Exhibit 4.16
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of May 21, 2001
Among
THE WISER OIL COMPANY
and
THE WISER OIL COMPANY OF CANADA
as Borrowers
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THE BANKS NAMED HEREIN
as Banks
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and
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UNION BANK OF CALIFORNIA, N.A.
as U.S. Administrative Agent
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and
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NATIONAL BANK OF CANADA
as Canadian Administrative Agent
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TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS AND ACCOUNTING TERMS
Section 1.01. Certain Defined Terms..................................................................2
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Section 1.02. Computation of Time Periods...........................................................25
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Section 1.03. Accounting Terms......................................................................25
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Section 1.04. Types of Advances.....................................................................25
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Section 1.05. Miscellaneous.........................................................................25
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ARTICLE II AMOUNTS AND TERMS OF THE ADVANCES AND DRAWINGS
Section 2.01. The Advances; Drawings................................................................26
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Section 2.02. Making the Advances...................................................................27
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Section 2.03. Letters of Credit.....................................................................29
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Section 2.04. Drawings of BA Obligations............................................................33
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Section 2.05. Borrowing Bases.......................................................................36
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Section 2.06. Fees; Reduction of Commitments........................................................39
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Section 2.07. Repayment of Obligations..............................................................40
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Section 2.08. Interest; Drawing Fees................................................................41
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Section 2.09. Additional Interest on Eurodollar Rate Advances.......................................42
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Section 2.10. Interest Rate Determination...........................................................42
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Section 2.11. Optional Prepayments..................................................................44
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Section 2.12. Mandatory Prepayments (U.S.)..........................................................45
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Section 2.13. Mandatory Prepayments (Canadian)......................................................46
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Section 2.14. Payments and Computations.............................................................47
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Section 2.15. Increased Costs and Capital Requirements..............................................49
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Section 2.16. Taxes.................................................................................51
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Section 2.17. Sharing of Payments, Etc..............................................................54
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Section 2.18. Illegality............................................................................55
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Section 2.19. Conversion of U.S. Advances; Interest Periods.........................................56
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Section 2.20. Lending Office. .....................................................................56
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Section 2.21. Renewal and Conversion of BA Obligations..............................................57
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ARTICLE III CONDITIONS OF LENDING
Section 3.01. Condition Precedent to Effectiveness..................................................60
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Section 3.02. Conditions Precedent to All Credit Extensions.........................................61
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Section 3.03. Conditions Precedent to U.S. Tranche B Advances.......................................62
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ARTICLE IV REPRESENTATIONS AND WARRANTIES
Section 4.01. Corporate Existence; Subsidiaries.....................................................62
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Section 4.02. Corporate Power.......................................................................63
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Section 4.03. Authorization and Approvals...........................................................63
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Section 4.04. Enforceable Obligations...............................................................63
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Section 4.05. Financial Statements..................................................................63
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Section 4.06. True and Complete Disclosure..........................................................64
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Section 4.07. Litigation............................................................................64
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Section 4.08. Use of Proceeds.......................................................................64
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Section 4.09. Investment Company Act................................................................64
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Section 4.10. Public Utility Holding Company Act....................................................65
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Section 4.11. Taxes.................................................................................65
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Section 4.12. Pension Plans.........................................................................65
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Section 4.13. Condition of Property; Casualties.....................................................66
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Section 4.14. Insurance.............................................................................66
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Section 4.15. No Burdensome Restrictions; No Defaults...............................................67
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Section 4.16. Environmental Condition...............................................................67
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Section 4.17. Liens and Encumbrances................................................................68
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Section 4.18. Title to Real Property, Etc...........................................................68
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Section 4.19. Subsidiaries..........................................................................68
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ARTICLE V COVENANTS OF THE BORROWERS
Section 5.01. Compliance with Laws, Etc.............................................................68
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Section 5.02. Maintenance of Insurance..............................................................68
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Section 5.03. Preservation of Corporate Existence, Etc..............................................69
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Section 5.04. Payment of Taxes, Etc.................................................................69
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Section 5.05. Reporting Requirements................................................................69
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(b) Quarterly Financials.........................................................70
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Section 5.06. Oil and Gas Reserve Reports...........................................................71
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Section 5.07. Maintenance of Property...............................................................72
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Section 5.08. Inspection............................................................................72
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Section 5.09. Use of Proceeds.......................................................................72
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Section 5.10. Nature of Business....................................................................73
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Section 5.11. New Subsidiaries......................................................................73
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Section 5.12. Title Opinions........................................................................73
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Section 5.13. Agreement to Pledge...................................................................74
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ARTICLE VI NEGATIVE COVENANTS
Section 6.01. Liens, Etc............................................................................74
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Section 6.02. Merger, Amalgamation or Consolidation; Asset Sales....................................74
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Section 6.03. Investments...........................................................................74
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Section 6.04. Transactions With Affiliates..........................................................75
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Section 6.05. Compliance with ERISA.................................................................75
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Section 6.06. Limitation on Sale and Lease-Back Transactions........................................75
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Section 6.07. Restricted Payments...................................................................76
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Section 6.08. Debts, Guaranties and Other Obligations...............................................76
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Section 6.09. Agreements Restricting Distributions..................................................76
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Section 6.10. Amendments to Subordinated Debt, Material Agreements..................................76
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Section 6.11. Limitation on Speculative Hedging.....................................................77
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Section 6.12. Limitation on Advance Payment Contracts...............................................77
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Section 6.13. EBITDA to Interest Expense Ratio......................................................77
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Section 6.14. Senior Debt to Interest Expense Ratio.................................................77
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Section 6.15. Working Capital.......................................................................77
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Section 6.16. Account Payables......................................................................77
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Section 6.17. Designation of Senior Indebtedness....................................................77
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Section 6.18. Special Provisions related to Invasion................................................77
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Section 7.01. Events of Default.....................................................................78
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Section 7.02. Optional Acceleration of Maturity.....................................................80
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Section 7.03. Automatic Acceleration of Maturity....................................................81
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Section 7.04. Non-exclusivity of Remedies...........................................................82
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Section 7.05. Right of Set-off......................................................................82
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Section 7.06. Application of Proceeds...............................................................82
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ARTICLE VIII THE ADMINISTRATIVE AGENTS AND ISSUING BANK
Section 8.01. Authorization and Action..............................................................83
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Section 8.02. Administrative Agents' Reliance, Etc..................................................83
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Section 8.03. Union Bank, NBC and Affiliates........................................................84
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Section 8.04. Bank Credit Decision..................................................................84
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Section 8.05. INDEMNIFICATION.......................................................................84
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Section 8.06. Successor Administrative Agents and Successor Issuing Bank............................85
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ARTICLE IX MISCELLANEOUS
Section 9.01. Amendments, Etc.......................................................................86
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Section 9.02. Notices, Etc..........................................................................86
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Section 9.03. No Waiver; Remedies...................................................................87
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Section 9.04. Expenses and Taxes; Compensation; Indemnity...........................................87
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Section 9.05. Limitation and Adjustment of Interest.................................................88
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Section 9.06. Binding Effect; Severability..........................................................90
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Section 9.07. Assignments and Participations........................................................90
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Section 9.08. Execution in Counterparts.............................................................93
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Section 9.09. Governing Law.........................................................................93
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Section 9.10. Jurisdiction..........................................................................93
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Section 9.11. Waiver of Jury Trial..................................................................94
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Section 9.12. Confidentiality.......................................................................94
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Section 9.13. Judgment Currency.....................................................................95
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EXHIBITS:
Exhibit A Form of Assignment and Acceptance
Exhibit B-1 Form of Canadian Note
Exhibit B-2 Form of U.S. Tranche A Note
Exhibit B-3 Form of U.S. Tranche B Note
Exhibit C Form of Draft
Exhibit D-1 Form of Subsidiary Guaranty
Exhibit D-2 Form of Parent Guaranty
Exhibit E Form of Pledge Agreement
Exhibit F Form of Transfer Letter
Exhibit G-1 Form of Notice of U.S. Borrowing
Exhibit G-2 Form of Notice of Canadian Borrowing
Exhibit H Form of Notice of Drawing
Exhibit I Form of Form of U.S. Counsel Opinion
Exhibit J-1 Form of Banks' Alberta Counsel Opinion
Exhibit J-2 Form of Canadian Borrower's Alberta Counsel Opinion
Exhibit J-3 - Form of Canadian Borrower's Nova Scotia Counsel Opinion
Exhibit K Form of Compliance Certificate
SCHEDULES:
Schedule I Pricing Grid
Schedule II Information for Banks
Schedule 4.07 Litigation
Schedule 4.20 Existing Subsidiaries
Schedule 6.01 Existing Liens
Schedule 6.03 Permitted Investments
Schedule 6.08 Existing Debt
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SECOND AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of May 21, 2001
This Second Amended and Restated Credit Agreement dated as of May 21, 2001
("Agreement") is among The Wiser Oil Company, a Delaware corporation ("U.S.
Borrower"), The Wiser Oil Company of Canada, a Nova Scotia unlimited liability
company ("Canadian Borrower," and together with the U.S. Borrower, referred to
collectively as the "Borrowers"), the Banks (as defined below), Union Bank of
California, N.A., a national banking association in its capacity as U.S.
Administrative Agent (as defined below), and National Bank of Canada, a Canadian
chartered bank in its capacity as Canadian Administrative Agent (as defined
below).
RECITALS
A. The U.S. Borrower, certain banks (collectively, the "Existing Banks"),
and Bank One Texas, N.A. ("Existing Agent") have entered into a Restated Credit
Agreement dated as of May 10, 1999 (as amended, supplemented or restated from
time to time, the "Existing Loan Agreement").
B. In order to secure the full and punctual payment and performance of the
loans under the Existing Loan Agreement, the U.S. Borrower has executed and
delivered mortgages, collateral assignments, security agreements and financing
statements in favor of the Existing Agent for the benefit of itself and the
Existing Banks (collectively, the "Existing Security Documents") granting a
mortgage lien and continuing security interest in and to the collateral
described in such Existing Security Documents.
C. The Existing Loan Agreement, the loans under the Existing Loan
Agreement, the notes evidencing such loans (collectively, the "Existing Notes"),
and the liens and security interests under the Existing Security Documents will
be purchased from the Existing Banks and assigned by the Existing Banks and the
Existing Agent to the Banks and the U.S. Administrative Agent for their benefit
pursuant to an Assignment of Notes, Liens and Other Rights dated as of May 21,
2001 among the Existing Banks, the Existing Agent, the Banks and the U.S.
Administrative Agent ("Assignment").
D. The Borrowers, the Agent and the Banks have agreed to amend and restate
the Existing Loan Agreement, the loans under the Existing Loan Agreement, the
Existing Security Documents and the Existing Notes effective upon the execution
of the Assignment.
Now, therefore, the Borrowers, the U.S. Administrative Agent, the Canadian
Administrative Agent and the Banks do hereby agree that the Existing Loan
Agreement is amended and restated as follows and the Existing Notes are amended
and restated to provide as stated in the Notes (as defined below):
01.
DEFINITIONS AND ACCOUNTING TERMS
(a) Certain Defined Terms. As used in this Agreement, the following terms
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shall have the following meanings (such meanings to be equally applicable to
both the singular and plural forms of the terms defined):
"Acceptable Security Interest" in any Property means a Lien which (a)
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exists in favor of either Administrative Agent for the benefit of the
Administrative Agents, the Issuing Banks and the Banks; (b) is superior to all
Liens or rights of any other Person in the Property encumbered thereby, except
to the extent that the rights of another Person are permitted hereunder; (c)
secures the Obligations; and (d) is perfected and enforceable.
"Advance" means a U.S. Tranche A Advance, a U.S. Tranche B Advance, or a
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Canadian Advance.
"Advance Payment Contract" means any contract whereby any of the Obligors
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either (a) receives or becomes entitled to receive (either directly or
indirectly through a third party for such Obligor's account or benefit) any
payment ("Advance Payment") to be applied toward the payment of the purchase
price of Hydrocarbons produced or to be produced from any Leases owned by such
Obligor and which Advance Payment is paid or to be paid more than two months in
advance of actual delivery of such production to or for the account of the
purchaser regardless of such production or (b) grants to the purchaser an option
or right of refusal to take delivery of such production in lieu of payment, and,
in either of the foregoing instances, the Advance Payment is, or is to be,
applied as payment in full for such production when sold and delivered or is, or
is to become applied as payment for a portion only of the purchase price thereof
or for a percentage or a share of such production.
"Administrative Agents" means, collectively, the U.S. Administrative Agent
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and the Canadian Administrative Agent.
"Affiliate" means, as to any Person, any other Person that, directly or
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indirectly, controls, is controlled by or is under common control with such
Person or any Subsidiary of such Person or, except where the term "Affiliate" is
used in the definitions herein of "Assignment and Acceptance" and "Bank" and in
Section 9.08, is a director or officer of such Person. For purposes of this
definition, the term "controls" (including the terms "controlled by" and "under
common control with") with respect to a Person means the possession, direct or
indirect, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of Voting Stock, by
contract or otherwise or, except where the term "Affiliate" is used in the
definitions herein of "Assignment and Acceptance" and "Bank" and in Section
9.08, to vote 20% or more of the Voting Stock of such Person.
"Agreement" means this Second Amended and Restated Credit Agreement dated
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as of May 21, 2001 among the Borrowers, the Banks and the Administrative Agents,
as amended from time to time in accordance with the terms hereof.
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"Applicable Lending Office" means, with (a) respect to each U.S. Bank, (i)
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in the case of a Base Rate Advance, such Bank's U.S. Domestic Lending Office,
and (ii) in the case of a Eurodollar Rate Advance, such Bank's Eurodollar
Lending Office, and (b) with respect to each Canadian Bank, (i) in the case of a
Drawing, such Bank's Canadian Bankers' Acceptance Lending Office and (ii) in the
case of a Canadian Prime Rate Advance, such Bank's Canadian Lending Office.
"Applicable Margin" means (a) as to any Canadian Prime Rate Advance, (i)
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during such times as any Event of Default exists, the sum of 2% per annum plus
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the rate per annum set forth in the Pricing Grid for a Canadian Prime Rate
Advance based on the relevant Utilization Level applicable from time to time,
and (ii) at all other times, the rate per annum set forth in the Pricing Grid
for a Canadian Prime Rate Advance based on the relevant Utilization Level
applicable from time to time, and (b) as to any U.S. Advance, (i) during such
times as any such Event of Default exists, the sum of 2% per annum plus the rate
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per annum set forth in the Pricing Grid for the relevant U.S. Type of such
Advance based on the relevant Utilization Level applicable from time to time,
and (ii) at all other times, the rate per annum set forth in the Pricing Grid
for the relevant U.S. Type of such Advance based on the relevant Utilization
Level applicable from time to time. The Applicable Margin for any Advance shall
change when and as the relevant Utilization Level changes and when and as any
such Event of Default commences or terminates.
"Assignment and Acceptance" means an assignment and acceptance, in
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substantially the form of Exhibit A, (a) entered into by a Bank and an Eligible
Assignee or an Affiliate of a Bank, (b) accepted by the U.S. Administrative
Agent and (c) consented to by the U.S. Administrative Agent and the U.S.
Borrower if such consents are required by Section 9.08.
"BA Equivalent Notes" has the meaning specified in Section 2.01(d).
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"BA Obligations" means, collectively, Bankers' Acceptances and BA
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Equivalent Notes.
"Bankers' Acceptance" has the meaning specified in Section 2.01(d).
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"Bankers' Acceptance Rate" means, with respect to each Bankers' Acceptance
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which is required to be accepted or purchased on any day, the arithmetical
average of the percentage discount rates (expressed to five decimal places) for
Canadian Dollars bankers' acceptances having a comparable Face Amount and
Maturity Date which is quoted on "Xxxxxx'x Screen CDOR Page" for acceptances by
Schedule I banks under the Bank Act (Canada) (or if such screen shall not be
available, any successor or similar service selected by the Administrative
Agents) as at approximately 10:00 a.m. (Toronto time) on such day, or if such
day is not a Business Day, then on the immediately preceding Business Day. If
neither such screen nor any successor or similar service is available, then the
"Bankers' Acceptance Rate" shall mean, with respect to each Bankers' Acceptance
which is required to be accepted and purchased by a Bank on such day, the
percentage discount rate (expressed to five decimal places) determined by the
Canadian Administrative Agent to be the average of quoted rates at which
Canadian Dollar bankers' acceptances having a comparable Face Amount and
Maturity Date are being bid for discount by the Banks which are Schedule I banks
under the Bank Act (Canada) at approximately 10:00 a.m. (Toronto time) on the
day of the
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acceptance and purchase of the Bankers' Acceptances hereunder. If any Bank does
not timely furnish a quotation, the Canadian Administrative Agent shall
determine the relevant discount rate on the basis of the quotation or quotations
furnished by the remaining Banks. Each determination of the Bankers' Acceptance
Rate shall be conclusive and binding, absent manifest error, and be computed
using any reasonable averaging and attribution method. The Bankers' Acceptance
Rate for each BA Obligation comprising part of the same Drawing shall be
determined by the Canadian Administrative Agent on the date of the applicable
Drawing, subject, however, to the provisions of Section 2.10.
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"Banks" means the lenders listed on the signature pages hereof and each
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Eligible Assignee or Affiliate of a Bank that becomes a party hereto pursuant to
Section 9.08(a), (b) and (d), and includes each U.S. Bank and each Canadian
Bank.
"Base Rate" means, for any period, a fluctuating interest rate per annum as
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shall be in effect from time to time which rate per annum shall at all times be
equal to the higher of:
(i) the rate of interest announced publicly by Union Bank in Los
Angeles, California, from time to time, as Union Bank's base rate; and
(ii) the sum of 1/2 of one percent per annum plus the Federal Funds
Rate in effect from time to time.
"Base Rate Advance" means an Advance in Dollars that bears interest as
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provided in Section 2.08(a)(i).
"Borrowers" means, collectively, the U.S. Borrower and the Canadian
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Borrower.
"Borrowing" means a U.S. Tranche A Borrowing, a U.S. Tranche B Borrowing,
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or a Canadian Borrowing.
"Borrowing Bases" means, collectively, the Canadian Borrowing Base and the
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U.S. Borrowing Base.
"Business Day" means (a) with respect to Base Rate Advances, Letters of
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Credit, determinations of Interest Periods or interest rates applicable thereto,
payments in respect thereof, the Federal Funds Rate or any notice required or
permitted to be delivered under any Loan Document to or by the U.S. Borrower or
the U.S. Administrative Agent, a U.S. Business Day, and (b) with respect to
Canadian Prime Rate Advances, Drawings, BA Obligations, determinations of
interest rates, discount rates and fees applicable thereto, payments in respect
thereof or any notice required or permitted to be delivered under any Loan
Document to or by the Canadian Borrower or the Canadian Administrative Agent, a
Canadian Business Day.
"Canadian Administrative Agent" means National Bank of Canada in its
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capacity as Canadian Administrative Agent pursuant to Article VIII and any
successor in such capacity pursuant to Section 8.06.
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"Canadian Advance" means an advance by a Canadian Bank to the Canadian
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Borrower pursuant to Section 2.02 and refers to a Canadian Prime Rate Advance.
"Canadian Bank" means each Bank listed under the heading "Canadian Banks"
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on Schedule II or identified as a Canadian Bank in the Assignment and Acceptance
pursuant to which such Bank became a Bank, as the case may be, in each case in
its capacity as such.
"Canadian Bankers' Acceptance Lending Office" means, with respect to any
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Canadian Bank, (i) the office of such Bank specified as its "Canadian Bankers'
Acceptance Lending Office" opposite its name on Schedule II hereto or in the
Assignment and Acceptance pursuant to which it became a Bank or (ii) such other
office of such Bank as such Bank may from time to time thereafter specify to the
Canadian Borrower and the Administrative Agents.
"Canadian Borrower" means The Wiser Oil Company of Canada, a Nova Scotia
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unlimited liability company.
"Canadian Borrowing" means a borrowing consisting of Canadian Advances made
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on the same day by the Canadian Banks pursuant to Section 2.02.
"Canadian Borrowing Base" means at any particular time, the amount in
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Canadian Dollars which is equal to the U.S. Dollar Equivalent amount determined
to be the Canadian Borrowing Base in accordance with Section 2.02 on account of
Proven Reserves attributable to Oil and Gas Properties of the Obligors described
in the most recent Independent Engineering Report or Internal Engineering
Report, as applicable, delivered to the Administrative Agents and the Banks
pursuant to Section 2.02.
"Canadian Business Day" means a U.S. Business Day on which banks are not
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required or authorized by law to close in Toronto.
"Canadian Cash Collateral Account" means an account established by the
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Canadian Borrower with the Canadian Administrative Agent pursuant to the terms
of this Agreement and designated as the "Canadian Cash Collateral Account".
"Canadian Dollars" and "C$" each means lawful money of Canada.
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"Canadian Dollar Equivalent" of any U.S. Dollar amount means, on any date
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of determination, the Canadian Dollar equivalent of such U.S. Dollar amount
determined by the U.S. Administrative Agent by using the quoted spot rate at
which NBC's principal office in Toronto, Ontario offers to exchange Canadian
Dollars for U.S. Dollars in Toronto at 11:00 a.m. (Toronto, Ontario time) on
such date, which determination shall be conclusive in the absence of manifest
error, or if such principal office is not then quoting such a rate, then such
rate as shown on page BOFC of the Reuters screen at such time on such date.
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"Canadian Interbank Rate" means the interest rate per annum which is
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customarily used by the Canadian Administrative Agent when calculating interest
due by it or owing to it arising from or in connection with correction of errors
between it and other Canadian chartered banks.
"Canadian Lending Office" means, with respect to any Canadian Bank, (a) the
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office of such Bank specified as its "Canadian Lending Office" opposite its name
on Schedule II hereto or in the Assignment and Acceptance pursuant to which it
became a Bank, or (b) such other office of such Bank as such Bank may from time
to time specify to the Canadian Borrower and the Administrative Agents.
"Canadian Note" means a promissory note of the Canadian Borrower payable to
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the order of any Bank, in substantially the form of Exhibit B-1, evidencing the
aggregate indebtedness of the Canadian Borrower to such Bank resulting from the
Canadian Advances owing to such Bank.
"Canadian Pension Plans" means a pension plan registered in accordance with
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the ITA which any Borrower or other Obligor sponsors or administers or into
which any such Person makes contributions.
"Canadian Prime Rate" means a fluctuating interest rate per annum in effect
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from time to time, which rate per annum shall at all times be equal to the
higher of:
(i) the rate per annum which the principal office of National Bank of
Canada in Toronto announces publicly from time to time as its prime rate
for determining rates of interest on commercial loans in Canadian Dollars
made by it in Canada; and
(ii) 3/4 of 1% per annum above the average CDOR Rate quoted for one
month Canadian Dollar bankers acceptances as of 10:00 a.m. (Toronto time)
on the date of determination.
"Canadian Prime Rate Advance" means an Advance in Canadian Dollars that
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bears interest as provided in Section 2.08(b).
"Canadian Revolving Commitment" means, with respect to any Bank at any
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time, the amount set forth opposite such Bank's name on Schedule II under the
caption "Canadian Revolving Commitment" or, if such Bank has entered into one or
more Assignments and Acceptances, set forth for such Bank in the Register
maintained by the U.S. Administrative Agent pursuant to Section 9.08(c) as such
Bank's "Canadian Revolving Commitment", as such amount may be reduced at or
prior to such time pursuant to Section 2.06(f).
"Capitalized Leases" means all leases that have been or should be, in
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accordance with GAAP, recorded as capitalized leases and the amount of the
obligation associated therewith shall be the capitalized amount thereof
determined in accordance with GAAP.
"Cash Equivalents" means any of the following, to the extent owned by any
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Obligor and having a maturity of not greater than 360 days from the date of
acquisition thereof: (a) readily marketable direct obligations of the United
States or Canada (or any agency or instrumentality
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thereof), and readily marketable obligations unconditionally guaranteed by the
full faith and credit of the United States or Canada, (b) certificates of
deposit of or time deposits with (i) any commercial bank that is a member of the
Federal Reserve System, issues (or the parent of which issues) commercial paper
rated as described in clause (c), is organized under the laws of the United
States or any State thereof or is organized under the laws of Canada and is
listed in Schedule I of the Bank Act (Canada), and in each case has combined
capital and surplus of at least U.S. $500,000,000 or (ii) any Bank, (c)
commercial paper in an aggregate amount of no more than U.S. $10,000,000 per
issuer outstanding at any time, issued by any corporation organized under the
laws of any State of the United States and rated at least "Prime-2" (or the then
equivalent grade) by Xxxxx'x and "A-2" (or the then equivalent grade) by S&P,
(d) demand deposits with banks made in the ordinary course of business, (e)
marketable direct obligations issued by any state of the United States or
province or territory of Canada or any political subdivision of any such state,
province or territory or any public instrumentality thereof maturing within one
year from the date of acquisition thereof and, at the time of acquisition,
having the highest rating obtainable from either S&P or Xxxxx'x, (f) any mutual
fund that invests solely in any of the items described in clauses (a), (b), (c)
and (e) of this definition, and (g) certificates of deposit or time deposits
with any bank organized under any foreign jurisdiction with an IBCA Banking
Analysis Limited legal rating of "2" or better and an IBCA Banking Analysis
Limited individual rating of "B" or better or, in the case of banks organized
under the laws of Canada, with a rating of at least "Prime-2" (or the then
equivalent grade) by Xxxxx'x, "A-2" (or the then equivalent grade) by S&P or
"R-1/Low" (or the then equivalent grade) by Dominion Bond Rating Service.
"Change of Control" shall occur if (a) any Person (or syndicate or group of
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Persons which is deemed a "Person" for purposes of Sections 13(d) or 14(d)(ii)
of the Securities Act of 1934, as amended) other than WIC shall acquire,
directly or indirectly, an amount of issued and outstanding voting stock of the
U.S. Borrower (including the acquisition of newly-issue stock) sufficient to
change the control of the U.S. Borrower by causing the election or change of a
majority of the directors of the U.S. Borrower, or (b) the U.S. Borrower shall
cease to, directly or indirectly, own 100% of the equity ownership interests of
the Canadian Borrower.
"Change of Management" shall occur if either (a) Xxxxxx X. Xxxxxx, Xx. ever
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ceases to act as Chief Executive Officer and Chairman of the Board, or (b)
Xxxxxxx X. Xxxxx ever ceases to act as Vice President of Finance, and in each
case, a replacement for such officer acceptable to the Administrative Agents is
not appointed within 30 days (or, if such cessation is due to the death or
incapacity of either of such officers, 120 days) thereafter.
"Code" means the Internal Revenue Code of 1986, as amended from time to
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time, or any successor Federal tax code, and the regulations promulgated and
rulings issued thereunder, in each case as now or hereafter in effect, and any
reference to any statutory provision shall be deemed to be a reference to any
successor provision or provisions.
"Collateral" means (a) all "Collateral," "Pledged Collateral," "Mortgaged
----------
Property" or other similar term used in the Security Documents to describe the
collateral covered thereby or any other Property securing the Obligations, and
(b) all amounts contained in the Borrowers' and the Guarantors' bank accounts.
-7-
"Commitment" means, as to any Bank at any time, such Bank's U.S. Tranche A
----------
Commitment, its U.S. Tranche B Commitment, its Canadian Revolving Commitment,
and "Commitments" shall mean all such Commitments collectively.
-----------
"Commitment Fee Rate" means .375% per annum.
-------------------
"Confidential Information" means information furnished by or on behalf of
------------------------
and relating to any Obligor to either Administrative Agent or any Bank or any of
their representatives or obtained by either Administrative Agent or any Bank or
any of their representatives, but does not include any such information (a) that
is or becomes generally available to the public (other than as a result of
action by either Administrative Agent or any Bank or any of their
representatives that violates Section 9.13) or (b) that is or becomes available
to either Administrative Agent or any Bank, in each case free of any restriction
as to its disclosure, from a source other than delivery by or on behalf of any
Obligor.
"Controlled Group" means all members of a controlled group of corporations
----------------
and all trades (whether or not incorporated) under common control which,
together with any Borrower, are treated as a single employer under Section 414
of the Code.
"Convert", "Conversion" and "Converted" each refers to (a) a conversion of
-------------------------------------
U.S. Tranche A Advances or U.S. Tranche B Advances of one U.S. Type into U.S.
Advances of another U.S. Type pursuant to Section 2.10, 2.18 or 2.19, (b) a
conversion of BA Obligations into Canadian Prime Rate Advances pursuant to
Section 2.18 or 2.21 or (c) a conversion of Canadian Prime Rate Advances into BA
Obligations pursuant to Section 2.21.
"Credit Extension" means (a) an Advance made by any Bank, (b) the issuance,
----------------
increase or extension of any Letter of Credit by the Issuing Bank, and (c) the
acceptance and purchase of Drafts or the purchase of BA Equivalent Notes, as the
case may be, by any Bank under this Agreement.
"Debt" of any Person means, means without duplication:
----
(a) indebtedness of such Person for borrowed money, including, without
limitation, obligations under letters of credit and agreements relating to
acceptance financing;
(b) obligations of such Person evidenced by bonds, debentures, notes or
other similar instruments;
(c) obligations of such Person to pay the deferred purchase price of
property or services (other than accounts payable in the ordinary course of
business that are not more than 90 days past due);
(d) obligations of such Person as lessee under Capital Leases;
(e) obligations of such person under any Hedge Agreement;
-8-
(f) obligations of such Person under direct or indirect guaranties in
respect of, and obligations (contingent or otherwise) of such Person to purchase
or otherwise acquire, or otherwise to assure a creditor against loss in respect
of, indebtedness or obligations of others of the kinds referred to in clauses
(a) through (e) above;
(g) any obligations in connection with any production payments; and
(h) indebtedness or obligations of others of the kinds referred to in
clauses (a) through (g) secured by any Lien on or in respect of any Property of
such Person.
"Default" means any event or condition which with notice or lapse of time
-------
or both would, unless cured or waived, become an Event of Default.
"Dollars", "$", "U.S. Dollars" and "U.S. $" each means lawful money of the
------- - ------------ ------
United States of America.
"Draft" means a xxxxx xxxx of exchange, within the meaning of the Bills of
-----
Exchange Act (Canada), drawn by the Canadian Borrower on any Canadian Bank, in
substantially the form of Exhibit C, and which, except as otherwise provided
herein, has not been completed or accepted by such Bank.
"Drawing" means (a) the simultaneous acceptance of Drafts and purchase of
-------
Bankers' Acceptances by the Canadian Banks, and (b) for any Canadian Bank which
is not a bank under the Bank Act (Canada) or that is otherwise unable to
complete and accept bankers' acceptances in Canada, the purchase of a BA
Equivalent Note, in each case in accordance with Section 2.04(a) or Section
2.21.
"Drawing Fee" means, with respect to each BA Obligation, an amount equal to
-----------
(a) the percentage set forth in the "Drawing Fee" row of the Pricing Grid for
the relevant Utilization Level in effect on the date of the Drawing or renewal
of, or Conversion into, as the case may be, such BA Obligation multiplied by (b)
-------------
the Face Amount of such BA Obligation, calculated on the basis of the term to
maturity of such BA Obligation and a year of 365 (or, in the case of a leap
year, 366) days.
"Drawing Purchase Price" means, with respect to each BA Obligation to be
----------------------
purchased and/or accepted by any Canadian Bank, at any time, the amount
(adjusted to the nearest whole cent or, if there is no nearest whole cent, the
next higher whole cent) obtained by dividing (a) the aggregate Face Amount of
such BA Obligation, by (b ) the sum of (i) one plus (ii) the product of (A) the
----
Bankers' Acceptance Rate (expressed as a decimal) for such BA Obligation
multiplied by (B) a fraction the numerator of which is the number of days in the
-------------
term to maturity of such BA Obligation and the denominator of which is 365 (or,
in the case of a leap year, 366) days.
"EBITDA" means for any period the sum, without duplication, of (a) the
------
consolidated net income (or loss) of the U.S. Borrower and its Subsidiaries for
such period determined in accordance with GAAP plus (b ) to the extent included
----
in the determination of such net income (or loss), the
-9-
consolidated charges for such period for net interest (including capitalized
interest), depreciation, depletion and amortization plus (c) to the extent not
----
included in the determination of such income (or loss), cash distributions and
debt service payments actually received by either Borrower from any other Person
plus (d) exploration expenses, plus (or, if there is a benefit from income
---- ----
taxes, minus) (e) to the extent included in the determination of such net
-----
income, the amount of the provision for or benefit from U.S. income taxes and
Canadian income taxes, in each case including federal, state, provincial and
local income taxes regardless of how named; provided that in determining such
--------
consolidated net income, such consolidated charges and such provision for or
benefit from income taxes, there shall be excluded therefrom (to the extent
otherwise included therein) (i) all extraordinary gains and extraordinary
losses, prior to applicable income taxes, and (ii) any item constituting the
cumulative effect of a change in accounting principles, prior to applicable
income taxes.
"Effective Date" means the date that the conditions to effectiveness set
--------------
forth in Section 3.01 are satisfied by the Borrowers or waived in writing by the
Administrative Agents, the Issuing Bank and the Banks.
"Eligible Assignee" means (a) any Bank, (b) a commercial bank organized
-----------------
under the laws of the United States, or any State thereof, and having total
assets in excess of U.S. $500,000,000, (c) a savings and loan association or
savings bank organized under the laws of the United States, or any State
thereof, and having total assets in excess of U.S. $500,000,000, (d) a
commercial bank organized under the laws of any other country that is a member
of the OECD, (e) the central bank of any country that is a member of the OECD,
and (f) any other Person approved by the U.S. Administrative Agent and, if no
Default or Event of Default shall exist, the U.S. Borrower, such approval on
the part of each not to be unreasonably withheld or delayed.
"Engineering Report" means either an Independent Engineering Report or an
------------------
Internal Engineering Report.
"Environmental Action" means any action, suit, claim, notice of non-
--------------------
compliance or violation, notice of liability or potential liability,
investigation, proceeding, consent order or consent agreement relating in any
way to any Environmental Law, Environmental Permit or Hazardous Materials or
arising from alleged injury or threat of injury to the environment, including
(a) by any governmental or regulatory authority for enforcement, cleanup,
removal, response, remedial or other actions or damages and (b) by any
governmental or regulatory authority or (based on any violation of Environmental
Law or any governmental action) any third party for damages, contribution,
indemnification, cost recovery, compensation or injunctive relief.
"Environmental Law" means any federal, state, provincial, local or foreign
-----------------
statute, law, ordinance, rule, regulation or code, and any order, judgment or
decree, in the case of all of the foregoing applicable to any Obligor or any
property of any Obligor, and also in each case relating to pollution or
protection of the environment or natural resources, including those relating to
the use, handling, transportation, treatment, storage, disposal, release or
discharge of Hazardous Materials.
-10-
"Environmental Permit" means any permit, approval, license or other
--------------------
authorization required under any Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time, and the regulations promulgated and rulings issued
thereunder, and any reference to any statutory provision shall be deemed to be a
reference to any successor provision or provisions.
"ERISA Affiliate" means any Person that for purposes of Title IV of ERISA
---------------
is a member of the U.S. Borrower's controlled group, or under common control
with the U.S. Borrower, within the meaning of Section 414(b) or (c) of the Code.
"Eurocurrency Liabilities" has the meaning assigned to that term in
------------------------
Regulation D of the Federal Reserve Board, as in effect from time to time.
"Eurodollar Lending Office" means, with respect to any U.S. Bank, the
-------------------------
office of such Bank specified as its "Eurodollar Lending Office" opposite its
name on Schedule II hereto or in the Assignment and Acceptance pursuant to which
it became a Bank (or, if no such office is specified, its U.S. Domestic Lending
Office), or such other office of such Bank as such Bank may from time to time
specify to the U.S. Borrower and the U.S. Administrative Agent.
