Page 1
EXECUTION COPY
************************************************************
CANADIAN FOREST OIL LTD.
and
SUBSIDIARY BORROWERS
-----------------------------
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of April 1, 1997
------------------------------
611852 SASKATCHEWAN LTD.
************************************************************
Page 2
TABLE OF CONTENTS
This Table of Contents is not part of the Agreement to which it is
attached but is inserted for convenience of reference only.
PAGE
Section 1. Definitions and Accounting Matters . . . . . . . . . . . . . . . 1
1.01 Certain Defined Terms. . . . . . . . . . . . . . . . . . . . . . . 1
1.02 Accounting Terms and Determinations. . . . . . . . . . . . . . . . 21
1.03 Borrowing Base . . . . . . . . . . . . . . . . . . . . . . . . . . 22
1.04 Types and Currency of Loans. . . . . . . . . . . . . . . . . . . . 24
Section 2. Commitment, Loans, Letters of Credit, Notes and Prepayments. . . 24
2.01 Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
2.02 Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.03 BA Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.04 Letters of Credit. . . . . . . . . . . . . . . . . . . . . . . . . 26
2.05 Swingline Loans. . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.06 Changes of Commitment. . . . . . . . . . . . . . . . . . . . . . . 30
2.07 Commitment Fee . . . . . . . . . . . . . . . . . . . . . . . . . . 30
2.08 Loans Made Only if Proceeds are Available. . . . . . . . . . . . . 30
2.09 Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
2.10 Optional Prepayments and Conversions or Continuations of Loans . . 31
2.11 Mandatory Prepayments and Reductions of Commitments. . . . . . . . 32
Section 3. Payments of Principal and Interest . . . . . . . . . . . . . . . 36
3.01 Repayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
3.02 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
3.03 Currency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
3.04 Interest on Overdue Amounts. . . . . . . . . . . . . . . . . . . . 37
Section 4. Payments; Pro Rata Treatment; Computations; Etc. . . . . . . . . 37
4.01 Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
4.02 Computations . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
4.03 Minimum Amounts. . . . . . . . . . . . . . . . . . . . . . . . . . 38
4.04 Interest Act (Canada). . . . . . . . . . . . . . . . . . . . . . . 39
4.05 Certain Notices. . . . . . . . . . . . . . . . . . . . . . . . . . 39
4.06 Set-Off. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 5. Yield Protection, Etc. . . . . . . . . . . . . . . . . . . . . . 41
5.01 Additional Costs . . . . . . . . . . . . . . . . . . . . . . . . . 41
5.02 Limitation on Types of Loans . . . . . . . . . . . . . . . . . . . 41
5.03 Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
5.04 Treatment of Affected Loans. . . . . . . . . . . . . . . . . . . . 43
5.05 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
5.06 Compliance with Section 2.08 . . . . . . . . . . . . . . . . . . . 44
Page 3
Section 6. Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . 44
6.01 Effectiveness. . . . . . . . . . . . . . . . . . . . . . . . . . . 44
6.02 Effectiveness and Subsequent Extensions of Credit. . . . . . . . . 47
Section 7. Representations and Warranties . . . . . . . . . . . . . . . . . 48
7.01 Corporate Existence. . . . . . . . . . . . . . . . . . . . . . . . 48
7.02 Financial Condition. . . . . . . . . . . . . . . . . . . . . . . . 49
7.03 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
7.04 No Breach. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
7.05 Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
7.06 Approvals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
7.07 Use of Credit. . . . . . . . . . . . . . . . . . . . . . . . . . . 50
7.08 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
7.09 Investment Company Act . . . . . . . . . . . . . . . . . . . . . . 50
7.10 Public Utility Holding Company Act . . . . . . . . . . . . . . . . 51
7.11 Material Agreements and Liens. . . . . . . . . . . . . . . . . . . 51
7.12 Environmental Matters. . . . . . . . . . . . . . . . . . . . . . . 51
7.13 Subsidiaries, Etc. . . . . . . . . . . . . . . . . . . . . . . . . 52
7.14 True and Complete Disclosure . . . . . . . . . . . . . . . . . . . 52
7.15 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . 53
7.16 Special Purpose Company. . . . . . . . . . . . . . . . . . . . . . 53
7.17 Title. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
7.18 Forest Indenture. . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 8. Covenants of the Borrowers . . . . . . . . . . . . . . . . . . . 54
8.01 Financial Statements Etc.. . . . . . . . . . . . . . . . . . . . . 54
8.02 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
8.03 Existence, Etc.. . . . . . . . . . . . . . . . . . . . . . . . . . 57
8.04 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
8.05 Prohibition of Fundamental Changes . . . . . . . . . . . . . . . . 58
8.06 Limitation on Liens. . . . . . . . . . . . . . . . . . . . . . . . 59
8.07 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
8.08 Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
8.09 Dividend Payments. . . . . . . . . . . . . . . . . . . . . . . . . 63
8.10 Debt Coverage Ratio; Interest Coverage Ratio . . . . . . . . . . . 64
8.11 Working Capital. . . . . . . . . . . . . . . . . . . . . . . . . . 64
8.12 Subordinated Indebtedness. . . . . . . . . . . . . . . . . . . . . 64
8.13 Lines of Business. . . . . . . . . . . . . . . . . . . . . . . . . 65
8.14 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . 65
8.15 Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . 65
8.16 Certain Obligations Respecting Subsidiaries. . . . . . . . . . . . 65
8.17 Ownership. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
8.18 Modifications of Certain Documents and Payments. . . . . . . . . . 66
8.19 Limitations on Sale and Leaseback Transactions . . . . . . . . . . 66
8.20 Governmental Approvals . . . . . . . . . . . . . . . . . . . . . . 66
8.21 Property Subject to the Lien of the Security Documents . . . . . . 67
8.22 Environmental Matters. . . . . . . . . . . . . . . . . . . . . . . 67
8.23 No Action to Affect Security Documents . . . . . . . . . . . . . . 67
Page 4
8.24 Fixed Charge . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
8.25 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . 68
8.26 Title Defects. . . . . . . . . . . . . . . . . . . . . . . . . . . 68
8.27 Additional Borrowers . . . . . . . . . . . . . . . . . . . . . . . 68
8.28 Special Covenant with Respect to ProMark . . . . . . . . . . . . . 69
Section 9. Events of Default; Remedies. . . . . . . . . . . . . . . . . . . 69
9.01 Events of Default. . . . . . . . . . . . . . . . . . . . . . . . . 69
9.02 Remedies Cumulative. . . . . . . . . . . . . . . . . . . . . . . . 75
9.03 Lender May Perform Covenants . . . . . . . . . . . . . . . . . . . 76
Section 10. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . 76
10.01 Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
10.02 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
10.03 Expenses, Etc.. . . . . . . . . . . . . . . . . . . . . . . . . . 77
10.04 Amendments, Etc.. . . . . . . . . . . . . . . . . . . . . . . . . 78
10.05 Successors and Assigns. . . . . . . . . . . . . . . . . . . . . . 78
10.06 Assignments and Participations. . . . . . . . . . . . . . . . . . 79
10.07 Survival. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
10.08 Captions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
10.09 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . 80
10.10 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . 80
10.11 Jurisdiction, Service of Process and Venue. . . . . . . . . . . . 80
10.12 Judgment Currency . . . . . . . . . . . . . . . . . . . . . . . . 80
10.13 Appointment of Canadian Forest as Agent for Notice. . . . . . . . 81
10.14 Joint and Several Liability . . . . . . . . . . . . . . . . . . . 81
10.15 Additional Provisions Relating to Interest and Fees . . . . . . . 82
10.16 Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . 82
10.17 Time of Essence . . . . . . . . . . . . . . . . . . . . . . . . . 82
10.18 Conflict of Terms . . . . . . . . . . . . . . . . . . . . . . . . 82
10.19 Restatement of Original Credit Agreement. . . . . . . . . . . . . 82
10.20 BOM Letters of Credit . . . . . . . . . . . . . . . . . . . . . . 83
10.21 Amendment of Certain Documents. . . . . . . . . . . . . . . . . . 83
SCHEDULE I - Material Agreements and Liens
SCHEDULE II - Subsidiaries and Investments
SCHEDULE III - Environmental Matters
EXHIBIT A-1 - Form of Note
EXHIBIT A-2 - Form of Swingline Note
EXHIBIT B - Form of Opinion of Counsel to Forest, Canadian Forest and
the Subsidiary Borrowers
Page 5
SECOND AMENDED AND RESTATED CREDIT AGREEMENT dated as of April 1,
1997 among: CANADIAN FOREST OIL LTD., a corporation duly amalgamated and
validly existing under the laws of Alberta ("CANADIAN FOREST"); PRODUCERS
MARKETING LTD., an Alberta corporation and a Wholly Owned Subsidiary of
Canadian Forest ("PROMARK") and each of the other Subsidiaries of Canadian
Forest that becomes a borrower pursuant to Section[nb]8.27 hereof (individually
a "SUBSIDIARY BORROWER" and collectively with Canadian Forest, the
"BORROWERS"); and 611852 SASKATCHEWAN LTD. (the "LENDER").
Canadian Forest, a Wholly Owned Subsidiary of 3189503, and the
Lender are parties to a Credit Agreement dated as of February 8, 1996 (as
modified, amended and restated on July 17, 1996 and supplemented and in
effect immediately prior to the Effective Date referred to below, the
"ORIGINAL CREDIT AGREEMENT"). In order to reflect, firstly, certain corporate
changes affecting the Borrowers (namely, the amalgamation of Acquisition Co.
and Atcor Resources to form 721940 Alberta Ltd. as the continuing corporation
resulting therefrom, and the amalgamation of 721940 Alberta Ltd. and Canadian
Forest to form Canadian Forest (as used herein Canadian Forest means, where
applicable, the corporation formed on the amalgamation of 721940 Alberta Ltd.
and Canadian Forest) as the continuing corporation resulting therefrom), and
secondly, certain asset sales from Canadian Forest to Forest and the
continued secured position of the Lender with respect to such assets, as well
as the continued inclusion of such assets in the Borrowing Base and financial
covenants hereunder, Canadian Forest has requested that the Lender agree to
amend and restate the Original Credit Agreement, and the Lender is willing to
amend and restate the Original Credit Agreement, all on the terms and
conditions hereinafter set forth. Accordingly, the parties hereto agree as
follows:
Section 1. DEFINITIONS AND ACCOUNTING MATTERS.
1.01 CERTAIN DEFINED TERMS. As used herein, the following terms
shall have the following meanings (all terms defined in this Section 1.01 or in
other provisions of this Agreement in the singular to have the same meanings
when used in the plural and VICE VERSA):
"ACQUISITION CO." shall mean 3189490 Canada Ltd., (as it existed prior
to its amalgamation with Atcor Resources).
"AFFILIATE" shall mean any Person that directly or indirectly
controls, or is under common control with, or is controlled by, the Borrowers
and, if such Person is an individual, any member of the immediate family
(including parents, spouse, children and siblings) of such individual and any
trust whose principal beneficiary is such individual
Page 6
or one or more members of such immediate family and any Person who is
controlled by any such member or trust. As used in this definition,
"CONTROL" (including, with its correlative meanings, "CONTROLLED BY" and
"UNDER COMMON CONTROL WITH") shall mean possession, directly or indirectly,
of power to direct or cause the direction of management or policies (whether
through ownership of securities or partnership or other ownership interests,
by contract or otherwise), PROVIDED that, in any event, any Person that owns
directly or indirectly securities having 10% or more of the voting power for
the election of directors or other governing body of a corporation or 10% or
more of the partnership or other ownership interests of any other Person
(other than as a limited partner of such other Person) will be deemed to
control such corporation or other Person. Notwithstanding the foregoing, (a)
no individual shall be an Affiliate solely by reason of his or her being a
director, officer or employee of the Borrowers or any of their Subsidiaries
and (b) none of the Borrowers or their respective Subsidiaries shall be an
Affiliate.
"AGENT" shall mean Chase Canada, or its successors as agent under the
Funding Credit Agreement.
"AGGREGATE BORROWINGS" has the meaning given to such term in Section
2.11(b).
"APPLICABLE MARGIN" shall mean, with respect to each Type of Loan
for any period during which the Usage Ratio is within the range specified
below, the percentage per annum set forth opposite such range under the
appropriate heading, PROVIDED that the "Applicable Margin" shall be increased
or reduced, as applicable, on the date of the borrowing of a Loan or the
repayment of a Loan which results in the Usage Ratio shifting from one range
to another but that the "Applicable Margin" for any BA Loan or Eurodollar
Loan outstanding prior to such date shall remain the same until the end of
Interest Period for such BA Loan or Eurodollar Loan, respectively.
APPLICABLE MARGIN (% P.A.)
-------------------------
Range of Canadian BA Fee U.S. Base Eurodollar
Usage Ratio Prime Loans Rate Rate Loans Loans
----------- ----------- ------- ----------- -------------
0 - .500:1.00 0.010% 1.010% 0.010% 1.010%
.501:1.00 to .750:1.00 0.385% 1.385% 0.385% 1.385%
.751:1.00 to 1.000:1.00 0.76% 1.76% 0.76% 1.76%
"ATCOR RESOURCES" shall mean Atcor Resources Ltd., (as it existed
prior to its amalgamation with Acquisition Co.)
"ATCOR RESOURCES PLEDGE AGREEMENT" shall mean the Guarantee and Pledge
Agreement dated as of February 8, 1996, between Atcor Resources and the
Page 7
Lender, as the same may be supplemented and amended up to the Effective Date.
"AVAILABLE BORROWING AMOUNT" has the meaning given to such term in
Section 2.07 hereof.
"BA LOAN" shall mean a Loan that bears interest at the BA Rate.
"BA RATE" has the meaning given such term in Section 2.03 hereof.
"BA FEE RATE" shall mean the rate that the Lender uses in charging the
fee for a BA Loan, such rate being described in the definition of Applicable
Margin.
"BANKRUPTCY AND INSOLVENCY ACT (CANADA)" shall mean, collectively, the
Bankruptcy and Insolvency Act (Canada) and the Companies' Creditors Arrangement
Act (Canada), each as amended from time to time and any similar statute of
Canada or any province thereof.
"BOM" shall mean the Bank of Montreal.
"BOM AGREEMENT" shall mean the Amended and Restated Financial
EDI Agreement Accounts Payable Service between ProMark and BOM dated July 17,
1996 with respect to the electronic transfers of funds and related remittance
data, as the same may be supplemented and amended and in effect from time to
time; PROVIDED that any supplements or amendments thereto shall be made in
accordance with the provisions of Section 11.21 of the Funding Credit Agreement.
"BOM PRIME RATE" shall mean the per annum floating rate of interest
established from time to time by BOM as the base rate it will use to determine
rates of interest on Canadian dollar demand loans to its customers in Canada and
which it designates as its prime rate. Each change in any interest rate
provided for herein based upon the BOM Prime Rate resulting from a change in the
BOM Prime Rate shall take effect at the time of such change in the BOM Prime
Rate.
"BORROWING BASE" has the meaning given to such term in Section 1.03
hereof.
"BORROWING BASE DEFICIENCY" has the meaning given to such term in
Section 2.11(a) hereof.
"BORROWING BASE REPORTS" shall mean collectively, (i) Net Back Pool
Reports and (ii) Reserve Evaluation Reports and "BORROWING BASE REPORT" shall
mean any thereof.
"BUSINESS DAY" shall mean (i) any day other than a Saturday or Sunday
Page 8
on which commercial banks are not authorized or required to close in Calgary
or Toronto, Canada, (ii) if such day relates to a U.S. Base Rate Loan or any
payments in connection therewith, a day (other than a Saturday or Sunday) on
which banks are open for business in New York City, Toronto and Calgary and
(iii) if such day relates to a borrowing of, a payment or prepayment of
principal of or interest on, a Conversion of or into, or an Interest Period
for, a Eurodollar Loan or a notice by any of the Borrowers with respect to
any such borrowing, payment, prepayment, Conversion or Interest Period, any
day other than a Saturday or Sunday on which dealings in U.S. Dollar deposits
are carried out in the London interbank market which is also a day on which
banks are open for business in New York City, Calgary and Toronto.
"CANADIAN DOLLARS" and "C$" shall mean lawful money of Canada.
"CANADIAN FOREST DEBENTURE" shall mean the Demand Debenture and
Negative Pledge, dated as of February 8, 1996, of Canadian Forest in the
original principal amount of C$80,000,000 payable to the Lender and assigned to
the Agent and its successors and assigns, as the same shall be modified and
supplemented and in effect from time to time.
"CANADIAN FOREST GUARANTEE" shall mean the guarantee made February 20,
1996 by Canadian Forest in favor of BOM with respect to obligations and
liabilities of ProMark under the BOM Agreement, as confirmed and amended by a
Guarantee Confirmation and Amendment Agreement entered into between Canadian
Forest and BOM dated July 17, 1996.
"CANADIAN PRIME LOANS" shall mean loans that bear interest at rates
based upon the Chase Canada Prime Rate.
"CAPITAL EXPENDITURES" shall mean, for any period, expenditures
(including, without limitation, the aggregate amount of Capital Lease
Obligations incurred during such period) made (a) by the Borrowers in connection
with the acquisition and exploitation of, or the exploration for or development
or production of, hydrocarbon reserves or to acquire or construct fixed assets,
plant and equipment (including renewals, improvements and replacements, but
excluding repairs) or (b) by Forest in connection with the acquisition and
exploitation of, or the exploration for or development or production of, the
Forest Pledged Properties or to acquire or construct fixed assets, plant and
equipment (including renewals, improvements and replacements, but excluding
repairs) in connection with the Forest Pledged Properties during such period, in
each case computed in accordance with GAAP.
"CAPITAL LEASE OBLIGATIONS" shall mean, for any Person, all
obligations of such Person to pay rent or other amounts under a lease of (or
other agreement conveying the right to use) Property to the extent such
obligations are required to be classified and accounted for as a capital lease
on a balance sheet of such Person
Page 9
under GAAP, and, for purposes of this Agreement, the amount of such
obligations shall be the capitalized amount thereof, determined in accordance
with GAAP.
"CASH COLLATERAL ACCOUNT" shall mean the cash collateral account
referred to in Section 13.4 of the Canadian Forest Debenture.
"CASH FLOW" shall mean, for any period, (a) for the Borrowers
(determined on a combined basis in accordance with GAAP), the sum, without
duplication, of the following: (i) the total sales revenue from natural gas,
oil and other hydrocarbon products and revenues from services related to
natural gas, oil and other hydrocarbon products for such period PLUS (ii)
cash dividends paid, if any, by any Non-Borrowing Subsidiary to the Borrowers
in an aggregate amount in excess of the aggregate amount of the Investments
in such Non-Borrowing Subsidiaries by the Borrowers during such period PLUS
(iii) the total Net Cash Payments (excluding the fair market value of
non-cash consideration) received during such period PLUS (iv) the total cash
proceeds received by Canadian Forest as a result of any capital contribution
by Acquisition Co., Atcor Resources or 3189503 that has been utilized to
repay indebtedness (to the extent permitted by the terms of this Agreement)
MINUS (v) the revenue attributable to the unearned balance of any advance
payment received during such period by the Borrowers relating to hydrocarbons
in place MINUS (vi) Operating Expenses, plus (b) for Forest (determined in
accordance with GAAP), the lesser of (A) the sum, without duplication, of the
following (determined in respect only of the Forest Pledged Properties): (i)
the total sales revenue from natural gas, oil and other hydrocarbon products;
PLUS (ii) the total Net Cash Payments (excluding the fair market value of
non-cash consideration) received during such period; MINUS (iii) the revenue
attributable to the unearned balance of any advance payment received during
such period by Forest relating to hydrocarbons in place MINUS (iv) Operating
Expenses, and (B) the amount contributed by 3189503 to Canadian Forest in
respect of the period for which the determination is made.
"CASUALTY EVENT" shall mean, with respect to any Property of any
Person, any loss of or damage to, or any condemnation or other taking of,
such Property for which such Person or any of its Subsidiaries receives
insurance proceeds, or proceeds of a condemnation award or other compensation.
"CHASE CANADA" shall mean The Chase Manhattan Bank of Canada or its
successors.
"CHASE CANADA PRIME RATE" shall mean the greater of (i) the per
annum floating rate of interest established from time to time by Chase Canada
as the base rate it will use to determine rates of interest on Canadian
dollar loans to its customers in Canada and (ii) the sum of (A) the discount
rate expressed as a rate of interest per annum payable by the purchasers of
30 day bills of exchange, duly completed and accepted by Chase Canada, as
established by Chase Canada, and (B) 100 basis
Page 10
points. Each change in any interest rate provided for herein based upon the
Chase Canada Prime Rate resulting from a change in the Chase Canada Prime
Rate shall take effect at the time of such change in the Chase Canada Prime
Rate.
"CHASE MANHATTAN" shall mean The Chase Manhattan Bank or its
successors.
"CHASE MANHATTAN PRIME RATE" shall mean the rate of interest from
time to time announced by Chase Manhattan at the Chase Manhattan Principal
Office as its prime commercial lending rate.
"CHASE MANHATTAN PRINCIPAL OFFICE" shall mean the principal office
of Chase Manhattan, located on the date hereof at 0 Xxxxx Xxxxxxxxx Xxxxx,
Xxx Xxxx, Xxx Xxxx 00000.
"CLOSING DATE" shall mean February 8, 1996.
"COMMITMENT" shall mean the obligation of the Lender to make Loans
pursuant to Sections 2.01 and 2.05 hereof and to obtain Letters of Credit
pursuant to Section 2.04 hereof, in an aggregate Principal Amount at any one
time outstanding up to but not exceeding C$80,000,000 or the Equivalent
Amount thereof in U.S. Dollars, as the same may be reduced at any time or
from time to time pursuant to Section 2.06 hereof.
"COMMITMENT TERMINATION DATE" shall mean February 7, 1999.
"COMMODITY HEDGING AGREEMENT" shall mean, for any Person, a notional
amount agreement or arrangement between such Person and one or more financial
institutions or other entities providing for the transfer or mitigation of
risks of fluctuations in prices of hydrocarbons, either generally or under
specific circumstances.
"CONTINUE," "CONTINUATION" and "CONTINUED" shall refer to the
continuation pursuant to Section 2.10 hereof of a Eurodollar Loan or BA Loan
from one Interest Period to the next Interest Period.
"CONVERT", "CONVERSION" and "CONVERTED" shall refer to a conversion
pursuant to Section 2.10 hereof of all or a portion of one Type of Loan into
another Type of Loan or Loans and shall include, if applicable, the
simultaneous conversion from one currency into another currency.
"CURRENCY" shall have the meaning assigned to such term in Section
1.04 hereof.
"DEBT COVERAGE RATIO" shall mean, for any period, the ratio of (a)
Cash
Page 11
Flow for such period to (b) Debt Service for such period.
"DEBT SERVICE" shall mean, for any period, the sum, without
duplication, of the following: (a) all payments of principal of Indebtedness
scheduled to be made during such period by the Lender (determined on a
consolidated basis in accordance with GAAP) PLUS (b) all payments of
principal of Indebtedness (other than Indebtedness to the Lender under this
Agreement) scheduled to be made during such period by the Borrowers
(determined on a combined basis in accordance with GAAP) PLUS (c) all
Interest Expense for such period.
"DEFAULT" shall mean an Event of Default or an event that with
notice or lapse of time or both would become an Event of Default.
"DEFICIENCY CURE PERIOD" shall have the meaning assigned to such
term in Section 2.11(a) hereof.
"DEFICIENCY NOTICE" shall have the meaning assigned to such term in
Section 2.11(a) hereof.
"DETERMINATION DATE" shall mean (a) each May 1 and October 15 of
each year prior to the Commitment Termination Date, commencing October 15,
1996 and (b) 45 days after each other date, if any, on which the Borrowing
Base Reports are delivered to the Lender as contemplated pursuant to Section
1.03 hereof.
"DISPOSITION" shall mean any sale, assignment, transfer or other
disposition of any Property by the Borrowers, or of any Forest Pledged
Property by Forest (whether now owned or hereafter acquired), to any other
Person excluding any sale, assignment, transfer or other disposition of any
Property sold or disposed of in the ordinary course of business and on
ordinary business terms, and also excluding the sale of the Forest Pledged
Properties by Canadian Forest to Forest pursuant to the Forest Purchase
Agreement.
"DIVIDEND PAYMENT" shall mean dividends (in cash, Property or
obligations) on, or other payments or distributions on account of, or the
setting apart of money for a sinking or other analogous fund for, or the
purchase, redemption, retirement or other acquisition of, any shares of any
class of stock of the Borrowers or any of their Subsidiaries or of any
warrants, options or other rights to acquire the same (or to make any
payments to any Person, such as "phantom stock" payments, where the amount
thereof is calculated with reference to the fair market or equity value of
either Borrower or any of their Subsidiaries), but excluding dividends
payable solely in shares of common stock of any Borrower.
"DOLLARS", "$" and "U.S. DOLLARS" shall mean lawful money of the
United States of America.
Page 12
"EFFECTIVE DATE" shall mean April 1, 1997.
"ENVIRONMENTAL CLAIM" shall mean, with respect to any Person, any
written or oral notice, claim, demand or other communication (a "CLAIM") by
any other Person alleging or asserting such Person's liability for
investigatory costs, cleanup costs, governmental response costs, damages to
natural resources or other property, personal injuries, fines or penalties
arising out of, based on or resulting from (i) the presence, or Release into
the environment, of any Hazardous Material at any location, whether or not
owned by such Person, or (ii) circumstances forming the basis of any
violation, or alleged violation, of any Environmental Law. The term
"Environmental Claim" shall include, without limitation, any claim by any
governmental authority for enforcement, cleanup, removal, response, remedial
or other actions or damages pursuant to any applicable Environmental Law, and
any claim by any third party seeking damages, contribution, indemnification,
cost recovery, compensation or injunctive relief resulting from the presence
of Hazardous Materials or arising from alleged injury or threat of injury to
health, safety or the environment.
"ENVIRONMENTAL LAWS" shall mean any and all present and future
Canadian federal, provincial, local and foreign laws, policies, guidelines,
rules or regulations, and any orders or decrees, in each case as now or
hereafter in effect, and including without limiting the foregoing both
statutory provisions and the common law, relating to the regulation or
protection of human health, safety or the environment or to emissions,
discharges, releases or threatened releases of pollutants, contaminants,
chemicals or toxic or Hazardous Materials or wastes into the indoor or
outdoor environment, including, without limitation, ambient air, soil,
surface water, ground water, wetlands, land or subsurface strata, or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of pollutants,
contaminants, chemicals or toxic or hazardous substances or wastes.
"EQUITY RIGHTS" shall mean, with respect to any Person, any
subscriptions, options, warrants, commitments, preemptive rights or
agreements of any kind (including, without limitation, any stockholders' or
voting trust agreements) for the issuance, sale, registration or voting of,
or securities convertible into, any additional shares of capital stock of any
class, or partnership or other ownership interests of any type in, such
Person.
"EQUIVALENT AMOUNT" shall mean as at any date the amount of Canadian
Dollars into which an amount of U.S. Dollars may be converted, or the amount
of U.S. Dollars into which an amount of Canadian Dollars may be converted, in
either case at The Bank of Canada mid-point noon spot rate of exchange for
such date in Toronto at approximately 12:00 noon, Toronto time on such date.
"EURODOLLAR BASE RATE" shall mean, with respect to any Eurodollar
Loan
Page 13
for any Interest Period therefor, the rate obtained by the Lender under the
Funding Credit Agreement with respect to eurodollar loans available to it
under such agreement with identical principal amounts and interest periods
and commencing on the same date as the applicable Eurodollar Loans hereunder.
"EURODOLLAR LOANS" shall mean Loans the interest rates on which are
determined on the basis of rates referred to in the definition of "Eurodollar
Base Rate" in this Section 1.01.
"EVENT OF DEFAULT" shall have the meaning assigned to such term in
Section 9 hereof.
"EXCHANGE RATE DEFICIENCY" shall have the meaning assigned to such
term in Section 2.11(b) hereof.
"FEDERAL FUNDS RATE" shall mean, for any day, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on
such day, as published by the Federal Reserve Bank of New York on the
Business Day next succeeding such day, PROVIDED that (a) if the day for which
such rate is to be determined is not a Business Day, the Federal Funds Rate
for such day shall be such rate for such transactions on the next preceding
Business Day as so published on the next succeeding Business Day and (b) if
such rate is not so published for any Business Day, the Federal Funds Rate
for such Business Day shall be the average rate charged to Chase Manhattan on
such Business Day on such transactions as determined by the Agent.
"FEE LETTER" shall mean the letter dated February 7, 1996 from Chase
Manhattan and Chase Securities Inc. to Forest describing certain fees payable
in connection with the transactions contemplated by this Agreement.
"FOREST" shall mean Forest Oil Corporation, a New York corporation.
"FOREST DEBENTURE" shall mean the Limited Recourse Demand Debenture
and Negative Pledge, dated as of April 1, 1997, of Forest in the original
principal amount of C$80,000,000, payable to the Lender and assigned to the
Agent and its successors and assigns, as the same shall be modified and
supplemented and in effect from time to time.
"FOREST GUARANTEE" shall mean the Limited Recourse Secured Guarantee
dated as of April 1, 1997 by Forest in favor of the Lender and assigned to
the Agent and its successors and assigns, as the same shall be modified and
supplemented and in effect from time to time.
Page 14
"FOREST PLEDGED PROPERTIES" shall mean the Property which is from
time to time the subject of the Lien created by the Forest Debenture.
"FOREST PURCHASE AGREEMENT" shall mean the Petroleum, Natural Gas
and General Rights Conveyance made effective as of April 1, 1997 between
Canadian Forest, as seller, and Forest, as purchaser.
"FUNDING CREDIT AGREEMENT" shall mean the Second Amended and
Restated Credit Agreement dated as of April 1, 1997 among the Lender, the
lenders party thereto and Chase Canada, as agent, as the same may be modified
and supplemented and in effect from time to time.
"FUTURE NET REVENUES" shall mean, as of any date of determination
for any period, the projected gross revenues attributable to all or a part
(as specified herein) of Proved Reserves constituting part of the Hydrocarbon
Properties included in the Reserve Evaluation Report for such period less the
sum for such period of all projected Operating Expenses and Capital
Expenditures with respect thereto, as set forth in the related Reserve
Evaluation Report, and less (without duplication) all amounts projected to be
applied to the discharge of any advance payments or similar agreements with
respect to hydrocarbons in place and to the unearned balance of any advance
payment received under any contract to be performed relating to such Proved
Reserves.
"GAAP" shall mean generally accepted accounting principles in the
United States applied on a basis consistent with those that, in accordance
with the last sentence of Section 1.02(a) hereof, are to be used in making
the calculations for purposes of determining compliance with this Agreement.
"GAS PAYMENT SETTLEMENT DAY" means the day of each calendar month on
which purchasers of natural gas produced in Alberta generally settle their
obligations (currently the 25th day of each month).
"GUARANTEE" shall mean a guarantee, an endorsement, a contingent
agreement to purchase or to furnish funds for the payment or maintenance of,
or otherwise to be or become contingently liable under or with respect to,
the Indebtedness, other obligations, net worth, working capital or earnings
of any Person, or a guarantee of the payment of dividends or other
distributions upon the stock or equity interests of any Person, or an
agreement to purchase, sell or lease (as lessee or lessor) Property,
products, materials, supplies or services primarily for the purpose of
enabling a debtor to make payment of such debtor's obligations or an
agreement to assure a creditor against loss, and including, without
limitation, causing a bank or other financial institution to issue a letter
of credit or other similar instrument for the benefit of another Person, but
excluding endorsements for collection or deposit in the ordinary
Page 15
course of business. The terms "GUARANTEE" and "GUARANTEED" used as a verb
shall have a correlative meaning.
"HAZARDOUS MATERIAL" shall mean, collectively, (a) any petroleum or
petroleum products, flammable explosives, radioactive materials, asbestos in
any form that is or could become friable, urea formaldehyde foam insulation,
and transformers or other equipment that contain dielectric fluid containing
polychlorinated biphenyls (PCB's), (b) any chemicals or other materials or
substances which are now or hereafter become defined as or included in the
definition of "hazardous substances", "hazardous wastes", "hazardous
materials", "extremely hazardous wastes", "restricted hazardous wastes",
"toxic substances", "toxic pollutants", "contaminants", "pollutants" or words
of similar import under any Environmental Law and (c) any other chemical or
other material or substance, exposure to which is now or hereafter
prohibited, limited or regulated under any Environmental Law.
"HYDROCARBON PROPERTIES" shall mean interests which the Borrowers
have from time to time in hydrocarbon reserves, and interests which Forest
has in the Forest Pledged Properties.
"INCOME TAX ACT (CANADA)" shall mean the Income Tax Act (Canada), as
amended from time to time.
"INDEBTEDNESS" shall mean, for any Person, without duplication: (a)
obligations created, issued or incurred by such Person for borrowed money
(whether by loan, the issuance and sale of debt securities or the sale of
Property to another Person subject to an understanding or agreement,
contingent or otherwise, to repurchase such Property from such Person); (b)
obligations of such Person to pay the deferred purchase or acquisition price
of Property or services, other than trade accounts payable (other than for
borrowed money) arising, and accrued expenses incurred, in the ordinary
course of business so long as such trade accounts payable are paid within 90
days of the date the respective goods are delivered or the respective
services are rendered; (c) Indebtedness of others secured by a Lien on the
Property of such Person, whether or not the respective indebtedness so
secured has been assumed by such Person; (d) obligations of such Person in
respect of letters of credit or similar instruments issued or accepted by
banks and other financial institutions for account of such Person; (e)
Capital Lease Obligations of such Person; (f) obligations of such Person in
respect of obligations of the types specified in other clauses of this
definition as a general partner or joint venturer of any partnership or joint
venture (other than in respect of obligations incurred in the ordinary course
of business); (g) the unearned balance of any advance payments received by
such Person under any contract to be performed in excess of C$350,000 (or the
equivalent in other currencies) in the aggregate (other than as provided in
clause (h) below); (h) the unearned balance of any advance payments received
by such Person under any contract to be performed in excess of C$2,500,000
(or the equivalent in other currencies) in the aggregate resulting
Page 16
from transactions in the ordinary course of such Person's business; and (i)
Indebtedness of others Guaranteed by such Person.
"INDEPENDENT PETROLEUM ENGINEER" shall mean (a) XxXxxxxx &
Associates Consultants Ltd. or (b) such other firm of independent petroleum
engineers expert in the matters required to be performed in connection with
the preparation and delivery of a Reserve Evaluation Report and satisfactory
to the Majority Lenders.
"INTEREST COVERAGE RATIO" shall mean, for any period, the ratio of
(a) Cash Flow for such period to (b) Interest Expense for such period.
"INTEREST EXPENSE" shall mean, for any period, interest expense for
the Borrowers for such period (determined on a combined basis without
duplication in accordance with GAAP) including, without limitation, the
following: all interest in respect of Indebtedness accrued or capitalized
during such period (whether or not actually paid during such period) (other
than interest paid in common stock of the Borrowers) and the net amounts
payable (or minus the net amounts receivable) under Interest Rate Protection
Agreements accrued during such period (whether or not actually paid or
received during such period), but excluding the non-cash amortization of
deferred debt issuance costs and original issue discount for such period.
