UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________
FORM 10-Q
________________
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
________________
For the quarterly period ended September 30, 1996
Commission file number 1-13108
________________
VASTAR RESOURCES, INC.
(Exact name of registrant as specified in its charter)
________________
Delaware 95-4446177
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
15375 Memorial Drive
Houston, Texas 77079
(Address of principal executive offices) (Zip code)
__________________
(713) 584-6000
(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
--- ---
Number of shares of Common Stock, $.01 par value, outstanding as of
September 30, 1996: 97,259,501.
<PAGE>
PART I. FINANCIAL INFORMATION
<TABLE>
<CAPTION>
VASTAR RESOURCES, INC.
CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
CONSOLIDATED STATEMENT OF INCOME
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ ----------------
(Millions of dollars 1996 1995 1996 1995
except per share amounts) ----- ----- ----- -----
<S>
<C> <C> <C> <C>
REVENUES
Net sales and other operating
revenues $223.2 $165.0 $664.1 $509.8
Other revenues 2.8 4.3 18.4 17.5
----- ----- ----- -----
Net revenues 226.0 169.3 682.5 527.3
----- ----- ----- -----
EXPENSES
Operating expenses 35.3 32.8 101.4 96.1
Exploration expenses 49.2 44.2 124.2 116.1
Selling, general and administrative
expenses 15.9 13.8 43.0 41.4
Taxes other than income taxes 10.1 7.3 29.8 25.8
Depreciation, depletion and
amortization 69.4 55.5 205.0 180.3
Interest 13.2 12.9 38.9 42.0
----- ----- ----- -----
Total expenses 193.1 166.5 542.3 501.7
----- ----- ----- -----
Income before income taxes 32.9 2.8 140.2 25.6
Income tax benefit ( 8.7) (16.1) (10.7) (38.6)
----- ----- ----- -----
Net income $ 41.6 $ 18.9 $150.9 $ 64.2
===== ===== ===== =====
Earned per share $ 0.43 $ 0.19 $ 1.55 $ 0.66
===== ===== ===== =====
Cash dividends paid per share
of common stock $0.075 $ 0.075 $0.225 $0.225
===== ===== ===== =====
</TABLE>
The accompanying notes are an integral part of these statements.
- 1 -
<PAGE>
<TABLE>
<CAPTION>
VASTAR RESOURCES, INC.
CONSOLIDATED BALANCE SHEET
(Unaudited)
September 30, December 31,
1996 1995
-------- -------
(Millions of dollars)
<S>
<C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 22.0 $ 5.3
Accounts receivable:
Trade 285.4 257.7
Related parties 20.5 27.6
Inventories 12.5 9.3
Prepaid expenses and other assets 47.1 55.7
------- -------
Total current assets 387.5 355.6
Oil and gas properties and equipment, net 1,335.5 1,196.3
------- -------
Total assets $ 1,723.0 $ 1,551.9
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 321.3 $ 292.9
Accrued liabilities 49.6 68.8
------- -------
Total current liabilities 370.9 361.7
Long-term debt 799.4 759.4
Deferred liabilities and credits 222.7 220.2
Deferred income taxes 98.5 108.2
STOCKHOLDERS' EQUITY
Common stock, $.01 par value;
authorized, 110,000,000 shares and
100,000,000 shares, respectively;
issued and outstanding,
97,259,501 shares and
97,250,001 shares, respectively. 1.0 1.0
Capital in excess of par value of stock 454.0 453.9
Accumulated deficit (223.5) (352.5)
------- -------
Total stockholders' equity 231.5 102.4
------- -------
Total liabilities and stockholders' equity $ 1,723.0 $ 1,551.9
======= =======
</TABLE>
The accompanying notes are an integral part of these statements.
- 2 -
<PAGE>
<TABLE>
<CAPTION>
VASTAR RESOURCES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
Nine Months Ended
September 30,
-------------------
1996 1995
(Millions of dollars) ----- -----
<S>
<C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 150.9 $ 64.2
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation, depletion and amortization 205.0 180.3
Deferred income taxes (9.7) (40.6)
Dry hole expense and undeveloped leasehold amortization 67.4 77.1
Gain on asset sales (12.3) (3.4)
Net change in accounts receivable, inventories
and accounts payable 4.6 81.2
Other (9.7) 1.1
----- -----
Net cash provided by operating activities 396.2 359.9
----- -----
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas properties and equipment,
including dry hole costs (412.8) (306.6)
Proceeds from oil and gas property and equipment sales 14.6 8.7
Other 0.4 (1.7)
----- -----
Net cash used by investing activities (397.8) (299.6)
----- -----
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt issuance 60.0 149.3
Repayments of long-term debt (20.0) (450.0)
Dividends paid (21.9) (21.9)
Other 0.2 ---
----- -----
Net cash provided (used) by financing activities 18.3 (322.6)
----- -----
Net change in cash and cash equivalents 16.7 (262.3)
Cash and cash equivalents at beginning of period 5.3 268.6
----- -----
Cash and cash equivalents at end of period $ 22.0 $ 6.3
===== =====
</TABLE>
The accompanying notes are an integral part of these statements.
- 3 -
<PAGE>
VASTAR RESOURCES, INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1. Introduction.
The foregoing information is unaudited and has been prepared from the
records of Vastar Resources, Inc. ("Vastar" or the "Company"). In the opinion
of management, the financial information reflects all adjustments (consisting
only of items of a normal recurring nature) necessary for a fair presentation
of financial position and results of operations in conformity with generally
accepted accounting principles. Such statements are presented in accordance
with the requirements of Regulation S-X which does not require all disclosures
normally required by generally accepted accounting principles or those
normally required on Form 10-K. These interim financial statements should be
read in conjunction with the annual financial statements for the year ended
December 31, 1995, and the Notes thereto contained in the Company's Form 10-K.
Certain previously reported amounts have been restated to conform with
classifications adopted in 1996.
NOTE 2. Net sales and other operating revenues.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- -----------------
(Millions of dollars) 1996 1995 1996 1995
------ ------ ------ ------
<S>
<C> <C> <C> <C>
Sales and other operating revenues:
Unrelated parties $ 773.1 $ 340.8 $2,062.3 $1,112.3
Related parties (1)<F1> 60.4 82.5 197.9 292.5
----- ----- ------ -----
Total 833.5 423.3 2,260.2 1,404.8
Less:
Purchases (2)<F2> (592.2) (248.1) (1,549.0) (863.0)
Delivery expenses (18.1) (10.2) (47.1) (32.0)
----- ----- ----- -----
Net sales and
other operating revenues $ 223.2 $ 165.0 $ 664.1 $ 509.8
===== ===== ===== =====
- -----------------
<FN>
<F1>(1) Average lifting costs associated with these sales were $21.6 million
and $38.5 million for the three months ended September 30, 1996 and 1995,
respectively, and $78.6 million and $133.2 million for the nine months ended
September 30, 1996 and 1995, respectively.
<F2>(2) Includes purchases from related parties at a cost of $6.8 million and
$8.4 million for the three months ended September 30, 1996 and 1995,
respectively, and $17.0 million and $30.9 million for the nine months ended
September 30, 1996 and 1995, respectively.
</FN>
</TABLE>
- 4 -
<PAGE>
VASTAR RESOURCES, INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
NOTE 3. Exploration Expenses.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- -----------------
(Millions of dollars) 1996 1995 1996 1995
------ ------ ------ ------
<S>
<C> <C> <C> <C>
Dry hole costs $ 24.7 $ 25.4 $ 47.3 $ 56.8
Geological and geophysical 10.0 5.0 34.9 18.5
Undeveloped leasehold amortization 6.9 6.8 20.1 20.3
Staff 5.0 5.8 17.5 17.4
Lease rentals 2.6 1.2 4.4 3.1
----- ----- ----- -----
Total $ 49.2 $ 44.2 $ 124.2 $ 116.1
===== ===== ===== =====
</TABLE>
NOTE 4. Per share data.
Earned per share is computed based upon the weighted average number of
common shares outstanding during the period. The dilutive effect of common
stock equivalents was not significant. The following table reflects the
weighted average number of common shares outstanding for the specified
periods.
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S>
<C> <C>
Three months ended September 30 97,259,501 97,250,001
Nine months ended September 30 97,254,645 97,250,001
</TABLE>
NOTE 5. Commitments and contingencies.
The Company and its subsidiaries are involved in a number of lawsuits,
all of which have arisen in the ordinary course of the Company's business.
The Company believes that any ultimate liability resulting from any of these
suits will not have a material adverse effect on the financial position or
results of operations of the Company.
- 5 -
<PAGE>
VASTAR RESOURCES, INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
NOTE 5. Commitments and contingencies (continued).
The operations and financial position of Vastar continue to be affected
from time to time in varying degrees by domestic and foreign political
developments, as well as legislation and regulations pertaining to
restrictions on oil and gas production, imports and exports, natural gas
regulations, tax increases, environmental regulations and cancellation of
contract rights. Both the likelihood of such occurrences and their overall
effect on the Company vary greatly and are not predictable. These
uncertainties are part of a number of items that Vastar has taken and will
continue to take into account in periodically establishing accounting
reserves.
Vastar and Atlantic Richfield Company ("ARCO") have agreements whereby
Vastar will indemnify ARCO against certain claims or liabilities which ARCO
may incur relating to ARCO's historical ownership and operation of Vastar's
properties, including liabilities under laws relating to the protection of the
environment and the workplace and liabilities arising out of certain
litigation. Under such agreements, ARCO will indemnify Vastar with respect to
other claims or liabilities and other matters of litigation not related to
Vastar's business or properties reflected in the consolidated financial
statements.
The Company has signed a contract with Diamond Offshore Drilling Company
for the major upgrade and operation of Diamond Offshore's semisubmersible
drilling rig, Ocean Victory, for a three-year deep water drilling program in
the Gulf of Mexico, commencing September 1997. This contract along with other
contracts for support equipment is anticipated to cost approximately $160
million over the next three years.
- 6 -
<PAGE>
VASTAR RESOURCES, INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
NOTE 6. Taxes.
The provision (benefit) for taxes on income is comprised of the
following:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
----------------- ----------------
(Millions of dollars) 1996 1995 1996 1995
------ ------ ------ ------
<S>
<C> <C> <C> <C>
Federal:
Current $ (0.8) $ --- $ (2.7) $ ---
Deferred (8.7) (16.2) (11.4) (39.5)
------ ------ ------ ------
Total federal (9.5) (16.2) (14.1) (39.5)
State:
Current (0.5) 0.4 1.7 2.0
Deferred 1.3 (0.3) 1.7 (1.1)
------ ------ ------ ------
Total state 0.8 0.1 3.4 0.9
------ ------ ------ ------
Total income tax benefit $ (8.7) $ (16.1) $ (10.7) $ (38.6)
====== ====== ====== ======
</TABLE>
A reconciliation of the income tax benefit as compared to the tax based
on the federal statutory rate for the specified period is as follows:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ ----------------
(Millions of dollars) 1996 1995 1996 1995
------ ------ ------ ------
<S>
<C> <C> <C> <C>
Income before taxes $ 32.9 $ 2.8 $ 140.2 $ 25.6
====== ====== ====== ======
Tax at 35% $ 11.5 $ 1.0 $ 49.1 $ 9.0
Increase (reduction) in taxes
resulting from:
State income taxes (net
of federal effect) 0.5 --- 2.3 0.7
Tax credits and other (20.7) (17.1) (62.1) (48.3)
------ ------ ------ ------
Income tax benefit $ (8.7) $ (16.1) $ (10.7) $ (38.6)
====== ====== ====== ======
</TABLE>
- 7 -
<PAGE>
VASTAR RESOURCES, INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
NOTE 7. Subsequent event.
On October 15, 1996, the Company declared a quarterly dividend of $0.075
per share of common stock, payable on December 2, 1996, to stockholders of
record on November 8, 1996.
- 8 -
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Sales and production volumes and average price statistics for the
specified periods are as follows:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ ----------------
1996 1995 1996 1995
------ ------ ------ ------
<S>
<C> <C> <C> <C>
Natural gas
Sales (MMcfd)*<F3> 3,237 1,929 2,773 2,057
Production (MMcfd) 866 766 878 803
Average sales price (per Mcf) $ 2.06 $ 1.47 $ 2.16 $ 1.51
Average wellhead price (per Mcf) $ 1.73 $ 1.25 $ 1.65 $ 1.31
Crude oil
Sales (MBbld) 102.0 94.8 102.5 104.5
Production (MBbld) 34.3 33.3 34.5 33.1
Average realized price (per Bbl) $ 21.06 $ 18.45 $ 20.48 $ 18.44
Natural gas liquids
Production (MBbld) 17.0 13.6 14.2 13.1
Average realized price (per Bbl) $ 13.81 $ 10.94 $ 13.60 $ 11.40
<FN>
- ---------------------
<F3>* As used herein, the terms "Bcf," "MMcf" and "Mcf" mean billion,
million and thousand cubic feet, respectively; the terms "Bcfd," "MMcfd" and
"Mcfd" mean billion, million and thousand cubic feet per day, respectively;
the terms "MMBbl" and "MBbl" mean million and thousand barrels, respectively;
the term "Bbl" means barrel; the terms "MMBbld" and "MBbld" mean million and
thousand barrels per day, respectively. In calculating Mcf and Bbl
equivalents, one Bbl is equal to six Mcf.
</FN>
</TABLE>
- 9 -
<PAGE>
The following table sets forth the statements of income for the specified
periods:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ ----------------
(Millions of dollars) 1996 1995 1996 1995
------ ------ ------ ------
<S>
<C> <C> <C> <C>
REVENUES
Natural gas
Sales $ 613.4 $ 260.3 $ 1,639.9 $ 850.9
Purchases (461.8) (157.3) (1,179.7) (521.5)
Delivery expenses (16.5) (8.1) (42.3) (27.0)
------ ------ ------ ------
Net sales - natural gas 135.1 94.9 417.9 302.4
------ ------ ------ ------
Crude oil
Sales 195.9 148.6 564.3 503.5
Purchases (128.5) (90.0) (367.4) (331.8)
Delivery expenses (1.0) (2.1) (3.5) (5.0)
------ ------ ------ ------
Net Sales - crude oil 66.4 56.5 193.4 166.7
------ ------ ------ ------
Natural gas liquids (NGLs) and other
Sales 24.2 14.4 56.0 50.4
Purchases and other costs (2.5) (0.8) (3.2) (9.7)
------ ------ ------ ------
Net sales - NGLs and other 21.7 13.6 52.8 40.7
------ ------ ------ ------
Net sales and other operating,
revenues 223.2 165.0 664.1 509.8
Other revenues 2.8 4.3 18.4 17.5
------ ------ ------ ------
Net revenues 226.0 169.3 682.5 527.3
------ ------ ------ ------
EXPENSES
Operating expenses 35.3 32.8 101.4 96.1
Exploration expenses 49.2 44.2 124.2 116.1
Selling, general and administrative
expenses 15.9 13.8 43.0 41.4
Taxes other than income taxes 10.1 7.3 29.8 25.8
Depreciation, depletion and
amortization 69.4 55.5 205.0 180.3
Interest 13.2 12.9 38.9 42.0
------ ------ ------ ------
Total expenses 193.1 166.5 542.3 501.7
------ ------ ------ ------
Income before income taxes 32.9 2.8 140.2 25.6
Income tax benefit (8.7) (16.1) (10.7) (38.6)
------ ------ ------ ------
Net income $ 41.6 $ 18.9 $ 150.9 $ 64.2
====== ====== ====== ======
</TABLE>
- 10 -
<PAGE>
THIRD QUARTER 1996 vs. THIRD QUARTER 1995.
Net income for the third quarter of 1996 was $41.6 million, compared to
$18.9 million for the third quarter of 1995. The earnings increase primarily
reflected higher commodity prices and production volumes, partially offset by
higher depletion, depreciation and amortization expense and higher exploration
costs.
Net sales and other operating revenues increased by $58.2 million to
$223.2 million for the third quarter of 1996, primarily as a result of higher
natural gas, crude oil and natural gas liquids prices and volumes.
Natural gas sales increased by $353.1 million to $613.4 million in the
third quarter of 1996. The higher revenues were the result of a 68 percent
increase in sales volume and a 40 percent increase in the average
natural gas sales price in the third quarter of 1996 as compared to the third
quarter of 1995. Reflected in natural gas revenues for the third quarter of
1996 was the unfavorable impact of $9.2 million related to the Company's
hedging activities.
Third quarter 1996 natural gas purchases increased by $304.5 million
from the third quarter of 1995 to $461.8 million. This increase was a result
of the combined effect of an increase in the cost of gas purchased and a 102
percent increase in natural gas purchased volumes which rose to an average of
approximately 2.4 Bcfd. Such volume increase was necessary to meet higher
sales levels resulting from increased marketing activities.
Third quarter 1996 natural gas production averaged 866 MMcfd, up
from 766 MMcfd during the same period last year. Contributing to the
increase were the continuing growth of San Juan Basin production and
exploitation programs in several offshore fields, including Eugene Island 177
and High Island 24L. These increases more than offset natural field declines
during the quarter.
Crude oil sales in the third quarter of 1996 were $195.9 million, up from
the same period last year as a result of both higher prices and volumes.
Third quarter 1996 crude oil production was 34.3 MBbld, up slightly from
the third quarter of 1995. The increase reflects higher production in several
offshore fields, partially offset by natural field declines. The net revenue
contribution from crude oil production and marketing activities was $66.4
million, up from the third quarter of 1995.
Net natural gas liquids and other sales were $21.7 million for the third
quarter of 1996, reflecting an $8.1 million increase over the same period last
year. This increase resulted from a combination of higher natural gas liquids
volumes and prices. The natural gas liquids average realized price increased
26 percent to $13.81 per Bbl in the third quarter of 1996 compared to the same
period last year.