"Eurodollar Rate" means, for any Interest Period for each Eurodollar Rate
---------------
Advance comprising part of the same U.S. Tranche A Borrowing or U.S. Tranche B
Borrowing, an interest rate per annum equal to the interest rate per annum
(rounded upward to the nearest whole multiple of 1/100 of 1% per annum) set
forth on the applicable Telerate Page as the London Interbank Offered Rate for
deposits in Dollars at 11:00 a.m. (London, England time) two Business Days
before the first day of such Interest Period, and for a period equal to such
Interest Period; provided that, if no such quotation appears on the applicable
--------
Telerate Page, the Eurodollar Rate shall be an interest rate per annum equal to
the rate per annum at which deposits in Dollars are offered by prime banks in
London, England in the London interbank market at 11:00 a.m. (London, England
time) two Business Days before the first day of such Interest Period in an
amount substantially equal to Union Bank's Eurodollar Rate Advance comprising
part of such Borrowing and for a period equal to such Interest Period.
"Eurodollar Rate Advance" means an Advance that bears interest as provided
-----------------------
in Section 2.08(a)(ii).
"Eurodollar Rate Reserve Percentage" of any Bank for any Interest Period
----------------------------------
for all Eurodollar Rate Advances comprising part of the same Borrowing means the
reserve percentage applicable during such Interest Period (or if more than one
such percentage shall be so applicable, the daily average of such percentages
for those days in such Interest Period during which any such percentage shall be
so applicable) under regulations issued from time to time by the Federal Reserve
Board for determining the maximum reserve requirement (including, without
limitation, any emergency, supplemental or other marginal reserve requirement)
for such Bank with respect to liabilities or assets consisting of or including
Eurocurrency Liabilities (or with respect to any other category of
-11-
liabilities that includes deposits by reference to which the interest rate on
Eurodollar Rate Advances is determined) having a term equal to such Interest
Period.
"Events of Default" has the meaning specified in Section 7.01.
-----------------
"Excluded Taxes" means (a) taxes imposed by any jurisdiction on its overall
--------------
net income and capital taxes imposed by Canada or any province or territory
thereof, and (b) franchise or capital taxes imposed on or measured by net income
or capital or imposed on it in lieu of net income taxes, in each case imposed by
the United States or by the jurisdiction under the laws of which such Bank or
such Administrative Agent (as the case may be) is organized or any political
subdivision of any of the foregoing.
"Face Amount" means, with respect to any BA Obligation, the amount payable
-----------
to the holder of such BA Obligation on its then existing Maturity Date.
"Federal Funds Rate" means, for any day, a fluctuating interest rate per
------------------
annum equal for such day to the weighted average of the rates on overnight
Federal funds transactions with members of the Federal Reserve System arranged
by Federal funds brokers, as published for such day (or, if such day is not a
Business Day, for the next preceding Business Day) by the Federal Reserve Bank
of New York, or, if such rate is not so published for any day that is a Business
Day, the average of the quotations for such day on such transactions received by
the U.S. Administrative Agent from three Federal funds brokers of recognized
standing selected by it.
"Federal Reserve Board" means the Board of Governors of the Federal Reserve
---------------------
System or any successor thereof.
"Financial Statements" means the consolidated balance sheet and other
--------------------
financial statements of the U.S. Borrower and the Consolidated Subsidiaries as
at December 31, 2000 referred to in Section 4.06, copies of which have been
furnished to each Bank listed on the signature pages hereof.
"Fiscal Year" means a fiscal year of the U.S. Borrower ending on December
-----------
31 in any calendar year.
"GAAP" means generally accepted accounting principles, as in effect from
----
time to time, applied on a basis consistent with those applied in the
preparation of the Financial Statements; provided that, if any changes in GAAP
--------
shall occur after the date of this Agreement and such changes affect the
calculation of compliance by the Borrowers and their consolidated Subsidiaries
of the covenants set forth in Article VI, the Borrower, the Administrative
Agents and the Banks shall negotiate in good faith to make corresponding
adjustments that are agreeable by all parties to account for such changes in
GAAP to the extent necessary to further the original intent of the parties in
establishing the levels required for compliance as of the date of this
Agreement.
"Governmental Authority" means any foreign governmental authority, the
----------------------
United States of America, any state of the United States of America and any
subdivision of any of the foregoing, and
-12-
any agency, department, commission, board, authority or instrumentality, bureau
or court having jurisdiction over any Bank, the Borrower, or any Guarantor or
any of their respective Properties.
"Guarantor" means (a) the Subsidiaries of the U.S. Borrower set forth on
---------
Schedule 4.20 (other than Wiser Peru), and (b) each other Subsidiary of the U.S.
Borrower that becomes a guarantor of all or a portion of the credit facilities
evidenced by this Agreement, and "Guarantors" means all such entities
----------
collectively.
"Guaranty" means (a) a guaranty executed by a Guarantor (other than the
--------
U.S. Borrower) in favor of the U.S. Administrative Agent, the Canadian
Administrative Agent, the Issuing Banks, the Banks and certain other entities in
substantially the form of Exhibit D-1, and (b) the Parent Guaranty, and
"Guaranties" shall mean all such guaranties collectively.
-----------
"Hazardous Materials" means any chemicals, materials or substances,
-------------------
including any petroleum and petroleum products and their byproducts or breakdown
products, radioactive materials, asbestos-containing materials, polychlorinated
biphenyls and radon gas, in each case designated, classified or regulated as
hazardous or toxic or as a pollutant or contaminant under any Environmental Law.
"Hedge Agreements" means interest rate swap, cap or collar agreements,
----------------
interest rate future or option contracts, currency swap agreements, currency
future or option contracts, forward rate transactions, commodity swap, cap or
collar agreements, commodity futures, forwards and option contracts and other
similar agreements, including without limitation, any Hydrocarbon Hedge
Agreement.
"Hydrocarbon Hedge Agreement" means a swap, collar, floor, cap, option,
---------------------------
forward sale or purchase or other contract which is intended to reduce or
eliminate the risk of fluctuations in the price of the Hydrocarbons.
"Hydrocarbons" means oil, gas, coal seam gas, casinghead gas, drip
------------
gasoline, natural gasoline, condensate, distillate, and all other liquid and
gaseous hydrocarbons produced or to be produced in conjunction therewith from a
well bore and all products, by-products, and other substances derived therefrom
or the processing thereof, and all other minerals and substances produced in
conjunction with such substances, including, but not limited to, sulfur,
geothermal steam, water, carbon dioxide, helium, and any and all minerals, ores,
or substances of value and the products and proceeds therefrom.
"Indemnified Party" means each of the Administrative Agents, the Banks, the
-----------------
Issuing Bank, and each director, officer, employee, Affiliate, advisor and agent
of either Administrative Agent, the Issuing Bank or any Bank.
"Indenture" means that certain Indenture dated as of May 21, 1997 among the
---------
U.S. Borrower, certain subsidiary guarantors and Chase Manhattan Bank, N.A. (as
successor in interest to Texas Commerce Bank National Association) as the
trustee, which was entered into in connection with the Senior Subordinated
Notes.
-13-
"Independent Engineer" means XxXxxxxx and MacNaughten, Xxxxxxx Xxxxxxxx
--------------------
Jung Associates Ltd., or any other engineering firm that either Borrower may
engage with the consent of the Administrative Agents, such consent not to be
unreasonably withheld.
"Independent Engineering Report" means a report, in form and substance
------------------------------
satisfactory to the Administrative Agents and each of the Banks, prepared by an
Independent Engineer, addressed to the Administrative Agents and the Banks with
respect to the Oil and Gas Properties owned by the Obligors (or to be acquired
by any of the Obligors) which are or are to be included in the Borrowing Base,
which report shall (a) specify the location, quantity, and type of the estimated
Proven Reserves attributable to such Oil and Gas Properties, (b) contain a
projection of the rate of production of such Oil and Gas Properties, (c) contain
an estimate of the net operating revenues to be derived from the production and
sale of Hydrocarbons from such Proven Reserves based on product price and cost
escalation assumptions specified by the Administrative Agents, and (d) contain
such other information as is customarily obtained from and provided in such
reports or is otherwise reasonably requested by either Administrative Agent or
any Bank.
"Interest Expense" means for the U.S. Borrower and its consolidated
----------------
Subsidiaries for any period, total interest (including, without limitation,
capitalized interest), letter of credit fees, and other fees incurred in
connection with any Debt for such period, whether paid or accrued, including,
without limitation, all commissions, discounts and other fees and charges owed
with respect to letters of credit and bankers' acceptance financing and net
costs under Hedge Agreements relating to interest rates, all as determined in
conformity with GAAP.
"Interest Period" means, for each Eurodollar Rate Advance comprising part
---------------
of the same Borrowing, the period commencing on the date of such Advance or the
date of the Conversion of any Base Rate Advance into such an Advance and ending
on the last day of the period selected by the U.S. Borrower pursuant to the
provisions below and, thereafter, each subsequent period commencing on the last
day of the immediately preceding Interest Period and ending on the last day of
the period selected by the U.S. Borrower pursuant to the provisions below. The
duration of each such Interest Period shall be one, two, three or six months in
each case as the U.S. Borrower may, upon notice received by the U.S.
Administrative Agent not later than 11:00 A.M. (Los Angeles, California time) on
the third U.S. Business Day prior to the first day of such Interest Period,
select; provided that:
--------
(1 Interest Periods commencing on the same date for Advances comprising
part of the same Borrowing shall be of the same duration;
(2 whenever the last day of any Interest Period would otherwise occur on
a day other than a Business Day, the last day of such Interest Period
shall be extended to occur on the next succeeding Business Day,
provided that if such extension would cause the last day of such
--------
Interest Period to occur in the next following calendar month, the
last day of such Interest Period shall occur on the next preceding
Business Day;
(3 any Interest Period which begins on the last Business Day of the
calendar month (or on a day for which there is no numerically
corresponding day in the calendar month
-14-
at the end of such Interest Period) shall end on the last Business Day
of the calendar month in which it would have ended if there were a
numerically corresponding day in such calendar month; and
(4 the U.S. Borrower may not select an Interest Period for any Advance if
the last day of such Interest Period would be later than the
Termination Date or if any Event of Default shall have occurred and be
continuing at the time of selection.
"Internal Engineering Report" means a report, in form and substance
---------------------------
satisfactory to the Administrative Agents and each Bank, prepared by the U.S.
Borrower and certified by a Responsible Officer of the U.S. Borrower, addressed
to the Administrative Agents and the Banks with respect to the Oil and Gas
Properties owned by the Obligors (or to be acquired by any of the Obligors)
which are or are to be included in the Borrowing Bases, which report shall (a)
specify the location, quantity, and type of the estimated Proven Reserves
attributable to such Oil and Gas Properties, (b) contain a projection of the
rate of production of such Oil and Gas Properties, (c) contain an estimate of
the net operating revenues to be derived from the production and sale of
Hydrocarbons from such Proven Reserves based on product price and cost
escalation assumptions specified by the Administrative Agents, and (d) contain
such other information as is customarily obtained from and provided in such
reports or is otherwise reasonably requested by the Administrative Agents or any
Bank.
"Invasion" means Invasion Energy, Inc., an Alberta corporation.
--------
"Investment" means, as applied to any Person, any direct or indirect
----------
(whether in cash or other property) (a) purchase or other acquisition by such
Person of any interest in stock, partnership interest, other ownership or profit
interest, warrants, rights, options, obligations or other securities of any
other Person, (b) loan, advance or other Debt made by such Person to any other
Person, (c) guaranty, assumption or other incurrence of liability by such Person
of or for any Debt or other obligation of any other Person, or (d) capital
contribution or other investment by such Person in any other Person. The amount
of any Investment shall be the amount that would be shown on such Person's
financial statements in respect of such Investment plus the pre-tax amount of
write-downs and write-offs with respect to such Investment since the date hereof
(determined in accordance with GAAP); provided that, "Investments" shall not
include accounts receivable generated in the ordinary course of business.
"Issuing Bank" means Union Bank and any successor issuing bank pursuant to
------------
Section 8.06.
"ITA" means the Income Tax Act (Canada) R.S.C., 1985, as amended from time
---
to time, and any successor statute and all rules and regulations promulgated
thereunder.
"Leases" means all oil and gas leases, oil, gas and mineral leases, oil,
------
gas and casinghead leases or any other instruments, agreements, or conveyances
under and pursuant to which the owner thereof has or obtains the right to enter
upon lands and explore for, drill, and develop such lands for the production of
Hydrocarbons.
-15-
"Legal Requirements" means any law, statute, ordinance, decree,
------------------
requirement, order, judgment, rule, regulation (or official interpretation of
any of the foregoing) of, and the terms of any license or permit issued by, any
Governmental Authority, including, but not limited to, Regulations D, T, U, and
X.
"Letter of Credit" means, individually, any letter of credit issued by the
----------------
Issuing Bank which is subject to this Agreement, and "Letters of Credit" means
-----------------
all such letters of credit collectively.
"Letter of Credit Application" means the Issuing Bank's standard form
----------------------------
letter of credit application for standby letters of credit which has been
executed by the U.S. Borrower and accepted by the Issuing Bank in connection
with the issuance of a Letter of Credit.
"Letter of Credit Documents" means all Letters of Credit, Letter of Credit
--------------------------
Applications, and agreements, documents, and instruments entered into in
connection with or relating thereto.
"Letter of Credit Exposure" means, at any time, the sum of (a) the
-------------------------
aggregate undrawn maximum face amount of each Letter of Credit at such time,
plus (b) the aggregate unpaid amount of all Reimbursement Obligations at such
----
time.
"Letter of Credit Obligations" means any obligations of the U.S. Borrower
----------------------------
under this Agreement in connection with the Letters of Credit, including the
Reimbursement Obligations.
"Lien" means any mortgage, pledge, security interest, claim, hypothec,
----
lien, charge, deed of trust, encumbrance or any other type of preferential
arrangement to secure or provide for the payment of any obligation of any
Person, whether arising by contract, operation of law or otherwise, and whether
or not filed, recorded or otherwise perfected under applicable law (including
any production payment treated as a liability under GAAP, advance payment or
similar arrangement with respect to minerals in place (but in all events
excluding interests arising under obligations in the nature of royalty or other
similar types of payments not treated as a liability under GAAP), any agreement
to grant any Lien, the interest of a vendor or lessor under any conditional sale
or other title retention agreement, Capitalized Lease or sale leaseback
transaction and any agreement to file any financing statement or other Lien
perfection document to secure an obligation).
"Loan Documents" means this Agreement, the Notes, the Letter of Credit
--------------
Documents, the Guaranties, the Security Documents, the Drafts, the Bankers'
Acceptances, the BA Equivalent Notes, any Hedge Agreements with a Bank, and each
other agreement, instrument, or document executed at any time in connection with
the foregoing documents, in each case as amended, modified, supplemented or
replaced from time to time.
"Material Adverse Change" means (a) a material adverse change in the
-----------------------
business, assets (including the Oil and Gas Properties of the Obligors),
financial condition, or results of operations of any Obligor or (b) a material
adverse effect on Obligor's ability to perform its obligations under this
Agreement, any Note, any Guaranty, or any other Loan Document.
-16-
"Material Agreements" means the Indenture and the agreements listed on the
-------------------
attached Schedule 1.01.
"Maturity Date" means, for each BA Obligation comprising part of the same
-------------
Drawing, the date on which the Face Amount for such BA Obligation becomes due
and payable in accordance with the provisions set forth below, which shall be a
Canadian Business Day occurring one, two, three or (with the consent of all
Canadian Banks as to each selection by the Canadian Borrower of six months ) six
months after the date on which such BA Obligation is purchased and/or accepted
as part of any Drawing, as the Canadian Borrower may select upon notice received
by the U.S. Administrative Agent not later than 12:00 noon (Los Angeles,
California time) on the third Canadian Business Day prior to the date on which
such BA Obligation is to be accepted and purchased (whether as a new Drawing, by
renewal or by Conversion); provided that:
--------
(i) the Canadian Borrower may not select any Maturity Date for any
BA Obligation that occurs after the Termination Date;
(ii) the Canadian Borrower may not select any Maturity Date with
respect to any BA Obligation if any Event of Default shall have occurred and be
continuing at the time of selection;
(iii) the Maturity Date for all BA Obligations comprising part of the
same Drawing shall occur on the same date; and
(iv) whenever the Maturity Date for any BA Obligation would
otherwise occur on a day other than a Canadian Business Day, such Maturity Date
shall be extended to occur on the next succeeding Canadian Business Day.
"Moody's" means Xxxxx'x Investors Service, Inc. or any successor to its
-------
debt ratings business.
"Mortgages" means, collectively, each of the Mortgages, Deeds of Trust,
---------
Security Agreements, Assignments of Production and Financing Statements executed
by any of the Obligors in favor of an Administrative Agent for the ratable
benefit of the Administrative Agents, the Issuing Banks and the Banks in form
and substance satisfactory to the Administrative Agents, as the same may be
amended, modified or supplemented from time-to-time.
"Multiemployer Plan" means a multiemployer plan as defined in Section
------------------
4001(a)(3) of ERISA to which the U.S. Borrower or any ERISA Affiliate is making
or accruing an obligation to make contributions, or has within any of the
preceding five plan years made or accrued an obligation to make contributions.
"Multiple Employer Plan" means a single employer plan, as defined in
----------------------
Section 4001(a)(15) of ERISA, that (a) is maintained for employees of the U.S.
Borrower or any ERISA Affiliate and at least one Person other than the U.S.
Borrower and the ERISA Affiliates or (b) was so maintained and in respect of
which the U.S. Borrower or any ERISA Affiliate could have liability under
Section 4064 or 4069 of ERISA in the event such plan has been or were to be
terminated.
-17-
"NBC" means National Bank of Canada, a Canadian chartered bank.
---
"Note" means a U.S. Tranche A Note, a U.S. Tranche B Note or a Canadian
----
Note, and "Notes" means all such notes collectively.
-----
"Notice of Canadian Borrowing" has the meaning specified in Section
----------------------------
2.02(b).
"Notice of Drawing" has the meaning specified in Section 2.04(a).
-----------------
"Notice of U.S. Borrowing" has the meaning specified in Section 2.02(a).
------------------------
"Obligations" means all principal, interest, fees, reimbursements,
-----------
indemnifications, and other amounts payable by the Obligors to the
Administrative Agents, the Issuing Bank or the Banks under the Loan Documents.
"Obligor" means the U.S. Borrower, the Canadian Borrower and each
-------
Guarantor, and "Obligors" means all such Persons collectively.
--------
"OECD" means the Organization for Economic Cooperation and Development.
----
"Oil and Gas Properties" means fee mineral interests, term mineral
----------------------
interests, Leases, subleases, farm-outs, royalties, overriding royalties, net
profit interests, carried interests, production payments and similar mineral
interests, and all unsevered and unextracted Hydrocarbons in, under, or
attributable to such oil and gas Properties and interests.
"Other Taxes" has the meaning specified in Section 2.16(b).
-----------
"Parent Guaranty" means the Guaranty executed by the U.S. Borrower in
---------------
substantially the form of the attached Exhibit D-2.
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
----
thereto.
"Permitted Liens" means (a) royalties, overriding royalties, reversionary
---------------
interests, production payments and similar interests; (b) sales contracts or
other arrangements for the sale of production of Hydrocarbons which would not
(when considered cumulatively with the matters described in clause (a) above
deprive any Obligor of any material right in respect of such Obligor's assets or
Properties (except for rights customarily granted with respect to such contracts
and arrangements); (c) statutory Liens for taxes or other assessments that are
not yet delinquent (or that, if delinquent, are being contested in good faith
and by appropriate proceedings, levy and execution thereon having been stayed
and continue to be stayed and for which the applicable Obligor has set aside on
its books adequate reserves in accordance with GAAP); (d) easements, rights of
way, servitudes, permits, surface leases and other rights in respect to surface
operations, pipelines, grazing, logging, canals, ditches, reservoirs or the
like, conditions, covenants and other restrictions, and easements of street,
alleys, highways, pipelines, telephone lines, power lines, railways and other
easements and rights of
-18-
way on, over or in respect of any Obligor's assets or properties and that do not
individually or in the aggregate, cause a Material Adverse Change; (e)
materialmen's, mechanic's repairman's, employee's, warehousemen's, landlord's,
carrier's, pipeline's, contractor's, sub-contractor's, operator's, non-
operator's (arising under operating, unit or similar agreements), and other
Liens (including any financing statements filed in respect thereof) incidental
to obligations incurred by Borrowers or any other Obligor in connection with the
construction, maintenance, development, transportation, storage or operation of
such Person's assets or properties to the extent not delinquent (or which,
delinquent, are being contested in good faith by appropriate proceedings and for
which Borrower or any Subsidiary has set aside on its books adequate reserves in
accordance with GAAP); (f) liens in connection with workmen's compensation,
unemployment insurance or other social security, old age pension or public
liability obligations; (g) legal or equitable encumbrances deemed to exist by
reason of the existence of any litigation or other legal proceeding or arising
out of a judgment or award with respect to which an appeal is being prosecuted
in good faith and levy and execution thereon have been stayed and continue to be
stayed, and liens securing appeal bonds or similar instruments; (h) rights
reserved to or vested in any municipality, governmental, statutory or other
public authority to control or regulate the Obligors' assets and properties in
any manner, and all applicable laws, rules and orders from any Governmental
Authority; (i) landlord's liens; (j) Liens incurred pursuant to the Security
Documents or expressly allowed thereunder, (k) Liens existing at the date of
this Agreement which are identified in Schedule 6.01, and (l) deposits of cash
or Cash Equivalents in connection with Hedge Agreements permitted hereunder in
an aggregate amount for all such deposits not to exceed U.S. $5,000,000 (or the
Canadian Dollar Equivalent thereof).
"Person" means an individual, partnership, corporation (including a
------
business trust), joint stock company, trust, unincorporated association, joint
venture or other entity, or a government or any political subdivision or agency
thereof or any trustee, receiver, custodian or similar official.
"Plan" means a Single Employer Plan, a Multiple Employer Plan or a
----
Multiemployer Plan, in each case that is subject to ERISA.
"Pledge Agreements" means each of the Pledge Agreements in substantially
-----------------
the form of Exhibit E, and executed by the U.S. Borrower or any Subsidiary of
the U.S. Borrower to secure all or a portion of the Obligations.
"Pricing Grid" means the pricing information set forth in Schedule I.
------------
"Property" or "asset" (in each case, whether or not capitalized) means any
-------- -----
interest in any kind of property or asset, whether real, personal or mixed, or
tangible or intangible.
"Pro Rata Share" means, at any time with respect to any Bank, (a) with
--------------
respect to amounts owing under the U.S. Tranche A Commitments, (i) if such U.S.
Tranche A Commitments have not been canceled, the ratio (expressed as a
percentage) of such Bank's uncancelled U.S. Tranche A Commitment at such time to
the aggregate uncancelled U.S. Tranche A Commitments at such time, or (ii) if
the aggregate U.S. Tranche A Commitments have been terminated, the Pro Rata
Share of such Bank as determined pursuant to the preceding clause (i)
immediately prior to such termination, (b) with respect to amounts owing under
the U.S. Tranche B Commitments, (i) if such U.S. Tranche
-19-
B Commitments have not been canceled, the ratio (expressed as a percentage) of
such Bank's uncancelled U.S. Tranche B Commitment at such time to the aggregate
uncancelled U.S. Tranche B Commitments at such time, or (ii) if the aggregate
U.S. Tranche B Commitments have been terminated, the Pro Rata Share of such Bank
as determined pursuant to the preceding clause (i) immediately prior to such
termination, (c) with respect to amounts owing under the Canadian Revolving
Commitments, (i) if such Canadian Revolving Commitments have not been canceled,
the ratio (expressed as a percentage) of such Bank's uncancelled Canadian
Revolving Commitment at such time to the aggregate uncancelled Canadian
Revolving Commitments at such time, or (ii) if the aggregate Canadian Revolving
Commitments have been terminated, the Pro Rata Share of such Bank as determined
pursuant to the preceding clause (i) immediately prior to such termination, and
(d) with respect to amounts owing generally under the Credit Agreement and the
other Loan Documents, the ratio (expressed as a percentage) of aggregate
Commitments of such Bank to the aggregate Commitments of all the Banks (or if
such Commitments have been terminated, the ratio (expressed as a percentage) of
Credit Extensions owing to such Bank to the aggregate Credit Extensions owing to
all such Banks.
"Proved Developed Producing Reserves" means, at any particular time with
-----------------------------------
respect to any Oil and Gas Properties, Proven Reserves estimated with
reasonable certainty to be economically recoverable using existing equipment and
operating methods from existing completion intervals open for production in
existing xxxxx, as determined in accordance with the Standards of the Society of
Petroleum Engineers (or any successor body).
"Proven Reserves" means, at any particular time with respect to any Oil and
---------------
Gas Properties, the estimated quantities of Hydrocarbons which geological and
engineering data demonstrate with reasonable certainty to be recoverable in
future years from known reservoirs attributable to such Oil and Gas Properties
under then existing economic and operating conditions (i.e., prices and costs as
of the date the estimate is made), as determined in accordance with the
Standards of the Society of Petroleum Engineers (or any successor body). The
prices used may include consideration of changes in existing prices provided
only by contractual arrangements, but not on escalations based upon future
conditions.
"Register" has the meaning specified in Section 9.08(c).
--------
"Regulation U" means Regulation U of the Federal Reserve Board, as the same
------------
is from time to time in effect, and all official rulings and interpretations
thereunder or thereof.
"Reimbursement Obligation" means all of the obligations of the U.S.
------------------------
Borrower to reimburse the Issuing Bank for amounts paid by the Issuing Bank
under Letters of Credit as established by the Letter of Credit Applications and
Section 2.03(d).
"Required Banks" means at any time Banks owed or holding at least 66_% of
--------------
the sum of (i) the aggregate Face Amount of all BA Obligations outstanding at
such time plus (ii) the aggregate principal amount of the Advances and Letter of
----
Credit exposure owing to the Banks outstanding at such time (in the case of BA
Obligations, Canadian Advances, determined on the basis of the then U.S. Dollar
Equivalent thereof), or, if no such principal amount is then outstanding and
there is no
-20-
Letter of Credit Exposure, Banks having at least 66_% of the total Commitments;
provided that for purposes of Sections 2.02(a), 2.10(d) or 2.12(b), "Required
--------
Banks" shall mean at any time U.S. Banks owed or holding at least 66_% of the
aggregate principal amount of the U.S. Tranche A Advances and U.S. Tranche B
Advances owing to the U.S. Banks outstanding at such time, or if no such
principal amount is then outstanding, U.S. Banks having at least 66_% of the
total Commitments held by the U.S. Banks; and provided further that for purposes
----------------
of Sections 2.02(b) or 2.04(a), "Required Banks" shall mean at any time Canadian
Banks owed or holding at least 66_% of the sum of (i) the aggregate Face Amount
of all BA Obligations outstanding at such time plus (ii) the aggregate principal
----
amount of the Canadian Advances owing to the Canadian Banks outstanding at such
time, or if no such principal amount is then outstanding, Canadian Banks having
at least 66_% of the total Canadian Revolving Commitments held by the Canadian
Banks.
"Responsible Officer" means, with respect to any Person, such Person's
-------------------
Chief Executive Officer, President, Chief Financial Officer, or Vice President.
"Restricted Payment" means any direct or indirect dividend or distribution
------------------
(whether in cash, securities or other property) or any direct or indirect
payment of any kind or character (whether in cash, securities or other property)
in consideration for or otherwise in connection with any retirement, purchase,
redemption or other acquisition of any capital stock of the U.S. Borrower, any
other ownership interest of the U.S. Borrower or any options, warrants or rights
to purchase or acquire any such capital stock, any such other ownership
interest; provided that the term "Restricted Payment" shall not include (a) any
--------
dividend or distribution payable solely in shares of common stock of the U.S.
Borrower or warrants, options or other rights to purchase such stock, or (b)
cash payments not exceeding U.S. $50,000 in the aggregate made in lieu of
fractional shares of such stock.
"SEC" means the Securities and Exchange Commission, or any successor or
---
comparable entity.
"Security Documents" means collectively, (a) the Mortgages, (b) the
------------------
Transfer Letters, (c) the Pledge Agreements, (d) the Security Agreements, (e)
each other agreement, instrument or document executed at any time in connection
with the Pledge Agreements, the Security Agreements, or the Mortgages, and (e)
each other agreement, instrument or document executed at any time in connection
with securing the Obligations.
"S&P" means Standard & Poor's Ratings Group, a division of XxXxxx-Xxxx,
---
Inc. on the date hereof, or any successor to its debt ratings business.
"Senior Subordinated Notes" means the 9-1/2% Senior Subordinated Notes of
-------------------------
the U.S. Borrower due 2007 in the aggregate principal amount of U.S.
$125,000,000 issued pursuant to the Indenture.
"Single Employer Plan" means a single employer plan, as defined in Section
--------------------
4001(a)(15) of ERISA, that (a) is maintained for employees of the U.S. Borrower
or any ERISA Affiliate and no Person other than the U.S. Borrower and the ERISA
Affiliates or (b) was so maintained and in
-21-
respect of which the U.S. Borrower or any ERISA Affiliate could have liability
under Section 4069 of ERISA in the event such plan has been or were to be
terminated.
"Subordinated Debt" means (a) the Senior Subordinated Notes, and (b) Debt
-----------------
for money borrowed for which the U.S. Borrower is directly and primarily
obligated which arises after the date hereof which is subordinate in right of
payment to the payment of the principal of and interest on the Notes and the
Parent Guaranty in a manner satisfactory to the Required Banks, provided that
--------
Subordinated Debt under this clause (b) shall not have a stated maturity prior
to May 21, 2004.
"Subsidiary" of any Person means any corporation, partnership, joint
----------
venture, limited liability company, trust, estate or other entity of which (or
in which) more than 50% of (a) the issued and outstanding capital stock having
ordinary voting power to elect a majority of the board of directors of such
corporation or entity (irrespective of whether at the time capital stock of any
other class or classes of such corporation shall or might have voting power upon
the occurrence of any contingency), (b) the interest in the capital or profits
of such limited liability company, partnership, joint venture, or other entity,
or (c) the beneficial interest in such trust or estate, is at the time directly
or indirectly owned or controlled by such Person, by such Person and one or more
of its other Subsidiaries or by one or more of such Person's other Subsidiaries.
"Taxes" has the meaning specified in Section 2.16(a).
-----
"Termination Date" means May 21, 2004, or the earlier date of termination
----------------
in whole of the Commitments pursuant to Section 2.06 or Section 7.01.
"Termination Event" means (a) a "reportable event", as such term is
-----------------
described in Section 4043 of ERISA and the regulations issued thereunder (other
than a "reportable event" not subject to the provision for 30-day notice to the
PBGC), or an event described in Section 4062(e) of ERISA, (b) the distribution
of a notice of intent to terminate a Plan under Section 4041(c) of ERISA or the
treatment of a Plan amendment as a termination under Section 4041(c) of ERISA,
(c) the institution of proceedings to terminate a Plan by the PBGC under Section
4042 of ERISA, or (d) any other event or condition which is reasonably expected
to constitute grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Plan.
"Transfer Letters" means, collectively, the letters in lieu of transfer
----------------
orders executed by the Borrower and any of the Guarantors executing a Mortgage
in the form of the attached Exhibit F, as each of the same may be amended,
modified or supplemented from time-to-time.
"Union Bank" means Union Bank of California, N.A., a national banking
----------
association.
"Unused Canadian Revolving Commitment" means, with respect to any Canadian
------------------------------------
Bank at any time, the lesser of (a) such Bank's Canadian Revolving Commitment at
such time and (b) such Bank's Pro Rata Share of the Canadian Borrowing Base then
in effect at such time minus, in each case the sum of (i) the aggregate
-----
outstanding principal amount of all Canadian Advances owed to
-22-
such Bank at such time plus (ii) Face Amount of all BA Obligations purchased
----
and/or accepted by such Bank (in its capacity as a Bank) outstanding at such
time.
"Unused U.S. Tranche A Commitment" means, with respect to any U.S. Bank at
--------------------------------
any time, the lesser of (a) such Bank's U.S. Tranche A Commitment at such time
and (b) such Bank's Pro Rata Share of the U.S. Borrowing Base then in effect at
such time minus, in each case the sum of (i) the aggregate outstanding principal
-----
amount of all U.S. Tranche A Advances owed to such Bank at such time plus (ii)
----
such Bank's Pro Rata Share of the aggregate Letter of Credit Obligations
outstanding at such time.
"Unused U.S. Tranche B Commitment" means, with respect to any U.S. Bank at
--------------------------------
any time, such Bank's U.S. Tranche B Commitment at such time minus the aggregate
-----
outstanding principal amount of all U.S. Tranche B Advances owed to such Bank at
such time.
"U.S. Administrative Agent" means Union Bank in its capacity as U.S.
-------------------------
Administrative Agent pursuant to Article VIII and any successor in such capacity
pursuant to Section 8.06.
"U.S. Bank" means each Bank listed under the heading "U.S. Banks" on
---------
Schedule II or identified as a U.S. Bank in the Assignment and Acceptance
pursuant to which such Bank became a Bank, as the case may be, in each case in
its capacity as such.
"U.S. Borrower" means The Wiser Oil Company, a Delaware corporation.
-------------
"U.S. Borrowing" means either a U.S. Tranche A Borrowing or a U.S. Tranche
--------------
B Borrowing.
"U.S. Borrowing Base" means at any particular time, the Dollar amount
-------------------
determined in accordance with Section 2.02 on account of Proven Reserves
attributable to Oil and Gas Properties of the Obligors described in the most
recent Independent Engineering Report or Internal Engineering Report, as
applicable, delivered to the Administrative Agents and the Banks pursuant to
Section 2.05.
"U.S. Business Day" means a day (other than a Saturday or Sunday) of the
-----------------
year on which banks are not required or authorized by law to close in Los
Angeles, California and, if the applicable U.S. Business Day relates to any
Eurodollar Rate Advance, on which dealings in U.S. Dollar deposits are carried
on in the London interbank market.
"U.S. Cash Collateral Account" means an account established by the U.S.
----------------------------
Borrower with the U.S. Administrative Agent pursuant to the terms of this
Agreement and designated as the "U.S. Cash Collateral Account".
"U.S. Dollar Equivalent" of any Canadian Dollar amount means, on any date
----------------------
of determination, the U.S. Dollar equivalent of such Canadian Dollar amount
determined by the U.S. Administrative Agent by using the quoted spot rate at
which NBC's principal office in Toronto, Ontario offers to exchange U.S. Dollars
for Canadian Dollars in Toronto at 11:00 a.m. (Los Angeles, California time) on
such date, which determination shall be conclusive in the absence of manifest
-23-
error, or if such principal office is not then quoting such a rate, then such
rate as shown on page BOFC of the Reuters screen at such time on such date.
"U.S. Domestic Lending Office" means, with respect to any U.S. Bank, the
----------------------------
office of such Bank specified as its "U.S. Domestic Lending Office" opposite its
name on Schedule II hereto or in the Assignment and Acceptance pursuant to which
it became a Bank, or such other office of such Bank as such Bank may from time
to time specify to the U.S. Borrower and the U.S. Administrative Agent.
"U.S. Tranche A Advance" means an advance by a U.S. Bank to the U.S.
----------------------
Borrower pursuant to Section 2.01(a) as part of a U.S. Tranche A Borrowing and
refers to a Base Rate Advance or a Eurodollar Rate Advance.
"U.S. Tranche A Borrowing" means a borrowing consisting of U.S. Tranche A
------------------------
Advances made on the same day by the U.S. Banks pursuant to Section 2.01(a).
"U.S. Tranche A Commitment" means, with respect to any Bank at any time,
-------------------------
the amount set forth opposite such Bank's name on Schedule II under the caption
"U.S. Tranche A Commitment" or, if such Bank has entered into one or more
Assignments and Acceptances, set forth for such Bank in the Register maintained
by the U.S. Administrative Agent pursuant to Section 9.08(c) as such Bank's
"U.S. Tranche A Commitment", as such amount may be reduced at or prior to such
time pursuant to Section 2.06(f).
"U.S. Tranche A Note" means a promissory note of the U.S. Borrower payable
-------------------
to the order of any Bank, in substantially the form of Exhibit B-2, evidencing
the aggregate indebtedness of the U.S. Borrower to such Bank resulting from the
U.S. Tranche A Advances owing to such Bank.
