EXHIBIT 4.4
EXECUTION COPY
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FOREST OIL CORPORATION
and
SUBSIDIARY GUARANTORS
----------------------------
SECOND AMENDED AND RESTATED
CREDIT AGREEMENT
Dated as of January 31, 1997
----------------------------
THE CHASE MANHATTAN BANK,
as Agent
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TABLE OF CONTENTS
THIS TABLE OF CONTENTS IS NOT PART OF THE AGREEMENT TO WHICH IT IS
ATTACHED BUT IS INSERTED FOR CONVENIENCE OF REFERENCE ONLY.
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Section 1. Definitions and Accounting Matters . . . . . . . . . . . . . . . . . . 1
1.01 Certain Defined Terms. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.02 Accounting Terms and Determinations. . . . . . . . . . . . . . . . . . . . . 23
1.03 Borrowing Base . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
1.04 Types of Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
1.05 Designation of Subsidiaries as Restricted or Unrestricted
Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
1.06 References to Subsidiaries, Restricted Subsidiaries and
Unrestricted Subsidiaries in Connection with Calculations
of Certain Financial Ratios . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 2. Commitments, Loans, Notes and Prepayments. . . . . . . . . . . . . . . 27
2.01 Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
2.02 Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
2.03 Letters of Credit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.04 Changes of Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
2.05 Commitment Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
2.06 Lending Offices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
2.07 Several Obligations; Remedies Independent. . . . . . . . . . . . . . . . . . 33
2.08 Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
2.09 Optional Prepayments and Conversions or Continuations
of Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
2.10 Mandatory Prepayments and Reductions of Commitments. . . . . . . . . . . . . 35
Section 3. Payments of Principal and Interest . . . . . . . . . . . . . . . . . . 36
3.01 Repayment of Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
3.02 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 4. Payments; Pro Rata Treatment; Computations; Etc. . . . . . . . . . . . 37
4.01 Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
4.02 Pro Rata Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
4.03 Computations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
(i)
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4.04 Minimum Amounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
4.05 Certain Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
4.06 Non-Receipt of Funds by the Agent. . . . . . . . . . . . . . . . . . . . . . 40
4.07 Sharing of Payments, Etc.. . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 5. Yield Protection, Etc. . . . . . . . . . . . . . . . . . . . . . . . . 42
5.01 Additional Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
5.02 Limitation on Types of Loans . . . . . . . . . . . . . . . . . . . . . . . . 45
5.03 Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
5.04 Treatment of Affected Loans. . . . . . . . . . . . . . . . . . . . . . . . . 45
5.05 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
5.06 Additional Costs in Respect of Letters of Credit . . . . . . . . . . . . . . 47
Section 6. Guarantee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
6.01 Guarantee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
6.02 Obligations Unconditional. . . . . . . . . . . . . . . . . . . . . . . . . . 48
6.03 Reinstatement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
6.04 Subrogation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
6.05 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
6.06 Continuing Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
6.07 Instrument for the Payment of Money. . . . . . . . . . . . . . . . . . . . . 49
6.08 Rights of Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
6.09 General Limitation on Guarantee Obligations. . . . . . . . . . . . . . . . . 50
Section 7. Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . . 50
7.01 Conditions to Effectiveness. . . . . . . . . . . . . . . . . . . . . . . . . 50
7.02 Initial and Subsequent Extensions of Credit. . . . . . . . . . . . . . . . . 53
Section 8. Representations and Warranties . . . . . . . . . . . . . . . . . . . . 54
8.01 Corporate Existence. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
8.02 Financial Condition. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
8.03 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
8.04 No Breach. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
8.05 Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
8.06 Approvals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
(ii)
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8.07 Use of Credit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
8.08 ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
8.09 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
8.10 Investment Company Act . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
8.11 Public Utility Holding Company Act . . . . . . . . . . . . . . . . . . . . . 56
8.12 Material Agreements and Liens. . . . . . . . . . . . . . . . . . . . . . . . 56
8.13 Environmental Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
8.14 Subsidiaries, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
8.15 True and Complete Disclosure . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 9. Covenants of the Obligors. . . . . . . . . . . . . . . . . . . . . . . 60
9.01 Financial Statements Etc . . . . . . . . . . . . . . . . . . . . . . . . . . 60
9.02 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
9.03 Existence, Etc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
9.04 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
9.05 Prohibition of Fundamental Changes . . . . . . . . . . . . . . . . . . . . . 64
9.06 Limitation on Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
9.07 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
9.08 Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
9.09 Dividend Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
9.10 Interest Coverage Ratio. . . . . . . . . . . . . . . . . . . . . . . . . . . 71
9.11 Working Capital. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
9.12 Lines of Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
9.13 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . 71
9.14 Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
9.15 Certain Obligations Respecting Subsidiaries. . . . . . . . . . . . . . . . . 72
9.16 Additional Subsidiary Guarantors. . . . . . . . . . . . . . . . . . . . . . 72
9.17 Modifications and Payments of Subordinated Indebtedness
and Production Payments Indebtedness. . . . . . . . . . . . . . . . . . . . 73
9.18 Mortgages. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
9.19 Unrestricted Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . . 73
9.20 Pledges. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Section 10. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Section 11. The Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
11.01 Appointment, Powers and Immunities. . . . . . . . . . . . . . . . . . . . . 77
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11.02 Reliance by Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
11.03 Defaults. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
11.04 Rights as a Bank. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
11.05 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
11.06 Non-Reliance on Agent and Other Banks . . . . . . . . . . . . . . . . . . . 79
11.07 Failure to Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
11.08 Resignation or Removal of Agent . . . . . . . . . . . . . . . . . . . . . . 80
11.09 Consents under Other Basic Documents. . . . . . . . . . . . . . . . . . . . 80
11.10 Collateral Sub-Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Section 12. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
12.01 Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
12.02 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
12.03 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
12.04 Amendments, Etc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
12.05 Successors and Assigns. . . . . . . . . . . . . . . . . . . . . . . . . . . 83
12.06 Assignments and Participations. . . . . . . . . . . . . . . . . . . . . . . 83
12.07 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
12.08 Survival. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
12.09 Captions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
12.10 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
12.11 Governing Law; Submission to Jurisdiction . . . . . . . . . . . . . . . . . 86
12.12 Waiver of Jury Trial. . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
12.13 Treatment of Certain Information. . . . . . . . . . . . . . . . . . . . . . 87
(iv)
SCHEDULE I - Material Agreements and Liens
SCHEDULE II - Hazardous Materials
SCHEDULE III - Subsidiaries and Investments
EXHIBIT A - Form of Note
EXHIBIT B - Form of Security Agreement
EXHIBIT C-1 - Form of Opinion of Counsel to
the Obligors
EXHIBIT C-2 - Form of Opinion of Corporate
Counsel of the Obligors
EXHIBIT D - Form of Opinion of Special
Counsel to Chase
EXHIBIT E - Form of Mortgage
EXHIBIT F - Form of Pledge Agreement
EXHIBIT G - Form of Confidentiality Agreement
(v)
AMENDED AND RESTATED CREDIT AGREEMENT dated as of January 31, 1997,
between: FOREST OIL CORPORATION, a corporation duly organized and validly
existing under the laws of the State of New York (the "COMPANY"); each of the
Subsidiaries of the Company that becomes a guarantor pursuant to Section 9.16
hereof (individually, a "SUBSIDIARY GUARANTOR" and, collectively, the
"SUBSIDIARY GUARANTORS" and, together with the Company, the "OBLIGORS"); each of
the lenders that is a signatory hereto identified under the caption "BANKS" on
the signature pages hereto or which, pursuant to Section 12.06(b) hereof, shall
become a "Bank" hereunder (individually, a "BANK" and, collectively, the
"BANKS"); and THE CHASE MANHATTAN BANK, a New York bank, as agent for the Banks
(in such capacity, together with its successors in such capacity, the "AGENT").
The Company, the Existing Banks (as defined below) and the Agent are
parties to an Amended and Restated Credit Agreement dated as of August 31, 1995
(as heretofore modified and supplemented and in effect on the date of this
Agreement, (the "ORIGINAL CREDIT AGREEMENT")). The parties hereto wish to amend
and restate the Original Credit Agreement in its entirety, all on the terms and
conditions hereinafter set forth.
Each of the Obligors has requested the Banks to make loans to the
Company in an aggregate principal amount not exceeding $100,000,000 at any one
time outstanding to provide working capital and for other general corporate
purposes of the Company and each of its Subsidiaries. The Company and the
Subsidiary Guarantors are engaged as an integrated group in the O&G Business (as
hereinafter defined) and in related businesses, and in furnishing the required
supplies, services, equipment, credit and other facilities for such integrated
operation. The integrated operation requires financing on such a basis that
credit supplied to the Company be made available from time to time to the
Subsidiary Guarantors, as required for the continued successful operation of the
Obligors, separately, and the integrated operation as a whole. Each of the
Obligors expects to derive benefit, directly or indirectly, from the loans so
made to the Company, both in its separate capacity and as a member of the
integrated group, since the successful operation of each of the Obligors is
dependent on the continued successful performance of the functions of the
integrated group as a whole.
Accordingly, the parties hereto agree to amend and restate the
Original Credit Agreement so that, amended and restated, it reads in its
entirety as provided herein.
Section 1. DEFINITIONS AND ACCOUNTING MATTERS.
1.01 CERTAIN DEFINED TERMS. As used herein, the following terms
shall have the following meanings (all terms defined in this Section 1.01 or in
other provisions of this Agreement in the singular to have the same meanings
when used in the plural and VICE VERSA):
"ADMINISTRATIVE QUESTIONNAIRE" shall mean an administrative
questionnaire in a form supplied by the Administrative Agent.
"AFFILIATE" shall mean any Person that directly or indirectly
controls, or is under common control with, or is controlled by, the Company and,
if such Person is an individual, any member of the immediate family (including
parents, spouse, children and siblings) of such individual and any trust whose
principal beneficiary is such individual or one or more members
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of such immediate family and any Person who is controlled by any such member
or trust. As used in this definition, "CONTROL" (including, with its
correlative meanings, "CONTROLLED BY" and "UNDER COMMON CONTROL WITH") shall
mean possession, directly or indirectly, of power to direct or cause the
direction of management or policies (whether through ownership of securities
or partnership or other ownership interests, by contract or otherwise),
PROVIDED that, in any event, any Person that owns directly or indirectly
securities having 10% or more of the voting power for the election of
directors or other governing body of a corporation or 10% or more of the
partnership or other ownership interests of any other Person (other than as a
limited partner of such other Person) will be deemed to control such
corporation or other Person. Notwithstanding the foregoing, (a) no
individual shall be an Affiliate solely by reason of his or her being a
director, officer or employee of the Company or any of its Subsidiaries and
(b) none of the Restricted Subsidiaries of the Company shall be, for purposes
of this definition, Affiliates of the Company.
"ANSCHUTZ" shall mean The Anschutz Corporation, a Kansas corporation.
"APPLICABLE COMMITMENT FEE RATE" shall mean the percentage per annum
set forth opposite the applicable range of Funded Indebtedness to Total
Capitalization in Schedule Y below, PROVIDED that the "Applicable Commitment Fee
Rate" shall be increased or reduced, as applicable, on the date the Funded
Indebtedness to Total Capitalization ratio of the Company and its Restricted
Subsidiaries shifts from one range to another.
SCHEDULE Y
Ratio of Funded Indebtedness Applicable Commitment
to Total Capitalization Fee Rate (bps per annum)
----------------------- ------------------------
0 - .400:1.00 30.0
.401:1.00 to .600:1.00 35.0
.601:1.00 to .700:1.00 37.5
.701:1.00 and greater 50.0
"APPLICABLE LENDING OFFICE" shall mean, for each Bank and for each
Type of Loan, the "Lending Office" of such Bank (or of an affiliate of such
Bank) designated for such Type of Loan in the Administrative Questionnaire of
such Bank or such other office of such Bank (or of an affiliate of such Bank) as
such Bank may from time to time specify to the Agent and the Company as the
office by which its Loans of such Type are to be made and maintained.
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"APPLICABLE MARGIN" shall mean, with respect to each Type of Loan for
any period during which the outstanding Loans and Letters of Credit Liabilities
under this Agreement are within the range specified under the "Ratio of Funded
Indebtedness to Total Capitalization" in Schedule X below, the percentage per
annum set forth opposite the range under such Type of Loan in such Schedule X,
PROVIDED that the "Applicable Margin" shall be increased or reduced, as
applicable, on the date the Funded Indebtedness to Total Capitalization ratio of
the Company and its Restricted Subsidiaries shifts from one range to another.
SCHEDULE X
Applicable Margin (bps)
Ratio of Funded Indebtedness -----------------------
to Total Capitalization Base Rate Loans Eurodollar Loans
----------------------- --------------- ----------------
0 - .400:1.00 0 100.0
.401:1.00 to .600:1.00 25.0 125.0
.601:1.00 to .700:1.00 50.0 150.0
.701:1.00 and greater 75.0 175.0
"BANKRUPTCY CODE" shall mean the Federal Bankruptcy Code of 1978, as
amended from time to time.
"BANKS" shall mean (a) on the date hereof, the Banks having
Commitments as indicated on the signature pages hereof and (b) thereafter, the
Banks from time to time holding Loans and (if the same have not expired or been
terminated) Commitments after giving effect to any assignments thereof permitted
by Section 12.06 hereof.
"BASE RATE" shall mean, for any day, a rate per annum equal to the
higher of (a) the Federal Funds Effective Rate for such day plus 1/2 of 1% and
(b) the Prime Rate for such day. Each change in any interest rate provided for
herein based upon the Base Rate resulting from a change in the Base Rate shall
take effect at the time of such change in the Base Rate.
"BASE RATE LOANS" shall mean Loans that bear interest at rates based
upon the Base Rate.
"BASIC DOCUMENTS" shall mean, collectively, this Agreement, the Notes,
the Letter of Credit Documents and the Security Documents.
"BORROWING BASE" has the meaning given to such term in Section 1.03
hereof.
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"BORROWING BASE DEFICIENCY" has the meaning given to such term in
Section 2.10(a) hereof.
"BUSINESS DAY" shall mean (a) any day on which commercial banks are
not authorized or required to close in New York City and (b) if such day relates
to a borrowing of, a payment or prepayment of principal of or interest on, a
Conversion of or into, or an Interest Period for, a Eurodollar Loan or a notice
by the Company with respect to any such borrowing, payment, prepayment,
Conversion or Interest Period, any day on which dealings in Dollar deposits are
carried out in the London interbank market.
"CANADIAN FOREST OIL" shall mean Canadian Forest Oil Ltd., an Alberta
corporation.
"CANADIAN FOREST OIL CREDIT AGREEMENT" shall mean the Amended and
Restated Credit Agreement dated as of July 17, 1996 among Canadian Forest Oil,
the Subsidiaries of Canadian Forest Oil that may become Subsidiary Borrowers
thereunder and Funding Co., as the same may be modified and supplemented and in
effect from time to time.
"CAPITAL EXPENDITURES" shall mean, for any period, expenditures
(including, without limitation, the aggregate amount of Capital Lease
Obligations incurred during such period) made by the Company or any of its
Restricted Subsidiaries in connection with the acquisition and exploitation of,
or the exploration for or development or production of, hydrocarbon reserves or
to acquire or construct fixed assets, plant and equipment (including renewals,
improvements and replacements, but excluding repairs) during such period
computed in accordance with GAAP.
"CAPITAL LEASE OBLIGATIONS" shall mean, for any Person, all
obligations of such Person to pay rent or other amounts under a lease of (or
other agreement conveying the right to use) Property to the extent such
obligations are required to be classified and accounted for as a capital lease
on a balance sheet of such Person under GAAP, and, for purposes of this
Agreement, the amount of such obligations shall be the capitalized amount
thereof, determined in accordance with GAAP.
"CAPITAL STOCK" shall mean, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated) of
corporate stock or partnership interests and any and all warrants, options and
rights with respect thereto (whether or not currently exercisable), including
each class of common stock and preferred stock of such Person.
"CASH FLOW" shall mean, for any period, for the Company and the
Restricted Subsidiaries (determined on a consolidated basis without duplication
in accordance with GAAP), the sum of the following: the total sales revenue
from natural gas, oil and other hydrocarbon
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products for such period PLUS cash dividend payments, if any, by an
Unrestricted Subsidiary to the Company or a Restricted Subsidiary in an
aggregate amount in excess of the aggregate amount of the Investments in such
Unrestricted Subsidiary by the Company and the Restricted Subsidiaries during
such period PLUS the total Net Cash Payments (excluding the fair market value
of non-cash consideration) received by the Company and its Restricted
Subsidiaries during such period PLUS the total cash proceeds received by the
Company as a result of any Equity Issuance (other than Disqualified Stock of
the Company) that has been utilized to repay any Indebtedness (to the extent
permitted pursuant to the terms of this Agreement) of the Company PLUS the
total cash proceeds received from any Disposition, including any Disposition
of Unrestricted Properties to the extent the proceeds of such Disposition are
applied during such period in satisfaction of the obligations described in
clause (b) of this definition PLUS the net proceeds received from the
issuance of any Debt to the extent such net proceeds are applied during such
period in satisfaction of the obligations described in clause (b) of this
definition MINUS (a) the revenue attributable to Volumetric Production
Payments for such period, (b) the amounts paid in satisfaction of obligations
under Dollar-Denominated Production Payments for such period, (c) oil and gas
production expenses for such period and (d) total overhead costs paid or
required to be paid in cash during such period (whether or not capitalized,
but net of credits related to such expenses).
"CASUALTY EVENT" shall mean, with respect to any Property of any
Person, any loss of or damage to, or any condemnation or other taking of, such
Property for which such Person or any of its Subsidiaries receives insurance
proceeds, or proceeds of a condemnation award or other compensation.
"CHANGE OF CONTROL" shall mean any event or series of events by which:
(i) any "Person" (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act) (other than Anschutz) is or becomes the "beneficial owner" (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act) of 40% or more of the
total voting power of the Voting Stock of the Company; (ii) the Company
consolidates with or merges or amalgamates with or into another Person or
conveys, transfers, or leases all or substantially all of its assets to any
other Person, or any Person consolidates with, or merges or amalgamates with or
into the Company, in any such event pursuant to a transaction in which the
outstanding Voting Stock of the Company is changed into or exchanged for cash,
securities or other property, other than any such transaction where (a) the
outstanding Voting Stock of the Company is changed into or exchanged for Voting
Stock of the surviving corporation which is not Disqualified Stock and (b) the
holders of the Voting Stock of the Company immediately prior to such transaction
own, directly or indirectly, not less than a majority of the Voting Stock of the
surviving corporation immediately after such transaction; (iii) the shareholders
of the Company approve any plan of liquidation or dissolution of the Company; or
(iv) during any period of 12 consecutive months, individuals who at the
beginning of such period constituted the board of directors of the Company (or
whose nomination for election by the shareholders of the Company was approved by
a vote of not less than a majority of the directors of the Company then still in
office who were either directors at the beginning of such
-6-
period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the board of
directors of the Company then in office.
"CHASE" shall mean The Chase Manhattan Bank.
"CLOSING DATE" shall mean December 1, 1993, the date upon which the
initial extension of credit was made hereunder.
"CODE" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"COLLATERAL ACCOUNT" shall have the meaning assigned to such term in
Section 4.01 of the Security Agreement.
"COMMITMENT" shall mean, for each Bank, the obligation of such Bank to
make Loans in an aggregate principal amount up to but not exceeding (a) in the
case of a Bank that is a party to this Agreement as of the date hereof, the
amount set opposite the name of such Bank on the signature pages hereof under
the caption "Commitment" or (b) in the case of any other Bank, the aggregate
amount of the Commitments of other Banks acquired by it pursuant to Section
12.06(b) hereof (in each case, as the same may be reduced from time to time
pursuant to Section 2.04 hereof or increased or reduced from time to time
pursuant to said Section 12.06(b)).
"COMMITMENT PERCENTAGE" shall mean, with respect to any Bank, the
ratio of the amount of the Commitment of such Bank to the aggregate amount of
the Commitments of all of the Banks.
"COMMITMENT TERMINATION DATE" shall mean January 31, 2000.
"COMMODITY HEDGING AGREEMENT" shall mean, for any Person, an agreement
or arrangement between such Person and one or more financial institutions or
other entities providing for the transfer or mitigation of risks of fluctuations
in prices of hydrocarbons, either generally or under specific circumstances.
"CONSOLIDATED SUBSIDIARY" shall mean, for any Person, each Subsidiary
of such Person (whether now existing or hereafter created or acquired) the
financial statements of which are (or should have been) consolidated with the
financial statements of such Person in accordance with GAAP.
"CONTINUE", "CONTINUATION" and "CONTINUED" shall refer to the
continuation pursuant to Section 2.09 hereof of a Eurodollar Loan from one
Interest Period to the next Interest Period.
-7-
"CONVERT", "CONVERSION" and "CONVERTED" shall refer to a conversion
pursuant to Section 2.09 hereof of one Type of Loans into another Type of Loans,
which may be accompanied by the transfer by a Bank (at its sole discretion) of a
Loan from one Applicable Lending Office to another.
"DEFICIENCY NOTICE" shall have the meaning assigned to such term in
Section 2.10 hereof.
"DEFAULT" shall mean an Event of Default or an event that with notice
or lapse of time or both would become an Event of Default.
"DETERMINATION DATE" shall mean (a) each May 1 and October 15 of each
year prior to the Commitment Termination Date and (b) 45 days after each other
date, if any, on which a Reserve Evaluation Report is delivered to the Agent as
contemplated hereby.
"DETERMINATION PERIOD" shall mean each period commencing on a
Determination Date and ending on the day next preceding the next succeeding
Determination Date.
"DISPOSITION" shall mean any sale, assignment, transfer or other
disposition of any Property (whether now owned or hereafter acquired) by the
Company or any of its Restricted Subsidiaries to any Person (other than by any
such Restricted Subsidiary to the Company or any other Restricted Subsidiary, or
by the Company to a Restricted Subsidiary), excluding any sale, assignment,
transfer or other disposition of (i) any Property sold or disposed of in the
ordinary course of business and on ordinary business terms and (ii) any
Unrestricted Properties.
"DISQUALIFIED STOCK" means any Capital Stock of the Company or any
Restricted Subsidiary of the Company which, by its terms (or by the terms of any
security into which it is convertible or for which it is exchangeable), or upon
the happening of any event or with the passage of time, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the option of the holder thereof, in whole or in part, on or
prior to the Commitment Termination Date or which is exchangeable or convertible
into debt securities of the Company or any Restricted Subsidiary of the Company,
except to the extent that such exchange or conversion rights cannot be exercised
prior to the Commitment Termination Date.
"DIVIDEND PAYMENT" shall mean dividends (in cash, Property or
obligations) on, or other payments or distributions on account of, or the
setting apart of money for a sinking or other analogous fund for, or the
purchase, redemption, retirement or other acquisition of, any shares of any
class of stock of the Company or any of its Restricted Subsidiaries or of any
warrants, options or other rights to acquire the same (or to make any payments
to any Person, such as "phantom stock" payments, where the amount thereof is
calculated with reference to the fair market or equity value of the Company or
any of its Restricted Subsidiaries), but excluding dividends payable solely in
shares of common stock of the Company.
-8-
"DOLLAR-DENOMINATED PRODUCTION PAYMENTS" shall mean production payment
obligations of the Company or any of its Restricted Subsidiaries which are
payable from a specified share of proceeds received from production from
specific Properties, together with all undertakings and obligations in
connection therewith.
"DOLLARS" and "$" shall mean lawful money of the United States of
America.
"ENVIRONMENTAL CLAIM" shall mean, with respect to any Person, (a) any
written or oral notice, claim, demand or other communication (collectively, a
"CLAIM") by any other Person alleging or asserting such Person's liability for
investigatory costs, cleanup costs, governmental response costs, damages to
natural resources or other Property, personal injuries, fines or penalties
arising out of, based on or resulting from (i) the presence, or Release into the
environment, of any Hazardous Material at any location, whether or not owned by
such Person, or (ii) circumstances forming the basis of any violation, or
alleged violation, of any Environmental Law. The term "Environmental Claim"
shall include, without limitation, any claim by any governmental authority for
enforcement, cleanup, removal, response, remedial or other actions or damages
pursuant to any applicable Environmental Law, and any claim by any third party
seeking damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from the presence of Hazardous Materials or arising
from alleged injury or threat of injury to health, safety or the environment.
"ENVIRONMENTAL LAWS" shall mean any and all present and future
Federal, state, local and foreign laws, rules or regulations, and any orders or
decrees, in each case as now or hereafter in effect, relating to the regulation
or protection of human health, safety or the environment or to emissions,
discharges, releases or threatened releases of pollutants, contaminants,
chemicals or toxic or hazardous substances or wastes into the indoor or outdoor
environment, including, without limitation, ambient air, soil, surface water,
ground water, wetlands, land or subsurface strata, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, chemicals or toxic or
hazardous substances or wastes.
"EQUITY ISSUANCE" shall mean (a) any issuance or sale by the Company
or any of its Restricted Subsidiaries after the date of this Agreement of
(i) any of its Capital Stock, (ii) any warrants or options exercisable in
respect of its Capital Stock or (iii) any other security or instrument
representing an equity interest (or the right to obtain any equity interest) in
the Company or any of its Restricted Subsidiaries or (b) the receipt by the
Company or any of its Restricted Subsidiaries after the date of this Agreement
of any capital contribution (whether or not evidenced by any equity security
issued by the recipient of such contribution); PROVIDED that Equity Issuance
shall not include (x) any such issuance or sale by any Restricted Subsidiary of
the Company to the Company or any other Wholly Owned Subsidiary of the Company
which is a Restricted Subsidiary, (y) any capital contribution by the Company or
any Wholly Owned Subsidiary of the Company which is a Restricted Subsidiary to
any other Restricted Subsidiary
-9-
of the Company or (z) any warrants or options issued to directors, officers
or employees of the Company and its Restricted Subsidiaries pursuant to any
employee benefit plans, incentive plans or similar programs established in
the ordinary course of business.
"EQUITY RIGHTS" shall mean, with respect to any Person, any
outstanding subscriptions, options, warrants, commitments, preemptive rights or
agreements of any kind (including, without limitation, any stockholders' or
voting trust agreements) for the issuance, sale, registration or voting of, or
outstanding securities convertible into, any additional shares of Capital Stock
of any class, or partnership or other ownership interests of any type in, such
Person.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time.
"ERISA AFFILIATE" shall mean any corporation or trade or business that
is a member of any group of organizations (a) described in Section 414(b) or (c)
of the Code of which the Company is a member and (b) solely for purposes of
potential liability under Section 302(c)(11) of ERISA and Section 412(c)(11) of
the Code and the lien created under Section 302(f) of ERISA and Section 412(n)
of the Code, described in Section 414(m) or (o) of the Code of which the Company
is a member.
"EURODOLLAR BASE RATE" shall mean, with respect to any Eurodollar Loan
for any Interest Period therefor, the rate per annum quoted by Chase at
approximately 11:00 a.m. London time (or as soon thereafter as practicable) on
the date two Business Days prior to the first day of such Interest Period for
the offering by Chase to leading banks in the London interbank market of Dollar
deposits having a term comparable to such Interest Period and in amounts
comparable to the principal amount of the Eurodollar Loan to be made by Chase
for such Interest Period. If Chase is not participating in any Eurodollar Loan
during any Interest Period therefor, the Eurodollar Base Rate for such Loan for
such Interest Period shall be determined by reference to the amount of the Loan
that Chase would have made or had outstanding had it been participating in such
Loan during such Interest Period.
"EURODOLLAR LOANS" shall mean Loans the interest rates on which are
determined on the basis of rates referred to in the definition of "Eurodollar
Base Rate" in this Section 1.01.
"EURODOLLAR RATE" shall mean, for any Eurodollar Loan for any Interest
Period therefor, a rate per annum (rounded upwards, if necessary, to the nearest
1/100 of 1%) determined by the Agent to be equal to the Eurodollar Base Rate for
such Loan for such Interest Period divided by 1 minus the Reserve Requirement
for such Loan for such Interest Period.
"EVENT OF DEFAULT" shall have the meaning assigned to such term in
Section 10 hereof.
-10-
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated by the SEC thereunder.
"EXISTING BANKS" shall mean the financial institutions party to the
Original Credit Agreement.
"FEDERAL FUNDS EFFECTIVE RATE" shall mean, for any day, the rate per
annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day, PROVIDED that (a) if the day for which such rate is to
be determined is not a Business Day, the Federal Funds Effective Rate for such
day shall be such rate on such transactions on the next preceding Business Day
as so published on the next succeeding Business Day and (b) if such rate is not
so published for any Business Day, the Federal Funds Effective Rate for such
Business Day shall be the average rate charged to Chase on such Business Day on
such transactions as determined by the Agent.
