CREDIT AGREEMENT
U.S. $100,000,000 REVOLVING CREDIT FACILITY
AMONG
SEAGULL ENERGY CANADA LTD.
AND
THE CHASE MANHATTAN BANK OF CANADA,
Individually and as Arranger and Administrative Agent,
THE BANK OF NOVA SCOTIA,
Individually and as Paying Agent and Co-Agent,
CANADIAN IMPERIAL BANK OF COMMERCE,
Individually and as Co-Agent,
AND
THE OTHER BANKS SIGNATORY HERETO
June 17, 1997
TABLE OF CONTENTS
Section 1. Definitions and Accounting Matters............................1
1.1 Certain Defined Terms.........................................1
1.2 Accounting Terms and Determinations..........................24
1.3 Types of Loans...............................................25
1.4 Miscellaneous................................................25
Section 2. Commitments; Designation of Maximum Outstanding Amount.......25
2.1 Loans and Bankers' Acceptances...............................25
2.2 Letters of Credit............................................26
2.3 Reductions and Changes of Commitments........................29
2.4 Fees.........................................................29
2.5 Affiliates; Lending Offices..................................29
2.6 Several Obligations..........................................30
2.7 Notes........................................................30
2.8 Use of Proceeds..............................................30
Section 3. Borrowings, Prepayments and Selection of Interest Rates......31
3.1 Borrowings...................................................31
3.2 Prepayments..................................................31
3.3 Selection of Interest Rates..................................32
3.4 Conditions Applicable to Bankers' Acceptances................32
3.5 Paying Agent's Duties Re Bankers' Acceptances................34
3.6 Certain Provisions Relating to Bankers' Acceptances Forms....35
Section 4. Payments of Principal and Interest...........................36
4.1 Repayment of Loans and Reimbursement Obligations.............36
4.2 Interest.....................................................36
4.3 Acceptance Fees..............................................37
Section 5. Payments; Pro Rata Treatment; Computations, Etc.............37
5.1 Payments....................................................37
5.2 Pro Rata Treatment..........................................38
5.3 Computations................................................38
5.4 Minimum and Maximum Amounts.................................38
5.5 Certain Actions, Notices, Etc...............................39
5.6 Non-Receipt of Funds by the Paying Agent....................41
5.7 Sharing of Payments, Etc....................................41
(1)
Section 6. Yield Protection and Illegality..............................42
6.1 Additional Costs.............................................42
6.2 Limitations..................................................44
6.3 Illegality...................................................45
6.4 Substitute Alternate Base Rate Loans or Canadian Prime Rate
Loans........................................................45
6.5 Compensation.................................................46
6.6 Additional Costs in Respect of Letters of Credit.............46
6.7 Capital Adequacy.............................................47
6.8 Limitation on Additional Charges; Substitute Banks;
Non-Discrimination...........................................47
Section 7. Conditions Precedent.........................................48
7.1 Initial Loans and Acceptance and Purchase of Bankers'
Acceptances..................................................48
7.2 Initial and Subsequent Loans.................................50
Section 8. Representations and Warranties...............................51
8.1 Corporate Existence..........................................51
8.2 Corporate Power and Authorization............................51
8.3 Binding Obligations..........................................52
8.4 No Legal Bar or Resultant Lien...............................52
8.5 No Consent...................................................52
8.6 Financial Condition..........................................52
8.7 Investments and Guaranties...................................53
8.8 Liabilities and Litigation...................................53
8.9 Taxes and Governmental Charges...............................53
8.10 Title to Properties..........................................53
8.11 Defaults.....................................................53
8.12 Location of Businesses and Offices...........................54
8.13 Compliance with Law...........................................54
8.14 Margin Stock..................................................54
8.15 Subsidiaries..................................................55
8.16 ERISA.........................................................55
8.17 Investment Company Act........................................55
8.18 Public Utility Holding Company Act............................55
8.19 Environmental Matters.........................................56
8.20 Claims and Liabilities........................................57
8.21 Solvency......................................................57
Section 9. Affirmative Covenants........................................57
9.1 Financial Statements and Reports.............................57
9.2 Officers' Certificates.......................................59
(2)
9.3 Taxes and Other Liens........................................60
9.4 Maintenance..................................................60
9.5 Further Assurances...........................................61
9.6 Performance of Obligations...................................61
9.7 Reimbursement of Expenses....................................61
9.8 Insurance....................................................62
9.9 Accounts and Records.........................................63
9.10 Rights of Inspection.........................................63
9.11 Notice of Certain Events.....................................63
9.12 ERISA Information and Compliance.............................65
Section 10. Negative Covenants..........................................65
10.1 Debts, Guarantees and Other Obligations......................66
10.2 Liens........................................................68
10.3 Investments, Loans and Advances..............................72
10.4 Dividend Payment Restrictions................................74
10.5 Mergers, Amalgamations and Sales of Assets...................74
10.6 Use of Proceeds..............................................74
10.7 ERISA Compliance.............................................74
10.8 Amendment of Certain Documents...............................75
10.9 Tangible Net Worth...........................................75
10.10 Parent Debt/Capitalization Ratio.............................75
10.11 EBITDAX/Interest Ratio.......................................75
10.12 Nature of Business...........................................75
10.13 Futures Contracts............................................76
10.14 Covenants in Other Agreements................................76
Section 11. Defaults.....................................................77
11.1 Events of Default............................................77
11.2 Collateral Account...........................................79
11.3 Preservation of Security for Unmatured Reimbursement
Obligations..................................................80
11.4 Right of Setoff..............................................80
Section 12. The Agents...................................................81
12.1 Appointment, Powers and Immunities...........................81
12.2 Reliance by Agents...........................................82
12.3 Defaults.....................................................82
12.4 Rights as a Bank.............................................83
12.5 Indemnification..............................................83
12.6 Non-Reliance on Agents and Other Banks.......................84
(3)
12.7 Failure to Act...............................................84
12.8 Resignation or Removal of Agents.............................84
Section 13. Miscellaneous................................................85
13.1 Waiver.......................................................85
13.2 Notices......................................................85
13.3 Indemnification..............................................85
13.4 Amendments, Etc..............................................86
13.5 Successors and Assigns.......................................87
13.6 Limitation of Interest.......................................90
13.7 Interest Act (Canada); Interest Generally....................91
13.8 Certain Saskatchewan Legislation.............................92
13.9 Survival.....................................................92
13.10 Captions.....................................................92
13.11 Counterparts.................................................92
13.12 Governing Law................................................92
13.13 Severability.................................................93
13.14 Confidential Information.....................................93
13.15 Amendment and Restatement....................................94
13.16 Intercreditor Agreement......................................94
13.17 Judgement Currency...........................................94
13.18 Withholding Tax Remittances..................................95
Exhibit A Oil and Gas Subsidiaries
Exhibit B Form of Request for Extension of Credit
Exhibit C-1 Form of Revolving Credit Loan Note (U.S. Dollars)
Exhibit C-2 Form of Revolving Credit Loan Note (Canadian Dollars)
Exhibit D Subsidiaries (with Addresses)
Exhibit E Form of Compliance Certificate
Exhibit F Assignment and Acceptance
Exhibit G Form of Engineering Report Certificate
Exhibit H Parameters Interest Rate Protection and Commodities Futures
Programs
Exhibit I Form of Bankers' Acceptance
(4)
CREDIT AGREEMENT
This CREDIT AGREEMENT, dated as of June 17, 1997, is by and among
SEAGULL ENERGY CANADA LTD. (the "Company"), a corporation duly organized and
validly existing under the laws of the Province of Alberta, Canada; each of the
banks which is or which may from time to time become a signatory hereto
(individually, a "Bank" and, collectively, the "Banks"); THE CHASE MANHATTAN
BANK OF CANADA ("Chase"), as arranger and administrative agent for the Banks (in
such capacity, together with its successors in such capacity, the
"Administrative Agent"); THE BANK OF NOVA SCOTIA ("BNS"), as paying agent and
coagent for the Banks (in such capacity, together with its successors in such
capacity, the "Paying Agent"), and CANADIAN IMPERIAL BANK OF COMMERCE ("CIBC"),
as co-agent for the Banks (in such capacity, together with its successors in
such capacity, the "Co-Agent").
The parties hereto agree as follows:
Section 1. Definitions and Accounting Matters
1.1 Certain Defined Terms. As used herein, the following terms shall
have the following meanings (all terms defined in this Section 1.1 or in other
provisions of this Agreement in the singular to have the same meanings when used
in the plural and vice versa):
"Additional Costs" shall have the meaning ascribed to such term in
Section 6.1 hereof.
"Affiliate" shall mean, as to any Person, any other Person which
directly or indirectly controls, or is under common control with, or is
controlled by, such Person and, if such Person is an individual, any member of
the immediate family (including parents, siblings, spouse, children,
stepchildren, grandchildren, nephews and nieces) of such individual and any
trust whose principal beneficiary is such individual or one or more members of
such immediate family and any Person who is controlled by any such member or
trust. As used in this definition, "control" (including, with correlative
meanings, "controlled by" and "under common control with") shall mean
possession, directly or indirectly, of power to direct or cause the direction of
management or policies (whether through ownership of securities or partnership
or other ownership interests, by contract or otherwise).
"Agents" shall mean the Administrative Agent, the Paying Agent and the
Co-Agent, collectively.
"Agreement" shall mean this Credit Agreement, as the same may be
amended, modified, restated or supplemented from time to time.
1
"Alternate Base Rate" shall mean, for any day, a rate per annum equal
to the higher of (a) the U.S. Prime Rate in effect on such day or (b) 1/2 of 1%
plus the Federal Funds Rate in effect for such day (rounded upwards, if
necessary, to the nearest 1/16th of 1%). For purposes hereof, "Federal Funds
Rate" shall mean, for any period, a fluctuating interest rate per annum equal
for each day during such period to 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 Paying Agent from three Federal funds brokers of recognized
standing selected by it. For purposes of this Agreement, any change in the
Alternate Base Rate due to a change in the Federal Funds Rate shall be effective
on the effective date of such change in the Federal Funds Rate. If for any
reason the Paying Agent shall have determined (which determination shall be
conclusive and binding, absent manifest error) that it is unable to ascertain
the Federal Funds Rate for any reason, including, without limitation, the
inability or failure of the Paying Agent to obtain sufficient bids or
publications in accordance with the terms hereof, the Alternate Base Rate shall
be the U.S. Prime Rate until the circumstances giving rise to such inability no
longer exist. For the purposes hereof, "U.S. Prime Rate" shall mean the annual
rate of interest announced from time to time by the Paying Agent in Canada as
its U.S. Base Rate for U.S. Dollar loans made by the Paying Agent in Canada.
Without notice to the Company or any other Person, the U.S. Prime Rate shall
change automatically from time to time as and in the amount by which said annual
rate of interest shall fluctuate. The U.S. Prime Rate is a reference rate and
does not necessarily represent the lowest or best rate actually charged to any
customer. The Chase Manhattan Bank, any Agent or any Bank may make commercial
loans or other loans at rates of interest at, above or below the U.S. Prime
Rate. For purposes of this Agreement any change in the Alternate Base Rate due
to a change in the U.S. Prime Rate shall be effective on the date such change in
the U.S. Prime Rate is announced.
"Alternate Base Rate Loans" shall mean Loans which bear interest at a
rate based upon the Alternate Base Rate.
"APC" shall mean Alaska Pipeline Company, an Alaska corporation, a
Subsidiary of the Parent.
"APC Long Term Financing Documents" shall mean that certain Inducement
Agreement and that certain Note Agreement (together with the Notes, as defined
therein), each dated as of May 14, 1992, by and among the Parent, Aid
Association for Lutherans, The Equitable Life Assurance Society of the United
States, Equitable Variable Life Insurance Company, Provident Life and Accident
Insurance Company and Teachers Insurance & Annuity Association of America, any
documentation executed in connection with any renewal, extension or
rearrangement of the Indebtedness that is the subject of the foregoing
documents, the Gas Sales Contract, the Intercompany Mortgage, as defined in the
above-mentioned Note Agreement, and any documents
2
executed in replacement of any of the foregoing documents, if any, and only if
the Administrative Agent has received notice thereof pursuant to Section 10.8.
"Applicable Lending Office" shall mean, for each Bank and for each Type
of Loan and for each Bankers' Acceptance, such office of such Bank (or of an
affiliate of such Bank) as such Bank may from time to time specify to the Paying
Agent and the Company as the office by which its Loans of such Type are to be
made and/or issued and maintained and at which Bankers' Acceptances are to be
accepted and purchased; provided, however, that each such office shall be
located in Canada.
"Applicable Margin" shall mean, on any day, (i) zero percent (0%) with
respect to any Alternate Base Rate Loan and Canadian Prime Rate Loan and (ii)
with respect to any Eurodollar Loan, the applicable per annum percentage set
forth at the appropriate intersection in the table shown below, based on the
Rating as of the close of business on the preceding Business Day:
Eurodollar
Loan
Applicable
Rating Margin
BBB/Baa2 and higher 0.20
BBB-/Baa3 0.275
BB+/Ba1 0.40
BB/Ba2 and lower 0.45
Notwithstanding the foregoing, at all times that a Borrowing Base Deficiency
shall exist and is continuing for more than 30 days, the Applicable Margins
provided for in this definition shall each be increased by adding 1.00%.
"Applications" shall mean all applications and agreements for Letters
of Credit, or similar instruments or agreements, now or hereafter executed by
any Person in connection with any Letter of Credit now or hereafter issued or to
be issued.
"Bank Guarantee" shall mean that certain Guarantee dated concurrently
herewith executed by the Parent in favour of the Administrative Agent.
"Bankers' Acceptances" means bankers' acceptances issued by the Company
and denominated in Canadian Dollars, which are accepted and purchased by the
Banks at the request of the Company pursuant to Section 2.1.
3
"B.A. Reference Banks" shall mean the Paying Agent and one (1) other
Bank selected by the Paying Agent (after consultation with the Company) which is
a "Schedule 1" accepting bank.
"B/A Stamping Rate" means, with respect to Bankers' Acceptances
accepted by a Bank, the Applicable Margin for Eurodollar Loans in effect on the
date of acceptance of the Bankers' Acceptance.
"Bankruptcy Code" shall mean (i) the United States Bankruptcy Code, as
amended, and any successor statute and (ii) the Bankruptcy and Insolvency Act
(Canada), as amended, and any successor statute.
"Beluga Financing Documents" shall mean that certain Inducement
Agreement and that certain Note Agreement (together with the Notes, as defined
therein), each dated June 17, 1985, and amended as of June 15, 1990, by and
among the Parent and The Equitable Life Assurance Society of the United States
and the Travelers Insurance Company, any documentation executed in connection
with any renewal, extension or rearrangement of the Indebtedness that is the
subject of the foregoing documents, the Gas Sales Contract, the Intercompany
Mortgage, as defined in the above-mentioned Note Agreement, and any documents
executed in replacement of any of the foregoing documents, if and only if the
Administrative Agent has received notice thereof pursuant to Section 10.8.
"Borrowing Base" shall have the meaning ascribed to such term in the
U.S. Facility (without amendment except as permitted pursuant to the
Intercreditor Agreement).
"Borrowing Base Debt" shall have the meaning ascribed to such term in
the U.S. Facility (without amendment except as permitted pursuant to the
Intercreditor Agreement).
"Borrowing Base Deficiency" shall have the meaning ascribed to such
term in the U.S. Facility (without amendment except as permitted pursuant to the
Intercreditor Agreement).
"Business Day" shall mean any day other than a day on which commercial
banks are authorized or required to close in Houston, Texas, United States,
Calgary, Alberta, Canada, or Toronto, Ontario, Canada, and where such term is
used in the definition of "Quarterly Date" in this Section 1.1 or if such day
relates to a borrowing of, a payment or prepayment of principal of or interest
on, or an Interest Period for, a Eurodollar Loan or a notice by the Company with
respect to any such borrowing, payment, prepayment or Interest Period, a day
which is also a day on which dealings in U.S. Dollar deposits are carried out in
the relevant interbank market.
"Canadian Bankers' Acceptance Discount Proceeds" means, in respect of
any Bankers' Acceptance required to be accepted and purchased by a Bank
hereunder, an amount (rounded to
4
the nearest whole cent with one-half of one cent being rounded up) calculated on
the date of acceptance of the Bankers' Acceptance by multiplying:
(a) the face amount of such Bankers' Acceptance divided by
one hundred (100); by
(b) the price, where the price is determined by dividing one
hundred (100) by the sum of one plus the product of:
(i) the Canadian Bankers' Acceptance Discount Rate
(expressed as a decimal); and
(ii) a fraction, the numerator of which is the term
(expressed in days) of such Bankers' Acceptance and
the denominator of which is three hundred sixty-five
(365); with the price as so determined being rounded
up or down to the fifth decimal place and .000005
being rounded up; "Canadian Bankers' Acceptance
Discount Rate" shall mean
(i) with respect to each Bankers' Acceptance which is required to be
accepted and purchased by a Bank hereunder and which has a term of more than 90
days, the percentage discount rate (expressed to two decimal places) determined
by the Paying Agent to be the average of the quoted discount rates at which
Canadian Dollar Bankers' Acceptances having a comparable issue and maturity date
are being bid for discount by the B.A. Reference Banks at approximately 11:00
a.m. Toronto, Ontario time (or as soon thereafter as practicable) on the day of
the issuance and acceptance of the Bankers' Acceptances. If either B.A.
Reference Bank does not furnish a timely quotation, the Paying Agent shall
determine the relevant discount rate on the basis of the quotation or quotations
furnished by the remaining B.A. Reference Bank; if neither of such quotations is
available on a timely basis, the provisions of Section 6.2 shall apply; and
(ii) with respect to each Bankers' Acceptance which is required to be
accepted and purchased by a Bank hereunder and which has a term of 90 days or
less, the percentage discount rate (expressed to two decimal places) for
Canadian Dollar Bankers' Acceptances having a comparable issue and maturity date
which is quoted on the Reuter's Canadian Discount Offer Rate Screen for
"Schedule 1" accepting banks (or if such screen shall not be available, any
successor or similar services may be selected by the Paying Agent and the
Company) as of 11:00 a.m. Toronto, Ontario time (or as soon thereafter as
practicable) on the day of acceptance of the Bankers' Acceptances. If none of
such screen nor any successor
5
or similar services is available then the "Canadian Bankers' Acceptance
Discount Rate" shall mean, with respect to each Bankers' Acceptance which is
required to be accepted and purchased by a Bank hereunder and which has a term
of 90 days or less, the percentage discount rate (expressed to two decimal
places) determined by the Paying Agent to be the average of the quoted discount
rates at which Canadian Dollar Bankers' Acceptances having a comparable issue
and maturity date are being bid for discount by the B.A. Reference Banks at
approximately 11:00 a.m. Toronto, Ontario time (or as soon thereafter as
practicable) on the day of the issuance and acceptance of the Bankers'
Acceptances. If either B.A. Reference Bank does not furnish a timely quotation,
the Paying Agent shall determine the relevant discount rate on the basis of the
quotation or quotations furnished by the remaining B.A. Reference Bank; if
neither of such quotations is available on a timely basis, the provisions of
Section 6.2 shall apply.
Each determination of the Canadian Bankers' Acceptance Discount Rate
shall be conclusive and binding, absent manifest error, and may be computed
using any reasonable averaging and attribution method.
"Canadian Dollars" and "Canadian $" shall mean lawful money of Canada.
"Canadian Prime Rate" for any day shall mean the variable lending rate
of interest (expressed as a rate per annum) established on such day by the
Paying Agent from time to time as the reference rate of interest which the
Paying Agent employs in order to determine the interest rate it will charge for
demand loans denominated in Canadian Dollars to its customers in Canada and
which it designates as its prime rate. Without notice to the Company or any
other Person, the Canadian Prime Rate shall change automatically from time to
time as and in the amount by which said prime rate shall fluctuate. The Canadian
Prime Rate is a reference rate and does not necessarily represent the lowest or
best rate actually charged to any customer. Any Agent or any Bank may make
commercial loans or other loans at rates of interest at, above or below the
Canadian Prime Rate. For purposes of this Agreement any change in the Canadian
Prime Rate due to a change in the said prime rate shall be effective on the date
such change in said prime rate is announced.
"Canadian Prime Rate Loans" shall mean Loans which bear interest at a
rate based upon the Canadian Prime Rate.
"Capital Expenditures" shall mean expenditures in respect of fixed or
capital assets (calculated in accordance with GAAP) excluding expenditures for
the restoration, repair or replacement of any fixed or capital asset which was
destroyed or damaged, in whole or in part, to the extent financed by the
proceeds of an insurance policy. Expenditures in respect of replacements and
maintenance consistent with the business practices of the Parent and its
Subsidiaries in respect of plant facilities, machinery, fixtures and other like
capital assets utilized
6
in the ordinary course of business are not Capital Expenditures to the extent
such expenditures are not capitalized in preparing a balance sheet of the Parent
in accordance with GAAP.
"Capital Lease Obligations" shall mean, as to any Person, the
obligations of such Person to pay rent or other amounts under a lease of (or
other agreement conveying the right to use) real and/or personal property which
obligations are required to be classified and accounted for as a capital lease
on a balance sheet of such Person under GAAP and, for purposes of this
Agreement, the amount of such obligations shall be the capitalized amount
thereof, determined in accordance with GAAP.
"Capitalization" shall mean an amount equal to the sum of (a) Funded
Indebtedness of the Parent and its Subsidiaries on a consolidated basis plus (b)
Current Maturities of the Parent and its Subsidiaries on a consolidated basis
plus (c) borrowed money Indebtedness of the Parent and its Subsidiaries on a
consolidated basis that is not Funded Indebtedness plus (d) Indebtedness of the
Parent and its Subsidiaries on a consolidated basis constituting obligations
payable out of Hydrocarbons (except such obligations payable solely by recourse
to properties not included in the Borrowing Base) plus (e) the Tangible Net
Worth of the Parent and its Subsidiaries on a consolidated basis.
"Change of Control" shall mean a change resulting when any Unrelated
Person or any Unrelated Persons acting together which would constitute a Group
together with any Affiliates or Related Persons thereof (in each case also
constituting Unrelated Persons) shall at any time either (i) Beneficially Own
more than 50% of the aggregate voting power of all classes of Voting Stock of
the Parent or (ii) succeed in having sufficient of its or their nominees elected
to the Board of Directors of the Parent such that such nominees, when added to
any existing director remaining on the Board of Directors of the Parent after
such election who is an Affiliate or Related Person of such Unrelated Person or
Group, shall constitute a majority of the Board of Directors of the Parent. As
used herein (a) "Beneficially Own" means "beneficially own" as defined in Rule
13d-3 of the United States Securities Exchange Act of 1934, as amended, or any
successor provision thereto; provided, however, that, for purposes of this
definition, a Person shall not be deemed to Beneficially Own securities tendered
pursuant to a tender or exchange offer made by or on behalf of such Person or
any of such Person's Affiliates until such tendered securities are accepted for
purchase or exchange; (b) "Group" means a "group" for purposes of Section 13(d)
of the United States Securities Exchange Act of 1934, as amended; (c) "Unrelated
Person" means at any time any Person other than the Parent or any Subsidiary and
other than any trust for any employee benefit plan of the Parent or any
Subsidiary of the Parent; (d) "Related Person" of any Person shall mean any
other Person owning (1) 5% or more of the outstanding common stock of such
Person or (2) 5% or more of the Voting Stock of such Person; and (e) "Voting
Stock" of any Person shall mean capital stock of such Person which ordinarily
has voting power for the election of directors (or persons performing similar
functions) of such Person, whether at all times or only so long as no senior
class of securities has such voting power by reason of any contingency.
7
"Code" shall mean, as applicable, (i) the Internal Revenue Code of
1986, as amended, or any successor statute, together with all regulations,
rulings and interpretations thereof or thereunder by the Internal Revenue
Service or (ii) the Income Tax Act (Canada), as amended, or any successor
statute, together with all regulations, rulings and interpretations thereof or
thereunder.
"Commitment Percentage" shall mean, as to any Bank, the percentage
equivalent of a fraction the numerator of which is the amount of such Bank's
Commitment and the denominator of which is the aggregate amount of the
Commitments of all Banks.
"Commitment" shall mean, as to any Bank, the obligation, if any, of
such Bank to make Loans, accept and purchase Bankers' Acceptances and incur
Letter of Credit Liabilities in an aggregate principal amount (including therein
the full face amount of all Bankers' Acceptances then outstanding) at any one
time outstanding up to but not exceeding the amount, if any, set forth opposite
such Bank's name on the signature pages hereof under the caption "Commitment"
(as the same may be reduced from time to time pursuant to Section 2.3).
"Cover" for Letter of Credit Liabilities shall be effected by paying to
the Paying Agent immediately available funds, to be held by the Paying Agent in
a collateral account maintained by Paying Agent at its Payment Office and
collaterally assigned as security for the financial accommodations extended
pursuant to this Agreement using documentation satisfactory to the
Administrative Agent, in an amount equal to any required prepayment. Such amount
shall be retained by the Paying Agent in such collateral account until such time
as (x) in the case of Cover being provided pursuant to Section 2.2(a), the
applicable Letter of Credit shall have expired and Reimbursement Obligations, if
any, with respect thereto shall have been fully satisfied or (y) in the case of
Cover being provided pursuant to Section 3.2(b)(1), the outstanding principal
amount of all Revolving Credit Obligations is not greater than the aggregate
amount of the Commitments.
"Current Maturities" shall mean, on any day on which Current Maturities
are calculated, the sum of (a) scheduled principal payments on Funded
Indebtedness which are payable within one (1) year after such day plus (b) the
principal component of payments required to be made with respect to Capital
Lease Obligations within one (1) year of said date plus (c), to the extent not
included above, all items which in accordance with GAAP would be classified as
current maturities of long term debt.
"Debt/Capitalization Ratio" shall mean the ratio of (a) the sum of
Funded Indebtedness of the Parent and its Subsidiaries on a consolidated basis
plus Current Maturities of the Parent and its Subsidiaries on a consolidated
basis plus borrowed money Indebtedness of the Parent and its Subsidiaries on a
consolidated basis that is not Funded Indebtedness plus Indebtedness of the
Parent and its Subsidiaries on a consolidated basis constituting obligations
payable out of Hydrocarbons (except such obligations payable solely by recourse
to properties not included in the Borrowing Base) to (b) Capitalization.
8
"Default" shall mean an Event of Default or an event which with notice
or lapse of time or both would, unless cured or waived, become an Event of
Default.
"Disclosure Statement" shall mean the Disclosure Statement dated
concurrently herewith delivered to the Administrative Agent by the Company.
"Dividend Payment" shall mean, with respect to any Person, dividends
(in cash, property or obligations) on, or other payments or distributions on
account of, or the redemption of, or the setting apart of money for a sinking or
other analogous fund for the purchase, redemption, retirement or other
acquisition of, any shares of any class of capital stock of such Person, or the
exchange or conversion of any shares of any class of capital stock of such
Person for or into any obligations of or shares of any other class of capital
stock of such Person or any other property, but excluding dividends to the
extent payable in, or exchanges or conversions for or into, shares of common
stock of the Parent or options or warrants to purchase common stock of the
Parent.
"EBITDAX" shall mean net earnings (excluding gains and losses on sales
and retirement of assets, non-cash write downs, charges resulting from
accounting convention changes and deductions for dry hole expenses) before
deduction for federal, provincial, municipal and state taxes, interest expense
(including capitalized interest), operating lease rentals or depreciation,
depletion and amortization expense, all determined in accordance with GAAP.
"EBITDAX/Interest Ratio" shall mean the ratio of (a) EBITDAX of the
Parent and its Subsidiaries on a consolidated basis to (b) operating lease
rentals and interest expense (including capitalized interest but excluding
non-cash amortization of deferred financing costs) on all Indebtedness of the
Parent and its Subsidiaries on a consolidated basis for any twelve-month period
ending on the last day of every calendar quarter during the period with respect
to which the EBITDAX/Interest Ratio is to be calculated.
"Engineering Report" shall mean one or more reports, in form
satisfactory to the Administrative Agent and the Majority Banks, prepared by one
or more independent consulting firms acceptable to the Administrative Agent and
the Majority Banks in their reasonable business judgment, which shall evaluate
at least 85% of the present value of the Included Reserves (as defined in the
U.S. Facility, without amendment except as permitted under the Intercreditor
Agreement) as of the immediately preceding January 1. Each Engineering Report
shall set forth a projection of the future rate of production, Net Proceeds of
Production and present value of the Net Proceeds of Production, in each case
based upon economic assumptions acceptable to the Administrative Agent and
approved by the Majority Banks.
"ENSTAR Alaska" shall collectively mean (i) the gas distribution system
in south-central Alaska known as ENSTAR Natural Gas Company, a division of the
Parent, and (ii) APC.
9
"Environmental Claim" means any third party (including Governmental
Authorities and employees) action, lawsuit, claim or proceeding (including
claims or proceedings at common law or under the Occupational Safety and Health
Act or similar laws relating to safety of employees) which seeks to impose
liability for (i) noise; (ii) pollution or contamination of the air, surface
water, ground water or land or the clean-up of such pollution or contamination;
(iii) solid, gaseous or liquid waste generation, handling, treatment, storage,
disposal or transportation; (iv) exposure to Hazardous Substances; (v) the
safety or health of employees or (vi) the manufacture, processing, distribution
in commerce or use of Hazardous Substances. An "Environmental Claim" includes,
but is not limited to, a common law action, as well as a proceeding to issue,
modify or terminate an Environmental Permit, or to adopt or amend a regulation
to the extent that such a proceeding attempts to redress violations of an
applicable permit, license, or regulation as alleged by any Governmental
Authority.
"Environmental Liabilities" includes all liabilities arising from any
Environmental Claim, Environmental Permit or Requirement of Environmental Law
under any theory of recovery, at law or in equity, and whether based on
negligence, strict liability or otherwise, including but not limited to:
remedial, removal, response, abatement, investigative, monitoring, personal
injury and damage to property or injuries to persons, and any other related
costs, expenses, losses, damages, penalties, fines, liabilities and obligations,
and all costs and expenses necessary to cause the issuance, reissuance or
renewal of any Environmental Permit including reasonable attorneys' fees and
court costs.