"U.S. Tranche B Advance" means an advance by a U.S. Bank to the U.S.
----------------------
Borrower pursuant to Section 2.01(b) as part of a U.S. Tranche B Borrowing and
refers to a Base Rate Advance or a Eurodollar Rate Advance.
"U.S. Tranche B Borrowing" means a borrowing consisting of U.S. Tranche B
------------------------
Advances made on the same day by the U.S. Banks pursuant to Section 2.01(b).
"U.S. Tranche B Commitment" means, with respect to any Bank at any time,
-------------------------
the amount set forth opposite such Bank's name on Schedule II under the caption
"U.S. Tranche B Commitment" or, if such Bank has entered into one or more
Assignments and Acceptances, set forth for such Bank in the Register maintained
by the U.S. Administrative Agent pursuant to Section 9.08(c) as such Bank's
"U.S. Tranche B Commitment", as such amount may be reduced at or prior to such
time pursuant to Section 2.06(f).
"U.S. Tranche B Note" means a promissory note of the U.S. Borrower payable
-------------------
to the order of any Bank, in substantially the form of Exhibit B-3, evidencing
the aggregate indebtedness of the U.S. Borrower to such Bank resulting from the
U.S. Tranche B Advances owing to such Bank.
-24-
"Utilization Level" means the applicable category (being Level I, Level II
-----------------
or Level III) of pricing criteria contained in Schedule I, which is based on the
percentage of utilization of the lesser of the applicable Commitments and the
applicable Borrowing Base.
"Voting Stock" means capital stock issued by a corporation, or equivalent
------------
interests in any other Person, the holders of which are ordinarily, in the
absence of contingencies, entitled to vote for the election of directors (or
persons performing similar functions) of such Person, even if the right so to
vote has been suspended by the happening of such a contingency.
"WIC" means, collectively, Wiser Investment Company, LLC, Dimeling
---
Xxxxxxxxx & Park, and their respective wholly-owned Subsidiaries.
"Wiser Peru" means The Wiser Oil Company of Peru, Ltd., a Cayman Islands
----------
corporation.
"Withdrawal Liability" has the meaning specified in Part I of Subtitle E of
--------------------
Title IV of ERISA.
(b Computation of Time Periods. In this Agreement in the computation of
---------------------------
periods of time from a specified date to a later specified date, the word "from"
means "from and including" and the words "to" and "until" each means "to but
excluding".
(c Accounting Terms. All accounting terms not specifically defined
----------------
herein shall be construed in accordance with GAAP; provided that, the effects of
FASB 133 and the accounting rules thereunder shall be disregarded for the
purpose of calculating compliance with Sections 6.14, 6.15 and 6.16 to the
extent that such effects do not otherwise impact the cash position of the
Borrowers and their consolidated Subsidiaries.
(d Types of Advances. U.S. Tranche A Advances and U.S. Tranche B
-----------------
Advances are distinguished by "U.S. Type." The "U.S. Type" of an Advance refers
to the determination whether such Advance is a Eurodollar Rate Advance or Base
Rate Advance.
(e Miscellaneous. The words "hereof", "herein" and "hereunder" and words
-------------
of similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Article,
Section, Schedule and Exhibit references are to Articles and Sections of and
Schedules and Exhibits to this Agreement, unless otherwise specified. The term
"including" shall mean "including, without limitation,".
-25-
02
AMOUNTS AND TERMS OF THE ADVANCES AND DRAWINGS
(a The Advances; Drawings.
----------------------
(i) Each U.S. Bank severally agrees, on the terms and conditions
hereinafter set forth, to make U.S. Tranche A Advances in U.S. Dollars to the
U.S. Borrower from time to time on any U.S. Business Day during the period from
the date hereof until the Termination Date in an amount for each not to exceed
such Bank's Unused U.S. Tranche A Commitment at such time. Each U.S. Tranche A
Borrowing shall be in an aggregate amount of U.S. $1,000,000 or an integral
multiple of U.S. $100,000 in excess thereof, except that a U.S. Tranche A
Borrowing comprised of Base Rate Advances may be in an amount of U.S. $500,000
or an integral multiple of U.S. $100,000 in excess thereof, and shall consist of
U.S. Tranche A Advances of the same U.S. Type made on the same day by the U.S.
Banks ratably according to their respective U.S. Tranche A Commitments. Within
the limits set forth herein, the U.S. Borrower may borrow, prepay pursuant to
Section 2.11 and reborrow under this Section 2.01(a).
(ii) Each U.S. Bank severally agrees, on the terms and conditions
hereinafter set forth, to make U.S. Tranche B Advances in U.S. Dollars to the
U.S. Borrower from time to time on any U.S. Business Day during the period from
the date hereof until the Termination Date in an amount for each not to exceed
such Bank's Unused U.S. Tranche B Commitment at such time. Each U.S. Tranche B
Borrowing shall be in an aggregate amount of U.S. $1,000,000 or an integral
multiple of U.S. $100,000 in excess thereof, except that a U.S. Tranche B
Borrowing comprised of Base Rate Advances may be in an amount of U.S. $500,000
or an integral multiple of U.S. $100,000 in excess thereof, and shall consist of
U.S. Tranche B Advances of the same U.S. Type made on the same day by the U.S.
Banks ratably according to their respective U.S. Tranche B Commitments. Within
the limits set forth herein, the U.S. Borrower may borrow, prepay pursuant to
Section 2.11 and reborrow under this Section 2.01(b).
(iii) Each Canadian Bank severally agrees, on the terms and
conditions hereinafter set forth, to make Canadian Advances in Canadian Dollars
to the Canadian Borrower from time to time on any Canadian Business Day during
the period from the date hereof until the Termination Date in an amount not to
exceed such Bank's Unused Canadian Revolving Commitment at such time. Each
Canadian Borrowing shall be in an aggregate amount of C$1,000,000 or an integral
multiple of C$100,000 in excess thereof, and shall consist of Canadian Prime
Rate Advances made on the same day by the Canadian Banks ratably according to
their respective Canadian Revolving Commitments. Within the limits set forth
herein, the Canadian Borrower may borrow, prepay pursuant to Section 2.11 and
reborrow under this Section 2.01(c) or draw under Section 2.01(d).
(iv) Each Canadian Bank having a Canadian Revolving Commitment that
is able to complete and accept bankers' acceptances in Canada severally agrees,
on the terms and conditions hereinafter set forth, to accept Drafts (each Draft
so accepted, a "Bankers' Acceptance") for the account of the Canadian Borrower,
and to purchase such Bankers' Acceptances at the applicable Drawing Purchase
Price from time to time on any Canadian Business Day during the period from
-26-
the date hereof until the Termination Date having a Face Amount (determined on
the basis of the U.S. Dollar Equivalent thereof) for all such Bankers'
Acceptances purchased by such Bank at the time of such Drawing not to exceed
such Bank's Unused Canadian Revolving Commitment at such time. Each Canadian
Bank having a Canadian Revolving Commitment that is unable to, or does not as a
matter of public policy, complete and accept bankers' acceptances in Canada
severally agrees, on the terms and conditions hereinafter set forth, to purchase
completed Drafts (which have not been and will not be accepted by such Bank or
any other Person) (each, a "BA Equivalent Note") for the account of the Canadian
Borrower at the applicable Drawing Purchase Price from time to time on any
Canadian Business Day during the period from the date hereof until the
Termination Date having a Face Amount (determined on the basis of the U.S.
Dollar Equivalent thereof) for all such BA Equivalent Notes purchased by such
Bank at the time of such Drawing not to exceed such Bank's Unused Canadian
Revolving Commitment at such time. Each Drawing shall be comprised solely of
Canadian Dollars, shall be in an aggregate Face Amount which, together with any
Canadian Prime Rate Advances made in connection with such Drawing, equals
C$1,000,000 or an integral multiple of C$100,000 in excess thereof and shall
consist of the creation and purchase of Tranche A Bankers' Acceptances or the
purchase of Tranche A BA Equivalent Notes at or about the same time by the
Canadian Banks ratably in accordance with their respective Canadian Revolving
Commitments. Within the limits set forth herein, amounts drawn by the Canadian
Borrower under this Section 2.01(d) and repaid from time to time may be redrawn
by the Canadian Borrower under this Section 2.01(d) or borrowed under Section
2.01(c).
(v) Notwithstanding any other provision in this Agreement, at no time
shall there be more than eight Borrowings and Drawings outstanding; provided
--------
that for the purposes of this Section 2.01(e), any one or more Base Rate
Advances that are outstanding at any one time collectively shall count as a
single Borrowing, and any one or more Canadian Prime Rate Advances that are
outstanding at any one time collectively shall count as a single Borrowing.
-27-
(b Making the Advances. (i) Each U.S. Borrowing shall be made on
-------------------
notice (a "Notice of U.S. Borrowing"), given not later than (i) 10:00 A.M. (Los
Angeles, California time) on the date of a proposed U.S. Borrowing comprised of
Base Rate Advances and (ii) 11:00 A.M. (Los Angeles, California time) on the
third Business Day prior to the date of a proposed U.S. Borrowing comprised of
Eurodollar Rate Advances, by the U.S. Borrower to the U.S. Administrative Agent,
which shall give to each U.S. Bank prompt notice thereof by telecopier. Each
Notice of U.S. Borrowing shall be by telecopier, in substantially the form of
Exhibit G-1, specifying therein the requested (i) date of such U.S. Borrowing,
(ii) U.S. Type of Advances comprising such U.S. Borrowing (which shall be Base
Rate Advances or Eurodollar Rate Advances), (iii) aggregate amount of such U.S.
Borrowing, and (iv) if such U.S. Borrowing is to be comprised of Eurodollar Rate
Advances, the initial Interest Period for each such Advance. Each Bank shall,
before 12:00 noon (Los Angeles, California time) on the date of such U.S.
Borrowing, make available for the account of its Applicable Lending Office to
the U.S. Administrative Agent at its address referred to in Section 9.02, in
same day funds, such Bank's ratable portion of such U.S. Borrowing in U.S.
Dollars. Promptly after (i) the U.S. Administrative Agent's receipt of such
funds and (ii) fulfillment of the applicable conditions set forth in Article III
(which fulfillment the U.S. Administrative Agent may assume in the absence of
actual knowledge, or notice received from either Borrower or the Required Banks,
to the contrary), the U.S. Administrative Agent will make such funds available
to the U.S. Borrower at an account in the United States designated by the U.S.
Borrower in the Notice of U.S. Borrowing or, if the U.S. Borrower does not so
designate, the U.S. Administrative Agent's aforesaid address.
(ii) Subject to Section 2.04, each Canadian Borrowing shall be made
on notice (a "Notice of Canadian Borrowing"), given not later than 11:00 A.M.
(Los Angeles, California time) on the first Canadian Business Day prior to the
date of a proposed Canadian Borrowing, by the Canadian Borrower to the U.S.
Administrative Agent, which shall give to each Canadian Bank and the Canadian
Administrative Agent prompt notice thereof by telecopier. Each Notice of
Canadian Borrowing shall be by telecopier, in substantially the form of Exhibit
G-2, specifying therein the requested (i) date of such Canadian Borrowing, and
(ii) aggregate amount of such Canadian Borrowing. Each Bank shall, before 12:00
noon (Los Angeles, California time) on the date of such Canadian Borrowing, make
available for the account of its Applicable Lending Office to the Canadian
Administrative Agent at its address referred to in Section 9.02, in same day
funds, such Bank's ratable portion of such Canadian Borrowing in Canadian
Dollars. Promptly after (i) the Canadian Administrative Agent's receipt of such
funds and (ii) fulfillment of the applicable conditions set forth in Article III
(which fulfillment the Canadian Administrative Agent may assume in the absence
of actual knowledge, or notice received from either Borrower or the Required
Banks, to the contrary), the Canadian Administrative Agent will make such funds
available to the Canadian Borrower at an account in Canada designated by the
Canadian Borrower in the Notice of Canadian Borrowing or, if the Canadian
Borrower does not so designate, the Canadian Administrative Agent's aforesaid
address.
(iii) Each Notice of Borrowing shall be irrevocable and binding on
the Borrowers. In the case of any Borrowing that the related Notice of
Borrowing specifies is to be comprised of Eurodollar Rate Advances, the U.S.
Borrower shall indemnify each Bank against any loss, cost or expense actually
incurred by such Bank as a result of any failure by the U.S. Borrower to fulfill
on or before the date specified in such Notice of Borrowing for such Borrowing
the applicable
-28-
conditions set forth in Article III, including any loss (excluding loss of
anticipated profits), cost or expense actually incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by such Bank to
fund the Advance to be made by such Bank as part of such Borrowing when such
Advance, as a result of such failure, is not made on such date.
(iv) Unless the Administrative Agent to which a Notice of U.S.
Borrowing or a Notice of Canadian Borrowing has been given shall have received
notice from a Bank prior to the date of any Borrowing that such Bank will not
make available to such Administrative Agent such Bank's ratable portion of such
Borrowing, such Administrative Agent may assume that such Bank has made such
portion available to such Administrative Agent on the date of such Borrowing in
accordance with this Section 2.02 and such Administrative Agent may, in reliance
upon such assumption, make available to the appropriate Borrower on such date a
corresponding amount. If and to the extent that such Bank shall not have so
made such ratable portion available to such Administrative Agent, such Bank and
the Borrower receiving such corresponding amount severally agree to repay to
such Administrative Agent forthwith on demand such corresponding amount together
with interest thereon, for each day from the date such amount is made available
to such Borrower until the date such amount is repaid to such Administrative
Agent, at (i) in the case of such Borrower, the interest rate applicable at the
time to Advances comprising such Borrowing and (ii) in the case of such Bank,
(a) if such Borrowing is a U.S. Borrowing, the Federal Funds Rate and (b) if
such Borrowing is a Canadian Borrowing, the Canadian Interbank Rate. If such
Bank shall repay to such Administrative Agent such corresponding amount, such
amount so repaid shall constitute such Bank's Advance as part of such Borrowing
for all purposes.
(v) The failure of any Bank to make the Advance to be made by it as
part of any Borrowing shall not relieve any other Bank of its obligation, if
any, hereunder to make its Advance on the date of such Borrowing, but no Bank
shall be responsible for the failure of any other Bank to make the Advance to be
made by such other Bank on the date of any Borrowing.
(vi) The indebtedness of the U.S. Borrower to each U.S. Bank
resulting from U.S. Tranche A Advances owing to such Bank shall be evidenced by
a U.S. Tranche A Note payable to the order of such Bank in substantially the
form of Exhibit B-2. The indebtedness of the U.S. Borrower to each U.S. Bank
resulting from U.S. Tranche B Advances owing to such Bank shall be evidenced by
a U.S. Tranche B Note payable to the order of such Bank in substantially the
form of Exhibit B-3. The indebtedness of the Canadian Borrower to each Canadian
Bank resulting from Canadian Advances owing to such Bank shall be evidenced by a
Canadian Note payable to the order of such Bank in substantially the form of
Exhibit B-1.
(c) Letters of Credit.
-----------------
(i) Commitment. From time to time from the date of this Agreement
----------
until the Termination Date, at the request of the U.S. Borrower, the Issuing
Bank shall, on the terms and conditions hereinafter set forth, issue, increase,
or extend the expiration date of Letters of Credit for the account of the U.S.
Borrower on any U.S. Business Day. No Letter of Credit shall be issued,
increased, or extended:
-29-
(1) unless such issuance, increase, or extension would not
cause the Letter of Credit Exposure to exceed the lesser of (A) $2,500,000
or (B) the Unused U.S. Tranche A Commitment;
(2) unless such Letter of Credit has an expiration date not
later than the earlier of (A) 12 months after the date of issuance thereof
(or, if extendable beyond such period, unless such Letter of Credit is
cancelable upon at least 30 days' notice given by the Issuing Bank to the
beneficiary of such Letter of Credit) and (B) the Termination Date;
(3) unless such Letter of Credit Documents are in form and
substance acceptable to the Issuing Bank in its sole discretion;
(4) unless such Letter of Credit is a standby letter of credit
not supporting the repayment of indebtedness for borrowed money of any
Person; and
(5) unless the Borrower has delivered to the Issuing Bank a
completed and executed Letter of Credit Application.
(ii) Participations. Upon the date of the issuance or increase of a
--------------
Letter of Credit, the Issuing Bank shall be deemed to have sold to each other
U.S. Bank having a U.S. Tranche A Commitment and each other U.S. Bank having a
U.S. Tranche A Commitment shall have been deemed to have purchased from the
Issuing Bank a participation in the related Letter of Credit Obligations equal
to such U.S. Bank's Pro Rata Share at such date and such sale and purchase shall
otherwise be in accordance with the terms of this Agreement. The Issuing Bank
shall promptly notify each such participant U.S. Bank by telex, telephone, or
telecopy of each Letter of Credit issued, increased, or extended or converted
and the actual dollar amount of such Bank's participation in such Letter of
Credit.
(iii) Issuing. Each Letter of Credit shall be issued, increased, or
-------
extended pursuant to a Letter of Credit Application (or by telephone notice
promptly confirmed in writing by a Letter of Credit Application), given not
later than 11:00 a.m. (Los Angeles, California, time) on the fifth Business Day
before the date of the proposed issuance, increase, or extension of the Letter
of Credit, and the U.S. Administrative Agent shall give to each U.S. Bank having
a U.S. Tranche A Commitment prompt notice of thereof by telex, telephone, or
telecopy. Each Letter of Credit Application shall be given by telecopier or
telex, confirmed immediately in writing, specifying the information required
therein. After the U.S. Administrative Agent's receipt of such Letter of Credit
Application and upon fulfillment of the applicable conditions set forth in
Article III, the U.S. Administrative Agent shall issue, increase, or extend such
Letter of Credit for the account of the U.S. Borrower. Each Letter of Credit
Application shall be irrevocable and binding on the U.S. Borrower.
(iv) Reimbursement. The U.S. Borrower hereby agrees to pay on
-------------
demand to the Issuing Bank an amount equal to any amount paid by the Issuing
Bank under any Letter of Credit. In the event the Issuing Bank makes a payment
pursuant to a request for draw presented under a Letter of Credit and such
payment is not promptly reimbursed by the U.S. Borrower upon demand, the Issuing
Bank shall give the U.S. Administrative Agent notice of the U.S. Borrower's
failure to
-30-
make such reimbursement and the U.S. Administrative Agent shall promptly notify
each U.S. Bank of the amount necessary to reimburse the Issuing Bank. Upon such
notice from the U.S. Administrative Agent, each U.S. Bank shall promptly
reimburse the Issuing Bank for such U.S. Bank's Pro Rata Share of such amount,
and such reimbursement shall be deemed for all purposes of this Agreement to be
a U.S. Tranche A Advance to the U.S. Borrower transferred at the U.S. Borrower's
request to the Issuing Bank. If such reimbursement is not made by any U.S. Bank
to the Issuing Bank on the same day on which the U.S. Administrative Agent
notifies such U.S. Bank to make reimbursement to the Issuing Bank hereunder,
such U.S. Bank shall pay interest on its Pro Rata Share thereof to the Issuing
Bank at a rate per annum equal to the Federal Funds Rate. The U.S. Borrower
hereby unconditionally and irrevocably authorizes, empowers, and directs the
U.S. Administrative Agent and the U.S. Banks to record and otherwise treat such
reimbursements to the Issuing Bank as Base Rate Advances under a U.S. Tranche A
Borrowing requested by the U.S. Borrower to reimburse the Issuing Bank which
have been transferred to the Issuing Bank at the U.S. Borrower's request.
(v) Obligations Unconditional. The obligations of the U.S.
-------------------------
Borrower under this Agreement in respect of each Letter of Credit shall be
unconditional and irrevocable, and shall be paid strictly in accordance with the
terms of this Agreement under all circumstances, including, without limitation,
the following circumstances:
(1) any lack of validity or enforceability of any Letter of
Credit Documents;
(2) any amendment or waiver of, or any consent to, departure
from any Letter of Credit Documents;
(3) the existence of any claim, set-off, defense, or other
right which the U.S. Borrower may have at any time against any beneficiary
or transferee of such Letter of Credit (or any Persons for whom any such
beneficiary or any such transferee may be acting), the Issuing Bank, or any
other person or entity, whether in connection with this Agreement, the
transactions contemplated in this Agreement or in any Letter of Credit
Documents, or any unrelated transaction; or
(4) any statement or any other document presented under such
Letter of Credit proving to be forged, fraudulent, invalid, or insufficient
in any respect or any statement therein being untrue or inaccurate in any
respect to the extent the Issuing Bank would not be liable therefor
pursuant to the following paragraph (f); or
(5) payment by the Issuing Bank under such Letter of Credit
against presentation of a draft or certificate which does not comply with
the terms of such Letter of Credit.
(vi) Liability of Issuing Bank. The U.S. Borrower assumes all risks
-------------------------
of the acts or omissions of any beneficiary or transferee of any Letter of
Credit with respect to its use of such
-31-
Letter of Credit. Neither the Issuing Bank nor any of its officers or directors
shall be liable or responsible for:
(1) the use which may be made of any Letter of Credit or any
acts or omissions of any beneficiary or transferee in connection therewith;
(2) the validity, sufficiency, or genuineness of documents, or
of any endorsement thereon, even if such documents should prove to be in
any or all respects invalid, insufficient, fraudulent, or forged;
(3) payment by the Issuing Bank against presentation of
documents which do not comply with the terms of a Letter of Credit,
including failure of any documents to bear any reference or adequate
reference to the relevant Letter of Credit; or
(4) any other circumstances whatsoever in making or failing to
make payment under any Letter of Credit (INCLUDING THE ISSUING BANK'S OWN
NEGLIGENCE),
except that the U.S. Borrower shall have a claim against the Issuing Bank, and
------
the Issuing Bank shall be liable to the U.S. Borrower, to the extent of any
direct, as opposed to consequential, damages suffered by the U.S. Borrower which
the U.S. Borrower proves were caused by (A) the Issuing Bank's willful
misconduct or gross negligence in determining whether documents presented under
a Letter of Credit comply with the terms of such Letter of Credit or (B) the
Issuing Bank's willful failure to make lawful payment under any Letter of Credit
after the presentation to it of a draft and certificate strictly complying with
the terms and conditions of such Letter of Credit. In furtherance and not in
limitation of the foregoing, the Issuing Bank may accept documents that appear
on their face to be in order, without responsibility for further investigation,
regardless of any notice or information to the contrary.
(vii) U.S. Cash Collateral Account.
----------------------------
(1) If the U.S. Borrower is required to deposit funds in the
U.S. Cash Collateral Account pursuant to Sections 2.11, 2.12, 7.02(b), or
7.03(b), then the U.S. Borrower and the U.S. Administrative Agent shall
establish the U.S. Cash Collateral Account and the U.S. Borrower shall
execute any documents and agreements, including the U.S. Administrative
Agent's standard form assignment of deposit accounts, that the U.S.
Administrative Agent requests in connection therewith to establish the U.S.
Cash Collateral Account and grant the U.S. Administrative Agent a first
priority security interest in such account and the funds therein. The U.S.
Borrower hereby pledges to the U.S. Administrative Agent and grants the
U.S. Administrative Agent a security interest in the U.S. Cash Collateral
Account, whenever established, all funds held in the U.S. Cash Collateral
Account from time to time, and all proceeds thereof as security for the
payment of the Obligations.
(2) So long as no Event of Default Exists, (A) the U.S.
Administrative Agent may apply the funds held in the U.S. Cash Collateral
Account only to the
-32-
reimbursement of any Letter of Credit Obligations, and (B) the U.S.
Administrative Agent shall release to the U.S. Borrower at the U.S.
Borrower's written request any funds held in the U.S. Cash Collateral
Account in an amount up to but not exceeding the excess, if any
(immediately prior to the release of any such funds), of the total amount
of funds held in the U.S. Cash Collateral Account over the sum of the
deposits to the U.S. Cash Collateral Account required under Section 2.12
plus the Letter of Credit Exposure. During the existence of any Event of
----
Default, the U.S. Administrative Agent may apply any funds held in the U.S.
Cash Collateral Account to the Obligations in any order determined by the
U.S. Administrative Agent, regardless of any Letter of Credit Exposure
which may remain outstanding. The U.S. Administrative Agent may in its
sole discretion at any time release to the U.S. Borrower any funds held in
the U.S. Cash Collateral Account.
(3) The U.S. Administrative Agent shall exercise reasonable
care in the custody and preservation of any funds held in the U.S. Cash
Collateral Account and shall be deemed to have exercised such care if such
funds are accorded treatment substantially equivalent to that which the
U.S. Administrative Agent accords its own property, it being understood
that the U.S. Administrative Agent shall not have any responsibility for
taking any necessary steps to preserve rights against any parties with
respect to any such funds.
(d) Drawings of BA Obligations. (i) Each Drawing shall be made on notice,
--------------------------
given not later than 11:00 a.m. (Los Angeles, California time) on the third
Canadian Business Day prior to the date of the proposed Drawing, by the Canadian
Borrower to the U.S. Administrative Agent, which shall give the Canadian
Administrative Agent and each Canadian Bank prompt notice thereof by telecopier.
Each notice of a Drawing (a "Notice of Drawing") shall be by telecopier, in
substantially the form of Exhibit I, specifying therein the requested (i) date
of such Drawing (which shall be a Canadian Business Day), (ii) aggregate Face
Amount of such Drawing, and (iii) the Maturity Date for each BA Obligation
comprising part of such Drawing (which shall be identical for each Canadian
Bank). Each Draft and BA Equivalent Note in connection with any requested
Drawing (A) shall be in an amount of C$100,000 or an integral multiple of
C$100,000 in excess thereof, and (B) shall be dated the date of the proposed
Drawing. In the event that the Face Amount of any Drawing requested by the
Canadian Borrower pursuant to any Notice of Drawing is an amount which, if
divided ratably among the Canadian Banks would not result in each Canadian Bank
accepting a Draft or purchasing a BA Equivalent Note which has an undiscounted
face amount equal to C$100,000 or an integral multiple of C$100,000 in excess
thereof, then notwithstanding any provision in this Agreement to the contrary,
the Canadian Administrative Agent is authorized by the Canadian Borrower and the
Canadian Banks to allocate among the Canadian Banks, the Drafts to be accepted
and purchased and BA Equivalent Notes to be purchased in such manner and amounts
as the Canadian Administrative Agent may, in its sole discretion, acting
reasonably, consider necessary, rounding up or down, so as to ensure that no
Canadian Bank is required to accept a Draft for a fraction of C$100,000 and, in
such event, the Canadian Banks' ratable share with respect to such Drafts and BA
Equivalent Notes shall be adjusted accordingly; provided that no Canadian Bank
--------
shall be required to purchase any Bankers Acceptance or BA Equivalent Note to
the extent that the Face Amount thereof exceeds its then Unused Canadian
Revolving Commitment. Each such Canadian Bank shall fund any portion of its
allocated share in excess of its Bankers' Acceptance or BA Equivalent Note in
the form of a Canadian Prime Rate Advance, which shall for all purposes be
-33-
deemed to be a Canadian Borrower Advance made pursuant to Section 2.01(b). Each
Canadian Bank shall, before 12:00 noon (Los Angeles, California time) on the
date of each Drawing, (1) in the case of each Canadian Bank able to complete and
accept bankers' acceptances in Canada, complete one or more Drafts in accordance
with the related Notice of Drawing, accept such Drafts and purchase the Bankers'
Acceptances created thereby for the Drawing Purchase Price, or (2) in the case
of each Canadian Bank that is not able to complete and accept bankers'
acceptances in Canada, complete one or more BA Equivalent Notes in accordance
with the related Notice of Drawing and purchase such completed BA Equivalent
Notes for the Drawing Purchase Price, and, in any case, shall, before 12:00 noon
(Los Angeles, California time) on such date, make available for the account of
its Applicable Lending Office to the Canadian Administrative Agent at its
address referenced to in Section 9.02, in same day funds, the Drawing Purchase
Price payable by such Bank for such Drawing less the Drawing Fee payable to such
Bank with respect thereto under Section 2.08(d). Promptly after the fulfillment
of the applicable conditions set forth in Article III (which fulfillment the
Canadian Administrative Agent may assume in the absence of actual knowledge, or
notice received from either Borrower or the Required Banks, to the contrary),
the Canadian Administrative Agent will make the funds it has received from the
Canadian Banks available to the Canadian Borrower at an account in Canada
designated by the Canadian Borrower in the Notice of Canadian Borrowing or, if
the Canadian Borrower does not so designate, the Canadian Administrative Agent's
aforesaid address.
(ii) Anything in Section 2.04(a) to the contrary notwithstanding,
the Canadian Borrower may not select a Drawing if the obligation of the Canadian
Banks to purchase Bankers' Acceptances shall then be suspended pursuant to
Section 2.04(d), Section 2.10 or Section 2.18.
(iii) Each Notice of Drawing shall be irrevocable and binding on the
Canadian Borrower. In the case of any proposed Drawing, the Canadian Borrower
shall indemnify each Canadian Bank against any loss, cost or expense actually
incurred by such Bank as a result of any failure by the Canadian Borrower to
fulfill on or before the date specified in the Notice of Drawing for such
Drawing the applicable conditions set forth in Article III, including, without
limitation, any loss (excluding loss of anticipated profits), cost or expense
actually incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by such Bank to fund the Drawing Purchase Price to be paid
by such Bank as part of such Drawing when, as a result of such failure, such
Drawing is not made on such date.
(iv) (1) If, with respect to any proposed Drawing, the Canadian
Administrative Agent determines in good faith that circumstances affecting the
money markets at the time any related Notice of Drawing is delivered or is
outstanding will result in no market for the Bankers' Acceptances to be created
in connection with such Drawing or an insufficient demand for such Bankers'
Acceptances to allow the Banks creating such Bankers' Acceptances to sell or
trade the Bankers' Acceptances to be created and purchased or discounted by them
hereunder in connection with such Drawing, then, upon notice to the Canadian
Borrower and the Canadian Banks thereof, (A) the Drawing requested therein shall
not be made and the Notice of Drawing with respect to such proposed Drawing
shall be deemed to be a Notice of Canadian Borrowing requesting a Canadian
Borrowing in an amount equal to the requested Face Amount of such Drawing and
(B) the right of the Canadian Borrower to request a Drawing, and the obligation
of the Canadian Banks to complete and accept Drafts and/or to purchase Bankers'
Acceptances or BA Equivalent Notes, shall be
-34-
suspended until the Canadian Administrative Agent shall notify such Borrower
that the circumstances causing such suspension no longer exist.
(2) Upon the occurrence and during the continuance of any Event
of Default, the obligation of the Canadian Banks to purchase and/or accept BA
Obligations, and the right of the Canadian Borrower to request a Drawing, shall
be suspended.
(v) Unless the Canadian Administrative Agent shall have received
notice from a Canadian Bank prior to the date of any Drawing that such Bank will
not make available to it such Bank's ratable share of such Drawing in accordance
with Section 2.04(a), such Administrative Agent may assume that such Bank has
made such ratable share available to it on the date of such Drawing in
accordance with Section 2.04(a) and such Administrative Agent may, in reliance
upon such assumption, make available to the Canadian Borrower on such date a
corresponding amount. If and to the extent that any such Bank shall not have so
made such ratable share available to the Canadian Administrative Agent, such
Bank and the Canadian Borrower severally agree to repay to the Canadian
Administrative Agent forthwith on demand such corresponding amount, together
with interest thereon, for each day from the date such amount is made available
to the Canadian Borrower until the date such amount is repaid to such
Administrative Agent, at (i) in the case of the Canadian Borrower, a rate per
annum equal to the annual yield resulting from application of the Bankers'
Acceptance Rate used in calculating the Drawing Purchase Price with respect to
such Drawing, and (ii) in the case of such Bank, the Canadian Interbank Rate.
If such Bank shall pay to the Canadian Administrative Agent such corresponding
amount, such amount so paid shall constitute such Bank's BA Obligation as part
of such Drawing for all purposes under this Agreement.
(vi) To enable the Canadian Banks to create Bankers' Acceptances or
to complete BA Equivalent Notes in accordance with Section 2.01(d) and this
Section 2.03, the Canadian Borrower shall supply each Canadian Bank, (i) upon
the Canadian Borrower's execution of this Agreement, with such number of Drafts
and signed blank BA Equivalent Notes provided to the Canadian Borrower by the
Canadian Administrative Agent as the Canadian Administrative Agent may
reasonably request and (ii) after the date hereof, such number of Drafts and
signed blank BA Equivalent Notes provided to the Canadian Borrower by the
Canadian Administrative Agent as the Canadian Administrative Agent may from time
to time reasonably request, in each case duly endorsed and executed on behalf of
the Canadian Borrower by any one or more of its duly authorized officers. Each
Canadian Bank shall exercise such care in the custody and safekeeping of any
Drafts and BA Equivalent Notes in its possession from time to time as it would
exercise in the custody and safekeeping of similar property owned by it. The
signatures of officers of the Canadian Borrower on Drafts and BA Equivalent
Notes may be mechanically reproduced in facsimile and Bankers' Acceptances and
BA Equivalent Notes bearing such facsimile signatures shall be binding upon the
Canadian Borrower as if they had been manually signed by such officers.
Notwithstanding that any of the individuals whose manual or facsimile signature
appears on any Draft or BA Equivalent Note as one of such officers may no longer
hold office at the date of such draft or at the date of its acceptance by a Bank
hereunder or at any time thereafter, any Draft or Bankers' Acceptance or BA
Equivalent Note so signed shall be valid and binding upon, and enforceable
against, the Canadian Borrower.
-35-
(vii) Bankers' Acceptances purchased by a Canadian Bank in accordance
with the terms of Section 2.01(d), Section 2.03 or Section 2.19 may, in such
Bank's sole discretion, be held by such Bank for its own account until the
applicable Maturity Date or sold, rediscounted or otherwise disposed of by it at
any time prior thereto in any relevant market therefor.
(viii) The failure of any Canadian Bank to fund the Drawing Purchase
Price to be funded by it as part of any Drawing shall not relieve any other
Canadian Bank of its obligation hereunder to fund its Drawing Purchase Price on
the date of such Drawing, but no Canadian Bank shall be responsible for the
failure of any other Canadian Bank to fund the Drawing Purchase Price to be
funded by such other Canadian Bank on the date of any Drawing.
(ix) Canadian Cash Collateral Account.
--------------------------------
(1) If the Canadian Borrower is required to deposit funds in
the Canadian Cash Collateral Account pursuant to Sections 2.11, 2.13, 2.18,
7.02(b), or 7.03(b), then the Canadian Borrower and the Canadian
Administrative Agent shall establish the Canadian Cash Collateral Account
and the Canadian Borrower shall execute any documents and agreements,
including the Canadian Administrative Agent's standard form assignment of
deposit accounts, that the Canadian Administrative Agent requests in
connection therewith to establish the Canadian Cash Collateral Account and
grant the Canadian Administrative Agent a first priority security interest
in such account and the funds therein. The Canadian Borrower hereby pledges
to the Canadian Administrative Agent and grants the Canadian Administrative
Agent a security interest in the Canadian Cash Collateral Account, whenever
established, all funds held in the Canadian Cash Collateral Account from
time to time, and all proceeds thereof as security for the payment of the
Obligations.
(2) So long as no Event of Default Exists, (A) the Canadian
Administrative Agent may apply the funds held in the Canadian Cash
Collateral Account only to the reimbursement of any BA Obligations, and (B)
the Canadian Administrative Agent shall release to the Canadian Borrower at
the Canadian Borrower's written request any funds held in the Canadian Cash
Collateral Account in an amount up to but not exceeding the excess, if any
(immediately prior to the release of any such funds), of the total amount
of funds held in the Canadian Cash Collateral Account over the sum of the
amounts required to be deposited in the Canadian Cash Collateral Account
pursuant to Section 2.13 plus the BA Obligations. During the existence of
----
any Event of Default, the Canadian Administrative Agent may apply any funds
held in the Canadian Cash Collateral Account to the Obligations in any
order determined by the Canadian Administrative Agent, regardless of any
Letter of Credit Exposure which may remain outstanding. The Canadian
Administrative Agent may in its sole discretion at any time release to the
Canadian Borrower any funds held in the Canadian Cash Collateral Account.
