<PAGE>
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, 1999
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)
__________________
(281) 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, 1999: 97,643,700.
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
VASTAR RESOURCES, INC.
CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
CONSOLIDATED STATEMENT OF INCOME
For the Three For the Nine
Months Ended Months Ended
September 30, September 30,
--------------- ----------------
(Millions of dollars, 1999 1998 1999 1998
except per share amounts) ----- ----- ----- -----
REVENUES
Net sales and other operating
revenues............................ $304.4 $206.6 $783.2 $643.2
Earnings from equity affiliate....... 4.4 5.3 13.8 15.9
Other revenues....................... 7.3 5.4 40.2 30.3
------ ------ ------ ------
Net revenues...................... 316.1 217.3 837.2 689.4
------ ------ ------ ------
EXPENSES
Operating expenses................... 49.8 39.6 147.3 113.2
Exploration expenses................. 38.1 35.3 123.4 167.7
Selling, general and administrative
expenses............................ 13.7 12.6 38.8 38.8
Taxes other than income taxes........ 14.6 11.6 35.3 37.7
Depreciation, depletion and
amortization........................ 105.9 82.3 322.8 225.6
Interest............................. 18.7 14.4 59.7 40.7
------ ------ ------ ------
Total expenses.................... 240.8 195.8 727.3 623.7
------ ------ ------ ------
Income before income taxes........... 75.3 21.5 109.9 65.7
Income tax provision (benefit)....... 4.2 (16.1) (28.5) (52.7)
------ ------ ------ ------
Net income......................... $ 71.1 $ 37.6 $138.4 $118.4
====== ====== ====== ======
Basic earnings per share............. $ 0.73 $ 0.39 $ 1.42 $ 1.22
====== ====== ====== ======
Diluted earnings per share........... $ 0.72 $ 0.38 $ 1.40 $ 1.21
====== ====== ====== ======
Cash dividends paid per share
of common stock..................... $0.075 $0.075 $0.225 $0.225
====== ====== ====== ======
The accompanying notes are an integral part of
these consolidated financial statements.
2
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VASTAR RESOURCES, INC.
CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
CONSOLIDATED BALANCE SHEET
September 30, December 31,
1999 1998
(Millions of dollars) ------------- -----------
ASSETS
Current assets:
Cash and cash equivalents....................... $ 10.5 $ 4.3
Accounts receivable:
Trade.......................................... 137.6 110.0
Related parties................................ 131.5 130.9
Inventories..................................... 10.4 10.2
Prepaid expenses and other assets............... 33.4 37.5
-------- --------
Total current assets........................... 323.4 292.9
Oil and gas properties and equipment, net........ 2,226.1 2,220.8
Other long-term assets........................... 82.5 60.3
-------- --------
Total assets................................... $2,632.0 $2,574.0
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable:
Trade.......................................... $ 186.4 $ 179.2
Related parties................................ 9.3 9.8
Accrued liabilities............................. 72.9 61.5
-------- --------
Total current liabilities..................... 268.6 250.5
Long-term debt................................... 1,067.7 1,288.6
Deferred liabilities and credits................. 310.7 205.4
Deferred income taxes............................ 246.4 214.3
-------- --------
Total liabilities.............................. 1,893.4 1,958.8
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock, $.01 par value; authorized,
110,000,000 shares; issued and outstanding,
97,643,700 shares as of September 30, 1999 and
97,403,340 shares as of December 31, 1998....... 1.0 1.0
Capital in excess of par value of stock.......... 464.3 457.4
Accumulated earnings............................. 273.3 156.8
-------- --------
Total stockholders' equity..................... 738.6 615.2
-------- --------
Total liabilities and stockholders' equity....... $2,632.0 $2,574.0
======== ========
The accompanying notes are an integral part of
these consolidated financial statements.
3
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VASTAR RESOURCES, INC.
CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Nine Months Ended
September 30,
--------------------------
1999 1998
(Millions of dollars) ------- -------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.......................................... $ 138.4 $ 118.4
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation, depletion and amortization.......... 322.8 225.6
Deferred income taxes............................. 32.1 25.4
Dry hole expense and undeveloped leasehold
amortization.................................... 65.6 99.6
Gain on asset sales............................... (25.5) (21.0)
Earnings from equity affiliate.................... (13.8) (15.9)
Net change in accounts receivable, inventories
and accounts payable............................ (21.7) (95.8)
Other............................................. 86.9 (23.0)
------- -------
Net cash provided by operating activities........... 584.8 313.3
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas properties and equipment,
including dry hole costs......................... (391.7) (528.4)
Proceeds from asset sales........................... 52.1 47.0
Other............................................... (3.1) 0.7
------- -------
Net cash used by investing activities............... (342.7) (480.7)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock............................ 6.9 1.5
Proceeds from long-term debt issuance............... 604.7 196.4
Repayments of long-term debt........................ (825.6) (1.3)
Dividends paid...................................... (21.9) (21.9)
------- -------
Net cash provided (used) by financing activities.... (235.9) 174.7
------- -------
Net change in cash and cash equivalents............. 6.2 7.3
Cash and cash equivalents at beginning of period.... 4.3 10.2
------- -------
Cash and cash equivalents at end of period.......... $ 10.5 $ 17.5
======= =======
The accompanying notes are an integral part of
these consolidated financial statements.
4
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VASTAR RESOURCES, INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1. INTRODUCTION.
The accompanying financial statements are unaudited and have been prepared from
our records. In the opinion of our management, these financial statements
reflect all adjustments (consisting only of items of a normal recurring nature)
necessary for a fair presentation of our financial position and results of
operations in conformity with generally accepted accounting principles. These
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 in an annual report on
Form 10-K. These interim financial statements should be read in conjunction with
the following:
(1) the annual financial statements for the year ended December 31, 1998 and the
related notes contained in our annual report on Form 10-K for the year ended
December 31, 1998; (2) the quarterly financial statements for the quarter ended
March 31, 1999, and the related notes in our quarterly report on Form 10-Q for
the quarter ended March 31, 1999; and (3) the quarterly financial statements for
the quarter ended June 30, 1999 and the related notes in our quarterly report on
Form 10-Q for the quarter ended June 30, 1999. We have restated certain
previously reported amounts to classifications we adopted in 1999.
NOTE 2. NET SALES AND OTHER OPERATING REVENUES.
For the Three For the Nine
Months Ended Months Ended
September 30, September 30,
------------------ --------------------
1999 1998 1999 1998
(Millions of dollars) -------- ------- -------- --------
Sales and other operating revenues:
Unrelated parties................... $ 277.1 $ 175.3 $ 733.2 $ 587.6
Related parties (1)................. 224.3 199.9 581.6 607.2
------- ------- -------- --------
Total.............................. 501.4 375.2 1,314.8 1,194.8
Less:
Purchases (2)....................... (191.5) (165.2) (515.8) (543.9)
Delivery expense.................... (5.5) (3.4) (15.8) (7.7)
------- ------- -------- --------
Net sales and
other operating revenues............ $ 304.4 $ 206.6 $ 783.2 $ 643.2
======= ======= ======== ========
- --------------------
(1) Average costs of related-party
sales.......................... $ 183.1 $ 175.8 $ 523.2 $ 513.2
(2) Related-party purchase cost...... $ 20.6 $ 31.3 $ 54.2 $ 88.6
5
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VASTAR RESOURCES, INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS -(Continued)
(Unaudited)
NOTE 3. SOUTHERN COMPANY ENERGY MARKETING L.P.
Southern Company Energy Marketing is a strategic marketing alliance between
Southern Energy, Inc. and Vastar Resources, Inc. Through subsidiaries, we
currently hold a 40 percent interest in Southern Company Energy Marketing and
Southern Energy holds a 60 percent interest.
We account for our interest in Southern Company Energy Marketing using the
equity method of accounting. Our $48.3 million equity investment in Southern
Company Energy Marketing is reflected as a long-term asset in our consolidated
balance sheet.
For the first five years of operation, we are entitled to receive, subject to
certain exceptions, minimum cash distributions from Southern Company Energy
Marketing of $20 million for the year 1998, $20 million for the year 1999, $25
million for the year 2000, $30 million for the year 2001 and $30 million for the
year 2002. In 1999 and 1998, we have recognized our accrued share of minimum
distributions, net of any contractual obligations, in the amounts of (1) $4.4
million for the three months ended September 30, 1999, (2) $5.3 million for the
three months ended September 30, 1998, (3) $13.8 million for the nine months
ended September 30, 1999 and (4) $15.9 million for the nine months ended
September 30, 1998. For additional details, including a discussion concerning a
dispute between Vastar and Southern Energy relating to the minimum cash
distribution payment for 1998, refer to our annual report on Form
10-K for the year ended December 31, 1998.
NOTE 4. EXPLORATION EXPENSES.
For the Three For the Nine
Months Ended Months Ended
September 30, September 30,
------------- -------------
(Millions of dollars) 1999 1998 1999 1998
----- ----- ------ -----
Dry hole costs...................... $12.4 $ 8.2 $ 39.3 $ 73.3
Geological and geophysical.......... 3.6 4.6 21.8 29.7
Undeveloped leasehold amortization.. 8.8 8.8 26.3 26.3
Staff............................... 10.4 10.3 29.8 31.3
Lease rentals....................... 2.9 3.4 6.2 7.1
----- ----- ------ ------
Total.............................. $38.1 $35.3 $123.4 $167.7
===== ===== ====== ======
6
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VASTAR RESOURCES, INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
NOTE 5. EARNINGS PER SHARE.
For the Three For the Nine
Months Ended Months Ended
September 30, September 30,
------------- -------------
1999 1998 1999 1998
---- ---- ---- ----
(Millions, except per share amounts)
Basic earnings per share:
Income available to common shareholders. $71.1 $37.6 $138.4 $118.4
Average shares of stock outstanding....... 97.6 97.4 97.5 97.3
Basic earnings per share................... $0.73 $0.39 $ 1.42 $ 1.22
Diluted earnings per share:
Income available to common shareholders.. $71.1 $37.6 $138.4 $118.4
Incremental shares assuming the exercise
of stock options......................... 1.1 0.5 0.8 0.6
Average shares of stock outstanding plus
effect of dilutive securities........... 98.7 97.9 98.3 97.9
Diluted earnings per share................ $0.72 $0.38 $ 1.40 $ 1.21
Set forth in the table below are all of our outstanding stock options granted
under all of our stock option plans and programs for directors, officers and
employees as of September 30, 1999. The exercise price of stock options range
from $14.00 to $46.66 per share.
Vested and exercisable(1)......... 1.2 million
Vested and unexercisable.......... 0.6 million
Non-vested........................ 0.5 million
-------------
Total............................. 2.3 million
-------------
(1) Stock options generally vest one year after the date of grant, become
exercisable in increments of 25 percent per year during the first four years
after the grant and expire ten years after the date of grant.
Our board of directors has adopted various arrangements that will become
operative upon a change of control of Vastar. One of these arrangements, our
Amended and Restated Executive Long-Term Incentive Plan, provides that, if a
change of control occurs, all unexercisable and/or unvested stock options
granted under the plan will become immediately vested and exercisable. All stock
options granted under our other stock option plans and programs are vested and
exercisable.
In March 1999, ARCO (Atlantic Richfield Company), which owns approximately 81.9
percent of our common stock, entered into a merger agreement with BP Amoco
p.l.c. which provides for the merger of a subsidiary of BP Amoco p.l.c. into
ARCO. If this transaction is consummated it would constitute a change of control
under the above-described arrangements, including our Amended and Restated
Executive Long-Term Incentive Plan. For additional information on the change of
control arrangements, refer to our proxy statement relating to our 1999 annual
meeting of stockholders, which we filed with the SEC on March 23, 1999. We filed
a copy of the Amended and Restated Executive Long-Term Incentive Plan as
Appendix A to our proxy statement relating to our 1998 annual meeting of
stockholders, which we filed with the SEC on March 26, 1998.
7
<PAGE>
VASTAR RESOURCES, INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
NOTE 6. COMMITMENTS AND CONTINGENCIES.
We are involved in a number of lawsuits, all of which have arisen in the
ordinary course of our business. We believe any ultimate liability resulting
from these lawsuits will not have a material adverse effect on our financial
position or results of operations.
Our operations and financial position 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 regulation, taxes, environmental
regulations and cancellation of contract rights. Both the likelihood of such
occurrences and their overall effect on us vary greatly and are not predictable.
These uncertainties are among a number of items we have taken and will continue
to take into account in periodically establishing accounting reserves.
Vastar and ARCO have agreements whereby we have agreed to indemnify ARCO against
certain claims or liabilities. Our indemnity obligations cover claims and
liabilities, which could be made against ARCO relating to ARCO's historical
ownership and operation of the properties ARCO transferred to us upon the
formation of Vastar. They also include liabilities under laws relating to the
protection of the environment and the workplace and liabilities arising out of
certain litigation described in the agreements. ARCO has agreed to indemnify us
with respect to other claims and liabilities and other litigation matters not
related to our business or properties as reflected in our consolidated financial
statements.
In September 1996, we entered into a contract with Diamond Offshore Drilling
Company (Diamond) for the major upgrade and operation of a semisubmersible
drilling rig, Ocean Victory, for a three-year deepwater drilling program in the
Gulf of Mexico, which began in November 1997. Since November 1997, scheduled
increases in the day rates and our request of Diamond to make improvements to
the rig have resulted in higher costs during the remaining contract term. This
contract has a remaining life as of September 30, 1999 of 1.4 years. Remaining
costs for this contract and other contracts for related support boats are
approximately $87.0 million. This amount does not take into consideration any
reimbursements we might receive from partners or potential partners. We have
three one-year options to renew the term of the contract, subject to
renegotiating the day rates.
In December 1998, we finalized an agreement with R&B Falcon Drilling Co. for the
operation of a semisubmersible, ultra-deepwater drilling rig, Deepwater Horizon,
for a three-year deepwater-drilling program in the Gulf of Mexico. The drilling
program is scheduled to commence in 2001. This contract is for three years and
has an anticipated cost of approximately $220.0 million, before any
reimbursements from partners or potential partners and operating cost
escalations. We have several options relating to the term and pricing of the
contract, including the option to extend the term of the contract for up to five
additional years.
Vastar and Southern Energy have agreed to guarantee certain obligations of
Southern Company Energy Marketing. In connection with these guarantees and
certain other matters, we have significant credit risk exposure to Southern
Company Energy Marketing and Southern Energy which are described in our annual
report on Form 10-K for the year ended December 31, 1998.
Pursuant to a working capital loan arrangement, we have agreed to loan Southern
Company Energy Marketing up to $20.0 million. At September 30, 1999, no loans
were outstanding under this arrangement.
8
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VASTAR RESOURCES, INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
NOTE 6. COMMITMENTS AND CONTINGENCIES - (continued).
We have performed and continue to perform ongoing credit evaluations of our
customers and generally do not require collateral on our credit sales. Any
amounts anticipated as uncollectible are charged to income and credited to a
valuation account. The amounts included in the allowance for uncollectible
accounts receivable at September 30, 1999 and 1998, were insignificant.
In July 1999, we entered into agreements with an unrelated third party that have
the effect of monetizing the value of one of our long-term natural gas sales
contracts. This particular contract is associated with gas sales to a certain
cogeneration facility, has a remaining life of approximately 11 years and has an
expected average price of approximately $3.00 per Mcf for 1999. Pursuant to
these agreements, we received an immediate payment of $88.0 million (net of
transaction costs) that has been recorded as a deferred liability and will be
amortized as the underlying contract volumes are delivered.
In March 1999, ARCO (Atlantic Richfield Company), which owns approximately 81.9
percent of our common stock, entered into a merger agreement with BP Amoco
p.l.c. which provides for the merger of a subsidiary of BP Amoco p.l.c. into
ARCO. The closing of the merger is subject to the approval of various regulatory
authorities some of which have yet to be obtained. ARCO and Vastar have entered
into a number of agreements, including technology assignments and licenses,
services agreements and insurance agreements. These agreements are more fully
described in our proxy statement relating to our 1999 annual meeting of
stockholders which we filed with the SEC on March 23, 1999 and copies of many of
these agreements have also been filed with the SEC. We do not anticipate that
the rights and obligations of the parties under these agreements, including any
termination rights, will be materially affected by the merger. Any amendments to
these agreements would have to be negotiated and agreed to by us. We do not
believe that the termination of any or all of the above-listed agreements with
ARCO would have a material adverse effect on our operations, cash flows or
financial condition.
Vastar and ARCO are also parties to a tax sharing agreement, which requires
Vastar, as a member of ARCO's consolidated tax group, to pay its share of the
group's federal and certain state income taxes to ARCO. If the merger is
consummated, we expect that the agreement would continue to govern consolidated
tax matters involving Vastar and ARCO. If any amendments become necessary as a
result of the merger, they will have to be negotiated and agreed to by us.
9
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VASTAR RESOURCES, INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
NOTE 7. TAXES.
The provision (benefit) for taxes on income is comprised of the following:
For the Three For the Nine
Months Ended Months Ended
September 30, September 30,
----------------- ----------------
(Millions of dollars) 1999 1998 1999 1998
-------- ------- -------- -------
Federal:
Current.............................. $(38.8) $(34.1) $(60.9) $(78.6)
Deferred............................. 41.2 17.5 29.7 24.5
------ ------ ------ ------
Total federal....................... 2.4 (16.6) (31.2) (54.1)
------ ------ ------ ------
State:
Current.............................. 0.2 (0.2) 0.3 0.5
Deferred............................. 1.6 0.7 2.4 0.9
------ ------ ------ ------
Total state......................... 1.8 0.5 2.7 1.4
------ ------ ------ ------
Total income tax provision (benefit).. $ 4.2 $(16.1) $(28.5) $(52.7)
====== ====== ====== ======
The following is a reconciliation of our income tax provision (benefit) with tax
at the federal statutory rate for the specified periods:
For the Three For the Nine
Months Ended Months Ended
September 30, September 30,
---------------- ----------------
(Millions of dollars) 1999 1998 1999 1998
------- ------- ------- -------
Income before taxes............. $ 75.3 $ 21.5 $109.9 $ 65.7
====== ====== ====== ======
Tax at the statutory rate....... $ 26.4 $ 7.5 $ 38.5 $ 23.0
Increase (reduction) in taxes
resulting from:
State income taxes (net
of federal effect)........... 1.1 0.3 1.7 0.9
Tax credits and other......... (23.3) (23.9) (68.7) (76.6)
------ ------ ------ ------
Income tax provision (benefit).. $ 4.2 $(16.1) $(28.5) $(52.7)
====== ====== ====== ======
10
<PAGE>
VASTAR RESOURCES, INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
NOTE 7. TAXES - (continued).
Under the Tax Sharing Agreement with ARCO, we are paid currently for Internal
Revenue Code Section 29 ("Section 29") tax credits that reduce the ARCO
consolidated tax group's income tax liability in the current period. Pursuant to
the Internal Revenue Code, our Section 29 tax credits can be used to reduce the
ARCO consolidated tax group's regular income tax liability after foreign tax
credits (the "Regular Tax"), but not below the ARCO consolidated tax group's
tentative minimum tax liability. If Section 29 tax credits are not used by the
ARCO consolidated tax group due to this limitation, the portion of the unused
credits that does not exceed the Regular Tax is carried forward to be used by
ARCO and by us in a subsequent year.
During the third quarter of 1999, we entered into a Third Amendment to the Tax
Sharing Agreement with ARCO. The Third Amendment implements certain tax
assumptions made in a Stock Purchase Agreement entered into with ARCO in 1998.
Under the Stock Purchase Agreement, we agreed to acquire the stock of Western
Midway Company from ARCO for $470 million which amount was later adjusted after
closing to approximately $440 million (the Adjusted Purchase Price). We also
agreed that, for the purposes of the Tax Sharing Agreement, our tax basis in the
Western Midway Company assets on the closing date of the acquisition would be
equal to the Adjusted Purchase Price. ARCO agreed to indemnify and hold us
harmless in the event that our actual tax basis was determined to be less than
the Adjusted Purchase Price.
The Third Amendment also changes a provision in the Tax Sharing Agreement
dealing with the compensation due to us for our Section 29 tax credits in the
event we are no longer consolidated with ARCO for federal income tax purposes
("deconsolidation"). Under the Tax Sharing Agreement prior to the Third
Amendment, we were entitled to be paid for our Section 29 tax credits that are
being carried forward on the ARCO consolidated tax group's consolidated return
in the event of deconsolidation, but only to the extent those tax credits were
also being carried forward on Vastar's pro forma federal tax return (i.e., the
pro forma federal income tax return that is prepared by Vastar pursuant to the
Tax Sharing Agreement as if Vastar were not part of the ARCO consolidated tax
group). In the event of deconsolidation, the Third Amendment allows us to be
paid for our Section 29 tax credits carried forward on the ARCO consolidated tax
group's consolidated return whether or not we are also carrying forward those
tax credits on our pro forma federal tax return.
11
<PAGE>
VASTAR RESOURCES, INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
NOTE 8. LONG-TERM DEBT.
Our long-term debt is comprised of the following:
September 30, December 31,
1999 1998
------------- ------------
(Millions of dollars)
8.75% Notes, issued February 1995, due 2005... $ 149.6 $ 149.6
6.95% Notes, issued November 1996, due 2006*.. 75.0 75.0
6.96% Notes, issued February 1997, due 2007*.. 75.0 75.0
6.39% Notes, issued January 1998, due 2008*... 50.0 50.0
6.50% Notes, issued March 1999, due 2009...... 299.1 ---
6.00% Putable/Callable Notes, issued
April 1998, due 2010......................... 100.0 100.0
Notes due to ARCO, due 2003................... --- 300.0
Revolving Credit Agreement.................... --- 320.0
Commercial Paper.............................. 319.0 219.0
-------- --------
Total......................................... $1,067.7 $1,288.6
======== ========
- ---------------
* Issuances pursuant to our Medium-Term Note Program.
We had one interest rate swap for $100.0 million outstanding at September 30,
1999 related to the putable/callable notes. This swap will terminate in April
2000. The swap effectively changes the 6.0 percent fixed rate to a floating
rate. The financial impact of settling this swap was a favorable $0.2 million
for the third quarter 1999 and $0.5 million for the first nine months of 1999.
NOTE 9. NEW ACCOUNTING STANDARDS.
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative
Instruments and Hedging Activities." This standard requires us to recognize all
of our derivative and hedging instruments in our statements of financial
position as either assets or liabilities and measured at fair value. In
addition, all hedging relationships must be designated, reassessed and
documented periodically. On July 7, 1999, the Financial Accounting Standards
Board delayed the effective date of SFAS 133 for one year. The delay, published
as SFAS No. 137, applies to quarterly and annual financial statements. SFAS No.
133, as revised by SFAS No. 137, is effective for all fiscal quarters of all
fiscal years beginning after June 15, 2000. We have not yet completed our
evaluation of the impact the provisions of these standards will have on us.
NOTE 10. SUBSEQUENT EVENTS.
On October 20, 1999, we declared a quarterly dividend of $0.075 per share of
common stock, payable on December 1, 1999, to our stockholders of record on
November 5, 1999.
12
<PAGE>
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS.
The following table sets forth sales and production volumes and average price
statistics for the specified periods:
For the Three For the Nine
Months Ended Months Ended
September 30, September 30,
-------------- --------------
1999 1998 1999 1998
------ ------ ------ ------
NATURAL GAS
Sales (MMcfd)*..................... 1,389 1,380 1,475 1,358
Production (MMcfd)................. 1,043 977 1,102 940
Average sales price (per Mcf)*..... $ 2.32 $ 1.85 $ 1.96 $ 1.91
Average wellhead price (per Mcf)... $ 2.26 $ 1.79 $ 1.91 $ 1.88
CRUDE OIL
Sales (MBbld)*..................... 102.3 109.7 114.7 115.5
Production (MBbld)................. 44.7 32.8 44.8 34.6
Average realized price (per Bbl)*.. $18.23 $13.11 $14.83 $14.90
NATURAL GAS LIQUIDS ("NGLs")
Production (MBbld)................. 17.8 12.0 14.6 14.0
Average realized price (per Bbl)... $13.95 $ 8.38 $11.62 $ 9.67
Total production (MMcfed)*.......... 1,418 1,246 1,458 1,232
- --------------
* As generally used in the oil and gas business and in this Form 10-Q, the
following terms have the following meanings:
MMcfd = million cubic feet per day
Mcf = thousand cubic feet
MMcfed = million cubic feet equivalent per day
Bbl = barrel
MBbld = thousand barrels per day
In calculating Mcf and Bbl equivalents, we use a generally recognized standard
in which one Bbl is equal to six Mcf.
13
<PAGE>
RESULTS OF OPERATIONS - (continued).
The following table sets forth the statement of income for the specified
periods:
For the Three For the Nine
Months Ended Months Ended
September 30, September 30,
----------------- ----------------
(Millions of dollars) 1999 1998 1999 1998
------ ------- ------ -------
REVENUES
Natural gas:
Sales.................................. $296.6 $234.7 $ 789.3 $ 710.1
Purchases.............................. (86.8) (74.8) (223.7) (241.6)
Delivery expense....................... (3.1) (2.2) (9.9) (2.8)
------ ------ ------- -------
Net sales - natural gas.............. 206.7 157.7 555.7 465.7
------ ------ ------- -------
Crude oil:
Sales.................................. 179.3 130.0 470.3 438.9
Purchases............................. (103.0) (89.2) (284.8) (294.4)
Delivery expense....................... (1.3) (1.3) (4.1) (3.8)
------ ------ ------- -------
Net sales - crude oil................. 75.0 39.5 181.4 140.7
------ ------ ------- -------
NGLs and other:
Sales.................................. 25.5 10.5 55.2 45.8
Purchases and other costs.............. (2.8) (1.1) (9.1) (9.0)
------ ------ ------- -------
Net sales - NGLs and other............ 22.7 9.4 46.1 36.8
------ ------ ------- -------
Net sales and other operating
revenues............................ 304.4 206.6 783.2 643.2
Earnings from equity affiliate.......... 4.4 5.3 13.8 15.9
Other revenues.......................... 7.3 5.4 40.2 30.3
------ ------ ------- -------
Net revenues......................... 316.1 217.3 837.2 689.4
------ ------ ------- -------
EXPENSES
Operating expenses...................... 49.8 39.6 147.3 113.2
Exploration expenses.................... 38.1 35.3 123.4 167.7
Selling, general and administrative
expenses............................... 13.7 12.6 38.8 38.8
Taxes other than income taxes........... 14.6 11.6 35.3 37.7
Depreciation, depletion and
amortization.......................... 105.9 82.3 322.8 225.6
Interest................................ 18.7 14.4 59.7 40.7
------ ------ ------- -------
Total expenses....................... 240.8 195.8 727.3 623.7
------ ------ ------- -------
Income before income taxes.............. 75.3 21.5 109.9 65.7
Income tax provision (benefit).......... 4.2 (16.1) (28.5) (52.7)
------ ------ ------- -------
Net income........................... $ 71.1 $ 37.6 $ 138.4 $ 118.4
====== ====== ======= =======
14
<PAGE>
THIRD QUARTER 1999 vs. THIRD QUARTER 1998.
