EXHIBIT 4.7
EXECUTION COUNTERPART
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FOREST OIL CORPORATION
and
SUBSIDIARY GUARANTORS
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THIRD AMENDED AND RESTATED
CREDIT AGREEMENT
Dated as of February 3, 1998
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THE CHASE MANHATTAN BANK,
as Administrative 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 . . . . . . . . . . . . . . 26
1.03 Borrowing Base. . . . . . . . . . . . . . . . . . . . . . . . . 27
1.04 Types of Loans. . . . . . . . . . . . . . . . . . . . . . . . . 29
1.05 Designation of Subsidiaries as Restricted or Unrestricted
Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . 29
1.06 References to Subsidiaries, Restricted Subsidiaries and
Unrestricted Subsidiaries in Connection with Calculations
of Certain Financial Ratios. . . . . . . . . . . . . . . . . . 30
Section 2. Commitments, Loans, Notes and Prepayments . . . . . . . . . . . 30
2.01 Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
2.02 Borrowings. . . . . . . . . . . . . . . . . . . . . . . . . . . 31
2.03 Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . 31
2.04 Changes of Commitments. . . . . . . . . . . . . . . . . . . . . 35
2.05 Commitment Fee. . . . . . . . . . . . . . . . . . . . . . . . . 36
2.06 Lending Offices . . . . . . . . . . . . . . . . . . . . . . . . 36
2.07 Several Obligations; Remedies Independent . . . . . . . . . . . 36
2.08 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
2.09 Optional Prepayments and Conversions or Continuations of
Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
2.10 Mandatory Prepayments and Reductions of Commitments . . . . . . 37
2.11 Allocation of Borrowing Base. . . . . . . . . . . . . . . . . . 39
Section 3. Payments of Principal and Interest. . . . . . . . . . . . . . . 40
3.01 Repayment of Loans. . . . . . . . . . . . . . . . . . . . . . . 40
3.02 Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 4. Payments; Pro Rata Treatment; Computations; Etc . . . . . . . . 41
4.01 Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
4.02 Pro Rata Treatment. . . . . . . . . . . . . . . . . . . . . . . 42
4.03 Computations. . . . . . . . . . . . . . . . . . . . . . . . . . 43
4.04 Minimum Amounts . . . . . . . . . . . . . . . . . . . . . . . . 43
4.05 Certain Notices . . . . . . . . . . . . . . . . . . . . . . . . 43
(i)
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4.06 Non-Receipt of Funds by the Agent . . . . . . . . . . . . . . . 44
4.07 Sharing of Payments, Etc. . . . . . . . . . . . . . . . . . . . 45
Section 5. Yield Protection, Etc . . . . . . . . . . . . . . . . . . . . . 46
5.01 Additional Costs. . . . . . . . . . . . . . . . . . . . . . . . 46
5.02 Limitation on Types of Loans. . . . . . . . . . . . . . . . . . 49
5.03 Illegality. . . . . . . . . . . . . . . . . . . . . . . . . . . 49
5.04 Treatment of Affected Loans . . . . . . . . . . . . . . . . . . 49
5.05 Compensation. . . . . . . . . . . . . . . . . . . . . . . . . . 50
5.06 Additional Costs in Respect of Letters of Credit. . . . . . . . 51
Section 6. Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
6.01 Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
6.02 Obligations Unconditional . . . . . . . . . . . . . . . . . . . 52
6.03 Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . . 52
6.04 Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . 53
6.05 Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
6.06 Continuing Guarantee. . . . . . . . . . . . . . . . . . . . . . 53
6.07 Instrument for the Payment of Money . . . . . . . . . . . . . . 53
6.08 Rights of Contribution. . . . . . . . . . . . . . . . . . . . . 53
6.09 General Limitation on Guarantee Obligations . . . . . . . . . . 54
Section 7. Conditions Precedent. . . . . . . . . . . . . . . . . . . . . . 54
7.01 Conditions to Effectiveness . . . . . . . . . . . . . . . . . . 54
7.02 Initial and Subsequent Extensions of Credit . . . . . . . . . . 58
Section 8. Representations and Warranties. . . . . . . . . . . . . . . . . 59
8.01 Corporate Existence . . . . . . . . . . . . . . . . . . . . . . 59
8.02 Financial Condition . . . . . . . . . . . . . . . . . . . . . . 59
8.03 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . 59
8.04 No Breach . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
8.05 Action. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
8.06 Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
8.07 Use of Credit . . . . . . . . . . . . . . . . . . . . . . . . . 60
8.08 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
8.09 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
8.10 Investment Company Act. . . . . . . . . . . . . . . . . . . . . 61
(ii)
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8.11 Public Utility Holding Company Act. . . . . . . . . . . . . . . 61
8.12 Material Agreements and Liens . . . . . . . . . . . . . . . . . 61
8.13 Environmental Matters . . . . . . . . . . . . . . . . . . . . . 62
8.14 Subsidiaries, Etc.. . . . . . . . . . . . . . . . . . . . . . . 64
8.15 True and Complete Disclosure. . . . . . . . . . . . . . . . . . 64
8.16 Title to Properties . . . . . . . . . . . . . . . . . . . . . . 65
8.17 Acquisition Documents . . . . . . . . . . . . . . . . . . . . . 65
Section 9. Covenants of the Obligors . . . . . . . . . . . . . . . . . . . 65
9.01 Financial Statements Etc. . . . . . . . . . . . . . . . . . . . 65
9.02 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . 68
9.03 Existence, Etc. . . . . . . . . . . . . . . . . . . . . . . . . 69
9.04 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
9.05 Prohibition of Fundamental Changes. . . . . . . . . . . . . . . 69
9.06 Limitation on Liens . . . . . . . . . . . . . . . . . . . . . . 71
9.07 Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . . 73
9.08 Investments . . . . . . . . . . . . . . . . . . . . . . . . . . 74
9.09 Dividend Payments . . . . . . . . . . . . . . . . . . . . . . . 75
9.10 Interest Coverage Ratio . . . . . . . . . . . . . . . . . . . . 76
9.11 Working Capital . . . . . . . . . . . . . . . . . . . . . . . . 76
9.12 Lines of Business . . . . . . . . . . . . . . . . . . . . . . . 77
9.13 Transactions with Affiliates. . . . . . . . . . . . . . . . . . 77
9.14 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . 77
9.15 Certain Obligations Respecting Subsidiaries . . . . . . . . . . 77
9.16 Additional Subsidiary Guarantors. . . . . . . . . . . . . . . 78
9.17 Modifications and Payments of Subordinated Indebtedness and
Production Payments Indebtedness . . . . . . . . . . . . . . . 78
9.18 Unrestricted Subsidiaries . . . . . . . . . . . . . . . . . . . 79
9.19 Title Opinions. . . . . . . . . . . . . . . . . . . . . . . . . 79
Section 10. Events of Default . . . . . . . . . . . . . . . . . . . . . . . 79
Section 11. The Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
11.01 Appointment, Powers and Immunities . . . . . . . . . . . . . . . 83
11.02 Reliance by Agent. . . . . . . . . . . . . . . . . . . . . . . . 83
11.03 Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
11.04 Rights as a Bank . . . . . . . . . . . . . . . . . . . . . . . . 84
11.05 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . 84
11.06 Non-Reliance on Agent and Other Banks. . . . . . . . . . . . . . 85
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11.07 Failure to Act . . . . . . . . . . . . . . . . . . . . . . . . . 85
11.08 Resignation or Removal of Agent. . . . . . . . . . . . . . . . . 85
11.09 Consents under Other Basic Documents . . . . . . . . . . . . . . 86
11.10 Collateral Sub-Agents. . . . . . . . . . . . . . . . . . . . . . 86
11.11 Co-Agents. . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Section 12. Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . . 87
12.01 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
12.02 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
12.03 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
12.04 Amendments, Etc. . . . . . . . . . . . . . . . . . . . . . . . . 88
12.05 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . 89
12.06 Assignments and Participations . . . . . . . . . . . . . . . . . 89
12.07 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . 91
12.08 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
12.09 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
12.10 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . 92
12.11 Governing Law; Submission to Jurisdiction. . . . . . . . . . . . 92
12.12 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . 92
12.13 Treatment of Certain Information . . . . . . . . . . . . . . . . 92
12.14 Intercreditor Agreement. . . . . . . . . . . . . . . . . . . . . 93
12.15 Acknowledgement of Priority of Indebtedness. . . . . . . . . . . 94
(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 - Form of Opinion of Counsel to
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)
THIRD AMENDED AND RESTATED CREDIT AGREEMENT dated as of February 3,
1998, 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 administrative 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 a Second Amended and Restated Credit Agreement dated as of
January 31, 1997 (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 $275,000,000 at any
one time outstanding to provide working capital, for other general corporate
purposes of the Company and each of its Subsidiaries and for the Acquisition
(as hereinafter defined). 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):
(vi)
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"ACQUISITION" shall mean the acquisition by the Company of certain
oil and gas properties from a private company in south Louisiana.
