Exhibit 10.3
XXXXXXXX PETROLEUMS LTD.
U.S. $75,000,000
6.76% SENIOR NOTES DUE JULY 19, 2005
NOTE AGREEMENT
Dated as of July 19, 1995
TABLE OF CONTENTS
(Not Part of Agreement)
Page
1. AUTHORIZATION OF ISSUE OF NOTES 1
2. PURCHASE AND SALE OF NOTES 1
3. CONDITIONS PRECEDENT 2
3A. Certain Documents 2
3B. Opinion of Purchasers' Special Counsel 3
3C. Representations and Warranties; No Default 3
3D. Purchase Permitted By Applicable Laws 3
3E. Xxxxxxxxxxx 0
0X. Sale of Notes to Other Purchasers 4
3G. Special Counsel Fees 4
3H. Private Placement Number 4
3I. Existing Bank Security Discharges 4
4. PREPAYMENTS 4
4A. Required Prepayments 4
4B. Optional Prepayment 5
4C. Notice of Optional Prepayment 5
4D. Payments Pro Rata 6
4E. Retirement of Notes 6
5. AFFIRMATIVE COVENANTS 6
5A. Financial Statements 6
5B. Information Required by Rule 144A 8
5C. Inspection of Property 8
5D. Covenant to Secure Notes Equally 9
5E. Reserve Reports 9
5F. Maintain Corporate Existence 9
5G. Comply With Laws 9
5H. Pay Taxes 9
5I. Filings 9
5J. Defend Title 10
5K. Environmental Permits 10
5L. Copies of Environmental Reports 10
5M. Continuous Environmental Risk Management 10
5N. Environmental Audit 10
5O. Proceeds 11
5P. Insurance 11
5Q. Xxxx Xxxxx 00
0. XXXXXXXX XXXXXXXXX 00
0X. Consolidated Net Worth 11
6B. Liens 11
6C. Funded Debt 12
6D. Restricted Subsidiary Funded Debt 12
6E. Xxxx-Xxxxxxxxxx 00
0X. Merger 13
6G. Change of Business 14
7. EVENTS OF DEFAULT 14
7A. Acceleration 14
7B. Rescission of Acceleration 18
7C. Notice of Acceleration or Rescission 18
7D. Other Remedies 18
8. REPRESENTATIONS, COVENANTS AND WARRANTIES 19
8A. Organization 19
8B. Financial Statements 19
8C. Actions Pending 19
8D. Outstanding Indebtedness 20
8E. Title to Xxxxxxxxxx 00
0X. Taxes 20
8G. Conflicting Agreements and Other Matters 20
8H. Offering of Notes 21
8I. Use of Proceeds 21
8J. Governmental Consent 21
8K. Environmental Compliance 22
8L. Disclosure 22
8M. Xxxx Xxxxx 00
0X. XXXXX 00
0X. List of Plans 22
8P. Foreign Assets Control Regulations, etc. 23
8Q. Investment Company Act and Public Utility Holding
Company Status 23
9. REPRESENTATIONS, WARRANTIES AND COVENANTS OF EACH
PURCHASER 23
9A. Representations and Warranties of Each Purchaser 23
9B. Representations, Acknowledgements and Covenants of
Each Purchaser 25
10. DEFINITIONS 26
10A. Yield-Maintenance Terms 26
10B. Other Terms 28
10C. Accounting Principles, Terms and Determinations 36
10D. Changes in GAAP 36
11. MISCELLANEOUS 37
11A. Note Payments 37
11B. Expenses 37
11C. Consent to Amendments 38
11D. Form, Registration, Transfer and Exchange of Notes;
Lost Notes 38
11E. Persons Deemed Owners; Participations 39
11F. Survival of Representations and Warranties; Entire
Agreement 39
11G. Successors and Assigns 40
11H. Disclosure to Other Persons; Confidentiality 40
11I. Notices 40
11J. Payments Due on Non-Business Days 41
11K. Satisfaction Requirement 41
11L. Governing Law and Submission to Jurisdiction 41
11M. Amendments 41
11N. Severability 41
11O. Descriptive Headings 42
11P. Payment Free from Equities 42
11Q. Note Repayment Net of Withholding Imposts 42
11R. Interest 43
11S. Counterparts 44
11T. Severalty of Obligations 44
11U. Judgment Currency 44
11V. Currency; Time; "Including"; Interest Equivalency;
Currency Conversion 45
11W. Further Assurances 46
PURCHASER SCHEDULE
SCHEDULE A -- FORM OF NOTE
SCHEDULE B-1 -- FORM OF OPINION OF CORPORATION'S COUNSEL
SCHEDULE B-2 -- FORM OF OPINION OF SPECIAL COUNSEL TO THE
PURCHASERS
SCHEDULE C -- EXISTING LIENS, AGREEMENTS RESTRICTING
INDEBTEDNESS, AND OUTSTANDING INDEBTEDNESS
SCHEDULE D -- SUBSIDIARIES AND RESTRICTED SUBSIDIARIES
SCHEDULE E -- FORM OF NOTICE OF DESIGNATION OF RESTRICTED
SUBSIDIARY
XXXXXXXX PETROLEUMS LTD.
0000, 000 - 0xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx
X0X 0X0
As of July 19, 1995
To Each of the Purchasers Named in the
Purchaser Schedule Attached Hereto
Re: Issue and Sale of U.S. $75,000,000 6.76% Senior Notes
Ladies and Gentlemen:
The undersigned, Xxxxxxxx Petroleums Ltd. (the "Corporation"),
hereby agrees with the purchasers named in the Purchaser Schedule attached
hereto (the "Purchasers") as follows:
PARAGRAPH 1. AUTHORIZATION OF ISSUE OF NOTES.
1. Authorization of Issue of Notes.
The Corporation will authorize the issue of its senior promissory
notes in the aggregate principal amount of U.S. $75,000,000, to be dated the
date of issue thereof, to mature July 19, 2005, to bear interest on the
unpaid balance thereof from the date thereof until the principal thereof
shall have become due and payable at the rate of 6.76% per annum and on
overdue payments at the rate specified therein, and to be substantially in
the form of Schedule A. The term "Notes" as used herein shall include each
such senior promissory note delivered pursuant to any provision of this
Agreement and each such senior promissory note delivered in substitution
or exchange for any other Note pursuant to any such provision. Capitalized
terms used herein have the meanings specified in paragraph 10.
PARAGRAPH 2. PURCHASE AND SALE OF NOTES.
2. Purchase and Sale of Notes.
The Corporation hereby agrees to sell to each Purchaser and,
subject to the terms and conditions herein set forth, each Purchaser agrees
to purchase from the Corporation the aggregate principal amount of Notes set
forth opposite such Purchaser's name in the Purchaser Schedule attached
hereto at 100% of such aggregate principal amount. The Corporation will
deliver to each Purchaser, at the offices of Xxxxxxx Xxxxx at 0000, 000 -
0xx Xxxxxx, X.X., Xxxxxxx, Xxxxxxx, X0X 0X0, one or more Notes registered
in such Purchaser's name, evidencing the aggregate principal amount of Notes
to be purchased by such Purchaser and in the denomination or denominations
specified with respect to such Purchaser in the Purchaser Schedule
against payment of the purchase price thereof by transfer of immediately
available funds for credit through the account of Skadden, Arps, Slate,
Xxxxxxx & Xxxx, Account no. 0391190261, at Chase Manhattan Bank NA, 000
Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx, XXX #000000000 with instructions to
pay Royal Bank of Canada, 000 - 0xx Xxxxxx X.X., Xxxxxxx, Xxxxxxx, Transit
#003-00009, for credit to Xxxxxxxx Petroleums Ltd. account #000-000-0 on the
date of closing, which shall be July 19, 1995 or any other date on or before
July 31, 1995 upon which the Corporation and the Purchasers may mutually
agree (the "Closing" or the "Date of Closing").
If at the Closing the Corporation shall fail to tender such Notes
to each Purchaser as provided above in this paragraph 2, or any of the
conditions specified in paragraph 3 shall not have been fulfilled to each
Purchaser's satisfaction, each Purchaser shall, at its election, be
relieved of all further obligations under this Agreement, without thereby
waiving any rights each Purchaser may have by reason of such failure or such
nonfulfillment.
PARAGRAPH 3. CONDITIONS PRECEDENT.
3. Conditions of Closing.
Each Purchaser's obligation to purchase and pay for the Notes to be
purchased by such Purchaser hereunder is subject to the satisfaction, on or
before the Date of Closing, of the following conditions:
3A. Certain Documents. Each Purchaser shall have received the following,
each dated the Date of Closing:
(i) The Notes to be purchased by such Purchaser.
(ii) A certified copy of the resolutions of the Board of Directors
of the Corporation approving this Agreement and the Notes, and of all
documents evidencing other necessary corporate action and governmental
approvals, if any, with respect to this Agreement and the Notes.
(iii) A certified copy of the articles and by-laws of the
Corporation.
(iv) A certificate of the Secretary or an Assistant Secretary of the
Corporation certifying the names and true signatures of the officers of
the Corporation authorized to sign this Agreement and the Notes and the
other documents to be delivered by it hereunder.
(v) Certificates of status for the Corporation issued by corporate
registries for each jurisdiction in which the Corporation owns material
property or carries on a material business.
(vi) An Officer's Certificate of the Corporation confirming that
the existing Liens publicly registered against the Corporation and each
Restricted Subsidiary, including any referred to in Part B of Schedule C,
would be, if created immediately after the execution and delivery of this
Agreement, permitted hereunder, and that the litigation to which the
Corporation and the Restricted Subsidiaries are presently subject
individually or in the aggregate is not reasonably expected to have a
Material Adverse Effect.
(vii) A favourable opinion of XxXxxxxx Xxxxxxxx, counsel to the
Corporation, substantially in the form of Schedule B-1 and as to such
other matters as the Purchasers may reasonably request.
(viii) A favourable opinion of Skadden, Arps, Slate, Xxxxxxx and
Xxxx, United States counsel to the Corporation, to the effect that it is
not necessary in connection with the offering, issuance, sale and delivery
of the Notes under the circumstances contemplated by this Agreement to
register the Notes under the Securities Act or to qualify an indenture
in respect of the Notes under the United States Trust Indenture Act of
1939, as amended, and that the extension, arranging and obtaining of the
credit represented by the Notes do not result in any violation of
Regulation G, T or X of the Board of Governors of the United States
Federal Reserve System.
(ix) A certified copy of the register of Notes maintained by the
Corporation pursuant to paragraph 11D.
3B. Opinion of Purchasers' Special Counsel. Each Purchaser shall have
received from Xxxxxxx Xxxxx, special counsel for the Purchasers in connection
with this transaction, a favourable opinion substantially in the form of
Schedule B-2 and as to such matters incident to the matters herein
contemplated as the Purchasers may reasonably request.
3C. Representations and Warranties; No Default. The representations and
warranties contained in paragraph 8 shall be true on and as of the Date of
Closing; there shall exist on the Date of Closing no Event of Default or
Default; and the Corporation shall have delivered to such Purchaser an
Officer's Certificate, dated the Date of Closing, to both such effects.
3D. Purchase Permitted By Applicable Laws. The purchase of and payment
for the Notes to be purchased by such Purchaser on the Date of Closing on the
terms and conditions herein provided (including the use of the proceeds of
such Notes by the Corporation) shall not violate any Applicable Law
(including section 5 of the Securities Act or Regulation G, T or X of
the Board of Governors of the United States Federal Reserve System) and shall
not subject such Purchaser to any tax, penalty or liability under or pursuant
to any Applicable Law and such Purchaser shall have received such certificates
or other evidence with respect to factual matters as it may request to
establish compliance with this condition.
3E. Proceedings. All corporate and other proceedings taken or to be
taken in connection with the transactions contemplated hereby and all documents
incident thereto shall be satisfactory in substance and form to such Purchaser,
and such Purchaser shall have received all such counterpart originals or
certified or other copies of such documents as it may reasonably request.
3F. Sale of Notes to Other Purchasers. The Corporation shall sell to the
other Purchasers, and the other Purchasers shall purchase, the Notes to be
purchased by them at the Closing.
3G. Special Counsel Fees. Without limiting paragraph 11B, the
Corporation shall have paid for credit on account of the fees of special
counsel for the Purchasers the amount stipulated in a letter of Xxxxxxx Xxxxx
delivered to the Corporation one day prior to Closing.
3H. Private Placement Number. A private placement number issued by
Standard & Poor's CUSIP Service Bureau (in cooperation with the Securities
Valuation Office of the National Association of Insurance Commissioners) shall
have been obtained for the Notes.
3I. Existing Bank Security Discharges. Canadian Imperial Bank of
Commerce shall have discharged, or provided an unconditional undertaking to
discharge, all security held by it over the properties and assets of the
Corporation.
PARAGRAPH 4. PREPAYMENTS.
4. Prepayments.
The Notes shall be subject to prepayment only with respect to the
required prepayments specified in paragraph 4A and the optional prepayments
permitted by paragraph 4B.
4A. Required Prepayments. Until the Notes shall be paid in full, the
Corporation shall apply to the prepayment of the Notes, without premium, the
following amounts on the following dates:
Prepayment Date Amount of Required Prepayment
July 19, 2001 U.S. $15,000,000
July 19, 2002 U.S. $15,000,000
July 19, 2003 U.S. $15,000,000
July 19, 2004 U.S. $15,000,000
and such principal amounts of the Notes, together with interest thereon to the
prepayment dates, shall become due on such prepayment dates. The remaining
outstanding principal amount of the Notes, together with interest accrued
thereon, shall become due on the maturity date of the Notes, being July 19,
2005.
4B. Optional Prepayment
(a) With Yield-Maintenance Amount. Prior to July 19, 2004, the
Notes shall be subject to prepayment, in whole at any time or
from time to time in part (in multiples of U.S. $1,000,000),
at the option of the Corporation, at 100% of the principal
amount so prepaid plus interest thereon to the prepayment date
and the Yield-Maintenance Amount, if any, with respect to each
Note.
(b) Without Yield-Maintenance Amount in Final Year. On and after
July 19, 2004, the Notes shall be subject to prepayment, in
whole at any time or from time to time in part (in multiples
of U.S. $1,000,000), at the option of the Corporation, at 100%
of the principal amount so prepaid plus interest thereon to
the prepayment date.