Natural gas liquids production averaged 17.0 MBbld, up from 13.6 MBbld in
the same period last year. The change reflects increased processing volumes
and higher ownership in an onshore gas plant.
Third quarter 1996 exploration expenses were $49.2 million compared to
$44.2 million reported for the same period in 1995. The $5.0 million increase
was primarily related to higher seismic costs.
-11-
<PAGE>
Depreciation, depletion and amortization increased to $69.4 million in
the third quarter of 1996 versus $55.5 million for the same period in 1995.
The increase reflects increased production volumes and higher depletion rates.
The income tax benefit of $8.7 million in the third quarter of 1996
reflected higher pre-tax earnings as compared to the same period in 1995. The
income tax benefit for third quarter 1996 and 1995 included $21.1 million and
$17.2 million, respectively, of Internal Revenue Code Section 29 tax credits
for non-conventional fuels.
NINE MONTHS ENDED SEPTEMBER 30, 1996 VS. NINE MONTHS ENDED SEPTEMBER 30, 1995.
Net income for the nine months ended September 30, 1996, was $150.9
million, compared to $64.2 million for the same period of 1995. The earnings
increase reflects higher commodity prices and volumes.
Net sales and other operating revenues increased by $154.3 million to
$664.1 million for the nine months ended September 30, 1996, as compared to
the same period last year, primarily as a result of higher commodity prices
and volumes for all products.
Natural gas sales increased by $789.0 million to $1,639.9 million for the
first nine months of 1996. The higher revenues were primarily the result of
higher commodity prices for natural gas throughout the first nine months of
1996. As a result of high market demand, the average sales price for natural
gas increased by $0.65 per Mcf to $2.16 per Mcf during the first nine months
of 1996. Natural gas sales volumes rose 716 MMcfd to an average of
approximately 2.8 Bcfd. Reflected in natural gas revenues for the first nine
months in 1996 was $43.2 million in hedging losses.
For the first nine months of 1996, gas purchases increased by $658.2
million to $1,179.7 million from the same period last year. This increase was
a result of the combined effect of an increase in the average price for
natural gas and a 51 percent increase in the natural gas purchased volumes to
an average of approximately 1.9 Bcfd necessary to meet higher sales levels.
Natural gas production increased 75 MMcfd to an average of 878 MMcfd for
the first nine months of 1996. Key contributors to the increase were the
improvement of San Juan production rates, South Marsh Island 33, South
Timbalier 145, the January 1996 start-up of High Island 177 extension
discovery and ongoing exploitation successes, partially offset by natural
field declines.
Crude oil sales for the first nine months of 1996 were $564.3 million, an
increase of $60.8 million compared to the first nine months of 1995. This
increase was primarily a result of higher sales prices, partially offset by
slightly lower sales volumes.
During the first nine months of 1996, crude oil production was 34.5
MBbld, compared to the first nine months of 1995 level of 33.1 MBbld. This
increase was primarily a result of increased production from West Delta
106/107 and South Pass 60, partially offset by the sale of the Company's
working interest in the Brookeland field in 1995 and natural field declines.
- 12 -
<PAGE>
Net natural gas liquids and other sales were $56.0 million for the first
nine months of this year, slightly up from the same period last year primarily
as a result of higher natural gas liquids prices partially offset by lower
sales volumes. Decreased supply and the strong demand for natural gas liquid
products, primarily during the first quarter of 1996, resulted in a 19 percent
higher average realized price for the first nine months of 1996 over the same
period last year.
Depletion, depreciation and amortization expense increased $24.7 million
in the first nine months of 1996 compared to the same period in 1995. The
increase was primarily associated with increased production volumes and a
charge of $4.9 million for the closure of an onshore shorebase facility.
The income tax benefit of $10.7 million in the first nine months of 1996
reflected higher pre-tax earnings as compared to the $38.6 million benefit for
the same period in 1995. The income tax benefit for the first nine months of
1996 and 1995 included $62.5 million and $48.3 million, respectively, of
Internal Revenue Code Section 29 tax credits for non-conventional fuels.
LIQUIDITY AND CAPITAL RESOURCES.
During the first nine months of 1996, net cash provided by operating
activities was $396.2 million, up from $359.9 million in the first nine months
of 1995 primarily a result of higher net income.
Net cash used for investing activities was $397.8 million during the first
nine months of 1996, compared to $299.6 million for the same period in 1995.
This increase was primarily a result of producing property and undeveloped
leasehold acquisitions and an increase in development drilling activities.
Net cash provided by financing activities in the first nine months of
1996 was $18.3 million. During the first nine months of 1995, net cash used
for financing activities was $322.6 million. The first nine months of 1996
included the net issuance of $40.0 million under Vastar's bank facility
compared to the net repayment of $300.7 million during the first nine months
of 1995. The third quarter 1996 debt issuance was a result of a higher
capital spending program.
RISK MANAGEMENT.
In 1995, the Company entered into a series of natural gas swap agreements
covering an average of 290 MMcfd of its natural gas production from January 1,
1996 to December 31, 1996. These swap agreements serve as a hedge which
secures sales prices averaging approximately $1.85 per Mcf (on a Henry Hub
basis). Net realized hedging losses related to these hedging activities were
$9.2 million during the third quarter of 1996 and $43.2 million for the
first nine months of 1996.
As of September 30, 1996, the Company has entered into a series of
natural gas swap agreements covering an average of approximately 125 MMcfd of
its natural gas production from January 1, 1997 to December 31, 1997, and
approximately 120 MMcfd of its natural gas production for the period
January 1, 1998 through December 31, 1998. These swap agreements serve as a
hedge which secures sales prices averaging approximately $1.92 per Mcf for
1997 and $2.02 per Mcf for 1998.
- 13 -
<PAGE>
Based on the settlement prices of the applicable NYMEX futures contracts
at the end of the third quarter of 1996, the loss to the Company with respect
to its natural gas hedges would be $10.6 million during the last three months
of 1996 and $2.8 million for the two years 1997 and 1998. The actual gains
or losses realized by the Company from such hedges may vary significantly from
the foregoing amounts due to the volatility of the futures markets and other
indices.
As of September 30, 1996, the Company had no open crude oil hedging
positions. The Company realized no losses in the third quarter of 1996 and a
$2.3 million loss for the first nine months of 1996 related to its crude oil
hedging program.
The Company continues to evaluate its open hedging positions in light of
current market conditions.
During the first nine months of 1996, the Company's long-term sales
commitments did not exceed the total of proprietary production and other
natural gas production controlled through call rights with third-party
producers and marketing agreements with the Company's royalty owners.
NEW ACCOUNTING STANDARD.
In October 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-
Based Compensation" ("SFAS No. 123"). SFAS No. 123 requires companies to
adopt its provisions for fiscal years beginning after December 15, 1995. SFAS
No. 123 encourages a fair value-based method of accounting for an employee
stock option or similar equity instrument, but allows continued use of the
intrinsic value-based method of accounting prescribed by Accounting Principles
Board No. 25, "Accounting for Stock Issued to Employees" ("APB No. 25").
Companies electing to continue to use APB No. 25 must make pro forma
disclosures of net income and earnings per share as if the fair value-based
method of accounting has been applied. The Company currently plans to
continue to follow the provisions of APB No. 25 and accordingly, will make the
pro forma disclosures required by SFAS No. 123 in its financial statements for
the year ended December 31, 1996.
- 14 -
<PAGE>
------------------------
Management cautions against projecting any future results based on
present earnings levels because of economic uncertainties, the extent and form
of existing or future governmental regulations and other possible actions by
governments.
The foregoing financial information is unaudited and has been prepared
from the books and records of the Company. In the opinion of Management, the
financial information reflects all adjustments, consisting only of normal
recurring adjustments, necessary for the fair presentation of the financial
position and results of operations in conformity with generally accepted
accounting principles.
- 15 -
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
There have been no material developments with respect to the Company's
legal proceedings as previously reported in the Company's Form 10-K for
the year ending December 31, 1995, and the Company's Forms 10-Q for the
quarters ending March 31, 1996 and June 30, 1996, except as follows:
1. With respect to the suit styled Laura Lyon, et al. v. Amoco, et al.,
Case No. 93-CV-130, in the District Court for LaPlata County (Durango),
Colorado, as previously reported, Vastar is one of seven
defendants in this case in which the plaintiffs have petitioned the
court to have the case certified as a class action, alleging widespread
methane gas contamination of the groundwater throughout the San Juan
Basin in northern New Mexico and southern Colorado. On June 17, 1994,
the trial court granted Vastar's motion to dismiss Vastar from the
litigation on the grounds, inter alia, that the court lacked subject-
matter jurisdiction over the claims asserted against Vastar. The
plaintiffs filed notice of appeal to the Colorado Court of Appeals and
on February 22, 1996, the court affirmed the trial court's
order dismissing Vastar from the litigation. The plaintiffs applied for a writ
of certiorari to the Colorado Supreme Court and on August 28, 1996, the
plaintiffs withdrew their application. The Colorado Court of Appeals has
remanded the case to the trial court for the determination of attorney's fees
due to Vastar and the other defendants from the plaintiffs.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
10.1 Amendment No. 1 to Vastar Resources, Inc. Capital
Accumulation Plan, effective as of July 1, 1994
10.2 Amendment No. 1 to Vastar Resources, Inc. Capital
Accumulation Plan II, effective as of July 1, 1994
10.3 Amendment No. 1 to Vastar Resources, Inc. Savings Plan,
effective as of July 1, 1994
10.4 Amendment No. 1 to Vastar Resources, Inc. Savings Plan II,
effective as of July 1, 1994
10.5 Amendment No. 2 to Vastar Resources, Inc. Capital
Accumulation Plan, effective as of August 5, 1996
10.6 Amendment No. 2 to Vastar Resources, Inc. Capital
Accumulation Plan II, effective as of August 5, 1996
10.7 Amendment No. 2 to Vastar Resources, Inc. Savings Plan,
effective as of August 5, 1996
10.8 Amendment No. 2 to Vastar Resources, Inc. Savings Plan II,
effective as of August 5, 1996
27 Financial Data Schedule
(b) Reports on Form 8-K.
No current reports on Form 8-K were filed during the quarter ended
September 30, 1996, and through the date hereof.
- 16 -
<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.
VASTAR RESOURCES, INC.
(Registrant)
Dated: October 29, 1996 /s/ Joseph P. McCoy
------------------------------
Joseph P. McCoy
Vice President and Controller
(Duly Authorized Officer and
Principal Accounting Officer)
- 17 -
<PAGE>
Exhibit Index
Exhibit No. Description
- ----------- --------------------------------
10.1 Amendment No. 1 to Vastar Resources, Inc. Capital
Accumulation Plan, effective as of July 1, 1994
10.2 Amendment No. 1 to Vastar Resources, Inc. Capital
Accumulation Plan II, effective as of July 1, 1994
10.3 Amendment No. 1 to Vastar Resources, Inc. Savings Plan,
effective as of July 1, 1994
10.4 Amendment No. 1 to Vastar Resources, Inc. Savings Plan II,
effective as of July 1, 1994
10.5 Amendment No. 2 to Vastar Resources, Inc. Capital
Accumulation Plan, effective as of August 5, 1996
10.6 Amendment No. 2 to Vastar Resources, Inc. Capital
Accumulation Plan II, effective as of August 5, 1996
10.7 Amendment No. 2 to Vastar Resources, Inc. Savings Plan,
effective as of August 5, 1996
10.8 Amendment No. 2 to Vastar Resources, Inc. Savings Plan II,
effective as of August 5, 1996
27 Financial Data Schedule
AMENDMENT NO. 1
TO
VASTAR RESOURCES, INC. CAPITAL ACCUMULATION PLAN
__________________________
Pursuant to resolutions adopted by Board of Directors on June 27,
1994, the Vastar Resources, Inc. Capital Accumulation Plan(the "Plan")
is hereby amended effective as of July 1, 1994:
1. Subparagraph 1.3(b) of the Plan is amended to read as follows:
"(b) In determining the Earnings of a Member, the rules of
Section 414(q)(6) of the Code shall apply, except in
applying such rules, the term "family" shall include only
the spouse of the Member and any lineal descendants of the
Member who have not attained age 19 before the close of the
year. If, as a result of the application of such rules the
adjusted Annual Earnings limitation is exceeded, then the
limitation shall be prorated among the affected individuals
in proportion to each such individual's Earnings as
determined under this paragraph prior to the application of
this limitation."
2. Subparagraph 1.13(b)(vii) of the Plan is amended to read as
follows:
"(vii) Compensation, for purposes of this Paragraph 1.13 means
compensation within the meaning of Section 415(c)(3) of the
Code without regard to Section 125, Section 402(e)(3) and
Section 402(h)(1)(B) of the Code."
3. Paragraph 2.1 of the Plan is amended to read as follows:
"2.1 Membership
An Employee who is paid on a United States dollar payroll of
the Company may become a Member on the earlier of (a) or (b)
below:
(a) Completion of six months of Credited Company Service,
<PAGE>
(b) Completion of 1,000 Hours of Service during any 12-
consecutive-month period commencing on the Employee's
date of employment or any anniversary thereof.
To become a Member, an Employee must enter into a Salary
Reduction Agreement in accordance with Section 3."
4. A new Paragraph 4.7 is added to the Plan to read as follows:
"4.7 Exclusive Benefit
The corpus or income of the trust may not be divested to or
used for other than the exclusive benefit of the Members and
their beneficiaries and to defray reasonable expenses of
administering the Plan."
5. The second paragraph of Paragraph 5.2 is amended to read as
follows:
"All Financed Shares acquired by the Plan shall initially be
credited to a loan suspense account, and will be allocated to the
Members' Accounts only as payments on the Acquisition Loan are
made. Release from the loan suspense account for allocation to
Members' Accounts in each Plan Year shall be based on shares of
stock or other non-monetary units, rather than by dollar amount,
and shall not be less than the number calculated as follows:"
Executed this 29th day of March, 1996.
ATTEST VASTAR RESOURCES, INC.
BY: /S/ Jonathan D. Edelfelt By: /S/Jeffrey M. Bender
---------------------------- ------------------------
JONATHAN D. EDELFELT JEFFREY M. BENDER
Associate Secretary Vice President
Human Resources
AMENDMENT NO. 1
TO
VASTAR RESOURCES, INC. CAPITAL ACCUMULATION PLAN II
__________________________
Pursuant to resolutions adopted by Board of Directors on June 27,
1994, the Vastar Resources, Inc. Capital Accumulation Plan II (the
"Plan") is hereby amended effective as of July 1, 1994:
1. Subparagraph 1.3(b) of the Plan is amended to read as follows:
"(b) In determining the Earnings of a Member, the rules of
Section 414(q)(6) of the Code shall apply, except in
applying such rules, the term "family" shall include only
the spouse of the Member and any lineal descendants of the
Member who have not attained age 19 before the close of the
year. If, as a result of the application of such rules the
adjusted Annual Earnings limitation is exceeded, then the
limitation shall be prorated among the affected individuals
in proportion to each such individual's Earnings as
determined under this paragraph prior to the application of
this limitation."
2. Subparagraph 1.13(b)(vii) of the Plan is amended to read as
follows:
"(vii) Compensation, for purposes of this Paragraph 1.13 means
compensation within the meaning of Section 415(c)(3) of the
Code without regard to Section 125, Section 402(e)(3) and
Section 402(h)(1)(B) of the Code."
3. Paragraph 2.1 of the Plan is amended to read as follows:
"2.1 Membership
An Employee who is paid on a United States dollar payroll of
the Company may become a Member on the earlier of (a) or (b)
below:
(a) Completion of six months of Credited Company Service,
<PAGE>
(b) Completion of 1,000 Hours of Service during any 12-
consecutive-month period commencing on the Employee's
date of employment or any anniversary thereof.
To become a Member, an Employee must enter into a Salary
Reduction Agreement in accordance with Section 3."
4. A new Paragraph 4.8 is added to the Plan to read as follows:
"4.8 Exclusive Benefit
The corpus or income of the trust may not be divested to or
used for other than the exclusive benefit of the Members and
their beneficiaries and to defray reasonable expenses of
administering the Plan."
5. The second paragraph of Paragraph 5.2 is amended to read as
follows:
"All Financed Shares acquired by the Plan shall initially be
credited to a loan suspense account, and will be allocated to the
Members' Accounts only as payments on the Acquisition Loan are
made. Release from the loan suspense account for allocation to
Members' Accounts in each Plan Year shall be based on shares of
stock or other non-monetary units, rather than by dollar amount,
and shall not be less than the number calculated as follows:"
Executed this 29th day of March, 1996.
ATTEST VASTAR RESOURCES, INC.
BY: /S/ Jonathan D. Edelfelt By: /S/Jeffrey M. Bender
---------------------------- ------------------------
JONATHAN D. EDELFELT JEFFREY M. BENDER
Associate Secretary Vice President
Human Resources
AMENDMENT NO. 1
TO
VASTAR RESOURCES, INC. SAVINGS PLAN
__________________________
Pursuant to resolutions adopted by Board of Directors on June 27,
1994, the Vastar Resources, Inc. Savings Plan (the "Plan") is hereby
amended effective as of July 1, 1994:
1. Subparagraph 1.3(b) of the Plan is amended to read as follows:
"(b) In determining the Base Pay of a Member, the rules of
Section 414(q)(6) of the Code shall apply, except in
applying such rules, the term "family" shall include only
the spouse of the Member and any lineal descendants of the
Member who have not attained age 19 before the close of the
year. If, as a result of the application of such rules the
adjusted Base Pay limitation is exceeded, then the
limitation shall be prorated among the affected individuals
in proportion to each such individual's Base Pay as
determined under this paragraph prior to the application of
this limitation."