"Environmental Permit" means any permit, license, approval or other
authorization under any applicable Legal Requirement relating to pollution or
protection of health or the environment, including laws, regulations or other
requirements relating to emissions, discharges, releases or threatened releases
of pollutants, contaminants or hazardous substances or toxic materials or wastes
into ambient air, surface water, ground water or land, or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of pollutants, contaminants or Hazardous Substances.
"Equivalent U.S. Dollar Amount" shall mean, with respect to any amount
of Canadian Dollars, the equivalent amount of U.S. Dollars determined by using
the Bank of Canada noon day rate at which it offers to provide U.S. Dollars in
exchange for such amount of Canadian Dollars on the date as of which such
Equivalent U.S. Dollar Amount is to be determined.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time, and all rules, regulations and interpretations by
the Internal Revenue Service or the Department of Labor thereunder.
"ERISA Affiliate" shall mean any trade or business (whether or not
incorporated) which is a member of a group of which the Parent is a member and
which is under common control within the meaning of the regulations under
Section 414 of the Code.
10
"Eurodollar Base Rate" shall mean, with respect to any Interest Period
for any Eurodollar Loan, the lesser of (A) the rate per annum (rounded upwards,
if necessary, to the nearest 1/16th of 1%) equal to the average of the offered
quotations appearing on Telerate Page 3750 (or if such Telerate Page shall not
be available, any successor or similar service as may be selected by the Paying
Agent and the Company) as of 11:00 a.m., Toronto, Ontario time (or as soon
thereafter as practicable) on the day two Business Days prior to the first day
of such Interest Period for U.S. Dollar deposits having a term comparable to
such Interest Period and in an amount comparable to the principal amount of the
Eurodollar Loan to which such Interest Period relates or (B) the Highest Lawful
Rate. If none of such Telerate Page 3750 nor any successor or similar service is
available, then the "Eurodollar Base Rate" shall mean, with respect to any
Interest Period for any applicable Eurodollar Loan, the lesser of (A) the rate
per annum (rounded upwards, if necessary, to the nearest 1/16th of 1%)
determined by the Paying Agent to be the average of the rates quoted by the
Reference Banks at approximately 11:00 a.m., Toronto, Ontario time (or as soon
thereafter as practicable) on the day two Business Days prior to the first day
of such Interest Period for the offering by such Reference Banks to leading
banks in the London interbank market of U.S. Dollar deposits having a term
comparable to such Interest Period and in an amount comparable to the principal
amount of the Eurodollar Loan to which such Interest Period relates or (B) the
Highest Lawful Rate. If any Reference Bank does not furnish a timely quotation,
the Paying Agent shall determine the relevant interest rate on the basis of the
quotation or quotations furnished by the remaining Reference Bank or Banks; if
none of such quotations is available on a timely basis, the provisions of
Section 6.2 shall apply. Each determination of the Eurodollar Base Rate shall be
conclusive and binding, absent manifest error, and may be computed using any
reasonable averaging and attribution method.
"Eurodollar Loans" shall mean Loans the interest on which is determined
on the basis of rates referred to in the definition of "Eurodollar Base Rate" in
this Section 1.1.
"Eurodollar Rate" shall mean, for any Interest Period for any
Eurodollar Loan, a rate per annum determined by the Paying Agent to be equal to
the Eurodollar Base Rate for such Loan for such Interest Period.
"Event of Default" shall have the meaning assigned to such term in
Section 11 hereof.
"Facility Fee Percentage" shall mean, on any date, the applicable per
annum percentage set forth at the appropriate intersection in the table shown
below, based on the Rating as of the close of business on the preceding Business
Day:
11
Facility
Fee
Rating Percentage
BBB/Baa2 and higher 0.125
BBB-/Baa3 0.150
BB+/Ba1 0.20
BB/Ba2 and lower 0.30
"Financial Statements" shall mean the financial statement or
statements, together with the notes and schedules thereto, described or referred
to in Sections 8.6 and 9.1.
"Funded Indebtedness" shall mean all Indebtedness which by its terms
matures more than one (1) year from the date as of which any calculation of
Funded Indebtedness is made, and any Indebtedness maturing within one (1) year
from such date which is renewable at the option of the obligor to a date beyond
one (1) year from such date (if Indebtedness provides for amortization, only the
amount of the principal payment required to be made within one (1) year from the
date as of which any calculation of Funded Indebtedness is made shall be
excluded from "Funded Indebtedness").
"GAAP" shall mean as to a particular Person, such accounting practice
as, in the opinion of KPMG Peat Marwick or other independent accountants of
recognized national standing retained by such Person and acceptable to the
Majority Banks, conforms at the time to generally accepted accounting
principles, consistently applied. Generally accepted accounting principles means
those principles and practices (a) which are recognized as such by the Financial
Accounting Standards Board, (b) which are applied for all periods after the date
hereof in a manner consistent with the manner in which such principles and
practices were applied to the most recent audited financial statements of the
relevant Person furnished to the Banks, except only for such changes in
principles and practices with which the applicable independent public
accountants concur and which are disclosed to the Banks in writing, and (c)
which are consistently applied for all periods after the date hereof so as to
reflect properly the financial condition and results of operations of such
Person.
"Gas and Liquids Pipeline Subsidiaries" shall mean each company (which
may include the Parent) engaged in the Pipeline Operations (as defined in the
U.S. Facility, without amendment except as permitted under the Intercreditor
Agreement).
"Gas Sale Contract" shall mean that certain Gas Sale Contract dated
January 1, 1984, between APC, as Seller, and ENSTAR Natural Gas Company, as
Purchaser, as amended on June 17, 1985, and from time to time thereafter, if and
only if the Administrative Agent has received notice thereof pursuant to Section
10.8.
"Governmental Authority" shall mean any sovereign governmental
authority, Canada, the United States of America, any Province of Canada, any
State of the United States and any political subdivision of any of the
foregoing, and any central bank, agency, instrumentality, department,
12
commission, board, bureau, authority, court or other tribunal or
quasi-governmental authority in each case whether executive, legislative,
judicial, regulatory or administrative, having jurisdiction over the Parent, any
of its Subsidiaries, any of their respective property, any Agent or any Bank.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of any such Person directly or indirectly guaranteeing any
Indebtedness of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness (whether arising by virtue of partnership
arrangements, by agreement to keep- well, to purchase assets, goods, securities
or services, to take-or-pay, or to maintain financial statement conditions or
otherwise, other than agreements to purchase assets, goods, securities or
services at an arm's length price in the ordinary course of business) or (ii)
entered into for the purpose of assuring in any other manner the holder of such
Indebtedness of the payment thereof or to protect such holder against loss in
respect thereof (in whole or in part), provided that the term "Guarantee" shall
not include endorsements for collection or deposit in the ordinary course of
business. The term "Guarantee" used as a verb has a corresponding meaning.
"Hazardous Substance" shall mean petroleum products, and any hazardous
or toxic waste or substance defined or regulated as such from time to time by
any law, rule, regulation or order described in the definition of "Requirements
of Environmental Law".
"Highest Lawful Rate" shall mean, on any day, the maximum nonusurious
rate of interest permitted for that day by whichever of applicable Canadian or
provincial law permits the higher interest rate, stated as a rate per annum.
"Hydrocarbons" shall mean oil, gas, casinghead gas, drip gasoline,
natural gasoline, condensate and all other liquid or gaseous hydrocarbons and
related minerals, in each case whether in a natural or a processed state.
"Indebtedness" shall mean, as to any Person: (i) indebtedness of such
Person for borrowed money (whether by loan or the issuance and sale of debt
securities) or for the deferred purchase or acquisition price of property or
services, including, without limitation, obligations (excluding volumetric
obligations with respect to pre-sales of Hydrocarbon production which have
already been accounted for in the calculation of the Borrowing Base) payable out
of Hydrocarbon production; (ii) obligations, whether fixed or contingent, of
such Person in respect of letters of credit, acceptances or similar instruments
issued or accepted by banks and other financial institutions for the account of
such Person or any other Person; (iii) Capital Lease Obligations of such Person;
(iv) Redemption Obligations of such Person and other obligations of such Person
to redeem or otherwise retire shares of capital stock of such Person or any
other Person, in each case to the extent that the redemption obligations will
arise prior to the stated maturity of the Obligations; (v) indebtedness of
others of the type described in clause (i), (ii), (iii) or (iv) above secured by
a Lien on the property of such Person, whether or not the respective obligation
so
13
secured has been assumed by such Person; and (vii) indebtedness of others of the
type described in clause (i), (ii), (iii) or (iv) above Guaranteed by such
Person.
"Intercreditor Agreement" shall mean that certain Intercreditor
Agreement dated December 30, 1993 executed by and among the Company, the Parent,
the Administrative Agent and the "Administrative Agent"(now known as "Agent")
under the U.S. Facility, as amended by that certain First Amendment to
Intercreditor Agreement dated May 24, 1994 and by that certain Second Amendment
to Intercreditor Agreement dated December 23, 1996, and as the same may be
further amended or modified from time to time.
"Interest Period" shall mean:
(a) With respect to any Eurodollar Loan, the period commencing
on (i) the date such Loan is made or converted into or continued as a Eurodollar
Loan or (ii) in the case of a roll-over to a successive Interest Period, the
last day of the immediately preceding Interest Period and ending on the
numerically corresponding day in the first, second, third or sixth calendar
month thereafter, as the Company may select as provided in Section 3.3 hereof,
except that each such Interest Period which commences on any day for which there
is no numerically corresponding day in the appropriate subsequent calendar month
shall end on the last Business Day of the appropriate subsequent calendar month.
(b) With respect to any Alternate Base Rate Loan or any
Canadian Prime Rate Loan, the period commencing on the date such Loan is made
and ending on the next succeeding Quarterly Date.
Notwithstanding the foregoing: (i) no Interest Period with respect to a
Eurodollar Loan may commence before and end after the date of any scheduled
reduction in the Commitments if, after giving effect thereto, the aggregate
principal amount of the Eurodollar Loans having Interest Periods which end after
such reduction date shall be greater than the aggregate principal amount of the
Commitments scheduled to be in effect after such reduction date; (ii) each
Interest Period which would otherwise end on a day which is not a Business Day
shall end on the next succeeding Business Day (or, in the case of an Interest
Period for Eurodollar Loans, if such next succeeding Business Day falls in the
next succeeding calendar month, on the next preceding Business Day); (iii) no
Interest Period with respect to a Eurodollar Loan shall extend beyond the end of
the scheduled Revolving Credit Availability Period; and (iv) no Interest Period
for any Eurodollar Loans shall have a duration of less than one month and, if
the Interest Period therefor would otherwise be a shorter period, such Loans
shall not be available hereunder.
"Investments" shall have the meaning assigned to such term in Section
10.3 hereof.
"Investments Tests" shall mean compliance with each of the following
restrictions (both before and immediately after giving effect to the applicable
Investments):
14
(i) there shall exist no Borrowing Base Deficiency;
(ii) no Default or Event of Default shall have occurred
and be continuing; and
(iii) the applicable Investment, when aggregated with any
prior permitted Investments (exclusive of Investments
permitted under Sections 10.3(a) through (o) hereof),
shall not exceed 10% of Tangible Net Worth of the
Parent and its Subsidiaries on a consolidated basis.
"Issuer" shall mean each Bank issuing a Letter of Credit hereunder.
"Legal Requirement" shall mean any law, statute, ordinance, decree,
requirement, order, judgment, rule, regulation (or interpretation of any of the
foregoing) of, and the terms of any license or permit issued by, any
Governmental Authority, now or hereafter in effect.
"Letter of Credit" shall have the meaning assigned to such term in
Section 2.2 hereof.
"Letter of Credit Fee" shall mean a per annum rate equal to the
Applicable Margin for Eurodollar Loans in effect from time to time.
"Letter of Credit Liabilities" shall mean, at any time and in respect
of any Letter of Credit, the sum of (i) the amount available for drawings under
such Letter of Credit plus (ii) the aggregate unpaid amount of all Reimbursement
Obligations at the time due and payable in respect of previous drawings made
under such Letter of Credit.
"Lien" shall mean, with respect to any asset, any mortgage, lien,
pledge, charge, collateral assignment, security interest or encumbrance of any
kind in respect of such asset. For the purposes of this Agreement, a Person
shall be deemed to own subject to a Lien any asset which it has acquired or
holds subject to the interest of a vendor or lessor under any conditional sale
agreement, capital lease or other title retention agreement relating to such
asset.
"Liquid Investments" shall mean:
(I) in the case of investments of U.S. Dollars
(i) securities issued or directly, fully and unconditionally
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof) having maturities of not more
than one year from the date of issue;
15
(ii) U.S. Dollar time deposits and certificates of deposit (A) of any
Bank having capital and surplus in excess of U.S. $300,000,000, or (B) of any
commercial bank incorporated in the United States, of recognized standing,
having capital and surplus in excess of U.S. $500,000,000 and which has (or
which is a Subsidiary of a holding company which has) publicly traded debt
securities rated, at the time of issuance of such time deposits, AA or higher by
Standard & Poor's Ratings Group or Aa-2 or higher by Moody's Investors Service,
Inc. with maturities of not more than one year from the date of issue;
(iii) repurchase obligations with a term of not more than seven days
for underlying securities of the types described in clause (I)(i) above entered
into with any bank meeting the qualifications specified in clause (I)(ii) above,
provided that the terms of such agreements comply with the guidelines set forth
in the Federal Financial Institution Examination Counsel Supervisory
Policy--Repurchase Agreements of Depository Institutions With Securities Dealers
and Others, as adopted by the Comptroller of the Currency on October 31, 1985;
(iv) commercial paper or other U.S. Dollar obligations issued by the
parent corporation (A) of any Bank having capital and surplus in excess of U.S.
$300,000,000, or (B) of any commercial bank (provided that the parent
corporation and the bank are both incorporated in the United States) of
recognized standing having capital and surplus in excess of U.S. $500,000,000
and commercial paper or other U.S. Dollar obligations issued by any Person
incorporated in the United States, which commercial paper is rated at least A-2
or the equivalent thereof by Standard & Poor's Ratings Group or at least P-2 or
the equivalent thereof by Moody's Investors Service, Inc. and in each case
maturing not more than six months after the date of issue;
(v) obligations of any state or political subdivision thereof rated at
least F-1 by Fitch Investors Service, Inc. or AA by Standard & Poor's Ratings
Group with an original maturity of 180 days or less; and
(vi) investments in money market funds substantially all the assets of
which are comprised of securities of the types described in clauses (I)(i)
through (v) above; and
(II) in the case of investments of Canadian dollars
16
(i) bonds or other evidences of indebtedness of, or the principal and
interest of which is fully guaranteed by, the Government of Canada or any
province of Canada, payable in Canadian dollars and (in the case of any
provincial obligations and any Government of Canada obligations that are rated)
rated AAA or AA (or the then equivalent grade) by Dominion Bond Rating Service
Limited, or any other nationally recognized bond rating service, having a
maturity not in excess of one year,
(ii) certificates of deposit issued or guaranteed by a bank or trust
company organized under the laws of Canada or any province thereof, provided
such bank or trust company has capital and retained earnings in the aggregate in
excess of Canadian $500,000,000 on its most recent balance sheet (whether
audited or unaudited), having a maturity not in excess of one year,
(iii) bankers' acceptances of any bank or trust company the
certificates of deposit of which would constitute Liquid Investments as provided
in clause (II)(ii) above, if outstanding unsecured debt of such bank or trust
company is rated no less than AA (or the then equivalent grade) by Dominion Bond
Rating Service Limited, or any other nationally recognized bond rating service;
and
(iv) commercial paper rated no less than R-1 (or the then equivalent
grade) by Dominion Bond Rating Service Limited or A-1 (or the then equivalent
grade) by CBRS Inc., having a maturity not in excess of one year; excluding any
bonds or other evidences of indebtedness, certificates of deposit or commercial
paper which a Canadian chartered bank may not hold as security under the Bank
Act (Canada).
"Loan Documents" shall mean this Agreement, the Notes, the Bank
Guarantee, the Intercreditor Agreement, the Bankers' Acceptances, all
Applications, all instruments, certificates and agreements now or hereafter
executed or delivered to any Agent or any Bank pursuant to any of the foregoing,
and all amendments, modifications, renewals, extensions, increases and
rearrangements of, and substitutions for, any of the foregoing.
"Loans" shall mean the loans provided for by Section 2.1 hereof.
"Majority Banks" shall mean Banks having greater than 66-2/3% of the
aggregate amount of Commitments.
"Material Adverse Effect" shall mean a material adverse effect on the
business, condition (financial or otherwise), operations or properties
(including proven oil and gas reserves) of the
17
Parent and its Subsidiaries, taken as a whole, or on the ability of any Relevant
Party to perform its material obligations under any Loan Document to which it is
a party.
"Maximum Outstanding Amount" shall have the meaning ascribed to such
term in Section 2.9 hereof.
"Maximum Revolving Credit Available Amount" shall mean, at any date, an
amount equal to the lesser of (i) the aggregate of the Commitments or (ii) the
Maximum Outstanding Amount designated from time to time by the Company in
accordance with the terms hereof.
"Mesa Contract" shall mean that certain Purchase and Sale Agreement
dated Febru ary 6, 1991 executed by and among Mesa Limited Partnership, a
Delaware limited partnership, Mesa Operating Limited Partnership, a Delaware
limited partnership, and Mesa Midcontinent Limited Partnership, a Delaware
limited partnership, as Sellers, and the Parent, as Buyer, as amended by that
certain First Amendment to Purchase and Sale Agreement dated Febru ary 22, 1991
and as further amended by that certain Second Amendment to Purchase and Sale
Agreement dated March 8, 1991.
"Net Proceeds of Production" shall mean, with respect to any Person,
all revenue received by or credited to the account of such Person from the sale
of Hydrocarbons and other minerals in, under or produced from their respective
oil, gas and mineral properties after deducting royalties, overriding royalties,
volumetric production payments with respect to pre-sales of Hydrocarbon
production, production payments pledged to secure non-recourse financing payable
solely out of such production payments, net profits interests and other burdens
payable out of production, normal and reasonable operating expenses and
severance, ad valorem, excise, freehold mineral and windfall profit taxes.
"Notes" shall mean the promissory notes of the Company evidencing the
Loans, in the form of Exhibit C hereto, together with all renewals, extensions,
modifications and replacements thereof and substitutions therefor.
"Novalta" shall mean Novalta Resources Inc., a corporation incorporated
under the laws of the Province of Alberta.
"Novalta Contract" shall mean that certain Sale Agreement dated
November 19, 1993 executed by and between Novacor Petrochemicals Ltd., as
Vendor, and the Parent, as Purchaser.
"Obligations" shall mean, as at any date of determination thereof, the
sum of the following: (i) the aggregate principal amount of Loans outstanding
hereunder plus (ii) the aggregate face amount of all outstanding Bankers'
Acceptances plus (iii) the aggregate amount of the Letter of Credit Liabilities
hereunder plus (iv) all other liabilities, obligations and indebtedness of the
Parent or any Subsidiary of the Parent under any Loan Document.
18
"Oil and Gas Subsidiaries" shall mean any Subsidiary of the Parent
whose assets consist primarily of oil and gas properties. As of the date hereof,
the Oil and Gas Subsidiaries are listed as such on Exhibit A hereto.
"Organizational Documents" shall mean, with respect to a corporation,
the certificate of incorporation, articles of incorporation and bylaws of such
corporation; with respect to a partnership, the partnership agreement
establishing such partnership; with respect to a joint venture, the joint
venture agreement establishing such joint venture, and with respect to a trust,
the instrument establishing such trust; in each case including any and all
modifications thereof as of the date of the Loan Document referring to such
Organizational Document.
"Parent" shall mean Seagull Energy Corporation, a Texas corporation.
"Parent Report" shall mean one or more reports, in form satisfactory to
the Administrative Agent and the Majority Banks, prepared by petroleum engineers
employed by the Parent or its Subsidiaries, which shall evaluate (i) at least
85% of the present value of the Included Reserves (as defined in the U.S.
Facility, without amendment except as permitted under the Intercreditor
Agreement) and (ii) any other properties as to which the Parent has conducted
successful exploration activities subsequent to the most recent Engineering
Report, in each case effective as of the immediately preceding July 1. Each
Parent Report shall set forth production, drilling and acquisition information
and other information requested by the Administrative Agent and shall be based
upon updated economic assumptions acceptable to the Administrative Agent and
approved by the Majority Banks at the beginning of the applicable year.
"Payment Office" shall mean the Toronto, Ontario office of the Paying
Agent, presently located at The Bank of Nova Scotia, International Banking
Division-Loan Accounting, 14th Floor, 44 King Street West, Toronto, Ontario,
Canada M5H 1H1.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Person" shall mean an individual, a corporation, a company, a bank, a
voluntary association, a partnership, a trust, an unincorporated organization,
any Governmental Authority or any other entity.
"Plan" shall mean an employee pension benefit plan which is covered by
Title IV of ERISA or subject to the minimum funding standards under Section 412
of the Code and is either (a) maintained by the Parent or any ERISA Affiliate
for employees of the Parent or any ERISA Affiliate or (b) maintained pursuant to
a collective bargaining agreement or any other arrangement under which more than
one employer makes contributions and to which the Parent or any ERISA Affiliate
is then making or accruing an obligation to make contributions or has within the
preceding five plan years made contributions.
19
"Post-Default Rate" shall mean, in respect of any principal of any
Loan, any Reimburse ment Obligation or any other amount payable by the Company
under this Agreement or any other Loan Document which is not paid when due
(whether at stated maturity, by acceleration, or otherwise), a rate per annum
during the period commencing on the due date until such amount is paid in full
equal to the lesser of (a) the sum of (w) with respect to Eurodollar Loans, 2%
per annum plus the applicable Eurodollar Rate then in effect plus the Applicable
Margin for Eurodollar Loans until the expiration of the applicable Interest
Period, (x) with respect to Canadian Prime Rate Loans, 2% per annum plus the
applicable Canadian Prime Rate as in effect from time to time plus the
Applicable Margin for Canadian Prime Rate Loans, and (y) with respect to
Alternate Base Rate Loans and with respect to Eurodollar Loans after the
expiration of the applicable Interest Period (and also with respect to
indebtedness other than Loans), 2% plus the Alternate Base Rate as in effect
from time to time plus the Applicable Margin for Alternate Base Rate Loans or
(b) the Highest Lawful Rate.
"Quarterly Dates" shall mean the last day of each March, June,
September and December, provided that, if any such date is not a Business Day,
then the relevant Quarterly Date shall be the next succeeding Business Day.
"Quarterly Equivalent" shall mean, as of any date, the Bank of Canada
noon day rate at which it offers to provide U.S. Dollars in exchange for
Canadian Dollars on the later of (i) the last Business Day immediately preceding
the then current calendar quarter or (ii) the last Business Day immediately
preceding the most recent revision of the Maximum Outstanding Amount pursuant to
Section 2.9.
"Rating" shall mean the senior debt rating for the Parent publicly
announced by Standard & Poor's Ratings Group or Moody's Investors Service, Inc.
(in the event the ratings are not equivalent, the higher rating shall be treated
as the "Rating" hereunder); provided, that if such ratings differ by more than
one (1) level, the Rating shall be the average, rounded upwards, of the two
ratings.
"Redemption Obligations" shall mean with respect to any Person all
mandatory redemption obligations of such Person with respect to preferred stock
or other equity securities issued by such Person or put rights in favour of the
holder of such preferred stock or other equity securities, to the extent that
the redemption obligations will arise prior to the stated maturity of the
Obligations.
"Reference Banks" shall mean The Bank of Nova Scotia and The Chase
Manhattan Bank of Canada and such other Banks (up to a maximum of two (2)
additional Banks) as the Company, with the approval of the Paying Agent (which
approval shall not be unreasonably withheld), may from time to time designate.
20
"Regulation D" shall mean Regulation D of the Board of Governors of the
Federal Reserve System as the same may be amended or supplemented from time to
time and any successor or other regulation relating to reserve requirements.
"Regulatory Change" shall mean, with respect to any Bank, any change on
or after the date of this Agreement in Legal Requirements (including Regulation
D) or the adoption or making on or after such date of any interpretation,
directive or request applying to a class of banks including such Bank under any
Legal Requirements (whether or not having the force of law) by any Governmental
Authority.
"Reimbursement Obligations" shall mean, as at any date, the obligations
of the Company then outstanding in respect of Letters of Credit under this
Agreement, to reimburse the Paying Agent for the account of the applicable
Issuer for the amount paid by the applicable Issuer in respect of any drawing
under such Letter of Credit.
"Relevant Party" shall mean the Company, the Parent and each other
party to any of the Loan Documents other than (a) the Banks and (b) the Agents.
"Request for Extension of Credit" shall mean a request for extension of
credit duly executed by any Responsible Officer of the Company, appropriately
completed and substantially in the form of Exhibit B attached hereto.
"Requirements of Environmental Law" means all requirements imposed by
any law (including for example and without limitation The Resource Conservation
and Recovery Act (U.S.) and The Comprehensive Environmental Response,
Compensation, and Liability Act (U.S.), the Environmental Protection and
Enhancement Act (Alberta) and the Canadian Environmental Protection Act), rule,
regulation, or order of any federal, state, provincial or local executive,
legislative, judicial, regulatory or administrative agency, board or authority
in effect at the applicable time which relate to (i) noise; (ii) pollution,
protection or clean-up of the air, surface water, ground water or land; (iii)
solid, gaseous or liquid waste generation, treatment, storage, disposal or
transportation; (iv) exposure to Hazardous Substances; (v) the safety or health
of employees or (vi) regulation of the manufacture, processing, distribution in
commerce, use, discharge or storage of Hazardous Substances.
"Reserve Requirement" shall mean, for any Eurodollar Loan for any
Interest Period therefor, the stated maximum rate for all reserves (including
any marginal, supplemental or emergency reserves) required to be maintained
during such Interest Period under applicable Legal Requirements by any Bank
against eurocurrency liabilities. Without limiting the effect of the foregoing,
the Reserve Requirement shall reflect and include any other reserves required to
be maintained by any Bank by reason of any Regulatory Change against (i) any
category of liabilities which includes deposits by reference to which the
Eurodollar Rate is to be determined as provided in the definition of "Eurodollar
Base Rate" in this Section 1.1 or (ii) any category of extensions
21
of credit or other assets which include Eurodollar Loans. Any determination by
the Paying Agent of the Reserve Requirement shall be conclusive and binding,
absent manifest error, and may be made using any reasonable averaging and
attribution method.
"Responsible Officer" shall mean the chairman of the board, the
president, any executive vice president, the vice president of finance and
administration, the chief executive officer or the chief operating officer or
any equivalent officer (regardless of title) and in the case of the Company, any
other vice president, and in respect of financial or accounting matters, shall
also include the chief financial officer, the treasurer and the controller or
any equivalent officer (regardless of title).
"Revolving Credit Availability Period" shall mean the period from and
including the date hereof to but not including May 31, 2004 or the date the
Commitments are terminated pursuant to Section 11.1, whichever is first to
occur.
"Revolving Credit Obligations" shall mean, as at any date of
determination thereof, the sum of the following (determined without
duplication): (i) the aggregate principal amount of Loans outstanding hereunder
plus (ii) the aggregate of the face amounts of all outstanding Bankers'
Acceptances plus (iii) the aggregate amount of the Letter of Credit Liabilities
hereunder.
"Senior Debt" shall mean Indebtedness having a weighted average
maturity at least seven (7) years from the date of issuance and having no
conditions precedent or covenants materially more onerous to the Parent than the
conditions precedent and covenants contained herein and in the other Loan
Documents with respect to the Loans. The documents evidencing any Senior Debt
shall contain a provision substantially identical to Section 10.2(y) hereof
permitting Liens securing the Notes and the other Obligations on a pari passu
basis with such Senior Debt.
"Subordinated Debt" shall mean Indebtedness of the Parent having a
weighted average maturity at least seven (7) years from the date of issuance and
having no conditions precedent or covenants materially more onerous to the
Parent than the conditions precedent and covenants contained in the U.S.
Facility, in this Agreement and in the other Loan Documents with respect to the
Loans and which is expressly made subordinate and junior in right of payment to
the Obligations and in respect of any collateral or security by the express
terms of the instruments evidencing the Subordinated Debt or the indenture or
other similar instrument under which the Subordinated Debt is issued (which
indenture or other instrument will be binding on all holders of such
Subordinated Debt), by provisions not more favourable to the holders of the
Subordinated Debt than the following:
(a) in the event a Default exists and is continuing, no payment of
principal or interest will be made on account of Subordinated Debt and no remedy
for default shall be exercised until (i) such Default will have been cured or
waived or until the Obligations will have been paid in full (or provisions made
therefor reasonably satisfactory to the Banks) or (ii) 179 days after the
22
occurrence of such Default (as to which the Banks have knowledge as a result of
having received notice from the Company pursuant to this Agreement or otherwise)
and no action being taken by the Banks with respect to such Default, whichever
occurs earlier;
(b) upon the occurrence of any of the events or proceedings specified
in Subsec tions 11.1(f) or (g) hereof (or, as to any Subsidiary of the Parent,
Subsection 11.1(j) to the extent that it refers to Subsections 11.1(f) or (g)),
the holders of any Obligations will be entitled to receive payment in full of
all principal or interest on all Obligations before the holders of the
Subordinated Debt are entitled to receive any payment on account of principal or
interest on the Subordinated Debt, and to that end (but subject to the power of
a court of competent jurisdiction to make other provision) the holders of the
Obligations will be entitled to receive distributions of any kind or character,
whether in cash or property or securities (other than equity securities and
other securities establishing rights in the holders thereof which are
subordinate to the rights of the holders of the Obligations in accordance with
this definition of Subordinated Debt), which may be or would otherwise be
payable or deliverable in any such proceedings in respect of the Subordinated
Debt (provided that, the Subordinated Debt may provide that if the Obligations
have been paid in full or provision therefor reasonably satisfactory to the
Banks has been made, the holders of the Subordinated Debt will be subrogated to
the rights of the holders of the Obligations);
(c) in the event that any Subordinated Debt is declared due and payable
before its expressed maturity because of the occurrence of an event of default
thereunder (under circumstances when the provisions of the foregoing clauses (a)
and (b) will not be applicable), the holders of the Obligations at the time such
Subordinated Debt becomes due and payable because of such an event of default
will be entitled to receive payment in full of all Obligations (or have
provision therefor satisfactory to the Banks made) before the holders of the
Subordinated Debt are entitled to receive any payment on account of the
principal or interest on the Subordinated Debt; and
(e) no holder of the Obligations will be prejudiced in its right to
enforce subordination of the Subordinated Debt by any act or failure to act on
the part of the Parent or the part of the holders of the Obligations; provided
that, the Subordinated Debt may provide that the foregoing provisions are solely
for the purpose of defining the relative rights of the holders of the
Obligations on the one hand, and the holders of the Subordinated Debt on the
other hand, and that nothing therein will impair, as between the Parent and the
holders of the Subordinated Debt, the obligation of the Parent, which may be
unconditional and absolute, to pay to the holders of the Subordinated Debt the
principal and interest thereon in accordance with its terms, nor will anything
herein prevent the holders of the Subordinated Debt from exercising all remedies
otherwise permitted by applicable law or thereunder upon default thereunder,
subject to the rights under clauses (a), (b) and (c) above of
23
the holders of the Obligations to receive cash, property or securities otherwise
payable or deliverable to the holders of the Subordinated Debt.
