1
EXHIBIT 10.2
[EXECUTION]
================================================================================
CANADIAN CREDIT AGREEMENT
-------------------------------------------------------
NORTHSTAR ENERGY CORPORATION
and
DEVON ENERGY CANADA CORPORATION
as Canadian Borrowers
BANK OF AMERICA CANADA
as Administrative Agent
NATIONSBANC MONTGOMERY SECURITIES, L.L.C.
as Arranger
FIRST CHICAGO CAPITAL MARKETS, INC.
as Syndication Agent
BANK OF MONTREAL
as Documentation Agent
FIRST UNION
as Co-Documentation Agent
and CERTAIN FINANCIAL INSTITUTIONS
as Lenders
-------------------------------------------------------
US $195,000,000
December 11, 1998
================================================================================
2
TABLE OF CONTENTS
Page
----
CREDIT AGREEMENT..................................................................................................1
Section 1.1. Commitments to Make Advances; Canadian Notes...........................................1
Section 1.2. Requests for New Canadian Advances.....................................................1
Section 1.3. Continuations and Conversions of Existing Canadian Advances............................3
Section 1.4. Repayments.............................................................................4
Section 1.5. Interest Rates and Fees................................................................7
Section 1.6. Extension of Conversion Date...........................................................8
Section 1.7. Conversion to Canadian Term Loan.......................................................9
Section 1.8. Non-Accepting Lender...................................................................9
Section 1.9. Competitive Bid Loans.................................................................10
Section 1.10. Use of Proceeds.......................................................................12
ARTICLE II - Bankers' Acceptances and Letters of Credit..........................................................13
Section 2.1. Creation of Bankers' Acceptances......................................................13
Section 2.2. Terms of Acceptance by the Canadian Resident Lenders..................................13
Section 2.3. General Procedures for Bankers' Acceptances...........................................15
Section 2.4. Execution of Bankers' Acceptances.....................................................17
Section 2.5. Escrowed Funds........................................................................17
Section 2.6. Letters of Credit.....................................................................17
Section 2.7. Requesting Letters of Credit..........................................................18
Section 2.8. Reimbursement and Participations......................................................19
Section 2.9. Letter of Credit Fees.................................................................19
Section 2.10. No Duty to Inquire....................................................................19
Section 2.11. LC Collateral.........................................................................20
ARTICLE III - Payments to Lenders................................................................................21
Section 3.1. General Procedures....................................................................21
Section 3.2. Change in Law; Gross Up; Increased Cost and Reduced Return............................23
Section 3.3. Limitation on Types of Canadian Loans.................................................25
Section 3.4. Illegality............................................................................25
Section 3.5. Treatment of Affected Loans...........................................................25
Section 3.6. Compensation..........................................................................26
Section 3.7. Change of Applicable Lending Office...................................................27
Section 3.8. Replacement of Lenders................................................................27
Section 3.9. Other Taxes...........................................................................27
Section 3.10. Currency Conversion and Currency Indemnity............................................28
ARTICLE IV - Conditions Precedent to Advances....................................................................29
Section 4.1. Documents to be Delivered.............................................................29
Section 4.2. Additional Conditions Precedent to First Canadian Loan or First Letter
of Credit.............................................................................30
i
3
Section 4.3. Additional Conditions Precedent to all Canadian Loans and Letters
of Credit.............................................................................31
ARTICLE V - Representations and Warranties.......................................................................31
Section 5.1. No Default............................................................................31
Section 5.2. Organization and Good Standing........................................................31
Section 5.3. Authorization.........................................................................32
Section 5.4. No Conflicts or Consents..............................................................32
Section 5.5. Enforceable Obligations...............................................................32
Section 5.6. Full Disclosure.......................................................................32
Section 5.7. Litigation............................................................................33
Section 5.8. Environmental and Other Laws..........................................................33
Section 5.9. Names and Places of Business..........................................................33
Section 5.10. Canadian Borrowers' Subsidiaries......................................................34
Section 5.11. Title to Properties; Licenses.........................................................34
Section 5.12. Solvency..............................................................................34
Section 5.13. Year 2000 Compliance..................................................................34
ARTICLE VI - Affirmative Covenants of Canadian Borrowers.........................................................35
Section 6.1. Payment and Performance...............................................................35
Section 6.2. Books, Financial Statements and Reports...............................................35
Section 6.3. Other Information and Inspections.....................................................36
Section 6.4. Notice of Material Events and Change of Address.......................................37
Section 6.5. Maintenance of Properties.............................................................37
Section 6.6. Maintenance of Existence and Qualifications...........................................37
Section 6.7. Payment of Trade Liabilities, Taxes, etc..............................................38
Section 6.8. Insurance.............................................................................38
Section 6.9. Performance on Canadian Borrowers' Behalf.............................................38
Section 6.10. Interest..............................................................................38
Section 6.11. Compliance with Law...................................................................38
Section 6.12. Environmental Matters.................................................................38
Section 6.13. Bank Accounts; Offset.................................................................39
Section 6.14. Year 2000 Compliance..................................................................39
ARTICLE VII - Negative Covenants of Canadian Borrowers...........................................................39
Section 7.1. Indebtedness..........................................................................40
Section 7.2. Limitation on Liens...................................................................41
Section 7.3. Limitation on Mergers.................................................................41
Section 7.4. Limitation on Issuance of Securities by Subsidiaries of US Borrower...................42
Section 7.5. Limitation on Restricted Payments.....................................................42
Section 7.6. Transactions with Affiliates..........................................................42
Section 7.7. Funded Debt to Total Capitalization...................................................42
Section 7.8. Funded Debt to EBITDA.................................................................42
Section 7.9. Hedging Contracts.....................................................................42
ii
4
ARTICLE VIII - Events of Default and Remedies....................................................................43
Section 8.1. Events of Default.....................................................................43
Section 8.2. Remedies..............................................................................46
ARTICLE IX - Canadian Agent......................................................................................46
Section 9.1. Appointment, Powers, and Immunities...................................................46
Section 9.2. Reliance by Canadian Agent............................................................47
Section 9.3. Defaults..............................................................................47
Section 9.4. Rights as Lender......................................................................47
Section 9.5. Indemnification.......................................................................48
Section 9.6. Non-Reliance on Canadian Agent and Other Lenders......................................48
Section 9.7. Rights as Lender......................................................................48
Section 9.8. Sharing of Set-Offs and Other Payments................................................48
Section 9.9. Investments...........................................................................49
Section 9.10. Benefit of Article IX.................................................................49
Section 9.11. Resignation...........................................................................49
Section 9.12. Lenders to Remain Pro Rata............................................................50
ARTICLE X - Miscellaneous........................................................................................50
Section 10.1. Waivers and Amendments; Acknowledgments...............................................50
Section 10.2. Survival of Agreements; Cumulative Nature.............................................52
Section 10.3. Notices...............................................................................52
Section 10.4. Payment of Expenses; Indemnity........................................................53
Section 10.5. Parties in Interest...................................................................54
Section 10.6. Assignments and Participations........................................................54
Section 10.7. Confidentiality.......................................................................56
Section 10.8. Governing Law; Submission to Process..................................................56
Section 10.9. Waiver of Judgment Interest Act (Alberta).............................................57
Section 10.10. Deemed Reinvestment Not Applicable....................................................57
Section 10.11. Limitation on Interest................................................................57
Section 10.12. Termination; Limited Survival.........................................................58
Section 10.13. Severability..........................................................................58
Section 10.14. Counterparts; Fax.....................................................................58
Section 10.15. Waiver of Jury Trial, Punitive Damages, etc...........................................59
Section 10.16. Defined Terms.........................................................................59
Section 10.17. Annex I, Exhibits and Schedules; Additional Definitions...............................59
Section 10.18. Amendment of Defined Instruments......................................................59
Section 10.19. References and Titles.................................................................59
Section 10.20. Calculations and Determinations.......................................................60
Section 10.21. Construction of Indemnities and Releases..............................................60
Section 10.22. Separate Obligations..................................................................60
iii
5
Schedules and Exhibits:
Annex I - Defined Terms
Annex II - Lenders Schedule
Schedule 1 - Disclosure Schedule
Exhibit A - Promissory Note
Exhibit B - Borrowing Notice
Exhibit C - Continuation/Conversion Notice
Exhibit D - Certificate Accompanying Financial Statements
Exhibit E - Opinion of Counsel for Restricted Persons
Exhibit F - Assignment and Acceptance Agreement
Exhibit G - Reserved
Exhibit H - Power of Attorney for BAs
Exhibit I - Competitive Bid Request
Exhibit J - Invitation to Bid
Exhibit K - Competitive Bid
Exhibit L - Competitive Bid Accept/Reject Letter
Exhibit M - Competitive Bid Note
iv
6
CREDIT AGREEMENT
THIS CREDIT AGREEMENT is made as of December 11, 1998, by and among
Northstar Energy Corporation, an Alberta corporation, and Devon Energy Canada
Corporation, an Alberta corporation (herein collectively, called "Canadian
Borrowers"), Bank of America Canada, individually and as administrative agent
(herein called "Canadian Agent") and the undersigned Lenders. In consideration
of the mutual covenants and agreements contained herein the parties hereto agree
as follows:
ARTICLE I - Canadian Advances
Section 1.1. Commitments to Make Advances; Canadian Notes. Subject to
the terms and conditions hereof, each Lender agrees to extend credit to each
Canadian Borrower by advancing funds to the applicable Canadian Borrower
specified in a Borrowing Notice (herein called such Lender's "Canadian Revolving
Loans" and, with reference to Canadian Resident Lenders only, accepting or
purchasing drafts of Bankers' Acceptances issued under this Agreement by the
applicable Canadian Borrower specified in a Borrowing Notice (herein called such
Lender's "Bankers' Acceptances"; each Lender's Canadian Revolving Loans,
Canadian Term Loans, and Bankers' Acceptances are herein collectively called
such Lender's "Canadian Advances") upon Canadian Borrower's request from time to
time during the Canadian Revolving Period, provided that (i) subject to Sections
2.1, 2.2., 3.3, 3.4 and 3.5, all Lenders are requested to make Canadian Advances
of the same Type in accordance with their respective Percentage Shares and as
part of the same Borrowing and (ii) such Lender's Percentage Share of the
Canadian Facility Usage shall never exceed such Lender's Percentage Share of the
Canadian Maximum Credit Amount. The aggregate amount of all Canadian Loans in
any Borrowing must be an integral multiple of $100,000 in the Applicable
Currency which equals or exceeds $1,000,000 in the Applicable Currency or must
equal the unadvanced portion of the Canadian Maximum Credit Amount. Each
Canadian Borrower may have no more than ten Borrowings of Eurodollar Loans
outstanding at any time. The obligation of each Canadian Borrower to repay to
each Lender the aggregate amount of all Canadian Advances made by such Lender to
such Borrower, together with interest accruing in connection therewith, shall be
evidenced by a separate promissory note (herein called such Lender's "Canadian
Note") made, by each Canadian Borrower payable to the order of such Lender in
the form of Exhibit A with appropriate insertions. The amount of principal owing
on any Lender's Canadian Note at any given time shall be the aggregate amount of
all Canadian Advances theretofore made by such Lender minus all payments of
principal theretofore received by such Lender on such Canadian Note. Interest on
each Canadian Note shall accrue and be due and payable as provided herein and
therein. Each Canadian Note shall be due and payable as provided herein and
therein and shall be due and payable in full on the Canadian Facility Maturity
Date.
Section 1.2. Requests for New Canadian Advances. The applicable
Canadian Borrower must give to Canadian Agent written notice (or telephonic
notice promptly confirmed in writing) of any requested Borrowing of new Canadian
Loans and any requested Borrowing by
7
way of new Bankers' Acceptances. Each such notice constitutes a "Borrowing
Notice" hereunder and must:
(a) specify (i) the aggregate amount of any such Borrowing of new
Canadian Base Rate Loans and the date on which such Canadian Base Rate Loans are
to be advanced, (ii) the aggregate amount of any such Borrowing of Canadian
Prime Rate Loans and the date on which such Canadian Prime Rate Loans are to be
advanced, (iii) the aggregate amount of any such Borrowing of new US Dollar
Eurodollar Loans, the date on which such US Dollar Eurodollar Loans are to be
advanced (which shall be the first day of the Eurodollar Interest Period which
is to apply thereto), and the length of the applicable Eurodollar Interest
Period, (iv) the aggregate amount of any such Borrowing of new Canadian Dollar
Eurodollar Loans, the date on which such Canadian Dollar Eurodollar Loans are to
be advanced (which shall be the first day of the Eurodollar Interest Period
which is to apply thereto), and the length of the applicable Eurodollar Interest
Period, or (v) the aggregate amount of any such Borrowing by way of Bankers'
Acceptances (subject to Section 2.2(f)), and the date on which such Bankers'
Acceptances are to be accepted and the maturity of such Bankers' Acceptances;
and
(b) be received by Canadian Agent not later than 11:00 a.m., Toronto,
Ontario time, on (i) on the Business Day preceding the day on which any such
Canadian Base Rate Loans or Canadian Prime Rate Loans are to be made, (ii) the
third Business Day preceding the day on which any such Eurodollar Loans are to
be made or (iii) the third Business Day before such Bankers' Acceptances are to
be issued.
Each such written request or confirmation must be made in the form and substance
of the "Borrowing Notice" attached hereto as Exhibit B, duly completed. Each
such telephonic request shall be deemed a representation, warranty,
acknowledgment and agreement by the applicable Canadian Borrower as to the
matters which are required to be set out in such written confirmation. Upon
receipt of any such Borrowing Notice, Canadian Agent shall give each Lender
prompt notice of the terms thereof not later than 5:00 p.m. Toronto, Ontario
time on the day it receives such Borrowing Notice from the applicable Canadian
Borrower if it receives such Borrowing Notice by 11:00 a.m., Toronto, Ontario
time, otherwise on the next Business Day. If all conditions precedent to such
new Canadian Advances have been met, (i) each Lender will on the date requested
promptly remit to Canadian Agent by 1:00 p.m. Toronto, Ontario time its Canadian
Advances made in Canadian Dollars to Canadian Agent's office in Toronto, Canada
and its Canadian Advances made in United States Dollars to the US Account in New
York, New York) in immediately available funds, and upon receipt of such funds,
unless to its actual knowledge any conditions precedent to such Canadian
Advances have been neither met nor waived as provided herein, Canadian Agent
shall promptly make such Canadian Advances available to the applicable Canadian
Borrower or (ii) each Canadian Resident Lender will accept drafts of Bankers'
Acceptances on the date requested in accordance with Sections 2.1 through 2.3.
Unless Canadian Agent shall have received prompt notice from a Lender that such
Lender will not make available to Canadian Agent such Lender's new Canadian
Advance, Canadian Agent may in its discretion assume that such Lender has made
such Canadian Advance available to Canadian Agent in accordance with this
section and Canadian Agent may if it chooses, in reliance upon such assumption,
make such Canadian Advance available to the applicable Canadian Borrower. If and
to the extent such Lender shall not so make its new Canadian Advance available
to Canadian Agent, such Lender and the applicable
2
8
Canadian Borrower severally agree to pay or repay to Canadian Agent within three
days after demand the amount of such Canadian Advance together with interest
thereon, for each day from the date such amount was made available to the
applicable Canadian Borrower until the date such amount is paid or repaid to
Canadian Agent, with interest at (1) the Canadian Prime Rate, if such Lender is
making such payment and (2) the interest rate applicable at the time to the
other new Canadian Advances made on such date, if a Canadian Borrower is making
such repayment; provided that Canadian Agent gave notice of the terms of the
Borrowing Notice to such Lender in accordance with the terms of this Section
1.2. If neither such Lender nor such Canadian Borrower pays or repays to
Canadian Agent such amount within such three-day period, Canadian Agent shall in
addition to such amount be entitled to recover from such Lender and from the
applicable Canadian Borrower, on demand, interest on such Canadian Advance at
the Default Rate applicable thereto, calculated from the date such amount was
made available to such Canadian Borrower. The failure of any Lender to make any
new Canadian Advance to be made by it hereunder shall not relieve any other
Lender of its obligation hereunder, if any, to make its new Canadian Advance,
but no Lender shall be responsible for the failure of any other Lender to make
any new Canadian Advance to be made by such other Lender.
Section 1.3. Continuations and Conversions of Existing Canadian
Advances. Subject to the terms of Section 2.3 with respect to Bankers'
Acceptances, the applicable Canadian Borrower may make the following elections
with respect to Canadian Advances already outstanding under this Agreement: to
convert any Type of Canadian Advance to any other Type of Canadian Advance,
provided that any such Conversion of any Eurodollar Loan must be made on the
last day of the Eurodollar Interest Period applicable thereto and any such
Conversion of a Bankers' Acceptance must be made on the date of maturity
thereof; and to continue Eurodollar Loans beyond the expiration of such
Eurodollar Interest Period by designating a new Eurodollar Interest Period to
take effect at the time of such expiration, and to rollover any existing
Bankers' Acceptance by designating the new maturity date applicable thereto. In
making such elections, the applicable Canadian Borrower may combine existing
Canadian Advances made pursuant to separate Borrowings into one new Borrowing or
divide existing Canadian Advances made pursuant to one Borrowing into separate
new Borrowings, provided that Canadian Borrowers may have no more than ten
Borrowings of US Dollar Eurodollar Loans outstanding at any time and no more
than ten Borrowings of Canadian Dollar Eurodollar Loans outstanding at any time.
To make any such election, the applicable Canadian Borrower must give to
Canadian Agent written notice (or telephonic notice promptly confirmed in
writing) of any such Conversion or Continuation of existing Canadian Advances,
with a separate notice given for each new Borrowing. Each such notice
constitutes a "Continuation/Conversion Notice" hereunder and must:
(a) specify the existing Canadian Advances made under this Agreement
which are to be continued or converted;
(b) specify (i) the aggregate amount of any Borrowing of Canadian Base
Rate Loans or Canadian Prime Rate Loans into which such existing Canadian
Advances are to be continued
3
9
or converted and the date on which such Continuation or Conversion is to occur,
or (ii) the aggregate amount of any Borrowing of Eurodollar Loans into which
such existing Canadian Advances are to be continued or converted, the date on
which such Continuation or Conversion is to occur (which shall be the first day
of the Eurodollar Interest Period which is to apply to such Eurodollar Loans),
and the length of the applicable Eurodollar Interest Period, or (iii) the amount
of any Borrowing of Bankers' Acceptances into which such existing Canadian
Advances are to be continued or converted, the date on which such Continuation
or Conversion is to occur, and the maturity of such Bankers' Acceptances; and
(c) be received by Canadian Agent not later than 11:00 a.m., Toronto,
Ontario time, on (i) the first Business Day preceding the day on which any such
Continuation or Conversion to Canadian Base Rate Loans or Canadian Prime Rate
Loans is to occur, or (ii) the third Business Day preceding the day on which any
such Continuation or Conversion to Eurodollar Loans is to occur, or (iii) on the
third Business Day preceding the day on which any such Continuation or
Conversion to Bankers' Acceptances is to occur.
Each such written request or confirmation must be made in the form and substance
of the "Continuation/Conversion Notice" attached hereto as Exhibit C, duly
completed. Each such telephonic request shall be deemed a representation,
warranty, acknowledgment and agreement by the applicable Canadian Borrower as to
the matters which are required to be set out in such written confirmation. Upon
receipt of any such Continuation/Conversion Notice, Canadian Agent shall give
each Lender prompt notice of the terms thereof. Each Continuation/Conversion
Notice shall be irrevocable and binding on the applicable Canadian Borrower.
During the continuance of any Default, Canadian Borrowers may not make any
election to convert existing Canadian Advances made under this Agreement into
Eurodollar Loans or Bankers' Acceptances or continue existing Eurodollar Loans
made under this Agreement as Eurodollar Loans or to rollover existing Bankers'
Acceptances into new Bankers' Acceptances. If (due to the existence of a Default
or for any other reason) the applicable Canadian Borrower fails to timely and
properly give or are prevented hereunder from giving any Continuation/Conversion
Notice with respect to a Borrowing of existing Eurodollar Loans at least three
days prior to the end of the Eurodollar Interest Period applicable thereto, such
Eurodollar Loans shall automatically be converted into Canadian Base Rate Loans
(in the case of US Dollar Eurodollar Loans) or Canadian Prime Rate Loans (in the
case of Canadian Dollar Eurodollar Loans) at the end of such Eurodollar Interest
Period. No new funds shall be repaid by the applicable Canadian Borrower or
advanced by any Lender in connection with any Continuation or Conversion of
existing Canadian Advances pursuant to this section, and no such Continuation or
Conversion shall be deemed to be a new advance of funds for any purpose; such
Continuations and Conversions merely constitute a change in terms of already
outstanding Advances and the interest rate applicable thereto.
Section 1.4. Repayments.
(a) During Canadian Revolving Period. Subject to the terms and
conditions hereof, either Canadian Borrower may borrow, repay, and reborrow
hereunder during the Canadian Revolving Period, so long as (i) the applicable
Canadian Borrower gives notice to Canadian
4
10
Agent by 2:00 p.m., Toronto, Ontario time on the Business Day immediately
preceding the date of prepayment (and Canadian Agent shall give each Lender
notice thereof by 4:30 p.m. Toronto, Ontario time on the date such notice is
received from the applicable Borrower if it receives such Borrowing Notice by
11:00 a.m., Toronto, Ontario time, otherwise on the next Business Day) all
partial prepayments of principal concurrently paid on the Canadian Loans are
increments of $100,000 in the Applicable Currency and in an aggregate amount
greater than or equal to $1,000,000 in the Applicable Currency and (ii) the
applicable Canadian Borrower pays all amounts owing in connection with the
prepayment of any Eurodollar Loan owing under Section 3.6.
(b) During Canadian Term Period.
(i) Optional Prepayments. Either Canadian Borrower may, upon giving
notice to Canadian Agent by 2:00 p.m., Toronto, Ontario time on the
Business Day immediately preceding the date of prepayment (and Canadian
Agent shall give each Lender notice thereof by 5:00 p.m. Toronto,
Ontario time on the date such notice is received from the applicable
Canadian Borrower if it receives such notice by 11:00 a.m., Toronto,
Ontario time, otherwise on the next Business Day), from time to time
during the Term Period and without premium or penalty, prepay the
Canadian Loans including Competitive Bid Notes, in whole or in part, so
long as all partial prepayments of principal concurrently paid on the
Canadian Loans are in increments of $100,000 in the Applicable Currency
and in an aggregate amount greater than or equal to $1,000,000 in the
Applicable Currency and so long as Canadian Borrowers pay all amounts
owing in connection with the prepayment of any Eurodollar Loan owing
under Section 3.6. Each prepayment of principal under this section
shall be accompanied by all interest then accrued and unpaid on the
principal so prepaid, shall be in addition to, and not in lieu of, all
payments otherwise required to be paid under the Canadian Loan
Documents at the time of such prepayment, and shall first reduce the
semi-annual scheduled installments (other than the final installment)
during the Term Period in respect of Canadian Loans that are not
Competitive Bid Loans, then reduce the final installment in respect of
Canadian Loans that are not Competitive Bid Loans, and then, unless
otherwise designated by Canadian Borrowers, reduce the outstanding
Competitive Bid Loans in order of shortest maturity.
(ii) Scheduled Repayments of Principal. Subject to Section
1.4(b)(iii) during the Term Period, Borrower shall repay the principal
of the Canadian Loans that are not Competitive Bid Loans in equal
semi-annual installments, each in an amount equal to two and one-half
percent (2.5%) of the outstanding principal balance of the Canadian
Advances on the Conversion Date. Such installments shall be due and
payable on each June 30 and December 31 each year and in a final
installment due and payable on the Canadian Facility Maturity Date in
an amount equal to the entire unpaid principal balance of such Loans
outstanding on the Canadian Facility Maturity Date.
(iii) Income Tax Act (Canada). In no event shall either Canadian
Borrower be required to repay more than 25% of the principal amount (as
defined in the Income Tax
5
11
Act (Canada)) of the Canadian Advances made to it prior to five years
and a day after the Conversion Date, including, but not limited to
payments under Section 1.4(b)(ii), 1.4(c) and 1.4(d).
(c) Mandatory Prepayments. Except to the extent permitted by Section
1.4(d) if the aggregate principal amount of the outstanding Canadian Obligations
ever exceeds the Canadian Maximum Credit Amount, Canadian Borrowers shall
immediately prepay the principal of the Canadian Loans outstanding under the
Canadian Agreement in an amount at least equal to such excess; provided that in
no event shall a Canadian Borrower ever be required to make any mandatory
prepayments or repayments in respect of a loan in an aggregate amount of more
than 25% of the principal amount of the loan prior to five years and a day after
the Conversion Date. Each prepayment of principal under this section shall be
accompanied by all interest then accrued and unpaid on the principal so prepaid.
Any principal or interest prepaid pursuant to this section shall be in addition
to, and not in lieu of, all payments otherwise required to be paid under the
Canadian Loan Documents at the time of such prepayment. Any mandatory prepayment
of any principal amount (for the purposes of this Section, as defined in the
Income Tax Act (Canada)) of the Canadian Loans made by a Canadian Borrower
pursuant to Sections 1.4(c) and 1.4(d) or otherwise, shall first reduce the
semi-annual scheduled installments (other than the final installment) during the
Term Period in respect of Canadian Loans that are not Competitive Bid Loans,
then reduce the final installment in respect of Canadian Loans that are not
Competitive Bid Loans, and then, unless otherwise designated by Canadian
Borrowers, reduce the outstanding Competitive Bid Loans in order of shortest
maturity. If such prepayment of Canadian Loans does not eliminate such mandatory
prepayment obligation, the further repayment shall apply to an escrow fund
maintained in accordance with Section 2.5.
(d) Currency Fluctuations. Notwithstanding any other provision of this
Agreement, if any Canadian Loan outstanding is denominated in C$, Canadian Agent
shall have the right to calculate the outstanding Canadian Obligations for all
purposes including making a determination from time to time of the available
undrawn portion of the Canadian Maximum Credit Amount. If following such
calculation, Canadian Agent determines that the outstanding Canadian Obligations
are greater than 105% of the Canadian Advances permitted hereby to be
outstanding at such time, then Canadian Agent shall so advise Canadian Borrowers
and Canadian Borrowers shall repay, on the later of five Business Days after
such advice and the next applicable Interest Payment Date immediately following
such date of calculation, an amount sufficient to eliminate the excess over and
above the aggregate amount of the Canadian Loans permitted hereby to be
outstanding at such time, together with all accrued interest on the amount so
paid.
Any mandatory prepayment of any principal amount (for the purposes of
this Section, as defined in the Income Tax Act (Canada)) made by a Canadian
Borrower pursuant to Sections 1.4(c) and 1.4(d) or otherwise in respect of a
particular loan, shall reduce the semi-annual scheduled installments (other than
the final installment) during the Term Period in respect of that loan in inverse
order of maturity. Such mandatory prepayments shall be applied to the Canadian
Loans (other than Bankers' Acceptances and Competitive Bid Loans) pro rata based
on outstanding principal; provided that if such prepayment of Canadian Loans
does not eliminate
6
12
such mandatory prepayment obligation, the further repayments shall apply first
to Competitive Bid Loans in order of shortest maturity, and second to an escrow
fund maintained in accordance with Section 2.5.
Section 1.5. Interest Rates and Fees.
(a) Interest Rates. The Canadian Loans shall bear interest payable by
the applicable Canadian Borrower as follows and all accrued and unpaid interest
on the Canadian Loans shall be due and payable on the applicable Interest
Payment Date at the place set forth in the Canadian Notes:
(i) Each Canadian Base Rate Loan shall bear interest on each day
outstanding at the Canadian US Dollar Base Rate in effect on such day.
(ii) Each Canadian Prime Rate Loan shall bear interest on each day
outstanding at the Canadian Prime Rate in effect on such day.
(iii) Each US Dollar Eurodollar Loan shall bear interest on each
day during the related Eurodollar Interest Period at the related
Adjusted US Dollar Eurodollar Rate in effect on such day.
(iv) Each Canadian Dollar Eurodollar Loan shall bear interest on
each day during the related Eurodollar Interest Period at the related
Adjusted Canadian Dollar Eurodollar Rate in effect on such day.
(v) Notwithstanding the foregoing, if an Event of Default has
occurred and is continuing, each Canadian Loan shall bear interest on
each day outstanding at the applicable Default Rate. Past due payments
of principal and interest shall bear interest at the rates and in the
manner set forth in the Canadian Notes.
(b) Facility Fees. In consideration of each Lender's commitment to make
Canadian Advances under this Agreement, Canadian Borrowers will pay to Canadian
Agent for the account of each Lender a facility fee determined on a daily basis
by applying the Facility Fee Rate to such Lender's Percentage Share of the
Canadian Maximum Credit Amount on each day during the Canadian Revolving Period.
This facility fee shall be due and payable in arrears on the last day of each
Fiscal Quarter and at the end of the Canadian Revolving Period.
(c) Utilization Fees. In consideration of each Lender's commitment to
make Canadian Advances under this Agreement, Canadian Borrowers will pay to
Canadian Agent for the account of each Lender a utilization fee determined on a
daily basis by applying a rate of 15 Basis Points per annum to such Lender's
Percentage Share of the Canadian Facility Usage on each day during the Canadian
Revolving Period on which the Canadian Facility Usage exceeds fifty percent
(50%) of the Canadian Maximum Credit Amount. This utilization fee shall be due
and payable in arrears on each Interest Payment Date for Canadian US Dollar Base
Rate Loans and at the end of the Canadian Revolving Period.
7
13
(d) Stamping Fees. In consideration of each Canadian Resident Lender's
commitment to accept or participate in Bankers' Acceptances under this
Agreement, the applicable Canadian Borrower will pay to Canadian Agent for the
account of such Lender the Stamping Fee Rate multiplied by the face amount of
each Bankers' Acceptance accepted by such Lender under this Agreement calculated
for the number of days in the term of such Bankers' Acceptance. Such fee shall
be due and payable on the date on which such Bankers' Acceptances are accepted
and if such Canadian Resident Lender is purchasing such Bankers' Acceptance,
such fee shall be deducted from the Discount Proceeds paid to the applicable
Canadian Borrower
(e) Canadian Agent's Fees. In addition to all other amounts due to
Canadian Agent under the Canadian Loan Documents, Canadian Borrowers will pay
fees to Canadian Agent as described in a letter agreement of even date herewith
between Canadian Agent and Canadian Borrowers.
Section 1.6. Extension of Conversion Date.
(a) Canadian Borrowers may, at their option and from time to time
during the Canadian Revolving Period, request an offer to extend the Canadian
Revolving Period by delivering to Canadian Agent a Request for an Offer of
Extension not more than ninety days prior to the then current Conversion Date.