(c) Application of Payments. Any partial prepayment of the Notes
pursuant to this paragraph 4B shall be applied in satisfaction
of required payments of principal in inverse order of their
scheduled due dates.
4C. Notice of Optional Prepayment.
(a) The Corporation shall give the holder of each Note irrevocable
written notice of any prepayment pursuant to paragraph 4B or
paragraph 11Q not less than 15 nor more than 30 Business Days
prior to the prepayment date, specifying such prepayment date
(which shall be a Business Day) and the principal amount of
the Notes, and of the Notes held by such holder, to be
prepaid on such date and stating that such prepayment is to be
made pursuant to paragraph 4B(a) or (b), or paragraph 11Q, as
applicable. Notice of prepayment having been given as
aforesaid, the principal amount of the Notes specified in such
notice, together with interest thereon to the prepayment date
and together with the Yield-Maintenance Amount, if any, with
respect thereto, shall become due and payable on such prepayment
date.
(b) The Corporation shall, at least two Business Days prior to the
prepayment date, give the holder of each Note facsimile notice
(followed by overnight written notice) setting forth the
estimated Yield-Maintenance Amount (for the purposes only of
such estimate, the yields referred to in the definition
of "Reinvestment Yield" shall be those reported three Business
Days preceding the Settlement Date instead of the yields on the
Business Day next preceding the Settlement Date) payable on
such prepayment date together with its calculations thereof in
reasonable detail, and further setting forth the accrued
interest payable on such prepayment date.
(c) The Corporation shall, on the day prior to the prepayment date,
give notice by facsimile followed by overnight written notice of
the actual Yield-Maintenance Amount (together with its
calculations thereof in reasonable detail), principal and
interest that the Corporation will be paying on the prepayment
date to each holder of a Note.
4D. Payments Pro Rata. Upon any prepayment of the Notes pursuant to
paragraph 4A or 4B, the principal amount so prepaid shall be allocated to all
Notes at the time outstanding in proportion to the respective outstanding
principal amounts thereof.
4E. Retirement of Notes. The Corporation shall not, and shall not permit
any of its Subsidiaries or Affiliates to, prepay or otherwise retire in whole
or in part prior to their stated final maturity (other than by prepayment
pursuant to paragraph 4A or 4B or upon acceleration of such final maturity
pursuant to paragraph 7A), or purchase or otherwise acquire, directly or
indirectly, Notes held by any holder.
PARAGRAPH 5. AFFIRMATIVE COVENANTS.
5. Affirmative Covenants.
So long as any Note shall remain unpaid, the Corporation covenants
that:
5A. Financial Statements. The Corporation will deliver to the holder of
each Note in duplicate (unless, in respect of any holder, such holder
designates a fewer number of copies in the Purchaser Schedule attached hereto):
(i) quarterly statements: as soon as practicable and in any event
within 60 days after the end of each quarterly period (other than the last
quarterly period) in each fiscal year, a consolidated statement of
earnings and retained earnings and a consolidated statement of changes
in financial position of the Corporation and its Subsidiaries (and of
the Corporation and its Restricted Subsidiaries on a consolidated basis)
for such quarterly period, and for the period from the beginning of the
current fiscal year to the end of such quarterly period, and a
consolidated balance sheet of the Corporation and its Subsidiaries
(and of the Corporation and its Restricted Subsidiaries on a consolidated
basis) as at the end of such quarterly period, setting forth, in the case
of the consolidated statements of earnings and retained earnings and of
changes in financial position, in comparative form figures for the
corresponding quarter and period in the preceding fiscal year and, in the
case of the consolidated balance sheets, in comparative form figures for
the most recent fiscal year end, all certified by an authorized financial
officer of the Corporation, subject to changes resulting from normal
year-end adjustments;
(ii) annual statements: as soon as practicable and in any event
within 120 days after the end of each fiscal year, a consolidated
statement of earnings and retained earnings and a consolidated statement
of changes in financial position of the Corporation and its Subsidiaries
(and of the Corporation and its Restricted Subsidiaries on a consolidated
basis) for such year, and a consolidated balance sheet of the Corporation
and its Subsidiaries (and of the Corporation and its Restricted
Subsidiaries on a consolidated basis) as at the end of such year,
setting forth in each case in comparative form corresponding consolidated
figures from the preceding annual audit, and, as to the consolidated
statements, reported on by independent public accountants of recognized
national or international standing in Canada or the United States selected
by the Corporation whose report shall be without limitation as to the
scope of the audit and satisfactory in substance to the Required Holders;
(iii) reports to shareholders: promptly upon transmission
thereof, copies of all such financial statements, proxy statements,
notices and reports as it shall send to its public shareholders and
copies of all prospectuses filed with Canadian or United States securities
regulatory authorities, registration statements (without exhibits) and all
reports (other than engineering reports) which it files with any Canadian
or United States securities regulatory authorities;
(iv) notice requirements: as soon as practicable and in any event
within 5 days after any Responsible Officer of the Corporation obtaining
knowledge:
(a) of the existence of an Event of Default or Default,
(b) of any condition or event which, in the opinion of
management of the Corporation, individually or in the
aggregate could reasonably be expected to have a Material
Adverse Effect,
(c) that any Person has given any notice to the Corporation or
any of its Restricted Subsidiaries or taken any other
action with respect to a claimed default or event or
condition of the type referred to in paragraph 7A(iii), or
(d) that any holder of a Note has given notice to the
Corporation of the existence or alleged existence of an
Event of Default or Default,
an Officer's Certificate specifying the nature and period of existence of
any such default, condition or event, or specifying the notice given or
action taken by such Person and the nature of any such claimed default,
event or condition, and further specifying what action the Corporation
is taking or proposes to take with respect thereto; and
(v) other information: with reasonable promptness, such other
information respecting the condition, properties or operations, financial
or otherwise, of the Corporation or any of its Restricted Subsidiaries as
such holder may reasonably request.
Together with each delivery of financial statements required by clauses
(i) and (ii) above, the Corporation will deliver to all holders of Notes an
Officer's Certificate demonstrating (with computations in reasonable detail)
compliance by the Corporation and its Restricted Subsidiaries with the
provisions of xxxxxxxxxx 0X, 0X(xx), 0X, 6D and 6E (for these purposes,
documentation showing the computation of Consolidated Net Worth, Consolidated
Funded Debt, Total Capitalization, Attributable Debt, Priority Debt, and
Non-Recourse Debt of the Corporation and the Restricted Subsidiaries shall be
delivered) and identifying the Subsidiaries and Restricted Subsidiaries,
identifying any Sale-Leaseback proceeds not reinvested as contemplated in
paragraph 6E(b), and stating that there exists no Event of Default or Default,
or, if any Event of Default or Default exists, specifying the nature and period
of existence thereof and what action the Corporation proposes to take with
respect thereto.
If the Corporation has Subsidiaries that are not Restricted Subsidiaries
during any relevant fiscal quarter or year, and the Corporation has delivered
consolidated statements in respect of the Corporation and its Subsidiaries in
accordance with paragraphs 5A(i) or (ii) for such fiscal quarter or year, as
applicable, then notwithstanding such paragraphs the Corporation shall not be
required to deliver additional separate statements in respect of such fiscal
quarter or year if at the end thereof: (A) no Subsidiary has total assets (as
included on the consolidated balance sheet of the Corporation) in excess of
$2,000,000, and (B) the total assets of all Subsidiaries (as included on
the consolidated balance sheet of the Corporation) does not exceed $20,000,000.
Notwithstanding the foregoing, and for certainty, Subsidiaries that are not
Restricted Subsidiaries shall not be included for the purposes of any financial
covenants herein, and the documentation referred to in the previous paragraph
shall reflect the non-inclusion of such Subsidiaries in accordance with such
financial covenants. Further, if the Corporation is relying on this paragraph
to relieve it from its obligation to deliver separate statements, the Officer's
Certificate referred to in the previous paragraph shall show the total assets
of each Subsidiary and the aggregate total assets of all Subsidiaries.
Together with each delivery of financial statements required by clause
(ii) above, the Corporation will deliver to each holder of a Note a certificate
of such accountants stating that, during the course of the audit necessary for
their report on such financial statements (without any special procedures being
implemented for this purpose), they have obtained no knowledge of any Event of
Default or Default, or, if they have obtained knowledge of any Event of Default
or Default, specifying the nature and period of existence thereof.
5B. Information Required by Rule 144A. The Corporation will, upon the
request of the holder of any Note, and at the expense of the Corporation,
provide to such holder, and to any qualified institutional buyer designated by
such holder, the financial and other information described in paragraph (d)(4)
of Rule 144A under the Securities Act required in order to permit reliance upon
Rule 144A under the Securities Act in connection with the resale of Notes,
except at such times as the Corporation is subject to the reporting
requirements of section 13 or 15(d) of the Exchange Act. For the purpose of
this paragraph 5B, the term "qualified institutional buyer" shall have the
meaning specified in Rule 144A under the Securities Act.
5C. Inspection of Property. The Corporation will permit any Person
designated by any holder of a Note in writing, at such holder's expense, to
visit and inspect any of the properties of the Corporation and its Restricted
Subsidiaries, to examine the corporate books, financial records and engineering
and property records and reports of the Corporation and its Restricted
Subsidiaries and make copies thereof or extracts therefrom and to discuss the
affairs, finances and accounts of any of such corporations with the principal
officers of the Corporation and its Restricted Subsidiaries and its independent
public accountants, all at such reasonable times and as often as such holder
may reasonably request, provided that the foregoing shall be at the
Corporation's expense, and shall be reimbursable by the Corporation on demand
by such holder, if such visitation, inspection or examination is conducted at
a time when a Default or Event of Default has occurred and is continuing.
5D. Covenant to Secure Notes Equally. The Corporation will, if it or any
Restricted Subsidiary shall create or assume any Lien upon any of its property
or assets, whether now owned or hereafter acquired, other than Liens expressly
permitted by paragraph 6B (unless prior written consent to the creation or
assumption thereof shall have been obtained pursuant to paragraph 11C), make
or cause to be made effective provision whereby the Notes will be secured by
such Lien equally and ratably with any and all other Indebtedness thereby
secured so long as any such other Indebtedness shall be so secured.
5E. Reserve Reports. Upon request by a holder of a Note, the Corporation
will deliver to such holder a summary of a Reserve Report prepared as at a date
not earlier than the Corporation's most recent fiscal year end, such summary to
be provided within 120 days of such fiscal year end, or if requested after such
120 days, within 10 days of request.
5F. Maintain Corporate Existence. The Corporation will, except as
permitted in paragraph 6F, and except where failure to do so individually or in
the aggregate could not reasonably be expected to have a Material Adverse
Effect, maintain and preserve its and each of the Restricted Subsidiary's
corporate existence and organization in good standing in each jurisdiction in
which it carries on business or owns assets, make all corporate and other
filings and registrations necessary or advisable in connection therewith,
obtain and maintain all licenses, permits, franchises, consents and other
authorizations of any Governmental/Judicial Body necessary to its ownership
of property and to the conduct of its business in each such jurisdiction.
5G. Comply With Laws. The Corporation will, and will cause each of its
Restricted Subsidiaries to, comply with Applicable Laws, including Applicable
Environmental Laws, where failure to do so individually or in the aggregate
could reasonably be expected to have a Material Adverse Effect.
5H. Pay Taxes. The Corporation will, and will cause each of its
Restricted Subsidiaries to, duly file on a timely basis all tax returns
required to be filed by it, and duly and punctually pay all business, goods
and services, income, capital and/or profits taxes and other governmental
charges levied or assessed against it or its property save and except when and
so long as the validity of any such tax is being contested by it in good faith
by appropriate proceedings diligently conducted (which contest effectively
postpones realization or enforcement of any Liens held by the taxing
authority), in which event it shall make on its books provision adequate
therefor to the extent the same is required in accordance with GAAP.
5I. Filings. The Corporation will, and will cause each of its Restricted
Subsidiaries to, comply with all requirements which may exist under applicable
securities legislation to file reports concerning the issuance of the Notes
pursuant to filing, registration or prospectus exemptions under such
legislation within the required time after such issuance.
5J. Defend Title. The Corporation will, and will cause each of its
Restricted Subsidiaries to, defend its title to its property against every
Person whomever claiming or attempting to claim the same, or asserting any
interest adverse to its interest therein, other than Permitted Title Defects.
5K. Environmental Permits. The Corporation will, and will cause each
of its Restricted Subsidiaries to, obtain and maintain all permits, licenses,
consents and other authorizations which are required under Applicable
Environmental Laws regarding its property, the absence of which individually or
in the aggregate could reasonably be expected to have a Material Adverse
Effect, and comply in all respects with the terms and conditions of all such
permits, licenses, consents and authorizations, and comply in all respects with
all other limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in any
Applicable Environmental Laws, or in any regulation, code, plan,
order, decree, judgment, injunction, notice or demand letter issued, entered,
promulgated or approved thereunder, where failure to do so individually or in
the aggregate could reasonably be expected to have a Material Adverse Effect.
5L. Copies of Environmental Reports. The Corporation will, promptly upon
receipt thereof, furnish to each holder of a Note a copy of any environmental
site assessment or audit report required to be submitted by it or any
Restricted Subsidiary to any Governmental/Judicial Body where the Corporation
estimates that the Corporation's share of the cost of any clean-up or
remedial action associated therewith will exceed $3,000,000, and in such event
it shall conduct such clean-up or remedial action within such time as may be
prescribed by such Governmental/Judicial Body.
5M. Continuous Environmental Risk Management. The Corporation will
maintain, in respect of itself and each of its Restricted Subsidiaries, and in
accordance with the practices and standards of companies of established
reputation carrying on the same business, a prudent periodic program for
environmental risk management.
5N. Environmental Audit. (i) The Corporation shall, promptly upon
acquiring knowledge thereof, provide the holder of each Note with written
notice of the discovery of any contaminant or of any spill, discharge, deposit,
escape or release of a contaminant into the environment from or upon the land
or property of the Corporation or a Restricted Subsidiary which, individually
or in the aggregate, could reasonably be expected to have a Material Adverse
Effect; (ii) within 120 days after the end of each fiscal year of the
Corporation, the Corporation shall provide a report to the holders in form and
substance satisfactory to the holders, acting reasonably, describing the
Corporation's environmental policies and the implementation of such
policies and other significant environmental activities of the Corporation and
its Restricted Subsidiaries during the previous fiscal year; (iii) the
Corporation shall, upon the request of the Required Holders (acting
reasonably), make available for discussion with the holders at all
reasonable times the senior officers of the Corporation and any Restricted
Subsidiary primarily responsible for the environmental activities and affairs
of the Corporation and its Restricted Subsidiaries.
