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EXHIBIT 10.2
________________________________________________________________________________
AMENDED AND RESTATED
ACCEPTANCE AGREEMENT
by and between
HADSON ENERGY LIMITED
and
BANK OF MONTREAL
individually and as Agent
and
the Other Banks
which may become Parties hereto
Dated as of May 26, 1994
________________________________________________________________________________
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TABLE OF CONTENTS
Page
SECTION 1. THE ACCEPTANCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1. General Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2. Procedure for Acceptance of Drafts . . . . . . . . . . . . . . . . . . . . . . . 2
1.3. Discounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4. Certain Undertakings of the Banks . . . . . . . . . . . . . . . . . . . . . . . 3
1.5. Payment of Drafts by the Company . . . . . . . . . . . . . . . . . . . . . . . . 3
1.6. Extension of Transition Date and Termination Date . . . . . . . . . . . . . . . 4
1.7. Certain Indemnities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.8. Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.9. Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.10. Taxes and Increased Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.11. Lending Branch . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.12. Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2. FEES, PAYMENTS, REDUCTIONS, APPLICATIONS . . . . . . . . . . . . . . . . . . . . 8
2.1. Facility Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.2. Agent's Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.3. Optional Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.4. Mandatory Reductions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.5. Voluntary Reductions of the Available Amount . . . . . . . . . . . . . . . . . . 9
2.6. Place and Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.7. Capital Adequacy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 3. THE COLLATERAL AND THE GUARANTIES . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 4. THE BORROWING BASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.1. Amount and Determination . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.2. The Borrowing Base Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.3. Special Adjustments to the Borrowing Base . . . . . . . . . . . . . . . . . . . 13
(a) Determination of Borrowing Base at the Request of the Company . . . . . . 13
(b) Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(c) Casualties and Adverse Claims . . . . . . . . . . . . . . . . . . . . . . 14
(d) Exogenous Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 5. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.1. Organization and Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.2. Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.3. Guaranties and Collateral Documents . . . . . . . . . . . . . . . . . . . . . . 16
5.4. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.5. Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.6. Litigation and Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.7. Burdensome Contracts with Affiliates . . . . . . . . . . . . . . . . . . . . . . 17
5.8. The Borrowing Base Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.9. Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.10. Compliance with Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
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TABLE OF CONTENTS
(CONTINUED)
Page
5.11. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.12. No Business in Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.13. Regulation G, U and X . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 6. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.1. All Acceptances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.2. Conditions to Effectiveness . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 7. COMPANY COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.1. Maintenance of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.2. Maintenance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.3. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.4. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.5. Financial Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.6. Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.7. Nature of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
7.8. Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
7.9. Acquisitions, Investments, Loans and Advances . . . . . . . . . . . . . . . . . 29
7.10. Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.11. Dividends and Certain Other Restricted Payments . . . . . . . . . . . . . . . . 31
7.12. Mergers, Consolidations, etc . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.13. Sale of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.14. Issuance of Additional Capital Stock . . . . . . . . . . . . . . . . . . . . . . 33
7.15. Burdensome Contracts with Affiliates . . . . . . . . . . . . . . . . . . . . . . 33
7.16. The Significant Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.17. Financial Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.18. Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.19. Limitations Concerning Distributions and Transfers by Pledged Subsidiaries . . . 34
SECTION 8. EVENTS OF DEFAULT AND REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . 34
8.1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
8.2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
8.3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 9. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
9.1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
9.2. U.S. Dollars . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 10. THE AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
10.1. Appointment and Authorization . . . . . . . . . . . . . . . . . . . . . . . . . 47
10.2. Rights as a Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
10.3. Standard of Care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
10.4. Costs and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
10.5. Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
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TABLE OF CONTENTS
(CONTINUED)
Page
SECTION 11. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
11.1. Waiver of Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
11.2. Non-Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
11.3. Documentary Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
11.4. Survival of Representations . . . . . . . . . . . . . . . . . . . . . . . . . . 50
11.5. Survival of Indemnities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
11.6. Set-off Sharing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
11.7. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
11.8. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
11.9. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
11.10. Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
11.11. Costs and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
11.12. Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
11.13. Assignment Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
11.14. Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
11.15. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
11.16. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
11.17. One Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
11.18. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
11.19. Judgment Currency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
11.20. Time is of the Essence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
11.21. Limit on Rate of Interest or Discount . . . . . . . . . . . . . . . . . . . . . 55
11.22. Courts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
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HADSON ENERGY LIMITED
AMENDED AND RESTATED ACCEPTANCE AGREEMENT
To:
Bank of Montreal
and the Other Banks From Time
to Time Parties Hereto
Gentlemen:
Reference is made to that certain Acceptance Agreement by and between
Hadson Energy Limited and Bank of Montreal, individually and as Agent, and the
other Banks which may become party thereto, dated as of June 6, 1991 (as the
same may, from time to time, be amended or modified, the "Original Acceptance
Agreement"). The undersigned, Hadson Energy Limited, A.C.N. 009 301 964, a
Western Australia corporation (the "Company"), wishes to amend and restate the
Original Acceptance Agreement, as set forth below, and hereby applies to you
for your several commitments, subject to all of the terms and conditions hereof
and on the basis of the representations and warranties hereinafter set forth,
to accept and discount Drafts, all as more fully hereinafter set forth.
SECTION 1. THE ACCEPTANCES.
1.1. General Terms. Acceptances (as defined in the
Original Acceptance Agreement) outstanding on the date hereof shall, on such
date, be continued as and deemed to be Acceptances under this Agreement having
the same maturity date and shall continue to be secured by the Collateral.
Subject to all of the terms and conditions hereof, the Banks agree to accept
and discount Drafts on behalf of the Company during the period from the date
hereof to and including the Termination Date, all as more fully hereinafter set
forth, provided that the aggregate face amount of Acceptances outstanding at
any one time shall not exceed the Available Amount as then determined and
computed, and provided further that from and after the Transition Date, Drafts
will be accepted and discounted in an aggregate amount no greater than that
necessary to refund the purchase price of Acceptances maturing on the related
Acceptance Date. Notwithstanding the immediately preceding sentence, during
the ninety (90) day period immediately following a reduction in the Borrowing
Base as a result of a redetermination thereof, the Banks shall accept and
discount Drafts in an aggregate amount necessary to refund the purchase price
of
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Acceptances maturing during such period even though, as a result thereof, the
aggregate face amount of Acceptances outstanding exceeds the Available Amount
then in effect. The obligations of the Banks hereunder are several and not
joint and no Bank shall under any circumstances be obligated to extend credit
hereunder in excess of its Facility Amount Percentage of the Available Amount
hereunder. At no time shall there be more than five tranches of Acceptances
outstanding.
1.2. Procedure for Acceptance of Drafts. In order to
facilitate the acceptance of Drafts hereunder, the Company will from time to
time deliver to each Bank, under cover of a letter in a form acceptable to such
Bank, a supply of Drafts executed on behalf of the Company but with the date,
the face amount and the maturity thereof left blank. Each Bank agrees to hold
the Drafts so delivered to it in safekeeping giving such Drafts the same
physical care and safeguards as it affords its own property of a similar type.
Not less than three Business Days prior to each Acceptance Date the Company
shall advise the Agent through issuance of an Acceptance Request in the form
annexed hereto as Exhibit A (the "Acceptance Requests") of the aggregate face
amount (if any) of Drafts which are to be accepted and discounted hereunder on
the Acceptance Date in question, which amount shall be a minimum amount of
$1,000,000 and thereafter in integral multiples of $100,000. In no event may
the Company request the creation and/or discount of Acceptances hereunder if
after giving effect thereto the aggregate amount of Acceptances scheduled to be
outstanding through the maturity date of the newly accepted Drafts will exceed
the Available Amount as scheduled to be outstanding during the same period.
The Agent shall promptly notify each Bank of each Acceptance Request so
received. Subject to all the conditions hereof on the related Acceptance Date,
each Bank shall withdraw one or more presigned Drafts from its inventory
thereof and complete the same with the applicable Acceptance Date, a face
amount equal to its Facility Amount Percentage of the aggregate face amount of
all Drafts to be accepted on the applicable Acceptance Date and the maturity
thereof (which shall be 30, 60 or 90 days after the applicable Acceptance Date
as requested by the Company in the applicable Acceptance Request except that
maturities of less than 30 days may be requested until the Available Amount is
fully in use and to facilitate an orderly retirement of the Available Amount)
and shall then accept such Drafts and discount the same for the account of the
Company pursuant to Section 1.3 hereof.
1.3. Discounting. Subject to all of the terms and
conditions hereof, each Bank agrees that it will on each Acceptance Date fund
or discount all Drafts accepted by it on such date in the Canadian U.S. Dollar
acceptance market or, subject to Section 1.4 hereof, purchase the same for its
own account such in each instance that the purchase price therefor shall be
equal to the face amount of the Drafts accepted, discounted or purchased by it
less the
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Discount applicable to such Drafts and the Stamping Fee payable with respect
thereto, with such purchase price to be remitted on the applicable Acceptance
Date to the Agent which will in turn make same available to the Company at the
main branch of the Agent in Toronto.
1.4. Certain Undertakings of the Banks. Each Bank for
itself alone undertakes to the Company to use reasonable efforts to ensure that
the Drafts accepted by it are widely distributed and agrees not to knowingly
sell or transfer a Draft or any interest therein to a resident of Australia.
Following a request from the Company which relates to:
(a) information ordinarily required for the purposes of
obtaining a certificate under section 128F of the Income Tax
Assessment Act 1936 of Australia relating to the Acceptances; or
(b) a request from the Australian Taxation Office for
specific information (in which case the request shall be accompanied
by satisfactory evidence of such request from the Australian Taxation
Office),
the Banks agree to provide to the Company within a reasonable time a
statement which sets out at that date:
(i) the number and face value of the Acceptances which
have been accepted by and are still retained by such Bank as at that
date; and
(ii) such other information concerning the Acceptances as
the Company may reasonably require in order to enable it to obtain a
certificate under section 128F of the Income Tax Assessment Act 1936
of Australia relating to such Acceptances.
1.5. Payment of Drafts by the Company. The Company agrees
to pay to the Agent for the ratable account of the Banks the face amount of
each Draft accepted and discounted pursuant hereto in same day U.S. Dollars no
later than such Draft's maturity date provided the amount of each Draft
accepted or discounted hereunder shall become immediately due and payable under
the circumstances set forth in Sections 8.2 and 8.3 hereof. In addition, the
Company agrees to pay on demand to the Agent for the ratable account of the
Banks interest (computed on the basis of a year of 360 days for the actual
number of days elapsed) at the Interest Rate on the face amount of each
Acceptance from the maturity date thereof (or such earlier date as the face
amount of such Draft becomes due and payable to the Bank accepting same
pursuant to the provisions of this Section 1.5 or the provisions of Sections
8.2 or 8.3 hereof) until payment in full thereof by the Company.
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1.6. Extension of Transition Date and Termination Date.
Subject to the other provisions of this Agreement, the obligation of the Banks
to accept Drafts hereunder shall be effective for an initial period from the
date hereof to the Termination Date; provided that the Transition Date and the
Termination Date may each be extended for successive one-year periods, if
requested by the Company and consented to by each of the Banks as set forth
below. The Company may request such an extension by delivering to the Agent a
Certificate of Extension duly executed by an officer of the Company not more
than one hundred twenty (120) days nor less than sixty (60) days prior to the
date occurring one year prior to the Transition Date then in effect. The Agent
will promptly deliver to all Banks a written notice of receipt of such a
Certificate of Extension and each Bank shall notify the Agent in writing of its
approval or disapproval of such request (which determination shall be made by
each Bank in its sole discretion) at least thirty (30) days prior to the date
(each such date an "Extension Date") occurring one year prior to the Transition
Date then in effect. Upon the receipt of such notices from all the Banks, the
Agent shall promptly notify the Company of the approval or disapproval of such
request for extension. If consented to by all the Banks such extension shall
be effective on such Extension Date without other or further action by any
party hereto for such additional one-year period. The Banks shall use
reasonable efforts to respond to any such request to extend the Transition Date
and the Termination Date; provided, however, that failure by any Bank to
respond to such requests shall be deemed to be a disapproval of such request
for extension and shall not create a claim against it or have the effect of
extending the obligation of the Banks to accept Drafts hereunder beyond the
Termination Date then in effect or of extending the Transition Date or the
Termination Date; and provided, further, however, that no Bank shall have any
obligation whatsoever to extend the Termination Date and Transition Date in
effect at any time.
1.7. Certain Indemnities. In consideration of the Banks'
acceptance and discounting of Drafts hereunder, the Company agrees to indemnify
and hold the Agent and each Bank harmless from and against any and all stamp
taxes, recording taxes and fees and filing taxes and other fees payable in
connection with the Drafts and/or the acceptance and/or discount thereof
pursuant to this Agreement (the Agent and the Banks acknowledging and agreeing
that no such taxes or fees are currently payable in Canada) and all actions,
claims, damages, losses, liabilities, fines, penalties, costs and expenses of
every nature suffered or incurred by the Agent or any Bank by reason of its
having accepted, discounted or maintained an inventory of Drafts at the
Company's request as provided for herein, provided that such indemnity shall
not apply to the extent that any such action, claim, damage, loss, liability,
fine, penalty, cost or expense arises out of or is based solely upon the
negligence of the party indemnified hereby.
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1.8. Records. Each Bank shall maintain a record of all
Drafts accepted by it hereunder, of the maturity date thereof, of the Discount
applicable thereto and of the amount of all charges with respect thereto and of
the initial purchasers thereof and the Company agrees that in any action or
proceeding brought to enforce the rights of such Bank hereunder with respect to
such Drafts the entries so recorded on the books of such Bank shall be deemed
prima facie correct.
1.9. Illegality. Notwithstanding any other provisions of
this Agreement, if at any time a Bank shall determine in good faith that any
applicable laws, treaties or regulations or the interpretation thereof makes it
unlawful for such Bank to accept or discount Drafts, or it becomes impractical
for any Bank so to do because of circumstances beyond such Bank's control, it
shall promptly so notify the Agent (which shall in turn promptly notify the
Company and the other Banks) and the obligation of such Bank to accept or
discount Drafts under this Agreement shall terminate until it is no longer
unlawful or impractical for such Bank to accept or discount Drafts. In the
event of any termination of a Bank's obligations under this Section 1.9, such
Bank agrees that it will, should the Company request, negotiate in good faith
with the Company for a replacement credit facility which will preserve, as
nearly as is practical, the benefits of this facility to the Company, provided
that such facility will not in the reasonable judgment of such Bank be greater
in amount, of longer duration, less secure, less profitable or otherwise less
advantageous to such Bank.