2. Subparagraph 1.10(b)(vii) of the Plan is amended to read as
follows:
"(vii) Compensation, for purposes of this Paragraph 1.13 means
compensation within the meaning of Section 415(c)(3) of the
Code without regard to Section 125, Section 402(e)(3) and
Section 402(h)(1)(B) of the Code."
3. Paragraph 2.1 of the Plan is amended to read as follows:
"2.1 Membership
An Employee who is paid on a United States dollar payroll of
the Company may become a Member on the earlier of (a) or (b)
below:
(a) Completion of six months of Credited Company Service,
<PAGE>
(b) Completion of 1,000 Hours of Service during any 12-
consecutive-month period commencing on the Employee's
date of employment or any anniversary thereof."
4. A new Paragraph 4.8 is added to the Plan to read as follows:
"4.8 Exclusive Benefit
The corpus or income of the trust may not be divested to or
used for other than the exclusive benefit of the Members and
their beneficiaries and to defray reasonable expenses of
administering the Plan."
5. The second paragraph of Paragraph 5.2 is amended to read as
follows:
"All Financed Shares acquired by the Plan shall initially be
credited to a loan suspense account, and will be allocated to the
Members' Accounts only as payments on the Acquisition Loan are
made. Release from the loan suspense account for allocation to
Members' Accounts in each Plan Year shall be based on shares of
stock or other non-monetary units, rather than by dollar amount,
and shall not be less than the number calculated as follows:"
Executed this 29th day of March, 1996.
ATTEST VASTAR RESOURCES, INC.
BY: /S/ Jonathan D. Edelfelt By: /S/Jeffrey M. Bender
---------------------------- ------------------------
JONATHAN D. EDELFELT JEFFREY M. BENDER
Associate Secretary Vice President
Human Resources
AMENDMENT NO. 1
TO
VASTAR RESOURCES, INC. SAVINGS PLAN II
__________________________
Pursuant to resolutions adopted by Board of Directors on June 27,
1994, the Vastar Resources, Inc. Savings Plan II (the "Plan") is
hereby amended effective as of July 1, 1994:
1. Subparagraph 1.3(b) of the Plan is amended to read as follows:
"(b) In determining the Base Pay of a Member, the rules of
Section 414(q)(6) of the Code shall apply, except in
applying such rules, the term "family" shall include only
the spouse of the Member and any lineal descendants of the
Member who have not attained age 19 before the close of the
year. If, as a result of the application of such rules the
adjusted Base Pay limitation is exceeded, then the
limitation shall be prorated among the affected individuals
in proportion to each such individual's Base Pay as
determined under this paragraph prior to the application of
this limitation."
2. Subparagraph 1.10(b)(vii) of the Plan is amended to read as
follows:
"(vii) Compensation, for purposes of this Paragraph 1.13 means
compensation within the meaning of Section 415(c)(3) of the
Code without regard to Section 125, Section 402(e)(3) and
Section 402(h)(1)(B) of the Code."
3. Paragraph 2.1 of the Plan is amended to read as follows:
"2.1 Membership
An Employee who is paid on a United States dollar payroll of
the Company may become a Member on the earlier of (a) or (b)
below:
(a) Completion of six months of Credited Company Service,
<PAGE>
(b) Completion of 1,000 Hours of Service during any 12-
consecutive-month period commencing on the Employee's
date of employment or any anniversary thereof."
4. A new Paragraph 4.8 is added to the Plan to read as follows:
"4.8 Exclusive Benefit
The corpus or income of the trust may not be divested to or
used for other than the exclusive benefit of the Members and
their beneficiaries and to defray reasonable expenses of
administering the Plan."
5. The second paragraph of Paragraph 5.2 is amended to read as
follows:
"All Financed Shares acquired by the Plan shall initially be
credited to a loan suspense account, and will be allocated to the
Members' Accounts only as payments on the Acquisition Loan are
made. Release from the loan suspense account for allocation to
Members' Accounts in each Plan Year shall be based on shares of
stock or other non-monetary units, rather than by dollar amount,
and shall not be less than the number calculated as follows:"
Executed this 29th day of March, 1996.
ATTEST VASTAR RESOURCES, INC.
BY: /S/ Jonathan D. Edelfelt By: /S/Jeffrey M. Bender
---------------------------- ------------------------
JONATHAN D. EDELFELT JEFFREY M. BENDER
Associate Secretary Vice President
Human Resources
AMENDMENT NO. 2
TO
VASTAR RESOURCES, INC. CAPITAL ACCUMULATION PLAN
__________________________
Pursuant to resolutions adopted by Board of Directors on May 15,
1996, the Vastar Resources, Inc. Capital Accumulation Plan (the
"Plan") is hereby amended effective as of August 5, 1996:
1. Paragraph 1.21 of the Plan is amended to read as follows:
"1.21 Salary Reduction Agreement means an agreement
entered into between the Member and the Company, and by
which the Member agrees to accept a reduction in Earnings
from the Company equal to any whole (or fractions, as
required by adjustments under Paragraph 3.3) percentage,
per payroll period, not to exceed 17 percent. This
agreement shall apply to each payroll period during the
period it is in effect in which the Member receives
Earnings. In consideration of such agreement, the Company
will transfer to the Member's Elective Deferral subaccount
the amount of the Elective Deferral at the time that
regular salary payments are made to its Employees."
2. Subparagraph 1.22(a) of the Plan is amended to read as follows:
"(a) All corporations which are members of a controlled
group of corporations within the meaning of 1563(a) of the
Code [determined without regard to 1563(a)(4) and
1563(e)(3)(C) of said Code] and of which Vastar Resources,
Inc. is then a member. For purposes of Paragraphs 1.7 and
1.14 and Subparagraphs 11.8(a), (b), (c) and (d),
Subsidiary or Affiliate shall include Lyondell
Petrochemical Company and its Subsidiaries or Affiliates;
and"
3. Paragraph 2.1 of the Plan is amended to read as follows:
1
<PAGE>
"2.1 Membership
(a) Elective Deferrals - An Employee who is paid on the
United States dollar payroll of the Company may become a
Member and make Elective Deferrals on the Employee's date
of employment.
To become a Member, an Employee must enter into a
Salary Reduction Agreement in accordance with Section 3.
(b) Company Contributions - An Employee who is paid on a
United States dollar payroll of the Company shall be
eligible for Company contributions on the earlier of (i) or
(ii) below:
(i) Completion of six months of Credited Company
Service,
(ii) Completion of 1,000 Hours of Service during
any 12-consecutive-month period commencing on the
Employee's date of employment or any anniversary
thereof."
4. Paragraph 2.3 of the Plan is amended to read as follows:
"2.3 Transferees
If an Employee transfers to the Company from a
Subsidiary or Affiliate and the Employee was making an
Elective Deferral under a Capital Accumulation Plan as of
the date of transfer, and was eligible for a Company
contribution, the Employee shall be eligible for a Company
contribution as soon as possible following the date of
transfer."
5. Paragraph 3.1 of the Plan is amended to read as follows:
"3.1 Members' Elections
2
<PAGE>
Each Member who is an Employee may enter into a Salary
Reduction Agreement with the Company providing for
withholding of Elective Deferrals from each of the Member's
regular paychecks at a rate of one percent to 17 percent of
the Member's Earnings, in whole percentages. A Salary
Reduction Agreement shall remain in effect until changed by
the Member.
A Member's election shall be made in the manner
prescribed by the Administrator. A Member may change the
Member's election with respect to the Member's rate of
future contributions at any time by giving notice in such
manner as is prescribed by the Administrator. Such changes
shall be effective as of the payroll period beginning after
the date of receipt of such notice by the Administrator.
The Company may limit or reduce its Salary Reduction
Agreement with any Member at any time, on a
nondiscriminatory basis, to the extent necessary to ensure
compliance with the limitations of Paragraph 3.3 or 3.4."
6. Subparagraph 3.2(a) of the Plan is amended to read as follows:
"(a) To the extent that a Member has directed pursuant to
Paragraph 6.2 that his or her Elective Deferrals be
invested in an option other than Vastar Resources, Inc.
Common Stock, such Elective Deferrals shall be paid to the
Trustee in cash."
7. Paragraph 4.1 of the Plan is amended to read as follows:
4.1 Company Contribution
Subject to the provisions of Paragraph 4.3, for each
pay period, the Company shall pay to the Trustee a
contribution on behalf of each Member equal to 160 percent
of the Member's Elective Deferrals for the pay period which
do not exceed five percent of the Member's Earnings for the
pay period. This contribution shall be made no later than
30 days following the date on which the related Member
Deferrals are
3
<PAGE>
made, and except for Members who have attained age 55,
shall be made under the ESOP Part of the Plan."
8. Section 6 of the Plan is amended to read as follows:
"SECTION 6
INVESTMENT OF MEMBERS' ACCOUNTS
6.1 Members' Accounts
The Administrator shall establish and maintain an
Account in the name of each Member. Separate records shall
be maintained with respect to the portion of a Member's
Account attributable to Elective Deferrals under Section 3
and transferred amounts under Section 14, and earnings
thereon, and the portion of a Member's Account attributable
to Company contributions under Section 4 and earnings
thereon.
6.2 Investment of Elective Deferrals, Transferred Amounts and
Certain Company Contributions
Upon receipt of a Member's Elective Deferrals,
transferred amounts under Section 14 and Company
contributions pursuant to Subparagraph 6.3(b), the Trustee
shall invest such amounts among the following investment
alternatives, in the proportion indicated by the Member in
his or her investment directions provided to the
Administrator:
(a) To the extent authorized by the
Administrator, in Vastar Resources, Inc. Common Stock
held under the ESOP Part of the Plan;
(b) In Vastar Resources, Inc. Common Stock held
under the non-ESOP Part of the Plan;
(c) In the Money Market Fund, consisting of specified
types of fixed income investments such as deposits in
interest-bearing bank accounts, certificates of
4
<PAGE>
deposit, corporate or governmental obligations maturing in
not more than five years, financial futures contracts,
deposits under a deposit administration or similar contract
issued by an insurance company or in a commingled or common
investment account or fund established and maintained by an
investment advisor or a bank (which bank may be the
Trustee) and the assets of which are invested primarily in
debt obligations, or in any combination thereof as Vastar
Resources, Inc. or a delegate thereof may determine;
(d) In the Equity Fund, consisting of specified equity
investments such as common or capital stock of issuers
(other than the Company, Subsidiaries or Affiliates, or
Lyondell Petrochemical Company or any of its Subsidiaries
or Affiliates), bonds, debentures or preferred stocks
convertible into common or capital stock of such issuers,
financial futures contracts, interests in any commingled or
common equity fund established and maintained by an
investment advisor or a bank (which bank may be the
Trustee), interests in any mutual fund or other similar
types of equity investments and cash equivalent short-term
investments maturing in less than one year, or in any
combination thereof as Vastar Resources, Inc. or a delegate
thereof may determine;
(e) In the Bond Fund, consisting of specified types of
fixed income investments, such as public obligations of the
United States or foreign governments or their agencies,
securitized financing or corporate bonds of issuers (other
than the Company, Subsidiaries or Affiliates, or Lyondell
Petrochemical Company or any of its Subsidiaries or
Affiliates), debentures, financial futures contracts,
interests in any commingled or common fixed income fund
established and maintained by an investment advisor or bank
(which bank may be the Trustee), interests in any mutual
fund or other similar types of fixed income investments and
cash equivalent short-term investments, or in any
combination thereof as Vastar Resources, Inc. or a delegate
thereof may determine;
(f) In the International Equity Fund consisting of
specified investments in global issuers such as common or
capital stock (other than common or capital stock of the
Company, Subsidiaries or Affiliates, or Lyondell
Petrochemical Company or any of
5
<PAGE>
its Subsidiaries or Affiliates), preferred stocks,
securities convertible into common or capital stock of such
issuers, financial futures contracts, currency futures or
options, forward currency contracts, interests in any
commingled or common equity fund established and maintained
by an investment advisor or a bank (which bank may be the
Trustee), interests in any mutual fund or other similar
types of equity investments and cash equivalent
investments, or similar investments or in any combination
thereof as Vastar Resources, Inc. or a delegate thereof may
determine; or
(g) In the Balanced Fund consisting of units of the Equity
Fund, the International Equity Fund and the Bond Fund. The
weighing of the Balanced Fund shall be approximately 45
percent Equity Fund, 15 percent International Equity Fund
and 40 percent Bond Fund.
A Member's directions as to the initial investment of his or her
Elective Deferrals and/or Company contributions shall be
provided in such manner as is prescribed by the Administrator.
Such directions shall remain in effect until new directions are
provided to the Administrator by the Member. A Member may
change the direction as to the initial investment of his or her
Elective Deferrals and/or Company contributions at any time by
providing notice in such manner as may be prescribed by the
Administrator. Any change of investment directions shall be
effective with respect to Elective Deferrals and/or Company
contributions paid to the Trustee for pay periods beginning
after the notice is received by the Administrator.
6.3 Investment of Company Contributions
(a) Except as provided in Subparagraph 6.3(b), all
contributions by the Company pursuant to Paragraph 4.1, and
any amounts of interest attributable to the proceeds of an
Acquisition Loan allocated to Members' Accounts pursuant to
Paragraph 5.2 after the Acquisition Loan has been repaid in
full, shall at all times be invested in Vastar Resources,
Inc. Common Stock under the ESOP Part of the Plan.
Contributions under Paragraph 4.1 made in cash shall be
applied to purchase
6
<PAGE>
shares of Vastar Resources, Inc. Common Stock or to make
payments on an Acquisition Loan within a reasonable time
after being paid to the Trustee or after being allocated to
Members' Accounts.
(b) A Member who has attained age 55 may invest Company
contributions in any of the investment options set forth in
Paragraph 6.2.
6.4 Funds Invested in the Money Market Fund
(a) There shall be invested in the Money Market Fund:
(i) Amounts which a Member elects to have so
invested under Subparagraph 6.2(c); and
(ii) On an interim basis, amounts being
accumulated in a Member's Account for investment under
Subparagraphs 6.2(a), (b), (d), (e), (f) and (g).
(b) Subject to the requirement of Subparagraph 6.5(c), a
Member may direct, once during each 15-calendar-day period,
that funds invested in the Money Market Fund under
Subparagraph 6.2(c) be invested in any of the other
permitted alternatives; provided, that (i) only one
direction whether made solely under this subparagraph, or
in combination with a direction under Paragraph 6.5, may be
made during a 15-calendar-day period; and (ii) a direction
under this subparagraph may not be made earlier than seven
days following (A) the date of receipt by the Administrator
of a Member's application to make a withdrawal under
Section 7, (B) the date a loan application is made under
Section 13, or (C) the date a loan repayment is made under
Subparagraph 13.8(c)(i).
(c) Interest shall be allocated on a monthly basis to
funds held for a Member in the Money Market Fund as of the
last day of a calendar month. However, such allocation
shall not be made with respect to funds resulting from a
conversion to cash of Vastar Resources, Inc. Common Stock,
Equity Fund, Bond Fund,
7
<PAGE>
International Equity Fund or Balanced Fund units which
occurred in the calendar month in which allocation of
interest is made.
6.5 Sale and Reinvestment of Common Stock, Equity Fund Units, Bond
Fund Units, International Equity Fund Units or Balanced Fund
Units
(a) A Member may direct that shares of Vastar Resources,
Inc. Common Stock, other than shares purchased with Company
contributions, units of the Equity Fund, Bond Fund,
International Equity Fund and/or Balanced Fund held in the
Member's Account be converted to cash and the proceeds
thereof, less any applicable expenses of sale, be invested
in a different option described in Paragraph 6.2; provided,
that (i) only one direction, whether made solely under this
subparagraph, or in combination with a direction under
Paragraph 6.4, may be made during a 15-calendar-day period;
(ii) a direction under this subparagraph may not be made
earlier than seven calendar days following (A) the date of
receipt by the Administrator of a Member's application to
make a withdrawal under Section 7, (B) the date a loan
application is made under Section 13, or (C) the date a
loan repayment is made under Subparagraph 13.8(c)(i); and
(iii) a Member who has attained age 55 as of the date of
the direction to convert may, subject to the restrictions
described in this paragraph, direct that shares of Common
Stock (including Common Stock of a Subsidiary or Affiliate
or Lyondell Petrochemical Company attributable to
contributions of such companies) held in the Member's
Account which are attributable to Company contributions be
sold and the proceeds reinvested in one or more of the
other options described in Paragraph 6.2.
(b) The conversion of shares of Vastar Resources, Inc.
Common Stock to shares of such stock held in the ESOP Part
of the Plan described in Subparagraph 6.2(a), and the
conversion of shares of Vastar Resources, Inc. Common Stock
held in the ESOP Part of the Plan to the shares held under
Subparagraph 6.2(b) of the Plan, shall be accomplished by a
recharacterization of the shares, pursuant to procedures
established by the Administrator; provided, that only one
direction, whether made solely under this subparagraph or
in combination with a direction under Paragraph 6.4, may be
made during a 15-calendar-day period.
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(c) Proceeds of the conversion of shares of Vastar
Resources, Inc. Common Stock to cash may not be reinvested
in Vastar Resources, Inc. Common Stock until 15 calendar
days after the date of such conversion. Proceeds of the
conversion of units of the Equity Fund, Bond Fund,
International Equity Fund or Balanced Fund to cash may not
be reinvested in the Equity Fund, Bond Fund, International
Equity Fund or Balanced Fund, as the case may be, until 15
calendar days after the date of such conversion.
6.6 Directives
All elections and directions by Members concerning the
investment of their Accounts shall be made in the manner
prescribed by the Administrator, shall be irrevocable and shall
become effective upon receipt by the Administrator.