5O. Proceeds. The Corporation will use the proceeds from the issuance
and sale of the Notes to pay down its existing revolving credit facilities, and
for its general corporate purposes.
5P. Insurance. The Corporation will maintain business and property
insurance in connection with its and its Restricted Subsidiaries' assets and
business, and liability insurance with respect to claims for personal injury,
death or property damage in relation to the operation of its businesses, all
with responsible and reputable insurance companies in such amounts and with
such deductibles as are customary in the case of businesses of established
reputation engaged in the same or similar businesses.
5Q. Pari Passu. The Corporation will ensure that all payment
obligations hereunder and under the Notes rank at least pari passu in priority
of payment with its other most senior unsubordinated Indebtedness, including
its bank Indebtedness.
PARAGRAPH 6. NEGATIVE COVENANTS.
6. Negative Covenants.
So long as any Note shall remain unpaid, the Corporation covenants
that:
6A. Consolidated Net Worth. The Corporation will not permit Consolidated
Net Worth at any time to be less than $240,000,000.
6B. Liens. The Corporation will not, and will not permit any Restricted
Subsidiary to, create or assume any Lien upon any of its properties or assets,
whether now owned or hereafter acquired, or any income or profits therefrom
(whether or not provision is made for the equal and ratable securing of the
Notes in accordance with paragraph 5D), except:
(i) Liens for taxes not yet due or which are being actively
contested in good faith by appropriate proceedings promptly initiated and
diligently conducted (so long as such contest effectively postpones
realization or enforcement of any such Liens) and for which reserves or
other appropriate provision, if any, as may be required by GAAP shall
have been made therefor,
(ii) Permitted Encumbrances,
(iii) Liens existing on the date hereof as described in Part A of
Schedule C,
(iv) Liens existing on property of a corporation or any other entity
at the time it is being acquired by the Corporation or a Restricted
Subsidiary if, concurrently with such acquisition, such corporation or
other entity becomes a Restricted Subsidiary, provided that such Liens are
not created in contemplation of such acquisition,
(v) Liens existing on property at the time of its acquisition by the
Corporation or a Restricted Subsidiary, provided that such Liens are not
created in contemplation of such acquisition,
(vi) Liens created by a Restricted Subsidiary in favour of the
Corporation or another Restricted Subsidiary,
(vii) Liens relating wholly to Non-Recourse Debt,
(viii) any Lien created to secure all or any part of the purchase
price, or to secure Indebtedness incurred or assumed to pay all or any
part of the purchase price, of equipment, land, buildings or other assets
acquired by the Corporation or a Restricted Subsidiary, provided that (A)
any such Lien shall be confined solely to the item or items of equipment,
land, buildings or other assets so acquired, (B) the principal amount of
Indebtedness secured by any such Lien shall at the time of creation not
exceed the lesser of (y) the purchase price payable by the Corporation or
such Restricted Subsidiary for the property so acquired, and (z) the fair
market value thereof, and (C) any such Lien shall be created within 6
months after such acquisition, and
(ix) other Liens (including Liens in respect of Production Payment
Transactions and Sale Leasebacks, but excluding general Liens such as
floating charges or security interests on all personal property) on
property of the Corporation or its Restricted Subsidiaries, provided that
(A) after giving effect thereto Priority Debt does not exceed 15% of Total
Capitalization, (B) if an Event of Default or Default hereunder, or a
default or event of default under the Corporation's bank loan agreements,
has occurred and is continuing, such Liens are not created to secure
existing Indebtedness, and (C) any Liens on the property of a Person
existing at the time it becomes a Restricted Subsidiary, or Liens assumed
in connection with any acquisition of property, shall be deemed to be
created at that time.
6C. Funded Debt. The Corporation will not, and will not permit its
Restricted Subsidiaries to, create, issue, assume, Guarantee or otherwise
become liable in respect of, any Funded Debt if after giving effect thereto
Consolidated Funded Debt exceeds 55% of Total Capitalization. For these
purposes Funded Debt of a Person existing at the time it becomes a
Restricted Subsidiary, or Indebtedness assumed in connection with any
acquisition of property, shall be deemed to be incurred at that time.
6D. Restricted Subsidiary Funded Debt. The Corporation will not permit
any Restricted Subsidiary to create, incur, assume, Guarantee or otherwise
become liable in respect of, any Funded Debt if after giving effect thereto
Priority Debt exceeds 15% of Total Capitalization. For these purposes Funded
Debt of a Person existing at the time it becomes a Restricted Subsidiary, or
Indebtedness assumed in connection with any acquisition of property,
shall be deemed to be incurred at that time.
6E. Sale-Leasebacks. The Corporation will not, and will not permit any
Restricted Subsidiary to, enter into any Sale-Leaseback unless at least one of
the following conditions is met:
(a) the term of the lease is three years or less, or
(b) the proceeds thereof are either reinvested in oil and gas properties,
equipment and fixed assets used in the business of the Corporation as
described in paragraph 6G, or are used to repay Funded Debt of the
Corporation or a Restricted Subsidiary, or a combination thereof,
within a period of 360 days following receipt thereof, or
(c) after giving effect thereto, Priority Debt does not exceed 15% of
Total Capitalization.
6F. Merger. The Corporation will not enter into any transaction whereby
all or substantially all of its undertaking, property and assets would become
the property of any other Person (herein called a "Successor Corporation")
whether by way of reorganization, consolidation, amalgamation, arrangement,
merger, transfer, sale or otherwise, except that:
(i) the Corporation may amalgamate or merge with any Restricted
Subsidiary (provided that the Corporation shall be the Successor
Corporation or shall form part of the Successor Corporation), and
(ii) the Corporation may enter into such transaction with any other
corporation if:
(A) the Successor Corporation is a corporation organized and
existing under the laws of Canada or a province thereof, or
any state of the United States of America, with
substantially all of its assets located and a majority of
its business conducted within the member countries (from
time to time) of the Organization for Economic Co-operation
and Development,
(B) such Successor Corporation expressly assumes, by an
agreement satisfactory in substance and form to the
Required Holders (which agreement may require the delivery
in connection with such assumption of such opinions of
counsel as the Required Holders may reasonably require),
the obligations of the Corporation under this Agreement
and the Notes,
(C) immediately following such amalgamation or merger, such
Successor Corporation could incur at least $1.00 of
additional Funded Debt in compliance with paragraphs 6C
and 6D, and at least $1.00 of Indebtedness secured by
Liens in compliance with paragraph 6B (ix) and
(D) no Default or Event of Default has occurred and is
continuing or would exist if such transaction is effected.
6G. Change of Business. The Corporation will not change in any material
respect the nature of its or its Restricted Subsidiaries' business or
operations from the exploration for, and development, production,
transportation and marketing of, petroleum, natural gas and related products,
nor will it engage directly or indirectly in any material business activity, or
purchase or otherwise acquire any material property, in either case not related
to the conduct of its business or operations as presently carried on.
PARAGRAPH 7. EVENTS OF DEFAULT.
7A. Acceleration. If any of the following events shall occur and be
continuing for any reason whatsoever (and whether such occurrence shall be
voluntary or involuntary or come about or be effected by operation of law or
otherwise):
(i) failure to pay principal: the Corporation defaults in the
payment of any principal of or Yield-Maintenance Amount payable with
respect to any Note when the same shall become due, either by the terms
thereof or otherwise as herein provided; or
(ii) failure to pay interest: the Corporation defaults in the
payment of any interest on any Note for more than 5 Business Days after
the date due; or
(iii) cross acceleration: the Corporation or any Restricted
Subsidiary (A) defaults (whether as primary obligor or as guarantor or
other surety) in any payment of principal of, premium (if any) or interest
on any Indebtedness beyond any period of grace provided with respect
thereto, or (B) fails to perform or observe any other agreement, term or
condition contained in any agreement under which any such Indebtedness is
created (or if any other event thereunder or under any such agreement
shall occur and be continuing), and the effect of such default in
paragraph (A) or (B) is to cause such obligation to become due and payable
(or to be repurchased by the Corporation or any Subsidiary) prior to any
stated maturity, provided in either case that the aggregate amount
of all obligations in respect of which such default shall occur and be
continuing exceeds $10,000,000 (or its then equivalent in U.S. Dollars),
and provided further that if (x) the holders of such accelerated
Indebtedness rescind the acceleration which has resulted in an Event of
Default under this paragraph 7A(iii) pursuant to an express right to do so
contained in the governing agreement for such Indebtedness, (y) no holders
of Notes have then commenced legal action in respect of their Notes, and
(z) no other Event of Default has occurred and is continuing, then the
holders of Notes shall thereupon be deemed to have waived any Default or
Event of Default under this paragraph 7A(iii), and to have rescinded any
acceleration that occurred by reason of this paragraph 7A(iii); or
(iv) incorrect representations: any representation or warranty made
by the Corporation herein or by or on behalf of the Corporation or any of
its officers in any writing furnished in connection with or pursuant to
this Agreement shall be false or incorrect in any respect on the date as
of which made, and the actual facts that exist and give rise to such
falsity individually or in the aggregate could reasonably be expected to
have a Material Adverse Effect, or could have any adverse effect on the
legality, validity or enforceability of this Agreement or any Notes; or
(v) breach of other covenant: the Corporation fails to perform or
observe any other agreement, covenant, term or condition contained herein
and such failure shall not be remedied within 30 days after the earlier of
(A) a Responsible Officer obtaining actual knowledge thereof, and (B) a
holder of a Note giving written notice thereof to the Corporation; or
(vi) insolvency (voluntary proceedings): the Corporation or any
Restricted Subsidiary shall:
(a) become insolvent, or generally not pay its debts or meet
its liabilities as the same become due, or admit in writing
its inability to pay its debts generally, or declare any
general moratorium on its indebtedness, or propose a
compromise or arrangement between it and any class of its
creditors,
(b) commit an act of bankruptcy under the Bankruptcy and
Insolvency Act (Canada), or make an assignment of its
property for the general benefit of its creditors under
such Act, or make a proposal (or file a notice of its
intention to do so) under such Act,
(c) institute any proceeding seeking to adjudicate it an
insolvent, or seeking liquidation, dissolution, winding-up,
reorganization, compromise, arrangement, adjustment,
protection, moratorium, relief, stay of proceedings of
creditors generally (or any class of creditors), or
composition of it or its debts under any other statute,
rule or regulation relating to bankruptcy, winding-up,
insolvency, reorganization, plans of arrangement, relief
or protection of debtors (including the Bankruptcy and
Insolvency Act (Canada), the Companies' Creditors
Arrangement Act (Canada) and any applicable Business
Corporations Act or Company Act), or at common law or
in equity,
(d) apply for the appointment of, or the taking of possession
by, a receiver, interim receiver, receiver/manager,
custodian, administrator, trustee, liquidator or other
similar official for it or any substantial part of its
property, or
(e) threaten to do any of the foregoing, or take any action,
corporate or otherwise, to approve, consent to or authorize
any of the actions described in this paragraph (vi) or in
paragraph (vii), or otherwise act in furtherance thereof
or fail to act in defense thereof; or
(vii) insolvency (involuntary proceedings): any petition shall
be filed, application made or other proceeding instituted against or in
respect of the Corporation or any Restricted Subsidiary:
(a) seeking to adjudicate it an insolvent,
(b) seeking a receiving order against it under the Bankruptcy
and Insolvency Act (Canada),
(c) seeking liquidation, dissolution, winding-up,
reorganization, compromise, arrangement, adjustment,
protection, moratorium, relief, stay of proceedings of
creditors generally (or any class of creditors), or
composition of it or its debts under any statute, rule
or regulation relating to bankruptcy, winding-up,
insolvency, reorganization, plans of arrangement, relief
or protection of debtors (including the Bankruptcy and
Insolvency Act (Canada), the Companies' Creditors
Arrangement Act (Canada) and any applicable Business
Corporations Act or Company Act), or at common law or
in equity, or
(d) seeking the entry of an order for relief or the appointment
of a receiver, interim receiver, receiver/manager,
custodian, administrator, trustee, liquidator or other
similar official for it or any substantial part of its
property,
and such petition, application or proceeding shall continue undismissed,
or unstayed and in effect, for a period of 60 days after the institution
thereof, provided that if an order, decree or judgment has been granted
(whether or not entered or subject to appeal) against the Corporation or
any Restricted Subsidiary thereunder in the interim, such grace period
shall cease to apply; or
(viii) extra-territorial proceedings: any other event shall occur
which, under the laws of any applicable jurisdiction, has an effect
equivalent to any of the events referred to in paragraphs (vi) or (vii); or
(ix) attachment or seizure (secured or unsecured): any property of
the Corporation or any Restricted Subsidiary having a fair market value in
excess of $10,000,000 (or its then equivalent in U.S. Dollars) in the
aggregate shall be seized (including by way of execution, attachment,
garnishment or distraint) or any Lien thereon shall be enforced, or such
property shall become subject to any charging order or equitable
execution of a Governmental/Judicial Body, or any writ of execution or
distress warrant shall exist in respect of the Corporation, any Restricted
Subsidiary or the property of either, or any sheriff or other Person shall
become lawfully entitled to seize or distrain upon such property under the
Execution Creditors Act (Alberta), Seizures Act (Alberta), the Workers'
Compensation Act (Alberta), the Personal Property Security Act (Alberta)
or any other Applicable Laws whereunder similar remedies are provided, and
in any case such seizure, enforcement, execution, attachment, garnishment,
distraint, charging order or equitable execution, or other seizure or
right, shall continue in effect and not be released or discharged for more
than 60 days; or
(x) judgments: one or more judgments for the payment of money in
excess of $10,000,000 (or its then equivalent in U.S. Dollars) in the
aggregate shall be rendered against the Corporation or any Restricted
Subsidiary and the Corporation or such Restricted Subsidiary shall not
have (A) provided for its discharge in accordance with its terms within
60 days from the date of entry thereof, or (B) procured a stay of
execution thereof within 60 days from the date of entry thereof and within
such period, or such longer period during which execution of such judgment
shall have been stayed, appealed such judgment and caused the execution
thereof to be stayed during such appeal, provided that if enforcement
and/or realization proceedings are lawfully commenced in respect
thereof in the interim, such grace period shall cease to apply; or
(xi) unenforceability of documents: this Agreement or any Note or
any material provision of either shall at any time for any reason cease to
be in full force and effect, be declared to be void or voidable or shall
be repudiated, or the validity or enforceability thereof shall at any time
be contested by the Corporation, or the Corporation shall deny that it has
any or any further liability or obligation thereunder or any action or
proceeding shall be commenced to enjoin or restrain the performance or
observance by the Corporation of the terms thereof or to question the
validity or enforceability thereof, or at any time it shall be unlawful
or impossible for the Corporation to perform any of its obligations
thereunder;
then:
(a) if such event is an Event of Default specified in clause (i) or (ii)
of this paragraph 7A, then the holder of any Note may at its option,
by notice in writing to the Corporation, declare such Note to be, and
such Note shall thereupon be and become, immediately due and payable
at par together with interest accrued thereon and together with the
Yield Maintenance Amount, if any, with respect to such Note, without
presentment, demand, protest or other notice of any kind, all of
which are hereby waived by the Corporation;
(b) if such event is an Event of Default specified in clause (vi), (vii)
or (viii) of this paragraph 7A with respect to the Corporation, then
all of the Notes at the time outstanding shall automatically become
immediately due and payable at par together with interest accrued
thereon and together with the Yield-Maintenance Amount, if any, with
respect to each Note, without presentment, demand, protest or notice
of any kind, all of which are hereby waived by the Corporation; and
(c) if such event is not an Event of Default specified in clause (vi),
(vii) or (viii) of this paragraph 7A with respect to the Corporation,
then, whether or not notice has been given pursuant to paragraph (a),
the holders of not less than 25% of the outstanding principal amount
of the Notes, in the case of an event specified in paragraphs (i)
and (ii), and not less than 50% in any other case, may at its or
their option, by notice in writing to the Corporation, declare all of
the Notes to be, and all of the Notes shall thereupon be and become,
immediately due and payable together with interest accrued thereon
and together with the Yield-Maintenance Amount, if any, with respect
to each Note, without presentment, demand, protest or other notice of
any kind, all of which are hereby waived by the Corporation.