(3) The Canadian Administrative Agent shall exercise reasonable
care in the custody and preservation of any funds held in the Canadian Cash
Collateral Account and shall be deemed to have exercised such care if such
funds are accorded treatment substantially equivalent to that which the
Canadian Administrative Agent accords its own
-36-
property, it being understood that the Canadian Administrative Agent shall
not have any responsibility for taking any necessary steps to preserve
rights against any parties with respect to any such funds.
(e) Borrowing Bases.
---------------
(i) Initial Borrowing Base. The respective Borrowing Bases to be
----------------------
in effect as of any day during the period beginning as of the date of this
Agreement and continuing thereafter until the first redetermination of the
Borrowing Bases pursuant to this Section 2.05 have been set by the
Administrative Agent and the Banks and acknowledged by the Borrowers as (i) with
respect to the U.S. Borrowing Base, U.S. $10,000,000, and (ii) with respect to
the Canadian Borrowing Base, an amount expressed in Canadian Dollars which is
the then Canadian Dollar Equivalent on such day of U.S. $20,000,000
(ii) Calculation of Borrowing Bases.
------------------------------
(1) The Borrowers shall deliver to the Administrative Agents
and each of the Banks on or before each March 31, beginning March 31, 2002,
an Independent Engineering Report and such other information as may be
reasonably requested by any Bank with respect to the Oil and Gas Properties
included or to be included in the Borrowing Bases. Within 30 days after the
Administrative Agents' and the Banks' receipt of such Independent
Engineering Report and other information, the Administrative Agents shall
deliver to each Bank the Administrative Agents' recommendation for the
redetermined U.S. Borrowing Base and the Canadian Borrowing Base. Within 15
days after the Banks' receipt of the Administrative Agents' recommendation,
the Administrative Agents and the Banks shall redetermine the U.S.
Borrowing Base and the Canadian Borrowing Base in accordance with Section
2.05(d) and the Administrative Agents shall promptly notify the Borrowers
in writing of the amount of the Borrowing Bases as so redetermined.
(2) The Borrowers shall deliver to the Administrative Agents
and each Bank on or before each September 30, beginning September 30, 2001,
an Internal Engineering Report and such other information as may be
reasonably requested by the Administrative Agents or any Bank with respect
to the Oil and Gas Properties included or to be included in the Borrowing
Bases. Within 30 days after the Administrative Agents and the Banks'
receipt of such Internal Engineering Report and other information, the
Administrative Agents shall deliver to each Bank the Administrative Agents'
recommendation for the redetermined Borrowing Base. Within 15 days after
the Banks' receipt of the Administrative Agents' recommendation, the
Administrative Agents and the Banks shall redetermine the Borrowing Base in
accordance with Section 2.05(d) and the Administrative Agents shall
promptly notify the Borrowers in writing of the amount of the Borrowing
Bases as so redetermined.
(3) In the event that the Borrowers do not furnish to the
Administrative Agents and the Banks the Independent Engineering Report,
Internal Engineering Report or other information specified in clauses (i)
and (ii) above by the date specified therein, the
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Administrative Agents and the Banks may nonetheless redetermine the
Borrowing Bases and redesignate the Borrowing Bases from time-to-time
thereafter in their sole discretion until the Administrative Agents and the
Banks receive the relevant Independent Engineering Report, Internal
Engineering Report, or other information, as applicable, whereupon the
Administrative Agents and the Banks shall redetermine the Borrowing Bases
as otherwise specified in this Section 2.05.
(4) Each delivery of an Engineering Report by the Borrowers to
the Administrative Agents and the Banks shall constitute a representation
and warranty by the Borrowers to the Administrative Agents and the Banks
that (A) the Borrowers and the other Obligors, as applicable, own the Oil
and Gas Properties specified therein free and clear of any Liens (except
Permitted Liens), and (B) on and as of the date of such Engineering Report
each Collateral described as "proved developed" therein was developed for
oil and gas, and the xxxxx pertaining to such Collateral that are described
therein as producing xxxxx ("Xxxxx"), were each producing oil and gas in
-----
paying quantities, except for Xxxxx that were unitized as water or gas
injection xxxxx or as water disposal xxxxx.
(iii) Interim Redeterminations.
------------------------
(1) In addition to the Borrowing Base redeterminations provided
for in Section 2.05(b), the Administrative Agents and the Banks may, either
in their sole discretion or at the request of the Borrowers and based on
such information as the Administrative Agents and the Banks deem relevant
(but in accordance with Section 2.05(d)), make one additional
redetermination of the Borrowing Bases during any 12-month period. The
party requesting the redetermination shall give the other party at least 10
days' prior written notice that a redetermination of the Borrowing Bases
pursuant to this paragraph (c) is to be performed.
(2) In addition to the optional interim Borrowing Base
redeterminations provided for in the preceding clause (i), the
Administrative Agents and the Banks may also redetermine the Borrowing
Bases on or after the 45th day following the acquisition by the Obligors,
using the proceeds of a U.S. Tranche B Borrowing, of any Oil and Gas
Properties (or the acquisition of such Obligor of at least 50.1% of the
capital stock (or other ownership interests) of any Person owning Oil and
Gas Properties) for which the consideration paid by such Obligor exceeds
U.S. $1,000,000 (or the Canadian Dollar Equivalent thereof) in the
aggregate.
(3) In connection with any redetermination of the Borrowing
Base under this Section 2.05(c), the Borrowers shall provide the
Administrative Agents and the Banks with such information regarding the
Borrowers and the other Obligors' business (including, without limitation,
its Oil and Gas Properties, the Proven Reserves, and production relating
thereto) as the Administrative Agents or any Bank may request, including,
in the case of requests for an increase to the Borrowing Base of U.S.
$1,000,000.00 (or the Canadian Dollar Equivalent thereof) or more, an
updated Independent Engineering Report. The Administrative Agents shall
promptly notify the Borrowers in writing of each
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redetermination of the Borrowing Bases pursuant to this Section 2.05(c) and
the amount of the Borrowing Bases as so redetermined.
(iv) Standards for Redetermination. Each redetermination of the
-----------------------------
Borrowing Bases by the Administrative Agents and the Banks pursuant to this
Section 2.05 shall be made (i) in the sole discretion of the Administrative
Agents and the Banks (but in accordance with the other provisions of this
Section 2.05(d)), (ii) in accordance with the Administrative Agents' and the
Banks' customary internal standards and practices for valuing and redetermining
the value of Oil and Gas Properties in connection with reserve based oil and gas
loan transactions, (iii) in conjunction with the most recent Independent
Engineering Report or Internal Engineering Report, as applicable, or other
information received by the Administrative Agents and the Banks relating to the
Proven Reserves of the Borrowers and the other Obligors, and (iv) based upon the
estimated value of the Proven Reserves owned by the Borrowers and the other
Obligors as determined by the Administrative Agents and the Banks. In valuing
and redetermining the Borrowing Bases, the Administrative Agents and the Banks
may also consider the business, financial condition, and Indebtedness
obligations of the Borrowers and the other Obligors and such other factors as
the Administrative Agents and the Banks customarily deem appropriate. In that
regard, the Borrowers acknowledge that the determination of the Borrowing Bases
contains an equity cushion (market value in excess of loan value), which is
essential for the adequate protection of the Administrative Agents and the
Banks. At all times after the Administrative Agents have given the Borrowers
notification of a redetermination of the Borrowing Bases under this Section
2.05, the Borrowing Bases shall be equal to the redetermined amounts or such
lesser amounts designated by the Borrowers and disclosed in writing to the
Administrative Agents and the Banks until the Borrowing Bases are subsequently
redetermined in accordance with this Section 2.05.
(v) Asset Sales. The Borrowing Base shall automatically reduce by the
-----------
loan value assigned to each Oil and Gas Property in the Borrowing Bases and sold
by the Borrowers or the other Obligors.
(f) Fees; Reduction of Commitments. (i) The U.S. Borrower agrees to pay
------------------------------
to the U.S. Administrative Agent for the account of each U.S. Bank having a U.S.
Tranche A Commitment a commitment fee on the average daily Unused U.S. Tranche A
Commitment of such U.S. Bank. The U.S. Borrower agrees to pay to the U.S.
Administrative Agent for the account of each U.S. Bank having a U.S. Tranche B
Commitment a commitment fee on the average daily Unused U.S. Tranche B
Commitment of such U.S. Bank. The Canadian Borrower agrees to pay to the
Canadian Administrative Agent for the account of each Canadian Bank having a
Canadian Revolving Commitment a commitment fee on the average daily Unused
Canadian Revolving Commitment of such Canadian Bank. In each case payment of
commitment fees will be in respect of the relevant Bank's Unused U.S. Tranche A
Commitment, Unused U.S. Tranche B Commitment, or Unused Canadian Revolving
Commitment from the date hereof in the case of each Bank listed on the signature
pages hereof, and from the effective date specified in the Assignment and
Acceptance pursuant to which it became a Bank in the case of each other Bank,
until the Termination Date, payable quarterly in arrears on the last day of each
March, June, September and December hereafter, commencing June 30, 2001, and on
the Termination Date, at a rate per annum equal to the Commitment Fee Rate in
effect from time to time.
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(ii) The U.S. Borrower agrees to pay to the U.S. Administrative
Agent for the account of the Banks in connection with any incremental increase
of the sum of the U.S. Borrowing Base and the U.S. Dollar Equivalent of the
Canadian Borrowing Base to an amount that exceeds the level of the sum of the
U.S. Borrowing Base and the U.S. Dollar Equivalent of the Canadian Borrowing
Base then in effect (such sum being referred to herein as the "Aggregate
Borrowing Base Amount"), a Borrowing Base increase fee on the amount of such
incremental increase. The Borrowing Base increase fee shall be in an amount
equal to .50% multiplied by the amount of the incremental increase to the
extent, but only to the extent that such incremental increase amount exceeds the
level of the Aggregate Borrowing Base Amount then in effect at such time, such
Borrowing Base increase fee to be due and payable on the date that the increase
to the Aggregate Borrowing Base Amount becomes effective. Notwithstanding the
foregoing, no such Borrowing Base increase fee shall be due and payable in
connection with any increase in the Aggregate Borrowing Base Amount to the
extent that such increase does not result in the Aggregate Borrowing Base Amount
exceeding U.S. 40,000,000.
(iii) Each Borrower agrees to pay to the Administrative Agents, for
their sole accounts, such fees as have been agreed to in a separate fee letter
dated May 21, 2001 among the Administrative Agents and the Borrowers.
(iv) In addition to interest on the Notes as provided herein and
other fees payable hereunder, the U.S. Borrower agrees to pay to the U.S.
Administrative Agent, for the account of the U.S. Banks having a U.S. Tranche A
Commitment, on the date of issuance or renewal of each Letter of Credit, a non-
refundable Letter of Credit fee equal to the greater of (a) U.S. $500 or (b) the
per annum Applicable Margin rate for Eurodollar Rate Advances then in effect, on
the face amount of such Letter of Credit and for the period for which such
Letter of Credit is issued or renewed. The Borrowers also agree to pay on demand
to the Issuing Bank, for its own account as the issuer of the Letters of Credit,
its customary letter of credit transactional fees, including, without
limitation, amendment fees, payable with respect to each Letter of Credit.
(v) The U.S. Borrower shall have the right, upon at least three
U.S. Business Days' notice to the U.S. Administrative Agent from the U.S.
Borrower, to terminate in whole or reduce in part the Unused U.S. Tranche A
Commitments or the U.S. Tranche B Commitments; provided that (i) each partial
--------
reduction shall be in the aggregate amount of U.S. $500,000 or an integral
multiple of U.S. $100,000 in excess thereof, (ii) each termination or partial
reduction of the Unused U.S. Tranche A Commitments shall reduce ratably the U.S.
Tranche A Commitments of the U.S. Banks by an aggregate amount equal to the
amount of such termination or partial reduction, and (iii) each termination or
partial reduction of the Unused U.S. Tranche B Commitments shall reduce ratably
the U.S. Tranche B Commitments of the U.S. Banks by an aggregate amount equal to
the amount of such termination or partial reduction. The Canadian Borrower shall
have the right, upon at least three Canadian Business Days' notice to the
Canadian Administrative Agent from the Canadian Borrower, to terminate in whole
or reduce in part the Unused Canadian Revolving Commitments; provided that (i)
--------
each partial reduction shall be in the aggregate amount of Canadian C$1,000,000
or an integral multiple of Canadian C$100,000 in excess thereof, and (ii) each
termination or partial reduction of the Unused Canadian Revolving Commitments
shall
-40-
reduce ratably the Canadian Revolving Commitments of the Canadian Banks by an
aggregate amount equal to the amount of such termination or partial reduction.
Any such termination or reduction shall be permanent.
(g) Repayment of Obligations. (i) The U.S. Borrower shall repay the
------------------------
principal amount of each U.S. Tranche A Advance owing to each U.S. Bank having a
U.S. Tranche A Commitment on May 21, 2004 or on such earlier date as may be
applicable pursuant hereto. The U.S. Borrower shall repay the principal amount
of each U.S. Tranche B Advance owing to each U.S. Bank having a U.S. Tranche B
Commitment on May 21, 2004 or on such earlier date as may be applicable pursuant
hereto. The Canadian Borrower shall repay the principal amount of each Canadian
Tranche A Advance owing to each Canadian Bank having a Canadian Tranche A
Commitment on May 21, 2004 or on such earlier date as may be applicable pursuant
hereto. The Canadian Borrower shall repay the principal amount of each Canadian
Tranche B Advance owing to each Canadian Bank having a Canadian Tranche B
Commitment on May 21, 2004 or on such earlier date as may be applicable pursuant
hereto.
(ii) The Canadian Borrower shall, subject to Sections 2.21(a) and
2.21(b), pay to the Canadian Administrative Agent for the ratable account of the
Canadian Banks on the Maturity Date of any BA Obligations an amount equal to the
sum of (1) the aggregate Face Amount of all such BA Obligations maturing on such
date and (2) the aggregate principal amount of all Canadian Prime Rate Advances
made pursuant to Section 2.04(a) or Section 2.21 in connection with the Drawing
of such BA Obligations. Any payment by the Canadian Borrower of any BA
Obligations in accordance with this Section 2.07(b) shall, to the extent of such
payment, satisfy the obligations of the Canadian Borrower under the BA
Obligations to which it relates and, in the case of a Bankers' Acceptance, the
Bank that has accepted such Bankers' Acceptance shall, to the extent of such
payment to such Bank, thereafter be solely responsible for the payment thereof.
(iii) The Canadian Borrower shall, on each Canadian Business Day on
which notice is given by the U.S. Administrative Agent that a prepayment under
this Section 2.07(c) is required, prepay (ratably among the Canadian Banks) an
aggregate principal amount (or an aggregate Face Amount) of the Credit
Extensions outstanding to the Canadian Borrower comprising part of the same
Borrowings or Drawings, as the case may be, equal to the amount by which (A) the
sum of (x) the aggregate principal amount of the Advances outstanding to the
Canadian Borrower plus (y) the aggregate Face Amount of the BA Obligations then
----
outstanding exceeds (B) the aggregate Canadian Revolving Commitments of the
Canadian Banks on such Business Day (after giving effect to any permanent
reduction thereof on or prior to such Business Day pursuant to Section 2.06(f)).
(h) Interest; Drawing Fees. (i) The U.S. Borrower shall pay interest on
----------------------
the unpaid principal amount of each U.S. Tranche A Advance and each U.S. Tranche
B Advance from the date of such Advance until such principal amount shall be
paid in full, at the following rates per annum:
(1) During such periods as such Advance is a Base Rate Advance,
a rate per annum equal at all times to the sum of the Base Rate in effect
from time to time plus the Applicable Margin in effect from time to time
----
for Base Rate Advances, payable quarterly in
-41-
arrears on the last day of each March, June, September and December and on
the date such Base Rate Advance shall be Converted or paid in full.
(2) During such periods as such Advance is a Eurodollar Rate
Advance, a rate per annum equal at all times during each Interest Period
for such Advance to the sum of the Eurodollar Rate for such Interest Period
plus the Applicable Margin in effect from time to time for Eurodollar Rate
----
Advances, payable on the last day of such Interest Period and, if such
Interest Period has a duration of more than three months, on each day that
occurs during such Interest Period every three months from the first day of
such Interest Period and on the date such Advance shall be Converted or
paid in full.
(ii) The Canadian Borrower shall pay interest on the unpaid
principal amount of each Canadian Advance from the date of such Advance until
such principal amount shall be paid in full, at a rate per annum equal at all
times to the sum of the Canadian Prime Rate in effect from time to time plus the
----
Applicable Margin in effect from time to time for Canadian Prime Rate Advances,
payable quarterly in arrears on the last day of each March, June, September and
December and on the date such Canadian Prime Rate Advance shall be Converted or
paid in full.
(iii) The U.S. Borrower shall pay interest, to the fullest extent
permitted by law, on the amount of any interest, fee, cost or other obligation
(other than principal of Advances) payable hereunder by it that is not paid when
due, from the date such amount shall be due until such amount shall be paid in
full, payable in arrears on the date such amount shall be paid in full and on
demand, at a rate per annum equal at all times to the sum of the Base Rate in
effect from time to time plus 2% per annum. The Canadian Borrower shall pay
----
interest, to the fullest extent permitted by law, on the amount of any interest,
fee, cost or other obligation (other than principal of Advances) payable
hereunder by it that is not paid when due, from the date such amount shall be
due until such amount shall be paid in full, payable in arrears on the date such
amount shall be paid in full and on demand, at a rate per annum equal at all
times to the sum of the Canadian Prime Rate in effect from time to time plus 2%
----
per annum.
(iv) The Canadian Borrower shall, on the date of each Drawing of, on
the date of any Conversion into, and on the date of each renewal of any
outstanding, BA Obligations, pay to the Canadian Administrative Agent, in
Canadian Dollars, for the ratable account of the Canadian Banks accepting Drafts
and purchasing Bankers' Acceptances or BA Equivalent Notes, the Drawing Fee with
respect to such BA Obligations. The Canadian Borrower irrevocably authorizes
each such Bank to deduct the Drawing Fee payable with respect to each BA
Obligation of such Bank from the Drawing Purchase Price payable by such Bank in
respect of such BA Obligation in accordance with Section 2.04 and to apply such
amount so withheld to the payment of such Drawing Fee for the account of the
Canadian Borrower and, to the extent such Drawing Fee is so withheld and legally
permitted to be so applied, the Canadian Borrower's obligations under the
preceding sentence in respect of such Drawing Fee shall be satisfied.
(i) Additional Interest on Eurodollar Rate Advances. The U.S. Borrower
-----------------------------------------------
shall pay to each U.S. Bank, so long as such U.S. Bank shall be required under
regulations of the Federal Reserve Board to maintain reserves with respect to
liabilities or assets consisting of or including
-42-
Eurocurrency Liabilities, additional interest on the unpaid principal amount of
each Advance of such U.S. Bank during such periods as such Advance is a
Eurodollar Rate Advance, from the date of such Advance until such principal
amount is paid in full, at an interest rate per annum equal at all times to the
remainder obtained by subtracting (i) the Eurodollar Rate for such Interest
Period for such Eurodollar Rate Advance from (ii) the rate obtained by dividing
such Eurodollar Rate by a percentage (expressed as a decimal) equal to 100%
minus the Eurodollar Rate Reserve Percentage of such U.S. Bank for such Interest
Period, payable on each date on which interest is payable on such Eurodollar
Rate Advance. Such additional interest shall be determined by such U.S. Bank and
notified to the U.S. Borrower through the U.S. Administrative Agent.
(j) Interest Rate Determination. (i) The U.S. Administrative Agent shall
---------------------------
give prompt notice to the U.S. Borrower and the U.S. Banks of the applicable
interest rate determined by the U.S. Administrative Agent for purposes of
Section 2.08(a)(ii). The Canadian Administrative Agent shall give prompt notice
to the Canadian Borrower and the Canadian Banks of each Bankers' Acceptance Rate
determined by such Administrative Agent for purposes hereof.
(ii) If the U.S. Administrative Agent shall be unable to determine
the Eurodollar Rate for any Eurodollar Rate Advances:
(1) the U.S. Administrative Agent shall forthwith notify the
U.S. Borrower and the U.S. Banks that the interest rate cannot be
determined for such Eurodollar Rate Advances,
(2) each such Eurodollar Rate Advance will automatically, on
the last day of the then existing Interest Period therefor, Convert into a
Base Rate Advance, and
(3) the obligation of the U.S. Banks to make Eurodollar Rate
Advances or to Convert Advances into Eurodollar Rate Advances shall be
suspended until the U.S. Administrative Agent shall notify the U.S.
Borrower and the U.S. Banks that the circumstances causing such suspension
no longer exist (which the U.S. Administrative Agent agrees to do promptly
following its becoming aware that such circumstances no longer exist).
(iii) If the Canadian Administrative Agent shall be unable to
determine the Bankers' Acceptance Rate for any BA Obligations:
(1) the Canadian Administrative Agent shall forthwith notify
the Canadian Borrower and the Canadian Banks that the interest rate cannot
be determined for such BA Obligations, and
(2) the obligation of the Canadian Banks to complete and accept
Drafts and/or to purchase Bankers' Acceptances or BA Equivalent Notes, or
to Convert Canadian Prime Rate Advances into BA Obligations, as the case
may be, shall be suspended until the Canadian Administrative Agent shall
notify the Canadian Borrower and the Canadian Banks that the circumstances
causing such suspension no longer exist (which the Canadian
-43-
Administrative Agent agrees to do promptly following its becoming aware
that such circumstances no longer exist).
(iv) If, with respect to any Eurodollar Rate Advances, the Required
Banks notify the U.S. Administrative Agent (A) that the Eurodollar Rate for any
Interest Period for such Advances will not adequately reflect the cost to such
Required Banks of making, funding or maintaining their respective Eurodollar
Rate Advances for such Interest Period or (B) that U.S. Dollar deposits for the
relevant amounts and Interest Period for their respective Advances are not
available to them in the London interbank market, the U.S. Administrative Agent
shall forthwith so notify the U.S. Borrower and the U.S. Banks, whereupon
(1) each Eurodollar Rate Advance will automatically, on the
last day of the then existing Interest Period therefor, Convert into a Base
Rate Advance, and
(2) the obligation of the Banks to make, or to Convert Advances
into, Eurodollar Rate Advances shall be suspended until the U.S.
Administrative Agent shall notify the U.S. Borrower and the U.S. Banks that
the circumstances causing such suspension no longer exist (which the U.S.
Administrative Agent agrees to do promptly following its becoming aware
that such circumstances no longer exist).
(v) If the U.S. Borrower shall fail to select the duration of any
Interest Period for any Eurodollar Rate Advances in accordance with the
provisions contained in the definition of "Interest Period" in Section 1.01, the
U.S. Administrative Agent will forthwith so notify the U.S. Borrower and the
U.S. Banks and such Advances will automatically, on the last day of the then
existing Interest Period therefor, Convert into Base Rate Advances.
(vi) On the date on which the aggregate unpaid principal amount of
Eurodollar Rate Advances having the same Interest Period (whether comprising one
or more Borrowings) shall be reduced, by payment or prepayment or otherwise, to
less than U.S. $1,000,000, such Advances shall automatically Convert into Base
Rate Advances, and on and after such date the right of the U.S. Borrower to
Convert such Advances into Eurodollar Rate Advances, shall terminate, unless
when combined with other Base Rate Advances such Conversion meets the
requirements of Section 2.19.
(vii) Upon the occurrence and during the continuance of any Event of
Default, (i) each Eurodollar Rate Advance will automatically, on the last day of
the then existing Interest Period therefor, Convert into a Base Rate Advance,
and (ii) the obligation of the Banks to make, or to Convert Advances into,
Eurodollar Rate Advances shall be suspended.
(k) Optional Prepayments. (i) Neither Borrower shall have any right to
--------------------
prepay (other than prepayments required herein) any principal amount of any
Advance other than as provided in this Section 2.11. The U.S. Borrower may,
upon notice given to the U.S. Administrative Agent before 11:00 A.M. (Los
Angeles, California time) on the first Business Day prior to the date of
prepayment in the case of Base Rate Advances or upon at least three Business
Days' notice to the U.S. Administrative Agent in the case of Eurodollar Rate
Advances, in each case stating the proposed date (which shall be a Business Day)
and aggregate principal amount of the prepayment,
-44-
and if such notice is given the U.S. Borrower shall, prepay the outstanding
principal amounts of the Advances comprising part of the same U.S. Borrowing in
whole or ratably in part, together with accrued interest to the date of such
prepayment on the principal amount prepaid; provided that (x) each partial
--------
prepayment shall be in an aggregate principal amount of U.S. $1,000,000 (or, in
the case of a partial prepayment of a Borrowing comprised of Base Rate Advances,
U.S. $500,000) or an integral multiple of U.S. $100,000 in excess thereof, and
after giving effect thereto no U.S. Borrowing then outstanding shall have a
principal amount of less than U.S. $1,000,000 (or, in the case of a Borrowing
comprised of Base Rate Advances, U.S. $500,000); and (y) in the case of any such
prepayment of a Eurodollar Rate Advance, the U.S. Borrower shall be obligated to
reimburse the Banks in respect thereof pursuant to Section 9.04(b). The Canadian
Borrower may, upon notice given to the Canadian Administrative Agent before
11:00 A.M. (Los Angeles, California time) on the first Business Day prior to the
date of prepayment stating the proposed date (which shall be a Business Day) and
aggregate principal amount of the prepayment, and if such notice is given the
Canadian Borrower shall, prepay the outstanding principal amounts of the
Advances comprising part of the same Canadian Borrowing in whole or ratably in
part or the Canadian Prime Rate Advances made pursuant to Section 2.04 or
Section 2.21 in whole, in each case together with accrued interest to the date
of such prepayment on the principal amount prepaid; provided that, except in the
--------
case of prepayments of the Canadian Prime Rate Advances made on any date
pursuant to Section 2.04 or Section 2.21, each partial prepayment shall be in an
aggregate principal amount of C$1,000,000 or, except in connection with a
reduction of the Commitments under Section 2.06, an integral multiple of
C$100,000 in excess thereof; provided, further, that, after giving effect
-------- -------
thereto no Canadian Borrowing then outstanding shall have a principal amount of
less than C$100,000. BA Obligations may not be prepaid at any time except as
required by Section 2.07.
(ii) Each prepayment pursuant to Section 2.11(a) or Section 2.07(c)
shall be allocated to the Advances or BA Obligations outstanding to the Borrower
making such prepayment and shall be applied to such Advances or BA Obligations
as directed by such Borrower so long as no Event of Default has occurred and is
continuing on the date of such prepayment and, if an Event of Default has
occurred and is continuing or such Borrower has not specified the application of
any such prepayment, shall be applied:
(1) in the case of Advances outstanding to the U.S. Borrower,
first to prepay (ratably among the Banks holding such Advances) U.S.
-----
Borrower Advances then outstanding comprising part of the same Borrowings
until such Advances are paid in full, and second deposited in the U.S. Cash
------
Collateral Account to cash collateralize 100% of the Letters of Credit
Exposure then outstanding. Upon the expiration date of any Letter of
Credit for which funds are on deposit in the U.S. Cash Collateral Account,
such funds shall, if no Default or Event of Default shall have occurred and
be continuing, be returned to the U.S. Borrower; and
(2) in the case of Advances outstanding to the Canadian
Borrower or BA Obligations, first to prepay (ratably among the Banks
-----
holding such Advances) Canadian Advances then outstanding comprising part
of the same Borrowings until such Advances are paid in full, and second
------
deposited in the Canadian Cash Collateral Account to cash collateralize
100% of the Face Amount of all BA Obligations then outstanding. Upon the
-45-
Maturity Date of any BA Obligation, for which funds are on deposit in the
Canadian Cash Collateral Account, such funds shall be applied to reimburse
the relevant Canadian Banks.
(iii) Any prepayment by the Canadian Borrower of any BA Obligations
in accordance with this Section 2.11 shall, upon the application thereof at the
applicable Maturity Date therefor, satisfy, to the extent of such application,
the obligations of the Canadian Borrower under such BA Obligations to which it
relates and, in the case of a Bankers' Acceptance, the Bank that has accepted
such Bankers' Acceptance shall thereafter, to the extent of such application, be
solely responsible for the payment thereof.
(iv) All prepayments under this Section 2.11 shall be made together
with accrued interest to the date of such prepayment on the principal amount
prepaid. If any payment made under this Section 2.11 on account of Eurodollar
Rate Advances or BA Obligations is made other than on the last day of the
applicable Interest Period or Maturity Date therefor, as the case may be, the
relevant Borrower shall also pay any amounts owing pursuant to Section 9.04(b).
(l) Mandatory Prepayments (U.S.).
----------------------------
(i) If the aggregate outstanding amount of U.S. Tranche A Advances
plus the Letter of Credit Exposure ever exceeds the U.S. Borrowing Base, the
U.S. Borrower shall after receipt of written notice from the U.S. Administrative
Agent, take one of the following actions to remedy the U.S. Borrowing Base
deficiency:
(1) prepay U.S. Tranche A Advances or, if the U.S. Tranche A
Advances have been repaid in full, make deposits into the U.S. Cash
Collateral Account to provide cash collateral for the Letter of Credit
Exposure, such that the U.S. Borrowing Base deficiency is cured within 10
days after the date such notice is received;
(2) pledge as Collateral for the Obligations additional Oil and
Gas Properties acceptable to the U.S. Administrative Agent and each of
Banks such that the U.S. Borrowing Base deficiency is cured within 30 days
after the date such notice is received; or
(3) prepay the U.S. Tranche A Advances or, if the U.S. Tranche
A Advances have been repaid in full, make deposits into the U.S. Cash
Collateral Account to provide cash collateral for the Letter of Credit
Exposure in six monthly installments equal to one-sixth of such U.S.
Borrowing Base deficiency with the first such installment due 30 days after
the date such notice is received and each following installment due 30 days
after the preceding installment.
Each prepayment pursuant to this Section 2.12(a) shall be accompanied by accrued
interest on the amount prepaid to the date of such prepayment and amounts, if
any, required to be paid pursuant to Section 9.04 as a result of such prepayment
being made on such date. Each prepayment under clauses (i) and (iii) of this
Section 2.12(a) shall be applied to the U.S. Tranche A Advances as determined by
the U.S. Administrative Agent and agreed to by the U.S. Banks having a U.S.
Tranche A Commitment as appropriate to minimize payments required to be made
pursuant to Section 9.04 and otherwise in their sole discretion.
-46-
(ii) The U.S. Borrower shall, upon request of the Administrative
Agents (at the direction of, or with the consent of, the Required Banks), prepay
the U.S. Tranche B Advances in full on the date of each Borrowing Base
redetermination made pursuant to Section 2.05(c)(ii). Each prepayment pursuant
to this Section 2.12(b) shall be accompanied by accrued interest on the amount
prepaid to the date of such prepayment and amounts, if any, required to be paid
pursuant to Section 9.04 as a result of such prepayment being made on such date.
(m) Mandatory Prepayments (Canadian). If the aggregate outstanding
--------------------------------
amount of Canadian Advances plus the Face Amount of all BA Obligations purchased
and/or accepted ever exceeds the Canadian Borrowing Base, the Canadian Borrower
shall after receipt of written notice from the Canadian Administrative Agent,
take one of the following actions to remedy the Canadian Borrowing Base
deficiency:
(i) prepay Canadian Advances or, if the Canadian Advances have been
repaid in full, make deposits into the Canadian Cash Collateral Account to
provide cash collateral for the Face Amount of all Tranche A BA Obligations
purchased and/or accepted, such that the Canadian Borrowing Base deficiency is
cured within 10 days after the date such notice is received;
(ii) pledge as Collateral for the Obligations additional Oil and Gas
Properties acceptable to the Canadian Administrative Agent and each of Banks
such that the Canadian Borrowing Base deficiency is cured within 30 days after
the date such notice is received; or
(iii) prepay the Canadian Advances or, if the Canadian Advances have
been repaid in full, make deposits into the Canadian Cash Collateral Account to
provide cash collateral for the Face Amount of all BA Obligations purchased
and/or accepted in six monthly installments equal to one-sixth of such Canadian
Borrowing Base deficiency with the first such installment due 30 days after the
date such notice is received and each following installment due 30 days after
the preceding installment.
Each prepayment pursuant to this Section 2.13(a) shall be accompanied by accrued
interest on the amount prepaid to the date of such prepayment and amounts, if
any, required to be paid pursuant to Section 9.04 as a result of such prepayment
being made on such date. Each prepayment under clauses (i) and (iii) of this
Section 2.13(a) shall be applied to the Canadian Advances as determined by the
Canadian Administrative Agent and agreed to by the Canadian Banks in their sole
discretion.
(n) Payments and Computations. (i) Each Borrower shall make each
-------------------------
payment hereunder and under the Notes not later than 12:00 noon (Los Angeles,
California time) on the day when due to the U.S. Administrative Agent (except
that (1) payments under Section 2.09 shall be paid directly to the Bank entitled
thereto and (2) payments by the Canadian Borrower shall be made to the Canadian
Administrative Agent at its address referred to in Section 9.02) at its address
referred to in Section 9.02 in same day funds (i) in the case of all payments in
respect of any BA Obligation or of principal of or interest on Canadian Tranche
A Advances, in Canadian Dollars and (ii) in the case of all payments of
principal of and interest on U.S. Tranche A Advances, U.S. Tranche B Advances,
fees, expenses, indemnities and other amounts (except principal of and interest
on Canadian
-47-
Advances), in U.S. Dollars. The appropriate Administrative Agent will promptly
thereafter cause to be distributed like funds relating to the payment of
principal, interest or commitment fees ratably (except amounts payable pursuant
to Section 2.15, Section 2.16 or Section 9.04(b) and except that any Bank may
receive less than its ratable share of interest to the extent Section 9.06 is
applicable to it) to the Banks for the account of their respective Applicable
Lending Offices, and like funds relating to the payment of any other amount
payable to any Bank to such Bank for the account of its Applicable Lending
Office, in each case to be applied in accordance with the terms of this
Agreement. Upon acceptance by the U.S. Administrative Agent of an Assignment and
Acceptance and recording of the information contained therein in the Register
pursuant to Section 9.08(d), from and after the effective date specified in such
Assignment and Acceptance, the appropriate Administrative Agent shall make all
payments hereunder and under the Notes in respect of the interest assigned
thereby to the Bank assignee thereunder, and the parties to such Assignment and
Acceptance shall make all appropriate adjustments in such payments for periods
prior to such effective date directly between themselves. At the time of each
payment by a Borrower in respect of a BA Obligation or of any principal of or
interest on any Borrowing to either Administrative Agent, such Borrower shall
notify such Administrative Agent of the BA Obligation or Borrowing, as the case
may be, to which such payment shall apply, subject to Section 2.11(b). In the
absence of such notice such Administrative Agent may specify the BA Obligation
or Borrowing to which such payment shall apply in accordance with Section
2.11(b).
(ii) All computations of interest based on the Base Rate (except
during such times as the Base Rate is determined pursuant to clause (b) of the
definition thereof) and of commitment fees and Letter of Credit fees shall be
made by the U.S. Administrative Agent on the basis of a year of 365 or 366 days,
as the case may be, and all computations of interest based on the Eurodollar
Rate, the Federal Funds Rate or, during such times as the Base Rate is
determined pursuant to clause (b) of the definition thereof, the Base Rate shall
be made by the U.S. Administrative Agent, and all computations of interest
pursuant to Section 2.09 shall be made by a Bank, on the basis of a year of 360
days, in each case for the actual number of days (including the first day but
excluding the last day) occurring in the period for which such interest or fees
are payable. All computations of interest based on the Canadian Prime Rate shall
be made by the Canadian Administrative Agent on the basis of a year of 365 or
366 days, as the case may be, in each case for the actual number of days
(including the first day but excluding the last day) occurring in the period for
which such interest or fees are payable. Each determination by either
Administrative Agent (or in the case of Section 2.09, by a Bank) of an interest
rate hereunder shall be conclusive and binding for all purposes, absent manifest
error.