Our net income for the third quarter of 1999 was $71.1 million compared to $37.6
million for the third quarter of 1998. This 89 percent increase was primarily
due to higher commodity prices and higher production volumes available for sale.
Our natural gas sales revenues increased in the third quarter of 1999 as
compared to the third quarter of 1998. The increase was primarily due to a
higher average sales price. Our natural gas purchases increased in the third
quarter of 1999 as compared to the third quarter of 1998 due to higher commodity
prices, partially offset by lower purchased volumes.
The average price for natural gas sold at Henry Hub, Louisiana (a benchmark from
which general natural gas price trends can be analyzed) was $2.63 per Mcf for
the third quarter of 1999 compared to $2.00 per Mcf for the corresponding period
last year. Our wellhead price increase of $0.47 per Mcf was less than the
improvement in the Henry Hub index primarily due to the widening of the basis
differential for our gas production from the San Juan basin in the third quarter
of 1999 as compared to the corresponding period last year. Basis differential is
the difference in value between gas at one delivery point (for example Henry
Hub) and gas at another delivery point (for example San Juan basin). Natural gas
hedging activity for the third quarter of 1999 resulted in a $0.2 million gain.
Natural gas hedging activity for the third quarter of 1998 resulted in a $4.0
million gain.
Our average natural gas production in the third quarter of 1999 increased by 66
MMcfd as compared to the corresponding period last year. The higher average
production level was a result of (1) natural gas volumes contributed from our
interests in 23 Gulf of Mexico shelf fields that we acquired late last year, (2)
successful exploitation programs in the San Juan basin, Deep Anadarko, and West
Cameron 645 fields, and (3) the addition of production from last year's African
Swallow discovery. Also, only one storm-related production curtailment occurred
in the Gulf of Mexico during the quarter, compared to four such events last
year. Production increases more than offset the impact of natural production
declines that normally occur in oil and gas fields.
Crude oil sales revenues for the third quarter of 1999 increased as compared to
the third quarter of 1998, primarily due to higher commodity prices. As a result
of an agreement by OPEC countries to limit production, crude oil prices began to
improve late in the first quarter of 1999. The average market price for the
third quarter of 1999 was higher as compared to the corresponding period last
year. This difference is reflected in the third quarter 1999 average price for
NYMEX-WTI-at-Cushing (a crude oil price benchmark from which general crude oil
price trends can be analyzed) of $19.49 per Bbl compared to the average price in
the third quarter of 1998 of $13.84 per Bbl. Our realized price for crude oil
recognized a smaller price increase compared to the general market, primarily
due to the widening of the basis differential between the Gulf Coast crude
markets and the WTI-at-Cushing benchmark. The majority of our production is
located in the Gulf Coast markets.
Our average crude oil production in the third quarter of 1999 increased 36
percent as compared to the third quarter of 1998. Our crude oil production
increased primarily as a result of volumes added from our interests in 23 Gulf
of Mexico shelf fields that we acquired late last year. In addition, the third
quarter of 1998 production levels were reduced due to the shut-in of production
at selected fields related to storms experienced during this time period.
Production increases more than offset the impact of natural field declines.
Our net sales revenues for NGLs and other for the third quarter of 1999 were
higher as compared to the third quarter of 1998. Our net NGL sales revenues for
the third quarter of 1999 reflect both an increase in our average NGL production
and an increase in average NGL prices. NGL prices often fluctuate with the price
of crude oil, and as crude oil prices increased in 1999, NGL prices generally
followed the corresponding trend. Our higher NGL production was due primarily to
selective decisions during the second quarter of 1999 to re-start the extraction
of NGLs from certain wet gas streams because of favorable NGL processing
economics. NGL processing economics remained favorable throughout the third
quarter of 1999.
15
<PAGE>
Our operating expenses for the third quarter of 1999 were higher than the third
quarter of 1998, primarily resulting from additional operating costs associated
with our interests in 23 Gulf of Mexico shelf fields that we acquired in late
1998.
Our exploration expenses for the third quarter of 1999 were higher than the
third quarter of 1998, primarily as a result of higher dry hole expenses. Dry
hole expenses in the third quarter of 1999 were $12.4 million, as compared to
$8.2 million in the third quarter of 1998. Of the 11 gross exploration wells
that were decisioned in the third quarter of 1999, eight were decisioned
discoveries. Of the 11 gross exploration wells that were decisioned in the third
quarter of 1998, four were decisioned discoveries. Although the number of wells
decisioned dry was smaller in the third quarter of 1999 as compared to the third
quarter of 1998, dry hole expense was higher because it included the cost of a
higher cost deepwater well.
Our depreciation, depletion and amortization expenses increased for the third
quarter of 1999 as compared to the third quarter of 1998. The increase resulted
primarily from increased production primarily associated with our interests in
23 Gulf of Mexico shelf fields that we acquired in late 1998 and higher average
depletive write-off rates.
Our interest expense for the third quarter of 1999 increased as compared to the
corresponding period last year as a result of higher average outstanding debt
levels during the third quarter of 1999 as compared to the third quarter of
1998. The increase in long-term debt is associated with our acquisition of
interests in 23 Gulf of Mexico shelf fields in late 1998.
Our income tax provision of $4.2 million for the third quarter of 1999 reflects
higher before-tax income when compared to the third quarter of 1998. The income
tax provision for the third quarter of 1999 includes the net benefit of $23.3
million of Internal Revenue Code Section 29 (Section 29) tax credits. The income
tax benefit for the third quarter of 1998 includes $23.9 million of Section 29
tax credits. Section 29 tax credits for the third quarter of 1999 were lower
than the third quarter of 1998 as a result of lower tax credit eligible
production and accounting adjustments.
NINE MONTHS ENDED SEPTEMBER 30, 1999 vs. NINE MONTHS ENDED SEPTEMBER 30, 1998.
Our net income for the first nine months of 1999 was $138.4 million compared to
$118.4 million for the first nine months of 1998. This increase was primarily
due to higher average sales prices and production volumes for all commodities
and lower exploration expenses.
Our natural gas sales revenues increased for the first nine months of 1999 as
compared to the corresponding period last year. The increase in revenues was
primarily due to a nine percent increase in natural gas volumes available for
sale. Our natural gas purchases decreased in the first nine months of 1999 as
compared to the corresponding period last year, primarily due to lower purchased
volumes.
Our average natural gas wellhead prices for the first nine months of 1999
increased approximately $0.03 per Mcf as compared to the corresponding period
last year. The average price for natural gas sold at Henry Hub, Louisiana (a
benchmark from which general natural gas price trends can be analyzed) during
the first nine months of 1999 was $2.19 per Mcf compared to $2.15 per Mcf for
the corresponding period last year. Two offsetting factors are reflected in our
average wellhead price. First, we experienced widening price differentials for
our gas production (effectively lower prices) in the first nine months of 1999
as compared to the same period last year. Offsetting the higher price
differentials was a $12.5 million gain associated with our hedging activity for
the first nine months of 1999. Hedging activity for the first nine months of
1998 resulted in a $0.9 million loss.
Our average natural gas production for the first nine months of 1999 increased
by 162 MMcfd as compared to the corresponding period last year. The higher
production level was a result of (1) natural gas production volumes added from
our interests in 23 Gulf of Mexico shelf fields we acquired late last year and
(2) production increases we achieved from new field startups and operational
improvements at Mississippi Canyon 148, West Cameron 645, Main Pass 199, the San
16
<PAGE>
Juan basin and other fields. These increases more than offset the impact of (1)
natural production declines that normally occur in oil and gas fields and (2)
property sales we completed in the first nine months of 1999.
Our crude oil sales revenues for the first nine months of 1999 increased as
compared to the corresponding period last year. This increase was due to a
higher average sales price. Average sales price was $15.02 for the first nine
months of 1999. During the first nine months of 1999 crude oil prices were
volatile, as reflected in the range of crude oil prices for NYMEX-WTI-at-Cushing
from a low of $11.38 per Bbl during February 1999 to a high of $25.48 per Bbl
received in late September 1999.
The average price for the first nine months of 1999 for NYMEX-WTI-at-Cushing was
$15.90 per Bbl compared to the average price in the first nine months of 1998 of
$15.40 per Bbl. As a result of an agreement by OPEC countries to limit
production, crude oil prices began to improve late in the first quarter of 1999.
Our realized price for crude oil did not recognize the full extent of the
general market price increase because of a widening of the basis differential
(effectively lowering the price we received) between the Gulf Coast crude
markets and the WTI-at-Cushing benchmark.
Our average crude oil production for the first nine months of 1999 increased 29
percent as compared to the corresponding period last year. Our crude oil
production increased primarily as a result of volumes from our interests in 23
Gulf of Mexico shelf fields that we acquired late last year. In addition,
the third quarter of 1998 production levels were reduced due to the shut-in of
production at selected fields related to storms experienced during this time
period. Production increases more than offset the impact of natural field
declines. The majority of our production is located in the Gulf Coast markets.
Net sales revenues for NGLs and other for the first nine months of 1999 were
higher as compared to the corresponding period last year. Our net NGL and other
sales revenues for the first nine months of 1999 reflect both an increase in
commodity prices and an increase in NGL production when compared to the
corresponding period last year. NGL prices often fluctuate with the price of
crude oil, and as crude oil prices increased in 1999, NGL prices generally
followed the same trend. Our higher NGL production was due primarily to
selective decisions during the second quarter of 1999 to re-start the extraction
of NGLs from certain wet gas streams because of favorable NGL processing
economics which continued through the third quarter of 1999.
Other revenues for the first nine months of 1999 were higher as compared to the
same period of 1998. The first nine months of 1999 included net gains of $25.5
million associated with the sale of our interests in selected fields. The first
nine months of 1998 included net gains of $21.0 million of which $17.7 million
was associated with the formation of Southern Company Energy Marketing.
Our operating expenses for the first nine months of 1999 were higher than the
corresponding period last year, primarily as a result of additional operating
costs associated with our interests in 23 Gulf of Mexico shelf fields that we
acquired in late 1998.
Exploration expenses for the first nine months of 1999 were lower than the
corresponding period last year, primarily as a result of lower dry hole
expenses. Dry hole expenses in the first nine months of 1999 were $39.3 million,
as compared to $73.3 million for the corresponding period last year. This
reduction in dry hole expense is due to 13 dry holes (26 discoveries of 39 gross
wells decisioned) in the first nine months of 1999 compared to 18 dry holes (22
discoveries of 40 gross wells decisioned) in the first nine months of 1998,
along with reduced drilling rig costs during the first nine months of 1999.
Our depreciation, depletion and amortization expenses increased for the first
nine months of 1999 as compared to the corresponding period last year. The
increase resulted primarily from increased production and higher average
depletive write-off rates.
Our interest expense for the first nine months of 1999 increased as compared to
the corresponding period last year. The increase was the result of higher
average outstanding long-term debt levels during the first nine months of 1999
as compared to the first nine months of 1998. The increase in average
outstanding long-term debt is associated with our acquisition of interests in 23
Gulf of Mexico shelf fields in late 1998.
17
<PAGE>
The income tax benefit for the first nine months of 1999 decreased as compared
to the same period last year. The income tax benefit of $28.5 million for the
first nine months of 1999 reflects higher pre-tax income and lower Section 29
tax credits when compared to the corresponding period last year. The income tax
benefit for the first nine months of 1999 includes the net benefit of $68.7
million of Section 29 tax credits. The income tax benefit for the first nine
months of 1998 includes $76.7 million for Section 29 tax credits. Section 29 tax
credits for the first nine months of 1999 were lower than the same period last
year as a result of lower tax credit eligible production and accounting
adjustments.
The likelihood of deferral of the Section 29 tax credits increases in a low
commodity price environment.
LIQUIDITY AND CAPITAL RESOURCES.
In the first nine months of 1999, our cash flow provided by operating activities
was $584.8 million as compared to $313.3 million for the first nine months of
1998. This increase was primarily due to (1) higher volumes and prices, (2) the
effect of monetizing the value of one of our long-term gas sales (described
below) and (3) a smaller increase in our working capital position in the first
nine months of 1999 compared to the first nine months of last year.
In July 1999, we entered into agreements with an unrelated third party that have
the effect of monetizing the value of one of our long-term gas sales contracts.
This particular contract is associated with gas sales to a certain cogeneration
facility, has a remaining life of approximately 11 years and has an expected
average price of approximately $3.00 per Mcf for 1999. Pursuant to these
agreements, we received an immediate payment of $88.0 million (net of
transaction costs) that has been recorded as a deferred liability and will be
amortized as the underlying contract volumes are delivered.
Our net cash used in investing activities in the first nine months of 1999 was
$342.7 million, which was lower compared to the first nine months of 1998. Our
capital spending was down during the first nine months of 1999 as a result of
the low commodity price environment during the early part of this year, which
led to our decision to defer some capital projects. Lower rig costs in 1999 also
contributed to our reduced spending levels.
Our proceeds from asset sales were $52.1 million in the first nine months of
1999, compared to $47.0 million received in the first nine months of 1998.
18
<PAGE>
The following table summarizes our capital investments for the comparative
periods.
For the Nine Months Ended
September 30,
--------------------------------
1999 1998
(Millions of dollars) ------------ -----------
Exploratory drilling.................. $133.2 $138.8
Development drilling.................. 157.9 247.1
Property acquisitions................. 32.2 70.1
Other additions....................... 68.4 72.4
------ ------
Total additions to property,
plant and equipment.................. 391.7 528.4
Geological and geophysical............ 21.8 29.7
------ ------
Total capital program............... $413.5 $558.1
====== ======
Our cash flows used by financing activities were $235.9 million in the first
nine months of 1999, which included a $220.9 million net decrease in long-term
debt.
Vastar's ratio of earnings to fixed charges was 2.7 for the nine months ended
September 30, 1999 and 2.5 for the nine months ended September 30, 1998. We
computed these ratios by dividing earnings by fixed charges. For this
calculation, earnings include income before income taxes and fixed charges.
Fixed charges include interest, amortization of debt expenses and the estimated
interest component of rental expense.
RISK MANAGEMENT AND MARKET-SENSITIVE INSTRUMENTS.
The following discussion of our risk-management activities includes "forward-
looking statements" that involve various uncertainties. Actual results could
differ materially from those projected in the forward-looking statements. For
further information on these risks and uncertainties refer to the "Cautionary
Statement for the Purpose of the Private Litigation Reform Act of 1995" in Items
1 and 2 in our annual report on Form 10-K for the year ended December 31, 1998.
We use various financial instruments for non-trading purposes in the normal
course of our business to manage and reduce price volatility and other market
risks associated with our natural gas and petroleum liquids production. This
activity is referred to as hedging. The hedging instruments which we had in
place as of September 30, 1999, have the effect of providing a market price
within the collar not to exceed the ceiling price of the collar or a market
price plus a premium when the market price is less than the floor price of the
collar. We structure these arrangements to reduce our exposure to commodity
price decreases, but they can also limit the benefit we might otherwise receive
from commodity price increases. Our risk management activity is generally
accomplished by purchasing and/or selling exchange-traded futures and over-the-
counter options.
As a result of all of our hedging transactions for natural gas and crude oil, we
realized a pre-tax gain of approximately $12.5 million in the first nine months
of 1999 compared to a $0.1 million pre-tax loss in the first nine months of
1998.
19
<PAGE>
The following table summarizes our open hedging positions as of September 30,
1999:
<TABLE>
<CAPTION>
Average Weighted
Product Financial Instrument Time Period Volume Average Prices
- ------- -------------------- ---------------- ----------- ------------------------
<S> <C> <C> <C> <C>
Gas Collars Oct - Dec 1999 250 MMcfd $2.63Mcf - $3.31/Mcf
Gas Puts Sold Oct - Dec 1999 250 MMcfd $2.20/Mcf
Gas Collars Jan - Jun 2000 250 MMcfd $2.51/Mcf - $3.24/Mcf
Gas Puts Sold Jan - Jun 2000 250 MMcfd $2.12/Mcf
Oil Collars Oct - Dec 1999 20 MBbld $18.00/Bbl - $21.51/Bbl
Oil Puts Sold Oct - Dec 1999 20 MBbld $15.00/Bbl
Oil Collars Jan - Dec 2000 16 MBbld $18.11/Bbl - $22.36/Bbl
Oil Puts Sold Jan - Dec 2000 16 MBbld $15.11/Bbl
</TABLE>
A "collar" is a financial instrument or a combination of financial instruments
which establishes a range of prices to be received relating to a set commodity
volume. This arrangement, in effect, allows us to receive no less than a stated
floor price per unit of volume and no more than a stated ceiling price per unit
of volume.
A "put" is an option contract that gives the holder the right to sell a stated
volume of the underlying commodity at a specified price for a certain fixed
period of time.
A "call" is an option contract that gives the holder the right to buy a stated
volume of the underlying commodity at a specified price for a certain fixed
period of time.
20
<PAGE>
The fair value (our unrealized pre-tax loss or gain) for the 1999 and 2000
hedged transactions in place as of September 30, 1999 would be a $1.0 million
gain for natural gas and a $5.5 million loss for crude oil. This hypothetical
loss is calculated based on brokers' forward price quotes and NYMEX forward
price quotes as of September 30, 1999, which for the remainder of 1999 averaged
$2.77 per Mcf for natural gas and $23.81 per Bbl for crude oil. The actual gains
or losses we realize from our hedge transactions may vary significantly due to
the fluctuation of prices in the commodity markets. For example, a hypothetical
10 percent increase in the forward price quotes would decrease the unrealized
gain by approximately $1.2 million for natural gas and increase the unrealized
loss by approximately $9.5 million for crude oil. In order to calculate the
hypothetical loss, the relevant variables are (1) the type of commodity, (2) the
delivery price and (3) the delivery location. We do not take into account the
time value of money because of the short-term nature of our hedging instruments.
These calculations may be used to analyze the gains and losses we might realize
on our financial hedging contracts and do not reflect the effects of price
changes on our actual physical commodity sales. Natural gas prices fluctuated
between $1.65 per Mcf and $3.08 per Mcf (Henry Hub) and crude oil prices
fluctuated between $11.38 per Bbl and $25.48 per Bbl (NYMEX-WTI-at-Cushing)
during the first nine months of 1999.
We also have long-term natural gas sales contracts with certain cogeneration
facilities. Approximately 55 MMcfd of the approximately 80 MMcfd of natural
gas volumes related to these contracts are for a fixed price of approximately
$2.40 per Mcf for the remainder of 1999. The remainder of the volume is at
market prices. As of September 30, 1999, these contracts have a remaining life
of approximately 11 years.
During the third quarter of 1999, our long-term sales commitments did not exceed
the total of our proprietary production and the other natural gas production we
control through call rights with third-party producers and marketing agreements
with royalty owners.
Our borrowings under our commercial paper program and $1.1 billion committed
bank line of credit are subject to the risk of interest rate fluctuation.
Assuming the principal amount of our borrowings had remained unchanged, higher
interest rates would have increased our interest expense. For example, a 10
percent increase in the London Interbank Offered Rate (a benchmark pursuant to
which the Company's interest rates may be set) would have increased our third
quarter 1999 interest expense by $1.9 million.
At September 30, 1999, we had an outstanding interest rate swap covering $100
million relating to our putable/callable notes. The swap effectively changed the
fixed-rate debt of 6.0 percent to a floating rate, which averaged 5.1 percent
for the first nine months of 1999.
21
<PAGE>
NEW ACCOUNTING STANDARDS.
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative
Instruments and Hedging Activities." This standard requires us to recognize all
of our derivative and hedging instruments in our statements of financial
position as either assets or liabilities and measured at fair value. In
addition, all hedging relationships must be designated, reassessed and
documented periodically. On July 7, 1999, the Financial Accounting Standards
Board delayed the effective date of SFAS 133 for one year. The delay, published
as SFAS No. 137, applies to quarterly and annual financial statements. SFAS No.
133, as revised by SFAS No. 137, is effective for all fiscal quarters of all
fiscal years beginning after June 15, 2000. We have not yet completed our
evaluation of the impact the provisions of these standards will have on us.
IMPACT OF THE YEAR 2000 ISSUE.
Progress in the First Nine Months of 1999.
There have been no material developments with respect to our approach on the
Year 2000 issue as previously reported in our annual report on Form 10-K for the
year ended December 31, 1998 and our quarterly reports on Form 10-Q for the
quarters ended June 30, 1999 and March 31, 1999, except as follows.
Since the start of the project, we have incurred and expensed approximately $3.4
million related to our assessment of Year 2000 issues and the development and
implementation of our remediation plan. The total cost of the Year 2000 project,
including expenses we will incur in 2000, is currently estimated at
approximately $5.0 million. The analysis process continues, and we have made
significant additional progress. Using an average phase completion method of
estimation, we estimate approximately 98 percent of the high-priority items are
complete, with an expected completion date before the end of 1999. Similarly, we
estimate that 99 percent of the medium-priority items and 98 percent of the low-
priority items are complete. The activities relating to the medium- and low-
priority items may not be completed by January 1, 2000, but we continue to
believe that the failure of those items to be Year 2000 ready will not have a
material adverse effect on our financial condition, cash flows or results of
operations.
Systems we obtained as part of property acquisitions since September 30, 1999
are not included in the above estimates. Year 2000 items will be addressed as
part of consolidating these properties into Vastar.
In addition to assessing our own systems that may be affected by the Year 2000
issue, we continued our efforts in the first nine months of 1999 to determine if
we will be affected by Year 2000 issues affecting third parties with which we
have material relationships. The complexity of our analysis is increased because
of our dependence on the representations of these third parties and the
correctness of their assessments of their Year 2000 issues, including their
exposures to third-party risks. This analysis is substantially complete and all
high-priority items which we have identified are being addressed and are
expected to be resolved before the end of 1999.
Further, we are continuing our process of developing contingency plans to handle
the most reasonably likely worst case scenarios caused by an interrelated
22
<PAGE>
IMPACT OF THE YEAR 2000 ISSUE - (continued).
failure of key components or widespread outages of key services. Our enterprise-
wide contingency planning is complete. Implementation and refinement of the
enterprise-wide plan will continue until year-end.
Conclusion.
The most significant difficulty associated with predicting the impact of Year
2000 failures stems from the interdependence of the various third parties on
which we rely. As a result of the general uncertainty inherent in the Year 2000
problem, we are unable to determine at this time whether the consequences of
Year 2000 failures would have a material impact on our results of operations,
cash flows or financial condition. Completion of our Year 2000 readiness program
as scheduled is expected to reduce the possibility of significant interruptions
of normal operations.
The preceding discussion of our Year 2000 readiness includes forward-looking
statements that involve risks and uncertainties. Actual results could differ
materially from those projected in the forward-looking statements. For further
information on these risks and uncertainties refer to the "Cautionary Statement
for the Purpose of the Private Litigation Reform Act of 1995" in Items 1 and 2
in our Form 10-K for the year ended December 31, 1998. This disclosure is also
subject to protection under the Year 2000 Information and Readiness Disclosure
Act of 1998, Public Law 105-271, as a "Year 2000 Statement" and "Year 2000
Readiness Disclosure" as defined therein.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
See Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations--Risk Management and Market-Sensitive Instruments.
------------------------
We caution 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 Vastar. In the opinion of our management, the financial
information reflects all adjustments, consisting only of normal recurring
adjustments, necessary for the fair presentation of the financial position,
results of operations and cash flows in conformity with generally accepted
accounting principles.
23
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
There have been no material developments with respect to Vastar's legal
proceedings as previously reported in our annual report on Form 10-K for the
period ending December 31, 1998 and our quarterly reports on Form 10-Q for the
quarterly periods ending June 30 and March 31, 1999.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
. 4.1 Vastar Resources, Inc. $50,000,000 Medium-Term Notes Series A due
January 15, 2008--form of Note
4.2 Vastar Resources, Inc. $75,000,000 Medium-Term Notes Series A due
November 8, 2006--form of Note
4.3 Vastar Resources, Inc. $75,000,000 Medium-Term Notes Series A due
February 26, 2007--form of Note
4.4 Vastar Resources, Inc. $150,000,000 8.75% Notes due February 1,
2005--form of Note
4.5 Vastar Resources, Inc. $100,000,000 6.50% Notes due April 1,
2009--form of Note
4.6 Vastar Resources, Inc. $200,000,000 6.50% Notes due April 1,
2009--form of Note
4.7 Vastar Resources, Inc. $100,000,000 Putable/Callable Notes, due
April 20, 2010, Putable/Callable April 20, 2000--form of Note
10.1 Third Amendment to Tax Sharing Agreement, effective as of October
30, 1998, between Vastar and its subsidiaries that are signatories
thereto and ARCO
10.2 Second Amendment to Vastar Annual Incentive Plan, effective as
of July 21, 1999
10.3 First Amendment to Vastar Executive Deferral Plan, effective as
of July 21, 1999
10.4 First Amendment to Vastar Comprehensive Management Medical Plan,
effective as of July 21, 1999
10.5 First Amendment to Vastar Executive Medical Plan, effective as of
July 21, 1999
10.6 Second Amendment to Vastar Executive Life Insurance Plan, effective
as of July 21, 1999
10.7 First Amendment to Amended and Restated Executive Long-Term Incentive
Plan, effective as of July 21, 1999
10.8 First Amendment to Vastar Amended and Restated Supplementary
Executive Retirement Plan, effective as of July 21, 1999
24
<PAGE>
10.9 Third Amendment to Special Termination Allowance Plan, effective as
of July 21, 1999
12 Computation of Ratio of Earnings to Fixed Charges
27 Financial Data Schedule
(b) Reports on Form 8-K.
Vastar did not file any reports on Form 8-K during the quarter ended September
30, 1999.