Canadian Agent shall forthwith provide a copy of the Request for an Offer of
Extension to each of the Lenders. Upon receipt by Canadian Agent from Canadian
Borrowers of an executed Request for an Offer of Extension, each Lender shall,
within thirty days after the date Canadian Agent receives such request from
Canadian Borrowers, either:
(i) notify Canadian Agent of its acceptance of the Request for an
Offer of Extension, and the terms and conditions, if any, upon which
such Lender is prepared to extend the Conversion Date; or
(ii) notify Canadian Agent that the Request for an Offer of
Extension has been denied, such notice to forthwith be forwarded by
Canadian Agent to Canadian Borrowers to allow Canadian Borrowers to
seek a replacement lender pursuant to Section 1.8 (any Lender giving
notice of such denial is herein called a "Non-Accepting Lender"). The
failure of a Lender to so notify Canadian Agent within such thirty day
period shall be deemed to be notification by such Lender to Canadian
Agent that such Lender has denied Canadian Borrowers' Request for an
Offer of Extension.
(b) Provided that all Lenders provide notice to Canadian Agent under
Section 1.6(a) that they accept the Request for an Offer of Extension, or if
there are Non-Accepting Lenders, such Lenders shall have been repaid pursuant to
Section 1.8 or replacement lenders shall have become parties hereto pursuant to
Section 1.8 and shall have accepted the Request for an Offer of Extension, such
acceptance having common terms and conditions, Canadian Agent shall deliver to
Canadian Borrowers an Offer of Extension incorporating the said terms and
conditions. Such offer shall be open for acceptance by Canadian Borrowers until
the fifth Business Day immediately preceding the then current Conversion Date.
Upon written notice by Canadian Borrowers to Canadian Agent accepting an
outstanding Offer of Extension and agreeing to the
8
14
terms and conditions, if any, specified therein (the date of such notice of
acceptance in Section 1.6 and 1.8 being called the "Extension Date"), the
Conversion Date shall be extended to the date 364 days from the Extension Date
and the terms and conditions specified in such Offer of Extension shall be
immediately effective.
(c) Canadian Borrowers understand that the consideration of any Request
for an Offer of Extension constitutes an independent credit decision which each
Lender retains the absolute and unfettered discretion to make and that no
commitment in this regard is hereby given by a Lender and that any offer to
extend the Conversion Date may be on such terms and conditions in addition to
those set out herein as the extending Lenders stipulate.
Section 1.7. Conversion to Canadian Term Loan. Unless there is an
extension of the Canadian Revolving Period in accordance with Section 1.6,
effective at 11:59 p.m. Toronto, Ontario time on the day immediately preceding
the Conversion Date, and provided that no Event of Default shall have occurred
and be continuing, (i) each Lender's obligation to make new Canadian Advances
and Canadian LC Issuer's obligation to issue Letters of Credit hereunder shall
be canceled automatically, and (ii) each Lender's Canadian Loans shall become
term Canadian Loans ("Canadian Term Loans") maturing on the Canadian Facility
Maturity Date.
Section 1.8. Non-Accepting Lender. Provided that Lenders whose
Percentage Shares represent more than 50% but less than 100% of the Canadian
Maximum Credit Amount provide notice to Agent under Section 1.6(a) that they
accept the Request for an Offer of Extension, on notice of Canadian Borrowers to
Agent, Canadian Borrowers shall be entitled to choose any of the following in
respect of each Non-Accepting Lender prior to the expiration of the Canadian
Revolving Period, provided that if Canadian Borrowers do not make an election
prior to the expiration of the Canadian Revolving Period, Canadian Borrowers
shall be deemed to have irrevocably elected to exercise the provisions of
Section 1.8(b):
(a) (i) the Non-Accepting Lender's obligations to make Canadian
Advances shall be canceled as of the Extension Date, the Canadian Maximum Credit
Amount shall be reduced by the amount so canceled, and on or prior to the
Extension Date the Canadian Borrowers shall repay in full all Obligations then
outstanding to the Non-Accepting Lender (as defined in Section 1.6(a)(ii)) , or
(ii) replace the Non-Accepting Lender by reaching satisfactory arrangements with
one or more existing Lenders or new Lenders, for the purchase, assignment and
assumption of all Canadian Obligations and US Obligations of the Non-Accepting
Lender, provided that any new Lender, with, if necessary, any Affiliate, shall
take a pro rata assignment of both Canadian Obligations and US Obligations, and
such Non-Accepting Lender shall be obligated to sell such Obligations in
accordance with such satisfactory arrangements; or
(b) Canadian Borrowers may elect to revoke and cancel the Request for
an Offer of Extension by giving notice of such revocation and cancellation to
Agent (which shall promptly notify the Lenders thereof), and concurrently
therewith, shall have the option to (i) cancel the obligations of Lenders under
the Canadian Agreement and, subject to the notice requirements set forth in
Section 1.6(a) and to the provisions of Article III, repay in full all Canadian
Obligations,
9
15
or (ii) have the outstanding Canadian Loans that are not Competitive Bid Loans
on the Conversion Date become term loans as provided in Section 1.7.
In connection with any such replacement of a Lender Party pursuant to this
Section 1.8, the applicable Canadian Borrower shall pay all costs that would
have been due to such Lender Party pursuant to Section 3.6 if such Lender
Party's Canadian Advances had been prepaid at the time of such replacement.
Section 1.9. Competitive Bid Loans.
(a) Either Canadian Borrower may request that each Canadian Resident
Lender submit Competitive Bids (on a several basis) to the applicable Canadian
Borrower on any Business Day during the Canadian Revolving Period, provided that
all Canadian Resident Lenders are requested to make a Competitive Bid on the
same basis at the same time. In order to request Competitive Bids, the
applicable Canadian Borrower shall deliver by hand or facsimile to Canadian
Agent a Competitive Bid Request, to be received by Canadian Agent not later than
9:00 a.m., Toronto, Ontario time one Business Day before the date specified for
a proposed Competitive Bid Loan. A Competitive Bid Request that does not conform
substantially to the format of Exhibit I may be rejected in Canadian Agent's
sole discretion, and Canadian Agent shall promptly notify the applicable
Canadian Borrower of such rejection by facsimile. After receiving an acceptable
Competitive Bid Request, Canadian Agent shall no later than 12:00 noon, Toronto,
Ontario time on the date such Competitive Bid Request is received by Canadian
Agent, by facsimile deliver to Canadian Resident Lenders an Invitation to Bid
substantially in the form of Exhibit J with respect thereto.
(b) Each Canadian Resident Lender may, in its sole discretion, make one
or more Competitive Bids to Canadian Agent responsive to each Competitive Bid
Request given by the applicable Canadian Borrower. Each Competitive Bid by a
Canadian Resident Lender must be received by Canadian Agent by facsimile not
later than 9:00 a.m., Toronto, Ontario time on the date specified for a proposed
Competitive Bid Loan. Multiple bids may be accepted by Canadian Agent.
Competitive Bids that do not conform substantially to the format of Exhibit K
may be rejected by Canadian Agent after conferring with, and upon the
instruction of, the applicable Canadian Borrower, and Canadian Agent shall
notify the bidding Canadian Resident Lender of such rejection as soon as
practicable. If any Canadian Resident Lender shall elect not to make a
Competitive Bid, such Canadian Resident Lender shall so notify Canadian Agent by
facsimile not later than 9:00 a.m., Toronto, Canada time, on the date specified
for a Competitive Bid Loan; provided, however, that failure by any Canadian
Resident Lender to give such notice shall not cause such Canadian Resident
Lender to be obligated to make any Competitive Bid Loan and by such failure such
Lender shall be deemed to have rejected such Competitive Bid. A Competitive Bid
submitted by a Canadian Resident Lender shall be irrevocable.
(c) Promptly, and in no event later than 9:30 a.m., Toronto, Ontario
time, on the date specified for a proposed Competitive Bid Loan, Canadian Agent
shall notify the applicable Canadian Borrower by facsimile of all the
Competitive Bids made, the Competitive Bid Rate and the principal amount of each
Competitive Bid Loan in respect of which a Competitive Bid was
10
16
made, and the identity of each Canadian Resident Lender that made each
Competitive Bid. Canadian Agent shall send a copy of all Competitive Bids to the
applicable Canadian Borrower for its records as soon as practicable after
completion of the bidding process.
(d) The applicable Canadian Borrower may, subject only to the
provisions hereof, accept or reject any Competitive Bid. The applicable Canadian
Borrower shall notify Canadian Agent by facsimile pursuant to a Competitive Bid
Accept/Reject Letter whether and to what extent the applicable Canadian Borrower
has decided to accept or reject any or all of the Competitive Bids, not later
than 10:00 a.m., Toronto, Ontario time, on the date specified for a proposed
Competitive Bid Loan; provided, however, that:
(i) the failure by the applicable Canadian Borrower to accept or
reject any Competitive Bid within the time period specified herein
shall be deemed to be a rejection of such Competitive Bid,
(ii) the aggregate amount of the Competitive Bids accepted by the
applicable Canadian Borrower shall not exceed the principal amount
specified in the Competitive Bid Request,
(iii) the aggregate amount of all outstanding Canadian Loans and
Canadian LC Obligations shall never exceed the Canadian Maximum Credit
Amount,
(iv) if the applicable Canadian Borrower shall accept a Competitive
Bid or Competitive Bids made at a particular Competitive Bid Rate, but
the amount of such Competitive Bid or Competitive Bids shall cause the
total amount of Competitive Bids to be accepted by the applicable
Canadian Borrower to exceed the amount specified in the Competitive Bid
Request, then the applicable Canadian Borrower shall accept a portion
of such Competitive Bid or Competitive Bids in an amount equal to the
amount specified in the Competitive Bid Request less the amount of all
other Competitive Bids accepted with respect to such Competitive Bid
Request, which acceptance, in the case of multiple Competitive Bids at
such Competitive Bid Rate, shall be made pro rata in accordance with
the amount of each such Competitive Bid at such Competitive Bid Rate,
and
(v) no Competitive Bid shall be accepted for a Competitive Bid Loan
unless such Competitive Bid Loan is in a minimum principal amount of C
$ 5,000,000 or a higher integral multiple thereof; provided, however,
that if a Competitive Bid Loan must be in an amount less than C
$5,000,000 because of the provisions of clause (iv) above, such
Competitive Bid Loan may be for a minimum of C $1,000,000 or any higher
integral multiple thereof, and in calculating the pro rata allocation
of acceptances or portions of multiple bids at a particular Competitive
Bid Rate pursuant to clause (iv), the amounts shall be rounded to
integral multiples of C $1,000,000 in a manner which shall be in the
sole and absolute discretion of the applicable Canadian Borrower.
11
17
(e) Promptly on each date the applicable Canadian Borrower accepts a
Competitive Bid, Canadian Agent shall notify each Canadian Resident Lender
whether or not its Competitive Bid has been accepted (and if so, in what amount
and at what Competitive Bid Rate) by facsimile transmission sent by Canadian
Agent, and each successful bidder will thereupon become bound, subject to the
other applicable conditions hereof, to make the Competitive Bid Loan in respect
of which its Competitive Bid has been accepted. After completing the
notifications referred to in the immediately preceding sentence, Canadian Agent
shall notify each Canadian Resident Lender of the aggregate principal amount of
all Competitive Bids accepted. Each Canadian Resident Lender which is to make a
Competitive Bid Loan shall, before 11:00 a.m., Toronto, Ontario time, on the
borrowing date specified in the Competitive Bid Request applicable thereto, make
available to Canadian Agent in immediately available funds the amount of each
Competitive Bid Loan to be made by such Canadian Resident Lender, and Canadian
Agent shall promptly deposit such funds to an account designated by the
applicable Canadian Borrower. As soon as practicable thereafter, Canadian Agent
shall notify each Canadian Resident Lender of the aggregate amount of
Competitive Bid Loans advanced, the respective Competitive Bid Interest Periods
thereof and Competitive Bid Rate applicable thereto.
(f) The obligation of the applicable Canadian Borrower to repay to each
Canadian Resident Lender the aggregate amount of all Competitive Bid Loans made
by such Canadian Resident Lender, together with interest accruing in connection
therewith, shall be evidenced by promissory notes (respectively, such Canadian
Resident Lender's "Competitive Bid Note") made by the applicable Canadian
Borrower payable to the order of such Canadian Resident Lender in the form of
Exhibit M, with appropriate insertions. The amount of principal owing on any
Canadian Resident Lender's Competitive Bid Note at any given time shall be the
aggregate amount of all Competitive Bid Loans theretofore made by such Canadian
Resident Lender thereunder minus all payments of principal theretofore received
by such Canadian Resident Lender thereon. Interest on each Competitive Bid Note
shall accrue and be due and payable as provided herein and therein. The
applicable Canadian Borrower shall repay on the final day of the Competitive Bid
Interest Period of each Competitive Bid Loan (such date being that specified by
the applicable Canadian Borrower for repayment of such Competitive Bid Loan in
the related Competitive Bid Request and such date being no later than six months
after the date of the Competitive Bid Loan) the then unpaid principal amount of
such Competitive Bid Loan. Subject to Section 1.4(b) and the payment of amounts
described in Section 3.6, the applicable Canadian Borrower shall have the right
to prepay any principal amount of any Competitive Bid Loan.
(g) No Competitive Bid Loan shall be made within five Business Days
after the date of any other Competitive Bid Loan, unless the applicable Canadian
Borrower and Canadian Agent shall mutually agree otherwise. If Canadian Agent
shall at any time elect to submit a Competitive Bid in its capacity as a
Canadian Resident Lender, it shall submit such bid directly to the applicable
Canadian Borrower requesting such Competitive Bid one quarter of an hour earlier
than the latest time at which the other Canadian Resident Lenders are required
to submit their bids to Canadian Agent.
Section 1.10. Use of Proceeds. Canadian Borrowers shall use all
Canadian Advances (i) to first, pay in full the Indebtedness of Northstar Energy
to Canadian Imperial Bank of Commerce pursuant to two Credit Agreements both
dated April 15, 1997, and thereafter (ii) to finance capital expenditures, (iii)
to refinance Matured Canadian LC Obligations outstanding
12
18
under this Agreement, and (iv) provide working capital for its operations and
for other general business purposes. Canadian Borrowers shall use all Letters of
Credit for its general corporate purposes. In no event shall the funds from any
Canadian Loan or any Letter of Credit be used directly or indirectly by any
Person for personal, family, household or agricultural purposes or for the
purpose, whether immediate, incidental or ultimate, of purchasing, acquiring or
carrying any "margin stock" (as such term is defined in Regulation U promulgated
by the Board of Governors of the Federal Reserve System) or to extend credit to
others directly or indirectly for the purpose of purchasing or carrying any such
margin stock. Each Canadian Borrower represents and warrants that such Canadian
Borrower is not engaged principally, or as one of such Canadian Borrower's
important activities, in the business of extending credit to others for the
purpose of purchasing or carrying such margin stock.
ARTICLE II - Bankers' Acceptances and Letters of Credit
Section 2.1. Creation of Bankers' Acceptances. Upon receipt of a
Borrowing Notice and subject to the provisions of this Agreement, each Canadian
Resident Lender shall accept, in accordance with its Percentage Share of the
requested Borrowing from time to time such Bankers' Acceptances as Canadian
Borrowers shall request provided that:
(a) Bankers' Acceptances shall be issued on a Business Day;
(b) each Bankers' Acceptance shall have a term of 30, 60, 90 or 180
days (excluding days of grace), as selected by Canadian Borrowers in the
relevant Borrowing Notice provided that each Bankers' Acceptance shall mature on
a Business Day;
(c) the face amount of each Bankers' Acceptance shall be not less than
C$100,000 and in multiples of C$100,000 for any amounts in excess thereof; and
(d) each Bankers' Acceptance shall be in a form acceptable to the
Canadian Resident Lenders.
Section 2.2. Terms of Acceptance by the Canadian Resident Lenders.
(a) Delivery and Payment. Subject to Sections 2.3 and 2.4, Canadian
Borrowers shall pre-sign and deliver to each Canadian Resident Lender bankers'
acceptance drafts in sufficient quantity to meet Canadian Borrowers'
requirements for anticipated Borrowings by way of Bankers' Acceptances. The
applicable Canadian Borrower shall, at its option, provide for payment to
Canadian Agent for the benefit of Canadian Resident Lenders of each Bankers'
Acceptance on the date on which a Bankers' Acceptance matures, either by payment
of the full face amount thereof or through utilization of a Conversion to
another Type of Borrowing in accordance with this Agreement, or through a
combination thereof. Each Canadian Borrower waives presentment for payment of
Bankers' Acceptances by Canadian Resident Lenders and shall not claim from
Canadian Resident Lenders any days of grace for the payment at maturity of
Bankers' Acceptances. Any amount owing by Canadian Borrowers in respect of any
Bankers'
13
19
Acceptance which is not paid in accordance with the foregoing, shall, as and
from the date on which such Bankers' Acceptance matures, be deemed to be
outstanding hereunder as a Canadian Prime Rate Loan.
(b) No Liability. Canadian Agent and Canadian Resident Lenders shall
not be liable for any damage, loss or improper use of any bankers' acceptance
draft endorsed in blank except for any loss arising by reason of Canadian Agent
or a Canadian Resident Lender failing to use the same standard of care in the
custody of such bankers' acceptance drafts as Canadian Agent or such Canadian
Resident Lender use in the custody of their own property of a similar nature.
(c) Bankers' Acceptances Purchased by Canadian Resident Lenders. Where
the applicable Canadian Borrower so elects in the Borrowing Notice or
Continuation/Conversion Notice, a Canadian Resident Lender shall purchase
Bankers' Acceptances accepted by it for an amount equal to the Discount
Proceeds.
(d) Marketing. Where the applicable Canadian Borrower so elects in the
Borrowing Notice or Continuation/Conversion Notice, it shall be responsible for,
and shall make its own arrangements with respect to, the marketing of Bankers'
Acceptances.
(e) Power of Attorney. At the request of Canadian Borrowers, the
Canadian Resident Lenders and Canadian Borrowers shall enter into a Power of
Attorney, substantially in the form of Exhibit "H", to facilitate the execution
and sale of Bankers' Acceptances.
(f) Non-resident Lenders Participation in Borrowing of Bankers'
Acceptances by Making Canadian Dollar Eurodollar Loans. As part of each
Borrowing by way of Bankers' Acceptances from Canadian Resident Lenders, each
Non-resident Lender shall, with respect to its obligations to fund such
Borrowing, make a Canadian Dollar Eurodollar Loan by advancing Canadian Dollars
in the amount of its Percentage Share of such Borrowing having a Eurodollar
Interest Period that is substantially the same as the period to maturity of the
Bankers' Acceptances that are accepted in such Borrowing by Canadian Resident
Lenders in order that all Borrowings other than Competitive Bid Loans shall
remain pro rata during the term of this Agreement. Such Canadian Dollar
Eurodollar Loan shall otherwise be made on the terms set forth in Article I with
respect to such Type of Loan.
(g) Pro-Rata Treatment of Canadian Advances.
(i) Each Canadian Advance shall be made available by each Canadian
Lender and all repayments and reductions in respect thereof shall be
made and applied in a manner so that the Canadian Advances outstanding
hereunder to each Canadian Lender will, to the extent possible,
thereafter be pro rata in accordance with such Lender's Percentage
Share. The Canadian Agent is authorized by each Canadian Borrower and
each Lender to determine, in its sole and unfettered discretion, the
portion of each Canadian Advance and each Type of Canadian Advance to
be made available by each Canadian Lender and the application of
repayments and reductions of Canadian Advances to give effect to the
provisions of this Section, provided that no Lender shall, as a result
14
20
of any such determination, have a Percentage Share of the Canadian
Advances which is in excess of its Percentage Share of the Canadian
Maximum Credit Amount.
(ii) In the event it is not practicable to allocate Bankers'
Acceptances to each Canadian Lender such that the aggregate amount of
Bankers' Acceptances required to be purchased by such Canadian Lender
hereunder is in a whole multiple of C $100,000, the Canadian Agent is
authorized by each Canadian Borrower and each Lender to make such
allocation as the Canadian Agent determines in its sole and unfettered
discretion may be equitable in the circumstances and, if the aggregate
amount of such Bankers' Acceptances is not a whole multiple of C
$100,000, then the Canadian Agent may allocate (on a basis considered
by it to be equitable) the excess of such Canadian Advance over the
next lowest whole multiple of C $100,000 to one Canadian Lender, which
shall purchase a Bankers' Acceptance with a face amount equal to the
excess and having the same term as the corresponding Bankers'
Acceptances. In no event shall the portion of the outstanding
Borrowings by way of Bankers' Acceptances of a Lender exceed such
Lenders' Percentage Share of the Aggregate Borrowings by way of
Bankers' Acceptances by more than C $100,000 as a result of such
exercise of discretion by the Canadian Agent.
(h) If during the term of any Bankers' Acceptance accepted by a Lender
hereunder the Applicable Margin changes or an Event of Default occurs and is
continuing, the fee paid to such Lender by the applicable Borrower pursuant to
Section 1.5(d) (in this paragraph called the "Initial Fee") with respect to such
Bankers' Acceptance shall be recalculated based upon such change in the
Applicable Margin or the existence of such Event of Default for the number of
days during the term of such Bankers' Acceptance that such change is applicable
or such Event of Default exists. If such recalculated amount is in excess of the
Initial Fee then such Canadian Borrower shall pay to such Lender the amount of
such excess, and if such recalculated amount is less than the Initial Fee, then
the amount of such reduction shall be credited to other amounts payable by such
Canadian Borrower to such Lender.
Section 2.3. General Procedures for Bankers' Acceptances.
(a) Notice. Canadian Borrowers may in the Borrowing Notice or in a
Continuation/Conversion Notice request a Borrowing by way of Bankers'
Acceptances and, if the Canadian Borrower is responsible for marketing of such
Bankers' Acceptances under Section 2.2(d), by subsequent notice to Canadian
Agent provide Canadian Agent, which shall in turn notify each Canadian Resident
Lender, with information as to the discount proceeds payable by the purchasers
of the Bankers' Acceptances and the party to whom delivery of the Bankers'
Acceptances by each Canadian Resident Lender is to be made against delivery to
each Canadian Resident Lender of the applicable discount proceeds, but if it
does not do so, Canadian Borrowers shall initiate a telephone call to Canadian
Agent by 10:00 a.m. Toronto, Ontario time on the date of advance, or the date of
the Continuation or Conversion, as applicable, and provide such information to
Canadian Agent. Such discount proceeds less the fee calculated in accordance
with Section 1.5(d) shall promptly be delivered to the Canadian Agent. Any such
telephone advice shall be subject to Section 1.2 and shall be confirmed by a
written notice of
15
21
Canadian Borrowers to Canadian Agent prior to 2:00 p.m. Toronto, Ontario time on
the same day.
(b) Continuations. In the case of a Continuation of maturing Bankers'
Acceptances, issued by a Canadian Resident Lender, such Canadian Resident
Lender, in order to satisfy the continuing liability of Canadian Borrowers to
the Canadian Resident Lender for the face amount of the maturing Bankers'
Acceptances, shall retain for its own account the Net Proceeds of each new
Bankers' Acceptance issued by it in connection with such Continuation; and
Canadian Borrowers shall, on the maturity date of the maturing Bankers'
Acceptances, pay to Canadian Agent for the benefit of Canadian Resident Lenders
an amount equal to the difference between the face amount of the maturing
Bankers' Acceptances and the aggregate Net Proceeds of the new Bankers'
Acceptances.
(c) Conversion from Canadian Prime Rate Loans and Canadian Dollar
Eurodollar Loans. In the case of a Conversion from a Borrowing of Canadian Prime
Rate Loans or Canadian Dollar Eurodollar Loans into a Borrowing by way of
Bankers' Acceptances to be accepted by a Canadian Resident Lender pursuant to
Sections 2.1, 2.2 and 2.3, such Canadian Resident Lender, in order to satisfy
the continuing liability of Canadian Borrowers to it for the principal amount of
the Canadian Prime Rate Loans or Canadian Dollar Eurodollar Loans being
converted, shall retain for its own account the Discount Proceeds of each new
Bankers' Acceptance issued by it in connection with such Conversion; and
Canadian Borrowers shall, on the date of issuance of the Bankers' Acceptances,
pay to Canadian Agent for the benefit of Canadian Resident Lenders an amount
equal to the difference between the aggregate principal amount of the Canadian
Prime Rate Loans or Canadian Dollar Eurodollar Loans being converted owing to
the Canadian Resident Lenders and the aggregate Discount Proceeds of such
Bankers' Acceptances.
(d) Conversions to Canadian Loans in Canadian Dollars. In the case of a
Conversion of a Borrowing by way of Bankers' Acceptances into Canadian Loans,
each Canadian Resident Lender, in order to satisfy the liability of the
applicable Canadian Borrower to it for the face amount of the maturing Bankers'
Acceptances, shall record the obligation of the applicable Canadian Borrower to
it as a Canadian Prime Rate Loan, unless the applicable Canadian Borrower
provide for payment to Canadian Agent for the benefit of Canadian Resident
Lenders of the face amount of the maturing Bankers' Acceptance in some other
manner acceptable to Canadian Resident Lenders, including Conversion to another
Type of Canadian Loan pursuant to a Continuation/Conversion Notice.
(e) Conversion from or to Canadian Loans in U.S. Dollars. In the case
of a conversion of Bankers' Acceptances from or to a Canadian Base Rate Loans or
US Dollar Eurodollar Loans, the parties to which this Section applies shall
follow the notice procedures set out in Section 1.3 and the funding procedures
set out in Section 2.3 (c) and (d) without netting of funds.
(f) Authorization. Canadian Borrowers hereby authorize each Canadian
Resident Lender to complete, stamp, hold, sell, rediscount or otherwise dispose
of all Bankers'
16
22
Acceptances accepted by it pursuant to this Section in accordance with the
instructions provided by Canadian Borrowers pursuant to Section 1.3, as
applicable.
(g) Depository Notes. The parties agree that in the administering of
Bankers' Acceptances, each Lender may avail itself of the debt clearing services
offered by a clearing house for depository notes pursuant to the Depository
Bills and Notes Act (Canada) and that the procedures set forth in Article II be
deemed amended to the extent necessary to comply with the requirements of such
debt clearing services.
Section 2.4. Execution of Bankers' Acceptances. The signatures of any
authorized signatory on Bankers' Acceptances may, at the option of Canadian
Borrowers, be reproduced in facsimile and such Bankers' Acceptances bearing such
facsimile signatures shall be binding on Canadian Borrowers as if they had been
manually signed by such authorized signatory. Notwithstanding that any person
whose signature appears on any Bankers' Acceptance as a signatory may no longer
be an authorized signatory of Canadian Borrowers at the date of issuance of a
Bankers' Acceptance, and notwithstanding that the signature affixed may be a
reproduction only, such signature shall nevertheless be valid and sufficient for
all purposes as if such authority had remained in force at the time of such
issuance and as if such signature had been manually applied, and any such
Bankers' Acceptance so signed shall be binding on Canadian Borrowers.
Section 2.5. Escrowed Funds. Upon the occurrence of an Event of Default
and an acceleration of the Canadian Obligations under Section 8.1 or upon a
prepayment permitted under Section 1.4, Canadian Borrowers shall forthwith pay
to Canadian Agent for deposit into an escrow account maintained by and in the
name of Canadian Agent for the benefit of Canadian Resident Lenders in
accordance with their Percentage Shares an amount equal to the Canadian Resident
Lenders' maximum potential liability (as determined by Canadian Agent) under
then outstanding Bankers' Acceptances (the "Escrow Funds"). The Escrow Funds
shall be held by Canadian Agent for set-off against future Canadian Obligations
of Canadian Borrowers and pending such application shall bear interest at the
rate declared by Canadian Agent from time to time as that payable by it in
respect of deposits for such amount and for such period relative to the maturity
date of the Bankers' Acceptances, as applicable. If such Event of Default is
either waived or cured in compliance with the terms of this Agreement, then the
Escrow Funds, together with any accrued interest to the date of release, shall
be forthwith released to Canadian Borrowers.
Section 2.6. Letters of Credit. Subject to the terms and conditions
hereof, any Canadian Borrower may during the Canadian Revolving Period request
Canadian LC Issuer to issue one or more Letters of Credit denominated in either
Canadian Dollars or US Dollars, provided that, after taking such Letter of
Credit into account:
(a) the Canadian Facility Usage does not exceed the Canadian Maximum
Credit Amount at such time;
17
23
(b) the aggregate amount of Canadian LC Obligations arising from
Letters of Credit issued under this Agreement at such time does not exceed the
Canadian LC Sublimit;
(c) the expiration date of such Letter of Credit is prior to the end of
the Canadian Revolving Period;
(d) such Letter of Credit is to be used for general corporate purposes
of such Canadian Borrower;
(e) such Letter of Credit is not directly or indirectly used to assure
payment of or otherwise support any Indebtedness of any Person other than
Indebtedness of any Restricted Person permitted by this Agreement;
(f) the issuance of such Letter of Credit will be in compliance with
all applicable governmental restrictions, policies, and guidelines and will not
subject Canadian LC Issuer to any cost which is not reimbursable under Article
III;
(g) the form and terms of such Letter of Credit are acceptable to
Canadian LC Issuer in its reasonable discretion; and
(h) all other conditions in this Agreement to the issuance of such
Letter of Credit have been satisfied.
Canadian LC Issuer will honor any such request if the foregoing conditions (a)
through (h) (in this Section 2.6 called the "LC Conditions") have been met as of
the date of issuance of such Letter of Credit. Canadian LC Issuer may choose to
honor any such request for any other Letter of Credit but has no obligation to
do so and may refuse to issue any other requested Letter of Credit for any
reason which Canadian LC Issuer in its sole discretion deems relevant.
Section 2.7. Requesting Letters of Credit. The applicable Canadian
Borrower must make written application for any Letter of Credit at least three
Business Days before the date on which the applicable Canadian Borrower desires
for Canadian LC Issuer to issue such Letter of Credit. By making any such
written application the applicable Canadian Borrower shall be deemed to have
represented and warranted that the LC Conditions described in Section 2.6 will
be met as of the date of issuance of such Letter of Credit. Each such written
application for a Letter of Credit must be made in writing on Canadian LC
Issuer's standard form of Letter of Credit Application, the terms and provisions
of which are hereby incorporated herein by reference (or in such other form as
may mutually be agreed upon by Canadian LC Issuer and the applicable Canadian
Borrower). Three Business Days after the LC Conditions for a Letter of Credit
have been met as described in Section 2.6 (or if Canadian LC Issuer otherwise
desires to issue such Letter of Credit), Canadian LC Issuer will issue such
Letter of Credit at Canadian LC Issuer's office in Toronto, Ontario. If any
provisions of any LC Application conflict with any provisions of this Agreement,
the provisions of this Agreement shall govern and control.
18
24
Section 2.8. Reimbursement and Participations.
(a) Reimbursement by Canadian Borrowers. Each Matured Canadian LC
Obligation arising from a Letter of Credit issued under the Canadian Agreement
shall constitute Canadian Prime Rate Loans made by Canadian LC Issuer to the
applicable Canadian Borrower even if any condition precedent to the making of
such a Loan shall not have been satisfied. Each Lender shall (in all
circumstances and without set-off or counterclaim) purchase from Canadian LC
Issuer its Percentage Share of such Canadian Prime Rate Loans and pay to
Canadian LC Issuer on demand on the date on which such Matured LC Obligation
arises, in immediately available funds at Canadian LC Issuer's address for
notices hereunder, such Lender's Percentage Share of such Matured Canadian LC
Obligation. Each Lender's obligation to pay Canadian LC Issuer pursuant to the
terms of this subsection is irrevocable and unconditional. If any amount
required to be paid by any Lender to Canadian LC Issuer pursuant to this
subsection is paid by such Lender to Canadian LC Issuer within three Business
Days after the date such payment is due, Canadian LC Issuer shall in addition to
such amount be entitled to recover from such Lender, on demand, interest thereon
calculated from such due date at the Canadian Prime Rate. If any amount required
to be paid by any Lender to Canadian LC Issuer pursuant to this subsection is
not paid by such Lender to Canadian LC Issuer within three Business Days after
the date such payment is due, Canadian LC Issuer shall in addition to such
amount be entitled to recover from such Lender, on demand, interest thereon
calculated from such due date at the Default Rate.
