Cdn. $18,000,000
AMENDED AND RESTATED
CREDIT AGREEMENT
among
Wainoco Oil Corporation
as Borrower
and
▇.▇. ▇▇▇▇▇▇ Canada
as Agent
and
Paribas Bank of Canada
as Fronting Bank
and
The Banks Listed Herein
Dated January 30, 1996
TABLE OF CONTENTS
Page
ARTICLE 1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 Definitions . . . . . . . . . . . . . . . . . . . . .. . 2
1.2 Accounting Terms and Determinations . . . . . . . . . .. 18
1.3 Headings and Agreement References . . . . . . . . . . . . 18
1.4 Number and Gender . . . . . . . . . . . . . . . . . . . . 18
1.5 Per Annum Calculations; Currency; Time; "Including" . . . 18
1.6 Exhibits. . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE 2 THE CREDITS . . . . . . . . . . . . . . . . . . . . . . . 19
2.1 Credit Facility . . . . . . . . . . . . . . . . . . . . . 19
2.2 Method of Borrowing: Direct Loans. . . . . . . . . . . . 20
2.3 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . 22
2.4 Maturity of Loans; Mandatory Prepayments. . . . . . . . . 22
2.5 Interest Rates. . . . . . . . . . . . . . . . . . . . . . 23
2.6 Commitment Fee. . . . . . . . . . . . . . . . . . . . . . 24
2.7 Optional Termination or Reduction of Commitments . . . . 25
2.8 Method of Electing Interest Rates . . . . . . . . . . . . 25
2.9 Optional Prepayments. . . . . . . . . . . . . . . . . . . 26
2.10 Contingent Prepayments. . . . . . . . . . . . . . . . . . 27
2.11 General Provisions as to Payments . . . . . . . . . . . . 28
2.12 Funding Losses. . . . . . . . . . . . . . . . . . . . . . 29
2.13 General Provisions as to Interest; Overdue Interest;
and Fees . . . . . . . . . . . . . . . . . . . . . . . 29
2.14 Letters of Credit . . . . . . . . . . . . . . . . . . . . 30
ARTICLE 3 CONDITIONS AND SECURITY . . . . . . . . . . . . . . . . . 33
3.1 Effectiveness . . . . . . . . . . . . . . . . . . . . . . 33
3.2 Amendment and Restatement . . . . . . . . . . . . . . . . 34
3.3 Borrowings. . . . . . . . . . . . . . . . . . . . . . . . 35
3.4 General Security Provisions . . . . . . . . . . . . . . . 35
ARTICLE 4 REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . 36
4.1 Corporate Existence and Power . . . . . . . . . . . . . . 36
4.2 Corporate and Governmental Authorization; No
No Contravention . . . . . . . . . . . . . . . . . . . 36
4.3 Binding Effect. . . . . . . . . . . . . . . . . . . . . . 37
4.4 Financial Information . . . . . . . . . . . . . . . . . . 37
4.5 Litigation. . . . . . . . . . . . . . . . . . . . . . . . 37
4.6 Compliance with ERISA . . . . . . . . . . . . . . . . . . 37
4.7 Environmental Matters . . . . . . . . . . . . . . . . . . 38
4.8 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 38
4.9 Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . 38
4.10 Regulation. . . . . . . . . . . . . . . . . . . . . . . . 39
- ii -
4.11 Full Disclosure . . . . . . . . . . . . . . . . . . . . . 39
4.12 Mortgaged Properties. . . . . . . . . . . . . . . . . . . 39
4.13 Liens of the Security Documents . . . . . . . . . . . . . 39
4.14 Reserve Data and Projections. . . . . . . . . . . . . . . 39
4.15 Production Penalties. . . . . . . . . . . . . . . . . . . 40
4.16 Conversion. . . . . . . . . . . . . . . . . . . . . . . . 40
4.17 Operations. . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE 5 COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . 40
5.1 Information . . . . . . . . . . . . . . . . . . . . . . . 40
5.2 Payment of Obligations. . . . . . . . . . . . . . . . . . 42
5.3 Maintenance and Development of Borrower
Engineered Properties and Other Property;
Insurance . . . . . . . . . . . . . . . . . . . . . . . 43
5.4 Conduct of Business and Maintenance of Existence . . . . 44
5.5 Compliance with Laws. . . . . . . . . . . . . . . . . . . 44
5.6 Inspection of Property, Books and Records . . . . . . . . 44
5.7 Debt. . . . . . . . . . . . . . . . . . . . . . . . . . . 44
5.8 Restricted Payments . . . . . . . . . . . . . . . . . . . 45
5.9 Investments . . . . . . . . . . . . . . . . . . . . . . . 45
5.10 Negative Pledge . . . . . . . . . . . . . . . . . . . . . 45
5.11 Consolidations, Mergers and Sales of Assets . . . . . . . 45
5.12 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . 46
5.13 Value of Mortgaged Properties . . . . . . . . . . . . . . 46
5.14 Engineer's Reports. . . . . . . . . . . . . . . . . . . . 46
5.15 Disposition of Borrower Engineered Properties . . . . . . 47
5.16 Transactions with Affiliates. . . . . . . . . . . . . . . 48
5.17 Minimum Fixed Charge Coverage . . . . . . . . . . . . . . 48
5.18 Minimum Consolidated Net Worth. . . . . . . . . . . . . . 49
5.19 Interest Coverage Ratio . . . . . . . . . . . . . . . . . 49
5.20 Amendments to Other Agreements. . . . . . . . . . . . . . 50
ARTICLE 6 DEFAULTS. . . . . . . . . . . . . . . . . . . . . . . . . 50
6.1 Events of Default . . . . . . . . . . . . . . . . . . . . 50
6.2 Notice of Default . . . . . . . . . . . . . . . . . . . . 52