"ACQUISITION DOCUMENTS" shall mean the Purchase Agreement, the
Escrow Agreement dated as of January 6, 1998 by the Company, the counterparty
thereto and Whitney National Bank, and each other document executed pursuant
to the foregoing.
"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
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.
"ALLOCATED CANADIAN BORROWING BASE" shall mean, as of any date, an
amount in Dollars designated as such from time to time by the Company
pursuant to Section 2.11 hereof.
"ALLOCATED U.S. BORROWING BASE" shall mean an amount equal to the
Borrowing Base then in effect MINUS the Allocated Canadian Borrowing Base.
"AMENDMENT FEE LETTER" shall mean the fee letter agreement dated as
of January 26, 1998 between the Company and the Agent.
"ANSCHUTZ" shall mean The Anschutz Corporation, a Kansas
corporation.
"APPLICABLE COMMITMENT FEE RATE" shall mean for any period during
which the Usage Ratio is within the range specified under "Usage Ratio" in
the following schedule, the percentage per annum set forth opposite the range
in such schedule:
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RANGE OF APPLICABLE COMMITMENT
USAGE RATIO FEE RATE (BPS PER ANNUM)
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less than or equal to .330:1.00 30.0
greater than .330:1.00 but less than or equal
to 0.660:1.00 35.0
greater than .660:1.00 37.5
"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.
"APPLICABLE MARGIN" shall mean, with respect to each Type of Loan
for any period during which the Usage Ratio is within the range specified
under "Usage Ratio" in the following schedule, the percentage per annum set
forth opposite the range in such schedule, provided that the "Applicable
Margin" shall be increased or reduced, as applicable, on the date of the
borrowing of a Loan or the issuance of a Letter of Credit, or the repayment
of a Loan or expiration of a Letter of Credit, as the case may be, which
results in the Usage Ratio shifting from one range to another but that the
"Applicable Margin" for any Eurodollar Loan outstanding prior to such date
shall remain the same until the end of the Interest Period for such
Eurodollar Loan:
APPLICABLE MARGIN (BPS)
RANGE OF -----------------------
USAGE RATIO BASE RATE LOANS EURODOLLAR LOANS
----------- --------------- ----------------
less than or equal to .330:1.00 0.0 100.0
greater than .330:1.00 but less than
or equal to .660:1.00 25.0 125.0
greater than .660:1.00 50.0 150.0
"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
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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, the Security Documents, the
Intercreditor Agreement, the Canadian Guarantee and the Acquisition Documents.
"BORROWING BASE" has the meaning given to such term in Section
1.03(b) hereof.
"BORROWING BASE DEFICIENCY" has the meaning given to such term in
Section 2.10(a) hereof.
"BORROWING BASE REPORTS" shall mean collectively, (i) Reserve
Evaluation Reports, (ii) Canadian Forest Reserve Evaluation Reports and (iii)
Canadian Net Back Pool Reports and "BORROWING BASE REPORT" shall mean any
thereof.
"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 AGENT" shall mean The Chase Manhattan Bank of Canada, as
administrative agent under the Funding Credit Agreement; provided that if the
Canadian Lenders make loans directly to Canadian Forest Oil, the "Canadian
Agent" shall mean the Agent under the Credit Agreement pursuant to which such
loans are made.
"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; provided that if the Canadian
Lenders make loans directly to Canadian Forest Oil, the "Canadian Forest Oil
Credit Oil Agreement" shall mean the Credit Agreement pursuant to which such
loans are made as the same may be modified and supplemented and in effect
from time to time.
"CANADIAN FOREST RESERVE EVALUATION REPORT" shall mean the report
defined in the Funding Credit Agreement as the "Reserve Evaluation Report"
prepared for Canadian Forest Oil.
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"CANADIAN FOREST SENIOR SUBORDINATED DEBT" shall mean the
Indebtedness of Canadian Forest Oil evidenced by and in respect of the
Canadian Forest Senior Subordinated Notes issued pursuant to the Canadian
Forest Senior Subordinated Debt Documents.
"CANADIAN FOREST SENIOR SUBORDINATED DEBT DOCUMENTS" shall mean all
documents and agreements executed and delivered in connection with the
issuance of the Canadian Forest Senior Subordinated Notes, including the
Indenture dated as of September 29, 1997 (as amended by a First Supplemental
Indenture dated as of February 2, 1998) among the Company, as guarantor,
Canadian Forest Oil, as issuer, and State Street Bank and Trust Company, as
trustee, as the same shall, subject to Section 9.17 hereof, be modified and
supplemented and in effect from time to time.
"CANADIAN FOREST SENIOR SUBORDINATED NOTES" shall mean Canadian
Forest Oil's 8 3/4% Senior Subordinated Notes due 2007 in an aggregate
principal amount not to exceed $200,000,000.
"CANADIAN GUARANTEE" shall mean the Guarantee dated as of August
19, 1997 executed by the Company in favor of the Canadian Agent and the
Canadian Lenders party to the Funding Credit Agreement, as the same may be
modified and supplemented and in effect from time to time; provided that if
the Canadian Lenders make loans directly to Canadian Forest Oil, the
"Canadian Guarantee" shall mean the Guarantee pursuant to which the Company
guarantees such loans and other obligations of Canadian Forest Oil thereunder.
