CDN. $125,000,000
EXTENDIBLE REVOLVING CREDIT FACILITY
CREDIT AGREEMENT
among
KEYSPAN ENERGY DEVELOPMENT CO.
(as Borrower)
and
Certain Financial Institutions
(as Lenders)
with
BANK OF MONTREAL
(as Agent for the Lenders)
Dated as of:
October 13, 2000
TABLE OF CONTENTS
ARTICLE 1
INTERPRETATION .................................................... 1
1.1 Definitions ................................................... 1
1.2 Headings and Table of Contents ............................... 26
1.3 References ................................................... 26
1.4 Rules of Interpretation ...................................... 26
1.5 Generally Accepted Accounting Principles ..................... 27
1.6 Time ......................................................... 27
1.7 Monetary References .......................................... 27
1.8 Payment for Value ............................................ 27
ARTICLE 2
REPRESENTATIONS AND WARRANTIES ................................... 27
2.1 Representations and Warranties ............................... 27
2.2 Deemed Representation and Warranty ........................... 36
ARTICLE 3
THE CREDIT FACILITIES ............................................ 36
3.1 Obligations of each Lender ................................... 36
3.2 Purpose ...................................................... 36
3.3 Takeover Notification ........................................ 36
3.4 Accommodations ............................................... 37
3.5 Selection of Libor Interest Periods .......................... 37
3.6 Conditions Applicable to Bankers' Acceptances ................ 38
3.7 Agent's Duties re Bankers' Acceptances ....................... 40
3.8 Notice of Repayment .......................................... 40
3.9 Pro-Rata Treatment of Accommodations ......................... 41
3.10 Conversion Option ........................................... 42
3.11 Rollovers of Libor Loans .................................... 42
3.12 Notices Irrevocable ......................................... 42
3.13 Extension of Maturity Date .................................. 43
ARTICLE 4
REPAYMENT AND PREPAYMENT ......................................... 44
4.1 Reduction of Commitments and Repayment of Accommodations
.................................................................. 44
4.2 Repayment of Outstandings In Excess of Commitments ........... 44
4.3 Cancellation of Commitment and Prepayment .................... 45
4.4 Early Repayment of Libor Loans and Bankers' Acceptances ...... 45
4.5 Evidence of Indebtedness ..................................... 46
ARTICLE 5
PAYMENT OF INTEREST AND FEES ..................................... 46
5.1 Interest on Prime Loans ...................................... 46
5.2 Interest on US Base Rate Loans ............................... 46
5.3 Interest on Libor Loans ...................................... 47
5.4 Bankers' Acceptance Fees ..................................... 47
5.5 Interest on Overdue Amounts .................................. 47
5.6 Standby Fees ................................................. 48
5.7 Agent's Fees ................................................. 48
5.8 Maximum Rate Permitted by Law ................................ 48
5.9 Interest Generally ........................................... 49
5.10 Interest and Fee Adjustment ................................. 49
ARTICLE 6
SECURITY ......................................................... 49
6.1 Security ..................................................... 49
6.2 Release and Amendment of Security ............................ 49
6.3 Registrations and Renewals ................................... 50
6.4 Extensions, Etc. ............................................. 50
6.5 Permitted Encumbrances, Permitted Indebtedness and
Permitted Title Defects ...................................... 50
ARTICLE 7
PAYMENT AND TAXES ................................................ 51
7.1 Time, Place and Currency of Payment .......................... 51
7.2 Application of Payments Prior to an Event of Default ......... 51
7.3 Taxes ........................................................ 51
7.4 Account Debit Authorization .................................. 52
ARTICLE 8
CONDITIONS PRECEDENT TO DISBURSEMENT OF THE ACCOMMODATIONS ....... 52
8.1 Effectiveness and Conditions Precedent ....................... 52
8.2 Continuing Conditions Precedent .............................. 54
8.3 Waiver of a Condition Precedent .............................. 54
ARTICLE 9
COVENANTS ........................................................ 54
9.1 Positive Covenants ........................................... 54
9.2 Negative Covenants ........................................... 60
9.3 Financial Covenants .......................................... 63
ARTICLE 10
EVENTS OF DEFAULT ................................................ 63
10.1 Events of Default ........................................... 63
10.2 Acceleration and Demand ..................................... 67
10.3 Cash Collateral Accounts .................................... 67
10.4 Remedies on Default ......................................... 68
10.5 Right of Set-Off ............................................ 68
10.6 Application and Sharing of Payments Following Acceleration .. 69
10.7 Lenders May Perform Covenants ............................... 69
10.8 Waiver of Default ........................................... 69
ARTICLE 11
EXPENSES AND INDEMNITIES ......................................... 70
11.1 Reimbursement of Expenses ................................... 70
11.2 Increased Cost .............................................. 70
11.3 Illegality .................................................. 71
11.4 Substitute Basis of Accommodation ........................... 72
11.5 Funding Indemnity ........................................... 72
11.6 General Indemnity ........................................... 73
11.7 Environmental Indemnity ..................................... 73
ARTICLE 12
THE AGENT AND THE LENDERS ........................................ 73
12.1 Authorization of Agent ...................................... 74
12.2 Responsibility of Agent ..................................... 74
12.3 Acknowledgment of Lenders ................................... 74
12.4 Rights and Obligations of Each Lender ....................... 75
12.5 Notice to Lenders ........................................... 75
12.6 Notices between the Lenders, the Agent and the Borrower ..... 75
12.7 Agent's Duty to Deliver Documents Obtained from the Borrower. 75
12.8 Arrangements for Accommodations ............................. 76
12.9 Arrangements for Repayment of Accommodations ................ 76
12.10 Repayment by Lenders to Agent .............................. 76
12.11 Adjustments Among Lenders .................................. 77
12.12 Lenders' Consents to Waivers, Amendments, etc. ............. 78
12.13 Reimbursement of Agent's Expenses or Lender's Costs ........ 79
12.14 Reliance by Agent on Notices, etc. ......................... 79
12.15 Relations with Borrower .................................... 79
12.16 Successor Agent ............................................ 79
12.17 Indemnity of Agent ......................................... 80
12.18 Sharing of Information ..................................... 80
12.19 Amendment to this Article .................................. 80
ARTICLE 13
SUCCESSORS AND ASSIGNS AND JUDGMENT CURRENCY ..................... 81
13.1 Successors and Assigns ...................................... 81
13.2 Confidentiality ............................................. 84
13.3 Judgment Currency ........................................... 85
ARTICLE 14
MISCELLANEOUS .................................................... 85
14.1 Severability ................................................ 85
14.2 Survival of Undertakings .................................... 85
14.3 Failure to Act .............................................. 85
14.4 Waivers ..................................................... 86
14.5 Amendments .................................................. 86
14.6 Notice ...................................................... 86
14.7 Whole Agreement ............................................. 86
14.8 Governing Law ............................................... 86
14.9 Term of Agreement ........................................... 87
14.10 Time of Essence ............................................ 87
14.11 Conflict with Loan Documents ............................... 87
14.12 Dealings with Agent ........................................ 87
14.13 Further Assurances ......................................... 87
14.14 Counterpart Execution ...................................... 87
Schedule "A" - Notice of Accommodation, Repayment, Prepayment or Cancellation of
Total Commitment
Schedule "B" - Power of Attorney Terms - Bankers' Acceptances
Schedule "C" - Notice of Conversion
Schedule "D" - Notice of Rollover
Schedule "E" - Compliance Certificate
Schedule "F" - Request for Extension
Schedule "G" - Lender Transfer Agreement
Schedule "H" - GMS Corporate Policy for Commodity Pricing, Trading and
Contractual Relationships
Schedule "I" - Labour and Pension Matters
Schedule "J" - Facilities Schedules
Part I - Gas Plants, Processing Facilities and Compressors
Part II - Pipelines and Gas Gathering Systems
Schedule "K" - Land Rights
Schedule "L" - Material Contracts
Schedule "M" - Permits
Schedule "N" - Marketing Contracts
Schedule "O" - Sources and Uses of Funds
Schedule "P" - Litigation
Schedule "Q" - Contingent Liabilities
Schedule "R" - Corporate Organization
Schedule "S" - Pro Forma Financial Statements
Schedule "T" - Preferential Rights
Schedule "U" - Outstanding Swaps.
THIS CREDIT AGREEMENT is dated and effective as of the 13th day of October, 2000
AMONG:
KEYSPAN ENERGY DEVELOPMENT CO., an unlimited liability
company under the laws of Nova Scotia, having its principal
offices in Calgary, Alberta, Canada (the "Borrower")
AND:
BANK OF MONTREAL, in its capacity as Lender
AND:
BANK OF MONTREAL, a Canadian chartered bank having its
head office in the City of Montreal, Quebec, Canada and a branch office, in
Toronto, Ontario, Canada, in its capacity as Agent
WHEREAS:
The Borrower has requested that the Lenders and the Agent agree to provide
credit facilities on the terms and conditions hereinafter set forth.
NOW THEREFORE, in consideration of the premises, the covenants herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged by each of the parties hereto, the
parties agree as follows:
ARTICLE 1
INTERPRETATION
1.1 Definitions
In this Agreement, including the recitals and the Schedules hereto and in
all notices pursuant to this Agreement, unless something in the subject matter
or context is inconsistent therewith, the following words and phrases shall have
the following meanings:
"Acceleration Notice" means a written notice delivered by the Agent to the
Borrower pursuant to Section 10.2(a)(ii) declaring all Indebtedness of the
Borrower outstanding to the Agent and the Lenders hereunder to be due and
payable;
"Accommodations" means the advance of Loans and the acceptance of Bankers'
Acceptances;
"Accounts" means the accounts and records established by the Agent pursuant to
Section 4.5 to record the Borrower's liability to each of the Lenders in respect
of the Accommodations and other amounts outstanding by the Borrower to each of
the Lenders and the Agent hereunder;
"Administrative Services Agreement" means the Administrative Services Agreement
dated as of December 1, 1998 between Gulf, GMSL and the Partnership;
"Affiliate" means any Person which, directly or indirectly, controls, is
controlled by or is under common control with another Person; and for the
purposes of this definition, "control" (including, with correlative meanings,
the terms "controlled by" or "under common control with") means the power to
direct or cause the direction of the management and policies of any Person,
whether through the ownership of Voting Shares or by contract or otherwise;
"Agent" means BMO when acting in its capacity as administrative agent hereunder
and includes any successor agent appointed pursuant to Section 12.16 and any
successor entity to BMO;
"Agent's Account for Payments" means:
(a) for all payments in Canadian Dollars, an account to be designated by the
Agent in writing to the Borrower to be maintained by the Agent at its
Toronto main branch, to which payments and transfers in Canadian Dollars
are to be effected; and
(b) for all payments in US Dollars, an account to be designated by the Agent in
writing to the Borrower to be maintained by the Agent at its Toronto main
branch, to which payments and transfers in US Dollars are to be effected;
or such other places or accounts as may be agreed upon by the Agent and the
Borrower from time to time and notified in writing to the Lenders;
"Agent's Branch of Account" means the Bank of Montreal, After Sales, 19th Floor,
First Canadian Place, 100 King Street West, Toronto, Ontario M5X 1A1 (Telecopy
No. (416) 867-5718) or such other office or branch of the Agent in Canada as the
Agent may from time to time advise the Borrower and the Lenders in writing;
"Agreement" means this credit agreement, all Schedules attached hereto and any
future amendments or supplements thereto;
"Applicable Law" means, in relation to any Person, property, transaction or
event, all applicable provisions (or mandatory applicable provisions, if so
specified) of federal, provincial, state or local laws, statutes, rules,
regulations, official directives and orders of all Governmental Authorities and
Governmental Actions of Governmental Authorities in actions or proceedings in
which the Person in question is a party or by which it is bound or having
application to the Person, property, transaction or event;
"Assets" means, collectively, the entire right, title, estate and interest of
the Loan Parties, in and to the Facilities, the Rimbey Shares, the Marketing
Business, the Permits and the Land Rights;
"Bankers' Acceptances" means the Accommodations or any portion thereof made
available by the Lenders to the Borrower by way of bankers' acceptances
denominated in Cdn. Dollars which are issued by the Borrower pursuant to
Sections 3.4 or 3.10 and accepted by the Lenders pursuant to Section 3.6;
"Banking Day" means a day which is both a Business Day and a day on which
dealings in US Dollars by and between banks in the London, England interbank
market may be conducted;
"BMO" means Bank of Montreal, a Canadian chartered bank and its successors and
permitted assigns;
"Borrower" means KeySpan Energy Development Co., an unlimited liability company
incorporated under the laws of Nova Scotia, having its principal offices in
Calgary, Alberta, Canada;
"Borrowing Notice" means a notice in the form attached as Schedule "A";
"bps" means 1/100 of 1%;
"Branch of Account" means, with respect to each Lender, the branch or office of
such Lender at the address set forth opposite such Lender's name on the
signature pages of this Agreement or such other branch or office in Canada as
such Lender may from time to time advise the Borrower and the Agent in writing;
provided that, for purposes of delivering any notice required to be delivered by
the Agent to a Lender pursuant to Section 12.6 and for purposes of effecting any
payments to a Lender in connection with this Agreement, a Lender may specify in
writing any other branch or office of such Lender in Canada and such branch or
office shall thereafter be the Branch of Account of such Lender for such
purpose;
"Business Day" means a day, excluding Saturday and Sunday, on which banking
institutions are open for business in Toronto, Ontario, Canada and Calgary,
Alberta, Canada and, in respect of any payments hereunder in US Dollars, a day
on which banking institutions are also open for business in New York, New York;
"Buy/Sell Agreements" means, collectively, the Buy/Sell Agreement dated as of
December 1, 1998 between GMSFL and Gulf and the Buy/Sell Agreement dated as of
December 1, 1998 between the Partnership and Gulf;
"Canadian Dollars", "Cdn. Dollars" and the symbol "Cdn. $" each means lawful
money of Canada;
"Capital Distribution by a Person" means:
(a) any declaration or payment by the Person of any dividend or other
distribution on or in respect of any of the share capital of such Person;
(b) any payment by the Person in respect of the redemption, retraction,
purchase or other acquisition or retirement, in whole or in part, of any
Voting Shares or any share or equity rights in or in relation to its
capital or equity;
(c) any payment by the Person of any amount of principal, interest or other
amounts in respect of any loan or other indebtedness which is owed to any
of its Affiliates;
(d) any loan, advance, payment of management or consulting fees or reimbursement
of costs which is made by the Person to or in favour of a holder of Voting
Shares in respect of the Person or an Affiliate of such holder; or
(e) the transfer by such Person of any property or assets for consideration of
less than its or their fair market value to any of its Affiliates;
whether any of the foregoing is made, paid or satisfied in or for cash, property
or both;
"Capital Lease" means, with respect to any Person, any lease or other
arrangement relating to real or personal property which should, in accordance
with Generally Accepted Accounting Principles, be accounted for as a capital
lease on a balance sheet of such Person;
"Capitalization" means, in respect of the Borrower, as at the last day of each
Fiscal Quarter, the aggregate of Shareholders' Tangible Equity and Funded Debt;
"Cash Collateral Account" means an account of a Loan Party with the Agent or
such institution as designated by the Agent from which the Borrower has no
withdrawal rights or privileges, which account and all funds credited thereto
and interest thereon (all of which shall be for the account of the Borrower)
shall be the subject of a Security Interest in favour of the Agent on behalf of
the Lenders;
"CDOR Rate" means with respect to each Bankers' Acceptance which is required to
be accepted and purchased on any day, the arithmetical average of the percentage
discount rates (expressed to 3 decimal places) for Canadian Dollar bankers'
acceptances in comparable amounts having an identical issue and maturity date
which is quoted on the "Reuters' Screen CDOR Page" (as defined in the
International Swap Dealer Association, Inc. definitions, as modified and amended
from time to time) for acceptances of Schedule I banks under the Bank Act
(Canada) (or if such screen shall not be available any successor or similar
service selected by the Agent) as at approximately 10:00 a.m. (Toronto time) on
such day, or if such day is not a Business Day, then on the immediately
preceding Business Day (as adjusted by the Agent in good faith after 10:00 a.m.
(Toronto time) or as soon thereafter as practicable to reflect any error in a
posted rate of interest or in the posted average annual rate of interest). If
neither such screen nor any successor or similar service is available, then the
"CDOR Rate" shall mean, with respect to each Bankers' Acceptance which is
required to be accepted and purchased by a Lender hereunder on any day, the
percentage discount rate (expressed to 3 decimal places) determined by the Agent
to be the average of the quoted discount rates at which Canadian Dollar bankers'
acceptances in comparable amounts having an identical issue and maturity date
are being bid for discount by the Lenders which are Schedule I banks under the
Bank Act (Canada) at approximately 10:00 a.m. (Toronto time) or so soon
thereafter as practical on the day of the acceptance and purchase of the
Bankers' Acceptances hereunder. If any Lender does not furnish a timely
quotation, the Agent shall determine the relevant discount rate on the basis of
the quotation or quotations furnished by the remaining Lenders. Each
determination of the CDOR Rate shall be conclusive and binding, absent manifest
error, and be computed using any reasonable averaging and attribution method;
"Circumstance" has the meaning set forth in Section 11.2;
"Collateral" is a collective reference to all property, assets, rights and
things (whether real, personal or mixed), tangible and intangible, and the
proceeds and products thereof, subjected or intended to be subjected from time
to time to any Security Interest under any Security;
"Commitment" means each Lender's obligation to make Accommodations available to
the Borrower, subject to the terms of this Agreement, at any one time
outstanding up to but not exceeding the amount set forth opposite such Lender's
name on the signature pages hereto (or in any Lender Transfer Agreement executed
hereafter) as such Lender's Commitment, as such amount may hereafter be
cancelled, reduced, increased or terminated from time to time pursuant to this
Agreement;
"Commodity Swap" means a financial arrangement entered into between a Person and
a counterparty on a case by case basis, the purpose and effect of which is to
mitigate or eliminate its exposure to fluctuations in commodity prices;
"Compliance Certificate" means a compliance certificate substantially in the
form attached hereto as Schedule "E" executed by any 2 of the Chief Executive
Officer, Chief Operating Officer, Chief Financial Officer, President, Controller
or Treasurer of the Borrower;
"Confidentiality Agreement" means the Confidentiality Agreement made the 27th
day of September, 2000 between the Agent, the Borrower, Gulf, the Partnership
and GMSFL, as from time to time amended;
"Contingent Liabilities" means, in respect of a Person, any obligation
whatsoever, whether choate or inchoate, direct or indirect, contingent or
otherwise, guaranteeing or assuring, or in effect guaranteeing or assuring, any
Indebtedness or obligation of any other Person, or indemnifying any Person
against loss, in any manner, whether directly or indirectly including, without
limitation, Financial Assistance;
"Conversion" means a conversion of one type of Accommodation into another type
of Accommodation;
"Conversion Date" means a Business Day or Banking Day that the Borrower has
notified the Agent at the Agent's Branch of Account as the date on which the
Borrower has elected to convert an Accommodation or a portion thereof pursuant
to Section 3.10;
"Conversion Notice" means a notice in the form of Schedule "C";
"Credit Facility" has the meaning set forth in Section 3.1;
"Currency Swap" means a financial arrangement entered into between a Person and
a counterparty on a case by case basis in connection with a foreign exchange
futures contract, currency swap, currency option or currency exchange or other
similar currency related transactions, the purpose and effect of which is to
mitigate or eliminate the exposure to fluctuations in exchange rates;
"Dedicated Reserves" means all Gas reserves owned or controlled by Persons which
have entered into agreements with any of the Loan Parties dedicating production
of any Gas from lands specified in such agreement to processing at any Facility;
"Default" shall mean the occurrence of any of the events specified in Section
10.1, whether or not any requirement for notice or lapse of time or other
condition precedent has been satisfied;
"Demand for Repayment" means an Acceleration Notice given hereunder;
"Discount Proceeds" means, in respect of any Bankers' Acceptance where required
to be purchased by a Lender hereunder, an amount (rounded to the nearest whole
cent with 1/2 of 1 cent being rounded-up) determined as of the applicable
Drawdown Date, Conversion Date or Rollover Date which is equal to:
Face Amount x Price
-----------
100
where "Face Amount" is the face amount of such bankers' acceptance and "Price"
is equal to:
100
-------------------
1 + (Rate x Term )
-----
365
where the "Rate" is the applicable Discount Rate expressed as a decimal on the
day of purchase; the "Term" is the term of such Bankers' Acceptance expressed as
a number of days; and the Price as so determined is rounded up or down to the
fifth decimal place with .000005 being rounded-up;
"Discount Rate" means:
(a) with respect to an issue of Bankers' Acceptances having the same maturity
date accepted by a Lender that is a bank under Schedule I of the Bank Act
(Canada), the CDOR Rate; and
(b) with respect to an issue of Bankers' Acceptances having the same maturity
date accepted by a Lender that is a bank under Schedule II to the Bank Act
(Canada), the lesser of (i) the CDOR Rate plus 10 bps and (ii) the percentage
discount rate (expressed to 5 decimal places) determined by the Agent to be the
average of the quoted discount rates (as at approximately 10:00 a.m. (Toronto
time) on such day) of the Reference Lenders for bankers' acceptances having an
identical issue and maturity date in amounts comparable to the Bankers'
Acceptances to be accepted and purchased by such Lenders in connection with such
issue of Bankers' Acceptances. If any Reference Lender does not furnish a timely
quotation, the Agent shall determine the relevant discount rate on the basis of
the quotation or the quotations furnished by the other reference lender (if
any). Each such determination by the Agent shall be conclusive and binding,
absent manifest error, and may be computed using any reasonable averaging and
attribution methods;
"Drawdown" means the advance of an Accommodation by way of a Prime Loan, US Base
Rate Loan, Libor Loan, or Bankers' Acceptance, other than as a result of a
Conversion or Rollover;
"Drawdown Date" means each Business Day on which Accommodations are to be made
pursuant to a request from the Borrower under Section 3.4;
"EBITDA" means, as at the last day of any Fiscal Quarter, an amount, calculated
in the aggregate on a consolidated basis for the Borrower in accordance with
GAAP (but excluding any Subsidiaries that are not Guaranteeing Subsidiaries) for
the 4 Fiscal Quarters ending on the last day of such Fiscal Quarter, equal to
the Net Income of the Borrower for such period, excluding extraordinary, unusual
or non-recurring items net of any applicable income taxes, as reflected in the
consolidated statement of income of the Borrower in accordance with GAAP (but
excluding any Subsidiaries that are not Guaranteeing Subsidiaries) for such
period:
(a) plus, to the extent deducted in calculating such amount, the amounts
classified in such consolidated statement of income of the Borrower in
accordance with GAAP (without duplication) as:
(i) income taxes (including deferred income taxes) in respect of such
period;
(ii) Interest Expense in respect of such period;
(iii) depreciation expenses in respect of such period; and
(iv) amortizations of other charges to the extent not involving an
outlay of cash in such period including, without limitation,
losses on the sale or other disposition of assets;
(b) minus, to the extent added in calculating such amount in accordance
with GAAP, the amounts classified in such consolidated statement of
income as credits to income to the extent not involving a receipt of
cash in such period, including:
(i) gains on the sale or other disposition of assets;
(ii) any amount of earnings on sinking fund assets other than any
amount which is unconditionally available to the Borrower; and
(iii) amortization of deferred income;
provided that, to the extent the Borrower or a Guaranteeing Subsidiary has
acquired, during the 4 Fiscal Quarters ending on the last day of such Fiscal
Quarter, any additional Facilities, the Borrower shall be entitled to include in
EBITDA for such period a calculation of "EBITDA" for such additional Facility
taking into account the operation of such acquired Facility for that part of
such period prior to its date of acquisition based on historical cost and
revenue information, provided that the calculation of the amount of any such
inclusion has first been approved in writing by the Agent. For the purposes of
calculating EBITDA where the calculation requires any period prior to the
Effective Date to be taken into account, the calculation as to such period shall
be made after taking into account the effect of the Purchase and Sale Agreement
and assuming it was in effect for such periods;
"Effective Date" means the date on which the conditions precedent under Section
8.1 have been satisfied;
"Eligible Assignee" has the meaning ascribed thereto in Section 13.1;
"Environmental Laws" means all Applicable Laws regarding the environment or
pursuant to which Environmental Liabilities would arise or have arisen,
including relating to the Release or threatened Release of any contaminant or
the generation, use, storage or transportation of any contaminant;
"Environmental Liabilities" means any and all Indebtedness for any Release, any
environmental damage, any contamination or any other environmental problem
caused or alleged to have been caused to any Person, property or the environment
as a result of any Release or the condition of any property or asset, whether or
not caused by a breach of applicable Laws, including, without limitation, all
Indebtedness arising from or related to: any surface, underground, air,
groundwater, or surface water contamination; the abandonment or plugging of any
