BONTANG II
TRUSTEE AND PAYING AGENT AGREEMENT
Amended and Restated as of July 15, 1991
among
PERUSAHAAN PERTAMBANGAN MINYAK DAN GAS BUMI NEGARA
(PERTAMINA)
VIRGINIA INDONESIA COMPANY
VIRGINIA INTERNATIONAL COMPANY
UNION TEXAS EAST KALIMANTAN LIMITED
ULTRAMAR INDONESIA LIMITED
OPICOIL HOUSTON, INC.
UNIVERSE GAS & OIL COMPANY, INC.
TOTAL INDONESIE
UNOCAL INDONESIA, LTD.
INDONESIA PETROLEUM, LTD.
and
CONTINENTAL BANK INTERNATIONAL
BONTANG II
TRUSTEE AND PAYING AGENT AGREEMENT
Amended and Restated as of July 15, 1991
THIS AGREEMENT, made as of the 15th day of July, 1991
among PERUSAHAAN PERTAMBANGAN MINYAK DAN GAS BUMI NEGARA
("Pertamina"); and VIRGINIA INDONESIA COMPANY ("Vico"), VIRGINIA
INTERNATIONAL COMPANY ("Virginia International"), UNION TEXAS
EAST KALIMANTAN LIMITED ("Union Texas"), ULTRAMAR INDONESIA
LIMITED ("Ultramar"), OPICOIL HOUSTON, INC. ("Opicoil Houston"),
UNIVERSE GAS & OIL COMPANY, INC. ("Universe"), TOTAL INDONESIE
("Total"), UNOCAL INDONESIA, LTD. ("Unocal"), INDONESIA
PETROLEUM, LTD. ("Inpex"); and CONTINENTAL BANK INTERNATIONAL
(the "Bontang II Trustee"), a banking corporation organized under
the laws of the United States of America not in its individual
capacity but solely as Trustee and Paying Agent;
W I T N E S S E T H:
I.
WHEREAS, the parties hereto or their respective
predecessors in interest are parties to that certain Badak
Expansion Trustee and Paying Agent Agreement dated as of the 15th
day of July, 1981, as amended by (i) Amendment No. 1 dated as of
September 10, 1986; (ii) Amendment No. 2 dated as of June 9,
1987; and (iii) Amendment No. 3 dated as of February 9, 1988
(said Agreement and Amendments being herein collectively called
the "Source Documents"); and
II.
WHEREAS, the parties desire to amend and restate the
Source Documents in order to provide a more convenient statement
thereof, to amend various provisions and to reflect that Universe
has succeeded to the interests of Universe Tankships, Inc.
thereunder and Opicoil Houston, Inc. now holds the interests
thereunder formerly held by Roy M. Huffington, Inc. and
Huffington Corporation; and
III.
WHEREAS, Pertamina entered into the Badak LNG Sales
Contract originally dated as of April 14, 1981, between Pertamina
and Chubu Electric Power Co., Inc., The Kansai Electric Power
Co., Inc., Osaka Gas Co., Ltd. and Toho Gas Co., Ltd. (together
with their respective successors and assigns thereunder, the
"Buyers") relating to the sale of liquefied natural gas ("LNG"),
to be manufactured from natural gas produced from the Badak,
Nilam and certain other nearby fields in East Kalimantan,
Indonesia (the "Gas Fields");
IV.
WHEREAS, pursuant to a Memorandum of Agreement dated as
of September 7, 1989, Pertamina and the Buyers agreed to make
certain changes to said Badak LNG Sales Contract and to give
effect thereto Pertamina and the Buyers have entered into an
amendment and restatement of the said Badak LNG Sales Contract as
of January 1, 1990 (such contract as so amended and restated, as
the same may be hereafter amended, being herein referred to as
the "1981 LNG Sales Contract"); and
V.
WHEREAS, under the 1981 LNG Sales Contract the Buyers
and Pertamina have agreed that each of the Buyers shall pay
amounts due under the 1981 LNG Sales Contract to a bank in the
United States designated by Pertamina; and
VI.
WHEREAS, under the following supply agreements:
(i) Supply Agreement for Badak LNG Expansion Project dated
as of April 14, 1981, between Pertamina, on the one hand, and the
members of the Vico Group, on the other;
(ii) Supply Agreement for Badak LNG Expansion Project dated
as of April 14, 1981 between Pertamina, on the one hand, and
Total and Inpex, on the other;
(iii) Attaka Natural Gas Supply Agreement for Badak LNG
Expansion Project dated as of April 14, 1981 between Pertamina,
on the one hand, and Unocal and Inpex, on the other;
(iv) Seventh Supply Agreement For Excess Sales dated as of
January 1, 1990, between Pertamina, on the one hand, and the
members of the Vico Group, on the other;
(v) Seventh Supply Agreement For Excess Sales dated as of
January 1, 1990, between Pertamina, on the one hand, and Total
and Inpex, on the other; and
(vi) Seventh Supply Agreement For Excess Sales dated as of
January 1, 1990, between Pertamina, on the one hand, and Unocal
and Inpex, on the other; each of the Contractors has agreed to
make available, for sale and delivery by Pertamina under the 1981
LNG Sales Contract, such Contractor's production sharing
percentage(s) of the LNG manufactured from gas produced from the
Gas Fields and delivered to the Buyers under the 1981 LNG Sales
Contract from time to time; Pertamina has assigned to each
Contractor such Contractor's Sharing Percentages of all amounts
paid or payable by the Buyers under the 1981 LNG Sales Contract
other than amounts payable by Japan Indonesia LNG Co., Ltd.
("Jilco") which are set off against amounts to be refunded or
paid by Pertamina as described in Section 7.1(a); and Pertamina
and the Contractors have agreed that all payments made by Buyers
shall be remitted directly to a bank in the United States
selected by Pertamina and the Contractors which will serve as
Trustee and Paying Agent for the purpose of causing the due
payment in an orderly administrative manner of certain costs and
expenses of Pertamina and of each Contractor incurred in the
processing and sale of the LNG of each such party; and
VII.
WHEREAS, under an Assignment dated as of June 10, 1981
(the "Assignment"), the Buyers have assigned to Jilco their
rights to purchase a portion of the LNG to be delivered under the
1981 LNG Sales Contract and Jilco has accepted such assignment
and agreed to assume the Buyers' obligation to pay for, or pay
for if not taken, the LNG assigned to it in accordance with the
terms of the 1981 LNG Sales Contract; and
VIII.
WHEREAS, under the Assignment and an LNG Facility
Development Agreement dated as of June 10, 1981 (the "Development
Agreement") between Pertamina and Jilco, Pertamina and Jilco have
agreed that Jilco shall make payment for the LNG purchased by it
pursuant to the Assignment either (i) by way of set-off against
certain amounts to be refunded or paid by Pertamina to Jilco
under the Development Agreement, (ii) by payment to the Payment
Trustee (the "Payment Trustee") acting pursuant to the Payments
Account Agreement dated as of June 10, 1981 (the "Payments
Account Agreement") among Pertamina, Jilco and The Industrial
Bank of Japan Trust Company, or (iii) by payment to the Trustee
and Paying Agent acting under this Agreement;
IX.
WHEREAS, under the Payments Account Agreement, the
Payment Trustee is required from time to time to make payments to
the Trustee and Paying Agent in respect of payments received by
the Payment Trustee from Jilco of sales proceeds under the 1981
LNG Sales Contract and the Assignment; and
X.
WHEREAS, Pertamina and the Contractors have entered
into the Amended and Restated Bontang Processing Agreement dated
as of February 9, 1988 (as from time to time amended, the
"Processing Agreement") providing for P. T. Badak Natural Gas
Liquefaction Company (the "Liquefaction Company") to collect and
liquefy natural gas from (inter alia) the Gas Fields, and store
and deliver LNG to LNG tankers for delivery under the 1981 LNG
Sales Contract; and
XI.
WHEREAS, Pertamina and Continental Bank International,
among others, have previously entered into various other
agreements similar to this Agreement, including such agreements
to which Mobil Oil Indonesia Inc. ("Mobil") is a party, providing
for the receipt and distribution of proceeds of the sale of LNG
and LPG (the agreements referred to above, and any other similar
future agreements, as amended, being hereinafter referred to
collectively as the "Other Trustee and Paying Agent
Agreements"); and
XII.
WHEREAS, Pertamina, the Contractors, and the Bontang II
Trustee wish to set forth arrangements whereby amounts paid under
the 1981 LNG Sales Contract (whether from the Buyers, from Jilco
pursuant to the Assignment or from the Payment Trustee pursuant
to the Assignment and the Payments Account Agreement) and certain
amounts paid by Jilco under the Development Agreement will be
received, held, managed and disbursed by the Bontang II Trustee
upon the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual
agreements contained herein, the parties hereto agree as
follows:
DEFINITIONS
The following defined terms shall have the meanings set
forth below:
"Accountants" is defined in Section 6.3.
"Additional Quantities Payment" means an amount in
respect of any Buyer
LNG Invoice determined by the following formula:
Additional Quantities Payment = FQA x AQ% x CSP, where:
FQA = the Fixed Quantity Amount specified on such
invoice;
AQ% = the Additional Quantities Percentage applicable
to such invoice; and
CSP = the Contract Sales Price (expressed in U.S.
Dollars per MMBTU) specified on such invoice.
"Additional Quantities Percentage" means, with respect
to any Buyer LNG Invoice or any invoice or other statement for
charges payable hereunder, the percentage set forth below for the
calendar year which (subject to Section 1.1(c)) corresponds to
the date of such invoice or statement:
Additional
Year Quantities Percentage
1991 4.8573%
1992 6.3732
1993 7.8416
1994-2003 9.2647
"Additional Quantities Sharing Percentages" is defined
in Section 6.1.
