep Madison
Formation well.
2
<PAGE> 7
[PHOTO OF CHAIRMAN, PRESIDENT AND CEO]
In the Northwest European Shelf, we began development of our East Irish Sea
properties, with plans for first production in the fourth quarter of 1999. We
successfully drilled three new wells in Algeria and participated in the
development of the giant Qoubba Field. We also expanded the Company's presence
in North Africa with our entry into Egypt's Offshore North Sinai Block.
Even after a challenging year like 1998, BR's mission remains unchanged. Our
objective is to deliver long-term shareholder value through value-added growth
and effective cost management. We are committed to maintaining our focus on this
goal, irrspective of near-term production gains or commodity price swings, and
we are resolute in maintaining the financial strength of the Company to pursue
this objective. BR's debt to total capital ratio at year end stood at 39
percent, among the strongest in the E & P sector. With our initial 1999 capital
budget set at $750 million, we believe that we will be able to maintain our
solid financial position during 1999. Such strength will enable us to quickly
react to the opportunities that are sure to be generated in the current
operating environment.
Admittedly, we have adopted an aggressive long-term growth target. In order to
position ourselves for success, we have transformed Burlington Resources from a
purely domestic exploitation company into a global Super Independent. Because of
the maturity of the United States from an exploration perspective, we are
building an international exploration and production business where we believe a
number of meaningful growth opportunities exist.
Our strong domestic asset base provides a dependable source of cash flow,
although there are limited opportunities within this business unit to provide
the type of significant growth we desire. The exception, of course, is the Deep
water play in the Gulf of Mexico to which we have made a major commitment.
Growth initiatives such as our Deep water Gulf of Mexico and international
programs require large capital investments and longer lead times. Our strong
balance sheet and stable domestic production base provide us with key advantages
in pursuing this strategy.
We are enthusiastically looking ahead to our 1999 capital program. In North
America, our Deep water exploration program will become fully operational, with
seven to ten wells planned for the year. In light of the current industry
environment, some of our anticipated 1999 Deep water activity may be delayed due
to a lack of partner participation. We are completing a plant expansion at the
Madden Field, doubling capacity to relieve current production constraints and in
preparation for the next Deep Madison well, which is currently drilling. Our San
Juan Basin conventional gas development will intensify in 1999 with an expanded
Mesaverde infill drilling program. Internationally, in addition to new
exploration and appraisal drilling, we will commence development of the MLN
Field in Algeria once we receive government approval for our exploitation plan.
The Company will drill at least one of the high potential exploration prospects
identified on Venezuela's Delta Centro Block in the first half of the year and
initiate the second phase of our East Irish Sea development by mid-year 1999.
1998 PROVED RESERVES
Total: 8.0 TCFE
[Pie Chart]
International Gas 7%
International Oil 3%
Domestic Gas 73%
Domestic Oil 17%
1998 DAILY PRODUCTION
Total: 2.1 BCFE
[Pie Chart]
International Gas 3%
International Oil 5%
Domestic Gas 74%
Domestic Oil 18%
[Photo of a Treating Plant]
<PAGE> 8
"In pursuing our long-term strategy, we strive to maintain a balance between
near-term production and long-term value growth."
In pursuing our long-term strategy, we strive to maintain a balance between
near-term production and long-term value growth. However, we refuse to fall
prey to the temptation of adding production volumes that do not generate true,
long-term value in order to meet artificially imposed, short-term growth
targets. When we face the inevitable trade-offs in capital allocation, as we
must in today's lower price environment, our choices are driven by what is best
for our shareholders in the long run. Our 1999 capital program reflects this
discipline with our decision to reduce capital spending on the Gulf of Mexico
Shelf where smaller reserve targets and steeper decline rates have made this
area less attractive in relation to other opportunities that can have a
significant impact on the Company's underlying value.
Last year we saw unprecedented deterioration of equity values among E & P
companies and we were certainly not satisfied with the performance of our stock.
Although there is a great deal of pessimism about our industry as we approach
the millennium, at Burlington Resources we are much more optimistic. BR
possesses a high quality domestic asset base that generates considerable cash
flow for reinvestment; a well balanced risk portfolio that includes a large
inventory of exploitation opportunities capable of maintaining stable annual
production without deterioration in overall value; a growing portfolio of high
potential growth oriented exploration projects; and, finally, superior financial
stability and flexibility. These qualities allow us to generate, nurture and
fund high-impact opportunities for the future, even in difficult times.
Reduced industry spending in 1999 will undoubtedly tighten natural gas supply
and create upward pressure on that commodity's price. As one of the largest
holders of U.S. natural gas, we believe our shareholders are superbly positioned
to benefit from the inevitable improvement in this market. And, as one of the
strongest independent E & P companies, both financially and operationally, we
believe our disciplined approach to investment in long-term growth opportunities
will deliver competitive value accretion to our shareholders. On the pages that
follow, we hope to give you insight into our progress, plans for the future and
efforts in positioning ourselves for growth and building long-term shareholder
value.
In closing, this annual report is dedicated to the memory of a friend and former
officer, Hays Warden, retired Senior Vice President and Controller, who recently
lost a battle with cancer. Hays contributed much to BR and will be missed.
/s/ Bobby S. Shackouls
- ----------------------
Bobby S. Shackouls
Chairman, President and
Chief Executive Officer
[Photo Montage]
<PAGE> 9
REVIEW OF 1998 OPERATIONS
NORTH AMERICA
& INTERNATIONAL
5
<PAGE> 10
[BURLINGTON RESOURCES NORTH AMERICA GRAPHIC]
BUSINESS AT A GLANCE
Burlington Resources North America (BRNA) was formed as a separate business unit
in 1998 to reinforce the value creation potential of the Company's high quality
domestic assets. With reserves of 7.2 TCFE (81 percent natural gas and 19
percent oil), the size and quality of BRNA's asset base is unparalleled among
independent oil and gas companies. These assets have yielded solid operating
results and a strong production profile since BR's inception and are expected to
be the springboard for the Company's future growth.
BRNA is the largest independent natural gas producer in the U.S. Proved natural
gas reserves at year-end 1998 stood at 5.9 TCF. This reserve base provides an
optimal balance between near-term cash flow generation and long-term stability,
with a reserve-to-production index of ten years.
[Globe Graphic]
6
<PAGE> 11
NORTH AMERICA
1998 HIGHLIGHTS
Formed BR North America as a separate business unit.
Added 734 BCFE of proved reserves.
Achieved record gas production levels in the San Juan Basin for the twelfth
consecutive year.
Expanded the Mesaverde 80-acre infill program to two new pilot areas.
Debottlenecked the Lost Cabin Gas Plant at the Madden Field, increasing the
plant inlet capacity to 65 MMCF of gas per day.
Reduced Madden Field shallow formation average drilling costs by over 35
percent.
Completed delineation of Cedar Hills Field in preparation for unitization and
waterflooding.
Drilled 28 successful wells in the onshore Gulf Coast area.
First Deep water Gulf of Mexico production for BR came on stream from the
Cinammon prospect at Green Canyon 89.
NORTH AMERICA
RESERVES
December 31, 1998
<TABLE>
<CAPTION>
GAS OIL TOTAL
(BCF) (MMBbls) (BCFE)
- -------------------------------------
<S> <C> <C> <C>
Proved
Developed
Reserves 4,565 199.2 5,760
Proved
Undeveloped
Reserves 1,293 27.4 1,458
- -------------------------------------
Total
Proved
Reserves 5,858 226.6 7,218
- -------------------------------------
</TABLE>
"BR North America's primary business objective is to implement a balanced
portfolio of projects which, in aggregate, will contribute to BR's corporate
value growth goals each year."
Technological innovation and cost containment have led to the development of
several core assets in the U.S., where investment repeatability and economies
of scale have allowed the Company to achieve superior returns. A prime example
is the San Juan Basin, where BR is the largest and lowest cost operator. New
business development activities are focused in areas that may become core
assets in the future. One example of this strategy is the Deep water Gulf
of Mexico, where the Company has amassed a 185-block leasehold inventory.
BRNA's primary business objective is to implement a balanced portfolio of
projects which, in aggregate, will contribute to BR's corporate value growth
goals. Activities are organized around core asset and strategic focus areas.
Each focus area develops strategies consistent with its unique strengths and
opportunities. Investment options include exploration, exploitation,
developmentand acquisition projects, as well as other business opportunities
designed to enhance the value of core operations. The Company continuously
evaluates its asset portfolio based on investment performance and anticipated
investment potential. This evaluation drives capital allocation and business
strategies for each asset area.
During 1998, oil and gas capital expenditures related to BRNA's operations
totaled $921 million: $407 million for exploration; $491 million for
development projects; and $23 million related to proved acquisitions. As
a result of these investments, the business unit added
734 BCFE to its proved oil and gas reserves, achieving a reserve replacement
ratio of 102 percent. Reserve replacement costs averaged $1.25 per MCFE.
These 1998 results represent continuing strong operating performance in the
U.S. Over the last three years, BR's U.S. reserve replacement has averaged
131 percent, while its reserve replacement costs have averaged $.89 per MCFE.
SAN JUAN BASIN
The San Juan Basin is the cornerstone of BR, providing significant earnings and
the cash flow to fuel the Company's long-term growth strategy. The assets in
this basin account for approximately half of BR's gas reserves and daily gas
production. These assets generate more than three times the cash flow required
to maintain production levels in this basin.
[Gas Plant and South Louisiana Graphics]
7
<PAGE> 12
NORTH AMERICA
1998 PROVED RESERVES
Total: 7.2 TCFE
[PIE CHART GRAPHIC]
Onshore Oil 16%
Offshore Oil 3%
Onshore Gas 75%
Offshore Gas 6%
[PIE CHART GRAPHIC]
North America 1998
Daily Production
Total: 1.9 BCFE
Onshore Oil 15%
Offshore Oil 5%
Onshore Gas 63%
Offshore Gas 17%
As the largest operator and the lowest cost producer in the basin, BR
continually adds significant value by using its technical expertise to optimize
costs.
The San Juan Basin, located in northwest New Mexico and southwest Colorado, is
one of the most prolific hydrocarbon producing basins in the U.S. The four major
gas producing horizons, the Fruitland Coal, Pictured Cliffs, Mesaverde and
Dakota, in the basin range in depth from 1,000 to 8,500 feet.
In 1998, BR achieved a record level of gas production in the basin for the
twelfth consecutive year. At year end, net daily gas production reached over 840
MMCF per day. Over the last ten years, BR has grown production in the San Juan
Basin at an annual compound rate of over 15 percent. While the rate of growth
has moderated in recent years as the coalbed methane play has matured, the
growth rate over the last five years has averaged seven percent.
Contributing approximately half of BR's net gas production from the San Juan
Basin, the Fruitland Coal is the largest producing coalbed methane reservoir
ever discovered worldwide. Because of BR's development of the Fruitland Coal, it
is the world's largest producer of coalbed methane. BR also operates the Val
Verde Plant, the basin's largest treating plant, along with approximately 420
miles of gathering lines and 14 compressor stations. Optimization projects such
as recavitations and wellsite compression have added net incremental coal seam
gas volumes in each of the last five years, to a peak of over 460 MMCF of gas
per day in early 1998. Net annualized coal seam gas volumes remained relatively
constant at 450 MMCF per day for the year.
In the conventional horizons, a major focus
of the efforts has been the Mesaverde Formation which was originally developed
in the 1950's on 320 acre spacing and down spaced in the early 1970's on 160
acre spacing. In 1994, BR undertook an extensive study of the formation across
the entire basin. Results indicated that down-spaced drilling (infill drilling)
on 80 acre spacing could increase gross recoverable gas reserves by
approximately 1.5 TCF across the basin. A pilot infill drilling program begun in
1997 was expanded in 1998 to include two additional pilot areas. To date, BR has
drilled 38 Mesaverde infill wells, investing about $9 million.
New basin-wide increased density pool rules that allow for 80 acre infilling of
the Mesaverde formation were approved by the New Mexico Oil Conservation
Division in February 1999. BR plans to drill 50 new wells in 1999. By 2000, the
development program is planned to level out at 90 wells per year. The Company
plans to spend about $80 million to drill in excess of 400 infill wells over the
next five years. In total, the Mesaverde infill program exposes the Company to
significant gas reserves at a cost to add of about $.32 per MCF.
Another effort started in 1998 was the Lewis Shale project, involving data
gathering from one of the major source rock shales in the basin. Results are
promising, with the average gross production increase for the first 29
completions at 300 MCF of gas per day and a cost to add of around $.30 per MCF
of gas. The project will continue in 1999 by adding Lewis Shale to existing
Mesaverde well bores with 66 completions planned. If results continue to be
favorable, the Company could expand the program to recomplete over 1,000 wells
in the Lewis Shale over the next five years. Total net costs for the expanded
program would be approximately $145 million, resulting in significant increases
in reserves.
[Pipe and gas plant Graphics]
8
<PAGE> 13
NORTH AMERICA
PRODUCTION & PRICES
Year Ended December 31,
<TABLE>
<CAPTION>
1998 1997 1996
- ---------------------------------------------------------------
<S> <C> <C> <C>
Production
Gas 1,580 1,592 1,520
(MMCF per day)
Oil 66.2 68.3 72.2
(MBbls per day)
- ---------------------------------------------------------------
Average
Sales Prices
Gas (per MCF) $ 1.94 $ 2.16 $ 2.02
Oil (per Bbl) $ 13.31 $ 19.32 $ 20.64
- ---------------------------------------------------------------
</TABLE>
In 1997, BR continued its exploratory efforts in the Deep Pennsylvanian
Formation. Two exploratory wells were drilled that confirmed reservoir quality
rock and hydrocarbon sourcing. During 1998, the Company acquired 350 square
miles of 3-D seismic aimed at locating structural or stratigraphic trapping of
hydrocarbons and delineating prospects for 1999. BR holds 815,000 gross acres in
the Pennsylvanian Formation. While this is a risky opportunity, the target sizes
are large enough that success could result in substantial growth in production.
Early in 1998, BR acquired additional interest in the Allison Unit. The
acquisition substantially increased the Company's ownership in the unit and
added proved reserves of 75 BCFE. It allowed BR to accelerate development
activity in the unit in 1998 and into 1999. The Company will continue to pursue
strategic acquisitions that strengthen its significant position in the basin.
PERMIAN BASIN
BR's position in the Permian Basin comprises in excess of 662,000 net acres in
several significant trends. These properties continue to provide a large number
of opportunities to add both oil and gas reserves. Net production in the basin
was approximately 85 MMCF of gas per day and 12,600 Bbls of oil per day in 1998.
The Company's primary asset in the Permian Basin is the Waddell Ranch, where BR
controls nearly 77,000 gross or 37,000 net acres. Since assuming operations in
1991, BR has continuously increased oil production on the Waddell Ranch
primarily through exploitation and optimization. In 1998, approximately 154
total projects were completed on the Waddell Ranch at a cost of $19 million. In
1999, the Company will implement more than 150 projects to increase recoveries
from existing waterfloods through expansion and optimization.
ANADARKO BASIN
[GAS PLANT GRAPHIC]
The Anadarko Basin offers a balanced, diverse inventory of exploitation and
exploration opportunities. During 1998, BR spent $63.5 million in the basin,
completing 55 drilling and workover projects and acquiring 265 square miles of
3-D seismic data surveys. Average net gas production for the year from the basin
was 107 MMCF of gas per day and oil production reached 600 Bbls per day.
A consolidated acreage position of approximately 250,000 net acres, in
conjunction with over 700 square miles of proprietary 3-D seismic data, yields a
significant competitive advantage for growth in the coming years.
In addition, BR's focus on reducing development costs should allow enhanced
economic viability of low-risk exploitation projects in the future.
WILLISTON BASIN
The Williston Basin, located in western North Dakota and northeast Montana, is
one of BR's primary oil producing areas. During 1998, 104 projects were
completed in the basin at a cost of $89 million. At year end, net daily oil
production for the basin was approximately 22,000 Bbls per day.
The Company's activity in 1998 focused on the Cedar Hills and East Lookout Butte
Fields. These fields are located along the Cedar Creek Anticline and are part of
the Red River "B"
"The cornerstone of BR is the San Juan Basin, providing significant earnings
and the cash flow to fuel the Company's long-term growth strategy."