(b) Calculations. A written advice setting forth in reasonable detail
the amounts owing under this section, submitted by Canadian LC Issuer to
Canadian Borrowers or any Lender from time to time, shall be conclusive, absent
manifest error, as to the amounts thereof.
Section 2.9. Letter of Credit Fees. In consideration of Canadian LC
Issuer's issuance of any Letter of Credit, the applicable Canadian Borrower
agrees to pay (a) to Canadian LC Issuer for its own account, a letter of credit
fronting fee at a rate equal to 12.5 Basis Points multiplied by the face amount
of such Letter of Credit, payable on the date of issuance, and (b) to Canadian
Agent, for the account of all Lenders in accordance with their respective
Percentage Shares, a letter of credit issuance fee calculated by applying the
Applicable Margin to the face amount of all Letters of Credit outstanding on
each day, payable in arrears on the last day of each Fiscal Quarter. In
addition, the applicable Canadian Borrower will pay to LC Issuer its standard
drawing and other processing fees upon any drawing under a Letter of Credit.
Section 2.10. No Duty to Inquire.
(a) Drafts and Demands. Canadian LC Issuer is authorized and instructed
to accept and pay drafts and demands for payment under any Letter of Credit
without requiring, and without responsibility for, any determination as to the
existence of any event giving rise to said draft, either at the time of
acceptance or payment or thereafter. Canadian LC Issuer is under no duty to
determine the proper identity of anyone presenting such a draft or making such a
demand (whether by tested telex or otherwise) as the officer, representative or
agent of any beneficiary under any Letter of Credit, and payment by Canadian LC
Issuer to any such beneficiary when requested by any such purported officer,
representative or agent is hereby authorized and
19
25
approved. CANADIAN BORROWERS RELEASE EACH LENDER PARTY FROM, AND AGREE TO HOLD
EACH LENDER PARTY HARMLESS AND INDEMNIFIED AGAINST, ANY LIABILITY OR CLAIM IN
CONNECTION WITH OR ARISING OUT OF THE SUBJECT MATTER OF THIS SECTIOn, WHICH
INDEMNITY SHALL APPLY WHETHER OR NOT ANY SUCH LIABILITY OR CLAIM IS IN ANY WAY
OR TO ANY EXTENT CAUSED, IN WHOLE OR IN PART, BY ANY NEGLIGENT ACT OR OMISSION
OF ANY KIND BY ANY LENDER PARTY, provided only that no Lender Party shall be
entitled to indemnification for that portion, if any, of any liability or claim
which is proximately caused by its own individual gross negligence or willful
misconduct, as determined in a final judgment.
(b) Extension of Maturity. If the maturity of any Letter of Credit is
extended by its terms or by Law or governmental action, if any extension of the
maturity or time for presentation of drafts or any other modification of the
terms of any Letter of Credit is made at the request of any Restricted Person,
or if the amount of any Letter of Credit is increased at the request of any
Restricted Person, this Agreement shall be binding upon all Restricted Persons
with respect to such Letter of Credit as so extended, increased or otherwise
modified, with respect to drafts and property covered thereby, and with respect
to any action taken by Canadian LC Issuer, Canadian LC Issuer's correspondents,
or any Lender Party in accordance with such extension, increase or other
modification.
(c) Transferees of Letters of Credit. If any Letter of Credit provides
that it is transferable, Canadian LC Issuer shall have no duty to determine the
proper identity of anyone appearing as transferee of such Letter of Credit, nor
shall Canadian LC Issuer be charged with responsibility of any nature or
character for the validity or correctness of any transfer or successive
transfers, and payment by Canadian LC Issuer to any purported transferee or
transferees as determined by Canadian LC Issuer is hereby authorized and
approved, and CANADIAN BORROWERS RELEASE EACH LENDER PARTY FROM, AND AGREE TO
HOLD EACH LENDER PARTY HARMLESS AND INDEMNIFIED AGAINST, ANY LIABILITY OR CLAIM
IN CONNECTION WITH OR ARISING OUT OF THE FOREGOING, WHICH INDEMNITY SHALL APPLY
WHETHER OR NOT ANY SUCH LIABILITY OR CLAIM IS IN ANY WAY OR TO ANY EXTENT
CAUSED, IN WHOLE OR IN PART, BY ANY NEGLIGENT ACT OR OMISSION OF ANY KIND BY ANY
LENDER PARTY, provided only that no Lender Party shall be entitled to
indemnification for that portion, if any, of any liability or claim which is
proximately caused by its own individual gross negligence or willful misconduct,
as determined in a final judgment.
Section 2.11. LC Collateral.
(a) Canadian LC Obligations in Excess of Canadian Maximum Credit
Amount. If, after the making of all mandatory prepayments required under Section
1.4(c), the outstanding Canadian LC Obligations will exceed Canadian Maximum
Credit Amount, then in addition to prepayment of the entire principal balance of
the Canadian Loans, Canadian Borrowers will immediately pay to Canadian LC
Issuer an amount equal to such excess. Canadian LC Issuer will hold such amount
to apply against the remaining Canadian LC Obligations outstanding
20
26
under the Canadian Agreement (all such amounts held for Canadian LC Obligations
being herein collectively called "LC Collateral") and the other Canadian
Obligations, and such collateral may be applied from time to time to any Matured
Canadian LC Obligations or other Canadian Obligations which are due and payable.
Neither this subsection nor the following subsection shall, however, limit or
impair any rights which Canadian LC Issuer may have under any other document or
agreement relating to any Letter of Credit, LC Collateral or Canadian LC
Obligation, including any LC Application, or any rights which any Lender Party
may have to otherwise apply any payments by Canadian Borrowers and any LC
Collateral under Section 3.1.
(b) Acceleration of Canadian LC Obligations. If the Canadian
Obligations or any part thereof become immediately due and payable pursuant to
Section 8.1 then, unless Required Lenders otherwise specifically elect to the
contrary (which election may thereafter be retracted by Required Lenders at any
time), all Canadian LC Obligations shall become immediately due and payable
without regard to whether or not actual drawings or payments on the Letters of
Credit have occurred, and the applicable Canadian Borrower in respect of such
Canadian LC Obligations shall be obligated to pay to Canadian LC Issuer
immediately an amount equal to the aggregate Canadian LC Obligations which are
then outstanding.
(c) Investment of LC Collateral. Pending application thereof, all LC
Collateral shall be invested by Canadian LC Issuer in such Investments as
Canadian LC Issuer may choose in its sole discretion. All interest on (and other
proceeds of) such Investments shall be reinvested or applied to Matured Canadian
LC Obligations or other Canadian Obligations which are due and payable. When all
Canadian Obligations have been satisfied in full, including all Canadian LC
Obligations, all Letters of Credit have expired or been terminated, and all of
Canadian Borrowers's reimbursement obligations in connection therewith have been
satisfied in full, Canadian LC Issuer shall release any remaining LC Collateral.
Canadian Borrowers hereby assign and grant to Canadian LC Issuer a continuing
security interest in all LC Collateral paid by it to Canadian LC Issuer, all
Investments purchased with such LC Collateral, and all proceeds thereof to
secure its Matured Canadian LC Obligations and the other Canadian Obligations
hereunder, each Canadian Note, and the other US Loan Documents. Canadian
Borrowers further agree that Canadian LC Issuer shall have all of the rights and
remedies of a secured party under the Personal Property Security Act (Alberta)
with respect to such security interest and that an Event of Default under this
Agreement shall constitute a default for purposes of such security interest.
When Canadian Borrowers are required to provide LC Collateral for any reason and
fail to do so on the day when required, Canadian LC Issuer may without notice to
Canadian Borrowers or any other Restricted Person provide such LC Collateral
(whether by transfers from other accounts maintained with Canadian LC Issuer, or
otherwise) using any available funds of Canadian Borrowers or any other Person
also liable to make such payments.
ARTICLE III - Payments to Lenders
Section 3.1. General Procedures. Each Canadian Borrower will make each
payment which it owes under the Canadian Loan Documents to Canadian Agent in
Toronto, Canada, if such payment is being
21
27
made in Canadian Dollars, or to the US Account, if such payment is being made in
US Dollars, in each case for the account of the Lender Party to whom such
payment is owed, without set-off, deduction or counterclaim, and in immediately
available funds, provided that any such payment may be made net of any deduction
or withholding for or on account of any withholding tax which such Canadian
Borrower is required at Law to withhold or deduct except as otherwise provided
in Section 3.2(d). Each such payment must be received by Canadian Agent not
later than 11:00 a.m., Toronto, Ontario time, on the date such payment becomes
due and payable. Any payment received by Canadian Agent after such time will be
deemed to have been made on the next following Business Day. Should any such
payment become due and payable on a day other than a Business Day, the maturity
of such payment shall be extended to the next succeeding Business Day, and, in
the case of a payment of principal or past due interest, interest shall accrue
and be payable thereon for the period of such extension as provided in the
Canadian Loan Document under which such payment is due. Each payment under a
Canadian Loan Document shall be due and payable at the place provided therein
and, if no specific place of payment is provided, shall be due and payable at
the place of payment of Canadian Agent's Canadian Note. When Canadian Agent
collects or receives money on account of the Canadian Obligations, Canadian
Agent shall distribute all money so collected or received by 2:00 p.m. Toronto,
Ontario time on the Business Day received, if received by 11:00 a.m. Toronto,
Ontario time, otherwise on the day of deemed receipt, and each Lender Party
shall apply all such money so distributed, as follows:
(a) first, for the payment of all Canadian Obligations which are then
due (and if such money is insufficient to pay all such Canadian Obligations,
first to any reimbursements due Canadian Agent under Section 6.9 or 10.4, then
to any reimbursement due any other Lender Party under Section 10.4, and then to
the partial payment of all other Canadian Obligations then due in proportion to
the amounts thereof, or as Lender Parties shall otherwise agree);
(b) then for the prepayment of amounts owing under the Canadian Loan
Documents (other than principal on the Canadian Notes) if so specified by
Canadian Borrowers;
(c) then for the prepayment of principal on the Canadian Notes that are
not Competitive Bid Notes, together with accrued and unpaid interest on the
principal so prepaid; and
(d) last, for the payment or prepayment of any other Canadian
Obligations.
All payments applied to principal or interest on any Canadian Note shall be
applied first to any interest then due and payable, then to principal then due
and payable, and last to any prepayment of principal and interest in compliance
with Sections 1.4 and 2.6. All distributions of amounts described in any of
subsections (b), (c) or (d) above shall be made by Canadian Agent pro rata to
each Lender Party then owed Canadian Obligations described in such subsection in
proportion to all amounts owed to all Lender Parties which are described in such
subsection; provided that if any Lender then owes payments to Canadian LC Issuer
for the purchase of a participation under Section 2.8(a) or to Canadian Agent
under Section 9.9, any amounts otherwise distributable under this section to
such Lender shall be deemed to belong to Canadian LC Issuer, or Canadian
22
28
Agent, respectively, to the extent of such unpaid payments, and Canadian Agent
shall apply such amounts to make such unpaid payments rather than distribute
such amounts to such Lender.
Section 3.2. Change in Law; Gross Up; Increased Cost and Reduced
Return.
(a) If, after the date hereof, the adoption of any applicable Law,
rule, or regulation, or any change in any applicable Law, rule, or regulation,
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 any Lender Party (or
its Applicable Lending Office) with any request or directive (whether or not
having the force of Law) of any such Governmental Authority, central bank, or
comparable agency (the occurrence of any of the foregoing events being herein
referred to as a "Change in Law"):
(i) shall subject such Lender Party (or its Applicable Lending
Office) to any tax, duty, deduction or any other charge (other than
with respect to Withholding Tax as defined in Section 3.2(d)) with
respect to any Eurodollar Loans, Bankers' Acceptances or Competitive
Bid Loans, or its obligation to make Eurodollar Loans, accept Bankers'
Acceptances or issue Letters of Credit, or change the basis of taxation
of any amounts payable to such Lender Party (or its Applicable Lending
Office) under this Agreement or its Canadian Note in respect of any
Eurodollar Loans, Bankers' Acceptances or Competitive Bid Loans other
than taxes (including franchise taxes) imposed on the overall net
income or capital of such Lender Party by the jurisdiction under the
Laws of which such Lender Party (or its Applicable Lending Office) is
organized or is a resident for tax purposes or any political
subdivision thereof;
(ii) shall impose, modify, or deem applicable any reserve, special
deposit, assessment, or similar requirement (other than the Reserve
Requirement utilized in the determination of the Adjusted US Dollar
Eurodollar Rate and Adjusted Canadian Dollar Eurodollar Rate) relating
to any extensions of credit or other assets of, or any deposits with or
other liabilities or commitments of, such Lender Party (or its
Applicable Lending Office), including the commitment of such Lender
Party hereunder; or
(iii) shall impose on such Lender Party (or its Applicable Lending
Office) or the London interbank market any other condition affecting
this Agreement or its Canadian Notes or any of such extensions of
credit or liabilities or commitments;
and the result of any of the foregoing is to increase the cost to such Lender
Party (or its Applicable Lending Office) of making, converting into, continuing,
or maintaining any Eurodollar Loans, Bankers' Acceptances or Competitive Bid
Loans or to reduce any sum received or receivable by such Lender Party (or its
Applicable Lending Office) under this Agreement or its Canadian Notes with
respect to any Eurodollar Loans, Bankers' Acceptances or Competitive Bid Loans,
then the applicable Canadian Borrower shall pay to such Lender Party on demand
such amount or amounts as will compensate such Lender Party for such increased
cost or reduction. If any Lender Party requests compensation by Canadian
Borrowers under this Section 3.2(a), Canadian Borrowers may, by notice to such
Lender Party (with a copy to Canadian Agent),
23
29
suspend the obligation of such Lender Party to make or continue Canadian
Advances of the Type with respect to which such compensation is requested, or to
convert Canadian Advances of any other Type into Canadian Advances of such Type,
until the event or condition giving rise to such request ceases to be in effect
(in which case the provisions of Section 3.5 shall be applicable); provided that
such suspension shall not affect the right of such Lender Party to receive the
compensation so requested.
(b) If, after the date hereof, Canadian LC Issuer or any Lender Party
shall have determined that the adoption of any applicable Law, rule, or
regulation regarding capital adequacy or any change therein or in the
interpretation or administration thereof by any Governmental Authority, central
bank, or comparable agency charged with the interpretation or administration
thereof, or any request or directive regarding capital adequacy (whether or not
having the force of Law) of any such Governmental Authority, central bank, or
comparable agency, has or would have the effect of reducing the rate of return
on the capital of such Lender Party or any corporation controlling such Lender
Party as a consequence of the obligations of such Lender Party hereunder to a
level below that which such Lender Party or such corporation could have achieved
but for such adoption, change, request, or directive (taking into consideration
its policies with respect to capital adequacy), then from time to time upon
demand the applicable Canadian Borrower shall pay to such Lender Party such
additional amount or amounts as will compensate such Lender Party for such
reduction, but only to the extent that such Lender Party has not been
compensated therefor by any increase in the Adjusted US Dollar Eurodollar Rate
or the Adjusted Canadian Dollar Eurodollar Rate; provided that if such Lender
Party fails to give notice to Canadian Borrowers of any additional costs within
ninety (90) days after it has actual knowledge thereof, such Lender Party shall
not be entitled to compensation for such additional costs incurred more than
ninety (90) days prior to the date on which notice is given by such Lender
Party.
(c) Each Lender Party shall promptly notify Canadian Borrowers and
Canadian Agent of any event of which it has knowledge, occurring after the date
hereof, which will entitle such Lender Party to compensation pursuant to this
Section and will designate a different Applicable Lending Office if such
designation will avoid the need for, or reduce the amount of, such compensation
and will not, in the judgment of such Lender Party, be otherwise disadvantageous
to it. Any Lender Party claiming compensation under this Section shall furnish
to Canadian Borrowers and Canadian Agent a statement setting forth the
additional amount or amounts to be paid to it hereunder which shall be
conclusive in the absence of manifest error. In determining such amount, such
Lender Party shall act in good faith and may use any reasonable averaging and
attribution methods.
(d) If by reason of a Change in Law, Canadian Borrowers shall be
required to withhold and remit withholding taxes in respect of any principal,
interest, or other amount paid or payable by it to or for the account of any
Lender Party hereunder or under any other Canadian Loan Document (a "Withholding
Tax"), (i) the sum payable shall be increased as necessary so that after making
all required deductions (including deductions applicable to additional sums
payable under this Section 3.2) such Lender Party receives an amount equal to
the sum it would have received had no such deductions been made, (ii) the
applicable Canadian Borrower shall
24
30
make such deductions, and (iii) the applicable Canadian Borrower shall pay the
full amount deducted to the relevant taxation authority or other authority in
accordance with applicable Law.
(e) Except as provided in paragraph (d) of this Section 3.2, no
Canadian Borrower shall be required to compensate any Lender Party for any
Withholding Taxes which such Canadian Borrower is required to withhold and remit
in respect of any principal, interest, or other amount paid or payable by it to
or for the account of any Lender Party hereunder or under any other Canadian
Loan Document.
Section 3.3. Limitation on Types of Canadian Loans. If on or prior to
the first day of any Eurodollar Interest Period for any Eurodollar Loan:
(a) Canadian Agent determines (which determination shall be conclusive)
that by reason of circumstances affecting the relevant market, adequate and
reasonable means do not exist for ascertaining the US Dollar Eurodollar Rate or
the Canadian Dollar Eurodollar Rate, as applicable, for such Eurodollar Interest
Period; or
(b) the Required Lenders determine (which determination shall be
conclusive) and notify Canadian Agent that the Adjusted US Dollar Eurodollar
Rate or the Adjusted Canadian Dollar Eurodollar Rate, as applicable, will not
adequately and fairly reflect the cost to the Lenders of funding Eurodollar
Loans or for such Eurodollar Interest Period;
then Canadian Agent shall give Canadian Borrowers prompt notice thereof
specifying the relevant amounts or periods, and so long as such condition
remains in effect, the Lender Parties shall be under no obligation to make
additional Canadian Loans, continue Eurodollar Loans or convert Canadian Base
Rate Loans or Canadian Dollar Prime Rate Loans into Eurodollar Loans, and
Canadian Borrowers shall, on the last day(s) of the then current Eurodollar
Interest Period(s) for the outstanding Eurodollar Loans, either prepay such
Canadian Loans or convert such Canadian Loans into Canadian Base Rate Loans,
Canadian Prime Rate Loans, or Bankers' Acceptances in accordance with the terms
of this Agreement.
Section 3.4. Illegality. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Lender Party or its
Applicable Lending Office to make, maintain, or fund Eurodollar Loans hereunder,
then such Lender Party shall promptly notify Canadian Borrowers thereof and such
Lender Party's obligation to make or continue Eurodollar Loans and to convert
BA's, Canadian Base Rate Loans, Canadian Prime Rate Loans, or Bankers'
Acceptances into Eurodollar Loans shall be suspended until such time as such
Lender Party may again make, maintain, and fund Eurodollar Loans (in which case
the provisions of Section 3.5 shall be applicable).
Section 3.5. Treatment of Affected Loans. If the obligation of any
Lender Party to make a particular Type of Loan or to continue, or to convert
Canadian Loans of any other Type into, Canadian Loans of a particular Type shall
be suspended pursuant to Sections 3.2 and 3.4 hereof (Canadian Loans of such
Type being herein called "Affected Loans" and such Type being herein called the
"Affected Type"), such Lender Party's Affected Loans shall be automatically
25
31
converted into Canadian Base Rate Loans with respect to US $ Loans or to
Canadian Prime Rate Loans with respect to C $ Loans on the last day(s) of the
then current Interest Period(s) for Affected Loans (or, in the case of a
Conversion required by Section 3.4 hereof, on such earlier date as such Lender
Party may specify to Canadian Borrowers with a copy to Canadian Agent) and,
unless and until such Lender Party gives notice as provided below that the
circumstances specified in Sections 3.2 or 3.4 hereof that gave rise to such
Conversion no longer exist:
(a) to the extent that such Lender Party's Affected Loans have been so
converted, all payments and prepayments of principal that would otherwise be
applied to such Lender Party's Affected Loans shall be applied instead to its
Canadian Base Rate Loans or Canadian Prime Rate Loans, as applicable; and
(b) all Canadian Loans that would otherwise be made or continued by
such Lender Party as Canadian Loans of the Affected Type shall be made or
continued instead as Canadian Base Rate Loans or Canadian Prime Rate Loans, as
applicable, and all Canadian Loans of such Lender Party that would otherwise be
converted into Canadian Loans of the Affected Type shall be converted instead
into (or shall remain as) Canadian Base Rate Loans or Canadian Prime Rate Loans,
as applicable.
If such Lender Party gives notice to Canadian Borrowers (with a copy to Canadian
Agent) that the circumstances specified in Section 3.2 or 3.4 hereof that gave
rise to the Conversion of such Lender Party's Affected Loans pursuant to this
Section no longer exist (which such Lender Party agrees to do promptly upon such
circumstances ceasing to exist) at a time when Canadian Loans of the Affected
Type made by other Lender Parties are outstanding, such Lender Party's Canadian
Base Rate Loans or Canadian Prime Rate Loans, as applicable, shall be
automatically converted, on the first day(s) of the next succeeding Interest
Period(s) for such outstanding Canadian Loans of the Affected Type, to the
extent necessary so that, after giving effect thereto, all Canadian Loans held
by the Lender Parties holding Canadian Loans of the Affected Type and by such
Lender Party are held pro rata (as to principal amounts, Types, and Interest
Periods) in accordance with their Percentage Shares of the Canadian Maximum
Credit Amount.
Section 3.6. Compensation. Upon the request of any Lender Party,
Canadian Borrowers shall pay to such Lender Party such amount or amounts as
shall be sufficient (in the reasonable opinion of such Lender Party) to
compensate it for any loss, cost, or expense (including loss of anticipated
profits) incurred by it as a result of:
(i) any payment, prepayment, or Conversion of a Eurodollar Loan or
Competitive Bid Loan for any reason (including, without limitation, the
acceleration of the Canadian Loans pursuant to Section 8.1) on a date
other than the last day of the Interest Period for such Loan; or
(ii) any failure by Canadian Borrowers for any reason (including,
without limitation, the failure of any condition precedent specified in
Article IV to be satisfied) to borrow, convert, continue, or prepay a
Eurodollar Loan on the date for such borrowing,
26
32
Conversion, Continuation, or prepayment specified in the relevant
notice of borrowing, prepayment, Continuation, or Conversion under this
Agreement.
Section 3.7. Change of Applicable Lending Office. Each Lender Party
agrees that, upon the occurrence of any event giving rise to the operation of
Sections 3.2 through 3.5 with respect to such Lender Party, it will, if
requested by Canadian Borrowers, use reasonable efforts (subject to overall
policy considerations of such Lender Party) to designate another Applicable
Lending Office, provided that such designation is made on such terms that such
Lender Party and its Applicable Lending Office suffer no economic, legal or
regulatory disadvantage, with the object of avoiding the consequence of the
event giving rise to the operation of any such section. Nothing in this section
shall affect or postpone any of the obligations of Canadian Borrowers or the
rights of any Lender Party provided in Sections 3.2 through 3.5.
Section 3.8. Replacement of Lenders. If any Lender Party seeks
reimbursement for increased costs under Sections 3.2 through 3.5, or if a
Canadian Borrower is required to increase any sum payable under Section 3.2(d),
then within ninety (90) days thereafter -- provided no Event of Default then
exists -- Canadian Borrowers shall have the right (unless such Lender Party
withdraws its request for additional compensation) to replace such Lender Party
by requiring such Lender Party to assign its Canadian Advances, Canadian Notes,
Canadian LC Obligations, US Loans, US Notes, US LC Obligations and its
commitments hereunder and under the US Agreement to an Eligible Transferee
reasonably acceptable to all Borrowers, provided that: all Obligations of
Borrowers owing to such Lender Party being replaced (including such increased
costs, but excluding principal and accrued interest on the Canadian Notes and
the US Notes being assigned) shall be paid in full to such Lender Party
concurrently with such assignment, and the replacement Eligible Transferee shall
purchase the foregoing by paying to such Lender Party a price equal to the
principal amount thereof plus accrued and unpaid interest thereon. In connection
with any such assignment Canadian Borrowers, Canadian Agent, US Borrower, US
Agent, such Lender Party and the replacement Eligible Transferee shall otherwise
comply with Section 10.6. Notwithstanding the foregoing rights of Canadian
Borrowers under this section, however, Canadian Borrowers may not replace any
Lender Party which seeks reimbursement for increased costs under Section 3.2
through 3.5, or to which Canadian Borrowers are required to increase any sums
payable under Section 3.2(d), unless Canadian Borrowers are at the same time
replacing all Lender Parties which are then seeking such compensation or to
which such sums payable must be increased. In connection with any such
replacement of a Lender Party, the applicable Canadian Borrower shall pay all
costs that would have been due to such Lender Party pursuant to Section 3.6 if
such Lender Party's Canadian Advances had been prepaid at the time of such
replacement.
Section 3.9. Other Taxes.
(a) Canadian Borrowers agree to pay any and all present or future stamp
or documentary taxes and any other excise or property taxes or charges or
similar levies which arise from any payment made under this Agreement or any
other Canadian Loan Document or from the execution or delivery of, or otherwise
with respect to, this Agreement or any other Canadian Loan Document (hereinafter
referred to as "Other Taxes").
27
33
(b) Canadian Borrowers agree to indemnify each Lender Party for the
full amount of Other Taxes (including, without limitation, any Other Taxes
imposed or asserted by any jurisdiction on amounts payable under this section)
paid by such Lender Party or Canadian Agent (as the case may be) and any
liability (including penalties, interest, and expenses) arising therefrom or
with respect thereto.
(c) If Canadian Borrowers are required to pay additional amounts to or
for the account of any Lender Party pursuant to this Section 3.9, then such
Lender Party will agree to use reasonable efforts to change the jurisdiction of
its Applicable Lending Office so as to eliminate or reduce any such additional
payment which may thereafter accrue if such change, in the judgment of such
Lender Party, is not otherwise disadvantageous to such Lender Party.
(d) If a Lender Party is reimbursed for an amount paid by Canadian
Borrowers pursuant to this Section 3.9, it shall promptly return such amount to
Canadian Borrowers.
(e) Within thirty (30) days after the date of any payment of Other
Taxes, Canadian Borrowers shall furnish to Canadian Agent the original or a
certified copy of a receipt evidencing such payment.
(f) Without prejudice to the survival of any other agreement of
Canadian Borrowers hereunder, the agreements and obligations of Canadian
Borrowers contained in this section shall survive the termination of this
Agreement and the payment in full of the Canadian Notes.
Section 3.10. Currency Conversion and Currency Indemnity.
(a) Canadian Borrowers and Canadian Guarantor (collectively, for
purposes of this Section 3.10 herein referred to as "Obligors") shall make
payment relative to any Obligation in the currency (the "Agreed Currency") in
which the Obligation was incurred. If any payment is received on account of any
Obligation in any currency (the "Other Currency") other than the Agreed Currency
(whether voluntarily or pursuant to an order or judgment or the enforcement
thereof or the realization of any security or the liquidation of such Obligor or
otherwise howsoever), such payment shall constitute a discharge of the liability
of an Obligor hereunder and under the other Canadian Loan Documents in respect
of such Obligation only to the extent of the amount of the Agreed Currency which
the relevant Lender Parties are able to purchase with the amount of the Other
Currency received by it on the Business Day next following such receipt in
accordance with its normal procedures and after deducting any premium and costs
of exchange.
(b) If, for the purpose of obtaining or enforcing judgment in any court
in any jurisdiction, it becomes necessary to convert into a particular currency
(the "Judgment Currency") any amount due in the Agreed Currency then the
conversion shall be made on the basis of the rate of exchange prevailing on the
next Business Day following the date such judgment is given and in any event
each Obligor shall be obligated to pay the Lender Parties any deficiency in
accordance with Section 3.10(c). For the foregoing purposes "rate of exchange"
means the rate at which the relevant Lender Parties, as applicable, in
accordance with their normal banking
28
34
procedures are able on the relevant date to purchase the Agreed Currency with
the Judgment Currency after deducting any premium and costs of exchange.
(c) If any Lender Party receives any payment or payments on account of
the liability of an Obligor hereunder pursuant to any judgment or order in any
Other Currency, and the amount of the Agreed Currency which the relevant Lender
Party is able to purchase on the Business Day next following such receipt with
the proceeds of such payment or payments in accordance with its normal
procedures and after deducting any premiums and costs of exchange is less than
the amount of the Agreed Currency due in respect of such Obligations immediately
prior to such judgment or order, then Canadian Borrowers on demand shall, and
Canadian Borrowers hereby agree to, indemnify and save such Lender Party
harmless from and against any loss, cost or expense arising out of or in
connection with such deficiency. The agreement of indemnity provided for in this
Section 3.10(c) shall constitute an obligation separate and independent from all
other obligations contained in this Agreement, shall give rise to a separate and
independent cause of action, shall apply irrespective of any indulgence granted
by the Lender Parties or any of them from time to time, and shall continue in
full force and effect notwithstanding any judgment or order for a liquidated sum
in respect of an amount due hereunder or under any judgment or order.
ARTICLE IV - Conditions Precedent to Advances
Section 4.1. Documents to be Delivered. No Lender has any obligation to
make its first Canadian Loan, and Canadian LC Issuer has no obligation to issue
the first Letter of Credit, unless Canadian Agent shall have received all of the
following, duly executed and delivered and in form, substance and date
satisfactory to Canadian Agent:
(a) This Agreement and any other documents that Lenders are to execute
in connection herewith.
(b) Each Canadian Note.
(c) The Guaranty of Canadian Guarantor.
(d) Certain certificates of Canadian Borrowers including:
(i) An "Omnibus Certificate" of the Secretary or Assistant
Secretary and of the Chairman of the Board, President, or Vice
President - Finance of each Canadian Borrower, which shall contain the
names and signatures of the officers of such Canadian Borrower
authorized to execute Canadian Loan Documents and which shall certify
to the truth, correctness and completeness of the following exhibits
attached thereto: (1) a copy of resolutions duly adopted by the Board
of Directors of such Canadian Borrower and in full force and effect at
the time this Agreement is entered into, authorizing the execution of
this Agreement and the other Canadian Loan Documents delivered or to be
delivered in connection herewith and the consummation of the
transactions contemplated herein
29
35
and therein, (2) a copy of the charter documents of such Canadian
Borrower and all amendments thereto, certified by the appropriate
official of its jurisdiction of organization, and (3) a copy of any
bylaws of such Canadian Borrower; and
(ii) A "Compliance Certificate" of the Chairman of the Board
or President and of the Vice President - Finance of each Canadian
Borrower, of even date with such Canadian Loan or such Letter of
Credit, in which such officers certify to the satisfaction of the
conditions set out in subsections (a), (b) and (c) of Section 4.3.