"Additional Quantities Supply Agreements" means the
Supply Agreements, as hereafter amended, specified in paragraphs
(iv), (v) and (vi) of Paragraph VI of the preamble hereof.
"Approved Level of Working Capital" is defined in
Section 6.1.
"Assignment" is defined in Paragraph VII of the
preamble hereof.
"Base Load Sharing Percentages" is defined in Section
6.1.
"Base Load Supply Agreements" means, collectively, the
Supply Agreements, as hereafter amended, specified in paragraphs
(i), (ii) and (iii) of Paragraph VI of the preamble hereof.
"Bontang Excess Sales Trust Agreement" means the
Bontang Excess Sales Trustee and Paying Agent Agreement, as
amended and restated as of February 9, 1988, as hereafter
amended, among the Producers and Continental Bank International.
"Bontang Excess Sales Trustee" means the trustee under
the Bontang Excess Sales Trust Agreement.
"Bontang Plant" means the natural gas liquefaction and
related facilities located at Bontang Bay on the east coast of
Kalimantan, Indonesia.
"Bontang II Accounts" means the accounts designated in
Section 1.3.
"Bontang II Base Load Account" is defined in Section
1.3.
"Bontang II Distribution Account" is defined in Section
1.3.
"Bontang II General Account" is defined in Section 1.3.
"Bontang II Retained Account" is defined in Section
1.3.
"Bontang II Transfer Account" is defined in Section
1.3.
"Bontang II Trustee" is defined in the title paragraph
hereof.
"Bontang II Trust Fund Accounts" is defined in Section
8.4.
"Bontang II Trust Funds" is defined in Section 1.2.
"Buyer LNG Invoice" is defined in Section 1.1.
"Buyers" is defined in Paragraph Ill of the preamble
hereof.
"Contingency Amount" is defined in Section 7.1.
"Contractor" means any member of the Vico Group, the
Total Group or the Unocal Group, or its predecessor in interest
as the context may require (collectively, the "Contractors").
"Contractor Groups" means the Vico Group, the Total
Group and the Unocal Group.
"Development Agreement" is defined in Paragraph VIII of
the preamble hereof.
"Fixed Quantity Amount" means the quantity of LNG
(expressed in MMBTU's) shown on any Buyer LNG Invoice as a fixed
quantity.
"Gas Fields" is defined in Paragraph III of the
preamble hereof.
"Inpex" is defined in the title paragraph hereof.
"Jilco" is defined in Paragraph VI of the preamble
hereof.
"Jilco LNG Invoice" is defined in Section 1.1.
"Liquefaction Company" is defined in Paragraph X of the
preamble hereof.
"LNG" is defined in Paragraph Ill of the preamble
hereof.
"LNG Invoice" is defined in Section 1.1.
"LPG" means propane or butane, or as the context
requires, both propane and butane.
"MMBTU" means million British Thermal Units.
"Mobil" is defined in Paragraph XI of the preamble
hereof.
"1981 LNG Sales Contract" is defined in Paragraph IV of
the preamble hereof.
"Opicoil Houston" is defined in the title paragraph
hereof.
"Original Quantities Percentage" means, with respect to
any Buyer LNG Invoice or any invoice or other statement for
charges payable hereunder, the percentage set forth below for the
calendar year which (subject to Section 1.1(c)) corresponds to
the date of such invoice or statement:
Original
Year Quantities Percentage
1991 95.1427%
1992 93.6268
1993 92.1584
1994-2003 90.7353
"Other Trustee and Paying Agent Agreements" is defined
in Paragraph XI of the preamble hereof.
"Payment Trustee" is defined in Paragraph VIII of the
preamble hereof.
"Payments Account" is defined in Section 7.1.
"Payments Account Agreement" is defined in Paragraph
VIII of the preamble hereof.
"Pertamina" is defined in the title paragraph hereof.
"Price Reduction Amount" means, with respect to any
Buyer LNG Invoice, the amount set forth below for the calendar
year which (subject to Section I.I(c)) corresponds to the date of
such invoice:
Price
Year Reduction Amount
1991 $0.06
1992 0.08
1993 0.10
1994-2003 0.12
"Processing Agreement" is defined in Paragraph X of the
preamble hereof.
"Producers" means Pertamina and the Contractors.
"Production Sharing Contract" means:
(i) as to Pertamina and the Vico Group, (i) until
August 8, 1998, the Amended and Restated Production Sharing
Contract dated April 23, 1990, as hereafter amended, between
Pertamina, on the one hand, and the members of the Vico Group on
the other, and (ii) effective August 8, 1998, the Production
Sharing Contract dated April 23, 1990, as hereafter amended,
between Pertamina, on the one hand, and the members of the Vico
Group, on the other;
(ii) as to Pertamina and the Total Group, (i) until
March 31, 1997, the Amended and Restated Production Sharing
Contract dated January 11, 1991, as hereafter amended, between
Pertamina, on the one hand, and the members of the Total Group,
on the other, and (ii) effective March 31, 1997, the Production
Sharing Contract dated January 11, 1991, as hereafter amended,
between Pertamina, on the one hand, and the members of the Total
Group, on the other;
(iii) as to Pertamina and the Unocal Group, (i)
until October 24, 1998, the Amended and Restated Production
Sharing Contract dated January 11, 1991, as hereafter amended,
between Pertamina, on the one hand, and Unocal on the other, and
(ii) effective October 25, 1998, the Production Sharing Contract
dated January 11, 1991, as hereafter amended, between Pertamina,
on the one hand, and Unocal, on the other; and
(iv) as to Pertamina and Inpex, effective March 31,
1997, the Production Sharing Contract dated March 28, 1991, as
hereafter amended, between Pertamina, on the one hand, and Inpex,
on the other.
"Quarter" is defined in Section 7.1.
"Retained Amount" means the portion of the Additional
Quantities Payment in respect of any Buyer LNG Invoice determined
by the following formula:
Retained Amount = FQA x OQ% x Pr, where:
FQA = the Fixed Quantity Amount specified on such
invoice;
OQ% = the Original Quantities Percentage applicable to
such invoice; and
Pr = the Price Reduction Amount applicable to such
invoice.
"Sharing Percentages" means the Base Load Sharing
Percentages and the Additional Quantities Sharing Percentages.
"Source Documents" is defined in Paragraph I of the
preamble hereof.
"Special Disbursement Amount" means an amount paid by
the Bontang II Trustee pursuant to a Special Disbursement
Instruction or an amount received by the Bontang II Trustee from
the trustee and paying agent under any Other Trustee and Paying
Agent Agreement which such trustee and paying agent has notified
the Bontang II Trustee is a Special Disbursement Amount, as the
case may be.
"Special Disbursement Instruction" is defined in
Section 6.5.
"Successor" is defined in Section 10.3.
"Supply Agreements" means, collectively, the Base
Load Supply Agreements and the Additional Quantities Supply
Agreements.
"Total" is defined in the title paragraph hereof.
"Total Group" means Total and Inpex and their
successors in interest.
"Transfer Amount" means the portion of the Additional
Quantities Payment in respect of any Buyer LNG Invoice determined
by the following formula:
Transfer Amount = AQP - RA, where:
AQP = the Additional Quantities Payment in respect of
such invoice; and
RA = the Retained Amount in respect of such invoice.
"Trustee's Office" means the office of the Trustee from
time to time in effect pursuant to Section 11.3.
"Ultramar" is defined in the title paragraph hereof.
"Union Texas" is defined in the title paragraph hereof.
"Universe" is defined in the title paragraph hereof.
"Unocal" is defined in the title paragraph hereof.
"Unocal Group" means Unocal and Inpex and their
successors in interest.
"Vico" is defined in the title paragraph hereof.
"Vico Group" means Vico, Virginia International, Union
Texas, Ultramar, Opicoil Houston and Universe and their
predecessors or successors in interest, as the context may
require.
"Virginia International" is defined in the title
paragraph hereof.
ARTICLE 1
RECEIPT OF INVOICES AND PAYMENTS WITH RESPECT TO LNG
1.1 LNG Invoices and Related Calculations. (a) The
Producers shall cause a copy of each invoice rendered under the
1981 LNG Sales Contract to be delivered to the Bontang II
Trustee, including invoices rendered to Jilco pursuant to the
Assignment. Any such copy of an invoice for LNG sold under the
1981 LNG Sales Contract, or for amounts deemed attributable to
such sales under Section 1.5, received by the Bontang II Trustee
hereunder is herein referred to as an "LNG Invoice"; any LNG
Invoice addressed to a Buyer (including any such invoice under
which no amount is payable by Buyer because the whole quantity
referred to therein is invoiced to Jilco) is herein referred to
as a "Buyer LNG Invoice" and any LNG Invoice addressed to Jilco
is herein referred to as a "Jilco LNG Invoice".
(b) Upon the Bontang II Trustee's receipt of any Buyer
LNG Invoice, it shall calculate the Additional Quantities
Payment, the Transfer Amount and the Retained Amount for such
invoice.
(c) In the case of an invoice dated between January
1st and 10th of any year, the Producers may notify the Bontang II
Trustee that for the purpose of determining the Additional
Quantities Percentage, the Original Quantities Percentage and the
Price Reduction Amount, the previous calendar year is deemed to
correspond to the date of such invoice.
1.2 Designation of Bontang II Trustee; Bontang II
Trust Funds. Pursuant to Section 10.4 of the 1981 LNG Sales
Contract and to the provisions of the Supply Agreements,
Pertamina hereby designates, and the Contractors hereby agree to
the designation of, the Bontang II Trustee named herein as the
Trustee and Paying Agent to which certain of the amounts which
become due and payable under the 1981 LNG Sales Contract shall be
paid (whether from the Buyers, from Jilco pursuant to the
Assignment or from the Payment Trustee pursuant to the Assignment
and the Payments Account Agreement). All such amounts and any
other amounts the Bontang II Trustee may receive under the terms
of this Agreement (together with any securities acquired by the
Bontang II Trustee pursuant to Article 9 and all interest
thereon) are herein referred to as the "Bontang II Trust Funds".