7B. Rescission of Acceleration. At any time after any or all of the
Notes shall have been declared immediately due and payable pursuant to paragraph
7A, the Required Holders may, by notice in writing to the Corporation, rescind
and annul such declaration and its consequences if (i) the Corporation shall
have paid all overdue interest on the Notes, the principal of and Yield-
Maintenance Amount, if any, payable with respect to any Notes which have become
due otherwise than by reason of such declaration, and interest on such overdue
interest and overdue principal and Yield-Maintenance Amount at the rate
specified in the Notes, (ii) the Corporation shall not have paid any amounts
which have become due solely by reason of such declaration, (iii) all Events of
Default and Defaults, other than non-payment of amounts which have become due
solely by reason of such declaration, shall have been cured or waived pursuant
to paragraph 11C, and (iv) no judgment or decree shall have been entered for
the payment of any amounts due pursuant to the Notes or this Agreement. No
such rescission or annulment shall extend to or affect any subsequent Event of
Default or Default or impair any right arising therefrom.
7C. Notice of Acceleration or Rescission. Whenever any Note shall be
declared immediately due and payable pursuant to paragraph 7A or any such
declaration shall be rescinded and annulled pursuant to paragraph 7B, the
Corporation shall forthwith give written notice thereof to the holder of each
Note.
7D. Other Remedies. If any Event of Default or Default shall occur and
be continuing, the holder of any Note may proceed to protect and enforce its
rights under this Agreement and such Note by exercising such remedies as are
available to such holder in respect thereof under Applicable Law, either by
suit in equity or by action at law, or both, whether for specific
performance of any covenant or other agreement contained in this Agreement or
in aid of the exercise of any power granted in this Agreement. No remedy
conferred in this Agreement upon the holder of any Note is intended to be
exclusive of any other remedy, and each and every such remedy shall be
cumulative and shall be in addition to every other remedy conferred herein or
now or hereafter existing at law or in equity or by statute or otherwise.
PARAGRAPH 8. REPRESENTATIONS, COVENANTS AND WARRANTIES.
8. Representations, Covenants and Warranties.
The Corporation represents, covenants and warrants as follows:
8A. Organization. The Corporation is a corporation duly organized and
validly existing in good standing under the laws of the Province of Alberta,
and each Restricted Subsidiary is duly organized and existing in good standing
under the laws of the jurisdiction in which it is incorporated. The
Corporation is validly registered as an extra-provincial corporation under the
laws of the Provinces of British Columbia and Saskatchewan, and in each other
jurisdiction where failure to be so registered individually or in the aggregate
could reasonably be expected to have a Material Adverse Effect. The execution,
delivery and performance by the Corporation of this Agreement and the Notes are
within the Corporation's corporate powers and have been duly authorized by all
necessary corporate action. This Agreement and the Notes constitute legal,
valid and binding obligations of the Corporation enforceable against it in
accordance with their respective terms, subject only to the qualifications to
enforceability contained in the opinion of the Corporation's counsel delivered
pursuant to paragraph 3A(vii). All of the Subsidiaries of the Corporation and
the percentage direct or indirect ownership thereof by the Corporation are
listed in Schedule D.
8B. Financial Statements. The Corporation has furnished each Purchaser
with the following financial statements: (a) a consolidated balance sheet of
the Corporation as at December 31 in each of the years 1992 to 1994, inclusive,
and consolidated statements of earnings and retained earnings and consolidated
statements of changes in financial position of the Corporation for each such
year, all reported on by Coopers & Xxxxxxx; and (b) a consolidated balance
sheet of the Corporation as at March 31 in each of the years 1994 and 1995 and
consolidated statements of earnings and retained earnings and consolidated
statements of changes in financial position for the 3 month period ended on
each such date, prepared by the Corporation. Such financial statements
(including any related schedules and/or notes) are true and correct in all
material respects (subject, as to interim statements, to changes resulting
from audits and normal year-end adjustments), have been prepared in accordance
with GAAP consistently followed throughout the periods involved and show all
liabilities, direct and contingent, of the Corporation and its Subsidiaries
required to be shown in accordance with GAAP. The balance sheets present
fairly the condition of the Corporation and its Subsidiaries as at the dates
thereof, and the statements of earnings, retained earnings and changes in
financial position present fairly the results of the operations, properties of
the Corporation and its Subsidiaries and their cash flows for the periods
indicated. There has been no change in the business, condition (financial or
otherwise), operations, properties or business prospects of the Corporation
and its Subsidiaries taken as a whole since December 31, 1994 which
individually or in the aggregate could reasonably be expected to have a
Material Adverse Effect.
8C. Actions Pending. There is no action, suit, investigation or
proceeding pending or, to the knowledge of the Corporation, threatened against
the Corporation or any of its Restricted Subsidiaries, or any properties or
rights of the Corporation or any of its Restricted Subsidiaries, by or before
any Governmental/Judicial Body which individually or in the aggregate could
reasonably be expected to have a Material Adverse Effect. There is no action,
suit, investigation or proceeding pending or threatened against the Corporation
or any of its Subsidiaries which alleges the breach of any Applicable
Environmental Laws, or could result in an order against the Corporation or any
Restricted Subsidiary for the clean up of any property except as disclosed by
the Corporation to each holder of a Note in writing prior to the date hereof,
with reference to this paragraph. There is no action, suit, investigation or
proceeding pending or threatened against the Corporation or any of its
Subsidiaries which purports to affect the validity or enforceability of this
Agreement or any Note.
8D. Outstanding Indebtedness. Neither the Corporation nor any of its
Restricted Subsidiaries has outstanding any Indebtedness except for
Indebtedness that, if it were incurred immediately after the execution and
delivery of this Agreement, would be permitted by paragraphs 6C and 6D of this
Agreement, and all such Indebtedness is accurately described in Part C of
Schedule C, together with particulars thereof. There exists no default or
event of default under the provisions of any instrument evidencing such
Indebtedness or of any agreement relating thereto.
8E. Title to Properties. Except for Permitted Title Defects, the
Corporation and each of its Restricted Subsidiaries have good and marketable
title to its proved producing oil and gas properties and proved non-producing
oil and gas properties, and good and valid title to all of its other respective
material properties and assets, including the properties and assets reflected
in the balance sheet as at March 31, 1995 referred to in paragraph 8B (other
than properties and assets disposed of in the ordinary course of business),
subject to no Lien of any kind except Liens that, if they were incurred
immediately after the execution and delivery of this Agreement, would be
permitted by paragraph 6B. All leases (including petroleum and/or natural gas
leases) necessary in any material respect for the conduct of the respective
businesses of the Corporation and its Restricted Subsidiaries are valid and
subsisting and are in full force and effect.
8F. Taxes. The Corporation and each of its Restricted Subsidiaries has
filed all federal, provincial and other income tax returns which are required
to be filed, and each has paid all taxes as shown on such returns and on all
assessments received by it to the extent that such taxes have become due,
except such taxes as are being contested in good faith by appropriate
proceedings and for which adequate reserves have been established in the
reasonable opinion of the Corporation and in accordance with GAAP.
8G. Conflicting Agreements and Other Matters. Neither the Corporation
nor any of its Subsidiaries is a party to any contract or agreement or subject
to any charter or other corporate restriction which individually or in the
aggregate could reasonably be expected to have a Material Adverse Effect.
Neither the execution nor delivery of this Agreement or the Notes, nor the
offering, issuance and sale of the Notes, nor fulfilment of nor compliance
with the terms and provisions hereof and the Notes will conflict with, or
result in a breach of the terms, conditions or provisions of, or constitute a
default under, or result in any violation of, or result in the creation
of any Lien upon any of the properties or assets of the Corporation or any of
its Restricted Subsidiaries pursuant to, the articles or by-laws of the
Corporation or any of its Restricted Subsidiaries, any Applicable Law or any
agreement (including any instrument or agreement creating or evidencing
Indebtedness), to which the Corporation or any of its Restricted
Subsidiaries is subject. The Corporation and each Restricted Subsidiary is in
compliance with Applicable Laws where failure to do so would individually or in
the aggregate could reasonably be expected to have a Material Adverse Effect.
Neither the Corporation nor any of its Subsidiaries is a party to, or otherwise
subject to any provision contained in, its articles, any instrument or
agreement creating or evidencing Indebtedness of the Corporation or such
Subsidiary, any agreement relating thereto or any other contract or agreement
which limits the amount of, or otherwise imposes restrictions on the incurring
of, Indebtedness of the Corporation of the type to be evidenced by the Notes
except for the agreements listed in Part B of Schedule C.
8H. Offering of Notes. Neither the Corporation nor any agent acting on
its behalf has, directly or indirectly, offered the Notes or any similar
security of the Corporation for sale to, or solicited any offers to buy the
Notes or any similar security of the Corporation from, or otherwise
approached or negotiated with respect thereto with, any Person other than 60
institutional "accredited investors" (as such term is defined in paragraph
9B(2)(a) hereof), each of which has been offered the Notes at a private sale
for investment, and neither the Corporation nor any agent acting on its behalf
has taken or will take any action which would subject the issuance or sale of
the Notes to the provisions of Section 5 of the Securities Act or to the
registration, qualification or similar provisions of any securities or "blue
sky" laws of any applicable jurisdiction or result in any contravention of the
provisions of any securities law of Alberta or any other applicable
jurisdiction.
8I. Use of Proceeds. The Corporation will apply the proceeds of the sale
of the Notes as set forth in paragraph 5O hereof. Neither the Corporation nor
any Subsidiary owns or has any present intention of acquiring any "margin
stock" as defined in Regulation G (12 CFR Part 207) of the Board of Governors
of the United States Federal Reserve System ("margin stock"). None of the
proceeds of the sale of the Notes will be used, directly or indirectly, for the
purpose, whether immediate, incidental or ultimate, of purchasing or carrying
any margin stock or for the purpose of maintaining, reducing or retiring any
Indebtedness which was originally incurred to purchase or carry any stock that
is currently a margin stock or for any other purpose which might constitute
this transaction a "purpose credit" within the meaning of such Regulation G.
Neither the Corporation nor any agent acting on its behalf has taken any action
which might cause this Agreement or the Notes to violate Regulation G,
Regulation T, Regulation X or any other regulation of the Board of Governors of
the United States Federal Reserve System or to violate the Exchange Act, and
the Corporation covenants that it will not, and will not permit any agent
acting on its behalf to, take any action which would cause this Agreement or
the Notes to violate any such regulations or laws or any amendments thereto.
8J. Governmental Consent. Neither the nature of the Corporation or of
any Subsidiary, nor any of their respective businesses or properties, nor any
relationship between the Corporation or any Subsidiary and any other Person,
nor any circumstance in connection with the offering, issuance, sale or
delivery of the Notes is such as to require any authorization, consent,
approval, exemption or other action by or notice to or filing with any
Governmental/Judicial Body (other than routine notification filings and
payment of applicable fees after the Date of Closing with the applicable
provincial securities authorities) in connection with the execution and
delivery of this Agreement, the offering, issuance, sale or delivery of the
Notes or fulfilment of or compliance with the terms and provisions hereof or
of the Notes.
8K. Environmental Compliance. The Corporation and its Restricted
Subsidiaries and all of their respective properties and facilities have
complied at all times and in all respects with all Applicable Environmental
Laws except, in any such case, where failure to comply individually
or in the aggregate could not reasonably be expected to have a Material
Adverse Effect.
8L. Disclosure. Neither this Agreement, the Private Placement
Memorandum, nor any other document, certificate or statement furnished to any
Purchaser by the Corporation or its agents in connection herewith contains any
untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements contained herein and therein not
misleading. There is no fact or facts peculiar to the Corporation or any of
its Subsidiaries (excluding conditions general to the oil and gas industry)
which individually or in the aggregate materially adversely affects or could
reasonably be expected to materially adversely affect the business, condition
(financial or otherwise), operations, properties or business prospects of the
Corporation and of its Restricted Subsidiaries taken as a whole and which has
not been set forth in this Agreement or in the other documents, certificates
and statements furnished to each Purchaser by or on behalf of the Corporation
prior to the date hereof in connection with the transactions contemplated
hereby.
