1
EXHIBIT 10.5
October 31, 1996
To each of the Parties Listed
on attached Schedule I
Re: Apache Corporation Global Credit Facility
Indemnity Agreement
Ladies and Gentlemen:
Reference is hereby made to (i) that certain Intercreditor Agreement of
even date herewith, in the form attached hereto as Exhibit "A" unless the
parties hereto otherwise agree (the "Intercreditor Agreement"), among the
various commercial lending institutions (the "U.S. Lenders") as are or may
become parties to that certain Fourth Amended and Restated Credit Agreement of
even date herewith among the U.S. Borrower (as herein defined), the U.S.
Lenders, the Global Administrative Agent (as herein defined), the U.S. Co-Agent
(as herein defined) and the Arrangers therein named (the "Arrangers") (as it
may be amended, supplemented, restated or otherwise modified and in effect from
time to time, the "U.S. Credit Agreement"), the various commercial lending
institutions (the "Australian Lenders") as are or may become parties to that
certain Credit Agreement of even date herewith among the Australian Borrower
(as herein defined), the Australian Lenders, the Global Administrative Agent,
the Australian Administrative Agent (as herein defined) and the Arrangers (as
it may be amended, supplemented, restated or otherwise modified and in effect
from time to time, the "Australian Credit Agreement"), the various commercial
lending institutions (the "Canadian Lenders", and together with the U.S.
Lenders and the Australian Lenders, the "Lenders") as are or may become parties
to that certain Credit Agreement of even date herewith among the Canadian
Borrower (as herein defined), the Canadian Lenders, the Global Administrative
Agent, the Canadian Administrative Agent (as herein defined) and the Arrangers
(as it may be amended, supplemented, restated or otherwise modified and in
effect from time to time, the "Canadian Credit Agreement"), The First National
Bank of Chicago, as Global Administrative Agent (the "Global Administrative
Agent"), The Chase Manhattan Bank, as Co-Agent under the U.S. Credit Agreement
(the "U.S. Co-Agent"), Chase Securities Australia Limited (ACN 002 888 011), as
the Administrative Agent for the Australian Lenders (the "Australian
Administrative Agent"), Bank of Montreal, as the Administrative Agent for the
Canadian Lenders (the "Canadian Administrative Agent" and together with the
Global Administrative Agent and the Australian Administrative Agent, the
"Administrative Agents"), First Chicago Capital Markets, Inc., as Arranger, and
Chase Securities Inc., as Arranger; (ii) that certain Fourth Amended and
Restated Credit Agreement of even date herewith among Apache Corporation (the
"U.S. Borrower"), the U.S. Lenders, the Global Administrative Agent, the U.S.
Co-Agent and the Arrangers; (iii) that certain Credit Agreement of even date
herewith among Apache Energy Limited (ACN 009 301
2
To each of the Parties Listed
on attached Schedule I
October 31, 1996
Page 2
964) and Apache Oil Australia Pty. Limited (ACN 050 611 688) (collectively, the
"Australian Borrower"), the Australian Lenders, the Global Administrative
Agent, the Australian Administrative Agent and the Arrangers; (iv) that certain
Credit Agreement of even date herewith among Apache Canada Ltd. (the "Canadian
Borrower", and together with the U.S. Borrower and the Australian Borrower, the
"Borrowers"), the Canadian Lenders, the Global Administrative Agent, the
Canadian Administrative Agent and the Arrangers, as each may be amended,
supplemented, restated or otherwise modified and in effect from time to time.
Capitalized terms not otherwise defined herein shall have the meanings assigned
to such terms in the Intercreditor Agreement.
The Australian Borrower consents to the terms and provisions of this
letter agreement (this "Indemnity Agreement") and the Intercreditor Agreement,
including, without limitation, the terms and provisions regarding the
disclosure of information, the sharing of payments, and the purchase and sale
of participations in the Credit Agreements, consents to all actions required of
any Administrative Agent or Lender pursuant to the terms and conditions of the
Intercreditor Agreement, and agrees to take all actions necessary to give
effect to the terms and provisions of this Indemnity Agreement and the
Intercreditor Agreement. The Australian Borrower agrees that any amounts which
are paid (or received by way of setoff, combination of accounts or similar
arrangements) to cure any Debt Limit Excession shall be made by the U.S.
Borrower to the U.S. Lenders, by the Australian Borrower to the Australian
Lenders and by the Canadian Borrower to the Canadian Lenders in accordance with
their respective Sharing Percentages as determined by the Administrative Agents
in accordance with the terms of the Intercreditor Agreement. It is the
intention of the parties hereto that, except as otherwise set forth in this
Indemnity Agreement, under no circumstances will any Borrower be required to
pay any principal amount under the Global Loan Documents in excess of
outstanding Obligations with respect to its Credit Agreement and any guaranty
executed by the Borrower plus any interest, fees and other amounts as set forth
in this Indemnity Letter and any other Global Loan Document.