1.3 Bontang II Accounts. The Bontang II Trustee shall
establish and maintain at the Trustee's Office the following
separately-designated accounts, herein referred to collectively
as the "Bontang II Accounts": the "Bontang II General Account"
and sub-accounts thereof designated as the "Bontang II Base Load
Account", the "Bontang II Transfer Account", the "Bontang II
Retained Account" and the "Bontang II Distribution Account".
Immediately upon the Bontang II Trustee's receipt of any funds
designated "Bontang II", "Badak LNG Sales Contract", "Badak
Expansion" or otherwise unambiguously representing amounts
payable with respect to LNG sold under the 1981 LNG Sales
Contract, such funds shall be impressed with the trust created
hereby, become a part of the Bontang II Trust Funds and be
deposited in the Bontang II General Account.
1.4 Proceeds Transfers. (a) Subject to clauses (b) and
(c) below, the Bontang II Trustee shall immediately transfer the
proceeds of any Buyer LNG Invoice deposited in the Bontang II
General Account from such account (i) first to the Bontang II
Transfer Account, until the Transfer Amount for such invoice has
been deposited therein and (ii) then to the Bontang II Retained
Account, until the Retained Amount for such invoice has been
deposited therein, and any funds remaining in the Bontang II
General Account after making such transfers shall be immediately
transferred to the Bontang II Base Load Account.
(b) Subject to clause (c) below, in the event that the
proceeds of any Buyer LNG Invoice deposited in the Bontang II
General Account are not at least equal to the Additional
Quantities Payment for such invoice, the Bontang II Trustee shall
immediately transfer such proceeds from the Bontang II General
Account to the Bontang II Transfer Account and the Bontang II
Retained Account, pro rata in proportion to the Transfer Amount
and Retained Amount, respectively, for such invoice.
(c) To the extent that less than the full Transfer
Amount and Retained Amount for any Buyer LNG Invoice has been
transferred to the Bontang II Transfer Account and the Bontang II
Retained Account, respectively, the Bontang II Trustee shall,
before making any other application of such funds required
hereunder, transfer the next available funds in the Bontang II
General Account from such account to the Bontang II Transfer
Account and the Bontang II Retained Account, pro rata in
proportion to the Transfer Amount and Retained Amount,
respectively, for such invoice, until the full Transfer Amount
and Retained Amount for such invoice has been so transferred.
(d) Subject to clause (c) above, the Bontang II
Trustee shall immediately transfer the proceeds of any Jilco LNG
Invoice deposited in the Bontang II General Account from such
account to the Bontang II Base Load Account.
1.5 Allocation of Amounts Received. All amounts
received by the Bontang II Trustee (whether from the Buyers or
Jilco) and designated as representing amounts payable for LNG
delivered under the 1981 LNG Sales Contract, or for LNG required
to be purchased under the 1981 LNG Sales Contract, but not taken,
and all amounts paid on account of interest due by reason of the
late payment of invoices for such LNG, shall be deemed to be
attributable to sales of LNG under the 1981 LNG Sales Contract.
In the event the Bontang II Trustee receives any amounts from
Buyers, from Jilco or from the Payment Trustee that are not
designated for the Bontang II General Account or any accounts
established or to be established under the Other Trustee and
Paying Agent Agreements, it shall first contact the remitting
party in order to determine the proper designation for the
amounts received, and shall solicit and, if possible, obtain from
the remitting party such documentation as the Bontang II Trustee
deems appropriate as evidence of such designation. In the event
the remitting party does not provide appropriate evidence of such
designation satisfactory to the Bontang II Trustee, the Bontang
II Trustee shall notify Pertamina, the Contractors and, if an
Other Trustee and Paying Agent Agreement involving Mobil is
concerned, Mobil of the amount received, the date of receipt and
any other information relevant to such amount known to the
Bontang II Trustee. The Bontang II Trustee shall thereupon
request instructions as to the proper allocation of the amount
received, and shall allocate such amounts among the Bontang II
General Account and any accounts established under the Other
Trustee and Paying Agent Agreements in accordance with
instructions given jointly by Pertamina, the Contractors and, as
appropriate, Mobil.
1.6 Amounts Received From Payment Trustee or Jilco.
All amounts received by the Bontang II Trustee from the Payment
Trustee designated as being pursuant to the Payments Account
Agreement or from Jilco designated as being pursuant to the
Development Agreement (other than amounts paid pursuant to an LNG
Invoice), shall be deposited in the Bontang II General Account
and, subject to Section 1.4(c), immediately transferred to the
Bontang II Base Load Account.
1.7 Credits and Charges to Producer Accounts. The (i)
Base Load Sharing Percentage of each Producer of all amounts
deposited in the Bontang II Retained Account and the Bontang II
Base Load Account and (ii) Additional Quantities Sharing
Percentage of each Producer of all amounts deposited in the
Bontang II Transfer Account, shall be credited to the Bontang II
Trust Fund Account of such Producer, to be held in trust,
however, for the benefit of those having a right, to the extent
provided in this Agreement, to receive disbursements and
distributions hereunder. The (a) Base Load Sharing Percentage of
each Producer of all amounts required to be paid from the Bontang
II Base Load Account and the Bontang II Retained Account and (b)
Additional Quantities Sharing Percentage of each Producer of all
amounts required to be paid from the Bontang II Transfer Account,
in each case under Articles 2 through 5 and, in the case of
clause (a) above, Section 6.5, shall be charged to such
Producer's Bontang II Trust Fund Account.
ARTICLE 2
DISBURSEMENTS WITH RESPECT TO PROCESSING CHARGES
2.1 Submission and Payment. The Producers shall
submit to the Bontang II Trustee invoices received from the
Liquefaction Company on account of LNG processing charges payable
with respect to LNG sold under the 1981 LNG Sales Contract. To
the extent that sufficient funds are then held in the accounts
specified in Article 4 to pay any such invoice in full the
Bontang II Trustee shall, in accordance with procedures from time
to time agreed upon among the Producers and the Liquefaction
Company pursuant to Section 2.2, promptly upon receipt of notice
from the Producers that any such invoice has been approved for
payment, pay to the Liquefaction Company from such accounts the
amount of such invoice. No partial payments of less than the
full amount of any such invoice shall be made.
2.2 Payment Procedures. The Producers shall from time
to time establish appropriate procedures with the Liquefaction
Company for the payment of funds payable to the Liquefaction
Company pursuant to Section 2.1, and shall advise the Bontang II
Trustee of such procedures which shall include a requirement that
the Liquefaction Company furnish the Bontang II Trustee with an
acknowledgment that each payment by the Bontang II Trustee
hereunder fully satisfies the liabilities of the Producers with
respect to the invoice to which the payment relates.
ARTICLE 3
TRUSTEE CHARGES
3.1 Compensation. The Bontang II Trustee shall be
entitled to reasonable compensation to be agreed upon from time
to time among the parties for the services to be performed by it
hereunder and to be reimbursed for all reasonable out-of-pocket
expenses incurred by it in connection therewith. To the extent
that sufficient funds are then held in the accounts specified in
Article 4 to pay such agreed compensation and expenses the
Bontang II Trustee may charge such agreed compensation and
expenses to such accounts, providing the Producers with such
evidence as to the nature and amount of such expenses as any of
the Producers may reasonably require.
3.2 Producers Obligations. If sufficient funds are
not available in the accounts specified in Article 4 to pay such
compensation and expenses, Pertamina and each Contractor shall
pay such compensation and expenses to the Bontang II Trustee;
provided, however, that the obligation of each Producer with
respect to this Section 3.2 shall be pro rata in accordance with
its Sharing Percentage with respect to each of the accounts to
which such charges are allocated pursuant to Section 4.1.
ARTICLE 4
ALLOCATION OF PROCESSING CHARGES AND
TRUSTEE CHARGES
4.1 Ultimate Allocation. The Original Quantities
Percentage of the total amount of any charges payable pursuant to
Articles 2 and 3 shall ultimately be borne by the Bontang II Base
Load Account or the Bontang II Retained Account. The Additional
Quantities Percentage of any such charges shall ultimately be
borne by the Bontang II Transfer Account. The allocation of
charges contemplated by this Section 4.1 shall be effected as set
forth in Sections 4.2 through 4.4.
4.2 Charges Ultimately To Be Borne By Bontang II Base
Load or Retained Accounts.
(a) When any invoice or other charges are to be paid
pursuant to Article 2 or 3, funds in the Bontang II Base Load
Account shall first be applied, to the extent required, to the
payment of the amount of such charges ultimately to be borne by
such account or the Bontang II Retained Account.
(b) If the application of funds pursuant to (a) above
is not sufficient to pay such amount, then funds in the Bontang
II Retained Account shall be applied, to the extent required, to
the payment thereof
(c) If the application of funds pursuant to (a) and
(b) above is not sufficient to pay such amount, then any funds
remaining in the Bontang II Transfer Account after making the
payment required by Section 4.3(a) shall be applied, to the
extent required, to the payment thereof.
4.3 Charges Ultimately To Be Borne B Bontang II
Transfer Account.
(a) When any invoice or other charges are to be paid
pursuant to Article 2 or 3, funds in the Bontang II Transfer
Account shall first be applied, to the extent required, to the
payment of the amount of such charges ultimately to be borne by
such account.
(b) If the application of funds pursuant to (a) above
is not sufficient to pay such amount, then any funds remaining in
the Bontang II Base Load Account after making the payment
required by Section 4.2(a) shall be applied, to the extent
required, to the payment of such amount.
(c) If the application of funds pursuant to (a) and
(b) above is not sufficient to pay such amount, then any funds
remaining in the Bontang II Retained Account after making the
payment required by Section 4.2(b) shall be applied, to the
extent required, to the payment thereof.
