UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
--- SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
---------------
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
--- SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
--------------- ------------
Commission file number 1-10053
-------
ORYX ENERGY COMPANY
--------------------
(Exact name of registrant as specified in its charter)
DELAWARE 23-1743284
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
13155 NOEL ROAD, DALLAS, TEXAS 75240-5067
------------------------------------------------------
(Address of principal executive offices) (Zip code)
(214) 715-4000
---------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
---
The number of shares of common stock, $1 par value,
outstanding on July 31, 1995 was 103,358,072.
<PAGE>
ORYX ENERGY COMPANY
INDEX
Page
----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Statements of Income for the
Three and Six Months Ended June 30, 1995 and 1994 3
Condensed Consolidated Balance Sheets at June 30,
1995 and December 31, 1994 4
Condensed Consolidated Statements of Cash Flows for
the Six Months Ended June 30, 1995 and 1994 5
Notes to Condensed Consolidated Financial
Statements 6
Report of Independent Accountants 10
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 14
SIGNATURE 15
<PAGE>
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
ORYX ENERGY COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
For the Three Months For the Six Months
(Millions of Dollars, Ended June 30 Ended June 30
Except Per Share Amounts) 1995 1994 1995 1994
---- ---- ---- ----
(Unaudited)
REVENUES
Oil and gas $ 272 $ 259 $ 571 $ 521
Other (Note 6) 13 (4) 7 (6)
------- ------- ------- --------
285 255 578 515
------- ------- ------- --------
COSTS AND EXPENSES
Operating costs 91 93 182 185
Production taxes 30 20 68 45
Exploration costs 13 29 26 57
Depreciation, depletion and
amortization 72 65 146 136
General and administrative
expense 16 18 34 37
Interest and debt expense 39 41 79 80
Interest capitalized (2) (4) (4) (7)
Provision for restructuring
(Note 2) - - - 76
------- ------- ------- --------
259 262 531 609
------- ------- ------- --------
Income (Loss) Before
Extraordinary Item,
Cumulative Effect of
Accounting Change and
Provision (Benefit) for
Income Taxes 26 (7) 47 (94)
Provision (Benefit) for
Income Taxes (Note 3) 2 (2) 8 (29)
Provision (Benefit) for
Remeasurement of Foreign
Deferred Tax (Note 3) (1) 2 1 2
------- ------- ------- --------
Income (Loss) Before
Extraordinary Item and
Cumulative Effect of
Accounting Change 25 (7) 38 (67)
Extraordinary Item (Note 4) (14) - (14) -
Cumulative Effect of
Accounting Change (Note 5) - - - (948)
------- ------- ------- --------
Net Income (Loss) 11 (7) 24 (1,015)
Less Preferred Dividend - 1 - 1
------- ------- ------- --------
Net Income (Loss)
Attributable to
Common Stock $ 11 $ (8) $ 24 $(1,016)
======= ======= ======= ========
Net Income (Loss) Per
Share of Common Stock:
Before extraordinary
item and cumulative
effect of accounting
change $ .25 $ (.08) $ .38 $ (.69)
Extraordinary item (.14) - (.14) -
Cumulative effect of
accounting change - - - (9.77)
------- ------- ------- --------
Net income (loss) $ .11 $ (.08) $ .24 $(10.46)
======= ======= ======= ========
Weighted Average Number
of Common Shares
Outstanding (millions
of shares) 102.5 97.0 100.8 97.0
======= ======= ======= ========
(See Accompanying Notes)
<PAGE>
ORYX ENERGY COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30 December 31
(Millions of Dollars) 1995 1994
------- -----------
(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents $ 14 $ 10
Accounts and notes receivable and other
current assets 185 185
Net assets held for sale (Note 7) 128 -
-------- --------
Total Current Assets 327 195
Properties, Plants and Equipment (Note 8) 1,559 1,840
Deferred Charges and Other Assets 52 72
-------- --------
Total Assets $ 1,938 $ 2,107
======== ========
Liabilities and Shareholders' Equity (Deficit)
Current Liabilities
Accounts payable $ 90 $ 105
Accrued liabilities 230 262
Obligations to be repaid from divestment
proceeds (Note 7) 270 -
Current portion of long-term debt 140 165
-------- --------
Total Current Liabilities 730 532
Long-Term Debt (Note 4) 1,167 1,546
Deferred Income Taxes 203 221
Deferred Credits and Other Liabilities 159 155
Shareholders' Equity (Deficit) (Note 9)
Preferred stock, $1 par value; 30,000,000
shares authorized; 1,009,394 and 5,259,394
shares of Series B Junior Cumulative
Convertible Preference Stock issued and
outstanding in 1995 and 1994 1 5
Common stock, $1 par value; 250,000,000
shares authorized; 126,703,553 shares
issued in 1995 and 1994, 103,358,072
and 98,946,066 shares outstanding in
1995 and 1994 124 124
Additional paid-in capital 1,874 2,098
Accumulated deficit (1,161) (1,181)
-------- --------
838 1,046
Less common stock in treasury, at cost;
20,343,602 and 24,755,608 shares in
1995 and 1994 (1,060) (1,294)
Loan to ESOP (99) (99)
-------- --------
Shareholders' Deficit (321) (347)
-------- --------
Total Liabilities and Shareholders'
Equity (Deficit) $ 1,938 $ 2,107
======== ========
The successful efforts method of accounting is followed.
(See Accompanying Notes)
<PAGE>
ORYX ENERGY COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months
Ended June 30
(Millions of Dollars) 1995 1994
---- ----
(Unaudited)
CASH AND CASH EQUIVALENTS FROM OPERATING
ACTIVITIES
Net income (loss) $ 24 $(1,015)
Adjustments to reconcile net income (loss)
to net cash from operating activities:
Depreciation, depletion and amortization 146 136
Dry hole costs and leasehold impairment 8 31
Gain on sale of assets, net of taxes (14) -
Deferred income taxes 26 (3)
Cumulative effect of accounting change - 948
Extraordinary item 14 -
Remeasurement of foreign deferred tax 1 2
Provision for restructuring, net of taxes - 49
Other 6 (2)
------- --------
211 146
Changes in working capital:
Accounts and notes receivable and
other current assets (20) (52)
Accounts payable and accrued
liabilities (40) (14)
------- --------
Net Cash Flow Provided From Operating
Activities 151 80
------- --------
INVESTING ACTIVITIES
Capital expenditures (129) (130)
Proceeds from divestments, net of
current taxes 123 3
Other (7) (34)
------- --------
Net Cash Flow Used For Investing Activities (13) (161)
------- --------
FINANCING ACTIVITIES
Proceeds from borrowings 10 120
Repayments of long-term debt (144) (41)
Cash dividends paid on preference stock - (1)
------- --------
Net Cash Flow Provided From (Used For)
Financing Activities (134) 78
------- --------
CHANGES IN CASH AND CASH EQUIVALENTS 4 (3)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 10 10
------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 14 $ 7
======= ========
(See Accompanying Notes)
<PAGE>
ORYX ENERGY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
The accompanying condensed consolidated financial statements
and related notes of Oryx Energy Company and its subsidiaries
(hereinafter, unless the context otherwise requires, being
referred to as the Company) are presented in accordance with the
requirements of Form 10-Q and do not include all disclosures
normally required by generally accepted accounting principles or
those normally made in annual reports on Form 10-K. In
management's opinion, all adjustments necessary for a fair
presentation of the results of operations for the periods shown
have been made and are of a normal recurring nature. The results
of operations of the Company for the six months ended June 30,
1995 are not necessarily indicative of the results for the full
year 1995.
As further discussed in Note 5, the Company changed its
accounting policy for calculating the oil and gas asset ceiling
test during the fourth quarter of 1994, but effective as of
January 1, 1994. As a result thereof, the Company's results of
operations and corresponding per share amounts as well as certain
items in the Condensed Consolidated Statement of Cash Flows for
the six months ended June 30, 1994 have been restated to reflect
this change in accounting policy.
Statements of Cash Flows
Amounts paid for interest and income taxes were as follows:
Six Months Ended June 30
1995 1994
------ ------
(Millions of Dollars)
Interest paid (net of capitalized
amounts) $ 84 $ 63
Income taxes paid $ 4 $ 2
In accordance with Statement of Financial Accounting
Standards No. 95, "Statement of Cash Flows," non-cash
transactions are not reflected within the accompanying Condensed
Consolidated Statements of Cash Flows.
2. Restructuring Liability
In 1994, the Company adopted plans to achieve further cost
reductions and, associated therewith, recognized a $92 million
($59 million after-tax) provision for restructuring. The 1994
provision consisted of a charge of $161 million provided in the
first quarter, revised to $76 million because of the accounting
change (Note 5), and $16 million provided in the fourth quarter.
An analysis of the restructuring liability follows:
<TABLE>
<CAPTION>
1995 1995
Balance First Second Balance
1994 1994 at Quarter Quarter at
Provision Activity 12/31/94 Activity Activity 6/30/95
--------- -------- -------- -------- -------- -------
(Millions of Dollars)
<S> <C> <C> <C> <C> <C> <C>
Termination and
Associated
Costs* $ 33 $ 21 $ 12 $ 5 $ 5 $ 2
FAS 88 and FAS
106 (Retirement
and Post-
retirement
Costs)** 33 21 12 - 5 7
Book Value of
Assets to be
Divested and
Lease
Obligations*** 26 4 22 - (7) 29
----- ----- ----- ----- ----- -----
Total Liability $ 92 $ 46 $ 46 $ 5 $ 3 $ 38
===== ===== ===== ===== ===== =====
</TABLE>
<PAGE>
ORYX ENERGY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(continued)
2. Restructuring Liability (continued)
* Termination and associated cash costs are primarily
comprised of severance pay, associated employee benefit costs and
moving costs for 345 employees. Management expects to complete
such payments by the end of 1996.
** Costs primarily represent non-cash adjustments due to
special termination benefits and the acceleration of a portion of
the transition obligation as a result of a reduction in the
remaining expected future years of service of active employees.
*** Book value of assets to be divested are a result of the
Company's program to consolidate its U.S. onshore position into 6
primary states. Under the terms of an operating lease which
expires in September 1995, the Company is obligated to pay the
lessor at the expiration of the lease the amount by which the
fair market value of the asset is less than $37 million, not to
exceed $31 million. The Company accrued an additional $7 million
in the second quarter of 1995 and subsequent to June 30, 1995 has
paid the obligation in full.
3. Income Taxes
The Company's provisions for income taxes for the three and six
months ended June 30, 1995 were $2 million and $8 million.
Foreign income tax provisions included within the Company's
consolidated provisions are determined based upon the appropriate
foreign statutory rates which differ from the U.S. statutory
rate.
The remeasurement provisions of Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS
No. 109) require the Company to remeasure its foreign currency
denominated deferred tax liabilities at current exchange rates.
The reported earnings of the Company for the three and six months
ended June 30, 1995 increased $1 million and decreased $1 million
while reported earnings for the three and six months ended June
30, 1994 each decreased $2 million from such remeasurement.
Management believes that such non-cash remeasurement credits and
debits distort current period economic results and should be
disregarded in analyzing the Company's current business. Future
economic results may also be distorted because payment of the
deferred tax liability is not expected to occur in the near-term
and it is likely that exchange rates will fluctuate prior to the
eventual settlement of the liability.
4. Long-Term Debt
Effective June 1, 1995, the Company replaced its $620 million
revolving credit facility with a $500 million revolving credit
facility which matures on June 30, 1998. In connection
therewith, the Company has recognized a non-cash extraordinary
loss of $14 million (net of $8 million of income tax) from the
write off of debt issuance costs deferred under the $620 million
revolving credit facility.
The terms of the $500 million revolving credit facility
incorporate restrictive covenants, including limitations on total
debt, minimum cash flow interest coverage and certain dividend
limitations. Additionally, variable rate bank debt originally
maturing $89 million in 1996 and $88 million in 1997, is
scheduled to mature June 30, 1998.
<PAGE>
ORYX ENERGY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(continued)
5. Accounting Change
Effective January 1, 1994, the Company changed its accounting
policy for calculating the oil and gas asset ceiling test from a
total company basis to an individual field basis. As a result of
this change, the Company recognized a one time non-cash
cumulative charge to earnings of $948 million ($1,355 million
pre-tax) to first quarter 1994 earnings. Consequently, earnings
have been restated for the three and six months ended June 30,
1994, as follows:
For the Three Months For the Six Months
Ended June 30, 1994 Ended June 30, 1994
-------------------- -------------------
(Millions of Dollars, Except Per Share Amounts)
As Reported:
Net loss $ (41) $ (181)
======= ========
Net loss per share $ (.43) $ (1.88)
======= ========
As Restated:
Net loss $ (7) $(1,015)
======= ========
Net loss per share $ (.08) $(10.46)
======= ========
6. Asset Sales
In the second quarter of 1995, the Company sold all of its
Indonesian assets and certain domestic assets, which represented
an estimated 37 million net barrels of proved reserves, for a
total consideration of $86 million and recognized a net gain of
$14 million. Proceeds from the sales were used to repay the
Company's long-term debt.
7. Net Assets Held For Sale
In July 1995, the Company completed the sale of its 15.5
percent interest in the U.K. North Sea Alba field for $270
million in sales proceeds, all of which were used to repay
long-term debt. The Alba interest represents an estimated 53
million net barrels of proved reserves at June 30, 1995.
8. Properties, Plants and Equipment
At June 30, 1995 and December 31, 1994, the Company's
properties, plants and equipment; and related accumulated
depreciation, depletion and amortization were as follows:
June 30 December 31
1995 1994
------- -----------
(Millions of Dollars)
Gross investment ................. $4,869 $6,320
Less accumulated depreciation,
depletion and amortization ..... 3,310 4,480
------- -------
Net investment ................... $1,559 $1,840
======= =======
<PAGE>
ORYX ENERGY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(continued)
9. Shareholders' Equity (Deficit)
Shares of the Company's preferred and common stocks
authorized, issued, outstanding and in treasury at June 30, 1995
and December 31, 1994 were as follows:
In
Authorized Issued Outstanding Treasury
---------- ------ ----------- --------
(Thousands of Shares)
June 30, 1995
Preferred stock 15,000 - - -
Preference stock 15,000 1,009 1,009 -
Common stock 250,000 126,704 103,358 (20,344)
December 31, 1994
Preferred stock 15,000 - - -
Preference stock 15,000 5,259 5,259 -
Common stock 250,000 126,704 98,946 (24,756)
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors, Oryx Energy Company:
We have reviewed the accompanying condensed consolidated balance
sheet of Oryx Energy Company and its Subsidiaries as of June 30,
1995, the related condensed consolidated statements of income for
the three and six months ended June 30, 1995 and 1994, and the
related condensed consolidated statements of cash flows for the
six months ended June 30, 1995 and 1994. These financial
statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established
by the American Institute of Certified Public Accountants. A
review of interim financial information consists principally of
applying analytical review procedures to financial data and
making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an
audit conducted in accordance with generally accepted auditing
standards, the objective of which is the expression of an opinion
regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material
modifications that should be made to the accompanying condensed
consolidated financial statements for them to be in conformity
with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the consolidated balance sheet as of December
31, 1994, and the related consolidated statements of income and
cash flows for the year then ended (not presented herein); and in
our report dated February 19, 1995, which included an explanatory
paragraph describing the change in accounting for calculating the
oil and gas asset ceiling test in 1994, we expressed an
unqualified opinion on those consolidated financial statements.
In our opinion, the information set forth in the accompanying
condensed consolidated balance sheet as of December 31, 1994, is
fairly stated, in all material respects, in relation to the
consolidated balance sheet from which it has been derived.
COOPERS & LYBRAND L.L.P.
Dallas, Texas
August 7, 1995
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
FINANCIAL CONDITION
The Company's cash and cash equivalents increased by $4 million
over the six months ended June 30, 1995. The increase was
comprised of $151 million of net cash flow provided from
operating activities, $13 million of net cash flow used for
investing activities and $134 million of net cash flow used for
financing activities. The $151 million in net cash flow provided
from operating activities consisted of $211 million in net cash
flow provided from operating activities before changes in current
assets and liabilities and $ 60 million used for changes in
current assets and liabilities. The $211 million in net cash
flow provided from operating activities before changes in current
assets and liabilities was primarily impacted by increased crude
oil volumes and prices, offset partially by an increase in U.K.
royalties and PRT expense, and decreased natural gas volumes and
prices. The $60 million of net cash flow used for changes in
current assets and liabilities consisted of a $20 million
increase in accounts and notes receivable and other current
assets and a $40 million decrease in accounts payable and accrued
liabilities.
The $13 million in net cash flow used for investing activities
and the $134 million in net cash flow used for financing
activities are primarily due to cash uses of $129 million for
capital expenditures and $134 million from net decreases in debt
and a cash source of $123 million from proceeds from divestments,
net of current taxes.
The Company incurred a provision for restructuring in 1994
consisting of an initial charge of $161 million in the first
quarter, revised to $76 million because of the accounting change,
and $16 million provided in the fourth quarter. The
restructuring program should lead to a $70 million cost reduction
for 1995. For analyses of the restructuring provision, see Note
2 to the Condensed Consolidated Financial Statements.
During March 1995, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed of", effective for fiscal years
beginning after December 15, 1995. When adopted, the impact of
this statement is expected to be immaterial.
During April 1995, the holders of the Company's Series B Junior
Cumulative Convertible Preferred Stock (Series B Preference)
converted 4,250,000 shares of Series B Preference into 4,250,000
shares of $1 par value common stock in connection with the sale
of such shares in private transactions.
In January 1995, the Company announced plans to reduce debt by
$400 million by year-end 1995 primarily through the application
of proceeds from the sale of certain oil and gas producing
assets. In the second quarter of 1995, the Company completed the
sale of all of its Indonesian assets and certain domestic assets,
which represented an estimated 37 million net barrels of proved
reserves for a total consideration of $86 million (see Note
6 to the Condensed Consolidated Financial Statements). In July
1995, the Company completed the sale of its interest in the U.K.
North Sea Alba field for $270 million in sales proceeds. The
Alba interest represents an estimated 53 million net barrels of
proved reserves at June 30, 1995. At June 30, 1995, after
adjusting for proceeds from the Alba sale, the year-end debt
target of $1.3 billion was achieved (see Note 7 to the Condensed
Consolidated Financial Statements). Additionally, in June 1995,
the Company announced the signing of a sales agreement for its
interest in Block 48/15a in the U.K. North Sea, which represents
an estimated 25 million net barrels of proved reserves at June
30, 1995. Closing is expected to occur in the third quarter and
to generate sales proceeds of $120 million, all of which will be
applied solely to debt reduction. Upon completion, the
Company estimates the year-end debt to be roughly in the $1.2
billion range, a 30% reduction from the 1994 debt levels.
The sale of the Company's interest in the U.K. Alba field has
caused the holder of the Company's 8.5% $100 million note to
require the Company to repay the note in full. In addition, the
holder of a $21 million debt agreement, although entitled to
require the Company to repay the debt in full, has elected to
extend the due date to October 24, 1995.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations - continued
RESULTS OF OPERATIONS - SIX MONTHS
The Company's net income for the six months ended June 30, 1995
was $24 million, or $.24 per share, as compared to a net loss
before the cumulative effect of an accounting change, of $67
million, or $.69 per share for the first six months of 1994.
Revenues for the six months were $578 million in 1995 versus $515
million in 1994. Year-to-date results for 1995 include a $14
million net gain on the sale of assets, a $14 million
extraordinary net charge for debt issue costs and a $1 million
charge for remeasurement of foreign deferred taxes. By
comparison, results for the six months ended June 30, 1994,
restated for a change in accounting principle but excluding the
cumulative effect, include a $49 million net restructuring
charge and a $2 million charge for the remeasurement
of foreign deferred taxes.
Average worldwide net production of crude oil and condensate for
the six months ended June 30, 1995 was 128 thousand barrels daily
compared to average net production for the six months ended June
30, 1994 of 116 thousand barrels daily. Average net production
of crude oil and condensate was 48 thousand barrels daily in the
United States and 80 thousand barrels daily from foreign
locations during the six months ended June 30, 1995, compared to
50 thousand barrels daily in the United States and 66 thousand
barrels daily from foreign locations during the six months ended
June 30, 1994. The worldwide crude oil and condensate price for
the first six months of 1995 was $16.69 per barrel compared to
$14.26 per barrel for the first six months of 1994.
Average worldwide net production of natural gas was 578 million
cubic feet daily for the six months ended June 30, 1995, compared
to 605 million cubic feet in the six months ended June 30, 1994.
Average net production of natural gas was 494 million cubic feet
daily in the United States and 84 million cubic feet daily from
the United Kingdom in the first six months of 1995, compared to
537 million cubic feet daily in the United States and 68 million
cubic feet daily in the United Kingdom in the first six months of
1994. The worldwide price of natural gas for the first six
months of 1995 and 1994 was $1.77 and $2.03 per thousand cubic
feet.
RESULTS OF OPERATIONS - THREE MONTHS
The Company's net income for the quarter ended June 30, 1995 was
$11 million, or $.11 per share, as compared to a net loss of $7
million, or $.08 per share for the same quarter last year, which
was restated for a change in accounting principle. Revenues for
the 1995 second quarter were $285 million versus $255 million for
the second quarter of 1994.
The second quarter of 1995 includes a $14 million net gain on
sale of assets, a $14 million extraordinary net charge associated
with refinancing the Company's revolving credit facility and a $1
million benefit for the remeasurement of foreign deferred income
taxes. By comparison, the 1994 second quarter, restated for a
change in accounting principle, includes a $2 million charge for
the remeasurement of foreign deferred taxes.
Compared to the same quarter last year, crude oil volumes
increased by three percent or three thousand barrels per day,
primarily as a result of increased U.K. production, while natural
gas volumes decreased 12 mmcf per day or two percent. Realized
crude oil prices rose $1.89 per barrel while natural gas prices
fell $.19 per mcf.
Average worldwide net production of crude oil and condensate for
the three months ended June 30, 1995 was 119 thousand barrels
daily compared to average net production for the three months
ended June 30, 1994 of 116 thousand barrels daily. Average net
production of crude oil and condensate was 47 thousand barrels
daily in the United States and 72 thousand barrels daily from
foreign locations during the three months ended June 30, 1995,
compared to 49 thousand barrels daily in the United States and 67
thousand barrels daily from foreign locations in the second
quarter of 1994. The worldwide crude oil and condensate price in
the second quarter of 1995 was $16.96 per barrel compared to
$15.07 per barrel in the second quarter of 1994.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations - continued
RESULTS OF OPERATIONS - THREE MONTHS (continued)
Average worldwide net production of natural gas was 553 million
cubic feet daily for the three months ended June 30, 1995,
compared to 565 million cubic feet daily in the three months
ended June 30, 1994. Average net production of natural gas was
485 million cubic feet daily in the United States and 68 million
cubic feet daily from the United Kingdom in the second quarter of
1995, compared to 520 million cubic feet daily in the United
States and 45 million cubic feet daily from the United Kingdom in
the second quarter of 1994. The worldwide price of natural gas
for the second quarter of 1995 was $1.76 per thousand cubic feet
compared to $1.95 per thousand cubic feet in the second quarter
of 1994.
<PAGE>
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
10.1 $500,000,000 Revolving Credit Agreement.
10.2 Sale and Purchase Agreement dated February 17,
1995.
10.3 Sale and Purchase Agreement dated May 31, 1995.
10.4 Sale and Purchase Agreement dated June 14, 1995.
12 Computation of Consolidated Ratio of Earnings to
Fixed Charges.
*15 Accountant's letter regarding unaudited interim
financial information.
27 Financial Data Schedule
28 Awareness letter of Coopers & Lybrand L.L.P.
* Attached as page 17 to this Form 10-Q.
(b) Reports on Form 8-K:
The Company did not file any reports on Form 8-K during
the quarter ended June 30, 1995.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
ORYX ENERGY COMPANY
BY /s/ E. W. Moneypenny
--------------------
E. W. Moneypenny
(Executive Vice President, Finance, and Chief Financial
Officer)
DATE August 7, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from SEC
Form 10-Q and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1000000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 14
<SECURITIES> 0
<RECEIVABLES> 158
<ALLOWANCES> 0
<INVENTORY> 7
<CURRENT-ASSETS> 327
<PP&E> 4869
<DEPRECIATION> 3310
<TOTAL-ASSETS> 1938
<CURRENT-LIABILITIES> 730
<BONDS> 1167
<COMMON> 1945
0
54
<OTHER-SE> (2320)
<TOTAL-LIABILITY-AND-EQUITY> 1938
<SALES> 571
<TOTAL-REVENUES> 578
<CGS> 396
<TOTAL-COSTS> 396
<OTHER-EXPENSES> 60
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 75
<INCOME-PRETAX> 47
<INCOME-TAX> 9
<INCOME-CONTINUING> 38
<DISCONTINUED> 0
<EXTRAORDINARY> 14
<CHANGES> 0
<NET-INCOME> 24
<EPS-PRIMARY> .24
<EPS-DILUTED> .24
</TABLE>
EXHIBIT 12
ORYX ENERGY COMPANY
COMPUTATION OF CONSOLIDATED RATIO OF EARNINGS
TO FIXED CHARGES - UNAUDITED (a)
(Millions of Dollars)
Three Months Six Months
Ended June 30 Ended June 30
1995 1995
------------- -------------
RATIO OF EARNINGS TO FIXED CHARGES:
Fixed Charges:
Consolidated interest cost and
debt expense $ 39 $ 79
Interest allocable to rental
expense (b) 4 7
------ ------
Total $ 43 $ 86
====== ======
Earnings:
Consolidated income before provision
for income taxes $ 26 $ 47
Fixed charges 43 86
Interest capitalized (2) (4)
Amortization of previously
capitalized interest 1 2
------ ------
Total $ 68 $ 131
====== ======
Ratio of Earnings to Fixed Charges 1.58 1.52
====== ======
RATIO OF EARNINGS TO FIXED CHARGES AND
PREFERRED STOCK DIVIDEND REQUIREMENTS:
Fixed Charges:
Consolidated interest cost and
debt expense $ 39 $ 79
Preferred stock dividend requirements - -
Interest allocable to rental
expense (b) 4 7
------ ------
Total $ 43 $ 86
====== ======
Earnings:
Consolidated income before provision
for income taxes $ 26 $ 47
Fixed charges 43 86
Interest capitalized (2) (4)
Amortization of previously
capitalized interest 1 2
------ ------
Total $ 68 $ 131
====== ======
Ratio of Earnings to Fixed Charges 1.58 1.52
====== ======
(a) The consolidated financial statements of Oryx Energy Company
include the accounts of all subsidiaries (more than 50 percent
owned and/or controlled).
(b) Represents one-third of total operating lease rental expense
which is that portion deemed to be interest.
EXHIBIT 28
Securities and Exchange Commission
450 Fifth Street, Northwest
Washington, D.C. 20549
Attn: Document Control
Re: Oryx Energy Company Form 10-Q
We are aware that our report dated August 7, 1995 on our review
of the interim condensed consolidated balance sheet of Oryx
Energy Company and its Subsidiaries as of June 30, 1995, the
related condensed consolidated statements of income for the three
and six months ended June 30, 1995 and 1994, and the related
condensed consolidated statements of cash flows for the six
months ended June 30, 1995 and 1994, included in this Form 10-Q,
is incorporated by reference in the following registration
statements:
Registration No.
----------------
On Form S-3 for:
Oryx Energy Company $500,000,000 Debt
Securities; Preferred Stock; and
Common Stock 33-45611
Oryx Energy Company $600,000,000 Debt
Securities 33-33361
Oryx Energy Company 7,259,394 shares of
Common Stock 33-36799
On Form S-8 for:
Oryx Energy Company 1992 Long-Term
Incentive Plan 33-42695
Oryx Energy Company Long-Term Incentive Plan 33-25032
Oryx Energy Company Capital Accumulation Plan 33-24918
Pursuant to Rule 436(c) under the Securities Act of 1933, this
report should not be considered a part of the registration
statement prepared or certified by us within the meaning of
Sections 7 and 11 of that Act.
COOPERS & LYBRAND L.L.P.
Dallas, Texas
August 7, 1995
EXHIBIT 10.1
REVOLVING CREDIT AGREEMENT, dated as of June 1, 1995,
among ORYX ENERGY COMPANY, a Delaware corporation (the
"Company"), the banks and other financial institutions (each a
"Bank" and, collectively, the "Banks") listed in Annex I hereto,
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, BARCLAYS
BANK PLC, MORGAN GUARANTY TRUST COMPANY OF NEW YORK and
NATIONSBANK OF TEXAS, N.A., as Co-Agents (in such capacity, each
a "Co-Agent" and, collectively, the "Co-Agents") and BARCLAYS
BANK PLC, as Administrative Agent for the Banks in the manner and
to the extent described in Section 9 (in such capacity, the
"Administrative Agent").
W I T N E S S E T H :
WHEREAS, subject to and upon the terms and conditions
herein set forth, the Banks are willing to make available to the
Company the credit facility provided for herein to meet the
Company's financing needs as of the date of this Agreement by
providing a revolving credit commitment in the amount of
$500,000,000 (the "Credit Facility");
WHEREAS, the Company, certain of the Banks ("Original
Banks"), the Co-Agents and the Administrative Agent are parties
to that certain Revolving Credit Agreement dated as of December
31, 1992 (as amended to the Effective Date (as defined herein),
the "Existing Credit Agreement"), and certain of the Banks ("New
Banks") are not parties to the Existing Credit Agreement;
WHEREAS, the New Banks have agreed, subject to the
terms and conditions contained herein, to enter into this
Agreement to make available to the Company the credit facility
provided for herein;
WHEREAS, the Original Banks have agreed, subject to the
terms and conditions herein (which are different from the terms
and conditions of the Existing Credit Agreement), to make
available to the Company the credit facility provided for herein;
and
WHEREAS, certain terms that are capitalized and used in
this Agreement are defined in Section 10 of this Agreement;
NOW, THEREFORE, in consideration of the premises and
the mutual covenants herein contained, the parties to this
Agreement hereby agree as follows:
SECTION 1. Amount and Terms of Credit.
1.01 Revolving Credit Loans. Subject to the terms and
conditions hereof, each Bank severally agrees to make revolving
credit loans (the "Revolving Credit Loans") to the Company from
time to time during the Commitment Period in an aggregate
principal amount at any one time outstanding on any particular
date not to exceed the lesser of (x) such Bank's Commitment as of
such date and (y) such Bank's Commitment Percentage of the
Current Borrowing Base Amount as of such date; provided that in
no event shall any Bank be obligated to make any Revolving Credit
Loan hereunder on any particular date in a principal amount in
excess of such Bank's Commitment Percentage of the Available
Commitment as of such date.
During the Commitment Period, the Company may use the
Commitment by borrowing, prepaying the Revolving Credit Loans in
whole or in part, and reborrowing, all in accordance with the
terms and conditions hereof. The Revolving Credit Loans may from
time to time be Eurodollar Loans, Base Rate Loans or a
combination thereof, as determined by the Company and notified to
the Administrative Agent in accordance with Sections 1.03 and
1.05.
1.02 Repayment of Revolving Credit Loans; Evidence of
Debt. (a) The Company hereby unconditionally promises to pay to
the Administrative Agent for the account of each Bank the then
unpaid principal amount of each Revolving Credit Loan of such
Bank on the Commitment Termination Date (or such earlier date on
which the Revolving Credit Loans become due and payable pursuant
to Section 3.01 or Section 8). The Company hereby further agrees
to pay interest on the unpaid principal amount of the Revolving
Credit Loans from time to time outstanding from the date hereof
until payment in full thereof at the rates per annum, and on the
dates, set forth in Section 1.07.
(b) Each Bank shall maintain in accordance with its
usual practice an account or accounts evidencing indebtedness of
the Company to such Bank resulting from each Revolving Credit
Loan of such Bank from time to time, including the amounts of
principal and interest payable and paid to such Bank from time to
time under this Agreement.
1.03 Procedure for Revolving Credit Loan Borrowing.
(a) Notices of Borrowing. Whenever the Company desires to incur
Revolving Credit Loans hereunder, it shall give the
Administrative Agent at its office located at 222 Broadway, New
York, New York 10038 (its "New York Office") irrevocable written
notice thereof (or irrevocable telephonic notice promptly
confirmed in writing) not later than 10:00 A.M. (New York time)
(i) on the requested Borrowing Date, in the case of any
incurrence of Base Rate Loans to be made hereunder and (ii) on
the date which is three Business Days prior to the requested
Borrowing Date, in the case of any incurrence of Eurodollar Loans
to be made hereunder.
Each such notice (a "Notice of Borrowing") shall
specify the aggregate principal amount of the Revolving Credit
Loans to be made pursuant to each Borrowing then being made, the
Borrowing Date (which shall be a Business Day), whether the
Revolving Credit Loans being made pursuant to each such Borrowing
are to be Base Rate Loans or Eurodollar Loans, and, if Eurodollar
Loans, the initial Interest Period to be applicable thereto.
The Administrative Agent shall promptly give each Bank
written notice (or telephonic notice promptly confirmed in
writing) of each proposed Borrowing, of such Bank's proportionate
share thereof and of the other matters covered by the Notice of
Borrowing.
(b) The aggregate principal amount of each Borrowing
of Revolving Credit Loans hereunder shall be not less than
$10,000,000, and, in each case, if greater, shall be in an
integral multiple of $1,000,000; provided that any Borrowing of
Revolving Credit Loans may be made in an amount equal to the
remaining amount of the Available Commitment.
(c) At no time shall there be outstanding more than
ten Borrowings of Eurodollar Loans under this Agreement.
1.04 Disbursements of Funds With Respect to Revolving
Credit Loans. No later than 12:00 Noon (New York time) on the
date of each incurrence of Revolving Credit Loans, each Bank
required to participate therein will make available its pro rata
portion of each Borrowing requested to be made on such date. All
such amounts shall be made available in U.S. dollars and in
immediately available funds, at the office (the "Payment Office")
of the Administrative Agent located at 222 Broadway, New York,
New York 10038 and the Administrative Agent will promptly make
available to the Company at its Payment Office the aggregate of
the amounts so made available by the Banks. Unless the
Administrative Agent shall have been notified by any Bank prior
to the time of a Borrowing of Revolving Credit Loans that such
Bank does not intend to make available to the Administrative
Agent such Bank's portion of each Borrowing to be made on the
date of such Borrowing, the Administrative Agent may assume that
such Bank has made such amount available to the Administrative
Agent on such date and the Administrative Agent may, in reliance
upon such assumption, make available to the Company a
corresponding amount. If such corresponding amount is not in
fact made available to the Administrative Agent by such Bank, the
Administrative Agent shall be entitled to recover such
corresponding amount on demand from such Bank. If such Bank does
not pay such corresponding amount forthwith upon the
Administrative Agent's demand therefor, the Administrative Agent
shall promptly notify the Company and the Company shall
immediately pay such corresponding amount to the Administrative
Agent. The Administrative Agent shall also be entitled to
recover from such Bank or the Company, as the case may be,
interest on such corresponding amount in respect of each day from
the date such corresponding amount was made available by the
Administrative Agent to the Company to the date such
corresponding amount is recovered by the Administrative Agent, at
a rate per annum equal to (a) in the case of a payment by a Bank,
the overnight Federal Funds rate or (b) in the case of a payment
by the Company, the then applicable rate of interest, calculated
in accordance with Section 1.07, for the relevant Revolving
Credit Loans. Nothing herein shall be deemed to relieve any Bank
from its obligation to fulfill its Commitment(s) hereunder or to
prejudice any rights which the Company may have against any Bank
as a result of any default by such Bank hereunder.
1.05 Conversions. The Company shall have the option
to convert pro rata on any Business Day all or a portion equal to
at least $10,000,000 or an integral multiple of $1,000,000 in
excess thereof of the outstanding principal amount of the
Revolving Credit Loans made pursuant to a Borrowing or Borrowings
from one Type of Revolving Credit Loan into another Type,
provided that (i) except as otherwise provided in Section
1.09(b), Eurodollar Loans may be converted into Base Rate Loans
only on the last day of an Interest Period applicable thereto and
no such partial conversion of Eurodollar Loans shall reduce the
outstanding principal amount of Eurodollar Loans made pursuant to
a single Borrowing to less than $10,000,000, (ii) if an Event of
Default shall have occurred and be continuing, no Base Rate Loan
may be converted into a Eurodollar Loan and each Eurodollar Loan
shall be converted into a Base Rate Loan at the end of its
Interest Period and (iii) no conversion pursuant to this Section
1.05 shall result in a greater number of Borrowings of Eurodollar
Loans than is permitted under Section 1.03(c). Each such
conversion shall be effected by the Company by giving the
Administrative Agent at its New York Office not later than 12:00
Noon (New York time) (a) at least one Business Day's prior
telephonic notice (promptly confirmed in writing) of each
conversion to Base Rate Loans and (b) at least three Business
Days' prior telephonic notice (promptly confirmed in writing) of
each conversion to Eurodollar Loans (each such notice, a "Notice
of Conversion"), specifying the Revolving Credit Loans to be so
converted and, if to be converted into Eurodollar Loans, the
initial Interest Period to be applicable thereto. The
Administrative Agent shall give each Bank prompt written or
telephonic notice of any such proposed conversion affecting any
of its Revolving Credit Loans.
1.06 Pro Rata Borrowings. All Borrowings of Revolving
Credit Loans under this Agreement shall be incurred from the
Banks pro rata on the basis of their respective Commitments. It
is understood that no Bank shall be responsible for any default
by any other Bank in its obligation to make Loans hereunder and
that each Bank shall be obligated to make the Loans provided to
be made by it hereunder regardless of the failure of any other
Bank to make its Loans hereunder.
1.07 Interest. (a) The Company agrees to pay
interest in respect of the unpaid principal amount of each Base
Rate Loan from the date of the respective Borrowing until
maturity (whether by acceleration or otherwise) at a rate per
annum equal to the Base Rate in effect from time to time plus the
Applicable Margin.
(b) The Company agrees to pay interest in respect of
the unpaid principal amount of each Eurodollar Loan from the date
of the respective Borrowing until maturity (whether by
acceleration or otherwise) at a rate per annum equal to the
relevant Quoted Rate plus the Applicable Margin.
(c) Overdue principal and, to the extent permitted by
law, overdue interest, in respect of each Revolving Credit Loan
shall bear interest at a rate per annum equal to 2% per annum
above the rate which would otherwise be applicable to Base Rate
Loans pursuant to Section 1.07(a); provided, however, that no
Revolving Credit Loan shall bear interest after maturity at a
rate per annum less than the rate of interest applicable thereto
at maturity.
(d) Interest shall accrue from and including the date
of any Borrowing of Revolving Credit Loans to but excluding the
date of repayment thereof and shall be payable (i) in respect of
each Base Rate Loan, quarterly in arrears on each Quarterly
Payment Date, (ii) in respect of each Eurodollar Loan, on the
last day of each Interest Period applicable to such Loan, (iii)
in the case of each Eurodollar Loan having an Interest Period in
excess of three months, on each date which is a three-month
anniversary of the first day of such Interest Period and (iv) in
the case of all Revolving Credit Loans, on any prepayment or
conversion (on the amount prepaid or converted), at maturity
(whether by acceleration or otherwise), and after such maturity,
on demand, or, in the absence of demand, weekly on Friday of each
week.
(e) The Administrative Agent, upon determining the
Quoted Rate for any Interest Period, shall promptly notify by
telephone or in writing the Company and the Banks thereof.
1.08 Interest Periods; Continuations. At the time it
gives any Notice of Borrowing or Notice of Conversion in respect
of the making of, or conversion into, Revolving Credit Loans
constituting Eurodollar Loans, in the case of the initial
Interest Period applicable thereto, or, in the case of subsequent
Interest Periods, if no Event of Default shall have occurred and
be continuing, on the third Business Day prior to the expiration
of an Interest Period applicable to Eurodollar Loans, the Company
shall have the right to elect by giving the Administrative Agent
written notice (or telephonic notice promptly confirmed in
writing) the interest period (each, an "Interest Period")
applicable to each Borrowing of Revolving Credit Loans
constituting Eurodollar Loans, which Interest Period shall, at
the option of the Company, be a two-week or a one, two, three or
six-month period, provided that: (i) the initial Interest Period
for any Borrowing of Eurodollar Loans shall commence on the date
of such Borrowing (including the date of any conversion from Base
Rate Loans) and each Interest Period occurring thereafter in
respect of such Borrowing shall commence on the day on which the
next preceding Interest Period expires; (ii) if any Interest
Period relating to a Borrowing of Eurodollar Loans begins on a
day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period, such Interest
Period shall end on the last Business Day of such calendar month;
(iii) if any Interest Period would otherwise expire on a day
which is not a Business Day, such Interest Period shall expire on
the next succeeding Business Day; provided, however, that if any
Interest Period in respect of a Borrowing of Eurodollar Loans
would otherwise expire on a day which is not a Business Day but
is a day of the month after which no further Business Day occurs
in such month, such Interest Period shall expire on the next
preceding Business Day; (iv) no Interest Period shall extend
beyond the Commitment Termination Date; and (v) the Company shall
select Interest Periods so that no scheduled payment and no
prepayment pursuant to Section 3.02 (if such prepayment may
reasonably be anticipated) shall require payment of a Eurodollar
Loan during an Interest Period for such Loan. The Administrative
Agent shall give each Bank prompt written or telephonic notice of
any such Interest Period requested by the Company affecting any
of its Revolving Credit Loans. If upon the expiration of any
Interest Period, (i) the Company has failed to elect a new
Interest Period to be applicable to the relevant Eurodollar Loan
as provided above or (ii) an Event of Default shall have occurred
and be continuing, the Company shall be deemed to have elected to
convert such Eurodollar Loan into a Base Rate Loan effective as
of the expiration date of such current Interest Period.
1.09 Increased Costs, Illegality, Etc. (a) In the
event that:
(i) on any date for determining the Quoted Rate for
any Interest Period applicable to Eurodollar Loans, the
Administrative Agent, the Reference Banks or the Required
Banks shall have determined (which determination shall
absent manifest error, be presumptively valid and binding on
all parties) that by reason of any changes arising on or
after the Effective Date affecting the interbank Eurodollar
market, adequate and fair means do not exist for
ascertaining the applicable interest rate on the basis
provided for in the definition of Quoted Rate; or
(ii) at any time, any Bank shall have determined (which
determination shall, absent manifest error, be presumptively
binding on all parties) that such Bank will incur increased
costs or reductions in the amounts received or receivable
hereunder by an amount deemed by such Bank to be material
with respect to any Eurodollar Loan or Index Rate Bid Loan
because of (x) any change since the Effective Date (in the
case of increased costs or reductions relating to Eurodollar
Loans) or the date of the related Index Bid Loan Request (in
the case of increased costs or reductions relating to an
Index Rate Bid Loan) in any applicable law or governmental
rule, regulation, guideline or order (or any interpretation
or administration thereof and including the introduction of
any new law or governmental rule, regulation, guideline or
order) (such as, for example, but not limited to, a change
in official reserve requirements, but, in all events,
excluding reserves required under Regulation D to the extent
included in the computation of the Quoted Rate or Applicable
Index Rate, as the case may be) and/or (y) other
circumstances affecting the interbank Eurodollar market that
occur after the Effective Date (in the case of increased
costs or reductions relating to Eurodollar Loans) or the
date of the related Index Bid Loan Request (in the case of
increased costs or reductions relating to Bid Loans);
provided, however, that this clause (ii) shall not apply to
any circumstances otherwise described in this clause (ii)
that relate to Taxes (as hereinafter defined in Section
3.04); or
(iii) at any time, any Bank shall have determined (which
determination shall, absent manifest error, be presumptively
binding on all parties) that the making or continuance by it
of any Eurodollar Loan or Index Rate Bid Loan has become
unlawful as a result of compliance by such Bank in good
faith with any law or governmental rule, regulation,
guideline or order (whether or not having the force of law
and whether or not failure to comply therewith would be
unlawful), or has become impracticable as a result of a
contingency occurring after the Effective Date (in the case
of events affecting Eurodollar Loans) or the date of the
related Index Bid Loan Request (in the case of events
affecting an Index Rate Bid Loan) which materially and
adversely affects the interbank Eurodollar market;
then, and in any such event, such Bank (or the Administrative
Agent, in the case of clause (i) above) shall, promptly after
making such determination give written notice (or telephonic
notice confirmed in writing) to the Company and to the
Administrative Agent of such determination (which notice the
Administrative Agent shall promptly transmit to each of the
Banks). Thereafter (x) in the case of clause (i) above,
Eurodollar Loans shall no longer be available until such time as
the Administrative Agent notifies the Company and the Banks that
the circumstances giving rise to such notice by the
Administrative Agent no longer exist, and any Notice of Borrowing
or Notice of Conversion given by the Company with respect to
Eurodollar Loans which have not yet been incurred shall be deemed
rescinded by the Company, (y) in the case of clause (ii) above,
the Company shall promptly pay to such Bank, after written demand
therefor, such additional amounts as shall be required to
compensate such Bank for such increased costs or reductions in
amounts receivable hereunder (a written notice as to the
additional amounts owed to such Bank, showing the basis for the
calculation thereof, submitted to the Company by such Bank shall,
absent manifest error, be valid and binding upon all of the
parties hereto) and (z) in the case of clause (iii) above, the
Company shall take one of the actions specified in Section
1.09(b) as promptly as possible and, in any event, within the
time period required by law.
(b) At any time that any of its Eurodollar Loans or
Index Rate Bid Loans are affected by the circumstances described
in Section 1.09(a)(ii) or (iii), the Company may, and in the case
of a Eurodollar Loan or Index Rate Bid Loan affected pursuant to
Section 1.09(a)(iii), shall, upon at least three Business Days'
telephonic notice (promptly confirmed in writing) to the
Administrative Agent, (x) in the case of each Eurodollar Loan so
affected, require the affected Bank to convert each such
Eurodollar Loan into a Base Rate Loan (on which interest and
principal shall be payable contemporaneously with the related
Eurodollar Loan of other Banks), provided that, if more than one
Bank is affected at any time, then all affected Banks must be
treated the same pursuant to this Section 1.09(b), or (y) in the
case of each Index Rate Bid Loan so affected, take such action as
the affected Bank shall reasonably request.
(c) If any Bank determines at any time that the
adoption of any Capital Adequacy Requirement after the Effective
Date, or any change after the Effective Date in any Capital
Adequacy Requirement (or any interpretation or administration
thereof) by any Governmental Authority, central bank or
comparable agency, will have the effect of increasing by an
amount deemed by such Bank to be material the amount of capital
required or expected to be maintained by such Bank based on the
existence of such Bank's unfunded commitments hereunder or its
unfunded obligations hereunder or with respect to any Letter of
Credit, then the Company shall pay to such Bank, promptly after
its written demand therefor, such additional amounts as shall be
required to compensate such Bank for the increased cost to such
Bank as a result of such increase of capital. Each Bank's
determination of compensation owing under this Section 1.09(c)
shall, absent manifest error, be valid and binding on all parties
hereto. Each Bank, upon determining that any additional amounts
will be payable pursuant to this Section 1.09(c), will give
prompt written notice thereof to the Company, which notice shall
show the manner and basis for calculation of such additional
amounts, which manner and basis shall be no less favorable to the
Company than the manner and basis used for calculating such an
amount for any other customer of such Bank to the extent such
Bank's commitments to such customer are given the same treatment
by the applicable Capital Adequacy Requirement, or change in the
applicable Capital Adequacy Requirement (or interpretation or
administration thereof).
(d) If the Issuing Bank determines that any change
since the Effective Date in any applicable law or governmental
rule, regulation, guideline or order (or any interpretation or
administration thereof and including the introduction of any new
law or governmental rule, regulation, guideline or order) shall
either (i) impose, modify, or deem or make applicable any
reserve, special deposit, assessment or similar requirement
against letters of credit issued by the Issuing Bank or (ii)
impose on the Issuing Bank any other condition regarding this
Agreement or any Letter of Credit, and the result of any event
referred to in clause (i) or (ii) above shall be to increase the
cost to the Issuing Bank of issuing or maintaining any Letter of
Credit by an amount deemed by the Issuing Bank to be material
(which increase in cost shall be the result of the Issuing Bank's
reasonable allocation of the aggregate of such cost increases
resulting from such events), then, promptly after written demand
by the Issuing Bank, the Company shall pay to the Issuing Bank
from time to time as specified by the Issuing Bank, additional
amounts which shall be sufficient to compensate the Issuing Bank
for such increased cost. A written notice as to the additional
amounts owed to the Issuing Bank, showing the basis for the
calculation thereof, submitted to the Company by the Issuing Bank
shall, absent manifest error, be valid and binding upon all of
the parties hereto. The Company agrees that the provisions of
this paragraph and the provisions of each Application providing
for reimbursement or payment to the Issuing Bank in the event of
the imposition or implementation of, or increase in, any reserve,
special deposit, assessment or similar requirement in respect of
the Letter of Credit relating thereto shall apply equally to each
L/C Participant in respect of its participating interest in such
Letter of Credit, as if the references in this paragraph referred
to, where applicable, such L/C Participant or any corporation
controlling such L/C Participant.
1.10 Compensation. Except as otherwise specified in
Section 3.02(b), the Company shall compensate each Bank, promptly
after its written request (which request shall set forth the
basis for requesting such compensation), for all reasonable
losses, expenses and liabilities (including, without limitation,
any loss, expense or liability incurred by reason of the
liquidation or reemployment of deposits or other funds required
by such Bank to fund its Eurodollar Loans or Index Rate Bid
Loans, but excluding loss of margin) which such Bank may sustain:
(i) if for any reason (other than a default by such Bank)
(x) a Borrowing of, or conversion from or into, or continuation
of Eurodollar Loans does not occur on a date specified therefor
in a Notice of Borrowing or Notice of Conversion or notice of
continuation pursuant to Section 1.08 or (y) a borrowing of Bid
Loans (with respect to which the Company has accepted one or more
offers pursuant to Section 4.09(b)(iv)(B)) does not occur on a
date specified therefor in a Bid Loan Request ; (ii) if (x) any
repayment or conversion of any of its Eurodollar Loans occurs on
a date which is not the last day of an Interest Period applicable
thereto or (y) any repayment of any of its Index Rate Bid Loans
occurs on a date which is not the maturity date therefor; (iii)
if any prepayment of any of its Eurodollar Loans is not made on
any date specified in a notice of prepayment given by the
Company; or (iv) as a consequence of (x) any other default by the
Company in repaying its Eurodollar Loans or Index Rate Bid Loans
hereunder when required by the terms of this Agreement or (y) an
election made or action taken by the Company pursuant to Section
1.09(b).
SECTION 2. Fees; Revolving Credit Commitments;
Borrowing Base Determinations; Maximum Exposure.
2.01 Fees. (a) The Company agrees to pay to the
Administrative Agent for pro rata distribution to each Bank a
commitment fee (the "Commitment Fee") for the period commencing
on and including the Effective Date to and excluding the
Commitment Termination Date computed at a rate per annum equal to
the applicable rate per annum set forth on the Pricing Grid on
the average daily amount of the Unused Commitment, such fee to be
distributed to each Bank proportionally on the basis of the
average daily amount of its Commitment Percentage of the Unused
Commitment. Accrued Commitment Fees shall be due and payable in
arrears on each Quarterly Payment Date for the quarter then
ending and on the Commitment Termination Date.
(b) The Company shall pay the Administrative Agent,
for the account of the Administrative Agent, each Co-Agent and
each Bank, when and as payable, such fees, expenses and other
amounts as have been agreed to in writing by the Company and the
Administrative Agent or the Co-Agents, as the case may be.
2.02 Voluntary Reduction of Revolving Credit
Commitment. Upon at least three Business Days' prior telephonic
notice (promptly confirmed in writing) to the Administrative
Agent at its New York Office (which notice the Administrative
Agent shall promptly transmit to each of the Banks), the Company
shall have the right, without premium or penalty, to terminate or
reduce the unutilized portion of the Commitments (in integral
multiples of $5,000,000 in the case of any such reduction);
provided that no reduction of the Commitments shall be permitted
on any date if, after giving effect thereto and, to the extent
applicable, to any payment or expiration of Extensions of Credit
occurring on such date, the Aggregate Exposure would exceed the
aggregate Commitments and; provided, that, notwithstanding the
foregoing, the Company may terminate the Commitments in their
entirety at any time when no Loans or L/C Obligations are
outstanding.
2.03 Borrowing Base Determinations. The Borrowing
Base shall be determined from time to time in the manner
described in this Section 2.03.
(a) Initial Borrowing Base Determination. The
Borrowing Base shall be $1,664,000,000 (the "Initial Borrowing
Base Determination") during the period from the Effective Date to
the effective date of the first change to the Borrowing Base
occurring thereafter pursuant to the following provisions of this
Section.
(b) Scheduled Borrowing Base Determinations. A
determination of the Borrowing Base (each, a "Scheduled Borrowing
Base Determination") shall be made once during each calendar year
in accordance with this Section 2.03(b).
(i) No later than December 15 of each calendar year,
the Company shall supply proposed Assumptions to the Engineering
Committee.
(ii) No later than January 15 of each calendar year,
the Engineering Committee shall notify the Company of the final
Assumptions (other than pricing Assumptions), which final
Assumptions may include, subject to Section 2.03(f), substitute
Assumptions in lieu of any or all of the Assumptions referred to
in clause (i) above, and, subject to Section 2.03(f), its
proposed pricing Assumptions.
(iii) No later than February 15 of each calendar year,
the Engineering Committee shall deliver to the Company the final
pricing Assumptions determined, subject to Section 2.03(f), by
the Engineering Committee.
(iv) No later than March 1 of each calendar year, the
Company shall, at its own expense, deliver to each member of the
Engineering Committee all information reasonably available to the
Company that is necessary or appropriate in connection with the
calculation of the Borrowing Base, including in any event a draft
Reserve and NPV Report (each, a "Draft Reserve and NPV Report")
containing a calculation in reasonable detail of the NPV (as of
the last day of the immediately preceding calendar year)
utilizing the Assumptions determined in accordance with clauses
(ii) and (iii) above. All such information shall be reasonably
satisfactory in form, scope and level of detail to the
Engineering Committee. In connection with the preparation of
each Draft Reserve and NPV Report, the Company shall provide to
each member of the Engineering Committee (i) reservoir
performance, engineering, geologic and other relevant data
pertaining to the Proved Borrowing Base Reserves, (ii) relevant
data concerning current and future operations, sales, taxes
(including income taxes paid or expected to be paid outside the
United States of America as determined utilizing the
Assumptions), and leasehold operating expenses (including field
level general and administrative expenses) and (iii) such other
relevant information as the Engineering Committee may reasonably
request.
(v) No later than March 31 of each calendar year, the
Engineering Committee shall deliver to the Company its final
adjustments to such Draft Reserve and NPV Report.
(vi) No later than April 15 of each calendar year, the
Company shall deliver to the Administrative Agent (with
sufficient copies for the Banks) a final Reserve and NPV Report
(the "Final Reserve and NPV Report") reflecting such adjustments
in a manner reasonably satisfactory to the Engineering Committee.
(vii) No later than April 30 of each calendar year,
the Engineering Committee shall deliver to the Company and the
Banks a written recommendation for the amount of the Borrowing
Base (the amount so recommended, the "Borrowing Base
Recommendation").
(viii) No later than May 15 of each calendar year (the
"Borrowing Base Voting Date"), each of the Banks shall furnish to
the Administrative Agent, in writing, either (x) such Bank's
consent to the Borrowing Base Recommendation or (y) such Bank's
alternative calculation of the Borrowing Base (the amount so
calculated, an "Alternate Borrowing Base").
If any Bank shall fail to furnish the Administrative
Agent with either its consent to the Borrowing Base
Recommendation or an Alternate Borrowing Base by the Borrowing
Base Voting Date, such Bank shall be deemed to have consented to
the Borrowing Base Recommendation.
The Borrowing Base resulting from each Scheduled
Borrowing Base Determination shall be calculated on the relevant
Borrowing Base Voting Date (or such earlier date as the Super-
Majority Banks shall have consented to the Borrowing Base
Recommendation), and shall equal (i) the Borrowing Base
Recommendation, if the Super-Majority Banks shall have consented
thereto or (ii) otherwise, the highest Alternate Borrowing Base
(the "Approved Alternate Borrowing Base") that would result in
the Super-Majority Banks having approved or consented to a
Borrowing Base Recommendation or Alternate Borrowing Base equal
to or greater than such Approved Alternate Borrowing Base. Such
new Borrowing Base shall become effective in accordance with
Section 2.03(g). The Administrative Agent shall promptly furnish
written notice to the Company and each Bank of each such
determination of the Borrowing Base.
(c) Borrowing Base Redeterminations and Reductions.
(i) In addition to the Scheduled Borrowing Base
Determinations, redeterminations of the Borrowing Base (each, a
"Borrowing Base Redetermination") may be made from time to time,
by written notice (a "Redetermination Notice"), under the
circumstances described in this Section 2.03(c)(i).
If requested by the Engineering Committee (which
request shall be made at the time of or promptly following
delivery of the relevant Redetermination Notice) then, no later
than 30 days after such request, the Company shall deliver to the
Administrative Agent (with sufficient copies for the Banks) such
information (an "Update Report") as shall be necessary or
appropriate to update the information utilized in making the most
recent Borrowing Base Determination, which shall in any event
include a calculation in reasonable detail of the NPV utilizing
the Assumptions determined in accordance with the most recent
Borrowing Base Determination (unless the Engineering Committee in
its sole discretion, subject to Section 2.03(f), shall substitute
updated Assumptions in such Redetermination Notice or in such
request). Each Update Report shall be in form, scope and level
of detail satisfactory to the Engineering Committee.
(x) The Engineering Committee may, or if instructed by
the Super-Majority Banks shall, submit a Redetermination
Notice to the Company on any date on which the Cumulative
Like-Kind Exchange Amount exceeds $25,000,000. The Company
shall notify the Banks (through the Administrative Agent) of
any event which would permit the submission of a
Redetermination Notice pursuant to this paragraph (x) within
three Business Days after the occurrence thereof.
Each determination pursuant to this paragraph (x) of
the NPV of assets subject to any Like-Kind Exchange shall be
made by the Company utilizing the NPV for such assets
contained in the most recent Final Reserve and NPV Report
or, in the case of any assets whose NPV is not contained in
such Final Reserve and NPV Report, the NPV for such assets
determined in connection with the most recent Borrowing Base
Redetermination; provided, that if such determination occurs
prior to the first Borrowing Base Determination after the
Initial Borrowing Base Determination, the NPV for such
assets contained in the Initial Reserve and NPV Report shall
be utilized.
(y) In addition to any Redetermination Notice
submitted pursuant to paragraph (x) above, the Engineering
Committee may, or if instructed by the Super-Majority Banks
shall, submit a Redetermination Notice to the Company at any
time in their sole discretion, provided, that no more than
four Redetermination Notices may be submitted pursuant to
this paragraph (y) during the Commitment Period.
(z) The Company may submit a Redetermination Notice to
the Engineering Committee at any time in its sole
discretion, provided, that no more than four Redetermination
Notices may be submitted pursuant to this paragraph (z)
during the Commitment Period.
(ii) Each Borrowing Base Redetermination shall be made
in accordance with the procedures described in this Section
2.03(c)(ii).
No later than 15 days after the date of delivery of
each Update Report or, if no Update Report is requested,
15 days after the date of delivery of each Redetermination
Notice, the Engineering Committee shall deliver to the
Company and the Banks a written recommendation for the
amount of the Borrowing Base (the amount so recommended, the
"Borrowing Base Redetermination Recommendation").