"CANADIAN LENDERS" shall have the meaning ascribed thereto in the
Intercreditor Agreement.
"CANADIAN LOAN DOCUMENTS" shall mean have the meaning ascribed
thereto in the Intercreditor Agreement.
"CANADIAN NET BACK POOL REPORT" shall mean the report defined in
the Funding Credit Agreement as the "Net Back Pool Report".
"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
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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 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
-7-
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 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.
"COMBINED COMMITMENTS" shall have the meaning ascribed thereto in
the Intercreditor Agreement.
"COMBINED MAJORITY LENDERS" shall have the meaning ascribed thereto
in the Intercreditor Agreement.
"COMBINED OBLIGATIONS" shall mean, at any time, the Loans
outstanding at such time hereunder PLUS the Letter of Credit Liabilities at
such time PLUS the Funding Credit Agreement Obligations at such time.
"COMBINED SUPERMAJORITY LENDERS" shall mean Banks and Canadian
Lenders having greater than 75% of the aggregate amount of the Combined
Commitments at such time.
"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
-8-
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 August 19, 2001.
"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.
"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(a) 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 (i) each May 1 and October 15 of
each year prior to the Commitment Termination Date and (ii) 45 days after
each other date, if any, on which a Borrowing Base Report is delivered to the
Agent as contemplated hereby.
"DETERMINATION PERIOD" shall mean (i) initially, the period
commencing on the date hereof and ending on the first Determination Date
thereafter and, (ii) each period commencing on a Determination Date and
ending on the day next preceding the next succeeding
-9-
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, (ii) any Unrestricted Properties and (iii) any capital stock of Saxon.
"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.
"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
-10-
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 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.
"EQUIVALENT AMOUNT" shall have the meaning ascribed thereto in the
Funding Credit Agreement.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time.
-11-
"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.
"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.
"EXISTING LOANS" shall mean the "Loans" under, and as defined in,
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
-12-
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.
"FOREST DEBENTURE" shall mean the Limited Recourse Demand Debenture
and Negative Pledge, dated as of April 1, 1997, of the Company in the
original principal amount of C$80,000,000, payable to Funding Co. and
assigned to The Chase Manhattan Bank of Canada, as administrative agent and
its successors and assigns, as the same shall be modified and supplemented
and in effect from time to time.
"FOREST GUARANTEE" shall mean the Limited Recourse Secured
Guarantee dated as of April 1, 1997 by the Company in favor of Funding Co.
and assigned to The Chase Manhattan Bank of Canada, as administrative agent
and its successors and assigns, as the same shall be modified and
supplemented and in effect from time to time.
"FOREST PLEDGED PROPERTIES" shall mean the property which is from
time to time the subject of the Lien created by the Forest Debenture.
"FOREST PURCHASE AGREEMENT" shall mean the Petroleum, Natural Gas
and General Rights Conveyance made effective as of April 1, 1997 between
Canadian Forest Oil, as seller, and the Company, as Purchaser.
"FUNDING CO." shall mean 611852 Saskatchewan Ltd., a corporation
organized under the laws of Saskatchewan.
"FUNDING CREDIT AGREEMENT" shall mean the Second Amended and
Restated Credit Agreement dated as of April 1, 1997 among Funding Co., the
Canadian Lenders and the Canadian Agent, as amended by Amendment No. 1 dated
as of August 19, 1997, Amendment No. 2 dated as of December 26, 1996,
Amendment No. 3 dated as of January 6, 1998 and Amendment No. 4 dated as of
January 30, 1998 and the Intercreditor Agreement, and as the same may be
further modified, supplemented, amended and/or restated from time to time;
provided that if the Canadian Lenders make loans directly to Canadian Forest
Oil, references to the "Funding Credit Agreement" shall be deemed to be
references to the Canadian Forest Oil Credit Agreement pursuant to which such
loans are made, as the same may be modified and supplemented and in effect
from time to time.
"FUNDING CREDIT AGREEMENT OBLIGATIONS" shall mean (i) the Loans
provided for in Section 2.01 of the Funding Credit Agreement, (ii) the
Swingline Loans provided for in Section 2.05 of the Funding Credit Agreement,
(iii) the Letter of Credit Liabilities under the Funding Credit Agreement and
(iv) the Bankers' Acceptance Liabilities under the Funding Credit
-13-
Agreement.
"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 Hydrocarbon 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 Borrowing Base
Report, and less (without duplication) all amounts projected to be applied to
the 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.
-14-
"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.
"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 XxXxxxxx & Associates (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.
"INTERCREDITOR AGREEMENT" shall mean the Intercreditor Agreement
dated as of August 19, 1997 between the Agent and the Canadian Agent as the
same may be modified, supplemented, amended and/or restated and in effect
from time to time.
"INTEREST COVERAGE RATIO" shall mean, for any period, the ratio of
(a) Cash Flow for such period to (b) Interest Expense for such period.
-15-
"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-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
-16
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.
"LENDER GROUP" shall have the meaning ascribed thereto in the
Intercreditor Agreement.
"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
-17-
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.
"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 Subsidiaries taken as a
whole, (b) the ability of any Obligor, Funding Co. or Canadian Forest Oil to
perform their respective obligations under any of the Basic Documents or the
Canadian Loan Documents to which it is a party, (c) the validity or
enforceability of any of the Basic Documents or the Canadian Loan Documents,
(d) the right and remedies of any member of the Lender Group, the Canadian
Agent and the Agent under any of the Basic Documents or the Canadian Loan
Documents, as the case may be, or (e) the timely payment of the principal of
or interest on the Loans, Reimbursement Obligations or Funding Credit
Agreement 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.
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"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 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 incurrence of Subordinated Debt, the aggregate
amount of all cash received by the Company and its Restricted Subsidiaries
in respect of such incurrence 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
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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 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 January
31, 1997 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.
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"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.
"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.
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"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.
"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 Borrowing Base 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 Borrowing Base Report or other internal
reserve reports prepared by the Company shall be determinative.
"PURCHASE AGREEMENT" shall mean the Purchase and Sale Agreement
dated January 7, 1998 between the Company and the seller party thereto.
"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.
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"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 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 Borrowing
Base 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 Combined Majority Lenders
(including as to assumptions) and (b) is prepared on the basis of findings
and material data as of a date not more than 90 days prior to the effective
date of such report, (i) identifies the Hydrocarbon Properties covered
thereby, (ii) 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
-23-
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.
"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.
"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.
"SAXON" shall mean Saxon Petroleum Inc., an Alberta corporation.
"SECURITY DOCUMENTS" shall mean, collectively, the Security
Agreement, the Pledge Agreement, the 3189503 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 111/4% Senior Subordinated Notes of the Company due
September 1, 2003 issued pursuant to the Senior Subordinated Debt Documents.