(e) certificate (or certificates) of the due formation, valid existence
and good standing of each Canadian Borrower in its jurisdiction of organization,
issued by the appropriate official of such jurisdiction.
(f) A favorable opinion of Bennett Jones, counsel for Restricted
Persons, substantially in the form set forth in Exhibit E and a favorable
opinion of Blake, Cassels & Graydon covering the matters requested by Canadian
Agent..
(g) The Initial Financial Statements.
(h) A copy of each Acquisition Document.
Section 4.2. Additional Conditions Precedent to First Canadian Loan or
First Letter of Credit. No Lender has any obligation to make its first Canadian
Loan, and Canadian LC Issuer has no obligation to issue the first Letter of
Credit, unless on the date thereof:
(a) US Borrower shall have consummated the transactions contemplated
under the Acquisition Documents, and acquired, directly or indirectly, one
hundred percent (100%) of the outstanding common shares of Northstar Energy;
(b) All approvals, if any, required under the Hart-Scott Rodino
Antitrust Improvement Act of 1976, as amended, in connection with the
transactions contemplated by the Acquisition Documents, shall have been
obtained.
(c) All commitment, facility, agency, legal and other fees required to
be paid or reimbursed to any Lender pursuant to any Canadian Loan Documents or
any commitment
agreement heretofore entered into shall have been paid.
(d) No event which would reasonably be expected to have a Material
Adverse Effect shall have occurred since September 30, 1998.
(e) US Borrower shall have certified to Canadian Agent and Lenders that
the Initial Financial Statements fairly present US Borrower's Consolidated
financial position at the respective dates thereof and the Consolidated results
of US Borrower's operations and US Borrower's Consolidated cash flows for the
respective periods thereof.
30
36
(f) US Borrower shall have certified to Canadian Agent and Lenders that
no Restricted Person has any outstanding Liabilities of any kind (including
contingent obligations, tax assessments, and unusual forward or long-term
commitments) which are, in the aggregate, material to US Borrower or material
with respect to US Borrower's Consolidated financial condition and not shown in
the Initial Financial Statements or disclosed in the Disclosure Schedule.
(g) All legal matters relating to the Canadian Loan Documents and the
consummation of the transactions contemplated thereby shall be satisfactory to
Thompson & Knight, a Professional Corporation, US counsel to Canadian Agent, and
Blake, Cassels & Graydon, Canadian counsel to Canadian Agent.
Section 4.3. Additional Conditions Precedent to all Canadian Loans and
Letters of Credit. No Lender has any obligation to make any Canadian Loan
(including its first), and Canadian LC Issuer has no obligation to issue any
Letter of Credit (including its first), unless the following conditions
precedent have been satisfied:
(a) All representations and warranties made by any Restricted Person in
any Canadian Loan Document shall be true on and as of the date of such Canadian
Loan or the date of issuance of such Letter of Credit (except to the extent that
the facts upon which such representations are based have been changed by the
extension of credit hereunder) as if such representations and warranties had
been made as of the date of such Canadian Loan or the date of issuance of such
Letter of Credit.
(b) No Default shall exist at the date of such Canadian Loan or the
date of issuance of such Letter of Credit.
(c) The making of such Canadian Loan or the issuance of such Letter of
Credit shall not be prohibited by any Law and shall not subject any Lender or
any LC Issuer to any material penalty under or pursuant to any such Law.
ARTICLE V - Representations and Warranties
To confirm each Lender's understanding concerning Restricted Persons
and Restricted Persons' businesses, properties and obligations and to induce
each Lender to enter into this Agreement and to extend credit hereunder, each
Canadian Borrower represents and warrants to each Lender that:
Section 5.1. No Default. No event has occurred and is continuing which
constitutes a Default.
Section 5.2. Organization and Good Standing. Each Canadian Borrower and
each Subsidiary of a Canadian Borrower that is a Restricted Person is duly
organized, validly existing and in good standing under the Laws of its
jurisdiction of organization, having all powers
31
37
required to carry on its business and enter into and carry out the transactions
contemplated hereby. Each Canadian Borrower and each Subsidiary of a Canadian
Borrower that is a Restricted Person is duly qualified, in good standing, and
authorized to do business in all other jurisdictions within Canada wherein the
character of the properties owned or held by it or the nature of the business
transacted by it makes such qualification necessary except where failure to so
qualify would not have a Material Adverse Effect. Each Canadian Borrower and
each Subsidiary of a Canadian Borrower that is a Restricted Person has taken all
actions and procedures customarily taken in order to enter, for the purpose of
conducting business or owning property, each jurisdiction outside Canada wherein
the character of the properties owned or held by it or the nature of the
business transacted by it makes such actions and procedures desirable except
where failure to so qualify would not have a Material Adverse Effect.
Section 5.3. Authorization. Each Canadian Borrower has duly taken all
action necessary to authorize the execution and delivery by it of the Canadian
Loan Documents to which it is a party and to authorize the consummation of the
transactions contemplated thereby and the performance of its obligations
thereunder. Each Canadian Borrower is duly authorized to borrow funds hereunder.
Section 5.4. No Conflicts or Consents. The execution and delivery by
each Canadian Borrower and each Subsidiary of a Canadian Borrower that is a
Restricted Person of the Canadian Loan Documents to which each is a party, the
performance by each of its obligations under such Canadian Loan Documents, and
the consummation of the transactions contemplated by the various Canadian Loan
Documents, do not and will not (i) conflict with any provision of (A) any Law,
(B) the organizational documents or any unanimous shareholders agreement of any
Restricted Person, or (C) any agreement, judgment, license, order or permit
applicable to or binding upon any Restricted Person unless such conflict would
not reasonably be expected to have a Material Adverse Effect, or (ii) result in
the acceleration of any Indebtedness owed by any Restricted Person which would
reasonably be expected to have a Material Adverse Effect, or (iii) result in or
require the creation of any Lien upon any assets or properties of any Restricted
Person which would reasonably be expected to have a Material Adverse Effect,
except as expressly contemplated or permitted in the Canadian Loan Documents.
Except as expressly contemplated in the Canadian Loan Documents no consent,
approval, authorization or order of, and no notice to or filing with, any
Tribunal or third party is required in connection with the execution, delivery
or performance by any Restricted Person of any Canadian Loan Document or to
consummate any transactions contemplated by the Canadian Loan Documents, unless
failure to obtain such consent would not reasonably be expected to have a
Material Adverse Effect.
Section 5.5. Enforceable Obligations. This Agreement is, and the other
Canadian Loan Documents when duly executed and delivered will be, legal, valid
and binding obligations of each Restricted Person which is a party hereto or
thereto, enforceable in accordance with their terms except as such enforcement
may be limited by bankruptcy, insolvency or similar Laws of general application
relating to the enforcement of creditors' rights.
Section 5.6. Full Disclosure. No certificate, statement or other
information delivered herewith or heretofore by any Canadian Borrower or any
Subsidiary of a Canadian Borrower that
32
38
is a Restricted Person to any Lender in connection with the negotiation of this
Agreement or in connection with any transaction contemplated hereby contains any
untrue statement of a material fact or omits to state any material fact known to
any such Person (other than industry-wide risks normally associated with the
types of businesses conducted by Restricted Persons) necessary to make the
statements contained herein or therein not misleading as of the date made or
deemed made. There is no fact known to any such Person (other than industry-wide
risks normally associated with the types of businesses conducted by Restricted
Persons) that has not been disclosed to each Lender in writing which would
reasonably be expected to have a Material Adverse Effect.
Section 5.7. Litigation. Except as disclosed in the Initial Financial
Statements or in the Disclosure Schedule: (a) there are no actions, suits or
legal, equitable, arbitrative or administrative proceedings pending, or to the
knowledge of any Canadian Borrower threatened, against any Canadian Borrower or
any Subsidiary of a Canadian Borrower that is a Restricted Person before any
Tribunal which would reasonably be expected to have a Material Adverse Effect,
and (b) there are no outstanding judgments, injunctions, writs, rulings or
orders by any such Tribunal against any Canadian Borrower which would reasonably
be expected to have a Material Adverse Effect.
Section 5.8. Environmental and Other Laws. Except as disclosed in the
Disclosure Schedule: (a) Canadian Borrowers and each Subsidiary of a Canadian
Borrower that is a Restricted Person are conducting their businesses in material
compliance with all applicable Laws, including Environmental Laws, and have and
are in compliance with all licenses and permits required under any such Laws,
unless failure to so comply would not reasonably be expected to have a Material
Adverse Effect; (b) none of the operations or properties of any Canadian
Borrowers and each Subsidiary of a Canadian Borrower that is a Restricted Person
is the subject of federal, provincial or local investigation evaluating whether
any material remedial action is needed to respond to a release of any Hazardous
Materials into the environment or to the improper storage or disposal (including
storage or disposal at offsite locations) of any Hazardous Materials, unless
such remedial action would not reasonably be expected to have a Material Adverse
Effect; and (c) neither any Canadian Borrower nor any Subsidiary of a Canadian
Borrower that is a Restricted Person (and to the best knowledge of Canadian
Borrowers, no other Person) has filed any notice under any Law indicating that
any such Person is responsible for the improper release into the environment, or
the improper storage or disposal, of any material amount of any Hazardous
Materials or that any Hazardous Materials have been improperly released, or are
improperly stored or disposed of, upon any property of any such Person, unless
such failure to so comply would not reasonably be expected to have a Material
Adverse Effect.
Section 5.9. Names and Places of Business. Neither Canadian Borrower
has, during the preceding five years, had, been known by, or used any other
trade or fictitious name, except as disclosed in the Disclosure Schedule. Except
as otherwise indicated in the Disclosure Schedule, the chief executive office
and principal place of business of each Canadian Borrower is (and for the
preceding five years have been) located at the address of such Canadian
33
39
Borrower set out on the signature pages hereto. Except as indicated in the
Disclosure Schedule, no Canadian Borrower or any Subsidiary of a Canadian
Borrower that is a Restricted Person has any other office or place of business.
Section 5.10. Canadian Borrowers' Subsidiaries. No Canadian Borrower
presently has any Subsidiary or owns any stock in any other corporation or
association except those listed in the Disclosure Schedule. Neither any Canadian
Borrower nor any of its Restricted Subsidiaries is a member of any general or
limited partnership, limited liability company, joint venture or association of
any type whatsoever except (a) those listed in the Disclosure Schedule, (b)
associations, joint ventures or other relationships (i) which are established
pursuant to a standard form operating agreement or similar agreement or which
are partnerships for purposes of federal income taxation only, (ii) which are
not corporations or partnerships (or subject to the Uniform Partnership Act)
under applicable state Law, and (iii) whose businesses are limited to the
exploration, development and operation of oil, gas or mineral properties,
pipelines or gathering systems, transportation and related facilities and
interests owned directly by the parties in such associations, joint ventures or
relationships, and (c) associations, joint ventures or other relationships (i)
which are not corporations or partnerships under applicable provincial Law, and
(ii) whose businesses are limited to the exploration, development and operation
of oil, gas or mineral properties, pipelines or gathering systems,
transportation and related facilities and interests owned directly by the
parties in such associations, joint ventures or relationships. Each Canadian
Borrower owns, directly or indirectly, the equity interest in each of its
Subsidiaries which is indicated in the Disclosure Schedule.
Section 5.11. Title to Properties; Licenses. Each Canadian Borrower and
each Subsidiary of a Canadian Borrower that is a Restricted Person has good and
defensible title to all of its material properties and assets, free and clear of
all Liens other than Permitted Liens and of all impediments to the use of such
properties and assets in such Person's business except to the extent failure to
have such title would not have a Material Adverse Effect. Each Canadian Borrower
and each Subsidiary of a Canadian Borrower that is a Restricted Person possesses
all licenses, permits, franchises, patents, copyrights, trademarks and trade
names, and other intellectual property (or otherwise possesses the right to use
such intellectual property without violation of the rights of any other Person)
which are necessary to carry out its business as presently conducted and as
presently proposed to be conducted hereafter, and no such Person is in violation
in any material respect of the terms under which it possesses such intellectual
property or the right to use such intellectual property except to the extent
failure to possess such licenses, permits, franchises, and intellectual property
would not have a Material Adverse Effect.
Section 5.12. Solvency. Upon giving effect to the issuance of the
Canadian Notes, the execution of the Canadian Loan Documents by Canadian
Borrowers and the consummation of the transactions contemplated hereby, each
Canadian Borrower will be solvent (as such term is used in applicable
bankruptcy, liquidation, receivership, insolvency or similar Laws).
Section 5.13. Year 2000 Compliance. Each Canadian Borrower has (a)
initiated a review and assessment of all areas within its and each of its
Subsidiaries' business and operations (including those affected by suppliers and
vendors) that could be adversely affected by the "Year 2000 Problem" (that is,
the risk that computer applications used by such Canadian Borrower and
34
40
its Subsidiaries may be unable to recognize and perform properly date-sensitive
functions involving certain dates prior to and any date after December 31,
1999), (b) developed a plan and timeline for addressing the Year 2000 Problem on
a timely basis, and (c) to date, implemented that plan in accordance with that
timetable. Each Canadian Borrower reasonably believes that all computer
applications (including those of its suppliers and vendors) that are material to
its or any of its Subsidiaries' business and operations will on a timely basis
be able to perform properly date- sensitive functions for all dates before and
after January 1, 2000 (that is, be "Year 2000 compliant"), except to the extent
that a failure to do so would not reasonably be expected to have a Material
Adverse Effect.
ARTICLE VI - Affirmative Covenants of Canadian Borrowers
To conform with the terms and conditions under which each Lender is
willing to have credit outstanding to each Canadian Borrower, and to induce each
Lender to enter into this Agreement and extend credit hereunder, each Canadian
Borrower warrants, covenants and agrees that until the full and final payment of
the Obligations and the termination of this Agreement, unless Required Lenders
have previously agreed otherwise:
Section 6.1. Payment and Performance. Each Canadian Borrower will pay
all amounts due by it under the Canadian Loan Documents in accordance with the
terms thereof and will observe, perform and comply with every covenant, term and
condition expressed or implied in the Canadian Loan Documents to be binding upon
it. Each Canadian Borrower will cause each of its Subsidiaries which is a
Restricted Person to observe, perform and comply with every such term, covenant
and condition in any Loan Document.
Section 6.2. Books, Financial Statements and Reports. Each Canadian
Borrower will at all times maintain full and accurate books of account and
records. Each Canadian Borrower will maintain and will cause its Subsidiaries to
maintain a standard system of accounting, will maintain its Fiscal Year, and
will furnish (or will cause to be furnished) the following statements and
reports to each Lender Party at Canadian Borrowers' expense:
(a) As soon as available, and in any event within ninety (90) days
after the end of each Fiscal Year, complete Consolidated financial statements of
US Borrower together with all notes thereto, prepared in reasonable detail in
accordance with US GAAP, together with an unqualified opinion, based on an audit
using generally accepted auditing standards, by KPMG Peat Marwick L.L.P., or
other independent certified public accountants selected by US Borrower and
acceptable to US Agent, stating that such Consolidated financial statements have
been so prepared. These financial statements shall contain a Consolidated
balance sheet as of the end of such Fiscal Year and Consolidated statements of
earnings, of cash flows, and of changes in owners' equity for such Fiscal Year,
each setting forth in comparative form the corresponding figures for the
preceding Fiscal Year. In addition, within ninety (90) days after the end of
each Fiscal Year each Canadian Borrower will furnish to Canadian Agent and each
Lender a certificate in the form of Exhibit D signed by the President, Vice
President - Finance or Controller of US Borrower, stating that such financial
statements are accurate and complete,
35
41
stating that such Person has reviewed the Canadian Loan Documents, containing
all calculations required to be made to show compliance or non-compliance with
the provisions of Sections 7.7 and 7.8, and further stating that there is no
condition or event at the end of such Fiscal Year or at the time of such
certificate which constitutes a Default and specifying the nature and period of
existence of any such condition or event.
(b) As soon as available, and in any event within forty-five (45) days
after the end of each Fiscal Quarter, US Borrower's Consolidated and
consolidating balance sheet and income statement as of the end of such Fiscal
Quarter and a Consolidated statement of cash flows for the period from the
beginning of the then current Fiscal Year to the end of such Fiscal Quarter, all
in reasonable detail and prepared in accordance with US GAAP, subject to changes
resulting from normal year-end adjustments. In addition each Canadian Borrower
will, together with each such set of financial statements, furnish a certificate
in the form of Exhibit D signed by the President, Vice President - Finance or
Controller of such US Borrower stating that such financial statements are
accurate and complete (subject to normal year-end adjustments), stating that
such Person has reviewed the Canadian Loan Documents, containing all
calculations required to be made to show compliance or non-compliance with the
provisions of Sections 7.7 and 7.8 and further stating that there is no
condition or event at the end of such Fiscal Quarter or at the time of such
certificate which constitutes a Default and specifying the nature and period of
existence of any such condition or event.
(c) Promptly upon their becoming available, copies of all financial
statements, reports, notices and proxy statements sent by US Borrower or any of
its Subsidiaries that is a Restricted Person to its shareholders and all
registration statements, prospectuses, periodic reports and other statements and
schedules filed by any such Person with any exchange, any securities commission
or any similar Governmental Authority, including any information or estimates
with respect to US Borrower's oil and gas business (including its exploration,
development and production activities) which are required to be furnished in
such Canadian Borrower's annual report pursuant to securities legislation or the
rules, policies and requirements of any Governmental Authority.
Section 6.3. Other Information and Inspections. Each Canadian Borrower
and each Subsidiary of a Canadian Borrower that is a Restricted Person will
furnish to each Lender any information which Canadian Agent may from time to
time reasonably request concerning any covenant, provision or condition of the
Loan Documents or any matter in connection with such Persons' businesses and
operations. Each Canadian Borrower and each Subsidiary of a Canadian Borrower
that is a Restricted Person will permit representatives appointed by Canadian
Agent (including independent accountants, auditors, agents, lawyers, appraisers
and any other Persons) to visit and inspect upon prior written notice during
normal business hours any of such Restricted Person's property, including its
books of account, other books and records, and any facilities or other business
assets, and to make extra copies therefrom and photocopies and photographs
thereof, and to write down and record any information such representatives
obtain, and each Canadian Borrower and each Subsidiary of a Canadian Borrower
that is a Restricted Person shall permit Canadian Agent or its representatives
to investigate and verify the accuracy of the
36
42
information furnished to Canadian Agent or any Lender in connection with the
Loan Documents and to discuss all such matters with its officers, employees and
representatives.
Section 6.4. Notice of Material Events and Change of Address. Canadian
Borrowers will promptly notify each Lender in writing, stating that such notice
is being given pursuant to this Agreement, of:
(a) the occurrence of any event which would have a Material Adverse
Effect,
(b) the occurrence of any Default,
(c) the acceleration of the maturity of any Indebtedness owed by any of
Canadian Borrowers or any of their Subsidiaries that are Restricted Persons
having a principal balance of more than US $25,000,000, or of any default by any
such Person under any indenture, mortgage, agreement, contract or other
instrument to which any of them is a party or by which any of them or any of
their properties is bound, if such default would have a Material Adverse Effect,
(d) the occurrence of any Termination Event,
(e) any claim of US $25,000,000 or more, any notice of potential
liability under any Environmental Laws which might exceed such amount, or any
other material adverse claim asserted against any of Canadian Borrowers or any
of their Subsidiaries that are Restricted Persons or with respect to any such
Person's properties, and
(f) the filing of any suit or proceeding against any Canadian Borrowers
or any of their Subsidiaries that are Restricted Person in which an adverse
decision would have a Material Adverse Effect.
Canadian Borrowers will also notify Canadian Agent and Canadian Agent's counsel
in writing promptly in the event that any Canadian Borrower or any of their
Subsidiaries that is a Restricted Person changes its name or the location of its
chief executive office.
Section 6.5. Maintenance of Properties. Each Canadian Borrower and each
Subsidiary of a Canadian Borrower that is a Restricted Person will maintain,
preserve, protect, and keep all property used or useful in the conduct of its
business in good condition, and will from time to time make all repairs,
renewals and replacements needed to enable the business and operations carried
on in connection therewith to be promptly and advantageously conducted at all
times.
Section 6.6. Maintenance of Existence and Qualifications. Each Canadian
Borrower and each Subsidiary of a Canadian Borrower that is a Restricted Person
will maintain and preserve its existence and its rights and franchises in full
force and effect and will qualify to do business in all states or jurisdictions
where required by applicable Law, except where the failure so to qualify will
not have a Material Adverse Effect.
37
43
Section 6.7. Payment of Trade Liabilities, Taxes, etc. Each Canadian
Borrower and each Subsidiary of a Canadian Borrower that is a Restricted Person
will (a) timely file all required tax returns; (b) timely pay all taxes,
assessments, and other governmental charges or levies imposed upon it or upon
its income, profits or property; and (c) maintain appropriate accruals and
reserves for all of the foregoing in accordance with US GAAP. Such Restricted
Person may, however, delay paying or discharging any of the foregoing so long as
it is in good faith contesting the validity thereof by appropriate proceedings
and has set aside on its books adequate reserves therefor.
Section 6.8. Insurance. Each Canadian Borrower and each Subsidiary of a
Canadian Borrower that is a Restricted Person will keep or cause to be kept
insured in accordance with industry standards by financially sound and reputable
insurers, its surface equipment and other property of a character usually
insured by similar Persons engaged in the same or similar businesses.
Section 6.9. Performance on Canadian Borrowers' Behalf. If either
Canadian Borrower or any Subsidiary of a Canadian Borrower that is a Restricted
Person fails to pay any taxes, insurance premiums, expenses, lawyers' fees or
other amounts it is required to pay under any Canadian Loan Document, Canadian
Agent may pay the same, and shall use its best efforts to give at least five (5)
Business Days notice to Canadian Borrowers prior to making any such payment;
provided, however, that any failure by Canadian Agent to so notify Canadian
Borrowers shall not limit or otherwise impair Canadian Agent's ability to make
any such payment. Northstar Energy shall immediately reimburse Canadian Agent
for any such payments and each amount paid by Canadian Agent shall constitute a
Canadian Obligation owed hereunder which is due and payable on the date such
amount is paid by Canadian Agent.
Section 6.10. Interest. Each Canadian Borrower hereby promises to each
Lender Party to pay interest at the Default Rate applicable to Canadian Base
Rate Loans on all Canadian Obligations (including Canadian Obligations to pay
fees or to reimburse or indemnify any Lender) which such Canadian Borrower has
in this Agreement promised to pay to such Lender Party and which are not paid
when due. Such interest shall accrue from the date such Canadian Obligations
become due until they are paid.
Section 6.11. Compliance with Law. Each Canadian Borrower and each
Subsidiary of a Canadian Borrower that is a Restricted Person will conduct its
business and affairs in compliance with all Laws applicable thereto except to
the extent failure to do so would not reasonably be expected to have a Material
Adverse Effect.
Section 6.12. Environmental Matters.
(a) Each Canadian Borrower and each Subsidiary of a Canadian Borrower
that is a Restricted Person will comply in all material respects with all
Environmental Laws now or hereafter applicable to such Restricted Person, as
well as all contractual obligations and agreements with respect to environmental
remediation or other environmental matters, and shall obtain, at or prior to the
time required by applicable Environmental Laws, all environmental,
38
44
health and safety permits, licenses and other authorizations necessary for its
operations and will maintain such authorizations in full force and effect,
unless such failure to so comply would not reasonably be expected to have a
Material Adverse Effect.
(b) will promptly furnish to Canadian Agent all written notices of
violation, orders, claims, citations, complaints, penalty assessments, suits or
other proceedings received by such Canadian Borrower, or of which it has notice,
pending or threatened against such Canadian Borrower, by any Governmental
Authority with respect to any alleged violation of or non-compliance with any
Environmental Laws or any permits, licenses or authorizations in connection with
its ownership or use of its properties or the operation of its business which
involve a potential liability or claim in excess of US $25,000,000.
Section 6.13. Bank Accounts; Offset. To secure the repayment of the
Obligations each Canadian Borrower hereby grants to each Lender a right of
offset, each of which shall be in addition to all other interests, liens, and
rights of any Lender at common Law, under the Loan Documents, or otherwise, and
each of which shall be upon and against (a) any and all moneys, securities or
other property (and the proceeds therefrom) of such Canadian Borrower now or
hereafter held or received by or in transit to any Lender from or for the
account of such Canadian Borrower, whether for safekeeping, custody, pledge,
transmission, collection or otherwise, (b) any and all deposits (general or
special, time or demand, provisional or final) of such Canadian Borrower with
any Lender, and (c) any other credits and claims of such Canadian Borrower at
any time existing against any Lender, including claims under certificates of
deposit. At any time and from time to time after the occurrence of any Default,
each Lender is hereby authorized to offset against the Obligations then due and
payable (in either case without notice to such Canadian Borrower), any and all
items hereinabove referred to. To the extent that such Canadian Borrower has
accounts designated as royalty or joint interest owner accounts, the foregoing
right of offset shall not extend to funds in such accounts which belong to, or
otherwise arise from payments to such Canadian Borrower for the account of,
third party royalty or joint interest owners.
Section 6.14. Year 2000 Compliance. Each Canadian Borrower will
promptly notify Canadian Agent in the event such Canadian Borrower discovers or
determines that any computer application (including those of its suppliers and
vendors) that is material to its or any of its Subsidiaries' business and
operations that will not be Year 2000 compliant on a timely basis, except to the
extent that such failure would not reasonably be expected to have a Material
Adverse Effect.
ARTICLE VII - Negative Covenants of Canadian Borrowers
To conform with the terms and conditions under which each Lender is
willing to have credit outstanding to each Canadian Borrower, and to induce each
Lender to enter into this Agreement and make the Canadian Loans, each Canadian
Borrower warrants, covenants and agrees that until the full and final payment of
the Obligations and the termination of this Agreement, unless Required Lenders
have previously agreed otherwise:
39
45
Section 7.1. Indebtedness. Neither any Canadian Borrower nor any
Subsidiary of a Canadian Borrower that is a Restricted Person (other than US
Borrower) will in any manner owe or be liable for Indebtedness except:
(a) the US Obligations and the Canadian Obligations.
(b) capital lease obligations (excluding oil, gas or mineral leases)
entered into in the ordinary course of such Restricted Person's business in
arm's length transactions at competitive market rates under competitive terms
and conditions in all respects, provided that the obligations required to be
paid in any Fiscal Year under any such capital leases do not in the aggregate
exceed US $25,000,000 for all Restricted Persons.
(c) unsecured Liabilities owed among Restricted Persons.
(d) guaranties by one Restricted Person of Liabilities owed by another
Restricted Person, if such Liabilities either (i) are not Indebtedness, or (ii)
are allowed under subsections (a), (b) or (c) of this Section 7.1.
(e) Indebtedness of the Restricted Persons for plugging and abandonment
bonds or for letters of credit issued by any Lender in place thereof which are
required by regulatory authorities in the area of operations, and Indebtedness
of the Restricted Persons for other bonds or letters of credit issued by any
Lender which are required by such regulatory authorities with respect to other
normal oil and gas operations.
(f) obligations under the Subordinated US Borrower Indenture, the
Subordinated US Borrower Debentures and the Subordinated US Borrower Guarantee;
(g) non-recourse Indebtedness as to which no Restricted Person (i)
provides any guaranty or credit support of any kind (including any undertaking,
guarantee, indemnity, agreement or instrument that would constitute
Indebtedness) or (ii) is directly or indirectly liable (as a guarantor or
otherwise); provided, that after giving effect to such Indebtedness outstanding
from time to time, US Borrower is not in violation of Sections 7.7 and 7.8.
(h) the following long-term institutional Indebtedness of Northstar
Energy:
(i) US $150,000,000 indebtedness to The Prudential Insurance
Company of America pursuant to a Note Agreement dated as of March 2,
1998 including the following guarantees of such indebtedness: (1)
guarantees both dated March 2, 1998 made by Northstar Energy
Partnership and David Limited Partnership; (2) guarantee dated as of
July 31, 1998 made by 728098 Alberta Ltd.; and (3) any other guarantees
of Subsidiaries of Northstar Energy executed after the date hereof
pursuant to the terms of such Note Agreement.
(ii) US $75,000,000 indebtedness to certain institutional investors
pursuant to a Note Agreement dated as of July 19, 1995, as amended from
time to time, including the
40
46
following guarantees of such indebtedness: (1) guarantee dated as of
July 31, 1998 made by Northstar Energy Partnership; (2) guarantee dated
as of July 31, 1998 made by 728098 Alberta Ltd.; and (3) any other
guarantee of Subsidiaries of Northstar Energy executed after the date
hereof pursuant to the terms of such Note Agreement.
including any refinancing of the above institutional indebtedness on
similar terms taking into account current market conditions.
(i) Indebtedness that is subordinated to the US Obligations and the
Canadian Obligations on terms acceptable to Required Lenders.
(j) Indebtedness in the amount of C $36,323,766 owing to The
Toronto-Dominion Bank due January 1, 1999 relating to the West Windsor
Cogeneration Plant sale.
(k) Indebtedness in the approximate amount of C $6,000,000 owed to
Indeck Gas Supply Corporation by Northstar Energy pursuant to a Gas Sales and
Purchase Agreement dated as of March 9, 1989, as heretofore or hereafter amended
from time to time.
(l) Acquired Debt.
(m) Indebtedness under Hedging Contracts permitted under Section 7.9.
(n) Indebtedness in the amount of US $15,000,000 to Bank of America
Canada payable on demand by Northstar Energy and guaranteed by Canadian
Guarantor.
(o) miscellaneous items of Indebtedness of all Restricted Persons
(other than US Borrower) not described in subsections (a) through (n) which do
not in the aggregate exceed US $50,000,000 (with Canadian Borrowers and their
Subsidiaries which are Restricted Persons having no more than US $20,000,000) in
principal amount at any one time outstanding.
Section 7.2. Limitation on Liens. Except for Permitted Liens, neither
any Canadian Borrower nor any Subsidiary of a Canadian Borrower that is a
Restricted Person will create, assume or permit to exist any Lien upon any of
the properties or assets which it now owns or hereafter acquires. Neither any
Canadian Borrower nor any Subsidiary of a Canadian Borrower that is a Restricted
Person will allow the filing or continued existence of any financing statement
describing as collateral any assets or property of such Restricted Person, other
than financing statements which describe only collateral subject to a Lien
permitted under this section and which name as secured party or lessor only the
holder of such Lien.
Section 7.3. Limitation on Mergers. Neither any Canadian Borrower nor
any Subsidiary of a Canadian Borrower that is a Restricted Person will merge or
consolidate with or into any other Person except that any Subsidiary of US
Borrower may be merged into or consolidated with (a) another Subsidiary of US
Borrower, or (b) US Borrower, so long as US Borrower is the surviving business
entity.