(iii) Whenever any payment hereunder (other than in respect of BA
Obligations or principal of or interest on the Canadian Advances) or under the
U.S. Notes shall be stated to be due on a day other than a U.S. Business Day,
such payment shall be made on the next succeeding U.S. Business Day, and such
extension of time shall in such case be included in the computation of payment
of interest and fees, as the case may be; provided, however, if such extension
-------- -------
would cause payment in respect of interest on or principal of Eurodollar Rate
Advances to be made in the next following calendar month, such payment shall be
made on the next preceding U.S. Business Day. Whenever any payment in respect
of BA Obligations or principal of or interest on Canadian Advances shall be
stated to be due on a day other than a Canadian Business Day, such payment shall
-48-
be made on the next succeeding Canadian Business Day, and such extension of time
shall in such case be included in the computation of payment of interest on
Canadian Credit Extensions.
(iv) Unless the appropriate Administrative Agent shall have received
notice from a Borrower prior to the date on which any payment is due to the
Banks hereunder that such Borrower will not make such payment in full to the
appropriate Administrative Agent, such Administrative Agent may assume that such
Borrower has made such payment in full to such Administrative Agent on such date
and such Administrative Agent may, in reliance upon such assumption, cause to be
distributed to each Bank on such due date an amount equal to the amount then due
such Bank. If and to the extent that such Borrower shall not have so made such
payment in full to such Administrative Agent, each Bank shall repay to such
Administrative Agent forthwith on demand such amount distributed to such Bank
together with interest thereon, for each day from the date such amount is
distributed to such Bank until the date such Bank repays such amount to such
Administrative Agent, (i) at the Canadian Interbank Rate in the case of payments
which are due in Canadian Dollars, and (ii) otherwise at the Federal Funds Rate.
(v) Each Borrower hereby authorizes each Bank, if and to the extent
payment owed to such Bank by such Borrower is not made when due hereunder or
under the Note held by each Bank, to charge from time to time against any or all
of such Borrower's accounts with such Bank any amount so due.
(vi) For purposes of the Interest Act (Canada), the principle of
deemed reinvestment of interest shall not apply to any interest calculation
under this Agreement in respect of Credit Extensions to the Canadian Borrower
and the rates of interest stipulated in this Agreement in respect of Credit
Extensions to the Canadian Borrower are intended to be normal and not effective
rates or yields.
(o) Increased Costs and Capital Requirements. (i) If, due to either
----------------------------------------
(i) the introduction of or any change in, or in the interpretation (by any
central bank or comparable agency or governmental authority charged with the
interpretation or administration thereof) of, any law or regulation or (ii) the
compliance with any guideline issued after the date hereof or request made after
the date hereof, in each case in this clause (ii) from any central bank or other
governmental authority (whether or not having the force of law), there shall be
any increase in the cost to any U.S. Bank of agreeing to make or making, funding
or maintaining any Eurodollar Rate Advance or any reduction of any amount
received or receivable by any Bank under any of the Loan Documents as a result
of agreeing to make or making, funding or maintaining any Eurodollar Rate
Advance (excluding for purposes of this Section 2.15(a) any such increased costs
resulting from (A) Taxes or Other Taxes (as to which Section 2.16 shall govern)
or any change in the Eurodollar Rate Reserve Percentage reflected in the
interest charged under Section 2.09 and (B) Excluded Taxes), then the U.S.
Borrower shall from time to time, promptly after its receipt of notice from such
Bank (with a copy of such notice delivered by such Bank to the U.S.
Administrative Agent), pay to the U.S. Administrative Agent for the account of
such Bank additional amounts sufficient to compensate such Bank for such
increased cost or reduction. A certificate as to the basis and the amount of
such increased cost or reduction, submitted to the U.S. Borrower and the U.S.
Administrative Agent by such Bank, shall
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be conclusive and binding for all purposes, absent manifest error, provided that
--------
the determination thereof is made on a reasonable basis.
(ii) If, due to either (i) the introduction of or any change in, or
in the interpretation (by any central bank or comparable agency or governmental
authority charged with the interpretation or administration thereof) of, any law
or regulation or (ii) the compliance with any guideline issued after the date
hereof or request made after the date hereof, in each case in this clause (ii)
from any central bank or other governmental authority (whether or not having the
force of law), there shall be any increase in the cost to any Canadian Bank of
agreeing to perform or of performing its obligations under this Agreement under
or in respect of any BA Obligations or any reduction in any amount payable to,
or any increase in any payment required to be made by, or any forgiveness or
reduction of effective return to such Bank under or in respect of any BA
Obligations (excluding for purposes of this Section 2.15(b) any such increased
costs resulting from (A) Taxes or Other Taxes (as to which Section 2.16 shall
govern) and (B) Excluded Taxes), then the Canadian Borrower shall from time to
time, promptly after its receipt of notice from such Bank (with a copy of such
notice delivered by such Bank to the Canadian Administrative Agent), pay to the
Canadian Administrative Agent for the account of such Bank additional amounts
sufficient to compensate such Bank for such increased cost, reduction or other
matter referred to in this Section 2.15(b). A certificate as to the basis and
the amount of such increased cost, reduction or other such matter, submitted to
the Canadian Borrower and the Canadian Administrative Agent by such Bank, shall
be conclusive and binding for all purposes, absent manifest error.
(iii) If any Bank determines that compliance by such Bank with any
law or regulation adopted after the date hereof, any change after the date
hereof in any law or regulation, any guideline issued after the date hereof from
any central bank or other governmental authority (whether or not having the
force of law) or any request made after the date hereof from any central bank or
other governmental authority (whether or not having the force of law) increases
or would increase the amount of capital required or expected to be maintained by
such Bank or any Person controlling such Bank and that the amount of such
capital is increased by or based upon the existence of such Bank's commitment to
lend or to accept, purchase and/or discount BA Obligations hereunder and other
commitments of this type or the purchase, acceptance or maintenance of BA
Obligations, or the Issuing Bank's commitment to issue Letter of Credit, then,
promptly following its receipt of notice from such Bank or the Issuing Bank, as
applicable (with a copy of such notice delivered to such Bank or Issuing Bank,
as applicable, to the Administrative Agents), the Borrowers shall pay to the
U.S. Administrative Agent for the account of such Bank or Issuing Bank, as
applicable, from time to time as specified by such Bank, additional amounts
sufficient to compensate such Bank or such Person in the light of such
circumstances (excluding amounts resulting from (A) Taxes or Other Taxes (as to
which Section 2.16 shall govern) or any change in the Eurodollar Rate Reserve
Percentage reflected in the interest charged under Section 2.07 and (B) Excluded
Taxes), to the extent that such Bank reasonably determines such increase in
capital to be allocable to the existence of such Bank's commitment to lend or to
accept, purchase and/or discount BA Obligations hereunder or the purchase,
acceptance or maintenance of BA Obligations or the Issuing Bank's commitment to
issue Letters of Credit. A certificate as to such amounts submitted to the
Borrowers and the U.S. Administrative Agent by such Bank shall be conclusive and
binding for all purposes, absent manifest error, provided that the determination
--------
thereof is made on a reasonable basis.
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(iv) If any change in any law or regulation or in the interpretation
thereof by any court or administrative or Governmental Authority charged with
the administration thereof shall either (i) impose, modify, or deem applicable
any reserve, special deposit, or similar requirement against letters of credit
issued by, or assets held by, or deposits in or for the account of, the Issuing
Bank or (ii) impose on the Issuing Bank any other condition regarding the
provisions of this Agreement relating to the Letters of Credit or any Letter of
Credit Obligations, and the result of any event referred to in the preceding
clause (i) or (ii) shall be to increase the cost to the Issuing Bank of issuing
or maintaining any Letter of Credit (which increase in cost shall be determined
by the Issuing Bank's reasonable allocation of the aggregate of such cost
increases resulting from such event), then, upon demand by the Issuing Bank, the
U.S. Borrower shall pay to the Issuing Bank, from time to time as specified by
the Issuing Bank, additional amounts which shall be sufficient to compensate the
Issuing Bank for such increased cost. A certificate as to such increased cost
incurred by the Issuing Bank, as a result of any event mentioned in clause (i)
or (ii) above, and detailing the calculation of such increased costs submitted
by the Issuing Bank to the U.S. Borrower, shall be conclusive and binding for
all purposes, absent manifest error.
(v) Neither Borrower shall be required to pay any Bank any amount
otherwise owed under this Section 2.15 that is incurred more than 90 days prior
to notice thereof being given by such Bank to such Borrower, unless such amount
had not been imposed or was not determinable on the date that is 90 days prior
to such notice.
(p) Taxes. (i) Any and all payments by either Borrower hereunder, under
-----
the Guaranties, the Notes, any other Loan Document or in respect of any BA
Obligation shall be made, in accordance with Section 2.14, free and clear of and
without deduction for any and all present or future taxes, levies, imposts,
deductions, charges and withholdings, and all liabilities with respect thereto,
excluding, in the case of each Bank and each Administrative Agent, Excluded
---------
Taxes (all such taxes, levies, imposts, deductions, charges, withholdings and
liabilities other than Excluded Taxes being hereinafter referred to (subject to
further exclusions, if any, under Section 2.16(e)) as "Taxes"). If any Taxes
are required to be withheld or deducted by any Person from or in respect of any
sum payable hereunder or under any Note or in respect of any BA Obligation to
any Bank or any Administrative Agent, (i) the sum payable by the relevant
Borrower shall be increased as may be necessary so that after making all
required deductions and withholdings (including deductions and withholdings
applicable to additional sums payable under this Section 2.16) such Bank or such
Administrative Agent (as the case may be) receives an amount equal to the sum it
would have received had no such deductions been made, (ii) the relevant Borrower
shall make such deductions and (iii) the relevant Borrower shall pay the full
amount deducted to the relevant taxation authority or other authority in
accordance with applicable law. Any such payment by a Borrower shall be made in
the name of the relevant Bank or Administrative Agent (as the case may be).
(ii) In addition, each Borrower agrees to pay any present or future
stamp or documentary taxes or any other excise or property taxes, charges or
similar levies which arise from any payment made by it or receipt from it
hereunder, under the Guaranty or under the Notes or in respect of any BA
Obligation or from its execution, delivery or registration of, performing under,
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or otherwise with respect to, this Agreement, any BA Obligation, the Guaranty or
any of the Notes (herein referred to as "Other Taxes").
(iii) The Borrowers will indemnify each Bank and each Administrative
Agent for the full amount of Taxes and Other Taxes (including, without
limitation, any Taxes or Other Taxes imposed by any jurisdiction on amounts
payable under this Section 2.16) imposed on or paid by such Bank or such
Administrative Agent (as the case may be) and any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto,
whether or not such Taxes or Other Taxes were correctly or legally asserted, but
excluding penalties, interest, expenses and other liabilities arising as a
result of the gross negligence or willful misconduct of such Bank or such
Administrative Agent (as the case may be). Payments under any indemnification
provided for in this Section 2.16(c) shall be made within 30 days from the date
such Bank or such Administrative Agent (as the case may be) makes written demand
therefor, which demand shall state the basis for, and set forth the calculation
of the amount of, such demand.
(iv) Within 30 days after the date of any payment of Taxes, the
Borrower making such payment will furnish to the U.S. Administrative Agent, at
its address referred to in Section 9.02, the original or a certified copy of a
receipt evidencing payment thereof. In the case of any payment hereunder, under
the Guaranties, the Notes, the Security Documents or any other Loan Documents by
or on behalf of the U.S. Borrower through an account or branch outside the
United States or by or on behalf of the U.S. Borrower by a payor that is not a
United States person, if the U.S. Borrower determines that no Taxes are payable
in respect thereof, the U.S. Borrower shall furnish, or shall cause such payor
to furnish, to each Administrative Agent a written statement from each
appropriate taxing authority or an opinion of counsel acceptable to the
Administrative Agents, in either case stating that such payment is exempt from
or not subject to Taxes. In the case of any payment hereunder, under the
Guaranty or under the Notes or in respect of BA Obligations by or on behalf of
the Canadian Borrower through an account or branch outside Canada or by or on
behalf of the Canadian Borrower by a payor that is not a Resident in Canada, if
the Canadian Borrower determines that no Taxes are payable in respect thereof,
the Canadian Borrower shall furnish, or shall cause such payor to furnish, to
each Administrative Agent a written statement from each appropriate taxing
authority or an opinion of counsel acceptable to the Administrative Agents, in
either case stating that such payment is exempt from or not subject to Taxes.
For purposes of this Section 2.16(d) and Section 2.16(e), the terms "United
------
States" and "United States person" shall have the meanings specified in Section
------ --------------------
7701 of the Code, and the terms "Canada" and "Resident in Canada" shall have the
------ ------------------
meanings they have for the purposes of the Income Tax Act (Canada).
(v) Each U.S. Bank that is not a citizen or resident of the United
States, a corporation, partnership, or other entity created or organized in or
under the laws of the United States or any state thereof, or an estate or trust
that is subject to federal income taxation regardless of source of its income,
on or prior to the date of its execution and delivery of this Agreement in the
case of each such Bank listed on the signature pages hereof and not later than
the date of the Assignment and Acceptance pursuant to which it becomes a Bank in
the case of each other such U.S. Bank, and from time to time thereafter as
requested in writing by the U.S. Borrower or the U.S. Administrative Agent (but
only so long as such Bank remains lawfully able to do so), shall provide each of
the U.S. Administrative Agent and the U.S. Borrower with two original Internal
Revenue Service Forms
-52-
1001 or 4224, as appropriate, or any successor or other form prescribed by the
Internal Revenue Service, or, in the case of a U.S. Bank claiming exemption from
U.S. federal withholding tax under Section 871(h) or 881(c) of the Code with
respect to payments of "portfolio interest", a Form W-8, or any successor or
other form prescribed by the Code (and, if such Bank delivers a Form W-8, an
annual certificate representing that (i) such Bank is not a "bank" for purposes
of Section 881(c) of the Code (and is not subject to regulatory or other legal
requirements as a bank in any jurisdiction, and has not been treated as a bank
in any filing with or submission made to any government or rating agency), (ii)
is not a 10-percent shareholder (within the meaning of Section 871(h)(3)(B) of
the Code) of the U.S. Borrower and (iii) is not a controlled foreign corporation
related to the U.S. Borrower (within the meaning of Section 864(d)(4) of the
Code)), along with such other additional forms or certificates as the U.S.
Borrower or the U.S. Administrative Agent may reasonably request, certifying
that such Bank is exempt from or entitled to a reduced rate of United States
withholding tax on payments pursuant to this Agreement or the Notes. If such
forms provided by a Bank at the time such Bank first becomes a party to this
Agreement indicate a United States interest withholding tax rate in excess of
zero, withholding tax at such rate shall be considered excluded from Taxes
unless and until such Bank provides the appropriate forms certifying that a
lesser rate applies, whereupon withholding tax at such lesser rate only shall be
considered excluded from Taxes for periods governed by such form; provided that
--------
if at the date of the Assignment and Acceptance pursuant to which a U.S. Bank
assignee becomes a party to this Agreement, the U.S. Bank assignor was entitled
to payments under Section 2.16(a) in respect of United States withholding tax
with respect to interest paid at such date, then to such extent, the term Taxes
shall include (in addition to withholding taxes that may be imposed in the
future and not otherwise excluded above or other amounts otherwise includable in
Taxes) United States withholding tax, if any, applicable with respect to the
Bank assignee on such date. Each U.S. Bank that is subject to the requirements
of this Section 2.16(e) and which so delivers a Form 1001, 4224 or W-8 required
by this Section 2.16(e) further undertakes to deliver (but only so long as such
Bank remains lawfully able to do so) to the U.S. Borrower and the U.S.
Administrative Agent two additional copies of such form (or a successor form) on
or before the date such form expires or becomes obsolete or after the occurrence
of any event requiring a change in the most recent form so delivered by it, and
such amendments thereto or extensions or renewals thereof as may be reasonably
requested by the U.S. Borrower or the U.S. Administrative Agent, in each case
certifying that such U.S. Bank is entitled to receive payments from the U.S.
Borrower under any Loan Document without deduction or withholding of any U.S.
federal income taxes, unless an event (including any change in law or
regulation) has occurred prior to the date on which any such delivery would
otherwise be required which renders all such forms inapplicable or which would
prevent such Bank from duly completing and delivering any such form with respect
to it and such Bank advises the U.S. Borrower and the U.S. Administrative Agent
that it is not capable of receiving such payments without any deduction or
withholding of U.S. federal income tax. If any form or document referred to in
this Section 2.16(e) requires the disclosure of information, other than
information necessary to compute the tax payable and information required on the
date hereof by Internal Revenue Service form 1001 or 4224, that the Bank
providing such form or document reasonably considers to be confidential, such
Bank shall give notice thereof to the U.S. Borrower and shall not be obligated
to include in such form or document such confidential information, but if
failure to include such confidential information in such form or document
renders such form or document ineffective for its purpose,
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then such Bank shall not be entitled to reimbursement for any increase in Taxes
to the extent caused by or resulting from such ineffectiveness.
(vi) For any period with respect to which a U.S. Bank has failed to
provide the U.S. Borrower and the U.S. Administrative Agent with the appropriate
form or certificate (or failed to provide substantially all of the information
required by such form or certificate) required by Section 2.16(e), such Bank
shall not be entitled to indemnification under Section 2.16(a) or (c) with
respect to Taxes imposed by the United States by reason of such failure or such
notification; provided that should a Bank become subject to Taxes because of its
--------
failure to deliver a form required hereunder, the Borrowers shall take such
steps as the Bank shall reasonably request to assist the Bank to recover such
Taxes.
(vii) Any Bank claiming any additional amounts payable pursuant to
this Section 2.16 agrees to use reasonable efforts (consistent with legal and
regulatory restrictions) to change the jurisdiction of its Eurodollar Lending
Office if the making of such a change would avoid the need for, or reduce the
amount of, any such additional amounts that may thereafter accrue and would not,
in the reasonable judgment of such Bank, be otherwise disadvantageous to such
Bank. Nothing herein contained shall interfere with the right of each Bank to
arrange its tax affairs in whatever manner it thinks fit nor oblige any Bank to
disclose any information relating to its tax affairs or any computations in
respect thereof, except as set forth in the last sentence of Section 2.16(c).
Nothing herein contained shall require any Bank to do anything that would
prejudice its ability to benefit from any credits, reliefs, remissions or
repayments to which it may be entitled.
(viii) The agreements in this Section 2.16 shall survive the
termination of this Agreement and the payment of the Notes and all other amounts
payable hereunder.
(q) Sharing of Payments, Etc. If any U.S. Bank shall obtain any payment
-------------------------
(whether voluntary, involuntary, through the exercise of any right of set-off,
or otherwise) on account of the principal of or interest on the U.S. Advances
owing to it (except amounts payable pursuant to Sections 2.09, 2.15 or 2.16, and
except that any Bank may receive less than its ratable share of interest to the
extent Section 9.06 is applicable to it) in excess of its ratable share of
payments on account of the principal of or interest on the U.S. Advances
obtained by all the U.S. Banks, such Bank shall forthwith purchase from the
other U.S. Banks such participations in the Advances owing to them as shall be
necessary to cause such purchasing Bank to share the excess payment ratably with
each of them, provided that if all or any portion of such excess payment is
--------
thereafter recovered from such purchasing Bank, such purchase from each Bank
shall be rescinded and such Bank shall repay to the purchasing Bank the purchase
price to the extent of such Bank's ratable share (according to the proportion of
(i) the amount of the participation purchased from such Bank as a result of such
excess payment to (ii) the total amount of such excess payment) of such recovery
together with an amount equal to such Bank's ratable share (according to the
proportion of (i) the amount of such Bank's required repayment to (ii) the total
amount so recovered from the purchasing Bank) of any interest or other amount
paid or payable by the purchasing Bank in respect of the total amount so
recovered. If any Canadian Bank shall obtain any payment (whether voluntary,
involuntary, through the exercise of any right of set-off, or otherwise) on
account of the principal of or interest on the Advances owing to it or on
account of BA Obligations (except amounts payable pursuant to Sections 2.09,
2.15 or 2.16, and except that any Bank may receive less than its ratable share
of interest to the extent Section 9.06 is applicable to it) in excess of its
ratable share of
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payments on account of the principal of or interest on the Canadian Advances or
BA Obligations, as the case may be, obtained by all the Canadian Banks, such
Bank shall forthwith purchase from the other Canadian Banks such participations
in the Advances owing to them or BA Obligations, as the case may be, as shall be
necessary to cause such purchasing Bank to share the excess payment ratably with
each of them, provided that if all or any portion of such excess payment is
--------
thereafter recovered from such purchasing Bank, such purchase from each Bank
shall be rescinded and such Bank shall repay to the purchasing Bank the purchase
price to the extent of such Bank's ratable share (according to the proportion of
(i) the amount of the participation purchased from such Bank as a result of such
excess payment to (ii) the total amount of such excess payment) of such recovery
together with an amount equal to such Bank's ratable share (according to the
proportion of (i) the amount of such Bank's required repayment to (ii) the total
amount so recovered from the purchasing Bank) of any interest or other amount
paid or payable by the purchasing Bank in respect of the total amount so
recovered. Each Borrower agrees that any Bank so purchasing a participation from
another Bank pursuant to this Section 2.17 may, to the fullest extent permitted
by law, exercise all its rights of payment (including the right of set-off) with
respect to such participation as fully as if such Bank were the direct creditor
of such Borrower in the amount of such participation.
(r) Illegality. (i) Notwithstanding any other provision of this
----------
Agreement, if any Bank ("Affected Bank") shall notify the U.S. Administrative
Agent that any law or regulation makes it unlawful, or any central bank or other
governmental authority hereafter asserts that it is unlawful, for such Affected
Bank or its Eurodollar Lending Office to perform its obligations hereunder to
make Eurodollar Rate Advances or to fund or maintain Eurodollar Rate Advances
hereunder, (i) the obligation of such Affected Bank to make, or to Convert
Advances into, Eurodollar Rate Advances shall be suspended (and any request by
the U.S. Borrower for a Borrowing comprised of Eurodollar Rate Advances shall be
deemed a request for a Base Rate Advance from such Affected Bank to be made on
the same date as the Eurodollar Rate Advances of the Banks that are not Affected
Banks and such Base Rate Advances shall be considered as part of such Borrowing)
until such Affected Bank shall notify the U.S. Borrower and the Banks that the
circumstances causing such suspension no longer exist (and such Affected Bank
shall give notice promptly to the U.S. Administrative Agent and the U.S.
Borrower upon such circumstance ceasing to exist), and (ii) each Eurodollar Rate
Advance of such Affected Bank will automatically, upon such notice, Convert into
a Base Rate Advance on the last day of the then current Interest Period for such
Eurodollar Rate Advance or earlier upon such notice if the law so requires. In
the event any Affected Bank shall notify the U.S. Administrative Agent of the
occurrence of any circumstance contemplated under this Section 2.18(a), all
payments of principal that would otherwise have been applied to repay the
Eurodollar Rate Advances that would have been made by such Affected Bank or the
Converted Eurodollar Rate Advances shall instead be applied to repay the Base
Rate Advances made by such Affected Bank in lieu of such Eurodollar Rate
Advances or resulting from the Conversion of such Eurodollar Rate Advances and
shall be made at the time that payments on the Eurodollar Rate Advances of the
Banks that are not Affected Banks are made.
(ii) Notwithstanding any other provision of this Agreement, if any
Bank ("Canadian Affected Bank") shall notify the Canadian Administrative Agent
that any law or regulation makes it unlawful, or any central bank or other
governmental authority asserts that it is
-55-
unlawful, for such Canadian Affected Bank or its Canadian Bankers' Acceptance
Lending Office to perform its obligations hereunder to complete and accept
Drafts, to purchase Bankers' Acceptance or BA Equivalent Notes or to continue to
fund or maintain BA Obligations hereunder, (i) the obligation of such Canadian
Affected Bank to complete and accept Drafts and/or to purchase Bankers'
Acceptances or BA Equivalent Notes, or Convert Canadian Prime Rate Advances into
BA Obligations, shall be suspended (and any request by the Canadian Borrower for
a Drawing shall be deemed a request for a Canadian Prime Rate Advance from such
Canadian Affected Bank to be made on the same date as the BA Obligations of the
Banks that are not Canadian Affected Banks and such Canadian Prime Rate Advance
shall be considered as part of such Drawing) until such Canadian Affected Bank
shall notify the Canadian Borrower and the Banks that the circumstances causing
such suspension no longer exist (and such Canadian Affected Bank shall give
notice promptly to the Canadian Administrative Agent and the Canadian Borrower
upon such circumstance ceasing to exist), (ii) an amount equal to the aggregate
Face Amount of all BA Obligations outstanding at such time, shall, upon such
demand (which shall only be made if reasonably deemed necessary by any Canadian
Bank to comply with applicable law), be deposited by the Canadian Borrower into
the Canadian Cash Collateral Account until the Maturity Date of each such BA
Obligation, and (iii) upon the Maturity Date of any BA Obligation in respect of
which any such deposit has been made, the U.S. Administrative Agent shall be,
and hereby is, authorized (without notice to or any further action by any
Borrower) to apply, or to direct the Canadian Administrative Agent to apply,
such amount (or the applicable portion thereof) to the reimbursement of such BA
Obligation. In the event any Canadian Affected Bank shall notify the Canadian
Administrative Agent of the occurrence of any circumstance contemplated under
this Section 2.18(b), all payments of principal that would otherwise have been
applied to repay the BA Obligations that would have been made by such Canadian
Affected Bank shall instead be applied to repay the Canadian Prime Rate Advances
made by such Canadian Affected Bank in lieu of such BA Obligations and shall be
made at the time that payments on the BA Obligations of the Canadian Banks that
are not Canadian Affected Banks are made.
(s) Conversion of U.S. Advances; Interest Periods. The U.S. Borrower may
---------------------------------------------
on any Business Day, upon notice given to the U.S. Administrative Agent not
later than 11:00 A.M. (Los Angeles, California time) on the third Business Day
prior to the date of the proposed Conversion (or in the case of notice to
Convert Eurodollar Advances to Base Rate Advances not later than 10:00 a.m. (Los
Angeles, California time) on the last day of the Interest Period for such
Eurodollar Rate Advance) and subject to the provisions of Sections 2.01(d), 2.10
and 2.18, Convert all Advances of one U.S. Type comprising the same Borrowing
into Advances of another U.S. Type; provided, however, that (i) if any
-------- -------
Conversion of any Eurodollar Rate Advances into Base Rate Advances is made on
any day other than the last day of an Interest Period for such Eurodollar Rate
Advances, the U.S. Borrower shall be obligated to reimburse the Banks in respect
thereof pursuant to Section 9.04(b), and (ii) Advances comprising a Borrowing
may not be Converted into Eurodollar Rate Advances if the outstanding principal
amount of such Borrowing is less than U.S. $1,000,000 or if any Event of Default
shall have occurred and be continuing on the date the related notice of
Conversion would otherwise be given pursuant to this Section 2.19. Each such
notice of a Conversion shall, within the restrictions specified above, specify
(i) the date of such Conversion, (ii) the Advances to be Converted, and (iii) if
such Conversion is into Eurodollar Rate Advances, the duration of the initial
Interest Period for each such Advance. Each notice of Conversion shall be
-56-
irrevocable and binding on the U.S. Borrower. If any Event of Default shall
have occurred and be continuing on the third Business Day prior to the last day
of any Interest Period for any Eurodollar Rate Advances, the U.S. Borrower
agrees to Convert all such Advances into Base Rate Advances on the last day of
such Interest Period. The U.S. Borrower may on any U.S. Business Day, upon
notice given to the U.S. Administrative Agent not later than 11:00 a.m. (Los
Angeles, California time) on the third U.S. Business Day prior to the last day
of any Interest Period designate a new Interest Period to commence on the last
day of the existing Interest Period, in accordance with the provisions of the
definition herein of "Interest Period."
(t) Lending Office. Any Bank that makes demand for payment of additional
--------------
amounts under Section 2.15, requires any Taxes be withheld or deducted under
Section 2.16(a), makes demand for any indemnity under Section 2.16 or notifies
the U.S. Administrative Agent of any circumstance pursuant to Section 2.18 or
Section 2.10(d)(B), shall use reasonable efforts (consistent with legal and
regulatory restrictions) to designate a different Applicable Lending Office if
the making of such designation would avoid the need for, or reduce the amount
of, such additional amounts, withholding, deduction or indemnity or avoid
thereafter the circumstances that gave rise to such notification; provided that
--------
no such designation need be made if such Bank reasonably believes that it may
suffer an economic, legal or regulatory disadvantage or that such designation
would be detrimental or otherwise disadvantageous in any respect to such Bank.
(u) Renewal and Conversion of BA Obligations. (i) The Canadian Borrower
----------------------------------------
may on any Canadian Business Day, upon notice given to the U.S. Administrative
Agent not later than 12:00 noon (Los Angeles, California time) on the third
Canadian Business Day prior to the date of the proposed renewal and subject to
the provisions of Sections 2.10 and 2.18, renew all or any portion of the BA
Obligations comprising part of the same Drawing; provided that:
--------
(1) any renewal of BA Obligations shall be made only on the then
existing Maturity Date of such BA Obligations;
(2) each renewal of BA Obligations comprising part of the same
Drawing shall be made ratably among the Banks holding such BA Obligations
in accordance with the respective amount of such BA Obligations so held
(counting Canadian Prime Rate Advances made under Section 2.04 or Section
2.21 in lieu thereof); and
(3) no renewal of any BA Obligation may be made at any time that
an Event of Default has occurred and is continuing.
Each such notice of renewal shall, within the restrictions set forth above,
specify (A) the date of such renewal (which shall be the then existing Maturity
Date of such BA Obligations and shall be a Canadian Business Day), (B) the BA
Obligations to be renewed, (C) if less than all of the BA Obligations comprising
part of any Drawing are to be renewed, the aggregate Face Amount for such
renewal and (D) the term to maturity of the renewed BA Obligations (which shall
comply with the definition of "Maturity Date" in Section 1.01). Each Draft and
BA Equivalent Note in connection with any renewal under this Section 2.21 (A)
shall be in an amount of C$100,000 or an integral multiple of C$100,000 in
excess thereof, and (B) shall be dated the date of the proposed
-57-
renewal. In the event that the Face Amount of any renewal requested by the
Canadian Borrower pursuant to this Section 2.21 is an amount which, if divided
ratably among the Canadian Banks would not result in each Canadian Bank
accepting a Draft or purchasing a BA Equivalent Note which has an undiscounted
face amount equal to C$100,000 or an integral multiple of C$100,000 in excess
thereof, then notwithstanding any provision in this Agreement to the contrary,
the Canadian Administrative Agent is authorized by the Canadian Borrower and the
Canadian Banks to allocate among the Canadian Banks, the Drafts to be accepted
and purchased and BA Equivalent Notes to be purchased in such manner and amounts
as the Canadian Administrative Agent may, in its sole discretion, acting
reasonably, consider necessary, rounding up or down, so as to ensure that no
Canadian Bank is required to accept a Draft for a fraction of C$100,000 and, in
such event, the Canadian Banks' ratable share with respect to such Drafts and BA
Equivalent Notes shall be adjusted accordingly; provided that no Canadian Bank
--------
shall be required to purchase any Bankers' Acceptance or BA Equivalent Note to
the extent that the Face Amount thereof exceeds its then Unused Canadian
Revolving Commitment. Each Canadian Bank having a Canadian Revolving Commitment
shall fund any portion of its allocated share in excess of its Bankers'
Acceptance or BA Equivalent Note in the form of a Canadian Prime Rate Advance,
which shall for all purposes be deemed to be a Canadian Advance made pursuant to
Section 2.01(c). Each notice of renewal under this Section 2.21 shall be
irrevocable and binding on the Canadian Borrower. Upon any renewal of BA
Obligations comprising part of any Drawing in accordance with this Section
2.21(a), the Banks holding the BA Obligations to be renewed shall exchange such
maturing BA Obligations for new BA Obligations containing the terms set forth in
the applicable notice of renewal, and the Drawing Purchase Price payable for
each such renewal shall be applied, together with other necessary funds of the
Canadian Borrower, to reimburse the BA Obligations otherwise maturing on such
date in accordance with Section 2.07(b). The Canadian Borrower hereby
irrevocably authorizes and directs each Canadian Bank to apply the proceeds of
each renewed BA Obligation owing to it to the payment, in accordance with this
Section 2.21(a), of the BA Obligations owing to such Bank and maturing on such
date, and the Canadian Borrower will pay any remaining balance owing thereon.
(ii) The Canadian Borrower may on any Canadian Business Day, upon
notice given to the U.S. Administrative Agent not later than 12:00 noon (Los
Angeles, California time) on the third Canadian Business Day prior to the date
of the proposed Conversion and subject to the provisions of Sections 2.10 and
2.18, (i) Convert all or any portion of Canadian Prime Rate Advances comprising
the same Borrowing or Borrowings into a Drawing comprised of BA Obligations, or
(ii) Convert all or any portion of the BA Obligations comprising part of the
same Drawing to a Canadian Borrowing comprised of Canadian Prime Rate Advances;
provided, that:
--------
(1) any Conversion of BA Obligations shall be made only on the
then existing Maturity Date for such BA Obligations;
(2) each Conversion of BA Obligations comprising part of the same
Drawing shall be made ratably among the Banks holding such BA Obligations
in accordance with the respective amounts of such BA Obligations so held;
-58-
(3) no Conversion may be made if the amount of the Advance to be
made by any Canadian Bank in connection with such Conversion would exceed
such Bank's Unused Canadian Revolving Commitment in effect at the time of
such Conversion;
(4) each Conversion into a Canadian Borrowing shall be in an
aggregate amount of C$1,000,000 or an integral multiple of C$100,000 in
excess thereof;
(5) each Conversion of Canadian Prime Rate Advances into a
Drawing shall be in an aggregate Face Amount of C$1,000,000 or an integral
multiple of C$100,000 in excess thereof and shall otherwise comply with the
requirements of, and be in accordance with, Sections 2.01(d) and 2.04; and
(6) no Conversion of Canadian Prime Rate Advances into a Drawing
may be made at any time that an Event of Default has occurred and is
continuing.
Each such notice of Conversion shall, within the restrictions set forth above,
specify (A) the date of such Conversion (which shall be, in the case of any
Conversion of BA Obligations, the then existing Maturity Date of such BA
Obligations and shall be a Canadian Business Day), (B) the BA Obligations or
Canadian Prime Rate Advances, as the case may be, to be Converted, (C) if less
than all of the BA Obligations comprising part of any Drawing are to be
Converted into Canadian Prime Rate Advances, the aggregate Face Amount of such
Conversion, and (D) in the case of Conversion into BA Obligations, the term to
maturity of such BA Obligations (which shall comply with the definition of
"Maturity Date" in Section 1.01). Each Draft and BA Equivalent Note in
connection with any such Conversion into BA Obligations under this Section 2.21
(A) shall be in an amount of C$100,000 or an integral multiple of C$100,000 in
excess thereof, and (B) shall be dated the date of the proposed Conversion. In
the event that the Face Amount of any such Conversion requested by the Canadian
Borrower pursuant to this Section 2.19 is an amount which, if divided ratably
among the Canadian Banks would not result in each Canadian Bank accepting a
Draft or purchasing a BA Equivalent Note which has an undiscounted face amount
equal to C$100,000 or an integral multiple of C$100,000 in excess thereof, then
notwithstanding any provision in this Agreement to the contrary, the Canadian
Administrative Agent is authorized by the Canadian Borrower and the Canadian
Banks to allocate among the Canadian Banks, the Drafts to be accepted and
purchased and BA Equivalent Notes to be purchased in such manner and amounts as
the Canadian Administrative Agent may, in its sole discretion, acting
reasonably, consider necessary, rounding up or down, so as to ensure that no
Canadian Bank is required to accept a Draft for a fraction of C$100,000 and, in
such event, the Canadian Banks' ratable share with respect to such Drafts and BA
Equivalent Notes shall be adjusted accordingly; provided that no Canadian Bank
--------
shall be required to purchase any Bankers' Acceptance or BA Equivalent Note to
the extent that the Face Amount thereof exceeds its then Unused Canadian
Revolving Commitment. Each such Canadian Bank shall fund any portion of its
allocated share in excess of its Bankers' Acceptance or BA Equivalent Note in
the form of a Canadian Prime Rate Advance, which shall for all purposes be
deemed to be a Canadian Advance made pursuant to Section 2.01(c). Each notice
of Conversion under this Section 2.21 shall be irrevocable and binding on the
Canadian Borrower. Upon any Conversion of BA Obligations comprising part of the
same Drawing in accordance with this Section 2.21(b), the obligation of the
Canadian Borrower to repay the Banks under Section 2.07 in respect of the
Tranche A BA Obligations otherwise maturing on such date shall, to the extent of
such
-59-
Conversion, be Converted to an obligation to repay on the Termination Date the
Canadian Banks making the Canadian Advances made in respect of such maturing BA
Obligations on such date ratably in accordance with the amount of the Canadian
Advances held by such Bank at the time of repayment. The Canadian Borrower
hereby irrevocably authorizes and directs each Canadian Bank to apply the net
proceeds of each Canadian Prime Rate Advance made by such Canadian Bank pursuant
to this Section 2.21(b) to the payment of the BA Obligations owing to such Bank
and maturing on such date, and the Canadian Borrower will pay any remaining
balance on such date.
