-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UoYmhcL4I/SOz/l5xrWBkfpWUxaDPPJ2sl2Jp7omuGZa/FBHKLN9OindUTZc+MTL wgokBDTmrnnaFgRZ32WhIw== 0000950123-96-000417.txt : 19960209 0000950123-96-000417.hdr.sgml : 19960209 ACCESSION NUMBER: 0000950123-96-000417 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 12 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960208 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BURLINGTON RESOURCES INC CENTRAL INDEX KEY: 0000833320 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 911413284 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: 1934 Act SEC FILE NUMBER: 001-09971 FILM NUMBER: 96513282 BUSINESS ADDRESS: STREET 1: 5051 WESTHEIMER STREET 2: SUITE 1400 CITY: HOUSTON STATE: TX ZIP: 77056 BUSINESS PHONE: 7136249500 MAIL ADDRESS: STREET 1: 999 THIRD AVENUE CITY: SEATTLE STATE: WA ZIP: 98104-4097 10-K405 1 BURLINGTON RESOURCES INC. - FORM 10-K 1 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 COMMISSION FILE NUMBER 1-9971 BURLINGTON RESOURCES INC. 5051 WESTHEIMER, SUITE 1400, HOUSTON, TEXAS 77056 TELEPHONE: (713) 624-9500 INCORPORATED IN THE STATE OF DELAWARE EMPLOYER IDENTIFICATION NO. 91-1413284
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: COMMON STOCK, PAR VALUE $.01 PER SHARE PREFERRED STOCK PURCHASE RIGHTS THE ABOVE SECURITIES ARE REGISTERED ON THE NEW YORK STOCK EXCHANGE. SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. /X/ State the aggregate market value of the voting stock held by non-affiliates of the registrant: Common Stock aggregate market value as of December 31, 1995: $4,968,044,376 Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date. Class: Common Stock, par value $.01 per share, on December 31, 1995, Shares Outstanding: 126,574,379 DOCUMENTS INCORPORATED BY REFERENCE List hereunder the following documents if incorporated by reference and the Part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is incorporated: Burlington Resources Inc. definitive proxy statement, to be filed not later than 120 days after the end of the fiscal year covered by this report, is incorporated by reference into Part III. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 BURLINGTON RESOURCES INC. TABLE OF CONTENTS
PAGE PART I Items One and Two Business and Properties......................................................... 1 Employees....................................................................... 8 Item Three Legal Proceedings............................................................... 8 Item Four Submission of Matters to a Vote of Security Holders............................. 8 Executive Officers of the Registrant and Principal Subsidiary................... 9 PART II Item Five Market for Registrant's Common Equity and Related Stockholder Matters........... 10 Item Six Selected Financial Data......................................................... 10 Item Seven Management's Discussion and Analysis of Financial Condition and Results of Operations.................................................................... 11 Item Eight Financial Statements and Supplementary Financial Information.................... 15 Item Nine Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.................................................................... 33 PART III Items Ten and Eleven Directors and Executive Officers of the Registrant and Executive Compensation... 33 Item Twelve Security Ownership of Certain Beneficial Owners and Management.................. 33 Item Thirteen Certain Relationships and Related Transactions.................................. 33 PART IV Item Fourteen Exhibits, Financial Statement Schedules and Reports on Form 8-K................. 34
3 PART I ITEMS ONE AND TWO BUSINESS AND PROPERTIES Burlington Resources Inc. ("BR") is a holding company engaged, through its principal subsidiary, Meridian Oil Inc. and its affiliated companies (together the "Company"), in the exploration, development and production of oil and gas, and related marketing activities. The Company is the largest independent (nonintegrated) oil and gas company in the United States in terms of total domestic proved equivalent reserves which were estimated at 6.7 TCFE at December 31, 1995. From its inception in 1988 through 1993, BR restructured its assets to become solely an oil and gas exploration and production company. The restructuring included the sale of non-strategic assets (real estate, minerals and forest products) resulting in cumulative gross proceeds of $1.4 billion and the 1992 spin-off of El Paso Natural Gas Company ("EPNG"). The net proceeds from non-strategic asset sales were reinvested in domestic oil and gas reserves and in the repurchase of the Company's common stock. For definitions of certain oil and gas terms used herein, see "Certain Definitions" on page 8. GENERAL INFORMATION The Company's objective is to build long-term shareholder value through value-added growth and effective cost management by increasing production, reserves, earnings and cash flow. The Company intends to achieve this objective by increasing its focus on high potential exploration and development projects, acquisitions and the application of advanced technologies. The Company's operations are located principally in the San Juan Basin, the Gulf Coast Basin, the Permian Basin, the Anadarko Basin, and the Williston Basin. Virtually all of the Company's oil and gas production is from properties located in the United States. Following is a description of the Company's major areas of activity. SAN JUAN BASIN. The San Juan Basin is the Company's most prolific operating area in terms of reserves and production. The San Juan Basin, located in northwest New Mexico and southwest Colorado, encompasses nearly 7,500 square miles, or approximately 4.8 million acres, with the major portion located in the New Mexico counties of Rio Arriba and San Juan. The Company is the largest private holder of productive leasehold acreage in this area with over 1.1 million net acres under its control. The Company has an interest in over 10,500 wells and currently operates approximately 7,000 of these wells. Approximately 60 percent of the Company's reserves are located in this basin. During 1995, the Company's daily net production in this basin averaged 700 MMCF of gas per day, representing approximately 60 percent of the Company's total daily gas production. The four significant gas producing horizons in the San Juan Basin, which range in depth from approximately 1,000 feet to 8,500 feet, are the Fruitland Coal, the Pictured Cliffs, the Mesaverde and the Dakota. The Pictured Cliffs, Mesaverde and Dakota are sandstone formations while the Fruitland Coal produces natural gas which is adsorbed to the surface of coal seams. The Company continues to be an industry leader in the development of the Fruitland Coal formation. The Company's net coal seam production from approximately 1,700 wells averaged 350 MMCF of gas per day during 1995. In order to manage production more effectively, improve recovery of reserves and remove impurities, the Company owns and operates the Val Verde plant and gathering system which includes approximately 420 miles of gathering lines and ten compressor stations to gather and treat coal seam gas in the San Juan Basin. GULF COAST BASIN. The Gulf Coast Basin includes onshore and offshore oil and gas deposits along virtually all of the states bordering the Gulf of Mexico. The area encompasses about 250,000 square miles and is one of the most heavily explored oil and gas basins in the world. The complex geologic 1 4 conditions and multiple prospective oil and gas formations, encountered as deep as 25,000 feet, make this an attractive area for the application of advanced technologies such as three dimensional ("3D") seismic, computerized modeling and horizontal drilling. Offshore In 1994, the Company established an operating position in the shallow offshore waters of the Gulf of Mexico through its acquisition of Diamond Shamrock Offshore Partners Limited Partnership. Subsequent acquisitions of producing properties as well as successful lease acquisitions have expanded the Company's interest to 115 blocks, of which 51 are operated, in offshore Federal and State waters. During 1995, the Company invested nearly $90 million in offshore operations including the participation in 23 drill wells and 12 workovers and has begun the planning or construction of 5 new platforms. The most notable platform project underway is a 100 MMCF of gas per day platform and processing facilities which will be installed in 400 feet of water in High Island Block A-371 as the result of an exploratory discovery made in late 1994. This operated project, in which the Company owns a 100% working interest, will be installed in early 1996, with simultaneous drilling and production activities taking place during the second half of 1996. The Company's investments in its offshore assets have resulted in the offset of the extensive decline rates characteristic of Gulf Coast Basin production. As a result, the Company's 1995 production volumes averaged 111 MMCF of gas per day. At year end 1995, the Company had a combined initial productive capacity of 75 MMCF of gas per day and 2,000 Bbls of oil per day from wells awaiting the necessary production facilities, a portion of which is associated with the High Island Block A-371 project. Onshore The Company's onshore activities in the Gulf Coast Basin are primarily concentrated in Luling, Darst Creek and the West Ranch area in south Texas as well as the Garden City, Lake Arthur, and Sulphur Mines Fields in south Louisiana. The Company has been actively applying horizontal drilling technology in the Edwards formation of the Luling and Darst Creek Fields to enhance production from this mature area. During 1995, 16 horizontal wells were drilled in these fields at a net cost of approximately $6 million. During 1995, net production from the Luling and Darst Creek Fields averaged 4 MBbls of oil per day, with 56 percent of this production attributable to horizontal wells drilled since these properties were acquired in 1989. The application of 3D seismic technology has been instrumental for the exploitation of the south Louisiana fields due to the complex structural nature of the stacked pay intervals. In 1995, the Company invested $15 million in south Louisiana which included over 40 square miles of seismic data and the drilling of 6 wells. During 1995, net production from south Louisiana fields averaged 23 MMCF of gas per day and 1 MBbls of oil per day. PERMIAN BASIN. The Company is an active operator in the Permian Basin, which includes essentially all of west Texas and southeast New Mexico and encompasses approximately 68,000 square miles. The Company's reserve base in the Permian Basin has more than doubled since 1988 from internal development projects and through the acquisition of producing properties. The Company has an interest in over 11,400 Permian Basin wells and operates over 3,300 of these wells resulting in average net production during 1995 of 17 MBbls of oil per day and 142 MMCF of gas per day. The most productive structural feature in the Permian Basin is the Central Basin Platform in which the Company controls over 158,000 net acres of mineral interests. This area is about 170 miles long and 50 miles wide trending northwest from west Texas to southeast New Mexico. Over 20 different formations, ranging in depth from 2,000 feet to over 12,000 feet, produce oil and gas on the Central Basin Platform. The largest consolidated block of acreage in this basin in which the Company has an interest is the Waddell Ranch, located 40 miles west of Midland, Texas. The Company operates over 1,300 wells on the Waddell Ranch resulting in average net production of 5 MBbls of oil per day and 22 MMCF of gas per day during 1995. 2 5 Due to the complex geologic nature of the Permian Basin, 3D seismic technology has been an effective exploitation tool in this area. In 1995, over 300 additional square miles were surveyed for a total investment of approximately $5 million. The utilization of 3D data resulted in the drilling of 33 wells in 1995, including 6 horizontal wells. This drilling program led to the discovery of 4 new fields in the Permian Basin. ANADARKO BASIN. The Anadarko Basin, located in the western portion of Oklahoma, the Texas panhandle and southwestern Kansas, encompasses over 30,000 square miles and contains some of the deepest producing formations in the world. The basin produces oil and gas from multiple zones ranging in depth from less than 1,000 feet to over 26,000 feet. The Company controls over 500,000 net acres principally located in the Anadarko Basin of western Oklahoma. The Company operates 788 wells in this basin and total net production during 1995 averaged 125 MMCF of gas per day. The Company has been concentrating its Anadarko Basin activity in the Elk City and Strong City Fields where the application of 3D seismic technology, computerized modeling and advanced reservoir stimulation are enhancing the value of these assets. The primary producing horizons in these fields are the Morrow, Springer and Cherokee Red Fork formations. During 1995, the Company participated in the drilling of 41 wells to these formations at a net cost of approximately $35 million. WILLISTON BASIN. The Williston Basin encompasses approximately 225,000 square miles in western North Dakota, northwest South Dakota, northeast Montana and Saskatchewan Province, Canada. The Williston Basin has 18 producing horizons ranging in depth from 4,500 feet to over 15,000 feet. The Company controls over 3.2 million net acres, primarily in the U.S. portion of the basin, through both mineral and leasehold interests. The Company continues its activity in the Williston Basin of North Dakota and Montana through the use of advanced technologies such as 3D seismic and horizontal drilling. In 1995, the Company was very active in exploration programs such as the Lodgepole and River Run plays of North Dakota. The Company also continues to use horizontal drilling to exploit reserves along the Cedar Creek anticline in Montana. In total, the Company participated in the completion of 44 horizontal wells in 1995 throughout the Williston Basin at a net cost of approximately $33 million. During 1995, net oil production from the Williston Basin averaged 13 MBbls of oil per day. SECTION 29 TAX CREDITS A number of formations located within the Company's producing areas have wells that may qualify for tax credits under Section 29 of the Internal Revenue Code of 1954, as amended ("IRC"). IRC Section 29 provides for a tax credit from non-conventional fuel sources such as oil produced from shale and tar sands and natural gas produced from geopressured brine, Devonian shale, coal seams, or tight sands formations. The Company estimates that the tax credit rate will range from $.52 to $1.03 per million British Thermal Unit depending on fuel source. The Company earned approximately $82 million of tax credits in 1995. CAPITAL EXPENDITURES AND MAJOR PROJECTS Following are the Company's capital expenditures.
YEAR ENDED DECEMBER 31, ---------------------------------- 1995 1994 1993 -------- -------- -------- (IN THOUSANDS) Oil and Gas Activities........................... $547,113 $810,466 $501,191 Plants and Pipelines............................. 27,979 36,026 33,327 Administrative................................... 13,703 35,153 18,866 -------- -------- -------- Total.................................. $588,795 $881,645 $553,384 ======== ======== ========
3 6 Capital expenditures for oil and gas activities in 1995 of $547 million include 19 percent for proved property acquisitions, 59 percent for developmental drilling and 22 percent for exploration. Included in capital expenditures for oil and gas activities are exploration costs expensed under the successful efforts method of accounting and capitalized interest. Drilling Activity Drilling activity in 1995 was principally in the San Juan, Gulf Coast, Permian, Anadarko and Williston basins. Total drilling activity levels are consistent with those reported at year end 1994. Additionally, 1995 activity includes a 50 percent increase in workover activity and an increased focus on higher potential exploration and development projects with commensurately higher risk. The following table sets forth the Company's net productive and dry wells.
YEAR ENDED DECEMBER 31, --------------------------- 1995 1994 1993 ----- ----- ----- Productive wells: Exploratory..................................... 18.1 15.9 7.2 Development..................................... 291.7 342.2 243.7 ----- ----- ----- 309.8 358.1 250.9 ----- ----- ----- Dry wells: Exploratory..................................... 15.8 3.7 9.0 Development..................................... 37.8 13.3 11.6 ----- ----- ----- 53.6 17.0 20.6 ----- ----- ----- Total net wells......................... 363.4 375.1 271.5 ===== ===== =====
As of December 31, 1995, 20 gross wells, representing approximately 13 net wells, were being drilled. Asset Rationalization The Company focuses its acquisition activity in areas where it has production in order to maximize the efficiencies gained in combining operations or in new areas where the Company can transfer its technological expertise or take advantage of premium markets. In addition, the Company uses a selective acquisition process that emphasizes the purchase of reserves as well as properties having upside potential that can be developed by the utilization of both conventional and advanced technologies. As a component of its overall growth strategy, the Company acquired 187 BCFE of producing oil and gas properties at a cost of approximately $104 million during 1995. Approximately 45 percent of the reserves acquired during the year were located in the prolific Gulf Coast Basin. The Company will continue to pursue transactions which enable the consolidation of assets and increase operating efficiencies. In an effort to maintain its high quality asset base, the Company continues to divest marginal and non-strategic assets. During 1995, the Company divested over 4,300 working interest wells comprising approximately 14 percent of the Company's working interest well inventory. In addition, the Company conveyed its working interests in certain coal seam gas wells in August 1995. In February 1995, the Company completed the sale of its intrastate natural gas pipeline systems and its underground natural gas storage facility, including gas inventory, for approximately $80 million. The net proceeds after tax from all 1995 asset divestitures were approximately $146 million. The Company expects to continue divesting marginal and non-strategic assets in 1996. 4 7 PRODUCTIVE WELLS, DEVELOPED AND UNDEVELOPED ACREAGE Working interests in productive wells, developed acreage and undeveloped leasehold acreage at December 31, 1995 follow.
PRODUCTIVE WELLS - -------------------------------------- OIL GAS DEVELOPED ACRES UNDEVELOPED ACRES - ----------------- ----------------- ------------------------ ------------------------ GROSS NET GROSS NET GROSS NET GROSS NET - ------- ------ ------- ------ ---------- ---------- ---------- ---------- 12,728 4,832 14,552 8,672 5,824,000 3,065,000 2,760,000 1,582,000
Included in the productive wells data are 777 multiple completions. Excluded from the acreage data are approximately 7 million undeveloped acres of Company-owned oil and gas mineral rights, of which approximately 3 to 4 million acres are considered to have potential for oil and gas exploration. OIL AND GAS PRODUCTION, PRICES AND PRODUCTION COSTS The Company's average daily production represents its net ownership after deduction of all royalty interests held by others but includes royalty interests and net profits interests owned by the Company. The Company's average natural gas price includes amounts from the sale of NGLs, less the actual costs incurred to gather, treat, process and transport the hydrocarbons to market. Following are production and prices.
YEAR ENDED DECEMBER 31, -------------------------------- 1995 1994 1993 ------ ------ ------ Production: Gas (MMCF per day)................................. 1,165 1,052 920 Oil (MBbls per day)................................ 48.0 45.6 41.9 Average sales prices: Gas per MCF........................................ $ 1.25 $ 1.65 $ 1.87 Oil per barrel..................................... 16.69 15.66 16.71 Average production costs per MCFE.................... .51 .54 .56 Depreciation, depletion and amortization rates per MCFE............................................... .63 .62 .58
In 1995, 1994 and 1993, approximately 58 percent, 66 percent and 69 percent, respectively, of the Company's gas production was transported to direct sale customers through EPNG's pipeline facilities. These transportation arrangements are pursuant to EPNG's approved Federal Energy Regulatory Commission ("FERC") tariffs applicable to all shippers. The Company expects to continue to transport a substantial portion of its future gas production through EPNG's pipeline system. RESERVES The following table sets forth estimates by the Company's petroleum engineers of proved oil and gas reserves at December 31, 1995. These reserves have been reduced for royalty interests owned by others.
GAS OIL TOTAL (BCF) (MMBBLS) (BCFE) ------ -------- ------ Proved Developed Reserves...................... 4,543 168.1 5,552 Proved Undeveloped Reserves.................... 964 28.8 1,137 ----- ----- ----- Total Proved Reserves................ 5,507 196.9 6,689 ===== ===== =====
For further information on reserves, including information on future net cash flows and the standardized measure of discounted future net cash flows, see "Financial Statements and Supplementary Financial Information--Supplemental Oil and Gas Disclosures." 5 8 INTRASTATE PIPELINES AND NGLS The Company owns and operates gathering systems in several states. In February 1995, the Company completed the sale of its intrastate natural gas pipeline systems and its underground gas storage facility, including gas inventory, for approximately $80 million.
YEAR ENDED DECEMBER 31, --------------------------- 1995 1994 1993 ---- ----- ---- (BCF) Annual intrastate natural gas throughput: Company-owned production.................... 1 16 19 Third party production...................... 1 49 41 Third party gas transportation and gathering..... 107 132 139 --- --- --- Total.................................. 109 197 199 === === ===
The Company is engaged in the fractionation, transportation and marketing of NGLs which are sold to a variety of distributors, refiners and petrochemical users. NGL sales were 13.3 MMBbls, 12.7 MMBbls and 14.9 MMBbls, for the years ended December 31, 1995, 1994 and 1993, respectively. MARKETING Marketing Strategy. In pursuit of its strategy to build long-term shareholder value for domestic hydrocarbons, the Company will continue to develop premium markets for its production. In addition, the Company adds value through such activities as processing, gathering, exchanging and transporting hydrocarbons for both itself and third parties. Financial instruments and fixed-price gas sales contracts are used from time to time in order to hedge the price of a portion of the Company's production. Wellhead Marketing. Substantially all of the Company's oil and gas production is sold on the spot market and under short-term contracts at market sensitive prices. Substantially all of the Company's gas production is sold to Meridian Oil Trading Inc. ("MOTI"), a wholly-owned marketing subsidiary of the Company. A majority of the Company's crude oil production is sold at the wellhead to third parties. OTHER MATTERS Competition. The Company actively competes for reserve acquisitions, exploration leases and sales of oil and gas, frequently against companies with substantially larger financial and other resources. In its marketing activities, the Company competes with numerous companies for gas purchasing and processing contracts and for oil, gas and NGLs at several steps in the distribution chain. Competitive factors in the Company's business include price, contract terms, quality of service, pipeline access, transportation discounts and distribution efficiencies. Regulation of Oil and Gas Production, Sales and Transportation. Numerous departments and agencies, both federal and state, have issued rules and regulations governing the oil and gas industry and its individual members, compliance with which is often difficult and costly and some of which carry substantial noncompliance penalties. State and federal statutes and regulations require drilling permits, drilling bonds and operating reports. Most states in which the Company operates also have statutes and regulations governing conservation matters, including the unitization or pooling of oil and gas properties and the establishment of maximum rates of production from oil and gas wells. Many states also limit production to the market demand for oil and gas. Such statutes and regulations may limit the rate at which oil and gas could otherwise be produced from the Company's properties. The Company operates various gathering systems and NGL pipelines. The United States Department of Transportation and comparable state agencies regulate, under various enabling statutes, the 6 9 safety aspects of the transportation and storage activities of these facilities by prescribing safety and operating standards. The transportation of gas in interstate commerce is regulated by the FERC pursuant to the Natural Gas Act of 1938. All of the Company's sales of gas are "deregulated". The FERC has fully implemented its Order No. 636 series which fundamentally restructured the rates and operations of interstate pipeline companies. Additionally, the FERC has implemented new policies deregulating the field area services of affiliates of interstate pipeline companies. Both of these orders have been appealed. The FERC has instituted proceedings concerning offshore and interstate pipeline companies' incentive ratemaking. These proceedings are in their early stages. The Company does not expect that these proceedings will have a materially adverse effect on the consolidated financial position or results of operations of the Company. Environmental Regulation. Various federal, state and local laws and regulations covering the discharge of materials into the environment, or otherwise relating to the protection of the environment, may affect the Company's operations and costs as a result of their effect on oil and gas exploration, development and production operations. Offshore oil and gas operations are subject to regulations of the U.S. Department of the Interior which currently imposes absolute liability upon the lessee under a federal lease for the cost of pollution cleanup resulting from the lessee's operations, and could subject the lessee to possible liability for pollution damages. In the event of a serious incident of pollution, the U.S. Department of the Interior may require a lessee under a federal lease to suspend or cease operations in the affected area. The Company believes it is in substantial compliance with applicable environmental laws and regulations. The Company does not anticipate that it will be required under environmental laws and regulations to expend amounts that will have a materially adverse effect on the consolidated financial position or results of operations of the Company. Filings of Reserve Estimates With Other Agencies. During 1995, the Company filed estimates of oil and gas reserves for the year 1994 with the Department of Energy. These estimates were not materially different from the reserve data presented herein. 7 10 CERTAIN DEFINITIONS Gas volumes are stated at the legal pressure base of the state or area in which the reserves are located and at 60(++)Fahrenheit. As used in this Form 10-K, "MCF" means thousand cubic feet, "MMCF" means million cubic feet, "BCF" means billion cubic feet, "MBbls" means thousands of barrels, "MMBbls" means millions of barrels, "MCFE" means thousand cubic feet of gas equivalent, "MMBTU" means million British thermal units, "BCFE" means billion cubic feet of gas equivalent and "TCFE" means trillion cubic feet of gas equivalent. Oil is converted into cubic feet of gas equivalent based on 6 MCF of gas to one barrel of oil. "NGL" means natural gas liquids. Proved reserves represent estimated quantities of oil and gas which geological and engineering data demonstrate with reasonable certainty can be recovered in future years from known reservoirs under existing economic and operating conditions. Reservoirs are considered proved if shown to be economically producible by either actual production or conclusive formation tests. Reserves which require the use of improved recovery techniques for production are included in proved reserves if supported by a successful pilot project or the operation of an installed program. Proved developed reserves are the portion of proved reserves which can be expected to be recovered through existing wells with existing equipment and operating methods. Proved undeveloped reserves are the portion of proved reserves which can be expected to be recovered from new wells on undrilled proved acreage, or from existing wells where a relatively major expenditure is required for completion. With respect to information on working interests in acreage and wells, "net" acreage and "net" oil and gas wells are obtained by multiplying "gross" acreage and "gross" oil and gas wells by the Company's working interest percentage in the properties. EMPLOYEES The Company had 1,796 and 1,846 employees at December 31, 1995 and 1994, respectively. ITEM THREE LEGAL PROCEEDINGS On May 25, 1995, the 270th Judicial District Court of Harris County, Texas entered an order in a lawsuit styled Caroline Altheide, et al. v. Meridian Oil Inc., et al. which allows the suit to be maintained as a class action on behalf of all royalty and overriding royalty interest owners in all Meridian properties and all working interest owners in properties operated by Meridian who have received payments from Meridian at any time from and after December 1, 1986 based upon wellhead sales of natural gas to MOTI. The lawsuit involves claims for unspecified actual and punitive damages based upon alleged breaches of duties owed to interest owners because of the use of Meridian corporate affiliates to gather, treat and market natural gas. The plaintiffs allege that Meridian's gas producing affiliates have sold natural gas to marketing affiliates at low inter-affiliate settlement prices which are then used as the basis for accounting to interest owners. Plaintiffs also allege that Meridian's pricing includes inappropriate deductions of inflated gathering and transportation costs. Meridian is vigorously defending this litigation and perfected an interlocutory appeal of the class certification order on May 30, 1995. This appeal effectively stays class action proceedings in the trial court until the appeal is completed. Oral argument in this appeal has been set for February 28, 1996. The Company and its subsidiaries are named defendants in numerous lawsuits and named parties in numerous governmental proceedings arising in the ordinary course of business. While the outcome of lawsuits and other proceedings cannot be predicted with certainty, management expects these matters, including the above-described Altheide litigation, will not have a materially adverse effect on the consolidated financial position or results of operations of the Company. ITEM FOUR SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS During the fourth quarter of 1995, no matters were submitted to a vote of security holders. 8 11 EXECUTIVE OFFICERS OF THE REGISTRANT AND PRINCIPAL SUBSIDIARY THOMAS H. O'LEARY, 61 Chairman of the Board Burlington Resources Inc. December 1995 to Present Chairman of the Board, President and Chief Executive Officer, February 1993 to December 1995; Chairman of the Board and Chief Executive Officer, July 1992 to February 1993; Chairman of the Board, President and Chief Executive Officer, October 1990 to July 1992. BOBBY S. SHACKOULS, 45 President and Chief Executive Officer Burlington Resources Inc. December 1995 to Present President and Chief Executive Officer, Meridian Oil Inc., October 1994 to Present; Executive Vice President and Chief Operating Officer, Meridian Oil Inc., June 1993 to October 1994; President and Chief Operating Officer, Torch Energy Advisors, Inc., July 1991 to May 1993; Executive Vice President, Torch Energy Advisors, Inc., September 1988 to July 1991. JOHN E. HAGALE, 39 Executive Vice President and Chief Financial Officer Burlington Resources Inc. December 1995 to Present Executive Vice President and Chief Financial Officer, Meridian Oil Inc., March 1993 to Present; Senior Vice President and Chief Financial Officer, Burlington Resources Inc., April 1994 to December 1995; Vice President, Finance, Burlington Resources Inc., March 1992 to February 1993; Vice President, Taxes, Burlington Resources Inc., December 1990 to March 1992. HAROLD E. HAUNSCHILD, 45 Vice President, Human Resources Burlington Resources Inc. July 1992 to Present Executive Vice President, Human Resources and Administration Meridian Oil Inc. May 1993 to Present Assistant Vice President, Compensation and Benefits, Burlington Resources Inc., May 1988 to June 1992. RANDOLPH P. MUNDT, 45 Executive Vice President, Marketing Meridian Oil Inc. March 1995 to Present Senior Vice President, Operations, Meridian Oil Inc., October 1994 to March 1995; Senior Vice President, Acquisitions and Land, Meridian Oil Inc., July 1993 to October 1994; Senior Vice President, Strategic Planning and Asset Management, Meridian Oil Inc., December 1990 to July 1993. C. RAY OWEN, 50 Executive Vice President and Chief Operating Officer Meridian Oil Inc. October 1994 to Present Senior Vice President, Operations, Meridian Oil Inc., March 1993 to October 1994; Vice President, Regional Operations, Meridian Oil Inc., December 1990 to March 1993. GERALD J. SCHISSLER, 51 Executive Vice President, Law Burlington Resources Inc. December 1995 to Present Executive Vice President, Law and Corporate Affairs, Meridian Oil Inc., July 1993 to Present; Senior Vice President, Law, Burlington Resources Inc., December 1993 to December 1995; Consultant, June 1991 to July 1993; Senior Vice President, Law, Meridian Minerals Company, a subsidiary of Burlington Resources Inc., November 1987 to June 1991. 9 12 PART II ITEM FIVE MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS The Company's common stock is traded on the New York Stock Exchange under the symbol "BR." At December 31, 1995, the number of common stockholders was 22,380. Information on common stock prices and quarterly dividends is shown on page 32. ITEM SIX SELECTED FINANCIAL DATA The selected financial data for the Company set forth below for the five years ended December 31, 1995 should be read in conjunction with the Consolidated Financial Statements.
1995 1994 1993 1992 1991 ------ ------ ------ ------ ------ (IN MILLIONS, EXCEPT PER SHARE AMOUNTS) CONTINUING OPERATIONS FOR THE YEAR ENDED: Revenues.................................... $ 873 $1,055 $1,043 $ 943 $ 813 Operating Income (Loss)..................... (467) 175 256 240 177 Income (Loss)............................... (280) 154 256 190 100 Earnings (Loss) per Common Share(a)......... (2.20) 1.20 1.96 1.44 .75 Cash Dividends Declared per Common Share(b)................................. .55 .55 .55 .60 .70 AT YEAR END: Total Assets(c)............................. $4,165 $4,809 $4,448 $4,470 $5,480 Long-term Debt.............................. 1,350 1,309 819 1,003 1,298 Stockholders' Equity(c)..................... 2,220 2,568 2,608 2,406 2,907 Common Shares Outstanding................... 127 127 130 129 131
- --------------- (a) Excluding the non-cash charge related to the adoption of Statement of Financial Accounting Standard No. 121, Accounting for the Impairment of Long-lived Assets and for Long-lived Assets to Be Disposed Of ("SFAS No. 121") totaling $(2.39) per share, Earnings (Loss) per Common Share would have been $.19 in 1995. Excluding non-recurring items totaling $.47, $.24, and $.08 per share, Earnings (Loss) per Common Share would have been $1.49, $1.20 and $.67 in 1993, 1992, and 1991, respectively. (b) On January 13, 1993, the Company increased its quarterly dividend rate to $.1375 per share. In July 1992, the quarterly dividend rate was reduced to $.125 per share to reflect the June 30, 1992 spin-off of EPNG to the Company's stockholders. (c) In 1995, as a result of the impairment of oil and gas assets related to the adoption of SFAS No. 121, the Company recognized a non-cash, pretax charge of $490 million ($304 million after tax). On June 30, 1992, the Company distributed its EPNG common stock to the Company's stockholders of record as of June 15, 1992. The distribution was accounted for as a $575 million non-cash dividend. 10 13 ITEM SEVEN MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FINANCIAL CONDITION AND LIQUIDITY The Company's total long-term debt to capital (long-term debt and stockholders' equity) ratio at December 31, 1995 and 1994 was 38 and 34 percent, respectively. In March 1995, the Company issued $150 million of 8.20% Notes due March 15, 2025. The net proceeds were used for general corporate purposes, including acquisition of oil and gas properties, repayment of commercial paper, capital expenditures and repurchases of the Company's common stock. The Company's credit facilities are comprised of a $600 million revolving credit agreement that expires in July 2000 and a $300 million revolving credit agreement that expires July 1996. The $300 million revolving credit agreement is renewable annually by mutual consent and was renewed in July 1995. As of December 31, 1995, there were no borrowings outstanding under the credit facilities, although borrowing capacity is reduced by outstanding commercial paper. At December 31, 1995, the Company had outstanding commercial paper borrowings of $152 million at an average interest rate of 6.15 percent. The Company had the capacity to borrow approximately $748 million under the credit facilities at December 31, 1995. In addition, the Company has $350 million of capacity under shelf registration statements filed with the Securities and Exchange Commission. During 1995, the Company repurchased 133 thousand shares of its common stock for $5 million. Since December 1988, the Company has repurchased 27.3 million shares under three 10 million share repurchase authorizations. Net cash provided by operating activities for 1995 was $452 million compared to $498 million and $455 million in 1994 and 1993, respectively. The decrease in 1995 compared to 1994 is primarily due to lower operating income partially offset by $39 million received in June 1995 from the sale of a receivable related to a claim resulting from the breach of a take-or-pay gas contract and other working capital changes. The increase in 1994 compared to 1993 is primarily due to working capital changes partially offset by decreased operating income. The Company continues to divest marginal and non-strategic assets to maintain its high quality asset base. During 1995, the Company divested over 4,300 working interest wells comprising approximately 14 percent of the Company's working interest well inventory. In addition, the Company conveyed its working interests in certain coal seam gas wells in August 1995. In February 1995, the Company completed the sale of its intrastate natural gas pipeline systems and its underground natural gas storage facility, including gas inventory, for approximately $80 million. The net proceeds after tax, from all 1995 asset divestitures were approximately $146 million. The Company expects to continue divesting marginal and non-strategic assets in 1996. The Company is involved in certain environmental proceedings and other related matters. Although it is possible that new information or future developments could require the Company to reassess its potential exposure related to these matters, the Company believes, based upon available information, the resolution of these issues will not have a materially adverse effect on the consolidated financial position or results of operations of the Company. The Company has certain commitments and uncertainties related to its normal operations. Management believes that there are no commitments, uncertainties or contingent liabilities that will have a materially adverse effect on the consolidated financial position or results of operations of the Company. 11 14 CAPITAL EXPENDITURES AND RESOURCES Capital expenditures during 1995 totaled $589 million compared to $882 million and $553 million in 1994 and 1993, respectively. The Company spent $104 million for producing property acquisitions in 1995 compared to $479 million and $270 million in 1994 and 1993, respectively. The Company spent $443 million on internal development and exploration during 1995 compared to $331 million and $231 million in 1994 and 1993, respectively. Capital expenditures for 1996, projected to be approximately $530 million, are expected to be primarily for development and exploration of oil and gas properties, reserve acquisitions, and plant and pipeline expenditures. Capital expenditures will be funded from internal cash flow supplemented, if needed, by external financing. The Company anticipates continued increases in gas production. The increased availability of gas will be a result of the continuing development of the Company's gas reserves, exploration of undeveloped acreage and the Company's producing property acquisition program. The Company expects to market its additional gas production in the Gulf Coast, the Midwest, the East Coast and its traditional California market. MARKETING Marketing Strategy. In pursuit of its strategy to build long-term shareholder value for domestic hydrocarbons, the Company will continue to develop premium markets for its production. In addition, the Company adds value through such activities as processing, gathering, exchanging and transporting hydrocarbons for both itself and third parties. Financial instruments and fixed-price gas sales contracts are used from time to time in order to hedge the price of a portion of the Company's production. Wellhead Marketing. Substantially all of the Company's oil and gas production is sold on the spot market and under short-term contracts at market sensitive prices. Substantially all of the Company's gas production is sold to Meridian Oil Trading Inc. ("MOTI"), a wholly-owned marketing subsidiary of the Company. A majority of the Company's crude oil production is sold at the wellhead to third parties. DIVIDENDS On January 10, 1996, the Board of Directors declared a common stock quarterly dividend of $.1375 per share, payable April 1, 1996. Dividend levels are determined by the Board of Directors based on profitability, capital expenditures, financing and other factors. The Company declared cash dividends on common stock totaling approximately $70 million during 1995. RESULTS OF OPERATIONS Year Ended December 31, 1995 Compared With Year Ended December 31, 1994 The Company reported a net loss of $280 million or $2.20 per share in 1995 compared to net income of $154 million or $1.20 per share in 1994. The 1995 results include a $2.39 per share non-cash charge resulting from the Company's adoption of Statement of Financial Accounting Standards No. 121, Accounting for the Impairment of Long-lived Assets and for Long-lived Assets to Be Disposed Of ("SFAS No. 121"). Revenues were $873 million in 1995 compared to $1,055 million in 1994. Gas sales volumes improved 11 percent to 1,165 MMCF per day and oil sales volumes improved 5 percent to 48 MBbls per day which increased revenues $68 million and $14 million, respectively. Gas and oil sales volumes increased primarily due to continued development and exploration of the Company's oil and gas properties and producing property acquisitions. Average oil prices increased by 7 percent to $16.69 per barrel which increased revenues by $18 million. The revenue increases were more than offset by a 24 percent decline in 1995 average gas sales prices to $1.25 per MCF which decreased revenues 12 15 $170 million. Additionally, intrastate natural gas sales declined $96 million due to the sale of the intrastate pipeline systems in February 1995 and other revenues declined $9 million. Costs and Expenses were $1,340 million in 1995 compared to $880 million in 1994. The increase was primarily due to a non-cash charge of $490 million related to the impairment of oil and gas properties, a $38 million increase in production related expenses and an $18 million increase in exploration costs. The non-cash charge resulted from the Company's adoption of SFAS No. 121 effective as of September 30, 1995. The increases were partially offset by a $85 million reduction in intrastate natural gas purchases primarily due to the February 1995 sale of the intrastate pipeline systems. Interest Expense was $109 million in 1995 compared to $90 million in 1994. The increase was primarily due to additional long-term debt issued in March 1995 and May 1994. Other Income (Expense) -- Net was $700 thousand expense in 1995 compared to $6 million income in 1994. The effective income tax rate was a benefit of 52 percent in 1995 compared to a benefit of 71 percent in 1994. The beneficial tax rate in 1995 is due to a pretax loss and non-conventional fuel tax credits earned. The beneficial tax rate in 1994 is due to low pretax income relative to the amount of non-conventional fuel tax credits earned. Year Ended December 31, 1994 Compared With Year Ended December 31, 1993 The Company reported net income in 1994 of $154 million or $1.20 per share compared to $256 million or $1.96 per share in 1993. The 1993 results include a total of $.47 per share from gains on the sale of the Burlington Resources Coal Seam Gas Royalty Trust (the "Trust") units, the exchange of Company debt for Anadarko Petroleum Corporation ("Anadarko") common stock and a charge to reflect the increase in the corporate income tax rate. Revenues were $1,055 million in 1994 compared to $1,043 million in 1993. Gas sales volumes improved 14 percent to 1,052 MMCF per day and oil sales volumes improved 9 percent to 45.6 MBbls per day which increased revenues $90 million and $23 million, respectively. Gas and oil sales volumes increased primarily due to continued development and exploration of the Company's oil and gas properties and producing property acquisitions. The revenue increases were offset by a 12 percent decline in 1994 average gas sales prices to $1.65 per MCF and a 6 percent decline in 1994 average oil sales prices to $15.66 per barrel which decreased revenues $84 million and $17 million, respectively. Costs and Expenses were $880 million in 1994 compared to $787 million in 1993. The increase was primarily due to a 13 percent improvement in 1994 production levels which increased production related expenses $84 million and a $5 million increase in exploration costs. Interest Expense was $90 million in 1994 compared to $73 million in 1993. The increase was primarily due to additional long-term debt issued in May 1994 and higher outstanding commercial paper borrowings during 1994. Other Income -- Net was $6 million in 1994 compared to $126 million in 1993. The 1993 amount includes a $108 million gain on the sale of the Trust units and a $19 million gain from the exchange of Company debt for Anadarko common stock. The effective income tax rate was a benefit of 71 percent in 1994 compared to an expense of 17 percent in 1993. Without the additional tax expense associated with the non-recurring 1993 gains from the sale of the Trust units and the exchange of Company debt for Anadarko common stock and the non-recurring portion of the 1993 tax rate increase, the 1993 effective tax rate was a benefit of 7 percent. The higher 1994 beneficial tax rate is primarily due to lower 1994 pretax income relative to the non-conventional fuel tax credit earned. 13 16 OTHER MATTERS Effective September 30, 1995, the Company adopted SFAS No. 121 which requires that long-lived assets held and used by an entity be reviewed for impairment whenever events or changes indicate that the net book value of the asset may not be recoverable. An impairment loss is recognized if the sum of expected future cash flows from the use of the asset is less than the net book value of the asset. The primary change under SFAS No. 121 is that the Company will now evaluate impairment of its oil and gas properties on a field-by-field basis rather than in the aggregate. Based upon this evaluation, certain properties were deemed to be impaired. For those properties, the Company adjusted the net book value of the properties to their fair value based upon expected future discounted cash flows. As a result of the Company's adoption of SFAS No. 121, combined with the current weak gas market, the Company recognized a non-cash, pretax charge of $490 million ($304 million after tax) related to its oil and gas properties. In October 1995, the Financial Accounting Standards Board issued SFAS No. 123, Accounting for Stock-Based Compensation, which is effective for fiscal years beginning after December 15, 1995. SFAS No. 123 establishes financial accounting and reporting standards for stock-based employee compensation plans. The pronouncement defines a fair value based method of accounting for an employee stock option or similar equity instrument and encourages all entities to adopt that method of accounting for all of their employee stock compensation plans. However, it also allows an entity to continue to measure compensation cost for those plans using the intrinsic value based method of accounting prescribed by Accounting Principles Board ("APB") Opinion No. 25, Accounting for Stock Issued to Employees. Entities electing to continue using the accounting methods prescribed by APB Opinion No. 25 must make pro forma disclosures of net income and earnings per share as if the fair value based method of accounting defined in SFAS No. 123 had been applied. The Company is currently evaluating the impact SFAS No. 123 will have on its financial position and results of operations and has not determined which accounting method will be applied. 14 17 ITEM EIGHT FINANCIAL STATEMENTS AND SUPPLEMENTARY FINANCIAL INFORMATION BURLINGTON RESOURCES INC. CONSOLIDATED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, -------------------------------------------- 1995 1994 1993 ---------- ---------- ---------- (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) Revenues........................................... $ 872,514 $1,054,847 $1,043,232 Costs and Expenses................................. 1,339,740 879,810 787,427 ---------- ---------- ---------- Operating Income (Loss)............................ (467,226) 175,037 255,805 Interest Expense................................... 108,865 90,291 72,799 Other Income (Expense) -- Net...................... (656) 5,523 125,570 ---------- ---------- ---------- Income (Loss) Before Income Taxes.................. (576,747) 90,269 308,576 Income Tax Expense (Benefit)....................... (297,102) (63,977) 52,264 ---------- ---------- ---------- Net Income (Loss).................................. $ (279,645) $ 154,246 $ 256,312 ========== ========== ========== Earnings (Loss) per Common Share................... $ (2.20) $ 1.20 $ 1.96 ========== ========== ==========
See accompanying Notes to Consolidated Financial Statements. 15 18 BURLINGTON RESOURCES INC. CONSOLIDATED BALANCE SHEET
DECEMBER 31, ------------------------- 1995 1994 ---------- ---------- (IN THOUSANDS) ASSETS Current Assets Cash and Short-term Investments................................... $ 20,473 $ 19,898 Accounts Receivable............................................... 209,669 193,825 Inventories....................................................... 18,317 35,188 Other Current Assets.............................................. 16,528 17,191 ---------- ---------- 264,987 266,102 ---------- ---------- Oil and Gas Properties (Successful Efforts Method).................. 5,870,344 5,689,135 Other Properties.................................................... 498,853 572,490 ---------- ---------- 6,369,197 6,261,625 Accumulated Depreciation, Depletion and Amortization.............. 2,602,014 1,904,212 ---------- ---------- Properties -- Net.............................................. 3,767,183 4,357,413 ---------- ---------- Other Assets........................................................ 132,590 185,095 ---------- ---------- Total Assets.............................................. $4,164,760 $4,808,610 ========== ========== LIABILITIES Current Liabilities Accounts Payable.................................................. $ 213,598 $ 177,956 Taxes Payable..................................................... 59,055 47,080 Accrued Interest.................................................. 19,453 15,863 Dividends Payable................................................. 17,407 17,434 Other Current Liabilities......................................... 12,420 3,688 ---------- ---------- 321,933 262,021 ---------- ---------- Long-term Debt...................................................... 1,350,319 1,309,137 ---------- ---------- Deferred Income Taxes............................................... 110,075 480,648 ---------- ---------- Other Liabilities and Deferred Credits.............................. 162,011 188,763 ---------- ---------- Commitments and Contingent Liabilities STOCKHOLDERS' EQUITY Common Stock, Par Value $.01 Per Share (Authorized 325,000,000 Shares; Issued 150,000,000 Shares)................................ 1,500 1,500 Paid-in Capital..................................................... 2,935,285 2,936,374 Retained Earnings................................................... 202,141 551,385 ---------- ---------- 3,138,926 3,489,259 Cost of Treasury Stock (1995, 23,425,621 Shares; 1994, 23,491,040 Shares).......................................... 918,504 921,218 ---------- ---------- Common Stockholders' Equity......................................... 2,220,422 2,568,041 ---------- ---------- Total Liabilities and Common Stockholders' Equity......... $4,164,760 $4,808,610 ========== ==========
See accompanying Notes to Consolidated Financial Statements. 16 19 BURLINGTON RESOURCES INC. CONSOLIDATED STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, ---------------------------------------- 1995 1994 1993 ---------- ---------- ---------- (IN THOUSANDS) Cash Flows From Operating Activities Net Income (Loss)................................. $(279,645) $ 154,246 $ 255,174 Adjustments to Reconcile Net Income (Loss) to Net Cash Provided By Operating Activities Depreciation, Depletion and Amortization....... 372,602 337,421 285,258 Deferred Income Taxes.......................... (370,573) (86,118) 2,438 Exploration Costs.............................. 51,382 32,983 28,173 Impairment of Oil and Gas Properties........... 490,000 -- -- Working Capital Changes Accounts Receivable.......................... (15,844) 24,536 17,294 Inventories.................................. 16,871 (11,234) (4,940) Other Current Assets......................... 663 (2,619) 69,165 Accounts Payable............................. 35,642 (12,533) (24,649) Taxes Payable................................ 11,975 (11,292) (1,761) Accrued Interest............................. 3,590 3,787 (4,549) Other Current Liabilities.................... 8,705 (17,558) (19,062) Gain on Sales and Other........................... 126,630 86,632 (147,130) --------- --------- --------- Net Cash Provided By Operating Activities.............................. 451,998 498,251 455,411 --------- --------- --------- Cash Flows From Investing Activities Additions to Properties........................... (588,795) (881,645) (553,384) Proceeds from Sales and Other..................... 182,453 82,831 222,556 --------- --------- --------- Net Cash Used In Investing Activities..... (406,342) (798,814) (330,828) --------- --------- --------- Cash Flows From Financing Activities Proceeds from Long-term Financing................. 150,000 488,596 -- Reduction in Long-term Debt....................... (107,994) -- (183,610) Dividends Paid.................................... (69,644) (71,010) (69,711) Treasury Stock Transactions -- Net................ 2,714 (123,175) 30,999 Other............................................. (20,157) 6,266 85,794 --------- --------- --------- Net Cash Provided By (Used In) Financing Activities.............................. (45,081) 300,677 (136,528) --------- --------- --------- Increase (Decrease) in Cash and Short-term Investments....................................... 575 114 (11,945) Cash and Short-term Investments Beginning of Year................................. 19,898 19,784 31,729 --------- --------- --------- End of Year....................................... $ 20,473 $ 19,898 $ 19,784 ========= ========= =========
See accompanying Notes to Consolidated Financial Statements. 17 20 BURLINGTON RESOURCES INC. CONSOLIDATED STATEMENT OF COMMON STOCKHOLDERS' EQUITY
COST OF COMMON COMMON PAID-IN RETAINED TREASURY STOCKHOLDERS' STOCK CAPITAL EARNINGS STOCK EQUITY ------ --------- --------- --------- ------------- (IN THOUSANDS) Balance, December 31, 1992.......... $1,500 $2,950,722 $282,610 $(829,042) $2,405,790 Net Income........................ 256,312 256,312 Cash Dividends ($.55 per share)... (71,255) (71,255) Stock Purchases (1,139,900 shares)........................ (45,280) (45,280) Stock Option Activity and Other... (13,788) 76,279 62,491 ------ ---------- -------- --------- ---------- Balance, December 31, 1993.......... 1,500 2,936,934 467,667 (798,043) 2,608,058 Net Income........................ 154,246 154,246 Cash Dividends ($.55 per share)... (70,528) (70,528) Stock Purchases (3,139,600 shares)........................ (122,007) (122,007) Stock Option Activity and Other... (560) (1,168) (1,728) ------ ---------- -------- --------- ---------- Balance, December 31, 1994.......... 1,500 2,936,374 551,385 (921,218) 2,568,041 Net Loss.......................... (279,645) (279,645) Cash Dividends ($.55 per share)... (69,599) (69,599) Stock Purchases (132,900 shares)........................ (4,791) (4,791) Stock Option Activity and Other... (1,089) 7,505 6,416 ------ ---------- -------- --------- ---------- Balance, December 31, 1995.......... $1,500 $2,935,285 $202,141 $(918,504) $2,220,422 ====== ========== ======== ========= ==========
See accompanying Notes to Consolidated Financial Statements. 18 21 BURLINGTON RESOURCES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. ACCOUNTING POLICIES Principles of Consolidation and Reporting The consolidated financial statements include the accounts of Burlington Resources Inc. and its majority owned subsidiaries (the "Company"). All significant intercompany transactions have been eliminated in consolidation. Due to the nature of financial reporting, management makes estimates and assumptions in preparing the consolidated financial statements. The financial statements for previous periods include certain reclassifications that were made to conform to current presentation. Such reclassifications have no impact on previously reported net income or stockholders' equity. Cash and Short-term Investments All short-term investments purchased with a maturity of three months or less are considered cash equivalents. Cash equivalents are stated at cost, which approximates market value. Inventories Inventories of materials, supplies and products are valued at the lower of average cost or market. Properties Oil and gas properties are accounted for using the successful efforts method. Under this method, all development costs and acquisition costs of proved properties are capitalized and amortized on a units-of-production basis over the remaining life of proved developed reserves and proved reserves, respectively. Costs of drilling exploratory wells are initially capitalized, but charged to expense if and when a well is determined to be unsuccessful. Prior to the adoption of Statement of Financial Accounting Standard No. 121, Accounting for the Impairment of Long-lived Assets and for Long-lived Assets to be Disposed Of ("SFAS" No. 121") as of September 30, 1995, the Company limited the total amount of unamortized capitalized costs to the aggregate value of future net revenues, based on current prices and costs. Under SFAS No. 121, the unamortized capital costs at a field level are reduced to fair value if the sum of expected future cash flows generated is less than net book value. Costs of retired, sold or abandoned properties that constitute a part of an amortization base are charged or credited, net of proceeds, to accumulated depreciation, depletion and amortization. Gains or losses from the disposal of other properties are recognized currently. Expenditures for maintenance, repairs and minor renewals necessary to maintain properties in operating condition are expensed as incurred. Major replacements and renewals are capitalized. All properties are stated at cost. Revenue Recognition Gas revenues are recorded on the entitlement method. Under the entitlement method, revenue is recorded based on the Company's net working interest. Hedging and Related Activities In order to mitigate the risk of market price fluctuations, futures and options transactions may be entered into as hedges of the Company's oil and gas production. Changes in the market value of futures and options transactions entered into as hedges are deferred until the gain or loss is recognized on the hedged transactions. The Company also enters into gas swap agreements to hedge oil or gas and from time to time to convert fixed price gas sales contracts to market-sensitive contracts. Gains or losses resulting from these transactions are recognized in the Company's Consolidated Statement of Income as the related physical production is delivered. 19 22 Credit and Market Risks The Company manages and controls market and counterparty credit risk through established formal internal control procedures which are reviewed on an ongoing basis. The Company attempts to minimize credit-risk exposure to counterparties through formal credit policies, monitoring procedures and through establishment of valuation reserves related to counterparty credit risk. In the normal course of business, collateral is not required for financial instruments with credit risk. Income Taxes Income taxes are provided based on earnings reported for tax return purposes in addition to a provision for deferred income taxes. Deferred income taxes are provided in order to reflect the tax consequences in future years of differences between the financial statement and tax basis of assets and liabilities at each year end. Tax credits are accounted for under the "flow-through" method, which reduces the provision for income taxes in the year the tax credits are earned. Earnings per Common Share Earnings per common share is based on the weighted average number of common shares outstanding during the year. The weighted average number of common shares outstanding was 127 million, 129 million, and 131 million for the years 1995, 1994, and 1993, respectively. 2. MARKETING ACTIVITIES The Company's marketing activities include the purchase and resale of oil, gas and NGLs in addition to the marketing of its own production. The costs and expenses of third party product marketing consist primarily of the cost of product purchased and transportation costs. These costs are netted against the related marketing revenues for financial reporting purposes. The volumes of third party oil, gas and NGLs marketed follow.