6.3 Conversions to USBR Loans . . . . . . . . . . . . . . . . 53
ARTICLE 7 THE AGENT . . . . . . . . . . . . . . . . . . . . . . . . 53
7.1 Appointment Authorization . . . . . . . . . . . . . . . . 53
7.2 Agent and Affiliates. . . . . . . . . . . . . . . . . . . 54
7.3 Action by Agent . . . . . . . . . . . . . . . . . . . . . 54
7.4 Consultation with Experts . . . . . . . . . . . . . . . . 54
7.5 Liability of Agent. . . . . . . . . . . . . . . . . . . . 54
7.6 Indemnification . . . . . . . . . . . . . . . . . . . . . 54
7.7 Credit Decision . . . . . . . . . . . . . . . . . . . . . 55
7.8 Successor Agent . . . . . . . . . . . . . . . . . . . . . 55
7.9 Agent's Fees. . . . . . . . . . . . . . . . . . . . . . . 55
- iii -
ARTICLE 8 CHANGE IN CIRCUMSTANCES . . . . . . . . . . . . . . . . . 55
8.1 Basis for Determining Interest Rate Inadequate
or Unfair . . . . . . . . . . . . . . . . . . . . . . . 55
8.2 Illegality. . . . . . . . . . . . . . . . . . . . . . . . 56
8.3 Increased Cost and Reduced Return . . . . . . . . . . . . 57
8.4 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 58
8.5 USBR Loans Substituted for Affected Euro-Dollar Loans . . 60
ARTICLE 9 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . 61
9.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . 61
9.2 No Waivers. . . . . . . . . . . . . . . . . . . . . . . . 61
9.3 Expenses; Indemnification . . . . . . . . . . . . . . . . 61
9.4 Sharing of Set-Offs . . . . . . . . . . . . . . . . . . . 62
9.5 Amendments and Waivers. . . . . . . . . . . . . . . . . . 63
9.6 Successors and Assigns. . . . . . . . . . . . . . . . . . 63
9.7 Collateral. . . . . . . . . . . . . . . . . . . . . . . . 64
9.8 Further Assurances. . . . . . . . . . . . . . . . . . . . 65
9.9 Conflicting Provisions. . . . . . . . . . . . . . . . . . 65
9.10 Section 426 Waiver. . . . . . . . . . . . . . . . . . . . 65
9.11 Governing Law . . . . . . . . . . . . . . . . . . . . . . 65
9.12 Submission to Jurisdiction. . . . . . . . . . . . . . . . 65
9.13 Counterparts; Integration . . . . . . . . . . . . . . . . 65
AMENDED AND RESTATED
CREDIT AGREEMENT
THIS AGREEMENT dated January 30, 1996 is effective
December 31, 1995, and amends and restates the Amended and Restated
Credit Agreement dated as of June 29, 1994.
AMONG:
WAINOCO OIL CORPORATION, a body corporate
having an office in the City of Houston, in
the State of Texas (the "Borrower")
- and -
▇.▇. ▇▇▇▇▇▇ CANADA, a Canadian chartered bank
with offices in the City of Toronto, in the
Province of Ontario (in its own capacity
referred to as "▇▇▇▇▇▇" and in its capacity as
agent referred to as the "Agent")
- and -
PARIBAS BANK OF CANADA, a Canadian chartered
bank with offices in the City of Toronto, in
the Province of Ontario ("Paribas")
WITNESSETH:
WHEREAS, the Borrower, ▇▇▇▇▇▇ (formerly ▇▇▇▇▇▇ Bank of
Canada), Paribas, The Bank of Tokyo Canada and the Agent have
heretofore entered into an Amended and Restated Credit Agreement
dated as of June 29, 1994 (as amended to the date hereof, the
"Original Credit Agreement"); and
WHEREAS, The Bank of Tokyo Canada has assigned its
interest in the Original Credit Agreement to ▇▇▇▇▇▇ and Paribas;
and
WHEREAS, the parties hereto wish to amend and restate the
Original Credit Agreement in its entirety to read as set forth
herein;
NOW, THEREFORE, the parties hereto agree as follows:
- 2 -
ARTICLE 1
DEFINITIONS
1.1 Definitions
The following terms, as used herein, have the following
meanings:
"Adjusted London Interbank Offered Rate" has the meaning
set forth in Section 2.5(c).
"Administrative Questionnaire" means, with respect to
each Bank, an administrative questionnaire in the form
prepared by the Agent and submitted to the Agent (with a
copy to the Borrower) duly completed by such Bank.
"Affiliate" means (i) any Person that directly, or
indirectly through one or more intermediaries, controls
the Borrower (a "Controlling Person") or (ii) any Person
which is controlled by or is under common control with a
Controlling Person. As used herein, the term "control"
means possession, directly or indirectly, of the power to
direct or cause the direction of the management or
policies of a Person, whether through the ownership of
voting securities, by contract or otherwise.
"Agent" means ▇.▇. ▇▇▇▇▇▇ Canada in its capacity as agent
for the Banks under the Financing Documents, and its
successors in such capacity.
"Agreement" means the Original Credit Agreement, as
amended and restated by this Amended Agreement, as the
same may be further amended from time to time.
"Amended Agreement" means this Amended and Restated
Credit Agreement dated January 30, 1996.
"Applicable Lending Office" means, with respect to any
Bank and the Fronting Bank, (i) in the case of its
Domestic Loans, USBR Loans and the issuance of Letters of
Credit, its Domestic Lending Office and (ii) in the case
of its Euro-Dollar Loans, its Euro-Dollar Lending Office.
"Assignee" has the meaning set forth in Section 9.6(c).