9
<PAGE> 14
NORTH AMERICA
WELLS DRILLED
Year Ended December 31,
1998 1997 1996
- ---------------------------------------------
PRODUCTIVE
Exploratory 16.3 29.0 23.3
Development 297.7 247.5 189.3
- ---------------------------------------------
DRY
Exploratory 27.5 26.5 17.5
Development 12.5 8.5 5.9
- ---------------------------------------------
TOTAL NET WELLS 354.0 311.5 236.0
- ---------------------------------------------
NORTH AMERICA
CAPITAL EXPENDITURES
Year Ended December 31,
($ Millions)
<TABLE>
<CAPTION>
1998 1997 1996
- ----------------------------------------------------
<S> <C> <C> <C>
OIL AND GAS
ACTIVITIES $ 921 $ 927 $ 676
- ----------------------------------------------------
PLANTS AND
PIPELINES 60 40 45
- ----------------------------------------------------
ADMINISTRATION 45 32 8
- ----------------------------------------------------
TOTAL $1,026 $ 999 $ 729
- ----------------------------------------------------
</TABLE>
NORTH AMERICA UNIT COSTS
Year Ended December 31,
($ per MCFE)
<TABLE>
<CAPTION>
1998 1997 1996
- -----------------------------------------------------------
<S> <C> <C> <C>
AVERAGE
PRODUCTION
COSTS $ .47 $ .50 $ .52
- -----------------------------------------------------------
DD&A Rates $ .59 $ .58 $ .57
- -----------------------------------------------------------
</TABLE>
Trend. During 1998, the Cedar Hills Field delineation was completed in
preparation for unitization and secondary recovery. If unitization of the field
proceeds on schedule, plans for 1999 include constructing waterflood facilities,
infill drilling and converting producing wells into water injectors. Production
response to waterflooding is anticipated in 2001.
In the East Lookout Butte Field, BR is operator of a horizontal waterflood
program. During 1998, BR drilled 24 infill wells and expects to complete infill
drilling by year-end 1999.
With horizontal drilling technology and expertise, BR believes it has a key
technical advantage in the Williston Basin. The Company has drilled over 300
horizontal wells in the basin and over 95 percent of the 1999 drilling budget
for the basin will be spent on approximately 50 horizontal wells. While most E&P
companies use outside directional drilling personnel on their horizontal wells,
BR does all of its directional work with its own wellsite, geoscience and
engineering staff. This has proven to be cost effective and has allowed BR to
develop world class horizontal drilling capabilities, ultimately translating
into higher well productivity and reserve recovery. This technical knowledge
will be even more valuable when applied to other domestic and international
opportunities requiring precision directional drilling skills.
WIND RIVER BASIN
BR's major asset in the Wind River Basin is the Madden Field in central Wyoming,
an asset whose value is being significantly enhanced by applying the Company's
engineering expertise. The field produces natural gas from multiple horizons,
ranging in depth from 5,500 to over 24,000 feet. The Company's working interest
varies by horizon, from 27 to 56 percent. The Madden Deep Unit, operated by BR,
covers 70,000 gross acres. There are currently three well completions in the
prolific deep Madison Formation and 58 producing wells in the shallower
formations.
Increased drilling activity in the shallow horizons in 1998 overcame the natural
field decline and resulted in gross shallow gas production increasing from 72
MMCF of gas per day early in the year to around 92 MMCF of gas per day at year
end. The total year-end field production of 140 MMCF of gas per day is the
highest sustained rate ever recorded in this 30 year old gas field. With
commissioning of additional gas processing capacity in the field, gross field
production is expected to grow to approximately 240 MMCF of gas per day by the
end of 1999.
During 1998, the shallow drilling program was concentrated in the Lower Fort
Union and Lance Formations. These programs were quite successful, with 13 wells
drilled during the year. Completed well costs in Lower Fort Union wells have
been reduced from an average of $1.4 million in late 1997 to under $900 thousand
on the wells drilled in 1998. Additionally, with the average well now being
drilled in 12 to 14 days, drilling time has been cut in half. The 1999 drilling
program includes drilling 20 more Lower Fort Union and shallow Lance wells.
In 1998, BR successfully connected and initiated production from the Bighorn
#4-36, the third well completed in the deeper Madison Formation. Completed in
1997, this well extended the lowest known gas in the pool, increasing proved
gross reserves to approximately 2 TCF of gas.
Unlike the gas produced from the shallow formations, the Madison Formation
contains carbon dioxide and hydrogen sulfide and must be processed prior to
sale. Constructed for this purpose, the Lost Cabin Gas Plant was debottlenecked
during the year, increasing gross inlet capacity from 50 to 65 MMCF of gas per
day. Because production levels continue to be constrained by plant capacity, an
expansion is currently under construction to provide an incremental inlet
capacity of 65 MMCF of gas per day in the third quarter 1999.
10
<PAGE> 15
"With horizontal
drilling
technology and
expertise, BR believes it has a key
technical advantage in
the Williston Basin."
<TABLE>
<CAPTION>
NORTH AMERICA
PRODUCTIVE WELLS
December 31, 1998
Gross Net
- -----------------------------------
<S> <C> <C>
Oil 5,559 2,920
- -----------------------------------
Gas 10,667 6,004
- -----------------------------------
</TABLE>
BR is currently drilling the fourth Madison well. The Bighorn #5-6 was spud in
January 1999, marking the beginning of the next development phase of the Madison
Formation. This well provides a necessary take point to drain existing proved
reserves. With continued encouraging performance of the existing producing
wells, plans are to drill lower on the structure following the Bighorn #5-6. The
Company believes drilling lower on this structure could possibly double proved
reserves in the formation.
In late 1998, BR reached agreement to participate in the construction of
additional gathering capacity to move gas from central Wyoming toward available
transportation and away from the pipeline constraints. This investment by BR is
key to optimizing the value of its current and future Madden natural gas
reserves.
Cost containment, an aggressive development program and an innovative gas
marketing and transportation plan combine to maximize the value of this world
class asset, which should provide BR with steady cash flow and earnings for the
next two decades or more.
ONSHORE GULF COAST
The Company has a long history of exploration and development in south
Louisiana. Its 600,000 acres of fee lands provide a competitive advantage in an
area where acreage costs are high, leasehold positions are difficult to maintain
and seismic data is expensive to gather. Most of the fee lands are now covered
by 3-D seismic data, a significant factor in the Company's successful drilling
program in 1998. In 1998, BR participated in the drilling of 16 successful
wells, which not only sustained net production but increased it from 134 MMCF of
gas per day and 8,300 Bbls of oil per day in 1997 to 160 MMCF of gas per day and
9,600 Bbls of oil per day in 1998.
An example of BR fee land operations is at Four Isle Dome, located in Terrebonne
Parish, about 25 miles southwest of Houma, Louisiana. The field was first
discovered in 1927 and contains 35 pay sands ranging in depth from 5,700 to
17,500 feet. Since 1997, BR has increased its working interest from 25 percent
to 45 percent and assumed operatorship. This has allowed BR to drill
aggressively, resulting in four successful wells and one recompletion, bringing
the total active well count to seven at year end. Gross daily gas production
increased from under one MMCF of gas per day to over 40 MMCF of gas per day over
this period.
Continued interpretation of a 55 square mile 3-D seismic survey has yielded at
least four additional prospects to be drilled in the Four Isle Dome area in the
next 12 to 18 months. The Company is highly optimistic about these prospects
because 3-D seismic data shows amplitude events that correlate well with
productive reservoirs. Successful results could yield additional volume
increases similar to those achieved in 1998. Other unexploited flanks of the
Four Isle Dome remain to be mapped, which should continue the rejuvenation of
the field.
Another area of onshore activity in 1998 was in the Transition Zone, an area
covering five miles of Louisiana coastline from the Sabine River to Vermilion
Bay. The Company's current acreage position includes 9,400 gross acres,
supported by 3-D seismic data of over 1,000 square miles. The Transition Zone
contains objectives in multiple formations ranging from 13,000 to 21,000 feet.
Although the Transition Zone drilling represents higher risk, potential reserve
targets of 20 to 800 BCF of gas led the Company to participate in a venture with
a 50 percent working interest. Two non-commercial wells have been drilled to
date and a third well was in progress at year end.
During 1998, the Gulf Coast program expanded into south Texas where the Company
participated in drilling 12 successful wells. At Armstrong Ranch in Jim Hogg
County, BR has found new opportunities in another older production area. This
field was
11
<PAGE> 16
<TABLE>
<CAPTION>
NORTH AMERICA
ACREAGE
December 31, 1998
GROSS NET
- --------------------------------------
<S> <C> <C>
DEVELOPED
ACRES 5,658,325 3,017,448
- --------------------------------------
UNDEVELOPED
ACRES 12,074,044 9,697,818
- --------------------------------------
</TABLE> "Most of the
fee lands are now
covered by 3-D
seismic data,
a significant factor
in the Company's
successful drilling program
in 1998."
discovered in 1959 using reflection 2-D seismic data, with first production
occurring in the same year. To date, the field has produced in excess of 650
BCF. In 1998, BR successfully drilled two wells in the Wilcox Formation which
were awaiting final completion at year end. When a pipeline is completed, the
two wells are anticipated to produce at a gross combined rate of 20 MMCF of gas
per day. Three additional Wilcox Formation wells are scheduled for drilling in
1999, as well as a lower Wilcox test.
With a total acreage position of over 860,000 acres in south Louisiana and south
Texas and many exploitation opportunities using 3-D seismic data, BR looks
optimistically to its onshore program to help offset the steep decline on its
Gulf of Mexico Shelf, which is consistent with industry experience in this area.
GULF OF MEXICO SHELF
BR's history on the Gulf of Mexico Shelf dates back to the 1970's. The "Shelf"
is defined as water depths less than 600 feet. BR invested $218 million on the
Shelf in 1998, with net gas production averaging about 307 MMCF of gas per day
and net oil production averaging 14,000 Bbls per day for the year. At year end,
the Company had an interest in a total of 236 Shelf leases, many of which are
held by production. In addition to non-operated interests in numerous blocks, BR
operates 60 platforms and 35 fields.
Although the industry's drilling activity on the Shelf has increased
dramatically over the last ten years and many completion technology improvements
have been made, production has remained fairly constant. Smaller reserve
targets, steeper production decline rates and depressed commodity prices led BR
to reassess the economic viability of exploration and exploitation programs on
the Shelf. As a result, BR is reducing its 1999 capital commitment by almost 80
percent, to around $50 million, focusing on low risk exploitation activities.
Such activities include South Timbalier 148, where the Company owns a 40 percent
working interest. It is located 80 miles south of New Orleans, Louisiana, in 110
feet of water. BR's interpretation of 3-D seismic data has resulted in the
drilling of seven successful wells, with net production on the block increasing
from two MMCF of gas per day and 25 Bbls of oil per day in 1994, to a peak of 54
MMCF of gas per day and 2,100 Bbls of oil per day at mid-year 1998. In 1998, BR
participated in the drilling of the B-2 and A-9/A-9ST wells, recompleted the B-1
well, and achieved an annualized production increase of 10 MMCF of gas per day
and 400 Bbls of oil per day. At year end, the net gas production in the field
had declined to 23 MMCF of gas per day and oil production to 660 Bbls per day,
exemplifying the steep production declines being experienced by all participants
on the Shelf. BR's interpretation of additional 3-D seismic data in the
surrounding area prompted the Company to negotiate a farmin of the adjacent
South Timbalier Block 149. At year end, the E-4 exploratory well was drilling
near the projected total depth of 21,776 feet.
High Island A-371, located 115 miles southeast of Galveston, Texas, in 400 feet
of water, is a 100 percent BR-owned field that first
produced in 1996. At its peak in 1996, High Island A-371 produced at a gross
rate of 100 MMCF of gas per day. At year-end 1998, gross production declined to
around 14 MMCF of gas per day. BR has identified six additional drilling
opportunities on the block and will drill several of these prospects in 1999,
which could help turn around the natural production decline of this field.
[offshore platform graphic]
12
<PAGE> 17
"BR will continue
to pursue
opportunities in
the Deep water
in 2000 and
beyond."
NORTH AMERICA
PLANS FOR 1999
Drill 50 wells in the Mesaverde 80-acre infill program.
Accomplish 66 Lewis Shale completions in existing Mesaverde well bores.
Drill approximately 50 horizontal wells in the Williston Basin.
Drill the fourth deep Madison well, the Bighorn #5-6, at the Madden Field and
complete the Lost Cabin Gas Plant expansion, bringing the inlet capacity to 130
MMCF of gas per day.
Drill 7 to 10 wells in the Gulf of Mexico Deep water program, including BR's
first operated prospect, Spoon, at Ewing Bank Block 913.
GULF OF MEXICO DEEP WATER
Hydrocarbon basins in the U.S. have continued to mature, making economically
attractive exploration opportunities increasingly rare. The Deep water Gulf of
Mexico represents one of the last world class exploration opportunities in the
U.S. The Company believes that the Deep water provides an excellent opportunity
for value-added growth in North America. A significant part of BR's future
growth strategy revolves around its
Deep water commitment.
The Company's exploratory Deep water acreage is diverse, covering water depths
from 600 to 8,000 feet, but is focused on several geologic trends. The acreage
position offers a balance of near-term and long-term drilling opportunities,
while also having the scale to provide for repeatable investments. BR has
identified approximately 75 leads or prospects on the basis of 2-D and 3-D
seismic data. At year end, BR had 185 blocks in its inventory, making it one of
the largest leaseholders in the Deep water.
In December 1998, production came on stream at Green Canyon Block 89, the
Cinnamon prospect, from the A-1 Well. Three additional wells are planned for
the first phase of development on this block in which BR owns a 17 percent
interest.
Although BR's Deep water program is not scheduled to be fully underway until
1999, the Company participated in the drilling of three wells in 1998, none of
which found commercial quantities of hydrocarbons. In preparation for its fully
operational Deep water drilling program, BR contracted for the construction of a
semisubmersible drilling rig capable of operating in water depths up to 7,500
feet. The rig will be delivered in the third quarter of 2000 and will be
exclusively available to BR for up to six years.
BR's Deep water drilling program is scheduled to accelerate in 1999, with seven
to ten wells planned. In light of the current industry environment, some of our
anticipated 1999 Deep water activity may be delayed due to a lack of partner
participation. In total, the 1999 program should expose the Company to
significant reserve potential. The first well to be drilled in the 1999 program
is the BR-operated Spoon prospect, located in Ewing Bank Block 913 in
approximately 800 feet of water. In addition, joint ventures have been forged
between BR and other companies to share risk and to gain exposure to other
exploration opportunities. One such venture will begin drilling in 1999. In the
fourth quarter of 1999, the joint venture will take delivery of a drillship
capable of drilling in up to 10,000 feet of water. The rig will be available to
the joint venture for up to five years.
BR will continue to pursue opportunities in the Deep water in 2000 and beyond.
The Company projects that its typical program in the future will consist of
drilling up to ten new wells per year. Based on its success from an aggressive
exploration program, BR plans to commit the capital to fund its drilling
program, as well as the capital necessary for future development.
[offshore drilling rig graphic]
13
<PAGE> 18
[BURLINGTON RESOURCES INTERNATIONAL GRAPHIC]
BUSINESS AT A GLANCE
BR entered the international oil and gas business through two major events: its
merger with LL&E, which had an established international presence, and the
acquisition of approximately 700 BCF of undeveloped proved and probable gas
reserves in the East Irish Sea. In 1998, BR affirmed its commitment to a global
presence as a key element of its long-term growth strategy by forming Burlington
Resources International (BRI).
BRI's proved reserves at year-end 1998 totaled 801 BCFE, approximately 35
percent oil and 65 percent natural gas. The proved reserves are concentrated in
the Northwest European Shelf, in the Irish Sea and the United Kingdom and Dutch
sectors of the North Sea. BRI also has proven reserves in Algeria, Colombia and
Indonesia. Although it is a relatively small part of BR's total business today,
BRI is positioning itself to provide significant future growth to BR through
high potential exploration and development opportunities.
[GLOBE GRAPHIC]
14
<PAGE> 19
INTERNATIONAL 1998 HIGHLIGHTS
Formed BR International Inc. as a separate operating unit.
Successful exploration discovery on North Sea Block 21/12. The well tested at
8,200 Bbls of oil per day. Participated with a 26 percent interest.
Reached transportation and processing agreements for the East Irish Sea Dalton
and Millom Fields.
Eventful year in Algeria with the discovery of the MLSE Field, commencement of
Qoubba field development and successful drilling of 3 wells in Block 405.
Entered into an agreement to earn a working interest in both exploration and
development opportunities in the Offshore North Sinai Concession in Egypt.
Completed environmental and pre-drilling engineering work at Delta Centro Block
in Venezuela in preparation for 1999 drilling program.
Participated in a 22-year agreement to provide up to 325 MMCF of gas per day to
Singapore from the Indonesian Kakap Block in the West Natuna Sea.