4.4 Adjusting Payments. When, pursuant to the
provisions of Sections 4.2 and 4.3, any charges pursuant to
Article 2 or 3 have been paid from an account (a "lending
account") which are ultimately to be borne by another account (a
"borrowing account"), the Bontang II Trustee shall transfer to
the lending account the next available funds deposited in the
borrowing account, before making any other application of such
finds required hereunder, until the lending account has been
fully reimbursed for the charges paid from it on behalf of the
borrowing account. If the next available funds in the borrowing
account are not sufficient to fully reimburse each lending
account to which funds are due from such borrowing account, such
funds shall be transferred to such lending accounts pro rata in
proportion to the amounts then due to each such account from the
borrowing account.
ARTICLE 5
DISBURSEMENTS WITH RESPECT TO OTHER CHARGES
5.1 Submission and Payment. It is contemplated that
other charges with respect to the production, sale or delivery of
LNG sold under the 1981 LNG Sales Contract will from time to time
be payable from certain accounts hereunder. The Producers may
submit to the Bontang II Trustee payment orders or instructions,
or invoices or other statements, received by any of them with
respect to such charges. The Bontang II Trustee shall, promptly
upon receipt of notice from the Producers that any such payment
order, instruction, invoice or statement has been approved for
payment, pay to the person entitled thereto from the Bontang II
Account or Accounts specified in such approval notice, to the
extent that funds are then held in such accounts, the amount
approved for payment, pursuant to procedures to be agreed upon
pursuant to Section 5.2.
5.2 Payment Procedures. The Producers shall agree
with the person submitting any invoice or statement payable
pursuant to Section 5.1 on appropriate procedures for the payment
thereof, and shall advise the Bontang II Trustee of such
procedures which shall include a requirement that the person
receiving payment furnish the Bontang II Trustee with an
acknowledgment that each payment by the Bontang II Trustee
hereunder fully satisfies the liabilities of the Producers with
respect to the invoice or statement to which the payment relates.
5.3 Designation of Account To Pay. Each notice to the
Bontang II Trustee from the Producers approving a payment
pursuant to Section 5.1 shall specify the Bontang II Account or
Accounts from which such payment is to be made and, in the event
payment is to be made from more than one account, the amount to
be paid from each account. Unless otherwise specified pursuant
to the preceding sentence, the Bontang II Base Load Account shall
be charged for payment of the following expenses:
(a) the portion of any transportation charge related
to the 1981 LNG Sales Contract for any "In-Kind Cargo" under the
Second Supply Agreements For Excess Sales (Quantities In-Kind
Under Amended and Restated Invoice Settlement Agreements)
effective as of March 31, 1987, as amended and restated as of
December 1, 1988, between Pertamina and the Vico Group, the Total
Group and the Unocal Group, respectively; and
(b) any fees or expenses related to the Development
Agreement.
ARTICLE 6
DISBURSEMENTS WITH RESPECT TO SHARING PERCENTAGES
6.1 Approved Level of Working Capital: Sharing
Percentages. For the purposes of this Agreement the "Approved
Level of Working Capital" for the Bontang II Base Load Account,
the Bontang II Retained Account and the Bontang II Transfer
Account, respectively, shall be that amount, if any, specified to
the Bontang II Trustee for such account in a notice from the
Producers. The respective "Base Load Sharing Percentages" and
"Additional Quantities Sharing Percentages" of each Producer
shall be the percentages set forth in the most recent applicable
certificate furnished to the Bontang II Trustee pursuant to
Section 6.3.
6.2 Payment of Excess.
(a) Whenever and to the extent that the amount held in
the Bontang II Base Load Account or the Bontang II Retained
Account at the end of any business day of the Bontang II Trustee
in the City of New York is in excess of the Approved Level of
Working Capital for such account, after having deducted all
amounts then payable or transferable by the Bontang II Trustee
from such accounts under Articles 2 through 5, then, such excess
shall be immediately transferred to the Bontang II Distribution
Account and, except as otherwise provided in Sections 6.3 or 6.5,
paid out to the Producers from such account in accordance with
their respective Base Load Sharing Percentages, as specified by
the most recent certificate for the current year furnished
pursuant to Section 6.3.
(b) Whenever and to the extent that the amount held in
the Bontang II Transfer Account at the end of any business day of
the Bontang II Trustee in the City of New York is in excess of
the Approved Level of Working Capital for such account, after
having deducted all amounts then payable or transferable by the
Bontang II Trustee from such account under Articles 2 through 5,
then such excess shall be immediately paid out to the Bontang
Excess Sales Trustee and shall be identified as a payment with
respect to Additional Quantities.
6.3 Accountants. The Producers shall mutually appoint
from time to time a firm of independent public accountants to act
as the accountants hereunder (the "Accountants") and shall
promptly advise the Bontang II Trustee of any such appointment or
change in appointment.
The Accountants shall be directed to furnish to the
Bontang II Trustee (with a copy to the Producers) a certificate
on or before the 15th day of December in each calendar year
setting forth the respective Sharing Percentages of each Producer
for the following calendar year.
The Sharing Percentages shall be calculated as provided
in the respective Production Sharing Contracts and Supply
Agreements, based upon actual or estimated production and costs
as required thereby.
The Accountants shall also be directed to furnish to
the Bontang II Trustee (with a copy to the Producers) on or
before the 15th day of March, June and September in each calendar
year a revision of the certificate furnished for such year
setting forth the respective Sharing Percentages of each Producer
based upon revised estimates of production and costs for such
year.
In addition, the Accountants shall be directed to
furnish to the Bontang II Trustee (with a copy to the Producers)
on or before the 15th day of February in each calendar year, a
final version of the certificate for the previous year setting
forth the respective Sharing Percentages of each Producer based
upon actual production and costs for the previous year.
Every revised and final certificate shall specify the
amount, if any, by which the aggregate amount paid by the Bontang
II Trustee to each Producer pursuant to the initial certificate
and any earlier revisions thereof under Section 6.2(a) was
greater or less than the amount that would have been paid to each
on the basis of the Base Load Sharing Percentages which are
certified therein and shall specify the amount that would be
required to be paid to any underpaid Producer, in order to bring
the total amount paid to it into equitable relation to the amount
paid to any overpaid Producer so that the payments, as adjusted,
would be in accordance with such Base Load Sharing Percentages.
In the event that any such certificate indicates that any of the
Producers has been underpaid, the Bontang II Trustee, after
receipt of the certificate, shall pay to any such Producers pro
rata in proportion to the amount by which each such Producer was
underpaid, all amounts otherwise payable under Section 6.2(a) to
the Producers which have been overpaid until each such underpaid
Producer shall have received the entire amount stated in the
certificate as required to be paid to such underpaid Producer.
After each such Producer has received the entire amount it is
entitled to receive as aforesaid, the Bontang II Trustee shall
make all future payments to the Producers pursuant to Section
6.2(a) in accordance with the Base Load Sharing Percentages
specified in the most recent certificate relating thereto
furnished to the Bontang II Trustee pursuant to this Section 6.3.
6.4 Arrangement for Payment. Each Producer shall make
such reasonable arrangements with the Bontang II Trustee as it
shall deem appropriate for the payment to it of amounts payable
to it under the terms of this Article 6. Except as otherwise
provided in Section 6.5, each Contractor shall make its own
arrangements with respect to such payments directly with the
Bontang II Trustee and, notwithstanding the provisions of Section
11.3, the representative of any Contractor Group shall have no
authority to act for any Contractor other than itself in making
such arrangements.
6.5 Special Disbursement Instructions. The Producers
acknowledge that from time to time it may be necessary for
amounts which would otherwise be paid to Producers pursuant to
Section 6.2(a) to be paid instead to (a) persons who have
submitted invoices or other statements for charges with respect
to the production, sale or delivery of LNG or LPG from the
Bontang Plant under sales contracts other than the 1981 LNG Sales
Contract, (b) the trustee under any trust established to pay
charges of the type described in (a) above, (c) the trustee under
any Other Trustee and Paying Agent Agreement or (d) Mobil, in
order to satisfy certain obligations of the Producers having
interests in the Bontang II Base Load Account and the Bontang II
Retained Account. Accordingly, notwithstanding the payment
arrangements made with the Bontang II Trustee pursuant to Section
6.4, each Contractor hereby authorizes the representative of any
of the Contractor Groups of which it is a member, as designated
in or pursuant to Section 11.3, to give to the Bontang II Trustee
from time to time on its behalf such Special Disbursement
Instructions as such representative may deem necessary or
appropriate to authorize such payments. Each representative
shall give copies of any such Special Disbursement Instruction to
the members of its Contractor Group contemporaneously with the
transmission thereof to the Bontang II Trustee, by the same means
of transmission. As used herein, a "Special Disbursement
Instruction" means an instruction so entitled which (i) is given
by the Producers as provided in Section 11.3, (ii) instructs the
Bontang II Trustee to pay to persons described in clauses (a),
(b), (c) or (d) above any amount which would otherwise be paid to
Producers pursuant to Section 6.2(a), and (iii) specifies the
funds and the Bontang II Account from which such payment is to be
made. Any Special Disbursement Instruction requiring payment to
another trustee shall also specify the account or accounts to
which such funds are to be credited and direct the Bontang II
Trustee to notify such trustee that such payment is a Special
Disbursement Amount for the account of accounts so specified.
The inclusion of this Section 6.5 shall have no effect on the
authority of the Bontang II Trustee to act and rely upon any
other special disbursement or transfer instruction which does not
comply with this Section 6.5 so long as such instruction is given
in an instrument executed by all of the Producers.