well; restorations and reclamations; the removal of or failure to remove any
foundations, structures or equipment; the cleaning up or reclamation of storage
sites; any Release; violation of pollution standards; and personal injury
(including sickness, disease or death) and property damage arising from the
foregoing and including, without limiting the generality of the foregoing, all
common law principles in relation to any civil action in nuisance, trespass,
negligence or strict liability; all applicable federal, provincial and local
laws, by-laws, rules, regulations, policies, orders, information letters,
interim directives, general bulletins, guidelines, standards, or other
legislation of any kind, and any judicial or administrative interpretation
thereof, including any judicial or administrative order, written request,
consent decree or judgment or any provision or condition of any permit, license,
approval or operating authorization relating to the protection of the
environment, health, safety or natural resources;
"Equivalent Amount" in one currency (the "First Currency") of an amount in
another currency (the "Other Currency") means, as of the date of determination,
the amount of the First Currency which would be required to purchase such amount
of the Other Currency at the Bank of Canada noon (Toronto time) mid-point spot
rate for such currencies on such date of determination (as quoted or published
from time to time by the Bank of Canada) or, if such date of determination is
not a Business Day, on the Business Day immediately preceding such date of
determination, or at such other rate as may have been agreed to by the Borrower
and the Agent;
"Escrow Funds" has the meaning ascribed thereto in Section 10.3(b);
"Event of Default" means any of the events or circumstances specified in Section
10.1 after the lapse of any cure or notice period;
"Facilities" means, collectively, the pipelines, the gas processing plants,
fractionation plants, gathering systems, compressor stations and other equipment
and facilities described in Schedule "J" and such additional Midstream
Facilities in which any Loan Party may hereafter acquire an interest;
"Facilities Service Agreement" means the agreement titled as such dated as of
December 1, 1998 entered into between Gulf and the Partnership;
"Fed Funds Rate" means, on any day, the rate of interest per annum for that day
set forth in the weekly statistical release designated as H.15(519), or any
successor publication, published by the Federal Reserve Board (the "H.15(519)")
opposite the caption "Federal Funds (Effective)" and, if on any day such rate is
not yet published in H.15(519), the rate for such day shall be the rate set
forth in the Composite 3:30 p.m. Quotations for US Government Securities, or any
successor.9 publication, for such day published by the Federal Reserve Board
(the "Composite 3:30 p.m. Quotations") under the caption "Federal Funds
Effective Rate"; provided that if such rate is not yet published in either
H.15(519) or the Composite 3:30 p.m. Quotations, such rate shall be the average
of the interest rates per annum quoted for such day on overnight Federal funds
(such words to have the meaning generally given to them by money market brokers
of recognized standing doing business in the United States of America)
transactions received by the Agent from 3 Federal funds brokers of recognized
standing selected by the Agent, acting reasonably;
"Financial Assistance" means providing or agreeing to provide (either directly
or indirectly) financial assistance to any Person including, without limitation,
financial assistance by way of a loan, Guarantee, loan purchase or any credit
support arrangement or of any nature whatsoever, the purpose of which is to
assure payment to the holder of any Indebtedness of such Person;
"Fiscal Quarter" means the 3 month period commencing on the first day of each
Fiscal Year and each successive 3 month period thereafter during such Fiscal
Year;
"Fiscal Year" means the Borrower's fiscal year commencing on January 1 of each
year and ending on December 31 of such year, or such other fiscal year of the
Borrower as agreed to by the Majority Lenders;
"Funded Debt" means, at any time and as determined in accordance with GAAP on a
consolidated basis for the Borrower, an amount equal to the aggregate of:
(a) all Indebtedness for Borrowed Money;
(b) all other obligations of a Loan Party in respect of which
interest charges are customarily paid; and
(c) all obligations secured by any Security Interest existing on
property owned by a Loan Party subject to such Security Interest,
whether or not the obligations secured thereby shall have been
assumed;
but, for the purposes of this Agreement, for so long as the KS Subordination is
in full force and effect, Funded Debt shall not include Intercorporate Debt;
"Funded Debt to Capitalization Ratio" means, as of the last day of a Fiscal
Quarter the ratio of Funded Debt to Capitalization;
"Funded Debt to EBITDA Ratio" means, as of the last day of a Fiscal Quarter, the
ratio of Funded Debt to EBITDA;
"Gas" means natural gas, solution gas and any other gas, together with
associated substances before such gas has been subjected to any processing,
except water removal, and includes sulphur and all fluid hydrocarbons not
defined as crude oil under the provisions of the Oil and Gas Conservation Act
(Alberta) and amendments thereto or substitutions therefore;
"Gas Liquids" means ethane, butane, propane, pentane and pentanes plus;
"Gas Products" means Gas Liquids, residue gas and other products derived from
Gas processing;
"Generally Accepted Accounting Principles" or "GAAP" means generally accepted
accounting principles consistently applied which are in effect from time to time
in Canada;
"GMS Agreements" means, collectively:
(a) the Partnership Agreement;
(b) the Buy/Sell Agreements;
(c) the Facilities Service Agreement;
(d) the NGL Purchase and Sale Agreements;
(e) the Indemnity Agreement dated as of December 1, 1998 between
Gulf, the Partnership, GMSFL and the Borrower;
(f) the Administrative Services Agreement;
(g) the Purchase and Sale Agreement;
(h) the Marketing Agency Agreement dated as of December 1, 1998
between Gulf and the Partnership;
(i) the letter agreement re: fractionation and storage at Chevron
Fort Saskatchewan Plant between Gulf and GMSFL dated as of
December 1, 1998; and
(j) NGL Extraction Agreement between Gulf and GMSL dated as of
December 1, 1998;
"GMSL" means Gulf Midstream Services Limited, a wholly-owned Subsidiary of the
Borrower, having its principal office in Calgary, Alberta;
"GMSFL" means GMS Facilities Limited, a wholly-owned Subsidiary of the Borrower,
having its principal office in Calgary, Alberta;
"Governmental Authority" means any federal, state, provincial, county, local or
municipal government; any governmental body, agency, authority, board, bureau,
department or commission (including any taxing authority); any instrumentality
or office of any of the foregoing (including any quarter tribunal) exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government; or any entity directly or indirectly controlled by any
of the foregoing;
"Governmental Authorization" means an authorization, consent, approval, waiver,
order, decree, license, exemption, permit, registration, filing, qualification
or declaration of or with any Governmental Authority (other than routine
reporting requirements) or the giving of notice to any Governmental Authority or
any other action in respect of a Governmental Authority;
"Guarantee" means any undertaking to assume, guarantee, indemnify, endorse
(other than the routine endorsement of cheques in the ordinary course of
business), contingently agree to purchase or to provide funds for the payment
of, or otherwise become liable in respect of, any Indebtedness of any Person;
provided that the amount of each Guarantee shall be deemed to be the amount of
the Indebtedness guaranteed thereby, unless the Guarantee is limited to a
specified amount or to realization exclusively on specified assets in which case
the amount of such Guarantee shall be deemed to be the lesser of such specified
amount or the fair market value of such specified assets, as the case may be, or
the amount of such Indebtedness;
"Guaranteeing Subsidiary" means each of GMSL, GMSFL, the Partnership and any
other wholly-owned Subsidiary which from time to time provides the Subsidiary
Guarantee and Security Interests provided for by Section 6.1(b) to the Agent;
"Gulf" means Gulf Canada Resources Limited;
"Hazardous Materials" means any substance, whether in liquid, solid or gaseous
form, which, if released into the environment, would likely cause, immediately
or at some future time, harm or degradation to the environment or to human
health or safety, includes any substance defined as or determined to be a
pollutant, contaminant, hazardous waste, hazardous chemical, hazardous
substances, toxic substance or dangerous good under any Environmental Law;
"Indebtedness" means, with respect to any Person, all the Person's present and
future indebtedness, liabilities and obligations of every nature and kind
whatsoever, whether absolute or contingent, material or not, known or unknown,
direct or indirect, including indebtedness created, incurred, assumed or
guaranteed by such Person, all indebtedness for borrowed money, any obligation
arising in respect of any Swap or similar obligation, the redemption amount of
all preferred shares redeemable at the option of the holder, and all liabilities
which in accordance with GAAP would appear on the liability side of a balance
sheet of such Person prepared as at such time;
"Indebtedness for Borrowed Money" means, with respect to a Loan Party at any
time, all indebtedness, liabilities and obligations of the Loan Party at such
time:
(a) in respect of money borrowed (whether by such Loan Party or not);
(b) in respect of any lease which would be accounted for as either a
Capital Lease or synthetic lease or any other obligation under
which interest charges are customarily paid, and being the amount
thereof determined in accordance with GAAP which would be
required to be classified and accounted for as a Capital Lease;
(c) in respect of Swap Indebtedness;
(d) in respect of "take-or-pay" or similar prepaid Indebtedness of
such Loan Party whereby it is obligated to settle, at some future
date more than 90 days from the date the obligation is incurred,
payment in respect of a commodity, whether by deliveries
(accelerated or otherwise) of such commodity, payment of money or
otherwise howsoever;
(e) in respect of reimbursement obligations under letters of credit
and letters of guarantee;
(f) in connection with the acquisition of assets or receipt of
services or both unless the same are payable on normal trade
terms in less than 6 months from the date incurred and are not
the subject of any renewal or extension provisions or
arrangements;
(g) held by or payable to a bank, trust or insurance company,
financial institution or other Person whose principle business is
lending money, and including as a result of any assignment or
transfer; or
(h) for Contingent Liabilities in respect of any such Indebtedness
for Borrowed Money (as hereinbefore defined);
"Intercorporate Debt" means Indebtedness of the Borrower to KeySpan Energy
Development Corporation, Nicodama Beheer V B.V. or Solex Production Ltd. which
has been subordinated to the Outstandings pursuant to the KS Subordination;
"Intercreditor Subordination Agreement" means the agreement dated concurrently
herewith entered into between the Loan Parties, the Agent, the Syndicated Agent,
the Syndicated Lenders and KeySpan Corporation in relation, inter alia, to the
subordination of Indebtedness under the Syndicated Facility to Indebtedness
under the Loan Documents;
"Interest Coverage Ratio" means, as at the end of each Fiscal Quarter, the ratio
of EBITDA to Interest Expense of the Borrower for the 12 month period ending on
the last day of such Fiscal Quarter;
"Interest Date" means the last Business Day of each month;
"Interest Determination Date" means, with respect to a Libor Loan, the date
which is 2 Banking Days prior to the first day of the Libor Interest Period
applicable to such Libor Loan;
"Interest Expense" means, in respect of any period and on a consolidated basis
for the Borrower, an amount equal to all interest expenses (including discounts
in respect of bankers' acceptances or commercial paper) and fees (including
Guarantee, standby, commitment, structuring, agency, management, acceptance,
stamping or other fees) in respect of Indebtedness or credit facilities, whether
expensed or capitalized (but as to capitalized amounts, only that amount
amortized in the relevant period), in accordance with GAAP, including:
(a) that portion of all lease payments in respect of Capital Leases
of the Borrower and its Subsidiaries which is or, in accordance
with GAAP, should be classified as an interest expense in the
consolidated statement of income of the Borrower;
(b) the net loss or gain associated with interest rate hedging
obligations relating to debt obligations; and
(c) amortization of deferred financing charges or premiums on indebtedness;
but excluding any of the foregoing to the extent it relates to Intercorporate
Debt;
"Interest Payment Date" means:
(a) with respect to Prime Loans and US Base Rate Loans, the last Business
Day of each calendar month;
(b) with respect to a Libor Loan, the Libor Interest Date; or
(c) such other date or dates as the Borrower and the Agent may agree in
writing;
"Interest Swap" means a financial arrangement entered into between a Person and
a counterparty on a case by case basis, in connection with interest rate swap
transactions, interest rate options, cap transactions, floor transactions,
collar transactions and other similar interest rate related transactions, the
purpose and effect of which is to mitigate or eliminate its exposure to
fluctuations in interest rates;
"Judgment Currency" has the meaning set forth in Section 13.3;
"KeySpan Canada" means TNG Liquids Ltd., a corporation incorporated under the
laws of Alberta having its principal offices in Calgary, Alberta;
"KS Subordination" means the subordination agreement of even date herewith
entered into between the Agent, on behalf of the Lenders, the Borrower, KeySpan
Energy Development Corporation, Solex Production Ltd. and Nicodama Beheer V B.V.
in relation, inter alia, to the subordination of Intercorporate Debt of any Loan
Party to KeySpan Energy Development Corporation (U.S.) and Nicodama Beheer V
B.V.;
"Land Rights" means easements, rights-of-way, surface leases, fee simple titles,
subleases, licenses of occupation and permits by virtue of which a Person is
entitled to occupy and access lands used or useful for the purposes of owning or
operating Midstream Facilities, including, without limitation, the Land Rights
detailed in Schedule "K";
"Lender's Proportion" means, at any time and from time to time with respect to
each Lender, the proportion that the amount of its Commitment bears the amount
of the Total Commitment at such time and if the Total Commitment is cancelled or
terminated, "Lender's Proportion" shall mean the Lender's Proportion of such
Lender in effect immediately prior to such cancellation or termination;
"Lenders" means each of the financial institutions named on the signature pages
hereto as Lenders and BMO in its capacity as a Lender but excluding BMO in its
capacity as the Agent; and any other financial institution which is an Eligible
Assignee, has executed a Lender Transfer Agreement pursuant to Section 13 and
which Lender Transfer Agreement has been executed by the assignee and the Agent,
and "Lender" means any 1 of them;
"Lender Transfer Agreement" means an agreement in the form attached hereto as
Schedule "G";
"Libor" means, with respect to any Libor Interest Period applicable to a Libor
Loan, the rate determined by the Agent, based on a 360 day year, rounded
upwards, if necessary, to the nearest whole multiple of 1/16th of 1%, as the
average of the offered quotations appearing on Reuters Page LIBO (or if such
Reuters Page LIBO shall not be available the average of the offered quotations
appearing on Telerate Page 3750 or if such Telerate Page shall not be.14
available, any successor or similar services as may be selected by the Agent)
for a period equal to the number of days in the applicable Libor Interest
Period, for deposits in US Dollars of amounts comparable to the principal amount
of such Libor Loan to be outstanding during such Libor Interest Period, at or
about 11:00 a.m. (London, England time) 2 Banking Days prior to a Drawdown Date,
Conversion Date or Rollover Date, as the case may be, for such Libor Interest
Period. If neither the Reuters Page LIBO, Telerate Page nor any successor or
similar service is available, then "Libor" shall mean, with respect to any Libor
Interest Period applicable to a Libor Loan, the rate determined by the Agent,
based on a 360 day year, rounded upwards, if necessary, to the nearest whole
multiple of 1/16th of 1%, at which the Agent, in accordance with its normal
practice, would be prepared to offer to leading banks in the London interbank
market for delivery by the Agent on the first day of the applicable Libor
Interest Period for a period equal to the number of days in such Libor Interest
Period, deposits in US Dollars of amounts comparable to the principal amount of
such Libor Loan to be outstanding during such Libor Interest Period, at or about
11:00 a.m. (London, England time) 2 Banking Days prior to a Drawdown Date,
Conversion Date or Rollover Date, as the case may be, for such Libor Interest
Period;
"Libor Interest Date" means the date falling on the last day of each Libor
Interest Period; provided that if the Borrower selects a Libor Interest Period
for a period longer than 3 months, the Libor Interest Date shall be each date
falling every 3 months after the beginning of such Libor Interest Period and the
date falling on the last day of such Libor Interest Period;
"Libor Interest Period" means, with respect to each Libor Loan, the initial
period (subject to availability) of approximately 1 month, 2 months, 3 months
and 6 months (as selected by the Borrower and notified to the Agent at the
Agent's Branch of Account pursuant to Section 3.4 or 3.10) commencing on and
including the Drawdown Date, Conversion Date or Rollover Date, as the case may
be, applicable to such Libor Loan and ending on and including the last day of
such initial period, and thereafter, each successive period (subject to
availability) of approximately 1 month, 2 months, 3 months, or 6 months (as
selected by the Borrower and notified to the Agent at the Agent's Branch of
Account pursuant to Section 3.4) commencing on and including the last day of the
prior Libor Interest Period; provided that no Libor Interest Period may be
selected which ends after the Maturity Date;
"Libor Loans" means the Accommodations or any portion thereof, made available by
the Lenders to the Borrower pursuant to Sections 3.4, 3.10 or 3.11 and
outstanding from time to time, which are denominated in US Dollars, as
applicable, and on which the Borrower has agreed to pay interest in accordance
with Section 5.3;
"Loan Documents" means this Agreement, the Security, each Bankers' Acceptance,
and all other certificates, instruments and documents delivered by or on behalf
of the Borrower or any Guaranteeing Subsidiary in connection therewith from time
to time;
"Loan Parties" means the Borrower and each of the Guaranteeing Subsidiaries, and
"Loan Party" means any of them;
"Loans" means the aggregate principal amount of Accommodations outstanding from
time to time pursuant to this Agreement by way of Prime Loans, Libor Loans and
US Base Rate Loans and "Loan" means any Prime Loan, Libor Loan or US Base Rate
Loan;
"Majority Lenders" means:
(a) where there is only 1 Lender, such Lender;
(b) where there are less than 3 Lenders, all of the Lenders;
(c) during the continuance of a Default or an Event of Default, those
Lenders (but in no circumstances less than 2) to whom there is owing
66-2/3% or more of the aggregate Outstandings; and
(d) at any other time those Lenders (but in no circumstances less than 2),
the Commitments of which are, in the aggregate, at least 66-2/3% of
the Total Commitment;
"Margin" means, at any time, a margin,
expressed as a rate per 365 day period for Prime Loans, US Base Rate Loans and
Bankers' Acceptances or in the case of Libor Loans, per 360 day period, payable
to the Lenders with respect to:
Type of Accommodation Funded Debt to EBITDA Ratio
>1.75 to 1.0
to
<2.75 to 1.0
-
<1.75 to 1.0 >2.75 to 1.0
-
Prime Loans and US Base Rate
Loans 0.0 bps 0.0 bps 0.0 bps
Bankers' Acceptances
(acceptance fees)
62.5 bps 75.0 bps 87.5 bps
Libor Loans 62.5 bps 75.0 bps 87.5 bps
provided that so long as there is any Syndicated Indebtedness then (i) during
the period from the Effective Date until 6 months thereafter, the margin
referred to above shall, in all cases, be deemed to be that applicable to #1.75
to 1.0 and (ii) during the period commencing 6 months after the Effective Date
the margin referred to above shall, in all cases, be deemed to be that
applicable to >2.75 to 1.0;
"Mark to Market Amount" means an amount calculated in the aggregate for all of
the Loan Parties as at a particular date as the sum of the following amounts (in
each case if a positive number):
(a) the aggregate Swap Indebtedness of all of the Loan Parties, net of any
"in the money" positions of the Loan Parties on such date in respect
of outstanding Swaps;
(b) an amount, in respect of all Gas Liquids which, as of such date, any
Loan Party owns and holds in storage (including Gas Liquids in
transit) or has an obligation to purchase (pursuant to future
deliveries) for its own account, determined as the difference between
all amounts paid or payable by any Loan Party in respect of the
purchase of such Gas Liquids, and deducting therefrom an amount equal
to:
(i) the aggregate proceeds payable to the applicable Loan Party pursuant
to any then outstanding sales contracts with arm's length purchasers
(or with non-arm's length purchasers on terms which would be
applicable on an arm's length basis and reflecting fair market value)
entered into by such Loan Party for the sale of such Gas Liquids and
under which the purchasers are not then in default of any payment
obligations in excess of 30 days; and
(ii) in respect of all other Gas Liquids, an amount equal to the aggregate
value of such Gas Liquids on such date calculated on the basis of the
"NGL Ref. Price" and "Condensate Ref. Price" (as defined in the
Buy/Sell Agreements on the Effective Date) for the month immediately
preceding such date, as applicable; and
(c) the aggregate amount which, as of such date, any Loan Party is committed for
its own account to pay for the purchase of Gas (whether for past or future
deliveries) in respect of which a matching sale transaction as referred to in
Section 9.2(i)(v) is not in place, less an amount equal to the aggregate value
of such Gas on such date, calculated as the product of the Monthly Price times
the Remaining Quantity. For the purposes hereof, "Remaining Quantity" means the
sum of (i) the quantity of Gas previously delivered to, but not yet paid for by,
the Loan Parties under such transactions and (ii) the total quantity of Gas
remaining to be delivered to the Loan Parties under such transactions, and
"Monthly Price" means the "Alberta Spot Price - AECO C/N.I.T. (7A) C$/GJ" for
the applicable month as published in the Canadian Gas Price Reporter in the
table entitled "Monthly Canadian and U.S. natural gas price summary".
"Marketing Business" means the marketing of any Gas Products by the Loan
Parties, either as principal or agent, pursuant to the Marketing Contracts and
other similar contracts pursuant to which any Loan Party may from time to time
market, or assume an obligation to market, any Gas Products;
"Marketing Contracts" means those contracts and agreements set forth in Schedule
"N" and any similar material contracts entered into after the Effective Date by
a Loan Party in respect of its Marketing Business;
"Material Adverse Effect" means a material adverse effect on the business,
condition (financial or otherwise), operations, assets or results of operations
of the Borrower and its Guaranteeing Subsidiaries taken as a whole, or their
ability to pay amounts payable by them when due under the Loan Documents or, in
respect of any Loan Party, a material adverse effect on:
(a) the validity or enforceability of any Loan Document to which it is a
party;
(b) its ability to perform its obligations (other than payment
obligations, as aforesaid) in all material respects under the Loan
Documents to which it is a party; or
(c) the rights and remedies of the Agent or the Lenders under any of the
Loan Documents to which it is a party;
and, in the case of the Partnership, includes a material adverse effect on its
ability to conduct its business as contemplated by the GMS Agreements or the
Material Contracts;
"Material Contracts" means each of the agreements, contracts and instruments set
forth in Schedule "L" and Schedule "N";
"Maturity Date" means, October 12, 2001; or if such date is extended pursuant to
Section 3.13, the date to which it has been extended;
"Midstream Facilities" means any Gas pipeline, Gas compressing facility, Gas
processing plant, Gas Liquids fractionation facility, Gas Liquids storage
facility or other similar facility in which Gas or Gas Products are processed,
treated, compressed, stored, transported or otherwise handled or dealt with
after being produced;
"Net Income" means, on a consolidated basis for the Borrower, net income
calculated in accordance with GAAP;
"NGL Purchase and Sale Agreements" means the agreements entitled as such, each
dated December 1, 1998, between the Partnership and GMSFL and between Gulf and
the Partnership;
"1 Month B/A Rate" means on any day the CDOR Rate hereunder (determined as of
10:00 a.m. Toronto time on such day) which would be applicable in respect of an
issuance of 1 month Bankers' Acceptances in an aggregate amount of Cdn
$10,000,000 issued on such day, or if such day is not a Business Day, then such
rate as determined at such time on the immediately preceding Business Day;
"Old System Lenders" means a Lender which is not able to issue bankers'
acceptances as depository bills under the Depository Bills and Notes Act
(Canada);
"Outstandings" at a time means, in relation to the Credit Facility the aggregate
at the time of :
(a) the Equivalent Amount in Canadian Dollars of the principal amounts
outstanding of, and all overdue and unpaid interest outstanding in
respect of, Prime Loans, US Base Rate Loans and Libor Loans;
(b) the face amount of outstanding Bankers' Acceptances; and
(c) the Equivalent Amount in Canadian Dollars of Indebtedness to the
Lenders or the Agent hereunder not included in any of the foregoing;
"Partnership" means Gulf Midstream Services Partnership, a general partnership
formed under the laws of the Province of Alberta of which the sole partners are
the Borrower and GMSL;
"Partnership Agreement" means the general partnership agreement of the
Partnership, initially entered into among Gulf, the Borrower and GMSL dated
December 1, 1998 as amended September 23, 1999 and as from time to time amended
as permitted hereunder;
"Permits" means those licenses, permits and other Governmental Authorizations
set forth in Schedule "M";
"Permitted Disposition" means, in respect of the Borrower or a Guaranteeing
Subsidiary, any of the following:
(a) sales or dispositions by a Guaranteeing Subsidiary to the Borrower, by
a Guaranteeing Subsidiary to another Guaranteeing Subsidiary or by the
Borrower to a Guaranteeing Subsidiary;
(b) any sale, lease, sublease, trade, abandonment, surrender or other
disposition of any assets which may have become worn out,
unserviceable, obsolete, unsuitable or unnecessary in operations or
activities relating to the business of the Loan Parties, taken as a
whole, provided that such sale, lease, sublease, trade or other
disposition is in keeping with prudent industry practice;
(c) any sale, lease, transfer or other disposition of assets in the
ordinary course of business if:
(i) such assets are sold, leased, transferred or disposed of for
proceeds not less than their fair market value at the time of
such disposition;
(ii) no Default or Event of Default has occurred and is continuing or
would exist if such disposition is effected; and
(iii)an amount equal to the proceeds of such disposition, net of
direct costs of such disposition, is reinvested in Assets within
180 days from the date of the transaction giving rise thereto or
such proceeds are applied on account of a cancellation of the
Total Commitment and a permanent reduction in the principal
amount of Indebtedness hereunder;
(d) dispositions of Gas Products or other Petroleum Substances constituting
inventory of a Loan Party disposed of in the ordinary course of such Loan Party'
s business;
(e) the sale of all of the Rimbey Shares pursuant to the exercise of a
Preferential Right arising from the execution of the Purchase and Sale Agreement
and the terms of the Articles of Continuance of Rimbey Pipe Line Co. Ltd.