"INTEREST PERIOD" shall mean, (a) with respect to any Eurodollar
Loan, each period commencing on the date such Eurodollar Loan is made or
Converted from another Type of Loan or the last day of the next preceding
Interest Period for such Loan and ending on the numerically corresponding day
in the first, second or third calendar month thereafter, as the applicable
Borrower may select as provided in Section 4.05 hereof, except that each
Interest Period that commences on the last Business Day of a calendar month
(or on any day for which there is no numerically corresponding day in the
appropriate subsequent calendar month) shall end on the last Business Day of
the appropriate subsequent calendar month. Notwithstanding the foregoing:
(i) if any Interest Period would otherwise end after the Commitment
Termination Date, such Interest Period shall end on the Commitment
Termination Date; (ii) each Interest Period that would otherwise end on a day
which is not a Business Day shall end on the next succeeding Business Day (or
if the next succeeding Business Day falls in the next succeeding calendar
month, on the next preceding Business Day); and (iii) notwithstanding clause
(i) above, no Interest Period shall have a duration of less than one month
and, if the Interest Period for any Eurodollar Loan would otherwise be a
shorter period, such Loan shall not be available as a Eurodollar Loan
hereunder for such period and (b) with respect to any BA Loan, each period
commencing on the date such BA Loan is made or Converted from another Type of
Loan or the last day of the next preceding Interest Period for such BA Loan
and ending on the date not less than 30 days or more than 180 days
thereafter, as the applicable Borrower may select as provided in Section 4.05
hereof. Notwithstanding the foregoing, no Interest Period shall mature on a
date after the Commitment Termination Date.
Page 17
"INTEREST RATE PROTECTION AGREEMENT" shall mean, for any Person, an
interest rate swap, cap or collar agreement or similar arrangement between
such Person and one or more financial institutions providing for the transfer
or mitigation of interest risks either generally or under specific
contingencies.
"INVESTMENT" shall mean, for any Person: (a) the acquisition
(whether for cash, Property, services or securities or otherwise) of capital
stock, bonds, notes, debentures, partnership or other ownership interests or
other securities of any other Person or any agreement to make any such
acquisition (including, without limitation, any "short sale" or any sale of
any securities at a time when such securities are not owned by the Person
entering into such short sale); (b) the making of any deposit with, or
advance, loan or other extension of credit to, any other Person (including
the purchase of Property from another Person subject to an understanding or
agreement, contingent or otherwise, to resell such Property to such Person,
but excluding any such advance, loan or extension of credit having a term not
exceeding 90 days representing the purchase price of inventory or supplies
sold by such Person in the ordinary course of business); (c) the entering
into of any Guarantee of, or other contingent obligation with respect to,
Indebtedness or other liability of any other Person and (without duplication)
any amount committed to be advanced, lent or extended to such Person; or (d)
the entering into of any Interest Rate Protection Agreement or Commodity
Hedging Agreement. The definition of "INVESTMENT" shall not include
expenditures made to acquire interests in joint ventures in oil and gas
properties and plants, facilities, pipelines and equipment reasonably related
thereto.
"ISSUING BANK" shall mean BOM, as the issuer of Letters of Credit
under Section 2.03 of the Funding Credit Agreement, together with its
successors and assigns in such capacity.
"LETTER OF CREDIT" shall have the meaning assigned to such term in
Section 2.04 hereof.
"LETTER OF CREDIT DOCUMENTS" shall mean, with respect to any Letter
of Credit, collectively, any application therefor and any other agreements,
instruments, guarantees or other documents (whether general in application or
applicable only to such Letter of Credit) governing or providing for (a) the
rights and obligations of the parties concerned or at risk with respect to
such Letter of Credit or (b) any collateral security for any of such
obligations, each as the same may be modified and supplemented and in effect
from time to time.
"LETTER OF CREDIT LIABILITY" shall mean, without duplication, at any
time and in respect of any Letter of Credit, the sum of (a) the undrawn face
amount of such Letter of Credit PLUS (b) the aggregate unpaid principal
amount of all Letter of Credit Reimbursement Obligations of the Borrowers at
such time due and payable in respect
Page 18
of all drawings made under such Letter of Credit.
"LETTER OF CREDIT REIMBURSEMENT OBLIGATIONS" shall mean, at any
time, the obligations of the Borrowers then outstanding, or that may
thereafter arise in respect of all Letters of Credit then outstanding, to
reimburse amounts paid by the Lender in respect of any drawings under a
Letter of Credit (to the extent not converted to a Canadian Prime Loan or a
U.S. Base Rate Loan hereunder).
"LIEN" shall mean, with respect to any Property, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of
such Property (including any advance payment or similar arrangements with
respect to minerals in place). For purposes of this Agreement and the other
Loan Documents, a Property shall be deemed to be subject to a Lien if a
Person has acquired or holds that Property subject to the interest of a
vendor or lessor under any conditional sale agreement, capital lease or other
title retention agreement (other than an operating lease) relating to such
Property.
"LOAN DOCUMENTS" shall mean, collectively, this Agreement, the
Notes, the Swingline Notes, the Letter of Credit Documents and the Security
Documents.
"LOANS" shall mean the loans provided for in Section 2.01 hereof and
the Swingline Loans provided for in Section 2.05 hereof.
"MAJORITY LENDERS" shall mean (i) at any time when there are three
or more lenders under the Funding Credit Agreement, lenders having at least
66 2/3% of the aggregate amount of the Commitments (as defined in the Funding
Credit Agreement) or, if the Commitments shall have terminated, lenders under
the Funding Credit Agreement holding at least 66 2/3% of the aggregate unpaid
Principal Amount of the Loans, Bankers' Acceptance Liabilities and Letter of
Credit Liabilities (each as defined in the Funding Credit Agreement); and
(ii) at any other time all of the lenders under the Funding Credit Agreement.
"MARGIN STOCK" shall mean "margin stock" within the meaning of
Regulations U and X.
"MATERIAL ADVERSE EFFECT" shall mean a material adverse effect on
(a) the Property, business, operations, financial condition, prospects,
liabilities or capitalization of the Borrowers and their Subsidiaries taken
as a whole or on the Forest Pledged Properties, (b) the ability of the
Borrowers or Forest (as applicable) to perform their respective obligations
under any of the Loan Documents, (c) the validity or enforceability of any of
the Loan Documents, (d) the rights and remedies of the Lender under any of
the Loan Documents or (e) the timely payment of the principal of or interest
on the Loans or Letter of Credit Reimbursement Obligations or Forest's
obligations under the Forest Guarantee or other amounts payable in connection
Page 19
therewith.
"MATERIAL SUBSIDIARY" shall mean, at any time of determination
thereof, any Subsidiary of any Borrower whose assets at such time exceed
C$7,500,000.
"NET AVAILABLE PROCEEDS" shall mean:
(a) in the case of any Disposition, the amount of Net Cash Payments
received in connection with such Disposition; PROVIDED that if 20% or less of
the total value of such Net Cash Payments consists of non-cash consideration,
and if such non-cash consideration is subjected to the Lien of the Security
Documents upon receipt by the Borrowers or Forest (as applicable), the amount
of such Net Cash Payments received shall be deemed to equal the amount of all
cash payments received in connection with such Disposition; and
(b) in the case of any Casualty Event, the aggregate amount of
proceeds of insurance, condemnation awards and other compensation received by
the Borrowers or Forest (as applicable) in respect of such Casualty Event net
of (i) reasonable expenses incurred by the Borrowers and their Subsidiaries
or Forest (as applicable) in connection therewith and (ii) contractually
required repayments of Indebtedness to the extent secured by a Lien on such
Property and any income and transfer taxes payable by the Borrowers or Forest
(as applicable) in respect of such Casualty Event.
"NET BACK POOL REPORT" shall mean a report furnished to the Lender,
the Agent and the lenders under the Funding Credit Agreement at the time of
each delivery of the Reserve Evaluation Report, in form and substance
satisfactory to the Agent and the Majority Lenders setting forth, in the case
of the report to be delivered in connection with the Determination Date
occurring on May 1 of each year, for the preceding fiscal year, and in the
case of the report to be delivered in connection with the Determination Date
occurring on October 15 of each year, for the first two calendar quarters of
such fiscal year, the following:
(i) the names of the buyers of hydrocarbons from the Borrowers
during the respective period;
(ii) the quantity of hydrocarbons sold to such buyer;
(iii) the unit price received from such buyer for such hydrocarbons
including the basis on which such price was calculated;
(iv) the payment terms of each sales contract with such buyer for
the remaining term of such contract and the basis upon which
the unit price under each such sales contract is to be
calculated; and
Page 20
(v) the remaining term of each such contract.
"NET CASH PAYMENTS" shall mean, with respect to any Disposition, the
aggregate amount of all cash payments, and the fair market value of any
non-cash consideration, received by the Borrowers (or by Forest, in the case
of any Disposition of any Forest Pledged Property) directly or indirectly in
connection with such Disposition; PROVIDED that (a) Net Cash Payments shall
be net of (i) the amount of any legal, title and recording tax expenses,
commissions and other fees and expenses paid by the Borrowers (or Forest, as
applicable) in connection with such Disposition and (ii) any Federal,
provincial, state and local income or other taxes estimated to be payable by
Borrowers (or Forest, as applicable) as a result of such Disposition (but
only to the extent that (x) such estimated taxes are in fact paid to the
relevant Federal, provincial, state or local governmental authority within
three months of the date of such Disposition or placed in escrow for the
payment of such taxes or (y) the amount of such estimated taxes is less than
C$1,000,000 and the payment of such taxes is being contested in good faith
and by appropriate proceedings) and (b) Net Cash Payments shall be net of any
repayments by the Borrowers of Indebtedness to the extent that (i) such
Indebtedness is secured by a Lien solely on the Property that is the subject
of such Disposition and (ii) such Indebtedness is to be repaid as a condition
to the Disposition of such Property.
"NON-BORROWING SUBSIDIARIES" shall mean Subsidiaries of Canadian
Forest other than the Subsidiary Borrowers.
"NOTES" shall mean the promissory notes provided for by Sections
2.09 (a) and (b) hereof and all promissory notes delivered in substitution or
exchange therefor, in each case as the same shall be modified and
supplemented and in effect from time to time.
"OPERATING EXPENSES" shall mean, for any period, the sum without
duplication of the following (a) for the Borrowers (determined on a combined
basis in accordance with GAAP) to the extent accrued or paid during such
period (without duplication): (i) lease operating expenses; (ii) Taxes;
(iii) general and administrative and other overhead expenditures; and (iv)
all other expenses paid or accrued related to or arising from the operations
of the Borrowers, and (b) for Forest (determined in accordance with GAAP in
respect only of the Forest Pledged Properties) to the extent accrued or paid
during such period (without duplication): (i) lease operating expenses; (ii)
Taxes; (iii) general and administrative and other overhead expenditures; and
(iv) all other expenses paid or accrued related to or arising from the
operations of Forest in connection with the Forest Pledged Properties.
"ORIGINAL CREDIT AGREEMENT" shall have the meaning assigned to such
term in the second paragraph hereof.
Page 21
"PERMITTED INVESTMENTS" shall mean: (a) direct obligations of
Canada or the United States of America, or of any agency of either thereof,
or obligations guaranteed as to principal and interest by Canada, or the
United States of America or by any agency of either thereof, in either case
maturing not more than 90 days from the date of acquisition thereof; (b)
certificates of deposit issued or bankers' acceptances issued by any lender
under the Funding Credit Agreement or any other bank or trust company
organized under the laws of Canada or any province thereof or the United
States of America or any state thereof and having capital, surplus and
undivided profits of at least C$500,000,000 (or the Equivalent Amount),
maturing not more than 90 days from the date of acquisition thereof; and (c)
commercial paper rated A-l or better or P-1, R-1 low or A-1 or better by
Standard & Poor's Ratings Group, a division of XxXxxx-Xxxx, Inc., Xxxxx'x
Investors Service, Inc., Dominion Bond Rating Service Limited or Canada Bond
Rating Service, respectively, maturing not more than 90 days from the date of
acquisition thereof.
"PERSON" shall mean any individual, corporation, company, voluntary
association, partnership, limited liability company, joint venture, trust,
unincorporated organization or government (or any agency, instrumentality or
political subdivision thereof).
"PRESENT VALUE OF RESERVES" shall mean, on any date, estimated net
cash flow expressed in Canadian Dollars (after development expenses and
production taxes) in respect of Proved Reserves attributable to Hydrocarbon
Properties calculated in accordance with the risk factors, product pricing
models and discounted to present value at a discount rate for Proved Reserves
in each case acceptable to the Majority Lenders from time to time.
"PRINCIPAL AMOUNT" shall mean for a BA Loan, the gross principal
amount of the BA Loan requested (as opposed to the amount advanced) and for
any other Loans, the outstanding principal amount thereof.
"PRINCIPAL OFFICE" shall mean the principal office of Chase Canada,
located on the date of this Agreement at 1 First Canadian Place, 000 Xxxx
Xxxxxx Xxxx, Xxxxx 0000, X.X. Xxx 000, Xxxxxxx, Xxxxxxx, Xxxxxx X0X 0X0.
"PROMARK DEBENTURE" shall mean the Demand Debenture and Negative
Pledge dated July 17, 1996 of ProMark in the original principal amount of
C$80,000,000 payable to the Lender and assigned to the Agent and its
successors and assigns, as the same shall be modified and supplemented in
accordance with Section 11.21 of the Funding Credit Agreement and in effect
from time to time.
"PROMARK SECURITY AGREEMENT" shall mean the Joint Security Agreement
dated July 17, 1996 of ProMark (joined by Canadian Forest to give full effect
thereto) in favor of BOM as same shall be modified and supplemented from time
to time in
Page 22
accordance with Section 11.21 of the Funding Credit Agreement.
"PROPERTY" shall mean any right or interest in or to property of any
kind whatsoever, whether real, personal or mixed and whether tangible or
intangible.
"PROVED RESERVES" shall mean reserves (to the extent of the net
interest of the Borrowers, and, in the case of the Forest Pledged Properties,
the net interest of Forest) comprised of quantities of hydrocarbons that
geologic and engineering data demonstrate with reasonable certainty to be
recoverable in the future from known reservoirs under existing conditions,
PROVIDED that such reserves are recoverable from (a) existing xxxxx, whether
from completion intervals currently open and producing to market, or completion
intervals currently open but not currently producing or zones behind casing of
existing xxxxx, or (b) new xxxxx on undrilled acreage. Proved Reserves on
undrilled acreage shall be limited to those drilling units offsetting productive
units that are reasonably certain to be productive when drilled. Other
undrilled units may also be credited with Proved Reserves where continuity of
production from existing productive formations can be demonstrated with
reasonable certainty. For purposes of determining whether any Hydrocarbon
Properties of the Borrowers (and Forest, as applicable) (other than Hydrocarbon
Properties that have been acquired since the date of the most recent Reserve
Evaluation Report or other internal reserve reports prepared by Canadian Forest,
all of which shall be considered Proved Reserves) contain Proved Reserves, the
Lender and the Borrowers agree that the most recent Reserve Evaluation Report or
other internal reserve reports prepared by Canadian Forest (including with
respect to the Forest Pledged Properties) shall be determinative.
"QUARTERLY DATES" shall mean the last Business Day of March, June,
September and December in each year, the first of which shall be the first such
day after the date hereof.
"REGULATIONS A, D, U AND X" shall mean, respectively, Regulations A,
D, U and X of the Board of Governors of the Federal Reserve System (or any
successor), as the same may be modified and supplemented and in effect from time
to time.
"REGULATORY CHANGE" shall mean, with respect to any lender under the
Funding Credit Agreement, any change after the date of this Agreement in
Canadian federal, provincial or foreign laws or regulations or the adoption or
making after such date of any interpretation, directive or request applying to a
class of banks, including such lender, of or under any Canadian federal,
provincial or foreign law or regulations (whether or not having the force of law
and whether or not failure to comply therewith would be unlawful) by any court
or governmental or monetary authority charged with the interpretation or
administration thereof.
"RELEASE" shall mean any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the
Page 23
environment, including, without limitation, the movement of Hazardous
Materials through ambient air, soil, surface water, ground water, wetlands, land
or subsurface strata.
"RELEVANT PARTIES" shall mean any Borrower, any Material Subsidiary or
3189503.
"REPORT DELIVERY DATE" shall mean, with respect to any Borrowing Base
Report, 45 days prior to the applicable Determination Date.
"RESERVE EVALUATION REPORT" shall mean an unsuperceded report that
(a) is (i) prepared, in the case of the report required to be delivered by
Canadian Forest in connection with the Determination Date occurring on May 1 of
each year, by the Independent Petroleum Engineer on the basis of assumptions and
projections which Canadian Forest believes in good faith to be reasonable or, in
the case of the report required to be delivered by Canadian Forest in connection
with the Determination Date occurring on October 15 of each year, by Canadian
Forest and (ii) satisfactory in form and substance to the Majority Lenders
(including as to assumptions) and (b) is prepared on the basis of findings and
material data (x) as of January 1 of such year, in the case of a report prepared
by the Independent Petroleum Engineer in connection with the Determination Date
occurring on May 1 of each year and (y) as of July 1 of such year, in the case
of a report prepared by Canadian Forest in connection with the Determination
Date occurring on October 15 of each year, and (i) identifies the Hydrocarbon
Properties covered thereby, and (ii) as to each of the Hydrocarbon Properties,
sets forth (A) the Proved Reserves attributable to such Hydrocarbon Property (in
the case of the report prepared by the Independent Petroleum Engineer),
describing the producing and non-producing Proved Reserves separately for
purposes of the following items (B) through (F)), (B) the total amount of such
Proved Reserves attributable to such Hydrocarbon Property that, in the opinion
of the preparer of such report, Canadian Forest and its Subsidiaries (and
Forest, in the case of the Forest Pledged Properties) have the right to produce
for their own account in the current and each succeeding calendar year, (C) a
projection of the rate of production and the Future Net Revenues of the
Borrowers and Forest, as applicable (including as additional information the
data and assumptions used to determine such Future Net Revenues), from such
Proved Reserves for the current and each succeeding calendar year, (D) the
quantity and type of hydrocarbons recoverable from such Proved Reserves in the
current and each succeeding calendar year, (E) an estimate of the projected
revenues and expenses attributable to such Proved Reserves in the current and
each succeeding calendar year, and (F) any reports or evaluations prepared by
Canadian Forest regarding the expediency of any change in methods of treatment
or operation of all or any xxxxx drilled to produce any of such Proved Reserves
that are producing or capable of producing hydrocarbons, any new drilling or
development, any method of secondary recovery by repressuring or otherwise, or
any other action with respect to such Proved Reserves, the decision as to which
may increase or reduce in
Page 24
any material respect the quantity of hydrocarbons
ultimately recoverable, or the rate of production thereof.
"SALE AGREEMENT" shall mean the Gas Marketing Business Sale and
Purchase Agreement dated January 30, 1996 between Atcor Ltd. (as Canadian Forest
was previously known) and ProMark.
"SECURITY DOCUMENTS" shall mean, collectively, the Canadian Forest
Debenture and the deposit agreement in respect thereof, the 3189503 Guarantee
and Pledge Agreement, the ProMark Debenture and the deposit agreement in respect
thereof, the Forest Guarantee, the Forest Debenture and the deposit agreement in
respect thereof, and any other security that is now or is hereafter held by or
on behalf of the Lender for the Borrowers' obligations hereunder and all
amendments, supplements, modifications, additions to, renewals of, substitutions
and replacements for any of the foregoing made in accordance with Section 11.21
of the Funding Credit Agreement and all registrations filed with respect to the
Liens created pursuant to any of such documents and agreements and without
limiting the generality of the foregoing includes the foregoing security and
other documents as confirmed and amended as provided in the Security
Confirmation and Amending Agreement described in Section 6.01(e) hereof.
"SUBORDINATED INDEBTEDNESS" shall mean Indebtedness (i) for which a
Borrower is directly and primarily liable, (ii) in respect of which none of its
Subsidiaries is contingently or otherwise obligated (unless such obligations are
subordinated to the obligation hereunder and under the Notes) and (iii) that is
subordinated to the obligations of Canadian Forest and its Affiliates to pay
principal of and interest on the Loans and Notes hereunder on terms, and
pursuant to documentation containing other terms (including interest,
amortization, covenants and events of default), in form and substance (including
term) satisfactory to each of the lenders under the Funding Credit Agreement.
"SUBSIDIARY" shall mean, with respect to any Person, any corporation,
partnership or other entity of which at least a majority of the securities or
other ownership interests having by the terms thereof ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions of such corporation, partnership or other entity (irrespective of
whether or not at the time securities or other ownership interests of any other
class or classes of such corporation, partnership or other entity shall have or
might have voting power by reason of the happening of any contingency) is at the
time directly or indirectly owned or controlled by such Person or one or more
Subsidiaries of such Person or by such Person and one or more Subsidiaries of
such Person.
"SWINGLINE LOANS" shall mean the loans provided for by Section 2.05
hereof.
Page 25
"SWINGLINE LOAN LIABILITY" shall mean, with respect to any Swingline
Loan, the obligation of the Borrowers to pay to the Lender the Principal Amount
of any Swingline Loan which the Borrowers have not repaid.
"SWINGLINE NOTE" shall mean the promissory note provided for by
Section 2.09 (b) hereof and any promissory note delivered in substitution or
exchange therefor, in each case as the same shall be modified and supplemented
and in effect from time to time.
"TAXES" shall mean all taxes, levies, imposts, stamp taxes, duties,
charges to tax, fees, deductions, withholdings, royalties, charges, compulsory
loans or restrictions or conditions resulting in a charge which are imposed,
levied, collected, withheld or assessed by any political subdivision or taxing
authority as of the date of this Agreement or at any time in the future together
with interest thereon and penalties with respect thereto, if any, and any
payments of principal, interest, charges, fees or other amounts made on or in
respect thereof, including without limitation, production and severance taxes
and windfall profit taxes, and "Tax" and "Taxation" shall be construed
accordingly provided that "Taxes" shall exclude taxes imposed on or measured by
the overall net income of a Person.
"3189503" shall mean 3189503 Canada Ltd., a Canadian corporation and a
Wholly Owned Subsidiary of Forest.
"3189503 GUARANTEE AND PLEDGE AGREEMENT" shall mean the Guarantee and
Pledge Agreement dated as of April 1, 1997 between 3189503 and the Lender, as
the same may be supplemented and amended and in effect from time to time.
"TYPE" shall have the meaning assigned to such term in Section 1.04
hereof.
"UNRESTRICTED PROPERTIES" shall mean, at any time of determination,
the Hydrocarbon Properties of Canadian Forest and its Subsidiaries that have not
been given any value in the Borrowing Base as determined immediately prior to
such time of determination and that do not contain Proved Reserves.
"USAGE RATIO" shall mean as of any date the ratio of (a) Aggregate
Borrowings on such date to (b) the lesser of the Borrowing Base or the
Commitment on such date.
"U.S. BASE RATE" shall mean, for any day, a rate per annum equal to
the higher of (a) the Federal Funds Rate for such day plus 1/2 of 1% and (b) the
Chase Manhattan Prime Rate for such day. Each change in any interest rate
provided for herein based upon the U.S. Base Rate resulting from a change in the
U.S. Base Rate
Page 26
shall take effect at the time of such change in the U.S. Base
Rate.
"U.S. BASE RATE LOAN" shall mean a Loan that bears interest at the
U.S. Base Rate.
"U.S. DOLLARS", "$" and "U.S.$" shall mean lawful money of the United
States of America.
"WHOLLY OWNED SUBSIDIARY" shall mean, with respect to any Person, any
corporation, partnership or other entity of which all of the equity securities
or other ownership interests (other than, in the case of a corporation,
directors' qualifying shares) are directly or indirectly owned or controlled by
such Person or one or more Wholly Owned Subsidiaries of such Person or by such
Person and one or more Wholly Owned Subsidiaries of such Person.
1.02 ACCOUNTING TERMS AND DETERMINATIONS.
(a) Except as otherwise expressly provided herein, all accounting
terms used herein shall be interpreted, and all financial statements and
certificates and reports as to financial matters required to be delivered to the
Lender hereunder shall (unless otherwise disclosed to the Lender in writing at
the time of delivery thereof in the manner described in subsection (b) below),
be prepared in accordance with GAAP. All calculations made for the purposes of
determining compliance with this Agreement shall (except as otherwise expressly
provided herein) be made by application of GAAP applied on a basis consistent
with that used in the preparation of the latest annual or quarterly financial
statements furnished to the Lender pursuant to Section 8.01 hereof, unless
(i) Canadian Forest shall have objected to determining such compliance on such
basis at the time of delivery of such financial statements or (ii) the Majority
Lenders shall so object in writing within 30 days after delivery of such
financial statements, in either of which events such calculations shall be made
on a basis consistent with those used in the preparation of the latest financial
statements as to which such objection shall not have been made.
(b) Canadian Forest shall deliver to the Lender at the same time as
the delivery of any annual or quarterly financial statements under Section 8.01
hereof (i) a description in reasonable detail of any material variation between
the application of accounting principles employed in the preparation of such
statements and the application of accounting principles employed in the
preparation of the next preceding annual or quarterly financial statements as to
which no objection has been made in accordance with the last sentence of
subsection (a) above and (ii) reasonable estimates of the difference between
such statements arising as a consequence thereof.
(c) To enable the ready and consistent determination of compliance
with the covenants set forth in Section 8 hereof, no Borrower will change the
last day of its
Page 27
fiscal year from December 31, or the last days of the first three fiscal
quarters in each of its fiscal years from March 31, June 30 and September 30
of each year, respectively.
1.03 BORROWING BASE.
(a) RESERVE EVALUATION REPORTS. Canadian Forest has furnished to
the Lender, the Agent and the lenders under the Funding Credit Agreement (i) a
reserve report prepared by XxXxxxxx & Associates Consultants Ltd. as of January
1, 1996, which report shall be deemed to be the initial Reserve Evaluation
Report, and (ii) a Net Back Pool Report for the fiscal year ending December 31,
1995, which report shall be deemed to be the initial Net Back Pool Report. On
or before each Report Delivery Date (commencing September 1, 1996), Canadian
Forest shall furnish to the Lender, the Agent and the lenders under the Funding
Credit Agreement updated Borrowing Base Reports.
(b) BORROWING BASE. The Borrowers acknowledge and agree that the
Borrowing Base determined from time to time under the Funding Credit Agreement
shall also be the Borrowing Base under and for the purposes of this Agreement.
In that regard, during the period commencing on the date hereof and ending on
the date the first redetermination of the Borrowing Base becomes effective as
provided below in this Section 1.03(b), the Borrowing Base shall be C$60,000,000
(subject to any adjustments and redeterminations provided for by Sections
1.03(c), 1.03(d) and 1.03(e) hereof) which amount has been determined on the
basis of the initial Borrowing Base Reports referred to in the first sentence of
Section 1.03(a) hereof (with such adjustments to the rates, factors, values,
estimates, assumptions and computations set forth in such initial Reserve
Evaluation Report and the initial Net Back Pool Report as were acceptable to the
Majority Lenders in their sole discretion). Under the Funding Credit Agreement
the Agent has agreed, as promptly as reasonably practicable after its receipt of
the Borrowing Base Reports furnished to it pursuant to the second sentence of
Section 1.03(a) hereof, to endeavor (in consultation with the Majority Lenders)
to redetermine the Borrowing Base on the basis of such updated Borrowing Base
Reports and in the manner provided for in Section 1.03(b) of the Funding Credit
Agreement, to notify the lenders under the Funding Credit Agreement of such
redetermination and, if such redetermination is approved by each of such lenders
(in the case of an increase in the Borrowing Base or determination to maintain
the then existing Borrowing Base) or by the Majority Lenders (in the case of a
decrease in the Borrowing Base), as applicable, to notify the Lender (who shall
promptly notify the Borrowers) of the Borrowing Base as so redetermined and such
redetermined Borrowing Base shall become effective on the Determination Date
next following each Report Delivery Date (or, if later, on the date notified by
the Agent to the Lender) and shall remain effective until again redetermined as
provided in this Section 1.03(b) (subject to any adjustments and
redeterminations provided for by Sections 1.03(c), 1.03(d) and 1.03(e) hereof,
additions pursuant to Section 2.11(a) hereof or reductions pursuant to Section
2.11(c) and (d) hereof).
Page 28
As used herein, "BORROWING BASE" shall mean the amount specified in
the first sentence of this Section 1.03(b) as determined from time to time as
provided in the second sentence of Section 1.03(b) and subject to adjustments,
redeterminations and principles provided in Sections 1.03(c), 1.03(d), 1.03(e)
and 2.11.
(c) MATERIAL CHANGE. The Borrowers agree to notify the Lender and
the Agent promptly of any material change of which the Borrowers or Forest or
any of their Subsidiaries are aware which reduces or may result in a reduction
of the Borrowing Base by more than 10%. Promptly upon receipt of such notice,
the Agent (in consultation with, and with the approval of, the Majority Lenders)
may adjust the Borrowing Base pursuant to the procedures set forth in the
Funding Credit Agreement.
(d) REDETERMINATION. If so requested by the Majority Lenders or
the Lender at the request of the Borrowers or otherwise at any time, the Agent
has agreed that it shall, as promptly as reasonably practicable after the
receipt of such request, endeavor to redetermine (in consultation with the
Lender and the lenders under the Funding Credit Agreement) the Borrowing Base as
then in effect on the basis of the then most recent Borrowing Base Reports
(subject, however, to such other factors and assumptions as the Agent, with the
concurrence of the Majority Lenders, may determine to be appropriate).
(e) DETERMINATIONS, ETC. It has been agreed in the Funding Credit
Agreement that all determinations and redeterminations and adjustments of the
Borrowing Base by the Agent or the Majority Lenders provided for in this Section
1.03 or in the definition of "Present Value of Reserves" in Section 1.01 hereof,
including any approvals or disapprovals of a determination or redetermination of
the Borrowing Base or any adjustment thereof shall be made on a reasonable
basis, in good faith and in a manner reasonably consistent with prevailing
practice in connection with borrowing base loans if then made by such lenders
under the Funding Credit Agreement to comparable borrowers.
(f) XXXXXX XXXX. The Borrowers and the Lender agree that the sale of
the Forest Pledged Properties from Canadian Forest to Forest pursuant to the
Forest Purchase Agreement, and the subjecting of such Forest Pledged Properties
to the Forest Debenture, shall not result in a redetermination or adjustment of
the Borrowing Base, and that such Forest Pledged Properties shall continue to be
included in the Borrowing Base (so long as they are owned by Forest and are not
otherwise subjected to any Lien (other than the Lien of the Forest Debenture) by
Forest) to the same extent as if such sale had not occurred.
1.04 TYPES AND CURRENCY OF LOANS. Loans hereunder are distinguished
by "Type" and "Currency". The "Type" of a Loan refers to whether such Loan is a
Canadian Prime Loan, a BA Loan, a U.S. Base Rate Loan or a Eurodollar Loan, each
of which constitutes a Type. The "Currency" of a Loan refers to whether such
Loan is
Page 29
denominated in Canadian Dollars or U.S. Dollars. Loans may be
identified by Type and Currency.
Section 2. COMMITMENT, LOANS, LETTERS OF CREDIT, NOTES AND
PREPAYMENTS.
2.01 LOANS.
(a) The Lender agrees, in accordance with the terms and conditions of
this Agreement, to make one or more loans to the Borrowers in Canadian Dollars
or U.S. Dollars during the period from and including the Closing Date to and
including the Commitment Termination Date, in an aggregate amount up to but not
exceeding the lesser of (x) the Commitment and (y) the most recently determined
Borrowing Base; PROVIDED that in no event shall the aggregate Principal Amount
of all Loans (including all Swingline Loans), together with the aggregate amount
of all Letter of Credit Liabilities (with the amounts of any Loans or Letter of
Credit Liabilities outstanding in U.S. Dollars expressed as an Equivalent Amount
in Canadian Dollars), exceed the lesser of (x) the amount of the Commitment as
in effect from time to time and (y) the most recently determined Borrowing Base.
(b) The Borrowers may not borrow Loans (including Swingline Loans)
under this Agreement at any time while a Borrowing Base Deficiency exists and
the Interest Period for any Loan that is Converted to or Continued as a
Eurodollar Loan or BA Loan at any time while a Borrowing Base Deficiency exists
shall not end after the Deficiency Cure Period.
(c) Subject to the terms and conditions of this Agreement, during the
period from and including the Closing Date to but not including the Commitment
Termination Date, the Borrowers may borrow, repay and reborrow the Loans by
means of Canadian Prime Loans, BA Loans, U.S. Base Rate Loans and Eurodollar
Loans and may, subject to Section 4.03 hereof, Convert all or a portion of any
Loan of one Type into Loans of another Type (as provided in Section 2.10 hereof)
or Continue all or a portion of a Loan of one Type as Loans of the same Type (as
provided in Section 2.10 hereof); PROVIDED that (i) no more than 3 separate
Interest Periods in respect of Eurodollar Loans may be outstanding at any one
time and (ii) no more than 6 separate Interest Periods with respect to BA Loans
may be outstanding at any one time.
2.02 BORROWINGS. The applicable Borrower shall give the Lender and
the Agent (or in the case of Swingline Loans, BOM instead of the Agent) notice
of each borrowing hereunder as provided in Section 4.05 hereof. Not later than
1:00 p.m. Toronto time on the date specified for each borrowing hereunder, the
Lender shall make available the amount of the Loan or Loans to be made by it on
such date, subject to the terms and conditions of this Agreement, to the
applicable Borrower by depositing the same, in immediately available funds, in
an account of the Borrowers or any one of
Page 30
them designated by such Borrower. Notwithstanding any provision of this
Agreement to the contrary, Canadian Prime Loans, Swingline Loans and BA Loans
may only be denominated in Canadian Dollars and U.S. Base Rate Loans and
Eurodollar Loans may only be denominated in U.S. Dollars.
2.03 BA LOANS. On or prior to 1:00 p.m. (Toronto time) on the date
of any requested extension of a BA Loan, the Lender shall determine an interest
rate per annum (the "BA RATE") for that BA Loan which rate shall be equal to the
Bankers' Acceptance Rate (as defined in the Funding Credit Agreement) on such
date for the Bankers' Acceptances issued under the Funding Credit Agreement
concurrently with funding any BA Loan plus .1%. The amount of proceeds to be
advanced by the Lender in respect of a BA Loan and, notwithstanding the
Principal Amount of that Loan, the amount that interest at the BA Rate will be
calculated on shall be equal to the following formula:
PA X PRICE
----------
100
Where:
PA = Principal Amount of BA Loan Requested
Price = 100
--- ---
( )
rounded to the nearest 1/1000 of 1%.
On the date a BA Loan is advanced the Borrowers shall pay the Lender a
fee with respect to that BA Loan. That fee shall be the product obtained by
multiplying:
(a) the applicable BA Fee Rate specified in the definition of
Applicable Margin in effect from time to time; by
(b) the Principal Amount of that BA Loan;
and pro rating that product for the number of days in the Interest Period for
the BA Loan on the basis of a year of 365 days.
That fee shall be deducted by the Lender from the proceeds of the BA
Loan advanced to the Borrower.