"Subsidiary" shall mean, with respect to any Person (the "parent"),
(a) any corporation of which at least a majority of the outstanding shares of
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 have or
might have voting power by reason of the happening of any contingency) is at the
time directly or indirectly owned or controlled by the parent or one or more of
the Subsidiaries of the parent or by the parent and one or more of the
Subsidiaries of the parent, and (b) any partnership, limited partnership, joint
venture or other form of entity, the majority of the legal or beneficial
ownership of which is at the time directly or indirectly owned or controlled by
the parent or one or more of the Subsidiaries of the parent or by the parent and
one or more of the Subsidiaries of the parent.
"Tangible Net Worth" shall mean the sum of the redemption price of
preferred stock, par value of common stock, capital in excess of par value of
common stock (additional paid-in capital) and retained earnings, less treasury
stock, goodwill, deferred development costs, franchises, licenses, patents,
trademarks and copyrights and all other assets which are properly classified as
intangible assets in accordance with GAAP less any Redemption Obligations.
"Type" shall have the meaning assigned to such term in Section 1.3
hereof.
"Unfunded Liabilities" shall mean, with respect to any Plan, at any
time, the amount (if any) by which (a) the present value of all benefits under
such Plan exceeds (b) the fair market value of all Plan assets allocable to such
benefits, all determined as of the then most recent actuarial valuation report
for such Plan, but only to the extent that such excess represents a potential
liability of any ERISA Affiliate to the PBGC or a Plan under Title IV of ERISA.
"U.S. Dollars" and "U.S. $" shall mean lawful money of the United
States of America.
"U.S. Facility" shall mean that certain Credit Agreement dated
concurrently herewith executed by and among the Parent, The Chase Manhattan
Bank, as Agent, and certain banks therein named, as amended by the Intercreditor
Agreement and as the same may be further amended or modified from time to time.
1.2 Accounting Terms and Determinations. Unless otherwise specified
herein, all accounting terms used herein shall be interpreted, all
determinations with respect to accounting matters hereunder shall be made, and
all financial statements and certificates and reports as to financial matters
required to be delivered hereunder shall be prepared, in accordance with GAAP.
To enable the ready determination of compliance with the provisions hereof, the
Parent will not change from December 31 in each year the date on which its
fiscal year ends, nor from March 31, June 30 and September 30 the dates on which
the first three fiscal quarters in each fiscal year end.
24
1.3 Types of Loans. Loans hereunder are distinguished by "Type". The
"Type" of a Loan refers to the determination whether such Loan is a Eurodollar
Loan, an Alternate Base Rate Loan or a Canadian Prime Rate Loan.
1.4 Miscellaneous. The words "hereof", "herein" and "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement. Any
reference to Sections shall refer to Sections of this Agreement. Whenever it is
necessary to convert an amount denominated in Canadian Dollars to U.S. Dollars,
such as calculating the aggregate outstanding principal amount of the Revolving
Credit Obligations, such conversion shall be effected using the Equivalent U.S.
Dollar Amount or, where applicable, the Quarterly Equivalent. Unless payments
are otherwise required by the terms of this Agreement or by any other applicable
Loan Document to be made in U.S. Dollars or Canadian Dollars, such payment shall
be made in U.S. Dollars or in Canadian Dollars converted by using the Equivalent
U.S. Dollar Amount as of the date of such payment calculated, where applicable,
using the Quarterly Equivalent.
Section 2. Commitments; Designation of Maximum Outstanding Amount.
2.1 Loans and Bankers' Acceptances. From time to time on or
after the date hereof and during the Revolving Credit
Availability Period, each Bank shall:
(a) make Loans under this Section 2.1, in Canadian Dollars or
U.S. Dollars, to the Company; and
(b) accept and purchase Bankers' Acceptances and deliver the
Canadian Bankers' Acceptance Discount Proceeds (less the
applicable acceptance fees payable by the Company to such
Bank pursuant to Sections 4.3) in respect thereof for the
account of the Company through the Paying Agent at the
Payment Office,
in an aggregate principal amount (including therein the aggregate face amount of
any outstanding Bankers' Acceptances) at any one time outstanding (including its
Commitment Percentage of all Letter of Credit Liabilities at such time) up to
but not exceeding such Bank's Commitment Percentage of the Maximum Revolving
Credit Available Amount. Subject to the conditions herein, any such Loan or
Bankers' Acceptance repaid prior to the end of the Revolving Credit Availability
Period may be reborrowed or reissued, as the case may be, pursuant to the terms
of this Agreement; provided, that any and all such Loans and the full face
amount of all outstanding Bankers' Acceptances shall be due and payable in full
at the end of the Revolving Credit Availability Period. For purposes of
determining the amount available for borrowing hereunder (or the maximum
availability for the issuance of Bankers' Acceptances or Letters of Credit), the
Equivalent U.S. Dollar Amount as of the Business Day preceding the Loan request,
Bankers' Acceptance Request or Letter of Credit request shall be used to
determine availability hereunder, rather than the Quarterly Equivalent.
25
2.2 Letters of Credit.
(a) Letters of Credit. Subject to the terms and conditions hereof, and
on the condition that aggregate Letter of Credit Liabilities shall never exceed
U.S. $10,000,000, the Company shall have the right, in addition to Loans
provided for in Section 2.1 hereof, to utilize the Commitments from time to time
from and after the date hereof through the expiration of the Revolving Credit
Availability Period by obtaining the issuance of letters of credit for the
account of the Company and on behalf of the Company by the applicable Issuer if
the Company shall so request in the notice referred to in Section 2.2(b)(i)
(such letters of credit being collectively referred to as the "Letters of
Credit"). Letters of Credit may, upon written request of the Company, be
denominated in Canadian Dollars and if so all payments and fees with respect
thereto shall be paid in Canadian Dollars. Upon the date of the issuance of a
Letter of Credit, the applicable Issuer shall be deemed, without further action
by any party hereto, to have sold to each Bank, and each Bank shall be deemed,
without further action by any party hereto, to have purchased from the
applicable Issuer, a participation, to the extent of such Bank's Commitment
Percentage, in such Letter of Credit and the related Letter of Credit
Liabilities. Any Letter of Credit having an expiry date after the end of the
Revolving Credit Availability Period shall have been fully Covered or shall be
backed by a letter of credit in form and substance, and issued by an issuer,
acceptable to the Administrative Agent in its reasonably exercised discretion.
Subject to the terms and conditions hereof, upon the request of the Company, if
BNS is the designated Issuer, BNS shall issue the applicable Letter of Credit
and if any other Bank is the designated Issuer, such Bank may, but shall not be
obligated to, issue such Letter of Credit.
(b) Additional Provisions. The following additional provisions shall
apply to each Letter of Credit:
(i) The Company shall give the Administrative Agent and the
Paying Agent at least three (3) Business Days' prior notice (effective upon
receipt) specifying the proposed Issuer and the date such Letter of Credit is to
be issued and describing the proposed terms of such Letter of Credit and the
nature of the transaction proposed to be supported thereby, and shall furnish
such additional information regarding such transaction as the Administrative
Agent, the Paying Agent or the applicable Issuer may reasonably request. Upon
receipt of such notice the Paying Agent shall promptly notify each Bank of the
contents thereof and of such Bank's Commitment Percentage of the amount of such
proposed Letter of Credit.
(ii) No Letter of Credit may be issued if after giving
effect thereto the Revolving Credit Obligations would exceed the Maximum
Revolving Credit Available Amount. On each day during the period commencing with
the issuance of any Letter of Credit and until such Letter of Credit shall have
expired or been terminated, the Commitment of each Bank shall be deemed to be
utilized for all purposes hereof in an amount equal to such Bank's Commitment
Percentage of the amount then available for drawings under such Letter of
Credit.
26
(iii) Upon receipt from the beneficiary of any Letter of
Credit of any demand for payment thereunder, the applicable Issuer shall
promptly notify the Company and each Bank as to the amount to be paid as a
result of such demand and the payment date. If at any time the applicable Issuer
shall have made a payment to a beneficiary of a Letter of Credit in respect of a
drawing under such Letter of Credit, each Bank will pay to the applicable Issuer
immediately upon demand by the applicable Issuer at any time during the period
commencing after such payment until reimbursement thereof in full by the
Company, an amount equal to such Bank's Commitment Percentage of such payment,
together with interest on such amount for each day from the date of demand for
such payment (or, if such demand is made after 11:00 a.m. Toronto, Ontario time
on such date, from the next succeeding Business Day) to the date of payment by
such Bank of such amount at a per annum rate of interest determined by the
Issuer (such rate to be conclusive and binding on the Banks) in accordance with
the Issuer's usual banking practice for similar advances to financial
institutions of like standing to the applicable Bank.
(iv) The Company shall be irrevocably and unconditionally
obligated forthwith to reimburse the applicable Issuer for any amount paid by
the applicable Issuer upon any drawing under any Letter of Credit, without
presentment, demand, protest or other formalities of any kind. Such
reimbursement may, subject to satisfaction of the conditions in Sections 7.1 and
7.2 hereof and to the existence of the Maximum Revolving Credit Available Amount
(after adjustment in the same to reflect the elimination of the corresponding
Letter of Credit Liability) be made by borrowing of Loans. In the event any such
reimbursement is not made by borrowing of Loans, the Company shall make such
reimbursement in immediately available funds within five (5) days after demand
therefor by the applicable Issuer. The applicable Issuer will pay to each Bank
such Bank's Commitment Percentage of all amounts received from the Company for
application in payment, in whole or in part, of the Reimbursement Obligation in
respect of any Letter of Credit, but only to the extent such Bank has made
payment to the applicable Issuer in respect of such Letter of Credit pursuant to
clause (iii) above.
(v) The Company will pay to the Paying Agent at the Payment
Office for the account of each Bank a fee on such Bank's Commitment Percentage
of the daily average amount available for drawings under each Letter of Credit,
in each case for the period from and including the date of issuance of such
Letter of Credit to and including the date of expiration or termination thereof
at a rate per annum equal to the Letter of Credit Fee in effect from time to
time, such fee to be paid in arrears on the Quarterly Dates and on the date of
the expiration or termination thereof. The Paying Agent will pay to each Bank,
promptly after receiving any payment in respect of letter of credit fees
referred to in the preceding sentence of this clause (v), an amount equal to
such Bank's Commitment Percentage of such fees. The Company shall pay to the
applicable Issuer an administration and issuance fee in an amount equal to 1/8
of 1% per annum of the daily average amount available for drawings under such
Letter of Credit, in each case for the period from and including the date of
issuance of such Letter of Credit to and including the date of expiration or
termination thereof, such fee to be paid in arrears on the Quarterly Dates and
on the
27
date of the expiration or termination thereof. Such administration and issuance
fee shall be retained by the applicable Issuer.
(vi) The issuance by the applicable Issuer of each Letter of
Credit shall, in addition to the conditions precedent set forth in Section 7
hereof, be subject to the conditions precedent that such Letter of Credit shall
be in such form and contain such terms as shall be reasonably satisfactory to
the applicable Issuer and that the Company shall have executed and delivered
such other instruments and agreements relating to such Letter of Credit as the
applicable Issuer shall have reasonably requested and are not inconsistent with
the terms of this Agreement including an Application therefor. In the event of a
conflict between the terms of this Agreement and the terms of any Application,
the terms of this Agreement shall control. Without limiting the generality of
the foregoing sentence, in the event any such Application shall include
requirements for Cover, it is agreed that there shall be no requirements for the
Company to provide Cover except as expressly required in this Agreement.
(c) Indemnification. The Company hereby indemnifies and holds harmless
each Agent, the applicable Issuer and each Bank from and against any and all
claims and damages, losses, liabilities, costs or expenses which such Bank, the
applicable Issuer or such Agent may incur (or which may be claimed against such
Bank, the applicable Issuer or such Agent by any Person whatsoever) in
connection with the execution and delivery or transfer of or payment or failure
to pay under any Letter of Credit, including, without limitation, any claims,
damages, losses, liabilities, costs or expenses which such Agent, the applicable
Issuer or such Bank, as the case may be, may incur (whether incurred as a result
of its own negligence or otherwise) by reason of or in connection with the
failure of any other Bank (whether as a result of its own negligence or
otherwise) to fulfill or comply with its obligations to such Agent, the
applicable Issuer or such Bank, as the case may be, hereunder (but nothing
herein contained shall affect any rights the Company may have against such
defaulting Bank); provided that, the Company shall not be required to indemnify
any Bank, the applicable Issuer or any Agent for any claims, damages, losses,
liabilities, costs or expenses to the extent, but only to the extent, caused by
(i) the willful misconduct or gross negligence of the party seeking
indemnification, or (ii) by such Bank's, the applicable Issuer's or such
Agent's, as the case may be, failure to pay under any Letter of Credit after the
presentation to it of a request required to be paid under applicable law.
Nothing in this Section 2.2(c) is intended to limit the obligations of the
Company under any other provision of this Agreement.
(d) Co-issuance or Separate Issuance of Letters of Credit. The Company
may, at its option, request that any requested Letter of Credit which exceeds
U.S. $1,000,000 be issued severally, but not jointly, by any two or more of the
Banks or issued through separate Letters of Credit issued by any two or more of
the Banks, respectively, each in an amount equal to a portion of the amount of
the applicable Letter of Credit requested by the Company. In either such event,
the Banks issuing such Letters of Credit shall each constitute an "Issuer" and
the Letters of Credit so issued shall each constitute a "Letter of Credit" for
all purposes hereunder and under the Loan
28
Documents. Notwithstanding the foregoing, no Bank other than BNS shall have any
obligation to issue any Letter of Credit, but may do so at its option.
2.3 Reductions and Changes of Commitments.
(a) Mandatory. On May 31, 2004, all Commitments shall be terminated
in their entirety unless terminated at an earlier date pursuant to Section 11.1.
(b) Optional. The Company shall have the right to terminate or reduce
the unused portion of the Commitments at any time or from time to time, provided
that: (i) the Company shall give notice of each such termination or reduction to
the Administrative Agent and the Paying Agent as provided in Section 5.5 hereof
and (ii) each such partial reduction shall be permanent and in an aggregate
amount at least equal to U.S. $5,000,000.
(c) No Reinstatement. Any reduction in or termination of the
Commitments may not be reinstated without the approval of the Administrative
Agent and each of the Banks.
2.4 Fees.
(a) The Company shall pay to the Paying Agent for the account of each
Bank a facility fee accruing from the date hereof, computed for each day at a
rate per annum equal to the Facility Fee Percentage times such Bank's pro rata
share (based on its respective Commitment) of the Maximum Revolving Credit
Available Amount on such day. Such facility fees shall be payable on the
Quarterly Dates and on the earlier of the date the Commitments are terminated or
the last day of the Revolving Credit Availability Period. Such fees shall be
calculated in U.S. Dollars, but paid in Canadian Dollars converted by using the
Equivalent U.S. Dollar Amount as of the date of payment.
(b) For purposes of determining the amount of any payment required to
be made under this Section 2.4, the Quarterly Equivalent shall be used as the
conversion rate with respect to Canadian Dollars.
2.5 Affiliates; Lending Offices.
(a) Any Bank may, if it so elects, fulfill its Commitment as to any
Eurodollar Loan by causing a branch, foreign or otherwise, or Affiliate of such
Bank to make such Loan and may transfer and carry such Loan at, to or for the
account of any branch office or Affiliate of such Bank which is a resident of
Canada under the Income Tax Act (Canada); provided that, in such event for the
purposes of this Agreement such Loan shall be deemed to have been made by such
Bank and the obligation of the Company to repay such Loan shall nevertheless be
to such Bank and shall be deemed to be held by such Bank and, to the extent of
such Loan, to have been made for the account of such branch or Affiliate.
29
(b) Notwithstanding any provision of this Agreement to the contrary,
each Bank shall be entitled to fund and maintain its funding of all or any part
of its Loans hereunder in any manner it sees fit, it being understood, however,
that for the purposes of this Agreement all determinations hereunder shall be
made as if such Bank had actually funded and maintained each Eurodollar Loan
during each Interest Period through the purchase of deposits having a maturity
corresponding to such Interest Period and bearing an interest rate equal to the
Eurodollar Rate, as the case may be, for such Interest Period for such Interest
Period.
2.6 Several Obligations. The failure of any Bank to make any Loan to be
made by it or accept and purchase Bankers' Acceptances to be purchased by it on
the date specified therefor shall not relieve any other Bank of its obligation
to make its Loan or accept and purchase such Bankers' Acceptances on such date,
but neither any Agent nor any Bank shall be responsible for the failure of any
other Bank to make a Loan to be made by such other Bank or to accept and
purchase any Bankers' Acceptances to be accepted and purchased by such other
Bank.
2.7 Notes. The Loans made by each Bank shall be evidenced by a single
Canadian Dollar denominated Note of the Company in the case of Loans denominated
in Canadian Dollars and by a single U.S. Dollar denominated Note of the Company
in the case of Loans denominated in U.S. Dollars, such notes to be in
substantially the forms of Exhibit C-1 and C-2, respectively, hereto payable to
the order of such Bank in a principal amount equal to the Commitment of such
Bank, and otherwise duly completed. Each Bank is hereby authorized by the
Company to endorse on the schedule (or a continuation thereof) attached to the
Note of such Bank, to the extent applicable, the date, amount and Type of and
the Interest Period for each Loan made by such Bank to the Company hereunder,
and the amount of each payment or prepayment of principal of such Loan received
by such Bank, provided, that any failure by such Bank to make any such
endorsement shall not affect the obligations of the Company under such Note or
hereunder in respect of such Loan.
2.8 Use of Proceeds. The proceeds of the Loans and the Canadian
Bankers' Acceptance Discount Proceeds, as the case may be, shall be used for
general corporate purposes.
2.9 Designation of Maximum Outstanding Amount. The Company shall from
time to time designate a maximum principal amount, denominated in U.S. Dollars,
permitted to be outstanding hereunder for the period during which such
designation is effective (such amount being herein called the "Maximum
Outstanding Amount"). The initial Maximum Outstanding Amount, effective from the
date hereof, is U.S. $95,000,000. The Company may, at any time, by written
notice delivered to the Administrative Agent and the Paying Agent no later than
two (2) Business Days prior to the effective date thereof, revise the Maximum
Outstanding Amount upwards or downwards; provided, however, that (i) the Maximum
Outstanding Amount may not at any time exceed the aggregate amount of the
Commitments, as reduced from time to time pursuant to Section 2.3 hereof and
(ii) the Maximum Outstanding Amount may not at any time exceed the amount by
which the Borrowing Base from time to time in effect exceeds the sum of
30
the aggregate amount of all "Revolving Credit Obligations" from time to time
outstanding under the U.S. Facility plus the aggregate amount of all other
Borrowing Base Debt of the Parent and its Subsidiaries from time to time
outstanding.
Section 3. Borrowings, Prepayments and Selection of Interest Rates.
3.1 Borrowings. The Company shall give the Administrative Agent and the
Paying Agent notice of each borrowing or the issuance of each Bankers'
Acceptance to be made hereunder as provided in Section 5.5 hereof. Not later
than 2:00 p.m. Toronto, Ontario time on the date specified for each such
borrowing or the issuance of each such Bankers' Acceptance hereunder, each Bank
shall make available the amount of the Loan, if any, to be made by it on such
date or make available Canadian Bankers' Acceptance Discount Proceeds in respect
of Bankers' Acceptances to be accepted and purchased by it on such date (less
the applicable acceptance fees payable by the Company in respect of such
Bankers' Acceptances), in each case to the Paying Agent, at the Payment Office,
in immediately available funds, for the account of the Company. The amount so
received by the Paying Agent shall, subject to the terms and conditions of this
Agreement, be made available to the Company by depositing the same, in
immediately available funds, in an account designated by the Company maintained
with the Paying Agent at the Payment Office.
3.2 Prepayments.
(a) Optional Prepayments. Subject to the provisions of Sections 4, 5
and 6, the Company shall have the right to prepay, on any Business Day, in whole
or in part, without the payment of any penalty or fee, Loans at any time or from
time to time, provided that, the Company shall give the Administrative Agent and
the Paying Agent notice of each such prepayment as provided in Section 5.5
hereof. Eurodollar Loans may be prepaid on the last day of an Interest Period
applicable thereto and Bankers' Acceptances may be prepaid on their stated
maturity date. Eurodollar Loans and Bankers' Acceptances may not be otherwise
prepaid unless prepayment is accompanied by payment of all compensation required
by Section 6.
(b) Mandatory Prepayments and Cover.
(1) Reduction of Commitments. The Company shall from time to
time on demand by the Administrative Agent prepay the Loans (or provide Cover
for Letter of Credit Liabilities and the face amount of Bankers' Acceptances) in
such amounts as shall be necessary so that at all times the aggregate
outstanding principal amount (including therein the face amount of all
outstanding Bankers' Acceptances) of all Revolving Credit Obligations shall not
be in excess of the Maximum Outstanding Amount plus any Cover provided under
this Section 3.2(b)(1).
(2) Borrowing Base Deficiency. Any payments required to cure
any Borrowing Base Deficiency shall be made by Parent to the lenders under the
U.S. Facility and by the
31
Company to the Banks (with the Maximum Outstanding Amount to be reduced by the
amount of such payments by the Company) in the manner provided in the
Intercreditor Agreement.
(3) Use of Quarterly Equivalent. For purposes of determining
whether any payment is required to be made under this Section 3.2, and the
amount thereof, when such determination requires a conversion of U.S. Dollars
into Canadian Dollars and vice versa, the Quarterly Equivalent shall be used as
the conversion rate.
3.3 Selection of Interest Rates. Subject to Section 5.1 and Section 6
hereof, the Company shall have the right, by giving written notice to the
Administrative Agent and the Paying Agent as provided in Section 5.5 hereof,
either to convert any Bankers' Acceptance (in whole or in part) into a Loan, to
convert any Loan (in whole or in part) into a Bankers' Acceptance, to convert
any Loan (in whole or in part) into a Loan of another Type (provided that no
such conversion of Eurodollar Loans shall be permitted other than on the last
day of an Interest Period applicable thereto and no conversion of Bankers'
Acceptances shall be permitted other than on the maturity date thereof), to
continue any Bankers' Acceptance (in whole or in part) or to continue any Loan
(in whole or in part) as a Loan of the same Type. Any such notice of conversion
of a Bankers' Acceptance into a Loan or of conversion of a Loan into, or
continuation of a Loan as, a Eurodollar Loan or a Bankers' Acceptance shall
specify the new Interest Period or maturity date, as applicable. In the event
the Company fails to so give such notice prior to the end of any Interest Period
for any Eurodollar Loan, such Loan shall become an Alternate Base Rate Loan on
the last day of such Interest Period.
3.4 Conditions Applicable to Bankers' Acceptances.
(a) Acceptance and Purchase of Bankers' Acceptances. Subject to the
terms and conditions of this Agreement, each Bank agrees to accept its
Commitment Percentage of Bankers' Acceptances issued by the Company and to
purchase same at the applicable Canadian Bankers' Acceptance Discount Rate and
to provide to the Paying Agent for the account of the Company the Canadian
Bankers' Acceptance Discount Proceeds in respect thereof less the applicable
acceptance fees payable by the Company to such Bank pursuant to Section 4.3.
Each such Bank may at any time and from time to time hold, sell, rediscount or
otherwise dispose of any or all Bankers' Acceptances purchased by it.
(b) Waiver of Presentment and Other Conditions. The Company waives
presentment for payment and any other defence to payment of any amounts due to a
Bank in respect of a Bankers' Acceptance accepted and purchased by it pursuant
to this Agreement which might exist solely by reason of such Bankers' Acceptance
being held, at the maturity thereof, by such Bank in its own right and the
Company agrees not to claim any days of grace if such Bank as holder sues the
Company on the Bankers' Acceptance for payment of the amount payable by the
Company
32
thereunder. On the specified maturity date of a Bankers' Acceptance, or such
earlier date as may be required or permitted pursuant to the provisions of this
Agreement, the Company shall pay the Bank that has accepted and purchased such
Bankers' Acceptance the full face amount of such Bankers' Acceptance.
(c) Terms of Each Bankers' Acceptance: Each Bankers' Acceptance shall:
(1) have a maturity date which shall be on a Business
Day;
(2) have a term of not less than thirty (30) days and not
more than one hundred and eighty (180) days
(excluding days of grace);
(3) be in the form of Exhibit I attached hereto or in
such other form as the Company may agree to in
writing;
(4) be issued in face amounts of Canadian $100,000 or
whole multiples thereof (each of the Banks agrees
that it will use its best efforts to minimize the
number of separate Bankers' Acceptances required to
be executed); and
(5) not have a maturity date which extends beyond the end
of the scheduled Revolving Credit Availability
Period.
(d) Delivery of Blank Bankers' Acceptances. As a condition precedent to
each Banks' obligation to accept and purchase Bankers' Acceptances hereunder,
the Company shall have delivered to such Bank through the Paying Agent at the
Payment Office sufficient bankers' acceptances endorsed in blank in sufficient
time for such Bank to forward to and hold the same for issuance in accordance
with a request from the Company. Each Bank is hereby authorized to issue such
bankers' acceptances endorsed in blank in such face amounts as may be determined
by such Bank; provided that the aggregate amount thereof is equal to the
aggregate amount of Bankers' Acceptances required to be accepted and purchased
by such Bank hereunder. No Bank shall be liable for any damage, loss or other
claim arising by reason of any loss or improper use of any bankers' acceptance
endorsed in blank except any loss arising by reason of the negligence or wilful
misconduct of such Bank or its officers, employees, agents or representatives.
The Paying Agent shall maintain a record with respect to bankers' acceptances
endorsed in blank that are received from the Company and that are delivered to a
Bank hereunder. Each Bank shall maintain a record with respect to bankers'
acceptances endorsed in blank that are:
(1) received by such Bank from the Paying Agent hereunder;
(2) voided by such Bank for any reason;
33
(3) accepted and purchased by such Bank hereunder; and
(4) cancelled by such Bank at the maturity thereof.
Each Bank agrees to provide such record to the Paying Agent upon request
therefor by the Paying Agent as well as concurrently with any request by such
Bank to the Paying Agent for any additional bankers' acceptances endorsed in
blank required from the Company. The Paying Agent shall provide a report of such
records received by the Paying Agent to the Company upon request from the
Company.
(e) Failure to Give Notice of Repayment. If the Company fails to give
notice to the Paying Agent at the Payment Office of the method of repayment of a
Bankers' Acceptance prior to the date of maturity of such Bankers' Acceptance in
accordance with the same period of notice required for the original acceptance
of such Bankers' Acceptance as set forth herein, the face amount of such
Bankers' Acceptance shall, on its maturity, automatically be converted to a
Canadian Prime Rate Loan.
(f) Execution of Bankers' Acceptances. Bankers' acceptances of the
Company which are endorsed in blank and are to be accepted as Bankers'
Acceptances hereunder shall be signed by a duly authorized signatory or duly
authorized signatories of the Company, and may, at the option of the Company, be
signed by way of affixing a reproduction of the signature or signatures of such
duly authorized signatory or signatories. Notwithstanding that any person whose
signature appears on any Bankers' Acceptance as a signatory may no longer be an
authorized signatory of the Company at the date of issuance of a Bankers'
Acceptance, and notwithstanding that the signature affixed may be a reproduction
only, such signature shall nevertheless be valid and sufficient for all purposes
as if such authority had remained in force at the time of such issuance and as
if such signature had been manually applied, and any such Bankers' Acceptance so
signed shall be binding on the Company.
3.5 Paying Agent's Duties Re Bankers' Acceptances.
(a) Advice to the Lenders. The Paying Agent, promptly following receipt
of a Request for Extension of Credit by way of Bankers' Acceptance, shall so
advise the Banks and shall advise each Bank of the amount of each issue of
Bankers' Acceptances to be accepted and purchased by it and the term thereof,
which term shall be identical for all Banks.
(b) Agent's Confirmation of Bankers' Acceptance Issuance. At or prior
to 11:00 a.m. (Toronto, Ontario time) on the date on which the Bankers'
Acceptances are to be accepted and purchased hereunder, the Paying Agent shall
provide telephone advice to the Company and each Bank confirming the particulars
with respect to the issuance, acceptance and purchase of such
34
Bankers' Acceptances. Such advice shall be confirmed in writing at or prior to
4:30 p.m. (Toronto, Ontario time) on such date by delivery to the Company and
each Bank of a written confirmation of such telephone advice with respect to the
issuance, acceptance and purchase of such Bankers' Acceptances. Each Bank will
forthwith advise the Paying Agent of the particulars of the Bankers' Acceptances
accepted and purchased by it.
(c) Completion of Bankers' Acceptance. Upon receipt of the telephone
advice referred to in Section 3.5(a), each Bank is thereupon authorized to
complete bankers' acceptances held by it in blank in accordance with the
particulars so advised by the Paying Agent.