"Bank" means each of ▇▇▇▇▇▇ and Paribas, each Assignee
which becomes a Bank pursuant to Section 9.6(c), and
their respective successors.
"Benefit Arrangement" means at any time an employee
benefit plan within the meaning of Section 3(3) of ERISA
which is not a Plan or a Multiemployer Plan and which is
maintained or otherwise contributed to by any member of
the ERISA Group.
- 3 -
"Borrower" means Wainoco Oil Corporation, a Wyoming
corporation, and its successors.
"Borrowing" means a borrowing hereunder consisting of
Loans made to the Borrower by the Banks pursuant to
Section 2.1(a). A Borrowing is a "Domestic Borrowing" if
such Loans are Domestic Loans, a USBR Borrowing if such
Loans are USBR Loans, a "Euro-Dollar Borrowing" if such
Loans are Euro-Dollar Loans and a "LC Borrowing" if such
Loans consist of Letters of Credit.
"Borrowing Base" means Cdn. $18,000,000 or the amount
notified to the Borrower by the Agent pursuant to
Section 2.1(b) as the amount of the Borrowing Base; less,
in either case, the Net Sales Proceeds of any of the
Engineered Properties covered by the then most recent
Engineer's Report sold, leased or transferred on or after
the date of such Engineer's Report (unless such sale,
lease or transfer is otherwise taken into account in the
determination of the Borrowing Base for such date), but
only if and to the extent the aggregate amount of such
Net Sales Proceeds in any calendar year exceeds Cdn.
$1,000,000. The Borrower will promptly notify the Agent
of any sale, lease or other transfer of Engineered
Properties which requires a reduction in the Borrowing
Base.
A "Borrowing Base Excession" exists at any date if and to
the extent that the Outstanding Principal at such date
exceeds the Borrowing Base at such date.
"Canadian Dollars" and "Cdn. $" means lawful money of
Canada for the payment of public and private debts.
"Canadian Equivalent" means, at any time, (i) in relation
to any amount in U.S. Dollars, the amount obtained by
converting such amount into Canadian Dollars at the Spot
Rate and, (ii) in relation to any amount in Canadian
Dollars, such amount.
"Capital Costs" means, with respect to any oil and gas
property, all capital expenditures incurred in connection
with the conversion or attempted conversion of such
property from "proved undeveloped" to "proved developed"
as classified in accordance with the regulations of the
Securities and Exchange Commission (United States of
America) as in effect on the date hereof and the
maintenance of such property as "proved developed" as
classified in accordance with the regulations of the
Securities and Exchange Commission (United States of
America) as in effect on the date hereof.
"Cash Collateral Account" means an interest-bearing
account with the Agent and from which the Borrower has no
withdrawal rights or privileges until repayment in full
of all Outstandings except in respect of any requirement
to apply funds to Outstandings hereunder.
- 4 -
"Commitment" means, with respect to each Bank, (i) its
obligation hereunder to make Loans to the Borrower by way
of Borrowings pursuant to Section 2.1(a) up to an amount
set forth opposite the name of such Bank on the signature
pages hereof, as such amount may be reduced from time to
time pursuant to Section 2.7 or subject to change
pursuant to Sections 8.4 or 9.6, or (ii) the amount set
forth opposite the name of such Bank on the signature
pages hereof, as such amount may be reduced from time to
time pursuant to Section 2.7 or subject to change
pursuant to Sections 8.4 or 9.6; in each case as the
context requires.
"Consent and Waiver" means that certain Consent and
Waiver dated November 30, 1995 among the Borrower, the
Agent, ▇▇▇▇▇▇, Paribas and The Bank of Tokyo Canada.
"Consolidated EBITDA" means, for any fiscal period,
consolidated net income of the Borrower and its
Consolidated Subsidiaries for such period plus, to the
extent deducted in determining such consolidated net
income for such period, the aggregate amount of
(i) interest expense, (ii) provision for income taxes and
(iii) depletion, depreciation, amortization and other
similar non-cash charges.
"Consolidated Subsidiary" means at any date any
Subsidiary or other entity the accounts of which would be
consolidated with the Borrower in its consolidated
financial statements if such statements were prepared as
of such date.
"Consolidated Tangible Net Worth" means at any date the
consolidated stockholders' equity of the Borrower and its
Consolidated Subsidiaries (excluding noncash write-downs
occurring after December 31, 1995 of oil and gas
properties to the extent the same have been applied
against the consolidated stockholders' equity of the
Borrower and its Consolidated Subsidiaries in the balance
sheet of the Borrower) less their consolidated Intangible
Assets, all determined as of such date. For purposes of
this definition "Intangible Assets" means the amount (to
the extent reflected in determining such consolidated
stockholders' equity) of (i) all write-ups (other than
write-ups resulting from foreign currency translations
and write-ups of assets of a going concern business made
within twelve months after the acquisition of such
business) subsequent to December 31, 1993 in the book
value of any asset owned by the Borrower or a
Consolidated Subsidiary, (ii) all Investments in
unconsolidated Subsidiaries and all equity investments in
Persons which are not Subsidiaries and (iii) all
unamortized debt discount and expense, unamortized
deferred charges, goodwill, patents, trademarks, service
marks, trade names, anticipated future benefit of tax
loss carry-forwards, copyrights, organization or
developmental expenses and other intangible assets.
"Convertible Debentures" means the 7 3/4% Convertible
Subordinated Debentures of the Borrower due 2014.