The Lender's Commitment shall be deemed utilized for the full
Principal Amount of the BA Loan requested notwithstanding that the proceeds
advanced are reduced as provided above and the Lender's fee for that BA Loan is
deducted from
Page 31
those proceeds.
2.04 LETTERS OF CREDIT. Subject to the terms and conditions of this
Agreement, upon request by any Borrower, the Lender hereby agrees to utilize a
portion of the commitments available to it under the Funding Credit Agreement
from time to time to obtain letters of credit ("LETTERS OF CREDIT") in Canadian
or U.S. Dollars and to provide the same to the Borrower which has requested such
Letter of Credit; PROVIDED that in no event shall (i) the aggregate amount of
all Letter of Credit Liabilities, together with the aggregate Principal Amount
of the Loans (including all Swingline Loans) (with the amounts of any Loans or
Letter of Credit Liabilities outstanding in U.S. Dollars being expressed as an
Equivalent Amount in Canadian Dollars), exceed the lesser of (x) the amount of
the Commitment in effect from time to time, and (y) the most recently determined
Borrowing Base, (ii) the aggregate outstanding amount of all Letter of Credit
Liabilities exceed C$15,000,000, (iii) the expiration date of any Letter of
Credit extend beyond the earlier of the Commitment Termination Date and the date
12 months following the issuance of such Letter of Credit and (iv) any Letter of
Credit require payment against a conforming draft to be made thereunder on the
same Business Day on which the draft is presented if presentation is made after
1:00 p.m. Toronto time. Each Letter of Credit shall comply in all respects with
the provisions of Section 2.03 of the Funding Credit Agreement. Each request by
a Borrower for a Letter of Credit shall be irrevocable.
The following additional provisions shall apply to Letters of Credit:
(a) The applicable Borrower shall give the Lender and the Agent at
least 3 Business Days' irrevocable and binding prior notice (effective upon
receipt) specifying the Business Day (which shall be no later than 30 days
preceding the Commitment Termination Date) on which each Letter of Credit is to
be issued, the beneficiary thereof and describing in reasonable detail the
proposed terms of such Letter of Credit (including the Currency of such Letter
of Credit) and the nature of the transactions or obligations proposed to be
supported thereby (including whether such Letter of Credit is to be a commercial
letter of credit or a standby letter of credit).
(b) On each day during the period commencing with the date on which
the Lender obtains the issuance of any Letter of Credit under the Funding Credit
Agreement and until such Letter of Credit shall have expired or been terminated,
the Commitment of the Lender shall be deemed to be utilized for all purposes of
this Agreement in an amount equal to the then undrawn face amount of such Letter
of Credit.
(c) Upon receipt by the Lender (through the Administrative Agent)
from the beneficiary of any Letter of Credit of any demand for payment under
such Letter of Credit, the Lender shall promptly notify the Borrowers of the
amount to be paid by the Lender as a result of such demand and the date on which
payment is to be made by
Page 32
the Lender to such beneficiary in respect of such demand. Notwithstanding
the identity of the account party of any Letter of Credit, the Borrowers
hereby unconditionally agree to pay and reimburse the Lender for the amount
of each demand for payment, in the Currency of the amount payable, under such
Letter of Credit that is in substantial compliance with the provisions of
such Letter of Credit at or prior to the date on which payment is to be made
by the Lender to the Issuing Bank, without presentment, demand, protest or
other formalities of any kind. The Borrowers' obligation to pay and
reimburse the Lender and the Lender's right to receive the same is
unconditional and irrevocable and shall be paid strictly in accordance with
this Agreement under all circumstances.
(d) Forthwith upon its receipt of a notice referred to in
paragraph (c) of this Section 2.04, the Borrowers shall advise the Lender and
the Agent whether or not the Borrowers intend to borrow hereunder to finance
their obligation with respect to the amount of the related demand for payment
and, if they do, submit a notice of such borrowing as provided in Section 4.05
hereof.
(e) Any payment by the Lender of an amount due under a Letter of
Credit shall be deemed to be a Canadian Prime Loan or U.S. Base Rate Loan made
to the Borrowers depending on whether the amounts paid are in Canadian Dollars
or U.S. Dollars.
(f) The Borrowers shall pay to the Lender a letter of credit fee in
respect of each Letter of Credit, payable in the Currency that such Letter of
Credit is denominated, in an amount equal to the Applicable Margin with respect
to BA Fee Rates (for Letters of Credit payable in Canadian Dollars) or the
Applicable Margin with respect to Eurodollar Loans (for Letters of Credit
payable in U.S. Dollars), of the daily average undrawn face amount of such
Letter of Credit for the period from and including the date of issuance of such
Letter of Credit (i) in the case of a Letter of Credit that expires in
accordance with its terms, to and including such expiration date and (ii) in the
case of a Letter of Credit that is drawn in full or is otherwise terminated
other than on the stated expiration date of such Letter of Credit, to but
excluding the date such Letter of Credit is drawn in full or is terminated (such
fee to be non-refundable, to be paid in arrears on each Quarterly Date and on
the Commitment Termination Date and to be calculated for any day after giving
effect to any payments made under such Letter of Credit on such day). In
addition, the Borrowers shall pay to the Lender a fronting fee in respect of
each Letter of Credit in an amount equal to the lesser of (y) C$1,010 and (z)
.51% per annum of the daily average undrawn face amount of such Letter of Credit
for the period from and including the date of issuance of such Letter of Credit
(i) in the case of a Letter of Credit that expires in accordance with its terms,
to and including such expiration date and (ii) in the case of a Letter of Credit
that is drawn in full or is otherwise terminated other than on the stated
expiration date of such Letter of Credit, to but excluding the date such Letter
of Credit is drawn in full or is terminated (such fee to be non-refundable, to
be paid in arrears on each Quarterly Date and on the
Page 33
Commitment Termination Date no later than 1:00 p.m. (Toronto time) and to be
calculated for any day after giving effect to any payments made under such
Letter of Credit on such day) and the Borrowers shall reimburse the Lender on
demand for all commissions, charges, costs and expenses in amounts equal to
the amounts customarily charged by the Issuing Bank from time to time in like
circumstances with respect to the issuance of each Letter of Credit and
drawings and other transactions relating thereto.
(g) Promptly following the end of each calendar month, the Lender
shall deliver to each Borrower all notices and information that the Lender has
received pursuant to the terms of Section 2.03(h) of the Funding Credit
Agreement.
As between the Borrowers and the Lender, the Borrowers assume all risks for the
acts and omissions of, or misuse of, the Letters of Credit by the respective
beneficiaries of such Letter of Credit. The Borrowers hereby jointly and
severally indemnify and hold harmless the Lender from and against any and all
claims and damages, losses, liabilities, costs or expenses that the Lender may
incur (or that may be claimed against the Lender by any Person whatsoever) by
reason of or in connection with (i) any loss or expense incurred by the Lender
as a result of the Borrowers' failure to honor or fulfill, before the date
specified for the issuance of any Letter of Credit, the applicable conditions
set forth in Section 6 and this Section 2.04 if the Letter of Credit is not
issued on that date because of that failure; and (ii) the execution, delivery,
issuance or transfer of or payment or refusal to pay by the Issuing Bank under
any Letter of Credit. Nothing in this Section 2.04 is intended to limit the
other obligations of the Borrowers or the Lender under this Agreement.
2.05 SWINGLINE LOANS. (a) In addition to the Loans provided for in
Section 2.01(a) hereof and subject to the terms and conditions of this
Agreement, the Lender agrees to make loans ("SWINGLINE LOANS") to the Borrowers
during the period from the date hereof to but excluding the Commitment
Termination Date, PROVIDED that the aggregate Principal Amount of all Loans
(including all Swingline Loans), together with the aggregate amount of all
Letter of Credit Liabilities (with the amounts of any Loans or Letters of Credit
Liabilities outstanding in U.S. Dollars expressed as an Equivalent Amount in
Canadian Dollars) shall not at any time exceed the lesser of (x) the aggregate
amount of the Commitment and (y) the most recently determined Borrowing Base,
nor shall the aggregate Principal Amount of all Swingline Loans exceed
C$5,000,000. All Swingline Loans shall be denominated in Canadian Dollars and
may not be made as BA Loans. Within the foregoing limits and subject to the
terms and conditions set forth herein, the Borrowers may borrow, prepay and
reborrow Swingline Loans. Swingline Loans shall constitute Loans hereunder.
(b) In order to request a Swingline Loan, the applicable Borrower
shall notify the Lender of such request by telephone (confirmed by telecopy),
not later than 2:00 p.m., Calgary time (or 4:00 p.m. Calgary time in the case of
borrowings to satisfy
Page 34
outstandings under the BOM Agreement), on the day of a proposed Swingline
Loan. Notwithstanding the foregoing, in the event that at any time BOM makes
demand for payment of any amounts to which it is entitled under the BOM
Agreement and such amounts are not paid by the close of business on the date
of demand, ProMark shall be deemed to have notified the Lender of a request
for a Swingline Loan in an amount equal to the lesser of (i) $5,000,000 less
the aggregate Principal Amount of any outstanding Swingline Loans and (ii)
the amounts demanded under the BOM Agreement. Each such notice provided by a
Borrower by telephone request shall be irrevocable and shall specify the
requested date (which shall be a Business Day) and amount of the requested
Swingline Loan. The Lender shall promptly advise BOM of any such notice
received from a Borrower. The Lender shall make each Swingline Loan
available to the applicable Borrower by means of a credit to the general
deposit account of such Borrower at the XXX Xxxx Xxxxxx, Xxxxxxx, Xxxxxxx by
2:30 p.m., Calgary time, on the requested date of such Swingline Loan, or in
the case of a deemed notice on or before the next Business Day following the
date that BOM so provides the demand for payment.
2.06 CHANGES OF COMMITMENT.
(a) The amount of the Commitment shall be automatically reduced to
zero on the Commitment Termination Date.
(b) The Borrowers shall have the right at any time or from time to
time (i) so long as no Loans are outstanding, to terminate the Commitment and
(ii) to reduce the aggregate unused amount of the Commitment (with any amounts
outstanding in U.S. Dollars being expressed as an Equivalent Amount in Canadian
Dollars); PROVIDED that (x) the Borrowers shall give notice of each such
termination or reduction as provided in Section 4.05 hereof, (y) each partial
reduction shall be in an aggregate amount at least equal to C$1,000,000 (or a
larger multiple of C$100,000 in excess thereof) and (z) the Lender concurrently
makes an identical termination or reduction under the Funding Credit Agreement.
(c) The Commitment once terminated or reduced may not be reinstated.
2.07 COMMITMENT FEE. The Borrowers jointly and severally shall pay
to the Lender a commitment fee on the daily average unused amount of the
difference, if any, between (x) the sum of the outstanding Loans and Letter of
Credit Liabilities (with any amounts outstanding in U.S. Dollars being expressed
as an Equivalent Amount in Canadian Dollars) and (y) an amount equal to the most
recently determined Borrowing Base (the "AVAILABLE BORROWING AMOUNT") for the
period from and including the date of this Agreement to but not including the
earlier of the date the Commitment is terminated and the Commitment Termination
Date, at a rate per annum equal to 1/2 of 1%. Accrued commitment fees shall be
payable in arrears on each Quarterly Date and on the earlier of the date the
Commitment is terminated and the Commitment Termination
Page 35
Date.
2.08 LOANS MADE ONLY IF PROCEEDS ARE AVAILABLE. The obligation of
the Lender to make Loans or Convert or Continue on any date shall be subject to
the condition that the Lender shall have received loans or had Bankers'
Acceptances (as defined in the Funding Credit Agreement) accepted in an amount
such that:
(a) the Lender has received net proceeds in the same amount of the
same Currency as the Loan requested by or, in the case of BA Loans, to be
advanced to the applicable Borrower hereunder;
(b) the aggregate Principal Amount of each Type of Loan (including
Swingline Loans) and all Bankers' Acceptances and of Letter of Credit
Liabilities (all such terms being as defined in the Funding Credit Agreement)
outstanding under the Funding Credit Agreement shall not be respectively greater
than the sum of the corresponding:
(i) aggregate Principal Amounts of the Types of Loans (including
Swingline Loans) under this Agreement; and
(ii) aggregate Letter of Credit Liabilities; and
(c) the rates of interest, fees and other amounts payable in respect
of Loans, Bankers' Acceptances and Letters of Credit (all those terms being as
defined in the Funding Credit Agreement) under the Funding Credit Agreement
shall be the same or less than the rates of interest, fees and other amounts
payable in respect of corresponding Types of Loans and Letters of Credit under
this Agreement.
2.09 NOTES.
(a) The Loans made by the Lender (other than Swingline Loans) to the
Borrowers shall be evidenced by the promissory note of each Borrower dated July
17, 1996, payable to the Lender in a principal amount equal to C$80,000,000.
(b) The Swingline Loans made by the Lender to each Borrower shall be
evidenced by the promissory note of each Borrower dated July 17, 1996, payable
to the Lender in a principal amount equal to C$5,000,000.
(c) The date, amount, Type, Interest Period and Currency of each Loan
made by the Lender to each Borrower, and each payment made on account of the
principal thereof, shall be recorded by the Lender on its books and, prior to
any transfer of the Notes of such Borrower held by it, endorsed by the Lender on
the schedule attached to such Note or any continuation thereof; PROVIDED that
the failure of the Lender to make any such recordation or endorsement shall not
affect the obligations of
Page 36
such Borrower to make a payment when due of any amount owing hereunder or
under such Note in respect of the Loans.
(d) The Lender shall not be entitled to have its Notes substituted or
exchanged for any reason, or subdivided for promissory notes of lesser
denominations.
2.10 OPTIONAL PREPAYMENTS AND CONVERSIONS OR CONTINUATIONS OF LOANS.
Subject to Section 4.03 hereof, the Borrowers shall have the right to prepay
Loans or to Convert all or a part of any Loan of one Type into Loans of another
Type (PROVIDED that a Loan that is not a Swingline Loan cannot be converted to a
Swingline Loan and a Loan (including a Swingline Loan) cannot be converted to a
Letter of Credit) or Continue all or a part of any Loan of one Type as Loans of
the same Type, at any time or from time to time, and Convert Letters of Credit
Liabilities and Swingline Loan Liabilities into Loans hereunder and may Continue
any Letter of Credit, PROVIDED that: (a) the applicable Borrower shall give the
Lender and the Agent (or in the case of Swingline Loans, shall give BOM instead
of the Agent) notice of each such prepayment, Conversion or Continuation as
provided in Section 4.05 hereof (and, upon the date specified in any such notice
of prepayment, the amount to be prepaid shall become due and payable hereunder);
(b) Eurodollar Loans and BA Loans may be prepaid or Converted only on the last
day of an Interest Period for such Loans; (c) the Lender concurrently makes an
identical prepayment, Conversion or Continuation under the Funding Credit
Agreement; and (d) the Conversion of a Swingline Loan to another Type of Loan
shall satisfy the full amount of the related Swingline Loan Liability.
Notwithstanding the foregoing, and without limiting the rights and remedies of
the Lender under Section 9 hereof, in the event that any Event of Default shall
have occurred and be continuing, the Lender may (and, if the Lender may only
maintain loans under the Funding Credit Agreement based on the Chase Canada
Prime Rate, shall) by notice to Canadian Forest suspend the right of the
Borrowers to Convert any Loan into a Eurodollar Loan, a U.S. Base Rate Loan or a
BA Loan or to Continue any Loan as a Eurodollar Loan, a U.S. Base Rate Loan or a
BA Loan, in which event all Loans shall be Converted (on the last day(s) of the
respective Interest Periods therefor, if applicable) or Continued, as the case
may be, as Canadian Prime Loans.
2.11 MANDATORY PREPAYMENTS AND REDUCTIONS OF COMMITMENTS.
(a) BORROWING BASE. The Lender shall promptly notify the Borrowers
(following the Lender's receipt of notice from the Agent (a "DEFICIENCY
NOTICE")) if following any redetermination of the Borrowing Base, the Borrowing
Base as then in effect is less than the aggregate Principal Amount of the Loans
and Letter of Credit Liabilities outstanding at such time (with any amounts
outstanding in U.S. Dollars being expressed as an Equivalent Amount in Canadian
Dollars)(the amount of such difference being called herein the "BORROWING BASE
DEFICIENCY"); and within 30 days after the date of the Deficiency Notice, the
Borrowers shall notify the Lender and the Agent of the Borrowers' intentions
with respect to compliance with the procedures set
Page 37
forth in this Section 2.11(a). As specified in such notice from the
Borrowers, the Borrowers shall (within 90 days after the date of the
Deficiency Notice (the "DEFICIENCY CURE PERIOD")) (i) prepay (in accordance
with the procedures of this Agreement) the outstanding principal of the Loans
(except BA Loans) in the manner as specified in clause (e) below and, if all
of the Loans (except BA Loans) have been prepaid and a Borrowing Base
Deficiency still exists, provide cover for Letter of Credit Liabilities and
BA Loans in an amount equal to such Borrowing Base Deficiency in the manner
specified in clause (f) below and/or (ii) add to the Hydrocarbon Properties
(other than to the interests which Forest has in the Forest Pledged
Properties) additional Hydrocarbon Properties (other than Unrestricted
Properties) (each such additional Hydrocarbon Property to have a Present
Value of Reserves at least equal to C$1,000,000) having a loan value, as
determined by the Majority Lenders, in an amount sufficient so that the
aggregate amount of such prepayments and/or the loan value of such additional
Hydrocarbon Properties shall equal or exceed the Borrowing Base Deficiency
(any such additional Hydrocarbon Property to be deemed added to the
Hydrocarbon Properties on the date the Borrowers deliver to the Lender and
the Agent evidence of satisfactory title to those additional Hydrocarbon
Properties, a written confirmation that such additional Hydrocarbon Property
is subject to the Lien of the Canadian Forest Debenture, or the Lien of
similar security granted by a Subsidiary Borrower to the Lender and an
opinion of counsel regarding such title and priority in form and substance
satisfactory to the Agent and the Majority Lenders).
(b) EXCESS RESULTING FROM EXCHANGE RATE CHANGE.
(i) Subject to Section 2.11(b)(ii), any time that, following one or
more fluctuations in the exchange rate of the U.S. Dollar against the
Canadian Dollar, the sum of the Equivalent Amount in Canadian Dollars of
the aggregate Principal Amount of Loans and Letter of Credit Liabilities
denominated in U.S. Dollars outstanding at such time PLUS the aggregate
Principal Amount of Canadian Dollar denominated Loans outstanding at such
time PLUS the aggregate amount of Letter of Credit Liabilities denominated
in Canadian Dollars (the amount of such sum being called herein the
"AGGREGATE BORROWINGS") EXCEEDS by an amount equal to or in excess of 1% of
the lesser of (x) the amount of the Commitment on such date and (y) the
most recently determined Borrowing Base, the Borrowers shall promptly after
receipt by the Lender of notice from the Agent in this regard and, in any
case, within 10 days after receipt of such notice, either (A) prepay the
Loans (except BA Loans) (and/or provide cover for Letter of Credit
Liabilities and BA Loans as specified in clause (f) below) in an amount
(such amount being called herein the "EXCHANGE RATE DEFICIENCY") necessary
to reduce the Aggregate Borrowings to an amount equal to or less than the
lesser of (x) the amount of the Commitment on such date and (y) the most
recently determined Borrowing Base or (B) maintain or cause to be
maintained with the Lender (who, in turn shall maintain with the Agent)
deposits of Canadian Dollars in an amount equal to the Exchange Rate
Deficiency, such deposits to be maintained in such
Page 38
form and upon such terms as are acceptable to the Agent. Without in any
way limiting the foregoing provisions, the Lender shall receive from the
Agent, on each Quarterly Date and on the date of any borrowing hereunder
any necessary exchange rate calculations to determine whether any such
excess exists on such date and, if such excess exists on such date, the
Lender shall so notify the Borrowers.
(ii) Notwithstanding Section 2.11(b)(i), the Lender (at the
direction of the Majority Lenders) shall be entitled to require that the
Borrowers, at the Borrowers' option, (A) make the payments or prepayments
or maintain the deposits required to be maintained under Section 2.11(b)(i)
or (B) fully hedge, to the reasonable satisfaction of the Majority Lenders,
the Exchange Rate Deficiency and assign the benefit of all hedging
contracts to the Lender, for the benefit of the lenders under the Funding
Credit Agreement, in any case where an Exchange Rate Deficiency exists.
(c) CASUALTY EVENTS. Upon the date 30 days following the receipt by
the Borrowers (or Forest, in the case of the Forest Pledged Properties), of the
proceeds of insurance, condemnation award or other compensation in respect of
any Casualty Event affecting any Hydrocarbon Property or gas marketing assets of
any Borrower (or Forest, in the case of the Forest Pledged Properties), other
than Unrestricted Properties or any Property of a Non-Borrowing Subsidiary, the
Borrowing Base shall be subject to automatic reduction, in an aggregate amount,
if any, equal to 100% of the Net Available Proceeds of such Casualty Event not
theretofore applied or committed to be applied to the repair or replacement of
such Hydrocarbon Property or gas marketing assets, or such lesser amount as is
specified in a written notice from the Majority Lenders to the Lender, such
reduction to be effected in the manner and to the extent specified in clause (e)
of this Section 2.11. Nothing in this clause (c) shall be deemed to limit any
obligation of the Borrowers or any of their Subsidiaries (or Forest, in the case
of the Forest Pledged Properties), pursuant to any of the Security Documents to
remit to a collateral or similar account maintained by the Agent (as assignee of
the Lender) pursuant to any of the Security Documents the proceeds of insurance,
condemnation award or other compensation received in respect of any Casualty
Event.
(d) SALE OF ASSETS. Without limiting the obligation of the Borrowers
to obtain the consent of the Lender and the Majority Lenders pursuant to
Section 8.05 hereof to any Disposition not otherwise permitted hereunder, no
later than five Business Days prior to the occurrence of any Disposition, the
applicable Borrower will deliver to the Lender and the Agent a statement,
certified by the chief financial officer or treasurer of such Borrower in form
and detail satisfactory to the Agent, of the amount of the Net Available
Proceeds of such Disposition and, to the extent such Net Available Proceeds
(when taken together with the Net Available Proceeds of all prior Dispositions
as to which a prepayment has not yet been made under this Section 2.11(d)) shall
exceed C$5,000,000, the Borrowing Base shall be subject to automatic reduction
and, if the
Page 39
amount of Loans and the Letter of Credit Liabilities (with the amounts of
Loans and Letter of Credit Liabilities in U.S. Dollars expressed as an
Equivalent Amount in Canadian Dollars) exceeds the Borrowing Base (as
reduced), such amount shall be applied as provided in clause (e) below, in an
aggregate amount equal to 100% of the Net Available Proceeds of such
Disposition, or such lesser amount as is specified in a written notice from
the Majority Lenders (together with 100%, or such lesser amount as is
specified in a written notice from the Majority Lenders, of the Net Available
Proceeds of all prior Dispositions as to which a prepayment has not yet been
made under this Section 2.11(d)), such reduction to be effected in the manner
and to the extent specified in clause (e) of this Section 2.11.
Notwithstanding the foregoing, the Borrowers shall not be required to prepay
Loans (except BA Loans) (and/or provide cover for Letter of Credit
Liabilities and BA Loans as specified in clause (f) below) and the Borrowing
Base shall not be subject to automatic reduction upon any sale of Property
permitted pursuant to Section 8.05 hereof.
(e) APPLICATION. Prepayments and reductions of the Commitment and/or
Borrowing Base described in the above clauses of this Section 2.11 shall be
effected as follows: the Commitment and/or Borrowing Base shall be
automatically reduced by an amount equal to the amount specified in such clauses
and to the extent that, after giving effect to such reduction, the aggregate
Principal Amount of the Loans together with the aggregate amount of all Letter
of Credit Liabilities (with the amounts of Loans and Letter of Credit
Liabilities in U.S. Dollars expressed as an Equivalent Amount in Canadian
Dollars), would exceed the Commitment and/or Borrowing Base, the Borrowers shall
first prepay the Loans (except BA Loans) and second, provide cover for Letter of
Credit Liabilities and BA Loans as specified in clause (f) below, in an
aggregate amount equal to such excess. To the extent possible, any prepayments
required pursuant to this Section 2.11 shall be applied FIRST to U.S. Base Rate
Loans, SECOND to Canadian Prime Rate Loans and THIRD to Eurodollar Loans.
(f) COVER FOR LETTERS OF CREDIT AND BA LOANS. In the event that the
Borrowers shall be required pursuant to this Section 2.11, or pursuant to
Section 3.01 hereof, to provide cover for Letter of Credit Liabilities and BA
Loans, the Borrowers shall effect the same by paying to the Lender immediately
available funds in an amount equal to the required amount, which funds shall be
retained by the Lender in the Cash Collateral Account (as provided in
Section 13.4 of the Canadian Forest Debenture or the ProMark Debenture) as
collateral security in the first instance PRO RATA for the Letter of Credit
Liabilities and BA Loans until such time as the Letters of Credit shall have
been terminated, all of the Letter of Credit Liabilities shall have been paid in
full and all BA Loans have been paid in full.
(g) MONTHLY CLEAN.
(i) The Borrowers will each month prior to the Commitment
Termination Date prepay the Swingline Loans and any other Loans or other
Page 40
borrowings outstanding hereunder as required so that (x) for the period
from the earlier of the 22nd day of each month and two Business Days
preceding the Gas Payment Settlement Day for such month (the "CLEANUP
DATE") until the Gas Payment Settlement Day, the outstanding Principal
Amount of Swingline Loans shall be zero, and (y) for the period from the
Cleanup Date to the close of business in Calgary, Alberta on the second
Business Day immediately following the Gas Payment Settlement Day (the
"CLEANUP TIME"), the Available Borrowing Amount shall be not less than
C$5,000,000 less any borrowings of Swingline Loans permitted pursuant to
clause (ii) below.
(ii) During the period from the Cleanup Date to the Cleanup
Time, the Borrowers shall not borrow any Swingline Loans other than for the
purposes of satisfying obligations under the BOM Agreement or as may be
required pursuant to any deemed notice of ProMark pursuant to Section
2.05(b) hereof.
(h) FUNDING CREDIT AGREEMENT. Any and all payments made to the
Lender shall be deemed payments hereunder only if they are forwarded by the
Lender to the Agent or the lenders under the Funding Credit Agreement.
Section 3. PAYMENTS OF PRINCIPAL AND INTEREST.
3.01 REPAYMENTS. Each Borrower hereby promises to pay to the Lender
the entire outstanding Principal Amount of the Loans to such Borrower (or with
respect to BA Loans, the proceeds thereof advanced by the Lender in accordance
with Section 2.03 hereof), and each Loan (other than Swingline Loans) shall
mature, on the earlier of the stipulated maturity date or the Commitment
Termination Date. All Letter of Credit Liabilities shall also be payable to the
Lender on the Commitment Termination Date. In addition, if following any
reduction in the Commitment, the aggregate Principal Amount of the Loans,
together with the aggregate amount of all Letter of Credit Liabilities (with the
amounts of any Loans and Letter of Credit Liabilities outstanding in U.S.
Dollars expressed as an Equivalent Amount in Canadian Dollars) shall exceed the
Commitments, the Borrowers shall pro rata, based on the outstanding Loans and
Letter of Credit Liabilities of the Borrowers, first, prepay Loans and second,
provide cover for Letter of Credit Liabilities with respect to the Commitments
as specified in Section 2.11(f) above, in an aggregate amount equal to such
excess.
3.02 INTEREST. Each Borrower hereby promises to pay to the Lender
interest on the unpaid principal amount of each Loan made to such Borrower (or
with respect to BA Loans, the proceeds thereof advanced by the Lender in
accordance with Section 2.03 hereof) for the period from and including the date
of such Loan to but excluding the date such Loan shall be paid in full, at the
following rates:
(a) during such periods as such Loan is a Canadian Prime Loan, the
Chase Canada Prime Rate (as in effect from time to time) PLUS the
Applicable
Page 41
Margin for such Loans,
(b) during such periods as such Loan is a U.S. Base Rate Loan, the
U.S. Base Rate (as in effect from time to time) PLUS the Applicable Margin
for such Loans,
(c) during such periods as such Loan is a Eurodollar Loan, for each
Interest Period relating thereto, the Eurodollar Base Rate for such Loan
for such Interest Period PLUS the Applicable Margin for such Loans,
(d) during such periods as such Loan is a BA Loan, for each Interest
Period relating thereto, the BA Rate for such Loan for such Interest
Period; and
(e) during such periods as such Loan is a Swingline Loan, the BOM
Prime Rate (as in effect from time to time) PLUS the Applicable Margin for
Canadian Prime Loans.
Accrued interest on each Loan shall be payable (i) quarterly on the Quarterly
Dates for Canadian Prime Loans and U.S. Base Rate Loans, (ii) at the end of each
Interest Period in the case of Eurodollar Loans and BA Loans, (iii) on any
Swingline Loan monthly on the last Business Day of each month and (iv) in the
case of any Loan, upon the payment or prepayment thereof (but only on the
principal amount so paid or prepaid). Promptly after the determination of any
interest rate provided for herein or any change therein, the Lender shall give
notice thereof to the Borrowers but failure to do so on a timely basis or at all
shall not effect the Borrowers' obligation to pay interest for any period at the
applicable rate determined by the Lender.
3.03 CURRENCY. Borrowings hereunder and any payments in respect
thereof including payments of any interest and fees are payable by the Borrowers
in the currency in which they are denominated.
3.04 INTEREST ON OVERDUE AMOUNTS. Except as otherwise provided in
this Agreement, all amounts owed by the Borrowers to the Lender under this
Agreement (including amounts of principal and interest) which are not paid when
due (whether at stated maturity, on demand, by acceleration or otherwise) shall
bear interest (both before and after judgment), from the date on which such
amount is due until such amount is paid in full, payable on demand, at a rate
per annum equal at all times to the rates applicable to U.S. Base Rate Loans (if
the amounts are due in U.S. Dollars) or to Canadian Prime Loans (if the amounts
are due in Canadian Dollars), with interest on overdue interest at the same rate
as well after as before maturity, demand and judgment.
Section 4. PAYMENTS; PRO RATA TREATMENT; COMPUTATIONS; ETC.
Page 42
4.01 PAYMENTS.
(a) Except to the extent otherwise provided herein, all payments
in Canadian Dollars of principal, interest, Letter of Credit Reimbursement
Obligations and other amounts to be made by the Borrowers under this
Agreement and the Notes, and, except to the extent otherwise provided
therein, all payments to be made by the Borrowers under any other Loan
Document, shall be made in immediately available funds, without deduction,
set-off or counterclaim, to the Lender at account number 000-000-0 at Royal
Bank of Canada, Main Branch, Toronto or at any other account designated by
the Lender, not later than 1:00 p.m. Toronto time on the date on which such
payment shall become due (each such payment made after such time on such due
date to be deemed to have been made on, and applicable interest shall be
payable to, the next succeeding Business Day).
(b) Except to the extent otherwise provided herein, all payments
in U.S. Dollars of principal, interest, Letter of Credit Reimbursement
Obligations and other amounts to be made by the Borrowers under this
Agreement and the Notes, and, except to the extent otherwise provided
therein, all payments to be made by the Borrowers under any other Loan
Document, shall be made in immediately available funds, without deduction,
set-off or counterclaim, to the Lender at account number 000-0-000000 at
Chase Manhattan Principal Office or at any other account designated by the
Lender, not later than 1:00 p.m. Toronto time on the date on which such
payment shall become due (each such payment made after such time on such due
date to be deemed to have been made on, and applicable interest shall be
payable to, the next succeeding Business Day).
(c) Each Borrower shall, at the time of making each payment under
this Agreement or any Note, specify to the Lender the Loans, Letter of Credit
Reimbursement Obligations or other amounts payable by the Borrowers hereunder
to which such payment is to be applied (and in the event that the Borrowers
fail to so specify, or if an Event of Default has occurred and is continuing,
the Lender may apply such payment as it determines to be appropriate).
(d) Except as provided in clause (a)(ii) of the definition of
"Interest Period", if the due date of any payment under this Agreement, or
any Note would otherwise fall on a day that is not a Business Day, such date
shall be extended to the next succeeding Business Day, and interest shall be
payable for any principal so extended for the period of such extension.
4.02 COMPUTATIONS. Interest on Eurodollar Loans and commitment
fees and Letter of Credit fees shall be computed on the basis of a year of
360 days and actual days elapsed (including the first day but, except as
otherwise provided in Section 2.04(f) hereof, excluding the last day)
occurring in the period for which that interest and those fees are payable,
interest on BA Loans and the fees for BA Loans shall be
Page 43
computed on the basis of a year of 365 days and the actual days elapsed
(including the first day but excluding the last day) occurring during the
period for which that interest or those fees are payable. Interest on any
other Loans and Letter of Credit Reimbursement Obligations shall be computed
on the basis of a year of 365 or 366 days and actual days elapsed (including
the first day but excluding the last day) occurring in the period for which
that interest and those fees are payable.
4.03 MINIMUM AMOUNTS. Except for conversions of Swingline Loans
pursuant to Section 2.10 hereof, mandatory prepayments made pursuant to
Section 2.11 hereof or prepayments or Conversions made pursuant to Section
5.04 hereof, each borrowing, Conversion and partial prepayment of principal
of Loans (other than Swingline Loans) shall be in an aggregate amount at
least equal to C$1,000,000 (or the equivalent in U.S. Dollars) or a larger
multiple of C$100,000 (or the equivalent in U.S. Dollars) (borrowings,
Conversions or prepayments of Loans of different Currencies at the same time
hereunder to be deemed separate borrowings, Conversions and prepayments for
purposes of the foregoing, one for each Currency); PROVIDED that any
borrowings of BA Loans shall be in an amount such that each lender under the
Funding Credit Agreement will be required to issue Bankers' Acceptances on
each Acceptance Date (as defined in the Funding Credit Agreement) in
accordance with their Commitment Percentage (as defined in the Funding Credit
Agreement), adjusted so as to permit each BA Loan to be in integral multiples
of C$100,000. Each borrowing other than a borrowing pursuant to a deemed
notice pursuant to Section 2.05(b) hereof or partial prepayment by any
Borrower of Swingline Loans shall be in an aggregate amount at least equal to
C$250,000 or a larger multiple of C$50,000 in excess thereof.
4.04 INTEREST ACT (CANADA). (a) For purposes of the INTEREST ACT
(Canada), (i) whenever any interest or fee under this Agreement is calculated
using a rate based on a year of 360 days or 365 days, such rate determined
pursuant to such calculation, when expressed as an annual rate, is equivalent
to (x) the applicable rate based on a year of 360 days or 365 days, as the
case may be, (y) multiplied by the actual number of days in the calendar year
in which the period for which such interest or fee is payable (or compounded)
ends, and (z) divided by 360 or 365 as the case may be.
(b) The principle of deemed reinvestment of interest shall not
apply to any interest calculation under this Agreement, and the rates of
interest stipulated in this Agreement are intended to be nominal rates and
not effective rates or yields.