(d) Paying Agent's Discretion on Allocation. In the event it is not
practicable to allocate Bankers' Acceptances to each Lender in accordance with
Section 5.2 such that the aggregate amount of Bankers' Acceptances required to
be accepted and purchased by such Bank hereunder is in a whole multiple of
Canadian $100,000, the Paying Agent is authorized by the Company and each Bank
to make such allocation as the Paying Agent determines in its sole and
unfettered discretion may be equitable in the circumstances.
3.6 Certain Provisions Relating to Bankers' Acceptances Forms.
(a) The Company shall hold and use prudently the bankers' acceptance
forms delivered to it in blank from time to time and shall return them from time
to time to the Paying Agent for onward conveyance to the respective Banks,
properly pre-signed and pre-endorsed and in sufficient quantities to be dealt
with by each Bank in conformity with this Agreement. The Paying Agent shall
provide to the Company written acknowledgment of the receipt of such pre-signed
and pre-endorsed bankers' acceptance forms.
(b) The Paying Agent and each Bank shall deal prudently with any
bankers' acceptance forms pre-signed and pre-endorsed by the Company and
delivered from time to time by the Company and shall use them only in accordance
with the instructions of the Company given to the Paying Agent, in conformity
with this Agreement.
(c) In accordance with the instructions given from time to time by the
Company, each Bank is hereby authorized to complete the aforementioned bankers'
acceptance forms, to provide its acceptance thereon and, at such Bank's option,
to put them into circulation, the whole as provided in and subject to this
Agreement.
(d) Neither the Paying Agent nor any Bank shall be responsible or
liable for any failure to make credit available by way of Bankers' Acceptances
under the terms of the Credit Agreement if such failure is due to the failure of
the Company to return duly pre-signed and pre-endorsed bankers' acceptance forms
to the Paying Agent on a timely basis.
35
(e) On request by the Paying Agent on behalf of the Banks, the Company
shall return to the Paying Agent all bankers' acceptance forms then held by the
Company, provided that all such bankers' acceptance forms which have been
pre-signed or pre-endorsed by the Company may be cancelled prior to their return
and on request by the Company made to the Paying Agent, a Bank shall cancel all
pre-signed or pre-endorsed bankers' acceptance forms held by such Bank and not
yet issued in accordance with the Company's instructions and shall confirm such
cancellation to the Paying Agent who shall in turn inform the Company.
Section 4. Payments of Principal and Interest.
4.1 Repayment of Loans and Reimbursement Obligations. The Company will
pay to the Paying Agent for the account of each Bank (a) the principal of each
Loan made by such Bank on the dates provided in the respective Notes and as
provided hereunder, (b) the face amount of each Bankers' Acceptance on its
maturity date and (c) the amount of each Reimbursement Obligation promptly upon
its occurrence. The face amount of any Bankers' Acceptance or the amount of any
Reimbursement Obligation may, if the applicable conditions precedent specified
in Section 7 hereof have been satisfied, be paid with the proceeds of Loans.
Repayments of Loans or Reimbursement Obligations denominated in Canadian Dollars
and repayments of Bankers' Acceptances shall be made in Canadian Dollars and
repayments of Loans or Reimbursement Obligations denominated in U.S. Dollars
shall be made in U.S. Dollars.
4.2 Interest.
(a) Subject to Section 13.6 hereof, the Company will pay to the Paying
Agent for the account of each Bank interest on the unpaid principal amount of
each Loan made by such Bank for the period commencing on the date of such Loan
to but excluding the date such Loan shall be paid in full, in the currency in
which the Loan is denominated, at the lesser of (I) the following rates per
annum:
(i) if such Loan is an Alternate Base Rate Loan, the Alternate Base
Rate plus the Applicable Margin, and
(ii) if such Loan is a Canadian Prime Rate Loan, the Canadian Prime
Rate plus the Applicable Margin, and
(iii) if such Loan is a Eurodollar Loan, the applicable Eurodollar
Rate plus the Applicable Margin, or (II) the Highest Lawful Rate.
36
(b) Notwithstanding any of the foregoing but subject to Section 13.6
hereof, the Company will pay to the Paying Agent for the account of each Bank
interest in the applicable currency at the applicable Post-Default Rate on any
principal of any Loan made by such Bank, on any Reimbursement Obligation and on
any other amount payable by the Company hereunder to or for the account of such
Bank (but, if such amount is interest, only to the extent legally allowed),
which shall not be paid in full when due (whether at stated maturity, by
acceleration or otherwise), for the period commencing on the due date thereof
until the same is paid in full.
(c) Accrued interest on each Loan shall be payable on the last day of
each Interest Period for such Loan (and, if such Interest Period exceeds three
months' duration, quarterly, commencing on the first quarterly anniversary of
the first day of such Interest Period), except that (i) accrued interest payable
at the Post-Default Rate shall be due and payable from time to time on demand of
the Administrative Agent or the Majority Banks (through the Administrative
Agent) and (ii) accrued interest on any amount prepaid or converted pursuant to
Section 6 hereof shall be paid on the amount so prepaid or converted.
4.3 Acceptance Fees. The Company shall pay to each Bank acceptance fees
in Canadian Dollars forthwith upon the acceptance by such Bank of each Bankers'
Acceptance issued by the Company at a rate per annum equal to the B/A Stamping
Rate in effect at the time of the acceptance of such Bankers' Acceptance,
calculated on the face amount of such Bankers' Acceptance and on the basis of
the number of days in the term of such Bankers' Acceptance divided by three
hundred sixty-five (365). Acceptance fees payable to the Banks pursuant to this
Section 4.3 shall be paid in the manner specified in Section 3.4(a).
Section 5. Payments; Pro Rata Treatment; Computations, Etc.
5.1 Payments.
(a) Except to the extent otherwise provided herein, all payments of
principal, interest, the full face amount of Bankers' Acceptances, Reimbursement
Obligations and other amounts to be made by the Company hereunder and under the
Notes and the other Loan Documents shall be made in U.S. Dollars or Canadian
Dollars, as the case may be, in immediately available funds, to the Paying Agent
at the Payment Office (or in the case of a successor Paying Agent, at the
payment office designated by such successor Paying Agent in Canada), not later
than 11:00 a.m. Toronto, Ontario time on the date on which such payment shall
become due (each such payment made after such time on such due date to be deemed
to have been made on the next succeeding Business Day).
(b) The Company shall, at the time of making each payment hereunder or
under any Note or any other Loan Document, specify to the Paying Agent the
Loans, the Bankers'
37
Acceptances or other amounts payable by the Company hereunder or thereunder to
which such payment is to be applied. Each payment received by the Paying Agent
hereunder or under any Note, Bankers' Acceptance or any other Loan Document for
the account of a Bank shall be paid promptly to such Bank, in immediately
available funds for the account of such Bank's Applicable Lending Office.
(c) If the due date of any payment hereunder or under any Note or any
other Loan Document falls on a day which is not a Business Day, the due date for
such payment (subject to the definition of Interest Period) shall be extended to
the next succeeding Business Day and interest shall be payable for any principal
so extended for the period of such extension.
5.2 Pro Rata Treatment. Except to the extent otherwise provided herein:
(a) each borrowing from the Banks under Section 2.1 hereof shall be made ratably
from the Banks on the basis of their respective Commitments and each payment of
commitment fees shall be made for the account of the Banks, and each termination
or reduction of the Commitments of the Banks under Section 2.3 hereof shall be
applied, pro rata, according to the Banks' respective Commitments; (b) each
payment by the Company of the full face amount of Bankers' Acceptances and
principal of or interest on Loans of a particular Type shall be made to the
Paying Agent for the account of the Banks pro rata in accordance with the
respective full face amount of such Bankers' Acceptances or the unpaid principal
amounts of such Loans held by the Banks; and (c) the Banks (other than the
applicable Issuer) shall purchase from the applicable Issuer participations in
the Letters of Credit to the extent of their respective Commitment Percentages.
5.3 Computations. Subject to Section 13.7, interest based on the
Eurodollar Base Rate or the Federal Funds Rate will be computed on the basis of
a year of 360 days and actual days elapsed (including the first day but
excluding the last day) occurring in the period for which payable, unless the
effect of so computing shall be to cause the rate of interest to exceed the
Highest Lawful Rate, in which case interest shall be calculated on the basis of
the actual number of days elapsed in a year composed of 365 or 366 days, as the
case may be. All other interest and fees shall be computed on the basis of a
year of 365 (or 366) days and actual days elapsed (including the first day but
excluding the last day) occurring in the period for which payable.
5.4 Minimum and Maximum Amounts. Except for prepayments made pursuant
to Section 3.2(b) hereof, each borrowing and repayment of principal of Loans,
each acceptance, purchase and repayment of Bankers' Acceptances and each
termination or reduction of Commitments, each optional prepayment and each
conversion of Type shall be in an aggregate principal amount at least equal to
(a) in the case of Eurodollar Loans, U.S. $5,000,000,(b) in the case of Bankers'
Acceptances, Canadian $5,000,000, (c) in the case of Canadian Prime Rate Loans,
Canadian $1,000,000, and (d) in the case of Alternate Base Rate Loans, U.S.
$1,000,000 (borrowings or prepayments of Loans of different Types or, in the
case of Eurodollar Loans,
38
having different Interest Periods at the same time hereunder to be deemed
separate borrowings and prepayments for purposes of the foregoing, one for each
Type or Interest Period). Upon any mandatory prepayment that would reduce
Eurodollar Loans having the same Interest Period to less than U.S. $5,000,000
such Loans shall automatically be converted into Alternate Base Rate Loans on
the last day of the applicable Interest Period. Notwithstanding anything to the
contrary contained in this Agreement, there shall not be, at any one time, more
than eight (8) Interest Periods in effect with respect to Eurodollar Loans.
5.5 Certain Actions, Notices, Etc. Notices to the Administrative Agent
and the Paying Agent of any termination or reduction of Commitments, of
borrowings and prepayments, of issuance, acceptance and purchase of Bankers'
Acceptances, of conversions and continuations of Loans and Bankers' Acceptances,
of the term of Bankers' Acceptances and of the duration of Interest Periods
shall be irrevocable and shall be effective only if received by the
Administrative Agent and the Paying Agent not later than 11:00 a.m. Toronto,
Ontario time on the number of Business Days prior to the date of the relevant
termination, reduction, borrowing and/or repayment, conversion or continuance
specified below:
Number of
Business
Notice Days Prior
Termination or
Reduction of Commitments 2
Borrowing or prepayment
of or conversion into or
continuance of
Alternate Base Rate
Loans or Canadian same day
Prime Rate Loans
which are equal to or less
than (in the aggregate with
respect to all Loans
requested on a given day)
U.S. $20,000,000
Borrowing or prepayment
of or conversion into or
continuance of
Alternate Base Rate 1
Loans or Canadian
Prime Rate Loans
which exceed
(in the aggregate with
respect to all Loans
requested on a given day)
U.S. $20,000,000
Issuance of Bankers' Acceptances 2
Borrowing or
prepayment of or conversion
into or continuance of 3
Eurodollar Loans
39
Each such notice of termination or reduction shall specify the amount of the
Commitments to be terminated or reduced. Each such notice of borrowing or
prepayment shall specify the amount of Bankers' Acceptances to be accepted and
purchased or prepaid and the Type of the Loans to be borrowed or prepaid
(subject to Sections 3.2(a) and 5.4 hereof), the date of borrowing, acceptance
and purchase or prepayment (which shall be a Business Day) and, in the case of
Eurodollar Loans, the duration of the Interest Period therefor (subject to the
definition of "Interest Period") and, in the case of Bankers' Acceptances, the
term and maturity date therefor (subject to Section 3.4(c)). Each such notice of
conversion of a Bankers' Acceptance into a Loan or conversion of a Loan into a
Loan of another Type or a Bankers' Acceptance shall identify such Bankers'
Acceptance or Loan (or portion thereof) being converted and specify the Type of
Loan into which such Bankers' Acceptance or Loan is being converted (subject to
Section 5.4 hereof) and the date for conversion (which shall be a Business Day)
and, unless such Bankers' Acceptance or Loan is being converted into an
Alternate Base Rate Loan or a Canadian Prime Rate Loan, the duration (subject to
the definition of "Interest Period") of the Interest Period therefor which is to
commence as of the last day of the then current Interest Period therefor (or the
date of conversion, if such Loan is being converted from an Alternate Base Rate
Loan or a Canadian Prime Rate Loan). In the case of any such notice for a
Bankers' Acceptance, the term and maturity date of such Bankers' Acceptance
shall also be specified. Each such notice of continuation of a Loan (or portion
thereof) as the same Type of Loan shall identify such Loan (or portion thereof)
being continued (subject to Section 5.4
40
hereof) and, unless such Loan is an Alternate Base Rate Loan or a Canadian Prime
Rate Loan, the duration (subject to the definition of "Interest Period") of the
Interest Period therefor which is to commence as of the last day of the then
current Interest Period therefor. The Paying Agent shall promptly notify the
affected Banks of the contents of each such notice. Notice of any prepayment
having been given, the principal amount specified in such notice, together with
interest thereon to the date of prepayment, shall be due and payable on such
prepayment date.
5.6 Non-Receipt of Funds by the Paying Agent. Unless the Paying Agent
shall have been notified by a Bank or the Company (the "Payor") prior to the
date on which such Bank is to make payment to the Paying Agent of the Canadian
Bankers' Acceptance Discount Proceeds in respect of a Bankers' Acceptance to be
purchased by it or the proceeds of a Loan to be made by it hereunder (or the
payment of any amount by such Bank to reimburse the applicable Issuer for a
drawing under any Letter of Credit) or the Company is to make a payment to the
Paying Agent for the account of one or more of the Banks, as the case may be
(such payment being herein called the "Required Payment"), which notice shall be
effective upon receipt, that the Payor does not intend to make the Required
Payment to the Paying Agent, the Paying Agent may assume that the Required
Payment has been made and may, in reliance upon such assumption (but shall not
be required to), make the amount thereof available to the intended recipient on
such date and, if the Payor has not in fact made the Required Payment to the
Paying Agent on or before such date, the recipient of such payment (or, if such
recipient is the beneficiary of a Letter of Credit, the Company and, if the
Company fails to pay the amount thereof to the Paying Agent forthwith upon
demand, the Banks ratably in proportion to their respective Commitment
Percentages) shall, on demand, pay to the Paying Agent the amount made available
to it together with interest thereon in respect of the period commencing on the
date such amount was so made available by the Paying Agent until the date the
Paying Agent recovers such amount at a per annum rate of interest determined by
the Paying Agent (such rate to be conclusive and binding on the Banks) in
accordance with the Paying Agent's usual banking practice for similar advances
to financial institutions of like standing to the applicable Bank.
5.7 Sharing of Payments, Etc. If a Bank shall obtain payment of the
full face amount of an outstanding Bankers' Acceptance accepted and purchased by
it under this Agreement or of any principal of or interest on any Loan made by
it under this Agreement, or on any Reimbursement Obligation or other obligation
then due to such Bank hereunder, through the exercise of any right of set-off,
banker's lien, counterclaim or similar right, or otherwise, it shall promptly
purchase from the other Banks participations in the Loans made, the outstanding
Bankers' Acceptances or Reimbursement Obligations or other obligations held, by
the other Banks in such amounts, and make such other adjustments from time to
time as shall be equitable to the end that all the Banks shall share the benefit
of such payment (net of any expenses which may be incurred by such Bank in
obtaining or preserving such benefit) pro rata in accordance with the unpaid
principal and interest on the Obligations then due to each of them. To such end
all the
41
Banks shall make appropriate adjustments among themselves (by the resale of
participations sold or otherwise) if such payment is rescinded or must otherwise
be restored. The Company agrees, to the fullest extent it may effectively do so
under applicable law, that any Bank so purchasing a participation in the Loans
made, the outstanding Bankers' Acceptances or Reimbursement Obligations or other
obligations held, by other Banks may exercise all rights of set-off, bankers'
lien, counterclaim or similar rights with respect to such participation as fully
as if such Bank were a direct holder of Loans, Bankers' Acceptances and
Reimbursement Obligations or other obligations in the amount of such
participation. Nothing contained herein shall require any Bank to exercise any
such right or shall affect the right of any Bank to exercise, and retain the
benefits of exercising, any such right with respect to any other Indebtedness or
obligation of the Company.
Section 6. Yield Protection and Illegality.
6.1 Additional Costs.
(a) Subject to Section 13.6, the Company shall pay to the Paying Agent,
on demand for the account of each Bank from time to time such amounts as such
Bank may determine to be necessary to compensate it for any costs incurred by
such Bank which such Bank determines are attributable to its making or
maintaining of any Eurodollar Loan or any Bankers' Acceptance hereunder or its
obligation to make any such Loan hereunder, or any reduction in any amount
receivable by such Bank hereunder in respect of any of such Loans or such
obligation (such increases in costs and reductions in amounts receivable being
herein called "Additional Costs"), in each case resulting from any Regulatory
Change which:
(i) subjects such Bank (or makes it apparent that such Bank is
subject) to any tax, levy, impost, duty, charge or fee (collectively, "Taxes"),
or any deduction or withholding for any Taxes on or from the payment due in
respect of any Bankers' Acceptance or under any Eurodollar Loan or other amounts
due hereunder, other than income and franchise taxes of each jurisdiction (or
any subdivision thereof) in which such Bank has an office or its Applicable
Lending Office; or
(ii) changes the basis of taxation of any amounts payable to
such Bank under this Agreement or its Notes in respect of any of such Loans or
in respect of Bankers' Acceptances (other than changes which affect taxes
measured by or imposed on the overall net income or franchise taxes of such Bank
or of its Applicable Lending Office for any of such Loans by each jurisdiction
(or any subdivision thereof) in which such Bank has an office or such Applicable
Lending Office); or
(iii) imposes or modifies or increases or deems applicable any
reserve, special deposit or similar requirements (including, without limitation,
any such requirement imposed by
42
the Office of the Superintendent of Financial Institutions Canada) relating to
any extensions of credit or other assets of, or any deposits with or other
liabilities of, such Bank or loans made by such Bank, or Bankers' Acceptances
accepted by such Bank or against any other funds, obligations or other property
owned or held by such Bank (including any of such Loans or, where applicable,
any deposits referred to in the definition of "Eurodollar Base Rate" in Section
1.1 hereof or any Bankers' Acceptances) and such Bank actually incurs such
additional costs.
Each Bank (if so requested by the Company through the Administrative Agent) will
designate a different available Applicable Lending Office for the Eurodollar
Loans or the Bankers' Acceptances of such Bank or take such other action as the
Company may request if such designation or action will avoid the need for, or
reduce the amount of, such compensation and will not, in the sole opinion of
such Bank exercised in good faith, be disadvantageous to such Bank (provided
that such Bank shall have no obligation so to designate an Applicable Lending
Office for Eurodollar Loans located in the United States of America or to
designate an Applicable Lending Office for Bankers' Acceptances located in any
jurisdiction that is not located in Canada). Each Bank will furnish the Company
with a statement setting forth the basis and amount of each request by such Bank
for compensation under this Section 6.1(a); subject to Section 6.8, such
certificate shall be conclusive, absent manifest error, and may be prepared
using any reasonable averaging and attribution methods.
(b) Without limiting the effect of the foregoing provisions of this
Section 6.1, in the event that, by reason of any Regulatory Change, any Bank
either (i) incurs Additional Costs based on or measured by the excess above a
specified level of the amount of a category of deposits or other liabilities of
such Bank which includes deposits by reference to which the interest rate on
Eurodollar Loans is determined as provided in this Agreement or a category of
extensions of credit or other assets of such Bank which includes Eurodollar
Loans or Bankers' Acceptances or (ii) becomes subject to restrictions on the
amount of such a category of liabilities or assets which it may hold, then, if
such Bank so elects by notice to the Company (with a copy to the Administrative
Agent and the Paying Agent), the obligation of such Bank to make Eurodollar
Loans or accept and purchase Bankers' Acceptances, as applicable, hereunder
shall be suspended until the date such Regulatory Change ceases to be in effect
(in which case the provisions of Section 6.4 hereof shall be applicable).
(c) Good faith determinations and allocations by any Bank for purposes
of this Section 6.1 of the effect of any Regulatory Change on its costs of
maintaining its obligations to make Loans or accept and purchase Bankers'
Acceptances or of making or maintaining Loans or accepting and purchasing
Bankers' Acceptances on amounts receivable by it in respect of Loans or Bankers'
Acceptances, and of the additional amounts required to compensate such Bank in
respect of any Additional Costs, shall be conclusive, absent manifest error.
43
(d) The Company's obligation to pay Additional Costs and compensation
with regard to each Eurodollar Loan and each Bankers' Acceptance shall survive
termination of this Agreement.
6.2 Limitations. Anything herein to the contrary notwithstanding, if,
with respect to any Eurodollar Loans or Bankers' Acceptance:
(a) the Paying Agent determines in good faith (which determination
shall be conclusive) that quotations of interest rates for the relevant deposits
referred to in the definition of "Eurodollar Base Rate" in Section 1.1 hereof
are not being provided by the Reference Banks in the relevant amounts or for the
relevant maturities for purposes of determining the rate of interest for such
Loans for Interest Periods therefor as provided in this Agreement; or
(b) the Paying Agent determines in good faith (which determination
shall be conclusive) that quotations of discount rates for the purchase of
Canadian Dollar bankers' acceptances referred to in the definition of "Canadian
Bankers' Acceptance Discount Rate" in Section 1.1 hereof are not available in
the relevant amounts or for the relevant maturities for purposes of determining
the Canadian Bankers' Acceptance Discount Rate therefor as provided in this
Agreement; or
(c) the Majority Banks determine in good faith (which determination
shall be conclusive) and notify the Paying Agent (with a copy to the
Administrative Agent) that the relevant rates of interest referred to in the
definition of "Eurodollar Base Rate" in Section 1.1 hereof upon the basis of
which the rates of interest for such Loans (where applicable) are to be
determined do not accurately reflect the cost to such Banks of making or
maintaining such Loans for Interest Periods therefor; or
(d) the Paying Agent determines in good faith (which determination
shall be conclusive) that by reason of circumstances affecting the interbank
U.S. Dollar market generally, deposits in United States dollars in the relevant
interbank U.S. Dollar market are not being offered for the applicable Interest
Period and in an amount equal to the amount of the Eurodollar Loan requested by
the Company; then the Paying Agent shall promptly notify the Company and each
Bank thereof, and, so long as such condition remains in effect, the Banks shall
be under no obligation to make Eurodollar Loans or accept and purchase Bankers'
Acceptances, as the case may be (but shall maintain until the end of the
Interest Period then in effect the Eurodollar Loans and until the specified
maturity date of the Bankers' Acceptances, as the case may be, then
outstanding).
44
6.3 Illegality. Notwithstanding any other provision of this Agreement
to the contrary, if (x) by reason of the adoption of any applicable Legal
Requirement or any change in any applicable Legal Requirement or in the
interpretation or administration thereof by any Governmental Authority or
compliance by any Bank with any request or directive (whether or not having the
force of law) of any central bank or other Governmental Authority or (y) with
respect to Eurodollar Loans, circumstances affecting the relevant interbank U.S.
Dollar market or the position of a Bank therein or (z) with respect to Bankers'
Acceptances, circumstances affecting the market for Canadian Dollar bankers'
acceptance or the position of a Bank therein shall at any time make it unlawful
or impracticable in the sole discretion of a Bank exercised in good faith for
such Bank or its Applicable Lending Office to (a) honour its obligation to make
Eurodollar Loans or accept and purchase Bankers' Acceptances, as the case may
be, hereunder, or (b) maintain Eurodollar Loans or Bankers' Acceptances, as the
case may be, hereunder, then such Bank shall promptly notify the Company thereof
through the Paying Agent and such Bank's obligation to make or maintain
Eurodollar Loans or accept and purchase Bankers' Acceptances, as the case may
be, hereunder shall be suspended until such time as such Bank may again make and
maintain Eurodollar Loans or accept and purchase Bankers' Acceptances, as the
case may be (in which case the provisions of Section 6.4 hereof shall be
applicable). Before giving such notice pursuant to this Section 6.3 with respect
to Eurodollar Loans only, such Bank will designate a different available
Applicable Lending Office for the Eurodollar Loans of such Bank or take such
other action as the Company may request if such designation or action will avoid
the need to suspend such Bank's obligation to make Eurodollar Loans hereunder
and will not, in the sole opinion of such Bank exercised in good faith, be
disadvantageous to such Bank (provided, that such Bank may not designate an
Applicable Lending Office that is not located in Canada).
6.4 Substitute Alternate Base Rate Loans or Canadian Prime Rate Loans.
If the obligation of any Bank to make or maintain Eurodollar Loans shall be
suspended pursuant to Section 6.1, 6.2 or 6.3 hereof, all Loans which would
otherwise be made by such Bank as Eurodollar Loans shall be made instead as
Alternate Base Rate Loans (and, if an event referred to in Section 6.1(b) or 6.3
hereof has occurred and such Bank so requests by notice to the Company with a
copy to the Paying Agent, each Eurodollar Loan of such Bank then outstanding
shall be automatically converted into an Alternate Base Rate Loan on the date
specified by such Bank in such notice) and, to the extent that Eurodollar Loans
are so made as (or converted into) Alternate Base Rate Loans, all payments of
principal which would otherwise be applied to such Eurodollar Loans shall be
applied instead to such Alternate Base Rate Loans. If the obligation of any Bank
to accept and purchase Bankers' Acceptances shall be suspended pursuant to
Section 6.1, 6.2 or 6.3 hereof, all advances which would otherwise be made by
such Bank by way of acceptance and purchase of Bankers' Acceptances shall be
made instead as Canadian Prime Rate Loans (and, if an event referred to in
Section 6.1(b) or 6.3 hereof has occurred and such Bank so requests by notice to
the Company with a copy to the Paying Agent, the face amount of each
45
Bankers' Acceptance of such Bank then outstanding shall be automatically
converted into a Canadian Prime Rate Loan on the date specified by such Bank in
such notice).
6.5 Compensation. Subject to Section 13.6 hereof, the Company shall pay
to the Paying Agent for the account of each Bank, within four (4) Business Days
after demand therefor by such Bank through the Administrative Agent, such amount
or amounts as shall be sufficient (in the reasonable opinion of such Bank) to
compensate it for any loss, cost or expense actually incurred by it (exclusive
of any lost profits or opportunity costs) as a result of:
(a) any payment, prepayment or conversion of a Eurodollar Loan made by
such Bank or a Bankers' Acceptance accepted by such Bank on a date other than
the last day of an Interest Period for such Eurodollar Loan or the specified
maturity date for such Bankers' Acceptance, as the case may be; or
(b) any failure by the Company to borrow a Eurodollar Loan to be made
by such Bank or to issue a Bankers' Acceptance to be accepted and purchased by
such Bank on the date for such borrowing or such issuance specified in the
relevant notice under Section 5.5 hereof or to convert a Eurodollar Loan into a
Bankers' Acceptance after giving notice of such conversion;
such compensation to include, without limitation, any loss or expense incurred
by reason of the liquidation or reemployment of deposits or other funds acquired
by the applicable Bank to fund or maintain its share of any Loan or to fund the
acceptance and purchase of any Bankers' Acceptance. Compensation due pursuant to
this Section with respect to Bankers' Acceptances shall be calculated using the
Canadian Bankers' Acceptance Discount Rate for bankers' acceptances maturing on
(or as close as reasonably possible) to the maturity date of the Bankers'
Acceptances with respect to which such compensation arises (versus the actual
Canadian Bankers' Acceptance Discount Rate for such Bankers' Acceptances).
Subject to Section 6.8, each determination of the amount of such compensation by
a Bank shall be conclusive and binding, absent manifest error, and may be
computed using any reasonable averaging and attribution method.
6.6 Additional Costs in Respect of Letters of Credit. If as a result of
any Regulatory Change there shall be imposed, modified or deemed applicable any
tax, reserve, special deposit or similar requirement against or with respect to
or measured by reference to Letters of Credit issued or to be issued hereunder
or participations in such Letters of Credit, and the result shall be to increase
the cost to any Bank of issuing or maintaining any Letter of Credit or any
participation therein, or reduce any amount receivable by any Bank hereunder in
respect of any Letter of Credit or any participation therein (which increase in
cost, or reduction in amount receivable, shall be the result of such Bank's
reasonable allocation of the aggregate of such increases or reductions resulting
from such event), then such Bank shall notify the Company through the
Administrative
46
Agent, and upon demand therefor by such Bank through the Administrative Agent,
the Company (subject to Section 13.6 hereof) shall pay to such Bank, from time
to time as specified by such Bank, such additional amounts as shall be
sufficient to compensate such Bank for such increased costs or reductions in
amount. Before making such demand pursuant to this Section 6.6, such Bank will
designate a different available Applicable Lending Office for the Letter of
Credit of such Bank or take such other action as the Company may request, if
such designation or action will avoid the need for, or reduce the amount of,
such compensation and will not, in the sole opinion of such Bank exercised in
good faith, be disadvantageous to such Bank. A statement as to such increased
costs or reductions in amount incurred by such Bank, submitted by such Bank to
the Company, shall be conclusive as to the amount thereof, absent manifest
error.
6.7 Capital Adequacy. If any Bank shall have determined that a
Regulatory Change resulting in the adoption after the date hereof or
effectiveness after the date hereof (whether or not previously announced) of any
applicable law, rule, regulation or treaty regarding capital adequacy, or any
change therein after the date hereof, or any change in the interpretation or
administration thereof after the date hereof by any Governmental Authority
charged with the interpretation or administration thereof, or compliance by any
Bank (or its Applicable Lending Office) with any request or directive after the
date hereof regarding capital adequacy (whether or not having the force of law)
of any such Governmental Authority has or would have the effect of reducing the
rate of return on such Bank's capital as a consequence of such Bank's
obligations hereunder, under the Loans made by it, under the Bankers'
Acceptances accepted and purchased by it, under the Letters of Credit and under
the Notes held by it to a level below that which such Bank could have achieved
but for such adoption, change or compliance (taking into consideration such
Bank's policies with respect to capital adequacy) by an amount deemed by such
Bank to be material, then from time to time, upon satisfaction of the conditions
precedent set forth in this Section 6.7, upon demand by such Bank (with a copy
to the Administrative Agent and the Paying Agent), the Company (subject to
Section 13.6 hereof) shall pay to such Bank such additional amount or amounts as
will compensate such Bank for such reduction. A certificate as to such amounts,
submitted to the Company and the Administrative Agent and the Paying Agent by
such Bank, setting forth the basis for such Bank's determination of such
amounts, shall constitute a demand therefor and shall be conclusive and binding
for all purposes, absent manifest error. The Company shall pay the amount shown
as due on any such certificate within four (4) Business Days after delivery of
such certificate. Subject to Section 6.8, in preparing such certificate, a Bank
may employ such assumptions and allocations of costs and expenses as it shall in
good faith deem reasonable and may use any reasonable averaging and attribution
method.