41
47
Section 7.4. Limitation on Issuance of Securities by Subsidiaries of US
Borrower. Neither any Canadian Borrower nor any Subsidiary of a Canadian
Borrower that is a Restricted Person will issue any additional shares of its
capital stock, additional partnership interests or other securities or any
options, warrants or other rights to acquire such additional shares, partnership
interests or other securities except to another Restricted Person of which such
issuer is already directly or indirectly a Subsidiary of US Borrower unless such
securities are being issued to acquire a business, directly or indirectly
through the use of the proceeds of such issuance, and such securities are
convertible into the common shares or similar securities of US Borrower,
including the issuance of the exchangeable shares of Northstar Energy issued
pursuant to the Acquisition Documents. Northstar Energy may also issue stock
options to its employees from time to time in the form of exchangeable shares of
Northstar Energy, provided that such shares are convertible into common shares
or similar securities of US Borrower and provided further that such options are
granted under a stock option plan of Northstar Energy and/or US Borrower.
Section 7.5. Limitation on Restricted Payments. Except as permitted
below in this section, neither any Canadian Borrower nor any Subsidiary of a
Canadian Borrower that is a Restricted Person shall directly or indirectly (i)
make any Restricted Distribution, or (ii) any Restricted Investment (the above
being herein collectively referred to as "Restricted Payments"), unless the
aggregate amount of Restricted Payments made during any Fiscal Year never
exceeds ten percent (10%) of the book value of the Consolidated Assets of US
Borrower.
Section 7.6. Transactions with Affiliates. Neither any Canadian
Borrower nor any Subsidiary of a Canadian Borrower that is a Restricted Person
will engage in any material transaction with any of its Affiliates on terms
which are less favorable in any material respect to it than those which would
have been obtainable at the time in arm's-length dealing with Persons other than
such Affiliates, provided that such restriction shall not apply to transactions
among such Restricted Persons that are wholly-owned, directly or indirectly, by
US Borrower.
Section 7.7. Funded Debt to Total Capitalization. At the end of each
Fiscal Quarter, the ratio of US Borrower's Consolidated Total Funded Debt to US
Borrower's Total Capitalization will never exceed sixty percent (60%).
Section 7.8. Funded Debt to EBITDA. At the end of each Fiscal Quarter,
the ratio of US Borrower's Consolidated Total Funded Debt to EBITDA, calculated
for the four consecutive Fiscal Quarters then ended, will never exceed 3.75 to
1.
Section 7.9. Hedging Contracts. Neither any Canadian Borrower nor any
Subsidiary of a Canadian Borrower that is a Restricted Person will be a party to
or in any manner be liable on any Hedging Contract, unless such contracts
qualify under US GAAP as a hedge of oil and gas production, floating rate
Indebtedness or foreign currency needs (and not as a speculative investment),
such contracts are entered into in the ordinary course of the Restricted
Persons' businesses, and
42
48
(i) if such contracts are entered into with the purpose and
effect of fixing prices on oil or gas expected to be produced by
Restricted Persons:
(A) such contracts for any single month (determined, in
the case of contracts that are not settled on a monthly basis,
by a monthly proration acceptable to US Agent) do not, in the
aggregate, cover amounts greater than seventy-five percent
(75%) of the Restricted Persons' aggregate Projected Oil and
Gas Production anticipated to be sold in the ordinary course
of the Restricted Persons' businesses for such month;
(B) such contracts do not require any Restricted Person to
provide any Lien to secure US Borrower's obligations
thereunder, other than Liens on cash or cash equivalents in an
aggregate amount not more than US $50,000,000; and
(C) each such contract is with a counterparty or has a
guarantor of the obligation of the counterparty who (unless
such counterparty is US Agent, any Lender or any of their
Affiliates) at the time the contract is made has long-term
obligations rated AA or better by S&P, Aa2 or better by
Moody's, A+ or better by CBRS, or AA or better by DBRS or is
an investment grade-rated industry participant.
As used in this subsection (i), the term "Projected Oil and Gas
Production" means the projected production of oil or gas (measured by
volume unit or BTU equivalent, not sales price) for the term of the
contracts or a particular month, as applicable, from properties and
interests owned by any Restricted Person which have attributable to
them proved oil or gas reserves.
(ii) if such contracts are entered into with the purpose and
effect of fixing interest rates on a principal amount of indebtedness
of such Restricted Person that is accruing interest at a variable rate,
the aggregate notional amount of such contracts never exceeds the
anticipated outstanding principal balance of the indebtedness to be
hedged by such contracts or an average of such principal balances
calculated using a generally accepted method of matching interest swap
contracts to declining principal balances, and the floating rate index
of each such contract generally matches the index used to determine the
floating rates of interest on the corresponding indebtedness to be
hedged by such contract.
ARTICLE VIII - Events of Default and Remedies
Section 8.1. Events of Default. Each of the following events
constitutes an Event of Default under this Agreement:
(a) Any Restricted Person fails to pay any principal component of any
Canadian Obligation when due and payable or fails to pay any other Canadian
Obligation within three (3)
43
49
days after the date when due and payable, whether at a date for the payment of a
fixed installment or as a contingent or other payment becomes due and payable or
as a result of acceleration or otherwise;
(b) Any "default" or "event of default" occurs under any Canadian Loan
Document which defines either such term, and the same is not remedied within the
applicable period of grace (if any) provided in such Loan Document;
(c) Any Restricted Person fails (other than as referred to in
subsections (a) or (b) above) to duly observe, perform or comply with any
covenant, agreement, condition or provision of any Canadian Loan Document, and
such failure remains unremedied for a period of thirty (30) days after notice of
such failure is given by Canadian Agent to Canadian Borrower;
(d) Any representation or warranty previously, presently or hereafter
made in writing by or on behalf of any Restricted Person in connection with any
Canadian Loan Document shall prove to have been false or incorrect in any
material respect on any date on or as of which made; provided, that if such
falsity or lack of correctness is capable of being remedied or cured within a
30-day period, Canadian Borrowers shall (subject to the other provisions of this
Section 8.1) have a period of 30 days after written notice thereof has been
given to Canadian Borrowers by Canadian Agent within which to remedy or cure
such lack of correctness, or this Agreement, any Canadian Note, or the Guaranty
executed by Canadian Guarantor is asserted to be or at any time ceases to be
valid, binding and enforceable in any material respect as warranted in Section
5.5 for any reason other than its release or subordination by Canadian Agent;
(e) Any Restricted Person (i) fails to duly pay any Indebtedness in
excess of US $25,000,000 constituting principal or interest owed by it with
respect to borrowed money or money otherwise owed under any note, bond, or
similar instrument, including without limitation the Subordinated US Borrower
Debentures, the Subordinated US Borrower Indenture, the Subordinated US Borrower
Guarantee and the Devon Trust Securities, or (ii) breaches or defaults in the
performance of any agreement or instrument by which any such Indebtedness is
issued, evidenced, governed, or secured, other than a breach or default
described in clause (i) above, and any such failure, breach or default results
in the acceleration of such Indebtedness;
(f) Any Change in Control occurs;
(g) Any "Event of Default" occurs under the US Agreement; and
(h) Any Canadian Borrower or any other Restricted Person having assets
with a book value of at least US $25,000,000:
(i) suffers the entry against it of a judgment, decree or order for
relief by a Tribunal of competent jurisdiction in an involuntary
proceeding commenced under any applicable bankruptcy, insolvency or
other similar Law of any jurisdiction now or hereafter in effect,
including the Bankruptcy and Insolvency Act (Canada) and the Companies'
Creditors Arrangement Act (Canada), as each are from time to time
amended,
44
50
or has any such proceeding commenced against it which remains
undismissed for a period of thirty days; or
(ii) commences a voluntary case under any applicable
bankruptcy, insolvency or similar Law now or hereafter in effect,
including the Bankruptcy and Insolvency Act (Canada) and the Companies'
Creditors Arrangement Act (Canada), as each are from time to time
amended; or applies for or consents to the entry of an order for relief
in an involuntary case under any such Law; or makes a general
assignment for the benefit of creditors; or fails generally to pay (or
admits in writing its inability to pay) its debts as such debts become
due; or takes corporate or other action to authorize any of the
foregoing; or
(iii) suffers the appointment of or taking possession by a
receiver, receiver- manager, liquidator, assignee, custodian, trustee,
sequestrator or similar official of all or a substantial part of its
property in a proceeding brought against or initiated by it, and such
appointment or taking possession is neither made ineffective nor
discharged within thirty days after the making thereof, or such
appointment or taking possession is at any time consented to, requested
by, or acquiesced to by it; or
(iv) suffers the entry against it of a final judgment for the
payment of money in an amount that exceeds (x) the valid and
collectible insurance in respect thereof or (y) the amount of an
indemnity with respect thereto reasonably acceptable to the Required
Lenders by US $25,000,000 or more, unless the same is discharged within
thirty days after the date of entry thereof or an appeal or appropriate
proceeding for review thereof is taken within such period and a stay of
execution pending such appeal is obtained; or
(v) suffers a levy of distress or execution or possession, or
a writ or warrant of attachment or any similar process to be issued by
any Tribunal against all or any part of its property having a book
value of at least US $25,000,000, and such writ or warrant of
attachment or any similar process is not stayed or released within
thirty days after the entry or levy thereof or after any stay is
vacated or set aside.
Upon the occurrence of an Event of Default described in subsection (h)(i),
(h)(ii) or (h)(iii) of this section with respect to Canadian Borrowers, all of
the Canadian Obligations shall thereupon be immediately due and payable, without
demand, presentment, notice of demand or of dishonor and nonpayment, protest,
notice of protest, notice of intention to accelerate, declaration or notice of
acceleration, or any other notice or declaration of any kind, all of which are
hereby expressly waived by Canadian Borrowers and each Restricted Person who at
any time ratifies or approves this Agreement. Upon any such acceleration, any
obligation of any Lender to make any further Canadian Advances and any
obligation of Canadian LC Issuer to issue Letters of Credit hereunder shall be
permanently terminated. During the continuance of any other Event of Default,
Canadian Agent at any time and from time to time may (and upon written
instructions from Required Lenders, Canadian Agent shall), without notice to
Canadian Borrowers or any other Restricted Person, do either or both of the
following: (1) terminate any obligation of Lenders to make Canadian Advances
hereunder, and any obligation of Canadian LC Issuer to
45
51
issue Letters of Credit hereunder, and (2) declare any or all of the Canadian
Obligations immediately due and payable, and all such Canadian Obligations shall
thereupon be immediately due and payable, without demand, presentment, notice of
demand or of dishonor and nonpayment, protest, notice of protest, notice of
intention to accelerate, declaration or notice of acceleration, or any other
notice or declaration of any kind, all of which are hereby expressly waived by
Canadian Borrowers and each Restricted Person who at any time ratifies or
approves this Agreement.
Section 8.2. Remedies. If any Default shall occur and be continuing,
each Lender Party may protect and enforce its rights under the Canadian Loan
Documents by any appropriate proceedings, including proceedings for specific
performance of any covenant or agreement contained in any Canadian Loan
Document, and each Lender Party may enforce the payment of any Canadian
Obligations due it or enforce any other legal or equitable right which it may
have. All rights, remedies and powers conferred upon Lender Parties under the
Canadian Loan Documents shall be deemed cumulative and not exclusive of any
other rights, remedies or powers available under the Canadian Loan Documents or
at Law or in equity.
ARTICLE IX - Canadian Agent
Section 9.1. Appointment, Powers, and Immunities. Each Lender hereby
irrevocably appoints and authorizes Canadian Agent to act as its agent under
this Agreement and the other Canadian Loan Documents with such powers and
discretion as are specifically delegated to Canadian Agent by the terms of this
Agreement and the other Canadian Loan Documents, together with such other powers
as are reasonably incidental thereto. Canadian Agent (which term as used in this
sentence and in Section 9.5 and the first sentence of Section 9.6 hereof shall
include its Affiliates and its own and its Affiliates' officers, directors,
employees, and agents): (a) shall not have any duties or responsibilities except
those expressly set forth in this Agreement and shall not be a trustee or
fiduciary for any Lender; (b) shall not be responsible to the Lenders for any
recital, statement, representation, or warranty (whether written or oral) made
in or in connection with any Canadian Loan Document or any certificate or other
document referred to or provided for in, or received by any of them under, any
Canadian Loan Document, or for the value, validity, effectiveness, genuineness,
enforceability, or sufficiency of any Canadian Loan Document, or any other
document referred to or provided for therein or for any failure by any
Restricted Person or any other Person to perform any of its obligations
thereunder; (c) shall not be responsible for or have any duty to ascertain,
inquire into, or verify the performance or observance of any covenants or
agreements by any Restricted Person or the satisfaction of any condition or to
inspect the property (including the books and records) of any Restricted Person
or any of its Subsidiaries or Affiliates; (d) shall not be required to initiate
or conduct any litigation or collection proceedings under any Canadian Loan
Document; and (e) shall not be responsible for any action taken or omitted to be
taken by it under or in connection with any Canadian Loan Document, except for
its own gross negligence or willful misconduct. Canadian Agent may employ agents
and attorneys-in-fact and shall not be responsible for the negligence or
misconduct of any such agents or attorneys-in-fact selected by it with
reasonable care.
46
52
Section 9.2. Reliance by Canadian Agent. Canadian Agent shall be
entitled to rely upon any certification, notice, instrument, writing, or other
communication (including, without limitation, any thereof by telephone or
telecopy) believed by it to be genuine and correct and to have been signed, sent
or made by or on behalf of the proper Person or Persons, and upon advice and
statements of legal counsel (including counsel for any Restricted Person),
independent accountants, and other experts selected by Canadian Agent. Canadian
Agent may deem and treat the payee of any Canadian Note as the holder thereof
for all purposes hereof unless and until Canadian Agent receives and accepts an
Assignment and Acceptance executed in accordance with Section 10.6 hereof. As to
any matters not expressly provided for by this Agreement, Canadian Agent shall
not be required to exercise any discretion or take any action, but shall be
required to act or to refrain from acting (and shall be fully indemnified and
protected in so acting or refraining from acting) upon the instructions of the
Required Lenders, and such instructions shall be binding on all of the Lenders;
provided, however, that Canadian Agent shall not be required to take any action
that exposes Canadian Agent to personal liability or that is contrary to any
Canadian Loan Document or applicable Law or unless it shall first be indemnified
to its satisfaction by the Lenders against any and all liability and expense
which may be incurred by it by reason of taking any such action.
Section 9.3. Defaults. Canadian Agent shall not be deemed to have
knowledge or notice of the occurrence of a Default or Event of Default unless
Canadian Agent has received written notice from a Lender or Canadian Borrowers
specifying such Default or Event of Default and stating that such notice is a
"Notice of Default". In the event that Canadian Agent receives such a notice of
the occurrence of a Default or Event of Default, Canadian Agent shall give
prompt notice thereof to the Lenders. Canadian Agent shall (subject to Section
9.1 hereof) take such action with respect to such Default or Event of Default as
shall reasonably be directed by the Required Lenders. Notwithstanding the
foregoing, unless and until Canadian Agent shall have received such directions,
Canadian Agent may (but shall not be obligated to) take such action, or refrain
from taking such action, with respect to such Default or Event of Default as it
shall deem advisable in the best interest of the Lenders.
Section 9.4. Rights as Lender. With respect to its Percentage Share of
the Canadian Maximum Credit Amount and the Canadian Loans made by it, Canadian
Agent (and any successor acting as Canadian Agent) in its capacity as a Lender
hereunder shall have the same rights and powers hereunder as any other Lender
and may exercise the same as though it were not acting as Canadian Agent, and
the term "Lender" or "Lenders" shall, unless the context otherwise indicates,
include Canadian Agent in its individual capacity. Canadian Agent (and any
successor acting as Canadian Agent) and its Affiliates may (without having to
account therefor to any Lender) accept deposits from, lend money to, make
Investments in, provide services to, and generally engage in any kind of
lending, trust, or other business with any Restricted Person or any of its
Subsidiaries or Affiliates as if it were not acting as Canadian Agent, and
Canadian Agent (and any successor acting as Canadian Agent) and its Affiliates
may accept fees and other consideration from any Restricted Person or any of its
Subsidiaries or Affiliates for services in connection with this Agreement or
otherwise without having to account for the same to the Lenders.
47
53
SECTION 9.5. INDEMNIFICATION. THE LENDERS AGREE TO INDEMNIFY CANADIAN
AGENT (TO THE EXTENT NOT REIMBURSED UNDER SECTION 10.4 HEREOF, BUT WITHOUT
LIMITING THE OBLIGATIONS OF CANADIAN BORROWERS UNDER SUCH SECTION) RATABLY IN
ACCORDANCE WITH THEIR RESPECTIVE PERCENTAGE SHARES, FOR ANY AND ALL LIABILITIES,
OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS,
EXPENSES (INCLUDING LEGAL FEES), OR DISBURSEMENTS OF ANY KIND AND NATURE
WHATSOEVER THAT MAY BE IMPOSED ON, INCURRED BY OR ASSERTED AGAINST CANADIAN
AGENT (INCLUDING BY ANY LENDER) IN ANY WAY RELATING TO OR ARISING OUT OF ANY
CANADIAN LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY OR ANY ACTION
TAKEN OR OMITTED BY CANADIAN AGENT UNDER ANY CANADIAN LOAN DOCUMENT (INCLUDING
ANY OF THE FOREGOING ARISING FROM THE NEGLIGENCE OF CANADIAN AGENT); provided
that no Lender shall be liable for any of the foregoing to the extent they arise
from the gross negligence or willful misconduct of the Person to be indemnified.
Without limitation of the foregoing, each Lender agrees to reimburse Canadian
Agent promptly upon demand for its ratable share of any costs or expenses
payable by Canadian Borrower under Section 10.4, to the extent that Canadian
Agent is not promptly reimbursed for such costs and expenses by Canadian
Borrowers. The agreements contained in this section shall survive payment in
full of the Canadian Loans and all other amounts payable under this Agreement.
Section 9.6. Non-Reliance on Canadian Agent and Other Lenders. Each
Lender agrees that it has, independently and without reliance on Canadian Agent
or any other Lender, and based on such documents and information as it has
deemed appropriate, made its own credit analysis of the Canadian Borrowers and
their Subsidiaries and decision to enter into this Agreement and that it will,
independently and without reliance upon Canadian Agent or any other Lender, and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own analysis and decisions in taking or not taking
action under the Canadian Loan Documents. Except for notices, reports, and other
documents and information expressly required to be furnished to the Lenders by
Canadian Agent hereunder, Canadian Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the affairs, financial condition, or business of any Restricted
Person or any of its Subsidiaries or Affiliates that may come into the
possession of Canadian Agent or any of its Affiliates.
Section 9.7. Rights as Lender. In its capacity as a Lender, Canadian
Agent shall have the same rights and obligations as any Lender and may exercise
such rights as though it were not Canadian Agent. Canadian Agent may accept
deposits from, lend money to, act as trustee under indentures of, and generally
engage in any kind of business with any Restricted Person or their Affiliates,
all as if it were not Canadian Agent hereunder and without any duty to account
therefor to any other Lender.
Section 9.8. Sharing of Set-Offs and Other Payments. Each Lender Party
agrees that if it shall, whether through the exercise of rights under Canadian
Loan Documents or rights of banker's lien, set off, or counterclaim against
Canadian Borrowers or otherwise, obtain payment of a portion of the aggregate
Obligations owed to it which, taking into account all distributions made by
Canadian Agent under Section 3.1, causes such Lender Party to have received more
than it would have received had such payment been received by Canadian Agent and
distributed pursuant to Section 3.1, then (a) it shall be deemed to have
simultaneously purchased and shall
48
54
be obligated to purchase interests in the Obligations as necessary to cause all
Lender Parties to share all payments as provided for in Section 3.1, and (b)
such other adjustments shall be made from time to time as shall be equitable to
ensure that Canadian Agent and all Lender Parties share all payments of
Obligations as provided in Section 3.1; provided, however, that nothing herein
contained shall in any way affect the right of any Lender Party to obtain
payment (whether by exercise of rights of banker's lien, set-off or counterclaim
or otherwise) of indebtedness other than the Obligations. Canadian Borrowers
expressly consent to the foregoing arrangements and agree that any holder of any
such interest or other participation in the Obligations, whether or not acquired
pursuant to the foregoing arrangements, may to the fullest extent permitted by
Law exercise any and all rights of banker's lien, set-off, or counterclaim as
fully as if such holder were a holder of the Obligations in the amount of such
interest or other participation. If all or any part of any funds transferred
pursuant to this section is thereafter recovered from the seller under this
section which received the same, the purchase provided for in this section shall
be deemed to have been rescinded to the extent of such recovery, together with
interest, if any, if interest is required pursuant to the order of a Tribunal
order to be paid on account of the possession of such funds prior to such
recovery.
Section 9.9. Investments. Whenever Canadian Agent in good faith
determines that it is uncertain about how to distribute to Lender Parties any
funds which it has received, or whenever Canadian Agent in good faith determines
that there is any dispute among Lender Parties about how such funds should be
distributed, Canadian Agent may choose to defer distribution of the funds which
are the subject of such uncertainty or dispute. If Canadian Agent in good faith
believes that the uncertainty or dispute will not be promptly resolved, or if
Canadian Agent is otherwise required to invest funds pending distribution to
Lender Parties, Canadian Agent shall invest such funds pending distribution; all
interest on any such Investment shall be distributed upon the distribution of
such Investment and in the same proportion and to the same Persons as such
Investment. All moneys received by Canadian Agent for distribution to Lender
Parties (other than to the Person who is Canadian Agent in its separate capacity
as a Lender Party) shall be held by Canadian Agent pending such distribution
solely as Canadian Agent for such Lender Parties, and Canadian Agent shall have
no equitable title to any portion thereof.
Section 9.10. Benefit of Article IX. The provisions of this Article
(other than the following Section 9.11) are intended solely for the benefit of
Lender Parties, and no Restricted Person shall be entitled to rely on any such
provision or assert any such provision in a claim or defense against any Lender.
Lender Parties may waive or amend such provisions as they desire without any
notice to or consent of Canadian Borrower or any Restricted Person.
Section 9.11. Resignation. Canadian Agent may resign at any time by
giving written notice thereof to Lenders and Canadian Borrowers. Each such
notice shall set forth the date of such resignation. Upon any such resignation,
Required Lenders shall have the right to appoint a successor Canadian Agent. A
successor must be appointed for any retiring Canadian Agent, and such Canadian
Agent's resignation shall become effective when such successor accepts such
appointment. If, within thirty days after the date of the retiring Canadian
Agent's resignation, no successor Canadian Agent has been appointed and has
accepted such appointment, then the retiring Canadian Agent may appoint a
successor Canadian Agent, which shall be a commercial
49
55
bank organized or licensed to conduct a banking or trust business under the Laws
of Canada or of any province thereof and if no Default or Event of Default has
occurred and is continuing, retiring Canadian Agent shall obtain the consent of
Canadian Borrowers. Upon the acceptance of any appointment as Canadian Agent
hereunder by a successor Canadian Agent, the retiring Canadian Agent shall be
discharged from its duties and obligations under this Agreement and the other
Canadian Loan Documents. After any retiring Canadian Agent's resignation
hereunder the provisions of this Article IX shall continue to inure to its
benefit as to any actions taken or omitted to be taken by it while it was
Canadian Agent under the Canadian Loan Documents.
Section 9.12. Lenders to Remain Pro Rata. It is the intent of all
parties hereto that, except for Competitive Bid Loans and matters related
thereto, the pro rata share of each Lender in the US Obligations and the
Canadian Obligations shall be substantially the same at all times during the
term of this Agreement. Accordingly, the initial Percentage Share of each Lender
in the US Maximum Credit Amount will be the same as the initial Percentage Share
of such Lender in the Canadian Maximum Credit Amount. All subsequent assignments
and adjustments of the interests of the Lenders in the US Obligations and the
Canadian Obligations will be made so as to maintain such a pro rata arrangement;
provided that for the purposes of determining these pro rata shares, any
Percentage Share held by any Lender's Affiliates shall be included in
determining the interests of such Lender.
ARTICLE X - Miscellaneous
Section 10.1. Waivers and Amendments; Acknowledgments.
(a) Waivers and Amendments. No failure or delay (whether by course of
conduct or otherwise) by any Lender Party in exercising any right, power or
remedy which such Lender Party may have under any of the Canadian Loan Documents
shall operate as a waiver thereof or of any other right, power or remedy, nor
shall any single or partial exercise by any Lender Party of any such right,
power or remedy preclude any other or further exercise thereof or of any other
right, power or remedy. No waiver of any provision of any Canadian Loan Document
and no consent to any departure therefrom shall ever be effective unless it is
in writing and signed as provided below in this section, and then such waiver or
consent shall be effective only in the specific instances and for the purposes
for which given and to the extent specified in such writing. No notice to or
demand on any Restricted Person shall in any case of itself entitle any
Restricted Person to any other or further notice or demand in similar or other
circumstances. This Agreement and the other Canadian Loan Documents set forth
the entire understanding between the parties hereto with respect to the
transactions contemplated herein and therein and supersede all prior discussions
and understandings with respect to the subject matter hereof and thereof, and no
waiver, consent, release, modification or amendment of or supplement to this
Agreement or the other Canadian Loan Documents shall be valid or effective
against any party hereto unless the same is in writing and signed by (i) if such
party is Canadian Borrowers, by Canadian Borrowers, (ii) if such party is
Canadian Agent or Canadian LC Issuer, by such party, and (iii) if such party is
a Lender, by such Lender or by Canadian Agent on behalf of Lenders with the
written consent of Required Lenders (which consent has already been given as to
the
50
56
termination of the Canadian Loan Documents as provided in Section 10.10).
Notwithstanding the foregoing or anything to the contrary herein, Canadian Agent
shall not, without the prior consent of Majority Lenders, execute and deliver on
behalf of such Lender any waiver or amendment which would increase the Canadian
Maximum Credit Amount hereunder. Notwithstanding the foregoing or anything to
the contrary herein, Canadian Agent shall not, without the prior consent of each
individual Lender, execute and deliver on behalf of such Lender any waiver or
amendment which would: (1) waive any of the conditions specified in Article IV,
(2) increase the maximum amount which such Lender is committed hereunder to
lend, (3) reduce any fees payable to such Lender hereunder, or the principal of,
or interest on, such Lender's Note, (4) postpone any date fixed for any payment
of any such fees, principal or interest, (5) amend the definition herein of
"Required Lenders", "Majority Lenders", or otherwise change the aggregate amount
of Percentage Shares which is required for Canadian Agent, Lenders or any of
them to take any particular action under the Canadian Loan Documents, (6)
release Canadian Borrowers from their obligation to pay such Lender's Note, or
(7) amend this Section 10.1(a).
(b) Acknowledgments and Admissions. Canadian Borrower hereby
represents, warrants, acknowledges and admits that (i) it has been advised by
counsel in the negotiation, execution and delivery of the Canadian Loan
Documents to which it is a party, (ii) it has made an independent decision to
enter into this Agreement and the other Canadian Loan Documents to which it is a
party, without reliance on any representation, warranty, covenant or undertaking
by Canadian Agent or any Lender, whether written, oral or implicit, other than
as expressly set out in this Agreement or in another Canadian Loan Document
delivered on or after the date hereof, (iii) there are no representations,
warranties, covenants, undertakings or agreements by any Lender as to the
Canadian Loan Documents except as expressly set out in this Agreement or in
another Canadian Loan Document delivered on or after the date hereof, (iv) no
Lender has any fiduciary obligation toward such Canadian Borrower with respect
to any Canadian Loan Document or the transactions contemplated thereby, (v) the
relationship pursuant to the Canadian Loan Documents between such Canadian
Borrower and the other Restricted Persons, on one hand, and each Lender, on the
other hand, is and shall be solely that of debtor and creditor, respectively,
(vi) no partnership or joint venture exists with respect to the Canadian Loan
Documents between any Restricted Person and any Lender, (vii) Canadian Agent is
not such Canadian Borrower's Canadian Agent, but Canadian Agent for Lenders,
(viii) without limiting any of the foregoing, Canadian Borrower is not relying
upon any representation or covenant by any Lender, or any representative
thereof, and no such representation or covenant has been made, that any Lender
will, at the time of an Event of Default or Default, or at any other time,
waive, negotiate, discuss, or take or refrain from taking any action permitted
under the Canadian Loan Documents with respect to any such Event of Default or
Default or any other provision of the Canadian Loan Documents, and (ix) all
Lender Parties have relied upon the truthfulness of the acknowledgments in this
section in deciding to execute and deliver this Agreement and to become
obligated hereunder.
(c) Joint Acknowledgment. THIS WRITTEN AGREEMENT AND THE OTHER CANADIAN
LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.
51
57
(d) Annual Rates of Interest. For the purposes of the Interest Act
(Canada), whenever interest payable pursuant to this Agreement is calculated on
the basis of a period other than a calendar year (the "Interest Period"), each
rate of interest determined pursuant to such calculation expressed as an annual
rate is equivalent to such rate as so determined multiplied by the actual number
of days in the calendar year in which the same is to be ascertained and divided
by the number of days in the Interest Period.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
Section 10.2. Survival of Agreements; Cumulative Nature. All of
Restricted Persons' various representations, warranties, covenants and
agreements in the Canadian Loan Documents shall survive the execution and
delivery of this Agreement and the other Canadian Loan Documents and the
performance hereof and thereof, including the making or granting of the Canadian
Loans and the delivery of the Canadian Notes and the other Canadian Loan
Documents, and shall further survive until all of the Canadian Obligations are
paid in full to each Lender Party and all of Lender Parties' obligations to
Canadian Borrowers are terminated. All statements and agreements contained in
any certificate or other instrument delivered by any Restricted Person to any
Lender Party under any Canadian Loan Document shall be deemed representations
and warranties by each Canadian Borrower or agreements and covenants of Canadian
Borrower under this Agreement. The representations, warranties, indemnities, and
covenants made by Restricted Persons in the Canadian Loan Documents, and the
rights, powers, and privileges granted to Lender Parties in the Canadian Loan
Documents, are cumulative, and, except for expressly specified waivers and
consents, no Canadian Loan Document shall be construed in the context of another
to diminish, nullify, or otherwise reduce the benefit to any Lender Party of any
such representation, warranty, indemnity, covenant, right, power or privilege.
In particular and without limitation, no exception set out in this Agreement to
any representation, warranty, indemnity, or covenant herein contained shall
apply to any similar representation, warranty, indemnity, or covenant contained
in any other Canadian Loan Document, and each such similar representation,
warranty, indemnity, or covenant shall be subject only to those exceptions which
are expressly made applicable to it by the terms of the various Canadian Loan
Documents.
Section 10.3. Notices. All notices, requests, consents, demands and
other communications required or permitted under any Canadian Loan Document
shall be in writing, unless otherwise specifically provided in such Canadian
Loan Document (provided that Canadian Agent may give telephonic notices to the
other Lender Parties), and shall be deemed sufficiently given or furnished if
delivered by personal delivery, by facsimile or other electronic transmission,
by delivery service with proof of delivery, or by registered Canadian mail,
postage prepaid, to each Canadian Borrower and Restricted Persons at the address
of each Canadian Borrower specified on the signature pages hereto and to
Canadian Agent at its address specified on the signature pages hereto and to
each Lender Party at the address specified on Annex II (unless
52
58
changed by similar notice in writing given by the particular Person whose
address is to be changed). Any such notice or communication shall be deemed to
have been given (a) in the case of personal delivery or delivery service, as of
the date of first attempted delivery during normal business hours at the address
provided herein, (b) in the case of facsimile or other electronic transmission,
upon receipt, or (c) in the case of registered Canadian mail, five Business Days
after deposit in the mail; provided, however, that no Borrowing Notice shall
become effective until actually received by Canadian Agent.