"FUNDED INDEBTEDNESS" shall mean, for the Company and its Restricted
Subsidiaries, as of the date of determination, all Indebtedness of such Persons
(on a consolidated basis) as of the date of the Company's most recent financial
statements (other than in respect of performance or surety bonds and other
obligations of a similar nature incurred in the ordinary course of business of
such Persons) which by its terms matures more than one year after such date of
determination and any such Indebtedness maturing within one year from the date
of determination which is renewable or extendable at the option of the obligor
to a date more than one year from the date of determination and plus the net
increase or minus the net decrease (for the period from the date of the
Company's most recent financial statements to the date of determination) in the
amount of outstanding Loans and the Letter of Credit Liabilities.
"FUNDING CO." shall mean 611852 Saskatchewan Ltd., a corporation
organized under the laws of Saskatchewan.
"FUNDING CREDIT AGREEMENT" shall mean the Amended and Restated Credit
Agreement dated as of July 17, 1996 among Funding Co., the lenders party thereto
and The Chase Manhattan Bank of Canada, as administrative agent, as the same may
be modified and supplemented from time to time.
"FUTURE NET REVENUES" shall mean, for any period, the future gross
revenues attributable to all or a part (as specified herein) of Proved Reserves
constituting part of the Mortgaged Properties for such period less the sum for
such period of all projected Operating Expenses and Capital Expenditures with
respect thereto, as set forth in the related Reserve Evaluation Report, and less
(without duplication) all amounts projected to be applied to the
-11-
discharge of any Production Payment and to the unearned balance of any
advance payment received under any contract to be performed relating to such
Proved Reserves.
"GAAP" shall mean generally accepted accounting principles applied on
a basis consistent with those which, in accordance with the last sentence of
Section 1.02(a) hereof, are to be used in making the calculations for purposes
of determining compliance with this Agreement.
"GOVERNMENT AUTHORITY" shall mean any federal, state, municipal,
local, territorial, or other governmental subdivision, department, commission,
board, bureau, agency, regulatory authority, instrumentality, judicial or
administrative body, domestic or foreign.
"GUARANTEE" shall mean a guarantee, an endorsement, a contingent
agreement to purchase or to furnish funds for the payment or maintenance of, or
otherwise to be or become contingently liable under or with respect to, the
Indebtedness, other obligations, net worth, working capital or earnings of any
Person or any production or revenues generated by (or any capital or other
expenditures incurred in connection with the acquisition and exploitation of,
exploration for, development of or production from) any hydrocarbon reserves, or
a guarantee of the payment of dividends or other distributions upon the stock or
equity interests of any Person, or an agreement to purchase, sell or lease (as
lessee or lessor) Property, products, materials, supplies or services primarily
for the purpose of enabling a debtor to make payment of such debtor's
obligations or an agreement to assure a creditor against loss, and including,
without limitation, causing a bank, surety company or other financial
institution or similar entity to issue a letter of credit, surety bond or other
similar instrument for the benefit of another Person, but excluding endorsements
for collection or deposit in the ordinary course of business. The terms
"GUARANTEE" and "GUARANTEED" used as a verb shall have a correlative meaning.
"HAZARDOUS MATERIAL" shall mean, collectively, (a) any petroleum or
petroleum products, flammable explosives, radioactive materials, asbestos in any
form that is or could become friable, urea formaldehyde foam insulation, and
transformers or other equipment that contain dielectric fluid containing
polychlorinated biphenyls (PCB's), (b) any chemicals or other materials or
substances which are now or hereafter become defined as or included in the
definition of "hazardous substances", "hazardous wastes", "hazardous materials",
"extremely hazardous wastes", "restricted hazardous wastes", "toxic substances",
"toxic pollutants", "contaminants", "pollutants" or words of similar import
under any Environmental Law and (c) any other chemical or other material or
substance, exposure to which is now or hereafter prohibited, limited or
regulated under any Environmental Law.
"HYDROCARBON PROPERTIES" shall mean interests which one or more of the
Obligors have from time to time in hydrocarbon reserves from which hydrocarbons
may be severed or extracted in commercially feasible quantities which
hydrocarbon reserves have been given value by the Banks in determining the
Borrowing Base.
-12-
"INDEBTEDNESS" shall mean, for any Person: (a) obligations created,
issued or incurred by such Person for borrowed money (whether by loan, the
issuance and sale of debt securities or the sale of Property to another Person
subject to an understanding or agreement, contingent or otherwise, to purchase
or repurchase the same or similar Property from such Person); (b) obligations of
such Person to pay the deferred purchase or acquisition price of Property or
services, other than trade accounts payable (other than for borrowed money)
arising, and accrued expenses incurred, in the ordinary course of business so
long as such trade accounts payable are payable within 90 days of the date the
respective goods are delivered or the respective services are rendered; (c)
obligations of others secured by a Lien on the Property of such Person, whether
or not the respective obligations so secured has been assumed by such Person;
(d) obligations of such Person in respect of letters of credit, surety bonds or
similar instruments issued or accepted by banks, surety companies and other
financial institutions for account of such Person; (e) Capital Lease Obligations
of such Person; (f) obligations of such Person in respect of obligations of the
types specified in other clauses of this definition as a general partner or
joint venturer of any partnership or joint venture (other than in respect of
obligations incurred in the ordinary course of business); (g) upon the failure
of such Person to perform or fulfill any warranties or guaranties of, or similar
obligations relating to, production or payment contained in any Non-Recourse
Debt, the maximum amount of the obligation of such Person in respect of such
warranties, guaranties or similar obligations; (h) the unearned balance of any
advance payment received by such Person under any contract to be performed in
excess of $250,000 in the aggregate (other than as provided in clause (i)
below); (i) the unearned balance of any advance payment received by such Person
under any contract to be performed in excess of $2,000,000 in the aggregate
resulting from transactions in the ordinary course of such Person's business;
and (j) Indebtedness of others Guaranteed by such Person.
"INDEPENDENT PETROLEUM ENGINEER" shall mean (a) Xxxxx Xxxxx Company
Petroleum Engineers or (b) such other firm of independent petroleum engineers
expert in the matters required to be performed in connection with the
preparation and delivery of a Reserve Evaluation Report and satisfactory to the
Majority Banks.
"INTEREST COVERAGE RATIO" shall mean, for any period, the ratio of (a)
Cash Flow for such period to (b) Interest Expense for such period.
"INTEREST EXPENSE" shall mean, for any period, interest expense for
the Company and the Restricted Subsidiaries for such period (determined on a
consolidated basis without duplication in accordance with GAAP) including,
without limitation, the following: all interest in respect of Indebtedness
accrued or capitalized during such period (whether or not actually paid during
such period) (other than interest paid in common stock of the Company) and the
net amounts payable (or minus the net amounts receivable) under Interest Rate
Protection Agreements of such Persons accrued during such period (whether or not
actually paid or received during such period), but excluding the non-cash
amortization of deferred debt issuance costs and original issue discount for
such period and the interest expense attributable to Dollar-
-13-
Denominated Production Payments of the Company in existence on the Closing
Date for such period.
"INTEREST PERIOD" shall mean, with respect to any Eurodollar Loan,
each period commencing on the date such Eurodollar Loan is made or Converted
from a Base Rate Loan or the last day of the next preceding Interest Period for
such Loan and ending on the numerically corresponding day in the first, second,
third or sixth calendar month thereafter, as the applicable Borrower may select
as provided in Section 4.05 hereof, except that each Interest Period that
commences on the last Business Day of a calendar month (or on any day for which
there is no numerically corresponding day in the appropriate subsequent calendar
month) shall end on the last Business Day of the appropriate subsequent calendar
month. Notwithstanding the foregoing: (i) if any Interest Period would
otherwise end after the Commitment Termination Date, such Interest Period shall
end on the Commitment Termination Date; (ii) each Interest Period that would
otherwise end on a day which is not a Business Day shall end on the next
succeeding Business Day (or, if such next succeeding Business Day falls in the
next succeeding calendar month, on the next preceding Business Day); and
(iii) notwithstanding clause (i) above, no Interest Period shall have a duration
of less than one month and, if the Interest Period for any Eurodollar Loan would
otherwise be a shorter period, such Loan shall not be available as a Eurodollar
Loan hereunder for such period.
"INTEREST RATE PROTECTION AGREEMENT" shall mean, for any Person, an
interest rate swap, cap or collar agreement or similar arrangement between such
Person and one or more financial institutions or other entities providing for
the transfer or mitigation of interest risks, either generally or under specific
contingencies.
"INVESTMENT" shall mean, for any Person: (a) the acquisition (whether
for cash, Property, services or securities or otherwise) of capital stock,
bonds, notes, debentures, partnership or other ownership interests or other
securities of any other Person or any agreement to make any such acquisition
(including, without limitation, any "short sale" or any sale of any securities
at a time when such securities are not owned by the Person entering into such
short sale); (b) the making of any deposit with, or advance, loan or other
extension of credit to, any other Person (including the purchase of Property
from another Person subject to an understanding or agreement, contingent or
otherwise, to resell such Property to such Person, but excluding any such
advance, loan or extension of credit having a term not exceeding 90 days
representing the purchase price of inventory or supplies sold by such Person in
the ordinary course of business); (c) the entering into of any Guarantee of, or
other contingent obligation with respect to, Indebtedness or other liability of
any other Person and (without duplication) any amount committed to be advanced,
lent or extended to such Person; or (d) the entering into of any Interest Rate
Protection Agreement or Commodity Hedging Agreement.
"ISSUING BANK" shall mean Chase, as the issuer of Letters of Credit
under Section 2.03 hereof, together with its successors and assigns in such
capacity.
-14-
"LETTER OF CREDIT" shall have the meaning assigned to such term in
Section 2.03 hereof.
"LETTER OF CREDIT DOCUMENTS" shall mean, with respect to any Letter of
Credit, collectively, any application therefor and any other agreements,
instruments, guarantees or other documents (whether general in application or
applicable only to such Letter of Credit) governing or providing for (a) the
rights and obligations of the parties concerned or at risk with respect to such
Letter of Credit or (b) any collateral security for any of such obligations,
each as the same may be modified and supplemented and in effect from time to
time.
"LETTER OF CREDIT INTEREST" shall mean, for each Bank, such Bank's
participation interest (or, in the case of the Issuing Bank, the Issuing Bank's
retained interest) in the Issuing Bank's liability under Letters of Credit and
such Bank's rights and interests in Reimbursement Obligations and fees, interest
and other amounts payable in connection with Letters of Credit and Reimbursement
Obligations.
"LETTER OF CREDIT LIABILITY" shall mean, without duplication, at any
time and in respect of any Letter of Credit, the sum of (a) the undrawn face
amount of such Letter of Credit PLUS (b) the aggregate unpaid principal amount
of all Reimbursement Obligations of the Company at such time due and payable in
respect of all drawings made under such Letter of Credit. For purposes of this
Agreement, a Bank (other than the Issuing Bank) shall be deemed to hold a Letter
of Credit Liability in an amount equal to its participation interest in the
related Letter of Credit under Section 2.03 hereof, and the Issuing Bank shall
be deemed to hold a Letter of Credit Liability in an amount equal to its
retained interest in the related Letter of Credit after giving effect to the
acquisition by the Banks other than the Issuing Bank of their participation
interests under said Section 2.03.
"LIEN" shall mean, with respect to any Property, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
Property (including any Production Payments, advance payment or similar
arrangements with respect to minerals in place). For purposes of this Agreement
and the other Basic Documents, a Person shall be deemed to own subject to a Lien
any Property that it has acquired or holds subject to the interest of a vendor
or lessor under any conditional sale agreement, capital lease or other title
retention agreement (other than an operating lease) relating to such Property.
"LOANS" shall mean the loans provided for by Section 2.01(a) hereof.
"MAJORITY BANKS" shall mean Banks having at least 66-2/3% of the
aggregate amount of the Commitments, or if the Commitments shall have been
terminated, Banks holding at least 66-2/3% of the sum of the aggregate unpaid
principal amount of the Loans and the Letter of Credit Liabilities in respect of
the Commitments.
-15-
"MARGIN STOCK" shall mean "margin stock" within the meaning of
Regulations U and X.
"MATERIAL ADVERSE EFFECT" shall mean a material adverse effect on
(a) the Property, business, operations, financial condition, prospects,
liabilities or capitalization of the Company and its Restricted Subsidiaries
taken as a whole, (b) the ability of any Obligor to perform its obligations
under any of the Basic Documents to which it is a party, (c) the validity or
enforceability of any of the Basic Documents, (d) the rights and remedies of the
Banks and the Agent under any of the Basic Documents or (e) the timely payment
of the principal of or interest on the Loans or the Reimbursement Obligations or
other amounts payable in connection therewith.
"MORTGAGE(S)" shall mean, collectively, one or more Mortgages, Deeds
of Trust, Assignments of Rents, Security Agreements and Fixture Filings or
similar documents executed by the Company in favor of the Agent and Xxxx Xx
Xxxxxxxx, as Trustee, for the benefit of the Agent and the Banks, in each case
substantially in the form of Exhibit E hereto and covering the respective
Mortgaged Properties and leasehold interest identified in any Exhibit or
Schedule thereto, as the same shall be modified and supplemented and in effect
from time to time.
"MORTGAGE AMENDMENTS" shall mean the amendments to the Mortgages
executed by the Company in connection with this Agreement.
"MORTGAGED PROPERTIES" shall mean Hydrocarbon Properties which are
subject to the Liens created hereunder and under the Security Documents.
"MULTIEMPLOYER PLAN" shall mean a multiemployer plan defined as such
in Section 3(37) of ERISA to which contributions have been made by the Company
or any ERISA Affiliate and which is covered by Title IV of ERISA.
"NET AVAILABLE PROCEEDS" shall mean:
(a) in the case of any Disposition by the Company or a Restricted
Subsidiary, the amount of Net Cash Payments received in connection with
such Disposition; PROVIDED that if 20% or less of the total value of such
Net Cash Payments consists of non-cash consideration, and if such non-cash
consideration is subjected to the Lien of the Security Documents within 90
days after its receipt by the Company or a Restricted Subsidiary, the
amount of such Net Cash Payments received shall be deemed to equal the
amount of all cash payments received in connection with such Disposition;
(b) in the case of any Casualty Event with respect to any Property of
the Company or any of its Restricted Subsidiaries, the aggregate amount of
proceeds of insurance, condemnation awards and other compensation received
by the Company and
-16-
its Restricted Subsidiaries in respect of such Casualty Event net of
(i) reasonable expenses incurred by the Company and its Restricted
Subsidiaries in connection therewith and (ii) contractually required
repayments of Indebtedness to the extent secured by a Lien on such
Property and any income and transfer taxes payable by the Company or any of
its Restricted Subsidiaries in respect of such Casualty Event; and
(c) in the case of any Equity Issuance, the aggregate amount of all
cash received by the Company and its Restricted Subsidiaries in respect of
such Equity Issuance net of commissions, discounts and other transaction
costs incurred by the Company and its Restricted Subsidiaries in connection
therewith.
"NET CASH PAYMENTS" shall mean, with respect to any Disposition, the
aggregate amount of all cash payments, and the fair market value of any non-cash
consideration, received by the Company and its Restricted Subsidiaries directly
or indirectly in connection with such Disposition; PROVIDED that (a) Net Cash
Payments shall be net of (i) the amount of any legal, title and recording tax
expenses, commissions and other fees and expenses paid by the Company and its
Restricted Subsidiaries in connection with such Disposition and (ii) any
Federal, state and local income or other taxes estimated to be payable by the
Company and its Restricted Subsidiaries as a result of such Disposition (but
only to the extent that (x) such estimated taxes are in fact paid to the
relevant Federal, state or local governmental authority within three months of
date of such Disposition or placed in escrow for the payment of such taxes or
(y) the amount of such estimated taxes is less than $2,000,000 and the payment
of such taxes is being contested in good faith and by appropriate proceedings),
(b) Net Cash Payments shall not include any cash payment (or portion thereof)
received in any fiscal year of the Company in respect of such Disposition to the
extent that such cash payment (or portion thereof), together with all cash
payments with respect to other Dispositions theretofore received in such fiscal
year, does not exceed $1,000,000 and (c) Net Cash Payments shall be net of any
repayments by the Company or any of its Restricted Subsidiaries of Indebtedness
to the extent that (i) such Indebtedness is secured by a Lien on the Property
that is the subject of such Disposition and (ii) such Indebtedness is to be
repaid as a condition to the Disposition of such Property.
"NEW WHOLLY-OWNED SUBSIDIARY" shall have the meaning assigned to such
term in Section 9.08 hereof.
"NON-RECOURSE DEBT" shall mean any Indebtedness of any Unrestricted
Subsidiary, in each case in respect of which the sole recourse of the holder or
holders thereof (except to the extent approved by the Majority Banks) is to such
Unrestricted Subsidiary and/or one or more of its Subsidiaries (which is an
Unrestricted Subsidiary) and/or any other Person (other than the Company and/or
any Restricted Subsidiary) and the terms and conditions of the non-recourse
provisions of which are reasonably acceptable to the Majority Banks; PROVIDED
that the existence in any document executed by any such Unrestricted Subsidiary,
in connection with such Non-Recourse Debt (the "SUBJECT DEBT") of a provision
which provides for recourse to the
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Properties or assets of the Company, or any Restricted Subsidiary generally
by reason of gross negligence or willful misconduct of such Unrestricted
Subsidiary, will not cause the Subject Debt to be excluded from the
definition of "Non-Recourse Debt" prior to the time that a claim is made
against the Company or such Restricted Subsidiary, as the case may be,
alleging the gross negligence or willful misconduct of such Unrestricted
Subsidiary (it being understood that immediately upon any such claim being
made against the Company or such Restricted Subsidiary the amount of such
claim shall cease to be Non-Recourse Debt).
"NOTES" shall mean the promissory notes provided for by Section 2.08
hereof and all promissory notes delivered in substitution or exchange therefor,
in each case as the same shall be modified and supplemented and in effect from
time to time.
"O&G BUSINESS" shall mean the lines of business referred to in Section
9.12 hereof.
"OPERATING EXPENSES" shall mean, for any period, the sum of the
following for the Company and its Restricted Subsidiaries (determined on a
consolidated basis in accordance with GAAP) to the extent accrued or paid during
such period (without duplication): (i) lease operating expenses; (ii) Taxes;
(iii) general and administrative and other overhead expenditures; and (iv) all
other expenses paid or accrued.
"ORIGINAL FEE LETTER" shall mean the letter agreement dated December
1, 1993 between the Agent and the Company.
"ORIGINAL NOTES" shall mean the promissory notes delivered pursuant to
the Original Credit Agreement.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"PERMITTED INVESTMENTS" shall mean: (a) direct obligations of the
United States of America, or of any agency thereof, or obligations guaranteed as
to principal and interest by the United States of America, or of any agency
thereof, in either case maturing not more than 90 days from the date of
acquisition thereof; (b) certificates of deposit issued by any bank or trust
company organized under the laws of the United States of America or any state
thereof and having capital, surplus and undivided profits of at least
$500,000,000, maturing not more than 90 days from the date of acquisition
thereof; (c) commercial paper rated A-1 or better or P-1 by Standard & Poor's
Rating Group or Xxxxx'x Investors Services, Inc., respectively, maturing not
more than 90 days from the date of acquisition thereof; and (d) commercial paper
rated A-2 or better (but less than A-1) or P-2 or better (but less than P-1) by
Standard and Poor's Rating Group or Xxxxx'x Investors Services, Inc.
respectively, maturing not more than 30 days from the date of acquisition
thereof.
-18-
"PERSON" shall mean any individual, corporation, company, voluntary
association, partnership, joint venture, trust, unincorporated organization or
government (or any agency, instrumentality or political subdivision thereof).
"PLAN" shall mean an employee benefit or other plan established or
maintained by the Company or any ERISA Affiliate and that is covered by Title IV
of ERISA, other than a Multiemployer Plan.
"PLEDGE AGREEMENT" shall mean the Pledge Agreement substantially in
the form of Exhibit F hereto between any Obligor required to execute a Pledge
Agreement at any time after the date hereof and the Agent, as the same shall be
modified and supplemented and in effect from time to time.
"POST-DEFAULT RATE" shall mean, in respect of any principal of any
Loan, any Reimbursement Obligation or any other amount under this Agreement, any
Note or any other Basic Document that is not paid when due (whether at stated
maturity, by acceleration, by optional or mandatory prepayment or otherwise), a
rate per annum during the period from and including the due date to but
excluding the date on which such amount is paid in full equal to 2% PLUS the
Base Rate as in effect from time to time PLUS the Applicable Margin for Base
Rate Loans (PROVIDED that, if the amount so in default is principal of a
Eurodollar Loan and the due date thereof is a day other than the last day of the
Interest Period therefor, the "Post-Default Rate" for such principal shall be,
for the period from and including such due date to but excluding the last day of
the Interest Period, 2% PLUS the interest rate for such Loan as provided in
Section 3.02(b) hereof and, thereafter, the rate provided for above in this
definition).
"PRESENT VALUE OF RESERVES" shall mean, on any date, estimated net
cash flow expressed in Dollars (after development expenses and production taxes)
in respect of Proved Reserves attributable to Hydrocarbon Properties calculated
in accordance with the Agent's risk factors and product pricing models in effect
from time to time and discounted to present value at a discount rate acceptable
to the Majority Banks from time to time for Proved Reserves.
"PRIME RATE" shall mean the rate of interest per annum publicly
announced from time to time by Chase as its prime rate in effect at its
principal office in New York City.
"PRODUCERS MARKETING" shall mean Producers Marketing Ltd., a Canadian
corporation.
"PRODUCTION PAYMENTS" shall mean, collectively, Dollar-Denominated
Production Payments and Volumetric Production Payments.
"PROPERTY" shall mean any right or interest in or to property of any
kind whatsoever, whether real, personal or mixed and whether tangible or
intangible.
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"PROVED RESERVES" shall mean reserves (to the extent of the net
interest of the Company and its Restricted Subsidiaries therein) comprised of
quantities of hydrocarbons that geologic and engineering data demonstrate with
reasonable certainty to be recoverable in the future from known reservoirs under
existing conditions, PROVIDED that such reserves are recoverable from
(a) existing xxxxx, whether from completion intervals currently open and
producing to market, or completion intervals currently open but not currently
producing or zones behind casing of existing xxxxx, or (b) new xxxxx on
undrilled acreage. Proved Reserves on undrilled acreage shall be limited to
those drilling units offsetting productive units that are reasonably certain to
be productive when drilled. Other undrilled units may also be credited with
Proved Reserves where continuity of production from existing productive
formations can be demonstrated with reasonable certainty. For purposes of
determining whether any Hydrocarbon Properties of any Obligor (other than
Hydrocarbon Properties that have been acquired by such Obligor since the date of
the most recent Reserve Evaluation Report or other internal reserve reports
prepared by the Company, all of which shall be considered Proved Reserves)
contain Proved Reserves, the Banks and the Obligors agree that the most recent
Reserve Evaluation Report or other internal reserve reports prepared by the
Company shall be determinative.
"QUARTERLY DATES" shall mean the last day of March, June, September
and December in each year, the first of which shall be the first such day after
the date of this Agreement; PROVIDED that if any such day is not a Business Day,
then such Quarterly Date shall be the next preceding Business Day.
"REGULATION A", "REGULATION D", "REGULATION G", "REGULATION T",
"REGULATION U" AND REGULATION X" shall mean, respectively, Regulations A, D, G,
T, U and X of the Board of Governors of the Federal Reserve System (or any
successor), as the same may be modified and supplemented and in effect from time
to time.
"REGULATORY CHANGE" shall mean, with respect to any Bank, any change
after the date of this Agreement in Federal, state or foreign law or regulations
(including, without limitation, Regulation D) or the adoption or making after
such date of any interpretation, directive or request applying to a class of
banks including such Bank of or under any Federal, state or foreign law or
regulations (whether or not having the force of law and whether or not failure
to comply therewith would be unlawful) by any court or governmental or monetary
authority charged with the interpretation or administration thereof.
"REIMBURSEMENT OBLIGATIONS" shall mean, at any time, the obligations
of the Company then outstanding, or which may thereafter arise in respect of all
Letters of Credit then outstanding, to reimburse amounts paid by the Issuing
Bank in respect of any drawings under a Letter of Credit.
"RELEASE" shall mean any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the indoor or outdoor
-20-
environment, including, without limitation, the movement of Hazardous
Materials through ambient air, soil, surface water, ground water, wetlands,
land or subsurface strata.
"REPORT DELIVERY DATE" shall mean, with respect to any Reserve
Evaluation Report, 45 days prior to the applicable Determination Date.
"RESERVE EVALUATION REPORT" shall mean an unsuperceded report that
(a) is (i) prepared, in the case of the report required to be delivered by the
Company pursuant to Section 9.01(f) hereof in connection with the Determination
Date occurring on May 1 of each year, by the Independent Petroleum Engineer on
the basis of assumptions and projections which the Company believes in good
faith to be reasonable or, in the case of the report required to be delivered by
the Company pursuant to Section 9.01(f) hereof in connection with each other
Determination Date, by the Independent Petroleum Engineer on the basis of the
most recently delivered Reserve Evaluation Report delivered in connection with
the Determination Date occurring on May 1 of each year as adjusted for reserve
additions and production from the date of such report, each as acceptable to the
Independent Petroleum Engineer and (ii) satisfactory in form and substance to
the Majority Banks (including as to assumptions) and (b)(x) is prepared on the
basis of findings and material data as of a date not more than 60 days prior to
the effective date of such report, in the case of a report prepared by the
Company and (y) not more than 90 days prior to the effective date of such
report, in the case of a report prepared by the Independent Petroleum Engineer,
(i) identifies the Hydrocarbon Properties covered thereby, (ii) identifies (in
the case of any report prepared by the Company) the Mortgaged Properties,
(iii) as to each of the Hydrocarbon Properties, sets forth (A) the Proved
Reserves attributable to such Hydrocarbon Property, (B) the total amount of such
Proved Reserves attributable to such Hydrocarbon Property that, in the opinion
of the preparer of such report, the Company and its Restricted Subsidiaries have
the right to produce for their own account in the current and each succeeding
calendar year, (C) a projection of the rate of production and the Future Net
Revenues of the Company and its Restricted Subsidiaries (including as additional
information the data and assumptions used to determine such Future Net Revenues)
from such Proved Reserves for the current and each succeeding calendar year, (D)
the quantity and type of hydrocarbons recoverable from such Proved Reserves in
the current and each succeeding calendar year, (E) an estimate of the projected
revenues and expenses attributable to such Proved Reserves in the current and
each succeeding calendar year, and (F) any reports or evaluations prepared by
the Company regarding the expediency of any change in methods of treatment or
operation of all or any xxxxx drilled to produce any of such Proved Reserves
that are producing or capable of producing hydrocarbons, any new drilling or
development, any method of secondary recovery by repressuring or otherwise, or
any other action with respect to such Proved Reserves, the decision as to which
may increase or reduce the quantity of hydrocarbons ultimately recoverable, or
the rate of production thereof and (c) reconciles (i) the total amount of Proved
Reserves attributable to each Hydrocarbon Property and (ii) any material changes
in Operating Expenses or Capital Expenditures contained in such Reserve
Evaluation Report with the information contained in the immediately preceding
Reserve Evaluation Report, if any.
-21-
"RESERVE REQUIREMENT" shall mean, for any Interest Period for any
Eurodollar Loan, the average maximum rate at which reserves (including, without
limitation, any marginal, supplemental or emergency reserves) are required to be
maintained during such Interest Period under Regulation D by member banks of the
Federal Reserve System in New York City with deposits exceeding one billion
Dollars against "Eurocurrency liabilities" (as such term is used in Regulation
D). Without limiting the effect of the foregoing, the Reserve Requirement shall
include any other reserves required to be maintained by such member banks by
reason of any Regulatory Change with respect to (i) any category of liabilities
that includes deposits by reference to which the Eurodollar Base Rate is to be
determined as provided in the definition of "Eurodollar Base Rate" in this
Section 1.01 or (ii) any category of extensions of credit or other assets that
includes Eurodollar Loans.
"RESTRICTED SUBSIDIARY" shall mean any Subsidiary of the Company other
than an Unrestricted Subsidiary.
"SECOND AMENDMENT FEE LETTER" shall mean the letter agreement dated
January 31, 1997 between the Agent and the Company.
"SECURITY AGREEMENT" shall mean an Amended and Restated Security
Agreement substantially in the form of Exhibit B hereto between the Obligors and
the Agent, as the same shall be modified and supplemented and in effect from
time to time.
"SECURITY DOCUMENTS" shall mean, collectively, the Security Agreement,
the Pledge Agreement, the Mortgages and all Uniform Commercial Code financing
statements required by this Agreement, the Security Agreement, the Pledge
Agreement or the Mortgages to be filed with respect to the security interests in
personal Property and fixtures created pursuant to the Security Agreement, the
Pledge Agreement or the Mortgages.
"SENIOR SUBORDINATED DEBT" shall mean the Indebtedness of the Company
in respect of the 11 1/4% Senior Subordinated Notes of the Company due September
1, 2003 issued pursuant to the Senior Subordinated Debt Documents.