(iii) If any Event of Default shall have occurred and be continuing
or if the Canadian Borrower shall fail (i) to deliver a properly completed
notice of renewal under Section 2.21(a) or a properly completed notice of
Conversion under Section 2.21(b) indicating its intention to renew or to Convert
any maturing BA Obligations or (ii) to pay the Canadian Banks for any BA
Obligations comprising part of the same Drawing pursuant to Section 2.07, the
Canadian Administrative Agent will forthwith so notify the U.S. Administrative
Agent, the Canadian Borrower and the Canadian Banks, and each of such BA
Obligations will automatically, on the then existing Maturity Date of such BA
Obligations, Convert into a Canadian Prime Rate Advance.
03.
CONDITIONS OF LENDING
(a) Condition Precedent to Effectiveness. The effectiveness of this
------------------------------------
Agreement is subject to the conditions precedent that:
(i) Documentation. On or before the Effective Date, the
-------------
Administrative Agents shall have received the following duly executed by all the
parties thereto, in form and substance satisfactory to the Administrative Agents
and the Banks, and, where applicable, in sufficient copies for each Bank:
(1) this Agreement, a U.S. Revolving Note payable to the order
of each U.S. Bank in the amount of its U.S. Tranche A Commitment, a
Canadian Note payable to the order of each Canadian Bank in the amount of
its Canadian Revolving Commitment, the Guaranties, the Pledge Agreements,
Mortgages and each of the other Loan Documents and all attached exhibits
and schedules;
(2) a favorable opinion of the Borrower's outside counsel,
dated as of the Effective Date and substantially in the form of the
attached Exhibit I covering the matters discussed in such Exhibit and such
other matters as any Bank through the Administrative Agents may reasonably
request;
(3) favorable opinions of the various Canadian counsels dated
as of the Effective Date and substantially in the form of the attached
Exhibits J-1, J-2 and J-3 covering the matters discussed in such Exhibits;
(4) a certificate of the secretary or an assistant secretary of
each Borrower and each Guarantor certifying the existence of such Obligor,
the certificate or articles of
-60-
incorporation of such Obligor, the bylaws of such Obligor, the resolutions
of the board of directors of such Obligor authorizing the Loan Documents of
such Obligor and related transactions, and the incumbency and signatures of
the officers of such Obligor authorized to execute the Loan Documents of
such Obligor and related documents;
(5) a certificate dated as of the Effective Date from the
president or chief financial officer of each of the Borrowers stating that
(A) all representations and warranties of such Borrower set forth in this
Agreement are true and correct in all material respects; (B) no Default has
occurred and is continuing; and (C) the condition in Section 3.01(g) has
been met;
(6) appropriate UCC-1 Financing Statements and other similar
filings required in connection with the Security Documents covering the
Collateral for filing with the appropriate authorities;
(7) stock certificates required in connection with the Pledge
Agreements and irrevocable stock powers executed in blank for each such
stock certificate;
(8) the initial Independent Engineering Report;
(9) insurance certificates naming the respective
Administrative Agents loss payee or additional insured evidencing insurance
which meets the requirements of this Agreement and the Security Documents;
and
(10) such other documents, governmental certificates,
agreements, and lien searches as the Administrative Agents or any Bank may
reasonably request.
(ii) Payment of Fees. On the date of this Agreement, the Borrowers
---------------
shall have paid the fees required by Section 2.06 and all costs and expenses
which have been invoiced and are payable pursuant to Section 9.04.
(iii) Title. The Administrative Agents shall be satisfied in their
-----
sole discretion with the title to the Oil and Gas Properties of the Obligors
which constitute at least 90% of the present value of the Proven Reserves of the
Obligors and 90% of the present value of the Proved Developed Producing Reserves
of the Obligors.
(iv) Administrative Agents' Liens. The Administrative Agents shall
----------------------------
have received satisfactory evidence that the Liens granted to them under the
Security Documents are Acceptable Security Interests.
(v) Security Interests. The Administrative Agents and the Banks
------------------
shall be satisfied that the Security Documents encumber substantially all of Oil
and Gas Properties of the Obligors.
(vi) Due Diligence. The Administrative Agents shall be satisfied in
-------------
their sole discretion with its due diligence analysis and review of the assets,
liabilities, business, operations,
-61-
condition (financial or otherwise) and prospects of the Borrowers, the
Guarantors, and their respective owners.
(vii) Material Adverse Change. No event or circumstance that could
-----------------------
cause a Material Adverse Change shall have occurred.
(b) Conditions Precedent to All Credit Extensions. The obligation of
---------------------------------------------
each Bank to make a Credit Extension and of the Issuing Bank to issue, increase,
or extend any Letter of Credit shall be subject to the further conditions
precedent that on the date of such Credit Extension or the issuance, increase,
or extension of such Letter of Credit:
(i) the following statements shall be true (and each of the giving
of the applicable Notice of Borrowing or Letter of Credit Application and the
acceptance by the applicable Borrower of the proceeds of such Credit Extension
or the issuance, increase, or extension of such Letter of Credit shall
constitute a representation and warranty by such Borrower that on the date of
such Credit Extension, the issuance, increase, or extension of such Letter of
Credit, such statements are true):
(1) the representations and warranties contained in Article IV,
the Security Documents, and the Guaranties are correct in all material
respects on and as of the date of such Credit Extension or the date of the
issuance, increase, or extension of such Letter of Credit, before and after
giving effect to such Credit Extension or to the issuance, increase, or
extension of such Letter of Credit and to the application of the proceeds
from such Credit Extension, as though made on and as of such date and
(2) no Default has occurred and is continuing or would result
from such Credit Extension or from the application of the proceeds
therefrom, from the issuance, increase, or extension of such Letter of
Credit; and
(ii) the Administrative Agents shall have received such other
approvals, opinions, or documents reasonably deemed necessary or desirable by
any Bank as a result of circumstances occurring after the date of this
Agreement, as any Bank through the Administrative Agents may reasonably request.
(c) Conditions Precedent to U.S. Tranche B Advances. The obligation of
-----------------------------------------------
each U.S. Bank having a U.S. Tranche B Commitment to make a U.S. Tranche B
Advances shall be subject to the further conditions precedent that on the date
of the making of such Advances:
(i) the proceeds of such Advances must be used by the applicable
Borrower to purchase Oil and Gas Properties or to acquire 50.1% or more of the
capital stock (or other ownership interests) of another Person who owns Oil and
Gas Properties;
(ii) the proceeds of such Advances must not exceed 75% of the
aggregate purchase price paid by the applicable Borrower for such Oil and Gas
Properties or such acquisition of capital stock (or other ownership interests);
and
-62-
(iii) the applicable Borrower shall have delivered to the
Administrative Agents an Independent Engineering Report in form and substance
satisfactory to the Administrative Agents with respect to the Oil and Gas
Properties to be acquired (or owned by the Person to be acquired) indicating
that such Oil and Gas Properties have a present value (based on a discount rate
of 10% and using the Administrative Agents' price forecast) equal to at least
175% of the aggregate amount of such Advances.
04.
REPRESENTATIONS AND WARRANTIES
Each Borrower represents and warrants as follows:
(a) Corporate Existence; Subsidiaries. Each of the U.S. Borrower and its
---------------------------------
Subsidiaries is a corporation duly organized, validly existing, and in good
standing under the laws of the jurisdiction of its incorporation and in good
standing and qualified to do business in each jurisdiction where its ownership
or lease of Property or conduct of its business requires such qualification and
where a failure to be qualified would reasonably be expected to cause a Material
Adverse Change.
(b) Corporate Power. The execution, delivery, and performance by the U.S.
---------------
Borrower and each of the other Obligors of this Agreement, the Notes, and the
other Loan Documents to which each is a party and the consummation of the
transactions contemplated hereby and thereby (a) are within such Obligor's
corporate powers, (b) have been duly authorized by all necessary corporate
action, (c) do not contravene (i) such Obligor's articles or certificate (as
applicable) of incorporation or bylaws or (ii) any law or any contractual
restriction binding on or affecting such Obligor, and (d) will not result in or
require the creation or imposition of any Lien prohibited by this Agreement. At
the time of each Credit Extension or the issuance, extension or increase of each
Letter of Credit, such Credit Extension and the use of the proceeds of such
Credit Extension or the issuance, extension or increase of such Letter of Credit
will be within the applicable Borrower's corporate xxxxxx, xxxx have been duly
authorized by all necessary corporate action, will not contravene (i) such
Borrower's articles or certificate (as applicable) of incorporation or bylaws or
(ii) any law or any contractual restriction binding on or affecting such
Borrower and will not result in or require the creation or imposition of any
Lien prohibited by this Agreement.
(c) Authorization and Approvals. No authorization or approval or other
---------------------------
action by, and no notice to or filing with, any Governmental Authority is
required for the due execution, delivery and performance by the U.S. Borrower
and each of the other Obligors of this Agreement, the Notes, or the other Loan
Documents to which each is a party or the consummation of the transactions
contemplated thereby. At the time of each Credit Extension or the issuance,
extension or increase of each Letter of Credit, no authorization or approval or
other action by, and no notice to or filing with, any Governmental Authority
will be required for such Credit Extension or the use of the proceeds of such
Credit Extension or the issuance, extension or increase of such Letter of
Credit.
(d) Enforceable Obligations. This Agreement, the Notes, and the other
-----------------------
Loan Documents to which the U.S. Borrower and the other Obligors are a party
have been duly executed and delivered by the U.S. Borrower or such Obligors, as
applicable. Each Loan Document to which the U.S.
-63-
Borrower or any of the other Obligors is a party is the legal, valid, and
binding obligation of the U.S. Borrower and each such Obligor and is enforceable
against the U.S. Borrower and each such Obligor in accordance with its terms,
except as such enforceability may be limited by any applicable bankruptcy,
insolvency, reorganization, moratorium, or similar law affecting creditors'
rights generally or by general principles of equity.
(e) Financial Statements.
--------------------
(i) The U.S. Borrower has delivered to the Administrative Agents
the Financial Statements, and the Financial Statements are accurate and complete
in all material respects and present fairly the financial condition of U.S.
Borrower as of their respective dates and for their respective periods in
accordance with GAAP. As of the date of the Financial Statements, there were no
material contingent obligations, liabilities for taxes, unusual forward or long-
term commitments, or unrealized or anticipated losses of the U.S. Borrower or
any of its Subsidiaries, except as disclosed therein and adequate reserves for
such items have been made in accordance with GAAP.
(ii) Since December 31, 2000, no Material Adverse Change has
occurred.
(f) True and Complete Disclosure. To the best of their knowledge and
----------------------------
belief, all factual information heretofore or contemporaneously furnished by or
on behalf of the U.S. Borrower and its Subsidiaries in writing to the
Administrative Agents and the Banks for purposes of or in connection with this
Agreement, any other Loan Document or any transaction contemplated hereby or
thereby is, and all other such factual information (taken as a whole) hereafter
furnished by or on behalf of the U.S. Borrower and its Subsidiaries in writing
to the Administrative Agents and the Banks, will be true and accurate in all
material respects on the date as of which such information is dated or certified
and not incomplete by omitting to state any material fact necessary to make such
information (taken as a whole) not misleading at such time. Except as set forth
in the U.S. Borrower's filings from time to time with the Securities and
Exchange Commission, none of the Borrowers or any of the other Obligors is a
party to any material agreement, contract or instrument as of the date of this
Agreement.
(g) Litigation. Except as set forth in the attached Schedule 4.07, there
----------
is no pending or, to the best knowledge of the Borrowers, threatened action or
proceeding affecting any of the Borrowers or any of their respective
Subsidiaries before any court, Governmental Authority or arbitrator, which would
reasonably be expected to cause a Material Adverse Change or which purports to
affect the legality, validity, binding effect or enforceability of this
Agreement, any Note, or any other Loan Document. Additionally, there is no
pending or, to the best of the knowledge of the Borrowers, threatened action or
proceeding instituted against any of the Borrowers or any of their respective
Subsidiaries which seeks to adjudicate any of the Borrowers or any of their
respective Subsidiaries as bankrupt or insolvent, or seeking liquidation,
winding up, reorganization, arrangement, adjustment, protection, relief, or
composition of it or its debts under any law relating to bankruptcy, insolvency
or reorganization or relief of debtors, or seeking the entry of an order for
relief or the appointment of a receiver, trustee, manager or other similar
official for it or for any substantial part of its Property.
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(h) Use of Proceeds. The proceeds of the Credit Extensions and the
---------------
Letters of Credit will be used by the Borrowers for the purposes described in
Section 5.09. None of the Borrowers is engaged in the business of extending
credit for the purpose of purchasing or carrying margin stock (within the
meaning of Regulation U). No proceeds of any Credit Extension or Letter of
Credit will be used to purchase or carry any margin stock in violation of
Regulation T, U or X.
(i) Investment Company Act. Neither the U.S. Borrower nor any of its
----------------------
Subsidiaries is an "investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended. Neither the U.S. Borrower nor any of its Subsidiaries is subject to
regulation under any Federal or state statute, regulation or other Legal
Requirement which limits its ability to incur Debt.
(j) Public Utility Holding Company Act. Neither the U.S. Borrower nor any
----------------------------------
of its Subsidiaries is a "holding company", or a "subsidiary company" of a
"holding company", or an "affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company", or a "public utility", as such terms are used
in the Public Utility Holding Company Act of 1935, as amended.
(k) Taxes. All federal, state, provincial, local and foreign tax returns
-----
reports and statements required to be filed (after giving effect to any
extension granted in the time for filing) by the Borrowers or any member of the
Controlled Group (hereafter collectively called the "Tax Group") have been filed
with the appropriate governmental agencies in all jurisdictions in which such
returns, reports and statements are required to be filed (except where any
obligation to so file is being contested in good faith and by appropriate
proceedings and after adequate reserves have been provided therefor), and all
taxes (which are material in amount) and other impositions due and payable have
been timely paid prior to the date on which any fine, penalty, interest, late
charge or loss may be added thereto for non-payment thereof except where
contested in good faith and by appropriate proceedings and after providing
adequate reserves therefor. None of the Borrowers nor any member of the Tax
Group has given, or been requested to give, a currently effective waiver of the
statute of limitations relating to the payment of any federal, state, local or
foreign taxes or other impositions. None of the Property owned by the Borrowers
or any other member of the Tax Group is Property which the Borrowers or any
member of the Tax Group is required to treat as being owned by any other Person
pursuant to the provisions of Section 168(f)(8) of the Code or any similar
provision of the ITA. Proper and accurate amounts have been withheld by the
Borrowers and all other members of the Tax Group from their employees for all
periods to comply in all material respects with the tax, social security and
unemployment withholding provisions of applicable federal, state, local and
foreign law. Timely payment of all material sales and use taxes required by
applicable law have been made by the Borrowers and all other members of the Tax
Group.
(l) Pension Plans.
-------------
(i) No Termination Event has occurred with respect to any Plan, and
each Plan has complied with and been administered in all material respects in
accordance with applicable provisions of ERISA and the Code. No "accumulated
funding deficiency" (as defined in Section 302 of ERISA) has occurred and there
has been no excise tax imposed under Section 4971 of the Code. To the knowledge
of any Responsible Officer of each Borrower, no Reportable Event has occurred
with respect to any Multiemployer Plan, and each Multiemployer Plan has complied
with and been
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administered in all material respects with applicable provisions of ERISA and
the Code. The present value of all benefits vested under each Plan (based on the
assumptions used to fund such Plan) did not, as of the last annual valuation
date applicable thereto, exceed the value of the assets of such Plan allocable
to such vested benefits in any amount that would reasonably be expected to cause
a Material Adverse Change. None of the Borrowers nor any member of the
Controlled Group has had a complete or partial withdrawal from any Multiemployer
Plan for which there is any material withdrawal liability. As of the most recent
valuation date applicable thereto, none of the Borrowers nor any member of the
Controlled Group has received notice that any Multiemployer Plan is insolvent or
in reorganization. Based upon GAAP existing as of the date of this Agreement and
current factual circumstances, none of the Borrowers has any reason to believe
that the annual cost during the term of this Agreement to such Borrower or any
of its Subsidiaries for post-retirement benefits to be provided to the current
and former employees of the Borrower or any of its Subsidiaries under welfare
benefit plans (as defined in Section 3(1) of ERISA) could, in the aggregate,
reasonably be expected to cause a Material Adverse Change.
(ii) As to any Canadian Pension Plans of the Canadian Borrower or any
other Obligor: (i) such Canadian Pension Plans are duly registered under all
applicable provincial pension benefits legislation, (ii) all obligations of the
Canadian Borrower or such Obligor (including fiduciary, funding, investment and
administrative obligations) required to be performed in connection with such
Canadian Pension Plans or the funding agreements therefor have been performed in
a timely fashion and there are no outstanding disputes concerning the assets
held pursuant to any such funding agreement, (iii) all contributions or premiums
required to be made by the Canadian Borrower or such Obligor to such Canadian
Pension Plans have been made in a timely fashion in accordance with the terms of
the Canadian Pension Plans and applicable laws and regulations, (iv) all
employee contributions to the Canadian Pension Plans required to be made by way
of authorized payroll deduction have been properly withheld by the Canadian
Borrower or such Obligor, as applicable, and fully paid into the Canadian
Pension Plans in a timely fashion, (v) all reports and disclosures relating to
the Canadian Pension Plans required by any applicable laws or regulations have
been filed or distributed in a timely fashion, (vi) there have been no improper
withdrawals or applications of the assets of any of the Canadian Pension Plans,
(vii) no amount is owing by any of the Canadian Pension Plans under the ITA or
any provincial taxation statute, (viii) the Canadian Pension Plans are fully-
funded both on an ongoing basis and on an insolvency basis (using actuarial
assumptions and methods which are consistent with the valuations last filed with
the applicable governmental authorities and which are consistent with generally
accepted actuarial principles), and (ix) the Canadian Borrower and each such
other Obligor, after diligent inquiry, has neither any knowledge nor any grounds
for believing that any of such Canadian Pension Plans is the subject of any
investigation, proceeding, action or claim. There exists no state of facts
which after notice or lapse of time or both could reasonably be expected to give
rise to any such proceeding, action or claim.
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(m) Condition of Property; Casualties. The material Properties used or to
---------------------------------
be used in the continuing operations of the U.S. Borrower and each of its
Subsidiaries, taken as a whole, are (a) in substantially the same or better
repair, working order, and condition as such Properties were as of December 31,
2000, normal wear and tear excepted and (b) in such repair, working order and
condition to permit the U.S. Borrower and its Subsidiaries to operate such
Properties in substantially the same or better manner as operated as of December
31, 2000. Neither the business nor the material Properties of the U.S. Borrower
and each of its Subsidiaries has been affected as a result of any fire,
explosion, earthquake, flood, drought, windstorm, accident, strike or other
labor disturbance, embargo, requisition or taking of Property or cancellation of
contracts, permits or concessions by a Governmental Authority, riot, activities
of armed forces or acts of God or of any public enemy, which effect would
reasonably be expected to cause a Material Adverse Change.
(n) Insurance. Each of the Borrowers and their Subsidiaries, at a
---------
minimum, carry insurance with reputable insurers in respect of such of their
respective Properties, in such amounts and against such risks as is customarily
maintained by other Persons of similar size engaged in similar businesses or,
self-insure to the extent that is customary for Persons of similar size engaged
in similar businesses.
(o) No Burdensome Restrictions; No Defaults.
---------------------------------------
(i) Neither the U.S. Borrower nor any of its Subsidiaries is a
party to any indenture, loan or credit agreement or any lease or other agreement
or instrument or subject to any charter or corporate restriction or provision of
applicable law or governmental regulation which would reasonably be expected to
cause a Material Adverse Change. Neither the U.S. Borrower nor any of its
Subsidiaries is in default under or with respect to any contract, agreement,
lease or other instrument to which the U.S. Borrower or such Subsidiary is a
party and which would reasonably be expected to cause a Material Adverse Change.
To the knowledge of a Responsible Officer of the Borrowers, neither the U.S.
Borrower nor any of its Subsidiaries has received any notice of default under
any contract, agreement, lease or other instrument to which the U.S. Borrower or
its Subsidiaries is a party which is continuing or which, if not cured, would
reasonably be expected to cause a Material Adverse Change.
(ii) No Default has occurred and is continuing. Additionally, no
event of default under any material financing agreement, contract or instrument
to which the U.S. Borrower or any of its Subsidiaries is a party has occurred
and is continuing.
(p) Environmental Condition.
-----------------------
(i) Each of the U.S. Borrower and its Subsidiaries (i) has been and
is in full compliance with all Environmental Laws in all material respects and
has obtained and is in full compliance with all related permits necessary for
the ownership and operation of its Property and business, except where the
failure to so comply could not reasonably be expected to result in liability of
the U.S. Borrower and its Subsidiaries in excess of U.S. $1,000,000 (or the
Canadian Dollar Equivalent thereof); and (ii) does not and has not created,
handled, transported, used, or disposed of any Hazardous Substances except in
compliance with all material Environmental Laws, nor, to
-67-
its knowledge, has any of its currently or previously owned Property been used
for those purposes, except where any such action that fails to so comply could
not reasonably be expected to result in liability of the U.S. Borrower and its
Subsidiaries in excess of U.S. $1,000,000 (or the Canadian Dollar Equivalent
thereof).
(ii) Neither the U.S. Borrower nor any of its Subsidiaries (i) has
ever been responsible for the release of any Hazardous Substances into the
environment except in compliance with all material Environmental Laws, except
where any such release that does not so comply would not reasonably be expected
to result in liability of the U.S. Borrower and its Subsidiaries in excess of
U.S. $1,000,000 (or the Canadian Dollar Equivalent) and, to their knowledge,
neither the U.S. Borrower's nor any of its Subsidiaries' currently or previously
owned Property has been subjected to any release of or is contaminated by any
Hazardous Substances; and (ii) has, except as set forth on Schedule 4.16, since
December 31, 2000 received notice of and has ever been investigated for any
violation or alleged violation of any Environmental Law which has not been
remedied in accordance with Environmental Laws, which violation or alleged
violation would reasonably be expected to result in liability of the U.S.
Borrower and its Subsidiaries in excess of U.S. $1,000,000 (or the Canadian
Dollar Equivalent thereof).
(q) Liens and Encumbrances. None of the Property of the U.S. Borrower or
----------------------
any of its Subsidiaries is subject to any Lien other than Permitted Liens.
(r) Title to Real Property, Etc. Each of the U.S. Borrower and its
---------------------------
Subsidiaries has good and marketable title in fee simple to, or a valid and
subsisting leasehold interest in, all its real Property and good title to all
its other Property, except where the failure to have such good and marketable
title could not reasonably be expected to cause a Material Adverse Change, and
none of such Property is subject to any Lien, except Permitted Liens.
(s) Subsidiaries. The Subsidiaries of the U.S. Borrower listed on
------------
Schedule 4.20 constitute all of the Subsidiaries of the U.S. Borrower on the
date hereof.
05.
COVENANTS OF THE BORROWERS
So long as the Notes or any amount under any Loan Document shall remain
unpaid, any BA Obligation shall be outstanding, any Bank shall have any
Commitment hereunder, or there shall exist any Letter of Credit Exposure, the
Borrowers agree, unless the Required Banks otherwise consent in writing, to
comply with the following covenants.
(a) Compliance with Laws, Etc. Each of the U.S. Borrower and its
-------------------------
Subsidiaries will comply in all material respects with all Legal Requirements
except where the failure to so comply could not reasonably be expected to cause
a Material Adverse Change. Without limiting the generality and coverage of the
foregoing, each of the U.S. Borrower and its Subsidiaries shall comply in all
material respects with all applicable Environmental Laws, and all laws,
regulations, or directives with respect to equal employment opportunity and
employee safety in all jurisdictions in which the U.S. Borrower and its
Subsidiaries do business except where the failure to so comply
-68-
could not reasonably be expected to cause a Material Adverse Change; provided,
--------
however, that this Section 5.01 shall not prevent the U.S. Borrower and its
Subsidiaries from, in good faith and with reasonable diligence, contesting the
validity or application of any such laws or regulations by appropriate legal
proceedings.
(b) Maintenance of Insurance.
------------------------
(i) The Borrowers shall, and shall cause each of the Guarantors to,
procure and maintain or shall cause to be procured and maintained continuously
in effect policies of insurance in form and amounts and issued by companies,
associations or organizations reasonably satisfactory to the Administrative
Agents covering such casualties, risks, perils, liabilities and other hazards
reasonably required by the Administrative Agents.
(ii) All certified copies of policies or certificates thereof, and
endorsements and renewals thereof shall be delivered to and retained by the
Administrative Agent. All policies of insurance shall either have attached
thereto a Lender's Loss Payable Endorsement for the benefit of the applicable
Administrative Agent, as loss payee in form reasonably satisfactory to the
Administrative Agents or shall name such Administrative Agent as an additional
insured, as applicable. The Borrowers shall furnish the Administrative Agents
with a certificate of insurance or a certified copy of all policies of insurance
required. All policies or certificates of insurance shall set forth the
coverage, the limits of liability, the name of the carrier, the policy number,
and the period of coverage. In addition, all policies of insurance required
under the terms hereof shall contain an endorsement or agreement by the insurer
that any loss shall be payable in accordance with the terms of such policy
notwithstanding any act of negligence of the Borrowers, or a Guarantor or any
party holding under the Borrowers or a Guarantor which might otherwise result in
a forfeiture of the insurance and the further agreement of the insurer waiving
all rights of setoff, counterclaim or deductions against the Borrowers and the
Guarantors. All such policies shall contain a provision that notwithstanding
any contrary agreements between the Borrowers, the Guarantors, and the
applicable insurance company, such policies will not be canceled, allowed to
lapse without renewal, surrendered or amended (which provision shall include any
reduction in the scope or limits of coverage) without at least 30 days' prior
written notice to the Administrative Agents.
(c) Preservation of Corporate Existence, Etc. Each of the U.S. Borrower
----------------------------------------
and its Subsidiaries will preserve and maintain its corporate existence, rights,
franchises and privileges in the jurisdiction of its incorporation, and qualify
and remain qualified as a foreign corporation in each jurisdiction in which
qualification is necessary or desirable in view of its business and operations
or the ownership of its Properties and where failure to qualify would reasonably
be expected to cause a Material Adverse Change; provided that, nothing in this
--------
Section 5.03 shall prohibit any transaction permitted by Section 6.02.
(d) Payment of Taxes, Etc. Each of the U.S. Borrower and its Subsidiaries
---------------------
will pay and discharge before the same shall become delinquent, (a) all taxes,
assessments and governmental
-69-
charges or levies imposed upon it or upon its income or profits or Property that
are material in amount, prior to the date on which penalties attach thereto and
(b) all lawful claims that are material in amount which, if unpaid, might by law
become a Lien upon its Property; provided, however, that the U.S. Borrower and
-------- -------
its Subsidiaries shall not be required to pay or discharge any such tax,
assessment, charge, levy, or claim which is being contested in good faith and by
appropriate proceedings, and with respect to which reserves in conformity with
GAAP have been provided.
(e) Reporting Requirements. The Borrowers will furnish to the
----------------------
Administrative Agents and the Banks:
(i) Defaults. As soon as possible and in any event within three
--------
Business Days after the occurrence of a Default known to any of the Borrowers
which is continuing on the date of such statement, a statement of an authorized
officer of the U.S. Borrower setting forth the details of such Default and the
actions which the Borrowers have taken and propose to take with respect thereto;
(ii) Quarterly Financials. As soon as available and in any event
--------------------
not later than 45 days after the end of each of the first three fiscal quarters
of each fiscal year of the U.S. Borrower and the Canadian Borrower:
(1) the consolidated and consolidating balance sheets of the
U.S. Borrower, as of the end of such quarter and the consolidated and
consolidating statements of income, changes in owners' equity and cash
flows of the U.S. Borrower, for the fiscal quarter then ended and for the
period commencing at the end of the previous year and ending with the end
of such fiscal quarter, all in reasonable detail and duly certified with
respect to such statements (subject to year-end audit adjustments) by an
authorized financial officer of the U.S. Borrower as having been prepared
in accordance with GAAP; and
(2) to the extent not included in (b)(i) above, the
consolidated and consolidating balance sheets of the Canadian Borrower, as
of the end of such quarter and the consolidated and consolidating
statements of income, changes in owners' equity and cash flows of the
Canadian Borrower, for the fiscal quarter then ended and for the period
commencing at the end of the previous year and ending with the end of such
fiscal quarter, all in reasonable detail and duly certified with respect to
such statements (subject to year-end audit adjustments) by an authorized
financial officer of the Canadian Borrower as having been prepared in
accordance with GAAP
(iii) Audited Annual Financials. As soon as available and in any
-------------------------
event not later than 90 days after the end of each fiscal year of the U.S.
Borrower, copies of the annual audit report for such year for the U.S. Borrower,
including therein the consolidated and, to the extent prepared in connection
with such audit report, consolidating balance sheets of the U.S. Borrower as of
the end of such fiscal year and consolidated and consolidating statements of
income, changes in owners' equity and cash flows for such fiscal year, in each
case certified by Xxxxxx Xxxxxxxx, LLP or other independent certified public
accountants of nationally recognized standing acceptable to the
-70-
Administrative Agents and the Required Banks and including any management
letters delivered by such accountants to the U.S. Borrower in connection with
such audit together with a certificate of such accounting firm to the
Administrative Agents and the Banks stating that, in the course of the regular
audit of the business of the U.S. Borrower, which audit was conducted by such
accounting firm in accordance with generally accepted auditing standards, such
accounting firm has obtained no knowledge that a Default has occurred and is
continuing, or if, in the opinion of such accounting firm, a Default has
occurred and is continuing, a statement as to the nature thereof; and
(iv) Compliance Certificates. (i) Within 45 days of each fiscal
-----------------------
quarter end of the U.S. Borrower for the first three fiscal quarters of each
fiscal year of the U.S. Borrower and (ii) within 90 days of each fiscal year end
of the U.S. Borrower, a Compliance Certificate in the form of the attached
Exhibit J for such fiscal quarter or fiscal year then ended indicating
compliance with Sections 6.14 through 6.16;
(f) Oil and Gas Reserve Reports.
---------------------------
(i) As soon as available but in any event on or before March 31 of
each year, an Independent Engineering Report dated as of January 1 for such
year.
(ii) As soon as available but in any event on or before September 30
of each year an Internal Engineering Report dated as of July 1 for such year.
(iii) Quarterly Reports. As soon as available and in any event
-----------------
within 45 days after the end of each calendar quarter, one or more reports
certified by a Responsible Officer of the U.S. Borrower in form and substance
satisfactory to the Administrative Agents and the Banks prepared by the U.S.
Borrower for each of the Obligors' Oil and Gas Properties detailing on a monthly
basis production, revenue, and price information and associated operating
expenses and further detailing any changes to any producing reservoir,
production equipment, or producing well which could reasonably be expected to
cause a Material Adverse Change;
(iv) Securities Law Filings. Promptly and in any event within 15
----------------------
days after the sending or filing thereof, copies of all proxy material, reports
and other information which the U.S. Borrower or any of its Subsidiaries sends
to or files with the SEC;
(v) Termination Events. As soon as possible and in any event (i)
------------------
within 30 days after the U.S. Borrower or any of its Subsidiaries knows or has
reason to know that any Termination Event described in clause (a) of the
definition of Termination Event with respect to any Plan has occurred, and (ii)
within 10 days after the U.S. Borrower or its Subsidiaries knows or has reason
to know that any other Termination Event with respect to any Plan has occurred,
a statement of a senior financial officer of the U.S. Borrower or such
Subsidiary describing such Termination Event and the action, if any, which the
U.S. Borrower or such Subsidiary proposes to take with respect thereto;
(vi) Termination of Plans. Promptly and in any event within two
--------------------
Business Days after receipt thereof by the U.S. Borrower or any member of the
Controlled Group from the PBGC,
-71-
copies of each notice received by the U.S. Borrower or any such member of the
Controlled Group of the PBGC's intention to terminate any Plan or to have a
trustee appointed to administer any Plan;
(vii) Other ERISA Notices. Promptly and in any event within five
-------------------
Business Days after receipt thereof by the U.S. Borrower or any member of the
Controlled Group from a Multiemployer Plan sponsor, a copy of each notice
received by the U.S. Borrower or any member of the Controlled Group concerning
the imposition of withdrawal liability pursuant to Section 4202 of ERISA in an
amount that could reasonably be expected to cause a Material Adverse Change;
(viii) Disputes, etc. Prompt written notice of any claims,
-------------
proceedings, or disputes, or to the knowledge of the U.S. Borrower and its
Subsidiaries threatened, or affecting the U.S. Borrower or any of its
Subsidiaries which, if adversely determined, could reasonably be expected to
cause a Material Adverse Change;
(ix) Material Changes. Prompt written notice of any condition or
----------------
event of which the U.S. Borrower or any of its Subsidiaries has knowledge, which
condition or event has resulted or may reasonably be expected to result in a
Material Adverse Change;
(x) Acquisition of Subsidiaries or Property. Within 30 days after
---------------------------------------
the occurrence thereof, notice of (i) the acquisition of any new Subsidiary by
any Obligor and (ii) the acquisition of any Proven Reserves or other material
assets by any Guarantor other than the Canadian Borrower.
(xi) Environmental Notices. Within 30 days after receipt by the
---------------------
U.S. Borrower or any of its Subsidiaries, a copy of (i) any notice, claim,
complaint or order to the effect that the U.S. Borrower or any of its
Subsidiaries is or could reasonably be expected to be liable to any Person in an
amount which could reasonably be expected to exceed U.S. $1,000,000 (or the
Canadian Dollar Equivalent thereof) as a result of the release by the U.S.
Borrower, any of its Subsidiaries, or any other Person of any Hazardous
Substances into the environment or requiring that action be taken to respond to
or clean up a Release of Hazardous Substances into the environment and such
action or clean-up could reasonably be expected to exceed U.S. $1,000,000 (or
the Canadian Dollar Equivalent thereof) and (ii) any notice, complaint, or
citation alleging any violation of any Environmental Law or Environmental Permit
by the U.S. Borrower or any of its Subsidiaries as to which the liability of the
U.S. Borrower and its Subsidiaries may reasonably be expected to exceed U.S.
$1,000,000 (or the Canadian Dollar Equivalent thereof); and
(xii) Other Information. Such other information respecting the
-----------------
business or Properties, or the condition or operations, financial or otherwise,
of the U.S. Borrower and its Subsidiaries as the Administrative Agents or any
Bank may from time-to-time reasonably request.
(g) Maintenance of Property. Each of the U.S. Borrower and its
-----------------------
Subsidiaries shall (a) maintain their material owned, leased, or operated
property, equipment, buildings and fixtures, taken as a whole, in substantially
the same or better condition and repair as the condition and repair as of
December 31, 2000, normal wear and tear excepted and (b) not knowingly or
willfully permit the commission of waste or other injury, or the release of
Hazardous Substances on or about the
-72-
owned or operated property in violation of applicable Environmental Laws that
would reasonably be expected to cause a Material Adverse Change.