6.8 Limitation on Additional Charges; Substitute Banks;
Non-Discrimination. Anything in this Section 6 notwithstanding:
47
(a) the Company shall not be required to pay to any Bank reimbursement
with regard to any costs or expenses, unless such Bank notifies the Company of
such costs or expenses within 90 days after the date paid or incurred;
(b) none of the Banks shall be permitted to pass through to the Company
charges and costs under this Section 6 on a discriminatory basis (i.e., which
are not also passed through by such Bank to other customers of such Bank
similarly situated where such customer is subject to documents providing for
such pass through); and
(c) if any Bank elects to pass through to the Company any material
charge or cost under this Section 6 or elects to terminate the availability of
Eurodollar Loans or Bankers' Acceptances for any material period of time, the
Company may, within 60 days after the date of such event and so long as no
Default shall have occurred and be continuing, elect to terminate such Bank as a
party to this Agreement; provided that, concurrently with such termination the
Company shall (i) if the Administrative Agent and each of the other Banks shall
consent, pay that Bank all principal, interest and fees and other amounts owed
to such Bank through such date of termination or (ii) have arranged for another
financial institution approved by the Administrative Agent (such approval not to
be unreasonably withheld) as of such date, to become a substitute Bank for all
purposes under this Agreement in the manner provided in Section 13.5; provided
further that, prior to substitution for any Bank, the Company shall have given
written notice to the Administrative Agent and the Paying Agent of such
intention and the Banks shall have the option, but no obligation, for a period
of 60 days after receipt of such notice, to increase their Commitments in order
to replace the affected Bank in lieu of such substitution.
Section 7. Conditions Precedent.
7.1 Initial Loans and Acceptance and Purchase of Bankers' Acceptances.
The obligation of each Bank or any applicable Issuer to make its initial Loans
after the date hereof or to accept and purchase the initial Bankers' Acceptance
after the date hereof or issue or participate in a Letter of Credit after the
date hereof (whichever shall first occur) hereunder is subject to the following
conditions precedent, each of which shall have been fulfilled or waived to the
satisfaction of the Majority Banks:
(a) Corporate Action and Status. The Administrative Agent shall have
received from the appropriate Governmental Authorities certified copies of the
Organizational Documents (other than bylaws) of the Parent and each of its
Subsidiaries, and evidence satisfactory to the Administrative Agent of all
corporate action taken by the Parent or any of its Subsidiaries authorizing the
execution, delivery and performance of the Loan Documents and all other
documents related to this Agreement to which it is a party (including, without
limitation, a certificate of the secretary of each such party setting forth the
resolutions of its Board of Directors
48
authorizing the transactions contemplated thereby and attaching a copy of its
bylaws), together with such certificates as may be appropriate to demonstrate
the qualification and good standing of and payment of taxes by the Parent and
each of its Subsidiaries in each state or province in which such qualification
is necessary.
(b) Incumbency. The Parent and each Relevant Party shall have delivered
to the Administrative Agent a certificate in respect of the name and signature
of each of the officers (i) who is authorized to sign on its behalf the
applicable Loan Documents related to any Loan or the issuance of any Letter of
Credit and (ii) who will, until replaced by another officer or officers duly
authorized for that purpose, act as its representative for the purposes of
signing documents and giving notices and other communications in connection with
any Loan or the issuance of any Letter of Credit. The Agents and each Bank may
conclusively rely on such certificates until they receive notice in writing from
the Parent or the appropriate Relevant Party to the contrary.
(c) Notes. The Administrative Agent shall have received the
appropriate Notes of the Company for each Bank, duly completed and executed.
(d) Loan Documents. The Company and each other Relevant Party shall
have duly executed and delivered the other Loan Documents to which it is a party
(in such number of copies as the Administrative Agent shall have requested) and
each such Loan Document shall be in form satisfactory to Administrative Agent.
Each such Loan Document shall be in substantially the form furnished to the
Banks prior to their execution of this Agreement, together with such changes
therein as the Administrative Agent may approve.
(e) Fees and Expenses. The Company shall have paid to the Paying Agent
for the account of each Bank all accrued and unpaid commitment fees and other
fees in the amounts previously agreed upon in writing among the Company and the
respective Agents; and shall have in addition paid to the Paying Agent all
amounts payable under Section 9.7 hereof, on or before the date of this
Agreement.
(f) Opinions of Counsel. The Administrative Agent shall have received
(1) an opinion of Vinson & Elkins L.L.P., counsel to the Parent and its
Subsidiaries, in form and substance reasonably satisfactory to the
Administrative Agent and (2) an opinion of Bennett Jones Verchere, Canadian
counsel to the Parent and its Subsidiaries, in form and substance reasonably
satisfactory to the Administrative Agent.
(g) Execution by Banks. The Administrative Agent shall have received
counterparts of this Agreement executed and delivered by or on behalf of each of
the Banks or the Administrative Agent shall have received evidence satisfactory
to it of the execution and delivery by each of the Banks of a counterpart
hereof.
49
(h) Consents. The Administrative Agent shall have received evidence
satisfactory to it that, except as disclosed in the Disclosure Statement, all
material consents of each Governmental Authority and of each other Person, if
any, reasonably required in connection with (a) the Loans, the Bankers'
Acceptances and the Letters of Credit and (b) the execution, delivery and
performance of this Agreement and the other Loan Documents have been
satisfactorily obtained.
(i) Amendment to Intercreditor Agreement. The Administrative Agent
shall have received counterparts of the Second Amendment to Intercreditor
Agreement referred to in the definition of "Intercreditor Agreement" in Section
1.1 hereof executed and delivered by or on behalf of each of the Company and by
the "Agent" under the U.S. Facility or the Administrative Agent shall have
received evidence satisfactory to it of the execution and delivery by each such
Person of a counterpart of such Second Amendment to Intercreditor Agreement.
(j) U.S. Facility. The Administrative Agent shall have received
counterparts of the Credit Agreement referred to in the definition of "U.S.
Facility" in Section 1.1 hereof executed and delivered by or on behalf of each
of Parent, The Chase Manhattan Bank, as Agent, and certain banks parties thereto
or Administrative Agent shall have received evidence satisfactory to it of the
execution and delivery by each such Person of a counterpart of such Credit
Agreement.
(k) Other Documents. The Administrative Agent shall have received such
other documents consistent with the terms of this Agreement and relating to the
transactions contemplated hereby as the Administrative Agent may reasonably
request.
All provisions and payments required by this Section 7.1 are subject to
the provisions of Section 13.6.
7.2 Initial and Subsequent Loans. The obligation of each Bank or any
applicable Issuer to make any Loan (including, without limitation, its initial
Loan) to be made by it hereunder or to accept and purchase Bankers' Acceptances
or to issue or participate in any Letter of Credit is subject to the additional
conditions precedent that (i) the Administrative Agent and the Paying Agent
shall have received a Request for Extension of Credit and such other
certifications as the Administrative Agent may reasonably require and (ii) as of
the date of such Loan or such acceptance and purchase or such issuance, and
after giving effect thereto:
(a) no Default shall have occurred and be continuing;
(b) except for facts timely disclosed to the Administrative Agent from
time to time in writing, which facts (i) are not materially more adverse to the
Parent and its Subsidiaries, (ii) do not materially decrease the ability of the
Banks to collect the Obligations as and when due and payable and (iii) do not
materially increase the liability of any of the Agent or any of the Banks,
50
in each case compared to those facts existing on the date hereof and the
material details of which have been set forth in the Financial Statements
delivered to the Administrative Agent prior to the date hereof or in the
Disclosure Statement, and except for the representations set forth in the Loan
Documents which, by their terms, are expressly (or by means of similar phrasing)
made as of the date hereof only, the representations and warranties made in each
Loan Document shall be true and correct in all material respects on and as of
the date of the making of such Loan or such acceptance and purchase or such
issuance, with the same force and effect as if made on and as of such date;
(c) the making of such Loan or the acceptance and purchase of such
Bankers' Acceptance or the issuance of such Letter of Credit shall not violate
any Legal Requirement applicable to any Bank.
Each Request for Extension of Credit by the Company hereunder or
request for issuance of a Letter of Credit shall include a representation and
warranty by the Company to the effect set forth in Subsections 7.2(a) and (b)
(both as of the date of such notice and, unless the Company otherwise notifies
the Administrative Agent prior to the date of such borrowing or issuance, as of
the date of such borrowing or issuance).
Section 8. Representations and Warranties. To induce the Banks to enter
into this Agreement and to make the Loans, accept and purchase Bankers'
Acceptances and issue or participate in the Letters of Credit, the Company (or,
where applicable, the Parent) represents and warrants (such representations and
warranties to survive any investigation and the making of the Loans, the
acceptance and purchase Bankers' Acceptances and the issuance of the Letters of
Credit) to the Banks and the Agents as follows:
8.1 Corporate Existence. The Parent and each Subsidiary of the Parent
are corporations duly incorporated and organized, legally existing and in good
standing under the laws of the respective jurisdictions in which they are
incorporated, and are duly qualified as foreign corporations in all
jurisdictions wherein the property owned or the business transacted by them
makes such qualification necessary and the failure to so qualify could
reasonably be expected to result in a Material Adverse Effect.
8.2 Corporate Power and Authorization. Each of the Company and the
other Relevant Parties is duly authorized and empowered to execute, deliver, and
perform the Loan Documents to which it is a party; and all corporate action on
the part of the Company and the other Relevant Parties requisite for the due
creation and issuance of the Notes and for the due execution, delivery, and
performance of this Agreement and the other Loan Documents to which each of the
Company and the other Relevant Parties is a party has been duly and effectively
taken.
51
8.3 Binding Obligations. This Agreement, the Notes and the other Loan
Documents constitute legal, valid and binding obligations of the Company and the
other Relevant Parties, to the extent each is a party thereto, enforceable
against the Company and the other Relevant Parties, to the extent each is a
party thereto, in accordance with their respective terms, except as may be
limited by (i) any applicable bankruptcy, insolvency, fraudulent transfer,
winding up, arrangement, liquidation, reorganization, moratorium or other
similar laws affecting creditors' rights generally, (ii) equitable limitations
on the availability of remedies, (iii) the statutory power of a court to grant
relief from forfeiture, (iv) applicable laws regarding limitations of actions,
(v) general principles of equity which may apply to any proceeding in equity or
at law, and (vi) the powers of a court to stay proceedings before it and to stay
the execution of judgments.
8.4 No Legal Bar or Resultant Lien. The Company's and each of the other
Relevant Parties' creation, issuance, execution, delivery and performance of
this Agreement, the Notes and the other Loan Documents, to the extent they are
parties thereto, do not and will not violate any provisions of the
Organizational Documents of the Company or any other Relevant Party or any
Subsidiary of the Parent, or any Legal Requirement to which the Company or any
other Relevant Party or any Subsidiary of the Parent is subject or by which its
property may be presently bound or encumbered, or result in the creation or
imposition of any Lien upon any properties of the Company or any other Relevant
Party or any Subsidiary of the Parent, other than those permitted by this
Agreement.
8.5 No Consent. Except as set forth in the Disclosure Statement, the
Company's creation and issuance of the Notes and the Company's and each of the
other Relevant Parties' execution, delivery, and performance of this Agreement,
the Notes and the other Loan Documents to which they are parties do not and will
not require the consent or approval of any Person other than such consents
and/or approvals obtained contemporaneously with or prior to the execution of
this Agreement, including, without limitation, any Governmental Authorities,
other than those consents the failure to obtain which could not be reasonably
expected to have a Material Adverse Effect.
8.6 Financial Condition. The audited consolidated annual financial
statements of the Parent and its Subsidiaries for the year ended December 31,
1996 and the unaudited consolidated interim financial statements of the Parent
and its Subsidiaries for the quarter and three-month period ended March 31,
1997, which have been delivered to the Banks, have been prepared in accordance
with GAAP, and present fairly the financial condition and results of the
operations of the Parent and its Subsidiaries for the period or periods stated
(subject only to normal year-end audit adjustments with respect to the unaudited
interim statements). No material adverse change, either in any case or in the
aggregate, has occurred since March 31, 1997 in the assets, liabilities,
financial condition, business, operations, affairs or circumstances of the
Parent and its Subsidiaries taken as a whole, except as disclosed to the Banks
in the Disclosure Statement. Each Engineering
52
Report and Parent Report fairly presents the values and prospective performances
of the property described therein and there are no statements or conclusions
therein which were based upon or included materially misleading information or
fail to take into account material information.
8.7 Investments and Guaranties. As of the date hereof, neither the
Parent nor any Subsidiary of the Parent had made Investments in, advances to, or
Guarantees of, the obligations of any Person, except as (a) disclosed to the
Banks in the Disclosure Statement or (b) not prohibited by applicable provisions
of Section 10.
8.8 Liabilities and Litigation. Neither the Parent nor any Subsidiary
of the Parent has any material (individually or in the aggregate) liabilities,
direct or contingent, except as (a) disclosed or referred to in the Financial
Statements, (b) disclosed to the Banks in the Disclosure Statement, (c)
disclosed in a notice to the Administrative Agent pursuant to Section 9.11 with
respect to such as could reasonably be expected to have a Material Adverse
Effect or (d) not prohibited by applicable provisions of Section 10. Except as
(a) described in the Financial Statements, (b) otherwise disclosed to the Banks
in the Disclosure Statement, (c) disclosed in a notice to the Administrative
Agent pursuant to Section 9.11 with respect to such as could reasonably be
expected to have a Material Adverse Effect or (d) not prohibited by applicable
provisions of Section 10, no litigation, legal, administrative or arbitral
proceeding, investigation, or other action of any nature exists or (to the
knowledge of the Parent or the Company) is threatened against or affecting the
Parent or any Subsidiary of the Parent which could reasonably be expected to
result in any judgment which could reasonably be expected to have a Material
Adverse Effect, or which in any manner challenges or may challenge or draw into
question the validity of this Agreement, the Notes or any other Loan Document,
or enjoins or threatens to enjoin or otherwise restrain any of the transactions
contemplated by any of them.
8.9 Taxes and Governmental Charges. The Parent and its Subsidiaries
have filed, or obtained extensions with respect to the filing of, all material
tax returns and reports required to be filed and have paid all material taxes,
assessments, fees and other governmental charges levied upon any of them or upon
any of their respective properties or income which are due and payable,
including interest and penalties, or have provided adequate reserves for the
payment thereof.
8.10 Title to Properties. The Parent and its Subsidiaries have good and
defensible title to their respective properties included in the Borrowing Base
(including, without limitation, all fee and leasehold interests), free and clear
of all Liens except (a) those referred to in the Financial Statements, (b) as
disclosed to the Banks in the Disclosure Statement or (c) as permitted by
Section 10.2.
8.11 Defaults. Neither the Parent nor any Subsidiary of the Parent is
in default, which default could reasonably be expected to have a Material
Adverse Effect, under any indenture,
53
mortgage, deed of trust, agreement or other instrument to which the Parent or
any Subsidiary of the Parent is a party or by which the Parent or any Subsidiary
of the Parent or the property of the Parent or any Subsidiary of the Parent is
bound, except as (a) disclosed to the Banks in the Disclosure Statement, (b)
disclosed in a notice to the Administrative Agent pursuant to Section 9.11 with
respect to such as could reasonably be expected to have a Material Adverse
Effect or (c) specifically permitted by applicable provisions of Section 10. No
Default under this Agreement, the Notes or any other Loan Document has occurred
and is continuing.
8.12 Location of Businesses and Offices. Except to the extent that the
Administrative Agent has been furnished written notice to the contrary or of
additional locations, pursuant to Section 9.11, the Company's principal place of
business and chief executive offices are located at the address stated on the
signature page hereof and the principal places of business and chief executive
offices of each Subsidiary of the Parent are described on Exhibit D hereto. The
Parent's principal place of business and chief executive office is at 1001
Fannin, Suite 1700, Houston, Texas 77002.
8.13 Compliance with Law. Neither the Parent nor any Subsidiary of the
Parent (except as (a) disclosed to the Banks in the Disclosure Statement, (b)
disclosed in a notice to the Administrative Agent pursuant to Section 9.11 with
respect to such as could reasonably be expected to have a Material Adverse
Effect or (c) not prohibited by applicable provisions of Section 10):
(a) is in violation of any Legal Requirement; or
(b) has failed to obtain any license, permit, franchise or other
governmental authorization necessary to the ownership of any of their respective
properties or the conduct of their respective business; which violation or
failure could reasonably be expected to have a Material Adverse Effect.
8.14 Margin Stock. None of the proceeds of the Loans will be used for
the purpose of, and neither the Parent nor any Subsidiary of the Parent is
engaged in the business of extending credit for the purpose of (a) purchasing or
carrying any "margin stock" as defined in Regulation U of the Board of Governors
of the Federal Reserve System (12 C.F.R. Part 221) or (b) reducing or retiring
any indebtedness which was originally incurred to purchase or carry margin
stock, if such purpose under either (a) or (b) above would constitute this
transaction a "purpose credit" within the meaning of said Regulation U, or for
any other purpose which would constitute this transaction a "purpose credit".
Neither the Parent nor any Subsidiary of the Parent is engaged principally, or
as one of its important activities, in the business of extending credit for the
purpose of purchasing or carrying margin stocks. Neither the Parent nor any
Subsidiary of the Parent nor
54
any Person acting on behalf of the Parent or any Subsidiary of the Parent has
taken or will take any action which might cause the Notes or any of the Loan
Documents, including this Agreement, to violate Regulation U or any other
regulation of the Board of Governors of the Federal Reserve System, or to
violate any similar provision of the Securities Exchange Act of 1934 or any rule
or regulation under any such provision thereof.
8.15 Subsidiaries. The Parent has no Subsidiaries as of the date of
this Agreement except those shown in Exhibit D hereto.
8.16 ERISA. With respect to each Plan, the Parent and each ERISA
Affiliate have fulfilled their obligations, including obligations under the
minimum funding standards of ERISA and the Code, and are in compliance in all
material respects with the provisions of ERISA and the Code. The Parent has no
knowledge of any event which could result in a liability of the Parent or any
ERISA Affiliate to the PBGC or a Plan (other than to make contributions in the
ordinary course). Since the effective date of Title IV of ERISA, there have not
been any nor are there now existing any events or conditions that would cause
the Lien provided under Section 4068 of ERISA to attach to any property of the
Parent or any ERISA Affiliate. There are no Unfunded Liabilities with respect to
any Plan other than those specifically described in the certificate delivered in
accordance with Section 7.1(i). No "prohibited transaction" has occurred with
respect to any Plan.
8.17 Investment Company Act. Neither the Parent nor any of its
Subsidiaries is an investment company within the meaning of the Investment
Company Act of 1940, as amended, or, directly or indirectly, controlled by or
acting on behalf of any Person which is an investment company, within the
meaning of said Act.
8.18 Public Utility Holding Company Act. Neither the Parent nor any of
its Subsidiaries (i) is subject to regulation under the Public Utility Holding
Company Act of 1935, as amended (the "PUHC Act"), except as to Section 9(a)(2)
thereof (15 U.S.C.A. ss.79(i)(a)(2)), or (ii) is in violation of any of the
provisions, rules, regulations or orders of or under the PUHC Act. Further, none
of the transactions contemplated under this Agreement, including without
limitation, the making of the Loans, the issuance of the Letters of Credit and
the creation of any Liens pursuant to the Loan Documents, shall cause or
constitute a violation of any of the provisions, rules, regulations or orders of
or under the PUHC Act and the PUHC Act does not in any manner impair the
legality, validity or enforceability of the Notes or any Liens created pursuant
to the Loan Documents. The Parent has duly filed with the Securities and
Exchange Commission good faith applications (each an "Application") under
Section 2(a)(8) of the PUHC Act (15 U.S.C.A. ss.79(b)(a)(8)) for a declaration
of non-subsidiary status pursuant to such Section 2(a)(8) with respect to each
Person (each a "Specified Shareholder") which owns, controls or holds with power
to vote, directly or indirectly, a sufficient quantity of the voting securities
of the Parent to be construed as a "holding company", as such term is defined in
the PUHC Act, in respect of the
55
Parent. All of the information contained in such Applications, as amended, was
true as of the most recent filing date with respect thereto (provided that the
Parent may, unless it has actual current knowledge to the contrary, rely solely
upon written information furnished by any Specified Shareholder with respect to
background information about the Specified Shareholder and the nature of the
ownership by such Specified Shareholder or its Affiliates of the voting
securities of the Parent), and the Parent knows of no reason why each such
Application, if acted upon by the Securities and Exchange Commission, would not
be approved. True and correct copies of each such Application and any amendments
thereto, as filed, have been furnished to the Administrative Agent. The Parent
has not received any written notice from the Securities and Exchange Commission
with respect to any such Application other than as disclosed in writing to the
Administrative Agent.
8.19 Environmental Matters. Except as disclosed in the Disclosure
Statement, (i) the Parent and it Subsidiaries have obtained and maintained in
effect all Environmental Permits (or has initiated the necessary steps to
transfer the Environmental Permits into its name), the failure to obtain which
could reasonably be expected to have a Material Adverse Effect, (ii) the Parent
and its Subsidiaries and their properties, assets, business and operations have
been and are in compliance with all applicable Requirements of Environmental Law
and Environmental Permits failure to comply with which could reasonably be
expected to have a Material Adverse Effect, (iii) the Parent and its
Subsidiaries and their properties, assets, business and operations are not
subject to any (A) Environmental Claims or (B) Environmental Liabilities, in
either case direct or contingent, and whether known or unknown, arising from or
based upon any act, omission, event, condition or circumstance occurring or
existing on or prior to the date hereof which could reasonably be expected to
have a Material Adverse Effect, and (iv) no Responsible Officer of the Parent or
any of its Subsidiaries has received any notice of any violation or alleged
violation of any Requirements of Environmental Law or Environmental Permit or
any Environmental Claim in connection with its assets, properties, business or
operations which could reasonably be expected to have a Material Adverse Effect.
The liability (including without limitation any Environmental Liability and any
other damage to persons or property), if any, of the Parent and its Subsidiaries
and with respect to their properties, assets, business and operations which is
reasonably expected to arise in connection with Requirements of Environmental
Laws currently in effect and other environmental matters presently known by a
Responsible Officer of the Parent will not have a Material Adverse Effect. No
Responsible Officer of the Parent knows of any event or condition with respect
to Environmental Matters with respect to any of its properties or the properties
of any of its Subsidiaries which could reasonably be expected to have a Material
Adverse Effect. For purposes of this Section 8.19, "Environmental Matters" shall
mean matters relating to pollution or protection of the environment, including,
without limitation, emissions, discharges, releases or threatened releases of
Hazardous Substances into the environment (including, without limitation,
ambient air, surface water or ground water, or land surface or sub surface), or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous Substances.
8.20 Claims and Liabilities. Except as disclosed to the Banks in
writing, neither the Parent nor any of its Subsidiaries has accrued any
liabilities under gas purchase contracts for gas not taken, but for which it is
liable to pay if not made up and which, if not paid, would have a Material
Adverse Effect. Except as disclosed to the Banks in writing, no claims exist
against the Parent or its Subsidiaries for gas imbalances which claims if
adversely determined would have a Material Adverse Effect. No purchaser of
product supplied by the Parent or any of its Subsidiaries has any claim against
the Parent or any of its Subsidiaries for product paid for, but for which
delivery was not taken as and when paid for, which claim if adversely determined
would have a Material Adverse Effect.
8.21 Solvency. Neither the Parent nor the Parent and its Subsidiaries,
on a consolidated basis, is "insolvent", as such term is used (and, where
applicable, defined) in (i) the Bankruptcy Code and (ii) the Companies'
Creditors Arrangement Act (Canada).
Section 9. Affirmative Covenants. A deviation from the provisions of
this Section 9 will not constitute a Default under this Agreement if such
deviation is consented to in writing by the Majority Banks. Without the prior
written consent of the Majority Banks, the Company (or, where applicable, the
Parent) agrees with the Banks and the Agents that, so long as any of the
Commitments is in effect and until payment in full of all Loans hereunder, the
repayment in full of the full face amount of all outstanding Bankers'
Acceptances, the termination or expiry of all Letters of Credit and payment in
full of Letter of Credit Liabilities, all interest thereon and all other amounts
payable by the Company hereunder:
9.1 Financial Statements and Reports. The Parent will promptly furnish
to any Bank from time to time upon request such information regarding the
business and affairs and financial condition of the Parent and its Subsidiaries
as such Bank may reasonably request, and will furnish to the Administrative
Agent and each of the Banks:
(a) Annual Reports - promptly after becoming available and in any event
within 100 days after the close of each fiscal year of the Parent:
(i) the audited consolidated balance sheet of the Parent and its
Subsidiaries as of the end of such year;
(ii) the audited consolidated statement of earnings of the Parent and
its Subsidiaries for such year;
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(iii) the audited consolidated statement of cash flows of the Parent
and its Subsidiaries for such year;
(iv) the unaudited consolidated balance sheet, statement of earnings
and statement of cash flows and unaudited consolidating balance sheet and
statement of earnings of the Company and its Subsidiaries, each for such year or
as of the end of such year, as the case may be;
(v) a report prepared by a petroleum engineer, who may be an employee
of the Parent or its Subsidiaries, setting forth the historical monthly
production data for Hydrocarbons produced and sold by the Parent and its
Subsidiaries for such year; setting forth in each case in comparative form the
corresponding figures for the preceding fiscal year, and, in the case of the
audited Financial Statements, audited and accompanied by the related opinion of
KPMG Peat Marwick or other independent certified public accountants of
recognized national standing acceptable to the Majority Banks, which opinion
shall state that such audited balance sheets and statements have been prepared
in accordance with GAAP consistently followed throughout the period indicated
and fairly present the consolidated financial condition and results of
operations of the applicable Persons as at the end of, and for, such fiscal
year; and
(b) Quarterly Reports - as soon as available and in any event within 50
days after the end of each of the first three quarterly periods in each fiscal
year of the Parent:
(i) the unaudited consolidated balance sheet of the Parent and its
Subsidiaries as of the end of such quarter;
(ii) the unaudited consolidated statement of earnings of the Parent
and its Subsidiaries for such quarter and for the period from the beginning of
the fiscal year to the close of such quarter;
(iii) the unaudited consolidated statement of cash flows of the Parent
and its Subsidiaries for such quarter and for the period from the beginning of
the fiscal year to the close of such quarter;
(iv) the unaudited consolidated balance sheet, statement of earnings
and statement of cash flows and unaudited consolidating balance sheet and
statement of earnings of the Company and its Subsidiaries, each for such quarter
and for the period from the beginning of the fiscal year to the close of such
quarter;
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(v) a report prepared by a petroleum engineer, who may be an employee
of the Parent or its Subsidiaries, setting forth the historical monthly
production data for Hydrocarbons produced and sold by the Parent and its
Subsidiaries for such quarter; all of items (i) through (iv) above prepared on
substantially the same accounting basis as the annual reports described in
Subsection 9.1(a), subject to normal changes resulting from year-end
adjustments; and
(c) Parent Report - promptly after becoming available and in any event
on or before September 1 of each year, a Parent Report; and
(d) Other Bank Requirements - at such time as the same are required to
be furnished to other lenders under other financing arrangements to which the
Parent or any of its Subsidiaries may be a party or be bound from time to time,
a copy of any report, certificate, affidavit or other information required to be
furnished to any such lender; and
(e) SEC and Other Reports - promptly upon their becoming publicly
available, one copy of each financial statement, report, notice or definitive
proxy statement sent by the Parent or any of its Subsidiaries to shareholders
generally, and of each regular or periodic report and any registration
statement, prospectus or written communication (other than transmittal letters)
in respect thereof filed by the Parent or any of its Subsidiaries with, or
received by the Parent or any of its Subsidiaries in connection therewith from,
any securities exchange or the Securities and Exchange Commission or any
successor agency; and
(f) Engineering Report - promptly after becoming available and in any
event on or before March 15 of each year, commencing with March 15, 1998, an
Engineering Report.
All of the balance sheets and other financial statements referred to in
this Section 9.1 will be in such detail as any Bank may reasonably request and
will conform to GAAP applied on a basis consistent with those of the Financial
Statements as of December 31, 1996. In addition, if GAAP shall change with
respect to any matter relative to determination of compliance with this
Agreement, the Parent will also provide financial information necessary for the
Banks to determine compliance with this Agreement.
9.2 Officers' Certificates.
(a) Concurrently with the furnishing of the annual financial
statements pursuant to Subsection 9.1(a), commencing with the annual financial
statements required to be delivered in
58
1998, the Parent will furnish or cause to be furnished to the Administrative
Agent certificates of compliance, as follows:
(i) a certificate signed by the principal financial officer of the
Parent and the principal financial officer of the Company in the form of Exhibit
E; and
(ii) a certificate from the independent public accountants stating
that their audit has not disclosed the existence of any condition which
constitutes a Default, or if their audit has disclosed the existence of any such
condition, specifying the nature and period of existence.
(b) Concurrently with the furnishing of the quarterly financial
statements pursuant to Subsection 9.1(b), the Parent will furnish to the
Administrative Agent a certificate signed by the principal financial officer of
the Parent and the principal financial officer of the Company in the form of
Exhibit E.
(c) Concurrently with the delivery of any Borrowing Base Certificate
under the U.S. Facility, the Parent will furnish to the Administrative Agent and
the Paying Agent a true, correct and complete copy thereof.