4.05 CERTAIN NOTICES. Notices by the Borrowers shall be given to
the Lender and the Agent of terminations or reductions of the Commitment and
of borrowings and optional prepayments of Loans (other than Swingline Loans),
and Conversions and Continuations of Loans. These notices shall be
irrevocable and shall be effective only if received by the Lender and the
Agent not later than 1:00 p.m. Toronto time on the number of Business Days
prior to the date of the relevant
Page 44
termination, reduction, borrowing or prepayment specified below:
Page 45
Number of
Business
Notice Days Prior
------ ----------
Termination or reduction
of Commitments; borrowings or
prepayments of, Conversions of
or into, Continuations as, or
duration of Interest Period
for, BA Loans 2
Borrowing or prepayment of,
or Conversions of or into,
Canadian Prime Loans or
U.S. Base Rate Loans 1
Borrowing or prepayment of,
Conversions of or into,
Continuations as, or duration
of Interest Period for, Eurodollar
Loans 3
Request for issuance of a
Letter of Credit 3
Notices by the Borrowers with respect to borrowings and optional
prepayment of Swingline Loans shall be irrevocable and shall be effective
only if received not later than 2:00 p.m. Calgary time (or 4:00 p.m. Calgary
time in the case of borrowings to satisfy outstandings under the BOM
Agreement) on the Business Day of the relevant borrowing or prepayment.
Each such notice of termination or reduction shall specify the amount of the
Commitment to be terminated or reduced. Each such notice of borrowing,
Conversion, Continuation or optional prepayment shall specify the Loans to be
borrowed, Converted, Continued or prepaid and the amount (subject to Section
4.04 hereof) and Type and Currency of each Loan to be borrowed, Converted,
Continued or prepaid and the date of borrowing, Conversion, Continuation or
optional prepayment (which shall be a Business Day) and, if applicable, the
relevant Interest Period. Each such notice of the duration of an Interest
Period shall specify the Loans to which such Interest Period is to relate.
In the event that any Borrower fails to select the Type of Loan, or the
duration of any Interest Period for any Eurodollar Loan, within the time
period and otherwise as provided in this Section 4.05, such Loan (if
outstanding as a Eurodollar Loan or U.S. Base Rate Loan) will be
automatically Converted into a Canadian Prime Loan on the last day of the
then current Interest Period for such Loan or (if outstanding
Page 46
as a Canadian Prime Loan) will remain as, or (if not then outstanding) will
be made as, a Canadian Prime Loan.
4.06 SET-OFF. Each of the Borrowers agrees that, in addition to
(and without limitation of) any right of set-off or counterclaim the Lender
may otherwise have, the Lender shall be entitled, at its option (to the
fullest extent permitted by law), to set off and apply any other
indebtedness, held by it for the credit or account of such Borrower at any of
its offices, in Canadian Dollars, U.S. Dollars or in any other currency,
against any principal of or interest on any of the Loans or any other amount
payable to the Lender hereunder, that is not paid when due (regardless of
whether such indebtedness is then due to the Borrowers), in which case it
shall promptly notify such Borrower thereof, PROVIDED that the Lender's
failure to give such notice shall not affect the validity thereof.
Section 5. YIELD PROTECTION, ETC.
5.01 ADDITIONAL COSTS.
(a) The Borrowers shall pay directly to the Lender promptly upon
request (but in any event within 10 Business Days), an amount equal to the
amount the Lender is required to pay pursuant to Section 5.01 of the Funding
Credit Agreement.
5.02 LIMITATION ON TYPES OF LOANS. Anything herein to the contrary
notwithstanding, if:
(a) the Agent has notified the Lender that quotations of interest
rates for the relevant deposits referred to in the definition of
"Eurodollar Base Rate" in Section 1.01 hereof are not being provided in the
relevant amounts or for the relevant maturities for purposes of determining
rates of interest for Eurodollar Loans as provided herein; or
(b) the Agent has notified the Lender that the Majority Lenders have
notified the Agent that:
(i) the relevant rates of interest referred to in the
definition of "Eurodollar Base Rate" in Section 1.01 hereof upon the
basis of which the rate of interest for Eurodollar Loans for such
Interest Period is to be determined are not likely to be adequate to
cover the cost to any lender under the Funding Credit Agreement of
making or maintaining Eurodollar Loans for such Interest Period;
(ii) by reason of circumstances affecting financial markets
inside or outside Canada, deposits of U.S. Dollars are unavailable to
the lenders under the Funding Credit Agreement in such markets; or
Page 47
(iii) the making or continuation of any Eurodollar Loan has
been made impracticable:
(A) by the occurrence of a contingency (other than a
mere increase in rates payable by any lender under the Funding
Credit Agreement to fund such loan) which materially and
adversely affects the funding of a Loan at any interest rate
computed on the basis of Eurodollar Base Rate, or
(B) by reason of:
(i) any law or the interpretation or
application thereof by any official body;
(ii) compliance by a lender under the Funding
Credit Agreement with any guideline, official directive
or request from any central bank or other official body
(whether or not having the force of law); or
(iii) a change since the date of this Agreement
in any relevant financial market, which results in the
Eurodollar Base Rate no longer representing the
effective cost to any lender under the Funding Credit
Agreement of deposits in such market for a relevant
Interest Period or other applicable period;
and the Agent gives the Lender (who shall give prompt notice to the
Borrowers) prompt notice thereof and, so long as such condition remains in
effect, the Lender shall be under no obligation to make additional Eurodollar
Loans, to Continue Eurodollar Loans or to Convert Canadian Prime Loans, U.S.
Base Rate Loans or BA Loans into Eurodollar Loans, depending upon which of
those loans is affected by such condition, and the Borrowers shall, on the
last day(s) of the then current Interest Period(s) for the outstanding
Eurodollar Loans, either prepay such Loans or Convert such Loans into U.S.
Base Rate Loans in accordance with Section 2.10 hereof if making U.S. Base
Rate Loans is not affected by such condition; PROVIDED that the Lender shall
be under no obligation to make additional U.S. Base Rate Loans or Eurodollar
Loans or to Convert Canadian Prime Loans, BA Loans, U.S. Base Rate Loans or
Eurodollar Loans into Eurodollar Loans or U.S. Base Rate Loans if deposits of
U.S. Dollars are unavailable to lenders under the Funding Credit Agreement.
5.03 ILLEGALITY. Notwithstanding any other provision of this
Agreement, in
Page 48
the event that it becomes unlawful for any lender under the Funding Credit
Agreement or its Applicable Lending Office (as defined in the Funding Credit
Agreement) to honor its obligation to make or maintain any Type of U.S.
Dollar loans under the Funding Credit Agreement then upon notification from
the Lender to the Borrowers thereof, the Lender's obligation to make or
Continue, or to Convert Loans of any other Type into, that Type of U.S.
Dollar Loan hereunder shall be suspended to the extent of that lender's
Commitment (as defined in the Funding Credit Agreement) until such time as
that lender under the Funding Credit Agreement may again make and maintain
that Type of U.S. Dollar loan (in which case the provisions of Section 5.04
hereof shall be applicable).
5.04 TREATMENT OF AFFECTED LOANS. If the obligation of any lender
under the Funding Credit Agreement to make Eurodollar Loans or to Continue,
or to Convert Canadian Prime Loans, U.S. Base Rate Loans or BA Loans into,
Eurodollar Loans (each as defined in the Funding Credit Agreement) shall be
suspended pursuant to the Funding Credit Agreement, such amount of Eurodollar
Loans hereunder equal to such lender's eurodollar loans under the Funding
Credit Agreement shall be automatically Converted into U.S. Base Rate Loans
on the last day(s) of the then current Interest Period(s) for Eurodollar
Loans (or, in the case of a Conversion required by Section 5.03 hereof, on
such earlier date as the Lender may specify to the Borrowers) and, unless and
until the Lender gives notice as provided below that the circumstances
specified in Section 5.01 or 5.03 hereof that gave rise to such Conversion no
longer exist:
(a) to the extent that all of such portion of the Eurodollar Loans
have been so Converted, all payments and prepayments of principal that
would otherwise be applied to such Eurodollar Loans shall be applied
instead to its U.S. Base Rate Loans; and
(b) the Principal Amount of Loans (the "APPLICABLE LOANS") that would
otherwise be made or Continued as Eurodollar Loans shall be made or
Continued instead as U.S. Base Rate Loans, and all Applicable Loans that
would otherwise be Converted into Eurodollar Loans shall remain in the Type
and Currency that they are currently in or if the Borrowers elect be
Converted into, as the case may be, U.S. Base Rate Loans.
If any U.S. Base Rate Loans are outstanding at any time when the
right of the Borrowers to select U.S. Base Rate Loans is suspended, all those
outstanding U.S. Base Rate Loans shall be Converted into Canadian Prime Loans.
If the Agent gives notice to the Lender (which notice the Lender
shall promptly give to the Borrowers) that the circumstances described in
Sections 5.01, 5.02 or 5.03 of the Funding Credit Agreement that resulted in
the suspension of a lender's obligations under that Agreement to provide any
borrowings thereunder no longer exist, the Borrowers shall cause such
borrowings or Conversions to occur hereunder so that
Page 49
the amounts of outstanding Types of Loans hereunder continue to be the same
as the outstanding corresponding types of loans under the Funding Credit
Agreement, including any eurodollar loans thereunder that occur as a result
of the suspension ending.
5.05 COMPENSATION. The Borrowers (jointly and severally) shall pay
to the Lender promptly upon request (but in any event within 10 Business
Days) an amount equal to the amount that the Lender is required to pay
pursuant to Section 5.05, 5.06, 5.07 or 5.08 of the Funding Credit Agreement.
5.06 COMPLIANCE WITH SECTION 2.08. Notwithstanding any suspension
of the Lender's obligations to provide Eurodollar Loans or any other Type of
Loan or Conversions that might be required as a result thereof, the amounts,
Types, Currencies and, if applicable, Interest Periods of Loans that are
outstanding hereunder shall at all times be and remain in compliance with the
provisions of Section 2.08 hereof.
Section 6. CONDITIONS PRECEDENT.
6.01 EFFECTIVENESS. The effectiveness of the amendment and
restatement of the Original Credit Agreement provided for hereby is subject
to the conditions precedent that the Lender shall have received the following
documents, each of which shall be satisfactory to the Lender, the Agent and
the Majority Lenders in form and substance:
(a) ORGANIZATIONAL DOCUMENTS. A certificate of a senior officer of
each Borrower and Forest dated the Effective Date certifying the articles
and by-laws for each Borrower and Forest, respectively, have not been
amended since December 31, 1996 and certifying the corporate authority for
each Borrower and Forest.
(b) EXISTENCE. A certificate of compliance under the Canada Business
Corporations Act dated as of a recent date as to the continuing existence
of 3189503, certificates of status under the Business Corporations Act
(Alberta) dated as of a recent date for each of Canadian Forest and
ProMark, a certificate of status under The Business Corporations Act
(Saskatchewan) from Saskatchewan Justice (Corporations Branch) dated as of
a recent date for the Lender, and Certificate from the Secretary of State
of New York dated as of a recent date as to the continuing existence of
Forest and a certificate from the appropriate official as to the
qualification of Forest to conduct business in the Province of Alberta.
(c) OFFICER'S CERTIFICATE. A certificate of a senior officer of
Canadian Forest, dated the Effective Date, to the effect set forth in the
first sentence of Section 6.02 hereof.
Page 50
(d) OPINION OF COUNSEL TO THE BORROWERS. An opinion, dated the
Effective Date, from each of Xxxxxxx Xxxxx, counsel to the Borrowers, and
Xxxxxx & Xxxxxx, counsel to Forest, substantially in the forms of Exhibit B
hereto and covering such other matters as the Lender, the Agent or any
lender under the Funding Credit Agreement may reasonably request (and the
Borrowers hereby confirm that they have instructed such counsel to deliver
such opinion to the Lender, the Agent and the lenders under the Funding
Credit Agreement).
(e) SECURITY CONFIRMATION. A Second Security Confirmation and
Amendment Agreement among the Agent, the Lender, ProMark, Forest, 3189503
and Canadian Forest relating to the security and guarantees given in
connection with the Original Credit Agreement and terminating the Atcor
Resources Pledge Agreement.
(f) NOTES. The existing Notes, duly completed and executed.
(g) CANADIAN FOREST DEBENTURE. The existing Canadian Forest
Debenture and the deposit agreement in respect thereof duly executed and
delivered by Canadian Forest including a charge over and delivery of the
certificates for the ProMark shares accompanied by undated stock powers in
blank.
(h) PROMARK DEBENTURE. The existing ProMark Debenture and the
existing deposit agreement in respect thereof duly executed and delivered
by ProMark.
(i) FOREST GUARANTEE. The Forest Guarantee, duly completed and
executed.
(j) FOREST DEBENTURE. The Forest Debenture and a deposit agreement
in respect thereof duly executed and delivered by Forest, providing for a
Lien on the Properties acquired by Forest pursuant to the Forest Purchase
Agreement.
(k) 3189503 GUARANTEE AGREEMENT. The 3189503 Guarantee and Pledge
Agreement duly executed and delivered by 3189503 (as successor to Atcor
Resources' position as direct owner of all of the issued and outstanding
shares of Canadian Forest) and the Lender, pledging all such shares to the
Lender, and the certificates identified in Section 3.10 thereof accompanied
by undated stock powers in blank.
(l) XXXXXX XXXX. The Forest Purchase Agreement duly completed and
executed.
Page 51
(m) BOM AGREEMENT. The BOM Agreement, the ProMark Security Agreement
and the Canadian Forest Guarantee as in effect on the Effective Date.
(n) REGISTRATION. Evidence that all Security Documents shall have
been registered in all places required to perfect the Liens and priority
thereof against other competing interests.
(o) INSURANCE. The existing certificate of the Chief Financial
Officer, Vice President-Finance or Treasurer of Canadian Forest setting
forth the insurance obtained by it in accordance with the requirements of
Section 8.04 and stating that such insurance is in full force and effect
and that all premiums then due and payable thereon have been paid.
(p) TITLE TO THE HYDROCARBON PROPERTIES. The existing opinion of
Xxxxxxx Xxxxx and Xxxxxxx Xxxxx Verchere with respect to the title to
certain Hydrocarbon Properties agreed to by Canadian Forest, the Lender and
the Agent.
(q) GOVERNMENTAL APPROVALS. Evidence that all governmental and
third-party consents and approvals necessary in connection with the
Acquisition, the financing hereunder and the security therefor and the
other transactions contemplated hereby have been obtained (without the
imposition of any conditions that are not reasonably acceptable to the
Lender and the lenders under the Funding Credit Agreement) and are in full
force and effect; all applicable waiting periods have expired without any
action being taken by any competent authority; and no law or regulation is
applicable (in the reasonable judgment of the lenders under the Funding
Credit Agreement) that restrains, prevents or imposes materially adverse
conditions upon the Acquisition, the financing hereunder, or any security
therefor or any of the other transactions contemplated hereby.
(r) NO MATERIAL ADVERSE CHANGE. Evidence satisfactory to the Lender,
the Agent and the lenders under the Funding Credit Agreement that:
(i) since March 31, 1997, there has been no material adverse
change in the consolidated financial condition,
operations, business or prospects taken as a whole of
Forest and its Subsidiaries from that set forth in
Forest's Form 10Q for the quarter ended March 31, 1997
filed with the U.S. Securities and Exchange Commission
pursuant to the United States Securities and Exchange Act
of 1934, as amended; and
(ii) completion of the Forest Purchase Agreement will not
result
Page 52
in any termination, cancellation or other Material
Adverse Effect in respect of the Property included in the
Forest Purchase Agreement or in Forest's title to or
interest in that property.
(s) NO CONFLICT. A certificate of a senior officer of Forest that
none of the transactions contemplated herein conflict with, violate or
result in a default under any indentures, agreements or other documents
providing for or relating to any indebtedness or other obligations
aggregating U.S.$500,000 or more of any of Forest, Canadian Forest or any
of their respective Subsidiaries or cause any of such Persons to be
required to prepay, purchase, redeem or acquire any of such Indebtedness or
obligation or any other securities issued by any of such Persons for an
aggregate cost exceeding U.S.$500,000.
(t) SEARCH REPORTS. Updated search reports in customary form
indicating that no prior encumbrances affect Canadian Forest, 3189503,
ProMark or the Forest Pledged Properties (other than those permitted
pursuant to Section 8.06 hereof).
(u) FUNDING CREDIT AGREEMENT. The Funding Credit Agreement and all
security and other documents required thereby have been entered into and
all conditions precedent with regard thereto have been or are being
contemporaneously satisfied.
(v) PROMARK GAS MARKETING POLICY. The existing copy of ProMark's
written policy with respect to its gas marketing activities.
(w) OTHER DOCUMENTS. Such other documents (including without
limitation certificates from senior officers of 3189503 and Forest) as the
Lender and the Agent or any lender under the Funding Credit Agreement or
special New York or Canadian counsel to Chase Canada under the Funding
Credit Agreement may reasonably request.
The effectiveness of the amendment and restatement of the Original Credit
Agreement provided for hereby is also subject to the payment by on or behalf
of Forest of the reasonable fees and expenses of Stikeman, Elliott, Canadian
counsel to Chase Canada under the Funding Credit Agreement and Milbank,
Tweed, Xxxxxx & XxXxxx, special New York counsel to Chase Canada under the
Funding Credit Agreement, in connection with the negotiation, preparation,
execution and delivery of this Agreement and the Notes and the other Loan
Documents and the extensions of credit hereunder (to the extent that
statements for such fees and expenses have been delivered to the Borrowers).
Page 53
6.02 EFFECTIVENESS AND SUBSEQUENT EXTENSIONS OF CREDIT. The
obligation of the Lender to make any Loan or otherwise extend any credit to
the Borrowers upon the occasion of each borrowing or other extension of
credit hereunder (including the initial extension of credit) is subject to
the further conditions precedent that, both immediately prior to the making
of such Loan or other extension of credit and also after giving effect
thereto and to the intended use thereof:
(a) no Default shall have occurred and be continuing nor shall any
Default (as defined in the Funding Credit Agreement) have occurred and be
continuing PROVIDED that if the only Default hereunder is a failure to make
a payment when due on a Swingline Loan, the Borrowers shall have the
ability to Convert such Swingline Loan to a Canadian Prime Loan;
(b) the representations and warranties made by the Borrowers in
Section 7 hereof, and in each of the other Loan Documents to which they are
a party, shall be true and complete on and as of the date of the making of
such Loan with the same force and effect as if made on and as of such date
(or, if any such representation or warranty is expressly stated to have
been made as of a specific date, as of such specific date);
(c) the aggregate Principal Amount of the Loans and the aggregate
amount of the Letter of Credit Liabilities (with the amount of Loans and
Letter of Credit Liabilities in U.S. Dollars expressed as an Equivalent
Amount in Canadian Dollars outstanding hereunder) shall not exceed the
Borrowing Base as determined pursuant to Section 1.03 hereof; and
(d) the provisions of Section 2.08 hereof shall have been complied
with.
Each notice of borrowing by the Borrowers or request for the issuance of a
Letter of Credit hereunder shall constitute a certification by the Borrowers
to the effect set forth in the preceding sentence (both as of the date of
such notice or request and, unless the Borrowers otherwise notify the Lender
prior to the date of such borrowing or issuance, as of the date of such
borrowing or issuance).
Section 7. REPRESENTATIONS AND WARRANTIES. Each of the Borrowers
represents and warrants to the Lender that:
7.01 CORPORATE EXISTENCE. Each of the Borrowers and their
Subsidiaries: (a) is a corporation, partnership or other entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization; (b) has all requisite corporate or other
power, and subject to the provisions in the Sale Agreement relating to
"Constrained Gas Marketing Agreements", has all material governmental
licenses,
Page 54
authorizations, consents and approvals necessary to own its assets and carry
on its business as now being or as proposed to be conducted; and (c) is
qualified to do business and is in good standing in all jurisdictions in
which the nature of the business conducted by it makes such qualification
necessary and where failure so to qualify could (either individually or in
the aggregate) have a Material Adverse Effect.
7.02 FINANCIAL CONDITION. The Borrowers have heretofore furnished
to the Lender consolidated balance sheets of Atcor Resources as at December
31, 1996 and the related consolidated statements of income, retained earnings
and cash flows of Canadian Forest and its Subsidiaries for the fiscal year
ended on said date, with the opinion thereon (in the case of said
consolidated balance sheet and statements) of Price Waterhouse, and the
unaudited consolidated balance sheets of Canadian Forest and its Subsidiaries
as at March 31, 1997 and the related consolidated statements of income,
retained earnings and cash flows of Canadian Forest and its Subsidiaries for
the three-month period ended on such date. All such financial statements are
complete and correct and present fairly in all material respects the
consolidated financial condition of Canadian Forest and its Subsidiaries in
accordance with generally accepted accounting principles then in effect in
Canada. None of 3189503, Canadian Forest nor any of its Subsidiaries has on
the date hereof any material contingent liabilities, liabilities for taxes,
unusual forward or long-term commitments or unrealized or anticipated losses
from any unfavorable commitments, except as referred to or reflected or
provided for in said balance sheets as at said dates. Since March 31, 1997
there has been no material adverse change in the consolidated financial
condition, operations, business or prospects taken as a whole of Canadian
Forest and its Subsidiaries from that set forth in said financial statements
as at said date.
7.03 LITIGATION. Except as disclosed to the Lender in writing
prior to the date of this Agreement, there are no legal or arbitral
proceedings, or any proceedings by or before any governmental or regulatory
authority or agency, now pending or (to the knowledge of the Borrowers)
threatened against the Borrowers or any of their Subsidiaries or affecting
the Forest Pledged Properties that, if adversely determined could (either
individually or in the aggregate) have a Material Adverse Effect.
7.04 NO BREACH. None of the execution and delivery of this
Agreement and the Notes, the BOM Agreement, the ProMark Security Agreement,
the Canadian Forest Guarantee and the other Loan Documents, the consummation
of the transactions herein and therein contemplated or compliance with the
terms and provisions hereof and thereof will conflict with or result in a
breach of, or require any consent under, the organizational documents of any
Borrower or any of its Subsidiaries, the BOM Agreement, or any applicable law
or regulation, or any order, writ, injunction or decree of any court or
governmental authority or agency, or any agreement or instrument to which any
Borrower or any of its Subsidiaries is a party or by which any of them or any
of their Property is bound or to which any of them is subject, or constitute
a default under any such agreement or instrument, or (except for the Liens
created
Page 55
pursuant to the Security Documents, the BOM Agreement, the ProMark Security
Agreement and the Canadian Forest Guarantee) result in the creation or
imposition of any Lien upon any Property of any Borrower or any of its
Subsidiaries pursuant to the terms of any such agreement or instrument.
7.05 ACTION. Each Borrower has all necessary corporate power,
authority and legal right to execute, deliver and perform its obligations
under each of the Loan Documents and the BOM Agreement, the ProMark Security
Agreement and the Canadian Forest Guarantee to which it is a party; the
execution, delivery and performance by the Borrowers of each of the Loan
Documents and the BOM Agreement, the ProMark Security Agreement and the
Canadian Forest Guarantee to which it is a party has been duly authorized by
all necessary corporate action on its part (including, without limitation,
any required shareholder approvals); and this Agreement has been duly and
validly executed and delivered by each Borrower and constitutes, and each of
the Notes, the other Loan Documents and the BOM Agreement, the ProMark
Security Agreement and the Canadian Forest Guarantee when executed and
delivered (in the case of the Notes for value) will constitute, its legal,
valid and binding obligation, enforceable against each Borrower in accordance
with its terms, except as such enforceability may be limited by (a)
bankruptcy, insolvency, reorganization, moratorium or similar laws of general
applicability affecting the enforcement of creditors' rights and (b) the
application of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
7.06 APPROVALS. No authorizations, approvals or consents of
(including any exchange control approval), and no filings or registrations
with, any governmental or regulatory authority or agency, or any securities
exchange, are necessary for the execution, delivery or performance by each
Borrower of this Agreement, any of the other Loan Documents or the BOM
Agreement, the ProMark Security Agreement and the Canadian Forest Guarantee
or for the legality, validity or enforceability hereof or thereof, except for
filings and recordings in respect of the Liens created pursuant to the
Security Documents.
7.07 USE OF CREDIT. None of the Borrowers nor any of their
Subsidiaries is engaged principally, or as one of its important activities,
in the business of extending credit for the purpose, whether immediate,
incidental or ultimate, of buying or carrying Margin Stock, and no part of
the proceeds of any extension of credit hereunder will be used to buy or
carry any Margin Stock.
7.08 TAXES. Each Borrower and its respective Subsidiaries have
filed all Canadian federal income tax returns required to be filed pursuant
to the Income Tax Act (Canada) and all other material tax returns that are
required to be filed by them and have paid all taxes due pursuant to such
returns or pursuant to any assessment received by any Obligor or any of their
Subsidiaries. The charges, accruals and reserves on the books of the
Borrowers and their Subsidiaries in respect of taxes and
Page 56
other governmental charges are, in the opinion of the Borrowers, adequate.
Except as disclosed in writing to the Lender and the Agent prior to the
Closing Date, no Borrower has given or been requested to give a waiver of the
statute of limitations relating to the payment of any taxes or other
impositions.
7.09 INVESTMENT COMPANY ACT. None of the Borrowers nor any of
their 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.
7.10 PUBLIC UTILITY HOLDING COMPANY ACT. None of the Borrowers nor
any of their Subsidiaries is a "holding company", or an "affiliate" of a
"holding company" or a "subsidiary company" of a "holding company", within
the meaning of the Public Utility Holding Company Act of 1935, as amended.
7.11 MATERIAL AGREEMENTS AND LIENS.
(a) Part A of Schedule I hereto is a complete and correct list of
each credit agreement, loan agreement, indenture, purchase agreement,
guarantee, letter of credit or other arrangement providing for or otherwise
relating to any Indebtedness or any extension of credit (or commitment for
any extension of credit) to, or guarantee by, each Borrower and its
Subsidiaries, outstanding on the date hereof the aggregate principal or face
amount of which equals or exceeds (or may equal or exceed) C$250,000 (or the
equivalent in other currencies), and the aggregate principal or face amount
outstanding or that may become outstanding under each such arrangement is
correctly described in Part A of said Schedule I.
(b) Part B of Schedule I hereto is a complete and correct list of
each Lien securing Indebtedness of any Person outstanding on the date hereof
the aggregate principal or face amount of which equals or exceeds (or may
equal or exceed) C$250,000 (or the equivalent in other currencies) and
covering any Property of each Borrower or any of their Subsidiaries, and the
aggregate Indebtedness secured (or that may be secured) by each such Lien and
the Property covered by each such Lien is correctly described in Part B of
said Schedule I.
7.12 ENVIRONMENTAL MATTERS. Each of the Borrowers and their
respective Subsidiaries have obtained all environmental, health and safety
permits, licenses and other authorizations required under all Environmental
Laws to carry on its business as now being or as proposed to be conducted,
except to the extent failure to have any such permit, license or
authorization would not have a Material Adverse Effect. Each of such
permits, licenses and authorizations is in full force and effect and each of
the Borrowers and their respective Subsidiaries is in compliance with the
terms and conditions thereof, and is also in compliance with all other
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in any applicable
Environmental Law or in any regulation, code, plan, order,
Page 57
decree, judgment, injunction, notice or demand letter issued, entered,
promulgated or approved thereunder, except to the extent failure to comply
therewith would not have a Material Adverse Effect. In addition, no notice,
notification, demand, request for information, citation, summons or order has
been issued, no complaint has been filed, no penalty has been assessed and no
investigation or review is pending or threatened by any governmental or other
entity with respect to any alleged failure by the Borrowers or any of their
respective Subsidiaries to have any environmental, health or safety permit,
license or other authorization required under any Environmental Law in
connection with the conduct of the business of the Borrowers or any of their
respective Subsidiaries or with respect to any generation, treatment,
storage, recycling, transportation, discharge or disposal, or any Release of
any Hazardous Materials generated by the Borrowers or any of their respective
Subsidiaries. Except as disclosed in Schedule III hereto, there have been no
environmental investigations, studies, audits, tests, reviews or other
analyses conducted by or that are in the possession of the Borrowers or any
of their respective Subsidiaries in relation to any site or facility now or
previously owned, operated or leased by the Borrowers or any of their
respective Subsidiaries which have not been made available to the Lender.
7.13 SUBSIDIARIES, ETC.
(a) Set forth in Part A of Schedule II hereto is a complete and
correct list of all of the Subsidiaries of each Borrower as of the date
hereof together with, for each such Subsidiary, (i) the jurisdiction of
organization of such Subsidiary, (ii) each Person holding ownership interests
in such Subsidiary and (iii) the nature of the ownership interests held by
each such Person and the percentage of ownership of such Subsidiary
represented by such ownership interests. Except as disclosed in Part A of
Schedule II hereto, (x) each of the Borrowers and their respective
Subsidiaries owns, free and clear of Liens (other than Liens created pursuant
to the Security Documents), and has the unencumbered right to vote, all
outstanding ownership interests in each Person shown to be held by it in Part
A of Schedule II hereto, (y) all of the issued and outstanding capital stock
of each such Person organized as a corporation is validly issued, fully paid
and nonassessable and (z) there are no outstanding Equity Rights with respect
to such Person.
(b) Set forth in Part B of Schedule II hereto is a complete and
correct list of all Investments (other than Investments disclosed in Part A
of said Schedule II hereto) held by the Borrowers or any of their respective
Subsidiaries in any Person on the date hereof and, for each such Investment,
(x) the identity of the Person or Persons holding such Investment and (y) the
nature of such Investment. Except as disclosed in Part B of Schedule II
hereto, each of the Borrowers and their respective Subsidiaries owns, free
and clear of all Liens (other than Liens created pursuant to the Security
Documents), all such Investments.
(c) None of the Subsidiaries of the Borrowers is, on the date
hereof,
Page 58
subject to any indenture, agreement, instrument or other arrangement of the
type described in Section 8.16(b) hereof.
7.14 TRUE AND COMPLETE DISCLOSURE. The information, reports,
financial statements, exhibits and schedules furnished in writing by or on
behalf of the Borrowers to the Lender, the Agent or any lender under the
Funding Credit Agreement in connection with the negotiation, preparation or
delivery of this Agreement and the other Loan Documents or included herein or
therein or delivered pursuant hereto or thereto, when taken as a whole do not
contain any untrue statement of material fact or omit to state any material
fact necessary to make the statements herein or therein, in light of the
circumstances under which they were made, not misleading. All written
information furnished after the date hereof by the Borrowers and their
Subsidiaries to the Lender, the Agent and the lenders under the Funding
Credit Agreement in connection with this Agreement and the other Loan
Documents and the transactions contemplated hereby and thereby will be true,
complete and accurate in every material respect, or (in the case of
projections) based on reasonable estimates, on the date as of which such
information is stated or certified. There is no fact known to the Borrowers
that could have a Material Adverse Effect that has not been disclosed herein,
in the other Loan Documents or in a report, financial statement, exhibit,
schedule, disclosure letter or other writing furnished to the Lender or the
lenders under the Funding Credit Agreement for use in connection with the
transactions contemplated hereby or thereby.
7.15 CAPITALIZATION.
(a) As of the Effective Date all of the issued and outstanding
shares of stock of Canadian Forest, consisting of 100 common shares, are
owned beneficially and of record by 3189503. As of the Effective Date there
are no outstanding Equity Rights with respect to Canadian Forest.
(b) As of the Effective Date all of the issued and outstanding
shares of common stock of 3189503, consisting of 100 common shares, are owned
beneficially and of record by Forest. As of the Effective Date there are no
outstanding Equity Rights with respect to 3189503.
(c) As of the Effective Date all of the issued and outstanding
shares of common stock of ProMark, consisting of 1,000,001 common shares, are
owned beneficially and of record by Canadian Forest. As of the Effective
Date there are no outstanding Equity Rights with respect to ProMark.
7.16 SPECIAL PURPOSE COMPANY. 3189503 has (a) no material assets
other than the stock of Canadian Forest and (b) no Indebtedness and no
material obligations other than its obligations under the 3189503 Guarantee
and Pledge Agreement.
Page 59
7.17 TITLE. Except for the title deficiencies in respect of
certain Hydrocarbon Properties which are set out in the opinions of (i)
Xxxxxxx Xxxxx, dated as of the date of the Original Credit Agreement and
effective as of January 30, 1996 and (ii) Xxxxxxx Xxxxx Verchere, the
Borrowers have good and valid title to its Hydrocarbon Properties, and Forest
has good and valid title to the Forest Pledged Properties and, except for the
Liens described in Section 8.06, such Hydrocarbon Properties are not subject
to any Liens; provided that the remedy of the Lender for any breach of this
representation shall be limited to the remedy set forth in Section 8.26
hereof.
7.18 FOREST INDENTURE. None of the execution and delivery of the
BOM Agreement, the Canadian Forest Guarantee, the ProMark Security Agreement,
the Forest Guarantee, the Forest Debenture, the 3189503 Guarantee and Pledge
Agreement, the consummation of the transactions therein contemplated, the
performance of the obligations therein contained or compliance with the terms
and provisions thereof will conflict with or result in a breach by Forest of
the Forest Indenture or by the Lender of the Forest Indenture Guaranty (as
such terms are defined in the Funding Credit Agreement) nor will obligate
Forest to cause any of the Borrowers to grant a "Guarantee" (as defined in
the Forest Indenture).
To the knowledge of the Borrowers, each of the Borrowers has good
and valid title to all of its material assets and properties (other than
Hydrocarbon Properties) and, except for the Liens described in Section 8.06,
such assets and properties are not subject to any Liens.