25
<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 28, 1999 /s/ Joseph P. McCoy
------------------------------
Joseph P. McCoy
Vice President and Controller
(Duly Authorized Officer and
Principal Accounting Officer)
26
<PAGE>
EXHIBIT INDEX
Exhibit
No. Description
- ---------- -----------
4.1 Vastar Resources, Inc. $50,000,000 Medium-Term Notes Series A due
January 15, 2008--form of Note
4.2 Vastar Resources, Inc. $75,000,000 Medium-Term Notes Series A due
November 8, 2006--form of Note
4.3 Vastar Resources, Inc. $75,000,000 Medium-Term Notes Series A due
February 26, 2007--form of Note
4.4 Vastar Resources, Inc. $150,000,000 8.75% Notes due February 1,
2005--form of Note
4.5 Vastar Resources, Inc. $100,000,000 6.50% Notes due April 1,
2009--form of Note
4.6 Vastar Resources, Inc. $200,000,000 6.50% Notes due April 1,
2009--form of Note
4.7 Vastar Resources, Inc. $100,000,000 Putable/Callable Notes, due
April 20, 2010, Putable/Callable April 20, 2000--form of Note
10.1 Third Amendment to Tax Sharing Agreement, effective as of October
30, 1998, between Vastar and its subsidiaries that are
signatories thereto and ARCO
10.2 Second Amendment to Vastar Annual Incentive Plan, effective as
of July 21, 1999
10.3 First Amendment to Vastar Executive Deferral Plan, effective as
of July 21, 1999
10.4 First Amendment to Vastar Comprehensive Management Medical Plan,
effective as of July 21, 1999
10.5 First Amendment to Vastar Executive Medical Plan, effective as of
July 21, 1999
10.6 Second Amendment to Vastar Executive Life Insurance Plan,
effective as of July 21, 1999
10.7 First Amendment to Amended and Restated Executive Long-Term
Incentive Plan, effective as of July 21, 1999
10.8 First Amendment to Vastar Amended and Restated Supplementary
Executive Retirement Plan, effective as of July 21, 1999
10.9 Third Amendment to Special Termination Allowance Plan, effective
as of July 21, 1999
12 Computation of Ratio of Earnings to Fixed Charges
27 Financial Data Schedule
<PAGE>
EXHIBIT 4.1
Unless this certificate is presented by an authorized representative of
The Depository Trust Company (55 Water Street, New York, New York) to the
Company or its agent for registration of transfer, exchange or payment, and any
certificate issued is registered in the name of Cede & Co. or such other name as
requested by an authorized representative of The Depository Trust Company (and
any payment is made to Cede & Co. or to such other entity as is requested by an
authorized representative of The Depository Trust Company), ANY TRANSFER, PLEDGE
OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
inasmuch as the registered owner hereof, Cede & Co., has an interest herein.
This Note is registered in the name of a depositary (hereinafter, a
"Depositary") or a nominee of a Depositary appointed by the Company pursuant to
the terms of the Indenture hereinafter referred to. This Note is exchangeable
for Notes registered in the name of a Person other than the Depositary or its
nominee only in certain circumstances described in an Officers' Certificate
dated May 31, 1995 delivered to the Trustee by the Company pursuant to Section
301 of the Indenture. Unless and until this Note is exchanged in whole or in
part for one or more Notes in definitive form, this Note may not be transferred
except as a whole (i) by the Depositary to a nominee of the Depositary, (ii) by
a nominee of the Depositary to the Depositary or another nominee of the
Depositary or (iii) by the Depositary or any nominee of the Depositary to a
successor Depositary or a nominee of such successor Depositary).
REGISTERED VASTAR RESOURCES, INC. REGISTERED
MEDIUM-TERM NOTE, SERIES A
(Fixed Rate)
No. A-3 PRINCIPAL AMOUNT: $50,000,000
CUSIP 92238P AC 9
<TABLE>
<S> <C> <C> <C>
ORIGINAL ISSUE DATE: January 12, 1998 INTEREST RATE: 6.39% STATED MATURITY: January 15, 2008 ISSUE PRICE: $ 50,000,000
INITIAL REDEMPTION DATE: Not Applicable INITIAL REDEMPTION ANNUAL REDEMPTION
PERCENTAGE: Not Applicable PERCENTAGE REDUCTION: Not Applicable per annum
REPURCHASE PRICE (for OID Notes): Not Applicable
</TABLE>
VASTAR RESOURCES, INC., a Delaware corporation (herein called the
"Company," which term includes any successor corporation under the Indenture, as
hereinafter defined), for value received, hereby promises to pay to Cede & Co.,
or registered assigns, the principal sum of FIFTY MILLION DOLLARS, on the Stated
Maturity shown above, and to pay interest thereon, at the rate per annum shown
above, from the Original Issue Date shown above or from the most recent Interest
Payment Date (as defined below) to which interest has been paid or duly provided
for semi-annually in arrears on June 15 and December 15 in each year ("Interest
Payment Dates"), until the principal hereof is paid or made available for
payment. Interest will be payable on each Interest Payment Date and at Stated
Maturity or upon redemption. Interest will be payable to the Holder at the
close of business on the Regular Record Date (which shall be May 31 and November
30 of each year) next preceding such Interest Payment Date. If the Original
Issue Date is between a Regular Record Date and the next succeeding Interest
Payment Date, the first payment of interest hereon will be made on the Interest
Payment Date following the next succeeding Regular Record Date to the Holder on
such next Regular Record Date. Any such interest which is payable, but is not
punctually paid or duly provided for on any Interest Payment Date (herein called
"Defaulted Interest") shall forthwith cease to be payable to the registered
Holder on the relevant Regular Record Date, and may be paid by the Company at
its election to the Person in whose name this Note is registered at the close of
business on a Special Record Date for the payment of such Defaulted Interest to
be fixed by the Company, notice whereof shall be given to the Holder of this
Note not less than ten days prior to such Special Record Date, or may be paid by
the Company at any time in any other lawful manner, all as more fully provided
in the Indenture.
Payment of the principal, premium, if any, and interest payable at Stated
Maturity or upon redemption of this Note will be made in immediately available
funds at the office or agency of the Company in the Borough of Manhattan, The
City of New York, in such coin or currency of the United States of America as at
the time of payment is legal tender for payment of public and private debts,
provided that this Note is presented to the Paying Agent in time for the Paying
Agent to make such payments in such funds in accordance with its normal
procedures. Periodic payments of interest will be made by check mailed to the
address of the Person entitled thereto as it appears in the Security Register as
of the applicable Regular Record Date or, at the option of the Company, by wire
transfer to an account maintained by such Person with a bank located in the
United States.
Reference is hereby made to the further provisions of this Note set forth
on the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Note shall
not be entitled to any benefit under the Indenture or be valid or obligatory for
any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated: January 12, 1998
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series designated
therein referred to in the within-mentioned Indenture.
HARRIS TRUST AND SAVINGS BANK, as Trustee VASTAR RESOURCES, INC.
By: /s/ Amy Roberts By: /s/ Charles D. Davidson
Authorized Signatory President
Attest: /s/ Albert D. Hoppe
Secretary
<PAGE>
VASTAR RESOURCES, INC.
MEDIUM-TERM NOTE
This Medium-Term Note is one of a duly authorized issue of Securities of
the Company (herein referred to from time to time as the "Securities"), issued
and to be issued in one or more series under an Indenture dated as of January 1,
1995 and as amended by the Supplemental Indenture dated as of May 18, 1995 (as
it may be supplemented or amended from time to time, herein called the
"Indenture") between the Company and Harris Trust and Savings Bank (successor to
NationsBank of Texas, N.A.), as trustee (herein called the "Trustee," which term
includes any successor trustee under the Indenture), to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights of the Company, the Trustee and the Holders of the Securities
and of the terms upon which the Securities are, and are to be, authenticated and
delivered. The Medium-Term Notes, Series A (the "Notes") may be issued from
time to time with different maturities, interest rates and redemption
provisions.
Interest payments for this Note will include interest accrued to but
excluding the Interest Payment Dates. Interest payments for this Note shall be
computed and paid on the basis of a 360-day year of twelve 30-day months.
Unless otherwise indicated on the face of this Note, this Note may not be
redeemed prior to Stated Maturity. If so indicated on the face of this Note,
this Note may be redeemed, at the option of the Company, on and after the
Initial Redemption Date, either in whole or from time to time in part at the
Redemption Price (as defined below), together with interest accrued thereon to
the date of redemption (the "Redemption Date"). Notice of redemption shall be
mailed to the Holders of the Notes designated for redemption at their addresses
as the same shall appear in the Security Register not more than 60 nor less than
30 days prior to the Redemption Date, subject to all the conditions and
provisions of the Indenture. In the event of any redemption in part, a new Note
for the amount of the unredeemed portion hereof shall be issued in the name of
the Holder hereof upon the surrender hereof. The "Redemption Price" shall
initially be the Initial Redemption Percentage, shown on the face hereof, of the
principal amount of this Note to be redeemed and shall decline at each
anniversary of the Initial Redemption Date, shown on the face hereof, by the
Annual Redemption Percentage Reduction, if any, shown on the face hereof, of the
principal amount to be redeemed until the Redemption Price is 100% of such
principal amount.
If an Event of Default with respect to the Notes shall occur and be
continuing, the principal of the Notes may be declared due and payable in the
manner and with the effect provided in the Indenture.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with the
consent of the Holders of not less than a majority in principal amount of the
Securities at the time Outstanding of each series to be affected. The Indenture
also contains provisions permitting the Holders of not less than a majority in
aggregate principal amount of the Outstanding Securities of any such series to
waive compliance by the Company with certain provisions of the Indenture and
certain past defaults under the Indenture and their consequences. Any such
consent or waiver by the Holder of this Note shall be conclusive and binding
upon such Holder and upon all future Holders of this Note and of any Note issued
upon the registration of transfer hereof or in lieu hereof or in exchange or
substitution hereof, whether or not any notation of such consent or waiver is
made upon this Note.
As set forth in, and subject to, the provisions of the Indenture, no Holder
of any Note will have any right to institute any proceeding, judicial or
otherwise, with respect to the Indenture or for any remedy thereunder, unless
such Holder shall have previously given to the Trustee written notice of a
continuing Event of Default with respect to the Notes, the Holders of not less
than 25% in principal amount of the Outstanding Notes shall have made written
request to the Trustee to institute such proceeding in respect of such Event of
Default in its own name as Trustee under the Indenture, such Holder or holders
have offered to the Trustee reasonable indemnity against the costs, expenses and
liabilities to be incurred in compliance with such request, the Trustee shall
have failed to institute such proceeding within 60 days of receipt of such
notice, request and offer of indemnity, and the Trustee shall not have received
from the Holders of a majority in principal amount of the Outstanding Notes a
direction inconsistent with such written request during the 60-day period;
provided, however, that such limitations do not apply to a suit instituted by
the Holder for the enforcement of payment of the principal of, premium, if any,
or interest on this Note on or after the respective due date expressed herein.
No reference herein to the Indenture and no provisions of this Note or of
the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of, premium, if any, and
interest on this Note at the times, place, and rate, and in the coin or
currency, herein prescribed.
The Indenture contains provisions for defeasance of (i) the entire
indebtedness of this Note and (ii) certain restrictive covenants upon compliance
by the Company with conditions set forth therein.
The Notes are issuable only in registered form without coupons and are
represented by either a global certificate registered in the name of a
depositary or in the name of its nominee or by a certificate registered in the
name of the purchaser of such Note or its nominee. The Notes are issuable in
denominations of $1,000 or any amount in excess thereof which is an integral
multiple of $1,000.
As provided in the Indenture and subject to certain limitations therein set
forth and except as otherwise restricted by a legend printed on the face hereof,
if any, the transfer of this Note may be registered on the Security Register,
upon surrender of this Note for registration of transfer at any office or agency
of the Company in any place where the principal of, premium, if any, and
interest on this Note are payable, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company, the Trustee and the
Security Registrar, duly executed by, the Holder or his attorney duly authorized
in writing, and thereupon one or more new Notes of like aggregate principal
amount of such denominations as are authorized for Notes and of like Stated
Maturity with like terms and conditions will be issued to the designated
transferee or transferees.
As provided in the Indenture and subject to certain limitations set forth
therein and except as otherwise restricted by a legend printed on the face
hereof, if any, Notes are exchangeable for a like aggregate principal amount of
Notes of such denominations as are authorized for Notes of like Stated Maturity
with like terms and conditions, as requested by the Holder surrendering the
same.
No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith. Expenses may
be charged for replacing mutilated, destroyed, lost or stolen Notes provided the
requirements for replacement are satisfied.
Prior to due presentment of this Note for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
person in whose name this Note is registered as the owner hereof for all
purposes, whether or not this Note be overdue, and none of the Company, the
Trustee or any such agent shall be affected by notice to the contrary.
THE INDENTURE AND THE NOTES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE
AND TO BE PERFORMED IN SUCH STATE.
All terms used in this Note which are defined in the Indenture shall have
the meanings assigned to them in the Indenture.
__________________________
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full according
to applicable laws or regulations:
<TABLE>
<S> <C>
TEN COM - as tenants in common UNIF GIFT MIN ACT-__________ Custodian _________ under Uniform Gifts to Minors Act______________
TEN ENT - as tenants by the (Cust) (Minor) (State)
entireties
JT TEN - as joint tenants with
right of survivorship
and not as tenants in
common
</TABLE>
Additional abbreviations may also be used though not in the above list.
____________________________________________
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- --------------------------------------
________________________________________________________________________________
________________________________________________________________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE
________________________________________________________________________________
the within Note and all rights thereunder, hereby irrevocably constituting and
________________________________________________________________________________
appointing
_______________________________________________________________________ Attorney
to transfer said Note on the books of the Company, with full power of
________________________________________________________________________________
substitution in the premises.
Dated:___________________________ ___________________________________
<PAGE>
EXHIBIT 4.2
Unless this certificate is presented by an authorized representative of
The Depository Trust Company (55 Water Street, New York, New York) to the
Company or its agent for registration of transfer, exchange or payment, and any
certificate issued is registered in the name of Cede & Co. or such other name as
requested by an authorized representative of The Depository Trust Company (and
any payment is made to Cede & Co. or to such other entity as is requested by an
authorized representative of The Depository Trust Company), ANY TRANSFER, PLEDGE
OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
inasmuch as the registered owner hereof, Cede & Co., has an interest herein.
This Note is registered in the name of a depositary (hereinafter, a
"Depositary") or a nominee of a Depositary appointed by the Company pursuant to
the terms of the Indenture hereinafter referred to. This Note is exchangeable
for Notes registered in the name of a Person other than the Depositary or its
nominee only in certain circumstances described in an Officers' Certificate
dated May 31, 1995 delivered to the Trustee by the Company pursuant to Section
301 of the Indenture. Unless and until this Note is exchanged in whole or in
part for one or more Notes in definitive form, this Note may not be transferred
except as a whole (i) by the Depositary to a nominee of the Depositary, (ii) by
a nominee of the Depositary to the Depositary or another nominee of the
Depositary or (iii) by the Depositary or any nominee of the Depositary to a
successor Depositary or a nominee of such successor Depositary).
REGISTERED VASTAR RESOURCES, INC. REGISTERED
MEDIUM-TERM NOTE, SERIES A
(Fixed Rate)
<TABLE>
<S> <C> <C>
No. A-1 PRINCIPAL AMOUNT: $ 75,000,000
CUSIP 92238P AA 3
ORIGINAL ISSUE DATE: November 8, 1996 INTEREST RATE: 6.95% STATED MATURITY: November 8, 2006 ISSUE PRICE: $ 75,000,000
INITIAL REDEMPTION DATE: Not Applicable INITIAL REDEMPTION ANNUAL REDEMPTION
PERCENTAGE: Not Applicable PERCENTAGE REDUCTION: Not Applicable per annum
REPURCHASE PRICE (for OID Notes): Not Applicable
</TABLE>
VASTAR RESOURCES, INC., a Delaware corporation (herein called the
"Company," which term includes any successor corporation under the Indenture, as
hereinafter defined), for value received, hereby promises to pay to Cede & Co.,
or registered assigns, the principal sum of SEVENTY FIVE MILLION DOLLARS, on the
Stated Maturity shown above, and to pay interest thereon, at the rate per annum
shown above, from the Original Issue Date shown above or from the most recent
Interest Payment Date (as defined below) to which interest has been paid or duly
provided for semi-annually in arrears on June 15 and December 15 in each year
("Interest Payment Dates"), until the principal hereof is paid or made available
for payment. Interest will be payable on each Interest Payment Date and at
Stated Maturity or upon redemption. Interest will be payable to the Holder at
the close of business on the Regular Record Date (which shall be May 31 and
November 30 of each year) next preceding such Interest Payment Date. If the
Original Issue Date is between a Regular Record Date and the next succeeding
Interest Payment Date, the first payment of interest hereon will be made on the
Interest Payment Date following the next succeeding Regular Record Date to the
Holder on such next Regular Record Date. Any such interest which is payable,
but is not punctually paid or duly provided for on any Interest Payment Date
(herein called "Defaulted Interest") shall forthwith cease to be payable to the
registered Holder on the relevant Regular Record Date, and may be paid by the
Company at its election to the Person in whose name this Note is registered at
the close of business on a Special Record Date for the payment of such Defaulted
Interest to be fixed by the Company, notice whereof shall be given to the Holder
of this Note not less than ten days prior to such Special Record Date, or may be
paid by the Company at any time in any other lawful manner, all as more fully
provided in the Indenture.
Payment of the principal, premium, if any, and interest payable at Stated
Maturity or upon redemption on this Note will be made in immediately available
funds at the office or agency of the Company in the Borough of Manhattan, The
City of New York, in such coin or currency of the United States of America as at
the time of payment is legal tender for payment of public and private debts,
provided that this Note is presented to the Paying Agent in time for the Paying
Agent to make such payments in such funds in accordance with its normal
procedures. Periodic payments of interest will be made by check mailed to the
address of the Person entitled thereto as it appears in the Security Register as
of the applicable Regular Record Date or, at the option of the Company, by wire
transfer to an account maintained by such Person with a bank located in the
United States.
Reference is hereby made to the further provisions of this Note set forth
on the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Note shall
not be entitled to any benefit under the Indenture or be valid or obligatory for
any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated: November 8, 1996
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series designated
therein referred to in the within-mentioned Indenture.
HARRIS TRUST AND SAVINGS BANK, as Trustee VASTAR RESOURCES, INC.
By: /s/ Amy Roberts By: /s/ Michael E. Wiley
Authorized Signatory President
Attest: /s/ Albert D. Hoppe
Secretary
<PAGE>
VASTAR RESOURCES, INC.
MEDIUM-TERM NOTE
This Medium-Term Note is one of a duly authorized issue of Securities of
the Company (herein referred to from time to time as the "Securities"), issued
and to be issued in one or more series under an Indenture dated as of January 1,
1995 and as amended by the Supplemental Indenture dated as of May 18, 1995 (as
it may be supplemented or amended from time to time, herein called the
"Indenture") between the Company and Harris Trust and Savings Bank (successor to
NationsBank of Texas, N.A.), as trustee (herein called the "Trustee," which term
includes any successor trustee under the Indenture), to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights of the Company, the Trustee and the Holders of the Securities
and of the terms upon which the Securities are, and are to be, authenticated and
delivered. The Medium-Term Notes, Series A (the "Notes") may be issued from
time to time with different maturities, interest rates and redemption
provisions.
Interest payments for this Note will include interest accrued to but
excluding the Interest Payment Dates. Interest payments for this Note shall be
computed and paid on the basis of a 360-day year of twelve 30-day months.
Unless otherwise indicated on the face of this Note, this Note may not be
redeemed prior to Stated Maturity. If so indicated on the face of this Note,
this Note may be redeemed, at the option of the Company, on and after the
Initial Redemption Date, either in whole or from time to time in part at the
Redemption Price (as defined below), together with interest accrued thereon to
the date of redemption (the "Redemption Date"). Notice of redemption shall be
mailed to the Holders of the Notes designated for redemption at their addresses
as the same shall appear in the Security Register not more than 60 nor less than
30 days prior to the Redemption Date, subject to all the conditions and
provisions of the Indenture. In the event of any redemption in part, a new Note
for the amount of the unredeemed portion hereof shall be issued in the name of
the Holder hereof upon the surrender hereof. The "Redemption Price" shall
initially be the Initial Redemption Percentage, shown on the face hereof, of the
principal amount of this Note to be redeemed and shall decline at each
anniversary of the Initial Redemption Date, shown on the face hereof, by the
Annual Redemption Percentage Reduction, if any, shown on the face hereof, of the
principal amount to be redeemed until the Redemption Price is 100% of such
principal amount.
If an Event of Default with respect to the Notes shall occur and be
continuing, the principal of the Notes may be declared due and payable in the
manner and with the effect provided in the Indenture.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with the
consent of the Holders of not less than a majority in principal amount of the
Securities at the time Outstanding of each series to be affected. The Indenture
also contains provisions permitting the Holders of not less than a majority in
aggregate principal amount of the Outstanding Securities of any such series to
waive compliance by the Company with certain provisions of the Indenture and
certain past defaults under the Indenture and their consequences. Any such
consent or waiver by the Holder of this Note shall be conclusive and binding
upon such Holder and upon all future Holders of this Note and of any Note issued
upon the registration of transfer hereof or in lieu hereof or in exchange or
substitution hereof, whether or not any notation of such consent or waiver is
made upon this Note.
As set forth in, and subject to, the provisions of the Indenture, no Holder
of any Note will have any right to institute any proceeding, judicial or
otherwise, with respect to the Indenture or for any remedy thereunder, unless
such Holder shall have previously given to the Trustee written notice of a
continuing Event of Default with respect to the Notes, the Holders of not less
than 25% in principal amount of the Outstanding Notes shall have made written
request to the Trustee to institute such proceeding in respect of such Event of
Default in its own name as Trustee under the Indenture, such Holder or holders
have offered to the Trustee reasonable indemnity against the costs, expenses and
liabilities to be incurred in compliance with such request, the Trustee shall
have failed to institute such proceeding within 60 days of receipt of such
notice, request and offer of indemnity, and the Trustee shall not have received
from the Holders of a majority in principal amount of the Outstanding Notes a
direction inconsistent with such written request during the 60-day period;
provided, however, that such limitations do not apply to a suit instituted by
the Holder for the enforcement of payment of the principal of, premium, if any,
or interest on this Note on or after the respective due date expressed herein.
No reference herein to the Indenture and no provisions of this Note or of
the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of, premium, if any, and
interest on this Note at the times, place, and rate, and in the coin or
currency, herein prescribed.
The Indenture contains provisions for defeasance of (i) the entire
indebtedness of this Note and (ii) certain restrictive covenants upon compliance
by the Company with conditions set forth therein.
The Notes are issuable only in registered form without coupons and are
represented by either a global certificate registered in the name of a
depositary or in the name of its nominee or by a certificate registered in the
name of the purchaser of such Note or its nominee. The Notes are issuable in
denominations of $1,000 or any amount in excess thereof which is an integral
multiple of $1,000.
As provided in the Indenture and subject to certain limitations therein set
forth and except as otherwise restricted by a legend printed on the face hereof,
if any, the transfer of this Note may be registered on the Security Register,
upon surrender of this Note for registration of transfer at any office or agency
of the Company in any place where the principal of, premium, if any, and
interest on this Note are payable, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company, the Trustee and the
Security Registrar, duly executed by, the Holder or his attorney duly authorized
in writing, and thereupon one or more new Notes of like aggregate principal
amount of such denominations as are authorized for Notes and of like Stated
Maturity with like terms and conditions will be issued to the designated
transferee or transferees.
As provided in the Indenture and subject to certain limitations set forth
therein and except as otherwise restricted by a legend printed on the face
hereof, if any, Notes are exchangeable for a like aggregate principal amount of
Notes of such denominations as are authorized for Notes of like Stated Maturity
with like terms and conditions, as requested by the Holder surrendering the
same.
No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith. Expenses may
be charged for replacing mutilated, destroyed, lost or stolen Notes provided the
requirements for replacement are satisfied.
Prior to due presentment of this Note for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
person in whose name this Note is registered as the owner hereof for all
purposes, whether or not this Note be overdue, and none of the Company, the
Trustee or any such agent shall be affected by notice to the contrary.
THE INDENTURE AND THE NOTES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE
AND TO BE PERFORMED IN SUCH STATE.
All terms used in this Note which are defined in the Indenture shall have
the meanings assigned to them in the Indenture.
__________________________
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full according
to applicable laws or regulations:
<TABLE>
<S> <C>
TEN COM - as tenants in common UNIF GIFT MIN ACT-___________ Custodian __________ under Uniform Gifts to Minors Act________
TEN ENT - as tenants by the entireties (Cust) (Minor) (State)
JT TEN - as joint tenants with right of survivorship
and not as tenants in common
</TABLE>
Additional abbreviations may also be used though not in the above list.
______________________________
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- --------------------------------------
________________________________________________________________________________
________________________________________________________________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE
________________________________________________________________________________
the within Note and all rights thereunder, hereby irrevocably constituting and
________________________________________________________________________________
appointing
_______________________________________________________________________ Attorney
to transfer said Note on the books of the Company, with full power of
________________________________________________________________________________
substitution in the premises.
Dated:_______________________ ________________________
<PAGE>
EXHIBIT 4.3
Unless this certificate is presented by an authorized representative of The
Depository Trust Company (55 Water Street, New York, New York) to the Company or
its agent for registration of transfer, exchange or payment, and any certificate
issued is registered in the name of Cede & Co. or such other name as requested
by an authorized representative of The Depository Trust Company (and any payment
is made to Cede & Co. or to such other entity as is requested by an authorized
representative of The Depository Trust Company), ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as
the registered owner hereof, Cede & Co., has an interest herein.
This Note is registered in the name of a depositary (hereinafter, a
"Depositary") or a nominee of a Depositary appointed by the Company pursuant to
the terms of the Indenture hereinafter referred to. This Note is exchangeable
for Notes registered in the name of a Person other than the Depositary or its
nominee only in certain circumstances described in an Officers' Certificate
dated May 31, 1995 delivered to the Trustee by the Company pursuant to Section
301 of the Indenture. Unless and until this Note is exchanged in whole or in
part for one or more Notes in definitive form, this Note may not be transferred
except as a whole (i) by the Depositary to a nominee of the Depositary, (ii) by
a nominee of the Depositary to the Depositary or another nominee of the
Depositary or (iii) by the Depositary or any nominee of the Depositary to a
successor Depositary or a nominee of such successor Depositary).