(d) Concurrently with the furnishing of any Engineering Report or
Parent Report, the Company will furnish to the Administrative Agent a
certificate signed by an appropriate officer of the Parent and any other
applicable Relevant Party in the form of Exhibit G.
9.3 Taxes and Other Liens. The Parent will and will cause each
Subsidiary of the Parent to pay and discharge promptly all taxes, assessments
and governmental charges or levies imposed upon the Parent or such Subsidiary,
or upon the income or any property of the Parent or such Subsidiary, as well as
all claims of any kind (including claims for labor, materials, supplies, rent
and payment of proceeds attributable to Hydrocarbon production) which, if
unpaid, might result in or become a Lien upon any or all of the property of the
Parent or such Subsidiary; provided, however, that neither the Parent nor such
Subsidiary will be required to pay any such tax, assessment, charge, levy or
claims if the amount, applicability or validity thereof will currently be
contested in good faith by appropriate proceedings diligently conducted and if
the Parent or such Subsidiary will have set up reserves therefor adequate under
GAAP.
9.4 Maintenance. Except as referred to in Sections 8.1 and 8.13 and
except as permitted under Section 10.5, the Parent will and will cause each
Subsidiary of the Parent to: (i) maintain its corporate existence; (ii) maintain
its rights and franchises, except for any mergers or consolidations otherwise
permitted by this Agreement and except to the extent failure to so maintain the
same would not have a Material Adverse Effect; (iii) observe and comply (to the
59
extent that any failure would have a Material Adverse Effect) with all valid
Legal Requirements (including without limitation Requirements of Environmental
Law); and (iv) maintain (except to the extent failure to so maintain the same
would not have a Material Adverse Effect) its properties (and any properties
leased by or consigned to it or held under title retention or conditional sales
contracts) consistent with the standards of a reasonably prudent operator at all
times and make all repairs, replacements, additions, betterments and
improvements to its properties consistent with the standards of a reasonably
prudent operator.
9.5 Further Assurances. The Parent will and will cause each Subsidiary
of the Parent to cure promptly any defects in the creation and issuance of the
Notes and the execution and delivery of the Loan Documents, including this
Agreement. The Parent at its expense will promptly execute and deliver to the
Administrative Agent upon request all such other and further documents,
agreements and instruments (or cause any of its Subsidiaries to take such
action) in compliance with or accomplishment of the covenants and agreements of
the Parent or any of its Subsidiaries in the Loan Documents, including this
Agreement, or to correct any omissions in the Loan Documents, or to make any
recordings, to file any notices, or obtain any consents, all as may be necessary
or appropriate in connection therewith.
9.6 Performance of Obligations. The Company will pay the Notes
according to the reading, tenor and effect thereof; and the Company will do and
perform every act and discharge all of the obligations provided to be performed
and discharged by the Company under this Agreement and the other Loan Documents
at the time or times and in the manner specified, and cause each of its
Subsidiaries to take such action with respect to their obligations to be
performed and discharged under the Loan Documents to which they respectively are
parties.
9.7 Reimbursement of Expenses. Whether or not any Loan is ever made or
any Letter of Credit is ever issued, the Company agrees to pay or reimburse the
Administrative Agent for paying the reasonable fees and expenses of Liddell,
Sapp, Zivley, Hill & LaBoon, L.L.P., special counsel to the Administrative
Agent, together with the reasonable fees and expenses of local counsel engaged
by the Administrative Agent, in connection with the negotiation of the terms and
structure of the Obligations, the preparation, execution and delivery of this
Agreement and the other Loan Documents and the making of the Loans and the
issuance of Letters of Credit hereunder, as well as any modification, supplement
or waiver of any of the terms of this Agreement and the other Loan Documents.
The Company will promptly upon request and in any event within 30 days from the
date of receipt by the Company of a copy of a bill for such amounts, reimburse
any Bank or any Agent for all amounts reasonably expended, advanced or incurred
by such Bank or such Agent to satisfy any obligation of the Company or any other
Relevant Party under this Agreement or any other Loan Document, to protect the
properties or business of the Parent or any Subsidiary of the Parent, to collect
the Obligations, or to enforce the rights of such Bank or such Agent under this
Agreement or any other Loan Document, which amounts will
60
include without limitation all court costs, attorneys' fees (but not including
allocated costs of in-house counsel), any engineering fees and expenses, fees of
auditors, accountants and appraisers, investigation expenses, all transfer,
stamp, documentary or similar taxes, assessments or charges levied by any
governmental or revenue authority in respect of any of the Loan Documents or any
other document referred to therein, all costs, expenses, taxes, assessments and
other charges incurred in connection with any filing, registration, recording or
perfection of any Lien contemplated by any of the Loan Documents or any document
referred to therein, fees and expenses incurred in connection with such Bank's
participation as a member of a creditors' committee in a case commenced under
the Bankruptcy Code or other similar law of the United States or any state
thereof or of Canada or any province thereof, fees and expenses incurred in
connection with lifting the automatic stay prescribed in ss.362 Title 11 of the
United States Code or in connection with any similar proceeding under the laws
of Canada or any province thereof, and fees and expenses incurred in connection
with any action pursuant to ss.1129 Title 11 of the United States Code or in
connection with any similar proceeding under the laws of Canada or any province
thereof, and all other customary out-of-pocket expenses incurred by such Bank or
such Agent in connection with such matters, together with interest after the
expiration of the 30-day period stated above in this Section if no Event of
Default has occurred and is continuing, or from the date of the request to the
Company if an Event of Default has occurred and is continuing, at either (i) the
Post-Default Rate on each such amount until the date of reimbursement to such
Bank or such Agent, or (ii) if no Event of Default will have occurred and be
continuing, the Alternate Base Rate plus the highest Applicable Margin for
Alternate Base Rate Loans (not to exceed the Highest Lawful Rate) on each such
amount until the date of the Company's receipt of written demand or request by
such Bank or such Agent for the reimbursement of same, and thereafter at the
applicable Post-Default Rate until the date of reimbursement to such Bank or
such Agent. The obligations of the Company under this Section are compensatory
in nature, shall be deemed liquidated as to amount upon receipt by the Company
of a copy of any invoice therefor, and will survive the non-assumption of this
Agreement in a case commenced under the Bankruptcy Code or other similar law of
the United States or any state thereof or of Canada or any province thereof, and
will remain binding on the Company and any trustee, receiver, or liquidator of
the Company appointed in any such case.
9.8 Insurance. The Parent and its Subsidiaries will maintain, with
financially sound and reputable insurers, insurance with respect to their
respective properties and business against such liabilities, casualties, risks
and contingencies and in such types and amounts as is customary in the case of
corporations engaged in the same or similar businesses and similarly situated.
Upon the request of the Administrative Agent acting at the instruction of the
Majority Banks, the Parent will furnish or cause to be furnished to the
Administrative Agent from time to time a summary of the insurance coverage of
the Parent and its Subsidiaries in form and substance satisfactory to the
Majority Banks in their reasonable judgment, and if requested will furnish the
Administrative Agent copies of the applicable policies. Subject to the terms of
Section 3 hereof, in the case of
61
any fire, accident or other casualty causing loss or damage to any properties of
the Parent or any of its Subsidiaries, the proceeds of such policies will be
used (i) to repair or replace the damaged property or (ii) to prepay the
Obligations, at the election of the Company.
9.9 Accounts and Records. The Parent will keep and will cause each
Subsidiary of the Parent to keep books of record and account which fairly
reflect all dealings or transactions in relation to their respective businesses
and activities, in accordance with GAAP, which books of record and account will
be maintained, to the extent necessary to enable compliance with all provisions
of this Agreement, separately for each such Subsidiary, the Parent and any
division of the Parent.
9.10 Rights of Inspection. The Parent will permit and will cause each
of its Subsidiaries to permit any officer, employee, or agent of any Agent or
any Bank to meet with the consultants who prepared any applicable Engineering
Report and to review such Engineering Report with such consultants and to visit
and inspect any of the properties of the Parent or such Subsidiary, examine the
Parent's or such Subsidiary's books of record and accounts, take copies and
extracts therefrom, and discuss the affairs, finances and accounts of the Bank
or such Subsidiary with the Parent's or such Subsidiary's officers, accountants
and auditors, all at such reasonable times during normal business hours and as
often as such Agent or such Bank may reasonably desire, and will assist in all
such matters.
9.11 Notice of Certain Events. The Parent will promptly notify the
Administrative Agent (and the Administrative Agent will then notify all of the
Banks) if a Responsible Officer of the Parent learns of the occurrence of, or if
the Parent causes or intends to cause, as the case may be:
(i) any event which constitutes a Default, together with a detailed
statement by a Responsible Officer of the Parent of the steps being taken to
cure the effect of such Default; or
(ii) the receipt of any notice from, or the taking of any other action
by, the holder of any promissory note, debenture or other evidence of
indebtedness of the Parent or any Subsidiary of the Parent or of any security
(as defined in the Securities Act of 1933, as amended) of the Parent or any
Subsidiary of the Parent with respect to a claimed default, together with a
detailed statement by a Responsible Officer of the Parent specifying the notice
given or other action taken by such holder and the nature of the claimed default
and what action the Parent or such Subsidiary is taking or proposes to take with
respect thereto; or
(iii) any legal, judicial or regulatory proceedings affecting the
Parent or any Subsidiary of the Parent or any of the properties of the Parent or
any Subsidiary of the Parent in which the amount involved is materially adverse
to the Parent and its Subsidiaries taken as a
62
whole, and is not covered by insurance or which, if adversely determined, would
have a Material Adverse Effect; or
(iv) any dispute between the Parent or any Subsidiary of the Parent
and any Governmental Authority or any other Person which, if adversely
determined, could reasonably be expected to have a Material Adverse Effect; or
(v) the occurrence of a default or event of default by the Parent or
any Subsidiary of the Parent under any other agreement to which it is a party,
which default or event of default could reasonably be expected to have a
Material Adverse Effect; or
(vi) any change in the accuracy of the representations and warranties
of the Parent or any Subsidiary contained in this Agreement or any other Loan
Document; or
(vii) any material violation or alleged material violation of any
Requirements of Environmental Law or Environmental Permit or any Environmental
Claim or any Environmental Liability; or
(viii) any tariff and rate cases and other material reports filed by
the Parent or any of its Subsidiaries with any Governmental Authority and any
notice to the Parent or any of its Subsidiaries from any Governmental Authority
concerning noncompliance with any applicable Legal Requirement; or
(ix) the existence of any Borrowing Base Deficiency; or
(x) within 10 days after the date on which a Responsible Officer of
the Parent has actual knowledge thereof, the receipt of any notice by the Parent
or any of its Subsidiaries of any claim of nonpayment of, or any attempt to
collect or enforce, accounts payable of the Parent or any of its Subsidiaries
exceeding, in the case of any one account payable at one time outstanding, U.S.
$1,000,000 and in the case of all accounts payable in the aggregate at any one
time outstanding, U.S. $3,000,000; or
(xi) any requirement for the payment of all or any portion of any
Indebtedness of the Parent or any of its Subsidiaries prior to the stated
maturity thereof (whether by acceleration or otherwise) or as the result of any
failure to maintain or the reaching of any threshold amount provided in any
promissory note, bond, debenture, or other evidence of Indebtedness or under any
credit agreement, loan agreement, indenture or similar agreement executed in
connection with any of the foregoing; or
63
(xii) any notice from the Securities and Exchange Commission with
respect to any Application (as defined in Section 8.18 hereof).
9.12 ERISA Information and Compliance. The Parent will promptly furnish
to the Administrative Agent (i) immediately upon receipt, a copy of any notice
of complete or partial withdrawal liability under Title IV of ERISA and any
notice from the PBGC under Title IV of ERISA of an intent to terminate or
appoint a trustee to administer any Plan, (ii) if requested by the
Administrative Agent, acting on the instruction of the Majority Banks, promptly
after the filing thereof with the United States Secretary of Labor or the PBGC
or the Internal Revenue Service, copies of each annual and other report with
respect to each Plan or any trust created thereunder, (iii) immediately upon
becoming aware of the occurrence of any "reportable event", as such term is
defined in Section 4043 of ERISA, for which the disclosure requirements of
Regulation Section 2615.3 promulgated by the PBGC have not been waived, or of
any "prohibited transaction", as such term is defined in Section 4975 of the
Code, in connection with any Plan or any trust created thereunder, a written
notice signed by the President or the principal financial officer of the Parent
or the applicable ERISA Affiliate specifying the nature thereof, what action the
Parent or the applicable ERISA Affiliate is taking or proposes to take with
respect thereto, and, when known, any action taken by the PBGC, the Internal
Revenue Service or the Department of Labor with respect thereto, (iv) promptly
after the filing or receiving thereof by the Parent or any ERISA Affiliate of
any notice of the institution of any proceedings or other actions which may
result in the termination of any Plan, and (v) each request for waiver of the
funding standards or extension of the amortization periods required by Sections
303 and 304 of ERISA or Section 412 of the Code promptly after the request is
submitted by the Parent or any ERISA Affiliate to the Secretary of the Treasury,
the Department of Labor or the Internal Revenue Service, as the case may be. To
the extent required under applicable statutory funding requirements, the Parent
will fund, or will cause each ERISA Affiliate to fund, all current service
pension liabilities as they are incurred under the provisions of all Plans from
time to time in effect, and comply with all applicable provisions of ERISA,
except to the extent that any such failure to comply could not reasonably be
expected to have a Material Adverse Effect. The Parent covenants that it shall
and shall cause each ERISA Affiliate to (1) make contributions to each Plan in a
timely manner and in an amount sufficient to comply with the contribution
obligations under such Plan and the minimum funding standards requirements of
ERISA; (2) prepare and file in a timely manner all notices and reports required
under the terms of ERISA including but not limited to annual reports; and (3)
pay in a timely manner all required PBGC premiums, in each case, to the extent
failure to do so would have a Material Adverse Effect.
Section 10. Negative Covenants. A deviation from the provisions of this
Section 10 will not constitute a Default under this Agreement if such deviation
is consented to in writing by the Majority Banks. The Company (or, where
applicable, the Parent) agrees with the Banks and the Agents that, so long as
any of the Commitments is in effect and until payment in full of all Loans
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hereunder, the payment in full of the full face amount of all outstanding
Bankers' Acceptances, the termination or expiry of all Letters of Credit and
payment in full of Letter of Credit Liabilities, all interest thereon and all
amounts payable by the Company hereunder:
10.1 Debts, Guarantees and Other Obligations. The Parent will not and
will not permit any of its Subsidiaries (other than APC) to incur, create,
assume or in any manner become or be liable in respect of any Indebtedness
(including obligations for the payment of rentals); and the Parent will not and
will not permit any of its Subsidiaries (other than APC) to Guarantee or
otherwise in any way become or be responsible for obligations of any other
Person, whether by agreement to purchase the Indebtedness of any other Person or
agreement for the furnishing of funds to any other Person through the purchase
or lease of goods, supplies or services (or by way of stock purchase, capital
contribution, advance or loan) for the purpose of paying or discharging the
Indebtedness of any other Person, or otherwise, except that the foregoing
restrictions will not apply to:
(a) the Notes, the Bankers' Acceptances or other Indebtedness under
the Loan Documents;
(b) liabilities, direct or contingent, of the Parent or any Subsidiary
of the Parent existing on the date of this Agreement which are reflected in the
Financial Statements or the Disclosure Statement and all renewals, extensions,
refinancings and rearrangements, but not increases, thereof;
(c) endorsements of negotiable or similar instruments for collection
or deposit in the ordinary course of business;
(d) trade payables, lease acquisition and lease maintenance
obligations, extensions of credit from suppliers or contractors, liabilities
incurred in exploration, development and operation of the Parent's or any of its
Subsidiaries' oil and gas properties or similar obligations from time to time
incurred in the ordinary course of business, other than for borrowed money,
which are paid within 90 days after the invoice date (inclusive of applicable
grace periods) or (i) are being contested in good faith, if such reserve as
required by GAAP has been made therefor or (ii) trade accounts payable of the
Parent and its Subsidiaries (with respect to which no legal proceeding to
enforce collection has been commenced or, to the knowledge of any Responsible
Officer of the Parent, threatened) not exceeding, in the aggregate at any time
outstanding, U.S. $25,000,000;
(e) taxes, assessments or other government charges which are not yet
due or are being contested in good faith by appropriate action promptly
initiated and diligently conducted, if such reserve as will be required by GAAP
will have been made therefor;
65
(f) Borrowing Base Debt of the Parent; provided that the aggregate of
all Indebtedness permitted under this Subsection 10.1(f) shall not exceed the
amount by which the then current Borrowing Base exceeds the then current
"Revolving Credit Obligations" under the U.S. Facility;
(g) to the extent, if any, not covered by Subsection (b) hereinabove,
the Indebtedness of the Parent to APC evidenced solely by the Intercompany
Notes, as defined in the Beluga Financing Documents and the APC Long Term
Financing Documents, together with any renewals, extensions, amendments,
refinancings, rearrangements, modifications, restatements or supplements, but
not increases (other than increases which are permitted under the present terms
of the Beluga Financing Documents and the APC Long Term Financing Documents)
thereof from time to time;
(h) intercompany Indebtedness owed to the Parent by any Subsidiary of
the Parent and intercompany Indebtedness owed to any Subsidiary of the Parent by
the Parent or any other Subsidiary of the Parent which is fully subordinated to
the Obligations;
(i) loans, advances or extensions of credit to the Parent for the
purpose of financing no more than 75% of the purchase price of any fixed assets
which are not included in the property taken into account in determining the
Borrowing Base and which are considered in the categories of property, plant or
equipment according to GAAP applied on a consistent basis;
(j) obligations of the Parent under the Gas Sales Contract, together
with any renewals, extensions, amendments, refinancings, rearrangements,
modifications, restatements or supplements, but not increases, thereof from time
to time;
(k) the Guarantee by the Parent or any Subsidiary of the Parent of
payment or performance by any Subsidiary of the Parent under any agreement so
long as the obligation guaranteed does not constitute Indebtedness for borrowed
money;
(l) obligations of the Parent and Wacker Oil Inc. pursuant to that
certain Agreement Regarding Contingent Payments For Well No. 3 and Well No. 9
dated as of June 18, 1990, by and among Costain Holdings Inc., Wacker Oil Inc.
and the Parent;
(m) obligations of the Parent or any of its Subsidiaries under gas
purchase contracts for gas not taken, as to which the Parent or its respective
Subsidiary is liable to pay if not made up;
(n) obligations of the Parent or any of its Subsidiaries under any
contract for sale for future delivery of oil or gas (whether or not the subject
oil or gas is to be delivered), hedging contract, forward contract, swap
agreement, futures contract or other similar agreement;
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(o) obligations of the Parent or any of its Subsidiaries under any
interest rate swap agreement, or any contract implementing any interest rate
cap, collar or floor, or any similar interest hedging contract;
(p) obligations in connection with gas imbalances arising in the
ordinary course of business;
(q) Indebtedness not exceeding U.S. $1,000,000 in the aggregate
borrowed from the Amarillo Economic Development Commission and related
Guarantees and related obligations of the Parent and its Subsidiaries;
(r) liabilities under leases and lease agreements which do not cover
oil and gas properties to the extent the incurrence and existence of such
liabilities will still enable the Parent and each Subsidiary to comply with all
other requirements of this Agreement and the other Loan Documents to which they
respectively are parties;
(s) Subordinated Debt;
(t) Indebtedness of any Oil and Gas Subsidiary for borrowed money
payable solely by recourse to properties not included in the Borrowing Base and
Indebtedness incurred by any Gas and Liquids Pipeline Subsidiary in connection
with the construction or acquisition of new assets in connection with the
Pipeline Operations (as defined in the U.S. Facility, without amendment except
as permitted under the Intercreditor Agreement) which is payable solely by
recourse to the assets so constructed or acquired, each to the extent not
otherwise expressly permitted by this Section 10.1;
(u) the note payable which is to be assumed by the Company in
connection with the consummation of the Novalta Contract and is to be fully paid
and satisfied out of the initial proceeds available under this Agreement from
the making of Loans or the acceptance and purchase of Bankers' Acceptances; and
(v) the U.S. Facility;
(w) Indebtedness of the Company having a maturity of 364 days or less
from the date of its incurrence in an aggregate principal amount not exceeding
Canadian $10,000,000 at any one time outstanding.
10.2 Liens. The Parent will not and will not permit any of its
Subsidiaries to create, incur, assume or permit to exist any Lien on any of its
or their properties (now owned or hereafter acquired), except:
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(a) Liens securing the Indebtedness described in Subsection 10.1(a) or
10.1(v);
(b) Liens for taxes, assessments or other governmental charges or
levies not yet due or which are being contested in good faith by appropriate
action promptly initiated and diligently conducted, if such reserve as will be
required by GAAP will have been made therefor;
(c) Liens of landlords, vendors, contractors, subcontractors,
carriers, warehousemen, mechanics, laborers or materialmen or other like Liens
arising by law in the ordinary course of business for sums not yet due or being
contested in good faith by appropriate action promptly initiated and diligently
conducted, if such reserve as will be required by GAAP will have been made
therefor;
(d) Liens existing on property owned by the Parent or any of its
Subsidiaries on the date of this Agreement which have been disclosed to the
Banks in the Disclosure Statement, together with any renewals, extensions,
amendments, refinancings, rearrangements, modifications, restatements or
supplements, but not increases, thereof from time to time;
(e) pledges or deposits made in the ordinary course of business in
connection with worker's compensation, unemployment insurance, social security
and other like laws;
(f) inchoate liens arising under ERISA to secure the contingent
liability of the Parent permitted by Section 9.12;
(g) Liens in the ordinary course of business, not to exceed in the
aggregate U.S. $10,000,000 as to the Parent and its Subsidiaries at any time in
effect, regarding (i) the performance of bids, tenders, contracts (other than
for the repayment of borrowed money or the deferred purchase price of property
or services) or leases, (ii) statutory obligations, (iii) surety appeal bonds or
(iv) Liens to secure progress or partial payments made to the Parent or any of
its Subsidiaries and other Liens of like nature;
(h) covenants, restrictions, easements, servitudes, permits,
conditions, exceptions, reservations, minor rights, minor encumbrances, minor
irregularities in title or conventional rights of reassignment prior to
abandonment which do not materially interfere with the occupation, use and
enjoyment by the Parent or any Subsidiary of the Parent of its respective assets
in the normal course of business as presently conducted, or materially impair
the value thereof for the purpose of such business;
(i) Liens of operators under joint operating agreements or similar
contractual arrangements with respect to the relevant entity's proportionate
share of the expense of exploration, development and operation of oil, gas and
mineral leasehold or fee interests owned
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jointly with others, to the extent that same relate to sums not yet due or which
are being contested in good faith by appropriate action promptly initiated and
diligently conducted, if such reserve as will be required by GAAP will have been
made therefor;
(j) Liens created pursuant to the creation of trusts or other
arrangements funded solely with cash, cash equivalents or other marketable
investments or securities of the type customarily subject to such arrangements
in customary financial practice with respect to long-term or medium-term
indebtedness for borrowed money, the sole purpose of which is to make provision
for the retirement or defeasance, without prepayment, of Indebtedness permitted
under Section 10.1;
(k) Liens on the assets or properties of ENSTAR Alaska;
(l) the Vendor Financing Arrangements (as defined in the Mesa
Contract), to the extent that the same shall have been deducted in calculating
the Borrowing Base;
(m) purchase money Liens for the acquisition of fixed assets pursuant
to Subsec tion 10.1(i), so long as such Liens exist solely against the relevant
fixed asset acquired and secure only the purchase money debt; provided, that the
aggregate amount of Indebtedness which is secured by Liens described in this
subsection (other than Indebtedness which is payable solely by recourse to the
applicable property) shall not exceed U.S. $10,000,000 at any one time
outstanding;
(n) any Lien existing on any real or personal property of any
corporation or partnership at the time it becomes a Subsidiary of the Parent or
of any other Subsidiary of the Parent, or existing prior to the time of
acquisition upon any real or personal property acquired by the Parent or any of
its Subsidiaries; provided, that such Liens may at all times be deducted in
calculating the Borrowing Base from time to time in effect;
(o) legal or equitable encumbrances deemed to exist by reason of the
existence of any litigation or other legal proceeding or arising out of a
judgment or award with respect to which an appeal is being prosecuted in good
faith by appropriate action promptly initiated and diligently conducted, if such
reserve as will be required by GAAP will have been made therefor;
(p) any Liens securing Indebtedness neither assumed nor guaranteed by
the Parent or any of its Subsidiaries nor on which it customarily pays interest,
existing upon real estate or rights in or relating to real estate acquired by
the Parent or any of its Subsidiaries for substation, metering station, pump
station, storage, gathering line, transmission line, transportation line,
distribution line or right-of-way purposes, and any Liens reserved in leases for
rent and full compliance with the terms of the leases in the case of leasehold
estates, to the extent that any such Lien referred to in this clause arises in
the normal course of business as presently conducted and
69
does not materially impair the use of the property covered by such Lien for the
purposes for which such property is held by the Parent or its applicable
Subsidiary;
(q) rights reserved to or vested in any municipality or governmental,
statutory or public authority by the terms of any right, power, franchise,
grant, license or permit, or by any provision of law, to terminate such right,
power, franchise, grant, license or permit or to purchase, condemn, expropriate
or recapture or to designate a purchaser of any of the property of the Parent or
any of its Subsidiaries;
(r) rights reserved to or vested in any municipality or governmental,
statutory or public authority to control or regulate any property of the Parent
or any of its Subsidiaries, or to use such property in a manner which does not
materially impair the use of such property for the purposes for which it is held
by the Parent or its applicable Subsidiary;
(s) any obligations or duties affecting the property of the Parent or
any of its Subsidiaries to any municipality, governmental, statutory or public
authority with respect to any franchise, grant, license or permit;
(t) rights of a common owner of any interest in real estate,
rights-of-way or easements held by the Parent or any of its Subsidiaries and
such common owner as tenants in common or through other common ownership;
(u) any Liens arising from the matters described in Schedule 3.19 of
the Mesa Contract;
(v) Liens securing Indebtedness permitted under Section 10.1(t) hereof
(to the extent such Liens are permitted under such Section 10.1(t));
(w) reservations, limitations, provisos and conditions in any original
grant from the Crown or freehold lessor of any of the properties of the Company
or its Subsidiaries;
(x) other Liens securing Indebtedness not exceeding, in the aggregate,
U.S. $3,000,000 at any one time outstanding;
(y) other Liens securing Senior Debt, but only so long as such Liens
shall also secure the Obligations on a pari passu basis, in a manner and
pursuant to documentation acceptable to the Majority Banks;
(z) Liens (i) granted to or existing in favor of third parties on
margin accounts of the Parent or any of its Subsidiaries relating to exchange
traded contracts for the delivery of natural gas pursuant to which the Parent or
any such Subsidiary intends to take actual delivery of such
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natural gas within forty (40) days from the then current date in the ordinary
course of business and not for speculative purposes, and (ii) on margin accounts
of the Parent or any of its Subsidiaries relating to exchange traded contracts
for the delivery of natural gas, provided, however, the aggregate balance of the
margin accounts subject to the Liens permitted by this clause (ii) shall not
exceed from time to time $10,000,000.
10.3 Investments, Loans and Advances. The Parent will not and will not
permit its Subsidiaries to make or permit to remain outstanding any advances,
loans or other extensions of credit or capital contributions (other than prepaid
expenses in the ordinary course of business) to (by means of transfers of
property or assets or otherwise), or purchase or own any stocks, bonds, notes,
debentures or other securities of, or incur contingent liability with respect to
(except for the endorsement of checks in the ordinary course of business and
except for the Indebtedness and Liens permitted under this Agreement) any Person
(all such transactions being herein called "Investments"), except that the
foregoing restriction will not apply to:
(a) Investments (all prior to the date hereof) the material details of
which have been set forth in the Financial Statements delivered to the
Administrative Agent prior to the date hereof or the Disclosure Statement;
(b) Liquid Investments;
(c) advances or extensions of credit in the form of accounts
receivable incurred in the ordinary course of business;
(d) the acquisition of all of the capital stock of wholly owned
Subsidiaries incorporated or acquired subsequent to the date of this Agreement;
(e) investments where the consideration paid is capital stock of the
Parent, plus cash paid in lieu of issuing fractional shares and cash paid in
settlement of claims of dissenters, such cash not to exceed 10% of the aggregate
purchase price in any such transaction;
(f) Investments in any Person which after giving effect thereto will
be a Subsidiary of the Parent, so long as the Investment in such Person, when
consummated, would not result in a breach of the covenants set forth in Section
10.1;
(g) intercompany loans, advances or investments by the Parent to or in
any Subsidiary of the Parent (other than a Subsidiary that is obligated to pay
Funded Indebtedness for borrowed money payable solely by recourse to properties
not included in the Borrowing Base) or, to the extent permitted under Section
10.1(h) hereof, by any Subsidiary of the Parent to or in the Parent or to or in
any other Subsidiary of the Parent, provided, however, that APC may not make any
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intercompany loans, advances or investments in any Subsidiary of the Parent
pursuant to this clause (g);
(h) intercompany loans, advances or investments by the Parent, solely
from income or cash flow of the Parent subject to the Beluga Financing
Documents, to APC as required under the Beluga Financing Documents and the APC
Long Term Financing Documents;
(i) to the extent, if any, not covered by Subsection (a) hereinabove,
the Indebtedness of the Parent to APC evidenced solely by the Intercompany
Notes, as defined in the Beluga Financing Documents and the APC Long Term
Financing Documents, together with any renewals, extensions, amendments,
refinancings, rearrangements, modifications, restatements or supplements, but
not increases (other than increases which are permitted under the present terms
of the Beluga Financing Documents and the APC Long Term Financing Documents)
thereof from time to time;
(j) loans or advances to employees made in the ordinary course of
business, up to the aggregate principal amount at any one time outstanding of
U.S. $5,000,000;
(k) Investments in reasonable amounts of securities for purposes of
funding employee benefit plans maintained by the Parent;
(l) advances or extensions of credit made in the ordinary course of
business to third parties under applicable contracts and agreements in
connection with (i) oil, gas or other mineral exploration, development and
production activities or (ii) Hydrocarbon or chemical pipeline gathering or
transportation activities;
(m) Investments where the consideration paid is assets of the Parent
or its Subsidiaries other than capital stock, cash or oil and gas reserves;
(n) Investments in EBOC Energy Ltd. made in connection with and
pursuant to the Novalta Contract;
(o) any payment, prepayment, purchase or retirement of Indebtedness of
the Parent (other than payments, prepayments, purchases or retirement of
Subordinated Debt prohibited under the definition of "Subordinated Debt"); and
(p) any other Investments which in the aggregate do not cause the
Parent to be in violation of the Investments Tests.