6.6 Payment Procedures. The Producers shall agree
with the persons specified in Section 6.5(a) on appropriate
procedures for the payment of the relevant invoices or
statements, and shall advise the Bontang II Trustee of such
procedures which shall include a requirement that the person
receiving payment furnish the Bontang II Trustee with an
acknowledgement that each payment by the Bontang II Trustee
hereunder fully satisfies the liabilities of the person to whom
such invoice or statement is addressed with respect thereto.
6.7 Receipt of Special Disbursements. The Bontang II
Trustee may from time to time receive Special Disbursement
Amounts from the trustee under any Other Trustee and Paying Agent
Agreement. Immediately upon the Bontang II Trustee's receipt of
any funds identified as a Special Disbursement Amount, such funds
shall be impressed with the trust created hereby and become a
part of the Bontang II Trust Funds. Any such amounts received by
the Bontang II Trustee shall be deposited in the Bontang II
Account or Accounts specified by the remitting trustee.
ARTICLE 7
DUTIES WITH RESPECT TO DEVELOPMENT AGREEMENT
AND
PAYMENTS ACCOUNT AGREEMENT
7.1 Terms of Related Agreements.
(a) Under the Development Agreement, Jilco is required
to give the Bontang II Trustee notice of each amount payable by
Jilco which is set off against amounts to be refunded or paid by
Pertamina under the Development Agreement.
(b) Under the Payments Account Agreement, (i) Jilco
and Pertamina, or Jilco alone, will furnish the Bontang II
Trustee a statement of the "Contingency Amount" for the
three-month period commencing on each March 25, June 25,
September 25 and December 25 (each such three-month period, a
"Quarter") and (ii) on the first business day in the City of New
York after the commencement of each such Quarter, the Payment
Trustee is required to pay to the Bontang II Trustee the amount
in the Payments Account established under the Payments
Account Agreement
(such account, the "Payments Account") in
excess of the Contingency Amount.
(c) Under the Development Agreement and the
Assignment, no payments for LNG delivered to Jilco are to be made
by Jilco to the Payments Account so long as the amount in such
account is equal to or greater than the Contingency Amount, but
instead are either to be made the subject of set-off as described
in (a) above or paid directly to the Bontang II Trustee
hereunder.
(d) Under the Payments Account Agreement, the Payment
Trustee is authorized to advise the Bontang II Trustee of the
amount in the Payments Account as of the time of any request for
such information by the Bontang II Trustee.
7.2 Reconciliation by Bontang II Trustee. On the
basis of the information submitted to the Bontang II Trustee, as
described in Section 7.1, and the procedures referred to therein,
the Bontang II Trustee shall reconcile with respect to the total
amount payable under each invoice rendered to Jilco for LNG sold
under the 1981 LNG Sales Contract (i) the portion of such amount
set off as described above, (ii) the portion of such amount paid
to the Payment Trustee and (iii) the portion of such amount paid
directly to the Bontang II Trustee hereunder. If the Bontang II
Trustee is unable or without sufficient information to so
reconcile the amount payable under any such invoice, it will
bring this fact to the attention of the Producers and attempt
with their assistance to cause such reconciliation to be made or
to find the cause of the discrepancy preventing such
reconciliation. Upon a request from any Producer, the Bontang II
Trustee will make available to the Producer making such request
copies of the Bontang II Trustee's reconciliations made in
accordance with the Section 7.2.
ARTICLE 8
PROCEDURES RESPECTING ACCOUNTS UNDER THIS AGREEMENT
8.1 Accounting For Assets. All assets under the
jurisdiction and control of the Bontang II Trustee and held from
time to time in the Bontang II Trust Funds shall be accounted for
within the Bontang II General Account, specifying the sub-account
thereof to which such assets may be allocated, the bank or banks
at which cash deposits may be maintained and the place or places
at which investment securities may be held in custody for the
account of the Bontang II Trustee. The Bontang II Trustee shall
maintain such books of account and other records as may be
necessary to ensure full and proper segregation of the funds
credited to such accounts as may be established by the Bontang II
Trustee hereunder. It shall also segregate and keep such
accounts separate from any accounts which may be established
under the Other Trustee and Paying Agent Agreements. Such books
of account shall be open to inspection by the duly authorized
representatives of any of the Producers at all reasonable times.
8.2 Payments Account Balance. The Bontang II Trustee
shall from time to time request from the Payment Trustee the
balance standing in the Payments Account under the Payments
Account Agreement and shall, upon request of any Producer,
communicate such information to such party.
8.3 Reports. The Bontang II Trustee shall furnish to
each of the Producers the following reports:
(a) As soon as practicable (and not later than 45
days) after the close of each calendar year, a statement prepared
by the Bontang II Trustee, setting forth the amount and source
(by category) of funds received pursuant to this Agreement and
the disbursement of such funds as disclosed by the records and
accounts kept by the Bontang II Trustee pursuant to Section 8.1
during such preceding calendar year, and a statement of the cash
and investments held in the accounts under this Agreement as of
the end of such period.
(b) Within 20 days after the close of each calendar
quarter a statement prepared by the Bontang II Trustee setting
forth the amount and source (by category) of funds received
pursuant to this Agreement and the disbursements of such funds as
disclosed by the records and accounts kept by the Bontang II
Trustee pursuant to Section 8.1 during such preceding calendar
quarter and a statement of the cash and investments held in the
accounts under this Agreement as of the end of such period.
(c) Promptly after its receipt or disbursement of any
finds pursuant to this Agreement the Bontang II Trustee shall
notify the Producers by telex or facsimile transmission of such
transactions specifying the amount and the source (by category)
of the funds received and disbursed and the amounts credited or
charged to the Bontang II Accounts or any accounts included
therein.
Notwithstanding the provisions of Section 11.3
respecting the representatives of the Contractor Groups, each of
the reports required by clauses (a) and (b) of this Section 8.3
shall be furnished by the Bontang II Trustee directly to each
Contractor at its address specified pursuant to Section 11.3.
8.4 Producer Accounts. The Bontang II Trustee shall
maintain separate accounts (the "Bontang II Trust Fund Accounts")
for each Producer which are sufficient to reflect each such
Producer's interest in the assets, liabilities, receipts and
disbursements of the Bontang II Trust Funds, and its right to
distributions therefrom. It is the intention of each Producer
that the trust created hereby be a security trust of the type
described in Treas. Reg. 1.61-13(b) and I.T. 1942, III-1 C.B. 11
(1924). Accordingly, each Producer agrees for United States
income tax purposes to account for its share of the receipts and
disbursements made pursuant to this Agreement as if it had
received such amounts directly and made such disbursements
directly, and the Bontang II Trustee agrees for United States
income tax purposes, unless advised by the U.S. Internal Revenue
Service to the contrary, to treat such receipts and disbursements
in a manner consistent with its status as the agent for each such
party, or if so advised by the Bontang II Trustee's counsel, as
the trustee of a separate grantor trust for each such party
within the meaning of Section 671 of the U.S. Internal Revenue
Code of 1986, as amended, and the regulations thereunder.
ARTICLE 9
INVESTMENT OF FUNDS HELD IN ACCOUNTS
UNDER THIS AGREEMENT
9.1 Permitted Investments. The Bontang II Trustee
shall invest amounts held by it from time to time in the Bontang
II Accounts solely in (i) Eurodollar bank time deposits and/or
Eurodollar certificates of deposit with banks whose deposits are
rated "P-l" by Moody's Bank Credit Report Service and "A-l+" by
Standard and Poor's Corporation CD Ranking Service; or (ii) such
other types of short-term interest-bearing bank time deposits and
certificates of deposit (x) as to which there is applicable a
sovereign guarantee of repayment of principal or other evidence
of sovereign support in respect of such repayment as approved by
the Producers, and (y) issued by banks having at least
$100,000,000 (or its equivalent) of capital and earned surplus
(or equivalent accounts) as reflected in the then current
financial statements of the issuing banks; or (iii) if, due to
the relatively small amount of funds to be invested, the
unconventional period during which such funds are to be invested
or similar factors, investments of the type authorized by clauses
(i) and (ii) above are not generally available for such funds,
the Bontang II Trustee may invest such funds in short-term
Eurodollar time deposits, Eurodollar certificates of deposit or
Eurodollar repurchase agreements, or any combination of the
foregoing, in each case with any bank or banks each having at
least $100,000,000 (or its equivalent) of capital and earned
surplus (or equivalent accounts) as reflected in the then current
financial statements of such bank or banks; provided, however,
that the aggregate principal amount of such funds so invested
shall not exceed $1,000,000 at any one time. In no event shall
the aggregate amount invested by the Bontang II Trustee pursuant
to the foregoing provisions in time deposits or certificates of
deposit with, or issued by, respectively, any one bank exceed 10%
of such bank's capital and earned surplus (or equivalent
accounts) as reflected in the bank's then current financial
statements. For purposes of investments pursuant to clause (ii)
above, the Bontang II Trustee shall request the approval of the
Producers in accordance with Section 11.3, which request shall
specify the type of investment proposed and the nature of any
sovereign guarantee or any support applicable thereto. The
Bontang II Trustee shall use its best efforts to assure that the
final maturity of any such investment does not extend beyond the
time when the amounts used to acquire such investment would be
required for any other application hereunder.
9.2 Prudence and Yield. In making any investments
pursuant to Section 9.1 the Bontang II Trustee shall be guided by
the standards of a prudent investor seeking the maximum yield
available consistent with security of principal at all times.
9.3 Interest Allocation. Interest or any other income
arising out of investment of the Bontang II Trust Funds shall be
and become a part of the Bontang II Trust Funds, allocated to the
account for which such investment was made.
ARTICLE 10
CONCERNING THE BONTANG II TRUSTEE
10.1 Duties. In connection with its duties, rights and
powers under this Agreement (including in relation to
transactions it may enter into pursuant hereto), the Bontang II
Trustee shall be subject to the following:
(a) The Bontang II Trustee shall be entitled to act
upon any notice, certificate, request, direction, waiver, receipt
or other document which it in good faith believes to be genuine;
and it shall be entitled to rely upon the due execution, validity
and effectiveness, and the truth and acceptability, of any
provisions contained therein.