1995 1994 1993 ---- ---- ---- Oil (MBbls per day)..................................... 272 467 405 Gas (MMCF per day)...................................... 604 549 526 NGLs (MBbls per day).................................... 12 11 20
Hedging and Related Transactions Swap Agreements -- These agreements require the Company and its counterparties to exchange payment streams based on the difference between fixed and market-sensitive gas prices. The Company enters into swap contracts to hedge the Company's underlying production. Additionally, the Company utilizes swap contracts as a risk management tool for fixed-price contracts entered into to accommodate the needs of its customers, which results in the Company effectively selling its production at market-sensitive prices. In 1993, the Company entered into a gas swap agreement to offset the effects of a long-term fixed-price contract of natural gas. When taking into account the gas swap and the original fixed-price contract, the Company is a fixed-price payor and receivor on substantially the same volume of gas at the same price. The financial result is that there will be no gain or loss on these transactions. The Company is a fixed-price payor on approximately 4 BCF of gas at prices ranging from $1.36 to $2.04 per MMBTU. These transactions convert fixed-price contracts to market-sensitive contracts. The Company is a fixed-price receivor on approximately 7 BCF of gas at prices ranging from $1.86 to $2.08 per MMBTU. These transactions are a hedge of the Company's underlying production. The deferred loss on these types of transactions as of December 31, 1995 was $5.2 million. This opportunity loss will be substantially offset in the cash market when the hedged commodity is delivered in 1996, which has the effect of fixing the price at which the commodity is sold. 20 23 Futures Contracts Sold -- The Company sells oil and gas futures contracts on the New York Mercantile Exchange ("NYMEX"). These contracts allow the Company to sell oil and gas at a future date for a specified price. Futures contracts which are sold are accounted for as hedges of the Company's underlying production. The crude oil positions outstanding as of December 31, 1995 totaled 740 MBbls (which approximates 4 percent of the Company's 1995 production) at NYMEX prices ranging from $17.50 to $18.50 per Bbl for production through April 1996. The natural gas positions outstanding as of December 31, 1995 totaled 6 BCF (which approximates 1 percent of the Company's 1995 production) at NYMEX prices ranging from $2.10 to $2.74 per MMBTU for production through March 1996. The deferred loss on futures contracts as of December 31, 1995 was $5.9 million. This opportunity loss will be substantially offset in the cash market when the hedged commodity is delivered in 1996, which has the effect of fixing the price at which the commodity is sold. 3. INCOME TAXES The provision (benefit) for income taxes follows.
YEAR ENDED DECEMBER 31, ----------------------------------------- 1995 1994 1993 --------- -------- -------- (IN THOUSANDS) Current: Federal............................................ $ 61,168 $ 23,320 $ 39,424 State.............................................. 12,303 (1,179) 10,402 -------- -------- -------- 73,471 22,141 49,826 -------- -------- -------- Deferred: Federal............................................ (331,286) (88,772) (14,934) Enacted federal tax rate change.................... -- -- 15,558 State.............................................. (39,287) 2,654 1,814 -------- -------- -------- (370,573) (86,118) 2,438 -------- -------- -------- Total...................................... $(297,102) $(63,977) $ 52,264 ======== ======== ========
Reconciliation of the federal statutory income tax rate to the effective income tax rate follows.
YEAR ENDED DECEMBER 31, ------------------------------ 1995 1994 1993 ----- ------ ----- Statutory rate................................................. (35.0)% 35.0% 35.0% State income taxes net of federal tax benefit.................. (3.0) 1.1 2.6 Tax credits.................................................... (14.5) (103.3) (25.0) Enacted federal tax rate change................................ -- -- 5.1 Other.......................................................... 1.0 (3.7) (.8) ------ ------ ----- Effective rate....................................... (51.5)% (70.9)% 16.9% ====== ====== =====
21 24 Deferred tax liabilities (assets) follow.
DECEMBER 31, ------------------------ 1995 1994 --------- --------- (IN THOUSANDS) Deferred liabilities Excess of book over tax basis of properties...................... $ 275,060 $ 600,253 Financial accruals and provisions................................ 15,861 30,769 --------- --------- 290,921 631,022 Deferred assets AMT credits carryover............................................ (180,846) (150,374) --------- --------- Net deferred liability................................... $ 110,075 $ 480,648 ========= =========
The above net deferred tax liabilities as of December 31, 1995 and 1994, include deferred state income tax liabilities of approximately $18 million and $57 million, respectively. As of December 31, 1995, the Alternative Minimum Tax ("AMT") credits carryover of approximately $181 million, related primarily to non-conventional fuel tax credits, is available to offset future regular tax liabilities. The AMT credits carryover has no expiration date. The benefit of the tax credits is recognized in net income (loss) for accounting purposes. The benefit is reflected in the current tax provision to the extent the Company is able to utilize the credits for tax return purposes. 4. LONG-TERM DEBT Long-term Debt follows.
DECEMBER 31, -------------------------- 1995 1994 ---------- ---------- (IN THOUSANDS) Commercial Paper.................................................. $ 151,596 $ 259,590 Notes, 7.15%, due 1999............................................ 300,000 300,000 Debentures, 8.20%, due 2025....................................... 150,000 -- Notes, 6 7/8%, due 1999........................................... 150,000 150,000 Notes, 8 1/2%, due 2001........................................... 150,000 150,000 Debentures, 9 1/8%, due 2021...................................... 150,000 150,000 Notes, 9 5/8%, due 2000........................................... 150,000 150,000 Debentures, 9 7/8%, due 2010...................................... 150,000 150,000 Other, including discounts -- net................................. (1,277) (453) ---------- ---------- Total................................................... $1,350,319 $1,309,137 ========== ==========
Excluding commercial paper, the Company has debt maturities of $450 million and $150 million due in 1999 and 2000, respectively. The Company's commercial paper borrowings at December 31, 1995 had an average interest rate of 6.15 percent. The Company's credit facilities are comprised of a $600 million revolving credit agreement that expires in July 2000 and a $300 million revolving credit agreement that expires July 1996. The $300 million revolving credit agreement is renewable annually by mutual consent and was renewed in July 1995. Annual fees are .12 and .08 percent, respectively, of the commitments. At the Company's option, interest on borrowings is based on the prime rate or Eurodollar rates. The unused commitment under these agreements is available to cover certain debt due within one year; therefore, commercial paper is classified as long-term debt. Under the covenants of these agreements, debt cannot exceed 52.5 percent of the sum of debt and tangible net worth (as defined in the agreements). Additionally, tangible net worth cannot be less than $1.3 billion. As of December 31, 1995, there were no borrowings outstanding under these credit facilities although borrowing capacity is reduced by outstanding 22 25 commercial paper. The Company had the capacity to borrow approximately $748 million under the credit facilities as of December 31, 1995. In addition, the Company has $350 million of capacity under shelf registration statements filed with the Securities and Exchange Commission. 5. TRANSPORTATION ARRANGEMENTS WITH EL PASO NATURAL GAS COMPANY In 1995, 1994 and 1993, approximately 58 percent, 66 percent and 69 percent, respectively, of the Company's gas production was transported to direct sale customers through El Paso Natural Gas Company ("EPNG") pipeline facilities. These transportation arrangements are pursuant to EPNG's approved Federal Energy Regulatory Commission tariffs applicable to all shippers. The Company expects to continue to transport a substantial portion of its future gas production through EPNG's pipeline system. See Note 8 for demand charges paid to EPNG which provide the Company with firm and interruptible transportation capacity rights on interstate and intrastate pipeline systems. 6. CAPITAL STOCK The Company's 1993 Stock Incentive Plan (the "1993 Plan") succeeds the Company's 1988 Stock Option Plan which expired by its terms in May 1993 but remains in effect for options granted prior to May 1993. The 1993 Plan provides for the grant of restricted stock, stock options and stock appreciation rights or limited stock appreciation rights (together "SARs"). Under the 1993 Plan, options may be granted to officers and key employees at fair market value at the date of grant, exercisable in whole or part by the optionee after completion of at least one year of continuous employment from the grant date. Activity in the Company's stock option plans follows.
EXERCISE OPTIONS PRICE PER SHARE ---------- ----------------- Balance, December 31, 1992.................................... 4,633,829 $ 10.91 to $38.00 ---------- Granted..................................................... 489,000 44.00 to 47.56 Exercised................................................... (1,984,383) 10.91 to 34.68 Cancelled................................................... (205,273) 31.83 to 46.44 ---------- Balance, December 31, 1993.................................... 2,933,173 16.14 to 47.56 ---------- Granted..................................................... 430,200 33.88 to 45.69 Exercised................................................... (62,631) 21.54 to 38.00 Cancelled................................................... (154,407) 31.83 to 44.00 ---------- Balance, December 31, 1994.................................... 3,146,335 16.14 to 47.56 ---------- Granted..................................................... 415,600 39.63 to 39.94 Exercised................................................... (177,365) 16.14 to 38.00 Cancelled................................................... (31,300) 33.88 to 38.00 ---------- Balance, December 31, 1995.................................... 3,353,270 $ 21.54 to $47.56 ==========
At December 31, 1995, 2,943,670 options were exercisable at prices of $21.54 to $47.56 per share. At December 31, 1995, 8,806,746 shares are available for grant under the 1993 Plan. Stock Appreciation Rights The Company has granted SARs in connection with certain outstanding options under the 1988 Plan. SARs are subject to the same terms and conditions as the related options. A SAR entitles an option holder, in lieu of exercise of an option, to receive a cash payment equal to the difference between the option price and the fair market value of the Company's common stock based upon the plan provisions. To the extent the SAR is exercised, the related option is cancelled and to the extent 23 26 the option is exercised the related SAR is cancelled. The outstanding SARs are exercisable only under certain circumstances related to significant changes in the ownership of the Company or its holdings, or certain changes in the constitution of its Board of Directors. At December 31, 1995, there were 647,148 SARs outstanding related to stock options with exercise prices ranging from $21.54 to $34.68 per share. Preferred Stock and Preferred Stock Purchase Rights The Company is authorized to issue 75,000,000 shares of preferred stock, par value $.01 per share, and as of December 31, 1995 there were no shares issued. On December 15, 1988, the Company's Board of Directors designated 3,250,000 of the authorized preferred shares as Series A Preferred Stock. Upon issuance each one-hundredth of a share of Series A Preferred Stock will have dividend and voting rights approximately equal to those of one share of Common Stock of the Company. In addition, on December 15, 1988, the Board of Directors declared a dividend distribution of one Right for each outstanding share of Common Stock of the Company. The Rights were amended on February 23, 1989. The Rights become exercisable if, without the Company's prior consent, a person or group acquires securities having 15 percent or more of the voting power of all of the Company's voting securities (an "Acquiring Person") or ten days following the announcement of a tender offer which would result in such ownership. Each Right, when exercisable, entitles the registered holder to purchase from the Company one-hundredth of a share of Series A Preferred Stock at a price of $95 per one-hundredth of a share, subject to adjustment. If, after the Rights become exercisable, the Company were to be involved in a merger or other business combination in which its Common Stock was exchanged or changed or 50% or more of the Company's assets or earning power were sold, each Right would permit the holder to purchase, for the exercise price, stock of the acquiring company having a value of twice the exercise price (the "Merger Right"). In addition, except for certain permitted offers, if any person or group becomes an Acquiring Person, each Right would permit the purchase, for the exercise price, of Common Stock of the Company having a value of twice the exercise price (the "Subscription Right"). Rights owned by an Acquiring Person are void as they relate to the Subscription Right or the Merger Right. The Rights may be redeemed by the Company under certain circumstances until their expiration date for $0.05 per Right. 7. PENSION PLANS The Company's pension plans are non-contributory defined benefit plans covering substantially all employees. The benefits are based on years of credited service and highest five-year average compensation levels. Contributions to the plans are based upon the Projected Unit Credit actuarial funding method and are limited to amounts that are currently deductible for tax purposes. Contributions are intended to provide not only for benefits attributed to service to date but also for those expected to be earned in the future.
DECEMBER 31, ---------------------- 1995 1994 -------- -------- (IN THOUSANDS) Actuarial present value of benefit obligations Accumulated benefit obligation, including vested benefits of $101,084 and $85,599................................ $104,152 $ 88,060 ======= ======= Projected benefit obligation for service to date................... $145,369 $116,839 Plan assets, primarily marketable equity and debt securities, at fair value.......................................... (112,739) (92,935) ------- ------- Funded status of projected benefit obligation........................ 32,630 23,904 Unrecognized net loss................................................ (44,483) (34,712) Unamortized net transition obligation................................ (3,456) (4,038) ------- ------- Net prepaid pension asset............................................ $(15,309) $(14,846) ======= =======
24 27 The following information relates to the consolidated Company plans.
YEAR ENDED DECEMBER 31, ---------------------------------- 1995 1994 1993 ------- ------- -------- (IN THOUSANDS) Pension cost for the plans includes the following components Service cost -- benefits earned during the period........ $ 5,808 $ 6,633 $ 5,503 Interest cost on projected benefit obligation............ 9,311 9,395 8,926 Actual (return)/loss on plan assets...................... (17,864) 409 (7,857) Net amortization and deferred amounts.................... 11,781 (4,640) 3,851 ------- ------- ------- Net pension cost......................................... $ 9,036 $11,797 $ 10,423 ======= ======= =======
The projected benefit obligation was determined using a weighted average discount rate of 7.50 percent in 1995 and 8.75 percent in 1994, and a rate of increase in future compensation levels of 5 percent. The expected long-term rate of return on plan assets was 9 percent in both 1995 and 1994. 8. COMMITMENTS AND CONTINGENT LIABILITIES Demand Charges The Company has entered into contracts which provide firm and interruptible transportation capacity rights on interstate and intrastate pipeline systems. The remaining terms on these contracts range in terms from 1 to 12 years and require the Company to pay transportation demand charges regardless of the amount of pipeline capacity utilized by the Company. The Company paid $56 million, $51 million and $48 million of demand charges of which $43 million, $40 million and $40 million was paid to EPNG for the years ended December 31, 1995, 1994 and 1993, respectively. Future transportation demand charge commitments at December 31, 1995 follows.
YEAR ENDED DECEMBER 31, -------------- (IN THOUSANDS) 1996.......................................................... $ 58,211 1997.......................................................... 63,147 1998.......................................................... 56,669 1999.......................................................... 57,089 2000.......................................................... 42,596 Thereafter.................................................... 221,018 -------- Total.................................................... $498,730 ========
Lease Obligations The Company has operating leases for office space and other property and equipment. The Company incurred lease rental expense of $14 million, $17 million and $13 million for the years ended December 31, 1995, 1994, and 1993, respectively. 25 28 Future minimum annual rental commitments at December 31, 1995 follow.
YEAR ENDED DECEMBER 31, -------------- (IN THOUSANDS) 1996.......................................................... $ 15,032 1997.......................................................... 13,667 1998.......................................................... 12,798 1999.......................................................... 9,643 2000.......................................................... 8,921 Thereafter.................................................... 78,644 -------- Total.................................................... $138,705 ========
Legal Proceedings On May 25, 1995, the 270th Judicial District Court of Harris County, Texas entered an order in a lawsuit styled Caroline Altheide, et al. v. Meridian Oil Inc., et al. which allows the suit to be maintained as a class action on behalf of all royalty and overriding royalty interest owners in all Meridian properties and all working interest owners in properties operated by Meridian who have received payments from Meridian at any time from and after December 1, 1986 based upon wellhead sales of natural gas to Meridian Oil Trading Inc. The lawsuit involves claims for unspecified actual and punitive damages based upon alleged breaches of duties owed to interest owners because of the use of Meridian corporate affiliates to gather, treat and market natural gas. The plaintiffs allege that Meridian's gas producing affiliates have sold natural gas to marketing affiliates at low inter-affiliate settlement prices which are then used as the basis for accounting to interest owners. Plaintiffs also allege that Meridian's pricing includes inappropriate deductions of inflated gathering and transportation costs. Meridian is vigorously defending this litigation and perfected an interlocutory appeal of the class certification order on May 30, 1995. This appeal effectively stays class action proceedings in the trial court until the appeal is completed. Oral argument in this appeal has been set for February 28, 1996. The Company and its subsidiaries are named defendants in numerous lawsuits and named parties in numerous governmental proceedings arising in the ordinary course of business. While the outcome of lawsuits and other proceedings cannot be predicted with certainty, management expects these matters, including the above-described Altheide litigation, will not have a materially adverse effect on the consolidated financial position or results of operations of the Company. 9. IMPAIRMENT OF OIL AND GAS PROPERTIES Effective September 30, 1995, the Company adopted SFAS No. 121 which requires that long-lived assets held and used by an entity be reviewed for impairment whenever events or changes indicate that the net book value of the asset may not be recoverable. An impairment loss is recognized if the sum of expected future cash flows from the use of the asset is less than the net book value of the asset. The primary change under SFAS No. 121 is that the Company will now evaluate impairment of its oil and gas properties on a field-by-field basis rather than in the aggregate. Based upon this evaluation, certain properties were deemed to be impaired. For those properties, the Company adjusted the net book value of the properties to their fair value based upon expected future discounted cash flows. As a result of the Company's adoption of SFAS No. 121, combined with the current weak gas market, the Company recognized a non-cash, pretax charge of $490 million ($304 million after tax) related to its oil and gas properties. 26 29 10. STOCK-BASED COMPENSATION In October 1995, the Financial Accounting Standards Board issued SFAS No. 123, Accounting for Stock-Based Compensation, which is effective for fiscal years beginning after December 15, 1995. SFAS No. 123 establishes financial accounting and reporting standards for stock-based employee compensation plans. The pronouncement defines a fair value based method of accounting for an employee stock option or similar equity instrument and encourages all entities to adopt that method of accounting for all of their employee stock compensation plans. However, it also allows an entity to continue to measure compensation cost for those plans using the intrinsic value based method of accounting prescribed by Accounting Principles Board ("APB") Opinion No. 25, Accounting for Stock Issued to Employees. Entities electing to remain with the accounting in APB Opinion No. 25 must make pro forma disclosures of net income and earnings per share as if the fair value based method of accounting defined in SFAS No. 123 had been applied. The Company is currently evaluating the impact SFAS No. 123 will have on its financial position and results of operations and has not determined which accounting method will be applied. 11. OTHER INFORMATION Other Income (Expense) -- Net During 1995 and 1994, there were no single significant items included in Other Income (Expense)--Net. A summary of significant items included in Other Income (Expense) -- Net in 1993 follows. Gain on sale of Trust units....................................... $107,800 Gain on conversion of debt........................................ 19,108 Other -- net...................................................... (1,338) -------- $125,570 ========
Supplemental Cash Flow Information The following is additional information concerning supplemental disclosures of cash flow activities.
YEAR ENDED DECEMBER 31, -------------------------------- 1995 1994 1993 -------- ------- ------- (IN THOUSANDS) Interest Paid................................ $104,379 $85,599 $77,351 Income Taxes Paid--Net....................... 60,518 40,966 39,948
In April 1993, holders of the Subordinated Debentures exchanged their Debentures with a carrying value of approximately $80 million for shares of Anadarko Petroleum Corporation common stock owned by the Company. This non-cash exchange is reflected as such in the Statement of Cash Flows. 27 30 REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Stockholders of Burlington Resources Inc. We have audited the accompanying consolidated balance sheets of Burlington Resources Inc. as of December 31, 1995 and 1994, and the related consolidated statements of income, cash flows and common stockholders' equity for each of the three years in the period ended December 31, 1995. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Burlington Resources Inc. at December 31, 1995 and 1994, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 1995, in conformity with generally accepted accounting principles. As discussed in Note 9 to the consolidated financial statements, the Company changed its method of accounting for the impairment of long-lived assets in 1995. /s/ COOPERS & LYBRAND L.L.P. Houston, Texas January 10, 1996 28 31 BURLINGTON RESOURCES INC. SUPPLEMENTARY FINANCIAL INFORMATION SUPPLEMENTAL OIL AND GAS DISCLOSURES--UNAUDITED The supplemental data presented herein reflects information for all of the Company's oil and gas producing activities. Capitalized costs for oil and gas producing activities follow.
DECEMBER 31, ---------------------------- 1995 1994 ---------- ---------- (IN THOUSANDS) Proved properties............................................... $5,830,201 $5,671,033 Unproved properties............................................. 40,143 18,102 ---------- ---------- 5,870,344 5,689,135 Accumulated depreciation, depletion and amortization............ 2,410,428 1,714,098 ---------- ---------- Net capitalized costs................................. $3,459,916 $3,975,037 ========= =========
Costs incurred for oil and gas property acquisition, exploration and development activities follow.
YEAR ENDED DECEMBER 31, ----------------------------------- 1995 1994 1993 --------- --------- --------- (IN THOUSANDS) Property acquisition Unproved................................................. $ 38,348 $ 21,679 $ 10,816 Proved................................................... 104,115 479,466 270,235 Exploration................................................ 80,339 30,978 17,159 Development................................................ 324,311 278,343 202,981 --------- --------- --------- Total costs incurred............................. $ 547,113 $ 810,466 $ 501,191 ======== ======== ========
Results of operations for oil and gas producing activities follow.
YEAR ENDED DECEMBER 31, ----------------------------------- 1995 1994 1993 --------- -------- -------- (IN THOUSANDS) Net revenues............................................. $ 826,190 $905,465 $897,927 --------- -------- -------- Production costs......................................... 269,710 261,453 240,220 Exploration and impairment costs......................... 51,382 32,983 28,173 Operating expenses....................................... 154,319 145,649 135,550 Depreciation, depletion and amortization................. 331,600 299,763 248,505 Impairment of oil and gas properties..................... 490,000 -- -- --------- -------- -------- 1,297,011 739,848 652,448 --------- -------- -------- Operating income (loss).................................. (470,821) 165,617 245,479 Income tax provision..................................... (260,873) (38,799) 26,582 --------- -------- -------- Results of operations for oil and gas producing activities............................................. $(209,948) $204,416 $218,897 ========= ======== ========
29 32 The following table reflects estimated quantities of proved oil and gas reserves. These reserves have been reduced for royalty interests owned by others. These reserves, virtually all located in the United States, have been estimated by the Company's petroleum engineers. The Company considers such estimates to be reasonable, however, due to inherent uncertainties, estimates of underground reserves are imprecise and subject to change over time as additional information becomes available.
OIL GAS (MMBBLS) (BCF) -------- ----- PROVED DEVELOPED AND UNDEVELOPED RESERVES January 1, 1993......................................................... 155.5 5,071 Revision of previous estimates....................................... (.9) (30) Extensions, discoveries and other additions.......................... 12.0 361 Production........................................................... (15.3) (336) Purchases of reserves in place(a).................................... 17.5 306 Sales of reserves in place(b)........................................ (.6) (151) ----- ----- December 31, 1993....................................................... 168.2 5,221 Revisions of previous estimates...................................... (1.4) (44) Extensions, discoveries and other additions.......................... 20.5 407 Production........................................................... (16.6) (384) Purchases of reserves in place(c).................................... 19.7 379 Sales of reserves in place(d)........................................ (6.3) (78) ----- ----- December 31, 1994....................................................... 184.1 5,501 Revision of previous estimates....................................... 1.5 (33) Extensions, discoveries and other additions.......................... 23.4 533 Production........................................................... (17.5) (425) Purchases of reserves in place....................................... 9.3 131 Sales of reserves in place(e)........................................ (3.9) (200) ----- ----- December 31, 1995....................................................... 196.9 5,507 ===== ===== PROVED DEVELOPED RESERVES January 1, 1993......................................................... 141.8 4,204 December 31, 1993....................................................... 149.8 4,381 December 31, 1994....................................................... 161.9 4,584 December 31, 1995....................................................... 168.1 4,543
- --------------- (a) Includes the reserves attributable to the purchase of 59 percent of the Permian Basin Royalty Trust. (b) Primarily the Burlington Resources Coal Seam Gas Royalty Trust transaction. (c) Includes the reserves attributable to the purchase of Diamond Shamrock Offshore Partners Limited Partnership. (d) Includes the reserves associated with the November 1994 conveyance of working interests in coal seam gas wells. (e) Includes the reserves associated with the August 1995 conveyance of working interests in coal seam gas wells. 30 33 A summary of the standardized measure of discounted future net cash flows relating to proved oil and gas reserves is shown below. Future net cash flows are computed using year end sales prices, costs and statutory tax rates (adjusted for tax credits and other items) that relate to the Company's existing proved oil and gas reserves.
DECEMBER 31, --------------------------- 1995 1994 ----------- ----------- (IN THOUSANDS) Future cash inflows.............................................. $11,609,000 $11,628,000 Less related future Production costs............................................ 3,451,000 3,505,000 Development costs........................................... 529,000 466,000 Income taxes................................................ 1,401,000 1,320,000 ----------- ----------- Future net cash flows.................................. 6,228,000 6,337,000 10% annual discount for estimated timing of cash flows......... 3,044,000 3,339,000 ----------- ----------- Standardized measure of discounted future net cash flows.... $ 3,184,000 $ 2,998,000 =========== ===========
A summary of the changes in the standardized measure of discounted future net cash flows applicable to proved oil and gas reserves follows.
YEAR ENDED DECEMBER 31, ---------------------------------------- 1995 1994 1993 ---------- ---------- ---------- (IN THOUSANDS) January 1.............................................. $2,998,000 $3,124,000 $3,138,000 ---------- ---------- ---------- Revisions of previous estimates Changes in prices and costs.......................... (33,000) (350,000) (208,000) Changes in quantities................................ (22,000) (20,000) 9,000 Changes in rate of production........................ 189,000 129,000 (105,000) Additions to proved reserves resulting from extensions, discoveries and improved recovery, less related costs................................................ 250,000 195,000 180,000 Purchases of reserves in place......................... 99,000 251,000 260,000 Sales of reserves in place............................. (124,000) (67,000) (107,000) Accretion of discount.................................. 358,000 363,000 375,000 Sales of oil and gas, net of production costs.......... (556,000) (644,000) (578,000) Net change in income taxes............................. 11,000 (80,000) 91,000 Other.................................................. 14,000 97,000 69,000 ---------- ---------- ---------- Net change............................................. 186,000 (126,000) (14,000) ---------- ---------- ---------- December 31............................................ $3,184,000 $2,998,000 $3,124,000 ========== ========== ==========
31 34 BURLINGTON RESOURCES INC. QUARTERLY FINANCIAL DATA--UNAUDITED
1995 1994 -------------------------------------- ------------------------------------- 4TH 3RD 2ND 1ST 4TH 3RD 2ND 1ST ------- ------ ------ ------- ------- ------- ------ ------- (IN MILLIONS, EXCEPT PER SHARE AMOUNTS) Revenues........................ $ 237 $ 210 $ 211 $ 215 $ 241 $ 273 $ 266 $ 275 Operating Income (Loss)(b)...... $ 20 $ (489) $ -- $ 2 $ 21 $ 39 $ 46 $ 69 Net Income (Loss)(a)............ $ 23 $ (300) $ 2 $ (5) $ 52 $ 21 $ 33 $ 48 Earnings (Loss) per Common Share......................... $ .18 $(2.36) $ .02 $ (.04) $ .42 $ .16 $ .25 $ .37 Dividends Declared per Common Share......................... $ .1375 $.1375 $.1375 $ .1375 $ .1375 $ .1375 $.1375 $ .1375 Common Stock Price Range: High.......................... 41 1/4 42 41 1/2 40 3/4 42 5/8 41 7/8 45 5/8 49 5/8 Low........................... 35 1/8 36 7/8 36 3/4 33 7/8 33 1/8 37 1/4 40 7/8 41 1/2
- --------------- (a) The beneficial effective tax rates for the fourth quarters of 1995 and 1994 are primarily due to non-conventional fuel tax credits earned. The 1994 benefit included increased tax credits due to higher taxable income resulting from additional tax gains in the fourth quarter of 1994. (b) In 1995, as a result of the Company's adoption of SFAS No. 121, the Company recognized a non-cash, pretax charge of $490 million. 32 35 ITEM NINE CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None PART III ITEMS TEN AND ELEVEN DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT AND EXECUTIVE COMPENSATION A definitive proxy statement for the 1996 Annual Meeting of Stockholders of Burlington Resources Inc. will be filed no later than 120 days after the end of the fiscal year with the Securities and Exchange Commission. The information set forth therein under "Election of Directors" and "Executive Compensation" is incorporated herein by reference. Executive Officers of the Company are listed on page 9 of this Form 10-K. ITEM TWELVE SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT Information required is set forth under the caption "Election of Directors" in the Proxy Statement for the 1996 Annual Meeting of Stockholders and is incorporated herein by reference. ITEM THIRTEEN CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Information required is set forth under the caption "Election of Directors" in the Proxy Statement for the 1996 Annual Meeting of Stockholders and is incorporated herein by reference. 33 36 PART IV ITEM FOURTEEN EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
PAGE ----- FINANCIAL STATEMENTS AND SUPPLEMENTARY FINANCIAL INFORMATION Consolidated Statement of Income................................................. 15 Consolidated Balance Sheet....................................................... 16 Consolidated Statement of Cash Flows............................................. 17 Consolidated Statement of Common Stockholders' Equity............................ 18 Notes to Consolidated Financial Statements....................................... 19 Report of Independent Accountants................................................ 28 Supplemental Oil and Gas Disclosures -- Unaudited................................ 29 Quarterly Financial Data -- Unaudited............................................ 32 AMENDED EXHIBIT INDEX.............................................................. *
REPORTS ON FORM 8-K The Company filed a Form 8-K dated March 21, 1995, which included as an exhibit the form of underwriting agreement in connection with its offering of $150 million of 8.20% Debentures due 2025. - --------------- * Included in Form 10-K filed with the Securities and Exchange Commission. 34 37 SIGNATURES REQUIRED FOR FORM 10-K Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Burlington Resources Inc. has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. BURLINGTON RESOURCES INC. By BOBBY S. SHACKOULS ----------------------------------- Bobby S. Shackouls President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of Burlington Resources Inc. and in the capacities and on the dates indicated. By BOBBY S. SHACKOULS President and Chief January 10, 1996 ------------------------------- Executive Officer, and Bobby S. Shackouls Director JOHN E. HAGALE Executive Vice President and January 10, 1996 ------------------------------- Chief Financial Officer John E. Hagale HAYS R. WARDEN Vice President, Controller January 10, 1996 ------------------------------- and Chief Accounting Officer Hays R. Warden THOMAS H. O'LEARY Chairman of the Board January 10, 1996 ------------------------------- Thomas H. O'Leary JOHN V. BYRNE Director January 10, 1996 ------------------------------- John V. Byrne S. PARKER GILBERT Director January 10, 1996 ------------------------------- S. Parker Gilbert JAMES F. McDONALD Director January 10, 1996 ------------------------------- James F. McDonald DONALD M. ROBERTS Director January 10, 1996 ------------------------------- Donald M. Roberts WALTER SCOTT, JR. Director January 10, 1996 ------------------------------- Walter Scott, Jr. WILLIAM E. WALL Director January 10, 1996 ------------------------------- William E. Wall
35 38 REPORT OF MANAGEMENT To the Stockholders and Directors of Burlington Resources Inc.: The accompanying financial statements have been prepared by management in conformity with generally accepted accounting principles. The fairness and integrity of these financial statements, including any judgments, estimates and selection of appropriate generally accepted accounting principles, are the responsibility of management, as is all other information presented in this Annual Report. In the opinion of management, the financial statements are fairly stated, and, to that end, the Company maintains a system of internal controls which: provides reasonable assurance that transactions are recorded properly for the preparation of financial statements; safeguards assets against loss or unauthorized use; maintains accountability for assets; and requires proper authorization and accounting for all transactions. Management is responsible for the effectiveness of internal controls. This is accomplished through established codes of conduct, accounting and other control systems, policies and procedures, employee selection and training, appropriate delegation of authority and segregation of responsibilities. To further ensure compliance with established standards and related control procedures, the Company conducts a substantial corporate audit program. Our independent certified public accountants provide an objective independent review by their audit of the Company's financial statements. Their audit is conducted in accordance with generally accepted auditing standards and includes a review of internal accounting controls to the extent deemed necessary for the purposes of their audit. The Audit Committee of the Board of Directors meets regularly with the independent certified public accountants, management, and corporate audit to review the work of each and to ensure that each is properly discharging its financial reporting and internal control responsibilities. To ensure complete independence, the certified public accountants and corporate audit have full and free access to the Audit Committee to discuss the results of their audits, the adequacy of internal accounting controls and the quality of financial reporting. January 10, 1996 /s/ John E. Hagale ----------------------------- John E. Hagale Executive Vice President and Chief Financial Officer /s/ Hays R. Warden ----------------------------- Hays R. Warden Vice President, Controller and Chief Accounting Officer 36 39 UNDERTAKINGS For the purposes of complying with the amendments to the rules governing Form S-8 (effective July 13, 1990) under the Securities Act of 1933, the registrant hereby undertakes as follows, which undertaking shall be incorporated by reference into the registrant's Registration Statements on Form S-8, Nos. 33-22493 (filed June 15, 1988), 33-25807 (filed December 1, 1988), 33-26024 (filed December 12, 1988), 2-97533 (filed December 29, 1989), 33-33626 (filed March 1, 1990), 33-46518 (filed March 19, 1992) and 33-53973 (filed June 3, 1994): Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue. 40 BURLINGTON RESOURCES INC. AMENDED EXHIBIT INDEX The following exhibits are filed as part of this report.
EXHIBIT PAGE NUMBER DESCRIPTION NUMBER - ------- -------------------------------------------------------------------------- ------ 3.1 Certificate of Incorporation of Burlington Resources Inc., as amended (Exhibit 3.1 to Form 8, filed March 1990)................................. * 3.2 By-Laws of Burlington Resources Inc. as amended........................... 4.1 Form of Rights Agreement dated as of December 16, 1988, between Burlington Resources Inc. and The First National Bank of Boston which includes, as Exhibit A thereto, the form of Certificate of Designation specifying terms of the Series A Preferred Stock and, as Exhibit B thereto, the form of Rights Certificate (Exhibit 1 to Form 8-A, filed December 1988)........... * Amendment No. 1 to Form of Rights Agreement (Exhibit 2 to Form 8-K, filed March 1989)............................................................... * 4.2 Indenture, dated as of June 15, 1990, between the registrant and Citibank, N.A., including Form of Debt Securities (Exhibit 4.2 to Form 8, filed February 1992)............................................................ * 4.3 Indenture, dated as of October 1, 1991, between the registrant and Citibank, N.A., including Form of Debt Securities (Exhibit 4.3 to Form 8, filed February 1992)...................................................... * 4.4 Indenture, dated as of April 1, 1992, between the registrant and Citibank, N.A., including Form of Debt Securities (Exhibit 4.4 to Form 8, filed March 1993)............................................................... * 10.1 The 1988 Burlington Resources Inc. Stock Option Incentive Plan as amended (Exhibit 10.4 to Form 8, filed March 1993)................................ * 10.2 Burlington Resources Inc. Incentive Compensation Plan as amended and restated October 1, 1994 (Exhibit 10.3 to Form 10-K, filed February 1995)..................................................................... * 10.3 Burlington Resources Inc. Senior Executive Survivor Benefit Plan dated as of January 1, 1989 (Exhibit 10.11 to Form 8, filed February 1989)......... * 10.4 Burlington Resources Inc. Deferred Compensation Plan as amended and restated October 1, 1994 (Exhibit 10.6 to Form 10-K, filed February 1995)..................................................................... * 10.5 Burlington Resources Inc. Supplemental Benefits Plan as amended and restated October 1, 1994 (Exhibit 10.8 to Form 10-K, filed February 1995)..................................................................... * 10.6 Employment Contract between Burlington Resources Inc. and Thomas H. O'Leary (Exhibit 10.14 to Form 8, filed February 1989).................... * Amendment to Employment Contract between Burlington Resources Inc. and Thomas H. O'Leary (Exhibit 10.14 to Form 8, filed March 1990)............. * Amendment to Employment Contract between Burlington Resources Inc. and Thomas H. O'Leary (Exhibit 10.15 to Form 8, filed February 1992).......... * Amendment to Employment Contract between Burlington Resources Inc. and Thomas H. O'Leary (Exhibit 10.8 to Form 10-K, filed February 1994)........ * Amendment to Employment Contract between Burlington Resources Inc. and Thomas H. O'Leary (Exhibit 10.10 to Form 10-K, filed February 1995)....... * Amendment to Employment Contract between Burlington Resources Inc. and Thomas H. O'Leary......................................................... 10.7 Employment Contract between Burlington Resources Inc. and Bobby S. Shackouls.................................................................