provided that (i) the price specified in the notice to be provided to the
shareholders of Rimbey Pipe Line Co. Ltd. will be not less than $12,000,000 and
(ii) if any Preferential Rights are exercised pursuant to such notice, then
proceeds thereof are reinvested by the Borrower in Assets within 180 days of the
receipt thereof; or
(f) any other sale or disposition which the Majority Lenders agree to in
writing;
"Permitted Encumbrances" means, as of any date:
(a) Security Interests granted in favour of the Agent or any Lender to secure
any Indebtedness under any of the Loan Documents;
(b) all rights reserved to or vested in any Government Authority by the terms of
any lease, license, franchise or permit or by a statutory provision to terminate
the lease, license, franchise or permit, to require periodic payments as a
condition of continuance or to effect a termination of any such lease, license,
franchise or permit or to distrain against or to obtain a lien on any property
or assets of a Loan Party in the event of failure to make any such periodic
payments;
(c) undetermined or inchoate Security Interests (including operators',
mechanic's, builder's, materialmen's and similar liens) arising in the ordinary
course of business, to the extent such Security Interests relate to obligations
not due or delinquent at that time (or if due or delinquent, are being
diligently contested in good faith by the applicable Loan Party by appropriate
proceedings for amounts in the aggregate not in excess of $5,000,000);
(d) Security Interests for Taxes, assessments or other governmental charges or
levies imposed upon a Loan Party or upon its income or profits or property
(including Security Interests securing assessments under workers' compensation
laws, unemployment insurance or similar social security legislation), if the
same are not yet due and payable (or if due or delinquent, are being diligently
contested in good faith by such Loan Party by appropriate proceedings in respect
of which there is no potential of forfeiture of any material property interest
of any Loan Party);
(e) the excess of any amount of any Taxes, rates, assessments or governmental
charges or levies for which final assessments (to the extent final assessments
are issued or applicable) have not been received over and above the amount of
such Taxes, rates, assessments or governmental charges or levies as set out in
the applicable filings made by the applicable Loan Party;
(f) easements, rights of way, servitudes, zoning restrictions and other similar
rights and interests in land (including surface rights for railways, sewers,
drains, watermains, pipelines, gas mains, electric, light, power, cable
television and telephone and telegraph poles, wires and cables (which do not in
the aggregate materially impair the use and benefit of any land subject
thereto);
(g) any Preferential Rights applicable to a Loan Party as set forth in Schedule
"U";
(h) the reservations, limitations, provisions and conditions contained in an
original grant from the Crown of any lands or interests therein and statutory
exceptions to title;
(i) Security Interests in respect of any material judgment rendered, or claim
filed, against any Loan Party which such Loan Party shall be contesting in good
faith and liens resulting from a deposit of cash, security or appeal bonds to
secure the costs of ongoing litigation, provided that the execution or
enforcement of any such lien, judgment or claim is effectively stayed or
appropriate security in respect thereof is posted with the Agent as the Agent
may reasonably require;
(j) any Security Interest or right of distress reserved in or exercisable under
any lease or sublease for rent or otherwise to effect compliance with the terms
of such lease or sublease in respect of which the rent or other obligations are
not at the time overdue, or if overdue, the validity of which are being
contested at the time in good faith for amounts in the aggregate not in excess
of Cdn. $5,000,000;
(k) Security Interests (including cash deposits) securing the performance of
bids, tenders, leases, contracts (other than for the repayment of Indebtedness),
statutory obligations, appeal bonds and performance bonds incurred as incidental
to and in the ordinary course of a Loan Party business, if all such Security
Interests neither singularly nor in the aggregate secure obligations in excess
of Cdn $5,000,000;
(l) Security Interests (including cash deposits) given by a Loan Party 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 such
Loan Party in connection with its operations if such Security Interests do not,
either alone or in the aggregate, materially impair the use of the property
affected in the conduct of the business of such Loan Party;
(m) any other Security Interests which the Majority Lenders agree in writing
shall be permitted;
(n) any Security Interest to secure a Purchase Money Obligation, provided that
the property subject to such Security Interest is limited to the property in
respect of which the Purchase Money Obligation was incurred or assumed, and the
identifiable or traceable proceeds thereof; and for purposes hereof "Purchase
Money Obligation" means:
(i) indebtedness incurred, assumed or owed by a Loan Party as all or part
of, or incurred or assumed by a Loan Party to provide funds to pay the
purchase price of any property or assets acquired by such Loan Party
provided that:
A. the aggregate principal amount of all such indebtedness, in
respect of all such purchases of property or assets does not, at
any time, exceed $500,000; and
B. no Loan Party or Affiliate thereof, immediately prior to entering
into an agreement for the acquisition of such property or assets,
owns or has any interest in, or any entitlement to own, or has an
interest in, the property or assets or a portion thereof being so
acquired; and
(ii) in the extension, renewal, refinancing or replacement (or success of
extensions, renewals, refinancings or replacements), whether from the
same or another lender, in whole or in part, of any Indebtedness
referred to in paragraph (i) above, provided that the principal amount
of Indebtedness secured by such extension, renewal, refinancing or
replacement shall not exceed the principal amount of such Indebtedness
immediately prior to such extension, renewal, refinancing or
replacement, and the security interests granted in respect of such
Indebtedness shall be limited to all or a part of the property or
assets which secured such Indebtedness immediately prior to such
extension, renewal, refinancing or replacement;
(o) any extension, renewal or replacement (or success of extensions, renewals or
replacements), as a whole or in part, of any Security Interest referred to in
the preceding paragraphs (a) to (m) inclusive of this definition, so long as any
such extension, renewal or replacement of such Security Interest is limited to
all or any part of the same property that secured the Security Interest
extended, renewed or replaced (plus improvements on such property) and the
principal amount of the Indebtedness or obligations secured thereby is not
increased;
"Permitted Indebtedness" means:
(a) Indebtedness under the Loan Documents;
(b) Indebtedness of the Borrower to a Guaranteeing Subsidiary or Indebtedness of
a Guaranteeing Subsidiary to the Borrower;
(c) Indebtedness of the Borrower or a Guaranteeing Subsidiary incurred in the
ordinary course of business for (i) trade payables or (ii) cash calls or
reimbursement of operators pursuant to operating or similar agreements entered
into by it in the ordinary course of business and provided, in each case, that
the same are payable on normal trade terms in less than 6 months from the date
incurred and not the subject of any renewal or extension provisions or
arrangements;
(d) Syndicated Indebtedness not exceeding in principal amount from time to time
the Syndicated Facility Amount;
(e) Intercorporate Debt;
(f) Contingent Liabilities (other than Guarantees and indemnities in respect of
Indebtedness for Borrowed Money) incurred in the ordinary course of business of
a Loan Party and which, in any event, (after any time when liability thereunder
can be reasonably quantified in respect of a particular circumstance) do not in
the aggregate exceed Cdn. $5,000,000; and
(g) Indebtedness applicable pursuant to the definition of Mark to Market Amount
not exceeding Cdn. $5,000,000;
"Permitted Title Defects" means, in respect of any particular asset of the
Borrower or any Guaranteeing Subsidiary, the following defects in its title
thereto:
(a) Permitted Encumbrances;
(b) title defects or irregularities which are of a minor nature and in the
aggregate will not materially impair the use of the property for the purposes
for which it is held, or impair its saleability, or cause a material disruption
or reduction in the production or cash flow (if any) associated therewith; and
(c) title defects which are disclosed to and expressly consented to in writing
by the Majority Lenders as constituting Permitted Title Defects hereunder or of
which the Agent has actual (and not merely constructive) knowledge prior to any
Accommodation first being made hereunder;
"Person" means any individual, firm, partnership, company, corporation or other
body corporate, government, governmental body, agency, instrumentality,
unincorporated body of persons or association;
"Petroleum Substances" means petroleum, crude oil, crude bitumen, synthetic
crude oil, oilsands, bituminous sands, natural gas, natural gas liquids and
specific products derived.22 therefrom, condensate, related hydrocarbons and any
and all other substances, whether liquid, solid or gaseous, whether hydrocarbons
or not, produced or producible in association with or derived from any of the
foregoing, including hydrogen sulphide, sulphur and coke;
"Preferential Right" means any pre-emptive right, right of first refusal or
right of first offer pursuant to which any Person may have a right of
acquisition in relation to any asset, property or undertaking;
"Prime Loans" means the Accommodations or any portion thereof made available by
the Lenders to the Borrower pursuant to Section 3.4, and outstanding from time
to time, which are denominated in Canadian Dollars and on which the Borrower has
agreed to pay interest in accordance with Section 5.1;
"Prime Rate" means, with respect to Prime Loans, the greater on any day of:
(a) the annual rate of interest announced from time to time by the Agent
as being its reference rate then in effect for determining interest
rates on Canadian Dollar denominated commercial loans made by the
Agent in Canada; and
(b) a rate of interest per 365 day period equal to the sum of the 1 Month
B/A Rate plus 1%;
"Purchase and Sale Agreement" means the purchase and sale agreement among Gulf,
GMSL, GMSFL, the Partnership and the Borrower dated as of October 13, 2000;
"Rateably" means the proportion that the amount of the Outstandings of any
Lender (as the case may be) bears to the aggregate of the Outstandings of all
Lenders;
"Reference Lenders" means, if there is only 1 Lender which is a bank under
Schedule II to the Bank Act (Canada), such Lender and, if there is more than 1
such Lender, any 2 of such Lenders agreed to by the Borrower and the Agent from
time to time;
"Release" means any presence, release, spill, emission, leaking, pumping,
pouring, injection, escaping, deposit, disposal, discharge, leeching or
migration of any element or compound in or into the indoor or outdoor
environment (including the abandonment or disposal of any barrels, tanks,
containers or receptacles containing any contaminant), or in, into or out of any
vessel or facility, including the movement of any contaminant through the air,
soil, subsoil, surface, water, groundwater, rock formation or otherwise which is
or may be (under any circumstances, whether or not they have not occurred);
(a) contrary to any Applicable Laws, Governmental Authorization, the terms
of any title or operating document, or to any other authorization,
permit or license; or
(b) harmful to any Person, property or the environment;
"Request for Extension" means a request of the Borrower in the form attached as
Schedule "F";
"Rimbey Shares" means 20,303 common shares in the capital stock of Rimbey
Pipeline Co. Ltd.;
"Rollover" means:
(a) with respect to any Libor Loan, the continuation of all or a portion
of such Libor Loan (subject to the provisions hereof) for an
additional Libor Interest Period subsequent to the initial or any
subsequent Libor Interest Period applicable thereto, all in accordance
with Section 3.10; and
(b) with respect to Bankers' Acceptances, the issuance of new Bankers'
Acceptances (subject to the provisions hereof) in respect of all or
any portion of Bankers' Acceptances which are maturing, all in
accordance with Section 3.6;
"Rollover Date" means a Business Day or Banking Day that the Borrower has
notified the Agent at the Agent' s Branch of Account as the date on which the
Borrower has elected to rollover an Accommodation, or a portion thereof,
pursuant to Section 3.10;
"Rollover Notice" means a notice in the form of Schedule "D";
"Security" means all documents, instruments or agreements directly or indirectly
assuring or securing the Lenders in respect of the Outstandings; and any
amendments to any of the foregoing; any indentures or instruments supplemental
to or in implementation of any of the foregoing; and any and all other
documents, instruments or agreements pursuant to which the Agent or any Lender
is assured or granted or receives a Security Interest pursuant to the terms
hereof (including as provided in Section 6.1) or thereof;
"Security Interest" means any security by way of an assignment, mortgage,
charge, pledge, lien, encumbrance, title retention agreement (including, without
limitation, a Capital Lease) or other security interest whatsoever, howsoever
created or arising, whether absolute or contingent, fixed or floating, perfected
or not;
"Shareholders' Tangible Equity" means, in respect of the Borrower, as at the
last day of any Fiscal Quarter, and as determined in accordance with GAAP on a
consolidated basis, the aggregate of (i) shareholders' equity classified as such
on the consolidated balance sheet of the Borrower including, without limitation,
retained earnings, the share capital and contributed surplus accounts of the
Borrower appearing on the consolidated balance sheet of the Borrower excluding
(A) any subscribed for but unissued share capital, and (B) any amounts
attributable to shares of the Borrower or any Subsidiary which are redeemable
for cash at the option of the holder thereof (whether or not the circumstances
entitling the holder to such redemption have then occurred or are applicable);
plus (ii) Indebtedness of the Borrower which has been subordinated to
Indebtedness of the Borrower to the Lenders and the Agent hereunder and under
any other Loan Document pursuant to a subordination agreement in form and
substance satisfactory to the Lenders and specifically including the
Intercorporate Debt but excluding the Syndicated Indebtedness;
"Standby Fee Rate" means , at any time, the rate, expressed as a rate per annum
based on a year of 365 days, as set out in the following table opposite the
applicable Funded Debt to EBITDA Ratio from time to time:
Funded Debt to EBITDA Ratio
================================================================================
1.75 to 1.0
to >2.75 to 1.0
<1.75 to <2.75 to 1.0
1.0 -
Standby Fee Rate 12.5 bps 12.5 bps 15.0 bps
================================================================================
provided that so long as there is any Syndicated Indebtedness, then (i) during
the period from the Effective Date until 6 months thereafter, the margin
referred to above shall, in all cases, be deemed to be that applicable to #1.75
to 1.0 and (ii) during the period commencing 6 months after the Effective Date
the margin referred to above shall, in all cases, be deemed to be that
applicable to >2.75 to 1.0;
"Subsidiary" means:
(a) a Person of which another Person alone or in conjunction with its other
Subsidiaries owns an aggregate number of Voting Shares sufficient to enable the
election of a majority of the directors (or other Persons performing similar
functions) regardless of the manner in which other Voting Shares are voted;
(b) a Person of which another Person alone or in conjunction with its other
Subsidiaries has, through the operation of any agreement or otherwise, the
ability to elect or cause the election of a majority of the directors (or other
Persons performing similar functions) or otherwise exercise control over the
management and policies of such Person; and
(c) any partnership or joint venture of which a Person:
(i) is the general or managing partner; or
(ii) directly or indirectly, owns more than 50% of the equity or beneficial
interest thereof;
and shall include any Person in like relation to a Subsidiary, and for the
purposes hereof in respect of the Borrower includes, without limitation, GMSL,
GMSFL and the Partnership;
"Subsidiary Guarantee" means a guarantee in the form of Subsidiary Guarantee
executed by GMFSC and the Subsidiary Guarantee and Indemnity executed by the
Partnership on the Effective Date, with such changes as the Agent may approve;
"Swap" means any Commodity Swap, Currency Swap or Interest Swap;
"Swap Indebtedness" means at any time for a Person in respect of all Swaps to
which it is a party or by which it is bound, the aggregate net amount, if any,
which (as of the date of any determination of the amount thereof) would be
payable by such Person under all agreements evidencing such Swaps in settlement
of obligations arising thereunder as a result of an early termination of all
such Swaps, together with all interest, fees and other amounts payable thereon
or in connection therewith;
"Syndicated Agent" means the Person from time to time named as the
"Administrative Agent" pursuant to the Syndicated Credit Agreement, being on the
date hereof Royal Bank of Canada;
"Syndicated Credit Agreement" means the Cdn.$200,000,000 extendible
revolving/term credit facility credit agreement among the Borrower, Royal Bank
of Canada, as agent, and the Syndicated Lenders as Lenders, dated July 29, 1999;
"Syndicated Facility" means the credit facility provided to the Borrower
pursuant to the terms of the Syndicated Credit Agreement;
"Syndicated Facility Amount" means the principal amount of the commitments of
the Syndicated Lenders under the Syndicated Credit Agreement aggregating Cdn.
$200,000,000 as such amount is reduced (but not increased) pursuant to the
provisions of the Syndicated Credit Agreement;
"Syndicated Indebtedness" means the outstanding principal amount of all
Indebtedness of the Borrower to the Syndicated Lenders under the Syndicated
Facility, such amount being determined by including the principal amount of all
outstanding loans and the face amount of all outstanding Bankers' Acceptances
thereunder, together with all interest, fees and other amounts payable
thereunder;
"Syndicated Lenders" means, on the date hereof, Royal Bank of Canada, The Chase
Manhattan Bank of Canada, Bank of Montreal, First Chicago NDB Bank, Canada and
Alberta Treasury Branches and such other lenders as may from time to time become
party to the Syndicated Credit Agreement in addition to or in replacement of any
of the foregoing lenders, and in accordance with and as permitted by the
provisions of the Syndicated Credit Agreement;
"Tax" means all present and future taxes, rates, levies, imposts, assessments,
dues, government fees, stamp taxes, deductions, charges or withholdings, and all
liabilities with respect thereto, and any interest, additions to tax and
penalties imposed with respect thereto, excluding, with respect to a Lender,
taxes imposed on its income or capital and franchise taxes imposed on it by any
taxation authority;
"Taylor Units" means limited partnership interests in the Taylor NGL Limited
Partnership, a limited partnership holding limited partnership interests in the
Taylor Gas Liquids Limited Partnership;
"Total Commitment" means the amount of Cdn. $125,000,000 (being all of the
Commitments) as hereafter cancelled, reduced or terminated from time to time
pursuant to this Agreement;
"US Base Rate" means, on any day with respect to US Base Rate Loans, the greater
of:
(a) the annual rate of interest announced from time to time by the Agent
as being its reference rate then in effect for determining interest
rates on US Dollar denominated commercial loans made by the Agent in
Canada; and
(b) a rate of interest per 365 day period equal to the Fed Funds Rate plus
100 bps;
"US Base Rate Loans" means the Accommodations or any portion thereof, made
available by the Lenders to the Borrower pursuant to Sections 3.4 or 3.10 and
outstanding from time to time, which are denominated in US Dollars and on which
the Borrower has agreed to pay interest in accordance with Section 5.2;
"US Dollars" and the symbol "US$" each means lawful money of the United States
of America; and
"Voting Shares" means share capital of any class of any corporation which
carries voting rights to elect the board of directors under any circumstances,
but shares which carry the right to so vote conditionally upon the happening of
an event shall not be considered Voting Shares until the occurrence of such
event.
1.2 Headings and Table of Contents
The headings, the table of contents and the Article and Section titles are
inserted for convenience of reference only and shall not affect the construction
or interpretation of this Agreement.
1.3 References
Unless something in the subject matter or context is inconsistent
therewith, all references to Sections, Articles and Schedules are to Sections
and Articles of and Schedules to this Agreement. The words "hereto", "herein",
"hereof", "hereunder" and similar expressions mean and refer to this Agreement.
1.4 Rules of Interpretation
In this Agreement, unless otherwise specifically provided, the singular
includes the plural and vice versa, "month" means calendar month, "quarter"
means calendar quarter, and "in writing" or "written" includes printing,
typewriting or any electronic means of communication capable of being visibly
reproduced at the point of reception, including facsimile.
1.5 Generally Accepted Accounting
Principles All financial statements required to be furnished by the
Borrower to the Agent hereunder shall be prepared in accordance with Generally
Accepted Accounting Principles. Each accounting term used in this Agreement,
unless otherwise defined herein, has the meaning assigned to it under Generally
Accepted Accounting Principles and, except as otherwise provided herein,
reference to any balance sheet item, statement of income item or statement of
cash flows item means such item as computed from the applicable financial
statement prepared in accordance with Generally Accepted Accounting Principles.
1.6 Time
Unless otherwise provided herein, all references to a time in this
Agreement shall mean local time in the City of Toronto, Ontario.
1.7 Monetary
References Whenever an amount of money is referred to herein, such amount
shall, unless otherwise expressly stated, be in Canadian Dollars. 1.8 Payment
for Value All payments required to be made hereunder shall be made for value on
the required day in same day immediately available funds.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
2.1 Representations and Warranties
The Borrower represents and warrants to each of the Lenders and the Agent
(all of which representations and warranties the Borrower hereby acknowledges
are being relied upon by the Lenders and the Agent in entering into this
Agreement) that:
(a) Corporate Existence: the Borrower and each Guaranteeing Subsidiary
(other than the Partnership) is a duly incorporated, organized and
validly existing corporation, and each is in good standing under the
laws of its jurisdiction of incorporation, and is duly registered and
qualified as an extra-provincial corporation under the laws of each
other jurisdiction in Canada in which the nature of any material
business transacted by it or the character of any material properties
and assets owned or leased by it requires such registration and
qualification, provided that on the Effective Date in respect of
Saskatchewan, applications for registrations have been submitted but
acceptance is outstanding;
(b) Partnership Existence: the Partnership is a duly formed and validly
existing partnership in good standing under the laws of Alberta and
qualified to carry on business as a partnership under the laws of the
Province of Saskatchewan and each other jurisdiction in Canada in
which the nature of any material business transacted by it or the
character of any material properties or assets owned or leased by it
require such registration and qualification, subject to the
registrations in process as referred to in Section 2.1(a);
(c) Corporate Power: the Borrower and each Guaranteeing Subsidiary (other
than the Partnership) has full corporate power and capacity to own its
properties and assets and conduct its business as presently conducted;
(d) Partnership Power: the Partnership has full partnership power and
capacity to own its properties and assets and conduct its business as
presently conducted;
(e) Authorization: the execution, delivery and performance by each Loan
Party of each of the Loan Documents to which it is a party has been
duly authorized by all necessary corporate or partnership action, as
applicable and are within its corporate or partnership power and
capacity, as applicable;
(f) Execution: each Loan Document to which any Loan Party is a party has
been duly executed and delivered by such Loan Party;
(g) Binding Obligations: each Loan Document to which any Loan Party is a
party is a legal, valid and binding obligation of such Loan Party,
enforceable against it in accordance with its terms except as
enforceability may be limited by general principles of equity and by
bankruptcy, insolvency, moratorium, reorganization or similar laws
affecting creditors' rights generally;
(h) No Legal Bar or Resultant Lien: the execution, delivery and
performance by each Loan Party of each of the Loan Documents and the
GMS Agreements to which it is a party will not:
(i) violate any provision of Applicable Law (including financial
assistance provisions), its articles or by-laws, the Partnership
Agreement or any resolutions passed by the directors,
shareholders or (in the case of the Partnership) partners of such
Loan Party; or
(ii) result in a breach of or constitute a default or require any
consent under, or result in the creation of any Security Interest
(other than Permitted Encumbrances) upon any of its property or
assets;
and the execution, delivery and performance by each Loan Party of each of the
Loan Documents and the GMS Agreements to which it is a party and the validity
and enforceability thereof does not require any Governmental Authorization
(other than filings necessary to perfect the Security and such Governmental
Authorizations which have been obtained) and does not and will not contravene
any provision of any Governmental Authorization applicable to such Loan Party or
any of its assets, properties or interests;
(i) Title:
(i) the Borrower is the legal and beneficial owner of the Rimbey
Shares, which have been issued as fully paid and non-assessable
shares and which constitute not less than 40.6% of the Voting
Shares of Rimbey Pipeline Co. Ltd., and its title to the Rimbey
Shares is free and clear of all adverse claims, Preferential
Rights (except pursuant to the Articles of Continuance of Rimbey
Pipe Line Co. Ltd.) and Security Interests and (except pursuant
to the Articles of Continuance of Rimbey Pipe Line Co. Ltd.) no
Person, firm or corporation now has any agreement, option, right,
warrant or privilege to purchase or acquire the Rimbey Shares;
(ii) subject to Permitted Title Defects, each Loan Party has good,
valid and marketable title to all of its other material assets,
properties and interests, including, without limitation, its
undivided working interest ownership percentage and leasehold
interest percentage in and to the Facilities as set forth in each
of the schedules comprising Schedules "J" and "K", free and clear
of all adverse claims, Preferential Rights (except as set forth
in Schedule "U") and Security Interests, other than Permitted
Encumbrances;
(j) Use of Assets:
(i) each Loan Party owns, leases or has the lawful right to use all
assets, rights and interests necessary for the conduct of its
respective businesses, including all required Governmental
Authorizations, all consents, authorizations and approvals of any
other Person, and all licenses, trademarks, patents, copyrights
or agreements with respect to the use of technology or
intellectual property necessary for the ownership, operation or
maintenance of such assets, rights or interests;
(ii) the ownership, use, occupation, operation and maintenance by each
Loan Party of its assets and businesses complies with all
Applicable Laws and Governmental Authorizations and any required
consents, authorizations and approvals of any other Person; and
(iii)no Loan Party has received any notice of any claim of
infringement or any claim challenging or questioning the validity
or effectiveness of any such Governmental Authorizations,
consents, authorizations or approvals of any other Person, or any
such licenses, trademarks, patents, copyrights or agreements with
respect to the use or technology or intellectual property;
except to the extent that failure to have or maintain the same, or any such
claim of infringement or claim challenging validity or effectiveness, could not,
when taken in the aggregate, reasonably be expected to have any Material Adverse
Effect;
(k) Required Availability: all utilities, services, means of transportation,
pipelines, facilities and other materials and equipment necessary or
desirable for the operation of the Facilities (including, without
limitation all necessary gas, electrical, water and sewage and other waste
disposal services and facilities) are available to the Facilities, and, to
the extent appropriate, arrangements have been made on commercially
reasonable terms for such services, means of transportation, pipelines,
facilities and other materials and equipment, except to the extent such
availability could not reasonably be expected to have a Material Adverse
Effect;
(l) Land Rights: all material Land Rights necessary for owning and operating
the Facilities are held by a Loan Party, in any circumstances where a Loan
Party is the operator of a Facility, or where a Loan Party is not the
operator by a Person holding such Land Rights as agent or trustee for or on
behalf of the owners of such Facility, including the applicable Loan Party,
and all of such Land Rights are in full force and effect and are not
subject to any material default or material defect, other than Permitted
Title Defects;
(m) Liens: as of the Effective Date, and except for Permitted Encumbrances,
there are, with respect to the Facilities operated by any Loan Party, and
to the best of the knowledge, information and belief of the Loan Parties
with respect to any Facilities not operated by a Loan Party, no:
(i) material payments overdue that would give rise to any mechanics,
laborers, materialmen's, builders or other similar liens;
(ii) material payments overdue that would give rise to any Security
Interests in favour of any Person, other than a Loan Party, conducting
the operation of such Facilities in respect of the joint operation of
any Facility;
(iii)material payments overdue that would give rise to any Security
Interest in favour of any Person in respect of Taxes, assessments or
water, sewer or other rents or charges; or
(iv) unsatisfied judgments or executions in any material amount;
(n) Material Contracts: as of the Effective Date and excluding Marketing
Contracts, the agreements identified in Schedule "L" are the only
agreements, contracts, documents or other writings which:
(i) would involve the payment or receipt of any amounts by or to any Loan
Party in any 12 month period which would exceed $10,000,000; or
(ii) would account for 5% or more of the aggregate volumes of Gas
processed, stored or transported by the Facilities in any 12 month
period
and the Persons identified in the last item on Schedule "L" are the only Persons
which would, pursuant to contracts with any such Person (including its
Affiliates) be liable to the Loan Parties for receivables which would exceed
$5,000,000 in any 12 month period.