(h) Inspection. From time-to-time upon reasonable notice, the U.S.
----------
Borrower and its Subsidiaries shall (a) permit the Administrative Agents (at the
request of any Bank) to examine and copy their books and records, (b) permit the
Administrative Agents and the Banks to visit and inspect their Properties, and
(c) permit the Administrative Agents and Banks to discuss the business
operations and Properties of the U.S. Borrower and its Subsidiaries with their
officers and directors. Notwithstanding the foregoing, the U.S. Borrower and
its Subsidiaries shall be entitled to honor its confidentiality obligations, if
any, with respect to proprietary information related to its drilling prospects.
(i) Use of Proceeds. The U.S. Borrower shall use the proceeds of U.S.
---------------
Tranche A Advances for (a) the refinancing of existing Debt of the U.S.
Borrower, and (b) general corporate purposes. The U.S. Borrower shall use the
proceeds of U.S. Tranche B Advances for the acquisition of Oil and Gas
Properties or for the acquisition of 50.1% or more of the capital stock (or
other ownership interests) of any Person owning Oil and Gas Properties. The
Canadian Borrower shall use the proceeds of the Canadian Advances for general
corporate purposes. The Borrowers will not engage in the business of extending
credit for the purpose of purchasing or carrying margin stock (within the
meaning of Regulation U). No proceeds of any Advance will be used to purchase
or carry any margin stock in violation of Regulation T, U, or X.
(j) Nature of Business. Neither the U.S. Borrower nor any of its
------------------
Subsidiaries shall engage in any business if, as a result, the general nature of
the business, taken on a consolidated basis, which would then be engaged in by
the U.S. Borrower and its Subsidiaries would be substantially changed from the
general nature of the business engaged in by the U.S. Borrower and its
Subsidiaries on the date of this Agreement.
(k) New Subsidiaries. (i) Within 30 days after the date of the creation
----------------
or acquisition of any new Subsidiary permitted by this Agreement, and (b) within
60 days after the purchase by the Borrower or any of its Subsidiaries of the
capital stock of any Person, which purchase results in such Person becoming a
Subsidiary of the U.S. Borrower, permitted by this Agreement, the U.S. Borrower
shall in each case cause such Subsidiary to execute and deliver to each Bank a
Guaranty in the form of the attached Exhibit D-1, Mortgages (if applicable and
reasonably required by the Administrative Agents), a Pledge Agreement in the
form of the attached Exhibit E (if applicable and reasonably required by the
Administrative Agents), and such other related Security Documents and the
Administrative Agents or any Bank may reasonably request, and such evidence of
corporate authority to enter into such Guaranty, Security Agreement, Pledge
Agreements, Mortgages and other Security Documents as the Administrative Agents
may reasonably request.
(l) Title Opinions. The Borrowers shall from time to time upon the
--------------
reasonable request of the Administrative Agents, take such actions and execute
and deliver such documents and instruments as the Administrative Agents shall
require to ensure that the Administrative Agents shall, at all times, have
received satisfactory title reviews (including, if requested, supplemental or
new title opinions addressed to it), which title opinions shall be in
-73-
form and substance acceptable to the Administrative Agent in their sole
discretion and shall include opinions regarding the before payout and after
payout ownership interests held by the Borrowers and the Guarantors for all
xxxxx located on the Oil and Gas Properties covered thereby) as to the ownership
of Oil and Gas Properties of the Borrowers and the Guarantors, and reflecting
that the Administrative Agents have an Acceptable Security Interest in such Oil
and Gas Properties of the Borrowers and the Guarantors, constituting at least
80% of the present value of the Proven Reserves of the Borrowers and the
Guarantors and at least 80% of the present value of the Proved Developed
Producing Reserves of the Borrowers and the Guarantors as determined by the
Administrative Agents. If the Administrative Agents shall determine that, as of
the date of any Borrowing Base determination, the Borrowers shall have failed to
comply with the preceding sentence, the Administrative Agents may notify the
Borrowers in writing of such failure and, within 30 days from and after receipt
of such written notice by the Borrowers, the Borrowers shall execute and deliver
to the Administrative Agents satisfactory title evidence (including supplemental
or new title opinions meeting the foregoing requirements) in form and substance
acceptable to the Administrative Agents in their reasonable business judgment as
to the Borrowers' and the Guarantor's ownership of such Oil and Gas Properties
and the Administrative Agents' Liens and security interests therein as are
required to maintain compliance with this Section 5.12.
(m) Agreement to Pledge. The Borrowers shall, and shall cause each
-------------------
Guarantor to, grant to the applicable Administrative Agent an Acceptable
Security Interest in any Oil and Gas Property of the Borrowers or any Guarantor
to which Proven Reserves are properly attributed that is now owned or hereafter
acquired promptly after receipt of a written request from the Administrative
Agents.
06.
NEGATIVE COVENANTS
So long as the Notes or any amount under any Loan Document shall remain
unpaid, any BA Obligation shall remain unpaid, any Bank shall have any
Commitment, or there shall exist any Letter of Credit Exposure, the Borrowers
agree, unless the Required Banks otherwise consent in writing, to comply with
the following covenants.
(a) Liens, Etc. Neither the U.S. Borrower nor any of its Subsidiaries
----------
will create, assume, incur or suffer to exist, any Lien on or in respect of any
of its Property whether now owned or hereafter acquired, or assign any right to
receive income, except that the U.S. Borrower and its Subsidiaries may create,
incur, assume or suffer to exist Permitted Liens.
(b) Merger, Amalgamation or Consolidation; Asset Sales. Neither the U.S.
--------------------------------------------------
Borrower nor any of its Subsidiaries will (a) merge, amalgamate or consolidate
with or into any other Person or (b) sell, lease, transfer, or otherwise dispose
of any of its Property (other than the sale in the ordinary course of business
of inventory, of equipment that is no longer useful or of Oil and Gas Properties
to which no Proven Reserves are properly attributed) except that so long as
after giving effect thereto no Default or Event of Default shall exist:
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(1) Any Person may merge, amalgamate or consolidate with any of
Obligors provided that such Obligor shall be the continuing or surviving
corporation;
(2) Any Obligor (other than a Borrower) may merge, amalgamate
or consolidate with any other Obligor; and
(3) Any Obligor may sell, lease, transfer or otherwise dispose
of Property to any other Obligor.
(c) Investments. Neither the U.S. Borrower nor any of its Subsidiaries
-----------
will make or permit to exist any Investment in any Person, or pay management
fees to any other Person, except for (a) loans, advances, capital contributions
or investments in any Obligor, (b) cash and Cash Equivalents, (c) Investments
set forth on Schedule 6.03; provided that, the amount of such Investments is not
--------
increased (other than through appreciation of the Investment's value) after the
date of this Agreement, (d) management fees in an aggregate amount not to exceed
U.S. $600,000 (or the Canadian Dollar Equivalent thereof) in any fiscal year of
the U.S. Borrower, (e) advances made in the ordinary course of the Borrowers'
business in respect of the operation and maintenance of its Oil and Gas
Properties, (f) equity Investments in 50.1% or more of the capital stock (or
other ownership interests) of any Person owning Oil and Gas Properties; provided
--------
that, (i) the aggregate amount of all such Investments under this clause (f)
from and after the date of this Agreement shall not exceed U.S. $75,000,000 (or
the Canadian Dollar Equivalent thereof) in the aggregate, and (ii) promptly, and
in any event within three Business Days after the making of such Investment,
such Person shall have become an Obligor and delivered a Guaranty and the other
Security Documents required by Section 5.11, and (g) Investments in Invasion to
the extent permitted by Section 6.18.
(d) Transactions With Affiliates. Neither the U.S. Borrower nor any of
----------------------------
its Subsidiaries shall, directly or indirectly, enter into or permit to exist
any transaction or series of transactions (including, but not limited to, the
purchase, sale, lease or exchange of Property, the making of any investment, the
giving of any guaranty or the rendering of any service) with any of their
Affiliates other than the U.S. Borrower or a wholly-owned Subsidiary of the U.S.
Borrower unless such transaction or series of transactions is on terms no less
favorable to such Person than those that could be obtained in a comparable arm's
length transaction with a Person that is not such an affiliate.
(e) Compliance with ERISA.
---------------------
(i) Neither the U.S. Borrower nor any of its Subsidiaries will (a)
terminate, or permit any Affiliate to terminate, any Plan so as to result in any
material (in the opinion of the Required Banks) liability of the U.S. Borrower
or such Subsidiary or (b) permit to exist any occurrence of any Reportable Event
(as defined in Title IV of ERISA), or any other event or condition, which
presents a material (in the reasonable opinion of the Required Banks) risk of
such a termination by the PBGC of any Plan.
(ii) The Canadian Borrower and each other Obligor having a Canadian
Pension Plan shall (i) administer such Canadian Pension Plan in accordance with
the requirements of the
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applicable pension plan texts, funding agreements, the ITA and applicable
provincial pension benefits legislation, (ii) not accept payment of any amount
from any such Canadian Pension Plan, (iii) not terminate, or cause to be
terminated, any such Canadian Pension Plan if such plan would have a solvency
deficiency upon termination of U.S. $1,000,000 or more, (iv) provide the U.S.
Administrative Agent with any documentation relating to any Canadian Pension
Plan as any Bank may reasonably request, and (v) notify the U.S. Administrative
Agent within 30 days of (A) a material increase in the liabilities of any
Canadian Pension Plan, (B) the establishment of a new registered pension plan,
(C) commencing payment of contributions to a Canadian Pension Plan to which such
Canadian Borrower or other Obligor had not previously been contributing.
(f) Limitation on Sale and Lease-Back Transactions. Neither the U.S.
----------------------------------------------
Borrower nor any of its Subsidiaries shall, directly or indirectly, enter into,
assume, guarantee or otherwise become liable with respect to any sale and lease-
back transaction.
(g) Restricted Payments. Neither the U.S. Borrower nor any of its
-------------------
Subsidiaries shall make any Restricted Payments except that (a) the Subsidiaries
of the U.S. Borrower may make Restricted Payments to the U.S. Borrower or any
other Obligor, and (b) the U.S. Borrower may make cash distributions in respect
of its preferred stock in an aggregate amount during any fiscal year not to
exceed U.S. $1,750,000 (or the Canadian Dollar Equivalent thereof) so long as no
Default or Event of Default shall have occurred both before and after giving
effect to each such distribution.
(h) Debts, Guaranties and Other Obligations. The U.S. Borrower will
---------------------------------------
not, and will not permit any of its Subsidiaries to, create, assume, suffer to
exist or in any manner become or be liable, in respect of any Debt except:
(i) Debt of the U.S. Borrower and its Subsidiaries under the Loan
Documents;
(ii) intercompany indebtedness owed between any Obligor and the U.S.
Borrower and permitted by Section 6.03 or between any two Obligors and permitted
by Section 6.03;
(iii) Debt of the Borrowers and the other Obligors owing in respect
of taxes, assessments or other government charges which are not yet due or are
being contested in good faith and for which adequate reserves have been
established in accordance with GAAP;
(iv) Debt of the Borrowers and the other Obligors incurred in the
ordinary course of business in respect of drilling, completing, leasing and
reworking oil and gas xxxxx;
(v) Debt of the Borrowers and the other Obligors owing under Hedge
Agreements to the extent such Hedge Agreements are permitted by Section 6.11;
provided that, if any such Debt is owing to any Person that is not a Bank, such
Debt shall not be secured by any Collateral (other than cash or Cash Equivalents
to the extent permitted by clause (l) of the definition of "Permitted Liens");
and
-76-
(vi) Debt listed on Schedule 6.08 and all extensions, amendments and
renewals thereof so long as none of the principal amount of such Debt is
increased or the maturity date is shortened.
(i) Agreements Restricting Distributions. The U.S. Borrower will not, nor
------------------------------------
will it permit any of its Subsidiaries to, enter into any agreement (other than
a Loan Document, the Indenture, and instruments evidencing Debt permitted under
Section 6.08(g)(i)) which limits Restricted Payments to or any advance by any of
the U.S. Borrower's Subsidiaries to the U.S. Borrower.
(j) Amendments to Subordinated Debt, Material Agreements. The Borrowers
----------------------------------------------------
shall not, and shall not permit any other Obligor to, amend, supplement, or
terminate (a) the Indenture or any other agreement or instrument evidencing any
Subordinated Debt in any manner or (b) any other Material Agreement in any
manner that could reasonably be expected to cause a Material Adverse Change.
(k) Limitation on Speculative Hedging. The Borrowers shall not, and shall
---------------------------------
not permit any other Obligor to, purchase, assume, or hold a speculative
position in any commodities market or futures market.
(l) Limitation on Advance Payment Contracts. The Borrowers shall not, and
---------------------------------------
shall not permit any other Obligor to, enter into or be a party to any Advance
Payment Contract with respect to any Oil and Gas Properties that are Collateral.
(m) EBITDA to Interest Expense Ratio. The Borrowers will not permit the
--------------------------------
ratio of, as of the last day of any fiscal quarter of the U.S. Borrower, (a) the
consolidated EBITDA of the U.S. Borrower for the four fiscal quarters then ended
to (b) the consolidated Interest Expense of the U.S. Borrower for the four
fiscal quarters then ended, to be less than 1.50 to 1.00.
(n) Senior Debt to Interest Expense Ratio. The Borrowers will not permit
-------------------------------------
the ratio of, as of the last day of any fiscal quarter of the U.S. Borrower, (a)
consolidated EBITDA of the U.S. Borrower for the four fiscal quarters then ended
minus the consolidated Interest Expense attributable to Subordinated Debt to (b)
-----
the consolidated Interest Expense of the U.S. Borrower owing in respect of the
Obligations for the four fiscal quarters then ended, to be less than 4.00 to
1.00.
(o) Working Capital. The Borrowers will not permit, as of the last day of
---------------
any fiscal quarter of the U.S. Borrower, the ratio of (a) the U.S. Borrower's
consolidated current assets to (b) its consolidated current liabilities to be
less than 1.10 to 1.00. For purposes of calculating the foregoing amount (a)
"current assets" shall include an amount, if positive, equal to the sum of the
Unused U.S. Tranche A Commitments as of the date of calculation plus the Unused
----
U.S. Tranche B Commitments as of the date of calculation plus the U.S. Dollar
----
Equivalent of the Unused Canadian Revolving Commitments as of the date of
calculation minus U.S. $10,000,000 and (b) "current liabilities" shall exclude
-----
the current portion of all long-term Debt existing as of the date of
calculation.
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(p) Account Payables. The Borrowers will not, and will not permit any
----------------
other Obligor to, allow (a) any of its trade payables or other accounts payable
to be outstanding for more than 90 days (except in cases where any such trade
payable is being disputed in good faith and adequate reserves under GAAP have
been established) and (b) the weighted average maturity of all such trade
payables to exceed 75 days.
(q) Designation of Senior Indebtedness. The Borrowers shall, and
----------------------------------
hereby does, designate the Obligations as "Designated Senior Indebtedness" of
the Borrowers, as defined in and as provided for in the Indenture. As
Designated Senior Indebtedness, the Obligations shall be senior in right of
payment to the indebtedness evidenced by the Senior Subordinated Notes, as set
forth in Article 10 of the Indenture.
(r) Special Provisions related to Invasion. The Canadian Borrower
--------------------------------------
intends to use the proceeds of the initial Canadian Borrowing together with a
loan or capital contribution from the U.S. Borrower to the Canadian Borrower to
pay no more than U.S. $38,000,000 (or the Canadian Dollar Equivalent thereof) to
purchase all (if tendered, and at least 90%) of the capital stock of Invasion,
together with certain Debt of Invasion, pursuant to the terms of the Share
Purchase Agreement dated as of May 4, 2001 among the Canadian Borrower, the U.S.
Borrower, Enron Canada Corp., and certain other parties named therein (such
purchase being referred to herein as the "Invasion Acquisition"). After the
consummation of the Invasion Acquisition, it is understood that (unless and
until Invasion becomes an Obligor and executes the documents required by Section
5.11) Invasion shall operate as a separate and distinct entity and that none of
the Borrowers nor any other Obligor shall make any Investment in Invasion nor
shall any such Borrower or Obligor sell, dispose of or otherwise transfer any
assets to Invasion; provided that, the Canadian Borrower may make Investments in
--------
Invasion after the date of this Agreement in an aggregate amount not to exceed
U.S.$8,000,000 (or the Canadian Dollar Equivalent thereof) so long as (a) no
Default shall have occurred or be continuing both before and after giving effect
to such Investment, (b) such Investment is made on or before December 31, 2001,
and (c) the Canadian Borrower is returned proceeds in an amount equal to such
Investment on or before May 31, 2002. It is understood and agreed that Invasion
shall not be a "Subsidiary" or "Obligor" for purposes of compliance with the
representations and warranties, covenants and agreements set forth in Articles
IV, V, VI and VII of this Agreement and Invasion shall not be required to comply
with any such terms. Skybird Energy Inc. is a holding company that is one of
the shareholders of Invasion and, for the purposes of this Agreement, references
to the purchase or ownership of Invasion shall also include the purchase or
ownership of shares of Skybird Energy Inc. as a means of acquiring or holding
shares of Invasion.
07.
EVENTS OF DEFAULT
(a) Events of Default. The occurrence of any of the following events
-----------------
shall constitute an "Event of Default" under any Loan Document:
(i) Payment. (i) Any of the Borrowers shall fail to pay any principal
-------
of any Note (including, without limitation, any mandatory prepayment required by
Section 2.12 or Section 2.13, or (ii) any of the Borrowers or other Obligors
shall fail to pay any interest on the Notes or any fee
-78-
or other amount payable hereunder or under any other Loan Document within three
days of when the same becomes due and payable;
(ii) Representation and Warranties. Any representation or warranty
-----------------------------
made or deemed to be made by any of the Obligors (or any of their officers) in
this Agreement, in any other Loan Document, or in any certificate delivered in
connection with this Agreement or any other Loan Document shall prove to have
been incorrect in any material respect when made or deemed to be made;
(iii) Covenant Breaches. Any of the Obligors shall (i) fail to
-----------------
perform or observe any covenant contained in Sections 5.05(a), or 5.09 and
Article VI of this Agreement or (ii) fail to perform or observe any other term
or covenant set forth in this Agreement or in any other Loan Document which is
not covered by clause (i) above or any other provision of this Section 7.01 if
such failure shall remain unremedied for 30 days earlier of written notice of
such default shall have been given to any of the Borrowers by the Administrative
Agents or any Bank or any actual knowledge of such default by the U.S. Borrower
or any of its Subsidiaries;
(iv) Cross-Default. (i) The U.S. Borrower or any of its
-------------
Subsidiaries shall fail to pay any principal of or premium or interest on its
Debt which is outstanding in a principal amount of at least U.S. $1,000,000 (or
the Canadian Dollar Equivalent thereof) when aggregated with all such Debt of
the U.S Borrower or Subsidiary so in default (but excluding Debt evidenced by
the Notes) when the same becomes due and payable (whether by scheduled maturity,
required prepayment, acceleration, demand or otherwise), (ii) any other event
shall occur or condition shall exist under any agreement or instrument relating
to Debt which is outstanding in a principal amount of at least U.S. $1,000,000
(or the Canadian Dollar Equivalent thereof) when aggregated with all such Debt
of the U.S. Borrower or Subsidiary so in default (but excluding Debt evidenced
by the Notes), and shall continue after the applicable grace period, if any,
specified in such agreement or instrument, if the effect of such event or
condition is to accelerate, or to permit the acceleration of, the maturity of
such Indebtedness; or (iii) any such Debt shall be declared to be due and
payable, or required to be prepaid (other than by an anticipated required
prepayment), prior to the stated maturity thereof;
(v) Insolvency. The U.S. Borrower or any of its Subsidiaries shall
----------
generally not pay its Debt as such Debt become due, or shall admit in writing
its inability to pay its indebtedness generally, or shall make a general
assignment for the benefit of creditors; or any proceeding shall be instituted
by or against the U.S. Borrower or any of its Subsidiaries seeking to adjudicate
it a bankrupt or insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief, or composition of it or its Debts
under any law relating to bankruptcy, insolvency or reorganization or relief of
indebtedness, or seeking the entry of an order for relief or the appointment of
a receiver, trustee or other similar official for it or for any substantial part
of its property and, in the case of any such proceeding instituted against the
U.S. Borrower or any of its Subsidiaries, either such proceeding shall remain
undismissed for a period of 60 days or any of the actions sought in such
proceeding shall occur; or the U.S. Borrower or any of its Subsidiaries shall
take any corporate action to authorize any of the actions set forth above in
this paragraph (e);
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(vi) Judgments. Any judgment, decree or order for the payment of
---------
money shall be rendered against the U.S. Borrower or any of its Subsidiaries in
an amount in excess of U.S. $1,000,000 (or the Canadian Dollar Equivalent
thereof) if rendered solely against the U.S. Borrower or any of its
Subsidiaries, or for which the U.S. Borrower's or any such Subsidiary's
allocated portion of which exceeds U.S. $1,000,000 (or the Canadian Dollar
Equivalent thereof) and either (i) such judgment, decree or order remains
unsatisfied and in effect for a period of 60 consecutive days or more without
being vacated, discharged, satisfied or stayed or bonded pending appeal or (ii)
enforcement proceedings shall have been commenced by any creditor upon such
judgment, decree or order;
(vii) Change of Control; Change of Management. A Change of Control
---------------------------------------
or Change of Management shall occur;
(viii) Termination Events. Any Termination Event with respect to a
------------------
Plan (or similar event with respect to any Canadian Pension Plan) shall have
occurred, and, 30 days after notice thereof shall have been given to any
Borrower by the Administrative Agent, (i) such Termination Event (or similar
event with respect to any Canadian Pension Plan) shall not have been corrected
and (ii) the then present value of such Plan's or Canadian Pension Plan's, as
applicable, vested benefits exceeds the then current value of assets accumulated
in such Plan or Canadian Pension Plan, as applicable, by an amount that would
reasonably be expected to cause or to have a Material Adverse Change (or in the
case of a Termination Event involving the withdrawal of a "substantial employer"
(as defined in Section 4001(a)(2) of ERISA), the withdrawing employer's
proportionate share of such excess shall exceed such amount);
(ix) Plan Withdrawals. The U.S. Borrower or any member of the
----------------
Controlled Group as employer under a Multiemployer Plan shall have made a
complete or partial withdrawal from such Multiemployer Plan and the plan sponsor
of such Multiemployer Plan shall have notified such withdrawing employer that
such employer has incurred a withdrawal liability in an annual amount that could
reasonably be expected to cause or to have a Material Adverse Change;
(x) Guaranty. (i) Any of the guaranty provisions in this Agreement
--------
or in any of the Guaranties shall for any reason cease to be valid and binding
on the U.S. Borrower or the other Guarantors, or (ii) any of the Guarantors
shall so state in writing;
(xi) Security Documents. (i) the Administrative Agents and the
------------------
Banks shall fail to have an Acceptable Security Interest in all or any portion
of the Collateral or (ii) any material provision of any Security Document shall
for any reason cease to be valid and binding on any of the Borrowers or other
Obligors executing such Security Document, or any such Person shall so state in
writing; or
(xii) Income Tax Act. A requirement from the Minister of National
--------------
Revenue for payment pursuant to Section 224 or any successor section of the ITA
or Section 317 (or any successor section of the Excise Tax Act (Canada) or any
comparable provision of similar legislation shall have been received by any
Administrative Agent or any Bank or any other Person in respect
-80-
of the U.S. Borrower or any other Obligor or is issued in respect of the U.S.
Borrower or any other Obligor.
(b) Optional Acceleration of Maturity. If any Event of Default (other
---------------------------------
than an Event of Default pursuant to paragraph (e) of Section 7.01) shall have
occurred and be continuing, then, and in any such event:
(i) the U.S. Administrative Agent (i) shall at the request of, or
may with the consent of, the Required Banks, by notice to the Borrowers, declare
the obligation of each Bank to make Credit Extensions and the obligation of the
Issuing Bank to issue Letters of Credit to be terminated, whereupon the same
shall forthwith terminate, and (ii) shall at the request of, or may with the
consent of, the Required Banks, by notice to the Borrowers, declare the Notes,
all interest thereon, and all other amounts payable under this Agreement to be
forthwith due and payable, whereupon the Notes, all such interest, and all such
amounts shall become and be forthwith due and payable in full, without
presentment, demand, protest or further notice of any kind (including, without
limitation, any notice of intent to accelerate or notice of acceleration), all
of which are hereby expressly waived by the Borrowers;
(ii) the U.S. Borrower shall, on demand of the U.S. Administrative
Agent at the request or with the consent of the Required Banks, deposit with the
Administrative Agent into the U.S. Cash Collateral Account an amount of cash in
Dollars equal to the outstanding Letter of Credit Exposure as security for the
Obligations to the extent the Letter of Credit Obligations are not otherwise
paid at such time.
(iii) the Canadian Borrower shall, on demand of the Canadian
Administrative Agent at the request or with the consent of the Required Banks,
deposit with the Canadian Administrative Agent into the Canadian Cash Collateral
Account an amount of cash in Canadian Dollars equal to the outstanding BA
Obligations as security for the Obligations to the extent the BA Obligations are
not otherwise paid at such time.
(iv) the Administrative Agents and the Banks may exercise all other
rights and remedies available under the Security Documents and applicable law.
(c) Automatic Acceleration of Maturity. If any Event of Default pursuant
----------------------------------
to paragraph (e) of Section 7.01 shall occur:
(i) the obligation of each Bank to make Credit Extensions and the
obligation of the Issuing Bank to issue Letters of Credit shall immediately and
automatically be terminated and the Notes, and all other amounts payable under
this Agreement shall immediately and automatically become and be due and payable
in full, without presentment, demand, protest or any notice of any kind
(including, without limitation, any notice of intent to accelerate or notice of
acceleration), all of which are hereby expressly waived by the Borrowers.
(ii) the U.S. Borrower shall, on demand of the U.S. Administrative
Agent at the request or with the consent of the Required Banks, deposit with the
Administrative Agent into the
-81-
U.S. Cash Collateral Account an amount of cash in Dollars equal to the
outstanding Letter of Credit Exposure as security for the Obligations to the
extent the Letter of Credit Obligations are not otherwise paid at such time.
(iii) the Canadian Borrower shall, on demand of the Canadian
Administrative Agent at the request or with the consent of the Required Banks,
deposit with the Canadian Administrative Agent into the Canadian Cash Collateral
Account an amount of cash in Canadian Dollars equal to the outstanding BA
Obligations as security for the Obligations to the extent the BA Obligations are
not otherwise paid at such time.
(iv) the Administrative Agents and the Banks may exercise all other
rights and remedies available under the Security Documents and applicable law.
(d) Non-exclusivity of Remedies. No remedy conferred upon the
---------------------------
Administrative Agents is intended to be exclusive of any other remedy, and each
remedy shall be cumulative of all other remedies existing by contract, at law,
in equity, by statute or otherwise.
(e) Right of Set-off. Upon (a) the occurrence and during the continuance
----------------
of any Event of Default and (b) the making of the request or the granting of the
consent, if any, specified by Section 7.02 to authorize the Administrative
Agents upon the consent of the Required Banks to declare the Notes and any other
amount payable hereunder due and payable pursuant to the provisions of Section
7.02 or the automatic acceleration of the Notes and all amounts payable under
this Agreement pursuant to Section 7.03, each Bank is hereby authorized at any
time and from time-to-time, to the fullest extent permitted by law, to set off
and apply any and all deposits (general or special, time or demand, provisional
or final) at any time held and other indebtedness at any time owing by such Bank
to or for the credit or the account of the Borrowers against any and all of the
obligations of the Borrowers now or hereafter existing under this Agreement, the
Notes, and the other Loan Documents, irrespective of whether or not such Bank
shall have made any demand under this Agreement, the Notes, or such other Loan
Documents, and although such obligations may be unmatured. Each Bank agrees to
promptly notify the Borrowers after any such set-off and application made by it,
provided that the failure to give such notice shall not affect the validity of
such set-off and application. The rights of each Bank under this Section are in
addition to any other rights and remedies (including, without limitation, other
rights of set-off) which such Bank may have.
(f) Application of Proceeds. From and during the continuance of any Event
-----------------------
of Default, any monies or property actually received by the Administrative
Agents pursuant to the Credit Agreement, the exercise of any rights or remedies
under any security agreement, mortgage or any other agreement with any Borrower
or any of its respective subsidiaries or affiliates which secures any of the
Obligations, shall be applied in the following order:
First, to the payment of all amounts due to the Administrative Agents
-----
under any of the expense reimbursement or indemnity provisions of the
Credit Agreement, any security agreement, mortgage or other collateral
documents, and any applicable law;
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Second, ratably, according to the then unpaid amounts thereof, without
------
preference or priority of any kind among them, to the payment of the
Obligations then due and payable, including Obligations with respect to
Letters of Credit, but not including any Hedging Obligations, and
Third, ratably, according to the then unpaid amounts thereof, without
-----
preference or priority of any kind among them, to the payment of all
Hedging Obligations of the Borrowers to the Banks, if any, then due and
payable;
Fourth, the remainder, if any, to whichever of the Borrowers, or its
------
respective successors or assigns, as may be lawfully entitled to receive
the same or as a court of competent jurisdiction may direct.
08.
THE ADMINISTRATIVE AGENTS AND ISSUING BANK
(a) Authorization and Action. Each Bank hereby appoints and authorizes
------------------------
each Administrative Agent to take such action as such agent on its behalf and to
exercise such powers under the Loan Documents as are delegated to such
Administrative Agent by the terms hereof or of any other Loan Document, together
with such powers and discretion as are reasonably incidental thereto. As to any
matters not expressly provided for by this Agreement (including enforcement or
collection of the Guaranty or any of the Notes), no Administrative Agent shall
be required to exercise any discretion or take any action, but shall be required
to act or to refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the Required Banks and such
instructions shall be binding upon all Banks and all holders of Notes; provided,
--------
however, that no Administrative Agent shall be required to take any action which
-------
exposes such Administrative Agent to personal liability or which is contrary to
any Loan Document or applicable law. The U.S. Administrative Agent agrees to
give to each U.S. Bank prompt notice of each notice received by it pertaining to
a U.S. Borrowing or a payment thereon and to each Bank prompt notice of each
other notice received by it (unless notice thereof is given by the Canadian
Administrative Agent). The Canadian Administrative Agent agrees to give to each
Canadian Bank prompt notice of each notice received by it pertaining to a
Canadian Borrowing, a Drawing or a payment thereon and to each Bank prompt
notice of each other notice received by it (unless notice thereof is given by
the U.S. Administrative Agent).
(b) Administrative Agents' Reliance, Etc. Neither Administrative Agent
------------------------------------
nor any director, officer, agent or employee of either Administrative Agent
shall be liable to any Bank for any action taken or omitted to be taken by it or
them under or in connection with any Loan Document, except for its or their own
gross negligence or willful misconduct. Without limitation of the generality of
the foregoing, each Administrative Agent: (a) may treat the payee of any Note
as the holder thereof until such Administrative Agent receives and accepts an
Assignment and Acceptance entered into by the Bank which is the payee of such
Note, as assignor, and an Eligible Assignee, as assignee, as provided in Section
9.08; (b) may consult with legal counsel, independent public accountants and
other experts selected by it and shall not be liable for any action taken or
omitted to be taken in good
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faith by it in accordance with the advice of such counsel, accountants or
experts; (c) makes no warranty or representation to any Bank and shall not be
responsible to any Bank for any statements, warranties or representations
(whether written or oral) made in or in connection with any of the Loan
Documents or any other instrument or document; (d) shall not have any duty to
any Bank to ascertain or to inquire as to the performance or observance of any
of the terms, covenants or conditions of any of Loan Documents or any other
instrument or document on the part of either Borrower or any Subsidiary of
either Borrower or to inspect the property (including the books and records) of
either Borrower or any Subsidiary of either Borrower; (e) shall not be
responsible to any Bank for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of any of the Loan Documents
or any other instrument or document; and (f) shall incur no liability to any
Bank under or in respect of any of Loan Documents or any other instrument or
document by acting upon any notice (including telephonic notice), consent,
certificate or other instrument or writing (which may be by telecopier, telegram
or telex) believed by it to be genuine and signed, given or sent by the proper
party or parties.
(c) Union Bank, NBC and Affiliates. With respect to its Commitment, the
------------------------------
Credit Extensions owed to it and the Notes issued to it, each of Union Bank and
NBC shall have the same rights and powers under the Loan Documents as any other
Bank and may exercise the same as though it were not an Administrative Agent;
and the term "Bank" or "Banks" shall, unless otherwise expressly indicated,
include Union Bank and NBC in its individual capacity. Each of Union Bank and
NBC and their respective affiliates may accept deposits from, lend money to, act
as trustee under indentures of, accept investment banking engagements from and
generally engage in any kind of business with, the Borrowers, any Affiliate of
either Borrower and any Person who may do business with or own securities of
either Borrower or any Affiliate of either Borrower, all as if Union Bank or
NBC, as the case may be, were not an Administrative Agent and without any duty
to account therefor to the Banks.
(d) Bank Credit Decision. Each Bank acknowledges that it has,
--------------------
independently and without reliance upon either Administrative Agent or any other
Bank and based on the Financial Statements and such other documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Bank also acknowledges that it
will, independently and without reliance upon either Administrative 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 credit decisions in taking or
not taking action under the Loan Documents or any other instrument or document.
(e) INDEMNIFICATION. THE BANKS AGREE TO INDEMNIFY EACH ADMINISTRATIVE
---------------
AGENT AND THE ISSUING BANK (TO THE EXTENT NOT REIMBURSED BY THE BORROWER),
RATABLY ACCORDING TO THE RESPECTIVE PRINCIPAL AMOUNTS OF THE NOTES THEN HELD BY
EACH OF THEM (OR IF NO ADVANCES ARE AT THE TIME OUTSTANDING OR IF ANY NOTES ARE
HELD BY PERSONS WHICH ARE NOT BANKS, RATABLY ACCORDING TO EITHER (A) THE
RESPECTIVE AMOUNTS OF THEIR COMMITMENTS, OR (B) IF NO COMMITMENTS ARE AT THE
TIME OUTSTANDING, THE RESPECTIVE AMOUNTS OF THE COMMITMENTS IMMEDIATELY PRIOR TO
THE TIME THE COMMITMENTS
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CEASED TO BE OUTSTANDING), FROM AND AGAINST ANY AND ALL LIABILITIES,
OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS,
EXPENSES AND DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER WHICH MAY BE IMPOSED
ON, INCURRED BY, OR ASSERTED AGAINST SUCH ADMINISTRATIVE AGENT OR THE ISSUING
BANK IN ANY WAY RELATING TO OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY
OTHER INSTRUMENT OR DOCUMENT FURNISHED PURSUANT HERETO OR IN CONNECTION
HEREWITH, OR ANY ACTION TAKEN OR OMITTED BY SUCH ADMINISTRATIVE AGENT OR THE
ISSUING BANK UNDER ANY OF THE LOAN DOCUMENTS OR ANY OTHER INSTRUMENT OR DOCUMENT
FURNISHED PURSUANT HERETO OR IN CONNECTION HEREWITH; PROVIDED THAT NO BANK SHALL
--------
BE LIABLE FOR ANY PORTION OF SUCH LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES,
PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES OR DISBURSEMENTS RESULTING
FROM SUCH ADMINISTRATIVE AGENT'S OR THE ISSUING BANK'S GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT. WITHOUT LIMITATION OF THE FOREGOING, EACH BANK AGREES TO
REIMBURSE EITHER ADMINISTRATIVE AGENT OR THE ISSUING BANK PROMPTLY UPON DEMAND
FOR SUCH BANK'S RATABLE SHARE OF ANY OUT-OF-POCKET EXPENSES (INCLUDING COUNSEL
FEES) INCURRED BY SUCH ADMINISTRATIVE AGENT OR THE ISSUING BANK IN CONNECTION
WITH ENFORCEMENT (WHETHER THROUGH NEGOTIATIONS, LEGAL PROCEEDINGS OR OTHERWISE)
OF, OR LEGAL ADVICE IN RESPECT OF RIGHTS OR RESPONSIBILITIES UNDER, ANY OF THE
LOAN DOCUMENTS OR ANY OTHER INSTRUMENT OR DOCUMENT FURNISHED PURSUANT HERETO OR
IN CONNECTION HEREWITH TO THE EXTENT THAT SUCH ADMINISTRATIVE AGENT OR THE
ISSUING BANK IS NOT REIMBURSED FOR SUCH EXPENSES BY THE BORROWER.