6.7 Purchases and Sales of Vastar Resources, Inc. Common Stock
Effective December 1, 1995, purchases and sales of Common Stock
of Vastar Resources, Inc. shall be handled in accordance with
the following rules and such additional procedures, consistent
with such rules, which the Administrator may establish from
time to time:
(a) Purchases and sales of Common Stock of Vastar
Resources, Inc. pursuant to a Member's directive under
Paragraph 6.4 or 6.5, or to accommodate a distribution or
withdrawal pursuant to Section 7 or 8, shall be made in the
open-market as follows:
(i) Each Wednesday and Friday the Administrator
shall execute an open-market transaction, at a time
determined at the discretion of the Administrator,
covering all participant directives received by the
Administrator by such time as determined by the
Administrator, and communicated to Members, on the
preceding Company business day, except that if a
Wednesday or Friday is a Company holiday or a day on
which trading on the New York Stock Exchange is
closed, the transaction
9
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will occur on the next day (a Wednesday or Friday) on
which the Plan executes a transaction in the open-
market.
(ii) If an unforeseeable administrative
difficulty prevents the execution of the open-market
transaction otherwise scheduled for a Wednesday or
Friday, such transaction will be executed on the first
business day thereafter which does not fall within one
of the two exceptions in Subparagraph 6.7(a)(i).
(iii) The Administrator may, in its
discretion, match the purchase and sale orders
scheduled for an open-market transaction and transact
the net purchase or sale, whichever the case may be.
The Administrator may also agree with the
Administrator of one or more other individual account
plans (as described in 3(34) of ERISA, and which is
maintained by the Company or its Subsidiaries or
Affiliates, and provides for the same purchases and
sales pursuant to participant directives described in
Paragraphs 6.4 and 6.5) to combine and match orders
from all of the plans and execute a "net" transaction,
as described above. The price per share allocated to
each purchase or sale order shall be the price
transacted for the "net" shares on the open-market
transaction date otherwise scheduled for the orders
under Subparagraph 6.7(a)(i). The price transacted
for a "net" transaction shall be the price obtained on
the open-market in the case of a single transaction,
and the weighted average of the prices obtained on the
open-market in the case of multiple transactions.
(iv) Brokerage commissions, transfer fees and
other expenses actually incurred in any such sale or
purchase shall be equitably allocated and added to the
cost or subtracted from the proceeds of all purchases
or sales, as the case may be, effected on a pricing
day, whether pursuant to the netting process described
in Subparagraph 6.7(a)(iii), or pursuant to actual
separate transactions per Member order.
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(b) Purchases of Common Stock of Vastar Resources, Inc.
with Member's Elective Deferrals or Company contributions
under Sections 3 and 4:
(i) Purchases shall normally be made either in
the open-market or from Vastar Resources, Inc., at
prices to the Plan not in excess of the fair market
value of such Vastar Resources, Inc. Common Stock on
the date of purchase thereof, as determined by the
Trustee.
(ii) Allocations to Members' Accounts will be
made in full and fractional shares.
(iii) The Trustee may limit the daily volume
of purchases to the extent it believes such action to
be in the best interests of the Members. When Vastar
Resources, Inc. Common Stock is purchased, the cost
charged to the Accounts of Members affected by such
purchase shall be determined on an equitable basis in
accordance with rules to be adopted by the
Administrator and incorporating the following
principles:
(A) The cost charged to each affected
Member's Account shall be based on the average
cost per share of all Vastar Resources, Inc.
Common Stock purchased during whatever period may
be established by the Administrator.
(B) Brokerage commissions, transfer
fees and other expenses actually incurred in any
such purchase shall be added to the cost of any
such purchase.
(c) A Member may direct the Administrator to use any
available cash or funds held for the Member under
Subparagraph 6.2(c) to exercise any options, rights or
warrants issued with respect to Vastar Resources, Inc.
Common Stock in the Member's Account. In the absence of
such direction, or if there are no available funds, any
such option, right or warrant having a market value shall
be sold for the Member's Account.
11
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6.8 Voting of Vastar Resources, Inc. Common Stock
(a) The Trustee shall vote whole shares of Vastar
Resources, Inc. Common Stock credited to each Member's
Account in accordance with such Members' written
instructions. Fractional shares of Vastar Resources, Inc.
Common Stock shall be aggregated into whole shares of stock
and voted by the Trustee, to the nearest whole vote, in the
same proportion as shares are to be voted by the Trustee
pursuant to Members' written instructions. In the absence
of voting instructions by one or more Members, the Trustee
shall vote uninstructed shares, to the nearest whole vote,
in the same proportion as shares are to be voted by the
Trustee pursuant to Members' written instructions. The
Trustee shall vote unallocated shares, to the nearest whole
vote, in the same proportion as allocated shares are to be
voted by the Trustee pursuant to Members' written
instructions.
(b) The Trustee shall exercise rights other than voting
rights attributable to whole shares of Vastar Resources,
Inc. Common Stock credited to each Member's Account in
accordance with such Members' written instructions. Rights
attributable to fractional shares of Vastar Resources, Inc.
Common Stock (which for this purpose shall be aggregated
into whole shares of stock) shall be exercised by the
Trustee in the same proportion as rights which are
exercised by the Trustee pursuant to Members' written
instructions. In the absence of instructions by one or
more Members, the Trustee shall exercise uninstructed
rights in the same proportion as rights which are to be
exercised by the Trustee pursuant to Members' written
instructions. The Trustee shall exercise rights
attributable to unallocated shares in the same proportion
as rights attributable to allocated shares which are to be
exercised by the Trustee pursuant to Members' written
instructions.
(c) The Trustee shall notify the Members of each occasion
for the exercise of voting rights and rights other than
voting rights within a reasonable time before such rights
are to be exercised. This notification shall include all
the information that the Company distributes to
shareholders regarding the exercise of such rights.
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6.9 Title of Investments
All investments will be held in the name of the Trustee or its
nominees.
6.10 Allocation of Trust Earnings and Valuation of Trust Investments
(a) To the extent authorized by the Administrator, any
cash dividends declared on Vastar Resources, Inc. Common
Stock held in a Member's Account under the ESOP Part of the
Plan as of the record date for the dividend shall be paid
in cash to the Member (or, in the event of death, to the
Member's beneficiary) on, or as soon as possible following,
the payment date for the dividend.
(b) Any cash dividends declared on Vastar Resources, Inc.
Common Stock held in a loan suspense account as of the
record date for the dividend shall be used to make payments
on the Acquisition Loan used to acquire the shares of stock
held in such account.
(c) Except as provided in Subparagraphs 6.10(a) and (b),
all dividends or other distributions attributable to shares
of Vastar Resources, Inc. Common Stock shall be allocated
to the Account of the Member whose Account is credited with
such shares.
(d) On the last day of each month, all income attributable
to the Money Market Fund shall be allocated to the Member's
Account in the ratio that each Member's Money Market Fund
Account balance bears to such account balance of all such
Members. For the purpose of determining such allocation,
the Money Market Fund shall be valued at fair market value.
6.11 Purchase and Redemption of the Equity Fund, Bond Fund,
International Equity Fund and Balanced Fund Units
Effective December 1, 1995, purchase and redemption of the
Equity Fund, Bond Fund, International Equity Fund and Balanced
Fund units shall be handled in accordance with
13
<PAGE>
the following rules and such additional procedures, consistent
with such rules, as the Administrator may establish from time to
time:
(a) Units of the Equity Fund, Bond Fund, International
Equity Fund and Balanced Fund shall be purchased or
redeemed, pursuant to Member directions under Paragraph
6.5, on each Wednesday and Friday, covering all Member
directives received by the Administrator by such time as
determined by the Administrator, and communicated to
Members, on the preceding Company business day, except that
if a Wednesday or Friday is a Company holiday or a day on
which trading on the New York Stock Exchange is closed, the
purchase or redemption will be executed on the next day (a
Wednesday or Friday) on which the Plan executes a
transaction under this Subparagraph 6.11(a).
(b) If an unforeseeable administrative difficulty prevents
the execution of a transaction under Subparagraph 6.11(a),
otherwise scheduled on a Wednesday or Friday, such
transaction will be executed on the first business day
thereafter which does not fall within one of the two
exceptions in Subparagraph 6.11(a).
(c) The Administrator may, in its discretion, combine the
purchase and redemption orders scheduled for a Wednesday or
Friday and transact the net purchase or sale orders,
whichever the case may be. The Administrator may also
agree with the Administrator of one or more individual
account plans [as described in 3(34) of ERISA, and which
is maintained by the Company or its Subsidiaries or
Affiliates, and provides for the same purchase and
redemption procedure described in Subparagraph 6.11(a)], to
combine orders from all of the plans and execute a "net"
transaction.
(d) When units of the Equity Fund, Bond Fund,
International Equity Fund and Balanced Fund are purchased
or redeemed, the cost or net proceeds charged or credited
to the Accounts of Members affected by such purchase or
redemption shall be determined on an equitable basis in
accordance with rules to be adopted by the
14
<PAGE>
Administrator, which are consistent with the rules
described in this section, and incorporate the following
principles:
(i) The net proceeds of any such redemption of
fund units in a Member's Account shall be credited to
such Member's Account.
(ii) The cost of any such purchase of fund units
for a Member's Account shall be charged to such
Member's Account.
(iii) The net proceeds and cost of fund units
shall be based on the net asset value of such units
determined on the valuation date next following the
date the purchase or redemption order is received by
the Administrator. The valuation date shall be
determined by the Administrator and shall occur on at
least a weekly basis. The net asset value of fund
units will be calculated by dividing the difference
between the value of the fund assets and fund
liabilities by the number of units outstanding with
respect to each fund.
(iv) Brokerage commissions, transfer fees and
other expenses actually incurred in any such purchase
or redemption shall be added to the cost or subtracted
from the gross proceeds, of any such purchase or
redemption, respectively.
(e) Income earned by the Equity Fund, Bond Fund and
International Equity Fund shall automatically be reinvested
in the Equity Fund, Bond Fund and International Equity
Fund, as the case may be. Income, gains and losses shall
be reflected in the net asset value of the units of the
Equity Fund, Bond Fund and International Equity Fund.
6.12 Voting of the Money Market Fund, Equity Fund, Bond Fund and
International Equity Fund Investments
The Trustee, in accordance with the Trust Agreement, shall
exercise all voting and other rights associated with any
investments held in the Money Market Fund, Equity Fund, Bond
Fund and International Equity Fund.
15
<PAGE>
6.13 Investment Advisory Fees
The investment advisory fees, if any, incurred for management of
the Money Market Fund, Equity Fund, Bond Fund, International
Equity Fund and Balanced Fund are charged to each respective
fund.
6.14 Member Protection
No shares of Vastar Resources, Inc. Common Stock held by the
ESOP Part of the Plan may be subject to a put, call or other
option, or buy/sell or similar arrangement. The provisions of
this Paragraph 6.14 shall continue to be applicable to the
shares of Vastar Resources, Inc. Common Stock held by the ESOP
Part of the Plan even if such part ceases to be an Employee
Stock Ownership Plan under 4945(e)(7) of the Code.
6.15 Confidentiality
The Capital Accumulation Plan Administrative
Committee shall be responsible for ensuring the adequacy of
procedures established by the Administrator to safeguard
the confidentiality of information relating to the
purchasing, holding and selling of Vastar Resources, Inc.
Common Stock and any voting, tender or similar rights
relating to such stock."
9. Subparagraph 13.3(f) of the Plan is amended to read as follows:
"(f) The value of Common Stock, the Equity Fund, the
International Equity Fund, the Bond Fund and the Balanced
Fund for purposes of Subparagraph 13.3(a), will be
determined on the sale date, pursuant to Paragraph 6.7 or
6.11, immediately preceding the date the loan application
is received by the Administrator."
10. Paragraph 13.4 of the Plan is amended to read as follows:
16
<PAGE>
"13.4 Frequency
(a) A Member may have such number of loans
outstanding at any time as shall be determined by the
Administrator.
(b) A loan application may be submitted only
once during any 15-day period and a loan application
may not be submitted earlier than seven days following
receipt by the Administrator of a Member's application
to make a purchase or sale under Paragraph 6.5 or a
hardship withdrawal under Section 7.
(c) A loan application may not be submitted
earlier than 15 days following repayment of a previous
loan under this Plan or any other Vastar Resources,
Inc. Capital Accumulation or Savings Plans.
(d) Unless determined otherwise by the
Administrator, if the Member is also a member of one
of the savings plans maintained by Vastar Resources,
Inc. at the time of the application for the loan, the
loan is permitted only if the Member has, at such
time, an outstanding loan under one of the savings
plans, or there are insufficient assets to fund the
loan in such savings plan."
11. Subparagraph 13.7(b) of the Plan is amended to read as follows:
"(b) The value of Common Stock, the Equity Fund, the
International Equity Fund, the Bond Fund and the Balanced
Fund sold to provide the loan proceeds shall be determined
on the sale date, pursuant to Paragraph 6.7 or 6.11,
immediately following the date the loan application is
received by the Administrator."
17
<PAGE>
Executed this 13th day of September, 1996.
ATTEST VASTAR RESOURCES, INC.
BY: /S/ Albert D. Hoppe By: /S/ Jeffrey M. Bender
----------------------- ------------------------
ALBERT D. HOPPE JEFFREY M. BENDER
Secretary Vice President
Human Resources
18
AMENDMENT NO. 2
TO
VASTAR RESOURCES, INC. CAPITAL ACCUMULATION PLAN II
__________________________
Pursuant to resolutions adopted by Board of Directors on May 15,
1996, the Vastar Resources, Inc. Capital Accumulation Plan II (the
"Plan") is hereby amended effective as of August 5, 1996:
1. Paragraph 1.21 of the Plan is amended to read as follows:
"1.21 Salary Reduction Agreement means an agreement
entered into between the Member and the Company, and by
which the Member agrees to accept a reduction in Earnings
from the Company equal to any whole (or fractions, as
required by adjustments under Paragraph 3.3) percentage,
per payroll period, not to exceed 17 percent. This
agreement shall apply to each payroll period during the
period it is in effect in which the Member receives
Earnings. In consideration of such agreement, the Company
will transfer to the Member's Elective Deferral subaccount
the amount of the Elective Deferral at the time that
regular salary payments are made to its Employees."
2. Subparagraph 1.22(a) of the Plan is amended to read as follows:
"(a) All corporations which are members of a controlled
group of corporations within the meaning of 1563(a) of the
Code [determined without regard to 1563(a)(4) and
1563(e)(3)(C) of said Code] and of which Vastar Resources,
Inc. is then a member. For purposes of Paragraphs 1.7 and
1.14 and Subparagraphs 11.8(a), (b), (c) and (d),
Subsidiary or Affiliate shall include Lyondell
Petrochemical Company and its Subsidiaries or Affiliates;
and"
3. Paragraph 2.1 of the Plan is amended to read as follows:
1
<PAGE>
"2.1 Membership
(a) Elective Deferrals - An Employee who is paid on the
United States dollar payroll of the Company may become a
Member and make Elective Deferrals on the Employee's date
of employment.
To become a Member, an Employee must enter into a
Salary Reduction Agreement in accordance with Section 3.
(b) Company Contributions - An Employee who is paid on a
United States dollar payroll of the Company shall be
eligible for Company contributions on the earlier of (i) or
(ii) below:
(i) Completion of six months of Credited Company
Service,
(ii) Completion of 1,000 Hours of Service during
any 12-consecutive-month period commencing on the
Employee's date of employment or any anniversary
thereof."
4. Paragraph 2.3 of the Plan is amended to read as follows:
"2.3 Transferees
If an Employee transfers to the Company from a
Subsidiary or Affiliate and the Employee was making an
Elective Deferral under a Capital Accumulation Plan as of
the date of transfer, and was eligible for a Company
contribution, the Employee shall be eligible for a Company
contribution as soon as possible following the date of
transfer."
5. Paragraph 3.1 of the Plan is amended to read as follows:
"3.1 Members' Elections
2
<PAGE>
Each Member who is an Employee may enter into a Salary
Reduction Agreement with the Company providing for
withholding of Elective Deferrals from each of the Member's
regular paychecks at a rate of one percent to 17 percent of
the Member's Earnings, in whole percentages. A Salary
Reduction Agreement shall remain in effect until changed by
the Member.
A Member's election shall be made in the manner
prescribed by the Administrator. A Member may change the
Member's election with respect to the Member's rate of
future contributions at any time by giving notice in such
manner as is prescribed by the Administrator. Such changes
shall be effective as of the payroll period beginning after
the date of receipt of such notice by the Administrator.
The Company may limit or reduce its Salary Reduction
Agreement with any Member at any time, on a
nondiscriminatory basis, to the extent necessary to ensure
compliance with the limitations of Paragraph 3.3 or 3.4."
6. Subparagraph 3.2(a) of the Plan is amended to read as follows:
"(a) To the extent that a Member has directed pursuant to
Paragraph 6.2 that his or her Elective Deferrals be
invested in an option other than Vastar Resources, Inc.
Common Stock, such Elective Deferrals shall be paid to the
Trustee in cash."
7. Paragraph 4.1 of the Plan is amended to read as follows:
4.1 Company Contribution
Subject to the provisions of Paragraphs 4.3 and 4.4,
for each pay period, the Company shall pay to the Trustee a
contribution on behalf of each Member equal to 160 percent
of the Member's Elective Deferrals for the pay period which
do not exceed five percent of the Member's Earnings for the
pay period. This contribution shall be made no later than
30 days following the date on which the related
3
<PAGE>
Member Deferrals are made, and except for Members who have
attained age 55, shall be made under the ESOP Part of the
Plan."
8. Section 6 of the Plan is amended to read as follows:
"SECTION 6
INVESTMENT OF MEMBERS' ACCOUNTS
6.1 Members' Accounts
The Administrator shall establish and maintain an
Account in the name of each Member. Separate records shall
be maintained with respect to the portion of a Member's
Account attributable to Elective Deferrals under Section 3
and transferred amounts under Section 14, and earnings
thereon, and the portion of a Member's Account attributable
to Company contributions under Section 4 and earnings
thereon.