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"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 State Street Bank and Trust Company as
successor to 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 DEBT" shall mean, as to any Person, any Indebtedness
at any time of such Person (a) for which such Person is directly and
primarily liable and (b) which is subordinated to the obligations of such
Person to pay principal of and interest on the Loans, Reimbursement
Obligations and Notes hereunder, or any obligation to make payment, or
provide cover, in respect of the Canadian Forest Oil Credit Agreement, 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, but excluding the Senior
Subordinated Debt and the Canadian Forest Senior Subordinated Debt.
"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 subordinated 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:
-25-
(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 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.
"3189503 PLEDGE AGREEMENT" shall mean the Pledge Agreement dated as
of August 19, 1997 between 3189503 and the Agent, as the same shall be
modified and supplemented and in effect from time to time.
"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.
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"USAGE RATIO" shall mean as of any date the ratio of (a) the
aggregate principal amount of all Loans and Letter of Credit Liabilities
outstanding on such date PLUS the aggregate principal amount of the Funding
Credit Agreement Obligations pursuant to the Funding Credit Agreement
outstanding on such date to (b) the Borrowing Base on such date.
"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) 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, 1996 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, 1996
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
-27-
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) BORROWING BASE REPORTS. The Company and Canadian Forest Oil
have furnished to the Agent and the Lenders updated preliminary Borrowing
Base Reports dated January 1, 1998. On or before each Report Delivery Date,
the Company and Canadian Forest Oil shall furnish to the Agent and the
Lenders updated Borrowing Base Reports.
(b) BORROWING BASE. During the period commencing on the date
hereof and ending on such date as the first redetermination of Borrowing Base
shall become effective as provided below in this Section 1.03(b), the
Borrowing Base shall be $260,000,000 (subject to any adjustments and
redeterminations provided for by Sections 1.03(c), 1.03(d), 1.03(e) and 2.10
hereof) which amount has been determined on the basis of the Borrowing Base
Reports 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 Borrowing Base Reports as are acceptable to
the Combined Supermajority Lenders). As promptly as reasonably practicable
after its receipt of the Borrowing Base Reports furnished to it pursuant to
the second sentence of Section 1.03(a) hereof, the Agent (in consultation
with the Combined Supermajority Lenders) shall endeavor to redetermine the
Borrowing Base on the basis of such Borrowing Base Reports in the manner
provided in this clause (b), notify the Lender Group of such redetermination
and, if such redetermination is approved by the Combined Supermajority
Lenders, notify the Company, Funding Co. and Canadian Forest Oil 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, Funding Co. and Canadian Forest Oil) 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, reductions pursuant to Section 2.10(b), (c) and (d)
hereof or additions pursuant to Section 2.10(a) hereof). The determination
by the Agent (and as approved by the Combined Supermajority Lenders), 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 as set forth in the applicable Borrowing Base Report
for such Determination Period, subject, however, to such adjustments as the
Agent, with the concurrence of the Combined Supermajority Lenders, may make
in its and their sole discretion to the rates, factors, values, estimates,
assumptions and computations set forth in such
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Borrowing Base 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
Combined Supermajority Lenders may deem appropriate.
As used herein, "BORROWING BASE" means the amount specified in the
first sentence of this Section 1.03(b) as determined from time to time as
provided in the second sentence of this Section 1.03(b) and subject to
adjustments, redeterminations and principles provided in Sections 1.03(c),
1.03(d), 1.03(e) and 2.10 hereof.
(c) MATERIAL CHANGE. The Company agrees to notify the Agent
promptly of any material change of which the Company, Funding Co., Canadian
Forest Oil or any of their respective 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
Combined Supermajority Lenders,) 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
Majority Lenders under, and as defined in, the Funding Credit Agreement, or
the Company at any time (provided that each of the Combined Supermajority
Lenders and the Company may each only make one such request in any calendar
year) the Agent shall, as promptly as reasonably practicable after the
receipt of such request, endeavor to redetermine (in consultation with the
Combined Supermajority Lenders) the Borrowing Base as then in effect on the
basis of the then most recent applicable Borrowing Base Reports (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 Combined Supermajority Lenders, 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 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 or Liens
permitted by Section 9.06 hereof, that the Combined Supermajority Lenders may
deem appropriate and as otherwise 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 or is a Subsidiary Borrower or otherwise liable as a surety under
the Canadian Forest Oil Credit Agreement. As promptly as reasonably
practical following its redetermination of the Borrowing Base, the Agent
shall notify the Lender Group of such redetermination and, if such
redetermination is approved by the Combined Supermajority Lenders, notify the
Company, the Funding Co. and Canadian Forest Oil of the Borrowing Base as so
redetermined and such redetermined Borrowing Base shall become effective
immediately upon delivery to the Company, Funding Co. and Canadian Forest Oil
of such notice of redetermination.
(e) DETERMINATIONS, ETC. All determinations and redeterminations
and
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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 Combined Supermajority Lenders 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 Borrowing Base 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 Lender Group (but after giving effect to changes in facts and
circumstances 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 Subsidiaries that the Combined Majority
Lenders 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 or is a Subsidiary Borrower or
otherwise liable as a surety under the Canadian Forest Oil Credit 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 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 9.18 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
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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 then effective
Allocated U.S. Borrowing Base determined pursuant to Section 2.11 hereof and
to the immediately preceding Borrowing Base Reports; 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,
and (y) the then effective Allocated U.S. Borrowing Base determined pursuant
to Section 2.11 hereof and the immediately preceding Borrowing Base Reports
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 $275,000,000.
(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 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 then
effective Allocated U.S. Borrowing Base.
(d) On the date this Agreement becomes effective:
(i) The Company shall pay all outstanding principal, interest
and other amounts owing in respect of the Existing Loans 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;
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(ii) 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
(iii) the Original Fee Letter, the Original Credit Agreement
and the commitments thereunder shall be superseded by the
Amendment Fee Letter, 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 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 Usage Ratio on such date, of the Company and its
Subsidiaries after giving effect to such borrowing and shall show, in reasonable
detail, the calculations used to derive such Usage 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 then effective Allocated U.S.
Borrowing Base as determined pursuant to Section 2.11 hereof and the immediately
preceding Borrowing Base Reports, (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).
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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 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
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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 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
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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 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
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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.
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 for each day at a rate per annum equal to the
Applicable Commitment Fee Rate TIMES such Bank's PRO RATA share (based on its
respective Commitment) of the Allocated U.S. Borrowing Base LESS the aggregate
principal amount of all Loans and Letter of Credit Liabilities outstanding on
such day for the period from and including the date hereof to but not including
the earlier of the date such Bank's Commitment is terminated and the Commitment
Termination Date. Accrued Commitment fees shall be payable on each Quarterly
Date and on
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the earlier of the date the Commitments are terminated and the Commitment
Termination Date.