"SENIOR SUBORDINATED DEBT DOCUMENTS" shall mean all documents and
agreements executed and delivered in connection with the original issuance of
the Senior Subordinated Debt, including the Indenture dated as of September 8,
1993 between the Company and Shawmut Bank Connecticut, National Association, as
trustee, as the same shall, subject to Section 9.17 hereof, be modified and
supplemented and in effect from time to time.
"SUBORDINATED INDEBTEDNESS" shall mean, collectively, (a) the Senior
Subordinated Debt, and (b) any other Indebtedness of any of the Obligors
outstanding on the date hereof (i) for which any Obligor is directly and
primarily liable, (ii) in respect of which none of the Company's other
Restricted Subsidiaries is contingently or otherwise obligated and (iii) which
is subordi-
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nated to the obligations of the respective Obligors to pay principal of and
interest on the Loans, Reimbursement Obligations and Notes hereunder, and any
extensions on renewals thereof, but excluding any increases in the outstanding
amount thereof, on terms, and pursuant to documentation containing other terms
(including interest, amortization, covenants and events of default), in form
and substance satisfactory to the Majority Banks.
"SUBSIDIARY" shall mean, for any Person, any corporation, partnership
or other entity of which at least a majority of the securities or other
ownership interests having by the terms thereof ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
of such corporation, partnership or other entity (irrespective of whether or not
at the time securities or other ownership interests of any other class or
classes of such corporation, partnership or other entity shall have or might
have voting power by reason of the happening of any contingency) is at the time
directly or indirectly owned or controlled by such Person or one or more
Subsidiaries of such Person or by such Person and one or more Subsidiaries of
such Person. "WHOLLY OWNED SUBSIDIARY" shall mean any such corporation,
partnership or other entity of which all of the equity securities or other
ownership interests (other than, in the case of a corporation, directors'
qualifying shares) are so owned or controlled.
"TANGIBLE NET WORTH" shall mean, as at any date for any Person, the
sum for such Person (determined on a consolidated basis without duplication in
accordance with GAAP as of the date of its most recent financial statement) and
plus any increase occurring during the period from the date of the Company's
most recent financial statements to the date of determination as a result of any
Equity Issuance by the Company, of the following:
(a) the amount of capital stock, PLUS
(b) the amount of surplus and retained earnings (or, in the case of a
surplus or retained earnings deficit, MINUS the amount of such deficit),
MINUS
(c) the sum of the following: cost of treasury shares and the book
value of all assets which should be classified as intangibles (without
duplication of deductions in respect of items already deducted in arriving
at surplus and retained earnings) but in any event including goodwill
(other than goodwill reflected on the financial statements of Canadian
Forest Oil), minority interests, research and development costs,
trademarks, trade names, copyrights, patents and franchises, unamortized
debt discount and expense, all accounting reserves; PLUS
(d) the amount of noncash writedowns of long-lived assets in
compliance with GAAP guidelines or Securities and Exchange Commissions
rules or regulations.
"TAXES" shall mean all taxes, levies, imposts, stamp taxes, duties,
charges to tax, fees, deductions, withholdings, royalties, charges, compulsory
loans or restrictions or conditions
-23-
resulting in a charge which are imposed, levied, collected, withheld or
assessed by any political subdivision or taxing authority as of the date of
this Agreement or at any time in the future together with interest thereon and
penalties with respect thereto, if any, and any payments of principal,
interest, charges, fees or other amounts made on or in respect thereof,
including without limitation production and severance taxes and windfall
profit taxes, and "TAX" and "TAXATION" shall be construed accordingly provided
that "TAXES" shall exclude taxes imposed on or measured by the overall net
income of a Person.
"3189503" shall mean 3189503 Canada Ltd., a Canadian Corporation.
"TOTAL CAPITALIZATION" shall mean, for any Person, as of the date of
determination, the sum of the Tangible Net Worth of such Person (or, in the case
of the Company, the Tangible Net Worth of the Company and its Restricted
Subsidiaries) as of such date of determination PLUS the Funded Indebtedness of
such Person (or, in the case of the Company, the Funded Indebtedness of the
Company and its Restricted Subsidiaries) as of such date of determination.
"TYPE" shall have the meaning assigned to such term in Section 1.04
hereof.
"UNRESTRICTED PROPERTIES" shall mean the Hydrocarbon Properties of the
Company and its Restricted Subsidiaries that (A) are (i) not Mortgaged
Properties and (ii) that do not contain Proved Reserves and (B) are encumbered
by Dollar-Denominated Production Payments in existence on the Closing Date.
"UNRESTRICTED SUBSIDIARY" shall mean such Subsidiaries of the Company
(other than Subsidiary Guarantors) as may be designated by the Company as
"Unrestricted Subsidiaries" as provided in Section 1.05 hereof.
"VOLUMETRIC PRODUCTION PAYMENTS" shall mean production payment
obligations of the Company or any of its Subsidiaries which are payable from a
specified share of production from specific Properties, together with all
undertakings and obligations in connection therewith.
"VOTING STOCK" means, with respect to any Person, securities of any
class or classes of Capital Stock in such Person entitling the holders thereof
(whether at all times or only so long as no senior class of stock has voting
power by reason of any contingency) to vote in the election of members of the
Board of Directors or other governing body of such Person.
1.02 ACCOUNTING TERMS AND DETERMINATIONS.
(a) Except as otherwise expressly provided herein, all accounting
terms used herein shall be interpreted, and all financial statements and
certificates and reports as to financial matters required to be delivered to the
Banks hereunder shall (unless otherwise disclosed to the Banks in writing at the
time of delivery thereof in the manner described in subsection (b) below)
-24-
be prepared, in accordance with GAAP applied on a basis consistent with those
used in the preparation of the latest financial statements furnished to the
Banks hereunder (which, prior to the delivery of the first financial
statements under Section 9.01 hereof, shall mean the audited financial
statements as at December 31, 1995 referred to in Section 8.02 hereof). All
calculations made for the purposes of determining compliance with this
Agreement shall (except as otherwise expressly provided herein) be made by
application of GAAP applied on a basis consistent with those used in the
preparation of the latest annual or quarterly financial statements furnished
to the Banks pursuant to Section 9.01 hereof (or, prior to the delivery of the
first financial statements under Section 9.01 hereof, used in the preparation
of the audited financial statements as at December 31, 1995 referred to in
Section 8.02 hereof) unless (i) the Company objects to the Banks in writing to
determining such compliance on such basis at the time of delivery of such
financial statements to the Banks or (ii) the Majority Banks shall object to
the Company (through the Agent) in writing to so determining such compliance
within 30 days after such delivery of such financial statements, in either of
which events such calculations shall be made on a basis consistent with those
used in the preparation of the latest financial statements as to which such
objection shall not have been made (which, if objection is made in respect of
the first financial statements delivered under Section 9.01 hereof, shall mean
the financial statements referred to in Section 8.02 hereof).
(b) At the reasonable request of the Majority Banks the Company shall
deliver to the Banks (i) a description in reasonable detail of any material
variation between the application of accounting principles employed in the
preparation of such statement and the application of accounting principles
employed in the preparation of the next preceding annual or quarterly financial
statements as to which no objection has been made in accordance with the last
sentence of subsection (a) above and (ii) reasonable estimates of the difference
between such statements arising as a consequence thereof.
(c) None of the Company and its Subsidiaries will change the last day
of their respective fiscal years from December 31 of each year, or the last days
of the first three fiscal quarters in each of its fiscal years from March 31,
June 30 and September 30 of each year, respectively.
1.03 BORROWING BASE.
(a) RESERVE EVALUATION REPORTS. The Company has furnished to the
Agent and the Banks a reserve report as of July 1, 1996, which report shall be
deemed to be the initial Reserve Evaluation Report. On or before each Report
Delivery Date, the Company shall furnish to the Agent and the Banks an updated
Reserve Evaluation Report.
(b) BORROWING BASE. During the period commencing on the date hereof
and ending on such date the first redetermination of the Borrowing Base becomes
effective as provided below in this Section 1.03(b), the Borrowing Base shall be
$60,000,000 (subject to any
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adjustments and redeterminations provided for by Sections 1.03(c), 1.03(d) and
1.03(e) hereof) which amount has been determined on the basis of the initial
Reserve Evaluation Report referred to in the first sentence of Section 1.03(a)
hereof (with such adjustments to the rates, factors, values, estimates,
assumptions and computations set forth in such Reserve Evaluation Report as
are acceptable to the Majority Banks). As promptly as reasonably practicable
after its receipt of each Reserve Evaluation Report furnished to it pursuant
to the second sentence of Section 1.03(a) hereof, the Agent (in consultation
with the Majority Banks) shall endeavor to redetermine the Borrowing Base on
the basis of such Reserve Evaluation Report in the manner provided in this
clause (b), notify the Banks of such redetermination and, if such
redetermination is approved by each of the Banks (in the case of an increase
in the Borrowing Base) or by the Majority Banks (in the case of (i) a decrease
in the Borrowing Base or (ii) no change in the Borrowing Base), as applicable,
notify the Company of the Borrowing Base as so redetermined and such
redetermined Borrowing Base shall become effective on the Determination Date
next following each Report Delivery Date (or, if later, on the date notified
by the Agent to the Company) and shall remain effective until again
redetermined as provided in this Section 1.03(b) (subject to any adjustments
and redeterminations provided for by Sections 1.03(c), 1.03(d) and 1.03(e)
hereof). The determination by the Agent and each of the Banks or the Majority
Banks, as the case may be, of the Borrowing Base for any Determination Period
shall be made on the basis of parameters which may include the Present Value
of Reserves attributable to Hydrocarbon Properties included in the Mortgaged
Properties as set forth in the Reserve Evaluation Report for such
Determination Period, subject, however, to such adjustments as the Agent, with
the concurrence of each of the Banks or the Majority Banks, as the case may
be, may make in its and their sole discretion to the rates, factors, values,
estimates, assumptions and computations set forth in such Reserve Evaluation
Report and any other relevant information or factors, including without
limitation, any additional Indebtedness or other obligations that may be
incurred by the Company and its Subsidiaries that the Majority Banks may deem
appropriate.
(c) MATERIAL CHANGE. The Company agrees to notify the Agent promptly
of any material change of which the Company or any of its Restricted
Subsidiaries is aware which reduces or may result in a reduction of the
Borrowing Base by more than 10%. Promptly upon receipt of such notice, the
Agent (in consultation with the Banks) shall endeavor to adjust the Borrowing
Base pursuant to the procedures set forth in Section 1.03(b) hereof.
(d) REDETERMINATION. If so requested by the Majority Banks or the
Company at any time, the Agent shall, as promptly as reasonably practicable
after the receipt of such request, endeavor to redetermine (in consultation with
the Company and the Banks) the Borrowing Base as then in effect on the basis of
the then most recent Reserve Evaluation Report (subject, however, to such
additional adjustments to the rates, factors, values, estimates, assumptions and
computations as set forth therein as the Agent, with the concurrence of the
Majority Banks, may determine to be appropriate) and any other relevant
information and factors, including, without limitation, any additional
Indebtedness or other obligations that have been or are reasonably anticipated
to be incurred by the Company and its Restricted Subsidiaries
-26-
and any Hydrocarbon Properties acquired by the Company and its Restricted
Subsidiaries which are not subject to any Lien other than Liens created
hereunder or under the Security Documents, Liens permitted by Section 9.06
hereof, that the Majority Banks may deem appropriate and otherwise as provided
in Section 1.03(b) hereof, PROVIDED that no Hydrocarbon Properties acquired by
any Subsidiary of the Company after the date hereof shall be included in the
calculation of the Borrowing Base unless such Subsidiary is a Subsidiary
Guarantor under this Agreement. As promptly as reasonably practical following
its redetermination of the Borrowing Base the Agent shall notify the Banks of
such redetermination and, if such redetermination is approved by each of the
Banks (in the case of an increase in the Borrowing Base) or by the Majority
Banks (in the case of a decrease in the Borrowing Base), as applicable, notify
the Company of the Borrowing Base as so redetermined and such redetermined
Borrowing Base shall become effective immediately upon delivery to the Company
of such notice of redetermination.
(e) DETERMINATIONS, ETC. All determinations and redeterminations and
adjustments by the Agent provided for above in this Section 1.03 or in the
definition of "Present Value of Reserves" in Section 1.01 (and any
determinations and decisions by the Majority Banks in connection therewith,
including any thereof approving or disapproving a proposed redetermination or
redetermination by the Agent or effecting any adjustment to any element included
in a Reserve Evaluation Report or the determination or redetermination of the
Borrowing Base) shall be made on a reasonable basis, in good faith and in a
manner reasonably consistent with the basis on which the initial Borrowing Base
was determined to be acceptable to the Banks (but after giving effect to changes
in facts and circumstance occurring after the date of such initial determination
including, but not limited to, reserves and production, operating expenses and
economic assumptions with respect to price of hydrocarbons and inflation), and
any such determination, redetermination or adjustment shall consider any other
relevant information or factors, including without limitation, any additional
Indebtedness or other obligations that may be incurred by the Company and its
Restricted Subsidiaries that the Majority Banks may deem appropriate, PROVIDED
that no Hydrocarbon Properties acquired by any Subsidiary of the Company after
the date hereof shall be included in the calculation of the Borrowing Base
unless such Subsidiary is a Subsidiary Guarantor under this Agreement.
1.04 TYPES OF LOANS. Loans hereunder are distinguished by "Type".
The "Type" of a Loan refers to whether such Loan is a Base Rate Loan or a
Eurodollar Loan, each of which constitutes a Type.
1.05 DESIGNATION OF SUBSIDIARIES AS RESTRICTED OR UNRESTRICTED
SUBSIDIARIES. The Company may, but only with the approval of the Majority
Banks, designate (by notice to the Agent which shall promptly notify the Banks)
a Restricted Subsidiary by delivery of a new Schedule III hereto (other than a
Subsidiary Guarantor) to be an Unrestricted Subsidiary or an Unrestricted
Subsidiary to be a Restricted Subsidiary; PROVIDED that the Company may, without
such approval, designate (by notice to the Agent which shall promptly notify the
Banks) a
-27-
corporation or other entity that is formed or acquired as a direct or indirect
Subsidiary of the Company after the date hereof (no part of the business or
assets of which was owned by the Company or a Restricted Subsidiary prior to
the date of such formation or acquisition) to be an Unrestricted Subsidiary on
or prior to the date of such formation or acquisition if, after giving effect
thereto, the Company would be in compliance with its obligations with respect
to such Subsidiary as an Unrestricted Subsidiary under Section 9.19 hereof and
no other Default shall have occurred and be continuing.
1.06 REFERENCES TO SUBSIDIARIES, RESTRICTED SUBSIDIARIES AND
UNRESTRICTED SUBSIDIARIES IN CONNECTION WITH CALCULATIONS OF CERTAIN FINANCIAL
RATIOS. References (whether in the singular or the plural) to Subsidiaries,
Restricted Subsidiaries and Unrestricted Subsidiaries in the definitions of
"Cash Flow" and "Interest Expense" in Section 1.01 hereof shall, for purposes of
calculating Cash Flow or Interest Expense (as the case may be) for a period or
part of a period ending prior to the date of this Agreement, be deemed to refer
to corporations or other entities that would have been "Subsidiaries",
"Restricted Subsidiaries" or "Unrestricted Subsidiaries" (as the case may be)
had this Agreement been in effect on the first day of such period.
Section 2. COMMITMENTS, LOANS, NOTES AND PREPAYMENTS.
2.01 LOANS.
(a) Each Bank severally agrees, in accordance with the terms and
conditions of this Agreement, to make one or more loans to the Company in
Dollars during the period from and including the Closing Date to and including
the Commitment Termination Date, in an aggregate amount up to but not exceeding
the lesser of (x) the Commitment of such Bank and (y) an amount equal to such
Bank's Commitment Percentage multiplied by the Borrowing Base determined
pursuant to the immediately preceding Reserve Evaluation Report; PROVIDED that
(i) in no event shall the aggregate principal amount of all Loans, together with
the aggregate amount of all Letter of Credit Liabilities, exceed the lesser of
(x) the aggregate amount of the Commitments as in effect from time to time any
(y) the Borrowing Base determined pursuant to the immediately preceding Reserve
Evaluation Report and (ii) the Company may not borrow Loans or obtain Letters of
Credit under this Agreement at any time while a Borrowing Base Deficiency
exists. The aggregate of the Commitments of the Banks on the date hereof is
$100,000,000.
(b) Subject to the terms and conditions of this Agreement, during the
period from and including the Closing Date to but not including the Commitment
Termination Date, the Company may borrow, repay and reborrow the Loans by means
of Base Rate Loans and Eurodollar Loans, and may Convert Loans of one Type into
Loans of another Type (as provided in Section 2.08 hereof) or Continue Loans of
one Type as Loans of the same Type (as provided
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in Section 2.08 hereof); PROVIDED that no more than three separate Interest
Periods in respect of Eurodollar Loans may be outstanding at any one time.
(c) Notwithstanding any provision of this Section 2.01 to the
contrary, the aggregate amount of Letter of Credit Liabilities outstanding under
this Agreement shall not at any time exceed the least of (i) $10,000,000, (ii)
the aggregate of the Commitments and (iii) the Borrowing Base.
(d) On the date this Agreement becomes effective:
(i) The Company shall pay all accrued and unpaid commitment fees
and letter of credit fronting fees outstanding under the Original
Credit Agreement for the account of each "Bank" under the
Original Credit Agreement;
(ii) each "Eurodollar Loan" outstanding under the Original Credit
Agreement shall be deemed a Eurodollar Loan hereunder in the
amount, with the same rate of interest and maturity date as such
"Eurodollar Loan" under the Original Credit Agreement, and the
obligations of the Company with respect to such "Eurodollar
Loan," including accrued and unpaid interest shall be deemed
carried forward hereunder (and, as such, such Eurodollar Loans
may not be allocated ratably among the Banks), and the execution
and delivery of this Agreement and the extension of such Loans
hereunder shall not entitle any "Bank" under the Original Credit
Agreement to seek compensation pursuant to Section 5.05 hereof or
thereof;
(iii) each "Base Rate Loan" under the Original Credit
Agreement shall be deemed to be repaid with the proceeds of a new
Base Rate Loan under this Agreement;
(iv) each "Letter of Credit" under the Original Credit Agreement
shall be deemed to be issued pursuant to the terms hereof without
payment of any additional issuance or amendment fees; and
(v) the Original Credit Agreement and the commitments thereunder
shall be superseded by this Agreement and such commitments shall
terminate.
2.02 BORROWINGS. The Company shall give the Agent (which shall
promptly notify the Banks) notice of each borrowing hereunder as provided in
Section 4.05 hereof. Not later than 1:00 p.m. New York time on the date
specified for each borrowing hereunder, each
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Bank shall make available the amount of the Loan or Loans to be made by it on
such date to the Agent, at an account specified by the Agent maintained by the
Agent with Chase, in immediately available funds, for account of the Company.
The amount so received by the Agent shall, subject to the terms and conditions
of this Agreement, be made available to the Company by depositing the same, in
immediately available funds, in an account of the Company maintained with
Chase in New York, New York, designated by the Company. At the time of each
such notice of borrowing hereunder the Company shall deliver a certificate of
the Chief Financial Officer, the Treasurer or an Assistant Treasurer of the
Company which certificate shall indicate the ratio of Funded Indebtedness to
Total Capitalization of the Company and its Restricted Subsidiaries after
giving effect to such borrowing and shall show, in reasonable detail, the
calculations used to derive such ratio.
2.03 LETTERS OF CREDIT. Subject to the terms and conditions of this
Agreement, the Commitments may be utilized, upon the request of the Company, in
addition to the Loans provided for by Section 2.01(a) hereof, for the issuance
by the Issuing Bank of letters of credit (collectively, "LETTERS OF CREDIT") for
account of the Company and its Restricted Subsidiaries, PROVIDED that in no
event shall (i) the aggregate amount of all Letter of Credit Liabilities,
together with the aggregate principal amount of the Loans, exceed the lesser of
(A) the aggregate of the Commitments and (B) the Borrowing Base as determined
pursuant to the immediately preceding Reserve Evaluation Report, (ii) the
outstanding aggregate amount of all Letter of Credit Liabilities exceed
$10,000,000 and (iii) the expiration date of any Letter of Credit extend beyond
the earlier of the Commitment Termination Date and the date 12 months following
the issuance of such Letter of Credit. The following additional provisions
shall apply to Letters of Credit:
(a) The Company shall give the Agent at least three Business Days'
irrevocable prior notice (effective upon receipt) specifying the Business
Day (which shall be no later than 30 days preceding the Commitment
Termination Date) each Letter of Credit is to be issued and the account
party or parties therefor and describing in reasonable detail the proposed
terms of such Letter of Credit (including the beneficiary thereof) and the
nature of the transactions or obligations proposed to be supported thereby
(including whether such Letter of Credit is to be a commercial letter of
credit or a standby letter of credit). Upon receipt of any such notice,
the Agent shall advise the Issuing Bank of the contents thereof.
(b) On each day during the period commencing with the issuance by the
Issuing Bank of any Letter of Credit and until such Letter of Credit shall
have expired or been terminated, the Commitment of each Bank shall be
deemed to be utilized for all purposes of this Agreement in an amount equal
to such Bank's Commitment Percentage of the then undrawn face amount of
such Letter of Credit. Each Bank (other than the Issuing Bank) agrees
that, upon the issuance of any Letter of Credit hereunder, it shall
automatically acquire a participation in the Issuing Bank's liability under
such Letter of Credit in an
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amount equal to such Bank's applicable Commitment Percentage of such
liability, and each such Bank (other than the Issuing Bank) thereby shall
absolutely, unconditionally and irrevocably assume, as primary obligor and
not as surety, and shall be unconditionally obligated to the Issuing Bank
to pay and discharge when due, its Commitment Percentage of the Issuing
Bank's liability under such Letter of Credit.
(c) Upon receipt from the beneficiary of any Letter of Credit of any
demand for payment under such Letter of Credit, the Issuing Bank shall
promptly notify the Company (through the Agent) of the amount to be paid by
the Issuing Bank as a result of such demand and the date on which payment
is to be made by the Issuing Bank to such beneficiary in respect of such
demand. Notwithstanding the identity of the account party of any Letter of
Credit, the Company agrees to pay and reimburse the Agent for account of
the Issuing Bank for the amount of each demand for payment under such
Letter of Credit at or prior to the date on which payment is to be made by
the Issuing Bank to the beneficiary thereunder, without presentment,
demand, protest or other formalities of any kind.
(d) Forthwith upon its receipt of a notice referred to in
clause (c) of this Section 2.03, the Company shall advise the Agent whether
or not the Company intends to borrow hereunder to finance its obligations
to reimburse the Issuing Bank for the amount of the related demand for
payment and, if it does, submit a notice of such borrowing as provided in
Section 4.05 hereof. In the event that the Company fails to so advise the
Agent, or if the Company fails to reimburse the Issuing Bank for a demand
for payment under a Letter of Credit by the date of such payment, the Agent
shall give each Bank prompt notice of the amount of the demand for payment,
specifying such Bank's Commitment Percentage of the amount of the related
demand for payment.
(e) Each Bank (other than the Issuing Bank) shall pay to the Agent
for the account of the Issuing Bank at an account specified by the Issuing
Bank maintained by the Issuing Bank at Chase in New York, New York in
Dollars and in immediately available funds, the amount of such Bank's
Commitment Percentage of any payment under a Letter of Credit upon notice
by the Issuing Bank (through the Agent) to such Bank requesting such
payment and specifying such amount. Each Bank's obligation to make such
payments to the Agent for account of the Issuing Bank under this
clause (e), and the Issuing Bank's right to receive the same, shall be
absolute and unconditional and shall not be affected by any circumstance
whatsoever, including, without limitation, (i) the failure of any other
Bank to make its payment under this clause (e), the financial condition of
the Company and the other Obligors (or any other account party), the
existence of any Default or (ii) the termination of the Commitments. Each
such payment to the Issuing Bank shall be made without any offset,
abatement, withholding or reduction whatsoever. If any Bank shall default
in its obligation to make any such payment to the Agent for account of the
Issuing Bank, for so long as such default shall
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continue the Agent shall at the request of the Issuing Bank withhold from
any payments received by the Agent under this Agreement or any Note for
account of such Bank the amount so in default and the Agent shall pay the
same to the Issuing Bank in satisfaction of such defaulted obligation.
(f) Upon the making of each payment by a Bank to the Issuing Bank
pursuant to clause (e) above in respect of any Letter of Credit, such Bank
shall, automatically and without any further action on the part of the
Agent, the Issuing Bank or such Bank, acquire (i) a participation in an
amount equal to such payment in the Reimbursement Obligation owing to the
Issuing Bank by the Company hereunder and under the Letter of Credit
Documents relating to such Letter of Credit and (ii) a participation in a
percentage equal to such Bank's Commitment Percentage of its Commitment in
any interest or other amounts payable by the Company hereunder and under
such Letter of Credit Documents in respect of such Reimbursement Obligation
(other than the commissions, charges, costs and expenses payable to the
Issuing Bank pursuant to clause (g) of this Section 2.03). Upon receipt by
the Issuing Bank from or for account of the Company of any payment in
respect of any Reimbursement Obligation or any such interest or other
amount (including by way of setoff or application of proceeds of any
collateral security) the Issuing Bank shall promptly pay to the Agent for
account of each Bank, such Bank's Commitment Percentage of its Commitment
of such payment, each such payment by the Issuing Bank to be made in the
same money and funds in which received by the Issuing Bank. In the event
any payment received by the Issuing Bank and so paid to the Banks hereunder
is rescinded or must otherwise be returned by the Issuing Bank, each Bank
shall, upon the request of the Issuing Bank (through the Agent), repay to
the Issuing Bank (through the Agent) the amount of such payment paid to
such Bank, with interest at the rate specified in clause (j) of this
Section 2.03.
(g) The Company agrees to pay to the Agent for account of the Issuing
Bank in respect of each Letter of Credit issued to the Company or any of
its Subsidiaries an issuance fee in an amount equal to the Applicable
Margin for Eurodollar Loans per annum of the daily average undrawn face
amount of such Letter of Credit for the period from and including the date
of issuance of such Letter of Credit to and including the date such Letter
of Credit is drawn in full, expires or is terminated (such fee to be
non-refundable, to be paid in arrears on each Quarterly Date and on the
Commitment Termination Date and to be calculated, for any day, after giving
effect to any payments made under such Letter of Credit on such day). The
Issuing Bank shall pay to the Agent for account of each Bank (other than
the Issuing Bank), from time to time at reasonable intervals (but in any
event at least quarterly), but only to the extent actually received from
the Company, an amount equal to such Bank's Commitment Percentage of all
such fees in respect of each Letter of Credit (including any such fee in
respect of any period of any renewal or extension thereof). In addition,
the Company agrees to pay to the Agent for account of the Issuing Bank on
the issuance date, a fronting fee in respect of each Letter
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of Credit in an amount equal to the greater of (i) $1,000 and (ii) 1/2 of
1% of the face amount of such Letter of Credit plus all commissions,
charges, costs and expenses in the amounts customarily charged by the
Issuing Bank from time to time in like circumstances with respect to the
issuance of each Letter of Credit and drawings and other transactions
relating thereto.
(h) Promptly following the end of each calendar month, the Issuing
Bank shall deliver (through the Agent) to each Bank and the Company notice
describing the aggregate amount of all Letters of Credit outstanding at the
end of such month. Upon the request of any Bank from time to time, the
Issuing Bank shall deliver any other information in its possession
reasonably requested by such Bank with respect to each Letter of Credit
then outstanding.
(i) The issuance by the Issuing Bank of each Letter of Credit shall,
in addition to the conditions precedent set forth in Section 7 hereof, be
subject to the conditions precedent that (i) such Letter of Credit shall be
in such form, contain such terms and support such transactions as shall be
satisfactory to the Issuing Bank consistent with its then current practices
and procedures with respect to letters of credit of the same type and
(ii) the Company shall have executed and delivered such applications,
agreements and other instruments relating to such Letter of Credit as the
Issuing Bank shall have reasonably requested consistent with its then
current practices and procedures with respect to letters of credit of the
same type, PROVIDED that in the event of any conflict between any such
application, agreement or other instrument and the provisions of this
Agreement or any Security Document, the provisions of this Agreement and
the Security Documents shall control.
(j) To the extent that any Bank fails to pay any amount required to
be paid pursuant to clause (e) or (f) of this Section 2.03 on the due date
therefor, such Bank shall pay interest to the Issuing Bank (through the
Agent) on such amount from and including such due date to but excluding the
date such payment is made (i) during the period from and including such due
date to but excluding the date three Business Days thereafter, at a rate
per annum equal to the Federal Funds Effective Rate (as in effect from time
to time) and (ii) thereafter, at a rate per annum equal to the Base Rate
(as in effect from time to time) plus 2%.
(k) The issuance by the Issuing Bank of any modification or
supplement to any Letter of Credit hereunder shall be subject to the same
conditions applicable under this Section 2.03 to the issuance of new
Letters of Credit, and no such modification or supplement shall be issued
hereunder unless either (x) the respective Letter of Credit affected
thereby would have complied with such conditions had it originally been
issued hereunder in such modified or supplemented form or (y) each Bank
shall have consented thereto.
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The Company hereby indemnifies and holds harmless each Bank and the Agent from
and against any and all claims and damages, losses, liabilities, costs or
expenses which such Bank or the Agent may incur (or which may be claimed against
such Bank or the Agent by any Person whatsoever) by reason of or in connection
with the execution and delivery or transfer of or payment or refusal to pay by
the Issuing Bank under any Letter of Credit; PROVIDED that the Company shall not
be required to indemnify any Bank or the Agent for any claims, damages, losses,
liabilities, costs or expenses to the extent caused by (x) the willful
misconduct or gross negligence of the Issuing Bank in determining whether a
request presented under any Letter of Credit complied with the terms of such
Letter of Credit or (y) in the case of the Issuing Bank, such Bank's failure to
pay under any Letter of Credit after the presentation to it of a request
strictly complying with the terms and conditions of such Letter of Credit.
Nothing in this Section 2.03 is intended to limit the other obligations of the
Company, any Bank or the Agent under this Agreement.
2.04 CHANGES OF COMMITMENTS.
(a) The aggregate amount of the Commitments shall be automatically
reduced to zero on the Commitment Termination Date.
(b) The Company shall have the right at any time or from time to time
(i) so long as no Loans or Letter of Credit Liabilities are outstanding, to
terminate the Commitments and (ii) to reduce the aggregate unused amount of the
Commitments (for which purpose use of the Commitments shall be deemed to include
the aggregate amount of Letter of Credit Liabilities); PROVIDED that (x) the
Company shall give notice of each such termination or reduction as provided in
Section 4.05 hereof and (y) each partial reduction shall be in an aggregate
amount at least equal to $1,000,000 or in multiples of $500,000 in excess
thereof.
(c) The Commitments once terminated or reduced may not be reinstated.
2.05 COMMITMENT FEE. The Company shall pay to the Agent for account
of each Bank a commitment fee on the daily average unused amount of the
difference, if any, between (x) each Bank's outstanding Loans and (y) an amount
equal to such Bank's Commitment Percentage multiplied by the Borrowing Base
determined pursuant to the immediately preceding Reserve Evaluation Report (the
"AVAILABLE BORROWING AMOUNT") (for which purpose the aggregate amount of any
Letter of Credit Liabilities shall be deemed to be a pro rata use of each Bank's
Available Borrowing Amount) for the period from and including the date of this
Agreement to but not including the earlier of the date such Bank's Commitment is
terminated and the Commitment Termination Date, at the Applicable Commitment Fee
Rate. Accrued commitment fees shall be payable on each Quarterly Date and on
the earlier of the date the Commitments are terminated and the Commitment
Termination Date.
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2.06 LENDING OFFICES. The Loans of each Type made by each Bank shall
be made and maintained at such Bank's Applicable Lending Office for Loans of
such Type.
2.07 SEVERAL OBLIGATIONS; REMEDIES INDEPENDENT. The failure of any
Bank to make any Loan to be made by it on the date specified therefor shall not
relieve any other Bank of its obligation to make its Loan on such date, but
neither any Bank nor the Agent shall be responsible for the failure of any other
Bank to make a Loan to be made by such other Bank, and no Bank shall have any
obligation to the Agent or any other Bank for the failure by such Bank to make
any Loan required to be made by such Bank. The amounts payable by the Company
at any time hereunder and under the Notes to each Bank shall be a separate and
independent debt and each Bank shall be entitled to protect and enforce its
rights arising out of this Agreement and the Notes, and it shall not be
necessary for any other Bank or the Agent to consent to, or be joined as an
additional party in, any proceedings for such purposes.
2.08 NOTES.
(a) The Loans made by each Bank shall be evidenced by a single
promissory note of the Company substantially in the form of Exhibit A hereto,
dated the date hereof, payable to such Bank in a principal amount equal to the
amount of its Commitment as originally in effect and otherwise duly completed.
(b) The date, amount, Type, interest rate and duration of Interest
Period (if applicable) of each Loan made by each Bank to the Company, and each
payment made on account of the principal thereof, shall be recorded by such Bank
on its books and, prior to any transfer of the Note evidencing the Loans held by
it, endorsed by such Bank on the schedule attached to such Note or any
continuation thereof; PROVIDED that the failure of such Bank to make any such
recordation or endorsement shall not affect the obligations of the Company to
make a payment when due of any amount owing hereunder or under such Note in
respect of the Loans evidenced by such Note.
(c) No Bank shall be entitled to have its Notes subdivided, by
exchange for promissory notes of lesser denominations or otherwise, except in
connection with a permitted assignment of all or any portion of such Bank's
Commitment, Loans and Note pursuant to Section 12.06(b) hereof.
2.09 OPTIONAL PREPAYMENTS AND CONVERSIONS OR CONTINUATIONS OF LOANS.
Subject to Section 4.04 hereof, the Company shall have the right to prepay
Loans, or to Convert Loans of one Type into Loans of another Type or Continue
Loans of one Type as Loans of the same Type, at any time or from time to time,
PROVIDED that: (a) the Company shall give the Agent notice of each such
prepayment, Conversion or Continuation as provided in Section 4.05 hereof (and,
upon the date specified in any such notice of prepayment, the amount to be
prepaid shall become due and payable hereunder); and (b) Eurodollar Loans may be
prepaid or Converted only on the last
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day of an Interest Period for such Loans. Notwithstanding the foregoing, and
without limiting the rights and remedies of the Banks under Section 10
hereof, in the event that any Event of Default shall have occurred and be
continuing, the Agent may (and at the request of the Majority Banks shall) by
notice to the Company suspend the right of the Company to Convert any Loan
into a Eurodollar Loan, or to Continue any Loan as a Eurodollar Loan, in
which event all Loans shall be Converted (on the last day(s) of the
respective Interest Periods therefor) or Continued, as the case may be, as
Base Rate Loans.
2.10 MANDATORY PREPAYMENTS AND REDUCTIONS OF COMMITMENTS.
(a) BORROWING BASE. The Agent shall notify the Company (in a
"DEFICIENCY NOTICE") any time the Borrowing Base as then in effect is less than
the aggregate principal amount of the Loans and Letter of Credit Liabilities
outstanding at such time (the amount of such difference being called herein the
"BORROWING BASE DEFICIENCY") and within 30 days after the date of the Deficiency
Notice the Company shall notify the Agent of the Company's intentions with
respect to compliance with the procedures set forth in this Section 2.10(a). As
specified in such notice from the Company, the Company shall (within 90 days
after the date of the Deficiency Notice) (i) prepay (in accordance with the
procedures of this Agreement) the outstanding principal of the Loans and, if all
of the Loans have been prepaid and a Borrowing Base Deficiency still exists,
provide cover for Letter of Credit Liabilities in an amount equal to such
Deficiency as specified in clause (e) below and/or (ii) add to the Hydrocarbon
Properties (each such additional Property to have a Present Value of Reserves at
least equal to $1,000,000) having a loan value, as determined by the Majority
Banks, in an amount sufficient so that the aggregate amount of such prepayments
and the loan value of such additional Properties shall equal or exceed the
Borrowing Base Deficiency. The Company shall, within 120 days of receipt of
notice from the Agent that the Properties to be added to the Borrowing Base are
acceptable to the Majority Banks, subject such Properties to the Lien of the
Mortgages pursuant to documentation and otherwise in a manner satisfactory to
the Majority Banks.
(b) CASUALTY EVENTS. Upon the date 30 days following the receipt by
the Company or any of its Restricted Subsidiaries of the proceeds of insurance,
condemnation award or other compensation in respect of any Casualty Event
affecting any Hydrocarbon Property other than Unrestricted Properties of any
Restricted Subsidiary, the Company shall prepay the Loans (and/or provide cover
for Letter of Credit Liabilities as specified in clause (e) below), and the
Commitments shall be subject to automatic reduction, in an aggregate amount, if
any, equal to 100% of the Net Available Proceeds of such Casualty Event not
theretofore applied to the repair or replacement of such Hydrocarbon Property,
or such lesser amount as is specified in a written notice from the Majority
Banks, such prepayment and reduction to be effected in each case in the manner
and to the extent specified in clause (d) of this Section 2.10. Nothing in this
clause (b) shall be deemed to limit any obligation of the Company and any of its
Restricted Subsidiaries pursuant to any of the Security Documents to remit to a
collateral or similar account (including, without limitation, the Collateral
Account) maintained by the Agent pursuant to any
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of the Security Documents the proceeds of insurance, condemnation award or
other compensation received in respect of any Casualty Event.
(c) SALE OF ASSETS. Without limiting the obligation of the Obligors
to obtain the consent of the Majority Banks pursuant to Section 9.05 hereof to
any Disposition not otherwise permitted hereunder, no later than five Business
Days prior to the occurrence of any Disposition, the Company, on behalf of the
applicable Obligor will deliver to the Banks a statement, certified by the chief
financial officer or treasurer of the Company, in form and detail satisfactory
to the Agent, of the amount of the Net Available Proceeds of such Disposition
and, to the extent such Net Available Proceeds (when taken together with the Net
Available Proceeds of all prior Dispositions as to which a prepayment has not
yet been made under this Section 2.10(c)) shall exceed $2,000,000, the Company
shall prepay the Loans (and/or provide cover for Letter of Credit Liabilities as
specified in clause (e) below), and the Borrowing Base shall be subject to
automatic reduction, in an aggregate amount equal to 100% of the Net Available
Proceeds of such Disposition, or such lesser amount as is specified in a written
notice from the Majority Banks (together with 100%, or such lesser amount as is
specified in a written notice from the Majority Banks, of the Net Available
Proceeds of all prior Dispositions as to which a prepayment has not yet been
made under this Section 2.10(c)), such prepayment and reduction to be effected
in each case in the manner and to the extent specified in clause (d) of this
Section 2.10. Notwithstanding the forgoing, the Company shall not be required
to prepay the Loans (and/or provide cover for the Letter of Credit Liabilities
pursuant to Section 2.10(e) hereof), and the Borrowing Base shall not be subject
to automatic reduction upon any sale of Property, other than any Hydrocarbon
Property, pursuant to Section 9.05 hereof.
(d) APPLICATION. Prepayments and reductions of Commitments or the
Borrowing Base, as the case may be, described in the above clauses of this
Section 2.10 shall be effected as follows: the Commitments or the Borrowing
Base, as the case may be, shall be automatically reduced by an amount equal to
the amount specified in such clauses (and to the extent that, after giving
effect to such reduction, the aggregate principal amount of the Loans, together
with the aggregate amount of all Letter of Credit Liabilities, would exceed the
Commitments or the Borrowing Base, as applicable, the Company shall first,
prepay the Loans and second, provide cover for Letter of Credit Liabilities with
respect to the Commitments or the Borrowing Base, as applicable, as specified in
clause (e) below, in an aggregate amount equal to such excess).
(e) COVER FOR LETTER OF CREDIT LIABILITIES. In the event that the
Company shall be required pursuant to this Section 2.10, or pursuant to Section
3.01 or 5.07(c) hereof, to provide cover for Letter of Credit Liabilities, the
Company shall effect the same by paying to the Agent immediately available funds
in an amount equal to the required amount, which funds shall be retained by the
Agent in the Collateral Account (as provided in Section 4.04 of the Security
Agreement as collateral security in the first instance for the Letter of Credit
Liabilities) until such time as the Letters of Credit shall have been terminated
and all of the Letter of Credit Liabilities have been paid in full.
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Section 3. PAYMENTS OF PRINCIPAL AND INTEREST.
3.01 REPAYMENT OF LOANS. The Company hereby promises to pay to the
Agent for the account of each Bank the entire outstanding principal amount of
such Bank's Loans, and each Loan shall mature, on the Commitment Termination
Date. In addition, if following any reduction in the Commitments, the aggregate
principal amount of the Loans, together with the aggregate amount of all Letter
of Credit Liabilities shall exceed the Commitments, the Company shall first,
prepay Loans and second, provide cover for Letter of Credit Liabilities with
respect to the Commitments as specified in Section 2.10(e) above, in an
aggregate amount equal to such excess.
3.02 INTEREST. The Company hereby promises to pay to the Agent for
the account of each Bank interest on the unpaid principal amount of each Loan
made by such Bank for the period from and including the date of such Loan to but
excluding the date such Loan shall be paid in full, at the following rates per
annum:
(a) during such periods as such Loan is a Base Rate Loan, the Base
Rate (as in effect from time to time) PLUS the Applicable Margin, and
(b) during such periods as such Loan is a Eurodollar Loan, for each
Interest Period relating thereto, the Eurodollar Rate for such Loan for
such Interest Period PLUS the Applicable Margin.
Notwithstanding the foregoing, the Company hereby promises to pay to the Agent
for account of each Bank interest at the applicable Post-Default Rate on any
principal of any Loan made by such Bank, on any Reimbursement Obligation held by
such Bank and on any other amount payable by the Company hereunder or under the
Note held by such Bank to or for account of such Bank, which shall not be paid
in full when due (whether at stated maturity, by acceleration, by mandatory
prepayment or otherwise), for the period from and including the due date thereof
to but excluding the date the same is paid in full. Accrued interest on each
Loan shall be payable (i) in the case of a Base Rate Loan, quarterly on the
Quarterly Dates, (ii) in the case of a Eurodollar Loan, on the last day of each
Interest Period therefor and (iii) in the case of any Loan, upon the payment or
prepayment thereof or the Conversion of such Loan to a Loan of another Type (but
only on the principal amount so paid, prepaid or Converted), except that
interest payable at the Post-Default Rate shall be payable from time to time on
demand. Promptly after the determination of any interest rate provided for
herein or any change therein, the Agent shall give notice thereof to the Banks
to which such interest is payable and to the Company.
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Section 4. PAYMENTS; PRO RATA TREATMENT; COMPUTATIONS; ETC.
4.01 PAYMENTS.
(a) Except to the extent otherwise provided herein, all payments of
principal, interest, Reimbursement Obligations and other amounts to be made by
the Company under this Agreement and the Notes, and, except to the extent
otherwise provided therein, all payments to be made by the Obligors under any
other Basic Document, shall be made in Dollars, in immediately available funds,
without deduction, set-off or counterclaim, to the Agent at an account in New
York, New York specified by the Agent, not later than 1:00 p.m. New York time on
the date on which such payment shall become due (each such payment made after
such time on such due date to be deemed to have been made on the next succeeding
Business Day).
(b) Any Bank for whose account any such payment is to be made may
(but shall not be obligated to) debit the amount of any such payment that is not
made by such time to any ordinary deposit account of the Company with such Bank
(with notice to the Company and the Agent).
(c) The Company shall, at the time of making each payment under this
Agreement or any Note for the account of any Bank, specify to the Agent (which
shall so notify the intended recipient(s) thereof) the Loans, Reimbursement
Obligations or other amounts payable by the Company hereunder to which such
payment is to be applied (and in the event that the Company fail to so specify,
or if an Event of Default has occurred and is continuing, the Agent may
distribute such payment to the Banks for application in such manner as it or the
Majority Banks, subject to Section 4.02 hereof, may determine to be
appropriate).
(d) Except to the extent otherwise provided in the last sentence of
Section 2.03(e) hereof, each payment received by the Agent under this Agreement
or any Note for account of any Bank shall be paid by the Agent promptly to such
Bank, in immediately available funds, for account of such Bank's Applicable
Lending Office for the Loan or other obligation in respect of which such payment
is made.
(e) If the due date of any payment under this Agreement or any Note
would otherwise fall on a day that is not a Business Day, such date shall be
extended to the next succeeding Business Day, and interest shall be payable for
any principal so extended for the period of such extension.
4.02 PRO RATA TREATMENT. Except to the extent otherwise provided
herein: (a) each borrowing of Loans from the Banks under Section 2.01 hereof
shall be made from the Banks, each payment of commitment fee under Section 2.05
hereof in respect of Commitments shall be made for account of the Banks, and
each termination or reduction of the amount of the Commitments under
Section 2.04 hereof shall be applied to the respective Commitments of the
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Banks, pro rata according to the amounts of their respective Commitments; (b)
the making, Conversion and Continuation of Loans of a particular Type (other
than Conversions provided for by Section 5.04 hereof) shall be made pro rata
among the Banks according to the amounts of their respective Commitments (in
the case of the making of Loans) or their respective Loans (in the case of
Conversions and Continuations of Loans) and the then current Interest Period
for each Eurodollar Loan shall be coterminous; (c) each payment or prepayment
of principal of Loans by the Company shall be made for the account of the
Banks pro rata in accordance with the respective unpaid principal amounts of
the Loans held by them; PROVIDED that if immediately prior to giving effect
to any such payment in respect of any Loans the outstanding principal amount
of the Loans shall not be held by the Banks pro rata in accordance with their
respective Commitments in effect at the time such Loans were made (whether by
reason of a failure of a Bank to make a Loan hereunder in the circumstances
described in the last paragraph of Section 12.04 hereof or otherwise), then
such payment shall be applied to the Loans in such manner as shall result, as
nearly as is practicable, in the outstanding principal amount of the Loans
being held by the Banks pro rata in accordance with their respective
Commitments; and (d) each payment of interest on Loans by the Company shall
be made for account of the Banks pro rata in accordance with the amounts of
interest on such Loans then due and payable to the respective Banks.
4.03 COMPUTATIONS. Interest on Eurodollar Loans and commitment fee
and letter of credit fees shall be computed on the basis of a year of 360 days
and actual days elapsed (including the first day but excluding the last day)
occurring in the period for which payable and interest on Base Rate Loans and
Reimbursement Obligations shall be computed on the basis of a year of 365 or 366
days, as the case may be, and actual days elapsed (including the first day but
excluding the last day) occurring in the period for which payable.
Notwithstanding the foregoing, for each day that the Base Rate is calculated by
reference to the Federal Funds Effective Rate, interest on Base Rate Loans and
Reimbursement Obligations shall be computed on the basis of a year of 360 days
and actual days elapsed.
4.04 MINIMUM AMOUNTS. Except for mandatory prepayments made pursuant
to Section 2.10 hereof and Conversions or prepayments made pursuant to
Section 5.04 hereof, each borrowing, Conversion and partial prepayment of
principal of Loans shall be in an aggregate amount at least equal to $500,000 or
in multiples of $100,000 in excess thereof (borrowings, Conversions or
prepayments of or into Loans of different Types or, in the case of Eurodollar
Loans, having different Interest Periods at the same time hereunder to be deemed
separate borrowings, Conversions and prepayments for purposes of the foregoing,
one for each Type or Interest Period).
4.05 CERTAIN NOTICES. Notices by the Company to the Agent of
terminations or reductions of the Commitments and of borrowings, Conversions,
Continuations and optional prepayments of Loans, of Types of Loans and of the
duration of Interest Periods shall be irrevocable and shall be effective only if
received by the Agent not later than 11:00 a.m. New
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York time on the number of Business Days prior to the date of the relevant
termination, reduction, borrowing, Conversion, Continuation or prepayment or
the first day of such Interest Period specified below:
Number of
Business
Notice Days Prior
------ ----------
Termination or reduction 2
of Commitments
Borrowing or prepayment of 1
Base Rate Loans
Borrowing or prepayment of, 3
Conversions of or into,
Continuations as, or duration
of Interest Period for,
Eurodollar Loans
Each such notice of termination or reduction shall specify the amount of the
Commitments to be terminated or reduced. Each such notice of borrowing,
Conversion, Continuation or optional prepayment shall specify the Loans to be
borrowed, Converted, Continued or prepaid and the amount (subject to
Section 4.04 hereof) and Type of each Loan to be borrowed, Converted, Continued
or prepaid and the date of borrowing, Conversion, Continuation or optional
prepayment (which shall be a Business Day). Each such notice of the duration of
an Interest Period shall specify the Loans to which such Interest Period is to
relate. The Agent shall promptly notify the Banks of the contents of each such
notice. In the event that the Company fails to select the Type of Loan, or the
duration of any Interest Period for any Eurodollar Loan, within the time period
and otherwise as provided in this Section 4.05, such Loan (if outstanding as a
Eurodollar Loan) will be automatically Converted into a Base Rate Loan on the
last day of the then current Interest Period for such Loan or (if outstanding as
a Base Rate Loan) will remain as, or (if not then outstanding) will be made as,
a Base Rate Loan.
4.06 NON-RECEIPT OF FUNDS BY THE AGENT. Unless the Agent shall have
been notified by a Bank or the Company (the "PAYOR") prior to the date on which
the Payor is to make payment to the Agent of (in the case of a Bank) the
proceeds of a Loan to be made by such Bank, or a participation in a Letter of
Credit drawing to be acquired by such Bank, hereunder or (in the case of the
Company) a payment to the Agent for account of one or more of the Banks
hereunder (such payment being herein called the "REQUIRED PAYMENT"), which
notice shall be effective upon receipt, that the Payor does not intend to make
the Required Payment to the Agent, the Agent may assume that the Required
Payment has been made and may, in reliance upon such
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assumption (but shall not be required to), make the amount thereof available
to the intended recipient(s) on such date; and, if the Payor has not in fact
made the Required Payment to the Agent, the recipient(s) of such payment
shall, on demand, repay to the Agent the amount so made available together
with interest thereon in respect of each day during the period commencing on
the date (the "ADVANCE DATE") such amount was so made available by the Agent
until the date the Agent recovers such amount at a rate per annum equal to
the Federal Funds Effective Rate for such day and, if such recipient(s) shall
fail promptly to make such payment, the Agent shall be entitled to recover
such amount, on demand, from the Payor, together with interest as aforesaid,
PROVIDED that if neither the recipient(s) nor the Payor shall return the
Required Payment to the Agent within three Business Days of the Advance Date,
then, retroactively to the Advance Date, the Payor and the recipient(s) shall
each be obligated to pay interest on the Required Payment as follows:
(i) if the Required Payment shall represent a payment to be made by
the Company to the Banks, the Company and the recipient(s) shall each be
obligated retroactively to the Advance Date to pay interest in respect of
the Required Payment at the Post-Default Rate (and, in case the
recipient(s) shall return the Required Payment to the Agent, without
limiting the obligation of the Company under Section 3.02 hereof to pay
interest to such recipient(s) at the Post-Default Rate in respect of the
Required Payment) and
(ii) if the Required Payment shall represent proceeds of a loan to be
made by a Bank to the Company, the Payor and the Company shall each be
obligated retroactively to the Advance Date to pay interest in respect of
the Required Payment at the rate of interest provided for such Required
Payment pursuant to Section 3.02 hereof (and, in case the Company shall
return the Required Payment to the Agent, without limiting any claim the
Company may have against the Payor in respect of the Required Payment);
PROVIDED that the Agent shall only be entitled to retain interest in respect of
a Required Payment pursuant to clause (i) or (ii) above from either the Payor or
the recipient.
4.07 SHARING OF PAYMENTS, ETC.
(a) Each of the Obligors agrees that, in addition to (and without
limitation of) any right of set-off, banker's lien or counterclaim a Bank may
otherwise have, each Bank shall be entitled, at its option, to offset balances
held by it for account of such Obligor at any of its offices, in Dollars or in
any other currency, against any principal of or interest on any of such Bank's
Loans, Reimbursement Obligations or any other amount payable to such Bank
hereunder, that is not paid when due (regardless of whether such balances are
then due to the Company), in which case it shall promptly notify such Obligor
(through the Company) and the Agent thereof, PROVIDED that such Bank's failure
to give such notice shall not affect the validity thereof.
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(b) If any Bank shall obtain from any Obligor payment of any
principal of or interest on any Loan or Letter of Credit Liability owing to it
or payment of any other amount under this Agreement or any other Basic Document
through the exercise of any right of set-off, banker's lien or counterclaim or
similar right or otherwise (other than from the Agent as provided herein), and,
as a result of such payment, such Bank shall have received a greater percentage
of the principal of or interest on the Loans or Letter of Credit Liabilities or
such other amounts then due hereunder or thereunder by such Obligor to such Bank
than the percentage received by any other Bank, it shall promptly purchase from
such other Banks participations in (or, if and to the extent specified by such
Bank, direct interests in) the Loans or Letter of Credit Liabilities or such
other amounts, respectively, owing to such other Banks (or in interest due
thereon, as the case may be) in such amounts, and make such other adjustments
from time to time as shall be equitable, to the end that all the Banks shall
share the benefit of such excess payment (net of any expenses that may be
incurred by such Bank in obtaining or preserving such excess payment) pro rata
in accordance with the unpaid principal of and/or interest on the Loans or
Letter of Credit Liabilities or such other amounts, respectively, owing to each
of the Banks, PROVIDED that if at the time of such payment the outstanding
principal amount of the Loans shall not be held by the Banks pro rata in
accordance with their respective Commitments in effect at the time such Loans
were made (whether by reason of a failure of a Bank to make a Loan hereunder in
the circumstances described in the last paragraph of Section 12.04 hereof or
otherwise), then such purchases of participations and/or direct interests shall
be made in such manner as will result, as nearly as is practicable, in the
outstanding principal amount of the Loans being held by the Banks pro rata
according to the amounts of such Commitments. To such end all the Banks shall
make appropriate adjustments among themselves (by the resale of participations
sold or otherwise) if such payment is rescinded or must otherwise be restored.
(c) The Obligors agree that any Bank so purchasing such a
participation (or direct interest) may exercise all rights of set-off, banker's
lien, counterclaim or similar rights with respect to such participation as fully
as if such Bank were a direct holder of Loans or other amounts (as the case may
be) owing to such Bank in the amount of such participation.
(d) Nothing contained herein shall require any Bank to exercise any
such right or shall affect the right of any Bank to exercise, and retain the
benefits of exercising, any such right with respect to any other indebtedness or
obligation of any Obligor. If, under any applicable bankruptcy, insolvency or
other similar law, any Bank receives a secured claim in lieu of a set-off to
which this Section 4.07 applies, such Bank shall, to the extent practicable,
exercise its rights in respect of such secured claim in a manner consistent with
the rights of the Banks entitled under this Section 4.07 to share in the
benefits of any recovery on such secured claim.
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Section 5. YIELD PROTECTION, ETC.
5.01 ADDITIONAL COSTS.
(a) The Company shall pay directly to each Bank from time to time
such amounts as such Bank may determine to be necessary to compensate such Bank
for any costs that such Bank determines are attributable to its making or
maintaining of any Eurodollar Loans or its obligation to make any Eurodollar
Loans hereunder, or any reduction in any amount receivable by such Bank
hereunder in respect of any of such Loans or such obligation (such increases in
costs and reductions in amounts receivable being herein called "ADDITIONAL
COSTS"), resulting from any Regulatory Change that:
(i) changes the basis of taxation of any amounts payable to such
Bank under this Agreement or its Notes in respect of any of such Loans
(other than taxes imposed on or measured by the overall net income of such
Bank or of its Applicable Lending Office for any of such Loans by the
jurisdiction in which such Bank has its principal office or such Applicable
Lending Office); or
(ii) imposes or modifies any reserve, special deposit or similar
requirements (other than the Reserve Requirement utilized in the
determination of the Eurodollar Rate for such Loan) relating to any
extensions of credit or other assets of, or any deposits with or other
liabilities of, such Bank (including, without limitation, any of such Loans
or any deposits referred to in the definition of "Eurodollar Base Rate" in
Section 1.01 hereof), or any commitment of such Bank (including, without
limitation, either of the Commitments of such Bank hereunder); or
(iii) imposes any other condition affecting this Agreement or its
Note (or any of such extensions of credit or liabilities) or its
Commitments.
If any Bank requests compensation from the Company under this Section 5.01(a),
the Company may, by notice to such Bank (with a copy to the Agent), suspend the
obligation of such Bank thereafter to make or Continue Eurodollar Loans, or to
Convert Prime Rate Loans into Eurodollar Loans, until the Regulatory Change
giving rise to such request ceases to be in effect (in which case the provisions
of Section 5.04 hereof shall be applicable), PROVIDED that such suspension shall
not affect the right of such Bank to receive the compensation so requested.
(b) Without limiting the effect of the provisions of paragraph (a) of
this Section 5.01, in the event that, by reason of any Regulatory Change, any
Bank either (i) incurs Additional Costs based on or measured by the excess above
a specified level of the amount of a category of deposits or other liabilities
of such Bank that includes deposits by reference to which the interest rate on
Eurodollar Loans is determined as provided in this Agreement or a category of
extensions of credit or other assets of such Bank that includes Eurodollar Loans
or
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(ii) becomes subject to restrictions on the amount of such a category of
liabilities or assets that it may hold, then, if such Bank so elects by
notice to the Company (with a copy to the Agent), the obligation of such Bank
to make or Continue, or to Convert Base Rate Loans into, Eurodollar Loans
hereunder shall be suspended until such Regulatory Change ceases to be in
effect (in which case the provisions of Section 5.04 hereof shall be
applicable).
(c) Without limiting the effect of the foregoing provisions of this
Section 5.01 (but without duplication), the Company shall pay directly to each
Bank from time to time on request such amounts as such Bank may determine to be
necessary to compensate such Bank (or, without duplication, the bank holding
company of which such Bank is a subsidiary) for any costs that it determines are
attributable to the maintenance by such Bank (or any Applicable Lending Office
or such bank holding company), pursuant to any law or regulation or any
interpretation, directive or request (whether or not having the force of law and
whether or not failure to comply therewith would be unlawful) of any court or
governmental or monetary authority (i) following any Regulatory Change or
(ii) implementing any risk-based capital guideline or other requirement (whether
or not having the force of law and whether or not the failure to comply
therewith would be unlawful) heretofore or hereafter issued by any government or
governmental or supervisory authority implementing at the national level the
Basel Accord (including, without limitation, the Final Risk-Based Capital
Guidelines of the Board of Governors of the Federal Reserve System (12 C.F.R.
Part 208, Appendix A; 00 X.X.X. Xxxx 000, Xxxxxxxx X) and the Final Risk-Based
Capital Guidelines of the Office of the Comptroller of the Currency (12 C.F.R.
Part 3, Appendix A)), of capital in respect of its Commitment or Loans (such
compensation to include, without limitation, an amount equal to any reduction of
the rate of return on assets or equity of such Bank (or any Applicable Lending
Office or such bank holding company) to a level below that which such Bank (or
any Applicable Lending Office or such bank holding company) could have achieved
but for such law, regulation, interpretation, directive or request). For
purposes of this Section 5.01(c) and Section 5.06 hereof, "BASEL ACCORD" shall
mean the proposals for risk-based capital framework described by the Basel
Committee on Banking Regulations and Supervisory Practices in its paper entitled
"International Convergence of Capital Measurement and Capital Standards" dated
July 1988, as amended, modified and supplemented and in effect from time to time
or any replacement thereof.
(d) Each Bank shall notify the Company of any event occurring after
the date of this Agreement entitling such Bank to compensation under
paragraph (a) or (c) of this Section 5.01 as promptly as practicable, but in any
event within 45 days, after such Bank obtains actual knowledge thereof; PROVIDED
that (i) if any Bank fails to give such notice within 45 days after it obtains
actual knowledge of such an event, such Bank shall, with respect to compensation
payable pursuant to this Section 5.01 in respect of any costs resulting from
such event, only be entitled to payment under this Section 5.01 for costs
incurred from and after the date 45 days prior to the date that such Bank does
give such notice and (ii) each Bank will designate a different Applicable
Lending Office for the Loans of such Bank affected by such event if such
designation will avoid the need for, or reduce the amount of, such compensation
and will not, in
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the sole opinion of such Bank, be disadvantageous to such Bank, except that
such Bank shall have no obligation to designate an Applicable Lending Office
located in the United States of America. Each Bank will furnish to the
Company a certificate setting forth the basis and amount of each request by
such Bank for compensation under paragraph (a) or (c) of this Section 5.01.
Determinations and allocations by any Bank for purposes of this Section 5.01
of the effect of any Regulatory Change pursuant to paragraph (a) or (b) of
this Section 5.01, or of the effect of capital maintained pursuant to
paragraph (c) of this Section 5.01, on its costs or rate of return of
maintaining Loans or its obligation to make Loans, or on amounts receivable
by it in respect of Loans, and of the amounts required to compensate such
Bank under this Section 5.01, shall be conclusive, PROVIDED that such
determinations and allocations are made on a reasonable basis.
5.02 LIMITATION ON TYPES OF LOANS. Anything herein to the contrary
notwithstanding, if, on or prior to the determination of any Eurodollar Base
Rate for any Interest Period:
(a) the Agent determines, which determination shall be conclusive,
that quotations of interest rates for the relevant deposits referred to in
the definition of "Eurodollar Base Rate" in Section 1.01 hereof are not
being provided in the relevant amounts or for the relevant maturities for
purposes of determining rates of interest for Eurodollar Loans as provided
herein; or
(b) the Majority Banks determine, which determination shall be
conclusive, and notify the Agent that the relevant rates of interest
referred to in the definition of "Eurodollar Base Rate" in Section 1.01
hereof upon the basis of which the rate of interest for Eurodollar Loans
for such Interest Period is to be determined are not likely to be adequate
to cover the cost to such Banks of making or maintaining Eurodollar Loans
for such Interest Period;
then the Agent shall give the Company and each Bank prompt notice thereof and,
so long as such condition remains in effect, the Banks shall be under no
obligation to make additional Eurodollar Loans, to Continue Eurodollar Loans or
to Convert Base Rate Loans into Eurodollar Loans, and the Company shall, on the
last day(s) of the then current Interest Period(s) for the outstanding
Eurodollar Loans, either prepay such Loans or Convert such Loans into Base Rate
Loans in accordance with Section 2.09 hereof.
5.03 ILLEGALITY. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Bank or its Applicable
Lending Office to honor its obligation to make or maintain Eurodollar Loans
hereunder, then such Bank shall promptly notify the Company thereof (with a copy
to the Agent) and such Bank's obligation to make or Continue, or to Convert
Loans of any other Type into, Eurodollar Loans shall be suspended until such
time as such Bank may again make and maintain Eurodollar Loans (in which case
the provisions of Section 5.04 hereof shall be applicable).
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5.04 TREATMENT OF AFFECTED LOANS. If the obligation of any Bank to
make Eurodollar Loans or to Continue, or to Convert Base Rate Loans into,
Eurodollar Loans shall be suspended pursuant to Section 5.01 or 5.03 hereof,
such Bank's Eurodollar Loans shall be automatically Converted into Base Rate
Loans on the last day(s) of the then current Interest Period(s) for Eurodollar
Loans (or, in the case of a Conversion required by Section 5.01(b) or 5.03
hereof, on such earlier date as such Bank may specify to the Company with a copy
to the Agent) and, unless and until such Bank gives notice as provided below
that the circumstances specified in Section 5.01 or 5.03 hereof that gave rise
to such Conversion no longer exist:
(a) to the extent that such Bank's Eurodollar Loans have been so
Converted, all payments and prepayments of principal that would otherwise
be applied to such Bank's Eurodollar Loans shall be applied instead to its
Base Rate Loans; and
(b) all Loans that would otherwise be made or Continued by such Bank
as Eurodollar Loans shall be made or Continued instead as Base Rate Loans,
and all Base Rate Loans of such Bank that would otherwise be Converted into
Eurodollar Loans shall remain as Base Rate Loans.
If such Bank gives notice to the Company with a copy to the Agent that the
circumstances specified in Section 5.01 or 5.03 hereof that gave rise to the
Conversion of such Bank's Eurodollar Loans pursuant to this Section 5.04 no
longer exist (which such Bank agrees to do promptly upon such circumstances
ceasing to exist) at a time when Eurodollar Loans made by other Banks are
outstanding, such Bank's Base Rate Loans shall be automatically Converted, on
the first day(s) of the next succeeding Interest Period(s) for such outstanding
Eurodollar Loans, to the extent necessary so that, after giving effect thereto,
all Loans held by the Banks holding Eurodollar Loans and by such Bank are held
pro rata (as to principal amounts, Types and Interest Periods) in accordance
with their respective Commitments.
5.05 COMPENSATION. The Company shall pay to the Agent for the
account of each Bank, upon the request of such Bank through the Agent, such
amount or amounts as shall be sufficient (in the reasonable opinion of such
Bank) to compensate it for any loss, cost or expense that such Bank determines
is attributable to:
(a) any payment, mandatory or optional prepayment or Conversion of a
Eurodollar Loan made by such Bank for any reason (including, without
limitation, the acceleration of the Loans pursuant to Section 10 hereof) on
a date other than the last day of an Interest Period for such Loan; or
(b) any failure by the Company for any reason (including, without
limitation, the failure of any of the conditions precedent specified in
Section 7 hereof to be satisfied) to borrow a Eurodollar Loan from such
Bank on the date for such borrowing specified in the relevant notice of
borrowing given pursuant to Section 2.02 hereof.
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Without limiting the effect of the preceding sentence, such compensation shall
include an amount equal to the excess, if any, of (i) the amount of interest
that otherwise would have accrued on the principal amount so paid, prepaid or
Converted or not borrowed for the period from the date of such payment,
prepayment, Conversion or failure to borrow to the last day of the then current
Interest Period for such Loan (or, in the case of a failure to borrow, the
Interest Period for such Loan that would have commenced on the date specified
for such borrowing) at the applicable rate of interest for such Loan provided
for herein over (ii) the amount of interest that otherwise would have accrued on
such principal amount at a rate per annum equal to the interest component of the
amount such Bank would have bid in the London interbank market for Dollar
deposits of leading banks in amounts comparable to such principal amount and
with maturities comparable to such period (as reasonably determined by such
Bank).
5.06 ADDITIONAL COSTS IN RESPECT OF LETTERS OF CREDIT. Without
limiting the obligations of the Company under Section 5.01 hereof (but without
duplication), if as a result of any Regulatory Change or any risk-based capital
guideline or other requirement heretofore or hereafter issued by any government
or governmental or supervisory authority implementing at the national level the
Basel Accord there shall be imposed, modified or deemed applicable any tax,
reserve, special deposit, capital adequacy or similar requirement against or
with respect to or measured by reference to Letters of Credit issued or to be
issued hereunder and the result shall be to increase the cost to any Bank or
Banks of issuing (or purchasing participations in) or maintaining its obligation
hereunder to issue (or purchase participations in) any Letter of Credit
hereunder or reduce any amount receivable by any Bank hereunder in respect of
any Letter of Credit (which increases in cost, or reductions in amount
receivable, shall be the result of such Bank's or Banks' reasonable allocation
of the aggregate of such increases or reductions resulting from such event),
then, upon demand by such Bank or Banks (through the Agent), the Company shall
pay immediately to the Agent for account of such Bank or Banks, from time to
time as specified by such Bank or Banks (through the Agent), such additional
amounts as shall be sufficient to compensate such Bank or Banks (through the
Agent) for such increased costs or reductions in amount. A statement as to such
increased costs or reductions in amount incurred by any such Bank or Banks,
submitted by such Bank or Banks to the Company shall be conclusive in the
absence of manifest error as to the amount thereof.
Section 6. GUARANTEE.
6.01 GUARANTEE. The Subsidiary Guarantors hereby jointly and
severally guarantee to each Bank and the Agent and their respective successors
and assigns the prompt payment in full when due (whether at stated maturity, by
acceleration or otherwise) of the principal of and interest on the Loans made by
the Banks to, and the Notes held by each Bank of, the Company and all other
amounts from time to time owing to the Banks or the Agent by the Company under
this Agreement, under the Notes and under any Commodity Hedging Agreements and
Interest Rate Protection Agreements to which the Company is a party and by any
Obligor under any of the other Basic Documents or under any agreement in respect
of a
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Commodity Hedging Agreement or Interest Rate Protection Agreement to which
such Obligor is a party, in each case strictly in accordance with the terms
thereof (such obligations being herein collectively called the "GUARANTEED
OBLIGATIONS"). The Subsidiary Guarantors hereby further jointly and
severally agree that if the Company shall fail to pay in full when due
(whether at stated maturity, by acceleration or otherwise) any of the
Guaranteed Obligations, the Subsidiary Guarantors will promptly pay the same,
without any demand or notice whatsoever, and that in the case of any
extension of time of payment or renewal of any of the Guaranteed Obligations,
the same will be promptly paid in full when due (whether at extended
maturity, by acceleration or otherwise) in accordance with the terms of such
extension or renewal.
6.02 OBLIGATIONS UNCONDITIONAL. The obligations of the Subsidiary
Guarantors under Section 6.01 hereof are absolute and unconditional, joint and
several, irrespective of the value, genuineness, validity, regularity or
enforceability of the obligations of the Company under this Agreement, the Notes
or any other agreement or instrument referred to herein or therein, or any
substitution, release or exchange of any other guarantee of or security for any
of the Guaranteed Obligations, and, to the fullest extent permitted by
applicable law, irrespective of any other circumstance whatsoever which might
otherwise constitute a legal or equitable discharge or defense of a surety or
guarantor, it being the intent of this Section 6.02 that the obligations of the
Subsidiary Guarantors hereunder shall be absolute and unconditional, joint and
several, under any and all circumstances. Without limiting the generality of
the foregoing, it is agreed that the occurrence of any one or more of the
following shall not alter or impair the liability of the Subsidiary Guarantors
hereunder which shall remain absolute and unconditional as described above:
(i) at any time or from time to time, without notice to the
Subsidiary Guarantors, the time for any performance of or compliance with
any of the Guaranteed Obligations shall be extended, or such performance or
compliance shall be waived;
(ii) any of the acts mentioned in any of the provisions of this
Agreement or the Notes or any other agreement or instrument referred to
herein or therein shall be done or omitted;
(iii) the maturity of any of the Guaranteed Obligations shall be
accelerated, or any of the Guaranteed Obligations shall be modified,
supplemented or amended in any respect, or any right under this Agreement
or the Notes or any other agreement or instrument referred to herein or
therein shall be waived or any other guarantee of any of the Guaranteed
Obligations or any security therefor shall be released or exchanged in
whole or in part or otherwise dealt with; or
(iv) any Lien granted to, or in favor of, the Agent or any Bank or
Banks as security for any of the Guaranteed Obligations shall fail to be
perfected.
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Each of the Subsidiary Guarantors hereby expressly waive diligence, presentment,
demand of payment, protest and all notices whatsoever, and any requirement that
the Agent or any Bank exhaust any right, power or remedy or proceed against the
Company and the other Subsidiary Guarantors under this Agreement or the Notes or
any other agreement or instrument referred to herein or therein, or against any
other Person under any other guarantee of, or security for, any of the
Guaranteed Obligations. Each Subsidiary Guarantor agrees that its obligations
pursuant to this Section 6 shall not be affected by any assignment or
participation entered into by any Bank pursuant to Section 12.06 hereof.
6.03 REINSTATEMENT. The obligations of the Subsidiary Guarantors
under this Section 6 shall be automatically reinstated if and to the extent that
for any reason any payment by or on behalf of the Company in respect of the
Guaranteed Obligations is rescinded or must be otherwise restored by any holder
of any of the Guaranteed Obligations, whether as a result of any proceedings in
bankruptcy or reorganization or otherwise and the Subsidiary Guarantors jointly
and severally agree that they will indemnify the Agent and each Bank on demand
for all reasonable costs and expenses (including, without limitation, fees of
counsel) incurred by the Agent or such Bank in connection with such rescission
or restoration, including any such costs and expenses incurred in defending
against any claim alleging that such payment constituted a preference,
fraudulent transfer or similar payment under any bankruptcy, insolvency or
similar law.
6.04 SUBROGATION. Until all Loans and Letter of Credit Liabilities
have been paid in full and the Commitments have been terminated, each Subsidiary
Guarantor hereby waives all rights of subrogation or contribution, whether
arising by contract or operation of law (including, without limitation, any such
right arising under the Bankruptcy Code) or otherwise by reason of any payment
by it pursuant to the provisions of this Section 6.
6.05 REMEDIES. The Subsidiary Guarantors jointly and severally agree
that, as between the Subsidiary Guarantors and the Banks, the obligations of the
Company under this Agreement and the Notes may be declared to be forthwith due
and payable as provided in Section 10 hereof (and shall be deemed to have become
automatically due and payable in the circumstances provided in said Section 10)
for purposes of Section 6.01 hereof notwithstanding any stay, injunction or
other prohibition preventing such declaration (or such obligations from becoming
automatically due and payable) as against the Company and that, in the event of
such declaration (or such obligations being deemed to have become automatically
due and payable), such obligations (whether or not due and payable by the
Company) shall forthwith become due and payable by the Subsidiary Guarantors for
purposes of said Section 6.01.
6.06 CONTINUING GUARANTEE. The guarantee in this Section 6 is a
continuing guarantee, and shall apply to all Guaranteed Obligations whenever
arising.
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6.07 INSTRUMENT FOR THE PAYMENT OF MONEY. Each Subsidiary Guarantor
hereby acknowledges that the guarantee in this Section 6 constitutes an
instrument for the payment of money, and consents and agrees that any Bank or
the Agent, at its sole option, in the event of a dispute by such Subsidiary
Guarantor in the payment of any moneys due hereunder, shall have the right to
bring motion-action under New York CPLR Section 3213.
6.08 RIGHTS OF CONTRIBUTION. The Subsidiary Guarantors hereby agree,
as between themselves, that if any Subsidiary Guarantor shall become an Excess
Funding Guarantor (as defined below) by reason of the payment by such Subsidiary
Guarantor of any Guaranteed Obligations, each other Subsidiary Guarantor shall,
on demand of such Excess Funding Guarantor (but subject to the next sentence),
pay to such Excess Funding Guarantor an amount equal to such Subsidiary
Guarantor's Pro Rata Share (as defined below and determined, for this purpose,
without reference to the Properties, debts and liabilities of such Excess
Funding Guarantor) of the Excess Payment (as defined below) in respect of such
Guaranteed Obligations. The payment obligation of a Subsidiary Guarantor to any
Excess Funding Guarantor under this Section 6.08 shall be subordinate and
subject in right of payment to the prior payment in full of the obligations of
such Subsidiary Guarantor under the other provisions of this Section 6 and such
Excess Funding Guarantor shall not exercise any right or remedy with respect to
such excess until payment and satisfaction in full of all of such obligations.
For purposes of this Section 6.08, (i) "EXCESS FUNDING GUARANTOR"
shall mean, in respect of any Guaranteed Obligations, a Subsidiary Guarantor
that has paid an amount in excess of its Pro Rata Share of such Guaranteed
Obligations, (ii) "EXCESS PAYMENT" shall mean, in respect of any Guaranteed
Obligations, the amount paid by an Excess Funding Guarantor in excess of its Pro
Rata Share of such Guaranteed Obligations and (iii) "PRO RATA SHARE" shall mean,
for any Subsidiary Guarantor, the ratio (expressed as a percentage) of (x) the
amount by which the aggregate present fair saleable value of all Properties of
such Subsidiary Guarantor (excluding any shares of stock of any other Subsidiary
Guarantor) exceeds the amount of all the debts and liabilities of such
Subsidiary Guarantor (including contingent, subordinated, unmatured and
unliquidated liabilities, but excluding the obligations of such Subsidiary
Guarantor hereunder and any obligations of any other Subsidiary Guarantor that
have been Guaranteed by such Subsidiary Guarantor) to (y) the amount by which
the aggregate fair saleable value of all Properties of all of the Subsidiary
Guarantors exceeds the amount of all the debts and liabilities (including
contingent, subordinated, unmatured and unliquidated liabilities, but excluding
the obligations of the Company and the Subsidiary Guarantors hereunder and under
the other Loan Documents) of all of the Subsidiary Guarantors, determined (A)
with respect to any Subsidiary Guarantor that is a party hereto on the date of
this Agreement, as of the date of this Agreement, and (B) with respect to any
other Subsidiary Guarantor, as of the date such Subsidiary Guarantor becomes a
Subsidiary Guarantor hereunder.
6.09 GENERAL LIMITATION ON GUARANTEE OBLIGATIONS. In any action or
proceeding involving any state corporate law, or any state or Federal
bankruptcy, insolvency, reorganization
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or other law affecting the rights of creditors generally, if the obligations
of any Subsidiary Guarantor under Section 6.01 hereof would otherwise, taking
into account the provisions of Section 6.08 hereof, be held or determined to
be void, invalid or unenforceable, or subordinated to the claims of any other
creditors, on account of the amount of its liability under said Section 6.01,
then, notwithstanding any other provision hereof to the contrary, the amount
of such liability shall, without any further action by such Subsidiary
Guarantor, any Bank, the Agent or any other Person, be automatically limited
and reduced to the highest amount that is valid and enforceable and not
subordinated to the claims of other creditors as determined in such action or
proceeding.
Section 7. CONDITIONS PRECEDENT.
7.01 CONDITIONS TO EFFECTIVENESS. The effectiveness of this Second
Amended and Restated Credit Agreement is subject to the receipt by the Agent of
the following documents and evidence, each of which shall be satisfactory to the
Agent (and to the extent specified below, to the Majority Banks) in form and
substance:
(a) CORPORATE DOCUMENTS. The following documents, each certified as
indicated below:
(i) for each Obligor, a copy of the charter, as amended and in
effect, of such Obligor certified as of a recent date by the Secretary
of State of its jurisdiction of incorporation, and a certificate from
such Secretary of State dated as of a recent date as to the good
standing of and charter documents filed by such Obligor;
(ii) for each Obligor, a certificate of the Secretary or an
Assistant Secretary of such Obligor, dated the date hereof and
certifying (A) that the by-laws of such Obligor have not been amended
since January 1, 1997, (B) that attached thereto is a true and
complete copy of resolutions duly adopted by the board of directors of
such Obligor authorizing the execution, delivery and performance of
such of the Basic Documents to which such Obligor is or is intended to
be a party and the extensions of credit hereunder, and that such
resolutions have not been modified, rescinded or amended and are in
full force and effect, (C) that the charter of such Obligor has not
been amended since January 1, 1997, and (D) as to the incumbency and
specimen signature of each officer of such Obligor executing such of
the Basic Documents to which such Obligor is intended to be a party
and each other document to be delivered by such Obligor from time to
time in connection therewith (and the Agent and each Bank may
conclusively rely on such certificate until it receives notice in
writing from such Obligor); and
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(iii) for each Obligor, a certificate of another officer of such
Obligor as to the incumbency and specimen signature of the Secretary
or Assistant Secretary, as the case may be, of such Obligor.
(b) OFFICER'S CERTIFICATE. A certificate of a senior officer of the
Company, dated the date hereof, to the effect set forth in the first
sentence of Section 7.02 hereof.
(c) OPINION OF COUNSEL TO THE OBLIGORS. An opinion, dated the date
hereof, of Xxxxxx & Xxxxxx L.L.P., Counsel of each of the Obligors,
substantially in the form of Exhibit C hereto and covering such other
matters as the Agent or any Bank may reasonably request (and each Obligor
hereby instructs such counsel to deliver such opinion to the Banks and the
Agent).
(d) OPINION OF SPECIAL COUNSEL TO CHASE. An opinion, dated the date
hereof, of Milbank, Tweed, Xxxxxx & XxXxxx, special counsel to Chase,
substantially in the form of Exhibit D hereto.
(e) NOTES. The Notes, duly completed and executed in exchange for
the Original Notes.
(f) SECURITY AGREEMENT. The Security Agreement, duly executed and
delivered by the Obligors and the Agent. In addition, the Company and the
Subsidiary Guarantors shall have taken such other action (including,
without limitation, delivering to the Agent, for filing, appropriately
completed and duly executed copies of Uniform Commercial Code financing
statements) as the Agent shall have requested in order to perfect the
security interests created pursuant to the Security Agreement.
(g) PLEDGE AGREEMENT. The Pledge Agreement, duly executed and
delivered by each of the Obligors, if any, required by the Majority Banks
to execute and deliver the Pledge Agreement and the certificates identified
in Section 3 thereof, accompanied by undated stock powers executed in
blank. In addition, each of such Obligors, if any, shall have taken such
other action (including, without limitation, delivering to the Agent, for
filing, appropriately completed and duly executed copies of Uniform
Commercial Code financing statements) as the Agent shall have requested in
order to perfect the security interests created pursuant to the Pledge
Agreement.
(h) MORTGAGES. The Mortgage Amendments covering the Hydrocarbon
Properties of the Company and its Restricted Subsidiaries located in
Louisiana, Oklahoma, Texas (other than Mortgages in respect of the
Company's interest in the Loma Vieja field) and Wyoming, in each case duly
executed and delivered by the Company in recordable form (in such number of
copies as the Agent shall have requested).
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(i) INSURANCE. A certificate of an officer of the Company as to the
existence of all insurance required to be maintained by the Obligors
pursuant to Section 9.04 hereof.
(j) OPINION OF LOCAL COUNSEL. A favorable opinion from each of
Liskow & Xxxxx, Xxxxxx & Xxxxxxx and Xxxxxx & Xxxxxx L.L.P., special
counsel to the Banks in each of Louisiana, Oklahoma and Texas,
respectively, dated the date hereof, for each such state and with respect
to the properties covered by the Mortgages and located in such respective
states, as to the following:
(i) Compliance with all applicable state laws, including all
applicable recording, filing and registration laws, of the Mortgages,
the Mortgage Amendments and the Notes, and the form and manner of the
authorization, execution, acknowledgment and delivery of each thereof;
(ii) the legal, valid and binding nature of the Mortgages, the
Mortgage Amendments and the Notes, and the enforceability thereof in
accordance with their respective terms;
(iii) the fact that, the Mortgages, as amended by the Mortgage
Amendments, constitute a legal, valid and effective mortgage lien upon
the mortgaged properties as security for the Indebtedness referred to
therein;
(iv) the absence of any requirement for any authorization or
approval by any public regulatory body or authority, with regard to
the valid execution and delivery of, and the validity, legality and
effectiveness of, the Mortgages, the Mortgage Amendments and the
Notes;
(v) as to all recording, filing and registration procedures as
shall be necessary under applicable state laws to constitute the
Mortgages, as amended by the Mortgage Amendments, a mortgage, pledge
and financing statement in accordance with the terms thereof and the
intention of the parties thereto, and as to the necessity of any
periodic or other rerecording or refiling of the Mortgages, or any
other instrument in order to maintain the lien of the Mortgages; and
(vi) as to such state or local mortgage recording taxes, stamp
taxes, or other fees, taxes or governmental charges as shall be
required to be paid in connection with the execution, delivery, filing
for record or recording of the Mortgages and the Notes.
(k) OTHER DOCUMENTS. Such other documents as the Agent or any Bank
or special New York counsel to Chase may reasonably request.
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The obligation of the Banks to make their initial extension of credit hereunder
is also subject to the payment by the Company of such fees as the Company shall
have agreed to pay or deliver to any Bank or the Agent in connection herewith,
including, without limitation, the fees set forth in the Amendment Fee Letter
and the Original Fee Letter, the reasonable fees and expenses of Milbank, Tweed,
Xxxxxx & XxXxxx, special New York counsel to Chase in connection with the
negotiation, preparation, execution and delivery of this Agreement and the Notes
and the other Basic Documents and the extensions of credit hereunder (to the
extent that statements for such fees and expenses have been delivered to the
Company).
7.02 INITIAL AND SUBSEQUENT EXTENSIONS OF CREDIT.
The obligation of the Banks to make any Loans or otherwise extend
credit to the Company upon the occasion of each borrowing or other extension of
credit hereunder (including the initial extension of credit) is subject to the
further conditions precedent that, (x) both immediately prior to the making of
such Loans or other extension of credit and also after giving effect thereto and
to the intended use thereof: (i) no Default shall have occurred and be
continuing; (ii) the representations and warranties made by the Company in
Section 8 hereof, and by each Obligor in each of the other Basic Documents to
which it is a party, shall be true and complete on and as of the date of the
making of such Loans or other extension of credit with the same force and effect
as if made on and as of such date (or, if any such representation or warranty is
expressly stated to have been made as of a specific date, as of such specific
date); and (iii) the aggregate principal amount of Loans and Letter of Credit
Liabilities shall not exceed the Borrowing Base as determined pursuant to
Section 1.03 hereof and (y) if the outstanding Loans and Letter of Credit
Liabilities exceed or, with the extension of credit then being requested by the
Company will exceed $50,000,000, the Company shall have delivered a certificate
from the Chief Financial Officer, Treasurer or an Assistant Treasurer stating
that (A) all of the obligations under the Basic Documents are "Senior Debt" (as
defined in the Senior Subordinated Debt Documents) for the purposes of the
Senior Subordinated Debt Documents and (B) the obligations under the Basic
Documents (including the extension credit to be made on the date of such
certificate) are permitted to be incurred (as defined in the Senior Subordinated
Debt Documents) by the Company and its Subsidiaries under the Senior
Subordinated Debt Documents and providing the calculations necessary to support
the statement made pursuant to this clause (B). Each notice of borrowing or
request for the issuance of a Letter of Credit by the Company hereunder shall
constitute a certification by the Company to the effect set forth in the
preceding sentence (both as of the date of such notice or request and, unless
the Company otherwise notifies the Agent prior to the date of such borrowing or
issuance, as of the date of such borrowing or issuance).
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Section 8. REPRESENTATIONS AND WARRANTIES. The Company and the
Subsidiary Guarantors represent and warrant to the Banks that:
8.01 CORPORATE EXISTENCE. The Company and each Subsidiary Guarantor:
(a) is a corporation, partnership or other entity duly incorporated, validly
existing and in good standing under the laws of the jurisdiction of its
organization; (b) has all requisite corporate power, and has all material
governmental licenses, authorizations, consents and approvals necessary to own
its assets and carry on its business as now being or as proposed to be
conducted; and (c) is qualified to do business and is in good standing in all
jurisdictions in which the nature of the business conducted by it makes such
qualification necessary and where failure so to qualify could have a Material
Adverse Effect.
8.02 FINANCIAL CONDITION. The Company has heretofore furnished to
each of the Banks the consolidated balance sheet of the Company and its
Consolidated Subsidiaries as at December 31, 1995 and the related consolidated
statements of income, retained earnings and cash flow of the Company and its
Consolidated Subsidiaries for the fiscal year ended on said date, with the
opinion thereon of KPMG Peat Marwick. All such financial statements are
complete and correct and fairly present the consolidated financial condition of
the Company and its Consolidated Subsidiaries as at said date and the
consolidated results of operations for the fiscal year ended on said date, all
in accordance with GAAP. Neither the Company nor any of its Subsidiaries has on
the date hereof any material contingent liabilities, liabilities for taxes,
unusual forward or long-term commitments or unrealized or anticipated losses
from any unfavorable commitments, except as referred to or reflected or provided
for in said balance sheets as at said date. Since December 31, 1995 there has
been no material adverse change in the consolidated financial condition,
operations, business or prospects taken as a whole of the Company and its
Consolidated Subsidiaries from that set forth in said financial statements as at
said date.
8.03 LITIGATION. Except as disclosed to the Banks in writing prior
to the date of this Agreement, there are no legal or arbitral proceedings, or
any proceedings by or before any governmental or regulatory authority or agency,
now pending or (to the knowledge of the Company or any of its Subsidiaries)
threatened against the Company or any of its Subsidiaries which, if adversely
determined could have a Material Adverse Effect.
8.04 NO BREACH. None of the execution and delivery of this Agreement
and the Notes and the other Basic Documents, the consummation of the
transactions herein and therein contemplated or compliance with the terms and
provisions hereof and thereof will conflict with or result in a breach of, or
require any consent under, the charter or by-laws of any Obligor, or any
applicable law or regulation, or any order, writ, injunction or decree of any
court or governmental authority or agency, or any agreement or instrument to
which the Company or any of its Restricted Subsidiaries is a party or by which
any of them or any of their Property is bound or to which any of them is
subject, or constitute a default under any such agreement or
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instrument, or (except for the Liens created pursuant to the Security
Documents) result in the creation or imposition of any Lien upon any Property
of the Company or any of its Restricted Subsidiaries pursuant to the terms of
any such agreement or instrument.
8.05 ACTION. Each Obligor has all necessary corporate power,
authority and legal right to execute, deliver and perform its obligations under
each of the Basic Documents to which it is or is intended to be a party; the
execution, delivery and performance by each Obligor of each of the Basic
Documents to which it is or is intended to be a party have been duly authorized
by all necessary corporate action on its part (including, without limitation,
any required shareholder approvals); and this Agreement has been duly and
validly executed and delivered by each Obligor and constitutes, and each of the
Notes and the other Basic Documents to which it is a party when executed and
delivered by such Obligor (in the case of the Notes, for value) will constitute,
its legal, valid and binding obligation, enforceable against each Obligor in
accordance with its terms, except as such enforceability may be limited by
(a) bankruptcy, insolvency, reorganization, moratorium or similar laws of
general applicability affecting the enforcement of creditors' rights and (b) the
application of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
8.06 APPROVALS. No authorizations, approvals or consents of, and no
filings or registrations with, any governmental or regulatory authority or
agency, or any securities exchange, are necessary for the execution, delivery or
performance by any Obligor of the Basic Documents to which it is a party or for
the legality, validity or enforceability hereof or thereof, except for filings
and recordings in respect of the Liens created pursuant to the Security
Documents.
8.07 USE OF CREDIT. Neither the Company nor any of its Subsidiaries
is engaged principally, or as one of its important activities, in the business
of extending credit for the purpose, whether immediate, incidental or ultimate,
of buying or carrying Margin Stock, and no part of the proceeds of any extension
of credit hereunder will be used to buy or carry any Margin Stock.
8.08 ERISA. Each Plan, and, to the knowledge of the Company, each
Multiemployer Plan, is in compliance in all material respects with, and has been
administered in all material respects in compliance with, the applicable
provisions of ERISA, the Code and any other Federal or State law, except where
non-compliance will not have a Material Adverse Effect and no event or condition
has occurred and is continuing as to which the Company would be under an
obligation to furnish a report to the Banks under Section 9.01(e) hereof.
8.09 TAXES. The Company and its U.S. Subsidiaries are members of an
affiliated group of corporations filing consolidated returns for Federal income
tax purposes, of which the Company is the "common parent" (within the meaning of
Section 1504 of the Code) of such group. The Company and its Subsidiaries have
filed either directly or indirectly through the
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Company all Federal income tax returns and all other material tax returns
that are required to be filed by them and have paid either directly or
indirectly through the Company all taxes due pursuant to such returns or
pursuant to any assessment received by the Company or any of its
Subsidiaries. The charges, accruals and reserves on the books of the Company
and its Subsidiaries in respect of taxes and other governmental charges are,
in the opinion of the Company, adequate. Except as disclosed to the Banks in
writing, the Company has not given or been requested to give a waiver of the
statute of limitations relating to the payment of Federal, state, local and
foreign taxes or other impositions.
8.10 INVESTMENT COMPANY ACT. Neither the Company nor any of its
Subsidiaries is an "investment company", or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act of 1940,
as amended.
8.11 PUBLIC UTILITY HOLDING COMPANY ACT. Neither the Company nor any
of its Subsidiaries is a "holding company", or an "affiliate" of a "holding
company" or a "subsidiary company" of a "holding company", within the meaning of
the Public Utility Holding Company Act of 1935, as amended.
8.12 MATERIAL AGREEMENTS AND LIENS.
(a) Part A of Schedule I hereto is a complete and correct list, as of
the date of this Agreement, of each credit agreement, loan agreement, indenture,
purchase agreement, guarantee, letter of credit or other arrangement providing
for or otherwise relating to any Indebtedness or any extension of credit (or
commitment for any extension of credit) to, or guarantee by, the Company or any
of its Restricted Subsidiaries the aggregate principal or face amount of which
equals or exceeds (or may equal or exceed) $1,000,000, and the aggregate
principal or face amount outstanding or that may become outstanding under each
such arrangement is correctly described in Part A of said Schedule I.
(b) Part B of Schedule I hereto is a complete and correct list, as of
the date of this Agreement, of each Lien securing Indebtedness of any Person the
aggregate principal or face amount of which equals or exceeds (or may equal or
exceed) $1,000,000 and covering any Property of the Company or any of its
Restricted Subsidiaries, and the aggregate Indebtedness secured (or which may be
secured) by each such Lien and the Property covered by each such Lien is
correctly described in Part B of said Schedule I.
8.13 ENVIRONMENTAL MATTERS. Each of the Company and its Subsidiaries
has obtained all environmental, health and safety permits, licenses and other
authorizations required under all Environmental Laws to carry on its business as
now being or as proposed to be conducted, except to the extent failure to have
any such permit, license or authorization would not have a Material Adverse
Effect. Each of such permits, licenses and authorizations is in full force and
effect and each of the Company and its Subsidiaries is in compliance with the
terms
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and conditions thereof, and is also in compliance with all other limitations,
restrictions, conditions, standards, prohibitions, requirements, obligations,
schedules and timetables contained in any applicable Environmental Law or in
any regulation, code, plan, order, decree, judgment, injunction, notice or
demand letter issued, entered, promulgated or approved thereunder, except to
the extent failure to comply therewith would not have a Material Adverse
Effect.
In addition, except as set forth in Schedule II hereto:
(a) No notice, notification, demand, request for information,
citation, summons or order has been issued, no complaint has been filed, no
penalty has been assessed and no investigation or review is pending or
threatened by any governmental or other entity with respect to any alleged
failure by the Company or any of its Subsidiaries to have any
environmental, health or safety permit, license or other authorization
required under any Environmental Law in connection with the conduct of the
business of the Company or any of its Subsidiaries or with respect to any
generation, treatment, storage, recycling, transportation, discharge or
disposal, or any Release of any Hazardous Materials generated by the
Company or any of its Subsidiaries.
(b) Neither the Company nor any of its Subsidiaries owns, operates or
leases a treatment, storage or disposal facility requiring a permit under
the Resource Conservation and Recovery Act of 1976, as amended, or under
any comparable state or local statute; and
(i) to the knowledge of the Company after due inquiry, no
polychlorinated biphenyls (PCB's) are or have been present at any site
or facility now or previously owned, operated or leased by the Company
or any of its Subsidiaries;
(ii) to the knowledge of the Company after due inquiry, no
asbestos or asbestos-containing materials is or has been present at
any site or facility now or previously owned, operated or leased by
the Company or any of its Subsidiaries;
(iii) to the knowledge of the Company after due inquiry, there are
no underground storage tanks or surface impoundments for Hazardous
Materials, active or abandoned, at any site or facility now or
previously owned, operated or leased by the Company or any of its
Subsidiaries;
(iv) to the knowledge of the Company after due inquiry, no
Hazardous Materials have been Released at, on or under any site or
facility now or previously owned, operated or leased by the Company or
any of its Subsidiaries in a reportable quantity established by
statute, ordinance, rule, regulation or order; and
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(v) to the knowledge of the Company after due inquiry, no
Hazardous Materials have been otherwise Released at, on or under any
site or facility now or previously owned, operated or leased by the
Company or any of its Subsidiaries that would have a Material Adverse
Effect.
(c) Neither the Company nor any of its Subsidiaries has transported
or arranged for the transportation of any Hazardous Material to any
location that is listed on the National Priorities List ("NPL") under the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended ("CERCLA"), listed for possible inclusion on the NPL by
the Environmental Protection Agency in the Comprehensive Environmental
Response and Liability Information System, as provided for by 40 C.F.R.
Section 300.5 ("CERCLIS"), or on any similar state or local list or that
is the subject of Federal, state or local enforcement actions or other
investigations that may lead to Environmental Claims against the Company or
any of its Subsidiaries.
(d) No Hazardous Material generated by the Company or any of its
Subsidiaries has been recycled, treated, stored, disposed of or Released by
the Company or any of its Subsidiaries at any location other than those
listed in Schedule II hereto.
(e) No oral or written notification of a Release of a Hazardous
Material has been filed by or on behalf of the Company or any of its
Subsidiaries and no site or facility now or previously owned, operated or
leased by the Company or any of its Subsidiaries is listed or proposed for
listing on the NPL, CERCLIS or any similar state list of sites requiring
investigation or clean-up.
(f) No Liens have arisen under or pursuant to any Environmental Laws
on any site or facility owned, operated or leased by the Company or any of
its Subsidiaries, and no government action has been taken or is in process
that could subject any such site or facility to such Liens and neither the
Company nor any of its Subsidiaries would be required to place any notice
or restriction relating to the presence of Hazardous Materials at any site
or facility owned by it in any deed to the real property on which such site
or facility is located.
(g) There have been no environmental investigations, studies, audits,
tests, reviews or other analyses conducted by or that are in the possession
of the Company or any of its Subsidiaries in relation to any site or
facility now or previously owned, operated or leased by the Company or any
of its Subsidiaries which have not been made available to the Banks.
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8.14 SUBSIDIARIES, ETC.
(a) Set forth in Part A of Schedule III hereto is a complete and
correct list, as of the date of this Agreement, of all of the Subsidiaries of
the Company, together with, for each such Subsidiary, (i) the jurisdiction of
organization of such Subsidiary, (ii) each Person holding ownership interests in
such Subsidiary, (iii) the nature of the ownership interests held by each such
Person and the percentage of ownership of such Subsidiary represented by such
ownership interests and (iv) indicating whether each such Subsidiary is a
Restricted Subsidiary or an Unrestricted Subsidiary. Except as disclosed in
Part A of Schedule III hereto, (x) each of the Company and its Subsidiaries
owns, free and clear of Liens (other than Liens created pursuant to the Security
Documents), and has the unencumbered right to vote, all outstanding ownership
interests in each Person shown to be held by it in Part A of Schedule III
hereto, (y) all of the issued and outstanding capital stock of each such Person
organized as a corporation is validly issued, fully paid and nonassessable and
(z) there are no outstanding Equity Rights with respect to such Person.
(b) Set forth in Part B of Schedule III hereto is a complete and
correct list, as of the date of this Agreement, of all Investments (other than
Investments disclosed in Part A of said Schedule III hereto and other than
Permitted Investments) held by the Company or any of its Subsidiaries in any
Person and, for each such Investment, (x) the identity of the Person or Persons
holding such Investment and (y) the nature of such Investment. Except as
disclosed in Part B of Schedule III hereto, each of the Company and its
Subsidiaries owns, free and clear of all Liens (other than Liens created
pursuant to the Security Documents), all such Investments.
(c) None of the Restricted Subsidiaries of the Company, other than
Forest I Development Company, is, on the date of this Agreement, subject to any
indenture, agreement, instrument or other arrangement of the type described in
the last sentence of 9.15 hereof.
8.15 TRUE AND COMPLETE DISCLOSURE. The information, reports,
financial statements, exhibits and schedules furnished in writing by or on
behalf of the Obligors to the Agent or any Bank in connection with the
negotiation, preparation or delivery of this Agreement and the other Basic
Documents or included herein or therein or delivered pursuant hereto or thereto,
when taken as a whole do not contain any untrue statement of material fact or
omit to state any material fact necessary to make the statements herein or
therein, in light of the circumstances under which they were made, not
misleading. All written information furnished after the date hereof by the
Obligors to the Agent and the Banks in connection with this Agreement and the
other Basic Documents and the transactions contemplated hereby and thereby will
be true, complete and accurate in every material respect, or (in the case of
projections) based on reasonable estimates, on the date as of which such
information is stated or certified. There is no fact known to any Obligor that
could have a Material Adverse Effect that has not been disclosed herein, in the
other Basic Documents or in a report, financial statement, exhibit,
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schedule, disclosure letter or other writing furnished to the Banks for use
in connection with the transactions contemplated hereby or thereby.
Section 9. COVENANTS OF THE OBLIGORS. Each Obligor covenants and
agrees with the Banks and the Agent that, so long as any Commitment, Loan or
Letter of Credit Liability is outstanding and until payment in full of all
amounts payable by the Company hereunder:
9.01 FINANCIAL STATEMENTS ETC. The Company shall (for itself and on
behalf of each of the other Obligors) deliver to the Agent and each of the
Banks:
(a) as soon as available and in any event within 60 days after the
end of each quarterly fiscal period of each fiscal year of the Company,
consolidated and, if prepared, or if the Company has designated any
Subsidiary an Unrestricted Subsidiary, consolidating statements of income,
retained earnings and cash flow of the Company and its Consolidated
Subsidiaries for such period and for the period from the beginning of the
respective fiscal year to the end of such period, and the related
consolidated and, if prepared, or if the Company has designated any
Subsidiary an Unrestricted Subsidiary, consolidating balance sheets of the
Company and its Consolidated Subsidiaries as at the end of such period,
setting forth in each case in comparative form the corresponding
consolidated and, if prepared, or if the Company has designated any
Subsidiary an Unrestricted Subsidiary, consolidating figures for the
corresponding period in the preceding fiscal year, accompanied by a
certificate of a senior financial officer of the Company, which certificate
shall state that said consolidated financial statements fairly present the
consolidated financial condition and results of operations of the Company
and its Consolidated Subsidiaries, and said consolidating financial
statements are materially correct and reconcile to the consolidated
financial statements of the Company and its Consolidated Subsidiaries, and
that such consolidated financial statements have been prepared in
accordance with GAAP, as at the end of, and for, such period (subject to
normal year-end audit adjustments);
(b) as soon as available and in any event within 100 days after the
end of each fiscal year of the Company, consolidated and, if prepared,
consolidating statements of income, retained earnings and cash flow of the
Company and its Consolidated Subsidiaries for such fiscal year and the
related consolidated and, if prepared, or if the Company has designated any
Subsidiary an Unrestricted Subsidiary, consolidating balance sheets of the
Company and its Consolidated Subsidiaries as at the end of such fiscal
year, setting forth in each case in comparative form the corresponding
consolidated and consolidating figures for the preceding fiscal year, and
accompanied (i) in the case of said consolidated statements and balance
sheet of the Company, by an opinion thereon of independent certified public
accountants of recognized national standing, which opinion shall state that
said consolidated financial statements fairly present the consolidated
financial condition and results of operations of the Company and its
Consolidated
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Subsidiaries as at the end of, and for, such fiscal year in accordance
with generally accepted accounting principles, and (ii) in the case of
said consolidating statements and balance sheet, by a certificate of a
senior financial officer of the Company, which certificate shall state
that said consolidating financial statements are materially correct and
reconcile to the consolidated financial statements of the Company and its
Consolidated Subsidiaries, and that such consolidated financial
statements have been prepared in accordance with GAAP, as at the end of,
and for, such fiscal year;
(c) promptly upon their becoming available, copies of all
registration statements and regular periodic reports, if any, which the
Company shall have filed with the Securities and Exchange Commission (or
any governmental agency substituted therefor) or any national securities
exchange;
(d) promptly upon the mailing thereof to the shareholders of the
Company generally or to holders of Subordinated Indebtedness generally,
copies of all financial statements, reports and proxy statements so mailed;
(e) as soon as possible, and in any event within ten days after the
Company knows or has reason to believe that any of the events or conditions
specified below with respect to any Plan or Multiemployer Plan has occurred
or exists, a statement signed by a senior financial officer of the Company
setting forth details respecting such event or condition and the action, if
any, that the Company or its ERISA Affiliate proposes to take with respect
thereto (and a copy of any report or notice required to be filed with or
given to PBGC by the Company or an ERISA Affiliate with respect to such
event or condition):
(i) any reportable event, as defined in Section 4043(b) of ERISA
and the regulations issued thereunder, with respect to a Plan, as to
which PBGC has not by regulation waived the requirement of
Section 4043(a) of ERISA that it be notified within 30 days of the
occurrence of such event (PROVIDED that a failure to meet the minimum
funding standard of Section 412 of the Code or Section 302 of ERISA,
including, without limitation, the failure to make on or before its
due date a required installment under Section 412(m) of the Code or
Section 302(e) of ERISA, shall be a reportable event regardless of the
issuance of any waivers in accordance with Section 412(d) of the
Code); and any request for a waiver under Section 412(d) of the Code
for any Plan;
(ii) the distribution under Section 4041(c) of ERISA of a notice
of intent to terminate any Plan or any action taken by the Company or
an ERISA Affiliate to terminate any Plan (other than in connection
with a standard termination under Section 4041(b) of ERISA);
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(iii) the institution by PBGC of proceedings under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to
administer, any Plan, or the receipt by the Company or any ERISA
Affiliate of a notice from a Multiemployer Plan that such action has
been taken by PBGC with respect to such Multiemployer Plan;
(iv) the complete or partial withdrawal from a Multiemployer Plan
by the Company or any ERISA Affiliate that results in liability under
Section 4201 or 4204 of ERISA (including the obligation to satisfy
secondary liability as a result of a purchaser default) or the receipt
by the Company or any ERISA Affiliate of notice from a Multiemployer
Plan that it is in reorganization or insolvency pursuant to
Section 4241 or 4245 of ERISA or that it intends to terminate or has
terminated under Section 4041A of ERISA;
(v) the institution of a proceeding by a fiduciary of any
Multiemployer Plan against the Company or any ERISA Affiliate to
enforce Section 515 of ERISA, which proceeding is not dismissed within
30 days; and
(vi) the adoption of an amendment to any Plan that, pursuant to
Section 401(a)(29) of the Code or Section 307 of ERISA, would result
in the loss of tax-exempt status of the trust of which such Plan is a
part if the Company or an ERISA Affiliate fails to timely provide
security to the Plan in accordance with the provisions of said
Sections;
(f) on or before each Report Delivery Date, a Reserve Evaluation
Report;
(g) promptly after the Company or any of its Restricted Subsidiaries
knows or has reason to believe that any Default has occurred, a notice of
such Default describing the same in reasonable detail and, together with
such notice or as soon thereafter as possible, a description of the action
that the Company or any of its Restricted Subsidiaries has taken or
proposes to take with respect thereto;
(h) within ten days after the Company or any of its Restricted
Subsidiaries receives notice of any change in the schedule of payment or
delivery of any Production Payment to which the Company or such Restricted
Subsidiary is a party, the Company shall give the Agent notice of such
change, together with an explanation of the reason for such change;
(i) at the time of the receipt by the Company or any Restricted
Subsidiary of the net proceeds of any Equity Issuance, the Company shall
deliver a certificate of the Chief Financial Officer, Treasurer or
Assistant Treasurer of the Company which certificate shall indicate the
ratio of Funded Indebtedness to Total Capitalization of the
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Company and its Restricted Subsidiaries after giving effect to the receipt
of the net proceeds of such Equity Issuance and shall show, in reasonable
detail, the calculations used to derive such ratio; and
(j) from time to time such other information regarding the financial
condition, operations, business, prospects or Properties of the Company or
any of its Subsidiaries (including, without limitation, any Plan or
Multiemployer Plan and any reports or other information required to be
filed under ERISA) as any Bank or the Agent may reasonably request.
The Company will furnish to each Bank, at the time it furnishes each set of
financial statements pursuant to paragraph (a) or (b) above, a certificate of a
senior financial officer of the Company (i) to the effect that no Default has
occurred and is continuing (or, if any Default has occurred and is continuing,
describing the same in reasonable detail and describing the action that the
Company has taken or proposes to take with respect thereto) and (ii) setting
forth in reasonable detail the computations necessary to determine whether the
Company is in compliance with Sections 9.06(k), 9.07(a)(v) and (a)(vi), 9.08(g),
9.09, 9.10, 9.11 and 9.16 hereof as of the end of the respective quarterly
fiscal period or fiscal year, which computations in respect of Sections 9.09,
9.10, 9.11 and 9.16 shall be in accordance with GAAP.
9.02 LITIGATION. The Company will promptly give to each Bank notice
of all legal or arbitral proceedings, and of all proceedings by or before any
governmental or regulatory authority or agency, and any material development in
respect of such legal or other proceedings, affecting the Company or any of its
Subsidiaries, except proceedings which, if adversely determined, would not have
a Material Adverse Effect. Without limiting the generality of the foregoing,
the Company will give to each Bank notice of the assertion of any Environmental
Claim by any Person against, or with respect to the activities of, the Company
or any of its Subsidiaries and notice of any alleged violation of or
non-compliance with any Environmental Laws or any permits, licenses or
authorizations, other than any Environmental Claim or alleged violation which,
if adversely determined, would not have a Material Adverse Effect.
9.03 EXISTENCE, ETC. The Company will, and will cause each of its
Restricted Subsidiaries to:
(a) preserve and maintain its legal existence and all of its material
rights, privileges, licenses and franchises (PROVIDED that nothing in this
Section 9.03 shall prohibit any transaction expressly permitted under
Section 9.05 hereof);
(b) comply with the requirements of all applicable laws, rules,
regulations and orders of governmental or regulatory authorities if failure
to comply with such requirements could have a Material Adverse Effect;
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(c) pay and discharge all taxes, assessments and governmental charges
or levies imposed on it or on its income or profits or on any of its
Property prior to the date on which penalties attach thereto, except for
any such tax, assessment, charge or levy the payment of which is being
contested in good faith and by proper proceedings and against which
adequate reserves are being maintained;
(d) maintain all of its Properties used or useful in its business in
good working order and condition, ordinary wear and tear excepted;
(e) keep adequate records and books of account, in which complete
entries will be made in accordance with generally accepted accounting
principles consistently applied; and
(f) permit representatives of any Bank or the Agent, at their own
risk during normal business hours, to examine, copy and make extracts from
its books and records, to inspect any of its Properties, and to discuss its
business and affairs with its officers, all to the extent reasonably
requested by such Bank or the Agent (as the case may be).
9.04 INSURANCE. The Company will, and will cause each of its
Restricted Subsidiaries (including without limitation the Subsidiary Guarantors)
to, keep insured by financially sound and reputable insurers all Property of a
character usually insured by corporations engaged in the same or similar
business similarly situated against loss or damage of the kinds and in the
amounts customarily insured against by such corporations and carry such other
insurance as is usually carried by such corporations or as is required by law.
9.05 PROHIBITION OF FUNDAMENTAL CHANGES. The Company will not, and
will not permit any of its Restricted Subsidiaries to, enter into any
transaction of merger or consolidation or amalgamation, or liquidate, wind up or
dissolve itself (or suffer any liquidation or dissolution). The Company will
not, and will not permit any of its Restricted Subsidiaries to, acquire any
business or Property from, or capital stock of, or be a party to any acquisition
of, any Person except for purchases of inventory and other Property to be sold
or used in the ordinary course of business and Investments permitted under
Section 9.08 hereof. The Company will not, and will not permit any of its
Restricted Subsidiaries to, convey, sell, lease, transfer or otherwise dispose
of, in one transaction or a series of transactions, all or a substantial part of
its business or Property, whether now owned or hereafter acquired including,
without limitation, receivables and leasehold interests, but excluding
(i) obsolete or worn-out Property, tools or equipment no longer used or useful
in its business so long as the amount thereof sold in any single fiscal year by
the Company and its Subsidiaries shall not have a fair market value in excess of
$1,000,000, (ii) any hydrocarbons produced or sold in the ordinary course of
business and on ordinary business terms (excluding, with respect to Properties
of the Company or any Restricted Subsidiary existing on the date hereof, and
with respect to any Mortgaged Property, Production Payments or any other sale or
lease of interests in hydrocarbons in the ground other than Production Payments
entered
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into by the Company or any of its Restricted Subsidiaries prior to the date
hereof), (iii) on and after the date hereof, other Properties of the Company
and its Restricted Subsidiaries (other than Mortgaged Properties and
Unrestricted Properties) provided that the aggregate fair market value of
such other Properties conveyed, sold, leased, transferred or otherwise
disposed of on or after the date hereof shall not exceed $5,000,000 during
any Determination Period, provided, further, that such conveyance, sale,
lease, transfer or other disposition shall not include any Accounts or
Inventory (each as defined in the Security Agreement) of the Company or any
of its Restricted Subsidiaries other than Accounts or Inventory (x)
incidental to the sale of Hydrocarbon Properties and (y) created or produced
from such Hydrocarbon Properties on or after the effective date of any such
conveyance, sale, lease, transfer or other disposition of such Hydrocarbon
Properties, (iv) the expiration of leases covering hydrocarbon producing
properties and (v) Unrestricted Properties. Notwithstanding the foregoing
provisions of this Section 9.05:
(a) any Restricted Subsidiary of the Company may be merged or
consolidated with or into: (i) the Company if the Company shall be the
continuing or surviving corporation or (ii) any other such Restricted
Subsidiary; PROVIDED that if any such transaction shall be between a
Subsidiary Guarantor and a Restricted Subsidiary not a Subsidiary
Guarantor, and such Subsidiary Guarantor is not the continuing or surviving
corporation, then the continuing or surviving corporation shall have
assumed all of the obligations of such Subsidiary Guarantor hereunder;
(b) any Restricted Subsidiary of the Company may sell, lease,
transfer or otherwise dispose of any or all of its Property (upon voluntary
liquidation or otherwise) to the Company or a Wholly Owned Subsidiary of
the Company which is a Restricted Subsidiary; PROVIDED that if any such
sale is by a Subsidiary Guarantor to a Restricted Subsidiary of the Company
not a Subsidiary Guarantor, then such Restricted Subsidiary shall have
assumed all of the obligations of such Subsidiary Guarantor hereunder; and
(c) the Company or any Restricted Subsidiary of the Company may merge
or consolidate with any other Person if (i) in the case of a merger or
consolidation of the Company, the Company is the surviving corporation and,
in any other case, the surviving corporation is a Wholly Owned Subsidiary
of the Company which is a Restricted Subsidiary and (ii) after giving
effect thereto no Default would exist hereunder.