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EXHIBIT PAGE NUMBER DESCRIPTION NUMBER - ------- -------------------------------------------------------------------------- ------ 10.8 Burlington Resources Inc. Compensation Plan for Non-Employee Directors (Exhibit 10.18 to Form S-8, No. 33-33626, filed March 1990)............... * Amendment No. 1 to Burlington Resources Inc. Compensation Plan for Non- Employee Directors (Exhibit 10.19 to Form 8, filed February 1992)......... * 10.9 Burlington Resources Inc. Key Executive Severance Protection Plan as amended June 8, 1989 (Exhibit 10.20 to Form 8, filed February 1992)....... * 10.10 Burlington Resources Inc. Retirement Savings Plan (Exhibits to Form S-8, No. 2-97533, filed December 1989)......................................... * Amendment No. 1 to Burlington Resources Inc. Retirement Savings Plan (Ex- hibit 10.15 to Form 8, filed March 1993).................................. * Amendment No. 2 to Burlington Resources Inc. Retirement Savings Plan (Ex- hibit 10.21 to Form 8, filed February 1992)............................... * Amendment No. 3 to Burlington Resources Inc. Retirement Savings Plan (Ex- hibit 10.15 to Form 8, filed March 1993).................................. * Amendment No. 4 to Burlington Resources Inc. Retirement Savings Plan...... 10.11 Burlington Resources Inc. Retirement Income Plan for Directors (Exhibit 10.21 to Form 8, filed February 1991)..................................... * 10.12 Burlington Resources Inc. Phantom Stock Plan for Non-Employee Directors, Effective March 21, 1996.................................................. 10.13 Burlington Resources Inc. 1991 Director Charitable Award Plan, dated as of January 16, 1991 (Exhibit 10.22 to Form 8, filed February 1991)........... * 10.14 Master Separation Agreement and documents related thereto dated January 15, 1992 by and among Burlington Resources Inc., El Paso Natural Gas Company and Meridian Oil Holding Inc., including exhibits (Exhibit 10.24 to Form 8, filed February 1992)........................................... * 10.15 Burlington Resources Inc. 1992 Stock Option Plan for Non-employee Directors (Exhibit 28.1 of Form S-8, No. 33-46518, filed March 1992)...... * 10.16 Burlington Resources Inc. Key Executive Retention Plan and Amendments No. 1 and 2 (Exhibit 10.20 to Form 8, filed March 1993)....................... * Amendments No. 3 and 4 to the Burlington Resources Inc. Key Executive Retention Plan (Exhibit 10.17 to Form 10-K, filed February 1994).......... * 10.17 Burlington Resources Inc. 1992 Performance Share Unit Plan (Exhibit 10.21 to Form 8, filed March 1993).............................................. * 10.18 Burlington Resources Inc. Severance Plan and Amendments No. 1 and 2 (Ex- hibit 10.22 to Form 8, filed March 1993).................................. * Amendments No. 3, 4 and 5 to the Burlington Resources Inc. Severance Plan (Exhibit 10.20 to Form 10-K, filed February 1994)......................... * 10.19 Burlington Resources Inc. 1993 Stock Incentive Plan (Exhibit 10.22 to Form 10-K, filed February 1994)................................................ * 10.20 Petrotech Long Term Incentive Plan (Exhibit 10.22 to Form 10-K, filed February 1995)............................................................ * 10.21 Burlington Resources Inc. 1994 Restricted Stock Exchange Plan (Exhibit 10.23 to Form 10-K, filed February 1995).................................. *
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EXHIBIT PAGE NUMBER DESCRIPTION NUMBER - ------- ------ 10.22 $300 million Short-term Revolving Credit Agreement, dated as of July 20, 1994, between Burlington Resources Inc. and Citibank, N.A., as agent (Exhibit 10.24 to Form 10-K, filed February 1995)......................... * 10.23 Amended and Restated $600 million Long-term Revolving Credit Agreement, dated as of July 14, 1995, between Burlington Resources Inc. and Citibank, N.A. as agent............................................................. 11.1 Earnings (Loss) Per Share................................................. 12.1 Ratio of Earnings to Fixed Charges........................................ 21.1 Subsidiaries of the Registrant............................................ 23.1 Consent of Independent Accountants........................................ 27.1 Financial Data Schedule................................................... **
- --------------- *Exhibit incorporated by reference as indicated. **Exhibit required only for filings made electronically using the Securities and Exchange Commission's EDGAR System. A-3 EX-3.2 2 BY-LAWS OF BURLINGTON RESOURCES 1 EXHIBIT 3.2 BY-LAWS OF BURLINGTON RESOURCES INC. AS AMENDED THROUGH DECEMBER 6, 1995 2 BY-LAWS OF BURLINGTON RESOURCES INC TABLE OF CONTENTS
PAGE ---- ARTICLE I OFFICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Section 1 Registered Office and Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Section 2 Other Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 ARTICLE II STOCKHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Section 1 Annual Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Section 2 Special Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Section 3 Place of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Section 4 Notice of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Section 5 Fixing of Record Date for Determining Stockholders . . . . . . . . . . . . . . . . 2 Section 6 Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Section 7 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Section 8 Voting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Section 9 Inspectors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Section 10 List of Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 ARTICLE III BOARD OF DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Section 1 Number, Qualification and Term of Office . . . . . . . . . . . . . . . . . . . . . 5 Section 2 Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Section 3 Resignations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Section 4 Removals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Section 5 Place of Meetings; Books and Records . . . . . . . . . . . . . . . . . . . . . . . 6 Section 6 Annual Meeting of the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Section 7 Regular Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Section 8 Special Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Section 9 Quorum and Manner of Acting . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Section 10 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Section 11 Consent of Directors in Lieu of Meeting . . . . . . . . . . . . . . . . . . . . . 7 Section 12 Telephonic Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Section 13 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
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PAGE ---- ARTICLE IV COMMITTEES OF THE BOARD OF DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Section 1 Executive Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Section 2 Finance Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Section 3 Audit Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Section 4 Compensation and Nominating Committee . . . . . . . . . . . . . . . . . . . . . . . 9 Section 5 Committee Chairman, Books and Records . . . . . . . . . . . . . . . . . . . . . . . 10 Section 6 Alternates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Section 7 Other Committees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Section 8 Quorum and Manner of Acting . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 ARTICLE V OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Section 1 Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Section 2 Election, Term of Office and Qualifications . . . . . . . . . . . . . . . . . . . . 11 Section 3 Resignations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Section 4 Removals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Section 5 Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Section 6 Compensation of Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Section 7 Chairman of the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Section 8 President and Chief Executive Officer . . . . . . . . . . . . . . . . . . . . . . . 12 Section 9 Executive Vice President and Chief Financial Officer . . . . . . . . . . . . . . . 13 Section 10 Executive Vice President, Law . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Section 11 Secretary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Section 12 Treasurer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Section 13 Absence or Disability of Officers . . . . . . . . . . . . . . . . . . . . . . . . 14 ARTICLE VI STOCK CERTIFICATES AND TRANSFER THEREOF . . . . . . . . . . . . . . . . . . . . . . . . . 15 Section 1 Stock Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Section 2 Transfer of Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Section 3 Transfer Agent and Registrar . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Section 4 Additional Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Section 5 Lost, Destroyed or Mutilated Certificates . . . . . . . . . . . . . . . . . . . . . 16 ARTICLE VII DIVIDENDS, SURPLUS, ETC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 ARTICLE VIII SEAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 ARTICLE IX FISCAL YEAR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Section 1 Right to Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Section 2 Right of Indemnitee to Bring Suit . . . . . . . . . . . . . . . . . . . . . . . . . 18
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PAGE ---- Section 3 Nonexclusivity of Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Section 4 Insurance, Contracts and Funding . . . . . . . . . . . . . . . . . . . . . . . . . 18 Section 5 Definition of Director and Officer . . . . . . . . . . . . . . . . . . . . . . . . 19 Section 6 Indemnification of Employees and Agents of the Corporation . . . . . . . . . . . . 19 ARTICLE XI CHECKS, DRAFTS, BANK ACCOUNTS, ETC . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Section 1 Checks, Drafts, Etc.; Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Section 2 Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 ARTICLE XII AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
-iii- 5 BY-LAWS OF BURLINGTON RESOURCES INC. ARTICLE I OFFICES SECTION 1. REGISTERED OFFICE AND AGENT. The registered office of the corporation is located at Corporation Trust Center, 1209 Orange Street in the City of Wilmington, County of New Castle, State of Delaware, and the name of its registered agent at such address is The Corporation Trust Company. SECTION 2. OTHER OFFICES. The corporation may have offices at such other places both within and without the State of Delaware as the Board of Directors may from time to time determine or the business of the corporation may require. ARTICLE II STOCKHOLDERS SECTION 1. ANNUAL MEETINGS. A meeting of the stockholders for the purpose of electing directors and for the transaction of such other business as may properly be brought before the meeting shall be held annually at ten (10) o'clock A.M. on the third Thursday of April, or at such other time on such other day as shall be fixed by resolution of the Board of Directors. If the day fixed for the annual meeting shall be a legal holiday such meeting shall be held on the next succeeding business day. SECTION 2. SPECIAL MEETINGS. Special meetings of the stockholders for any purpose or purposes may be called only by a majority of the Board of Directors, the Chairman of the Board, or the President. (Amended February 22, 1989) 1 6 SECTION 3. PLACE OF MEETINGS. The annual meeting of the stockholders of the corporation shall be held at the general offices of the corporation in the City of Houston, State of Texas, or at such other place in the United States as may be stated in the notice of the meeting. All other meetings of the stockholders shall be held at such places within or without the State of Delaware as shall be stated in the notice of the meeting. (Amended December 6, 1995) SECTION 4. NOTICE OF MEETINGS. 4.1 Giving of Notice. Except as otherwise provided by statute, written notice of each meeting of the stockholders, whether annual or special, shall be given not less than ten nor more than sixty days before the date of the meeting to each stockholder entitled to vote at such meeting. If mailed, notice shall be given when deposited in the United States mails, postage prepaid, directed to such stockholder at his address as it appears in the stock ledger of the corporation. Each such notice shall state the place, date and hour of the meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called. 4.2 Notice of Adjourned Meetings. When a meeting is adjourned to another time and place, notice of the adjourned meeting need not be given if the time and place thereof are announced at the meeting at which the adjournment is given. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. 4.3 Waiver of Notice. 4.3.1 Whenever any notice is required to be given to any stockholder under the provisions of these By-Laws, the Certificate of Incorporation or the General Corporation Law of Delaware, a waiver thereof in writing, signed by the person or persons entitled to such notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice. 4.3.2 The attendance of a stockholder at a meeting shall constitute a waiver of notice of such meeting, except when a stockholder attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. SECTION5. FIXING OF RECORD DATE FOR DETERMINING STOCKHOLDERS. 5.1 Meetings. For the purpose of determining stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, the Board may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board, and which record date shall not be more than sixty nor less than ten days before the date of such meeting. If no record date is fixed by the Board, the record date for 2 7 determining stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at the meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board may fix a new record date for the adjourned meeting. 5.2 Dividends, Distributions and Other Rights. For the purpose of determining stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than sixty days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board adopts the resolution relating thereto. SECTION 6. QUORUM. A majority of the outstanding shares of stock of the corporation entitled to vote, present in person or represented by proxy, shall constitute a quorum at a meeting of the stockholders; provided that where a separate vote by a class or classes or by a series of a class is required, a majority of the outstanding shares of such class or classes or of such series of a class, present in person or represented by proxy at the meeting, shall constitute a quorum entitled to take action with respect to the vote on that matter. If less than a majority of the outstanding shares entitled to vote are represented at a meeting, a majority of the shares so represented may adjourn the meeting from time to time without further notice. If a quorum is present or represented at a reconvened meeting following such an adjournment, any business may be transacted that might have been transacted at the meeting as originally called. The stockholders present at a duly organized meeting may continue to transact business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum. SECTION 7. ORGANIZATION. At each meeting of the stockholders, the Chairman of the Board, or in his absence such person as shall have been designated by the Board of Directors, or in the absence of such designation a person elected by the holders of a majority in number of shares of stock present in person or represented by proxy and entitled to vote, shall act as Chairman of the meeting. The Secretary, or in his absence or in the event he shall be presiding over the meeting in accordance with the provisions of this Section, an Assistant Secretary or, in the absence of the 4 Secretary and all of the Assistant Secretaries, any person appointed by the Chairman of the meeting, shall act as Secretary of the meeting. 3 8 SECTION 8. VOTING. 8.1 Generally. Unless otherwise provided in the Certificate of Incorporation or a resolution of the Board of Directors creating a series of stock, at each meeting of the stockholders, each holder of shares of any series or class of stock entitled to vote at such meeting shall be entitled to one vote for each share of stock having voting power in respect of each matter upon which a vote is to be taken, standing in his name on the stock ledger of the corporation on the record date fixed as provided in these By-Laws for determining the stockholders entitled to vote at such meeting. In all matters other than the election of Directors, if a quorum is present, the affirmative vote of the majority of the shares present in person or represented by proxy at the meeting and entitled to vote on the subject matter shall be the act of the stockholders, unless the vote of a greater number is required by these By-Laws, the Certificate of Incorporation or the General Corporation Law of Delaware. Where a separate vote by a class or classes or by a series of a class is required, if a quorum is present, the affirmative vote of the majority of shares of such class or classes or series of a class present in person or represented by proxy at the meeting shall be the act of such class or classes or series of a class. 8.2 Voting for Directors. At each election of Directors the voting shall be by ballot. Directors shall be elected by a plurality of the votes of the shares present in person or represented by proxy at the meeting and entitled to vote on the election of Directors. 8.3 Shares Held or Controlled by the Corporation. Shares of its own capital stock belonging to the corporation, or to another corporation if a majority of the shares entitled to vote in the election of directors of such other corporation is held by the corporation, shall neither be entitled to vote nor counted for quorum purposes. 8.4 Proxies. A stockholder may vote by proxy executed in writing by the stockholder or by his attorney-in-fact. Such proxy shall be filed with the Secretary of the corporation before or at the time of the meeting. A proxy shall become invalid three years after the date of its execution, unless otherwise provided in the proxy. A proxy with respect to a specified meeting shall entitle the holder thereof to vote at any reconvened meeting following adjournment of such meeting but shall not be valid after the final adjournment thereof. SECTION 9. INSPECTORS. Prior to each meeting of stockholders, the Board of Directors shall appoint two Inspectors who are not directors, candidates for directors or officers of the corporation, who shall receive and determine the validity of proxies and the qualifications of voters, and receive, inspect, count and report to the meeting in writing the votes cast on all matters submitted to a vote at such meeting. In case of failure of the Board of Directors to make such appointments or in case of failure of any Inspector so appointed to act, the Chairman of the Board shall make such appointment or fill such vacancies. Each Inspector, immediately before entering upon his duties, shall subscribe to an oath or affirmation faithfully to execute the duties of Inspector at such meeting with strict impartiality and according to the best of his ability. 4 9 SECTION 10. LIST OF STOCKHOLDERS. The Secretary or other officer or agent having charge of the stock ledger of the corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at said meeting, arranged in alphabetical order and showing the address of each stockholder and the number of shares of each class and series registered in the name of each such stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. Such list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. The stock ledger shall be the only evidence as to who are the stockholders entitled to examine the stock ledger, the list required by this section, or the books of the corporation, or to vote in person or by proxy at any such meeting. ARTICLE III BOARD OF DIRECTORS SECTION 1. NUMBER, QUALIFICATION AND TERM OF OFFICE. The business, property and affairs of the corporation shall be managed by a Board consisting of not less than one Director. The Board of Directors shall from time to time by a vote of a majority of the Directors then in office fix the specific number of Directors to constitute the Board. At each annual meeting of stockholders a Board of Directors shall be elected by the stockholders for a term of one year. Each Director shall serve until his successor is elected and shall qualify. SECTION 2. VACANCIES. Vacancies in the Board of Directors and newly created directorships resulting from any increase in the authorized number of Directors may be filled by a majority of the Directors then in office, although less than a quorum, or by a sole remaining Director, at any regular or special meeting of the Board of Directors. SECTION 3. RESIGNATIONS. Any Director may resign at any time upon written notice to the Secretary of the corporation. Such resignation shall take effect on the date of receipt of such notice or at any later date specified therein; and the acceptance of such resignation, unless required by the terms thereof, shall not be necessary to make it effective. When one or more Directors shall resign effective at a future date, a majority of the Directors then in office, including those who have 5 10 resigned, shall have power to fill such vacancy or vacancies to take effect when such resignation or resignations shall become effective. SECTION 4. REMOVALS. Any Director may be removed, with cause, at any special meeting of the stockholders called for that purpose, by the affirmative vote of the holders of a majority in number of shares of the corporation entitled to vote for the election of such Director, and the vacancy in the Board caused by any such removal may be filled by the stockholders at such a meeting. SECTION 5. PLACE OF MEETINGS; BOOKS AND RECORDS. The Board of Directors may hold its meetings, and have an office or offices, at such place or places within or without the State of Delaware as the Board from time to time may determine. The Board of Directors, subject to the provisions of applicable statutes, may authorize the books and records of the corporation, and offices or agencies for the issue, transfer and registration of the capital stock of the corporation, to be kept at such place or places outside of the State of Delaware as, from time to time, may be designated by the Board of Directors. SECTION 6. ANNUAL MEETING OF THE BOARD. The first meeting of each newly elected Board of Directors, to be known as the Annual Meeting of the Board, for the purpose of electing officers, designating committees and the transaction of such other business as may come before the Board, shall be held as soon as practicable after the adjournment of the annual meeting of stockholders, and no notice of such meeting shall be necessary to the newly elected Directors in order legally to constitute the meeting, provided a quorum shall be present. In the event such meeting is not held due to the absence of a quorum, the 8 meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the Board of Directors, or as shall be specified in a written waiver signed by all of the newly elected Directors. SECTION 7. REGULAR MEETINGS. The Board of Directors shall, by resolution, provide for regular meetings of the Board at such times and at such places as it deems desirable. Notice of regular meetings need not be given. SECTION 8. SPECIAL MEETINGS. Special meetings of the Board of Directors may be called by the Chairman of the Board or the President and shall be called by the Secretary on the written request of three Directors on such notice as the person or persons calling the meeting shall deem appropriate in the circumstances. Notice of each such special meeting shall be mailed to each Director or delivered to him by telephone, telegraph or any other means of electronic communication, in each case 6 11 addressed to his residence or usual place of business, or delivered to him in person or given to him orally. The notice of meeting shall state the time and place of the meeting but need not state the purpose thereof. Whenever any notice is required to be given to any Director under the provisions of these By-Laws, the Certificate of Incorporation or the General Corporation Law of Delaware, a waiver thereof in writing, signed by the person or persons entitled to such notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board or any committee appointed by the Board need be specified in the waiver of notice of such meeting. Attendance of a Director at any meeting shall constitute a waiver of notice of such meeting except when a Director attends a meeting for the express purpose of objecting to the transaction of any business because the meeting was not lawfully called or convened. (Amended July 7, 1992) SECTION 9. QUORUM AND MANNER OF ACTING. Except as otherwise provided by statute, the Certificate of Incorporation, or these By-Laws, the presence of a majority of the total number of Directors shall constitute a quorum for the transaction of business at any regular or special meeting of the Board of Directors, and the act of a majority of the Directors present at any such meeting at which a quorum is present shall be the act of the Board of Directors. In the absence of a quorum, a majority of the Directors present may adjourn the meeting, from time to time, until a quorum is present. Notice of any such adjourned meeting need not be given. SECTION 10. ORGANIZATION. At every meeting of the Board of Directors, the Chairman of the Board or in his absence the President or, if both of the said officers are absent, a Chairman chosen by a majority of the Directors present shall act as Chairman of the meeting. The Secretary, or in his absence, an Assistant Secretary, or in the absence of the Secretary and all the Assistant Secretaries, any person appointed by the Chairman of the meeting, shall act as Secretary of the meeting. (Amended July 7, 1992) SECTION 11. CONSENT OF DIRECTORS IN LIEU OF MEETING. Unless otherwise restricted by the Certificate of Incorporation or by these By-Laws, any action required or permitted to be taken at any meeting of the Board of Directors, or any committee designated by the Board, may be taken without a meeting if all members of the Board or committee consent thereto in writing, and such written consent is filed with the minutes of the proceedings of the Board or committee. SECTION 12. TELEPHONIC MEETINGS. Members of the Board of Directors, or any committee designated by the Board of Directors, may participate in a meeting of the Board or committee by means of conference telephone or similar communications equipment by means of which all persons participating in 7 12 the meeting can hear each other, and participation in such a meeting shall constitute presence in person at such meeting. SECTION 13. COMPENSATION. Each Director, who is not a full-time salaried officer of the corporation or any of its wholly owned subsidiaries, when authorized by resolution of the Board of Directors, may receive as a Director a stated salary or an annual retainer and in addition may be allowed a fixed fee and his reasonable expenses for attendance at each regular or special meeting of the Board of any Committee thereof. ARTICLE IV COMMITTEES OF THE BOARD OF DIRECTORS SECTION 1. EXECUTIVE COMMITTEE. The Board of Directors may, in its discretion, designate annually an Executive Committee consisting of not less than five Directors as it may from time to time determine. The Committee shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the corporation and may authorize the seal of the corporation to be affixed to all papers which may require it, but the Committee shall have no power or authority to amend the Certificate of Incorporation (except that the Committee may, to the extent authorized in the resolution or resolutions providing for the issuance of shares of stock adopted by the Board of Directors, fix the designations and any of the preferences or rights of such shares relating to dividends, redemption, dissolution, any distribution of assets of the corporation or the conversion into, or the exchange of such shares for, shares of any other class or classes or any other series of the same or any other class or classes of stock of the corporation or fix the number of shares of any series of stock or authorize the increase or decrease of the shares of any series), adopt an agreement of merger or consolidation, recommend to the stockholders the sale, lease or exchange of all or substantially all of the corporation's property and assets, recommend to the stockholders a dissolution of the corporation or a revocation of a dissolution, amend the By- Laws of the corporation, elect officers or fill vacancies on the Board of Directors or any Committee of the Board, declare a dividend, authorize the issuance of stock, or such other powers as the Board may from time to time eliminate. SECTION 2. FINANCE COMMITTEE. The Board of Directors may, in its discretion, designate annually a Finance Committee, consisting of such number of Directors as the Board of Directors may from time to time determine. The Committee shall monitor, review, appraise and recommend to the Board of Directors appropriate action with respect to the corporation's capital structure, its source of funds and its financial position; review and recommend appropriate delegations of authority to management on expenditures and other financial commitments; review terms and conditions of 8 13 financing plans; develop and recommend dividend policies and recommend to the Board specific dividend payments; review the performance of the trustee of the corporation's pension trust fund, and any proposed change in the investment policy of the trustee with respect to such fund; and such other duties, functions and powers as the Board may from time to time prescribe. SECTION 3. AUDIT COMMITTEE. The Board of Directors shall designate annually an Audit Committee consisting of not less than three Directors as it may from time to time determine, none of whom shall be officers of the corporation. The Committee shall review with the independent accountants the corporation's financial statements, basic accounting and financial policies and practices, competency of control personnel, standard and special tests used in verifying the corporation's statements of account and in determining the soundness of the corporation's financial condition and report to the Board the results of such reviews; review the policies and practices pertaining to publication of quarterly and annual statements to assure consistency with audited results and the implementing of policies and practices recommended by the independent accountants; ensure that suitable independent audits are made of the operations and results of subsidiary corporations and affiliates; monitor compliance with the corporation's code of business conduct, and such other duties, functions and powers as the Board may from time to time prescribe. SECTION 4. COMPENSATION AND NOMINATING COMMITTEE. The Board of Directors shall designate annually a Compensation and Nominating Committee consisting of such number of Directors as the Board of Directors may from time to time determine. The Committee shall review, report and make recommendations to the Board of Directors on the following matters: (a) The compensation of the Chief Executive Officer and all senior officers of the corporation and its principal operating subsidiaries reporting directly to the Chief Executive Officer following an annual review of management's recommendations for the individuals involved. If circumstances involving individuals require a salary adjustment between such reviews, a recommendation may be made directly to the Board of Directors by the Chief Executive Officer without the necessity of a meeting of the Compensation and Nominating Committee. (b) The size and composition of the Board and nominees for Directors; evaluate the performance of the officers of the corporation and together with management, select and recommend to the Board appropriate individuals for election, appointment and promotion as officers of the corporation and ensure the continuity of able capable management. (c) Any proposed stock option plans, stock purchase plans, retirement plans, and any other plans, systems and practices of the corporation relating to the compensation of any employees of the corporation and any proposed plans 9 14 of any subsidiary company involving the issuance or purchase of capital stock of the corporation. (d) Such other matters as the Board may from time to time prescribe. The Committee shall carry out the duties assigned to the Committee under any existing stock option plans or other existing compenstion or benefit plans; and shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe. (Amended July 7, 1992 and December 6, 1995) SECTION 5. COMMITTEE CHAIRMAN, BOOKS AND RECORDS. Each Committee shall elect a Chairman to serve for such term as it may determine, shall fix its own rules of procedure and shall meet at such times and places and upon such call or notice as shall be provided by such rules. It shall keep a record of its acts and proceedings, and all action of the Committee shall be reported to the Board of Directors at the next meeting of the Board. SECTION 6. ALTERNATES. Alternate members of the Committees prescribed by this Article IV may be designated by the Board of Directors from among the Directors to serve as occasion may require. Whenever a quorum cannot be secured for any meeting of any such Committee from among the regular members thereof and designated alternates, the member or members of such Committee present at such meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board to act at the meeting in the place of such absent or disqualified member. Alternative members of such Committees shall receive a reimbursement for expenses and compensation at the same rate as regular members of such Committees. SECTION 7. OTHER COMMITTEES. The Board of Directors may designate such other Committees, each to consist of two or more Directors, as it may from time to time determine, and each such Committee shall serve for such term and shall have and may exercise, during intervals between meetings of the Board of Directors, such duties, functions and powers as the Board of Directors may from time to time prescribe. SECTION 8. QUORUM AND MANNER OF ACTING. At each meeting of any Committee the presence of a majority of the members of such Committee, whether regular or alternate, shall be necessary to constitute a quorum for the transaction of business, and if a quorum is present the concurrence of a majority of those present shall be necessary for the taking of any action; provided, however, that no action may be taken 10 15 by the Executive Committee or the Finance Committee when two or more officers of the corporation are present as members at a meeting of either such Committee unless such action shall be concurred in by the vote of two or more members of such Committee who are not officers of the corporation. ARTICLE V OFFICERS SECTION 1. NUMBER. The officers of the corporation shall be a Chairman of the Board, a President and Chief Executive Officer, an Executive Vice President and Chief Financial Officer, an Executive Vice President, Law, a Secretary, a Treasurer, and such other officers as may be elected or appointed by the Board of Directors. Any number of offices may be held by the same person. (Amended July 7, 1992 and December 6, 1995) SECTION 2. ELECTION, TERM OF OFFICE AND QUALIFICATIONS. The officers of the corporation shall be elected annually by the Board of Directors. Each officer elected by the Board of Directors shall hold office until his successor shall have been duly elected and qualified, or until he shall have died, resigned or been removed in the manner hereinafter provided. SECTION 3. RESIGNATIONS. Any officer may resign at any time upon written notice to the Secretary of the corporation. Such resignation shall take effect at the date of its receipt, or at any later date specified therein; and the acceptance of such resignation, unless required by the terms thereof, shall not be necessary to make it effective. SECTION 4. REMOVALS. Any officer elected or appointed by the Board of Directors may be removed, with or without cause, by the Board of Directors at a regular meeting or special meeting of the Board. Any officer or agent appointed by any officer or committee may be removed, either with or without cause, by such appointing officer or committee. SECTION 5. VACANCIES. Any vacancy occurring in any office of the corporation shall be filled for the unexpired portion of the term in the same manner as prescribed in these By-Laws for regular election or appointment to such office. 11 16 SECTION 6. COMPENSATION OF OFFICERS. The compensation of all officers elected by the Board of Directors shall be approved or authorized by the Board of Directors or by the President and Chief Executive Officer when so authorized by the Board of Directors or these By- Laws. (Amended July 7, 1992 and December 6, 1995) SECTION 7. CHAIRMAN OF THE BOARD. The Chairman of the Board shall, when present, preside at all meetings of the stockholders and of the Board of Directors; have authority to call special meetings of the stockholders and of the Board of Directors; have authority to sign and acknowledge in the name and on behalf of the corporation all stock certificates, contracts or other documents and instruments except when the signing thereof shall be expressly delegated to some other officer or agent by the Board of Directors or required by law to be otherwise signed or executed and, unless otherwise provided by law or by the Board of Directors, may authorize any officer, employee or agent of the corporation to sign, execute and acknowledge in his place and stead all such documents and instruments. He shall consult with the President and Chief Executive Officer regarding the strategic direction and business and affairs of the corporation and shall have such other powers and perform such other duties as from time to time may be assigned to him by the Board of Directors or the Executive Committee. (Amended July 7, 1992 and December 6, 1995) SECTION 8. PRESIDENT AND CHIEF EXECUTIVE OFFICER. The President and Chief Executive Officer shall, in the absence of the Chairman of the Board, preside at all meetings of the stockholders and of the Board of Directors and have authority to call special meetings of the stockholders and of the Board of Directors. The President and Chief Executive Officer shall have general authority over the property, business and affairs of the corporation, and over all other officers, agents and employees of the corporation, subject to the control and direction of the Board of Directors and the Executive Committee, including the power to sign and acknowledge in the name and on behalf of the corporation all stock certificates, contracts or other documents and instruments except when the signing thereof shall be expressly delegated to some other officer or agent by the Board of Directors or required by law to be otherwise signed or executed and, unless otherwise provided by law or by the Board of Directors, may authorize any officer, employee or agent of the corporation to sign, execute and acknowledge in his place and stead all such documents and instruments; he shall fix the compensation of officers of the corporation other than his own compensation and that of the senior officers of the corporation and its principal operating subsidiaries reporting directly to him; and he shall approve proposed employee compensation and benefit plans of subsidiary companies not involving the issuance or purchase of capital stock of the corporation. The President and Chief Executive Officer is hereby authorized, without further approval of the Finance Committee or the Board of Directors: 12 17 (a) To approve any expenditure by the corporation of up to $20 million for those expenditure categories presented to the Board of Directors in the annual budget and up to $10 million for any expenditure categories not presented, including investments, leases, options to purchase or lease assets, business acquisitions and land purchases. (b) To approve individual cost overruns of up to 10% of any amounts approved by or presented to the Board of Directors. (c) To approve disposition of assets and interests in securities of subsidiaries or related commitments, provided that the aggregate market value of the assets being disposed of in any one such transaction does not exceed $10 million. (d) To enter into leases or extensions thereof and other agreements with respect to the assets of the corporation, including interests in minerals and real estate, for a term of not more than 10 years or for an unlimited term if the aggregate initial rentals, over the term of the lease, including renewal options, do not exceed $3 million. (e) To approve increases in the capital budgets of the corporation's operating subsidiaries provided such increases in the aggregate do not exceed 10% of the corporation's capital budget for the fiscal year. (f) To approve in emergency situations commitments in excess of the above-described limits provided they are in the interests of the corporation. The above delegation of authority does not authorize the corporation or its subsidiaries to make a significant change in its business or to issue the corporation's capital stock without the specific approval of the Board of Directors. Notwithstanding these limitations, the President and Chief Executive Officer shall have such power and authority as is usual, customary and desirable to perform all the duties of the office. (Amended July 7, 1992 and December 6, 1995) SECTION 9. EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER. The Executive Vice President and Chief Financial Officer shall have responsibility for development and administration of the corporation's financial plans and all financial arrangements, its insurance programs, its cash deposits and short term investments, its accounting policies, and its federal and state tax returns. Such officer shall also be responsible for the corporation's internal control procedures and for its relationship with the financial community. (Amended July 7, 1992 and December 6, 1995) 13 18 SECTION 10. EXECUTIVE VICE PRESIDENT, LAW. The Executive Vice President, Law shall be the chief legal advisor of the corporation and shall have charge of the management of the legal affairs and litigation of the corporation. (Amended July 7, 1992 and December 6, 1995) SECTION 11. SECRETARY. The Secretary shall record the proceedings of the meetings of the stockholders and directors, in one or more books kept for that purpose; see that all notices are duly given in accordance with the provisions of the By-Laws or as required by law; have charge of the corporate records and of the seal of the corporation; affix the seal of the corporation or a facsimile thereof, or cause it to be affixed, to all certificates for shares prior to the issue thereof and to all documents the execution of which on behalf of the corporation under its seal is duly authorized by the Board of Directors or otherwise in accordance with the provisions of the By-Laws; keep a register of the post office address of each stockholder, director or member, sign with the Chairman of the Board or the President, certificates for shares of stock of the corporation, the issuance of which shall have been duly authorized by resolution of the Board of Directors; have general charge of the stock transfer books of the corporation; and in general, perform all duties incident to the office of Secretary and such other duties as from time to time may be assigned to him by the Board of Directors, the Executive Committee, the Chairman of the Board, the President, or the Executive Vice President, Law. (Amended July 7, 1992 and December 6, 1995) SECTION 12. TREASURER. The Treasurer shall have the responsibility for the custody and safekeeping of all funds of the corporation and shall have charge of their collection, receipt and disbursement; shall receive and have authority to sign receipts for all monies paid to the corporation and shall deposit the same in the name and to the credit of the corporation in such banks or depositories as the Board of Directors shall approve; shall endorse for collection on behalf of the corporation all checks, drafts, notes and other obligations payable to the corporation; shall sign or countersign all notes, endorsements, guaranties and acceptances made on behalf of the corporation when and as directed by the Board of Directors; shall give bond for the faithful discharge of his duties in such sum and with such surety or sureties as the Board of Directors may require; shall have the responsibility for the custody and safekeeping of all securities of the corporation; and in general shall have such other powers and perform such other duties as are incident to the office of Treasurer and as from time to time may be prescribed by the Board of Directors or be delegated to him by the Chairman of the Board, the President or the Executive Vice President and Chief Financial Officer. (Amended July 7, 1992 and December 6, 1995) SECTION 13. ABSENCE OR DISABILITY OF OFFICERS. In the absence or disability of the Chairman of the Board or the President, the Board of Directors may designate, by resolution, individuals to perform the duties of those absent or 14 19 disabled. The Board of Directors may also delegate this power to a committee or to a senior corporate officer. (Amended July 7, 1992) ARTICLE VI STOCK CERTIFICATES AND TRANSFER THEREOF SECTION 1. STOCK CERTIFICATES. Except as otherwise permitted by statute, the Certificate of Incorporation or resolution or resolutions of the Board of Directors, every holder of stock in the corporation shall be entitled to have a certificate, signed by or in the name of, the corporation by the Chairman of the Board, the President, or a Vice President, and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary of the corporation, certifying the number of shares, and the class and series thereof, owned by him in the corporation. Any and all of the signatures on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. (Amended July 7, 1992) SECTION 2. TRANSFER OF STOCK. Transfer of shares of the capital stock of the corporation shall be made only on the books of the corporation by the holder thereof, or by his attorney duly authorized, and on surrender of the certificate or certificates for such shares. A person in whose name shares of stock stand on the books of the corporation shall be deemed the owner thereof as regards the corporation, and the corporation shall not, except as expressly required by statute, be bound to recognize any equitable or other claim to, or interest in, such shares on the part of any other person whether or not it shall have express or other notice thereof. SECTION 3. TRANSFER AGENT AND REGISTRAR. The corporation shall at all times maintain a transfer office or agency in the Borough of Manhattan, The City of New York, in charge of a transfer agent designated by the Board of Directors (who shall have custody, subject to the direction of the Secretary, of the original stock ledger and stock records of the corporation), where the shares of the capital stock of the corporation of each class shall be transferable, and also a registry office in the Borough of Manhattan, The City of New York, other than its transfer office or agency in said city, in charge of a registrar designated by the Board of Directors, where its stock of each class shall be registered. The corporation may, in addition to the said offices, if and whenever the Board of Directors shall so determine, maintain in such place or places as the Board shall determine, one or more additional transfer offices or agencies, each in charge of a transfer agent designated by the Board, where the shares of capital stock of the corporation of any class or classes shall be 15 20 transferable, and also one or more additional registry offices, each in charge of a registrar designated by the Board of Directors, where such shares of stock of any class or classes shall be registered. Except as otherwise provided by resolution of the Board of Directors in respect of temporary certificates, no certificates for shares of capital stock of the corporation shall be valid unless countersigned by a transfer agent and registered by a registrant authorized as aforesaid. SECTION 4. ADDITIONAL REGULATIONS. The Board of Directors may make such additional rules and regulations as it may deem expedient concerning the issue, transfer and registration of certificates for shares of the capital stock of the corporation. SECTION 5. LOST, DESTROYED OR MUTILATED CERTIFICATES. The Board of Directors may provide for the issuance of new certificates of stock to replace certificates of stock lost, stolen, mutilated or destroyed, or alleged to be lost, stolen, mutilated or destroyed, upon such terms and in accordance with such procedures as the Board of Directors shall deem proper and prescribe. ARTICLE VII DIVIDENDS, SURPLUS, ETC. Except as otherwise provided by statute or the Certificate of Incorporation, the Board of Directors may declare dividends upon the shares of its capital stock either (1) out of its surplus, or (2) in case there shall be no surplus, out of its net profits for the fiscal year, whenever, and in such amounts as, in its opinion, the condition of the affairs of the corporation shall render it advisable. Dividends may be paid in cash, in property, or in shares of the capital stock of the corporation. ARTICLE VIII SEAL The Board of Directors shall adopt a suitable corporate seal which shall be in the form imprinted hereon. The seal may be used by causing it or a facsimile thereof to be impressed or affixed or in any other manner reproduced. 16 21 ARTICLE IX FISCAL YEAR The fiscal year of the corporation shall begin on the first day of January of each year. ARTICLE X INDEMNIFICATION SECTION 1. RIGHT TO INDEMNIFICATION. Each person who was or is made a party or is threatened to be made a party to or is involved (including, without limitation, as a witness) in any actual or threatened action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter a "proceeding"), by reason of the fact that he or she is or was a Director or officer of the corporation or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to an employee benefit plan (hereinafter an "indemnitee"), whether the basis of such proceeding is alleged action in an official capacity as a Director, officer, employee or agent or in any other capacity while serving as such a director, officer, employee or agent, shall be indemnified and held harmless by the corporation to the full extent authorized by the Delaware General Corporation Law, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the corporation to provide broader indemnification rights than said law permitted the corporation to provide prior to such amendment), or by other applicable law as then in effect, against all expense, liability and loss (including attorneys' fees, judgments, fines, ERISA excise taxes or penalties and amounts to be paid in settlement) actually and reasonably incurred or suffered by such indemnitee in connection therewith and such indemnification shall continue as to an indemnitee who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the indemnitee's heirs, executors and administrators, provided, however, that except as provided in Section 2 of this Article with respect to proceedings seeking to enforce rights to indemnification, the corporation shall indemnify any such indemnitee seeking indemnification in connection with a proceeding (or part thereof) initiated by such indemnitee only if such proceeding (or part thereof) was authorized by the Board of Directors of the corporation. The right to indemnification conferred in this Section shall be a contract right and shall include the right to be paid by the corporation the expenses incurred in defending any such proceeding in advance of its final disposition (hereinafter an "advancement of expenses"); provided, however, that, if the Delaware General Corporation Law requires, an advancement of expenses incurred by an indemnitee in his or her capacity as a Director or officer (and not in any other capacity in which service was or is rendered by such indemnitee while a Director or officer, including, without limitation, service to an employee benefit plan) shall be made only upon delivery to the corporation of an undertaking, by or on behalf of such indemnitee, to repay all amounts so advanced if it shall ultimately be 17 22 determined that such indemnitee is not entitled to be indemnified under this Section 1, or otherwise. SECTION 2. RIGHT OF INDEMNITEE TO BRING SUIT. If a claim under Section 1 of this Article is not paid in full by the corporation within sixty days after a written claim has been received by the corporation, except in the case of a claim for an advancement of expenses, in which case the applicable period shall be twenty days, the indemnitee may at any time thereafter bring suit against the corporation to recover the unpaid amount of the claim and, to the extent successful in whole or in part, the indemnitee shall be entitled to be paid also the expense of prosecuting such suit. The indemnitee shall be presumed to be entitled to indemnification under this Article upon submission of a written claim (and, in an action brought to enforce a claim for an advancement of expenses, where the required undertaking, if any is required, has been tendered to the corporation), and thereafter the corporation shall have the burden of proof to overcome the presumption that the indemnitee is not so entitled. Neither the failure of the corporation (including its Board of Directors, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such suit that indemnification of the indemnitee is proper in the circumstances nor an actual determination by the corporation (including its Board of Directors, independent legal counsel or its stockholders) that the indemnitee is not entitled to indemnification shall be a defense to the suit or create a presumption that the indemnitee is not so entitled. SECTION 3. NONEXCLUSIVITY OF RIGHTS. The rights to indemnification and to the advancement of expenses conferred in this Article shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, provision of the Certificate of Incorporation, By-Law, agreement, vote of stockholders or disinterested Directors or otherwise. SECTION 4. INSURANCE, CONTRACTS AND FUNDING. The corporation may maintain insurance, at its expense, to protect itself and any Director, officer, employee or agent of the corporation or another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss, whether or not the corporation would have the power to indemnify such person against such expense, liability or loss under the Delaware General Corporation Law. The corporation may enter into contracts with any indemnitee in furtherance of the provisions of this Article and may create a trust fund, grant a security interest or use other means (including, without limitation, a letter of credit) to ensure the payment of such amounts as may be necessary to effect indemnification as provided in this Article. 18 23 SECTION 5. DEFINITION OF DIRECTOR AND OFFICER. Any person who is or was serving as a Director or officer of a wholly owned subsidiary of the corporation shall be deemed, for purposes of this Article only, to be a Director or officer of the corporation entitled to indemnification under this Article. SECTION 6. INDEMNIFICATION OF EMPLOYEES AND AGENTS OF THE CORPORATION. The corporation may, by action of the Board of Directors from time to time, grant rights to indemnification and advancement of expenses to employees and agents of the corporation with the same scope and effect as the provisions of this Article with respect to the indemnification and advancement of expenses of Directors and officers of the corporation. ARTICLE XI CHECKS, DRAFTS, BANK ACCOUNTS, ETC. SECTION 1. CHECKS, DRAFTS, ETC.; LOANS. All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the corporation shall be signed by such officer or officers, agent or agents of the corporation and in such manner as shall, from time to time, be determined by resolution of the Board of Directors. No loans shall be contracted on behalf of the corporation unless authorized by the Board of Directors. Such authority may be general or confined to specific circumstances. (Amended July 7, 1992) SECTION 2. DEPOSITS. All funds of the corporation shall be deposited, from time to time, to the credit of the corporation in such banks, trust companies or other depositories as the Board of Directors may select, or as may be selected by any officer or officers, agent or agents of the corporation to whom such power may, from time to time, be delegated by the Board of Directors; and for the purpose of such deposit, the Chairman of the Board, the President, any Vice President, the Treasurer or any Assistant Treasurer, the Secretary or any Assistant Secretary, or any other officer or agent to whom such power may be delegated by the Board of Directors, may endorse, assign and deliver checks, drafts and other order for the payment of money which are payable to the order of the corporation. 19 24 ARTICLE XII AMENDMENTS These By-Laws may be altered or repealed and new By-Laws may be made by the affirmative vote, at any meeting of the Board, of a majority of the whole Board of Directors, subject to the rights of the stockholders of the corporation to amend or repeal By-Laws made or amended by the Board of Directors by the affirmative vote of the holders of record of a majority in number of shares of the outstanding stock of the corporation present or represented at any meeting of the stockholders and entitled to vote thereon, provided that notice of the proposed action be included in the notice of such meeting. 20 EX-10.6 3 AMENDMENT TO EMPLOYMENT CONTRACT 1 EXHIBIT 10.6 December 6, 1995 Mr. Thomas H. O'Leary 5051 Westheimer Houston, Texas 77056 Dear Tom: Your Employment Agreement with Burlington Resources Inc. (the "Company") is dated October 20, 1988 and was previously amended on February 22, 1989, December 6, 1991, December 8, 1993, and December 7, 1994. The Employment Agreement, as previously amended, will be referred to herein as the "Agreement". The Board of Directors of the Company (the "Board") has deemed it advisable and in the best interests of the Company and its stockholders to further amend the Agreement with respect to the matters addressed herein. Accordingly, this letter, when accepted by you in the space provided below, will amend the Agreement in the following particulars: 1. Employment and Term. The Company agrees to employ you and you agree to act as its Chairman of the Board during the period commencing December 6, 1995 and ending on December 15, 1998, unless sooner terminated by death, permanent disability or the mutual agreement of the parties. 