<TABLE>
<CAPTION>
INTERNATIONAL
RESERVES
As of December 31, 1998
GAS OIL TOTAL
(BCF) (MMBbls) (BCFE)
- ------------------------------------
<S> <C> <C> <C>
Proved
Developed
Reserves 258 14.5 345
- ------------------------------------
Proved
Undeveloped
Reserves 264 32.1 456
- ------------------------------------
Total
Proved
Reserves 522 46.6 801
- ------------------------------------
</TABLE>
"BRI has adopted a strategy with three major elements: focus, balance and
discipline."
In building its portfolio, BRI adopted a strategy based on focus, balance and
discipline. Focus translates into a decision to concentrate in a limited number
of geographical areas. Each area must be capable of becoming material to BR and
offer potential for repeatable or continued investment opportunities to provide
sustainable growth. Balance refers to building a portfolio which includes
acquisition, exploitation and exploration opportunities, as well as creating a
mix of short, medium and longer term projects that can provide a sustainable and
growing production profile. Finally, although a sense of urgency is crucial to
grow the international business and contribute to corporate growth goals, BR
takes a disciplined approach when considering new projects and ventures. This
approach assures that opportunities create value and are beneficial to the
corporate portfolio.
An objective assessment was undertaken in 1998 of hydrocarbon basins around the
world based on geotechnical, commercial and geopolitical risks balanced with
BR's knowledge and competencies. As a result, five areas were selected for
business development activities: the Northwest European Shelf; North Africa;
Northern South America; the Far East; and West Africa. Strategies for the first
four are centered around expanding the Company's existing assets in these areas,
while an entry strategy has been developed for West Africa, where the Company
currently has no operations.
Oil and gas capital expenditures devoted to international activities totaled
$136 million in 1998: $102 million for exploration; $30 million for development
activities; and $4 million related to proved acquisition activities. Proved
reserves added during the year totaled 225 BCFE. International projects are
typically viewed on a multi-year investment cycle. As a start-up operation,
single year statistics are somewhat distorted. Nonetheless, BR's international
reserve replacement averaged 260 percent over the three-year period 1996 to
1998, and reserve replacement costs over the same period averaged $.82 per MCFE.
[Oil and gas equipment graphic]
15
<PAGE> 20
INTERNATIONAL
1998 PROVED RESERVES
Total: 801 BCFE
[PIE CHART GRAPHIC]
Oil - 35%
Gas - 65%
INTERNATIONAL
1998 DAILY PRODUCTION
Total: 166 MMCFE
[PIE CHART GRAPHIC]
Oil - 60%
Gas - 40%
[NORTH SEA DRILLING PLATFORM GRAPHIC]
NORTHWEST EUROPEAN SHELF
BR's Northwest European Shelf focus area includes the U.K., Dutch and Danish
sectors of the North Sea, as well as the East Irish Sea. Current production
comes from the U.K. and Dutch sectors of the North Sea, where in 1998 the
Company's average net production was 66 MMCF of gas per day and 11 MBbls of oil
per day.
In the U.K. North Sea, production is from the T-Block Complex, where BR has an
11 percent working interest, and from the Brae Complex, where the Company has a
six percent working interest. Although base production is declining in both
fields, this is being mitigated by new exploration and development opportunities
within each area. In 1999, newly identified leads at Brae will be evaluated for
drilling. Also, one well is scheduled for drilling at the T-Block Thelma Field
to extend field limits.
The Company participates in natural gas exploration and production in the Dutch
and Danish sectors of the North Sea. Net production in this area averaged 30
MMCF of gas per day in 1998. In 1999, three wells are scheduled to be drilled in
the Dutch North Sea. In the Danish North Sea, BR participated in a new license
which was awarded for exploration on the Ribe and Viborg Blocks. During 1999,
seismic evaluation of leads on these blocks will be conducted, with exploratory
drilling expected in 2000. Work commitment under the license requires
acquisition of 170 square miles of seismic data and drilling of three wells. The
Company has assessed the reserve potential of this area to be significant.
In mid-1998, BR acquired a 20 percent working interest in central North Sea
Blocks 21/12 and 21/13 through two farmins. In August 1998, an exploratory
discovery was made when the 21/12-3 well encountered a 100-foot thick oil
producing Jurassic sandstone formation. BR has a 26 percent interest in this
well as a result of a farmin. The well, located 80 miles off the coast of
Scotland in 279 feet of water, tested at a stabilized rate of 8,200 Bbls of oil
per day. Development options are currently being evaluated.
BR's most exciting project on the Northwest European Shelf is in the East Irish
Sea. In late 1997, BR acquired ten licenses in the East Irish Sea, encompassing
267,000 acres at a cost of $143 million, including a 90 percent working interest
in seven operated, undeveloped gas fields with estimated gross recoverable
reserves in excess of 700 BCF.
The properties are located 25 miles offshore in approximately 100 feet of water
and are covered by high quality 3-D seismic surveys. BR originally included
construction of processing and transportation facilities into the project timing
and economic evaluation. Development plans were accelerated and economics were
enhanced when an agreement was reached with a nearby operator to transport and
process the gas from two sweet gas fields, Dalton and Millom. The Company also
received development and operatorship approval for Dalton Annex B from the U.K.
government.
The first development well for these fields was spud in February 1999, with a
total of three wells scheduled for the year. Subsea completion of these wells
will initiate first production in October 1999, with gross production reaching
95 MMCF of gas per day by year end. Additional drilling, completion and
facilities work is scheduled in 2000. Gross production from the project is
expected to reach 170 MMCF of gas per day. Development options for the five
remaining sour gas fields are being evaluated.
16
<PAGE> 21
INTERNATIONAL
PRODUCTION & PRICES
YEAR ENDED DECEMBER 31,
<TABLE>
<CAPTION>
1998 1997 1996
- ---------------------------------------------------------------
PRODUCTION
<S> <C> <C> <C>
Gas 67 77 83
(MMCF per day)
Oil 16.5 18.9 18.9
(MBbls per day)
- ---------------------------------------------------------------
AVERAGE
SALES PRICES
Gas (per MCF) $ 2.56 $ 2.69 $ 2.56
Oil (per Bbl) $13.16 $18.95 $19.45
- ---------------------------------------------------------------
</TABLE>
INTERNATIONAL
CAPITAL EXPENDITURES
YEAR ENDED DECEMBER 31,
($ MILLIONS)
<TABLE>
<CAPTION>
1998 1997 1996
- --------------------------------------------------------
<S> <C> <C> <C>
Oil and Gas
Activities $136 $228 $ 62
- --------------------------------------------------------
Plants and
Pipelines -- 10 9
- --------------------------------------------------------
Administration 3 8 4
- --------------------------------------------------------
Total $139 $246 $ 75
- --------------------------------------------------------
</TABLE>
INTERNATIONAL UNIT COSTS
YEAR ENDED DECEMBER 31,
($ PER MCFE)
<TABLE>
<CAPTION>
1998 1997 1996
- ----------------------------------------------------------------
<S> <C> <C> <C>
Average
Production
Costs $ .71 $ .60 $ .71
- ----------------------------------------------------------------
DD&A Rates $ 1.06 $ 1.08 $ 1.13
- ----------------------------------------------------------------
</TABLE>
NORTH AFRICA
The Company's operations on Algeria's Block 405, located in the Berkine Basin of
eastern Algeria, are the centerpiece of the Company's North African focus area.
Industry activity in this highly prospective area has discovered in excess of
three billion Bbls of recoverable oil reserves since the country opened to
foreign investment in 1989.
BR was a relatively early entrant into Algeria, having initiated a production
sharing agreement in 1993 that gave the Company a 65 percent working interest,
before participation by Sonatrach, the state-owned oil company, in two
exploration blocks in the Saharan Berkine Basin, Blocks 215 and 405.
As operator, BR has drilled 12 wells on Block 405 so far and all have
encountered hydrocarbons. Appraisal of these accumulations is ongoing. However,
the Company now believes it has discovered at least three commercial oil fields,
the MLN Field, the MLSE Field and the MLNE Field which is an extension of the
giant Qoubba Field, discovered on adjacent blocks. A fourth discovery well, the
MLC-1, is currently under evaluation. The Company is also appraising deeper
accumulations encountered in at least three wells. The nature and full extent of
this deeper reservoir is not yet known.
Proved reserves for Block 405 were booked in 1998 with the potential to increase
significantly with successful delineation of recent discoveries. In compliance
with its production sharing agreement, the Company relinquished a portion of
Block 405 in 1998 as it entered the second five-year exploration phase of the
contract. The area relinquished included a portion of the unexplored area of the
block, as well as the MLE gas discovery, which was the first well drilled on the
block. BR also relinquished Block 215 in 1998.
Capital and exploration expenditures in Algeria totaled $45 million in 1998. Of
this total, $33 million was devoted to exploratory, development and appraisal
drilling, $11 million was related to seismic evaluation and $1 million was
committed to production facility construction.
Two wells were drilled in the central portion of Block 405 in 1998. In August,
BR began drilling the MLW-1, a wildcat well 8.4 miles southwest of MLN-4, which
had encountered the presence of a deeper Devonian reservoir in addition to the
Triassic TAG. The MLW-1 encountered hydrocarbons at both intervals. While the
TAG Formation failed to produce fluids to the surface, the Devonian flowed 1,545
Bbls of oil per day and 3 MMCF of gas per day, confirming the presence of a
productive Devonian reservoir in the western portion of the block.
Following the completion of the MLW-1, the rig was moved to drill the MLN-5, 6.8
miles northeast of the MLW-1 and 1.6 miles southwest of the MLN-4. The well
tested at a rate of 6,820 Bbls per day of 44 degree API gravity oil and 7 MMCF
of gas per day from the Devonian Formation, but was not productive in the TAG
reservoir. Two other thin hydrocarbon zones identified were not tested and will
be evaluated in future drilling. The presence of the Devonian at MLN-4, MLN-5
and MLW-1 is highly encouraging and could indicate a very productive and
widespread accumulation on Block 405. Additional drilling in 1999 should provide
additional data in determining the extent and potential of the reservoir. At
year end, the Company was planning development for the MLN Field. The plan will
be submitted to the government in 1999 and, with timely approval by Sonatrach,
production at the field is anticipated in late 2001.
[PIPE GRAPHIC]
<PAGE> 22
INTERNATIONAL
WELLS DRILLED
YEAR ENDED DECEMBER 31,
<TABLE>
<CAPTION>
1998 1997 1996
- ---------------------------------------------------------------
<S> <C> <C> <C>
Productive
Exploratory 3.5 2.4 2.0
Development 1.8 1.3 2.4
- ---------------------------------------------------------------
Dry
Exploratory 2.0 1.3 0.6
Development -- 0.1 --
- ---------------------------------------------------------------
Total Net Wells 7.3 5.1 5.0
- ---------------------------------------------------------------
</TABLE>
INTERNATIONAL
PRODUCTIVE WELLS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
Gross Net
- ------------------------------------------------------
<S> <C> <C>
Oil 134 19
- ------------------------------------------------------
Gas 59 5
- ------------------------------------------------------
</TABLE>
In June of 1998, BR announced the discovery of a new field, MLSE, with the
successful drilling of the MLSE-1. Located in the southeastern portion of the
block, the well encountered four hydrocarbon bearing intervals. The well flowed
at a combined rate of 14,638 Bbls of oil per day and 107 MMCF of gas per day. In
the fourth quarter, the MLSE-2 was drilled, establishing the limits of the two
main producing horizons and was suspended as a potential water injector. In late
1998, additional 3-D seismic survey work was initiated to cover the southeast
portion of the block. When this survey is completed in 1999, additional drilling
will more fully appraise the extent of the MLSE Field.
The MLNE Field, representing approximately six percent of the giant Qoubba
Field, which extends onto the block from the north, is currently under
development. Production is anticipated in 2002.
BR will drill six more wells on Block 405 in 1999. A total capital commitment of
$84 million has been earmarked for drilling, facilities development and
completion of seismic survey work.
BR's approach to exploration includes allocating a small part of its portfolio
to frontier exploration opportunities. These are high-risk opportunities in
relatively unexplored regions that provide tremendous upside potential if a
discovery is made. In 1998, BR took a 20 percent interest in a frontier
exploration project of this type in Eritrea. The concession covers nine million
gross acres and carries a commitment to drill at least three wells. The first
well was drilled in 1998 and although the well was unsuccessful, the fact that
free oil was encountered in sidewall cores was very encouraging. The second well
on the concession was also unsuccessful. The third well was spud in January
1999. Although a high-risk venture, any success in Eritrea could be significant
because of the huge acreage position covered by the concession.
In December 1998, BR announced an agreement to earn a working interest in both
exploration and development opportunities at the Offshore North Sinai Block,
located in the Nile River Delta area of the Mediterranean Sea. The agreement
provides the Company with a 50 percent working interest in an 870,000 gross acre
block that contains three proved undeveloped Pliocene gas fields, several
additional exploration prospects which are similar in nature to these Pliocene
accumulations and an exploration prospect in deeper Miocene stratigraphy. In
exchange, BR has agreed to fund a disproportionate share of future capital
commitment to develop these proved undeveloped gas reserves. Initial development
is projected to begin during 1999, with production to commence during 2001.
Additionally, if the high potential deeper Miocene prospect, referred to as Seti
East, is successful and deemed to be commercial, BR has agreed to fund a
disproportionate share of future development costs associated with the project,
as well. Total capital committed to this project in 1999 is $22 million.
NORTHERN SOUTH AMERICA
BR's efforts in Latin America are focused in northern South America. Presently,
the Company has a 14 percent interest in the Casanare Association Contract in
Colombia as well as exploration interests in Venezuela, Colombia and Peru.
The Latin American strategy provides the springboard to quickly transform the
business from a highly leveraged exploration portfolio to one of balance -
providing production, exploitation and exploration opportunities. BR intends to
aggregate substantive interest in key producing assets then work to enhance the
value through exploitation. Success of the strategy hinges on maintaining focus,
aggressive pursuit of key assets and value-based acquisitions.
18
<PAGE> 23
INTERNATIONAL ACREAGE
DECEMBER 31, 1998
<TABLE>
<CAPTION>
Gross Net
- --------------------------------------------------------------
<S> <C> <C>
Developed
Acres 165,401 12,745
- --------------------------------------------------------------
Undeveloped
Acres 16,112,345 5,125,131
- --------------------------------------------------------------
</TABLE>
INTERNATIONAL
PLANS FOR 1999
Submit plan of development for the Algerian MLN Field in Block 405.
Drill 6 additional wells in Algeria on Block 405 and participate in 12
development wells in the Qoubba Field.
Begin development of the Dalton and Millom fields in the East Irish Sea, with
initial gross production of 95 MMCF of gas per day commencing in the fourth
quarter of 1999.
Commence exploratory drilling on the Delta Centro Block in Venezuela.
Pursue aggressively opportunities to establish a West African focus area and
expand the Far East focus area.
Of the exploration interests, the most significant is the Delta Centro Block in
eastern Venezuela. BR operates this block with a 35 percent working interest.
Located in the Orinoco River Basin near the prolific Oficina Trend the 525,000
gross acre block is covered by 230 square miles of 3-D seismic and 230 miles of
2-D seismic data. As part of its work commitment, the Company will drill three
exploratory wells before the end of 2001, with an option to extend the
exploratory period for an additional four years. The most promising prospect,
Wakajara, is scheduled for drilling in 1999. During 1998, extensive
environmental evaluation was performed in preparation for drilling.
In Colombia, BR has a 14 percent non-operated working interest in 12 fields in
the Casanare Association Contract Area. During 1998, three development wells
were drilled in this area, mitigating natural production declines in these
mature fields. The Company also holds a 25 percent working interest in a 288,000
gross acre association contract located in the San Jacinto Association Contract
Area. The contract is located in the upper Magdalena Valley Basin. During 1998,
93 miles of 2-D seismic data were acquired. A decision on the initial
exploratory well is expected by mid-year 1999.
Peru Block 32 is non-operated with BR holding a 35 percent interest. Results of
the 1998 acquisition and processing of approximately 450 kilometers of 2-D
seismic have resulted in the identification of the Guineayacu prospect. Site
preparation for drilling of this exploratory well should commence by year-end
1999, with drilling anticipated in early 2000.
FAR EAST
BR holds a 15 percent working interest in the Indonesian KAKAP block, located in
the West Natuna Sea. The partners in KAKAP recently negotiated a 22 year
agreement for the sale of up to 325 MMCF of gas per day to Singapore. This
long-term sales agreement enhances the value of KAKAP reserves and production,
which historically have had limited marketability.