- 5 -
"Debt" of any Person means at any date, without
duplication, (i) all obligations of such Person for
borrowed money, (ii) all obligations of such Person
evidenced by bonds, debentures, notes or other similar
instruments, (iii) all obligations of such Person to pay
the deferred purchase price of property or services,
except trade accounts payable arising in the ordinary
course of business, (iv) all obligations of such Person
as lessee which are capitalized in accordance with
generally accepted accounting principles, (v) all
non-contingent obligations (and, for purposes of
Section 5.7 and the definitions of Material Debt and
Material Financial Obligations, all contingent
obligations) of such Person to reimburse any bank or
other Person in respect of amounts paid under a letter of
credit or similar instrument, (vi) all Debt secured by a
Lien on any asset of such Person, whether or not such
Debt is otherwise an obligation of such Person, and
(vii) all Debt of others Guaranteed by such Person.
"Default" means any condition or event which constitutes
an Event of Default or which with the giving of notice or
lapse of time or both would, unless cured or waived,
become an Event of Default.
"Derivatives Obligations" of any Person means all
obligations of such Person in respect of any rate swap
transaction, basis swap, forward rate transaction,
commodity swap, commodity option, equity or equity index
swap, equity or equity index option, bond option,
interest rate option, foreign exchange transaction, cap
transaction, floor transaction, collar transaction,
currency swap transaction, cross-currency rate swap
transaction, currency option or any other similar
transaction (including any option with respect to any of
the foregoing transactions) or any combination of the
foregoing transactions.
"Determination Date" means each date on which the Agent
shall notify the Borrower of the amount of the Borrowing
Base pursuant to Section 2.1(b).
"Discounted Present Value of Future Net Revenue" means,
with respect to any Engineered Property and as of any
specified date, an amount equal to the present value of
Future Net Revenue from such Engineered Property,
determined by discounting the stated amount of such
Future Net Revenue from the date on which such amount is
expected to be realized to such specified date at
(i) prior to the first Determination Date, the applicable
discount rate used for the purposes of the computations
contained in the Initial Engineer's Report covering such
Engineered Property, computed on a simple interest basis
for years of 365 days (or 366 days in a leap year), and
(ii) on or after the first Determination Date, the rate
specified by the Agent pursuant to Section 5.14(b),
computed on a simple interest basis for years of 365 days
(or 366 days in a leap year).
"Domestic Business Day" means any day except a Saturday,
Sunday or other day on which commercial banks in Toronto,
Ontario are authorized by law to close.
- 6 -
"Domestic Lending Office" means, as to each Bank, its
office in Canada located at its address set forth in its
Administrative Questionnaire (or identified in its
Administrative Questionnaire as its Canadian Domestic
Lending Office) or such other office in Canada as such
Bank may hereafter designate as its Domestic Lending
Office by notice to the Borrower and the Agent.
"Domestic Loan" means (i) a Loan which bears interest
with reference to the Prime Rate or (ii) an overdue
amount which was a Domestic Loan immediately before it
became overdue.
"Effective Date" means December 31, 1995.
"Engineered Properties" means all the Canadian oil and
gas properties of the Borrower in respect of which proven
and producing Hydrocarbon reserves have been attributed
in the then most recent Engineer's Report.
"Engineer's Report" means (a) the Initial Engineer's
Report, and (b) each report delivered by the Borrower
pursuant to Sections 5.14(a) or (c) that (i) is based on
evaluations by the Independent Petroleum Engineers with
respect to Engineered Properties having a minimum of 80%
of the Value of all the Engineered Properties and based
on evaluations by the Borrower with respect to Engineered
Properties having a maximum of 20% of the Value of all
the Engineered Properties, provided that all fields with
a value in excess of 10% of the Value of all the
Engineered Properties shall be evaluated by the
Independent Petroleum Engineers in such report, (ii) is
certified by the Independent Petroleum Engineers, except
for the internally evaluated Engineered Properties,
(iii) is prepared in accordance with established criteria
generally accepted in the oil and gas industry and
standards customarily used by such Independent Petroleum
Engineers in making any determinations or appraisals,
(iv) is based upon the assumptions determined in
accordance with Sections 5.14 (a) or (c), as the case may
be, and such other assumptions, estimates and projections
as are fully disclosed in such Engineer's Report,
(v) sets forth the matters specified in Sections 5.14 (a)
and (vi) is, except to the extent that any of the
requirements of clauses (i) to (v) hereof would cause its
form to differ from the form of the Initial Engineer's
Report, substantially in the form of the Initial
Engineer's Report.
"Environmental Laws" means any and all federal,
provincial, local and foreign statutes, laws, judicial
decisions, regulations, ordinances, rules, judgments,
orders, decrees, plans, injunctions, permits,
concessions, grants, franchises, licenses, agreements and
other governmental restrictions relating to the
environment, the effect of the environment on human
health or to emissions, discharges or releases of
pollutants, contaminants, Hazardous Substances or wastes
into the environment including, without limitation,
ambient air, surface water, ground water, or land, or
otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal,
transport or handling
- 7 -
of pollutants, contaminants, Hazardous Substances or wastes or
the clean-up or other remediation thereof.
"ERISA" means the U.S. Employee Retirement Income
Security Act of 1974, as amended, or any successor
statute.
"ERISA Group" means the Borrower, any Subsidiary and all
members of a controlled group of corporations and all
trades or businesses (whether or not incorporated) under
common control which, together with the Borrower or any
Subsidiary, are treated as a single employer under
Section 414 of the U.S. Internal Revenue Code.
"Euro-Dollar Business Day" means any Domestic Business
Day on which commercial banks are open for international
business (including dealings in dollar deposits) in
London, England and New York, New York.
"Euro-Dollar Lending Office" means, as to each Bank, its
office, branch or affiliate located at its address set
forth in its Administrative Questionnaire (or identified
in its Administrative Questionnaire as its Euro-Dollar
Lending Office) or such other office, branch or affiliate
of such Bank as it may hereafter designate as its
Euro-Dollar Lending Office by notice to the Borrower and
the Agent.