Section 8. COVENANTS OF THE BORROWERS. Each of the Borrowers
covenants and agrees with the Lender that, so long as the Commitment or any
Loan is outstanding and until payment in full of all amounts payable by the
Borrowers hereunder:
8.01 FINANCIAL STATEMENTS ETC. Canadian Forest (and ProMark with
respect to clauses (c) and (d) below and any Borrower with respect to clause
(h) below) shall deliver to the Lender and each of the lenders under the
Funding Credit Agreement (provided that the consolidating financial
statements referred to in clauses (a), (b), (c) and (d) below need only be
delivered if they have been prepared by the Borrowers):
(a) as soon as available and in any event within 60 days after the
end of each quarterly fiscal period of each fiscal year of Canadian Forest,
consolidated and consolidating statements of income, retained earnings and
cash flows of Canadian Forest and its Subsidiaries for such period and for
the period from the beginning of the respective fiscal year to the end of
such period, and the related consolidated and consolidating balance sheets
of Canadian Forest and its Subsidiaries as at the end of such period,
setting forth in each case in comparative form the corresponding
consolidated and consolidating figures for
Page 60
the corresponding periods in the preceding fiscal year (except that, in
the case of balance sheets, such comparison shall be to the last day of
the prior fiscal year), accompanied by a certificate of a senior
financial officer of Canadian Forest, which certificate shall state that
said consolidated financial statements fairly present in all material
respects the consolidated financial condition and results of operations
of Canadian Forest and its Subsidiaries, and said consolidating financial
statements fairly present, in all material respects, the respective
individual unconsolidated financial condition and results of operations
of Canadian Forest and of its Subsidiaries, in each case in accordance
with GAAP, consistently applied, as at the end of, and for, such period
(subject to normal year-end audit adjustments);
(b) as soon as available and in any event within 100 days after the
end of each fiscal year of Canadian Forest, consolidated and consolidating
statements of income, retained earnings and cash flows of Canadian Forest
and its Subsidiaries for such fiscal year and the related consolidated and
consolidating balance sheets of its Subsidiaries as at the end of such
fiscal year, setting forth in each case in comparative form the
corresponding consolidated and consolidating figures for the preceding
fiscal year, and accompanied (i) in the case of said consolidated
statements and balance sheet of Canadian Forest, by an opinion thereon of
independent certified public accountants of recognized national standing,
which opinion shall state that said consolidated financial statements
fairly present in all material respects the consolidated financial
condition and results of operations of Canadian Forest and its Subsidiaries
as at the end of, and for, such fiscal year in accordance with generally
accepted accounting principles, and (ii) in the case of said consolidating
statements and balance sheets, by a certificate of a senior financial
officer of Canadian Forest, which certificate shall state that said
consolidating financial statements fairly present, in all material
respects, the respective individual unconsolidated financial condition and
results of operations of Canadian Forest and of each of its Subsidiaries,
in each case in accordance with GAAP, consistently applied, as at the end
of, and for, such fiscal year;
(c) as soon as available and in any event within 60 days after the
end of each quarterly fiscal period of each fiscal year of ProMark,
consolidated and consolidating statements of income, retained earnings and
cash flows of ProMark and its Subsidiaries for such period and for the
period from the beginning of the respective fiscal year to the end of such
period, and the related consolidated and consolidating balance sheets of
ProMark and its Subsidiaries as at the end of such period, setting forth in
each case in comparative form the corresponding consolidated and
consolidating figures for the corresponding periods in the preceding fiscal
year (except that, in the case of balance sheets, such comparison shall be
to the last day of the prior fiscal year), accompanied by a certificate of
a senior financial officer of ProMark, which certificate shall state
Page 61
that said consolidated financial statements fairly present in all
material respects the consolidated financial condition and results of
operations of ProMark and its Subsidiaries, and said consolidating
financial statements fairly present, in all material respects, the
respective individual unconsolidated financial condition and results of
operations of ProMark and of its Subsidiaries, in each case in accordance
with GAAP, consistently applied, as at the end of, and for, such period
(subject to normal year-end audit adjustments);
(d) as soon as available and in any event within 100 days after the
end of each fiscal year of ProMark, consolidated and consolidating
statements of income, retained earnings and cash flows of ProMark and its
Subsidiaries for such fiscal year and the related consolidated and
consolidating balance sheets of ProMark and its Subsidiaries as at the end
of such fiscal year, setting forth in each case in comparative form the
corresponding consolidated and consolidating figures for the preceding
fiscal year, and accompanied in the case of said consolidating statements
and balance sheets, by a certificate of a senior financial officer of
ProMark, which certificate shall state that said consolidating financial
statements fairly present, in all material respects, the respective
individual unconsolidated financial condition and results of operations of
ProMark and of each of its Subsidiaries, in each case in accordance with
GAAP, consistently applied, as at the end of, and for, such fiscal year;
(e) promptly upon their becoming available, copies of all
prospectuses, registration statements and regular periodic reports, if any,
that any Borrower shall have filed with any securities commission in Canada
having jurisdiction or any Canadian or United States national securities
exchange;
(f) promptly upon the mailing thereof to the public shareholders of
any Borrower, if any, generally or to holders of Indebtedness generally
(other than the Lenders), copies of all financial statements, reports and
proxy circulars or statements so mailed;
(g) on or before each Report Delivery Date, the Borrowing Base
Reports;
(h) promptly after such Borrower knows or has reason to believe that
any Default has occurred, a notice of such Default describing the same in
reasonable detail and, together with such notice or as soon thereafter as
possible, a description of the action taken or proposed to be taken with
respect thereto; and
(i) from time to time such other information regarding the financial
condition, operations, business or prospects of the Borrowers or any of
their respective Subsidiaries, Forest or 3189503, as the Lender or the
Agent may reasonably request.
Page 62
Canadian Forest will furnish to the Lender and each lender under the Funding
Credit Agreement, at the time it furnishes each set of financial statements
pursuant to paragraph (a) or (b) above, a certificate of its senior financial
officer (i) to the effect that no Default has occurred and is continuing (or, if
any Default has occurred and is continuing, describing the same in reasonable
detail and describing the action the Borrowers have taken or propose to take
with respect thereto) and (ii) setting forth in reasonable detail the
computations necessary to determine whether the Borrowers are in compliance with
Sections 8.06(k) and (n), 8.07(e), (f) and (h), 8.08(e), (f) and (h), 8.09, 8.10
and 8.11 hereof as of the end of the respective quarterly fiscal period or
fiscal year.
8.02 LITIGATION. Each of the Borrowers will promptly give to the
Lender and each lender under the Funding Credit Agreement notice of all legal or
arbitral proceedings, and of all proceedings by or before any governmental or
regulatory authority or agency, and any material development in respect of such
legal or other proceedings, affecting such Borrower or any of its Subsidiaries
or the Forest Pledged Properties, except proceedings that, if adversely
determined, would not (either individually or in the aggregate) have a Material
Adverse Effect. Without limiting the generality of the foregoing, each Borrower
will give to the Lender and each lender under the Funding Credit Agreement
notice of the assertion of any Environmental Claim by any Person against, or
with respect to the activities of, such Borrowers or any of its Subsidiaries or
in respect of the Forest Pledged Properties and notice of any alleged violation
of or non-compliance with any Environmental Laws or any permits, licenses or
authorizations, other than any Environmental Claim or alleged violation which,
if adversely determined, would not have a Material Adverse Effect.
8.03 EXISTENCE, ETC. Each Borrower will, and will cause each of its
Subsidiaries to:
(a) preserve and maintain its legal existence and all of its material
rights, privileges, licenses and franchises (PROVIDED that nothing in this
Section 8.03 shall prohibit any transaction expressly permitted under
Section 8.05 hereof or required pursuant to Section 8.21 hereof);
(b) comply with the requirements of all applicable laws, rules,
regulations and orders of governmental or regulatory authorities if failure
to comply with such requirements could (either individually or in the
aggregate) have a Material Adverse Effect;
(c) pay and discharge all taxes, assessments and governmental charges
or levies imposed on it or on its income or profits or on any of its
Property prior to the date on which penalties attach thereto, except for
any such tax, assessment, charge or levy the payment of which is being
contested in good faith and by proper proceedings and against which
adequate reserves are being maintained;
Page 63
(d) maintain all of its Properties used or useful in its business in
good working order and condition, ordinary wear and tear excepted;
(e) keep adequate records and books of account, in which complete
entries will be made in accordance with generally accepted accounting
principles consistently applied; and
(f) permit representatives of the Lender, any lender under the
Funding Credit Agreement or the Agent, during normal business hours, to
examine, copy and make extracts from its books and records, to inspect any
of its Properties, and to discuss its business and affairs with its
officers, all to the extent reasonably requested by the Lender, any such
lender under the Funding Credit Agreement or the Agent (as the case may
be).
8.04 INSURANCE. Each of the Borrowers will, and will cause each of
its Subsidiaries to, maintain insurance with financially sound and reputable
insurance companies, and with respect to Property and risks of a character
usually maintained by corporations engaged in the same or similar business
similarly situated, against loss, damage and liability of the kinds and in the
amounts customarily maintained by such corporations and carry such other
insurance as is usually carried by such corporations or as is required by law.
8.05 PROHIBITION OF FUNDAMENTAL CHANGES. No Borrower will enter into
any transaction of merger or consolidation or amalgamation, or liquidate, wind
up or dissolve itself (or suffer any liquidation or dissolution). No Borrower
will acquire any business or Property from, or capital stock of, or be a party
to any acquisition of, any Person except for (i) purchases of inventory and
other Property to be sold or used in the ordinary course of business, and (ii)
Investments permitted under Section 8.08 hereof. No Borrower will convey, sell,
lease, transfer or otherwise dispose of, in one transaction or a series of
transactions, all or a substantial part of its business or Property, whether now
owned or hereafter acquired including, without limitation, receivables and
leasehold interests, but excluding (i) obsolete or worn-out Property, tools or
equipment no longer used or useful in its business so long as the sum of the
amount thereof PLUS the amount of any Mortgaged Property (other than the Alberta
Hydrocarbon Rights and the proceeds thereof) (each as defined in the Forest
Debenture), tools or equipment no longer used or useful in connection with the
Forest Pledged Properties, sold in any single fiscal year by all Borrowers and
Forest shall not, in the aggregate, have a fair market value in excess of
C$1,000,000 (or the equivalent in other currencies), (ii) any hydrocarbons
produced or sold in the ordinary course of business and on ordinary business
terms (excluding prepayment contracts or similar agreements or any other sale or
lease of interests in hydrocarbons in the ground), (iii) other Properties (other
than Unrestricted Properties) provided that the sum of the fair market value of
such other Properties and the fair market value of any Alberta
Page 64
Hydrocarbon Rights (as defined in the Forest Debenture) conveyed, sold,
leased, transferred or otherwise disposed of on or after the date hereof
shall not, in the aggregate, exceed C$7,500,000 (or the equivalent in other
currencies) (PROVIDED, if any single Property or Mortgaged Property (as
defined in the Forest Debenture) or group of Properties or Mortgaged
Properties (as defined in the Forest Debenture) disposed of as part of a
single plan of disposition, sale, transfer, lease or conveyance shall have a
fair market value in excess of C$1,000,000 (or the equivalent in other
Currencies), such disposition shall not occur without the prior written
consent of the Lender and the Agent), (iv) the scheduled expiration of leases
covering hydrocarbon producing properties in accordance with their terms, (v)
Unrestricted Properties, (vi) Canadian Forest may complete the transfer of
assets to ProMark in connection with the transfer to ProMark of all or
substantially all of Canadian Forest's assets used or useful in gas
marketing, and (vii) the transactions contemplated by the Forest Purchase
Agreement.
Notwithstanding the foregoing provisions of this Section 8.05:
(a) any Subsidiary of Canadian Forest (other than ProMark) may be
amalgamated or consolidated with or into: (i) Canadian Forest if Canadian
Forest shall be the continuing or surviving corporation and the
amalgamation or consolidation does not have a Material Adverse Effect or
(ii) any other such Subsidiary; PROVIDED that (x) if any such transaction
shall be between a Subsidiary and a Wholly Owned Subsidiary, the Wholly
Owned Subsidiary shall be the continuing or surviving corporation and
(y) ProMark may be amalgamated or consolidated as provided in clauses (i)
and (ii) above if each of the lenders party to Funding Credit Agreement
(other than BOM) and BOM have entered into intercreditor arrangements
satisfactory to each of such lenders and BOM;
(b) any Non-Borrowing Subsidiary of Canadian Forest may sell, lease,
transfer or otherwise dispose of any or all of its Property (upon voluntary
liquidation or otherwise) to Canadian Forest or a Wholly Owned Subsidiary
of Canadian Forest and any Subsidiary Borrower may sell, lease, transfer or
otherwise dispose of any or all of its Property (upon voluntary liquidation
or otherwise) to Canadian Forest or another Subsidiary Borrower; and
(c) Canadian Forest or any Subsidiary of Canadian Forest may
amalgamate or consolidate with any other Person if (i) in the case of a
merger or consolidation of Canadian Forest, Canadian Forest is the
surviving corporation and, in any other case, the surviving corporation is
a Wholly Owned Subsidiary of Canadian Forest and (ii) after giving effect
thereto no Material Adverse Effect would occur nor would any Default exist
hereunder; provided that none of the Security Documents shall be affected
in any adverse manner or impaired by any of the foregoing and any documents
required to confirm the Borrowers' obligations hereunder and under the
Security Documents are provided to the Lender on or prior to the
transactions described above occurring.
Page 65
8.06 LIMITATION ON LIENS. No Borrower will create, incur, assume or
suffer to exist any Lien upon any of its Property, whether now owned or
hereafter acquired, except:
(a) Liens created pursuant to the Security Documents;
(b) Liens in existence on the Effective Date and listed in Part B of
Schedule I hereto;
(c) Liens imposed by any governmental authority for taxes,
assessments or charges not yet due or that are being contested in good
faith and by appropriate proceedings if, unless the amount thereof is not
material with respect to it or its financial condition, adequate reserves
with respect thereto are maintained on the books of such Borrower or such
Borrower's Subsidiaries, as the case may be, in accordance with GAAP;
(d) carriers', warehousemen's, mechanics', materialmen's,
repairmen's, builder's or other like Liens arising in the ordinary course
of business that are not overdue for a period of more than 45 days or that
are being contested in good faith and by appropriate proceedings, and Liens
securing judgments (but only to the extent for an amount and for a period
not resulting in an Event of Default under Section 9.01(h) hereof);
(e) pledges or deposits under worker's compensation, unemployment
insurance and other social security legislation;
(f) deposits to secure the performance of bids, trade contracts
(other than for Indebtedness), leases, statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a like nature
incurred in the ordinary course of business;
(g) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business and encumbrances
consisting of zoning restrictions, easements, licenses, restrictions on the
use of Property or minor imperfections in title thereto that, in the
aggregate, are not material in amount, and that do not in any case
materially detract from the value of the Property subject thereto or
interfere with the ordinary conduct of the business of such Borrower or any
of such Borrower's Subsidiaries;
(h) Liens (provided such Liens consist only of floating charges on
real property and security interests in personal property) on Property of
any corporation that becomes a Subsidiary of Canadian Forest after the date
hereof, PROVIDED that such Liens are in existence at the time such
corporation becomes
Page 66
a Subsidiary of Canadian Forest and were not created in anticipation
thereof;
(i) Liens securing obligations of a Subsidiary of Canadian Forest to
a Borrower, and obligations of a Borrower to another Borrower;
(j) Liens for farm-in, farm-out, joint operating, area of mutual
interest agreements or similar agreements entered into by a Borrower in the
ordinary course of business which a Borrower determines in good faith to be
necessary for or advantageous to the economic development of its
Properties; PROVIDED any farm-out agreements covering any Property other
than Unrestricted Property shall require the prior written consent of the
Lender (with the consent of Majority Lenders);
(k) (i) Liens on Property of the Borrowers that are pari passu or
subordinated to the Liens created pursuant to this Agreement (other than
receivables) created pursuant to any Commodity Hedging Agreement or
Interest Rate Protection Agreement or Currency hedge agreement permitted
pursuant to Section 8.08(e) with any lender under the Funding Credit
Agreement or any affiliate of such lender or (ii) Liens on cash or cash
equivalents (other than receivables) created pursuant to any Commodity
Hedging Agreement or Interest Rate Protection Agreement or Currency hedge
agreement permitted pursuant to Section 8.08(e) hereof with any Person
(other than a lender under the Funding Credit Agreement) provided that the
aggregate amount of cash or cash equivalents secured by such Liens shall
not exceed C$2,000,000 (or its equivalent in other currencies) in the
aggregate at any one time;
(l) Liens on the accounts receivable of ProMark (including accounts
receivable held by Canadian Forest in trust for ProMark pursuant to the
Sale Agreement) to secure ProMark's obligations under the BOM Agreement;
(m) any extension, renewal or replacement of the foregoing, PROVIDED
that the Liens permitted hereunder would not nor shall be amended to cover
any additional Indebtedness or Property (other than a substitution of like
Property); and
(n) additional Liens upon Property created after the Effective Date,
PROVIDED that the aggregate Indebtedness secured thereby and incurred on
and after the Effective Date shall not exceed C$1,000,000 (or its
equivalent in other currencies) in the aggregate at any one time
outstanding.
8.07 INDEBTEDNESS. No Borrower will create, incur or suffer to exist
any Indebtedness except:
(a) Indebtedness to the Lender;
Page 67
(b) Indebtedness of a Borrower outstanding on the Effective Date and
listed in Part A of Schedule I hereto;
(c) Subordinated Indebtedness of a Borrower;
(d) Indebtedness of a Borrower to another Borrower; and Indebtedness
of Subsidiaries of Canadian Forest to a Borrower or to other Wholly Owned
Subsidiaries of a Borrower;
(e) Indebtedness of the Borrowers and their Subsidiaries secured by
Liens permitted by Section 8.06(j) hereof up to but not exceeding C$500,000
(or its equivalent in other currencies) at any one time outstanding;
(f) performance Guarantees of the obligations of ProMark issued by
Canadian Forest guaranteeing delivery of gas volumes under gas sales
contracts entered into in the ordinary course of business by ProMark,
PROVIDED that the aggregate volumes of gas for which delivery has been
guaranteed does not exceed 1.5bcf per day; and unsecured payment Guarantees
issued by Canadian Forest guaranteeing payment for hydrocarbons purchased
in the ordinary course of business by ProMark, PROVIDED that the aggregate
amount guaranteed does not exceed C$100,000,000 (or the equivalent Amount)
at any one time outstanding;
(g) Indebtedness of ProMark assumed or acquired by it under the Sale
Agreement;
(h) additional Indebtedness of Canadian Forest and its Subsidiaries
up to but not exceeding C$1,000,000 (or its equivalent in other Currencies)
at any one time outstanding; and
(i) the Canadian Forest Guarantee.
8.08 INVESTMENTS. No Borrower will, nor will any Borrower permit any
of its Subsidiaries to, make or permit to remain outstanding any Investments
except:
(a) Investments outstanding on the Effective Date and identified in
Schedule II hereto;
(b) operating deposit accounts with banks;
(c) Permitted Investments;
(d) Investments by a Borrower permitted by Section 8.07(d), (f) and
(h)
Page 68
hereof;
(e) Investments made on and after the Closing Date by a Borrower in
(i) Interest Rate Protection Agreements in which (A) a Borrower is a fixed
rate payor (or for which a Borrower shall have purchased a cap), and (B)
the notional amount(s) therefor will constitute, at any time during the
term(s) of such Interest Rate Protection Agreement(s), an amount not to
exceed the lesser of C$30,000,000 and the outstanding aggregate principal
balance of the Loans; and (ii) Commodity Hedging Agreements (A) entered
into by a Borrower in the ordinary course of business to hedge expected
potential fluctuations of the price of oil and gas or for other business
purposes and not for speculation and (B) where the aggregate notional
amount of all such Commodity Hedging Agreements shall not exceed 80% of the
Borrowers' combined anticipated hydrocarbon production (net of royalties)
during the three years immediately succeeding any date of determination;
(f) Investments by a Borrower in Wholly Owned direct Subsidiaries of
a Borrower made after the Effective Date provided that if at any time the
aggregate amount of such Investments PLUS the aggregate amount of
Investments pursuant to Section 8.08(h) hereof exceeds C$5,000,000 (or its
equivalent in other currencies), a Borrower will cause each such Subsidiary
that receives any such Investment (including without limitation the
Investment which causes the aggregate of the Investments pursuant to
Section 8.08(h) and this Section 8.08(f) to exceed C$5,000,000 (or its
equivalent in other Currencies)) to become a Subsidiary Borrower in
accordance with Section 8.28 hereof; provided that (i) if any Wholly Owned
Subsidiaries are sold, transferred or otherwise disposed of, the amount of
the Investment in such Wholly Owned Subsidiary shall be considered to be an
Investment pursuant to this Section 8.08(f) provided that the net proceeds
received by a Borrower (after the payment of any expenses incurred in
connection therewith and the repayment of any debt required to be paid upon
such sale, transfer or other disposition) from such sale, transfer or other
disposition shall reduce (but not below zero) the Investment in such Wholly
Owned Subsidiary and (ii) the amount (but not in excess of the amount
invested pursuant to this Section 8.08(f)) of any Investment in a Wholly
Owned Subsidiary pursuant to this Section 8.08(f) that becomes a Subsidiary
Borrower shall cease to be considered an Investment for the purposes of
this Section 8.08(f);
(g) Investments by a Borrower in another Borrower; and
(h) additional Investments of the Borrowers up to but not exceeding
C$5,000,000 (or its equivalent in other Currencies) in the aggregate.
8.09 DIVIDEND PAYMENTS. No Borrower will make, nor will such
Borrower permit any of its Subsidiaries to make any Dividend Payment at any
time; PROVIDED that
Page 69
(i) a Borrower or any Subsidiary of a Borrower may make dividend payments to
a Borrower, (ii) Canadian Forest may, contemporaneously with consummation of
the Forest Purchase Agreement, make a Dividend Payment or return of capital
to 3189503 in an amount not to exceed C$30,000,000, and (iii) Canadian Forest
may declare and make Dividend Payments in cash, subject to the satisfaction
of each of the following conditions on the date of such Dividend Payment and
after giving effect thereto:
(A) no Default shall have occurred and be continuing or shall occur
as a result of the making of such Dividend Payment; and
(B) the aggregate amount of such dividend payments from and after the
Closing Date shall not exceed (x) $45,000,000 PLUS (y) an amount (which
cannot be less than zero) equal to 50% of consolidated net income of
Canadian Forest and its Subsidiaries for the period from the Trigger Date
to the date of determination (treated for these purposes as a single
accounting period) or zero, if Canadian Forest and its Subsidiaries have a
consolidated net loss for such period. For the purposes of this Section
8.09, "TRIGGER DATE" shall mean the date upon which the aggregate of the
combined Cash Flow of the Borrowers following the Closing Date PLUS cash
equity contributions received by Canadian Forest from Atcor Resources,
Acquisition Co. or 3189503 following the Closing Date and exclusive of any
increase in the equity of Canadian Forest (or its successor) as a result of
the Amalgamation, equals $45,000,000.
Nothing herein shall be deemed to prohibit the payment of dividends by
any Subsidiary of a Borrower to a Borrower or to any other Subsidiary of a
Borrower.
8.10 DEBT COVERAGE RATIO; INTEREST COVERAGE RATIO.
(a) The Borrowers will not permit the Debt Coverage Ratio for any
period of two complete consecutive fiscal quarters (treated for this purpose as
a single accounting period), to be less than 1.50 to 1 as of the end of any
fiscal quarter of Canadian Forest.
(b) The Borrowers will not permit the Interest Coverage Ratio for any
period of two complete consecutive fiscal quarters (treated for this purpose as
a single accounting period), to be less than 3.00 to 1 as of the end of any
fiscal quarter of Canadian Forest.
8.11 WORKING CAPITAL. The Borrowers will not permit the current
assets of the Borrowers (determined on a consolidated basis in accordance with
GAAP) to be equal to or less than the current liabilities of the Borrowers (so
determined). For purposes hereof, the terms "CURRENT ASSETS" and "CURRENT
LIABILITIES" shall have the respective meanings assigned to them by GAAP,
PROVIDED that in any event there shall be (i) included in current assets the
Available Borrowing Amount (but only to the extent
Page 70
such Available Borrowing Amount could then be utilized as provided in Section
6.02 hereof), (ii) excluded from current liabilities all Indebtedness
hereunder and (iii) excluded from current liabilities the current portion of
any liabilities generated from the overproduction of any of the Borrower's
working interest gas.
8.12 SUBORDINATED INDEBTEDNESS. No Borrower will nor will it permit
any of its Subsidiaries to purchase, redeem, retire or otherwise acquire for
value, set apart any money for a sinking, defeasance or other analogous fund
for, the purchase, redemption, retirement or other acquisition of, or make any
voluntary payment or prepayment of the principal of or interest on, or any other
amount owing in respect of any Subordinated Indebtedness.
8.13 LINES OF BUSINESS. The Borrowers will not, nor will they permit
any of their Subsidiaries to, engage to any substantial extent in any line or
lines of business activity other than the business of the acquisition,
exploration, production, processing, marketing, trading, gathering and sale of
hydrocarbons in Canada and the United States (but in no event shall the
Borrowers or any of their Subsidiaries engage in the refining of oil).
8.14 TRANSACTIONS WITH AFFILIATES. Except as expressly permitted by
this Agreement, the Borrowers will not, nor will they permit any of their
respective Subsidiaries to, directly or indirectly: (a) make any Investment in
an Affiliate; (b) transfer, sell, lease, assign or otherwise dispose of any
Property to an Affiliate; (c) merge into or consolidate with or purchase or
acquire Property from an Affiliate; or (d) enter into any other transaction
directly or indirectly with or for the benefit of an Affiliate (including,
without limitation, Guarantees and assumptions of obligations of an Affiliate);
PROVIDED that (i) any Affiliate who is an individual may serve as a director,
officer or employee of the Borrowers or any of its Subsidiaries and receive
reasonable compensation for his or her services in such capacity, (ii) the
Borrowers and their Subsidiaries may enter into transactions (other than
extensions of credit by the Borrowers or any of their Subsidiaries to an
Affiliate) providing for the leasing of Property, the rendering or receipt of
services or the purchase or sale of inventory and other Property in the ordinary
course of business if the monetary or business consideration arising therefrom
would be substantially as advantageous to the Borrowers and their Subsidiaries
as the monetary or business consideration that would obtain in a comparable
transaction with a Person not an Affiliate and (iii) Canadian Forest may sell
the Forest Pledged Properties to Forest in accordance with the provisions of the
Forest Purchase Agreement.
8.15 USE OF PROCEEDS.
(a) The Borrowers will use the proceeds of the Loans hereunder solely
for general corporate purposes (in compliance with all applicable legal and
regulatory requirements); PROVIDED that the Lender shall not have any
responsibility as to the use
Page 71
of any of such proceeds.
(b) The Borrowers will use the proceeds of the Swingline Loans
hereunder solely (i) to repay amounts outstanding under the BOM Agreement and
(ii) for general corporate purposes.
8.16 CERTAIN OBLIGATIONS RESPECTING SUBSIDIARIES.
(a) OWNERSHIP OF SUBSIDIARIES. Canadian Forest will, and will cause
each of its Subsidiaries to, take such action from time to time as shall be
necessary to ensure that each of its Subsidiaries is a Wholly Owned Subsidiary.
In the event that any additional shares of stock shall be issued by any
Subsidiary Borrower, Canadian Forest agrees forthwith to deliver to the Agent,
on behalf of the Lender pursuant to the Canadian Forest Debenture the
certificates evidencing such shares of stock, accompanied by undated stock
powers executed in blank and to take such other action as the Agent, as assignee
of the Lender shall request to perfect the security interest created therein
pursuant to the Canadian Forest Debenture.
(b) CERTAIN RESTRICTIONS. Other than (i) the Loan Documents, (ii)
any documents in favor of the Agent or the lenders under the Funding Credit
Agreement and (iii) in the case of ProMark, the BOM Agreement, no Borrower will
permit any of its Subsidiaries to enter into, after the date hereof, any
indenture, agreement, instrument or other arrangement that, directly or
indirectly, prohibits or restrains, or has the effect of prohibiting or
restraining, or imposes materially adverse conditions upon, the incurrence or
payment of Indebtedness, the granting of Liens, the declaration or payment of
dividends, the making of loans, advances or Investments or the sale, assignment,
transfer or other disposition of Property.
8.17 OWNERSHIP. Canadian Forest will at all times own 100% of the
outstanding capital stock of ProMark.
8.18 MODIFICATIONS OF CERTAIN DOCUMENTS AND PAYMENTS. Canadian
Forest will not consent to any material modification, supplement or waiver of
any of the provisions of (i) its charter documents if such modification,
supplement or waiver would have a Material Adverse Effect, or (ii) documentation
in respect of any Subordinated Indebtedness, in each case without the prior
consent of the Lender (with the approval of each lender under the Funding Credit
Agreement). No Borrower will consent to any modification, supplement or waiver
of any of the Loan Documents without the approval of the Agent and the Majority
Lenders.
8.19 LIMITATIONS ON SALE AND LEASEBACK TRANSACTIONS. No Borrower
will, nor will it permit any of its Subsidiaries to, enter into, renew or extend
any transaction or series of related transactions pursuant to which such
Borrower or any such Subsidiary sells or transfers any Property in connection
with the leasing, or the release against
Page 72
installment payments, or as part of an arrangement involving the leasing or
resale against installment payments, of such Property to the seller or
transferor ("SALE AND LEASEBACK TRANSACTION") except a Sale and Leaseback
Transaction entered into prior to the date of this Agreement.
8.20 GOVERNMENTAL APPROVALS. Each Borrower agrees that it will
promptly obtain from time to time at its own expense and at all times maintain
in full force and effect without any material modification or amendment, all
such governmental licenses, authorizations, registrations, consents, permits and
approvals as may be required for such Borrower to (a) comply with its
obligations, and preserve its rights under, each of the Loan Documents and
(b) maintain the existence, priority and perfection of the Liens purported to be
created under the Security Documents.
8.21 PROPERTY SUBJECT TO THE LIEN OF THE SECURITY DOCUMENTS. By the
Closing Date, Canadian Forest shall (i) cause substantially all of its
Properties, including without limitation all of the Hydrocarbon Properties which
have been given any value in connection with the determination of the initial
Borrowing Base to be subjected to the Lien of the Security Documents and (ii)
perform such other acts and deeds in connection with clause (i) above, at the
expense of Canadian Forest, as the Lender (at the direction of the Majority
Lenders) shall require.
8.22 ENVIRONMENTAL MATTERS.
(a) Each Borrower will and will cause each of its Subsidiaries to
comply in all material respects with all Environmental Laws now or hereafter
applicable to such Borrower or its Subsidiaries, and shall obtain, at or prior
to the time required by applicable Environmental Laws, all environmental, health
and safety permits, licenses and other authorizations necessary for its
operations and maintain such authorizations in full force and effect, except to
the extent failure to have any such permit, license or authorization would not
have a Material Adverse Effect.
(b) Each Borrower will and will cause each of its Subsidiaries to
promptly furnish to the Lender and the Agent all written notices of violation,
orders, claims, citations, complaints, penalty assessments, suits or other
proceedings, administrative, civil or criminal, at law or in equity, received by
such Borrower or its Subsidiaries or of which it has notice, pending or
threatened against such Borrower or its Subsidiaries by any governmental
authority with respect to any alleged violation of or non-compliance with any
Environmental Laws or any permits, licenses or authorizations in connection with
its ownership or use of the Properties or the operation of its business.
(c) Each Borrower will and will cause each of its Subsidiaries to
promptly furnish to the Lender and the Agent all requests for information,
notices of claim, demand letters, and other notifications, received by such
Borrower or its Subsidiaries, to the effect that, in connection with its
ownership or use of its Properties or the conduct
Page 73
of its business, it may be potentially responsible with respect to any
investigation or clean-up of Hazardous Material at any location.
8.23 NO ACTION TO AFFECT SECURITY DOCUMENTS. The Borrowers shall not
do anything to adversely affect the priority of the Security Documents given or
to be given in respect of the obligations of the Borrowers hereunder.
8.24 FIXED CHARGE. The Borrowers shall, upon the reasonable request
by the Lender or the Agent, grant a fixed mortgage and charge (in form and
substance satisfactory to the Lender and the Agent) to or for the benefit of the
Lender, as collateral security for the Borrowers' obligations to the Lender
under this Agreement, on any of its Hydrocarbon Properties and assets (other
than the accounts receivable of ProMark) now owned or hereafter acquired that
are subject to a floating charge created by the Security Documents, free and
clear of any other mortgages, charges, encumbrances or other security interests
except as provided in Section 8.06.
8.25 FURTHER ASSURANCES. Each Borrower shall, after notice thereof
from Lender or the Agent, do all such further acts and things and execute and
deliver all such further documents as shall be reasonably requested by the
Lender or the Agent in order to give effect to this Agreement and the Security
Documents and shall cause the same to be registered wherever, in the opinion of
the Lender or the Agent, such registration may be required or advisable to
preserve, perfect or validate or continue the perfected status of any deemed or
other Lien granted pursuant to a Security Document or to enable the Lender to
exercise and enforce its rights hereunder with respect to such deemed or other
Lien.
8.26 TITLE DEFECTS. Canadian Forest shall, promptly upon becoming
aware of the existence of any title defect or any encumbrance (other than as
described in Section 8.06) affecting any Hydrocarbon Property which has been
given value in the most recent Borrowing Base (other than title defects which do
not materially and adversely impact the value of such Hydrocarbon Property),
give the Lender and the Agent prompt written notice of such title defect or
encumbrance, and in such case, Canadian Forest shall or shall cause the
applicable Subsidiary Borrower to undertake to take all steps necessary to cure
such title defect or discharge such encumbrance; PROVIDED that if Canadian
Forest, Forest or the applicable Subsidiary Borrower is unable to cure such
title defect or discharge such encumbrance to the reasonable satisfaction of the
Agent within 60 days following the date on which Canadian Forest shall have
given the notice referred to in this Section 8.26, then the remedy of the
Lender, the Agent and the lenders under the Funding Credit Agreement shall be to
cause the Borrowing Base to be reduced by an amount equal to the value (or such
portion thereof which has been impaired) assigned such Hydrocarbon Property in
the most recent Borrowing Base which reductions may lead to the provisions of
Section 2.11(a) becoming applicable and actions taken by the Lender, the Agent
and the Lenders under the Funding Credit Agreement in that regard; PROVIDED that
if the Agent
Page 74
reasonably believes that any title defect or series of defects has caused a
reduction in the Borrowing Base in excess of C$10,000,000 and such reduction
results in a Borrowing Base Deficiency, the Lender shall have all the rights
set forth in Section 9 hereof.
8.27 ADDITIONAL BORROWERS. The Borrowers will take such action, and
will cause each of their Wholly Owned Subsidiaries to take such action,
including without limitation the action specified below in this Section 8.27
from time to time as shall be necessary to ensure that if at any time the
aggregate amount of all Investments pursuant to Section 8.08(f) and (h) hereof
exceeds C$5,000,000 (or its equivalent in other currencies), Canadian Forest
will cause each Wholly Owned Subsidiary that receives any Investment from
Canadian Forest or ProMark (including without limitation the Investment which
causes the aggregate of the Investments pursuant to Section 8.08(f) and (h)
hereof to exceed C$5,000,000) (or its equivalent in other currencies) to become
Subsidiary Borrowers hereunder. Each Wholly Owned Subsidiary of Canadian Forest
that is required to or for any other reason desires to become a Subsidiary
Borrower after the date hereof shall execute such instruments, agreements,
guarantees and security and provide such other documents and opinions, in form
and substance satisfactory to, and as required by, the Lender and the Agent to
acknowledge that such Subsidiary has all of the rights and obligations of a
Borrower under this Agreement and to confirm that the Security Documents
constitute a Lien on its Properties free of any other encumbrances except those
described in Section 8.06 and that the Subsidiary Borrower and the other
Borrowers are and remain liable and obligated to pay all amounts due hereunder
and under any other Loan Document that they are party to.
8.28 SPECIAL COVENANT WITH RESPECT TO PROMARK.
(a) ProMark shall not amend in any material respect the written
policy with respect to its gas marketing activities delivered pursuant to
Section 6.01(v) hereof without the consent of the Lender, the Agent, BOM
and the Majority Banks.
(b) ProMark will provide the Lender, the Agent and each of the
Lenders under the Funding Credit Agreement with:
(i) a report as soon as available and in any event within 60
days after the end of each quarterly fiscal period of each fiscal year
of ProMark setting forth the aging with respect to each of ProMark's
receivables (and the name and amount owed by each Person that is an
obligor with respect to such receivables); and
(ii) prompt notice of any request or demand for payment of an
amount in excess of C$5,000,000 (other than in the ordinary course of
business) or for delivery of gas valued in excess of C$5,000,000
(other
Page 75
than in the ordinary course of business) or of any requests or
demands for payment or for delivery of gas if the aggregate amount so
requested or demanded (other than in the ordinary course of business)
exceeds or is valued in excess of, as the case may be, C$5,000,000 in
any calendar month under any Guarantee of Canadian Forest permitted
pursuant to Section 8.