To the best of each Loan Party's knowledge, information and belief, after due
inquiry,
A. there are presently no material defaults by any of the parties to any
of the Material Contracts;
B. no Material Contract nor any material term or condition thereof has
been terminated or cancelled, nor have there been any material
modifications or amendments thereto or material waivers granted in
respect thereof other than as referenced in Schedule "L"; and
C. each of the Material Contracts is a valid and binding obligation of
the parties thereto, enforceable in accordance with its terms, except
as enforcement may be limited by bankruptcy, insolvency,
reorganization or similar laws or equitable principles relating to
creditor's rights generally;
(o) Marketing Contracts: as of the Effective Date, the contracts set forth in
Schedule "N" constitute all of the material contracts to which any Loan
Party is a party in a capacity as a seller for its own account and which
have a term in excess of 12 months or where, if any such contract was
terminated, the liability of any Loan Party could exceed $5,000,000;
(p) Indebtedness: the Loan Parties have not incurred, created or assumed any
Indebtedness other than Permitted Indebtedness and, as of the Effective
Date, the outstanding Syndicated Indebtedness is Cdn. $200,000,000 and the
outstanding Indebtedness on account of Intercorporate Debt is $225,600,000;
(q) Designations: no Loan Party operating a Facility, nor any other Person
operating any Facility on behalf of a Loan Party, has been designated as a
"Common Processor" or "Common Carrier" pursuant to the Gas Utilities Act
(Alberta) or any similar legislation in any other jurisdiction where any
Facilities are located;
(r) Operating Condition: each of the Facilities (with the exception of the
Facility set forth in Schedule "J" and described as Paddle River) operated
by a Loan Party has, since December, 1998, and in the case of the Facility
described in Schedule "J" as Paddle River since August 1, 2000 has, been
maintained and operated in accordance with generally accepted engineering
practices and in all material respects with all Applicable Laws and
Governmental Authorizations (and non-compliance with which could reasonably
be expected to result in liabilities or obligations to any Loan Party or
Loan Parties at any time in the aggregate in excess of $2,500,000) and is
in satisfactory condition for its intended use in accordance with prudent
industry practices;
(s) Novations: each Loan Party, to the extent of its ownership interest in any
Facility, has been properly novated into all Material Contracts applicable
to such Facility and has all rights and privileges of an owner thereunder
commensurate with its interest in such Facility except to the extent
rights, privileges or interests (including legal title), in accordance with
generally accepted industry practice, are held in trust by another Person
for and on behalf of the applicable Loan Party;
(t) Dedicated Reserves: no Loan Party has done any act or thing, nor is aware
of any act or thing having been done, whereby material Dedicated Reserves
have been released from dedication or material amendments, restrictions or
alterations made to any dedication covenants in respect thereof;
(u) Operatorship: as of the Effective Date, except for the Facilities described
in Schedule "J as Bigoray, Judy Creek and Fort Saskatchewan, the
Partnership or GMSL is the operator of each of the Facilities and there are
no outstanding challenges to such operatorship or seeking the replacement
of the Partnership or GMSL;
(v) Petroleum and Natural Gas Reserves: no Loan Party has acquired any interest
in any petroleum or natural gas reserves, except to the extent that (i)
such acquisition was required to acquire or hold a corresponding interest
in a Facility, or (ii) such acquisition was made pursuant to Dedicated
Reserves, or (iii) such acquisition was made as ancillary to a transaction
the primary purpose of which is to allow injection of waste products and in
circumstances where the purchase price attributable to such reserves would
not exceed $25,000.00;
(w) Default of Contracts: neither the Borrower nor any Guaranteeing Subsidiary
is in breach or default of, nor has any event or circumstance occurred,
which, but for the passage of time or the giving of notice, or both, would
constitute a breach or default, under any agreement or instrument by which
the Borrower, any Guaranteeing.32 Subsidiary or any of their respective
properties, assets or undertakings are bound, except such breaches,
defaults, events or circumstances which could not, individually or in the
aggregate, be reasonably expected to have a Material Adverse Effect;
(x) Litigation: except as set forth in Schedule "P", there are no actions,
suits or proceedings (whether or not purportedly on behalf of the Borrower
or any Guaranteeing Subsidiary) pending or threatened against any Loan
Party or any of its business, assets or properties at law or in equity by
or before any court, tribunal, governmental department, commission, board,
bureau, agent or instrumentality, domestic or foreign, or before any
arbitrator of any kind and neither the Borrower nor any Guaranteeing
Subsidiary is in default with respect to any judgment, order, writ,
injunction, decree, award, rule or regulation of any court, tribunal,
governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign or any arbitrator of any kind, and
which actions, suits or proceedings if determined adversely to any Loan
Party could, individually, or in the aggregate, be reasonably expected to
have a Material Adverse Effect;
(y) Engineering and Financial Information: all engineering data, production
data, economic models, cash flow projections, capital expenditure
requirements, budgets and other data provided to the Agent by the Borrower
in respect of the properties, assets and undertakings of the Loan Parties
is, as at the Effective Date in respect of information delivered prior
thereto, and in respect of deliveries thereafter as at the date of
delivery, true and correct in all material respects and fairly and properly
reflects the interests of each Loan Party therein and thereto;
(z) Financial Condition: all financial statements of the Loan Parties submitted
to the Agent (including the audited consolidated financial statements of
the Borrower for the Fiscal Year ending December 31, 1999) fairly reflect,
as of the dates thereof, the consolidated financial condition of the
Borrower, the unconsolidated position of each Loan Party to the extent
provided in such financial statements and the results of its operations for
the periods covered thereby, have been prepared in accordance with
Generally Accepted Accounting Principles and, from the date of the latest
of such financial statements submitted to the Agent, there has been no
changes in the financial condition of any Loan Party or any of its
properties, assets, condition or undertakings which have had, or could be
reasonably expected to have, a Material Adverse Effect except those which
have been specifically disclosed as such in writing to the Agent as having
such effect;
(aa) Pro Forma Financial Statements: the Borrower has furnished the Agent with
pro forma financial statements for the Borrower on a consolidated basis
which take into account the effect of the Purchase and Sale Agreement. The
balance sheet contained in such pro forma financial statements represents
fairly the consolidated pro forma financial position of the Borrower as of
the date hereof and the pro forma statement of operations contained therein
presents fairly the pro forma results of its operations for the periods
indicated. All information provided to the Agent in connection with the
Purchase and Sale Agreement, including the pro forma financial statements
contained in Schedule "S" and the sources and uses of funds contained in
Schedule "O" have been prepared in good faith;
(ab) Corporate Organization: as of the Effective Date, Schedule "R" accurately
sets forth the corporate structure of the Borrower, its shareholders and
its Subsidiaries;
(ac) Risk Management: neither the Borrower nor any Guaranteeing Subsidiary is a
party to any Swap on the Effective Date except as set forth in Schedule
"U", and as of the Business Day immediately preceding the Effective Date,
the Mark to Market Amount was in an amount not exceeding $5,000,000;
(ad) Subsidiaries: the Borrower has no Subsidiaries other than GMSL, GMSFL,
KeySpan Canada and the Partnership, each of which are wholly-owned
Subsidiaries. As of the Effective Date, KeySpan Canada has no material
assets, properties or businesses other than ownership of the Taylor Units;
(ae) Taxes:
(i) each Loan Party has filed all tax returns which were required to be
filed, has paid or made provision for payment (in accordance with
Generally Accepted Accounting Principles) of all Taxes which are due
and payable, and has provided adequate reserves (in accordance with
Generally Accepted Accounting Principles) for the payment of any Tax,
the payment of which is being contested;
(ii) all ad valorem, property, production, severance and similar taxes and
assessment based on or measured by the ownership of assets or the
processing of Petroleum Substances or the receipt of proceeds
therefrom payable by any Loan Party in respect of or in relation to
its assets have been properly paid and fully discharged; and
(iii)no reassessment, appeal or material claim is, to the knowledge of any
Loan Party, being asserted or processed with respect to Taxes against
any Loan Party or in respect of any of its assets or properties which
could reasonably be expected to have a Material Adverse Effect if
adversely determined;
(af) Insurance:
(i) the Borrower and each Guaranteeing Subsidiary has in full force and
effect such policies of insurance in such amounts issued by insurers
of recognized standing insuring its properties and operations, and
providing such coverage as would be maintained by a prudent oil and
gas operator engaged in the same or similar business in the localities
where its properties and operations are located, and in any event as
required by Section 9.1(n);
(ii) there are no material outstanding insurance claims in respect of
physical damage, or for liability in respect of the ownership or
operation of any assets, properties or interests of any Loan Party,
which are being disputed as to any material liability or amount by any
of the insurers in respect thereof, except such as have been disclosed
in writing to the Agent;
(ag) Compliance with Laws and Material Contracts: the Borrower and each
Guaranteeing Subsidiary is in compliance in all material respects with all
Applicable Laws and all Material Contracts;
(ah) Environmental Laws:
(i) each Loan Party has obtained, and, to the best of the knowledge,
information and belief of the Loan Parties, each operator of any
Facility not operated by a Loan Party has obtained (in respect of such
Facility), all material permits, licenses and other Governmental
Authorizations which are required under all Environmental Laws in
respect of its material businesses, operations and assets and the
acquisition, ownership and operation thereof;
(ii) the Borrower and each Guaranteeing Subsidiary is, and to the best of
the knowledge, information and belief of the Loan Parties, each
operator of any Facility not operated by a Loan Party is (in respect
of such Facility) is, in all material respects in compliance with
Environmental Laws in relation to the material business, activities
and assets of the Loan Parties and the operation thereof and in
compliance in all material respects with all terms and conditions of
all material permits, licenses and other Governmental Authorizations;
(iii)as of the Effective Date, no Loan Party has received any written
notice under any Environmental Laws or Governmental Authorizations in
respect of its businesses, operations or assets which could result in
any material obligation or liability to any Loan Party; and
(iv) except as previously disclosed to the Agent in writing, no Loan Party
has any knowledge of any facts which could give rise to any notice of
non-compliance in any material respect with any Environmental Laws or
Governmental Authorizations or any notice that any Loan Party is
potentially responsible for any material clean-up, remedial action,
decommissioning or other corrective action;
(ai) Environmental Condition of Property: the properties and assets of the
Borrower and of each Guaranteeing Subsidiary, including each of the
Facilities:
(i) are not the subject of any material outstanding orders, claims or
charges from any government agency, department or commission or
otherwise alleging violation of any Environmental Laws or, if subject
to any such material claim, charge or order, the applicable Loan Party
(or the operator of such asset or property if not operated by a Loan
Party) is taking or causing to be taken all remedial, corrective or
other action required under the claim, charge or order or is
diligently and in good faith contesting the validity thereof; and
(ii) comply, with respect to their use and condition and in all material
respects, with all Environmental Laws and all terms and conditions of
all permits, licenses and other authorizations, which are required
under all Environmental Laws;
(aj) Hazardous Materials: the operations of the Assets which have generated,
manufactured, refined, treated, transported, stored, handled, disposed,
transferred, produced or processed Hazardous Materials have done so in
compliance with all Environmental Laws and all permits, licenses and
authorizations thereunder, except to the extent failure to so comply could
not reasonably be expected to have a Material Adverse Effect;
(ak) Labour and Pension Matters: Schedule "I" identifies each collective
bargaining agreement, each material management agreement and each material
pension plan and material benefit plan maintained (or, if applicable,
intended to be maintained) by or on behalf of any Loan Party for any of its
employees. As of the Effective Date, there are no strikes or other labour
disputes against any Loan Party or any of its material businesses pending
or threatened, nor is any Loan Party aware of any organizing activity
pending or threatened by any labour union or group of employees with
respect to any of its material businesses or any demand for recognition by
any thereof;
(al) Contingent Liability: except as set forth in Schedule "Q", no Loan Party
has any Contingent Liability except for (i) ordinary course of business
liabilities and indemnities, (ii) obligations incurred pursuant to the
performance of the terms of the Material Contracts, and (iii) obligations
to pay royalties and license fees incurred in the ordinary course of
business;
(am) Permits: As of the Effective Date, Schedule "M" lists all of the material
Governmental Authorizations required for the operation of the Facilities;
and
(an) Expropriation: as of the Effective Date, no part of any real property
owned, leased or used by any Loan Party, or any building or fixture located
thereon, has been taken or expropriated by any Governmental Action, nor is
any Loan Party aware that any written notice or proceeding in respect of an
expropriation has been given or commenced and no Loan Party is aware of any
intent or proposal to give any such notice or commence any such
proceedings.
2.2 Deemed Representation and Warranty
Each request by the Borrower for a Drawdown, Rollover or Conversion of
Accommodations shall be deemed to be a representation and warranty by the
Borrower to the Lenders that, except as disclosed to the Agent in writing, (i)
the matters referred to in Section 2.1 are, as of the date of such request, and
will be as of the applicable Drawdown Date, Conversion Date or Rollover Date,
true and correct as of each such date and that (ii) as of the date of such
request and as of the applicable Drawdown Date, Conversion Date or Rollover
Date, there exists no Default or Event of Default, nor will any such event occur
as a result of such Drawdown Date, Conversion Date or Rollover Date.
ARTICLE 3
THE CREDIT FACILITIES
3.1 Obligations of each Lender
Relying on each of the representations and warranties set out in Article 2
and subject to the terms and conditions of this Agreement, each Lender agrees to
make Accommodations available to the Borrower up to the amount of its
Commitment, commencing on the Effective Date and ending on the Maturity Date, by
way of an extendible revolving credit facility in a maximum principal amount not
exceeding the Total Commitment (the "Credit Facility").
3.2 Purpose
Accommodations shall only be used by the Borrower for the purchase of
interests of Gulf pursuant to the provisions of the Purchase and Sale Agreement
and thereafter for the acquisition, operation, maintenance, construction and
expansion of Facilities.
3.3 Takeover Notification
In the event the Borrower wishes to utilize Accommodations to, or to
provide funds to any Subsidiary to, offer to acquire (which shall include an
offer to purchase securities, solicitation of an offer to sell securities, an
acceptance of an offer to sell securities, whether or not the offer to sell was
solicited, or any combination of the foregoing) outstanding securities of any
Person (other than a private company as defined under the Securities Act
(Alberta) or a corporation whose shares are directly or indirectly held by 1
Person) where, as of the date of the offer to acquire, the securities that are
subject to the offer to acquire, together with the securities of such Person
that are beneficially owned, or over which control or direction is exercised, by
the Borrower or its Subsidiaries and any Person acting jointly or in concert
with any thereof on the date that the offer to acquire is made, constitute in
the aggregate 5% or more of all of the outstanding securities of that class of
securities of the Person or are likely to result in a change of the voting
control of such Person if it is a publicly traded corporation, then the Borrower
shall require the consent of each Lender, such consent not to be unreasonably
withheld.
3.4 Accommodations
Subject to the provisions of this Agreement, the Borrower may borrow, repay
and reborrow by way of Accommodations from each Lender pursuant to the Facility
up to the amount of such Lender's Commitment by:
(a) Prime Loans: borrowing Prime Loans, in minimum aggregate amounts of Cdn.
$1,000,000 and in integral multiples of Cdn. $100,000 thereafter, upon at
least 1 Business Day' s prior written notice;
(b) Bankers' Acceptances: issuing Bankers' Acceptances to be accepted by the
Lenders, in minimum aggregate amounts of Cdn. $5,000,000 and in integral
multiples of Cdn. $100,000 thereafter, upon at least 2 Business Days' prior
written notice;
(c) US Base Rate Loans: borrowing US Base Rate Loans, in minimum aggregate
amounts of US $1,000,000 and in integral multiples of US $100,000
thereafter, upon at least 1 Business Day' s prior written notice; and
(d) Libor Loans: borrowing Libor Loans, in minimum aggregate amounts of US
$5,000,000 and in integral multiples of US $500,000 thereafter, upon at
least 3 Banking Days' prior written notice;
each such notice to be given to the Agent at the Agent's Branch of Account at or
prior to 12:00 noon (Toronto time) on the last day on which such notice can be
given pursuant to this Section 3.4 and to be substantially in the form of
Schedule "A". Any such notice may be given by telephone and in such case shall
be followed by delivery on the day of such telephone notice of written notice
substantially in the form of Schedule "A".
Prior to the Maturity Date, the Borrower may increase or decrease
Accommodations under the Facility by obtaining Accommodations and by making
repayments in respect thereof. The Facility shall terminate on the Maturity Date
and all Outstandings thereunder shall be repaid in full to the Lenders not later
than the Maturity Date.
3.5 Selection of Libor Interest Periods
If the Borrower elects to borrow by way of a Libor Loan pursuant to Section
3.4, elects to convert an Accommodation into a Libor Loan pursuant to Section
3.10 or elects to Rollover a Libor Loan pursuant to Section 3.11, the Borrower
shall, prior to the beginning of the Libor Interest Period applicable to such
Libor Loan, in accordance with the same period of notice required for the
initial drawdown of a Libor Loan as set forth in Section 3.4 select and notify
the Agent at the Agent's Branch of Account in writing, of the Libor Interest
Period (which shall begin and end on a Banking Day) applicable to such Libor
Loan.
3.6 Conditions Applicable to Bankers' Acceptances
(a) Purchase of Bankers' Acceptances by Lenders: Subject to the terms and
conditions of this Agreement, each Lender hereby agrees to purchase at the
applicable Discount Rate its Lender's Proportion of Bankers' Acceptances
issued by the Borrower pursuant to Sections 3.4 and 3.10. Any Lender may at
any time and from time to time hold, sell, rediscount or otherwise dispose
of any or all Bankers' Acceptances purchased by it.
(b) Payment to Borrower:
(i) On the Drawdown Date relating to any issue of Bankers' Acceptances,
each Lender shall deliver the Discount Proceeds (less the applicable
acceptance fees pursuant to Section 5.4) to the Agent for the account
of the Borrower through the Agent's Account for Payments.
(ii) In the case of a Rollover of Bankers' Acceptances under the Facility,
the Borrower shall be liable to the Lenders for the principal amount
of maturing Bankers' Acceptances. In order to satisfy the continuing
liability of the Borrower to the Lenders for the principal amount of
the maturing Bankers' Acceptances, each Lender shall receive and
retain for its own account the.38 Discount Proceeds of such new
Bankers' Acceptances accepted by it and the Borrower shall on the
maturity date of the maturing Bankers' Acceptances pay to the Agent
for the benefit of such Lender an amount equal to the difference
between the principal amount of the maturing Bankers Acceptances
accepted by it and the Discount Proceeds from the new Bankers'
Acceptances accepted by it together with the fee to which such Lender
is entitled pursuant to Section 5.4.
(iii)In the case of a Conversion into Bankers' Acceptances, in order to
satisfy the continuing liability of the Borrower to the Lenders for
the amount of the converted Accommodation, each Lender shall receive
for its own account the Discount Proceeds of the Bankers' Acceptances
accepted by it and the Borrower shall on the Conversion Date pay to
the Agent for the benefit of such Lender the difference between the
principal amount of the converted Accommodation and the Discount
Proceeds from such Bankers' Acceptances accepted by it together with
the fee to which such Lender is entitled to pursuant to Section 5.4.
(iv) In the case of a Conversion of Bankers' Acceptances, in order to
satisfy the continuing liability of the Borrower to the Lenders for an
amount equal to the principal amount of such Bankers' Acceptances, the
Agent shall record the obligation of such Borrower to each Lender as
an Accommodation of the type into which the maturing Bankers'
Acceptance has been converted.
(c) Waiver of Presentment and Other Conditions: The Borrower waives presentment
for payment and, except to the extent of the gross negligence or wilful
misconduct of the Lenders referred to in the Power of Attorney - Bankers'
Acceptances referred to in Section 3.6(e), any other defence to payment of
any amounts due to a Lender in respect of a Bankers' Acceptance accepted by
it pursuant to this Agreement which might exist solely by reason of such
Bankers' Acceptance being held, at the maturity thereof, by such Lender in
its own right and the Borrower agrees not to claim any days of grace if
such Lender as holder sues the Borrower on the Bankers' Acceptance for
payment of the amount payable by the Borrower thereunder. On the specified
maturity date of a Bankers' Acceptance, or such earlier date as may be
required or permitted pursuant to the provisions of this Agreement, the
Borrower shall pay the Agent on behalf of the Lender that has accepted such
Bankers' Acceptance, the full face amount of such Bankers' Acceptance
either through payment to the Agent's Branch of Account or conversion of
such Bankers' Acceptance into a Prime Loan pursuant to Section 3.10.
(d) Terms of Each Bankers' Acceptance: Each Bankers' Acceptance shall:
(i) have a maturity date which shall be on a Business Day;
(ii) have a term of not less than 30 days and not more than 180 days
(excluding days of grace);
(iii)have an aggregate face amount of not less than Cdn. $10,000,000
and be in an integral multiple of Cdn. $100,000;
(iv) be in the standard form of each Lender accepting same, provided
however, the Agent may require a Lender to use a generic form of
Bankers' Acceptance, in a form satisfactory to the Borrower and
each Lender, each acting reasonably, provided by the Agent for
such purpose in place of the Lender's own forms; and
(v) have a term which does not extend beyond the Maturity Date.
It is the intention of the parties that, pursuant to the Depository Bills
and Notes Act (Canada) ("DBNA"), all Bankers' Acceptances accepted by the
Lenders (other than Old System Lenders) under this Agreement shall be issued in
the form of a "depository bill" (as defined in the DBNA), deposited with, and
made payable to, a "clearing house" (as defined in the DBNA including, without
limitation, The Canadian Depository for Securities Limited or its nominee, CDS &
Co. ("CDS"). The Agent and the Lenders (other than Old System Lenders) shall,
inter alia, effect the following and, subject to the approval of the Borrower
and the Majority Lenders, establish and notify the Borrower and the Lenders of
any additional procedures, consistent with the terms of this Agreement and the
quarterly requirements of the DBNA, as are reasonably necessary to accomplish
such intention including, without limitation:
A. each Bankers' Acceptance accepted by a Lender (other than an Old
System Lender) hereunder shall have marked prominently and legibly on
its face a notation to the effect that it is issued subject to the
DBNA;
B. any reference to authentication of the Bankers' Acceptance will be
removed; and
C. such Bankers' Acceptance shall not be marked with any words
prohibiting negotiation, transfer or assignment of it or of any
interest in it.
(e) Power of Attorney - Bankers' Acceptances: As a condition precedent to each
Lender's obligation to accept and purchase Bankers' Acceptances hereunder,
and subject to the DBNA compliance requirements set forth in Section
3.6(d), the Borrower agrees to the Power of Attorney Terms - Bankers'
Acceptances set out in Schedule "B".
(f) Failure to Give Notice of Repayment: If the Borrower fails to give notice
to the Agent at the Agent's Branch of Account of the method of repayment of
a Bankers' Acceptance prior to the date of maturity of such Bankers'
Acceptance in accordance with the same period of notice required for the
original acceptance of such Bankers' Acceptance as set forth in Section
3.4, the face amount of such Bankers' Acceptance shall be converted on its
maturity to a Prime Loan from the Lender pursuant to Section 3.10.
3.7 Agent's Duties re Bankers' Acceptances
(a) Advice to the Lenders: The Agent, promptly following receipt of a Borrowing
Notice by way of Bankers' Acceptance or Conversion Notice of an
Accommodation to a Bankers' Acceptance, shall so advise the Lenders and
shall advise each Lender of the face amount of each Bankers' Acceptance to
be purchased by it and the term thereof, which term shall be identical for
all Lenders. By no later than 10:30 a.m. (Toronto time) on each Drawdown
Date or Conversion Date on which the Lenders are required to purchase
Bankers' Acceptances hereunder, the Agent shall determine the applicable
CDOR Rate in respect of such Bankers' Acceptances.
(b) Agent's Confirmation of Bankers' Acceptance Issuance: On or prior to 11:30
a.m. (Toronto time) on the Drawdown Date or Conversion Date relating to all
Bankers' Acceptances to be purchased by the Lenders on such date, the Agent
shall provide telephone advice to the Borrower and each Lender with respect
to such Bankers' Acceptances. Such advice shall be confirmed in writing on
or prior to 4:30 p.m. (Toronto time) on such Drawdown Date or Conversion
Date and shall include reasonable particulars as to such Bankers'
Acceptances.
(c) Completion of Bankers' Acceptance: Upon receipt of such telephone advice,
each Lender is thereupon authorized to complete bankers' acceptances in the
manner applicable pursuant to Section 3.6(e) in accordance with the
particulars so advised by the Agent.
3.8 Notice of Repayment
The Borrower shall give the Agent, at the Agent's Branch of Account, prior
written notice of each repayment of Accommodations in respect of each Facility
in accordance with the same period of notice required pursuant to Section 3.4,
for the initial drawdown of the basis of the Accommodation being repaid, such
notice to be substantially in the form of Schedule "A". Notwithstanding the
foregoing, a Bankers' Acceptance shall only be repaid on its maturity date and a
Libor Loan shall only be repaid prior to the last day of the Libor Interest
Period applicable to such Libor Loan upon payment by the Borrower of amounts
payable in respect thereof pursuant to Sections 4.4 and 11.5. Such amounts
deposited by the Borrower shall belong to the Borrower and shall be held by the
Agent in an interest bearing Cash Collateral Account with interest to be
credited to the Borrower at rates prevailing at the time of deposit and shall be
applied by the Agent in accordance with the provisions hereof to satisfy the
obligations of the Borrower with respect to the outstanding Bankers' Acceptance
or Libor Loan, as applicable. Such Cash Collateral Account shall be assigned to
the Agent as security for the Obligations and amounts held in such Cash
Collateral Account may not be withdrawn by the Borrower without the consent of
the Agent; however, interest on such deposited amount shall be for the account
of the Borrower and, provided no Default or Event of Default has occurred and is
continuing, may be withdrawn from time to time by the Borrower. If after
maturity of the Bankers' Acceptance or expiration of the Libor Interest Period,
as applicable, for which such funds are held and application by the Agent of the
amounts in such Cash Collateral Account to satisfy the Obligations with respect
to the Bankers' Acceptance or Libor Loan being repaid, any excess remains and no
Default or Event of Default has occurred and is continuing, such excess shall be
promptly paid by the Agent to the Borrower.
3.9 Pro-Rata Treatment of Accommodations
(a) Pro-Rata Accommodations: Subject to Section 3.9(b), each Accommodation and
each basis of Accommodation shall be made available by each Lender and all
repayments and reductions in respect thereof shall be made and applied in a
manner so that the Accommodations and each basis of Accommodation
outstanding hereunder to each Lender will, to the extent possible,
thereafter be in the same proportion as the Lender's Proportion of such
Lender. The Agent is authorized by the Borrower and each Lender to
determine, in its sole and unfettered discretion, the amount of
Accommodations and each basis of Accommodation to be made available by each
Lender and the application of repayments and reductions of Accommodations
to give effect to the provisions of this Section 3.9(a) and Section 7.2;
provided that, subject to Section 3.9(b), no Lender shall, as a result of
any such determination, have Accommodations outstanding in an amount which
is in excess of the amount of its Commitment.
(b) Agent's Discretion on Allocation: If it is not practicable to allocate
Bankers' Acceptances to each Lender such that the aggregate amount of
Bankers' Acceptances required to be purchased by such Lender hereunder is
in a whole multiple of Cdn. $100,000, the Agent is authorized by the
Borrower and each Lender to make such allocation as the Agent determines in
its sole and unfettered discretion may be equitable in the circumstances.
In no event shall the outstanding Accommodations of a Lender exceed its
Lender's Proportion by more than Cdn. $100,000 as a result of such exercise
of discretion by the Agent. In the event it is not practicable to allocate
each basis of Accommodation in accordance with Section 3.9(a) by reason of
the occurrence of circumstances described in Sections 11.2, 11.3 or 11.4,
the Agent is authorized by the Borrower and each Lender to make such
allocation as the Agent determines in its sole and unfettered discretion
may be equitable in the circumstances.
(c) Further Assurances by Borrower: The Borrower and each Lender agrees to be
bound by and to do all things necessary or appropriate to give effect to
the provisions of this Section 3.9.
3.10 Conversion Option
The Borrower may, during the term of this Agreement, convert any basis of
Accommodation in a currency to another basis of Accommodation in the same
currency upon giving the Agent at the Agent's Branch of Account a Conversion
Notice in accordance with the period of notice and other requirements set out in
Section 3.4 applicable to the basis of Accommodation to which any Accommodation
is being converted (other than delivery of a notice in the form of Schedule
"A"), provided that:
(a) Bankers' Acceptances: a Bankers' Acceptance may only be converted on its
maturity date; and
(b) Libor Loans: a Libor Loan may be converted on the last day of the Libor
Interest Period applicable to such Libor Loan or on any other day if the
Borrower pays all amounts payable in respect thereof pursuant to Section
11.5. On each Conversion Date, the Borrower shall be required to repay to
the Agent for the account of the Lenders the basis of Accommodation which
is being converted and, subject to the provisions of this Agreement, the
Lenders shall be required to make available to the Borrower the
Accommodations into which such basis of Accommodation is being converted.
3.11 Rollovers of Libor Loans
The Borrower may, during the term of this Agreement, Rollover all or any
portion of a Libor Loan for an additional Libor Interest Period subsequent to
the initial or any subsequent Libor Interest Period where the amount of such
continued Libor Loan will be equal to the amount of the existing Libor Loan,
upon giving the Agent at the Agent's Branch of Account a Rollover Notice in
accordance with the period of notice and other requirements set out in Section
3.4 to Libor Loans (other than delivery of a notice in the form of Schedule
"A"), unless immediately prior to the commencement of any subsequent Libor
Interest Period, an Event of Default shall have occurred and be continuing, in
which event the Borrower shall be deemed to have converted such Libor Loan to a
US Base Rate Loan pursuant to Section 3.10 and the Borrower shall not be
entitled to continue such Libor Loan subsequent to the existing Libor Interest
Period. In the event notice of a Rollover of an existing Libor Loan is not given
pursuant to this Section 3.11 or notice of a Conversion of such existing Libor
Loan is not given pursuant to Section 3.10 such Libor Loan shall be converted to
a US Base Rate Loan on the last day of the Libor Interest Period applicable to
such existing Libor Loan.
3.12 Notices Irrevocable
All notices delivered or deemed to be delivered by the Borrower pursuant to
this Article 3 shall be irrevocable and shall oblige the Borrower to take the
action contemplated on the date specified therein.
3.13 Extension of Maturity Date
(a) Request for Extension: The Borrower may, from time to time, request an
extension of the Maturity Date by sending to the Agent at the Agent's
Branch of Account a Request for Extension in duplicate not less than 60
days and not more than 90 days prior to the then current Maturity Date and
the Agent shall forthwith notify the Lenders of such request and each
Lender shall acknowledge receipt of such notification. Provided the Lenders
have previously received the financial statements required by Section
9.1(e) and the budgets and financial plans required by Sections 9.1(h) and
9.1(i), each Lender shall advise the Agent as to whether it agrees with
such request within 30 days of being notified of the Borrower' s Request
for Extension, provided that in the event such Lender does not so advise
the Agent within such 30 day period, such Lender shall be deemed to have
advised the Agent that it does not agree with such request.
(b) Extension: If, pursuant to Section 3.13(a), Lenders holding less than 50%
of the Total Commitment agree to the request made in a Request for
Extension, then the Agent shall, within 5 Business Days after it has
received the response or deemed response of each Lender to the Request for
Extension, advise the Borrower and the Maturity Date shall not be extended
and the further provisions of this Section 3.13 shall have no further
application to such Request for Extension. If Lenders holding more than
50%, but less than 100%, of the Total Commitment agree to a Request for an
Extension, then the Agent shall advise the Borrower within 5 Business Days
after it has received the response or deemed response of each Lender to the
Request for Extension, and the other provisions of this Section 3.13 shall
be applicable.
(c) Request Refused: If any Lender receiving a Request for Extension does not
agree or is deemed not to have agreed to such a request (such Lender being
a "Non-Agreeing Lender"), each of the other Lenders which do agree to such
request shall have the right (but not the obligation) to purchase the
Commitment of the Non-Agreeing Lender. Each of the other Lenders (a
"Purchasing Lender") wishing to exercise its rights to purchase the
Commitment of a Non-Agreeing Lender shall forthwith so notify the Borrower,
the Agent, the Non-Agreeing Lender and each of the other Lenders, if any,
and such Purchasing Lender shall thereupon be obligated to purchase, and
the Non-Agreeing Lender shall be obligated to sell, not less than 6
Business Days prior to the then current Maturity Date, that portion of such
Commitment which is in the ratio that its Lender's Proportion bears to the
aggregate of the Lender's Proportions of all Purchasing Lenders or as
otherwise agreed to by the Borrower and the Purchasing Lenders.