"Euro-Dollar Loan" means (i) a Loan which bears interest
at a Euro-Dollar Rate or (ii) an overdue amount which was
a Euro-Dollar Loan immediately before it became overdue.
"Euro-Dollar Rate" means a rate of interest determined
pursuant to Section 2.5(c) on the basis of an Adjusted
London Interbank Offered Rate.
"Euro-Dollar Reserve Percentage" has the meaning set
forth in Section 2.5(c).
"Event of Default" has the meaning set forth in
Section 6.1.
"Existing Security Documents" means (i) a Fixed Charge
Demand Debenture dated October 2, 1991 by the Borrower,
as amended by an agreement dated June 30, 1994, deposited
pursuant to a Deposit Agreement dated October 2, 1991, as
amended by an agreement dated June 30, 1994, (ii) a
General Security Agreement dated October 2, 1991 by the
Borrower, as amended by an agreement dated June 30, 1994,
(iii) all Assignments under Section 177 (now Section 426)
of the Bank Act (Canada) previously provided by the
Borrower or any predecessor and (iv) all Assignments of
Proceeds previously provided by the Borrower or any
predecessor.
"FHI" means Frontier Holdings Inc., a Delaware
corporation.
- 8 -
"FHI Credit Agreement" means a bank credit facility
providing for loan availability and/or letter of credit
availability, provided that the aggregate outstanding
principal amount of loans (excluding letters of credit)
thereunder may at no time exceed U.S. $20,000,000.
"FHI EBITDA" means, for any fiscal period, consolidated
net income of FHI and its Consolidated Subsidiaries for
such period plus, to the extent deducted in determining
such consolidated net income for such period, the
aggregate amount of (i) interest expense, (ii) provision
for income taxes and (iii) depletion, depreciation,
amortization and other similar non-cash charges.
"FHI Subsidiary" means any corporation or other entity of
which securities or other ownership interests having
ordinary voting power to elect a majority of the board of
directors or other persons performing similar functions
are directly or indirectly owned by FHI.
"Federal Funds Rate" means, for any day, the rate of
interest per annum set forth in the weekly statistical
release designated as H.15(519), or any successor
publication, published by the Federal Reserve Board
(including any such successor, the "H.15(519)") for such
day opposite the caption "Federal Funds (Effective)". If
on any relevant day such rate is not yet published in
H.15(519), the rate for such day will be the rate of
interest per annum set forth in the daily statistical
release designated as the Composite 3:30 p.m. Quotations
for U.S. Government Securities, or any successor
publication, published by the Federal Reserve Bank of New
York (including any successor, the "Composite 3:30 p.m.
Quotations") for such day under the caption "Federal
Funds Effective Rate". If on any relevant day the
appropriate rate per annum for such day is not yet
published in either H.15(519) or the Composite 3:30 p.m.
Quotations, the rate for such day will be the arithmetic
mean of the rates per annum for the last transaction in
overnight Federal funds arranged prior to 9:00 a.m. (New
York time) on that day by each of three major brokers of
Federal funds transactions in New York City selected by
the Agent;
"Financing Documents" means this Agreement, the Notes and
the Security Documents.
"Fixed Charges" means, for any fiscal year, the sum of:
(i) interest payments required to be made on Debt of
the Borrower or any Subsidiary during such fiscal
year, provided that,
(A) subject to paragraph (B) immediately below, if
the rate of interest applicable to any Debt is
at the date of determination an unknown or
variable rate, then the rate to be used for
the purpose of such determination shall be the
rate per annum equal to the weighted
- 9 -
average applicable rate of interest paid by such Person
on such Debt during the then most recently ended
calendar month,
(B) with respect to Debt under the FHI Credit
Agreement and Debt hereunder, the rate of
interest to be used for the purposes of a
determination shall be the rate per annum
equal to the rate of interest that was in
effect for such Debt as at the last day of the
fiscal quarter of the Borrower most recently
ended on or prior to the date of
determination,
(C) subject to paragraph (D) immediately below,
the principal amount of Debt outstanding
during such fiscal year shall be assumed to be
the amount outstanding at the last day of the
fiscal quarter of the Borrower most recently
ended on or prior to the date of
determination, reduced as contemplated by
clause (iv) below,
(D) with respect to Debt hereunder, (y) for any
determination on or prior to the day
immediately prior to the last four fiscal
quarters (including the quarter containing the
Termination Date) of the Revolving Credit
Period (the "extension date"), the principal
amount of such Debt outstanding during such
fiscal year shall be assumed to be the amount
outstanding at the last day of the fiscal
quarter of the Borrower most recently ended on
or prior to the date of determination, (z) for
any determination after the extension date,
the principal amount of such Debt outstanding
during such fiscal year shall be assumed to be
the amount outstanding at the last day of the
fiscal quarter of the Borrower most recently
ended on or prior to the date of
determination, reduced as contemplated by
clause (iii) below;
(ii) assumed sinking fund payments by the Borrower on
account of the Subordinated Debentures of
U.S. $1,250,000 in each of the Borrower's 1996 and
1997 fiscal years;
(iii) for any determination after the extension
date, assumed principal payments hereunder
during such fiscal year so as to reduce the
Outstanding Principal at the Termination Date
in 8 quarterly instalments commencing three
months after the Termination Date; and
(iv) any other scheduled payments of principal required
to be made on Debt of the Borrower or any
Subsidiary during such fiscal year.