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
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and payable hereunder); and (b) Eurodollar Loans may be prepaid or Converted
only on the last 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, Funding Co.
and Canadian Forest Oil (in a "DEFICIENCY NOTICE") any time the Borrowing Base
as then in effect is less than the sum of (i) the aggregate principal amount of
the Loans and Letter of Credit Liabilities outstanding at such time and (ii) the
aggregate principal amount of the Funding Credit Agreement Obligations
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 and Funding Co.'s
(or, if the Canadian Lenders are making loans directly to Canadian Forest Oil,
of Canadian Forest Oil'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 or shall cause Funding Co. (or, if the Canadian
Lenders are making loans directly to Canadian Forest Oil, Canadian Forest Oil)
to (within 45 days, 90 days and 180 days after the date of the Deficiency
Notice) prepay, in accordance with Section 3.02 of the Intercreditor Agreement
or, provide cover in accordance with Section 2.10(f) of this Agreement, 25
percent, 25 percent and 50 percent, respectively, of the aggregate principal
amount of all Loans and Letter of Credit Liabilities outstanding at such time
and the aggregate principal amount of the Funding Credit Agreement Obligations
outstanding at such time, in an amount sufficient to eliminate such Borrowing
Base Deficiency.
(b) CASUALTY EVENTS. Upon the date (the "INSURANCE DATE") 30 days
following the receipt by the Company or any of its Restricted Subsidiaries
incorporated in the United States 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 (f) below), and if such Casualty
Event shall result in the receipt by the Company or any of its Restricted
Subsidiaries incorporated in the United States of Net Available Proceeds in
excess of $2,500,000, the Combined Supermajority Lenders, in their sole
discretion based on their review of such Casualty Event, may reduce the
Borrowing Base in an aggregate amount not in excess of 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 Combined Supermajority Lenders, such prepayment and
reduction to be effected in each case in the manner and to the extent specified
in clause (e) of this Section 2.10. Nothing in this clause (b) shall be deemed
to limit any obligation
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of the Company and any of its Restricted Subsidiaries incorporated in the
United States 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 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 Combined Majority Lenders 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 Lender Group 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, if the Net Available Proceeds of such
Disposition together with the aggregate of all other Dispositions during the
current Determination Period is in excess of $5,000,000, the Combined
Supermajority Lenders, based on their review of the statement referred to in
this Section 2.10(c) may reduce the Borrowing Base in an aggregate amount
determined in their sole discretion. If a Borrowing Base Deficiency results
from such reduction, then the Company shall, notwithstanding Section 2.10(a) to
the contrary, immediately prepay the Loans (and/or provide cover for the Letter
of Credit Liabilities) with the Net Available Proceeds to cure such deficiency.
Notwithstanding the foregoing, 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(f) 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) SUBORDINATED DEBT. Without limiting the obligation of the
Obligors to obtain the approval of the Majority Banks to the extent required by
Section 9.07 hereof, upon the incurrence of any Subordinated Debt by the
Borrower or Canadian Forest Oil, the Borrowing Base may be reduced in an
aggregate amount determined in their sole discretion by the Combined
Supermajority Lenders. If a Borrowing Base Deficiency results from such
reduction, then the Company shall, notwithstanding Section 2.10(a) to the
contrary, immediately prepay the Loans (and/or provide cover for the Letter of
Credit Liabilities) to cure the deficiency.
(e) 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 then effective Allocated U.S. Borrowing Base determined
pursuant to Section 2.11 hereof and the immediately preceding Borrowing Base
Reports, 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 (f) below, in an
aggregate amount equal to such excess).
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(f) 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 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.
2.11 ALLOCATION OF BORROWING BASE.
(a) The Borrowing Base may be allocated between the Company under
this Agreement and Funding Co. (or, if the Canadian Lenders are making loans
directly to Canadian Forest Oil, Canadian Forest Oil) under the Funding Credit
Agreement. The Allocated U.S. Borrowing Base in effect from time to time shall
represent the maximum amount of credit in the form of Loans and Letters of
Credit (subject to the aggregate Commitments and the other provisions of this
Agreement) that the Banks will extend to the Company at any one time prior to
the Commitment Termination Date. The Allocated Canadian Borrowing Base in
effect from time to time shall represent the maximum amount of credit in the
form of Loans, Letters of Credit and Bankers' Acceptances (subject to the
aggregate Commitments and the other provisions of the Funding Credit Agreement)
that the Canadian Lenders will extend to Funding Co. (or, if the Canadian
Lenders are making loans directly to Canadian Forest Oil, Canadian Forest Oil)
at any one time prior to the "Commitment Termination Date" specified in the
Funding Credit Agreement. On the date hereof, the Allocated Canadian Borrowing
Base shall be $10,000,000, resulting in an initial Allocated U.S. Borrowing Base
of $250,000,000.
(b) Funding Co. (or, if the Canadian Lenders are making loans
directly to Canadian Forest Oil, Canadian Forest Oil) at any time shall have the
right to request in writing to the Agent, Canadian Agent and the Lender Group,
in their sole discretion, an increase in the Allocated Canadian Borrowing Base
and a corresponding decrease in the Allocated U.S. Borrowing Base; provided that
any such increase shall require the approval of all of the Canadian Lenders and
at no time shall the Allocated Canadian Borrowing Base exceed $25,000,000; and
provided further that Funding Co. (or, if the Canadian Lenders are making loans
directly to Canadian Forest Oil, Canadian Forest Oil) may not make a request for
an increase in the Allocated Canadian Borrowing Base more than four (4) times
during any twelve (12) month period. Within ten (10) Business Days of the
receipt by the Canadian Lenders of such request, the Canadian Lenders shall give
written notice to the Company and the Agent of their approval or disapproval of
such increase. The revised Allocated U.S. Borrowing Base and Allocated Canadian
Borrowing Base shall become effective upon the distribution by the Agent to the
Company, the Canadian Agent and the Lender Group of written notice thereof which
shall occur not later than three (3) Business Days after its receipt of the
notice of increase.
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(c) The Company at any time shall have the right to request in
writing to the Agent, the Canadian Agent and the Banks that such Banks, in their
sole discretion, permit the Company to increase the Allocated U.S. Borrowing
Base and decrease the Allocated Canadian Borrowing Base; provided that any such
change shall require the approval of all of such Banks and at no time shall the
Allocated U.S. Borrowing Base exceed $275,000,000; and provided further that the
Company may not make a request for an increase in the Allocated U.S. Borrowing
Base more than four (4) times during any twelve (12) month period. Within ten
(10) Business Days of the receipt by such Banks of such request, such Banks
shall give written notice to the Company and the Agent of their approval or
disapproval of such change. If such increase is approved, each such Bank shall
have its share of the Allocated U.S. Borrowing Base increased by an amount in
proportion to its Commitment Percentage. The revised Allocated U.S. Borrowing
Base and Allocated Canadian Borrowing Base shall become effective upon the
distribution by the Agent to the Company, the Canadian Agent and the Lender
Group of written notice thereof which shall occur not later than three (3)
Business Days after its receipt of the notice of increase.
(d) For purposes of the Funding Credit Agreement, the Allocated
Canadian Borrowing Base shall be the Equivalent Amount. The Equivalent Amount
shall be calculated (i) on the date a reallocation pursuant to this Section 2.11
between the Allocated U.S. Borrowing Base and the Allocated Canadian Borrowing
Base occurs, (ii) on each Determination Date, or (iii) in any event, at ninety
(90) day intervals following the most recent Determination Date.