Notwithstanding the foregoing, and unless otherwise agreed at that time,
the Non-Agreeing Lender shall not be obligated to sell to any Purchasing
Lender unless (i) provision satisfactory to the Non-Agreeing Lender (acting
reasonably) has been made for payment of any costs, losses, premiums or
expenses incurred by the Non-Agreeing Lender by reason of any liquidation
or re-deployment of deposits or other funds in respect of Libor Loans
outstanding; and (ii) provision satisfactory to the Non-Agreeing Lender
(acting reasonably) has been made for payment at maturity of outstanding
Bankers' Acceptances accepted by it. The Non-Agreeing Lenders, the
Purchasing Lenders, the Agent, the Borrower and each of the other Lenders,
if any, shall forthwith duly execute and deliver any necessary
documentation to give effect to any purchase under this Section 3.13(c).
(d) Replacement: If a Non-Agreeing Lender's Commitment is not purchased
pursuant to Section 3.13(c), the Borrower may arrange for a replacement
lender (a "Replacement Lender") (which may be 1 of the Lenders) to purchase
the Non-Agreeing Lender's Commitment on the same basis and subject to the
same requirements and indemnities as specified in Section 3.13(c). Any such
Replacement Lender shall require the approval of the Agent, such approval
not to be unreasonably withheld, and no later than 2 Business Days prior to
the Maturity Date such Replacement Lender shall have purchased the
Non-Agreeing Lender's Commitment by execution of all necessary
documentation including, without limitation, execution and delivery of a
Lender Transfer Agreement.
(e) Extension: The Maturity Date shall only be extended pursuant to any Request
for Extension if:
(i) each Lender agrees to the request made in such Request for Extension;
or
(ii) Non-Agreeing Lenders hold less than 50% of the Total Commitment and
the Commitment of each such Non-Agreeing Lender is either:
A. purchased pursuant to Section 3.13(c); or
B. replaced by the Borrower pursuant to Section 3.13(d);
and, in any such case, the Maturity Date shall thereupon be extended for 364
days or such other period of time as the Lenders may stipulate in their response
to a Request for Extension. The Borrower understands that consideration of
any Request for Extension constitutes an independent credit decision which each
Lender on its own behalf retains the absolute and unfettered discretion to make
and that no commitment in this regard is hereby given by any Lender and that any
extension of the Maturity Date may be on such terms and conditions in addition
to those set out herein as the Lenders may stipulate and the Borrower may agree
to.
ARTICLE 4
REPAYMENT AND PREPAYMENT
4.1 Reduction of Commitments and Repayment of Accommodations
On the Maturity Date, the Borrower shall repay all Accommodations then
outstanding and the Commitments of each Lender shall be reduced to zero. The
Borrower shall ensure that all Libor Loans and Bankers' Acceptances mature on or
prior to the Maturity Date and shall ensure that the maturities of all Bankers'
Acceptances and Libor Loans are such that the foregoing mandatory repayments can
be effected.
4.2 Repayment of Outstandings In Excess of Commitments
If the amount of Outstandings (determined in Cdn. Dollars with all
Accommodations denominated in US Dollars being converted to the Equivalent
Amount of Cdn. Dollars using the Bank of Canada noon (Toronto time) spot rate
for converting US Dollars to Canadian Dollars on the first Business Day of the
calendar month for any determination of the currency conversion in such month)
outstanding to any Lender is on any day in excess of the amount of such Lender's
Commitment, the Borrower shall within 5 Business Days thereafter repay, provide
cash cover to be held by the Agent on behalf of such Lender in the same manner
provided for in Section 10.3 or otherwise reduce a portion of such
Accommodations to the extent of the amount of such excess.
Notwithstanding the foregoing, if the excess referred to above is as a
result of exchange rate fluctuations then the Borrower shall not be obligated to
provide the cash cover referred to above unless the Outstandings in respect of
all Lenders has in the aggregate exceeded the aggregate of all Commitments, for
5 consecutive Business Days.
4.3 Cancellation of Commitment and Prepayment
The Borrower may, without penalty or premium, at any time upon 3 Business
Days' prior written notice substantially in the form of Schedule "A", cancel all
of the Total Commitment or any portions thereof in minimum amounts of Cdn.
$100,000 and whole multiples thereof if, on or prior to the last day of such
notice period, the Borrower has:
(a) identified in writing, the amount of reduction to be applicable to the
Total Commitment;
(b) prepaid or otherwise reduced Accommodations outstanding to each Lender
in an amount equal to the amount by which Accommodations outstanding
to such Lender would otherwise be in excess of such Lender's
Commitment immediately after the reduction of the Commitments provided
for in such notice; and
(c) paid all accrued interest and other charges and fees in respect of the
Accommodations being repaid or reduced as aforesaid.
Any such notice of cancellation is irrevocable and the amount of the
Commitment of each Lender so cancelled and reduced may not be reinstated
hereunder.
4.4 Early Repayment of Libor Loans and Bankers' Acceptances
The Borrower shall not cancel all or any portion of the Commitment of any
Lender pursuant to Section 4.3 if the Accommodations required to be repaid to
such Lender as a result thereof include Libor Loans with a Libor Interest Period
falling subsequent to the date of such cancellation or Bankers' Acceptances
accepted by such Lender with a maturity date falling subsequent to the date of
such cancellation unless, on the date of such cancellation, the Borrower has
paid to the Agent at the Agent's Account for Payments, for the account of such
Lender, in respect of Libor Loans the amount required to be paid pursuant to
Section 11.5, and, in respect of Bankers' Acceptances, the amount determined by
such Lender, acting reasonably, (and advised to the Agent) to be the amount
required to be paid on such date of cancellation in order to yield to the Lender
the face amount of all such Bankers' Acceptances, as applicable, on the maturity
date thereof.
4.5 Evidence of Indebtedness
The Agent shall open and maintain on the books of the Agent's Branch of
Account, accounts and records evidencing the Accommodations and other amounts
owing by the Borrower to the Agent and each Lender under this Agreement. The
Agent shall debit therein the amount of such Accommodations, and shall enter
therein each payment of principal of and interest on the Accommodations and fees
and other amounts payable pursuant to this Agreement and shall record the
Bankers' Acceptances accepted by each Lender and all other amounts becoming due
to the Agent and each Lender under this Agreement. The Accounts constitute, in
the absence of manifest error, prima facie evidence of the Indebtedness of the
Borrower to the Agent and each Lender pursuant to this Agreement, the date each
Lender made each Accommodation available to the Borrower and the amounts the
Borrower has paid from time to time on account of the principal of and interest
on the Accommodations, fees payable pursuant to this Agreement and other amounts
owing hereunder. The Agent shall, from time to time, provide to the Borrower
copies of such accounts and records upon the Borrower' s reasonable request.
ARTICLE 5
PAYMENT OF INTEREST AND FEES
5.1 Interest on Prime Loans
The Borrower shall pay to the Agent on behalf of each Lender interest on
each Prime Loan in Canadian Dollars at the Agent's Account for Payments at a
rate per 365 day period equal to the Prime Rate plus the Margin applicable to
such Prime Loan. A change in the Prime Rate will simultaneously cause a
corresponding change in the interest payable for a Prime Loan and a change in
the Margin will cause a change in the interest payable as provided for in
Section 5.10. Such interest is payable monthly in arrears on each Interest Date
for the period commencing on and including the immediately prior Interest Date
up to and including the last day prior to the Interest Date on which such
interest is to be paid and shall be calculated on a daily basis and on the basis
of the actual number of days elapsed in a year of 365 days. The annual rates of
interest to which the rates determined in accordance with the foregoing
provisions of this Section 5.1 are equivalent, are the rates so determined
multiplied by the actual number of days in a period of 1 year commencing on the
first day of the period for which such interest is payable and divided by 365.
5.2 Interest on US Base Rate Loans
The Borrower shall pay to the Agent on behalf of each Lender interest on
each US Base Rate Loan in US Dollars at the Agent's Account for Payments at a
rate per 365 day period equal to the US Base Rate plus the Margin applicable to
such US Base Rate Loan. A change in the US Base Rate will simultaneously cause a
corresponding change in the interest payable for a US Base Rate Loan and a
change in the Margin will cause a change in the interest payable as provided for
in Section 5.10. Such interest is payable monthly in arrears on each Interest
Date for the period commencing on and including the immediately prior Interest
Date up to and including the last day prior to the Interest Date on which such
interest is to be paid and shall be calculated on a daily basis and on the basis
of the actual number of days elapsed in a year of 365 days. The annual rates of
interest to which the rates determined in accordance with the foregoing
provisions of this Section 5.2 are equivalent, are the rates so determined
multiplied by the actual number of days in a period of 1 year commencing on the
first day of the period for which such interest is payable and divided by 365.
5.3 Interest on Libor Loans
The Borrower shall pay to the Agent on behalf of each Lender interest on
each Libor Loan in US Dollars at the Agent's Account for Payments for the period
commencing on and including the first day of the Libor Interest Period
applicable to such Libor Loan up to but not including the last day of such Libor
Interest Period at a rate per 360 day period, equal to the sum of Libor plus the
Margin applicable to such Libor Loan. A change in the Libor Margin will cause a
corresponding change in the interest payable for a Libor Loan as provided for in
Section 5.10. Such interest shall be payable on each Libor Interest Date
applicable to such Libor Interest Period and shall be calculated on a daily
basis and on the basis of the actual number of days elapsed in the period for
which such interest is payable (including the first day of such period but
excluding the date on which such interest is payable) divided by 360. The annual
rates of interest to which the rates determined in accordance with the foregoing
provisions of this Section 5.3 are equivalent, are the rates so determined
multiplied by the actual number of days in a period of 1 year commencing on the
first day of the period for which such interest is payable and divided by 360.
5.4 Bankers' Acceptance Fees
The Borrower shall pay acceptance fees in Canadian Dollars to the Agent on
behalf of the Lenders at the Agent's Account for Payments forthwith upon the
acceptance by each Lender of each Bankers' Acceptance issued by the Borrower at
a rate per 365 day period equal to the applicable Margin, calculated on the face
amount of such Bankers' Acceptance and on the basis of the number of days in the
term of such Bankers' Acceptance divided by 365. Acceptance fees payable to the
Lenders pursuant to this Section 5.4 shall be paid in the manner specified in
Section 3.6. All fees payable pursuant to this Section 5.4 on any date in
respect of any issuance of Bankers' Acceptances shall be calculated by the Agent
and payable by the Borrower based on the applicable Margin in effect on such
date as provided for in Section 5.10; provided that if during the term of any
such Bankers' Acceptance a change in the Margin occurs, the fees paid by the
Borrower in respect of such Bankers' Acceptance shall be adjusted, effective at
the beginning of the Fiscal Quarter next following the Fiscal Quarter in which
the change in the Margin occurs pursuant to Section 5.10, to reflect the Margin
for the remaining term (if any) of the Bankers' Acceptance and the Borrower, in
the case of an increase in the Margin, shall forthwith after receipt of a notice
from the Agent make such payments to the Agent at the Agent's Account for
Payments for the account of the Lenders as are necessary to reflect such change
and the Lenders, in the case of a decrease in the Margin, shall credit any
amount which would otherwise be refundable to the Borrower against amounts in
respect of interest or fees accruing hereunder in relation to the Borrower.
5.5 Interest on Overdue Amounts
Notwithstanding any other provision hereof, in the event that any amount
due hereunder (including, without limitation, any interest payment) is not paid
when due (whether by acceleration or otherwise), the Borrower shall and hereby
agrees to pay to the Lenders interest on such unpaid amount (including, without
limitation, interest on interest), if and to the fullest extent permitted by
Applicable Law, from the date that such amount is due until the date that such
amount is paid in full (but excluding the date of such payment if the payment is
made before 10:00 a.m. at the place of payment on the date of such payment), and
such interest shall accrue daily, be calculated and compounded on the last
Business Day of each calendar month and be payable in the currency of the
relevant Accommodation on demand, as well after as before maturity, default and
judgment, at a rate per annum that is equal to:
(a) if such amount is payable in Canadian Dollars, the Prime Rate plus 2%
per annum; and
(b) if such amount is payable in US Dollars, the US Base Rate plus 2% per
annum.
The Borrower hereby waives, to the fullest extent it may do so under
Applicable Law, any provisions of Applicable Law, including specifically the
Interest Act (Canada) or the Judgment Interest Act (Alberta) which may be
inconsistent with this Agreement.
5.6 Standby Fees
The Borrower shall pay standby fees to the Agent on behalf of each Lender
at the Agent's Account for Payments calculated quarterly in arrears on the last
Business Day of each calendar quarter commencing with the last Business Day of
the calendar quarter in which the Effective Date occurs, and payable quarterly
in arrears on the last Business Day of each calendar quarter thereafter and on
the Maturity Date. Each payment of standby fees shall be calculated for the
period commencing on and including the Effective Date or the last date on which
such standby fees were payable hereunder, as the case may be, up to and
including the last day of the calendar quarter for which such standby fees are
to be paid and shall be in an amount equal to the Standby Fee Rate in effect on
each day during such period of calculation multiplied by the difference, if
positive, obtained by subtracting the Accommodations outstanding from such
Lender for each day in the period of the calculation from the amount of such
Lender' s Commitment in effect on each such day. Such standby fees shall be
calculated on a daily basis and on the basis of a 365 day year. For purposes of
calculating standby fees payable pursuant to this Section 5.6, the amount of
Accommodations outstanding from time to time in US Dollars on each day during
the period for which such standby fees are payable shall, for the purposes of
determining an Equivalent Amount on such day, be notionally converted to the
Equivalent Amount in Canadian Dollars using the Bank of Canada noon (Toronto
time) spot rate for converting US Dollars to Canadian Dollars for the first
Business Day of such calendar month for any calculation in such month.
5.7 Agent's Fees
The Borrower shall pay an agency fee to the Agent (for the Agent's sole
account) at the Agent's Account for Payments, in the amount as from time to time
agreed to between the Borrower and the Agent, on the Effective Date and on each
extension of the Maturity Date and such fees shall, for purposes of this
Agreement, be deemed to be an amount payable pursuant to this Agreement.
5.8 Maximum Rate Permitted by Law
No interest or fee to be paid hereunder shall be paid at a rate exceeding
the maximum rate permitted by Applicable Law. In the event any such interest or
fee exceeds such maximum rate, such interest or fee shall be reduced or
refunded, as the case may be, so as to be payable at the highest rate
recoverable under Applicable Law.
5.9 Interest Generally
The theory of deemed reinvestment shall not apply to the calculation of
interest or payment of fees or other amounts hereunder, notwithstanding anything
contained in this Agreement or in any other Loan Document now or hereafter
granted to or taken by the Lender and all interest and fees payable by the
Borrower to any Lender shall accrue from day to day and be computed as described
herein in accordance with the "nominal rate" method of interest calculation.
5.10 Interest and Fee Adjustment
In the event of a change in the Margin or a change in the Standby Fee Rate
as a result of a change in the Funded Debt to EBITDA Ratio (at a time when there
is no Syndicated Indebtedness), such change shall become effective on the day on
which the Borrower delivers a Compliance Certificate in accordance with the
requirements hereof evidencing the change in the Funded Debt to EBITDA Ratio,
or, if the Borrower has not delivered a Compliance Certificate as required by
the terms hereof within 75 days of the end of any Fiscal Quarter, then such
change in the Margin or a change in the Standby Fee Rate shall become effective
on such 75 th day and the determination of the Funded Debt to EBITDA Ratio on
such date shall be made by the Agent, in its sole discretion, and such
determination shall be final and binding for all purposes hereof.
ARTICLE 6
SECURITY
6.1 Security
To secure due repayment and satisfaction of all Indebtedness of the
Borrower to the Lenders from time to time pursuant to this Agreement and any of
the other Loan Documents, including due performance, payment and satisfaction of
all its obligations and Indebtedness hereunder and thereunder, the Borrower
shall, in each case in form, substance and amount satisfactory to the Agent:
(a) execute and deliver a floating charge debenture, a pledge agreement thereof
and an opinion in respect of such documents from counsel to the Borrower;
and
(b) cause each Guaranteeing Subsidiary to execute and deliver to the Agent a
Subsidiary Guarantee, a floating charge debenture, a pledge agreement
thereof, and an opinion in respect of such documents from counsel to such
Guaranteeing Subsidiary.
6.2 Release and Amendment of Security
No Lender shall, during the term of this Agreement, discharge, surrender,
amend or otherwise modify any Security, without the prior written consent of all
of the Lenders provided that the Agent and each Lender shall, when there is no
Default or Event of Default, discharge Security provided hereunder with respect
to Permitted Dispositions upon the written request of the Borrower, accompanied
by evidence to the satisfaction of the Agent, acting reasonably, that a
Permitted Disposition has or is about to occur.
6.3 Registrations and Renewals
The Borrower shall and shall cause each Guaranteeing Subsidiary to, at the
Borrower' s sole cost and expense, do all such acts, execute all such
instruments and provide such further assurances as counsel to the Agent may
reasonably request to ensure that the priority of the Security Interests created
by all of the Security executed and delivered to the Agent as contemplated
hereby is duly protected and perfected by registration, filing or recordation of
such Security or a caution, caveat, security notice or other appropriate
instrument at all offices where necessary or of advantage to the protection or
perfection thereof including in the Provinces of Alberta and Saskatchewan; and
to so cooperate with the Agent and the Agent's counsel in renewing or refiling
any registration, filing or recordation required hereby in order to preserve,
protect and maintain the priority of such Security Interests, from time to time.
6.4 Extensions, Etc.
The Lenders may directly, or through the Agent or other duly authorized
representatives, grant extensions, take and give up securities, accept
compositions, grant releases and discharges and otherwise deal with the
Borrower, any Guaranteeing Subsidiary or any other Persons, sureties or
securities as the Lenders, in their sole discretion, may see fit, all without
prejudice to the liability of the Borrower or any Guaranteeing Subsidiary under
the Loan Documents or the rights of the Lenders under the Loan Documents.
6.5 Permitted Encumbrances, Permitted Indebtedness and Permitted Title
Defects
None of:
(a) the fact that the Borrower or a Guaranteeing Subsidiary is permitted to
create or suffer to exist any Permitted Encumbrance, Permitted Indebtedness
or Permitted Title Defect;
(b) the fact that any representation, warranty or covenant herein may make an
exception for the existence of Permitted Encumbrances, Permitted
Indebtedness or Permitted Title Defects; or
(c) the fact that the Security Interests created pursuant to the Loan Documents
are stated to be subject to, or are not required to rank in priority to,
Permitted Encumbrances;
shall in any manner, nor in any cause or proceeding, directly or indirectly, be
taken to constitute a subordination of any Security Interest created pursuant to
the Loan Documents to any Permitted Encumbrance or to any other Security
Interest or other obligation whatsoever, or that the Indebtedness under the Loan
Documents is in any way subordinate or junior in right of payment to any
Permitted Indebtedness, it being the intention of the parties that all Security
Interests created pursuant to the Loan Documents shall at all times, to the
maximum extent permitted by Applicable Law, rank as first priority Security
Interests in priority to Permitted Encumbrances and all other Security Interests
or other obligations whatsoever and that the Indebtedness under the Loan
Documents will rank in right of payment at all times at least equally with such
Permitted Indebtedness.
ARTICLE 7
PAYMENT AND TAXES
7.1 Time, Place and Currency of Payment
Payments of principal, interest, fees and all other amounts payable by the
Borrower pursuant to this Agreement shall be paid in the currency in which it is
due for value at or before 1:00 p.m. (Toronto time) on the day such payment is
due. If any such day is not a Business Day, such amount shall be deemed for all
purposes of this Agreement to be due on the Business Day next following such day
and any such extension of time shall be included in the computation of the
payment of any interest or fees payable under this Agreement. All payments shall
be made at the Agent's Account for Payments. Receipt by the Agent from the
Borrower of funds pursuant to this Agreement, as principal, interest, fees or
otherwise, shall be deemed to be receipt of such funds by the Agent or Lenders,
as the case may be.
7.2 Application of Payments Prior to an Event of Default
Except as otherwise agreed to by all of the Lenders in their sole
discretion, all payments made by or on behalf of the Borrower pursuant to this
Agreement, prior to the delivery of an Acceleration Notice or the occurrence of
an Event of Default specified in Section 10.1(f) or 10.1(g), shall be applied by
the Agent rateably among the Lenders and the Agent in accordance with amounts
owed to the Lenders and the Agent in respect of each category of amounts set
forth below, each such application to be made in the following order with the
balance remaining after application in respect of each category to be applied to
the next succeeding category:
(a) Expenses: firstly, in payment of any amounts due and payable as and by way
of recoverable expenses hereunder;
(b) Interest and Fees: secondly, in payment of any amounts due and payable as
and by way of interest pursuant to Sections 5.1, 5.2 and 5.3, fees pursuant
to Sections 5.4, 5.6 and 5.7 and interest on overdue amounts pursuant to
Section 5.5; and
(c) Other Amounts (other than Accommodations): thirdly, in payment of any
amounts (other than Accommodations) then due and payable by the Borrower
hereunder other than amounts hereinbefore referred to in this Section 7.2;
with the balance to be applied to repay or otherwise reduce Accommodations in a
manner so that the Accommodations and each basis of Accommodation outstanding
hereunder to each Lender will, to the extent possible, be in the same proportion
as its Lender's Proportion.
7.3 Taxes
The Borrower shall make all payments to the Agent on behalf of the Lenders
without set-off or counterclaim, free and clear of, and without deduction for or
on account of, any Tax, other than tax withheld in respect of a Lender by reason
of such Lender not being a resident of Canada within the meaning of the Income
Tax Act (Canada) ("Withholding Tax"). If any Tax is deducted or withheld from
any payments, other than in respect of any Withholding Tax in respect of a
Lender not a resident of Canada within the meaning of the Income Tax Act
(Canada), the Borrower shall promptly remit to the Agent on behalf of the
Lenders the equivalent of the amounts so deducted or withheld together with the
relevant official receipts or other evidence satisfactory to the Agent
evidencing payment to the appropriate taxing authority of each such Tax by the
Borrower on behalf of the Lenders.
7.4 Account Debit Authorization
The Borrower authorizes and directs the Agent, in its discretion, to
automatically debit, by mechanical, electronic or manual means, the bank
accounts of the Borrower maintained with BMO (for so long as BMO is Agent
hereunder) for all amounts payable under this Agreement, including but not
limited, to the repayment of principal and the payment of interest, fees and all
charges for the keeping of such bank accounts.
ARTICLE 8
CONDITIONS PRECEDENT TO DISBURSEMENT OF THE ACCOMMODATIONS
8.1 Effectiveness and Conditions Precedent
This Agreement shall become effective at such time as the
following conditions precedent have been satisfied:
(a) No Event of Default: as of such time, there exists no Default or Event of
Default;
(b) Representations and Warranties True: the representations and warranties
contained in Article 2 are true and correct as of such time;
(c) Receipt of Documentation: the Agent has received, in form and substance
satisfactory to the Lenders, the following:
(i) a duly executed copy of this Agreement for the Agent and each Lender;
(ii) duly executed copies of the Security as required pursuant to Article
6;
(iii)a certificate of status in respect of the Borrower and each
Guaranteeing Subsidiary that is a corporation issued under the laws of
the provinces in which any of them carries on any material business;
(iv) a certified copy of the constating documents and by-laws of the
Borrower and each Guaranteeing Subsidiary, and a certified copy of the
Partnership Agreement, the certificate of the Partnership, and all
amendments to any of the foregoing, certified as of the Effective
Date;
(v) a certified copy of a directors' resolution of the Borrower and each
Guaranteeing Subsidiary that is a corporation, and a certified copy of
a partners resolution of the Partnership, with respect to the Loan
Documents to which it is a party, certified as of the Effective Date;
(vi) certified copies of the GMS Agreements;
(vii)execution and delivery by all parties thereto of the Intercreditor
Subordination Agreement and the KS Subordination;
(viii) execution and delivery of an amendment to the Confidentiality
Agreement in respect of which the only parties will be Gulf and the
Agent;
(ix) an officer' s certificate from the chief financial officer of the
Borrower confirming the sources and uses of funds as set forth in
Schedule "O", including that such sources are adequate to complete the
transactions contemplated by the Purchase and Sale Agreement;
(x) an officer's certificate from a senior officer of the Borrower
certifying that the transactions provided for in the Purchase and Sale
Agreement have been successfully completed and closed, including the
purchase and transfer to the Borrower of all of Gulf's remaining
interests in the Partnership and each of the Guaranteed Subsidiaries
not held by it immediately prior to such closing, and including the
satisfaction of all conditions precedent contained therein, without
any waiver or amendment of any terms or conditions thereof;
(xi) evidence that James V. Bertram, David G. Smith, David J. Lovitt and
Kenneth W. Merritt have been retained by GMSL;
(xii)evidence that all regulatory and shareholder approvals required on or
before the date hereof have been received with respect to the Loan
Documents, the Purchase and Sale Agreement, and the execution,
delivery and performance of the Loan Documents;
(xiii) submission of an environmental check-list in the Agent's standard
form in respect of each of the Loan Parties;
(xiv)an opinion of Macleod Dixon, counsel to the Borrower, the
Guaranteeing Subsidiaries and Solex Production Ltd., addressed to the
Agent and each Lender, relating to, inter alia, existence of the
Borrower, each Guaranteeing Subsidiary and Solex Production Ltd. and
the authorization, execution, delivery and enforceability of the Loan
Documents to which each is a party;
(xv) an opinion of Burnet, Duckworth & Palmer, counsel to the Lenders,
addressed to the Agent and each Lender;
(xvi)an opinion of Dickstein Shapiro Morin & Oshinsky, counsel to KeySpan
Energy Development Corporation and an opinion of Loyens & Loeff,
counsel to Nicodama Beheer V B.V., in respect of the KS Subordination;
(xvii) an opinion of Dickstein Shapiro Morin & Oshinsky, counsel to KeySpan
Corporation in respect of the Intercreditor Subordination Agreement;
(xviii) a duly executed Notice of Borrowing;
(xix) evidence of insurance in compliance with Section 9.1(n); and
(xx) such other documents and documentation which the Agent may reasonably
request;
(d) Fees: payment of all advisory, underwriting, agency and legal fees of the
Agent; and
(e) No Material Adverse Effect: as of such time no circumstance or event has
occurred which could reasonably be expected to have a Material Adverse
Effect.
8.2 Continuing Conditions Precedent
The obligation of the Lenders to make available any Accommodations pursuant
to Section 3.4 or to make any Conversion of Accommodations pursuant to Section
3.10 or to make a Rollover pursuant to Section 3.11, is subject to and
conditional upon the condition precedent that, on each Drawdown Date, Conversion
Date and Rollover Date (i) there exists no Default or Event of Default, and (ii)
after giving effect to the Drawdown, Conversion or Rollover, the aggregate
Outstandings will not exceed the Total Commitment.
8.3 Waiver of a Condition Precedent
The terms and conditions of Sections 8.1 and 8.2 are inserted for the sole
benefit of the Agent and the Lenders and may be waived by the Majority Lenders
in whole or in part with or without terms or conditions, in respect of all or
any portion of the Accommodations, without affecting the right of the Lenders to
assert such terms and conditions in whole or in part in respect of any other
Accommodations.