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10.4 Dividend Payment Restrictions. The Parent will not declare or make
any Dividend Payment if any Default or Event of Default has occurred and is
continuing or if there exists any Borrowing Base Deficiency.
10.5 Mergers, Amalgamations and Sales of Assets. The Parent will not
(a) merge, amalgamate or consolidate with, or sell, assign, lease or otherwise
dispose of, whether in one transaction or in a series of transactions, more than
ten percent (10%) in the aggregate of the Parent's and its Subsidiaries'
consolidated total assets (whether now owned or hereafter acquired) to any
Person or Persons during the period since the most recent "Borrowing Base
Determination" (as defined in the U.S. Facility, without amendment except as
permitted under the Intercreditor Agreement), or permit any Subsidiary of the
Parent to do so (other than to the Parent or another Subsidiary of the Parent or
the issuance by any Subsidiary of the Parent of any stock to the Parent or
another Subsidiary of the Parent), or (b) sell, assign, lease or otherwise
dispose of, whether in one transaction or in a series of transactions, any other
properties if receiving therefor consideration other than cash or other
consideration readily convertible to cash or which is less than the fair market
value of the relevant properties, or permit any Subsidiary of the Parent to do
so; provided that the Parent or any Subsidiary of the Parent may merge,
amalgamate or consolidate with any other Person and any Subsidiary of the Parent
may transfer properties to any other Subsidiary of the Parent or to the Parent
so long as, in each case, (i) immediately thereafter and giving effect thereto,
no event will occur and be continuing which constitutes a Default, (ii) in the
case of any such merger, amalgamation or consolidation to which the Parent is a
party, the Parent is the surviving Person, (iii) in the case of any such merger,
amalgamation or consolidation to which any Subsidiary of the Parent is a party
(but not the Parent), after giving effect to all transactions closing
concurrently relating to such merger or consolidation, the surviving Person is a
Subsidiary of the Parent and (iv) the surviving Person ratifies each applicable
Loan Document and provided further that any Subsidiary of the Parent may merge
or consolidate with any other Subsidiary of the Parent so long as, in each case
(i) immediately thereafter and giving effect thereto, no event will occur and be
continuing which constitutes a Default and (ii) the surviving Person ratifies
each applicable Loan Document.
10.6 Use of Proceeds. The Company will not permit the proceeds of the
Loans or the Canadian Bankers' Acceptance Discount Proceeds to be used for any
purpose other than those permitted by this Agreement.
10.7 ERISA Compliance. The Parent will not at any time permit any Plan
maintained by it or any Subsidiary of the Parent to:
(a) engage in any "prohibited transaction" as such term is defined in
Section 4975 of the Code;
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(b) incur any "accumulated funding deficiency" as such term is defined
in Section 302 of ERISA; or
(c) terminate or be terminated in a manner which could result in the
imposition of a Lien on the property of the Parent or any Subsidiary of the
Parent pursuant to Section 4068 of ERISA, in each case, to the extent that
permitting the Plan to do so would have a Material Adverse Effect.
10.8 Amendment of Certain Documents. The Parent will not amend, modify
or obtain or grant a waiver of (except for waivers only of cross-defaults
created by a Default under this Agreement), or allow APC to enter into any
amendment or modification or obtain or grant any waiver of (except for waivers
only of cross-defaults created by a Default under this Agreement), any provision
of those documents relating to or constituting the Beluga Financing Documents or
the APC Long Term Financing Documents, without prior written notification to the
Administrative Agent.
10.9 Tangible Net Worth. The Parent will not permit the Tangible Net
Worth of the Parent and its Subsidiaries, on a consolidated basis, at any time
to be less than U.S. $465,000,000 plus 50% of net income of the Parent and its
Subsidiaries on a consolidated basis, if positive, beginning with the fiscal
year ended December 31, 1997 and calculated annually thereafter based upon
positive net income of the Parent and its Subsidiaries for each applicable
fiscal year taken cumulatively.
10.10 Parent Debt/Capitalization Ratio. The Parent will not permit the
Debt/Capitalization Ratio to be, at any time, more than 65%.
10.11 EBITDAX/Interest Ratio. The Parent will not permit the
EBITDAX/Interest Ratio to be, at any time, less than 3.50:1.00 for any twelve
month period ending on the last day of any calendar quarter.
10.12 Nature of Business. The Parent will not engage in, and will not
permit any Subsidiary of the Parent to engage in, businesses other than oil and
gas exploration and production, gas processing, transmission, distribution,
marketing and storage and gas and liquids pipeline operations and activities
related or ancillary thereto; provided, that if the Parent acquires one or more
Subsidiaries in transactions otherwise permitted by the terms hereof, any such
Subsidiary may be engaged in businesses other than those listed in this Section
so long as the assets of such Subsidiaries which are used in the conduct of such
other businesses do not constitute more than five percent (5%) of the
consolidated total assets of the Parent (inclusive of the assets of the
Subsidiary so acquired).
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10.13 Futures Contracts. The Parent will not, and will not permit any
Subsidiary of the Parent to, enter into or be obligated under any contract for
sale for future delivery of oil or gas (whether or not the subject oil or gas is
to be delivered), hedging contract, forward contract, swap agreement, futures
contract or other similar agreement except for (i) such contracts (x) which fall
within the parameters set forth on Exhibit H hereto or are otherwise approved in
writing by the Majority Banks and (y) which in the aggregate do not cover at any
time a volume of oil and/or gas equal to or greater than 50% of the proved
producing reserves attributable to the oil and gas properties of the Parent and
its Subsidiaries, taken as a whole, as evidenced by the most current Engineering
and Parent Reports and (ii) production sales contracts entered into in the
ordinary course of the Parent's or the applicable Subsidiary's business.
10.14 Covenants in Other Agreements. The Parent will not and will not
permit any of its Subsidiaries to become a party to or to agree that it or any
of its property is bound by any agreement, indenture, mortgage, deed of trust or
any other instrument directly or indirectly
(i) restricting any loans, advances or any other Investments to or in
the Parent by any of its Subsidiaries;
(ii) restricting the ability of any Subsidiary of the Parent to make
tax payments or management fee payments;
(iii) restricting the capitalization structure of any Subsidiary of
the Parent; or
(iv) restricting the ability or capacity of any Subsidiary of the
Parent to make Dividend Payments; provided, however, nothing in this Section
10.14 shall restrict the existence of negative covenants otherwise prohibited by
this Section in documentation evidencing or related to Indebtedness permitted by
Subsection 10.1(v) and, to the extent that the applicable Subsidiary does not
own any property included in the Borrowing Base, Subsections 10.1(n), (o) and
(p). Notwithstanding the foregoing, either of ENSTAR Alaska or APC may become a
party to, or grant a Lien in any of its property by way of, or agree that it
will be bound by, any indenture, mortgage, deed of trust or other instrument
containing provisions of the types described above in this Section 10.14 so long
as the terms and provisions thereof are not materially more restrictive than the
terms or provisions which were legally binding on ENSTAR Alaska or APC on the
date hereof.
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Section 11. Defaults.
11.1 Events of Default. If one or more of the following events (herein
called "Events of Default") shall occur and be continuing:
(a) Payments - (i) the Company or any other Relevant Party fails to
make any payment or prepayment of any installment of principal on the Loans or
any Reimbursement Obligation payable under the Notes, this Agreement or the
other Loan Documents or the full face amount of any outstanding Bankers'
Acceptances when due or (ii) the Company or any other Relevant Party fails to
make any payment or prepayment of interest with respect to the Loans, any
Reimbursement Obligation or any other fee or amount under the Notes, the
Bankers' Acceptances, this Agreement or the other Loan Documents and such
failure to pay continues unremedied for a period of five (5) Business Days; or
(b) Representations and Warranties - any representation or warranty
made by the Company or any other Relevant Party in this Agreement or in any
other Loan Document or in any instrument executed in connection herewith or
therewith proves to have been incorrect in any material respect as of the date
thereof; or any representation, statement (including Financial Statements),
certificate or data furnished or made by the Company or any other Relevant Party
(or any officer of the Company or any other Relevant Party) under or in
connection with this Agreement or any other Loan Document, including without
limitation in the Disclosure Statement, proves to have been untrue in any
material respect, as of the date as of which the facts therein set forth were
stated or certified; or
(c) Affirmative Covenants - (i) default shall be made in the due
observance or performance of any of the covenants or agreements contained in
Sections 9.11 (or in Section 9.6 to the extent such default is considered an
Event of Default under the other Subsections of this Sec tion 11.1) or (ii)
default is made in the due observance or performance of any of the other
covenants or agreements contained in Section 9 of this Agreement or any other
affirmative covenant of the Company or any other Relevant Party contained in
this Agreement or any other Loan Document and such default continues unremedied
for a period of 30 days after (x) notice thereof is given by the Administrative
Agent to the Company or (y) such default otherwise becomes known to the Company,
whichever is earlier; or
(d) Negative Covenants - (i) default shall be made in the observance or
performance of any of the covenants or agreements contained in Section 10.8 and
such default continues unremedied for a period of five (5) Business Days after
(x) notice thereof is given by the Administrative Agent to the Company or (y)
such default otherwise becomes known to the Parent, whichever is earlier, or
(ii) default is made in the due observance or performance by the Company or the
Parent, as the case may be, of any of the other covenants or agreements
contained in
76
Section 10 of this Agreement or of any other negative covenant of the Company or
any other Relevant Party contained in this Agreement or any other Loan Document;
or
(e) Other Obligations - default is made in the due observance or
performance by the Parent or any of its Subsidiaries (as principal or guarantor
or other surety) of any of the covenants or agreements contained in any bond,
debenture, note or other evidence of Indebtedness in excess of U.S. $25,000,000
(singly or aggregating several such bonds, debentures, notes or other evidence
of Indebtedness) which default gives the holder the right to accelerate the
maturity of such Indebtedness, other than the Loan Documents, or under any
credit agreement, loan agreement, indenture, promissory note or similar
agreement or instrument executed in connection with any of the foregoing, to
which it (respectively) is a party and such default is unwaived or continues
unremedied beyond the expiration of any applicable grace period which may be
expressly allowed under such instrument or agreement; or
(f) Involuntary Bankruptcy or Receivership Proceedings - a receiver,
conservator, liquidator or trustee of the Parent or of any of its property is
appointed by the order or decree of any court or agency or supervisory authority
having jurisdiction, and such decree or order remains in effect for more than 60
days; or the Parent is adjudicated bankrupt or insolvent; or any of its property
is sequestered by court order and such order remains in effect for more than 60
days; or a petition is filed against the Parent under any provincial, state or
federal bankruptcy, reorganization, arrangement, insolvency, readjustment of
debt, dissolution, liquidation or receivership law of any jurisdiction, whether
now or hereafter in effect, and is not dismissed within 60 days after such
filing; or
(g) Voluntary Petitions or Consents - the Parent commences a voluntary
case or other proceeding seeking liquidation, reorganization, arrangement,
insolvency, readjustment of debt, dissolution, liquidation or other relief with
respect to itself or its debt or other liabilities under any bankruptcy,
insolvency or other similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian or other similar
official of it or any substantial part of its property, or consents to any such
relief or to the appointment of or taking possession by any such official in an
involuntary case or other proceeding commenced against it, or fails generally
to, or cannot, pay its debts generally as they become due or takes any corporate
action to authorize or effect any of the foregoing, or files a notice of
intention to make a proposal under the Bankruptcy Code; or
(h) Assignments for Benefit of Creditors or Admissions of Insolvency -
the Parent makes an assignment for the benefit of its creditors, or admits in
writing its inability to pay its debts generally as they become due, or consents
to the appointment of a receiver, trustee, or liquidator of the Parent or of all
or any part of its property; or
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(i) Undischarged Judgments - judgments (individually or in the
aggregate) for the payment of money in excess of U.S. $10,000,000 is rendered by
any court or other governmental body against the Parent or any of its
Subsidiaries and the Parent or such Subsidiary does not discharge the same or
provide for its discharge in accordance with its terms, or procure a stay of
execution thereof within 60 days from the date of entry thereof, and within said
period of 60 days from the date of entry thereof or such longer period during
which execution of such judgment will have been stayed, the Parent or such
Subsidiary fails to appeal therefrom and cause the execution thereof to be
stayed during such appeal while providing such reserves therefor as may be
required under GAAP; or
(j) Subsidiary Defaults - any Subsidiary of the Parent takes, suffers,
or permits to exist any of the events or conditions referred to in Subsections
11.1(f), (g) or (h); or
(k) Change in Control - there should occur any Change of Control.
THEREUPON: the Administrative Agent may (and, if directed by the Majority Banks,
shall) (a) declare the Commitments terminated (whereupon the Commitments shall
be terminated) and/or (b) terminate any Letter of Credit providing for such
termination by sending a notice of ter mination as provided therein and/or (c)
declare the principal amount then outstanding of and the accrued interest on the
Loans and Reimbursement Obligations and all fees and all other amounts payable
hereunder and under the Notes to be forthwith due and payable and/or (d) declare
the full face amount of all outstanding Bankers' Acceptances to be forthwith due
and payable, whereupon such amounts shall be and become immediately due and
payable, without notice (including without limitation notice of acceleration and
notice of intent to accelerate), presentment, demand, protest or other
formalities of any kind, all of which are hereby expressly waived by the
Company; provided that in the case of the occurrence of an Event of Default with
respect to the Parent referred to in clause (f) or (g) of this Section 11.1 or
in clause (j) of this Section 11.1 to the extent it refers to clauses (f) or
(g), the Commitments shall be automatically terminated and the principal amount
then outstanding of and the accrued interest on the Loans and Reimbursement
Obligations and all fees and all other amounts payable hereunder and under the
Notes and the full face amount of all outstanding Bankers' Acceptances shall be
and become automatically and immediately due and payable, without notice
(including but not limited to notice of intent to accelerate and notice of
acceleration) and without presentment, demand, protest or other formalities of
any kind, all of which are hereby expressly waived by the Company and/or (d)
exercise any and all other rights available to it under the Loan Documents, at
law or in equity.
11.2 Collateral Account. The Company hereby agrees, in addition to the
provisions of Section 11.1 hereof, that upon the occurrence and during the
continuance of any Event of Default, it shall, if requested by the
Administrative Agent or the Majority Banks (through the Administrative Agent),
pay to the Paying Agent an amount in immediately available funds equal
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to the then aggregate amount available for drawings under all Letters of Credit
issued for the account of the Company, which funds shall be held by the Paying
Agent as Cover.
11.3 Preservation of Security for Unmatured Reimbursement Obligations.
In the event that, following (i) the occurrence of an Event of Default and the
exercise of any rights available to any Agent under the Loan Documents, and (ii)
payment in full of the principal amount then outstanding of and the accrued
interest on the Loans and Reimbursement Obligations and fees and all other
amounts payable hereunder and under the Notes and under the other Loan
Documents, and (iii) payment in full of the full face amount of all outstanding
Bankers' Acceptances, any Letters of Credit shall remain outstanding and undrawn
upon, the each Agent shall be entitled to hold (and the Company hereby grants
and conveys to each Agent a security interest in and to) all cash or other
property ("Proceeds of Remedies") realized or arising out of the exercise by
such Agent of any rights available to it under the Loan Documents, at law or in
equity, including, without limitation, the proceeds of any foreclosure, as
collateral for the payment of any amounts due or to become due under or in
respect of such Letters of Credit. Such Proceeds of Remedies shall be held for
the ratable benefit of the applicable Issuers. The rights, titles, benefits,
privileges, duties and obligations of each applicable Agent with respect thereto
shall be governed by the terms and provisions of this Agreement. The applicable
Agent may, but shall have no obligation to, invest any such Proceeds of Remedies
in such manner as such Agent, in the exercise of its sole discretion, deems
appropriate. Such Proceeds of Remedies shall be applied to Reimbursement
Obligations arising in respect of any such Letters of Credit and/or the payment
of any Issuer's obligations under any such Letter of Credit when such Letter of
Credit is drawn upon. The Company hereby agrees to execute and deliver to the
Administrative Agent and the Banks such security agreements, pledges or other
documents as the Administrative Agent or any of the Banks may, from time to
time, require to perfect the pledge, lien and security interest in and to any
such Proceeds of Remedies provided for in this Section 11.3.
11.4 Right of Setoff. Upon (i) the occurrence and during the
continuance of any Event of Default referred to in clauses (f), (g) or (h) of
Section 11.1, or in clause (j) of Section 11.1 to the extent it refers to
clauses (f), (g) or (h), or upon (ii) the occurrence and continuance of any
other Event of Default and upon the making of the notice specified in Section
11.1 to authorize the Administrative Agent to declare the Notes and the full
face amount of all Bankers' Acceptances outstanding due and payable pursuant to
the provisions thereof, or if (iii) the Parent or any of its Subsidiaries
becomes insolvent, however evidenced, the Banks are hereby authorized at any
time and from time to time, without notice to the Parent or any of its
Subsidiaries (any such notice being expressly waived by the Parent and its
Subsidiaries), to setoff and apply any and all deposits (general or special,
time or demand, provisional or final, whether or not such setoff results in any
loss of interest or other penalty, and including without limitation all
certificates of deposit) at any time held, and any other funds or property at
any time held, and other Indebtedness at any time owing by any Bank to or for
the credit or the account of the Company against any and all of the
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Obligations irrespective of whether or not such Bank will have made any demand
under this Agreement, any Bankers' Acceptances or the Notes and although such
obligations may be unmatured. Should the right of any Bank to realize funds in
any manner set forth hereinabove be challenged and any application of such funds
be reversed, whether by court order or otherwise, the Banks shall make
restitution or refund to the Company pro rata in accordance with their
Commitments. The Banks agree promptly to notify the Company and the
Administrative Agent and the Paying Agent after any such setoff and application,
provided that the failure to give such notice will not affect the validity of
such setoff and application. The rights of the Agents and the Banks under this
Section are in addition to other rights and remedies (including without
limitation other rights of setoff) which the Agents or the Banks may have.
Section 12. The Agents.
12.1 Appointment, Powers and Immunities. Each Bank hereby irrevocably
appoints and authorizes the Administrative Agent to act as arranger and
administrative agent hereunder and under the Letters of Credit and the other
Loan Documents with such powers as are specifically delegated to the
Administrative Agent by the terms hereof and thereof, together with such other
powers as are reasonably incidental thereto. Each Bank hereby irrevocably
appoints and authorizes the Paying Agent to act as co-agent and paying agent
hereunder and under the Bankers' Acceptances, the Letters of Credit and the
other Loan Documents with such powers as are specifically delegated to the
Paying Agent by the terms hereof and thereof, together with such other powers as
are reasonably incidental thereto. Each Bank hereby irrevocably appoints and
authorizes the Co-Agent to act as co-agent hereunder and under the Letters of
Credit and the other Loan Documents with such powers as are specifically
delegated to the Co-Agent by the terms hereof and thereof, together with such
other powers as are reasonably incidental thereto. None of the Agents (which
term as used in this Section 12 shall include reference to their affiliates and
their own and their affiliates' officers, directors, employees and agents) (a)
shall have any duties or responsibilities except those expressly set forth in
this Agreement, the Bankers' Acceptances, the Letters of Credit, and the other
Loan Documents, or shall by reason of this Agreement or any other Loan Document
be a trustee or fiduciary for any Bank; (b) shall be responsible to any Bank for
any recitals, statements, representations or warranties contained in this
Agreement, the Bankers' Acceptances, the Letters of Credit or any other Loan
Document, or in any certificate or other document referred to or provided for
in, or received by any of them under, this Agreement, the Bankers' Acceptances,
the Letters of Credit or any other Loan Document, or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement, the
Bankers' Acceptances, the Letters of Credit, or any other Loan Document or any
other document referred to or provided for herein or therein or any property
covered thereby or for any failure by any Relevant Party or any other Person to
perform any of its obligations hereunder or thereunder; (c) shall be required to
initiate or conduct any litigation or collection proceedings hereunder or under
the Bankers' Acceptances, the Letters of Credit or any other Loan Document
except to the extent
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requested by the Majority Banks, and (d) shall be responsible for any action
taken or omitted to be taken by them hereunder or under the Bankers'
Acceptances, the Letters of Credit or any other Loan Document or any other
document or instrument referred to or provided for herein or therein or in
connection herewith or therewith, including, without limitation, pursuant to
their own negligence, except for their own gross negligence or wilful
misconduct. The Agents may employ agents and attorneys-in-fact and shall not be
responsible for the negligence or misconduct of any such agents or
attorneys-in-fact selected by them with reasonable care. Without in any way
limiting any of the foregoing, each Bank acknowledges that neither any Agent nor
any Issuer shall have any greater responsibility in the operation of the Letters
of Credit than is specified in the Uniform Customs and Practice for Documentary
Credits (1993 Revision, International Chamber of Commerce Publication No. 500).
In any foreclosure proceeding concerning any collateral for the Obligations,
each holder of an Obligation if bidding for its own account or for its own
account and the accounts of other Banks is prohibited from including in the
amount of its bid an amount to be applied as a credit against its Obligation or
Obligations or the Obligations of the other Banks; instead, such holder must bid
in cash only; provided that this provision is for the sole benefit of the Agents
and the Banks and shall not inure to the benefit of the Parent or any of its
Subsidiaries. However, in any such foreclosure proceeding, the Administrative
Agent may (but shall not be obligated to) submit a bid for all Banks (including
itself) in the form of a credit against the Notes of all of the Banks, and the
Administrative Agent or its designee may (but shall not be obligated to) accept
title to such collateral for and on behalf of all Banks.
12.2 Reliance by Agents. Each of the Agents shall be entitled to rely
upon any certification, notice or other communication (including any thereof by
telephone, telex, telegram or cable) believed by them to be genuine and correct
and to have been signed or sent by or on behalf of the proper Person or Persons,
and upon advice and statements of legal counsel (which may be counsel for the
Company and/or the Parent and/or any Subsidiary of the Parent), independent
accountants and other experts selected by any Agent. As to any matters not
expressly provided for by this Agreement, the Bankers' Acceptances, the Letters
of Credit, or any other Loan Document, the Agents shall in all cases be fully
protected in acting, or in refraining from acting, hereunder and thereunder in
accordance with instructions of the Majority Banks (or, where unanimous consent
is required by the terms hereof or of the other Loan Documents, all of the
Banks), and any action taken or failure to act pursuant thereto shall be binding
on all of the Banks. Pursuant to instructions of the Majority Banks (except as
otherwise provided in Section 13.4 hereof), the Administrative Agent shall have
the authority to execute releases of any Liens created by the Loan Documents on
behalf of the Banks without the joinder of any Bank.
12.3 Defaults. The Agents shall not be deemed to have knowledge of the
occurrence of a Default unless they have received notice from a Bank or the
Company specifying such Default and stating that such notice is a "Notice of
Default"; provided, however, that the Paying Agent shall be deemed to have
knowledge of the non-payment of principal of or interest on Loans or the
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full face amount of outstanding Bankers' Acceptances or Reimbursement
Obligations at the time of such non-payment. In the event that the
Administrative Agent receives such a notice of the occurrence of a Default, the
Administrative Agent shall give prompt notice thereof to the Banks. The Paying
Agent shall give each Bank prompt notice to the Banks of each non-payment of
principal of or interest on Loans, the full face amount of outstanding Bankers'
Acceptances or Reimbursement Obligations. The Administrative Agent shall
(subject to Section 12.7 hereof) take such action with respect to such Default
as shall be directed by the Majority Banks and within its rights under the Loan
Documents and at law or in equity, provided that, unless and until the
Administrative Agent shall have received such directions, the Administrative
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, permitted hereby with respect to such Default as it shall
deem advisable in the best interests of the Banks and within its rights under
the Loan Documents, at law or in equity.
12.4 Rights as a Bank. With respect to their Commitments and the Loans
made, Bankers' Acceptances accepted and purchased and Letter of Credit
Liabilities, the Agents in their capacities as Banks hereunder shall have the
same rights and powers hereunder as any other Bank and may exercise the same as
though they were not acting as Agents, and the term "Bank" or "Banks" shall,
unless the context otherwise indicates, include the Agents in their individual
capacities. The Agents may (without having to account therefor to any Bank)
accept deposits from, lend money to and generally engage in any kind of banking,
trust, letter of credit, agency or other business with the Parent or its
Subsidiaries (and any of their Affiliates) as if they were not acting as Agents,
and the Agents may accept fees and other consideration from the Parent or its
Subsidiaries (and any of their Affiliates), in addition to the fees heretofore
agreed to between the Company and the Agents, for services in connection with
this Agreement or otherwise without having to account for the same to the Banks.
12.5 Indemnification. The Banks agree to indemnify the Agents (to the
extent not reimbursed under Section 2.2(c), Section 9.7 or Section 13.3 hereof,
but without limiting the obligations of the Company under said Sections 2.2(c),
9.7 and 13.3), ratably in accordance with their respective Commitments, for any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind and nature
whatsoever (including but not limited to, the consequences of the negligence of
the Agents) which may be imposed on, incurred by or asserted against the Agents
in any way relating to or arising out of this Agreement, the Bankers'
Acceptances, the Letters of Credit or any other Loan Document or any other
documents contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby (including, without limitation, the costs and
expenses which the Company is obligated to pay under Sections 2.2(c), 9.8 and
13.3 hereof but excluding, unless a Default has occurred and is continuing,
normal administrative costs and expenses incident to the performance of their
agency duties hereunder) or the enforcement of any of the terms hereof or
thereof or of any such other documents, including but not limited to the
negligence of the Agents, provided that
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no Bank shall be liable for any of the foregoing to the extent they arise from
the gross negligence or wilful misconduct of the party to be indemnified. The
obligations of the Banks under this Section 12.5 shall survive the termination
of this Agreement and the repayment of the Obligations.
12.6 Non-Reliance on Agents and Other Banks. Each Bank agrees that it
has received current financial information with respect to the Parent and its
Subsidiaries and that it has, independently and without reliance on the Agents
or any other Bank and based on such documents and information as it has deemed
appropriate, made its own credit analysis of the Parent and its Subsidiaries and
decision to enter into this Agreement and that it will, independently and
without reliance upon the Agents or any other Bank, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own analysis and decisions in taking or not taking action under this Agreement
or any of the other Loan Documents. The Agents shall not be required to keep
themselves informed as to the performance or observance by any Relevant Party of
this Agreement, the Bankers' Acceptances, the Letters of Credit or any of the
other Loan Documents or any other document referred to or provided for herein or
therein or to inspect the properties or books of the Parent or its Subsidiaries.
Except for notices, reports and other documents and information expressly
required to be furnished to the Banks by the Agents hereunder, under the
Bankers' Acceptances, under the Letters of Credit or the other Loan Documents,
the Agents shall not have any duty or responsibility to provide any Bank with
any credit or other information concerning the affairs, financial condition or
business of the Parent or its Subsidiaries (or any of their Affiliates) which
may come into the possession of the Agents.
12.7 Failure to Act. Except for action expressly required of the Agents
hereunder, under the Bankers' Acceptances, under the Letters of Credit and under
the other Loan Documents, the Agents shall in all cases be fully justified in
failing or refusing to act hereunder and thereunder unless they shall receive
further assurances to their satisfaction by the Banks of their indemnification
obligations under Section 12.5 hereof against any and all liability and expense
which may be incurred by them by reason of taking or continuing to take any such
action.
12.8 Resignation or Removal of Agents. Subject to the appointment and
acceptance of a successor Agent as provided below, any Agent may resign at any
time by giving notice thereof to the Banks and the Company, and any Agent may be
removed at any time with or without cause by the Majority Banks. Upon any such
resignation or removal, the Majority Banks shall have the right to appoint a
successor Agent, provided deposits with such successor Agent shall be insured by
the Canada Deposit Insurance Corporation or its successor. If no successor Agent
shall have been so appointed by the Majority Banks and shall have accepted such
appointment within 30 days after the retiring Agent's giving of notice of
resignation or the Majority Banks' removal of the retiring Agent, then the
retiring Agent may, on behalf of the Banks, appoint a successor Agent. Any
successor Agent shall be a bank which has an office in Canada and a combined
capital and surplus of at least U.S. $250,000,000. Upon the acceptance of any
appointment as Agent
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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 hereunder. Any successor Paying Agent shall promptly specify by
notice to the Company its Payment Office referred to in Sections 3.1 and 5.1.
After any retiring Agent's resignation or removal hereunder as Agent, the
provisions of this Section 12 shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was acting as
the Agent.
Section 13. Miscellaneous.
13.1 Waiver. No waiver of any Default shall be a waiver of any other
Default. No failure on the part of any Agent or any Bank to exercise and no
delay in exercising, and no course of dealing with respect to, any right, power
or privilege under any Loan Document shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, power or privilege thereunder
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The remedies provided in the Loan Documents are
cumulative and not exclusive of any remedies provided by law or in equity.
13.2 Notices. All notices and other communications provided for herein
(including, without limitation, any modifications of, or waivers or consents
under, this Agreement) shall be given or made by telex, telegraph, telecopy
(confirmed by mail), cable, mail or other writing and telexed, telecopied,
telegraphed, cabled, mailed or delivered to the intended recipient at the
"Address for Notices" specified below its name on the signature pages hereof;
or, as to any party, at such other address as shall be designated by such party
in a notice to the Company and the Administrative Agent given in accordance with
this Section 13.2. Except as otherwise provided in this Agreement, all such
communications shall be deemed to have been duly received when transmitted by
telex or telecopier during regular business hours, delivered to the telegraph or
cable office or personally delivered or, in the case of a mailed notice, three
(3) days after deposit in the Canadian mails, postage prepaid, registered mail
with return receipt requested (or upon actual receipt, if earlier), in each case
given or addressed as aforesaid.