8M. Pari Passu. All payment obligations of the Corporation hereunder and
under the Notes rank at least pari passu in priority of payment with its other
most senior unsubordinated Indebtedness (including Indebtedness referred to in
Part C of Schedule C) (it being acknowledged that certain holders of such
Indebtedness may hold security therefor to the extent permitted in paragraph
6B).
8N. ERISA. The execution and delivery of this Agreement and the
issuance and sale of the Notes hereunder will not involve any transaction that
is subject to the prohibitions of section 406(a) of the Employee Retirement
Income Security Act (U.S.) of 1974, as amended ("ERISA") and in connection with
which a tax could be imposed pursuant to section 4975(c)(1(A)-(D)) of the
Internal Revenue Code (U.S.) (the "Code").
The representation by the Corporation in this paragraph 8N is made in
reliance upon and subject to (i) the accuracy of a Purchaser's representation
in paragraph 9A(2) as to the sources of the funds used to pay the purchase
price of the Notes to be purchased by such Purchaser, and (ii) the assumption,
made solely for the purpose of making such representation, that the proposed
prohibited transaction class exemption published by the United States
Department of Labor in the Federal Register on August 22, 1994 (59 FR 43134,
August 22, 1994) will become final in its current form.
8O. List of Plans. The Corporation has furnished a list ("ERISA
Schedule") to each Purchaser identifying (i) each ERISA Affiliate, if any, and
(ii) each "employee benefit plan" as defined in Section 3 of ERISA, and each
"plan" (as defined in section 4975 (e)(1) of the Code), maintained by the
Corporation or any ERISA Affiliate, if any. If the name of any employee
benefit plan (as defined in Section 3 of ERISA) has been disclosed to the
Corporation pursuant to paragraph 9A(2)(g), the Corporation is not a "party in
interest" (as defined in Section 3 of ERISA) with respect to any such plan.
For these purposes, "ERISA Affiliate" means any corporation which is a member
of the same controlled group of corporations as the Corporation within the
meaning of Section 414(b) of the Code, or any trade or business which is under
common control with the Corporation within the meaning of Section 414(c) of
the Code.
8P. Foreign Assets Control Regulations, etc. The Corporation is not a
"national" of any foreign country with which the United States maintains a
commercial embargo, or an order freezing assets, pursuant to legislation,
Executive orders of the President, or regulations of the Treasury Department.
Neither the sale of the Notes by the Corporation nor the use of the
proceeds thereof by the Corporation will violate any of such legislation,
regulations or orders.
8Q. Investment Company Act and Public Utility Holding Company Status.
The Corporation is not (a) an investment company or a Person directly or
indirectly controlled by or acting on behalf of an investment company, within
the meaning of the United States Investment Company Act of 1940, as amended,
or (b) a "holding company" or "subsidiary company" of a "holding company" or
an "affiliate" of a "holding company" or of a "subsidiary company" of a
"holding company", or a "public utility", within the meaning of the United
States Public Utility Holding Company Act of 1935, as amended.
PARAGRAPH 9. REPRESENTATIONS, WARRANTIES AND
COVENANTS OF EACH PURCHASER.
9A. Representations and Warranties of Each Purchaser.
Each Purchaser represents and warrants as follows:
9A(1) Nature of Purchase. Each Purchaser represents (and in entering
into this Agreement the Corporation understands) that each Purchaser is
acquiring the Notes for its own account or for an account over which it
exercises sole investment discretion, and that it is not acquiring the Notes
with a view to the distribution thereof and that it has no present intention of
selling, negotiating or otherwise disposing of the Notes; it being understood,
however, that the disposition of its property shall at all times be and
remain within its control. Each acquisition of a Note is in respect of a
security which has an aggregate acquisition cost to such Purchaser or
account of not less than $97,000, all within the meaning of the Securities Act
(Alberta). Without limiting the foregoing, each Purchaser agrees that it will
only re-offer or resell the Notes purchased by it in accordance with any
applicable federal, state or provincial securities laws, as the case may be;
it understands that the Notes are not being registered under the Securities
Act and are being sold to it in transactions that are exempt from the
registration requirements of the Securities Act; and it has such knowledge and
experience in financial and business matters as to be capable of evaluating the
merits and risks of an investment in the Notes, and it (and any account
for which it is purchasing) is able to bear the economic risk of investment
in the Notes for an indefinite period.
9A(2) ERISA. In connection with the acquisition of Notes to be
purchased by it hereunder and solely for purposes of determining whether such
acquisition is a "prohibited transaction" (as provided for in section 406 of
ERISA or section 4975 of the Code), one or more of the following statements is
correct with respect to each source of funds being used by Purchaser
to acquire the Notes:
(a) no part of such funds constitutes the assets of any "employee
benefit plan" as defined in Section 3(3) of ERISA, or its
related trust, or any "plan" as defined in Section 4975(e)(1)
of the Code, or its related trust (each a "Plan");
(b) it is an "insurance company" as defined in Section 2(13) of the
Securities Act and it is acquiring such Notes for its own
account with funds from its general account assets, or from
assets of one or more segments of such general account, and,
if any assets in such general account are, or are deemed to
be, assets of any Plan, such acquisition is eligible for and
satisfies the requirements of Prohibited Transaction Exemption
("PTE") 95-60 (issued July 12, 1995), and will be exempt from
the restrictions of section 406(a) and 407(a) of ERISA and the
taxes imposed by section 4975(a) and (b) of the Code;
(c) it is acquiring such Notes with assets of a separate account
that is maintained solely in connection with fixed contractual
obligations of an insurance company under which the amounts
payable, or credited, to any employee benefit plan having an
interest in such account and to any participant or beneficiary
of such plan (including an annuitant) are not affected in any
manner by the investment performance of the separate account
(as provided by the exception set forth in 29 C.F.R. Section
2510.3-101(h)(1)(iii));
(d) such funds constitute assets of either (i) an insurance company
pooled separate account, within the meaning of PTE 90-1 (issued
January 29, 1990), or (ii) a bank collective investment fund,
within the meaning of PTE 91-38 (issued July 12, 1991); no Plan
(together with any other Plan maintained by the same employer or
employee organization) holds more than a 10% interest in such
account or fund; and the Purchaser's acquisition of the Notes
with such funds is eligible for and satisfies the requirements
of PTE 90-1 or PTE 91-38 and will be exempt from the restrictions
of section 406(a), 406(b)(2) and 407(a) of ERISA and the taxes
imposed by section 4975(a) and (b) of the Code; (e) such funds
constitute assets of a governmental plan as defined in Section
3(32) of ERISA;
(f) (i) the source of such funds is one or more "employee benefit
plans" or "plans" (as defined in section 3(3) of ERISA and
section 4975 of the Code, respectively) (each a "Plan") or a
separate account or trust fund including the assets of one or
more Plans; and (ii) the Purchaser has identified each
such Plan to the Corporation in writing; or (g) it is acquiring
such Notes with assets of one or more single customer separate
accounts and it has disclosed to the Corporation in writing the
names of such employee benefit plans whose assets are invested
in such separate accounts, and the purchase of such Notes with
assets of such accounts will not result in a non-exempt
"prohibited transaction"; provided that the foregoing
representation is made in reliance upon the ERISA Schedule
delivered to the Purchasers by the Corporation pursuant to
paragraph 8O.
9A(3) Location. The head registered office of such Purchaser is located
outside of Canada, the employees of such Purchaser responsible for investment
decisions relating to the purchase and holding of the Notes are located outside
Canada, and the Notes will be held by such Purchaser outside Canada.
9B. Representations, Acknowledgements and Covenants of Each Purchaser.
9B(1) Credit Decision. By its execution of this Agreement, each
Purchaser severally represents and acknowledges to each other Purchaser that
it has, independently and without reliance upon any other Purchaser and based
on the financial statements referred to in paragraph 8B, the Private Placement
Memorandum, and such other documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Purchaser also severally represents and acknowledges to each
other Purchaser that it will, independently and without reliance upon any other
Purchaser and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement and the Notes. The provisions of this
paragraph are for the sole benefit of the Purchasers and are not intended to
benefit or to confer any right upon the Corporation or any other Person.
9B(2) Acknowledgement. Each Purchaser acknowledges that:
(a) it has purchased the Notes for its own account, or for the account of
one or more separate accounts, each of which is an institutional
"accredited investor" within the meaning of Rule 501(a)(1), (2), (3)
or (7) of the Securities Act;
(b) it has received the Private Placement Memorandum; and
(c) the Notes shall bear the following legend:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT
BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "U.S.
SECURITIES ACT") AND MAY BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED ONLY (A) TO THE
CORPORATION, (B) OUTSIDE THE UNITED STATES IN
ACCORDANCE WITH RULE 904 OF REGULATION "S"
UNDER THE U.S. SECURITIES ACT, (C) PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE U.S.
SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER,
OR (D) PURSUANT TO ANOTHER EXEMPTION FROM
REGISTRATION UNDER THE U.S. SECURITIES ACT.
THIS NOTE MAY NOT BE TRADED IN CANADA EXCEPT AS
PERMITTED BY RELEVANT SECURITIES LEGISLATION.
ANY TRANSFER OF THIS NOTE IS SUBJECT TO THE
PROVISIONS OF THE NOTE AGREEMENT."
9B(3) Transferee ERISA Representation. By its acquisition of a Note,
each Transferee will be deemed to represent that for the purposes set forth
in paragraph 9A(2), one or more of the statements in clauses (a) to (g)
thereof is correct with respect to the source of funds being used by
it to acquire the Notes.
PARAGRAPH 10. DEFINITIONS.
10. Definitions.
For the purpose of this Agreement, the terms defined in the
introductory sentence and in paragraphs 1 and 2 shall have the respective
meanings specified therein, and the following terms shall have the meanings
specified with respect thereto below (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
10A. Yield-Maintenance Terms.
"Business Day" shall mean, when used in connection with the Yield-
Maintenance Amount, any day other than a Saturday, a Sunday or a day on which
commercial banks in New York, New York are required or authorized to be closed.
"Called Principal" shall mean, with respect to any Note, the principal of
such Note that is to be prepaid pursuant to paragraph 4B or is declared to be
immediately due and payable pursuant to paragraph 7A, as the context requires.
"Discounted Value" shall mean, with respect to the Called Principal of any
Note, the amount obtained by discounting all Remaining Scheduled Payments with
respect to such Called Principal from their respective scheduled due dates to
the Settlement Date with respect to such Called Principal, in accordance with
accepted financial practice and at a discount factor (applied on the same
periodic basis as that on which interest on the Notes is payable) equal to the
Reinvestment Yield with respect to such Called Principal.
"Reinvestment Yield" shall mean, with respect to the Called Principal of
any Note, 0.50% over the yield to maturity implied by (i) the Treasury
Constant Maturity Series yields reported, for the latest day for which such
yields shall have been so reported as of the Business Day next preceding the
Settlement Date with respect to such Called Principal, in Federal Reserve
Statistical Release H.15 (519) (or any comparable successor publication) for
actively traded U.S. Treasury securities having a constant maturity equal to
the Remaining Average Life of such Called Principal as of such Settlement Date,
or if such yields shall not be reported as of such time or the yields reported
as of such time shall not be ascertainable, (ii) the yields reported, as of
10:00 a.m. (New York City time) on the Business Day next preceding the
Settlement Date with respect to such Called Principal, on the display
designated as "Page 678" on the Telerate Service (or such other display as may
replace Page 678 on the Telerate Service) for actively traded U.S. Treasury
securities having a maturity equal to the Remaining Average Life of such
Called Principal as of such Settlement Date. Such implied yield shall be
determined, if necessary, by (a) converting U.S. Treasury xxxx quotations to
bond-equivalent yields in accordance with accepted financial practice and (b)
interpolating linearly between (1) the actively traded U.S. Treasury xxxx
with the maturity closest to and greater than the Remaining Average Life,
and (2) the actively traded U.S. Treasury xxxx with the maturity closest to
and less than the Remaining Average Life.
"Remaining Average Life" shall mean, with respect to the Called Principal
of any Note, the number of years (calculated to the nearest one-twelfth year)
obtained by dividing (i) such Called Principal into (ii) the sum of the
products obtained by multiplying (a) each Remaining Scheduled Payment of such
Called Principal (but not of interest thereon) by (b) the number of years
(calculated to the nearest one-twelfth year) which will elapse between the
Settlement Date with respect to such Called Principal and the scheduled due
date of such Remaining Scheduled Payment.
"Remaining Scheduled Payments" shall mean, with respect to the Called
Principal of any Note, all payments of such Called Principal and interest
thereon that would be due on or after the Settlement Date with respect to
such Called Principal if no payment of such Called Principal were made prior
to its scheduled due date.
"Settlement Date" shall mean, with respect to the Called Principal of any
Note, the date on which such Called Principal is to be prepaid pursuant to
paragraph 4B or is declared to be immediately due and payable pursuant to
paragraph 7A, as the context requires.
"Yield-Maintenance Amount" shall mean, with respect to any Note, an
amount equal to the excess, if any, of the Discounted Value of the Called
Principal of such Note over the sum of (i) such Called Principal plus (ii)
interest accrued thereon as of (including interest due on) the Settlement
Date with respect to such Called Principal. The Yield-Maintenance Amount
shall in no event be less than zero.
10B. Other Terms.
"Affiliate" shall mean:
(a) any Person directly or indirectly controlling, controlled by, or
under direct or indirect common control with, the Corporation.
A Person shall be deemed to control a corporation if such
Person possesses, directly or indirectly, the power to direct
or cause the direction of the management and policies of such
corporation, whether through the ownership of voting securities,
by contract or otherwise,
(b) any Person who beneficially owns or holds 10% or more of any
class of shares of the Corporation, or
(c) any Person, 10% or more of any class of shares (or in the case
of a Person that is not a corporation, 10% or more of the
partnership or equity interest) of which is beneficially
owned or held by the Corporation or a Subsidiary.
"Applicable Environmental Laws" shall mean those Applicable Laws which
pertain to the environment or the release of Hazardous Materials into the
environment, and includes any condition or requirement contained in a permit,
licence, approval, consent or other document issued pursuant to such laws.
"Applicable Laws" shall mean, in relation to any Person, transaction or
event:
(a) all applicable provisions of laws, statutes, rules and
regulations from time to time in effect of any Governmental/
Judicial Body, and
(b) all judgments, orders, awards, decrees, official directives,
writs and injunctions from time to time in effect of any
Governmental/Judicial Body in an action, proceeding or matter
in which the Person is a party or by which it or its property
is bound or having application to the transaction or event.