9.06 LIMITATION ON LIENS. The Company will not, nor will it permit
any of its Restricted Subsidiaries to, create, incur, assume or suffer to exist
any Lien upon any of their Property, whether now owned or hereafter acquired,
except:
(a) Liens created pursuant to the Security Documents;
(b) Liens in existence on the date hereof and listed in Part B of
Schedule I hereto (excluding, however, following the making of the initial
Loans hereunder, Liens securing
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Indebtedness to be repaid with the proceeds of such Loans, if any, indicated
on said Schedule I);
(c) Liens imposed by any governmental authority for taxes,
assessments, charges or levies not yet due or which are being contested in
good faith and by appropriate proceedings if, unless the amount thereof is
not material with respect to it or its financial condition, adequate
reserves with respect thereto are maintained on the books of the Company or
the affected Subsidiaries, as the case may be, in accordance with GAAP;
(d) carriers', warehousemen's, mechanics', materialmen's, repairmen's
or other like Liens arising in the ordinary course of business which are
not overdue for a period of more than 45 days or which are being contested
in good faith and by appropriate proceedings and Liens securing judgments
(but only to the extent, for an amount and for a period not resulting in an
Event of Default under Section 10(h) hereof);
(e) pledges or deposits under worker's compensation, unemployment
insurance and other social security or similar legislation;
(f) deposits to secure the performance of bids, trade contracts
(other than for borrowed money), leases, statutory obligations, surety,
stay, appeal and indemnity bonds, performance bonds and other obligations
of a like nature incurred in the ordinary course of business;
(g) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business and encumbrances
consisting of zoning restrictions, easements, licenses, restrictions on the
use of Property or minor imperfections in title thereto which, in the
aggregate, are not material in amount, and which do not in any case
materially detract from the value of the Property subject thereto or
interfere with the ordinary conduct of the business of the Company or any
of its Restricted Subsidiaries;
(h) Liens on Property of any corporation which becomes a Restricted
Subsidiary of the Company after the date of this Agreement, PROVIDED that
such Liens are in existence at the time such corporation becomes a
Restricted Subsidiary of the Company and were not created in anticipation
thereof;
(i) Liens upon real and/or tangible personal Property acquired after
the date hereof (by purchase, construction or otherwise) by the Company or
any of its Restricted Subsidiaries, each of which Liens either (A) existed
on such Property before the time of its acquisition and was not created in
anticipation thereof, or (B) was created solely for the purpose of securing
Indebtedness representing, or incurred to finance, refinance or refund, the
cost (including the cost of construction) of such Property; PROVIDED that
(x) no
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such Lien shall extend to or cover any Property of the Company or a
Restricted Subsidiary other than the Property so acquired and improvements
thereon; and (y) the principal amount of Indebtedness secured by any such
Lien shall at no time exceed 80% of the fair market value (as determined in
good faith by a senior financial officer of the Company) of such Property
at the time it was acquired (by purchase, construction or otherwise);
PROVIDED that the obligations of the Company or any Restricted Subsidiary
of the Company in respect of Capital Lease Obligations under a capital
lease of Property other than Hydrocarbon Property entered into in the
ordinary course of business may be secured by a Lien on the Property
subject to such capital lease;
(j) Liens for farm-in, farm-out, joint operating, area of mutual
interest agreements or similar agreements entered into by the Company and
its Restricted Subsidiaries in the ordinary course of business which the
Company or such Restricted Subsidiary determines in good faith to be
necessary for or advantageous to the economic development of their
Properties; PROVIDED any farm-out agreements covering any Mortgaged
Property shall require the prior written consent of the Majority Banks;
(k) additional Liens upon real and/or personal Property created after
the date hereof, PROVIDED that the aggregate Indebtedness secured thereby
and incurred on and after the date hereof shall not exceed $2,500,000 in
the aggregate at any one time outstanding;
(l) Liens created pursuant to any Commodity Hedging Agreement or
Interest Rate Protection Agreement (i) with any Bank or any Affiliate of
such Bank, or (ii) with any other Person, PROVIDED that the aggregate
Indebtedness secured by all such Liens permitted by this clause (ii) shall
not exceed $5,000,000 in the aggregate at any one time outstanding and no
such Liens shall extend to any Mortgaged Properties;
(m) Liens securing obligations of a Restricted Subsidiary of the
Company to the Company or to any Restricted Subsidiary or any obligations
of the Company to a Restricted Subsidiary provided that such Liens are not
(i) on Mortgaged Properties existing on the date hereof or (ii) on
Mortgaged Properties acquired after the date hereof that are not subject to
any Lien prior to the Lien of the Mortgage; and
(n) any extension, renewal or replacement of the foregoing, PROVIDED
that the Liens permitted hereunder shall not be spread to cover any
additional Indebtedness or Property (other than a substitution of like
Property).
9.07 INDEBTEDNESS. (a) The Company will not, and will not permit any
of its Restricted Subsidiaries to, create, incur or suffer to exist any
Indebtedness except:
(i) Indebtedness to the Agent and the Banks hereunder;
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(ii) Indebtedness outstanding on the date hereof and listed in
Part A of Schedule I hereto (excluding, however, following the making of
the initial Loans hereunder, the Indebtedness to be repaid with the
proceeds of such Loans, if any, indicated on said Schedule I);
(iii) Subordinated Indebtedness;
(iv) Indebtedness of Restricted Subsidiaries of the Company to
the Company or to other Restricted Subsidiaries of the Company;
(v) Indebtedness of the Company and its Subsidiaries secured by
Liens permitted by Section 9.06(j) hereof up to but not exceeding $500,000
at any one time outstanding;
(vi) additional Indebtedness of the Company and its Restricted
Subsidiaries in an aggregate amount up to but not exceeding $5,000,000 at
any one time outstanding; and
(vii) Indebtedness ("REFINANCING INDEBTEDNESS") issued in
exchange for or the proceeds of which are used to repay, refund, refinance
or discharge or otherwise retire any Indebtedness ("REFINANCED
INDEBTEDNESS") specified in clause (ii) above, such Refinancing
Indebtedness not to exceed the principal amount of, accelerate the maturity
of, or increase the interest rate applicable to, the Refinanced
Indebtedness outstanding on the date of the issuance of the Refinancing
Indebtedness; provided that the Company and its Restricted Subsidiaries may
not refinance any Production Payment outstanding on the date hereof with
any Production Payment of the Company or any Restricted Subsidiary.
(b) The Company will not permit any of its Unrestricted Subsidiaries
to create, incur or suffer to exist any Indebtedness except Non-Recourse Debt.
9.08 INVESTMENTS. The Company will not, and will not permit any of
its Restricted Subsidiaries to, make or permit to remain outstanding any
Investments except:
(a) Investments outstanding on the date hereof and identified in
Schedule III Part B hereto (excluding Investments in Unrestricted
Subsidiaries);
(b) operating deposit accounts with banks;
(c) Permitted Investments;
(d) Investments by the Company and its Restricted Subsidiaries in
capital stock of Restricted Subsidiaries to the extent outstanding on the
date of the financial statements
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of the Company and its Consolidated Subsidiaries referred to in Section
8.02 hereof and advances by the Company and its Restricted Subsidiaries
to Restricted Subsidiaries of the Company in the ordinary course of business
or pursuant to Section 6.08 hereof;
(e) Investments in the Capital Stock of any Wholly-Owned Subsidiary
of the Company formed or acquired by the Company or any of its other
Wholly-Owned Subsidiaries (other than Unrestricted Subsidiaries, 3189503,
Canadian Forest Oil and Funding Co.) after the date hereof (a "NEW WHOLLY-
OWNED SUBSIDIARY"), provided that (i) such New Wholly-Owned Subsidiary is
maintained as a separate Subsidiary of the Company (unless the Majority
Banks consent to the merger of such New Wholly-Owned Subsidiary into the
Company or into another Wholly-Owned Subsidiary of the Company, except that
no such consent shall be required to merge such New Wholly-Owned Subsidiary
into another Wholly-Owned Subsidiary of the Company established solely for
the purpose of facilitating the acquisition of such New Wholly-Owned
Subsidiary (which Wholly-Owned Subsidiary, following such merger, shall
have no assets other than the assets of such New Wholly-Owned Subsidiary)),
(ii) such New Wholly-Owned Subsidiary is engaged principally in the
business of the acquisition and exploitation of, exploration for and/or
development, production, processing, marketing, gathering and sales of oil,
gas or other hydrocarbons, (iii) immediately following the consummation of
each such Investment, such New Wholly-Owned Subsidiary shall have no
Indebtedness other than Non-Recourse Debt (provided such Indebtedness may
have full recourse to the assets of such Wholly-Owned Subsidiary or any
Unrestricted Subsidiary) and, if applicable, Indebtedness hereunder and
(iv) the Company complies with Section 9.16 hereof with respect to such New
Wholly-Owned Subsidiary immediately following the consummation of such
Investment by the Company;
(f) Commodity Hedging Agreements and Interest Rate Protection
Agreements entered into by the Company and its Restricted Subsidiaries in
the ordinary course of business substantially as conducted on the date
hereof and not for speculation purposes;
(g) additional Investments up to but not exceeding $30,000,000 (or
the equivalent) in the aggregate PLUS the net cash proceeds of any Equity
Issuance which is applied simultaneously or substantially simultaneously
for an Investment, including, without limitation, Investments in
Unrestricted Subsidiaries; PROVIDED that any cash dividends received by the
Company or any Restricted Subsidiary from an Unrestricted Subsidiary, up to
the amount of the Investments in such Unrestricted Subsidiary, shall reduce
PRO TANTO the aggregate amount of the Investments in such Unrestricted
Subsidiary for purposes of calculating compliance with such $30,000,000
limitation; and
(h) undivided fractional interests in hydrocarbon reserves.
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9.09 DIVIDEND PAYMENTS. The Company will not, nor will it permit any
of its Restricted Subsidiaries to, declare or make any Dividend Payment at any
time; PROVIDED that (i) any Wholly-Owned Subsidiaries of the Company may declare
and make Dividend Payments to the Company and (ii) the Company or any Restricted
Subsidiary may declare and make Dividend Payments in cash, subject to the
satisfaction of each of the following conditions on the date of such Dividend
Payment and after giving effect thereto:
(i) no Default shall have occurred and be continuing or shall occur
as a result of the making of such Dividend Payment; and
(ii) immediately after giving effect to such Dividend Payment, the
aggregate amount of Dividend Payments made during the period commencing on
the date hereof through and including the date of such Dividend Payment
shall not exceed an amount equal to the sum of (A) 50% of consolidated net
income of the Company and its Consolidated Subsidiaries for the period
commencing on January 1, 1997 through and including the last day of the
fiscal quarter most recently ended prior to the date of such Dividend
Payment (the "TRACKING PERIOD") (treated for these purposes as a single
accounting period), or 100% of consolidated net losses of the Company and
its Consolidated Subsidiaries for the Tracking Period (treated for these
purposes as a single accounting period), PLUS 50% of the net cash proceeds
received by the Company during the Tracking Period from any Person other
than a Subsidiary of the Company as a result of the issuance or sale of
Capital Stock (other than Disqualified Capital Stock) of the Company
(reduced by 100% of the amount of such net cash proceeds used or intended
to be used to prepay, redeem or retire any Subordinated Indebtedness
pursuant to Section 9.17 hereof); PROVIDED that no more than 10% of such
net cash proceeds may be used to make any Dividend Payment during any
fiscal year of the Company and (B) $10,000,000; provided that in no event
will the amount determined pursuant to clause (A) hereof be less than zero.
For the purpose of this paragraph 9.09(ii), consolidated net income or loss
of the Company and its Consolidated Subsidiaries shall exclude the
following non-cash items (provided that the same shall be included when
they become cash items): (i) any impairment of Properties for accounting
purposes under a ceiling test adjustment, (ii) any extraordinary item or
(iii) any gain or loss attributable to a change in accounting method which,
at the time of recognition in the financial statements of the Company and
its Restricted Subsidiaries is not a cash item. To the extent future cash
payments are made or received with respect to a change in accounting method
and such payment is not otherwise included in the computation of
consolidated net income or loss for such period, consolidated net income or
loss shall be reduced or increased by the amount of such cash payment or
receipt.
9.10 INTEREST COVERAGE RATIO. The Company will not permit the
Interest Coverage Ratio for any period of four complete consecutive fiscal
quarters (treated for this
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purpose as a single accounting period) following March 31, 1996, to be less
than 2.0 to 1.0 as of the end of any fiscal quarter of the Company.
9.11 WORKING CAPITAL. The Company will not permit the current assets
of the Company and its Restricted Subsidiaries (determined on a consolidated
basis in accordance with GAAP) to be equal to or less than the current
liabilities of the Company and its Restricted Subsidiaries (so determined). For
purposes hereof, the terms "CURRENT ASSETS" and "CURRENT LIABILITIES" shall have
the respective meanings assigned to them by GAAP, PROVIDED that in any event
there shall be (i) included in current assets the aggregate amount of the unused
Commitments (but only to the extent such unused Commitments could then be
utilized as provided in Section 7.02 hereof), (ii) excluded from current
liabilities all Indebtedness hereunder, (iii) excluded from current liabilities
all Production Payments and (iv) excluded from current liabilities the current
portion of any gas balancing liabilities.
9.12 LINES OF BUSINESS. The Company will not, and will not permit
any of its Restricted Subsidiaries to, engage to any substantial extent in any
line or lines of business activity other than the business of the acquisition,
exploration, development, production, processing, marketing, gathering and sale
of hydrocarbons.
9.13 TRANSACTIONS WITH AFFILIATES. Except as expressly permitted by
this Agreement, the Company will not, and will not permit any Restricted
Subsidiaries to, directly or indirectly: (a) make any Investment in an
Affiliate; (b) transfer, sell, lease, assign or otherwise dispose of any
Property to an Affiliate; (c) merge into or consolidate with or purchase or
acquire Property from an Affiliate; or (d) enter into any other transaction
directly or indirectly with or for the benefit of an Affiliate (including,
without limitation, guarantees and assumptions of obligations of an Affiliate);
PROVIDED that (x) any Affiliate who is an individual may serve as a director,
officer or employee of any of the Company and its Subsidiaries and receive
reasonable compensation for his or her services in such capacity and (y) any of
the Company and its Restricted Subsidiaries may enter into transactions with
Affiliates (other than extensions of credit to Affiliates) providing for the
leasing of Property, the rendering or receipt of services or the purchase or
sale of inventory and other Property in the ordinary course of business if the
monetary or business consideration arising therefrom would be substantially as
advantageous to the Company and its Restricted Subsidiaries as the monetary or
business consideration which would obtain in a comparable transaction with a
Person not an Affiliate.
9.14 USE OF PROCEEDS. The Company will use the proceeds of the Loans
hereunder and will use Letters of Credit issued hereunder solely for general
corporate purposes (in compliance with all applicable legal and regulatory
requirements); PROVIDED that neither the Agent nor any Bank shall have any
responsibility as to the use of any of such proceeds.
9.15 CERTAIN OBLIGATIONS RESPECTING SUBSIDIARIES. The Company will,
and will cause each of its Restricted Subsidiaries to, take such action from
time to time as shall be
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necessary to ensure that the Company and each of its Restricted Subsidiaries
at all times own (subject only to the Lien of the Pledge Agreement) at least
the same percentage of the issued and outstanding shares of each class of
stock of each of such Restricted Subsidiaries the stock of which is subject
to the Lien of the Pledge Agreement as is owned on the date hereof or, in the
case of New Wholly-Owned Subsidiaries created or acquired after the date
hereof (other than Funding Co., 3189503, Canadian Forest Oil, and any
Wholly-Owned Subsidiaries of such Persons), the stock of which are required
to be subject to the Lien of the Pledge Agreement, 100% of each class of
stock of each of such Subsidiaries (each of the Subsidiaries referred to
above being herein called, a "PLEDGED SUBSIDIARY"). Without limiting the
generality of the foregoing, none of the Company and its Restricted
Subsidiaries will sell, transfer or otherwise dispose of any shares of stock
in any Pledged Subsidiary owned by it, nor permit any Pledged Subsidiary to
issue any shares of stock of any class whatsoever to any Person (other than
to the Company or another Obligor). In the event that any such additional
shares of stock are issued by any Pledged Subsidiary, the respective Obligor
agrees forthwith to deliver to the Agent pursuant to the Pledge Agreement the
certificates evidencing such shares of stock, accompanied by undated stock
powers executed in blank and shall take such other action as the Agent shall
request to perfect the security interest created therein pursuant to the
Pledge Agreement. The Company will not and will not permit any of its
Restricted Subsidiaries to enter into any indenture, agreement, instrument or
other arrangement (other than the Indenture included in the Senior
Subordinated Debt Documents as initially in effect, the Funding Credit
Agreement as initially in effect and the other Loan Documents (as defined
therein) and the Canadian Forest Oil Credit Agreement as initially in effect
and the other Loan Documents (as defined therein)) that, directly or
indirectly, prohibits or restrains, or has the effect of prohibiting or
restraining, or imposes materially adverse conditions upon, the incurrence or
payment of Indebtedness of the Company and its Restricted Subsidiaries, the
granting of Liens, the declaration or payment of dividends, the making of
loans, advances or Investments or the sale, assignment, transfer or other
disposition of Property.
9.16 ADDITIONAL SUBSIDIARY GUARANTORS. The Company will take such
action, and will cause each of its Subsidiaries to take such action, including
without limitation the action specified below in this Section 9.16 from time to
time as shall be necessary to ensure that (i) each of such Subsidiaries (other
than (i) Unrestricted Subsidiaries, (ii) Forest I Development Company, (iii)
Funding Co., (iv) 3189503, (v) Canadian Forest Oil, and (vi) any Wholly-Owned
Subsidiaries of the Persons set forth in clauses (iii) through (v)) with
Tangible Net Worth of more than 5% of the Tangible Net Worth of the Company and
its Consolidated Subsidiaries determined on a consolidated basis in accordance
with GAAP is a Subsidiary Guarantor hereunder and (ii) all Subsidiaries that
Guarantee the Company's obligations in respect of the Senior Subordinated
Indebtedness, other than Funding Co., are Subsidiary Guarantors and in each
case, thereby, "OBLIGORS" hereunder. Each Subsidiary of the Company that is
required to become a Subsidiary Guarantor after the date hereof shall execute
such instruments and agreements, in form and substance satisfactory to, and as
required by, the Agent to acknowledge
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that such Subsidiary has all of the obligations of a Subsidiary Guarantor
pursuant to this Agreement.
9.17 MODIFICATIONS AND PAYMENTS OF SUBORDINATED INDEBTEDNESS AND
PRODUCTION PAYMENTS INDEBTEDNESS. The Company will not, and will not permit any
of its Restricted Subsidiaries to, (a) agree to any amendment, supplement or
other modification of any of the Senior Subordinated Debt Documents or any other
documents providing for or evidencing any Subordinated Indebtedness or
Production Payments or (b) pay, prepay, redeem, retire, purchase or otherwise
acquire for value, or defease, any Subordinated Indebtedness or Production
Payments except for (subject to the subordination provisions, if applicable,
relating thereto) regularly scheduled payments of principal thereof and interest
thereon or regularly scheduled redemptions thereof on the respective dates on
which such payments or redemptions are required to be made; PROVIDED that the
Company may (if no Default has occurred and is continuing or will result
therefrom) (i) apply the net cash proceeds received by the Company from any
Person other than a Subsidiary of the Company as a result of an Equity Issuance
to prepay, redeem or retire any Subordinated Indebtedness or Production
Payments; and (ii) refinance such Senior Subordinated Debt provided that (w) the
subordination for such Indebtedness remain unchanged; (x) the interest rate
applicable to such Indebtedness is not increased; (y) the final maturity of such
Indebtedness is not accelerated and (z) the covenants and other provisions
thereof are not modified in any respect determined by the Majority Banks to be
materially adverse to the Company, any such Restricted Subsidiary or the Banks.
9.18 MORTGAGES. (a) The Company will file or cause to be delivered
to the Agent not later than 30 days following the date hereof, Mortgages over
the Company's interest in the Hydrocarbon Properties of the Loma Vieja field in
Texas.
(b) The Company will at the time each Reserve Evaluation Report is
delivered cause the Mortgaged Properties to constitute not less than 80% of the
Hydrocarbon Properties PROVIDED THAT, if such Mortgage Properties constitute
less than 80% of the Hydrocarbon Properties, the Company will within 30 days of
the date of delivery to the Agent of such Reserve Evaluation Report cause the
Mortgaged Properties to constitute not less than 80% of the Hydrocarbon
Properties.
9.19 UNRESTRICTED SUBSIDIARIES. The Company:
(a) will cause the management, business and affairs of each of the
Company and its Subsidiaries to be conducted in such a manner (including,
without limitation, by keeping separate books of account, furnishing separate
financial statements of Unrestricted Subsidiaries to creditors and potential
creditors thereof and by not permitting Properties of the Company and its
respective Subsidiaries to be commingled) so that each Unrestricted Subsidiary
that is a corporation will be treated as a corporate entity separate and
distinct from the Company and the Restricted Subsidiaries;
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(b) will not, and will not permit any of the Restricted Subsidiaries
to, incur, assume, Guarantee or be or become liable for any Indebtedness or
other obligations of any of the Unrestricted Subsidiaries; and
(c) will not permit any Unrestricted Subsidiary to hold any capital
stock of or other ownership interest in, or any Indebtedness of, any Restricted
Subsidiary.
9.20 PLEDGES. The Company anticipates acquiring certain pipeline
assets in the Republic of Italy. Promptly upon acquiring such assets the
Company shall pledge pursuant to a pledge agreement in the form of Exhibit F
hereto, all the stock of any US Subsidiary which owns directly or indirectly all
or any portion of such assets.
Section 10. EVENTS OF DEFAULT. If one or more of the following
events (herein called "EVENTS OF DEFAULT") shall occur and be continuing:
(a) The Company shall default in the payment when due (whether at
stated maturity or upon mandatory or optional prepayment) of any principal
of or interest on any Loan or any Reimbursement Obligation, any fee or any
other amount payable by it hereunder or under any other Basic Document; or
(b) The Company or any of its Restricted Subsidiaries shall default
in the payment when due of any principal of or interest on any of its other
Indebtedness aggregating $500,000 or more, or in the payment when due of
$100,000 or more under any Interest Rate Protection Agreement or Commodity
Hedging Agreement; or any event specified in any note, agreement, indenture
or other document evidencing or relating to any such Indebtedness or any
event specified in any Interest Rate Protection Agreement or Commodity
Hedging Agreement shall occur if the effect of such event is to cause, or
(with the giving of any notice or the lapse of time or both) to permit the
holder or holders of such Indebtedness (or a trustee or agent on behalf of
such holder or holders) to cause, such Indebtedness to become due, or to be
prepaid in full (whether by redemption, purchase, offer to purchase or
otherwise), prior to its stated maturity or to have the interest rate
thereon reset to a level so that securities evidencing such Indebtedness
trade at a level specified in relation to the par value thereof or, in the
case of an Interest Rate Protection Agreement or Commodity Hedging
Agreement, to permit the payments owing under such Interest Rate Protection
Agreement or Commodity Hedging Agreement to be liquidated;
(c) Any representation, warranty or certification made or deemed made
herein or in any other Basic Document (or in any modification or supplement
hereto or thereto) by any Obligor, or any certificate furnished to any Bank
or the Agent pursuant to the provisions hereof or thereof, shall prove to
have been false or misleading as of the time made or furnished in any
material respect; or
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(d) The Company shall default in the performance of any of its
obligations under any of Sections 9.01(g), 9.05, 9.06, 9.07, 9.08, 9.09,
9.10, 9.11, 9.12, 9.14, 9.15, 9.17 or 9.18 hereof or any Obligor shall
default in the performance of any of its obligations under Section 4.02
or 5.02 of the Security Agreement; or any Obligor shall default in the
performance of any of its other obligations in this Agreement or any other
Basic Document and such default shall continue unremedied for a period of
30 days after notice thereof to the Company by the Agent or any Bank
(through the Agent); or
(e) The Company or any of its Restricted Subsidiaries shall admit in
writing its inability to, or be generally unable to, pay its debts as such
debts become due; or
(f) The Company or any of its Restricted Subsidiaries shall (i) apply
for or consent to the appointment of, or the taking of possession by, a
receiver, custodian, trustee, examiner or liquidator of itself or of all or
a substantial part of its Property, (ii) make a general assignment for the
benefit of its creditors, (iii) commence a voluntary case under the
Bankruptcy Code, (iv) file a petition seeking to take advantage of any
other law relating to bankruptcy, insolvency, reorganization, liquidation,
dissolution, arrangement or winding-up, or composition or readjustment of
debts, (v) fail to controvert in a timely and appropriate manner, or
acquiesce in writing to, any petition filed against it in an involuntary
case under the Bankruptcy Code or (vi) take any corporate action for the
purpose of effecting any of the foregoing; or
(g) A proceeding or case shall be commenced, without the application
or consent of the Company or any of its Restricted Subsidiaries, in any
court of competent jurisdiction, seeking (i) its reorganization,
liquidation, dissolution, arrangement or winding-up, or the composition or
readjustment of its debts, (ii) the appointment of a receiver, custodian,
trustee, examiner, liquidator or the like of the Company or such Restricted
Subsidiary or of all or any substantial part of its Property, or
(iii) similar relief in respect of the Company or such Restricted
Subsidiary under any law relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or adjustment of debts, and such
proceeding or case shall continue undismissed, or an order, judgment or
decree approving or ordering any of the foregoing shall be entered and
continue unstayed and in effect, for a period of 60 or more days; or an
order for relief against the Company or such Restricted Subsidiary shall be
entered in an involuntary case under the Bankruptcy Code; or
(h) A final judgment or judgments for the payment of money in excess
of $1,000,000 in the aggregate (exclusive of judgment amounts fully covered
by insurance where the insurer(s) has or have admitted liability in respect
of the full amount of such judgment(s) in excess of $1,000,000 and in
respect of which the Majority Banks believe such insurer(s) has or have the
financial ability to satisfy the full amount of such judgment(s)) shall be
rendered by a one or more courts, administrative tribunals or other
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bodies having jurisdiction against the Company or any of its Restricted
Subsidiaries and the same shall not be discharged (or provision shall not
be made for such discharge), or a stay of execution thereof shall not be
procured, within 60 days from the date of entry thereof and the Company or
the relevant Restricted Subsidiary shall not, within said period of 60
days, or such longer period during which execution of the same shall have
been stayed, appeal therefrom and cause the execution thereof to be stayed
during such appeal; or
(i) An event or condition specified in Section 9.01(e) hereof shall
occur or exist with respect to any Plan or Multiemployer Plan and, as a
result of such event or condition, together with all other such events or
conditions, the Company or any ERISA Affiliate shall incur or in the
opinion of the Majority Banks shall be reasonably likely to incur a
liability to a Plan, a Multiemployer Plan or PBGC (or any combination of
the foregoing) which would constitute, in the determination of the Majority
Banks, a Material Adverse Effect; or
(j) Any Governmental Authority shall assert claims against the
Company or any of its Subsidiaries, or any other Person shall commence any
proceeding against the Company or any of its Subsidiaries before any court,
administrative tribunal or other body having jurisdiction over the Company
or any of its Subsidiaries, in either such case based on or arising from
the generation, storage, transport, handling or disposal of Hazardous
Materials by the Company or any of its Subsidiaries or Affiliates, or any
predecessor in interest of the Company or any of its Subsidiaries or
Affiliates, or relating to any site or facility owned, operated or leased
by the Company or any of its Subsidiaries or Affiliates, which claims or
liabilities (insofar as they are payable by the Company or any of its
Subsidiaries but after deducting any portion thereof which is reasonably
expected to be paid by other creditworthy Persons jointly and severally
liable therefor), and the amount thereof is, singly or in the aggregate,
reasonably anticipated to have a Material Adverse Effect and such claim is
not withdrawn or such proceeding is not withdrawn or dismissed, as the case
may be, within 45 days after the assertion or commencement thereof, as
applicable; or
(k) A Change of Control; or
(l) Except for expiration in accordance with its terms, any of the
Security Documents shall be terminated or shall cease to be in full force
and effect, for whatever reason;
THEREUPON: (1) in the case of an Event of Default other than one referred to in
clause (f) or (g) of this Section 10 with respect to any Obligor, the Agent may
and, upon request of the Majority Banks, shall, by notice to the Company,
terminate the Commitments and/or declare the principal amount then outstanding
of, and the accrued interest on, the Loans, the Reimbursement
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Obligations and all other amounts payable by the Obligors hereunder and under
the Notes (including, without limitation, any amounts payable under Section
5.05 or 5.06 hereof) to be forthwith due and payable, whereupon such amounts
shall be immediately due and payable without presentment, demand, protest or
other formalities of any kind, all of which are hereby expressly waived by
each Obligor; and (2) in the case of the occurrence of an Event of Default
referred to in clause (f) or (g) of this Section 10 with respect to any
Obligor, the Commitments shall automatically be terminated and the principal
amount then outstanding of, and the accrued interest on, the Loans, the
Reimbursement Obligations and all other amounts payable by the Obligors
hereunder and under the Notes (including, without limitation, any amounts
payable under Section 5.05 or 5.06 hereof) shall automatically become
immediately due and payable without presentment, demand, protest or other
formalities of any kind, all of which are hereby expressly waived by each
Obligor.
In addition, upon the occurrence and during the continuance of any
Event of Default (if the Agent has declared the principal amount then
outstanding of, and accrued interest on, the Loans and all other amounts payable
by the Company hereunder and under the Notes to be due and payable), the Company
agrees that it shall, if requested by the Agent or the Majority Banks through
the Agent (and, in the case of any Event of Default referred to in clause (f)
or (g) of this Section 10 with respect to the Company, forthwith, without any
demand or the taking of any other action by the Agent or such Banks) provide
cover for the Letter of Credit Liabilities by paying to the Agent immediately
available funds in an amount equal to the then aggregate undrawn face amount of
all Letters of Credit, which funds shall be held by the Agent in the Collateral
Account as collateral security in the first instance for the Letter of Credit
Liabilities and be subject to withdrawal only as therein provided.
Section 11. THE AGENT.