"Fronting Bank" means Paribas Bank of Canada in its
capacity as the fronting bank for the Banks for the
purposes of issuing Letters of Credit hereunder, and its
successors in such capacity. The Fronting Bank may
resign at any time by giving notice thereof to the Banks
and the Borrower, and upon such resignation,
- 10 -
the Required Banks shall have the right to appoint a
successor Fronting Bank which is a Bank hereunder. If no
successor Fronting Bank shall have been so appointed
within 30 days after the retiring Fronting Bank gives
notice of its resignation, then the retiring Fronting
Bank may, on behalf of the Banks, appoint a successor
Fronting Bank which shall be a Canadian chartered Bank
under the Bank Act (Canada). Upon the acceptance of its
appointment as Fronting Bank hereunder by a successor
Fronting Bank, such successor Fronting Bank shall, and
the Borrower shall cooperate with and do all acts and
things necessary for the successor Fronting Bank to,
replace all Letters of Credit then outstanding with
replacement Letters of Credit issued by the successor
Fronting Bank, whereupon the retiring Fronting Bank shall
be discharged from its duties and obligations hereunder.
"Future Net Revenue" means, with respect to any
Engineered Property and for any period, the future gross
revenue from such Engineered Property for such period as
determined in the then most recent Engineer's Report
less, without duplication, the sum of (i) any royalties
payable in connection with such property during such
period, (ii) any overriding royalties, net profits
interests and other similar obligations payable in
connection with such property during such period,
(iii) all production, ad valorem and severance taxes
relating to such property and payable during such period
and (iv) Capital Costs and Production Expenses during
such period necessary to provide such future gross
revenue.
"Group of Loans" means at any time a group of Direct
Loans consisting of (i) all Direct Loans which are
Domestic Loans at such time, (ii) all Direct Loans which
are USBR Loans at such time or (iii) all Direct Loans
which are Euro-Dollar Loans having the same Interest
Period at such time; provided that, if Direct Loans of
any particular Bank are converted to or made as USBR
Loans pursuant to Section 8.2 or 8.5, such Direct Loans
shall be included in the same Group or Groups of Loans
from time to time as they would have been in if they had
not been so converted or made.
"Guarantee" by any Person means any obligation,
contingent or otherwise, of such Person directly or
indirectly guaranteeing any Debt or other obligation of
any other Person and, without limiting the generality of
the foregoing, any obligation, direct or indirect,
contingent or otherwise, of such Person, (i) to purchase
or pay (or advance or supply funds for the purchase or
payment of) such Debt or other obligation (whether
arising by virtue of partnership arrangements, by
agreement to keep-well, to purchase assets, goods,
securities or services, to take-or-pay, or to maintain
financial statement conditions or otherwise) or
(ii) entered into for the purpose of assuring in any
other manner the obligee of such Debt or other obligation
of the payment thereof or to protect such obligee against
loss in respect thereof (in whole or in part); provided
that the term Guarantee shall not include endorsements
for collection or deposit in the ordinary course of
business. The term "Guarantee" used as a verb has a
corresponding meaning.
- 11 -
"Hazardous Substances" means any toxic, radioactive,
caustic or otherwise hazardous substance, including
petroleum, its derivatives, by-products and other
hydrocarbons, or any substance having any constituent
elements displaying any of the foregoing characteristics.
"Hydrocarbons" means oil, gas, casinghead gas, condensate
and other liquid and gaseous hydrocarbons and all other
minerals produced in connection therewith.
"Indemnitee" has the meaning set forth in Section 9.3(b).
"Independent Petroleum Engineers" means ▇▇▇▇▇ ▇▇▇▇▇
Company or other petroleum engineers not regularly
employed by or otherwise affiliated with the Borrower
selected by the Borrower and approved by the Required
Banks.
"Initial Engineer's Report" means the report of ▇▇▇▇▇
▇▇▇▇▇ Company dated January 1, 1995 covering the
Engineered Properties, a copy of which has been delivered
to each of the Banks.
"Interest Period" means: (1) with respect to each
Euro-Dollar Loan, the period commencing on the date
specified in the applicable Notice of Borrowing or on the
date specified in the applicable Notice of Interest Rate
Election and ending one, two, three or six months
thereafter, as the Borrower may elect in the applicable
Notice; provided that:
(a) any Interest Period which would otherwise end on a
day which is not a Euro-Dollar Business Day shall
be extended to the next succeeding Euro-Dollar
Business Day unless such Euro-Dollar Business Day
falls in another calendar month, in which case such
Interest Period shall end on the next preceding
Euro-Dollar Business Day;
(b) any Interest Period which begins on the last
Euro-Dollar Business Day of a calendar month (or on
a day for which there is no numerically
corresponding day in the calendar month at the end
of such Interest Period) shall, subject to
clause (c) below, end on the last Euro-Dollar
Business Day of a calendar month; and
(c) if any Interest Period includes a date on which a
payment of principal of the Loans is required to be
made under Section 2.4 but does not end on such
date, then (i) the principal amount (if any) of
each Euro-Dollar Loan required to be repaid on such
date shall have an Interest Period ending on such
date and (ii) the remainder (if any) of each such
Euro-Dollar Loan shall have an Interest Period
determined as set forth above,
(2) with respect to each Domestic Loan, the period
commencing on the date specified in the applicable Notice
of Borrowing or on the date specified in the applicable
Notice of Interest Rate Election, or commencing on the
date such
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Domestic Loan is otherwise deemed to have been
made hereunder, and ending on the last Domestic Business
Day of each calendar month, and
(3) with respect to each USBR Loan, the period commencing
on the date specified in the applicable Notice of
Borrowing or on the date specified in the applicable
Notice of Interest Rate Election, or commencing on the
date such USBR Loan is otherwise deemed to have been made
hereunder, and ending on the last Domestic Business Day
of each calendar month.
"Investment" means any investment in any Person, whether
by means of share purchase, capital contribution, loan,
time deposit or otherwise.