"Attributable Debt" shall mean, in respect of any Sale-Leaseback
transaction where all of the proceeds thereof have not been reinvested as
contemplated in paragraph 6E(b), the lesser of (a) the fair value of the
assets subject to such transaction, and (b) the present value (discounted
in accordance with GAAP at the interest rate implicit in the lease) of the
obligations of the lessee for rental payments during the term of such lease.
"Business Day" shall mean, when used other than in connection with the
Yield-Maintenance Amount, any day other than a Saturday, a Sunday or a day on
which commercial banks in New York, New York or Calgary, Alberta are required
or authorized to be closed.
"Canadian Dollars" or "Cdn. $" means lawful money of Canada.
"Capitalized Lease Obligation" shall mean, with respect to any Person,
any rental obligation which, under GAAP, would be required to be capitalized
on the books of such Person, taken at the amount thereof accounted for as
indebtedness (net of interest expense) in accordance with such principles.
"Closing" or "Date of Closing" shall have the meaning specified in
paragraph 2.
"Code" shall have the meaning specified in paragraph 8N.
"Confidential Information" shall mean any material non-public information
regarding the Corporation that was clearly marked or labelled or otherwise
adequately identified when received by the holders of Notes as being
"confidential", that is provided to any holder of any Note, any
Person who purchases a participation in a Note and any offeree of a Note or
a participation therein pursuant to this Agreement other than information (a)
which was publicly known or otherwise known to such holder, such Person or
such offeree at the time of disclosure, (b) which subsequently becomes
publicly known through no act or omission of such holder, such Person or
such offeree or (c) which otherwise becomes known to such holder, such Person
or such offeree, other than through disclosure by the Corporation or any
Subsidiary.
"Consolidated Funded Debt" shall mean, as at any date of determination,
the total Funded Debt of the Corporation and its Restricted Subsidiaries
determined on a consolidated basis in accordance with GAAP, after eliminating
all intercompany transactions.
"Consolidated Net Worth" shall mean, as at any date of determination,
shareholders' equity (including capital stock and retained earnings) of the
Corporation and its Restricted Subsidiaries determined on a consolidated basis
in accordance with GAAP as at such date of determination, after eliminating all
amounts properly attributable to minority interests, if any, in the shares
and surplus of Subsidiaries, and after eliminating all earnings which are
derived from assets which are subject to a Lien that secures Non-Recourse Debt.
"ERISA" shall have the meaning specified in paragraph 8N.
"Event of Default" shall mean any of the events specified in paragraph 7A,
provided that there has been satisfied any requirement in connection with such
event for the giving of notice, or the lapse of time, or the happening of any
further condition, event or act, and "Default" shall mean any of such events,
whether or not any such requirement has been satisfied.
"Exchange Act" shall mean the United States Securities Exchange Act of
1934, as amended.
"Funded Debt" shall mean all Indebtedness which is payable more than one
year from the date of creation thereof, including Indebtedness which is
payable within one year but which by its terms is renewable or extendible to
a date beyond one year from the date of creation thereof, but excluding
Non-Recourse Debt. For certainty, obligations and Indebtedness (contingent
or not) under Guarantees of Funded Debt shall be considered to be Funded Debt.
"GAAP" shall mean generally accepted accounting principles in Canada from
time to time approved by the Canadian Institute of Chartered Accountants, or
any successor institute, applicable on the date on which the applicable
determination or calculation is made or required to be made, subject to
paragraphs 10C and 10D.
"Governmental/Judicial Body" shall mean:
(a) any government, parliament or legislature or any regulatory or
administrative authority, agency, commission, tribunal or board
of any government and any other law, regulation or rule making
entity having or purporting to have jurisdiction in the relevant
circumstances, or any Person acting or purporting to act under
the authority of any of the foregoing, and
(b) any judicial, administrative or arbitral court, authority,
tribunal or commission having jurisdiction in the relevant
circumstances.
"Guarantee" shall mean, with respect to any Person, any direct or indirect
liability, contingent or otherwise, of such Person with respect to any
indebtedness, letter of credit, lease, dividend or other obligation of another,
including any such obligation directly or indirectly guaranteed, endorsed
(otherwise than for collection or deposit in the ordinary course of business)
or discounted or sold with recourse by such Person, or in respect of which
such Person is otherwise directly or indirectly liable, including any such
obligation in effect guaranteed by such Person through any agreement
(contingent or otherwise) to purchase, repurchase or otherwise acquire such
obligation or any security therefor, or to provide funds for the payment or
discharge of such obligation (whether in the form of loans, advances, stock
purchases, capital contributions or otherwise), or to maintain the solvency or
any balance sheet or other financial condition of the obligor of such
obligation (including keep-well covenants), in any such case if the purpose or
intent of such agreement is to provide assurance that such obligation will be
paid or discharged, or that the holders of such obligation will be protected
against loss in respect thereof.
"Hazardous Materials" shall mean any substance that:
(a) when released to the natural environment is likely to cause,
immediately or at some future time, material harm or degradation
to the natural environment or any risk to human health and
without restricting the generality of the foregoing, includes
any pollutant, contaminant, waste or hazardous waste, or any
"dangerous goods", "hazardous chemical", "hazardous substance"
or "hazardous waste" as may be defined by Applicable
Environmental Law for the protection of the natural
environment or human health, or (b) exhibits characteristics
of flammability, corrosivity, reactivity or toxicity.
"Indebtedness" shall mean, with respect to any Person, without duplication:
(a) all liabilities for borrowed money of such Person (including,
for certainty, reimbursement obligations in respect of letters
of credit, bankers' acceptances and note purchase facilities,
liabilities of such Person evidenced by a bond, note, debenture
or similar instrument, and liabilities of such Person in
relation to purchase money obligations, deferred purchase price
payments, conditional sales or title retention agreements),
(b) all Capitalized Lease Obligations of such Person, and all
obligations of such Person under Sale-Leasebacks,
(c) all liabilities of such Person under Production Payment
Transactions,
(d) all liabilities secured by a Lien on any property or asset owned
or held by such Person, whether or not the liabilities secured
thereby shall have been assumed, and
(e) all Guarantees of such Person with respect to liabilities of a
type described in the preceding clauses (a) to (d), provided
that contingent liabilities thereunder shall be included only
to the extent of the lesser of (i) the amount of Indebtedness
guaranteed or (ii) the amount to which the maximum exposure of
the Person shall have been expressly limited.
"Lien" shall mean any mortgage, pledge, security interest, encumbrance,
statutory deemed trust, contractual deposit arrangement, lien (statutory or
otherwise) or charge of any kind (including any agreement to give any of the
foregoing, any conditional sale or other title retention agreement or any
Capitalized Lease Obligation) which secures payment or performance of an
obligation, including any right of set-off created for the purpose of securing,
directly or indirectly, the repayment of Indebtedness.
"Material Adverse Effect" shall mean a material adverse effect on the
business, financial condition, operations or property of the Corporation and
its Restricted Subsidiaries taken as a whole, or a material adverse effect on
the rights of the holders hereunder or under the Notes or on the ability of the
Corporation to perform any of its obligations hereunder or under any Note.
"Non-Recourse Debt" means Indebtedness incurred by the Corporation or any
Restricted Subsidiary to finance the acquisition or construction of property or
assets if the terms and conditions of such Indebtedness provide that:
(a) in enforcing their rights in respect of such Indebtedness the
creditors shall have recourse only to, and the obligations of
the Corporation or the Restricted Subsidiary shall be performed,
satisfied and paid only out of, the acquired or constructed (as
the case may be) property or assets or the revenue therefrom
which shall have been mortgaged, pledged or otherwise encumbered
as security for the payment of such Indebtedness, and
(b) no resort or recourse for such purpose shall be had by such
creditors to any other property or assets or revenues of the
Corporation or the Restricted Subsidiary and in particular no
resort or recourse shall be had, judgment issued or execution
or other process levied by such creditors against any of
the property or assets of the Corporation or the Restricted
Subsidiary as the case may be, other than the acquired or
constructed (as the case may be) property or assets or the
revenue therefrom which shall have been mortgaged, pledged or
otherwise encumbered as security for the payment of such
Indebtedness,
provided that if under Applicable Law any creditor in respect of such
Indebtedness could ever become entitled to recourse against the Corporation
or the Restricted Subsidiary pursuant to any bankruptcy, insolvency,
reorganization, moratorium or similar laws of any jurisdiction, or in the
event of a breached representation or warranty or fraud, or for any other
reason, then such instrument shall contain a further provision to the effect
that such creditor's recourse in respect of such Indebtedness shall be and
remain in all respects subordinate and junior to all of the Notes and that
such creditor shall not be entitled to receive any payment, under any condition,
in respect of such Indebtedness, other than the proceeds of such specific
property or assets, until the Notes shall have been indefeasibly paid in full.
"Notes" shall have the meaning specified in paragraph 1.
"Officer's Certificate" shall mean a certificate signed in the name of the
Corporation by any two of its President, a Vice President or its Treasurer.
"Permitted Encumbrances" shall mean, as at any particular time, any of the
following Liens on or in respect of the property or assets of the Corporation
or any Restricted Subsidiary:
(a) Liens of any judgments rendered, or claims filed, against the
Corporation or any Restricted Subsidiary which the Corporation
or Restricted Subsidiary shall be contesting in good faith if
and for so long as (i) a stay of enforcement of such judgment
or claim (if enforceable by seizure, sale or other remedy
against any property), as the case may be, shall, by reason of
a pending appeal or otherwise, be in effect and (ii) in respect
of all such Liens which are in excess of $10,000,000 in the
aggregate, an amount in cash sufficient to pay such judgments
or claims shall have been deposited with a court of competent
jurisdiction,
(b) Liens incurred or created in the ordinary course of business of
the Corporation or any Restricted Subsidiary and in accordance
with sound industry practice and incidental to construction or
operations which have not at such time been filed pursuant to
law or which relate to obligations not due or delinquent,
(c) Liens incurred or created in the ordinary course of business and
in accordance with sound industry practice in respect of any of
the property and assets of the Corporation or any Restricted
Subsidiary as security in favour of any other Person who is
conducting the exploration, development or operation of the
property to which such rights relate for the Corporation's or
Subsidiary's portion of the costs and expenses of such
development or operation which have not at such time been filed
pursuant to law or which relate to obligations not due or
delinquent,
(d) Liens securing assessments under workers' compensation laws,
unemployment insurance or similar social security legislation
which relate to obligations not due or delinquent, and
(e) Liens on any specific property in favour of a government within
or outside Canada or any political subdivision, department,
agency or instrumentality thereof to secure the performance by
the Corporation or any Restricted Subsidiary of any covenant or
obligation to or in favour of or entered into at the request of
any such authorities in the ordinary course of the Corporation's
or Restricted Subsidiary's business where such security is
required pursuant to any statute, order or regulation, and which
relate to obligations not due or delinquent.
"Permitted Title Defects" shall mean, as at any particular time, any of
the following rights, limitations, reservations, provisos, conditions,
exceptions, qualifications, agreements, obligations and interests on or in
respect of the undertaking, property or assets, or any part of the
undertaking, property or assets, of the Corporation or any Restricted
Subsidiary:
(a) easements, rights-of-way, servitudes, and similar rights in land
(including rights-of-way and servitudes for railways, sewers,
drains, gas and oil pipelines, gas and water mains, electric
light and power and telephone or telegraph or cable television
conduits, poles, wires and cables) granted to or reserved or
taken by other Persons, which, individually or in the aggregate,
do not materially detract from the use or value of the property
subject thereto,
(b) the reservations, limitations, provisos and conditions in any
original grants from the Crown of any land or interests therein
and statutory exceptions, qualifications and reservations in
respect of title,
(c) the rights reserved or vested in any governmental or other
authority or Person by the terms of any leases, or by any
statutory provisions to terminate any such leases, or to require
annual or other periodic payments as a condition of the
continuance thereof,
(d) royalties, overriding royalties, net profits and other interests
and obligations arising in the ordinary course of business and
in accordance with sound industry practice under leases in which
the Corporation or Restricted Subsidiaries have an interest,
(e) any agreement, or any interest or right created in favour of any
Person thereunder, relating to pooling or unitization affecting
the property and arising in the ordinary course of business and
in accordance with sound industry practice,
(f) any rights of first refusal, pre-emption or first purchase or
requirements of consent to sale or disposition, created in the
ordinary course of business, none of which have become
exercisable heretofore or as a result of the execution and
delivery of this Agreement or will, merely on the passage of
time, become exercisable, and
(g) the potential existence of defects in title which are not
general in application and which in the aggregate do not
materially detract from the value of the petroleum and natural
gas lands and rights of the Corporation or any Restricted
Subsidiary or any significant part thereof or materially impair
the use of any thereof in the operation of their respective
businesses, or the cash flow therefrom.
"Person" shall mean and include an individual, a partnership, a joint
venture, a corporation, a trust, a limited liability company, an unincorporated
organization and a government or any department or agency thereof.
"Priority Debt" shall mean the aggregate, without duplication, of (a)
Indebtedness of the Corporation or Restricted Subsidiaries that is secured by
any Lien other than Liens expressly permitted by clauses (i) to and including
(viii) of paragraph 6B, plus (b) Indebtedness of the Corporation or Restricted
Subsidiaries associated with Production Payment Transactions, plus (c) Funded
Debt of Restricted Subsidiaries, plus (d) Attributable Debt in respect of Sale-
Leaseback transactions entered into after the date of this Agreement.
"Private Placement Memorandum" means the Private Placement Memorandum dated
June 1995 furnished to the Purchasers through Xxxxxxx Xxxxx Securities Inc. and
Toronto Dominion Securities (USA) Inc.
"Production Payment Transactions" shall mean:
(a) the sale (including any forward sale) or other transfer of
petroleum or natural gas substances, chemicals, minerals or
other products of the Corporation or a Restricted Subsidiary,
whether in place or when produced, for a period of time until,
or an amount such that, the purchaser will realize a specified
amount of money (however determined, including by reference
to interest rates or other factors which may not be fixed) or a
specified amount of such products, or
(b) any other transaction involving an interest in property of the
character commonly referred to as a "production payment",
but excluding, for certainty, any sale or forward sale entered into for the sole
purpose of risk management/hedging in respect of production prices in the
ordinary course of the Corporation's business.