BR has selected the Far East as a potential focus area for value-added growth.
The Far East growth strategy targets selected basins in Indonesia, Thailand,
Malaysia, Vietnam, China, Bangladesh and Australia, primarily by acquisition.
WEST AFRICA
The fifth focus area selected by BR is West Africa, unique in being the only
focus area that has not been established around an existing acreage position.
This region was selected on the basis of its world class reserves, tremendous
upside potential, relative stability, and very active deal flow. During 1998,
the West Africa team was established, conducted initial studies of the region,
and pursued several attractive exploration and production opportunities. BR is
committed to establishing a strategic foothold within the West Africa region
that will lead to a significant value-added position in this prolific
hydrocarbon province.
[SAND DUNES AND MEN ON AIR BOAT GRAPHICS]
19
<PAGE> 24
BURLINGTON RESOURCES 1998
Financial Review
CONTENTS
Selected Financial Data ............................... 21
Management's Discussion & Analysis of
Financial Condition and Results of Operations ...... 22
Financial Statements .................................. 26
Report of Management .................................. 44
Report of Independent Accountants ..................... 45
Supplementary Financial Information ................... 46
20
<PAGE> 25
BURLINGTON RESOURCES INC.
SELECTED FINANCIAL DATA
The selected financial data for Burlington Resources Inc. ("the Company")
set forth below for the five years ended December 31, 1998 should be read in
conjunction with the consolidated financial statements.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
(In Millions, Except per Share Amounts) 1998 1997 1996 1995 1994
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Income Statement Data
Revenues $ 1,637 $ 2,000 $ 2,200 $ 1,734 $ 1,871
Operating Income (Loss) 218 503 580 (397) (159)
Net Income (Loss) 86 319 335 (261) (73)
Basic Earnings (Loss) per Common Share .48 1.80 1.89 (1.47) (.41)
Diluted Earnings (Loss) per Common Share $ .48 $ 1.79 $ 1.88 $ (1.47) $ (.41)
- -----------------------------------------------------------------------------------------------------------------------------------
Balance Sheet Data
Total Assets $ 5,917 $ 5,821 $ 5,683 $ 5,608 $ 6,285
Long-term Debt 1,938 1,748 1,853 2,042 2,049
Stockholders' Equity 3,018 3,016 2,808 2,591 2,920
Cash Dividends Declared per Common Share $ .55 $ .46 $ .44 $ .44 $ .58
Common Shares Outstanding 177 177 177 178 177
</TABLE>
21
<PAGE> 26
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION AND LIQUIDITY
The Company's long-term debt to capital ratio at December 31, 1998 and
1997 was 39 percent and 37 percent, respectively.
The Company's credit facilities are comprised of a $600 million revolving
credit agreement that expires in February 2003 and a $400 million revolving
credit agreement that expires in February 2000. The $400 million revolving
credit agreement is renewable annually by mutual consent. As of December 31,
1998, there were no borrowings outstanding under the credit facilities. At
December 31, 1998, the Company had outstanding commercial paper borrowings of
$190 million at an average interest rate of 6 percent. The Company also has the
capacity to issue $1 billion of securities under a shelf registration statement
filed with the Securities and Exchange Commission.
The Company has a total of $640 million of debt to be repaid in 1999. Of
this amount, $450 million represents fixed-rate debt which the Company intends
to refinance with other fixed-rate long-term debt in 1999. The remaining $190
million represents commercial paper.
In July 1998, the Company's Board of Directors approved the repurchase of
up to two million shares of its Common Stock. During 1998, the Company
repurchased 435,000 shares of its Common Stock for $15 million. Since December
1988, the Company has repurchased approximately 32 million shares. In
conjunction with the Company's stock repurchase program, the Company sold put
options ("options") during 1998. The options entitled the holders, upon exercise
on the expiration dates, to sell shares of BR Common Stock to the Company at
specified prices. Alternatively, the Company retained the ability to settle the
options in cash. During 1998, the Company sold 400,000 options with an average
strike price of $37.25 per share and received an average premium of $2.67 per
option. During 1998, 110,000 options were exercised, 25,000 expired and 265,000
remained outstanding at December 31, 1998 with expiration dates through March of
1999.
Net cash provided by operating activities for 1998 was $770 million
compared to $1,122 million and $995 million in 1997 and 1996, respectively. The
decrease in 1998 compared to 1997 was primarily due to lower operating income
and working capital changes. The increase in 1997 compared to 1996 was primarily
due to significantly higher operating income and working capital changes.
In June 1997, the Company completed its divestiture program of
non-strategic assets which was announced in July 1996. As planned, the Company
sold approximately 27,000 wells and related facilities. Before closing
adjustments, gross proceeds for 1997 from the sales of oil and gas properties
related to this divestiture program were approximately $450 million.
On July 31, 1996, the Company completed the sale of its crude oil
refinery and terminal, including crude oil and refined product inventories, for
approximately $70 million. The net book value of refinery property, plant and
equipment and inventory at that date was approximately $68 million.
The Company and its subsidiaries are named defendants in numerous
lawsuits and named parties in numerous governmental and other proceedings
arising in the ordinary course of business. While the outcome of lawsuits and
other proceedings cannot be predicted with certainty, management believes these
matters will not have a material adverse effect on the consolidated financial
position of the Company, although results of operations and cash flows could be
significantly impacted in the reporting periods in which such matters are
resolved.
The Company has certain other commitments and uncertainties related to
its normal operations. Management believes that there are no other commitments,
uncertainties or contingent liabilities that will have a material adverse effect
on the consolidated financial position, results of operations or cash flows of
the Company.
CAPITAL EXPENDITURES AND RESOURCES
Capital expenditures during 1998 totaled $1,165 million compared to
$1,245 million and $804 million in 1997 and 1996, respectively. The Company
invested $1,030 million on internal development and exploration during 1998
compared to $941 million and $646 million in 1997 and 1996, respectively. The
Company invested $27 million for proved property acquisitions in 1998 compared
to $214 million and $92 million in 1997 and 1996, respectively.
Capital expenditures for 1999, excluding proved property acquisitions,
are projected to be approximately $750 million. Capital expenditures are
expected to be primarily for internal development and exploration of oil and gas
properties and plant and pipeline expenditures. Capital expenditures will be
funded from internal cash flows, supplemented, if needed, by external financing.
22
<PAGE> 27
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
MARKETING
Domestic
In pursuit of its mission to build long-term shareholder value, the
Company's marketing strategy is to maximize the value of its production by
developing marketing flexibility from the wellhead to its ultimate sale. The
Company's gas production is gathered, processed, exchanged and transported
utilizing various firm and interruptible contracts and routes to access the
highest value market hubs. The Company's customers include local distribution
companies, electric utilities and a diverse portfolio of industrial users. The
Company maintains the capacity to ensure its production can be marketed either
at the wellhead or downstream at market sensitive prices.
All of the Company's crude oil production is sold to third parties at the
wellhead or transported to market hubs where it is sold or exchanged. NGLs are
typically transported to market hubs, primarily in the Houston area, and sold to
third parties.
International
The Company's international oil and gas is produced from non-operated
properties. These products are sold to third parties either directly by the
Company or by the operators of the properties.
Commodity Pricing and Demand
Substantially all of the Company's crude oil and natural gas production
is sold on the spot market or under short-term contracts at market sensitive
prices. Spot market prices for domestic crude oil and natural gas are subject to
volatile trading patterns in the commodity futures markets, including among
others, the New York Mercantile Exchange ("NYMEX"). Crude oil prices are also
affected by quality differentials, by worldwide political developments and by
the actions of the Organization of Petroleum Exporting Countries.
There is also a difference between the NYMEX futures contract price for a
particular month and the actual cash price received for that month in a U.S.
producing basin or at a U.S market hub, which is referred to as the "basis
differential."
In the ordinary course and conduct of its business, the Company utilizes
futures contracts traded on the NYMEX and the Kansas City Board of Trade, and
over-the-counter price and basis swaps and options with major crude oil and
natural gas merchants and financial institutions to hedge its price risk
exposure related to the Company's U.S. production. The gains and losses realized
as a result of these derivative transactions are substantially offset in the
cash market when the hedged commodity is delivered. In order to accommodate the
needs of its customers, the Company also uses price swaps to convert gas sold
under fixed price contracts to market prices.
The Company uses a sensitivity analysis technique to evaluate the
hypothetical effect that changes in the market value of crude oil and natural
gas may have on the fair value of the Company's derivative instruments. At
December 31, 1998, the potential decrease in fair value of commodity derivative
instruments assuming a 10 percent adverse movement in the underlying commodities
would result in an 89 percent decrease in the net deferred amount.
For purposes of calculating the hypothetical change in fair value, the
relevant variables are the type of commodity (crude oil or natural gas), the
commodity futures prices, the volatility of commodity prices and the basis and
quality differentials. The hypothetical change in fair value is calculated by
multiplying the difference between the hypothetical price (adjusted for any
basis or quality differentials) and the contractual price by the contractual
volumes.
DIVIDENDS
On January 13, 1999, the Board of Directors declared a common stock
quarterly cash dividend of $.1375 per share, payable April 1, 1999 to
shareholders of record on March 12, 1999. Dividend levels are determined by the
Board of Directors based on profitability, capital expenditures, financing and
other factors. The Company declared cash dividends on Common Stock totaling
approximately $98 million during 1998.
23
<PAGE> 28
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Year Ended December 31, 1998 Compared With Year Ended December 31, 1997
The Company reported net income of $86 million or $.48 basic earnings per
common share in 1998 compared to $319 million or $1.80 basic earnings per common
share in 1997. The 1997 results included a $.40 per share charge related to the
1997 merger with The Louisiana Land and Exploration Company ("LL&E") for
severance and related exit costs and transaction costs. The 1997 results also
included an $.18 per share gain related to the sales of oil and gas properties.
Revenues were $1,637 million in 1998 compared to $2,000 million in 1997.
Average oil prices decreased 31 percent to $13.28 per barrel in 1998 and average
gas prices decreased 10 percent to $1.97 per MCF which decreased revenues $180
million and $129 million, respectively. Oil sales volumes decreased 5 percent in
1998 to 82.7 MBbls per day and gas sales volumes decreased 1 percent to 1,647
MMCF per day which decreased revenues $31 million and $18 million, respectively.
Oil and gas sales volumes decreased primarily due to natural production declines
in certain areas, adverse weather conditions and third-party plant outages.
Costs and Expenses were $1,419 million in 1998 compared to $1,497 million
in 1997. Costs and expenses in 1997 included an $80 million charge related to
the 1997 merger with LL&E for severance and related exit costs and transaction
costs. Excluding the $80 million charge in 1997, costs and expenses in 1998
increased $2 million compared to 1997. The increase was primarily due to a $39
million increase in exploration costs and a $4 million increase in production
and processing expenses. These increases were partially offset by a $19 million
decrease in production taxes, a $15 million decrease in administrative expenses
and a $7 million decrease in depreciation, depletion and amortization expenses.
Administrative expenses decreased primarily due to a reduction in employees.
Interest Expense was $148 million in 1998 compared to $142 million in
1997. The increase was primarily due to higher outstanding commercial paper
balances during 1998.
Other Income-Net was $25 million in 1998 compared to $50 million in 1997.
The decrease in other income is primarily related to lower gains on sales of oil
and gas properties.
The effective income tax rate was an expense of 9 percent in 1998
compared to an expense of 23 percent in 1997. The decreased tax expense in 1998
versus 1997 was primarily a result of lower pretax income partially offset by
lower benefits from nonconventional fuel tax credits.
Year Ended December 31, 1997 Compared With Year Ended December 31, 1996
The Company reported net income of $319 million or $1.80 basic earnings
per common share in 1997 compared to net income of $335 million or $1.89 basic
earnings per common share in 1996. The 1997 results included a $.40 per share
charge related to the merger with LL&E for severance and related exit costs and
transaction costs. The 1997 results also included an $.18 per share gain related
to the sales of oil and gas properties. The 1996 results included an $.11 per
share charge related to the divestiture program and reorganization for severance
and other related exit costs.
Revenues were $2,000 million in 1997 compared to $2,200 million in 1996.
Revenues decreased $264 million as a result of the sale of the refinery on July
31, 1996. Average oil prices decreased 6 percent to $19.24 per barrel and oil
sales volumes decreased 4 percent to 87.2 MBbls per day which decreased revenues
$37 million and $31 million, respectively. These decreases were partially offset
by an average gas price increase of 6 percent to $2.18 per MCF and an increase
in gas sales volumes of 4 percent to 1,669 MMCF per day which increased revenues
$82 million and $46 million, respectively. Gas volumes increased due to
continued development of gas properties. Oil volumes were down primarily due to
the divestiture program.
Costs and Expenses were $1,497 million in 1997 compared to $1,620 million
in 1996. Costs and expenses in 1997 included an $80 million charge related to
the merger with LL&E for severance and related exit costs and transaction costs.
Costs and expenses in 1996 included $30 million related to the divestiture
program and reorganization. Excluding the $80 million charge in 1997 and the $30
million charge in 1996, costs and expenses in 1997 decreased $173 million from
1996. The decrease was primarily due to a $254 million decrease in refinery
costs resulting from the sale of the refinery and a $27 million decrease in
production and processing expenses. These decreases were partially offset by a
$100 million increase in exploration costs, a $5 million increase in
depreciation, depletion and amortization and a $4 million increase in production
taxes.
24
<PAGE> 29
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Interest Expense was $142 million in 1997 compared to $147 million in
1996. The decrease was primarily due to lower outstanding commercial paper
balances during 1997.
Other Income -- Net was $50 million in 1997 due to a gain related to the
sales of oil and gas properties associated with the Company's 1996 divestiture
program.
OTHER MATTERS
Year 2000 Compliance
The Company began a program during 1996 to assess computer software and
hardware (hereafter referred to as information technology) for year 2000
compliance. The Company determined that because significant portions of
information technology were scheduled for replacement before the year 2000 that
its exposure with respect to information technology was not material.
The Company's year 2000 project plan involves four phases; assessment,
remediation, testing, and implementation. The Company has completed its
assessment of all material systems that could be affected by the year 2000
issue. The assessment confirmed that information technology exposures were not
material, however, assets used in producing, gathering and transporting
hydrocarbons (hereafter referred to as operating equipment) are at risk.
For its operating equipment, the Company has completed 85 percent of the
remediation phase for all operationally significant equipment and expects to
complete testing and implementation in the second quarter of 1999.
The total cost of the year 2000 project is being funded through operating
cash flows and is estimated at $3 million of which $2 million has been incurred.
The Company has contacted all third-party vendors and suppliers of
products and services that it considers critical to its operations in order to
ascertain their level of year 2000 readiness. The Company has no means of
ensuring that all customers and suppliers will be year 2000 compliant. The
inability of these parties to complete their year 2000 resolution process could
materially impact the Company. As a result, the Company will consider new
business relationships with alternate providers of products and services as
necessary and to the extent alternatives are available.
The Company's plan to complete the year 2000 modifications is based on
management's best estimates, which were derived utilizing numerous assumptions
of future events including the continued availability of certain resources and
other factors. However, there can be no guarantee that these estimates will be
achieved and actual results could differ materially from those plans. Specific
factors that might cause such material differences include, but are not limited
to, the availability and cost of personnel trained in this area, the ability to
locate and correct all relevant computer codes and similar uncertainties.
The Company's goal is to ensure that all critical systems and processes
under its direct control remain operational. However, because certain systems
and processes may be linked with systems outside of the Company's control, there
can be no assurance that all implementations will be successful. As a result,
the Company is developing a contingency plan, which will be complete at the end
of the first quarter 1999, to respond to any failures that may occur. The cost
estimates associated with the contingency plan are currently being developed.
Management does not expect the costs of the Company's year 2000 project to have
a material adverse effect on the Company's financial position or results of
operations. Presently, based on information available, the Company cannot
conclude that any failure of the Company or third parties to achieve year 2000
compliance will not adversely effect the Company.
Recent Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards ("SFAS") No. 133, Accounting for Derivative
Instruments and Hedging Activities, which is effective for fiscal years
beginning after June 15, 1999.
SFAS No. 133 establishes accounting and reporting standards for
derivative instruments, including certain derivative instruments embedded in
other contracts, and for hedging activities. It also requires that an entity
recognize all derivatives as either assets or liabilities in the balance sheet
and measure those items at fair value. If certain conditions are met, a
derivative may be specifically designated as (a) a hedge of the exposure to
changes in the fair value of a recognized asset or liability or an unrecognized
firm commitment, (b) a hedge of the exposure to variable cash flows of a
forecasted transaction or (c) a hedge of the foreign currency exposure of a net
investment in a foreign operation, an unrecognized firm commitment, an
available-for-sale security, or a foreign-currency-denominated forecasted
transaction. The Company plans to adopt SFAS No. 133 during the first quarter of
the year ended December 31, 2000 and is currently evaluating the effects of this
pronouncement.