13.3 Indemnification. The Company shall indemnify the Agents, the
Banks, and each Affiliate thereof and their respective directors, officers,
employees and agents from, and hold each of them harmless against, any and all
losses, liabilities, claims or damages to which any of them may become subject
(except as provided in clause (c) of this Section 13.3, regardless of whether
caused in whole or in part by the simple (but not gross) negligence of the
Person indemnified), insofar as such losses, liabilities, claims or damages
arise out of or result from any (i) actual or proposed use by the Company of the
proceeds of any extension of credit (whether a Loan, Bankers' Acceptance or a
Letter of Credit) by any Bank hereunder, (ii) breach by the Company or any other
Relevant Party of this Agreement or any other Loan Document, (iii) violation by
the
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Parent or any of its Subsidiaries of any Legal Requirement, including but not
limited to those relating to Hazardous Substances, (iv) Liens or security
interests previously or hereafter granted on any real or personal property, to
the extent resulting from any Hazardous Substance located in, on or under any
such property, (v) ownership by the Banks or the Agents of any real or personal
property following foreclosure, to the extent such losses, liabilities, claims
or damages arise out of or result from any Hazardous Substance located in, on or
under such property, including, without limitation, losses, liabilities, claims
or damages which are imposed upon Persons under laws relating to or regulating
Hazardous Substances solely by virtue of ownership, (vi) Banks' or Agents' being
deemed an operator of any such real or personal property by a court or other
regulatory or administrative agency or tribunal in circumstances in which
neither any of the Agents nor any of the Banks is generally operating or
generally exercising control over such property, to the extent such losses,
liabilities, claims or damages arise out of or result from any Hazardous
Substance located in, on or under such property, (vii) investigation, litigation
or other proceeding (including any threatened investigation or proceeding)
relating to any of the foregoing, and the Company shall reimburse each Agent,
each Bank, and each Affiliate thereof and their respective directors, officers,
employees and agents, upon demand, for any expenses (including legal fees)
incurred in connection with any such investigation or proceeding or (viii) taxes
(excluding income taxes and franchise taxes) payable or ruled payable by any
Governmental Authority in respect of the principal and interest of the Loans,
the Bankers' Acceptances or any other Loan Document, together with interest and
penalties, if any; provided, however, that the Company shall not have any
obligations pursuant to this Section 13.3 with respect to any losses,
liabilities, claims, damages or expenses (a) arising from or relating solely to
events, conditions or circumstances which, as to clauses (iv), (v) or (vi)
above, first came into existence or which first occurred after the date on which
the Parent or any of its Subsidiaries conveyed to an unrelated third party all
of the Parent's or the applicable Subsidiary's rights, titles and interests to
the applicable real or personal property (whether by deed, deed-in-lieu,
foreclosure or otherwise) other than a conveyance made in violation of any Loan
Document, (b) incurred by the Person seeking indemnification by reason of the
gross negligence or wilful misconduct of such Person, (c) in the case of
liability arising with respect to Bankers' Acceptances, incurred by the Person
seeking indemnification by reason of the negligence or wilful misconduct of such
Person or (d) resulting from withholding tax liability incurred in connection
with payments made by the Company to any Agent, any Bank or any Affiliate
thereof. If the Company ever disputes a good faith claim for indemnification
under this Section 13.3 on the basis of the proviso set forth in the preceding
sentence, the full amount of indemnification provided for shall nonetheless be
paid, subject to later adjustment or reimbursement at such time (if any) as a
court of competent jurisdiction enters a final judgment as to the applicability
of any such exceptions.
13.4 Amendments, Etc. No amendment or waiver of any provision of this
Agreement, the Notes or any other Loan Document, nor any consent to any
departure by the Company or any other Relevant Party therefrom, shall in any
event be effective unless the same shall be agreed or
85
consented to by the Majority Banks and the Company, and each such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given; provided, that no amendment, waiver or consent shall,
unless in writing and signed by each Bank affected thereby, do any of the
following: (a) increase the Commitment of such Bank (it being understood that
the waiver of any reduction in the Commitments or any mandatory repayment other
than (x) the repayment of all Loans at the end of the Revolving Credit
Availability Period and (y) the mandatory reductions of the Commitments provided
for in Section 2.3(a) and (z) the mandatory prepayments required by the terms of
Section 3.2(b), shall not be deemed to be an increase in any Commitment) or
subject the Banks to any additional obligation; (b) reduce the principal of, or
interest on, any Loan, Reimbursement Obligation or fee hereunder or the face
amount of any outstanding Bankers' Acceptances; (c) postpone any scheduled date
fixed for any payment or mandatory prepayment of principal of, or interest on,
any Loan, Reimbursement Obligation, fee or the face amount of any outstanding
Bankers' Acceptances or other sum to be paid hereunder; (d) change the
percentage of any of the Commitments or of the aggregate unpaid principal amount
of any of the Loans or the face amount of any outstanding Bankers' Acceptances
and Letter of Credit Liabilities, or the number of Banks, which shall be
required for the Banks or any of them to take any action under this Agreement;
(e) change any provision contained in Sections 2.2(c), 9.7 or 13.3 hereof or
this Section 13.4 or Section 6.7 hereof, or (f) release all or substantially all
of any security for the obligations of the Company under this Agreement or any
Note or all or substantially all of the personal liability of any obligor
created under any of the Loan Documents. Anything in this Section 13.4 to the
contrary, no amendment, waiver or consent shall be made with respect to Section
12 without the consent of the applicable Agent or Agents affected thereby.
13.5 Successors and Assigns.
(a) This Agreement shall be binding upon and inure to the benefit of
the Company, the Agents and the Banks and their respective successors and
assigns. The Company may not assign or transfer any of its rights or obligations
hereunder without the prior written consent of all of the Banks. Each Bank may
sell participations to any Person which is a resident of Canada under the Income
Tax Act (Canada) in all or part of any Loan, Bankers' Acceptance or Letter of
Credit, or all or part of its Notes or Commitments, in which event, without
limiting the foregoing, the provisions of Section 6 shall inure to the benefit
of each purchaser of a participation and the pro rata treatment of payments, as
described in Section 5.2, shall be determined as if such Bank had not sold such
participation. In the event any Bank shall sell any participation, such Bank
shall retain the sole right and responsibility to enforce the obligations of the
Company or any other Relevant Party relating to the Loans, Bankers' Acceptances
or Letters of Credit, including, without limitation, the right to approve any
amendment, modification or waiver of any provision of this Agreement other than
amendments, modifications or waivers with respect to (i) any fees payable
hereunder to the Banks and (ii) the amount of principal or the rate of interest
payable on, or the dates fixed for the scheduled repayment of principal of, the
Loans.
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(b) Each Bank may assign to one or more Banks or any other Person, in
each case which is a resident of Canada under the Income Tax Act (Canada), all
or a portion of its interests, rights and obligations under this Agreement,
provided, however, that (i) other than in the case of an assignment to another
Bank that is, at the time of such assignment, a party hereto or an Affiliate of
such Bank which is a resident of Canada under the Income Tax Act (Canada), the
Company must give its prior written consent, which consent will not be
unreasonably withheld, (ii) the aggregate amount of the Commitment and/or Loans,
the face amount of all outstanding Bankers' Acceptances or Letters of Credit of
the assigning Bank subject to each such assignment (determined as of the date
the Assignment and Acceptance (as defined below) with respect to such assignment
is delivered to the Administrative Agent) shall in no event be less than U.S.
$10,000,000 (or U.S. $5,000,000 in the case of an assignment to an Affiliate of
a Bank or between Banks), (iii) no assignment shall have the effect of reducing
the pro rata share of the Loans, the face amount of all outstanding Bankers'
Acceptances or Letters of Credit and the Commitments held by the assignor and
its Affiliates below U.S. $10,000,000, (iv) notwithstanding any other term or
provision of this Agreement, unless the Company shall have otherwise consented
in writing (such consent not to be unreasonably withheld), each such assignment
shall be pro rata with respect to the Loans, the Bankers' Acceptances, the
Letters of Credit and the Commitment of the assignor, and (v) the parties to
each such assignment shall execute and deliver to the Administrative Agent, for
its acceptance and recording in the Register (as defined below), an Assignment
and Acceptance in the form of Exhibit F hereto (each an "Assignment and
Acceptance") with blanks appropriately completed, together with any Note or
Notes subject to such assignment and a processing and recordation fee of U.S.
$2,500 paid by the assignee (for which the Company shall have no liability).
Upon such execution, delivery, acceptance and recording, from and after the
effective date specified in each Assignment and Acceptance, which effective date
shall be at least five Business Days after the execution thereof, (A) the
assignee thereunder shall be a party hereto and, to the extent provided in such
Assignment and Acceptance, have the rights and obligations of a Bank hereunder
and (B) the Bank thereunder shall, to the extent provided in such Assignment and
Acceptance, be released from its obligations under this Agreement.
(c) By executing and delivering an Assignment and Acceptance, the Bank
assignor thereunder and the assignee thereunder confirm to and agree with each
other and the other parties hereto as follows: (i) other than the representation
and warranty that it is the legal and beneficial owner of the interest being
assigned thereby free and clear of any adverse claim, such Bank assignor 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 any of the other Loan Documents or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement or
any of the other Loan Documents or any other instrument or document furnished
pursuant thereto; (ii) such Bank assignor makes no representation or warranty
and assumes no responsibility with respect to the financial condition
87
of the Parent or any of its Subsidiaries or the performance or observance by the
Company or any other Relevant Party of any of its obligations under this
Agreement or any of the other Loan Documents 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 8.6 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 any Agent, such Bank assignor or any other Bank and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement and the other Loan Documents; (v) such assignee appoints and
authorizes the Agents to take such action as agent on its behalf and to exercise
such powers under this Agreement and the other Loan Documents as are delegated
to the Agents by the terms hereof, together with such powers as are reasonably
incidental thereto; and (vi) such assignee agrees that it will perform in
accordance with their terms all obligations that by the terms of this Agreement
and the other Loan Documents are required to be performed by it as a Bank.
(d) The Administrative Agent shall maintain at its office a copy of
each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Banks and the Commitments of, and
principal amount of the Loans owing to, and the face amount of all Bankers'
Acceptances accepted and purchased by, each Bank from time to time (the
"Register"). The entries in the Register shall be conclusive, in the absence of
manifest error, and the Company, the Agents and the Banks may treat each person
the name of which is recorded in the Register as a Bank hereunder for all
purposes of this Agreement and the other Loan Documents. The Register shall be
available for inspection by the Company or any Bank at any reasonable time and
from time to time upon reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed by an
assigning Bank and the assignee thereunder together with any Note or Notes
subject to such assignment, the written consent to such assignment executed by
the Company and the fee payable in respect thereto, the Administrative Agent
shall, if such Assignment and Acceptance has been completed with blanks
appropriately filled, (i) accept such Assignment and Acceptance, (ii) record the
information contained therein in the Register and (iii) give prompt notice
thereof to the Company. Within five Business Days after receipt of notice, the
Company, at its own expense, shall execute and deliver to the Administrative
Agent in exchange for the surrendered Notes new Notes to the order of such
assignee in an amount equal to the Commitments and/or Loans or the face amount
of outstanding Bankers' Acceptances or Letters of Credit assumed by it pursuant
to such Assignment and Acceptance and, if the assigning Bank has retained
Commitments and/or Loans hereunder, new Notes to the order of the assigning Bank
in an amount equal to the Commitment and/or Loans retained by it hereunder. Such
new Notes shall be in an aggregate principal amount equal to the aggregate
principal amount of such surrendered Notes, shall be dated the effective date
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of such Assignment and Acceptance and shall otherwise be in substantially the
form of the respective Note. Thereafter, such surrendered Notes shall be marked
renewed and substituted and the originals delivered to the Company (with copies,
certified by the Company as true, correct and complete, to be retained by the
Administrative Agent).
(f) Any Bank may, in connection with any assignment or participation or
proposed assignment or participation pursuant to this Section 13.5, disclose to
the assignee or participant or proposed assignee or participant, any information
relating to the Parent or its Subsidiaries furnished to such Bank by or on
behalf of the Parent or its Subsidiaries; provided, however, that, prior to any
such disclosure, the Parent shall have consented thereto, which consent shall
not be unreasonably withheld, and each such assignee or participant, or proposed
assignee or participant, shall execute an agreement whereby such assignee or
participant shall agree to preserve the confidentiality of any Confidential
Information (defined in Section 13.12) on terms substantially the same as those
provided in Section 13.12.
(g) The Company will have the right to consent to any material
intercreditor arrangements in connection with an assignment by any Bank of any
interest, right or obligation under this Agreement which is not pro rata with
respect to the Loans, or the face amount of outstanding Bankers' Acceptances,
the Letters of Credit and the Commitment of the assignor and the Company may
deny its consent to any such arrangements which, in the reasonable judgement of
the Company, would adversely affect the Company in a material respect.
13.6 Limitation of Interest. The Company and the Banks intend to
strictly comply with all applicable laws, including applicable usury laws.
Accordingly, the provisions of this Section 13.6 shall govern and control over
every other provision of this Agreement or any other Loan Document which
conflicts or is inconsistent with this Section, even if such provision declares
that it controls. As used in this Section, the term "interest" includes the
aggregate of all charges, fees, benefits or other compensation which constitute
interest under applicable law, provided that, to the maximum extent permitted by
applicable law, (a) any non-principal payment shall be character ized as an
expense or as compensation for something other than the use, forbearance or
detention of money and not as interest, and (b) all interest at any time
contracted for, reserved, charged or received shall be amortized, prorated,
allocated and spread, in equal parts during the full term of the Obligations. In
no event shall the Company or any other Person be obligated to pay, or any Bank
have any right or privilege to reserve, receive or retain, (a) any interest in
excess of the maximum amount of nonusurious interest permitted under the laws of
the Province of Alberta or the applicable laws (if any) of Canada or of any
other applicable jurisdiction, or (b) total interest in excess of the amount
which such Bank could lawfully have contracted for, reserved, received, retained
or charged had the interest been calculated for the full term of the Obligations
at the Highest Lawful Rate. On each day, if any, that the interest rate (the
"Stated Rate") called for under this Agreement or any other Loan Document
exceeds the Highest Lawful Rate, the rate at
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which interest shall accrue shall automatically be fixed by operation of this
sentence at the Highest Lawful Rate for that day, and shall remain fixed at the
Highest Lawful Rate for each day thereafter until the total amount of interest
accrued equals the total amount of interest which would have accrued if there
were no such ceiling rate as is imposed by this sentence. Thereafter, interest
shall accrue at the Stated Rate unless and until the Stated Rate again exceeds
the Highest Lawful Rate when the provisions of the immediately preceding
sentence shall again automatically operate to limit the interest accrual rate.
The daily interest rates to be used in calculating interest at the Highest
Lawful Rate shall be determined by dividing the applicable Highest Lawful Rate
per annum by the number of days in the calendar year for which such calculation
is being made. None of the terms and provisions contained in this Agreement or
in any other Loan Document which directly or indirectly relate to interest shall
ever be construed without reference to this Section 13.6, or be construed to
create a contract to pay for the use, forbearance or detention of money at an
interest rate in excess of the Highest Lawful Rate. If the term of any
Obligation is shortened by reason of acceleration of maturity as a result of any
Default or by any other cause, or by reason of any required or permitted
prepayment, and if for that (or any other) reason any Bank at any time,
including but not limited to, the stated maturity, is owed or receives (and/or
has received) interest in excess of interest calculated at the Highest Lawful
Rate, then and in any such event all of any such excess interest shall be
canceled automatically as of the date of such acceleration, prepayment or other
event which produces the excess, and, if such excess interest has been paid to
such Bank, it shall be credited pro tanto against the then-outstanding principal
balance of the Company's obligations to such Bank, effective as of the date or
dates when the event occurs which causes it to be excess interest, until such
excess is exhausted or all of such principal has been fully paid and satisfied,
whichever occurs first, and any remaining balance of such excess shall be
promptly refunded to its payor.
13.7 Interest Act (Canada); Interest Generally. For the purposes of
this Agreement, the Notes and the other Loan Documents, whenever interest or
fees to be paid hereunder are to be calculated on the basis of a year of 365 or
360 days, the yearly rate of interest to which the rate determined pursuant to
such calculation is equivalent is the rate so determined multiplied by the
actual number of days in the 12 month period commencing on the first day of the
period for which such calculation is made and divided by 365 or 360, as
applicable. The theory of deemed reinvestment shall not apply to the calculation
of interest or payment of fees or other amounts hereunder or under the Notes or
under the other Loan Documents, notwithstanding anything contained in this
Agreement or in the Notes or in the other Loan Documents, or in any other
instrument referred to herein or in the Notes or in the other Loan Documents,
and all interest and fees payable by the Borrower to the Lender shall accrue
from day to day and be computed as described herein or in the Notes or in the
other Loan Documents in accordance with the "nominal rate" method of interest
calculation. To the extent permitted by law, any provision of the Judgment
Interest Act (Alberta) and the Interest Act (Canada) which restricts the rate of
interest
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on any judgment debt shall be inapplicable to this Agreement and is hereby
waived by the Borrower.
13.8 Certain Saskatchewan Legislation. The Land Contracts (Actions) Act
of the Province of Saskatchewan shall have no application to any action, as
defined in the said Land Contracts (Actions) Act, with respect to this
Agreement; and the Limitation of Civil Rights Act in the Province of
Saskatchewan shall have no application to this Agreement. The Company agrees
that the provisions of both the Land Contracts (Actions) Act and the Limitation
of Civil Rights Act are hereby waived.
13.9 Survival. The obligations of the Company under Sections 2.2(c), 6,
9.7 and 13.3 hereof and the obligations of the Banks under Section 13.6 hereof
shall survive the repayment of the Loans and Reimbursement Obligations and the
termination of the Commitments and the Letters of Credit.
13.10 Captions. Captions and section headings appearing herein are
included solely for convenience of reference and are not intended to affect the
interpretation of any provision of this Agreement.
13.11 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
agreement and any of the parties hereto may execute this Agreement by signing
any such counterpart.
13.12 Governing Law. This Agreement and the Notes and the Bankers'
Acceptances and (except as therein provided) the other Loan Documents are
performable in Calgary, Alberta, Canada, which shall be a proper place of venue
for suit on or in respect thereof. The Company irrevocably agrees that any legal
proceeding in respect of this Agreement or the other Loan Documents shall be
brought in the courts of the Province of Alberta and the courts of appeal
therefrom (collectively, the "Specified Courts"). The Company hereby irrevocably
submits to the nonexclusive jurisdiction of such courts. The Company hereby
irrevocably waives, to the fullest extent permitted by law, any objection which
it may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to any Loan Document brought in any
Specified Court, and hereby further irrevocably waives any claims that any such
suit, action or proceeding brought in any such court has been brought in an
inconvenient forum. The Company further (1) agrees to designate and maintain an
agent for service of process in Calgary, Alberta, Canada in connection with any
such suit, action or proceeding and to deliver to the Administrative Agent
evidence thereof and (2) irrevocably consents to the service of process out of
any of the aforementioned courts in any such suit, action or proceeding by the
mailing of copies thereof by registered mail, return receipt requested, postage
prepaid, to the Company at its address as provided in this Agreement or as
otherwise provided by governing law. Nothing herein shall
91
affect the right of any Agent or any Bank to commence legal proceedings or
otherwise proceed against the Company in any jurisdiction or to serve process in
any manner permitted by applicable law. The Company 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. THIS AGREEMENT AND (EXCEPT AS THEREIN PROVIDED) THE OTHER LOAN DOCUMENTS
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE APPLICABLE LAWS (OTHER
THAN THE CONFLICT OF LAWS RULES) OF THE PROVINCE OF ALBERTA AND OF CANADA FROM
TIME TO TIME IN EFFECT.
13.13 Severability. Whenever possible, each provision of the Loan
Documents shall be interpreted in such manner as to be effective and valid under
applicable law. If any provision of any Loan Document shall be invalid, illegal
or unenforceable in any respect under any applicable law, the validity, legality
and enforceability of the remaining provisions of such Loan Document shall not
be affected or impaired thereby.
13.14 Confidential Information. Each Agent and each Bank separately
agrees that:
(a) As used herein, the term "Confidential Information" means written
information about the Parent or its Subsidiaries or the transactions
contemplated herein furnished by the Parent or its Subsidiaries to the Agents
and/or the Banks which is specifically designated as confidential by the Parent;
Confidential Information, however, shall not include information which (i) was
publicly known or available, or otherwise available on a non-confidential basis
to any Bank, at the time of disclosure from a source other than the Parent or
its Subsidiaries, (ii) subsequently becomes publicly known through no act or
omission by such Bank, (iii) otherwise becomes available on a non-confidential
basis to any Bank other than through disclosure by the Parent or its
Subsidiaries or (iv) has been in the possession of any Bank for a period of more
than two years from the date on which such information originally was furnished
to such Bank by the Parent or its Subsidiaries, unless the Parent shall have
requested the Agents and the Banks in writing, at least 30 days prior to the end
of such two-year period, to maintain the confidentiality of such information for
another two (2) year period (or for successive two (2) year periods); provided
that the Parent shall not unreasonably withhold its consent to a request made
after the initial two (2) year period to eliminate information from
"Confidential Information".
(b) Each Agent and each Bank agrees that it will take normal and
reasonable precautions to maintain the confidentiality of any Confidential
Information furnished to such Person; provided, however, that such Person may
disclose Confidential Information (i) upon the Parent's consent; (ii) to its
auditors; (iii) when required by any Legal Requirement; (iv) as may be required
or appropriate in any report, statement or testimony submitted to any
Governmental Authority having or claiming to have jurisdiction over it; (v) to
such Person's and its Subsidiaries'
92
or Affiliates' officers, directors, employees, agents, representatives and
professional consultants in connection with this Agreement or administration of
the Loans and Letters of Credit; (vi) as may be required or appropriate, should
such Bank elect to assign or grant participations in any of the Obligations in
connection with (1) the enforcement of the Obligations to any such Person under
any of the Loan Documents or related agreements, or (2) any potential transfer
pursuant to this Agreement of any Obligation owned by any Bank (provided any
potential transferee has been approved by the Company if required by this
Agreement, which approval shall not be unreasonably withheld, and has agreed in
writing to be bound by substantially the same provisions regarding Confidential
Information contained in this Section); (vii) as may be required or appropriate
in response to any summons or subpoena or in connection with any litigation or
administrative proceeding; (viii) to any other Bank; (ix) to the extent
reasonably required in connection with the exercise of any remedy hereunder or
under the other Loan Documents; or (x) to correct any false or misleading
information which may become public concerning such Person's relationship to the
Parent or its Subsidiaries.
13.15 Amendment and Restatement. This Agreement amends and restates in
its entirety that certain Credit Agreement dated as of December 23, 1996
executed by and among the Company, the Banks and the Agents, as amended.
13.16 Intercreditor Agreement. Reference is hereby made to the
Intercreditor Agreement, which provides for certain matters relating to both the
Obligations and the U.S. Facility. To the extent of any conflict between the
terms hereof and the terms of the Intercreditor Agreement, the Intercreditor
Agreement shall control. The execution and delivery by the Administrative Agent
of the Intercreditor Agreement on behalf of the Banks is hereby ratified and
confirmed by each of the Banks. Any Bank that becomes a party to this Agreement
after the date hereof agrees to be bound by the terms and provisions of the
Intercreditor Agreement.
13.17 Judgement Currency. Notwithstanding that this Agreement is
governed by the laws of the Province of Alberta, Canada, monies outstanding in
connection herewith may be stipulated in terms of lawful money of the United
States of America (which stipulation or expression is of the essence) and
payments to be made in regard thereto pursuant to this Agreement, or otherwise,
are and are intended to be payable in lawful money of the United States of
America; and to the extent permitted by law any judgment in respect of any such
monies outstanding as aforesaid or any obligation pertaining thereto arising
under this Agreement may be obtained or enforced either in lawful money of the
United States of America or the equivalent in lawful money of Canada, as the
Administrative Agent may elect, and the Administrative Agent shall to the extent
permitted by law be entitled to such election and the benefit (if any) from the
consequent conversion of currency at the date of payment or enforcement of the
judgment. Any such payment obligation stipulated or expressed in lawful money of
the United States of America shall not be discharged by an amount paid in lawful
money of Canada, whether pursuant to a judgment or otherwise, to the
93
extent that the amount so paid on prompt conversion into lawful money of the
United States of America does not, after deduction of any and all premiums
and/or costs of exchange paid or payable by the Administrative Agent in
connection with such conversion, yield the required amount of payment expressed
in terms of lawful money of the United States of America. In the event that any
payment in lawful money of Canada in respect of a payment in lawful money of
Canada in respect of a payment obligation stipulated or expressed in terms of
lawful money of the United States of America as aforesaid, whether pursuant to a
judgment or otherwise, upon conversion as aforesaid does not, after deduction of
any and all premiums and/or costs of exchange paid or payable by any Agent or
any Bank in connection with such conversion, yield the required amount expressed
in terms of lawful money of the United States of America, the Administrative
Agent shall, on behalf of and for the benefit of the affected Person, have a
separate cause of action for the additional amount required to yield the
required amount expressed in terms of lawful money of the United States of
America.
13.18 Withholding Tax Remittances. If any withholding for, or on
account of, any present or future tax, duty or charge of whatsoever nature is
imposed or levied by or on behalf of any taxing jurisdiction or authority
(together with any interest and penalties thereon and additions thereto) in
respect of any payments to be made pursuant to this Agreement or the Notes, the
Company shall be entitled to withhold and remit such payment to the applicable
taxing authority whereupon such payment, for the purposes of this Agreement and
the Notes, shall be deemed to have been made as required hereunder or under the
Notes, notwithstanding anything contained elsewhere in this Agreement or in the
Notes.
94
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
SEAGULL ENERGY CANADA LTD.
By: /s/ William L. Transier
Name: William L. Transier
Title: Vice Chairman & Chief
Financial Officer
Address for Notices:
1001 Fannin, Suite 1700
Houston, Texas 77002
Attention: Steve Thorington
with a copy to:
2900 Western Canadian Place
707 8th Avenue S.W.
Calgary, Alberta T2P 2M7
Attention: Mr. Lorne Martin
95
THE CHASE MANHATTAN BANK OF CANADA,
as Arranger, as Administrative Agent and as a Bank
By: /s/ D. McGorman
Name: D. McGorman
Commitment: Title: Vice President
U.S. $25,000,000
By: /s/ Alvin Bery
Name: Alvin Bery
Title: Vice President
Address for Notices:
First Canadian Place
100 King Street West, Suite 6900
Toronto, Ontario M5X 1A4
Attention: Mr. David McGorman
with copies to:
The Chase Manhattan Bank
1 Chase Manhattan Plaza, 8th Floor
New York, New York 10081
Attention: Agent Services
and
Texas Commerce Bank National Association
712 Main Street
Houston, Texas 77002
Attention: Manager, Energy Division
96
THE BANK OF NOVA SCOTIA, as Paying Agent,
as Co-Agent and as a Bank
By: /s/ R. D. Lee
Commitment: Name: R. D. Lee
Title: Sr. Relationship Manager
U.S. $22,500,000
By: /s/ J. T. Cebryk
Name: J. T. Cebryk
Title: Account Officer
Address for Notices:
International Banking Division-Loan Accounting
14th Floor
44 King Street West
Toronto, Ontario CANADA M5H 1H1
Attention: Assistant Manager
with a copies to:
The Bank of Nova Scotia
Corporate Banking Calgary
Suite #3820, 700-2nd Street S.W.
Calgary, Alberta CANADA T2P 2N7
Attention: Vice President
and to:
The Bank of Nova Scotia
Suite 3000, 1100 Louisiana
Houston, Texas 77002
Attention: Mr. Mark A. Ammerman
97
CANADIAN IMPERIAL BANK OF COMMERCE,
as Co-Agent and as a Bank
By: /s/ David J. Swain
Commitment: Name: David J. Swain
Title: Vice President
U.S. $22,5000,000
Address for Notices:
Oil and Gas Group
10th Floor, 855 2nd Street, S.W.
Calgary, Alberta CANADA T2P 2P2
Attention: Director
with a copy to:
Canadian Imperial Bank of Commerce
Two Houston Center, Suite 1200
909 Fannin Street
Houston, Texas 77010
Attention: Brian Myers
98
ABN AMRO BANK CANADA
By: /s/ Robert Duffield
Commitment: Name: Robert Duffield
Title: Vice President
U.S. $10,000,000
By: /s/ P. K. Chan
Name: P. K. Chan
Title: Vice President, Credit
Address for Notices:
2500-650 West Georgia Street
Vancouver, British Columbia
CANADA V6B 4N8
Attention: Jane Taylor
with a copy to:
ABN AMRO Bank N.V., Houston Agency
Three Riverway, Suite 1700
Houston, Texas 77056
Attention: Ms. Cheryl Lipshutz
99
FIRST CHICAGO NBD BANK, CANADA
By: /s/ Dennis E. Petito
Commitment: Name: Dennis E. Petito
Title: Attorney-In-Fact
U.S. $5,000,000
Address for Notices:
BCE Place
161 Bay Street
P.O. Box 613
Toronto, Ontario CANADA M5J 2S1
Attention: Ms. Janet Beadle
with a copy to:
The First National Bank of Chicago
1100 Louisiana, Suite 3200
Houston, Texas 77002
Attention: Ms. Dixon Schultz
100
BANK OF MONTREAL
By: /s/ Michael Gardner
Commitment: Name: Michael Gardner
Title: Director
U.S. $10,000,000
Address for Notices:
360-7th Avenue S.W.
24th Floor
Calgary, Alberta CANADA T29 3N9
Attention: Ms. Marge Wassenaar
101
MELLON BANK
By:
Commitment: Name:
Title:
U.S. $5,000,000
Address for Notices:
Suite 3200
Royal Trust Tower
T-D Centre
Toronto, Ontario CANADA M5K 1K2
Attention: Mr. Joseph Cavanaugh
102