"Letter of Credit" means a standby letter of credit or
performance bond in U.S. Dollars or Canadian Dollars
issued by the Fronting Bank at the request of the
Borrower pursuant to this Agreement.
"Lien" means any mortgage, lien, pledge, charge,
hypothec, assignment by way of security, security
interest or encumbrance of any kind (whether statutory,
equitable or at common law) including, without
limitation, the rights of a vendor, lessor or similar
party under any conditional sale agreement or other title
retention agreement or lease substantially equivalent
thereto, and the rights of the holder of any production
payment, advance payment or similar interests.
"Loan" means a Euro-Dollar Loan, USBR Loan, Domestic Loan
or Letter of Credit outstanding hereunder and made or
issued pursuant to Section 2.1 or Section 2.8, or, in the
case of a Domestic Loan or USBR Loan, which is otherwise
deemed to have been made hereunder; and the term "Direct
Loan" means any such Euro-Dollar Loan, USBR Loan or a
Domestic Loan; provided that if any such Euro-Dollar Loan
or Loans, USBR Loan or Loans, or Domestic Loan or Loans
(or portions thereof) are combined or subdivided pursuant
to a Notice of Interest Rate Election, the terms "Loan"
and "Direct Loan" shall refer to the combined principal
amount resulting from such combination or to each of the
separate principal amounts resulting from such
subdivision, as the case may be.
"Loan Limit" means,
(a) during the Revolving Credit Period, the lesser of
(i) the aggregate of each Bank's Commitment as
reduced pursuant to Section 2.7 and (ii) the
Borrowing Base, and
(b) after the Termination Date, the lesser of (i) the
Outstanding Principal on the Termination Date less
the Loan Limit reductions pursuant to
Sections 2.4(a), 2.9(d) and 2.10(b) and (ii) the
Borrowing Base.
"London Interbank Offered Rate" has the meaning set forth
in Section 2.5(c).
- 13 -
"Margin" has the meaning set forth in Section 2.5(c).
"Material Debt" means Debt (other than the Notes) of the
Borrower and/or one or more of its Subsidiaries, arising
in one or more related or unrelated transactions, in an
aggregate principal or face amount (or the U.S.
Equivalent thereof) exceeding U.S. $500,000.
"Material Financial Obligations" means a principal or
face amount (or the U.S. Equivalent thereof) of Debt
and/or payment obligations in respect of Derivatives
Obligations of the Borrower and/or one or more of its
Subsidiaries, arising in one or more related or unrelated
transactions, exceeding in the aggregate U.S. $500,000.
"Material Plan" means at any time a Plan or Plans having
aggregate Unfunded Liabilities in excess of U.S.
$500,000.
"Maturity Date" means the Quarterly Date falling in
December, 1999.
"Mortgaged Properties" means all property and assets of
the Borrower subject or purported to be subject to the
Lien of the Security Documents.
"Multiemployer Plan" means at any time an employee
pension benefit plan within the meaning of
Section 4001(a)(3) of ERISA to which any member of the
ERISA Group is then making or accruing an obligation to
make contributions or has within the preceding five plan
years made contributions, including for these purposes
any Person which ceased to be a member of the ERISA Group
during such five year period.
"Net Proceeds from Petroleum Operations" means, for any
calendar quarter, the gross revenues of the Borrower from
the sale of Hydrocarbons produced and saved from the
Borrower's Canadian oil, gas, and mineral properties,
rights or interests less the sum of (i) any Crown or
lessor royalties paid by the Borrower in connection with
such properties during such period, (ii) any overriding
royalties, net profits interests and other similar
obligations paid by the Borrower in connection with such
properties during such period, (iii) all production, ad
valorem and severance taxes relating to such properties
paid by the Borrower during such period, and (iv) Capital
Costs and Production Expenses necessary to produce such
revenues paid by the Borrower during such period.
"Net Sales Proceeds" means, in respect of any sale, lease
or transfer of any Engineered Property, the gross cash
proceeds of such sale, lease or transfer less expenses
incurred in connection thereto including any commissions,
broker's fees and sales taxes.
- 14 -
"Notes" means promissory notes of the Borrower,
substantially in the form of Exhibit A hereto, evidencing
the obligation of the Borrower to repay the Direct Loans,
and "Note" means any one of such promissory notes issued
hereunder.
"Notice of Borrowing" means a notice delivered by the
Borrower to the Agent pursuant to Section 2.4(b) or
Section 2.14(a) requesting a Borrowing hereunder.
"Notice of Interest Rate Election" has the meaning set
forth in Section 2.8.
"Original Credit Agreement" has the meaning set forth in
the recitals hereto.
"Outstandings" means the aggregate, at any time, of
(i) the principal amount of all outstanding Direct Loans,
(ii) the maximum amount available to be drawn under all
outstanding Letters of Credit, (iii) all accrued and
unpaid interest, including interest on overdue and unpaid
interest, payable by the Borrower hereunder, and (iv) all
fees, indemnities and other amounts payable by the
Borrower hereunder or under the Notes or the Security
Documents.
"Outstanding Principal" means the aggregate, at any time,
of (i) the aggregate principal amount of all Domestic
Loans, (ii) the Canadian Equivalent of the aggregate
principal amount of all Euro-Dollar Loans and USBR Loans,
(iii) the aggregate face amount of all outstanding
Letters of Credit in Canadian Dollars, and (iv) the
Canadian Equivalent of the aggregate face amount of all
outstanding Letters of Credit in U.S. Dollars.
"Parent" means, with respect to any Bank, any Person
controlling such Bank.
"Participant" has the meaning set forth in
Section 9.6(b).