No later than 15 days after delivery of a Borrowing
Base Redetermination Recommendation (the "Borrowing Base
Redetermination Voting Date"), each of the Banks shall
furnish to the Administrative Agent, in writing, either
(x) such Bank's consent to the Borrowing Base
Redetermination Recommendation or (y) such Bank's
alternative calculation of the Borrowing Base (the amount so
calculated, an "Alternate Redetermined Borrowing Base"). If
any Bank shall fail to furnish the Administrative Agent with
either its consent to the Borrowing Base Redetermination
Recommendation or an Alternate Redetermined Borrowing Base
by the Borrowing Base Redetermination Voting Date, such Bank
shall be deemed to have consented to the Borrowing Base
Redetermination Recommendation.
The Borrowing Base resulting from each Borrowing Base
Redetermination shall be calculated on the relevant
Borrowing Base Redetermination Voting Date (or such earlier
date as the Super-Majority Banks shall have consented to the
Borrowing Base Redetermination Recommendation), and shall
equal (i) the Borrowing Base Redetermination Recommendation,
if the Super-Majority Banks shall have consented thereto, or
(ii) otherwise, the highest Alternate Redetermined Borrowing
Base (the "Approved Alternate Redetermined Borrowing Base")
that would result in the Super-Majority Banks having
approved or consented to a Borrowing Base Redetermination
Recommendation or Alternate Redetermined Borrowing Base
equal to or greater than such Approved Alternate
Redetermined Borrowing Base. Such new Borrowing Base shall
become effective in accordance with Section 2.03(g). The
Administrative Agent shall promptly furnish written notice
to the Company and each Bank of each such redetermination of
the Borrowing Base.
(iii) Unless there shall have been a Borrowing Base
Redetermination prior to December 31, 1995, in the event that the
Borrowing Base Coverage Ratio is less than 1.75 to 1.0 on
December 31, 1995, the Borrowing Base shall be immediately
reduced on such date to the extent necessary such that after
giving effect thereto, the Borrowing Base Coverage Ratio is 1.75
to 1.0.
(iv) In the event that at any time between December
31, 1995 and the earlier to occur after such date of a Borrowing
Base Voting Date or Borrowing Base Redetermination Voting Date,
the Borrowing Base Coverage Ratio is less than 1.75 to 1.0, the
Borrowing Base shall be immediately reduced to the extent
necessary such that after giving effect thereto, the Borrowing
Base Coverage Ratio is 1.75 to 1.0.
(v) If any Asset Sale, Other Exchange, Asset
Reclassification or Subsidiary Reclassification shall occur after
the Effective Date, the Borrowing Base shall be immediately
reduced on the applicable Asset Transfer Date by an amount equal
to 100% of the Transfer Amount in respect thereof.
(d) To the extent that (i) the Engineering Committee
or the Super-Majority Banks shall not be satisfied with the form,
scope, or level of detail of any Reserve and NPV Report, or of
any Update Report requested by the Engineering Committee, or
(ii) the Company shall fail to deliver any Reserve and NPV Report
or Update Report in accordance with this Section 2.03, then the
Engineering Committee or the Super-Majority Banks, as the case
may be, may rely upon such other relevant reports, documents or
information as shall be available to such Persons in connection
with the making of any Borrowing Base Determination.
(e) To the extent not satisfied with any Reserve and
NPV Report or Update Report, the Engineering Committee or the
Super-Majority Banks may at any time, by written notice to the
Administrative Agent, request the Independent Engineer, at the
Company's expense, to evaluate all or any portion of the
Borrowing Base Assets specified by the Co-Agents or the Super-
Majority Banks, as the case may be, and to calculate the NPV
attributable thereto, in connection with the associated Borrowing
Base Determination and each subsequent Borrowing Base
Determination (until written notice to the contrary shall have
been given to the Administrative Agent by the Co-Agents or the
Super-Majority Banks, as the case may be).
(f) Any substitute Assumptions supplied by the
Engineering Committee pursuant to Section 2.03(b)(ii) or (c)(i),
and any proposed or final pricing Assumptions supplied pursuant
to Section 2.03(b)(ii) or (iii), shall be determined in
accordance with, and shall be no less favorable to the Company
(as shall be reasonably determined by the Engineering Committee)
than, the customary practices of the Co-Agents in evaluating oil
and gas credits. Each such substituted Assumption or proposed or
final pricing Assumption shall be determined on the basis of the
simple average of the relevant Assumptions used by each Co-Agent.
Such substituted Assumptions, together with any Assumptions
supplied by the Company and not so substituted, shall be binding
on the Company, the Engineering Committee and the Banks.
(g) Any Borrowing Base Determination that does not
result in a Borrowing Base Decrease shall be effective on the
related Borrowing Base Voting Date or Borrowing Base
Redetermination Voting Date. Any Borrowing Base Determination
that results in a Borrowing Base Decrease shall be effective as
follows:
(i) in the case of any Borrowing Base Decrease
resulting from a Scheduled Borrowing Base Determination or a
Borrowing Base Redetermination pursuant to Section
2.03(c)(i)(y) or (z), then (A) the Borrowing Base in effect
immediately prior to such Borrowing Base Determination shall
continue in effect until the date that is three months after
the relevant Borrowing Base Notification Date, at which time
the Borrowing Base shall be reduced by an amount equal to
one-third of such Borrowing Base Decrease, and (B) the
Borrowing Base, as so reduced, shall continue in effect
until the date that is six months after the relevant
Borrowing Base Notification Date, at which time the
Borrowing Base shall be reduced by an amount equal to the
remaining two-thirds of such Borrowing Base Decrease; or
(ii) in the case of any Borrowing Base Decrease
resulting from a Borrowing Base Redetermination pursuant to
Section 2.03(c)(i)(x), then the Borrowing Base in effect
immediately prior to such Borrowing Base Redetermination
shall continue in effect until the date that is 30 days
after the relevant Borrowing Base Notification Date, at
which time the Borrowing Base shall be reduced by an amount
equal to such Borrowing Base Decrease;
provided that (x) if a Borrowing Base Determination results in a
Borrowing Base Decrease and, prior to the time that such
Borrowing Base Decrease becomes fully effective as provided
above, a new Borrowing Base Determination renders it unnecessary
to give full effect to such Borrowing Base Decrease, then such
Borrowing Base Decrease shall either be rescinded (if the new
Borrowing Base is equal to or greater than the Borrowing Base
then in effect) or shall continue to become effective as provided
above, but only until the Borrowing Base has been reduced to the
amount determined pursuant to such new Borrowing Base
Determination, (y) if an additional Borrowing Base Decrease
results from a new Borrowing Base Determination prior to the time
that a Borrowing Base Decrease resulting from a previous
Borrowing Base Determination becomes fully effective as provided
above, then the scheduled reductions to the Borrowing Base
required as a result of the previous Borrowing Base Determination
shall be made as scheduled and shall be credited against the
scheduled reductions required as a result of the new Borrowing
Base Determination pro rata, and (z) the Company may, in its
discretion, elect by notice to the Administrative Agent to have a
Borrowing Base Decrease become effective prior to the time that
such Borrowing Base Decrease otherwise would become effective as
provided above.
(h) Each recommendation, determination or
redetermination of the Borrowing Base hereunder shall be made by
each Co-Agent or Bank in accordance with the then current
standards and practices of such Co-Agent or Bank for similar oil
and gas credits, with the understanding that the Borrowing Base
should reflect the amount of Borrowing Base Indebtedness that
such Co-Agent or Bank, in accordance with such standards and
practices, determines to be supportable, based upon the NPV and
its assessment of the financial condition, results of operations,
assets, liabilities and prospects of the Company and its
Subsidiaries.
(i) The Engineering Committee will not recommend a
Borrowing Base in connection with any Borrowing Base
Determination after the Initial Borrowing Base Determination in
an amount that would result in the ratio of (i) the NPV of the
Borrowing Base Assets as of the relevant NPV Date to (ii) the
recommended Borrowing Base, being less than 1.75 to 1.0.
2.04 Maximum Exposure. Notwithstanding anything to
the contrary herein, in no event shall the Company request a
Revolving Credit Loan, Letter of Credit or Bid Loan if, after
giving effect to the incurrence or issuance thereof, the
Aggregate Exposure would exceed the Current Borrowing Base
Amount.
SECTION 3. Payments.
3.01 Voluntary Prepayments. The Company shall have
the right to prepay the Revolving Credit Loans in whole or in
part from time to time, without premium or penalty, on the
following terms and conditions: (a) the Company shall give the
Administrative Agent at its New York Office irrevocable
telephonic notice (promptly confirmed in writing) of its intent
to prepay the Revolving Credit Loans, the amount of such
prepayment, the Type of Revolving Credit Loans to be prepaid, and
(in the case of Eurodollar Loans) the specific Borrowing(s)
pursuant to which made, which notice shall be given by the
Company (i) at least one Business Day prior to the date of any
prepayment of Base Rate Loans or (ii) at least three Business
Days prior to the date of any prepayment of Eurodollar Loans and
shall promptly be transmitted by the Administrative Agent to each
of the Banks affected thereby, (b) if any such notice is given,
the amount specified in such notice shall be due and payable on
the date specified therein, (c) each partial prepayment of any
Borrowing shall be in an aggregate principal amount of at least
$5,000,000 and, if greater, shall be in an integral multiple of
$1,000,000, provided that no partial prepayment of Eurodollar
Loans made pursuant to a single Borrowing shall reduce the
outstanding Loans made pursuant to such Borrowing to an amount
less than $10,000,000, (d) prepayments of Eurodollar Loans made
pursuant to this Section 3.01 shall be subject to compliance by
the Company with the provisions of Section 1.10 and (e) each
prepayment in respect of any Borrowing of Revolving Credit Loans
shall be applied pro rata among such Revolving Credit Loans.
3.02 Mandatory Prepayments of Borrowing Base
Indebtedness. (a) If, on any day, the Aggregate Exposure
exceeds the Current Borrowing Base Amount, the Company shall, on
such day, reduce or prepay Borrowing Base Indebtedness by an
amount such that, after giving effect thereto, the Aggregate
Exposure will not exceed the Current Borrowing Base Amount.
(b) If any prepayment pursuant to Section 3.02(a)
results from a Borrowing Base Decrease implemented pursuant to
clause (ii) of Section 2.03(g) and would require the prepayment
of Eurodollar Loans on a date that is not the last day of the
Interest Period then applicable thereto and any Bank would be
entitled to compensation pursuant to Section 1.10 as a result
thereof, then (i) upon the request of the Required Banks in their
sole discretion, the Company shall prepay such Eurodollar Loans
on such date (or any subsequent date requested by the Required
Banks), provided that no Bank shall be entitled to compensation
pursuant to Section 1.10 as a result of such prepayment or
(ii) in the absence of such request, such prepayment, or the
portion thereof that would have such effect, may at the Company's
option be postponed until the next following expiration or
successive expirations of Interest Periods then in effect, at
which time or times the portion of such prepayment so postponed
shall be paid, up to the principal amount of Eurodollar Loans as
to which the Interest Period so expiring is applicable; provided,
that, notwithstanding the foregoing, if an Event of Default shall
have occurred and be continuing on any date on which a prepayment
of Eurodollar Loans is required by Section 3.02(a), or on any
date on which such prepayment is being postponed pursuant to this
Section 3.02(b), the Company shall, on such date, prepay such
Eurodollar Loans, which prepayment shall be accompanied by any
amounts owing pursuant to Section 1.10.
(c) With respect to each prepayment of Revolving
Credit Loans made pursuant to this Section 3.02, the Company may
designate the Types of Revolving Credit Loans which are to be
prepaid and (in the case of Eurodollar Loans) the specific
Borrowing(s) pursuant to which made, provided that (i) on any
date on which a prepayment is made pursuant to this Section 3.02
the Company shall first designate for prepayment all Base Rate
Loans and all Eurodollar Loans with Interest Periods ending on
the date of such prepayment; (ii) if any prepayment of Eurodollar
Loans made pursuant to a single Borrowing would reduce the
outstanding Loans made pursuant to such Borrowing to an amount
less than $10,000,000, such Borrowing shall immediately be
converted into Base Rate Loans and (iii) each prepayment of
Revolving Credit Loans shall be applied pro rata among Revolving
Credit Loans. In the absence of a designation by the Company
making such prepayments as described in the preceding sentence,
the Administrative Agent shall, subject to the above, make such
designation in its sole discretion.
(d) To the extent a Letter of Credit is undrawn, the
Borrowing Base Indebtedness associated therewith may be reduced
pursuant to this Section 3.02 only (i) upon expiration or
cancellation of such Letter of Credit or (ii) upon (and to the
extent of) cash collateralization by the Company of such undrawn
amount (or a portion thereof) in an amount equal to such undrawn
amount (or such portion) in a manner satisfactory to the
Administrative Agent.
3.03 Method and Place of Payment. Except as otherwise
specifically provided herein, all payments under this Agreement
shall be made to the Administrative Agent not later than
12:00 Noon (New York time) on the date when due and shall be made
in lawful money of the United States of America in immediately
available funds at the Payment Office of the Administrative
Agent. Whenever any payment to be made hereunder shall be stated
to be due on a day which is not a Business Day, the due date
thereof shall be extended to the next succeeding Business Day
and, with respect to payments of principal, interest shall be
payable at the applicable rate during such extension.
3.04 Net Payments. (a) All payments made by the
Company under this Agreement shall be made free and clear of, and
without deduction or withholding for or on account of, any
present or future income, stamp or other taxes, levies, imposts,
duties, charges, fees, deductions or withholdings, now or
hereafter imposed, levied, collected, withheld or assessed by any
Governmental Authority, excluding, in the case of the
Administrative Agent and each Bank, net income taxes and
franchise taxes (imposed in lieu of net income taxes) imposed on
the Administrative Agent or such Bank, as the case may be, as a
result of a present or former connection between the jurisdiction
of the government or taxing authority imposing such tax and the
Administrative Agent or such Bank (excluding a connection arising
solely from the Administrative Agent or such Bank having
executed, delivered or performed its obligations or received a
payment under, or enforced, this Agreement) or any political
subdivision or taxing authority thereof or therein (all such
non-excluded taxes, levies, imposts, duties, charges, fees,
deductions and withholdings being hereinafter called "Taxes").
If any Taxes are required to be withheld from any amounts payable
to the Administrative Agent or any Bank hereunder, the amounts so
payable to the Administrative Agent or such Bank shall be
increased to the extent necessary to yield to the Administrative
Agent or such Bank (after payment of all Taxes) interest or any
such other amounts payable hereunder at the rates or in the
amounts specified in this Agreement. Whenever any Taxes are
payable by the Company, as promptly as possible thereafter the
Company shall send to the Administrative Agent for its own
account or for the account of such Bank, as the case may be, a
certified copy of an original official receipt received by the
Company showing payment thereof. If the Company fails to pay any
Taxes when due to the appropriate taxing authority or fails to
remit to the Administrative Agent the required receipts or other
required documentary evidence, the Company shall indemnify the
Administrative Agent and the Banks for any incremental taxes,
interest or penalties that may become payable by the
Administrative Agent or any Bank as a result of any such failure.
The agreements in this Section 3.04(a) shall survive the
termination of this Agreement and the payment of the Loans and
all other amounts payable hereunder. Each Bank agrees to use
reasonable efforts to minimize the Company's obligations to pay
additional amounts to such Bank pursuant to this Section 3.04(a),
provided, that such efforts shall not cause the imposition on
such Bank of any additional costs or legal or regulatory burdens
deemed by such Bank to be material.
(b) Each Bank that is not incorporated under the laws
of the United States of America or a state thereof agrees that it
will deliver to the Company and the Administrative Agent (i) two
duly completed copies of United States Internal Revenue Service
Form 1001 or 4224 or successor applicable form, as the case may
be, and (ii) an Internal Revenue Service Form W-8 or W-9 or
successor applicable form. Each such Bank also agrees to deliver
to the Company and the Administrative Agent two further copies of
the said Form 1001 or 4224 and Form W-8 or W-9, or successor
applicable forms or other manner of certification, as the case
may be, on or before the date that any such form expires or
becomes obsolete or after the occurrence of any event requiring a
change in the most recent form previously delivered by it to the
Company, and such extensions or renewals thereof as may
reasonably be requested by the Company or the Administrative
Agent, unless in any such case an event (including, without
limitation, any change in treaty, law or regulation) has occurred
prior to the date on which any such delivery would otherwise be
required which renders all such forms inapplicable or which would
prevent such Bank from duly completing and delivering any such
form with respect to it and such Bank so advises the Company and
the Administrative Agent. Such Bank shall certify (i) in the
case of a Form 1001 or 4224, that it is entitled to receive
payments under this Agreement without deduction or withholding of
any United States federal income taxes or at a reduced rate of
deduction or withholding of such taxes and (ii) in the case of a
Form W-8 or W-9, that it is entitled to an exemption from
United States backup withholding tax. In the event that any Bank
fails to deliver any forms required under this Section 3.04(b),
the Company's obligation to pay additional amounts shall be
reduced to the amount that it would have been obligated to pay
had such forms been provided.
(c) Notwithstanding any provision to the contrary
herein, the Company shall not be liable for the payment of any
Taxes, or any losses related to Taxes, other than as provided for
in this Section 3.04, Section 4.05 or Section 11.01(c).
SECTION 4. Letters of Credit; Bid Loans.
4.01 L/C Commitment. (a) Subject to the terms and
conditions hereof, the Issuing Bank, in reliance on the
agreements of the other Banks set forth in Section 4.04(a),
agrees to issue letters of credit denominated in Dollars or in
the Alternate Currency ("Letters of Credit") for the account of
the Company on any Business Day during the Commitment Period in
such form as may be approved from time to time by the Issuing
Bank; provided that the Issuing Bank shall not have any
obligation to issue any Letter of Credit if, after giving effect
to such issuance, (x) the L/C Obligations would exceed the L/C
Commitment or (y) the Available Commitment would be less than
zero. Each Letter of Credit shall expire no later than the
Commitment Termination Date.
(b) Each Letter of Credit shall be in a minimum stated
amount of $100,000 (or the Dollar Equivalent thereof) and shall
be either (a) a standby letter of credit issued to support the
obligations of the Company or any of its Subsidiaries (contingent
or otherwise) or (b) a commercial letter of credit issued in
respect of the purchase of goods or services by the Company or
any of its Subsidiaries in the ordinary course of business. Each
Letter of Credit shall be subject to the Uniform Customs and, to
the extent not inconsistent therewith, the laws of the State of
New York or such other jurisdiction as shall be specified by the
Issuing Bank.
(c) In the event that a Letter of Credit denominated
in the Alternate Currency (an "Alternate Currency Letter of
Credit") is issued pursuant to Section 4.01(a), the following
provisions shall apply so long as such Alternate Currency Letter
of Credit or any L/C Obligation in respect thereof is
outstanding:
(i) Such Alternate Currency Letter of Credit shall
be a Letter of Credit for all purposes of this Agreement.
(ii) For purposes of determining the Available
Commitment, the Aggregate Exposure and/or the Current
Borrowing Base Amount under Sections 1.01, 1.03(b), 2.02,
2.04, 3.02(a), 4.01(a), 4.09 and 7.02(b), the amount of L/C
Obligations in respect of Alternate Currency Letters of
Credit shall be, as of any date of determination, the Dollar
Equivalent of the Alternate Currency amount of such L/C
Obligations; provided that if any prepayment pursuant to
Section 3.02(a) results from a change in the Dollar
Equivalent of L/C Obligations in respect of Alternate
Currency Letters of Credit, the provisions of Section
3.02(b) shall apply and the amount, if any, to be so prepaid
shall be determined using the Dollar Equivalent of such L/C
Obligations as of the fourth Business Day prior to the end
of the applicable Interest Period.
(iii) For purposes of determining Commitment Fees
payable under Section 2.01, the amount of the L/C
Obligations in respect of Alternate Currency Letters of
Credit utilized for purposes of calculating the Unused
Commitment shall be the Dollar Equivalent of the Alternate
Currency amount of such L/C Obligations as of the first day
of each month (or, if later during such month, the date on
which such Alternate Currency Letter of Credit is issued)
during the period in respect of which such Commitment Fees
are payable.
(iv) For purposes of determining letter of credit
commissions and fronting commissions payable under Section
4.03, the amount available to be drawn under an Alternate
Currency Letter of Credit shall be the Dollar Equivalent of
the Alternate Currency amount available to be drawn under
such Alternate Currency Letter of Credit as of the first day
of each month (or, if later during such month, the date on
which such Alternate Currency Letter of Credit is issued)
during the period in respect of which such commissions and
fronting commissions are payable.
(v) The obligation of each L/C Participant to pay
amounts to the Issuing Bank in respect of an unreimbursed
drawing under an Alternate Currency Letter of Credit
pursuant to the last sentence of Section 4.04(a) shall be to
pay to the Issuing Bank an amount equal to such L/C
Participant's Commitment Percentage of the Dollar Equivalent
(as determined pursuant to paragraph (vi) below) of such
unreimbursed drawing.
(vi) The obligation of the Company to reimburse the
Issuing Bank pursuant to the first sentence of Section 4.05
in respect of a drawing made under an Alternate Currency
Letter of Credit shall be to reimburse the Issuing Bank in
Dollars in an amount equal to the Dollar Equivalent on the
date of such drawing of the Alternate Currency amounts to be
reimbursed in respect of such drawing pursuant to such first
sentence of Section 4.05 ; interest payable under Section
4.05 shall be payable in Dollars on the Dollar Equivalent of
any and all amounts remaining unpaid by the Company under
Section 4.05 in respect of drafts paid under an Alternate
Currency Letter of Credit; and any Loan requested or deemed
requested to be made pursuant to the next to last sentence
of Section 4.05 shall be in an amount equal to the Dollar
Equivalent (as determined pursuant to the first clause of
this paragraph) of the Alternate Currency amount of the
drawing in respect of which such Loan is so requested.
(vii) In addition to its obligations under
Section 7.02(b), the Company shall from time to time, upon
request of the Administrative Agent, deliver to the
Administrative Agent a calculation in reasonable detail
showing the amount of the Available Commitment, utilizing in
such calculation the Dollar Equivalent of the L/C
Obligations in respect of Alternate Currency Letters of
Credit.
(d) The Issuing Bank shall not at any time be
obligated to issue any Letter of Credit hereunder if such
issuance would conflict with, or cause the Issuing Bank or any
L/C Participant to exceed any limits imposed by, any applicable
Requirement of Law.
4.02 Procedure for Issuance of Letters of Credit. The
Company may from time to time request that the Issuing Bank issue
a Letter of Credit by delivering to the Issuing Bank at its
address for notices specified herein an Application therefor,
completed to the satisfaction of the Issuing Bank, and such other
certificates, documents and other papers and information as the
Issuing Bank may reasonably request. Upon receipt of any
Application, the Issuing Bank will process such Application and
the certificates, documents and other papers and information
delivered to it in connection therewith in accordance with its
customary procedures and shall promptly issue the Letter of
Credit requested thereby (but in no event shall the Issuing Bank
be required to issue any Letter of Credit earlier than three
Business Days after its receipt of the Application therefor and
all such other certificates, documents and other papers and
information relating thereto) by issuing the original of such
Letter of Credit to the beneficiary thereof or as otherwise may
be agreed by the Issuing Bank and the Company. Each such Letter
of Credit shall have terms and conditions consistent with the
provisions of this Section 4 and shall be otherwise in form and
substance reasonably satisfactory to the Issuing Bank. The
Issuing Bank shall furnish a copy of each such Letter of Credit
to the Company promptly following the issuance thereof.
4.03 Fees, Commissions and Other Charges. (a) The
Company shall pay to the Administrative Agent, (i) for the
account of the Issuing Bank and each L/C Participant, ratably
among them in accordance with their respective Commitment
Percentages, a letter of credit commission with respect to each
Letter of Credit, computed for the period from the date of
issuance of such Letter of Credit to and including the expiration
date of such Letter of Credit at a rate per annum equal to the
Applicable Margin for Eurodollar Loans minus the fronting
commission referred to clause (ii) below on the aggregate amount
available to be drawn under such Letter of Credit during such
period (taking into account any scheduled reductions) and (ii)
for the account of the Issuing Bank, a fronting commission with
respect to each Letter of Credit, computed for the period from
the date of issuance of such Letter of Credit to and including
the expiration date of such Letter of Credit at a rate per annum
equal to 1/4 of 1% on the aggregate amount available to be drawn
under such Letter of Credit during such period (taking into
account any scheduled reductions). Such commissions shall be
payable in arrears on each L/C Fee Payment Date to occur after
the date of issuance of each Letter of Credit and on the
Commitment Termination Date and shall be nonrefundable.
(b) In addition to the foregoing fees and commissions,
the Company shall pay or reimburse the Issuing Bank for such
normal and customary costs and expenses as are incurred or
charged by the Issuing Bank in issuing, effecting payment under,
amending or otherwise administering any Letter of Credit.
(c) The Administrative Agent shall, promptly following
its receipt thereof, distribute to the Issuing Bank and the L/C
Participants all fees and commissions received by the
Administrative Agent for their respective accounts pursuant to
this Section 4.03.
4.04 L/C Participations. (a) The Issuing Bank
irrevocably agrees to grant and hereby grants to each L/C
Participant, and, to induce the Issuing Bank to issue Letters of
Credit hereunder, each L/C Participant irrevocably agrees to
accept and purchase and hereby accepts and purchases from the
Issuing Bank, on the terms and conditions hereinafter stated, for
such L/C Participant's own account and risk, an undivided
interest equal to such L/C Participant's Commitment Percentage in
the Issuing Bank's obligations and rights under each Letter of
Credit issued hereunder and the amount of each draft paid by the
Issuing Bank thereunder effective upon the issuance of each such
Letter of Credit. In furtherance and not in limitation of the
foregoing, each L/C Participant unconditionally and irrevocably
agrees with the Issuing Bank that such L/C Participant shall pay
to the Issuing Bank upon demand at the Issuing Bank's address for
notices specified herein an amount equal to such L/C
Participant's Commitment Percentage of the amount of such draft
which is not reimbursed by the Company in accordance with the
terms of this Agreement.
(b) If any amount required to be paid by any L/C
Participant to the Issuing Bank pursuant to Section 4.04(a) in
respect of any unreimbursed portion of any payment made by the
Issuing Bank under any Letter of Credit is paid to the Issuing
Bank within three Business Days after the date such payment is
due, such L/C Participant shall pay to the Issuing Bank on demand
an amount equal to the product of (i) such amount, times (ii) the
daily average Federal funds rate, as quoted by the Issuing Bank,
during the period from and including the date such payment is
required to the date on which such payment is immediately
available to the Issuing Bank, times (iii) a fraction the
numerator of which is the number of days that elapse during such
period and the denominator of which is 360. If any such amount
required to be paid by any L/C Participant pursuant to Section
4.04(a) is not in fact made available to the Issuing Bank by such
L/C Participant within three Business Days after the date such
payment is due, the Issuing Bank shall be entitled to recover
from such L/C Participant, on demand, such amount with interest
thereon calculated from such due date at the rate per annum
applicable to Base Rate Loans hereunder. A certificate of the
Issuing Bank submitted to any L/C Participant with respect to any
amounts owing under this Section 4.04 shall be conclusive in the
absence of manifest error.
(c) Whenever, at any time after the Issuing Bank has
made payment under any Letter of Credit and has received from any
L/C Participant its pro rata share of such payment in accordance
with Section 4.04(a), the Issuing Bank receives any payment
related to such Letter of Credit (whether directly from the
Company or otherwise, including proceeds of collateral applied
thereto by the Issuing Bank), or any payment of interest on
account thereof, the Issuing Bank will distribute to such L/C
Participant its pro rata share thereof; provided, however, that
in the event that any such payment received by the Issuing Bank
shall be required to be returned by the Issuing Bank, such L/C
Participant shall return to the Issuing Bank the portion thereof
previously distributed by the Issuing Bank to it.
4.05 Reimbursement Obligation of the Company. The
Company agrees to reimburse the Issuing Bank on the first
Business Day following any date on which the Issuing Bank
notifies the Company of the date and amount of a draft presented
under any Letter of Credit and paid by the Issuing Bank for the
amount of (a) such draft so paid and (b) any stamp, documentary
or similar taxes, or any fees, charges or other costs or
expenses, incurred by the Issuing Bank in connection with such
payment and identified in such notice. Each such payment shall
be made to the Issuing Bank at its address for notices specified
herein in lawful money of the United States of America and in
immediately available funds. Interest shall be payable on any
and all amounts remaining unpaid by the Company under this
Section 4.05 from and excluding the date such amounts become
payable (whether at stated maturity, by acceleration or
otherwise) until payment in full at the rate which would be
payable on any outstanding Base Rate Loans which were then
overdue. Notwithstanding the preceding sentence, interest shall
be payable on the amount paid by the Issuing Bank on any draft in
respect of a Letter of Credit (a) from and excluding the date of
such payment to and including the first Business Day following
the date on which the Issuing Bank notifies the Company of the
date and amount thereof, at the rate which would be payable on
any outstanding Base Rate Loans which were not overdue and (b)
thereafter, in accordance with the preceding sentence. Each
drawing under any Letter of Credit shall (unless otherwise
specified by the Company) constitute a request by the Company to
the Administrative Agent for a Borrowing in the amount of such
drawing pursuant to Section 1.03 of Revolving Credit Loans which
are Base Rate Loans. The Borrowing Date with respect to such
Borrowing shall be the first Business Day following the date of
such drawing.
4.06 Obligations Absolute. The Company's obligations
under this Agreement with respect to the Letters of Credit shall
be absolute and unconditional under any and all circumstances and
irrespective of any set-off, counterclaim or defense to payment
which the Company may have or have had against the Issuing Bank
(other than the defense of payment) or any beneficiary of a
Letter of Credit. The Company also agrees with the Issuing Bank
that the Issuing Bank shall not be responsible for, and the
Company's Reimbursement Obligations under Section 4.05 shall not
be affected by, among other things, the validity or genuineness
of documents or of any endorsements thereon, even though such
documents shall in fact prove to be invalid, fraudulent or
forged, or any dispute between or among the Company and any
beneficiary of any Letter of Credit or any other party to which
such Letter of Credit may be transferred or any claims whatsoever
of the Company against any beneficiary of such Letter of Credit
or any such transferee. The Issuing Bank shall not be liable for
any error, omission, interruption or delay in transmission,
dispatch or delivery of any message or advice, however
transmitted, in connection with any Letter of Credit, including
but not limited to negligent errors or omissions of the Issuing
Bank, except for errors or omissions caused by the Issuing Bank's
gross negligence or willful misconduct. The Company agrees that
any action taken or omitted by the Issuing Bank under or in
connection with any Letter of Credit or the related drafts or
documents, whether or not negligent, if done in the absence of
gross negligence or willful misconduct and in accordance with the
standards of care specified in the Uniform Commercial Code of the
State of New York, shall be binding on the Company and shall not
result in any liability of the Issuing Bank to the Company.
4.07 Letter of Credit Payments. If any draft shall be
presented for payment under any Letter of Credit, the Issuing
Bank shall promptly notify the Company and the Administrative
Agent of the date and amount thereof. The responsibility of the
Issuing Bank to the Company in connection with any draft
presented for payment under any Letter of Credit shall, in
addition to any payment obligation expressly provided for in such
Letter of Credit, be limited to determining that the documents
(including each draft) delivered under such Letter of Credit in
connection with such presentment are in conformity with such
Letter of Credit.
4.08 Application. To the extent that any provision of
any Application related to any Letter of Credit is inconsistent
with the provisions of this Agreement, the provisions of this
Agreement shall apply.
4.09 Procedure for Bid Loan Borrowing. (a) The
Company may borrow Bid Loans from time to time on any Business
Day during the Commitment Period in the manner set forth in this
Section 4.09 and in amounts such that, after giving effect to the
incurrence thereof, the Aggregate Exposure shall not exceed the
Current Borrowing Base Amount at any time.
(b) (i) The Company shall request Bid Loans by
delivering a Bid Loan Request to the Administrative Agent, not
later than 12:00 Noon (New York time) four Business Days prior to
the proposed Borrowing Date (in the case of an Index Rate Bid
Loan Request), and not later than 10:00 a.m. (New York time) one
Business Day prior to the proposed Borrowing Date (in the case of
an Absolute Rate Bid Loan Request). Each Bid Loan Request may
solicit bids for Bid Loans in an aggregate principal amount of
$5,000,000 or an integral multiple of $1,000,000 in excess
thereof and for not more than three alternative maturity dates
for such Bid Loans. The maturity date for each Bid Loan shall be
not less than seven days nor more than 12 months after the
Borrowing Date therefor (and in any event not after the
Commitment Termination Date). The Administrative Agent shall
promptly notify each Bank in writing of the contents of each Bid
Loan Request.
(ii) In the case of an Index Rate Bid Loan Request,
upon receipt of notice from the Administrative Agent of the
contents of such Bid Loan Request, any Bank that elects, in its
sole discretion, to do so, shall irrevocably offer to make one or
more Bid Loans at the Applicable Index Rate plus or minus a
margin determined by such Bank in its sole discretion for each
such Bid Loan. Any such irrevocable offer shall be made by
delivering a Bid Loan Offer to the Administrative Agent, before
10:30 a.m. (New York time) three Business Days before the
proposed Borrowing Date, setting forth the maximum and minimum
amount of Bid Loans for each maturity date, and the aggregate
maximum amount for all maturity dates, which such Bank would be
willing to make (which amounts may, subject to Section 4.09(a),
exceed such Bank's Commitment) and the margin above or below the
Applicable Index Rate at which such Bank is willing to make each
such Bid Loan; the Administrative Agent shall advise the Company
before 11:15 a.m. (New York time) three Business Days before the
proposed Borrowing Date, of the contents of each such Bid Loan
Offer received by it. If the Administrative Agent in its
capacity as a Bank shall, in its sole discretion, elect to make
any such offer, it shall advise the Company of the contents of
its Bid Loan Offer before 10:15 a.m. (New York time) three
Business Days before the proposed Borrowing Date.
(iii) In the case of an Absolute Rate Bid Loan
Request, upon receipt of notice from the Administrative Agent of
the contents of such Bid Loan Request, any Bank that elects, in
its sole discretion, to do so, shall irrevocably offer to make
one or more Bid Loans at a rate of interest determined by such
Bank in its sole discretion for each such Bid Loan. Any such
irrevocable offer shall be made by delivering a Bid Loan Offer to
the Administrative Agent, before 9:30 a.m. (New York time) on the
proposed Borrowing Date, setting forth the maximum and minimum
amount of Bid Loans for each maturity date, and the aggregate
maximum amount for all maturity dates, which such Bank would be
willing to make (which amounts may, subject to Section 4.09(a),
exceed such Bank's Commitment) and the rate of interest at which
such Bank is willing to make each such Bid Loan; the
Administrative Agent shall advise the Company before 10:00 a.m.
(New York time) on the proposed Borrowing Date of the contents of
each such Bid Loan Offer received by it. If the Administrative
Agent in its capacity as a Bank shall, in its sole discretion,
elect to make any such offer, it shall advise the Company of the
contents of its Bid Loan Offer before 9:15 a.m. (New York time)
on the proposed Borrowing Date.
(iv) The Company shall before 11:30 a.m. (New York
time) three Business Days before the proposed Borrowing Date (in
the case of Bid Loans requested by an Index Rate Bid Loan
Request) and before 10:30 a.m. (New York time) on the proposed
Borrowing Date (in the case of Bid Loans requested by an Absolute
Rate Bid Loan Request) either, in its absolute discretion:
(A) cancel such Bid Loan Request by giving the
Administrative Agent telephonic notice (promptly
confirmed in writing) to that effect, or
(B) accept one or more of the offers made by any
Bank or Banks pursuant to clause (ii) or clause
(iii) above, as the case may be, by giving
telephonic notice to the Administrative Agent
(immediately confirmed by delivery to the
Administrative Agent of a Bid Loan Confirmation)
of the amount of Bid Loans for each relevant
maturity date to be made by each such Bank (which
amount for each such maturity date shall be equal
to or less than the maximum amount for such
maturity date specified in the Bid Loan Offer of
such Bank and greater than or equal to the minimum
amount for such maturity date specified in the Bid
Loan Offer (a "Minimum Bid Loan Amount") of such
Bank, and for all maturity dates included in such
Bid Loan Offer shall be equal to or less than the
aggregate maximum amount specified in such Bid
Loan Offer for all such maturity dates) and reject
any remaining offers made by Banks pursuant to
clause (ii) or clause (iii) above, as the case may
be; provided, however, that (w) the Company may
not accept offers for Bid Loans for any maturity
date in an aggregate principal amount in excess of
the maximum principal amount requested in the
related Bid Loan Request, (x) subject to clause
(y) below, if the Company accepts any of such
offers, it must accept offers strictly based upon
pricing for such relevant maturity date and no
other criteria whatsoever, (y) if two or more
Banks submit offers for any maturity date at
identical pricing and the Company accepts any of
such offers but does not wish to (or by reason of
the limitations set forth in Section 4.09(a) or in
clause (w) of this proviso, cannot) borrow the
total amount offered by such Banks with such
identical pricing, the Company shall accept offers
from all of such Banks in amounts allocated among
them pro rata according to the amounts offered by
such Banks (or as nearly pro rata as shall be
practicable after giving effect to the requirement
set forth in clause (z) below), provided that if
as a result of such pro rata allocation the amount
of any accepted offer with respect to any Bank
shall be less than such Bank's relevant Minimum
Bid Loan Amount, then the Company may select Banks
to make the relevant Bid Loan such that it will
not be precluded from borrowing the total amount
which it wishes to borrow with respect to such Bid
Loan and (z) the Bid Loans made by a Bank on a
Borrowing Date for each relevant maturity date
shall be in a principal amount of $5,000,000 or an
integral multiple of $1,000,000 in excess thereof.
(v) If the Company notifies the Administrative Agent
that a Bid Loan Request is cancelled pursuant to clause (iv)(A)
above, the Administrative Agent shall give prompt telephonic or
written notice thereof to the Banks and the Bid Loans requested
thereby shall not be made. Failure of the Company to give a
timely acceptance in accordance with clause (iv)(B) above shall
constitute a cancellation pursuant to such clause (iv)(A).
(vi) If the Company accepts pursuant to
clause (iv) (B) above one or more of the offers made by any
Bank or Banks, the Administrative Agent shall promptly notify
each Bank which has made such an offer of the aggregate amount of
such Bid Loans to be made on such Borrowing Date for each
maturity date and of the acceptance or rejection of any offers to
make such Bid Loans made by such Bank. Each Bank which is to
make a Bid Loan shall, before 12:00 Noon (New York time) on the
Borrowing Date specified in the Bid Loan Request applicable
thereto, make available to the Administrative Agent at its
Payment Office the amount of Bid Loans to be made by such Bank,
in immediately available funds. The Administrative Agent will
make such funds available to the Company as soon as practicable
on such date at the Administrative Agent's aforesaid address. As
soon as practicable after each Borrowing Date, the Administrative
Agent shall notify each Bank of the aggregate amount of Bid Loans
advanced on such Borrowing Date and the respective maturity dates
thereof.
(c) Within the limits and on the conditions set forth
in this Section 4.09, the Company may from time to time borrow
under this Section 4.09, repay pursuant to paragraph (d) below,
and reborrow under this Section 4.09.
(d) The Company shall repay to the Administrative
Agent for the account of each Bank which has made a Bid Loan (or
the Bid Loan Assignee in respect thereof, as the case may be) on
the maturity date of each Bid Loan (such maturity date being that
specified by the Company for repayment of such Bid Loan in the
related Bid Loan Request) the then unpaid principal amount of
such Bid Loan. The Company shall not have the right to prepay
any principal amount of any Bid Loan without the consent of the
holder or holders of such Bid Loan (which may be withheld in its
or their sole discretion).
(e) The Company shall pay interest on the unpaid
principal amount of each Bid Loan from the Borrowing Date to the
stated maturity date thereof, at the rate of interest determined
pursuant to paragraph (b) above (calculated on the basis
specified in Section 11.07(b)), payable on the interest payment
date or dates specified by the Company for such Bid Loan in the
related Bid Loan Request. If all or a portion of the principal
amount of or interest on any Bid Loan shall not be paid when due
(whether at the stated maturity, by acceleration or otherwise),
such overdue principal amount, and, to the extent permitted by
law, overdue interest, shall, without limiting any rights of any
Bank under this Agreement, bear interest from the date on which
such payment was due at a rate per annum which is equal to
2% plus the rate which would otherwise be applicable to such Bid
Loan until the scheduled maturity date with respect thereto, and
for each day thereafter at a rate per annum which is equal to 2%
above the rate which would otherwise be applicable to Base Rate
Loans pursuant to Section 1.07(a) hereof until paid in full (as
well after as before judgment), payable on demand, or, in the
absence of demand, weekly on Friday of each week.
(f) Each Bank shall maintain in accordance with its
usual practice an account or accounts evidencing indebtedness of
the Company to such Bank resulting from each Bid Loan of such
Bank from time to time, including the amounts of principal and
interest payable and paid to such Bank from time to time under
this Agreement.
(g) Amounts advanced by a Bank pursuant to this
Section 4.09 on a Borrowing Date which have the same maturity
date and interest rate shall be deemed to constitute one Bid
Loan.
SECTION 5. Conditions Precedent.
The obligation of each Bank to make Loans to, and of
the Issuing Bank to issue Letters of Credit for the account of,
the Company hereunder on or after the Effective Date is subject,
at the time of the making of each such Loan or the issuance of
each such Letter of Credit, as the case may be, to the
satisfaction of the following conditions:
5.01 Agreement. On the Effective Date, there shall
have been delivered to the Administrative Agent for the account
of each Bank, this Agreement, executed and delivered by a duly
authorized officer of each party hereto.
5.02 Officer's Certificate. On the Effective Date,
the Administrative Agent shall have received a certificate dated
the Effective Date, and signed by the chief financial officer or
the chief accounting officer or the treasurer of the Company,
stating that (to the best of his knowledge) the conditions set
forth in Section 5.07 exist as of such date.
5.03 Opinions of Counsel. On the Effective Date, the
Administrative Agent shall have received an opinion, addressed to
each Bank and dated such date, from each of (i) Cravath, Swaine &
Moore, special counsel to the Company, covering the matters set
forth in Exhibit B-1 hereto and (ii) William C. Lemmer, Vice
President, General Counsel and Secretary of the Company, covering
the matters set forth in Exhibit B-2 hereto. Each such legal
opinion shall also cover such other matters incident to the
transactions contemplated herein as the Administrative Agent may
reasonably request.
5.04 Organizational Documents; Corporate Proceedings.
(a) On or prior to the Effective Date, the Administrative Agent
shall have received certified copies of the Company's charter
documents, by-laws, resolutions of the Company's Board of
Directors evidencing the Company's authority to enter into this
Agreement, and certificates of incumbency, each in form and
substance satisfactory to the Administrative Agent.
(b) On or prior to the Effective Date, the
Administrative Agent shall have received all information and
copies of all documents and papers, including records of
corporate proceedings and governmental approvals, if any, which
the Administrative Agent reasonably may have requested in
connection therewith, such documents and papers where appropriate
to be certified by proper corporate or governmental authorities.
5.05 Fees. The Administrative Agent shall have
received (or shall have concurrently received) the fees to be
received by it for its account and the account of the Co-Agents
and Banks on or prior to the Effective Date referred to in
Section 2.01.
5.06 Reserve and NPV Report. On or prior to the
Effective Date, each Bank shall have received a Final Reserve and
NPV Report setting forth the NPV as of December 31, 1994.
5.07 No Default; Etc. On the Effective Date:
(a) Representations and Warranties. Each of the
representations and warranties made by the Company in or
pursuant to this Agreement shall be true and correct in all
material respects on and as of such date as if made on and
as of such date.
(b) No Default. No Default or Event of Default shall
have occurred and be continuing on such date or after giving
effect to any Loans or Letters of Credit requested to be
made or issued on such date.
5.08 Conditions Precedent to Subsequent Loans and
Letters of Credit. The agreement of each Bank to make any Loan
pursuant to Section 1.03 or 4.09 requested to be made by it on
any date after the Effective Date, and of the Issuing Bank to
issue any Letter of Credit on any date after the Effective Date,
is subject to the satisfaction of the following conditions
precedent:
(a) Representations and Warranties. Each of the
representations and warranties made by the Company in or
pursuant to this Agreement shall be true and correct in all
material respects on and as of the date of such Loan or
issuance of such Letter of Credit as if made on and as of
such date.
(b) No Default. No Default or Event of Default shall
have occurred and be continuing on the date of such Loan or
issuance of such Letter of Credit or after giving effect to
the Loans requested to be made or any Letter of Credit
requested to be issued, as the case may be, on such date.
Each borrowing of Loans by and issuance of a Letter of Credit for
the account of the Company hereunder shall constitute a
representation and warranty by the Company as of the date such
Loans are borrowed or such Letter of Credit is issued, as the
case may be, that the conditions contained in this Section 5.08
have been satisfied (except to the extent that, prior to or
concurrently with the delivery of the relevant Notice of
Borrowing, Bid Loan Confirmation or Application, as the case may
be, the Company notifies the Banks in writing, through the
Administrative Agent, that any such conditions shall not be
satisfied).
This Agreement and all of the certificates, legal opinions and
other documents and papers referred to in this Section 5 shall be
delivered to the Administrative Agent at the offices of Simpson
Thacher & Bartlett for the account of each of the Banks.
SECTION 6. Representations and Warranties.
In order to induce the Banks to enter into this
Agreement and to make the Loans and issue or participate in the
Letters of Credit provided for herein, the Company makes the
following representations and warranties as of the Effective Date
and as of each subsequent Borrowing Date or date of issuance of a
Letter of Credit, as the case may be, which representations and
warranties shall survive the execution and delivery of this
Agreement and the making of the Loans:
6.01 Corporate Status. Each of the Company and each
of its Subsidiaries (i) is a duly organized and validly existing
corporation or partnership in good standing under the laws of its
jurisdiction of organization, (ii) has all requisite power and
authority to own its property and assets and to transact the
business in which it is engaged and presently proposes to engage,
and (iii) if a corporation or a limited partnership, is duly
qualified and is authorized to do business and is in good
standing in all jurisdictions where the failure to do so would
have a Material Adverse Effect. As of the Effective Date, the
Subsidiaries listed on Annex III hereto constitute all of the
Subsidiaries of the Company.
6.02 Corporate Power and Authority. The Company has
the corporate power to execute, deliver and carry out the terms
and provisions of this Agreement and each other agreement or
instrument contemplated hereby to which it is or will be a party
and to borrow hereunder. The Company has taken all necessary
corporate action to authorize the execution, delivery and
performance of this Agreement and the borrowings and other
transactions contemplated hereby. This Agreement has been duly
executed and delivered by the Company and constitutes the legal,
valid and binding obligations of the Company enforceable in
accordance with their respective terms except as the
enforceability thereof may be limited by applicable bankruptcy,
insolvency, reorganization, receivership or other similar laws
affecting the enforcement of creditors' rights generally and by
general principles of equity.
6.03 No Violation. Neither the execution, delivery
nor performance by the Company of this Agreement or any
Application, nor the consummation of the transactions herein or
therein contemplated, nor compliance with the terms and
provisions herein or therein, (i) will contravene any applicable
provision of any law, statute, rule, regulation, order, writ,
injunction or decree of any court or governmental instrumentality
or (ii) will conflict or be inconsistent with or result in any
breach of, any of the terms, covenants, conditions or provisions
of, or constitute a default under, or result in the creation or
imposition of (or the obligation to create or impose) any Lien
upon any of the property or assets of the Company or any of its
Subsidiaries pursuant to the terms of any indenture, mortgage,
deed of trust, or other material agreement or instrument to which
the Company or any of its Subsidiaries is a party or by which it
or any of its property or assets is bound or to which it may be
subject, or (iii) will violate any provision of the Certificate
of Incorporation or By-Laws or, in the case of any partnership,
the applicable partnership agreement or other organizational
documents, of the Company or any of its Subsidiaries. Each of
the Company and its Subsidiaries is in compliance with all
Requirements of Law (including ERISA and environmental laws)
except to the extent that failure to comply therewith
(individually or in the aggregate) is not reasonably likely to
have a Material Adverse Effect. After giving due consideration
to all relevant factors, the Company has concluded that
Requirements of Law concerning environmental protection matters
(including, without limitation, claims thereunder) are not
reasonably likely to have a Material Adverse Effect.
6.04 Litigation. Except as disclosed in the Company's
Annual Report on Form 10-K for the year ended December 31, 1994,
there are no actions, suits or proceedings pending or, to the
best knowledge of the Company, threatened against or affecting
the Company or any of its Subsidiaries before any court or before
any governmental or administrative body or agency that
(individually or in the aggregate) are reasonably likely to have
a Material Adverse Effect.
6.05 Financial Statements. The audited consolidated
statement of financial condition of the Company and its
consolidated Subsidiaries at December 31, 1994 and the related
consolidated statements of income and retained earnings and cash
flows of the Company and its consolidated Subsidiaries for the
fiscal year ending December 31, 1994 heretofore furnished to the
Banks present fairly the consolidated financial condition of the
Company at the date of said statements for said period. All such
financial statements have been prepared in accordance with GAAP
consistently applied except for such changes as have been
concurred with by Coopers & Lybrand, independent public
accountants for the Company, and disclosed in accordance with
GAAP in such financial statements or the report thereon by
Coopers & Lybrand. Since December 31, 1994, there has been no
material adverse change in the financial condition or results of
operations of the Company and its Restricted Subsidiaries taken
as a whole or in the ability of the Company and its Restricted
Subsidiaries taken as a whole to satisfy their financial
obligations.
6.06 Governmental Approvals. No order, consent,
approval, license, authorization, or validation of, or filing,
recording or registration with, or exemption by, any governmental
or public body or authority, or any subdivision thereof, is
required to authorize, or is required in connection with (i) the
execution, delivery and performance by the Company of this
Agreement or (ii) the legality, validity, binding effect or
enforceability of this Agreement as against the Company.
6.07 Use of Proceeds; Regulation U. The proceeds of
all incurrences of Loans, and the Letters of Credit, will be used
by the Company for general corporate purposes, which may include,
without limitation to provide funds for the support and repayment
of Commercial Paper. Neither the making of any Loan hereunder,
nor the use of the proceeds thereof, will violate or be
inconsistent with the provisions of Regulation G, T, U or X of
the Board of Governors of the Federal Reserve System.
6.08 Investment Company Act. The Company 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.
6.09 Public Utility Holding Company Act. Neither the
Company nor any of its Subsidiaries is a "holding company", or a
"subsidiary company" of a "holding company", or an "affiliate" of
a "holding company" or of a "subsidiary company" of a "holding
company", within the meaning of the Public Utility Holding
Company Act of 1935, as amended.
6.10 True and Complete Disclosure. All factual
information heretofore or contemporaneously furnished by or on
behalf of the Company in writing to any Bank, for purposes of or
in connection with this Agreement or any transaction contemplated
hereby is, and all other such factual information hereafter
furnished by or on behalf of the Company in writing to any Bank
will be, true and accurate in all material respects on the date
as of which such information is dated or certified and not
incomplete by omitting to state any material fact necessary to
make such information (taken as a whole) not misleading at such
time in light of the circumstances under which such information
was provided. There is no fact known to the Company (other than
matters of a general economic nature) which is reasonably likely
to have a Material Adverse Effect, which has not been disclosed
herein or in such other documents, certificates and statements
furnished to the Banks for use in connection with the
transactions contemplated hereby.
6.11 No Default. Neither the Company nor any of its
Subsidiaries is in default under or with respect to any
Contractual Obligation in any respect which (individually or in
the aggregate) is reasonably likely to have a Material Adverse
Effect. Neither the Company nor any of its Subsidiaries is in
default under any order, award or decree of any Governmental
Authority or arbitrator binding upon or affecting it or them or
by which any of its or their properties or assets may be bound or
affected in any respect which (individually or in the aggregate)
is reasonably likely to have a Material Adverse Effect. No
Default or Event of Default has occurred and is continuing.
6.12 Ownership of Property. To the extent customary
in the oil and gas business for the type and location of the
relevant property and consistent with the past practices of the
Company in effect on the Effective Date, each of the Company and
its Restricted Subsidiaries has good title to all its material
Oil and Gas Interests.
SECTION 7. Covenants.
The Company covenants and agrees that, on and after the
Effective Date so long as this Agreement or any Commitment is in
effect and until payment in full of the Loans, and no Letter of
Credit or Reimbursement Obligation remains outstanding, and
performance by the Company of all of its other obligations
arising hereunder:
7.01 Financial Statements and Reports. The Company
will deliver to the Administrative Agent, with sufficient copies
for each Bank:
(a) as soon as available and in any event within
50 days after the end of the relevant fiscal quarter, the
consolidated financial statements of each of (i) Energy
Partners and its consolidated Subsidiaries and (ii) the
Company and its consolidated Subsidiaries for each of the
first three fiscal quarters of each fiscal year of the
Company or Energy Partners, as the case may be, as filed
with the Securities and Exchange Commission ("SEC") on
Form 10-Q (or any form which replaces Form 10-Q), or if the
Company or Energy Partners is not required to file any such
form with the SEC, an unaudited report containing the
financial information that would be required to be contained
in such form, such report to be certified by the chief
financial officer or the chief accounting officer of the
Company or Energy Partners, as the case may be;
(b) as soon as available and in any event within
90 days after the end of the relevant fiscal year, the
consolidated financial statements of each of (i) Energy
Partners and its consolidated Subsidiaries and (ii) the
Company and its consolidated Subsidiaries for each fiscal
year as filed with the SEC on Form 10-K (or any form which
replaces Form 10-K) containing financial statements
accompanied by the report thereon by Coopers & Lybrand or
other independent public accountants of recognized national
standing, or if the Company or Energy Partners is not
required to file any such form with the SEC, the financial
information that would be required to be contained in such
form accompanied by a report thereon by Coopers & Lybrand or
other independent public accountants of recognized national
standing;
(c) at the time of the delivery of the financial
statements provided for in Section 7.01(a) and (b), a
certificate of the chief financial officer or the treasurer
of the Company to the effect that, to the best of his
knowledge, no Default or Event of Default has occurred and
is continuing or, if any Default or Event of Default has
occurred and is continuing, specifying the nature and extent
thereof and what type of remedial action is being taken with
respect thereto and which certificate shall set forth the
calculations required to establish whether the Company was
in compliance with the provisions of Sections 7.10 and, if
the Company has any Non-Restricted Subsidiary, 7.14(g) at
the end of such fiscal quarter or year, as the case may be,
and which certificate shall further set forth the
calculation of the Total Indebtedness to Cash Flow Ratio as
of the end of such fiscal quarter or year, as the case may
be;
(d) promptly after the sending or filing thereof,
copies of all reports which the Company or Energy Partners
sends to its stockholders or unitholders generally, as the
case may be, and copies of all reports and registration
statements which the Company or Energy Partners files with
the SEC;
(e) promptly upon request, such geophysical,
geological and petroleum engineering data concerning the
Proved Borrowing Base Reserves as any Bank through the
Administrative Agent shall reasonably request; and
(f) with reasonable promptness, such further
information regarding the condition or operations, financial
or otherwise, of the Company and its Subsidiaries (including
any such information relevant to any Borrowing Base
Determination) as any Bank through the Administrative Agent
may from time to time reasonably request.
7.02 Notices. (a) Promptly, and in any event within
three Business Days after an officer of the Company obtains
knowledge thereof, the Company will deliver to the Administrative
Agent (with sufficient copies for each Bank) notice of (i) the
occurrence of any event which constitutes a Default or Event of
Default, (ii) any litigation or governmental proceeding pending
(x) against the Company or any of its Subsidiaries which
(individually or in the aggregate) is or becomes reasonably
likely to have a Material Adverse Effect or (y) with respect to
this Agreement and (iii) any other event which (individually or
in the aggregate) is or becomes reasonably likely to have a
Material Adverse Effect.
(b) If, as a result of any borrowing of Loans (after
giving effect to the application of proceeds thereof) or the
issuance of any Letter of Credit, the aggregate amount of Loans
and L/C Obligations shall be increased, the Company shall deliver
to the Administrative Agent, concurrently with the relevant
Notice of Borrowing, Bid Loan Confirmation or Application, as the
case may be, a calculation in reasonable detail showing the
amount of the Available Commitment after giving effect to such
borrowing or issuance.
7.03 Corporate Franchises. The Company and its
consolidated Subsidiaries will continue to engage primarily in
the oil and gas business and the Company will, and will cause
each of its consolidated Subsidiaries to do or cause to be done,
all things necessary to preserve and keep in full force and
effect its existence and its material rights, franchises,
licenses and patents, except to the extent that failure to do or
cause to be done any of the foregoing (individually or in the
aggregate) is not reasonably likely to have a Material Adverse
Effect. Nothing in this Section 7.03 shall prevent the merger of
Subsidiaries into the Company or with or into another Subsidiary
or the withdrawal by the Company or any of its Subsidiaries of
its qualification as a foreign corporation in any jurisdiction,
provided that such merger or withdrawal could not reasonably be
expected to have a Material Adverse Effect.
7.04 Payment of Taxes, Etc. The Company shall pay and
discharge, and cause each Subsidiary to pay and discharge, all
taxes, assessments and governmental charges or levies imposed
upon it or upon its income or profits, or upon any properties
belonging to it, shown to be due and payable by the Company or
such Subsidiary on its tax returns, prior to the date on which
penalties attach thereto, and all lawful claims which, if unpaid,
might become a Lien upon any properties of the Company or any
Restricted Subsidiary, or maintain adequate reserves with respect
thereto in accordance with GAAP, except to the extent that
failure to pay or discharge or cause to be paid or discharged any
of the foregoing (individually or in the aggregate) is not
reasonably likely to have a Material Adverse Effect, provided
that neither the Company nor any Subsidiary shall be required to
pay any such tax, assessment, charge, levy or claim which is
being contested in good faith and by proper proceedings and for
which adequate reserves in accordance with GAAP have been
provided.
7.05 Compliance with Laws, Etc. The Company shall
comply, and cause each Subsidiary to comply, with the
requirements of all applicable laws (including ERISA and
environmental laws), rules, regulations and orders of any
Governmental Authority, non-compliance with which (individually
or in the aggregate) is reasonably likely to have a Material
Adverse Effect.
7.06 Maintenance of Property; Insurance. The Company
shall, and shall cause each Subsidiary to, keep all property
useful or necessary in its business in good working order and
condition (ordinary wear and tear excepted). The Company shall
maintain, and cause each Subsidiary to maintain, insurance on its
property with responsible and reputable insurance companies or
associations covering such risks (but including in any event
property, general liability and environmental liability), and in
such amounts as are in accordance with normal industry practice.
7.07 Liens, Etc. The Company shall not, and shall not
permit any Subsidiary to, create, incur, assume or suffer to
exist, any Lien (other than Permitted Liens) upon or with respect
to any property or assets (real or personal, tangible or
intangible) now owned or hereafter acquired by the Company or any
of its Subsidiaries and securing any Indebtedness.
7.08 Fundamental Changes. (a) The Company shall not
enter into any merger, consolidation or amalgamation, unless:
(i) the Company shall be the continuing Person;
(ii) no Default or Event of Default shall have occurred
and be continuing or would result therefrom; and
(iii) the Company shall have delivered to the
Administrative Agent (x) a certificate of an officer of the
Company and (y) a legal opinion from counsel reasonably
satisfactory to the Administrative Agent, in each case to
the effect that such transaction complies with the
requirements of this Section 7.08(a).