25
<PAGE> 30
BURLINGTON RESOURCES INC.
CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
Year Ended December 31,
- ----------------------------------------------------------------------------------
(In Millions, Except per Share Amounts) 1998 1997 1996
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUES $1,637 $2,000 $2,200
- ----------------------------------------------------------------------------------
COSTS AND EXPENSES
Production Taxes 95 114 110
Production and Processing 383 379 406
Refinery Costs -- -- 254
Depreciation, Depletion and Amortization 519 526 521
Exploration Costs 298 259 159
Reorganization Charge -- -- 30
Merger Costs -- 80 --
Administrative 124 139 140
- ----------------------------------------------------------------------------------
Total Costs and Expenses 1,419 1,497 1,620
- ----------------------------------------------------------------------------------
Operating Income 218 503 580
Interest Expense 148 142 147
Other Income -- Net 25 50 --
- ----------------------------------------------------------------------------------
Income Before Income Taxes 95 411 433
Income Tax Expense 9 92 98
- ----------------------------------------------------------------------------------
NET INCOME $ 86 $ 319 $ 335
==================================================================================
BASIC EARNINGS PER COMMON SHARE $ .48 $ 1.80 $ 1.89
==================================================================================
DILUTED EARNINGS PER COMMON SHARE $ .48 $ 1.79 $ 1.88
==================================================================================
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
26
<PAGE> 31
BURLINGTON RESOURCES INC.
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
December 31,
- ---------------------------------------------------------------------------------------------------------------------
(In Millions, Except Share Data) 1998 1997
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current Assets
Cash and Cash Equivalents $ -- $ 152
Short-term Investments -- 83
Accounts Receivable 402 376
Inventories 33 39
Other Current Assets 21 28
- ---------------------------------------------------------------------------------------------------------------------
456 678
- ---------------------------------------------------------------------------------------------------------------------
Oil and Gas Properties (Successful Efforts Method) 9,348 8,666
Other Properties 828 689
- ---------------------------------------------------------------------------------------------------------------------
10,176 9,355
Accumulated Depreciation, Depletion and Amortization 4,818 4,315
- ---------------------------------------------------------------------------------------------------------------------
Properties -- Net 5,358 5,040
- ---------------------------------------------------------------------------------------------------------------------
Other Assets 103 103
- ---------------------------------------------------------------------------------------------------------------------
Total Assets $ 5,917 $ 5,821
=====================================================================================================================
LIABILITIES
Current Liabilities
Accounts Payable $ 374 $ 396
Taxes Payable 53 71
Accrued Interest 26 28
Dividends Payable 24 24
Deferred Revenue 17 19
- ---------------------------------------------------------------------------------------------------------------------
494 538
- ---------------------------------------------------------------------------------------------------------------------
Long-term Debt 1,938 1,748
- ---------------------------------------------------------------------------------------------------------------------
Deferred Income Taxes 199 203
- ---------------------------------------------------------------------------------------------------------------------
Deferred Revenue 40 56
- ---------------------------------------------------------------------------------------------------------------------
Other Liabilities and Deferred Credits 217 260
- ---------------------------------------------------------------------------------------------------------------------
Put Options on Common Stock 11 --
- ---------------------------------------------------------------------------------------------------------------------
Commitments and Contingent Liabilities
STOCKHOLDERS' EQUITY
Preferred Stock, Par Value $.01 Per Share
(Authorized 75,000,000 Shares; No Shares Issued) -- --
Common Stock, Par Value $.01 Per Share
(Authorized 325,000,000 Shares; Issued 202,795,635 Shares) 2 2
Paid-in Capital 2,984 3,001
Retained Earnings 1,039 1,051
- ---------------------------------------------------------------------------------------------------------------------
4,025 4,054
Cost of Treasury Stock (25,420,562 and 26,087,134 Shares for 1998 and 1997, respectively) 1,007 1,038
- ---------------------------------------------------------------------------------------------------------------------
Stockholders' Equity 3,018 3,016
=====================================================================================================================
Total Liabilities and Stockholders' Equity $ 5,917 $ 5,821
=====================================================================================================================
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
27
<PAGE> 32
BURLINGTON RESOURCES INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended December 31,
- ------------------------------------------------------------------------------------------------------
(In Millions) 1998 1997 1996
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 86 $ 319 $ 335
Adjustments to Reconcile Net Income to Net Cash
Provided By Operating Activities
Depreciation, Depletion and Amortization 534 538 534
Deferred Income Taxes (4) 36 32
Exploration Costs 298 259 159
Gain on Sales of Oil and Gas Properties (13) (50) --
Working Capital Changes
Accounts Receivable (26) 108 (135)
Inventories 6 (4) 39
Other Current Assets 7 -- 1
Accounts Payable (22) 47 (57)
Taxes Payable (18) (3) 11
Accrued Interest (2) -- 2
Other Current Liabilities (2) (22) 37
Other (74) (106) 37
- ------------------------------------------------------------------------------------------------------
Net Cash Provided By Operating Activities 770 1,122 995
- ------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to Properties (1,165) (1,245) (804)
Short-term Investments 83 (83) --
Proceeds from Sales and Other 55 494 193
- ------------------------------------------------------------------------------------------------------
Net Cash Used In Investing Activities (1,027) (834) (611)
- ------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Long-term Debt 190 -- 150
Reduction in Long-term Debt -- (105) (337)
Dividends Paid (97) (74) (77)
Common Stock Purchases (15) (58) (112)
Other 27 24 38
- ------------------------------------------------------------------------------------------------------
Net Cash Provided By (Used In) Financing Activities 105 (213) (338)
- ------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (152) 75 46
CASH AND CASH EQUIVALENTS
Beginning of Year 152 77 31
- ------------------------------------------------------------------------------------------------------
End of Year $ -- $ 152 $ 77
======================================================================================================
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
28
<PAGE> 33
BURLINGTON RESOURCES INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Cost of
Common Paid-in Retained Treasury Stockholders'
(In Millions, Except per Share Data) Stock Capital Earnings Other Stock Equity
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1995 $ 2 $ 2,955 $ 555 $ (2) $ (919) $ 2,591
Net Income 335 335
Cash Dividends ($.44 per Share) (77) (77)
Stock Purchases (2,706,000 Shares) (112) (112)
Stock Option Activity and Other 27 2 42 71
- ---------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1996 2 2,982 813 -- (989) 2,808
Net Income 319 319
Cash Dividends ($.46 per Share) (82) (82)
Stock Purchases (1,312,500 Shares) (58) (58)
Stock Option Activity and Other 19 1 9 29
- ---------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1997 2 3,001 1,051 -- (1,038) 3,016
Net Income 86 86
Cash Dividends ($.55 per Share) (98) (98)
Stock Purchases (435,000 Shares) (15) (15)
Stock Option Activity and Other (17) 46 29
- ---------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1998 $ 2 $ 2,984 $ 1,039 $ -- $ (1,007) $ 3,018
===========================================================================================================================
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
29
<PAGE> 34
BURLINGTON RESOURCES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION AND REPORTING
The consolidated financial statements include the accounts of
Burlington Resources Inc. ("BR") and its majority-owned subsidiaries (the
"Company"). All significant intercompany transactions have been eliminated in
consolidation. Due to the nature of financial reporting, management makes
estimates and assumptions in preparing the consolidated financial statements.
Actual results could differ from estimates. The consolidated financial
statements include certain reclassifications that were made to conform to
current presentation. Such reclassifications have no impact on net income or
stockholders' equity.
CASH AND CASH EQUIVALENTS
All short-term investments purchased with a maturity of three months or
less are considered cash equivalents. Cash equivalents are stated at cost, which
approximates market value.
SHORT-TERM INVESTMENTS
Short-term investments consist of highly-liquid debt securities with a
maturity of more than three months. The securities are available for sale and
are carried at fair value based on quoted market prices. As of December 31,
1997, the fair value of these investments approximated amortized cost.
Unrealized gains and losses, net of tax, are included as a component of
stockholders' equity until realized. Realized gains and losses are based on
specific identification of the securities sold.
INVENTORIES
Inventories of materials, supplies and products are valued at the lower
of average cost or market.
PROPERTIES
Oil and gas properties are accounted for using the successful efforts
method. Under this method, all development costs and acquisition costs of proved
properties are capitalized and amortized on a units-of-production basis over the
remaining life of proved developed reserves and proved reserves, respectively.
Costs of drilling exploratory wells are initially capitalized, but charged to
expense if and when a well is determined to be unsuccessful. In addition,
unamortized capital costs at a field level are reduced to fair value if the sum
of expected undiscounted future cash flows is less than net book value.
Costs of retired, sold or abandoned properties that constitute a part
of an amortization base are charged or credited, net of proceeds, to accumulated
depreciation, depletion and amortization. Gains or losses from the disposal of
other properties are recognized currently. Expenditures for maintenance, repairs
and minor renewals necessary to maintain properties in operating condition are
expensed as incurred. Major replacements and renewals are capitalized. Estimated
dismantlement and abandonment costs for oil and gas properties are accrued, net
of salvage value, based on a units-of-production method.
REVENUE RECOGNITION
Gas revenues are recorded on the entitlement method. Under the
entitlement method, revenue is recorded based on the Company's net interest.
FUNCTIONAL CURRENCY
International exploration and production operations are considered an
extension of the Company's operations. The assets, liabilities and operations of
international locations are therefore measured using the United States dollar as
the functional currency. Foreign currency transaction adjustments, which are not
material, are included in net income.
HEDGING AND RELATED ACTIVITIES
In order to mitigate the risk of market price fluctuations, the Company
utilizes options and swaps to hedge future crude oil and natural gas production.
Changes in the market value of these contracts are deferred until the gain or
loss is recognized on the hedged commodity. To qualify as a hedge, these
transactions must be designated as a hedge and changes in their fair value must
correlate with changes in the price of anticipated future production such that
the Company's exposure to the effects of commodity price changes is reduced. The
Company also enters into swap agreements to convert fixed price gas sales
contracts to market-sensitive contracts. Gains or losses resulting from these
transactions are included in revenue as the related physical production is
delivered.
These instruments are measured for effectiveness on an enterprise basis
both at the inception of the contract and on an ongoing basis. If these
instruments are terminated prior to maturity, resulting gains or losses continue
to be deferred until the hedged item is recognized in income.
30
<PAGE> 35
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Treasury lock agreements are used to hedge interest rate exposure on
specific anticipated debt issuances of the Company. Accordingly, the
differential paid or received by the Company on maturity of a treasury lock
agreement is recognized as an adjustment to interest expense over the term of
the underlying financing transaction.
CREDIT AND MARKET RISKS
The Company manages and controls market and counterparty credit risk
through established formal internal control procedures which are reviewed on an
ongoing basis. The Company attempts to minimize credit risk exposure to
counterparties through formal credit policies, monitoring procedures and through
establishment of valuation reserves related to counterparty credit risk. In the
normal course of business, collateral is not required for financial instruments
with credit risk.
INCOME TAXES
Income taxes are provided based on earnings reported for tax return
purposes in addition to a provision for deferred income taxes. Deferred income
taxes are provided to reflect the tax consequences in future years of
differences between the financial statement and tax basis of assets and
liabilities. Tax credits are accounted for under the flow-through method, which
reduces the provision for income taxes in the year the tax credits are earned. A
valuation allowance is established to reduce deferred tax assets if it is more
likely than not that the related tax benefits will not be realized.
STOCK-BASED COMPENSATION
The Company uses the intrinsic value based method of accounting for
stock-based compensation. Under this method, the Company records no compensation
expense for stock options granted when the exercise price for options granted is
equal to the fair market value of the Company's stock on the date of the grant.
EARNINGS PER COMMON SHARE
Basic earnings per common share ("EPS") is computed by dividing income
available to common stockholders by the weighted-average number of common shares
outstanding for the period. The weighted average number of common shares
outstanding for computing basic EPS was 177 million for the years ended December
31, 1998, 1997 and 1996. Diluted EPS reflects the potential dilution that could
occur if securities or other contracts to issue common stock were exercised or
converted into common stock. The weighted average number of common shares
outstanding for computing diluted EPS, including dilutive stock options, was 178
million for the years ended December 31, 1998, 1997 and 1996. For the years
ended December 31, 1998, 1997 and 1996, approximately 4 million, 600 thousand
and 3 million shares, respectively, attributable to the exercise of outstanding
options were excluded from the calculation of diluted EPS because the effect was
antidilutive. No adjustments were made to reported net income in the computation
of EPS.
2. MERGER
On July 17, 1997, BR and The Louisiana Land and Exploration Company
("LL&E")announced that they had entered into an Agreement and Plan of Merger
(the "Merger"). On October 22, 1997, the Merger was completed and LL&E became a
wholly-owned subsidiary of the Company. Pursuant to the Merger, BR issued
52,795,635 shares of its Common Stock based on an exchange ratio of 1.525 for
each outstanding share of LL&E stock. The Merger was accounted for as a pooling
of interests and qualified as a tax-free reorganization. The transaction was
valued at approximately $3 billion based on BR's closing stock price on October
22, 1997. During the fourth quarter of 1997, the Company recorded a pretax
charge of $80 million ($71 million after tax) for direct costs associated with
the Merger. These costs primarily consist of $44 million for severance and
related exit costs and $36 million for direct transaction costs. Approximately
$2 million of accrued unpaid costs remained on the consolidated balance sheet as
of December 31, 1998.
3. INCOME TAXES
The jurisdictional components of income before income taxes follow.
<TABLE>
<CAPTION>
Year Ended December 31,
- -----------------------------------------------
(In Millions) 1998 1997 1996
- -----------------------------------------------
<S> <C> <C> <C>
Domestic $139 $369 $400
Foreign (44) 42 33
- -----------------------------------------------
Total $ 95 $411 $433
===============================================
</TABLE>
31
<PAGE> 36
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The provision for income taxes follows.
<TABLE>
<CAPTION>
Year Ended December 31,
- ------------------------------------------------
(In Millions) 1998 1997 1996
- ------------------------------------------------
<S> <C> <C> <C>
Current
Federal $ 10 $ 44 $ 53
State 5 2 11
Foreign (2) 10 2
- ------------------------------------------------
13 56 66
- ------------------------------------------------
Deferred
Federal 8 30 18
State 1 11 9
Foreign (13) (5) 5
- ------------------------------------------------
(4) 36 32
- ------------------------------------------------
Total $ 9 $ 92 $ 98
================================================
</TABLE>
Reconciliation of the federal statutory income tax rate to the effective income
tax rate follows.
<TABLE>
<CAPTION>
Year Ended December 31,
- ----------------------------------------------------------------------
1998 1997 1996
- ----------------------------------------------------------------------
<S> <C> <C> <C>
Statutory rate 35.0% 35.0% 35.0%
State income taxes 4.1 2.1 3.0
Taxes on foreign income
in excess of statutory rate .6 2.1 .2
Tax credits (33.4) (18.5) (15.0)
Merger costs -- 4.6 --
Other 3.1 (2.8) (.7)
- ----------------------------------------------------------------------
Effective rate 9.4% 22.5% 22.5%
======================================================================
</TABLE>
Deferred income tax liabilities (assets) follow.
<TABLE>
<CAPTION>
December 31,
- ------------------------------------------------------------------------
(In Millions) 1998 1997
- ------------------------------------------------------------------------
<S> <C> <C>
Deferred income tax liabilities
Excess of book over tax basis of properties $ 514 $ 548
Deferred income tax assets
AMT credit carryforward (264) (255)
Deferred foreign tax credits (71) (66)
Net operating loss carryforward (3) (4)
Foreign tax credit carryforward (2) (2)
Financial accruals and other (10) (51)
- ------------------------------------------------------------------------
(350) $(378)
- ------------------------------------------------------------------------
Less valuation allowance 35 33
- ------------------------------------------------------------------------
Net deferred income tax liabilities $ 199 $ 203
========================================================================
</TABLE>
32
<PAGE> 37
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The above net deferred tax liabilities, as of December 31, 1998 and
1997, include deferred state income tax liabilities of approximately $39 million
for both years.
The Alternative Minimum Tax ("AMT") credit carryforward, related
primarily to nonconventional fuel tax credits, is available to offset future
federal income tax liabilities. The AMT credit carryforward has no expiration.