"Responsible Officer" shall mean the chief executive officer, chief
operating officer, chief financial officer, any vice president, or treasurer
of the Corporation.
"Required Holders" shall mean the holder or holders of more than 50% of
the aggregate principal amount of the Notes from time to time outstanding,
exclusive of Notes held by Affiliates.
"Reserve Report" shall mean a consolidated engineering evaluation of and
report on all proven producing and proven non-producing petroleum and natural
gas rights now or hereafter owned by the Corporation and its Restricted
Subsidiaries in form, detail and content satisfactory to the Required Holders
and setting out estimates of reserves and cash flows attributable thereto,
prepared by an independent engineer or firm of engineers [or qualified in-house
engineer], provided that either (a) an evaluation and report that is acceptable
to the Corporation's principal bankers or (b) an evaluation and report that
accords with regulations or guidelines established by provincial securities
regulatory authorities, shall be deemed to be satisfactory to the Required
Holders.
"Restricted Subsidiary" shall mean each Subsidiary identified as a
Restricted Subsidiary in Schedule D, and any Subsidiary which has substantially
all of its assets located and a majority of its business conducted within the
member countries (from time to time) of the Organization for Economic
Co-operation and Development, and which is hereafter designated as a Restricted
Subsidiary by the Chief Executive Officer, the President and Chief Operating
Officer, or the Vice President, Finance, of the Corporation (such designation
to be effective upon receipt by all holders of Notes of a notice of such
designation in the form of Schedule E duly completed and signed by
the Corporation), provided that no Subsidiary may be designated as a Restricted
Subsidiary if after giving effect thereto a Default or Event of Default would
exist, or if the Corporation could not incur at least $1.00 of Indebtedness
secured by Liens in compliance with paragraph 6B(ix) and at least $1.00 of
additional Indebtedness in compliance with paragraphs 6C and 6D or if any
shares in its capital stock are owned by a Subsidiary that is not itself a
Restricted Subsidiary.
The Chief Executive Officer, the President and Chief Operating Officer, or the
Vice President, Finance, of the Corporation may remove the designation of any
Restricted Subsidiary (the Subsidiary to cease being a Restricted Subsidiary
upon receipt by all holders of Notes of a notice to that effect signed by the
Corporation), if the following conditions are met: (a) the Corporation
shall be able to incur at least $1.00 of Indebtedness secured by Liens in
compliance with paragraph 6B(ix), and at least $1.00 of additional Indebtedness
in compliance with paragraphs 6C and 6D, immediately after such removal, (b)
no Default or Event of Default has occurred and is continuing or would exist
immediately after such removal, and (c) the Subsidiary being removed
does not directly or indirectly own any Funded Debt of, or shares in the
capital stock of, any Restricted Subsidiary.
If a Subsidiary previously removed as a Restricted Subsidiary is again
designated hereunder, then any deemed creation of Liens or incurrence of
Indebtedness under paragraph 6B, 6C or 6D shall be deemed to have been created
or incurred on the date of such designation.
"Sale-Leaseback" means an arrangement under which title to any property or
an interest therein, is transferred by or on the direction of a person ("X") to
another person which leases or otherwise grants the right to use such property,
asset or interest to X or nominee of X, whether or not in connection therewith
X also acquires a right or is subject to an obligation to acquire the
property, asset or interest, and regardless of the accounting treatment of such
arrangement.
"Securities Act" shall mean the United States Securities Act of 1933, as
amended.
"Subsidiary" shall mean any corporation organized under the laws of Canada,
or any province of Canada, or any state of the United States of America, over
50% of the total combined voting power of all classes of Voting Stock of which
shall, at the time as of which any determination is being made, be owned by the
Corporation either directly or through Subsidiaries, provided that in the case
of a "wholly-owned Subsidiary", 100% of the issued and outstanding shares in the
capital of such Subsidiary shall, at the time as of which any determination
is being made, be owned by the Corporation either directly or through wholly-
owned Subsidiaries.
"Total Capitalization" shall mean Consolidated Net Worth plus Consolidated
Funded Debt.
"Transferee" shall mean any direct or indirect transferee of all or any
part of any Note purchased by any Purchaser under this Agreement.
"Voting Stock" shall mean, with respect to any corporation, any shares of
stock of such corporation whose holders are entitled under ordinary
circumstances to vote for the election of directors of such corporation
(irrespective of whether at the time stock of any other class or classes
shall have or might have voting power by reason of the happening of any
contingency).
"U.S. Dollars" or "U.S. $" means lawful currency of the United States of
America.
10C. Accounting Principles, Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
determinations with respect to accounting matters hereunder shall be made, and
all financial statements and certificates and reports as to financial matters
required to be furnished hereunder shall be prepared, in accordance with GAAP,
applied on a basis consistent with the most recent audited consolidated
financial statements of the Corporation and its Subsidiaries delivered pursuant
to clause (ii) of paragraph 5A or, if no such statements have been so delivered,
the most recent audited financial statements referred to in clause (a) of
paragraph 8B.
10D. Changes in GAAP. If, due to a change in GAAP after the date hereof,
the Corporation or the Required Holders determine that an amount required to be
calculated for purposes of a financial covenant in paragraphs 6A, 6B(ix), 6C, 6D
and 6E would be materially different if such amount were calculated in
accordance with GAAP in effect on the date hereof, and the parties hereto
cannot agree on equitable adjustments (if any) that may be required to deal
therewith, then either the Corporation or the Required Holders may give written
notice to the other party that it desires to revert, for such purposes, to GAAP
on the date hereof. Effective as of the first day of the fiscal quarter in
which such change in GAAP became effective, the term "GAAP" shall thereafter
be deemed to mean GAAP in effect on the date hereof, together with changes in
GAAP that are not objected to for these purposes after the date hereof, for
the purposes of such financial covenants. Within 30 days of such notice being
given, the Corporation shall deliver to each holder of Notes:
(a) revised financial statements prepared utilizing GAAP in effect
on the date hereof, together with changes in GAAP that are not
objected to for these purposes after the date hereof, and
(b) a revised Officer's Certificate pursuant to paragraph 5A
utilizing, for the purposes of such financial covenants, such
revised financial statements.
No notice shall be delivered under this paragraph except within one year of the
date that the objectionable change in GAAP was made.
PARAGRAPH 11. MISCELLANEOUS.
11A. Note Payments. So long as any Purchaser shall hold any Note, the
Corporation will make payments of principal of, interest on and any Yield-
Maintenance Amount payable with respect to such Note in compliance with the
terms of the Note and this Agreement, such payments to be made by wire transfer
of immediately available funds for credit (not later than 10:00 a.m.,
New York City time, on the date due) to such Purchaser's account or accounts as
specified in the Purchaser Schedule attached hereto, or such other account or
accounts in the United States as such Purchaser may designate in writing,
notwithstanding any contrary provision herein or in any Note with respect to
the place of payment. Each Purchaser agrees that, before disposing of any Note,
such Purchaser will make a notation thereon (or on a schedule attached thereto)
of all principal payments previously made thereon and of the date to which
interest thereon has been paid. The Corporation agrees to afford the benefits
of this paragraph 11A to any transferee which shall have made the same agreement
as each Purchaser has made in this paragraph 11A.
11B. Expenses. The Corporation agrees, whether or not the transactions
contemplated hereby shall be consummated, to pay, and save each Purchaser and
any holder of a Note harmless against liability for the payment of, all out-of-
pocket expenses arising in connection with such transactions, including (i)
all document production and duplication charges and the reasonable fees
and expenses of special counsel (and, if reasonably required, local or other
counsel) engaged by the Purchasers or such holders of a Note in connection with
this Agreement, the transactions contemplated hereby (including the reasonable
fees and expenses of Xxxxxxx Xxxxx) and any subsequent proposed modification
of, or proposed consent or waiver under, this Agreement, whether or not such
proposed modification shall be effected or proposed consent or waiver
granted, (ii) the fees for obtaining a private placement number for the Notes
from Standard & Poors CUSIP Service Bureau, and (iii) the costs and expenses,
including attorneys' fees and solicitors' fees (on a solicitor and his own
client basis), incurred by such Purchaser or such holder of a Note in enforcing
(or determining whether or how to enforce) any rights under this Agreement
or the Notes or in responding to any subpoena or other legal process or
informal investigative demand of any Governmental/Judicial Body issued in
connection with this Agreement or the transactions contemplated hereby or by
reason of such Purchaser's or such holder's having acquired any Note, including
costs and expenses incurred in any bankruptcy case. The obligations of the
Corporation under this paragraph 11B shall survive the transfer of any Note or
portion thereof or interest therein by any Purchaser or any holder of a Note
and the payment of any Note provided that the Corporation shall not be liable
for legal fees of a Purchaser or Transferee in connection with the transfer of
a Note or any portion thereof.
11C. Consent to Amendments. This Agreement may be amended, and the
Corporation may take any action herein prohibited, or omit to perform any act
herein required to be performed by it, if the Corporation shall obtain the
written consent to such amendment, action or omission to act, of the holders
of not less than 66 2/3% of the aggregate principal outstanding on the Notes
(exclusive of Notes held by Affiliates) except that, without the written
consent of the holder or holders of all Notes at the time outstanding, no
amendment to this Agreement shall change the maturity of any Note, or change
the principal of, or the time of payment of interest on or any Yield-
Maintenance Amount payable with respect to any Note, or affect the time,
amount or allocation of any prepayments, or reduce the rate on the Notes, or
change the proportion of the principal amount of the Notes required with
respect to any consent, amendment, waiver or declaration. The Corporation
shall provide to each holder of a Note sufficient information in
respect of the amendment or consent requested to allow it to make a fully
informed decision thereon, and shall also, if requested by the Required
Holders, certify that no Default or Event of Default has occurred or is then
continuing or would occur if such amendment is made or consent granted. Each
holder of any Note at the time or thereafter outstanding shall be bound by
any consent authorized by this paragraph 11C, whether or not such Note shall
have been marked to indicate such consent, but any Notes issued thereafter may
bear a notation referring to any such consent. No course of dealing between
the Corporation and the holder of any Note nor any delay in exercising any
rights hereunder or under any Note shall operate as a waiver of any rights of
any holder of such Note. As used herein and in the Notes, the term "this
Agreement" and references thereto shall mean this Agreement as it may from
time to time be amended or supplemented.
11D. Form, Registration, Transfer and Exchange of Notes; Lost Notes.
(a) The Notes are issuable as registered notes without coupons in
amounts of at least U.S. $1,000,000, except as may be necessary
to reflect any principal amount not evenly divisible by U.S.
$1,000,000. Except as repaid or prepaid in accordance herewith,
no holder of a Note shall hold less than an aggregate principal
amount of U.S. $1,000,000 of Notes.
(b) The Corporation shall keep at its principal office a register in
which the Corporation shall provide for the registration of
Notes and of transfers of Notes. Upon surrender for registration
of transfer of any Note at the principal office of the
Corporation, the Corporation shall, at its expense, execute and
deliver one or more new Notes of like tenor and of a like
aggregate principal amount, registered in the name of such
transferee or transferees. At the option of the holder of any
Note, such Note may be exchanged for other Notes of like tenor
and of any authorized denominations, of a like aggregate
principal amount, upon surrender of the Note to be exchanged at
the principal office of the Corporation. Whenever any Notes are
so surrendered for exchange, the Corporation shall, at its ex-
pense, execute and deliver the Notes which the holder making the
exchange is entitled to receive. Every Note surrendered for
registration of transfer or exchange shall be duly endorsed, or
be accompanied by a written instrument of transfer duly executed,
by the holder of such Note or such holder's attorney duly
authorized in writing. Any Note or Notes issued in exchange
for any Note or upon transfer thereof shall carry the rights
to unpaid interest and interest to accrue which were carried by
the Note so exchanged or transferred, so that neither gain nor
loss of interest shall result from any such transfer or exchange.
(c) Upon receipt of written notice from the holder of any Note of
the loss, theft, destruction or mutilation of such Note and, in
the case of any such loss, theft or destruction, upon receipt of
such holder's unsecured indemnity agreement, or in the case of
any such mutilation upon surrender and cancellation of such Note,
the Corporation will make and deliver a new Note, of like tenor,
in lieu of the lost, stolen, destroyed or mutilated Note.
11E. Persons Deemed Owners; Participations. Prior to due presentment for
registration of transfer, the Corporation may treat the Person in whose name
any Note is registered as the owner and holder of such Note for the purpose of
receiving payment of principal of, interest on and any Yield-Maintenance Amount
payable with respect to such Note and for all other purposes whatsoever,
whether or not such Note shall be overdue, and the Corporation shall not
be affected by notice to the contrary. Subject to the preceding sentence, the
holder of any Note may from time to time grant participations in such Note to
any Person on such terms and conditions as may be determined by such holder in
its sole and absolute discretion, provided that any such participation shall be
in a principal amount of at least U.S. $250,000.
11F. Survival of Representations and Warranties; Entire Agreement. All
representations and warranties contained herein or made in writing by or on
behalf of the Corporation in connection herewith shall survive the execution
and delivery of this Agreement and the Notes, the transfer by any Purchaser of
any Note or portion thereof or interest therein and the payment of any Note,
and may be relied upon by any Transferee, regardless of any investigation made
at any time by or on behalf of any Purchaser. Subject to the preceding
sentence, this Agreement and the Notes embody the entire agreement and
understanding between the Purchasers and the Corporation and supersede all
prior agreements and understandings relating to the subject matter hereof.
11G. Successors and Assigns. All covenants and other agreements in this
Agreement contained by or on behalf of any of the parties hereto shall bind and
inure to the benefit of the respective successors and assigns of the parties
hereto (including any Transferee) whether so expressed or not.