(b) None of the Company, Energy Partners or SOLP shall
liquidate, wind up or dissolve itself (or suffer any liquidation
or dissolution of itself), or convey, sell, lease, assign,
transfer or otherwise dispose of all or substantially all of its
property, business or assets; provided that, Energy Partners or
SOLP may engage in any of the foregoing transactions so long
after giving effect thereto, the beneficial ownership interest of
the Company in the assets of Energy Partners or SOLP, as the case
may be, is not decreased.
7.09 Indebtedness. (a) The Company shall not, and
shall not permit any Subsidiary to, contract, create, incur or
assume any Indebtedness (collectively, an "Incurrence of
Indebtedness"), or suffer to exist any Indebtedness, on any date
when the aggregate amount of Borrowing Base Indebtedness either
(i) exceeds the Borrowing Base then in effect or (ii) in the case
of any Incurrence of Indebtedness, would exceed the Borrowing
Base then in effect after giving effect to such Incurrence of
Indebtedness and to any application of the proceeds thereof on
such date. Notwithstanding the foregoing, (A) in no event shall
the aggregate principal amount of Indebtedness of the Restricted
Subsidiaries of the Company (other than (1) any EIB Indebtedness
in an aggregate principal amount not to exceed $100,000,000, (2)
any FEC Indebtedness in an aggregate principal amount not to
exceed $50,000,000 and (3) any Indebtedness owing to the Company
or any other Subsidiary) exceed $20,000,000 at any one time
outstanding for all such Restricted Subsidiaries and (B) all
Indebtedness of the Company to any Subsidiary and of any
Subsidiary to the Company or any other Subsidiary shall be
evidenced by a note (or other appropriate instrument) or an
account entry clearly identifying its character as a liability.
(b) The Company shall, and shall cause its Restricted
Subsidiaries to, apply all net cash proceeds generated from the
sale of assets to reduce Borrowing Base Indebtedness until the
aggregate principal amount of outstanding Consolidated Debt of
the Company and its consolidated Subsidiaries is less than
$1,300,000,000; provided, however, that:
(i) for purposes of the foregoing, the net cash
proceeds from any asset sale shall be determined after
deducting, without limitation, all costs and expenses
incurred in connection with such asset sale, any
liabilities or other obligations required to be paid as
a result of such asset sale, and reasonable reserves
for any taxes resulting from such asset sale and for
any other liabilities (including contingent
liabilities) or obligations retained or incurred in
connection with such asset sale;
(ii) the foregoing shall not apply to (A) sales
of assets in the ordinary course of business, which
shall be deemed to include, without limitation, any
sale of assets or related sales of assets for an
aggregate consideration of less than $1,000,000 or (B)
any sale of assets by the Company to a Subsidiary, or
by a Subsidiary to the Company or to another
Subsidiary;
(iii) if the net cash proceeds from any asset
sale are required by the foregoing provisions of this
Section to be applied to reduce Borrowing Base
Indebtedness and the amount of such net cash proceeds,
together with the amount of any net cash proceeds from
previous asset sales not yet so applied by reason of
this clause (iii), is less than $10,000,000, then the
Company shall not be required to apply such net cash
proceeds to reduce Borrowing Base Indebtedness until
the aggregate amount of net cash proceeds required to
be so applied exceeds $10,000,000 in which case all
such net cash proceeds shall be so applied;
(iv) the Company shall have the discretion to
determine which Borrowing Base Indebtedness will be
reduced and, upon being required to reduce Borrowing
Base Indebtedness, may delay the reduction of Borrowing
Base Indebtedness for a period of up to 120 days in
order to provide for the giving of prepayment notices,
or to minimize prepayment premiums, or for other
reasons in order to provide for the orderly reduction
of Borrowing Base Indebtedness;
(v) the foregoing shall not be construed as
restricting the incurrence of Indebtedness; and
(vi) the obligations of the Company under this
Section 7.09(b) shall terminate on the first date that
Consolidated Debt is less than $1,300,000,000 and shall
not apply thereafter, regardless of any subsequent
increase in Consolidated Debt.
(c) Until (i) the aggregate principal amount of
outstanding Consolidated Debt of the Company and its consolidated
Subsidiaries is less than $1,300,000,000 and (ii) either the
Borrowing Base Coverage Ratio is at least 1.75 to 1 or a
Borrowing Base Determination occurs subsequent to the Initial
Borrowing Base Determination, the Company shall not, and shall
not permit any Restricted Subsidiary to, incur any additional
Funded Indebtedness or refinance existing Funded Indebtedness
unless such additional or refinanced Funded Indebtedness has a
weighted average maturity that, measured from the date such
additional or refinanced Funded Indebtedness is incurred, extends
at least six months after the Commitment Termination Date;
provided, however, that:
(A) up to $25,000,000 of Funded Indebtedness may be
incurred or refinanced without regard to the foregoing
restrictions; and
(B) upon satisfaction of the conditions set forth in
clauses (i) and (ii) of this Section 7.09(c), the
obligations of the Company under this Section 7.09(c) shall
terminate and shall not apply thereafter, regardless of any
subsequent increase in Consolidated Debt or decrease in the
Borrowing Base Coverage Ratio.
7.10 Interest Coverage. The Company shall not permit
the ratio of (a) Consolidated Adjusted EBITDA for any period of
four consecutive fiscal quarters (taken as one accounting period)
commencing with the four consecutive fiscal quarters ended June
30, 1995 to (b) Consolidated Interest Expense for such period of
four consecutive fiscal quarters (taken as one accounting period)
to be less than 3.00 to 1.
7.11 Limitation on Dividends, etc. The Company shall
not declare or pay any dividend (other than dividends payable
solely in common stock of the Company) on, or make any payment on
account of, or set apart assets for a sinking or other analogous
fund for the purchase, redemption, defeasance, retirement or
other acquisition of, any shares of any class of capital stock of
the Company or any warrants or options to purchase any such
capital stock, whether now or hereafter outstanding, or make any
other distribution in respect thereof, either directly or
indirectly, whether in cash or property or in obligations of the
Company or any Subsidiary, except, if no Event of Default or
Specified Default shall have occurred and be continuing, (i) the
Company may declare and pay (x) cash dividends on the common
stock of the Company in any fiscal year in an aggregate amount
not exceeding 35% of consolidated net income of the Company and
its consolidated Subsidiaries for the immediately preceding
fiscal year, if at the time of declaration of any such dividend
(i) the Company's shareholders' equity is at least $300,000,000
and (ii) the ratio of Total Indebtedness to Cash Flow shall be
less than or equal to 1.75 to 1.0 (y) cash dividends on the
Series A Preference Stock and the Series B Preference Stock of
the Company and (z) dividends on preferred stock of the Company,
provided that if an Event of Default or Specified Default shall
have occurred and be continuing the Company may in any event pay
any such dividends referred to in the foregoing clauses (x), (y)
and (z) that were declared prior to the occurrence of such Event
of Default or Specified Default and (ii) the Company may make
payments to repurchase options to purchase common stock of the
Company issued to its officers or employees, provided that the
aggregate amount of such payments shall not exceed $1,000,000 in
any fiscal year.
7.12 No Further Negative Pledges. The Company shall
not, and shall not permit any Subsidiary to, enter into any
agreement with respect to its Indebtedness which would limit the
ability of the Company or any of its Restricted Subsidiaries to
grant Liens upon their respective properties or assets, whether
now owned or hereafter acquired, securing the Indebtedness
incurred by the Company under this Agreement; provided, that any
agreement relating to Indebtedness which provides (an "Equal and
Ratable Provision") that Liens may secure other Indebtedness of
the Company or its Subsidiaries if such Liens equally and ratably
secure the Indebtedness incurred under such agreement shall be
deemed not to constitute such a limitation (provided that in no
event shall any such Equal and Ratable Provision require that
Liens incurred pursuant to such Provision in respect of the
assets of the Company or any Restricted Subsidiary secure all or
any portion of the Indebtedness of any Non-Restricted
Subsidiary), and provided, further, that any such limitations
contained in agreements relating to Indebtedness secured by Liens
permitted by Section 7.07 shall not be prohibited by the
provisions of this Section 7.12 if such limitations apply only to
the properties or assets covered by such Liens.
7.13 Inspection of Property; Books and Records;
Discussions. The Company shall, and shall cause each of its
Subsidiaries to, keep proper books of records and account in
which full, true and correct entries in conformity with GAAP and
all Requirements of Law shall be made of all dealings and
transactions in relation to its business and activities; and
permit representatives of the Administrative Agent, any Co-Agent
or any Bank designated as a lead manager at any reasonable time
and as often as may reasonably be desired to visit and inspect
any of its properties and examine and make abstracts from any of
its books and records and to discuss the business, operations,
properties and financial and other condition of the Company and
its Subsidiaries with officers and employees of the Company and
its Subsidiaries.
7.14 Limitation on Investments, Loans and Advances.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, make any advance, loan, extension of credit or
capital contribution to, or purchase any stock, bonds, notes,
debentures or other securities of, or make any other investment
in, any Person (all of the foregoing being herein called
"Investments"), except:
(a) accounts receivable arising in the ordinary
course of business;
(b) Investments in Cash Equivalents;
(c) Indebtedness of the Company or any of its
Subsidiaries permitted by Section 7.09;
(d) Investments by the Company in its Restricted
Subsidiaries (including Persons who thereby become
Restricted Subsidiaries) and in the Company's 50%-owned
Affiliates owning assets included in the Borrowing Base
Assets and investments by Restricted Subsidiaries of
the Company in other Restricted Subsidiaries of the
Company and in the Company's 50%-owned Affiliates
owning assets included in the Borrowing Base Assets;
(e) Investments in the nature of debt obligations
received by the Company or any of its Restricted
Subsidiaries in connection with sales or other dispositions
of assets;
(f) Investments by the Company or any Restricted
Subsidiary in joint ventures and other investment
vehicles (other than Subsidiaries) primarily formed to
acquire, develop or market (or invested in primarily as
a means of acquiring, developing or marketing) Oil and
Gas Interests and related facilities;
(g) Investments by the Company or any Restricted
Subsidiary in Non-Restricted Subsidiaries, provided, that
any such Investment to be made in cash shall not be
permitted unless after giving effect thereto the Net
Investment Amount shall not exceed 5% of Consolidated Cash
Flow for the immediately preceding fiscal year;
(h) Investments taken by the Company or any of its
Restricted Subsidiaries in connection with past due accounts
in accordance with prudent business practices; and
(i) other Investments not to exceed $15,000,000 at any
one time outstanding.
7.15 Limitation on Affiliate Transactions. The
Company shall not, nor shall it permit any of its Restricted
Subsidiaries to, enter into any transaction (including, without
limitation, any purchase, sale or exchange of property or the
rendering of any services, but excluding any Investment permitted
by Section 7.14(g)) with any Subsidiary (other than a Wholly
Owned Restricted Subsidiary of the Company or of such Restricted
Subsidiary) or Affiliate of the Company, unless such transaction
is not otherwise prohibited under this Agreement and is upon fair
and reasonable terms no less favorable to the Company or such
Restricted Subsidiary than it would obtain in a comparable
arm's-length transaction with a Person not a Subsidiary or an
Affiliate.
7.16 Energy Partners and SOLP. The Company shall at
all times maintain a 95% or greater ownership interest in each of
Energy Partners (whether through general partnership interests or
limited partnership units or both) and SOLP; provided, however,
that the foregoing shall not be construed to prevent the
liquidation or dissolution of Energy Partners or SOLP in
accordance with Section 7.08(b).
7.17 Maintenance of Corporate Separateness. The
Company shall, and shall cause each of its Subsidiaries that has
any significant business activities or any significant
indebtedness or liabilities to, satisfy customary corporate
formalities, including the holding of regular board of directors'
and shareholders' meetings and the maintenance of corporate
offices and records. No account of a Non-Restricted Subsidiary
with any bank or other financial institution shall be commingled
with any account of the Company or any of its Restricted
Subsidiaries with any bank or other financial institution. Any
financial statements distributed to any creditors of a Non-
Restricted Subsidiary shall clearly establish the separateness of
such Non-Restricted Subsidiary from the Company and its
Restricted Subsidiaries. Neither the Company nor any of its
Subsidiaries shall take any action, or conduct its affairs in a
manner, which could reasonably be expected to result in the
separate corporate existence of any Non-Restricted Subsidiary
being ignored, or the assets and liabilities of the Company or
any Restricted Subsidiary being substantively consolidated with
those of any Non-Restricted Subsidiary in a bankruptcy,
reorganization or other insolvency proceeding.
SECTION 8. Events of Default.
Upon the occurrence of any of the following specified
events (each an "Event of Default"):
8.01 Principal. The Company shall default in (a) the
payment when due of any principal of any Loan or any
Reimbursement Obligation or (b) the due performance of its
obligations under Section 3.02(a); or
8.02 Interest and Other Amounts. The Company shall
default in the payment of interest in respect of any Loan or any
Reimbursement Obligation or in the payment of any fees or other
amounts payable under or with respect to this Agreement, and such
default shall continue unremedied for 5 days after the date when
due; or
8.03 Representations and Warranties. Any
representation or warranty made by the Company herein or in any
writing furnished pursuant to this Agreement by the Company shall
prove to be untrue in any material respect on the date as of
which made or deemed made; or
8.04 Certain Covenants. The Company shall default in
the due performance or observance by it of any term, covenant or
agreement contained in Sections 7.02(a)(i), 7.08, 7.10, 7.11,
7.12 and 7.16 and notice thereof shall have been given to the
Company by the Administrative Agent or the Required Banks; or
8.05 Covenants. The Company shall default in the due
performance or observance by it of any term, covenant or
agreement contained in this Agreement (other than those referred
to in Sections 8.01, 8.02, 8.03 and 8.04) and such default shall
continue unremedied for a period of 30 days after notice thereof
shall have been given to the Company by the Administrative Agent
or the Required Banks; or
8.06 Indebtedness. (a) The Company or any of its
Material Restricted Subsidiaries shall (i) fail to pay any
principal of or interest on its outstanding Indebtedness (other
than the Loans) when due (or, if permitted by the terms of the
relevant documents, within any applicable grace period) in an
aggregate amount in excess of $25,000,000, or (ii) default in the
observance or performance of any agreement or condition relating
to any Indebtedness in an aggregate amount in excess of
$25,000,000 (other than the Loans) or any other event shall exist
or occur the effect of which default or other event is to
accelerate, or to permit the holders of such Indebtedness to
accelerate, such Indebtedness prior to its stated maturity, or
(b) any event (in the nature of a default or an event of default
or relating to the altered financial condition or prospects of
the Company) shall exist or occur which would permit the holder
of any Indebtedness of the Company or any of its Material
Restricted Subsidiaries (other than the Loans) to require the
Company or any of its Material Restricted Subsidiaries to repay
prior to its stated maturity, repurchase or redeem $25,000,000 or
more of any such Indebtedness or result in $25,000,000 or more of
any such Indebtedness becoming due and payable or subject to
repurchase or redemption prior to the stated maturity date
thereof; provided that no failure, default or event described in
this Section 8.06 occurring with respect to a Material Restricted
Subsidiary shall constitute an Event of Default unless and until
any one or more of such failures, defaults or events shall have
occurred with respect to Material Restricted Subsidiaries
contributing (individually or in the aggregate) at least 2.5% of
the NPV as determined in connection with the most recent
Borrowing Base Determination; or
8.07 Bankruptcy, Etc. The Company or any of its
Material Restricted Subsidiaries shall commence a voluntary case
concerning itself under Title 11 of the United States Code
entitled "Bankruptcy" as now or hereafter in effect, or any
successor thereto (the "Bankruptcy Code"); or an involuntary case
is commenced against the Company or any such Material Restricted
Subsidiary, and the petition is not controverted within 10 days,
or is not dismissed within 90 days, after commencement of the
case; or a custodian (as defined in the Bankruptcy Code) is
appointed for, or takes charge of, all or substantially all of
the property of the Company or any such Material Restricted
Subsidiary pursuant to a proceeding under the Bankruptcy Code, or
the Company or any such Material Restricted Subsidiary commences
any other proceeding under any reorganization, arrangement,
adjustment of debt, relief of debtors, dissolution, insolvency or
liquidation or similar law of any jurisdiction whether now or
hereafter in effect relating to the Company or any such Material
Restricted Subsidiary, or there is commenced against the Company
or any such Material Restricted Subsidiary any such proceeding
which remains undismissed for a period of 90 days, or the Company
or any such Material Restricted Subsidiary is adjudicated
insolvent or bankrupt; or any order of relief or other order
approving any such case or proceeding is entered; or the Company
or any such Material Restricted Subsidiary suffers any
appointment of any custodian or the like for it or any
substantial part of its property to continue undischarged or
unstayed for a period of 90 days; or the Company or any such
Material Restricted Subsidiary makes a general assignment for the
benefit of creditors; or any corporate action is taken by the
Company or any such Material Restricted Subsidiary for the
purpose of effecting any of the foregoing; provided that no event
described in this Section 8.07 occurring with respect to a
Material Restricted Subsidiary shall constitute an Event of
Default unless and until any one or more of such events shall
have occurred with respect to Material Restricted Subsidiaries
contributing (individually or in the aggregate) at least 2.5% of
the NPV as determined in connection with the most recent
Borrowing Base Determination; or
8.08 ERISA. Any Plan (other than a multiemployer plan
(as defined in Section 4001(a)(3) of ERISA)) shall fail to
maintain the minimum funding standard required for any plan year
or part thereof or a waiver of such standard or extension of any
amortization period is sought or granted under Section 412 of the
Code, any Plan is, shall have been or is likely to be terminated
or the subject of termination proceedings under ERISA, any
required contribution to a Plan shall not have been timely made,
or the Company or a Subsidiary or any ERISA Affiliate has
incurred or is likely to incur a liability to or on account of a
Plan under Section 515, 4062, 4063, 4064, 4201 or 4204 of ERISA,
and there shall result from any such event or events the
imposition of a Lien upon the assets of the Company or any of its
Subsidiaries or any ERISA Affiliate, the granting of a security
interest, or a liability or a material risk of incurring a
liability to the PBGC or the Internal Revenue Service or a Plan
or a trustee appointed under ERISA or a penalty under Section
4971 of the Code, which, in the opinion of the Required Banks,
will have a Material Adverse Effect; or
8.09 Judgments. A final judgment which, together with
other outstanding final judgments against the Company and/or its
Material Restricted Subsidiaries, exceeds an aggregate of
$25,000,000 (the "Judgment Amount") shall be entered against the
Company and/or any Material Restricted Subsidiary and (i) within
the Applicable Period after entry thereof such judgment or
judgments shall not have been discharged or execution thereof
stayed pending appeal or, within the Applicable Period after the
expiration of any such stay, such judgment or judgments shall not
have been discharged or (ii) any enforcement proceeding shall
have been commenced (and not stayed) by any creditor upon such
judgment or judgments; provided that no such judgment against any
Material Restricted Subsidiary shall be included in the Judgment
Amount unless one or more of such judgments have been entered
against Material Restricted Subsidiaries contributing
(individually or in the aggregate) at least 2.5% of the NPV as
determined in connection with the most recent Borrowing Base
Determination; or
8.10 Ownership; Directors. (a) Any Person (other
than the Company, a Subsidiary of the Company or any employee
benefit plan of the Company or any of its Subsidiaries) or group
(as such term is used in Section 13(d) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended) shall acquire,
directly or indirectly, beneficial ownership of an aggregate of
35% or more of the issued and outstanding common stock of the
Company or (b) during any period of two consecutive years, the
individuals (the "Initial Directors") who at the beginning of
such period constituted the Board of Directors of the Company
(together with any new directors of the Company whose election or
nomination was approved by a vote of at least two-thirds of such
Initial Directors or new directors so approved, or whose election
or nomination was so approved prior to such period) shall cease
for any reason to constitute 50% or more of the Board of
Directors of the Company;
then, and in any such event, and at any time thereafter, if any
Event of Default shall then be continuing, the Administrative
Agent, upon the written request of the Required Banks, shall by
written notice to the Company, take either or both of the
following actions, without prejudice to the rights of the
Administrative Agent, any Bank or the holder of any obligations
owing by the Company hereunder to enforce its claims against the
Company: (i) declare the Commitments to be terminated forthwith,
whereupon the Commitment of each Bank shall immediately
terminate; or (ii) declare the principal of and any accrued
interest in respect of the Loans, and all other obligations owing
hereunder (including, without limitation, all amounts of L/C
Obligations, whether or not the beneficiaries of the then
outstanding Letters of Credit shall have presented the documents
required thereunder), to be, whereupon the same shall become,
forthwith due and payable without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by the
Company; provided that, if an Event of Default specified in
Section 8.07 shall occur with respect to the Company, the result
which would occur upon the giving of written notice by the
Administrative Agent to the Company, as specified in clauses (i)
and (ii) above, shall occur automatically without the giving of
any such notice. With respect to all Letters of Credit with
respect to which presentment for honor shall not have occurred at
the time of an acceleration pursuant to the preceding provisions
of this Section 8, the Company shall at such time deposit in a
cash collateral account opened by the Administrative Agent an
amount equal to the aggregate then undrawn and unexpired amount
of such Letters of Credit. Amounts held in such cash collateral
account shall be applied by the Administrative Agent to the
payment of drafts drawn under such Letters of Credit, and the
unused portion thereof after all such Letters of Credit shall
have expired or been fully drawn upon, if any, shall be applied
to repay other obligations of the Company hereunder. After all
such Letters of Credit shall have expired or been fully drawn
upon, all Reimbursement Obligations shall have been satisfied and
all other obligations of the Company hereunder shall have been
paid in full, the balance, if any, in such cash collateral
account shall be returned to the Company.
SECTION 9. The Administrative Agent and the Co-Agents.
9.01 Appointment. Each Bank hereby irrevocably
designates and appoints Barclays Bank PLC as the Administrative
Agent of such Bank under this Agreement. Each Bank hereby
irrevocably designates and appoints Bank of America National
Trust and Savings Association, Barclays Bank PLC, Morgan Guaranty
Trust Company of New York and NationsBank of Texas, N.A., as the
Co-Agents of such Bank under this Agreement. Each Bank hereby
irrevocably authorizes Barclays Bank PLC, as the Administrative
Agent for such Bank, to take such action on its behalf under the
provisions of this Agreement and to exercise such powers and
perform such duties as are expressly delegated to the
Administrative Agent by the terms of this Agreement, together
with such other powers as are reasonably incidental thereto.
Each Bank hereby irrevocably authorizes each of Bank of America
National Trust and Savings Association, Barclays Bank PLC, Morgan
Guaranty Trust Company of New York and NationsBank of Texas,
N.A., as Co-Agent for such Bank, to take such action on its
behalf under the provisions of this Agreement and to exercise
such powers and perform such duties as are expressly delegated to
the Co-Agents by the terms of this Agreement, together with such
other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this
Agreement, neither the Administrative Agent nor the Co-Agents
shall have any duties or responsibilities, except those expressly
set forth herein, or any fiduciary relationship with any Bank,
and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or
otherwise exist against the Administrative Agent or any Co-Agent.
9.02 Delegation of Duties. The Administrative Agent
and each Co-Agent may execute any of its duties under this
Agreement by or through agents or attorneys-in-fact and shall be
entitled to advice of counsel concerning all matters pertaining
to such duties. Neither the Administrative Agent nor any Co-
Agent shall be responsible for the negligence or misconduct of
any agents or attorneys-in-fact selected by it with reasonable
care.
9.03 Exculpatory Provisions. Neither the
Administrative Agent nor any Co-Agent nor any of their respective
officers, directors, employees, agents, attorneys-in-fact or
affiliates nor any member of the Engineering Committee shall be
(i) liable for any action lawfully taken or omitted to be taken
by it or such Person under or in connection with this Agreement
(including but not limited to any such Person's negligent actions
or omissions, but excluding such Person's own gross negligence or
willful misconduct) or (ii) responsible in any manner to any of
the Banks for any recitals, statements, representations or
warranties made by the Company or any officer thereof contained
in this Agreement or in any certificate, report, statement or
other document referred to or provided for in, or received by the
Administrative Agent or any Co-Agent under or in connection with,
this Agreement or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or
for any failure of the Company to perform its obligations
hereunder or thereunder. Neither the Administrative Agent nor
any Co-Agent shall be under any obligation to any Bank to
ascertain or to inquire as to the observance or performance of
any of the agreements contained in, or conditions of, this
Agreement, or to inspect the properties, books or records of the
Company.
9.04 Reliance by Administrative Agent and the Co-
Agents. Each of the Administrative Agent and the Co-Agents shall
be entitled to rely, and shall be fully protected in relying,
upon any writing, resolution, notice, consent, certificate,
affidavit, letter, cablegram, telegram, telecopy, telex or
teletype message, statement, order or other document or
conversation believed by it to be genuine and correct and to have
been signed, sent or made by the proper Person or Persons and
upon advice and statements of legal counsel (including, without
limitation, counsel to the Company), independent accountants and
other experts selected by the Administrative Agent or such Co-
Agent. Each of the Administrative Agent and the Co-Agents may
deem and treat the Bank specified in the Register with respect to
any amount owing hereunder as the owner thereof for all purposes
unless a written notice of assignment, negotiation or transfer
thereof shall have been filed with the Administrative Agent or
such Co-Agent. Each of the Administrative Agent and the Co-
Agents shall be fully justified in failing or refusing to take
any action under this Agreement unless it shall first receive
such advice or concurrence of the Required Banks as it deems
appropriate or it shall first be indemnified to its satisfaction
by the Banks against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any
such action. Each of the Administrative Agent and the Co-Agents
shall in all cases be fully protected in acting, or in refraining
from acting, under this Agreement in accordance with a request of
the Required Banks, or all Banks, as the case may be, and such
request and any action taken or failure to act pursuant thereto
shall be binding upon all the Banks and all future holders of the
obligations owing by the Company hereunder.
9.05 Notice of Default. Neither the Administrative
Agent nor any Co-Agent shall be deemed to have knowledge or
notice of the occurrence of any Default or Event of Default
hereunder unless the Administrative Agent or such Co-Agent has
received notice from a Bank or the Company referring to this
Agreement, describing such Default or Event of Default and
stating that such notice is a "notice of default". In the event
that the Administrative Agent receives such a notice, the
Administrative Agent shall give notice thereof to the Banks. The
Administrative Agent shall take such action with respect to such
Default or Event of Default as shall be reasonably directed by
the Required Banks; provided that unless and until the
Administrative Agent shall have received such directions, the
Administrative Agent may (but shall not be obligated to) take
such action, or refrain from taking such action, with respect to
such Default or Event of Default as it shall deem advisable in
the best interests of the Banks.
9.06 Non-Reliance on Administrative Agent, Co-Agents
and Other Banks. Each Bank expressly acknowledges that neither
the Administrative Agent nor any Co-Agent nor any of their
respective officers, directors, employees, agents, attorneys-in-
fact or affiliates has made any representations or warranties to
it and that no act by the Administrative Agent or any Co-Agent
hereinafter taken, including any review of the affairs of the
Company, shall be deemed to constitute any representation or
warranty by the Administrative Agent or such Co-Agent to any
Bank. Each Bank represents to the Administrative Agent and each
Co-Agent that it has, independently and without reliance upon the
Administrative Agent or such Co-Agent or any other Bank, and
based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the
business, operations, property, financial and other condition and
creditworthiness of the Company and made its own decision to make
its Loans hereunder and issue or participate in Letters of Credit
hereunder and enter into this Agreement. Each Bank also
represents that it will, independently and without reliance upon
the Administrative Agent or any Co-Agent or any other Bank, and
based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit
analysis, appraisals and decisions in taking or not taking action
under this Agreement, and to make such investigation as it deems
necessary to inform itself as to the business, operations,
property, financial and other condition and creditworthiness of
the Company. Except for notices, reports and other documents
expressly required to be furnished to the Banks by the
Administrative Agent hereunder, neither the Administrative Agent
nor any Co-Agent shall have any duty or responsibility to provide
any Bank with any credit or other information concerning the
business, operations, property, condition (financial or
otherwise), prospects or creditworthiness of the Company which
may come into the possession of the Administrative Agent or any
Co-Agent or any of their respective officers, directors,
employees, agents, attorneys-in-fact or affiliates.
9.07 Indemnification. The Banks agree to indemnify
each of the Administrative Agent and Co-Agents in its capacity as
such (to the extent not reimbursed by the Company and without
limiting the obligation of the Company to do so), ratably
according to the respective amounts of their original
Commitments, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind whatsoever
(in this Section 9.07 collectively called "liabilities and
disbursements") which may at any time (including, without
limitation, at any time following the payment of the amounts
owing hereunder) be imposed on, incurred by or asserted against
the Administrative Agent or any Co-Agent in any way relating to
or arising out of this Agreement or any documents contemplated by
or referred to herein or therein or the transactions contemplated
hereby or thereby or any action taken or omitted by the
Administrative Agent or any Co-Agent under or in connection with
any of the foregoing, regardless of whether such liabilities and
disbursements are caused by the negligent actions or omissions to
act of the Administrative Agent or any Co-Agent; provided that no
Bank shall be liable for the payment of any portion of such
liabilities and disbursements resulting solely from the
Administrative Agent's or such Co-Agent's (as the case may be)
gross negligence or willful misconduct. The agreements in this
Section 9.07 shall survive the payment of the Loans and all other
amounts payable hereunder.
9.08 Administrative Agent and Co-Agent in their
Individual Capacities. Each of the Administrative Agent and the
Co-Agents and their respective affiliates may make loans to,
accept deposits from and generally engage in any kind of business
with the Company as though the Administrative Agent or such
Co-Agent were not the Administrative Agent or Co-Agent hereunder.
With respect to its Loans made or renewed by it and with respect
to any Letter of Credit issued or participated in by it, the
Administrative Agent and each Co-Agent shall have the same rights
and powers under this Agreement as any Bank and may exercise the
same as though it were not the Administrative Agent or Co-Agent,
and the terms "Bank" and "Banks" shall include the Administrative
Agent and each Co-Agent in their individual capacity.
9.09 Successor Administrative Agent or Co-Agent.
(a) The Administrative Agent may resign as Administrative Agent
upon 15 days' notice to the Company and the Banks. If the
Administrative Agent shall resign as Administrative Agent under
this Agreement, then the Co-Agents shall appoint from among the
Banks a successor agent for the Banks acceptable to the Required
Banks and the Company, whereupon such successor agent shall
succeed to the rights, powers and duties of the Administrative
Agent, and the term "Administrative Agent" shall mean such
successor agent effective upon its appointment, and the former
Administrative Agent's rights, powers and duties as
Administrative Agent shall be terminated, without any other or
further act or deed on the part of such former Administrative
Agent or any of the parties to this Agreement or any holders of
the obligations owing hereunder. If a successor Administrative
Agent shall not have been so appointed within said 15 day period,
the Administrative Agent may then appoint a successor
Administrative Agent acceptable to the Company and the Co-Agents
who shall serve as Administrative Agent hereunder until such
time, if any, as a successor Administrative Agent is appointed as
provided above. If no successor Administrative Agent has been
appointed by the 20th day after the date such notice of
resignation was given by the Administrative Agent, the
Administrative Agent's resignation shall become effective and the
Banks shall thereafter perform all the duties of the
Administrative Agent hereunder until such time, if any, as a
successor Administrative Agent is appointed as provided above.
After any retiring Administrative Agent's or Co-Agent's
resignation as Administrative Agent or Co-Agent, as the case may
be, the provisions of this Section 9 shall inure to its benefit
as to any actions taken or omitted to be taken by it while it was
Administrative Agent or Co-Agent, as the case may be, under this
Agreement.
(b) Any Co-Agent may resign as Co-Agent upon 15 days'
notice to the Administrative Agent, the Company and the Banks.
The resignation of any Co-Agent shall be effective without any
further act or deed on the part of such Co-Agent or any other
party hereto. If at any time there shall be less than three
Co-Agents, the Company and the remaining Co-Agents shall, with
the consent of the Required Banks, select a new Co-Agent so that
at all times there shall be at least three Co-Agents.
SECTION 10. Definitions.
As used herein, the following terms shall have the
meanings herein specified unless the context otherwise requires.
As used herein, the respective meanings of terms relating to
Petroleum reserves not otherwise defined herein shall be
determined in accordance with the standards and practices of The
Society of Petroleum Engineers. Defined terms in this Agreement
shall include in the singular number the plural and the plural
number the singular.
"Absolute Rate Bid Loan Request" shall mean any Bid
Loan Request requesting the Banks to offer to make Bid Loans
at an absolute rate (as opposed to a rate composed of the
Applicable Index Rate plus (or minus) a margin).
"Additional Charges" shall have the meaning provided in
Section 11.15(b).
"Adjusted Borrowing Base Assets" shall mean, at any
time of the determination thereof, the NPV of the Borrowing
Base Assets as of December 31, 1994, as set forth in the
Initial Reserve and NPV Report, reduced by the NPV
attributable to any such Borrowing Base Assets which are the
subject of an Asset Sale, Other Exchange or Asset
Reclassification or Subsidiary Reclassification after
December 31, 1994.
"Administrative Agent" shall have the meaning provided
in the first paragraph of this Agreement.
"Affiliate" of any Person shall mean (a) any Person
(other than a Subsidiary of such Person) that, directly or
indirectly, is in control of, is controlled by, or is under
common control with, such Person or (b) any Person who is a
director or officer of (i) such Person, (ii) any Subsidiary
of such Person or (iii) any Person described in clause (a)
above. For purposes of this definition, control of a Person
shall mean the power, direct or indirect, to direct or cause
the direction of the management and policies of such Person
whether by contract or otherwise.
"Aggregate Exposure" shall mean, at any time, an amount
equal to the sum of (a) the aggregate principal amount of
all Revolving Credit Loans then outstanding, (b) the
aggregate amount of L/C Obligations then outstanding, (c)
the aggregate principal amount of all Bid Loans then
outstanding and (d) the Commercial Paper Exposure, all
determined after giving effect, to the extent applicable, to
any repayment or expiration of the relevant Extensions of
Credit occurring on the date of determination.
"Agreement" shall mean this Revolving Credit Agreement
as the same may hereafter be modified, supplemented or
amended from time to time.
"Alternate Borrowing Base" shall have the meaning
provided in Section 2.03(b)(viii).
"Alternate Currency" shall mean pounds sterling in the
lawful currency of the United Kingdom.
"Alternate Currency Letter of Credit" shall have the
meaning set forth in Section 4.01(c).
"Alternate Redetermined Borrowing Base" shall have the
meaning provided in Section 2.03(c)(ii).
"Applicable Index Rate" shall mean in respect of any
Index Rate Bid Loan of a specified maturity requested
pursuant to an Index Rate Bid Loan Request (a) the average
of the offered quotation by leading banks in the interbank
Eurodollar market to each of the Reference Banks for
U.S. dollar deposits of amounts in immediately available
funds comparable to the principal amount of such Index Rate
Bid Loan with a maturity comparable to the maturity
applicable to such Index Rate Bid Loan, commencing two
Business Days thereafter, which offered quotation shall be
determined as of 10:00 a.m. (New York time) on the date
which is two Business Days prior to the Borrowing Date with
respect to such Index Rate Bid Loan, provided that, if any
Reference Bank fails to provide the Administrative Agent
with its aforesaid quotation, the Applicable Index Rate
shall be based on the quotation or quotations provided to
the Administrative Agent by the other Reference Banks,
divided (and rounded up to the nearest 1/100 of 1%) by (b) a
percentage equal to 100% minus the then stated maximum rate
of all reserve requirements (including, without limitation,
any marginal, emergency, supplemental, special or other
reserves) applicable to any member bank of the Federal
Reserve System in respect of Eurocurrency liabilities as
defined in Regulation D.
"Applicable Margin" shall mean, for each Type of Loan,
at any time, the applicable rate per annum based on the then
applicable Total Indebtedness to Cash Flow Ratio as set
forth on the Pricing Grid.
"Applicable Period" shall mean (i) in the case of a
judgment entered by a U.S. Federal or state court, 60 days
and (ii) in the case of a judgment entered by any other
court, 90 days.
"Application" shall mean an application, in such form
as the Issuing Bank may specify from time to time,
requesting the Issuing Bank to issue a Letter of Credit.
"Asset Reclassification" shall have the meaning
provided in the definition of the term "Transfer Amount".
"Asset Sale" shall mean (without duplication) any sale,
assignment, lease or disposition (collectively,
"dispositions") of Oil and Gas Interests included in the
Borrowing Base Assets, except (a) dispositions of inventory
in the ordinary course of business, (b) farm-outs or other
similar arrangements (other than those involving Proved
Borrowing Base Reserves) in the ordinary course of business
and consistent with prudent industry practices,
(c) dispositions made by the Company or any of its
Subsidiaries to the Company, a Wholly Owned Restricted
Subsidiary or a Non-Restricted Subsidiary, (d) Like-Kind
Exchanges, (e) Other Exchanges and (f) net revenue interests
granted to suppliers in payment for (or to third parties in
consideration of payments to pay suppliers for) services or
equipment to the extent that the expense thereof was
included in calculating NPV, provided that to the extent
that NPV shall be reduced as a result of such net interest
revenue grant such reduction shall constitute an "Asset
Sale".
"Asset Transfer Date" shall mean, (i) in the case of
any Asset Reclassification, the date on which Borrowing Base
Assets are sold, assigned or transferred to a Non-Restricted
Subsidiary, (ii) in the case of any Subsidiary
Reclassification, the date as of which any Restricted
Subsidiary is reclassified as a Non-Restricted Subsidiary
and (iii) in the case of any Asset Sale or Other Exchange,
the date of consummation of such Asset Sale or Other
Exchange.
"Assignment and Acceptance" shall mean an Assignment
and Acceptance, substantially in the form of Exhibit D.
"Assignment Effective Date" shall mean the "Effective
Date" as defined in any applicable Assignment and
Acceptance.
"Assumptions" shall mean price parameters, cost
escalations, discount rates and exchange rates and other
relevant economic factors and assumptions utilized in
calculating NPV.
"Available Commitment" shall mean at any time of the
determination thereof an amount equal to the excess, if any,
of (a) the Current Borrowing Base Amount over (b) the
Aggregate Exposure.
"Bank" shall have the meaning provided in the first
paragraph of this Agreement.
"Bankruptcy Code" shall have the meaning provided in
Section 8.07.
"Base Rate" shall mean, on any day, a fluctuating rate
per annum equal to the higher of (i) 1/2 of 1% plus the rate
set forth for such day opposite the caption "Federal Funds
(Effective)" in the weekly statistical release designated as
"H.15(519)", or any successor publication, published by the
Board of Governors of the Federal Reserve System and
(ii) the Prime Lending Rate.
"Base Rate Loans" shall mean each Revolving Credit Loan
bearing interest at the rates provided in Section 1.07(a).
"Bid Loan" shall mean each loan made pursuant to
Section 4.09; the aggregate amount advanced by a Bank
pursuant to Section 4.09 on each Borrowing Date shall
constitute one or more Bid Loans, as specified by such Bank
pursuant to Section 4.09(g).
"Bid Loan Assignees" shall have the meaning provided in
Section 11.04(c).
"Bid Loan Assignment" shall mean any assignment by a
Bank to a Bid Loan Assignee of a Bid Loan; any such Bid Loan
Assignment to be registered in the Register must set forth,
in respect of the Bid Loan Assignee thereunder, the full
name of such Bid Loan Assignee, its address for notices, its
lending office address (in each case with telephone, telex
and facsimile transmission numbers) and payment instructions
for all payments to such Bid Loan Assignee, and must contain
an agreement by such Bid Loan Assignee to comply with the
provisions of Section 11.04(c), 11.04(h) and 11.16 to the
same extent as any Bank.
"Bid Loan Confirmation" shall mean each confirmation by
the Company of its acceptance of Bid Loan Offers, which Bid
Loan Confirmation shall be substantially in the form of
Exhibit C-1 and shall be delivered to the Administrative
Agent in writing.
"Bid Loan Offer" shall mean each offer by a Bank to
make Bid Loans pursuant to a Bid Loan Request, which Bid
Loan Offer shall contain the information specified in
Exhibit C-2 and shall be delivered to the Administrative
Agent by telephone, immediately confirmed in writing.
"Bid Loan Request" shall mean each request by the
Company for Banks to submit bids to make Bid Loans, which
shall contain the information in respect of such requested
Bid Loans specified in Exhibit C-3 and shall be delivered to
the Administrative Agent in writing, or by telephone,
immediately confirmed in writing.
"Borrowing" shall mean the incurrence of one Type of
Revolving Credit Loan on a given date (or resulting from
conversions on a given date), having in the case of
Eurodollar Loans the same Interest Period, provided that
Base Rate Loans incurred pursuant to Section 1.09(b) shall
be considered part of any related Borrowing of Eurodollar
Loans.
"Borrowing Base" shall mean, (a) on any date prior to
the effective date of the first change to the Borrowing Base
occurring after the Effective Date pursuant to Section 2.03,
the amount designated as such in Section 2.03(a), and
(b) thereafter, the amount determined in accordance with
Section 2.03 and designated as such by the Administrative
Agent on the most recent Borrowing Base Notification Date,
which shall become effective as provided in Section 2.03(g),
in each case subject to any reductions that shall have
become effective pursuant to Section 2.03(c)(iii), (iv) or
(v).
"Borrowing Base Assets" shall mean all Proved Borrowing
Base Reserves, excluding any assets subject to any Lien
securing Indebtedness.
"Borrowing Base Coverage Ratio" shall mean, as at any
date of determination, the ratio of (a) Adjusted Borrowing
Base Assets to (b) the Borrowing Base.
"Borrowing Base Decrease" shall mean the circumstance
that, as a result of any Borrowing Base Determination, the
new Borrowing Base resulting from such Borrowing Base
Determination will be less than the Borrowing Base in effect
on the relevant Borrowing Base Voting Date or Borrowing Base
Redetermination Voting Date immediately prior to such
Borrowing Base Determination; the amount of a "Borrowing
Base Decrease" equals the amount by which such Borrowing
Base then in effect exceeds such new Borrowing Base.
"Borrowing Base Determination" shall be the collective
reference to the Initial Borrowing Base Determination, each
Scheduled Borrowing Base Determination and each Borrowing
Base Redetermination.
"Borrowing Base Indebtedness" shall be the collective
reference to the Extensions of Credit and Other Borrowing
Base Indebtedness.
"Borrowing Base Notification Date" shall mean any
Business Day on which the Company is notified in writing of
the amount of the Borrowing Base resulting from a Scheduled
Borrowing Base Determination or Borrowing Base
Redetermination.
"Borrowing Base Recommendation" shall have the meaning
provided in Section 2.03(b).
"Borrowing Base Redetermination" shall have the meaning
provided in Section 2.03(c)(i).
"Borrowing Base Redetermination Recommendation" shall
have the meaning provided in Section 2.03(c)(ii).
"Borrowing Base Redetermination Voting Date" shall have
the meaning provided in Section 2.03(c)(ii).
"Borrowing Base Voting Date" shall have the meaning
provided in Section 2.03(b)(viii).
"Borrowing Date" shall mean any Business Day specified
in a Notice of Borrowing or a Bid Loan Request, as the case
may be, as a date on which the Company requests the Banks to
make Loans hereunder.
"Business Day" shall mean (i) for all purposes other
than as covered by clause (ii) below, any day excluding
Saturday, Sunday and any day which shall be in the City of
New York or in the State of Texas a legal holiday or a day
on which banking institutions are authorized or required by
law or other government actions to close and (ii) with
respect to all notices and determinations in connection
with, and payments of principal and interest on, Eurodollar
Loans or Index Rate Bid Loans, any day which is a Business
Day described in clause (i) and which is also a day for
trading by and between banks in U.S. dollar deposits in the
interbank Eurodollar market.
"Capital Adequacy Requirement" shall mean any law or
governmental rule, regulation or order, or any governmental
guideline or requirement (whether or not having the force of
law), concerning capital adequacy.
"Capital Expenditures" shall mean all amounts that
would, in accordance with GAAP, be set forth as capital
expenditures on the consolidated statement of cash flows,
income statement or other similar statement of the Company
and its consolidated Restricted Subsidiaries.
"Cash Equivalents" shall mean (a) securities issued or
directly and fully guaranteed or insured by the United
States Government or any agency or instrumentality thereof
having maturities of not more than 6 months from the date of
acquisition thereof, (b) time deposits and certificates of
deposit having maturities of not more than 6 months from the
date of acquisition thereof issued by any commercial bank
having capital and surplus in excess of $500,000,000 that
has, or the holding company of which has, a commercial paper
rating meeting the requirements specified in clause (d)
below or a long-term debt rating of at least A or the
equivalent thereof by either Standard & Poor's Ratings
Group, a division of McGraw-Hill, Inc. (or any successor
statistical rating organization) ("S&P") or Moody's
Investors Service, Inc. (or any successor statistical rating
organization) ("Moody's"), (c) repurchase obligations with a
term of not more than 60 days for underlying securities of
the types described in clauses (a) and (b) above entered
into with any bank meeting the qualifications specified in
clause (b) above and (d) commercial paper rated at least A-2
or the equivalent thereof by S&P or P-2 or the equivalent
thereof by Moody's, and in either case maturing within 6
months after the date of acquisition thereof.
"Co-Agent" and "Co-Agents" shall have the meaning
provided in the first paragraph of this Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time. Section references to the Code
shall be to those sections as in effect at the Effective
Date and any subsequent provisions of the Code, amendatory
thereof, supplemental thereto or substituted therefor.
"Commercial Paper" shall mean any commercial paper
issued by the Company or any of its Restricted Subsidiaries.
"Commercial Paper Exposure" shall mean, at any time,
the lesser of (a) the aggregate principal amount of all
Commercial Paper then outstanding and (b) (i) the aggregate
Commitments then in effect minus (ii) the sum of (x) the
aggregate principal amount of all Revolving Credit Loans
then outstanding, (y) the aggregate amount of L/C
Obligations then outstanding and (z) the aggregate principal
amount of all Bid Loans then outstanding.
"Commitment" shall mean, as to any Bank, its obligation
to make Revolving Credit Loans and/or issue or participate
in Letters of Credit issued hereunder in an aggregate
principal and/or face amount (after giving effect, in the
case of a Letter of Credit, to the participations therein of
other Banks) at any one time outstanding not to exceed the
amount set forth opposite such Bank's name in Annex I under
the heading "Commitment", as the same may be reduced from
time to time; collectively, as to all the Banks, the
"Commitments".
"Commitment Fee" shall have the meaning provided in
Section 2.01.
"Commitment Percentage" shall mean, as to any Bank, the
percentage of the aggregate Commitments constituted by such
Bank's Commitment.
"Commitment Period" shall mean the period from and
including the Effective Date to but not including the
Commitment Termination Date.
"Commitment Termination Date" shall mean June 30, 1998
or such earlier date on which the Commitments shall
terminate hereunder.
"Company" shall have the meaning provided in the first
paragraph of this Agreement.
"Consolidated Adjusted EBITDA" shall mean, for any
period, the Consolidated EBIT of the Company and its
Subsidiaries for such period, adjusted by adding thereto the
amount of all non-cash expenses that were deducted in
arriving at such Consolidated EBIT for such period.
"Consolidated Cash Flow" shall mean, for any period,
the consolidated cash flow from operations before working
capital changes (determined in accordance with GAAP) of the
Company and its Restricted Subsidiaries for such period.
"Consolidated Debt" shall mean, as of any date, the sum
of the amounts that would be included as long-term debt or
current portion of long-term debt on a consolidated balance
sheet of the Company and its consolidated Subsidiaries
prepared as of such date in accordance with GAAP.
"Consolidated EBIT" shall mean, for any period, the
consolidated net income of the Company and its Subsidiaries
for such period, before Consolidated Interest Expense and
provision for taxes and without giving effect to (i) any
non-cash extraordinary gains or losses, (ii) any gains or
losses resulting from the early retirement of debt, (iii)
any non-recurring charges for restructuring of the Company's
business or operations, employee termination or similar
costs, or (iv) any gains or losses from sales of assets
(other than sales of inventory in the ordinary course of
business).
"Consolidated Interest Expense" shall mean, for any
period, the consolidated interest expense (including without
limitation capitalized interest) and accrued dividends on
Redeemable Preferred Stock of the Company and its
Subsidiaries for such period (calculated without regard to
any limitations on the payment thereof).
"Consolidated Total Indebtedness" shall mean, at any
particular date, the outstanding principal amount of
Indebtedness of the Company and its Restricted Subsidiaries,
determined on a consolidated basis, as of the end of the
most recent fiscal quarter ending prior to such date for
which quarterly or annual financial statements have been
delivered pursuant to Section 7.01.
"Contingent Obligation" shall mean, as to any Person,
any obligation of such Person guaranteeing or intended to
guarantee any Indebtedness or dividends ("primary
obligations") of any other Person (the "primary obligor") in
any manner, whether directly or indirectly, including,
without limitation, any obligation of such Person, whether
or not contingent, (i) to purchase any such primary
obligation or any property constituting direct or indirect
security therefor, (ii) to advance or supply funds (x) for
the purchase or payment of any such primary obligation or
(y) to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or
solvency of the primary obligor for the purpose of assuring
the owner of any such primary obligation of the ability of
the primary obligor to make payment of such primary
obligation, (iii) to purchase property, securities or
services primarily for the purpose of assuring the owner of
any such primary obligation of the ability of the primary
obligor to make payment of such primary obligation or (iv)
otherwise to assure or hold harmless the holder of such
primary obligation against loss in respect thereof;
provided, however, that the term Contingent Obligation shall
not include endorsements of instruments for deposit or
collection in the ordinary course of business. The amount
of any Contingent Obligation shall be deemed to be an amount
equal to the lesser of (A) the stated or determinable amount
of the primary obligation in respect of which such
Contingent Obligation is made or, if not stated or
determinable, the maximum reasonably anticipated liability
in respect thereof (assuming such Person is required to
perform thereunder) as determined by such Person in good
faith or (B) the maximum stated amount of such Person's
liability in respect of the primary obligation.
"Contractual Obligation" shall mean, as to any Person,
any provision of any security issued by such Person or of
any agreement, instrument or other undertaking to which such
Person is a party or by which it or any of its property is
bound.
"Cumulative Like-Kind Exchange Amount" shall mean, on
any date of determination, the aggregate of each increase or
decrease (on a cumulative basis) in NPV resulting from the
transfer of assets by the Company or any Restricted
Subsidiary in connection with Like-Kind Exchanges since the
NPV Date associated with the most recent Borrowing Base
Determination (or, if such date of determination occurs
prior to the first Borrowing Base Determination after the
Initial Borrowing Base Determination, since December 31,
1994).
"Current Borrowing Base Amount" shall mean, as of any
date of determination, the lesser of (a) the aggregate
Commitments in effect on such date and (b) the excess, if
any, of (i) the Borrowing Base in effect on such date over
(ii) the aggregate outstanding principal amount of Other
Borrowing Base Indebtedness on such date (after giving
effect, to the extent applicable, to any repayment or
expiration of Other Borrowing Base Indebtedness occurring on
such date).
"Default" shall mean any event, act or condition which
with notice or lapse of time, or both, would constitute an
Event of Default.
"Designated Reserve Region" shall mean (a) the
United States, including offshore sites under the
jurisdiction of the United States and sites located in the
North Sea under the jurisdiction of the United Kingdom or
(b) Indonesia, including offshore sites under the
jurisdiction of Indonesia or (c) any place where Oil and Gas
Interests are located not described in clause (a) or (b)
above.
"Dollars or $" shall mean dollars in the lawful
currency of the United States of America.
"Dollar Equivalent" shall mean, on or as of a
particular date, with respect to L/C Obligations in respect
of Alternate Currency Letters of Credit, the amount of
Dollars, as conclusively determined by the Administrative
Agent, which is required by the Administrative Agent to
purchase the Alternate Currency amount of such L/C
Obligations on or as of such date on the basis of the spot
exchange rate therefor in the interbank currency market
where the foreign currency and exchange operations of the
Administrative Agent are customarily conducted with respect
to the Alternate Currency as at 10:00 A.M. (or as near
thereto as may be practicable), New York City time, on or as
of such date.
"Draft Reserve and NPV Report" shall have the meaning
provided in Section 2.03(b)(iv).
"Effective Date" shall have the meaning provided in
Section 11.04.
"EIB Indebtedness" shall mean the Indebtedness of Oryx
U.K. Energy Company, a Wholly Owned Subsidiary of the
Company, to the European Investment Bank pursuant to a Loan
Agreement dated as of November 22, 1991, as amended and in
effect from time to time (the "EIB Facility") and any
Indebtedness of Oryx U.K. Energy Company or the Company to
any financial institutions incurred in the form of stand-by
letters of credit securing the repayment obligations of Oryx
U.K. Energy Company under the EIB Facility.
"Energy Partners" shall mean Sun Energy Partners, L.P.,
a Delaware limited partnership.
"Engineering Committee" shall mean a committee of
petroleum engineers (each of whom may be an officer or
employee of, or a consultant to (and engaged at the expense
of), a Co-Agent), the chairman of which shall be the
petroleum engineer selected by Barclays Bank PLC. Each
Co-Agent shall select its representatives on the Engineering
Committee in its sole discretion and the representatives of
each Co-Agent shall together have one vote; determinations
of the Engineering Committee shall be by majority vote
thereof. In connection with its determinations hereunder
the Engineering Committee shall consult with the Company and
its representatives and may in its discretion invite one or
more representatives of the Company to attend its meetings.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974 as amended from time to time.
Section references to ERISA are to ERISA, as in effect at
the Effective Date and any subsequent provisions of ERISA
amendatory thereof, supplemental thereto or substituted
therefor.
"ERISA Affiliate" shall mean any Person (as defined in
Section 3(9) of ERISA) which together with the Company or
any of its Subsidiaries would be a member of the same
"controlled group" within the meaning of Section 414(b),
(c), (m) and (o) of the Code, and each trade or business
(whether or not incorporated) which together with the
Company or a Subsidiary would be deemed to be a "single
employer" within the meaning of Section 4001 of ERISA.
"Eurodollar Loan" shall mean any Revolving Credit Loan
bearing interest at the rates provided in Section 1.07(b).
"Event of Default" shall have the meaning provided in
Section 8.
"Existing Credit Agreement" shall have the meaning
provided in the recitals hereto.
"Extensions of Credit" shall be the collective
reference to the Loans, the L/C Obligations and the
Commercial Paper.
"FEC Indebtedness" shall mean the Indebtedness of SOLP
to the Finnish Export Credit Limited pursuant to a loan
agreement, as amended and in effect from time to time (the
"FEC Facility"), and any Indebtedness of SOLP or the Company
to any financial institutions incurred in the form of stand-
by letters of credit securing the repayment obligations of
SOLP under the FEC Facility.
"Final Reserve and NPV Report" shall have the meaning
provided in Section 2.03(b)(vi).
"Financing Lease" shall mean any lease of property,
real or personal, the obligations of the lessee in respect
of which are required in accordance with GAAP to be
capitalized on a balance sheet of the lessee.
"Funded Indebtedness" shall mean, as of the date of
determination, Consolidated Debt as of such date, excluding
Extensions of Credit.
"GAAP" shall mean generally accepted accounting
principles in the United States of America in effect from
time to time.
"Governmental Authority" shall mean any nation or
government, any state or other political subdivision thereof
and any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to
government.
"Highest Lawful Rate" shall mean, with respect to any
Indebtedness owed to any Bank hereunder, the maximum
nonusurious interest rate, if any, that at any time or from
time to time may be contracted for, taken, reserved, charged
or received by such Bank with respect to such Indebtedness
under applicable law. In the event that applicable law
provides for an interest ceiling under Texas Revised Civil
Statutes Annotated Article 5069-1.04, that ceiling shall be
the Highest Lawful Rate. As used in this definition the
term "applicable law" means, with respect to each Bank,
whichever laws allow the greater interest, as such laws now
exist or may be changed or amended or come into effect in
the future.
"Indebtedness" shall mean, as to any Person, without
duplication, (i) all indebtedness of such Person for
borrowed money or for the deferred purchase price of
property or services (but excluding the deferred purchase
price of property or services to the extent that such
deferments are taken in the ordinary course of such Person's
business consistent with prudent business practices),
(ii) the face amount of all letters of credit issued for the
account of such Person in respect of liabilities of the type
described in clauses (i), (iv) and (v) of this definition
and all drafts drawn thereunder, (iii) all liabilities of
the type described in clauses (i), (ii), (iv) and (v) of
this definition which are secured by any Lien on any
property owned by such Person, whether or not such
liabilities have been assumed by such Person (limited
however to the lesser of (a) the amount of its liability or
(b) the value of such property), (iv) all obligations of
such Person under Financing Leases, (v) all Contingent
Obligations of such Person and (vi) all Redeemable Preferred
Stock of such Person; provided that for the purposes of this
Agreement, the term "Indebtedness" shall not include any of
the foregoing which (x) are owing to the Company or any
Wholly Owned Restricted Subsidiary of the Company (except
for the purposes of clause (b) of the second sentence of
Section 7.09), (y) are subject to irrevocable legal
defeasance in accordance with the terms thereof or (z) arise
out of the sale of receivables.
"Independent Engineer" shall mean any petroleum
engineer(s) selected by the Engineering Committee and
reasonably acceptable to the Company.
"Index Rate Bid Loan" shall mean any Bid Loan bearing
interest at an interest rate equal to the Applicable Index
Rate plus (or minus) a margin.
"Index Rate Bid Loan Request" shall mean any Bid Loan
Request requesting the Banks to offer to make Bid Loans at
an interest rate equal to the Applicable Index Rate plus (or
minus) a margin.
"Information Memorandum" shall mean the information
memorandum prepared by the Company in connection with this
Agreement for distribution by the Co-Agents to potential
Banks.
"Initial Borrowing Base Determination" shall have the
meaning provided in Section 2.03(a).
"Initial Reserve and NPV Report" shall mean the Reserve
and NPV Report delivered to the Banks pursuant to Section
5.06.
"Interest Period" shall have the meaning provided in
Section 1.08.
"Investments" shall have the meaning provided in
Section 7.14.
"Issuing Bank" shall mean Barclays Bank PLC.
"Judgment Amount" shall have the meaning provided in
Section 8.09.
"L/C Commitment" shall mean $200,000,000.
"L/C Fee Payment Date" shall mean the last Business Day
of each March, June, September and December.
"L/C Obligations" shall mean at any time, an amount
equal to the sum of (a) the aggregate then undrawn and
unexpired amount of the then outstanding Letters of Credit
and (b) the aggregate amount of drawings under Letters of
Credit which have not then been reimbursed pursuant to
Section 4.05.
"L/C Participants" shall mean the Banks other than the
Issuing Bank.
"Letters of Credit" shall have the meaning provided in
Section 4.01(a).
"Lien" shall mean any mortgage, pledge, security
interest, encumbrance, or lien of any kind (including any
agreement to give any of the foregoing, any conditional sale
or other title retention agreement or any lease in the
nature thereof); provided, that neither the sale of
receivables nor any filing of financing statements or other
instruments made or given in furtherance thereof shall be
deemed to constitute a Lien.
"Like-Kind Exchange" shall mean any disposition of Oil
and Gas Interests included in the Borrowing Base Assets
located in a Designated Reserve Region made in exchange for
Oil and Gas Interests in substantially concurrent
transactions located in the same Designated Reserve Region,
substantially all of which are of the same or higher Quality
as the Oil and Gas Interests being disposed of.
"Loans" shall be the collective reference to the
Revolving Credit Loans and the Bid Loans.