Section 9. EVENTS OF DEFAULT; REMEDIES.
9.01 EVENTS OF DEFAULT. If one or more of the following events
(herein called "EVENTS OF DEFAULT") shall occur and be continuing:
(a) Any Borrower shall (i) default in the payment when due (whether
at stated maturity or upon mandatory or optional prepayment) of any
principal of or interest on any Loan (other than Swingline Loans), Letter
of Credit Reimbursement Obligations, any fee or any other amount payable by
it hereunder or under any other Loan Document or (ii) default in the
payment when due (whether on demand, at stated maturity or upon mandatory
or optional prepayment) of any principal or interest on a Swingline Loan
following the expiration of a 3 Business Day grace period that shall begin
upon the Borrowers' receipt of demand for payment on such Swingline Loan;
provided that with respect to this clause (ii) the Borrowers shall be
entitled to Convert such Swingline Loan to another Type of Loan to cure
such default; or
(b) Any Borrower or any of their respective Subsidiaries, or 3189503
shall default in the payment when due of any principal of or interest on
any of its other Indebtedness aggregating C$500,000 or more; or any event
specified in any note, agreement, indenture or other document evidencing or
relating to any such Indebtedness shall occur if the effect of such event
is to cause, or (with the giving of any notice or the lapse of time or
both) to permit the holder or holders of such Indebtedness (or a trustee or
agent on behalf of such holder or holders) to cause, such Indebtedness to
become due, or to be prepaid in full (whether by redemption, purchase,
offer to purchase or otherwise), prior to its stated maturity or to have
the interest rate thereon reset to a level so that securities evidencing
such Indebtedness trade at a level specified in relation to the par value
thereof; or any Borrower or any of their respective Subsidiaries, or
3189503 shall default in the payment when due of any amount aggregating
C$100,000 or more under any Interest Rate Protection Agreement or Commodity
Hedging Agreement; or any event specified in any Interest Rate Protection
Agreement or Commodity Hedging Agreement shall occur if the effect of such
event is to cause, or (with the giving of any notice or the lapse of time
or both) to permit, termination or liquidation payment or payments
aggregating C$250,000 or more to become due; or
Page 76
(c) Any representation, warranty or certification made or deemed made
herein or in any other Loan Document (or in any modification or supplement
hereto or thereto) by any Borrower, 3189503, or Forest or any Material
Subsidiary, or any certificate furnished to any lender under the Funding
Credit Agreement or the Agent pursuant to the provisions hereof or thereof,
shall prove to have been false or misleading as of the time made or
furnished in any material respect; or
(d) Any Borrower shall default in the performance of any of its
obligations under any of Sections 8.01(h), 8.05, 8.06, 8.07, 8.08, 8.09,
8.10, 8.11, 8.13, 8.15, 8.16, 8.17, 8.18 or 8.20 hereof; or 3189503 shall
default in the performance of any of its obligations under Sections
6.01(e), 6.04 or 7.02 of the 3189503 Guarantee and Pledge Agreement; or
Forest shall default in the performance of any of its obligations under any
of Sections 9.1, 9.2, 9.4 or 9.6 of the Forest Debenture; or any Borrower,
3189503 or Forest shall default in the performance of any of its other
obligations in this Agreement or any other Loan Document and such default
shall continue unremedied for a period of thirty or more days after notice
thereof to the Borrowers by the Lender; or
(e) Any Relevant Party or Forest shall admit in writing its inability
to, or be generally unable to, pay its debts as such debts become due; or
(f) Any Relevant Party or Forest shall (i) apply for or consent to
the appointment of, or the taking of possession by, a receiver, custodian,
trustee, examiner or liquidator of itself or of all or a substantial part
of its Property, (ii) make a general assignment for the benefit of its
creditors, (iii) file a petition seeking to take advantage of any other law
relating to bankruptcy, insolvency, reorganization, liquidation,
dissolution, arrangement or winding-up, or composition or readjustment of
debts, (iv) take any corporate action for the purpose of effecting any of
the foregoing or (v) do the equivalent of any of the foregoing under the
laws of Canada or the United States, as applicable; or
(g) A proceeding or case shall be commenced, without the application
or consent of the affected Relevant Party or Forest, as the case may be, in
any court of competent jurisdiction, seeking (i) its reorganization,
liquidation, dissolution, arrangement or winding-up, or the composition or
readjustment of its debts, (ii) the appointment of a receiver, custodian,
trustee, examiner, liquidator or the like of such Relevant Party or Forest
or of all or any substantial part of its Property, (iii) similar relief in
respect of such Relevant Party under the Bankruptcy and Insolvency Act
(Canada) or such Relevant Party or Forest under any other law relating to
bankruptcy, insolvency, reorganization, winding-up, or composition or
adjustment of debts, and such proceeding or case shall continue
undismissed, or an order, judgment or decree approving or ordering any of
the foregoing shall be entered and continue unstayed and in effect, for a
period of 60
Page 77
or more days or (iv) the equivalent of any of the foregoing
under the laws of Canada or the United States, as applicable; or
(h) A final judgment or judgments for the payment of money of
C$1,000,000 or more in the aggregate (exclusive of judgment amounts fully
covered by insurance (subject to ordinary and customary deductibles) where
the insurer has admitted liability in respect of the full amount (subject
to ordinary and customary deductibles) of such judgment(s) in excess of
C$1,000,000 and in respect of which the Majority Lenders believe such
insurer has the financial ability to satisfy the full amount of such
judgment(s)) shall be rendered by one or more courts, administrative
tribunals or other bodies having jurisdiction against any Relevant Party
and the same shall not be discharged (or provision shall not be made for
such discharge), or a stay of execution thereof shall not be procured,
within 60 days from the date of entry thereof, or such Relevant Party shall
not, within said period of 60 days, or such longer period during which
execution of the same shall have been stayed, appeal therefrom and cause
the execution thereof to be stayed during such appeal; or
(i) Any governmental authority shall take any action to condemn,
seize, nationalize or appropriate any substantial portion of the Property
of any Borrower (either with or without payment of compensation) or shall
take any action that, in the opinion of the Majority Lenders, adversely
affects the ability of such Borrower to perform its obligations under this
Agreement or any other Loan Document; or
(j) The Liens created by the Security Documents shall at any time not
constitute a valid and perfected Lien on the collateral intended to be
covered thereby (to the extent perfection by filing, registration,
recordation or possession is required herein or therein) in favor of the
Lender, free and clear of all other Liens (other than Liens permitted under
Section 8.06 hereof or under the respective Security Documents), or, except
for expiration in accordance with its terms, any of the Security Documents
shall for whatever reason be terminated or cease to be in full force and
effect, or the enforceability thereof shall be contested by any Borrower,
Forest or 3189503, as applicable; or
(k) Any Governmental Authority shall assert claims against any
Relevant Party, or any other Person shall commence any proceeding against
any Relevant Party before any court, administrative tribunal or other body
having jurisdiction over such Relevant Party, in either such case based on
or arising from the generation, storage, transport, handling or disposal of
Hazardous Materials by such Relevant Party or Affiliates, or any
predecessor in interest of such Relevant Party or Affiliates, or relating
to any site or facility owned, operated or leased by such Relevant Party or
Affiliates, which claims or liabilities (insofar as they are payable by
such Relevant Party but after deducting any portion thereof which may
reasonably be expected to be paid by other
Page 78
creditworthy Persons jointly and severally liable therefor), and the amount
thereof may, singly or in the aggregate, reasonably be anticipated to have
a Material Adverse Effect and such claim is not withdrawn or such proceeding
is not withdrawn or dismissed, as the case may be, within 45 days after the
assertion or commencement thereof, as applicable; or
(l) Canadian Forest shall cease to be a Wholly Owned Subsidiary of
3189503; or
(m) if a writ, execution or attachment or similar process is issued
or levied against all or a material portion of the Forest Pledged
Properties in connection with any judgement or judgements against those
Forest Pledged Properties aggregating in excess of C$1,000,000 and such
writ, execution, attachment or similar process is not released, bonded,
satisfied, discharged, vacated or stayed within 30 days after its entry,
commencement or levy;
(n) if an encumbrancer or lienor takes possession of any material
part of the Forest Pledged Properties, or if execution or other similar
process is enforced against such property;
(o) Forest shall apply for or consent to the appointment of, or the
taking of possession by, a receiver, custodian, trustee, examiner or
liquidator of all or a substantial part of the Forest Pledged Properties;
or a proceeding or case shall be commenced, without the application or
consent of Forest, in any court of competent jurisdiction, seeking the
appointment of a receiver, custodian, trustee, examiner, liquidator or the
like of all or any substantial part of the Forest Pledged Properties and
such proceeding or case shall continue undismissed, or an order, judgment
or decree approving or ordering any of the foregoing shall be entered and
continue unstayed and in effect, for a period of 60 or more days; or any
governmental authority shall take any action to condemn, seize, nationalize
or appropriate any substantial portion of the Forest Pledged Properties
(either with or without payment of compensation) or shall take any action
that, in the opinion of the Majority Lenders, adversely affects the ability
of Forest to perform its obligations under the Forest Guarantee or the
Forest Debenture; or any claim shall be asserted, or proceeding commenced,
against Forest based on or arising from the matters dealt with in clause
(k) which affect the Forest Pledged Properties, and the amount thereof may,
singly or in the aggregate, reasonably be anticipated to have a Material
Adverse Effect and such claim is not withdrawn or such proceeding is not
withdrawn or dismissed, as the case may be, within 45 days after the
assertion or commencement thereof, as applicable; or
(p) 3189503 shall cease to be a Wholly Owned Subsidiary of Forest; or
(q) ProMark or any other Subsidiary Borrower shall cease to be a
Wholly
Page 79
Owned Subsidiary of Canadian Forest; or
(r) Any event shall occur if the effect is to cause the Indebtedness
under the Second Amended and Restated Credit Agreement dated as of January
31, 1997 among Forest, the Subsidiary Guarantors and Subsidiary Obligors
mentioned therein, the lenders party thereto and Chase Manhattan, as agent
(as such agreement is amended, supplemented and modified from time to time)
to become due, or to be prepaid (other than voluntary) in full prior to its
stated maturity; or
(s) Any Event of Default (as defined in the Funding Credit Agreement)
shall occur and be continuing; or
(t) the aggregate Principal Amount of each Type of Loan (including
Swingline Loans) and all Bankers' Acceptance Liabilities and of Letter of
Credit Liabilities (all of those terms being as defined in the Funding
Credit Agreement) outstanding under the Funding Credit Agreement shall be
respectively greater than the sum of the corresponding:
(i) aggregate Principal Amount of all Types of Loans
(including Swingline Loans) under this Agreement; and
(ii) aggregate Letter of Credit Liabilities hereunder; or
(u) the rates of interest, fees and other amounts payable in respect
of Loans, Bankers' Acceptances and Letters of Credit (all those terms being
as defined in the Funding Credit Agreement) under the Funding Credit
Agreement shall be greater than the rates of interest, fees and other
amounts payable in respect of corresponding Types of Loans and Letters of
Credit under this Agreement; or
(v) Forest shall have or incur any obligation to cause any of the
Borrowers to grant a "Guarantee" (as defined in the Forest Indenture).
THEREUPON: (1) in the case of the occurrence and during the continuance of an
Event of Default other than one referred to in clause (a)(ii), (f) or (g) of
this Section 9.01 with respect to any Borrower, the Lender shall (but only upon
the direction of the Agent or the Majority Lenders), by notice to the Borrowers,
terminate the Commitment and/or declare the Principal Amount then outstanding
of, and the accrued interest on, the Loans, the Swingline Loans, the Letter of
Credit Reimbursement Obligations and all other amounts payable by any Borrower
hereunder and under the Notes (including, without limitation, any amounts
payable under Section 5.05 hereof) to be forthwith due and payable, whereupon
such amounts shall be immediately due and payable without presentment, demand,
protest or other formalities of any kind, all of which are hereby
Page 80
expressly waived by each Borrower; (2) in the case of the occurrence of an
Event of Default referred to in clause (f) or (g) of this Section 9.01 with
respect to any Borrower, the Commitments shall automatically be terminated
and the principal amount then outstanding of, and the accrued interest on,
the Loans, the Swingline Loans, the Letter of Credit Reimbursement
Obligations, and all other amounts payable by any Borrower hereunder and
under the Notes (including, without limitation, any amounts payable under
Section 5.05 hereof) shall automatically become immediately due and payable
without presentment, demand, protest or other formalities of any kind, all of
which are hereby expressly waived by each Borrower and (3) in the case of the
occurrence of an Event of Default referred to in clause (a)(ii) of this
Section 9.01 with respect to the Borrowers, the Lender may and, upon receipt
of notice from the Administrative Agent, will, by notice to the Borrowers,
terminate the Commitment to make Swingline Loans pursuant to Section 2.05
hereof and/or declare the Principal Amount then outstanding of, and accrued
interest on, the Swingline Loans and all other amounts payable under the
Swingline Notes to be forthwith due and payable, whereupon such amounts shall
be immediately due and payable without presentment, demand, protest or other
formalities of any kind, all of which are hereby expressly waived by each
Borrower.
In addition, upon the occurrence and during the continuance of any
Event of Default (if the Lender has declared the Principal Amount then
outstanding of, and accrued interest on, the Loans and all other amounts payable
by the Borrowers hereunder and under the Notes to be due and payable), the
Borrowers agree that (i) they shall provide cover for the Letter of Credit
Liabilities and BA Loans by paying to the Lender immediately available funds in
an amount equal to the aggregate undrawn face amount of all Letters of Credit
and all BA Loans, which funds shall be held by the Lender in the Cash Collateral
Account as collateral security in the first instance PRO RATA for the Letter of
Credit Liabilities and BA Loans and be subject to withdrawal only as therein
provided and (ii) the Lender may (but only at the direction of the Agent or the
Majority Lenders), in addition to any other rights and remedies that it may have
hereunder or in law or at equity in that event, realize on all or any part of
the Security Documents held by them for the Borrowers' obligations hereunder.
Payment of the Principal Amount of any BA Loan as provided in paragraph (i)
above shall satisfy the obligation to pay any interest accrued on that BA Loan.
9.02 REMEDIES CUMULATIVE. It is expressly understood and agreed that
the rights and remedies of the Lender under the Loan Documents are cumulative
and are in addition to and not in substitution for any rights or remedies
provided by law; any single or partial exercise by the Lender of any right or
remedy for a default or breach of any term, covenant, condition or agreement
herein or therein contained shall not be deemed to be a waiver of or to alter,
affect or prejudice any other right or remedy or other rights or remedies to
which the Lender may be lawfully entitled for the same default or breach, and
any waiver by the Lender of the strict observance, performance or compliance
with any term, covenant, condition or agreement herein or therein contained, and
any indulgence granted thereby, shall be deemed not to be a waiver of
Page 81
any subsequent default. The Lender acting on the instructions of the Agent
and the Majority Lenders (or BOM in the case of Swingline Loans) may, to the
extent permitted by applicable law, bring suit at law, in equity or otherwise
for any available relief or purpose including but not limited to:
(a) the specific performance of any covenant or agreement contained
in the Loan Documents;
(b) enjoining a violation of any of the terms of the Loan Documents;
(c) aiding in the exercise of any power granted by the Loan Documents
or by law; or
(d) obtaining and recovering judgment for any and all amounts due in
respect of the Borrowers' obligations under this Agreement.
9.03 LENDER MAY PERFORM COVENANTS. If the Borrowers shall fail to
perform any covenant on their part herein contained, the Lender with the
approval of the Majority Lenders, may perform any such covenant capable of being
performed by the Lender and, if any such covenant requires the payment or
expenditure of money, the Lender may make such payment or expenditure with its
own funds. All amounts so paid by the Lender hereunder shall be repaid by the
Borrowers on demand therefor, and shall bear interest at the rate set forth in
Section 3.04 commencing on the date following a demand for payment of such
amounts.
Section 10. MISCELLANEOUS.
10.01 WAIVER. No failure on the part of the Lender to exercise and
no delay in exercising, and no course of dealing with respect to, any right,
power or privilege under this Agreement or any Note shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, power or
privilege under this Agreement or any Note preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. The
remedies provided herein are cumulative and not exclusive of any remedies
provided by law.
Each Borrower irrevocably waives, to the fullest extent permitted by
applicable law, any claim that any action or proceeding commenced by the Lender,
the Agent or any lender under the Funding Credit Agreement relating in any way
to this Agreement should be dismissed or stayed by reason, or pending the
resolution, of any action or proceeding commenced by any such Borrower relating
in any way to this Agreement whether or not commenced earlier. To the fullest
extent permitted by applicable law, each Borrower shall take all measures
necessary for any such action or proceeding commenced by the Lender, the Agent
or any lender under the Funding Credit Agreement to proceed to judgment prior to
the entry of judgment in any such
Page 82
action or proceeding commenced by any such Borrower.
10.02 NOTICES. All notices, requests and other communications
provided for herein and under the Security Documents (including, without
limitation, any modifications of, or waivers, requests or consents under, this
Agreement) shall be given or made in writing (including, without limitation, by
telex or telecopy) delivered to the intended recipient at the "Address for
Notices" specified below its name on the signature pages hereof); or, as to any
party, at such other address as shall be designated by such party in a notice to
each other party. Except as otherwise provided in this Agreement, all such
communications shall be deemed to have been duly given when transmitted by telex
or telecopier or personally delivered or, in the case of a mailed notice, upon
receipt, in each case given or addressed as aforesaid.
10.03 EXPENSES, ETC. The Borrowers jointly and severally agree to
pay or reimburse the Lender on demand an amount equal to the amount the Lender
owes to the lenders under the Funding Credit Agreement and the Agent for:
(a) all reasonable out-of-pocket costs and expenses of the Agent (including,
without limitation, the reasonable fees and expenses of Stikeman, Elliott,
Canadian counsel to Chase Canada and Milbank, Tweed, Xxxxxx & XxXxxx, special
New York counsel to Chase Canada) in connection with (i) the negotiation,
preparation, execution and delivery of this Agreement, the Funding Credit
Agreement, the other Loan Documents thereunder and hereunder (without
duplication of amounts paid pursuant to Section 10.03 of the Funding Credit
Agreement) and the extension of credit hereunder and (ii) the negotiation or
preparation of any modification, supplement or waiver of any of the terms of
this Agreement, the Funding Credit Agreement or any of the other Loan Documents
(whether or not consummated); (b) all reasonable out-of-pocket costs and
expenses of the Lender, the lenders under the Funding Credit Agreement and the
Agent (including, without limitation, the reasonable fees and expenses of legal
counsel) in connection with (i) any Default and any enforcement or collection
proceedings resulting therefrom, including, without limitation, all manner of
participation in or other involvement with (x) bankruptcy, insolvency,
receivership, foreclosure, winding up or liquidation proceedings, (y) judicial
or regulatory proceedings and (z) workout, restructuring or other negotiations
or proceedings (whether or not the workout, restructuring or transaction
contemplated thereby is consummated) and (ii) the enforcement of this
Section 10.03; and (c) all transfer, stamp, documentary or other similar taxes,
assessments or charges levied by any governmental or revenue authority in
respect of this Agreement or any of the other Loan Documents or any other
document referred to herein or therein and all costs, expenses, taxes,
assessments and other charges incurred in connection with any filing,
registration, recording or perfection of any security interest contemplated by
any Security Document or any other document referred to therein (in each case to
the extent, in the case of the lenders under the Funding Credit Agreement and
the Agent are not reimbursed by the Lender under the Funding Credit Agreement
for such expenses) or any discharge thereof.
Page 83
The Borrowers jointly and severally agree to indemnify the Lender, the
Agent and each lender under the Funding Credit Agreement and their respective
directors, officers, employees, attorneys and agents from, and hold each of them
harmless against, any and all losses, liabilities, claims, damages or expenses
incurred by any of them (including, without limitation, any and all losses,
liabilities, claims, damages or expenses incurred by the Lender, the Agent or
any lender under the Funding Credit Agreement, whether or not the Lender, the
Agent or any lender under the Funding Credit Agreement is a party thereto)
arising out of or by reason of any failure of the Borrowers to perform any of
their obligations hereunder or any investigation or litigation or other
proceedings (including any threatened investigation or litigation or other
proceedings) relating to the extensions of credit hereunder or any actual or
proposed use by the Borrowers or any of their Subsidiaries of the proceeds of
any of the extensions of credit hereunder, including, without limitation, the
reasonable fees and disbursements of counsel incurred in connection with any
such investigation or litigation or other proceedings (but excluding any such
losses, liabilities, claims, damages or expenses incurred by reason of the gross
negligence or willful misconduct of the Person to be indemnified) in each case,
with respect to the Agent and the lenders under the Funding Credit Agreement, to
the extent the full amount of such indemnification is not made by the Lender
pursuant to the Funding Credit Agreement. Without limiting the generality of
the foregoing, the Borrowers will jointly and severally indemnify the Lender,
the Agent and each lender under the Funding Credit Agreement from, and hold the
Lender, the Agent and each lender under the Funding Credit Agreement harmless
against, any losses, liabilities, claims, damages or expenses described in the
preceding sentence (but excluding, as provided in the preceding sentence, any
loss, liability, claim, damage or expense incurred by reason of the gross
negligence or willful misconduct of the Person to be indemnified) arising under
any Environmental Law as a result of the past, present or future operations of
any Borrower or any of its Subsidiaries (or any predecessor in interest to such
Borrower or any of its Subsidiaries), or the past, present or future condition
of any site or facility owned, operated or leased at any time by such Borrower
or any of its Subsidiaries (or any such predecessor in interest), or any Release
or threatened Release of any Hazardous Materials at or from any such site or
facility, excluding any such Release or threatened Release that shall occur
during any period when the Lender, the Agent or any lender under the Funding
Credit Agreement shall be in possession of any such site or facility following
the exercise by the Lender, the Agent or any lender under the Funding Credit
Agreement of any of its rights and remedies hereunder or under any of the
Security Documents, but including any such Release or threatened Release
occurring during such period that is a continuation of conditions previously in
existence, or of practices employed by such Borrower and its Subsidiaries, at
such site or facility.
A certificate of the Lender or the Agent as to the amount of any such
loss or expense shall be PRIMA FACIE proof of the amount thereof, in the absence
of manifest error. The amount required to be paid by the Borrowers hereunder
shall become part of the Borrowers' obligations hereunder, shall be payable by
the Borrower on demand,
Page 84
shall bear interest at the rate of interest that the Lender is required to
pay under the Funding Credit Agreement on such amounts calculated from the
date any indemnified cost, liability or damage is incurred or outlay is made
by the Lender hereunder to the date paid by the Borrowers.
10.04 AMENDMENTS, ETC. Any provision of this Agreement may be
modified or supplemented only by an instrument in writing signed by each
Borrower and the Lender with the prior written consent of the Agent and the
Majority Lenders.
10.05 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns.
10.06 ASSIGNMENTS AND PARTICIPATIONS.
(a) No Borrower may assign any of its rights or obligations hereunder
or under the Notes without the prior consent of the Lender (with the prior
written consent of the Agent).
(b) Except as provided in clause (c) below, the Lender may not assign
any of its Loans, its Note or its Commitment hereunder.
(c) Each Borrower understands that the Lender will assign and grant
to the Agent, as agent for the lenders from time to time party to the Funding
Credit Agreement a security interest in all of the Lender's right, title and
interest under this Agreement and the Security Documents. Each Borrower
consents to such assignment and grant and further agrees that all
representations, warranties, covenants and agreements of such Borrower made
herein shall also be for the benefit and inure to the Agent and such lenders and
all holders from time to time of the notes issued to and Bankers' Acceptances
accepted by, such lenders.
(d) Each Borrower acknowledges that in addition to the assignments
referred to above the Lender will assign to the Agent all payments to be made by
the Borrowers under this Agreement. The Lender agrees that payments made by the
Borrowers to the Agent pursuant to that assignment of payments will satisfy the
Borrowers' obligations hereunder to the extent of the amounts of the payments
made to the Agent.
10.07 SURVIVAL. The obligations of the Borrowers under Sections
5.01, 5.05 and 10.03 hereof shall survive the repayment of the Loans and the
Letter of Credit Reimbursement Obligations and the termination of the Commitment
and, in the case the Lender may assign any interest in the Commitment or Loans
hereunder, shall survive the making of such assignment, notwithstanding that it
may cease to be the "Lender" hereunder. In addition, each representation and
warranty made, or deemed to
Page 85
be made by a notice of any extension of credit herein or pursuant hereto
shall survive the making of such representation and warranty, and the Lender
shall not be deemed to have waived, by reason of making any extension of
credit hereunder, any Default that may arise by reason of such representation
or warranty proving to have been false or misleading, notwithstanding that
the Lender or the Agent may have had notice or knowledge or reason to believe
that such representation or warranty was false or misleading at the time such
extension of credit was made.
10.08 CAPTIONS. The table of contents and captions and section
headings appearing herein are included solely for convenience of reference and
are not intended to affect the interpretation of any provision of this
Agreement.
10.09 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Agreement by signing
any such counterpart.
10.10 GOVERNING LAW. This Agreement and the Notes shall be governed
by, and construed in accordance with, the laws of the Province of Alberta and
the laws of Canada applicable therein.
10.11 JURISDICTION, SERVICE OF PROCESS AND VENUE.
(a) Each party hereto hereby agrees that any suit, action or
proceeding with respect to this Agreement, any Note, the other Loan Documents or
any judgment entered by any court in respect thereof may be brought in the
courts of the Province of Alberta; and each party hereto hereby irrevocably
submits to the jurisdiction of such courts for the purpose of any such suit,
action, proceeding or judgment. Each party hereto further submits, for the
purpose of any such suit, action, proceeding or judgment brought or rendered
against it, to the appropriate courts of the jurisdiction of its domicile.
(b) Nothing herein shall in any way be deemed to limit the ability of
the Lender, the Agent or any lender under the Funding Credit Agreement to serve
any such writs, process or summonses in any other manner permitted by applicable
law or to obtain jurisdiction over the Borrowers in such other jurisdictions,
and in such manner, as may be permitted by applicable law.
(c) Each Borrower hereby irrevocably waives any objection that it may
now or hereafter have to the laying of the venue of any suit, action or
proceeding arising out of or relating to this Agreement or any other Loan
Document brought in the courts of the Province of Alberta and hereby further
irrevocably waives any claim that any such suit, action or proceeding brought in
any such court has been brought in an inconvenient forum.
Page 86
10.12 JUDGMENT CURRENCY. This is an international loan transaction
in which the specification of Canadian Dollars or U.S. Dollars is of the
essence, and the stipulated currency shall in each instance be the Currency of
account and payment in all instances. A payment obligation in one Currency
hereunder (the "ORIGINAL CURRENCY") shall not be discharged by an amount paid in
another currency (the "OTHER CURRENCY"), whether pursuant to any judgment
expressed in or converted into any Other Currency or in another place except to
the extent that such tender or recovery results in the effective receipt by the
Lender of the full amount of the Original Currency payable to the Lender under
this Agreement. If for the purpose of obtaining judgment in any court it is
necessary to convert a sum due hereunder in the Original Currency into the Other
Currency, the rate of exchange that shall be applied shall be that at which in
accordance with normal banking procedures the Agent could purchase Original
Currency at the Principal Office with the Other Currency on the Business Day
next preceding the day on which such judgment is rendered. The obligation of
each Borrower in respect of any such sum due from it to the Lender, the Agent or
any lender under the Funding Credit Agreement hereunder or under any other Loan
Document (in this Section 10.12 called an "ENTITLED PERSON") shall,
notwithstanding the rate of exchange actually applied in rendering such
judgment, be discharged only to the extent that on the Business Day following
receipt by such Entitled Person of any sum adjudged to be due hereunder in the
Other Currency such Entitled Person may in accordance with normal banking
procedures purchase and transfer the Original Currency to Toronto with the
amount of the judgment currency so adjudged to be due; and each Borrower hereby,
as a separate obligation and notwithstanding any such judgment, agrees to
indemnify such Entitled Person against, and to pay such Entitled Person on
demand, in the Original Currency, the amount (if any) by which the sum
originally due to such Entitled Person in the Original Currency hereunder
exceeds the amount of the Other Currency so purchased and transferred.
10.13 APPOINTMENT OF CANADIAN FOREST AS AGENT FOR NOTICE. Each
Borrower (other than Canadian Forest) hereby irrevocably appoints Canadian
Forest as its agent for the purpose of giving and receiving any and all notices
and other communications provided for herein to be given by or to it hereunder.
By its signature below, Canadian Forest hereby accepts such appointment.
10.14 JOINT AND SEVERAL LIABILITY. (a) All monetary obligations of
the Borrowers hereunder and under the other Loan Documents (including, without
limitation, the Notes) to which the Borrowers are a party shall be their joint
and several obligations.
(b) Each Borrower hereby agrees that until the payment and
satisfaction in full of all monetary obligations hereunder and the expiration or
termination of the Commitments it shall not exercise any right or remedy against
any other Borrower arising by reason of any performance by it of its joint and
several obligations hereunder,
Page 87
whether by subrogation or otherwise.
(c) In any action or proceeding involving any state or provincial
corporate law, or any state provincial or Federal bankruptcy, insolvency,
reorganization or other law affecting the rights of creditors generally, if the
monetary obligations of any Borrower hereunder or under the Notes would
otherwise be held or determined to be void, invalid or unenforceable, or
subordinated to the claims of any other creditors, then, notwithstanding any
other provision hereof to the contrary, the amount of such liability shall,
without any further action by such Borrower, the Lender or any other Person, be
automatically limited and reduced to the highest amount that is valid and
enforceable and not subordinated to the claims of other creditors as determined
in such action or proceeding (but such limitation and reduction shall not affect
the obligations of any other Borrower hereunder or under any other Loan
Document).
10.15 ADDITIONAL PROVISIONS RELATING TO INTEREST AND FEES.
(a) MAXIMUM RATE OF INTEREST. In no event shall any interest or fee
to be paid hereunder exceed the maximum rate permitted by applicable law. In
the event any such interest rate or fee exceed such maximum rate, such rate
shall be adjusted downward to the highest rate (expressed as a percentage per
annum) or fee that the parties could validly have agreed to by contract on the
date hereof under applicable law. It is further agreed that any excess actually
received by the Lender shall be credited against the Principal Amount of any
Loan (or the principal owing with respect to a BA Loan) or, if the Principal
Amount shall have been or would thereby be paid in full, the remaining amount
shall be credited to the applicable Borrower.
(b) CONTINUING OBLIGATIONS. All interest (including interest on
overdue interest) payable by the Borrowers to the Lender hereunder shall accrue
from day to day, computed as provided herein, and shall be payable after as well
as before maturity, demand, default and judgment.
(c) WAIVER OF SECTION 6 OF JUDGMENT INTEREST ACT. To the extent
permitted by law, Section 6 of the Judgment Interest Act (Alberta) shall not
apply to this Agreement and is hereby expressly waived by each Borrower.
10.16 SEVERABILITY. The provisions of this Agreement are intended to
be severable. If any provision of this Agreement shall be held invalid of
unenforceable in whole or in part in any jurisdiction, such provision shall, as
to such jurisdiction, be ineffective to the extent of such invalidity of
unenforceability without in any manner affecting the validity or enforceability
thereof in any other jurisdiction or the remaining provisions hereof in any
jurisdiction.
10.17 TIME OF ESSENCE. Time shall be of the essence hereof.
Page 88
10.18 CONFLICT OF TERMS. In the event of any conflict between the
terms of this Agreement and any other Loan Document, the provisions of this
Agreement shall prevail to the extent necessary to remove such conflict.
10.19 RESTATEMENT OF ORIGINAL CREDIT AGREEMENT. This Agreement
amends and restates the terms and conditions applicable to the revolving term
credit facility provided by the Lender to the Borrowers under the Original
Credit Agreement. The amendments contained in this Agreement shall be effective
as of the Effective Date. This Agreement governs the terms and conditions
applicable to the Commitment and the Loans (including the Swingline Loans) and
Letters of Credit provided hereunder to the Borrowers. All amounts outstanding
to the Lender as of the Effective Date under the Original Credit Agreement by
way of Eurodollar Loans, U.S. Base Rate Loans, Canadian Prime Loans, Letters of
Credit, and BA Loans (as each of such terms are defined in the Original Credit
Agreement) shall, as of the date hereof, be deemed to be outstanding hereunder
as borrowings by way of Eurodollar Loans, U.S. Base Rate Loans, Canadian Prime
Loans, BA Loans and Letters of Credit, respectively, and shall thereafter be
governed by the terms and conditions of this Agreement, notwithstanding that the
Issuing Bank under Letters of Credit will continue to be Chase Canada. All
accrued interest and fees payable to the Lender pursuant to the Original Credit
Agreement which are outstanding as of the date hereof shall be paid to the
Lender in accordance with the terms of this Agreement and shall be deemed to be
amounts owing hereunder.
10.20 BOM LETTERS OF CREDIT. The Lender and the Borrowers agree that
in addition to Section 10.19 the following letter of credit issued by BOM to
ProMark:
Letter of Credit with BOM in favor of the Minister of C$2,500.00
Finance and Corporate Relations, British Columbia dated
November 2, 1994, as amended on September 22, 1995. Expires
October 31, 1997
is and shall be from and after the date of this Agreement Letters of Credit
under this Agreement and shall be subject to the applicable terms of this
Agreement in that regard.
10.21 AMENDMENT OF CERTAIN DOCUMENTS. References to the BOM
Agreement, the Canadian Forest Guarantee, the ProMark Security Agreement and the
ProMark Debenture mean such agreements in the form thereof on the date of
execution of this Agreement, together with such amendments or supplements
thereto as are permitted by the provisions of Section 11.21 of the Funding
Credit Agreement.
Page 89
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered as of the day and year first above written.
CANADIAN FOREST OIL LTD.
By
-------------------------
Title:
Address for Notices:
Canadian Forest Oil Ltd.
000, 000-Xxxxx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx X0X0X0
Xxxxxx
Attention: Vice President-Finance
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
with a copy to:
Forest Oil Corporation
0000 Xxxxxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attention: Vice President-Treasurer
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
Page 90
PRODUCERS MARKETING LTD.
By
-------------------------
Title:
Address for Notices:
Producers Marketing Ltd.
c/o Canadian Forest Oil Ltd.
000, 000-Xxxxx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx X0X 0X0
Xxxxxx
Attention: Vice President-Finance
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
with a copy to:
Forest Oil Corporation
0000 Xxxxxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attention: Vice President-Treasurer
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
Page 91
611852 SASKATCHEWAN LTD.
By
-------------------------
Title:
Address for Notices
611852 SASKATCHEWAN LTD.
c/o Canadian Forest Oil Ltd.