ARTICLE 9
COVENANTS
9.1 Positive Covenants
During the term of this Agreement, the Borrower covenants with each of the
Lenders and the Agent that:
(a) Payment and Performance of Indebtedness: the Borrower shall, and shall
cause each Guaranteeing Subsidiary to, pay duly and punctually all
Indebtedness as and when due by it hereunder and shall perform all other
obligations on its part to be performed under the terms of the Loan
Documents at the times and places and in the manner provided for therein;
(b) Corporate Existence: the Borrower shall maintain its corporate existence in
good standing under the laws of the Province of Nova Scotia and register
and qualify and remain registered and qualified as an extra-provincial
corporation under the laws of each jurisdiction in which the nature of any
material business conducted by it or the character of any material
properties and assets owned or leased by it requires such registration and
qualification;
(c) Corporate Existence of Guaranteeing Subsidiaries: the Borrower shall cause
each Guaranteeing Subsidiary which is a corporation to maintain its
corporate existence in good standing under the laws of its jurisdiction of
incorporation or creation, as the case may be, and shall cause each to duly
register and qualify and remain duly registered and qualified as an extra
provincial corporation under the laws of each jurisdiction in Canada in
which the nature of any material business transacted by it or the character
of any material properties or assets owned or leased by it requires such
registration and qualification;
(d) Partnership Existence of the Partnership: other than as expressly permitted
hereunder, the Borrower shall cause the Partnership to maintain its
partnership existence in good standing under the laws of Alberta and under
the laws of Saskatchewan and shall cause the Partnership to be duly
registered and qualified and remain duly registered and qualified as a
partnership under the laws of Alberta and each other jurisdiction in Canada
in which the nature of any material business transacted by it or the
character of any material properties or assets owned or leased by it
require such qualification;
(e) Annual Financial Statements: the Borrower shall furnish to the Agent as
soon as available and in any event within 120 days after the end of each
Fiscal Year of the Borrower, the annual audited consolidated financial
statements of the Borrower, and unaudited unconsolidated annual financial
statements for each Loan Party. as at the close of such Fiscal Year,
setting forth in comparative form the corresponding figures of the
preceding Fiscal Year together with (i) (in the case of audited statements)
an auditor's report confirming that its examinations of such consolidated
financial statements were made in accordance with generally accepted
auditing standards and accordingly included such tests and other procedures
as it considered necessary in the circumstances and that such consolidated
financial statements present fairly in all material respects the
consolidated financial position of the Borrower and its Subsidiaries as of
the close of such Fiscal Year and the results of their operations and the
changes in their financial position for the Fiscal Year then ended, in
accordance with Generally Accepted Accounting Principles; and (ii) a
certificate of a senior officer of the Borrower certifying that, except as
disclosed in such financial statements, no Loan Party has had any
liability, contingent or otherwise, or any unrealized or anticipated loss
that, singularly or in the aggregate, had, or could reasonably be expected
to have, a Material Adverse Effect;
(f) Quarterly Financial Statements: the Borrower shall furnish to the Agent as
soon as available and in any event within 75 days after the end of each of
the first 3 Fiscal Quarters of each Fiscal Year of each Loan Party, its
quarterly unaudited consolidated financial statements including unaudited
consolidated statements of income, changes in financial position and
balance sheet prepared in accordance with GAAP consistently applied;
(g) Quarterly Compliance Certificate: the Borrower shall furnish to the Agent,
as soon as reasonably practicable and in any event within 75 days after the
end of each Fiscal Quarter, and effective as of the last day of each Fiscal
Quarter, a duly executed and completed Compliance Certificate, such
Compliance Certificate to be substantially in the form of Schedule "E"
hereto and providing, with detail and supporting calculations satisfactory
to the Agent, the determination of the financial ratios set out in the
financial covenants in Section 9.3;
(h) Annual Budget: the Borrower shall furnish to the Agent as soon as available
and in any event not later than 75 days after each Fiscal Year and in form
and substance satisfactory to the Agent, acting reasonably, an annual
budget for the Borrower and its Guaranteeing Subsidiaries for that Fiscal
Year containing reasonable detail as to all budgeted capital expenditures,
an operating business plan, a projection of revenues and expenses and cash
flow forecast;
(i) Five Year Financial Plan: the Borrower shall furnish to the Agent as soon
as available and in any event within 90 days after each Fiscal Year and in
form and substance satisfactory to the Agent, acting reasonably, a detailed
financial plan in respect of the Borrower and its Guaranteeing Subsidiaries
for the 5 year period commencing with such Fiscal Year;
(j) Mark to Market Amount: the Borrower shall ensure that at all times the Mark
to Market Amount does not exceed $5,000,000;
(k) Inspection and Audit: the Borrower shall, and shall cause each Guaranteeing
Subsidiary to, at reasonable times, on reasonable notice and subject to
observance of applicable safety rules and procedures, allow or enable (to
the extent it is able in respect of Facilities not operated by a Loan
Party) the Agent, any Lender or any of their representatives to visit and
inspect the assets or properties of the Borrower or any Guaranteeing
Subsidiary (in each case at the risk of the Borrower except to the extent
of the negligence or wilful misconduct of the Agent, such Lender or such
representatives) during normal business hours and afford to any Lender and
its representatives such access as may be reasonably required for such
purposes;
(l) Environmental Inspection: where the Majority Lenders reasonably believe
that the Borrower or a Guaranteeing Subsidiary in is material breach of an
Environmental Law and that the result of such breach could reasonably be
expected to have a Material Adverse Effect such Loan Party shall permit, or
if it is not the operator of the Collateral in question seek the permission
of the operator for, properly qualified representatives of the Agent to
conduct tests, inspections and appraisals on the applicable Collateral,
including environmental audits and soil tests, and to remove soil and other
samples from the subject Collateral from time to time to determine whether
there is a breach of any Environmental Law by the Borrower or such
Guaranteeing Subsidiary which could reasonably be expected to have a
Material Adverse Effect, provided that the results of any such tests shall
be delivered to the Borrower or such Guaranteeing Subsidiary and the
Borrower shall be responsible for the reasonable costs thereof;
(m) Payment of Taxes: the Borrower shall and shall cause each Subsidiary to
file all income tax returns which are required to be filed, pay or make
provision for payment (in accordance with Generally Accepted Accounting
Principles) of all Taxes which are due and payable, and provide adequate
reserves (in accordance with Generally Accepted Accounting Principles) for
the payment of any Tax, the payment of which is being contested, and shall
provide the Agent upon request with evidence, in form and substance
satisfactory to the Agent, of such payment or, in the case of a
contestation, evidence that such contestation could not reasonably be
expected to have a Material Adverse Effect if determined adversely to the
applicable Loan Party;
(n) Insurance: the Borrower shall and shall cause each Guaranteeing Subsidiary
to maintain in full force and effect such policies of insurance issued by
insurers of recognized standing insuring such properties and operations of
the Borrower and the Subsidiaries, including all risks property insurance,
wrap-up general liability insurance, employee's liability insurance,
business interruption insurance, sudden and accidental pollution insurance
and replacement cost insurance, and providing such coverages as would be
maintained by a prudent oil and gas operator engaged in the same or similar
business in the localities where such properties and operations are
located, all with responsible and reputable insurance companies in such
amounts, with such waivers of insurer's rights of subrogation and with such
deductibles as are customary and consistent with prudent industry practice,
and including the Agent as additional insured and first loss payee, and
shall, if required, furnish the Agent with certificates or other evidence
satisfactory to the Agent of compliance with the foregoing provisions;
(o) Defend Title: except as otherwise expressly provided for hereunder the
Borrower shall, and shall cause each Guaranteeing Subsidiary to, maintain,
protect and defend title to all of its material assets and take all such
commercially reasonable acts and steps as are necessary or advisable at any
time and from time to time to retain its ownership and that of any
Guaranteeing Subsidiary in all such material assets in good standing (other
than Permitted Title Defects) and to cure any title defects in respect of
all such material assets (other than Permitted Title Defects);
(p) Books and Records: the Borrower shall and shall cause each Guaranteeing
Subsidiary to keep proper and adequate records and books of account
(including lists of accounts receivable showing amounts owing on each
account) in which true and complete entries will be made in a manner
sufficient to enable the preparation of financial statements in accordance
with Generally Accepted Accounting Principles as consistently applied to
the Borrower and each Guaranteeing Subsidiary and, upon request of the
Agent, make the same available for confidential inspection by the Agent and
the Lenders and their respective employees at all reasonable times and for
the purposes of obtaining copies of and abstracts therefrom;
(q) Notice of Certain Events: the Borrower shall, to the extent any Loan Party
is or becomes aware, provide the Agent with prompt written notice of:
(i) any Default or Event of Default, or of any circumstance or event which
would constitute a material default by any party to any of the GMS
Agreements together in each case with an officer' s certificate
describing in detail such Default, or Event of Default or other
defaults and specifying the steps, if any, being taken to cure or
remedy the same;
(ii) any material actions, suits, litigation or other proceedings of which
any Loan Party has knowledge which are commenced or threatened against
or adversely affect any Loan Party;
(iii)the discovery of any Hazardous Material or of any material Release
from or upon the land or property of the Borrower or any Guaranteeing
Subsidiary which could reasonably be expected to result in liability
to the Borrower or any Guaranteeing Subsidiary in excess of Cdn.
$5,000,000 in the aggregate;
(iv) any Governmental Authorization that has been issued or made by any
Governmental Authority to the effect that the Borrower, any
Guaranteeing Subsidiary, or any operator of a property in which the
Borrower or any Guaranteeing Subsidiary has an interest, has failed to
comply in any material respect with any Environmental Laws or
requiring any material remediation, stop work, cleanup or otherwise;
and
(v) any event, circumstance or condition that has had, or could reasonably
be expected to have, a Material Adverse Effect;
(r) Maintenance of Assets: the Borrower shall, and shall cause each
Guaranteeing Subsidiary to, maintain in all material respects all of its
businesses, activities and operations in accordance with prudent industry
practice, including the maintenance and renewal of all required permits
(including, without limitation, the Permits), Land Rights, licenses, rights
and privileges necessary to enable the Borrower and each Guaranteeing
Subsidiary to operate and conduct its respective businesses, activities and
operations in accordance in all material respects with prudent industry
practice;
(s) Novations: to the extent that the applicable Loan Party is not a party to
any Material Contract on the Effective Date, to diligently and
expeditiously pursue the novation of the applicable Loan Party to all such
Material Contracts except to the extent that any rights, privileges or
interests, in accordance with generally accepted industry practice, are
held in trust by another Person for the applicable Loan Party;
(t) Additional Environmental Information: the Borrower shall, and the Borrower
shall cause each Guaranteeing Subsidiary to, upon the request of the Agent
(acting reasonably), make available for discussion with the Lenders at all
reasonable times the senior officers of the Borrower and any Guaranteeing
Subsidiary primarily responsible for the environmental activities and
affairs of the Borrower or such Guaranteeing Subsidiary;
(u) Compliance with Laws and Regulations: the Borrower shall and shall cause
each Guaranteeing Subsidiary to:
(i) comply with all Applicable Laws in all material respects; and
(ii) observe and conform in all material respects to all valid requirements
of any governmental or municipal authority relative to any of its
material assets and all material covenants, terms and conditions of
all material agreements upon or under which any of its assets are
held;
(v) Guaranteeing Subsidiary Ownership: the Borrower shall ensure at all times
that it beneficially owns either directly or indirectly through 1 or more
Guaranteeing Subsidiaries, all of the issued and outstanding shares in the
capital stock of each Guaranteeing Subsidiary that is a corporation, and
all voting, equity and partnership interests in any other Guaranteeing
Subsidiary;
(w) Remittance of Cash Flow: the Borrower shall cause each Guaranteeing
Subsidiary to remit, on a regular basis, all cash flow after operating
expenses of such Subsidiary, to the Borrower as may be required to ensure
that the Borrower is able to discharge all of its payment obligations from
time to time under the Loan Documents on a timely basis;
(x) Additional Information: the Borrower shall, and shall cause each
Guaranteeing Subsidiary to, furnish to the Agent any additional information
regarding the business affairs, operations and financial condition of the
Borrower and its Subsidiaries as the Agent shall reasonably request;
(y) Further Assurances: the Borrower shall, within 30 days after notice thereof
from the Agent, to do all such further acts and things and execute and
deliver all such further documents as shall be reasonably required by the
Agent in order to ensure the terms and provisions of the Loan Documents are
fully performed and carry out;
(z) Parent Undertaking: the Borrower shall use its best efforts and act
diligently and expeditiously to obtain as soon as possible after an Event
of Default, or an event of default under the Syndicated Credit Agreement,
an undertaking in writing to the Agent from KeySpan Corporation undertaking
that (i) if there is any demand for payment made upon the Borrower by or on
behalf of the Syndicated Lenders under the Syndicated Credit Facility and a
demand for payment under the guarantee thereof provided by KeySpan
Corporation, then KeySpan Corporation will forthwith make payment under its
guarantee of all Indebtedness to the Syndicated Lenders or will otherwise
forthwith fund the Borrower such that it is able to effect such payment
directly, and (ii) if it makes payment under its guarantee, it will enter
into a subordination agreement in the terms of the KS Subordination in
respect of all Indebtedness of the Borrower to KeySpan Corporation arising
as a result of any such payment;
(aa) Disposition Restrictions: the Borrower shall use and shall cause each
Guaranteeing Subsidiary to use reasonable commercial efforts to ensure that
all agreements in the nature of Material Contracts entered into by the
Borrower or any Guaranteeing Subsidiary after the date hereof may be
subject to the Security Interest constituted by the Security and may
thereafter be sold, assigned and transferred in the course of any
realization or enforcement of such Security to a reasonably creditworthy
purchaser, assignee or transferee who agrees to be bound by the provisions
of such contracts; and
(ab) Mark to Market Reporting: the Borrower shall:
(i) on the 10th Business Day of each month provide a certificate of a
senior officer of the Borrower, confirming (A) the Mark to Market
Amount as of the last Business Day of the immediately preceding month;
and (B) the amounts of any loss or potential losses as referred to in
Section 9.2(i)(vi); and
(ii) at any time when the threshold amount provided in Section 9.2(i)(vi)
is exceeded; provide a notice to the Agent to that effect.
9.2 Negative Covenants
During the term of this Agreement, the Borrower covenants with each of the
Lenders and the Agent that it shall not, and shall ensure that each Guaranteeing
Subsidiary shall not:
(a) Limitation on Indebtedness: issue, create, incur, assume, permit, or suffer
to exist, or directly or indirectly be or become in any way liable for or
in respect of, any Indebtedness except for Permitted Indebtedness;
(b) Negative Pledge: except for Permitted Encumbrances, create, incur, assume
or suffer to exist any Security Interest upon or with respect to any of its
undertaking, properties, rights or assets, whether now owned or hereafter
acquired;
(c) Mergers, Etc.: enter into or become party to any transaction of merger,
amalgamation (other than any amalgamation of the Borrower with a
Guaranteeing Subsidiary or winding up of a Guaranteeing Subsidiary into the
Borrower, or a dissolution of the Partnership and distribution of all of
its assets to the Loan Parties which are partners thereof, on terms and
conditions as approved by the Agent, acting reasonably), consolidation,
reorganization, winding up, plan of arrangement, or reconstruction with any
Person or become a party to any other transaction whereby all or
substantially all the property or assets of any Loan Party may become the
property or assets of another Person, including, in the case of an
amalgamation, of the continuing company resulting therefrom, or take any
corporate action in pursuance of any of the foregoing;
(d) Restriction on Dispositions: except for Permitted Dispositions, directly or
indirectly, make any sale, exchange, lease, transfer or other disposition
of any of its properties and assets to any Person;
(e) Change of Fiscal Year: change its Fiscal Year or the basis on which its
financial records are now maintained;
(f) Capital Distributions: directly or indirectly reduce stated capital or
surplus accounts, or make or give effect to any Capital Distribution other
than:
(i) Capital Distributions by a Guaranteeing Subsidiary to the Borrower;
(ii) Capital Distributions on account of the payment of dividends on or in
respect of any share capital of the Borrower, or reasonable interest
payments on account of Intercorporate Debt, provided that all such
dividends paid or declared and all such interest payments made in any
Fiscal Year are not in the aggregate in excess of 75% of Net Income
for such Fiscal Year;
(g) Limit Activities: make any material change in the nature of its business
and operations, or conduct any businesses or operations, which are
materially different from those conducted on the date hereof;
(h) Financial Assistance: provide any form of Financial Assistance to any
Person except for Financial Assistance provided as between the Borrower and
any Guaranteeing Subsidiary or between any Guaranteeing Subsidiaries;
(i) Risk Management: enter into or become subject to:
(i) any Swap in respect of which any Security Interest is created, assumed
or granted;
(ii) any Swap outside the ordinary course of its business or for
speculative purposes (determined, where relevant, by reference to
GAAP), unless the aggregate Swap Indebtedness of all Loan Parties in
respect of Swaps which would be so characterized does not at any time
exceed $1,000,000;
(iii)any Currency Swap having a term to maturity exceeding 1 year or which
has as its subject matter any amount which would exceed the applicable
Loan Party's underlying liability or exposure in such currency in
respect of the physical or financial transaction mitigated by the
Currency Swap;
(iv) any Commodity Swap other than in respect of Gas Products and then
only:
A. in the case of Gas Liquids, if any such Commodity Swap has a term
not exceeding 12 months and is entered into with counterparties
having an "Investment Grade Rating" as defined in Section 13.1;
and
B. in the case of Gas Products other than Gas Liquids, if any such
Commodity Swap has a term not exceeding 12 months and is entered
into with counterparties having an "Investment Grade Rating" as
defined in Section 13.1 or, if entered into with any other
counterparty, then (x) such counterparty is a customer of any of
the Loan Parties and the Borrower has determined, after diligent
review and inquiry, that such counterparty is a reasonably credit
worthy counterparty, and (y) there is concurrently entered into
an offsetting back to back Swap with a counterparty having such
Investment Grade Rating;
(v) any agreement for the purchase for its own account of any Petroleum
Substances (other than Gas Liquids) unless it concurrently enters into
a matching sale transaction having the same term, the same daily
quantity purchase commitment and for a price not less than the price
to be paid by it and with all other material terms being substantially
similar, with the exception of purchases of residue gas pursuant to
contracts not exceeding in the aggregate 30 mmcf/day at any time;
(vi) any agreements whereunder it, or a Person on behalf of it, would be
entitled or required to extract Gas Liquids from Gas for the account
or benefit of it but would incur or be subject to a make whole
commitment obligating it to provide or pay for make-up gas to replace
lost heating value (attributable to the extraction) unless (A) in
respect of each such transaction the Gas Liquids sale price, the Gas
purchase price, the processing fees and any applicable transportation
and other costs are fixed at such time for the duration of the
transaction with the result that it is not exposed to any loss; or (B)
to the extent any such transactions are not so structured, the Loan
Parties in the aggregate are not exposed to any loss or potential loss
that would in the aggregate for the remaining term of all such
transactions exceed $2,000,000; or
(vii)any Swap or any other agreement or transaction which would be
contrary to the "GMS Corporate Policy for Commodity Pricing, Trading
and Contractual Relationships" dated March 17, 2000 and which policy
is as attached hereto as Schedule "H", provided that changes may be
made thereto with the prior written approval of the Agent.
The restrictions set forth in this Section 9.2(i) are in addition to, and
without qualification of, the obligations with respect to the Mark to Market
Amount as set forth in Section 9.1(j).
(j) Restriction on Investments: make any investments in, capitalize or acquire
any ownership interest in, any Person (other than Guaranteeing Subsidiaries
which remain as wholly-owned Subsidiaries of the Borrower) unless any such
investment is consented to by the Majority Lenders and is made on terms and
conditions approved by the Majority Lenders (acting reasonably);
(k) Ownership of Petroleum and Natural Gas Reserves: acquire any interest in
petroleum or natural gas reserves except to the extent (i) required to
acquire or hold a corresponding interest in a Facility, (ii) made pursuant
to Dedicated Reserves, or (iii) made as ancillary to a transaction the
primary purpose of which is to allow injection of waste products and in
circumstances where the purchase price attributable to such reserves would
not exceed $25,000.00;
(l) Amendment of Agreements:
(i) agree to any material revision, alteration, modification, amendment,
change, extension, renewal, replacement or substitution of or under,
or terminate, forfeit, surrender or cancel any of the GMS Agreements,
other than the Administrative Services Agreement;
(ii) waive any material failure of any party to any of the GMS Agreements
to perform its obligations thereunder or release such party from its
obligations to perform and comply with the terms and provisions of the
GMS Agreements;
(iii)suffer or permit anything (within its control) allowing termination
of any of the GMS Agreements, other than the Administrative Services
Agreement; or
(iv) assign or consent (to the extent it is entitled to withhold same) to
any assignment or further assignment of any of the GMS Agreements.
9.3 Financial Covenants
The Borrower shall ensure that at
any time when there is no Syndicated Indebtedness:
(a) its Funded Debt to EBITDA Ratio as of the last day of each Fiscal Quarter
is not more than 3.5 to 1.0;
(b) its Interest Coverage Ratio as of the last day of each Fiscal Quarter is
not less than 3 to 1; and
(c) its Funded Debt to Capitalization Ratio as at the last day of each Fiscal
Quarter is not more than .55 to 1;
and at any time when there is any such Syndicated Indebtedness, then to the
extent such Syndicated Indebtedness would cause any of the ratios specified
above to be in excess of such ratios, the Borrower shall ensure that, after
taking into account such outstanding Syndicated Indebtedness:
(d) its Funded Debt to EBITDA Ratio as of the last day of each Fiscal Quarter
is not more than 5.6 to 1.0;
(e) its Interest Coverage Ratio as of the last day of each Fiscal Quarter is
not less than 2.25 to 1;
(f) its Funded Debt to Capitalization Ratio as at the last day of each Fiscal
Quarter is not more than .60 to 1.
ARTICLE 10
EVENTS OF DEFAULT
10.1 Events of Default
The occurrence of any 1 or more of the following events or circumstances
constitutes an Event of Default under this Agreement:
(a) Payments: (i) the failure of the Borrower to pay or otherwise reduce the
Accommodations or any portion thereof when due for payment or other
reduction hereunder; or (ii) the failure to pay any other amount due
hereunder on the date upon which the same is due and payable, which failure
to pay continues for 2 Business Days after the date such amount is due;
(b) Covenants: if there is a breach or failure of due performance by the
Borrower or any Guaranteeing Subsidiary of any covenant or provision of any
of the Loan Documents (other than those otherwise dealt with in this
Section 10.1), and such breach or failure is not capable of being remedied,
or if capable of being remedied such breach or failure is not cured to the
reasonable satisfaction of the Majority Lenders within 30 days after
written notice thereof by the Agent to the Borrower;
(c) Representations and Warranties: if any representation or warranty made by
the Borrower or any Guaranteeing Subsidiary in Article 2 or any other Loan
Document or certificate or document delivered to the Agent or any Lender
shall prove to have been incorrect in any material respect when made
hereunder, or would be incorrect in any material particular if then made
hereunder, and (if capable of being corrected, but without changing same)
such representation or warranty continues to be incorrect for a period of
30 days after the Agent gives written notice of such incorrect
representation and warranty to the Borrower;
(d) Cross Default: if the Borrower or a Guaranteeing Subsidiary is given a
valid notice of a default under any term or provision of any agreement
evidencing Indebtedness for Borrowed Money (other than this Agreement or
Intercorporate Debt, but including, without limitation, any Capital Lease),
securing or evidencing Indebtedness in the aggregate in excess of Cdn.
$5,000,000 and such breach or default shall not be remedied within the
lesser of 30 days from the occurrence thereof and the cure period (if any)
allowed in the relevant agreement, or if any Person shall demand repayment
of any Indebtedness which is repayable on demand and is owing to it by the
Borrower or any Guaranteeing Subsidiary and such Indebtedness shall not be
paid within the time required by law, and the aggregate amount of all such
Indebtedness outstanding at any one time to which all such defaults or
demands relate is in excess of Cdn. $5,000,000 or the Equivalent Amount in
any other currencies;
(e) Cease to Carry on Business: other than as permitted hereunder, if the
Borrower or any Guaranteeing Subsidiary ceases or threatens to cease to
carry on its business, or a substantial part thereof, or makes a bulk sale
of its property;
(f) Voluntary Insolvency: if the Borrower or any Guaranteeing Subsidiary shall:
(i) apply for or consent to the appointment of a receiver, trustee or
liquidator of itself or of all or a substantial part of its assets;
(ii) be unable, or admit in writing its inability or failure, to pay its
debts generally as they become due;
(iii) make a general assignment for the benefit of creditors;
(iv) commit or threaten to commit an act of bankruptcy under the Bankruptcy
and Insolvency Act (Canada) or any statute passed in substitution
therefor, as amended from time to time;
(v) commence any cause, proceeding or other action under any existing or
future law relating to bankruptcy, insolvency, reorganization or
relief of debtors seeking to have an order for relief entered with
respect to it, or seeking to adjudicate it a bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment, winding up,
liquidation, dissolution, composition or other relief with respect to
it or its debts or an arrangement with creditors or taking advantage
of any insolvency law or proceeding for the relief of debtors, or file
an answer admitting the material allegations of a petition filed
against it in any bankruptcy, reorganization or insolvency proceeding;
or
(vi) take corporate action for the purpose of effecting any of the
foregoing;
(g) Involuntary Insolvency: if any cause, proceeding or other action shall be
instituted in any court of competent jurisdiction, against the Borrower or
any Guaranteeing Subsidiary seeking in respect of the Borrower or such
Guaranteeing Subsidiary an adjudication in bankruptcy, reorganization,
dissolution, winding up, liquidation, a composition or arrangement with
creditors, a readjustment of debts, the appointment of a trustee, receiver,
liquidator or the like of the Borrower or any Guaranteeing Subsidiary or of
all or any substantial part of its assets, or any other like relief in
respect of the Borrower or any Guaranteeing Subsidiary under any bankruptcy
or insolvency law, and if such cause, proceeding or other action results in
an entry of an order for relief or any such adjudication or appointment, or
if such case, proceeding or other action is being diligently contested by
the Borrower or such Guaranteeing Subsidiary in good faith, the same shall
continue undismissed or unstayed and in effect, for any period of 15
consecutive days;
(h) Change of Control: if at any time when there is any Syndicated
Indebtedness, the Borrower ceases to be a wholly-owned direct or indirect
Subsidiary of KeySpan Corporation, or, at any time after the Syndicated
Indebtedness has been permanently repaid in full, if there is a change of
effective control of the Borrower, direct or indirect, including, without
limitation:
(i) the acquisition by any Person or Persons, (other than KeySpan
Corporation or a wholly-owned Subsidiary of it) acting jointly or in
concert of beneficial ownership of, or control or direction over, 49%
or more of the outstanding Voting Shares of the Borrower;
(ii) the acquisition by any Person or Persons, (other than KeySpan
Corporation or a wholly-owned Subsidiary of it) of the ability to
elect a majority of its or his nominees to the board of directors of
the Borrower; or
(iii) any change in the effective control of management of the Borrower;
(i) Material Adverse Effect: if an event or circumstance shall occur which, in
the opinion of the Majority Lenders, on reasonable grounds and in good
faith, could reasonably be expected to result in a Material Adverse Effect
and, if capable of remedy, such event shall not be remedied within a period
of 30 days from the date of written notice (including reasonable
particulars) by the Agent to the Borrower of such event;
(j) Judgments: if a final judgment or judgments for the payment of money
aggregating in excess of Cdn. $5,000,000 shall be rendered against the
Borrower or any Guaranteeing Subsidiary and the same shall remain
undischarged for a period of 30 days during which such judgment or
judgments shall not be on appeal or execution thereof shall not be
effectively stayed;
(k) Writs: if a writ, execution, attachment or similar process is issued or
levied against any property of the Borrower or any Guaranteeing Subsidiary
in connection with any judgment or judgments against the Borrower or any
Guaranteeing Subsidiary or in connection with any judgment for non-payment
of any Tax, aggregating in excess of Cdn. $5,000,000 and such writs,
executions, attachments or similar processes are not released, bonded,
satisfied, discharged, vacated or stayed within 30 days after their entry,
commencement or levy;
(l) Encumbrancers: if an encumbrancer or lienor lawfully takes possession of
any property of the Borrower or any Guaranteeing Subsidiary having a net
book value in excess of Cdn. $5,000,000 and such possession continues for a
period of 30 consecutive days;
(m) Actions: if there shall be commenced in any court or with or before any
Governmental Authority any material action, suit or proceeding against or
affecting the Borrower or any Guaranteeing Subsidiary or any material
portion of its assets, which, if successful, could reasonably be expected
to have a Material Adverse Effect unless the action, suit or proceeding is
being diligently contested in good faith by appropriate proceedings and in
respect of which adequate reserves have been established in accordance with
Generally Accepted Accounting Principles on the books of the Borrower;
(n) Invalid Documents: if any of the Loan Documents, the GMS Agreements, the
Intercreditor Subordination Agreement, the KS Subordination or any material
provision thereof shall at any time for any reason cease to be in full
force and effect in accordance with its terms, be declared to be void or
voidable or shall be repudiated or claimed to be ineffective, or the
validity or enforceability thereof shall at any time be contested by any
party thereto (other than the Lenders); or if in respect of the Loan
Documents (i) any Loan Party shall deny that it has any or any further
liability or obligation thereunder, or (ii) at any time it shall be
unlawful or impossible for any Loan Party to perform any of its material
obligations under any such Loan Document;
(o) Specified Events: if there is a breach of or default under the covenant
specified in Section 9.1(v) or under any of the covenants specified in
Sections 9.2(a), 9.2(b), 9.2(c), 9.2(f) or 9.2(j); or
(p) Environmental Orders: if an order from a Governmental Authority is issued
against any Loan Party or any material assets or businesses of any Loan
Party alleging a material violation of any Environmental Laws and either:
(i) adequate accounting reserves have not been established in accordance
with GAAP within a reasonable period of time after the order is
issued; or
(ii) the order is not being diligently contested in good faith.