11.01 APPOINTMENT, POWERS AND IMMUNITIES. Each Bank hereby
irrevocably appoints and authorizes the Agent to act as its agent hereunder and
under the other Basic Documents with such powers as are specifically delegated
to the Agent by the terms of this Agreement and of the other Basic Documents,
together with such other powers as are reasonably incidental thereto. The Agent
(which term as used in this sentence and in Section 11.05 and the first sentence
of Section 11.06 hereof shall include reference to its affiliates and its own
and its affiliates' officers, directors, employees and agents): (a) shall have
no duties or responsibilities except those expressly set forth in this Agreement
and in the other Basic Documents, and shall not by reason of this Agreement or
any other Basic Document be a trustee for any Bank; (b) shall not be responsible
to the Banks for any recitals, statements, representations or warranties
contained in this Agreement or in any other Basic Document, or in any
certificate or other document referred to or provided for in, or received by any
of them under, this Agreement or any other Basic Document, or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of any
collateral security provided for by any of the Security Documents, or of this
Agreement, any Note or any other Basic Document or any other document referred
to or
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provided for herein or therein, or for any failure by the Company or any
other Person to perform any of its obligations hereunder or thereunder; (c)
shall not be required to initiate or conduct any litigation or collection
proceedings hereunder or under any other Basic Document; and (d) shall not be
responsible for any action taken or omitted to be taken by it hereunder or
under any other Basic Document or under any other document or instrument
referred to or provided for herein or therein or in connection herewith or
therewith, except for its own gross negligence or willful misconduct. The
Agent may employ agents and attorneys-in-fact and shall not be responsible
for the negligence or misconduct of any such agents or attorneys-in-fact
selected by it in good faith. The Agent may deem and treat the payee of any
Note as the holder thereof for all purposes hereof unless and until a notice
of the assignment or transfer thereof shall have been filed with the Agent,
together with the consent of the Company to such assignment or transfer (to
the extent provided in Section 12.06(b) hereof).
11.02 RELIANCE BY AGENT. The Agent shall be entitled to rely upon
any certification, notice or other communication (including, without limitation,
any thereof by telephone, telecopy, telex, telegram or cable) believed by it to
be genuine and correct and to have been signed or sent by or on behalf of the
proper Person or Persons, and upon advice and statements of legal counsel,
independent accountants and other experts selected by the Agent. As to any
matters not expressly provided for by this Agreement or any other Basic
Document, the Agent shall in all cases be fully protected in acting, or in
refraining from acting, hereunder or thereunder in accordance with instructions
given by the Majority Banks, and such instructions of the Majority Banks and any
action taken or failure to act pursuant thereto shall be binding on all of the
Banks.
11.03 DEFAULTS. The Agent shall not be deemed to have knowledge or
notice of the occurrence of a Default (other than the non-payment of principal
of or interest on Loans, Reimbursement Obligations or of commitment fees) unless
the Agent has received notice from a Bank or the Company specifying such Default
and stating that such notice is a "Notice of Default". In the event that the
Agent receives such a notice of the occurrence of a Default, the Agent shall
give prompt notice thereof to the Banks (and shall give each Bank prompt notice
of each such non-payment). The Agent shall (subject to Section 11.07 hereof)
take such action with respect to such Default as shall be directed by the
Majority Banks, PROVIDED that, unless and until the Agent shall have received
such directions, the Agent may (but shall not be obligated to) take such action,
or refrain from taking such action, with respect to such Default as it shall
deem advisable in the best interest of the Banks except to the extent that this
Agreement expressly requires that such action be taken, or not be taken, only
with the consent or upon the authorization of the Majority Banks or all of the
Banks.
11.04 RIGHTS AS A BANK. With respect to its Commitment and the Loans
made by it, Chase (and any successor acting as Agent) in its capacity as a Bank
hereunder shall have the same rights and powers hereunder as any other Bank and
may exercise the same as though it were not acting as the Agent, and the term
"Bank" or "Banks" shall, unless the context otherwise
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indicates, include the Agent in its individual capacity. Chase (and any
successor acting as Agent) and its affiliates may (without having to account
therefor to any Bank) accept deposits from, lend money to, make investments
in and generally engage in any kind of banking, trust or other business with
the Obligors (and any of their Subsidiaries or Affiliates) as if it were not
acting as the Agent, and Chase and its affiliates may accept fees and other
consideration from the Obligors for services in connection with this
Agreement or otherwise without having to account for the same to the Banks.
11.05 INDEMNIFICATION. The Banks agree to indemnify the Agent (to
the extent not reimbursed under Sections 12.03 and 12.07 hereof, but without
limiting the obligations of the Company under said Sections 12.03 and 12.07, and
including in any event any payments under any indemnity that the Agent is
required to issue to any bank referred to in Section 4.02 of the Security
Agreement to which remittances in respect of Accounts, as defined therein, are
to be made) ratably in accordance with the aggregate principal amount of the
Loans and Reimbursement Obligations held by the Banks (or, if no Loans or
Reimbursement Obligations are at the time outstanding, ratably in accordance
with their respective Commitments or, if no Loans, Reimbursement Obligations or
Commitments are at the time outstanding or in effect, ratably in accordance with
their respective Commitments as most recently in effect), for any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind and nature whatsoever that may be
imposed on, incurred by or asserted against the Agent (including by any Bank)
arising out of or by reason of any investigation in or in any way relating to or
arising out of this Agreement or any other Basic Document or any other documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby (including, without limitation, the costs and
expenses that the Company is obligated to pay under Sections 12.03 and 12.07
hereof, and including also any payments under any indemnity that the Agent is
required to issue to any bank referred to in Section 4.02 of the Security
Agreement to which remittances in respect of Accounts, as defined therein, are
to be made, but excluding, unless a Default has occurred and is continuing,
normal administrative costs and expenses incident to the performance of its
agency duties hereunder) or the enforcement of any of the terms hereof or
thereof or of any such other documents, PROVIDED that no Bank shall be liable
for any of the foregoing to the extent they arise from the gross negligence or
willful misconduct of the party to be indemnified.
11.06 NON-RELIANCE ON AGENT AND OTHER BANKS. Each Bank agrees that
it has, independently and without reliance on the Agent or any other Bank, and
based on such documents and information as it has deemed appropriate, made its
own credit analysis of the Company and its Subsidiaries and decision to enter
into this Agreement and that it will, independently and without reliance upon
the Agent or any other Bank, and based on such documents and information as it
shall deem appropriate at the time, continue to make its own analysis and
decisions in taking or not taking action under this Agreement. The Agent shall
not be required to keep itself informed as to the performance or observance by
any Obligor of this Agreement or any of the other Basic Documents or any other
document referred to or provided
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for herein or therein or to inspect the Properties or books of the Company or
any of its Subsidiaries. Except for notices, reports and other documents and
information expressly required to be furnished to the Banks by the Agent
hereunder, the Agent shall not have any duty or responsibility to provide any
Bank with any credit or other information concerning the affairs, financial
condition or business of the Company or any of its Subsidiaries (or any of
their Affiliates) that may come into the possession of the Agent or any of
its affiliates.
11.07 FAILURE TO ACT. Except for action expressly required of the
Agent hereunder and under the other Basic Documents, the Agent shall in all
cases be fully justified in failing or refusing to act hereunder and thereunder
unless it shall receive further assurances to its satisfaction from the Banks of
their indemnification obligations under Section 11.05 hereof against any and all
liability and expense that may be incurred by it by reason of taking or
continuing to take any such action.
11.08 RESIGNATION OR REMOVAL OF AGENT. Subject to the appointment
and acceptance of a successor Agent as provided below, the Agent may resign at
any time by giving notice thereof to the Banks and the Company, and the Agent
may be removed at any time with or without cause by the Majority Banks. Upon
any such resignation or removal, the Majority Banks shall have the right to
appoint a successor Agent. If no successor Agent shall have been so appointed
by the Majority Banks and shall have accepted such appointment within 30 days
after the retiring Agent's giving of notice of resignation or the Majority
Banks' removal of the retiring Agent, then the retiring Agent may, on behalf of
the Banks, appoint a successor Agent, that shall be a bank which has an office
in New York, New York with a combined capital and surplus of at least
$1,000,000,000. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations
hereunder. After any retiring Agent's resignation or removal hereunder as
Agent, the provisions of this Section 11 shall continue in effect for its
benefit in respect of any actions taken or omitted to be taken by it while it
was acting as the Agent.
11.09 CONSENTS UNDER OTHER BASIC DOCUMENTS. The Agent may, with the
prior consent of the Majority Banks (but not otherwise), consent to any
modification, supplement or waiver under any of the Basic Documents other than
this Agreement, PROVIDED that, without the prior consent of each Bank, the Agent
shall not (except as provided herein or in the Security Documents) release any
collateral or otherwise terminate any Lien under any Basic Document providing
for collateral security, or agree to additional obligations being secured by
such collateral security (unless the Lien for such additional obligations shall
be junior to the Lien in favor of the other obligations secured by such Basic
Document), except that no such consent shall be required, and the Agent is
hereby authorized, to release any Lien covering Property which is the subject of
a disposition of Property permitted hereunder.
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Notwithstanding any provision of this Agreement to the contrary, the
Agent shall, in connection with any disposition by an Obligor of any Properties,
other than Mortgaged Properties, to the extent such Properties are disposed of
in accordance with the limitations set forth in Section 9.05(iii) hereof,
release such Properties from the Lien of each of the Security Documents, without
the consent of any Bank, upon the receipt by the Agent of a certificate from the
Obligor seeking such release which certificate shall state (i) that no Default
or Event of Default has occurred and is continuing and (ii) that the disposition
of such Property in the manner contemplated by such Obligor is permitted
pursuant to the terms of this Agreement provided that such release shall not
extend to (A) any equipment located on, proceeds from sale of, or production of
hydrocarbons from, such Hydrocarbon Properties that are retained by the Company
after any farmout or similar agreement and (B) any Inventory or Equipment (as
defined in the Security Agreement) that is the subject of such farmout or
similar agreement (the "FARMOUT INTEREST") and that is or may be utilized for
the exploration, production or marketing of Hydrocarbons attributable to (x) the
Farmout Interest and (y) other properties of the Company that are (i) Mortgaged
Properties or (ii) described in the Security Documents and intended to be
Mortgaged Properties.
11.10 COLLATERAL SUB-AGENTS. Each Bank by its execution and delivery
of this Agreement agrees, as contemplated by Section 4.03 of the Security
Agreement, that, in the event it shall hold any Permitted Investments referred
to therein, such Permitted Investments shall be held in the name and under the
control of such Bank, and such Bank shall hold such Permitted Investments as a
collateral sub-agent for the Agent thereunder. The Company by its execution and
delivery of this Agreement hereby consents to the foregoing.
Section 12. MISCELLANEOUS.
12.01 WAIVER. No failure on the part of the Agent or any Bank to
exercise and no delay in exercising, and no course of dealing with respect to,
any right, power or privilege under this Agreement or any Note shall operate as
a waiver thereof, nor shall any single or partial exercise of any right, power
or privilege under this Agreement or any Note preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. The
remedies provided herein are cumulative and not exclusive of any remedies
provided by law.
12.02 NOTICES. All notices, requests and other communications
provided for herein and under the Security Documents (including, without
limitation, any modifications of, or waivers or consents under, this Agreement)
shall be given or made by telecopy or other writing and telecopied, mailed or
delivered to the intended recipient:
(a) in the case of the Company or any Subsidiary Guarantor, at the
"Address for Notices" specified below the name of the Company on the
signature pages hereof;
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(b) in the case of the Agent, at the "Address for Notices" specified
below its name on the signature pages hereof; and
(c) in the case of any Bank, at its address (or telecopy number) set
forth in its Administrative Questionnaire;
or, as to any party, at such other address as shall be designated by such party
in a notice to the Company and the Agent given in accordance with this
Section 12.02. Except as otherwise provided in this Agreement, all such
communications shall be deemed to have been duly given when transmitted by
telecopier (and receipt is electronically confirmed), personally delivered or,
in the case of a mailed notice, upon receipt, in each case given or addressed as
aforesaid.
12.03 EXPENSES. The Company hereby agrees to pay or reimburse each
of the Banks and the Agent for paying: (a) all reasonable out-of-pocket costs
and expenses of the Agent (including, without limitation, the reasonable fees
and expenses of (i) Milbank, Tweed, Xxxxxx & XxXxxx, special New York counsel to
Chase and (ii) each of the special counsel to the Banks set forth in Section
7.01(j) hereof), in connection with (i) the negotiation, preparation, execution
and delivery of this Agreement and the other Basic Documents and the extensions
of credit hereunder and (ii) any modification, supplement or waiver of any of
the terms of this Agreement or any of the other Basic Documents; (b) all
reasonable out-of-pocket costs and expenses of the Banks and the Agent
(including, without limitation, reasonable counsels' fees) in connection with
(i) any Default and any enforcement or collection proceedings resulting
therefrom or in connection with the negotiation of any restructuring or
"work-out" (whether or not consummated), or the obligations of the Company
hereunder and (ii) the enforcement of this Section 12.03 or Section 12.07; and
(c) all transfer, stamp, documentary or other similar taxes, assessments or
charges levied by any governmental or revenue authority in respect of this
Agreement or any of the other Basic Documents or any other document referred to
herein or therein and all costs, expenses, taxes, assessments and other charges
incurred in connection with any filing, registration, recording or perfection of
any security interest contemplated by any Basic Document or any other document
referred to therein.
12.04 AMENDMENTS, ETC. Except as otherwise expressly provided in
this Agreement, any provision of this Agreement may be modified or supplemented
only by an instrument in writing signed by the Obligors, the Agent and the
Majority Banks, or by the Obligors and the Agent acting with the consent of the
Majority Banks, and any provision of this Agreement may be waived by the
Majority Banks or by the Agent acting with the consent of the Majority Banks;
PROVIDED that: no modification, supplement or waiver shall, unless by an
instrument signed by all of the Banks or by the Agent acting with the consent of
all of the Banks whose rights or interests are affected thereby: (i) increase,
or extend the term of any of the Commitments, or extend the time or waive any
requirement for the reduction or termination of any of the Commitments,
(ii) extend the date fixed for the payment of principal of or interest on the
Loans, the Reimbursement Obligations or any fee hereunder, (iii) reduce the
amount of any
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such payment of principal, (iv) reduce the rate at which interest is payable
thereon or any fee is payable hereunder, (v) alter the rights or obligations
of the Company to prepay Loans, (vi) alter the terms of this Section 12.04 or
(vii) modify the definition of the term "Majority Banks" or modify in any
other manner the number or percentage of the Banks required to make any
determinations or waive any rights hereunder or to modify any provision
hereof, any modification or supplement of this Agreement that increases any
of the obligations or reduces or impairs any of the rights of, or otherwise
adversely affects the interests of, the Agent or the Issuing Bank under this
Agreement or any of the other Basic Documents shall require the consent of
the Agent or the Issuing Bank (as the case may be).
Anything in this Agreement to the contrary notwithstanding, if:
(x) at a time when the conditions precedent set forth in Section 7
hereof to any Loans or other extension of credit hereunder are, in the
opinion of the Majority Banks satisfied, any Bank shall fail to fulfill its
obligations to make the Loan to be made by it; or
(y) any Bank shall fail to pay to the Agent for the account of the
Issuing Bank the amount of such Bank's Commitment Percentage of the
Commitments of any payment under a Letter of Credit pursuant to Section
2.04(e) hereof;
then, for so long as such failure shall continue, such Bank shall (unless the
Majority Banks, determined as if such Bank were not a "Bank" hereunder, shall
otherwise consent in writing) be deemed for all purposes relating to amendments,
modifications, waivers or consents under this Agreement or any of the other
Basic Documents (including, without limitation, under this Section 12.04 and
under Section 11.09 hereof) to have no Loans, Letter of Credit Liabilities or
Commitments, shall not be treated as a "Bank" hereunder when performing the
computation of Majority Banks and shall have no rights under the preceding
paragraph of this Section 12.04 or under Section 11.09 hereof; provided that any
action taken by the other Banks with respect to the matters referred to in the
preceding paragraph shall not be effective as against such Bank.
12.05 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns.
12.06 ASSIGNMENTS AND PARTICIPATIONS.
(a) No Obligor may assign any of its rights or obligations hereunder
or under the Notes without the prior consent of the Majority Banks and the
Agent.
(b) Each Bank may assign any of its Loans, its Note, its Commitment,
and its Letter of Credit Interest (but only with the consent of, in the case of
an outstanding Commitment, the Company and the Agent and, in the case of a
Commitment or a Letter of Credit Interest, the
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Issuing Bank (which consent, in the case of the Company, shall not be
unreasonably withheld)); PROVIDED that (i) no such consent by the Company or
the Agent or the Issuing Bank, if applicable, shall be required in the case
of any assignment to another Bank; (ii) any such partial assignment shall be
in an amount at least equal to $3,000,000; and (iii) each such assignment by
a Bank of any of its Loans, Notes, Commitments or Letter of Credit Interests
shall be made in such manner so that the same portion of its Loans, Notes,
Commitments and Letter of Credit Interests is assigned to the respective
assignee. Upon execution and delivery by the assignee to Company, the Agent
and the Issuing Bank of an instrument in writing pursuant to which such
assignee agrees to become a "Bank" hereunder (if not already a Bank) having
the Commitments, Loans, and, if applicable, Letter of Credit Interests
specified in such instrument, and upon the consent thereto by the Company,
the Agent and the Issuing Bank, to the extent required above, the assignee
shall have, to the extent of such assignment (unless otherwise provided in
such assignment with the consent of the Company, the Agent and the Issuing
Bank), the obligations, rights and benefits of a Bank hereunder holding the
Commitments, Loans and, if applicable, Letter of Credit Interests (or
portions thereof) assigned to it (in addition to the Commitments, Loans and
Letter of Credit Interests, if any, theretofore held by such assignee) and
the assigning Bank shall, to the extent of such assignment, be released from
the Commitments (or portion thereof) so assigned. Upon each such assignment
the assigning Bank shall pay the Agent an assignment fee of $5,000.
(c) Each Bank may sell or agree to sell to one or more other Persons
a participation in not more than 75% of its rights and obligations under this
Agreement (including, without limitation, not more than 75% of its Commitment
and the Loans and/or Letter of Credit Interest held by it), in which event each
purchaser of a participation (a "PARTICIPANT") shall be entitled to the rights
and benefits of the provisions of Section 9.01(g) hereof with respect to its
participation in such Loans, Letter of Credit Interests and Commitments as if
(and the Company shall be directly obligated to such Participant under such
provisions as if) such Participant were a "Bank" for purposes of said Section,
but, except as otherwise provided in Section 4.07(c) hereof, shall not have any
other rights or benefits under this Agreement or any Note or any other Basic
Document (the Participant's rights against such Bank in respect of such
participation to be those set forth in the agreements executed by such Bank in
favor of the Participant). All amounts payable by the Company to any Bank under
Section 5 hereof in respect of Loans, Letter of Credit Interests held by it, and
its Commitment, shall be determined as if such Bank had not sold or agreed to
sell any participations in such Loans, Letter of Credit Interest and Commitment,
and as if such Bank were funding each of such Loans, Letter of Credit Interests
and Commitment in the same way that it is funding the portion of such Loans,
Letter of Credit Interests and Commitment in which no participations have been
sold. In no event shall a Bank that sells a participation agree with the
Participant to take or refrain from taking any action hereunder or under any
other Basic Document except that such Bank may agree with the Participant that
it will not, without the consent of the Participant, agree to any of the
following (to the extent the rights or interest of the Participant are adversely
affected thereby): (i) increase or extend the term, or extend the time or waive
any requirement for the reduction or termination, of such Bank's Commitment,
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(ii) extend the date fixed for the payment of principal of or interest on the
related Loan or Loans, Reimbursement Obligations or any portion of any fee
hereunder payable to the Participant, (iii) reduce the amount of any such
payment of principal, (iv) reduce the rate at which interest is payable thereon,
or any fee hereunder payable to the Participant, to a level below the rate at
which the Participant is entitled to receive such interest or fee, (v) alter the
rights or obligations of the Company to prepay the related Loans or (vi) consent
to any other modification, supplement or waiver hereof or of any of the other
Basic Documents to the extent that the same, under Section 11.09 or 12.04
hereof, requires the consent of each Bank.
(d) In addition to the assignments and participations permitted under
the foregoing provisions of this Section 12.06, including, without limitation,
Section 12.06(c) hereof, any Bank may assign and pledge all or any portion of
its Loans and its Notes to any Federal Reserve Bank as collateral security
pursuant to Regulation A and any Operating Circular issued by such Federal
Reserve Bank. No such assignment shall release the assigning Bank from its
obligations hereunder.
(e) A Bank may furnish any information concerning the Company or any
of its Subsidiaries in the possession of such Bank from time to time to
assignees and participants (including prospective assignees and participants),
subject, however, to the provisions of Section 12.13(b) hereof.
(f) Anything in this Section 12.06 to the contrary notwithstanding,
no Bank may assign or participate any interest in any Loan or Reimbursement
Obligation held by it hereunder to the Obligors or any of their Affiliates or
Subsidiaries without the prior written consent of each Bank.
12.07 INDEMNIFICATION. The Company hereby agrees (i) to indemnify
the Agent and each Bank and their respective directors, officers, employees,
attorneys and agents from, and hold each of them harmless against, any and all
losses, liabilities, claims, damages or expenses incurred by any of them
(including, without limitation, any and all losses, liabilities, claims, damages
or expenses incurred by the Agent to any Bank, whether or not the Agent or any
Bank is a party thereto) arising out of or by reason of any investigation or
litigation or other proceedings (including any threatened investigation or
litigation or other proceedings) relating to the extensions of credit hereunder
or any actual or proposed use by the Company or any of its Subsidiaries of the
proceeds of any of the extensions of credit hereunder, including, without
limitation, the reasonable fees and disbursements of counsel incurred in
connection with any such investigation or litigation or other proceedings (but
excluding any such losses, liabilities, claims, damages or expenses incurred by
reason of the gross negligence or willful misconduct of the Person to be
indemnified) and (ii) not to assert any claim against the Agent, any Bank, any
of their affiliates, or any of their respective directors, officers, employees,
attorneys and agents, on any theory of liability, for special, indirect,
consequential or punitive damages arising out of or otherwise relating to any of
the transactions contemplated herein or in any other Basic
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Document; PROVIDED that the Company may enforce the obligations, if
applicable, of the Banks hereunder. Without limiting the generality of the
foregoing, the Company will (x) indemnify the Agent for any payments that the
Agent is required to make under any indemnity issued to any bank referred to
in Section 4.02 of the Security Agreement to which remittances in respect to
Accounts, as defined therein, are to be made and (y) indemnify the Agent and
each Bank from, and hold the Agent and each Bank harmless against, any
losses, liabilities, claims, damages or expenses described in the preceding
sentence (but excluding, as provided in the preceding sentence, any loss,
liability, claim, damage or expense incurred by reason of the gross
negligence or willful misconduct of the Person to be indemnified) arising
under any Environmental Law as a result of the past, present or future
operations of the Company or any of its Subsidiaries (or any predecessor in
interest to the Company or any of its Subsidiaries), or the past, present or
future condition of any site or facility owned, operated or leased by the
Company or any of its Subsidiaries (or any such predecessor in interest), or
any Release or threatened Release of any Hazardous Materials from any such
site or facility, including any such Release or threatened Release which
shall occur during any period when the Agent or any Bank shall be in
possession of any such site or facility following the exercise by the Agent
or any Bank of any of its rights and remedies hereunder or under any of the
Security Documents.
12.08 SURVIVAL. The obligations of the Company under Sections 5.01,
5.05, 5.06, 5.07, 12.03 and 12.07 hereof, the obligations of the Subsidiary
Guarantors under Section 6.03 hereof and the obligations of the Banks under
Section 11.05 hereof shall survive the repayment of the Loans and Reimbursement
Obligations and the termination of the Commitments. In addition, each
representation and warranty made, or deemed to be made by a notice of any
extension of credit (whether by means of a Loan or a Letter of Credit), herein
or pursuant hereto shall survive the making of such representation and warranty,
and no Bank shall be deemed to have waived, by reason of making any extension of
credit hereunder (whether by means of a Loan or a Letter of Credit), any Default
which may arise by reason of such representation or warranty proving to have
been false or misleading, notwithstanding that such Bank or the Agent may have
had notice or knowledge or reason to believe that such representation or
warranty was false or misleading at the time such extension of credit was made.
12.09 CAPTIONS. The table of contents and captions and section
headings appearing herein are included solely for convenience of reference and
are not intended to affect the interpretation of any provision of this
Agreement.
12.10 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Agreement by signing
any such counterpart.
12.11 GOVERNING LAW; SUBMISSION TO JURISDICTION. This Agreement and
the Notes shall be governed by, and construed in accordance with, the law of the
State of New York. Each Obligor hereby submits to the nonexclusive jurisdiction
of the United States District Court
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for the Southern District of New York and of any New York state court sitting
in New York City for the purposes of all legal proceedings arising out of or
relating to this Agreement or the transactions contemplated hereby. Each
Obligor irrevocably waives, to the fullest extent permitted by applicable
law, any objection which it may now or hereafter have to the laying of the
venue of any such proceeding brought in such a court and any claim that any
such proceeding brought in such a court has been brought in an inconvenient
forum.
12.12 WAIVER OF JURY TRIAL. EACH OF THE OBLIGORS, THE AGENT AND THE
BANKS HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
12.13 TREATMENT OF CERTAIN INFORMATION.
(a) The Company acknowledges that from time to time financial
advisory, investment banking and other services may be offered or provided to
the Company or one or more of its Subsidiaries (in connection with this
Agreement or otherwise) by any Bank or by one or more subsidiaries or affiliates
of such Bank and the Company, subject to Section 12.13(b) hereof, hereby
authorizes each Bank to share any information delivered to such Bank by the
Company and its Subsidiaries pursuant to this Agreement, or in connection with
the decision of such Bank to enter into this Agreement, to any such subsidiary
or affiliate.
(b) Each Bank and the Agent agrees (on behalf of itself and each of
its affiliates, directors, officers, employees and representatives) to use
reasonable precautions to keep confidential, in accordance with their customary
procedures for handling confidential information of the same nature and in
accordance with safe and sound banking practices, any non-public information
supplied by the Company or any of its Subsidiaries pursuant to this Agreement
which is identified by such Person as being confidential at the time the same is
delivered to such Bank or the Agent, PROVIDED that nothing herein shall limit
the disclosure of any such information (i) to the extent required by statute,
rule, regulation or judicial process, (ii) to counsel for any of the Banks or
the Agent, (iii) to bank examiners, auditors or accountants, (iv) to the Agent
or any other Bank, (v) in connection with any litigation to which any one or
more of the Banks or the Agent is a party, (vi) to a subsidiary or affiliate of
such Bank as provided in clause (a) above (provided that neither the Agent nor
any Bank shall disclose any non-public information delivered by the Company or
any of its Subsidiaries pursuant to this Agreement to any subsidiary or
affiliate of the Agent or any such Bank, as the case may be, which is generally
engaged in the securities business other than in connection with (x) Commodity
Hedging Agreements or Interest Rate Protection Agreements permitted pursuant to
Section 9.08(f) hereof or (y) the syndication or participation of the
Commitments, Loans or Letter of Credit Interests under this Agreement, without
the prior written consent of the Company) or (vii) to any assignee or
participant (or
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prospective assignee or participant) so long as such assignee or participant
(or prospective assignee or participant) first executes and delivers to the
respective Bank a Confidentiality Agreement substantially in the form of
Exhibit G hereto.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered as of the day and year first above written.
FOREST OIL CORPORATION
By /s/ Xxxxxx X. Xxxxxxx
---------------------------
Title: V.P.
Address for Notices:
0000 Xxxxxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx Xxxxxxx
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
-00-
XXXXX
Xxxxxxxxxx: $30,000,000 THE CHASE MANHATTAN BANK
By
---------------------------
Title: Managing Director
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Commitment: $30,000,000 CHRISTIANIA BANK OG KREDITKASSE
By /s/ Xxxx-Xxxxxx Xxxxxxxx
----------------------------
Title: First Vice President
By /s/ Xxxxx X. Xxxxx
----------------------------
Title: First Vice President
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Commitment: $20,000,000 CREDIT LYONNAIS NEW YORK BRANCH
By /s/ Pascal Poupelle
----------------------------
Title: Senior Vice President
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Commitment: $20,000,000 BANK OF MONTREAL
By /s/ Xxxxxx X. Xxxxxxx
-----------------------------
Title: Director,
U.S. Corporate Banking
-00-
XXX XXXXX XXXXXXXXX BANK,
as Agent
By
----------------------------
Title: Managing Director
Address for Notices to
Chase as Agent:
The Chase Manhattan Bank
One Chase Xxxxxxxxx Xxxxx,
Xxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Agency Services, Xxxxxx Xxxxxxx
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
SCHEDULE I
MATERIAL AGREEMENTS AND LIENS
(Sections 8.12 and 9.07(b))
SCHEDULE I TO CREDIT AGREEMENT
SCHEDULE II
HAZARDOUS MATERIALS
(Section 8.13)
SCHEDULE II TO CREDIT AGREEMENT
SCHEDULE III
SUBSIDIARIES AND INVESTMENTS
(Sections 8.15 and 9.08(a))
SCHEDULE III TO CREDIT AGREEMENT