If after any amount is paid under Section 3.3(c) of the Intercreditor
Agreement a Borrower or any trustee, liquidator, receiver or receiver-manager
or Person with analogous powers (collectively the "Reimbursed Borrower")
recovers any amount from any Lenders ("Disgorging Lenders") in respect of any
amount theretofore used to reduce outstanding Obligations under any Credit
Agreement or to purchase or repurchase participation interests from the other
Lenders, then the amount so recovered (including any interest paid by the
Lenders) shall be treated for all purposes: (i) as between the relevant
Reimbursed Borrower and the Disgorging Lenders, and (ii) as between the
Disgorging Lenders and the other Lenders (the
3
To each of the Parties Listed
on attached Schedule I
October 31, 1996
Page 3
"Non-Disgorging Lenders"), to be outstanding as U.S. Credit Outstandings,
Canadian Credit Outstandings or Australian Credit Outstandings, as applicable,
in which case the Reallocable Payment Proportions shall thereupon be adjusted
and, notwithstanding the fact that no reallocable payment is received, Section
3.3(c) of the Intercreditor Agreement again applied in order that the
Reallocable Payment Proportions equal the applicable Target Sharing
Percentages.
To the extent the application of the provisions of this Indemnity
Agreement or the Intercreditor Agreement give rise to any liability for any tax
payments (other than income tax and franchise tax payments) in connection with
any payments made by the U.S. Borrower, the Australian Borrower, the Canadian
Borrower, any Administrative Agent, the Co-Agent, any Arranger, or any Lender
or any other party to any Credit Agreement, then (notwithstanding any
provisions to the contrary set forth in the Credit Agreements), the Australian
Borrower agrees that the Borrowers, including the Australian Borrower, jointly
and severally, shall indemnify each Lender, Administrative Agent, Co-Agent and
Arranger (the "Loan Parties") and shall hold each Loan Party free and harmless
from and against any such liability; provided, however, that each Loan Party
(if so requested by a Borrower under a Credit Agreement through the appropriate
Administrative Agent) will use good faith efforts to accommodate any reasonable
request by such Borrower in order to avoid the need for, or reduce the amount
of, such compensation so long as the request will not, in the sole opinion of
the applicable Loan Party, be disadvantageous to such Loan Party.
The Australian Borrower agree to reimburse each Loan Party for any
reasonable costs and out-of-pocket expenses (including fees and expenses of
consultants and attorneys' fees (on a solicitor and his own client basis with
respect to the Canadian Loan Documents) for such Loan Party) paid or incurred
by such Loan Party in connection with the preparation, review, execution,
delivery, amendment, modification and administration of the Global Loan
Documents, including, without limitation, this Indemnity Agreement and the
Intercreditor Agreement. The Australian Borrower agrees to reimburse each Loan
Party for any reasonable costs and out-of-pocket expenses (including attorneys'
fees (on a solicitor and his own client basis with respect to the Canadian Loan
Documents) for the Loan Parties) paid or incurred by any Loan Party in
connection with the collection and enforcement of the Global Loan Documents,
including this Indemnity Agreement and the Intercreditor Agreement.
The Australian Borrower hereby indemnifies, exonerates and holds each
Loan Party, and their respective directors, agents, officers and employees
("Indemnified Persons") free and harmless from and against any and all losses,
claims, damages, penalties, judgments, liabilities, actions, suits, costs and
expenses (including, without limitation, all expenses of litigation or
4
To each of the Parties Listed
on attached Schedule I
October 31, 1996
Page 4
preparation therefor whether or not any Loan Party or any Indemnified Person is
a party thereto and all other attorneys' fees (on a solicitor and his own
client basis with respect to the Canadian Loan Documents) and disbursements)
("Claims") which any of them may pay or incur as a result of, arising out of,
or relating to, this Indemnity Agreement, the Intercreditor Agreement, the
other Global Loan Documents or the transactions contemplated hereby or thereby
(the "Indemnified Liabilities"), except to the extent that a final order of a
court of competent jurisdiction finds that such Indemnified Liability arises
solely from such Indemnified Person's gross negligence or wilful misconduct.
If and to the extent that the foregoing undertaking may be unenforceable for
any reason, the Australian Borrower hereby agrees to make the maximum
contribution to the payment and satisfaction of each of the Indemnified
Liabilities which is permissible under applicable law. The Australian Borrower
shall be obligated to indemnify the Indemnified Persons for all Claims
regardless of whether the Australian Borrower had knowledge of the facts and
circumstances giving rise to such Claims.