000, 000-Xxxxx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx X0X 0X0
Xxxxxx
Attention: Vice President-Finance
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
with a copy to:
The Chase Manhattan Bank of Canada
1 First Canadian Place
000 Xxxx Xxxxxx Xxxx
Xxxxx 0000, X.X. Xxx 000
Xxxxxxx, Xxxxxxx X0X 0X0
Xxxxxx
Attention: Vice President
Corporate Finance
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
and
Page 92
Forest Oil Corporation
0000 Xxxxxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attention: Vice President and
Treasurer
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
Page 93
SCHEDULE I
MATERIAL AGREEMENTS AND LIENS
[See Sections 7.11, 8.06(b) or 8.07(b)]
Part A - MATERIAL AGREEMENTS
Part B - LIENS
Page 94
SCHEDULE II
SUBSIDIARIES AND INVESTMENTS
[See Sections 7.13 and 8.08(a)]
Part A - SUBSIDIARIES
Part B - INVESTMENTS
Page 95
SCHEDULE III
ENVIRONMENTAL MATTERS
[See Section 7.12]
Page 1
EXECUTION COPY
EXHIBIT B
SECOND AMENDED AND RESTATED SECURITY AGREEMENT
SECOND AMENDED AND RESTATED SECURITY AGREEMENT dated as of January 31,
1997 between FOREST OIL CORPORATION, a corporation duly organized and validly
existing under the laws of the State of New York (the "COMPANY"); each of the
Subsidiaries of the Company that becomes a guarantor pursuant to Section 9.16 of
the Second Amended and Restated Credit Agreement referred to below (the
"SUBSIDIARY GUARANTOR", and together with the Company, the "OBLIGORS"); and THE
CHASE MANHATTAN BANK, as agent for the Banks party to the Second Amended and
Restated Credit Agreement (the "BANKS") (in such capacity, together with its
successors in such capacity, the "AGENT").
The Company, the Existing Banks (as defined in the Second Amended and
Restated Credit Agreement referred to below), and the Agent are parties to a
Credit Agreement dated as of December 1, 1993 (as modified and supplemented and
in effect from time to time, the "ORIGINAL CREDIT AGREEMENT") as amended and
restated by an Amended and Restated Credit Agreement dated as of August 31,
1995. The Company, the Banks and the Agent have agreed to amend and restate the
Amended and Restated Credit Agreement pursuant to a Second Amended and Restated
Credit Agreement dated as of January 31, 1997 (the Original Credit Agreement as
so amended and restated and as the same may be further modified and supplemented
and in effect from time to time being referred to herein as the "SECOND AMENDED
AND RESTATED CREDIT AGREEMENT").
Pursuant to the terms of the Amended and Restated Credit Agreement the
Obligors entered into an Amended and Restated Security Agreement dated as of
August 31, 1995 (the "AMENDED AND RESTATED SECURITY AGREEMENT") providing for
the pledge and grant of a security interest in the Collateral (as hereinafter
defined) as security for the Secured Obligations (as so defined). The parties
hereto desire to amend and restate the Amended and Restated Security Agreement
to provide for the continuation of the pledge and grant of a security interest
thereunder with respect to the Collateral as security for the Secured
Obligations. Accordingly, the parties hereto agree as follows:
Section 1. DEFINITIONS. Terms defined in the Second Amended and
Restated Credit Agreement are used herein as defined therein. In addition, as
used herein:
Page 2
"ACCOUNTS" shall have the meaning ascribed thereto in Section 3(a)
hereof.
"CHASE DEPOSIT PROCEEDS" shall mean cash to the extent that such cash
is credited to accounts at The Chase Manhattan Bank.
"COLLATERAL" shall have the meaning ascribed thereto in Section 3
hereof.
"COLLATERAL ACCOUNT" shall have the meaning ascribed thereto in
Section 4.01 hereof.
"EQUIPMENT" shall mean all fixtures and equipment as defined in the
Uniform Commercial Code.
"HYDROCARBONS" shall mean, collectively, oil, gas, casinghead gas,
condensate, natural gas liquids finished and unfinished petroleum products
and other liquid or gaseous hydrocarbons (including, without limitation,
all liquefiable hydrocarbons and other products that may be extracted from
gas and gas condensate by processing thereof in a gas processing plant).
"INVENTORY" shall mean all inventory (as defined in the Uniform
Commercial Code) of such Obligor produced from Mortgaged Properties, all
goods obtained by such Obligor in exchange for such inventory, and any
products made or processed from such inventory including all substances, if
any, commingled therewith or added thereto.
"SECURED OBLIGATIONS" shall mean, collectively, (a) the principal of
and interest on the Loans made by the Banks to, and the Note(s) held by
each Bank of, the Company and all other amounts from time to time owing to
the Banks or the Agent by the Obligors under the Basic Documents including,
without limitation, all Reimbursement Obligations and interest thereon,
(b) all obligations of the Subsidiary Guarantors under the Second Amended
and Restated Credit Agreement and the other Basic Documents (c) all
obligations of the Obligors to the Banks under any Commodity Hedging
Agreements or Interest Rate Protection Agreements and (d) all obligations
of the Obligors to the Banks and the Agent hereunder.
"UNIFORM COMMERCIAL CODE" shall mean the Uniform Commercial Code as in
effect from time to time in the State of New York.
Section 2. REPRESENTATIONS AND WARRANTIES. Each Obligor represents
and warrants to the Banks and the Agent that:
(a) Such Obligor is the sole beneficial owner of the
Page 3
Collateral in which it purports to grant a security interest pursuant to
Section 3 hereof and no Lien exists or will exist upon such Collateral at
any time (and no right or option to acquire the same exists in favor of any
other Person) except for Liens permitted under Section 9.06 of the Second
Amended and Restated Credit Agreement and except for the pledge and
security interest in favor of the Agent for the benefit of the Banks
created or provided for herein, which pledge and security interest
constitute a first priority perfected pledge and security interest in and
to all of such Collateral.
(b) The goods or products now or hereafter produced by such Obligor
or any of its Subsidiaries which results in the creation of the Accounts
included in the Collateral have been and will be produced in compliance
with the requirements of the Fair Labor Standards Act, as amended.
Section 3. COLLATERAL. As collateral security for the prompt payment
in full when due (whether at stated maturity, by acceleration or otherwise) of
the Secured Obligations, each Obligor hereby pledges and grants to the Agent,
for the benefit of the Banks as hereinafter provided, a security interest in all
of such Obligor's right, title and interest in the following property now owned
by such Obligor, whether now owned by such Obligor or hereafter acquired and
whether now existing or hereafter coming into existence (all being collectively
referred to herein as "COLLATERAL"):
(a) all accounts and general intangibles (each as defined in the
Uniform Commercial Code) of such Obligor constituting any right to the
payment of money, including (but not limited to) all moneys due and to
become due to such Obligor in respect of any loans or advances in
connection with the sale of Hydrocarbons produced from Mortgaged Properties
(which loans and advances are payable within one year) or for sales of
Hydrocarbons, Inventory or Equipment or for services rendered, all moneys
due and to become due to such Obligor under any guarantee (including a
letter of credit) of the purchase price of Hydrocarbons Equipment sold by
such Obligor (such accounts, general intangibles and moneys due and to
become due being herein called collectively "ACCOUNTS");
(b) the balance from time to time in the Collateral Account;
(c) all fixtures and equipment (as such terms are defined in the
Uniform Commercial Code), including, without limitation, any and all
property, equipment, fixtures and other property, including, without
limitation, oil xxxxx, gas xxxxx, injection xxxxx or other xxxxx or well
equipment,
Page 4
compressors, pumps, pumping units, pipelines, sales and flow lines,
gathering lines, field gathering systems, salt water disposal facilities,
tanks and tank batteries, valves, fittings, machinery and parts, engines,
boilers, meters, apparatus, equipment, appliances, tools, implements,
cables, wires, towers, casing, tubing and rods, power and telephone and
telegraph lines, constituting all or a portion of a production or drilling
platform located on Mortgaged Properties or used or useful in the
production of Hydrocarbons from Mortgaged Properties.
(d) all proceeds, profits, income, benefits, renewals, extensions,
substitutions and replacements of and to any of the property of such
Obligor described in the preceding clauses of this Section 3 (including,
without limitation, any proceeds of insurance thereon and all causes of
action, claims and warranties now or hereafter held by any Obligor in
respect of any of the items listed above) and, to the extent related to any
property described in said clauses or such proceeds, products and
accessions, all books, correspondence, credit files records, invoices and
other papers, including without limitation all tapes, cards, computer runs
and other papers and documents in the possession or under the control of
such Obligor or any computer bureau or service company from time to time
acting for such Obligor; and
(e) any property that may from time to time hereafter, by delivery or
by writing of any kind, be subjected to the lien and security interest
hereof by such Obligor or by anyone on such Obligor's behalf.
Section 4. CASH PROCEEDS OF COLLATERAL.
4.01 COLLATERAL ACCOUNT. There was previously established with the
Agent a cash collateral account (the "COLLATERAL ACCOUNT") in the name and under
the control of the Agent into which there shall be deposited from time to time
the cash proceeds of any of the Collateral (including proceeds of insurance
thereon) required to be delivered to the Agent pursuant hereto and into which
the Obligors may from time to time deposit any additional amounts that any of
them wishes to pledge to the Agent for the benefit of the Banks as additional
collateral security hereunder. The balance from time to time in the Collateral
Account shall constitute part of the Collateral hereunder and shall not
constitute payment of the Secured Obligations until applied as hereinafter
provided. Except as expressly provided in the next sentence, the Agent shall
remit the collected balance outstanding to the credit of the Collateral Account
to or upon the order of the respective Obligor as such Obligor through the
Company shall from time to time instruct. However, at any time following the
occurrence and during the
Page 5
continuance of an Event of Default, the Agent may (and, if instructed by the
Banks in accordance with the Second Amended and Restated Credit Agreement,
shall) in its (or their) discretion apply or cause to be applied (subject to
collection) the balance from time to time outstanding to the credit of the
Collateral Account to the payment of the Secured Obligations in the manner
specified in Section 5.08 hereof. The balance from time to time in the
Collateral Account shall be subject to withdrawal only as provided herein.
4.02 PROCEEDS OF ACCOUNTS. At any time after the occurrence and
during the continuance of an Event of Default, each Obligor shall, upon the
request of the Agent, instruct all account debtors and other Persons obligated
in respect of all Accounts to make all payments in respect of the Accounts
either (a) directly to the Agent (by instructing that such payments be remitted
to a post office box which shall be in the name and under the control of the
Agent) or (b) to one or more other banks in the United States of America (by
instructing that such payments be remitted to a post office box which shall be
in the name and under the control of the Agent) under arrangements, in form and
substance satisfactory to the Agent pursuant to which such Obligor shall have
irrevocably instructed such other bank (and such other bank shall have agreed)
to remit all proceeds of such payments directly to the Agent for deposit into
the Collateral Account. All payments made to the Agent, as provided in the
preceding sentence, shall be immediately deposited in the Collateral Account.
In addition to the foregoing, each Obligor agrees that, at any time after the
occurrence and during the continuance of an Event of Default, if the proceeds of
any Collateral hereunder (including the payments made in respect of Accounts)
shall be received by it, such Obligor shall, upon the request of the Agent, as
promptly as possible deposit such proceeds into the Collateral Account. Until
so deposited, all such proceeds shall be held in trust by such Obligor for and
as the property of the Agent and shall not be commingled with any other funds or
property of such Obligor.
4.03 INVESTMENT OF BALANCE IN COLLATERAL ACCOUNT. Amounts on deposit
in the Collateral Account shall be invested from time to time in such Permitted
Investments as the respective Obligor through the Company (or, after the
occurrence and during the continuance of a Default, the Agent) shall determine,
which Permitted Investments shall be held in the name and be under the control
of the Agent, PROVIDED that (i) at any time after the occurrence and during the
continuance of an Event of Default, the Agent may (and, if instructed by the
Banks in accordance with the Second Amended and Restated Credit Agreement,
shall) in its (or their) discretion at any time and from time to time elect to
liquidate any such Permitted Investments and to apply or cause to be applied the
proceeds thereof to the payment of the Secured Obligations in the manner
specified in Section 5.08 hereof and (ii) if requested by the respective Obligor
through the Company,
Page 6
such Permitted Investments may be held in the name and under the control of one
or more of the Banks (and in that connection each Bank, pursuant to
Section 11.10 of the Second Amended and Restated Credit Agreement, has agreed
that such Permitted Investments shall be held by such Bank as a collateral
sub-agent for the Agent hereunder).
4.04 COVER FOR LETTER OF CREDIT LIABILITIES. Amounts deposited into
the Collateral Account as cover for Letter of Credit Liabilities under the
Second Amended and Restated Credit Agreement pursuant to Section 2.10(e) or 10
thereof shall be held by the Agent in a separate sub-account (designated "Letter
of Credit Liabilities Sub-Account") and all amounts held in such sub-account
shall constitute collateral security FIRST for the Letter of Credit Liabilities
outstanding from time to time and SECOND as collateral security for the other
Secured Obligations hereunder.
4.05 AUTHORITY TO COLLECT. Until the occurrence of an Event of
Default, each Obligor (i) shall, at its own expense, endeavor to collect, as and
when due, all amounts due to such Obligor with respect to the Collateral,
including the taking of any action with respect to such collection as the Agent
may reasonably request, or, in the absence of such request, as such Obligor may
deem advisable and (ii) may grant, in the ordinary course of business, to any
account debtor, any rebate, refund or allowance to which such account debtor may
lawfully be entitled, and may accept, in connection therewith, the return of
Hydrocarbons, the sale of which shall have given rise to Accounts.
Section 5. FURTHER ASSURANCES; REMEDIES. In furtherance of the grant
of the pledge and security interest pursuant to Section 3 hereof, the Obligors
hereby jointly and severally agree with each Bank and the Agent as follows:
5.01 DELIVERY AND OTHER PERFECTION. Each Obligor shall:
(a) give, execute, deliver, file and/or record any financing
statement, notice, instrument, document, agreement or other papers that may
be necessary or desirable (in the judgment of the Agent) to create,
preserve, perfect or validate the security interest granted pursuant hereto
or to enable the Agent to exercise and enforce its rights hereunder with
respect to such pledge and security interest, PROVIDED that notices to
account debtors in respect of any Accounts shall be subject to the
provisions of clause (e) below;
(b) keep full and accurate books and records relating to the
Collateral, and stamp or otherwise xxxx such books and records in such
manner as the Agent may reasonably
Page 7
require in order to reflect the security interests granted by this
Agreement;
(c) permit representatives of the Agent, upon reasonable notice, at
any time during normal business hours to inspect and make abstracts from
its books and records pertaining to the Collateral, and permit
representatives of the Agent to be present at such Obligor's place of
business to receive copies of all communications and remittances relating
to the Collateral, and forward copies of any notices or communications
received by such Obligor with respect to the Collateral, all in such manner
as the Agent may require; and
(d) upon the occurrence and during the continuance of any Default,
upon request of the Agent, promptly notify (and such Obligor hereby
authorizes the Agent so to notify) each account debtor in respect of any
Accounts or Instruments that such Collateral has been assigned to the Agent
hereunder, and that any payments due or to become due in respect of such
Collateral are to be made directly to the Agent.
5.02 OTHER FINANCING STATEMENTS AND LIENS. Except as otherwise
permitted under Section 9.06 of the Second Amended and Restated Credit
Agreement, without the prior written consent of the Agent (granted with the
authorization of the Banks as specified in Section 12.04 of the Second Amended
and Restated Credit Agreement), no Obligor shall file or suffer to be on file,
or authorize or permit to be filed or to be on file, in any jurisdiction, any
financing statement or like instrument with respect to the Collateral in which
the Agent is not named as the sole secured party for the benefit of the Banks.
5.03 PRESERVATION OF RIGHTS. The Agent shall not be required to take
steps necessary to preserve any rights against prior parties to any of the
Collateral.
5.04 EVENTS OF DEFAULT, ETC. During the period during which an Event
of Default shall have occurred and be continuing:
(a) each Obligor shall, at the request of the Agent, assemble the
Collateral owned by it at such place or places, reasonably convenient to
both the Agent and such Obligor, designated in its request;
(b) the Agent may make any reasonable compromise or settlement deemed
desirable with respect to any of the Collateral and may extend the time of
payment, arrange for payment in installments, or otherwise modify the terms
of, any of the Collateral;
(c) the Agent shall have all of the rights and
Page 8
remedies with respect to the Collateral of a secured party under the
Uniform Commercial Code (whether or not said Code is in effect in the
jurisdiction where the rights and remedies are asserted) and such
additional rights and remedies to which a secured party is entitled under
the laws in effect in any jurisdiction where any rights and remedies
hereunder may be asserted, including, without limitation, the right, to the
maximum extent permitted by law, to exercise all voting, consensual and
other powers of ownership pertaining to the Collateral as if the Agent were
the sole and absolute owner thereof (and each Obligor agrees to take all
such action as may be appropriate to give effect to such right);
(d) the Agent in its discretion may, in its name or in the name of
the Obligors or otherwise, demand, xxx for, collect or receive any money or
property at any time payable or receivable on account of or in exchange for
any of the Collateral, but shall be under no obligation to do so; and
(e) the Agent may, upon ten business days' prior written notice to
the Obligors of the time and place, with respect to the Collateral or any
part thereof that shall then be or shall thereafter come into the
possession, custody or control of the Agent, the Banks or any of their
respective agents, sell, lease, assign or otherwise dispose of all or any
part of such Collateral, at such place or places as the Agent deems best,
and for cash or for credit or for future delivery (without thereby assuming
any credit risk), at public or private sale, without demand of performance
or notice of intention to effect any such disposition or of the time or
place thereof (except such notice as is required above or by applicable
statute and cannot be waived), and the Agent or any Bank or anyone else may
be the purchaser, lessee, assignee or recipient of any or all of the
Collateral so disposed of at any public sale (or, to the extent permitted
by law, at any private sale) and thereafter hold the same absolutely, free
from any claim or right of whatsoever kind, including any right or equity
of redemption (statutory or otherwise), of the Obligors, any such demand,
notice and right or equity being hereby expressly waived and released. The
Agent may, without notice or publication, adjourn any public or private
sale or cause the same to be adjourned from time to time by announcement at
the time and place fixed for the sale, and such sale may be made at any
time or place to which the sale may be so adjourned.
The proceeds of each collection, sale or other disposition under this
Section 5.04 shall be applied in accordance with Section 5.08 hereof.
The Obligors recognize that, by reason of certain
Page 9
prohibitions contained in the Securities Act of 1933, as amended, and
applicable state securities laws, the Agent may be compelled, with respect
to any sale of all or any part of the Collateral, to limit purchasers to
those who will agree, among other things, to acquire the Collateral for
their own account, for investment and not with a view to the distribution
or resale thereof. The Obligors acknowledge that any such private sales
may be at prices and on terms less favorable to the Agent than those
obtainable through a public sale without such restrictions, and,
notwithstanding such circumstances, agree that any such private sale shall
be deemed to have been made in a commercially reasonable manner and that
the Agent shall have no obligation to engage in public sales and no
obligation to delay the sale of any Collateral for the period of time
necessary to permit the issuer thereof to register it for public sale.
5.05 DEFICIENCY. If the proceeds of sale, collection or other
realization of or upon the Collateral pursuant to Section 5.04 hereof are
insufficient to cover the costs and expenses of such realization and the payment
in full of the Secured Obligations, the Obligors shall remain liable for any
deficiency.
5.06 REMOVALS, ETC. Without at least 30 days' prior written notice
to the Agent, no Obligor shall (i) maintain any of its books and records with
respect to the Collateral at any office or maintain its principal place of
business at any place, other than at the address indicated beneath the signature
of the Company to the Second Amended and Restated Credit Agreement or at one of
the locations identified in Annex 1 hereto under its name or in transit from one
of such locations to another or (ii) change its name, or the name under which it
does business, from the name shown on the signature pages hereto.
5.07 PRIVATE SALE. The Agent and the Banks shall incur no liability
as a result of the sale of the Collateral, or any part thereof, at any private
sale pursuant to Section 5.04 hereof conducted in a commercially reasonable
manner. Each Obligor hereby waives any claims against the Agent or any Bank
arising by reason of the fact that the price at which the Collateral may have
been sold at such a private sale was less than the price that might have been
obtained at a public sale or was less than the aggregate amount of the Secured
Obligations, even if the Agent accepts the first offer received and does not
offer the Collateral to more than one offeree.
5.08 APPLICATION OF PROCEEDS. Except as otherwise herein expressly
provided and except as provided below in this Section 5.08, the proceeds of any
collection, sale or other realization of all or any part of the Collateral
pursuant hereto, and any other cash at the time held by the Agent under
Section 4 hereof or this Section 5, shall be applied by the Agent:
Page 10
FIRST, to the payment of the costs and expenses of such collection,
sale or other realization, including reasonable out-of-pocket costs and
expenses of the Agent and the fees and expenses of its agents and counsel,
and all expenses incurred and advances made by the Agent in connection
therewith;
NEXT, to the payment in full of the Secured Obligations, in each case
equally and ratably in accordance with the respective amounts thereof then
due and owing or as the Banks holding the same may otherwise agree; and
FINALLY, after payment in full of all of the Secured Obligations and
the termination of the Commitments to the payment to the respective
Obligor, or their respective successors or assigns, or as a court of
competent jurisdiction may direct, of any surplus then remaining.
Notwithstanding the foregoing, the proceeds of any cash or other amounts held in
the "Letter of Credit Liabilities Sub-Account" of the Collateral Account
pursuant to Section 4.04 hereof shall be applied FIRST to the Letter of Credit
Liabilities outstanding from time to time and SECOND to the other Secured
Obligations in the manner provided above in this Section 5.08.
As used in this Section 5, "PROCEEDS" of Collateral shall mean cash,
securities and other property realized in respect of, and distributions in kind
of, Collateral, including any thereof received under any reorganization,
liquidation or adjustment of debt of the Obligors or any issuer of or obligor on
any of the Collateral.
5.09 ATTORNEY-IN-FACT. Without limiting any rights or powers granted
by this Agreement to the Agent while no Event of Default has occurred and is
continuing, upon the occurrence and during the continuance of any Event of
Default the Agent is hereby appointed the attorney-in-fact of each Obligor for
the purpose of carrying out the provisions of this Section 5 and taking any
action and executing any instruments that the Agent may deem necessary or
advisable to accomplish the purposes hereof, which appointment as
attorney-in-fact is irrevocable and coupled with an interest. Without limiting
the generality of the foregoing, so long as the Agent shall be entitled under
this Section 5 to make collections in respect of the Collateral, the Agent shall
have the right and power to receive, endorse and collect all checks made payable
to the order of any Obligor representing any dividend, payment or other
distribution in respect of the Collateral or any part thereof and to give full
discharge for the same.
5.10 PERFECTION. Prior to or concurrently with the execution and
delivery of this Agreement, each Obligor shall file such financing statements
and other documents in such offices as
Page 11
the Agent may request to perfect the security interests granted by Section 3 of
this Agreement.
5.11 TERMINATION. When all Secured Obligations shall have been paid
in full and the Commitments of the Banks under the Second Amended and Restated
Credit Agreement and all Letter of Credit Liabilities shall have expired or been
terminated, this Agreement shall terminate, and the Agent shall forthwith cause
to be assigned, transferred and delivered, against receipt but without any
recourse, warranty or representation whatsoever, any remaining Collateral and
money received in respect thereof, to or on the order of the respective Obligor.
The Agent shall also execute and deliver to the respective Obligor upon such
termination such Uniform Commercial Code termination statements and such other
documentation as shall be reasonably requested by the respective Obligor to
effect the termination and release of the Liens on the Collateral.
5.12 FURTHER ASSURANCES. Each Obligor agrees that, from time to time
upon the written request of the Agent, such Obligor will execute and deliver
such further documents and do such other acts and things as the Agent may
reasonably request in order fully to effect the purposes of this Agreement.
Section 6. MISCELLANEOUS.
6.01 NO WAIVER. No failure on the part of the Agent or any Bank to
exercise, and no course of dealing with respect to, and no delay in exercising,
any right, power or remedy hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise by the Agent or any Bank of any right,
power or remedy hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or remedy. The remedies herein are
cumulative and are not exclusive of any remedies provided by law.
6.02 NOTICES. All notices, requests, consents and demands hereunder
shall be in writing and telexed, telecopied or delivered to the intended
recipient at its "Address for Notices" specified pursuant to Section 12.02 of
the Second Amended and Restated Credit Agreement and shall be deemed to have
been given at the times specified in said Section 12.02.
6.03 EXPENSES. The Obligors jointly and severally agree to reimburse
each of the Banks and the Agent for all reasonable costs and expenses of the
Banks and the Agent (including, without limitation, the reasonable fees and
expenses of legal counsel) in connection with (i) any Default and any
enforcement or collection proceeding resulting therefrom, including, without
limitation, all manner of participation in or other involvement with (w)
performance by the Agent of any obligations of the Obligors in respect of the
Collateral that the
Page 12
Obligors have failed or refused to perform, (x) bankruptcy, insolvency,
receivership, foreclosure, winding up or liquidation proceedings, or any actual
or attempted sale, or any exchange, enforcement, collection, compromise or
settlement in respect of any of the Collateral, and for the care of the
Collateral and defending or asserting rights and claims of the Agent in respect
thereof, by litigation or otherwise, including expenses of insurance, (y)
judicial or regulatory proceedings and (z) workout, restructuring or other
negotiations or proceedings (whether or not the workout, restructuring or
transaction contemplated thereby is consummated) and (ii) the enforcement of
this Section 6.03, and all such costs and expenses shall be Secured Obligations
entitled to the benefits of the collateral security provided pursuant to
Section 3 hereof.
6.04 AMENDMENTS, ETC. The terms of this Agreement may be waived,
altered or amended only by an instrument in writing duly executed by each
Obligor and the Agent (with the consent of the Banks as specified in Section
12.04 of the Second Amended and Restated Credit Agreement). Any such amendment
or waiver shall be binding upon the Agent and each Bank, each holder of any of
the Secured Obligations and each Obligor.
6.05 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of the respective successors and assigns of each
Obligor, the Agent, the Banks and each holder of any of the Secured Obligations
(PROVIDED, however, that no Obligor shall assign or transfer its rights
hereunder without the prior written consent of the Agent).
6.06 CAPTIONS. The captions and section headings appearing herein
are included solely for convenience of reference and are not intended to affect
the interpretation of any provision of this Agreement.
6.07 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Agreement by signing
any such counterpart.
6.08 GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the law of the State of New York.
6.09 AGENTS AND ATTORNEYS-IN-FACT. The Agent may employ agents and
attorneys-in-fact in connection herewith and shall not be responsible for the
negligence or misconduct of any such agents or attorneys-in-fact selected by it
in good faith.
6.10 INCONSISTENT PROVISIONS. In the event of any inconsistency
between the provisions of this Agreement and the provisions of the Second
Amended and Restated Credit Agreement,
Page 13
the provisions set forth in the Second Amended and Restated Credit Agreement
shall control.
6.11 SEVERABILITY. If any provision hereof is invalid and
unenforceable in any jurisdiction, then, to the fullest extent permitted by law,
(i) the other provisions hereof shall remain in full force and effect in such
jurisdiction and shall be liberally construed in favor of the Agent and the
Banks in order to carry out the intentions of the parties hereto as nearly as
may be possible and (ii) the invalidity or unenforceability of any provision
hereof in any jurisdiction shall not affect the validity or enforceability of
such provision in any other jurisdiction.
Page 14
IN WITNESS WHEREOF, the parties hereto have caused this Security
Agreement to be duly executed and delivered as of the day and year first above
written.
FOREST OIL CORPORATION
By
-------------------------
Title:
THE CHASE MANHATTAN BANK,
as Agent
By
-------------------------
Title:
Page 15
ANNEX 1
LIST OF LOCATIONS
[See Section 5.06]
[Complete for each Obligor:]
[NAME OF OBLIGOR]
Page 16
EXHIBIT C-1
[Form of Opinion of Xxxxxx & Xxxxxx LLP]
January __, 1997
To the Banks party to the
Second Amended and Restated Credit
Agreement referred to
below and The Chase
Manhattan Bank, as Agent
Ladies and Gentlemen:
We have acted as counsel to Forest Oil Corporation (the "COMPANY") in
connection with the Second Amended and Restated Credit Agreement (the "SECOND
AMENDED AND RESTATED CREDIT AGREEMENT") dated as of January __, 1997, between
the Company, the lenders named therein (the "BANKS") and THE CHASE MANHATTAN
BANK, as agent for the Banks, providing for extensions of credit to be made by
said lenders to the Company in an aggregate amount not exceeding $100,000,000.
Terms defined in the Second Amended and Restated Credit Agreement are used
herein as defined therein.
In rendering the opinion expressed below, we have examined the
originals or conformed copies of such corporate records, agreements and
instruments of the Obligors, certificates of public officials and of officers of
the Obligors, and such other documents and records, and such matters of law, as
we have deemed appropriate as a basis for the opinions hereinafter expressed.
Based upon the foregoing, we are of the opinion that:
1. The Company is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of New York has the
necessary corporate power to make and perform the Second Amended and
Restated Credit Agreement and the Notes and the other Basic Documents and
to borrow under the Credit Agreement. Each Subsidiary (1) of the Company
is a corporation duly incorporated, validly existing and in good standing
under the laws of the respective state indicated opposite its name in
Schedule III to the Second Amended and Restated Credit Agreement. The
Company is duly qualified to transact business in the States of Colorado,
Louisiana, Oklahoma, Texas and Wyoming and, to our knowledge, the Company
is duly qualified to transact business in such other jurisdictions, and the
Subsidiaries of the Company are duly qualified to transact business in
Page 17
all such jurisdictions, where failure so to qualify would have a material
adverse effect on the consolidated financial condition, operations,
business or prospects taken as a whole of the Company and its Consolidated
Subsidiaries.
2. The making and performance by the Company of the Second Amended
and Restated Credit Agreement and the other Basic Documents including the
Notes and the borrowings by the Company under the Second Amended and
Restated Credit Agreement have been duly authorized by all necessary
corporate action, and do not and will not violate any provision of law or
regulation or any provision of the charter or by-laws of the Company or any
Subsidiary of the Company or result in the breach of, or constitute a
default or require any consent under, or (except for the Liens created
pursuant to the Security Documents) result in the creation of any Lien upon
any of the Properties, revenues or assets of the Company or any Subsidiary
of the Company pursuant to certain material documents to be specified.
3. The Second Amended and Restated Credit Agreement, the Notes and
the Security Agreement constitute legal, valid and binding obligations of
the Company enforceable in accordance with their respective terms, except
as such enforceability may be limited by (a) bankruptcy, insolvency,
reorganization, moratorium or other similar laws of general applicability
affecting the enforcement of creditors' rights and (b) the application of
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law), and except that no opinion
is expressed as to Section 4.07(c) of the Second Amended and Restated
Credit Agreement.
We express no opinion as to (i) whether a Federal or state court
outside of the State of New York would give effect to the choice of New
York law provided for in the Second Amended and Restated Credit Agreement
and the Notes and in the other Basic Documents, (ii) the second sentence of
Section 12.11 of the Amended and Restated Credit Agreement, insofar as such
sentences relate to the subject matter jurisdiction of the United States
District Court for the Southern District of New York to adjudicate any
controversy related to the Second Amended and Restated Credit Agreement or
the Notes or (iii) the waiver of inconvenient forum set forth in
Section 12.12 of the Second Amended and Restated Credit Agreement with
respect to proceedings in the United States District Court for the Southern
District of New York. We also wish to point out that the obligations of
the Company under the Second Amended and Restated Security Agreement may be
subject to possible limitations upon the exercise of remedial or procedural
provisions contained in the Second Amended and Restated Security Agreement,
PROVIDED that such limitations do not,
Page 18
in our opinion, make the remedies and procedures which will be afforded to
the Agent and the Banks inadequate for the practical realization of the
substantive benefits purported to be provided to the Agent and the Banks by
the Second Amended and Restated Security Agreement. Finally, we wish to
point out that provisions of the Basic Documents which permit the Agent or
any Bank to take action or make determinations, or to benefit from
indemnities and similar undertakings of the Company, may be subject to a
requirement that such action be taken or such determinations be made, and
that any action or inaction by the Agent or any Bank which may give rise to
a request for payment under such an undertaking be taken or not taken, on a
reasonable basis and in good faith.
4. There are no legal or arbitral proceedings, and no proceedings by
or before any governmental or regulatory authority or agency, pending or
(to our knowledge) threatened against or affecting the Company or any of
its Subsidiaries, or any Properties or rights of any of the Company or any
of its Subsidiaries, which, if adversely determined, would have a Material
Adverse Effect.
5. No authorizations, consents, approvals, licenses, filings or
registrations with, any governmental or regulatory authority or agency are
required in connection with the execution, delivery or performance by the
Company of the Basic Documents, except the filings and recordings of Liens
to be created pursuant to the Security Documents.
6. The Security Agreement is effective to create, in favor of the
Agent for the benefit of the Banks thereunder, a valid security interest
(to the extent that Article 9 of the Uniform Commercial Code is applicable
thereto) in the right, title and interest of the Company in the Collateral
(as defined in the Security Agreement), as collateral security for the
payment of the Secured Obligations (as so defined), except that the
security interest in Collateral in which the Company acquires rights after
the commencement of a case against it under the Bankruptcy Code will be
limited by Section 552 of the Bankruptcy Code. By virtue of the filings
described in Annex 1 attached hereto, all such security interests which can
be perfected by a Uniform Commercial Code filing in the United States of
America will have been, upon such filings being completed, so perfected.
We express no opinion as to the right, title or interest of the Company in
any of the Collateral.
Very truly yours,
Page 19
EXHIBIT C-2
[Form of Opinion of Corporate Counsel
of the Obligors]
Page 20
EXHIBIT D
[Form of Opinion of Special Counsel to Chase]
________, 1995
Each of the Banks party
to the Credit Agreement
referred to below
The Chase Manhattan Bank,
as Agent
for said Banks
0 Xxxxx Xxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
We have acted as special New York counsel to The Chase Manhattan Bank
("CHASE") in connection with (i) the Second Amended and Restated Credit
Agreement (the "CREDIT AGREEMENT") dated as of January ___, 1997, between Forest
Oil Company (the "COMPANY"), the Subsidiary Guarantors party thereto, the
lenders party thereto (the "BANKS") and Chase, in its capacity as agent for the
Banks (the "AGENT"), providing for, among other things, loans to be made by the
Banks to the Company in an aggregate principal amount not exceeding $100,000,000
and (ii) the various other agreements, instruments and other documents referred
to in the next following paragraph. All capitalized terms used but not defined
herein have the respective meanings given to such terms in the Credit Agreement.
This opinion letter is being delivered pursuant to Section 7.01(d) of the Credit
Agreement.
In rendering the opinions expressed below, we have examined the
following (collectively referred to as the "DOCUMENTS"):
(a) the Credit Agreement;
(b) the Notes being delivered concurrently with the delivery of this
opinion; and
(c) the Security Agreement.
In our examination, we have assumed the genuineness of all signatures,
the authenticity of all documents submitted to us as originals and the
conformity with authentic original documents of all documents submitted to us as
copies.
Page 21
In rendering the opinions expressed below, we have assumed, with
respect to all of the documents referred to in this opinion letter, that:
(i) such documents have been duly authorized by, have been duly
executed and delivered by, and (except, to the extent set forth
in the opinions expressed below, as to the Obligors) constitute
legal, valid, binding and enforceable obligations of, all of the
parties to such documents;
(ii) all signatories to such documents have been duly authorized; and
(iii) all of the parties to such documents are duly organized and
validly existing and have the power and authority (corporate,
partnership or other) to execute, deliver and perform such
documents.