<TABLE>
<CAPTION>
REGISTERED VASTAR RESOURCES, INC. REGISTERED
MEDIUM-TERM NOTE, SERIES A
(Fixed Rate)
<S> <C>
No. A-2 PRINCIPAL AMOUNT: $75,000,000
CUSIP 92238P AB 1
ORIGINAL ISSUE DATE: February 24, 1997 INTEREST RATE: 6.96% STATED MATURITY: February 26, 2007 ISSUE PRICE: $75,000,000
INITIAL REDEMPTION DATE: Not Applicable INITIAL REDEMPTION ANNUAL REDEMPTION
PERCENTAGE: Not Applicable PERCENTAGE REDUCTION: Not Applicable per annum
</TABLE>
REPURCHASE PRICE (for OID Notes): Not Applicable
VASTAR RESOURCES, INC., a Delaware corporation (herein called the
"Company," which term includes any successor corporation under the Indenture, as
hereinafter defined), for value received, hereby promises to pay to Cede & Co.,
or registered assigns, the principal sum of SEVENTY-FIVE MILLION DOLLARS, on the
Stated Maturity shown above, and to pay interest thereon, at the rate per annum
shown above, from the Original Issue Date shown above or from the most recent
Interest Payment Date (as defined below) to which interest has been paid or duly
provided for semi-annually in arrears on June 15 and December 15 in each year
("Interest Payment Dates"), until the principal hereof is paid or made available
for payment. Interest will be payable on each Interest Payment Date and at
Stated Maturity or upon redemption. Interest will be payable to the Holder at
the close of business on the Regular Record Date (which shall be May 31 and
November 30 of each year) next preceding such Interest Payment Date. If the
Original Issue Date is between a Regular Record Date and the next succeeding
Interest Payment Date, the first payment of interest hereon will be made on the
Interest Payment Date following the next succeeding Regular Record Date to the
Holder on such next Regular Record Date. Any such interest which is payable, but
is not punctually paid or duly provided for on any Interest Payment Date (herein
called "Defaulted Interest") shall forthwith cease to be payable to the
registered Holder on the relevant Regular Record Date, and may be paid by the
Company at its election to the Person in whose name this Note is registered at
the close of business on a Special Record Date for the payment of such Defaulted
Interest to be fixed by the Company, notice whereof shall be given to the Holder
of this Note not less than ten days prior to such Special Record Date, or may be
paid by the Company at any time in any other lawful manner, all as more fully
provided in the Indenture.
Payment of the principal, premium, if any, and interest payable at Stated
Maturity or upon redemption of this Note will be made in immediately available
funds at the office or agency of the Company in the Borough of Manhattan, The
City of New York, in such coin or currency of the United States of America as at
the time of payment is legal tender for payment of public and private debts,
provided that this Note is presented to the Paying Agent in time for the Paying
Agent to make such payments in such funds in accordance with its normal
procedures. Periodic payments of interest will be made by check mailed to the
address of the Person entitled thereto as it appears in the Security Register as
of the applicable Regular Record Date or, at the option of the Company, by wire
transfer to an account maintained by such Person with a bank located in the
United States.
Reference is hereby made to the further provisions of this Note set forth
on the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Note shall
not be entitled to any benefit under the Indenture or be valid or obligatory for
any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated: February 24, 1997
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series designated
therein referred to in the within-mentioned Indenture.
HARRIS TRUST AND SAVINGS BANK, as Trustee VASTAR RESOURCES, INC.
By: /s/ Frances Rusakowsky By: /s/ Michael E. Wiley
President
Authorized Signatory
Attest: /s/ Albert D. Hoppe
Secretary
<PAGE>
VASTAR RESOURCES, INC.
MEDIUM-TERM NOTE
This Medium-Term Note is one of a duly authorized issue of Securities of
the Company (herein referred to from time to time as the "Securities"), issued
and to be issued in one or more series under an Indenture dated as of January 1,
1995 and as amended by the Supplemental Indenture dated as of May 18, 1995 (as
it may be supplemented or amended from time to time, herein called the
"Indenture") between the Company and Harris Trust and Savings Bank (successor to
NationsBank of Texas, N.A.), as trustee (herein called the "Trustee," which term
includes any successor trustee under the Indenture), to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights of the Company, the Trustee and the Holders of the Securities
and of the terms upon which the Securities are, and are to be, authenticated and
delivered. The Medium-Term Notes, Series A (the "Notes") may be issued from
time to time with different maturities, interest rates and redemption
provisions.
Interest payments for this Note will include interest accrued to but
excluding the Interest Payment Dates. Interest payments for this Note shall be
computed and paid on the basis of a 360-day year of twelve 30-day months.
Unless otherwise indicated on the face of this Note, this Note may not be
redeemed prior to Stated Maturity. If so indicated on the face of this Note,
this Note may be redeemed, at the option of the Company, on and after the
Initial Redemption Date, either in whole or from time to time in part at the
Redemption Price (as defined below), together with interest accrued thereon to
the date of redemption (the "Redemption Date"). Notice of redemption shall be
mailed to the Holders of the Notes designated for redemption at their addresses
as the same shall appear in the Security Register not more than 60 nor less than
30 days prior to the Redemption Date, subject to all the conditions and
provisions of the Indenture. In the event of any redemption in part, a new Note
for the amount of the unredeemed portion hereof shall be issued in the name of
the Holder hereof upon the surrender hereof. The "Redemption Price" shall
initially be the Initial Redemption Percentage, shown on the face hereof, of the
principal amount of this Note to be redeemed and shall decline at each
anniversary of the Initial Redemption Date, shown on the face hereof, by the
Annual Redemption Percentage Reduction, if any, shown on the face hereof, of the
principal amount to be redeemed until the Redemption Price is 100% of such
principal amount.
If an Event of Default with respect to the Notes shall occur and be
continuing, the principal of the Notes may be declared due and payable in the
manner and with the effect provided in the Indenture.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with the
consent of the Holders of not less than a majority in principal amount of the
Securities at the time Outstanding of each series to be affected. The Indenture
also contains provisions permitting the Holders of not less than a majority in
aggregate principal amount of the Outstanding Securities of any such series to
waive compliance by the Company with certain provisions of the Indenture and
certain past defaults under the Indenture and their consequences. Any such
consent or waiver by the Holder of this Note shall be conclusive and binding
upon such Holder and upon all future Holders of this Note and of any Note issued
upon the registration of transfer hereof or in lieu hereof or in exchange or
substitution hereof, whether or not any notation of such consent or waiver is
made upon this Note.
As set forth in, and subject to, the provisions of the Indenture, no Holder
of any Note will have any right to institute any proceeding, judicial or
otherwise, with respect to the Indenture or for any remedy thereunder, unless
such Holder shall have previously given to the Trustee written notice of a
continuing Event of Default with respect to the Notes, the Holders of not less
than 25% in principal amount of the Outstanding Notes shall have made written
request to the Trustee to institute such proceeding in respect of such Event of
Default in its own name as Trustee under the Indenture, such Holder or holders
have offered to the Trustee reasonable indemnity against the costs, expenses and
liabilities to be incurred in compliance with such request, the Trustee shall
have failed to institute such proceeding within 60 days of receipt of such
notice, request and offer of indemnity, and the Trustee shall not have received
from the Holders of a majority in principal amount of the Outstanding Notes a
direction inconsistent with such written request during the 60-day period;
provided, however, that such limitations do not apply to a suit instituted by
the Holder for the enforcement of payment of the principal of, premium, if any,
or interest on this Note on or after the respective due date expressed herein.
No reference herein to the Indenture and no provisions of this Note or of
the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of, premium, if any, and
interest on this Note at the times, place, and rate, and in the coin or
currency, herein prescribed.
The Indenture contains provisions for defeasance of (i) the entire
indebtedness of this Note and (ii) certain restrictive covenants upon compliance
by the Company with conditions set forth therein.
The Notes are issuable only in registered form without coupons and are
represented by either a global certificate registered in the name of a
depositary or in the name of its nominee or by a certificate registered in the
name of the purchaser of such Note or its nominee. The Notes are issuable in
denominations of $1,000 or any amount in excess thereof which is an integral
multiple of $1,000.
As provided in the Indenture and subject to certain limitations therein set
forth and except as otherwise restricted by a legend printed on the face hereof,
if any, the transfer of this Note may be registered on the Security Register,
upon surrender of this Note for registration of transfer at any office or agency
of the Company in any place where the principal of, premium, if any, and
interest on this Note are payable, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company, the Trustee and the
Security Registrar, duly executed by, the Holder or his attorney duly authorized
in writing, and thereupon one or more new Notes of like aggregate principal
amount of such denominations as are authorized for Notes and of like Stated
Maturity with like terms and conditions will be issued to the designated
transferee or transferees.
As provided in the Indenture and subject to certain limitations set forth
therein and except as otherwise restricted by a legend printed on the face
hereof, if any, Notes are exchangeable for a like aggregate principal amount of
Notes of such denominations as are authorized for Notes of like Stated Maturity
with like terms and conditions, as requested by the Holder surrendering the
same.
No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith. Expenses may
be charged for replacing mutilated, destroyed, lost or stolen Notes provided the
requirements for replacement are satisfied.
Prior to due presentment of this Note for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
person in whose name this Note is registered as the owner hereof for all
purposes, whether or not this Note be overdue, and none of the Company, the
Trustee or any such agent shall be affected by notice to the contrary.
THE INDENTURE AND THE NOTES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE
AND TO BE PERFORMED IN SUCH STATE.
All terms used in this Note which are defined in the Indenture shall have
the meanings assigned to them in the Indenture.
________________________________
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of
this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
<TABLE>
<CAPTION>
<S> <C>
TEN COM - as tenants in common UNIF GIFT MIN ACT-___________ Custodian __________ under Uniform Gifts to Minors Act_____________
TEN ENT - as tenants by the entireties (Cust) (Minor) (State)
JT TEN - as joint tenants with right of survivorship
and not as tenants in common
Additional abbreviations may also be used though not in the above list.
_____________________________________________
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto
</TABLE>
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- --------------------------------------
________________________________________________________________________________
________________________________________________________________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE
________________________________________________________________________________
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing
________________________________________________________________________Attorney
to transfer said Note on the books of the Company, with full power of
________________________________________________________________________________
substitution in the premises.
Dated:___________________________ _______________________________
<PAGE>
EXHIBIT 4.4
Unless this certificate is presented by an authorized representative of The
Depository Trust Company (55 Water Street, New York, New York) to the Company or
its agent for registration of transfer, exchange or payment, and any certificate
issued is registered in the name of Cede & Co. or such other name as requested
by an authorized representative of The Depository Trust Company (and any payment
is made to Cede & Co. or to such other entity as is requested by an authorized
representative of The Depository Trust Company), ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as
the registered owner hereof, Cede & Co., has an interest herein.
Registered Registered
VASTAR RESOURCES, INC.
8.75% NOTES DUE FEBRUARY 1, 2005
VASTAR RESOURCES, INC., a CUSIP 922380AA8
corporation duly organized and existing SEE REVERSE FOR CERTAIN DEFINITIONS
under the laws of Delaware (herein
called the "Company", which term includes
any successor Person under the Indenture
hereinafter referred to), for value
received, hereby promises to pay to
***Cede & Co.*** *150000000*
<TABLE>
<S> <C> <C>
, or registered assigns, the principal sum of **ONE HUNDRED FIFTY MILLION** DOLLARS
</TABLE>
on February 1, 2005, and to pay interest thereon from February 1, 1995, or from
the most recent Interest Payment Date to which interest has been paid or duly
provided for, semi-annually on February 1 and August 1 in each year, commencing
August 1, 1995, at the rate of 8.75% per annum, until the principal hereof is
paid or made available for payment. The interest so payable, and punctually
paid or duly provided for, on any Interest Payment Date will, as provided in
such Indenture, be paid to the Person in whose name this Security (or one or
more Predecessor Securities) is registered at the close of business on the
Regular Record Date for such interest, which shall be the January 15 or July 15
(whether or not a Business Day), as the case may be, next preceding such
Interest Payment Date. Any such Interest not so punctually paid or duly
provided for will forthwith cease to be payable to the Holder on such Regular
Record Date and may either be paid to the Person in whose name this Security (or
one or more Predecessor Securities) is registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest to be fixed by
the Trustee, notice whereof shall be given to Holders of Securities of this
series not less than 10 days prior to such Special Record Date, or be paid at
any time in any other lawful manner not inconsistent with the requirements of
any securities exchange on which the Securities of this series may be listed,
and upon such notice as may be required by such exchange, all as more fully
provided in said Indenture.
Payment of the principal of (and premium, if any) and interest on this
Security will be made at the office or agency of the Company maintained for that
purpose in the City of Atlanta, Georgia, or, at the option of the Holder, in the
Borough of Manhattan, The City of New York, New York, in such coin or currency
of the United States of America as at the time of payment is legal tender for
payment of public and private debts, providing, however, that, at the option of
the Company, payment of interest may be made by check mailed to the address of
the Person entitled thereto as such address shall appear in the Security
Register.
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereby by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
Dated: February 1, 1995 IN WITNESS WHEREOF, the Company has caused
this instrument to be duly executed under
its corporate seal.
TRUSTEE'S AUTHENTICATION CERTIFICATE Attest: VASTAR RESOURCES, INC
This is one of the Securities of
the series designated therein
referred to in the within-mentioned
Indenture.
NationsBank of Texas, N.A.,
By /s/ T.R. Singer as Trustee /s/ Albert D. Hoppe By /s/ Michael E. Wiley
Authorized Signature Secretary President
<PAGE>
VASTAR RESOURCES, INC.
8.75% NOTES DUE FEBRUARY 1, 2005
This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities"), issued and to be issued in one or more
series under an Indenture, dated as of January 1, 1995 (herein called the
"Indenture"), between the Company and NationsBank of Texas, N.A., as Trustee
(herein called the "Trustee", which term includes any successor trustee under
the Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights, limitations
of rights, duties and immunities thereunder of the Company, the Trustee and the
Holders of the Securities and of the terms upon which the Securities are, and
are to be, authenticated and delivered. This Security is one of the series
designated on the face hereof, limited in aggregate principal amount to
$150,000,000.
If an Event of Default with respect to Securities of this series shall
occur and be continuing, the principal of the Securities of this series may be
declared due and payable in the manner and with the effect provided in the
Indenture.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with the
consent of the Holders of a majority in principal amount of all Securities at
the time Outstanding to be affected. The Indenture also contains provisions
permitting the Holders of specified percentages in principal amount of the
Securities at the time Outstanding, on behalf of the Holders of all Securities,
to waive compliance by the Company with certain provisions of the Indenture and
certain past defaults under the Indenture and their consequences. Any such
consent or waiver by the Holder of this Security shall be conclusive and binding
upon such Holder and upon the registration of transfer hereof or in exchange
herefor or in lieu hereof, whether or not notation of such consent or waiver is
made upon this Security.
The Indenture contains provisions for the legal defeasance at any time of
the entire indebtedness of the Company on this Security upon compliance by the
Company with certain conditions set forth therein, which provisions apply to
this Security. Upon compliance with such provisions, the Company shall be deemed
to have paid and discharged the entire indebtedness on this Security and the
Company's obligation to pay the principal of (and premium, if any) and interest
on this Security shall cease, terminate and be completely discharged.
The Indenture provides that no Holder of any Securities may enforce any
remedy under the Indenture except in the case of refusal or neglect of the
Trustee to act after notice of default and request by the Holders of 25% in
principal amount of Outstanding Securities in the series for which a remedy is
sought to be enforced and the offer to the Trustee of reasonable indemnity.
No reference herein to the Indenture and no provision of this Security or
of the Indenture shall, without the consent of the Holder, alter or impair the
right of the Holder, which is absolute and unconditional, to receive payment of
principal of (and premium, if any) and interest on this Security at the times,
place and rate, and in the coin or currency herein prescribed.
As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Security is registrable in the Security Register,
upon surrender of this Security for registration of transfer at the office or
agency of the Company in any place where the principal of (and premium, if any)
and interest on this Security are payable, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Company and the
Security Registrar duly executed by, the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Securities of this series,
of authorized denominations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees.
The Securities of this series are issuable only in registered form without
coupons in denominations of $1,000 and any integral multiple thereof. As
provided in the Indenture and subject to certain limitations therein set forth,
Securities of this series are exchangeable for a like aggregate principal amount
of Securities of this series of a different authorized denomination, as
requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name this Security is registered as the owner hereof for all
purposes, whether or not this Security be overdue; and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
All terms used in this Security which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
_________________________
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of
this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
<TABLE>
<S> <C>
TEN COM - as tenants in common UNIF GIFT MIN ACT - _______________________ Custodian ________________________________
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right of under Uniform Gifts to Minors Act
survivorship and not as tenants __________________________________________________________________
in common (State)
</TABLE>
Additional abbreviations may also be used though not in the above list.
______________________________
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- --------------------------------------
________________________________________________________________________________
________________________________________________________________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE
________________________________________________________________________________
the within Security and all rights thereunder, hereby irrevocably constituting
________________________________________________________________________________
and appointing
________________________________________________________________________________
to transfer said Security on the books of the Company, with full power of
________________________________________________________________________________
substitution in the premises.
Dated: _________________________ _____________________________________________
NOTICE: The signature to this assignment must
correspond with the name as written upon the
face of the certificate in every particular,
without alteration or enlargement or any
change whatever.
<PAGE>
EXHIBIT 4.5
Unless this certificate is presented by an authorized representative of The
Depository Trust Company (55 Water Street, New York, New York) to the Company or
its agent for registration of transfer, exchange or payment, and any certificate
issued is registered in the name of Cede & Co. or such other name as is
requested by an authorized representative of The Depository Trust Company (and
any payment is made to Cede & Co. or to such other entity as is requested by an
authorized representative of The Depository Trust Company), ANY TRANSFER, PLEDGE
OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
inasmuch as the registered owner hereof, Cede & Co., has an interest herein.
This Security is registered in the name of a depositary (hereinafter, a
"Depositary") or a nominee of a Depositary appointed by the Company pursuant to
the terms of the Indenture hereinafter referred to. This Security is
exchangeable for Securities registered in the name of a Person other than the
Depositary or its nominee only in certain circumstances described in an
Officers' Certificate dated March 31, 1999, delivered to the Trustee by the
Company pursuant to Section 301 of the Indenture. Unless and until this
Security is exchanged in whole or in part for one or more Securities in
definitive form, this Security may not be transferred except as a whole (i) by
the Depositary to a nominee of the Depositary, (ii) by a nominee of the
Depositary to the Depositary or another nominee of the Depositary or (iii) by
the Depositary or a nominee of the Depositary to a successor Depositary or a
nominee of such successor Depositary.
REGISTERED VASTAR RESOURCES, INC. REGISTERED
No. A-2 6.50% NOTES DUE APRIL 1, 2009 PRINCIPAL AMOUNT: $100,000,000
CUSIP 922380 AD 2
SEE REVERSE FOR CERTAIN DEFINITIONS
VASTAR RESOURCES, INC., a corporation duly organized and existing
under the laws of the State of Delaware (herein called the "Company," which term
includes any successor Person under the Indenture, as hereinafter defined), for
value received, hereby promises to pay to Cede & Co., or registered assigns, the
principal sum of ONE HUNDRED MILLION DOLLARS on April 1, 2009 (the "Stated
Maturity"), and to pay interest thereon from March 31, 1999, or from the most
recent Interest Payment Date (as hereinafter defined) to which interest has been
paid or duly provided for, semi-annually in arrears on April 1 and October 1 in
each year (each an "Interest Payment Date"), commencing October 1, 1999, at the
rate of 6.50% per annum, until the principal hereof is paid or made available
for payment. The interest so payable, and punctually paid or duly provided for,
on any Interest Payment Date will, as provided in the Indenture, be paid to the
Person in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest, which shall be the March 15 or September 15 (whether or not a Business
Day), as the case may be, next preceding such Interest Payment Date. Any such
Interest not so punctually paid or duly provided for on any Interest Payment
Date (herein called "Defaulted Interest") will forthwith cease to be payable to
the Holder on the relevant Regular Record Date and may either be paid to the
Person in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on a Special Record Date for the payment of
such Defaulted Interest to be fixed by the Trustee, notice of which shall be
given to Holders of Securities of this series not less than 10 days prior to
such Special Record Date, or be paid by the Company at any time in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which the Securities of this series may be listed, and upon such notice as
may be required by such exchange, all as more fully provided in the Indenture.
Payment of the principal of (and premium, if any, on) and interest
payable at Stated Maturity on this Security will be made in immediately
available funds at the office or agency of the Company in the Borough of
Manhattan, The City of New York, New York, in such coin or currency of the
United States of America as at the time of payment is legal tender for payment
of public and private debts, provided that this Security is presented to the
Paying Agent in time for the Paying Agent to make such payments in such funds in
accordance with its normal procedures. Periodic payments of interest will be
made by check mailed to the address of the Person entitled thereto as it appears
in the Security Register as of the applicable Regular Record Date or, at the
option of the Company, by wire transfer to an account maintained by such Person
with a bank located in the United States.
Reference is hereby made to the further provisions of this Security
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
<TABLE>
<CAPTION>
<S> <C>
Dated: March 31, 1999
TRUSTEE'S CERTIFICATE OF AUTHENTICATION VASTAR RESOURCES, INC.
This is one of the Securities of the series designated
therein referred to in the within-mentioned Indenture.
HARRIS TRUST AND SAVINGS BANK, as Trustee By: /s/ Charles D. Davidson
President
By: /s/ Amy Roberts
Authorized Signatory Attest: /s/ Albert D. Hoppe
Secretary
</TABLE>
<PAGE>
VASTAR RESOURCES, INC.
6.50% NOTES DUE APRIL 1, 2009
This Security is one of a duly authorized issue of securities of the
Company (referred to herein as the "Securities"), issued and to be issued in one
or more series under an Indenture dated as of January 1, 1995 and as amended by
Supplemental Indentures dated as of May 18, 1995 and April 16, 1998 (and as it
may be further supplemented or amended from time to time, referred to herein as
the "Indenture") among the Company and Harris Trust and Savings Bank (successor
to NationsBank of Texas, N.A.), as trustee (referred to herein as the "Trustee,"
which term includes any successor trustee under the Indenture), and the Bank of
Montreal Trust Company, as paying agent (the "Paying Agent," which term includes
any successor paying agent under the Indenture), to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Company, the Trustee and the Holders of the Securities and of the terms upon
which the Securities are, and are to be, authenticated and delivered. This
Security is one of the series designated on the face hereof, limited in
aggregate principal amount to $300,000,000.
If an Event of Default with respect to Securities of this series shall
occur and be continuing, the principal of the Securities of this series may be
declared due and payable in the manner and with the effect provided in the
Indenture.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with the
consent of the Holders of not less than a majority in principal amount of all
Securities at the time Outstanding of each series to be affected. The Indenture
also contains provisions permitting the Holders of not less than a majority in
principal amount of the Outstanding Securities of any such series, on behalf of
the Holders of all Outstanding Securities of that series, to waive compliance by
the Company with certain provisions of the Indenture and certain past defaults
under the Indenture and their consequences. Any such consent or waiver by the
Holder of this Security shall be conclusive and binding upon such Holder and
upon all future Holders of this Security and of any Security issued upon the
registration of transfer hereof or in exchange or substitution herefor or in
lieu hereof, whether or not notation of such consent or waiver is made upon this
Security.
The Indenture contains provisions for the defeasance at any time of
the entire indebtedness of the Company on this Security upon compliance by the
Company with certain conditions set forth therein.
As set forth in, and subject to, the provisions of the Indenture, no
Holder of any of the Securities of any series will have any right to institute
any proceeding, judicial or otherwise, with respect to the Indenture or for any
remedy thereunder, unless such Holder shall have previously given to the Trustee
written notice of a continuing Event of Default with respect to the Securities
of that series, the Holders of not less than 25% in aggregate principal amount
of the Outstanding Securities of that series shall have made written request to
the Trustee to institute such proceeding in respect of such Event of Default in
its own name as Trustee under the Indenture, such Holder or Holders have offered
to the Trustee reasonable indemnity against the costs, expenses and liabilities
to be incurred in compliance with such request, the Trustee shall have failed to
institute such proceeding within 60 days of receipt of such notice, request and
offer of indemnity, and the Trustee shall not have received from the Holders of
a majority in principal amount of the Outstanding Securities of that series a
direction inconsistent with such written request during the 60-day period;
provided, however, that such limitations do not apply to a suit instituted by
the Holder for the enforcement of payment of the principal of, premium, if any,
or interest on this Security on or after the respective due date expressed
herein.
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall, without the consent of the Holder, alter or impair
the obligation of the Company, which is absolute and unconditional, to pay the
principal of (and premium, if any) and interest on this Security at the times,
place and rate, and in the coin or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations
therein set forth, and except as otherwise restricted by a legend printed on the
face hereof, if any, the transfer of this Security may be registered in the
Security Register, upon surrender of this Security for registration of transfer
at the office or agency of the Company in any place where the principal of (and
premium, if any) and interest on this Security are payable, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company, the Trustee and the Security Registrar duly executed by, the Holder
hereof or his attorney duly authorized in writing, and thereupon one or more new
Securities of this series, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or
transferees.
The Securities of this series are issuable only in registered form
without coupons in denominations of $1,000 and any integral multiple thereof. As
provided in the Indenture and subject to certain limitations therein set forth,
and except as otherwise restricted by a legend printed on the face hereof, if
any, Securities of this series are exchangeable for a like aggregate principal
amount of Securities of this series of a different authorized denomination, as
requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith. Expenses
may be charged for replacing mutilated, destroyed, lost or stolen Securities,
provided the requirements for replacement are satisfied.
Prior to due presentment of this Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Security is registered as the owner
hereof for all purposes, whether or not this Security be overdue; and none of
the Company, the Trustee or any such agent shall be affected by notice to the
contrary.
THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE
AND TO BE PERFORMED IN THAT STATE.
All terms used in this Security which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
_______________________
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
<TABLE>
<CAPTION>
<S> <C>
TEN COM - as tenants in common UNIF GIFT MIN ACT - ____________ Custodian__________________
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right of under Uniform Gifts to Minors Act
survivorship and not as tenants ________________________________________
in common (State)
Additional abbreviations may also be used though not in the above list.
______________________
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- -----------------------------------------
_______________________________________________________________________________________________________________
_______________________________________________________________________________________________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE
_______________________________________________________________________________________________________________
the within Security and all rights thereunder, hereby irrevocably constituting and appointing
_______________________________________________________________________________________________________________
to transfer said Security on the books of the Company, with full power of substitution in the premises.
Dated: _________________________ X________________________________________________________________________
NOTICE: The signature to this assignment must
correspond with the name as written upon the face of
the certificate in every particular, without alteration
or enlargement or any change whatever.