(b) The Bontang II Trustee shall not be liable for any
error of judgment or for any act done or omitted by it in good
faith or for any mistake of fact or law, or for anything which it
may do or refrain from doing, except for its own gross negligence
or willful misconduct.
(c) The Bontang II Trustee may consult with, and
obtain advice from, accounting and legal advisers and it shall
incur no liability or loss and shall be fully protected in acting
in good faith in accordance with the opinion and advice of such
advisers.
(d) The Bontang II Trustee shall have no duties other
than those specifically set forth or provided for in this
Agreement. The Bontang II Trustee shall have no obligation to
familiarize itself with and shall have no responsibility with
respect to any other agreement to which it is not a party
relating to the transactions contemplated by this Agreement nor
any obligation to inquire whether any notice, instruction,
statement or calculation is in conformity with the terms of any
such other agreement, except those irregularities, errors or
mistakes apparent on the face of such document or to the
knowledge of the Bontang II Trustee. If, however, any remittance
or communication received by the Bontang II Trustee appears
erroneous or irregular on its face, the Bontang II Trustee shall
be under a duty to make prompt inquiry to the person or party
originating such remittance or communication in order to
determine whether a clerical error or inadvertent mistake has
occurred.
10.2 Resignation. The Bontang II Trustee may, at any
time, by notice to the Producers, tender its resignation as
Trustee and Paying Agent under this Agreement. Likewise, the
Producers may, at any time by notice jointly given by them,
terminate the Bontang II Trustee's appointment hereunder. Such
resignation or termination shall be effective as from the
appointment of a successor as hereinafter provided.
10.3 Appointment of Successor. Within 60 days of
receipt of a notice of resignation or issuance of a notice of
termination, the Producers shall jointly appoint a successor,
being a bank in the United States acceptable to the Producers.
The proposed successor bank (the "Successor") shall promptly give
notice of its appointment to the Bontang II Trustee and shall
execute and deliver to each of the parties hereto an instrument
in writing accepting its appointment hereunder which shall
specify the office of Successor in the United States which is to
be the Trustee's Office for the purpose of this Agreement.
10.4 Application to Court. If in any case a Successor
shall not be appointed pursuant to the foregoing provisions of
this Article 10 within the 60 days aforesaid, the Bontang II
Trustee may apply to any court of competent jurisdiction to
appoint a Successor Trustee, notwithstanding the provisions of
Section 11.2. Such court may thereupon, in any case, after such
notice, if any, as such court may deem proper and prescribe,
appoint a Successor.
10.5 Successor Vested with Rights. Upon and from the
execution and delivery of its acceptance in writing as aforesaid,
the Successor without any further act or deed shall become fully
vested with all the rights, powers and duties and subject to all
the obligations of the Bontang II Trustee hereunder, but the
Bontang II Trustee, upon payment of all sums due it and on the
written request of the Producers shall execute and deliver an
instrument transferring to the Successor the Bontang II Trust
Funds, including all funds held in the Bontang II Accounts and
assigning to the Successor all its rights hereunder.
10.6 Payments After Notice. Upon and from the date of
notification from any Successor, any person required to pay
amounts to the Bontang II Trustee under this Agreement shall pay
the Successor at its office specified as aforesaid all amounts
described herein as payable to the Bontang II Trustee.
10.7 Indemnification. The Producers hereby agree to
indemnity the Bontang II Trustee for, and to hold it harmless
against, any loss, liability, claim, judgment, settlement,
compromise or reasonable expense incurred or suffered without
gross negligence or willful misconduct on the part of the Bontang
II Trustee, arising out of or in connection with its entering
into this Agreement and carrying out its duties or exercising its
rights hereunder, including the cost and expenses of defending
itself against any claim of liability in the premises.
10.8 Trustee in Individual Capacity. Each of the
parties hereto acknowledges and consents that the Bontang II
Trustee, in its individual capacity, or any affiliate thereof
shall have the same rights, power and authority to enter into any
deposit agreement, loan agreement or any other banking or
business relationship permitted by law with any of the Producers
(without having to account therefor to any of the Producers) as
though it were not the Trustee and Paying Agent under this
Agreement.
ARTICLE 11
MISCELLANEOUS
11.1 Term. As of the date hereof the Source Documents
shall be amended and restated in their entirety as provided
herein and, as so amended and restated, shall remain in effect
until the Producers shall have notified the Bontang II Trustee
that the 1981 LNG Sales Contract has terminated as to all Buyers
and that all claims by Pertamina against the Buyers have been
finally settled and determined.
11.2 Disputes. All disputes arising among the parties
relating to this Agreement or the interpretation or performance
hereof, shall be finally settled by arbitration conducted in the
English language in Paris, France, by three arbitrators under the
rules of arbitration of the International Chamber of Commerce.
Judgment upon the award rendered may be entered in any court
having jurisdiction, or application be made to such court for a
judicial acceptance of the award and an order of enforcement, as
the case may be. Any award made under this Section 11.2 shall be
binding upon all parties concerned.
11.3 Notices. All notices, approvals, instructions and
other communications for purposes of this Agreement shall be in
writing, which shall include transmission by cable, telex or
facsimile transmission. All communications given by mail, cable,
telex or facsimile transmission shall be directed as set forth
below, provided, however, that in the event any communication is
received by the Bontang II Trustee from a cable, telex or
facsimile number other than those set forth below, its responses
thereto may be directed to the number from which such
communication was received.
(a) To Pertamina at the following mail, cable, telex
and telecopier addresses, in each case to the attention of the
Director of Finance:
Perusahaan Pertambangan Minyak dan Gas Bumi Negara
(Pertamina)
Jalan Medan Merdeka Timur 1A
Jakarta, Indonesia
Cable: Pertamina Jakarta, Indonesia via RCA
Telex No.: 44441/44134
(Answerback: PTMJKT IA)
Telecopier No.: 62-21 343 882
(b) To the Contractors comprising the Vico Group at
the following mail, telex
and telecopier addresses:
Virginia Indonesia Company
6 - llth floor
Kuningan Plaza - South Tower
Jalan H.R. Rasuna Said
Kav. C 11- 14
Jakarta Selatan, Indonesia
Telex No.: 79644421/7964457
(Answerback: VICO IA)
Telecopier No.: 62-21 380 0037
(c) To the Contractors comprising the Total Group at
the following mail, cable,
telex and telecopier addresses:
Total Indonesie
P.O. Box 1010
Jakarta 10010
Indonesia
Cable: Totalindo Jakarta
Telex No.: 44108
(Answerback: TOTAL JKT)
(Telecopier No.: 62-21 520 0834
(d) To the Contractors comprising the Unocal Group at
the following mail,
telex and telecopier addresses:
Unocal Indonesia, Ltd.
Ratu Plaza Office Tower, 7th floor
Jalan Jenderal Sudirman
Jakarta, Indonesia
Telex No.: 47335
(Answerback: UNOCAL IA)
Telecopier No.: 62-21-720-4499
(e) To the Bontang II Trustee at the following mail,
telex and telecopier
addresses, in each case to the attention of the LNG/LPG Division:
Continental Bank International
520 Madison Avenue
New York, NY 10022
Telex No.: RCA 232304/ITT 420177
(Answerback: CBI UR/CBI UI)
Telecopier No.: 1-212-605-1014 or 1-212-319-0676
(f) To Mobil at the following mail, cable, telex and
telecopier addresses:
Mobil Oil Indonesia Inc.
P.O. Box 400
Jakarta, Indonesia
Cable: Mobiloil Jakarta
Telex No.: 47431
(Answerback: MOI JKT)
Telecopier No.: 62-21 715 295
Each of Vico, Total and Unocal is hereby designated the sole
representative of the Contractors comprising its respective
Contractor Group for the giving and receipt of notices,
approvals, instructions and other communications to or from the
Contractors under this Agreement and, to the extent Contractors
are entitled to give or receive notices, approvals or
instructions thereunder, the Other Trustee and Paying Agent
Agreements. For purposes of the foregoing, unless specifically
provided otherwise, each reference in this Agreement to the
Producers or the Contractors, shall insofar as the Contractors
are concerned, require notices, approvals and other
communications to and from such representatives. A new or
successor representative may be designated by notice to such
effect signed by all the Contractors comprising a Contractor
Group given to the parties to this Agreement ten days in advance
of any such change. Until receipt of any such notices, the
parties to this Agreement and the Other Trustee and Paying Agent
Agreements may rely on any notice, approval, instruction or other
communication from or to the representative of a Contractor Group
as binding upon each of the Contractors in such Contractor Group;
provided however, that, except as otherwise provided in Section
6.5, nothing in this Agreement is intended to grant the
representative of a Contractor Group (or any successor
representative designated pursuant to this Section 11.3) any
power or authority as among the Contractors in such Contractor
Group themselves.
The parties may designate additional addresses for
particular communications as required from time to time, and may
change any address, by notice given ten days in advance of such
additions or changes, provided, however, that the Bontang II
Trustee's address shall be in the United States of America.
Immediately upon receiving communications by cable, telex or
facsimile transmission a party may request a repeat transmittal
of the entire communication or confirmation of particular
matters.
11.4 Incumbency Certificates; Notices; Test Key
Arrangements.
(a) Pertamina and each representative of a Contractor
Group (or any successor representative of a Contractor Group
designated pursuant to Section 11.3) shall each furnish the
Bontang II Trustee, from time to time, with duly executed
incumbency certificates showing the names, titles and specimen
signatures of the persons authorized on behalf of such party to
give the notifications and approvals required by this Agreement.
(b) The Producers shall arrange for the Accountants to
provide the Bontang II Trustee from time to time with a
notification signed by two of its partners, advising the Bontang
II Trustee of the name and title, and furnishing a specimen
signature, of the person or persons authorized to execute the
certificates and other documents required by this Agreement.