The benefit of these tax credits is recognized in net income for accounting
purposes and is reflected in the current tax provision to the extent the Company
is able to utilize the credits for tax return purposes.
The foreign tax credit carryforward is available through the year 2003
to offset future federal income taxes. The federal income tax net operating loss
carryforward is available through the year 2009 to offset future federal taxable
income, subject to the separate return limitation provisions of the federal
income tax regulations.
A valuation allowance is provided for uncertainties surrounding the
realization of certain foreign tax credit carryforwards and certain deferred
foreign tax credits.
4. COMMODITY HEDGING ACTIVITIES
Gas Swaps
The Company enters into gas swap agreements to fix the price of
anticipated future natural gas production. As of December 31, 1998, the Company
has the following volumes hedged.
<TABLE>
<CAPTION>
Total Hedged Average
Production Volume Hedge/Strike Deferred Gain
Period (MMBTU) Price (In Millions)
- -----------------------------------------------------------
<S> <C> <C> <C>
1999 168,650,000 $2.39 $ 68
2000 201,300,000 2.33 26
2001 77,565,000 $2.36 $ 7
</TABLE>
Gas Basis Swaps
The Company enters into gas basis swap agreements to fix a component of
the sales price of anticipated future natural gas production. This component is
expressed as the differential between a location and Henry Hub. These
transactions are accounted for as hedges of the Company's underlying production.
As of December 31, 1998, the Company had 40 million MMBTU of 1999 natural gas
production hedged at a fixed differential of approximately $.28 per MMBTU. The
deferred loss on these transactions as of December 31, 1998 is approximately $2
million.
Options Contracts
The Company enters into put option agreements to set a floor price on
anticipated future natural gas production while allowing the Company to
participate in market price increases that exceed those floor prices. These
transactions are accounted for as hedges of the Company's underlying production.
As of December 31, 1998, the Company has 34 million MMBTU of 1999 natural gas
production hedged at a floor price of $1.80 per MMBTU. The deferred gain on
these transactions as of December 31, 1998 is approximately $1 million.
5. LONG-TERM DEBT
Long-term debt follows.
<TABLE>
<CAPTION>
December 31,
- ---------------------------------------------------------
(In Millions) 1998 1997
- ---------------------------------------------------------
<S> <C> <C>
Commercial Paper $ 190 $ --
Notes, 7.15%, due 1999 300 300
Notes, 6 7/8%, due 1999 150 150
Notes, 9 5/8%, due 2000 150 150
Notes, 8 1/2%, due 2001 150 150
Notes, 8 1/4%, due 2002 100 100
Debentures, 9 7/8%, due 2010 150 150
Debentures, 7 5/8%, due 2013 100 100
Debentures, 9 1/8%, due 2021 150 150
Debentures, 7.65%, due 2023 200 200
Debentures, 8.20%, due 2025 150 150
Debentures, 6 7/8%, due 2026 150 150
Other, including discounts -- net (2) (2)
- ---------------------------------------------------------
Total $1,938 $1,748
=========================================================
</TABLE>
33
<PAGE> 38
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company had fixed-rate debt maturities of $450 million, $150
million, $150 million, $100 million, $0 and $1,090 million due in 1999, 2000,
2001, 2002, 2003 and thereafter, respectively. The Company's commercial paper
borrowings at December 31, 1998 had an average interest rate of 6 percent.
The Company's credit facilities are comprised of a $600 million
revolving credit agreement that expires in February 2003 and a $400 million
revolving credit agreement that expires in February 2000. The $400 million
revolving credit agreement is renewable annually by mutual consent. Annual fees
are .08 and .12 percent, respectively, of the $600 million and $400 million
commitments. At the Company's option, interest on borrowings is based on the
Prime rate or Eurodollar rates. The unused commitment under these agreements is
available to cover debt due within one year; therefore, commercial paper and
fixed-rate debt due within one year are classified as long-term debt. Under the
covenants of these agreements, debt cannot exceed 60 percent of capitalization
(as defined in the agreements). As of December 31, 1998, there were no
borrowings outstanding under these credit facilities. In addition, the Company
has the capacity to issue $1 billion of securities under shelf registration
statements filed with the Securities and Exchange Commission.
The Company utilizes a treasury lock agreement to hedge the effect of
interest rate movements on anticipated debt transactions. At December 31, 1998,
the aggregate notional amount of the lock agreement was $128 million. At
December 31, 1998, the fair value of the agreement was an obligation of $11
million. The treasury lock agreement matures in the first quarter 1999.
6. TRANSPORTATION ARRANGEMENTS WITH EL PASO NATURAL GAS COMPANY
In 1998, 1997 and 1996, approximately 37 percent, 41 percent and 43
percent, respectively, of the Company's gas production was transported to direct
sale customers through El Paso Natural Gas Company's ("EPNG") pipeline systems.
These transportation arrangements are pursuant to EPNG's approved Federal Energy
Regulatory Commission tariffs applicable to all shippers. The Company expects to
continue to transport a substantial portion of its future gas production through
EPNG's pipeline system. See Note 9 for demand charges paid to EPNG which provide
the Company with firm and interruptible transportation capacity rights on
interstate and intrastate pipeline systems.
34
<PAGE> 39
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7. CAPITAL STOCK
STOCK OPTIONS
The Company's 1993 Stock Incentive Plan (the "1993 Plan") succeeds its
1988 Stock Option Plan which expired by its terms in May 1993 but remains in
effect for options granted prior to May 1993. The 1993 Plan provides for the
grant of stock options, restricted stock, stock purchase rights and stock
appreciation rights or limited stock appreciation rights (together "SARs").
Under the 1993 Plan, options may be granted to officers and key
employees at fair market value on the date of grant, exercisable in whole or
part by the optionee after completion of at least one year of continuous
employment from the grant date and have a term of ten years. At December 31,
1998, 6,049,276 shares were available for grant under the 1993 Plan.
In 1997, the Company adopted the 1997 Employee Stock Incentive Plan
(the "1997 Plan") from which stock options and restricted stock ("Awards") may
be granted to employees who are not eligible to participate in the 1993 Plan.
The options are granted at fair market value on the grant date, become
exercisable in whole or part by the optionee after completion of at least one
year of continuous employment and have a term of ten years. The 1997 Plan limits
Awards, in aggregate, to a maximum of one million shares annually.
Activity in the Company's stock option plans follows.
<TABLE>
<CAPTION>
Weighted Average
Options Exercise Price
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Balance, December 31, 1995 6,283,659 $29.07
Granted 2,896,483 47.35
Exercised (2,288,458) 26.91
Cancelled (105,615) 34.74
- -----------------------------------------------------------------------------------------------
Balance, December 31, 1996 6,786,069 37.51
Granted 2,253,627 40.99
Exercised (886,009) 27.09
Cancelled (210,613) 47.82
- -----------------------------------------------------------------------------------------------
Balance, December 31, 1997 7,943,074 39.39
Granted 276,200 43.43
Exercised (1,060,365) 26.11
Cancelled (758,460) 47.35
- -----------------------------------------------------------------------------------------------
Balance, December 31, 1998 6,400,449 $40.82
===============================================================================================
</TABLE>
The following table summarizes information related to stock options outstanding
and exercisable at December 31, 1998.
<TABLE>
<CAPTION>
Weighted Average
Options Range of Weighted Average Remaining Options Weighted Average
Outstanding Exercise Prices Exercise Price Contractual Life Exercisable Exercise Price
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
2,267,554 $19.51 to $38.00 $30.36 5.1 years 2,090,366 $30.10
4,132,895 39.63 to 52.03 46.55 7.8 years 2,430,599 46.16
- ---------------------------------------------------------------------------------------------------------------------------------
6,400,449 $19.51 to $52.03 $40.82 6.9 years 4,520,965 $38.74
=================================================================================================================================
</TABLE>
Exercisable stock options and weighted average exercise prices at December 31,
1997 and 1996 follow.
<TABLE>
<CAPTION>
Weighted Average
Options Exercisable Exercise Price
- -------------------------------------------------------------
<S> <C> <C>
December 31, 1997 3,917,331 $33.93
=============================================================
December 31, 1996 3,593,423 $30.79
=============================================================
</TABLE>
35
<PAGE> 40
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The weighted average fair values of options granted during the years
1998, 1997 and 1996 were $11.32, $10.45 and $12.45, respectively. The fair
values of employee stock options were calculated using a variation of the
Black-Scholes stock option valuation model with the following weighted average
assumptions for grants in 1998, 1997 and 1996: stock price volatility of 24.18
percent, 18.35 percent and 18.62 percent, respectively; risk free rate of return
ranging from 4.66 percent to 6.00 percent; dividend yield of 1.36 percent, 1.07
percent and 1 percent, respectively; and an expected term of 5 years. If the
fair value based method of accounting had been applied, the Company's net income
and EPS would have been reduced to the pro forma amounts indicated below. The
fair value of stock options included in the pro forma amounts is not necessarily
indicative of future effects on net income and EPS.
<TABLE>
<CAPTION>
Year Ended December 31,
- -------------------------------------------------------------------
(In Millions, Except per share Amounts) 1998 1997 1996
- -------------------------------------------------------------------
<S> <C> <C> <C>
Net income -- as reported $ 86 $ 319 $ 335
Net income -- pro forma 74 308 329
Basic EPS -- as reported .48 1.80 1.89
Basic EPS -- pro forma .42 1.74 1.86
Diluted EPS -- as reported .48 1.79 1.88
Diluted EPS -- pro forma $.42 $1.73 $1.85
</TABLE>
STOCK APPRECIATION RIGHTS
The Company has granted SARs in connection with certain outstanding
options under the 1988 Stock Option Plan. SARs are subject to the same terms and
conditions as the related options. A SAR entitles an option holder, in lieu of
exercise of an option, to receive a cash payment equal to the difference between
the option price and the fair market value of the Company's Common Stock based
upon the plan provisions. To the extent the SAR is exercised, the related option
is cancelled and to the extent the option is exercised, the related SAR is
cancelled. The outstanding SARs are exercisable only under certain circumstances
related to significant changes in the ownership of the Company or its holdings,
or certain changes in the constitution of its Board of Directors. At December
31, 1998, there were 74,276 SARs outstanding related to stock options with a
weighted average exercise price of $34.21 per share.
PREFERRED STOCK AND PREFERRED STOCK PURCHASE RIGHTS
The Company is authorized to issue 75,000,000 shares of preferred
stock, par value $.01 per share, and as of December 31, 1998, there were no
shares issued. On December 9, 1998, the Company's Board of Directors designated
3,250,000 of the authorized preferred shares as Series A Junior Participating
Preferred Stock. Upon issuance, each one-hundredth of a share of Series A Junior
Participating Preferred Stock will have dividend and voting rights approximately
equal to those of one share of Common Stock of the Company. In addition, on
December 9, 1998, the Board of Directors declared a dividend distribution of one
Right for each outstanding share of Common Stock of the Company to shareholders
of record on December 16, 1998. The Rights become exercisable if, without the
Company's prior consent, a person or group acquires securities having 15 percent
or more of the voting power of all of the Company's voting securities (an
"Acquiring Person") or ten days following the announcement of a tender offer
which would result in such ownership. Each Right, when exercisable, entitles the
registered holder to purchase from the Company one-hundredth of a share of
Series A Junior Participating Preferred Stock at a price of $200 per one
hundredth of a share, subject to adjustment. If, after the Rights become
exercisable, the Company were to be involved in a merger or other business
combination in which its Common Stock was exchanged or changed or 50% or more of
the Company's assets or earning power were sold, each Right would permit the
holder to purchase, for the exercise price, stock of the acquiring company
having a value of twice the exercise price. In addition, except for certain
permitted offers, if any person or group becomes an Acquiring Person, each Right
would permit the purchase, for the exercise price, of Common Stock of the
Company having a value of twice the exercise price. Rights owned by an Acquiring
Person are void. The Rights may be redeemed by the Company under certain
circumstances until their expiration date for $.01 per Right.
36
<PAGE> 41
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
8. RETIREMENT BENEFITS
The Company's pension plans are non-contributory defined benefit plans
covering substantially all employees. The benefits are based on years of
credited service and final average compensation. Contributions to the plans are
limited to amounts that are currently deductible for tax purposes. Contributions
are intended to provide not only for benefits attributed to service to date but
also for those expected to be earned in the future.
The Company has postretirement medical and dental care plans for a closed
group of retirees and their dependents and certain employees. The postretirement
benefit plans are unfunded and the Company funds claims on a cash basis. The
Company also maintains a Medicare Part B reimbursement plan and life insurance
coverage for a closed group of retirees.
The following tables set forth the amounts recognized in the Consolidated
Balance Sheet and Statement of Income.
<TABLE>
<CAPTION>
Postretirement
Pension Benefits Benefits
- ---------------------------------------------------------------------------------
Year Ended December 31,
- ---------------------------------------------------------------------------------
(In Millions) 1998 1997 1998 1997
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Change in benefit obligation
Benefit obligation at beginning of year $ 178 $ 161 $ 33 $ 31
Service cost 9 9 -- 1
Interest cost 12 12 2 3
Amendments 2 -- 1 --
Actuarial loss (gain) 8 17 (2) --
Benefits paid (27) (21) (2) (2)
- ---------------------------------------------------------------------------------
Benefit obligation at end of year 182 178 32 33
- ---------------------------------------------------------------------------------
Change in plan assets
Fair value of plan assets
at beginning of year 161 144 -- --
Actual return on plan assets 30 28 -- --
Employer contribution 8 10 2 2
Benefits paid (27) (21) (2) (2)
- ---------------------------------------------------------------------------------
Fair value of plan assets at
end of year 172 161 -- --
- ---------------------------------------------------------------------------------
Funded status (10) (17) (32) (33)
- ---------------------------------------------------------------------------------
Unrecognized net actuarial loss 16 26 1 3
Unrecognized net transition obligation 1 2 -- --
Unrecognized prior service cost 2 -- 2 --
- ---------------------------------------------------------------------------------
Net prepaid (accrued) benefit cost $ 9 $ 11 $ (29) $ (30)
=================================================================================
</TABLE>
37
<PAGE> 42
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Postretirement
Pension Benefits Benefits
- ---------------------------------------------------------------------------------------------------------
(In Millions) Year Ended December 31,
- ---------------------------------------------------------------------------------------------------------
1998 1997 1996 1998 1997 1996
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Benefit cost for the plans includes the following
components
Service cost $ 9 $ 9 $ 9 $-- $ 1 $ 1
Interest cost 12 12 12 1 3 3
Expected return on plan assets (13) (12) (12) -- -- --
Amortization of transition obligation -- -- 2 -- -- --
Amortization of prior service cost -- 1 1 -- -- --
Recognized net actuarial loss 2 1 2 -- -- --
- ---------------------------------------------------------------------------------------------------------
Net benefit cost $ 10 $ 11 $ 14 $ 1 $ 4 $ 4
- ---------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Postretirement
Pension Benefits Benefits
- --------------------------------------------------------------------------------------------------------
December 31,
- --------------------------------------------------------------------------------------------------------
1998 1997 1998 1997
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Weighted average assumptions
Discount rate 6.75% 7.25% 6.75% 7.25%
Expected return on plan assets 9.00% 9.00% -- --
Rate of compensation increase 5.00% 5.00% -- --
- --------------------------------------------------------------------------------------------------------
</TABLE>
During 1998, the Company recognized a settlement expense of approximately
$800 thousand related to the employee reduction associated with the LL&E merger
in the fourth quarter of 1997.
A 5 percent annual rate of increase in the per capita cost of covered
health care benefits was assumed for 1998. The rate is assumed to decrease
gradually to 4 percent for 2003 and remain at that level thereafter.
Assumed health care cost trends have a significant effect on the amounts
reported for the postretirement medical and dental care plans. A one-percentage
point change in assumed health care cost trend rates would have the following
effects:
<TABLE>
<CAPTION>
1-Percentage 1-Percentage
(In Thousands) Point Increase Point Decrease
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
Effect on total service and interest cost $ 152 $ (131)
Effect on postretirement benefit obligation $2,841 $(2,457)
</TABLE>
38
<PAGE> 43
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
9. COMMITMENTS AND CONTINGENT LIABILITIES
DEMAND CHARGES
The Company has entered into contracts which provide firm transportation
capacity rights on interstate and intrastate pipeline systems. The remaining
terms on these contracts range from 1 to 9 years and require the Company to pay
transportation demand charges regardless of the amount of pipeline capacity
utilized by the Company. The Company paid $60 million, $49 million and $61
million of demand charges of which $44 million, $34 million and $47 million was
paid to EPNG for the years ended December 31, 1998, 1997 and 1996, respectively.