Section 10.4. Payment of Expenses; Indemnity.
(a) Payment of Expenses. Whether or not the transactions contemplated
by this Agreement are consummated, Northstar Energy will promptly (and in any
event, within 30 days after any invoice or other statement or notice) pay: (i)
all reasonable costs and expenses incurred by or on behalf of Canadian Agent
(including without limitation, legal fees) in connection with (1) the
negotiation, preparation, execution and delivery of the Canadian Loan Documents,
and any and all consents, waivers or other documents or instruments relating
thereto, (2) the filing, recording, refiling and re-recording of any Canadian
Loan Documents and any other documents or instruments or further assurances
required to be filed or recorded or refiled or re-recorded by the terms of any
Canadian Loan Document, (3) the borrowings hereunder and other action reasonably
required in the course of administration hereof, (4) monitoring or confirming
(or preparation or negotiation of any document related to) Canadian Borrowers'
compliance with any covenants or conditions contained in this Agreement or in
any Canadian Loan Document, and (ii) all reasonable costs and expenses incurred
by or on behalf of any Lender Party (including without limitation, legal fees,
consultants' fees and accounting fees) in connection with the defense or
enforcement of any of the Canadian Loan Documents (including this section) or
the defense of any Lender Party's exercise of its rights thereunder.
(B) INDEMNITY. NORTHSTAR ENERGY AGREES TO INDEMNIFY EACH LENDER PARTY,
UPON DEMAND, FROM AND AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS, CLAIMS,
LOSSES, DAMAGES, PENALTIES, FINES, ACTIONS, JUDGMENTS, SUITS, SETTLEMENTS,
COSTS, EXPENSES OR DISBURSEMENTS, EXCLUDING PRINCIPAL AND INTEREST OWING BY
DEVON CANADA WITH RESPECT TO CANADIAN ADVANCES MADE TO DEVON CANADA, BUT
INCLUDING REASONABLE FEES OF LEGAL COUNSEL, ACCOUNTANTS, EXPERTS AND ADVISORS)
OF ANY KIND OR NATURE WHATSOEVER (IN THIS SECTION COLLECTIVELY CALLED
"LIABILITIES AND COSTS") WHICH TO ANY EXTENT (IN WHOLE OR IN PART) MAY BE
IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST SUCH LENDER PARTY GROWING OUT OF,
RESULTING FROM OR IN ANY OTHER WAY ASSOCIATED WITH THE CANADIAN LOAN DOCUMENTS
AND THE TRANSACTIONS AND EVENTS (INCLUDING THE ENFORCEMENT OR DEFENSE THEREOF)
AT ANY TIME ASSOCIATED THEREWITH OR CONTEMPLATED THEREIN (WHETHER ARISING IN
CONTRACT OR IN TORT OR OTHERWISE AND INCLUDING ANY VIOLATION OR NONCOMPLIANCE
WITH ANY ENVIRONMENTAL LAWS BY ANY LENDER PARTY OR ANY OTHER PERSON OR ANY
LIABILITIES OR DUTIES OF ANY LENDER PARTY OR ANY OTHER PERSON WITH RESPECT TO
HAZARDOUS MATERIALS FOUND IN OR RELEASED INTO THE ENVIRONMENT). THE FOREGOING
INDEMNIFICATION SHALL APPLY WHETHER OR NOT SUCH LIABILITIES AND COSTS ARE IN ANY
WAY OR TO ANY EXTENT OWED, IN WHOLE OR IN PART, UNDER ANY CLAIM OR THEORY OF
STRICT LIABILITY
53
59
OR CAUSED, IN WHOLE OR IN PART BY ANY NEGLIGENT ACT OR OMISSION OF ANY KIND BY
ANY LENDER PARTY,
provided only that no Lender Party shall be entitled under this section to
receive indemnification for that portion, if any, of any liabilities and costs
which is proximately caused by its own individual gross negligence or willful
misconduct, as determined in a final judgment. If any Person (including Canadian
Borrowers or any of their Affiliates) ever alleges such gross negligence or
willful misconduct by any Lender Party, the indemnification provided for in this
section shall nonetheless be paid upon demand, subject to later adjustment or
reimbursement, until such time as a court of competent jurisdiction enters a
final judgment as to the extent and effect of the alleged gross negligence or
willful misconduct. As used in this section the term "Lender Party" shall refer
not only to each Person designated as such in Section 1.1 but also to each
director, officer, agent, attorney, employee, representative and Affiliate of
such Person.
Section 10.5. Parties in Interest. All grants, covenants and agreements
contained in the Canadian Loan Documents shall bind and inure to the benefit of
the parties thereto and their respective successors and assigns; provided,
however, that no Restricted Person may assign or transfer any of its rights or
delegate any of its duties or obligations under any Canadian Loan Document
without the prior consent of Required Lenders. No Canadian Borrower nor any
Affiliates of any Canadian Borrower shall directly or indirectly purchase or
otherwise retire any Obligations owed to any Lender nor will any Lender accept
any offer to do so, unless each Lender shall have received substantially the
same offer with respect to the same Percentage Share of the Obligations owed to
it. If Canadian Borrower or any Affiliate of any Canadian Borrower at any time
purchases some but less than all of the Obligations owed to all Lender Parties,
such purchaser shall not be entitled to any rights of any Lender under the
Canadian Loan Documents unless and until Canadian Borrowers or their Affiliates
have purchased all of the Obligations.
Section 10.6. Assignments and Participations.
(a) Each Lender may assign to one or more Eligible Transferees all or a
portion of its rights and obligations under this Agreement (including, without
limitation, all or a portion of its Canadian Loans, its Note, and its Percentage
Share of the Canadian Maximum Credit Amount); provided, however, that
(i) each such assignment shall be to an Eligible Transferee;
(ii) together with each such assignment of its rights and
obligations under this Agreement, such Lender shall assign the same
Percentage Share of its rights and obligations under the US Agreement
to the same Eligible Transferee or an Affiliate of such Eligible
Transferee;
(iii) except in the case of such an assignment to another Lender or
an assignment of all of a Lender's rights and obligations under this
Agreement, any partial assignment of such Lender's rights and
obligations under this Agreement and under the
54
60
US Agreement shall be in a collective amount at least equal to US
$20,000,000 or an integral multiple of US $5,000,000 in excess thereof;
(iv) each such assignment by a Lender shall be of a constant, and
not varying, percentage of all of its rights and obligations under the
Canadian Loan Documents; and
(v) the parties to such assignment shall execute and deliver to
Canadian Agent for its acceptance an Assignment and Acceptance in the
form of Exhibit F hereto, together with any Canadian Note subject to
such assignment and a processing fee of US$3,500.
Upon execution, delivery, and acceptance of such Assignment and Acceptance, the
assignee thereunder shall be a party hereto and, to the extent of such
assignment, have the obligations, rights, and benefits of a Lender hereunder and
the assigning Lender shall, to the extent of such assignment, relinquish its
rights and be released from its obligations under this Agreement. Upon the
consummation of any assignment pursuant to this section, the assignor, Canadian
Agent and Canadian Borrowers shall make appropriate arrangements so that, if
required, new Canadian Notes are issued to the assignor and the assignee. If the
assignee is not incorporated under the Laws of Canada or a province thereof, it
shall deliver to Canadian Borrowers and Canadian Agent certification as to
exemption from deduction or withholding of Taxes in accordance with Section 3.9
of the US Agreement.
(b) Canadian Agent shall maintain at its address referred to in Section
10.3 a copy of each Assignment and Acceptance delivered to and accepted by it
and a register for the recordation of the names and addresses of the Lenders and
their Percentage Share of the Canadian Maximum Credit Amount of, and principal
amount of the Canadian Loans owing to, each Lender from time to time (the
"Register"). The entries in the Register shall be conclusive and binding for all
purposes, absent manifest error, and Canadian Borrowers, Canadian Agent and the
Lenders may treat each Person whose name is recorded in the Register as a Lender
hereunder for all purposes of this Agreement. The Register shall be available
for inspection by Canadian Borrowers or any Lender at any reasonable time and
from time to time upon reasonable prior notice.
(c) Upon its receipt of an Assignment and Acceptance executed by the
parties thereto, together with any Canadian Note subject to such assignment and
payment of the processing fee, Canadian Agent shall, if such Assignment and
Acceptance has been completed and is in substantially the form of Exhibit F
hereto, (i) accept such Assignment and Acceptance, (ii) record the information
contained therein in the Register and (iii) give prompt notice thereof to the
parties thereto.
(d) Each Lender may sell participations to one or more Persons that are
Eligible Transferees in all or a portion of its rights and obligations under
this Agreement (including all or a portion of the Canadian Maximum Credit Amount
and its Canadian Loans); provided, however, that (i) such Lender's obligations
under this Agreement shall remain unchanged, (ii) such Lender shall remain
solely responsible to the other parties hereto for the performance of
55
61
such obligations, (iii) the participant shall be entitled to the benefit of the
yield protection provisions contained in Article III and the right of offset
contained in Section 6.13, and (iv) Canadian Borrowers shall continue to deal
solely and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement, and such Lender shall retain the sole right to
enforce the obligations of Canadian Borrowers relating to its Canadian Loans and
its Canadian Note and to approve any amendment, modification, or waiver of any
provision of this Agreement (other than amendments, modifications, or waivers
decreasing the amount of principal of or the rate at which interest is payable
on such Canadian Loans or Canadian Note, extending any scheduled principal
payment date or date fixed for the payment of interest on such Canadian Loans or
Canadian Note, or extending its Canadian Maximum Credit Amount).
(e) Notwithstanding any other provision set forth in this Agreement,
any Lender residing in the United States may at any time assign and pledge all
or any portion of its Canadian Advances and its Canadian Note to any Federal
Reserve Bank as collateral security pursuant to Regulation A and any Operating
Circular issued by such Federal Reserve Bank. No such assignment shall release
the assigning Lender from its obligations hereunder.
(f) Any Lender may furnish any information concerning Canadian
Borrowers or any of its Subsidiaries in the possession of such Lender from time
to time to assignees and participants (including prospective assignees and
participants), subject, however, to the provisions of Section 10.7 hereof.
Section 10.7. Confidentiality. Canadian Agent and each Lender (each, a
"Lending Party") agrees to keep confidential any information furnished or made
available to it by Canadian Borrowers pursuant to this Agreement that is marked
confidential; provided that nothing herein shall prevent any Lending Party from
disclosing such information (a) to any other Lending Party or any Affiliate of
any Lending Party, or any officer, director, employee, agent, or advisor of any
Lending Party or Affiliate of any Lending Party, (b) to any other Person if
reasonably incidental to the administration of the credit facility provided
herein, (c) as required by any Law, rule, or regulation, (d) upon the order of
any Tribunal, (e) upon the request or demand of any regulatory agency or
authority, (f) that is or becomes available to the public or that is or becomes
available to any Lending Party other than as a result of a disclosure by any
Lending Party prohibited by this Agreement, (g) in connection with any
litigation to which such Lending Party or any of its Affiliates may be a party,
(h) to the extent necessary in connection with the exercise of any remedy under
this Agreement or any other Canadian Loan Document, and (i) subject to
provisions substantially similar to those contained in this section, to any
actual or proposed participant or assignee.
Section 10.8. Governing Law; Submission to Process. EXCEPT TO THE
EXTENT THAT THE LAW OF ANOTHER JURISDICTION IS EXPRESSLY ELECTED IN A CANADIAN
LOAN DOCUMENT, THE CANADIAN LOAN DOCUMENTS SHALL BE DEEMED CONTRACTS AND
INSTRUMENTS MADE UNDER THE LAWS OF THE PROVINCE OF ALBERTA AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
PROVINCE OF ALBERTA AND THE LAWS OF CANADA APPLICABLE THERETO, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HEREBY AGREES
56
62
THAT ANY LEGAL ACTION OR PROCEEDING AGAINST SUCH CANADIAN BORROWER WITH RESPECT
TO THIS AGREEMENT, THE CANADIAN NOTES OR ANY OF THE CANADIAN LOAN DOCUMENTS MAY
BE BROUGHT IN THE COURTS OF THE PROVINCE OF ALBERTA AND EACH PARTY SUBMITS AND
ATTORNS TO, THE NON-EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS. EACH PARTY
WAIVES ANY RIGHT TO STAY OR TO DISMISS ANY ACTION OR PROCEEDING BROUGHT BEFORE
SAID COURTS ON THE BASIS OF FORUM NON CONVENIENS. NOTHING HEREIN SHALL AFFECT
THE RIGHT OF LENDER PARTIES TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY
LAW OR SHALL LIMIT THE RIGHT OF LENDER PARTIES TO BRING PROCEEDINGS AGAINST
CANADIAN BORROWERS IN THE COURTS OF ANY OTHER JURISDICTION.
Section 10.9. Waiver of Judgment Interest Act (Alberta). To the extent
permitted by Law, the provisions of the Judgment Interest Act (Alberta) shall
not apply to the Canadian Loan Documents and are hereby expressly waived by
Canadian Borrowers.
Section 10.10. Deemed Reinvestment Not Applicable. For the purposes of
the Interest Act (Canada), the principle of deemed reinvestment of interest
shall not apply to any interest calculation under the Canadian Loan Documents,
and the rates of interest stipulated in this Agreement are intended to be
nominal rates and not effective rates or yields.
Section 10.11. Limitation on Interest. Lender Parties, Restricted
Persons and any other parties to the Canadian Loan Documents intend to contract
in strict compliance with applicable usury Law from time to time in effect. In
furtherance thereof such Persons stipulate and agree that none of the terms and
provisions contained in the Canadian Loan Documents shall ever be construed to
create a contract to pay, for the use, forbearance or detention of money,
interest in excess of the maximum amount of interest permitted to be charged by
applicable Law from time to time in effect. Neither any Restricted Person nor
any present or future guarantors, endorsers, or other Persons hereafter becoming
liable for payment of any Obligation shall ever be liable for unearned interest
thereon or shall ever be required to pay interest thereon in excess of the
maximum amount that may be lawfully charged under applicable Law from time to
time in effect, and the provisions of this section shall control over all other
provisions of the Canadian Loan Documents which may be in conflict or apparent
conflict herewith. Lender Parties expressly disavow any intention to charge or
collect excessive unearned interest or finance charges in the event the maturity
of any Obligation is accelerated. If (a) the maturity of any Obligation is
accelerated for any reason, (b) any Obligation is prepaid and as a result any
amounts held to constitute interest are determined to be in excess of the legal
maximum, or (c) any Lender or any other holder of any or all of the Obligations
shall otherwise collect moneys which are determined to constitute interest which
would otherwise increase the interest on any or all of the Obligations to an
amount in excess of that permitted to be charged by applicable Law then in
effect, then all sums determined to constitute interest in excess of such legal
limit shall, without penalty, be promptly applied to reduce the then outstanding
principal of the related Obligations or, at such Lender's or holder's option,
promptly returned to Canadian Borrowers or the other payor thereof upon such
determination. In determining whether or not the interest paid or payable, under
any specific circumstance, exceeds the maximum amount permitted under applicable
Law, Lender Parties and Restricted Persons (and any other payors thereof) shall
to the greatest extent permitted under applicable Law, and in accordance with
generally accepted actuarial practices and principles, (i) characterize any
non-principal payment as an expense, fee
57
63
or premium rather than as interest, (ii) exclude voluntary prepayments and the
effects thereof, and (iii) amortize, prorate, allocate, and spread the total
amount of interest throughout the entire contemplated term of the instruments
evidencing the Obligations in accordance with the amounts outstanding from time
to time thereunder and the maximum legal rate of interest from time to time in
effect under applicable Law in order to lawfully charge the maximum amount of
interest permitted under applicable Law. In no event shall the aggregate
"interest" (as defined in section 347 of the Criminal Code (Canada)) payable
under the Canadian Loan Documents exceed the maximum effective annual rate of
interest on the "credit advanced" (as defined in that section) permitted under
that section and, if any payment, collection or demand pursuant to this
Agreement in respect of "interest" (as defined in that section) is determined to
be contrary to the provisions of that section, such payment, collection or
demand shall be deemed to have been made by mutual mistake of Canadian
Borrowers, Canadian Agent and Lenders and the amount of such excess payment or
collection shall be refunded to Canadian Borrowers. For purposes of the Canadian
Loan Documents, the effective annual rate of interest shall be determined in
accordance with generally accepted actuarial practices and principles over the
term applicable to the Canadian Obligations on the basis of annual compounding
of the lawfully permitted rate of interest and, in the event of dispute, a
certificate of a Fellow of the Canadian Institute of Actuaries appointed by
Canadian Agent shall be prima facie evidence, for the purposes of such
determination.
Section 10.12. Termination; Limited Survival. In their sole and
absolute discretion, Canadian Borrowers may at any time that no Obligations are
owing elect in a written notice delivered to Canadian Agent to terminate this
Agreement. Upon receipt by Canadian Agent of such a notice, if no Obligations
are then owing this Agreement and all other Canadian Loan Documents shall
thereupon be terminated and the parties thereto released from all prospective
obligations thereunder. Notwithstanding the foregoing or anything herein to the
contrary, any waivers or admissions made by any Restricted Person in any
Canadian Loan Document, any Obligations under Sections 3.2 through 3.6, and any
obligations which any Person may have to indemnify or compensate any Lender
Party shall survive any termination of this Agreement or any other Canadian Loan
Document. At the request and expense of Canadian Borrowers, Canadian Agent shall
prepare and execute all necessary instruments to reflect and effect such
termination of the Canadian Loan Documents. Canadian Agent is hereby authorized
to execute all such instruments on behalf of all Lenders, without the joinder of
or further action by any Lender.
Section 10.13. Severability. If any term or provision of any Canadian
Loan Document shall be determined to be illegal or unenforceable all other terms
and provisions of the Canadian Loan Documents shall nevertheless remain
effective and shall be enforced to the fullest extent permitted by applicable
Law.
Section 10.14. Counterparts; Fax. This Agreement may be separately
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to
constitute one and the same Agreement. This Agreement and the Canadian Loan
Documents may be validly executed and delivered by facsimile or other electronic
transmission.
58
64
Section 10.15. Waiver of Jury Trial, Punitive Damages, etc. EACH
CANADIAN BORROWER AND EACH LENDER PARTY HEREBY KNOWINGLY, VOLUNTARILY,
INTENTIONALLY, AND IRREVOCABLY (a) WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED
BY LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
BASED HEREON, OR DIRECTLY OR INDIRECTLY AT ANY TIME ARISING OUT OF, UNDER OR IN
CONNECTION WITH THE CANADIAN LOAN DOCUMENTS OR ANY TRANSACTION CONTEMPLATED
THEREBY OR ASSOCIATED THEREWITH, BEFORE OR AFTER MATURITY; (b) WAIVES, TO THE
MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER
IN ANY SUCH LITIGATION ANY "SPECIAL DAMAGES", AS DEFINED BELOW, (c) CERTIFIES
THAT NO PARTY HERETO NOR ANY REPRESENTATIVE OR AGENT OR COUNSEL FOR ANY PARTY
HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS, AND (d)
ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT, THE OTHER
CANADIAN LOAN DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED IN THIS
SECTION. AS USED IN THIS SECTION, "SPECIAL DAMAGES" INCLUDES ALL SPECIAL,
CONSEQUENTIAL, EXEMPLARY, OR PUNITIVE DAMAGES (REGARDLESS OF HOW NAMED), BUT
DOES NOT INCLUDE ANY PAYMENTS OR FUNDS WHICH ANY PARTY HERETO HAS EXPRESSLY
PROMISED TO PAY OR DELIVER TO ANY OTHER PARTY HERETO.
Section 10.16. Defined Terms. Capitalized terms and phrases used and
not otherwise defined herein shall for all purposes of this Agreement have the
meaning given to such terms and phrases in Annex I hereto.
Section 10.17. Annex I, Exhibits and Schedules; Additional Definitions.
Annex I and all Exhibits and Schedules attached to this Agreement are a part
hereof for all purposes.
Section 10.18. Amendment of Defined Instruments. Unless the context
otherwise requires or unless otherwise provided herein the terms defined in this
Agreement which refer to a particular agreement, instrument or document also
refer to and include all renewals, extensions, modifications, amendments and
restatements of such agreement, instrument or document, provided that nothing
contained in this section shall be construed to authorize any such renewal,
extension, modification, amendment or restatement.
Section 10.19. References and Titles. All references in this Agreement
to Exhibits, Schedules, articles, sections, subsections and other subdivisions
refer to the Exhibits, Schedules, articles, sections, subsections and other
subdivisions of this Agreement unless expressly provided otherwise. Titles
appearing at the beginning of any subdivisions are for convenience only and do
not constitute any part of such subdivisions and shall be disregarded in
construing the language contained in such subdivisions. The words "this
Agreement", "this instrument", "herein", "hereof", "hereby", "hereunder" and
words of similar import refer to this Agreement as a whole and not to any
particular subdivision unless expressly so limited. The phrases "this section"
and "this subsection" and similar phrases refer only to the sections or
subsections hereof in which such phrases occur. The word "or" is not exclusive,
and the word "including" (in its various forms) means "including without
limitation". Pronouns in masculine, feminine and neuter genders shall be
construed to include any other gender, and words in the singular form shall be
construed to include the plural and vice versa, unless the context otherwise
requires.
59
65
Section 10.20. Calculations and Determinations. All calculations under
the Canadian Loan Documents of interest chargeable with respect to Eurodollar
Loans and of fees shall be made on the basis of actual days elapsed (including
the first day but excluding the last) and a year of 360 days. All other
calculations of interest made under the Canadian Loan Documents shall be made on
the basis of actual days elapsed (including the first day but excluding the
last) and a year of 365 or 366 days, as appropriate. Each determination by a
Lender Party of amounts to be paid under Article III or any other matters which
are to be determined hereunder by a Lender Party (such as any US Dollar
Eurodollar Rate, Canadian Dollar Eurodollar Rate, Adjusted US Dollar Eurodollar
Rate, Adjusted Canadian Dollar Eurodollar Rate, Business Day, Interest Period,
or Reserve Requirement) shall, in the absence of manifest error, be conclusive
and binding. Unless otherwise expressly provided herein or unless Required
Lenders otherwise consent all financial statements and reports furnished to any
Lender Party hereunder shall be prepared and all financial computations and
determinations pursuant hereto shall be made in accordance with US GAAP.
Section 10.21. Construction of Indemnities and Releases. All
indemnification and release provisions of this Agreement shall be construed
broadly (and not narrowly) in favor of the Persons receiving indemnification
from or being released.
Section 10.22. Separate Obligations. All obligations of Northstar
Energy and Devon Canada under this Agreement and the other Canadian Loan
Documents are separate and individual obligations of Northstar Energy and Devon
Canada, respectively, and Northstar Energy shall not have any liabilities in
respect of Canadian Advances made by the Lenders to Devon Canada nor shall Devon
Canada have any liabilities in respect of Canadian Advances made to Northstar
Energy.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
60
66
IN WITNESS WHEREOF, this Agreement is executed as of the date first
written above.
NORTHSTAR ENERGY CORPORATION
Canadian Borrower
By: /s/ PAUL BRERETON
----------------------------------------------
Name: Paul Brereton
Title: Vice President, Finance
Address:
3000, 400-3 Avenue SW
Calgary, AB T2P 4H2
Attention: Vice President - Finance
Telephone: (403)
------------------------
Fax: (403)
------------------------------
DEVON ENERGY CANADA CORPORATION
Canadian Borrower
By: /s/ PAUL BRERETON
-----------------------------------------------
Name: Paul Brereton
Title: Vice President, Finance
Address:
-----------------------------------------
-----------------------------------------
Attention: Vice President - Finance
Telephone:
-------------------------------
Fax:
-------------------------------------
67
BANK OF AMERICA CANADA
Administrative Agent, Canadian LC Issuer
and Lender
By: /s/ RICHARD J. HALL
-----------------------------------------------
Name: Richard J. Hall
Title: Vice President
Address:
200 Front Street West, Suite 2700
Toronto, Canada M5V 3L2
Attention:
Telephone:
Fax:
68
FIRST CHICAGO NBD BANK, CANADA
Lender
By: /s/ JEREMIAH A. HYNES, III
-----------------------------------------------
Name: Jeremiah A. Hynes, III
Title: First Vice President
69
BANK OF MONTREAL
Lender
By: /s/ MICHAEL P. STUCKEY
--------------------------------------------------
Name: Michael P. Stuckey
Title: Managing Director, U.S. Corporate Banking
70
CHASE BANK OF TEXAS, NATIONAL
ASSOCIATION
Lender
By: /s/ DONNA J. GERMAN
-----------------------------------------------
Name: Donna J. German
Title: Managing Director
71
UMB OKLAHOMA BANK
Lender
By: /s/ RICHARD J. LEHRTER
-----------------------------------------------
Name: Richard J. Lehrter
Title: Executive Vice President
72
FIRST UNION NATIONAL BANK
Lender
By: /s/ ROBERT R. WETTEROFF
------------------------------------------------
Name: Robert R. Wetteroff
Title: Senior Vice President
73
TORONTO-DOMINION BANK
Lender
By: /s/ CAROL BRANDT
------------------------------------------------
Name: Carol Brandt
Title: Vice President
74
BANK OF OKLAHOMA, N.A.
Lender
By: /s/ JOHN N. HUFF
------------------------------------------------
Name: John N. Huff
Title: Vice President
75
WESTDEUTSCHE LANDESBANK
GIROZENTRALE
Lender
By: /s/ KHEIL A. MCINTYRE
------------------------------------------------
Name: Kheil A. McIntyre
Title: Vice President
By: /s/ ANTHONY J. ALESSANDRO
------------------------------------------------
Name: Anthony J. Alessandro
Title:
76
THE BANK OF NEW YORK
Lender
By: /s/ RAYMOND J. PALMER
------------------------------------------------
Name: Raymond J. Palmer
Title: Vice President
77
ROYAL BANK OF CANADA
Lender
By: /s/ IAN G. WILD
------------------------------------------------
Name: Ian G. Wild
Title: Senior Account Manager
78
SUNTRUST BANK, ATLANTA
Lender
By: /s/ TODD C. DAVIS
------------------------------------------------
Name: Todd C. Davis
Title: Assistant Vice President
By: /s/ DAVID J. EDGE
------------------------------------------------
Name: David J. Edge
Title: Vice President
79
[EXECUTION]
ANNEX I
DEFINED TERMS
"Acquired Debt" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any assets acquired by such specified Person, and any refinancing of
the foregoing indebtedness on similar terms, taking into account current market
conditions.
"Acquisition Documents" means (a) the Amended and Restated Combination
Agreement dated as of June 29, 1998 and all schedules and exhibits thereto
pursuant to which US Borrower is acquiring all of the outstanding common shares
of Northstar Energy and (b) all other material agreements or instruments
delivered in connection therewith to consummate the acquisition contemplated
thereby.
"Adjusted Canadian Dollar Eurodollar Rate" means, for any Canadian
Dollar Eurodollar Loan for any Eurodollar Interest Period therefor, the per
annum rate equal to the sum of (a) the Applicable Margin plus (b) the rate per
annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) determined by
Canadian Agent to be equal to the quotient obtained by dividing (i) the Canadian
Dollar Eurodollar Rate for such Canadian Dollar Eurodollar Loan for such
Eurodollar Interest Period by (ii) 1 minus the Reserve Requirement for such
Canadian Dollar Eurodollar Loan for such Interest Period. The Adjusted Canadian
Dollar Eurodollar Rate for any Canadian Dollar Eurodollar Loan shall change
whenever the Applicable Margin or the Reserve Requirement changes. No Adjusted
Canadian Dollar Eurodollar Rate charged by any Person shall ever exceed the
Highest Lawful Rate.
"Adjusted US Dollar Eurodollar Rate" means, for any US Dollar
Eurodollar Loan for any Eurodollar Interest Period therefor, the per annum rate
equal to the sum of (a) the Applicable Margin plus (b) the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) determined by Agent
to be equal to the quotient obtained by dividing (i) the US Dollar Eurodollar
Rate for such US Dollar Eurodollar Loan for such Eurodollar Interest Period by
(ii) 1 minus the Reserve Requirement for such US Dollar Eurodollar Loan for such
Interest Period. The Adjusted US Dollar Eurodollar Rate for any US Dollar
Eurodollar Loan shall change whenever the Applicable Margin or the Reserve
Requirement changes. No Adjusted US Dollar Eurodollar Rate charged by any Person
shall ever exceed the Highest Lawful Rate.
"Affiliate" means, as to any Person, each other Person that directly or
indirectly (through one or more intermediaries or otherwise) controls, is
controlled by, or is under common control
80
with, such Person. A Person shall be deemed to be "controlled by" any other
Person if such other Person possesses, directly or indirectly, power
(a) to vote 20% or more of the securities (on a fully diluted basis)
having ordinary voting power for the election of directors or managing general
partners; or
(b) to direct or cause the direction of the management and policies of
such Person whether by contract or otherwise.
"Applicable Currency" means (i) when used with respect to any US Loan
or US LC Obligations, US Dollars, and (ii) when used with respect to any
Canadian Prime Rate Loan, any Canadian Dollar Eurodollar Loan or any Bankers'
Acceptance, Canadian Dollars, and (iii) when used with respect to any Canadian
Base Rate Loan or an US Dollar Eurodollar Loan made under the Canadian
Agreement, US Dollars.
"Applicable Lending Office" means, for each Lender and for each Type of
Loan, the "Lending Office" of such Lender (or of an Affiliate of such Lender)
designated for such Type of Loan on the signature pages hereof or such other
office of such Lender (or an Affiliate of such Lender) as such Lender may from
time to time specify to US Agent, Canadian Agent, and Borrowers by written
notice in accordance with the terms hereof as the office by which its Loans of
such Type are to be made and maintained.
"Applicable Margin" means
(a) except with respect to any Tranche B Loan, when used in the
Canadian Agreement and when used in the US Agreement on any
date, the number of Basis Points per annum set forth below
based on the Applicable Rating Level on such date:
======================================
Applicable Applicable
Rating Level Margin
======================================
Level I 27.0
--------------------------------------
Level II 30.0
--------------------------------------
Level III 40.0
--------------------------------------
Level IV 42.5
--------------------------------------
Level V 60.0
======================================
2
81
(b) when used with respect to any Tranche B Loan on any date, the
number of Basis Points per annum set forth below based on the
Applicable Rating Level on such date:
======================================
Applicable Applicable
Rating Level Margin
======================================
Level I 28.0
--------------------------------------
Level II 31.0
--------------------------------------
Level III 42.5
--------------------------------------
Level IV 45.0
--------------------------------------
Level V 62.5
======================================
Changes in the Applicable Margin will occur automatically without prior notice
as changes in the Applicable Rating Level occur. US Agent will give notice
promptly to Borrowers and the Lenders of changes in the Applicable Margin.