2. Base Compensation. Effective January 1, 1996, the base compensation described in Section 2 of the Agreement will be $500,000 per annum. This amendatory letter agreement shall be binding upon and inure to the benefit of Thomas H. O'Leary and the Company and its successors and assigns. The term "successor" shall include, without limitation, any corporation which at any time, whether by merger, purchase or otherwise, acquires all or substantially all of the assets or business of the Company. As amended hereby, the Agreement shall remain in full force and effect in accordance with its terms. If this letter correctly sets forth our agreement with respect to the subject matter hereof, please sign the original and return it to me. Please retain a copy for your records. Very truly yours, BURLINGTON RESOURCES INC. /s/ H. E. HAUNSCHILD ------------------------------------- By Harold E. Haunschild Its Vice President, Human Resources ACCEPTED AND AGREED TO this 18TH day of December, 1995 /s/ THOMAS H. O'LEARY - ------------------------------------------- Thomas H. O'Leary EX-10.7 4 EMPLOYMENT CONTRACT - (BOBBY S. SHACKOULS) 1 EXHIBIT 10.7 December 6, 1995 Mr. Bobby S. Shackouls 5051 Westheimer Houston, Texas 77056 Dear Bobby, Your Employment Agreement with Burlington Resources Inc. (the "Company") is dated April 30, 1993 and was previously amended on November 8, 1994. The Board of Directors of the Company (the "Board") has deemed it advisable and in the best interests of the Company and its stockholders to further amend and restate the agreement with respect to the matters addressed herein. Accordingly, this letter, when accepted by you in the space provided below, will amend and restate the agreement in its entirety: 1. Position and Term. The Company agrees to employ you and you agree to act as its President and Chief Executive Officer during the period commencing December 6, 1995 and ending on December 15, 2000. 2. Base Salary. Your minimum salary will be $600,000 per annum or such higher rate as may be fixed from time to time by the Board. 3. Incentive Compensation, Long-Term Incentives and Other Benefits. You will participate with other senior executives of the Company in compensation and benefit plans in effect from time to time including the Incentive Compensation Plan, the Stock Incentive Plan, the Performance Share Unit Plan, the Deferred Compensation Plan, the Supplemental Benefits Plan, the Senior Executive Survivor Benefit Plan, the Key Executive Severance Protection Plan and any other plan or perquisites available to other executives at your level of responsibility in the Company, including a company automobile and company-provided country and luncheon club memberships. You will also participate in health, retirement, survivor and disability plans available to all employees of the Company. You understand that the Company may amend, modify or terminate these plans at any time. All plans referenced in this agreement are BR plans. Your maximum bonus opportunity under the Incentive Compensation Plan will be 100% of base salary. Annual bonuses are determined by the Compensation and Nominating Committee of the Board (the "Compensation Committee") based on Company and individual performance. 2 Mr. Bobby S. Shackouls December 6, 1995 Page 2 In consideration of the accrued unvested compensation and benefits that you forfeited in terminating employment with a former employer, the Company established a deferred compensation memorandum account under the Supplemental Benefits Plan. This account was credited with $350,000 as of June 1, 1993. This arrangement is an unfunded deferred compensation arrangement which will be paid to you in a lump-sum upon your termination of employment with the Company. 4. Supplemental Pension Benefit. You are a participant under the qualified Pension Plan and non-qualified Supplemental Benefits Plan. If you are still employed by the Company at age 55, you will receive upon your retirement a supplemental pension benefit equal to the difference between the benefit calculated using your actual service and the benefit calculated assuming you started employment at age 30. If your employment is terminated by the Company after age 50, you will receive the supplemental pension benefit at termination equal to the supplemental benefit described above, assuming the pension annuity commenced at age 55. This supplemental pension benefit will be calculated using the provisions of the qualified Pension Plan and the non-qualified Supplemental Benefits Plan in effect at the time of your retirement. This benefit is a non-qualified, unfunded deferred compensation arrangement. 5. Severance Benefit. If your employment is terminated by the Company for any reason before December 15, 2000, other than as a result of your death, permanent disability or for Cause, or is initiated by you for Good Reason, the Company will pay you within 10 days after the date of termination an amount equal to the product of the number of whole and partial months remaining from the date of your termination until December 15, 2000, times your then current monthly base salary. The terms Cause and Good Reason are defined in the Key Executive Severance Protection Plan. 6. Coordination With Other Plans. If your termination entitles you to benefits under the Key Executive Severance Protection Plan, you may elect to receive the benefits payable under this agreement in lieu of those benefits. If you elect to receive the benefits under this agreement, you will nevertheless be eligible to receive the additional benefits related to the gross-up payment for excise taxes under Article 6 of that plan. 7. Non-Disclosure. As an officer of the Company, you will have access to and continue to receive and develop confidential and proprietary information and trade secrets pertaining to the business of the Company and its affiliates, including, without limitation, reports, maps, data (including geologic and seismic data and interpretations thereof), plans, and contracts. As part of the consideration for this agreement and in return for receiving access to such confidential information, you agree to keep all such confidential and proprietary information confidential. In particular, you agree that you will not divulge, communicate or otherwise disclose any confidential information furnished to 3 Mr. Bobby S. Shackouls December 6, 1995 Page 3 you or obtained or developed by you while employed by the Company to any person, firm, corporation or entity other than to an authorized representative of the Company. You agree that if your employment with the Company is terminated, you will not discuss the Company's business, operations, plans, strategies, personnel or business relationships or agreements with the press or with any of the Company's current or prospective customers or suppliers or with any other person with which the Company has business relationships. 8. Non-Competition. In order to enforce your obligations under Section 7 and in consideration for the benefits of employment described in this agreement, you agree to the covenant not to compete in this Section 8. You agree and acknowledge that this covenant not to compete is ancillary to your commitment as set forth in Section 7 to refrain from disclosing such confidential information. If you initiate the termination of your employment with the Company other than for Good Reason during the term of this agreement, you agree that you will not for a period of two years after your termination be employed by, consult with, provide advice or information to, otherwise perform services for, own, manage, operate, join, control or participate in the ownership of more than 5% of the voting power of equity securities of, management, operation or control of any Competitor (as defined in this agreement) unless released by the Company from such obligation in writing with respect to a specific situation. A Competitor is defined as any entity (i) that is engaged in exploring for and producing oil and natural gas in Louisiana, Montana, New Mexico, North Dakota, Oklahoma, Texas or federal or state waters in the Gulf of Mexico or in the oil and gas marketing business in the mainland United States and (ii) whose assets associated with such oil and gas business exceed $50 million. 9. Non-Interference. For a period ending on the later of December 15, 2000 or two years after you terminate employment with the Company, you agree not to solicit, directly or indirectly, any officer or employee of the Company to leave and work for any other employer. During this same period, you agree not to suggest to others that they approach or solicit any officers or employees of the Company with respect to potential employment elsewhere. 10. Severability and Enforcement. It is the desire of the parties hereto that this agreement be enforced to the maximum extent permitted by law, and should any provision contained herein be held unenforceable, the parties hereby agree and consent that such provision will be reformed to make it a valid and enforceable provision to the maximum extent permitted by law. Any provision hereof not capable of such reformation and determined to be prohibited by or unenforceable under applicable law of any jurisdiction will as to such jurisdiction be deemed ineffective and deleted from this agreement without affecting any other provision of this agreement. 4 Mr. Bobby S. Shackouls December 6, 1995 Page 4 In the event of a breach by you of any of the provisions of Sections 7, 8 or 9, you understand and agree that the Company may, in addition to any other rights or remedies existing in its favor, apply to any court of law or equity of competent jurisdiction for specific performance and injunctive or other relief in order to enforce or prevent any violations of such provisions. You understand and agree that this agreement is being executed by the Company on behalf of itself and each of its affiliates, and that all rights of the Company under this agreement and all of your obligations and duties under this agreement will inure to the benefit of and may be enforced by the Company or any of its affiliates. If the above correctly set forth our agreement, please sign the original and return it to me. Please retain a copy for your records. Very truly yours, BURLINGTON RESOURCES INC. /s/ H. E. HAUNSCHILD --------------------------------------- By Harold E. Haunschild Its Vice President, Human Resources ACCEPTED and AGREED TO this 18TH day of December, 1995 /s/ BOBBY S. SHACKOULS - --------------------------------------- Bobby S. Shackouls EX-10.10 5 AMENDMENT NO. 4 RETIREMENT SAVINGS PLAN 1 EXHIBIT 10.10 AMENDMENT FOUR BURLINGTON RESOURCES INC. RETIREMENT SAVINGS PLAN The Burlington Resources Inc. Retirement Savings Plan, as adopted effective as of January 1, 1990, subject to various adoption agreements with participating employers (the "Plan"), has previously been amended by Amendment One adopted on August 23, 1990, by the unnumbered amendment to the Plan and specified predecessor plans adopted on December 13, 1991, and by Amendment Three adopted on July 8, 1992. This Amendment Four is adopted, effective as shown below, in order to provide greater flexibility in the timing of elections relating to Participants' contributions and Plan investments; to eliminate prior restrictions on amounts invested in Participants' ESOP Rollover Accounts; to permit past service with an acquired business to count toward eligibility for additional matching contributions that Participants can receive after 10 years of employment; to address compliance requirements relating to (i) the reduced Internal Revenue Code section 401(a)(17) limit of $150,000 that applies to Plan compensation in 1994, (ii) the handling of eligible rollover distributions under Code section 401(a)(31) and related authorities beginning in 1993, and (iii) the Department of Labor's regulations for participant-directed investments under section 404(c) of ERISA; and to make other Plan changes of a minor, clarifying nature. 1. Subsection 2.1(e) is hereby amended to read as follows, effective as of June 1, 1993: (e) "Beneficiary" means the person or persons (who may be named contingently or successively) designated by a Participant (or the Beneficiary of a deceased Participant) to receive his Account in the event of his death. Each designation shall be in a form prescribed by the -1- 2 Committee, shall revoke all prior designations by the same Participant, and shall be effective only when filed in a writing that is acknowledged by a Plan representative. The designation of a Beneficiary shall be disregarded if the Beneficiary makes a legally valid disclaimer of any interest under the designation, if the Beneficiary is a natural person who does not survive the Participant, or if the Beneficiary is a legal entity that does not exist at the Participant's death. The determination of whether a natural person survives the Participant shall be made by the Committee in accordance with the Uniform Simultaneous Death Act. If more than one person is designated together in the same Beneficiary priority category, the percentage share of each shall be equal unless the percentage of each is specifically indicated. If persons are named as Beneficiaries contingently or successively, the contingency and the order of their succession shall be clearly indicated. The designation by a married Participant of a Beneficiary other than his spouse shall be invalid unless the spouse consents in writing to such designation, the consent acknowledges the effect of such designation and is notarized or is witnessed by a Plan representative, and the Beneficiary designation complies in all other respects with the requirements of Code sections 401(a)(11)(B)(iii)(I) and 417(a)(2). However, no consent shall be required if it is established to the satisfaction of the Plan representative that such consent cannot be obtained because there is no spouse or because the spouse cannot be located. If there is no surviving spouse and if no other Beneficiary is designated, then the Beneficiary shall be the Participant's estate. If a designation is ineffective in whole or in part, all or such part of the Participant's Account as has not been distributed, shall be payable to the Participant's surviving spouse, or if the deceased Participant has no surviving spouse, to his estate. If a deceased -2- 3 Participant's Beneficiary has begun to receive payments hereunder and does not survive to receive all payments that are due from the Plan, the payments remaining after his death shall be made to such Beneficiary's designated Beneficiary, if any, or, if none, to his estate. 2. Subsection 2.1(g) is hereby amended to read as follows, effective as of June 1, 1993: (g) "Change Date" means the effective date of a Participant's election, made in accordance with the terms and limitations specified below and elsewhere in the Plan, to begin, stop, increase, or decrease the amount of Basic Contributions or Supplemental Contributions to his Account under the Plan, or to change the before-tax or after-tax nature of Basic Contributions or direct the way that his future contributions or the amounts in his Account are to be invested. The Change Date for elections affecting the level or nature of a Participant's contributions is the first day of the month after the election, and a Participant may make such contribution elections in any month without regard to the number of other elections that he has made or their frequency. The Change Date for elections relating to the investment of a Participant's future contributions or existing Account balances is also the first day of the month after the election, although changes in the investment of existing Account balances may be reflected in statements that show closing balances as of the last moment of the month ending just prior to the Change Date. Except as otherwise permitted under a general exception approved by the Committee, a Participant may not make more than six monthly investment elections during a calendar year (treating each election that will take effect on the same Change Date as one election). Notwithstanding the foregoing, if the Committee approves procedures allowing elections to be made more than one -3- 4 month in advance on an irrevocable basis, the future month specified in any such advance election shall be substituted for the month in which the election is made when determining the first of the following month that is to be the Change Date for such election. All choices implemented on behalf of a Participant on a Change Date are subject to the completion of such forms and the satisfaction of such other reasonable procedural requirements, with such reasonable advance notice, as may be specified in the Plan or prescribed by the Committee. As permitted by the Committee, such choices may be made by telephone voice or touchtone response or by other appropriate means of electronic data transmittal. 3. Effective as of January 1, 1990, the last sentence of subsection 5.1(a) of the Plan is hereby deleted and the following is substituted in its place: For this purposes, "Years of Employment" mean the total of the full and fractional years (counting each completed calendar month as 1/12th of a year) of employment with the Company or an Affiliate, as determined from appropriate personnel records, provided that Years of Employment for periods prior to January 1, 1990, shall continue to be determined under the applicable Plan provisions that were in effect when the determination was made. In addition, when the Company or another Employer acquires a business entity or its assets, any individuals working in that business who become Eligible Employees as a result of the acquisition shall receive additional Years of Employment corresponding to their service prior to the acquisition, subject to the following conditions. The prior service credit shall be consistent with the intent of the parties to the acquisition and may include as Years of Employment hereunder, any prior service with the acquired entity (or the former owner of the acquired assets) and any other prior service that was recognized as eligibility or -4- 5 vesting service for them under a qualified plan of the acquired entity or former asset owner, or an affiliate of such entity or owner, provided that the Committee may deny prior service credit in counting Years of Employment under the Plan and make other arrangements outside the Plan instead if it deems this step is necessary to prevent discrimination or to protect the qualification of the Plan for other reasons. No prior service credit shall apply for acquisitions in which the parties to the transaction do not intend it to be given. The Committee shall ensure that appropriate records are kept to record the identities of Participants who have received credit for past service under this acquisition rule and the amount of their past service credit. 4. Subsections 5.6(f) is hereby amended to read as follows, effective as of June 1, 1993: (f) Effective June 1, 1993, the former restrictions relating to the ESOP Rollover Account are eliminated. Such restrictions required all amounts attributable to a rollover from a terminated tax credit employee stock ownership plan of a former parent or affiliate of the Company to be held in a separate ESOP Rollover Account and invested only in the Company Stock Fund, and also imposed loan and withdrawal limitations for the ESOP Rollover Account that did not apply to other Accounts. Upon the elimination of such ESOP Rollover Account restrictions, the Committee may require the ESOP Rollover Account to continue as a separate Account that can be invested and otherwise treated like any other Rollover Account, or it may eliminate the separate ESOP Rollover Account by transferring each Participant's balance in such Account to his or her Rollover Account, in which case, any references to the ESOP Rollover Account in other Plan sections shall be construed as references to the Rollover Account. -5- 6 5. A new subsection 5.6(h) is hereby added to read as follows, effective as of January 1, 1993: (h) Notwithstanding the foregoing, on and after January 1, 1993, a distribution or amount received, as used in this section shall include an eligible rollover distribution described in Code section 402(c)(4), and a transfer to this Plan pursuant to this section shall include a direct rollover of an eligible rollover distribution that is made in accordance with Code section 401(a)(31) and the rules of this section. Accordingly, in the case of any distribution occurring after December 31, 1992, the rule in section 5.6(c)(3) relating to partial distributions shall no longer apply, and the reference in section 5.6(b) to "a qualified total distribution described in Code section 402(a)(5)" shall be replaced by a reference to "an eligible rollover distribution described in Code section 402(c)(4)." The Committee may establish additional rules and procedures, consistent with the rules of the Code and related regulatory guidance, concerning the acceptance of direct rollovers and sixty-day rollovers of eligible rollover distributions in this Plan, including rules that limit or prohibit wire transfers and other payments that are made directly to this Plan by another plan in lieu of giving the Participant a check payable to the Trustee that the Participant can deliver to a Plan representative. 6. Section 6.5 of the Plan is hereby amended by adding the following at the end thereof, effective as of January 1, 1994: Effective as of January 1, 1994, a new base year limitation of $150,000 shall apply in accordance with Code section 401(a)(17), as amended, and the annual limitation on the Compensation taken into account for each Participant under the Plan for Plan Years beginning after 1994 shall reflect such adjustments to the 1994 limitation of $150,000 and such -6- 7 changes in Code section 401(a)(17) as may occur in the future and be in effect from time to time. In the case of a short Plan Year or other period of less than 12 months requiring a reduction of the Code section 401(a)(17) annual limit, the otherwise applicable limit shall be prorated by multiplying it by a fraction, the numerator of which is the number of months in the short period and the denominator of which is 12. Moreover, in implementing the Code section 401(a)(17) limit, the rules of Code section 414(q)(6) (requiring the aggregation of compensation paid to family members of certain five-percent owners and the ten most highly compensated Employees) shall apply, except that in applying such rules, the term "family" shall include only the spouse of the Employee and any lineal descendants of the Employee who have not attained age 19 before the close of the year. If, as a result of the application of such rules, the adjusted annual Code section 401(a)(17) limit on compensation is exceeded, then (except for determining the portion of compensation up to the integration level if this Plan provides for permitted disparity), such limit shall be prorated among the affected individuals in proportion to each such individual's compensation as determined prior to the application of the Code section 401(a)(17) limit. 7. A new section 7.12 is hereby added to the Plan, effective as of January 1, 1993, to read as follows: 7.12 Eligible Rollover Distributions. Eligible rollover distributions from the Plan shall comply with the requirements of Code section 401(a)(31) as follows. This section applies to distributions made on or after January 1, 1993. Notwithstanding any provision of the Plan to the contrary that would otherwise limit a distributee's election under this section, a distributee may elect, at the time and in the manner prescribed by the Committee, to have any portion of an eligible rollover distribution paid directly to an eligible -7- 8 retirement plan specified by the distributee in a direct rollover. For purposes of this section, the following definitions shall apply. An "eligible rollover distribution" is any distribution of all or any portion of the balance to the credit of the distributee, except that an "eligible rollover distribution" does not include: any distribution that is one of a series of substantially equal period payments (not less frequently than annually) made for the life (or life expectancy) of the distributee and the distributee's designated Beneficiary, or for a specified period of ten years or more; any distribution to the extent such distribution is required under section 401(a)(9) of the Code; and the portion of any distribution that is not includible in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to employer securities); and provided further that the determination of what constitutes an "eligible rollover distribution" shall at all times be made in accordance with the current rules of Code section 402(c), which shall be controlling for this purpose. An "eligible retirement plan" is an individual retirement account described in section 408(a) of the Code, an individual retirement annuity described in section 408(b) of the Code, an annuity plan described in section 403(a) of the Code, or a qualified trust described in section 401(a) of the Code that accepts the distributee's eligible rollover distribution. However, in the case of an eligible rollover distribution to the surviving spouse, an "eligible retirement plan" is an individual retirement account or individual retirement annuity. A "distributee" includes an Employee or former Employee. In addition, the Employee's or former Employee's surviving spouse and the Employee's or former Employee's spouse or former -8- 9 spouse who is the alternate payee under a qualified domestic relations order, as defined in section 414(p) of the Code, are distributees with regard to the interest of the spouse or former spouse. A "direct rollover" is a payment by the Plan to the eligible retirement plan specified by the distributee. In prescribing the manner of making elections with respect to eligible rollover distributions, as described above, the Committee may provide for the uniform, nondiscriminatory application of any restrictions permitted under applicable sections of the Code and related rules and regulations, including a requirement that a distributee may not elect a partial direct rollover in an amount less than $500 and a requirement that a distributee may not elect to make a direct rollover from a single eligible rollover distribution to more than one eligible retirement plan. Moreover, if a distribution is one to which sections 401(a)(11) and 417 of the Code do not apply, such distribution may commence less than 30 days after the notice required under section 1.411(a)-11(c) of the Income Tax Regulations is given, provided that: (1) the Plan administrator clearly informs the Participant that the Participant has a right to a period of at least 30 days after receiving the notice to consider the decision of whether or not to elect a distribution (and, if applicable, a particular distribution option), and (2) the Participant, after receiving the notice, affirmatively elects a distribution. 8. Two new sections 8.7 is hereby added to the Plan to read as follows, effective as of January 1, 1994: -9- 10 8.7 Compliance With ERISA Section 404(c). The Plan provisions pertaining to Participant-directed investments are intended to permit the Plan and Participant-directed transactions under it to comply with requirements in ERISA section 404(c) and related regulations so that a Participant will not be deemed to be a fiduciary by reason of exercising control over assets in his Account, and no person who is otherwise a fiduciary shall be liable, either for any loss or by reason of any breach, which results from the exercise of such control. For purposes of carrying out this intent, any Plan reference to a Participant or Participants who exercise control over Account assets shall be deemed to include a Beneficiary or Beneficiaries who exercise such control, and any reference to a specific Department of Labor regulation shall be deemed to include a reference to any other currently applicable rule or regulation pertaining to the same subject. To comply with section 404(c) of ERISA and Department of Labor regulation 2550.404(c)-1 thereunder, the Committee is designated as the Plan fiduciary responsible for giving Participants all required information, receiving and carrying out investment directions from Participants, and giving Participants written confirmation of instructions received from them. Accordingly, the Committee (or a person or persons designated by the Committee to act on its behalf) shall provide information to Participants in accordance with section 1(b)(2)(B) of the above Department of Labor regulation, shall receive investment instructions provided by Participants in accordance with this article of the Plan, and shall provide Participants with written confirmation of such instructions. The Committee and any person or persons it has designated to act on its behalf shall comply with all such investment instructions from Participants except in cases where the Committee declines to implement such instructions in accordance with sections 1(b)(2)(ii)(B) and 1(d)(2)(ii) of the above Department of Labor regulation. -10- 11 The Committee shall establish procedures to safeguard the confidentiality of information relating to the purchase, sale, holding, and exercise of voting and similar rights with respect to Company Stock, provided that such procedures relating to confidentiality shall not apply to the extent necessary to comply with federal or state laws not preempted by ERISA, including any such laws that may require certain Participants who are corporate officers or large stockholders to report their transactions in Company Stock. Where the Committee determines, in its discretion, that the situation involves a potential for undue Employer influence upon Participants with regard to their direct or indirect exercise of shareholder rights, the Committee shall appoint an independent fiduciary who is not affiliated with any sponsor of the Plan to carry out Plan activities relating to Company Stock on behalf of Participants in such situation. 9. Section 11.2 of the Plan is hereby amended to read as follows, effective as of January 1, 1990: 11.2 Committee and Plan Expenses. Responsibility for the general administration of the Plan and for carrying out the provisions hereof shall be placed in a Committee of three or more members, each of whom shall be an Employee of an Employer and each of whom shall be appointed by the Chief Executive Officer of the Company and serve at the pleasure of the latter. Any member of the Committee may resign by notice in writing filed with the Secretary of the Committee, such resignation to become effective no earlier than the date of such written notice. All costs and expenses that the Committee approves for payment by the Plan after determining that they are necessary for the operation of the Plan and reasonable in amount shall be paid from Plan assets. All other expenses related to the operation of the Plan shall be paid by the Company or another Employer. -11- 12 If the Plan pays recordkeeping fees, loan processing fees, or other fees or expenses charged by a third-party provider for services to the Plan pursuant to the first sentence of this paragraph, the payments shall be accounted for in a manner acceptable to the Committee, which may provide that such fees and expenses will be charged directly to the Accounts of Participants and Beneficiaries to the extent that they represent reasonable charges attributable to services performed with respect to the Accounts being charged. The Committee may also provide that such charges shall apply on a uniform, nondiscriminatory basis to the Accounts of former Employees who have deferred their distributions under the Plan, and shall not apply to the Accounts of Participants who are still Employees. The members of the Committee shall not receive compensation from the Plan for their services to the Committee. 10. Except as amended above, the terms of the Plan as in effect prior to this amendment shall continue unchanged. Adopted, effective as indicated above, pursuant to section 12.1 of the Plan. By: /s/ H. E. HAUNSCHILD ------------------------------ Harold E. Haunschild Vice President-Human Resources Burlington Resources Inc. Date: May 9, 1994 ------------------------------ ATTEST: By: /s/ Margaret A. Salin ------------------------------ Date: May 9, 1994 ---------------------------- -12- EX-10.12 6 BURLINGTON RESOURCES INC. - PHANTOM STOCK PLAN 1 EXHIBIT 10.12 BURLINGTON RESOURCES INC. PHANTOM STOCK PLAN FOR NON-EMPLOYEE DIRECTORS Effective March 21, 1996 2 BURLINGTON RESOURCES INC. PHANTOM STOCK PLAN FOR NON-EMPLOYEE DIRECTORS TABLE OF CONTENTS -----------------
PAGE ---- SECTION 1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 SECTION 2 ADMINISTRATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 SECTION 3 PARTICIPANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 SECTION 4 BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 SECTION 5 GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
-i- 3 BURLINGTON RESOURCES INC. PHANTOM STOCK PLAN FOR NON-EMPLOYEE DIRECTORS PREAMBLE WHEREAS, Burlington Resources Inc. (the "Company") desires to establish the Burlington Resources Inc. Phantom Stock Plan For Non-Employee Directors (the "Plan") in order for the Company to attract and retain highly qualified individuals to serve as members of the Company's Board of Directors by providing them with phantom stock in the Company; NOW, THEREFORE, the Company does hereby adopt the Plan as set forth herein, effective as of the 1996 Annual Meeting of the stockholders of the Company. SECTION 1 DEFINITIONS For purposes of the Plan, the following terms shall have the meanings indicated: 1.1 Beneficiary means the person(s) designated by a Participant, on a form provided by the Management Committee and filed with the Company's Human Resources Department, to receive benefits from the Plan in the event of his or her death. A Participant may change his or her beneficiary designation at any time. If no designated Beneficiary survives the Participant, the Beneficiary shall be the Participant's surviving spouse or, if none, his or her estate. 1.2 Board means the Board of Directors of the Company. 1.3 Company means Burlington Resources Inc., a Delaware corporation. 4 1.4 Company Stock Account means a notional account credited with Phantom Stock, as provided in Section 4.2. 1.5 Fair Market Value means, as applied to a specific date, the mean between the highest and lowest quoted selling prices at which the common stock of the Company was sold on such date as reported in the NYSE-Consolidated Transactions by The Wall Street Journal on such date or, if no Company common stock was traded on such date, on the next preceding day on which its common stock was so traded. 1.6 Grant Date means the first business day following each Annual Meeting of the stockholders of the Company ("Annual Meeting Date") that occurs on or after the effective date of the Plan. For an individual who first becomes a Participant other than on an Annual Meeting Date, the initial Grant Date as to that Participant shall be the first business day following the date the individual becomes a Participant. 1.7 Interest Account means a notional account credited with interest, as provided in Section 4.4. 1.8 Management Committee means the committee appointed pursuant to Section 2.1 to administer the Plan. 1.9 Participant means a member of the Board who is not also an employee of the Company or a subsidiary thereof. 1.10 Phantom Stock means a phantom or notional share of common stock of the Company. A Participant shall not possess any rights of a stockholder of the Company with respect to a share of Phantom Stock, including, without limitation, rights concerning voting and dividends. A share of Phantom Stock shall be payable solely in cash under the Plan. -2- 5 1.11 Plan means the Burlington Resources Inc. Phantom Stock Plan For Non-Employee Directors as amended from time to time. 1.12 Termination means a Participant's ceasing to be a member of the Board. SECTION 2 ADMINISTRATION 2.1 Management Committee. The Plan shall be administered by a management committee (the "Management Committee") consisting of such officers of the Company as the Chief Executive Officer of the Company shall designate. Subject to review by the Compensation and Nominating Committee of the Board, the Management Committee shall have the complete authority and power to interpret the Plan, prescribe, amend and rescind rules relating to its administration, determine the eligible Participants, determine a Participant's (or Beneficiary's) right to a payment and the amount of such payment, and to take all other actions necessary or desirable for the administration of the Plan. All actions and decisions of the Management Committee shall be final and binding upon all Participants and Beneficiaries. SECTION 3 PARTICIPANTS 3.1 Participants. Each member of the Board who is not an employee of the Company or a subsidiary thereof shall automatically be a Participant. SECTION 4 BENEFITS 4.1 Automatic Phantom Stock Grants. On each Grant Date each Participant on such date shall have credited to his Company Stock Account 500 shares of Phantom Stock. -3- 6 A separate Company Stock Account shall be established for each Participant with respect to each Grant Date; provided, however, that all Company Stock Accounts established for a Participant that are to be paid in the same manner, i.e., a lump sum, 60 installments or 120 installments, may be combined into a single Company Stock Account. 4.2 Payment Elections. Prior to each Grant Date a Participant may elect to have all or a portion of the shares of Phantom Stock that are to be granted to the Participant on such Grant Date be paid in one of the forms specified in Section 4.4 following the Participant's Termination. The payment election shall be irrevocable, shall apply only to the grant applicable to that specified Grant Date and shall be made on a form prescribed by the Management Committee. If a Participant does not make a payment election with respect to a specified Grant Date, the Phantom Stock granted to the Participant on that Grant Date shall be paid following his or her Termination in the same manner as provided in the last election made by the Participant for a grant under the Plan prior to that Grant Date and, if no election has ever been made, then in a lump sum in accordance with Section 4.4 as if the Participant had elected such option. 4.3 Investment of Accounts. A Participant's Company Stock Account(s) shall be credited with the shares of Phantom Stock granted as of the applicable Grant Dates, and with phantom (notional) dividends with respect to the Phantom Stock, which shall be credited as being reinvested in additional shares of Phantom Stock. All credits and debits to a Company Stock Account shall be made based on the Fair Market Value per share of the Company's common stock on the applicable date. -4- 7 4.4 Payment of Accounts. Except as provided below, upon a Participant's Termination the Company shall pay to such Participant (or to Participant's death) an amount in cash equal to the balance then credited to his or her Company Stock Account(s) as follows: (a) a lump sum payment; or (b) in 60 consecutive substantially equal monthly installments; or (c) in 120 consecutive substantially equal monthly installments, whichever form of payment has been elected (or deemed elected) by the Participant. However, if a Participant has elected to receive the distribution of a Company Stock Account in installments, such Company Stock Account shall be automatically converted into an Interest Account as of the Participant's date of Termination. Each Interest Account shall accrue interest on the balance credited to such Interest Account from the date of Termination through the date of its distribution. Such interest shall be credited to the Interest Account at the end of each calendar quarter or such other periods as may be determined by the Management Committee. The Management Committee shall determine, in its sole discretion, the rate of interest to be credited periodically to the Interest Accounts. Payment of Accounts shall commence or be made in the January following the year in which the Participant's Termination occurs. Notwithstanding anything in the Plan to the contrary, if the Management Committee determines at any time that Participants may be given the ability to change their election as to the distribution of their Company Stock Account(s) without causing the loss of any exempt treatment to "insiders" subject to the provisions of Section 16 of the Securities Exchange -5- 8 Act of 1934, as amended, the Management Committee may amend the Plan to provide for such election changes as it deems appropriate. 4.5 Acceleration of Payments. Notwithstanding a Participant's election to the contrary, the Management Committee, in its sole discretion, may accelerate the payment of all or part of the unpaid balance of a Participant's Account(s) in the event of the Participant's death, or upon its determination that the Participant (or his or her Beneficiary in the case of the Participant's death) has incurred a "severe financial hardship" resulting from a sudden and unexpected illness or accident of such person or of a dependent, a loss of such person's property due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of such person. The Management Committee in making its determination of severe financial hardship may consider such factors and require such information as it deems appropriate, but, in any case, payment may not be made to the extent that such hardship is or may be relieved (i) through reimbursement or compensation by insurance or otherwise or (ii) by liquidation of such person's assets, to the extent liquidation of such assets will not itself cause severe financial hardship. However, notwithstanding the foregoing, the Management Committee shall not accelerate the payment of any Company Stock Account maintained for a Participant if such acceleration would cause the loss on any exempt treatment under the Plan for "insiders" for securities laws purposes. -6- 9 SECTION 5 GENERAL PROVISIONS 5.1 Unfunded Obligation. The amounts to be paid to Participants pursuant to this Plan are unfunded obligations of the Company. The Company is not required to segregate any monies from its general funds, to create any trusts, or to make any special deposits with respect to this obligation. Title to and beneficial ownership of any investments, including trust investments, which the Company may make to fulfill this obligation shall at all times remain in the Company. Any investments and the creation or maintenance of any trust or notional accounts shall not create or constitute a trust or a fiduciary relationship between the Management Committee or the Company and a Participant, or otherwise create any vested or beneficial interest in any Participant or his or her Beneficiary or his or her creditors in any assets of the Company whatsoever. The Participants (and Beneficiaries) shall have no claim against the Company for any changes in the value of any Accounts and shall be general unsecured creditors of the Company with respect to any payment due under this Plan. 5.2 Incapacity of Participant or Beneficiary. If the Management Committee finds that any Participant or Beneficiary to whom a payment is payable under the Plan is unable to care for his or her affairs because of illness or accident or is under a legal disability, any payment due (unless a prior claim therefore shall have been made by a duly appointed legal representative) at the discretion of the Management Committee, may be paid to the spouse, child, parent or brother or sister of such Participant or Beneficiary or to any person whom the Management Committee has determined has incurred expense for such Participant or Beneficiary. -7- 10 Any such payment shall be a complete discharge of the obligations of the Company under the provisions of the Plan. 5.3 Nonassignment. The right of a Participant or Beneficiary to the payment of any amounts under the Plan may not be assigned, transferred, pledged or encumbered in any manner nor shall such right or other interests be subject to attachment, garnishment, execution or other legal process. 5.4 Termination and Amendment. The Board may from time to time amend, suspend or terminate the Plan, in whole or in part, and if the Plan is suspended or terminated, the Board may reinstate any or all of its provisions. The Management Committee may also amend the Plan; provided, however, it may not suspend or terminate the Plan, or substantially increase the obligations of the Company under the Plan, or expand the classification of employees who are eligible to participate in the Plan. No amendment, suspension or termination of the Plan may impair the right of a Participant or his or her Beneficiary to receive the benefit accrued hereunder prior to the effective date of such amendment, suspension or termination. Notwithstanding the foregoing, the Plan may not be amended more than once every six months, other than to comport with changes in the Internal Revenue Code, the Employee Retirement Income Security Act of 1974, or the rules thereunder. 5.5 Compliance with Securities Laws. It is the intention of the Company that, so long as any of the Company's equity securities are registered pursuant to Section 12(b) or 12(g) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), this Plan shall be construed to meet the requirements for exemption from Section 16 of the Exchange Act and, if any Plan provision is later found to be contrary to meeting the requirements for such -8- 11 exemption, that provision shall be deemed null and void. Notwithstanding anything in the Plan to the contrary, the Board, in its absolute discretion, may bifurcate the Plan so as to restrict, limit or condition the use of any provision of the Plan to Participants who are officers and directors subject to Section 16 of the Exchange Act without so restricting, limiting or conditioning the Plan with respect to other Participants. 5.6 Applicable Law. Except to the extent preempted by applicable federal law, the Plan shall be construed and governed in accordance with the laws of the State of Texas. -9- EX-10.23 7 AMENDED AND RESTATED - LONG TERM REVOL. CREDIT... 1 EXHIBIT 10.23 BURLINGTON RESOURCES INC. $600,000,000 AMENDED AND RESTATED LONG-TERM REVOLVING CREDIT AGREEMENT Dated as of July 14, 1995 CITIBANK, N.A., as Agent 2 TABLE OF CONTENTS
Page ARTICLE I DEFINITIONS AND ACCOUNTING TERMS SECTION 1.01. Certain Defined Terms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 --------------------- SECTION 1.02. Computation of Time Periods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 --------------------------- SECTION 1.03. Accounting Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 ---------------- ARTICLE II AMOUNTS AND TERMS OF THE ADVANCES SECTION 2.01. The A Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 -------------- SECTION 2.02. Making the A Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 --------------------- SECTION 2.03. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 ---- SECTION 2.04. Reduction of the Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 ---------------------------- SECTION 2.05. Repayment of A Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 ----------------------- SECTION 2.06. Interest on A Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 ---------------------- SECTION 2.07. Additional Interest on Eurodollar Rate Advances . . . . . . . . . . . . . . . . . . . . . . . 17 ----------------------------------------------- SECTION 2.08. Interest Rate Determination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 --------------------------- SECTION 2.09. Voluntary Conversion of A Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 ---------------------------------- SECTION 2.10. Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 ----------- SECTION 2.11. Increased Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 --------------- SECTION 2.12. Increased Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 ----------------- SECTION 2.13. Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 ---------- SECTION 2.14. Payments and Computations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 ------------------------- SECTION 2.15. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 ----- SECTION 2.16. Sharing of Payments, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 ------------------------ SECTION 2.17. Evidence of Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 ---------------- SECTION 2.18. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 --------------- SECTION 2.19. The B Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 -------------- SECTION 2.20. Increase of Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 ----------------------- ARTICLE III CONDITIONS OF EFFECTIVENESS AND LENDING SECTION 3.01. Conditions Precedent to Effectiveness of this Agreement . . . . . . . . . . . . . . . . . . . 33 ------------------------------------------------------- SECTION 3.02. Conditions Precedent to Each A Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . 33 ---------------------------------------- SECTION 3.03. Conditions Precedent to Each B Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . 34 ---------------------------------------- ARTICLE IV REPRESENTATIONS AND WARRANTIES
3 SECTION 4.01. Representations and Warranties of the Borrower . . . . . . . . . . . . . . . . . . . . . . . 35 ---------------------------------------------- ARTICLE V COVENANTS OF THE BORROWER SECTION 5.01. Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 --------------------- SECTION 5.02. Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 ------------------ SECTION 5.03. Reporting Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 ---------------------- ARTICLE VI EVENTS OF DEFAULT SECTION 6.01. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 ----------------- ARTICLE VII THE AGENT SECTION 7.01. Authorization and Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 ------------------------ SECTION 7.02. Agent's Reliance, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 --------------------- SECTION 7.03. Citibank and Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 ----------------------- SECTION 7.04. Lender Credit Decision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 ---------------------- SECTION 7.05. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 --------------- SECTION 7.06. Successor Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 --------------- ARTICLE VIII MISCELLANEOUS SECTION 8.01. Amendments, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 --------------- SECTION 8.02. Notices, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 ------------- SECTION 8.03. No Waiver; Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 ------------------- SECTION 8.04. Costs and Expenses; Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 ----------------------------- SECTION 8.05. Right of Set-off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 ---------------- SECTION 8.06. Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 -------------- SECTION 8.07. Assignments and Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 ------------------------------ SECTION 8.08. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 --------------- SECTION 8.09. Consent to Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 ----------------------- SECTION 8.10. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 ------------- SECTION 8.11. Execution in Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 -------------------------
-ii- 4 EXHIBITS Exhibit A Form of A Promissory Note Exhibit B Form of B Promissory Note Exhibit C Form of Notice of A Borrowing Exhibit D Form of Notice of B Borrowing Exhibit E Form of Assignment and Acceptance Exhibit F-1 Form of Commitment Increase Agreement Exhibit F-2 Form of New Lender Agreement Exhibit G Form of Opinion of Vice President, Law for Borrower Exhibit H Form of Opinion of Jones, Day, Reavis & Pogue, New York Counsel for Borrower Exhibit I Form of Opinion of Counsel to Citibank, N.A., as Agent Exhibit J Form of Process Agent Letter Exhibit K Form of Designation Agreement SCHEDULES Schedule I -- Domestic and Eurodollar Lending Offices Schedule II -- Material Subsidiaries Schedule III -- Pricing Grid