6.2 Investment of Elective Deferrals, Transferred Amounts and
Certain Company Contributions
Upon receipt of a Member's Elective Deferrals,
transferred amounts under Section 14 and Company
contributions pursuant to Subparagraph 6.3(b), the Trustee
shall invest such amounts among the following investment
alternatives, in the proportion indicated by the Member in
his or her investment directions provided to the
Administrator:
(a) To the extent authorized by the
Administrator Vastar Resources, Inc. Common Stock held
under the ESOP Part of the Plan;
(b) In Vastar Resources, Inc. Common Stock held
under the non-ESOP Part of the Plan;
4
<PAGE>
(c) In the Money Market Fund, consisting of specified
types of fixed income investments such as deposits in
interest-bearing bank accounts, certificates of
deposit, corporate or governmental obligations
maturing in not more than five years, financial
futures contracts, deposits under a deposit
administration or similar contract issued by an
insurance company or in a commingled or common
investment account or fund established and maintained
by an investment advisor or a bank (which bank may be
the Trustee) and the assets of which are invested
primarily in debt obligations, or in any combination
thereof as Vastar Resources, Inc. or a delegate
thereof may determine;
(d) In the Equity Fund, consisting of specified
equity investments such as common or capital stock of
issuers (other than the Company, Subsidiaries or
Affiliates, or Lyondell Petrochemical Company or any
of its Subsidiaries or Affiliates), bonds, debentures
or preferred stocks convertible into common or capital
stock of such issuers, financial futures contracts,
interests in any commingled or common equity fund
established and maintained by an investment advisor or
a bank (which bank may be the Trustee), interests in
any mutual fund or other similar types of equity
investments and cash equivalent short-term investments
maturing in less than one year, or in any combination
thereof as Vastar Resources, Inc. or a delegate
thereof may determine;
(e) In the Bond Fund, consisting of specified types
of fixed income investments, such as public
obligations of the United States or foreign
governments or their agencies, securitized financing
or corporate bonds of issuers (other than the Company,
Subsidiaries or Affiliates, or Lyondell Petrochemical
Company or any of its Subsidiaries or Affiliates),
debentures, financial futures contracts, interests in
any commingled or common fixed income fund established
and maintained by an investment advisor or bank (which
bank may be the Trustee), interests in any mutual fund
or other similar types of fixed income investments and
cash equivalent short-term investments, or in
5
<PAGE>
any combination thereof as Vastar Resources, Inc. or a
delegate thereof may determine;
(f) In the International Equity Fund consisting of
specified investments in global issuers such as common
or capital stock (other than common or capital stock
of the Company, Subsidiaries or Affiliates, or
Lyondell Petrochemical Company or any of its
Subsidiaries or Affiliates), preferred stocks,
securities convertible into common or capital stock of
such issuers, financial futures contracts, currency
futures or options, forward currency contracts,
interests in any commingled or common equity fund
established and maintained by an investment advisor or
a bank (which bank may be the Trustee), interests in
any mutual fund or other similar types of equity
investments and cash equivalent investments, or
similar investments or in any combination thereof as
Vastar Resources, Inc. or a delegate thereof may
determine; or
(g) In the Balanced Fund consisting of units of the
Equity Fund, the International Equity Fund and the
Bond Fund. The weighing of the Balanced Fund shall be
approximately 45 percent Equity Fund, 15 percent
International Equity Fund and 40 percent Bond Fund.
A Member's directions as to the initial investment of his
or her Elective Deferrals and/or Company contributions
shall be provided in such manner as is prescribed by the
Administrator. Such directions shall remain in effect
until new directions are provided to the Administrator by
the Member. A Member may change the direction as to the
initial investment of his or her Elective Deferrals and/or
Company contributions at any time by providing notice in
such manner as may be prescribed by the Administrator. Any
change of investment directions shall be effective with
respect to Elective Deferrals and/or Company contributions
paid to the Trustee for pay periods beginning after the
notice is received by the Administrator.
6.3 Investment of Company Contributions
6
<PAGE>
(a) Except as provided in Subparagraph 6.3(b), all
contributions by the Company pursuant to Paragraph
4.1, and any amounts of interest attributable to the
proceeds of an Acquisition Loan allocated to Members'
Accounts pursuant to Paragraph 5.2 after the
Acquisition Loan has been repaid in full, shall at all
times be invested in Vastar Resources, Inc. Common
Stock under the ESOP Part of the Plan. Contributions
under Paragraph 4.1 made in cash shall be applied to
purchase shares of Vastar Resources, Inc. Common Stock
or to make payments on an Acquisition Loan within a
reasonable time after being paid to the Trustee or
after being allocated to Members' Accounts.
(b) A Member who has attained age 55 may invest
Company contributions in any of the investment options
set forth in Paragraph 6.2.
6.4 Funds Invested in the Money Market Fund
(a) There shall be invested in the Money Market Fund:
(i) Amounts which a Member elects to have
so invested under Subparagraph 6.2(c); and
(ii) On an interim basis, amounts being
accumulated in a Member's Account for investment
under Subparagraphs 6.2(a), (b), (d), (e), (f)
and (g).
(b) Subject to the requirement of Subparagraph
6.5(c), a Member may direct, once during each 15-
calendar-day period, that funds invested in the Money
Market Fund under Subparagraph 6.2(c) be invested in
any of the other permitted alternatives; provided,
that (i) only one direction whether made solely under
this subparagraph, or in combination with a direction
under Paragraph 6.5, may be made during a 15-calendar-
day period and (ii) a direction under this
subparagraph may not be made earlier than seven days
7
<PAGE>
following (A) the date of receipt by the Administrator
of a Member's application to make a withdrawal under
Section 7, (B) the date a loan application is made
under Section 13, or (C) the date a loan repayment is
made under Subparagraph 13.8(c)(i).
(c) Interest shall be allocated on a monthly basis to
funds held for a Member in the Money Market Fund as of
the last day of a calendar month. However, such
allocation shall not be made with respect to funds
resulting from a conversion to cash of Vastar
Resources, Inc. Common Stock, Equity Fund, Bond Fund,
International Equity Fund or Balanced Fund units which
occurred in the calendar month in which allocation of
interest is made.
6.5 Sale and Reinvestment of Common Stock, Equity Fund Units,
Bond Fund Units, International Equity Fund Units or
Balanced Fund Units
(a) A Member may direct that shares of Vastar
Resources, Inc. Common Stock, other than shares
purchased with Company contributions, units of the
Equity Fund, Bond Fund, International Equity Fund
and/or Balanced Fund held in the Member's Account be
converted to cash and the proceeds thereof, less any
applicable expenses of sale, be invested in a
different option described in Paragraph 6.2; provided,
that (i) only one direction, whether made solely under
this subparagraph, or in combination with a direction
under Paragraph 6.4, may be made during a 15-calendar-
day period; (ii) a direction under this subparagraph
may not be made earlier than seven calendar days
following (A) the date of receipt by the Administrator
of a Member's application to make a withdrawal under
Section 7, (B) the date a loan application is made
under Section 13, or (C) the date a loan repayment is
made under Subparagraph 13.8(c)(i); (iii) a Member who
has attained age 55 as of the date of the direction to
convert may, subject to the restrictions described in
this paragraph, direct that shares of Common Stock
(including Common Stock of a Subsidiary or Affiliate
or Lyondell Petrochemical Company attributable to
contributions of such companies) held in the Member's
Account which are attributable to Company
contributions be sold and the
8
<PAGE>
proceeds reinvested in one or more of the other
options described in Paragraph 6.2.
(b) The conversion of shares of Vastar Resources,
Inc. Common Stock to shares of such stock held in the
ESOP Part of the Plan described in Subparagraph
6.2(a), and the conversion of shares of Vastar
Resources, Inc. Common Stock held in the ESOP Part of
the Plan to the shares held under Subparagraph 6.2(b)
of the Plan, shall be accomplished by a
recharacterization of the shares, pursuant to
procedures established by the Administrator; provided,
that only one direction, whether made solely under
this subparagraph or in combination with a direction
under Paragraph 6.4, may be made during a 15-calendar-
day period.
(c) Proceeds of the conversion of shares of Vastar
Resources, Inc. Common Stock to cash may not be
reinvested in Vastar Resources, Inc. Common Stock
until 15 calendar days after the date of such
conversion. Proceeds of the conversion of units of
the Equity Fund, Bond Fund, International Equity Fund
or Balanced Fund to cash may not be reinvested in the
Equity Fund, Bond Fund, International Equity Fund or
Balanced Fund, as the case may be, until 15 calendar
days after the date of such conversion.
6.6 Directives
All elections and directions by Members concerning the
investment of their Accounts shall be made in the manner
prescribed by the Administrator, shall be irrevocable and
shall become effective upon receipt by the Administrator.
6.7 Purchases and Sales of Vastar Resources, Inc. Common Stock
Effective December 1, 1995, purchases and sales of Common
Stock of Vastar Resources, Inc. shall be handled in
accordance with the following rules and such additional
procedures, consistent with such rules, which the
Administrator may establish from time to time:
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(a) Purchases and sales of Common Stock of Vastar
Resources, Inc. pursuant to a Member's directive under
Paragraph 6.4 or 6.5, or to accommodate a distribution
or withdrawal pursuant to Section 7 or 8, shall be
made in the open-market as follows:
(i) Each Wednesday and Friday the
Administrator shall execute an open-market
transaction, at a time determined at the
discretion of the Administrator, covering all
participant directives received by the
Administrator by such time as determined by the
Administrator, and communicated to Members, on
the preceding Company business day, except that
if a Wednesday or Friday is a Company holiday or
a day on which trading on the New York Stock
Exchange is closed, the transaction will occur on
the next day (a Wednesday or Friday) on which the
Plan executes a transaction in the open- market.
(ii) If an unforeseeable administrative
difficulty prevents the execution of the open-
market transaction otherwise scheduled for a
Wednesday or Friday, such transaction will be
executed on the first business day thereafter
which does not fall within one of the two
exceptions in Subparagraph 6.7(a)(i).
(iii) The Administrator may, in its
discretion, match the purchase and sale orders
scheduled for an open-market transaction and
transact the net purchase or sale, whichever the
case may be. The Administrator may also agree
with the Administrator of one or more other
individual account plans (as described in 3(34)
of ERISA, and which is maintained by the Company
or its Subsidiaries or Affiliates, and provides
for the same purchases and sales pursuant to
participant directives described in Paragraphs
6.4 and 6.5) to combine and match orders from all
of the plans and execute a "net" transaction, as
described above. The price per share allocated
to each purchase or
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sale order shall be the price transacted for the
"net" shares on the open-market transaction date
otherwise scheduled for the orders under
Subparagraph 6.7(a)(i). The price transacted for
a "net" transaction shall be the price obtained
on the open-market in the case of a single
transaction, and the weighted average of the
prices obtained on the open-market in the case of
multiple transactions.
(iv) Brokerage commissions, transfer fees
and other expenses actually incurred in any such
sale or purchase shall be equitably allocated and
added to the cost or subtracted from the proceeds
of all purchases or sales, as the case may be,
effected on a pricing day, whether pursuant to
the netting process described in Subparagraph
6.7(a)(iii), or pursuant to actual separate
transactions per Member order.
(b) Purchases of Common Stock of Vastar Resources,
Inc. with Member's Elective Deferrals or Company
contributions under Sections 3 and 4:
(i) Purchases shall normally be made either
in the open-market or from Vastar Resources,
Inc., at prices to the Plan not in excess of the
fair market value of such Vastar Resources, Inc.
Common Stock on the date of purchase thereof, as
determined by the Trustee.
(ii) Allocations to Members' Accounts will
be made in full and fractional shares.
(iii) The Trustee may limit the daily
volume of purchases to the extent it believes
such action to be in the best interests of the
Members. When Vastar Resources, Inc. Common
Stock is purchased, the cost charged to the
Accounts of Members affected by such purchase
shall be determined on an equitable basis in
accordance with rules to be
11
<PAGE>
adopted by the Administrator and incorporating
the following principles:
(A) The cost charged to each
affected Member's Account shall be based on
the average cost per share of all Vastar
Resources, Inc. Common Stock purchased
during whatever period may be established by
the Administrator.
(B) Brokerage commissions,
transfer fees and other expenses actually
incurred in any such purchase shall be added
to the cost of any such purchase.
(c) A Member may direct the Administrator to use any
available cash or funds held for the Member under
Subparagraph 6.2(c) to exercise any options, rights or
warrants issued with respect to Vastar Resources, Inc.
Common Stock in the Member's Account. In the absence
of such direction, or if there are no available funds,
any such option, right or warrant having a market
value shall be sold for the Member's Account.
6.8 Voting of Vastar Resources, Inc. Common Stock
(a) The Trustee shall vote whole shares of Vastar
Resources, Inc. Common Stock credited to each Member's
Account in accordance with such Members' written
instructions. Fractional shares of Vastar Resources,
Inc. Common Stock shall be aggregated into whole
shares of stock and voted by the Trustee, to the
nearest whole vote, in the same proportion as shares
are to be voted by the Trustee pursuant to Members'
written instructions. In the absence of voting
instructions by one or more Members, the Trustee shall
vote uninstructed shares, to the nearest whole vote,
in the same proportion as shares are to be voted by
the Trustee pursuant to Members' written instructions.
The Trustee shall vote unallocated shares, to the
nearest
12
<PAGE>
whole vote, in the same proportion as allocated shares
are to be voted by the Trustee pursuant to Members'
written instructions.
(b) The Trustee shall exercise rights other than
voting rights attributable to whole shares of Vastar
Resources, Inc. Common Stock credited to each Member's
Account in accordance with such Members' written
instructions. Rights attributable to fractional
shares of Vastar Resources, Inc. Common Stock (which
for this purpose shall be aggregated into whole shares
of stock) shall be exercised by the Trustee in the
same proportion as rights which are exercised by the
Trustee pursuant to Members' written instructions. In
the absence of instructions by one or more Members,
the Trustee shall exercise uninstructed rights in the
same proportion as rights which are to be exercised by
the Trustee pursuant to Members' written instructions.
The Trustee shall exercise rights attributable to
unallocated shares in the same proportion as rights
attributable to allocated shares which are to be
exercised by the Trustee pursuant to Members' written
instructions.
(c) The Trustee shall notify the Members of each
occasion for the exercise of voting rights and rights
other than voting rights within a reasonable time
before such rights are to be exercised. This
notification shall include all the information that
the Company distributes to shareholders regarding the
exercise of such rights.
6.9 Title of Investments
All investments will be held in the name of the Trustee or
its nominees.
6.10 Allocation of Trust Earnings and Valuation of Trust
Investments
(a) To the extent authorized by the Administrator,
any cash dividends declared on Vastar Resources, Inc.
Common Stock held in a Member's Account under the ESOP
Part of the Plan as of the record date for the
dividend shall
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be paid in cash to the Member (or, in the event of
death, to the Member's beneficiary) on, or as soon as
possible following, the payment date for the dividend.
(b) Any cash dividends declared on Vastar Resources,
Inc. Common Stock held in a loan suspense account as
of the record date for the dividend shall be used to
make payments on the Acquisition Loan used to acquire
the shares of stock held in such account.
(c) Except as provided in Subparagraphs 6.10(a) and
(b), all dividends or other distributions attributable
to shares of Vastar Resources, Inc. Common Stock shall
be allocated to the Account of the Member whose
Account is credited with such shares.
(d) On the last day of each month, all income
attributable to the Money Market Fund shall be
allocated to the Member's Account in the ratio that
each Member's Money Market Fund Account balance bears
to such account balance of all such Members. For the
purpose of determining such allocation, the Money
Market Fund shall be valued at fair market value.
6.11 Purchase and Redemption of the Equity Fund, Bond Fund,
International Equity Fund and Balanced Fund Units
Effective December 1, 1995, purchase and redemption of the
Equity Fund, Bond Fund, International Equity Fund and
Balanced Fund units shall be handled in accordance with the
following rules and such additional procedures, consistent
with such rules, as the Administrator may establish from
time to time:
(a) Units of the Equity Fund, Bond Fund,
International Equity Fund and Balanced Fund shall be
purchased or redeemed, pursuant to Member directions
under Paragraph 6.5, on each Wednesday and Friday,
covering all Member directives received by the
Administrator by such time as determined by the
Administrator, and communicated to Members, on the
14
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preceding Company business day, except that if a
Wednesday or Friday is a Company holiday or a day on
which trading on the New York Stock Exchange is
closed, the purchase or redemption will be executed on
the next day (a Wednesday or Friday) on which the Plan
executes a transaction under this Subparagraph
6.11(a).
(b) If an unforeseeable administrative difficulty
prevents the execution of a transaction under
Subparagraph 6.11(a), otherwise scheduled on a
Wednesday or Friday, such transaction will be executed
on the first business day thereafter which does not
fall within one of the two exceptions in Subparagraph
6.11(a).
(c) The Administrator may, in its discretion, combine
the purchase and redemption orders scheduled for a
Wednesday or Friday and transact the net purchase or
sale orders, whichever the case may be. The
Administrator may also agree with the Administrator of
one or more individual account plans [as described in
3(34) of ERISA, and which is maintained by the
Company or its Subsidiaries or Affiliates, and
provides for the same purchase and redemption
procedure described in Subparagraph 6.11(a)], to
combine orders from all of the plans and execute a
"net" transaction.
(d) When units of the Equity Fund, Bond Fund,
International Equity Fund and Balanced Fund are
purchased or redeemed, the cost or net proceeds
charged or credited to the Accounts of Members
affected by such purchase or redemption shall be
determined on an equitable basis in accordance with
rules to be adopted by the Administrator, which are
consistent with the rules described in this section,
and incorporate the following principles:
(i) The net proceeds of any such redemption
of fund units in a Member's Account shall be
credited to such Member's Account.