Based upon and subject to the foregoing and subject also to the
comments and qualifications set forth below, and having considered such
questions of law as we have deemed necessary as a basis for the opinions
expressed below, we are of the opinion that:
1. Each Document constitutes the legal, valid and binding obligation
of each Obligor party thereto, enforceable against each Obligor party
thereto in accordance with its terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance
or transfer or other similar laws relating to or affecting the rights of
creditors generally and except as the enforceability of the Documents is
subject to the application of general principles of equity (regardless of
whether considered in a proceeding in equity or at law), including, without
limitation, (a) the possible unavailability of specific performance,
injunctive relief or any other equitable remedy and (b) concepts of
materiality, reasonableness, good faith and fair dealing.
2. The Security Agreement is effective to create, in favor of the
Agent for the benefit of the Agent and the Banks, a valid security interest
under the Uniform Commercial Code as in effect in the State of New York
(the "UCC") in all of the right, title and interest of the Obligors in, to
and under the Collateral as collateral security for the payment when due of
the Secured Obligations, except that:
(a) such security interest will continue in Collateral after its
sale, exchange or other
Page 22
disposition and in any Proceeds thereof only to the extent provided in
Sections 9-306 and 9-307 and 9-308 of the UCC;
(b) such security interest in any portion of the Collateral in
which an Obligor acquires rights after the commencement of a case
under the Bankruptcy Code in respect of such Obligor may be limited by
Section 552 of the Bankruptcy Code; and
(c) the creation of a security interest in any portion of the
Collateral constituting an Investment Security requires the transfer
thereof to the Agent pursuant to Section 8-313(1) of the UCC.
The foregoing opinions are subject to the following comments and
qualifications:
(A) The enforceability of Section 12.03 of the Credit Agreement (and
any similar provisions in any of the other Documents) may be limited by
laws limiting the enforceability of provisions exculpating or exempting a
party from, or requiring indemnification of a party for, its own action or
inaction, to the extent such action or inaction involves gross negligence,
recklessness or wilful or unlawful conduct.
(B) Clause (iii) of the second sentence of Section 6.02 of the Credit
Agreement may not be enforceable to the extent that the Guaranteed
Obligations are materially modified.
(C) The enforceability of provisions in the Documents to the effect
that terms may not be waived or modified except in writing may be limited
under certain circumstances.
(D) We express no opinion as to (i) the effect of the laws of any
jurisdiction in which any Bank is located (other than the State of New
York) that limit the interest, fees or other charges such Bank may impose
for the loan or use of money or other credit, (ii) Section 4.07(c) of the
Credit Agreement, (iii) Sections 6.06 and 6.09 of the Credit Agreement,
(iv) the second sentence of Section 12.10 of the Credit Agreement (and any
similar provisions in any of the other Documents), insofar as such sentence
relates to the subject matter jurisdiction of the United States District
Court for the Southern District of New York to adjudicate any controversy
related to the Document and (v) the waiver of inconvenient forum set forth
in Section 12.10 of the Credit Agreement (and any similar provisions in any
of the other Documents) with respect to proceedings in the United States
District Court for the Southern District of New York.
Page 23
(E) We express no opinion as to the applicability to the obligations
of any Subsidiary Guarantor (or the enforceability of such obligations) of
Section 548 of the Bankruptcy Code, Article 10 of the New York Debtor and
Creditor Law or any other provision of law relating to fraudulent
conveyances, transfers or obligations.
(F) We wish to point out that the obligations of the Obligors, and
the rights and remedies of the Agent, under the Security Agreement and the
Mortgages may be subject to possible limitations upon the exercise of
remedial or procedural provisions contained therein, provided that such
limitations do not, in our opinion (but subject to the other comments and
qualifications set forth in this opinion letter), make the remedies and
procedures that will be afforded to the Agent and the Banks inadequate for
the practical realization of the substantive benefits purported to be
provided to the Agent and the Banks thereby.
(G) With respect to our opinions in paragraph 2 above, we express no
opinion as to the creation of any security interest in (or other lien on)
any portion of the Collateral (i) to the extent that, pursuant to
Section 9-104 of the UCC, Article 9 of the UCC does not apply thereto or
(ii) consisting of Uncertificated Securities issued by a corporation
organized under any laws other than the laws of the State of New York.
(H) We express no opinion as to the existence of, or the right, title
or interest of any Obligor in, to or under, any of the Collateral.
(I) Except as expressly provided in paragraph 2 above, we express no
opinion as to the creation, perfection or priority of any security interest
in, or other lien on, the Collateral.
The foregoing opinions are limited to matters involving the Federal
laws of the United States of America and the law of the State of New York, and
we do not express any opinion as to the laws of any other jurisdiction.
At the request of our clients, this opinion letter is provided to you
by us in our capacity as special New York counsel to Chase, and this opinion
letter may not be relied upon by any Person for any purpose other than in
connection with the transactions contemplated by the Credit Agreement without,
in each instance, our prior written consent.
Very truly yours,
Page 24
JRR/TDB
Page 25
EXHIBIT E
[Form of Mortgage]
Page 26
EXHIBIT F
[Form of Pledge Agreement]
PLEDGE AGREEMENT
PLEDGE AGREEMENT dated as of ________ __, 1997 between FOREST OIL
CORPORATION, a corporation duly organized and validly existing under the laws of
the State of New York (the "COMPANY"); each of the Subsidiaries of the Company
identified under the captions "SUBSIDIARY PLEDGORS" on the signature pages
hereof (individually, a "SUBSIDIARY PLEDGOR" and, collectively, the "SUBSIDIARY
PLEDGORS" and, together with the Company, the "PLEDGORS"); and THE CHASE
MANHATTAN BANK, as agent for the lenders or other financial institutions or
entities party, as lenders, to the Credit Agreement referred to below (in such
capacity, together with its successors in such capacity, the "AGENT").
The Company, certain Subsidiary Guarantors, certain lenders and the
Agent are parties to a Second Amended and Restated Credit Agreement dated as of
January __, 1997 (as modified and supplemented and in effect from time to time,
the "SECOND AMENDED AND RESTATED CREDIT AGREEMENT"), providing, subject to the
terms and conditions thereof, for extensions of credit (by making of loans and
issuing of letters of credit) to be made by said lenders to the Company in an
aggregate principal or face amount not exceeding $100,000,000.
To induce said lenders to enter into the Second Amended and Restated
Credit Agreement and to extend credit thereunder, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, each Pledgor has agreed to pledge and grant a security interest in
the Collateral (as hereinafter defined) as security for the Secured Obligations
(as so defined). Accordingly, the parties hereto agree as follows:
Section 1. DEFINITIONS. Terms defined in the Second Amended and
Restated Credit Agreement are used herein as defined therein. In addition, as
used herein:
"COLLATERAL" shall have the meaning ascribed thereto in Section 3
hereof.
"COLLATERAL ACCOUNT" shall have the meaning ascribed thereto in
Section 4.01 hereof.
"ISSUERS" shall mean, collectively, the respective corporations
identified beneath the names of the Pledgors on
Page 27
Annex 1 hereto under the caption "ISSUER".
"PLEDGED STOCK" shall have the meaning ascribed thereto in
Section 3(a) hereof.
"SECURED OBLIGATIONS" shall mean, collectively, (a) the principal of
and interest on the Loans made by the Banks to, and the Note(s) held by
each Bank of, the Company and all other amounts from time to time owing to
the Banks or the Agent by the Pledgors under the Basic Documents including,
without limitation, all Reimbursement Obligations and interest thereon,
(b) all obligations of the Subsidiary Guarantors under the Second Amended
and Restated Credit Agreement and the other Basic Documents (c) all
obligations of the Obligors to the Banks under any Commodity Hedging
Agreements or Interest Rate Protection Agreements and (d) all obligations
of the Pledgors to the Banks and the Agent hereunder.
"UNIFORM COMMERCIAL CODE" shall mean the Uniform Commercial Code as in
effect from time to time in the State of New York.
Section 2. REPRESENTATIONS AND WARRANTIES. Each Pledgor represents
and warrants to the Banks and the Agent that:
(a) Such Pledgor is the sole beneficial owner of the Collateral in
which it purports to grant a security interest pursuant to Section 3 hereof
and no Lien exists or will exist upon such Collateral at any time (and no
right or option to acquire the same exists in favor of any other Person),
except for Liens permitted under Section 9.06 of the Second Amended and
Restated Credit Agreement and except for the pledge and security interest
in favor of the Agent for the benefit of the Banks created or provided for
herein, which pledge and security interest constitute a first priority
perfected pledge and security interest in and to all of such Collateral.
(b) The Pledged Stock represented by the certificates identified
under the name of such Pledgor in Annex 1 hereto is, and all other Pledged
Stock in which such Pledgor shall hereafter grant a security interest
pursuant to Section 3 hereof will be, duly authorized, validly existing,
fully paid and non-assessable and none of such Pledged Stock is or will be
subject to any contractual restriction, or any restriction under the
charter or by-laws of the respective Issuer of such Pledged Stock, upon the
transfer of such Pledged Stock (except for any such restriction contained
herein or in the Second Amended and Restated Credit Agreement).
Page 28
(c) The Pledged Stock represented by the certificates identified
under the name of such Pledgor in Annex 1 hereto constitutes all of the
issued and outstanding shares of capital stock of any class of the Issuers
beneficially owned by such Pledgor on the date hereof (whether or not
registered in the name of such Pledgor) and said Annex 1 correctly
identifies, as at the date hereof, the respective Issuers of such Pledged
Stock, the respective class and par value of the shares comprising such
Pledged Stock and the respective number of shares (and registered owners
thereof) represented by each such certificate.
Section 3. THE PLEDGE. As collateral security for the prompt payment
in full when due (whether at stated maturity, by acceleration or otherwise) of
the Secured Obligations, each Pledgor hereby pledges and grants to the Agent,
for the benefit of the Banks as hereinafter provided, a security interest in all
of such Pledgor's right, title and interest in the following property, whether
now owned by such Pledgor or hereafter acquired and whether now existing or
hereafter coming into existence (all being collectively referred to herein as
"COLLATERAL"):
(a) the shares of [common/preferred] stock of the Issuers represented
by the certificates identified in Annex 1 hereto under the name of such
Pledgor and all other shares of capital stock of whatever class of the
Issuers, now or hereafter owned by such Pledgor, in each case together with
the certificates evidencing the same (collectively, the "PLEDGED STOCK");
(b) all shares, securities, moneys or property representing a
dividend on any of the Pledged Stock, or representing a distribution or
return of capital upon or in respect of the Pledged Stock, or resulting
from a split-up, revision, reclassification or other like change of the
Pledged Stock or otherwise received in exchange therefor, and any
subscription warrants, rights or options issued to the holders of, or
otherwise in respect of, the Pledged Stock;
(c) without affecting the obligations of such Pledgor under any
provision prohibiting such action hereunder or under the Second Amended and
Restated Credit Agreement, in the event of any consolidation or merger in
which an Issuer is not the surviving corporation, all shares of each class
of the capital stock of the successor corporation (unless such successor
corporation is such Pledgor itself) formed by or resulting from such
consolidation or merger;
(d) the balance from time to time in the Collateral Account; and
Page 29
(e) all proceeds of and to any of the property of such Pledgor
described in the preceding clauses of this Section 3 (including, without
limitation, all causes of action, claims and warranties now or hereafter
held by any Pledgor in respect of any of the items listed above) and, to
the extent related to any property described in said clauses or such
proceeds, all books, correspondence, credit files, records, invoices and
other papers.
Section 4. CASH PROCEEDS OF COLLATERAL.
4.01 COLLATERAL ACCOUNT. There was previously established with the
Agent a cash collateral account (the "COLLATERAL ACCOUNT") in the name and under
the control of the Agent into which there shall be deposited from time to time
the cash proceeds of any of the Collateral required to be delivered to the Agent
pursuant hereto and into which the Pledgors may from time to time deposit any
additional amounts that any of them wishes to pledge to the Agent for the
benefit of the Banks as additional collateral security hereunder. The balance
from time to time in the Collateral Account shall constitute part of the
Collateral hereunder and shall not constitute payment of the Secured Obligations
until applied as hereinafter provided. Except as expressly provided in the next
sentence, the Agent shall remit the collected balance outstanding to the credit
of the Collateral Account to or upon the order of the respective Pledgor as such
Pledgor through the Company shall from time to time instruct. However, at any
time following the occurrence and during the continuance of an Event of Default,
the Agent may (and, if instructed by the Banks as specified in Section 11.03 of
the Second Amended and Restated Credit Agreement, shall) in its (or their)
discretion apply or cause to be applied (subject to collection) the balance from
time to time outstanding to the credit of the Collateral Account to the payment
of the Secured Obligations in the manner specified in Section 5.09 hereof. The
balance from time to time in the Collateral Account shall be subject to
withdrawal only as provided herein. In addition to the foregoing, each Pledgor
agrees that if the proceeds of any Collateral hereunder shall be received by it,
such Pledgor shall as promptly as possible deposit such proceeds into the
Collateral Account. Until so deposited, all such proceeds shall be held in
trust by such Pledgor for and as the property of the Agent and shall not be
commingled with any other funds or property of such Pledgor.
4.02 INVESTMENT OF BALANCE IN COLLATERAL ACCOUNT. Amounts on deposit
in the Collateral Account shall be invested from time to time in such Permitted
Investments as the respective Pledgor through the Company (or, after the
occurrence and during the continuance of a Default, the Agent) shall determine,
which Permitted Investments shall be held in the name and be under the control
of the Agent, PROVIDED that (i) at any time after the
Page 30
occurrence and during the continuance of an Event of Default, the Agent may
(and, if instructed by the Banks as specified in Section 11.03 of the Second
Amended and Restated Credit Agreement, shall) in its (or their) discretion at
any time and from time to time elect to liquidate any such Permitted Investments
and to apply or cause to be applied the proceeds thereof to the payment of the
Secured Obligations in the manner specified in Section 5.09 hereof and (ii) if
requested by the respective Pledgor through the Company, such Permitted
Investments may be held in the name and under the control of one or more of the
Banks (and in that connection each Bank, pursuant to Section 11.10 of the Second
Amended and Restated Credit Agreement) has agreed that such Permitted
Investments shall be held by such Bank as a collateral sub-agent for the Agent
hereunder).
4.03 COVER FOR LETTER OF CREDIT LIABILITIES. Amounts deposited into
the Collateral Account as cover for Letter of Credit Liabilities under the
Second Amended and Restated Credit Agreement pursuant to Section 2.10(e) and
Section 10 thereof shall be held by the Agent in a separate sub-account
(designated "Letter of Credit Liabilities Sub-Account") and all amounts held in
such sub-account shall constitute collateral security FIRST for the Letter of
Credit Liabilities outstanding from time to time and SECOND as collateral
security for the other Secured Obligations hereunder.
Section 5. FURTHER ASSURANCES; REMEDIES. In furtherance of the grant
of the pledge and security interest pursuant to Section 3 hereof, the Pledgors
hereby jointly and severally agree with each Bank and the Agent as follows:
5.01 DELIVERY AND OTHER PERFECTION. Each Pledgor shall:
(a) if any of the shares, securities, moneys or property required to
be pledged by such Pledgor under clauses (a), (b) and (c) of Section 3
hereof are received by such Pledgor, forthwith either (x) transfer and
deliver to the Agent such shares or securities so received by such Pledgor
(together with the certificates for any such shares and securities duly
endorsed in blank or accompanied by undated stock powers duly executed in
blank), all of which thereafter shall be held by the Agent, pursuant to the
terms of this Agreement, as part of the Collateral or (y) take such other
action as the Agent shall deem necessary or appropriate to duly record the
Lien created hereunder in such shares, securities, moneys or property in
said clauses (a), (b) and (c);
(b) give, execute, deliver, file and/or record any financing
statement, notice, instrument, document, agreement
Page 31
or other papers that may be necessary or desirable (in the judgment of the
Agent) to create, preserve, perfect or validate the security interest
granted pursuant hereto or to enable the Agent to exercise and enforce its
rights hereunder with respect to such pledge and security interest,
including, without limitation, causing any or all of the Collateral to be
transferred of record into the name of the Agent or its nominee (and the
Agent agrees that if any Collateral is transferred into its name or the
name of its nominee, the Agent will thereafter promptly give to the
respective Pledgor copies of any notices and communications received by it
with respect to the Collateral pledged by such Pledgor hereunder);
(c) keep full and accurate books and records relating to the
Collateral, and stamp or otherwise xxxx such books and records in such
manner as the Agent may reasonably require in order to reflect the security
interests granted by this Agreement; and
(d) permit representatives of the Agent, upon reasonable notice, at
any time during normal business hours to inspect and make abstracts from
its books and records pertaining to the Collateral, and permit
representatives of the Agent to be present at such Pledgor's place of
business to receive copies of all communications and remittances relating
to the Collateral, and forward copies of any notices or communications
received by such Pledgor with respect to the Collateral, all in such manner
as the Agent may require.
5.02 OTHER FINANCING STATEMENTS AND LIENS. Except as otherwise
permitted under Section 9.06 of the Second Amended and Restated Credit
Agreement, without the prior written consent of the Agent (granted with the
authorization of the Banks as specified in Section 11.09 of the Second Amended
and Restated Credit Agreement), no Pledgor shall file or suffer to be on file,
or authorize or permit to be filed or to be on file, in any jurisdiction, any
financing statement or like instrument with respect to the Collateral in which
the Agent is not named as the sole secured party for the benefit of the Banks.
5.03 PRESERVATION OF RIGHTS. The Agent shall not be required to take
steps necessary to preserve any rights against prior parties to any of the
Collateral.
5.04 COLLATERAL.
(1) The Pledgors will cause the Collateral to constitute at all times
[100%] of the total number of shares of each class of capital stock of each
Issuer then outstanding.
(2) So long as no Event of Default shall have occurred
Page 32
and be continuing, the Pledgors shall have the right to exercise all voting,
consensual and other powers of ownership pertaining to the Collateral for all
purposes not inconsistent with the terms of this Agreement, the Second Amended
and Restated Credit Agreement, the Notes or any other instrument or agreement
referred to herein or therein, PROVIDED that the Pledgors jointly and severally
agree that they will not vote the Collateral in any manner that is inconsistent
with the terms of this Agreement, the Second Amended and Restated Credit
Agreement, the Notes or any such other instrument or agreement; and the Agent
shall execute and deliver to the Pledgors or cause to be executed and delivered
to the Pledgors all such proxies, powers of attorney, dividend and other orders,
and all such instruments, without recourse, as the Pledgors may reasonably
request for the purpose of enabling the Pledgors to exercise the rights and
powers that they are entitled to exercise pursuant to this Section 5.04(2).
(3) Unless and until an Event of Default has occurred and is
continuing, the Pledgors shall be entitled to receive and retain any dividends
on the Collateral paid in cash out of earned surplus.
(4) If any Event of Default shall have occurred, then so long as such
Event of Default shall continue, and whether or not the Agent or any Bank
exercises any available right to declare any Secured Obligation due and payable
or seeks or pursues any other relief or remedy available to it under applicable
law or under this Agreement, the Second Amended and Restated Credit Agreement,
the Notes or any other agreement relating to such Secured Obligation, all
dividends and other distributions on the Collateral shall be paid directly to
the Agent and retained by it in the Collateral Account as part of the
Collateral, subject to the terms of this Agreement, and, if the Agent shall so
request in writing, the Pledgors jointly and severally agree to execute and
deliver to the Agent appropriate additional dividend, distribution and other
orders and documents to that end, PROVIDED that if such Event of Default is
cured, any such dividend or distribution theretofore paid to the Agent shall,
upon request of the Pledgors (except to the extent theretofore applied to the
Secured Obligations), be returned by the Agent to the Pledgors.
5.05 EVENTS OF DEFAULT, ETC. During the period during which an Event
of Default shall have occurred and be continuing:
(a) the Agent shall have all of the rights and remedies with respect
to the Collateral of a secured party under the Uniform Commercial Code
(whether or not said Code is in effect in the jurisdiction where the rights
and remedies are asserted) and such additional rights and remedies to which
a secured party is entitled under the laws in effect in any jurisdiction
where any rights and remedies hereunder may be asserted, including, without
limitation,
Page 33
the right, to the maximum extent permitted by law, to exercise all voting,
consensual and other powers of ownership pertaining to the Collateral as if
the Agent were the sole and absolute owner thereof (and each Pledgor agrees
to take all such action as may be appropriate to give effect to such
right);
(b) the Agent in its discretion may, in its name or in the name of
the Pledgors or otherwise, demand, xxx for, collect or receive any money or
property at any time payable or receivable on account of or in exchange for
any of the Collateral, but shall be under no obligation to do so; and
(c) the Agent may, upon ten business days' prior written notice to
the Pledgors of the time and place, with respect to the Collateral or any
part thereof that shall then be or shall thereafter come into the
possession, custody or control of the Agent, the Banks or any of their
respective agents, sell, lease, assign or otherwise dispose of all or any
part of such Collateral, at such place or places as the Agent deems best,
and for cash or for credit or for future delivery (without thereby assuming
any credit risk), at public or private sale, without demand of performance
or notice of intention to effect any such disposition or of the time or
place thereof (except such notice as is required above or by applicable
statute and cannot be waived), and the Agent or any Bank or anyone else may
be the purchaser, lessee, assignee or recipient of any or all of the
Collateral so disposed of at any public sale (or, to the extent permitted
by law, at any private sale) and thereafter hold the same absolutely, free
from any claim or right of whatsoever kind, including any right or equity
of redemption (statutory or otherwise), of the Pledgors, any such demand,
notice and right or equity being hereby expressly waived and released. The
Agent may, without notice or publication, adjourn any public or private
sale or cause the same to be adjourned from time to time by announcement at
the time and place fixed for the sale, and such sale may be made at any
time or place to which the sale may be so adjourned.
The proceeds of each collection, sale or other disposition under this
Section 5.05 shall be applied in accordance with Section 5.09 hereof.
The Pledgors recognize that, by reason of certain prohibitions
contained in the Securities Act of 1933, as amended, and applicable state
securities laws, the Agent may be compelled, with respect to any sale of all or
any part of the Collateral, to limit purchasers to those who will agree, among
other things, to acquire the Collateral for their own account, for investment
and not with a view to the distribution or resale thereof. The Pledgors
acknowledge that any such private sales may be at prices
Page 34
and on terms less favorable to the Agent than those obtainable through a public
sale without such restrictions, and, notwithstanding such circumstances, agree
that any such private sale shall be deemed to have been made in a commercially
reasonable manner and that the Agent shall have no obligation to engage in
public sales and no obligation to delay the sale of any Collateral for the
period of time necessary to permit the respective Issuer or issuer thereof to
register it for public sale.
5.06 DEFICIENCY. If the proceeds of sale, collection or other
realization of or upon the Collateral pursuant to Section 5.05 hereof are
insufficient to cover the costs and expenses of such realization and the payment
in full of the Secured Obligations, the Pledgors shall remain liable for any
deficiency.
5.07 REMOVALS, ETC. Without at least 30 days' prior written notice
to the Agent, no Pledgor shall (i) maintain any of its books and records with
respect to the Collateral at any office or maintain its principal place of
business at any place other than at the address indicated beneath the signature
of the Company to the Second Amended and Restated Credit Agreement or
(ii) change its name, or the name under which it does business, from the name
shown on the signature pages hereto.
5.08 PRIVATE SALE. The Agent and the Banks shall incur no liability
as a result of the sale of the Collateral, or any part thereof, at any private
sale pursuant to Section 5.05 hereof conducted in a commercially reasonable
manner. Each Pledgor hereby waives any claims against the Agent or any Bank
arising by reason of the fact that the price at which the Collateral may have
been sold at such a private sale was less than the price that might have been
obtained at a public sale or was less than the aggregate amount of the Secured
Obligations, even if the Agent accepts the first offer received and does not
offer the Collateral to more than one offeree.
5.09 APPLICATION OF PROCEEDS. Except as otherwise herein expressly
provided and except as provided below in this Section 5.09, the proceeds of any
collection, sale or other realization of all or any part of the Collateral
pursuant hereto, and any other cash at the time held by the Agent under
Section 4 hereof or this Section 5, shall be applied by the Agent:
FIRST, to the payment of the costs and expenses of such collection,
sale or other realization, including reasonable out-of-pocket costs and
expenses of the Agent and the fees and expenses of its agents and counsel,
and all expenses incurred and advances made by the Agent in connection
therewith;
NEXT, to the payment in full of the Secured
Page 35
Obligations, in each case equally and ratably in accordance with the respective
amounts thereof then due and owing or as the Banks holding the same may
otherwise agree; and
FINALLY, to the payment to the respective Pledgor, or their respective
successors or assigns, or as a court of competent jurisdiction may direct,
of any surplus then remaining.
Notwithstanding the foregoing, the proceeds of any cash or other amounts held in
the "Letter of Credit Liabilities Sub-Account" of the Collateral Account
pursuant to Section 4.03 hereof shall be applied FIRST to the Letter of Credit
Liabilities outstanding from time to time and SECOND to the other Secured
Obligations in the manner provided above in this Section 5.09.
As used in this Section 5, "PROCEEDS" of Collateral shall mean cash,
securities and other property realized in respect of, and distributions in kind
of, Collateral, including any thereof received under any reorganization,
liquidation or adjustment of debt of the Pledgors or any issuer of or obligor on
any of the Collateral.
5.10 ATTORNEY-IN-FACT. Without limiting any rights or powers granted
by this Agreement to the Agent while no Event of Default has occurred and is
continuing, upon the occurrence and during the continuance of any Event of
Default the Agent is hereby appointed the attorney-in-fact of each Pledgor for
the purpose of carrying out the provisions of this Section 5 and taking any
action and executing any instruments that the Agent may deem necessary or
advisable to accomplish the purposes hereof, which appointment as
attorney-in-fact is irrevocable and coupled with an interest. Without limiting
the generality of the foregoing, so long as the Agent shall be entitled under
this Section 5 to make collections in respect of the Collateral, the Agent shall
have the right and power to receive, endorse and collect all checks made payable
to the order of any Pledgor representing any dividend, payment or other
distribution in respect of the Collateral or any part thereof and to give full
discharge for the same.
5.11 PERFECTION. Prior to or concurrently with the execution and
delivery of this Agreement, each Pledgor shall deliver to the Agent all
certificates identified in Annex 1 hereto, accompanied by undated stock powers
duly executed in blank.
5.12 TERMINATION. When all Secured Obligations shall have been paid
in full and the Commitments of the Banks under the Second Amended and Restated
Credit Agreement and all Letter of Credit Liabilities shall have expired or been
terminated, this Agreement shall terminate, and the Agent shall forthwith cause
to be assigned, transferred and delivered, against receipt but
Page 36
without any recourse, warranty or representation whatsoever, any remaining
Collateral and money received in respect thereof, to or on the order of the
respective Pledgor.
5.13 FURTHER ASSURANCES. Each Pledgor agrees that, from time to time
upon the written request of the Agent, such Pledgor will execute and deliver
such further documents and do such other acts and things as the Agent may
reasonably request in order fully to effect the purposes of this Agreement.
Section 6. MISCELLANEOUS.
6.01 NO WAIVER. No failure on the part of the Agent or any Bank to
exercise, and no course of dealing with respect to, and no delay in exercising,
any right, power or remedy hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise by the Agent or any Bank of any right,
power or remedy hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or remedy. The remedies herein are
cumulative and are not exclusive of any remedies provided by law.
6.02 NOTICES. All notices, requests, consents and demands hereunder
shall be in writing and telexed, telecopied or delivered to the intended
recipient at its "Address for Notices" specified pursuant to Section 12.02 of
the Second Amended and Restated Credit Agreement and shall be deemed to have
been given at the times specified in said Section 12.02.
6.03 EXPENSES. The Pledgors jointly and severally agree to reimburse
each of the Banks and the Agent for all reasonable costs and expenses of the
Banks and the Agent (including, without limitation, the reasonable fees and
expenses of legal counsel) in connection with (i) any Default and any
enforcement or collection proceeding resulting therefrom, including, without
limitation, all manner of participation in or other involvement with (w)
performance by the Agent of any obligations of the Pledgors in respect of the
Collateral that the Pledgors have failed or refused to perform, (x) bankruptcy,
insolvency, receivership, foreclosure, winding up or liquidation proceedings, or
any actual or attempted sale, or any exchange, enforcement, collection,
compromise or settlement in respect of any of the Collateral, and for the care
of the Collateral and defending or asserting rights and claims of the Agent in
respect thereof, by litigation or otherwise, (y) judicial or regulatory
proceedings and (z) workout, restructuring or other negotiations or proceedings
(whether or not the workout, restructuring or transaction contemplated thereby
is consummated) and (ii) the enforcement of this Section 6.03, and all such
costs and expenses shall be Secured Obligations entitled to the benefits of the
collateral security provided pursuant to Section 3 hereof.
Page 37
6.04 AMENDMENTS, ETC. The terms of this Agreement may be waived,
altered or amended only by an instrument in writing duly executed by each
Pledgor and the Agent (with the consent of the Banks as specified in Section
11.09 of the Second Amended and Restated Credit Agreement). Any such amendment
or waiver shall be binding upon the Agent and each Bank, each holder of any of
the Secured Obligations and each Pledgor.
6.05 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of the respective successors and assigns of each
Pledgor, the Agent, the Banks and each holder of any of the Secured Obligations
(PROVIDED, however, that no Pledgor shall assign or transfer its rights
hereunder without the prior written consent of the Agent).
6.06 CAPTIONS. The captions and section headings appearing herein
are included solely for convenience of reference and are not intended to affect
the interpretation of any provision of this Agreement.
6.07 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Agreement by signing
any such counterpart.
6.08 GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the law of the State of New York.
6.09 AGENTS AND ATTORNEYS-IN-FACT. The Agent may employ agents and
attorneys-in-fact in connection herewith and shall not be responsible for the
negligence or misconduct of any such agents or attorneys-in-fact selected by it
in good faith.
6.10 INCONSISTENT PROVISIONS. In the event of any inconsistency
between the provisions of this Agreement and the provisions of the Second
Amended and Restated Credit Agreement, the provisions set forth in the Second
Amended and Restated Credit Agreement shall control.
6.11 SEVERABILITY. If any provision hereof is invalid and
unenforceable in any jurisdiction, then, to the fullest extent permitted by law,
(i) the other provisions hereof shall remain in full force and effect in such
jurisdiction and shall be liberally construed in favor of the Agent and the
Banks in order to carry out the intentions of the parties hereto as nearly as
may be possible and (ii) the invalidity or unenforceability of any provision
hereof in any jurisdiction shall not affect the validity or enforceability of
such provision in any other jurisdiction.
Page 38
IN WITNESS WHEREOF, the parties hereto have caused this Pledge
Agreement to be duly executed and delivered as of the day and year first above
written.
FOREST OIL CORPORATION
By
-------------------------
Title:
SUBSIDIARY PLEDGORS
[SUBSIDIARY PLEDGOR]
By
-------------------------
Title:
[SUBSIDIARY PLEDGOR]
By
-------------------------
Title:
[SUBSIDIARY PLEDGOR]
By
-------------------------
Title:
THE CHASE MANHATTAN BANK,
as Agent
By
-------------------------
Title:
Page 39
ANNEX 1
PLEDGED STOCK
[See Section 2(b) and (c)]
[Complete for each Pledgor:]
[NAME OF PLEDGOR]
Certificate Registered
ISSUER NOS. OWNER NUMBER OF SHARES
------ ----------- ---------- ----------------
[Issuer #1] _______ ________ _______ shares of
[common/preferred]
stock, [no] par
value [$________]
[Issuer #2] _______ ________ _______ shares of
[common/preferred]
stock, [no] par
value [$________]
[Issuer #3] _______ ________ _______ shares of
[common/preferred]
stock, [no] par
value [$________]
Page 40
EXHIBIT G
[Form of Confidentiality Agreement]
CONFIDENTIALITY AGREEMENT
[Date]
[Insert Name and
Address of Prospective
Participant or Assignee]
Re: Second Amended and Restated Amended and Restated Credit Agreement
dated as of January __, 1997 (the "SECOND AMENDED AND RESTATED
CREDIT AGREEMENT"), between Forest Oil Corporation (the
"COMPANY"), the Subsidiary Guarantors, the lenders named therein
and The Chase Manhattan Bank, as Agent.
Dear Ladies and Gentlemen:
As a Bank party to the Second Amended and Restated Credit Agreement,
we have agreed with the Company pursuant to Section 12.13 of the Second Amended
and Restated Credit Agreement to use reasonable precautions to keep
confidential, except as otherwise provided therein, all non-public information
identified by the Company or any of its Subsidiaries as being confidential at
the time the same is delivered to us pursuant to the Second Amended and Restated
Credit Agreement.
As provided in said Section 12.13, we are permitted to provide you, as
a prospective [holder of a participation in the Loans (as defined in the Second
Amended and Restated Credit Agreement)][assignee Bank], with certain of such
non-public information subject to the execution and delivery by you, prior to
receiving such non-public information, of a Confidentiality Agreement in this
form. Such information will not be made available to you until your execution
and return to us of this Confidentiality Agreement.
Accordingly, in consideration of the foregoing, you agree (on behalf
of yourself and each of your affiliates, directors, officers, employees and
representatives) that (A) such information will not be used by you except in
connection with the proposed [participation][assignment] mentioned above and
(B) you shall use reasonable precautions, in accordance with your customary
procedures for handling confidential information and in
Page 41
accordance with safe and sound banking practices, to keep such information
confidential, PROVIDED that nothing herein shall limit the disclosure of any
such information (i) to the extent required by statute, rule, regulation or
judicial process, (ii) to your counsel or to counsel for any of the Banks or the
Agent, (iii) to bank examiners, auditors or accountants, (iv) to the Agent or
any other Bank, (v) in connection with any litigation to which you or any one or
more of the Banks or the Agent are a party, (vi) to a subsidiary or affiliate of
yours as provided in Section 12.13(a) of the Second Amended and Restated Credit
Agreement (provided that you shall not disclose any non-public information
delivered pursuant to this Confidentiality Agreement to any subsidiary of your
which is generally engaged in securities business other than in connection with
(x) Commodity Hedging Agreements or Interest Rate Protection Agreements
permitted pursuant to Section 9.08(f) of the Second Amended and Restated Credit
Agreement or (y) the syndication or participation of the Commitments, Loans or
Letter of Credit Interests under the Second Amended and Restated Credit
Agreement without the prior written consent of the Company) or (vii) to any
assignee or participant (or prospective assignee or participant) so long as such
assignee or participant (or prospective assignee or participant) first executes
and delivers to you a Confidentiality Agreement substantially in the form
hereof; PROVIDED, FURTHER, that (x) unless specifically prohibited by applicable
law or court order, you agree, prior to disclosure thereof, to notify the
Company of any request for disclosure of any such non-public information (A) by
any governmental agency or representative thereof (other than any such request
in connection with an examination of your financial condition by such
governmental agency) or (B) pursuant to legal process and (y) that in no event
shall you be obligated to return any materials furnished to you pursuant to this
Confidentiality Agreement.
Please indicate your agreement to the foregoing by signing as provided
below the enclosed copy of this Confidentiality Agreement and returning the same
to us.
Very truly yours,
[INSERT NAME OF BANK]
By
-------------------------
The foregoing is agreed to
as of the date of this letter.
[INSERT NAME OF PROSPECTIVE
PARTICIPANT OR ASSIGNEE]
Page 42
By
-------------------------