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(g) 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
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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.
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).
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(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 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
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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 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
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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 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.
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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.
(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
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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.
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.
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(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 (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
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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 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
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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).
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
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(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.
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.
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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 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;
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(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.
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
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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.
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
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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 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 Third
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 the date of the resolutions specified in the following clause
(B), (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 the date of their certification pursuant to the foregoing clause
(i), and (D) as to the incumbency and specimen signature of each
officer of such Obligor
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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
(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) ACQUISITION. Evidence that the Acquisition shall have been (or
shall be simultaneously) consummated in accordance with the Acquisition
Documents (except for any modifications, supplements or waivers thereof, or
written consents or determinations made by the parties thereto, that shall
be satisfactory to each Lender), and the Agent shall have received a
certificate of a senior officer of the Company to such effect and to the
effect that attached thereto are true and complete copies of the
Acquisition Documents and all other documents delivered in connection with
the closing of the Acquisition pursuant to the Acquisition Documents
(including, without limitation, certified copies of all authorizations,
approvals or consents of, and filings or registrations with all
governmental or regulatory authorities and agencies and securities
exchanges necessary for the Acquisition. In addition, the Agent shall have
received copies of the legal opinions and certificates (including, without
limitation, those delivered pursuant to Sections 9.02(e) and (g) of the
Purchase Agreement) delivered to the Company pursuant to the Acquisition
Documents in connection with the Acquisition, together with a letter from
each Person delivering such opinion or certificate (or authorization within
such opinion or certificate) authorizing reliance thereon by the Agent and
the Banks.
(g) REPORT OF INDEPENDENT PETROLEUM ENGINEER. A preliminary report
of the
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Independent Petroleum Engineer dated as of January 1, 1998 setting forth
the Proved Reserves at such date for (x) approximately 80% of the
Properties subject to the Acquisition and (y) all of the existing
Properties of the Company.
(h) MORTGAGES. The Mortgage Amendments covering the Hydrocarbon
Properties of the Company and its Restricted Subsidiaries currently subject
to the Mortgages located in Louisiana, Oklahoma, Texas 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).
(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
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(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) REPORT OF THE COMPANY. A report of the Company dated as of
January 1, 1998 setting forth the Proved Reserves at such date for all the
Hydrocarbon Properties of the Company and its Restricted Subsidiaries,
including the Properties which are the subject of the Acquisition.
(l) LETTER AGREEMENT. The Company shall have executed a letter with
respect to the collapse of the Funding Credit Agreement with and into the
Canadian Forest Oil Credit Agreement).
(m) ENVIRONMENTAL. Evidence that each of the Company and its
Restricted Subsidiaries is in compliance with all applicable Environmental
Laws and that no Environmental Claims are pending against any of the
Company or its Restricted Subsidiary that either individually or in the
aggregate could have a Material Adverse Effect.
(n) PAYMENT. Evidence of payment of all amounts specified in
Section 2.01(d)(i) hereof.
(o) OTHER DOCUMENTS. Such other documents as the Agent or any Bank
or special New York counsel to Chase may reasonably request.
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).
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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); (iii) no event or events with respect to the Company or any of its
Subsidiaries shall have occurred which alone or in the aggregate could have a
Material Adverse Effect; and (iv) 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 $150,000,000 (as such amount may be reduced by the
Net Available Proceeds of each Disposition), 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
"Designated Senior Debt Indebtedness" (as defined in the Canadian Forest Senior
Subordinated Debt Documents) for the purposes of the Canadian Forest 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 Canadian Forest Senior Subordinated
Debt Documents) by the Company and its Subsidiaries under the Canadian Forest
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).
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.
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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, 1996 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, 1996 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 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
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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 (i)
filings and recordings in respect of the Liens created pursuant to the Security
Documents and (ii) the authorizations, approvals, consents, filings and
registrations contemplated by the Acquisition Documents (each of which shall
have been made or obtained on or prior to the closing of the Acquisition to the
extent required by the Acquisition Documents to be obtained before such date).
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 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. The Company and each of its
Subsidiaries are
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not, or are exempt from regulation as, 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 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
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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
(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,
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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.
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.
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(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 and Canadian Forest Oil, is, on the date hereof,
subject to any indenture, agreement, instrument or other arrangement of the type
described in the last sentence of Section 9.15 hereof other than, in the case of
Canadian Forest Oil, as provided in the Canadian Forest Senior Subordinated Debt
Documents.
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, schedule,
disclosure letter or other writing furnished to the Banks for use in connection
with the transactions contemplated hereby or thereby.
8.16 TITLE TO PROPERTIES. The Company and each of its Subsidiaries
owns its Properties free and clear of all Liens (other than Liens described in
Section 9.06 hereof).
8.17 ACQUISITION DOCUMENTS. The Company has heretofore delivered to
the Agent a true and complete copy of the Acquisition Documents (including all
modifications or supplements to each thereof) and each of such Acquisition
Documents has been duly executed and delivered by each party thereto and is in
full force and effect. After the consummation of the Acquisition, the Company
and its Subsidiaries will have good title to all of the assets purported to be
transferred to them pursuant to the Acquisition Documents, free and clear of all
Liens (other than Liens described in Section 9.06 hereof). To the best of the
knowledge of the Obligors, each of the representations and warranties of the
"Seller" (as defined in the Purchase Agreement) in the Purchase Agreement is
true and correct on the date hereof. The Company has heretofore delivered to
the Agent notice of (i) any Title Defects (as defined in the Purchase
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Agreement) in an aggregate amount in excess of $1,000,000 and (ii) any
Material Adverse Environmental Conditions (as defined in the Purchase
Agreement) in an aggregate amount in excess of $1,000,000.
Section 9. COVENANTS OF THE OBLIGORS. Each Obligor covenants and
agrees with the Lender Group 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
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financial condition and results of operations of the Company and its
Consolidated 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);
(iii) the institution by PBGC of proceedings under Section 4042 of
ERISA for
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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, the Borrowing Base
Reports;
(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; and
(i) 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.
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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;
(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 and
maintain, develop and operate its Hydrocarbon Properties to their economic
limit in accordance with prudent industry standards;
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(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 and the Acquisition. 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 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,
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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;
(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; and
(d) the Company or any of its Restricted Subsidiaries may sell or
otherwise dispose of its shares of common stock in Saxon.
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 and the Canadian
Loan Documents;
(b) Liens created pursuant to the Forest Debenture or the Forest
Guarantee;
(c) 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 Indebtedness to be repaid with the proceeds
of such Loans, if any, indicated on said Schedule I);
(d) Liens imposed by any governmental authority for taxes,
assessments, charges
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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;
(e) 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);
(f) pledges or deposits under worker's compensation, unemployment
insurance and other social security or similar legislation;
(g) 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;
(h) 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;
(i) 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;
(j) 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 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
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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;
(k) 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 Hydrocarbon
Property shall require the prior written consent of the Majority Banks;
(l) 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;
(m) 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 Hydrocarbon Properties;
(n) 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
Hydrocarbon Properties acquired after the date hereof that are not subject
to any Lien prior to the Lien of the Mortgage; and
(o) 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 or to the
Canadian Agent and the Canadian Lenders under the Canadian Guarantee;
(ii) Indebtedness outstanding on the date hereof and listed in
Part A of Schedule I hereto;
(iii) Subordinated Indebtedness; provided that the aggregate
principal amount of
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the Senior Subordinated Debt outstanding shall not exceed $11,000,000;
(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(k) 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;
(vii) the Canadian Forest Senior Subordinated Debt and the Guarantee
thereof as contemplated in the Canadian Forest Senior Subordinated Debt
Documents; and
(viii) 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 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
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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;
(h) undivided fractional interests in hydrocarbon reserves; and
(i) investments in shares of common stock of Saxon, subject to
Section 9.05 hereof.
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
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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 consecutive fiscal quarters
(treated for this purpose as a single accounting period) to be less than 2.0:1.0
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
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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 Combined Commitments (but
only to the extent such unused Combined Commitments could then be utilized as
provided in Section 7.02 hereof and Section 6.02 of the Funding Credit
Agreement), (ii) excluded from current liabilities all Indebtedness hereunder
PLUS all Indebtedness under, and as defined in, the Funding Credit Agreement
PLUS, without duplication, all Indebtedness under, and as defined in, the
Canadian Forest Oil Credit Agreement, (iii) excluded from current liabilities
all Production Payments and (iv) excluded from current liabilities the
current portion of any gas balancing liabilities hereunder and under the
Funding Credit Agreement.
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 and for the Acquisition (in each case, 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 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
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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 Indenture included in the Canadian Forest Senior Subordinated
Debt Documents and the Guarantee granted by Forest in relation thereto each
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 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
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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; (ii) refinance the Canadian
Forest Senior Subordinated Debt provided that (v) the principal amount of the
Indebtedness issued in exchange for or the proceeds of which are used to
repay, refund, refinance or discharge or otherwise retire such Canadian
Forest Senior Subordinated Debt does exceed the principal amount of such
Canadian Forest Senior Subordinated Debt being refinanced; (w) the
subordination for such Indebtedness remains 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; (iii) apply amounts that would be available for the Dividend
Payments pursuant to Section 9.09 hereof for the prepayment, redemption or
retirement of Subordinated Indebtedness or Production Payments and (iv)
redeem any outstanding Senior Subordinated Debt provided such redemption does
not exceed $11,000,000 in the aggregate.
9.18 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;
(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.
9.19 TITLE OPINIONS. Not later than 60 days after the date hereof,
the Company
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shall deliver to the Agent title opinions or other evidence, in each case in
form and substance reasonably satisfactory to the Agent, of its ownership of
the Properties that are the subject of the Acquisition.
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
(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 or 9.17 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
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(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 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
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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) Any Event of Default shall occur under the Funding Credit
Agreement; or
(l) A Change of Control; or
(m) 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 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
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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.
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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 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
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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 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
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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 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
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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.
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.
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11.11 CO-AGENTS. If at any time the Banks shall appoint more than
one agent under this Agreement or the other Basic Documents all references to
"Agent" in this Section 11 shall be deemed to be a reference to "any Agent".
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;
(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
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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 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 Combined Supermajority Lenders 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
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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 Issuing Bank
(which consent, in the case of the Company will 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 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 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
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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, (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.
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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 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
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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 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
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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
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.
12.14 INTERCREDITOR AGREEMENT. (a) Reference is hereby made to
the Intercreditor Agreement, which provides for certain matters relating to
this Agreement and the Funding Credit Agreement. To the extent of any
conflict between the terms of this Agreement and the terms of the
Intercreditor Agreement, the Intercreditor Agreement shall control. Each
Bank hereby authorizes the Agent to execute and deliver the Intercreditor
Agreement on its behalf and the execution and delivery by the Agent of the
Intercreditor Agreement on behalf of the Banks is hereby ratified and
confirmed by each of the Banks. Any Bank that becomes a party to this
Agreement after the date hereof agrees to be bound by the terms and
provisions of the Intercreditor Agreement.
(b) The Company acknowledges that certain financial institutions
including certain of the Banks are providing financing to Funding Co. (or, if
the Canadian Lenders are making loans directly to Canadian Forest Oil,
Canadian Forest Oil). Subject to Section 12.13 hereof, the Company consents
to the disclosure of information provided by the Company to the Banks to such
other financial institutions. The Company also acknowledges that the Banks
may enter into participation arrangements and payment sharing understandings
with such financial institutions and consents to such arrangements and
understandings. To the extent any such arrangements or undertakings give
rise to any liability for any withholding tax payments in connection with any
payments made by the Funding Co., (or, if the Canadian Lenders are making
loans directly to Canadian Forest Oil, Canadian Forest Oil) the Company or
any other Obligor under either this Agreement or the Funding Credit
Agreement, then (notwithstanding any provisions to the contrary set forth in
this Agreement or the Funding Credit Agreement), the Company shall indemnify
each of the applicable members of the Lender Group and shall hold each of the
applicable members of the Lender Group harmless from and against any such
liability; PROVIDED, HOWEVER, that each member of the Lender Group (if so
requested by the Company under this Agreement or Funding Co. (or, if the
Canadian Lenders are making loans
-94-
directly to Canadian Forest Oil, Canadian Forest Oil) under the Funding
Credit Agreement) will use good faith efforts to accommodate any reasonable
request by the Company or Funding Co. in order to avoid the need for, or
reduce the amount of, such compensation so long as the request will not, in
the sole opinion of the applicable member of the Lender Group, be
disadvantageous to such member of the Lender Group.
12.15 ACKNOWLEDGEMENT OF PRIORITY OF INDEBTEDNESS. The Company
represents and warrants to the Banks and the Agent that the Indebtedness
hereunder and under the other Basic Documents is (a) "Senior Indebtedness of
the Company" and "Senior Indebtedness of a Subsidiary Guarantor", as
applicable, for the purposes of the Indenture dated as of September 8, 1993
between the Company and State Street Bank and Trust Company (as successor to
Shawmut Bank Connecticut, National Association), as supplemented and (b)
"Designated Senior Indebtedness" for the purposes of the Indenture dated as
of September 29, 1997 between Canadian Forest Oil and State Street Bank and
Trust Company, as trustee, as both shall, subject to Section 9.17 hereof, be
modified and supplemented and in effect from time to time.