1.10. Taxes and Increased Costs. If any Bank shall
determine in good faith that any applicable law, treaty, regulation or
guideline or any interpretation of any of the foregoing by any governmental
authority charged with the administration thereof or any central bank or other
fiscal, monetary or other authority having jurisdiction over such Bank or the
Acceptances contemplated by this Agreement (whether or not having the force of
law) shall:
(i) impose, increase, or deem applicable any reserve,
special deposit or similar requirement against assets held by, or
drafts accepted, purchased or discounted by, such Bank;
(ii) subject such Bank or the Acceptances or the
obligations of the Company with respect thereto to any tax, duty,
charge, stamp tax, fee, deduction or withholding in respect of this
Agreement, any Acceptance or the Company's obligations with respect
thereto, except such taxes as may be measured by the overall net
income of such Bank and imposed by the jurisdiction, or any political
subdivision or taxing authority thereof, in which such Bank's
principal executive office or its accepting branch is located and
except such
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taxes as would be imposed on the date hereof by Canada or any
political subdivision thereof;
(iii) change the basis of taxation of payments due from the
Company to such Bank hereunder or under or in respect of an Acceptance
(other than by a change in taxation of the overall net income of such
Bank and imposed by the jurisdiction, or any political subdivision or
taxing authority thereof, in which such Bank's principal executive
office or its accepting branch is located); or
(iv) impose on such Bank any penalty with respect to the
foregoing or any other condition regarding this Agreement or the
Acceptances or the discounting thereof except for penalties which
would be imposed on the date hereby by Canada or any political
subdivision thereof;
and such Bank shall determine that the result of any of the foregoing is to
increase the cost (whether by incurring a cost or adding to a cost) to such
Bank of creating or discounting Acceptances or to reduce any amount received or
receivable by such Bank with respect thereto, then the Company shall pay on
demand to such Bank from time to time as specified by such Bank such additional
amounts as such Bank shall reasonably determine are sufficient to compensate
and indemnify it for such increased cost or reduced amount. If any Bank makes
such a claim for compensation, it shall provide to the Company a certificate
executed by an officer of such Bank setting forth the amount of such loss,
cost, expense or premium in reasonable detail (including an explanation of the
basis for and the computation of such loss, cost, expense or penalty), and the
amounts shown on such certificate shall be conclusive and binding absent
manifest error.
1.11. Lending Branch. Each Bank may, at its option, elect
to make and fund its Acceptances and the discount thereof at the branches or
offices specified on the signature pages hereof or on any Assignment Agreement
executed and delivered pursuant to Section 11.13 hereof or at such other of its
branches or offices located outside of Australia as such Bank may from time to
time elect, but the Company shall not be obligated to reimburse any Bank for
any increased cost or reduced amount incident to such Bank accepting or
discounting Drafts outside of Canada.
1.12. Disclosures. For the purposes of the Interest Act
(Canada) and disclosure thereunder, the parties agree to the provisions of
subparagraphs (i) through (vi) of this Section 1.12 hereinafter set forth:
(i) For the purposes of this Section 1.12, the following
terms shall have the following meanings, respectively:
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(A) "Advance" shall mean an advance or other
amount owing or payable under this Agreement on which interest
shall be payable at a specific Stated Interest Rate;
(B) "Specific Interest Period" shall mean a
period of time designated in this Agreement with respect to
which interest shall be calculated on an Advance at a specific
Stated Interest Rate;
(C) "Stated Interest Rate" shall mean a rate of
interest expressed in or determined in accordance with this
Agreement;
(D) "Year" has the meaning attributed thereto in
the Interpretation Act (Canada), and the term "yearly" has
corresponding meaning: and
(E) "Yearly Stated Interest Rate" shall mean:
(I) with respect to a Stated Interest
Rate which is expressed or determined on the basis of
a year, the Stated Interest Rate; and
(II) with respect to a Stated Interest
Rate which is expressed or determined on the basis of
a period of less than a year (a "Short Period"), the
yearly rate of interest to which such Stated Interest
Rate is equivalent determined in accordance with
paragraph (ii) of this paragraph.
(ii) Where any Stated Interest Rate applicable to a
Specific Interest Period is expressed or determined on the basis of a
Short Period, the yearly rate of interest to which such Stated
Interest Rate is equivalent is determined by multiplying such Stated
Interest Rate by the actual number of days in the year in which such
Specific Interest Period ends and dividing the result by the number of
days in such Short Period.
(iii) The effective yearly rate of interest of a specific
Advance for any period during a year of less than a year (a "Payment
Period") for which interest is made payable at a specific Yearly
Stated Interest Rate (assuming the reinvestment of such interest at
such Yearly Stated Interest Rate and the periodic compounding of such
interest at intervals based on the terms of the Payment Period) may be
determined by the formula (1 + (C/100N)N-1 x 100, expressed
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as a percentage and not as a decimal, where C is equal to the
arithmetic average of the Yearly Stated Interest Rate, expressed as an
absolute interest rate percent, in effect on each day during the
Payment Period and N is the result obtained by dividing the number of
days comprising the year by the number of days in such Payment Period.
(iv) The effective yearly rate of interest in respect of a
specific Advance for any year (or if the Advance is not outstanding
for the entire year, for the portion of the year during which such
Advance shall be outstanding) is equal to the arithmetic average of
the effective yearly interest rates for each day of each Payment
Period in respect of a specific Advance during such year.
(v) The Company acknowledges that there is a material
difference between the Yearly Stated Interest Rates and the effective
yearly rates of interest referred to above in this paragraph and that
it is capable of making the calculations contemplated by this
paragraph required to determine such effective yearly rates of
interest.
(vi) The Company acknowledges and agrees that all
calculations of interest under this Agreement are to be made on the
basis of the applicable Stated Interest rate and not on the basis of
the effective yearly rates determined in accordance with paragraphs
(iii) and (iv) hereof or on any other basis which gives effect to the
principle of deemed reinvestment.
SECTION 2. FEES, PAYMENTS, REDUCTIONS, APPLICATIONS.
2.1. Facility Fee. For the period from the date hereof to
but excluding the Transition Date, the Company shall pay to the Agent for the
ratable account of the Banks a facility fee at the rate of 3/8 of 1% per annum
on the average daily unused amount of the Available Amount hereunder, such fee
to be payable quarterly in arrears (and calculated for the actual number of
days elapsed on the basis of a year consisting of 365 or, when appropriate, 366
days) on the last day of each June, September, December and March in each year
to and including the Transition Date.
2.2. Agent's Fees. The Company shall pay the Agent an
agent's fee of $5,000 per annum for each Bank party to this Agreement other
than the Agent, such fee to be payable at the time each such other Bank becomes
a party hereto and annually thereafter so long as this Agreement is in effect
or any Acceptances are outstanding hereunder.
2.3. Optional Prepayments. The Acceptances may not be
prepaid.
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2.4. Mandatory Reductions. In the event that the
outstanding face amount of the Acceptances shall at any time and for any reason
(other than during the ninety (90) day period immediately following a reduction
in the Borrowing Base as the result of a redetermination thereof) exceed the
Available Amount as then determined and computed, the Company shall pay over
the amount of the excess to the Agent immediately upon becoming aware that an
excess exists to be held as collateral security for the Company's obligations
hereunder, (and invested at the request of the Company in investments of the
type identified in clauses (a) through (c) of Section 7.9 hereof maturing on or
before the next Acceptance Date, with the investment earnings thereon to be
released to the Company if and so long as no Default or Event of Default has
occurred and is continuing) and applied to the payment of the Drafts on their
maturity date. Any cash or investments (and the proceeds thereof) held by the
Agent pursuant to this Section 2.4 shall be and constitute collateral security
for the obligations of the Company under the Loan Documents and Related
Documents and shall be pledged to the Agent for that purpose.
2.5. Voluntary Reductions of the Available Amount. The
Company shall have the privilege at any time and from time to time upon notice
to the Agent (which shall promptly notify the Banks) received on or before
12:00 p.m. (Chicago time) at least three Business Days before the Termination
Date to reduce the Available Amount, each such reduction to reduce the
Available Amount otherwise scheduled to be outstanding on each date occurring
thereafter and no such reduction may be made if after giving effect thereto the
outstanding face amount of Acceptances will exceed the Available Amount. Any
reduction of the Available Amount may be reinstated upon request by the Company
at the time of any redetermination of the Borrowing Base provided the requested
increase of the Available Amount shall not cause the Available Amount,
including amounts reinstated, to exceed the lesser of the Borrowing Base or the
Facility Amount.
2.6. Place and Application. All payments required
hereunder shall be made to the Agent at its office at First Canadian Place,
Toronto, Ontario (or at such other place as the Agent may specify) in
immediately available and freely transferable funds at the place of payment.
All payments hereunder shall be made in U.S. Dollars. All such payments shall
be made without setoff or counterclaim and without reduction for, and free
from, any and all present or future taxes, levies, imposts, duties, fees,
charges, deductions, withholdings, restrictions or conditions of any nature
imposed by any government or political subdivision or taxing authority thereof
(collectively, "Taxes"), except for Taxes presently imposed by Canada and its
political subdivisions and Taxes assessable against any Bank with respect to
the overall net income of such Bank. If the Company is prohibited by
applicable law from making any payment free and clear of Taxes it shall pay
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such Taxes and forthwith pay to the affected Bank or Banks through the Agent
such additional amount so that the net amount received by such Bank or Banks
after taking account of such Taxes (and any additional Taxes payable on the
amount of any additional payment called for by this sentence) will equal the
full amount which would have been received by such Bank or Banks had no such
Taxes been paid, deducted or withheld. Payments received by the Agent after
1:00 p.m. (Toronto time) shall be deemed received as of the opening of business
on the next Business Day. Except as otherwise provided in this Agreement, all
payments shall be received by the Agent for the ratable account of the Banks,
and shall be promptly distributed by the Agent ratably to the Banks except that
payments which pursuant to the terms hereof are for the use and benefit of the
Agent shall be retained by it for its own account and payments received to
reimburse a Bank for a cost peculiar to that Bank shall be remitted to it.
Anything contained herein to the contrary notwithstanding, all
payments and collections received in respect of the Acceptances and all
proceeds of the Collateral or recoveries on the Guaranties received, in each
instance, by the Agent or any of the Banks after the occurrence of an Event of
Default shall be distributed as follows:
(a) first, to the payment of any outstanding costs and
expenses incurred by the Agent in monitoring, verifying, protecting,
preserving or enforcing the liens on the Collateral or in protecting,
preserving or enforcing rights under the Loan Documents and in any
event including all costs and expenses of a character which the
Company has agreed to pay under Section 11.11 hereof (such funds to be
retained by the Agent for its own account unless it has previously
been reimbursed for such costs and expenses by the Banks, in which
event such amounts shall be remitted to the Banks to reimburse them
for payments theretofore made to the Agent);
(b) second, to the payment of any outstanding principal,
interest or other fees or amounts due under the Loan Documents or
Related Documents not described in part (c) below ratably, as among
the Banks in accord with the amount of such owing each;
(c) third, to the Agent to be held as collateral security
for Drafts accepted but not yet paid and for contingent liabilities
not yet due; and
(d) fourth, to whoever may be lawfully entitled thereto.
2.7. Capital Adequacy. If any Bank shall determine that
any applicable law, rule or regulation regarding capital
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adequacy, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof or
compliance by such Bank (or its accepting and/or discounting office) with any
request or directive regarding capital adequacy (whether or not having the
force of law) of any such authority, central bank or comparable agency, has the
effect of reducing the rate of return on such Bank's capital as a consequence
of its obligations hereunder or the Acceptances or credit extended by it
hereunder to a level below that which such Bank could have achieved but for
such law, rule, regulation, 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 as specified by such Bank the
Company shall pay such additional amount or amounts as will compensate such
Bank for such reduction. A certificate of any Bank claiming compensation under
this Section 2.7 and setting forth the additional amount or amounts to be paid
to it hereunder in reasonable detail shall be final and conclusive absent
manifest error. In determining such amount, such Bank may use any reasonable
averaging and attribution methods.
SECTION 3. THE COLLATERAL AND THE GUARANTIES.
The obligations of the Company under the Loan Documents
(except the obligations contained in the third and fourth sentences of the
first paragraph of Section 2.6 hereof) and Related Documents are (i) secured by
valid, perfected and enforceable first liens on all capital stock of the
Pledged Subsidiaries, in each instance whether now owned or existing or
hereafter issued, and all proceeds thereof (collectively the "Collateral") and
(ii) unconditionally guaranteed by the Guarantors. The Company agrees that it
will and will cause any other owners of any of the Collateral to, from time to
time at the request of the Agent or the Required Banks execute and deliver such
documents and do such acts and things as the Agent or the Required Banks may
reasonably request in order to provide for, continue or perfect such liens.
The Company agrees that it will cause any entity which becomes a Pledged
Subsidiary to execute and deliver to the Agent and the Banks a Guaranty.
SECTION 4. THE BORROWING BASE.
4.1. Amount and Determination. The Borrowing Base shall,
as of any date, be an amount equal to the lesser of (i) the Maximum Borrowing
Base and (ii) the sum of the loan value (determined as hereinafter set forth)
of the Borrowing Base Assets. The loan value of the Borrowing Base Assets
shall be determined by the Agent and the Banks, according to the procedures set
forth below in this Section 4.1, using their from time to time customary
standards and practices for evaluating oil and gas loans, including
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an evaluation of the projected revenues which the Company and the owners of the
Borrowing Base Assets shall require for their other needs, all based upon
engineering reports, production data from the Borrowing Base Assets, other
information submitted by the Company and additional factors and data which the
Agent and the Banks believe relevant, the determination by the Agent and the
Banks of the Borrowing Base as of any time to be final and conclusive absent
manifest error, provided that the Banks have acted in good faith in connection
therewith.
In determining the Borrowing Base, the Company acknowledges
and agrees that the Agent and the Banks will take into consideration risks
incident to foreign currency conversions, exchange and export controls, taxes,
restrictions or potential restrictions on repatriation of earnings and the
proceeds of asset dispositions and other sovereign risks which may result in a
reduction in the values included for Borrowing Base Assets located in foreign
jurisdictions over what such values would have been had such assets been
located within the United States or Canada and it is further acknowledged and
agreed that the Agent and the Required Banks shall have the right to reconsider
such matters at the time of redetermination of the Borrowing Base and under the
circumstances set forth in Section 4.3(c) hereof.
Based on the information and data heretofore submitted to the
Banks, the Banks have determined that the Borrowing Base as of the date hereof
is $25,000,000 which will, subject to the other provisions of this Agreement,
continue to be used for the computation of the Borrowing Base until the next
redetermination. The Company shall submit engineering reports pursuant to
Section 7.5(f) and (g) for regularly scheduled Borrowing Base redeterminations,
together with such other information and data as the Required Banks may
reasonably request, evaluating the Borrowing Base Assets and prepared in
substantially the same manner and containing substantially the same data and
projections as are contained in the reports dated as of January 1994 ("the
Initial Report").