-iii- 5 AMENDED AND RESTATED LONG-TERM REVOLVING CREDIT AGREEMENT Dated as of July 14, 1995 BURLINGTON RESOURCES INC., a Delaware corporation (the "Borrower"), the financial institutions (the "Initial Lenders") listed on the signature pages hereof, and CITIBANK, N.A. ("Citibank") as agent (the "Agent") for the Lenders hereunder, agree as follows: PRELIMINARY STATEMENTS 1. The Borrower, the Agent and certain Lenders are parties to the Long-Term Revolving Credit Agreement dated as of July 20, 1994 (the "1994 Credit Agreement") pursuant to which such Lenders committed to make Advances (as such term is defined in the 1994 Credit Agreement) to the Borrower on the terms and conditions set forth therein. 2. The parties hereto have agreed to amend (effective as of July 14, 1995) the definition of "Termination Date" and Sections 2.19, 3.01 and 4.01 of, and Exhibits A through K to, the 1994 Credit Agreement and, as so amended, to restate it in its entirety and the Lenders and the Agent have agreed to do so on the terms and conditions set forth herein. ARTICLE I DEFINITIONS AND ACCOUNTING TERMS SECTION 1.01. Certain Defined Terms. As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined): "A Advance" means an advance by a Lender to the Borrower as part of an A Borrowing, and refers to a Base Rate Advance or a Eurodollar Rate Advance (each of which shall be a "Type" of A Advance). "A Borrowing" means a borrowing consisting of A Advances of the same Type made on the same day by the Lenders pursuant to Section 2.01 and, in the case of Eurodollar Rate Advances, having Interest Periods of the same duration, it being understood that there may be more than one A Borrowing on a particular day. "A Note" means a promissory note of the Borrower payable to the order of any Lender, in substantially the form of Exhibit A hereto, evidencing the 6 aggregate indebtedness of the Borrower to such Lender resulting from the A Advances made by such Lender. "Advance" means an A Advance or a B Advance. "Affiliate" means, as to any Person, any other Person that, directly or indirectly, controls, is controlled by or is under common control with such Person or is a director or officer of such Person. The term "controls" (including the terms "controlled by" or "under common control with") means, with respect to any Person, the possession, direct or indirect, of the power to vote 10% or more (or in the case of an "Affiliate" of any Lender, 5% or more) of the securities having ordinary voting power for the election of directors of such Person or to direct or cause the direction of the management and policies of such Person, whether through ownership of voting securities or by contract or otherwise. "Agreement" means the 1994 Credit Agreement (defined above), as amended and restated by this Amended and Restated Long-Term Revolving Credit Agreement, together with all exhibits and schedules hereto, as may be amended or otherwise modified from time to time pursuant to the terms hereof. "Applicable Lending Office" means, with respect to each Lender, (i) in the case of an A Advance, such Lender's Domestic Lending Office in respect of Base Rate Advances and such Lender's Eurodollar Lending Office in respect of Eurodollar Rate Advances and (ii) in the case of a B Advance, the office of such Lender notified by such Lender to the Agent as its Applicable Lending Office with respect to such B Advance. "Arranger" means Citicorp Securities, Inc. "Assignment and Acceptance" means an assignment and acceptance entered into by a Lender (other than a Designated Bidder) and an Eligible Assignee, and accepted by the Agent, in substantially the form of Exhibit E hereto. "B Advance" means an advance by a Lender to the Borrower as part of a B Borrowing resulting from the auction bidding procedure described in Section 2.19. "B Borrowing" means a borrowing consisting of simultaneous B Advances to the Borrower from each of the Lenders whose offer to make one or more B Advances as part of such borrowing has been accepted by the -2- 7 Borrower under the auction bidding procedure described in Section 2.19, it being understood that there may be more than one B Borrowing on a particular day. "B Note" means a promissory note of the Borrower payable to the order of any Lender, in substantially the form of Exhibit B hereto, evidencing the indebtedness of the Borrower to such Lender resulting from a B Advance made by such Lender. "B Reduction" has the meaning specified in Section 2.01. "Base Rate" means, for each day in any period, a fluctuating interest rate per annum as shall be in effect from time to time which rate per annum shall at all times for such day be equal to the highest of: (a) The rate of interest announced publicly by the Agent in the United States with respect to loans made in the United States, from time to time, as the Agent's base or prime rate as in effect for such day; (b) The sum (adjusted to the nearest 1/16 of one percent or, if there is no nearest 1/16 of one percent, to the next higher 1/16 of one percent) of (i) 1/2 of one percent per annum, plus (ii) the rate obtained by dividing (A) the latest three-week moving average of secondary market morning offering rates in the United States for three-month certificates of deposit of major United States money market banks, such three-week moving average (adjusted to the basis of a year of 365 or 366 days, as the case may be) being determined weekly on each Monday (or, if any such day is not a Business Day, on the next succeeding Business Day) for the three-week period ending on the previous Friday by the Agent on the basis of such rates reported by certificate of deposit dealers to and published by the Federal Reserve Bank of New York or, if such publication shall be suspended or terminated, on the basis of quotations for such rates received by the Agent from three New York certificate of deposit dealers of recognized standing selected by the Agent, by (B) a percentage equal to 100% minus the average of the daily percentages specified during such three-week period by the Board of Governors of the Federal Reserve System (or any successor) for determining the maximum reserve requirement (including, but not limited to, any emergency, supplemental or other marginal reserve requirement) for the Agent in respect of liabilities consisting of or including (among other liabilities) three-month U.S. dollar nonpersonal time deposits in the United States each in the amount of $100,000 or more, plus (iii) the average during such three-week period of the annual assessment rates estimated by the Agent for determining the then current annual -3- 8 assessment payable by the Agent to the Federal Deposit Insurance Corporation (or any successor) for insuring U.S. dollar deposits of the Agent in the United States; and (c) 0.50% per annum above the Effective Federal Funds Rate for such day. "Base Rate Advance" means an A Advance which bears interest as provided in Section 2.06(a)(i). "Borrowing" means an A Borrowing or a B Borrowing. "Business Day" means a day of the year on which banks are not required or authorized to close in New York, New York and, if the applicable Business Day relates to any Eurodollar Rate Advances, on which dealings are carried on in the London interbank market. "Capitalization" means the sum (without duplication) of (i) consolidated Debt of the Borrower and its consolidated Subsidiaries, plus (ii) the aggregate amount of Guaranties by the Borrower or its consolidated Subsidiaries and letters of credit issued for the account of the Borrower or any consolidated Subsidiary of the Borrower, plus (iii) the sum of the preferred stock and common stockholders' equity of the Borrower. "Commitment" has the meaning specified in Section 2.01. "Consolidated Tangible Net Worth" means, on a consolidated basis, the excess of (i) the sum of the preferred stock and common stockholders' equity of the Borrower, over (ii) the intangible assets of the Borrower and its consolidated Subsidiaries. "Convert", "Conversion" and "Converted" each refers to a conversion of A Advances of one Type into A Advances of another Type pursuant to Section 2.08, 2.09 or 2.13. "Debt" of any Person means, without duplication (i) indebtedness of such Person for borrowed money, (ii) obligations of such Person (other than any portion of any trade payable obligation of such Person which shall not have remained unpaid for 91 days or more from the original due date of such portion) to pay the deferred purchase price of property or services, and (iii) obligations of such Person as lessee under leases which shall have been or should be, in accordance with generally accepted accounting principles, recorded as capital leases, except that where any such indebtedness or obligation of such Person is -4- 9 made jointly, or jointly and severally, with any third party or parties, which are not the Borrower or any of its consolidated Subsidiaries, the amount thereof for the purposes of this definition only shall be the pro rata portion thereof payable by such Person, so long as such third party or parties have not defaulted on its or their joint and several portions thereof. "Designated Bidder" means (a) an Affiliate of a Lender or (b) a special purpose corporation that is engaged in making, purchasing or otherwise investing in commercial loans in the ordinary course of its business and that issues (or the parent of which issues) commercial paper rated at least "Prime-1" by Moody's or "A-1" by S&P or a comparable rating from the successor of either of them, that, in the case of either clause (a) or (b) above, (i) is organized under the laws of the United States or any state thereof, (ii) shall have become a party hereto pursuant to subsections (e), (f) and (g) of Section 8.07, and (iii) is not otherwise a Lender. Notwithstanding the foregoing, each Designated Bidder shall be subject to the written consent of the Borrower and the Agent, such consent not to be unreasonably withheld. "Designation Agreement" means a designation agreement entered into by the Borrower, a Lender (other than a Designated Bidder) and a Designated Bidder, and accepted by the Agent, in substantially the form of Exhibit K hereto. "Domestic Lending Office" means, with respect to any Lender, the office of such Lender specified as its "Domestic Lending Office" opposite its name on Schedule I hereto or in the Assignment and Acceptance or Increase Agreement pursuant to which it became a Lender, or such other office of such Lender as such Lender may from time to time specify to the Borrower and the Agent. "Effective Federal Funds Rate" means, for any day, the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York or, if such rate is not so published for any day which is a Business Day, the average of the quotations for such day on such transactions received by the Agent from three Federal funds brokers of recognized standing selected by it. "Eligible Assignee" means, with respect to any particular assignment under Section 8.07, any bank or other financial institution approved in writing by the Borrower expressly with respect to such assignment and, except as to such an assignment by Citibank so long as Citibank is the Agent hereunder, the Agent as an Eligible Assignee for purposes of this Agreement, provided that neither the Agent's nor the Borrower's approval shall be unreasonably withheld. -5- 10 "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated and rulings issued from time to time thereunder. "ERISA Affiliate" means any Person who is a member of the Borrower's controlled group within the meaning of Section 4001(a)(14)(A) of ERISA. "Eurocurrency Liabilities" has the meaning assigned to that term in Regulation D of the Board of Governors of the Federal Reserve System, as in effect from time to time. "Eurodollar Lending Office" means, with respect to each Lender, the office of such Lender specified as its "Eurodollar Lending Office" opposite its name on Schedule I hereto or in the Assignment and Acceptance or Increase Agreement pursuant to which it became a Lender (or, if no such office is specified, its Domestic Lending Office) or such other office of such Lender as such Lender may from time to time specify to the Borrower and the Agent. "Eurodollar Rate" means, for any Interest Period for each Eurodollar Rate Advance comprising part of the same A Borrowing, the interest rate per annum equal to the average (rounded upward to the nearest whole multiple of 1/16 of 1% per annum, if such average is not such a multiple) of the rate per annum at which deposits in U.S. dollars are offered by the principal office of each of the Reference Banks in London, England, to prime banks in the London interbank market at 11:00 A.M. (London, England time) two Business Days before the first day of such Interest Period in an amount comparable to the amount of such A Borrowing and for a period equal to such Interest Period. The Eurodollar Rate for the Interest Period for each Eurodollar Rate Advance comprising part of the same A Borrowing shall be determined by the Agent on the basis of applicable rates furnished to and received by the Agent from the Reference Banks two Business Days before the first day of such Interest Period, subject, however, to the provisions of Section 2.08. "Eurodollar Rate Advance" means an A Advance which bears interest determined by reference to the Eurodollar Rate, as provided in Section 2.06(a)(ii). "Eurodollar Rate Margin" means for any date the percentage per annum applicable on such date as set forth in the row labelled "LIBOR Applicable Margin" on Schedule III hereto, which is based on the ratings (or lack thereof) by Moody's or S&P or both of the public long-term senior unsecured debt securities of the Borrower. -6- 11 "Eurodollar Reserve Percentage" of any Lender for any Interest Period for any Eurodollar Rate Advance means the reserve percentage applicable during such Interest Period under regulations issued from time to time by the Board of Governors of the Federal Reserve System (or if more than one such percentage shall be so applicable, the daily average of such percentages for those days in such Interest Period during which any such percentage shall be so applicable) for determining the maximum reserve requirement (including, but not limited to, any emergency, supplemental or other marginal reserve requirement) for such Lender with respect to liabilities or assets consisting of or including Eurocurrency Liabilities having a term equal to such Interest Period. "Events of Default" has the meaning specified in Section 6.01. "Facility Fee Percentage" means for any date the percentage per annum applicable on such date as set forth in the row labelled "Facility Fee" on Schedule III hereto, which is based on the ratings (or lack thereof) by Moody's or S&P or both of the public long-term senior unsecured debt securities of the Borrower. "Guaranty", "Guaranteed" and "Guaranteeing" each means any act by which a Person assumes, guarantees, endorses or otherwise incurs direct or contingent liability in connection with, or agrees to purchase or otherwise acquire or otherwise assures a creditor against loss in respect of, any Debt of any Person other than the Borrower or any of its consolidated Subsidiaries (excluding (i) any liability by endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business, and (ii) any liability in connection with obligations of the Borrower or any of its consolidated Subsidiaries, including, without limitation, obligations under any conditional sales agreement or equipment lease); provided, however, that for the purposes of this definition the liability of the Borrower or any of its Subsidiaries with respect to any obligation as to which a third party or parties are jointly, or jointly and severally, liable as a guarantor or otherwise as contemplated hereby and have not defaulted on its or their portions thereof, shall be only its pro rata portion of such obligation. "Increase Agreement" means an agreement entered into by the Borrower and a Lender increasing such Lender's Commitment pursuant to Section 2.20, and accepted by the Agent, in substantially the form of Exhibit F-1 hereto or an agreement entered into by the Borrower and a bank or other financial institution becoming a Lender pursuant to Section 2.20, and accepted by the Agent, in substantially the form of Exhibit F-2 hereto. -7- 12 "Indemnified Party" means any or all of the Lenders, the Arranger and the Agent. "Insufficiency" means, with respect to any Plan, the amount, if any, of its unfunded benefit liabilities, as defined in Section 4001(a)(18) of ERISA. "Interest Period" means, for each Eurodollar Rate Advance comprising part of the same A Borrowing, the period beginning on the date of such Advance or the date of the Conversion of any Advance into such Advance and ending on the last day of the period selected by the Borrower pursuant to the provisions below and, thereafter, each subsequent period commencing on the last day of the immediately preceding Interest Period and ending on the last day of the period selected by the Borrower pursuant to the provisions below. The duration of each such Interest Period for a Eurodollar Rate Advance shall be one, two, three or six months, or, subject to availability to each Lender, nine or twelve months, in each case as the Borrower may, upon notice received by the Agent not later than 12:00 noon (New York City time) on the third Business Day prior to the first day of such Interest Period, select; provided, however, that: (i) the duration of any Interest Period which commences before the Termination Date and would otherwise end after the Termination Date shall end on the Termination Date; (ii) if the last day of such Interest Period would otherwise occur on a day which is not a Business Day, such last day shall be extended to the next succeeding Business Day, except if such extension would cause such last day to occur in a new calendar month, then such last day shall occur on the next preceding Business Day; (iii) Interest Periods commencing on the same date for A Advances comprising the same A Borrowing shall be of the same duration; and (iv) any Interest Period which begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall, subject to clause (i) above, end on the last Business Day of a calendar month. "Lenders" means the Initial Lenders, each bank or other financial institution that shall become a party hereto pursuant to Section 2.20, each Eligible Assignee that shall become a party hereto pursuant to Section 8.07(a), (b) and (d) and, except when used in reference to an A Advance, an A -8- 13 Borrowing, an A Note, a Commitment or a term related to any of the foregoing, each Designated Bidder. "Lien" means any lien, security interest or other charge or encumbrance, or any assignment of the right to receive income, or any other type of preferential arrangement, in each case to secure any Debt or any Guaranty of any Person. "Majority Lenders" means at any time Lenders holding at least 51% of the then aggregate unpaid principal amount of the A Notes held by Lenders, or, if no such principal amount is then outstanding, Lenders having at least 51% of the Commitments. "Margin Stock" means "margin stock" as defined in Regulation U of the Board of Governors of the Federal Reserve System, as in effect from time to time. "Material Adverse Effect" means a material adverse effect on the financial condition or operations of the Borrower and its consolidated Subsidiaries on a consolidated basis. "Material Plan" means any Plan the assets of which exceed $50,000,000 or the liabilities of which for unfunded vested benefits determined on a plan termination basis (in accordance with Title IV of ERISA) exceed $10,000,000. "Material Subsidiary" means, from time to time, any Subsidiary of the Borrower then owning assets (determined on a consolidated basis) that equal or exceed 5% of the book value of the consolidated assets of the Borrower and its consolidated Subsidiaries at such time. "Moody's" means Moody's Investors Service. "Multiemployer Plan" means a "multiemployer plan" as defined in Section 4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate is making or accruing an obligation to make contributions, or has within any of the preceding five plan years made or accrued an obligation to make contributions, such plan being maintained pursuant to one or more collective bargaining agreements. "Multiple Employer Plan" means a single employer plan, as defined in Section 4001(a)(15) of ERISA, which (i) is maintained for employees of the Borrower or an ERISA Affiliate and at least one Person other than the Borrower and its ERISA Affiliates or (ii) was so maintained and in respect of which the -9- 14 Borrower or an ERISA Affiliate could have liability under Section 4064 or 4069 of ERISA in the event such plan has been or were to be terminated. "Note" means an A Note or a B Note. "Notice of A Borrowing" has the meaning specified in Section 2.02(a). "Notice of B Borrowing" has the meaning specified in Section 2.19(a). "PBGC" means the Pension Benefit Guaranty Corporation (or any successor). "Permitted Assets" means (i) hydrocarbon or other reserves (including, without limitation, proved, probable, possible or speculative reserves), (ii) properties, assets, rights or business related to reserves (including, without limitation, real property, gathering systems, plants, pipelines, equipment and processing and treatment facilities), (iii) other fixed or operating assets and (iv) the stock of any and all companies that are or become Subsidiaries of the Borrower owning assets referred to in any of the foregoing clauses. "Permitted Liens" means (a) inchoate Liens and charges imposed by law and incidental to construction, maintenance, development or operation of properties, or the operation of business, in the ordinary course of business if payment of the obligation secured thereby is not yet overdue or if the validity or amount of which is being contested in good faith by the Borrower or any Subsidiary of the Borrower; (b) Liens for taxes, assessments, obligations under workers' compensation or other social security legislation or other governmental requirements, charges or levies, in each case not yet overdue; (c) Liens reserved in any oil, gas or other mineral lease entered into in the ordinary course of business for rent, royalty or delay rental under such lease and for compliance with the terms of such lease; (d) easements, servitudes, rights-of-way and other rights, exceptions, reservations, conditions, limitations, covenants and other restrictions which do not materially interfere with the operation, value or use of the properties affected thereby; -10- 15 (e) conventional provisions contained in any contracts or agreements affecting properties under which the Borrower or a Subsidiary of the Borrower is required immediately before the expiration, termination or abandonment of a particular property to reassign to the Borrower's or a Subsidiary's predecessor in title all or a portion of the Borrower's or such Subsidiary's rights, titles and interests in and to all or a portion of such property; (f) any Lien reserved in a grant or conveyance in the nature of a farm-out or conditional assignment to the Borrower or any of its Subsidiaries entered into in the ordinary course of business on reasonable terms to secure undertakings of the Borrower or such Subsidiary in such grant or conveyance; and (g) any Lien consisting of (i) statutory landlord's liens under leases to which the Borrower or any Subsidiary of the Borrower is a party or other Liens on leased property reserved in leases thereof for rent or for compliance with the terms of such leases, (ii) rights reserved to or vested in any municipality or governmental, statutory or public authority to control or regulate any property of the Borrower or any of its Subsidiaries or to use such property in any manner which does not materially impair the use of such property for the purposes for which it is held by the Borrower or any such Subsidiary, (iii) obligations or duties to any municipality or public authority with respect to any franchise, grant, license, lease or permit and the rights reserved or vested in any governmental authority or public utility to terminate any such franchise, grant, license, lease or permit or to condemn or expropriate any property, and (iv) zoning laws and ordinances and municipal regulations. "Person" means an individual, partnership, corporation (including a business trust), joint stock company, trust, unincorporated association, joint venture or other entity, or a country or any political subdivision thereof or any agency or instrumentality of such country or subdivision. "Plan" means a Single Employer Plan or a Multiple Employer Plan. "Process Agent" has the meaning specified in Section 8.09(a). "Reference Banks" means Citibank, Morgan Guaranty Trust Company of New York and Union Bank of Switzerland. "Register" has the meaning specified in Section 8.07(c). "S&P" means Standard and Poor's Ratings Group, a division of McGraw-Hill, Inc. on the date hereof. -11- 16 "Short-Term Revolving Credit Agreement" means the Short-Term Revolving Credit Agreement dated as of July 20, 1994 among the Borrower, the financial institutions party thereto and Citibank, N.A., as agent for such financial institutions, as it may be amended or otherwise modified from time to time. "Single Employer Plan" means a single employer plan, as defined in Section 4001(a)(15) of ERISA, that (i) is maintained for employees of the Borrower or an ERISA Affiliate and no Person other than the Borrower and its ERISA Affiliates or (ii) was so maintained and in respect of which the Borrower or an ERISA Affiliate could have liability under Section 4069 of ERISA in the event such plan has been or were to be terminated. "Subsidiary" means, as to any Person, any corporation of which at least a majority of the outstanding stock having by the terms thereof ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether or not at the time stock of any other class or classes of such corporation shall or might have voting power by reason of the happening of any contingency) is at the time directly or indirectly beneficially owned or controlled by such Person or one or more of its Subsidiaries or by such Person and one or more of the Subsidiaries of such Person. "Termination Date" means the earlier of (i) July 20, 2000 and (ii) the date of termination in whole of the Commitments pursuant to Section 2.04 or 6.01. "Termination Event" means (i) a "reportable event," as such term is described in Section 4043 of ERISA (other than a "reportable event" not subject to the provision for 30-day notice to the PBGC), or an event described in Section 4062(e) of ERISA, or (ii) the withdrawal of the Borrower or any ERISA Affiliate from a Multiple Employer Plan during a plan year in which it was a "substantial employer," as such term is defined in Section 4001(a)(2) of ERISA, or the incurrence of liability by the Borrower or any ERISA Affiliate under Section 4064 of ERISA upon the termination of a Multiple Employer Plan, or (iii) the filing of a notice of intent to terminate a Plan or the treatment of a Plan amendment as a termination under Section 4041 of ERISA, or (iv) the institution of proceedings to terminate a Plan by the PBGC under Section 4042 of ERISA, or (v) the conditions set forth in Section 302(f)(1)(A) and (B) of ERISA to the creation of a lien upon property or rights to property of the Borrower or any ERISA Affiliate for failure to make a required payment to a Plan are satisfied, or (vi) the adoption of an amendment to a Plan requiring the provision of security to such Plan, pursuant to Section 307 of ERISA, or (vii) any other event or condition which might constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan. -12- 17 "Type" has the meaning specified in the definition of "A Advance". "Utilization Fee Percentage" means for any date the percentage per annum, if any, applicable on such date as set forth in the row labelled "Utilization Fee" on Schedule III hereto, which is based on the ratings (or lack thereof) by Moody's or S&P or both of the public long-term senior unsecured debt securities of the Borrower. "Withdrawal Liability" shall have the meaning given such term under Part I of Subtitle E of Title IV of ERISA. SECTION 1.02. Computation of Time Periods. Unless otherwise stated in this Agreement, in the computation of a period of time from a specified date to a later specified date, the word "from" means "from and including" and the words "to" and "until" each means "to but excluding." SECTION 1.03. Accounting Terms. All accounting terms not specifically defined herein shall be construed in accordance with generally accepted accounting principles either (i) consistent with those principles applied in the preparation of the annual financial statements referred to in Section 4.01(e), or (ii) not so materially inconsistent with such principles that a covenant contained in Section 5.01 or 5.02 would be calculated or construed in a materially different manner or with materially different results than if such covenant were calculated or construed in accordance with clause (i) of this Section 1.03. ARTICLE II AMOUNTS AND TERMS OF THE ADVANCES SECTION 2.01. The A Advances. Each Lender severally agrees, on the terms and conditions hereinafter set forth, to make A Advances to the Borrower from time to time on any Business Day during the period from the date hereof to and including the Termination Date in an aggregate amount not to exceed at any time outstanding the amount set forth opposite such Lender's name on the signature pages hereof under the caption "Commitments", or, if such Lender has entered into any Assignment and Acceptance or Increase Agreement, set forth for such Lender in the Register maintained by the Agent pursuant to Section 8.07(c), as such amount may be reduced pursuant to Section 2.04 (such Lender's "Commitment"), provided that the aggregate amount of the Commitments of the Lenders shall be deemed used from time to time to the extent of the aggregate amount of the B Advances then outstanding and such deemed use of the aggregate amount of such Commitments shall be applied to all the Lenders ratably according to their respective Commitments (such deemed use of the aggregate amount of the Commitments being a "B Reduction"). Each A Borrowing -13- 18 shall be in an aggregate amount of $10,000,000 in the case of an A Borrowing comprised of Base Rate Advances and $25,000,000 in the case of an A Borrowing comprised of Eurodollar Rate Advances, or, in either case an integral multiple of $1,000,000 in excess thereof (or, in the case of an A Borrowing of Base Rate Advances, the aggregate unused Commitments, if less) and shall consist of A Advances of the same Type made on the same day by the Lenders ratably according to their respective Commitments. Within the limits of each Lender's Commitment, the Borrower may make more than one Borrowing on any Business Day and may borrow, prepay pursuant to Section 2.10, and reborrow under this Section 2.01. SECTION 2.02. Making the A Advances. (a) Each A Borrowing shall be made on notice by the Borrower to the Agent (a "Notice of A Borrowing") received by the Agent, (i) in the case of a proposed A Borrowing comprised of Base Rate Advances, not later than 10:00 A.M. (New York City time) on the Business Day of such proposed A Borrowing, and (ii) in the case of a proposed A Borrowing comprised of Eurodollar Rate Advances, not later than 12:00 noon (New York City time) on the third Business Day prior to the date of such proposed A Borrowing. Each Notice of A Borrowing shall be by telecopy, telefax or other teletransmission or by telephone (and if by telephone, confirmed promptly by telecopier, telefax or other teletransmission), in substantially the form of Exhibit C hereto, specifying therein the requested (w) date of such A Borrowing, (x) Type of A Advances comprising such A Borrowing, (y) aggregate amount of such A Borrowing, and (z) in the case of an A Borrowing comprised of Eurodollar Rate Advances, the initial Interest Period for each such A Advance. Each Lender shall, before 1:00 p.m. (New York City time) on the date of such A Borrowing, make available for the account of its Applicable Lending Office to the Agent at its address at Citibank, 399 Park Avenue, New York, New York 10043, Reference: Burlington Resources Inc., or at such other location designated by notice from the Agent to the Lenders pursuant to Section 8.02, in same day funds, such Lender's ratable portion of such A Borrowing. Immediately after the Agent's receipt of such funds and upon fulfillment of the applicable conditions set forth in Article III, the Agent will make such funds available to the Borrower at Citibank, 399 Park Avenue, New York, New York, or at any account of the Borrower maintained by the Agent (or any successor Agent) designated by the Borrower and agreed to by the Agent (or such successor Agent), in same day funds. (b) Each Notice of A Borrowing shall be irrevocable and binding on the Borrower. In the case of any A Borrowing which the related Notice of A Borrowing specified is to be comprised of Eurodollar Rate Advances, if such A Advances are not made as a result of any failure to fulfill on or before the date specified for such A Borrowing the applicable conditions set forth in Article III, the Borrower shall indemnify each Lender against any loss, cost or expense incurred by such Lender as a result of such failure, including, without limitation, any loss, cost or -14- 19 expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such Lender to fund the A Advance to be made by such Lender as part of such A Borrowing. (c) Unless the Agent shall have received notice from a Lender prior to the date of any A Borrowing that such Lender will not make available to the Agent such Lender's ratable portion of such A Borrowing, the Agent may assume that such Lender has made such portion available to the Agent on the date of such A Borrowing in accordance with subsection (a) of this Section 2.02 and the Agent may, in reliance upon such assumption, make available to the Borrower on such date a corresponding amount. If and to the extent such Lender shall not have so made such ratable portion available to the Agent, such Lender and the Borrower severally agree to repay to the Agent forthwith on demand such corresponding amount together with interest thereon, for each day from the date such amount is made available to the Borrower until the date such amount is repaid to the Agent, at the Effective Federal Funds Rate for such day. If such Lender shall repay to the Agent such corresponding amount, such amount so repaid shall constitute such Lender's A Advance to the Borrower as part of such A Borrowing for purposes of this Agreement. (d) The failure of any Lender to make the A Advance to be made by it as part of any A Borrowing shall not relieve any other Lender of its obligation, if any, hereunder to make its A Advance on the date of such A Borrowing, but no Lender shall be responsible for the failure of any other Lender to make the A Advance to be made by such other Lender on the date of any A Borrowing. SECTION 2.03. Fees. (a) Facility Fee. The Borrower agrees to pay to each Lender (other than a Designated Bidder) a facility fee on the average daily amount of such Lender's Commitment, whether or not used or deemed used, from the date hereof in the case of each Initial Lender and from the effective date specified in the Assignment and Acceptance or Increase Agreement pursuant to which it became a Lender in the case of each other Lender, in each case until the Termination Date, payable quarterly in arrears on the last day of each March, June, September and December during the term of such Lender's Commitment and on the Termination Date, at a rate per annum equal to the Facility Fee Percentage in effect from time to time. (b) Agency Fee. The Borrower agrees to pay to the Agent, for its own account, such agency fees as may be separately agreed to in writing by the Borrower and the Agent, such fees to be in the amounts and payable on the dates as may be so agreed to. -15- 20 (c) Arrangement Fee. The Borrower agrees to pay to the Agent, for its own account, an arrangement fee in the amount and payable on the date separately agreed to in writing by the Agent and the Borrower. (d) Utilization Fee. The Borrower agrees to pay to each Lender (other than a Designated Bidder) a utilization fee on the average daily aggregate amount of the A Advances owing to such Lender and outstanding from time to time at a rate per annum equal to the Utilization Fee Percentage in effect from time to time, payable quarterly in arrears on the last day of each March, June, September and December, beginning September 30, 1994, and on the Termination Date; provided, however, that no utilization fee shall be payable with respect to any quarter or portion thereof for which the utilization fee would otherwise be payable by the Borrower in accordance with the foregoing provisions of this subsection (d) if the average daily aggregate amount of Advances owing to all the Lenders and outstanding from time to time during such quarter or portion is equal to or less than 50% of the average daily aggregate amount of the Commitments (used and unused) of all the Lenders during such quarter or portion. SECTION 2.04. Reduction of the Commitments. The Borrower shall have the right, upon at least three Business Days' notice to the Agent, to terminate in whole or reduce ratably in part the unused portions of the Commitments of the Lenders (being the amount by which such Commitments exceed the aggregate outstanding principal amount of all Advances), provided that each partial reduction shall be in the aggregate amount of $20,000,000 or any whole multiple of $1,000,000 in excess thereof. SECTION 2.05. Repayment of A Advances. The Borrower shall repay to each Lender on the Termination Date the aggregate principal amount of the A Advances then owing to such Lender. SECTION 2.06. Interest on A Advances. (a) Ordinary Interest. The Borrower shall pay interest on the unpaid principal amount of each A Advance owing to each Lender from the date of such A Advance until such principal amount is due (whether at stated maturity, by acceleration or otherwise), at the following rates: (i) Base Rate Advances. During such periods as such A Advance is a Base Rate Advance, a rate per annum equal at all times to the Base Rate in effect from time to time, payable quarterly in arrears on the last day of each March, June, September and December during such periods and on the date such Base Rate Advance shall be Converted or due (whether at stated maturity, by acceleration or otherwise). -16- 21 (ii) Eurodollar Rate Advances. During such periods as such A Advance is a Eurodollar Rate Advance, a rate per annum equal at all times during each Interest Period for such A Advance to the sum of the Eurodollar Rate for such Interest Period plus the Eurodollar Rate Margin in effect from time to time, payable on the last day of each such Interest Period and, if any such Interest Period has a duration of more than three months, on each day which occurs during such Interest Period every three months from the first day of such Interest Period and, if such A Advance is Converted into a Base Rate Advance on any date other than the last day of any Interest Period for such A Advance, on the date of such Conversion or, if later, the Business Day on which the Borrower shall have received at least one Business Day's prior notice from the Agent or the applicable Lender of the amount of unpaid interest accrued on such A Advances to the date of such Conversion. (b) Default Interest. The Borrower shall pay interest on the unpaid principal amount of each Advance that is not paid when due (whether at stated maturity, by acceleration or otherwise) from the date on which such amount is due until such amount is paid in full, payable on demand, at a rate per annum equal at all times (i) from such due date to the last day of the then existing Interest Period therefor, in the case of each Eurodollar Rate Advance, to 1% per annum above the interest rate per annum required to be paid on such A Advance immediately prior to the date on which such amount became due and (ii) from and after the last day of the then existing Interest Period therefor, in the case of each Eurodollar Rate Advance, and at all times in the case of each Base Rate Advance or B Advance, to 1% per annum above the Base Rate in effect from time to time. SECTION 2.07. Additional Interest on Eurodollar Rate Advances. If any Lender shall determine in good faith that reserves under regulations of the Board of Governors of the Federal Reserve System are required to be maintained by it in respect of, or a portion of its costs of maintaining reserves under such regulations is properly attributable to, one or more of its Eurodollar Rate Advances, the Borrower shall pay to such Lender additional interest on the unpaid principal amount of each such Eurodollar Rate Advance (other than any such additional interest accruing to a particular Lender in respect of periods prior to the 30th day preceding the date notice of such interest is given by such Lender as provided in this Section 2.07), payable on the same day or days on which interest is payable on such A Advance, at an interest rate per annum equal at all times during each Interest Period for such A Advance to the excess of (i) the rate obtained by dividing the Eurodollar Rate for such Interest Period by a percentage equal to 100% minus the Eurodollar Reserve Percentage, if any, for such Lender for such Interest Period over (ii) the Eurodollar Rate for such Interest Period. The amount of such additional interest (if any) shall be determined by each Lender, and such Lender shall furnish written notice of the amount of such additional interest to the -17- 22 Borrower and the Agent, which notice shall be conclusive and binding for all purposes, absent manifest error. SECTION 2.08. Interest Rate Determination. (a) Each Reference Bank agrees to furnish to the Agent timely information for the purpose of determining each Eurodollar Rate. If any one or more of the Reference Banks shall not furnish such timely information to the Agent for the purpose of determining any such interest rate, the Agent shall determine such interest rate on the basis of timely information furnished by the remaining Reference Banks. (b) The Agent shall give prompt notice to the Borrower and the Lenders of the applicable interest rate determined by the Agent for purposes of Section 2.06(a)(i) or (ii), and the applicable rate, if any, furnished by each Reference Bank for the purpose of determining the applicable interest rate under Section 2.06(a)(ii). (c) If fewer than two Reference Banks furnish timely information to the Agent for determining the Eurodollar Rate for any applicable A Advances, (i) the Agent shall give the Borrower and each Lender prompt notice by telephone (confirmed in writing) that the interest rate cannot be determined for such applicable A Advances, (ii) each such A Advance that is a Eurodollar Rate Advance will automatically, on the last day of the then existing Interest Period therefor, Convert into a Base Rate Advance (or if such A Advance is then a Base Rate Advance, will continue as a Base Rate Advance), and (iii) the obligations of the Lenders to make, or to Convert A Advances into, Eurodollar Rate Advances, as the case may be, shall be suspended until the Agent shall notify the Borrower and the Lenders that the circumstances causing such suspension no longer exist. (d) If, with respect to any Eurodollar Rate Advances, the Majority Lenders determine and give notice to the Agent that as a result of conditions in or generally affecting the relevant market, the rates of interest determined on the basis of the Eurodollar Rate for any Interest Period for such A Advances will not adequately reflect the cost to such Majority Lenders of making, funding or maintaining their respective Eurodollar Rate Advances for such Interest Period, the Agent shall forthwith so notify the Borrower and the Lenders, whereupon, -18- 23 (i) each such Eurodollar Rate Advance will automatically, on the last day of the then existing Interest Period therefor, Convert into a Base Rate Advance, and (ii) the obligation of the Lenders to make, or to Convert A Advances into, Eurodollar Rate Advances shall be suspended until the Agent shall notify the Borrower and the Lenders that the circumstances causing such suspension no longer exist. (e) If the Borrower shall fail to select the duration of any Interest Period for any Eurodollar Rate Advances in accordance with the provisions contained in the definition of "Interest Period" in Section 1.01, the Agent will forthwith so notify the Borrower and the Lenders and such Eurodollar Rate Advances will automatically, on the last day of the then existing Interest Period therefor, Convert into Base Rate Advances. (f) On the date on which the aggregate unpaid principal amount of A Advances comprising any A Borrowing shall be reduced, by payment or prepayment or otherwise, to less than $10,000,000, such A Advances shall, if they are Eurodollar Rate Advances, automatically Convert into Base Rate Advances, and on and after such date the right of the Borrower to Convert such A Advances into Eurodollar Rate Advances shall terminate; provided, however, that if and so long as each such A Advance shall be, or be elected to be Converted to, Eurodollar Rate Advances having the same Interest Period as Eurodollar Rate Advances comprising another A Borrowing or other A Borrowings, and the aggregate unpaid principal amount of all such Eurodollar Rate Advances shall, or upon such Conversion will, equal or exceed $20,000,000, the Borrower shall have the right to continue all such Eurodollar Rate Advances as, or to Convert all such A Advances into, Eurodollar Rate Advances having such Interest Period. SECTION 2.09. Voluntary Conversion of A Advances. The Borrower may on any Business Day, upon notice given to the Agent, not later than 10:00 A.M. (New York City time) on the Business Day of the proposed Conversion of Eurodollar Rate Advances to Base Rate Advances, and not later than 12:00 noon (New York City time) on the third Business Day prior to the date of the proposed Conversion in the case of a Conversion of Base Rate Advances to Eurodollar Rate Advances, and subject to the provisions of Section 2.08, 2.11 and 2.13, Convert all A Advances of one Type comprising the same A Borrowing into A Advances of the other Type; provided, however, that any Conversion of any Eurodollar Rate Advances into Base Rate Advances made on any day other than the last day of an Interest Period for such Eurodollar Rate Advances shall be subject to the provisions of Section 8.04(b). Each such notice of a Conversion shall, within the restrictions specified above, specify (i) the date of such Conversion, (ii) the A Advances to be Converted, and (iii) if such -19- 24 Conversion is into Eurodollar Rate Advances, the duration of the Interest Period for each such Eurodollar Rate Advance. SECTION 2.10. Prepayments. The Borrower may, upon (i) in the case of Eurodollar Rate Advances, at least two Business Days notice or (ii) in the case of Base Rate Advances, telephonic notice not later than 12:00 noon (New York City time) on the date of prepayment, to the Agent which specifies the proposed date and aggregate principal amount of the prepayment and the Type of A Advances to be prepaid, and if such notice is given the Borrower shall, prepay the outstanding principal amounts of the A Advances comprising the same A Borrowing in whole or ratably in part, together with accrued interest to the date of such prepayment on the amount prepaid; provided, however, that (x) each partial prepayment shall be in an aggregate principal amount not less than $10,000,000 or an integral multiple of $1,000,000 in excess thereof and (y) in the event of any such prepayment of Eurodollar Rate Advances on any day other than the last day of an Interest Period for such Eurodollar Rate Advances, the Borrower shall be obligated to reimburse the Lenders in respect thereof pursuant to, and to the extent required by, Section 8.04(b); provided, further, however, that the Borrower will use its best efforts to give notice to the Agent of the proposed prepayment of Base Rate Advances on the Business Day prior to the date of such proposed prepayment. SECTION 2.11. Increased Costs. (a) If, due to either (i) the introduction after the date of this Agreement of or any change after the date of this Agreement (including any change by way of imposition or increase of reserve requirements or assessments other than those referred to in the definition of "Eurodollar Reserve Percentage" contained in Section 1.01) in or in the interpretation of any law or regulation or (ii) the compliance with any guideline or request issued or made after the date of this Agreement from or by any central bank or other governmental authority (whether or not having the force of law), in each case above other than those referred to in Section 2.12, there shall be any increase in the cost to any Lender of agreeing to make, fund or maintain, or of making, funding or maintaining, Eurodollar Rate Advances funded in the interbank Eurodollar market, then the Borrower shall from time to time, upon demand by such Lender (with a copy of such demand to the Agent), pay to the Agent for the account of such Lender additional amounts sufficient to reimburse such Lender for all such increased costs (except those incurred more than 60 days prior to the date of such demand; for the purposes hereof any cost or expense allocable to a period prior to the publication or effective date of such an introduction, change, guideline or request shall be deemed to be incurred on the later of such publication or effective date). Each Lender agrees to use its best reasonable efforts promptly to notify the Borrower of any event referred to in clause (i) or (ii) above, provided that the failure to give such notice shall not affect the rights of any Lender under this Section 2.11(a) (except as otherwise expressly provided above -20- 25 in this Section 2.11(a)). A certificate as to the amount of such increased cost, submitted to the Borrower and the Agent by such Lender, shall be conclusive and binding for all purposes, absent manifest error. After one or more Lenders have notified the Borrower of any increased costs pursuant to this Section 2.11, the Borrower may specify by notice to the Agent and the affected Lenders that, after the date of such notice whenever the election of a Eurodollar Rate Advance by the Borrower for an Interest Period or portion thereof would give rise to such increased costs, such election shall not apply to the A Advances of such Lender or Lenders during such Interest Period or portion thereof, and, in lieu thereof, such A Advances shall during such Interest Period or portion thereof be Base Rate Advances. Each Lender agrees to use its best reasonable efforts (including, without limitation, a reasonable effort to change its Applicable Lending Office or to transfer its affected A Advances to an Affiliate of such Lender) to avoid, or minimize the amount of, any demand for payment from the Borrower under this Section 2.11. (b) In the event that any Lender shall change its Eurodollar Lending Office and such change results (at the time of such change) in increased costs to such Lender, the Borrower shall not be liable to such Lender for such increased costs incurred by such Lender to the extent, but only to the extent, that such increased costs shall exceed the increased costs which such Lender would have incurred if the Eurodollar Lending Office of such Lender had not been so changed, but, subject to subsection (a) of this Section 2.11 and to Section 2.13, nothing herein shall require any Lender to change its Eurodollar Lending Office for any reason. SECTION 2.12. Increased Capital. If either (i) the introduction of or any change in or in the interpretation of any law or regulation or (ii) compliance by any Lender with any guideline or request from any central bank or other governmental authority (whether or not having the force of law) affects or would affect the amount of capital required or expected to be maintained by such Lender or any corporation controlling such Lender and such Lender determines that the amount of such capital is increased by or based upon the existence of such Lender's commitment to lend hereunder and other commitments of this type, then, within ten days after demand, and delivery to the Borrower of the certificate referred to in the last sentence of this Section 2.12 by such Lender (with a copy of such demand to the Agent), the Borrower shall pay to the Agent for the account of such Lender, from time to time as specified by such Lender, additional amounts sufficient to compensate such Lender or such corporation in the light of such circumstances, to the extent that such Lender reasonably determines such increase in capital to be allocable to the existence of such Lender's commitment to lend hereunder (except any such increase in capital incurred more than, or compensation attributable to the period before, 90 days prior to the date of such demand; for the purposes hereof any increase in capital allocable to, or compensation attributable to, a period prior to the publication or effective date of such an introduction, change, guideline or request shall be deemed to be incurred on the later of such -21- 26 publication or effective date). Each Lender agrees to use its best reasonable efforts promptly to notify the Borrower of any event referred to in clause (i) or (ii) above, provided that the failure to give such notice shall not affect the rights of any Lender under this Section 2.12 (except as otherwise expressly provided above in this Section 2.12). A certificate in reasonable detail as to the basis for, and the amount of, such compensation submitted to the Borrower and the Agent by such Lender shall, in the absence of manifest error, be conclusive and binding for all purposes. SECTION 2.13. Illegality. Notwithstanding any other provision of this Agreement, if the introduction of or any change in or in the interpretation of any law or regulation shall make it unlawful, or any central bank or other governmental authority shall assert that it is unlawful, for any Lender or its Applicable Lending Office to perform its obligations hereunder to make Eurodollar Rate Advances or to continue to fund or maintain such Advances hereunder, such Lender may, by notice to the Borrower and the Agent, suspend the right of the Borrower to elect Eurodollar Rate Advances from such Lender and, if necessary in the reasonable opinion of such Lender to comply with such law or regulation, Convert all such Eurodollar Rate Advances of such Lender to Base Rate Advances at the latest time permitted by the applicable law or regulation, and such suspension and, if applicable, such Conversion shall continue until such Lender notifies the Borrower and the Agent that the circumstances making it unlawful for such Lender to perform such obligations no longer exist (which such Lender shall promptly do when such circumstances no longer exist). So long as the obligation of any Lender to make Eurodollar Rate Advances has been suspended under this Section 2.13, all Notices of A Borrowing specifying A Advances of such Type shall be deemed, as to such Lender, to be requests for Base Rate Advances. Each Lender agrees to use its best reasonable efforts (including, without limitation, a reasonable effort to change its Applicable Lending Office or to transfer its affected A Advances to an affiliate) to avoid any such illegality. SECTION 2.14. Payments and Computations. (a) The Borrower shall make each payment hereunder (including, without limitation, under Section 2.03, 2.05 or 2.06) and under the Notes, whether the amount so paid is owing to any or all of the Lenders or to the Agent, not later than 1:00 P.M. (New York City time) without setoff, counterclaim, or any other deduction whatsoever, on the day when due in U.S. dollars to the Agent at Citibank, 399 Park Avenue, New York, New York, Reference: Burlington Resources Inc., or at such other location designated by notice to the Borrower from the Agent and agreed to by the Borrower, in same day funds. Each such payment made by the Borrower for the account of any Lender hereunder, when so made to the Agent, shall be deemed duly made for all purposes of this Agreement and the A Notes, except that if at any time any such payment is rescinded or must otherwise be returned by the Agent or any Lender upon the bankruptcy, insolvency or reorganization of the Borrower or otherwise, such -22- 27 payment shall be deemed not to have been so made. The Agent will promptly thereafter cause to be distributed like funds relating to the payment of principal or interest or fees ratably (other than amounts payable pursuant to Section 2.07, 2.11, 2.12, 2.13, 2.15, 2.19 or 8.04(b)) to the Lenders for the account of their respective Applicable Lending Offices, and like funds relating to the payment of any other amount payable to any Lender to such Lender for the account of its Applicable Lending Office, in each case to be applied in accordance with the terms of this Agreement. Upon its acceptance of an Assignment and Acceptance and recording of the information contained therein in the Register pursuant to Section 8.07(d), from and after the effective date specified in such Assignment and Acceptance, the Agent shall make all payments hereunder and under the A Notes in respect of the interest assigned thereby to the Lender assignee thereunder, and the parties to such Assignment and Acceptance shall make all appropriate adjustments in such payments for periods prior to such effective date directly between themselves. (b) All computations of interest based on the Base Rate and of facility fees and utilization fees shall be made by the Agent on the basis of a year of 365 or 366 days, as the case may be, and all computations of interest based on the Eurodollar Rate, or the Effective Federal Funds Rate shall be made by the Agent, and all computations of interest pursuant to Section 2.07 shall be made by each Lender with respect to its own Eurodollar Rate Advances, on the basis of a year of 360 days, in each case for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest or fees are payable. Each determination by the Agent (or, in the case of Section 2.07, 2.11, 2.12, 2.13, 2.15, 2.19 or 8.04(b), by each Lender with respect to its own Advances) of an interest rate or an increased cost, loss or expense or increased capital or of illegality or taxes hereunder shall be conclusive and binding for all purposes if made reasonably and in good faith. (c) Whenever any payment hereunder or under the Notes shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of payment of interest or facility fees or utilization fees, as the case may be; provided, however, if such extension would cause payment of interest on or principal of Eurodollar Rate Advances to be made in the next following calendar month, such payment shall be made on the next preceding Business Day. (d) Unless the Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Lenders hereunder that the Borrower will not make such payment in full, the Agent may assume that the Borrower has made such payment in full to the Agent on such date and the Agent may, in reliance upon such assumption, cause to be distributed to each Lender on such due date an amount equal to the amount then due such Lender. If and to the extent the Borrower shall not have so made such payment in full to the Agent, each Lender shall repay to -23- 28 the Agent forthwith on demand such amount distributed to such Lender together with interest thereon, for each day from the date such amount is distributed to such Lender until the date such Lender repays such amount to the Agent, at a rate equal to the Effective Federal Funds Rate for such day. SECTION 2.15. Taxes. (a) Any and all payments by the Borrower hereunder or under the Notes shall be made in accordance with Section 2.14, free and clear of and without deduction for any and all present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto, excluding in the case of each Indemnified Party, (i) all taxes, levies, imposts, deductions, charges, or withholdings, and all liabilities with respect thereto, imposed on or determined by reference to its income, and all franchise taxes, and (ii) all other taxes, levies, imposts, deductions, charges, or withholdings in effect at the time that such Indemnified Party executed this Agreement or otherwise became an "Indemnified Party" hereunder, and liabilities with respect thereto, imposed on it by reason of the jurisdiction in which such Indemnified Party is organized, domiciled, resident or doing business, or any political subdivision thereof, or by reason of the jurisdiction of its Applicable Lending Office or any other office from which it makes or maintains any extension of credit hereunder or any political subdivision thereof (all such non-excluded taxes, levies, imposts, deductions, charges, withholdings and liabilities in respect of payments under this Agreement or under the Notes being herein referred to as "Taxes"). If the Borrower shall be required by law to deduct any Taxes from or in respect of any sum payable hereunder or under any Note to any Indemnified Party, (i) the sum payable shall be increased as may be necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 2.15) such Indemnified Party receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower (or the Agent, as applicable) shall make such deductions at the applicable statutory rate and (iii) the Borrower (or the Agent, as applicable) shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law, provided that the Borrower shall not be required to pay any additional amount (and shall be relieved of any liability with respect thereto) pursuant to this subsection (a) (or pursuant to Section 2.15(c), except to the extent Section 2.15(c) relates to Other Taxes) to any Indemnified Party that either (x) on the date such Indemnified Party executed this Agreement or otherwise became an "Indemnified Party" hereunder, either (A) was not entitled to submit a U.S. Internal Revenue Service form 1001 (relating to such Indemnified Party, and entitling it to a complete exemption from withholding on all amounts to be received by such Indemnified Party, including fees, pursuant to this Agreement or the Advances) or a U.S. Internal Revenue Service form 4224 (relating to all amounts to be received by such Indemnified Party, including fees, pursuant to this Agreement and the Advances) or (B) is not a United States person (as such term is defined in Section 7701(a)(30) of -24- 29 the Internal Revenue Code), or (y) has failed to submit any form or certificate that it was required to file or provide pursuant to subsection (d) of this Section 2.15 and is entitled to file or give, as applicable, under applicable law, provided, further, that should an Indemnified Party become subject to Taxes because of its failure to deliver a form required hereunder, the Borrower shall take such administrative steps as such Indemnified Party shall reasonably request to assist such Indemnified Party to recover such Taxes, and provided further, that each Indemnified Party, with respect to itself, agrees to indemnify and hold harmless the Borrower from any taxes, penalties, interest and other expenses, costs and losses incurred or payable by the Borrower as a result of the failure of the Borrower to comply with its obligations under clauses (ii) or (iii) above in reliance on any form or certificate provided to it by such Indemnified Party pursuant to this Section 2.15. If any Indemnified Party receives a net credit or refund in respect of such Taxes or amounts so paid by the Borrower, it shall promptly notify the Borrower of such net credit or refund and shall promptly pay such net credit or refund to the Borrower, provided that the Borrower agrees to return such net credit or refund if the Indemnified Party to which such net credit or refund is applicable, is required to repay it. (b) In addition, the Borrower agrees to pay any present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies which arise from any payment made hereunder or under the Notes or from the execution, delivery or registration of, or otherwise with respect to, this Agreement or the Notes (hereinafter referred to as "Other Taxes"). (c) The Borrower will indemnify each Indemnified Party for the full amount of Taxes or Other Taxes (including, without limitation, any Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this Section 2.15) paid by such Indemnified Party and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto except as a result of the gross negligence (which shall in any event include the failure of such Indemnified Party to provide to the Borrower any form or certificate that it was required to provide pursuant to subsection (d) below) or willful misconduct of such Indemnified Party, whether or not such Taxes or Other Taxes were correctly or legally asserted. This indemnification shall be made within 30 days from the date such Indemnified Party makes written demand therefor. (d) On or prior to the date on which each Indemnified Party organized under the laws of a jurisdiction outside the United States executes this Agreement or otherwise becomes an "Indemnified Party" hereunder, such Indemnified Party shall provide the Borrower and the Agent with U.S. Internal Revenue Service form 1001 or 4224, as appropriate, or any successor form prescribed by the U.S. Internal Revenue Service, certifying that such Indemnified Party is fully exempt from United States withholding taxes with respect to all payments to be made to such Indemnified Party hereunder, or other documents satisfactory to the Borrower indicating that all payments -25- 30 to be made to such Indemnified Party hereunder are fully exempt from such taxes. Thereafter and from time to time, each such Indemnified Party shall submit to the Borrower and the Agent such additional duly completed and signed copies of one or the other of such forms (or such successor forms as shall be adopted from time to time by the relevant United States taxing authorities) as may be (i) notified by the Borrower to such Indemnified Party and (ii) required under then-current United States law or regulations to avoid United States withholding taxes on payments in respect of all amounts to be received by such Indemnified Party pursuant to this Agreement or the Notes, including without limitation fees. Upon the request of the Borrower from time to time, each Indemnified Party that is a United States person (as such term is defined in Section 7701(a)(30) of the Internal Revenue Code) shall submit to the Borrower a certificate to the effect that it is such a United States person. If any Indemnified Party determines, as a result of any change in applicable law, regulation or treaty, or in any official application or interpretation thereof, that it is unable to submit to the Borrower any form or certificate that such Indemnified Party is obligated to submit pursuant to this subsection (d), or that such Indemnified Party is required to withdraw or cancel any such form or certificate previously submitted, such Indemnified Party shall promptly notify the Borrower and the Agent of such fact. (e) Any Indemnified Party claiming any additional amounts payable pursuant to this Section 2.15 shall use its best reasonable efforts (consistent with its internal policy and legal and regulatory restrictions) to change the jurisdiction of its Applicable Lending Office if the making of such a change would avoid the need for, or reduce the amount of, any such additional amounts which may thereafter accrue and would not, in the reasonable judgment of such Indemnified Party, be otherwise disadvantageous to such Indemnified Party. (f) Without prejudice to the survival of any other agreement of the Borrower hereunder, the agreements and obligations of the Borrower and each Indemnified Party contained in this Section 2.15 shall survive the payment in full of principal and interest hereunder and under the Notes. SECTION 2.16. Sharing of Payments, Etc. If any Lender shall obtain any payment (whether voluntary, involuntary, through the exercise of any right of set-off, or otherwise) on account of the A Advances made by it (other than pursuant to Section 