(c) The Producers shall arrange for Mobil to furnish
the Bontang II Trustee, from time to time, with duly executed
incumbency certificates showing the names, titles and specimen
signatures of the persons authorized on behalf of Mobil to give
the instructions, notifications and approvals required by this
Agreement.
(d) Each of the Contractors shall furnish the Bontang
II Trustee, from time to time, with such certificates or other
evidence as the Bontang II Trustee may reasonably require showing
the names, titles and specimen signatures of the persons
authorized on behalf of such party to make the payment
arrangements contemplated by Section 6.4. Each Contractor shall
also furnish the Bontang II Trustee, from time to time, with its
address to which the reports required by Section 8.3 shall be
sent.
(e) The Bontang II Trustee shall furnish the Producers
and the Payment Trustee with notice of the officers of the
Bontang II Trustee who are authorized to act on its behalf in the
performance by the Bontang II Trustee of its duties under this
Agreement.
(f) Each Producer shall, and the Producers shall cause
the Accountants to, agree with the Bontang II Trustee upon
"test-key" arrangements for the purpose of authenticating
communications between them respectively which authorize,
accomplish, direct or otherwise deal with the transfer of money
under this Agreement. If the Bontang II Trustee or any Producer
receives such a communication which does not comply with such
arrangements, such recipient shall notify the sender of such
failure to comply, requesting correction thereof, and shall take
no action in accordance with such communication until such
correction is effected.
11.5 No Amendment Except in Writing. This Agreement
may not be revoked, amended, modified, varied or supplemented
except by an instrument in writing signed by all of the parties
hereto.
11.6 Section Headings. The Section headings in this
Agreement are inserted for convenience of reference only and
shall be ignored in construing this Agreement.
11.7 Governing Law. This Agreement shall be governed
by and construed in accordance with the law of the State of New
York, United States of America, applicable to agreements made and
to be performed entirely within such state.
11.8 Counterparts. This Agreement may be executed in
any number of counterparts and by the different parties hereto on
separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts
together shall constitute one and the same instrument. Complete
sets of counterparts shall be lodged with the Bontang II Trustee.
ARTICLE 12
DEBT SERVICE ALLOCATION
12.1 Definitions. In addition to and in amendment of
the terms defined elsewhere in this Agreement, the following
terms shall, solely for purposes of this Article 12, have the
meanings set forth below:
"Aggregate Dollar Share" is defined in Section 12.3.
"Allocation Trust Agreements" means this Agreement, the
Bontang III Trust Agreement, the Bontang Excess Sales Trust
Agreement and the Bontang LPG Trust Agreement.
"Allocation Trustees" means all of the trustees under
the Allocation Trust Agreements, collectively, and "Allocation
Trustee" means one of such Allocation Trustees as the context may
require.
"Bontang LPG Trust Agreement" means the Bontang LPG
Trustee and Paying Agent Agreement dated as of August 1, 1988, as
hereafter amended, among the Producers and Continental Bank
International.
"Bontang LPG Trustee" means the trustee and paying
agent under the Bontang LPG Trust Agreement.
"Bontang I Trust Agreement" means the Badak Trustee and
Paying Agent Agreement as amended and restated effective as of
February 9, 1988, as hereafter amended, among the Producers and
Continental Bank International.
"Bontang I Trustee" means the trustee under the Bontang
I Trust Agreement.
"Bontang III Trust Agreement" means the Bontang III
Trustee and Paying Agent Agreement dated as of February 9, 1988,
as hereafter amended, among the Producers and Continental Bank
International.
"Bontang III Trustee" means the trustee under the
Bontang III Trust Agreement.
"Borrowed Amounts" has the meaning specified in
Financing Agreement No. 3.
"Borrowing Trustee" means any Trustee which is a party
to any of the Financing Agreements and "Borrowing Trustees" means
such Borrowing Trustees, collectively.
"Contingent Support" means amounts so designated
pursuant to any Trust Agreement which are paid to the Bontang III
Trustee for deposit in any of the Debt Service Accounts
established pursuant to the Bontang III Trust Agreement.
"Contingent Support Trustees" means, collectively, the
Bontang Excess Sales Trustee and all other Trustees which
hereafter enter into a Trust Agreement providing for the payment
of Contingent Support as to which the Bontang II Trustee has been
notified by Pertamina, and "Contingent Support Trustee" means one
of such Trustees as the context may require.
"Debt Service" means (i) amounts paid into any Debt
Service Account by a Borrowing Trustee (other than amounts so
paid by the Bontang III Trustee from Borrowed Amounts or
Contingent Support), (ii) amounts which any Borrowing Trustee has
been notified as having been paid by one or more Producers and
identified to such Borrowing Trustee as "Debt Service" under the
Debt Service Allocation Agreement with respect to indebtedness of
such Borrowing Trustee, (iii) Contingent Support paid by any
Contingent Support Trustee to the Bontang III Trustee, and (iv)
trustee's fees and expenses of the Bontang I Trustee incurred in
connection with Financing Agreement No. 1 or Financing Agreement
No. 2 which are charged to the Badak Current Accounts under the
Bontang I Trust Agreement.
"Debt Service Accounts" means all accounts, including
any sub-accounts thereof, which a Borrowing Trustee opens and
into which it transfers LNG revenues or other funds in
anticipation of payments of, or as a reserve for possible
payments of, principal, interest and other fees and expenses
pursuant to any of the Financing Agreements, and "Debt Service
Account" means one of such Debt Service Accounts as the context
may require.
"Debt Service Allocation Agreement" means the Amended
and Restated Debt Service Allocation Agreement dated as of
February 9, 1988, as hereafter amended, among the Producers.
"Estimated Debt Service Percentages" has the meaning
set forth in Section 12.2.
"Financing Agreement No. 1" means Bontang Capital
Projects Loan Agreement No. 1 dated as of September 10, 1986, as
heretofore and hereafter amended, entered into by the Bontang I
Trustee.
"Financing Agreement No. 2" means Bontang Capital
Projects Loan Agreement No. 2 dated as of June 9, 1987, as
heretofore and hereafter amended, entered into by the Bontang I
Trustee.
"Financing Agreement No. 3" means Bontang III Loan
Agreement dated as of February 9, 1988, as hereafter amended,
entered into by the Bontang III Trustee.
"Financing Agreements" means, collectively, Financing
Agreement No. 1, Financing Agreement No. 2, Financing Agreement
No. 3 and any other agreement designated as a "Financing
Agreement" in a notice to the Bontang II Trustee from the
Producers.
"Producers Agreement" means any agreement so entitled
among the Producers, or any of them, and lenders under a
Financing Agreement, as heretofore and hereafter amended.
"Provisional Debt Service" means, with respect to any
Debt Service, payments by any Allocation Trustee to reimburse
Producers which have borne more than their respective Estimated
Debt Service Percentages of such Debt Service, together with
interest on the Reimbursement Amount from and including the date
of such Debt Service payment to, but not including, the date of
such reimbursement, at the rate equal to the weighted average of
the interest rates in effect under Financing Agreement No. 3 on
the date of such reimbursement.
"Reimbursement Amount" means the amount of any
Provisional Debt Service payment other than the portion thereof
attributable to interest on said reimbursement amount.
"Trust Agreements" means, collectively, this Agreement
and all Other Trustee and Paying Agent Agreements, and "Trust
Agreement" means one of such Trust Agreements as the context may
require.
"Trustees" means the trustees under the Trust
Agreements and "Trustee" means one of such Trustees as the
context may require.
12.2 Provisional Debt Service Payments. The Debt
Service Allocation Agreement requires that the Accountants
calculate, and deliver to the Allocation Trustees from time to
time certificates setting forth, the Estimated Debt Service
Percentages for each Producer of the estimated amounts of each
type of Debt Service to be paid by the Borrowing Trustees and the
Contingent Support Trustees (the percentages last so certified as
to each period for each Producer being its "Estimated Debt
Service Percentages"). Each Trust Agreement to which a Borrowing
Trustee is a party provides that such Borrowing Trustee shall
promptly give notice to the Allocation Trustees of (i) each
payment into a Debt Service Account made by such Borrowing
Trustee, (ii) each transfer, payment or distribution from a Debt
Service Account of funds in excess of the amount required to be
held therein from time to time, (iii) each receipt by such
Borrowing Trustee of amounts from a disbursement trustee to which
the Producers are entitled, (iv) each payment of Debt Service of
which such Borrowing Trustee has been notified made by a Producer
pursuant to a Producers Agreement, and (v) the portion of each
such payment of Debt Service, whether made by such Borrowing
Trustee or a Producer, borne by each Producer, after taking into
account such Producer's interest in any excess funds transferred,
paid or distributed from any Debt Service Account and any amounts
received by such Borrowing Trustee from a disbursement trustee to
which the Producers are entitled. Each Trust Agreement to which
a Contingent Support Trustee is a party provides for similar
notices.
In the event that such notices received by the Bontang
II Trustee, together with the notices referred to in the last
sentence of this paragraph and all similar notices received from
other Allocation Trustees, considered in the aggregate, show at
any time that any Producers have borne more than their Estimated
Debt Service Percentages of Debt Service ("underpaid Producers"),
the Bontang II Trustee shall thereafter make Provisional Debt
Service payments to the underpaid Producers pro rata in
proportion to the excess amount borne by each such Producer, out
of all amounts otherwise payable under Article 6 to the Producers
which have borne less than their Estimated Debt Service
Percentages of such Debt Service until the Reimbursement Amount
of the aggregate Provisional Debt Service payments received by
each of the underpaid Producers from the Allocation Trustees
equals the excess amount of Debt Service borne by such Producer.
The Bontang II Trustee shall promptly advise each other
Allocation Trustee of each such Provisional Debt Service payment
made by it.