15
<PAGE>
(ii) The cost of any such purchase of fund
units for a Member's Account shall be charged to
such Member's Account.
(iii) The net proceeds and cost of fund
units shall be based on the net asset value of
such units determined on the valuation date next
following the date the purchase or redemption
order is received by the Administrator. The
valuation date shall be determined by the
Administrator and shall occur on at least a
weekly basis. The net asset value of fund units
will be calculated by dividing the difference
between the value of the fund assets and fund
liabilities by the number of units outstanding
with respect to each fund.
(iv) Brokerage commissions, transfer fees
and other expenses actually incurred in any such
purchase or redemption shall be added to the cost
or subtracted from the gross proceeds, of any
such purchase or redemption, respectively.
(e) Income earned by the Equity Fund, Bond Fund and
International Equity Fund shall automatically be
reinvested in the Equity Fund, Bond Fund and
International Equity Fund, as the case may be.
Income, gains and losses shall be reflected in the net
asset value of the units of the Equity Fund, Bond Fund
and International Equity Fund.
6.12 Voting of the Money Market Fund, Equity Fund, Bond Fund and
International Equity Fund Investments
The Trustee, in accordance with the Trust Agreement, shall
exercise all voting and other rights associated with any
investments held in the Money Market Fund, Equity Fund,
Bond Fund and International Equity Fund.
6.13 Investment Advisory Fees
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<PAGE>
The investment advisory fees, if any, incurred for
management of the Money Market Fund, Equity Fund, Bond
Fund, International Equity Fund and Balanced Fund are
charged to each respective fund.
6.14 Member Protection
No shares of Vastar Resources, Inc. Common Stock held by
the ESOP Part of the Plan may be subject to a put, call or
other option, or buy/sell or similar arrangement. The
provisions of this Paragraph 6.14 shall continue to be
applicable to the shares of Atlantic Richfield Company
Common Stock held by the ESOP Part of the Plan even if such
part ceases to be an Employee Stock Ownership Plan under
4945(e)(7) of the Code.
6.15 Confidentiality
The Capital Accumulation Plan Administrative Committee
shall be responsible for ensuring the adequacy of
procedures established by the Administrator to safeguard
the confidentiality of information relating to the
purchasing, holding and selling of Vastar Resources, Inc.
Common Stock and any voting, tender or similar rights
relating to such stock."
9. Subparagraph 13.3(f) of the Plan is amended to read as follows:
"(f) The value of Common Stock, the Equity Fund, the
International Equity Fund, the Bond Fund and the Balanced
Fund for purposes of Subparagraph 13.3(a), will be
determined on the sale date, pursuant to Paragraph 6.7 or
6.11, immediately preceding the date the loan application
is received by the Administrator."
10. Paragraph 13.4 of the Plan is amended to read as follows:
"13.4 Frequency
(a) A Member may have such number of loans
outstanding at any time as shall be determined by the
Administrator.
17
<PAGE>
(b) A loan application may be submitted only
once during any 15-day period and a loan application
may not be submitted earlier than seven days following
receipt by the Administrator of a Member's application
to make a purchase or sale under Paragraph 6.5 or a
hardship withdrawal under Section 7.
(c) A loan application may not be submitted
earlier than 15 days following repayment of a previous
loan under this Plan or any other Vastar Resources,
Inc. Capital Accumulation or Savings Plans.
(d) Unless determined otherwise by the
Administrator, if the Member is also a member of one
of the savings plans maintained by Vastar Resources,
Inc. at the time of the application for the loan, the
loan is permitted only if the Member has, at such
time, an outstanding loan under one of the savings
plans, or there are insufficient assets to fund the
loan in such savings plan."
11. Subparagraph 13.7(b) of the Plan is amended to read as follows:
"(b) The value of Common Stock, the Equity Fund, the
International Equity Fund, the Bond Fund and the Balanced
Fund sold to provide the loan proceeds shall be determined
on the sale date, pursuant to Paragraph 6.7 or 6.11,
immediately following the date the loan application is
received by the Administrator."
Executed this 13th day of September, 1996.
ATTEST VASTAR RESOURCES, INC.
BY: /S/ Albert D. Hoppe By: /S/ Jeffrey M. Bender
----------------------- ------------------------
ALBERT D. HOPPE JEFFREY M. BENDER
Secretary Vice President
Human Resources
18
AMENDMENT NO. 2
TO
VASTAR RESOURCES, INC. SAVINGS PLAN
__________________________
Pursuant to resolutions adopted by Board of Directors on May 15,
1996, the Vastar Resources, Inc. Savings Plan (the "Plan") is hereby
amended effective as of August 5, 1996:
1. Paragraph 1.17(a) of the Plan is amended to read as follows:
"(a) All corporations which are members of a controlled
group of corporations within the meaning of 1563(a) of the
Code [determined without regard to 1563(a)(4) and
1563(e)(3)(C) of said Code] and of which Vastar Resources,
Inc. is then a member. For purposes of Paragraphs 1.6 and
1.11 and Subparagraphs 11.8(a), (b), (c) and (d),
Subsidiary or Affiliate shall include Lyondell
Petrochemical Company and its Subsidiaries or Affiliates;
and"
2. Paragraph 2.1 of the Plan is amended to read as follows:
"2.1 Membership
An Employee who is paid on the United States dollar
payroll of the Company may become a Member on the
Employee's date of employment.
3. Subparagraph 3.2(a) of the Plan is amended to read as follows:
"(a) To the extent that a Member has directed pursuant to
Paragraph 6.2 that Member contributions be invested in an
option other than Vastar Resources, Inc. Common Stock, such
contributions shall be paid to the Trustee in cash."
4. Paragraph 4.1 of the Plan is amended to read as follows:
1
<PAGE>
"4.1 Company Contribution
Effective August 5, 1996, Company contributions
ceased. Prior to such date, the Company contributed 200
percent of the Member's contribution which did not exceed
one percent of the Member's Base Pay."
5. Subparagraph 4.5(a) of the Plan is amended to read as follows:
"(a) If the Administrator determines, in its discretion,
that the allocation of contributions to Members' Accounts
for a Plan Year does not meet a requirement of Paragraph
4.3, the Administrator may reduce the allocation of such
contributions to the Accounts of certain Members who are
Highly Compensated Employees to the extent necessary to
meet that requirement. The reduction will be accomplished
by reducing allocations to the Accounts of Members who are
Highly Compensated Employees in order of their Actual
Contribution Percents, beginning with the Member having the
highest percent until a requirement of Paragraph 4.3 is
met. The reduced amounts, adjusted by gain or loss
allocable thereto for the Plan Year, will be returned to
affected Members by the end of the following Plan Year."
6. Section 6 of the Plan is amended to read as follows:
"SECTION 6
INVESTMENT OF MEMBERS' ACCOUNTS
6.1 Members' Accounts
The Administrator shall establish and maintain an
Account in the name of each Member. Separate records shall
be maintained with respect to the portion of a Member's
Account attributable to Member contributions under Section
3 and earnings thereon, and the portion of a Member's
Account attributable to Company contributions under Section
4 and earnings thereon.
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<PAGE>
6.2 Investment of Member Contributions
Upon receipt of a Member's contributions, the Trustee shall
invest such amounts among the following investment alternatives,
in the proportion indicated by the Member in his or her
investment directions provided to the Administrator:
(a) To the extent authorized by the Administrator, in
Vastar Resources, Inc. Common Stock held under the ESOP
Part of the Plan;
(b) In Vastar Resources, Inc. Common Stock held under the
non-ESOP Part of the Plan;
(c) In the Money Market Fund, consisting of specified
types of fixed income investments such as deposits in
interest-bearing bank accounts, certificates of deposit,
corporate or governmental obligations maturing in not more
than five years, financial futures contracts, deposits
under a deposit administration or similar contract issued
by an insurance company or in a commingled or common
investment account or fund established and maintained by an
investment advisor or a bank (which bank may be the
Trustee) and the assets of which are invested primarily in
debt obligations, or in any combination thereof as Vastar
Resources, Inc. or a delegate thereof may determine;
(d) In the Equity Fund, consisting of specified equity
investments such as common or capital stock of issuers
(other than the Company, Subsidiaries or Affiliates, or
Lyondell Petrochemical Company or any of its Subsidiaries
or Affiliates), bonds, debentures or preferred stocks
convertible into common or capital stock of such issuers,
financial futures contracts, interests in any commingled or
common equity fund established and maintained by an
investment advisor or a bank (which bank may be the
Trustee), interests in any mutual fund or other similar
types of equity investments and cash equivalent short-term
investments maturing in less than one year, or in any
combination thereof as Vastar Resources, Inc. or a delegate
thereof may determine;
3
<PAGE>
(e) In the Bond Fund, consisting of specified types of
fixed income investments, such as public obligations of the
United States or foreign governments or their agencies,
securitized financing or corporate bonds of issuers (other
than the Company, Subsidiaries or Affiliates, or Lyondell
Petrochemical Company or any of its Subsidiaries or
Affiliates), debentures, financial futures contracts,
interests in any commingled or common fixed income fund
established and maintained by an investment advisor or bank
(which bank may be the Trustee), interests in any mutual
fund or other similar types of fixed income investments and
cash equivalent short-term investments, or in any
combination thereof as Vastar Resources, Inc. or a delegate
thereof may determine;
(f) In the International Equity Fund consisting of
specified investments in global issuers such as common or
capital stock (other than common or capital stock of the
Company, Subsidiaries or Affiliates, or Lyondell
Petrochemical Company or any of its Subsidiaries or
Affiliates), preferred stocks, securities convertible into
common or capital stock of such issuers, financial futures
contracts, currency futures or options, forward currency
contracts, interests in any commingled or common equity
fund established and maintained by an investment advisor or
a bank (which bank may be the Trustee), interests in any
mutual fund or other similar types of equity investments
and cash equivalent investments, or similar investments or
in any combination thereof as Vastar Resources, Inc. or a
delegate thereof may determine; or
(g) In the Balanced Fund consisting of units of the Equity
Fund, the International Equity Fund and the Bond Fund. The
weighing of the Balanced Fund shall be approximately 45
percent Equity Fund, 15 percent International Equity Fund
and 40 percent Bond Fund.
A Member's directions as to the initial investment of his or her
contributions shall be provided in such manner as is prescribed
by the Administrator. Such directions shall remain in effect
until new directions are provided to the Administrator by the
Member. A
4
<PAGE>
Member may change the direction as to the initial investment of
his or her contributions at any time by providing notice in such
manner as may be prescribed by the Administrator. Any change of
investment directions shall be effective with respect to
contributions paid to the Trustee for pay periods beginning
after the notice is received by the Administrator.
6.3 Investment of Company Contributions
All contributions by the Company pursuant to Paragraph 4.1, and
any amounts of interest attributable to the proceeds of an
Acquisition Loan allocated to Members' Accounts pursuant to
Paragraph 5.2 after the Acquisition Loan has been repaid in
full, shall at all times be invested in Vastar Resources, Inc.
Common Stock under the ESOP Part of the Plan. Contributions
under Paragraph 4.1 made in cash were applied to purchase shares
of Vastar Resources, Inc. Common Stock or to make payments on an
Acquisition Loan within a reasonable time after being paid to
the Trustee or after being allocated to Members' Accounts.
6.4 Funds Invested in the Money Market Fund
(a) There shall be invested in the Money Market Fund:
(i) Amounts which a Member elects to have so
invested under Subparagraph 6.2(c); and
(ii) On an interim basis, amounts being
accumulated in a Member's Account for investment under
Subparagraphs 6.2(a), (b), (d), (e), (f) and (g).
(b) Subject to the requirement of Subparagraph 6.5(c), a
Member may direct, once during each 15-calendar-day period,
that funds invested in the Money Market Fund under
Subparagraph 6.2(c) be invested in any of the other
permitted alternatives; provided, that (i) only one
direction whether made solely under this subparagraph, or
in combination with a direction under Paragraph 6.5, may be
made during a 15-calendar-day period; and (ii) a direction
under this subparagraph may not be made earlier than seven
days following (A) the date of receipt by the Administrator
of a
5
<PAGE>
Member's application to make a withdrawal under Paragraph
7.1, (B) the date a loan application is made under Section
12, or (C) the date a loan repayment is made under
Subparagraph 12.8(c)(i).
(c) Interest shall be allocated on a monthly basis to
funds held for a Member in the Money Market Fund as of the
last day of a calendar month. However, such allocation
shall not be made with respect to funds resulting from a
conversion to cash of Vastar Resources, Inc. Common Stock,
Equity Fund, Bond Fund, International Equity Fund or
Balanced Fund units which occurred in the calendar month in
which allocation of interest is made.
6.5 Sale and Reinvestment of Common Stock, Equity Fund Units, Bond
Fund Units, International Equity Fund Units or Balanced Fund
Units
(a) A Member may direct that shares of Vastar Resources,
Inc. Common Stock, other than shares purchased with Company
contributions, units of the Equity Fund, Bond Fund,
International Equity Fund and/or Balanced Fund held in the
Member's Account be converted to cash and the proceeds
thereof, less any applicable expenses of sale, be invested
in a different option described in Paragraph 6.2; provided,
that (i) only one direction, whether made solely under this
subparagraph, or in combination with a direction under
Paragraph 6.4, may be made during a 15-calendar-day period;
(ii) a direction under this subparagraph may not be made
earlier than seven calendar days following (A) the date of
receipt by the Administrator of a Member's application to
make a withdrawal under Paragraph 7.1, (B) the date a loan
application is made under Section 12, or (C) the date a
loan repayment is made under Subparagraph 12.8(c)(i); and
(iii) a Member who has attained age 55 as of the date of
the direction to convert may, subject to the restrictions
described in this paragraph, direct that shares of Common
Stock (including Common Stock of a Subsidiary or Affiliate
or Lyondell Petrochemical Company attributable to
contributions of such companies) held in the Member's
Account which are attributable to Company contributions be
sold and the proceeds reinvested in one or more of the
other options described in Paragraph 6.2.
6
<PAGE>
(b) The conversion of shares of Vastar Resources, Inc.
Common Stock to shares of such stock held in the ESOP Part
of the Plan described in Subparagraph 6.2(a), and the
conversion of shares of Vastar Resources, Inc. Common Stock
held in the ESOP Part of the Plan to the shares held under
Subparagraph 6.2(b) of the Plan, shall be accomplished by a
recharacterization of the shares, pursuant to procedures
established by the Administrator; provided, that only one
direction, whether made solely under this subparagraph or
in combination with a direction under Paragraph 6.4, may be
made during a 15-calendar-day period.
(c) Proceeds of the conversion of shares of Vastar
Resources, Inc. Common Stock to cash may not be reinvested
in Vastar Resources, Inc. Common Stock until 15 calendar
days after the date of such conversion. Proceeds of the
conversion of units of the Equity Fund, Bond Fund,
International Equity Fund or Balanced Fund to cash may not
be reinvested in the Equity Fund, Bond Fund, International
Equity Fund or Balanced Fund, as the case may be, until 15
calendar days after the date of such conversion.
6.6 Directives
All elections and directions by Members concerning the
investment of their Accounts shall be made in the manner
prescribed by the Administrator, shall be irrevocable and shall
become effective upon receipt by the Administrator.
6.7 Purchases and Sales of Vastar Resources, Inc. Common Stock
Effective December 1, 1995, purchases and sales of Common Stock
of Vastar Resources, Inc. shall be handled in accordance with
the following rules and such additional procedures, consistent
with such rules, which the Administrator may establish from
time to time:
(a) Purchases and sales of Common Stock of Vastar
Resources, Inc. pursuant to a Member's directive under
Paragraph 6.4 or 6.5, or to accommodate a distribution or
withdrawal pursuant to Section 7 or 8, shall be made in the
open-market as follows:
7
<PAGE>
(i) Each Wednesday and Friday the Administrator
shall execute an open-market transaction, at a time
determined at the discretion of the Administrator,
covering all participant directives received by the
Administrator by such time as determined by the
Administrator, and communicated to Members, on the
preceding Company business day, except that if a
Wednesday or Friday is a Company holiday or a day on
which trading on the New York Stock Exchange is
closed, the transaction will occur on the next day (a
Wednesday or Friday) on which the Plan executes a
transaction in the open- market.
(ii) If an unforeseeable administrative
difficulty prevents the execution of the open-market
transaction otherwise scheduled for a Wednesday or
Friday, such transaction will be executed on the first
business day thereafter which does not fall within one
of the two exceptions in Subparagraph 6.7(a)(i).
(iii) The Administrator may, in its
discretion, match the purchase and sale orders
scheduled for an open-market transaction and transact
the net purchase or sale, whichever the case may be.
The Administrator may also agree with the
Administrator of one or more other individual account
plans (as described in 3(34) of ERISA, and which is
maintained by the Company or its Subsidiaries or
Affiliates, and provides for the same purchases and
sales pursuant to participant directives described in
Paragraphs 6.4 and 6.5) to combine and match orders
from all of the plans and execute a "net" transaction,
as described above. The price per share allocated to
each purchase or sale order shall be the price
transacted for the "net" shares on the open-market
transaction date otherwise scheduled for the orders
under Subparagraph 6.7(a)(i). The price transacted
for a "net" transaction shall be the price obtained on
the open-market in the case of a single transaction,
and the weighted average of the prices obtained on the
open-market in the case of multiple transactions.
8
<PAGE>
(iv) Brokerage commissions, transfer fees and
other expenses actually incurred in any such sale or
purchase shall be equitably allocated and added to the
cost or subtracted from the proceeds of all purchases
or sales, as the case may be, effected on a pricing
day, whether pursuant to the netting process described
in Subparagraph 6.7(a)(iii), or pursuant to actual
separate transactions per Member order.