"Applicable Rating Level" means for any day, the highest Rating Level
(as such term is defined below in this paragraph) issued by S&P, Duff & Phelps,
or Moody's, if Moody's shall have issued such a rating with respect to US
Borrower (collectively, in this definition called the "Designated Rating
Agencies"); provided that if at any time three Designated Rating Agencies have
ratings in effect with respect to US Borrower's Long-Term Debt and the Rating
Levels (as such terms are defined below in this paragraph) of at least two of
the three Designated Rating Agencies are not the same, "Applicable Rating Level"
shall mean the higher of the two lowest Rating Levels of the Designated Rating
Agencies. As used in this definition, (i) the term "Rating Level" means for any
day with respect to any of the Designated Rating Agencies, the rating level
described below (or its then equivalent) applicable on such day, issued by such
Designated Rating Agency, from time to time, with respect to US Borrower's
Long-Term Debt or if such rating is unavailable, equivalents thereof, including
counterparty ratings, implied ratings and corporate ratings; (ii) "US Borrower's
Long-Term Debt" means senior, unsecured, non-credit enhanced long-term
indebtedness for borrowed money of US Borrower, and (iii) ">" means a rating
equal to or more favorable than and "<" means a rating less favorable than.
3
82
======================================================================
Duff &
Rating Level S&P Phelps Moody's*
----------------------------------------------------------------------
Level I >=A- >=A- >=A3
----------------------------------------------------------------------
Level II BBB+ BBB+ Baa1
----------------------------------------------------------------------
Level III BBB BBB Baa2
----------------------------------------------------------------------
Level IV BBB- BBB- Baa3
----------------------------------------------------------------------
Level V <BBB- <BBB- <Baa3
======================================================================
*A Moody's rating is not currently available for US Borrower.
If any two of the Designated Rating Agencies shall not have in effect a rating
for US Borrower's Long-Term Debt or if the rating system of any of the
Designated Rating Agencies shall change, or if any of such Designated Rating
Agencies shall cease to be in the business of rating corporate debt obligations,
US Borrower and Required Lenders shall negotiate in good faith to amend this
definition to reflect such changed rating system or the unavailability of
ratings from such Designated Rating Agency, but until such an agreement shall be
reached, the Applicable Rating Level shall be based only upon the rating by the
remaining Designated Rating Agency.
"BA Discount Rate" means, in respect of a BA being accepted by a Lender
on any date, (i) for a Lender that is listed in Schedule I to the Bank Act
(Canada), the average bankers' acceptance rate as quoted on Reuters CDOR page
(or such other page as may, from time to time, replace such page on that service
for the purpose of displaying quotations for bankers' acceptances accepted by
leading Canadian financial institutions) at approximately 10:00 a.m. (Toronto
time) on such drawdown date for bankers' acceptances having a comparable
maturity date as the maturity date of such BA (the "CDOR Rate"); or, if such
rate is not available at or about such time, the average of the bankers'
acceptance rates (expressed to five decimal places) as quoted to the Agent by
the Schedule I BA Reference Banks as of 10:00 a.m. (Toronto time) on such
drawdown date for bankers' acceptances having a comparable maturity date as the
maturity date of such BA; and (ii) for a Lender that is listed in Schedule II to
the Bank Act (Canada), the rate established by the Canadian Agent to be the
lesser of (A) the CDOR Rate plus 10 Basis Points; and (B) the average of the
bankers' acceptance rates (expressed to five decimal places) as quoted to the
Canadian Agent by the Schedule II BA Reference Banks as of 10:00 a.m. (Toronto
time) on such drawdown date for bankers' acceptances having a comparable
maturity date as the maturity date of such BA;
"Bankers' Acceptance" or "BA" means a Canadian Dollar draft of either
Canadian Borrower, for a term selected by such Canadian Borrower of either 30,
60, 90 or 180 days (as reduced or extended by the Lender, acting reasonably, to
allow the maturity thereof to fall on a Business Day) payable in Canada.
4
83
"Bankruptcy and Insolvency Act (Canada)" means the Bankruptcy and
Insolvency Act, S.C. 1992, c. 27, including the regulations made and, from time
to time, in force under that Act.
"Basis Point" means one one-hundredth of one percent (0.01%).
"Borrower" means any of US Borrower and Canadian Borrowers.
"Borrowing" means a borrowing of new Loans of a single Type pursuant to
Section 1.2 or a Continuation or Conversion of existing Loans into a single Type
(and, in the case of Eurodollar Loans, with the same Interest Period) pursuant
to Section 1.3 of the US Agreement or the Canadian Agreement or the acceptance
or purchase of Bankers' Acceptances issued by Canadian Borrowers under the
Canadian Agreement or the Continuation or Conversion of existing Banker's
Acceptances into Canadian Loans of a single Type in the case of Eurodollar Loans
with the same Interest Period pursuant to Section 1.3 of the Canadian Agreement.
"Borrowing Notice" means a written or telephonic request, or a written
confirmation, made by any Borrower which meets the requirements of Section 1.2
of the US Agreement or Section 1.2 of the Canadian Agreement.
"Business Day" means (a) with respect to the Canadian Agreement, a day,
other than a Saturday or Sunday, on which commercial banks are open for business
with the public in Dallas, Texas and Toronto, Ontario and (b) with respect to
the US Agreement, a day, other than a Saturday or Sunday, on which commercial
banks are open for business with the public in Dallas, Texas. Any Business Day
in any way relating to Eurodollar Loans (such as the day on which an Interest
Period begins or ends) must also be a day on which, in the judgment of US Agent
or Canadian Agent, as applicable, significant transactions in dollars are
carried out in the interbank eurocurrency market.
"Canadian Advances" has the meaning given to such term in Section 1.1
of the Canadian Agreement.
"Canadian Agent" means Bank of America Canada, as administrative agent
under the Canadian Agreement, and its successors and assigns in such capacity.
"Canadian Agreement" means that certain Credit Agreement dated the
Closing Date among Canadian Borrowers, Canadian Agent and Lenders, as it may be
amended, supplemented, restated or otherwise modified and in effect from time to
time.
"Canadian Base Rate Loan" means a Canadian Loan which bears interest at
the Canadian US Dollar Base Rate.
"Canadian Borrowers" means Northstar Energy and Devon Energy Canada.
"Canadian Dollar" or "C$" means the lawful currency of Canada.
5
84
"Canadian Dollar Eurodollar Loan" means a Canadian Loan that bears
interest at the Adjusted Canadian Dollar Eurodollar Rate.
"Canadian Dollar Eurodollar Rate" means, for any Canadian Dollar
Eurodollar Loan within a Borrowing and with respect to the related Interest
Period therefor, the rate per annum (rounded upwards, if necessary, to the
nearest 1/100 of 1%) appearing on the Dow Jones Market Service (formerly
Telerate Access Service) Page 3740 (or any successor page) as the London
interbank offered rate for deposits in Canadian Dollars at approximately 11:00
a.m. (London time) two Business Days prior to the first day of such Interest
Period for a term comparable to such Interest Period. If for any reason such
rate is not available, then such offered rate shall be otherwise independently
determined by Canadian Agent from an alternate, substantially similar
independent source available to Canadian Agent or shall be calculated by
Canadian Agent by a substantially similar methodology as that theretofore used
to determine such offered rate on Dow Jones Market Service, in the London
interbank eurodollar market for a period of time equal or comparable to the
related Interest Period and in an amount equal to or comparable to the principal
amount of the eurodollar portion to which such Interest Period relates.
"Canadian Facility Maturity Date" means the date which is five years
and one day after the Conversion Date.
"Canadian Facility Usage" means, at the time in question, the US Dollar
Exchange Equivalent of the aggregate amount of Canadian Loans, Canadian LC
Obligations, and BA's outstanding at such time.
"Canadian Guarantor" means US Borrower.
"Canadian LC Issuer" means Bank of America Canada in its capacity as
the issuer of Letters of Credit under the Canadian Agreement, and its successors
in such capacity. Canadian Agent may, with the consent of Canadian Borrowers and
the Lender in question, appoint any Canadian Resident Lender hereunder as a
Canadian LC Issuer in place of or in addition to Bank of America Canada.
"Canadian LC Obligations" means, at the time in question, the sum of
all Matured Canadian LC Obligations plus the maximum amounts which Canadian LC
Issuer might then or thereafter be called upon to advance under all Letters of
Credit then outstanding under the Canadian Agreement.
"Canadian LC Sublimit" means US $25,000,000.
"Canadian Loan Documents" means the Canadian Agreement, the Canadian
Notes, the Letters of Credit issued under the Canadian Agreement, the LC
Applications related thereto, the BA's, the Guaranty executed by Canadian
Guarantor, and all other agreements, certificates, documents, instruments and
writings at any time delivered in connection herewith or therewith (exclusive of
term sheets and commitment letters).
6
85
"Canadian Loans" means the Canadian Revolver Loans, the Canadian Term
Loans into which such Revolving Loans may be converted and the Competitive Bid
Loans made under the Canadian Agreement.
"Canadian Maximum Credit Amount" means US $195,000,000 or the Canadian
Dollar Exchange Equivalent.
"Canadian Notes" means each Lender's "Canadian Note", as defined in
Section 1.1 of the Canadian Agreement, and the Competitive Bid Notes issued
under the Canadian Agreement.
"Canadian Obligations" means all Liabilities from time to time owing by
Canadian Borrowers to any Lender Party under or pursuant to any of the Canadian
Loan Documents, including all Canadian LC Obligations owing thereunder.
"Canadian Obligation" means any part of the Canadian Obligations.
"Canadian Prime Rate" means on any day a fluctuating rate of interest
per annum equal to the higher of (i) the rate of interest per annum most
recently announced by Bank of America Canada as its reference rate for Canadian
Dollar commercial loans made to a Person in Canada; and (ii) Bank of America
Canada's Discount Rate for Bankers' Acceptances having a maturity of thirty days
plus the Applicable Margin. No Canadian Prime Rate charged by any Person shall
ever exceed the Highest Lawful Rate
"Canadian Prime Rate Loan" means a Canadian Loan that bears interest at
the Canadian Prime Rate.
"Canadian Resident Lender" means each Lender identified as such on the
signature pages to the Canadian Agreement or any Assignment and Acceptance
executed by a new Lender, each being a Person that is not a non-resident of
Canada for the purposes of the Income Tax Act (Canada).
"Canadian Revolving Loans" has the meaning given it in Section 1.1 of
the Canadian Agreement.
"Canadian Revolving Period" means the period from and including the
Closing Date until the Conversion Date (or, if earlier, the day on which the
obligations of Lenders to make Canadian Loans or the obligations of Canadian LC
Issuer to issue Letters of Credit under the Canadian Agreement have been
terminated or the Canadian Notes first become due and payable in full).
"Canadian Term Loan" has the meaning given it in Section 1.7 of the
Canadian Agreement.
"Canadian Term Period" means the period from and including the day
immediately following the Conversion Date until and including the Canadian
Facility Maturity Date.
"Canadian US Dollar Base Rate" means for a day, the rate per annum
equal to the higher of (a) the Federal Funds Rate for such day plus one-half of
one percent (0.5%) and (b) the rate of
7
86
interest per annum most recently established by Bank of America Canada as its
reference rate for US Dollar commercial loans made to a Person in Canada. Any
change in the Canadian US Dollar Base Rate due to a change in the Bank of
America Canada's reference rate shall be effective on the effective date of such
change. No Canadian US Dollar Base Rate charged by any Person shall ever exceed
the Highest Lawful Rate.
"Cash Equivalents" means Investments in:
(a) marketable obligations, maturing within twelve months after
acquisition thereof, issued or unconditionally guaranteed by Canada or the
United States of America or an instrumentality or agency thereof and entitled to
the full faith and credit of Canada or the United States of America, as
applicable;
(b) demand deposits, and time deposits (including certificates of
deposit) maturing within twelve months from the date of deposit thereof, with a
domestic office (1) of US Agent or Canadian Agent or any Lender, or (2) of any
bank or trust company organized under the laws of Canada or the United States of
America or any Province or State therein, provided that (x) the full amount of
each such deposit in such bank or trust company is insured by the Federal
Deposit Insurance Corporation if applicable, or (y) such bank or trust company
has capital, surplus and undivided profits aggregating at least US $50,000,000,
and
(c) (1) publicly traded debt securities with an original term of 270
days or less or (2) interest bearing securities issued to the public by banks,
associated entities or similar institutions, which can be put to the issuer at
the investor's unconditional option within one month after acquisition, so long
as in each case such securities have a credit rating of at least A-1 from S&P or
P-1 from Moody's or A-1 [low] from CBRS or R-1 [low] from DBRS.
"CBRS" means CBRS Inc., or its successor.
"Change of Control" means the occurrence of either of the following
events: any Person (or syndicate or group of Persons which is deemed a "person"
for the purposes of Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended) acquires more than thirty percent (30%) of the outstanding stock of US
Borrower having ordinary voting power (disregarding changes in voting power
based on the occurrence of contingencies) for the election of directors, or
during any period of twelve successive months a majority of the Persons who were
directors of US Borrower at the beginning of such period cease to be directors
of US Borrower.
"Closing Date" means December 11, 1998.
"Companies' Creditors Arrangement Act (Canada)" means the Companies'
Creditors Arrangement Act, R.S.C. 1985, c. C-36, including the regulations made
and from time to time in force under that Act.
"Competitive Bid" means (i) with respect to the US Agreement, a
response from any Lender to an Invitation to Bid, substantially in the form of
Exhibit J to the US Agreement and
8
87
(ii) with respect to the Canadian Agreement, a response from any Canadian
Resident Lender to an Invitation to Bid, substantially in the form of Exhibit K
to the Canadian Agreement.
"Competitive Bid Accept/Reject Letter" means (i) with respect to the US
Agreement, a notice sent by US Borrower to US Agent, substantially in the form
of Exhibit K to the US Agreement, indicating its acceptance or rejection of
Competitive Bids from various Lenders and (ii) with respect to the Canadian
Agreement, a notice sent by the applicable Canadian Borrower to Canadian Agent,
substantially in the form of Exhibit L to the Canadian Agreement, indicating its
acceptance or rejection of Competitive Bids from various Lenders.
"Competitive Bid Interest Period" means, with respect to any
Competitive Bid Loan, a period from one day to one hundred eighty days as
specified in the Competitive Bid applicable thereto.
"Competitive Bid Loan" means (i) with respect to the US Agreement, a
loan from a Lender to US Borrower pursuant to the bidding procedure described in
Section 1.7 of the US Agreement and (ii) with respect to the Canadian Agreement,
a loan from a Canadian Resident Lender to the applicable Canadian Borrower
pursuant to the bidding procedure described in Section 1.9 of the Canadian
Agreement.
"Competitive Bid Note" (i) with respect to the US Agreement, a
"Competitive Bid Note" as defined in Section 1.7 of the US Agreement and (ii)
with respect to the Canadian Agreement, a "Competitive Bid Note" as defined in
Section 1.9 of the Canadian Agreement.
"Competitive Bid Rate" means, for any Competitive Bid Loan, the fixed
rate at which such Lender is willing to make such Competitive Bid Loan indicated
in its Competitive Bid. The Competitive Bid Rate shall in no event, however,
exceed the Highest Lawful Rate.
"Competitive Bid Request" means (i) with respect to the US Agreement, a
request by US Borrower in the form of Exhibit H to the US Agreement for Lenders
to submit Competitive Bids and (ii) with respect to the Canadian Agreement, a
request by the applicable Canadian Borrower in the form of Exhibit I to the
Canadian Agreement for Canadian Resident Lenders to submit Competitive Bids.
"Consolidated" refers to the consolidation of any Person, in accordance
with US GAAP, with its properly consolidated subsidiaries. References herein to
a Person's Consolidated financial statements, financial position, financial
condition, liabilities, etc. refer to the consolidated financial statements,
financial position, financial condition, liabilities, etc. of such Person and
its properly consolidated subsidiaries.
"Consolidated Assets" means the total assets of US Borrower and its
Restricted Subsidiaries which would be shown as assets on a Consolidated balance
sheet of US Borrower and its Restricted Subsidiaries prepared in accordance with
US GAAP, after eliminating all amounts properly attributable to minority
interest, if any, in the stock and surplus of the Restricted Subsidiaries.
9
88
"Consolidated Interest Expense" means, for any period, total interest
expense (including distributions on the Devon Trust Securities treated as
interest expense), whether paid or accrued, including without limitation all
commissions, discounts and other fees and charges owed with respect to Letters
of Credit.
"Continuation" (i) as used in the US Agreement shall refer to the
continuation pursuant to Section 1.3 thereof of a Eurodollar Loan as a
Eurodollar Loan from one Interest Period to the next Interest Period and (ii) as
used in the Canadian Agreement shall refer to the continuation pursuant to
Section 1.3 thereof of a Eurodollar Loan as a Eurodollar Loan from one Interest
Period to the next Interest Period or a rollover of a Banker's Acceptance at
maturity.
"Continuation/Conversion Notice" means (i) with respect to the US
Agreement, a written or telephonic request, or a written confirmation, made by
Borrower which meets the requirements of Section 1.3 of the US Agreement, and
(ii) with respect to the Canadian Agreement, a written or telephonic request, or
a written confirmation, made by the applicable Canadian Borrower which meets the
requirements of Section 1.3 of the Canadian Agreement.
"Conversion" (i) as used in the US Agreement shall refer to a
conversion pursuant to Section 1.3 or Article III of one Type of US Loan into
another Type of US Loan and (ii) as used in the Canadian Agreement shall refer
to a conversion pursuant to Section 1.3 or Article III of one Type of Canadian
Advance into another Type of Canadian Advance.
"Conversion Date" means the date which is 364 days after the Closing
Date, or such later day to which the Conversion Date is extended pursuant to
Section 1.6 of the Canadian Agreement.
"DBC" means DBC, Inc., an Oklahoma corporation.
"DBRS" means Dominion Bond Rating Service Limited, or its successor.
"Default" means any Event of Default and any default, event or
condition which would, with the giving of any requisite notices and the passage
of any requisite periods of time, constitute an Event of Default.
"Default Rate" means at the time in question (i) with respect to any US
Base Rate Loan, the rate two percent (2.0%) above the US Base Rate then in
effect, (ii) with respect to any US Dollar Eurodollar Loan, the rate two percent
(2%) above the Adjusted US Dollar Eurodollar Rate then in effect for such Loan,
(iii) with respect to any Canadian Prime Rate Loan, the rate two percent (2.0%)
above the Canadian Prime Rate then in effect for such Loan, (iv) with respect to
any Canadian Base Rate Loan, the rate two percent (2%) above the Canadian US
Dollar Base Rate then in effect for such Loan, (v) with respect to any Canadian
Dollar Eurodollar Loan, the rate two percent (2%) above the Adjusted Canadian
Dollar Eurodollar Rate then in effect for such Loan; and (vi) with respect to
any Competitive Bid Loan, the rate two percent (2%) above the Competitive Bid
Rate then in effect for such Loan. No Default Rate charged by any Person shall
ever exceed the Highest Lawful Rate.
10
89
"Depository Bills and Notes Act (Canada)" means the Depository Bills
and Notes Act (Canada), R.S.C. 1998, c. 13, including the regulations made and,
from time to time, in force under that Act.
"Devon Energy Canada" means Devon Energy Canada Corporation, a Canadian
corporation organized under the laws of Alberta.
"Devon Nevada" means Devon Energy Corporation (Nevada), a Nevada
corporation.
"Devon Trust" means Devon Financing Trust, a statutory business trust
formed under the laws of the State of Delaware.
"Devon Trust Securities" means those certain Trust Convertible
Preferred Securities, issued by Devon Trust in an amount of 2,990,000.
"Disclosure Schedule" means (i) with respect to the US Agreement,
Schedule 1 thereto, and (ii) with respect to the Canadian Agreement, Schedule 1
thereto.
"Discount Proceeds" means, in respect of each Bankers' Acceptance,
funds in an amount which is equal to:
Face Amount
---------------
1 + (Rate x Term)
-----------
365
(where "Face Amount" is the principal amount of the Bankers' Acceptance being
purchased, "Rate" is the BA Discount Rate divided by 100 and "Term" is the
number of days in the term of the Bankers' Acceptance.)
"Distribution" means (a) any dividend or other distribution made by a
Restricted Person on or in respect of any stock, partnership interest, or other
equity interest in such Restricted Person (including any option or warrant to
buy such an equity interest), or (b) any payment made by a Restricted Person to
purchase, redeem, acquire or retire any stock, partnership interest, or other
equity interest in such Restricted Person (including any such option or
warrant).
"Domestic Lending Office" means, with respect to any Lender, the office
of such Lender specified as its "Domestic Lending Office" below its name on its
signature page to the Canadian Agreement or the US Agreement, or such other
office as such Lender may from time to time specify to any Borrower and Agent;
with respect to LC Issuer, the office, branch, or agency through which it issues
Letters of Credit; and, with respect to Agent, the office, branch, or agency
through which it administers this Agreement.
"Duff & Phelps" means Duff & Phelps Credit Rating Co., or its
successor.
"EBITDA" means, for any period, calculated on a Consolidated basis, the
sum of the amount for such period of Consolidated net income, Consolidated
Interest Expense, depreciation
11
90
expense, depletion expense, amortization expense, federal, state, and provincial
income taxes, exploitation and abandonment expense and other non-cash charges
and expenses.
"Eligible Transferee" means a Person which either (a) is a Lender or an
Affiliate of a Lender, or (b) is consented to as an Eligible Transferee by US
Agent or Canadian Agent, as applicable, and, so long as no Default or Event of
Default is continuing, by the Borrowers, in each case which consent will not be
unreasonably withheld; provided that the Borrowers' consent shall not be
required for a Person to be an "Eligible Transferee" for purposes of Section
10.6(d) of the US Agreement and Section 10.6(d) of the Canadian Agreement.
"Environmental Laws" means any and all Laws relating to the environment
or to emissions, discharges, releases or threatened releases of pollutants,
contaminants, chemicals, or industrial, toxic or hazardous substances or wastes
into the environment including ambient air, surface water, ground water, or
land, or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of pollutants,
contaminants, chemicals, or industrial, toxic or hazardous substances or wastes.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, together with all rules and regulations promulgated
with respect thereto.
"ERISA Affiliate" means US Borrower and all members of a controlled
group of corporations and all trades or businesses (whether or not incorporated)
under common control that, together with US Borrower, are treated as a single
employer under Section 414 of the Internal Revenue Code.
"ERISA Plan" means any employee pension benefit plan subject to Title
IV of ERISA maintained by any ERISA Affiliate with respect to which any
Restricted Person has a fixed or contingent liability.
"Eurodollar Interest Period" means, with respect to each particular
Eurodollar Loan in a Borrowing, the period specified in the Borrowing Notice or
Continuation/Conversion Notice applicable thereto, beginning on and including
the date specified in such Borrowing Notice or Continuation/Conversion Notice
(which must be a Business Day), and ending one, two, three, or six months
thereafter, as the applicable Borrower may elect in such notice; provided that:
(a) any Interest Period which would otherwise end on a day which is not a
Business Day shall be extended to the next succeeding Business Day unless such
Business Day falls in another calendar month, in which case such Interest Period
shall end on the next preceding Business Day; (b) any Interest Period which
begins on the last Business Day in a calendar month (or on a day for which
there is no numerically corresponding day in the calendar month at the end of
such Interest Period) shall end on the last Business Day in a calendar month;
and (c) notwithstanding the foregoing, any Interest Period which would otherwise
end after the last day of the US Facility Commitment Period or the Canadian
Revolving Period shall end on the last day of the US Facility Commitment Period
or the Canadian Revolving Period (or, if the last day of such period is not a
Business Day, on the next preceding Business Day).
12
91
"Eurodollar Lending Office" means, with respect to any Lender, the
office of such Lender specified as its "Eurodollar Lending Office" below its
name on the signature page hereto (or, if no such office is specified, its
Domestic Lending Office), or such other office of such Lender as such Lender may
from time to time specify to Borrowers, Canadian Agent, and US Agent.
"Eurodollar Loan" means any Canadian Dollar Eurodollar Loan and any US
Dollar Eurodollar Loan.
"Event of Default" means (i) with respect to the US Agreement the
meaning given to such term in Section 8.1 thereof and (ii) with respect to the
Canadian Agreement the meaning given to such term in Section 8.1 thereof.
"Exchange Equivalent" in respect of one currency (the "Original
Currency"), being Canadian Dollars or U.S. Dollars, as the case may be, means,
at the date of determination, the amount of currency expressed in the other such
currency necessary to purchase, based on the Noon Rate on such date, the
specified amount of the Original Currency on such date.
"Existing Agreement" means that certain Credit Agreement dated as of
May 15, 1998 among US Borrower, Devon Nevada, US Agent, and certain lenders
named therein.
"Facility Fee Rate" means, on any date, the number of Basis Points per
annum set forth below based on the Applicable Rating Level on such date:
============================================
Applicable Applicable
Rating Level Facility Fee Rate
--------------------------------------------
Level I 8.0
--------------------------------------------
Level II 10.0
--------------------------------------------
Level III 12.5
--------------------------------------------
Level IV 17.5
--------------------------------------------
Level V 25.0
============================================
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100th of one percent) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of Dallas, Texas on the Business
Day next succeeding such day, provided that (i) if the day for which such rate
is to be determined is not a Business Day, the Federal Funds Rate for such day
shall be such rate on such transactions on the next preceding Business Day as so
published on the next succeeding Business Day, and (ii) if such rate is not so
published for any day, the Federal Funds Rate for such day shall be the average
rate quoted to US Agent on such day on such transactions as determined by US
Agent.
13
92
"Fiscal Quarter" means a three-month period ending on March 31, June
30, September 30 or December 31 of any year.
"Fiscal Year" means a twelve-month period ending on December 31 of any
year.
"Governmental Authority" means any domestic or foreign, national,
federal, provincial, state, municipal or other local government or body and any
division, agency, ministry, commission, board or authority or any
quasi-governmental or private body exercising any statutory, regulatory,
expropriation or taxing authority under the authority of any of the foregoing,
and any domestic, foreign or international judicial, quasi-judicial, arbitration
or administrative court, tribunal, commission, board or panel acting under the
authority of any of the foregoing.
"Hazardous Materials" means any substances regulated under any
Environmental Law, whether as pollutants, contaminants, or chemicals, or as
industrial, toxic or hazardous substances or wastes, or otherwise.
"Hedging Contract" means (a) any agreement providing for options,
swaps, floors, caps, collars, forward sales or forward purchases involving
interest rates, commodities or commodity prices, equities, currencies, bonds, or
indexes based on any of the foregoing, (b) any option, futures or forward
contract traded on an exchange, and (c) any other derivative agreement or other
similar agreement or arrangement.
"Highest Lawful Rate" means, with respect to each Lender Party to whom
Obligations are owed, the maximum nonusurious rate of interest that such Lender
Party is permitted under applicable Law to contract for, take, charge, or
receive with respect to such Obligations. All determinations herein of the
Highest Lawful Rate, or of any interest rate determined by reference to the
Highest Lawful Rate, shall be made separately for each Lender Party as
appropriate to assure that the Loan Documents are not construed to obligate any
Person to pay interest to any Lender Party at a rate in excess of the Highest
Lawful Rate applicable to such Lender Party.
"Income Tax Act (Canada)" means the Income Tax Act, S.C. 1970-71-72, c.
63, including the regulations made and, from time to time, in force under that
Act.
"Indebtedness" of any Person means Liabilities in any of the following
categories:
(a) Liabilities for borrowed money,
(b) Liabilities constituting an obligation to pay the deferred purchase
price of property or services, other than customary payment terms taken in the
ordinary course of such Person's business,
(c) Liabilities evidenced by a bond, debenture, note or similar
instrument,
14
93
(d) Liabilities arising under conditional sales or other title
retention agreements or under leases capitalized in accordance with US GAAP, but
excluding customary oil, gas or mineral leases,
(e) Liabilities with respect to payments received in consideration of
oil, gas, or other minerals yet to be acquired or produced at the time of
payment (including obligations under "take-or-pay" contracts to deliver gas in
return for payments already received and the undischarged balance of any
production payment created by such Person or for the creation of which such
Person directly or indirectly received payment);
(f) Liabilities under Hedging Contracts,
(g) Liabilities with respect to letters of credit or applications or
reimbursement agreements therefor, or
(h) Liabilities under direct or indirect guaranties of Liabilities of
any Person or constituting obligations to purchase or acquire or to otherwise
protect or insure a creditor against loss in respect of Indebtedness of the
types described in paragraphs (a) through (g) above of any Person (such as
obligations under working capital maintenance agreements, agreements to
keep-well, or agreements to purchase debt, assets, goods, securities or
services, but excluding endorsements in the ordinary course of business of
negotiable instruments in the course of collection),
provided, however, that the "Indebtedness" of any Person shall not include
Liabilities that were incurred by such Person on ordinary trade terms to
vendors, suppliers, or other Persons providing goods and services for use by
such Person in the ordinary course of its business, unless and until such
Liabilities are outstanding more than 90 days past the original invoice or
billing date therefor. Any Indebtedness owed by a partnership shall be deemed
Indebtedness of any partner in such partnership to the extent such partner has
any liability of any kind therefor.
"Initial Financial Statements" means (i) the audited annual
Consolidated financial statements of US Borrower dated as of December 31, 1997,
and (ii) the unaudited quarterly Consolidated financial statements of US
Borrower dated as of September 30, 1998.
"Interest Act (Canada)" means the Interest Act, R.S.C. 1985, c. I-15,
including the regulations made and, from time to time, in force under that Act.
"Interest Payment Date" means (a) with respect to each US Base Rate
Loan, Canadian US Dollar Base Rate Loan, and Canadian Prime Rate Loan, the last
day of each March, June, September and December beginning December 31, 1998, and
(b) with respect to each Eurodollar Loan, the last day of the Eurodollar
Interest Period that is applicable thereto and, if such Eurodollar Interest
Period is six months in length, the date specified by Agent which is
approximately three months after such Eurodollar Interest Period begins;
provided that the last day of each calendar month shall also be an Interest
Payment Date for each such Loan so long as any Event of Default exists under
Section 8.1 (a) or (b).
15
94
"Interest Period" means (i) with respect to any Eurodollar Loan, the
related Eurodollar Interest Period and (ii) with respect to any Competitive Bid
Loan, the related Competitive Bid Interest Period.
"Internal Revenue Code" means the United States Internal Revenue Code
of 1986, as amended from time to time and any successor statute or statutes.
"Investment" means any investment made directly or indirectly, in any
Person, whether by acquisition of shares of capital stock, indebtedness or other
obligations or securities or by loan, advance, capital contribution or otherwise
and whether made in cash, by the transfer of property, or by any other means.
"Invitation to Bid" means (i) with respect to the US Agreement, an
invitation by US Agent to each Lender, substantially in the form of Exhibit I
thereto, inviting such Lender to submit Competitive Bids in response to a
Competitive Bid Request under the US Agreement, and (ii) with respect to the
Canadian Agreement, an invitation by Canadian Agent to each Lender,
substantially in the form of Exhibit J thereto, inviting such Lender to submit
Competitive Bids in response to a Competitive Bid Request under the Canadian
Agreement.