Except as otherwise provided herein, the procedures for
determining the Borrowing Base shall be as follows: the Agent shall make a
determination of the Borrowing Base, based upon the most recent engineering
reports submitted, production data from the Borrowing Base Assets, other
factors and data customarily used by it in making such evaluations and
otherwise in accordance with the criteria set forth in this Section 4.1 on or
prior to April 25 and October 25 in each year (and in the case of a
redetermination pursuant to Section 4.3(a), within 25 days of receipt of all
information to be provided by the Company pursuant to such Section). Within
ten (10) days following such determination, the Agent shall notify the Banks in
writing of such determination. Each Bank shall notify the Agent in writing, by
Telex or facsimile
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transmission, whether it approves or disapproves of such determination within
twenty (20) Business Days of its receipt of such notice from the Agent;
provided that any Bank which does not so notify the Agent shall be deemed to
have approved of such determination. Upon the approval (or deemed approval) by
the Required Banks, such determination shall, subject to the other provisions
of this Section 4.1, be the Borrowing Base, and the Agent shall promptly notify
the Company in writing of such redetermined Borrowing Base. If any such
determination results in a decrease in the Borrowing Base, the Agent will, at
the request of the Company, provide it with a statement in reasonable detail of
the computation of the Borrowing Base, which will be final and conclusive
absent manifest error.
4.2. The Borrowing Base Assets. The assets included in
the determination of the Borrowing Base as of the date hereof (the "Initial
Borrowing Base Assets") are as described in the Initial Report previously
delivered to the Banks and the Company represents and warrants that all such
assets satisfy the criteria set forth below. In order to be eligible for
designation as a Borrowing Base Asset such asset must meet each of the
following criteria unless the Required Banks otherwise agree in any instance,
and by requesting that any asset be included as a Borrowing Base Asset, the
Company shall be deemed to have represented and warranted that it satisfies all
such criteria:
(i) It consists of a Proved Producing Property or is an
Oil and/or Gas Property of a type which the Required Banks find
acceptable for inclusion in the Borrowing Base;
(ii) The Company or a Pledged Subsidiary has defensible
title (subject only to minor title defects and irregularities and to
liens permitted by Section 7.8 hereof which do not materially affect
the value thereof) to the Borrowing Base Asset in question which
entitles it to a net interest in the production therefrom equal to
that disclosed to the Banks; and
(iii) Any representations or covenants contained herein
with respect to Borrowing Base Assets are true and correct and
complied with in the case of the Borrowing Base Asset in question.
4.3. Special Adjustments to the Borrowing Base.
(a) Determination of Borrowing Base at the Request of the
Company. The Company may request one Borrowing Base redetermination during any
twelve month period by delivery to the Agent and the Banks of a written request
for such determination. In connection therewith, the Company shall deliver to
the Agent and the Banks such reports and information concerning the Borrowing
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Base Assets as the Agent shall reasonably deem appropriate. Following receipt
of such request, reports and information, the Agent and the Banks shall
determine the Borrowing Base using the procedures set forth in Section 4.1. In
connection with each such redetermination, the Company shall pay to the Agent,
for its own use and benefit an engineering evaluation fee of $10,000.
(b) Sales. In the event that any Borrowing Base Asset is
leased, sold, transferred or conveyed (other than sales or transfers from the
Company or a Pledged Subsidiary to a Pledged Subsidiary or the Company, (i) if
the sale is permitted under Section 7.13(c), the Company shall notify the Agent
of such sale and the loan value of the Borrowing Base Assets shall be reduced
by an amount equal to the proceeds of such sale net of reasonable incidental,
brokerage and legal costs actually paid to third parties, taxes associated with
such sale payable in cash concurrently with the consummation of such sale and
net of an amount to be determined by the Company acting reasonably and in good
faith equal to the income taxes estimated to be payable by the Company or the
applicable Pledged Subsidiary in cash in respect of such sale, provided
reserves for such taxes are established by the Company or such Pledged
Subsidiary; and (ii) if the sale is not permitted under Section 7.13(c) (or in
the event any Borrowing Base Asset ceases to satisfy any of the criteria set
forth in Section 4.2 for inclusion as a Borrowing Base Asset), (x) the Company
shall notify the Banks prior to such sale (or promptly following that date on
which any Borrowing Base Asset ceases to satisfy any of the criteria set forth
in Section 4.2), (y) the Agent and the Banks shall recalculate the loan value
of the Borrowing Base Assets to reflect the deletion of the asset in question
and notify the Company of the adjustment to the loan value of the Borrowing
Base Assets, and (z) no such sale, lease, transfer or conveyance shall be made
until any necessary reduction to the Borrowing Base has been made or if after
giving effect thereto a Default or Event of Default would have occurred and be
continuing or if the aggregate outstanding face amount of the Acceptances would
exceed the amount of the Borrowing Base as so reduced.
(c) Casualties and Adverse Claims. The Company shall
notify the Banks of the assertion or filing of any material adverse claim,
defect or encumbrance affecting or purporting to affect the Company's or any
Pledged Subsidiary's title to all or any portion of any of the Borrowing Base
Assets or of any blow out or other material casualty affecting any Borrowing
Base Asset or the production of oil or gas therefrom, of any withholding by any
person of any payment of sums due in respect of oil or gas produced which
withholding materially diminishes the value of the Borrowing Base Assets and
which results from an allegation or claim affecting the Company's or any
Pledged Subsidiary's rights to such payment, of any material breach by any
party of any obligation under a Significant Agreement and of any other
occurrence which materially
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diminishes the value of the Borrowing Base Assets and/or the production or sale
of oil and/or gas therefrom and/or the right of the Company or any Pledged
Subsidiary to receive all of such sums, in each case promptly after any
responsible officer of the Company becomes aware of same. The Required Banks
shall have the right to reduce the Borrowing Base, either temporarily or
permanently, by the amount of such claim or dispute, or the diminution in value
caused by such claim or dispute, as determined in good faith by the Required
Banks, with respect to the Borrowing Base Assets as to which a claim or dispute
has arisen or a casualty or other event giving rise to a diminution in value or
suspension or reduction of payment has occurred. The failure of the Required
Banks to make any such reduction upon receipt of any such notice shall not
preclude their later election to so reduce the Borrowing Base.
(d) Exogenous Factors. In the event that between
determination dates, in the reasonable determination of the Agent, a material
change occurs in oil and/or gas prices, taxes, anticipated inflation rates as
reflected in the money markets, exchange rates, export controls, sovereign
risks, or other material external factors or assumptions used by the Banks in
determining the Borrowing Base as of the last determination date in accord with
their customary standards and practices applicable to oil and gas loans or if
any other material adverse change shall, in the reasonable determination of the
Agent, have occurred in the financial condition, operations, assets, business,
prospects or properties of the Company or any Pledged Subsidiary, then in that
event the Required Banks may redetermine the Borrowing Base between
determination dates by adjusting such value to reflect the change which has
occurred. For the purposes hereof, a material change in external factors shall
be deemed to materially affect the value of the Borrowing Base Assets if, in
the sole determination of the Agent, the change would result in a decrease in
the value of the Borrowing Base Assets under the customary standards and
practices used by the Required Banks of more than ten percent (10%) of the
Borrowing Base then in effect.
SECTION 5. REPRESENTATIONS AND WARRANTIES.
The Company represents and warrants to the Banks as follows:
5.1. Organization and Power. The Company is duly
organized and existing under the laws of Western Australia, and is duly
licensed or qualified to do business in each jurisdiction where the nature of
the assets owned or leased by it or business conducted by it requires such
licensing or qualification and in which the failure to be so licensed or
qualified would materially and adversely affect the business, properties or
operations of the Company and its Subsidiaries taken as a whole or the value or
marketability of the Borrowing Base Assets taken as a whole and has
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all necessary corporate power to carry on its present business. The Company
has full right, power and authority to enter into this Agreement, to issue the
Drafts, to execute and deliver the Collateral Documents and Related Documents
executed and delivered or to be executed and delivered by it and to perform
each and all of the matters and things herein and therein provided for. The
Loan Documents and Related Documents do not, nor will the performance or
observance by the Company of any of the matters and things herein or therein
provided for, contravene any provision of law (except where such contravention
would not affect the validity or enforceability of any of the Loan Documents or
Related Documents or have a material adverse effect on the financial condition
or business prospects of the Company or its Subsidiaries), or any charter or
by-law provision of the Company or any material covenant, indenture or
agreement of or affecting the Company or any of its properties.
5.2. Subsidiaries. Each Pledged Subsidiary is duly
organized and existing under the laws of the jurisdiction in which it was
incorporated, has full and adequate corporate power to carry on its business as
now conducted and is duly licensed or qualified in all jurisdictions wherein
the nature of its business requires such licensing or qualification and in
which the failure to be so licensed or qualified would materially and adversely
affect the business, properties or operations of the Company and the Pledged
Subsidiaries taken as a whole or the value or marketability of the Borrowing
Base Assets taken as a whole. All of the outstanding capital stock of all of
such Pledged Subsidiaries has been validly issued, is fully paid and
nonassessable and, to the extent and in the percentages set forth in Exhibit B
hereto, is owned by the Company or one or more of the Subsidiaries free and
clear of all liens, security interests, charges and encumbrances (except for
liens in favor of the Agent to the extent permitted by Section 7.8 hereof).
There are outstanding no commitments or other obligations of any Pledged
Subsidiary to issue, and no options, warrants or other rights of any individual
or entity to acquire, any shares of any class of capital stock of any Pledged
Subsidiary. All Subsidiaries are listed on Exhibit B.
5.3. Guaranties and Collateral Documents . The Pledged
Subsidiaries have all necessary right, power and authority to execute and
deliver the Guaranties and Collateral Documents and any document or instrument
related thereto executed and delivered or to be executed and delivered by them,
and to observe and perform all of the matters and things therein provided for,
and the execution and delivery of such Guaranties and Collateral Documents will
not, nor will the observance or performance of any of the matters and things
therein provided for, contravene any provision of law (except where such
contravention would not affect the validity or enforceability of any of the
Loan Documents or have a material adverse effect on the financial condition or
business
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prospects of the Company or its Subsidiaries), or any charter or bylaw
provision of any of the Pledged Subsidiaries or any material covenant,
indenture or agreement of or affecting any of the Pledged Subsidiaries or of
any of their properties.
5.4. Financial Statements. The financial report of the
Company and its Subsidiaries for the year ended December 31, 1993, including a
consolidated balance sheet as of December 31, 1993, and a consolidated
statement of profit and loss for the twelve months ended on said date prepared
by the Company, truly and accurately reflect the financial condition of the
Company and its Subsidiaries as at said date and the results of operations for
the period covered thereby. The Company and its Subsidiaries have no
contingent liabilities which are material to the Company and its Subsidiaries
other than as indicated on said financial statements and since the date of such
financial statements, there have been no material adverse changes in the
condition, financial or otherwise, of the Company and its Subsidiaries.
5.5. Financial Information. The consolidated financial
statements of Apache dated December 31, 1993, copies of which have been
furnished to the Agent and each Bank, have been prepared in accordance with
GAAP in effect on the date of such statements, and present fairly the
consolidated financial condition of the corporations covered thereby as at the
dates thereof and the results of their operations for the periods then ended.
5.6. Litigation and Taxes. There is no litigation or
governmental proceeding pending, nor to the knowledge of the Company
threatened, against the Company or any Subsidiary which if adversely determined
would result in any material adverse change in the financial condition or
properties, business, prospects or operations of the Company or any Subsidiary.
No objections to or controversies in respect of the income or other tax returns
of the Company or its Subsidiaries are pending or threatened which, if
adversely determined, would have a material adverse effect on the financial
condition of the Company and its Subsidiaries. Except as provided herein, no
authorization, consent, license, exemption or filing or registration with any
court or governmental department, agency or instrumentality, is or will be
necessary to the valid execution, delivery or performance by the Company or the
Pledged Subsidiaries of the Loan Documents or Related Documents.
5.7. Burdensome Contracts with Affiliates. Neither the
Company nor any Subsidiary is a party to any contracts or agreements with any
of its Affiliates on terms and conditions which, taken as a whole, are less
favorable to the Company or such Subsidiary than would be usual and customary
in similar contracts or agreements between Persons not affiliated with each
other.
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5.8. The Borrowing Base Assets. All of the leasehold
estates, mineral interests, licenses, concessions, Significant Agreements and
other interests constituting part of the Borrowing Base Assets are valid and
subsisting and mortgageable or assignable, and (with respect to oil and gas
production) provide for the continuation or renewal thereof so long as oil
and/or gas is produced and saved therefrom and contain no unusual or unduly
burdensome covenants or restrictions or provisions for the forfeiture thereof
(other than covenants and restrictions which are customary in the oil and gas
industry and which do not materially detract from the value of the interest
therein of the owner) and the Company and Pledged Subsidiaries have defensible
title to the Borrowing Base Assets, free and clear of all liens, defects and
encumbrances other than such thereof as may be permitted hereunder and minor
title defects and irregularities which do not materially affect the value
thereof and such title entitles the Company or a Pledged Subsidiary to a net
interest in production from the Borrowing Base Assets equal to the net interest
in production set forth in the most recent report received by the Banks
pursuant to Sections 7.5(f) or (g).
5.9. Full Disclosure. The statements and information
furnished to the Agent and the Banks in connection with the negotiation of this
Agreement and the commitments by the Banks to provide all or part of the
financing contemplated hereby do not, taken as a whole, contain any untrue
statement of a material fact or omit a material fact necessary to make the
material statements contained therein or herein not misleading except for such
thereof as were corrected in subsequent written statements furnished the Banks,
the Banks acknowledging that as to any projections furnished to the Banks, the
Company only represents that the same were prepared on the basis of information
and estimates the Company believes to be reasonable. There is no fact peculiar
to the Company or its Subsidiaries which the Company has not disclosed to the
Banks in writing which materially adversely affects nor, so far as the Company
now can reasonably foresee, may reasonably be expected to materially adversely
affect the properties, business, profits or condition (financial or otherwise)
of the Company or its Subsidiaries. Without limiting the generality of the
foregoing, the factual data contained in or submitted by the Company and the
Pledged Subsidiaries in connection with the preparation of the Initial Report
and all other information and data submitted to the Banks concerning the
Borrowing Base Assets and the values thereof, the past, present and estimated
future production therefrom and the arrangements for and pricing of sales
therefrom is, to the best knowledge of the Company, true, correct and complete
and the Company has not failed to deliver any information or data available to
it or to the Pledged Subsidiaries which is inconsistent with any of that
submitted.
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5.10. Compliance with Law. Except where any default or
failure to comply would not have any material adverse effect on the Company and
its Subsidiaries taken as a whole, or on Hadson Australia Development Pty. Ltd.
or on of Petro Energy Limited, (a) neither the Company nor any Subsidiary is
(i) in default with respect to any order, writ, injunction or decree of any
court or (ii) to the best knowledge of the Company, in default in any material
respect under any law, ordinance, order, regulation, license or demand of any
federal, state, municipal or other governmental agency; and (b) the Company and
its Subsidiaries are each in compliance with all applicable environmental,
health and safety statutes and regulations and, to the knowledge of the Company
neither it nor any Subsidiary will have acquired, incurred or assumed, directly
or indirectly, any material contingent liability in connection with the release
of any toxic or hazardous waste or substance into the environment.
5.11. Use of Proceeds. The proceeds of the Drafts shall be
applied to the acquisition of Oil and/or Gas Properties and for general
corporate purposes of the Company, in each case in connection with the Oil and
Gas Business of the Company in Australia. The Company irrevocably authorizes
the Banks to (and the Banks shall) apply the proceeds of Drafts discounted
pursuant hereto on any date first to the payment of any Drafts maturing on such
date.
5.12. No Business in Canada. Neither the Company nor any
Subsidiary carries on or will carry on business in Canada.
5.13. Regulation G, U and X. Neither the Company nor any
Subsidiary is engaged in the business of extending credit for the purpose of
carrying margin stock (as defined in F.R.S. Regulations G, U and X), and no
proceeds of any Drafts will be used for a purpose which violates, or would be
inconsistent with, F.R.S. Board Regulation G, U or X.
SECTION 6. CONDITIONS PRECEDENT.
6.1. All Acceptances. The obligation of the Banks to
accept or discount any Draft shall be subject to the provisions of Sections 8.2
and 8.3 hereof and shall also be subject to the conditions precedent that as of
the time of the creation of each Acceptance or the discount thereof:
(a) each of the representations and warranties set forth
herein or in the Collateral Documents or Guaranties shall be true and
correct, as of the date of such creation or discount (except that the
representations and warranties made in Sections 5.4 and 5.5 hereof
shall be deemed to refer to the most recent financial statements
delivered to the Banks pursuant to Section 7.5);
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(b) no material adverse change shall have occurred in the
financial condition or business prospects of Apache, the Company or
its Subsidiaries or any Guarantor;
(c) no Default or Event of Default shall have occurred
and be continuing;
(d) the Agent shall have received an Acceptance Request
in the form annexed hereto as Exhibit A (which may be by facsimile
transmission thereof to be followed by a hard copy original);
(e) the Banks shall have received the Stamping Fee for
the Drafts then to be accepted (provided that unless the Company has
paid the Stamping Fee in cash, the Banks are hereby irrevocably
authorized to deduct the amount thereof from the proceeds of the
drafts being accepted and discounted); and
(f) the Agent shall have received either (i) a copy of a
certificate or certificates issued by the Australian Taxation Office
under section 128F(4) of the Income Tax Assessment Act 1936 of
Australia in respect of all prior Acceptances or all Acceptances
whenever issued or (ii) a certificate of the Company's vice president
and treasurer stating that such certificate shall not be forthcoming.
Any request made by the Company to the Agent for the acceptance or discount of
a Draft shall be deemed to constitute a representation and warranty that the
foregoing statements are true and correct.
6.2. Conditions to Effectiveness. The effectiveness of
this Agreement and the obligation of each Bank to accept Drafts hereunder are
subject to the satisfaction of the following conditions precedent:
(a) The Agent shall have received the following for the
account of the Banks (each to be properly executed and completed) and
the same shall have been approved as to form and substance by the
Banks:
(i) copies (executed or certified as may be
appropriate) for each Bank of all legal documents or
proceedings taken in connection with the execution and
delivery of this Agreement and the other Loan Documents, to
the extent the Agent or its counsel may reasonably request,
including, without limitation, certificates as to the
incumbency and authority, and setting forth a specimen
signature of, each officer of the Company or any Guarantor or
Pledged Subsidiary who is to sign any document hereunder;
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(ii) any Collateral Documents which are required
by this Agreement to be delivered to the Agent and which have
not previously been delivered to the Agent, any documentation
necessary to perfect the liens thereby created, and any
documentation which, in the reasonable determination of the
Agent, is necessary to perfect or continue the liens created
pursuant to any Collateral Document;
(iii) the certificates evidencing the stock of each
Pledged Subsidiary other than Hadson Australia Development Pty
Limited A.C.N. 009 140 854 and Petro Energy Limited A.C.N. 000
293 729, together with duly executed share transfers therefor
and acknowledgments of pledge from the issuers thereof;
(iv) Guaranties from each Pledged Subsidiary other
than Hadson Australia Development Pty Limited A.C.N. 009 140
854 and Petro Energy Limited A.C.N. 000 293 729;
(v) the liens evidenced by the Collateral
Documents executed by each Pledged Subsidiary other than
Hadson Australia Development Pty Limited A.C.N. 009 140 854
and Petro Energy Limited A.C.N. 000 293 729 shall have been
duly perfected in the manner required by law so as to be
effective against all creditors of and purchasers from the
Company and the Pledged Subsidiaries including, without
limitation, stamping and registration required under the laws
of any State or territory of Australia;
(vi) a consent and acknowledgement duly executed
by each of the Guarantors, in form and substance satisfactory
to the Agent, consenting to this Agreement and acknowledging
that the obligations of such Guarantor continue in full force
and effect with respect to the obligations of the Company and
such Guarantor pursuant to this Agreement and each Loan
Document;
(vii) either (x) an indicative letter from the
Australian Taxation Office indicating that, based on the
information submitted, a certificate of exemption under
section 128F(4) of the Income Tax Assessment Act 1936 of
Australia may be expected to be issued in respect of
Acceptances under this Agreement or (y) a certificate of the
Company's vice president and treasurer stating that such
letter shall not be forthcoming;
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(viii) copies of the Significant Agreements
certified to be true and correct as of the date hereof;
(ix) a summary of the insurance coverages
maintained by the Company and the Subsidiaries;
(x) an organizational chart for the Company and
the Pledged Subsidiaries and a listing of the Oil and/or Gas
Properties owned by each Subsidiary;
(xi) Subordination Agreements, in form and
substance satisfactory to the Agent, from each of Apache
Corporation and Hadson Energy Resources Corporation;
(xii) a certificate of the Company's vice president
and treasurer listing the production licenses, pipeline
licenses and exploration permits in effect on the date of such
certificate; and
(xiii) an amendment, in form and substance
satisfactory to the Agent, of that certain Subordination Deed
among the Company, Hadson Australia Development Pty. Limited,
Petro Energy Limited and the Agent, dated June 13, 1991.
(b) The Agent shall have received for its own account
such fees as the Company has otherwise agreed to pay to the Agent
together with a letter confirming ongoing fee arrangements;
(c) The Agent shall have received and approved such
evidence as it shall reasonably require as to the state of title to
the Borrowing Base Assets and the truthfulness of the representations
contained in Sections 5.7 and 5.9 hereof;
(d) an acknowledgement of the Company, satisfactory in
form and substance to the Banks, that all present and future claims of
the Company against the Pledged Subsidiaries are or continue to be
subordinated to the obligations of the Pledged Subsidiaries under the
Guaranties pursuant to that certain Subordination Deed among the
Company, Hadson Australia Development Pty Limited, Petro Energy
Limited and the Agent dated June 13, 1991,
(e) Legal matters incident to the execution and delivery
of this Agreement and the other instruments and documents contemplated
hereby shall be satisfactory to the Banks and their counsel and the
Banks shall have received the favorable written opinion of acceptable
counsel for the
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Company and the Guarantors in form and substance satisfactory to the
Banks and their counsel and with such exceptions, qualifications and
limitations as shall be acceptable to the Banks and their counsel,
with respect to:
(i) the due organization and existence of the
Company and the Guarantors and the due licensing or
qualification of the Company and the Guarantors in all
jurisdictions where the nature of the assets owned or leased
by it or business conducted by it requires such licensing or
qualification and in which the failure to be so licensed or
qualified would materially and adversely affect the business,
properties or operations of the Company and its Subsidiaries
taken as a whole or the value or marketability of the
Borrowing Base Assets;
(ii) the power and authority of the Company and
the Guarantors to enter into this Agreement and other
instruments and documents contemplated hereby and Related
Documents and the power and authority of the Company and the
Guarantors to perform and observe all the matters and things
herein and therein provided for and the fact that the
execution and delivery of this Agreement and other instruments
and documents contemplated hereby and Related Documents will
not, nor will the observance or performance of any of the
matters or things therein or herein provided for, contravene
any provision of law known to counsel after due inquiry or of
the Charter or By-Laws of the Company or of any Guarantor or
of any provision of any material agreement binding upon the
Company or of any Guarantor or affecting any of their
properties or assets;
(iii) the due authorization for and the validity
and enforceability of this Agreement and each other document
or agreement contemplated hereby and each other Loan Document;
(iv) the fact that no governmental authorization
or consent is required with respect to the lawful execution
and delivery of this Agreement and each other document or
agreement contemplated hereby or Related Documents or if any
such consent is necessary, that the same has been obtained and
is in full force and effect;
(v) the fact that the ordinary shares of the
Pledged Subsidiaries are fully paid and not subject to any tax
or other government impost;
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(vi) the lack, to the knowledge of such counsel,
of any material legal or administrative proceedings pending or
threatened against the Company or any Guarantor; and
(vii) that an Australian court would recognize and
enforce a judgment obtained against the Company or the
Guarantors in an Ontario or Illinois court.
In expressing its opinion as to the validity and
enforceability of those Loan Documents governed by the laws of Ontario, counsel
may assume that the laws of Ontario do not differ in any respect material to
its opinion from those of Western Australia if Ontario counsel advises the
Agent that such documents would be valid (subject to customary exceptions
affecting creditor's rights generally and assuming that they were duly
authorized, executed and delivered by, and within the corporate power of, the
parties thereto), under the laws of Ontario.
SECTION 7. COMPANY COVENANTS.
The Company agrees that, so long as any credit is available to
or in use by the Company hereunder, except to the extent compliance in any case
or cases is waived in writing by the Required Banks:
7.1. Maintenance of Business. The Company will preserve
and keep in force and effect, and cause each of its Subsidiaries to preserve
and keep in force and effect, all material licenses and permits necessary to
the ownership, development and operation of the Borrowing Base Assets.
7.2. Maintenance. The Company will maintain, preserve and
keep its plant, properties and equipment in good repair, working order and
condition and will from time to time make all needful and proper repairs,
renewals, replacements, additions and betterments thereto so that at all times
the efficiency thereof shall be fully preserved and maintained and will cause
each Subsidiary so to do in respect of its properties.
7.3. Taxes. The Company will duly pay and discharge, and
will cause each Subsidiary to duly pay and discharge, all taxes, rates,
assessments, fees and governmental charges upon or against the Company, or such
Subsidiary or against their respective properties, in each case before the same
become delinquent and before penalties accrue thereon, unless and to the extent
that the same are being contested in good faith and by appropriate proceedings.
7.4. Insurance. The Company will insure and keep insured,
and will cause each Subsidiary to insure and keep insured,
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in good and responsible insurance companies, all material insurable property
owned by it which is of a character usually insured by companies similarly
situated and operating like properties; and will insure, and cause each
Subsidiary to insure, such other hazards and risks (including employers' and
public liability risks) in good and responsible insurance companies as and to
the extent usually insured by companies similarly situated and conducting
similar businesses. The Company will upon request of any Bank furnish a
certificate setting forth in summary form the nature and extent of the
insurance maintained pursuant to this Section 7.4.
7.5. Financial Reports. The Company will, and will cause
each Subsidiary to, maintain a standard and modern system of accounting in
accordance with sound accounting practice and will furnish to the Banks and
their duly authorized representatives such information respecting the business
and financial condition of the Company and its Subsidiaries, as any Bank may
reasonably request; and without any request, will furnish to the Banks:
(a) as soon as available, and in any event within 60 days
after the close of each quarterly fiscal period of the Company other
than at fiscal year end, a copy of the balance sheet, statement of
earnings and statement of cash flow of the Company and its
Subsidiaries for such period, prepared on a consolidated basis in
accordance with GAAP and certified to by the president or the vice
president and treasurer thereof with such certificate to also (i)
state that the signer thereof has reexamined the provisions of this
Agreement and that no Default or Event of Default has occurred or is
continuing or if any of such has occurred or is continuing stating the
nature thereof and the action, if any, which the Company proposes to
take with respect thereto, (ii) include a statement of all sales of
Borrowing Base Assets during the preceding twelve months, and (iii)
include such information as may be necessary to confirm the Company's
compliance with the covenants set forth in Section 7.17;
(b) as soon as available, and in any event within 90 days
after the close of each fiscal year, a copy of the report for such
year and accompanying financial statements, including balance sheet,
statement of earnings and statement of cash flow on a consolidated
basis for the Company and its Subsidiaries, all as prepared in
accordance with GAAP and certified by the president or the vice
president and treasurer of Apache with such certificate to also (i)
state that the signer thereof has reexamined the provisions of this
Agreement and that no Default or Event of Default has occurred and is
continuing or if any of such has occurred or is continuing stating the
nature thereof and the action, if any, which the Company proposes to
take with respect thereto, (ii) include a statement of all sales of
Borrowing Base Assets during the
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preceding twelve months and (iii) include such information as may be
necessary to confirm the Company's compliance with the covenants set
forth in Section 7.17;
(c) as soon as available and in any event within 60 days
after the close of each quarterly fiscal period of the Company other
than at fiscal year end and within 90 days after the close of each of
the fiscal years of the Company, the Company shall provide information
as to the gross volumes and proceeds received by the Company and the
Pledged Subsidiaries during the immediately preceding quarterly fiscal
period from the sale of oil and gas;
(d) as soon as available and in any event within 90 days
after the close of each of the fiscal years of Apache, an unqualified
audit report certified by independent certified public accountants,
acceptable to the Required Banks, prepared in accordance with GAAP on
a consolidated basis, including balance sheets as of the end of such
period, related profit and loss and reconciliation of surplus
statements, and a statement of cash flows for Apache and its
Subsidiaries;
(e) as soon as available and in any event within 60 days
after the close of the first three quarterly periods of each of its
fiscal years, for Apache and its Subsidiaries, consolidated unaudited
balance sheets as of the close of each such period and consolidated
profit and loss statements and a statement of cash flows for the
period from the beginning of such fiscal year to the end of such
quarter;
(f) as soon as available after each January 1st and in
any event by March 31st of each year, an updated engineering report in
form and substance satisfactory to the Agent, prepared by the Company
and audited and certified by an Acceptable Engineer, together with
such other information and data as the Required Banks may reasonably
request (including, without limitation, a listing of changes, if any,
to the production licenses, pipeline licenses and exploration permits
then in effect from the previous information delivered pursuant to
Section 6.2(a)(xii) or this clause (f), as the case may be),
evaluating the Borrowing Base Assets as of January 1 of such year;
(g) as soon as available after each June 30th and in any
event by September 30th of each year, a report in form and substance
satisfactory to the Agent, prepared by the Company, together with such
other information and data as the Required Banks may reasonably
request (including, without limitation, a listing of changes, if any,
to the production licenses, pipeline licenses and exploration permits
then in effect from the previous information delivered pursuant to
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Section 6.2(a)(xii) or this clause (g), as the case may be),
evaluating the Borrowing Base Assets as of June 30 of such year;
(h) promptly after the end of each calendar year and in
any case no later than April 1st of the next succeeding calendar year,
a budget for each of the next succeeding three calendar years
(including specific capital expenditures information) for the Company
and its Subsidiaries in reasonable detail, based on reasonable
assumptions set forth therein acceptable to the Required Banks and in
form and substance satisfactory to the Required Banks;
(i) promptly after actual knowledge thereof shall have
come to the attention of any responsible officer of the Company,
written notice of (i) any threatened or pending litigation or
governmental proceeding or assessment against the Company or any
Subsidiary which if adversely determined would materially adversely
affect the business and properties of the Company and its Subsidiaries
on a consolidated basis, (ii) the occurrence of any Default or Event
of Default, (iii) any material breach by any party of its obligations
under any of the Significant Agreements and (iv) any occurrence or
condition which may reasonably be expected to have a material adverse
effect on the properties, business, operations, condition (financial
or otherwise) of the Company or any Pledged Subsidiary or to
materially adversely affect the ability of the Company or any Pledged
Subsidiary to fulfill its obligations pursuant to this Agreement, any
other Loan Document, or any Related Document; and
(j) such other information (including engineering,
financial and non-financial information) as the Agent or any Bank may
from time to time reasonably request.
The Company will permit representatives of any Bank at all
reasonable times to examine and make extracts from the books and records of the
Company and its Subsidiaries and to examine their assets and access thereto
shall be permitted for such purpose.
7.6. Compliance with Laws. The Company will comply, and
will cause each Subsidiary to comply, with all laws, ordinances and
governmental rules and regulations to which it is subject, including without
limitation, all laws, ordinances, governmental rules and regulations relating
to environmental protection in all applicable jurisdictions, the violation of
which could materially and adversely affect the properties, business, profits
or condition of the Company and its Subsidiaries taken as a whole or the
Borrowing Base Assets taken as a whole or would result in any lien
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or charge upon any property of the Company or any Subsidiary not permitted
hereby.
7.7. Nature of Business. Neither the Company nor any
Subsidiary will engage in any business or activity other than the Oil and Gas
Business and activities reasonably incidental thereto.
7.8. Liens. The Company will not, nor will it permit any
Pledged Subsidiary to, pledge, mortgage or otherwise encumber or subject to, or
permit to exist upon or be subjected to, any lien, security interest or charge
upon, any assets or property of any kind or character at any time owned by the
Company or any Subsidiary; provided, however, that nothing in this Section
contained shall operate to prevent:
(a) liens, pledges or deposits in connection with
workmen's compensation, social security obligations, assessments,
statutory obligations or other similar charges, good faith deposits in
connection with tenders, contracts or leases to which the Company or a
Subsidiary is a party or other deposits required to be made in the
ordinary course of business and not in connection with borrowing money
or obtaining advances or credit; provided in each case that the
obligation or liability arises in the ordinary course of business and
is not overdue, or if overdue, is being contested in good faith by
appropriate proceedings;
(b) inchoate statutory, construction, materialmen's,
warehousemen's, producers' or operator's liens securing obligations
not overdue, or if overdue, which are being contested in good faith by
appropriate proceedings and for which adequate reserves in accordance
with GAAP have been set aside;
(c) liens of judgments or awards if and so long as the
judgment or award in question does not constitute an Event of Default
under Section 8.1(f) hereof;
(d) the liens created by the Collateral Documents;
(e) Permitted Exceptions and liens securing abandonment
costs;
(f) liens in the form of margin deposits incident to
arrangements entered into to hedge against the risk of changes in the
prices of hydrocarbons produced by the Company or its Pledged
Subsidiaries;
(g) liens arising under operating agreements in respect
of obligations not yet due;
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(h) zoning and use restrictions, easements,
rights-of-way, reservations or other similar encumbrances on real
property incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount and do not materially detract
from the value of property subject thereto or interfere with the
ordinary conduct of the business of the Company or any of its
Subsidiaries;
(i) liens pursuant to partnership agreements, oil, gas
and/or mineral interests, farm-out agreements, division orders,
contracts for the sale, purchase, exchange, or processing of oil, gas
and/or other hydrocarbons, unitization and pooling declarations and
agreements, operating agreements, development agreements, area of
mutual interest agreements, and other agreements which are customary
in the oil, gas and other mineral exploration, development and
production business and in the business of processing of gas and gas
condensate production for the extraction of products therefrom;
(j) cash deposits securing liabilities in respect of
letters of credit, bonds and guaranties permitted by Section 7.10(e)
and (g) hereof; and
(k) any lien, security interest or charge upon any assets
of the Company with respect to the construction and financing of
improvements to the Company's administrative offices.
7.9. Acquisitions, Investments, Loans and Advances. The
Company will not, nor will it permit any Subsidiary to, directly or indirectly,
make, retain or have outstanding any interest or investments (whether through
purchase of stock or obligations or otherwise) in, or loans or advances to, any
other Person, or acquire all or any substantial part of the assets or business
of any other Person, or subordinate any claim or demand it may have to the
claim or demand of any other person, firm or corporation; provided, however,
that the foregoing provisions shall not apply to nor operate to prevent:
(a) investments by the Company in direct obligations of
Australia or the United States of America or of any agency or
instrumentality thereof whose obligations constitute full faith and
credit obligations of Australia or the United States of America,
respectively, provided that any such obligations shall mature within
one year from the date the same are acquired by the Company;
(b) investments by the Company in commercial paper rated
P-1 by Moody's Investors Services, Inc. and A-1 by Standard and Poor's
Corporation (or equivalent ratings by
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Australian rating agencies) maturing within 270 days of the date of
issuance thereof;
(c) investments by the Company in notes, certificates of
deposit or time deposits issued by and bills of exchange accepted by
any Commercial Bank, or by any prime Australian commercial bank and
having a maturity of one year or less;
(d) acquisitions by the Company and Subsidiaries of Oil
and/or Gas Properties or companies substantially all of the assets of
which are Oil and/or Gas Properties or assets incidental thereto and
which following such acquisition shall be Pledged Subsidiaries (and
shall deliver to the Agent a Guaranty and such other documents and
opinions as the Agent may reasonably require) or shall be merged into
the Company or any of the Pledged Subsidiaries;
(e) advances to employees and suppliers made in the
ordinary course of business;
(f) loans and advances by the Company to Pledged
Subsidiaries;
(g) loans and advances by the Company to Subsidiaries
other than Pledged Subsidiaries or to Subsidiaries of Apache and by
any Subsidiary of the Company to its Subsidiaries, provided that the
amount of such loans or advances outstanding at any one time shall not
exceed (i) $500,000 to any such Subsidiary and (ii) $1,000,000 in the
aggregate to all such Subsidiaries; and
(h) subordinations by the Company of obligations owing it
from Pledged Subsidiaries to obligations of the Pledged Subsidiaries
to the Banks, including without limitation, subordinations of
obligations pursuant to that certain Subordination Deed dated June 13,
1991 among the Company, Hadson Australia Development Pty Limited,
Petro Energy Limited and Bank of Montreal, as the same may have been
or may hereafter be amended or modified.
7.10. Indebtedness. The Company will not, nor will it
permit any Subsidiary to, issue, incur, assume, create or have outstanding any
Indebtedness except:
(a) Indebtedness of the Company hereunder;
(b) the Guaranties;
(c) Indebtedness in respect of judgments or awards if and
so long as such judgments or awards: (i) do not
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constitute Indebtedness for borrowed money or (ii) do not constitute
or create an Event of Default under Section 8.1(f) hereof;
(d) Indebtedness of the Company to Subsidiaries and of
Subsidiaries to the Company permitted by Section 7.9;
(e) the liability of the Company or Subsidiaries in
respect of letters of credit not exceeding AUS $1,000,000 at any one
time outstanding, which letters of credit are (i) for the procurement
of goods and services in the ordinary course of business directly
associated with the normal conduct of the Oil and Gas Business of the
Company or such Subsidiary or (ii) to guarantee, pursuant to any
governmental requirements, future unfunded obligations with respect to
plugging or abandonment of wells;
(f) Subordinated Indebtedness of the Company to Apache
and/or Hadson Energy Resources Corporation;
(g) liabilities (other than pursuant to letters of credit
and other than Indebtedness of the type referred to in clause (f) of
the definition of Indebtedness) in respect of bonds and guaranties
supporting statutory obligations in respect of the Oil and Gas
Business of the Company and its Subsidiaries; provided any such
liabilities assumed by the Company or any Pledged Subsidiary in
respect of any Subsidiary which is not a Pledged Subsidiary shall be
deemed an advance to such Subsidiary for purposes of Section 7.9(g);
(h) Hedging Agreements entered into by the Company and
letters of credit in support of such Hedging Agreements; and
(i) Indebtedness in an aggregate amount not to exceed
$1,200,000 incurred in connection with the construction and financing
of improvements of the Company's administrative offices.
(j) Indebtedness for taxes due and payable but not yet
overdue, or overdue but being contested in good faith by appropriate
proceedings.
7.11. Dividends and Certain Other Restricted Payments. The
Company will not declare or pay any dividends on any class of its capital stock
(other than dividends payable solely in its capital stock) or directly or
indirectly or through any Subsidiary purchase, redeem or otherwise acquire or
retire any of its capital stock if after giving effect thereto either: (i) a
Default or Event of Default has occurred and is continuing or (ii) the
Company's Tangible Net Worth is less than $37,000,000.
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7.12. Mergers, Consolidations, etc. The Company will not,
nor will it permit any Pledged Subsidiary to, sell, lease or otherwise dispose
of all or a substantial part of its properties or assets, and will not, nor
will it permit any Pledged Subsidiary to, consolidate or be a party to a merger
with any other corporation or in any event sell or discount, with or without
recourse, any of its notes or accounts receivable or sell, transfer or
otherwise dispose of any capital stock of a Pledged Subsidiary except that and
provided always that after giving effect to any of the transactions enumerated
below, no Default or Event of Default has occurred or is continuing, (i) any
Pledged Subsidiary may merge with or into any other Pledged Subsidiary or the
Company if such actions are taken as the Agent may require to assure that any
such merger does not adversely affect its liens on the Collateral, (ii) any
corporation may merge with or into any Pledged Subsidiary or the Company
provided that such Pledged Subsidiary or the Company is the surviving
corporation, and (iii) the Company and its Subsidiaries may sell, lease or
otherwise dispose of assets as permitted by Section 7.13 below.
7.13. Sale of Assets. The Company will not, nor will it
permit any Pledged Subsidiary to, lease, sell, transfer, convey, assign, issue
or otherwise dispose of any of its property, assets (including stocks or
partnership interests in or of any Subsidiary) or business to any other Person,
whether in one transaction or in a series of transactions, except:
(a) sales of oil and gas inventory and severed oil and
gas in the ordinary course of business;
(b) sales or other transfers of obsolete equipment and
other personal property not useful in the operation or maintenance of
the Borrowing Base Assets (other than oil and gas inventory and
severed oil and gas in the ordinary course of business) at fair market
value and in the ordinary course of business;
(c) sales or other transfers of Borrowing Base Assets,
whether in one or more transactions, which do not exceed in the
aggregate $1,000,000 in any period occurring between successive dates
of determination of the Borrowing Base pursuant to Section 4.1;
(d) sales or other transfers of assets (other than sales
of oil and gas inventory and severed oil and gas in the ordinary
course of business) by the Company to any Pledged Subsidiary or by any
Pledged Subsidiary to any other Pledged Subsidiary or the Company;
(e) sales, relinquishments or farm outs of exploration
rights by the Company or any Pledged Subsidiary of
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exploration rights other than those forming part of the Borrowing Base
Assets;
(f) a transfer, conveyance or assignment to the Company
or a Subsidiary of Properties as a result of a merger permitted
pursuant to Section 7.12; and
(g) sales or other transfers of assets which are not
Borrowing Base Assets, whether in one or more transactions, which do
not exceed in the aggregate $3,000,000 in any period between
successive dates of determination of the Borrowing Base pursuant to
Section 4.1.
Anything herein contained to the contrary notwithstanding, the Company will
not, nor will it permit any Subsidiary to consummate any sale or transfer
otherwise permitted hereunder if receiving therefor consideration other than
cash or other consideration readily convertible to cash or Proved Producing
Properties or Oil and/or Gas Properties or which is less than the fair market
value of the relevant property or asset.
7.14. Issuance of Additional Capital Stock. The Company
will not permit any Pledged Subsidiary to issue any additional shares of its
capital stock of any class unless such stock is issued to the Company or
another Pledged Subsidiary and all such actions are taken as the Agent may
require in order to grant it a valid perfected lien on such stock.
7.15. Burdensome Contracts with Affiliates. The Company
will not, nor will it permit any Subsidiary to, enter into any contract,
agreement or business arrangement with an Affiliate on terms and conditions
which, taken as a whole, are less favorable to the Company or such Subsidiary
than would be usual and customary in similar contracts, agreements or business
arrangements between Persons not affiliated with each other.
7.16. The Significant Agreements. The Company will comply
with all of its material obligations under the Significant Agreements and will
not amend or modify the same in any material respect or waive compliance by any
other party with the provisions thereof. The Company will and will cause the
Pledged Subsidiaries to comply with the terms of all licenses, concessions and
governmental requirements incident to their interests in the Borrowing Base
Assets.
7.17. Financial Covenants. The Company shall comply with
the following:
(a) the Company will maintain as of the last day of each
fiscal quarter a Current Ratio of at least 1.0:1.0;
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(b) the Company will at all times maintain a Tangible Net
Worth of not less than the sum of (i) $30,000,000 plus (ii) the
product of 0.50 times the sum of Consolidated Net Income for each
calendar quarter subsequent to the calendar quarter ending December
31, 1993 during which Consolidated Net Income is greater than $0;
(c) as of the last day of each fiscal quarter, the
Company shall have a ratio, for the Calculation Period then ended, of
Consolidated Cash Flow to Debt Service of at least 1.1:1.0; and
(d) as of the last day of each fiscal quarter, the
Company shall have a ratio, for the Calculation Period then ended, of
Consolidated Cash Flow to Interest Expense of at least 3.0:1.0.
7.18. Capital Expenditures. In accordance with each
engineering report, the Company shall use reasonable efforts to make such
capital expenditures as may be advisable to develop Oil and Gas Properties so
that they achieve production in Paying Quantities.
7.19. Limitations Concerning Distributions and Transfers by
Pledged Subsidiaries. Except as provided in this Acceptance Agreement, the
Company shall not, and shall not permit any of its Pledged Subsidiaries to,
suffer to exist any consensual encumbrance or restriction on the ability of any
Pledged Subsidiary (i) to pay, directly or indirectly, dividends or make other
distribution with respect to its capital stock or pay any Indebtedness owed to
the Company or any other Pledged Subsidiary; (ii) to make loans or advances to
the Company or any Pledged Subsidiary; or (iii) to transfer any of its property
or assets to the Company or any Pledged Subsidiary.
SECTION 8. EVENTS OF DEFAULT AND REMEDIES.
8.1. Any one or more of the following shall constitute an
Event of Default hereunder:
(a) failure to pay within three days following the date
when payment is due with respect to any amount due any Bank with
respect to any Acceptance, whether at the stated maturity thereof or
at any other time provided for in this Agreement, or failure to pay
within three days after notice from the Agent or any Bank regarding
payment of any fee, charge or other amount payable by the Company or
any Guarantor hereunder or under any of the Related Documents or Loan
Documents;
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(b) default in the observance or performance of any
covenant set forth in Sections 7.12, 7.13, 7.14, or 7.17 hereof;
(c) default in the observance or performance of any other
provision hereof or any of the other Loan Documents or of any of the
Related Documents which is not remedied within 30 days after written
notice thereof to the Company by any Bank;
(d) (i) default shall occur in the payment when due
(whether by lapse of time, acceleration or otherwise), after giving
effect to any period of grace provided therefor, of (A) any
indebtedness issued, assumed or guaranteed by the Company or any
Subsidiary which aggregates $1,000,000 (or its equivalent in any other
currency) or more or (B) any indebtedness issued, assumed or
guaranteed by Apache or any Subsidiary or Subsidiaries of Apache which
aggregates $25,000,000 (or its equivalent in any other currency) or
more or (ii) any other event or default shall occur with respect to
any such indebtedness beyond any period of grace provided therefor if
the effect thereof is to permit the maturity of such Indebtedness to
be accelerated;
(e) any representation or warranty made herein or in any
of the other Loan Documents or in any Related Document or in any
statement or certificate furnished pursuant hereto or thereto, or in
connection with any acceptance or discount made hereunder or by any
person in connection with the transactions contemplated hereby proves
untrue in any material respect as of the date of the issuance or
making thereof, and shall not be made good within 30 days after notice
thereof to the Company by any Bank or by the holder of any Note;
(f) any Judgment or Judgments, writ or writs or warrant
or warrants of attachment or any levies or executions, or any similar
process or processes in an aggregate amount in excess of $1,000,000
shall be entered or filed against the Company or any Subsidiary or
against any of the property or assets of any of them and remains
undischarged, unvacated, unbonded or unstayed for a period of 10 days
(30 days if the liability therefor is fully covered by insurance
(subject to an immaterial deductible) as to which the insurer has
acknowledged liability without reservation);
(g) any event occurs or condition exists which is
specified as an event of default under any of the Collateral
Documents;
(h) any Significant Agreement is voided or terminated or
any party thereto defaults in the performance of
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any of its material obligations thereunder and fails to cure such
default within any applicable period of grace;
(i) the Company ceases for any reason to be a wholly
owned subsidiary of Apache, either directly or through one or more
other wholly owned subsidiaries;
(j) any event or condition has occurred or exists and is
continuing which may have a material adverse effect on the business,
operations, property, finances or prospects of the Company, any
Pledged Subsidiary or Apache or on the ability of the Company or any
Pledged Subsidiary to perform its obligations under any Loan Document
or Related Document;
(k) the Company or Apache or any Pledged Subsidiary
becomes insolvent or bankrupt or bankruptcy, reorganization,
arrangement, insolvency, moratorium or liquidation proceedings or
other proceedings for relief under any bankruptcy law or laws for the
relief of debtors are instituted against the Company or Apache or any
Pledged Subsidiary and are not dismissed within 60 days after such
institution or a decree or order of a court having jurisdiction in the
premises for the appointment of a trustee or receiver or custodian for
the Company or Apache or any Pledged Subsidiary or for the major part
of any of the property of any of the aforementioned is entered and the
trustee or receiver or custodian appointed pursuant to such decree or
order is not discharged within 60 days after such appointment; or
(l) Apache or the Company or any Pledged Subsidiary shall
institute bankruptcy, reorganization, arrangement, insolvency,
moratorium or liquidation proceedings or other proceedings for relief
under any bankruptcy law or laws for the relief of debtors or shall
consent to the institution of such proceedings against it by others or
to the entry of any decree or order adjudging it bankrupt or insolvent
or approving as filed any petition seeking reorganization under any
bankruptcy or similar law or shall apply for or shall consent to the
appointment of a receiver or trustee or custodian for it or for the
major part of its property or shall make an assignment for the benefit
of creditors or shall suspend payment of or admit in writing its
inability to pay its debts as they mature or shall cease to carry on
its business or shall be wound up or dissolved or shall take any
corporate action in contemplation or in furtherance of any of the
foregoing purposes or under governmental authority its management is
displaced or its authority to conduct its business is curtailed.
8.2. When any Event of Default described in subsections
8.1(a) to 8.1(j), both inclusive, has occurred and is
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continuing or any event described in the last sentence of Section 11.21 hereof
has occurred and is continuing, the Agent shall, upon request of the Required
Banks, by notice to the Company, take any or all of the following actions:
(a) terminate the obligation of the Banks to accept or
discount any further Drafts hereunder on the date (which may be the
date thereof) stated in such notice (such termination shall be
effective upon verbal notification; the Agent hereby agreeing to
provide written notification thereof to the Company as soon as
practical thereafter);
(b) declare all fees, charges and commissions payable
hereunder to be immediately due and payable whereupon all of such
shall be and become immediately due and payable without further
demand, presentment, protest or notice of any kind;
(c) demand that the Company immediately pay to the Agent
the full face amount of each Acceptance and the Company agrees to
immediately make such payment and acknowledges and agrees that the
Banks would not have an adequate remedy at law for failure by the
Company to honor any such demand and that the Banks shall have the
right to require the Company to specifically perform such undertaking
whether or not any Acceptance has by its terms matured; and
(d) enforce any and all rights and remedies available
under the Loan Documents or applicable law.
8.3. When any Event of Default described in subsections
8.1(k) or (l) has occurred and is continuing, then (a) all fees, charges and
commissions payable hereunder, shall immediately become due and payable without
presentment, demand, protest or notice of any kind, (b) the obligation of the
Banks to accept or discount further Drafts pursuant to any of the terms hereof
shall immediately and automatically terminate (c) the Company shall immediately
pay to the Agent the full amount of all Acceptances, whether or not such
Acceptances have by their terms matured, the Company acknowledging that the
Banks would not have an adequate remedy at law for failure by the Company to
honor any such demand, and the Banks shall have the right to require the
Company to specifically perform such undertaking whether or not such
Acceptances have by their terms matured, and (d) the Agent may exercise all
remedies available to it under the Loan Documents or applicable law.
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SECTION 9. DEFINITIONS.
9.1. The following terms when used herein shall have the
following meanings, such definitions to be equally applicable to the singular
and plural of the terms defined:
The term "Acceptable Engineer" means Ryder Scott Company
Petroleum Engineers or such other petroleum engineers of recognized standing
selected by the Company and satisfactory to the Required Banks.
The term "Acceptances" shall mean Drafts which have been
accepted by one or more of the Banks pursuant to the terms of this Agreement.
The term "Acceptance Date" shall mean July 11, 1994 and each
day thereafter on which outstanding Acceptances mature provided that (i) no
Acceptance Date shall be a date later than the Termination Date then in effect
and (ii) if any such day is not a Business Day, then the related Acceptance
Date shall be the first Business Day following such maturity date.
The term "Acceptance Request" has the meaning set forth in
Section 1.2 hereof.
The term "Affiliate" shall mean any Person directly or
indirectly controlling or controlled by, or under direct or indirect common
control with, another Person. A Person shall be deemed to control another
Person for the purposes of this definition if such first Person possesses,
directly or indirectly, the power to direct, or cause the direction of, the
management and policies of the second Person, whether through the ownership of
voting securities, common directors, trustees or officers, by contract or
otherwise.
The term "Agent" shall mean Bank of Montreal and its
successors as agent hereunder.
The term "Apache" means Apache Corporation, a Delaware
corporation.
The term "Apache Debt/Capitalization Ratio" shall have the
meaning assigned to the term "Debt/Capitalization Ratio" in the Second Amended
and Restated Credit Agreement, dated as of May 9, 1994 among Apache, the
Lenders named therein, The First National Bank of Chicago, as Administrative
Agent and Collateral Agent, and Chemical Bank, as Co-Agent, as in effect on the
date hereof without giving effect to any amendments or modifications to such
Second Amended and Restated Credit Agreement subsequent to the date hereof.
Such term and all ancillary provisions and definitions are herein incorporated
by reference as if set forth herein and shall survive any termination of such
Second Amended and Restated Credit Agreement.
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The term "Assignment Agreement" has the meaning specified in
Section 11.13 hereof.
The term "Available Amount" shall mean the lesser of (i) the
Facility Amount and (ii) the Borrowing Base or such lesser amount as the
Company shall request pursuant to Section 2.5.
The term "Bank" shall mean Bank of Montreal and each other
Person which becomes a Bank party hereto pursuant to Section 11.13 hereof.
The term "Borrowing Base" has the meaning specified in Section
4.1 hereof.
The term "Borrowing Base Assets" shall mean the assets from
time to time included in the computation of the Borrowing Base.
The term "Business Day" shall mean a day (other than a
Saturday or Sunday) on which the Banks are open for business in Toronto,
Ontario.
The term "Certificate of Extension" means a certificate duly
executed by the Company delivered to the Agent pursuant to Section 1.6 hereof
and substantially in the form of Exhibit C.
The term "Calculation Period" means, as of the end of any
fiscal quarter of the Company, the period of four fiscal quarters ending on
such date.
The term "Collateral" has the meaning specified in Section 3
hereof.
The term "Collateral Documents" shall mean all assignments,
pledge agreements, security agreements, applications and instruments and
documents at any time providing, creating or evidencing liens on the Collateral
or any part thereof.
The term "Commercial Bank" shall mean any person which has
publicly traded debt securities rated either A- or higher by Standard and
Poor's Corporation or A(3) or higher by Moody's Investors Service, Inc.
The term "Consolidated Cash Flow" means, for any Calculation
Period, the sum of Consolidated Net Income plus, the change in deferred revenue
plus, to the extent deducted in the computation of such Consolidated Net
Income, depreciation, depletion, deferred taxes, amortization of goodwill,
interest expenses (net of interest capitalized) plus other non-cash charges
acceptable to the Agent for such Calculation Period.
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The term "Consolidated Net Income" for any Calculation Period
shall mean the net earnings of the Company and its Subsidiaries for such period
computed on a consolidated basis in accordance with GAAP, and excluding
undistributed earnings of entities which are not Subsidiaries and without
limiting the foregoing, after the deduction from gross income of all charges
and reserves for all taxes on or measured by income, but excluding any
extraordinary profits or losses (as determined in accordance with GAAP) on the
sale or other disposition of fixed or capital assets or on the acquisition,
retirement, sale or other disposition of stock or securities of the Company or
any Subsidiary, and also excluding any taxes on such profits and any tax
deductions or credits on account of any such losses.
The term "Current Ratio" means the ratio of (a) consolidated
current assets of the Company and its Subsidiaries to (b) consolidated current
liabilities of the Company and its Subsidiaries; provided that (i) current
portions of long-term debt and loans payable to Affiliates shall be excluded
from current liabilities and (ii) on any date of determination prior to the
Transition Date, current assets of the Company shall be increased by the face
amount of Drafts which might be accepted pursuant to Section 1.1 hereof, but
which have not been accepted and for which no Acceptance Request has been given
as of the date of such determination.
The term "Debt Service" means the sum of the scheduled
principal repayments of all Indebtedness of the Company and its Subsidiaries
during the period for which such amount is being determined plus the sum of all
principal payments actually paid by the Company and its Subsidiaries during
such period with respect to Subordinated Indebtedness (excluding the sum of all
scheduled principal payments actually paid by the Company and its Subsidiaries
with respect to Subordinated Indebtedness) plus Interest Expense and fees on
all Indebtedness for such period, computed in each case on a consolidated basis
in accordance with GAAP.
The term "Discount" shall mean as to each Bank and each
Acceptance discounted by such Bank or purchased by such Bank for its own
account hereunder the amount to be deducted from the face amount of such Draft
when the same is discounted (using a year of 360 days for the actual number of
days elapsed) at the effective discount rate of the Agent applicable to U.S.
dollar banker's acceptances accepted by the Agent in Canada for the same term
to maturity and for a similar face amount not later than 11:00 a.m. (Toronto
time) on the Business Day preceding the Acceptance Date in question. The
determination by the Agent of the Discount (including the discount rate) to be
applicable to each Draft accepted shall be final and conclusive absent manifest
error.
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The term "Drafts" shall mean Drafts of the Company drawn on
one or more of the Banks maturing as contemplated by the last sentence of
Section 1.2 hereof from their date and being payable in U.S. dollars.
The term "Event of Default" shall mean any of the events or
conditions described as such in Section 8.1 hereof and the term "Default" shall
mean any event or condition which if uncured and/or with the lapse of time, the
giving of notice, or both, would constitute an Event of Default.
The term "Extension Date" has the meaning specified in Section
1.6 hereof.
The term "Facility Amount" shall mean $50,000,000 through (and
including) the date one day prior to the Transition Date with the Facility
Amount to automatically reduce on the Transition Date to an amount equal to the
aggregate face amount of all Drafts outstanding on the Transition Date and to
further reduce by an amount equal to 1/12 of the aggregate face amount of all
Drafts outstanding on the Transition Date as of the date in the third month
after the Transition Date, and in every third month thereafter, which
numerically corresponds to the Transition Date (or, if such month has no
numerically corresponding date, on the last Business Day of such month), all as
such amounts may be further reduced pursuant to Section 2.5 hereof.
The term "Facility Amount Percentage" shall mean the
percentage for each Bank specified opposite its signature hereto or on an
assignment agreement executed by it, as such a percentage may be adjusted
pursuant to the provisions of Section 11.13 hereof.
The term "F.R.S. Board" means the Board of Governors of the
Federal Reserve System or any successor thereto.
The term "GAAP" shall mean generally accepted United States
accounting principles as in effect on the date financial statements are
prepared and applied consistently with those used in the preparation of the
financial reports referred to in Sections 5.4 and 5.5 hereof.
The term "Guaranties" shall mean guaranties acceptable in form
and substance to the Banks pursuant to which the Guarantors guarantee
unconditionally all indebtedness, obligations and liabilities of the Company
and the Pledged Subsidiaries arising under the Loan Documents and/or the
Related Documents.
The term "Guarantors" shall mean the Pledged Subsidiaries.
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The term "Hedging Agreement" means (i) any commodity hedge,
commodity swap, exchange, forward, future, collar or cap agreements, fixed
price agreements and all other agreements or arrangements designed to protect
the Company or any Pledged Subsidiary against fluctuations in commodity prices,
(ii) any interest rate swap agreement, interest rate cap agreement, interest
rate collar agreement or similar agreement designed to protect the Company or
any Pledged Subsidiary against fluctuations in interest rates or (iii) all
commitment and/or facility letters, applications, contracts, agreements and
confirmations of every kind or character evidencing or setting forth terms and
conditions to be applicable to or constituting agreements to provide, letters
of credit, bonds, guaranties or currencies (whether on a spot or forward basis)
or other arrangements entered into for the purpose of hedging or otherwise
protecting the Company or any Pledged Subsidiary against the consequences of
changes in currency conversion rates.
The term "Indebtedness" of any Person shall mean, as of any
date (a) all obligations of such Person for borrowed money, (b) all obligations
which are secured by any lien or encumbrance existing on property owned by such
Person whether or not the obligation secured thereby shall have been assumed by
such Person, other than those obligations which are incurred in the ordinary
course of business and are not required to be shown as a liability on a balance
sheet in accordance with GAAP, (c) all obligations of such Person under any
lease which, in accordance with GAAP, is or should be capitalized on the books
of the lessee, (d) the deferred purchase price for goods, property or services
acquired by such Person, and all obligations of such Person to purchase such
goods, property or services where payment therefore is required regardless of
whether or not delivery of such goods or property or the performance of such
services is ever made or tendered, other than such deferred purchase price and
obligations which are incurred in the ordinary course of business and are not
required to be shown as a liability on a balance sheet in accordance with GAAP,
(e) all obligations of such Person to advance funds to, or to purchase property
or services from, any other person in order to maintain the financial condition
of such person, (f) all obligations of others similar in character to those
described in clauses (a) through (c) of this definition for which such Person
is liable contingently or otherwise, as obligor, guarantor or in any other
capacity, or in respect of which obligations such Person assures a creditor
against loss or agrees to take any action to prevent any such loss (other than
endorsements of negotiable instruments for collection in the ordinary course of
business) and (g)liabilities of such Person in respect of banker's acceptances
and letters of credit (to the extent the obligation supported by such a letter
of credit is not already a liability of such Person).
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The term "Initial Borrowing Base Assets" has the meaning
specified in Section 4.2 hereof.
The term "Initial Report" has the meaning specified in Section
4.1 hereof.
The term "Interest Expense" means with respect to any period
for which a determination thereof is to be made, the aggregate amount of all
interest accrued (whether or not paid) on all Indebtedness.
The term "Interest Rate" shall mean the rate per annum
determined by adding 2% to the floating annual rate of interest established
from time to time by the Agent as the base rate it will use to determine rates
of interest on Canadian dollar loans to customers in Canada and designated as
its prime rate, with any change in the Interest Rate resulting from a change in
the prime rate to be and become effective on the date of the change in the
prime rate.
The term "Loan Documents" shall mean, collectively, this
Agreement, the Guaranties, the Collateral Documents, the Consent and
Acknowledgement of each Guarantor and any Certificate of Extension.
The term "Maximum Borrowing Base" means $30,000,000 or such
greater amount as the Banks from time to time may agree; provided, however,
that the Banks shall have no obligation to so agree.
The term "Oil and Gas Business" shall mean the business of
acquiring Oil and/or Gas Properties, exploring for and/or producing and/or
developing and/or marketing oil and/or natural gas and/or dealing in Oil and/or
Gas Properties, including as part of the Oil and Gas Business the sale of
natural gas at wholesale or retail and the ownership and operation of pipelines
and gas processing plants.
The term "Oil and/or Gas Property" shall mean and include any
interest in real estate and/or in oil and/or gas which may be found thereon or
produced therefrom, or in the revenues derived from the sale or other
disposition thereof including without limitation mineral interests, royalty
interests, net profits interests, working interests of all types and licenses,
permits and rights to produce and retain hydrocarbons, other than interests in
real estate which are acquired and held for purposes other than exploring for
or producing oil and/or gas or selling such properties to others who intend to
engage in the exploration for or production of oil and/or gas.
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The term "Original Currency" has the meaning specified in
Section 11.19 hereof.
The term "Paying Quantities" shall mean production of
hydrocarbons in an amount sufficient to pay operating and marketing expenses.
The term "Permitted Exceptions" shall mean and include:
(a) liens and charges incidental to construction except
such as may result from any delinquent obligation for the payment of
money on account of such construction, or, if delinquent, the payment
or validity of which is being contested in good faith and for which
adequate reserves in accordance with GAAP have been sat aside;
(b) the lien of current taxes and assessments not in
default or, if delinquent, the validity of which is being contested in
good faith and for which adequate reserves in accordance with GAAP
have been set aside;
(c) liens reserved in leases, easements, grants,
franchises or permits for rent and fees or for compliance with the
terms of such leases, easements, grants, franchises or permits; and
(d) liens securing obligations neither (x) assumed by the
Company or any Subsidiary (y) nor on account of which the Company or a
Subsidiary customarily pays interest, upon real estate in which the
Company or a Subsidiary has a right- of-way, easement, franchise or
other servitude or of which the Company or a Subsidiary is the lessee
of the whole thereof or any interest therein for the purpose of
locating pipe lines, substations, measuring stations, tanks or pumping
or delivery equipment.
The term "Person" shall mean an individual, partnership,
corporation, trust or unincorporated organization and a government or agency or
political subdivision thereof.
The term "Pledged Subsidiaries" shall mean (i) Hadson
Australia Development Pty Limited A.C.N. 009 140 854, a company incorporated in
Western Australia, (ii) Petro Energy Limited A.C.N. 000 293 729, a company
incorporated in New South Wales, (iii) any Subsidiary which owns any interest
in any Oil and/or Gas Property included in the Borrowing Base and (iv) any
Subsidiary to which the Company or any Subsidiary or Subsidiaries of the
Company shall, at any time on or after the date hereof, have loans or advances
which were made subsequent to the date hereof outstanding in an aggregate
principal amount greater than $500,000, and which
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in each case has executed and delivered a Guaranty and Collateral Documents to
the Agent in form and substance satisfactory to the Agent which remain in full
force and effect.
The term "Process Agent" has the meaning specified in Section
11.22 hereof.
The term "Proved Producing Properties" shall mean interests in
Oil and/or Gas Properties of the Company and Pledged Subsidiaries subject only
to liens permitted by Section 7.8 hereof, in oil and/or gas to be produced from
existing wells which have been continuously producing oil and/or gas in Paying
Quantities at stabilized production rates for a period sufficient in the
reasonable judgment of the Required Banks so as to enable future production
amounts and trends to be predicted with reasonable assurance.
The term "Rating Agency" shall mean each of Duff & Phelps
Credit Rating Company, Moody's Investors Service, Inc. and Standard & Poor's
Corporation.
The term "Related Documents" shall mean all Hedging Agreements
between any of the Banks and the Company or the Pledged Subsidiaries against
the consequences of changes in interest rates or currency conversion rates.
The term "Required Banks" shall mean Banks holding 50% or more
of the outstanding principal amount of the Acceptances, or, if no Acceptances
are outstanding, Banks whose Facility Amount Percentages aggregate 50% or more.
The term "Second Currency" has the meaning specified in
Section 11.19 hereof.
The term "Significant Agreements" shall mean the agreements
listed on Exhibit D hereto, together will all amendments or modifications with
respect thereto.
The term "Stamping Fee" shall mean a percentage per annum
equal to the percentage set forth below:
Rating of Apache's
Apache/Debt Long-Term Debt by 2 or Stamping
Capitalization Ratio more Rating Agencies Fee
Greater than or equal to Lower than BBB-/Baa3 2.375%
.60 to 1.0
Greater than or equal to BBB-/Baa3 2.125%
.60 to 1.0
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Rating of Apache's
Apache/Debt Long-Term Debt by 2 or Stamping
Capitalization Ratio more Rating Agencies Fee
Greater than or equal to BBB/Baa2 or higher 1.875%
.60 to 1.0
Greater than or equal to Lower than BBB-/Baa3 2.125%
.55 to 1 but less than .60 to 1
Greater than or equal to BBB-/Baa3 or higher 1.875%
.55 to 1 but less than .60 to 1
Greater than or equal to Lower than BBB-/Baa3 1.75%
.50 to 1 but less than .55 to 1
Greater than or equal to .50 to BBB-/Baa3 or higher 1.625%
1 but less than .55 to 1
Greater than or equal to .45 to BBB-/Baa3 or lower 1.375%
1 but less than .50 to 1
Greater than or equal to .45 to BBB/Baa2 or higher 1.125%
1 but less than .50 to 1
Greater than or equal to .40 to BBB-/Baa3 or lower 1.125%
1 but less than .45 to 1
Greater than or equal to .40 to BBB/Baa2 or higher 1.00%
1 but less than .45 to 1
Less than .40 to 1 Lower than BBB-/Baa3 1.125%
Less than .40 to 1 BBB-/Baa3 1.00%
Less than .40 to 1 BBB/Baa2 or higher .875%
Such percentage shall be computed on the face amount of each Acceptance for the
period from the date of Acceptance to its maturity date.
The term "Subordinated Indebtedness" means unsecured
Indebtedness of the Company which is subordinated, upon terms satisfactory to
the Agent, in right of payment to the payment in full of the Company under this
Agreement or any Related Document.
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The term "Subsidiary" shall mean any corporation all of the
outstanding voting shares of which, other than directors qualifying shares to
the extent required by law, is at the time, owned by the parent in question or
by any other corporations or entities which are themselves Subsidiaries within
the meaning of this definition or jointly by the parent in question and any one
or more such Subsidiaries.
The term "Tangible Net Worth" means the consolidated net worth
of the Company and its Subsidiaries after subtracting therefrom the aggregate
amount of any intangible assets of the Company and its Subsidiaries, including
goodwill, franchises, licenses, patents, trademarks, trade names, copyrights,
service marks and brand names.
The term "Taxes" has the meaning set forth in Section 2.6
hereof.
The term "Termination Date" shall mean May 26, 1999, as such
date may be extended pursuant to Section 1.6, or such earlier date on which the
obligation of the Banks to accept Drafts hereunder is terminated in whole
pursuant to Sections 2.5, 8.2, 8.3 or 11.21 hereof.
The term "Transition Date" shall mean May 26, 1996, as such
date may be extended pursuant to Section 1.6 hereof.
The term "U.S. Dollars" shall mean currency which at the time
is legal tender for public and private debts in the United States of America.
The term "U.S. Dollar Equivalent" shall mean the amount of
United States Dollars which would be realized by converting a foreign currency
into United States Dollars in the spot market at the exchange rate quoted by
Bank of Montreal at 11:00 a.m. (New York time) on the date of determination to
prime banks in the London interbank foreign exchange market for the purchase of
United States Dollars with such foreign currency.
The term "$" shall mean U.S. Dollars.
9.2. U.S. Dollars. Except to the extent explicitly
otherwise provided herein, all references to dollars and dollar amounts shall
be deemed references to U.S. Dollars.
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SECTION 10. THE AGENT.
10.1. Appointment and Authorization. Each Bank hereby
appoints and authorizes the Agent to take such action as agent on its behalf
and to exercise such powers hereunder and under the Loan Documents as are
designated to the Agent by the terms hereof and thereof together with such
powers as are reasonably incidental thereto. The Agent may resign at any time
by sending twenty (20) days prior written notice to the Company and the Banks
and may be removed by the Required Banks upon twenty (20) days prior written
notice to the Company and the Banks. In the event of any such resignation or
removal the Required Banks may appoint a new agent, which shall succeed to all
the rights, powers and duties of the Agent hereunder and under the other Loan
Documents. Any resigning or removed Agent shall be entitled to the benefit of
all the protective provisions hereof with respect to its acts as an agent
hereunder, but no successor Agent shall in any event be liable or responsible
for any actions of its predecessor. If the Agent resigns or is removed and no
successor is appointed, the rights and obligations of such Agent shall be
automatically assumed by the Required Banks and (i) the Company shall be
directed to make all payments due each Bank hereunder directly to such Bank and
(ii) the Agent's rights in the Loan Documents shall be assigned without
representation, recourse or warranty to the Banks as their interests may
appear.
10.2. Rights as a Bank. The Agent has and reserves all of
the rights, powers and duties hereunder and under the other Loan Documents, the
Guaranties and the Acceptances as any Bank may have and may exercise the same
as though it were not the Agent and the terms "Bank" or "Banks" as used herein
and in all of such documents shall, unless the context otherwise expressly
indicates, include the Agent in its individual capacity as a Bank. The Agent
reserves the right to engage in other business transactions with the Company
and its Affiliates.
10.3. Standard of Care. The Banks acknowledge that they
have received and approved copies of the Loan Documents, and such other
information and documents concerning the transactions contemplated and financed
hereby as they have requested to receive and/or review and that the Agent or an
Affiliate thereof may be financially interested in the Company. The Agent
makes no representations or warranties of any kind or character to the Banks
with respect to the validity, enforceability, genuineness, perfection, value,
worth or collectibility hereof or of the other Loan Documents or of the liens
provided for thereby or of any other documents called for hereby or thereby or
of the Collateral. The Agent need not verify the worth or existence of the
Collateral and may rely exclusively on reports provided by the Company in
computing the Borrowing Base. Neither the Agent nor any director, officer,
employee, agent or representative thereof (including any
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security trustee therefor) shall, subject to Section 1.7, in the case of the
Company, in any event be liable for any clerical errors or errors in judgment,
inadvertence or oversight, or for action taken or omitted to be taken by it or
them hereunder or under the Loan Documents or in connection herewith or
therewith except for its or their own gross negligence or willful misconduct.
The Agent shall incur no liability under or in respect of this Agreement or the
other Loan Documents by acting upon any notice, certificate, warranty,
instruction or statement (oral or written) of anyone (including anyone in good
faith believed by it to be authorized to act on behalf of the Company), unless
it has actual knowledge of the untruthfulness of same. The Agent agrees to use
the same care in protecting the interests of the Banks under the Loan Documents
as it uses for similar facilities held by it solely for its own account. The
Agent shall be entitled to advice of counsel concerning all matters pertaining
to the agencies hereby created and its duties hereunder, and shall incur no
liability to anyone and be fully protected in acting upon the advice of such
counsel. The Agent shall be entitled to assume that no Default or Event of
Default exists, absent actual knowledge thereof, unless notified to the
contrary by a Bank. The Agent shall in all events be fully protected in acting
or failing to act in accord with the instructions of the Required Banks.
Whenever the terms hereof or of another Loan Document permit the Agent to take
a particular action, the Agent agrees that it will take such action or refrain
from same, if requested to do so by the Required Banks. Upon the occurrence of
an Event of Default hereunder, the Agent shall take such action with respect to
the enforcement of its liens on the Collateral and the preservation and
protection thereof and its rights under the Guaranties as it shall be directed
to take by the Required Banks (and shall consult with the Banks as to actions
to be taken) but unless and until the Required Banks have given such direction
the Agent shall take or refrain from taking such actions as it deems
appropriate and in the best of interest of all Banks. The Agent shall in all
cases be fully justified in failing or refusing to act hereunder unless it
shall be indemnified to its reasonable satisfaction by the Banks against any
and all liability and expense which may be incurred by it by reason of taking
or continuing to take any such action. Each Bank acknowledges that it has
independently and without reliance on the Agent or any other Bank and based
upon such information, investigations and inquiries as it deems appropriate
made its own credit analysis and decision to extend credit to the Company. It
shall be the responsibility of each Bank to keep itself informed as to the
creditworthiness of the Company and the Agent shall have no liability to any
Bank with respect thereto. The Agent shall, upon the written request of a
Bank, request from the Company copies of any information to which the Agent is
entitled to receive hereunder, and shall promptly deliver copies thereof upon
receipt of same to such requesting Bank.
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10.4. Costs and Expenses. Each Bank agrees to reimburse
the Agent for all out-of-pocket costs and expenses suffered or incurred by the
Agent or any security trustee in performing its duties hereunder and under the
other Loan Documents or in the exercise of any right or power imposed or
conferred upon the Agent hereby or thereby, to the extent that the Agent is not
promptly reimbursed for same by the Company or out of the Collateral, all such
costs and expenses to be borne by the Banks ratably in accordance with the
amounts of their respective Facility Amount Percentages. If any Bank fails to
reimburse the Agent for its share of any such costs and expenses, such costs
and expenses shall be paid pro rata by the remaining Banks, but without in any
manner releasing the defaulting Bank from its liability hereunder.
10.5. Indemnity. The Banks shall ratably indemnify and
hold the Agent, and its directors, officers, employees, agents or
representatives (including as such any security trustee therefor) harmless from
and against any liabilities, losses, costs or expenses suffered or incurred by
them under the other Loan Documents or in connection with the transactions
contemplated hereby or thereby, regardless of when asserted or arising, except
to the extent they are promptly reimbursed for the same by the Company or out
of the Collateral and except to the extent that any event giving rise to a
claim was caused by the gross negligence or willful misconduct of the party
seeking to be indemnified. If any Bank defaults in its obligations hereunder,
its share of the obligations shall be paid pro rata by the remaining Banks, but
without in any manner releasing the defaulting Bank from its liability
hereunder.
SECTION 11. MISCELLANEOUS.
11.1. Waiver of Rights. No delay or failure on the part of
the Company, the Agent or any Bank in the exercise of any power or right shall
operate as a waiver thereof, nor as an acquiescence in any default, nor shall
any single or partial exercise thereof, or the exercise of any other power or
right, preclude any other right or the further exercise of any other rights,
and the rights and remedies hereunder of the Company, the Banks and the Agent
are cumulative to, and not exclusive of, any rights or remedies which any of
them would otherwise have.
11.2. Non-Business Day. If any amount payable hereunder
shall fall due on a day which is not a Business Day, the payment date therefor
shall be extended to the next date which is a Business Day.
11.3. Documentary Taxes. The Company agrees to pay any
documentary, stamp or similar taxes payable in respect to this Agreement or any
Draft or Acceptance, including interest and penalties, in the event any such
taxes are assessed irrespective of
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when such assessment is made and whether or not any credit is then in use or
available hereunder.
11.4. Survival of Representations. All representations and
warranties made in the Loan Documents or pursuant thereto or in certificates
given pursuant hereto or thereto shall survive the execution and delivery of
this Agreement, and shall continue in full force and effect with respect to the
date as of which they were made as long as any credit is in use or available
hereunder.
11.5. Survival of Indemnities. All indemnities and all
other provisions relative to reimbursement to the Banks of amounts sufficient
to protect the yield of the Banks with respect to the Acceptances shall survive
the termination of this Agreement and the payment of the Acceptances.
11.6. Set-off Sharing. Each Bank agrees with each other
Bank party hereto that in the event such Bank shall receive and retain any
payment, whether by set-off or application of deposit balances or otherwise
("Set-off"), on or in respect of any Acceptance outstanding under this
Agreement in excess of its ratable share of payments on all Acceptances then
outstanding, then such Bank shall purchase for cash at face value, but without
recourse, ratably from each of the other Banks such amount of the risk incident
to the Acceptances held by each such other Bank (or interest therein) as shall
be necessary to cause such Bank to share such excess payment ratably with all
the other Banks; provided, however, that if any such purchase is made by any
Bank, and if such excess payment or part thereof is thereafter recovered from
the other Banks, the related purchases shall be rescinded ratably and the
purchase price restored as to the purchasing Bank such portion of such excess
payment so recovered, but without interest.
11.7. Notices. All communications provided for herein
shall be in writing or by telex, telegraph or facsimile transmission, except as
otherwise specifically provided for hereinabove, addressed, if to the Company
at 2000 Post Oak Boulevard, Suite 100, Houston, Texas 77056-4400, Attention:
Clyde E. McKenzie, or if to the Agent or Banks at their respective addresses
set forth opposite their respective signatures hereto, or at such other address
as shall be designated by any party hereto in a written notice to each other
party pursuant to this Section 11.7. Any notice in writing shall be deemed to
have been given or made when served personally or when received if sent by
mail, and any notice given by telex or telegraphic means shall be deemed given
when transmitted (answerback confirmed); provided that any notice to the Agent
or any Bank under Section 1 hereof shall only be effective upon receipt.
11.8. Counterparts. This Agreement may be executed in any
number of counterparts, and by the different parties on
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different counterparts, each of which when executed shall be deemed an
original, but all such counterparts taken together shall constitute one and the
same instrument.
11.9. Successors and Assigns. This Agreement shall be
binding upon the Company and its successors and assigns, and shall be binding
upon and inure to the benefit of the Banks and their respective successors and
permitted assigns. The Company may not assign its rights or obligations
hereunder without the prior written consent of the Banks.
11.10. Participants. Each Bank shall have the right at its
own cost to grant participations (to be evidenced by one or more agreements or
certificates of participation) in the Acceptances created by such Bank at any
time and from time to time to one or more other financial institutions,
provided that no such participant shall have any rights under this Agreement
(the participant's rights against the Bank granting its participation to be
those set forth in the participation agreement between the participant and such
Bank). Each such Bank shall be entitled to the benefits of Section 1 hereof to
the extent such Bank would have been so entitled had no such participation been
sold.
11.11. Costs and Expenses. The Company agrees to pay on
demand all reasonable out-of-pocket costs and expenses of the Agent in
connection with the negotiation, preparation, execution, delivery, syndication,
recording and/or filing and/or release of the Loan Documents and the other
instruments and documents to be delivered hereunder or thereunder or in
connection with the transactions contemplated hereby or thereby or in
connection with any consents hereunder or thereunder or waivers or amendments
hereto or thereto, including the reasonable fees and expenses of counsel for
the Agent with respect to all of the foregoing, and all recording, filing or
other fees, costs and taxes incident to perfecting a lien upon the collateral
security for the Company's obligations under the Loan Documents and Related
Documents and other obligations of the Company, and all reasonable costs and
expenses (including reasonable attorneys' fees), incurred by the Agent, any
security trustee for the Banks or the Banks in connection with a default or the
enforcement of any of the Loan Documents and the other instruments and
documents to be delivered hereunder or thereunder. Subject to Section 1.7
hereof, the Company agrees to indemnify and save the Banks, the Agent and any
security trustee for the Banks harmless from any and all liabilities, losses,
costs and expenses incurred by the Banks or the Agent in connection with any
action, suit or proceeding brought against the Agent, security trustee or any
Bank by any person which arises out of the transactions contemplated or
financed hereby or by the other Loan Documents or Related Documents or out of
any action or inaction by the Agent, any security Trustee or any Bank hereunder
or thereunder, except for such thereof as is caused by
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the gross negligence or willful misconduct of the party indemnified or a breach
by the indemnified Bank of its agreements herein contained. The provisions of
this Section 11.11 and the protective provisions of Section 1 hereof shall
survive payment of the Acceptances.
11.12. Construction. The parties hereto acknowledge and
agree that this Agreement shall not be construed more favorably in favor of one
than the other based upon which party drafted the same, it being acknowledged
that all parties hereto contributed substantially to the negotiation of this
Agreement.
11.13. Assignment Agreements. Bank of Montreal may, from
time to time, with the consent of the Company (which will not be unreasonably
withheld, it being acknowledged that it would be reasonable to withhold a
consent if the Company's costs would be increased in any material respect by
factors peculiar to the proposed assignee bank or to a class of banks of which
it is a part), assign to other financial institutions a portion of its
obligation to create and discount Acceptances hereunder pursuant to written
agreements executed by the assignor, the assignee and the Company, which
agreements shall specify in each instance the portion of the Facility Amount
Percentage which is to be assigned to each such assignee and assumed by it (the
"Assignment Agreements"), provided that the Company may in its sole discretion
withhold its consent to any assignment by Bank of Montreal if as a result
thereof Bank of Montreal would have assigned fifty percent or more of its
original Facility Amount Percentage or there would be more than four Banks
hereunder. Upon the execution of each Assignment Agreement by the assignor,
the assignee and the Company (i) such assignee shall thereupon become a "Bank"
for all purposes of this Agreement with a Facility Amount Percentage in the
amount set forth in such Assignment Agreement and with all the rights, powers
and obligations afforded a Bank hereunder, (ii) Bank of Montreal shall have no
further liability for accepting or funding the portion of its Facility Amount
Percentage assumed by such other Bank and (iii) the address for notices to such
Bank shall be as specified in the Assignment Agreement executed by it.
11.14. Amendments and Waivers. No provision of the Loan
Documents may be amended or waived except in writing signed by the Company and
the Required Banks and, if the rights or duties of the Agent are affected
thereby, by the Agent; provided that no such amendment or waiver shall, unless
signed by all Banks, (i) increase or extend the Facility Amount Percentage of
any Bank or subject any Bank to any additional obligation, (ii) reduce the
principal of or rate of interest or discount payable to any Bank with respect
to any Acceptance created or discounted by it or any fees due such Bank
hereunder, or (iii) change the stated time or manner of any payment due from
such Bank or the provisions hereof allocating payments or recoveries, or (iv)
change the percentage of the
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Facility Amount or of the aggregate unpaid principal amount of the Acceptances,
or the number of Banks required for the Banks or any of them to take any action
under this Section 11.14 or any other provisions of this Agreement or release
the lien of the Collateral Documents on any substantial (in value) part of the
Collateral except concurrently with the sale thereof, if permitted hereby.
11.15. Governing Law. This Agreement and the rights and
duties of the parties hereto, shall be construed and determined in accordance
with the laws of the Province of Ontario and the laws of Canada applicable
therein.
11.16. Entire Agreement. This Agreement constitutes the
entire understanding of the parties with respect to the subject matter hereof
and any prior agreements, whether written or oral, with respect thereto are
superseded hereby.
11.17. One Bank. If and so long as Bank of Montreal is the
only Bank hereunder, Bank of Montreal shall have all rights, powers and
privileges afforded the Agent, the Banks or the Required Banks hereunder.
11.18. Headings. Section headings used in this Agreement
are for reference only and shall not affect the construction of this Agreement.
11.19. Judgment Currency.
(a) If for the purpose of obtaining judgment in any court
it is necessary to convert an amount due hereunder in the currency in
which it is due (the "Original Currency") into another currency (the
"Second Currency"), the rate of exchange applied shall be that at
which, in accordance with normal banking procedures, a Bank could
purchase, in the Toronto foreign exchange market, the Original
Currency with the Second Currency on the date two Business Days
preceding that on which judgment is given. The Company agrees that
its obligation in respect of any Original Currency due from it to each
Bank hereunder shall, notwithstanding any judgment or payment in such
other currency, be discharged only to the extent that on the Business
Day following the date such Bank receives payment of any sum so
adjudged to be due hereunder in the Second Currency the Bank can, in
accordance with normal banking procedures, purchase, in the Toronto
foreign exchange market the amount due in the Original Currency with
the amount of the Second Currency so paid; and if the amount of the
Original Currency so purchased or which could have been so purchased
is less than the amount originally due in the Original Currency, the
Company agrees as a separate obligation and notwithstanding any such
payment or judgment to indemnify such Bank against such loss.
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(b) The term "rate of exchange" in this Section 11.19
means the spot rate at which the Bank in accordance with normal
practices is able on the relevant date to purchase the Original
Currency with the Second Currency and includes any premium and costs
of exchange payable in connection with such purchase.
11.20. Time is of the Essence. Time is of the essence of
this Agreement.
11.21. Limit on Rate of Interest or Discount.
Notwithstanding any provision contained in this Agreement, the Company shall
not be obliged to make any payment of interest, discount or other amounts
payable to a Bank hereunder in excess of the amount or rate which would be
prohibited by applicable law or would result in the receipt by such Bank of
interest at a criminal rate (as such terms are construed under the Criminal
Code (Canada)). In the event that any such payments are limited or prohibited
as provided in Section 11.21, the Banks shall have no further obligation to
make any Credit available hereunder and the entire amount of credit then
outstanding shall become immediately due and payable.
11.22. Courts. Any legal action or proceeding with respect
to this Agreement or any Collateral against the Company may be brought in the
courts of the Province of Ontario, which courts the parties hereto acknowledge
irrevocably to be a convenient forum for the resolution of any such legal
action or proceeding. The Company hereby accepts, for itself and in respect of
its assets and revenues, generally and unconditionally the non-exclusive
jurisdiction of the aforesaid courts.
The Company hereby irrevocably designates and appoints C T
Corporation System (Canada), Ltd. (the "Process Agent") at its registered
office from time to time and of which the Agent shall have been notified, which
office is currently located at 20 Queen Street West, Toronto, Ontario M5H 2V3
as the authorized agent of the Company upon which process may be served in any
suit or proceeding arising out of or in connection with this Agreement or any
Loan Document which may be instituted in the Province of Ontario and agrees
that service of process on the Process Agent shall, to the extent permitted by
law, be deemed in every respect to be effective service of process on the
Company. However, nothing in this Section 11.22 shall affect the right of the
Agent to serve legal process in any other manner permitted by law or affect the
right of the Agent to bring any action or proceed against the Company or its
properties in the courts of any other jurisdiction.
11.23. No Merger or Novation. All Guaranties (except the
Guaranty of Hadson Energy Corporation), Collateral Documents
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and other Loan Documents provided to the Agent and/or the Banks prior to the
date hereof in connection with the Original Acceptance Agreement or the
Indebtedness of the Company thereunder remain in full force and effect, there
being no novation or merger of the Original Acceptance Agreement, this Amended
and Restated Acceptance Agreement, the Guaranties, Collateral Documents or Loan
Documents.
Upon your acceptance hereof in the manner hereinafter set
forth, this Agreement shall be a contract between us for the purposes
hereinabove set forth.
Executed and delivered as of this 26th day of May, 1994.
HADSON ENERGY LIMITED
By /s/ CLYDE E. MCKENZIE
Its Vice President
Accepted and agreed to as of the day and year last above
written.
Address and Amount and Percentage of
Facility Amount:
First Canadian Place BANK OF MONTREAL,
Toronto, Ontario M5X 1A1 individually and as Agent
Attention: Corporate Loan
Administration
Sylvia Ehrlund
Level B-2
With copies of notices to: /s/ ROBERT L. ROBERTS
Robert L. Roberts
700 Louisiana, Suite 4400 Director, US Corporate Banking
Houston, Texas 77002
Attention: Robert L. Roberts
Facility Amount Percentage:
$50,000,000
(100%)
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