(b) Purchases of Common Stock of Vastar Resources, Inc.
with Member's Elective Deferrals or Company contributions
under Sections 3 and 4:
(i) Purchases shall normally be made either in
the open-market or from Vastar Resources, Inc., at
prices to the Plan not in excess of the fair market
value of such Vastar Resources, Inc. Common Stock on
the date of purchase thereof, as determined by the
Trustee.
(ii) Allocations to Members' Accounts will be
made in full and fractional shares.
(iii) The Trustee may limit the daily volume
of purchases to the extent it believes such action to
be in the best interests of the Members. When Vastar
Resources, Inc. Common Stock is purchased, the cost
charged to the Accounts of Members affected by such
purchase shall be determined on an equitable basis in
accordance with rules to be adopted by the
Administrator and incorporating the following
principles:
(A) The cost charged to each affected
Member's Account shall be based on the average
cost per share of all Vastar Resources, Inc.
Common Stock purchased during whatever period may
be established by the Administrator.
(B) Brokerage commissions, transfer
fees and other expenses actually incurred in any
such purchase shall be added to the cost of any
such purchase.
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(c) A Member may direct the Administrator to use any
available cash or funds held for the Member under
Subparagraph 6.2(c) to exercise any options, rights or
warrants issued with respect to Vastar Resources, Inc.
Common Stock in the Member's Account. In the absence of
such direction, or if there are no available funds, any
such option, right or warrant having a market value shall
be sold for the Member's Account.
6.8 Voting of Vastar Resources, Inc. Common Stock
(a) The Trustee shall vote whole shares of Vastar
Resources, Inc. Common Stock credited to each Member's
Account in accordance with such Members' written
instructions. Fractional shares of Vastar Resources, Inc.
Common Stock shall be aggregated into whole shares of stock
and voted by the Trustee, to the nearest whole vote, in the
same proportion as shares are to be voted by the Trustee
pursuant to Members' written instructions. In the absence
of voting instructions by one or more Members, the Trustee
shall vote uninstructed shares, to the nearest whole vote,
in the same proportion as shares are to be voted by the
Trustee pursuant to Members' written instructions. The
Trustee shall vote unallocated shares, to the nearest whole
vote, in the same proportion as allocated shares are to be
voted by the Trustee pursuant to Members' written
instructions.
(b) The Trustee shall exercise rights other than voting
rights attributable to whole shares of Vastar Resources,
Inc. Common Stock credited to each Member's Account in
accordance with such Members' written instructions. Rights
attributable to fractional shares of Vastar Resources, Inc.
Common Stock (which for this purpose shall be aggregated
into whole shares of stock) shall be exercised by the
Trustee in the same proportion as rights which are
exercised by the Trustee pursuant to Members' written
instructions. In the absence of instructions by one or
more Members, the Trustee shall exercise uninstructed
rights in the same proportion as rights which are to be
exercised by the Trustee pursuant to Members' written
instructions. The Trustee shall exercise rights
attributable to unallocated
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shares in the same proportion as rights attributable to
allocated shares which are to be exercised by the Trustee
pursuant to Members' written instructions.
(c) The Trustee shall notify the Members of each occasion
for the exercise of voting rights and rights other than
voting rights within a reasonable time before such rights
are to be exercised. This notification shall include all
the information that the Company distributes to
shareholders regarding the exercise of such rights.
6.9 Title of Investments
All investments will be held in the name of the Trustee or its
nominees.
6.10 Allocation of Trust Earnings and Valuation of Trust Investments
(a) To the extent authorized by the Administrator, any
cash dividends declared on Vastar Resources, Inc. Common
Stock held in a Member's Account under the ESOP Part of the
Plan as of the record date for the dividend shall be paid
in cash to the Member (or, in the event of death, to the
Member's beneficiary) on, or as soon as possible following,
the payment date for the dividend.
(b) Any cash dividends declared on Vastar Resources, Inc.
Common Stock held in a loan suspense account as of the
record date for the dividend shall be used to make payments
on the Acquisition Loan used to acquire the shares of stock
held in such account.
(c) Except as provided in Subparagraphs 6.10(a) and (b),
all dividends or other distributions attributable to shares
of Vastar Resources, Inc. Common Stock shall be allocated
to the Account of the Member whose Account is credited with
such shares.
(d) On the last day of each month, all income attributable
to the Money Market Fund shall be allocated to the Member's
Account in the ratio that each Member's Money Market Fund
Account balance bears to such account balance of all such
Members.
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For the purpose of determining such allocation, the Money
Market Fund shall be valued at fair market value.
6.11 Purchase and Redemption of the Equity Fund, Bond Fund,
International Equity Fund and Balanced Fund Units
Effective December 1, 1995, purchase and redemption of the
Equity Fund, Bond Fund, International Equity Fund and Balanced
Fund units shall be handled in accordance with the following
rules and such additional procedures, consistent with such
rules, as the Administrator may establish from time to time:
(a) Units of the Equity Fund, Bond Fund, International
Equity Fund and Balanced Fund shall be purchased or
redeemed, pursuant to Member directions under Paragraph
6.5, on each Wednesday and Friday, covering all Member
directives received by the Administrator by such time as
determined by the Administrator, and communicated to
Members, on the preceding Company business day, except that
if a Wednesday or Friday is a Company holiday or a day on
which trading on the New York Stock Exchange is closed, the
purchase or redemption will be executed on the next day (a
Wednesday or Friday) on which the Plan executes a
transaction under this Subparagraph 6.11(a).
(b) If an unforeseeable administrative difficulty prevents
the execution of a transaction under Subparagraph 6.11(a),
otherwise scheduled on a Wednesday or Friday, such
transaction will be executed on the first business day
thereafter which does not fall within one of the two
exceptions in Subparagraph 6.11(a).
(c) The Administrator may, in its discretion, combine the
purchase and redemption orders scheduled for a Wednesday or
Friday and transact the net purchase or sale orders,
whichever the case may be. The Administrator may also
agree with the Administrator of one or more individual
account plans [as described in 3(34) of ERISA, and which
is maintained by the Company or its Subsidiaries or
Affiliates, and provides for the same purchase and
redemption procedure described in
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Subparagraph 6.11(a)], to combine orders from all of the
plans and execute a "net" transaction.
(d) When units of the Equity Fund, Bond Fund,
International Equity Fund and Balanced Fund are purchased
or redeemed, the cost or net proceeds charged or credited
to the Accounts of Members affected by such purchase or
redemption shall be determined on an equitable basis in
accordance with rules to be adopted by the Administrator,
which are consistent with the rules described in this
section, and incorporate the following principles:
(i) The net proceeds of any such redemption of
fund units in a Member's Account shall be credited to
such Member's Account.
(ii) The cost of any such purchase of fund units
for a Member's Account shall be charged to such
Member's Account.
(iii) The net proceeds and cost of fund units
shall be based on the net asset value of such units
determined on the valuation date next following the
date the purchase or redemption order is received by
the Administrator. The valuation date shall be
determined by the Administrator and shall occur on at
least a weekly basis. The net asset value of fund
units will be calculated by dividing the difference
between the value of the fund assets and fund
liabilities by the number of units outstanding with
respect to each fund.
(iv) Brokerage commissions, transfer fees and
other expenses actually incurred in any such purchase
or redemption shall be added to the cost or subtracted
from the gross proceeds, of any such purchase or
redemption, respectively.
(e) Income earned by the Equity Fund, Bond Fund and
International Equity Fund shall automatically be reinvested
in the Equity Fund, Bond Fund and International Equity
Fund, as the case may be. Income, gains and losses shall
be reflected in the net asset value of the units of the
Equity Fund, Bond Fund and International Equity Fund.
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6.12 Voting of the Money Market Fund, Equity Fund, Bond Fund and
International Equity Fund Investments
The Trustee, in accordance with the Trust Agreement, shall
exercise all voting and other rights associated with any
investments held in the Money Market Fund, Equity Fund, Bond
Fund and International Equity Fund.
6.13 Investment Advisory Fees
The investment advisory fees, if any, incurred for management of
the Money Market Fund, Equity Fund, Bond Fund, International
Equity Fund and Balanced Fund are charged to each respective
fund.
6.14 Member Protection
No shares of Vastar Resources, Inc. Common Stock held
by the ESOP Part of the Plan may be subject to a put, call
or other option, or buy/sell or similar arrangement. The
provisions of this Paragraph 6.14 shall continue to be
applicable to the shares of Vastar Resources, Inc. Common
Stock held by the ESOP Part of the Plan even if such part
ceases to be an Employee Stock Ownership Plan under
4945(e)(7) of the Code.
6.15 Confidentiality
The Savings Plan Administrative Committee shall be
responsible for ensuring the adequacy of procedures
established by the Administrator to safeguard the
confidentiality of information relating to the purchasing,
holding and selling of Vastar Resources, Inc. Common Stock
and any voting, tender or similar rights relating to such
stock."
7. Subparagraph 12.3(e) of the Plan is amended to read as follows:
"(e) The value of Common Stock, the Equity Fund, the
International Equity Fund, the Bond Fund and the Balanced
Fund for purposes of Subparagraph 12.3(a), will be
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determined on the sale date, pursuant to Paragraph 6.7 or
6.11, immediately preceding the date the loan application
is received by the Administrator."
8. Paragraph 12.4 of the Plan is amended to read as follows:
"12.4 Frequency
(a) A Member may have such number of loans
outstanding at any time as shall be determined by the
Administrator.
(b) A loan application may be submitted only
once during any 15-day period and a loan application
may not be submitted earlier than seven days following
receipt by the Administrator of a Member's application
to make a purchase or sale under Paragraph 6.5 or a
partial withdrawal under Paragraph 7.1.
(c) A loan application may not be submitted
earlier than 15 days following repayment of a previous
loan under this Plan or any other Vastar Resources,
Inc. Capital Accumulation or Savings Plans."
9. Subparagraph 12.7(b) of the Plan is amended to read as follows:
"(b) The value of Common Stock, the Equity Fund, the
International Equity Fund, the Bond Fund and the Balanced
Fund sold to provide the loan proceeds shall be determined
on the sale date, pursuant to Paragraph 6.7 or 6.11,
immediately following the date the loan application is
received by the Administrator."
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Executed this 13th day of September, 1996.
ATTEST VASTAR RESOURCES, INC.
BY: /S/ Albert D. Hoppe By: /S/ Jeffrey M. Bender
----------------------- ------------------------
ALBERT D. HOPPE JEFFREY M. BENDER
Secretary Vice President
Human Resources
16
AMENDMENT NO. 2
TO
VASTAR RESOURCES, INC. SAVINGS PLAN II
__________________________
Pursuant to resolutions adopted by Board of Directors on May 15,
1996, the Vastar Resources, Inc. Savings Plan II (the "Plan") is
hereby amended effective as of August 5, 1996:
1. Paragraph 1.17(a) of the Plan is amended to read as follows:
"(a) All corporations which are members of a controlled
group of corporations within the meaning of 1563(a) of the
Code [determined without regard to 1563(a)(4) and
1563(e)(3)(C) of said Code] and of which Vastar Resources,
Inc. is then a member. For purposes of Paragraphs 1.6 and
1.11 and Subparagraphs 11.8(a), (b), (c) and (d),
Subsidiary or Affiliate shall include Lyondell
Petrochemical Company and its Subsidiaries or Affiliates;
and"
2. Paragraph 2.1 of the Plan is amended to read as follows:
"2.1 Membership
An Employee who is paid on the United States dollar
payroll of the Company may become a Member on the
Employee's date of employment.
3. Subparagraph 3.2(a) of the Plan is amended to read as follows:
"(a) To the extent that a Member has directed pursuant to
Paragraph 6.2 that Member contributions be invested in an
option other than Vastar Resources, Inc. Common Stock, such
contributions shall be paid to the Trustee in cash."
4. Paragraph 4.1 of the Plan is amended to read as follows:
"4.1 Company Contribution
Effective August 5, 1996, Company contributions
ceased. Prior to such date, the Company contributed 200
percent of the Member's contribution which did not exceed
one percent of the Member's Base Pay."
5. Subparagraph 4.5(a) of the Plan is amended to read as follows:
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"(a) If the Administrator determines, in its discretion,
that the allocation of contributions to Members' Accounts
for a Plan Year does not meet a requirement of Paragraph
4.3, the Administrator may reduce the allocation of such
contributions to the Accounts of certain Members who are
Highly Compensated Employees to the extent necessary to
meet that requirement. The reduction will be accomplished
by reducing allocations to the Accounts of Members who are
Highly Compensated Employees in order of their Actual
Contribution Percents, beginning with the Member having the
highest percent until a requirement of Paragraph 4.3 is
met. The reduced amounts, adjusted by gain or loss
allocable thereto for the Plan Year, will be returned to
affected Members by the end of the following Plan Year."
6. Section 6 of the Plan is amended to read as follows:
"SECTION 6
INVESTMENT OF MEMBERS' ACCOUNTS
6.1 Members' Accounts
The Administrator shall establish and maintain an
Account in the name of each Member. Separate records shall
be maintained with respect to the portion of a Member's
Account attributable to Member contributions under Section
3 and earnings thereon, and the portion of a Member's
Account attributable to Company contributions under Section
4 and earnings thereon.
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6.2 Investment of Member Contributions
Upon receipt of a Member's contributions, the Trustee shall
invest such amounts among the following investment
alternatives, in the proportion indicated by the Member in
his or her investment directions provided to the
Administrator:
(a) To the extent authorized by the Administrator, in
Vastar Resources, Inc. Common Stock held under the
ESOP Part of the Plan;
(b) In Vastar Resources, Inc. Common Stock held under
the non-ESOP Part of the Plan;
(c) In the Money Market Fund, consisting of specified
types of fixed income investments such as deposits in
interest-bearing bank accounts, certificates of
deposit, corporate or governmental obligations
maturing in not more than five years, financial
futures contracts, deposits under a deposit
administration or similar contract issued by an
insurance company or in a commingled or common
investment account or fund established and maintained
by an investment advisor or a bank (which bank may be
the Trustee) and the assets of which are invested
primarily in debt obligations, or in any combination
thereof as Vastar Resources, Inc. or a delegate
thereof may determine;
(d) In the Equity Fund, consisting of specified
equity investments such as common or capital stock of
issuers (other than the Company, Subsidiaries or
Affiliates, or Lyondell Petrochemical Company or any
of its Subsidiaries or Affiliates), bonds, debentures
or preferred stocks convertible into common or capital
stock of such issuers, financial futures contracts,
interests in any commingled or common equity fund
established and maintained by an investment advisor or
a bank (which bank may be the Trustee), interests in
any mutual fund or other similar types of equity
investments and cash
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equivalent short-term investments maturing in less
than one year, or in any combination thereof as Vastar
Resources, Inc. or a delegate thereof may determine;
(e) In the Bond Fund, consisting of specified types
of fixed income investments, such as public
obligations of the United States or foreign
governments or their agencies, securitized financing
or corporate bonds of issuers (other than the Company,
Subsidiaries or Affiliates, or Lyondell Petrochemical
Company or any of its Subsidiaries or Affiliates),
debentures, financial futures contracts, interests in
any commingled or common fixed income fund established
and maintained by an investment advisor or bank (which
bank may be the Trustee), interests in any mutual fund
or other similar types of fixed income investments and
cash equivalent short-term investments, or in any
combination thereof as Vastar Resources, Inc. or a
delegate thereof may determine;
(f) In the International Equity Fund consisting of
specified investments in global issuers such as common
or capital stock (other than common or capital stock
of the Company, Subsidiaries or Affiliates, or
Lyondell Petrochemical Company or any of its
Subsidiaries or Affiliates), preferred stocks,
securities convertible into common or capital stock of
such issuers, financial futures contracts, currency
futures or options, forward currency contracts,
interests in any commingled or common equity fund
established and maintained by an investment advisor or
a bank (which bank may be the Trustee), interests in
any mutual fund or other similar types of equity
investments and cash equivalent investments, or
similar investments or in any combination thereof as
Vastar Resources, Inc. or a delegate thereof may
determine; or
(g) In the Balanced Fund consisting of units of the
Equity Fund, the International Equity Fund and the
Bond Fund. The weighing of the Balanced Fund shall
4
<PAGE>
be approximately 45 percent Equity Fund, 15 percent
International Equity Fund and 40 percent Bond Fund.
A Member's directions as to the initial investment of his or her
contributions shall be provided in such manner as is prescribed
by the Administrator. Such directions shall remain in effect
until new directions are provided to the Administrator by the
Member. A Member may change the direction as to the initial
investment of his or her contributions at any time by providing
notice in such manner as may be prescribed by the Administrator.
Any change of investment directions shall be effective with
respect to contributions paid to the Trustee for pay periods
beginning after the notice is received by the Administrator.
6.3 Investment of Company Contributions
All contributions by the Company pursuant to Paragraph 4.1, and
any amounts of interest attributable to the proceeds of an
Acquisition Loan allocated to Members' Accounts pursuant to
Paragraph 5.2 after the Acquisition Loan has been repaid in
full, shall at all times be invested in Vastar Resources, Inc.
Common Stock under the ESOP Part of the Plan. Contributions
under Paragraph 4.1 made in cash were applied to purchase shares
of Vastar Resources, Inc. Common Stock or to make payments on an
Acquisition Loan within a reasonable time after being paid to
the Trustee or after being allocated to Members' Accounts.
6.4 Funds Invested in the Money Market Fund
(a) There shall be invested in the Money Market Fund:
(i) Amounts which a Member elects to have so
invested under Subparagraph 6.2(c); and
(ii) On an interim basis, amounts being
accumulated in a Member's Account for investment under
Subparagraphs 6.2(a), (b), (d), (e), (f) and (g).