12.3 Debt Service Allocations. The Debt Service
Allocation Agreement also requires that the Accountants
calculate, and deliver to the Allocation Trustees from time to
time certificates setting forth, the portion of Debt Service each
Producer should have borne of the Debt Service paid by the
Borrowing Trustees and the Contingent Support Trustees (the
amount last so certified as to each period for each Producer
being its "Aggregate Dollar Share") and the portion thereof which
has actually been borne by each Producer. In the event that any
such calculations indicate that any Producers have borne more
than their Aggregate Dollar Shares of Debt Service during the
period in question ("underpaid Producers"), the Accountants are
required to instruct the Bontang II Trustee to pay to the
underpaid Producers, pro rata in proportion to the excess amount
borne by each such Producer, all amounts otherwise payable under
Article 6 to the Producers which have borne less than their
Aggregate Dollar Shares for the period in question until the
aggregate amount received by each of the underpaid Producers from
the Allocation Trustees (as shown by the notices referred to in
the last sentence of this paragraph and all similar notices
received from the other Allocation Trustees) equals the amount
stated in such instructions to be the excess amount borne by such
Producer. The Bontang II Trustee shall promptly advise each
other Allocation Trustee of each such payment pursuant to this
Section 12.3
Upon receipt of any such instructions the Bontang II
Trustee shall give effect thereto commencing with the next
payments to Producers pursuant to Article 6.
12.4 Insufficient Funds. In the event that the funds
available for making the payments required by Sections 12.2 and
12.3 shall not be sufficient to make the payments therein
required in full, such funds shall be paid to the Producers
entitled to payments pursuant to such Sections pro rata in
proportion to the amounts payable to each such Producer
thereunder.
12.5 Information. The Bontang II Trustee shall furnish
the Accountants (with a copy to the Producers) with such
information as they may from time to time request, to the extent
such information is in the possession of the Bontang II Trustee,
as to Debt Service, Provisional Debt Service and other matters
stated by the Accountants to be necessary to enable them to
perform their functions under the Debt Service Allocation
Agreement in a timely manner.
IN WITNESS WHEREOF, the parties have caused this
Agreement to be duly executed by their respective duly authorized
signatories as of the date first above written.
PERUSAHAAN PERAMBANGAN
MINYAK DAN GAS BUMI
NEGARA (PERTAMINA)
By /s/______________________
Name:____________________
Title:___________________
VIRGINIA INDONESIA COMPANY
By /s/ Paul T. Scott
Name: Paul T. Scott
Title: Chairman and Chief
Executive Officer
VIRGINIA INTERNATIONAL COMPANY
By /s/ Robert W. Bland
Name: Robert W. Bland
Title: President
UNION TEXAS EAST KALIMANTAN
LIMITED
By /s/ M. M. Markowitz
Name: Mike N. Markowitz
Title: Treasurer
TOTAL INDONESIE
By /s/ J. P. Benfils
Name: J. P. Benfils
Title: Vice President Gas
CONTINENTAL BANK
INTERNATIONAL, as Bontang II
Trustee
By /s/ John P. Keker
Name: John P. Keker
Title: Senior Director
ULTRAMAR INDONESIA LIMITED
By /s/ Robert W. Bland
Name: Robert W. Bland
Title: Exec. Vice
President
OPICOIL HOUSTON, INC.
By /s/ Charles C. J. Chu
Name: Charles C. J. Chu
Title: Executive Vice
President
UNIVERSE GAS & OIL COMPANY,
INC.
By /s/ Kosho Uno
Name: Kosho Uno
Title: General Manager
UNOCAL INDOESIA, LTD.
By /s/ Gene R. Ward
Name: Gene R. Ward
Title: President &
Managing
Director
INDONESIA PETROLEUM, LTD.
By /s/ K. Ishikawa
Name: K. Ishikawa
Title: General Manager
(Acting)
TABLE OF CONTENTS
Page
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE 1 RECEIPT OF INVOICES AND PAYMENTS
WITH RESPECT TO LNG . . . . . . . . . . . . . . . . . . .13
1.1 LNG Invoices and Related Calculations. . . . . . . .13
1.2 Designation of Bontang II Trustee; Bontang II Trust
Funds. . . . . . . . . . . . . . . . . . . . . . . .13
1.3 Bontang II Accounts. . . . . . . . . . . . . . . . .14
1.4 Proceeds Transfers . . . . . . . . . . . . . . . . .14
1.5 Allocation of Amounts Received . . . . . . . . . . .15
1.6 Amounts Received From Payment Trustee or Jilco . . .16
1.7 Credits and Charges to Producer Accounts . . . . . .17
ARTICLE 2 DISBURSEMENTS WITH RESPECT TO
PROCESSING CHARGES . . . . . . . . . . . . . . . . .17
2.1 Submission and Payment . . . . . . . . . . . . . . .17
2.2 Payment Procedures . . . . . . . . . . . . . . . . .18
ARTICLE 3 TRUSTEE CHARGES. . . . . . . . . . . . . . . . . . .18
3.1 Compensation . . . . . . . . . . . . . . . . . . . .18
3.2 Producers Obligations. . . . . . . . . . . . . . . .18
ARTICLE 4 ALLOCATION OF PROCESSING CHARGES
AND TRUSTEE CHARGES. . . . . . . . . . . . . . . . .19
4.1 Ultimate Allocation. . . . . . . . . . . . . . . . .19
4.2 Charges Ultimately To Be Borne By Bontang II Base Load
or Retained Accounts . . . . . . . . . . . . . . . .19
4.3 Charges Ultimately To Be Borne By Bontang II Transfer
Account . . . . . . . . . . . . . . . . . . . . .20
4.4 Adjusting Payments . . . . . . . . . . . . . . . . .20
ARTICLE 5 DISBURSEMENTS WITH RESPECT TO OTHER CHARGES. . . . .21
5.1 Submission and Payment . . . . . . . . . . . . . . .21
5.2 Payment Procedures . . . . . . . . . . . . . . . . .21
5.3 Designation of Account to Pay. . . . . . . . . . . .21
Page
ARTICLE 6 DISBURSEMENTS WITH RESPECT TO
SHARING PERCENTAGES. . . . . . . . . . . . . . . . .22
6.1 Approved Level of Working Capital; Sharing
Percentages. . . . . . . . . . . . . . . . . . . . .22
6.2 Payment of Excess. . . . . . . . . . . . . . . . . .22
6.3 Accountants. . . . . . . . . . . . . . . . . . . . .23
6.4 Arrangement for Payment. . . . . . . . . . . . . . .25
6.5 Special Disbursement Instructions. . . . . . . . . .25
6.6 Payment Procedures . . . . . . . . . . . . . . . . .26
6.7 Receipt of Special Disbursements . . . . . . . . . .27
ARTICLE 7 DUTIES WITH RESPECT TO DEVELOPMENT AGREEMENT
AND PAYMENTS ACCOUNT AGREEMENT . . . . . . . . . . .27
7.1 Terms of Related Agreements. . . . . . . . . . . . .27
7.2 Reconciliation by Bontang II Trustee . . . . . . . .28
ARTICLE 8 PROCEDURES RESPECTING ACCOUNTS
UNDER THIS AGREEMENT . . . . . . . . . . . . . . . .29
8.1 Accounting For Assets. . . . . . . . . . . . . . . .29
8.2 Payments Account Balance . . . . . . . . . . . . . .29
8.3 Reports. . . . . . . . . . . . . . . . . . . . . . .29
8.4 Producer Accounts. . . . . . . . . . . . . . . . . .30
ARTICLE 9 INVESTMENT OF FUNDS HELD IN
ACCOUNTS UNDER THIS AGREEMENT. . . . . . . . . . . .31
9.1 Permitted Investments. . . . . . . . . . . . . . . .31
9.2 Prudence and Yield . . . . . . . . . . . . . . . . .32
9.3 Interest Allocation. . . . . . . . . . . . . . . . .33
ARTICLE 10 CONCERNING THE BONTANG II TRUSTEE . . . . . . . .33
10.1 Duties . . . . . . . . . . . . . . . . . . . . . . .33
10.2 Resignation. . . . . . . . . . . . . . . . . . . . .34
10.3 Appointment of Successor . . . . . . . . . . . . . .34
10.4 Application to Court . . . . . . . . . . . . . . . .34
10.5 Successor Vested with Rights . . . . . . . . . . . .35
10.6 Payments After Notice. . . . . . . . . . . . . . . .35
10.7 Indemnification. . . . . . . . . . . . . . . . . . .35
10.8 Trustee in Individual Capacity . . . . . . . . . . .35
Page
ARTICLE 11 MISCELLANEOUS . . . . . . . . . . . . . . . . . .36
11.1 Term . . . . . . . . . . . . . . . . . . . . . . . .36
11.2 Disputes . . . . . . . . . . . . . . . . . . . . . .36
11.3 Notices. . . . . . . . . . . . . . . . . . . . . . .36
11.4 Incumbency Certificates; Notices; Test Key
Arrangements . . . . . . . . . . . . . . . . . . . .39
11.5 No Amendment Except in Writing . . . . . . . . . . .41
11.6 Section Headings . . . . . . . . . . . . . . . . . .41
11.7 Governing Law. . . . . . . . . . . . . . . . . . . .41
11.8 Counterparts . . . . . . . . . . . . . . . . . . . .41
ARTICLE 12 DEBT SERVICE ALLOCATION . . . . . . . . . . . . .41
12.1 Definitions. . . . . . . . . . . . . . . . . . . . .41
12.2 Provisional Debt Service Payments. . . . . . . . . .45
12.3 Debt Service Allocations . . . . . . . . . . . . . .46
12.4 Insufficient Funds . . . . . . . . . . . . . . . . .47
12.5 Information. . . . . . . . . . . . . . . . . . . . .47