"Material Adverse Effect" shall mean a material adverse
effect on (a) the financial condition or results of
operations of the Company and its Restricted Subsidiaries
taken as a whole or (b) the ability of the Company to
perform its obligations under this Agreement.
"Material Restricted Subsidiary" shall mean at any
particular date, each Restricted Subsidiary of the Company
which holds Borrowing Base Assets.
"Minimum Bid Loan Amount" shall have the meaning
provided in Section 4.09(b)(iv)(B).
"Net Investment Amount" shall mean, at any time during
any fiscal year of the Company, (a) the aggregate amount of
cash Investments made since the first day of such fiscal
year by the Company or any Restricted Subsidiary in any
Subsidiary which was a Non-Restricted Subsidiary on the date
of such Investment minus (b) the sum of (i) cash dividends
and cash distributions received by the Company or any
Restricted Subsidiary from Non-Restricted Subsidiaries since
the first day of such fiscal year and (ii) cash proceeds
received by the Company or any Restricted Subsidiary since
the first day of such fiscal year in connection with the
sale of any capital stock of or other Investment in
Non-Restricted Subsidiaries (net of any costs, expenses,
fees and taxes incurred in connection therewith).
"Net Proceeds" shall mean, with respect to any Asset
Sale, the aggregate proceeds thereof (which amount shall
include the fair market value of any debt securities or
other property received in connection therewith), net of
costs, expenses and fees incurred in connection therewith
(other than United States taxes).
"New York Office" shall have the meaning provided in
Section 1.03.
"Non-Recourse Indebtedness" shall mean Indebtedness of
a Non-Restricted Subsidiary as to which there is no recourse
or liability of any kind to the Company or any Restricted
Subsidiary or any of their respective assets.
"Non-Restricted Subsidiary" shall mean (a) each
Subsidiary designated by the Company as a Non-Restricted
Subsidiary by written notice to the Administrative Agent
(effective 30 days after such designation unless a
Redetermination Notice is given as a result of such
designation, in which event effective on the date on which
the new Borrowing Base resulting from the ensuing Borrowing
Base Redetermination becomes fully effective in accordance
with Section 2.03(g)), provided, that on the effective date
of such designation (i) the Company shall have entered into
a tax sharing agreement providing that such Non-Restricted
Subsidiary shall promptly reimburse the Company for (x)
taxes allocated to such Non-Restricted Subsidiary in
accordance with the principles contained in Section
1552(a)(1), (2) or (3) of the Code and any Treasury
Regulations thereunder and Treasury Regulation Sections 1.1502-
33(d)(2) or (y) taxes allocated to such Non-Restricted
Subsidiary in any other reasonable manner satisfactory to
the Administrative Agent and (ii) no Specified
Reclassification Default or Event of Default shall have
occurred and be continuing or would result therefrom and (b)
each Subsidiary of a Non-Restricted Subsidiary; provided,
that on and after the effective date of any designation of
the kind described in clause (c) of the definition of
"Restricted Subsidiary", the Subsidiary so designated shall
no longer constitute a Non-Restricted Subsidiary (unless and
until such Subsidiary subsequently becomes a Non-Restricted
Subsidiary as provided above).
"Notice of Borrowing" shall have the meaning provided
in Section 1.03.
"Notice of Conversion" shall have the meaning provided
in Section 1.05.
"NPV" shall mean the net present value of the projected
future net revenues attributable to the Borrowing Base
Assets calculated in accordance with Section 2.03; provided
that there shall be deducted from such future net revenues,
royalties and other burdens on production, operating
expenses (including, without limitation, field level general
and administrative expenses), taxes (including petroleum
revenue taxes and severance taxes and actual taxes based on
income but excluding any such taxes based on income imposed
by the United States or any political subdivision thereof)
and Capital Expenditures made to upgrade to a higher
Quality, or to maintain, such Borrowing Base Assets; and
provided, further, that for the purposes of each calculation
of NPV, taxes shall be determined on the basis of tax rates,
laws, regulations and rules in effect at the time of such
calculation.
"NPV Date" shall mean (a) any date as of which NPV is
required to be calculated in connection with a Scheduled
Borrowing Base Determination (or December 31, 1994, in the
case of the Initial Borrowing Base Determination), and (b)
the date of any Redetermination Notice associated with any
Borrowing Base Redetermination.
"Oil and Gas Interests" shall mean (i) leasehold or
other interests in or under oil, gas or other mineral
leases, fee interests, overriding royalty, royalty or other
real property interests in oil, gas or other liquid or gas
hydrocarbons in place, all licenses, permits or production
sharing agreements with respect to oil, gas and other liquid
or gas hydrocarbons to be produced, all plants, facilities,
including without limitation cogeneration facilities,
pipelines, gathering systems and all items of equipment or
fixtures used in connection with the production, gathering,
processing or transportation of oil, gas or other liquid or
gas hydrocarbons, (ii) without duplication of the foregoing,
all Proved Borrowing Base Reserves and (iii) the capital
stock of any Subsidiary of the Company whose assets are
comprised principally or in substantial part of assets
described in the foregoing clauses (i)-(ii).
"Other Borrowing Base Indebtedness" shall mean the
aggregate outstanding principal or face amount, as the case
may be, of Indebtedness of the Company and its Subsidiaries,
determined on a consolidated basis, excluding (without
duplication) (a) Extensions of Credit, (b) Non-Recourse
Indebtedness of a Non-Restricted Subsidiary,
(c) Indebtedness supported by Letters of Credit (but only to
the extent so supported) and (d) the Company's 7.50%
Convertible Subordinated Debentures Due 2014 issued in the
principal amount of $200,000,000.
"Other Exchange" shall mean any disposition of Oil and
Gas Interests included in the Borrowing Base Assets (other
than a Like-Kind Exchange) made in exchange for Oil and Gas
Interests in substantially concurrent transactions.
"Participants" shall have the meaning provided in
Section 11.04(b).
"Payment Office" shall have the meaning provided in
Section 1.04.
"PBGC" shall mean the Pension Benefit Guaranty
Corporation established under ERISA, or any successor
thereto.
"Permitted Liens" shall mean:
(a) Attachments or judgments which give rise to
Liens or other similar Liens arising in connection
with
litigation or other legal proceedings (and not
otherwise an Event of Default hereunder);
(b) Liens on assets acquired by the Company or any
of its Subsidiaries and Liens on assets of entities
that become Subsidiaries of the Company, which
Liens
existed prior to the date such assets are acquired
or
such entities become Subsidiaries, as the case may
be,
provided that such Liens were not incurred solely
in
contemplation of such acquisitions;
(c) Liens listed on Annex II hereto;
(d) (i) purchase money security interests in real
property, interests therein, improvements thereto
or
equipment acquired (or, in the case of
improvements,
constructed) by the Company or any Subsidiary
("Purchase Money Liens"), provided, that the
aggregate
principal amount of Indebtedness secured by any
Lien
referred to in this clause (i) shall not exceed 80%
of
the purchase price or cost of construction of the
asset
encumbered thereby; (ii) Purchase Money Liens not
otherwise permitted under clause (i) above,
provided,
that (x) the aggregate principal amount of
Indebtedness
secured by any Lien referred to in this clause (ii)
shall not exceed 100% of the purchase price or cost
of
construction of the asset encumbered thereby and
(y)
the aggregate outstanding principal amount of
Indebtedness secured by Liens described in this
clause
(ii) shall not exceed $25,000,000 at any one time;
and
(iii) Financing Leases; provided, that the
aggregate
outstanding principal amount of Indebtedness
secured by
Liens described in this paragraph (d) shall not
exceed
$100,000,000 at any one time;
(e) Liens on assets of or Investments in Non-
Restricted Subsidiaries;
(f) Liens on assets of or Investments in joint
ventures and other investment vehicles (other than
Subsidiaries) that do not own assets included in
the
Borrowing Base; and
(g) Liens securing Indebtedness (excluding the
amount of all Indebtedness secured by Liens
permitted
by clauses (a) through (f) above) the aggregate
principal amount of which does not exceed
$10,000,000.
"Person" shall mean and include any individual, firm,
corporation, association, trust or other enterprise or any
government or political subdivision or agency, department or
instrumentality thereof.
"Petroleum" shall mean oil, gas and other liquid or
gaseous hydrocarbons, including, without limitation, all
liquefiable hydrocarbons and other products which may be
extracted from gas and gas condensate by the processing
thereof in a gas processing plant.
"Plan" shall mean any multiemployer plan or single-
employer plan, as defined in Section 4001 of ERISA, which is
maintained, or at any time during the five calendar years
preceding the Effective Date was maintained or contributed
to, for employees of the Company or a Subsidiary or an ERISA
Affiliate.
"Pricing Grid" shall mean the Pricing Grid attached
hereto as Schedule A.
"Prime Lending Rate" on any date shall mean the rate
announced publicly by Barclays Bank PLC in New York, New
York from time to time as its prime rate and in effect on
such date, the Prime Lending Rate to change when and as such
prime rate changes. The Prime Lending Rate is a reference
rate and does not necessarily represent the lowest or best
rate actually charged by Barclays Bank PLC to any customer.
Barclays Bank PLC may make commercial loans or other loans
at rates of interest at, above or below the Prime Lending
Rate.
"Proved Borrowing Base Reserves" shall mean proved
developed producing, proved developed non-producing and
proved undeveloped Petroleum reserves of the Company and its
Restricted Subsidiaries and its 50% owned Affiliates as
determined in accordance with standards established by The
Society of Petroleum Engineers (but in any event including
completed gas plants, gathering systems, co-generation
plants, pipelines and other assets analyzed for the purposes
of determining NPV in accordance with the projected future
net revenues attributable thereto based on existing
contracts for the use of such facilities).
"Purchasing Banks" shall have the meaning provided in
Section 11.04(d).
"Quality" shall mean as to any Petroleum reserves,
their nature as proved developed producing, proved developed
nonproducing, proved undeveloped or probable.
"Quarterly Payment Date" shall mean the last Business
Day of each March, June, September and December of each
year.
"Quoted Rate" shall mean with respect to each Interest
Period for a Eurodollar Loan (a) the average of the offered
quotation by leading banks in the interbank Eurodollar
market to each of the Reference Banks for U.S. dollar
deposits of amounts in immediately available funds
comparable to the outstanding principal amount of the
Eurodollar Loan of such Reference Bank with maturities
comparable to the Interest Period applicable to such
Eurodollar Loan, commencing two Business Days thereafter,
which offered quotation shall be determined as of 10:00 a.m.
(New York time) on the date which is two Business Days prior
to the commencement of such Interest Period, provided that,
if any Reference Bank fails to provide the Administrative
Agent with its aforesaid quotation, the Quoted Rate shall be
based on the quotation or quotations provided to the
Administrative Agent by the other Reference Banks, divided
(and rounded up to the nearest 1/100 of 1%) by (b) a
percentage equal to 100% minus the then stated maximum rate
of all reserve requirements (including, without limitation,
any marginal, emergency, supplemental, special or other
reserves) applicable to any member bank of the Federal
Reserve System in respect of Eurocurrency liabilities as
defined in Regulation D.
"Redeemable Preferred Stock" shall mean any preferred
stock subject to mandatory redemption requirements or whose
redemption is outside the control of the issuer within the
meaning of Rule 5-02.28 of Regulation S-X under the
Securities Exchange Act of 1934, as amended. All references
in this Agreement to interest, principal and principal
installments of Indebtedness shall, where such Indebtedness
is in the form of Redeemable Preferred Stock, be deemed to
be references to dividends, stated amount and scheduled
sinking fund payments, respectively, with respect to such
Redeemable Preferred Stock.
"Redetermination Notice" shall have the meaning
provided in Section 2.03(c)(i).
"Reference Banks" shall mean Barclays Bank PLC, Morgan
Guaranty Trust Company of New York and NationsBank of Texas,
N.A.
"Register" shall have the meaning provided in Section
11.04(e).
"Reimbursement Obligation" shall mean the obligation of
the Company to reimburse the Issuing Bank pursuant to
Section 4.05 for amounts drawn under Letters of Credit.
"Regulation D" shall mean Regulation D of the Board of
Governors of the Federal Reserve System as from time to time
in effect and any successor to all or a portion thereof
establishing reserve requirements.
"Required Banks" shall mean, at any date, Banks holding
a majority of the aggregate Commitments.
"Required Co-Agents" shall mean, at any date, a number
of Co-Agents equal to at least a majority of the total
number of Co-Agents.
"Requirement of Law" shall mean, as to any Person, the
Certificate of Incorporation and By-Laws or other
organizational or governing documents of such Person, and
any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in
each case applicable to or binding upon such Person or any
of its property or to which such Person or any of its
property is subject.
"Reserve and NPV Report" shall mean a report of the
Company delivered pursuant to Section 2.03 or 5.06 and
setting forth in reasonable detail the projected production
of Petroleum attributable to, and the NPV of, the Proved
Borrowing Base Reserves. Each Reserve and NPV Report shall
separately address the Company's and its Restricted
Subsidiaries' (i) proved developed producing Petroleum
reserves, (ii) proved developed nonproducing Petroleum
reserves, (iii) proved undeveloped Petroleum reserves,
(iv) gas plants and gathering systems, (v) co-generation
plants and (vi) pipelines.
"Restricted Subsidiary" shall mean (a) each Subsidiary
of the Company in existence on the Effective Date (unless
and until such Subsidiary becomes a Non-Restricted
Subsidiary), (b) each Subsidiary of the Company created,
established or acquired by the Company after the Effective
Date (unless and until such Subsidiary becomes a Non-
Restricted Subsidiary) and (c) each Non-Restricted
Subsidiary designated by the Company as a Restricted
Subsidiary by written notice to the Administrative Agent
(effective upon such designation) (unless and until such
Subsidiary subsequently becomes a Non-Restricted
Subsidiary), provided, that at the time of such designation
no Specified Reclassification Default or Event of Default
shall have occurred and be continuing or would result
therefrom; but in any event including Oryx U.K Energy
Company, SOLP and Energy Partners and excluding any
Subsidiary of a Non-Restricted Subsidiary.
"Revolving Credit Loans" shall have the meaning
provided in Section 1.01.
"Scheduled Borrowing Base Determination" shall have the
meaning provided in Section 2.03(b).
"SEC" shall have the meaning provided in Section 7.01.
"SOLP" shall mean Sun Operating Limited Partnership, a
Delaware limited partnership.
"Specified Default" shall mean any default by the
Company in the due performance or observance by it of any
term, covenant or agreement contained in Sections 7.08,
7.10, 7.11, 7.12 and 7.16.
"Specified Reclassification Default" shall mean any
default by the Company in (a) the due performance or
observance by it of any term, covenant or agreement
contained in Sections 7.07, 7.08, 7.09, 7.10, 7.11, 7.12,
7.14, 7.15, 7.16 and 7.17 or (b) the payment when due of (i)
any principal or interest in respect of any Loan or
Reimbursement Obligation or (ii) any fees or other amounts
payable hereunder.
"Subsidiary" of any Person shall mean and include
(i) any corporation more than 50% of whose stock of any
class or classes having by the terms thereof ordinary voting
power to elect a majority of the directors of such
corporation (irrespective of whether or not at the time
stock of any class or classes of such corporation shall have
or might have voting power by reason of the happening of any
contingency) is at the time owned by such Person directly or
indirectly through Subsidiaries and (ii) any partnership,
association, joint venture, trust or other entity in which
such Person directly or indirectly through Subsidiaries, has
more than a 50% equity or beneficial ownership interest at
the time.
"Subsidiary Reclassification" shall have the meaning
provided in the definition of the term "Transfer Amount".
"Super-Majority Banks" shall mean, at any date, Banks
holding at least 66-2/3% of the aggregate Commitments.
"Taxes" shall have the meaning provided in
Section 3.04.
"Total Indebtedness to Cash Flow Ratio" shall mean, on
any date of determination, the ratio of (a) Consolidated
Total Indebtedness as of the end of the most recent fiscal
quarter or fiscal year of the Company for which financial
statements have been delivered pursuant to Section 7.01 to
(b) Consolidated Adjusted EBITDA for the period of the four
consecutive fiscal quarters (taken as one accounting period)
ending on the last day of the most recent fiscal quarter or
fiscal year of the Company for which financial statements
have been delivered pursuant to Section 7.01.
"Transfer Amount" shall mean the following amount or
amounts, as applicable: (a) the Net Proceeds received by
the Company or any Restricted Subsidiary from any Asset
Sale, other than a farm-out of Proved Borrowing Base
Reserves, (b) the decrease in NPV resulting from the
transfer of assets by the Company or any Restricted
Subsidiary in connection with any Other Exchange or any
Asset Sale that is a farm-out of Proved Borrowing Base
Reserves, (c) the NPV of the Borrowing Base Assets of any
Restricted Subsidiary which has been reclassified as a Non-
Restricted Subsidiary (a "Subsidiary Reclassification") or
(d) the NPV of Borrowing Base Assets which have been sold,
assigned or otherwise transferred to any Non-Restricted
Subsidiary or to any joint venture or other investment
vehicle (other than a Restricted Subsidiary) (an "Asset
Reclassification").
"Transferees" shall have the meaning provided in
Section 11.04(g).
"Type" as to any Revolving Credit Loan, shall mean its
nature as a Base Rate Loan or a Eurodollar Loan.
"Uniform Customs" shall mean the Uniform customs and
Practice for Documentary Credits (1993 Revision),
International Chamber of Commerce Publication No. 500, as
the same may be amended from time to time.
"Unused Commitment" shall mean at any time of the
determination thereof an amount equal to (a) the aggregate
Commitments less (b) the aggregate outstanding principal
amount of the Revolving Credit Loans less (c) the aggregate
amount of the L/C Obligations.
"Update Report" shall have the meaning provided in
Section 2.03(c)(i).
"Wholly Owned Subsidiary" shall mean, as to any Person,
any Subsidiary of such Person to the extent all of the
capital stock or other ownership interest of such
Subsidiary, other than directors' or nominees' qualifying
shares or shares or other ownership interests required by
law, statute, rule or regulation to be held by government
entities or foreign nationals to the extent not in excess of
5% of the issued and outstanding capital stock or other
ownership interest of such Subsidiary, is owned directly or
indirectly by such Person, provided that with respect to the
Company, Energy Partners, SOLP and each of its Subsidiaries
shall be deemed to be a Wholly Owned Subsidiary for so long
as the Company has at least a 95% ownership interest
(directly or indirectly) in Energy Partners, SOLP or such
Subsidiary, as the case may be.
SECTION 11. Miscellaneous.
11.01 Payment of Expenses; Etc. The Company shall:
(a) whether or not the transactions contemplated hereby are
consummated, pay all reasonable out-of-pocket costs and expenses
(i) of the Administrative Agent in connection with the
preparation, negotiation, execution and delivery of this
Agreement and the documents and instruments referred to herein
and in connection with any amendment, supplement, waiver or
consent relating hereto or thereto (limited, in the case of legal
fees and disbursements to the fees and disbursements of Simpson
Thacher & Bartlett, counsel to the Administrative Agent and the
Co-Agents) and (ii) of the Administrative Agent and each Bank in
connection with its separate enforcement of its rights under this
Agreement and the documents and instruments referred to herein
(including with respect to clauses (i)-(ii) above, without
limitation, the reasonable fees and disbursements of Simpson
Thacher & Bartlett, counsel to the Administrative Agent and the
Co-Agents and, in the case of its separate enforcement of its
rights, of any counsel employed by any of the Banks), (b) pay all
reasonable fees and out-of-pocket costs and expenses of the
Independent Engineer incurred in connection herewith, (c) pay and
hold each of the Banks harmless from and against any and all
present and future stamp and other similar taxes with respect to
the foregoing matters and save each Bank harmless from and
against any and all liabilities with respect to or resulting from
any delay or omission (other than to the extent attributable to
such Bank) to pay such taxes and (d) indemnify the Administrative
Agent, each Co-Agent and each Bank, and each of their respective
officers, directors, employees, affiliates, representatives and
agents, from and hold each of them harmless against any and all
losses, liabilities, claims, damages or expenses (in this Section
11.01, collectively called "losses and expenses") incurred by any
of them arising out of or by reason of any investigation,
litigation or other proceeding related to (i) any acquisition
effected or proposed to be effected by the Company with, or other
use by the Company of, the proceeds of the Loans or any other
transactions contemplated or required by this Agreement or
(ii) the execution, delivery, enforcement and performance of this
Agreement or (iii) the distribution of the Information
Memorandum, including, without limitation, the reasonable fees
and disbursements of counsel incurred in connection with any such
investigation, litigation or other proceeding (regardless of
whether such losses and expenses are caused by the negligent
actions or omissions to act of the Person to be indemnified, but
excluding any such losses and expenses incurred by reason of the
gross negligence or willful misconduct of the Person to be
indemnified or in connection with claims by any of the Banks
against any other Banks (in any capacity)).
11.02 Right of Setoff. In addition to any rights now
or hereafter granted under applicable law or otherwise and not by
way of limitation of any such rights, upon the occurrence of an
Event of Default, each Bank is hereby authorized at any time or
from time to time, without presentment, demand, protest or other
notice of any kind to the Company or to any other Person, any
such notice being hereby expressly waived, to set off and to
appropriate and apply any and all deposits (general or special)
and any other Indebtedness at any time held or owing by such Bank
to or for the credit or the account of the Company against and on
account of the obligations and liabilities of the Company to such
Bank under this Agreement, including (without limitation) all
claims of any nature or description arising out of or connected
with this Agreement, irrespective of whether or not such Bank
shall have made any demand hereunder and although said
obligations, liabilities or claims, or any of them, shall be
contingent or unmatured.
11.03 Notices. Except as otherwise specified herein,
all notices, requests, demands, or other communications to or
upon the respective parties hereto shall be deemed to have been
duly given or made when delivered to the party to which such
notice, request, demand or other communication is required or
permitted to be given or made under this Agreement, addressed as
follows in the case of the Company, the Administrative Agent or
the Issuing Bank, and as set forth on Annex I in the case of the
Banks, or to such other address as any of the parties hereto may
hereafter notify the others in writing:
The Company:
Oryx Energy Company
13155 Noel Road
Dallas, Texas 75240
Attention: Treasurer
Telecopy: 214-715-4304
Telephone: 214-715-4000
The Administrative Agent and the Issuing Bank:
Barclays Bank PLC
222 Broadway
New York, New York 10038
Attention: Les Bek
Telecopy: 212-412-7585
Telephone: 212-412-3782
Unless otherwise specified herein, (a) any written notice
hereunder may be given by facsimile transmission, (b) each
telephonic notice hereunder must be promptly confirmed in writing
and (c) no notice hereunder may be given by telex.
11.04 Effectiveness; Successors and Assigns;
Participations; Purchasing Banks. (a) This Agreement shall
become effective on the first date (the "Effective Date") on
which each of the conditions precedent set forth in Sections
5.01-5.07 shall have been satisfied, and thereafter shall be
binding upon and inure to the benefit of the Company, the Banks,
the Co-Agents, the Administrative Agent, all future holders of
the obligations owing hereunder, and their respective successors
and assigns, except that the Company may not assign or transfer
any of its rights or obligations under this Agreement without the
prior written consent of each Bank. On the Effective Date, all
"CC Bid Loans" of an Original Bank outstanding under the Existing
Credit Agreement shall become Bid Loans, and all "Letters of
Credit" outstanding under the Existing Credit Agreement shall
become Letters of Credit outstanding hereunder.
(b) Any Bank may, in the ordinary course of its
commercial banking business and in accordance with applicable
law, at any time sell to one or more banks or other entities
("Participants") participating interests in any Loan owing to
such Bank, any Commitment of such Bank or any other interest of
such Bank hereunder, provided that no Bank shall transfer, grant
or assign any participation under which the participant shall
have rights to approve any amendment, supplement or modification
to or waiver of this Agreement except to the extent such
amendment, supplement, modification or waiver would (i) increase
the amount of the Participant's funding obligations in respect of
such Bank's Commitment, (ii) reduce the principal of, or interest
on, any of the Participant's interest in such Bank's Loans, or
any fees or other amounts payable to such Bank hereunder (to the
extent an interest therein has been sold to the Participant), or
(iii) postpone any date fixed for any scheduled payment of
principal of, or interest on, any of such Bank's Loans, or any
fees or other amounts payable to such Bank hereunder (to the
extent an interest therein has been sold to the Participant). In
the event of any such sale by a Bank of participating interests
to a Participant, such Bank's obligations under this Agreement to
the other parties to this Agreement shall remain unchanged, such
Bank shall remain solely responsible for the performance thereof,
such Bank shall remain the holder of any such obligation owing to
it hereunder for all purposes under this Agreement and the
Company and the Administrative Agent, and the Co-Agents shall
continue to deal solely and directly with such Bank in connection
with such Bank's rights and obligations under this Agreement.
The Company agrees that if amounts outstanding under this
Agreement are due and unpaid, or shall have been declared or
shall have become due and payable upon the occurrence of an Event
of Default, each Participant shall be deemed to have the right of
setoff in respect of its participating interest in amounts owing
under this Agreement to the same extent as if the amount of its
participating interest were owing directly to it as a Bank under
this Agreement; provided that such right of setoff shall be
subject to the obligation of such Participant to share with the
Banks, and the Banks agree to share with such Participant, as
provided in Section 11.06. The Company also agrees that each
Participant shall be entitled to the benefits of Sections 1.09,
1.10 and 3.04 with respect to its participation in the
Commitments and the Loans outstanding from time to time; provided
that no Participant shall be entitled to receive any greater
amount pursuant to such Sections than the transferor Bank would
have been entitled to receive in respect of the amount of the
participation transferred by such transferor Bank to such
Participant had no such transfer occurred.
(c) Any Bank may, in the ordinary course of its
commercial banking business and in accordance with applicable
law, at any time assign to one or more banks or other entities
("Bid Loan Assignees") any Bid Loan owing to such Bank, pursuant
to a Bid Loan Assignment executed by the assignor Bank and the
Bid Loan Assignee. Upon such execution, from and after the date
of such Bid Loan Assignment, the Bid Loan Assignee shall, to the
extent of the assignment provided for in such Bid Loan
Assignment, be deemed to have the same rights and benefits of
payment and enforcement with respect to such Bid Loan and the
same rights of setoff and obligation to share pursuant to
Sections 11.02 and 11.06 as it would have had if it were a Bank
hereunder; provided that unless such Bid Loan Assignment shall
otherwise specify and a copy of such Bid Loan Assignment shall
have been delivered to the Administrative Agent for its
acceptance and recording in the Register in accordance with
Section 11.04(f), the assignor thereunder shall act as collection
agent for the Bid Loan Assignee thereunder, and the
Administrative Agent shall pay all amounts received from the
Company which are allocable to the assigned Bid Loan directly to
such assignor without any further liability to such Bid Loan
Assignee. A Bid Loan Assignee under a Bid Loan Assignment shall
not, by virtue of such Bid Loan Assignment, become a party to
this Agreement or have any rights to consent to or refrain from
consenting to any amendment, supplement, waiver or other
modification of any provision of this Agreement or any related
document; provided that (i) the assignor under such Bid Loan
Assignment and such Bid Loan Assignee may, in their discretion,
agree between themselves upon the manner in which such assignor
will exercise its rights under this Agreement and any related
document and (ii) if a copy of such Bid Loan Assignment shall
have been delivered to the Administrative Agent for its
acceptance and recording in the Register in accordance with
Section 11.04(f), neither the principal amount of, the interest
rate on, nor the maturity date of any Bid Loan assigned to the
Bid Loan Assignee thereunder will be reduced or postponed, as the
case may be, without the written consent of such Bid Loan
Assignee. If a Bid Loan Assignee has caused a Bid Loan
Assignment to be recorded in the Register in accordance with
Section 11.04(f), such Bid Loan Assignee may thereafter, in the
ordinary course of its business and in accordance with applicable
law, assign the relevant Bid Loans to any Bank, to any affiliate
or subsidiary of such Bid Loan Assignee or to any other financial
institution that has total assets in excess of $1,000,000,000 and
that in the ordinary course of its business extends credit of the
same type as the Bid Loans, and the foregoing provisions of this
paragraph (c) shall apply, mutatis mutandis, to any such
assignment by a Bid Loan Assignee. Except in accordance with the
preceding sentence, Bid Loans may not be further assigned by a
Bid Loan Assignee, subject to any legal or regulatory requirement
that the Bid Loan Assignee's assets must remain under its
control.
(d) Any Bank may, in the ordinary course of its
commercial banking business and in accordance with applicable
law, at any time sell to any Bank or any affiliate thereof, and,
with the consent of the Administrative Agent (which shall not be
unreasonably withheld), the Issuing Bank and the Company, to one
or more banks or financial institutions ("Purchasing Banks") all
or any part of its rights and obligations under this Agreement,
pursuant to an Assignment and Acceptance, executed by such
Purchasing Bank and such transferor Bank (and, in the case of a
Purchasing Bank which is not then a Bank or an affiliate thereof,
by the Administrative Agent, the Issuing Bank and the Company),
and delivered to the Administrative Agent for its acceptance and
recording in the Register; provided that, except in the case of a
sale of all rights and obligations of a Bank and its affiliates
under this Agreement, (i) each such sale to a Purchasing Bank
which is not already a Bank or an affiliate thereof shall be in
an amount of $10,000,000 or more and (ii) after giving effect to
each such sale, the aggregate Commitments of the selling Bank and
its affiliates shall in no event be less than $10,000,000; and
provided, further, that no Bank may sell Revolving Credit Loans
to a Purchasing Bank without also selling to such Purchasing Bank
the appropriate pro rata share of its Commitment. Upon such
execution, delivery, acceptance and recording, from and after the
Assignment Effective Date, (x) the Purchasing Bank thereunder
shall be a party hereto and, to the extent provided in such
Assignment and Acceptance, have the rights and obligations of a
Bank hereunder with a Commitment as set forth therein and (y) the
transferor Bank thereunder shall, to the extent provided in such
Assignment and Acceptance, be released from its obligations under
this Agreement (and, in the case of an Assignment and Acceptance
covering all or the remaining portion of a transferor Bank's
rights and obligations under this Agreement, such transferor Bank
shall cease to be a party hereto). Such Assignment and
Acceptance shall be deemed to amend this Agreement to the extent,
and only to the extent, necessary to reflect the addition of such
Purchasing Bank and the resulting adjustment of Commitments
arising from the purchase by such Purchasing Bank of all or a
portion of the rights and obligations of such transferor Bank
under this Agreement.
(e) The Administrative Agent, on behalf of the
Borrower, shall maintain at its New York Office a copy of each
Bid Loan Assignment and each Assignment and Acceptance delivered
to it and a register (the "Register") for the recordation of (i)
the names and addresses of the Banks and the Commitment of each
Bank from time to time, (ii) the amount of each Revolving Credit
Loan and Bid Loan made hereunder, the Type thereof and each
Interest Period or maturity date (if any) applicable thereto,
(iii) the amount of any principal or interest due and payable or
to become due and payable from the Company to each Bank
hereunder, (iv) both the amount of any sum received by the
Administrative Agent hereunder from the Company and each Bank's
share thereof, and (v) with respect to each Bid Loan Assignment
delivered to the Administrative Agent, the name and address of
the Bid Loan Assignee and the principal amount of each Bid Loan
owing to such Bid Loan Assignee. The entries in the Register and
the accounts of each Bank maintained pursuant to Section 1.02(b)
and Section 4.09 shall be conclusive, in the absence of manifest
error, and shall, to the extent permitted by applicable law, be
prima facie evidence of the existence and amounts of the
obligations of the Company therein recorded; provided, however,
that the failure of any Bank or the Administrative Agent to
maintain the Register or any such account, or any error therein,
shall not in any manner affect the obligation of the Company to
repay (with applicable interest) the Loans made to such Company
by such Bank in accordance with the terms of this Agreement. The
Company, the Administrative Agent, the Co-Agents and the Banks
may treat each Person whose name is recorded in the Register as
the owner of the Loan recorded therein for all purposes of this
Agreement. The Register shall be available for inspection by the
Company or any Bank or Bid Loan Assignee at any reasonable time
and from time to time upon reasonable prior notice.
(f) Upon its receipt of a Bid Loan Assignment executed
by an assignor Bank and a Bid Loan Assignee, together with
payment to the Administrative Agent of a registration and
processing fee of $500 (which fee shall not be for the account of
the Company), the Administrative Agent shall promptly accept such
Bid Loan Assignment, record the information contained therein in
the Register and give notice of such acceptance and recordation
to the assignor Bank, the Bid Loan Assignee and the Company.
Upon its receipt of an Assignment and Acceptance executed by a
transferor Bank and a Purchasing Bank (and, in the case of a
Purchasing Bank that is not then a Bank or an affiliate thereof,
by the Administrative Agent, the Issuing Bank and the Company)
together with payment by the Purchasing Bank or such transferor
Bank, as the case may be, to the Administrative Agent of a
registration and processing fee of $3,000 (unless the Purchasing
Bank is a Bank or an affiliate thereof prior to the execution of
such Supplement), the Administrative Agent shall (i) promptly
accept such Assignment and Acceptance and (ii) on the Assignment
Effective Date determined pursuant thereto record the information
contained therein in the Register and give notice of such
acceptance and recordation to the Banks and the Company.
(g) Subject to Section 11.16, the Company authorizes
each Bank to disclose to any Participant, Bid Loan Assignee or
Purchasing Bank (each, a "Transferee") and any prospective
Transferee any and all financial information in such Bank's
possession concerning the Company and its Subsidiaries and
Affiliates which has been delivered to such Bank by or on behalf
of the Company pursuant to this Agreement or which has been
delivered to such Bank by or on behalf of the Company in
connection with such Bank's credit evaluation of the Company and
its Subsidiaries and Affiliates prior to becoming a party to this
Agreement.
(h) If, pursuant to this Section 11.04, any interest
in this Agreement is transferred to any Transferee which is
organized under the laws of any jurisdiction other than the
United States or any State thereof, the transferor Bank shall
cause such Transferee, concurrently with the effectiveness of
such transfer, (i) to represent to the transferor Bank (for the
benefit of the transferor Bank, the Administrative Agent and the
Company) that under applicable law and treaties no taxes will be
required to be withheld by the Administrative Agent, the Company
or the transferor Bank with respect to any payments to be made to
such Transferee in respect of the Loans, (ii) to furnish to the
transferor Bank (and, in the case of any Purchasing Bank and any
Bid Loan Assignee registered in the Register, the Administrative
Agent and the Company) either U.S. Internal Revenue Service
Form 4224 or U.S. Internal Revenue Service Form 1001 or successor
applicable forms (wherein such Transferee claims entitlement to
complete exemption from U.S. federal withholding tax on all
interest payments hereunder) and Form W-8 or W-9 or successor
applicable forms and (iii) to agree (for the benefit of the
transferor Bank, the Administrative Agent and the Company) to
provide the transferor Bank (and, in the case of any Purchasing
Bank and any Bid Loan Assignee registered in the Register, the
Administrative Agent and the Company) a new Form 4224 or Form
1001 or successor applicable forms and Form W-8 or W-9 or
successor applicable forms upon the expiration or obsolescence of
any previously delivered form and comparable statements in
accordance with applicable U.S. laws and regulations and
amendments duly executed and completed by such Transferee, and to
comply from time to time with all applicable U.S. laws and
regulations with regard to such withholding tax exemption.
(i) The Company shall be permitted to replace any Bank
which (i) requests reimbursement for increased costs or
reductions in the amounts received or receivable hereunder (other
than with respect to Index Rate Bid Loans) pursuant to Section
1.09(a)(ii) or 1.09(d) or (ii) determines that additional amounts
will be payable pursuant to Sections 1.09(c) or 3.04 and requests
reimbursement therefor, if such increased costs or reductions or
additional amounts are materially different from the additional
amounts or increased costs or reductions incurred by the other
Banks or (iii) is affected in the manner described in Section
1.09(a)(iii) (other than with respect to Index Rate Bid Loans)
and as a result thereof any of the actions described in Section
1.09(b) is required to be taken or (iv) defaults in its
obligations to make Loans hereunder, with a replacement bank or
other financial institution; provided that (i) the Company shall
repay (or the replacement bank or institution shall purchase, at
par) all Loans and other amounts owing to such replaced Bank
prior to the date of replacement, (ii) the Company shall be
liable to such replaced Bank under Section 1.10 if any Eurodollar
Loan owing to such replaced Bank shall be prepaid (or purchased)
other than on the last day of the Interest Period relating
thereto or any Bid Loan owing to such replaced Bank shall be paid
other than on the date of its maturity, (iii) the replacement
bank or other institution, if not already a Bank, and the terms
and conditions of such replacement shall be reasonably
satisfactory to the Administrative Agent and the Issuing Bank,
(iv) the replaced Bank shall be obligated to make such
replacement in accordance with the provisions of Section
11.04(d), (v) until such time as such substitution shall be
consummated, the Company shall pay all additional amounts
required pursuant to Sections 1.09, 1.10(iv)(y) or 3.04 and
(vi) any such replacement shall not be deemed to be a waiver of
any rights which the Company, the Administrative Agent or any
other Bank shall have against the replaced Bank.
(j) Nothing herein shall prohibit or restrict the
pledge or assignment by any Bank of any Loan to any Federal
Reserve Bank in accordance with applicable law, but such Bank
shall remain liable for performance of its obligations hereunder.
In order to facilitate such pledge or assignment, the Company
hereby agrees that, upon request of any Bank at any time and from
time to time after the Company has made its initial borrowing
hereunder, the Company shall provide to such Bank, at the
Company's own expense, a promissory note, substantially in the
form of Exhibit A-1 or A-2, as the case may be, evidencing the
Revolving Credit Loans or Bid Loans, as the case may be, owing to
such Bank.
11.05 No Waiver; Remedies Cumulative. No failure or
delay on the part of the Administrative Agent, any Co-Agent or
any Bank or any holder of any obligation owing to it hereunder in
exercising any right, power or privilege hereunder and no course
of dealing between the Administrative Agent, any Co-Agent or any
Bank or the holder of any obligation owing to it hereunder shall
operate as a waiver thereof; nor shall any single or partial
exercise of any right, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other
right, power or privilege hereunder. The rights and remedies
herein expressly provided are cumulative and not exclusive of any
rights or remedies which the Administrative Agent, any Co-Agent
or any Bank or the holder of any obligation owing to it hereunder
would otherwise have. No notice to or demand on the Company in
any case shall entitle the Company to any other or further notice
or demand in similar or other circumstances or constitute a
waiver of the rights of the Administrative Agent, the Co-Agents,
the Banks or the holder of any obligation owing to it hereunder
to any other or further action in any circumstances without
notice or demand.
11.06 Payments Pro Rata. Except as provided in
Section 11.04(i), each of the Banks agrees that if it should
receive any payment (whether by voluntary payment, by realization
upon security, by the exercise of the right of setoff or banker's
lien, by counterclaim or cross action, by the enforcement of any
right under this Agreement, or otherwise) in respect of any
obligation (including, without limitation, the Reimbursement
Obligations) of the Company hereunder of a sum which with respect
to the related sum or sums received by other Banks is in a
greater proportion than the total amount of principal, interest,
fees or any other obligation incurred hereunder, as the case may
be, then owed and due to such Bank bears to the total amount of
principal, interest, fees or any such other obligation then owed
and due to all of the Banks immediately prior to such receipt,
then such Bank receiving such excess payment shall purchase for
cash without recourse from the other Banks an interest in the
obligations of the Company to such Banks in such amount as shall
result in a proportional participation by all of the Banks in the
aggregate unpaid amount of principal, interest, fees or any such
other obligation, as the case may be, owed to all of the Banks,
provided that if all or any portion of such excess payment is
thereafter recovered from such Bank, such purchase shall be
rescinded and the purchase price restored to the extent of such
recovery, but without interest.
11.07 Calculations; Computations. (a) The financial
statements to be furnished to the Banks pursuant hereto shall be
made and prepared, and all computations to determine compliance
with Section 7 and to determine the Total Indebtedness to Cash
Flow Ratio shall be made, in accordance with GAAP consistently
applied throughout the periods involved (except as set forth in
the notes thereto or as otherwise disclosed in writing by the
Company to the Banks), provided that, if the Company notifies the
Administrative Agent that the Company wishes to amend any
covenant contained in Section 7 or the definitions utilized in
the Total Indebtedness to Cash Flow Ratio to eliminate the effect
of any change in GAAP on the operation of such covenant (or if
the Administrative Agent notifies the Company that the Required
Banks wish to amend any such covenant for such purpose), then
compliance with such covenant shall be determined on the basis of
GAAP in effect immediately before the relevant change in GAAP
became effective, until either such notice is withdrawn or such
covenant is amended in a manner satisfactory to the Company and
the Required Banks.
(b) Interest on Base Rate Loans and Bid Loans (other
than Index Rate Bid Loans) shall be calculated on the basis of a
365- or 366-day year, as the case may be, for the actual days
elapsed. Interest on Eurodollar Loans and Index Rate Bid Loans,
Commitment Fees and other fees and letter of credit and fronting
commissions hereunder shall be calculated on the basis of a
360-day year for the actual days elapsed. The Administrative
Agent shall as soon as practicable notify the Company and the
Banks of each determination of a Quoted Rate. Any change in the
interest rate on a Base Rate Loan resulting from a change in the
Prime Lending Rate or the Federal funds rate shall become
effective as of the opening of business on the day on which such
change in the Prime Lending Rate is announced or such change in
the Federal funds rate is published, as the case may be. The
Administrative Agent shall as soon as practicable notify the
Company and the Banks of the effective date and the amount of
each such change in interest rate.
11.08 GOVERNING LAW; SUBMISSION TO JURISDICTION;
VENUE. (A) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER AND THEREUNDER SHALL BE CONSTRUED IN ACCORDANCE
WITH AND BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK.
CHAPTER 15 OF TEXAS REVISED CIVIL STATUTES ARTICLE 5069 (WHICH
REGULATES CERTAIN REVOLVING CREDIT LOAN ACCOUNTS AND REVOLVING
TRI-PARTY ACCOUNTS) SHALL NOT APPLY TO THIS AGREEMENT. ANY LEGAL
ACTION OR PROCEEDING AGAINST THE COMPANY WITH RESPECT TO THIS
AGREEMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK
OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK AND
APPELLATE COURTS FROM ANY THEREOF, AND, BY EXECUTION AND DELIVERY
OF THIS AGREEMENT, THE COMPANY HEREBY IRREVOCABLY ACCEPTS FOR
ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. THE
COMPANY HEREBY IRREVOCABLY DESIGNATES, APPOINTS AND EMPOWERS
CT CORPORATION SYSTEM, WITH OFFICES ON THE DATE HEREOF AT
1633 BROADWAY, NEW YORK, NEW YORK 10019, AS ITS DESIGNEE,
APPOINTEE AND AGENT TO RECEIVE, ACCEPT AND ACKNOWLEDGE FOR AND ON
ITS BEHALF, AND IN RESPECT OF ITS PROPERTY, SERVICE OF ANY AND
ALL LEGAL PROCESS, SUMMONS, NOTICES AND DOCUMENTS WHICH MAY BE
SERVED IN ANY SUCH ACTION OR PROCEEDING. IF FOR ANY REASON SUCH
DESIGNEE, APPOINTEE AND AGENT SHALL CEASE TO BE AVAILABLE TO ACT
AS SUCH, THE COMPANY AGREES TO DESIGNATE A NEW DESIGNEE,
APPOINTEE AND AGENT IN NEW YORK CITY ON THE TERMS AND FOR THE
PURPOSES OF THIS PROVISION SATISFACTORY TO THE ADMINISTRATIVE
AGENT. THE COMPANY FURTHER IRREVOCABLY CONSENTS TO THE SERVICE
OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH
ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY
REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE COMPANY AT
ITS ADDRESS SET FORTH OPPOSITE ITS SIGNATURE BELOW, SUCH SERVICE
TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING. NOTHING HEREIN
SHALL AFFECT THE RIGHT OF THE ADMINISTRATIVE AGENT, ANY CO-AGENT,
ANY BANK OR THE HOLDER OF ANY OBLIGATION OWING HEREUNDER TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL
PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE COMPANY IN ANY OTHER
JURISDICTION.
(B) THE COMPANY HEREBY IRREVOCABLY WAIVES ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF
VENUE OF ANY OF THE AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT
OF OR IN CONNECTION WITH THIS AGREEMENT BROUGHT IN THE COURTS
REFERRED TO IN CLAUSE (A) ABOVE AND HEREBY FURTHER IRREVOCABLY
WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT
ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM.
(C) THE COMPANY HEREBY IRREVOCABLY WAIVES, TO THE
MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO
CLAIM OR RECOVER IN ANY LEGAL ACTION OR PROCEEDING REFERRED TO IN
THIS SECTION 11.08 ANY SPECIAL, EXEMPLARY, PUNITIVE OR
CONSEQUENTIAL DAMAGES.
11.09 Counterparts. This Agreement may be executed in
any number of counterparts and by the different parties hereto on
separate counterparts, each of which when so executed and
delivered shall be an original, but all of which shall together
constitute one and the same instrument. A complete set of
counterparts shall be lodged with the Company and the
Administrative Agent.
11.10 Headings Descriptive. The headings of the
several sections and subsections of this Agreement are inserted
for convenience only and shall not in any way affect the meaning
or construction of any provision of this Agreement.
11.11 Amendment or Waiver. Neither this Agreement nor
any terms hereof or thereof may be amended, supplemented or
modified except in accordance with the provisions of this Section
11.11. With the written consent of the Required Banks, the
Administrative Agent and the Company may, from time to time,
enter into written amendments, supplements or modifications
hereto for the purpose of adding any provisions to this Agreement
or changing in any manner the rights of the Banks or of the
Company hereunder or thereunder or waiving, on such terms and
conditions as the Administrative Agent may specify in such
instrument, any of the requirements of this Agreement or any
Default or Event of Default and its consequences; provided,
however, that no such waiver and no such amendment, supplement or
modification shall (a) reduce the amount or extend the maturity
of any Loan or any installment thereof or Reimbursement
Obligations, or reduce the rate or extend the time of payment of
interest thereon, or reduce any fee payable to any Bank
hereunder, or change the amount of any Bank's Commitment, or
extend the expiration date of any Letter of Credit beyond the
Commitment Termination Date, in each case without the written
consent of each Bank affected thereby, or (b) (i) amend, modify
or waive any provision of this Section 11.11, (ii) reduce the
percentage specified in the definition of Required Banks, (iii)
reduce the percentage specified in the definition of Super-
Majority Banks or (iv) consent to the assignment or transfer by
the Company of any of its rights and obligations under this
Agreement, in each case without the written consent of all of the
Banks, or (c) amend, modify or waive any provision of Sections
11.01, 11.02, 11.06 or 11.07(b) without the written consent of
each Bank affected thereby, or (d) amend, modify or waive any
provision of Section 9 or reduce the percentage specified in the
definition of Required Co-Agents without the written consent of
the then Administrative Agent (if affected thereby) or each Co-
Agent affected thereby, as the case may be, or (e) modify any of
the rights expressly granted to the Super-Majority Banks by
Section 2.03 without the written consent of the Super-Majority
Banks. Any such waiver and any such amendment, supplement or
modification shall be binding upon the Company, the Banks, the
Co-Agents, the Administrative Agent and all future holders of the
obligations owing hereunder. In the case of any waiver, the
Company, the Banks, the Co-Agents and the Administrative Agent
shall be restored to their former position and rights hereunder,
and any Default or Event of Default waived shall be deemed to be
cured and not continuing; but no such waiver shall extend to any
subsequent or other Default or Event of Default, or impair any
right consequent thereon.
11.12 Survival. All indemnities set forth herein
including, without limitation, in Sections 1.09, 1.10, 3.04, 9.07
and 11.01, shall survive the execution and delivery of this
Agreement and the making and repayment of the Loans hereunder.
11.13 Domicile of Loans. Each Bank may transfer and
carry its Loans at, to or for the account of any branch office,
Subsidiary or affiliate of such Bank; provided that if a Bank
transfers its Loans from, or otherwise carries its Loans at any
office other than, the lending office or offices at which its
Loans are initially carried and as a result any greater amount
would otherwise be payable pursuant to any provision of this
Agreement than would have been payable if its Loans were
continued to be carried at such initial lending office or
offices, the Company shall not be liable to such Bank for such
greater amount. Each Bank further agrees, subject to overall
policy considerations, to use reasonable efforts (including
reasonable efforts to change its lending office) to avoid or to
minimize any amounts which might otherwise be payable pursuant to
this Agreement; provided, however, that such efforts shall not
cause the imposition on such Bank of any additional costs or
legal or regulatory burdens determined by such Bank to be
material.
11.14 WAIVERS OF JURY TRIAL. THE COMPANY, THE
ADMINISTRATIVE AGENT, THE CO-AGENTS AND THE BANKS HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL
ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY AND FOR ANY COUNTERCLAIM
THEREIN.
11.15 Interest. (a) It is the intention of the
parties hereto that each Bank shall conform strictly to usury
laws applicable to it. Accordingly, the parties hereto stipulate
and agree that none of the terms and provisions contained in this
Agreement shall ever be construed to create a contract to pay to
any Bank for the use, forbearance, or dedentition of money at a
rate in excess of the Highest Lawful Rate applicable to such
Bank, and that for purposes hereof, "interest" shall include the
aggregate of all charges or other consideration which constitute
interest under applicable laws and are contracted for, taken,
reserved, charged, or received under this Agreement or otherwise
in connection with the transactions contemplated by this
Agreement. Further, if the transactions contemplated hereby
would be usurious as to any Bank under laws applicable to it,
then, in that event, notwithstanding anything to the contrary in
this Agreement or any other agreement entered into in connection
with or as security for the Loans, it is agreed as follows: the
aggregate of all consideration which constitutes interest under
law applicable to each such Bank that is contracted for, taken,
reserved, charged, or received by such Bank under this Agreement
or under any of the other aforesaid agreements or otherwise in
connection with this Agreement shall under no circumstances
exceed the maximum amount allowed by the law applicable to such
Bank, and any excess shall be credited by such Bank on the
principal amount of the Indebtedness of the Company owed to such
Bank (or, if the principal amount of such Indebtedness shall have
been paid in full, to the extent such interest has been received
by a Bank it shall be refunded by such Bank to the Company). The
provisions of this Section 11.15(a) shall control over all other
provisions of this Agreement which may be in apparent conflict
herewith. The parties further stipulate and agree that, without
limitation on the foregoing, all calculations of the rate or
amount of interest contracted for, taken, reserved, charged or
received under any of this Agreement which are made for the
purpose of determining whether such rate or amount exceed the
Highest Lawful Rate shall be made, to the extent permitted by
applicable law, by amortizing, prorating, allocating, and
spreading during the period of the full stated term of the
Indebtedness, and if longer and if permitted by applicable law,
until payment in full, all interest at any time so contracted
for, taken, reserved, charged, or received.
(b) If at any time the effective rate of interest
which would otherwise apply to any Indebtedness arising under
this Agreement would exceed the Highest Lawful Rate applicable to
any Bank (taking into account the interest rate applicable to
such Indebtedness pursuant to the other provisions of this
Agreement, plus all additional charges and consideration which
have been contracted for, taken, reserved, charged, or received
under this Agreement, or any of them, and which additional
charges or consideration (the "Additional Charges") constitute
interest with respect to such Indebtedness), the effective
interest rate to apply to such Indebtedness made by such Bank
shall be limited to the Highest Lawful Rate, but any subsequent
reductions in the interest rate applicable to such Indebtedness
owed to such Bank shall not reduce the effective interest rate to
apply to such Indebtedness owed to such Bank below the Highest
Lawful Rate applicable to such Bank until the total amount of
interest accrued on such Indebtedness equals the amount of
interest which would have accrued if the interest rate from time
to time applicable to such Indebtedness owed to such Bank had at
all times been in effect with respect to such Indebtedness
pursuant to other provisions of this Agreement and if the Banks
had collected all Additional Charges called for under this
Agreement. If at maturity or final payment of such Bank's Loans
and all the amounts owed pursuant to this Agreement, the total
amount of interest accrued under this Agreement on such Bank's
Loans (including amounts designated as "interest" plus any
Additional Charges which constitute interest with respect to
amounts owed hereunder, and taking into account the limitations
of the first sentence of this Section 11.15(b)) is less than the
total amount of interest which would have accrued if the interest
rate or interest rates applicable to the Indebtedness from time
to time outstanding hereunder had at all times been in effect
pursuant to the other provisions of this Agreement, then the
Company agrees, to the fullest extent permitted by the laws
applicable to such Bank, to pay to such Bank an amount equal to
the difference between (i) the lesser of (1) the amount of
interest which would have accrued hereunder on such Bank's Loans
if the Highest Lawful Rate had at all times been in effect (but
excluding, for purposes of calculating such amount of interest,
any Additional Charges which constitute interest with respect to
such Bank's Loans) or (2) the amount of interest which would have
accrued hereunder on such Bank's Loans if the interest rate or
interest rates applicable to the Indebtedness from time to time
outstanding hereunder had at all times been in effect pursuant to
the other provisions of this Agreement (including amounts
designated as "interest" plus any Additional Charges which
constitute interest with respect to this Agreement) less (ii) the
amount of interest actually accrued hereunder on such Bank's
Loans (including amounts designated as "interest" plus any
Additional Charges which constitute interest with respect to such
Bank's Loans).
11.16 Confidentiality. Each of the Administrative
Agent, the Co-Agents and the Banks hereby agrees that all
information, including financial information, which is
non-public, disclosed to any Bank by the Company pursuant to this
Agreement will be kept confidential and will not, without the
prior written consent of the Company, be disclosed in any manner
whatsoever, in whole or in part, except that such Bank shall be
permitted to disclose such information (a) to any regulatory
agencies having jurisdiction over such Bank in connection with
their regulatory functions, (b) as required by law or court order
or in connection with any investigation or proceeding, (c) to
such Bank's affiliates, auditors, accountants and attorneys
subject to such procedures as are reasonably calculated to
maintain the confidentiality thereof and (d) to a Transferee or
potential Transferee; provided that such Transferee or potential
Transferee has entered into a written agreement containing
provisions equivalent to this Section 11.16 regarding the
confidentiality and non-disclosure of such information.
11.17 Existing Credit Agreement. The Company and each
of the Original Banks hereby agree that the commitments under the
Existing Credit Agreement shall, effective upon the Effective
Date, be automatically and immediately terminated. In connection
with the foregoing, each of the Original Banks (the Original
Banks constituting, in the aggregate, the "Required Banks" under
and as defined in the Existing Credit Agreement) hereby agrees to
waive the requirement that the Company provide notice of such
termination under Section 2.02 of the Existing Credit Agreement.
11.18 Judgment in a Currency Other Than Dollars. The
obligations of the Company hereunder to make payments in Dollars
shall not be discharged or satisfied by any tender or recovery
pursuant to any judgment expressed in or converted into any
currency other than Dollars except to the extent to which such
tender or recovery shall result in the effective receipt by the
Banks of the full amount of the Dollars expressed to be payable
hereunder, and accordingly such primary obligations of the
Company shall be enforceable as an alternative or additional
cause of action for the purpose of recovery in Dollars of the
amount (if any) by which such effective receipt shall fall short
of the full amount of the Dollars expressed to be payable
hereunder and shall not be effected by judgment being obtained
for any other sums due under this Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused
their duly authorized officers to execute and deliver this
Agreement as of the date first above written.
ORYX ENERGY COMPANY
By: /s/ David F. Chavenson
----------------------
Title: Treasurer
BARCLAYS BANK PLC, as
Administrative Agent, as a
Co-Agent and as a Bank
By: /s/ Les Bek
----------------------
Title: Director
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as a
Co-Agent and as a Bank
By: /s/ Michael J. Dillon
----------------------
Title: Vice President
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as a
Co-Agent and as a Bank
By: /s/ Philip W. McNeal
----------------------
Title: Vice President
NATIONSBANK OF TEXAS, N.A.,
as Documentation Agent,
as a Co-Agent and as a Bank
By: /s/ William D. Clift
----------------------
Title: Senior Vice President
THE INDUSTRIAL BANK OF JAPAN, LTD.,
NEW YORK BRANCH, as Senior Lead
Manager and as a Bank
By: /s/ Junri Oda
----------------------
Title: Senior Vice President and
Senior Manager
<PAGE>
BANK OF MONTREAL
By: /s/ Marshall D. Smith
----------------------
Title: Director, U.S. Corporate
Banking
THE BANK OF NEW YORK
By: /s/ Raymond J. Palmer
----------------------
Title: Vice President
BANK OF SCOTLAND
By: /s/ Elizabeth Wilson
----------------------
Title: Vice President and
Branch Manager
THE BANK OF TOKYO LTD., DALLAS
AGENCY
By: /s/ John M . McIntyre
----------------------
Title: Vice President
BANQUE PARIBAS
By: /s/ Kenneth E. Moore, Jr.
----------------------
Title: Vice President
By: /s/ Robert S. Bowers, II
----------------------
Title: Vice President
BANKERS TRUST COMPANY
By: /s/ Robert R. Telesca
----------------------
Title: Assistant Vice President
CAISSE NATIONALE DE CREDIT AGRICOLE
By: /s/ Dean Balice
----------------------
Title: Senior Vice President and
Branch Manager
THE CHASE MANHATTAN BANK, N.A.
By: /s/ Bettylou J. Robert
----------------------
Title: Vice President
CHEMICAL BANK
By: /s/ John F. Gehebe
----------------------
Title: Assistant Vice President
CHRISTIANIA BANK, NEW YORK BRANCH
By: /s/ Debra Dickehuth Ives
----------------------
Title: Vice President
By: /s/ Jahn Roising
----------------------
Title: First Vice President
CITIBANK, N.A.
By: /s/ Barbara A. Cohen
----------------------
Title: Vice President
CREDIT LYONNAIS,
CAYMAN ISLAND BRANCH
By: /s/ Xavier Ratouis
----------------------
Title: Authorized Signatory
CREDIT SUISSE
By: /s/ David J. Worthington
----------------------
Title: Member of Senior
Management
By: /s/ Marilou Palenzuela
----------------------
Title: Member of Senior
Management
DEN NORSKE BANK AS
By: /s/ Nelvin Farstad
----------------------
Title: Senior Vice President
By: /s/ Fran Meyers
----------------------
Title: Vice President
FIRST INTERSTATE BANK OF
TEXAS, N.A.
By: /s/ Ann M. Rhoads
----------------------
Title: Vice President
THE FIRST NATIONAL BANK OF CHICAGO
By: /s/ Daniel B. Catlin
----------------------
Title: Assistant Vice President
THE FUJI BANK LTD., HOUSTON AGENCY
By: /s/ Soichi Yoshida
----------------------
Title: Vice President and
Senior Manager
THE LONG-TERM CREDIT BANK
OF JAPAN, LIMITED,
NEW YORK BRANCH
By: /s/ Satoru Otsubo
----------------------
Title: Joint General Manager
MIDLAND BANK, PLC,
NEW YORK BRANCH
By: /s/ Gregory B. Jansen
----------------------
Title: Director
THE MITSUBISHI TRUST &
BANKING CORPORATION
By: /s/ Masaaki Yamagishi
----------------------
Title: Chief Manager
THE ROYAL BANK OF CANADA
By: /s/ Gil J. Bernard
----------------------
Title: Senior Manager
NATIONAL WESTMINSTER BANK PLC,
NEW YORK BRANCH
By: /s/ Stephen R. Parker
----------------------
Title: Vice President
NATIONAL WESTMINSTER BANK PLC,
NASSAU BRANCH
By: /s/ Stephen R. Parker
----------------------
Title: Vice President
<PAGE>
CONFORMED COPY
ORYX ENERGY COMPANY
$500,000,000
REVOLVING CREDIT AGREEMENT
Dated as of June 1, 1995
<PAGE>
TABLE OF CONTENTS
Page
SECTION 1. Amount and Terms of Credit . . . . . . . . . . . 1
1.01 Revolving Credit Loans.. . . . . . . . . . . . . . 1
1.02 Repayment of Revolving Credit Loans; Evidence of
Debt. . . . . . . . . . . . . . . . . . . . . . . . 2
1.03 Procedure for Revolving Credit Loan Borrowing. . . 2
1.04 Disbursements of Funds With Respect to Revolving
Credit Loans. . . . . . . . . . . . . . . . . . . . 3
1.05 Conversions. . . . . . . . . . . . . . . . . . . . 4
1.06 Pro Rata Borrowings. . . . . . . . . . . . . . . . 4
1.07 Interest . . . . . . . . . . . . . . . . . . . . . 4
1.08 Interest Periods; Continuations. . . . . . . . . . 5
1.09 Increased Costs, Illegality, Etc. . . . . . . . . 6
1.10 Compensation . . . . . . . . . . . . . . . . . . . 9
SECTION 2. Fees; Revolving Credit Commitments; Borrowing
Base Determinations; Maximum Exposure. . . . . . . . . . 10
2.01 Fees . . . . . . . . . . . . . . . . . . . . . . . 10
2.02 Voluntary Reduction of Revolving Credit
Commitment. . . . . . . . . . . . . . . . . . . . . 10
2.03 Borrowing Base Determinations. . . . . . . . . . . 11
2.04 Maximum Exposure . . . . . . . . . . . . . . . . . 17
SECTION 3. Payments . . . . . . . . . . . . . . . . . . . . 17
3.01 Voluntary Prepayments. . . . . . . . . . . . . . . 17
3.02 Mandatory Prepayments of Borrowing Base
Indebtedness. . . . . . . . . . . . . . . . . . . . 18
3.03 Method and Place of Payment. . . . . . . . . . . . 19
3.04 Net Payments . . . . . . . . . . . . . . . . . . . 19
SECTION 4. Letters of Credit; Bid Loans . . . . . . . . . . 21
4.01 L/C Commitment.. . . . . . . . . . . . . . . . . . 21
4.02 Procedure for Issuance of Letters of Credit. . . . 23
4.03 Fees, Commissions and Other Charges. . . . . . . . 23
4.04 L/C Participations . . . . . . . . . . . . . . . . 24
4.05 Reimbursement Obligation of the Company. . . . . . 25
4.06 Obligations Absolute . . . . . . . . . . . . . . . 26
4.07 Letter of Credit Payments. . . . . . . . . . . . . 26
4.08 Application. . . . . . . . . . . . . . . . . . . . 27
4.09 Procedure for Bid Loan Borrowing . . . . . . . . . 27
SECTION 5. Conditions Precedent . . . . . . . . . . . . . . 31
5.01 Agreement. . . . . . . . . . . . . . . . . . . . . 31
5.02 Officer's Certificate. . . . . . . . . . . . . . . 31
5.03 Opinions of Counsel. . . . . . . . . . . . . . . . 31
5.04 Organizational Documents; Corporate Proceedings. . 31
5.05 Fees . . . . . . . . . . . . . . . . . . . . . . . 32
5.06 Reserve and NPV Report . . . . . . . . . . . . . . 32
5.07 No Default; Etc. . . . . . . . . . . . . . . . . . 32
5.08 Conditions Precedent to Subsequent Loans and
Letters of Credit . . . . . . . . . . . . . . . . 32
SECTION 6. Representations and Warranties . . . . . . . . . 33
6.01 Corporate Status . . . . . . . . . . . . . . . . . 33
6.02 Corporate Power and Authority. . . . . . . . . . . 33
6.03 No Violation . . . . . . . . . . . . . . . . . . . 33
6.04 Litigation . . . . . . . . . . . . . . . . . . . . 34
6.05 Financial Statements . . . . . . . . . . . . . . . 34
6.06 Governmental Approvals . . . . . . . . . . . . . . 35
6.07 Use of Proceeds; Regulation U. . . . . . . . . . . 35
6.08 Investment Company Act . . . . . . . . . . . . . . 35
6.09 Public Utility Holding Company Act . . . . . . . . 35
6.10 True and Complete Disclosure . . . . . . . . . . . 35
6.11 No Default . . . . . . . . . . . . . . . . . . . . 36
6.12 Ownership of Property. . . . . . . . . . . . . . . 36
SECTION 7. Covenants. . . . . . . . . . . . . . . . . . . . 36
7.01 Financial Statements and Reports . . . . . . . . . 36
7.02 Notices. . . . . . . . . . . . . . . . . . . . . . 37
7.03 Corporate Franchises . . . . . . . . . . . . . . . 38
7.04 Payment of Taxes, Etc. . . . . . . . . . . . . . . 38
7.05 Compliance with Laws, Etc. . . . . . . . . . . . . 39
7.06 Maintenance of Property; Insurance . . . . . . . . 39
7.07 Liens, Etc. . . . . . . . . . . . . . . . . . . . 39
7.08 Fundamental Changes. . . . . . . . . . . . . . . . 39
7.09 Indebtedness . . . . . . . . . . . . . . . . . . . 39
7.10 Interest Coverage. . . . . . . . . . . . . . . . . 41
7.11 Limitation on Dividends, etc. . . . . . . . . . . 42
7.12 No Further Negative Pledges. . . . . . . . . . . . 42
7.13 Inspection of Property; Books and Records;
Discussions . . . . . . . . . . . . . . . . . . . 43
7.14 Limitation on Investments, Loans and Advances. . . 43
7.15 Limitation on Affiliate Transactions . . . . . . . 44
7.16 Energy Partners and SOLP . . . . . . . . . . . . . 44
7.17 Maintenance of Corporate Separateness. . . . . . . 44
SECTION 8. Events of Default. . . . . . . . . . . . . . . . 45
8.01 Principal. . . . . . . . . . . . . . . . . . . . . 45
8.02 Interest and Other Amounts . . . . . . . . . . . . 45
8.03 Representations and Warranties . . . . . . . . . . 45
8.04 Certain Covenants. . . . . . . . . . . . . . . . . 45
8.05 Covenants. . . . . . . . . . . . . . . . . . . . . 45
8.06 Indebtedness . . . . . . . . . . . . . . . . . . . 45
8.07 Bankruptcy, Etc. . . . . . . . . . . . . . . . . . 46
8.08 ERISA. . . . . . . . . . . . . . . . . . . . . . . 47
8.09 Judgments. . . . . . . . . . . . . . . . . . . . . 47
8.10 Ownership; Directors . . . . . . . . . . . . . . . 47
SECTION 9. The Administrative Agent and the Co-Agents . . . 49
9.01 Appointment. . . . . . . . . . . . . . . . . . . . 49
9.02 Delegation of Duties . . . . . . . . . . . . . . . 49
9.03 Exculpatory Provisions . . . . . . . . . . . . . . 49
9.04 Reliance by Administrative Agent and the Co-
Agents. . . . . . . . . . . . . . . . . . . . . . . 50
9.05 Notice of Default. . . . . . . . . . . . . . . . . 50
9.06 Non-Reliance on Administrative Agent, Co-Agents
and Other Banks . . . . . . . . . . . . . . . . . . 51
9.07 Indemnification. . . . . . . . . . . . . . . . . . 51
9.08 Administrative Agent and Co-Agent in their
Individual Capacities . . . . . . . . . . .. . . .. 52
9.09 Successor Administrative Agent or Co-Agent . . . . 52
SECTION 10. Definitions . . . . . . . . . . . . . . . . . . 53
SECTION 11. Miscellaneous . . . . . . . . . . . . . . . . . 76
11.01 Payment of Expenses; Etc. . . . . . . . . . . . . 76
11.02 Right of Setoff . . . . . . . . . . . . . . . . . 77
11.03 Notices . . . . . . . . . . . . . . . . . . . . . 77
11.04 Effectiveness; Successors and Assigns;
Participations; Purchasing Banks. . . . . . . . . . 78
11.05 No Waiver; Remedies Cumulative. . . . . . . . . . 83
11.06 Payments Pro Rata . . . . . . . . . . . . . . . . 84
11.07 Calculations; Computations. . . . . . . . . . . . 84
11.08 Governing Law; Submission to Jurisdiction;
Venue . . . . . . . . . . . . . . . . . . . . . . . 85
11.09 Counterparts. . . . . . . . . . . . . . . . . . . 86
11.10 Headings Descriptive. . . . . . . . . . . . . . . 86
11.11 Amendment or Waiver . . . . . . . . . . . . . . . 86
11.12 Survival. . . . . . . . . . . . . . . . . . . . . 87
11.13 Domicile of Loans . . . . . . . . . . . . . . . . 87
11.14 WAIVERS OF JURY TRIAL . . . . . . . . . . . . . . 87
11.15 Interest. . . . . . . . . . . . . . . . . . . . . 88
11.16 Confidentiality . . . . . . . . . . . . . . . . . 89
11.17 Existing Credit Agreement . . . . . . . . . . . . 90
11.18 Judgment in a Currency Other Than Dollars . . . . 90
<PAGE>
SCHEDULE A PRICING GRID
ANNEX I COMMITMENTS
ANNEX II LIENS
ANNEX III SUBSIDIARIES
EXHIBIT A-1 Form of Revolving Credit Note
EXHIBIT A-2 Form of Bid Loan Note
EXHIBIT B-1 Form of Opinion of Cravath, Swaine & Moore
EXHIBIT B-2 Form of Opinion of William C. Lemmer
EXHIBIT C-1 Form of Bid Loan Confirmation
EXHIBIT C-2 Form of Bid Loan Offer
EXHIBIT C-3 Form of Bid Loan Request
EXHIBIT D Form of Assignment and Acceptance
<PAGE>
Schedule A
PRICING GRID
Total Indebtedness to
Cash Flow Ratio
Less than or equal to 2.0
>2.0
Less than or equal to 2.5
>2.5
Less than or equal to 2.75
>2.75
Less than or equal to 3.25
>3.25
Less than or equal to 3.75
>3.75
Applicable Margin for
Eurodollar Loans:
.75%
1.125%
1.375%
1.75%
2.0%
2.5%
Applicable Margin for
Base Rate Loans:
0
.125%
.375%
.75%
1.0%
1.5%
Commitment Fee:
.375%
.375%
.50%
.50%
.50%
.50%
For purposes of determining the Applicable Margin and Commitment
Fee for
any date, the Total Indebtedness to Cash Flow Ratio shall be the
Total
Indebtedness to Cash Flow Ratio as of the last day of the fiscal
quarter
most recently ended prior to such date for which the Company
shall have
delivered to the Administrative Agent the compliance certificate
required
by Section 7.01(c); provided that, at any time prior to the date
by which
the first compliance certificate is required to be delivered by
the Company
under Section 7.01(c), the Total Indebtedness to Cash Flow Ratio
shall be
deemed, solely for purposes of determining the Applicable Margin
and
Commitment Fee, to be greater than 3.25 to 1 but less than or
equal to 3.75
to 1; and provided further that at any time during which the
Company is in
default of its obligation to deliver a compliance certificate
required to
be delivered under Section 7.01(c) by the last date following the
end of
the preceding quarter or fiscal year, as the case may be, by
which the
Company can deliver such compliance certificate without being in
default of
such obligation, the Total Indebtedness to Cash Flow Ratio shall
be deemed,
solely for the purposes of determining the Applicable Margin and
Commitment
Fee, to be greater than 3.75 to 1 until such time as the Company
shall
deliver such compliance certificate.
EXHIBIT 10.2
SALE AND PURCHASE AGREEMENT
THIS AGREEMENT is entered into this 17th day of February, 1995
--------------------------
by and between:
1. ORYX ENERGY COMPANY whose principal place of business is
13155 Noel Road, Dallas, Texas 75240-5067 (hereinafter
referred to as "ORYX"),
2. ORYX INDONESIA HOLDING COMPANY whose principal place of
business is 13155 Noel Road, Dallas, Texas 75240-5067
(hereinafter referred to as the "Seller"), and
3. NOVUS PETROLEUM LIMITED (A.C.N. 067 777 440) whose principal
place of business is c/o Phillips Fox, 255 Elizabeth Street,
Sydney NSW 2000 Australia (hereinafter referred to as the
"Purchaser").
WHEREAS:
A. ORYX and Fern Consultants Limited, as sponsor of the
Purchaser, have executed a letter dated January 5, 1995
whereby they agreed to negotiate a Sale and Purchase
Agreement pursuant to which ORYX will cause to be sold and
the Purchaser will purchase, inter alia, one hundred percent
(100%) of the issued capital stock of Oryx Canada
(Indonesian Holdings) Ltd. (hereinafter referred to as
"OC(IH)L");
B. Seller beneficially owns and legally owns all issued capital
stock of OC(IH)L;
C. OC(IH)L beneficially owns and legally owns all issued
capital stock of Oryx Canada (Kakap) Ltd. (hereinafter
referred to as "OC(K)L"), Oryx Canada (Malacca Strait) Ltd.,
(hereinafter referred to as "OC(MS)L"), and Oryx Canada
(Southeast Sumatra) Ltd., (hereinafter referred to as
"OC(SS)L") and beneficially and legally owns fifty percent
(50%) of the capital stock of 113857 Canada Ltd.;
D. OC(K)L, OC(MS)L, and OC(SS)L hold undivided participating
interests, in the percentages set out in Schedule 4, in the
Kakap PSC, the Malacca Strait PSC and the Southeast Sumatra
PSC (all as hereinafter defined) respectively;
E. The interests to be transferred hereunder comprise all of
the Seller's ownership interests in OC(IH)L;
<PAGE>
F. ORYX, along with certain of its Affiliates, and the
Purchaser have entered into agreements of even date herewith
for the sale and purchase of the ownership interest in Oryx
U.K. (Indonesia Holdings) Ltd. (the "OUKEC Agreement"), in
Oryx Indonesia Brantas Company (the "OIBC Agreement") and in
Oryx Australia Energy Company Pty. Ltd. (the "ORYX AUSTRALIA
Agreement"); and
G. ORYX, the Seller and the Purchaser wish to set out the terms
and conditions upon which the Seller will sell and the
Purchaser will purchase the ownership interest in OC(IH)L.
NOW THEREFORE, in consideration of the obligations contained
herein, it is hereby agreed as follows:
I. DEFINITIONS
1.1 In this Agreement the following expressions shall
except where expressly stated otherwise, have the
following respective meanings:
"Affiliate" means in relation to any Party any company
or other entity which controls or is controlled by
that Party or is controlled by a company or other
entity which controls that Party. "Control" means the
right to exercise, directly or indirectly, more than
fifty percent (50%) of the voting rights of a company
or other entity.
"Asset" means the entire issued capital stock of
OC(IH)L consisting of one thousand (1,000) common
shares of no par value and one hundred twenty-three
thousand four hundred twenty-seven (123,427) Class A
preference shares of no par value;
"Business Day" means a day other than Saturday on
which banks are or, as the context may require, were
generally open for business in Canada;
"Closing" means the delivery by the Seller to the
Purchaser of certificates for all of the issued shares
of OC(IH)L, OC(K)L, OC(MS)L and OC(SS)L, the payment
by the Purchaser to ORYX of the Consideration and any
sums payable in accordance with Clause 3.5 and the
performance of such concomitant acts as are required
of any of the Parties pursuant to Clause 5.1;
"Consideration" means the consideration for the
transfer of the Asset as set out in Clause 3.1;
<PAGE>
"Contract Area" means, with respect to any Production
Sharing Contract, the area covered for the time being
by that Production Sharing Contract;
"Data" means all data held by any of OC(K)L, OC(MS)L
or OC(SS)L directly relating to the Production Sharing
Contract in which it holds an interest whether in hard
copy or digital form (where available) including but
not limited to geoscientific and engineering data and
logs, but excluding Traded Data;
"Data Room Document" means the documents relating to
the Asset or to OC(IH)L's Business made available to
the Purchaser and set out in Schedule 5 hereto,
together with, in the event Closing takes place, such
other documents as ORYX may have notified to the
Purchaser in writing during the Interim Period and,
where the context so admits, any one or more of such
documents;
"Effective Date" means 00:01 hours Jakarta, Indonesia
time on 1st January 1995;
"Government" means the Government of the Republic of
Indonesia;
"Interim Period" means the period of time commencing
on the Effective Date and terminating at Closing.
"Joint Operating Agreement" means, in relation to the
Malacca Strait PSC, the Operating Agreement dated 2
July 1971 originally among Atlantic Richfield
Indonesia Inc., Pan Ocean Oil Corporation (Indonesia)
and Houston Oils Limited; in relation to the Kakap
PSC, the Operating Agreement dated 23 November 1977
originally among Marathon Petroleum Indonesia Ltd.,
Hudbay Oil (Indonesia), Ltd. and Coastal Indonesia,
Inc.; and in relation to the Southeast Sumatra PSC,
the Operating Agreement dated 6 September 1968
originally among Independent Indonesian American
Petroleum Company, Carver-Dodge International
Corporation and Warrior International Corporation;
"Kakap PSC" means the Production Sharing Contract
dated 22 March 1975 originally among Pertamina,
Phillips Petroleum Company Indonesia and Tenneco
Indonesia Inc.;
"Malacca Strait PSC" means the Production Sharing
Contract dated 5 August 1970 originally between
Pertamina and Kondur Petroleum S.A.;
"OC(IH)L" means Oryx Canada (Indonesian Holdings)
Ltd., a company incorporated under the laws of Canada;
"OC(IH)L's Business" means the interests, activities,
assets, liabilities and all other affairs of OC(IH)L,
including but not limited to the interests,
activities, assets, liabilities and all other affairs
of each of OC(K)L, OC(MS)L and OC(SS)L (including but
not limited to their respective participating
interests in the Production Sharing Contracts and the
corresponding joint operating agreements and other
related agreements);
"OC(K)L" means Oryx Canada (Kakap) Ltd., a company
incorporated under the laws of Canada;
"OC(MS)L" means Oryx Canada (Malacca Strait) Ltd., a
company incorporated under the laws of Canada;
"OC(SS)L" means Oryx Canada (Southeast Sumatra) Ltd.,
a company incorporated under the laws of Canada;
"OIBC Agreement" means the Sale and Purchase Agreement
referred to in recital F. providing for the transfer
of the ownership interest in Oryx Indonesia Brantas
Company;
"ORYX AUSTRALIA Agreement" means the Sale and Purchase
Agreement referred to in recital F. providing for the
transfer of the ownership interest in Oryx Australia
Energy Company Pty. Ltd.;
"OUKEC Agreement" means the Sale and Purchase
Agreement referred to in recital F. providing for the
transfer of the ownership interest in Oryx U.K.
(Indonesia Holdings) Ltd.;
"Party" means any party to this Agreement;
"Pertamina" means Perusahaan Pertambangan Minyak dan
Gas Bumi Negara;
"Petroleum" has the meaning ascribed to it under the
Production Sharing Contracts;
<PAGE>
"Production Sharing Contract" means the Malacca Strait
PSC, the Kakap PSC or the Southeast Sumatra PSC (as
the context requires) and "Production Sharing
Contracts" means all three of the aforementioned
contracts collectively;
"Prospectus" means the prospectus to be registered
under the Corporation Laws of Australia and issued by
the Purchaser for the offer of its shares for
subscription to fund, among other things, the purchase
of the Asset.
"Southeast Sumatra PSC" means the Production Sharing
Contract dated 6 September 1968 originally between
Pertamina and Independent Indonesian American
Petroleum Company;
"Traded Data" means with respect to any Contract Area
data which is related to an area outside that Contract
Area and which has been acquired by trade, purchase or
otherwise by or on behalf of OC(K)L, OC(MS)L or
OC(SS)L (either alone or in conjunction with other
parties) under the relevant Production Sharing
Contract or as a party to the related Joint Operating
Agreement from a third party or parties, where such
data cannot be provided to the Purchaser because such
transfer is prohibited by the agreement by which the
data were obtained;
"Underwriting Agreement" means the underwriting
agreement to be entered into by the Purchaser in
relation to the offer of its shares under the
Prospectus;
"Underwriting Date" means the date on which the
Underwriting Agreement is fully executed; and
"113857 Canada Ltd." means 113857 Canada Ltd., a
company incorporated under the laws of Canada.
1.2 All references to Clauses, recitals and Schedules are,
unless otherwise expressly stated, references to
Clauses of and recitals and Schedules to this
Agreement.
1.3 The headings in this Agreement are inserted for
convenience only and shall not be used in construing
this Agreement.
<PAGE>
1.4 Any reference to any statute or statutory instrument
in this Agreement shall be a reference to the same as
amended, supplemented or re-enacted from time to time.
Any reference in this Agreement to another agreement
shall be construed as a reference to the same as
amended, varied, supplemented or novated prior to the
date hereof.
1.5 Unless the context otherwise requires, reference to
the singular shall include a reference to the plural
and vice-versa; and reference to any gender shall
include a reference to all other genders.
1.6 The Schedules attached hereto form part of this
Agreement. In the event of any conflict between the
provisions of this Agreement and the Schedules hereto,
the provisions of this Agreement shall prevail.
II. TRANSFER OF THE ASSET
2.1 Sale and Purchase
2.1.1 Subject as herein provided and subject to the
Data Room Documents, the Seller as beneficial
and legal owner of the Asset hereby agrees for
the Consideration and other payments provided
for in Clause 3 to transfer to the Purchaser at
Closing and the Purchaser hereby agrees to
accept at Closing the Asset free (save as
referred to in this Agreement and the Data Room
Documents) from all liens, charges, mortgages,
pledges, encumbrances or security interests
whatsoever relating thereto.
2.1.2 At Closing, the transfer referred to in 2.1.1
above shall be deemed for all purposes to be
made with effect from the Effective Date.
2.1.3 The Purchaser shall not be required to acquire
any of the staff or premises of OC(IH)L,
OC(K)L, OC(MS)L or OC(SS)L.
2.2 The respective obligations of the Seller to transfer
(or cause to be transferred) and the Purchaser to
accept the Asset as at the Effective Date shall be
subject to:
2.2.1 receipt of any necessary consents or approvals,
including but not limited to those of any
regulatory or governmental authorities in the
United States, Canada or Indonesia, to the
transactions contemplated by this Agreement;
2.2.2 at ORYX's discretion, the Purchaser having
notified to ORYX in writing not less than
thirty (30) Business Days beforehand in respect
of OC(IH)L, OC(K)L, OC(MS)L and OC(SS)L:
(a) the identity of the respective directors
and officers to be appointed at Closing;
(b) the address of the respective registered
offices to be effective as from Closing;
and
(c) the respective accounting reference dates
to apply as from Closing;
2.2.3 at ORYX's discretion, execution by February 28,
1995 of the Underwriting Agreement for the
Purchaser containing terms and conditions
satisfactory to the Purchaser, ORYX and the
Seller;
2.2.4 the Purchaser successfully raising the amount
of cleared funds set out in the Underwriting
Agreement to finance, among other things, the
purchases contemplated by this Agreement, the
OUKEC Agreement, the OIBC Agreement and the
ORYX AUSTRALIA Agreement by the issue of its
shares pursuant to the Prospectus and the
Underwriting Agreement, by April 30, 1995; and
2.2.5 contemporaneous Closing (as defined therein) on
the OUKEC Agreement, the OIBC Agreement and the
ORYX AUSTRALIA Agreement, unless an agreement
should terminate, in which case it will not be
necessary to close on that agreement.
2.3 If any of the conditions set out above is not
satisfied by the date specified, if any, then the
Seller may terminate this Agreement by written notice
to the Purchaser, and neither the Seller nor the
Purchaser shall have any further liability to the
other hereunder.
III. CONSIDERATION AND OTHER PAYMENTS
3.1 Consideration
The Consideration for the transfer of the Asset to the
Purchaser shall be:
<PAGE>
3.1.1 US Dollars Sixteen Million Five Hundred Ninety-
nine Thousand (US$16,599,000) for the Class A
preference shares of OC(IH)L;
3.1.2 US Dollars One Thousand (US$1,000) for the
common shares of OC(IH)L;
3.1.3 proceeding to Closing on the OUKEC Agreement;
3.1.4 proceeding to Closing on the OIBC Agreement;
and
3.1.5 proceeding to Closing on the ORYX AUSTRALIA
Agreement.
3.2 Other Payments
The Purchaser shall pay to ORYX or ORYX shall pay to
the Purchaser (as the case may be) such further sums
as may be payable pursuant to Clauses 3.3, 3.4, 3.5,
3.6, 7, 8.1 and 8.2
3.3 Working Capital
3.3.1 The Purchaser shall pay to ORYX or ORYX shall
pay to the Purchaser (as the case may be) a sum
to reflect the monetary value of working
capital of OC(IH)L, OC(K)L, OC(MS)L and OC(SS)L
as set out in Schedule 3. The said sum shall
be set out in a statement to be prepared and
given by ORYX to the Purchaser within one (1)
calendar month after Closing. Such statement
shall be a statement of working capital and a
statement of adjustments made pursuant to
Schedule 3.
3.3.2 Working capital balances used for the purposes
of the statement referred to in Clause 3.3.1
shall be taken from the individual accounts,
statements and records for the year ending on
31 December 1994. A copy of the individual
accounts, statements and records shall be
provided by ORYX to the Purchaser with such
statement. Verification of the aforesaid
statement shall be carried out within sixty
(60) days of receipt of such statement, and
notwithstanding the provisions of Clause 3.3.3,
settlement of the sum detailed in the statement
as varied by any adjustment agreed between ORYX
and the Purchaser shall be made within the said
sixty (60) day period.
<PAGE>
3.3.3 In the event that ORYX and the Purchaser cannot
agree upon any matter to which the statement
referred to in Clause 3.3.2 relates, the same
shall be referred for resolution in accordance
with Clause XVII, except that the arbitrator
must be a certified public accountant or
independent chartered accountant. The decision
of the arbitrator so appointed shall, in the
absence of manifest error, be final and binding
on ORYX and the Purchaser and settlement of any
outstanding amount shall be made within five
(5) Business Days of such decision. The costs
of the arbitrator shall be borne equally by
ORYX and the Purchaser.
3.4 Interim Period Adjustment
3.4.1 Purchaser shall pay ORYX the amount of all
obligations and liabilities pertaining to the
Production Sharing Contracts paid on behalf of
OC(IH)L, OC(K)L, OC(MS)L or OC(SS)L during the
Interim Period in respect of the period on and
after the Effective Date.
3.4.2 ORYX shall pay to the Purchaser the amount of
all monies received pertaining to the
Production Sharing Contracts received by ORYX
or the Seller on behalf of OC(IH)L, OC(K)L,
OC(MS)L or OC(SS)L in respect of the period on
and after the Effective Date.
3.4.3 The amounts set out above shall be set out in a
statement to be prepared and given by ORYX to
the Purchaser within one (1) calendar month
after Closing. Verification of said statement
shall be carried out within sixty (60) days of
receipt of such statement and notwithstanding
the provision of Clause 3.4.4, settlement of
the amounts detailed in the statement as varied
by any adjustment agreed between ORYX and the
Purchaser shall be made within the said sixty
(60) day period.
3.4.4 In the event that ORYX and the Purchaser cannot
agree upon any matter to which the statement
referred to in Clause 3.4.3 relates, the same
shall be referred for resolution in accordance
with Clause XVII, except that the arbitrator
must be a certified public accountant or an
independent chartered accountant. The decision
of the arbitrator so appointed shall, in the
absence of manifest error, be final and binding
on ORYX and the Purchaser and settlement of any
outstanding amount shall be made within five
(5) Business Days of such decision. The costs
of the arbitrator shall be borne equally by
ORYX and the Purchaser.
3.5 Interest on Consideration
The Consideration shall bear simple interest from the
Effective Date until Closing (both days inclusive),
beginning on the dates noted below and thereafter on
Monday of each succeeding one (1) week term, at the
following rates:
(a) from the Effective Date through the
Underwriting Date: the weighted average one
(1) month term LIBOR rate for the relevant
period for U.S. dollar deposits as published by
the Wall Street Journal (or if not published,
then by the Financial Times of London), plus
two (2) percentage points; and
(b) after the Underwriting Date through Closing:
the weighted average one (1) month term LIBOR
rate for the relevant period for U.S. dollar
deposits as published by the Wall Street
Journal (or if not published, then by the
Financial Times of London), plus one (1)
percentage point.
The interest shall be paid with the Consideration when
the Consideration is paid.
3.6 Interest on Further Sums
In the event of late payment of further sums that may
be payable pursuant to Clauses 3.3 or 3.4, the
Purchaser shall pay to ORYX or ORYX shall pay to the
Purchaser (as the case may be) simple interest on the
amount not paid on time at the weighted average one
(1) month term LIBOR rate for the relevant period for
U.S. dollar deposits as published by the Wall Street
Journal (or if not published, then by the Financial
Times of London), plus two (2) percentage points,
beginning on the date due and thereafter on Monday of
each succeeding one (1) week term, from the date due
until the date paid.
<PAGE>
IV. INTERIM PERIOD
During the Interim Period:
4.1 The Parties shall each use all reasonable endeavors to
obtain all consents, approvals and clearances that may
be required to effect the transfer of the Asset to the
Purchaser;
4.2 ORYX shall keep the Purchaser informed of all material
matters known to ORYX in relation to the Kakap PSC,
the Malacca Strait PSC and the Southeast Sumatra PSC;
and
4.3 The Seller shall conduct all business in relation to
the Asset in a proper and workmanlike manner in
accordance with good oilfield practice and shall
ensure that OC(IH)L, OC(K)L, OC(MS)L and OC(SS)L
continue to act in and not incur liabilities other
than those associated with the ordinary course of
business as explorers for and producers of oil and
gas.
V. CLOSING
5.1 Time of Closing
Closing shall take place at a mutually acceptable time
and place in the United States after the later to
occur of:
(a) fulfillment of all requirements for Closing on
the OUKEC Agreement, the OIBC Agreement, the
ORYX AUSTRALIA Agreement and the OZOC
Agreement, or
(b) satisfaction of the condition set out in Clause
2.2.1;
and on the date of:
(c) satisfaction of the condition set out in Clause
2.2.4.
Subject to the occurrence of the conditions set out in
paragraphs (a) and (b), the Purchaser shall give ORYX and
the Seller seven (7) days notice of the date that it expects
the condition in paragraph (c) to be satisfied.
5.2 Payment and Delivery at Closing
At or before Closing:
<PAGE>
5.2.1 The Purchaser shall pay to ORYX by wire
transfer (which shall be deemed to have been
made upon receipt by ORYX's bank in ORYX's
account) as directed by ORYX in United States
Dollars the cash component of the Consideration
set out in Clause 3.1 together with any sums
payable in accordance with Clause 3.5.
5.2.2 Oryx shall deliver to the Purchaser:
(a) a copy, certified as a true copy and in
full force and effect by a director and
the secretary or an assistant secretary of
the Seller, of a resolution of the Board
of Directors of the Seller approving the
transfer of the Asset, on the terms of
this Agreement, by the Seller, and
authorizing the execution by the Seller of
this Agreement and all other documents
contemplated hereby; and
(b) copies of the consents or approvals, if
any, referred to in Clause 2.2.1 and
obtained by or on behalf of ORYX or the
Seller.
5.2.3 The Seller shall deliver to the Purchaser:
(a) an instrument in writing signed by the
Seller as the sole shareholder of OC(IH)L
approving the transfer of the issued
shares of OC(IH)L to the Purchaser;
(b) a certificate for all of the issued shares
of OC(IH)L, accompanied by a stock
transfer power, executed in favor of the
Purchaser, and a direction to the
Secretary of OC(IH)L to register the share
in the name of the Purchaser; and
(c) certificates for all of the issued shares
of each of OC(K)L, OC(MS)L and OC(SS)L;
5.2.4 The Parties shall execute all such other
documents and do all acts and things as may be
reasonably required in order to effect the
transfer of the Asset to the Purchaser and
otherwise carry out the true intent of this
Agreement.
<PAGE>
5.3 If Closing has not occurred by May 19, 1995 and at
that time or any time thereafter the only unsatisfied
condition to Closing is the condition contained in
Clause 2.2.4, then the Seller may terminate this
Agreement by written notice to the Purchaser, and
neither the Seller nor the Purchaser shall have any
further liability to the other hereunder, except as
provided in Clause 15.3.
5.4 The Seller shall procure that resolutions of the
respective boards of directors of OC(IH)L, OC(K)L,
OC(MS)L and OC(SS)L are passed at or before Closing:
(a) approving for registration (subject to being
duly stamped) the transfers referred to in
Clause 5.2.3, and
(b) providing for the following to occur with
immediate effect:
(i) the appointment of the respective
directors and officers notified pursuant
to Clause 2.2.2(a);
(ii) the resignation of the respective
existing directors and officers;
(iii) the change of the addresses of the
respective registered offices to those
notified pursuant to Clause 2.2.2(b);
and
(iv) the change (if a change is required) of
the respective accounting reference
dates to those notified pursuant to
Clause 2.2.2(c).
5.5 At all times after Closing, ORYX shall treat and cause
any relevant Affiliate thereof (excluding, for the
avoidance of doubt, OC(IH)L, OC(K)L, OC(MS)L and
OC(SS)L) to treat as terminated, and the Purchaser
shall cause OC(IH)L, OC(K)L, OC(MS)L and OC(SS)L to
treat as terminated, any and all agreements (whether
written or oral) between OC(IH)L, OC(K)L, OC(MS)L and
OC(SS)L on the one hand and ORYX, the Seller or any
Affiliate thereof on the other hand, which would
otherwise have continued in force after Closing. This
provision shall not affect indemnities given in favor
of officers and directors of OC(IH)L, OC(K)L, OC(MS)L
and OC(SS)L.
5.6 As soon as reasonably practicable following Closing,
the Seller shall deliver to the Purchaser at a place
in Canada to be agreed between them:
(a) the respective company seals,
(b) the respective registers of members and share
ledger (with any unissued share certificates),
the respective registers of directors and
officers and the respective other statutory
registers,
(c) the respective minute books,
(d) the respective Memoranda of Association and
Articles of Association,
(e) the respective Certificates of Incorporation,
and
(f) resignations in writing by each of the
directors and officers of OC(IH)L, OC(K)L,
OC(MS)L and OC(SS)L to be effective at Closing.
5.7 To the extent not already delivered or provided, ORYX
will deliver to the Purchaser, or provide the
Purchaser with access to, the Data and copies of the
Data Room Documents and such other relevant
documentation relating to OC(IH)L'S Business as the
Purchaser may reasonably request, as soon as
practicable after Closing.
5.8 As soon as practicable after, and in any case not
later than five (5) working days after, Closing, the
Purchaser shall effect or procure the due registration
and stamping of the transfers of legal ownership
referred to in Clause 5.2.3.
5.9 The Purchaser shall cause OC(IH)L, OC(K)L, OC(MS)L and
OC(SS)L:
(a) as soon as reasonably practicable after (but in
any case not later than sixty (60) days after)
Closing, to effect such a change of corporate
name that neither the expression "ORYX" nor any
other expression likely to suggest a connection
with the ORYX group of companies is contained
in the revised names, and
<PAGE>
(b) to cease as soon as reasonably practicable, but
in any case no later than at the time of such
change, to use any stationery, invoices, forms,
seals, trade marks, logos and any other similar
articles or symbols showing the expression
"ORYX" or any other expression likely to
suggest a connection with the ORYX group of
companies. In the period between Closing and
the time of such change the Purchaser shall
take all reasonable steps to ensure that any
use of the existing names of OC(IH)L, OC(K)L,
OC(MS)L and OC(SS)L or of any of the aforesaid
items occurs in such a manner as to minimize
any impression that the relevant company
continues to be a member of the ORYX group of
companies.
5.10 At or before Closing, the Seller will provide the
Purchaser with resignations of all ORYX personnel
serving on Operating Committees or Technical
Committees under the Joint Operating Agreements.
5.11
A. Prior to Closing, the Seller and the Purchaser
will in good faith discuss the possibility of
OC(IH)L divesting itself of 113857 Canada Ltd.
such that the Purchaser will acquire no
interest in 113857 Canada Ltd. through this
Agreement.
B. Notwithstanding Paragraph A, OC(IH)L shall only
be required to divest itself of 113857 Canada
Ltd. if Seller has determined that it is not
reasonably likely that any adverse tax
consequences will arise therefrom to ORYX and
the Seller.
C. In the event that Paragraph B applies, such
that the Purchaser acquires an interest in
113857 Canada Ltd. through this Agreement at
Closing, then the warranty in Paragraph 22 of
Schedule 1 and the indemnity in Clause
7.4.1(a)(v) shall apply.
VI. REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS
6.1 Subject to the provisions of Clause 6.3, ORYX and the
Seller hereby represent and warrant to the Purchaser
in terms set out in Schedule 1 and such
representations and warranties shall be deemed to be
repeated at Closing.
6.2 The Purchaser hereby represents and warrants to ORYX
and the Seller in terms set out in Schedule 2 and such
representations and warranties shall be deemed to be
repeated at Closing.
6.3 The Purchaser shall not be entitled to claim that any
fact or matter constitutes a breach of the
representations and warranties set out in Schedule 1
hereto to the extent that such fact or matter is
referred to herein or in the Data Room Documents or
has been disclosed in writing by ORYX or on behalf of
the Seller to the Purchaser prior to the date hereof,
is known to the Purchaser, or is disclosed pursuant to
Clause 6.4 prior to Closing.
6.4 ORYX and the Seller shall use all reasonable efforts
to ensure that the representations and warranties
referred to in Clause 6.1 are true and accurate at
Closing but if notwithstanding such efforts any matter
or thing occurs which would be materially inconsistent
with any of such representations and warranties at
Closing, ORYX or the Seller shall promptly notify the
Purchaser thereof.
6.5 In the event of any matter or thing materially
inconsistent with any of the representations or
warranties given by ORYX or the Seller in or pursuant
to this Agreement being notified by ORYX or on behalf
of the Seller to the Purchaser prior to Closing and
such matter or thing continuing to be materially
inconsistent at the date agreed for Closing, the
Purchaser shall not be bound to complete the
acquisition of the Asset and the Purchaser may by
notice in writing to ORYX prior to Closing rescind
this Agreement. Such right of rescission shall be the
Purchaser's only remedy, and there shall be no
liability on the part of the Purchaser or ORYX or the
Seller with respect to such matters or thing whether
or not this Agreement is rescinded.
6.6 Subject to all other provisions of this Clause, the
Purchaser may recover from ORYX or the Seller any
amount the Purchaser is obligated to pay to a third
party under the relevant Production Sharing Contract
and/or Joint Operating Agreement which arises directly
from a breach of a representation or warranty by ORYX
or the Seller. No claim for breach of any
representation or warranty by ORYX or the Seller, or
the Purchaser, in or pursuant to this Agreement, or
otherwise in relation to the transfer and purchase of
the Asset shall be made after February 29, 1996,
unless, prior to February 29, 1996, written notice of
the matter complained of (giving such details of such
matter as shall then be reasonably practicable) shall
have been given by the Purchaser to ORYX or the Seller
or as the case may be by ORYX or the Seller to the
Purchaser PROVIDED ALWAYS that neither the Purchaser
nor ORYX and the Seller shall be entitled to recover
in respect of any claim or claims (whether relating to
breach of warranty, representation or otherwise but
excluding any claim made under Clauses 3.1 or 3.2)
relating to the subject matter of this Agreement, an
amount which either would exceed in aggregate the
Consideration for the Asset, or would be less in
aggregate than one percent (1%) of such Consideration.
FURTHER PROVIDED THAT NOTWITHSTANDING ANY OTHER
PROVISION OF THIS AGREEMENT, NO PARTY SHALL BE LIABLE
UNDER ANY CIRCUMSTANCES ARISING UNDER THIS AGREEMENT
FOR ANY CONSEQUENTIAL LOSS OR DAMAGE WHETHER ARISING
IN CONTRACT OR TORT (INCLUDING NEGLIGENCE OR OTHER
FAULT OF THE PARTY). FOR PURPOSES OF THIS CLAUSE,
CONSEQUENTIAL LOSS SHALL INCLUDE BUT NOT BE LIMITED TO
INABILITY TO PRODUCE PETROLEUM, LOST PRODUCTION AND
LOSS OF PROFITS.
6.7 If the Purchaser receives any claim or becomes aware
of any fact which may result in the Purchaser having a
claim against ORYX or the Seller under this Clause,
the Purchaser shall promptly notify ORYX or the Seller
thereof in writing and ORYX or the Seller shall be
entitled to take and/or require the Purchaser to take
any reasonable action it may request to resist such
claim or do any reasonable act or thing in the name of
the Purchaser but at the expense of ORYX or the Seller
and to have the conduct of any appeal, dispute,
compromise or defense thereof and of any incidental
negotiations and the Purchaser will give ORYX and the
Seller all cooperation, access and assistance for the
purposes of considering and resisting such claim as
they may reasonably require provided always that the
Purchaser is indemnified to its reasonable
satisfaction by ORYX or the Seller against all claims,
costs, expenses, damages or losses which may thereby
be incurred.
6.8 The Purchaser recognizes that, in accordance with the
Production Sharing Contracts, title to any facilities
held or brought into being in connection with
operations under the Production Sharing Contracts lies
with Pertamina, and none of the provisions of this
Agreement is to be construed to imply any warranty
that OC(IH)L, OC(K)L, OC(MS)L or OC(SS)L owns any of
such facilities.
<PAGE>
6.9 Except as set forth in Clause 6.1, as modified by
Clause 6.3, ORYX and the Seller make no
representations or warranties in respect of any matter
or thing and disclaim all liability and responsibility
for any representation, warranty, statement, opinion,
information or advice made or communicated (orally or
in writing) to the Purchaser (including without
limitation any representation, warranty, statement,
opinion, information or advice made or communicated to
the Purchaser by any officer, director, shareholder,
employee, agent, consultant, representative or advisor
of ORYX or the Seller) and the Purchaser acknowledges
and confirms that it has not relied upon any such
representation, warranty, statement, opinion,
information or advice in entering into or carrying out
the transactions contemplated by this Agreement.
6.10 Notwithstanding anything contained in Clauses 6.1 and
6.3, the Purchaser acknowledges that a signature or
other bonus is payable to Pertamina in 1995 in respect
of the Southeast Sumatra PSC.
6.11 Notwithstanding anything contained in Clauses 6.1 and
6.3, ORYX and the Seller make no representations or
warranties whatsoever as to the amounts of reserves
that may be attributable to the Production Sharing
Contracts or any of them, nor as to any geological,
geophysical, engineering, economic, tax, legal or
other interpretations, forecasts or evaluations. The
Purchaser acknowledges and confirms that no such
representations or warranties have been made and shall
indemnify and defend ORYX and the Seller against any
claims, demands, causes of action, costs, expenses and
liabilities arising out of or related to the
Prospectus or the offering of the Purchaser's shares.
6.12 Notwithstanding anything contained in Clauses 6.1 and
6.3, the Purchaser acknowledges and confirms that it
has made its own independent investigation, analysis
and evaluation of the geological, geophysical,
engineering, economic and tax aspects of the
Production Sharing Contracts based on the Data Room
Documents, and acknowledges and confirms that in
making the decision to purchase OC(IH)L it has relied
solely upon its independent investigation of the Data
Room Documents and that of its representatives,
including professional, legal, tax, financial,
business and other advisors.
<PAGE>
6.13 Except as provided in Paragraph 21 of Schedule 1, ORYX
and the Seller make no representations or warranties
in relation to any tax matter, and the Purchaser
acknowledges that all issues relating to tax shall be
dealt with in accordance with Clause 7 hereof.
6.14 ORYX and the Seller make no representations or
warranties in relation to any claim that may be made
by Pertamina relating to the period prior to the
Effective Date as a result of a Pertamina audit of the
Production Sharing Contracts or any of them.
VII. AUDITS AND TAXATION
7.1 Audits
7.1.1 In the event that there is any audit claim by
OC(K)L, OC(MS)L or OC(SS)L with respect to
OC(IH)L's Business and relating to the period
prior to the Effective Date then the Purchaser
shall cause OC(K)L, OC(MS)L or OC(SS)L to
pursue such claim in accordance with the
relevant Joint Operating Agreement or other
governing document at the reasonable direction
of ORYX and/or the Seller. The benefit of any
successful audit claim relating to the period
prior to the Effective Date shall accrue to
ORYX.
7.2 Taxation
Tax Returns
7.2.1 The Seller or its duly authorized agents shall
prepare the Indonesian and Canadian tax returns
of OC(IH)L, OC(K)L, OC(MS)L and OC(SS)L for all
accounting periods ended on or prior to the
Effective Date, to the extent that the same
shall not have been prepared before Closing.
The Purchaser shall afford such access to the
books, accounts and records of OC(IH)L, OC(K)L,
OC(MS)L and OC(SS)L as is necessary and
reasonable to enable the Seller or its duly
authorized agents to prepare returns and
conduct matters relating thereto. The
Purchaser shall also procure that each of
OC(IH)L, OC(K)L, OC(MS)L and OC(SS)L shall
authorize, sign and submit such tax returns to
the appropriate authority without amendment (or
with such amendments as ORYX or the Seller may
in their discretion agree).
7.2.2 The Purchaser or its duly authorized agents
shall prepare the Indonesian and Canadian tax
returns of OC(IH)L, OC(K)L, OC(MS)L and OC(SS)L
for all accounting periods ending after the
Effective Date. The Purchaser shall procure
that each of OC(IH)L, OC(K)L, OC(MS)L and
OC(SS)L makes all tax claims and elections
under the applicable tax law in respect of
dividends and distributions paid by those
companies during the Interim Period in
accordance with the directions of ORYX or the
Seller. The Purchaser also procures to deliver
to ORYX at its reasonable request a copy of any
tax return filed by the Purchaser or its duly
authorized agents for any taxable period
including the Interim Period.
7.3 Taxes Included in Elements of Working Capital
7.3.1 Tax assets/liabilities including current and
deferred tax items shall be specifically
excluded from the working capital calculations
referred to in Schedule 3 except as follows.
Any difference between the amount of any
estimated tax payments made by OC(IH)L, OC(K)L,
OC(MS)L and OC(SS)L prior to the Effective Date
in respect of the accounting period ended 31
December 1994 and the amount of tax reported on
a tax return prepared by the Seller pursuant to
Clause 7.2.1 hereinbefore for the accounting
period ended 31 December 1994 shall be included
in the working capital calculations referred to
in Schedule 3 as appropriate.
7.4 Adjustment to the Consideration for Taxes
7.4.1 Subject to Clause 7.4.2, Oryx and Seller hereby
covenant with the Purchaser to pay to the
Purchaser by way of adjustment to the
Consideration an amount equal to:
(a) Any Canadian or Indonesian tax liability of
OC(IH)L, OC(K)L, OC(MS)L or OC(SS)L arising:
(i) as a consequence of or by reference
to any transaction which occurred
on or before the Effective Date
where the tax consequences of the
transaction could not reasonably
have been foreseen during the
Purchaser's due diligence
investigations having regard to the
disclosures made by Oryx or the
Seller in the Data Room Documents
prior to Closing;
(ii) in respect of or by reference to
any income, profits or gains which
were earned or accrued prior to the
Effective Date (and taken into
account as an asset in the working
capital calculations referred to in
Schedule 3) but received on or
after the Effective Date and
became subject to tax for a taxable
period ending after the Effective
Date;
(iii) from the repayment on or before
Closing by any of OC(IH)L, OC(K)L,
OC(MS)L or OC(SS)L of any
intercompany indebtedness between
any of those companies and any
member of the Oryx group of
companies, or the payment of any
dividend on or before Closing, by
any of OC(IH)L, OC(K)L, OC(MS)L or
OC(SS)L to any member of the ORYX
group of companies;
(iv) in respect of Canadian or
Indonesian withholding tax
liability in relation to the period
1 January 1990 to the Effective
Date;
(v) if OC(IH)L has not divested itself
of 113857 Canada Ltd. in accordance
with Clause 5.11, out of the
Purchaser's acquisition of 113857
Canada Ltd. pursuant to this
Agreement or from the business,
activities or affairs of 113857
Canada Ltd. accruing prior to
Closing.
(b) Any reasonable legal and accounting costs and
expenses reasonably incurred by the Purchaser
or OC(IH)L, OC(K)L, OC(MS)L or OC(SS)L in
connection either with any such tax liability,
or with any successful claim therefor under
this covenant.
7.4.2 The covenant given by Oryx and the Seller
pursuant to Clause 7.4.1 shall not cover any
tax liability of OC(IH)L, OC(K)L, OC(MS)L or
OC(SS)L:
(a) to the extent of any increase in tax liability
attributable to an increase in taxable income
for a taxable period ending on or before the
Effective Date where the increase in taxable
income for such period will result in a
decrease in tax liability attributable to a
decrease in taxable income for taxable periods
ending after the Effective Date;
(b) to the extent that such tax liability arises in
respect of or by reference to any income, or
profits or gains earned or accrued in respect
of the period, or event occurring, between the
Effective Date and Closing and which arises in
the ordinary course of business of OC(IH)L,
OC(K)L, OC(MS)L or OC(SS)L;
(c) to the extent that such tax liability arises or
is increased as a result only of any increase
in rates of Canadian or Indonesian tax made, or
of any change in relevant Canadian or
Indonesian tax law or practice occurring, after
the Effective Date which affects a period prior
to the Effective Date or a period including the
Interim Period;
(d) to the extent that such tax liability would not
have arisen but for a voluntary transaction,
action or omission carried out at any time
after Closing by OC(IH)L, OC(K)L, OC(MS)L or
OC(SS)L, the Purchaser or any company
associated with the Purchaser (other than any
such transaction, action or omission carried
out or effected pursuant to a legally binding
commitment entered into on or before Closing
between the Purchaser on the one hand and Oryx
and the Seller on the other hand);
(e) to the extent that such tax liability was
discharged prior to Closing;
(f) to the extent that such tax liability would not
have arisen but for or has been increased by:
<PAGE>
(i) a disclaimer, claim or election
made or notice or consent given by
the Purchaser or OC(IH)L, OC(K)L,
OC(MS)L or OC(SS)L after Closing
(other than such disclaimer, claim,
election, notice or consent which
has been assumed to be made or
given in the accounts of OC(IH)L,
OC(K)L, OC(MS)L or OC(SS)L for
accounting periods ending on or
before the Effective Date);
(ii) a failure or omission by OC(IH)L,
OC(K)L, OC(MS)L or OC(SS)L after
Closing to make any disclaimer,
claim, election, or to give any
notice or consent or do any other
thing, the making, giving or doing
of which was properly taken into
account or assumed in the provision
for tax in the accounts of OC(IH)L,
OC(K)L, OC(MS)L or OC(SS)L for
accounting periods ending on or
before the Effective Date;
(g) to the extent that such tax liability arises or
is increased as a consequence of any failure or
omission of the Purchaser or OC(IH)L, OC(K)L,
OC(MS)L or OC(SS)L after Closing to comply with
their respective obligations under this Clause
7;
(h) to the extent that such tax liability arises
from any change after Closing in accounting or
tax policy or practice of or affecting any of
OC(IH)L, OC(K)L, OC(MS)L or OC(SS)L (including
the method of submission of tax returns);
(i) to the extent that recovery is available to the
Purchaser in respect of the tax liability for
breach of any warranty in Schedule 1 to this
Agreement;
(j) to the extent that there is a right to recover
an amount in respect of the tax liability from
a person other than Oryx, Seller, the
Purchaser, OC(IH)L, OC(K)L, OC(MS)L or OC(SS)L;
(k) to the extent that the tax liability arises in
respect of a prepayment received in the
ordinary course of business of OC(IH)L, OC(K)L,
OC(MS)L or OC(SS)L prior to the Effective Date;
(l) to the extent that the tax liability would not
have arisen but for the winding up of, or the
cessation of any trade or business by OC(IH)L,
OC(K)L, OC(MS)L or OC(SS)L after Closing;
(m) to the extent that the tax liability gives rise
to any relief from or repayment of tax;
(n) to the extent that payment in respect of the
tax liability, together with any related costs
and expenses, would cause the total amount paid
and/or payable by Oryx and Seller pursuant to
this Clause 7 to exceed 2 million U.S. dollars.
7.4.3 The Purchaser hereby covenants with Oryx and
the Seller to pay to the Seller or Oryx, as
Oryx shall direct, by way of adjustment to the
Consideration an amount equal to any Canadian
or Indonesian tax liability of OC(IH)L, OC(K)L,
OC(MS)L or OC(SS)L arising in respect of or by
reference to any income or profits which were
earned or accrued on or after the
Effective Date (and taken into account as a
liability in the working capital calculations
referred to in Schedule 3) but received prior
to the Effective Date and became subject to tax
for a taxable period ending on or prior to the
Effective Date.
7.5 Notification of Claims and Conduct of Disputes
7.5.1 If the Purchaser, OC(IH)L, OC(K)L, OC(MS)L or
OC(SS)L become aware of any tax claim which
could give rise to a liability for Seller or
Oryx under Clause 7 (whether alone or in
combination with other claims), the Purchaser
shall give notice to Oryx and Seller of that
tax claim (including reasonably sufficient
details of such tax claim, the due date for any
payment and the time limits for any appeal, and
so far as practicable the amount of the claim
in respect thereof) as soon as possible (and in
any event not more than 15 days after the
Purchaser, OC(IH)L, OC(K)L, OC(MS)L or OC(SS)L
becomes aware of such claim) and shall take (or
procure that OC(IH)L, OC(K)L, OC(MS)L or
OC(SS)L as appropriate shall take) such action
as Oryx or Seller may reasonably request to
avoid, dispute, resist appeal, compromise or
defend the tax claim and any adjudication in
respect thereof. Seller or Oryx shall have the
right (if it wishes) to control any proceedings
taken in connection with such action, and shall
in any event be kept fully informed of any
actual or proposed developments (including any
meetings) and shall be provided with copies of
all correspondence and documentation relating
to such tax claim or action, and such other
information, assistance and access to records
and personnel as it reasonably requires.
7.5.2 Seller or Oryx shall reimburse to the Purchaser
its reasonable costs and expenses properly
incurred in connection with any such action or
proceedings as are referred to in Clause 7.5.1
7.5.3 Subject to Clause 7.5.4, the Purchaser shall
procure that no tax claim, action or issue in
respect of which Seller or Oryx could be
required to make a payment under this Clause 7
is settled or otherwise compromised without the
prior written consent of Seller or Oryx, such
consent not to be unreasonably withheld, and
the Purchaser shall procure that OC(IH)L,
OC(K)L, OC(MS)L and OC(SS)L and any of their
respective advisers shall not submit any
correspondence or return or send any other
document to any tax authority where the
Purchaser or any such person is aware or could
reasonable be expected to be aware that the
effect of submitting such correspondence or
return or sending such document would or could
be to put such tax authority on notice of any
matter which could give rise to, or could
increase, a claim under this Clause 7, without
first affording Oryx and Seller a reasonable
opportunity to comment thereon and without
taking account of such comments so far as it is
reasonable to do so.
7.5.4 If Seller or Oryx do not request the Purchaser
to take any appropriate action within 30 days
of notice to Seller and Oryx, the Purchaser
shall be free to satisfy or settle the relevant
tax liability on such terms as it may
reasonably think fit.
7.6 Recovery from Third Parties
7.6.1 If any payment is made by Oryx or Seller under
Clause 7 in respect of a tax liability and the
Purchaser, OC(IH)L, OC(K)L, OC(MS)L or OC(SS)L
(or any person connected with any of them)
either receives, or is entitled, or may be
entitled either immediately or at some future
date to recover or obtain, from any person
(other than the Purchaser, OC(IH)L OC(K)L,
OC(MS)L or OC(SS)L or any such connected
person) a payment or relief in respect of the
tax liability in question, then:
(a) the Purchaser shall notify the Seller and Oryx
of that fact as soon as possible and if so
required by the Seller or Oryx shall take (or
shall procure that OC(IH)L, OC(K)L, OC(MS)L or
OC(SS)L or other person concerned shall take)
such action as Seller or Oryx may reasonably
request to enforce such recovery or to obtain
such payment or relief (keeping the Seller and
Oryx fully informed of the progress of any
action taken and providing it with copies of
all relevant correspondence and documentation);
and
(b) if the Purchaser, OC(IH)L, OC(K)L, OC(MS)L and
OC(SS)L, or other person concerned receives or
obtains a payment or relief in respect of the
tax liability in question, the Purchaser shall
pay to Seller or Oryx the amount received or
the amount that the Purchaser, OC(IH)L, OC(K)L,
OC(MS)L or OC(SS)L or other person concerned
will save by virtue of the payment or the
relief (less any reasonable costs of recovering
or obtaining such payment or relief and any tax
actually suffered thereon).
7.6.2 Any payment required to be made by the
Purchaser pursuant to Clause 7.6.1 shall be
made:
(a) in a case where the Purchaser, OC(IH)L,
OC(K)L, OC(MS)L or OC(SS)L or other person
concerned received a payment, within five
(5) Business Days of the receipt thereof;
and
(b) in a case where the Purchaser, OC(IH)L,
OC(K)L, OC(MS)L and OC(SS)L or other
person concerned obtains relief, on or
before the date on which tax would have
become recoverable by the appropriate tax
authority but for the use of such relief.
7.6.3 The Purchaser shall procure, to the extent
legally possible, that any such relief as is
referred to in Clause 7.6.2(b) is used in
priority to any other relief, and in the
absence of evidence to the contrary it shall be
deemed to be so used. Seller or Oryx shall be
entitled to require that OC(IH)L's, OC(K)L's,
OC(MS)L's, or OC(SS)L's or other person's
auditors shall certify the amount and date of
use of such relief for the purposes of this
Clause 7.6.
7.6.4 Any sum not paid by the Purchaser on the due
date of payment specified in Clause 7.6.2 shall
bear interest (which shall accrue from day to
day) at the rate specified in Clause 3.6 from
such due date to and including the day of
actual payment of such sum.
7.7 Due Date of Payment and Interest
7.7.1 Seller or Oryx, as appropriate, shall pay to
the Purchaser any amount payable under Clause 7
on or before the date which is the later of the
date ten (10) Business Days after demand is
made therefor by the Purchaser and two (2)
Business Days before the first date on which
the tax in question becomes recoverable by the
tax authority demanding the same. Provided
that, if the date on which the tax can be
recovered is deferred following application to
the relevant tax authority, the date for
payment by the Seller or Oryx shall be two (2)
Business Days before such later date when the
amount of tax is finally and conclusively
determined. For this purpose, an amount of tax
shall be deemed to be finally determined when,
in respect of such amount, an agreement is made
or a decision of a court or tribunal is given
from which either no appeal lies or in respect
of which no appeal is made within the
prescribed time limit.
7.7.2 Any sum not paid by Seller or Oryx on the due
date for payment specified in Clause 7.8.1
shall bear interest (which shall accrue from
day to day) at the rate specified in Clause 3.6
from the due date to and including the day of
actual payment of such sum, provided that such
interest shall not accrue to the extent that
the liability of Oryx or Seller under Clause
7.4.1 extends to interest or penalties arising
after the due date. Any interest due under
this Clause 7.8.2 shall be paid on the demand
of the Purchaser on or following the date of
payment of such sum.
<PAGE>
VIII. INDEMNITY AND INSURANCE
8.1 Indemnity
8.1.1 The Purchaser shall be liable for all costs,
charges, expenses, liabilities and obligations
in respect of the Asset or OC(IH)L's Business
which arise out of OC(K)L's, OC(MS)L's and
OC(SS)L's ordinary course of business as
explorers for and producers of oil and gas or
OC(IH)L's ordinary course of business as a
holding company for explorers and producers of
oil and gas and as holder of beneficial
interests in the Production Sharing Contracts.
The Purchaser shall reimburse, indemnify and
defend ORYX and the Seller against any such
costs, charges, expenses, liabilities and
obligations REGARDLESS OF HOW OR WHEN
OCCASIONED AND REGARDLESS OF CAUSE OR CAUSES
THEREOF, INCLUDING WITHOUT LIMITATION, THE
NEGLIGENCE OR OTHER FAULT OF ORYX, THE SELLER,
OC(IH)L, OC(K)L, OC(MS)L OR OC(SS)L, which are
paid by ORYX or the Seller, or by any other
member of the ORYX group of companies on behalf
of OC(IH)L, OC(K)L, OC(MS)L or OC(SS)L and have
not been reimbursed to ORYX or the Seller
pursuant to the other provisions of this
Agreement, including Clauses 3.4. Without
prejudice to the generality of the foregoing
the Purchaser shall indemnify and hold ORYX and
the Seller harmless against any costs, charges,
expenses, liabilities and obligations incurred
in abandoning any facilities acquired pursuant
to this Agreement or held or brought into being
in connection with operations under any of the
Production Sharing Contracts to the extent that
such costs, charges, expenses, liabilities and
obligations are attributable to the Asset
and/or OC(IH)L's Business.
8.1.2 The Purchaser shall indemnify, defend and hold
ORYX and the Seller harmless against any costs,
charges, expenses, liabilities and obligations
incurred in respect of environmental damage,
clean-up, amelioration, reclamation,
remediation or rehabilitation arising out of or
in connection with operations under any of the
Production Sharing Contracts to the extent that
such costs, charges, expenses, liabilities and
obligations are attributable to the Asset
and/or OC(IH)L's Business, WITHOUT REGARD TO
HOW OR WHEN OCCASIONED AND WITHOUT REGARD TO
THE CAUSE OR CAUSES THEREOF, INCLUDING WITHOUT
LIMITATION, THE NEGLIGENCE OR OTHER FAULT OF
ORYX, THE SELLER, OC(IH)L, OC(K)L, OC(MS)L OR
OC(SS)L.
8.2 Insurance
ORYX and the Seller will maintain their normal level
of insurance over OC(IH)L's Business for the Interim
Period, it being further agreed that:
(a) If able and it so desires, the Purchaser may
arrange additional insurance with respect to
the deductibles under ORYX's and the Seller's
policies, or those of field operator(s) as
applicable. The insurance premium with respect
to such additional insurance shall be paid by
the Purchaser, and
(b) As soon as reasonably practicable following
Closing, ORYX or the Seller shall request the
Operator to pay ORYX's or the Seller's share of
any successful insurance claim with respect to
damage to the physical assets of (or other
recoverable event in connection with) OC(IH)L's
Business during the Interim Period to the
Purchaser, and
(c) Any insurance premium paid by ORYX or the
Seller or on behalf of OC(IH)L by any other
member of the ORYX group of companies relating
to OC(IH)L's Business in respect of the Interim
Period shall be reimbursed by the Purchaser to
ORYX pursuant to Clauses 3.3.1 and 3.4., and
(d) The benefit of any successful insurance claim
relating to the period prior to the Effective
Date which is outstanding as of the Effective
Date shall accrue to ORYX.
IX. ANNOUNCEMENTS
The Parties shall attempt to coordinate all written public
announcements during the Interim Period, PROVIDED THAT no
such coordination shall be required where such announcement
is required by law or by a competent government agency or
other regulatory body or by the regulations of any relevant
stock exchange.
<PAGE>
X. NOTICES
10.1 All notices authorized or required between the Parties
by any of the provisions of this Agreement, shall be
in writing, in English and delivered in person or by
registered mail or by courier service or by any
electronic means of transmitting written
communications which provides confirmation of complete
transmission, and addressed to such Parties as
designated below. Notices given under any provision
of this Agreement shall be deemed delivered only when
received by the Party to whom such notice is directed.
"Received" for purposes of this Clause with respect
to written notice delivered pursuant to this Agreement
shall be actual delivery of the notice to the address
of the Party to be notified specified in accordance
with this Article. Each Party shall have the right to
change its address at any time and/or designate that
copies of all such notices be directed to another
person at another address, by giving written notice
thereof to all other Parties.
10.2 The respective addresses are:
(i) ORYX Oryx Energy Company
13155 Noel Road
Dallas, Texas 75240-5067
U.S.A.
Attention: Andrew B. Derman
Telex:
Facsimile: (214) 715-8851
(ii) Seller Oryx Indonesia Holding Company
13155 Noel Road
Dallas, Texas 75240-5067
U.S.A.
Attention: Andrew B. Derman
Telex:
Facsimile: (214) 715-8851
(iii) Purchaser Novus Petroleum Limited
(A.C.N. 067 777 440)
c/o Phillips Fox
255 Elizabeth Street
Sydney NSW 2000 Australia
Attention: Mr. Stephen Barber
Telex:
Facsimile: 61-2-286-8191
<PAGE>
XI. COSTS AND EXPENSES
11.1 The Parties shall each pay their own costs and
expenses in relation to the preparation and execution
of this Agreement and the documents contemplated
hereby or executed pursuant hereto.
11.2 The Purchaser shall be responsible for payment in a
timely fashion of any and all stamp duties, transfer
taxes, filing fees or similar duties, taxes, fees and
charges payable on or in respect of this Agreement,
and all transfers and/or documents contemplated hereby
or executed pursuant hereto.
XII. CONFIDENTIALITY
The terms of this Agreement shall be held confidential by
the Parties and shall not be divulged in any way to any
third party by one Party without the prior written approval
of the other Parties provided that any Party may, without
such approval, disclose such terms to:
12.1 any outside professional consultants, upon obtaining a
similar undertaking of confidentiality (but excluding
this proviso) from such consultants; or
12.2 any bank, financial institution or underwriter from
whom such Party is seeking or obtaining finance or
funding, upon obtaining a similar undertaking of
confidentiality (but excluding this proviso) from such
bank, institution or underwriter; or
12.3 the extent required by any applicable laws, any
Production Sharing Contract, or the requirements of
any recognized stock exchange in compliance with its
rules and regulations; or
12.4 any Government agency lawfully requesting such
information; or
12.5 any court of competent jurisdiction acting in
pursuance of its powers.
XIII. VARIANCE
The terms and conditions of this Agreement shall only be
varied by an agreement in writing signed by each of the
Parties and specifically referring to this Agreement.
XIV. ASSIGNMENT
None of the rights, liabilities or obligations of the
Purchaser under this Agreement are assignable except with
the prior written consent of ORYX, such consent not to be
unreasonably withheld.
XV. TERMINATION
15.1 Subject to Clause 15.2, this Agreement shall terminate
if Closing does not occur prior to June 1, 1995, and
the sums payable in accordance with Clause 3 shall not
be payable.
15.2 Notwithstanding termination of this Agreement pursuant
to Clauses 5.3, 6.5 or 15.1 the provisions of Clause
12 shall continue to apply for a period of five (5)
years from the date hereof.
15.3 Termination of this Agreement pursuant to Clauses 5.3,
6.5 or 15.1 shall be without cost to any Party except
where a Party has failed to use reasonable efforts to
effect Closing in which event the other Parties shall
be entitled to all costs and expenses reasonably
incurred in seeking to effect such Closing in
accordance with the provisions hereof.
15.4 Subject to the foregoing provisions of this Clause and
to the provisions of Clause 6, except insofar as the
same have been performed at or prior to Closing, this
Agreement, including the representations, warranties,
undertakings and agreements contained herein, shall
remain in full force and effect, notwithstanding
Closing.
XVI. GENERAL
16.1 This Agreement, the OUKEC Agreement, the OIBC
Agreement, the ORYX AUSTRALIA Agreement and the OZOC
Agreement constitute the entire agreement of the
Parties regarding the subject matter hereof, and
supersede and replace all prior negotiations,
understandings and agreements, oral or written, among
the Parties or any of them, regarding the subject
matter hereof.
16.2 No waiver by any Party of any breach of a provision of
this Agreement shall be binding unless made expressly
in writing. Further, any such waiver shall relate
only to the breach to which it expressly relates and
shall not apply to any subsequent or other breach.
16.3 Time shall be of the essence of this Agreement.
16.4 This Agreement shall inure to the benefit of and be
binding upon the respective successors and permitted
assigns of the Parties.
XVII. GOVERNING LAW AND VENUE
The construction, validity and performance of this Agreement
shall be governed by the substantive law of the State of
Texas, U.S.A., without reference or regard to any conflicts
of law rules which would refer the matter to any other
jurisdiction.
Any and all disputes or differences relating to, arising out
of or in connection with this Agreement which cannot be
settled amicably shall be finally settled by arbitration
pursuant to this Clause XVII. The Parties hereby agree and
consent to submit to the American Arbitration Association
any and all disputes or differences relating to, or arising
out of or in connection with this Agreement for settlement
by final and binding arbitration by one (1) arbitrator
pursuant to the International Arbitration Rules of the
American Arbitration Association in effect on the Effective
Date (the "Rules"). The resulting award shall be the sole
and exclusive remedy between the Parties regarding any and
all such disputes or differences.
Arbitration proceedings pursuant to this Clause XVII shall
be held in Dallas, Texas, U.S.A., unless otherwise agreed,
and conducted in the English language. The substantive law
of Texas shall be applied without reference or regard to any
rules and procedures regarding conflicts of law which would
refer the matter to the laws of another jurisdiction.
Arbitration shall be initiated in accordance with Article 2
of the Rules. ORYX and the Seller on one hand and the
Purchaser on the other shall agree on the arbitrator, who
shall be a practicing oil and gas attorney. If the
arbitrator has not been agreed upon within thirty (30) days
after the American Arbitration Association received the
notice of arbitration, ORYX and the Seller on one hand and
the Purchaser on the other shall each submit to the American
Arbitration Association a list containing the names of three
(3) oil and gas attorneys which it nominates to serve as the
arbitrator. Within sixty (60) days after it received the
notice of arbitration, the American Arbitration Association
shall appoint the arbitrator from the names submitted by
each side. Should a side fail to submit a list of names,
the American Arbitration Association shall appoint the
arbitrator from the names submitted. Should both sides fail
to submit a list of names, the American Arbitration
Association shall appoint the arbitrator it deems
appropriate.
In the event of the absence or default of a Party, the
arbitration shall continue in accordance with Article 24 of
the Rules.
The decision of the arbitrator shall be final and binding on
all Parties and shall be enforceable in any court of
competent jurisdiction. The Parties agree to exclude any
right of application or appeal to the courts of any
jurisdiction in connection with any question of law arising
in the course of arbitration or with respect to any award
made. Any monetary award shall be made and payable in U.S.
Dollars, and any costs or fees incident to enforcing the
award shall, to the maximum extent permitted by law, be
charged against the Party resisting enforcement. An award
may include interest as deemed appropriate by the
arbitrator, but may not include consequential, punitive or
other similar damages. The costs and/or fees of the
arbitrator and the administrative fees of the American
Arbitration Association shall be borne equally by ORYX and
the Purchaser.
This arbitration provision shall continue in force
notwithstanding the invalidity or termination of this
Agreement.
<PAGE>
IN WITNESS whereof this Agreement has been executed on the date
first above written.
ORYX ENERGY COMPANY
By: /s/Andrew B. Derman
-------------------
Attorney-in-Fact
ORYX INDONESIA HOLDING COMPANY
By: /s/Andrew B. Derman
-------------------
Attorney-in-Fact
NOVUS PETROLEUM LIMITED
(A.C.N. 067 777 440)
By: /s/Dr. R. C. Williams
---------------------
Director
<PAGE>
SCHEDULE 1
REPRESENTATIONS AND WARRANTIES OF ORYX AND THE SELLER
1. Seller has beneficial and legal ownership of all of the
capital stock of OC(IH)L.
2. OC(IH)L has beneficial and legal ownership of all of the
capital stock of OC(K)L, OC(MS)L and OC(SS)L, and legal and
beneficial ownership of fifty percent (50%) of the capital
stock of 113857 Canada Ltd.
3. Each of OC(K)L, OC(MS)L and OC(SS)L is one of the parties
constituting the Contractor under the Production Sharing
Contract against which its name is set in Schedule 4.
4. No mortgage, charge (whether fixed or floating), pledge,
lien, encumbrance or other security or net profit or royalty
interest has been created over the interests of the Seller
in the Asset or OC(K)L, OC(MS)L, OC(SS)L or their respective
interests in the Production Sharing Contracts; nor is there
in effect any agreement or commitment to create the same.
5. As far as ORYX and the Seller are aware, OC(IH)L, OC(K)L,
OC(MS)L and OC(SS)L have not committed any breach of and are
not in default under any of the Data Room Documents, and
have not received notice that any of the parties to the Data
Room Documents has committed any breach of, or is in default
under, any of the Data Room Documents, which breach or
default, at the date hereof, is of a material nature and
subsisting.
6. The Production Sharing Contracts and all rights and interest
thereunder or deriving therefrom of OC(K)L, OC(MS)L and
OC(SS)L are in full force and effect and no act or omission
of any of OC(K)L, OC(MS)L or OC(SS)L or, as far as the
Seller is aware, of any other person, firm or company has
occurred which would or might entitle the Government or
Pertamina to revoke the Production Sharing Contracts and no
notice has been given to the Seller or, as far as the Seller
is aware, to any other person, firm or company by the
Government or Pertamina of any intention to revoke the
Production Sharing Contracts.
7. All accrued obligations and liabilities imposed by the
Production Sharing Contracts (including, without limitation,
work obligations) have been duly fulfilled and discharged
and there are no outstanding work obligations to be
fulfilled under the Production Sharing Contracts and neither
the Government nor Pertamina has given notice to the Seller,
OC(IH)L or, as far as the Seller is aware, OC(K)L, OC(MS)L
or OC(SS)L of any intention to require further works to be
conducted (whether in relation to exploration or
development), or to call for the submission of or impose a
development program in respect of any undeveloped Petroleum
discovery.
8. OC(IH)L, OC(K)L, OC(MS)L and OC(SS)L have kept proper and
consistent accounts, books and records of their activities
and to the best of ORYX's and the Seller's knowledge, such
accounts, books and records have been kept in accordance
with all legal requirements and are up to date.
Additionally, except as previously disclosed, there has been
no change in any practice or policy insofar as such might
materially affect the valuation of assets or the recording
of expenditures or receipts relating to those assets; and
such accounts, books and records:
(a) have been prepared in accordance with generally
accepted accounting principles as they apply to
the relevant jurisdiction; and
(b) take account of all gains and losses, whether
realized or unrealized, arising from all
foreign currency transactions.
9. The Seller is not a party to any litigation or arbitration
or administrative proceedings or to any dispute in relation
to, and which are likely materially to prejudice or endanger
in any manner, the Asset and the Seller is not aware that
any such litigation, arbitration or administrative
proceedings are threatened or pending either by or against
the Seller and there are no facts known to the Seller which
are likely so to prejudice or endanger the Asset and, as far
as the Seller is aware, none of the parties to the Data Room
Documents is involved in or threatened with any litigation,
arbitration or administrative proceedings or any dispute in
relation to, or which is likely to prejudice or endanger in
any material manner, the Asset.
10. Each of OC(IH)L, OC(K)L, OC(MS)L, OC(SS)L and 113857 Canada
Ltd. is duly incorporated as a limited liability company and
validly exists under the laws of Canada.
11. The documents which contain or establish the Seller's
constitution incorporate provisions which authorize, and all
necessary corporate actions have been taken to authorize,
the Seller to sign and deliver, and perform the transactions
contemplated by, this Agreement.
12. Neither the signing and delivery of this Agreement nor the
performance of any of the transactions contemplated by this
Agreement, will:
(i) contravene or constitute a default under any provision
contained in any agreement, instrument, law, judgment,
order, license, permit or consent by which the Seller
or any of its assets is bound or affected; or
(ii) cause any limitation on the Seller or the powers of
its directors, whether imposed by or contained in any
document which contains or establishes its
constitution on in any law, order, judgment,
agreement, instrument or otherwise, to be exceeded
which in either case is material in the context of this
Agreement, and in particular, the Seller has, as far as it
is aware, full power and authority to perform its
obligations hereunder and to sell the Asset without the
consent of any other person.
13. All information given by or on behalf of ORYX or the Seller
to the Purchaser with respect to OC(IH)L, OC(K)L, OC(MS)L
and OC(SS)L is, as far as ORYX and the Seller are aware,
true and accurate in all material respects and, as far as
ORYX and the Seller are aware, none of that information is
misleading in any material respect, whether by inclusion of
misleading information or omission of material information
or both.
14. All information which ORYX or the Seller is aware of as
being material to a purchaser for value of the Asset has
been disclosed in writing to the Purchaser.
15. None of OC(IH)L, OC(K)L, OC(MS)L or OC(SS)L is under an
obligation to issue, and has not granted to any person a
right that remains in existence to call for the issuance of,
stock, shares or other securities.
16. As far as ORYX and the Seller are aware, there has been full
compliance with all requirements imposed by law and all
competent authorities in relation to the affairs of OC(IH)L,
OC(K)L, OC(MS)L and OC(SS)L.
17. As far as ORYX and the Seller are aware, all documents
required to be lodged by OC(IH)L, OC(K)L, OC(MS)L and
OC(SS)L prior to this transaction with all applicable
Indonesian and Canadian regulatory authorities have been
duly lodged.
18. At or before Closing, the respective boards of directors of
OC(IH)L, OC(K)L, OC(MS)L and OC(SS)L will have passed
resolutions terminating or rescinding all powers of attorney
and bank authorizations which had previously been issued by
them.
19. As far as ORYX and the Seller are aware, the Operator of
each Production Sharing Contract has complied with all
applicable environmental requirements contained in the
Production Sharing Contract.
20. Each of OC(IH)L, OC(K)L, OC(MS)L and OC(SS)L has, as far as
ORYX and the Seller are aware, at all material times had the
benefit of such insurance coverage as was required by
applicable law or the relevant Production Sharing Contract.
21. Subject to Clause 7.2.1, all tax returns, necessary
information and notices in respect of the Indonesian and
Canadian tax obligations of each of OC(IH)L, OC(K)L, OC(MS)L
and OC(SS)L have been lodged or filed with the appropriate
taxation authorities, all Indonesian and Canadian taxes
reflected thereon have been paid, and each of OC(IH)L,
OC(K)L, OC(MS)L and OC(SS)L has maintained sufficient
records to support all returns lodged or filed relating to
taxation matters.
22. 113857 Canada Ltd. is currently inactive and will have no
existing liabilities as of Closing if OC(IH)L has not
divested itself of 113857 Canada Ltd. in accordance with
Clause 5.11.
<PAGE>
SCHEDULE 2
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
1. The Purchaser is duly incorporated with limited liability in
and validly exists under the laws of Australia.
2. The documents which contain or establish the Purchaser's
constitution incorporate provisions which authorize, and all
necessary corporate action has been taken to authorize, the
Purchaser to sign and deliver, and perform the transactions
contemplated by, this Agreement.
3. Neither the signing and delivery of this Agreement nor the
performance of any of the transactions contemplated by this
Agreement, will:
(i) contravene or constitute a default under any provision
contained in any agreement, instrument, law,
judgement, order, license, permit or consent by which
the Purchaser or any of its assets is bound or
affected; or
(ii) cause any limitation on it or the powers of its
Directors, whether imposed by or contained in any
document which contains or establishes its
constitution or in any law, order, judgement,
agreement, instrument or otherwise, to be exceeded
which in either case is material in the context of this
Agreement.
4. No event has occurred which constitutes, or which with the
giving of notice and/or the lapse of time and/or a relevant
determination would constitute, a contravention of, or
default under any agreement or instrument by which the
Purchaser or any of its assets is bound or affected, being a
contravention or default which would have a material adverse
effect on the business, assets or condition of the Purchaser
and which would materially and adversely affect its ability
to observe or perform its obligations under this Agreement
and the transactions contemplated hereby.
5. No litigation, arbitration or administrative proceeding or
claim which might by itself or together with any other such
proceedings or claims have a material adverse effect on its
business, assets or condition and which would materially and
adversely affect its ability to observe or perform its
obligations under this Agreement and the agreements
contemplated hereby, is presently in progress or pending or,
to the best of the knowledge, information and belief of the
Purchaser, threatened against the Purchaser or any Affiliate
of the Purchaser.
<PAGE>
SCHEDULE 3
WORKING CAPITAL
Pursuant to Clause 3.3 of this Agreement, the monetary value of
working capital shall be valued in accordance with the provisions
of this Schedule.
1. Preparation of Statement
The statement of working capital shall be prepared in United
States dollars by the Seller or ORYX and shall be based on
the accounts, statements and records of OC(IH)L and those of
OC(K)L, OC(MS)L and OC(SS)L as of midnight (Jakarta,
Indonesia time) on 31 December 1994. The statement shall be
prepared using actual amounts and not estimates or estimated
amounts, if any, that may be reflected in the accounts.
2. Elements of Working Capital
(i) Subject to paragraph 2(ii) below the elements of
working capital shall comprise the aggregated current
assets (which shall include, without limitation, an
underlifted position, oil and gas in inventory, other
inventories, materials and stock) minus aggregated
current liabilities (which shall include, without
limitation, an overlifted position) of OC(IH)L,
OC(K)L, OC(MS)L and OC(SS)L in United States dollars.
The elements of working capital shall exclude all
indebtedness between, on the one hand, OC(IH)L,
OC(K)L, OC(MS)L or OC(SS)L and, on the other hand, any
of their Affiliates. The elements of working capital
shall also exclude any amounts for future liabilities,
estimates or reserves for future liabilities. For the
avoidance of doubt, items to be included under the
heading "materials and stock" shall include those
items for which OC(IH)L, OC(K)L, OC(MS)L or OC(SS)L
has, before the Effective Date, reimbursed the
Operator under the relevant Joint Operating Agreement,
but which as of the Effective Date have not been
placed in service under the respective Production
Sharing Contract.
(ii) Any tax assets/liabilities including current and
deferred taxes are to be specifically excluded in the
calculation of Working Capital pursuant to paragraph
2(i) above except as provided for in Clause 7.3.1 of
the Agreement.
<PAGE>
3. Payment of Working Capital
The Seller is obligated to pay the Purchaser Eight Hundred
Twenty Thousand U.S. Dollars (U.S. $820,000) as a result of
adjustment of sunk costs as of 31 December 1994.
Should subtraction of that amount from the estimate of
working capital result in a positive number, then the
Purchaser shall pay to ORYX (acting on behalf of the Seller)
the resulting amount as settlement for working capital in
accordance with the provisions of Clause 3.3 of this
Agreement.
Should subtraction of that amount from the estimate of
working capital result in a negative number, then ORYX
(acting on behalf of the Seller) shall pay to the Purchaser
the resulting amount as settlement for working capital in
accordance with the provisions of Clause 3.3 of this
Agreement.
<PAGE>
SCHEDULE 4
INTERESTS IN PRODUCTION SHARING CONTRACTS
A B C D
Participating
Entity's legal
Production OC(IH)L's ownership interest in
Sharing Participating interest in Production
Contract Entity Participating Entity Sharing Contract
---------- ------------- --------------------- ----------------
Kakap PSC OC(K)L 100%
Main Area 5.25%
KC Prospect 5.25%
KW Prospect 5.25%
Malacca
Strait PSC OC(MS)L 100% 7.3%
Southeast
Sumatra
PSC OC(SS)L 100% 1.635638%
<PAGE>
SCHEDULE 5
DATA ROOM DOCUMENTS
ORYX CANADA (KAKAP) LTD.
LEGAL DOCUMENTS
1. Pertamina/Phillips Petroleum Company Production Sharing
Contract (March 22, 1975)
2. Corrigendum to Production Sharing Contract (April 28, 1975)
3. Amendment to Production Sharing Contract (June 30, 1975)
4. Amendment to Production Sharing Contract (February 18, 1975)
5. Operating Agreement - South China Sea, Kakap PSC (November
23, 1977)
6. Decree of Minister of Finance regarding procedures to be
applied to the calculation and payment of Corporation Tax,
Tax on Interest, Dividends and Royalties (January 1, 1978)
7. Agreement to Amendments to Joint Operating Agreement (August
25, 1978)
8. Amendment to Production Sharing Contract (November 27, 1979)
9. Amendment to Operating Agreement (May 22, 1981)
10. Second Amendment to Operating Agreement (January 31, 1984)
11. Novation Agreement between Marathon Petroleum Indonesia
Ltd., Hudbay Oil (Kakap) Ltd., BP Petroleum Development
(Kakap) Ltd. and Lasmo Kakap Limited (July 14, 1985)
12. Crude Oil Offtake Procedure (June 1, 1986)
13. Interparty Offtake Agreement (December 5, 1987)
14. Interparty Prospect Agreement for Northern Kakap Block
(December 18, 1987)
15. Deed of Assignment Relating to the KC Prospect (February 18,
1988)
16. Amendment No. 4 to Operating Agreement (January 1, 1991)
17. Novation Agreement between Kakap PSC Partners (January 1,
1991)
18. Amendment to Amendment No. 4 to Operating Agreement (March
26, 1991)
19. Amendment to Novation Agreement (March 26, 1991)
20. Pertamina acceptance of Amendment #4 to Operating Agreement
(September 13, 1991)
21. JOA (Joint Operating Agreement dated Nov. 23, 1977) partner
has legally changed from Phillips Petroleum Production
Indonesia, Inc. to the Louisiana Land & Exploration
Indonesia, Ltd. (February 17, 1993)
DATA
1. OCM/TCM Handouts from 1993, 1994
2. Kakap Budget 1991-1995
3. Plan of Developments for KRA KG
4. Monthly Progress Report from KRA/KG - October 1994
5. Kakap Production Sharing Contract and all Amendments
6. Kakap JOA and all Amendments
7. Kakap Monthly Production Reports - October 1994
8. Kakap Historical Production Data in ASCII Format
Well/Month/Field/Year
9. KRA/KG Oil in Place Study from 3-D
10. KF Field Study
11. KH Field Study
12. Oryx Estimated Production Forecast
13. Oryx Summary of Terms of PSC Contract
14. Oryx Production Budgeted vs. Actual Volumes from 1991-1995
15. Indonesian Crude Sales/Pricing Information
16. Final Pertamina Cost Recovery Statements - 1992, 1993
17. Third Quarter Pertamina Cost Recovery Statement - 1994
18. Joint Interest Billing - 1994
19. Work Program and Budget - 1991, 1992, 1993, 1994, 1995
20. Development Plan
FINANCIAL, ACCOUNTING AND TAX
1. Tax provisions for Oryx Canda (Kakap) Ltd. - 1994
2. Tax provisions for Oryx Canada (Indonesian Holdings) Ltd. -
1994
3. Indonesian tax return - 1993
4. Unaudited management financial statements for Oryx Canada
(Indonesian Holdings) Ltd. and consolidated subsidiaries -
1992, 1993, 1994
5. Preliminary materials and stock inventory number for Oryx
Canada (Indonesian Holdings) Ltd.
6. Indonesian dividend tax calculation - 1990-1994
7. Monthly tax calculation - June 1993
OPERATING COMMITTEE MEETINGS/TECHNICAL COMMITTEE MEETINGS
1. Minutes - September 14-15, 1994 TCM
2. Minutes - October 25, 27, 1994 OCM
3. Minutes - 1993 TCM and OCM
INSURANCE
1. January 24, 1995 Memorandum from Randy Reese to Cosmas
Kapsanis regarding insurance
CORPORATE
1. Minutes - 1993 Shareholders' Meeting
2. Minutes - 1993 Directors' Meeting
3. Minutes - 1994 Shareholders' Meeting
4. Minutes - 1994 Directors' Meeting
5. Minutes - 1993 OC(IH)L Shareholders' Meeting
6. Minutes - 1993 OC(IH)L Directors' Meeting
7. Minutes - 1994 OC(IH)L Shareholders' Meeting
8. Minutes - 1994 OC(IH) Directors' Meeting
ORYX UK (MALACCA STRAIT) LTD.
LEGAL DOCUMENTS
1. Pertamina/Kondur Petroleum S.A. Production Sharing Contract
(August 5, 1970)
2. Pertamina letter of approval for extension to date of
commencement of operations (January 13, 1971)
3. Farmout agreement between Arco Indonesia, Inc., Pan Ocean
Oil Corporation (Indonesia) and Houston Oils Limited (July
2, 1971)
4. Operating Agreement between Arco Indonesia, Inc., Pan Ocean
Oil Corporation (Indonesia) and Houston Oils Limited (July
2, 1971)
5. Amendment to the Production Sharing Contract (August 14,
1976)
6. Farmout Agreement between Arco Indonesia, Inc., Pan Ocean
Oil Corporation (Indonesia), Bridge Petroleum Corporation,
Kondur Petroleum S.A. and Hudbay Oil (Malacca Strait) Ltd.
as Farminee (November 29, 1978)
7. Assignment Agreement among Arco Indonesia, Inc., Pan Ocean
Oil Corporation (Indonesia), Bridge Petroleum Corporation,
Kondur Petroleum S.A. and Hudbay Oil (Malacca Strait) Ltd.
(November 29, 1978)
8. Amendment to the Production Sharing Contract (December 11,
1978)
9. Amendment to the Farmout Agreement between Malacca Strait
Partners and Hudbay Oil (Malacca Strait) Ltd. (January 31,
1979)
10. Assignment between Hudbay Oil (Malacca Strait) Ltd. and BP
Petroleum Development (Malacca Strait) Ltd. (June 22, 1984)
11. Crude Oil Offtake Procedure (July 15, 1984)
12. Crude Oil Sales Agreement between Hudbay Oil (Malacca
Strait) Ltd. and BP Petroleum Development (Malacca Strait)
Ltd. (July 31, 1985)
13. Amendment to Crude Oil Sales Agreement between BP Petroleum
Development (Malacca Strait) Ltd. and Hudbay Oil (Malacca
Strait) Ltd. (February 10, 1986)
14. Offtake Agreement (January 1987)
15. Settlement Agreement between Atlantic Richfield Indonesia,
Inc., Hudbay Oil (Malacca Strait) Ltd., BP Petroleum
Development (Malacca Strait) Ltd., Lasmo and Lasmo Malacca
Limited relating to the Malacca Strait Offtake Agreement
(January 31, 1987)
16. Mengkapan Unit Agreement between Calasiatic Oil Company,
Texaco Overseas Petroleum Company and Malacca Strait
Partners (February 17, 1988)
17. Mengkapan Unit Operating Agreement (May 10, 1988)
18. Malacca Strait Inter-Party Lifting Agreement (November 18,
1988)
19. Letter Agreement between Pertamina and Hudbay Oil (Malacca
Strait) Ltd. regarding provisions for liftings at end 1988
(November 19, 1988)
20. Novation Agreement between Malacca Strait Partners (January
1, 1991)
21. Novation Agreement: Mengkapan between Malacca Strait
Partners (January 1, 1991)
22. Amendment to the Malacca Strait Operating Agreement (not yet
approved by Partners)
23. Amendments to Novation Agreements and Novation Agreements:
Mengkapan (March 26, 1991)
24. Novation Agreement between TCR (September 1, 1993)
25. Review and Extension of the Revised JOA Novation Agreement
and the Novation Agreement regarding the Sale of Interest in
Malacca Strait PSC (August 11, 1994)
26. The Novation Agreements for the Malacca Strait Operating
Agreement and the Mengkapan Unit Operating Agreement
<PAGE>
DATA
1. OCM/TCM Handouts from 1993, 1994
2. Malacca Strait Budgets 1991-1995
3. Malacca Strait Production Sharing Contract and all
Amendments
4. Malacca Strait JOA and all Amendments
5. Malacca Strait Monthly Production Reports - October 1994
6. Malacca Strait Historical Production Data in ASCII Format
Well/Month/Field
7. Oryx Estimated Production Forecast
8. Oryx Summary of Terms of PSC Contract
9. Oryx Production Budgeted vs. Actual Volumes from 1991-1995
10. Indonesian Crude Sales/Pricing Information
11. Final Pertamina Cost Recovery Statements - 1992, 1993
12. Third Quarter Pertamina Cost Recovery Statement - 1994
13. Joint Interest Billing - 1994
14. Work Program and Budget - 1991, 1992, 1993, 1994, 1995
FINANCIAL, ACCOUNTING AND TAX
1. Tax provisions for Oryx Canada (Malacca Strait) Ltd. - 1994
2. Tax provisions for Oryx Canada (Indonesian Holdings) Ltd. -
1994
3. Indonesian tax return - 1993
4. Unaudited management financial statements for Oryx Canada
(Indonesian Holdings) Ltd. and consolidated subsidiaries -
1992, 1993, 1994
5. Preliminary materials and stock inventory number for Oryx
and Canada (Indonesian Holdings) Ltd.
6. Indonesia dividend tax calculation - 1990-1994
<PAGE>
OPERATING COMMITTEE MEETINGS/TECHNICAL COMMITTEE MEETINGS
1. Minutes - April 13, 1993 OCM
2. Minutes - December 2, 1993 TCM
3. Minutes - April 17, 1994 TCM
4. Minutes - September 29, 1994 TCM/OCM
INSURANCE
1. January 24, 1995 Memorandum from Randy Reese to Cosmas
Kapsanis regarding insurance
CORPORATE
1. Minutes - 1993 Shareholders' Meeting
2. Minutes - 1993 Directors' Meeting
3. Minutes - 1994 Shareholders' Meeting
4. Minutes - 1994 Directors' Meeting
5. Minutes - 1993 OC(IH)L Shareholders' Meeting
6. Minutes - 1993 OC(IH)L Directors' Meeting
7. Minutes - 1994 OC(IH)L Shareholders' Meeting
8. Minutes - 1994 OC(IH) Directors' Meeting
ORYX U.K. (SOUTHEAST SUMATRA) LTD.
LEGAL DOCUMENTS
1. Pertamina/IIAPCO Production Sharing Contract (September 6,
1968)
2. Operating Agreement (September 6, 1968)
3. Crude Oil Offtake Procedure (December 17, 1971)
4. Pertamina/IIAPCO Production Sharing Contract: Letter
Agreement (February 22, 1974)
5. Memorandum of Articles of Association of BP Petroleum
Development (South East Sumatra) Limited (November 1974)
6. Hudbay Farm-In Agreement to Phillips Petroleum Corp.
Indonesia and Tenneco Indonesia Inc. (July 17, 1975)
7. Pertamina/IIAPCO Production Sharing Agreement: Letter
Agreement (August 5, 1976)
8. Hudbay Oil (Indonesia) Ltd. purchase from Carver-Dodge
International Partnership (December 6, 1976)
9. Hudbay Oil (Indonesia) Ltd. purchase from Carver-Dodge
International Partnership (December 7, 1976)
10. Indenture of Guarantee between Hudbay Oil (Indonesia) Ltd.
and Carver-Dodge International Partnership (December 7,
1976)
11. Assignment from Carver-Dodge International Partnership to
Hudbay Oil (Indonesia) Ltd. (Document #1) (December 15,
1976)
12. Assignment from Carver-Dodge International Partnership to
Hudbay Oil (Indonesia) Ltd. (Document #2) (December 15,
1976)
13. Pertamina-IIAPCO Supplementary Agreement (August 5, 1976)
14. Supplementary Agreement between Hudbay Oil (Indonesia) Ltd.
and Carver-Dodge International Partnership (December 8,
1976)
15. Amending Agreement between Hudbay Oil (Indonesia) Ltd. and
Carver-Dodge International Partnership (December 13, 1976)
16. Letter of Assignment between Carver-Dodge International
Partnership and Hudbay Oil (Indonesia) Ltd. (December 15,
1976)
17. Letter of Assignment between Ramah Properties and Warrior
International Corporation and Tidewater S.E. Sumatra Inc.
(June 29, 1980)
18. Assignment and Ratification Agreement between Lasmo and
Cieco
19. Crude Oil Offtake Procedure: Letter of Agreement (November
9, 1978)
20. Pertamina/IIAPCO Production Sharing Contract: Amendment
(November 14, 1978)
21. Amendment to Operating Agreement (January 1, 1980)
22. Amendment to "Area of Mutual Interest" (January 1, 1980)
23. Methods and Procedures for Handling Certain Lifting
Imbalances Agreement (May 23, 1980)
24. Memorandum of Agreement between Hudbay Oil and Gas Limited
and 257288 Alberta Ltd. (June 9, 1981)
25. Agreement between Hudbay Oil and Gas Limited and 257288
Alberta Ltd. (June 1, 1981)
26. Agreement between Hudbay Oil and Gas Limited and 257288
Alberta Ltd. and Hudbay Oil (Indonesia) Ltd. (June 9, 1981)
27. Southeast Sumatra Asset Conveyance Agreement between 257288
Alberta Ltd. and Hudbay Oil and Gas - Hudbay Oil (Indonesia)
Ltd. Partnership (June 9, 1982)
28. Amendment to Operating Agreement (January 1, 1984)
29. Ratification Agreement relating to transfer by Reading and
Bates Sumatra Oil
30. Sale and Purchase Agreement for Cinta Crude Oil between
Hudbay Oil (Indonesia) Ltd. and BP Petroleum Development
(Southeast Sumatra) Ltd. (January 24, 1986)
31. Sale and Purchase Agreement for Cinta Crude Oil between
Hudbay Oil (Indonesia) Ltd. and Lasmo Sumatra Ltd. (January
24, 1986)
32. Ratification Agreement between Southeast Sumatra PSC
Partners and Reading and Bates Sumatra Petroleum Company and
Sumatra Petroleum Ltd. (December 24, 1986)
33. Ratification Agreement between Southeast Sumatra PSC
Partners and Transocean Gulf Oil Company and Inpex Sumatra
Ltd. (December 1, 1987)
34. Ratification Agreement between Southeast Sumatra PSC
Partners and the Travelers Insurance Company and Travelers
Southeast Sumatra Inc. (October 15, 1987)
35. Ratification Agreement between Southeast Sumatra PSC
Partners and Southeast Sumatra Oil Inc. and Inpex Sumatra
Ltd. (December 2, 1987)
36. Ratification Agreement between Southeast Sumatra PSC
Partners and TCR Sumatra Ltd. (May 2, 1989)
37. Certificate of Incorporation: Oryx Canada (Southeast
Sumatra) Limited (February 12, 1990)
38. Certificate of Incorporation of name change: BP Petroleum
Development (South East Sumatra) Limited to Oryx UK
(Southeast Sumatra) Limited (April 26, 1990)
39. Certificate of Incorporation of name change: Oryx UK (South
East Sumatra) Limited to Oryx UK (Southeast Sumatra) Limited
(April 26, 1990)
40. Ratification Agreement between Southeast Sumatra PSC
Partners and Oryx Canada (Southeast Sumatra) Ltd. (January
1, 1991)
41. Amendment to Ratification Agreement between Southeast
Sumatra PSC Partners and Oryx Canada (Southeast Sumatra)
Ltd. (March 26, 1991)
42. Pertamina approvals of Hudbay/Oryx and C. Itoh/Ceico
transfer of interest (October 25, 1991) (Oryx UK and Oryx
Canada copies)
43. Amendment to Southeast Sumatra Production Sharing Contract
(September 6, 1968-1998)
44. Southeast Sumatra Production Sharing Contract (September 6,
1998-2018)
45. Ratification Agreement for TCPL interest to Cieco (May 19,
1993)
46. Technical Evaluation Agreement between Pertamina and Maxus
Southeast Sumatra Inc. (June 21, 1988)
47. Offshore Southeast Sumatra Contract: Contract Extension
Study (Updated June 1990)
48. Letters concerning Southeast Sumatra Contract Extension
Negotiation
49. Pertamina/Maxus and other Parties: Production Sharing
Contract (August 22, 1991) (as yet unapproved)
50. Pertamina/Maxus and other Parties: Amendment to Production
Sharing Contract dated September 6, 1968 (August 22, 1991)
51. Production Sharing Contract (Final Version) (November 1991)
52. Amendment to Production Sharing Contract (Final Version)
(November 1991)
DATA
1. OCM/TCM Handouts from 1993 and 1994
2. SES Budgets 1991-1995
3. SES Production Sharing Contract and all Amendments
4. SES JOA and all Amendments
5. SES Monthly Production Reports - October 1994
6. SES Historical Production Data in ASCII Format
Well/Month/Field/Year: From 1977 forward
7. Oryx Estimated Production Forecast
8. Oryx Summary of Terms of PSC Contract
9. Oryx Production Budgeted v. Actual Volumes from 1991-1995
10. Maxus Drill-in Proposal
11. Gas Project Meeting Handout
12. Plan of Development for the SES Gas Project
13. Degolyer McNaughton Reserve Certification for the SES Gas
Project
14. 1994 Proposed Development Drilling Program
15. Prospect and Lead Inventory from September 1994
16. Results of Development Drilling Program 1993-1995
17. Indonesian Crude Sales/Pricing Information
18. Final Pertamina Cost Recovery Statements - 1992, 1993
19. Third Quarter Pertamina Cost Recovery Statement - 1994
20. Joint Interest Billing - 1994
21. Work Program and Budget 1991, 1992, 1993, 1994, 1995
22. Gas Project Development Plan
23. KH Field Review
24. KF Field Review
25. 3-D KG Oil in Place Evaluation
26. KG 5X Reserve Evaluation
27. Gas Project Revised Development Plan
28. Gas Project Meeting Economics
FINANCIAL, ACCOUNTING AND TAX
1. Tax provisions for Oryx Canada (Southeast Sumatra) Ltd. -
1994
2. Tax provisions for Oryx Canada (Indonesian Holdings) Ltd. -
1994
3. Indonesian tax return - 1993
4. Unaudited management financial statements for Oryx Canada
(Indonesian Holdings) Ltd. and consolidated subsidiaries -
1992, 1993, 1994
5. Preliminary materials and stock inventory number for Oryx
Canada (Indonesian Holdings) Ltd.
6. Indonesia dividend tax calculation - 1990-1994
OPERATING COMMITTEE MEETINGS/TECHNICAL COMMITTEE MEETINGS
1. Minutes - September 17, 1993 Annual Budget and Work Program
Meeting
2. Minutes - November 29, 1994 Special Work Program Meeting
3. Minutes - 1993 TCM and OCM
CONTRACT DETAILS
1. General Information
2. Map of Contract Area and Contract Boundary Coordinates
INSURANCE
1. January 24, 1995 Memorandum from Randy Reese to Cosmas
Kapsanis regarding insurance
CORPORATE
1. Minutes - 1993 Shareholders' Meeting
2. Minutes - 1993 Directors' Meeting
3. Minutes - 1994 Shareholders' Meeting
4. Minutes - 1994 Directors' Meeting
5. Minutes - 1993 OC(IH)L Shareholders' Meeting
6. Minutes - 1993 OC(IH)L Directors' Meeting
7. Minutes - 1994 OC(IH)L Shareholders' Meeting
8. Minutes - 1994 OC(IH) Directors' Meeting
EXHIBIT 10.3
SALE AND PURCHASE AGREEMENT
THIS AGREEMENT is made the 31st day of May, 1995.
---------------------
BETWEEN:
1. UNION TEXAS PETROLEUM LIMITED, a company incorporated in
England whose registered number is 708552 and whose
registered office is 5th Floor, Bowater House, 68-114
Knightsbridge, London SW1X 7LR ("Buyer");
2. ORYX U.K. ENERGY COMPANY, a corporation organized and
existing under the laws of the State of Delaware whose
principal place of business is Charter Place, Vine Street,
Uxbridge, Middlesex, England UB8 1EZ, ("Seller").
WHEREAS:
The Seller wishes to sell and Buyer wishes to purchase Seller's
undivided interest under U.K. Continental Shelf Licence P213
encompassing Area A of Block 16/26 (containing Alba Field) and
Area C of Block 16/26, all under the terms of this Agreement.
NOW THEREFORE IT IS HEREBY AGREED as follows:
1. Definitions
1.1 In this Agreement, including its recitals and
schedules, the following expressions shall, except
where expressly stated otherwise, have the following
respective meanings:
"Accruals Basis" means that basis of accounting under
which costs and benefits are regarded as applicable to
the period in which the liability for the cost is
incurred or the rights to the benefits arise regardless
of when invoiced, paid or received;
"Affiliate" means in relation to any Party, any company
or other entity which controls or is controlled by that
Party or is controlled by a company or other entity
which controls that Party. "Control" means the right
to exercise, directly or indirectly, more than 50% of
the voting rights of a company or other entity;
"Asset" means Seller's undivided interest in and under
the Licence and the Seller's 15.5% interest in and
under the Joint Operating Agreement and, in particular,
the Seller's 15.5% interest in Block 16/26 Area A and
Block 16/26 Area C, (including, without limitation, all
equipment, materials, Production Facilities and
associated records and data and the burden of all
corresponding obligations and liabilities), attaching
to such interests, including the corresponding rights
and interests in and under the Asset Documents;
"Asset Documents" means all the agreements relating to
the Asset as listed in Schedule 1;
"Block 16/26 Area A" means that area defined in the
Joint Operating Agreement as Area A of Block 16/26
(including, without limitation, the Alba Field, as
defined in the Joint Operating Agreement and as may be
defined by the Secretary of State from time to time);
"Block 16/26 Area C" means that area defined in the
Joint Operating Agreement as Area C of Block 16/26;
"Business Day" means a day other than Saturday or
Sunday on which banks are or, as the context may
require, were generally open for business in the City
of London and New York City;
"Completion" means the completion of the sale and
purchase of the Asset as provided for in Clause 6;
"Completion Date" means the date on which Completion
actually occurs;
"Co-Venturers" means the persons (and their respective
successors and assigns) other than Seller having
undivided interests in the Licence and in all
agreements, instruments and documents related to the
Licence, including for the avoidance of doubt the Joint
Operating Agreement;
"Data" means all accounts, books and data relating to
the Asset including, without prejudice to the
generality of the foregoing, contracts, correspondence,
information, data and reports (including petroleum
engineering, reservoir engineering, drilling,
geological, geophysical and all other kinds of
technical data and reports, samples, well-logs and
analyses in whatever form the same are maintained)
together with (i) traded data other than the Traded
Data; and (ii) so far as practical, meaningful
extracts relating to the Asset of the accounts, books
and data in the possession of the Seller, which relate
partly to the Asset, but excluding information and data
consisting of analysis prepared by Seller for its own
internal corporate decision making and/or review
process;
"Data Room Documents" means the documents relating to
the Asset and made available for the Buyer's inspection
in the data rooms located at Seller's offices together
with such other documents as Seller may have provided
to the Buyer prior to the date hereof, all as set out
in Schedule 6 hereto;
"Effective Date" means 00:01 hours GMT on 1st July,
1995;
"Encumbrance" means any mortgage, charge (whether fixed
or floating), pledge, lien, equity or encumbrance;
"Further Documents" means the Working Interest
Assignment and the other documents listed on Schedule 7
in a form reasonably satisfactory to Buyer and in
accordance with this Agreement, to be executed in
accordance with Clause 6.1.3 and 6.1.4, subject to such
amendments required by the Secretary of State and in
respect of documents set out in part 2 of Schedule 7
any reasonable amendments required by the Co-Venturers,
together with such other documents as are required to
effect Completion;
"DTI" means the Department of Trade and Industry;
"Interim Period" means the period of time commencing on
the Effective Date and extending up to and including
the Completion Date;
"Joint Operating Agreement" means the Joint Operating
Agreement dated 10 October 1990 as amended and
restated;
"LIBOR" for any period means the rate per annum quoted
by National Westminster Bank plc, 53 Threadneedle
Street, London EL2P 2JN for one (1) month deposits and
in amounts of at least U.S. one (1) million dollars
($1,000,000) to leading banks in the London Interbank
market at or about 11:00 a.m. (GMT) on Monday of each
succeeding one (1) week term for the relevant period;
"Licence" means the United Kingdom Petroleum Production
Licence P. 213 granted under the provisions of the
Petroleum (Production) Act 1934, as applied by the
Continental Shelf Act 1964 and any extensions,
amendments, variations or renewals of, or substitutions
in respect of the whole or any part of, such licence in
effect at the date hereof or hereafter;
"Operator" shall mean the Operator, as such term is
defined in the Joint Operating Agreement;
"Party" means any party to this Agreement;
"Petroleum" has the meaning assigned to it under the
Licence;
"Production Facilities" means the Alba Field platform
and floating storage unit as described on schedule 5,
and any other associated facilities, assets and systems
related thereto;
"Reference Interest Rate" means LIBOR for the period in
question for the sum due but unpaid on such date for
the period in question plus one (1) percentage point;
"Secretary of State" means Her Majesty's Secretary of
State for Trade and Industry;
"Subsidiary" has the meaning assigned to it by Section
736 of the Companies Act 1985;
"Traded Data" means, with respect to the Asset, data
which relates to an area unrelated thereto and which
has been acquired by trade, purchase or otherwise by or
on behalf of the Seller as a party to the Joint
Operating Agreement from a third party or parties where
such data cannot be provided to the Buyer because such
transfer is prohibited by the Agreement under which it
was acquired;
"Working Interest Assignment" means the assignment of
the Asset in a form reasonably satisfactory to Buyer
and in accordance with this Agreement.
1.2 All references to clauses, recitals and schedules are,
unless otherwise expressly stated, references to
clauses of, and recitals and schedules to, this
Agreement.
1.3 The headings in this Agreement are inserted for
convenience only and shall be ignored in construing
this Agreement.
1.4 Any reference to any statute or statutory instrument in
this Agreement shall be a reference to the same as
amended, supplemented or re-enacted from time to time.
1.5 Unless the context otherwise requires, reference to the
singular shall include a reference to the plural and
vice-versa; and reference to any gender shall include a
reference to all other genders.
1.6 The schedules attached hereto form part of this
Agreement. In the event of any conflict between the
provisions of this Agreement and the schedules hereto,
the provisions of this Agreement shall prevail.
1.7 Documents "in the Agreed Terms" shall mean documents in
the form agreed between the Parties and initialled by
the Parties for identification.
2. Transfer of the Asset
2.1 Subject as provided in Clause 3, the Seller as legal
and beneficial owner of the Asset hereby agrees for the
consideration provided for herein to transfer to the
Buyer at Completion and the Buyer hereby agrees to
accept at Completion the Asset free from all
Encumbrances, rights of pre-emption, royalty interests,
production payments, carried interests, deferred
obligations or any other third party rights or security
interests whatsoever (except as specified in the
Licence or in the Joint Operating Agreement).
2.2 On Completion, the transfer referred to in Clause 2.1
above shall, as between the Parties, be deemed for all
purposes to be made with effect from the Effective
Date.
3. Conditions of Completion
3.1 Completion is conditioned on:
3.1.1 the receipt of all necessary written consents
and approvals of the Secretary of State;
3.1.2 the receipt of any necessary written consents
and approvals of each of the Co-Venturers;
3.1.3 the receipt of the confirmation by Buyer from
each of the Co-Venturers that the Further
Documents are in a form and content satisfactory
to each of them and will be executed by each of
them without further material amendment;
3.1.4 the Buyer having made the visit to the
Production Facilities referred to in Clause 5.4
and having given no notice to Seller, within 48
hours from the return of its representatives to
the U.K. mainland that, in its reasonable
opinion, the Production Facilities have not been
designed, fabricated, installed or managed in a
good, workmanlike fashion, or are not in
conformance with industry standards in the U.K.
North Sea;
3.2 Completion is also conditioned on:
3.2.1 there not occurring before Completion (a) any
casualty, losses or damages (including in either
case, without limitation, curtailment or loss of
production), (b) any mechanical failure or
breakdown of equipment or (c) any event in
relation to the Asset which gives or may give
rise to environmental or pollution liability,
and any of (a), (b) or (c), individually or in
the aggregate, having or being reasonably
expected to have an after-tax impact on Buyer of
a monetary value exceeding U.S. $20,000,000;
provided that if any of the same shall occur the
Buyer shall have the option to terminate this
Agreement and, subject to Clause 18.2 and 18.3,
upon said termination no Party shall have any
liability except for a breach of this Agreement
committed before such termination.
3.3 Seller shall use all reasonable endeavours to procure,
with prompt dispatch, the satisfaction of the
conditions set out in Clause 3.1 and give the
appropriate notices of transfer in the Agreed Terms to
the Co-Venturers within five (5) Business Days of the
execution of this Agreement and shall keep the Buyer
informed of progress.
4. Consideration and Other Payments
4.1 Consideration
The consideration for the transfer of the Asset to the
Buyer shall be Two Hundred Seventy Million
($270,000,000.00) U.S. dollars, exclusive of Value
Added Tax ("VAT").
4.2 Other Payments
The Buyer shall pay to Seller, or Seller shall pay to
the Buyer (as the case may be) such further sums as may
be payable pursuant to Clauses 4.3, 4.4, 4.5, 8.3, 9.1,
10.8, 10.9, 11.1 and 11.2. Subject to Clause 4.4.4, any
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sums that may become payable pursuant to Clause 4.4
shall be an adjustment to the consideration and shall
be added to or subtracted from the relevant balance of
the asset allocation pursuant to Clause 8.1.
4.3 Working Capital
4.3.1 The Buyer shall pay to Seller or Seller shall
pay to the Buyer (as the case may be) a sum to
reflect the monetary value of the working
capital attributable to the Asset as set forth
in Schedule 4. The said sum shall be set out in
a statement to be prepared and given by Seller
to the Buyer within sixty (60) days after the
Completion Date. Such statement shall be a
statement of working capital and a statement of
adjustments made pursuant to Schedule 4.
4.3.2 Working capital balances used for the purposes
of the statement referred to in Clause 4.3.1
shall be taken from the individual accounts,
statements and records as of June 30, 1995. A
copy of the individual accounts, statements and
records shall be provided by Seller to the Buyer
with such statement. Verification (including
the right of audit) of the aforesaid statement
shall be carried out within sixty (60) days of
receipt of such statement, and subject to the
provisions of Clause 4.3.3, settlement of the
sum detailed in the statement, as varied by any
adjustment agreed between Seller and Buyer,
shall be made within the said sixty (60) day
period.
4.3.3 In the event that Seller and Buyer cannot agree
upon any matter to which the statement referred
to in Clause 4.3 relates, the undisputed amount
shall be paid and the disputed amounts shall be
referred for resolution to an independent
chartered accountant appointed by Seller and
Buyer or in the event of Seller and Buyer
differing as to such appointment by the
President for the time being of the Institute of
Chartered Accountants of England and Wales. The
accountant shall be afforded such access to
books, records, accounts and documents in the
possession of each of the Parties as he may
reasonably request. For the purposes of this
Agreement, the accountant so appointed shall be
deemed to be acting as an expert and not as an
arbitrator, and the decision of the accountant
so appointed shall, in the absence of manifest
error, be final and binding on Seller and Buyer
and settlement of any outstanding amount shall
be made within (5) Business Days of such
decision. The costs of the accountant shall be
borne equally by Seller and Buyer.
4.3.4 The Buyer shall pay to Seller or Seller shall
pay to the Buyer (as the case may be) interest
on such further sums as may be payable from the
date such sums are due to be paid to the date
the sums are actually paid (both dates
inclusive) at a rate per annum equal to one (1)
percentage point above the Reference Interest
Rate calculated on a daily basis using simple
interest.
4.4 Interim Period Adjustment
4.4.1 Buyer shall pay Seller the amount of all
obligations and liabilities pertaining to the
Asset and Licence paid by Seller in respect of
the Interim Period.
4.4.2 Seller shall pay to the Buyer the amount of all
receipts pertaining to the Asset and Licence
received by Seller in respect of the Interim
Period.
4.4.3 For the purposes of this Clause, obligations and
liabilities will include, inter alia, cash calls
for operating costs and receipts will include,
inter alia, actual proceeds from the sale of
Petroleum produced after the Effective Date.
The Buyer will refund an amount equal to the
Petroleum Revenue Tax ("PRT") and Corporation
Tax ("CT") at the assumed rate of twenty-eight
percent (28%) incurred by the Seller relating to
the Asset for the period between the Effective
Date and the Completion Date. For purposes of
clarity, the PRT incurred by the Seller will be
that amount of PRT actually paid or accrued by
the Seller and CT incurred by the Seller will be
a notional calculation based on the assumed rate
of twenty-eight percent (28%) times receipts
less revenue expenditures and PRT paid or
accrued but with no capital allowances on any
capital expenditure during the Interim Period.
4.4.4 If the Seller does not incur liability to PRT
and CT relating to the Asset for the period
between the Effective Date and the Completion
Date, which situation shall arise if the Inland
Revenue accepts the Effective Date as the date
of transfer for tax purposes, then the sums
repaid by the Buyer to the Seller and by the
Seller to the Buyer pursuant to the foregoing
provisions of this Clause 4.4 shall be deemed to
have been incurred or received (as the case may
be) directly by the Buyer as if the transfer of
the Asset had taken place on the Effective Date
for tax purposes. The Buyer may, at its own
costs and expense with such assistance from the
Seller as Buyer may reasonably request, seek to
obtain the consent of the Inland Revenue to
accept the Effective Date as the date of
transfer for tax purposes and if such consent is
obtained, the Seller agrees to file its PRT and
CT returns accordingly and notwithstanding
Clause 4.2 any sums that become payable pursuant
to this Clause 4.4 shall not be an adjustment to
the consideration.
4.4.5 The amounts set out above shall be set out in a
statement to be prepared and given by Seller to
the Buyer within sixty (60) days after
Completion. Verification, including the right
of audit of said statement, shall be carried out
within sixty (60) days of receipt of such
statement and subject to the provisions of
Clause 4.4.6, settlement of the amounts detailed
in the statement as varied by any adjustment
agreed between Seller and Buyer shall be made
within the said sixty (60) day period.
4.4.6 In the event that Seller and the Buyer cannot
agree upon any matter to which the statement
referred to in Clause 4.4.5 relates, the
undisputed amounts shall be paid and the
disputed amounts shall be referred for
resolution to an independent chartered
accountant appointed by Seller and Buyer or, in
the event of Seller or Buyer differing as to
such appointment, by the President for the time
being of the Institute of Chartered Accountants
of England and Wales. The accountant shall be
afforded such access to books, records, accounts
and documents in the possession of each of the
Parties as he may reasonably request. For the
purposes of this Agreement, the accountant so
appointed shall be deemed to be acting as an
expert and not as an arbitrator, and the
decision of the accountant so appointed shall,
in the absence of manifest error, be final and
binding on Seller and the Buyer and settlement
of any outstanding amount shall be made within five
(5) business days of such decision. The costs of
the accountant shall be borne equally by Seller
and the Buyer.
4.5 Interest
4.5.1 In the event that Completion occurs after the
Effective Date, the consideration shall be
treated as having become due on the Effective
Date and the Buyer shall pay to the Seller on
the Completion Date, in addition to the
consideration, interest on the consideration at
a rate per annum equal to the Reference Interest
Rate calculated on a daily basis using simple
interest for the number of days elapsed between
the Effective Date and the day immediately
preceding the Completion Date (both dates
inclusive).
4.5.2 Interest shall be paid on any payments due under
Clause 4.4.1 and Clause 4.4.2 at a rate per
annum equal to the Reference Interest Rate
calculated on a daily basis using simple
interest for the number of days elapsed between
the time receipts are received and payments are
made in accordance with Clause 4.4.1 and Clause
4.4.2.
4.6 Any and all amounts to be paid pursuant to this
Agreement shall be paid in same day funds to the
Seller's account as the Seller shall nominate in
writing if owed to the Seller, or if owed to the Buyer
in same day funds to such bank account as the Buyer
shall nominate in writing.
5. Conduct of Operations Prior to the Completion Date
5.1 Subject to any obligations of confidentiality by which
Seller is bound, Seller shall in respect of the Asset
from the date of this Agreement to Completion Date:
5.1.1 provide Buyer with copies of all notices and
other information provided by or to Seller under
the Joint Operating Agreement as the same become
available;
5.1.2 provide to Buyer (and its authorized employees,
agents and professional advisers) access to all
such technical, legal and financial information
in the possession of Seller which is or has been
made available to Co-Venturers relating to the
Asset as Buyer may from time to time reasonably
require;
5.1.3 not without prior written consent of Buyer (not
to be unreasonably withheld) agree to amend the
Licence, (or to execute a new joint operating
Agreement in respect of the Licence) any of the
Asset Documents or any other project documents;
5.1.4 keep the Buyer informed of and consult with the
Buyer with regard to the marketing of Petroleum
and on all material proposals affecting the
Asset and, prior to any operating committee
meeting or any material decision relating to the
Asset, consult with the Buyer and (in each case)
act or vote in accordance with the instructions
of the Buyer provided that in the opinion of the
Seller, exercised in good faith, the interests
of the Seller are not thereby materially
prejudiced;
5.1.5 continue to meet all expenditures, receive all
income, perform all obligations relating to the
Asset and generally conduct all business in
relation to the Asset in a proper and
workmanlike manner and exercise its voting power
to ensure that the Asset is well maintained and
fully safeguarded;
5.1.6 wherever practicable consult with Buyer and give
due consideration to the view of Buyer before
exercising its voting rights in connection with
any matter or proposal to be voted upon by the
operating committee established under the Joint
Operating Agreement; and
5.1.7 not sell, charge, transfer, assign, encumber in
any manner whatsoever the Asset or purport to
seek to do any of the same.
5.2 Without prejudice to the foregoing, Seller shall
(subject to any confidentiality obligations by which it
is bound) ensure that pending Completion Buyer is kept
fully informed of developments relating to the Asset
including but not limited to:
(a) the making of any cash calls;
(b) the adoption or proposal of any budget; and
(c) the receipt of any significant geological or
other data.
5.3. Nothing hereunder shall require Seller to consult or
obtain the consent of Buyer in respect of actions taken
by the Operator in cases of emergency under the Joint
Operating Agreement.
5.4 Between the date of this Agreement and Completion Date,
the Buyer shall have the right to visit the Production
Facilities, either by itself or, if the Operator
refuses consent for such visit, through Buyer's
selected representatives with Seller.
6. Completion
6.1 Completion shall, subject to the provisions of Clauses
3.2 and 18, take place as soon as possible (but in no
event prior to July 1, 1995) within five (5) business
days after the conditions in 3.1 have been satisfied at
such location outside the territory of the U.K. and at
such time as is mutually agreed by the Parties, when
all of the following shall occur:
6.1.1 the Buyer shall pay to Seller by wire transfer
in United States dollars the consideration set
out in Clause 4.1 of this Agreement together
with any sums payable in accordance with Clause
4.5.1;
6.1.2 Buyer shall deliver to Seller:
a copy, certified as a true copy and in full
force and effect by a director and the secretary
or an assistant secretary of the Buyer of a
resolution of the Board of Directors of the
Buyer approving the acquisition of the Asset, on
the terms of this Agreement, by the Buyer, and
authorizing the execution on behalf of the Buyer
of all the Further Documents and all other
documents contemplated hereby;
6.1.3 Seller shall deliver to Buyer:
(a) a copy, certified as a true copy and in
full force and effect by a director and
the secretary or an assistant secretary
of the Seller, of a resolution of the
Board of Directors of the Seller
approving the disposal of the Asset, on
the terms of this Agreement, by the
Seller, and authorizing the execution by
the Seller of the Further Documents and
all other documents contemplated hereby;
and
(b) the Further Documents (other than the
Working Interest Assignment) duly
executed by the Seller and, as
appropriate, by all of the Co-Venturers;
and
(c) signed originals of the Asset Documents
or copies thereof.
6.1.4 The Parties shall execute the Working Interest
Assignment and comply with its terms.
6.1.5 The Parties shall execute all such other
documents and do all acts and things as may be
reasonably required in order to effect the
transfer of the Asset to the Buyer and otherwise
carry out the true intent of this Agreement.
6.2 Seller will deliver to Buyer the Data and copies of the
Data Room Documents and such other documentation
relevant to the Asset as Buyer may reasonably request
as soon as practicable after the Completion Date.
6.3 Without prejudice to the provisions of Clause 6.1.5 the
Parties agree, notwithstanding Completion, to execute
and deliver to each other all such additional
instruments and to do all such further acts and things
as may reasonably be required, or as may be reasonably
requested by any Party, to fully vest in, and assure
each Party of, all rights, powers and privileges
intended to be granted to or conferred upon the Parties
under or pursuant to this Agreement and to otherwise
give effect to the transactions contemplated under this
Agreement.
7. Representations, Warranties and Undertakings
7.1 Subject to the provisions of Clause 7.3, Seller hereby
represents and warrants to Buyer in the terms set out
in Schedule 2 and such representations and warranties
shall be deemed to be repeated immediately prior to
Completion on the basis that all references to "the
date hereof" shall be deemed to refer to the Completion
Date.
7.2 Buyer hereby represents and warrants to the Seller in
the terms set out in Schedule 3 and such
representations and warranties shall be deemed to be
repeated immediately prior to Completion on the basis
that all references to "the date hereof" shall be
deemed to refer to the Completion Date.
7.3 Except with regard to the warranties 1, 2, 3 and 21 in
Schedule 2, the Buyer shall not be entitled to claim
that any fact or matter constitutes a breach of the
representations and warranties set out in Schedule 2
hereto to the extent that such fact or matter is fairly
disclosed in the Data Room Documents relating to the
Asset.
7.4 Seller shall ensure that the representations and
warranties referred to in Clause 7.1 are true and
accurate on the Completion Date but if notwithstanding
such efforts any matter or thing occurs of which Seller
is aware and which would be inconsistent with any of
such representations and warranties on the Completion
Date Seller shall promptly notify Buyer thereof.
7.5 In the event of any matter or thing materially
inconsistent with any of the representations or
warranties given by Seller in or pursuant to this
Agreement being notified by Seller to Buyer prior to
Completion (or Buyer otherwise becoming aware of such
matter or thing) and such matter or thing continuing to
be materially inconsistent at the date agreed for
Completion, Buyer shall not be bound to complete the
acquisition of the Asset and Buyer may by notice in
writing to Seller prior to Completion rescind this
Agreement. Such right of rescission shall be Buyer's
only remedy, and there shall be no liability on the
part of Buyer or Seller with respect to such matters or
things whether or not this Agreement is rescinded.
7.6 The maximum aggregate liability of Buyer or Seller as
the case may be, for all claims for breach of any
representation or warranty under Clauses 7.1 or 7.2
arising after Completion shall in no event exceed the
aggregate of the amount of consideration, interest (if
any) paid thereon, and any amounts paid by Buyer
pursuant to Clause 4.2.
7.7 If Buyer receives any claim or becomes aware of any
fact which may result in Buyer having a claim against
Seller under this Clause, Buyer shall promptly notify
Seller thereof in writing and Seller shall be entitled
to require Buyer to take any reasonable action it may
request to resist such claim and Buyer will give Seller
all co-operation, access and assistance for the
purposes of considering such claim as they may
reasonably require; provided always that Buyer is
indemnified to its reasonable satisfaction by Seller
against all claims, costs, expenses, damages or losses
which may thereby be incurred.
7.8 Where any statement in Schedule 2 is qualified by the
expression "so far as Seller is aware" or any similar
expression, that statement shall be deemed to include
an additional statement that it has been made after due
and careful enquiry.
7.9 The Seller acknowledges that the Buyer has entered into
this Agreement in reliance upon the warranties and has
been induced by the warranties to enter into this
Agreement.
7.10 The benefit of the warranties may be assigned in whole
or in part to any assignee of the Purchaser permitted
in accordance with Clause 17.
7.11 No claim may be made by either Party for a breach of
any representation or warranty made by Seller or Buyer,
in the case of a claim relating to taxes following the
seventh anniversary of the Completion Date and in the
case of any other claim following the second
anniversary of the Completion Date, and no liability
shall attach to Seller or Buyer, as the case may be, in
respect of any such claim until the aggregate amount of
all such claims against Seller or Buyer, as the case
may be, exceeds one million (1,000,000) U.K. pounds
sterling in which event Buyer or Seller, as the case
may be, shall be liable for the whole of such amount
and not merely the excess.
7.12 Any claim for breach of warranty under Schedule 2,
including but not limited to lost production or loss of
profits shall be limited in any recovery to the
economic impact on Buyer based on Buyer's economic
assumptions used to develop the consideration paid for
the Asset.
8. Taxation
8.1 Seller and Buyer acknowledge that:
(a) the consideration represents expenditure
incurred by Buyer in acquiring plant and
machinery relating to the Asset to the extent of
the amount of the Seller's gross expenditure
incurred with respect to the Asset in acquiring
plant and machinery less any relevant disposal
proceeds up to but not including the Completion
Date, and the remainder of the consideration
relates to the balance of the Asset including
the Licence. Seller covenants that it will
treat the said allocated expenditure on plant
and machinery as disposal proceeds for the
purposes of Section 24(6) Capital Allowance Act
1990, and Buyer covenants that it will treat
such amount as capital expenditure incurred for
the purposes of the Capital Allowances Act 1990,
and the Seller will provide details of such
amount to the Buyer as soon as reasonably
practicable after Completion.
(b) subject to Clause 4.4.4 any sums that may become
payable pursuant to Clause 4.4 and shall be
added to or subtracted from the balance of the
Asset;
(c) no part of the consideration or other payments
pursuant to Clause 4.2 whether or not attributed
to the balance of the Asset, shall be treated as
a reimbursement of expenditure which the Seller
has incurred whether comprising intangible
drilling expenditure or otherwise; and
(d) they will each present their returns for tax
purposes on the basis stated above and that they
will use all reasonable endeavors to agree with
the Oil Taxation Office the figures so
presented.
8.2 The Seller shall prepare and the Seller and the Buyer
shall deliver to the Board of Inland Revenue in a
timely fashion a notice in accordance with paragraph 3
of Schedule 17 to the Finance Act 1980 and shall not
make an application under paragraph 4 of the said
Schedule for the provisions of Parts II and III of the
said Schedule not to apply to the transfer of the
Asset.
8.3 Buyer confirms that it is registered for VAT in the UK
and that it intends to use the assets acquired for its
own trade of exploration/exploitation. Seller and
Buyer confirm that neither of them has elected to waive
exemption under section 51 and paragraphs 2-4 Schedule
10 Value Added Tax Act 1994 in relation to the Asset
and they each intend that the sale shall be treated as
a transfer of part of the business of the Seller as a
going concern within the terms of Section 49 of the
Value Added Tax Act 1994 and of Article 5 Value Added
Tax (Special Provisions) Order 1992, hereinafter
referred to as "Article 5".
In the event that Seller is advised in writing by H.M.
Customs and Excise that the transaction is subject to
VAT and if called upon to do so by Seller, Buyer agrees
to pay to Seller, on presentation of a valid VAT
invoice, any amounts due in respect of VAT relating to
this transaction set out in such invoice and within
thirty (30) days of demand.
8.4 It is agreed that:
(a) the Seller shall cooperate with any reasonable
request by the Buyer who may, at its own cost
and expense, send to HM Customs & Excise a
letter seeking a ruling as to whether the sale
of the Asset is to be treated as a transfer of
part of the business of the Seller as a going
concern and the Seller will assist the Buyer
with all reasonable endeavours to obtain such a
ruling as soon as reasonably practicable;
(b) if the sale is to be so treated the Seller shall
send to HM Customs & Excise a letter seeking
confirmation that Seller be permitted to keep
and preserve the records for the period prior to
the date of Completion referred to in Section 49
of the Value Added Tax Act 1994 relating to the
Asset and if such confirmation is not given, the
Seller shall transfer to the Buyer all such
records as relate to the Asset;
(c) if HM Customs & Excise state in writing that the
sale of the Asset does not fall within the
provisions of Article 5 the Seller shall
cooperate with any reasonable request by the
Buyer who may, at its own cost and expense, seek
a ruling from HM Customs & Excise that the sale
is outside the scope of VAT being a supply of
services in relation to land situated outside
the UK and that no VAT will become due on this
transaction;
(d) if HM Customs & Excise state in writing that the
sale of the Asset is taxable, the Seller shall
cooperate with any reasonable request by the
Buyer who may, at its own cost and expense,
promptly take all steps to dispute such
statement. In the event that it is subsequently
held or decided that no VAT is payable in
respect of the sale of the Asset and the Seller
receives any repayment or credit in respect of
an amount which had been paid by the Buyer as
VAT to the Seller, the Seller shall promptly
reimburse such amount to the Buyer; and
(e) the Seller and Buyer shall copy each to the
other all relevant correspondence between either
of them and HM Customs and Excise.
9. Audit Claims
9.1 Notwithstanding any other provision of this Agreement,
in the event that any audit in respect of any period
prior to the Effective Date is made under the Joint
Operating Agreement prior to the third anniversary of
Completion or any request is made for an adjustment to
any joint account relating to the Asset under the Joint
Operating Agreement the Buyer shall, subject to it
being reimbursed for all its reasonable expenses in so
doing, give the Seller access to the results of such
audit or request to the extent that they relate to
periods prior to the Effective Date; and (a) to the
extent that any payment in respect thereof is made by
the Operator such payment shall be made to Seller and
(b) to the extent that any payment is required to be
made in respect thereof to the Operator, such payment
shall be made by Seller to Buyer.
9.2 To the extent that the Seller shall have any
information, records or data in respect of the Asset or
the Asset Documents for periods prior to the Effective
Date that it has not made available to the Buyer on or
after Completion and/or to the extent that the Buyer
shall request the assistance of the Seller in the
interpretation and construction of the same and for any
information, records or data that have been delivered
to it by the Seller hereunder, the Seller shall,
subject to it being reimbursed for all its reasonable
expenses in so doing, make the same available to the
Buyer promptly after receipt of said request.
10. Insurance
10.1 Neither Buyer nor Seller shall be obligated to arrange
for insurance coverage on the Asset protecting the
other party for any loss, damage, liability or expense
for which such party may have responsibility under this
Agreement, except as may be provided in Clauses 10.4,
10.5, 10.6 and 10.7 herein. Both Buyer and Seller
shall be free to arrange such insurance coverage on the
Asset protecting their respective interests as each may
deem advisable for their own account and at their own
expense and shall cooperate with each other to ensure,
as far as practicable, that the insurance coverage held
by either party is appropriately coordinated and does
not conflict.
10.2 Upon execution of this Agreement, Seller shall furnish
all such information as Buyer may reasonably request in
order to enable Buyer to arrange for its own insurance
coverage during and after the Interim Period, including
<PAGE>
information in respect of Seller's insurance coverage
on the Asset.
10.3 Seller shall use reasonable efforts to ensure its
policies providing insurance coverage on the Asset are
endorsed such that the underwriters and/or insurers
thereof shall have no right of contribution from the
Buyer's insurance, and Buyer shall use reasonable
efforts to ensure its policies providing insurance
coverage on the Asset are endorsed such that the
underwriters and/or insurers thereof shall have no
right of contribution from the Seller's insurance.
10.4 During the Interim Period, Seller shall maintain or
obtain or cause to be obtained in respect of the Asset
all such insurance coverage as may be necessary to
comply with applicable laws, rules and regulations and
as may be required by any Asset Document. Buyer shall
be named as an additional insured and loss payee on all
such insurance wherever possible.
10.5 At the request of the Buyer, Seller shall, as soon as
reasonably practicable following such request, have
Buyer joined wherever possible on any insurance policy
effected by the Seller in respect of the Asset, other
than any business interruption insurance effected by
the Seller, as an additional assured and loss payee
during the Interim Period, in respect of Buyer's rights
and interest under this Agreement. Seller shall
provide certification or other documentation evidencing
that the Buyer has been included as an additional
insured and loss payee as soon as reasonably
practicable.
10.6 In respect of the Gard Protection and Indemnity Entry
on the Floating Storage Unit and the CRISTAL Entry on
the shuttle tanker(s), Seller and Buyer shall endeavour
as soon as reasonably practicable, at the request of
Buyer, to have the Buyer protected thereunder.
10.7 In respect of any Operator arranged insurance in
respect of the Asset, Seller and Buyer shall endeavor
to have the Buyer protected thereunder.
10.8 In respect of the insurance coverage which may be
afforded to the Buyer pursuant to the terms of Clauses
10.4, 10.5, 10.6, and 10.7, at the Completion Date or
on the 10th Business Day after their receipt by Seller
(whichever occurs later), Seller shall pay to Buyer the
sum of any proceeds of such insurance coverage received
against loss or damage suffered or liability or expense
incurred in relation to the Asset during the Interim
Period, less any amount which has been applied (or
represents sums which have been applied)
10.8.1 in rectifying or remedying such loss or
damage or meeting such liability or expense;
and
10.8.2 in reimbursing Seller for expenditure
incurred prior to the Effective Date for
rectifying or remedying such loss or damage
or meeting such liability of expense.
Seller shall use reasonable endeavours to pursue (or
assist and cooperate with Buyer to pursue, if Buyer is
able to do so in its own name) any claim against
insurers for loss or damage, liability or expense
relating to the Asset suffered during the Interim
Period. If the insurers dispute or resist any claim
Seller shall promptly notify Buyer who shall be
entitled to require Seller to pursue (or assist and
cooperate with Buyer to pursue, if Buyer is able to do
so in its own name) the claim provided that it shall
indemnify Seller against any reasonable and verifiable
costs and expenses Seller may thereby incur in pursuing
such claim.
10.9 In respect of the insurance coverage which may be
afforded to the Buyer pursuant to the terms of Clauses
10.4, 10.5, 10.6, and 10.7, Buyer shall pay to Seller
the insurance premiums relative to such insurance
during the Interim Period, at the time of the interim
period adjustment as provided in Clause 4.4. Any
premiums due to Seller hereunder shall not exceed
reasonable commercial market rates.
11. Indemnity
11.1 Seller shall be liable for all costs, charges,
expenses, liabilities and obligations in respect of the
Asset which accrue or relate to any period before the
Effective Date. Seller shall reimburse and indemnify
Buyer against any such costs, charges, expenses,
liabilities and obligations which are paid by Buyer and
have not been reimbursed to Buyer pursuant to the other
provisions of this Agreement, including Clauses 4.3 and
4.4.
11.2 Buyer shall be liable for all costs, charges, expenses,
liabilities and obligations in respect of the Asset
which accrue or relate to any period on and after the
Effective Date. Buyer shall reimburse and indemnify
Seller against any such costs, charges, expenses,
liabilities and obligations which are paid by Seller
and have not been reimbursed to Seller pursuant to the
other provisions of this Agreement, including Clauses
4.3 and 4.4. Without prejudice to the generality of
the foregoing Buyer shall indemnify and hold Seller
harmless against any costs, charges, expenses,
liabilities and obligations incurred in abandoning any
field property (including but not limited to wells) or
facilities acquired pursuant to this Agreement or held
or brought into being with respect to the Asset to the
extent that such costs, charges, expenses, liabilities
and obligations are attributable to the Asset and
accrue and relate to any period on or after the
Effective Date.
11.3 Notwithstanding any other provision of this Agreement
Seller shall not under any circumstances be liable to
Buyer and Buyer shall not under any circumstances be
liable to Seller under, arising out of or in any way
connected with this Agreement or the Further Documents
for any punitive loss or damages however imposed.
11.4 No claim may be made by either Party under Clause 11.1
or 11.2 by the Buyer or Seller as the case may be,
until the aggregate amount of all such claims against
Seller or Buyer, as the case may be, exceeds Fifty
Thousand (50,000) U.K. pounds sterling, in which event
Buyer or Seller, as the case may be, shall be liable
for the whole of such amount and not merely the excess.
12. Announcements
12.1 Any Party shall be entitled to make a public
announcement or statement regarding the Asset except
that the prior approval of all other Parties shall be
required where such announcement or statement relates
to:
a. the negotiation and/or execution of this
Agreement or the Further Documents or
Completion;
b. subject to Clause 15 hereof, the terms of this
Agreement.
12.2 Each party shall submit any proposed releases referred
to in Clause 12(a) and 12(b) above to the other for
comment and will give due consideration to any comments
received.
12.3 Nothwithstanding the foregoing, neither Party shall be
precluded from making any public announcement or
release regarding the Asset or the transaction
hereunder if the same is required by applicable law,
the U.S. Securities and Exchange Commission or any
recognized stock exchange on which the shares of the
Parties or their respective Affiliates are traded.
13. Notices
13.1 Any notice pursuant to this Agreement may be given by
telex, facsimile transmission or letter to the Party to
be served at the address stated in Clause 13.3 or such
other address as may be given for the purposes of this
Agreement by written notice to the other Parties.
13.2 A notice given by telex or facsimile transmission shall
be deemed to be served on the first Business Day
following the date of dispatch, but a notice sent by
post or delivered personally shall not be deemed to be
delivered until received.
13.3 The respective addresses for service are:
Seller: Oryx U.K. Energy Company
Charter Place, Vine Street, Uxbridge,
Middlesex, England UB8 1EZ
Facsimile No.: 01 895-270-208
With copy to:
Oryx Energy Company
13155 Noel Road
Dallas, Texas 75240-5067
Attention: Director Commercial
Transactions
Buyer: Union Texas Petroleum Limited
Bowater House, 5th Floor
68/114 Knightsbridge
London, SW1X 7LR
Facsimile: 01-44-171-584-7785
Attention: Ms. Carol Boyd
With copy to:
Union Texas Petroleum Holdings, Inc.
1330 Post Oak Blvd.
Houston, Texas 77056
Facsimile: (713) 968-2725
Attention: General Counsel
14. Costs and Expenses
14.1 The Parties shall each pay their own costs and expenses
in relation to the preparation and execution of this
Agreement and the documents contemplated hereby or
executed pursuant hereto.
14.2 Buyer shall be responsible for payment in a timely
fashion of any and all United Kingdom stamp duties and
any other charges payable on or in respect of this
Agreement, the Further Documents and all transfers
and/or documents contemplated hereby or executed
pursuant hereto.
15. Confidentiality
The terms of this Agreement shall be held confidential by
the Parties and shall not be divulged in any way to any
third party by either Party provided that either Party may,
without such approval, disclose such terms to:
15.1 any outside professional consultants, upon obtaining a
similar undertaking of confidentiality (but excluding
this proviso) from such consultants; or
15.2 any bank or financial institution from whom such Party
is seeking or obtaining finance, upon obtaining a
similar undertaking of confidentiality (but excluding
this proviso) from such bank or institution; or
15.3 the extent required by any applicable laws, the
Licence, or the requirements of any recognized stock
exchange in compliance with its rules and regulations;
or
15.4 any government agency lawfully requesting such
information; or
15.5 any court of competent jurisdiction acting in pursuance
of its powers; or
15.6 any Affiliate upon obtaining a similar undertaking of
confidentiality.
16. Variance
The terms and conditions of this Agreement shall only be
varied by an agreement in writing signed by each of the
Parties and specifically referring to this Agreement.
17. Assignment
None of the rights, liabilities or obligations of either of
the Parties under this Agreement are assignable except with
the prior written consent of the other Party, such consent
not to be unreasonably withheld; provided, however, that
Buyer shall be free to assign its rights under this
Agreement to any Affiliate but only on terms that all such
rights should ipso facto lapse if for any reason whatsoever
any such assignee ceases to be an Affiliate unless said
Assignee shall, before ceasing to be an Affiliate, reassign
said rights to Buyer.
18. Termination
18.1 Subject to Clause 18.2, this Agreement shall terminate
if Completion does not occur due to failure to fulfill
the conditions set out in Clause 3.1 on or before 30
November 1995. Upon such termination, no Party shall
have any liability hereunder except for a breach of
this Agreement committed before such termination.
18.2 Notwithstanding termination of this Agreement pursuant
to Clause 18.1, the provisions of Clause 15 shall
continue to apply for a period of two years from the
date hereof.
18.3 Termination of this Agreement pursuant to Clause 18.1
shall be without cost to any Party except where a Party
has failed to use all reasonable endeavours to effect
Completion in accordance with its obligations hereunder
in which event the other Party shall be entitled to all
costs and expenses reasonably incurred in seeking to
effect such Completion in accordance with the
provisions hereof.
19. General
19.1 This Agreement constitutes the entire agreement between
the Parties and supersedes all warranties and
representations previously made and all previous
agreements, arrangements or understandings between the
Parties relating to the matters contained herein
whether oral or in writing made or dated prior to the
date hereof. Buyer hereby confirms to Seller that they
have not relied on any representation save those
referred to in this Agreement.
19.2 No waiver by any Party of any breach of a provision of
this Agreement shall be binding unless made expressly
in writing. Further, any such waiver shall relate only
to the breach to which it expressly relates and shall
not apply to any subsequent or other breach.
19.3 Time shall be of the essence of this Agreement.
19.4 This Agreement shall enure to the benefit of and be
binding upon the respective successors and permitted
assigns of the Parties.
20. Governing Law Jurisdiction
The construction, validity and performance of this Agreement
shall be governed by English Law and the Parties hereby
submit to the jurisdiction of the High Court in London.
21. Counterparts
This Agreement may be executed in counterparts by the
parties hereto on separate counterparts, each of which when
so executed and delivered shall be an original, but all of
which shall together constitute one and the same instrument.
IN WITNESS WHEREOF, the Parties have caused their duly authorized
signatories to execute and deliver this Agreement on the day and
year first above written.
UNION TEXAS PETROLEUM LIMITED )
)
By:/s/W. M. Krips )
------------------- )
Name:W. M. Krips )
)
Title: Director )
in the presence of: )
)
/s/A. R. Crain, Jr. )
-------------------- )
Name: A. R. Crain, Jr. )
ORYX U.K. ENERGY COMPANY )
)
By: /s/Andrew B. Derman )
------------------- )
Name: Andrew B. Derman )
)
Title: Authorized Signatory )
)
in the presence of: )
)
______________________________ )
)
Name:_________________________ )
<PAGE>
SCHEDULE 1
ASSET DOCUMENTS
1. Licence P.213 dated 10 July 1972
2. Assignment of Licence dated 15 April 1975
3. Agreement to assign participating interests under the 1972
JOA dated 15 April 1975
4. Department of Energy Consent Letter dated 5 May 1977
5. Department of Energy Consent Letter dated 20 May 1977
6. Assignment of Licence dated 27 May 1977
7. Assignment of Licence dated 15 November 1977
8. Schedule of Retained Areas dated 15 March 1978
9. Joint Operating Agreement dated 14 February 1979
10. JOA Novation Agreement dated 7 February 1980
11. Department of Energy Consent Letter dated 3 July 1980
12. Assignment of Licence dated 31 July 1980
13. JOA Novation Agreement dated 31 July 1980
14. Assignment of Licence dated 30 June 1981
15. JOA Novation Agreement dated 29 September 1981
16. JOA Novation Agreement dated 26 January 1982
17. Assignment of Licence dated 27 March 1984
18. JOA Novation Agreement dated 27 March 1984
19. Assignment of Licence dated 28 March 1984
20. JOA Novation Agreement dated 28 March 1984
21. Assignment of Licence dated 17 April 1984
22. JOA Novation Agreement dated 17 April 1984
23. Assignment of Licence dated 11 May 1984
24. JOA Novation Agreement dated 11 May 1984
25. Assignment of Licence dated 16 September 1985
26. JOA Novation Agreement dated 16 September 1985
27. Assignment of Licence dated 24 January 1986
28. JOA Novation Agreement dated 24 January 1986
29. Assignment of Licence dated 7 March 1986
30. JOA Novation Agreement dated 7 March 1986
31. JOA Novation Agreement dated 1 July 1986
32. Department of Energy Consent Letter dated 15 July 1986
33. JOA Amendment Agreement dated 24 November 1986
34. JOA Novation Agreement dated 9 December 1986
35. Assignment of Licence dated 17 March 1987
36. JOA Amendment Agreement dated 23 December 1987
37. JOA Novation Agreement dated 17 August 1988
38. Assignment of Licence dated 17 August 1988
39. Assignment of Licence dated 22 December 1988
40. JOA Novation Agreement dated 22 December 1988
41. JOA Novation Agreement dated 30 December 1988
42. Assignment of Licence dated 1 January 1989
43. Assignment of Licence dated 3 January 1990
44. JOA Novation Agreement dated 3 January 1990
45. Assignment of Licence dated 27 June 1990
46. JOA Novation Agreement dated 27 June 1990
47. Department of Energy Consent Letter dated 4 July 1990
48. Joint Operating Agreement dated 10 October 1990
49. Supplementary Agreement to 1979 JOA dated 10 October 1990
50. Assignment of Licence dated 16 October 1990
51. JOA Novation Agreement dated 16 October 1990
52. Novation Agreement dated 16 October 1990 to the 1990
Supplementary Agreement
53. Schedule of Retained Area dated 1 January 1991
54. Department of Energy Consent Letter dated 4 January 1991
55. 1990 JOA Novation Agreement dated 9 January 1991
56. Department of Energy Consent Letter dated 28 February 1992
57. Assignment of Licence dated 25 March 1991
58. Assignment of Working Interest dated 25 March 1991
59. 1990 JOA Novation Agreement dated 25 March 1991
60. Novation Agreement dated 25 March 1991 relating to the 1990
Supplementary Agreement
61. Memorandum of Understanding dated 23 July 1991
62. Amendment No. 1 to the 1990 JOA dated 23 July 1991
63. Novation and Amendment Agreement No. 2 to the 1990 JOA dated
21 November 1991
64. Novation Agreement relating to the 1990 Supplementary
Agreement dated 16 December 1991
65. Assignment of Licence dated 16 December 1991
66. Supplementary Agreement to the 1979 JOA dated 20 December
1991
67. Assignment of Licence dated 29 May 1992
68. Novation of 1990 Supplementary Agreement dated 29 May 1992
69. 1990 JOA Novation Agreement dated 29 March 1992
70. 1990 JOA Novation Agreement dated 9 May 1994
71. DTI Consent Letter dated 20 July 1994
72. Assignment of Licence dated 21 July 1994
73. Novation Agreement relating to the 1990 Supplementary
Agreement dated 21 July 1994
74. DTI consent letter dated 19 October 1994
75. Assignment of Licence dated 1 November 1994
76. Novation Agreement relating to the 1990 Supplementary
Agreement dated 1 November 1994
77. Novation and Amendment Agreement No. 4 to the 1990 JOA dated
1 November 1994
78. Memorandum of Understanding dated 1 November 1994
79. Amendment Agreement No. 5 to the 1990 JOA dated 22 December
1994
80. Novation and Amendment Agreement No. 6 to the 1990 JOA dated
22 December 1994
<PAGE>
SCHEDULE 2
REPRESENTATIONS AND WARRANTIES OF THE SELLER
1. Seller is a licencee of the Licence.
2. Seller is the legal and beneficial owner of the Asset.
3. The Asset is free from all Encumbrances and from all
overriding interests, royalties, deferred payments, net
profit interests, carried interests, production payment,
rights of pre-emption, rights of first refusal and any other
burden, equity or third party rights whatsoever and there is
no agreement or commitment to give or create any of the
same.
4. Seller has not committed any breach of and is not in default
under any of the Data Room Documents relating to the Asset,
and has not received notice (nor is it aware) that any of
the parties to the Data Room Documents relating to the Asset
has committed any breach of, or is in default under, any of
the Data Room Documents relating to the Asset, which breach
or default, as the date hereof, is of a material nature and
subsisting.
5. The Licence and all rights and interests thereunder or
deriving therefrom of the Seller are in full force and
effect and no act or omission of the Seller, or, as far as
the Seller is aware, of any other person, firm or company
has occurred which would or might entitle the Secretary of
State to revoke the Licence and no notice has been given to
the Seller or, as far as the Seller is aware, to any other
person, firm or company by the Secretary of State of any
intention to revoke the Licence and there are no other
grounds for rescission, avoidance, revocation, repudiation
or termination of the Licence or any of the Asset Documents
as against the Seller.
6. To the extent that such fact or matter is fairly disclosed
in the Data Room Documents relating to the Asset and except
as set out this Agreement all accrued obligations and
liabilities imposed by the Licence (including, without
limitation, work obligations) have been duly fulfilled and
discharged and there are no outstanding work obligations to
be fulfilled under the Licence and the Secretary of State
has not given notice to Seller of any intention to require
further works to be conducted (whether in relation to
exploration or development), or to call for the submission
of or impose a development programme.
7. Seller has kept proper and consistent accounts, books and
records of its activities relating to its operations
conducted with respect to the Asset and such accounts, books
and records are up to date and there has been no change in
any practice or policy insofar as such change might affect
the valuation of assets or the recording of expenditure or
receipts relating to the Asset. All returns relating to
Petroleum Revenue Tax relating to the Asset, the Licence or
the subject matter thereof, are up to date and there is
currently no dispute concerning the same of which Seller is
aware.
8. Seller is not a party to any litigation, arbitration or
administrative proceedings or to any dispute in relation to,
and which are likely to prejudice or endanger in any manner,
the Asset and Seller is not aware that any such litigation,
arbitration or administrative proceedings are threatened or
pending either by or against Seller and there are no facts
known to Seller which are likely so to prejudice or endanger
the Asset and, as far as Seller is aware, none of the
parties to the Licence or Data Room Documents relating to
the Asset is involved in or threatened with any litigation,
arbitration or administrative proceedings or any dispute in
relation to, or which is likely to prejudice or endanger in
any manner, the Asset.
9. Seller is duly incorporated with limited liability and
validly exists under the laws of the State of Delaware, is
in good standing, has its central management and control and
is therefore resident for tax purposes within some part of
the United Kingdom, is registered for value added tax
purposes and is a wholly owned subsidiary of Oryx Energy
Company.
10. The documents which contain or establish Seller's
constitution incorporate provisions which authorize, and all
necessary corporate action has been taken to authorize,
Seller to sign and deliver, and perform the transactions
contemplated by, this Agreement.
11. Upon execution by all the relevant parties of the Further
Documents, neither the signing and delivery of this
Agreement nor the performance of any of the transactions
contemplated by this Agreement, will:
(i) contravene or constitute a default under any
provision contained in any agreement (including
the European Investment Company Finance Contract
and the Peseta Loan), instrument, law, judgment,
order, licence, permit or consent by which
Seller or any of its assets is bound or
affected;
(ii) result in the creation or imposition of (or the
obligation to create or impose) any Encumbrance
upon the Asset; or
(iii) cause any limitation on Seller or the powers of
its directors, whether imposed by or contained
in any document which contains or establishes
its constitution or in any law, order, judgment,
agreement, instrument or otherwise, to be
exceeded which in either case is material in the
context of this Agreement.
12. To the best of Seller's knowledge and belief, the relevant
Data Room Documents relating to the Asset conform to the
originals and there are no other documents or written
information relating to the Asset in the possession of
Seller which:
(i) are not included in the Data Room Documents, and
(ii) would render the Data Room Documents relating to
the Asset taken as a whole materially inaccurate
or misleading.
13. No tender, quotation or offer issued by the Seller in
respect of the Asset and still outstanding is or will be
capable of giving rise to a contract merely by acceptance or
other action by another party.
14. No sole risk notice has been issued by the Seller or
received from any of the parties to the Joint Operating
Agreement, and the Seller is not aware of any indication
that any such operations may be proposed.
15. The Seller is not a party to any arrangements which are in
the nature of farm-in or farm-out arrangements in respect of
the Asset.
16. Save to the extent that such fact or matter is fairly
disclosed in the Data Room Documents relating to the Asset,
there are no arrangements binding on the Seller which
restrict the ability of the Seller freely to dispose of the
Asset or any Petroleum.
17. The Seller is not the subject of any official investigation
or inquiry insofar as it relates to the Assets and so far as
the Seller is aware there are no facts which are likely to
give rise to any such investigation or inquiry.
18. In respect of the Asset:
18.1 so far as the Seller is aware, nothing has been done or
has been omitted to be done, whereby the Seller's
insurance coverage on the Asset has or may become void
or voidable;
18.2 so far as the Seller is aware, there are no claims
outstanding under any of the Seller's insurance
coverage on the Asset, nor is the Seller aware of any
circumstances which are likely to give rise to any
claim thereunder; and
18.3 details of the Seller's insurance coverage on the Asset
under which the Buyer may have benefit (including,
without limitation, the policy loss limits and
deductibles) have been disclosed in writing to the
Buyer.
19. The Seller has not cancelled, surrendered, waived, released
or discontinued any rights or claims under the Licence or
any other of the Asset Documents insofar as they relate to
the Asset.
20. To the best of Seller's knowledge and belief, as of the date
hereof there are not owing any material financial
commitments with respect to the Asset other than those
(a) provided for in the last approved budgets provided to
Buyer and as described in Schedule 6;
(b) identified in Data Room Documents; or
(c) cost overruns arising under the Joint Operating
Agreement.
21. Neither the European Investment Bank by virtue of their loan
to Oryx Energy Company dated 22 November 1991, nor the
Barclays Bank PLC by virtue of their loan to Oryx Energy
Company dated 23 October 1991 (collectively the "Loans"),
have the benefit of any rights, interests or security in,
nor any options over the Asset arising out of the Loans
documentation or agreements relating to the same, nor has
the Seller agreed to give or create any rights, interests,
security or options over the Asset nor do the Loans in any
way affect the ability of the Seller to transfer the Asset
to the Buyer.
22. In the period of ownership of the Seller, all agreements and
other documents relating to the title to the Asset of the
Seller which would be stampable if executed in the United
Kingdom either have been duly stamped or have been executed
and retained up to the date hereto outside the United
Kingdom.
SCHEDULE 3
REPRESENTATIONS AND WARRANTIES OF THE BUYER
1. Buyer is duly incorporated in England with limited liability
and validly exists under the laws of England and has its
central management and control within some part of the
United Kingdom and is registered for VAT purposes.
2. The documents which contain or establish Buyer's
constitution, incorporate provisions which authorize, and
all necessary corporate action has been taken to authorize,
Buyer to sign and deliver, and perform the transactions
contemplated by, this Agreement.
3. Upon execution by all relevant parties of the Further
Documents, neither the signing and delivery of this
Agreement nor the performance of any of the transactions
contemplated by this Agreement, will:
(i) contravene or constitute a default under any provision
contained in any agreement, instrument, law, judgement,
order, licence, permit or consent by which the Buyer or
any of its assets is bound or affected; or
(ii) cause any limitation on it or the powers of its
directors, whether imposed by or contained in any
document which contains or establishes its constitution
or in any law, order, judgment, agreement, instrument
or otherwise, to be exceeded,
which in either case is material in the context of this
Agreement.
4. No event has occurred which constitutes, or which with the
giving of notice and/or the lapse of time and/or a relevant
determination would constitute, a contravention of, or
default under any agreement or instrument by which Buyer or
any of its assets is bound or affected, being a
contravention or default would materially and adversely
affect its ability to observe or perform its obligations
under this Agreement and the transactions contemplated
hereby.
5. No litigation, arbitration or administrative proceeding or
claim which might by itself or together with any other such
proceedings or claims which would materially and adversely
affect its ability to observe or perform its obligations
under this Agreement and the agreements contemplated hereby,
is presently in progress or pending or, to the best of the
knowledge, information and belief of Buyer, threatened
against Buyer or any Affiliate of Buyer.
<PAGE>
SCHEDULE 4
WORKING CAPITAL
Pursuant to Clause 4.3 of this Agreement, the monetary value of
working capital shall be valued in accordance with the provisions
of this Schedule and U.S. Generally Accepted Accounting
Principles.
1. Preparation of Statement
The statement of working capital shall be expressed in
pounds sterling or United States dollars as incurred by the
Seller and shall be based on the accounts, statements and
records as of June 30, 1995. The statement shall be
prepared using actual amounts or estimated amounts, if any,
that may be reflected in the accounts.
2. Elements of Working Capital
The elements of working capital shall comprise the
aggregated current assets (which shall include, without
limitation, an underlifted position, oil in inventory, other
inventories, materials and stock) minus aggregated current
liabilities (which shall include, without limitation, an
overlifted position). Any tax assets/liabilities including
current and deferred taxes are to be specifically excluded
in the calculation of working capital pursuant to this
paragraph 2.
3. Payment of Working Capital
Should the working capital be a positive sum, then the Buyer
shall pay to the Seller that amount as settlement for
working capital in accordance with the provisions of Clause
4.3 of this Agreement.
Should the working capital be a negative sum, then the
Seller shall pay to the Buyer that amount as settlement for
working capital in accordance with the provisions of Clause
4.3 of this Agreement.
<PAGE>
SCHEDULE 5
Located in Block 16/26 at coordinates 386 775 mE 6437 000 mN
eight- legged steel jack with production, drilling and quarters
topsides including two production trains, one drilling rig and
quarters for 144 people connected to a floating storage unit,
overall length 248.2m beam 42.0m with storage capacity of 825,000
bbls.
<PAGE>
SCHEDULE 6
DATA ROOM DOCUMENTS
Licence No. P 213
Block Nos. 15/8a 16/26 and 28/5a
1. 1 November 1994 Deed of Assignment of UK Petroleum
Production Licence No. P213
2. 1 November 1994 Novation Agreement relating to the P213
Supplemental Agreement
3. 1 November 1994 Novation and Amendment No. 4 of the JOA
for Block 16/26
4. 1 November 1994 Memorandum of Understanding - Block
16/26
5. 22 December 1994 Amendment No. 5 to the JOA - Block
16/26- Areas A, B, C and D
6. 22 December 1994 Novation and Amendment No. 6 of the JOA
in respect of Block 16/26
7. 20 December 1993 DTI Letter of Consent to Flare Gas
8. 12 January 1994 Alba Crude Oil Marketing and Sale and
Purchase Agreement
9. 26 January 1994 DTI Letter of Approval re Amendments
10. 9 May 1994 Novation of the Joint Operating
Agreement - Block 16/26 - Area A and
Area B
11. 20 July 1994 DTI Letter of Consent re Assignments
12. 21 July 1994 Deed of Assignment in respect of Blocks
16/26 and 28/5a to Licence P213
13. 21 July 1994 Novation Agreement relating to the
Supplemental Agreement
14. 24 August 1994 Amendment and Novation of the Crude Oil
Transportation Agreement - Alba Field
(Block 16/26 Licence P213)
15. 15 September 1994 KL Field Joint Planning Agreement
Novation
16. 19 October 1994 DTI Letter re P213 - Block 16/26
Assignments
17. 23 April 1992 Block 16/26 Alba ("Area A") Technology
Agreement re ownership of technology
produced for Alba development
18. 29 May 1992 Deed of Assignment of Production Licence
re Blocks 16/26 and 28/5a
19. 29 May 1992 Novation Agreement Relating to the JOA
in respect of Area A and Area B of Block
16/26
20. 29 May 1992 Novation Agreement Relating to the P213
Supplemental Agreement
21. 5 November 1992 DTI Letter re Waiver of Landing
Requirement until further notice
22. 25 October 1993 Side Letter Agreement to Contract of
Affreightment dated 4 November 1991
23. 25 October 1993 Letter of Indemnity (Per Special
Provision K of Attachment 3 of C.O.A.) &
Alba Transportation Accounting
Procedures- Exhibits A and II
24. 12 November 1993 DTI Letter re Petroleum Act 1987:
Section 1 Notice ("an abandonment
programme")
25. 16 November 1993 Crude Oil Transportation Agreement
(Block 16/26)
26. 16 November 1993 Amendment No. 3 to the JOA (Block 16/26)
27. 9 May 1991 DEn approval to the JOA Amendment re Blk
16/26
28. 22 May 1991 DEn consent re Production Licence
29. 23 July 1991 Memorandum of Understanding (co-
operation in Alba area and remainder of
Block)
30. 23 July 1991 JOA Amendment No. 1 re Block 16/26
(Segregation of Alba Area)
31. 18 September 1991 Notice of Assignment of JOA and other
agreements relating to Alba Field to
Block 16/26
32. 18 September 1991 Scottish Assignation in Security to
Block 16/26
33. September 1991 DEn letter consent re Development and
Production Works
34. 4 November 1991 Contract of Affreightment - 1st Original
Statoil/Chevron
35. 21 November 1991 Novation and Amendment No. 2 to the JOA
relating to Areas A & B of Block 16/26
36. 4 December 1991 DEn letter re abandonment of offshore
installations Petroleum Act of 1987:
Section 3(5)
37. 16 December 1991 Novation Agreement relating to the
Supplemental Agreement dated 10 October
1990 to the JOA dated 14 February 1979
38. 16 December 1991 Deed of Assignment of UK Petroleum
Production Licence P.213
39. 20 December 1991 Supplemental Agreement re JOA dated 14
February 1979
40. 14 February 1992 DEn letter re abandonment of the Alba
Floating Storage Unit: Petroleum Act of
1987: Section 3(5)
41. 23 April 1992 Alba Technology Agreement - Block 16/26
'Area A'
42. 10 October 1990 Supplemental Agreement to JOA
43. 16 October 1990 Deed of Licence Agreement
(Triton/Conoco)
44. 16 October 1990 Novation Agreement to JOA - Block 16/26
45. 16 October 1990 Novation Agreement to the Supplemental
Agreement
46. 20 December 1990 Determination of Oilfield No. 126 Alba
47. 1 January 1990 Schedule of Retained Area
48. 4 January 1991 DEn letter of consent to Production
Licence No. P213
49. 9 January 1991 16/26 JOA Novation Agreement Clyde to
Fina
50. 24 January 1991 Letter from Phillips Petroleum Company
re Sale and Purchase Agreement Block
16/26
51. 28 February 1992 DEn letter of consent re Sale and
Purchase Agreement re Block 16/26
52. 28 March 1991 Deed of Assignment in respect of Blocks
16/26 and 28/5a
53. 25 March 1991 Assignment of Working Interest (Phillips
to Conoco (U.K.) Limited - Sale of
Phillips 7.5% interest in Block 16/26)
54. 25 March 1991 Novation Agreement relating to JOA -
Block 16/26
55. 25 March 1991 Novation of Supplemental Agreement re
Blocks 15/8a, 28/51 and 16/26
56. 26 April 1991 DEn Letter re Petroleum Production
Licence No. P.213 Development and
Production Works
57. 26 April 1991 DEn letter re Production Licence Alba
Field Development
58. 3 January 1990 Deed of Licence Assignment (BP/Oryx)
59. 3 January 1990 Novation of Joint Operating Agreement
60. 27 June 1990 Deed of Assignment (Amerada Hess re-
organisation)
61. 27 June 1990 Novation of Joint Operating Agreement
62. 4 July 1990 DEn approval to Block 16/26 JOA and
Supplementary Agreement
63. 24 January 1986 Deed of Assignment (GAO U.K. ceased to
be a licencee)
64. 24 January 1986 Amendment to JOA (GAO's interest
acquired by Phillips)
65. 7 March 1986 Deed of Assignment (Sunlite's interest
acquired by Whitehall)
66. 7 March 1986 JOA Novation Agreement
67. 1 July 1986 Amendment to Operating Agreement
(Assignment of beneficial interest from
Husky to Marathon Oil)
68. 15 July 1986 DEn consent to Unilon/Baytrust
assignment to Clyde (Block 16/26 only)
69. 24 November 1986 Amendment to Operating Agreement
(removal of AMI)
70. 9 December 1986 Novation Agreement (Unilon/Baytrust
Assignment to Aran)
71. 17 March 1987 Novation Agreement (Phillips transferred
its interest in Blocks 15/18a and 28/5a
to Clyde)
72. 17 March 1987 Deed of Assignment
73. 23 December 1987 Amendment Agreement relating to P.213
Operating Agreement (Substitution of
Kewanee Oil Company by BKI)
74. 17 August 1988 Novation Agreement (Whitehall re-
organisation)
75. 17 August 1988 Deed of Licence Assignment
76. 30 December 1988 Novation Agreement (Chevron re-
organisation)
77. 22 December 1988 Novation of Joint Operating Agreement
(Fina acquired Marathon's interest)
78. 22 December 1988 Deed of Licence Agreement
79. 1 January 1989 Deed of Assignment (Chevron re-
organisation)
80. 27 May 1981 Various consents relating to BP's
acquisition of Sunlite's' interests in
P.213 and P.141
81. 26 June 1981 Various consents relating to BP's
acquisition of Sunlite's interests)
82. 24 June 1981 Stamp Duty Agreement
83. 30 June 1981 Deed of Assignment (Shell/Esso became
licencees)
84. 26 January 1982 Amendment to Operating Agreement
(Oxoco's beneficial interest vested in
Petrolex)
85. 27 March 1984 Deed of Assignment (Esso re-
organisation)
86. 27 March 1984 JOA Novation Agreement
87. 28 March 1984 Deed of Assignment (Petrolex re-
organisation)
88. 28 March 1984 Amendment to JOA (Petrolex re-
organisation)
89. 17 April 1984 Deed of Assignment (Berkeley to Santa
Fe) Block 16/26 & JOA Novation
89. 11 May 1984 Deed of Assignment (Tanks re-
organisation)
90. 11 May 1984 JOA Novation
91. 16 September 1985 Deed of Assignment (Petrolex (Aran
Energy) re-organisation)
92. 16 September 1985 JOA Novation
93. 10 July 1972 P.213 Licence with effective date of 15
March 1972
94. 15 April 1975 P.213 Licence with effective date of 15
March 1972
95. 5 May 1977 DEn consent to assignment to Gulf (UK)
Offshore Investments Limited
96. 20 May 1977 DEn consent to assignment to Asamera Oil
(UK) Ltd.
97. 27 May 1977 Deed of Assignment (Asamera)
98. 15 November 1977 Deed of Assignment (Gulf)
99. 15 March 1978 Schedule of Retained Areas
100. 14 February 1979 Joint Operating Agreement
101. 7 February 1980 JOA Amendment (Berkely Exploration
replaced Berry Wiggans)
102. 14 March 1980 Side Letter BP Petroleum Development
Limited re proposed sale of CGF's
interests
103. 30 June 1980 Side Letter BP Petroleum Development Ltd
re proposed agreement for the sale of
GCF's int.
104. 1 July 1980 Sale and Purchase Agreement Consolidated
Gold Fields/BPPD
105. 1 July 1980 Stamp Duty Agreement
106. 1 July 1980 Novation of Test Well Agreement
107. 3 July 1980 DEn consent to assignment from
Consolidated Gold Fields to BP
108. 31 July 1980 Amendment to Sale and Purchase Agreement
109. 31 July 1980 Deed of Assignment
110. 31 July 1980 Side Letter Consolidated Gold Fields/BP
JOA Novation
111. 15 September 1980 Side Letter BP Petroleum Dev Ltd. re
Test Well Agreement to Blocks 16/26 and
15/30
<PAGE>
SCHEDULE 7
PART 1
1. Deed of Assignment of the Licence
2. Working Interest Assignment
PART 2
1. Novation and Amendment of the Joint Operating Agreement
2. Novation of a Supplemental Agreement dated 10 October 1990
3. Memorandum of Understanding dated 1 November 1994
4. Assignment of the Alba Crude Marketing and Sale and Purchase
Agreement
5. Crude Oil Transportation Agreement dated 16 November 1993
EXHIBIT 10.4
SALE AND PURCHASE AGREEMENT
THIS AGREEMENT is made the 14th day of June, 1995.
-----------------------
BETWEEN:
1. POWERGEN NORTH SEA LIMITED, a company incorporated in
England whose registered number is 2855151 and whose
registered office is 53 New Broad Street, London, England
EC2M 1JJ ("Buyer"); and
2. ORYX U.K. ENERGY COMPANY, a corporation organised and
existing under the laws of the State of Delaware whose
principal place of business is Charter Place, Vine
Street, Uxbridge, Middlesex, England UB8 1EZ, ("Seller").
WHEREAS:
The Seller wishes to sell and Buyer wishes to purchase
Seller's undivided interest under U.K. Continental Shelf
Licence P130 encompassing Block 48/15a including the Audrey
and Galleon Fields and the Ensign Area and License P103
encompassing Block 21/5a, all under the terms of this
Agreement; and
The Board of Directors of the Seller and Buyer, and that of
their respective parent companies, Oryx Energy Company and
PowerGen plc, have adopted resolutions approving the sale and
purchase of the Assets on the terms and conditions of this
Agreement and authorizing the execution of this Agreement and
all Further Documents and all other documents contemplated
hereby, and copies of such resolutions each certified as a
true copy and in full force and effect by the secretary or an
assistant secretary of each Company have been exchanged.
NOW THEREFORE IT IS HEREBY AGREED as follows:
1. Definitions
1.1 In this Agreement, including its recitals and
schedules, the following expressions shall, except
where expressly stated otherwise, have the following
respective meanings:
"Accruals Basis" means that basis of accounting
under which costs and benefits are regarded as
applicable to the period in which the liability for
the cost is incurred or the rights to the benefits
arise regardless of when invoiced, paid or received;
"Affiliate" means in relation to any Party, any
company or other entity which controls or is
controlled by that Party or is controlled by a
company or other entity which controls that Party.
"Control" means the right to exercise, directly or
indirectly, more than 50% of the voting rights of a
company or other entity;
"Assets" means Seller's undivided interest in and
under the Licences and Seller's interest in Block
21/5a and Seller's 50% interest under the Joint
Operating Agreement in so far as it relates to the
areas of Block 48/15a other than the Ensign area,
and Seller's 100% interest under the Joint Operating
Agreement in so far as it relates to the Ensign
area, together with its interests under the Unit
Operating Agreements, including, without limitation,
all equipment, materials, Production Facilities and
associated records and data and the burden of all
corresponding obligations and liabilities attaching
to such interests, including the corresponding
rights and interests in and under the Data Room
Documents, such Assets being more fully described in
Schedule 1 attached hereto;
"Audrey Field" means the "Unit Area" as defined in
the Audrey Field Unitisation Agreement;
"Audrey Field Unitisation Agreement" means the
Audrey Field Unitisation and Unit Operating
Agreement dated 8 July 1988 as subsequently amended
and novated;
"Business Day" means a day other than Saturday or
Sunday on which banks are or, as the context may
require, were generally open for business in both
the City of London and New York City;
"Completion" means the completion of the sale and
purchase of the Assets as provided for in Clause 7;
"Completion Date" means the date on which Completion
actually occurs;
"Co-Venturers" means the persons (and their
respective successors and assigns) other than Seller
having undivided interests in the Licences and in
all agreements, instruments and documents related to
the Licences, including for the avoidance of doubt
the Operating Agreements;
"CT" means the tax applied pursuant to section 6 of
the Income and Corporation Taxes Act 1988;
"Data" means all accounts, books and data relating
to the Assets including, without prejudice to the
generality of the foregoing cash calls, billing
statements, reconciliation statements, contracts,
correspondence, information, data and reports
(including petroleum engineering, reservoir
engineering, drilling, geological, geophysical and
all other kinds of technical data and reports,
samples, well-logs and analyses in whatever form the
same are maintained) together with traded data other
than the Traded Data;
"Data Room Documents" means the documents relating
to the Assets and made available for the Buyer's
inspection in the data rooms located at Seller's
offices together with such other documents as Seller
may have provided to the Buyer prior to the date
hereof, all as set out in Schedule 6 hereto;
"DTI" means the Department of Trade and Industry;
"Effective Date" means 00:01 hours GMT on 1st July,
1995;
"Encumbrance" means any mortgage, charge (whether
fixed or floating), pledge, lien, equity or
encumbrance;
"Ensign Area" means that part of Block 48/15a
defined as the Ensign Area in paragraph 5 of
Schedule 1;
"Further Documents" means the Working Interest
Assignment and the other documents listed on
Schedule 7 in a form reasonably satisfactory to
Buyer and in accordance with this Agreement, to be
executed in accordance with Clause 7.1.3 and 7.1.4,
subject to such amendments required by the Secretary
of State and in respect of documents set out in
Schedule 7 any reasonable amendments required by the
Co-Venturers, together with such other documents as
are required to effect Completion;
"Galleon Field" means the "Unit Area" as defined in
the Galleon Field Unitisation Agreement;
"Galleon Field Unitisation Agreement" means the
Galleon Field Unitisation and Unit Operating
Agreement dated 9 June 1993 as subsequently amended
and novated;
"Interim Period" means the period of time commencing
on the Effective Date and extending up to and
including the Completion Date;
"Joint Operating Agreements" means the Southern
Waters Joint Operating Agreement dated 18 June 1971
as subsequently amended and novated and the Northern
Waters Joint Operating Agreement dated 16 July 1974
as subsequently amended and novated;
"LIBOR" for any period means the rate per annum
quoted by National Westminster Bank plc, 53
Threadneedle Street, London EL2P 2JN for one (1)
month deposits and in amounts of at least U.S. one
(1) million dollars ($1,000,000) to leading banks in
the London Interbank market at or about 11:00 a.m.
(GMT) on Monday of each succeeding one (1) week term
for the relevant period;
"Licence P103" means the United Kingdom Petroleum
Production Licence P. 103 granted under the
provisions of the Petroleum (Production) Act 1934,
as applied by the Continental Shelf Act 1964 and any
extensions, amendments, variations or renewals of,
or substitutions in respect of the whole or any part
of, such licence in effect at the date hereof or
hereafter;
"Licence P130" means the United Kingdom Petroleum
Production Licence P. 130 granted under the
provisions of the Petroleum (Production) Act 1934,
as applied by the Continental Shelf Act 1964 and any
extensions, amendments, variations or renewals of,
or substitutions in respect of the whole or any part
of, such licence in effect at the date hereof or
hereafter;
"Licences" means Licence P103 and Licence P130;
"Operating Agreements" means the Joint Operating
Agreements and Unit Operating Agreements;
"Operator" shall mean the Operator, as such term is
defined in the Joint Operating Agreements and/or the
Unit Operating Agreements;
"Party" means any party to this Agreement;
"Petroleum" has the meaning assigned to it under the
Licences;
"Production Facilities" means the Audrey and Galleon
platforms and any other associated facilities,
assets and systems related thereto;
"PRT" means the tax applied pursuant to Part 1 of
the Oil Taxation Act 1975;
"Reference Interest Rate" means LIBOR for the period
in question for the sum due but unpaid on such date
for the period in question plus two (2) percentage
points;
"Secretary of State" means Her Majesty's Secretary
of State for Trade and Industry;
"Subsidiary" has the meaning assigned to it by
Section 736 of the Companies Act 1985;
"U.S. Tax" means any tax, charge, fee, duty, levy or
other assessment imposed by any taxing authority of
any Governmental Authority (including any interest,
penalties or additions to tax), any recapture or
clawback of interest with respect to taxes refunded
or offset, any obligation to indemnify, reimburse,
or pay over (pursuant to a tax sharing arrangement
or otherwise) to Oryx Energy Company or any of its
Affiliates (other than the Company or any Company
Subsidiary) any amount in respect of the foregoing;
"Traded Data" means, with respect to the Assets,
data which relates to an area unrelated thereto and
which has been acquired by trade, purchase or
otherwise by or on behalf of the Seller as a party
to the Operating Agreements from a third party or
parties where such data cannot be provided to the
Buyer because such transfer is prohibited by the
agreement under which it was acquired;
"Unit Operating Agreements" means the Audrey Field
Unitisation Agreement and the Galleon Field
Unitisation Agreement;
"VAT" means the tax applied pursuant to the Value
Added Tax Act 1994; and
"Working Interest Assignment" means the assignment
of the Assets in a form reasonably satisfactory to
Buyer and in accordance with this Agreement.