</TABLE>
<PAGE>
EXHIBIT 4.6
Unless this certificate is presented by an authorized representative of The
Depository Trust Company (55 Water Street, New York, New York) to the Company or
its agent for registration of transfer, exchange or payment, and any certificate
issued is registered in the name of Cede & Co. or such other name as is
requested by an authorized representative of The Depository Trust Company (and
any payment is made to Cede & Co. or to such other entity as is requested by an
authorized representative of The Depository Trust Company), ANY TRANSFER, PLEDGE
OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
inasmuch as the registered owner hereof, Cede & Co., has an interest herein.
This Security is registered in the name of a depositary (hereinafter, a
"Depositary") or a nominee of a Depositary appointed by the Company pursuant to
the terms of the Indenture hereinafter referred to. This Security is
exchangeable for Securities registered in the name of a Person other than the
Depositary or its nominee only in certain circumstances described in an
Officers' Certificate dated March 31, 1999, delivered to the Trustee by the
Company pursuant to Section 301 of the Indenture. Unless and until this
Security is exchanged in whole or in part for one or more Securities in
definitive form, this Security may not be transferred except as a whole (i) by
the Depositary to a nominee of the Depositary, (ii) by a nominee of the
Depositary to the Depositary or another nominee of the Depositary or (iii) by
the Depositary or a nominee of the Depositary to a successor Depositary or a
nominee of such successor Depositary.
REGISTERED VASTAR RESOURCES, INC. REGISTERED
No. A-1 6.50% NOTES DUE APRIL 1, 2009 PRINCIPAL AMOUNT: $200,000,000
CUSIP 922380 AD 2
SEE REVERSE FOR CERTAIN DEFINITIONS
VASTAR RESOURCES, INC., a corporation duly organized and existing under
the laws of the State of Delaware (herein called the "Company," which term
includes any successor Person under the Indenture, as hereinafter defined), for
value received, hereby promises to pay to Cede & Co., or registered assigns, the
principal sum of TWO HUNDRED MILLION DOLLARS on April 1, 2009 (the "Stated
Maturity"), and to pay interest thereon from March 31, 1999, or from the most
recent Interest Payment Date (as hereinafter defined) to which interest has been
paid or duly provided for, semi-annually in arrears on April 1 and October 1 in
each year (each an "Interest Payment Date"), commencing October 1, 1999, at the
rate of 6.50% per annum, until the principal hereof is paid or made available
for payment. The interest so payable, and punctually paid or duly provided for,
on any Interest Payment Date will, as provided in the Indenture, be paid to the
Person in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest, which shall be the March 15 or September 15 (whether or not a Business
Day), as the case may be, next preceding such Interest Payment Date. Any such
Interest not so punctually paid or duly provided for on any Interest Payment
Date (herein called "Defaulted Interest") will forthwith cease to be payable to
the Holder on the relevant Regular Record Date and may either be paid to the
Person in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on a Special Record Date for the payment of
such Defaulted Interest to be fixed by the Trustee, notice of which shall be
given to Holders of Securities of this series not less than 10 days prior to
such Special Record Date, or be paid by the Company at any time in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which the Securities of this series may be listed, and upon such notice as
may be required by such exchange, all as more fully provided in the Indenture.
Payment of the principal of (and premium, if any, on) and interest
payable at Stated Maturity on this Security will be made in immediately
available funds at the office or agency of the Company in the Borough of
Manhattan, The City of New York, New York, in such coin or currency of the
United States of America as at the time of payment is legal tender for payment
of public and private debts, provided that this Security is presented to the
Paying Agent in time for the Paying Agent to make such payments in such funds in
accordance with its normal procedures. Periodic payments of interest will be
made by check mailed to the address of the Person entitled thereto as it appears
in the Security Register as of the applicable Regular Record Date or, at the
option of the Company, by wire transfer to an account maintained by such Person
with a bank located in the United States.
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated: March 31, 1999
TRUSTEE'S CERTIFICATE OF AUTHENTICATION VASTAR RESOURCES, INC.
This is one of the Securities of the
series designated therein referred
to in the within-mentioned Indenture.
HARRIS TRUST AND SAVINGS BANK, as Trustee By: /s/ Charles D. Davidson
President
By: /s/ Amy Roberts
Authorized Signatory Attest: /s/ Albert D. Hoppe
Secretary
<PAGE>
VASTAR RESOURCES, INC.
6.50% NOTES DUE APRIL 1, 2009
This Security is one of a duly authorized issue of securities of the
Company (referred to herein as the "Securities"), issued and to be issued in one
or more series under an Indenture dated as of January 1, 1995 and as amended by
Supplemental Indentures dated as of May 18, 1995 and April 16, 1998 (and as it
may be further supplemented or amended from time to time, referred to herein as
the "Indenture") among the Company and Harris Trust and Savings Bank (successor
to NationsBank of Texas, N.A.), as trustee (referred to herein as the "Trustee,"
which term includes any successor trustee under the Indenture), and the Bank of
Montreal Trust Company, as paying agent (the "Paying Agent," which term includes
any successor paying agent under the Indenture), to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Company, the Trustee and the Holders of the Securities and of the terms upon
which the Securities are, and are to be, authenticated and delivered. This
Security is one of the series designated on the face hereof, limited in
aggregate principal amount to $300,000,000.
If an Event of Default with respect to Securities of this series shall
occur and be continuing, the principal of the Securities of this series may be
declared due and payable in the manner and with the effect provided in the
Indenture.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with the
consent of the Holders of not less than a majority in principal amount of all
Securities at the time Outstanding of each series to be affected. The Indenture
also contains provisions permitting the Holders of not less than a majority in
principal amount of the Outstanding Securities of any such series, on behalf of
the Holders of all Outstanding Securities of that series, to waive compliance by
the Company with certain provisions of the Indenture and certain past defaults
under the Indenture and their consequences. Any such consent or waiver by the
Holder of this Security shall be conclusive and binding upon such Holder and
upon all future Holders of this Security and of any Security issued upon the
registration of transfer hereof or in exchange or substitution herefor or in
lieu hereof, whether or not notation of such consent or waiver is made upon this
Security.
The Indenture contains provisions for the defeasance at any time of the
entire indebtedness of the Company on this Security upon compliance by the
Company with certain conditions set forth therein.
As set forth in, and subject to, the provisions of the Indenture, no Holder
of any of the Securities of any series will have any right to institute any
proceeding, judicial or otherwise, with respect to the Indenture or for any
remedy thereunder, unless such Holder shall have previously given to the Trustee
written notice of a continuing Event of Default with respect to the Securities
of that series, the Holders of not less than 25% in aggregate principal amount
of the Outstanding Securities of that series shall have made written request to
the Trustee to institute such proceeding in respect of such Event of Default in
its own name as Trustee under the Indenture, such Holder or Holders have offered
to the Trustee reasonable indemnity against the costs, expenses and liabilities
to be incurred in compliance with such request, the Trustee shall have failed to
institute such proceeding within 60 days of receipt of such notice, request and
offer of indemnity, and the Trustee shall not have received from the Holders of
a majority in principal amount of the Outstanding Securities of that series a
direction inconsistent with such written request during the 60-day period;
provided, however, that such limitations do not apply to a suit instituted by
the Holder for the enforcement of payment of the principal of, premium, if any,
or interest on this Security on or after the respective due date expressed
herein.
No reference herein to the Indenture and no provision of this Security or
of the Indenture shall, without the consent of the Holder, alter or impair the
obligation of the Company, which is absolute and unconditional, to pay the
principal of (and premium, if any) and interest on this Security at the times,
place and rate, and in the coin or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein set
forth, and except as otherwise restricted by a legend printed on the face
hereof, if any, the transfer of this Security may be registered in the Security
register, upon surrender of this Security for registration of transfer at the
office or agency of the Company in any place where the principal of (and
premium, if any) and interest on this Security are payable, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company, the Trustee and the Security Registrar duly executed by, the Holder
hereof or his attorney duly authorized in writing, and thereupon one or more new
securities of this series, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or
transferees.
The Securities of this series are issuable only in registered form without
coupons in denominations of $1,000 and any integral multiple thereof. As
provided in the Indenture and subject to certain limitations therein set forth,
and except as otherwise restricted by a legend printed on the face hereof, if
any, Securities of this series are exchangeable for a like aggregate principal
amount of Securities of this series of a different authorized denomination, as
requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith. Expenses may
be charged for replacing mutilated, destroyed, lost or stolen Securities,
provided the requirements for replacement are satisfied.
Prior to due presentment of this Security for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name this Security is registered as the owner hereof for all
purposes, whether or not this Security be overdue; and none of the Company, the
Trustee or any such agent shall be affected by notice to the contrary.
THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE
AND TO BE PERFORMED IN THAT STATE.
All terms used in this Security which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
_______________________________
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of
this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
<TABLE>
<S> <C>
TEN COM - as tenants in common UNIF GIFT MIN ACT - _____________________ Custodian____________________
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right of under Uniform Gifts to Minors Act
survivorship and not as tenants ____________________________________________________
in common (State)
</TABLE>
Additional abbreviations may also be used though not in the above list.
______________________________
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- --------------------------------------
________________________________________________________________________________
________________________________________________________________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE
________________________________________________________________________________
the within Security and all rights thereunder, hereby irrevocably constituting
and appointing
________________________________________________________________________________
to transfer said Security on the books of the Company, with full power of
substitution in the premises.
Dated: _________________ X_________________________________________________
NOTICE: The signature to this assignment must
correspond with the name as written upon the face
of the certificate in every particular, without
alteration or enlargement or any change whatever.
<PAGE>
EXHIBIT 4.7
NOTE
----
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET,
NEW YORK, NEW YORK) TO THE ISSUER OR ITS AGENT FOR THE
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS MADE TO CEDE &
CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
VASTAR RESOURCES, INC.
PUTABLE/CALLABLE NOTE
(FIXED RATE)
REGISTERED PRINCIPAL AMOUNT
No. 1 $100,000,000
INTEREST PAYABLE EACH APRIL 20 AND OCTOBER 20 AND AT MATURITY
CUSIP 922380AC4
ORIGINAL ISSUE DATE: APRIL 20, 1998
- --------------------
INITIAL INTEREST RATE: 6%
- ----------------------
MATURITY DATE: APRIL 20, 2010
- --------------
COUPON RESET DATE: APRIL 20, 2000
- ------------------
CALCULATION AGENT: UBS Securities LLC
- ------------------
OTHER PROVISIONS: As set forth on Exhibit A to this Note.
- -----------------
<PAGE>
VASTAR RESOURCES, INC., a Delaware corporation (herein called the "Company"),
for value received, hereby promises to pay to Cede & Co. or registered assigns,
the principal amount of ONE HUNDRED MILLION U.S. DOLLARS on the Maturity Date
set forth above at the office or agency of the Company for such payment in The
City of New York, in such coin or currency of the United States of America as at
the time of payment shall be legal tender for the payment of public and private
debts, and to pay interest on said principal amount until maturity at the rate
per annum (on the basis of a 360-day year consisting of twelve 30-day months or
as otherwise provided above) equal to the Initial Interest Rate shown above
until the Coupon Reset Date and thereafter at a rate determined in accordance
with the provisions set forth on Exhibit A to this Note attached hereto under
"Coupon Reset Process" and on the reverse hereof, at such office or agency, in
like coin or currency, semi-annually on April 20 and October 20 of each year or
as otherwise provided above (each an "Interest Payment Date"), until the date on
which payment of said principal amount has been made or duly provided for, and
on such date. Unless otherwise provided above, such interest shall be payable
from the date hereof or from the most recent date to which interest has been
paid. Except as otherwise provided below or in the Indenture hereinafter
referred to and in the next sentence, the interest payable hereon on any April
20, or October 20, or such other date on which interest hereon is payable shall
be payable to the person in whose name this Note is registered on the fifteenth
calendar day (whether or not a Business Day) immediately preceding such April 20
or October 20 (the "Record Date"), or such other date on which interest hereon
is payable and may be paid, at the option of the Company, by check mailed to the
person entitled thereto at his address appearing in the Note Register (as
defined in the Indenture hereinafter referred to). Any such interest not so
punctually paid or duly provided for will forthwith cease to be payable to the
holder on such Record Date and may either be paid to the person in whose name
this Note (or one or more predecessor notes) is registered at the close of
business on a special record date (the "Special Record Date") for the payment of
such defaulted interest to be fixed by the Trustee, notice whereof shall be
given to the holder of this Note not less than 10 days prior to such Special
Record Date. Interest payable hereon on the Maturity Date set forth above shall
be payable to the same person to whom the principal amount hereof shall be
payable. Unless otherwise specified above, if the date of this Note is between
the last calendar day of the month next preceding an April 20, or October 20, or
other interest payment date and on April 20, or October 20, then the first
payment of interest hereon shall be made on the April 20 or October 20 following
the next succeeding Record Date to the registered owner on such Record Date. If
any Interest Payment Date or the Maturity Date falls on a day that is not a
Business Day, payment of principal or interest will be made on the next Business
Day as if it were made on the date such payment was due, and no interest will
accrue on the amount so payable for the period from and after such Interest
Payment Date or the Maturity Date, as the case may be.
Unless the Certificate of Authentication hereon has been executed by the
Trustee by the manual signature of one of its authorized officers, this Note
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
The provisions of this Note are continued on the reverse hereof and on
Exhibit A attached hereto and such continued provisions shall for all purposes
have the same effect as though fully set forth at this place.
2
<PAGE>
IN WITNESS WHEREOF, VASTAR RESOURCES, INC. has caused this Instrument to be
signed manually or by facsimile signature by its Chairman of the Board of
Directors, a Vice Chairman of the Board of Directors, President, a Member of the
Office of the President or one of its Vice Presidents and by its Treasurer or
one of its Assistant Treasurers or its Secretary or one of its Associate or
Assistant Secretaries, and a facsimile of its corporate seal to be affixed
hereunto or imprinted hereon.
VASTAR RESOURCES, INC.
By /s/ Daniel D. Hawk
_____________________________
Name:
Title:
By /s/ Jonathan D. Edelfelt
_____________________________
Associate Secretary
8
<PAGE>
This Note shall be deemed to be a contract made under the laws of the State
of New York, and for all purposes shall be construed in accordance with the laws
of said State.
CERTIFICATE OF AUTHENTICATION
Dated: April 21, 1998
This is one of the Notes of the series designed herein issued under the
within-mentioned Indenture.
HARRIS TRUST AND SAVINGS BANK
as Trustee
By: /s/ Therese Gaballah
_______________________
Name:
Title:
<PAGE>
REVERSE OF NOTE
This Note is a Global Security evidencing a portion of a duly authorized
issue of notes of the Company, designated generally as its Putable/Callable
Notes (the "Notes"). The Notes are all issued or to be issued under and
pursuant to the Indenture dated as of January 1, 1995 as supplemented by the
Supplemental Indenture dated as of May 18, 1995 and the Second Supplemental
Indenture dated as of April 16, 1998 (collectively, the "Indenture"), duly
executed and delivered by Harris Trust and Savings Bank, as trustee (the
"Trustee") and the Bank of Montreal Trust Company, as paying agent, to which
Indenture and all indentures supplemental thereto reference is hereby made for a
description of the rights, limitation of rights, obligations, duties and
immunities thereunder of the Trustee, the Company and the holders of the Notes.
The Notes constitute a single series for purposes of the Indenture.
In case an Event of Default, as defined in the Indenture, with respect to
the Notes shall have occurred and be continuing, the principal hereof may be
declared, and upon such declaration shall become, due and payable, in the
manner, with the effect and subject to the conditions provided in the Indenture.
The Indenture provides that the holders of a majority in aggregate principal
amount of the Notes at the time outstanding may on behalf of the holders of all
of the Notes waive any past default under the Indenture and its consequences,
except a default in the payment of principal of or interest on any of the Notes,
in the manner and to the extent provided in the Indenture.
The Indenture contains provisions permitting the Company and the Trustee,
with the consent of the holders of not less than a majority in aggregate
principal amount of the Notes at the time outstanding, evidenced as in the
Indenture provided, to execute supplemental indentures adding any provisions to
or changing in any manner or eliminating any of the provisions of the Indenture
or of any supplemental indenture or modifying in any manner the rights of the
holders of the Notes; provided, however, that no such supplemental Indenture
-------- -------
shall (i) extend the fixed maturity of any Note, or reduce the principal amount
thereof, or reduce the rate or extend the time of payment of interest thereon,
or make the principal thereof or interest thereon payable in any coin or
currency other than that hereinabove provided, without the consent of the holder
of each Note so affected, or (ii) reduce the aforesaid percentage of Notes, the
holders of which are required to consent to any such supplemental indenture,
without the consent of the holders of all Notes then outstanding.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditioned, to pay the principal of and interest on this Note at
the time and place and at the rate and in the coin or currency herein
prescribed.
The Notes are issuable as registered Notes only, in the denomination of
$1,000 and any larger denomination which is an integral multiple of $1,000
approved by the Company, such approval to be evidenced by the execution thereof.
This Note is transferable by the registered holder hereof in person or by
his attorney duly authorized in writing on the books of the Company at the
office or agency to be maintained by the Company for that purpose in The City of
New York, but only in the manner subject to the limitations and upon payment of
any tax or governmental charge for which the Company may require reimbursement
as provided in the Indenture, and upon surrender and cancellation of this Note.
Subject to limitations set forth in the Indenture, upon any registration of
transfer, a new registered Note or Notes, of authorized
4
<PAGE>
denomination or denominations, and in the same aggregate principal amount, will
be issued to the transferee in exchange therefor.
The Company, the Trustee, any paying agent, and any Note registrar may deem
and treat the registered holder hereof as the absolute owner of this Note
(whether or not this Note shall be overdue and notwithstanding any notations of
ownership or other writing hereon made by anyone other than the Note registrar)
for the purpose of receiving payment of or on account of the principal hereof
and interest due hereon, as herein provided and for all other purposes, and
neither the Company nor the Trustee nor any paying agent nor any Note registrar
shall be affected by any notice to the contrary.
No recourse shall be had for the payment of the principal of or interest on
this Note, or for any claim based hereon, or otherwise in respect hereof, or
based on or in respect of the Indenture or any indenture supplemental thereto,
against any incorporator, stockholder, officer or director, as such past,
present or future, of the Company or of any successor corporation, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issue hereof, expressly waived
and released.
Notwithstanding any other provision of this Note, unless and until it is
exchanged in whole or in part for Notes in definitive form, this Global Security
representing all or a portion of the Notes may not be transferred except as a
whole by the Depositary for such Notes to a nominee of such Depositary or by a
nominee of such Depositary to such Depositary or another nominee to a successor
Depositary for these Notes or a nominee of such successor Depositary.
The Notes are not redeemable prior to maturity but are subject to the Call
Option and are entitled to the Put Option described on Exhibit A to this Note.
5
<PAGE>
__________________________
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of
this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations.
TEN COM - as tenants in common UNIF GIFT MIN ACT ______ Custodian ______
TEN ENT - as tenants by the entries (Cust) (Minor)
JT TEN - as joint tenants with
right of survivorship _______________
and not as tenants (State)
in common
Additional abbreviations may also be used though not in the above list.
7
<PAGE>
FOR VALUE RECEIVED the undersigned hereby
sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING OF ASSIGNEE {.............}
__________________
(Please print or
________________________________________________________________________________
typewrite name and address of assignee)
the within Note of Beneficial Corporation and hereby does irrevocably constitute
and appoint
_________________________________________________________Attorney to transfer
the said Note on the books of the within-mentioned Company, with full power of
substitution in the premises.
Dated: _________________ _________________________________________________
NOTICE: The signature to this assignment must
correspond with the name as written upon the face
of the Note in every particular without alteration
or enlargement or any change whatever.
_________________________________________________
8
<PAGE>
EXHIBIT A
OTHER PROVISIONS
Call Option; Put Option
The Company and any of its assigns, including, but not limited to, Union
Bank of Switzerland, London branch (the "Callholder") has the right to purchase
this Note in whole but not in part on the Coupon Reset Date (as defined above)
(the "Call Option"), at a price equal to 100% of the principal amount hereof
(the "Call Price"), by giving notice to the Trustee (the "Call Notice"). Unpaid
interest accrued to but excluding the Coupon Reset Date will be paid by the
Company on such date to the holders on the most recent Record Date preceding the
Coupon Reset Date. In order to exercise the Call Option, the Callholder must
deliver the Call Notice to the Trustee, in writing, prior to 4:00 p.m., New York
time, no later than 15 calendar days prior to the Coupon Reset Date. In the
event of exercise of the Call Option, then (i) the Callholder shall deliver
immediately available funds equal to the Call Price to the Trustee not later
than 2:00 p.m., New York time, on the Business Day prior to the Coupon Reset
Date, for payment of the Call Price on the Coupon Reset Date and (ii) the
holders of the Notes shall be required to deliver the Notes to the Callholder
against payment therefor on the Coupon Reset Date through the facilities of the
Depositary.
If the Callholder elects to exercise the Call Option, the obligation of the
Callholder to pay the Call Price is subject to certain conditions precedent
including the following: (i) since the date of the Call Notice, no Event of
Default (as defined in the Indenture) with respect to the Notes, or any event
which, with the giving of notice or passage of time, or both would constitute an
Event of Default with respect to the Notes, shall have occurred and be
continuing; (ii) since the date of the Call Notice, no Market Disruption Event
(as defined below) shall have occurred; and (iii) since the date of the Call
Notice, two or more Dealers (as defined below) shall have provided timely Bids
(as defined below) in the manner described below under "Coupon Reset Process."
No holder of Notes or any interest therein shall have any rights or claims
against the Callholder as a result of the Callholder purchasing or not
purchasing the Notes.
If the Call Option has not been exercised, or in the event the Callholder
is not required or fails to deliver the Call Price to the Trustee by 2:00 p.m.,
New York time, on the Business Day prior to the Coupon Reset Date, the Trustee
will, for and on behalf of the holders of the Notes, exercise the put option
(the "Put Option") by giving the Company notice of such exercise not later than
the close of business on the Business Day prior to the Coupon Reset Date. Upon
exercise of the Put Option, the Company will be required to purchase all of the
Notes on the Coupon Reset Date, at a purchase price equal to 100% of the entire
principal amount thereof (the "Put Redemption Price"). Unpaid interest accrued
to but excluding the Coupon Reset Date will be paid by the Company on such date
to the holders on the most recent Record Date preceding the Coupon Reset Date.
The Put Option will be exercised automatically by the Trustee, on behalf of the
holders, if the Call Option has not been exercised. If the Put Option is
exercised, the Company will deliver the Put Redemption Price to the Trustee,
together with the accrued and unpaid interest due on the Coupon Reset Date, by
no later than 12:00 noon, New York time, on the Coupon Reset Date and the
holders of Notes will be required to deliver the Notes to the Company against
payment therefor on the Coupon Reset Date through the facilities of the
Depositary. No holder of Notes or any interest therein has the right to consent
or object to the Trustee's exercise of the Put Option. By its purchase of this
Note, the
1
<PAGE>
holder irrevocably agrees that the Trustee shall exercise the Put Option
relating to this Note for and on behalf of the holder as provided herein.
COUPON RESET PROCESS
If the Callholder has exercised the Call Option as set forth above under
"Call Option; Put Option," the Company and the Calculation Agent shall complete
the following steps in order to determine the interest rate to be paid on the
Notes from and including the Coupon Reset Date to the Maturity Date. The
Company and the Calculation Agent shall use reasonable efforts to cause the
actions contemplated below to be completed in as timely a manner as possible.
(a) The Company shall provide the Calculation Agent with a list (the
"Dealer List"), no later than seven Business Days prior to the Coupon Reset
Date, containing the names and addresses of five dealers (each, a "Dealer"), one
of which shall be UBS Securities LLC, or its successor as Calculation Agent,
from which it desires the Calculation Agent to obtain the Bids (as defined
below) for the purchase of the Notes. As used herein, "Business Day" means any
day other than a Saturday, a Sunday or a day on which banking institutions in
The City of New York are authorized or obligated by law, executive order or
governmental decree to close.
(b) Within one Business Day following receipt by the Calculation Agent of
the Dealer List, the Calculation Agent shall provide to each Dealer on the
Dealer List (i) a copy of the Prospectus dated November 18, 1994 and a copy of
the Prospectus Supplement dated April 16, 1998 relating to the offering of the
Notes, (ii) a copy of the form of Notes and (iii) a written request that each
Dealer submit a Bid to the Calculation Agent by 12:00 noon, New York time (the
"Bid Deadline"), on the third Business Day prior to the Coupon Reset Date (the
"Bid Date"). "Bid" shall mean an irrevocable written offer given by a Dealer
for the purchase of all the Notes subject to the exercise of the Call Option
settling on the Coupon Reset Date, and shall be quoted by such Dealer as a
stated yield to maturity on the Notes (the "Yield to Maturity"). The
Calculation Agent shall also provide each Dealer with (i) the name of the
Company, (ii) an estimate of the Purchase Price (as defined below) (which shall
be stated as a United States dollar amount and be calculated by the Calculation
Agent in accordance with clause (c) below), (iii) the principal amount and
maturity of the Notes and (iv) the method by which interest will be calculated
on the Notes.
(c) The entire purchase price to be paid by any Dealer for the Notes (the
"Purchase Price") shall be equal to (i) the entire principal amount of the Notes
plus (ii) a premium (the "Notes Premium") which shall be equal to the excess, if
any, of (A) the discounted present value to the Coupon Reset Date of a bond,
with a maturity of April 20, 2010 which has an interest rate of 5.443%, semi-
annual interest payments on each April 20 and October 20, commencing October 20,
2000, and a principal amount of $100,000,000, and assuming a discount rate equal
to the Treasury Rate (as defined below), over (B) $100,000,000. "Treasury Rate"
means the per annum rate equal to the offer side yield to maturity of the
current on-the-run 10-year United States Treasury Security per Telerate page 500
at 11:00 a.m., New York time, on the Bid Date (or such other date or time that
may be agreed upon by the Company and the Calculation Agent), or, if such rate
does not appear on Telerate page 500 at such time, the rates on GovPx End-of-Day
Pricing at 3:00 p.m., New York time, on the Bid Date (or such other date or time
that may be agreed upon by the Company and the Calculation Agent).