(f) Successor Administrative Agents and Successor Issuing Bank. Subject
----------------------------------------------------------
to the appointment of and acceptance by a successor Administrative Agent or
successor Issuing Bank as provided below, each Administrative Agent and the
Issuing Bank may resign at any time by giving written notice thereof to the
Banks and the Borrowers and may be removed at any time with or without cause by
the Required Banks. Upon any such resignation or removal, the Required Banks
shall have the right to, with the consent of the U.S. Borrower (which consent
shall not be unreasonably withheld and which consent shall not be required if a
Default shall have occurred and is continuing), appoint any Bank or any Eligible
Assignee as a successor Administrative Agent or successor Issuing Bank, as
applicable, to assume the duties of such resigning or removed Administrative
Agent or Issuing Bank, as applicable. If no such successor Administrative Agent
or successor Issuing Bank, as applicable, shall have been so appointed by the
Required Banks (and, if no Default shall have occurred and is continuing,
approved by the Borrower), and shall have accepted such appointment, within 30
days after the retiring Administrative Agent's or Issuing Bank's giving of
notice of resignation or the Required Banks' removal of the retiring
Administrative Agent or Issuing Bank, as applicable, then the retiring
Administrative Agent or Issuing Bank, as applicable, may, on behalf of the
Banks, appoint any Bank, or with the consent of the U.S. Borrower (which consent
shall not be unreasonably withheld), any Eligible Assignee as a successor
Administrative
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Agent or successor Issuing Bank, as applicable. Upon the acceptance of any
appointment as an Administrative Agent or Issuing Bank, as applicable hereunder
by a successor Administrative Agent or successor Issuing Bank, as applicable,
such successor shall thereupon succeed to and become vested with all the rights,
powers, privileges and duties of the retiring Administrative Agent or Issuing
Bank, as applicable, and the retiring Administrative Agent or Issuing Bank, as
applicable shall be discharged from its duties and obligations under this
Agreement and the other Loan Documents. After any retiring Administrative
Agent's or Issuing Bank's, as applicable resignation or removal hereunder as an
Administrative Agent or Issuing Bank, as applicable, the provisions of this
Article VIII shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was an Administrative Agent or Issuing Bank, as applicable,
under this Agreement. If any Administrative Agent or Issuing Bank, as applicable
resigns or is removed as an Administrative Agent or Issuing Bank, as applicable,
and if any Affiliate thereof continues to perform its duties as an
Administrative Agent or Issuing Bank, as applicable ("Continuing Administrative
Agent" or "Continuing Issuing Bank"), upon the written request of the U.S.
Borrower, the Continuing Administrative Agent or Continuing Issuing Bank, as
applicable, shall resign and may be replaced in accordance with the provisions
of this Section 7.06.
09.
MISCELLANEOUS
(a) Amendments, Etc. No amendment or waiver of any provision of this
---------------
Agreement or any Note, nor consent to any departure by the Borrowers therefrom,
shall in any event be effective unless the same shall be in writing and signed
by the Required Banks, and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given; provided
--------
that no such amendment, waiver or consent shall, unless in writing and signed by
all the Banks, do any of the following: (a) waive any of the conditions
specified in Section 3.01, (b) increase the Commitment of any Bank or subject
any Bank to any additional obligations (provided that no amendment or waiver of,
or consent to any departure from, any representation or warranty, covenant or
Event of Default, any of which would not otherwise require the approval of all
of the Banks, shall be deemed to "subject any Bank to any additional
obligations" for the purposes of this clause (b) only), (c) reduce the principal
of, or interest on, the Notes or any fees or other amounts payable hereunder,
(d) postpone any date fixed for any payment of principal of, or interest on, the
Notes or any fees or BA Obligations or Drawing Fees payable hereunder or any
Letter of Credit Obligations, (e) change the percentage of the Commitments or of
the aggregate unpaid principal amount of the Notes and aggregate Face Amount of
BA Obligations which shall be required for the Banks or any of them to take any
action hereunder, (f) change the definition herein of "Termination Date", or (g)
amend this Section 8.01; and provided, further, that no amendment, waiver or
-------- -------
consent shall, unless in writing and signed by an Administrative Agent or the
Issuing Bank, as applicable, in addition to the Banks required above to take
such action, affect the rights or duties of such Administrative Agent or Issuing
Bank, as applicable, under this Agreement or any of the Notes.
(b) Notices, Etc. All notices and other communications provided for
------------
hereunder shall be in writing (including telecopier communication) and mailed,
telecopied, or delivered, (a) if to the U.S. Borrower, at its address at 0000
Xxxxxxx Xxxx, Xxxxx 000, Xxxxxx, Xxxxx 00000, Attention: Xx. Xxxxxxx X. Xxxxx,
Telecopier: (000) 000-0000; and if to the Canadian Borrower, at its address at
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0000, 000-Xxxxxxx Xxxxxx X.X., Xxxxxxx, Xxxxxxx X0X 0X0, Telecopier: (403) 269-
6976 (with a copy to the U.S. Borrower); (b) if to any U.S. Bank listed on the
signature pages hereof, at its U.S. Domestic Lending Office specified opposite
its name on Schedule II; (c) if to any other U.S. Bank, at its U.S. Domestic
Lending Office specified in the Assignment and Acceptance pursuant to which it
becomes a Bank; (d) if to any Canadian Bank listed on the signature pages
hereof, at its Canadian Lending Office specified opposite its name on Schedule
II; (e) if to any other Canadian Bank, at its Canadian Lending Office specified
in the Assignment and Acceptance pursuant to which it becomes a Bank; (f) if to
the U.S. Administrative Agent, at 4200 Lincoln Plaza, 000 X. Xxxxx Xx., Xxxxxx,
Xxxxx 00000, Attention: Xx. Xxxxxx Xxxxxxxxx, Telecopier (000) 000-0000; and (g)
if to the Canadian Administrative Agent, at its address at 000 Xxxxxx Xxxxxx XX,
Xxxxx 000, Xxxxxxx, Xxxxxxx, X0X 0X0, Attention: Xxx Xxxxx, Telecopier: (403)
294-3078; or, as to either Borrower or either Administrative Agent, at such
other address as shall be designated by such party in a written notice to the
other parties hereto and, as to each other party, at such other address as shall
be designated by such party in a written notice to the Borrower and the
Administrative Agents. Each such notice or communication shall be effective (i)
if mailed, three U.S. Business Days after deposit in the U.S. mail or Canadian
mail, (ii) if delivered by hand (including by overnight delivery service), upon
delivery, and (iii) if telecopied, upon transmission and receipt of electronic
confirmation except that any notice or communication to any Administrative Agent
pursuant to Sections 2.02(a), 2.02(b), 2.04(a), 2.06(f), 2.11, 2.14, 2.19 or
2.21 of this Agreement shall not be effective until actually received by such
Administrative Agent.
(c) No Waiver; Remedies. No failure on the part of any Bank or either
-------------------
Administrative Agent to exercise, and no delay in exercising, any right
hereunder or under any Note shall operate as a waiver thereof; nor shall any
single or partial exercise of any such right preclude any other or further
exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
(d) Expenses and Taxes; Compensation; Indemnity. (i) Each Borrower
-------------------------------------------
agrees to pay promptly all reasonable out-of-pocket costs and expenses of each
Administrative Agent, the Issuing Bank and their respective Affiliates in
connection with the preparation, execution, delivery, administration,
modification, syndication and amendment of the Loan Documents and the other
documents to be delivered hereunder, including the reasonable due diligence,
syndication, transportation, computer, duplication, printing, distribution and
bank meeting expenses (but excluding allocated overhead costs) and the
reasonable fees and out-of-pocket expenses (excluding allocated overhead costs)
of counsel for each Administrative Agent with respect thereto and with respect
to advising either Administrative Agent as to its rights and responsibilities
under the Loan Documents and, after the occurrence and during the continuance of
an Event of Default, all reasonable out-of-pocket costs and expenses of each
Administrative Agent, the Issuing Bank and each Bank, if any (including
reasonable counsel fees and expenses but excluding allocated overhead costs), in
connection with the enforcement (whether through negotiations, legal proceedings
or otherwise) of the Loan Documents and the other documents to be delivered
hereunder, including reasonable counsel fees and expenses (but excluding
allocated overhead costs) in connection with the enforcement of rights under
this Section 9.04(a).
(ii) If any payment of principal of, or Conversion of, any
Eurodollar Rate Advance is made other than on the last day of the Interest
Period for such Advance, as a result of a
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payment or Conversion pursuant to Section 2.10, Section 2.11, Section 2.18 or
Section 2.19, acceleration of the maturity of the U.S. Notes pursuant to Section
7.01 or for any other reason, the U.S. Borrower shall, within 15 days after
demand by any Bank (with a copy of such demand to the U.S. Administrative
Agent), pay to the U.S. Administrative Agent for the account of such Bank any
amounts required to compensate such Bank for any additional losses, costs or
expenses which it may reasonably incur as a result of such payment, purchase or
Conversion, including any loss (excluding loss of anticipated profits), cost or
expense actually incurred by reason of the liquidation or reemployment of
deposits or other funds acquired by any Bank to fund or maintain such Advance. A
certificate as to the amount of such additional losses, costs or expenses,
submitted to the U.S. Borrower and the U.S. Administrative Agent by such Bank,
shall be conclusive and binding for all purposes, absent manifest error. Such
certificate shall be in reasonable detail but such Bank shall not be required to
disclose any confidential or proprietary information therein. If any payment of
principal of, or Conversion of, any BA Obligation is made other than on the
Maturity Date for such BA Obligation, as a result of a payment or Conversion
pursuant to Section 2.10, Section 2.11, Section 2.18 or Section 2.19,
acceleration or for any other reason the Canadian Borrower shall, within 15 days
after demand by any Bank (with a copy of such demand to the Canadian
Administrative Agent), pay to the Canadian Administrative Agent for the account
of such Bank any amounts required to compensate such Bank for any additional
losses, costs or expenses which it may actually incur as a result of such
payment, purchase or Conversion, including any loss (excluding loss of
anticipated profits), cost or expense actually incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by any Bank to
fund or maintain such BA Obligation. A certificate as to the amount of such
additional losses, costs or expenses, submitted to the Canadian Borrower and the
Canadian Administrative Agent by such Bank, shall be conclusive and binding for
all purposes, absent manifest error. Such certificate shall be in reasonable
detail but such Bank shall not be required to disclose any confidential or
proprietary information therein.
(iii) EACH BORROWER AGREES TO INDEMNIFY AND HOLD HARMLESS EACH
INDEMNIFIED PARTY FROM AND AGAINST ANY AND ALL CLAIMS, DAMAGES, LOSSES,
LIABILITIES AND EXPENSES (INCLUDING REASONABLE FEES AND EXPENSES OF COUNSEL THAT
MAY BE INCURRED BY OR ASSERTED OR AWARDED AGAINST SUCH INDEMNIFIED PARTY), IN
EACH CASE ARISING OUT OF OR IN CONNECTION WITH OR BY REASON OF, OR IN CONNECTION
WITH THE PREPARATION FOR A DEFENSE OF, ANY INVESTIGATION, LITIGATION, OR
PROCEEDING ARISING OUT OF, RELATED TO OR IN CONNECTION WITH ANY OF THE
COMMITMENTS OR ANY LOAN DOCUMENT, WHETHER OR NOT SUCH INDEMNIFIED PARTY IS A
PARTY THERETO, AND WHETHER OR NOT ANY BORROWING OR DRAWING IS MADE HEREUNDER,
AND INCLUDING ANY SUCH CLAIM, DAMAGE, LOSS, LIABILITY OR EXPENSE RESULTING FROM
THE NEGLIGENCE OF SUCH INDEMNIFIED PARTY, EXCEPT TO THE EXTENT SUCH CLAIM,
DAMAGE, LOSS, LIABILITY OR EXPENSE IS FOUND IN A FINAL, NON-APPEALABLE JUDGMENT
BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED FROM THE GROSS NEGLIGENCE
OR WILLFUL MISCONDUCT OF SUCH INDEMNIFIED PARTY.
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(iv) Without prejudice to the survival of any other agreement of the
Borrowers hereunder, all obligations of the Borrowers under Section 2.15,
Section 2.16 and this Section 9.04 shall survive the termination of the
Commitments and this Agreement and the payment in full of all amounts hereunder
and under the Notes.
(e) Limitation and Adjustment of Interest. (i) Notwithstanding
-------------------------------------
anything to the contrary set forth herein, in any other Loan Document or in any
other document or instrument, no provision of any of the Loan Documents or any
other instrument or document furnished pursuant hereto or in connection herewith
is intended or shall be construed to require the payment or permit the
collection of interest in excess of the maximum non-usurious rate or amount
permitted by applicable law. Accordingly, if the transactions with any Bank
contemplated hereby would be usurious under applicable law, if any, then, in
that event, notwithstanding anything to the contrary in any Note payable to such
Bank, this Agreement, any other Loan Document or any other document or
instrument, it is agreed as follows: (i) the aggregate of all consideration
which constitutes interest under applicable law that is contracted for, taken,
reserved, charged or received by such Bank under any Note payable to such Bank,
this Agreement or any other Loan Document or under any other document or
instrument shall under no circumstances exceed the maximum amount allowed by
such applicable law, and any excess shall be canceled automatically and, if
theretofore paid, shall, at the option of such Bank, be credited by such Bank on
the principal amount of the indebtedness owed to such Bank by the relevant
Borrower or refunded by such Bank to such Borrower, and (ii) in the event that
the maturity of any Note payable to such Bank is accelerated or in the event of
any required or permitted prepayment, then such consideration that constitutes
interest under law applicable to such Bank may never include more than the
maximum amount allowed by such applicable law and excess interest, if any, to
such Bank provided for in this Agreement or otherwise shall be canceled
automatically as of the date of such acceleration or prepayment and, if
theretofore paid, shall, at the option of such Bank, be credited by such Bank on
the principal amount of the indebtedness owed to such Bank by the relevant
Borrower or refunded by such Bank to such Borrower. In determining whether or
not the interest contracted for, taken, reserved, charged or received by any
Bank exceeds the maximum non-usurious rate permitted by applicable law, such
determination shall be made, to the extent that doing so does not result in a
violation of applicable law, by amortizing, prorating, allocating and spreading,
in equal parts during the period of the full stated term of the loans hereunder,
all interest at any time contracted for, taken, charged, received or reserved by
such Bank in connection with such loans. For purposes of Tex. Fin. Code Xxx.
(S) 303.301 (Xxxxxx 1998), each of the Borrowers agrees that the maximum non-
usurious rate shall be the "indicated (weekly) rate ceiling" as defined in such
Article, provided that the Administrative Agents and the Banks may also rely, to
the extent permitted by applicable laws of the State of Texas or the United
States of America, on alternative maximum rates of interest under other laws of
the State of Texas or other states or the United States of America applicable to
the Agent and/or such Lender, if greater.
(ii) In the event that at any time the interest rate applicable to
any Advance made by any Bank would exceed the maximum non-usurious rate allowed
by applicable law, the rate of interest to accrue on the Advances by such Bank
shall be limited to the maximum non-usurious rate allowed by applicable law, but
shall accrue, to the extent permitted by law, on the principal amount of the
Advances made by such Bank from time to time outstanding, if any, at the maximum
non-
-89-
usurious rate allowed by applicable law until the total amount of interest
accrued on the Advances made by such Bank equals the amount of interest which
would have accrued if the interest rates applicable to the Advances pursuant to
Article II had at all times been in effect. In the event that upon the final
payment of the Advances made by any Bank and termination of the Commitment of
such Bank, the total amount of interest paid to such Bank hereunder and under
the Notes is less than the total amount of interest which would have accrued if
the interest rates applicable to such Advances pursuant to Article II had at all
times been in effect, then the relevant Borrower agrees to pay to such Bank, to
the extent permitted by law, an amount equal to the excess of (a) the lesser of
(i) the amount of interest which would have accrued on such Advances if the
maximum non-usurious rate allowed by applicable law had at all times been in
effect or (ii) the amount of interest which would have accrued on such Advances
if the interest rates applicable to such Advances pursuant to Article II had at
all times been in effect over (b) the amount of interest otherwise accrued on
such Advances in accordance with this Agreement.
(iii) Notwithstanding any provision to the contrary contained in this
Agreement, in no event shall the aggregate "interest" (as defined in Section 347
of the Criminal Code (Canada), as the same may be amended, replaced or re-
enacted from time to time) payable under this Agreement by the Canadian Borrower
exceed the maximum amount of interest on the "credit advanced" (as defined in
that section) under this Agreement to the Canadian Borrower lawfully permitted
under that section and, if any payment, collection or demand pursuant to this
Agreement in respect of "interest" (as defined in that section) payable by the
Canadian Borrower is determined to be contrary to the provisions of that
section, such payment, collection or demand shall be deemed to have been made by
mutual mistake of the Canadian Borrower, the Canadian Administrative Agent and
the Canadian Banks and the amount of such payment or collection in excess of the
amount lawfully permitted shall be refunded to the Canadian Borrower. For
purposes of this Agreement, the effective annual rate of interest on all such
"credit advanced" to the Canadian Borrower shall be determined in accordance
with generally accepted actuarial practices and principles over the term the
Canadian Advances, BA Obligations and Banker's Acceptance are outstanding on the
basis of annual compounding of the lawfully permitted rate of interest and, in
the event of any dispute, a certificate of a Fellow of the Canadian Institute of
Actuaries appointed by the Canadian Administrative Agent will be conclusive for
the purposes of such determination. The Canadian Borrower shall not have any
action against the Administrative Agents or any Bank for damages whatsoever
arising out of the payment or collection of any amounts in excess of the amounts
of interest lawfully permitted to be paid pursuant to the Criminal Code
(Canada). The parties agree that (i) the principle of deemed reinvestment of
interest shall not apply to any interest calculation under this Agreement, and
(ii) the rates of interest stipulated in this Agreement are intended to be
nominal rates and not effective rates or yields.
(f) Binding Effect; Severability. This Agreement shall become effective
----------------------------
when it shall have been executed by the Borrowers, the Issuing Bank and the
Administrative Agents and when the U.S. Administrative Agent shall have, as to
each Bank, either received a copy of a signature page hereof executed by such
Bank or been notified by such Bank that such Bank has executed it and thereafter
shall be binding upon and inure to the benefit of the Borrowers, the Issuing
Bank, the Administrative Agents and each Bank and their respective successors
and assigns, except that neither Borrower shall have the right to assign its
rights hereunder or under any other Loan Document or any
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interest herein or therein without the prior written consent of all of the
Banks. The invalidity, illegality or unenforceability in any jurisdiction of any
provision in or obligation under this Agreement or the other Loan Documents
shall not effect or impair the validity, legality or enforceability of the
remaining provisions or obligations under this Agreement, or the other Loan
Documents.
(g) Assignments and Participations. (i) Each Bank may assign to one or
------------------------------
more banks or other entities all or a portion of its rights and obligations
under this Agreement (including, without limitation, all or a portion of its
Commitment, the Advances owing to it and the Notes held by it); provided,
--------
however, that, except as provided in Section 9.08(g), (i) each such assignment
-------
shall be of a uniform, and not a varying, percentage of all rights and
obligations under and in respect of this Agreement, (ii) except in the case of
an assignment of all of a Bank's rights and obligations under this Agreement or
an assignment to another Bank, the amount of the Commitment of the assigning
Bank being assigned pursuant to each such assignment (determined as of the date
of the Assignment and Acceptance with respect to such assignment) shall in no
event be less than U.S. $5,000,000 (or the Canadian Dollar Equivalent thereof),
(iii) each such assignment shall be to an Eligible Assignee or an Affiliate of a
Bank, (iv) each such assignment to an Eligible Assignee or to any Affiliate of a
Bank shall be subject to the consent of the U.S. Administrative Agent and the
U.S. Borrower, which consent shall not be unreasonably withheld, and (v) the
assigning Bank and the assignee shall execute and deliver to the U.S.
Administrative Agent, for its acceptance and recording in the Register, an
Assignment and Acceptance, together with the Notes subject to such assignment
and a processing and recordation fee of U.S. $3,000. Upon such execution,
delivery, acceptance and recording, from and after the effective date specified
in each Assignment and Acceptance, (x) the assignee thereunder shall be a party
hereto and, to the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment and Acceptance, have the rights and
obligations of a Bank hereunder and (y) the Bank assignor thereunder shall, to
the extent that rights and obligations hereunder have been assigned by it
pursuant to such Assignment and Acceptance, relinquish its rights and be
released from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all of an assigning Bank's rights and
obligations under this Agreement, such Bank shall cease to be a party hereto).
(ii) By executing and delivering an Assignment and Acceptance, the
Bank assignor thereunder and the assignee thereunder confirm to and agree with
each other and the other parties hereto as follows: (i) other than as provided
in such Assignment and Acceptance, such assigning Bank makes no representation
or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with any Loan Document or
any other instrument or document furnished pursuant hereto or in connection
herewith or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of any Loan Document or any other instrument or document
furnished pursuant hereto or in connection herewith; (ii) such assigning Bank
makes no representation or warranty and assumes no responsibility with respect
to the financial condition of either Borrower or any other Person or the
performance or observance by either Borrower or any other Person of any of its
respective obligations under any Loan Document or any other instrument or
document furnished pursuant hereto or in connection herewith; (iii) such
assignee confirms that it has received a copy of this Agreement, together with
copies of the Financial Statements and such other documents and information as
it has deemed appropriate to make its own
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credit analysis and decision to enter into such Assignment and Acceptance; (iv)
such assignee will, independently and without reliance upon either
Administrative Agent, such assigning Bank or any other Bank and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under this
Agreement, any of the other Loan Documents or any other instrument or document;
(v) such assignee confirms that it is an Eligible Assignee or an Affiliate of a
Bank; (vi) such assignee appoints and authorizes each Administrative Agent to
take such action as an Administrative Agent on its behalf and to exercise such
powers and discretion under the Loan Documents as are delegated to such
Administrative Agent by the terms hereof or thereof, together with such powers
and discretion as are reasonably incidental thereto; and (vii) such assignee
agrees that it will perform in accordance with their terms all of the
obligations which by the terms of this Agreement are required to be performed by
it as a Bank.
(iii) The U.S. Administrative Agent shall maintain at its address
referred to in Section 9.02 a copy of each Assignment and Acceptance delivered
to and accepted by it and a register for the recordation of the names and
addresses of the Banks and the Commitment of, and the principal amount of the
Advances owing to, each Bank from time to time (the "Register"). The entries in
the Register shall be conclusive and binding for all purposes, absent manifest
error, and the Borrower, each Administrative Agent and the Banks may treat each
Person whose name is recorded in the Register as a Bank hereunder for all
purposes of this Agreement. The Register shall be available for inspection by
the Borrower or any Bank at any reasonable time and from time to time upon
reasonable prior notice.
(iv) Upon its receipt of an Assignment and Acceptance executed by an
assigning Bank and an assignee representing that it is an Eligible Assignee or
an Affiliate of a Bank and consented to by the U.S. Borrower and U.S.
Administrative Agent where so required by this Agreement, together with the
Notes subject to such assignment, the U.S. Administrative Agent shall, if such
Assignment and Acceptance has been completed and is in substantially the form of
Exhibit A, (i) accept such Assignment and Acceptance, (ii) record the
information contained therein in the Register and (iii) give prompt notice
thereof to the Borrowers. Within five Business Days after its receipt of such
notice, the Borrowers, at their expense, shall execute and deliver to the
Administrative Agent in exchange for the surrendered Note a new Note payable to
the order of such Eligible Assignee in an amount equal to the Commitment assumed
by it pursuant to such Assignment and Acceptance and, if the assigning Bank has
retained a Commitment hereunder, a new Note payable to the order of the
assigning Bank in an amount equal to the Commitment retained by it hereunder
(such new Notes shall be in an aggregate principal amount equal to the aggregate
principal amount of such surrendered Notes, shall be dated the effective date of
such Assignment and Acceptance and shall otherwise be in substantially the form
of Exhibits X-0, X-0 or B-3 as the case may be).
(v) Each Bank may sell participations to one or more banks or other
entities (other than either Borrower or any of their respective Affiliates) in
or to all or a portion of its rights and obligations under this Agreement
(including, without limitation, all or a portion of its Commitment, the Advances
and other Credit Extensions owing to it and the Notes held by it); provided that
--------
(i) such Bank's obligations under this Agreement (including, without limitation,
its Commitment to the Borrower hereunder) shall remain unchanged, (ii) such Bank
shall remain solely
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responsible to the other parties hereto for the performance of such obligations,
(iii) such Bank shall remain the holder of any such Notes for all purposes of
this Agreement, (iv) the Borrowers, the Administrative Agents and the other
Banks shall continue to deal solely and directly with such Bank in connection
with such Bank's rights and obligations under this Agreement, (v) the terms of
any such participation shall not restrict such Bank's ability to make any
amendment or waiver of this Agreement or any Note or such Bank's ability to
consent to any departure by the Borrowers therefrom without the approval of the
participant, except that the approval of the participant may be required to the
extent that such amendment, waiver or consent would release or impair the
Guaranty, reduce the principal of, or interest on, the Notes, the BA Obligations
or any fees or other amounts payable hereunder, in each case to the extent
subject to such participation, or postpone any date fixed for any payment of
principal of, or interest on, the Notes, the BA Obligations or any fees payable
hereunder, in each case to the extent subject to such participation, and (vi) no
Participant shall have any rights under this Agreement or any of the other Loan
Documents, with each participant's rights against the granting Bank in respect
of any participation to be those set forth in the participation agreement, and
all amounts payable by the Borrower hereunder shall be determined as if such
Bank had not granted such participation.
(vi) Any Bank may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
9.08, disclose to the assignee or participant or proposed assignee or
participant, any information relating to either Borrower or any Subsidiary of
either Borrower furnished to such Bank by or on behalf of either Borrower or any
such Subsidiary; provided, that, prior to any such disclosure, the assignee or
--------
participant or proposed assignee or participant shall agree for the benefit of
the Borrowers and such Bank to comply with Section 9.13.
(vii) Notwithstanding any other provision set forth in this
Agreement, any Bank may at any time create a security interest in all or any
portion of its rights under this Agreement (including the Advances owing to it
and the Note or Notes held by it) in favor of any Federal Reserve Bank in
accordance with Regulation A of the Board of Governors of the Federal Reserve
System, but no such assignment shall release such Bank from its obligations
hereunder.
(h) Execution in Counterparts. This Agreement may be executed in any
-------------------------
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement. Delivery of
an executed counterpart of a signature page to this Agreement by telecopier
shall be as effective as delivery of a manually executed counterpart of this
Agreement.
(i) Governing Law. This Agreement and the Notes shall be governed by, and
-------------
construed in accordance with, the laws of the State of Texas. Without limiting
the intent of the parties set forth above, Vernon's Chapter 346 of the Texas
Finance Code shall not apply to this Agreement, the Notes or the transactions
contemplated hereby. Each Letter of Credit shall be governed by the Uniform
Customs and Practice for Documentary Credits, International Chamber of Commerce
Publication No. 500 (1993 version).
(j) Jurisdiction. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND
------------
UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE
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NON-EXCLUSIVE JURISDICTION OF ANY TEXAS STATE COURT OR FEDERAL COURT SITTING IN
DALLAS COUNTY, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OF THE NOTES, THE
GUARANTY OR ANY OTHER LOAN DOCUMENT OR FOR RECOGNITION OR ENFORCEMENT OF ANY
JUDGMENT ARISING OUT OF ANY OF THE FOREGOING, AND EACH OF THE PARTIES HERETO
HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH
ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT. EACH OF THE
PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST
EXTENT IT MAY EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO THE
MAINTENANCE OF SUCH ACTION OR PROCEEDING AND ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY
SUCH COURT. EACH BORROWER HEREBY AGREES THAT SERVICE OF COPIES OF THE SUMMONS
AND COMPLAINT AND ANY OTHER PROCESS WHICH MAY BE SERVED IN ANY SUCH ACTION OR
PROCEEDING MAY BE MADE BY MAILING OR DELIVERING A COPY OF SUCH PROCESS TO SUCH
BORROWER AT ITS ADDRESS SPECIFIED IN SECTION 9.02. EACH OF THE PARTIES HERETO
AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE
CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR
IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING HEREIN SHALL AFFECT THE RIGHTS OF
ANY BANK OR EITHER ADMINISTRATIVE AGENT TO SERVE LEGAL PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR AFFECT THE RIGHT THAT ANY PARTY HERETO MAY OTHERWISE
HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT, ANY OF THE
NOTES, THE GUARANTY OR ANY OTHER INSTRUMENT OR DOCUMENT FURNISHED PURSUANT
HERETO OR IN CONNECTION HEREWITH IN THE COURTS OF ANY OTHER JURISDICTION.
(k) Waiver of Jury Trial. THE BORROWERS, THE ADMINISTRATIVE AGENTS, THE
--------------------
ISSUING BANK, AND THE BANKS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY AND
ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT, ANY OF THE NOTES, THE GUARANTY OR ANY OTHER INSTRUMENT OR
DOCUMENT FURNISHED PURSUANT HERETO OR IN CONNECTION HEREWITH OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
(l) Confidentiality. Each Administrative Agent and each Bank agrees that
---------------
it will use reasonable efforts not to disclose any Confidential Information
without the prior consent of the U.S. Borrower (other than to representatives of
either Administrative Agent or any Bank who are informed by such Administrative
Agent or Bank of, or are aware of, the confidential nature thereof and who are
bound, for the benefit of the Borrowers and such Administrative Agent or Bank,
by the terms and conditions hereof and who are bound, for the benefit of the
Borrowers and such Administrative Agent or Bank, to not use any such
Confidential Information except for the purposes of the Loan Documents and the
Credit Extensions and Letters of Credit), provided that any Bank or
--------
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Administrative Agent may disclose any such information (a) as has become
generally available to the public, (b) as may be required or appropriate in any
report, statement or testimony submitted to or required by any municipal,
provincial, territorial, state or Federal regulatory body having or claiming to
have regulatory authority over any Bank or Administrative Agent, or submitted to
or required by the Federal Reserve Board, the Comptroller of the Currency or the
Federal Deposit Insurance Corporation or similar organizations (whether in the
United States or elsewhere) or their successors in each case having or claiming
to have regulatory authority over any Bank or Administrative Agent, (c) as may
be required or appropriate in response to any summons or subpoena in connection
with any litigation, (d) in order to comply with any law, order, regulation or
ruling applicable to any Bank or Administrative Agent, (e) as contemplated by
Section 9.08(f), (f) in connection with the exercise of any remedy by any Bank
or Administrative Agent pertaining to this Agreement, any of the Notes, any BA
Obligation or any other document delivered in connection herewith, (g) in
connection with any litigation between any Borrower and any Administrative Agent
or any Bank pertaining to any Loan Document or any other document delivered in
connection herewith, (h) to any Bank or either Administrative Agent, or (i) to
any Affiliate of any Bank or Administrative Agent that is informed by such Bank
or Administrative Agent of, or is aware of, the confidential nature thereof and
that is bound, for the benefit of the Borrowers and such Bank or Administrative
Agent, by the terms and conditions hereof and that is bound, for the benefit of
the Borrowers and such Bank or Administrative Agent, to not use any such
Confidential Information except for the purposes of the Loan Documents and the
Credit Extensions, provided that in the event of any disclosure of Confidential
--------
Information pursuant to either of clauses (c) and (d) of this Section 9.13, such
Administrative Agent or Bank making such disclosure shall make a good faith
attempt, to the extent practicable, to notify the U.S. Borrower of any such
disclosure of such Confidential Information at least three U.S. Business Days
prior to such disclosure, and in any event shall notify the U.S. Borrower of
such disclosure as soon as practicable, but no notice shall be required pursuant
to this proviso if giving such notice would conflict with any law, order,
regulation or ruling.
(m) Judgment Currency. (i) If, for the purposes of obtaining judgment in
-----------------
any court, it is necessary to convert any sum due or owing hereunder or under
the Guaranty or any other Loan Document to either Administrative Agent or any
one or more of the Banks in any currency (the "Original Currency") into another
currency (the "Other Currency"), the parties hereto agree, to the fullest extent
that they may effectively do so, that the rate of exchange used shall be that at
which in accordance with normal banking procedures such Administrative Agent or
Bank, as the case may be, could purchase the Original Currency with the Other
Currency on the Business Day preceding that on which final judgment is granted,
together with any premiums and costs of exchange payable in connection with such
purchase.
(ii) The obligations of the Borrowers in respect of any sum due in
the Original Currency from it to either Administrative Agent or any Bank under
any of the Loan Documents shall, notwithstanding any judgment in any Other
Currency, be discharged only to the extent that on the Business Day following
receipt by such Administrative Agent or Bank, as the case may be, of any sum
adjudged to be so due or owing in such Other Currency, such Administrative Agent
or Bank, as the case may be, may in accordance with normal banking procedures
purchase the Original Currency with such Other Currency. IF THE AMOUNT OF THE
ORIGINAL CURRENCY SO PURCHASED IS LESS THAN THE SUM ORIGINALLY DUE OR OWING TO
SUCH
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ADMINISTRATIVE AGENT OR BANK, AS THE CASE MAY BE, IN THE ORIGINAL CURRENCY, EACH
BORROWER AGREES, AS A SEPARATE OBLIGATION AND NOTWITHSTANDING ANY SUCH JUDGMENT,
TO INDEMNIFY SUCH ADMINISTRATIVE AGENT OR SUCH BANK, AS THE CASE MAY BE, AGAINST
SUCH LOSS, AND IF THE AMOUNT OF THE ORIGINAL CURRENCY SO PURCHASED EXCEEDS THE
SUM ORIGINALLY DUE OR OWING TO SUCH ADMINISTRATIVE AGENT OR SUCH BANK, AS THE
CASE MAY BE, IN THE ORIGINAL CURRENCY, SUCH ADMINISTRATIVE AGENT OR SUCH BANK,
AS THE CASE MAY BE, SHALL REMIT SUCH EXCESS TO SUCH BORROWER.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
BORROWERS:
THE WISER OIL COMPANY
By: ________________________________________
Name: ______________________________________
Title: _____________________________________
THE WISER OIL COMPANY OF CANADA
By: ________________________________________
Name: ______________________________________
Title: _____________________________________
U.S. ADMINISTRATIVE AGENT:
UNION BANK OF CALIFORNIA, N.A.
as U.S. Administrative Agent
By: ________________________________________
Name: ______________________________________
Title: _____________________________________
By: ________________________________________
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Name: ______________________________________
Title: _____________________________________
CANADIAN ADMINISTRATIVE AGENT:
NATIONAL BANK OF CANADA,
as Canadian Administrative Agent
By: ________________________________________
Authorized Officer
ISSUING BANK:
UNION BANK OF CALIFORNIA, N.A.,
as Issuing Bank
By: ________________________________________
Name: ______________________________________
Title: _____________________________________
By: ________________________________________
Name: ______________________________________
Title: _____________________________________
BANKS:
UNION BANK OF CALIFORNIA, N.A.,
as a U.S. Bank and a Canadian Bank
By: ________________________________________
Name: ______________________________________
Title: _____________________________________
By: ________________________________________
Name: ______________________________________
Title: _____________________________________
-00-
XXXXXXXX XXXX XX XXXXXX, XXX XXXX BRANCH
as a U.S. Bank
By: ________________________________________
Authorized Officer
By: ________________________________________
Authorized Officer
NATIONAL BANK OF CANADA
as a Canadian Bank
By: ________________________________________
Authorized Officer
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