1.2 All references to clauses, recitals and schedules
are, unless otherwise expressly stated, references
to clauses of, and recitals and schedules to, this
Agreement.
1.3 The headings in this Agreement are inserted for
convenience only and shall be ignored in construing
this Agreement.
1.4 Any reference to any statute or statutory instrument
in this Agreement shall be a reference to the same
as amended, supplemented or re-enacted from time to
time.
1.5 Unless the context otherwise requires, reference to
the singular shall include a reference to the plural
and vice-versa; and reference to any gender shall
include a reference to all other genders.
1.6 The schedules attached hereto form part of this
Agreement. In the event of any conflict between the
provisions of this Agreement and the schedules
hereto, the provisions of this Agreement shall
prevail.
2. Transfer of the Assets
2.1 Subject as provided in Clause 3, the Seller as legal
and beneficial owner of the Assets hereby agrees for
the consideration provided for herein to transfer to
the Buyer at Completion and the Buyer hereby agrees
to accept at Completion the Assets free, save as
disclosed in the Data Room Documents, from all
Encumbrances, royalty interests, production
payments, carried interests, deferred obligations or
any other third party rights or security interests
whatsoever (except as specified in the Licences or
in the Operating Agreements).
2.2 On Completion, the transfer referred to in Clause
2.1 above shall, as between the Parties, be deemed
for all purposes to be made with effect from the
Effective Date.
3. Conditions of Completion
3.1 Completion is conditional on:
3.1.1 the receipt of all necessary written consents
and approvals of the Secretary of State;
3.1.2 the receipt of any necessary written consents
and approvals of each of the Co-Venturers,
and/or evidence of the expiry, exercise or
waiver of all rights of preemption in respect
of any of the Assets;
3.1.3 the receipt of the confirmation by Buyer from
each of the Co-Venturers that the Further
Documents are in a form and content
satisfactory to each of them and will be
executed by each of them without further
material amendment;
3.1.4 receipt of all necessary consents of British
Gas and Kinetica Limited;
3.2 If, in relation to the Assets, there occurs before
Completion (a) any casualty, losses or damages
(including in either case, without limitation,
curtailment or loss of production), (b) any
mechanical failure or breakdown of equipment or (c)
any event which gives or may give rise to
environmental or pollution liability, and any of
(a), (b) or (c), individually or in the aggregate,
having or being reasonably expected to have an
after-tax impact on Buyer of a monetary value
exceeding U.S. $12,500,000 the Buyer shall have the
option to terminate this Agreement, in which case
subject to Clauses 19.2 and 19.3, no Party shall
have any liability except for a breach of this
Agreement committed before such termination. Any
dispute as to the monetary value of the after-tax
impact shall be referred to an independent chartered
accountant for resolution in the manner set out in
Clause 4.3.3.
3.3 Seller shall use all reasonable endeavours to
procure, with prompt dispatch, the satisfaction of
the conditions set out in Clause 3.1 and give the
appropriate notices of transfer to the Co-Venturers
upon the prior written approval by Buyer, which
approval shall not be unreasonably withheld, and
shall keep the Buyer informed of progress.
4. Consideration and Adjustments to Consideration
4.1 Consideration
The consideration for the transfer of the Assets to
the Buyer shall be One Hundred Twenty Million
($120,000,000.00) U.S. dollars, exclusive of VAT and
any U.S. Tax, the allocation of which is set out in
Schedule 5.
4.2 Adjustments to Consideration
The Buyer shall pay to Seller, or Seller shall pay
to the Buyer (as the case may be) such further sums
as may be payable pursuant to Clauses 4.3, 4.4, 4.5,
9.3, 9.4, 10.1, 11.7, 11.8, 12.1 and 12.2. Any sums
that may become payable under this Clause shall be
an adjustment to the consideration and shall be
dealt with in accordance with Clause 9.1(a).
4.3 Working Capital
4.3.1 The Buyer shall pay to Seller or Seller shall
pay to the Buyer (as the case may be) a sum to
reflect the monetary value of the working
capital attributable to the Assets as set
forth in Schedule 4. The said sum shall be
set out in a statement to be prepared and
given by Seller to the Buyer as soon as
practicable but no later than thirty (30) days
after the Completion Date. Such statement
shall be a statement of working capital and a
statement of adjustments made pursuant to
Schedule 4.
4.3.2 Working capital balances used for the purposes
of the statement referred to in Clause 4.3.1
shall be taken from the individual accounts,
statements and records as of June 30, 1995. A
copy of the individual accounts, statements
and records shall be provided by Seller to the
Buyer with such statement. Verification
(including the right of audit) of the
aforesaid statement shall be carried out as
soon as practicable but no later than
thirty(30)days after receipt of such
statement, and subject to the provisions of
Clause 4.3.3, settlement of the sum detailed
in the statement, as varied by any adjustment
agreed between Seller and Buyer, shall be made
as soon as practicable within (fifteen) 15
days from completion of the verification.
4.3.3 In the event that Seller and Buyer cannot
agree upon any matter to which the statement
referred to in Clause 4.3.1 relates, the
undisputed amount shall be paid and the
disputed amounts shall be referred for
resolution to an independent chartered
accountant appointed by Seller and Buyer or,
in the event Seller and Buyer fail to agree on
such appointment, by the President for the
time being of the Institute of Chartered
Accountants of England and Wales. The
accountant shall render his decision within
thirty (30) days of the referral and shall be
afforded such access to books, records,
accounts and documents in the possession of
each of the Parties as he may reasonably
request. For the purposes of this Agreement,
the accountant so appointed shall be deemed to
be acting as an expert and not as an
arbitrator, and the decision of the accountant
so appointed shall, in the absence of manifest
error, be final and binding on Seller and
Buyer and settlement of any outstanding amount
shall be made within (5) Business Days of such
decision. The costs of the accountant shall
be borne equally by Seller and Buyer.
4.4 Interim Period Adjustment
4.4.1 Buyer shall pay Seller the amount of all
obligations and liabilities pertaining to the
Assets paid by Seller in respect of the
Interim Period, excluding any VAT paid on
operators' cash calls which either has been or
has not been but will be, reimbursed to the
Seller as input tax recoverable by the Seller
after the Completion Date.
4.4.2 Seller shall pay to the Buyer the amount of
all receipts pertaining to the Assets received
by Seller in respect of the Interim Period.
4.4.3 For the purposes of this Clause, obligations
and liabilities will include, inter alia, cash
calls for operating costs and receipts will
include, inter alia, actual proceeds from the
sale of Petroleum produced after the Effective
Date. The Buyer will refund an amount equal
to the PRT and CT at the full marginal rate
incurred by the Seller relating to the Assets
for the period from the Effective Date up to
but excluding the Completion Date. For
purposes of clarity, the PRT incurred by the
Seller will be that amount of PRT actually
paid by the Seller for the chargeable period
or periods covering the Interim Period and CT
incurred by the Seller will be a notional
calculation based on the full marginal rate
times the receipts less revenue expenditures
and PRT paid but with no capital allowances on
any capital expenditure during the Interim
Period. The full marginal rate shall be
twenty-eight percent (28%).
4.4.4 The amounts set out above shall be set out in
a statement to be prepared and given by Seller
to the Buyer as soon as practicable but no
later than sixty (60) days after Completion.
Verification, including the right of audit of
said statement, shall be carried out as soon
as practicable but no later than forty five
(45) days after receipt of such statement and
subject to the provisions of Clause 4.4.5,
settlement of the amounts detailed in the
statement as varied by any adjustment agreed
between Seller and Buyer shall be made within
fifteen (15) days from completion of the
audit. With respect to PRT, the Seller will
estimate the PRT amount for purposes of the
statement and provide to the Buyer a copy of
the PRT assessment(s) for the relevant
chargeable period(s) within the Interim Period
within five days of receipt of each assessment
and any difference between the estimate and
the actual assessment(s) will be settled
between the Parties within thirty (30) days
after the assessment(s) being provided to the
Buyer by the Seller.
4.4.5 In the event that Seller and the Buyer cannot
agree upon any matter to which the statement
referred to in Clause 4.4.4 relates, the
undisputed amounts shall be paid and the
disputed amounts shall be referred for
resolution to an independent chartered
accountant appointed by Seller and Buyer or,
in the event Seller and Buyer fail to agree on
such appointment, by the President for the
time being of the Institute of Chartered
Accountants of England and Wales. The
accountant shall render his decision within
thirty (30) days of the referral and shall be
afforded such access to books, records,
accounts and documents in the possession of
each of the Parties as he may reasonably
request. For the purposes of this Agreement,
the accountant so appointed shall be deemed to
be acting as an expert and not as an
arbitrator, and the decision of the accountant
so appointed shall, in the absence of manifest
error, be final and binding on Seller and the
Buyer and settlement of any outstanding amount
shall be made within five (5) business days of
such decision. The costs of the accountant
shall be borne equally by Seller and the
Buyer.
4.5 Interest
4.5.1 In the event that Completion occurs after the
Effective Date, the Buyer shall pay to the
Seller on the Completion Date, in addition to
the consideration, an amount equal to interest
on the consideration at a rate per annum equal
to the Reference Interest Rate calculated on a
daily basis using simple interest for the
number of days elapsed between the Effective
Date and the day immediately preceding the
Completion Date (both dates inclusive).
4.5.2 An amount equal to interest shall be paid on
any payments due under Clause 4.3 and Clause
4.4 at a rate per annum equal to the Reference
Interest Rate calculated on a daily basis
using simple interest for the number of days
elapsed between the time receipts are received
or payments are made to the date of final
settlement between the Parties in the case of
Clause 4.4 and from the Effective Date to the
date of settlement between the Parties in the
case of Clause 4.3.
4.6 Any and all amounts to be paid pursuant to this
Agreement shall be paid in same day funds to the
Seller's account as the Seller shall nominate in
writing if owed to the Seller, or if owed to the
Buyer in same day funds to such bank account as the
Buyer shall nominate in writing.
5. Conduct of Operations Prior to the Completion Date
5.1 Subject to any obligations of confidentiality by
which Seller is bound, Seller shall in respect of
the Assets from the date of this Agreement to
Completion Date:
5.1.1 provide Buyer with copies of all notices and
other information provided by or to Seller
under the Operating Agreements as the same
become available;
5.1.2 provide to Buyer (and its authorized
employees, agents and professional advisers)
access to all such technical, legal and
financial information in the possession of
Seller which is or has been made available to
Co-Venturers relating to the Assets as Buyer
may from time to time reasonably require;
5.1.3 not without prior written consent of Buyer
(not to be unreasonably withheld) agree to
amend the Licences, any of the Data Room
Documents or any other document or agreement
affecting the Assets, nor agree to execute a
new joint operating agreement in respect of
either of the Licences;
5.1.4 keep the Buyer informed of and consult with
the Buyer with regard to the marketing of
Petroleum and on all material proposals
affecting the Assets and, prior to any
operating committee meeting or any material
decision relating to the Assets, consult with
the Buyer in good time and (in each case) act
or vote in accordance with the instructions of
the Buyer provided that in the opinion of the
Seller, exercised in good faith, the interests
of the Seller are not thereby materially
prejudiced, and, with regard to any other
proposals, wherever practicable consult with
Buyer and give due consideration to the view
of Buyer before exercising its voting rights
in connection with any matter or proposal to
be voted upon by the operating committees
established under the Operating Agreements;
5.1.5 continue to meet all expenditures, receive all
income, perform all obligations relating to
the Assets and generally conduct all business
in relation to the Assets in a proper and
workmanlike manner and exercise its voting
power to ensure that the Assets are well
maintained and fully safeguarded; and
5.1.6 not sell, charge, transfer, assign, encumber
in any manner whatsoever the Assets or purport
to seek to do any of the same.
5.2 Without prejudice to the foregoing, Seller shall
(subject to any confidentiality obligations by which
it is bound) ensure that pending Completion Buyer is
kept fully informed of developments relating to the
Assets including but not limited to:
(a) the making of any cash calls or approval of
AFE's;
(b) the adoption or proposal of any budget; and
(c) the receipt of any significant geological or
other data.
5.3. Nothing hereunder shall require Seller to consult or
obtain the consent of Buyer in respect of actions
taken by the Operator in cases of emergency under
the Joint Operating Agreements.
6. Pre-emption Rights
6.1 If pursuant to rights of preemption under any Joint
Operating Agreement or any Unit Agreement any Co-
Venturer of the Seller acquires any of the Assets,
this Agreement shall for all purposes cease to apply
as between the Seller and the Buyer to those of the
Assets over which such rights are exercised.
6.2 For the avoidance of doubt, it is confirmed that the
Consideration shall be reduced by the amount or
amounts as specified in Schedule 5 allocated to
those of the Assets in respect of which this
Agreement ceases to apply pursuant to Clause 6.1 and
this Agreement shall continue to apply to those
Assets not so affected.
7. Completion
7.1 Completion shall, subject to the provisions of
Clauses 3.2 and 19, take place as soon as possible
(but in no event prior to July 1, 1995) within seven
(7) Business Days after notification from Seller to
the Buyer that the conditions in 3.1 have been
satisfied at such location outside the territory of
the U.K. and at such time as is mutually agreed by
the Parties, at which time:
7.1.1 the Buyer shall pay to Seller by wire transfer
in United States dollars the consideration
set out in Clause 4.1 of this Agreement
together with any sums payable in accordance
with Clause 4.5.1 including such adjustments
thereto that are capable of being made at
Completion; and
7.1.2 Seller shall deliver to Buyer:
(a) the Further Documents (other than the
Working Interest Assignment) duly
executed by the Seller and, as
appropriate, by all of the Co-
Venturers; and
(b) evidence that Seller has instructed
each Operator to recognise the
Buyer's ownership of the Buyer's
proportion of the working capital at
the Completion Date.
7.1.3 The Parties shall execute the Working Interest
Assignment and comply with its terms.
7.1.4 The Parties shall execute all such other
documents and do all acts and things as may be
reasonably required in order to effect the
transfer of the Assets to the Buyer and
otherwise carry out the true intent of this
Agreement.
7.2 Seller will deliver to Buyer the Data and copies of
the Data Room Documents and such other documentation
relevant to the Assets as Buyer may reasonably
request as soon as practicable but in any event
within twenty (20) Business Days after the
Completion Date.
7.3 Without prejudice to the provisions of Clause 7.1.3
the Parties agree, notwithstanding Completion, to
execute and deliver to each other all such
additional instruments and to do all such further
acts and things as may reasonably be required, or as
may be reasonably requested by any Party, to fully
vest in, and assure each Party of, all rights,
powers and privileges intended to be granted to or
conferred upon the Parties under or pursuant to this
Agreement and to otherwise give effect to the
transactions contemplated under this Agreement.
8. Representations, Warranties and Undertakings
8.1 Subject to the provisions of Clause 8.3, Seller
hereby represents and warrants to Buyer in the terms
set out in Schedule 2 and such representations and
warranties shall be deemed to be repeated
immediately prior to Completion on the basis that
all references to "the date hereof" shall be deemed
to refer to the Completion Date.
8.2 Buyer hereby represents and warrants to the Seller
in the terms set out in Schedule 3 and such
representations and warranties shall be deemed to be
repeated immediately prior to Completion on the
basis that all references to "the date hereof" shall
be deemed to refer to the Completion Date.
8.3 Seller shall ensure that the representations and
warranties referred to in Clause 8.1 are true and
accurate on the Completion Date but if
notwithstanding such efforts any matter or thing
occurs of which Seller is aware and which would be
inconsistent with any of such representations and
warranties on the Completion Date Seller shall
promptly notify Buyer thereof.
8.4 In the event of any matter or thing materially
inconsistent with any of the representations or
warranties given by Seller in or pursuant to this
Agreement being notified by Seller to Buyer prior to
Completion (or Buyer otherwise becoming aware of
such matter or thing) and such matter or thing
continuing to be materially inconsistent at the date
agreed for Completion, Buyer shall not be bound to
complete the acquisition of the Assets and Buyer may
by notice in writing to Seller prior to Completion
rescind this Agreement. Such right of rescission
shall be Buyer's only remedy, and there shall be no
liability on the part of Buyer or Seller with
respect to such matters or things whether or not
this Agreement is rescinded; provided, however, that
if the inconsistency or breach is material and due
to the intentional or reckless act or omission of a
Party, the non-defaulting Party may proceed to
Completion and may seek compensation in respect of
such inconsistency or breach notwithstanding
Completion and its rights thereof shall not be
prejudiced by Completion.
8.5 If Buyer receives any claim or becomes aware of any
fact which may result in Buyer having a claim
against Seller under this Clause, Buyer shall
promptly notify Seller thereof in writing and Seller
shall be entitled to require Buyer to take any
reasonable action it may request to resist such
claim and Buyer will give Seller all co-operation,
access and assistance for the purposes of
considering such claim as it may reasonably require;
provided always that Buyer is indemnified to its
reasonable satisfaction by Seller against all
claims, costs, expenses, damages or losses which may
thereby be incurred.
8.6 The Buyer shall not be entitled to claim that any
fact or matter constitutes a breach of the
representations and warranties set out in Schedule 2
hereto to the extent that such fact or matter is
fairly disclosed in the Data Room Documents relating
to the Assets or is disclosed in Schedule 8 hereto.
8.7 No claim may be made by either Party for a breach of
any representation or warranty made by the other
Party, in the case of a claim relating to taxes
following the sixth anniversary of the Completion
Date, and in the case of any other claim following
the second anniversary of the Completion Date, and
no liability shall attach to either Party in respect
of any such claim until the aggregate amount of all
such claims against that Party exceeds five hundred
thousand (500,000) U.K. pounds sterling, in which
event that Party shall be liable for the whole of
such amount and not merely the excess.
8.8 The maximum aggregate liability of Buyer or Seller
as the case may be for all claims for breach of any
representation or warranty under Clauses 8.1 or 8.2
arising after Completion shall in no event exceed
the aggregate of the amount of consideration,
together with any adjustments thereto.
9. Taxation
9.1 Seller and Buyer acknowledge that:
(a) the consideration represents expenditure
incurred by the Buyer in acquiring plant and
machinery relating to the Assets in the
following amounts:
Audrey Field : 27,000,000 pounds sterling
Galleon Field : 7,500,000 pounds sterling
and the remainder of the consideration relates
to the balance of the Assets including the
Licences.
The adjustments to consideration made in
accordance with Clause 4.2 shall be added to
or subtracted from the part of the
consideration attributed to the relevant
Assets and to the relevant categories of plant
and machinery, balance of licence interest or
working capital items, as the case may be, and
for the avoidance of doubt any such
expenditure not expressly allocable to plant
and machinery or working capital items shall
be allocated to the category of licence
interest.
To the maximum extent possible the Seller
covenants that it will treat that adjusted
amount of the consideration representing plant
and machinery as disposal proceeds for the
purposes of Section 24(6) of the Capital
Allowances Act 1990 and Buyer covenants that
it will treat such amount as capital
expenditure incurred for the purposes of the
Capital Allowances Act 1990.
(b) no part of the consideration or adjustments to
consideration pursuant to Clause 4.2 whether
or not attributed to the balance of the
Assets, shall be treated as a reimbursement of
expenditure which the Seller has incurred
whether comprising intangible drilling
expenditure or otherwise; and
(c) they will each present their returns for tax
purposes on the basis stated above and that
they will use all reasonable endeavors to
agree with the Oil Taxation Office the figures
so presented.
9.2 With respect to the Audrey Field and the Galleon
Field the Seller shall prepare and the Seller and
the Buyer shall deliver to the Board of Inland
Revenue in a timely fashion a notice in accordance
with paragraph 3 of Schedule 17 to the Finance Act
1980 and shall not make an application under
paragraph 4 of the said Schedule for the provisions
of Parts II and III of the said Schedule not to
apply to the transfer of the Assets.
9.3 Each of the Seller and Buyer confirms that it is
registered as a taxable person for the purposes of
VAT.
Each of the Seller and Buyer confirms that it has
not elected to waive exemption under Section 51 and
paragraphs 2-4 Schedule 10 Value Added Tax Act 1994
in relation to the Assets and undertakes not to make
any such election.
The Seller confirms that the Assets have been used
as part of the business operated by a group of
companies which constitute a VAT group of which the
Seller is a member as a going concern for the
purposes of Article 5 of the Value Added Tax
(Special Provisions) Order 1992 (as amended from
time to time).
The Buyer undertakes that it will use the Assets as
part of its business of searching for, boring for
and getting petroleum as a going concern for a
sufficient period to comply with the requirements of
Article 5 of the Value Added Tax (Special
Provisions)Order 1992 so that the assignment of the
Assets is neither a supply of goods nor a supply of
services for VAT purposes.
Notwithstanding that the Parties believe that the
sale hereunder is a transaction which is outside the
scope of VAT by virtue of the Value Added Tax
(Special Provisions) Order 1992 (as amended from
time to time); in the event that the Seller is
advised in writing by H M Customs and Excise after
full disclosure of all material facts that the
transaction is subject to VAT and if called upon to
do so by the Seller the Buyer undertakes to pay the
Seller on presentation of a VAT invoice any amounts
properly due in respect of VAT set out in such
invoice within 30 days of demand.
The Parties agree that the Seller shall make an
application to the Commissioners of Customs and
Excise for the purposes specified in Section
49(1)(b) of the Value Added Tax Act 1994 to enable
the records relating to the Assets which under
paragraph 6 of Schedule 11 of the Value Added Tax
Act 1994 have been maintained by the Seller or its
Affiliates to be preserved by the Seller or its
Affiliates notwithstanding the provisions of the
said section and it is agreed that the Buyer shall
retain access at all reasonable times during
business hours to all books and records retained by
the Seller in relation to value added tax matters in
relation to the Assets, and the Seller covenants to
retain such records as required by paragraph 6 of
Schedule 11 of the Value Added Tax Act 1994.
9.4 The Parties acknowledge that in the periods up to 30
June 1995, the Seller may have incurred expenditure
relating to the Assets either not claimed for PRT
purposes prior to 1 September 1995 or claimed but
not yet taken into account in assessments to PRT by
the Inland Revenue in respect of chargeable periods
ending before the Effective Date.
It is hereby agreed that with respect to the Galleon
Field the Buyer shall be entitled for its own
exclusive account to all PRT benefits which may
result from successful pursuit of claims for such
expenditures incurred prior to the Effective Date
and that with respect to the Audrey Field the Buyer
shall be entitled for its own exclusive account to
all PRT benefits which may result from successful
pursuit for such expenditure incurred prior to the
Effective Date and claimed or claimable under
Schedule 5 of the Oil Taxation Act 1975. For the
avoidance of doubt the Buyer will be responsible for
any additional CT liability which may result from
receiving the PRT benefits.
It is further agreed that with respect to the Audrey
Field that the Seller shall be entitled for its own
exclusive account to all PRT benefits which may
result from successful pursuit of claims for such
expenditure incurred prior to the Effective Date and
claimed or claimable under Schedule 6 of the Oil
Taxation Act 1975. The Buyer will pay to the Seller
in pounds sterling, within fifteen (15) Business
Days of the later of the date of any such PRT
benefit being approved by the Oil Taxation Office or
the date of any such PRT benefit being realized by
the Buyer, a sum equal to the PRT benefit being
realized by the Buyer. For the purpose of
identifying the PRT benefit, PRT benefits shall be
deemed to arise first from the Buyer's allowable
expenditure for claims under Schedule 5 of the Oil
Taxation Act 1975 incurred on or after the Effective
Date and then from Buyer's allowable expenditure for
claims under Schedule 6 of the Oil Taxation Act 1975
and then such expenditure incurred by the Seller and
claimed or claimable under Schedule 5 of the Oil
Taxation Act 1975 and then such expenditure incurred
by the Seller and claimed or claimable under
Schedule 6 to the Oil Taxation Act 1975. To the
extent that such a PRT benefit would give rise to an
additional CT liability for the Buyer or any
Affiliate of the Buyer, such sum to be paid by the
Buyer to the Seller shall be reduced by a sum in
pounds sterling equal to such CT together with any
interest payable to the Inland Revenue in respect
thereof for any period ending not later than the
date on which the Buyer becomes entitled to such PRT
benefit. To the extent that such expenditure
incurred by the Seller and claimed or claimable
under Schedule 6 to the Oil Taxation Act 1975
displaces another relief or allowance for PRT, no
payments shall be made by the Buyer to the Seller.
The Buyer shall not pay Seller for any PRT benefits
arising from the Seller's Schedule 6 claims as
referred to herein once PRT benefits have resulted
from 750,000 pounds sterling of expenditure incurred
by the Seller and claimed or claimable under
Schedule 6 to the Oil Taxation Act 1975.
9.5 Where an amount of interest is required to be paid
under this Agreement, and tax is required by law to
be deducted from such amount, the Party making such
payment shall be entitled to make such deduction,
and account for the same to the Inland Revenue and
shall deliver within 30 days after it has done so a
certificate of deduction to the Party receiving the
interest.
9.6 The Seller will furnish the Buyer with copies of any
assessments to PRT or determinations of losses, or
any variations or amendments to such assessments or
determinations, and any claims for the allowance of
expenditure made by the responsible person (as that
term is defined in the Audrey Field Unitisation
Agreement and the Galleon Field Unitisation
Agreement) in respect of the Audrey Field and the
Galleon Field made or received by the Seller after
the Completion Date.
9.7 The Seller shall use its best efforts to procure
that all documentation reasonably requested by the
Buyer relating to any PRT assessments,
determinations, returns or claims whether existing
or future, in respect of the Assets, made by the
Seller or issued by any Operator or the Inland
Revenue to the Seller are communicated to the Buyer
without delay. The Seller shall not make any
claims, file any returns, make any representations
or enter into any discussions or negotiations with
third parties (including for the avoidance of doubt
the responsible person as that term is defined in
the Audrey Field Unitisation Agreement and the
Galleon Field Unitisation Agreement) in respect of
the Assets without the prior consent of the Buyer
(such consent not to be unreasonably withheld or
delayed) in relation to tax matters relating to any
chargeable period or claim period (as defined in the
Oil Taxation Act 1975) after the chargeable period
or claim period in which the Completion Date falls,
provided the Seller shall not be required to divulge
any information of a privileged or confidential
nature to the Buyer with respect to its claims under
Schedule 6 of the Oil Taxation Act 1975.
10. Audit Claims
10.1 Notwithstanding any other provision of this
Agreement, in the event that any audit in respect of
any period prior to the Effective Date is made under
the Joint Operating Agreements prior to the third
anniversary of Completion or any request is made for
an adjustment to any joint account relating to the
Assets under the Joint Operating Agreements the
Buyer shall, subject to it being reimbursed for all
its reasonable expenses in so doing, give the Seller
access to the results of such audit or request to
the extent that they relate to periods prior to the
Effective Date; and (a) to the extent that any
payment in respect thereof is made by the Operator
such payment shall be made to Seller and (b) to the
extent that any payment is required to be made in
respect thereof to the Operator, such payment shall
be made by Seller to Buyer.
10.2 Without limiting Seller's obligation to deliver the
Data under any other provision of this Agreement, to
the extent that the Seller shall have any
information, records or data in respect of the
Assets or the Data Room Documents for periods prior
to the Effective Date that it has not made available
to the Buyer on or after Completion and/or to the
extent that the Buyer shall request the assistance
of the Seller in the interpretation and construction
of the same and for any information, records or data
that have been delivered to it by the Seller
hereunder, the Seller shall, subject to it being
reimbursed for all its reasonable expenses in so
doing, make the same available to the Buyer promptly
after receipt of said request.
11. Insurance
11.1 Neither Buyer nor Seller shall be obligated to
arrange for insurance coverage on the Assets
protecting the other party for any loss, damage,
liability or expense for which such party may have
responsibility under this Agreement, except as may
be provided in Clauses 11.4, 11.5, 11.6 and 11.7
herein. Both Buyer and Seller shall be free to
arrange such insurance coverage on the Assets
protecting their respective interests as each may
deem advisable for their own account and at their
own expense and shall cooperate with each other to
ensure, as far as practicable, that the insurance
coverage held by either party is appropriately
coordinated and does not conflict.
11.2 Upon execution of this Agreement, Seller shall
furnish all such information as Buyer may reasonably
request in order to enable Buyer to arrange for its
own insurance coverage during and after the Interim
Period, including information in respect of Seller's
insurance coverage on the Assets.
11.3 Seller shall use reasonable efforts to ensure its
policies providing insurance coverage on the Assets
are endorsed such that the underwriters and/or
insurers thereof shall have no right of contribution
from the Buyer's insurance, and Buyer shall use
reasonable efforts to ensure its policies providing
insurance coverage on the Assets are endorsed such
that the underwriters and/or insurers thereof shall
have no right of contribution from the Seller's
insurance.
11.4 During the Interim Period, Seller shall maintain or
obtain or cause to be obtained in respect of the
Assets all such insurance coverage as may be
necessary to comply with applicable laws, rules and
regulations and as may be required by any Assets
Document. Buyer shall be named as an additional
insured and loss payee on all such insurance
wherever possible.
11.5 At the request of the Buyer and with Seller's
agreement, Seller shall, as soon as reasonably
practicable following such request, have Buyer
joined wherever possible on any insurance policy
effected by the Seller in respect of the Assets as
an additional insured and loss payee during the
Interim Period, in respect of Buyer's rights and
interest under this Agreement. Seller shall provide
certification or other documentation evidencing that
the Buyer has been included as an additional insured
and loss payee as soon as reasonably practicable.
11.6 In respect of any Operator arranged insurance in
respect of the Assets, Seller and Buyer shall
endeavor to have the Buyer protected thereunder.
11.7 In respect of the insurance coverage which may be
afforded to the Buyer pursuant to the terms of
Clauses 11.4, 11.5, and 11.6, at the Completion Date
or on the 10th Business Day after their receipt by
Seller (whichever occurs later), Seller shall pay to
Buyer the sum of any proceeds of such insurance
coverage received against loss or damage suffered or
liability or expense incurred in relation to the
Assets during the Interim Period less any CT
including CT on capital gains or PRT incurred or to
be incurred thereon by the Seller and less any
amount which has been applied (or represents sums
which have been applied)
(i) in rectifying or remedying such loss or damage
or meeting such liability or expense; and
(ii) in reimbursing Seller for expenditure incurred
prior to the Effective Date for rectifying or
remedying such loss or damage or meeting such
liability of expense.
Seller shall use reasonable endeavours to pursue (or
assist and cooperate with Buyer to pursue, if Buyer
is able to do so in its own name) any claim against
insurers for loss or damage, liability or expense
relating to the Assets suffered during the Interim
Period. If the insurers dispute or resist any claim
Seller shall promptly notify Buyer who shall be
entitled to require Seller to pursue (or assist and
cooperate with Buyer to pursue, if Buyer is able to
do so in its own name) the claim provided that it
shall indemnify Seller against any reasonable and
verifiable costs and expenses Seller may thereby
incur in pursuing such claim.
11.8 In respect of the insurance coverage which may be
afforded to the Buyer pursuant to the terms of
Clauses 11.4, 11.5, and 11.6, Buyer shall pay to
Seller the insurance premiums relative to such
insurance during the Interim Period, at the time of
the Interim Period adjustment as provided in Clause
4.4. Any premiums due to Seller hereunder shall not
exceed reasonable commercial market rates and shall
be a revenue expenditure for the notional tax
calculation under Clause 4.4.3.
12. Indemnity
12.1 Seller shall be entitled to all benefits and
receipts and shall be liable for all costs, charges,
expenses, liabilities and obligations in respect of
the Assets which accrue or relate to any period
before the Effective Date. Seller shall reimburse
and indemnify Buyer against any such costs, charges,
expenses, liabilities and obligations which are paid
by Buyer and have not been reimbursed to Buyer
pursuant to the other provisions of this Agreement,
including Clauses 4.3 and 4.4. For the avoidance of
doubt the Seller shall be entitled to all benefits
and receipts which arise in connection with the
resolution of the disputes referred to in paragraphs
2 and 3 of Schedule 8.
12.2 Buyer shall be entitled to all benefits and receipts
and shall be liable for all costs, charges,
expenses, liabilities and obligations in respect of
the Assets which accrue or relate to any period on
and after the Effective Date. Buyer shall reimburse
and indemnify Seller against any such costs,
charges, expenses, liabilities and obligations which
are paid by Seller and have not been reimbursed to
Seller pursuant to the other provisions of this
Agreement, including Clauses 4.3 and 4.4. Without
prejudice to the generality of the foregoing Buyer
shall indemnify and hold Seller harmless against any
costs, charges, expenses, liabilities and
obligations incurred in abandoning any field
property (including but not limited to wells) or
facilities acquired pursuant to this Agreement or
held or brought into being with respect to the
Assets to the extent that such costs, charges,
expenses, liabilities and obligations are
attributable to the Assets and accrue and relate to
any period on or after the Effective Date.
12.3 Notwithstanding any other provision of this
Agreement neither Party shall under any
circumstances be liable to the other for any special
or punitive loss or damage, whether arising out of
or in any way connected with this Agreement or the
Further Documents.
12.4 No claim may be made by either Party under Clause
12.1 or 12.2 against the other Party until the
aggregate amount of all such claims against that
Party exceeds One Hundred Thousand (100,000) U.K.
pounds sterling, in which event that Party shall be
liable to the other Party for the whole of such
amount and not merely the excess, and, in any event,
after three years from the Completion Date.
12.5 Reimbursement pursuant to this Clause 12 shall be
exclusive of VAT which a Party ("Charging Party")
may be required to charge and if called upon to do
so by the Charging Party the other Party undertakes
to pay the Charging Party on presentation of a VAT
invoice any amounts properly due in respect of VAT
set out in such invoice within 30 days of demand.
12.6 Notwithstanding the provisions of Clauses 12.1 and
12.2, it is agreed that any costs, charges,
expenses, liabilities and obligations, including
without limitation payment to be made to any Co-
Venturers, and any benefits, including without
limitation any payment received (whether in kind or
otherwise) from Co-Venturers, shall be for the
account of the Buyer where the entitlement to such
benefit or the liability to assume such costs,
charges, expenses, liabilities and obligations
arises out of a redetermination of unit interests in
accordance with the Unit Operating Agreements to the
extent that such obligations are attributable to the
Assets.
13. Announcements
13.1 Either Party shall be entitled to make a public
announcement or statement regarding the Assets
except that the prior written consent of the other
Party shall be required where such announcement or
statement relates to:
a. the negotiation and/or execution of this
Agreement or the Further Documents or
Completion;
b. subject to Clause 16 hereof, the terms of this
Agreement.
13.2 Each party shall submit any proposed releases
referred to in Clauses 13.1(a) and (b) above to the
other for comment and will give due consideration to
any comments received.
13.3 Notwithstanding the foregoing, neither Party shall
be precluded from making any public announcement or
release regarding the Assets or the transaction
hereunder if the same is required by applicable law,
the U.S. Securities and Exchange Commission or any
recognized stock exchange on which the shares of the
Parties or their respective Affiliates are traded.
14. Notices
14.1 Any notice pursuant to this Agreement may be given
by telex, facsimile transmission or letter to the
Party to be served at the address stated in Clause
14.3 or such other address as may be given for the
purposes of this Agreement by written notice to the
other Parties.
14.2 A notice given by telex or facsimile transmission
shall be deemed to be served on the first Business
Day following the date of dispatch, but a notice
sent by post or delivered personally shall not be
deemed to be delivered until received.
14.3 The respective addresses for service are:
Seller: Oryx U.K. Energy Company
Charter Place, Vine Street, Uxbridge,
Middlesex, England UB8 1JG
Facsimile No: (01895) 270208
Attention : Managing Director
With copy to:
Oryx Energy Company
13155 Noel Road
Dallas, Texas 75240-5067
Facsimile No: (214) 715-8851
Attention : Director, Commercial
Transactions
Buyer: PowerGen (North Sea) Limited
53 New Broad Street
London EC2M 1JJ
England
Facsimile : 44-171-826-2891
Attention : Managing Director
With copy to:
PowerGen (North Sea) Limited
53 New Broad Street
London EC2M 1JJ
England
Attention : Company Secretary
Fascimile : 44-171-826-2712
15. Costs and Expenses
15.1 The Parties shall each pay their own costs and
expenses in relation to the preparation and
execution of this Agreement and the documents
contemplated hereby or executed pursuant hereto.
15.2 Buyer shall be responsible for payment in a timely
fashion of any and all United Kingdom stamp duties
and any other charges payable on or in respect of
this Agreement, the Further Documents and all
transfers and/or documents contemplated hereby or
executed pursuant hereto.
16. Confidentiality
The terms of this Agreement shall be held confidential by
the Parties and shall not be divulged in any way to any
third party by either Party provided that either Party
may, without such approval, disclose such terms to:
16.1 any outside professional consultants, upon obtaining
a similar undertaking of confidentiality (but
excluding this proviso) from such consultants; or
16.2 any bank or financial institution from whom such
Party is seeking or obtaining finance, upon
obtaining a similar undertaking of confidentiality
(but excluding this proviso) from such bank or
institution; or
16.3 the extent required by any applicable laws, the
Licence, or the requirements of any recognized stock
exchange in compliance with its rules and
regulations; or
16.4 any government agency lawfully requesting such
information; or
16.5 any court of competent jurisdiction acting in
pursuance of its powers; or
16.6 any Affiliate upon obtaining a similar undertaking
of confidentiality; or
16.7 The provisions of this Clause 16 shall not apply to
any information which at the time of being furnished
or disclosed to a party ("Receiving Party") is
already within the public domain or subsequently
comes within the public domain other than by breach
of this Clause 16, or is acquired by the Receiving
Party from a third party, which, so far as the
Receiving Party is aware, is free to disclose it.
17. Variance
The terms and conditions of this Agreement shall only be
varied by an agreement in writing signed by each of the
Parties and specifically referring to this Agreement.
18. Assignment
None of the rights, liabilities or obligations of either
of the Parties under this Agreement are assignable except
with the prior written consent of the other Party, such
consent not to be unreasonably withheld; provided,
however, that Buyer shall be free to assign its rights
under this Agreement to any Subsidiary or Affiliate but
only on terms that all such rights should ipso facto
lapse if for any reason whatsoever any such assignee
ceases to be an Affiliate unless said Assignee shall,
before ceasing to be an Affiliate, reassign said rights
to Buyer.
19. Termination
19.1 Subject to Clause 19.2, this Agreement shall
terminate if Completion does not occur due to
failure to fulfill the conditions set out in Clause
3.1 on or before 30 November 1995. Upon such
termination, no Party shall have any liability
hereunder except for a breach of this Agreement
committed before such termination.
19.2 Notwithstanding termination of this Agreement
pursuant to Clause 19.1, the provisions of Clause 16
shall continue to apply for a period of two years
from the date hereof.
19.3 Termination of this Agreement pursuant to Clause
19.1 shall be without cost to any Party.
20. General
20.1 This Agreement constitutes the entire agreement
between the Parties and supersedes all warranties
and representations previously made and all previous
agreements, arrangements or understandings between
the Parties relating to the matters contained herein
whether oral or in writing made or dated prior to
the date hereof. Buyer hereby confirms to Seller
that it has not relied on any representation save
those referred to in this Agreement. Seller hereby
confirms to Buyer that it has not relied on any
representations save those referred to in this
Agreement.
20.2 No waiver by any Party of any breach of a provision
of this Agreement shall be binding unless made
expressly in writing. Further, any such waiver
shall relate only to the breach to which it
expressly relates and shall not apply to any
subsequent or other breach.
20.3 Time shall be of the essence of this Agreement.
20.4 This Agreement shall enure to the benefit of and be
binding upon the respective successors and permitted
assigns of the Parties.
21. Governing Law Jurisdiction
The construction, validity and performance of this
Agreement shall be governed by English Law and the
Parties hereby submit to the exclusive jurisdiction of
the High Court in London.
22. Counterparts
This Agreement may be executed in counterparts by the
parties hereto on separate counterparts, each of which
when so executed and delivered shall be an original, but
all of which shall together constitute one and the same
instrument.
IN WITNESS WHEREOF, the Parties have caused their duly
authorized signatories to execute and deliver this Agreement
on the day and year first above written.
POWERGEN (NORTH SEA) LIMITED )
)
By:/s/Jon R. Morgan )
----------------- )
Name: Jon R. Morgan )
)
Title: Managing Director )
)
in the presence of: )
)
/s/W.E.C. Gubbins )
------------------ )
Name: W.E.C. Gubbins )
ORYX U.K. ENERGY COMPANY )
)
By: /s/Andrew B. Derman )
-------------------- )
Name: Andrew B. Derman )
)
Title: Director, Commercial )
Transactions )
in the presence of: )
)
/s/William C. Lemmer )
--------------------- )
Name: William C. Lemmer )
<PAGE>
SCHEDULE 1
DESCRIPTION OF ASSETS
1. Audrey Unit Interest
The Seller's entire undivided legal and beneficial
interest in the Audrey Unit Area (as defined in the
Audrey Field Unitisation Agreement) which at the date
hereof is a 33.73% interest and in and under all
agreements, deeds, instruments and documents governing or
affecting the Audrey Unit Area including (but not limited
to) the Data Room Documents together with all rights,
benefits and property held thereunder or arising
therefrom, subject to the obligations therein contained.
2. Galleon Unit Interest
The Seller's entire undivided legal and beneficial
interest in the Galleon Unit Area (as defined in the
Galleon Field Unitisation Agreement) which at the date
hereof is a 10% interest and in and under all agreements,
deeds, instruments and documents governing or affecting
the Galleon Unit Area including (but not limited to) the
Data Room Documents, together with all rights, benefits
and property held thereunder or arising therefrom,
subject to the obligations therein contained.
3. P103 Interest
The Seller's entire undivided 33.33% legal and beneficial
interest and under the P103 Licence and all agreements,
deeds, instruments and documents governing or affecting
the P103 Licence including (but not limited to) the Data
Room Documents, together with all rights, benefits and
property held thereunder or arising therefrom, subject to
the obligations therein contained.
4. P130 Interest
The Seller's entire undivided 50% legal and beneficial
interest in and under the P130 Licence in so far as it
relates to the area covered by the Licence other than the
Ensign Area and all agreements, deeds, instruments and
documents governing or affecting the P130 Licence
including (but not limited to) the Data Room Documents
together with all rights, benefits and property held
thereunder or arising therefrom, subject to the
obligations therein contained.
5. Ensign Area
The Seller's entire undivided legal and beneficial
interest in that part of Block 48/15a as is comprised
within the lines drawn between the coordinates as shown
on the Plan Forming Attachment A to this Schedule 1,
which at the date hereof is a 100% interest and in and
under all agreements, deeds, instruments and documents
governing or affecting such area including but not
limited to the Data Room Documents, together with all
rights, benefits and property held thereunder or arising
therefrom, subject to the obligations therein contained.
<PAGE>
SCHEDULE 2
REPRESENTATIONS AND WARRANTIES OF THE SELLER
1. Seller is a licencee of the Licences.
2. Seller is the legal and beneficial owner of the Assets,
subject to the provisions of the Data Room Documents
relating to the Audrey Field unit redetermination and any
pipeline or facility ownership redetermination related
thereto.
3. The Assets are free from all Encumbrances and from all
overriding interests, royalties, deferred payments, net
profit interests, carried interests, production payment,
and any other burden, equity or third party rights
whatsoever and there is no agreement or commitment to
give or create any of the same.
4. Seller has not committed any breach of and is not in
default under any of the Data Room Documents relating to
the Assets, and has not received notice (nor is it aware)
that any of the parties to the Data Room Documents
relating to the Assets has committed any breach of, or is
in default under, any of the Data Room Documents relating
to the Assets, which breach or default, as the date
hereof, is of a material nature and subsisting.
5. The Licences and all rights and interests thereunder or
deriving therefrom of the Seller are in full force and
effect and no act or omission of the Seller, or, as far
as the Seller is aware, of any other person, firm or
company has occurred which would or might entitle the
Secretary of State to revoke either of the Licences and
no notice has been given to the Seller or, as far as the
Seller is aware, to any other person, firm or company by
the Secretary of State of any intention to revoke either
of the Licences and there are no other grounds for
rescission, avoidance, revocation, repudiation or
termination of either of the Licences.
6. Subject to the provisions of the Data Room Documents all
accrued obligations and liabilities imposed by the either
of the Licences (including, without limitation, work
obligations) have been duly fulfilled and discharged and
there are no outstanding work obligations to be fulfilled
under either of the Licences and the Secretary of State
has not given notice to Seller of any intention to
require further works to be conducted (whether in
relation to exploration or development), or to call for
the submission of or impose a development programme.
7. Seller has kept proper and consistent accounts, books and
records of its activities relating to its operations
conducted with respect to the Assets and such accounts,
books and records are up to date and there has been no
change in any practice or policy insofar as such change
might affect the valuation of assets or the recording of
expenditure or receipts relating to the Assets. All
returns relating to Petroleum Revenue Tax relating to the
Assets, the Licences or the subject matter thereof, are
up to date and there is currently no dispute except as
disclosed in the Data Room Documents concerning the same
of which Seller is aware.
8. Seller is not a party to any litigation, arbitration or
administrative proceedings or to any dispute in relation
to, and which are likely to prejudice or endanger in any
manner, the Assets and Seller is not aware that any such
litigation, arbitration or administrative proceedings are
threatened or pending either by or against Seller and
there are no facts known to Seller which are likely so to
prejudice or endanger the Assets and, as far as Seller is
aware, none of the parties to the Data Room Documents
relating to the Assets is involved in or threatened with
any litigation, arbitration or administrative proceedings
or any dispute in relation to, or which is likely to
prejudice or endanger in any manner, the Assets.
9. Seller is duly incorporated with limited liability and
validly exists under the laws of the State of Delaware,
is in good standing, has its central management and
control and is resident for tax purposes within some part
of the United Kingdom, is registered for value added tax
purposes and is a wholly owned subsidiary of Oryx Energy
Company.
10. The documents which contain or establish Seller's
constitution incorporate provisions which authorize, and
all necessary corporate action has been taken to
authorize, Seller to sign and deliver, and perform the
transactions contemplated by, this Agreement.
11. Upon execution by all the relevant parties of the Further
Documents, neither the signing and delivery of this
Agreement nor the performance of any of the transactions
contemplated by this Agreement, will:
(i) contravene or constitute a default under any
provision contained in any agreement,
instrument, law, judgment, order, licence,
permit or consent by which Seller or any of
its assets is bound or affected; or
(ii) cause any limitation on Seller or the powers
of its directors, whether imposed by or
contained in any document which contains or
establishes its constitution or in any law,
order, judgment, agreement, instrument or
otherwise, to be exceeded which in either case
is material in the context of this Agreement.
12. To the best of Seller's knowledge and belief, the
relevant Data Room Documents relating to the Assets
conform to the originals and there are no other documents
or written information relating to the Assets which:
(i) are not included in the Data Room Documents,
and
(ii) would, taken as a whole, render the Data Room
Documents relating to the Assets materially
inaccurate or misleading.
13. Save to the extent that such fact or matter is fairly
disclosed in the Data Room Documents relating to the
Assets, there are no arrangements binding on the Seller
which restrict the ability of the Seller freely to
dispose of the Assets or any Petroleum.
14. In respect of the Assets:
14.1 so far as the Seller is aware, nothing has been done
or has been omitted to be done, whereby the Seller's
insurance coverage on the Assets has or may become
void or voidable; and
14.2 so far as the Seller is aware, there are no claims
outstanding under any of the Seller's insurance
coverage on the Assets, nor is the Seller aware of
any circumstances which are likely to give rise to
any claim thereunder.
15. The Seller has not cancelled, surrendered, waived,
released or discontinued any rights or claims under any
of the Licences.
16. In relation to the Ensign Area, and, to the best of
Seller's knowledge with the remainder of the Assets, all
operations carried out or proposed to be carried out by
the Operator have been carried out materially in
accordance with all applicable laws and regulations, and
all necessary licences, consents, permissions and
approvals of a material nature have been obtained and
complied with.
17. Seller is not for statutory purposes deemed to be unable
to pay its debts or is unable to pay its debts as they
become due, nor has it otherwise become insolvent or
suspended making any payment or threatened to do so.
18. No steps have been taken to:
(a) propose any composition, scheme of arrangement,
compromise or arrangement involving the Seller and
its creditors generally;
(b) obtain an administration order or appoint any
administrative or other receiver or manager (or
equivalent officer) in relation to, or put in force
any legal process against the Seller or any of its
or their property;
(c) wind up or dissolve the Seller.
19. In relation to the Assets, expenditure in an amount not
less than 31,378,881 pounds sterling in Seller's opinion
has been incurred by the Seller on plant and machinery
and has been or will be claimed by the Seller as
expenditure that qualifies for plant and machinery
capital allowances under Part II of the Capital
Allowances Act 1990 ("CAA 1990") in the Seller's CT
returns for periods prior to 1 January 1995 and the
Seller has prepared or will prepare all relevant CT
returns in a prudent and professional manner and has no
knowledge or belief that the amounts claimed for capital
allowances in relation to the Assets are incorrect.
20. In relation to the Galleon Field, the accumulated capital
expenditure incurred by the Seller or a predecessor of
the Seller at the end of the chargeable period ending 31
December 1994 for the purposes of section 9(3) of the Oil
Taxation Act 1975 is not less than 10,836,654 pounds
sterling and the aggregate of allowable losses determined
or to be determined under Schedule 2 of the Oil Taxation
Act 1975 for chargeable periods up to and including the
chargeable period ended 31 December 1994 is not less than
13,047,000 pounds sterling.
<PAGE>
SCHEDULE 3
REPRESENTATIONS AND WARRANTIES OF THE BUYER
1. Buyer is duly incorporated in England with limited
liability and validly exists under the laws of England
and has its central management and control within some
part of the United Kingdom and is registered for VAT
purposes.
2. The documents which contain or establish Buyer's
constitution, incorporate provisions which authorize, and
all necessary corporate action has been taken to
authorize, Buyer to sign and deliver, and perform the
transactions contemplated by, this Agreement.
3. Upon execution by all relevant parties of the Further
Documents, neither the signing and delivery of this
Agreement nor the performance of any of the transactions
contemplated by this Agreement, will:
(i) contravene or constitute a default under any
provision contained in any agreement, instrument,
law, judgment, order, licence, permit or consent by
which the Buyer or any of its assets is bound or
affected; or
(ii) cause any limitation on it or the powers of its
directors, whether imposed by or contained in any
document which contains or establishes its
constitution or in any law, order, judgment,
agreement, instrument or otherwise, to be exceeded,
which in either case is material in the context of this
Agreement.
4. No event has occurred which constitutes, or which with
the giving of notice and/or the lapse of time and/or a
relevant determination would constitute, a contravention
of, or default under any agreement or instrument by which
Buyer or any of its assets are bound or affected, being a
contravention or default would materially and adversely
affect its ability to observe or perform its obligations
under this Agreement and the transaction contemplated
hereby.
5. No litigation, arbitration or administrative proceeding
or claim which might by itself or together with any other
such proceedings or claims which would materially and
adversely affect its ability to observe or perform its
obligations under this Agreement and the agreements
contemplated hereby, is presently in progress or pending
or, to the best of the knowledge, information and belief
of Buyer, threatened against Buyer or any Affiliate of
Buyer.
6. Buyer is not for statutory purposes deemed to be unable
to pay its debts or is unable to pay its debts as they
become due, nor has it otherwise become insolvent or
suspended making any payment or threatened to do so.
7. No steps have been taken to:
(a) propose any composition, scheme of arrangement,
compromise or arrangement involving the Buyer and
its creditors generally;
(b) obtain an administration order or appoint any
administrative or other receiver or manager (or
equivalent officer) in relation to, or put in force
any legal process against the Buyer or any of its or
their property;
(c) wind up or dissolve the Buyer.
<PAGE>
SCHEDULE 4
WORKING CAPITAL
Pursuant to Clause 4.3 of this Agreement, the monetary value
of working capital shall be valued in accordance with the
provisions of this Schedule and U.S. Generally Accepted
Accounting Principles.
1. Preparation of Statement
The statement of working capital shall be expressed in
pounds sterling or United States dollars as incurred by
the Seller and shall be based on the accounts, statements
and records as of June 30, 1995. The statement shall be
prepared using actual amounts or estimated amounts, if
any, that may be reflected in the accounts.
2. Elements of Working Capital
The elements of working capital shall comprise the
aggregated current assets (which shall include, without
limitation, cash, any underlifted position, oil in
inventory, other inventories, materials and stock) minus
aggregated current liabilities (which shall include,
without limitation, any overlifted position). Any tax
assets/liabilities including current and deferred taxes
are to be specifically excluded in the calculation of
working capital pursuant to this paragraph 2.
3. Payment of Working Capital
Should the working capital be a positive sum, then the
Buyer shall pay to the Seller that amount as settlement
for working capital in accordance with the provisions of
Clause 4.3 of this Agreement.
Should the working capital be a negative sum, then the
Seller shall pay to the Buyer that amount as settlement
for working capital in accordance with the provisions of
Clause 4.3 of this Agreement.<PAGE>
SCHEDULE 5
ALLOCATION OF THE CONSIDERATION
U.S. $
--------
1. Audrey Unit Interest 55,000,000
2. Galleon Unit Interest 62,000,000
3. Ensign Area 1,500,000
4. P103 Interest 1,000,000
5. P130 Interest 500,000
<PAGE>
SCHEDULE 6
DATA ROOM DOCUMENTS
<PAGE>
SCHEDULE 7
References in this Schedule to any document shall mean such
document as subsequently amended and novated.
1. Deed of Assignment of Licence P103
2. Deed of Assignment of Licence P130
3. Working Interest Assignment
4. Novation and Amendment of Southern Waters Joint Operating
Agreement dated 18 June 1971
5. Novation and Amendment of Audrey Field Unitisation and
Unit Operating Agreement dated 8 July 1988
6. Assignment of Audrey Field Gas Sales Agreement dated 8
July 1988
7. Novation and Amendment of Audrey Field Sellers
Representative Agreement dated 8 July 1988
8. Novation and Amendment of Letter Agreement regarding
Audrey Gas Specification dated 8 July 1988
9. Novation and Amendment of Audrey Field Common Stream
Agreement dated 8 July 1988
10. Novation and Amendment of LOGGS Production and Operating
Services Agreement dated 8 July 1988
11. Novation and Amendment of the Agreement for the
Transportaion, Treatment, Processing and Redelivery of
Audrey Field Gas in LOGGS dated 8 July 1988
12. Assignment of Audrey Field Condensate Sales Agreement
dated 8 July 1988
13. Novation and Amendment of Southern Lobe Well 49/11a - Azz
Agreement dated 12 May 1989
14. Novation and Amendment of Theddlethorpe User Principles
Agreement dated 1 October 1992
15. Novation and Amendment of Theddlethorpe User Fields
Agreement dated 1 October 1993
16. Novation and Amendment of Theddlethorpe Allocation and
Commingling Agreement dated 1 October 1993
17. Assignment of Expert Agreement for the Third
Redetermination of the Audrey Field dated 17 August 1994
18. Novation and Amendment of Galleon Common Stream Agreement
dated 9 June 1993
19. Novation and Amendment of SPOTS Allocation and
Commingling Agreement dated 9 June 1993
20. Novation and Amendment of Production and Operating
Services Agreement for the Galleon Field dated 9 June
1993
21. Assignment of Agreement for the Sale and Purchase of
Natural Gas from the Galleon Field dated 9 June 1993
22. Novation and Amendment of Galleon Unitisation and Unit
Operating Agreement dated 9 June 1993
23. Novation and Amendment of Tie-In Agreement for the
Galleon Field dated 9 June 1993
24. Novation and Amendment of Galleon Agreement for
Transportation and Processing dated 9 June 1993
25. Novation and Amendment of SPOTS User Group Agreement
dated 9 June 1993
26. Assignment of Galleon Condensate Purchase Agreement dated
9 June 1993
27. Novation of SPOTS Condensate Sub-Allocation Agreement
dated 9 June 1993
28. Novation and Amendment of Galleon Representative
Agreement dated 9 June 1993
29. Novation and Amendment of Side Letter regarding Galleon
Field ESD Testing dated 28 June 1993
30. Novation and Amendment of First Galleon Oryx Amending
Agreement (Metrication) dated 19 September 1994
31. Novation and Amendment of SPOTS Condensate Sub-Allocation
Agreement dated 27 September 1994
32. Novation and Amendment of the Galleon 1994 Lifting
Agreement dated 28 September 1994
33. Assignment of Agreement for the Sale and Purchase of
Natural Gas from the Galleon Field from 1994/95 dated 28
September 1994
34. Novation and Amendment of Operating Agreement relating to
the Northern Waters and Celtic Sea Areas of the UK
Offshore dated 16 July 1974
<PAGE>
SCHEDULE 8
Seller hereby discloses to Buyer the existence of the
following disputes relating to the Audrey Field:
1. Redetermination
ERC Tigress Limited was appointed as the Expert pursuant
to the Expert Agreement for the Third Redetermination of
the Audrey Field dated 17th August 1994 ("the
Agreement"). ERC rendered its decision to the Audrey Co-
Venturers on the 20th March 1994.
The Seller and Conoco (U.K.) Limited ("Conoco") have
notified ERC and the other Co-Venturers in the Audrey
Field that as a result of a manifest error in ERC's
report the decision of the expert is not final and
binding on the Audrey Co-Venturers in accordance with the
Audrey Field Unitisation Agreement.
The manifest errors identified by the Seller and Conoco
relate to the Zechstein interval velocity and the Layer B
Water Saturation (wedge corrected) grid utilised by ERC
in its decision.
Phillips, as operator of the 49/11a licence group, has
rejected Oryx and Conoco's assertion that ERC's decision
is not binding by reason of a manifest error.
2. Condensate
By letters dated 25th April 1994 and 4th May 1994 Conoco
Limited alleged that it had made certain overpayments to
the Seller related to condensate purchased from the LOGGS
system and processed at Conoco's Humber Refinery. The
total overpayment alleged is 1,574,000 (pounds sterling) and arises from
errors by Conoco in calculating the condensate price from
the beginning of 1992.
The errors were in connection with:
(a) Non-Recovery of VAT
Conoco commenced to report maximum retail pump
prices inclusive of VAT to the Petroleum Times as of
4th March 1993 instead of the previously reported
wholesale prices which were net of VAT. The
application of these reported prices in the
condensate contract price mechanism allegedly led to
a part of the overpayments.
<PAGE>
(b) Rebates
It is also alleged that the retailer rebate
information and distillate rebate information used
in the condensate price mechanism was inaccurate.
Seller has denied the claim for repayment on the basis
that the contract has been correctly applied as regards
error a) and that Conoco have failed to provide adequate
evidence in connection with claim b).
3. Force Majeure
Between 26th October 1993 and 30th April 1994 the Block
48/15a group underdelivered Audrey gas to British Gas
("BG") by approximately 10215.19 Million MJ. Such
underdelivery was classified by BG as shortfall gas and
an equivalent volume of gas was, therefore, delivered to
BG at a 30% shortfall discount price. This equates at
Sellers interest to 1.935 million (pounds sterling) which Seller alleges
is due to it as such underdelivery should have been
classified as force majeure gas rather than shortfall gas
under its Gas Sales Agreement with BG.
The matter is under discussion with BG and is in part
dependent on the outcome of force majeure claims asserted
by other user fields in the LOGGS transportation system
via which Audrey gas is delivered to BG.