-95-
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. Xxxxxxxxx
-----------------------------------
Title:
Address for Notices:
0000 Xxxxxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx Xxxxxxxxx
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
-96-
BANKS
Commitment: THE CHASE MANHATTAN BANK
$55,000,000
By /s/ Xxxx Xx Xxxxxxxx
-----------------------------------
Title: Vice President
-97-
Commitment: CHRSTIANIA BANK OG KREDITKASSE
$40,000,000
By /s/ Xxxxx X. Xxxxx
-----------------------------------
Title: First Vice President
By /s/ Xxxxxxx X. Xxxxxxxx
-----------------------------------
Title: Vice President
-98-
Commitment: SOCIETE GENERALE
SOUTHWEST AGENCY
$35,000,000
By /s/ Xxxxxxx X. Xxxxxx
-----------------------------------
Title: Vice President
-99-
Commitment: HIBERNIA NATIONAL BANK
$30,000,000
By /s/ Xxxxxxx XxXxxx
-----------------------------------
Title: Vice President
-100-
Commitment: DEN NORSKE BANK ASA
$25,000,000
By /s/ Morten Sjornsen
-----------------------------------
Title: Senior Vice President
By /s/ J. Xxxxxx Xxxxxx
-----------------------------------
Title: Vice President
-101-
Commitment: TORONTO DOMINION (TEXAS), INC.
$25,000,000
By /s/ Xxxxxx X. Xxxxxx
-----------------------------------
Title: Vice President
-102-
Commitment: ROYAL BANK OF CANADA
$20,000,000
By /s/ Xxx X. Xxxxxxxxxx
-----------------------------------
Title: Manager
-103-
Commitment: BANQUE PARIBAS
$15,000,000
By /s/ Xxxxxx X. Xxxxxxxx
-----------------------------------
Title: Managing Director
By /s/ Xxxxx X. Xxxxxx
-----------------------------------
Title: Director
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Commitment: BANK OF MONTREAL
$15,000,000
By /s/ Xxxxxxx X. Xxxxxx
----------------------------------------
Xxxxxxx X. Xxxxxx
Title: Director of U.S. Corporate Banking
-105-
Commitment: CREDIT LYONNAIS NEW YORK BRANCH
$15,000,000
By /s/ Pascal Poupelle
-----------------------------------
Pascal Poupelle
Title: Executive Vice President
-106-
THE CHASE MANHATTAN BANK,
as Agent
By /s/ Xxxx Xx Xxxxxxxx
-----------------------------------
Xxxx Xx Xxxxxxxx
Title: Vice President
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
with a copy to:
The Chase Manhattan Bank
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xx Xxxxxxxx/Xxxxx Xxxxxxxxx
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
(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
FOREST OIL CORPORATION
BDS - LOADING LLOG BUDGETS
RFS #841
March 4, 1998
NEW SCREEN OPTIONS
Two new options have been added to the Yearly Budget Detail Menu. These
options will be used to replace some existing options to handle loading of
LLOG budgets as defined by accounting. These options are explained below, and
can be used in plce of existing options.
Option 61 - LLOG-Net Calcs & Shared Properties.
This option was initial added to replace budget options 5 (Apply
Overhead, Ins, & Alloc) & 6 (Net Calcs & Shared Properties). In the basic
Budget processing, these options perform the following functions:
- Option 5 - Apply Overhead, Ins, & Alloc
- COPY NON-ZERO RECORDS FROM THE BUDGET WORK FILE (BDWKPF) INTO THE
BUDGET ALLOCATION WORK FILE (BDWKPFB)
- Calculate Overhead and insurance (Based on well counts)
- Perform the Facility Allocations
- Option 6 - Net Calcs & Shared Properties
- CALCULATES AND POPULATES NET AMOUNTS, AND LOADS INFORMATION INTO
THE SHARED PROPERTIES.
The new option 61 now performs the above options which are italicized and
underlined. This options can be run in place of option 5 & 6, and is
totally rerunable.
NOTE: however, it now appears that this option will not be needed since
the decision to load overhead has been made.
FOREST OIL CORPORATION
BDS - LOADING LLOG BUDGETS
RFS #841
March 4, 1998
Option 61 - LLOG-Copy O/H & Create Well Cnts.
This option was added to replace budget options 4 (Copy Production Files
to Budget). In the basic Budget processing, this option performed the
following functions:
- Copy the Facility Allocation file(s) from production into a budget area
to be used for budgeting.
- Copy the well count file from production into a budget area, and
create 12 month's worth of well counts.
- CREATE AN OVERHEAD RATE FILE FROM PRODUCTION INTO A BUDGET AREA, AND
CREATE 12 MONTH'S WORTH OF DATA.
The new option 62 now performs the above option which is italicized and
underlined. In addition to leading the overhead rate file, a program was
written to load well counts based on the LLOG Budget work file which was
loaded into BDWKPF.
This option can be run in place of option 4, and is totally rerunable.
However, just as in option 4, if this option is re-run, and you have
made changes to the files in the budget area, these changes will be lost.
FOREST OIL CORPORATION
BDS - LOADING LLOG BUDGETS
BFS #841
March 4, 1998
BDSC1027 - Summary By Location menu Program
This program Provides two options:
- Update G&A Summary By Location Report File (1)
- Re-run G&A Summary By Location Report (21)
BDSR1028 - New Report Program
This program will read the above summarized file, and generate the G&A
Summary Report by location.
This report can be generated either in whole dollars or thousands of
dollars. The whole dollar report is printed on legal paper, and the
thousands report is printed on standard paper. The print files used to
print these reports are BDP1028A and BDP1028B.
BDSR1029 - Maintain Summary file
In order to provide flexibility to include top side entries in this
report, this program is provides the user, the ability to maintain the
dollars on this file.
BDSC1000 - Budget Menu
- Add new option (52) to access the G&A Summary Menu.
- There was not enough space on the current menu to add the new functions
to re-generate the new G&A Summary by location report, and to maintain
the G&A Summary file. This menu was modified to transfer to a new menu.
(Call BDSC1027) which contains two new functions
- Update G&A Summary by Location File (1-BDSR1029)
- Re-run G&A Summary by Location Report (21-BDSC1022)
BDSC1020 - Submit G&A Responsibility Report
This program will be changed to execute the new programs which will create
the new G&A Budget Summary File, and new report.
- BDSR1027 - Create Summary Work File
- BDSR1028 - Product G&A Summary By location report in whole dollars.
BDSC1022 & BDSD1022 - Re-run G&A Summary by Location Report -
Select and submit (BDSC1028)
FOREST OIL CORPORATION
BDS - LOADING LLOG BUDGETS
BFS #841
March 4, 1998
BDSC1028 - CL to Re-run G&A Summary by Location Report
This program reads the G&A Summary Work file to re-create the report.
The report can be requested in whole dollars or thousands
This will be run to allow file updates to account for rounding, ad
topside entries which can be included on the report by using the new
maintenance screen (BDSR1029)
BDSC1002 - Submit G&A Responsibility Report
This program was changed to access the most current Submit programs
(FOGC004) so F3 is now available on this screen.
FILE CHANGES
BDSQPF - three additional fields were added to this file
- The fields added were page, column and carry-over
- These fields are used to identify where a cost center is to be
accumulated in the summary report.
- This file already existed to sequence the G&A Responsibility
Report.
BDSMPF - New G&A Summary by location file
- This file is used to create the new report
- It can be maintained to handle top-side entries.
MSTCPF- Added a new table
- BDGHDG - This is keyed by page, group, & heading line, and
contains two heading lines to allow flexibility
- The existing Budget Group table (BDGGRP) is used to control the
lines printed on the report.