11H. Disclosure to Other Persons; Confidentiality. Except as provided in
this paragraph 11H, each holder and each Person who purchases a participation
in a Note or any part thereof agrees that, prior to the occurrence of a Default,
it will, in accordance with its usual practices, hold in confidence and not
disclose the Confidential Information. The Corporation acknowledges that the
holder of any Note may deliver copies of any financial statements and other
documents delivered to such holder, and disclose any other information disclosed
to such holder, by or on behalf of the Corporation or any Subsidiary in
connection with or pursuant to this Agreement to (i) such holder's directors,
officers, employees, agents and professional consultants (to the extent such
disclosure relates to the administration of the investment represented by the
Notes), (ii) any other holder of any Note, (iii) any Person to which
such holder offers to sell such Note or any part thereof, and any Person to
which such holder sells or offers to sell a participation in all or any part
of such Note (if such Person has agreed in writing prior to its receipt of s
uch Confidential Information to be bound by this paragraph), (iv) any Person
from which such holder offers to purchase any security of the Corporation (if
such Person has agreed in writing prior to its receipt of such Confidential
Information to be bound by this paragraph), (v) any federal or state regulatory
authority having jurisdiction over such holder, (vi) the National Association
of Insurance Commissioners (including the Securities Valuation Office) or any
similar organization, (vii) rating agencies that require access to information
about the Purchaser's investment portfolio, or (viii) any other Person to which
such delivery or disclosure may be necessary or appropriate (a) in compliance
with any law, rule, regulation or order applicable to such holder, (b) in
response to any subpoena or other legal process or informal investigative
demand of a Governmental/Judicial Body or (c) in connection with any litigation
to which such holder is a party.
11I. Notices. All notices or other communications provided for hereunder
(except for the facsimile notice required by paragraph 4C) shall be in writing
and sent by nationwide overnight delivery service (with charges prepaid) and
(i) if to any Purchaser, addressed to such Purchaser at the address specified
for such communications in the Purchaser Schedule attached hereto, or at such
other address as such Purchaser shall have specified to the Corporation in
writing, (ii) if to any other holder of any Note, addressed to such other
holder at such address as such other holder shall have specified to the
Corporation in writing or, if any such other holder shall not have so specified
an address to the Corporation, then addressed to such other holder in
care of the last holder of such Note which shall have so specified an address
to the Corporation, and (iii) if to the Corporation, addressed to it at Xxxxx
0000, 000 Xxxxx Xxxxxx X.X., Xxxxxxx, Xxxxxxx, X0X 0X0 Attention: Vice
President, Finance, or at such other address as the Corporation shall have
specified to the holder of each Note in writing; provided that any such
communication to the Corporation may also, at the option of the holder of any
Note, be delivered by any other means either to the Corporation at its address
specified above or to any officer of the Corporation.
11J. Payments Due on Non-Business Days. Anything in this Agreement or the
Notes to the contrary notwithstanding, any payment of principal of or interest
on any Note that is due on a date other than a Business Day shall be made on the
next succeeding Business Day. If the date for any payment is extended to the
next succeeding Business Day by reason of the preceding sentence, the period of
such extension shall be included in the computation of the interest payable
on such Business Day, provided that this shall not result in duplication of
interest payable.
11K. Satisfaction Requirement. If any agreement, certificate or other
writing, or any action taken or to be taken, is by the terms of this Agreement
required to be satisfactory to any Purchaser or to the Required Holders, the
determination of such satisfaction shall be made by such Purchaser or the
Required Holders, as the case may be, in the sole and exclusive judgment
(exercised in good faith) of the Person or Persons making such determination.
11L. Governing Law and Submission to Jurisdiction.
(a) THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL
BE GOVERNED BY, THE LAW OF THE PROVINCE OF ALBERTA
AND THE LAW OF CANADA APPLICABLE THEREIN.
(b) The Corporation agrees that the courts of Alberta shall have
jurisdiction to hear and determine any suit, action or proceeding
and to settle any disputes which may arise out of or in
connection with the aforesaid documents and it irrevocably
submits to the non-exclusive jurisdiction of such courts,
without prejudice to the rights of any holder to take proceedings
in any other jurisdictions, whether concurrently or not.
(c) The Corporation agrees that final judgment in any such suit,
action or proceeding brought in such courts shall be conclusive
and binding upon it and may be enforced against it in the courts
of Canada (or any other courts to the jurisdiction of which it
or its property is subject) by a suit upon such judgment,
provided that it does not waive any right to appeal any such
judgment, to seek any stay or otherwise to seek reconsideration
or review of any such judgment.
11M. Amendments. This Agreement may not be changed orally, but (subject to
the provisions of paragraph 11C) only by an agreement in writing signed by the
party against whom enforcement of any waiver, change, modification or discharge
is sought.
11N. Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
11O. Descriptive Headings. The descriptive headings of the several
paragraphs of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.
11P. Payment Free from Equities. The Notes shall be paid by the
Corporation, and may be assigned by each holder, absolutely free and clear of
all equities, rights of set-off, claims, defenses, counterclaims, rights or
other matters whatsoever (collectively, "Claims"), whether existing between a
holder and the Corporation and/or any third parties or intermediate holders,
and whether now existing or hereafter arising (before or after notice of any
assignment to the Corporation) which could impair or adversely affect in any
way the entitlement of any present or future holder to enforce the Notes
strictly in accordance with the terms and provisions hereof and of the Note,
and the Corporation hereby agrees not to assert, as against any assignee or any
present or future holder, any Claims arising out of this Agreement or any Note
(other than the defense that obligations hereunder have been performed or
observed by the Corporation). For greater certainty, but without limiting the
generality of the foregoing, the foregoing shall apply:
(a) notwithstanding that such Claim arises due to any act or
omission of any holder or any intermediate holder or any other
party;
(b) regardless of how closely or inseparably connected such Claim is
to the obligations or whether it flows out of dealings or
transactions related thereto; and
(c) notwithstanding actual or constructive notice to any assignee or
any present or future holder, or to any intermediate holder of a
Note or any other third party of such Claim, regardless of when
received or deemed to be received.
The foregoing shall be without prejudice to the right of the Corporation to
subsequently assert any Claim as against the assignor.
11Q. Note Repayment Net of Withholding Imposts. (a) All payments by the
Corporation under this Agreement or any Note, whether in respect of principal,
Yield-Maintenance Amount (if any), interest, interest on overdue interest, fees
or any other payment obligations, shall be made in full without any deduction
or withholding (whether in respect of or on account of taxes, charges or
otherwise whatsoever) unless the Corporation is prohibited by Applicable Law
from doing so, in which event the Corporation shall:
(i) ensure that the deduction or withholding does not exceed the
minimum amount legally required;
(ii) forthwith pay to the holder of each Note such additional amount
so that the net amount received by the holder will equal the
full amount which would have been received by it had no such
deduction or withholding been made;
(iii) pay to the relevant taxation or other authorities within the
period for payment permitted by Applicable Law the full
minimum amount of the deduction or withholding (including the
full amount of any deduction or withholding from any additional
amount paid pursuant to this paragraph); and
(iv) furnish to the holder of each Note promptly, as soon as
available, an official receipt of the relevant taxation or
other authorities involved for all amounts deducted or withheld
as aforesaid.
(b) If as a result of any payment by the Corporation under this
Agreement or any Note, whether in respect of principal, Yield-Maintenance
Amount (if any), interest, interest on overdue interest, fees or other payment
obligations, any holder is required to pay tax under Part XIII of the Income
Tax Act (Canada) or any successor provisions (for instance, in accordance
with Section 803 of the Regulations to the Income Tax Act), then the
Corporation will, upon demand by the holder of any Note, and whether or not
such taxes are correctly or legally asserted, indemnify the holder of each
Note for the payment of any such taxes, together with any interest, penalties
and expenses in connection therewith. All such amounts shall be payable by the
Corporation on demand and shall bear interest at 7.76% per annum calculated
from the date incurred by the holder to the date paid by the Corporation.
(c) If, as a result of a change in Applicable Laws after the date
hereof, the Corporation is required to make payments to all holders of Notes
under paragraph (a)(ii) above or make any indemnity payment to all holders of
Notes under paragraph (b) above, then, unless all holders of Notes waive future
obligations under this paragraph 11Q (without prejudice to accrued obligations),
the Corporation shall be entitled to prepay the Notes in whole at 100% of
the principal thereof plus interest thereon to the prepayment date, plus all
accrued but unpaid obligations under this paragraph 11Q to and including the
date of prepayment, subject to the notice requirements in paragraph 4C hereof,
provided that the Corporation's right to repay under this paragraph shall
terminate if the Corporation has not given notice of optional prepayment under
paragraph 4C(a) within 30 days after the Corporation is first called upon by
any holder to honour its payment or indemnity obligations in paragraph (a)(ii)
or (b) above, respectively.
11R. Interest.
(a) In respect of any overdue amounts hereunder or under the Notes
where no provision is made herein or therein for payment of
interest thereon, the Corporation shall pay interest on such
overdue amounts on demand, calculated from the date such unpaid
amount is due until such unpaid amount is paid in full at 7.76%
per annum.
(b) In no event shall any interest or fee to be paid hereunder or
under a Note exceed the maximum rate permitted by Applicable
Law. In the event any such interest rate or fee exceeds 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 a holder shall be credited against
the principal of the Notes (or, if the principal shall have been
or would thereby be paid in full, the remaining amount shall be
credited to the Corporation).
(c) All interest (including interest on overdue interest) payable by
the Corporation hereunder and under the Notes shall accrue from
day to day, computed as provided herein, and shall be payable
after as well as before maturity, demand, default and judgment.
11S. Counterparts. This Agreement may be executed in any number of
counterparts, and by facsimile, all of which together shall constitute one
instrument.
11T. Severalty of Obligations. The sales of Notes to the Purchasers are
to be several sales, and the obligations of the Purchasers under this Agreement
are several obligations. Except as provided in paragraph 3F, no failure by any
Purchaser to perform its obligations under this Agreement shall relieve any
other Purchaser or the Corporation of any of its obligations hereunder, and no
Purchaser shall be responsible for the obligations of, or any action taken or
omitted by, any other Purchaser hereunder.
11U. Judgment Currency.
(a) If for the purposes of obtaining judgment in any court it
becomes necessary to convert any amount due hereunder or under
a Note in one currency into another currency, then the conversion
shall be made at the Rate of Exchange prevailing on the last
Business Day before the day on which the judgment is given.
"Rate of Exchange" means the rate at which the holder is able
on the relevant date to purchase the currency being converted for
such other currency.
(b) In the event that there is a change in the Rate of Exchange
prevailing between the Business Day before the day on which the
judgment is given and the date of payment, the Corporation will
pay such additional amount (if any) or, as the case may be, the
holder will refund such amount (if any) as may be necessary to
ensure that the amount paid on such date is the amount in such
other currency which, when converted at the Rate of Exchange
prevailing on the date of payment, is the amount then due under
this Agreement or any Note in the currency which was converted.
(c) Any amount due from the Corporation or any holder pursuant to
this Section will be due as a separate debt and shall not be
affected by judgment being obtained for any other sum due under
or in respect of this Agreement or any Note.
(d) The Corporation shall indemnify each holder against payment by
the holder of any premiums and costs of exchange incurred in
connection with the purchase of, or conversion into, the relevant
currency.
11V. Currency; Time; "Including"; Interest Equivalency; Currency
Conversion.
(a) Unless otherwise stated, references in this Agreement to dollar
amounts or $ shall be deemed to be references to Canadian
Dollars.
(b) Unless otherwise stated, references to time shall mean local time
in Calgary, Alberta.
(c) The word "including" shall not be construed to limit or restrict
the generality of the matter that precedes it.
(d) Interest on the Notes shall be computed on the basis of a 360-day
year of 12 30-day months. Solely for purposes of the Interest
Act (Canada), the yearly rate of interest to which interest
calculated for a period of less than one year on the basis of
a year of 360 days consisting of 12 30-day periods is equivalent
is such rate of interest multiplied by a fraction of which (i)
the numerator is the product of (A) the actual number of days in
the year commencing on the first day of such period, multiplied
by (B) the sum of (y) the product of 30 multiplied by the number
of complete months elapsed in such period and (z) the actual
number of days elapsed in any incomplete month in such period;
and (ii) the denominator is the product of (a) 360 multiplied by
(b) the actual number of days in such period.
(e) The theory of "deemed reinvestment" shall not apply to the
computation of interest and no allowance, reduction or deduction
shall be made for the deemed reinvestment of interest in respect
of any payments. Calculation of interest shall be made using
the nominal rate method, and not the effective rate method, of
calculation.
(f) A reference in this Agreement to the equivalent of one currency
in another currency shall mean the equivalent determined using
the noon spot rate of exchange for conversion announced by the
Bank of Canada on the day for conversion.
(g) For certainty, the words "property" and "assets" are used
interchangeably herein, and include both real and personal
property.
(h) To the extent permitted by law, Section 6 of the Judgment
Interest Act (Alberta) is hereby waived and shall not apply to
this Agreement or the Notes.
11W. Further Assurances.
(a) Each party shall promptly cure any defect by it in the execution
and delivery of this Agreement or the Notes.
(b) The Corporation, at its expense, shall promptly execute and
deliver to any holder of a Note, upon request by such holder in
writing, all such other and further documents, agreements,
opinions, certificates and instruments in order to give effect
to the covenants and agreements of the Corporation in this
Agreement or the Notes, and shall make any recording, file any
notice or obtain any consent in connection therewith, all as may
be reasonably necessary or appropriate in connection therewith.
If you are in agreement with the foregoing, please sign the form of
acceptance on the enclosed counterparts of this letter and return the same to
the Corporation, whereupon this letter shall become a binding agreement among
the Corporation and the Purchasers.
Very truly yours,
XXXXXXXX PETROLEUMS LTD.
By: ________________________________________
Chairman and
Chief Executive Officer
By: _________________________________________
Treasurer
The foregoing Agreement is hereby
accepted as of the date first
above written.
CONNECTICUT GENERAL LIFE PRINCIPAL MUTUAL LIFE INSURANCE
INSURANCE COMPANY COMPANY
By: CIGNA Investments, Inc.
By: By:
Title: Title:
By:
Title:
CONNECTICUT GENERAL LIFE CONNECTICUT MUTUAL LIFE
COMPANY, on behalf of INSURANCE COMPANY
one or more separate accounts
By: CIGNA Investments, Inc. By:
Title:
By: By:
Title: Title:
C M LIFE INSURANCE COMPANY CIGNA PROPERTY AND CASUALTY
INSURANCE COMPANY
By: CIGNA Investments, Inc.
By: By:
Title: Title:
By: By:
Title: Title:
SECURITY LIFE OF DENVER LIFE INSURANCE COMPANY OF
INSURANCE COMPANY NORTH AMERICA
By: CIGNA Investments, Inc.
By: By:
Title: Title:
By:
Title:
