Hostile Acquisition. The Borrower shall not utilize whether directly or indirectly Availments to facilitate, assist or participate in a hostile acquisition without the prior written consent of CIBC which may be withheld in CIBC's sole discretion. BORROWING BASE: Subject to the satisfaction of the Conditions Precedent to Funding, the Production Loan currently permits draws of up to Cdn. $14,000,000, (the "Borrowing Base") subject to adjustment as herein provided, and will remain in effect until expiration of the Revolving Phase. CIBC will undertake at any time, but not less frequently than semi-annually during the Revolving and Term phase if CIBC so chooses, a review of the Borrower's oil and gas properties evaluated in an independently prepared economic and reserve evaluation report (provided annually) for purposes of redetermining the Borrowing Base applicable to the Facility. To assist in such redetermination, the Borrower will provide to CIBC operating statements and such other technical information with respect to the properties being reviewed as CIBC may request. Should CIBC determine at any time that there is a Borrowing Base Shortfall, during both the Revolving Phase and the Term Phase, the Borrower will, within 60 days, use whatever means necessary to reduce its indebtedness under this Financing Commitment by that amount stipulated by CIBC, or alternatively pledge additional security to CIBC sufficient to cover, in CIBC's opinion, such deficiency. While a Borrowing Base Shortfall exists, the Borrower shall: • not request new Availments; • provide CIBC with information needed to determine the Borrower's Available Cash Flow; • dedicate on a monthly basis for repayment of this Financing Commitment such portion of its Available Cash Flow as is required to eliminate the Borrowing Base Shortfall within 60 days from the date CIBC delivers notice to the Borrower of the Borrowing Base Shortfall; and • pay the increased compensation required under the heading "Borrowing Base Rate Shortfall or Event of Default". PRODUCTION LOAN AVAILABILITY: The Production Loan can be advanced by way of any combination of the following availments: • overdraft borrowings in Canadian dollars; • letters of credit, letters of guarantee, cheque credits, bid cheques for out of Province land sales and corporate visa (collectively the "Sundry Options"). SWAP FACILITY AVAILABILITY: At the Borrower's request and subject to market availability, CIBC and/or PLC will provide quotes for (i) forward rate agreements to provide fixed or floating rate funding for part or all of the Production Loan, (ii) commodity swaps covering a portion of the Borrower's oil and gas production, (iii) forward exchange contracts and (iv) firm gas purchase and sale transactions, subject to the following: • Forward Rate Agreements—terms shall not exceed the lesser of two years and the date of expiry or termination of the Production Loan, with aggregate amounts hedged not to exceed 60% of the average Principal Indebtedness outstanding during the Borrower's previous fiscal quarter; • Commodity Swaps—terms shall not exceed the lesser of two years and the date of expiry or termination of the Production Loan, with aggregate production volumes hedged from all sources, for both natural gas and oil, (calculated separately, not collectively) not to exceed 60% of the Borrower's average production as forecast by CIBC. • Forward Exchange Contracts—terms shall not exceed the lesser of two years and the date of expiry or termination of the Production Loan, with aggregate amounts hedged not to exceed 60% of the Borrower's applicable foreign revenue; • Physical Gas Purchase and Sale Transactions—terms and conditions as outlined in the Master Firm Gas Purchase/Sale Agreement, terms shall not exceed the lesser of two years and the date of expiry or termination of the Production Loan, with aggregate production volumes hedged from natural gas not to exceed 60% of the Borrower's current daily production volume as determined by CIBC; provided that in all instances, the Borrower's contingent liability to CIBC and/or PLC under the Swap Facility shall be secured and rank pari passu with the Principal Indebtedness. Notwithstanding the foregoing, the sum of the aggregate production volumes hedged with CIBC and/or PLC from natural gas under both the commodity swaps and physical gas purchase and sale transactions described above shall not at any time exceed 60% of the Borrower's current daily production volumes of natural gas as determined by CIBC.
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Hostile Acquisition. The Borrower shall not utilize whether directly or indirectly Availments to facilitate, assist or participate in a hostile acquisition without the prior written consent of CIBC which may be withheld in CIBC's sole discretion. BORROWING BASE: Subject to the satisfaction of the Conditions Precedent to Funding, the Production Loan Credit Facility currently permits draws of up to Cdn. $14,000,000, (the "Borrowing Base") subject to adjustment as herein provided, and will remain in effect until expiration of the Revolving Phase. CIBC will undertake at any time, but not less frequently than semi-annually during the Revolving and Term phase if CIBC so chooses, a review of the Borrower's oil and gas properties evaluated in an independently prepared economic and reserve evaluation report (provided annually) for purposes of redetermining the Borrowing Base applicable to the Facility. To assist in such redetermination, the Borrower will provide to CIBC operating statements and such other technical information with respect to the properties being reviewed as CIBC may request. The next review will occur on or before September 30, 2002. Should CIBC determine at any time that there is a Borrowing Base Shortfall, during both the Revolving Phase and the Term Phase, the Borrower will, within 60 days, use whatever means necessary to reduce its indebtedness under this Financing Commitment by that amount stipulated by CIBC, or alternatively pledge additional security to CIBC sufficient to cover, in CIBC's opinion, such deficiency. While a Borrowing Base Shortfall exists, the Borrower shall: • not request new Availments; • provide CIBC with information needed to determine the Borrower's Available Cash Flow; • dedicate on a monthly basis for repayment of this Financing Commitment such portion of its Available Cash Flow as is required to eliminate the Borrowing Base Shortfall within 60 days from the date CIBC delivers notice to the Borrower of the Borrowing Base Shortfall; and • pay the increased compensation required under the heading "Borrowing Base Rate Shortfall or Event of Default". PRODUCTION LOAN TOTAL DEBT: To determine Principal Indebtedness, outstanding borrowings in U.S. Dollars will be the Cdn. Dollar Exchange Equivalent thereof. To the extent the Borrower does not have sufficient U.S. Dollar revenue to service the U.S. Dollar borrowings under the Facility such borrowings, in an amount to be determined by CIBC, must be hedged to CIBC's satisfaction acting reasonably. CREDIT FACILITY AVAILABILITY: The Production Loan Credit Facility can be advanced by way of any combination of the following availmentsAvailments: • overdraft borrowings in Canadian dollarsCdn. Dollars; • letters of creditbanker's acceptances in Cdn. Dollars, letters of guarantee, cheque credits, bid cheques for out of Province land sales and corporate visa (collectively the "Sundry Options"). SWAP FACILITY AVAILABILITY: At the Borrower's request and subject to market availability, CIBC and/or PLC will provide quotes for (i) forward rate agreements to provide fixed or floating rate funding for part or all of the Production Loan, (ii) commodity swaps covering a portion of the Borrower's oil and gas production, (iii) forward exchange contracts and (iv) firm gas purchase and sale transactions, subject to the following: • Forward Rate Agreements—terms shall not exceed the lesser of two years and the date of expiry or termination of the Production Loan, with in minimum aggregate amounts hedged not to exceed 60% of the average Principal Indebtedness outstanding during the Borrower's previous fiscal quarterCdn. $2,500,000 for each drawdown, rollover or conversion and in minimum incremental amounts of Cdn. $500,000 thereafter; • Commodity Swaps—terms shall not exceed the lesser of two years and the date of expiry or termination of the Production Loan, with aggregate production volumes hedged from all sources, for both natural gas and oil, (calculated separately, not collectively) not to exceed 60% of the Borrower's average production as forecast by CIBCdirect borrowings in Cdn. • Forward Exchange Contracts—terms shall not exceed the lesser of two years and the date of expiry or termination of the Production Loan, with aggregate amounts hedged not to exceed 60% of the Borrower's applicable foreign revenue; • Physical Gas Purchase and Sale Transactions—terms and conditions as outlined in the Master Firm Gas Purchase/Sale Agreement, terms shall not exceed the lesser of two years and the date of expiry or termination of the Production Loan, with aggregate production volumes hedged from natural gas not to exceed 60% of the Borrower's current daily production volume as determined by CIBC; provided that in all instances, the Borrower's contingent liability to CIBC Dollars and/or PLC under the Swap Facility shall be secured and rank pari passu with the Principal Indebtedness. Notwithstanding the foregoing, the sum of the aggregate production volumes hedged with CIBC and/or PLC from natural gas under both the commodity swaps and physical gas purchase and sale transactions described above shall not at any time exceed 60% of the Borrower's current daily production volumes of natural gas as determined by CIBC.U.S. Dollars
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