Nothing contained in this agreement shall be construed in a manner which
would deem any party to this Indemnity Agreement, the Intercreditor Agreement
or any other Global Loan Document (under state law or for tax purposes) to be
acting in partnership with any other party. The obligations of the Australian
Borrower under this Indemnity Agreement and the Intercreditor Agreement shall
survive the termination of this Indemnity Agreement, the Intercreditor
Agreement or any other Global Loan Document or any non-assumption of this
Indemnity Agreement, the Intercreditor Agreement or any other Global Loan
Document in a bankruptcy or similar proceeding.
This Indemnity Agreement may be executed in any number of counterparts
and by different parties on separate counterparts, and all such counterparts
shall together constitute but one and the same agreement.
5
To each of the Parties Listed
on attached Schedule I
October 31, 1996
Page 5
THIS INDEMNITY AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF ILLINOIS, BUT
GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS. This Indemnity
Agreement constitutes the entire understanding of the parties hereto with the
Australian Borrower with respect to the Intercreditor Agreement and this
Indemnity Agreement and supersedes any prior agreements, written or oral, with
respect thereto.
Very truly yours,
APACHE ENERGY LIMITED (ACN 009 301
964), as an Australian Borrower
By: /s/ APACHE ENERGY LIMITED
----------------------------------
Name: Matthew W. Dundrea
Title: Treasurer
APACHE OIL AUSTRALIA PTY. LIMITED
(ACN 050 611 688), as an Australian
Borrower
By: /s/ APACHE OIL AUSTRALIA PTY. LIMITED
--------------------------------------
Name: Matthew W. Dundrea
Title: Treasurer
6
To each of the Parties Listed
on attached Schedule I
October 31, 1996
Page 6
AGREED AND CONSENTED TO BY:
THE FIRST NATIONAL BANK OF CHICAGO,
as Global Administrative Agent and on behalf of
the U.S. Lenders under the U.S. Credit Agreement
By: /s/ THE FIRST NATIONAL BANK OF CHICAGO
---------------------------------------
Name: W. Walter Green
Title: Attorney-in-fact for
The First National Bank of Chicago
7
To each of the Parties Listed
on attached Schedule I
October 31, 1996
Page 7
AGREED AND CONSENTED TO BY:
THE CHASE MANHATTAN BANK, as U.S. Co-Agent
By: /s/ THE CHASE MANHATTAN BANK
----------------------------------------
Name:
Title:
8
To each of the Parties Listed
on attached Schedule I
October 31, 1996
Page 8
AGREED AND CONSENTED TO BY:
CHASE SECURITIES AUSTRALIA LIMITED (ACN 002 888 011), as
Australian Administrative Agent and on behalf of
the Australian Lenders under the Australian Credit Agreement
SIGNED on behalf of )
CHASE SECURITIES )
AUSTRALIA LIMITED )
by its attorney in the )
presence of: ) /s/ CHASE SECURITIES AUSTRALIA LIMITED
-------------------------------------
Attorney
Lori Vetters
- ------------------------------ -------------------------------------
Witness Print Name
Christopher Click
- ------------------------------
Print Name
9
To each of the Parties Listed
on attached Schedule I
October 31, 1996
Page 9
AGREED AND CONSENTED TO BY:
BANK OF MONTREAL, as Canadian
Administrative Agent and on behalf of
the Canadian Lenders under the Canadian Credit Agreement
By: /s/ BANK OF MONTREAL
----------------------------------------
Name:
Title:
10
To each of the Parties Listed
on attached Schedule I
October 31, 1996
Page 10
AGREED AND CONSENTED TO BY:
FIRST CHICAGO CAPITAL MARKETS,
INC., as Arranger
By: /s/ FIRST CHICAGO CAPITAL MARKETS, INC.
----------------------------------------
Name:
Title:
11
To each of the Parties Listed
on attached Schedule I
October 31, 1996
Page 11
AGREED AND CONSENTED TO BY:
CHASE SECURITIES INC., as Arranger
By: /s/ CHASE SECURITIES INC.
----------------------------------------
Name: Tod Benton
Title: Managing Director
12
SCHEDULE I
The First National Bank of Chicago,
as Global Administrative Agent
The Chase Manhattan Bank, as U.S. Co-Agent
Chase Securities Australia Limited, as
Australian Administrative Agent
Bank of Montreal, as Canadian
Administrative Agent
First Chicago Capital Markets, Inc., as Arranger
Chase Securities Inc., as Arranger
The U.S. Lenders party to the Fourth Amended
and Restated Credit Agreement
The Australian Lenders party to the Australian Credit Agreement
The Canadian Lenders party to the Canadian Credit Agreement
c/o The First National Bank of Chicago
One First National Plaza
Chicago, Illinois 60670