2
<PAGE>
(d) Immediately following receipt of the Bids, and in no event later than
12:30 p.m., New York time, on the Bid Date, the Calculation Agent shall provide
written notice to the Company, setting forth (i) the names of each of the
Dealers from whom the Calculation Agent received Bids on the Bid Date, (ii) the
Bid submitted by each such Dealer and (iii) the Purchase Price as determined
pursuant to paragraph (c) above. Except as provided below, the Calculation
Agent shall on the Bid Date select from the Bids received the Bid with the
lowest Yield to Maturity (the "Selected Bid") and establish the Coupon Reset
Rate for the Notes at a rate equal to the interest rate which would amortize the
Notes Premium fully over the term of the Notes at the Yield to Maturity
indicated by the Selected Bid; provided, however, that if the Calculation Agent
has not received a Bid from a Dealer by the Bid Deadline, the Selected Bid shall
be the lowest of all Bids received by such time and provided, further that if
any two or more of the lowest Bids submitted are equivalent, the Company shall
in its sole discretion select any of such equivalent Bids (and such selected Bid
shall be the Selected Bid). The Calculation Agent shall notify the Dealer that
submitted the Selected Bid by 12:30 p.m., New York time, on the Bid Date that
its Bid has been selected.
(e) Immediately after calculating the Coupon Reset Rate, and in no event
later than 12:30 p.m., New York time, on the Bid Date, the Calculation Agent
shall provide written notice to the Company and the Trustee, setting forth such
Coupon Reset Rate. The Company shall thereafter establish the Coupon Reset Rate
as the new interest rate on the Notes, effective from and including the Coupon
Reset Date, by delivering an officers' certificate to the Trustee on or before
the Coupon Reset Date.
(f) The Callholder shall sell the Notes to the Dealer that made the
Selected Bid at the Purchase Price, such sale to be settled on the Coupon Reset
Date in immediately available funds.
If the Calculation Agent determines (which determination must be reflected
in a written notice delivered by the Calculation Agent to the Company and the
Trustee no later than 2:00 p.m., New York time, on the Business Day prior to the
Coupon Reset Date) that (i) since the delivery of the Call Notice, an Event of
Default with respect to the Notes, or an event which, with the giving of notice
or the passage of time, or both, would constitute an Event of Default with
respect to the Notes, shall have occurred and be continuing, (ii) since the
delivery of the Call Notice, a Market Disruption Event (as described below) has
occurred or (iii) fewer than two Dealers have provided Bids in a timely manner
substantially as provided above, the Call Option will automatically terminate,
and the Trustee will exercise the Put Option on behalf of the holders. "Market
Disruption Event" shall mean any of the following, as determined by both the
Calculation and the Company: (i) a suspension or material limitation in trading
in securities generally on the New York Stock Exchange or the establishment of
minimum prices in such exchange; (ii) a general moratorium on commercial banking
activities declared by either federal or New York State authorities; (iii) any
material adverse change in the existing financial, political or economic
conditions in the United States of America; (iv) an outbreak or escalation of
major hostilities involving the United States of America or the declaration of a
national emergency or war by the United States of America; or (v) any material
disruption of the U.S. government securities market, U.S. corporate bond market
or U.S. federal wire system.
3
<PAGE>
EXHIBIT 10.1
THIRD AMENDMENT TO THE TAX SHARING AGREEMENT
EFFECTIVE OCTOBER 30, 1998
This THIRD AMENDMENT TO THE TAX SHARING AGREEMENT ("Third Amendment") is
made and entered into as of October 30, 1998 by and among ATLANTIC RICHFIELD
COMPANY, a Delaware corporation ("ARCO"), VASTAR RESOURCES, INC., a Delaware
corporation ("VRI"), VASTAR OFFSHORE, INC. (formerly Western Midway Company), a
Delaware corporation ("VOI"), Vastar Pipeline, LLC, a Delaware Limited Liability
Company ("VPL"), and the other Subsidiaries of VRI that are signatories hereto.
WHEREAS, ARCO, VRI and VRI's subsidiaries entered into that certain tax
sharing agreement dated effective October 1, 1993, and amendments thereto
effective June 1, 1995 and January 1, 1997 (the "Basic Tax Sharing Agreement"),
in each case to provide for the sharing of the ARCO Group Consolidated Tax
Liability, the state and local income and franchise tax liabilities relating to
certain consolidated, combined or unitary returns filed by the ARCO Group and
certain other matters relating to the inclusion of the VRI Group in the ARCO
Group; and
WHEREAS, ARCO and VRI entered into that certain stock purchase agreement
dated as of August 4, 1998 (the "Stock Purchase Agreement") to provide for the
sale of all of the common stock of Western Midway Company to VRI; and
WHEREAS, the Stock Purchase Agreement contains provisions relating to the
tax treatment of the assets acquired by VOI and VPL pursuant to that certain
Exchange Agreement dated as of August 4, 1998 by and among Mobil Exploration &
Producing US, Inc., as agent for Mobil Oil Exploration & Producing Southeast
Inc. and Mobil Texas & New Mexico Inc., and Western Midway Company (the
"Exchange Agreement"); and
WHEREAS, the Stock Purchase Agreement provides that the Basic Tax Sharing
Agreement will be amended to take into account the tax provisions in the Stock
Purchase Agreement relating to the assets acquired by VOI and VPL pursuant to
the Exchange Agreement (the "Gulf Assets"); and
WHEREAS, ARCO and VRI and its subsidiaries have agreed to amend Section
7(b) of the Basic Tax Sharing Agreement to incorporate their full and final
1
<PAGE>
agreement with respect to certain provisions of the Stock Purchase Agreement
that require ARCO to make certain payments to VRI in the event of a
deconsolidation of VRI and to clarify the application of Section 7(b) to certain
Designated Credits.
NOW THEREFORE, in consideration of the premises and of the mutual covenants
and agreements contained herein, the parties hereto agree as follows:
1. DEFINITIONS. Sections 1(m) through 1(s) are redesignated 1(n) through
-----------
1(t) and a new Section 1(m) is added to read as follows;
"(m) EXCHANGE AGREEMENT shall mean that certain exchange agreement dated as of
August 4, 1998 by and among Mobil Exploration & Producing US, Inc., as agent for
Mobil Oil Exploration & Producing Southeast Inc. and Mobil Texas & New Mexico
Inc., and Western Midway Company."
Sections 1(t) through 1(aa) are redesignated 1(v) through 1(cc) and a new
Section 1(u) is added to read as follows:
"(u) STOCK PURCHASE AGREEMENT shall mean that certain stock purchase agreement
dated as of August 4, 1998 between ARCO and VRI."
All capitalized terms not otherwise defined herein shall have the meaning given
to those terms in the Basic Tax Sharing Agreement or if not defined therein, in
the Stock Purchase Agreement.
2. AMENDMENT TO SECTION 4 OF THE BASIC TAX SHARING AGREEMENT. A new
---------------------------------------------------------
Section 4(j) is added to the Basic Tax Sharing Agreement to read as follows:
"(j) Special Provisions Applicable to the Assets Acquired By Vastar Offshore,
------------------------------------------------------------------------
Inc. and Vastar Pipeline, LLC. Notwithstanding anything else to the contrary in
- -----------------------------
this Agreement, the Pro Forma VRI Return and the Pro Forma State Return shall be
prepared (1) as if the aggregate adjusted tax basis of Vastar Offshore, Inc.
("VOI") and Vastar Pipeline, LLC ("VPL") in all of the assets acquired by VOI
and VPL pursuant to the Exchange Agreement on the initial date of such
acquisition was $440,021,187 and (2) as if such adjusted tax basis were
allocated among such assets in the manner specified on Appendix A hereto.
Moreover, tax reimbursement payments made to the VRI Group pursuant to Section
10.1 or 10.2 of the Stock Purchase Agreement, and tax reimbursement payments
made by the VRI Group pursuant to such Sections of the Stock Purchase Agreement,
shall not
2
<PAGE>
be considered items of income or deduction, respectively, on the Pro Forma VRI
Return or the Pro Forma State Return."
3. AMENDMENT TO SECTION 7(B) OF THE BASIC TAX SHARING AGREEMENT.
------------------------------------------------------------
Section 7(b) of the Basic Tax Sharing Agreement is amended by adding the
following language immediately after the third sentence of that section:
"Notwithstanding anything to the contrary in the Code or other applicable
authority, ARCO shall make the determinations required by this Section 7(b) as
if all Designated Credits described in Section 4(h)(iv) of the Basic Tax
Sharing Agreement are credits that would have been available for carryover by
the VRI Group if all Pro Forma VRI Returns had been actual returns.
In the event that ARCO and VRI determine that the aggregate tax basis of the
Gulf Assets immediately following an event that causes VRI to cease to be a
Member of the ARCO Group (taking into account any step up in such basis relating
to such event, whether pursuant to a Section 338(h)(10) election or otherwise)
(the "Actual Basis") is less than the aggregate tax basis that would have
resulted (taking into account all allowed or allowable depreciation or
amortization deductions) on such date if the initial tax basis of such assets as
of the Closing Date of the Stock Purchase Agreement had been $440,021,187 (the
"Calculated Basis"), then ARCO shall pay to VRI an amount equal to the
discounted present value (based on a discount rate of 10%, compounded annually)
of the dollar amount of deductions for depreciation and depletion attributable
to the difference between the Actual Basis and the Calculated Basis, as
determined in a commercially reasonable manner. In the event that (i) VRI
becomes the Common Parent of its own Affiliated Group for the year beginning on
the date it ceases to be a member of the ARCO Group and (ii) there is a Final
Determination after such date that the initial tax basis of the Gulf Assets as
of the Closing Date of the Stock Purchase Agreement is less than $440,021,187
and as a result the aggregate tax basis of the Gulf Assets as of the date of the
calculation set forth in the preceding sentence (taking into account any
increase in such tax basis related to such event) ("Redetermined Basis") is less
than the Actual Basis used by the parties in such calculation, then ARCO shall
recalculate the amounts, if any, that it owes pursuant to the preceding sentence
using the Redetermined Basis in lieu of the Actual Basis and shall promptly pay
to VRI the excess of the recalculated amount over the amount, if any, paid to
VRI pursuant to the initial calculation."
3
<PAGE>
4. EFFECTIVE DATE. This Third Amendment shall be effective as of October
--------------
30, 1998.
5. CONTINUATION OF THE BASIC TAX SHARING AGREEMENT. The Basic Tax Sharing
-----------------------------------------------
Agreement shall continue in full force and effect, except as expressly amended
herein.
6. CONFLICTS BETWEEN THIS THIRD AMENDMENT AND THE STOCK PURCHASE
-------------------------------------------------------------
AGREEMENT. In the event a conflict arises between the terms of the Basic Tax
- ---------
Sharing Agreement as amended by this Third Amendment and the terms of the Stock
Purchase Agreement during any Taxable Year in which the Basic Tax Sharing
Agreement and this Third Amendment are in effect, the terms of the Basic Tax
Sharing Agreement and this Third Amendment shall control. The parties hereto
intend that this Third Amendment to the Basic Tax Sharing Agreement shall
supersede Sections 11.1(a)(v) and 11.1(b) of the Stock Purchase Agreement and
shall constitute the parties' final agreement with respect to such sections.
VRI and its Affiliates further agree to release ARCO from any indemnity
obligations pursuant to Section 11.1(a)(v) of the Stock Purchase Agreement. It
is intended that this Agreement shall constitute a writing described in Section
12.3 of the Stock Purchase Agreement. If the items of income, deduction, gain,
loss, credits and other tax attributes of the Gulf Assets are included in the
Pro Forma VRI Return and the Pro Forma State Return in accordance with the Basic
Tax Sharing Agreement and this Third Amendment for the period(s) after the
Closing Date (as defined in the Stock Purchase Agreement) and VRI satisfies its
payment obligations with respect thereto pursuant to the Basic Tax Sharing
Agreement and this Third Amendment, then VOI and the VRI Group shall have no
further liability to ARCO for income and franchise taxes attributable to the
Gulf Assets. Furthermore, the tax indemnity provisions of the Basic Tax Sharing
Agreement shall be applicable with respect to the payment by VRI of such taxes.
The undersigned acknowledge their agreement to the foregoing Third Amendment
effective on the date specified above.
ATLANTIC RICHFIELD COMPANY VASTAR RESOURCES, INC.
By: /s/ Patrick J. Ellingsworth By: /s/ A. Shawn Noonan
---------------------------- --------------------
Patrick J. Ellingsworth A. Shawn Noonan
Vice President and General Tax Officer
General Tax Officer
Date: August 26, 1999 Date: August 26, 1999
--------------- ---------------
4
<PAGE>
F & H PIPELINE GRANT GATHERING COMPANY
By: /s/ A. Shawn Noonan By: /s/ A. Shawn Noonan
------------------- -------------------
A. Shawn Noonan A. Shawn Noonan
Assistant Secretary Assistant Secretary
Date: 8/26/99 Date: 8/26/99
---------- ----------
WILBURTON HUB, INC. VASTAR GAS MARKETING, INC.
By: /s/ A. Shawn Noonan By: /s/ A. Shawn Noonan
------------------- -------------------
A. Shawn Noonan A. Shawn Noonan
Assistant Secretary Assistant Secretary
Date: 8/26/99 Date: 8/26/99
---------- ----------
VASTAR HOLDINGS, INC VASTAR POWER MARKETING, INC.
By: /s/ A. Shawn Noonan By: /s/ A. Shawn Noonan
------------------- -------------------
A. Shawn Noonan A. Shawn Noonan
Assistant Secretary Assistant Secretary
Date: 8/26/99 Date: 8/26/99
--------- ---------
VASTAR OFFSHORE, INC. VASTAR PIPELINE, LLC
By: /s/ A. Shawn Noonan By: /s/ A. Shawn Noonan
------------------- -------------------
A. Shawn Noonan A. Shawn Noonan
General Tax Officer and Assistant Secretary
Assistant Secretary Date: 8/26/99
Date: 8/26/99 ---------
----------
VASTAR ENERGY, INC.
By: /s/ A. Shawn Noonan
--------------------
A. Shawn Noonan
Assistant Secretary
Date: 8/26/99
----------
5
<PAGE>
APPENDIX A TO THIRD AMENDMENT TO THE TAX SHARING AGREEMENT
VASTAR'S BASIS IN MOBIL ASSETS - PER VASTAR/ARCO TAX SHARING AGREEMENT
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
VASTAR TAX BASIS IN MOBIL ASSETS
------------------------------------------------
General Asset Product Class ARCO Basis Vastar
Class No. SIC Code No. Kind of Asset After LKE Adjustment Adjusted Basis
- --------- ------------ --------------------------------------------------- ------------- ------------ ---------------
SEC 1031 - EXCHANGE ASSETS
--------------------------------------------------- -
00.110 ---- Office furniture, fixtures, and equipment 265,327 (68,544) 196,783
00.120 ---- Information systems (computers and peripheral equipment) 11,841 (3,059) 8,782
00.130 ---- Data handling equipment, except computers 0 0 0
- ---- 3533 Oil field machinery and equipment 162,847,141 (42,069,679) 120,777,462
3663 Radio & TV communication equipment 140,523 (36,302) 104,221
- ---- ---- Reserves 346,902,565 (29,187,027) 317,715,538
----------- ------------ ------------
Sub-Total 510,167,397 (71,364,611) 438,802,786
=========== ============ ============
NON-SEC 1031 - EXCHANGE ASSETS
---------------------------------------------------
00.220 ---- Automobiles, taxis - 0 0
00.241 ---- Light general purpose trucks - 0 0
00.280 ---- Vessels, barges, tugs, and similar water-transportation
equipment 93 (24) 69
- ---- 3441 Fabricated structural metal 1,624,945 (419,786) 1,205,159
- ---- 3537 Forklift 7,586 (1,960) 5,626
3548 Welding apparatus 7,401 (1,912) 5,489
- ---- ---- Co-Gen Partnership Interest - 0 0
- ---- ---- Oil price guarantee - 0 0
00.400 ---- Industrial steam and electric generation and/or 0 0
steam distribution systems 2,775 (717) 2,058
----------- ------------ ------------
Sub-Total 1,642,799 (424,398) 1,218,401
=========== ============ ============
Grand Total 511,810,196 (71,789,009) 440,021,187
=========== ============ ============
Amount to allocate to Tangible/Depletable Assets:
Gross basis per Stock Purchase Agreement 470,000,000
Less: WMC cash balance at purchase date (29,229,342)
Adjustments for post closing operating expenses (5,971,855)
Add: Vastar capitalized costs 5,222,384
-----------
Amount to allocate to Tangible/Depletable
Assets 440,021,187
===========
Note 1: Gross basis per Article 10.4 of Stock Purchase Agreement
Note 2: Adjustments for post closing operating expenses per discussions w/Ann Kluppel @ Vastar
and Mark Hildebrand @ AWE.
Note 3: Vastar capitalized costs per discussions w/ Ann Kluppel @ Vastar
</TABLE>
<PAGE>
EXHIBIT 10.2
VASTAR RESOURCES, INC.
SECOND AMENDMENT TO
ANNUAL INCENTIVE PLAN
Pursuant to the power of amendment reserved therein, Vastar Resources,
Inc. Annual Incentive Plan (the "Plan") is hereby amended as follows:
1. Section 2 is amended, effective as of the Effective Time (as
defined in Annex A to the Plan as amended hereby) to renumber subsections (o)
and (p) as (p) and (q), to renumber subsection (q) as (u), and to renumber
subsection (r) as (w), and to add new subsections (o), (r), (s), (t) and (v)
which shall read as follows:
"(o) "Benefit Trigger Window" means the 24-month period
commencing on the date immediately following the Effective Time and means the
24-month period commencing on the date that a Subsequent Change of Control
occurs.
(r) "Effective Time" shall be ascribed the meaning set forth for
such term on Annex A attached hereto.
(s) "Merger" shall be ascribed the meaning set forth for such
term on Annex A attached hereto.
(t) "Parent Company" shall be ascribed the meaning set forth for
such term on Annex A attached hereto.
(v) "Subsequent Change of Control" shall be ascribed the meaning
set forth for such term on Annex A attached hereto."
When amending sections or subsections currently set forth in the Plan,
the section or subsection references below refer to the sections and subsections
as they existed prior to the renumbering as provided for above. Moreover, all
current references in the Plan to other sections and subsections of the Plan
shall be deemed to refer to the applicable section or subsection as renumbered
herein.
2. Section 2 will be amended to eliminate the clause in subsection
(o) which reads "but excluding an event described under paragraph (3) of the
definition of such term on Annex A."
3. Section 7 will be amended, effective as of the Effective Time, to
delete subsection (a) and replace it with the following:
"(a) A Participant shall be entitled to a Change of Control Bonus
Payment (as hereafter defined) within 60 days of the first to occur of (i) his
or her Termination of Employment during a Benefit Trigger Window, or (ii) a
Subsequent Change of Control. Each of (i) and (ii) in the previous sentence is
referred to hereafter as a "Bonus Triggering Event." The term "Change of
Control Bonus Payment" shall mean an amount equal to
1
<PAGE>
(i)(A) if the Bonus Triggering Event occurs during the first six months of a
Plan Year, an amount equal to 50 percent of the Participant's Target AIP Award
for such Plan Year, and (B) if the Bonus Triggering Event occurs during the
second six months of a Plan Year, an amount equal to 100 percent of the
Participant's Target AIP Award for such Plan Year, plus (ii) the Target AIP
Award applicable to such Participant for the Plan Year ending immediately prior
to the Bonus Triggering Event if a specific award has not been paid to such
Participant with respect to such Plan Year."
4. Section 7 will be amended, effective as of the Effective Time, to
add new subsection (c) which shall read as follows:
"(c) For the purposes of subsection (a) above, the term
"Termination of Employment" shall mean:
(i) a termination of employment during the Benefit
Trigger Window by the Surviving Entity, other than for Cause, or
(ii) the Employee's voluntary termination within the
Benefit Trigger Window as a result of the Surviving Entity's implementation of:
(A) a ten percent or more reduction of such
Employee's Qualifying Pay from the Qualifying Pay determined as of the date
immediately prior to the date of the Change of Control, or a ten percent or more
reduction (based on dollar value) in the Employee's aggregate Qualifying Pay
plus Target Award ("Total Pay") from the Employee's Total Pay determined as of
the date immediately prior to the date of the Change of Control;
(B) a required relocation of the Employee's principal
place of work to a location which would satisfy the conditions specified in (S)
217(c)(1) of the Internal Revenue Code of 1986, as amended (the "Code"), for a
deduction by such Employee of moving expenses under (S) 217 of the Code; or
(C) with respect to Tier 1 and 2 Employees of the
Company, a demotion to a lesser job.
(iii) An Employee shall be deemed to have a termination of
employment due to a transfer of employment directly between the Company or any
of its affiliates.
For purposes of this subsection, the following definitions shall
apply:
(i) "Cause" shall mean (i) the conviction of the Employee for
any felony involving dishonesty, fraud or breach of trust or (ii) the willful
engagement by the Employee in gross misconduct in the performance of his or her
duties that materially injures the Surviving Entity.
2
<PAGE>
(ii) "Qualifying Pay" means the Employee's annualized rate of
regular wages or salary, excluding all extra pay such as overtime, premiums,
bonuses, living or other allowances, determined as of the relevant date.
(iii) "Surviving Entity" means the Company, or any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of the Company after a
Change of Control, and its affiliates.
(iv) "Target Award" means the annual target performance bonus
award applicable to the Employee for the relevant period."
5. Section 8 will be amended to replace subsection (d) in its entirety
which shall now read as follows:
"(d) Both the Chief Financial Officer and the Vice President, Human
Resources of the Company whose duties with respect to this Plan are provided
herein, will be those persons who have been employed in such positions by the
Company since April 1, 1999. Any action required to be taken under this Plan by
the Chief Financial Officer and the Vice President, Human Resources of the
Company may be taken by either individual if the other position is vacant. If
the positions of Chief Financial Officer and Vice President, Human Resources of
the Company are both vacant, actions required to be taken under the Plan by such
officers may only be taken by one of the officers of the Company set forth below
(in the order stated) who was in such position on April 1, 1999:
(i) Controller
(ii) General Counsel
(iii) Senior Vice President of Production
(iv) Senior Vice President of Exploration
(v) Vice President of Business Development.
If none of such persons is in such position, the Special Plan Administrator
shall take actions required to be taken under the Plan."
6. Annex A is amended, with respect to the definition of "Change of
Control" and the definition of "Outside Director", to replace the terms
"Atlantic Richfield Company" and "ARCO" with the term "Parent Company". This
amendment shall be construed consistently with the intent that the Merger, if it
occurs, is a Change of Control.
7. Annex A, with respect to the definition of "Change of Control," is
amended, effective as of the Effective Time, to add "; or" at the end of
Paragraph (6) and to add new Paragraph (7) which shall read as follows:
"(7) A Subsequent Change of Control."
8. Annex A is amended to add the following definitions:
3
<PAGE>
"Effective Time" means, with respect to the Merger, such time as
the Certificate of Merger is duly filed with the Secretary of State of the State
of Delaware or at such later time as is specified in the Certificate of Merger
in accordance with the Delaware General Corporation Law.
"Merger" shall mean the merger between Atlantic Richfield Company
and Prairie Holdings, Inc., a subsidiary of BP Amoco p.l.c.
"Parent Company" shall mean, until the Effective Time of the
Merger, Atlantic Richfield Company and, after the Effective Time of the Merger,
BP Amoco p.l.c. or any of its subsidiaries or affiliates and any of their
respective successors.
"Subsequent Change of Control" shall mean each Change of Control
which occurs after the consummation of a transaction constituting a Change of
Control."
9. The Plan will be amended to replace (except in Section 8(d)(ii) of
the Plan as amended above) the term "General Counsel" with the term "Vice
President, Human Resources."
10. All amendments shall be effective as of July 21, 1999 unless
otherwise noted.
Executed as of the 12th day of August, 1999.
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
APPROVED as to form this 24/th/day
of August, 1999
WACHOVIA BANK, N.A.,
By:/s/ Peter D. Quinn
---------------------------
Name: Peter D. Quinn
-------------------------
Title: Senior Vice President
------------------------
4
<PAGE>
EXHIBIT 10.3
VARTAR RESOURCES, INC.
FIRST AMENDMENT TO
EXECUTIVE DEFERRAL PLAN
Pursuant to the power of amendment reserved therein, Vastar Resources,
Inc. Amended and Restated Executive Deferral Plan, which was effective March 24,
1999 (the "Plan") is hereby amended as follows:
1. Section 1.3 is amended:
(a) to delete subsection (f) "ARCO Acquisition"; subsection (ii)
"Secondary Change of Control"; and subsection (ll) "Transition Window";
(b) to renumber subsections (g) through (j) as (f) through (i);
(c) to renumber subsections (v) through (y) as (w) through (z);
(d) to renumber subsection (z) as (bb);
(e) to renumber subsection (aa) through (ee) as (dd) through
(hh);
(f) to renumber subsections (ff) through (hh) as (kk) through
(mm);
(g) to renumber subsection (jj) as (nn);
(h) to renumber subsection (kk) to (rr); and
(i) to renumber subsection (mm) through (oo) as (ss) through
(uu).
When amending sections or subsections currently set forth in the Plan,
the section or subsection references below refer to the sections and subsections
as they existed prior to the renumbering as provided for above. Moreover, all
current references in the Plan to other sections and subsections of the Plan
shall be deemed to refer to the applicable section or subsection as renumbered
herein.
2. Section 1.3 is amended to add new subsections (j), (v), (aa),
(cc), (ii), (jj) (oo), (pp) and (qq) to read as follows:
"(j) "Benefit Trigger Window" means the 24-month period commencing on
the date immediately following the Effective Time and means each 24-month period
commencing on the date that a Subsequent Change of Control occurs."
(v) "Effective Time" shall be ascribed the meaning set forth for such
term on Annex A attached hereto.
1
<PAGE>
(aa) "Merger" shall be ascribed the meaning set forth for such term on
Annex A attached hereto.
(cc) "Parent Company" shall be ascribed the meaning set forth for such
term on Annex A attached hereto.
(ii) "Qualifying Pay" means the Employee's annualized rate of regular
wages or salary, excluding all extra pay such as overtime, premiums, bonuses,
living or other allowances, determined as of the relevant date.
(jj) "Qualifying Termination of Employment" means the Employee's
termination of employment from Vastar, ARCO and their affiliates and their
respective successors in interest under one of the circumstances described
below:
(i) a termination of employment during a Benefit Trigger Window
by the Surviving Entity, other than for Cause, or
(ii) the Employee's voluntary termination within a Benefit
Trigger Window as a result of the Surviving Entity's
implementation of:
(A) a ten percent or more reduction of such Employee's
Qualifying Pay from the Qualifying Pay determined as of the
date immediately prior to the date of the Change of
Control, or a ten percent or more reduction (based on
dollar value) in the Employee's aggregate Qualifying Pay
plus Target Award ("Total Pay") from the Employee's Total
Pay determined as of the date immediately prior to the date
of the Change of Control;
(B) a required relocation of the Employee's principal
place of work to a location which would satisfy the
conditions specified in (S) 217(c)(1) of the Internal
Revenue Code of 1986, as amended (the "Code"), for a
deduction by such Employee of moving expenses under (S) 217
of the Code; or
(C) with respect to Tier 1 and 2 Employees of Vastar, a
demotion to a lesser job.
(iii) No Employee shall be deemed to have a termination of
employment solely due to a transfer of employment directly
between Vastar, a Surviving Entity or any of their affiliates.
(oo) "Subsequent Change of Control" shall be ascribed the meaning set
forth for such term on Annex A attached hereto.
2
<PAGE>
(pp) "Surviving Entity" means Vastar, or any successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of Vastar after a Change of
Control, and its affiliates.
(qq) "Target Award" means the annual target performance bonus award
applicable to the Employee for the relevant period."
3. Subsection 1.3(d) is amended to delete the last sentence of
subsection (d).
4. Section 1.3(m) is amended to delete the clause which reads "and
shall also mean a Secondary Change of Control".
5. Section 1.3(y) is amended to replace the second sentence with the
following:
"After a Change of Control, "Interest Rate" shall mean the
greatest of (a) 125% of the 120-month rolling average of the 10-year U.S.
Treasury Note rate for the period ending the prior June 30, effective for the
Plan Year commencing thereafter, determined in a manner consistent with past
practice; or (b) the Citibank Base Rate; or (c) the rate of interest credited
under a comparable plan maintained in the United States for senior executives of
BP Amoco p.l.c. and Atlantic Richfield Company (or upon a Subsequent Change of
Control, the acquiring company). The provision of clauses (a), (b), and (c)
shall apply for 10 complete Plan Years, with the first year commencing the
January 1 after the Change of Control or Subsequent Change of Control. For the
11th through 20th years after a Change of Control or Subsequent Change of
Control, the "Interest Rate" shall be no less than the greater of (b) or (c)
above. If a Subsequent Change of Control occurs within any of the above time
periods, the time periods would restart commencing on January 1 after any
Subsequent Change of Control. As used above, the term "Citibank Base Rate" means
the rate of interest announced from time to time by Citibank, N.A. or its
successor as its base rate of interest charged to its customers. If Citibank,
N.A. is not in existence then the Special Plan Administrator shall substitute
the base rate of another major money center bank located in the United States."
6. Section 1.3(ff)(ii)(2) is amended to replace the phrase
"involuntary termination of employment" with "Qualifying Termination of
Employment."
7. Section 2.5(b) is amended to replace the subsection with the
following:
"A Participant's Deferral Commitments shall not terminate upon a
Change of Control triggered by the Merger. Deferral Commitments shall terminate
upon a Subsequent Change of Control, provided, however, that any Deferral
Commitments relating to Awards and ESSP benefits which a Participant is or
becomes entitled to on or prior to the Subsequent Change of Control shall remain
binding."
3
<PAGE>
8. Section 2.6 is amended to delete subsections 2.6(c), (d) and (e)
thereof.
9. Section 3.3 is amended to delete the words "Prior to a Change of
Control, a" and replace them with "A" in subsection 3.3(a), to delete subsection
3.3(b) in its entirety and to renumber the remaining text as Section 3.3.
10. Section 4.2(a) is amended to add at the end of the first sentence
of 4.2(a)(ii) the phrase "(provided that a Participant shall not be allowed to
make or change a Retirement Distribution election after receiving a notice of
any Termination of Employment)" and to add a new subsection (v) at the end
thereof which shall read as follows:
"(v) Notwithstanding anything in this Section 4.2(a) to the
contrary, within 30 days after the earlier to occur of an Anticipatory
Change of Control (which relates to a Subsequent Change of Control) or
a Subsequent Change of Control, on a form prescribed by the Special
Plan Administrator, each Participant may make an election as to the
time and/or the form of Retirement Distribution of the Participant's
Account which would be paid in the event of the Participant's
Qualifying Termination of Employment during a Benefit Trigger Window
relating to such Subsequent Change of Control (provided that a
Participant shall not be allowed to make or change a Retirement
Distribution election after receiving a notice of any Termination of
Employment). Such election shall conform with the following
limitations:
A. The Participant's earliest payment start date shall be the
first January following the Participant's Qualifying
Termination of Employment, but not earlier than 12 months
following the date of the Subsequent Change of Control;
B. The Participant's latest payment start date shall be the
fifth January following the date of the Subsequent Change of
Control;
C. The benefits shall be distributed in the form of a lump sum
and/or installment payments made over a five, ten or
fifteen-year period. If a lump sum distribution is elected,
payments may be made over a three-year period; and
D. Payments may not be made beyond 20 years following the date
of the Subsequent Change of Control.
If a Participant fails to make the above-described election and has a
Qualifying Termination of Employment in the Benefit Trigger Window after a
Subsequent Change of Control, payment of the Participant's Account will be made
in accordance with the Participant's election under Section 4.2(a)(i), provided,
however, that the Retirement
4
<PAGE>
Distribution and the payment starting date shall be adjusted by the Special Plan
Administrator, as necessary, so that no payments will be made beyond 20 years
following the date of the Subsequent Change of Control."
11. The opening clause of Section 4.2(b) shall be amended to read:
"Except as provided in Section 4.2(a)(v), notwithstanding anything in this Plan
to the contrary, the only available forms and times of payment upon Retirement
are as follows:"
12. Section 4.4(b) is amended to delete the last sentence and replace
it with the following:
"Notwithstanding the foregoing or anything to the contrary elsewhere
in this Plan, in the event the Participant's Termination of Employment due to
death occurs after any Subsequent Change of Control, the survivor benefits shall
be the Participant's Account, payable in monthly installments pursuant to this
Section 4.4(b)."
13. Article VI will be amended to add new Section 6.7 which shall
read as follows:
"6.7 Authorized Officers
Both the Chief Financial Officer and the Vice President, Human
Resources of Vastar whose duties with respect to this Plan are provided herein,
will be those persons who have been employed by the Company in such positions by
since April 1, 1999. Any action required to be taken under this Plan by the
Chief Financial Officer and the Vice President, Human Resources of Vastar may be
taken by either individual if the other position is vacant. If the positions of
Chief Financial Officer and Vice President, Human Resources of Vastar are both
vacant, actions required to be taken under the Plan by such officers may only be
taken by one of the officers of Vastar set forth below (in the order stated) who
was in such position on April 1, 1999:
(a) Controller
(b) General Counsel
(c) Senior Vice President of Production
(d) Senior Vice President of Exploration
(e) Vice President of Business Development.
If none of such persons is in such position, the Special Plan Administrator
shall take actions required to be taken under the Plan."
14. Section 7.1 is amended to delete the second sentence and replace it
with the following:
5
<PAGE>
"Notwithstanding the above, upon an Anticipatory Change Termination (as
defined in Section 1.3(d)), this Plan may again be amended, subject to Section
7.3, from time to time by the Board of Directors of Vastar or its designee."
15. Section 7.2 is amended to delete the last sentence thereof.
16. Section 7.4 is amended to delete the last sentence thereof.
17. Annex A is amended, with respect to the definition of "Change of
Control" and the definition of "Outside Director", to replace the terms
"Atlantic Richfield Company" and "ARCO" with the term "Parent Company". This
amendment shall be construed consistently with the intent that the Merger, if it
occurs, is a Change of Control.
18. Annex A, with respect to the definition of "Change of Control," is
amended, effective as of the Effective Time (as defined in Annex A to the Plan
as amended hereby), to add "; or" at the end of Paragraph (6) and to add new
Paragraph (7) which shall read as follows:
"(7) A Subsequent Change of Control."
19. Annex A is amended to add the following definitions:
""Effective Time" means, with respect to the Merger, such time as the
Certificate of Merger is duly filed with the Secretary of State of the State of
Delaware or at such later time as is specified in the Certificate of Merger in
accordance with the Delaware General Corporation Law.
"Merger" shall mean the merger between Atlantic Richfield Company and
Prairie Holdings, Inc., a subsidiary of BP Amoco p.l.c.
"Parent Company" shall mean, until the consummation of the Merger,
Atlantic Richfield Company and, after the consummation of the Merger, BP Amoco
p.l.c. or any of its subsidiaries or affiliates and any of their respective
successors.
"Subsequent Change of Control" shall mean each Change of Control which
occurs after the consummation of a transaction constituting a Change of
Control."
20. The Plan will be amended to replace (except in Section 6.7(b) of the
Plan as amended above) the term "General Counsel" with the term "Vice President,
Human Resources."
21. All amendments shall be effective as of July 21, 1999 unless otherwise
noted.
6
<PAGE>
Executed as of the 12th day of August, 1999.
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
APPROVED as to form this 24/th/ day
of August, 1999
WACHOVIA BANK, N.A.,
By: /s/ Peter D. Quinn
------------------------------
Name: Peter D. Quinn
----------------------------
Title: Senior Vice president
---------------------------
7
<PAGE>
EXHIBIT 10.4
VASTAR RESOURCES, INC.
FIRST AMENDMENT TO
COMPREHENSIVE MANAGEMENT MEDICAL PLAN
Pursuant to the power of amendment reserved therein, Vastar Resources, Inc.
Comprehensive Management Medical Plan (the "Plan") is hereby amended as follows:
1. Paragraph 1(c) is amended in its entirety, effective as of the
Effective Time (as defined in Annex A to the Plan as amended hereby), to read as
follows:
"(c) "Benefit Trigger Window" means the 24-month period commencing on
the date immediately following the Effective Time and means the 24-month period
commencing on the date that a Subsequent Change of Control occurs.
2. Paragraph 1 is amended to delete the last sentence of subparagraph
(o).
3. Paragraph 1 is amended to renumber subparagraph (g) as (i), to
renumber subparagraph (h) as (k), to renumber subparagraphs (i) through (l) as
(m) through (p), and to renumber subparagraphs (m) through (o) as (r) through
(t), and to add new subparagraphs (g), (h),(j), (l), and (q) to read as follows:
"(g) "Company" means Vastar Resources, Inc.
(h) "Effective Time" shall be ascribed the meaning set forth for
such term on Annex A attached hereto.
(j) "Merger" shall be ascribed the meaning set forth for such term
on Annex A attached hereto.
(l) "Parent Company" shall be ascribed the meaning set forth for
such term on Annex A attached hereto.
(q) "Subsequent Change of Control" shall be ascribed the meaning set
forth for such term on Annex A attached hereto."
When amending sections or subsections currently set forth in the Plan, the
section or subsection references below refer to the sections and subsections as
they existed prior to the renumbering as provided for above. Moreover, all
current references in the Plan to other sections and subsections of the Plan
shall be deemed to refer to the applicable section or subsection as renumbered
herein.
4. Paragraph 2 is amended to add "; or" at the end of subparagraph
(b)(i)(B)(II) and to add a new subparagraph (b)(i)(B)(III) which shall read as
follows:
1
<PAGE>
"(III) with respect to Tier 1 and 2 Employees of the Company, a
demotion to a lesser job."
5. Paragraph 2 is amended to eliminate subparagraph (b)(ii).
6. Paragraph 2 is amended to eliminate the parenthetical "(excluding an
ARCO Acquisition)" from subparagraph (d).
7. Paragraph 3 is amended to delete the second sentence of subparagraph
(c).
8. Paragraph 3 is amended to eliminate subparagraph (d).
9. Paragraph 4 is amended in its entirety and shall now read as follows:
"4. AUTHORIZED OFFICER
Both the Chief Financial Officer and the Vice President, Human
Resources of the Company whose duties with respect to this Plan are provided
herein, will be those persons who have been employed in such positions by the
Company since April 1, 1999. Any action required to be taken under this Plan by
the Chief Financial Officer and the Vice President, Human Resources of the
Company may be taken by either individual if the other position is vacant. If
the positions of Chief Financial Officer and Vice President, Human Resources of
the Company are both vacant, actions required to be taken under the Plan by such
officers may only be taken by one of the officers of the Company set forth below
(in the order stated) who was in such position on April 1, 1999:
(a) Controller
(b) General Counsel
(c) Senior Vice President of Production
(d) Senior Vice President of Exploration
(e) Vice President of Business Development.
If none of such persons is in such position, the Special Plan Administrator
shall take actions required to be taken under the Plan."
10. Annex A is amended, with respect to the definition of "Change of
Control" and the definition of "Outside Director", to replace the terms
"Atlantic Richfield Company" and "ARCO" with the term "Parent Company". This
amendment shall be construed consistently with the intent that the Merger, if it
occurs, is a Change of Control.
11. Annex A, with respect to the definition of "Change of Control," is
amended, effective as of the Effective Time, to add "; or" at the end of
Paragraph (6) and to add new Paragraph (7) which shall read as follows:
"(7) A Subsequent Change of Control."
2
<PAGE>
12. Annex A is amended to add the following definitions:
""Effective Time" means, with respect to the Merger, such time as the
Certificate of Merger is duly filed with the Secretary of State of the State of
Delaware or at such later time as is specified in the Certificate of Merger in
accordance with the Delaware General Corporation Law.
"Merger" shall mean the merger between Atlantic Richfield Company and
Prairie Holdings, Inc., a subsidiary of BP Amoco p.l.c.
"Parent Company" shall mean, until the Effective Time of the Merger,
Atlantic Richfield Company and, after the Effective Time of the Merger, BP Amoco
p.l.c. or any of its subsidiaries or affiliates and any of their respective
successors.
"Subsequent Change of Control" shall mean each Change of Control which
occurs after the consummation of a transaction constituting a Change of
Control."
13. The Plan is amended to replace (except in Paragraph 4(b) of the Plan
as amended above) the term "General Counsel" with the term "Vice President,
Human Resources."
14. All amendments shall be effective as of July 21, 1999 unless otherwise
noted.
Executed as of the 12th day of August, 1999.
ATTEST: VASTAR RESOURCES, INC.
By: /s/ Johnathan D. Edelfelt By: /s/ Jeffrey M. Bender
--------------------------- ----------------------------------
Jonathan D. Edelfelt Jeffrey M. Bender
Associate Secretary Vice President, Human Resources
APPROVED as to form this 12th day
of August, 1999
WACHOVIA BANK, N.A.,
By: /s/ Peter D. Quinn
-------------------------------
Name: Peter D. Quinn
-----------------------------
Title: Senior Vice President
----------------------------
3
<PAGE>
EXHIBIT 10.5
VASTAR RESOURCES, INC.
FIRST AMENDMENT TO
EXECUTIVE MEDICAL PLAN
Pursuant to the power of amendment reserved therein, Vastar Resources,
Inc. Executive Medical Plan (the "Plan") is hereby amended as follows:
1. Paragraph 1(c) is amended, effective as of the Effective Time (as
defined in Annex A to the Plan as amended hereby), to read as follows:
"(c) "Benefit Trigger Window" means the 24-month period
commencing on the date immediately following the Effective Time and means the
24-month period commencing on the date that a Subsequent Change of Control
occurs."
2. Paragraph 1 is amended to delete the last sentence of subparagraph
(o).
3. Paragraph 1 is amended to renumber subparagraph (g) as (h), to
renumber subparagraph (h) as (j), to renumber subparagraphs (i) through (l) as
(l) through (o), and to renumber subparagraphs (m) through (o) as (q) through
(s), and to add new subparagraphs (g), (i), (k) and (p) to read as follows:
"(g) "Effective Time" shall be ascribed the meaning set forth for
such term on Annex A attached hereto.
(i) "Merger" shall be ascribed the meaning set forth for such
term on Annex A attached hereto.
(k) "Parent Company" shall be ascribed the meaning set forth for
such term on Annex A attached hereto.
(p) "Subsequent Change of Control" shall be ascribed the meaning
set forth for such term on Annex A attached hereto."
When amending sections or subsections currently set forth in the Plan,
the section or subsection references below refer to the sections and subsections
as they existed prior to the renumbering as provided for above. Moreover, all
current references in the Plan to other sections and subsections of the Plan
shall be deemed to refer to the applicable section or subsection as renumbered
herein.
4. Paragraph 2 is amended to add "; or" at the end of subparagraph
(b)(i)(B)(II) and to add a new subparagraph (b)(i)(B)(III) which shall read as
follows:
"(III) with respect to Tier 1 and 2 Employees of the Company, a
demotion to a lesser job."
<PAGE>
5. Paragraph 2 is amended to eliminate subparagraph (b)(ii).
6. Paragraph 2 is amended to eliminate the parenthetical "(excluding
an ARCO Acquisition)" from subparagraph (d).
7. The reference in Paragraph 3(b) to "Section 1(o)" is deleted and
replaced with "Paragraph 1(s)."
8. Paragraph 3 is amended to delete the second sentence of
subparagraph (c).
9. Paragraph 3 is amended to eliminate subparagraph (d).
10. Paragraph 4 is amended in its entirety and shall now read as
follows:
"4. AUTHORIZED OFFICER
Both the Chief Financial Officer and the Vice President, Human
Resources of the Company whose duties with respect to this Plan are provided
herein, will be those persons who have been employed in such positions by the
Company since April 1, 1999. Any action required to be taken under this Plan by
the Chief Financial Officer and the Vice President, Human Resources of the
Company may be taken by either individual if the other position is vacant. If
the positions of Chief Financial Officer and Vice President, Human Resources of
the Company are both vacant, actions required to be taken under the Plan by such
officers may only be taken by one of the officers of the Company set forth below
(in the order stated) who was in such position on April 1, 1999:
(a) Controller
(b) General Counsel
(c) Senior Vice President of Production
(d) Senior Vice President of Exploration
(e) Vice President of Business Development.
If none of such persons is in such position, the Special Plan Administrator
shall take actions required to be taken under the Plan."
11. Annex A is amended, with respect to the definition of "Change of
Control" and the definition of "Outside Director", to replace the terms
"Atlantic Richfield Company" and "ARCO" with the term "Parent Company". This
amendment shall be construed consistently with the intent that the Merger, if it
occurs, is a Change of Control.
12. Annex A, with respect to the definition of "Change of Control," is
amended, effective as of the Effective Time, to add "; or" at the end of
Paragraph (6) and to add new Paragraph (7) which shall read as follows:
"(7) A Subsequent Change of Control."
<PAGE>
13. Annex A is amended to add the following definitions:
""Effective Time" means, with respect to the Merger, such time as the
Certificate of Merger is duly filed with the Secretary of State of the State of
Delaware or at such later time as is specified in the Certificate of Merger in
accordance with the Delaware General Corporation Law.
"Merger" shall mean the merger between Atlantic Richfield Company
Prairie Holdings, Inc., a subsidiary of BP Amoco p.l.c.
"Parent Company" shall mean, until the Effective Time of the Merger,
Atlantic Richfield Company and, after the Effective Time of the Merger, BP Amoco
p.l.c. or any of its subsidiaries or affiliates and any of their respective
successors.
"Subsequent Change of Control" shall mean each Change of Control which
occurs after the consummation of a transaction constituting a Change of
Control."
14. The Plan is amended to replace (except in Paragraph 4(b) of the Plan
as amended above) the term "General Counsel" with the term "Vice President,
Human Resources."
15. The Plan is amended to add Paragraph 5 which shall read as follows:
"5. Retiree Medical Coverage.
A Retiree (as hereafter defined) may continue participation in this Plan
provided the Retiree waives the continuation coverage to which he or she may be
entitled to under COBRA. The term "Retiree" shall mean any Participant who was
participating in the Plan and who while a participating in the Plan:
(a) Terminated employment and, at such time, was entitled to an immediate
retirement allowance from a qualified retirement plan of the Company
(excluding any enhanced retirement allowance payable immediately upon
termination of employment in connection with a Change of Control of the
Company, such as is contained in Section 30 of the Vastar Resources, Inc.
Retirement Plan); or
(b) Terminated employment after attainment of age 53 years plus six months
and ten or more years of Membership Service, as defined in the Vastar
Resources, Inc. Retirement Plan and is eligible for an allowance under the
Vastar Resources, Inc. Special Termination Allowance Plan. A Participant
described in this subparagraph (b) shall become a Retiree upon the date the
Participant becomes
<PAGE>
eligible to receive an immediate monthly retirement allowance from a
qualified retirement plan of the Company (excluding any enhanced retirement
allowance payable immediately upon termination of employment in connection
with a Change of Control of the Company, such as is contained in Section 30
of the Vastar Resources, Inc. Retirement Plan); or
(c) Terminated employment in accordance with the terms and conditions of a
written agreement between the Company and the Employee, which grants the
Employee Retiree status. The applicable provisions of such written
agreement are incorporated by reference as a provision of this Plan;
(d) (i) Has a termination of employment as described in Paragraph 2(b)(i)
of the Plan during a Benefit Trigger Window and the Participant (A) does
not elect immediate receipt of the enhanced component under Paragraph 30.5
of the Vastar Resources, Inc. Retirement Plan, (B) as of the date of the
Participant's termination of employment, has attained the age of 48 years
plus six months or more and (C) as of the date of the Participant's
termination of employment, has five or more years of Membership Service, as
defined under the Vastar Resources, Inc. Retirement Plan and is eligible
for an allowance under the Vastar Resources, Inc. Special Termination
Allowance Plan. A Participant described in this subparagraph (d)(i) shall
become a Retiree on the earliest of the 19th month after such Participant's
termination of employment or the date the Participant becomes eligible to
receive an immediate monthly retirement allowance under the Vastar
Resources, Inc. Retirement Plan (other than the allowance described in
Paragraph 30.5 of such plan).
(ii) Has a termination of employment as described in Paragraph 2(b)(i) of
the Plan during a Benefit Trigger Window and the Participant, at such time,
(A) has attained the age of 48 years plus six months or more and (B) has
ten or more years of Membership Service, as defined in the Vastar
Resources, Inc. Retirement Plan; provided that the Participant is eligible
for an allowance under the Vastar Resources, Inc. Special Termination
Allowance Plan. A Participant described in this subparagraph (d)(ii) shall
become a Retiree on the earliest of the 19th month after such Participant's
termination of employment or the date the Participant becomes eligible to
receive an immediate monthly retirement allowance under the Vastar
Resources, Inc. Retirement Plan (other than the allowance described in
Paragraph 30.5 of such plan)."
16. All amendments shall be effective as of July 21, 1999 unless otherwise
noted.
<PAGE>
Executed as of the 12th day of August, 1999.
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
APPROVED as to form this 12th day
of August, 1999
WACHOVIA BANK, N.A.,
By: /s/ Peter D. Quinn
--------------------------
Name: Peter D. Quinn
------------------------
Title: Senior Vice President
-----------------------
<PAGE>
EXHIBIT 10.6
VASTAR RESOURCES, INC.
SECOND AMENDMENT TO
EXECUTIVE LIFE INSURANCE PLAN
Pursuant to the power of amendment reserved therein, Vastar Resources,
Inc. Executive Life Insurance Plan (the "Plan") is hereby amended as follows:
1. Paragraph 1.1 is amended to delete the last sentence contained
therein.
2. Paragraph 1.29 is amended in its entirety, effective as of the
Effective Time (as defined in Annex A to the Plan as amended hereby), to read as
follows:
"1.29 "Benefit Trigger Window" means the 24-month period commencing on
the date immediately following the Effective Time and means the 24-month period
commencing on the date that a Subsequent Change of Control occurs."
3. Article I is amended to add new Paragraphs 1.37, 1.38, 1.39 and 1.40
which shall read as follows:
"1.37 "Effective Time" shall be ascribed the meaning set forth for
such term on Annex A attached hereto.
1.38 "Merger" shall be ascribed the meaning set forth for such term
on Annex A attached hereto.
1.39 "Parent Company" shall be ascribed the meaning set forth for
such term on Annex A attached hereto.
1.40 "Subsequent Change of Control" shall be ascribed the meaning set
forth for such term on Annex A attached hereto."
4. Paragraph 9.2 is amended to add "; or" at the end of subparagraph
(a)(ii)(B) and to add a new subparagraph (a)(ii)(C) which shall read as follows:
"(C) with respect to Tier 1 and 2 Employees of the Company, a demotion
to a lesser job."
5. Paragraph 9.2 is amended to eliminate subparagraph (b).
6. Paragraph 9.4 is amended to eliminate the parenthetical "(excluding an
ARCO Acquisition)".
7. Paragraph 11.4 is amended to delete the second sentence contained
therein.
8. Paragraph 11.5 is deleted in its entirety.
1
<PAGE>
9. Paragraph 14.9 is amended in its entirety and shall now read as
follows:
"14.9 Authorized Officers
Both the Chief Financial Officer and the Vice President, Human
Resources of the Company whose duties with respect to this Plan are provided
herein, will be those persons who have been employed in such positions by the
Company since April 1, 1999. Any action required to be taken under this Plan by
the Chief Financial Officer and the Vice President, Human Resources of the
Company may be taken by either individual if the other position is vacant. If
the positions of Chief Financial Officer and Vice President, Human Resources of
the Company are both vacant, actions required to be taken under the Plan by such
officers may only be taken by one of the officers of the Company set forth below
(in the order stated) who was in such position on April 1, 1999:
(a) Controller
(b) General Counsel
(c) Senior Vice President of Production
(d) Senior Vice President of Exploration
(e) Vice President of Business Development.
If none of such persons is in such position, the Special Plan Administrator
shall take actions required to be taken under the Plan."
10. Annex A is amended, with respect to the definition of "Change of
Control" and the definition of "Outside Director", to replace the terms
"Atlantic Richfield Company" and "ARCO" with the term "Parent Company". This
amendment shall be construed consistently with the intent that the Merger, if it
occurs, is a Change of Control.
11. Annex A, with respect to the definition of "Change of Control," is
amended, effective as of the Effective Time, to add "; or" at the end of
Paragraph (6) and to add new Paragraph (7) which shall read as follows:
"(7) A Subsequent Change of Control."
12. Annex A is amended to add the following definitions:
""Effective Time" means, with respect to the Merger, such time as the
Certificate of Merger is duly filed with the Secretary of State of the State of
Delaware or at such later time as is specified in the Certificate of Merger in
accordance with the Delaware General Corporation Laws.
"Merger" shall mean the merger between Atlantic Richfield Company and
Prairie Holdings, Inc.,a subsidiary of BP Amoco p.l.c.
2
<PAGE>
"Parent Company" shall mean, until the Effective Time of the Merger,
Atlantic Richfield Company and, after the Effective Time of the Merger, BP Amoco
p.l.c. or any of its subsidiaries or affiliates and any of their respective
successors.
"Subsequent Change of Control" shall mean each Change of Control which
occurs after the consummation of a transaction constituting a Change of
Control."
13. The Plan is amended to replace (except in Paragraph 14.9(b) of the
Plan as amended above) the term "General Counsel" with the term "Vice President,
Human Resources."
14. All amendments shall be effective as of July 21, 1999 unless otherwise
noted.
Executed as of the 12th day of August, 1999.
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
APPROVED as to form this 12th day
of August, 1999
WACHOVIA BANK, N.A.,
By: /s/ Peter D. Quinn
---------------------------
Name: PETER D. QUINN
-------------------------
Title: Senior Vice President
------------------------
3
<PAGE>
EXHIBIT 10.7
VASTAR RESOURCES, INC.
FIRST AMENDMENT TO
EXECUTIVE LONG-TERM INCENTIVE PLAN
Pursuant to the power of amendment reserved therein, Vastar Resources,
Inc. Executive Long-Term Incentive Plan, as amended and restated, effective
March 5, 1998 (the "Plan") is hereby amended as follows:
1. Article I is amended, with respect to the definition of "Change of
Control" in Section 2(a) and the definition of "Outside Director" in Section
2(i), to replace the terms "Atlantic Richfield Company" and "ARCO" with the term
"Parent Company". This amendment shall be construed consistently with the
intent that the Merger, if it occurs, is a Change of Control.
2. Article I is amended, with respect to the definition of "Change of
Control," effective as of such time as the Certificate of Merger relating to the
merger between Atlantic Richfield Company and Prairie Holdings, Inc., a
subsidiary of BP Amoco p.l.c. is duly filed with the Secretary of State of the
State of Delaware or at such later time as is specified in the Certificate of
Merger in accordance with the Delaware General Corporation Law, to read as
follows:
"(vii) A Subsequent Change of Control."
3. Article I, Section 2 is amended to renumber subsections (f)
through (h) to subsections (g) through (i), to renumber subsection (i) as (k),
to renumber subsections (j) through (n) as (m) through (q), and to renumber
subsection (o) as (s), and to add new subsections (f), (j), (l) and (r) to read
as follows:
"(f) "Effective Time" means, with respect to the Merger, such
time as the Certificate of Merger is duly filed with the Secretary of State of
the State of Delaware or at such later time as is specified in the Certificate
of Merger in accordance with the Delaware General Corporation Law.
(j) "Merger" shall mean the merger between Atlantic Richfield
Company and Prairie Holdings, Inc., a subsidiary of BP Amoco p.l.c.
(l) "Parent Company" shall mean, until the Effective Time of the
Merger, Atlantic Richfield Company and, after the Effective Time of the Merger,
BP Amoco p.l.c. or any of its subsidiaries or affiliates and any of their
respective successors.
(r) "Subsequent Change of Control" shall mean each Change of
Control which occurs after the consummation of a transaction constituting a
Change of Control."
4. Article I is amended to add new subsection (d) to Section 3 which
shall read as follows:
1
<PAGE>
"(d) Both the Chief Financial Officer and the Vice President, Human
Resources of the Company whose duties with respect to this Plan are provided
herein, will be those persons who have been employed in such positions by the
Company since April 1, 1999. Any action required to be taken under this Plan by
the Chief Financial Officer and the Vice President, Human Resources of the
Company may be taken by either individual if the other position is vacant. If
the positions of Chief Financial Officer and Vice President, Human Resources of
the Company are both vacant, actions required to be taken under the Plan by such
officers may only be taken by one of the officers of the Company set forth below
(in the order stated) who was in such position on April 1, 1999:
(i) Controller
(ii) General Counsel
(iii) Senior Vice President of Production
(iv) Senior Vice President of Exploration
(v) Vice President of Business Development.
If none of such persons is in such position, the Special Plan Administrator
shall take actions required to be taken under the Plan."
5. Article II, Section 2 is amended to replace the reference word
"President" in subsections (d)(iii) and (iv) and replace it with the words
"Senior Vice President and Chief Financial Officer."
6. All amendments shall be effective as of July 21, 1999 unless otherwise
noted.
Executed as of the 12th day of August, 1999.
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
APPROVED as to form this 12th day
of August, 1999
WACHOVIA BANK, N.A.,
By: /s/ Peter D. Quinn
----------------------
Name: Peter D. Quinn
----------------------
Title: Senior Vice President
----------------------
2
<PAGE>
EXHIBIT 10.8
VASTAR RESOURCES, INC.
FIRST AMENDMENT TO
AMENDED AND RESTATED SUPPLEMENTARY
EXECUTIVE RETIREMENT PLAN
Pursuant to the power of amendment reserved therein, Vastar Resources,
Inc. Amended and Restated Supplementary Executive Retirement Plan, which was
effective March 24, 1999 (the "Plan") is hereby amended as follows:
1. Section 1.3 is amended:
(a) to delete subsection (f) "ARCO Acquisition"; subsection (g)
"ARCO Takeover"; and subsection (aa) "Secondary Change of
Control"
(b) to renumber subsections (h) through (k) as (f) through (i);
(c) to renumber subsections (l) through (o) as (k) through (n);
(d) to renumber subsection (u) as (v);
(e) to renumber subsections (v) through (z) as (x) through (bb);
(f) to renumber subsection (bb) and (cc) as (cc) and (dd); and
(e) to renumber subsections (dd) and (ee) as (ff) and (gg),
When amending sections or subsections currently set forth in the Plan,
the section or subsection references below refer to the sections and subsections
as they existed prior to the renumbering as provided for above. Moreover, all
current references in the Plan to other sections and subsections of the Plan
shall be deemed to refer to the applicable section or subsection as renumbered
herein.
2. Section 1.3 is amended to add new subsections (j), (o), (u), (w)
and (ee) to read as follows:
"(j) "Benefit Trigger Window" means the 24-month period commencing on
the date immediately following the Effective Time and means each 24-month period
commencing on the date that a Subsequent Change of Control occurs.
(o) "Effective Time" " shall be ascribed the meaning set forth for
such term on Annex A attached hereto.
(u) "Merger" shall be ascribed the meaning set forth for such term
on Annex A attached hereto.
(w) "Parent Company" shall be ascribed the meaning set forth for
such term on Annex A attached hereto.
1
<PAGE>
(ee) "Subsequent Change of Control" shall be ascribed the meaning set
forth for such term on Annex A attached hereto."
3. Section 1.3 is amended to delete the last sentence of subsection
(b).
4. Section 2.2 is amended to delete subsection (d) effective as of
the Effective Time (as defined in Annex A to the Plan as amended hereby).
5. Section 5.3 will be amended to delete Sections 5.3(a), (b) and
(c) and replace them with the following:
(a) GENERAL. Except as provided in Section 5.3(d) below, the
Administrator shall cause an amount equal to a Lump Sum payment for each
Participant (which amount shall include, but not be limited to, all amounts due
to the Participant under this Plan, if any, as a result of his or her
eligibility for the Retirement Allowance as described in Paragraph 30.4 of the
Vastar Resources, Inc. Retirement Plan) to be transferred from the Plan to the
Participant's account in the Vastar Resources, Inc. Executive Deferral Plan, in
the following three circumstances:
(i) the Participant has a "Termination of Employment" during a
Benefit Trigger Window; or
(ii) the Benefit Trigger Window following a Subsequent Change of
Control expires.
No calculation of a Lump Sum payment or transfer to the Vastar
Resources, Inc. Executive Deferral Plan shall be made prior to January 1, 2000.
After such transfer, the benefits payable under this Plan shall be governed by
the terms of the Vastar Resources, Inc. Executive Deferral Plan, as amended from
time to time.
(b) DEFINITION OF TERMINATION OF EMPLOYMENT. For the purposes of
subsection (a) above, the term "Termination of Employment" shall mean:
(i) a termination of employment during a Benefit Trigger Window
by the Surviving Entity, other than for Cause, or
(ii) the Employee's voluntary termination within a Benefit
Trigger Window as a result of the Surviving Entity's implementation of:
(A) a ten percent or more reduction of such Employee's
Qualifying Pay from the Qualifying Pay determined as of the date
2
<PAGE>
immediately prior to the date of the Change of Control, or a ten
percent or more reduction (based on dollar value) in the
Employee's aggregate Qualifying Pay plus Target Award ("Total
Pay") from the Employee's Total Pay determined as of the date
immediately prior to the date of the Change of Control;
(B) a required relocation of the Employee's principal
place of work to a location which would satisfy the conditions
specified in (S) 217(c)(1) of the Internal Revenue Code of 1986,
as amended (the "Code"), for a deduction by such Employee of
moving expenses under (S) 217 of the Code; or
(C) with respect to Tier 1 and 2 Employees of the Company,
a demotion to a lesser job.
(iii) No Employee shall be deemed to have a termination of
employment solely due to a transfer of employment directly between the
Company, a Surviving Entity or any of their affiliates.
(c) DEFINITION OF CAUSE, QUALIFYING PAY, SURVIVING ENTITY AND TARGET
AWARD. For purposes of this subsection (b) above, the following definitions
shall apply:
(i) "Cause" shall mean (i) the conviction of the Employee for
any felony involving dishonesty, fraud or breach of trust or (ii) the
willful engagement by the Employee in gross misconduct in the
performance of his or her duties that materially injures the Surviving
Entity.
(ii) "Qualifying Pay" means the Employee's annualized rate of
regular wages or salary, excluding all extra pay such as overtime,
premiums, bonuses, living or other allowances, determined as of the
relevant date.
(iii) "Surviving Entity" means the Company, or any successor
(whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company after a Change of Control, and its affiliates.
(iv) "Target Award" means the annual target performance bonus
award applicable to the Employee for the relevant period."
(d) MISCELLANEOUS. Notwithstanding subsection (a) above:
3
<PAGE>
(i) If a Participant does not have an account in the Vastar
Resources, Inc. Executive Deferral Plan, the Lump Sum payment applicable to the
Participant's benefit under this Plan shall be payable in one of the following
two methods (which shall be selected by the Company at its discretion): (x) as
soon as practicable after the occurrence of the applicable event described in
Section 5.3(a)(i) or (ii) above, or (y) in up to three installments (not
necessarily equal) over a period not to exceed two calendar years beginning on
the date of the occurrence of the applicable event described in Section
5.3(a)(i) or (ii) above. Such payment or payments, when completed shall be in
complete satisfaction of the Participant's accrued rights hereunder.
(ii) With respect to (x) the remaining annuity payments to be
received by any Participant or Beneficiary pursuant to this Plan whose annuity
payments have commenced as of the date of any of the events described in
subsection (a) above and (y) the benefit payable to any Participant who
terminated his or her employment prior to any of the events described in Section
5.3(a) (i) or (ii) above (or a Beneficiary who became entitled to a benefit
under this Plan as a result of the death of a Participant occurring prior to any
of the events described in Section 5.3(a) (i) or (ii) above) which has not
commenced as of the date of any of the events described in subsection Section
5.3 (a) (i) or (ii) above, the benefits payable to such persons shall continue
as provided for in this Plan.
6. Article VI is amended to add a new Section 6.7 which shall read
as follows:
"6.7. Authorized Officers
Both the Chief Financial Officer and the Vice President, Human
Resources of the Company whose duties with respect to this Plan are provided
herein, will be those persons who have been employed in such positions by the
Company since April 1, 1999. Any action required to be taken under this Plan by
the Chief Financial Officer and the Vice President, Human Resources of the
Company may be taken by either individual if the other position is vacant. If
the positions of Chief Financial Officer and Vice President, Human Resources of
the Company are both vacant, actions required to be taken under the Plan by such
officers may only be taken by one of the officers of the Company set forth below
(in the order stated) who was in such position on April 1, 1999:
(a) Controller
(b) General Counsel
(c) Senior Vice President of Production
(d) Senior Vice President of Exploration
(e) Vice President of Business Development.
4
<PAGE>
If none of such persons is in such position, the Special Plan
Administrator shall take actions required to be taken under the Plan."
7. Annex A is amended, with respect to the definition of "Change of
Control" and the definition of "Outside Director", to replace the terms
"Atlantic Richfield Company" and "ARCO" with the term "Parent Company". This
amendment shall be construed consistently with the intent that the Merger, if it
occurs, is a Change of Control.
8. Annex A, with respect to the definition of "Change of Control," is
amended, effective immediately after the Effective Time, to add "; or" at the
end of Paragraph (6) and to add new Paragraph (7) which shall read as follows:
"(7) A Subsequent Change of Control."
9. Annex A is amended to add the following definitions:
""Effective Time" means, with respect to the Merger, such time as the
Certificate of Merger is duly filed with the Secretary of State of the State of
Delaware or at such later time as is specified in the Certificate of Merger in
accordance with the Delaware General Corporation Law.
"Merger" shall mean the merger between Atlantic Richfield Company and
Prairie Holdings, Inc., a subsidiary of BP Amoco p.l.c.
"Parent Company" shall mean, until the Effective Time of the Merger,
Atlantic Richfield Company and, after Effective Time of the Merger, BP Amoco
p.l.c. or any of its subsidiaries or affiliates and any of their respective
successors.
"Subsequent Change of Control" shall mean each Change of Control which
occurs after the consummation of a transaction constituting a Change of
Control.""
10. The Plan is amended to add new Article X which shall read as
follows:
"ARTICLE X
SPECIAL PROVISIONS APPLICABLE TO
CERTAIN EMPLOYEES
1.1 Eligibility
A Participant in Tier 1 and 2 is eligible for the benefit set forth in
this Article X in the event he or she voluntarily terminates his or her
employment during a
5
<PAGE>
Benefit Trigger Window after being demoted, or advised of an
impending demotion to, a lesser job.
2.1 Rights and Benefits
A Participant described in Section 1.1 of this Article X shall be entitled,
on the date of his or her Termination of Employment, to a benefit equal to the
Retirement Allowance as described in Paragraph 30.4 of the Vastar Resources,
Inc. Retirement Plan (the "5+5 Benefit"). The 5+5 Benefit shall be calculated
as if it were to be paid from the Vastar Resources, Inc. Retirement Plan but
shall be paid exclusively by this Plan in accordance with the applicable terms
and conditions of this Plan and shall be transferred (but not before December
31, 1999) to the Vastar Resources, Inc. Executive Deferral Plan. When
calculating benefits under Article II and III of this Plan, a Participant
entitled to the benefit described in Section 1.1 of this Article X shall be
credited with the 5 years of service and 5 years of age as described in Article
30 of the Vastar Resources, Inc. Retirement Plan and be deemed to have been
entitled to, and to have received from the Vastar Resources, Inc. Retirement
Plan, such portion of his or her 5+5 benefit which could have been paid under
the Vastar Resources, Inc. Retirement Plan had the Participant been eligible
thereunder.
11. The Plan is amended to replace (except in Section 6.7) the term
"General Counsel" with the term "Vice President, Human Resources."
12. Section 9.1 is amended to delete the second sentence and replace it
with the following:
"Notwithstanding the above, upon an Anticipatory Change Termination (as
defined in Section 1.3(b)), this Plan may again be terminated, subject to
Section 9.3 from time to time by the Board of Directors of Vastar or its
designee."
13. Section 9.2 is amended to delete the second sentence and replace it
with the following:
"Notwithstanding the above, upon an Anticipatory Change Termination, this
Plan may again be amended, subject to Section 9.3 from time to time by the Board
of Directors of Vastar or its designee."
14. Section 9.4 is amended to delete the last sentence.
15. All amendments shall be effective as of July 21, 1999 unless otherwise
noted.
6
<PAGE>
Executed as of the 12th day of August, 1999.
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
APPROVED as to form this 24th day
of August, 1999
WACHOVIA BANK, N.A.,
By: /s/ Peter D. Quinn
--------------------------------
Name: Peter D. Quinn
--------------------------------
Title: Senior Vice President
--------------------------------
7
<PAGE>
EXHIBIT 10.9
VASTAR RESOURCES, INC.
THIRD AMENDMENT TO
SPECIAL TERMINATION ALLOWANCE PLAN
Pursuant to the power of amendment reserved therein, Vastar Resources,
Inc. Special Termination Allowance Plan (the "Plan") is hereby amended as
follows:
1. Paragraph 3.1 is amended to delete the last sentence therein.
2. Paragraph 3.18 is amended in its entirety, effective as of the
Effective Time (as defined in Annex A to the Plan as amended hereby), to read as
follows:
"3.18 "Benefit Trigger Window" means the 24-month period
commencing on the date immediately following the Effective Time and means the
24-month period commencing on the date that a Subsequent Change of Control
occurs."
3. Paragraph 3 is amended to add new Paragraphs 3.29, 3.30, 3.31 and
3.32 which shall read as follows:
"3.29 "Effective Time" shall be ascribed the meaning set forth for
such term on Annex A attached hereto.
3.30 "Merger" shall be ascribed the meaning set forth for such
term on Annex A attached hereto.
3.31 "Parent Company" shall be ascribed the meaning set forth for
such term on Annex A attached hereto.
3.32 "Subsequent Change of Control" shall be ascribed the meaning
set forth for such term on Annex A attached hereto."
4. Paragraph 6.2 is amended to add "; or" at the end of subparagraph
(b)(ii) and to add a new subparagraph (b)(iii) which shall read as follows:
"(iii) with respect to Tier 1 and 2 Employees of the Company, a
demotion to a lesser job."
5. Paragraph 6.3 is amended in its entirety and shall read as
follows:
"6.3 A Terminated Employee shall be entitled to the following cash
payments, in lieu of any other benefit to which the Employee is entitled under
this Plan (except for the benefit described in Paragraph 6.5 hereof):
1
<PAGE>
(a) Basic Allowance: The Terminated Employee shall receive a basic
cash allowance equal to 1 1/2 weeks of Base Pay per year of service with a
minimum of 6 weeks of Base Pay and a maximum of 36 weeks of Base Pay.
(b) Supplemental Allowance:
(i) For Terminated Employees, other than Tier 1, 2 or 3
Employees of the Company, if the total of the Basic Allowance and the value of
the retirement allowance to which the Employee is entitled, if any, as described
in Paragraph 30.4 of the Vastar Resources, Inc. Retirement Plan (hereinafter
referred to as the "5+5 Benefit Component") is less than the greater of (A) the
Prior Benefit or (B) 1/2 of the Terminated Employee's Annual Compensation, the
Terminated Employee shall also be entitled to a supplemental payment under this
Plan so that the total of the Terminated Employee's Basic Allowance plus the
value of the 5+5 Benefit Component plus the supplemental payment equals the
greater of (A) the Prior Benefit or (B) 1/2 of the Terminated Employee's Annual
Compensation; and
(ii) For Terminated Employees who are Tier 1, 2 or 3 Employees
of the Company, if the Basic Allowance and the value of the 5+5 Benefit
Component is less than 3 times the Terminated Employee's Annual Compensation
(for Tier 1 Employees), 2 times the Terminated Employee's Annual Compensation
(for Tier 2 Employees), or 1 times the Terminated Employee's Annual Compensation
(or the Basic STAP if greater) (for Tier 3 Employees), respectively, the
Terminated Employee shall also be entitled to a supplemental payment under this
Plan so that the total of the Terminated Employee's Basic Allowance plus the
value of the 5+5 Benefit Component plus the supplemental payment equals 3 times
the Terminated Employee's Annual Compensation, 2 times the Terminated Employee's
Annual Compensation or 1 times the Terminated Employee's Annual Compensation (or
the Basic STAP if greater), as applicable.
(c) "Annual Compensation": For purposes of subparagraph (b) above,
"Annual Compensation" means the sum of a Terminated Employee's Base Pay plus
either (i) as to Terminated Employees who participate in Vastar Resources, Inc.
Annual Incentive Plan, the greatest of (x) the average of the awards, if any,
granted under such plan during the consecutive 3 years ending prior to the date
of the Change of Control, (y) the Terminated Employee's most recent award under
such plan, or (z) the Terminated Employee's Target Award under such plan for the
year in which his or her Termination of Employment occurs, or (ii) as to
Terminated Employees who do not participate in Vastar Resources, Inc. Annual
Incentive Plan, the Terminated Employee's target bonus under Vastar Resources,
Inc. Variable Pay Plan, if any, for the then current year.
2
<PAGE>
(d) "Prior Benefit": For purposes of subparagraph (b) above, "Prior
Benefit" means a cash allowance equal to 3 weeks of Base Pay per year of service
with a minimum of 12 weeks and a maximum of 72 weeks."
6. Paragraph 6.4 is deleted in its entirety.
7. Paragraph 6.5 is amended to renumber the Paragraph as 6.4 and to
eliminate the parenthetical "(excluding an ARCO Acquisition)".
8. Paragraph 6.6 is amended to renumber the Paragraph as 6.5, to delete
subparagraph (b), to renumber subparagraph (c) as subparagraph (b) and to
replace subparagraph (a) with new subparagraph (a) which shall read as follows:
"(a) If any employee is liable for the payment of any excise tax (the
"Basic Excise Tax") because of Section 4999 of the Code, or any successor or
similar provision relating to a Change of Control, with respect to any payments
or benefits received or to be received from the Company or its affiliates, or
any successor to the Company or its affiliates, upon a termination of employment
during a Benefit Trigger Window, whether provided under this Plan or otherwise,
the Company or any successor to the obligations of the Company will pay the
employee an amount (the "Special Reimbursement") which, after payment by such
employee (or on the employee's behalf) of any federal, state and local taxes
applicable thereto, including, without limitation, any further excise tax under
such Section 4999 of the Code, on, with respect to or resulting from the Special
Reimbursement, equals the net amount of the Basic Excise Tax. The Special
Reimbursement will be paid upon receipt by the employee of any payment or
benefit that will result in the Basic Excise Tax."
9. The references in the Plan, if any, to Paragraph 6.5 and 6.6 shall
be changed to 6.4 and 6.5, respectively.
10. Paragraph 8.4 is amended in its entirety and shall now read as follows:
"8.4. Authorized Officers
Both the Chief Financial Officer and the Vice President, Human
Resources of the Company whose duties with respect to this Plan are provided
herein, will be those persons who have been employed in such positions by the
Company since April 1, 1999. Any action required to be taken under this Plan by
the Chief Financial Officer and the Vice President, Human Resources of the
Company may be taken by either individual if the other position is vacant. If
the positions of Chief Financial Officer and Vice President, Human Resources of
the Company are both vacant, actions required to be taken under the Plan by such
officers may only be taken by one of the officers of the Company set forth below
(in the order stated) who was in such position on April 1, 1999:
3
<PAGE>
(a) Controller
(b) General Counsel
(c) Senior Vice President of Production
(d) Senior Vice President of Exploration
(e) Vice President of Business Development.
If none of such persons is in such position, the Special Plan Administrator
shall take actions required to be taken under the Plan."
11. Paragraph 9.3 is amended to delete the second sentence therein.
12. Paragraph 9.4 is deleted in its entirety.
13. Annex A is amended, with respect to the definition of "Change of
Control" and the definition of "Outside Director", to replace the terms
"Atlantic Richfield Company" and "ARCO" with the term "Parent Company". This
amendment shall be construed consistently with the intent that the Merger, if it
occurs, is a Change of Control.
14. Annex A, with respect to the definition of "Change of Control," is
amended, effective as of the Effective Time, to add "; or" at the end of
Paragraph (6) and to add new Paragraph (7) which shall read as follows:
"(7) A Subsequent Change of Control."
15. Annex A is amended to add the following definitions:
""Effective Time" means, with respect to the Merger, such time as the
Certificate of Merger is duly filed with the Secretary of State of the State of
Delaware or at such later time as is specified in the Certificate of Merger in
accordance with the Delaware General Corporation Law.
"Merger" shall mean the merger between Atlantic Richfield Company and
Prairie Holdings, Inc., a subsidiary of BP Amoco p.l.c.
"Parent Company" shall mean, until the Effective Time, Atlantic
Richfield Company and, after Effective Time of the Merger, BP Amoco p.l.c. or
any of its subsidiaries or affiliates and any of their respective successors.
"Subsequent Change of Control" shall mean each Change of Control which
occurs after the consummation of a transaction constituting a Change of
Control.""
16. The Plan is amended to replace (except in Paragraph 8.4 as amended
herein) the term "General Counsel" with the term "Vice President, Human
Resources."
4
<PAGE>
17. All current references in the Plan to other sections and subsections
of the Plan shall be deemed to refer to the applicable section or subsection as
renumbered herein. All amendments shall be effective as of July 21, 1999 unless
otherwise noted.
Executed as of the 12th day of August, 1999.
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
APPROVED as to form this 12th day
of August, 1999
WACHOVIA BANK, N.A.,
By: /s/ Peter D. Quinn
----------------------
Name: Peter D. Quinn
----------------------
Title: Senior Vice President
----------------------
5
<PAGE>
EXHIBIT 12
VASTAR RESOURCES, INC.
STATEMENT SETTING FORTH DETAIL OF COMPUTATION OF
RATIO OF EARNINGS TO FIXED CHARGES
(Unaudited)
For the Nine
Months Ended
September 30,
-----------------
(Millions of dollars, 1999 1998
except per share amounts) ------ ------
Income from continuing operations before
income taxes, minority interest and cumulative
effect of change in accounting principle(1)..... $109.9 $ 65.7
Fixed Charges:
Interest expense charged to income and portion
of rentals representative of interest(2)....... 63.2 42.7
Capitalized Interest............................ 0.3 0.0
------ ------
Total fixed charges.............................. 63.5 42.7
------ ------
Earnings (1) + (2)............................... $173.4 $108.4
====== ======
Ratio of earnings to fixed charges............... 2.7 2.5
====== ======
The Company has no issuances of preferred stock.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
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 THOSE FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 10,500
<SECURITIES> 0
<RECEIVABLES> 269,100
<ALLOWANCES> 0
<INVENTORY> 10,400
<CURRENT-ASSETS> 323,400
<PP&E> 6,261,200
<DEPRECIATION> 4,035,100
<TOTAL-ASSETS> 2,632,000
<CURRENT-LIABILITIES> 268,600
<BONDS> 1,067,700
0
0
<COMMON> 1,000
<OTHER-SE> 737,600
<TOTAL-LIABILITY-AND-EQUITY> 2,632,000
<SALES> 783,200
<TOTAL-REVENUES> 837,200
<CGS> 505,400
<TOTAL-COSTS> 628,800
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 59,700
<INCOME-PRETAX> 109,900
<INCOME-TAX> (28,500)
<INCOME-CONTINUING> 138,400
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 138,400
<EPS-BASIC> 1.42
<EPS-DILUTED> 1.40
</TABLE>