10.2 Acceleration and Demand
Upon the occurrence of any Event of Default the Agent may:
(a) if so required by the Majority Lenders:
(i) Terminate Commitment: by written notice to the Borrower, declare the
Total Commitment and each Lender's Commitment in respect thereof and
the right of the Borrower to apply for further Accommodations
thereunder to be terminated; and
(ii) Acceleration Notice: by written notice to the Borrower (an
"Acceleration Notice"), declare all Indebtedness (whether matured or
unmatured) of the Borrower outstanding to the Agent or any of the
Lenders (including the face amount of all Bankers' Acceptances) to be
immediately due and payable (or to be due and payable at such later
time as may be stated in such notice) without further demand,
presentation, protest or other notice of any kind, all of which are
expressly waived by the Borrower.
10.3 Cash Collateral Accounts
(a) Exchange Rate Fluctuations: Upon the receipt of cash cover by the Agent
pursuant to Section 4.2 and in addition to any other rights or remedies of
the Lenders hereunder, the Agent, for the benefit of the Lenders hereunder,
shall thereafter be entitled to deposit and retain in a Cash Collateral
Account, bearing interest (with interest to follow principal) at the Agent'
s prevailing rates for demand deposits of comparable amounts which are
received by the Agent from the Borrower until the next Business Day on
which there has been no such excess under Section 4.2 for a period of 5
consecutive Business Days, whereupon all such amounts (including interest)
shall be immediately credited to the Prime Loans outstanding.
(b) Bankers' Acceptances, Libor Loans: Upon the occurrence of an Event of
Default or delivery of an Acceleration Notice, the Borrower shall forthwith
pay to the Agent, for deposit into a Cash Collateral Account, an amount
equal to the Lenders' maximum potential liability under the Borrower's then
outstanding Bankers' Acceptances and (unless the Borrower makes payment of
the amount required pursuant to Section 11.5) Libor Loans (collectively,
the "Escrow Funds"). The Escrow Funds shall be held by the Agent for
set-off against future Indebtedness owing by the Borrower to the Lenders in
respect of such Bankers' Acceptances and Libor Loans and shall be held
until repayment of such Outstandings in full, except to apply the amount
represented thereby to the Outstandings or a portion thereof. Escrow Funds
shall bear interest at the Agent' s prevailing rates for demand deposits of
comparable amounts, with interest to follow principal.
10.4 Remedies on Default
After an Event of Default:
(a) Majority Lenders Instructions: If the Majority Lenders do provide
directions or instructions to the Agent, the Agent, on behalf of all
Lenders shall, take such actions and commence such proceedings as the
Majority Lenders in their sole discretion may determine and may enforce or
otherwise realize upon any Security, all without any obligation to marshall
any Security Interests and without additional notice, presentation, demand
or protest, all of which the Borrower hereby expressly waives (to the
extent such rights may be waived under Applicable Law).
(b) General Remedies: The rights and remedies of the Agent and each Lender
under the Loan Documents are cumulative and are in addition to and not in
substitution for any rights or remedies provided by law. To the extent that
the circumstances in paragraph (a) above are applicable, the Agent may on
behalf of all Lenders and shall if so required by the Majority Lenders, to
the extent permitted by Applicable Law, bring suit at law, in equity or
otherwise for any available relief or purpose including but not limited to:
(i) Specific Performance: the specific performance of any covenant or
agreement contained in the Loan Documents;
(ii) Injunction: enjoining a violation of any of the terms of the Loan
Documents;
(iii)Assistance: aiding in the exercise of any power granted by the Loan
Documents or by law; or
(iv) Judgment: obtaining and recovering judgment for any and all amounts
due in respect of the Accommodation or amounts otherwise due hereunder
or under the Loan Documents.
10.5 Right of Set-Off
Upon the occurrence and during the continuance of any Event of Default, and
in addition to any rights now or hereafter granted under Applicable Law and not
by way of limitation of any such rights, the Agent and the Lenders are
authorized at any time and from time to time thereafter, without notice to the
Borrower or to any other Person, (any such notice being expressly waived by the
Borrower) to set-off and to appropriate and to apply any and all deposits
(general or special, time or demand, provisional or final) and any other
Indebtedness at any time held by or owing by the Agent or such Lender to or for
the credit of or the account of the Borrower against and on account of the
obligations and Indebtedness of the Borrower to the Agent or such Lender under
this Agreement including without limitation, all claims of the Agent or any
Lender of any nature or description arising out of or connected with this
Agreement, irrespective of whether or not the Agent or any Lender has made any
demand under this Agreement and although such obligations, liabilities or claims
of the Borrower or any of them are contingent or unmatured. Any exercise of such
rights by any Lender shall be subject to the obligations of such Lender pursuant
to Section 12.11.
10.6 Application and Sharing of Payments Following Acceleration
Except as otherwise agreed to by all the Lenders in their sole discretion,
any sum received by the Agent at any time after delivery of an Acceleration
Notice or the occurrence of an Event of Default specified in Sections 10.1(f) or
10.1(g), shall be applied by the Agent among the Lenders and the Agent in
accordance with amounts owed to the Lenders and the Agent in respect of each
category of amounts set forth below, each such application to be made in the
following order with the balance remaining after application in respect of each
category to be applied to the next succeeding category:
(a) firstly, in or towards payment of any fees or expenses then due and payable
to the Agent hereunder or under any other Loan Document;
(b) secondly, Rateably among the Lenders in respect of amounts due and payable
to such Lenders as and by way of recoverable expenses hereunder or under
any Loan Document;
(c) thirdly, Rateably among the Lenders in respect of amounts due and payable
to such Lenders by way of interest pursuant to Sections 5.1, 5.2 and 5.3,
acceptance fees pursuant to Section 5.4, interest on overdue amounts
pursuant to Section 5.5, standby fees pursuant to Section 5.6 and Agent's
fees pursuant to Section 5.7; and
(d) fourthly, Rateably among the Lenders in respect of any other amount (other
than Accommodations) not hereinbefore referred to in this Section 10.6
which are then due and payable by the Borrower hereunder or under any other
Loan Document.
10.7 Lenders May Perform Covenants
If any Loan Party shall fail to perform any of its obligations under any
covenant contained in any of the Loan Documents within the time permitted for
the performance of any such covenant or for the cure of any default thereof, the
Agent may on behalf of the Lenders, on the instructions of the Majority Lenders,
perform any such covenant capable of being performed by it and, if any such
covenant requires the payment or expenditure of money, it may make such payment
or expenditure with its own funds on behalf of the Lenders. If the Majority
Lenders elect to effect such observance or performance, neither the Agent nor
the Majority Lenders shall be liable for any failure or deficiency, apart from
fraud, in effecting such observance or performance, nor for the payment of any
bills, invoices or accounts incurred or rendered in connection therewith. All
amounts so paid by the Agent hereunder shall be repaid by the Borrower on demand
therefor, and shall bear interest at the rate set forth in Section 5.5 from and
including the date paid by the Agent hereunder to but excluding the date such
amounts are repaid in full by the Borrower.
10.8 Waiver of Default
Any single or partial exercise by any Lender, the Agent or by the Agent on
behalf of any Lender of any right or remedy for a default or breach of any term,
covenant, condition or agreement contained in the Loan Documents shall not be
deemed to be a waiver of or to alter, affect or prejudice any other right or
remedy to which the Agent or such Lender may be lawfully entitled for the same
default or breach, and any waiver by any Lender, the Agent or by the Agent on
behalf of any Lender of the strict observance, performance or compliance with
any term, covenant, condition or agreement contained in the Loan Documents, and
any indulgence granted thereby, shall be deemed not to be a waiver of any
subsequent default. To the extent permitted by Applicable Law, the Borrower
hereby waives any rights now or hereafter conferred by statute or otherwise
which are inconsistent with the Agent's or a Lender's rights or remedies under
the Loan Documents.
ARTICLE 11
EXPENSES AND INDEMNITIES
11.1 Reimbursement of Expenses
All statements, reports (including engineering reports and environmental
reports), certificates, opinions and other documents or information required to
be furnished to the Agent or the Lenders by any Loan Party under this Agreement
shall be supplied by the Loan Parties without cost to the Agent or the Lenders.
In addition, the Borrower agrees to pay promptly to the Agent on demand, all
reasonable legal fees and other reasonable out-of-pocket expenses (including
travel, publicity and syndication expenses) incurred or which may hereafter be
incurred from time to time by the Agent or the Lenders in respect of the
documentation, preparation, registration, negotiation, execution and
administration of the Loan Documents (including any stamp taxes or other Taxes
payable in connection with the execution, delivery or enforcement of the Loan
Documents) and all reasonable legal fees and other out-of-pocket expenses (on a
solicitor and his own client basis) which are incurred from time to time by the
Agent or the Lenders in respect of the enforcement of the Loan Documents. The
Borrower acknowledges that the Agent' s fees payable pursuant to Section 5.7 do
not include any activities which the Agent may undertake hereunder in respect of
any restructuring of the Credit Facility that may be required in the event of
any adverse developments or circumstances affecting the Borrower and that in all
such circumstances additional fees may be required by the Agent in respect of
any such restructuring and in addition to any fees otherwise payable hereunder.
11.2 Increased Cost
If the introduction of, any change in or the implementation of any
Applicable Law, (including any capital adequacy requirement but excluding any
taxes on the overall net income of a Lender or upon the overall capital of a
Lender), regulation, treaty or official directive now or hereafter in effect
(whether or not having the force of law) or any change in the interpretation or
application thereof by any court or by any judicial or Governmental Authority
charged with the interpretation or administration thereof, or if compliance by
any Lender with any request from any central bank or other fiscal, monetary or
other authority (whether or not having the force of law) (individually, a
"Circumstance"):
(a) subjects a Lender to any Tax, or changes the basis of taxation of payments
due to a Lender or increases any existing Tax, on payments of principal,
interest or other amounts payable by the Borrower to a Lender under this
Agreement;
(b) imposes, modifies or deems applicable any reserve, special deposit, capital
adequacy, regulatory or similar requirement against assets or liabilities
held by a Lender, or deposits of or for the account of a Lender, or loans
by a Lender, or any other acquisition of funds for loans by a Lender or
commitments by a Lender to fund loans or obligations of a Lender in respect
of bankers' acceptances accepted by such Lender; or
(c) imposes on a Lender any other condition with respect to this Agreement;
and the result of (a), (b) or (c) is, in the sole determination of such Lender
acting reasonably and in good faith, to increase the cost in respect of an
Accommodation to such Lender or to reduce the income receivable by such Lender
in respect of an Accommodation or standby fees payable pursuant to Section 5.6,
such Lender shall promptly notify the Agent. The Agent shall promptly notify the
Borrower and the Borrower shall pay to the Agent for the benefit of such Lender
that amount which compensates such Lender for such additional cost or reduction
in income (except to the extent such increase in costs or reduction in income is
reflected in or recovered by an increase in the Prime Rate or the US Base Rate)
("Additional Compensation") on the next Libor Interest Date in the case of a
Libor Loan, on the next date on which standby fees are payable under Section 5.6
in the case of standby fees and the next date of issuance of any Bankers'
Acceptances or on the next Interest Date in any other case (and each successive
Libor Interest Date, or Interest Date, if applicable) unless such Lender knew,
on the date of execution of this Agreement, of such Circumstance and the likely
result thereof. The Borrower shall not be obligated to pay any portion of such
Additional Compensation accruing under this Section 11.2 for any period prior to
the date which is 3 months prior to the date on which the Agent, on behalf of
such Lender, gives notice to the Borrower that such Additional Compensation is
so accruing. A photocopy of the relevant law, regulation, treaty, official
directive or regulatory requirement (or, if it is impracticable to provide a
photocopy, a written summary of the same) and a certificate by a duly authorized
officer of such Lender (prepared in good faith) setting forth the amount of the
Additional Compensation and the basis for it must be submitted by the Agent to
the Borrower and is conclusive evidence, in the absence of manifest error, of
the amount of the Additional Compensation. If the Agent notifies the Borrower
that Additional Compensation is owed, the Borrower shall pay such Additional
Compensation to the Agent for the account of such Lender and the Borrower shall
have the right, upon written irrevocable prior notice of at least 3 Business
Days to the Agent at the Agent's Branch of Account, to make payment in full to
the Agent for the account of such Lender in respect of the applicable
Accommodation on the date specified in such notice together with accrued but
unpaid interest and fees in respect of such Accommodation or to convert such
Accommodation into another basis of Accommodation available under this
Agreement.
11.3 Illegality
If the introduction of or any change in Applicable Law, regulation, treaty,
official directive or regulatory requirement now or hereafter in effect (whether
or not having the force of law) or any change in the interpretation or
application thereof by any court or by any judicial or Governmental Authority
charged with the interpretation or administration thereof, makes it unlawful or
prohibited for a Lender (in its sole opinion acting reasonably and in good
faith) to make, to fund or to maintain the Accommodations or a portion of the
Accommodations or to perform its obligations under this Agreement, such Lender
may by written notice to the Borrower through the Agent terminate its
obligations under this Agreement to make such Accommodations or perform such
obligations and the Borrower shall prepay such Accommodations within 2 Business
Days together with all accrued but unpaid interest and fees as may be applicable
to the date of payment or convert by notice to the Agent such Accommodation
forthwith into another basis of Borrowing available under this Agreement.
11.4 Substitute Basis of Accommodation
If, on or prior to any Interest Determination Date in respect of a Libor
Loan, a Lender determines acting reasonably and in good faith (which
determination is final, conclusive and binding upon the Borrower) that:
(a) adequate and fair means do not exist for ascertaining the rate of interest
on such Libor Loan;
(b) the cost to such Lender of making, funding or maintaining such Libor Loan
does not accurately reflect the effective cost to such Lender thereof and
the costs to such Lender are increased or the income receivable by such
Lender is reduced in respect of such Libor Loan;
(c) the making or the continuation of such Libor Loan or a portion of such
Libor Loan by such Lender has become impracticable by reason of
circumstances which materially and adversely affect the London interbank
market; or
(d) deposits in US Dollars are not available to such Lender in the London
interbank market in sufficient amounts in the ordinary course of business
for the applicable Libor Interest Period to make, fund or maintain such
Libor Loan during such Libor Interest Period;
then, such Lender shall promptly notify the Agent, and the Agent shall promptly
notify the Borrower in writing of such determination setting forth the basis of
such determination and such Lender shall not thereafter be obligated to provide
such Libor Loan. The Borrower shall thereupon forthwith notify the Agent as to
the substitute basis of Accommodation available under this Agreement which it
has selected for such Libor Loan. If the Borrower has not so notified the Agent,
such Libor Loan shall automatically be converted to a US Base Rate Loan for all
purposes under this Agreement on the date falling 2 Banking Days subsequent to
such Interest Determination Date.
11.5 Funding Indemnity
If, for any reason whatsoever and whether or not required or permitted
pursuant to the provisions of this Agreement, the Borrower repays, prepays,
converts or cancels a Libor Loan other than on the last day of a Libor Interest
Period applicable to such Libor Loan, or fails for any reason to borrow,
convert, rollover or otherwise act in accordance with a notice given hereunder
pursuant to Schedules "A", "C" or "D", the Borrower shall indemnify the Lender
for any loss or expense incurred by such Lender including without limitation,
any loss of profit or expenses such Lender incurs by reason of the liquidation
or reemployment of deposits or other funds acquired by such Lender to maintain
the Libor Loan or any increased interest or other charges payable to lenders of
funds borrowed in order to maintain such Libor Loan together with any other
out-of-pocket charges, costs or expenses incurred by such Lender relative
thereto. A certificate of such Lender (acting reasonably and prepared in good
faith) submitted by the Agent setting out the basis for the determination of the
amount necessary to indemnify such Lender shall be, in the absence of manifest
error, prima facie evidence thereof.
11.6 General Indemnity
The Borrower hereby covenants with the Agent and each Lender that it shall
at all times hereafter keep the Agent, each Lender and their respective
officers, directors, employees, agents, Affiliates, shareholders and assignees
(the "Indemnified Persons") indemnified and held harmless from and against all
suits (whether founded or unfounded), actions, proceedings, judgments, demands
or claims instituted or made against any Indemnified Person, and all costs,
losses, liabilities, damages and expenses (including all legal fees on a
solicitor and his own client basis) incurred by any Indemnified Person in any
way relating to, arising out of, or incidental to any default by the Borrower or
any Guaranteeing Subsidiary under any provision of any of the Loan Documents
(unless any of the foregoing arise from the gross negligence or wilful
misconduct of such Indemnified Person). Provided there is no Default hereunder
and for so long as there is no Default hereunder, the Borrower, or at its option
another Loan Party, shall be entitled to conduct the defence of such suit,
action or proceeding with the participation of and taking into account the best
interests of the Indemnified Persons. If the Agent or such Lender shall
determine in good faith that the defence of any such suit, action or proceeding
is not being conducted in the best interests of the Indemnified Persons, the
Agent or such Lender shall on notice to the Borrower and any such Loan Party be
entitled to take over the sole conduct of the defence of such suit, action or
proceeding and, unless the Agent or Lender advises that the basis of such
determination is that counsel to a Loan Party has a material conflict of
interest in representing both the Loan Party and the Indemnified Persons, the
Borrower shall not be obligated to indemnify the Agent or such Lender in respect
of any legal fees and disbursements thereafter incurred in respect of such suit,
action or proceeding.
11.7 Environmental Indemnity
The Borrower shall indemnify and hold harmless the Agent and the Lenders
(including any receiver, receiver-manager or similar Person appointed under
Applicable Law) and their respective Affiliates, officers, directors, employees
and agents (the "Indemnitees") forthwith on demand by the Agent from and against
any and all suits (whether founded or unfounded), actions, proceedings,
judgments, demands or claims instituted or made against any Indemnitee, and all
costs, losses, liabilities, damages and expenses (including all legal fees on a
solicitor and his own client basis) of any nature whatsoever suffered or
incurred by any Indemnitee with respect to any Environmental Liabilities (actual
or alleged) related to any Loan Party's assets and properties or arising from
its operations in respect thereof (or any predecessor in interest to any such
Loan Party), except to the extent any thereof arise as a result of the gross
negligence or wilful misconduct of such Indemnitee.
ARTICLE 12
THE AGENT AND THE LENDERS
12.1 Authorization of Agent
Each Lender irrevocably appoints and authorizes the Agent to exercise such
powers, perform such duties, take such actions, make such decisions and
determinations and give such consents under the Loan Documents as are required
to be exercised, performed, taken, made, given or otherwise carried out by the
Agent hereunder or under any other agreement between the Lenders, together with
all powers reasonably incidental thereto. As to any matters not expressly
required by this Agreement, the other Loan Documents or by any other agreement
between the Lenders to be carried out by the Agent, the Agent is not required to
exercise any discretion or take or to refrain from taking any action except upon
the written instructions of the Majority Lenders. Notwithstanding anything to
the contrary in this Agreement, the Agent shall not be required to exercise any
discretion or to take or to refrain from taking any action in any manner which
is contrary to the Loan Documents, to any other agreement between the Lenders or
to Applicable Law.
12.2 Responsibility of Agent
The Agent makes no representation or warranty and accepts no responsibility
with respect to the due execution, legality, validity, sufficiency,
enforceability or priority of any of the Loan Documents nor with respect to the
due execution, legality, validity, sufficiency, enforceability, accuracy or
authenticity of any documents, papers, materials or other information furnished
by the Borrower (or any other person, including the Agent or any Guaranteeing
Subsidiary) in connection with the Loan Documents, whether provided before or
after the date of this Agreement. The Agent shall incur no liability to the
Lenders under or in respect of the Loan Documents with respect to anything which
it may do or refrain from doing in the reasonable exercise of its judgment or
which may seem to it to be necessary or desirable in the circumstances, except
for its gross negligence or wilful misconduct. The Agent assumes no
responsibility for the payment of any of the Accommodations or other amounts
outstanding hereunder by the Borrower.
12.3 Acknowledgment of Lenders
Each Lender acknowledges to the Agent that it has been, and will continue
to be, solely responsible for making its own independent appraisal of and
investigation into the financial condition, creditworthiness, environmental
soundness, affairs, status and nature of the Borrower and accordingly each
Lender confirms to the Agent that it has not relied, and will not hereafter rely
on the Agent:
(a) Information: to check or inquire on its behalf into the adequacy, accuracy
or completeness of any information provided by the Borrower or any
Guaranteeing Subsidiary or in connection with the Loan Documents (whether
or not such information has been or is hereafter circulated to such Lender
by the Agent);
(b) Performance: to inquire as to the performance by the Borrower or any
Guaranteeing Subsidiary of its obligations under the Loan Documents; or
(c) Credit Review: to assess or keep under review on its behalf the financial
condition, creditworthiness, environmental soundness, affairs, status or
nature of the Borrower or any Guaranteeing Subsidiary.
12.4 Rights and Obligations of Each Lender
The rights and obligations of each Lender under this Agreement are several
and no Lender shall be obligated to make Accommodations available to the
Borrower in excess of the amount of such Lender's Commitment. The failure of a
Lender to perform its obligations under this Agreement shall neither:
(a) No Liability to Other Lenders: result in any other Lender incurring any
liability whatsoever; nor
(b) No Relief from Obligations: relieve the Borrower or any other Lender from
their respective obligations under any Loan Document.
Nothing contained herein or in any other Loan Document nor any action taken
pursuant hereto or thereto shall be deemed to constitute the Lenders a
partnership, joint venture or any other similar entity.
12.5 Notice to Lenders
Unless otherwise specifically dealt with in this Agreement, in the event
the Agent delivers a written notice to a Lender requesting advice from such
Lender as to whether it consents or objects to any matter in connection with the
Loan Documents, then, except as otherwise expressly provided herein, if such
Lender does not deliver to the Agent its written consent or objection to such
matter:
(a) where a time period is specified hereunder for the Agent or the Majority
Lenders to provide any response, notice or other communication, not less
than 1 Business Day prior to the end of such period; or
(b) where no such time period is specified hereunder, then within 15 Business
Days of the delivery of such written notice by the Agent to such Lender;
such Lender shall be deemed not to have consented thereto.
12.6 Notices between the Lenders, the Agent and the Borrower
All notices by the Lenders to the Agent shall be through the Agent's Branch
of Account and all notices by the Agent to a Lender shall be through such
Lender's Branch of Account. All notices or communications between the Borrower
and the Lenders which are required or contemplated pursuant to the Loan
Documents shall be given or made through the Agent at the Agent's Branch of
Account.
12.7 Agent's Duty to Deliver Documents Obtained from the Borrower
The Agent shall promptly deliver to each Lender, at its Branch of Account,
such documents, papers, materials and other information as are furnished by the
Borrower to the Agent on behalf of such Lender pursuant to this Agreement, and
the Borrower shall provide the Agent with sufficient copies of all such
information for such purpose.
12.8 Arrangements for Accommodations
The Agent shall promptly give written notice to each Lender at its Branch
of Account upon receipt by the Agent of any notice given pursuant to Article 3
or Section 4.3. The Agent shall advise each Lender of the amount, date and
details of each Accommodation and of such Lender's share in each Accommodation.
At or before 1:00 p.m. (Toronto time) on each Drawdown Date, Conversion Date or
Rollover Date:
(a) Loans: each Lender will make available to the Borrower its share of
Accommodations by way of Loans by forwarding to the Agent at the Agent's
Account for Payments the amount of Loans required to be made available by
such Lender; and
(b) Bankers' Acceptances: each Lender will make available to the Borrower its
share of Accommodations by way of Bankers' Acceptances by forwarding to the
Agent at the Agent's Account for Payments the amount of the Discount
Proceeds (less the amount of applicable fees payable by the Borrower to
such Lender pursuant to Section 5.4).
12.9 Arrangements for Repayment of Accommodations
(a) Prior to Demand or Acceleration: Prior to the delivery of an Acceleration
Notice or the occurrence of an Event of Default specified in Section
10.1(f) or 10.1(g), upon receipt by the Agent of payments from the Borrower
on account of principal, interest, fees or any other payment made to the
Agent on behalf of the Lenders, the Agent shall pay over to each Lender at
its Branch of Account the amount to which it is entitled under this
Agreement and shall use its best efforts to make such payment to such
Lender on the same Business Day on which such payment is received by the
Agent. If the Agent does not remit any such payment to a Lender on the same
Business Day as such payment is received by the Agent, the Agent shall pay
interest thereon to such Lender until the date of payment at a rate
determined by the Agent (such rate to be conclusive and binding on such
Lender) in accordance with the Agent's usual banking practice in respect of
deposits of amounts comparable to the amount of such payment which are
received by the Agent at a time similar to the time at which such payment
is received by the Agent, and no Loan Party will have any liability
therefor.
(b) Subsequent to Acceleration: Following delivery of an Acceleration Notice or
the occurrence of an Event of Default specified in Section 10.1(f) or
10.1(g), the Lenders shall share any payments subsequently received in
accordance with Section 10.6 of this Agreement.
12.10 Repayment by Lenders to Agent
(a) Where Borrower Fails to Pay: Unless the Agent has been notified in writing
by the Borrower at least 1 Business Day prior to the date on which any
payment to be made by the Borrower hereunder is due that the Borrower does
not intend to remit such payment, the Agent may, in its discretion, assume
that the Borrower has remitted such payment when so due and the Agent may,
in its discretion and in reliance upon such assumption, make available to
each Lender on such payment date an amount equal to the amount of such
payment which is due to such Lender pursuant to this Agreement. If the
Borrower does not in fact remit such payment to the Agent, the Agent shall
promptly notify each Lender and each such Lender shall forthwith on demand
repay to the Agent the amount of such assumed payment made available to
such Lender, together with interest thereon until the date of repayment
thereof at a rate determined by the Agent (such rate to be conclusive and
binding on such Lender) in accordance with the Agent's usual banking
practice for similar advances to financial institutions of like standing to
such Lender.
(b) Where a Lender Fails to Pay: Unless the Agent has been notified in writing
by an Lender at least 1 Business Day prior to a Drawdown Date or Conversion
Date that such Lender does not intend to make available the amount required
to be made available by such Lender pursuant to this Agreement on such
Drawdown Date or Conversion Date, the Agent may, in its discretion, assume
that such Lender has remitted funds to the Agent in an amount equal to the
amount required to be made available by such Lender pursuant to this
Agreement and the Agent may, in its discretion and in reliance upon such
assumption, make available to the Borrower on such Drawdown Date or
Conversion Date an amount equal to the amount required to be made available
by such Lender pursuant to this Agreement. If an Lender does not in fact
remit such funds to the Agent, the Agent shall promptly notify such Lender
and such Lender shall forthwith remit such funds to the Agent, failing
which the Borrower shall forthwith on demand repay to the Agent (without
prejudice to the Borrower's rights against such Lender) the amount made
available by the Agent on behalf of such Lender, in each case together with
interest thereon until the date of repayment thereof at a rate determined
by the Agent (such rate to be conclusive and binding on such Lender or the
Borrower, as the case may be) in accordance with the Agent's usual banking
practice for similar advances to financial institutions of like standing to
such Lender.
12.11 Adjustments Among Lenders
(a) Adjustments to Outstanding Accommodations: Each Lender agrees that, after
delivery of an Acceleration Notice or the occurrence of an Event of Default
specified in Section 10.1(f) or 10.1(g), it will at any time and from time
to time upon the request of the Agent purchase portions of the Outstandings
outstanding and make any other adjustments which may be necessary or
appropriate, in order that amounts which remain outstanding to each Lender
are thereafter outstanding in the same proportion as the Lender' s
Proportion of the Total Commitment. The Borrower agrees to do all things
reasonably necessary or appropriate to give effect to any and all purchases
and other adjustments by and between the Lenders pursuant to this Section
12.11.
(b) Application of Payments: The Lenders agree that, after delivery of an
Acceleration Notice or the occurrence of an Event of Default specified in
Section 10.1(f) or 10.1(g), the amount of any repayment made by the
Borrower under this Agreement, and the amount of any proceeds from the
exercise of any rights or remedies of the Lenders under the Loan Documents,
which are to be applied against amounts owing hereunder, will be so applied
in a manner so that to the extent possible the amount of Accommodations
made available by each Lender which remain outstanding after giving effect
to such application will be in the same proportion as the Lender's
Proportion of such Lender.
(c) Set-Off: Notwithstanding anything contained in this Section 12.11, there
shall not be taken into account for the purposes of computing any amount
payable to any Lender pursuant to this Section 12.11, any amount which a
Lender receives as a result of any payment (whether voluntary, involuntary,
through the exercise of any right of set-off, or otherwise) on account of
any monies owing by the Borrower to such Lender other than on account of
liabilities under the Loan Documents; provided that, if at any time a
Lender receives any payments (whether voluntary, involuntary through the
exercise of any right of set-off, or otherwise) on account of any monies
owing by an Loan Party to such Lender other than on account of liabilities
arising under the Loan Documents; provided that, if at any time a Lender
receives any payments (whether voluntary, involuntary, through the exercise
of any right of set-off, or otherwise) on account of any monies owing or
payable to it by any Loan Party in respect of liabilities of such Loan
Party arising under the Loan Documents, such Lender shall purchase portions
of the Accommodations made available by the other Lenders to the extent
required pursuant to Section 12.11(a).
(d) Further Assurances: The Borrower agrees to be bound by and, at the request
of the Agent, to do all things necessary or appropriate to give effect to
any and all purchases and other adjustments made by and between the Lenders
pursuant to this Section 12.11 but shall incur no increased Indebtedness,
in aggregate, by reason thereof.
12.12 Lenders' Consents to Waivers, Amendments, etc.
(a) Unanimous Consent of Lenders: Any waiver of or any amendment to a provision
of the Loan Documents which relates to:
(i) a change in the types of Accommodations, interest rates, standby fees,
the Margin, the Standby Fee Rate, the Discount Rate, notice periods or
the amount of any payments payable by the Borrower to any Lender under
this Agreement including any waiver of the time of payment thereof;
(ii) an increase or decrease in the Commitment of any Lender other than as
provided for herein;
(iii)a change in the definition of "CDOR Rate", "Discount Rate", "Majority
Lenders" or "Maturity Date";
(iv) any matter which, pursuant to the Loan Documents, specifically
requires the consent or agreement of all of the Lenders rather than
the consent or agreement of "the Lenders" or the "Majority Lenders" or
the "Agent";
(v) the provisions of this Section 12.12(a);
(vi) an Event of Default under Section 10.1; or
(vii)any release or modification of the Security;
shall bind the Lenders only if such waiver or amendment is agreed to in writing
by all of the Lenders.
(b) Except as otherwise provided in the Loan Documents, including Section
12.12(a) hereof, any waiver of or any amendment to the provisions of the
Loan Documents and any action, consent or other determination in connection
with the Loan Documents shall bind all of the Lenders if such waiver,
amendment, action, consent or other determination is agreed to in writing
by the Majority Lenders.
12.13 Reimbursement of Agent's Expenses or Lender's Costs
Each Lender agrees that it will indemnify the Agent for its Lender's
Proportion of any and all costs, expenses and disbursements (including, without
limitation, those costs and expenses referred to in Section 11.1) which may be
incurred or made by the Agent in good faith in connection with the Loan
Documents, and agrees that it will, on written demand detailing such costs,
expenses and disbursements, reimburse the Agent for any such costs, expenses or
disbursements for which the Agent is not promptly reimbursed at any time by the
Borrower. The Agent may refrain from exercising any right, power or discretion
or taking any action to protect or enforce the rights of any Lender under the
Loan Documents until it has been so reimbursed.
12.14 Reliance by Agent on Notices, etc.
The Agent shall be entitled:
(a) Reliance on Written Documents: to rely upon any writing, letter, written
notice, certificate, telex, facsimile copy, cable, statement, order or
other document believed by the Agent to be genuine and correct and to have
been signed, sent or made by the proper person or persons; and
(b) Reliance on Legal Advice: with respect to legal matters, to act upon advice
of legal advisors selected by the Agent concerning all matters pertaining
to the Loan Documents and the Agent's duties thereunder; and the Agent
shall assume no responsibility and shall incur no liability to the Borrower
or any Lender by reason of relying on any such document or acting on any
such advice.
12.15 Relations with Borrower
Except for the transactions provided for in this Agreement, each Lender may deal
with the Borrower in all transactions and generally do any banking business
with or provide any financial services to the Borrower without having any
liability to account to the other Lenders therefor. With respect to its
Commitment and Lender's Proportion, BMO shall have the same rights and
powers under this Agreement as any other Lender and may exercise the same
as though it were not the Agent.
12.16 Successor Agent
The Agent shall resign if at any time it is no longer a Lender hereunder by
reason of an assignment of its rights and obligations under this Agreement and
the Loan Documents pursuant to Article 13 and, in such event, it shall provide
30 days prior written notice of any such intended assignment to each of the
Lenders and the Borrower. The Agent may resign at any time by giving 30 days
prior written notice thereof to each of the Lenders and the Borrower. Upon any
such resignation, the remaining Lenders (the "Remaining Lenders") shall have the
right to appoint a successor agent. Any successor agent appointed under this
Section 12.16 shall be a Lender which has offices in Calgary, Alberta and
Toronto, Ontario. If no successor agent shall have been appointed by the
Remaining Lenders and shall have accepted such appointment within 30 days after
the retiring agent's giving of notice of resignation, then the retiring agent
may, on behalf of the Lenders appoint a successor agent. Upon the acceptance of
any appointment as Agent by a successor agent, such successor agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring agent as Agent, and the retiring agent shall be
discharged from its duties and obligations under this Agreement as Agent. After
any retiring agent's resignation hereunder as the Agent, the provisions of this
Agreement shall continue in effect for its benefit and for the benefit of the
Lenders in respect of any actions taken or omitted to be taken by the retiring
agent while it was acting as the Agent.
12.17 Indemnity of Agent
Each Lender hereby agrees to indemnify the Agent (to the extent not
reimbursed by the Borrower), as to its Lender's Proportion from and against any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, costs, expenses or disbursements of any kind or nature whatsoever
which may be imposed on, incurred by, or asserted against the Agent in any way
relating to or arising out of the Loan Documents or any action taken or omitted
by Agent under or in respect of the Loan Documents; provided that the Lenders
shall not be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the Agent's gross negligence or wilful misconduct. Without
limiting the generality of the foregoing, each Lender agrees to reimburse the
Agent promptly upon demand for its Lender's Proportion of any out-of-pocket
expenses (including counsel fees) incurred by the Agent in connection with the
preservation of any rights of the Agent or the Lenders under, or the enforcement
of, or legal advice in respect of rights or responsibilities under, the Loan
Documents, but only to the extent that the Agent is not reimbursed for such
expenses by the Borrower.
12.18 Sharing of Information
The Borrower authorizes the Agent and each Lender to share among each other
and with any successor, assignee, or any potential assignee, any information
possessed by it regarding the Borrower, any Guaranteeing Subsidiary or the Loan
Documents. The Agent and each Lender agrees to keep all information provided by
the Borrower or any Guaranteeing Subsidiary confidential and shall not disclose
such information other than as provided for herein and other than to employees
and professional advisors in the necessary course of business.
12.19 Amendment to this Article 12
Save and except for the provisions of Sections 12.15 and 12.16, the
provisions of this Article 12 may be amended or added to, from time to time,
without the agreement of the Borrower provided such amendment or addition does
not adversely affect the rights of the Borrower hereunder or increase, in the
aggregate, the liabilities of the Borrower hereunder. A copy of the instrument
evidencing such amendment or addition shall be forwarded by the Agent to the
Borrower as soon as practicable following the execution thereof; provided that
after an Event of Default a failure to do so by the Agent that has not been
remedied as required hereunder or that has not been waived in writing by all of
the Lenders, shall not render it liable in damages to the Borrower.
ARTICLE 13
SUCCESSORS AND ASSIGNS AND JUDGMENT CURRENCY
13.1 Successors and Assigns
(a) Borrower: The provisions of this Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns permitted hereby, except that the Borrower may not (except pursuant
to Section 9.2(c)) assign or otherwise transfer any of its rights or
obligations hereunder without the prior written consent of each Lender (and
any attempted assignment or transfer by the Borrower without such consent
shall be null and void). Nothing in this Agreement, expressed or implied,
shall be construed to confer upon any Person (other than the parties
hereto, their respective successors and assigns permitted hereby and, to
the extent expressly contemplated hereby, the Affiliates of each of the
Agent and the Lenders) any legal or equitable right, remedy or claim under
or by reason of this Agreement.
(b) Lender Assignment: Any Lender may assign to 1 or more Eligible Assignees
(as defined below) all or a portion of its rights and obligations under
this Agreement (including all or a portion of its Commitment and the
Accommodations at the time outstanding to it); provided that (i) except in
the case of an assignment of the entire remaining amount of the assigning
Lender's Commitment, the amount of the Commitment of the assigning Lender
subject to each such assignment (determined as of the date the Lender
Transfer Agreement with respect to such assignment is delivered to the
Agent) shall not be less than $10,000,000 (and provided further that, so
long as BMO is the Agent and so long as a Credit Event (as defined below)
with respect to the Borrower or an Event of Default has not occurred and is
then continuing, BMO' s Lender' s Proportion of the Total Commitment is at
all times greater than 25% of the Total Commitment) unless each of the
Agent and, so long as a Credit Event with respect to the Borrower or,
without limiting the foregoing, an Event of Default has not occurred and is
then continuing, the Borrower otherwise consents in its discretion, (ii)
each partial assignment shall be made as an assignment of a proportionate
part of all the assigning Lender's rights and obligations under this
Agreement, and (iii) the parties to each assignment shall execute and
deliver to the Agent a Lender Transfer Agreement, together with a
processing and recordation fee of $5,000, and the Eligible Assignee, if it
shall not be a Lender, shall deliver to the Agent an administrative
questionnaire. Subject to such conditions, and acceptance and recording
thereof by the Agent, from and after the effective date specified in each
Lender Transfer Agreement, the Eligible Assignee thereunder shall be a
party hereto and, to the extent of the interest assigned by such Lender
Transfer Agreement, have the rights and obligations of a Lender under this
Agreement, and the assigning Lender thereunder shall, to the extent of the
interest assigned by such Lender Transfer Agreement, be released from its
obligations under this Agreement (and, in the case of a Lender Transfer
Agreement covering all of the assigning Lender's rights and obligations
under this Agreement, such Lender shall cease to be a party hereto but
shall continue to be entitled to the benefits of the indemnities in this
Agreement). Any assignment or transfer by a Lender of rights or obligations
under this Agreement that does not comply with this Section 13.1(b) shall
be treated for purposes of this Agreement as a sale by such Lender of a
participation in such rights and obligations in accordance with Section
13.1(c).
(c) Participation: Any Lender may, without the consent of, or notice to, the
Borrower (unless there is then no Default or Event of Default outstanding
in which case with the consent of the Borrower, not to be unreasonably
withheld) or the Agent, sell participations to 1 or more banks or other
entities (a "Participant") in all or a portion of such Lender's rights
and/or obligations under this Agreement (including all or a portion of its
Commitment and/or the Accommodations to it); provided 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 such obligations, and (iii) the Borrower, the Agent and the
other Lenders shall continue to deal solely and directly with such Lender
in connection with such Lender's rights and obligations under this
Agreement. Any agreement or instrument pursuant to which a Lender sells
such a participation shall provide that such Lender shall retain the sole
right to enforce this Agreement and to approve any amendment, modification
or waiver of any provision of this Agreement; provided that such agreement
or instrument may provide that such Lender will not, without the consent of
the Participant, agree to any amendment, modification or waiver described
in Section 12.12 that affects such Participant. Subject to Section 13.1(d),
the Borrower agrees that each Participant shall be entitled to the benefits
of the indemnities contained in this Agreement to the same extent as if it
were a Lender and had acquired its interest by assignment pursuant to
Section 13.1(b).
(d) Participation Indemnity: A Participant shall not be entitled to receive any
greater payment under Section 13.1(c) than the applicable Lender would have
been entitled to receive with respect to the participation sold to such
Participant, had no participation been sold. A Participant that would be a
foreign lender if it were a Lender shall not be entitled to the benefits of
Section 7.3 unless the Borrower has requested the participation sold to
such Participant and such Participant agrees, for the benefit of the
Borrower, to comply with Section 7.3 as though it were a Lender.
(e) Lender Pledge: Without limiting any right of a Lender to pledge its rights
under this Agreement to a third party, it is specifically acknowledged that
any Lender may at any time pledge or grant a Security Interest in all or
any portion of its rights under this Agreement to secure obligations of
such Lender, including any pledge or assignment to secure obligations to a
Federal Reserve Bank, and this Section shall not apply to any such pledge
or assignment of a security interest; provided that no such pledge or
assignment of a security interest shall release a Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such
Lender as a party hereto.
(f) Special Definitions: In this Article 13:
"Credit Event" has the meaning set forth in the 1999 ISDA Credit Derivatives
Definitions as published by the International Swaps and Derivatives Association,
Inc.
"Eligible Assignee" means (a) a Lender; (b) an Affiliate of a Lender; (c) a fund
(whether a corporation, partnership, trust or other entity) or other financial
institution that is engaged in making, purchasing or other investing in
commercial loans in the ordinary course of its business and that has or has been
structured to achieve an Investment Grade Rating for at least 1 class of its
securities provided that, unless a Credit Event with respect to the Borrower or,
without limiting the foregoing, an Event of Default, has occurred and is
continuing prior to the time any assignment is effected in accordance with
Section 13.1(b), with the approval of the Borrower, such approval not to be
unreasonably withheld or delayed; and (d) any other Person approved by the
Agent, and, unless a Credit Event with respect to the Borrower or, without
limiting the foregoing, an Event of Default, has occurred and is continuing
prior to the time any assignment is effected in accordance with Section 13.1(b),
the Borrower, such approval not to be unreasonably withheld or delayed;
provided, however, that neither the Borrower nor an Affiliate of the Borrower
shall qualify as an Eligible Assignee and provided further that it is understood
that such other Persons may, without limitation, include (i) commercial banks or
savings and loan associations or savings banks in each case organized under the
laws of the United States, or any State thereof or under the laws of any other
country that is a member of the Organization for Economic Cooperation and
Development or that has concluded special lending arrangements with the
International Monetary Fund associated with its general arrangements to
Borrower, or a political subdivision of any such country, so long as such bank
is acting through a branch or agency located in Canada; (ii) the central bank of
any country that is a member of the Organization for Economic Cooperation and
Development; (iii) a finance company; (iv) an insurance company; or (v) other
fund or financial institution. If the consent of any party to an assignment or
to an Eligible Assignee is required hereunder (including a consent to an
assignment which does not meet the minimum assignment thresholds specified in
Section 13.1(b)), such party shall be deemed to have given its consent 5
Business Days after it has been requested by the assigning Lender (such request
to refer to the 5 day period) unless consent is expressly refused by such party
prior to such 5 th Business Day.
"Fitch" means Fitch IBCA Inc.
"Investment Grade Rating" means (i) with respect to the rating of a Person
referred to in this Section 13, that such Person has been rated at least
investment grade (consistent with the standards set forth in the second clause
of this definition) by any of S&P or Moody's, if such Person is rated by only 1
of such rating entities or by both S&P and Moody's, if such Person is rated by
both such rating agencies, and (ii) with respect to the rating of any fund
referred to in clause (c) of the definition of "Eligible Assignee", that such
fund has a long term unsecured debt rating of at least BBB+ from S&P or Baa1
from Moody's or the equivalent in each case from Fitch or, in the absence of any
such ratings, such entity has a short term unsecured debt rating of at least A-2
from S&P or P-2 from Moody's or the equivalent from Fitch.
"Moody's" means Moody's Investors Service, Inc.
"S&P" means Standard & Poors Ratings Services, a division of The McGraw-Hill
Companies, Inc.
13.2 Confidentiality
Each of the Agent and the Lenders agrees to maintain the confidentiality of
the Information (as defined below), except that Information may be disclosed:
(a) to its and its Affiliates' directors, officers, employees and agents,
including accountants, legal counsel and other advisors (it being
understood that the Persons to whom such disclosure is made will be
required by the Agent or such Lender to provide an acknowledgment to the
Borrower agreeing to be subject to the confidentiality restrictions of this
Section 13.2);
(b) to the extent requested by any regulatory authority;
(c) to the extent required by applicable laws or regulations or by any
subpoena or similar legal process;
(d) to any other party to this Agreement;
(e) in connection with the exercise of any remedies hereunder or any suit,
action or proceeding relating to this Agreement or the enforcement of
rights hereunder;
(f) subject to an agreement containing provisions substantially the same
as those of this Section 13.2, to:
(i) any Eligible Assignee of or Participant in, or any prospective
Eligible Assignee of or Participant in, any of its rights or
obligations under this Agreement; or
(ii) any direct or indirect contractual counterparty in Swaps relating
to the Borrower or such contractual counterparty's professional
advisor;
(g) with the written consent of a Loan Party; or
(h) to the extent such Information:
(i) becomes publicly available other than as a result of a
breach of this Section; or
(ii) becomes available to the Agent or any Lender from a source
other than the Borrower and without a breach or default, to
the knowledge of the Agent or such Lender, after due
inquiry, in respect of a confidentiality obligation owed to
the Borrower by any other Person.
For the purposes of this Section, "Information" means all information
received from a Loan Party relating to a Loan Party or its business, other than
any such information that is available to the Agent or any Lender on a
nonconfidential basis prior to receipt from such Loan Party.
The provisions of this Section 13.2 shall supersede and replace, as between
the Agent, the Lenders and any Loan Party, the provisions of the Confidentiality
Agreement and the confidentiality agreement made March 3, 2000 between BMO, GMSL
and GMSFL, each of which agreements shall have no further force and effect as
between the Agent, the Lenders and the Loan Parties on or after the Effective
Date.
13.3 Judgment Currency
If for the purposes of obtaining judgment in any court in any jurisdiction
with respect to this Agreement it becomes necessary to convert into the currency
of such jurisdiction (herein called the "Judgment Currency") any amount due
hereunder in any currency other than the Judgment Currency, then such conversion
shall be made at the rate of exchange prevailing on the Business Day before the
day on which judgment is given. For such purpose "rate of exchange" means the
spot rate at which the Agent, on the relevant date at or about 12:00 o'clock
noon (Toronto time), would be prepared to sell a similar amount of such currency
in Toronto, Ontario against the Judgment Currency. In the event that there is a
change in the rate of exchange prevailing between the Business Day before the
day on which the judgment is given and the date of payment of the amount due,
the Borrower shall, on the date of payment, pay such additional amounts (if any)
as may be necessary to ensure that the amount paid on such date is the amount in
the Judgment Currency which when converted at the rate of exchange prevailing on
the date of payment is the amount then due under this Agreement in such other
currency. Any additional amount due from the Borrower under this Section 13.3
shall be due as a separate debt and shall not be affected by judgment being
obtained for any other sums due under or in respect of this Agreement.
ARTICLE 14
MISCELLANEOUS
14.1 Severability
Any provision of this Agreement which is or becomes prohibited or
unenforceable in any jurisdiction does not invalidate, affect or impair the
remaining provisions hereof in such jurisdiction and any such prohibition or
unenforceability in any jurisdiction does not invalidate or render unenforceable
such provision in any other jurisdiction.
14.2 Survival of Undertakings
All covenants, undertakings, agreements, representations and warranties
made pursuant to this Agreement survive the execution and delivery of this
Agreement and continue in full force and effect until the full payment and
satisfaction of all obligations of the Borrower incurred pursuant to the Loan
Documents and the termination of this Agreement.
14.3 Failure to Act
No failure, omission or delay on the part of the Agent or any Lender in
exercising any right, power or privilege hereunder shall impair such right,
power or privilege or operate as a waiver thereof nor shall any single or
partial exercise of any right, power or privilege preclude any further exercise
thereof or the exercise of any other right, power or privilege.
14.4 Waivers
No breach of any of the provisions of any of the Loan Documents may be
waived or discharged verbally; any such waiver or discharge may only be made by
way of an instrument in writing signed by either the Agent on behalf of the
Lenders or the Majority Lenders, as applicable, or by the Lenders and, if
required by the Agent, the Borrower, and such waiver or discharge will then be
effective only in the specific instance, for the specific purpose and for the
specific length of time for which it is given. Any such waiver or discharge
which affects the rights of the Agent may only be made by way of an instrument
in writing signed by the Agent.
14.5 Amendments
No provision of the Loan Documents may be amended verbally and any such
amendment may only be made by way of an instrument in writing signed by the
Borrower, the Agent and the Lenders required by Section 12.12.
14.6 Notice
Except as otherwise expressly provided herein, all notices, advices,
requests and demands hereunder shall be in writing (including facsimile
transmissions) or, if by telephone, immediately confirmed in writing, and shall
be given to or made upon the respective parties hereto at the address set forth
opposite their names on the signature pages hereto or at such other address as
any party shall designate for itself. All notices shall be effective upon actual
receipt. In the event of any discrepancy between any telephone notice, advice,
request or demand and the written confirmation thereof, the telephone version
shall govern with respect to actions taken by the recipient thereof before such
recipient has had a reasonable time to act after its receipt of the written
confirmation.
14.7 Whole Agreement
This Agreement together with the other Loan Documents constitutes the whole
and entire agreement between the parties and cancels and supersedes any prior
agreements, undertakings, declarations and representations, written or verbal,
in respect of the subject matter of this Agreement and the other Loan Documents.
14.8 Governing Law
The parties agree that this Agreement is conclusively deemed to be made
under, and for all purposes to be governed by and construed in accordance with,
the laws of the Province of Alberta and of Canada applicable therein. There
shall be no application of any conflict of law or rules which would result in
any laws other than internal laws in force in the Province of Alberta applying
to this Agreement. The parties hereto do hereby irrevocably submit and attorn to
the jurisdiction of the courts of the Province of Alberta for all matters
arising out of or relating to this Agreement or any other Loan Document, or any
of the transactions contemplated hereby or by any thereof, without prejudice to
the rights of the Agent or any Lender to take proceedings in other jurisdictions
in which any assets, property or undertakings secured by the Security may be
situate.
14.9 Term of Agreement
The term of this Agreement is until the later of the termination of each
Lender's Commitment and payment in full of all the obligations of the Borrower
incurred pursuant to this Agreement. Notwithstanding any such termination, all
of the indemnities provided for hereunder shall survive any such termination.
14.10 Time of Essence
Time shall be of the essence of this Agreement.
14.11 Conflict with Loan Documents
In the event there is a conflict or inconsistency as to any matter between
the provisions hereof and the provisions of any other Loan Document, the
provisions of this Agreement shall prevail to the extent of such conflict or
inconsistency; provided, however, that for the purposes of this Section 14.11
there shall not be considered to be a conflict or inconsistency between any
provision hereof and any provision of any other Loan Document merely because one
of such Loan Documents does, and the other does not, deal with the particular
matter.
14.12 Dealings with Agent
Subject to Section 12.12, the Borrower shall be entitled to accept the
written advice, instruction or direction of the Agent on behalf of the Majority
Lenders or the Lenders without further inquiry. Each Lender hereby agrees to be
bound by any advice, instruction or direction in writing given to the Borrower
by the Agent on behalf of the Majority Lenders or the Lenders, where it is
authorized to do so in accordance with the terms and conditions hereof or under
any other Loan Document, and each Lender hereby waives any right to contest or
disaffirm any such advice, instruction, or direction in writing of the Agent, in
the absence of manifest error.
14.13 Further Assurances
The Borrower, the Agent and each of the Lenders shall do all such further
acts and things and execute and deliver all such further documents as shall be
reasonably required in order to fully perform and carry out the terms of the
Loan Documents.
14.14 Counterpart Execution
This Agreement may be executed in any number of counterparts and by
different parties in separate counterparts, each of which when so executed shall
be deemed to be an original and all of which taken together shall constitute one
and the same instrument.
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be duly
executed as of the date and year first above written.
COMMITMENTS AND
ADDRESSES FOR NOTICES:
Borrower: KEYSPAN ENERGY DEVELOPMENT CO.
By: /s/
------------------
Michael J. Nilsen
Treasurer and Controller
KeySpan Energy Development Corporation
(U.S.)
One MetroTech Center
Brooklyn, New York
11201-3850 USA
Attention: President
Telefax: (718) 403-6421
with a copy to:
Gulf Midstream S
ervices Limited
(to be renamed KeySpan Energy Canada
Limited)
17 th Floor, 400 - 3 rd Avenue S.W.
Calgary, Alberta
T2P 4H2
Attention: President
Telefax: (403) 205-7677
Lender: BANK OF MONTREAL, as Lender
By: /s/
----------------
Guy Amato
Director
Bank of Montreal
Investment Corporate Banking
14th Floor, 421 - 7th Avenue S.W.
Calgary, Alberta
T2P 4K9
Attention: Director
Telefax: (403) 515-3650
Commitment: Cdn. $125,000,000
Agent: BANK OF MONTREAL, as Lender
By: /s/
-----------------
Guy Amato
Director
Agent' s Branch of Account
After Sales
19th Floor, First Canadian Place
100 King Street West
Toronto, Ontario
M5X 1A1
Attention: Manager, Global Distribution
Services
Telefax: (416) 867-5718