Future transportation demand charge commitments at December 31, 1998
follow.
<TABLE>
<CAPTION>
Year Ended December 31,
- ------------------------------------------------------------
(In Millions)
<S> <C>
1999 $ 62
2000 47
2001 42
2002 41
2003 42
Thereafter 127
- ------------------------------------------------------------
Total $361
============================================================
</TABLE>
LEASE OBLIGATIONS
The Company has operating leases for office space and other property and
equipment. The Company incurred lease rental expense of $17 million, $18 million
and $20 million for the years ended December 31, 1998, 1997 and 1996,
respectively.
Future minimum annual rental commitments at December 31, 1998 follow.
<TABLE>
<CAPTION>
Year Ended December 31,
- ----------------------------------------------------------
(In Millions)
<S> <C>
1999 $ 18
2000 16
2001 16
2002 16
2003 16
Thereafter 68
- ----------------------------------------------------------
Total $150
==========================================================
</TABLE>
DRILLING RIG COMMITMENTS
During 1998, the Company entered into agreements to lease or participate in
the use of various drilling rigs. The exposure with respect to these commitments
ranges from $152 million to $280 million depending on partner participation.
These agreements extend through the year 2004.
LEGAL PROCEEDINGS
The Company is involved in several proceedings challenging the payment of
royalties for its crude oil and natural gas production.
On November 20, 1997, the Company and numerous other defendants entered
into a settlement agreement in a lawsuit styled as The McMahon Foundation, et
al. v. Amerada Hess Corporation, et al. This lawsuit is a proposed class action
consisting of both working interest owners and royalty owners against numerous
defendants, all of which are oil companies and/or purchasers of oil from oil
companies, including Burlington Resources Oil & Gas Company, formerly known as
Meridian Oil Inc. ("BROG") and LL&E. The plaintiffs allege that the defendants
conspired to fix, depress, stabilize and maintain at artificially low levels the
prices paid for oil by, among other things, setting their posted prices at
arbitrary levels below competitive market prices. Cases involving similar
allegations have been filed in federal courts in other states. On January 14,
1998, the United States Judicial Panel on Multidistrict Litigation issued an
order consolidating these cases and transferring the McMahon case to the United
States District Court for the Southern District of Texas in Corpus Christi. The
Company and other defendants have entered into a Settlement Agreement which
received preliminary approval by the Court on October 28, 1998. The Court has
set a hearing to finally determine the fairness, accuracy and reasonableness of
the Settlement Agreement beginning in April 1999.
The Company is also involved in several governmental proceedings relating
to the payment of royalties. Various administrative proceedings are pending
before the Minerals Management Service ("MMS") of the United States Department
of the Interior with respect to the proper valuation of oil and gas produced on
federal and Indian lands for purposes of paying royalties on production sold by
BROG to its affiliate, Burlington Resources Trading Inc. ("BRTI"), or gathered
by its affiliate, Burlington Resources Gathering Inc. In general, these
proceedings stem from regular MMS audits of the Company's royalty payments over
various periods of time and involve the interpretation of the relevant federal
regulations. Most of these administrative proceedings currently have been
suspended pending
39
<PAGE> 44
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
LEGAL PROCEEDINGS (CONTINUED)
negotiations between the Company and the MMS to resolve their disputes regarding
the appropriate valuation methodology or pending resolution of the federal False
Claims Act litigation as hereinafter described.
In late February 1998, the Company and numerous other oil and gas companies
received a complaint filed in the United States District Court for the Eastern
District of Texas in Lufkin in a lawsuit styled as United States of America ex
rel J. Benjamin Johnson, Jr., et al v. Shell Oil Company, et al. alleging
violations of the civil False Claims Act. The United States has intervened in
this lawsuit as to some of the defendants, including the Company, and has filed
a separate complaint. This suit alleges that the Company underpaid royalties for
crude oil produced on federal and Indian lands through the use of below-market
posted prices in the sale of oil from BROG to BRTI. The suit alleges that
royalties paid by BROG based on these posted prices were lower than the
royalties allegedly required to be paid under federal regulations, and that the
forms filed by BROG with the MMS reporting the royalties paid were false,
thereby violating the civil False Claims Act. The Company and others have also
received document subpoenas and other inquiries from the Department of Justice
relating to the payment of royalties to the federal government for natural gas
production. These requests and inquiries have been made in the context of one or
more other False Claims Act cases brought by individuals which remain under seal
and are now being investigated by the Civil Division of the Department of
Justice. The Company has responded and continues to respond to these requests
and inquiries, but the Company does not know what action, if any, the Department
of Justice will take with regard to these other cases. If the government chooses
not to intervene and pursue these cases, the individuals who initially brought
these cases are free to pursue them in return for a share, if any, of any final
settlement or judgment. In addition, the Company has been advised that it is a
target of a criminal investigation by the United States Attorney for the
District of Wyoming into the alleged underpayment of oil and gas royalties. The
Company has responded to numerous grand jury document subpoenas in connection
with an investigation and is otherwise cooperating with the investigation.
Management cannot predict when the investigation will be completed or its
ultimate outcome.
Based on the Company's present understanding of the various governmental
proceedings relating to royalty payments, described in the preceding two
paragraphs, the Company believes that it has substantial defenses to these
claims and intends to vigorously assert such defenses. However, in the event
that the Company is found to have violated the civil False Claims Act or is
indicted or convicted on criminal charges, the Company could be subjected to a
variety of sanctions, including treble damages, substantial monetary fines,
civil and/or criminal penalties and a temporary suspension from entering into
future federal mineral leases and other federal contracts for a defined period
of time. While the ultimate outcome and impact on the Company cannot be
predicted with certainty, management believes that the resolution of these
proceedings will not have a material adverse effect on the consolidated
financial position of the Company, although results of operations and cash flows
could be significantly impacted in the reporting periods in which such matters
are resolved.
In addition to the foregoing, the Company and its subsidiaries are named
defendants in numerous other lawsuits and named parties in numerous governmental
and other proceedings arising in the ordinary course of business. While the
outcome of these other lawsuits and proceedings cannot be predicted with
certainty, management believes these matters, other than the above-described
proceedings, will not have a material adverse effect on the consolidated
financial position, results of operations or cash flows of the Company.
10. DIVESTITURE PROGRAM AND REORGANIZATION
In June 1997, the Company completed its divestiture program of
non-strategic assets which was announced in July 1996. As planned, the Company
sold approximately 27,000 wells and related facilities. Before closing
adjustments, gross proceeds for 1997 from the sales of oil and gas properties
related to this divestiture program were approximately $450 million. During
1997, the Company recorded a pretax gain of approximately $50 million related to
the sales of oil and gas properties. This program allowed the Company to
reorganize and resulted in a reduction of 456 employees. As of December 31,
1997, this program was complete.
On July 31, 1996, the Company completed the sale of its crude oil refinery
and terminal, including crude oil and refined product inventories, for
approximately $70 million. The net book value of refinery property, plant and
equipment and inventory at that date was approximately $68 million.
40
<PAGE> 45
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
11. DEFERRED REVENUE
In September 1996, the Company received cash proceeds of $108 million for a
transaction in which it is obligated to deliver gas through December 31, 2002.
The proceeds were recorded as deferred revenue and are being amortized into
revenues as the gas is delivered. Approximately $18 million, $20 million and $13
million of deferred revenue was recognized in 1998, 1997 and 1996, respectively.
12. RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 133, Accounting for Derivative
Instruments and Hedging Activities, which is effective for fiscal years
beginning after June 15, 1999.
SFAS No. 133 establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts, and for hedging activities. It also requires that an entity recognize
all derivatives as either assets or liabilities on the balance sheet and measure
those items at fair value. If certain conditions are met, a derivative may be
specifically designated as (a) a hedge of the exposure to changes in the fair
value of a recognized asset or liability or an unrecognized firm commitment, (b)
a hedge of the exposure to variable cash flows of a forecasted transaction or
(c) a hedge of the foreign currency exposure of a net investment in a foreign
operation, an unrecognized firm commitment, an available-for-sale security, or a
foreign-currency-denominated forecasted transaction. The Company plans to adopt
SFAS No. 133 during the first quarter of the year ended December 31, 2000 and is
currently evaluating the effects of this pronouncement.
13. SUPPLEMENTAL CASH FLOW INFORMATION
The following is additional information concerning supplemental disclosures
of cash flow activities.
<TABLE>
<CAPTION>
Year Ended December 31,
- --------------------------------------------------------------------
(In Millions) 1998 1997 1996
- --------------------------------------------------------------------
<S> <C> <C> <C>
Interest paid $150 $149 $154
Income taxes paid-- net $ 21 $ 56 $ 60
</TABLE>
14. SEGMENT AND GEOGRAPHIC INFORMATION
The Company's reportable segments are North America and International. Both
segments are engaged principally in the exploration, development, production and
marketing of oil and gas. The North America segment is responsible for the
Company's operations in the U.S. and Canada and the International segment is
responsible for all operations outside that geographical region. The accounting
policies for the segments are the same as those described in Note 1 to the
consolidated financial statements. There are no significant intersegment sales
or transfers.
41
<PAGE> 46
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following tables present information about reported segment operations.
<TABLE>
<CAPTION>
Year Ended December 31, 1998
- ---------------------------------------------------------------------------------------------------
(In Millions) North America International Total
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues $1,488 $149 $1,637
Depreciation, depletion and amortization 440 67 507
Operating income (loss) 391 (38) 353
Additions to oil and gas properties $ 981 $136 $1,117
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31, 1997
- ---------------------------------------------------------------------------------------------------
(In Millions) North America International Total
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues $1,795 $205 $2,000
Depreciation, depletion and amortization 434 75 509
Operating income 686 53 739
Additions to oil and gas properties $ 977 $228 $1,205
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31, 1996
- ---------------------------------------------------------------------------------------------------
(In Millions) North America International Total
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues $1,989 $211 $2,200
Depreciation, depletion and amortization 419 81 500
Operating income 717 54 771
Additions to oil and gas properties $ 730 $ 62 $ 792
</TABLE>
42
<PAGE> 47
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following is a reconciliation of segment operating income to consolidated
income before income taxes.
<TABLE>
<CAPTION>
Year Ended December 31,
- ---------------------------------------------------------------------------------------------------
(In Millions) 1998 1997 1996
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Total operating income for reportable segments $ 353 $ 739 $771
Corporate expenses(a) 135 236 191
Interest expense 148 142 147
Other income-- net 25 50 --
- ---------------------------------------------------------------------------------------------------
Consolidated income before income taxes $ 95 $ 411 $433
===================================================================================================
</TABLE>
(a) In 1997, corporate expenses included an $80 million charge related to the
Merger. In 1996, corporate expenses included a $30 million charge related to the
reorganization.
The following is a reconciliation of segment additions to oil and gas properties
to consolidated amounts.
<TABLE>
<CAPTION>
Year Ended December 31,
- ----------------------------------------------------------------------------------------------------
(In Millions) 1998 1997 1996
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Total additions to oil and gas properties
for reportable segments $1,117 $1,205 $792
Administrative expenditures 48 40 12
- ----------------------------------------------------------------------------------------------------
Consolidated additions to properties $1,165 $1,245 $804
====================================================================================================
</TABLE>
43
<PAGE> 48
REPORT OF MANAGEMENT
The management of Burlington Resources is responsible for the preparation
and integrity of all information contained in this Annual Report. The
accompanying financial statements have been prepared in conformity with
generally accepted accounting principles. The financial statements include
amounts that are management's best estimates and judgments.
BR maintains a system of internal control and a program of internal
auditing that provides management with reasonable assurance that BR's assets are
protected and that published financial statements are reliable and free of
material misstatement. Management is responsible for the effectiveness of
internal controls. This is accomplished through established codes of conduct,
accounting and other control systems, policies and procedures, employee
selection and training, appropriate delegation of authority and segregation of
responsibilities.
The Audit Committee of the Board of Directors, composed solely of directors
who are not officers or employees, meets regularly with the independent
certified public accountants, financial management, counsel and corporate audit.
To ensure complete independence, the certified public accountants and corporate
audit have full and free access to the Audit Committee to discuss the results of
their audits, the adequacy of internal controls and the quality of financial
reporting.
Our independent certified public accountants provide an objective
independent review by their audit of the Company's financial statements. Their
audit is conducted in accordance with generally accepted auditing standards and
includes a review of internal accounting controls to the extent deemed necessary
for the purposes of their audit.
/s/ John E. Hagale /s/ Philip W. Cook
------------------ ------------------
John E. Hagale Philip W. Cook
Executive Vice President and Vice President, Controller and
Chief Financial Officer Chief Accounting Officer
44
<PAGE> 49
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of Burlington Resources Inc.
In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of income, cash flows and stockholders' equity present
fairly, in all material respects, the financial position of Burlington Resources
Inc. and its subsidiaries at December 31, 1998 and 1997, and the results of
their operations and their cash flows for each of the three years in the period
ended December 31, 1998, in conformity with generally accepted accounting
principles. These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these statements in
accordance with generally accepted auditing standards which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for the opinion expressed
above.
PriceWaterhouseCoopers LLP
Houston, Texas
January 20, 1999
45
<PAGE> 50
BURLINGTON RESOURCES INC.
SUPPLEMENTARY FINANCIAL INFORMATION
SUPPLEMENTAL OIL AND GAS DISCLOSURES -- UNAUDITED
- --------------------------------------------------------------------------------
The supplemental data presented herein reflects information for all of the
Company's oil and gas producing activities. Capitalized costs for oil and gas
producing activities follow.
<TABLE>
<CAPTION>
December 31,
- --------------------------------------------------------------------------------
(In Millions) 1998 1997
- --------------------------------------------------------------------------------
<S> <C> <C>
Proved properties $9,154 $8,516
Unproved properties 194 150
- --------------------------------------------------------------------------------
9,348 8,666
Accumulated depreciation, depletion and amortization 4,474 4,003
- --------------------------------------------------------------------------------
Net capitalized costs $4,874 $4,663
================================================================================
</TABLE>
Costs incurred for oil and gas property acquisition, exploration and
development activities follow.
<TABLE>
<CAPTION>
Year Ended December 31, 1998
- --------------------------------------------------------------------------------
(In Millions) North America International Total
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Property acquisition
Unproved $ 92 $ 6 $ 98
Proved 23 4 27
Exploration 315 96 411
Development 491 30 521
- --------------------------------------------------------------------------------
Total costs incurred $921 $136 $1,057
================================================================================
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31, 1997
- --------------------------------------------------------------------------------
(In Millions) North America International Total
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Property acquisition
Unproved $ 93 $ 5 $ 98
Proved 54 160 214
Exploration 241 48 289
Development 539 15 554
- --------------------------------------------------------------------------------
Total costs incurred $927 $228 $1,155
================================================================================
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31, 1996
- --------------------------------------------------------------------------------
(In Millions) North America International Total
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Property acquisition
Unproved $ 48 $ 9 $ 57
Proved 92 -- 92
Exploration 134 29 163
Development 402 24 426
- --------------------------------------------------------------------------------
Total costs incurred $676 $62 $738
================================================================================
</TABLE>
46
<PAGE> 51
SUPPLEMENTARY FINANCIAL INFORMATION
Results of operations for oil and gas producing activities follow.
<TABLE>
<CAPTION>
Year Ended December 31, 1998
- -------------------------------------------------------------------------------------------------------
(In Millions) North America International Total
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues $1,448 $ 149 $1,597
- -------------------------------------------------------------------------------------------------------
Production costs 343 43 386
Exploration costs 239 59 298
Operating expenses 177 32 209
Depreciation, depletion and amortization 429 64 493
- -------------------------------------------------------------------------------------------------------
1,188 198 1,386
- -------------------------------------------------------------------------------------------------------
Operating income (loss) 260 (49) 211
Income tax provision (benefit) 64 (11) 53
- -------------------------------------------------------------------------------------------------------
Results of operations for oil and gas producing activities $ 196 $ (38) $ 158
=======================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31, 1997
- -------------------------------------------------------------------------------------------------------
(In Millions) North America International Total
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues $1,747 $ 205 $1,952
- -------------------------------------------------------------------------------------------------------
Production costs 363 42 405
Exploration costs 234 25 259
Operating expenses 220 10 230
Depreciation, depletion and amortization 422 75 497
- -------------------------------------------------------------------------------------------------------
1,239 152 1,391
- -------------------------------------------------------------------------------------------------------
Operating income 508 53 561
Income tax provision 103 27 130
- -------------------------------------------------------------------------------------------------------
Results of operations for oil and gas producing activities $ 405 $ 26 $ 431
=======================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31, 1996
- -------------------------------------------------------------------------------------------------------
(In Millions) North America International Total
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues $1,682 $ 211 $1,893
- -------------------------------------------------------------------------------------------------------
Production costs 372 51 423
Exploration costs 145 14 159
Operating expenses 224 11 235
Depreciation, depletion and amortization 408 81 489
- -------------------------------------------------------------------------------------------------------
1,149 157 1,306
- -------------------------------------------------------------------------------------------------------
Operating income 533 54 587
Income tax provision 131 20 151
- -------------------------------------------------------------------------------------------------------
Results of operations for oil and gas producing activities $ 402 $ 34 $ 436
=======================================================================================================
</TABLE>
47
<PAGE> 52
SUPPLEMENTARY FINANCIAL INFORMATION
The following table reflects estimated quantities of proved oil and gas
reserves. These reserves have been reduced for royalty interests owned by
others. These reserves have been estimated by the Company's petroleum engineers.