5
<PAGE>
(b) Subject to the requirement of Subparagraph 6.5(c), a
Member may direct, once during each 15-calendar-day period,
that funds invested in the Money Market Fund under
Subparagraph 6.2(c) be invested in any of the other
permitted alternatives; provided, that (i) only one
direction whether made solely under this subparagraph, or
in combination with a direction under Paragraph 6.5, may be
made during a 15-calendar-day period and (ii) a direction
under this subparagraph may not be made earlier than seven
days following (A) the date of receipt by the Administrator
of a Member's application to make a withdrawal under
Paragraph 7.1, (B) the date a loan application is made
under Section 12, or (C) the date a loan repayment is made
under Subparagraph 12.8(c)(i).
(c) Interest shall be allocated on a monthly basis to
funds held for a Member in the Money Market Fund as of the
last day of a calendar month. However, such allocation
shall not be made with respect to funds resulting from a
conversion to cash of Vastar Resources, Inc. Common Stock,
Equity Fund, Bond Fund, International Equity Fund or
Balanced Fund units which occurred in the calendar month in
which allocation of interest is made.
6.5 Sale and Reinvestment of Common Stock, Equity Fund Units, Bond
Fund Units, International Equity Fund Units or Balanced Fund
Units
(a) A Member may direct that shares of Vastar Resources,
Inc. Common Stock, other than shares purchased with Company
contributions, units of the Equity Fund, Bond Fund,
International Equity Fund and/or Balanced Fund held in the
Member's Account be converted to cash and the proceeds
thereof, less any applicable expenses of sale, be invested
in a different option described in Paragraph 6.2; provided,
that (i) only one direction, whether made solely under this
subparagraph, or in combination with a direction under
Paragraph 6.4, may be made during a 15-calendar-day period;
(ii) a direction under this subparagraph may not be made
earlier than seven calendar days following (A) the date of
receipt by the Administrator of a Member's application to
make a withdrawal under Paragraph 7.1, (B) the date a loan
application is made under Section 12, or (C) the date a
loan
6
<PAGE>
repayment is made under Subparagraph 12.8(c)(i) and (iii) a
Member who has attained age 55 as of the date of the
direction to convert may, subject to the restrictions
described in this paragraph, direct that shares of Common
Stock (including Common Stock of a Subsidiary or Affiliate
or Lyondell Petrochemical Company attributable to
contributions of such companies) held in the Member's
Account which are attributable to Company contributions be
sold and the proceeds reinvested in one or more of the
other options described in Paragraph 6.2.
(b) The conversion of shares of Vastar Resources, Inc.
Common Stock to shares of such stock held in the ESOP Part
of the Plan described in Subparagraph 6.2(a), and the
conversion of shares of Vastar Resources, Inc. Common Stock
held in the ESOP Part of the Plan to the shares held under
Subparagraph 6.2(b) of the Plan, shall be accomplished by a
recharacterization of the shares, pursuant to procedures
established by the Administrator; provided, that only one
direction, whether made solely under this subparagraph or
in combination with a direction under Paragraph 6.4, may be
made during a 15-calendar-day period.
(c) Proceeds of the conversion of shares of Vastar
Resources, Inc. Common Stock to cash may not be reinvested
in Vastar Resources, Inc. Common Stock until 15 calendar
days after the date of such conversion. Proceeds of the
conversion of units of the Equity Fund, Bond Fund,
International Equity Fund or Balanced Fund to cash may not
be reinvested in the Equity Fund, Bond Fund, International
Equity Fund or Balanced Fund, as the case may be, until 15
calendar days after the date of such conversion.
6.6 Directives
All elections and directions by Members concerning the
investment of their Accounts shall be made in the manner
prescribed by the Administrator, shall be irrevocable and shall
become effective upon receipt by the Administrator.
7
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6.7 Purchases and Sales of Vastar Resources, Inc. Common Stock
Effective December 1, 1995, purchases and sales of Common Stock
of Vastar Resources, Inc. shall be handled in accordance with
the following rules and such additional procedures, consistent
with such rules, which the Administrator may establish from
time to time:
(a) Purchases and sales of Common Stock of Vastar
Resources, Inc. pursuant to a Member's directive under
Paragraph 6.4 or 6.5, or to accommodate a distribution or
withdrawal pursuant to Section 7 or 8, shall be made in the
open-market as follows:
(i) Each Wednesday and Friday the Administrator
shall execute an open-market transaction, at a time
determined at the discretion of the Administrator,
covering all participant directives received by the
Administrator by such time as determined by the
Administrator, and communicated to Members, on the
preceding Company business day, except that if a
Wednesday or Friday is a Company holiday or a day on
which trading on the New York Stock Exchange is
closed, the transaction will occur on the next day (a
Wednesday or Friday) on which the Plan executes a
transaction in the open- market.
(ii) If an unforeseeable administrative
difficulty prevents the execution of the open-market
transaction otherwise scheduled for a Wednesday or
Friday, such transaction will be executed on the first
business day thereafter which does not fall within one
of the two exceptions in Subparagraph 6.7(a)(i).
(iii) The Administrator may, in its
discretion, match the purchase and sale orders
scheduled for an open-market transaction and transact
the net purchase or sale, whichever the case may be.
The Administrator may also agree with the
Administrator of one or more other individual account
plans (as described in 3(34) of ERISA, and which is
maintained by the Company or its Subsidiaries or
Affiliates, and provides for the same purchases and
sales
8
<PAGE>
pursuant to participant directives described in
Paragraphs 6.4 and 6.5) to combine and match orders
from all of the plans and execute a "net" transaction,
as described above. The price per share allocated to
each purchase or sale order shall be the price
transacted for the "net" shares on the open-market
transaction date otherwise scheduled for the orders
under Subparagraph 6.7(a)(i). The price transacted
for a "net" transaction shall be the price obtained on
the open-market in the case of a single transaction,
and the weighted average of the prices obtained on the
open-market in the case of multiple transactions.
(iv) Brokerage commissions, transfer fees and
other expenses actually incurred in any such sale or
purchase shall be equitably allocated and added to the
cost or subtracted from the proceeds of all purchases
or sales, as the case may be, effected on a pricing
day, whether pursuant to the netting process described
in Subparagraph 6.7(a)(iii), or pursuant to actual
separate transactions per Member order.
(b) Purchases of Common Stock of Vastar Resources, Inc.
with Member's Elective Deferrals or Company contributions
under Sections 3 and 4:
(i) Purchases shall normally be made either in
the open-market or from Vastar Resources, Inc., at
prices to the Plan not in excess of the fair market
value of such Vastar Resources, Inc. Common Stock on
the date of purchase thereof, as determined by the
Trustee.
(ii) Allocations to Members' Accounts will be
made in full and fractional shares.
(iii) The Trustee may limit the daily volume
of purchases to the extent it believes such action to
be in the best interests of the Members. When Vastar
Resources, Inc. Common Stock is purchased, the cost
charged to the Accounts of Members affected by such
purchase shall be determined on an
9
<PAGE>
equitable basis in accordance with rules to be adopted
by the Administrator and incorporating the following
principles:
(A) The cost charged to each affected
Member's Account shall be based on the average
cost per share of all Vastar Resources, Inc.
Common Stock purchased during whatever period may
be established by the Administrator.
(B) Brokerage commissions, transfer
fees and other expenses actually incurred in any
such purchase shall be added to the cost of any
such purchase.
(c) A Member may direct the Administrator to use any
available cash or funds held for the Member under
Subparagraph 6.2(c) to exercise any options, rights or
warrants issued with respect to Vastar Resources, Inc.
Common Stock in the Member's Account. In the absence of
such direction, or if there are no available funds, any
such option, right or warrant having a market value shall
be sold for the Member's Account.
6.8 Voting of Vastar Resources, Inc. Common Stock
(a) The Trustee shall vote whole shares of Vastar
Resources, Inc. Common Stock credited to each Member's
Account in accordance with such Members' written
instructions. Fractional shares of Vastar Resources, Inc.
Common Stock shall be aggregated into whole shares of stock
and voted by the Trustee, to the nearest whole vote, in the
same proportion as shares are to be voted by the Trustee
pursuant to Members' written instructions. In the absence
of voting instructions by one or more Members, the Trustee
shall vote uninstructed shares, to the nearest whole vote,
in the same proportion as shares are to be voted by the
Trustee pursuant to Members' written instructions. The
Trustee shall vote unallocated shares, to the nearest whole
vote, in the same proportion as allocated shares are to be
voted by the Trustee pursuant to Members' written
instructions.
10
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(b) The Trustee shall exercise rights other than voting
rights attributable to whole shares of Vastar Resources,
Inc. Common Stock credited to each Member's Account in
accordance with such Members' written instructions. Rights
attributable to fractional shares of Vastar Resources, Inc.
Common Stock (which for this purpose shall be aggregated
into whole shares of stock) shall be exercised by the
Trustee in the same proportion as rights which are
exercised by the Trustee pursuant to Members' written
instructions. In the absence of instructions by one or
more Members, the Trustee shall exercise uninstructed
rights in the same proportion as rights which are to be
exercised by the Trustee pursuant to Members' written
instructions. The Trustee shall exercise rights
attributable to unallocated shares in the same proportion
as rights attributable to allocated shares which are to be
exercised by the Trustee pursuant to Members' written
instructions.
(c) The Trustee shall notify the Members of each occasion
for the exercise of voting rights and rights other than
voting rights within a reasonable time before such rights
are to be exercised. This notification shall include all
the information that the Company distributes to
shareholders regarding the exercise of such rights.
6.9 Title of Investments
All investments will be held in the name of the Trustee or its
nominees.
6.10 Allocation of Trust Earnings and Valuation of Trust Investments
(a) To the extent authorized by the Administrator, any
cash dividends declared on Vastar Resources, Inc. Common
Stock held in a Member's Account under the ESOP Part of the
Plan as of the record date for the dividend shall be paid
in cash to the Member (or, in the event of death, to the
Member's beneficiary) on, or as soon as possible following,
the payment date for the dividend.
(b) Any cash dividends declared on Vastar Resources, Inc.
Common Stock held in a loan suspense account as of the
record date for the dividend shall be used to make
11
<PAGE>
payments on the Acquisition Loan used to acquire the shares
of stock held in such account.
(c) Except as provided in Subparagraphs 6.10(a) and (b),
all dividends or other distributions attributable to shares
of Vastar Resources, Inc. Common Stock shall be allocated
to the Account of the Member whose Account is credited with
such shares.
(d) On the last day of each month, all income attributable
to the Money Market Fund shall be allocated to the Member's
Account in the ratio that each Member's Money Market Fund
Account balance bears to such account balance of all such
Members. For the purpose of determining such allocation,
the Money Market Fund shall be valued at fair market value.
6.11 Purchase and Redemption of the Equity Fund, Bond Fund,
International Equity Fund and Balanced Fund Units
Effective December 1, 1995, purchase and redemption of the
Equity Fund, Bond Fund, International Equity Fund and Balanced
Fund units shall be handled in accordance with the following
rules and such additional procedures, consistent with such
rules, as the Administrator may establish from time to time:
(a) Units of the Equity Fund, Bond Fund, International
Equity Fund and Balanced Fund shall be purchased or
redeemed, pursuant to Member directions under Paragraph
6.5, on each Wednesday and Friday, covering all Member
directives received by the Administrator by such time as
determined by the Administrator, and communicated to
Members, on the preceding Company business day, except that
if a Wednesday or Friday is a Company holiday or a day on
which trading on the New York Stock Exchange is closed, the
purchase or redemption will be executed on the next day (a
Wednesday or Friday) on which the Plan executes a
transaction under this Subparagraph 6.11(a).
12
<PAGE>
(b) If an unforeseeable administrative difficulty prevents
the execution of a transaction under Subparagraph 6.11(a),
otherwise scheduled on a Wednesday or Friday, such
transaction will be executed on the first business day
thereafter which does not fall within one of the two
exceptions in Subparagraph 6.11(a).
(c) The Administrator may, in its discretion, combine the
purchase and redemption orders scheduled for a Wednesday or
Friday and transact the net purchase or sale orders,
whichever the case may be. The Administrator may also
agree with the Administrator of one or more individual
account plans [as described in 3(34) of ERISA, and which
is maintained by the Company or its Subsidiaries or
Affiliates, and provides for the same purchase and
redemption procedure described in Subparagraph 6.11(a)], to
combine orders from all of the plans and execute a "net"
transaction.
(d) When units of the Equity Fund, Bond Fund,
International Equity Fund and Balanced Fund are purchased
or redeemed, the cost or net proceeds charged or credited
to the Accounts of Members affected by such purchase or
redemption shall be determined on an equitable basis in
accordance with rules to be adopted by the Administrator,
which are consistent with the rules described in this
section, and incorporate the following principles:
(i) The net proceeds of any such redemption of
fund units in a Member's Account shall be credited to
such Member's Account.
(ii) The cost of any such purchase of fund units
for a Member's Account shall be charged to such
Member's Account.
(iii) The net proceeds and cost of fund units
shall be based on the net asset value of such units
determined on the valuation date next following the
date the purchase or redemption order is received by
the Administrator. The valuation date shall be
determined by the Administrator and shall occur on
13
<PAGE>
at least a weekly basis. The net asset value of fund
units will be calculated by dividing the difference
between the value of the fund assets and fund
liabilities by the number of units outstanding with
respect to each fund.
(iv) Brokerage commissions, transfer fees and
other expenses actually incurred in any such purchase
or redemption shall be added to the cost or subtracted
from the gross proceeds, of any such purchase or
redemption, respectively.
(e) Income earned by the Equity Fund, Bond Fund and
International Equity Fund shall automatically be reinvested
in the Equity Fund, Bond Fund and International Equity
Fund, as the case may be. Income, gains and losses shall
be reflected in the net asset value of the units of the
Equity Fund, Bond Fund and International Equity Fund.
6.12 Voting of the Money Market Fund, Equity Fund, Bond Fund and
International Equity Fund Investments
The Trustee, in accordance with the Trust Agreement, shall
exercise all voting and other rights associated with any
investments held in the Money Market Fund, Equity Fund,
Bond Fund and International Equity Fund.
6.13 Investment Advisory Fees
The investment advisory fees, if any, incurred for
management of the Money Market Fund, Equity Fund, Bond
Fund, International Equity Fund and Balanced Fund are
charged to each respective fund.
6.14 Member Protection
No shares of Vastar Resources, Inc. Common Stock held
by the ESOP Part of the Plan may be subject to a put, call
or other option, or buy/sell or similar arrangement. The
provisions of this Paragraph 6.14 shall continue to be
applicable to the shares of Vastar Resources, Inc. Common
Stock held by the ESOP Part of the Plan even if
14
<PAGE>
such part ceases to be an Employee Stock Ownership Plan
under 4945(e)(7) of the Code.
6.15 Confidentiality
The Savings Plan Administrative Committee shall be
responsible for ensuring the adequacy of procedures
established by the Administrator to safeguard the
confidentiality of information relating to the purchasing,
holding and selling of Vastar Resources, Inc. Common Stock
and any voting, tender or similar rights relating to such
stock."
7. Subparagraph 12.3(e) of the Plan is amended to read as follows:
"(e) The value of Common Stock, the Equity Fund, the
International Equity Fund, the Bond Fund and the Balanced
Fund for purposes of Subparagraph 12.3(a), will be
determined on the sale date, pursuant to Paragraph 6.7 or
6.11, immediately preceding the date the loan application
is received by the Administrator."
8. Paragraph 12.4 of the Plan is amended to read as follows:
"12.4 Frequency
(a) A Member may have such number of loans
outstanding at any time as shall be determined by the
Administrator.
(b) A loan application may be submitted only
once during any 15-day period and a loan application
may not be submitted earlier than seven days following
receipt by the Administrator of a Member's application
to make a purchase or sale under Paragraph 6.5 or a
partial withdrawal under Paragraph 7.1.
15
<PAGE>
(c) A loan application may not be submitted
earlier than 15 days following repayment of a previous
loan under this Plan or any other Vastar Resources,
Inc. Capital Accumulation or Savings Plans."
9. Subparagraph 12.7(b) of the Plan is amended to read as follows:
"(b) The value of Common Stock, the Equity Fund, the
International Equity Fund, the Bond Fund and the Balanced
Fund sold to provide the loan proceeds shall be determined
on the sale date, pursuant to Paragraph 6.7 or 6.11,
immediately following the date the loan application is
received by the Administrator."
Executed this 13th day of September, 1996.
ATTEST VASTAR RESOURCES, INC.
BY: /S/ Albert D. Hoppe By: /S/ Jeffrey M. Bender
----------------------- ------------------------
ALBERT D. HOPPE JEFFREY M. BENDER
Secretary Vice President
Human Resources
16
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Vastar Resources, Inc.: Financial Data Schedule for the nine months ending
September 30, 1996. This schedule contains summary financial information
extracted from the Consolidated Statement of Income and the Consolidated
Balance Sheet and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 22000
<SECURITIES> 0
<RECEIVABLES> 305900
<ALLOWANCES> 0
<INVENTORY> 12500
<CURRENT-ASSETS> 387500
<PP&E> 4577700
<DEPRECIATION> 3242200
<TOTAL-ASSETS> 1723000
<CURRENT-LIABILITIES> 370900
<BONDS> 799400
0
0
<COMMON> 455000
<OTHER-SE> (223500)
<TOTAL-LIABILITY-AND-EQUITY> 1723000
<SALES> 664100
<TOTAL-REVENUES> 682500
<CGS> 336200
<TOTAL-COSTS> 460400
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 38900
<INCOME-PRETAX> 140200
<INCOME-TAX> (10700)
<INCOME-CONTINUING> 150900
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 150900
<EPS-PRIMARY> 1.55
<EPS-DILUTED> 1.55
</TABLE>