2.07, 2.11, 2.12, 2.13, 2.15 or 8.04(b)) in excess of its ratable share of payments on account of the A Advances obtained by all the Lenders, such Lender shall forthwith purchase from the other Lenders such participations in the A Advances made by them as shall be necessary to cause such purchasing Lender to share the excess payment ratably with each of them, provided, however, that if all or any portion of such excess payment is thereafter recovered from such purchasing Lender, such purchase from each Lender shall be rescinded and each Lender shall repay to the purchasing Lender the purchase price to the extent of such Lender's ratable share (according to the -26- 31 proportion of (i) the amount of the participation purchased from such Lender as a result of such excess payment to (ii) the total amount of such excess payment) of such recovery together with an amount equal to such Lender's ratable share (according to the proportion of (i) the amount of such Lender's required repayment to (ii) the total amount so recovered from the purchasing Lender) of any interest or other amount paid or payable by the purchasing Lender in respect of the total amount so recovered. The Borrower agrees that any Lender so purchasing a participation from another Lender pursuant to this Section may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of set-off) with respect to such participation as fully as if such Lender were the direct creditor of the Borrower in the amount of such participation. SECTION 2.17. Evidence of Debt. The indebtedness of the Borrower to each Lender in respect of principal of and interest on the A Advances shall be evidenced by an A Note payable to the order of such Lender and delivered hereunder by the Borrower. Notwithstanding the provisions of the A Notes for notations to be made on the grid attached thereto, any Lender may maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower resulting from A Advances and payments made from time to time hereunder and under the A Note payable to its order. In any legal action or proceeding in respect of this Agreement or such A Note, the entries made in such account or accounts shall be conclusive evidence of the existence and amounts of the obligations of the Borrower therein recorded, absent manifest error. SECTION 2.18. Use of Proceeds. Proceeds of the Advances may be used for general corporate purposes of the Borrower and its Subsidiaries, including, without limitation, for acquisitions and for payment of commercial paper issued by the Borrower. SECTION 2.19. The B Advances. (a) Each Lender severally agrees that the Borrower may make B Borrowings under this Section 2.19 from time to time on any Business Day during the period from the date hereof until the earlier of (I) the Termination Date or (II) June 15, 2000, in the manner set forth below; provided that (x) each B Borrowing shall be in an aggregate amount of $25,000,000 or an integral multiple of $5,000,000 in excess thereof and (y) following the making of each B Borrowing, the aggregate number of outstanding B Borrowings shall not exceed seven and the aggregate amount of all Advances then outstanding shall not exceed the aggregate amount of the Commitments of the Lenders (computed without regard to any B Reduction). (i) The Borrower may request a B Borrowing under this Section 2.19 by delivering to the Agent, by telecopy, telefax or other teletransmission, a notice of a B Borrowing (a "Notice of B Borrowing"), in substantially the form of -27- 32 Exhibit D hereto, specifying the date and aggregate amount of the proposed B Borrowing, the maturity date for repayment of each B Advance to be made as part of such B Borrowing (which maturity date may not be earlier than the date occurring 30 days after the date of such B Borrowing or later than the earlier of (x) 180 days after the date of such B Borrowing or (y) July 15, 2000), the interest payment date or dates relating thereto, and any other terms to be applicable to such B Borrowing, not later than 10:00 A.M. (New York City time) (A) at least one Business Day prior to the date of the proposed B Borrowing, if the Borrower shall specify in the Notice of B Borrowing that the rates of interest to be offered by the Lenders shall be fixed rates per annum and (B) at least four Business Days prior to the date of the proposed B Borrowing, if the Borrower shall instead specify in the Notice of B Borrowing the basis to be used by the Lenders in determining the rates of interest to be offered by them. The Agent shall in turn promptly notify each Lender of each request for a B Borrowing received by it from the Borrower by sending such Lender a copy of the related Notice of B Borrowing. (ii) Each Lender may, if in its sole and absolute discretion it elects to do so, irrevocably offer to make one or more B Advances to the Borrower as part of such proposed B Borrowing at a rate or rates of interest specified by such Lender in its sole discretion, by notifying the Agent (which shall give prompt notice thereof to the Borrower), before 10:00 A.M. (New York City time) (x) on the date of such proposed B Borrowing in the case of a Notice of B Borrowing delivered pursuant to clause (A) of paragraph (i) above, and (y) three Business Days before the date of such proposed B Borrowing in the case of a Notice of B Borrowing delivered pursuant to clause (B) of paragraph (i) above, of the minimum amount and maximum amount of each B Advance which such Lender would be willing to make as part of such proposed B Borrowing (which amounts may, subject to clause (y) of the proviso to the first sentence of this Section 2.19(a), exceed such Lender's Commitment), the rate or rates of interest therefor and such Lender's Applicable Lending Office with respect to such B Advance; provided that if the Agent in its capacity as a Lender shall, in its sole discretion, elect to make any such offer, it shall notify the Borrower of such offer before 9:45 A.M. (New York City time) on the date on which notice of such election is to be given to the Agent by the other Lenders. If any Lender shall elect not to make such an offer, such Lender shall so notify the Agent, before 10:00 A.M. (New York City time) on the date on which notice of such election is to be given to the Agent by the other Lenders, and such Lender shall not be obligated to, and shall not, make any B Advance as part of such B Borrowing; provided that the failure by any Lender to give such notice shall not cause such Lender to be obligated to make any B Advance as part of such proposed B Borrowing. -28- 33 (iii) The Borrower shall, in turn, before 11:00 A.M. (New York City time) (x) on the date of such proposed B Borrowing, in the case of a Notice of B Borrowing delivered pursuant to clause (A) of paragraph (i) above and (y) three Business Days before the date of such proposed B Borrowing in the case of a Notice of B Borrowing delivered pursuant to clause (B) of paragraph (i) above, either A. cancel such B Borrowing by giving the Agent notice to that effect, or B. accept one or more of the offers made by any Lender or Lenders pursuant to paragraph (ii) above, in order of the lowest to highest rates of interest or margins (or, if two or more Lenders bid at the same rates of interest, and the amount of accepted offers is less than the aggregate amount of such offers, the amount to be borrowed from such Lenders as part of such B Borrowing shall be allocated among such Lenders pro rata on the basis of the maximum amount offered by such Lenders at such rates or margin in connection with such B Borrowing), in any aggregate amount up to the aggregate amount initially requested by the Borrower in the relevant Notice of B Borrowing, by giving notice to the Agent of the amount of each B Advance (which amount shall be equal to or greater than the minimum amount, and equal to or less than the maximum amount, notified to the Borrower by the Agent on behalf of such Lender for such B Advance pursuant to paragraph (ii) above) to be made by each Lender as part of such B Borrowing, and reject any remaining offers made by Lenders pursuant to paragraph (ii) above by giving the Agent notice to that effect. (iv) If the Borrower notifies the Agent that such B Borrowing is cancelled pursuant to paragraph (iii)(A) above, the Agent shall give prompt notice thereof to the Lenders and such B Borrowing shall not be made. (v) If the Borrower accepts one or more of the offers made by any Lender or Lenders pursuant to paragraph (iii)(B) above, the Agent shall in turn promptly notify (A) each Lender that has made an offer as described in paragraph (ii) above, of the date and aggregate amount of such B Borrowing and whether or not any offer or offers made by such Lender pursuant to paragraph (ii) above have been accepted by the Borrower, (B) each Lender that is to make a B Advance as part of such B Borrowing, of the amount of each B Advance to be made by such Lender as part of such B Borrowing, and (C) each Lender that is to make a B Advance as part of such B Borrowing, upon receipt, that the Agent has received forms of documents appearing to fulfill the applicable conditions set forth in Article III. Each Lender that is to make a -29- 34 B Advance as part of such B Borrowing shall, before 12:00 noon (New York City time) on the date of such B Borrowing specified in the notice received from the Agent pursuant to clause (A) of the preceding sentence or any later time when such Lender shall have received notice from the Agent pursuant to clause (C) of the preceding sentence, make available for the account of its Applicable Lending Office to the Agent at its address referred to in Section 8.02 such Lender's portion of such B Borrowing, in same day funds. Upon fulfillment of the applicable conditions set forth in Article III and after receipt by the Agent of such funds, the Agent will make such funds available to the Borrower at the Agent's aforesaid address. Promptly after each B Borrowing the Agent will notify each Lender of the amount of the B Borrowing, the consequent B Reduction and the dates upon which such B Reduction commenced and will terminate. (b) Within the limits and on the conditions set forth in this Section 2.19, the Borrower may from time to time borrow under this Section 2.19, repay or prepay pursuant to subsection (c) below, and reborrow under this Section 2.19. (c) The Borrower shall repay to the Agent for the account of each Lender which has made a B Advance, or each other holder of a B Note, on the maturity date of each B Advance (such maturity date being that specified by the Borrower for repayment in the related Notice of B Borrowing and provided in the B Note evidencing such B Advance), the then unpaid principal amount of such B Advance. The Borrower shall have no right to prepay any B Advance unless, and then only on the terms, specified by the Borrower for such B Advance in the related Notice of B Borrowing delivered pursuant to Section 2.19(a)(i) and set forth in the B Note evidencing such B Advance or unless the holder of such B Advance otherwise consents in writing to such prepayment. (d) The Borrower shall pay interest on the unpaid principal amount of each B Advance from the date of such B Advance to the date the principal amount of such B Advance is repaid in full at the rate of interest for such B Advance specified by the Lender making such B Advance in its notice delivered pursuant to subsection (a)(ii) above on the interest date or dates specified by the Borrower for such B Advance in the related Notice of B Borrowing and set forth in the B Note evidencing such B Advance, subject to Section 2.06(b). (e) The indebtedness of the Borrower in respect of principal of and interest on each B Advance made to the Borrower as part of a B Borrowing shall be evidenced by a separate B Note of the Borrower payable to the order of the Lender making such B Advance. -30- 35 (f) Each time that the Borrower gives a Notice of B Borrowing, the Borrower shall pay to the Agent for its own account such fee as may be agreed between the Borrower and the Agent from time to time, whether or not any B Borrowing is in fact made. (g) Following the making of each B Borrowing, the Borrower agrees that it will be in compliance with the limitations set forth in clause (y) of the proviso to the first sentence of Section 2.19(a). (h) The failure of any Lender to make the B Advance to be made by it as part of any B Borrowing shall not relieve any other Lender of its obligation, if any, hereunder to make its B Advance on the date of such B Borrowing, but no Lender shall be responsible for the failure of any other Lender to make the B Advance to be made by such other Lender on the date of any B Borrowing. If any Designated Bidder fails to make the B Advance to be made by it as part of any B Borrowing, such Designated Bidder shall not thereafter have the right to offer to make any B Advance without the prior written consent of the Borrower and the Agent. SECTION 2.20. Increase of Commitments. The Borrower shall have the right, without the consent of the Lenders or the Agent (except as contemplated in clauses (d) and (e) of this sentence), to effectuate from time to time, on any Business Day (but not on more than one Business Day in any calendar quarter) an increase in the total Commitments under this Agreement (an "Increase") by adding to this Agreement one or more banks or other financial institutions (who shall, upon completion of the requirements stated in this Section 2.20, constitute Lenders hereunder), or by allowing one or more Lenders to increase their Commitments hereunder, or both, provided that (a) no Increase in Commitments pursuant to this Section 2.20 shall result in the total Commitments exceeding $800,000,000 or shall result in the aggregate amount of the Increases in the Commitments effectuated pursuant to this Section 2.20 since the date of this Agreement exceeding $200,000,000, (b) any Increase in Commitments pursuant to this Section 2.20 shall be in the amount of $20,000,000 or an integral multiple of $1,000,000 in excess thereof, (c) on the effective date of each Increase in the Commitments pursuant to this Section 2.20, (i) the Borrower shall have outstanding public long-term senior unsecured debt securities that are rated by S&P or Moody's, (ii) either (1) the lowest such rating by Moody's shall be A3 or better or (2) the lowest such rating by S&P shall be A- or better, and (iii) no event shall have occurred and be continuing which constitutes an Event of Default or would constitute an Event of Default but for the requirement that notice be given or time elapse or both, (d) no Lender's Commitment amount shall be increased without the consent of such Lender, (e) each new bank or other financial institution, if any, both is acceptable to the Agent and provides a Commitment of at least $20,000,000, (f) simultaneously with each increase in the Commitment of any Lender pursuant to this Section 2.20, the Borrower will cause such Lender's "Commitment" (under and as defined in the Short-Term -31- 36 Revolving Credit Agreement) to be increased pursuant to Section 2.20 thereof by the same percentage as such Lender's Commitment is being increased pursuant to this Section 2.20, unless the Short-Term Revolving Credit Agreement has been terminated, (g) simultaneously with the addition of any bank or financial institution pursuant to this Section 2.20, the Borrower will cause such bank or financial institution to become a party to the Short-Term Revolving Credit Agreement pursuant to Section 2.20 thereof with a "Commitment" (under and as defined in the Short-Term Revolving Credit Agreement) that constitutes the same percentage of all "Commitments" thereunder as the percentage that its Commitment hereunder constitutes of all Commitments hereunder, unless the Short-Term Revolving Credit Agreement has been terminated, and (h) immediately prior to, or simultaneously with, any Increase pursuant to this Section 2.20, the Borrower will prepay in accordance with the terms of this Agreement, all outstanding A Advances, if any (including, without limitation, prepayment from the proceeds of any A Borrowing from the Lenders made on the date of such Increase in accordance with this Agreement and in accordance with their respective Commitments after giving effect to such Increase). The Borrower shall give the Agent ten Business Days' notice of the Borrower's intention to effect any Increase in the total Commitments pursuant to this Section 2.20. Such notice shall specify each new bank or other financial institution, if any, the changes in amounts of Commitments that will result, if any, and such other information as is reasonably requested by the Agent. Each new bank or other financial institution, and each Lender agreeing to increase its Commitment, shall execute and deliver to the Agent an Increase Agreement, substantially in the form of Exhibit F-1 hereto or Exhibit F-2 hereto, as the case may be, pursuant to which it becomes a party hereto or increases its Commitment, as the case may be. In addition, the Borrower shall execute and deliver an A Note in the principal amount of the Commitment of each new bank or other financial institution, or a replacement A Note in the principal amount of the increased Commitment of each Lender agreeing to increase its Commitment, as the case may be. Such A Notes and other documents of the nature referred to in Section 3.01 shall be furnished to the Agent in form and substance as may be reasonably required by it. Upon execution and delivery of such documents, such new bank or other financial institution shall constitute a "Lender" hereunder with a Commitment as specified therein, or such Lender's Commitment shall increase as specified therein, as the case may be. Before effecting any Increase by addition of any new bank or other financial institution, the Borrower will first offer the Lenders, by notice to them, the right to participate in such Increase by increasing their respective Commitments, and each Lender electing to participate in such Increase shall have the right to participate in such Increase (by increasing its Commitment in accordance with, and subject to, this Section 2.20) on a ratable basis. ARTICLE III CONDITIONS OF EFFECTIVENESS AND LENDING -32- 37 SECTION 3.01. Conditions Precedent to Effectiveness of this Agreement. This Agreement shall become effective when (i) it shall have been executed by the Borrower and the Agent, (ii) the Agent and the Borrower either shall have been notified by each Initial Lender that such Initial Lender has executed it or shall have received a counterpart of this Agreement executed by such Initial Lender, and (iii) the Agent shall have received the following, each dated the date of delivery thereof unless otherwise specified below (which date shall be selected by the Borrower and be the same for all documents and all Lenders), in form and substance satisfactory to the Agent and (except for the Notes) in sufficient copies for each Lender: (a) The A Notes, to the order of the Lenders, respectively. (b) Certified copies of the resolutions of the Board of Directors of the Borrower approving the borrowings contemplated hereby and authorizing the execution of this Agreement and the Notes, and of all documents evidencing other necessary corporate action and governmental approvals, if any, with respect to this Agreement and the Notes. (c) A certificate of the Secretary or an Assistant Secretary of the Borrower (i) certifying names and true signatures of officers of the Borrower authorized to sign this Agreement and the Notes and the other documents to be delivered hereunder and (ii) if the date of effectiveness of this Agreement is other than the date hereof, certifying that the representations and warranties contained in Section 4.01 are true and correct as of such date of effectiveness. (d) A favorable opinion of the Borrower's Senior Vice President, Law or its Vice President, Law, in substantially the form of Exhibit G hereto. (e) A favorable opinion of Jones, Day, Reavis & Pogue, New York counsel to the Borrower, in substantially the form of Exhibit H hereto. (f) A favorable opinion of Bracewell & Patterson, L.L.P., counsel for the Agent, in substantially the form of Exhibit I hereto. (g) A letter from the Process Agent, in substantially the form of Exhibit J hereto, agreeing to act as Process Agent and to forward forthwith all process received by it to the Borrower. SECTION 3.02. Conditions Precedent to Each A Borrowing. The obligation of each Lender to make an A Advance (including the initial A Advance) on the occasion of any A Borrowing shall be subject to the further conditions precedent that on or before the date of such A Borrowing this Agreement shall have become effective pursuant to Section 3.01 and that on the date of such A Borrowing, before and -33- 38 immediately after giving effect to such A Borrowing and to the application of the proceeds therefrom, the following statements shall be true and correct, and the giving by the Borrower of the applicable Notice of A Borrowing and the acceptance by the Borrower of the proceeds of such A Borrowing shall constitute its representation and warranty that on and as of the date of such A Borrowing, before and immediately after giving effect thereto and to the application of the proceeds therefrom, the following statements are true and correct: (a) Each representation and warranty contained in Section 4.01 is correct in all material respects as though made on and as of such date; (b) No event has occurred and is continuing, or would result from such A Borrowing, which constitutes an Event of Default or would constitute an Event of Default but for the requirement that notice be given or time elapse or both; and (c) The aggregate amount of the borrowings under this Agreement (including, without limitation, such A Borrowing) and under other agreements or facilities or evidenced by other instruments or documents is not in excess of the aggregate amount of such borrowings approved as of such date by the Board of Directors of the Borrower. SECTION 3.03. Conditions Precedent to Each B Borrowing. The obligation of each Lender which is to make a B Advance on the occasion of any B Borrowing (including the initial B Borrowing) shall be subject to the further conditions precedent that (i) at or before the time required by paragraph (iii) of Section 2.19(a), the Agent shall have received the written confirmatory notice of such B Borrowing contemplated by such paragraph, (ii) on or before the date of such B Borrowing, but prior to such B Borrowing, the Agent shall have received a B Note executed by the Borrower payable to the order of such Lender for each of the one or more B Advances to be made by such Lender as part of such B Borrowing, in a principal amount equal to the principal amount of the B Advance to be evidenced thereby and otherwise on such terms as were agreed to for such B Advance in accordance with Section 2.19, (iii) on or before the date of such B Borrowing this Agreement shall have become effective pursuant to Section 3.01, and (iv) on the date of such B Borrowing, before and immediately after giving effect to such B Borrowing and to the application of the proceeds therefrom, the following statements shall be true and correct, and the giving by the Borrower of the applicable Notice of B Borrowing and the acceptance by the Borrower of the proceeds of such B Borrowing shall constitute its representation and warranty that on and as of the date of such B Borrowing, before and immediately after giving effect thereto and to the application of the proceeds therefrom, the following statements are true and correct: -34- 39 (a) Each representation and warranty contained in Section 4.01 is correct in all material respects as though made on and as of such date; (b) No event has occurred and is continuing, or would result from such B Borrowing, which constitutes an Event of Default or would constitute an Event of Default but for the requirement that notice be given or time elapse or both; and (c) The aggregate amount of the borrowings under this Agreement (including, without limitation, such B Borrowing) and under other agreements or facilities or evidenced by other instruments or documents is not in excess of the aggregate amount of such borrowings approved as of such date by the Board of Directors of the Borrower. ARTICLE IV REPRESENTATIONS AND WARRANTIES SECTION 4.01. Representations and Warranties of the Borrower. The Borrower represents and warrants as follows: (a) The Borrower is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware. Each Material Subsidiary is duly incorporated, validly existing and in good standing in the jurisdiction of its incorporation. The Borrower and each Material Subsidiary possess all corporate powers and all other authorizations and licenses necessary to engage in its business and operations as now conducted, the failure to obtain or maintain which would have a Material Adverse Effect. Each Subsidiary which is, on and as of the date of this Agreement, a Material Subsidiary is listed on Schedule II hereto. (b) The execution, delivery and performance by the Borrower of this Agreement and the Notes are within the Borrower's corporate powers, have been duly authorized by all necessary corporate action, and do not contravene (i) the Borrower's certificate of incorporation or by-laws or (ii) law or any contractual restriction binding on or affecting the Borrower. (c) No authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for the due execution, delivery and performance by the Borrower of this Agreement or the Notes which has not been duly made or obtained, except those (i) required in the ordinary course to comply with ongoing covenant obligations of the Borrower hereunder the performance of which is not yet due and (ii) that will, -35- 40 in the ordinary course of business in accordance with this Agreement, be duly made or obtained on or prior to the time or times the performance of such obligations shall be due. (d) This Agreement constitutes, and the Notes when delivered hereunder shall constitute, legal, valid and binding obligations of the Borrower enforceable against the Borrower in accordance with their respective terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors rights generally or by general principles of equity. (e) The consolidated balance sheet of the Borrower and its consolidated Subsidiaries as at December 31, 1994 and the related consolidated statements of income and cash flow for the fiscal year then ended, reported on by Coopers & Lybrand, independent public accountants, copies of which have been furnished to the Agent and the Initial Lenders prior to the date hereof, fairly present the consolidated financial condition of the Borrower and such Subsidiaries as at such date and the consolidated results of their operations for such fiscal period, all in accordance with generally accepted accounting principles consistently applied. The consolidated balance sheet of the Borrower and its consolidated Subsidiaries as at March 31, 1995 and the related consolidated statements of income and cash flow for the three months then ended, copies of which have been furnished to the Agent and the Initial Lenders prior to the date hereof, fairly present the consolidated financial condition of the Borrower and such Subsidiaries as at such date and the consolidated results of their operations for such fiscal period, all in accordance with generally accepted accounting principles consistently applied, and since March 31, 1995 there has been no material adverse change in such condition or operations. (f) There is no action, suit or proceeding pending, or to the knowledge of the Borrower threatened, against or involving the Borrower or any Material Subsidiary in any court, or before any arbitrator of any kind, or before or by any governmental body, which in the reasonable judgment of the Borrower (taking into account the exhaustion of all appeals) would have a material adverse effect on the consolidated financial condition of the Borrower and its consolidated Subsidiaries taken as a whole, or which purports to affect the legality, validity, binding effect or enforceability of this Agreement or the Notes. (g) The Borrower and each consolidated Subsidiary have duly filed all tax returns required to be filed, and duly paid and discharged all taxes, assessments and governmental charges upon it or against its properties now due and payable, the failure to file or pay which, as applicable, would have a Material Adverse Effect, unless and to the extent only that the same are being -36- 41 contested in good faith and by appropriate proceedings by the Borrower or the appropriate Subsidiary. (h) The Borrower and each Material Subsidiary have good title to their respective properties and assets, free and clear of all mortgages, liens and encumbrances, except for mortgages, liens and encumbrances (including covenants, restrictions, rights, easements and minor irregularities in title) which do not have a Material Adverse Effect or which are permitted by Section 5.02(a), and except that no representation or warranty is being made with respect to Margin Stock. (i) Except to the extent permitted pursuant to Section 5.02(e), neither the Borrower nor any Material Subsidiary is subject to any contractual restrictions which limit the amount of dividends payable by any Subsidiary. (j) No Termination Event has occurred or is reasonably expected to occur with respect to any Plan which, with the giving of notice or lapse of time, or both, would constitute an Event of Default under Section 6.01(g). (k) The statement of assets and liabilities of each Plan and the statements of changes in fund balance and in financial position, or the statement of changes in net assets available for plan benefits, for the most recent plan year for which an accountant's report with respect to such plan year has been prepared, copies of which have been furnished to the Agent, fairly present the financial condition of such Plan as at such date and the results of operations of such Plan for the plan year ended on such date. (l) Neither the Borrower nor any ERISA Affiliate has incurred, or is reasonably expected to incur, any Withdrawal Liability to any Multiemployer Plan which, when aggregated with all other amounts required to be paid to Multiemployer Plans in connection with Withdrawal Liability (as of the date of determination), exceeds $50,000,000. (m) Neither the Borrower nor any ERISA Affiliate has received any notification that any Multiemployer Plan is in reorganization or has been terminated, within the meaning of Title IV of ERISA, and no Multiemployer Plan is reasonably expected to be in reorganization or to be terminated within the meaning of Title IV of ERISA the effect of which reorganization or termination would be the occurrence of an Event of Default under Section 6.01(i). (n) The Borrower is not engaged in the business of extending credit for the purpose of purchasing or carrying Margin Stock, and no proceeds of any -37- 42 Advance will be used to extend credit to others (other than to any Subsidiary of the Borrower) for the purpose of purchasing or carrying Margin Stock. (o) The Borrower is not an "investment company" or a "company" controlled by an "investment company" within the meaning of the Investment Company Act of 1940, as amended. (p) The Borrower is not a "holding company" or a "subsidiary company" of a "holding company", or an "affiliate" of a "holding company" or of a "subsidiary company" of a "holding company", or a "public utility" within the meaning of the Public Utility Holding Company Act of 1935, as amended. All representations and warranties made by the Borrower herein or made in any certificate delivered pursuant hereto shall survive the making of the Advances and the execution and delivery to the Lenders of this Agreement and the Notes. ARTICLE V COVENANTS OF THE BORROWER SECTION 5.01. Affirmative Covenants. So long as any Note or other amount payable by the Borrower hereunder shall remain unpaid or any Lender shall have any Commitment hereunder, the Borrower will, unless the Majority Lenders shall otherwise consent in writing: (a) Preservation of Corporate Existence, Etc. Preserve and maintain, and cause each Material Subsidiary to preserve and maintain, its corporate existence, rights (charter and statutory) and material franchises, except as otherwise permitted by Section 5.02(c) or 5.02(d). (b) Compliance with Laws, Etc. Comply, and cause each Subsidiary to comply, in all material respects, with all applicable laws, rules, regulations and orders (including, without limitation, all environmental laws and laws requiring payment of all taxes, assessments and governmental charges imposed upon it or upon its property except to the extent contested in good faith by appropriate proceedings) the failure to comply with which would have a Material Adverse Effect. (c) Visitation Rights. At such reasonable times and intervals as the Agent or any of the Lenders (other than Designated Bidders) may desire, permit the Agent or any of the Lenders (other than Designated Bidders) to visit the Borrower and to discuss the affairs, finances, accounts and mineral reserve performance of the Borrower and any of its Subsidiaries with officers of the -38- 43 Borrower and independent certified public accountants of the Borrower and any of its Subsidiaries, provided that if an Event of Default, or an event which with the giving of notice or the passage of time, or both, would become an Event of Default, has occurred and is continuing, the Agent or any Lender may, in addition to the other provisions of this subsection (c) and at such reasonable times and intervals as the Agent or any of the Lenders may desire, visit and inspect, under guidance of officers of the Borrower, any properties significant to the consolidated operations of the Borrower and its Subsidiaries, and to examine the books and records of account (other than with respect to any mineral reserve information that the Borrower determines to be confidential) of the Borrower and any of its Subsidiaries and to discuss the affairs, finances and accounts of any of the Borrower's Subsidiaries with any of the officers of such Subsidiary. (d) Books and Records. Keep, and cause each of its Subsidiaries to keep, proper books of record and account, in which full and correct entries shall be made of all financial transactions and the assets and business of the Borrower and each Subsidiary in accordance with generally accepted accounting principles either (i) consistently applied or (ii) applied in a changed manner that does not, under generally accepted accounting principles or public reporting requirements applicable to the Borrower, either require disclosure in the consolidated financial statements of the Borrower and its consolidated Subsidiaries or require the consent of the accountants which (as required by Section 5.03(b)) report on such financial statements for the fiscal year in which such change shall have occurred, or (iii) applied in a changed manner not covered by clause (ii) above provided such change shall have been disclosed to the Agent and shall have been consented to by the accountants which (as required by Section 5.03(b)) report on the consolidated financial statements of the Borrower and its consolidated Subsidiaries for the fiscal year in which such change shall have occurred, provided that if any change referred to in clause (ii) or (iii) above would not meet the standard set forth in clause (i) or (ii) of Section 1.03, the Agent, the Lenders and the Borrower agree to amend the covenants contained in Section 5.01 and 5.02 so that the relative protection afforded thereby to the Lenders and the relative flexibility afforded thereby to the Borrower will in substance be retained after such amendment, provided, however, that until such amendment becomes effective hereunder, the covenants as set forth herein shall remain in full force and effect and those accounting principles applicable to the Borrower and its consolidated Subsidiaries which do meet the standards set forth in clause (i) or (ii) of Section 1.03 shall be applied to determine whether or not the Borrower is in compliance with such covenants. (e) Maintenance of Properties, Etc. Maintain and preserve, and cause each Material Subsidiary to maintain and preserve, all of its properties which are -39- 44 used in the conduct of its business in good working order and condition, ordinary wear and tear excepted, to the extent that any failure to do so would have a Material Adverse Effect. (f) Maintenance of Insurance. Maintain, and cause each Material Subsidiary to maintain, insurance with responsible and reputable insurance companies or associations in such amounts and covering such risks as is usually carried by companies engaged in similar businesses and owning similar properties in the same general areas in which the Borrower or such Subsidiary operates. (g) Consolidated Tangible Net Worth. Maintain Consolidated Tangible Net Worth of not less than $1,300,000,000 at all times. (h) Subsidiary Dividends. Cause each Subsidiary to pay to the Borrower, or such Subsidiary's immediate parent company if such parent company is not the Borrower, such dividends as such Subsidiary may legally pay (giving due consideration to the rights of any minority shareholders) to the extent necessary to provide the Borrower with funds for the payment of its obligations under this Agreement and the Notes. SECTION 5.02. Negative Covenants. So long as any Note or other amount payable by the Borrower hereunder shall remain unpaid or any Lender shall have any Commitment hereunder, the Borrower will not, unless the Majority Lenders shall otherwise consent in writing: (a) Liens, Etc. (i) Create, assume or suffer to exist, or permit any Material Subsidiary to create, assume or suffer to exist, any Liens upon or with respect to any of the capital stock of any Material Subsidiary, whether now owned or hereafter acquired, or (ii) create or assume, or permit any Material Subsidiary to create or assume, any Liens upon or with respect to any other assets material to the consolidated operations of the Borrower and its consolidated Subsidiaries taken as a whole securing the payment of Debt and Guaranties in an aggregate amount (determined without duplication of amount (so that the amount of a Guaranty will be excluded to the extent the Debt Guaranteed thereby is included in computing such aggregate amount)) exceeding $200,000,000 at any one time; provided, however, that this subsection (a) shall not apply to: A. Liens on assets acquired by the Borrower or any of its Subsidiaries after the date hereof to the extent that such Liens existed at the time of such acquisition and were not placed thereon by or with the consent of the Borrower in contemplation of such acquisition; -40- 45 B. Liens on stock acquired after the date hereof of a corporation which has become or becomes a Subsidiary of the Borrower, to the extent that such Liens existed at the time of such acquisition and were not placed thereon by or with the consent of the Borrower in contemplation of such acquisition; C. Liens on Margin Stock; and D. Permitted Liens. (b) Debt, Etc. Create, assume or suffer to exist, or permit any of its consolidated Subsidiaries to create, assume or suffer to exist, any Debt, any Guaranty or, to the extent set forth in clause (1) below, any reimbursement obligation with respect to any letter of credit, unless, immediately after giving effect to such Debt, Guaranty or reimbursement obligation and the receipt and application of any proceeds thereof or value received in connection therewith, (1) the sum (without duplication) of (i) consolidated Debt of the Borrower and its consolidated Subsidiaries plus (ii) the aggregate amount (determined on a consolidated basis) of Guaranties and of letters of credit issued for the account of the Borrower and its consolidated Subsidiaries is less than 52.5% of Capitalization, provided that Debt for borrowed money either maturing within one year and evidenced by instruments commonly known as commercial paper, or evidenced by variable demand notes or other similar short-term financing instruments issued to commercial banks and trust companies (other than Debt incurred pursuant to this Agreement or the Short-Term Revolving Credit Agreement or any replacement therefor), shall not exceed the aggregate of the Borrower's unused bank lines of credit and unused credit available to the Borrower under financing arrangements with banks; and (2) with respect to any such Debt created, assumed or suffered to exist by a consolidated Subsidiary that is either a Subsidiary of the Borrower as of the date hereof or a Subsidiary of the Borrower acquired or created after the date hereof and owning a material portion of the consolidated operating assets existing at the date hereof of the Borrower and its Subsidiaries, the aggregate amount of Debt of the consolidated Subsidiaries of the Borrower referred to above in this paragraph (2) owing to Persons other than the Borrower and its consolidated Subsidiaries is less than $400,000,000. (c) Sale, Etc. of Assets. Sell, lease or otherwise transfer, or permit any Material Subsidiary to sell, lease or otherwise transfer (in either case, whether -41- 46 in one transaction or in a series of transactions, and except, in either case, to the Borrower or an entity which after giving effect to such transfer will be or become a Material Subsidiary in which the Borrower's direct or indirect equity interest will be at least as great as its direct or indirect equity interest in the transferor immediately prior thereto, and except as permitted by Section 5.02(d)), assets constituting a material portion of the book value of the consolidated assets of the Borrower and its Material Subsidiaries, provided that, notwithstanding the foregoing, (i) assets restricted hereunder shall not include Margin Stock or inventory sold in the ordinary course of business, (ii) the Borrower or any Material Subsidiary may sell, lease or otherwise transfer the assets or capital stock of any Subsidiary that is not a Material Subsidiary as of the date of this Agreement, and (iii) the Borrower or any Material Subsidiary may sell, lease or otherwise transfer any Permitted Assets constituting a material portion of the consolidated assets of the Borrower and its Material Subsidiaries, provided that, for purposes of this clause (iii), (A) such Permitted Assets are sold, leased or otherwise transferred in exchange for other Permitted Assets and/or (B) the proceeds from such sale, lease or other transfer, or an amount equal to the proceeds thereof, are (x) reinvested within one year in Permitted Assets and/or the development of Permitted Assets and/or (y) used to repay Debt the proceeds of which were or are being used for investment in, and/or the development of, Permitted Assets; provided further that, no such sale, lease or other transfer shall be permitted by this clause (iii) unless either (1) after giving effect to such sale, lease or other transfer, no Event of Default, and no event which with lapse of time or the giving of notice, or both, would constitute an Event of Default, shall have occurred and be continuing or (2) the Borrower or the relevant Material Subsidiary, as the case may be, was contractually obligated, prior to the occurrence of such Event of Default or event, to consummate such sale, lease or other transfer. (d) Mergers, Etc. Merge or consolidate with any Person, or permit any of its Material Subsidiaries to merge or consolidate with any Person, except that (i) such a Subsidiary may merge or consolidate with (or liquidate into) any other Subsidiary or may merge or consolidate with (or liquidate into) the Borrower, provided that (A) if such Material Subsidiary merges or consolidates with (or liquidates into) the Borrower, the Borrower shall be the continuing or surviving corporation, (B) if any such Material Subsidiary merges or consolidates with (or liquidates into) any other Subsidiary of the Borrower, one of such Subsidiaries is the surviving corporation and, if either such Subsidiary is not wholly-owned by the Borrower, such merger or consolidation is on an arm's length basis and (C) as a result of such merger or consolidation, no Event of Default, and no event which with lapse of time or the giving of notice, or both, would constitute an Event of Default, shall have occurred and be continuing, and (ii) the Borrower or any Material Subsidiary may merge or consolidate with any other -42- 47 corporation (that is, in addition to the Borrower or any Subsidiary of the Borrower), provided that (A) if the Borrower merges or consolidates with any such other corporation, the Borrower is the surviving corporation, (B) if any Material Subsidiary merges or consolidates with any such other corporation, the surviving corporation is a wholly-owned Material Subsidiary of the Borrower, and (C) if either the Borrower or any Material Subsidiary merges or consolidates with any such other corporation, after giving effect to such merger or consolidation no Event of Default, and no event which with lapse of time or the giving of notice, or both, would constitute an Event of Default, shall have occurred and be continuing. (e) Dividend Restrictions. Create, or consent or agree to, or permit any of its Material Subsidiaries existing on the date hereof or any of its Subsidiaries hereafter created or acquired and owning a material portion of the consolidated operating assets existing at the date hereof of the Borrower and its Subsidiaries, to create, or consent or agree to, any restrictions, contained in any agreement or instrument relating to or evidencing Debt, on any such Subsidiary's ability to pay dividends or to make advances to the Borrower or any Subsidiary of the Borrower; provided, however, that this subsection (e) shall not apply to any such restrictions (including any extensions of the term of any thereof) applicable to the stock of any Subsidiary of the Borrower the stock of which shall be hereafter acquired by the Borrower and which restrictions are existing at the time such Subsidiary first becomes a Subsidiary of the Borrower and are not placed thereon by or with the consent of the Borrower in contemplation of such acquisition by the Borrower. SECTION 5.03. Reporting Requirements. So long as any Note shall remain unpaid or any Lender shall have any Commitment hereunder, the Borrower will furnish to each Lender in such reasonable quantities as shall from time to time be requested by such Lender: (a) within 60 days after the end of each of the first three quarters of each fiscal year of the Borrower, a consolidated balance sheet of the Borrower and its consolidated Subsidiaries as of the end of such quarter, and consolidated statements of income and cash flow of the Borrower and its consolidated Subsidiaries each for the period commencing at the end of the previous fiscal year and ending with the end of such quarter, certified (subject to normal year-end adjustments) as to fairness and utilization of generally accepted accounting principles by the chief financial officer of the Borrower and accompanied by a certificate of such officer stating (i) that such statements of income and cash flow and such balance sheet have been prepared in accordance with generally accepted accounting principles, (ii) whether or not such officer has knowledge of the occurrence of any Event of Default which is continuing hereunder or of any event not theretofore remedied which with notice or lapse -43- 48 of time or both would constitute such an Event of Default and, if so, stating in reasonable detail the facts with respect thereto, (iii) all relevant facts in reasonable detail to evidence, and the computations as to, whether or not the Borrower is in compliance with the requirements set forth in subsection (g) of Section 5.01 and in subsection (b) of Section 5.02, and (iv) a listing of all Material Subsidiaries and consolidated Subsidiaries of the Borrower showing the extent of its direct and indirect holdings of their stocks; (b) within 120 days after the end of each fiscal year of the Borrower, a copy of the annual report for such year for the Borrower and its consolidated Subsidiaries containing financial statements for such year reported on by nationally recognized independent public accountants acceptable to the Lenders, accompanied by (i) a report signed by said accountants stating that such financial statements have been prepared in accordance with generally accepted accounting principles and (ii) a letter from such accountants stating that in making the investigations necessary for such report they obtained no knowledge, except as specifically stated therein, of any Event of Default which is continuing hereunder or of any event not theretofore remedied which with notice or lapse of time or both would constitute such an Event of Default; (c) within 120 days after the close of each of the Borrower's fiscal years, a certificate of the chief financial officer of the Borrower stating (i) whether or not such officer has knowledge of the occurrence of any Event of Default which is continuing hereunder or of any event not theretofore remedied which with notice or lapse of time or both would constitute such an Event of Default and, if so, stating in reasonable detail the facts with respect thereto, (ii) all relevant facts in reasonable detail to evidence, and the computations as to, whether or not the Borrower is in compliance with the requirements set forth in subsection (g) of Section 5.01 and in subsection (b) of Section 5.02 and (iii) a listing of all Material Subsidiaries and consolidated Subsidiaries of the Borrower showing the extent of its direct and indirect holdings of their stocks; (d) promptly upon their distribution, copies of all financial statements, reports and proxy statements which the Borrower or any Material Subsidiary shall have sent to its public stockholders; (e) promptly upon their becoming publicly available, all regular and periodic financial reports and registration statements which the Borrower or any Material Subsidiary shall file with the Securities and Exchange Commission or any national securities exchange other than registration statements relating to employee benefit plans and to registration statements of securities for selling security holders; -44- 49 (f) promptly in writing, notice of all litigation and of all proceedings before any governmental or regulatory agencies against or involving the Borrower or any Material Subsidiary, except any litigation or proceeding which in the reasonable judgment of the Borrower (taking into account the exhaustion of all appeals) is not likely to have a material adverse effect on the consolidated financial condition of the Borrower and its consolidated Subsidiaries taken as a whole; (g) within three Business Days after an executive officer of the Borrower obtains knowledge of the occurrence of any Event of Default which is continuing or of any event not theretofore remedied which with notice or lapse of time, or both, would constitute an Event of Default, notice of such occurrence together with a detailed statement by a responsible officer of the Borrower of the steps being taken by the Borrower or the appropriate Subsidiary to cure the effect of such event; (h) as soon as practicable and in any event (i) within 30 days after the Borrower or any ERISA Affiliate knows or has reason to know that any Termination Event described in clause (i) of the definition of Termination Event with respect to any Plan has occurred and (ii) within 10 days after the Borrower or any ERISA Affiliate knows or has reason to know that any other Termination Event with respect to any Plan has occurred, a statement of the chief financial officer of the Borrower describing such Termination Event and the action, if any, which the Borrower or such ERISA Affiliate proposes to take with respect thereto; (i) promptly and in any event within two Business Days after receipt thereof by the Borrower or any ERISA Affiliate, copies of each notice received by the Borrower or any ERISA Affiliate from the PBGC stating its intention to terminate any Plan or to have a trustee appointed to administer any Plan; (j) promptly and in any event within 30 days after the filing thereof with the Internal Revenue Service, copies of each Schedule B (Actuarial Information) to the annual report (Form 5500 Series) with respect to each Plan; (k) promptly and in any event within five Business Days after receipt thereof by the Borrower or any ERISA Affiliate from the sponsor of a Multiemployer Plan, a copy of each notice received by the Borrower or any ERISA Affiliate concerning (i) the imposition of Withdrawal Liability by a Multiemployer Plan, (ii) the determination that a Multiemployer Plan is, or is expected to be, in reorganization within the meaning of Title IV of ERISA, (iii) the termination of a Multiemployer Plan within the meaning of Title IV of ERISA, or (iv) the amount of liability incurred, or expected to be incurred, by -45- 50 the Borrower or any ERISA Affiliate in connection with any event described in clause (i), (ii) or (iii) above; and (l) as soon as practicable but in any event within 60 days of any notice of request therefor, such other information respecting the financial condition and results of operations of the Borrower or any Subsidiary as any Lender through the Agent may from time to time reasonably request. Each balance sheet and other financial statement furnished pursuant to subsections (a) and (b) of this Section 5.03 shall contain comparative information which conforms to the presentation required in Form 10-Q and Form 10-K, as appropriate, under the Securities Exchange Act of 1934, as amended. ARTICLE VI EVENTS OF DEFAULT SECTION 6.01. Events of Default. If any of the following events ("Events of Default") shall occur and be continuing: (a) The Borrower shall fail to pay any principal of any Note when due, or any interest on any Note or any other amount payable hereunder within five Business Days after the same shall be due; or (b) Any representation or warranty made or deemed made by the Borrower herein or by the Borrower (or any of its officers) in connection with this Agreement shall prove to have been incorrect in any material respect when made or deemed made; or (c) The Borrower shall fail to perform or observe any other term, covenant or agreement contained in this Agreement on its part to be performed or observed and any such failure shall remain unremedied for 30 days after written notice thereof shall have been given to the Borrower by the Agent or by any Lender with a copy to the Agent; or (d) The Borrower or any Material Subsidiary shall fail to pay any Debt or Guaranty (excluding Debt evidenced by the Notes) of the Borrower or such Subsidiary (as the case may be) in an aggregate principal amount of $50,000,000 or more, or any installment of principal thereof or interest or premium thereon, when due (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise) and such failure shall continue after the applicable grace period, if any, specified in the agreement or instrument relating to such Debt or Guaranty; or any other default under any agreement or instrument relating to any such Debt, or any other event, shall occur and shall -46- 51 continue after the applicable grace period, if any, specified in such agreement or instrument, if the effect of such default or event is to accelerate, or to permit the acceleration of, the maturity of such Debt; provided that, notwithstanding any provision contained in this subsection (d) to the contrary, to the extent that pursuant to the terms of any agreement or instrument relating to any Debt referred to in this subsection (d), any sale, pledge or disposal of Margin Stock, or utilization of the proceeds thereof would result in a breach of any covenant contained therein or otherwise give rise to a default or event of default thereunder and/or acceleration of the maturity of the Debt extended pursuant thereto and as a result of such terms or of such sale, pledge, disposal, utilization, breach, default, event of default or acceleration, or the provisions hereof relating thereto, this Agreement or any Advance hereunder would otherwise be subject to the margin requirements or any other restriction under Regulation U issued by the Board of Governors of the Federal Reserve System, then such breach, default, event of default or acceleration shall not constitute a default or Event of Default under this subsection (d); or (e) (i) The Borrower or any Material Subsidiary shall (A) generally not pay its debts as such debts become due; or (B) admit in writing its inability to pay its debts generally; or (C) make a general assignment for the benefit of creditors; or (ii) any proceeding shall be instituted or consented to by the Borrower or any such Subsidiary seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, or other similar official for it or for any substantial part of its property; or (iii) any such proceeding shall have been instituted against the Borrower or any such Subsidiary and either such proceeding shall not be stayed or dismissed for 60 consecutive days or any of the actions referred to above sought in such proceeding (including, without limitation, the entry of an order for relief against it or the appointment of a receiver, trustee, custodian or other similar official for it or any substantial part of its property) shall occur; or (iv) the Borrower or any such Subsidiary shall take any corporate action to authorize any of the actions set forth above in this subsection (e); or (f) Any judgment or order for the payment of money in excess of $50,000,000 shall be rendered against the Borrower or any Material Subsidiary and either (i) enforcement proceedings shall have been commenced by any creditor upon such judgment or order (other than any enforcement proceedings consisting of the mere obtaining and filing of a judgment lien or obtaining of a garnishment or similar order so long as no foreclosure, levy or similar process in respect of such lien, or payment over in respect of such garnishment or similar order, has commenced) or (ii) there shall be any period of 30 consecutive -47- 52 days during which a stay of execution or enforcement proceedings (other than those referred to in the parenthesis in clause (i) above) in respect of such judgment or order, by reason of a pending appeal, bonding or otherwise, shall not be in effect; or (g) Any Termination Event with respect to a Material Plan shall have occurred and, 30 days after notice thereof shall have been given to the Borrower by the Lender, (i) such Termination Event shall still exist and (ii) the sum (determined as of the date of occurrence of such Termination Event) of the Insufficiency of such Plan and the Insufficiency of any and all other Plans with respect to which a Termination Event shall have occurred and then exist (or in the case of a Plan with respect to which a Termination Event described in clause (ii) of the definition of Termination Event shall have occurred and then exist, the liability related thereto), in each case in respect of which the Borrower or any ERISA Affiliate has liability, is equal to or greater than $50,000,000; or (h) The Borrower or any ERISA Affiliate shall have been notified by the sponsor of a Multiemployer Plan that it has incurred Withdrawal Liability to such Multiemployer Plan in an amount which, when aggregated with all other amounts required to be paid to Multiemployer Plans in connection with Withdrawal Liabilities (determined as of the date of such notification), exceeds $50,000,000; or (i) The Borrower or any ERISA Affiliate shall have been notified by the sponsor of a Multiemployer Plan that such Multiemployer Plan is in reorganization or is being terminated, within the meaning of Title IV of ERISA, if as a result of such reorganization or termination the aggregate annual contributions of the Borrower and its ERISA Affiliates to all Multiemployer Plans which are then in reorganization or being terminated have been or will be increased over the amounts contributed to such Multiemployer Plans for the respective plan years which include the date hereof by an amount exceeding $50,000,000; or (j) Upon completion of, and pursuant to, a transaction, or a series of transactions (which may include prior acquisitions of capital stock of the Borrower in the open market or otherwise), involving a tender offer (i) a "person" (within the meaning of Section 13(d) of the Securities Exchange Act of 1934) other than the Borrower, a Subsidiary of the Borrower or any employee benefit plan maintained for employees of the Borrower and/or any of its Subsidiaries or the trustee therefor, shall have acquired direct or indirect ownership of and paid for in excess of 50% of the outstanding capital stock of the Borrower entitled to vote in elections for directors of the Borrower and (ii) at any time before the later of (x) six months after the completion of such tender offer and (y) the next annual meeting of the shareholders of the Borrower -48- 53 following the completion of such tender offer more than half of the directors of the Borrower consists of individuals who (a) were not directors before the completion of such tender offer and (b) were not appointed, elected or nominated by the Board of Directors in office prior to the completion of such tender offer (other than any such appointment, election or nomination required or agreed to in connection with, or as a result of, the completion of such tender offer); or (k) Any "Event of Default" as defined in the Short-Term Revolving Credit Agreement shall occur and be continuing; then, and in any such event, the Agent shall at the request, or may with the consent, of the Majority Lenders, by notice to the Borrower, (i) declare the obligation of each Lender to make Advances to be terminated, whereupon the same shall forthwith terminate, and (ii) declare the Notes, all interest thereon and all other amounts payable under this Agreement to be forthwith due and payable, whereupon the Notes, all such interest and all such amounts shall become and be forthwith due and payable, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by the Borrower; provided, however, that if an Event of Default under subsection (e) of this Section 6.01 (except under clause (i)(A) thereof) shall occur, (A) the obligation of each Lender to make Advances shall automatically be terminated and (B) the Notes, all interest thereon and all other amounts payable under this Agreement shall automatically become and be forthwith due and payable, without presentment, demand, protest or any notice of any kind, all of which are hereby expressly waived by the Borrower. ARTICLE VII THE AGENT SECTION 7.01. Authorization and Action. Each Lender hereby appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers under this Agreement as are delegated to the Agent by the terms hereof, together with such powers as are reasonably incidental thereto. As to any matters not expressly provided for by this Agreement (including, without limitation, enforcement of this Agreement or collection of the Notes), the Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Majority Lenders, and such instructions shall be binding upon all Lenders and all holders of Notes; provided, however, that the Agent shall not be required to take any action which exposes the Agent to personal liability or which is contrary to this Agreement or applicable law. The Agent agrees to give to each Lender prompt notice of each notice given to it by the Borrower pursuant to the terms of this Agreement. -49- 54 SECTION 7.02. Agent's Reliance, Etc. Neither the Agent nor any of its directors, officers, agents or employees shall be liable for any action taken or omitted to be taken by it or them under or in connection with this Agreement, except for its or their own gross negligence or willful misconduct. Without limitation of the generality of the foregoing, the Agent: (i) may treat the payee of any Note as the holder thereof until the Agent receives and accepts an Assignment and Acceptance entered into by the Lender which is the payee of such Note, as assignor, and an Eligible Assignee, as assignee, as provided in Section 8.07; (ii) may consult with legal counsel (including counsel for the Borrower), independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts; (iii) makes no warranty or representation to any Lender and shall not be responsible to any Lender for any statements, warranties or representations (whether written or oral) made in or in connection with this Agreement; (iv) shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of this Agreement on the part of the Borrower or to inspect the property (including the books and records) of the Borrower; (v) shall not be responsible to any Lender for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any other instrument or document furnished pursuant hereto; and (vi) shall incur no liability under or in respect of this Agreement by acting upon any notice, consent, certificate or other instrument or writing (which may be by telegram, telecopy, cable or telex) believed by it to be genuine and signed or sent by the proper party or parties. SECTION 7.03. Citibank and Affiliates. With respect to its Commitments, the Advances made by it and the Notes issued to it, Citibank shall have the same rights and powers under this Agreement as any other Lender and may exercise the same as though it were not the Agent; and the term "Lender" or "Lenders" shall, unless otherwise expressly indicated, include Citibank in its individual capacity. Citibank and its affiliates may accept deposits from, lend money to, act as trustee under indentures of, and generally engage in any kind of business with, the Borrower, any of its Subsidiaries and any Person who may do business with or own securities of the Borrower or any Subsidiary, all as if Citibank were not the Agent and without any duty to account therefor to the other Lenders. SECTION 7.04. Lender Credit Decision. Each Lender acknowledges that it has, independently and without reliance upon the Agent or any other Lender and based on the financial statements referred to in Section 4.01 and such other documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon the Agent or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement. -50- 55 SECTION 7.05. Indemnification. The Lenders (other than the Designated Bidders) agree to indemnify the Agent (to the extent not reimbursed by the Borrower), ratably according to the respective principal amounts of the A Notes then held by each of them (or if no A Notes are at the time outstanding or if any A Notes are held by Persons which are not Lenders, ratably according to the respective amounts of their Commitments or the respective amounts of their Commitments immediately prior to termination if the Commitments have been terminated), from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by, or asserted against the Agent in any way relating to or arising out of this Agreement or any action taken or omitted by the Agent under this Agreement, provided that no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the Agent's gross negligence or willful misconduct. Without limitation of the foregoing, each Lender (other than the Designated Bidders) agrees to reimburse the Agent promptly upon demand for its ratable share of any reasonable out-of-pocket expenses (including counsel fees) incurred by the Agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings, in bankruptcy or insolvency proceedings, or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement, to the extent that the Agent acts in its capacity as Agent and is not reimbursed for such expenses by the Borrower. SECTION 7.06. Successor Agent. The Agent may resign at any time by giving written notice thereof to the Lenders and the Borrower and may be removed at any time with or without cause by the Majority Lenders. Upon any such resignation or removal, the Majority Lenders shall have the right to appoint a successor Agent. If no successor Agent shall have been so appointed by the Majority Lenders, and shall have accepted such appointment, within 30 days after the retiring Agent's giving of notice of resignation or the Majority Lenders' removal of the retiring Agent, then such retiring Agent may, on behalf of the Lenders, appoint a successor Agent, which shall be a commercial bank organized, or authorized to conduct a banking business, under the laws of the United States of America or of any State thereof and having a combined capital and surplus of at least $500,000,000. Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations under this Agreement. After any retiring Agent's resignation or removal hereunder as Agent, the provisions of this Article VII shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement. -51- 56 ARTICLE VIII MISCELLANEOUS SECTION 8.01. Amendments, Etc. An amendment or waiver of any provision of this Agreement or the A Notes, or a consent to any departure by the Borrower therefrom, shall be effective against the Lenders and all holders of the Notes if, but only if, it shall be in writing and signed by the Majority Lenders, and then such a waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no such amendment, waiver or consent shall, unless in writing and signed by all the Lenders (other than the Designated Bidders), be effective to: (a) waive any of the conditions specified in Article III, (b) except as contemplated by Section 2.20, increase the Commitments of the Lenders or subject the Lenders to any additional obligations, (c) reduce the principal of, or interest on, the A Notes or any facility fees or utilization fees hereunder, (d) postpone any date fixed for any payment of principal of, or interest on, the A Notes or any facility fees or utilization fees hereunder, (e) change the percentage of the Commitments or of the aggregate unpaid principal amount of the A Notes, which shall be required for the Lenders or any of them to take any action under this Agreement, or (f) amend this Section 8.01; and, provided further that no amendment, waiver or consent shall, unless in writing and signed by the Agent in addition to the Lenders required hereinabove to take such action, affect the rights or duties of the Agent under this Agreement or any Note. SECTION 8.02. Notices, Etc. Except as otherwise provided in Section 2.02(a) or 2.10(ii), all notices and other communications provided for hereunder shall be in writing and mailed by certified mail, return receipt requested and postage prepaid, or telecopied, telefaxed or otherwise teletransmitted, or delivered, if to the Borrower, at 5051 Westheimer, Suite 1400, Houston, Texas 77056, Attention: Treasurer, Telefax: (713) 624-9621; if to any Initial Lender, at its Domestic Lending Office set forth opposite its name on Schedule I hereto; if to any other Lender at its Domestic Lending Office specified in the Assignment and Acceptance or Increase Agreement pursuant to which it became a Lender or at the address for notices specified in the Designation Agreement pursuant to which it became a party hereto; and if to the Agent, in care of Citicorp North America, Inc., at 1200 Smith Street, Suite 2000, Houston, Texas 77002, Attention: Burlington Resources Inc., Account Officer, Telefax: (713) 654-2849; or, as to each party, at such other address as shall be designated by such party in a written notice to the other parties. All such notices and communications shall be effective, (a) in the case of any notice or communication given by certified mail, when receipted for, (b) in the case of any notice or communication given by telecopy, telefax or other teletransmission, when confirmed by appropriate answerback, in each case addressed as aforesaid, and (c) in the case of any notice or communication delivered by hand or courier, when so delivered, except that notices and communications to the Agent pursuant to Article II or VII shall not be effective until received by the Agent. A notice received by the Agent or a Lender by telephone -52- 57 pursuant to Section 2.02(a) or 2.10(ii) shall be effective if the Agent or Lender believes in good faith that it was given by an authorized representative of the Borrower and acts pursuant thereto, notwithstanding the absence of written confirmation or any contradictory provision thereof. SECTION 8.03. No Waiver; Remedies. No failure on the part of any Lender or the Agent to exercise, and no delay in exercising, any right hereunder or under any Note shall operate as a waiver thereof; nor shall any single or partial exercise of any right hereunder or under any Note preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law. SECTION 8.04. Costs and Expenses; Indemnity. (a) The Borrower agrees to pay on demand (i) all reasonable fees and out-of-pocket expenses of counsel for the Agent in connection with the preparation, execution and delivery of this Agreement, the Notes and the other documents to be delivered hereunder and with respect to advising the Agent as to its rights and responsibilities under this Agreement, (ii) all reasonable costs and expenses incurred by the Agent and its Affiliates in initially syndicating all or any portion of the Commitments hereunder, including, without limitation, the related reasonable fees and out-of-pocket expenses of counsel for the Agent or its Affiliates, travel expenses, duplication and printing costs and courier and postage fees, and excluding any syndication fees paid to other parties joining the syndicate and (iii) all out-of-pocket costs and expenses, if any, of the Agent and the Lenders (including reasonable counsel fees and expenses), in connection with the enforcement (whether through negotiations, legal proceedings, in bankruptcy or insolvency proceedings, or otherwise) of this Agreement, the Notes and the other documents to be delivered hereunder and thereunder. (b) If any payment of principal of, or Conversion of, any Eurodollar Rate Advance is made by the Borrower to or for the account of a Lender on any day other than the last day of the Interest Period for such Advance, as a result of a prepayment pursuant to Section 2.10 or a Conversion pursuant to Section 2.08(f) or Section 2.09 or due to acceleration of the maturity of the Notes pursuant to Section 6.01 or due to any other reason attributable to the Borrower, the Borrower shall, upon demand by such Lender (with a copy of such demand to the Agent), pay to the Agent for the account of such Lender any amounts required to compensate such Lender for any additional losses, costs or expenses which it may reasonably incur as a result of such payment or Conversion, including, without limitation, any loss (excluding loss of anticipated profits), cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by any Lender to fund or maintain such Advance. -53- 58 (c) The Borrower agrees to indemnify and hold harmless the Agent, the Arranger and each Lender from and against any and all claims, damages, liabilities and expenses (including, without limitation, fees and disbursements of counsel) which may be incurred by or asserted against the Agent, the Arranger or such Lender in connection with or arising out of any investigation, litigation, or proceeding (whether or not the Agent, the Arranger or such Lender is party thereto) related to any acquisition or proposed acquisition by the Borrower, or by any Subsidiary of the Borrower, of all or any portion of the stock or substantially all the assets of any Person or any use or proposed use of the Advances by the Borrower (excluding any claims, damages, liabilities or expenses incurred by reason of the gross negligence or willful misconduct of the party to be indemnified or its employees or agents, or by reason of any use or disclosure of information relating to any such acquisition or use or proposed use of the proceeds by the party to be indemnified or its employees or agents). SECTION 8.05. Right of Set-off. Upon the declaration of the Notes as due and payable pursuant to the provisions of Section 6.01, each Lender is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by such Lender to or for the credit or the account of the Borrower against any and all of the obligations of the Borrower now or hereafter existing under this Agreement and any Note held by such Lender, irrespective of whether or not such Lender shall have made any demand under this Agreement or such Note and although such obligations may be unmatured. Each Lender agrees promptly to notify the Borrower after any such set-off and application made by such Lender, provided that the failure to give such notice shall not affect the validity of such set-off and application. The rights of each Lender under this Section 8.05 are in addition to other rights and remedies (including, without limitation, other rights of set-off) which such Lender may have. SECTION 8.06. Binding Effect. This Agreement shall become effective in accordance with the provisions of Section 3.01, and thereafter shall be binding upon and inure to the benefit of the Borrower, the Agent, the Arranger and each Lender and their respective successors and assigns, except that the Borrower shall not have the right to assign its rights hereunder or any interest herein without the prior written consent of all of the Lenders. SECTION 8.07. Assignments and Participations. (a) Each Lender (other than a Designated Bidder) may assign to one or more banks or other financial institutions all or a portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of its Commitment, the A Advances owing to it and the A Note or A Notes held by it); provided, however, that (i) each such assignment shall be of a constant, and not a varying, percentage of all rights and obligations under this Agreement (other than any right to make B -54- 59 Advances, any B Advances or any B Notes), and the same constant percentage of all rights and obligations of such assigning Lender under the Short-Term Revolving Credit Agreement, unless the Short-Term Revolving Credit Agreement has been terminated, shall be contemporaneously assigned by such assigning Lender to the same assignee pursuant to Section 8.07(a) of the Short-Term Revolving Credit Agreement, (ii) the sum of (x) the amount of the Commitment of the assigning Lender being assigned to the assignee pursuant to each such assignment (determined as of the date of the Assignment and Acceptance with respect to such assignment) plus (y) the amount of the "Commitment" of the assigning Lender under the Short-Term Revolving Credit Agreement contemporaneously assigned by such assigning Lender to such assignee as contemplated by clause (i) of this sentence must be equal to or greater than $25,000,000 and must be an integral multiple of $1,000,000, (iii) each such assignment shall be to an Eligible Assignee, and (iv) the parties to each such assignment shall execute and deliver to the Agent, for its acceptance and recording in the Register, an Assignment and Acceptance, together with any A Note or A Notes subject to such assignment and a processing and recordation fee of $3,000, and shall send to the Borrower an executed counterpart of such Assignment and Acceptance. Upon such execution, delivery, acceptance and recording, from and after the effective date specified in each Assignment and Acceptance, (x) the assignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment and Acceptance, have the rights and obligations of a Lender hereunder and (y) the Lender assignor thereunder shall, to the extent that rights and obligations hereunder have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights and be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Lender's rights and obligations under this Agreement, such Lender shall cease to be a party hereto, provided, however, such assigning Lender shall retain any claim with respect to any fee, interest, cost, expense or indemnity which accrues, or relates to an event that occurs, prior to the date of such assignment pursuant to Section 2.03, 2.06, 2.07, 2.11, 2.12, 2.15 or 8.04). (b) By executing and delivering an Assignment and Acceptance, each Lender assignor thereunder and the assignee thereunder confirm to and agree with each other and the other parties hereto as follows: (i) other than as provided in such Assignment and Acceptance, such assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or the execution, legality, validity , enforceability, genuineness, sufficiency or value of this Agreement or any other instrument or document furnished pursuant hereto; (ii) such assigning Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Borrower or the performance or observance by the Borrower of any of its obligations under this Agreement or any other instrument or document furnished pursuant hereto; (iii) such assignee confirms that it has received a copy of this Agreement, together with copies of the financial statements referred to in Section 4.01 -55- 60 and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance; (iv) such assignee will, independently and without reliance upon the Agent, such assigning Lender or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement; (v) such assignee confirms that it is (subject to approval in writing by the Borrower and the Agent) an Eligible Assignee; (vi) such assignee appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers under this Agreement as are delegated to the Agent by the terms hereof, together with such powers as are reasonably incidental thereto; and (vii) such assignee agrees that it will perform in accordance with their terms all of the obligations which by the terms of this Agreement are required to be performed by it as a Lender. (c) The Agent shall maintain at its address referred to in Section 8.02 a copy of each Assignment and Acceptance, each Designation Agreement and each Increase Agreement delivered to and accepted by it and a register for the recordation of the names and addresses of the Lenders and, with respect to Lenders other than Designated Bidders, the Commitment of, and principal amount of the A Advances owing to, each Lender from time to time (the "Register"). The entries in the Register shall be conclusive and binding for all purposes, absent manifest error, and the Borrower, the Agent and the Lenders may treat each Person whose name is recorded in the Register as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Borrower or any Lender at any reasonable time and from time to time upon reasonable prior notice. (d) Upon its receipt of an Assignment and Acceptance executed by an assigning Lender and an assignee representing that it is an Eligible Assignee, together with any A Note or A Notes subject to such assignment, the Agent shall, if such Assignment and Acceptance has been completed and is in substantially the form of Exhibit E hereto, (i) accept such Assignment and Acceptance, (ii) record the information contained therein in the Register and (iii) give prompt notice thereof to the Borrower. Within five Business Days after its receipt of such notice and its receipt of an executed counterpart of such Assignment and Acceptance, the Borrower, at its own expense, shall execute and deliver to the Agent in exchange for the surrendered A Note or A Notes a new A Note to the order of such Eligible Assignee in an amount equal to the Commitment assumed by it pursuant to such Assignment and Acceptance and, if the assigning Lender has retained a Commitment hereunder, a new A Note to the order of the assigning Lender in an amount equal to the Commitment retained by it hereunder. Such new A Note or A Notes shall be in an aggregate principal amount equal to the aggregate principal amount of such surrendered A Note or A Notes, shall be dated the effective date of such Assignment and Acceptance and shall otherwise be in substantially the form of Exhibit A hereto. -56- 61 (e) Each Lender (other than a Designated Bidder) may designate one or more banks or other entities to have a right to make B Advances as a Lender pursuant to Section 2.19; provided that (i) such Lender shall have obtained the written consent of the Agent and the Borrower, such consent not to be unreasonably withheld, (ii) no such Lender shall be entitled to make more than two such designations, (iii) each such Lender making one or more of such designations shall retain the right to make B Advances as a Lender pursuant to Section 2.19, (iv) each such designation shall be to a Designated Bidder and (v) the parties to each such designation shall execute and deliver to the Agent, for its acceptance and recording in the Register, a Designation Agreement. Upon such execution, delivery, acceptance and recording, from and after the effective date specified in each Designation Agreement, the designee thereunder shall be a party hereto with a right to make B Advances as a Lender pursuant to Section 2.19 and the obligations related thereto. (f) By executing and delivering a Designation Agreement, the Lender making the designation thereunder and its designee thereunder confirm and agree with each other and the other parties hereto as follows: (i) such Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any other instrument or document furnished pursuant hereto, (ii) such Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Borrower or the performance or observance by the Borrower of any of its obligations under this Agreement or any other instrument or document furnished pursuant hereto; (iii) such designee confirms that it has received a copy of this Agreement, together with copies of the financial statements referred to in Section 4.01 and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into the Designation Agreement; (iv) such designee will, independently and without reliance upon the Agent, such designating Lender or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement; (v) such designee confirms that it is a Designated Bidder; (vi) such designee appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers under this Agreement as are delegated to the Agent by the terms hereof, together with such powers as are reasonably incidental thereto, and (vii) such designee agrees that it will perform in accordance with their terms all of the obligations which by the terms of this Agreement are required to be performed by it as a Lender. (g) Upon its receipt of a Designation Agreement executed by a designating Lender and a designee representing that it is a Designated Bidder, the Agent shall, if such Designation Agreement has been completed and is substantially in the form of Exhibit K hereto, (i) accept such Designation Agreement, (ii) record the -57- 62 information contained therein in the Register and (iii) give prompt notice thereof to the Borrower. (h) Each Lender may sell participations to one or more banks or other entities in or to all or a portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of its Commitment, and the Advances owing to it and the Note or Notes held by it); provided, however, that (i) such Lender's obligations under this Agreement (including, without limitation, its Commitment to the Borrower hereunder) shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, (iii) such Lender shall remain the holder of any such Note for all purposes of this Agreement, (iv) the Borrower, the Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement, (v) such Lender shall continue to be able to agree to any modification or amendment of this Agreement or any waiver hereunder without the consent, approval or vote of any such participant or group of participants, other than modifications, amendments and waivers which (A) postpone any date fixed for any payment of, or reduce any payment of, principal of or interest on such Lender's Note or any facility fees or utilization fees payable under this Agreement, or (B) increase the amount of such Lender's Commitment in a manner which would have the effect of increasing the amount of a participant's participation, or (C) reduce the interest rate payable under this Agreement and such Lender's Note, or (D) consent to the assignment or the transfer by the Borrower of any of its rights and obligations under the Agreement, and (vi) except as contemplated by the immediately preceding clause (v), no participant shall be deemed to be or to have any of the rights or obligations of a "Lender" hereunder. (i) Any Lender may, in connection with any assignment, designation or participation or proposed assignment, designation or participation pursuant to this Section 8.07, disclose to the assignee, designee or participant or proposed assignee, designee or participant, any information relating to the Borrower furnished to such Lender by or on behalf of the Borrower; provided that, prior to any such disclosure, the assignee, designee or participant or proposed assignee, designee or participant shall agree in writing for the benefit of the Borrower to preserve the confidentiality of any confidential information relating to the Borrower received by it from such Lender in a manner consistent with Section 8.08. (j) Anything in this Agreement to the contrary notwithstanding, any Lender may at any time create a security interest in all or any portion of its rights under this Agreement (including, without limitation, the Advances owing to it) and the Notes issued to it hereunder in favor of any Federal Reserve Bank in accordance with Regulation A of the Board of Governors of the Federal Reserve System (or any successor regulation) and the applicable operating circular of such Federal Reserve Bank. -58- 63 (k) Each Lender may assign to one or more Eligible Assignees any B Note or B Notes held by it. SECTION 8.08. Confidentiality. Each Lender and the Agent (each, a "party") agrees that it will use its best reasonable efforts not to disclose, without the prior consent of the Borrower (other than to its, or its Affiliate's, employees, auditors, accountants, counsel or other representatives, whether existing at the date of this Agreement or any subsequent time), any information with respect to the Borrower which is furnished pursuant to this Agreement, provided that any party may disclose any such information (i) as has become generally available to the public, (ii) as may be required or appropriate in any report, statement or testimony submitted to any municipal, state or Federal regulatory body having or claiming to have jurisdiction over such party or to the Board of Governors of the Federal Reserve System or the Federal Deposit Insurance Corporation or similar organizations (whether in the United States or elsewhere) or their successors, (iii) as may be required or appropriate in response to any summons or subpoena or in connection with any litigation or regulatory proceeding, (iv) in order to comply with any law, order, regulation or ruling applicable to such party, or (v) to any prospective assignee, designee or participant in connection with any contemplated assignment of any rights or obligations hereunder, any designation or any sale of any participation therein, by such party pursuant to Section 8.07, if such prospective assignee, designee or participant, as the case may be, executes an agreement with the Borrower containing provisions substantially similar to those contained in this Section 8.08; provided, however, that the Borrower acknowledges that the Agent has disclosed and may continue to disclose such information as the Agent in its sole discretion determines is appropriate to the Lenders from time to time. SECTION 8.09. Consent to Jurisdiction. (a) The Borrower hereby irrevocably submits to the jurisdiction of any New York State or Federal court sitting in New York City and any appellate court from any thereof in any action or proceeding by the Agent, the Arranger, any Lender or the holder of any Note in respect of, but only in respect of, any claims or causes of action arising out of or relating to this Agreement or the Notes (such claims and causes of action, collectively, being "Permitted Claims"), and the Borrower hereby irrevocably agrees that all Permitted Claims may be heard and determined in such New York State court or in such Federal court. The Borrower hereby irrevocably waives, to the fullest extent it may effectively do so, the defense of an inconvenient forum to the maintenance of such action or proceeding in any aforementioned court in respect of Permitted Claims. The Borrower hereby irrevocably appoints CT Corporation System (the "Process Agent"), with an office on the date hereof at 1633 Broadway, New York, New York 10019, as its agent to receive on behalf of the Borrower and its property service of copies of the summons and complaint and any other process which may be served by the Agent, the Arranger, any Lender or the holder of any Note in any such action or proceeding in any aforementioned court in respect of Permitted Claims. Such -59- 64 service may be made by delivering a copy of such process to the Borrower by courier and by certified mail (return receipt requested), fees and postage prepaid, both (i) in care of the Process Agent at the Process Agent's above address and (ii) at the Borrower's address specified pursuant to Section 8.02, and the Borrower hereby irrevocably authorizes and directs the Process Agent to accept such service on its behalf. The Borrower agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. (b) Nothing in this Section 8.09 (i) shall affect the right of the Arranger, the Borrower, any Lender, the holder of any Note or the Agent to serve legal process in any other manner permitted by law or affect any right otherwise existing of the Borrower, any Lender, the Arranger, the holder of any Note or the Agent to bring any action or proceeding in the courts of other jurisdictions or (ii) shall be deemed to be a general consent to jurisdiction in any particular court or a general waiver of any defense or a consent to jurisdiction of the courts expressly referred to in subsection (a) above in any action or proceeding in respect of any claim or cause of action other than Permitted Claims. SECTION 8.10. Governing Law. This Agreement and the Notes shall be governed by, and construed in accordance with, the laws of the State of New York. SECTION 8.11. Execution in Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Delivery to the Agent of a counterpart executed by a Lender shall constitute delivery of such counterpart to all of the Lenders. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written. BURLINGTON RESOURCES INC. By: ------------------------ Name: ---------------------- Title: --------------------- -60- 65 CITIBANK, N.A., as Agent By: ------------------------- Name: ----------------------- Title: ---------------------- Commitments The Initial Lenders ----------- ------------------- $60,000,000 CITIBANK, N.A. By: ------------------------- Name: ----------------------- Title: ---------------------- $60,000,000 MORGAN GUARANTY TRUST COMPANY OF NEW YORK By: ------------------------- Name: ----------------------- Title: ---------------------- $60,000,000 NATIONSBANK OF TEXAS, N.A. By: ------------------------- Name: ----------------------- Title: ---------------------- $60,000,000 TEXAS COMMERCE BANK NATIONAL ASSOCIATION By: ------------------------- Name: ----------------------- Title: ---------------------- -61- 66 Commitments ----------- $42,000,000 BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION By: ------------------------- Name: ----------------------- Title: ---------------------- $42,000,000 THE FIRST NATIONAL BANK OF BOSTON By: ------------------------- Name: ----------------------- Title: ---------------------- $42,000,000 CREDIT LYONNAIS CAYMAN ISLAND BRANCH By: ------------------------ Name: ---------------------- Title: --------------------- $42,000,000 MELLON BANK, N.A. By: ------------------------- Name: ----------------------- Title: ---------------------- $42,000,000 TORONTO DOMINION (TEXAS), INC. By: ------------------------- Name: ----------------------- Title: ---------------------- -62- 67 Commitments ----------- $25,000,000 ABN AMRO BANK N.V. By: ------------------------- Name: ----------------------- Title: ---------------------- By: ------------------------- Name: ----------------------- Title: ---------------------- $25,000,000 THE BANK OF TOKYO, LTD., DALLAS AGENCY By: ------------------------- Name: ----------------------- Title: ---------------------- $25,000,000 FIRST INTERSTATE BANK OF TEXAS, N.A. By: ------------------------- Name: ----------------------- Title: ---------------------- $25,000,000 THE NORTHERN TRUST COMPANY By: ------------------------- Name: ----------------------- Title: ---------------------- -63- 68 Commitments ----------- $25,000,000 THE SUMITOMO BANK, LIMITED, HOUSTON AGENCY By: ------------------------- Name: ----------------------- Title: ---------------------- $25,000,000 UNION BANK OF SWITZERLAND By: ------------------------- Name: ----------------------- Title: ---------------------- By: ------------------------- Name: ----------------------- Title: ---------------------- $600,000,000 Total of the Commitments ============ -64- 69 EXHIBIT A A PROMISSORY NOTE U.S. $[Amount of Lender's Dated: , 19 Commitment] ------------ -- FOR VALUE RECEIVED, the undersigned, Burlington Resources Inc., a Delaware corporation (the "Borrower"), HEREBY PROMISES TO PAY to the order of ________________________ (the "Lender") for the account of its Applicable Lending Office (as defined in the Credit Agreement referred to below) the principal sum of U.S. $[amount of the Lender's Commitment in figures] or, if less, the aggregate unpaid principal amount of all A Advances (as defined below) owing to the Lender by the Borrower pursuant to the Credit Agreement (as hereinafter defined) outstanding on the Termination Date (as defined in the Credit Agreement) on the Termination Date. The Borrower promises to pay interest on the unpaid principal amount of each A Advance from the date of such A Advance until such principal amount is paid in full, at such interest rates, and payable at such times, as are specified in the Credit Agreement. Both principal and interest are payable in lawful money of the United States of America to Citibank, N.A., as Agent, at 399 Park Avenue, New York, New York 10043, in same day funds. All A Advances made by the Lender to the Borrower pursuant to the Credit Agreement, and all payments made on account of principal thereof, shall be recorded by the Lender and, prior to any transfer hereof, endorsed on the grid attached hereto which is part of this A Promissory Note; provided, however, that any failure to make such an endorsement on such grid shall in no way impair or otherwise effect the Borrower's obligations hereunder. This A Promissory Note is one of the A Notes referred to in, and is entitled to the benefits of, the Amended and Restated Long-Term Revolving Credit Agreement dated as of July 14, 1995 (as may be amended or otherwise modified from time to time, the "Credit Agreement") among the Borrower, the Lender, certain other lenders parties thereto, and Citibank, N.A., as Agent for the Lender and such other lenders. The Credit Agreement, among other things, (i) provides for the making of advances pursuant to Section 2.01 thereof (the "A Advances") by the Lender to the Borrower from time to time in an aggregate amount not to exceed at any time outstanding the U.S. dollar amount first above mentioned, the indebtedness of the Borrower resulting from each such A Advance being evidenced by this A Promissory Note, and (ii) contains provisions for acceleration of the maturity hereof upon the 70 happening of certain stated events and also for prepayments on account of principal hereof prior to the maturity hereof upon the terms and conditions therein specified. BURLINGTON RESOURCES INC. By: -------------------------- Name: ------------------------ Title: ----------------------- -2- 71 [INSERT GRID HERE] -3- 72 EXHIBIT B B PROMISSORY NOTE U.S. $ Dated: , 19 ---------------------- ----------- -- FOR VALUE RECEIVED, the undersigned, Burlington Resources Inc., a Delaware corporation (the "Borrower"), HEREBY PROMISES TO PAY to the order of _________________ (the "Lender") for the account of its Applicable Lending Office (as defined in the Credit Agreement referred to below), on _________, 19__, the principal amount of U.S. $_____________. The Borrower promises to pay interest on the unpaid principal amount hereof from the date hereof until such principal amount is paid in full, at the interest rate, subject to Section 2.06(b) of the Credit Agreement, and payable on the interest payment date or dates provided below: Interest Rate: ______% per annum (calculated on the basis of a year of ___ days for the actual number of days elapsed). Interest Payment Date or Dates: _____________ ______________. Both principal and interest are payable in lawful money of the United States of America to the account of the Lender at the office of Citibank, N.A., as Agent, at 399 Park Avenue, New York, New York 10043, in same days funds, free and clear of and without any deduction, with respect to the payee named above, for any and all present and future taxes, deductions, charges or withholdings, and all liabilities with respect thereto. This B Promissory Note is one of the B Notes referred to in, and is entitled to the benefits of, the Amended and Restated Long-Term Revolving Credit Agreement dated as of July 14, 1995, (as may be amended or otherwise modified from time to time, the "Credit Agreement") among the Borrower, the Lender, certain other lenders parties thereto, and Citibank, N.A., as Agent for the Lender and such other lenders. The Credit Agreement, among other things, contains provisions for acceleration of the maturity hereof upon the happening of certain stated events. This B Promissory Note is not subject to prepayment except as set forth below: [insert applicable prepayment provisions, if any] -------------------------------------------------------------- -------------------------------------------------------------- -------------------------------------------------------------- 73 The Borrower hereby waives presentment, demand, protest and notice of any kind. No failure to exercise, and no delay in exercising, any rights hereunder on the part of the holder hereof shall operate as a waiver of such rights. This B Promissory Note shall be governed by, and construed in accordance with, the laws of the State of New York. BURLINGTON RESOURCES INC. By: ------------------------ Name: ---------------------- Title: --------------------- -2- 74 EXHIBIT C NOTICE OF A BORROWING Citibank, N.A., as Agent for the Lenders parties to the Credit Agreement referred to below c/o Citicorp North America, Inc. 1200 Smith Street, Suite 2000 Houston, Texas 77002 [Date] Attention: Burlington Resources Inc., Account Officer Ladies and Gentlemen: The undersigned, Burlington Resources Inc., refers to the Amended and Restated Long-Term Revolving Credit Agreement dated as of July 14, 1995 (as may be amended or otherwise modified from time to time, the "Credit Agreement", the terms defined therein being used herein as therein defined), among the undersigned, certain Lenders parties thereto and Citibank, N.A., as Agent for said Lenders, and hereby gives you notice, irrevocably, pursuant to Section 2.02 of the Credit Agreement that the undersigned hereby requests an A Borrowing under the Credit Agreement, and in that connection sets forth below the information relating to such A Borrowing (the "Proposed A Borrowing") as required by Section 2.02(a) of the Credit Agreement: (i) The Business Day of the Proposed A Borrowing is ___________, 19__. (ii) The Type of A Advances comprising the Proposed A Borrowing is [Base Rate Advances] [Eurodollar Rate Advances]. (iii) The aggregate amount of the Proposed A Borrowing is $___________. (iv)(1) The Interest Period for each Eurodollar Rate Advance made as part of the Proposed A Borrowing is [____] month[s]. The undersigned hereby certifies that the following statements are true on the date hereof, and will be true on the date of the Proposed A Borrowing, before - ----------------------------- (1) To be used for Eurodollar Rate Advances only. 75 Citibank, N.A., as Agent [Date] and immediately after giving effect thereto and to the application of the proceeds therefrom: (a) each representation and warranty contained in Section 4.01 is correct in all material respects as though made on and as of each such date; (b) no event has occurred and is continuing, or would result from the Proposed A Borrowing, which constitutes an Event of Default or would constitute an Event of Default but for the requirement that notice be given or time elapse or both; and (c) the aggregate amount of the borrowings under the Credit Agreement (including, without limitation, the Proposed A Borrowing) and under other agreements or facilities or evidenced by other instruments or documents is not in excess of the aggregate amount of such borrowings that has been approved by the Board of Directors of the Borrower. Very truly yours, BURLINGTON RESOURCES INC. By: ------------------------------ Title: --------------------------- -2- 76 EXHIBIT D NOTICE OF B BORROWING Citibank, N.A., as Agent for the Lenders parties to the Credit Agreement referred to below 399 Park Avenue New York, New York 10043 [Date] Attention: Burlington Resources Inc., Account Officer Gentlemen: The undersigned, Burlington Resources Inc., refers to the Amended and Restated Long-Term Revolving Credit Agreement dated as of July 14, 1995 (as may be amended or otherwise modified from time to time, the "Credit Agreement", the terms defined therein being used herein as therein defined), among the undersigned, certain Lenders parties thereto and Citibank, N.A., as Agent for said Lenders, and hereby gives you notice pursuant to Section 2.19 of the Credit Agreement that the undersigned hereby requests a B Borrowing under the Credit Agreement, and in that connection sets forth the terms on which such B Borrowing (the "Proposed B Borrowing") is requested to be made: (A) Date of B Borrowing ----------------------- (B) Proposed Amount of B Borrowing ----------------------- (C) Maturity Date ----------------------- (D) Interest Rate Basis ----------------------- (E) Interest Payment Date(s) ----------------------- (F) Proposed Amount of B Reduction ----------------------- (G) ----------------------- ----------------------- (H) ----------------------- ----------------------- The undersigned hereby certifies that the following statements are true on the date hereof, and will be true on the date of the Proposed B Borrowing, before and immediately after giving effect thereto and to the application of the proceeds therefrom: 77 Citibank, N.A., as Agent [Date] (a) each representation and warranty contained in Section 4.01 of the Credit Agreement is correct in all material respects as though made on and as of each such date; (b) no event has occurred and is continuing, or would result from the Proposed B Borrowing, which constitutes an Event of Default or would constitute an Event of Default but for the requirement that notice be given or time elapse or both; and (c) the aggregate amount of the borrowings under the Credit Agreement (including, without limitation, the Proposed B Borrowing) and under other agreements or facilities or evidenced by other instruments or documents is not in excess of the aggregate amount of such borrowings that has been approved by the Board of Directors of the Borrower. The undersigned hereby confirms that the Proposed B Borrowing is to be made available to it in accordance with Section 2.19(a)(v) of the Credit Agreement. Very truly yours, BURLINGTON RESOURCES INC. By: ---------------------------- Title: ------------------------- -2- 78 EXHIBIT E ASSIGNMENT AND ACCEPTANCE Dated , 19 ----------- -- Reference is made to the Amended and Restated Long-Term Revolving Credit Agreement dated as of July 14, 1995 (as may be amended or otherwise modified from time to time, the "Credit Agreement") among Burlington Resources Inc., a Delaware corporation (the "Borrower"), the Lenders (as defined in the Credit Agreement) and Citibank, N.A., as Agent for the Lenders (the "Agent"). Capitalized terms defined in the Credit Agreement and not defined herein are used herein as therein defined. _______________ (the "Assignor") and _____________ (the "Assignee") agree as follows: 1. The Assignor hereby sells and assigns to the Assignee, and the Assignee hereby purchases and assumes from the Assignor, that interest in and to all of the Assignor's rights and obligations under the Credit Agreement as of the date hereof (other than in respect of B Advances and B Notes) which represents the percentage interest specified on Schedule 1 of all outstanding rights and obligations under the Credit Agreement (other than in respect of B Advances and B Notes), including, without limitation, such interest in the Assignor's Commitment, the A Advances owing to the Assignor, and the A Note[s] held by the Assignor. After giving effect to such sale and assignment, the Assignee's Commitment and the amount of the A Advances owing to the Assignee will be as set forth in Section 2 of Schedule 1. 2. The Assignor (i) represents and warrants that it is the legal and beneficial owner of the interest being assigned by it hereunder and that such interest is free and clear of any adverse claim; (ii) represents and warrants that it has made or is contemporaneously making herewith, to the Assignee as contemplated by Section 8.07 of the Credit Agreement, an assignment under the Short-Term Revolving Credit Agreement, unless the Short-Term Revolving Credit Agreement has been terminated; (iii) makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Credit Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit Agreement or any other instrument or document furnished pursuant thereto; (iv) makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Borrower or the performance or observance by the Borrower of any of its obligations under the Credit Agreement or any other instrument or document furnished pursuant thereto; and (v) attaches the A Note[s] 79 referred to in paragraph 1 above and requests that the Agent exchange such A Note[s] for a new A Note payable to the order of the Assignee in an amount equal to the Commitment assumed by the Assignee pursuant hereto or new A Notes payable to the order of the Assignee in an amount equal to the Commitment assumed by the Assignee pursuant hereto and the Assignor in an amount equal to the Commitment retained by the Assignor under the Credit Agreement, respectively, as specified on Schedule 1 hereto. 3. The Assignee (i) confirms that it has received a copy of the Credit Agreement, together with copies of the financial statements referred to in Section 4.01 thereof and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Acceptance; (ii) confirms that it has entered into or is contemporaneously herewith entering into, with the Assignor as contemplated by Section 8.07 of the Credit Agreement, an assignment under the Short-Term Revolving Credit Agreement, unless the Short-Term Revolving Credit Agreement has been terminated; (iii) agrees that it will, independently and without reliance upon the Agent, the Assignor or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement; (iv) confirms that it is (subject to approval in writing by the Borrower and the Agent) an Eligible Assignee; (v) appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers under the Credit Agreement as are delegated to the Agent by the terms thereof, together with such powers as are reasonably incidental thereto; (vi) agrees that it will perform in accordance with their terms all of the obligations which by the terms of the Credit Agreement are required to be performed by it as a Lender; [and] (vii) specifies as its Domestic Lending Office (and address for notices) and Eurodollar Lending Office the offices set forth beneath its name on the signature pages hereof [and (viii) attaches the forms prescribed by the Internal Revenue Service of the United States certifying as to the Assignee's status for purposes of determining exemption from United States withholding taxes with respect to all payments to be made to the Assignee under the Credit Agreement and the Notes or such other documents as are necessary to indicate that all such payments are subject to such rates at a rate reduced by an applicable tax treaty](1). 4. Following the execution of this Assignment and Acceptance by the Assignor and the Assignee and the execution of its consent hereto by the Borrower, the Assignor will deliver this Assignment and Acceptance to the Agent for acceptance and recording by the Agent. The effective date of this Assignment and Acceptance shall be the date of acceptance thereof by the Agent, unless otherwise specified on Schedule 1 hereto (the "Effective Date"). - -------------------------------- (1) If the Assignee is organized under the laws of a jurisdiction outside of the United States. -2- 80 5. Upon such acceptance and recording by the Agent, as of the Effective Date, (i) the Assignee shall be a party to the Credit Agreement and, to the extent provided in this Assignment and Acceptance, have the rights and obligations of a Lender thereunder and (ii) the Assignor shall, to the extent provided in this Assignment and Acceptance, relinquish its rights and be released from its obligations under the Credit Agreement, provided, however, the Assignor shall retain any claim with respect to any fee, interest, cost, expense or indemnity which accrues, or relates to an event that occurs, prior to the Effective Date pursuant to Section 2.03, 2.06, 2.07, 2.11, 2.12, 2.15 or 8.04 of the Agreement. 6. Upon such acceptance and recording by the Agent, from and after the Effective Date, the Agent shall make all payments under the Credit Agreement and the Notes in respect of the interest assigned hereby (including, without limitation, all payments of principal, interest and commitment fees with respect thereto) to the Assignee. The Assignor and Assignee shall make all appropriate adjustments in payments under the Credit Agreement and the Notes for periods prior to the Effective Date directly between themselves. 7. This Assignment and Acceptance shall be governed by, and construed in accordance with, the laws of the State of New York. IN WITNESS WHEREOF, the parties hereto have caused this Assignment and Acceptance to be executed by their respective officers thereunto duly authorized, as of the date first above written, such execution being made on Schedule 1 hereto. -3- 81 Schedule 1 to Assignment and Acceptance Dated , 19 --------- -- Section 1. Percentage Interest: % ----------- Section 2. Assignee's Commitment: $ -------------- Aggregate Outstanding Principal Amount of Advances owing to the Assignee: $ ------ Note payable to the order of the Assignee Dated: , 19 --------- --- Principal amount: ------ Note payable to the order of the Assignor Dated: , 19 --------- --- Principal amount: ------ Section 3. Effective Date(2): , 19 --------- --- [NAME OF ASSIGNOR] By: -------------------------- Title: [NAME OF ASSIGNEE] By: ------------------------- Title: - ---------------------- (2) This date should be no earlier than the date of acceptance by the Agent. -4- 82 Domestic Lending Office (and address for notices): [Address] Eurodollar Lending Office: [Address] Accepted this day ---- of , 19 : ------------ -- CITIBANK, N.A. By: ---------------------- Name: -------------------- Title: ------------------- Consented to this day -- of , 19 : ---------- -- BURLINGTON RESOURCES INC. By: ---------------------- Name: -------------------- Title: ------------------- -5- 83 EXHIBIT F-1 COMMITMENT INCREASE AGREEMENT This Commitment Increase Agreement dated as of ________, 19__ (this "Agreement") is by and among (i) Burlington Resources Inc., a Delaware corporation ("Borrower"), (ii) Citibank, N.A. in its capacity as Agent under the Amended and Restated Long-Term Revolving Credit Agreement dated as of July 14, 1995 (as may be amended or otherwise modified from time to time, the "Credit Agreement", capitalized terms that are defined in the Credit Agreement and not defined herein are used herein as therein defined) among the Borrower, Citibank, N.A. in such capacity and the lenders party thereto, and (iii) __________________ ("Increasing Lender"). Preliminary Statements A. Pursuant to Section 2.20 of the Credit Agreement, the Borrower has the right, subject to the terms and conditions thereof, to effectuate from time to time an increase in the total Commitments under the Credit Agreement by agreeing with a Lender to increase that Lender's Commitment. B. The Borrower has given notice to the Agent of its intention to increase the total Commitments pursuant to such Section 2.20 by increasing the Commitment of the Increasing Lender from $___________ to $_____________, and the Agent is willing to consent thereto. Accordingly, the parties hereto agree as follows: Section 1. Increase of Commitment. Pursuant to Section 2.20 of the Credit Agreement, the Commitment of the Increasing Lender is hereby increased from $__________ to $____________. Section 2. New Note. The Borrower agrees to promptly execute and deliver to the Increasing Lender an A Note in the amount of its increased Commitment set forth in Section 1 above (the "New Note"), and the Increasing Lender agrees to return to the Borrower, with reasonable promptness, the A Note previously delivered to the Increasing Lender by the Borrower. Section 3. Consent. The Agent hereby consents to the increase in the Commitment of the Increasing Lender effectuated hereby. Section 4. Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York. 84 Section 5. Execution in Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Section 6. Lender Credit Decision. The Increasing Lender acknowledges that it has, independently and without reliance upon the Agent or any other Lender and based on the financial statements referred to in Section 4.01 and such other documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement and to agree to the various matters set forth herein. The Increasing Lender also acknowledges that it will, independently and without reliance upon the Agent or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement. Section 7. Representations and Warranties of the Borrower. The Borrower represents and warrants as follows: (a) The execution, delivery and performance by the Borrower of this Agreement and the New Note are within the Borrower's corporate powers, have been duly authorized by all necessary corporate action, and do not contravene (i) the Borrower's certificate of incorporation or by-laws or (ii) law or any contractual restriction binding on or affecting the Borrower. (b) No authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for the due execution, delivery and performance by the Borrower of this Agreement or the New Note which has not been duly made or obtained. (c) This Agreement constitutes, and the New Note when delivered hereunder shall constitute, legal, valid and binding obligations of the Borrower enforceable against the Borrower in accordance with their respective terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors rights generally or by general principles of equity. (d) No Increase (as defined in Section 2.20 of the Credit Agreement) in Commitments pursuant to this Agreement results in the total Commitments of all Lenders exceeding $800,000,000 or results in the aggregate amount of all Increases in the Commitments of all Lenders effectuated pursuant to Section 2.20 of the Credit Agreement since the date of the Credit Agreement exceeding $200,000,000. No prior Increase has taken effect during the calendar quarter that includes the effective date hereof. -2- 85 (e) The Borrower has outstanding public long-term senior unsecured debt securities that are rated by S&P or Moody's of which the lowest such rating by Moody's is A3 or better or of which the lowest such rating by S&P is A- or better. (f) No event has occurred and is continuing which constitutes an Event of Default or would constitute an Event of Default but for the requirement that notice be given or time elapse or both. (g) Immediately prior to, or simultaneously with, the Increase in Commitment pursuant to this Agreement, the Borrower has prepaid in accordance with the terms of the Credit Agreement, all outstanding A Advances, if any. (h) Unless the Short-Term Revolving Credit Agreement has been terminated, the Borrower has caused, or is simultaneously causing, the Increasing Lender's "Commitment" (under and as defined in the Short-Term Revolving Credit Agreement) to be increased pursuant to Section 2.20 thereof by the same percentage as the Increasing Lender's Commitment under the Credit Agreement is being increased pursuant to Section 2.20 of the Credit Agreement. (i) Attached hereto are resolutions duly adopted by the Board of Directors of the Borrower sufficient to authorize this Agreement and the New Note, and such resolutions are in full force and effect. Section 8. Default. Without limiting any other event that may constitute an Event of Default, in the event any representation or warranty set forth herein shall prove to have been incorrect in any material respect when made, such event shall constitute an "Event of Default" under the Credit Agreement. Section 9. Expenses. The Borrower agrees to pay on demand all costs and expenses of the Agent in connection with the preparation, negotiation, execution and delivery of this Agreement and the New Note, including, without limitation, the reasonable fees and out-of-pocket expenses of counsel for the Agent with respect thereto. Section 10. Effectiveness. When, and only when, the Agent shall have received counterparts of, or telecopied signature pages of, this Agreement executed by the Borrower, the Agent and the Increasing Lender, this Agreement shall become effective as of the date first written above. -3- 86 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written. BORROWER: -------- BURLINGTON RESOURCES INC. By: -------------------------- Name: ------------------------ Title: ----------------------- AGENT: ----- CITIBANK, N.A., as Agent By: -------------------------- Name: ------------------------ Title: ----------------------- INCREASING LENDER: ----------------- ------------------------------ By: -------------------------- Name: ------------------------ Title: ----------------------- Attachment -4- 87 EXHIBIT F-2 NEW LENDER AGREEMENT This New Lender Agreement dated as of ______, 19__ (this "Agreement") is by and among (i) Burlington Resources Inc., a Delaware corporation ("Borrower"), (ii) Citibank, N.A. in its capacity as Agent under the Amended and Restated Long-Term Revolving Credit Agreement dated as of July 14, 1995 (as may be amended or otherwise modified from time to time, the "Credit Agreement", capitalized terms that are defined in the Credit Agreement and not defined herein are used herein as therein defined) among the Borrower, Citibank, N.A. in such capacity and the lenders party thereto, and (iii) _____________________ ("New Lender"). Preliminary Statements C. Pursuant to Section 2.20 of the Credit Agreement, the Borrower has the right, subject to the terms and conditions thereof, to effectuate from time to time an increase in the total Commitments under the Credit Agreement by adding to the Credit Agreement one or more banks or other financial institutions. D. The Borrower has given notice to the Agent pursuant to Section 2.20 of the Credit Agreement of its intention to increase the total Commitments pursuant to such Section 2.20 by adding the New Lender to the Credit Agreement as a Lender with a Commitment of $__________, and the Agent is willing to consent thereto. Accordingly, the parties hereto agree as follows: Section 1. Addition of New Lender. Pursuant to Section 2.20 of the Credit Agreement, the New Lender is hereby added to the Credit Agreement as a Lender with a Commitment of $__________. The New Lender specifies as its Domestic Lending Office and Eurodollar Lending Office the following: Domestic Lending Address: Office: Attention: Telephone: Telecopy: 88 Eurodollar Lending Address: Office: Attention: Telephone: Telecopy: Section 2. New Note. The Borrower agrees to promptly execute and deliver to the New Lender an A Note in the amount of its Commitment set forth in Section 1 above ("New Note"). Section 3. Consent. The Agent and the Borrower hereby consent to the increase in the Commitments and addition of the New Lender effectuated hereby. Section 4. Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York. Section 5. Execution in Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Section 6. Lender Credit Decision. The New Lender acknowledges that it has, independently and without reliance upon the Agent or any other Lender and based on the financial statements referred to in Section 4.01 and such other documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement and to agree to the various matters set forth herein. The New Lender also acknowledges that it will, independently and without reliance upon the Agent or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement. Section 7. Representations and Warranties of the Borrower. The Borrower represents and warrants as follows: (a) The execution, delivery and performance by the Borrower of this Agreement and the New Note are within the Borrower's corporate powers, have been duly authorized by all necessary corporate action, and do not contravene (i) the Borrower's certificate of incorporation or by-laws or (ii) law or any contractual restriction binding on or affecting the Borrower. (b) No authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for the -2- 89 due execution, delivery and performance by the Borrower of this Agreement or the New Note which has not been duly made or obtained. (c) This Agreement constitutes, and the New Note when delivered hereunder shall constitute, legal, valid and binding obligations of the Borrower enforceable against the Borrower in accordance with their respective terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors rights generally or by general principles of equity. (d) No Increase (as defined in Section 2.20 of the Credit Agreement) in Commitments pursuant to this Agreement results in the total Commitments of all Lenders exceeding $800,000,000 or results in the aggregate amount of all Increases in the Commitments of all Lenders effectuated pursuant to Section 2.20 of the Credit Agreement since the date of the Credit Agreement exceeding $200,000,000. No prior Increase has taken effect during the calendar quarter that includes the effective date hereof. (e) The Borrower has outstanding public long-term senior unsecured debt securities that are rated by S&P or Moody's of which the lowest such rating by Moody's is A3 or better or of which the lowest such rating by S&P is A- or better. (f) No event has occurred and is continuing which constitutes an Event of Default or would constitute an Event of Default but for the requirement that notice be given or time elapse or both. (g) Immediately prior to, or simultaneously with, the Increase in Commitments pursuant to this Agreement, the Borrower has prepaid in accordance with the terms of the Credit Agreement, all outstanding A Advances, if any. (h) Unless the Short-Term Revolving Credit Agreement has been terminated, the Borrower has caused, or is simultaneously causing, the New Lender to become a party to the Short-Term Revolving Credit Agreement pursuant to Section 2.20 thereof with a "Commitment" (under and as defined in the Short-Term Revolving Credit Agreement) that constitutes the same percentage of all "Commitments" thereunder as the percentage that the New Lender's Commitment under the Credit Agreement constitutes of all Commitments under the Credit Agreement. -3- 90 (i) Prior to the Increase in Commitment pursuant to this Agreement, the Borrower has offered the Lenders the right to participate in such Increase by increasing their respective Commitments. (j) Attached hereto are resolutions duly adopted by the Board of Directors of the Borrower sufficient to authorize this Agreement and the New Note, and such resolutions are in full force and effect. Section 8. Default. Without limiting any other event that may constitute an Event of Default, in the event any representation or warranty set forth herein shall prove to have been incorrect in any material respect when made, such event shall constitute an "Event of Default" under the Credit Agreement. Section 9. Expenses. The Borrower agrees to pay on demand all costs and expenses of the Agent in connection with the preparation, negotiation, execution and delivery of this Agreement and the New Note, including, without limitation, the reasonable fees and out-of-pocket expenses of counsel for the Agent with respect thereto. Section 10. Effectiveness. When, and only when, the Agent shall have received counterparts of, or telecopied signature pages of, this Agreement executed by the Borrower, the Agent and the New Lender, this Agreement shall become effective as of the date first written above. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written. BORROWER: BURLINGTON RESOURCES INC. By: -------------------------- Name: ------------------------ Title: ----------------------- -4- 91 AGENT: ----- CITIBANK, N.A., as Agent By: -------------------------- Name: ------------------------ Title: ----------------------- NEW LENDER: ---------- ------------------------------ By: -------------------------- Name: ------------------------ Title: ----------------------- -5- 92 EXHIBIT G FORM OF OPINION OF VICE PRESIDENT, LAW FOR BORROWER July 14, 1995 To each of the Lenders and the Agent Referred to Below c/o Citibank, N.A. 1200 Smith Street, Suite 2000 Houston, Texas 77002 Ladies and Gentlemen: This opinion is furnished to you pursuant to Section 3.01(d) of the Amended and Restated Long-Term Revolving Credit Agreement, dated as of July 14, 1995 (the "Credit Agreement"), among Burlington Resources, Inc., a Delaware corporation (the "Company"), the financial institutions party thereto (each a "Lender," and together the "Lenders"), and Citibank, N.A., as agent for the Lenders. Unless the context otherwise requires, all capitalized terms used herein without definition shall have the meanings ascribed to them in the Credit Agreement. I am Vice President, Law of the Company, and I, or attorneys over whom I exercise supervision, have acted as counsel for the Company in connection with the preparation, execution and delivery of the Credit Agreement. In that connection, I or such attorneys have examined: (1) The Credit Agreement, executed by the parties thereto; (2) The fifteen A Notes, executed by the Company; and (3) The other documents furnished by the Company pursuant to Section 3.01 of the Credit Agreement. I, or attorneys over whom I exercise supervision, have also examined the originals, or copies certified to our satisfaction, of the agreements, instruments and other documents, and all of the orders, writs, judgments, awards, injunctions and decrees, which affect or purport to affect the Company's ability to perform the Company's obligations under the Credit Agreement or the Notes (collectively referred to herein as the "Documents"). In addition, I, or attorneys over whom I exercise supervision, have examined the originals, or copies certified to our satisfaction, of such other corporate records of the Company, certificates of public officials and of officers of the Company, 93 and agreements, instruments and other documents, as I have deemed necessary as a basis for the opinions hereinafter expressed. In all such examinations, I, or attorneys over whom I exercise supervision, have assumed the legal capacity of all natural persons executing documents, the genuineness of all signatures on original or certified, conformed or reproduction copies of documents of all parties (other than, with respect to the Documents, the Company), the authenticity of original and certified documents and the conformity to original or certified copies of all copies submitted to such attorneys or me as conformed or reproduction copies. As to various questions of fact relevant to the opinions expressed herein, I have relied upon, and assume the accuracy of, representations and warranties contained in the Credit Agreement and certificates and oral or written statements and other information of or from public officials, officers and/or representatives of the Company and others. To the extent it may be relevant to the opinions expressed herein, I have assumed that the parties to the Documents other than the Company have the power to enter into and perform such documents and that such documents have been duly authorized, executed and delivered by, and constitute legal, valid and binding obligations of, such parties. The opinions expressed below are limited to the federal laws of the United States and, to the extent relevant hereto, the General Corporation Law of the State of Delaware, as currently in effect. I assume no obligation to supplement this opinion if any applicable laws change after the date hereof or if I become aware of any facts that might change the opinions expressed herein after the date hereof. Based upon the foregoing and upon such investigation as I have deemed necessary, and subject to the limitations, qualifications and assumptions set forth herein, I am of the following opinion: 1. The Company (i) is a corporation duly incorporated and existing in good standing under the laws of the State of Delaware, and (ii) possesses all the corporate powers and all other authorizations and licenses necessary to engage in its business and operations as now conducted, the failure to obtain or maintain which would have a Material Adverse Effect. 2. The execution, delivery and performance by the Company of the Documents are within the Company's corporate powers and have been duly authorized by all necessary corporate action in respect of or by the Company (except to the extent that the Company seeks to exercise its right under Section 2.20 of the Credit Agreement to effect an increase of Commitments), and do not contravene (i) the Company's Certificate of Incorporation or By-Laws, in each case as amended, (ii) any federal law, rule or regulation applicable to the Company (excluding provisions of federal law expressly -2- 94 referred to in and covered by the opinion of Jones, Day, Reavis & Pogue delivered to you in connection with the transactions contemplated hereby), or (iii) any contractual restriction binding on or affecting the Company. The Documents have been duly executed and delivered on behalf of the Company. 3. No authorization or approval or other action by, and no notice to or filing with, any federal governmental authority or regulatory body (including, without limitation, the Federal Energy Regulatory Commission) is required for the due execution, delivery and performance by the Company of the Documents, except those required in the ordinary course of business in connection with the performance by the Company of its obligations under certain covenants and warranties contained in the Documents. 4. To the best of my knowledge, there is no action, suit or proceeding pending or overtly threatened against or involving the Company or any of its Material Subsidiaries, which, in my reasonable judgment (taking into account the exhaustion of all appeals), would have a material adverse effect upon the consolidated financial condition of the Company and its consolidated Subsidiaries taken as a whole, or which purports to affect the legality, validity, binding effect or enforceability of any Document. These opinions are given as of the date hereof and are solely for your benefit in connection with the transactions contemplated by the Credit Agreement. These opinions may not be relied upon by you for any other purpose or relied upon by any other person for any purpose without my prior written consent. Very truly yours, L. David Hanower Vice President, Law -3- 95 EXHIBIT H FORM OF OPINION OF JONES, DAY, REAVIS & POGUE, NEW YORK COUNSEL FOR BORROWER July 14, 1995 To Each of the Lenders and the Agent Referred to Below c/o Citicorp North America, Inc. 1200 Smith Street Suite 2000 Houston, Texas 77002 Re: Burlington Resources Inc. Ladies and Gentlemen: We have acted as special New York counsel for Burlington Resources Inc., a Delaware corporation (the "Borrower"), in connection with the Amended and Restated Long-Term Revolving Credit Agreement, dated as of July 14, 1995 (the "Long-Term Revolving Credit Agreement"), among the Borrower, the financial institutions party thereto (each a "Lender," and together the "Lenders"), and Citibank, N.A., as agent for the Lenders (in such capacity, the "Agent"). This opinion is delivered to you pursuant to Section 3.01(e) of the Long-Term Revolving Credit Agreement. All capitalized terms used herein that are defined in, or by reference in, the Long-Term Revolving Credit Agreement have the meanings assigned to such terms therein, or by reference therein, unless otherwise defined herein. With your permission, all assumptions and statements of reliance herein have been made without any independent investigation or verification on our part except to the extent otherwise expressly stated, and we express no opinion with respect to the subject matter or accuracy of such assumptions or items relied upon. In connection with this opinion, we have (i) investigated such questions of law, (ii) examined originals or certified, conformed or reproduction copies of such documents, and (iii) received such information from officers and representatives of the Borrower as we have deemed necessary or appropriate for the purposes of this opinion. We have examined, among other documents, the following: (a) A facsimile of an executed copy of the Long-Term Revolving Credit Agreement; and 96 (b) A facsimile of an executed copy of each of the fifteen A Notes; and (c) A facsimile of the Officer's Certificate of the Borrower delivered to us in connection with this opinion, a copy of which is attached hereto as Annex A. The documents referred to in items (a) and (b) above are referred to herein collectively as the "Documents." In all such examinations, we have assumed the legal capacity of all natural persons executing documents, the genuineness of all signatures, the authenticity of original and certified documents and the conformity to original or certified copies of all copies submitted to us as conformed or reproduction copies. As to various questions of fact relevant to the opinions expressed herein, we have relied upon, and assume the accuracy of, representations and warranties contained in the Documents and certificates and oral or written statements and other information of or from representatives of the Borrower and others. With respect to the opinions expressed in paragraph (a) below, our opinions are limited (x) to our actual knowledge of the Borrower's specially regulated business activities and properties based solely upon an officer's certificate in respect of such matters and without any independent investigation or verification on our part and (y) to our review of only those laws and regulations that, in our experience, are normally applicable to transactions of the type contemplated by the Documents. To the extent it may be relevant to the opinions expressed herein, we have assumed that the parties to the Documents other than the Borrower have the power to enter into and perform such documents and that such documents have been duly authorized, executed and delivered by, and constitute legal, valid and binding obligations of, such parties. Based upon the foregoing, and subject to the limitations, qualifications and assumptions set forth herein, we are of the opinion that: (a) The execution and delivery to the Agent and the Lenders by the Borrower of the Documents and the performance by the Borrower of its obligations thereunder (i) do not require under present law any filing or registration by the Borrower with, or approval or consent to the Borrower of, any governmental agency or authority of the State of New York, except those, if any, required in the ordinary course of business in connection with the performance by the Borrower of its obligations under certain covenants and warranties contained in the Documents and (ii) do not violate any present law, or present regulation of any governmental agency or authority, of the State of New York applicable to the Borrower or its property. -2- 97 (b) The Documents constitute the legal, valid and binding obligations of the Borrower enforceable against the Borrower in accordance with their respective terms. (c) The borrowings by the Borrower under the Long-Term Revolving Credit Agreement and the applications of the proceeds thereof as provided in the Long-Term Revolving Credit Agreement will not violate Regulation G, T, U or X of the Board of Governors of the Federal Reserve System. The opinions set forth above are subject to the following qualifications: (A) We express no opinion as to: (i) the validity, binding effect or enforceability (a) of any provision of the Documents relating to indemnification, contribution or exculpation in connection with violations of any securities laws or statutory duties or public policy, or in connection with willful, reckless or criminal acts or gross negligence of the indemnified or exculpated party or the party receiving contribution; or (b) of any provision of any of the Documents relating to exculpation of any party in connection with its own negligence that a court would determine in the circumstances under applicable law to be unfair or insufficiently explicit; (ii) the validity, binding effect or enforceability of (a) any purported waiver, release, variation, disclaimer, consent or other agreement to similar effect (all of the foregoing, collectively, a "Waiver") by the Borrower under the Documents to the extent limited by provisions of applicable law (including judicial decisions), or to the extent that such a Waiver applies to a right, claim, duty, defense or ground for discharge otherwise existing or occurring as a matter of law (including judicial decisions), except to the extent that such a Waiver is effective under and is not prohibited by or void or invalid under provisions of applicable law (including judicial decisions) or (b) any provision of any Document relating to choice of governing law to the extent that the validity, binding effect or enforceability of any such provision is to be determined by any court other than a court of the State of New York; (iii) the enforceability of any provision in the Documents specifying that provisions thereof may be waived only in writing, to the extent that an oral agreement or an implied agreement by trade practice or course of conduct has been created that modifies any provision of the Documents; -3- 98 (iv) the effect of any law of any jurisdiction other than the State of New York wherein the Agent or any Lender may be located or wherein enforcement of any document referred to above may be sought that limits the rates of interest legally chargeable or collectible; and (v) any approval, consent or authorization of the Federal Energy Regulatory Commission or any other United States federal agency or authority needed in connection with the execution, delivery and performance by the Borrower of the Documents, the consummation of the transactions contemplated thereby and compliance with the terms and conditions thereof. (B) Our opinions above are subject to (i) applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or similar laws from time to time in effect affecting creditors' rights generally, (ii) general principles of equity (including, without limitation, standards of materiality, good faith, fair dealing and reasonableness), whether such principles are considered in a proceeding at law or in equity and (iii) the qualification that certain other provisions of the Documents may be unenforceable in whole or in part under the laws (including judicial decisions) of the State of New York or the United States of America, but the inclusion of such provisions does not affect the validity as against the Borrower of the Documents as a whole, and the Documents contain adequate provisions for enforcing payment of the obligations governed thereby, subject to the other qualifications contained in this letter. (C) For purposes of the opinions set forth in paragraph (c) above, we have assumed that (i) neither the Agent nor any of the Lenders has or will have the benefit of any agreement or arrangement (excluding the Documents) pursuant to which any Advances are directly or indirectly secured by Margin Stock, (ii) neither the Agent nor any of the Lenders nor any of their respective affiliates has extended or will extend any other credit to the Borrower directly or indirectly secured by Margin Stock and (iii) neither the Agent nor any of the Lenders has relied or will rely upon any Margin Stock as collateral in extending or maintaining any Advances pursuant to the Long-Term Revolving Credit Agreement. (D) For purposes of our opinions above, insofar as they relate to the Borrower, we have assumed that (i) the Borrower is a corporation validly existing in good standing in its jurisdiction of incorporation, has all requisite power and authority, and has obtained all requisite corporate, shareholder, third party and governmental authorizations, consents and approvals, and made all requisite filings and registrations, necessary to execute, deliver and perform the Documents (except to the extent noted in paragraph (a) above), and that such execution, delivery and performance will not violate or conflict with any law, rule, regulation, order, decree, judgment, instrument -4- 99 or agreement binding upon or applicable to the Borrower or its properties (except to the extent noted in paragraph (a) above), and (ii) the Documents have been duly executed and delivered by the Borrower. The opinions expressed herein are limited to the federal laws of the United States of America (in the case of the matters covered in paragraph (c) above) and the laws of the State of New York, as currently in effect. The opinions expressed herein are solely for the benefit of the Agent and the Lenders and may not be relied on in any manner or for any purpose by any other person or entity. Very truly yours, JONES, DAY, REAVIS & POGUE -5- 100 ANNEX A to the Opinion dated July 14, 1995 of Jones, Day, Reavis & Pogue, New York Counsel for Borrower OFFICER'S CERTIFICATE I, L. David Hanower, Vice President, Law of Burlington Resources Inc., a Delaware corporation (the "Company"), hereby certify, for and on behalf of the Company, in connection with the legal opinion of Jones, Day, Reavis & Pogue delivered pursuant to the Amended and Restated Long-Term Revolving Credit Agreement, dated as of July 14, 1995, among the Company, the financial institutions party thereto (the "Lenders"), and Citibank, N.A., as Agent for the Lenders, that the Company does not, to the best of my knowledge and belief, engage or propose to engage in any industry or business, or own, lease or maintain any property or asset in the State of New York. IN WITNESS WHEREOF, I have executed this Certificate on the ___ day of July, 1995. ----------------------- L. David Hanower Vice President, Law -6- 101 EXHIBIT I FORM OF OPINION OF COUNSEL TO CITIBANK, N.A., AS AGENT July 14, 1995 To the Lenders listed on Annex A hereto and to Citibank, N.A., as Agent c/o Citicorp North America, Inc. 1200 Smith Street, Suite 2000 Houston, Texas 77002 Re: Burlington Resources Inc. Ladies and Gentlemen: We have acted as counsel to Citibank, N.A., individually and as Agent, in connection with the preparation, execution and delivery of the Amended and Restated Long-Term Revolving Credit Agreement dated as of July 14, 1995 (the "Credit Agreement") among Burlington Resources Inc. (the "Borrower") and each of you. Terms defined in the Credit Agreement are used herein as therein defined. In that connection, we have examined the following documents: (1) Counterparts of the Credit Agreement executed by the Borrower and the Agent. (2) The documents furnished by the Borrower pursuant to Section 3.01 of the Credit Agreement and listed on Annex B hereto, including the opinion of Jones, Day, Reavis & Pogue, New York counsel to the Borrower, and the opinion of L. David Hanower, Esq., the Vice President, Law of the Borrower. In our examination of the documents referred to above, we have assumed the authenticity of all such documents submitted to us as originals, the genuineness of all signatures, the due authority of the parties executing such documents, and the conformity to the originals of all such documents submitted to us as copies. We have relied as to factual matters on the documents we have examined. 102 To the Lenders listed on Exhibit A hereto and to Citibank, N.A., as Agent July 14, 1995 Page 2 While we are not expressing to you any opinion or conclusion with respect to the matters covered by the opinions of Jones, Day, Reavis & Pogue and of L. David Hanower, Esq. referred to above, we call to your attention the various qualifications and exceptions set forth in such opinions. Based on and subject to the foregoing, we are of the opinion that the documents listed on Annex B hereto are substantially responsive to the requirements of Section 3.01 of the Credit Agreement. Very truly yours, BRACEWELL & PATTERSON, L.L.P. 103 ANNEX A to the Opinion dated July 14, 1995 of Bracewell & Patterson, L.L.P. Lenders Citibank, N.A. Morgan Guaranty Trust Company of New York NationsBank of Texas, N.A. Texas Commerce Bank National Association Bank of America National Trust and Savings Association The First National Bank of Boston Credit Lyonnais Cayman Island Branch Mellon Bank, N.A. Toronto Dominion (Texas), Inc. ABN AMRO Bank N.V. The Bank of Tokyo, Ltd. First Interstate Bank of Texas, N.A. The Northern Trust Company The Sumitomo Bank, Limited, Houston Agency Union Bank of Switzerland 104 ANNEX B to the Opinion dated July 14, 1995 of Bracewell & Patterson, L.L.P. Documents 1. The fifteen A Notes dated July 14, 1995, one such A Note payable to the order of each of the respective Lenders. 2. The opinion dated July 14, 1995 of L. David Hanower, Esq., the Vice President, Law of the Borrower. 3. The opinion dated July 14, 1995 of Jones, Day, Reavis & Pogue, New York counsel to the Borrower. 4. A certified copy of the resolutions of the Board of Directors of the Borrower. 5. A certificate of the Assistant Secretary of the Borrower certifying names and true signatures of officers of the Borrower. 6. The letter from CT Corporation System dated July [__], 1995. 105 EXHIBIT J FORM OF PROCESS AGENT LETTER July , 1995 -- To each of the Lenders party to the Credit Agreement (as defined and referred to below) and to Citibank, N.A., as Agent for said Lenders c/o Citibank, N.A. 399 Park Avenue New York, NY 10043 To Burlington Resources Inc. 5051 Westheimer, Suite 1400 Houston, Texas 77056 Re: Burlington Resources Inc. Ladies and Gentlemen: Reference is made to the $600,000,000 Long-Term Revolving Credit Agreement, dated as of July 20, 1994, which has been amended and restated in its entirety by the Amended and Restated Long-Term Revolving Credit Agreement, dated as of July 14, 1995 (as may be amended or otherwise modified from time to time, the "Credit Agreement", the capitalized terms defined therein and not defined herein being used herein as therein defined), among Burlington Resources Inc. (the "Borrower"), certain financial institutions from time to time party thereto as Lenders thereunder (the "Lenders") and Citibank, N.A., as agent (the "Agent") for the Lenders. Pursuant to Section 8.09(a) of the Credit Agreement, the Borrower has appointed the undersigned (with an office on the date hereof at 1633 Broadway, New York, New York 10019) as Process Agent to receive, on behalf of the Borrower and its property, service of copies of the summons and complaint and any other process which may be served by the Agent, the Arranger, any Lender or the holder of any Note in any action or proceeding by the Agent, the Arranger, any Lender or the holder of any Note in any New York State or Federal court sitting in New York City in respect of, but only in respect of, any claims or causes of action arising out of or relating to the Credit Agreement and the Notes issued pursuant thereto. 106 To each of the Lenders party to the Credit Agreement (referred to below) and to Citibank, N.A., as Agent for said Lenders, and to Burlington Resources Inc. July 14, 1995 Page 2 The undersigned hereby accepts such appointment as Process Agent and agrees with each of you that (i) it will not terminate its agency as such Process Agent prior to July 20, 2000 (and hereby acknowledges that it has been paid in full by the Borrower for its services as Process Agent through such date), (ii) it will maintain an office in New York City through such date and will give the Agent prompt notice of any change of its address, (iii) it will perform its duties as Process Agent in accordance with Section 8.09(a) of the Credit Agreement and (iv) it will forward forthwith to the Borrower at the Borrower's address specified in Section 8.02 of the Credit Agreement copies of any summons, complaint and other process which it receives in connection with its appointment as Process Agent. This agreement shall be binding upon the undersigned and all successors of the undersigned. Very Truly Yours, CT CORPORATION SYSTEM By: ----------------------------- Name: --------------------------- Title: -------------------------- 107 EXHIBIT K DESIGNATION AGREEMENT Dated , 19 ---------- -- Reference is made to the Amended and Restated Long-Term Credit Agreement dated as of July 14, 1995 (as amended or otherwise modified from time to time, the "Credit Agreement") among Burlington Resources Inc., a Delaware corporation (the "Borrower"), the Lenders (as defined in the Credit Agreement) and Citibank, N.A., as Agent for the Lenders (the "Agent"). Terms defined in the Credit Agreement are used herein with the same meaning. _________________ (the "Designator"), ______________ (the "Designee"), and Burlington Resources Inc., a Delaware corporation (the "Borrower"), agree as follows: 1. The Designator hereby designates the Designee, and the Designee hereby accepts such designation, to have a right to make B Advances pursuant to Section 2.19 of the Credit Agreement. 2. The Designator makes no representations or warranty and assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Credit Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit Agreement or any other instrument or document furnished pursuant thereto and (ii) the financial condition of the Borrower or the performance or observance by the Borrower of any of its obligations under the Credit Agreement or any other instrument or document furnished pursuant thereto. 3. The Designee (i) confirms that it has received a copy of the Credit Agreement, together with copies of the financial statements referred to in Section 4.01 thereof and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Designation Agreement; (ii) agrees that it will, independently and without reliance upon the Agent, the Designator or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement; (iii) confirms that it is a Designated Bidder; (iv) appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers under the Credit Agreement as are delegated to the Agent by the terms thereof, together with such powers as are reasonably incidental thereto; (v) agrees that it will perform in accordance with their terms all of the obligations which by the terms of the Credit Agreement are required to be performed by it as a Lender; and (vi) specifies as 108 its Applicable Lending Office with respect to B Advances (and address for notices) the offices set forth beneath its name on the signature pages hereof. 4. Following the execution of this Designation Agreement by the Designator, the Designee and the Borrower, it will be delivered to the Agent for acceptance and recording by the Agent. The effective date of this Designation Agreement shall be the date of acceptance thereof by the Agent, unless otherwise specified on the signature page hereto (the "Effective Date"). 5. Upon such acceptance and recording by the Agent, as of the Effective Date, the Designee shall be a party to the Credit Agreement with a right to make B Advances as a Lender pursuant to Section 2.19 of the Credit Agreement and the rights and obligations of a Lender related thereto. 6. This Designation Agreement shall be governed by, and construed in accordance with, the laws of the State of New York. IN WITNESS WHEREOF, the parties have caused this Designation Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written. Effective Date(1): , 19 ------------ -- [NAME OF DESIGNATOR] By: ------------------------ Name: ---------------------- Title: --------------------- [NAME OF DESIGNEE] By: ------------------------ Name: ---------------------- Title: --------------------- - ------------------ (1) This date should be no earlier than the date of acceptance by the Agent. -2- 109 Applicable Lending Office (and addresses for notices) [Address] BURLINGTON RESOURCES INC. By: ----------------------- Name: --------------------- Title: -------------------- Accepted and Approved this day of , 19 - --- ---------- -- CITIBANK, N.A., as Agent By: ----------------------- Title: -3- 110 SCHEDULE I APPLICABLE LENDING OFFICES
Name of Bank Domestic Lending Office Eurodollar Lending Office - ------------ ----------------------- ------------------------- ABN AMRO Bank N.V. ABN AMRO Bank N.V. ABN AMRO Bank N.V. Three Riverway, Suite 1600 Three Riverway, Suite 1600 Houston, Texas 77056 Houston, Texas 77056 Attention: Bruno J. Riegl Attention: W.Bryan Chapman Telephone: (713) 964-3361 Telephone: (713) 964-3361 Telecopy: (713) 629-7533 Telecopy: (713) 629-7533 Bank of America National Bank of America National Trust and Bank of America National Trust and Trust and Savings Savings Association Savings Association Association 1850 Gateway Boulevard 1850 Gateway Boulevard Concord, California 94520 Concord, California 94520 Attention: Joyce Drumgoole Attention: Joyce Drumgoole Telephone: (510) 675-7727 Telephone: (510) 675-7727 Telecopy: (510) 675-7531 Telecopy: (510) 675-7531 Citibank, N.A. Citibank, N.A. Citibank, N.A. 399 Park Avenue 399 Park Avenue New York, New York 10043 New York, New York 10043 Attention: Petroleum Metals Attention: Petroleum Metals and Mining and Mining Telephone: (713) 654-2887 Telephone: (713) 654-2887 Telecopy: (212) 832-9857 Telecopy: (212) 832-9857 with a copy to: with a copy to: Citibank, N.A. Citibank, N.A. c/o Citicorp North America, Inc. c/o Citicorp North America, Inc. 1200 Smith St., 20th Floor 1200 Smith St., 20th Floor Houston, Texas 77002 Houston, Texas 77002 Attn: Raymond Bowen, Jr. Attn: Raymond Bowen, Jr. Telephone: (713) 654-2887 Telephone: (713) 654-2887 Telecopy: (713) 654-2849 Telecopy: (713) 654-2849 Credit Lyonnais Cayman Credit Lyonnais Cayman Island Credit Lyonnais Cayman Island Island Branch c/o CL New York Branch c/o CL New York Branch 1301 Avenue of Americas 1301 Avenue of Americas New York, New York 10019 New York, New York 10019 Attention: Loan Servicing Attention: Loan Servicing Telephone: (212) 261-7000 Telephone: (212) 261-7000 Telecopy: (212) 459-3180 Telecopy: (212) 459-3100 with a copy to: with a copy to:
111
Name of Bank Domestic Lending Office Eurodollar Lending Office - ------------ ----------------------- ------------------------- Credit Lyonnais Rep Office Credit Lyonnais Rep Office 1000 Louisiana, Suite 5360 1000 Louisiana, Suite 5360 Houston, Texas 77002 Houston, Texas 77002 Attention: John M. Falbo Attention: John M. Falbo Telephone: (713) 751-0500 Telephone: (713) 751-0500 Telecopy: (713) 751-0307 Telecopy: (713) 751-0307 First Interstate Bank of First Interstate Bank of Texas, First Interstate Bank of Texas, Texas, N.A. N.A. N.A. 1000 Louisiana, 3rd Floor 1000 Louisiana, 3rd Floor Houston, Texas 77002 Houston, Texas 77002 Attention: Ms. Ann Rhoads Attention: Ms. Ann Rhoads Telephone: (713) 250-4327 Telephone: (713) 250-4327 Telecopy: (713) 250-6933 Telecopy: (713) 250-6933 Mellon Bank, N.A. Mellon Bank, N.A. Mellon Bank, N.A. 3 Mellon Bank Ctr, Rm 2332 3 Mellon Bank Ctr, Rm 2332 Pittsburgh, PA. 15259 Pittsburgh, PA. 15259 Attention: Cathy Fisher Attention: Cathy Fisher Telephone: (412) 234-3698 Telephone: (412) 234-3698 Telecopy: (412) 234-5049 Telecopy: (412) 234-5049 with a copy to: with a copy to: Mellon Bank, N.A. Mellon Bank, N.A. 1100 Louisiana, Suite 3600 1100 Louisiana, Suite 3600 Houston, Texas 77002 Houston, Texas 77002 Attention: Sushim R. Shah Attention: Sushim R. Shah Telephone: (713) 759-3050 Telephone: (713) 759-3050 Telecopy: (713) 650-3409 Telecopy: (713) 650-3409 Morgan Guaranty Trust Morgan Guaranty Trust Company of Morgan Guaranty Trust Company of Company of New York New York New York 150 William St., 11th Floor 150 William St., 11th Floor New York, New York 10036 New York, New York 10036 Attention: Yani Kwee Attention: Yani Kwee Telephone: (212) 483-2323 Telephone: (212) 483-2323 Telecopy: (212) 619-2156 Telecopy: (212) 619-2156 with a copy to: with a copy to: Morgan Guaranty Trust Company of Morgan Guaranty Trust Company of New York New York 60 Wall Street 60 Wall Street New York, New York 10260 New York, New York 10260 Attention: Ferrell McClean Attention: Ferrell McClean Telephone: (212) 483-2323 Telephone: (212) 483-2323 Telecopy: (212) 648-5335 Telecopy: (212) 648-5335
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Name of Bank Domestic Lending Office Eurodollar Lending Office - ------------ ----------------------- ------------------------- NationsBank of Texas, N.A. NationsBank of Texas, N.A. NationsBank of Texas, N.A. 901 Main Street 901 Main Street P.O. Box 830104 P.O. Box 830104 Dallas, Texas 75283-0104 Dallas, Texas 75283-0104 Attention: Kyle Spicer Attention: Kyle Spicer Telephone: (214) 871-2600 Telephone: (214) 871-2600 Telecopy: (214) 508-1285 Telecopy: (214) 508-1285 Texas Commerce Bank Texas Commerce Bank National Texas Commerce Bank National National Association Association Association 707 Travis St., 5-TCB-N-86 707 Travis St., 5-TCB-N-86 Houston, Texas 77002 Houston, Texas 77002 Attention: Pam Shanks Attention: Pam Shanks Telephone: (713) 216-5733 Telephone: (713) 216-5733 Telecopy: (713) 236-4117 Telecopy: (713) 236-4117 The Bank of Tokyo, LTD. The Bank of Tokyo, LTD., The Bank of Tokyo, LTD., Dallas Agency Dallas Agency Dallas Agency 2001 Ross Ave, Suite 3200 2001 Ross Ave, Suite 3200 Dallas, Texas 75201 Dallas, Texas 75201 with a copy to: with a copy to: The Bank of Tokyo, LTD. The Bank of Tokyo, LTD. Houston Office Houston Office 909 Fannin, Suite 1104 909 Fannin, Suite 1104 Houston, Texas 77010 Houston, Texas 77010 Attn: John M. McIntyre Attn: John M. McIntyre Telephone: (713) 658-1021 Telephone: (713) 658-1021 Telecopy: (713) 658-8341 Telecopy: (713) 658-8341 The First National Bank of The First National Bank of Boston The First National Bank of Boston Boston 100 Federal Street 100 Federal Street Boston, Massachusetts 02110 Boston, Massachusetts 02110 Attention: Cindy Stableford Attention: Cindy Stableford Telephone: (617) 467-2613 Telephone: (617) 467-2613 Telecopy: (617) 474-3652 Telecopy: (617) 474-3652 The Northern Trust The Northern Trust Company The Northern Trust Company Company 50 S. LaSalle Street 50 S. LaSalle Street Chicago, Illinois 60675 Chicago, Illinois 60675 Attention: John Fumagalli Attention: John Fumagalli Telephone: (312) 444-5051 Telephone: (312) 444-5051 Telecopy: (312) 630-1566 Telecopy: (312) 630-1566
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Name of Bank Domestic Lending Office Eurodollar Lending Office - ------------ ----------------------- ------------------------- The Sumitomo Bank, The Sumitomo Bank, Limited, The Sumitomo Bank, Limited, Limited, Houston Agency Houston Agency Houston Agency NationsBank Center NationsBank Center 700 Louisiana, Suite 1750 700 Louisiana, Suite 1750 Houston, Texas 77002 Houston, Texas 77002 Attn: William McKown, III Attn: William McKown, III Telephone: (713) 759-0136 Telephone: (713) 759-0136 Telecopy: (713) 759-0020 Telecopy: (713) 759-0020 Toronto-Dominion Toronto-Dominion (Texas), Inc. Toronto-Dominion (Texas), Inc. (Texas), Inc. 909 Fannin Street 909 Fannin Street Houston, Texas 77010 Houston, Texas 77010 Attention: Debbie A. Greene Attention: Debbie A. Greene Telephone: (713) 653-8245 Telephone: (713) 653-8245 Telecopy: (713) 951-9921 Telecopy: (713) 951-9921 Union Bank of Switzerland Union Bank of Switzerland Union Bank of Switzerland 299 Park Avenue 299 Park Avenue New York, New York 10171 New York, New York 10171 Attention: James Broadus Attention: James Broadus Telephone: (212) 821-3227 Telephone: (212) 821-3227 Telecopy: (212) 821-3891 Telecopy: (212) 821-3891 with a copy to: with a copy to: Union Bank of Switzerland Union Bank of Switzerland 1100 Louisiana, Suite 4500 1100 Louisiana, Suite 4500 Houston, Texas 77005 Houston, Texas 77005 Attention: Evans Swann Attention: Evans Swann Telephone: (713) 655-6500 Telephone: (713) 655-6500 Telecopy: (713) 655-6555 Telecopy: (713) 655-6555
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DOMESTIC EURODOLLAR NAME OF BANK LENDING OFFICE LENDING OFFICE ------------ -------------- -------------- ABN AMRO BANK N.V. ABN AMRO BANK N.V. ABN AMRO BANK N.V. THREE RIVERWAY, SUITE 1600 THREE RIVERWAY, SUITE 1600 HOUSTON, TEXAS 77056 HOUSTON, TEXAS 77056 ATTENTION: BRUNO J. RIEGL ATTENTION: W. BRYAN CHAPMAN TELEPHONE: (713) 964-3361 TELEPHONE: (713) 964-3361 TELECOPY: (713) 629-7533 TELECOPY: (713) 629-7533 Bank of America National Bank of America National Bank of America National Trust and Savings Trust and Savings Trust and Savings Association Association Association 1850 Gateway Boulevard 1850 Gateway Boulevard Concord, California 94520 Concord, California 94520 Attention: Joyce Drumgoole Attention: Joyce Drumgoole Telephone: (510) 675-7727 Telephone: (510) 675-7727 Telecopy: (510) 675-7531 Telecopy: (617) 675-7531 Citibank, N.A. Citibank, N.A. Citibank, N.A. 399 Park Avenue 399 Park Avenue New York, New York 10043 New York, New York 10043 Attention: Petroleum Metals Attention: Petroleum Metals and Mining and Mining Telephone: (713) 654-2887 Telephone: (713) 654-2887 Telecopy: (212) 832-9857 Telecopy: (212) 832-9857 with a copy to: with a copy to: Citibank, N.A. Citibank, N.A. c/o Citicorp North America, Inc. c/o Citicorp North America, Inc. 1200 Smith Street, 20th Floor 1200 Smith Street, 20th Floor Houston, Texas 77002 Houston, Texas 77002 Attention: Raymond M. Bowen, Jr. Attention: Raymond M. Bowen, Jr. Telephone: (713) 654-2887 Telephone: (713) 654-2887 Telecopy: (713) 654-2849 Telecopy: (713) 654-2849 Credit Lyonnais Credit Lyonnais Credit Lyonnais Cayman Island Branch Cayman Island Branch Cayman Island Branch c/o Credit Lyonnais New York Branch c/o Credit Lyonnais New York Branch 1301 Avenue of the Americas 1301 Avenue of the Americas New York, New York 10019 New York, New York 10019 Attention: Loan Servicing Attention: Loan Servicing Telephone: (212) 261-7000 Telephone: (212) 261-7000 Telecopy: (212) 459-3180 Telecopy: (212) 459-3100 with a copy to: with a copy to: Credit Lyonnais Representative Credit Lyonnais Representative Office Office 1000 Louisiana, Suite 5360 1000 Louisiana, Suite 5360 Houston, Texas 77002 Houston, Texas 77002 Attention: John M. Falbo Attention: John M. Falbo Telephone: (713) 751-0500 Telephone: (713) 751-0500 Telecopy: (713) 751-0307 Telecopy: (713) 751-0307 First Interstate Bank First Interstate Bank of First Interstate Bank of Texas, N.A. Texas, N.A. Texas, N.A. 1000 Louisiana, 3rd Floor 1000 Louisiana, 3rd Floor Houston, Texas 77002 Houston, Texas 77002 Attention: Ms. Ann Rhoads Attention: Ms. Ann Rhoads Telephone: (713) 250-4327 Telephone: (713) 250-4327 Telecopy: (713) 250-6933 Telecopy: (713) 250-4327 Mellon Bank, N.A. Mellon Bank, N.A. Mellon Bank, N.A. Three Mellon Bank Center Three Mellon Bank Center Room 2332 Room 2332 Pittsburgh, Pennsylvania 15259 Pittsburgh, Pennsylvania 15259 Attention: Cathy Fisher Attention: Cathy Fisher Telephone: (412) 234-3698 Telephone: (412) 234-3698 Telecopy: (412) 234-5049 Telecopy: (412) 234-5049 with a copy to: with a copy to: Mellon Bank, N.A. Mellon Bank, N.A. 1100 Louisiana, Suite 3600 1100 Louisiana, Suite 3600 Houston, Texas 77002 Houston, Texas 77002 Attention: Sushim R. Shah Attention: Sushim R. Shah Telephone: (713) 759-3050 Telephone: (713) 759-3030 Telecopy: (713) 650-3409 Telecopy: (713) 650-3409
-5- 115 Morgan Guaranty Trust Morgan Guaranty Trust Company Morgan Guaranty Trust Company Company of New York of New York of New York 150 William Street, 11th Floor 150 William Street, 11th Floor New York, New York 10036 New York, New York 10036 Attention: Yani Kwee Attention: Yani Kwee Telephone: (212) 483-2323 Telephone: (212) 483-2323 Telecopy: (212) 619-2156 Telecopy: (212) 619-2156 with a copy to: with a copy to: Morgan Guaranty Trust Company Morgan Guaranty Trust Company of New York of New York 60 Wall Street 60 Wall Street New York, New York 10260 New York, New York 10260 Attention: Ferrell P. McClean Attention: Ferrell P. McClean Telephone: (212) 483-2323 Telephone: (212) 483-2323 Telecopy: (212) 648-5335 Telecopy: (212) 648-5335 NationsBank of Texas, N.A. NationsBank of Texas, N.A. NationsBank of Texas, N.A. 901 Main Street 901 Main Street P.O. Box 830104 P.O. Box 830104 Dallas, Texas 75283-0104 Dallas, Texas 75283-0104 Attention: Kyle Spicer Attention: Kyle Spicer Telephone: (214) 871-2600 Telephone: (214) 871-2600 Telecopy: (214) 508-1285 Telecopy: (214) 508-1285 Texas Commerce Bank Texas Commerce Bank National Texas Commerce Bank National National Association Association Association 707 Travis Street, 5-TCB-N-86 707 Travis Street, 5-TCB-N-86 Houston, Texas 77002 Houston, Texas 77002 Attention: Pam Shanks Attention: Pam Shanks Telephone: (713) 216-5733 Telephone: (713) 216-5733 Telecopy: (713) 236-4117 Telecopy: (713) 236-4117 The Bank of Tokyo, LTD. The Bank of Tokyo, LTD. The Bank of Tokyo, LTD. Dallas Agency Dallas Agency 2001 Ross Avenue, Suite 3200 2001 Ross Avenue, Suite 3200 Dallas, Texas 75201 Dallas, Texas 75201 with a copy to: with a copy to: The Bank of Tokyo, LTD. The Bank of Tokyo, LTD. Houston Office Houston Office 909 Fannin, Suite 1104 909 Fannin, Suite 1104 Houston, Texas 77010 Houston, Texas 77010 Attention: John M. McIntyre Attention: John M. McIntyre Telephone: (713) 658-1021 Telephone: (713) 658-1021 Telecopy: (713) 658-8341 Telecopy: (713) 658-8341 The First National Bank The First National Bank The First National Bank of of Boston of Boston of Boston 100 Federal Street 100 Federal Street Boston, Massachusetts 02110 Boston, Massachusetts 02110 Attention: Cindy Stableford Attention: Cindy Stableford Telephone: (617) 467-2613 Telephone: (617) 467-2613 Telecopy: (617) 474-3652 Telecopy: (617) 474-3652 The Northern Trust Company The Northern Trust Company The Northern Trust Company 50 S. LaSalle Street 50 S. LaSalle Street Chicago, Illinois 60675 Chicago, Illinois 60675 Attention: John Fumagalli Attention: John Fumagalli Telephone: (312) 444-5051 Telephone: (312) 444-5051 Telecopy: (312) 630-1566 Telecopy: (312) 630-1566 The Sumitomo Bank, Limited, The Sumitomo Bank, Limited The Sumitomo Bank, Limited Houston Agency Houston Agency Houston Agency NationsBank Center NationsBank Center 700 Louisiana, Suite 1750 700 Louisiana, Suite 1750 Houston, Texas 77002 Houston, Texas 77002 Attention: William R. McKown, III Attention: William R. McKown, III Telephone: (713) 759-0136 Telephone: (713) 759-0136 Telecopy: (713) 759-0020 Telecopy: (713) 759-0020 Toronto-Dominion (Texas), Inc. Toronto-Dominion (Texas), Inc. Toronto-Dominion (Texas), Inc. 909 Fannin Street 909 Fannin Street Houston, Texas 77010 Houston, Texas 77010 Attention: Debbie A. Greene Attention: Debbie A. Greene Telephone: (713) 653-8245 Telephone: (713) 653-8245 Telecopy: (713) 951-9921 Telecopy: (713) 951-9921
-6- 116 Union Bank of Switzerland Union Bank of Switzerland Union Bank of Switzerland 299 Park Avenue 299 Park Avenue New York, New York 10171 New York, New York 10171 Attention: James Broadus Attention: James Broadus Telephone: (212) 821-3227 Telephone: (212) 821-3227 Telecopy: (212) 821-3891 Telecopy: (212) 821-3891 with a copy to: with a copy to: Union Bank of Switzerland Union Bank of Switzerland 1100 Louisiana, Suite 4500 1100 Louisiana, Suite 4500 Houston, Texas 77005 Houston, Texas 77005 Attention: Evans Swann Attention: Evans Swann Telephone: (713) 655-6500 Telephone: (713) 655-6500 Telecopy: (713) 655-6555 Telecopy: (713) 655-6555
-7- 117 SCHEDULE II MATERIAL SUBSIDIARIES El Paso Production Company Meridian Oil Holding Inc. Meridian Oil Inc. Meridian Oil Production Inc. Southland Royalty Company 118 SCHEDULE III
==================================================================================================================================== LEVEL 1 LEVEL 2 LEVEL 3 LEVEL 4 Borrower's public Borrower's public Borrower's public Borrower's public BASIS FOR PRICING long-term senior long-term senior long-term senior long-term senior unsecured debt unsecured debt unsecured debt unsecured debt securities rated securities rated securities rated securities rated A+ by S&P And A1 less than Level 1 but less than Level 2 but lower than Level 3 by Moody's at least BBB+ by at least BBB- by OR such securities S&P OR Baa1 by Moody's S&P And Baa3 by Moody's are not rated by S&P and are not rated by Moody's - ------------------------------------------------------------------------------------------------------------------------------------ Facility Fee 10.00 bps 12.00 bps 15.00 bps 30.00 bps - ------------------------------------------------------------------------------------------------------------------------------------ LIBOR 20.00 bps 23.00 bps 30.00 bps 45.00 bps Applicable Margin - ------------------------------------------------------------------------------------------------------------------------------------ Utilization Fee 0.00 bps 0.00 bps 0.00 bps 12.50 bps ====================================================================================================================================
bps = basis points (each basis point being 1/100% per annum) The applicable pricing level shall change on the date of any relevant change in the rating by S&P or Moody's of any public long-term senior unsecured debt securities of the Borrower. If either S&P or Moody's has more than one rating for public long-term senior unsecured debt securities of the Borrower, the lowest such rating shall be applicable. EX-11.1 8 EARNINGS (LOSS) PER SHARE 1 EXHIBIT 11.1 BURLINGTON RESOURCES INC. EARNINGS (LOSS) PER SHARE
YEAR ENDED DECEMBER 31, ------------------------------------------------------------- 1995 1994 1993 ------------------- ------------------ ------------------ LOSS SHARES EARNINGS SHARES EARNINGS SHARES --------- ------- -------- ------- -------- ------- (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) Primary earnings (loss) per common share Net earnings (loss) available for common stock and weighted average common shares outstanding.................. $(279,645) 126,553 $154,246 128,406 $256,312 129,746 Stock options assumed exercised- net.......................... -- 482 -- 628 -- 1,036 --------- ------- -------- ------- -------- ------- Total net earnings (loss) and primary common shares........ $(279,645) 127,035 $154,246 129,034 $256,312 130,782 ========= ======= ======== ======= ======== ======= Primary earnings (loss) per common share................. $ (2.20) $ 1.20 $ 1.96 ========= ======== ======== Fully diluted earnings (loss) per common share Net earnings (loss) available for common stock and weighted average common shares outstanding.................. $(279,645) 126,553 $154,246 128,406 $256,312 129,746 Stock options assumed exercised- net.......................... -- 551 -- 628 -- 1,036 --------- ------- -------- ------- -------- ------- Total net earnings (loss) and fully diluted common shares....................... $(279,645) 127,104 $154,246 129,034 $256,312 130,782 ========= ======= ======== ======= ======== ======= Fully diluted earnings (loss) per common share............. $ (2.20) $ 1.20 $ 1.96 ========= ======== ========
EX-12.1 9 RATIO OF EARNINGS TO FIXED CHARGES 1 EXHIBIT 12.1 BURLINGTON RESOURCES INC. RATIO OF EARNINGS TO FIXED CHARGES
YEAR ENDED DECEMBER 31, ------------------------------------------------------ 1995 1994 1993 1992 1991 --------- -------- -------- -------- -------- (IN THOUSANDS, EXCEPT RATIO AMOUNTS) Earnings Income (Loss) Before Income Taxes.................. $(576,747) $ 90,269 $307,438 $218,039 $103,118 Add Interest and fixed charges........... 108,865 90,291 72,799 79,196 90,344 Portion of rent under long-term operating leases representative of an interest factor................. 5,107 4,926 4,688 4,205 5,903 --------- -------- -------- -------- -------- Total Earnings Available for Fixed Charges.............................. (462,775) $185,486 $384,925 $301,440 $199,365 ========= ======== ======== ======== ======== Fixed Charges Interest and fixed charges.............. 108,865 $ 90,291 $ 72,799 $ 79,196 $ 90,344 Portion of rent under long-term operating leases representative of an interest factor...................... 5,107 4,926 4,688 4,205 5,903 Capitalized interest.................... 2,808 1,380 2,829 3,094 6,137 --------- -------- -------- -------- -------- Total Fixed Charges..................... 116,780 $ 96,597 $ 80,316 $ 86,495 $102,384 ========= ======== ======== ======== ======== Ratio of Earnings to Fixed Charges(1)..... -- 1.92x 4.79x 3.49x 1.95x
- --------------- (1) Total Earnings Available for Fixed Charges in 1995 are inadequate to cover Total Fixed Charges in the amount of approximately $580 million. EX-21.1 10 SUBSIDIARIES OF REGISTRANT 1 EXHIBIT 21.1 BURLINGTON RESOURCES INC. SUBSIDIARIES OF THE REGISTRANT The following is a list of the significant subsidiaries of Burlington Resources Inc. showing the place of incorporation and the percentage of voting securities owned.
PERCENTAGE OF VOTING SECURITIES OWNED JURISDICTION DIRECTLY OR OF INDIRECTLY BY NAME OF COMPANY INCORPORATION IMMEDIATE PARENT - ------------------------------------------------------------ -------------- ---------------- El Paso Production Company.................................. Delaware 100% Glacier Park Company........................................ Delaware 100% Meridian Oil Hydrocarbons Inc............................... Delaware 100% Meridian Oil Inc............................................ Delaware 100% Meridian Oil Production Inc................................. Delaware 100% Meridian Oil Trading Inc.................................... Delaware 100% Southland Royalty Company................................... Delaware 100%
The names of certain subsidiaries are omitted as such subsidiaries, considered as a single subsidiary, would not constitute a significant subsidiary. EX-23.1 11 CONSENT OF COOPERS & LYBRAND L.L.P. 1 EXHIBIT 23.1 CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the incorporation by reference in the registration statements of Burlington Resources Inc. on Form S-8 (Registration Nos. 33-22493, 33-25807, 33-26024 (as amended in Registration No. 2-97533), 33-33626, 33-46518 and 33-53973) and on Form S-3 (Registration Nos. 33-50077 and 33-54477) of our report dated January 10, 1996, on our audit of the consolidated financial statements of Burlington Resources Inc. as of December 31, 1995 and 1994, and for each of the three years in the period ended December 31, 1995, which report is included in this 1995 Annual Report on Form 10-K. COOPERS & LYBRAND L.L.P. Houston, Texas February 6, 1996 EX-27.1 12 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BURLING- TON RESOURCES INC. CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 1995, AND THE RELATED CONSOLIDATED STATEMENT OF INCOME FOR THE YEAR ENDED DECEMBER 31, 1995, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS AND TO CONSOLIDATED FINANCIAL STATEMENTS CONTAINED IN THE 1995 ANNUAL REPORT ON FORM 10-K. 0000833320 BURLINGTON RESOURCES INC. 1,000 YEAR DEC-31-1995 JAN-01-1995 DEC-31-1995 20,473 0 209,669 0 18,317 264,987 6,369,197 2,602,014 4,164,760 321,933 1,350,319 1,500 0 0 2,218,922 4,164,760 872,514 872,514 0 1,339,740 0 0 108,865 (576,747) (297,102) (279,645) 0 0 0 (279,645) (2.20) (2.20)
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