"Judgment Interest Act (Alberta)" means the Judgment Interest Act, S.A.
1984 c. J-O.5, including the regulations made and, from time to time, in force
under that Act.
"Law" means any statute, law, regulation, ordinance, rule, treaty,
judgment, order, decree, permit, concession, franchise, license, agreement or
other governmental restriction of the United States or Canada or any state,
province or political subdivision thereof or of any foreign country or any
department, province or other political subdivision thereof.
"LC Application" means any application for a Letter of Credit hereafter
made by any Borrower to US LC Issuer or Canadian LC Issuer.
"LC Collateral" (i) as used in the US Agreement, has the meaning given
to such term in Section 2.6 of the US Agreement and (ii) as used in the Canadian
Agreement, has the meaning given such term in Section 2.11 of the Canadian
Agreement.
"Lender Parties" means Agent, US LC Issuer, Canadian LC Issuer, and all
Lenders.
"Lenders" means each signatory to the US Agreement and the Canadian
Agreement (other than any Borrower), including NationsBank, N.A. and Bank of
America Canada in their capacity as a Lender hereunder rather than as US Agent
or Canadian Agent and US LC Issuer or Canadian LC Issuer, respectively, and the
successors of each such party as holder of a US Note or a Canadian Note.
"Lenders Schedule" means Annex II to the US Agreement and Annex II to
the Canadian Agreement which are the same.
16
95
"Letter of Credit" means any letter of credit issued by US LC Issuer
under the US Agreement or by Canadian LC Issuer under the Canadian Agreement at
the application of any Borrower.
"Liabilities" means, as to any Person, all indebtedness, liabilities
and obligations of such Person, whether matured or unmatured, liquidated or
unliquidated, primary or secondary, direct or indirect, absolute, fixed or
contingent, and whether or not required to be considered pursuant to US GAAP.
"Lien" means, with respect to any property or assets, any lien,
mortgage, security interest, pledge, deposit, production payment, rights of a
vendor under any title retention or conditional sale agreement or lease
substantially equivalent thereto, tax lien, mechanic's or materialman's lien, or
any other charge or encumbrance for security purposes, whether arising by Law or
agreement or otherwise, but excluding any right of offset. "Lien" also means any
filed financing statement, any registration of a pledge (such as with an issuer
of uncertificated securities), or any other arrangement or action which would
serve to perfect a Lien described in the preceding sentence, regardless of
whether such financing statement is filed, such registration is made, or such
arrangement or action is undertaken before or after such Lien exists.
"Loan Documents" means, collectively, the Canadian Loan Documents and
the US Loan Documents.
"Loans" means, collectively, the Canadian Loans and the US Loans.
"Majority Lenders" means Lenders whose aggregate Percentage Shares
exceed sixty-six and two thirds percent (66 2/3%).
"Material Adverse Effect" means any event which would reasonably be
expected to have a material and adverse effect upon (a) US Borrower's
Consolidated financial condition, (b) US Borrower's Consolidated operations,
properties or prospects, considered as a whole, (c) US Borrower's ability to
timely pay the Obligations, or (d) the enforceability of the material terms of
any Loan Documents.
"Matured Canadian LC Obligations" means all amounts paid by Canadian LC
Issuer on drafts or demands for payment drawn or made under or purported to be
under any Letter of Credit issued under the Canadian Agreement and all other
amounts due and owing to Canadian LC Issuer under any LC Application for any
such Letter of Credit, to the extent the same have not been repaid to Canadian
LC Issuer (with the proceeds of Loans or otherwise).
"Matured US LC Obligations" means all amounts paid by US LC Issuer on
drafts or demands for payment drawn or made under or purported to be under any
Letter of Credit issued under the US Agreement and all other amounts due and
owing to US LC Issuer under any LC Application for any such Letter of Credit, to
the extent the same have not been repaid to US LC Issuer (with the proceeds of
Loans or otherwise).
17
96
"Maximum Canadian Drawing Amount" means at the time in question the sum
of the maximum amounts which Canadian LC Issuer might then or thereafter be
called upon to advance under all Letters of Credit issued pursuant to the
Canadian Agreement which are then outstanding.
"Maximum US Drawing Amount" means at the time in question the sum of
the maximum amounts which US LC Issuer might then or thereafter be called upon
to advance under all Letters of Credit issued pursuant to the US Agreement which
are then outstanding.
"Moody's" means Moody's Investor Service, Inc., or its successor.
"Net Proceeds" means with respect to any Bankers' Acceptance, the
Discount Proceeds less the amount equal to the applicable Stamping Fee Rate
multiplied by the face amount of such Bankers' Acceptance..
"Non-resident Lender" means any Lender which is not a Canadian Resident
Lender, and shall initially mean each Lender identified as such on the signature
pages to the Canadian Agreement or thereafter on any Assignment and Acceptance.
"Noon Rate" means, in relation to the conversion of one currency into
another currency, the rate of exchange for such conversion as quoted by the Bank
of Canada (or, if not so quoted, the spot rate of exchange quoted for wholesale
transactions made by Canadian Agent at Toronto, Ontario at approximately noon
(Toronto local time)).
"Northstar Energy" means Northstar Energy Corporation, an Alberta
corporation.
"Notes" mean, collectively, the Canadian Notes and the US Notes.
"Obligations" means, collectively, the US Obligations and the Canadian
Obligations.
"Offer of Extension" means (a) with respect to the Canadian Agreement,
a written offer by Canadian Agent, for and on behalf of Required Lenders, to
Canadian Borrowers to extend the Canadian Facility Revolving Period to a date
364 days from acceptance by Canadian Borrowers of such offer, and setting forth,
if applicable, the terms and conditions on which such extension is offered by
the Lenders and as may be accepted by Canadian Borrowers, and (b) with respect
to the US Agreement, a written offer by US Agent, for and on behalf of Required
Lenders, to US Borrower to extend the Tranche B Revolving Period to a date 364
days from acceptance by US Borrower of such offer, and setting forth, if
applicable, the terms and conditions on which such extension is offered by the
Lenders and as may be accepted by US Borrower.
"Percentage Share" means
(a) under the US Agreement with respect to any Lender (i) when used in
Article I or Article II of the US Agreement, in any Borrowing Notice thereunder
or when no US Loans are outstanding, the percentage set forth opposite such
Lender's name on the Lenders Schedule as modified by assignments of a Lender's
rights and obligations under the US Agreement made by
18
97
or to such Lender in accordance with the terms of the US Agreement, and (ii)
when used otherwise, the percentage obtained by dividing (x) the sum of the
unpaid principal balance of such Lender's US Loans and such Lender's Percentage
Share of the US LC Obligations, by (y) the sum of the aggregate unpaid principal
balance of all US Loans at such time plus the aggregate amount of all US LC
Obligations outstanding at such time; and
(b) under the Canadian Agreement with respect to any Lender (i) when
used in Article I or Article II of the Canadian Agreement, in any Borrowing
Notice thereunder or when no Canadian Advances are outstanding, the percentage
set forth opposite such Lender's name on the Lenders Schedule as modified by
assignments of a Lender's rights and obligations under the Canadian Agreement
made by or to such Lender in accordance with the terms of the Canadian
Agreement, and (ii) when used otherwise, the percentage obtained by dividing (x)
the sum of the unpaid principal balance of such Lender's Canadian Advances and
such Lender's Percentage Share of the Canadian LC Obligations, by (y) the sum of
the aggregate unpaid principal balance of all Canadian Advances at such time
plus the aggregate amount of all Canadian LC Obligations outstanding at such
time.
"Permitted Distribution" means (i) any Distribution made by any
Restricted Person that is payable only in common stock of such Restricted
Person, and (ii) any other Distribution made by any Restricted Person to US
Borrower, Canadian Borrower or to any other Restricted Person that is a
wholly-owned Subsidiary of US Borrower.
"Permitted Investments" means (a) Cash Equivalents, (b) Investments in
Restricted Subsidiaries that are wholly-owned by US Borrower and in Canadian
Borrowers, and (c) US Borrower's Investments in Thunder Creek Gas Services
L.L.C. and Sage Creek Gas Processors, L.L.C., which are limited liability
companies involved in the methane gas and conventional gas production and
development in the Powder River basin of central Wyoming and are owned by a
Subsidiary of US Borrower and other industry partners (US Borrower will include
its pro rata share of these entities in its Consolidated financial statements),
(d) payments made for the purchase of oil and gas assets, leaseholds and
associated facilities and/or the purchase of equity interests in entities
involved in the oil and gas industry, all in accordance with US Borrower's
normal business practices; provided that no Default shall exist before or after
any such acquisition or Investment, and (e) Investments in any Person, so long
as such Person becomes a Restricted Subsidiary of US Borrower within one year
after the date such Investment is made.
"Permitted Liens" means:
(a) Liens for taxes, assessments or governmental charges which are not due
or delinquent, or the validity of which US Borrower or any Restricted
Subsidiary shall be contesting in good faith; provided US Borrower or
such Restricted Subsidiary shall have made adequate provision therefor
in accordance with US GAAP;
(b) the Lien of any judgment rendered, or claim filed, against US Borrower
or any Restricted Subsidiary which does not constitute an Event of
Default and which US Borrower or any such Restricted Subsidiary shall
be contesting in good faith; provided US Borrower or
19
98
such Restricted Subsidiary shall have made adequate provision therefor
in accordance with US GAAP;
(c) Liens, privileges or other charges imposed or permitted by law such as
statutory liens and deemed trusts, carriers' liens, builders' liens,
materialmens' liens and other liens, privileges or other charges of a
similar nature which relate to obligations not due or delinquent,
including any lien or trust arising in connection with workers'
compensation, unemployment insurance, pension, employment and similar
laws or regulations;
(d) Liens arising in the ordinary course of and incidental to construction,
maintenance or current operations which have not been filed pursuant to
law against US Borrower or any Restricted Subsidiary or in respect of
which no steps or proceedings to enforce such lien have been initiated
or which relate to obligations which are not due or delinquent or if
due or delinquent, which US Borrower or such Restricted Subsidiary
shall be contesting in good faith; provided US Borrower or such
Restricted Subsidiary shall have made adequate provision therefor in
accordance with US GAAP;
(e) Liens incurred or created in the ordinary course of business and in
accordance with sound oil and gas industry practice in respect of the
exploration, development or operation of oil and gas properties or
related production or processing facilities or the transmission of
petroleum substances as security in favor of any other Person
conducting the exploration, development, operation or transmission of
the property to which such Liens relate, for US Borrower's or any of
its Restricted Subsidiaries' portion of the costs and expenses of such
exploration, development, operation or transmission, provided that such
costs or expenses are not due or delinquent or, if due or delinquent,
which US Borrower or such Restricted Subsidiary shall be contesting in
good faith; provided US Borrower or such Restricted Subsidiary shall
have made adequate provision therefor in accordance with US GAAP;
(f) overriding royalty interests, net profit interests, reversionary
interests and carried interests or other similar burdens on production
in respect of US Borrower's or any of its Restricted Subsidiaries' oil
and gas properties that are entered into with or granted to arm's
length third parties in the ordinary course of business and in
accordance with sound oil and gas industry practice in the area of
operation;
(g) Liens for penalties arising under non-participation provisions of
operating agreements in respect of US Borrower's or any of its
Restricted Subsidiaries' oil and gas properties if such Liens do not
materially detract from the value of any material part of the property
of US Borrower and its Subsidiaries taken as a whole;
(h) easements, rights-of-way, servitudes, zoning or other similar rights or
restrictions in respect of land held by US Borrower or any Restricted
Subsidiary (including, without limitation, rights-of-way and servitudes
for railways, sewers, drains, pipe lines, gas and water mains, electric
light and power and telephone or telegraph or cable television
conduits, poles, wires and cables) which, either alone or in the
aggregate, do not materially detract from the value of such land or
materially impair its use in the operation of the business of US
Borrower and its Restricted Subsidiaries taken as a whole;
20
99
(i) security given by US Borrower or any Restricted Subsidiary to a public
utility or any Governmental Authority when required by such public
utility or Governmental Authority in the ordinary course of the
business of US Borrower or any Restricted Subsidiary in connection with
operations of US Borrower or any Restricted Subsidiary if such security
does not, either alone or in the aggregate, materially detract from the
value of any material part of the property of US Borrower and its
Restricted Subsidiaries taken as a whole;
(j) the right reserved to or vested in any Governmental Authority by the
terms of any lease, license, grant or permit or by any statutory or
regulatory provision to terminate any such lease, license, grant or
permit or to require annual or other periodic payments as a condition
of the continuance thereof;
(k) all reservations in the original grant of any lands and premises or any
interests therein and all statutory exceptions, qualifications and
reservations in respect of title;
(l) any Lien from time to time disclosed by US Borrower or any Restricted
Subsidiary to the US Agent or the Canadian Agent and which is consented
to by the Majority Lenders;
(m) any right of first refusal in favor of any Person granted in the
ordinary course of business with respect to all or any of the oil and
gas properties of US Borrower or any Restricted Subsidiary;
(n) Liens on cash or marketable securities of US Borrower or any Restricted
Subsidiary granted in connection with any Hedging Contract permitted
under the US Agreement;
(o) Liens in respect of Indebtedness permitted by Sections 7.1(b), 7.1(g)
and 7.1(k);
(p) Liens in favor of the US Agent or the Canadian Agent for the benefit of
the Lender Parties;
(q) Liens to collateralize moneys held in a cash collateral account by a
lender in respect of the prepayment of bankers' acceptances, letters of
credit or similar obligations accepted or issued by such lender but
only if at the time of such prepayment no default or event of default
has occurred and is continuing under the credit facility pursuant to
which the bankers' acceptances or letters of credit have been accepted
or issued;
(r) purchase money Liens upon or in any tangible personal property and
fixtures (including real property surface rights upon which such
fixtures are located and contractual rights and receivables relating to
such property) acquired by US Borrower or a Restricted Subsidiary in
the ordinary course of business to secure the purchase price of such
property or to secure Indebtedness incurred solely for the purpose of
financing the acquisition of such property, including any Liens
existing on such property at the time of its acquisition (other than
any such Lien created in contemplation of any such acquisition);
21
100
(s) the rights of buyers under production sale contracts related to US
Borrower's or a Restricted Subsidiary's share of petroleum substances
entered into in the ordinary course of business, provided that the
contracts create no rights (including any Lien) in favor of the buyer
or any other Person in, to or over any reserves of petroleum substances
or other assets of US Borrower or a Restricted Subsidiary, other than a
dedication of reserves (not by way of Lien or absolute assignment) on
usual industry terms;
(t) Liens arising in respect of operating leases of personal property under
which Canadian Borrowers or any of their Subsidiaries are lessees;
(u) Liens on property of a Person existing at the time such Person becomes
a Restricted Subsidiary, is merged into or consolidated with US
Borrower or any of its Subsidiaries; provided, such Liens were in
existence prior to the contemplation of such stock acquisition, merger
or consolidation and do not extend to any assets other than those of
the Person so acquired or merged into or consolidated with US Borrower
or any of its Subsidiaries.
(v) any extension, renewal or replacement (or successive extensions,
renewals or replacements), as a whole or in part, of any Lien referred
to in the preceding paragraphs (a) to (u) inclusive of this definition,
so long as any such extension, renewal or replacement of such Lien is
limited to all or any part of the same property that secured the Lien
extended, renewed or replaced (plus improvements on such property), the
indebtedness or obligation secured thereby is not increased and such
Lien is otherwise permitted by the applicable section above;
(w) in addition to Liens permitted by clauses (a) through (v) above, Liens
on property or assets if the aggregate Indebtedness secured thereby
does not exceed US $25,000,000.
provided that nothing in this definition shall in and of itself constitute or be
deemed to constitute an agreement or acknowledgment by the US Agent or the
Canadian Agent or any Lender that the Indebtedness subject to or secured by any
such Permitted Lien ranks (apart from the effect of any Lien included in or
inherent in any such Permitted Liens) in priority to the Obligations;
"Person" means an individual, corporation, partnership, limited
liability company, association, joint stock company, trust or trustee thereof,
estate or executor thereof, unincorporated organization or joint venture,
Tribunal, or any other legally recognizable entity.
"Rating Agency" means any of S & P or Moody's, or their respective
successors.
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System as from time to time in effect.
"Request for an Offer of Extension" means (a) with respect to the
Canadian Agreement, a written request made by Canadian Borrowers to the Lenders
to have Required Lenders issue an offer to Canadian Borrowers extending the
Canadian Revolving Period for a further 364 days, and (b) with respect to the US
Agreement, a written request made by US Borrower to the Lenders
22
101
to have Required Lenders issue an offer to US Borrower extending the Tranche B
Revolving Period for a further 364 days.
"Required Lenders" means Lenders whose aggregate Percentage Shares
equal or exceed fifty percent (50%).
"Reserve Requirement" means, at any time, the maximum rate at which
reserves (including any marginal, special, supplemental, or emergency reserves)
are required to be maintained under regulations issued from time to time by the
Board of Governors of the Federal Reserve System of the United States of America
(or any successor) by member banks of such Federal Reserve System against
"Eurocurrency liabilities" (as such term is used in Regulation D). Without
limiting the effect of the foregoing, the Reserve Requirement shall reflect any
other reserves required to be maintained by such member banks with respect to
(a) any category of liabilities which includes deposits by reference to which
the Adjusted US Dollar Eurodollar Rate or the Adjusted Canadian Dollar
Eurodollar Rate is to be determined, or (b) any category of extensions of credit
or other assets which include US Dollar Eurodollar Loans or Canadian Dollar
Eurodollar Loans.
"Restricted Distribution" means any Distribution that is not a
Permitted Distribution.
"Restricted Investment" means any Investment that is not a Permitted
Investment.
"Restricted Payments" has the meaning given to such term in Section 7.5
of the US Agreement.
"Restricted Person" means any of US Borrower and each Restricted
Subsidiary.
"Restricted Subsidiary" means each Canadian Borrower and any other
Subsidiary of US Borrower that is not an Unrestricted Subsidiary; provided, the
following Subsidiaries of US Borrower shall be deemed not to be Restricted
Subsidiaries:
(a) BN Co. A Limited Partnership, a New Mexico limited partnership;
(b) BN Coal, L.L.C., a New Mexico limited liability company;
(c) BN Non-Coal, L.L.C., a New Mexico limited liability company;
(d) Blackwood & Nicholls Co., a New Mexico limited partnership;
(e) Devon-Blanco Company, an Oklahoma general partnership;
(f) 172173 Canada Inc.;
(g) 410760 Alberta Ltd.;
(h) 653087 Alberta Ltd.;
(i) 661151 Alberta Ltd.;
(j) 728097 Alberta Ltd.;
(k) Foothills Partnership;
(l) Morrison Administration Corporation;
(m) Morrison Capital Inc.;
(n) Morrison Gas Gathering Inc.;
(o) Morrison Operating Company Ltd.;
23
102
(p) Morrison Petroleums (Alberta) Ltd.;
(q) Polar Energy Marketing Corporation; and
(r) Saratoga Processing Company, Ltd.
"S & P" means Standard & Poor's Ratings Services (a division of McGraw
Hill Companies, Inc.), or its successor.
"Schedule I BA Reference Banks" means the Lenders listed in Schedule I
to the Bank Act (Canada) as are, at such time, designated by Canadian Agent,
with the prior consent of Canadian Borrowers (acting reasonably), as the
Schedule I BA reference Banks.
"Schedule II BA Reference Banks" means the Lenders listed in Schedule
II to the Bank Act (Canada) as are, at such time, designated by Canadian Agent,
with the prior consent of Canadian Borrowers (acting reasonably), as the
Schedule II BA Reference Banks.
"Stamping Fee Rate" means with respect to any Bankers' Acceptance
accepted by any Canadian Resident Lender at any time, the Applicable Margin then
in effect; provided that if an Event of Default has occurred and is continuing,
the Stamping Fee Rate shall be increased by two hundred (200) Basis Points.
"Subordinated US Borrower Debentures" means those certain Convertible
Junior Subordinated Debentures issued by US Borrower to Devon Trust pursuant to
the Subordinated US Borrower Indenture and subordinated to the Obligations, in
the aggregate principal amount of approximately US $154,500,000.
"Subordinated US Borrower Guarantee" means that certain Guarantee dated
July 1, 1996, by US Borrower in favor of the holders of the Devon Trust
Securities pursuant to the Subordinated US Borrower Indenture and subordinated
to the Obligations, guaranteeing certain payments to be made by Devon Trust
pursuant to the Devon Trust Securities.
"Subordinated US Borrower Indenture" means that certain Trust Indenture
dated July 1, 1996, between US Borrower and The Bank of New York, as indenture
trustee.
"Subsidiary" means, with respect to any Person, any corporation,
association, partnership, limited liability company, joint venture, or other
business or corporate entity, enterprise or
organization which is directly or indirectly (through one or more
intermediaries) controlled by or owned fifty percent or more by such Person,
provided that (a) associations, joint ventures or other relationships (i) which
are established pursuant to a standard form operating agreement or similar
agreement or which are partnerships for purposes of federal income taxation
only, (ii) which are not corporations or partnerships (or subject to the Uniform
Partnership Act) under applicable state Law, and (iii) whose businesses are
limited to the exploration, development and operation of oil, gas or mineral
properties, transportation and related facilities and interests owned directly
by the parties in such associations, joint ventures or relationships, shall not
be deemed to be "Subsidiaries" of such Person and (b) associations, joint
ventures or other relationships (i) which are not corporations or partnerships
under applicable provincial Law, and (ii) whose businesses are limited to the
exploration, development and operation of oil, gas or
24
103
mineral properties, transportation and related facilities and interests owned
directly by the parties in such associations, joint ventures or relationships,
shall not be deemed to be "Subsidiaries" of such Person.
"Termination Event" means (a) the occurrence with respect to any ERISA
Plan of (i) a reportable event described in Sections 4043(b)(5) or (6) of ERISA
or (ii) any other reportable event described in Section 4043(b) of ERISA other
than a reportable event not subject to the provision for 30-day notice to the
Pension Benefit Guaranty Corporation pursuant to a waiver by such corporation
under Section 4043(a) of ERISA, or (b) the withdrawal of any ERISA Affiliate
from an ERISA Plan during a plan year in which it was a "substantial employer"
as defined in Section 4001(a)(2) of ERISA, or (c) the filing of a notice of
intent to terminate any ERISA Plan or the treatment of any ERISA Plan amendment
as a termination under Section 4041 of ERISA, or (d) the institution of
proceedings to terminate any ERISA Plan by the Pension Benefit Guaranty
Corporation under Section 4042 of ERISA, or (e) any other event or condition
which might constitute grounds under Section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer, any ERISA Plan.
"Total Capitalization" means the sum (without duplication) of (i) US
Borrower's Consolidated Total Funded Debt plus (ii) US Borrower's Consolidated
shareholder's equity plus (iii) 70% of the outstanding balance of the Devon
Trust Securities.
"Total Funded Debt" means (i) Liabilities referred to in clauses (a),
(b), (c), (d), and (e) of the definition of "Indebtedness", plus (ii) 30% of the
outstanding balance of the Devon Trust Securities.
"Tranche A Facility Usage" means, at the time in question, the
aggregate amount of Tranche A Loans and existing US LC Obligations outstanding
at such time under the US Agreement.
"Tranche A Loan" has the meaning given it in Section 1.1(a) of the US
Agreement.
"Tranche A Maximum Credit Amount" means $130,000,000.
"Tranche A Note" has the meaning given it in Section 1.1(a) of the US
Agreement.
"Tranche B Conversion Date" means the date which is 364 days after the
Closing Date, or such later day to which the Tranche B Conversion Date is
extended pursuant to Section 1.1 of the US Agreement.
"Tranche B Facility Fee Rate" means, on any date, the number of Basis
Points per annum set forth below based on the Applicable Rating Level on such
date:
25
104
=============================================
Applicable Applicable Tranche B
Rating Level Facility Fee Rate
---------------------------------------------
Level I 7.0
---------------------------------------------
Level II 9.0
---------------------------------------------
Level III 10.0
---------------------------------------------
Level IV 15.0
---------------------------------------------
Level V 22.5
=============================================
"Tranche B Facility Usage" means, at the time in question, the
aggregate amount of Tranche B Loans outstanding at such time under the US
Agreement.
"Tranche B Loan" has the meaning given it in Section 1.1(b) of the US
Agreement.
"Tranche B Maturity Date" means the date which is two years after the
Tranche B Conversion Date.
"Tranche B Maximum Credit Amount" means $75,000,000.
"Tranche B Note" has the meaning given it in Section 1.1(b) of the US
Agreement.
"Tranche B Revolving Period" means the period from the Closing Date
until the Tranche B Conversion Date.
"Tribunal" means any government, any arbitration panel, any court or
any governmental department, commission, board, bureau, agency or
instrumentality of the United States of America or Canada or any state,
province, commonwealth, nation, territory, possession, county, parish, town,
township, village or municipality, whether now or hereafter constituted or
existing.
"Type" means (i) with respect to any US Loans, the characterization of
such US Loans as either US Base Rate Loans or US Dollar Eurodollar Loans and
(ii) with respect to any Canadian Advances, the characterization of such
Canadian Advances as Canadian Base Rate Loans, Canadian Prime Rate Loans, US
Dollar Eurodollar Loans, Canadian Dollar Eurodollar Loans or Bankers'
Acceptances.
"Unrestricted Subsidiary" means any corporation, association,
partnership, limited liability company, joint venture, or other business or
corporate entity, enterprise or organization in which US Borrower does not
presently own an interest (directly or indirectly) which hereafter becomes a
Subsidiary of US Borrower and which, within 90 days thereafter, is designated as
an Unrestricted Subsidiary by US Borrower to US Agent, provided that US Borrower
may not designate as an Unrestricted Subsidiary any Subsidiary in which it has
made an Investment of more than US $25,000,000 (directly or indirectly) by any
means other than newly issued stock or
26
105
treasury stock of US Borrower, which may be used to make an Investment in
Unrestricted Subsidiaries without limit and provided further that in the event
the book value of the assets of any Unrestricted Subsidiary at any time exceeds
US $25,000,000, such Subsidiary shall cease to be an Unrestricted Subsidiary and
shall automatically become a Restricted Person.
"US Account" means an account established by Canadian Agent in New York
into which funds to be advanced to Canadian Borrowers by Lenders in US Dollars
and funds to be paid by Canadian Borrowers to Lenders in US Dollars will be
deposited.
"US Agent" means NationsBank, N.A., as administrative agent, under the
US Agreement and its successors and assigns in such capacity.
"US Agreement" means that certain Credit Agreement of even date
herewith among US Borrower, Agent and the Lenders, as it may be amended,
supplemented, restated or otherwise modified and in effect from time to time.
"US Base Rate" means, for any day, the rate per annum equal to the
higher of (a) the Federal Funds Rate for such day plus one-half of one percent
(0.5%) and (b) the US Reference Rate for such day. Any change in the US Base
Rate due to a change in the US Reference Rate or the Federal Funds Rate shall be
effective on the effective date of such change in the US Reference Rate or
Federal Funds Rate. No US Base Rate charged by any Person shall ever exceed the
Highest Lawful Rate.
"US Base Rate Loan" means a US Loan made in US Dollars which bears
interest at the US Base Rate.
"US Borrower" means Devon Energy Corporation, an Oklahoma corporation.
"US Dollar" or "US $" means the lawful currency of the United States of
America.
"US Dollar Equivalent" means, with respect to an amount denominated in
Canadian Dollars, the amount of US Dollars required to purchase the relevant
stated amount of Canadian Dollars on the date of determination.
"US Dollar Eurodollar Loan" means a US Loan or a Canadian Loan, in each
case, which bears interest at the Adjusted US Dollar Eurodollar Rate.
"US Dollar Eurodollar Rate" means, for any US Dollar Eurodollar Loan
within a Borrowing and with respect to the related Interest Period therefor, the
rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%)
appearing on the Dow Jones Market Service (formerly Telerate Access Service)
Page 3750 (or any successor page) as the London interbank offered rate for
deposits in US Dollars at approximately 11:00 a.m. (London time) two Business
Days prior to the first day of such Interest Period for a term comparable to
such Interest Period. If for any reason such rate is not available, the term "US
Dollar Eurodollar Rate" shall mean, for any US Dollar Eurodollar Loan within a
Borrowing and with respect to the related Interest Period therefor, the rate per
annum (rounded upwards, if necessary, to the nearest 1/100 of 1%)
27
106
appearing on Reuters Screen LIBO Page as the London interbank offered rate for
deposits of US Dollars at approximately 11:00 a.m. (London time) two Business
Days prior to the first day of such Interest Period for a term comparable to
such Interest Period; provided, however, if more than one rate is specified on
Reuters Screen LIBO Page, the applicable rate shall be the arithmetic mean of
all such rates (rounded upwards, if necessary, to the nearest 1/100 of 1%).
"US Facility Commitment Period" means the period from and including the
Closing Date until the US Facility Maturity Date (or, if earlier, the day on
which the obligations of Lenders to make US Loans hereunder or the obligations
of US LC Issuer to issue Letters of Credit hereunder have been terminated or the
US Notes first become due and payable in full).
"US Facility Maturity Date" means December 10, 2003.
"US Facility Usage" means, at the time in question, the aggregate
amount of US Loans and existing US LC Obligations outstanding at such time under
the US Agreement.
"US GAAP" means those generally accepted accounting principles and
practices which are recognized as such from time to time by the Financial
Accounting Standards Board (or any generally recognized successor) and which, in
the case of US Borrower and its Consolidated Subsidiaries, are applied for all
periods after the Closing Date in a manner consistent with the manner in which
such principles and practices were applied to the Initial Financial Statements.
"US LC Issuer" means NationsBank, N.A. in its capacity as the issuer of
Letters of Credit under the US Agreement, and its successors in such capacity.
"US LC Obligations" means, at the time in question, with respect to the
US Agreement, the sum of all Matured US LC Obligations plus the maximum amounts
which US LC Issuer might then or thereafter be called upon to advance under all
Letters of Credit then outstanding.
"US LC Sublimit" means US $25,000,000.
"US Loans" means the Tranche A Loans, the Tranche B Loans and
Competitive Bid Loans made under the US Agreement.
"US Loan Documents" means the US Agreement, the US Notes issued under
the US Agreement, the Letters of Credit issued under the US Agreement, the LC
Applications related thereto, and all other agreements, certificates, documents,
instruments and writings at any time delivered in connection herewith or
therewith (exclusive of term sheets and commitment letters).
"US Maximum Credit Amount" means the amount of US $205,000,000.
"US Notes" means the Tranche A Notes, the Tranche B Notes and the
Competitive Bid Notes issued under the US Agreement.
28
107
"US Obligations" means all Liabilities from time to time owing by any
Restricted Person to any Lender Party under or pursuant to any of the US Loan
Documents, including all US LC Obligations owing thereunder. "US Obligation"
means any part of the US Obligations.
"US Reference Rate" means the per annum rate of interest established
from time to time by NationsBank, N.A. as its prime rate, which rate may not be
the lowest rate of interest charged by NationsBank, N.A. to its customers.
"Withholding Tax" has the meaning given it in Section 3.2(d) of the
Canadian Agreement.
29