The Company considers such estimates to be reasonable, however, due to inherent
uncertainties, estimates of underground reserves are imprecise and subject to
change over time as additional information becomes available.
<TABLE>
<CAPTION>
Oil (MMBbls) Gas (BCF)
- ----------------------------------------------------------------------------------------------------------------------------
North America International Total North America International Total
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PROVED DEVELOPED AND UNDEVELOPED RESERVES
December 31, 1995 257.6 36.1 293.7 6,197 289 6,486
Revision of previous estimates 6.6 (.4) 6.2 (8) 28 20
Extensions, discoveries and
other additions 33.1 2.3 35.4 474 34 508
Production (26.1) (7.2) (33.3) (559) (28) (587)
Purchases of reserves in place 8.0 -- 8.0 78 -- 78
Sales of reserves in place (4.2) -- (4.2) (274) -- (274)
- ----------------------------------------------------------------------------------------------------------------------------
December 31, 1996 275.0 30.8 305.8 5,908 323 6,231
Revisions of previous estimates (15.6) (2.6) (18.2) 68 (4) 64
Extensions, discoveries and
other additions 44.9 .3 45.2 913 1 914
Production (24.6) (7.2) (31.8) (583) (26) (609)
Purchases of reserves in place 1.4 -- 1.4 116 240 356
Sales of reserves in place (48.7) -- (48.7) (538) -- (538)
- ----------------------------------------------------------------------------------------------------------------------------
December 31, 1997 232.4 21.3 253.7 5,884 534 6,418
Revision of previous estimates (8.4) 1.6 (6.8) (94) (6) (100)
Extensions, discoveries and
other additions 26.7 29.7 56.4 636 35 671
Production (24.2) (6.0) (30.2) (577) (24) (601)
Purchases of reserves in place .1 -- .1 81 8 89
Sales of reserves in place -- -- -- (72) (25) (97)
- ----------------------------------------------------------------------------------------------------------------------------
December 31, 1998 226.6 46.6 273.2 5,858 522 6,380
============================================================================================================================
PROVED DEVELOPED RESERVES
December 31, 1995 224.8 30.3 255.1 5,064 271 5,335
December 31, 1996 242.0 25.4 267.4 4,870 265 5,135
December 31, 1997 203.9 15.6 219.5 4,641 233 4,874
December 31, 1998 199.2 14.5 213.7 4,565 258 4,823
</TABLE>
48
<PAGE> 53
SUPPLEMENTARY FINANCIAL INFORMATION
A summary of the standardized measure of discounted future net cash flows
relating to proved oil and gas reserves is shown below. Future net cash flows
are computed using year end sales prices, costs and statutory tax rates
(adjusted for tax credits and other items) that relate to the Company's existing
proved oil and gas reserves.
<TABLE>
<CAPTION>
December 31, 1998
- --------------------------------------------------------------------------------------------------------
(In Millions) North America International Total
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Future cash inflows $13,840 $1,912 $15,752
Less related future
Production costs 3,761 773 4,534
Development costs 617 296 913
Income taxes 2,113 190 2,303
- --------------------------------------------------------------------------------------------------------
Future net cash flows 7,349 653 8,002
10% annual discount for estimated timing of cash flows 3,643 301 3,944
- --------------------------------------------------------------------------------------------------------
Standardized measure of discounted future net cash flows $ 3,706 $ 352 $ 4,058
========================================================================================================
</TABLE>
<TABLE>
<CAPTION>
December 31, 1997
- --------------------------------------------------------------------------------------------------------
(In Millions) North America International Total
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Future cash inflows $15,934 $1,800 $17,734
Less related future
Production costs 4,076 702 4,778
Development costs 736 214 950
Income taxes 2,767 200 2,967
- --------------------------------------------------------------------------------------------------------
Future net cash flows 8,355 684 9,039
10% annual discount for estimated timing of cash flows 3,960 234 4,194
- --------------------------------------------------------------------------------------------------------
Standardized measure of discounted future net cash flows $ 4,395 $ 450 $ 4,845
========================================================================================================
</TABLE>
A summary of the changes in the standardized measure of discounted future
net cash flows applicable to proved oil and gas reserves follows.
<TABLE>
<CAPTION>
Year Ended December 31,
- ----------------------------------------------------------------------------------------------------
(In Millions) 1998 1997 1996
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
January 1 $ 4,845 $ 7,505 $ 4,393
- ----------------------------------------------------------------------------------------------------
Revisions of previous estimates
Changes in prices and costs (904) (4,167) 4,981
Changes in quantities (100) (23) 119
Changes in rate of production (262) (436) (77)
Additions to proved reserves resulting from extensions,
discoveries and improved recovery, less related costs 465 655 782
Purchases of reserves in place 56 246 148
Sales of reserves in place (77) (667) (177)
Accretion of discount 612 1,048 529
Sales of oil and gas, net of production costs (1,211) (1,547) (1,470)
Net change in income taxes 297 1,697 (1,652)
Other 337 534 (71)
- ----------------------------------------------------------------------------------------------------
Net change (787) (2,660) 3,112
- ----------------------------------------------------------------------------------------------------
December 31 $ 4,058 $ 4,845 $ 7,505
====================================================================================================
</TABLE>
49
<PAGE> 54
BURLINGTON RESOURCES INC.
QUARTERLY FINANCIAL DATA -- UNAUDITED
<TABLE>
<CAPTION>
1998 1997
- ------------------------------------------------------------------------------------------------------------------------------
(In Millions, Except per Share Amounts) 4th 3rd 2nd 1st 4th 3rd 2nd 1st
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues $ 403 $ 390 $ 412 $ 432 $ 541 $ 464 $ 427 $ 568
Operating Income(a) 14 41 64 99 87 116 93 207
Net Income(a)(b) -- 15 23 48 37 65 86 131
Basic Earnings per Common Share -- .08 .13 .27 .20 .37 .49 .74
Diluted Earnings per Common Share -- .08 .13 .27 .20 .37 .49 .73
Cash Dividends Declared per Common Share $ .14 $ .13 $ .14 $ .14 $ .14 $ .10 $ .11 $ .11
- ------------------------------------------------------------------------------------------------------------------------------
Common Stock Price Range
High $43 1/8 $ 44 1/2 $ 49 5/8 $ 49 1/2 $53 5/8 $53 3/16 $48 5/8 $54 1/2
Low $ 32 $29 7/16 $38 3/16 $38 15/16 $42 1/2 $ 43 5/8 $39 3/4 $42 5/8
</TABLE>
(a) During the fourth quarter of 1997, as a result of the Merger, the Company
recorded a pretax charge of $80 million ($71 million after tax).
(b) During the second quarter of 1997, as a result of the divestiture program,
the Company recorded a pretax gain of $50 million ($31 million after tax).
50
<PAGE> 55
EXECUTIVE OFFICERS OF THE REGISTRANT
BOBBY S. SHACKOULS, 48
Chairman of the Board,
President and Chief Executive Officer
Burlington Resources Inc.
July 1997 to Present
President and Chief Executive Officer, Burlington Resources Inc., December 1995
to July 1997; President and Chief Executive Officer, Burlington Resources Oil &
Gas Company, October 1994 to Present; Executive Vice President and Chief
Operating Officer, Meridian Oil Inc., June 1993 to October 1994.
JOHN E. HAGALE, 42
Executive Vice President and Chief Financial Officer
Burlington Resources Inc.
December 1995 to Present
Executive Vice President and Chief Financial Officer, Burlington Resources Oil &
Gas Company, March 1993 to Present; Senior Vice President and Chief Financial
Officer, Burlington Resources Inc., April 1994 to December 1995.
RANDY L. LIMBACHER, 40
President and Chief Executive Officer
Burlington Resources North America
July 1998 to Present
Vice President, Gulf Coast Division, Burlington Resources Oil & Gas Company,
February 1997 to June 1998; Vice President, Farmington Region, Burlington
Resources Oil & Gas Company, June 1993 to January 1997.
H. LEIGHTON STEWARD, 64
Vice Chairman of the Board
Burlington Resources Inc.
October 1997 to Present
Chairman of the Board, President and Chief Executive Officer, The Louisiana Land
and Exploration Company, November 1996 to October 1997; Chairman of the Board
and Chief Executive Officer, The Louisiana Land and Exploration Company,
September 1995 to November 1996; and Chairman of the Board, President and Chief
Executive Officer, The Louisiana Land and Exploration Company, January 1989 to
September 1995.
L. DAVID HANOWER, 39
Senior Vice President
Law and Administration
Burlington Resources Inc.
July 1998 to Present
Senior Vice President, Law, Burlington Resources Inc., April 1996 to June 1998,
Vice President, Law, Burlington Resources Inc., April 1991 to April 1996; Senior
Vice President, Law, Burlington Resources Oil & Gas Company, July 1993 to June
1998.
JOHN A. WILLIAMS, 54
President and Chief Executive Officer
Burlington Resources International
July 1998 to Present
Senior Vice President, Exploration, Burlington Resources Inc., October 1997 to
June 1998; Senior Vice President, Exploration and Production, The Louisiana Land
and Exploration Company, September 1995 to October 1997; Vice President, The
Louisiana Land and Exploration Company, March 1988 to September 1995.
51
<PAGE> 56
FORWARD-LOOKING STATEMENTS
The Company may, in discussions of its future plans, objectives and expected
performance in periodic reports filed by the Company with the Securities and
Exchange Commission (or documents incorporated by reference therein) and in
written and oral presentations made by the Company, include projections or other
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933 or Section 21E of the Securities Exchange Act of 1934, as amended.
Such projections and forward-looking statements are based on assumptions which
the Company believes are reasonable, but are by their nature inherently
uncertain. In all cases, there can be no assurance that such assumptions will
prove correct or that projected events will occur, and actual results could
differ materially from those projected.
52
<PAGE> 57
BOARD OF DIRECTORS
John V. Byrne (1)
President Emeritus
Oregon State University
S. Parker Gilbert (2)
Former Chairman
Morgan Stanley Group Inc.
Laird I. Grant (1)
Former President, Chief Executive Officer
and Chief Investment Officer
Rockefeller & Co., Inc.
John T. LaMacchia (2) (3)
President and Chief Executive Officer
Cincinnati Bell Inc.
James F. McDonald (1) (3)
President and Chief Executive Officer
Scientific-Atlanta, Inc.
Kenneth W. Orce (1)
Senior Partner
Cahill Gordon & Reindel
Donald M. Roberts (1)
Retired Vice Chairman and Treasurer
United States Trust Company of New York
and U.S. Trust Corporation
John F. Schwarz (2)
Chairman, President and Chief Executive Officer
Entech Enterprises, Inc.
Walter Scott, Jr. (2) (3)
Chairman
Level 3 Communications, Inc.
Bobby S. Shackouls (3)
Chairman of the Board, President
and Chief Executive Officer
Burlington Resources Inc.
H. Leighton Steward (3)
Vice Chairman of the Board
Burlington Resources Inc.
William E. Wall (2)
Of Counsel
Siderius Lonergan
(1) Audit Committee
(2) Compensation and Nominating Committee
(3) Executive Committee
EXECUTIVE OFFICERS
Bobby S. Shackouls
Chairman of the Board, President and
Chief Executive Officer
Burlington Resources Inc.
H. Leighton Steward
Vice Chairman of the Board
Burlington Resources Inc.
John E. Hagale
Executive Vice President and
Chief Financial Officer
Burlington Resources Inc.
L. David Hanower
Senior Vice President,
Law and Administration
Burlington Resources Inc.
Randy L. Limbacher
President and Chief Executive Officer
Burlington Resources North America
John A. Williams
President and Chief Executive Officer
Burlington Resources International
CORPORATE INFORMATION
Principal Corporate Office
Burlington Resources Inc.
5051 Westheimer, Suite 1400
Houston, Texas 77056
(713) 624-9500
http://www.br-inc.com
Annual Meeting
The Annual Meeting of Stockholders will be in Houston, Texas on April 7, 1999.
Formal notice of the meeting will be mailed in advance.
Stock Exchange Listing
New York Stock Exchange
Symbol: BR
Stock Transfer Agent and Registrar
BankBoston, N.A.
c/o EquiServe
P.O. Box 8040
Boston, Massachusetts 02266-8040
(800) 736-3001
http://www.equiserve.com
Additional copies of this Annual Report and the Company's Form 10-K filed with
the Securities and Exchange Commission are available, without charge, by writing
or calling:
Investor Relations
Burlington Resources Inc.
P.O. Box 4239
Houston, Texas 77210
(800) 262-3456
[GRAPHIC OF GAS PLANT]
<PAGE> 58
[PHOTOS OF MAN, SUNSET, & SATELLITE]
BURLINGTON
RESOURCES
5051 WESTHEIMER, SUITE 1400
HOUSTON, TEXAS 77056
<PAGE> 1
EXHIBIT 21.1
BURLINGTON RESOURCES INC.
SUBSIDIARIES OF THE REGISTRANT
The following is a list of the significant subsidiaries of Burlington
Resources Inc. showing the place of incorporation and the percentage of voting
securities owned.
<TABLE>
<CAPTION>
PERCENTAGE
OF VOTING
SECURITIES OWNED
DIRECTLY OR
JURISDICTION OF INDIRECTLY BY
NAME OF COMPANY INCORPORATION IMMEDIATE PARENT
--------------- --------------- ----------------
<S> <C> <C>
Burlington Resources North America Inc. .................... Delaware 100%
Burlington Resources International Inc...................... Delaware 100%
Burlington Resources Hydrocarbons Inc. ..................... Delaware 100%
Burlington Resources Oil & Gas Company...................... Delaware 100%
Burlington Resources Trading Inc. .......................... Delaware 100%
Glacier Park Company........................................ Delaware 100%
The Louisiana Land and Exploration Company.................. Maryland 100%
</TABLE>
The names of certain subsidiaries are omitted as such subsidiaries,
considered as a single subsidiary, would not constitute a significant
subsidiary.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statements
of Burlington Resources Inc. (the "Company") on Form S-8 (Registration Nos.
33-22493, 33-25807, 33-26024, as amended in Registration No. 2-97533, 33-33626,
33-46518, 33-53973, 333-02029, 333-32603, 333-40565 and 333-60081) and on Form
S-3 (Registration Nos. 33-54477, 333-24999 and 333-52213) of our report dated
January 20, 1999, on our audits of the consolidated financial statements of the
Company as of December 31, 1998 and 1997, and for each of the three years in the
period ended December 31, 1998, which report is incorporated by reference in the
Company's Annual Report on Form 10-K for the year ended December 31, 1998.
PricewaterhouseCoopers LLP
February 25, 1999
Houston, Texas
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE BURLINGTON
RESOURCES INC. CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 1998 AND THE
RELATED CONSOLIDATED STATEMENT OF INCOME FOR THE YEAR ENDED DECEMBER 31, 1998,
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 402
<ALLOWANCES> 0
<INVENTORY> 33
<CURRENT-ASSETS> 456
<PP&E> 10,176
<DEPRECIATION> 4,818
<TOTAL-ASSETS> 5,917
<CURRENT-LIABILITIES> 494
<BONDS> 0
0
0
<COMMON> 2
<OTHER-SE> 3,016<F1>
<TOTAL-LIABILITY-AND-EQUITY> 5,917
<SALES> 1,637
<TOTAL-REVENUES> 1,637
<CGS> 1,419
<TOTAL-COSTS> 1,419
<OTHER-EXPENSES> (25)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 148
<INCOME-PRETAX> 95
<INCOME-TAX> 9
<INCOME-CONTINUING> 86
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 86
<EPS-PRIMARY> 0.48
<EPS-DILUTED> 0.48
<FN>
<F1>Other Stockholders' Equity = Total Equity less Common Stock
</FN>
</TABLE>