"PBGC" means the Pension Benefit Guaranty Corporation or
any entity succeeding to any or all of its functions
under ERISA.
"Person" means an individual, a corporation, a
partnership, an association, a trust or any other entity
or organization, including a government or political
subdivision or an agency or instrumentality thereof.
"Plan" means at any time an employee pension benefit plan
(other than a Multiemployer Plan) which is covered by
Title IV of ERISA or subject to the minimum funding
standards under Section 412 of the U.S. Internal Revenue
Code and either (i) is maintained, or contributed to, by
any member of the ERISA Group for employees of any member
of the ERISA Group or (ii) has at any time within the
preceding five years been maintained, or contributed to,
by any Person which was at such time a member of the
ERISA Group for employees of any Person which was at such
time a member of the ERISA Group.
- 15 -
"Prepaid Gas Contract" means that certain Prepaid Crude
Petroleum and/or Natural Gas Purchase Agreement dated as
of December 1, 1995 between the Borrower and Wainoco
Production Partnership.
"Prime Rate" means the variable rate of interest
(expressed as a rate per annum) which the Agent
establishes from time to time as the reference rate of
interest which it employs in order to determine the
interest rate it will charge for loans in Canadian
Dollars to its customers in Canada and which it
designates as its Canadian prime rate.
"Principal Repayment Date" means each Quarterly Date
falling after the Termination Date and on or prior to the
Maturity Date.
"Production Expenses" means, with respect to any oil and
gas property, all cash costs and expenses (excluding
general and administrative expenses) incurred for or
payable in connection with the lifting, producing,
gathering, separating, treating, compressing, storing,
processing, marketing, transporting or otherwise handling
Hydrocarbons from such property, or developing,
equipping, operating or maintaining such property.
"Projected Cash Flow Available for Fixed Charges" means,
for any fiscal year, the amount determined pursuant to
Section 5.17(c) as (A) the projected Future Net Revenues
from Engineered Properties for such fiscal year minus
(B) general and administrative expenses payable by the
Borrower or any Subsidiary during such fiscal year (as
forecast by the Borrower and satisfactory to the Required
Banks) plus (C) the FHI EBITDA for the period of eight
consecutive quarters then most recently ended divided by
two minus (D) U.S. $5,000,000 (representing a notional
allowance for capital costs of FHI for such fiscal year).
"Quarterly Date" means the last Euro-Dollar Business Day
of each March, June, September and December.
"Reference Banks" means the principal London offices of
▇▇▇▇▇▇ Guaranty Trust Company of New York and Banque
Paribas.
"Regulation X" means Regulation X of the Board of
Governors of the U.S. Federal Reserve System, as in
effect from time to time.
"Required Banks" means at any time Banks having at least
66 2/3% of the aggregate amount of all Commitments or, if
the Commitments shall have been terminated, having an
interest in at least 66 2/3% of the aggregate amount of
all outstanding Loans.
"Restricted Payment" means (i) any dividend or other
distribution on any shares of the Borrower's capital
stock (except dividends payable solely in shares of its
capital stock) or (ii) any payment on account of the
purchase, redemption,
- 16 -
retirement or acquisition of (a) any shares of the Borrower's
capital stock or (b) any option, warrant or other right to
acquire shares of the Borrower's capital stock.
"Revolving Credit Period" means the period from and
including the Effective Date to and including the
Termination Date.
"Security Documents" means the Existing Security
Documents, the Subsidiary Security Documents and any
other documents delivered to or for the benefit of the
Banks and intended to secure or assure payment or
performance of all or any part of the obligation and
liabilities of the Borrower under this Agreement,
including liability for all Outstandings; all as the same
may be amended, supplemented, replaced, substituted or
renewed from time to time.
"Senior Notes" means the 12% Senior Notes of the Borrower
due 2002.
"Spot Rate" means, in relation to the conversion of one
currency into another currency, the noon spot rate of
exchange for such conversion as quoted by the Bank of
Canada on the Domestic Business Day immediately preceding
the date that such conversion is to be made.
"Subordinated Debentures" means the 10 3/4% Subordinated
Debentures of the Borrower due 1998.
"Subsidiary" means, as to any Person, any corporation or
other entity of which securities or other ownership
interests having ordinary voting power to elect a
majority of the board of directors or other persons
performing similar functions are at the time directly or
indirectly owned by such Person; unless otherwise
specified, "Subsidiary" means a Subsidiary of the
Borrower.
"Subsidiary Security Documents" means (i) a Guarantee
dated as of December 1, 1995 by Wainoco Production
Partnership, (ii) a General Security Agreement dated as
of December 1, 1995 by Wainoco Production Partnership,
(iii) a Guarantee dated December 1, 1995 by 662712
Alberta Ltd. and (iv) a General Security Agreement dated
December 1, 1995 by 662712 Alberta Ltd., in each case in
favour of the Agent for the benefit of the Banks.
"Temporary Cash Investment" means any Investment in
(i) direct obligations of the United States of America or
Canada, or any agency thereof, or obligations guaranteed
by the United States of America or Canada, or any agency
thereof, (ii) commercial paper rated at least A-1 by
Standard & Poor's Corporation and P-1 by ▇▇▇▇▇'▇
Investors Service, Inc., (iii) commercial paper issued by
Union Commercial Funding Corp. (a subsidiary of Union
Bank) guaranteed by Union Bank and rated at least A-1 by
Standard & Poor's Corporation and P-2 by ▇▇▇▇▇'▇
Investors Services, Inc. not in the aggregate at any time
greater than U.S. $10,000,000, (iv) time deposits
(including overnight deposits accruing
- 17 -
interest at rates based on the London Interbank market)
with, including certificates of deposit issued by, any
office of any bank or trust company which is organized
under the laws of the United States of America or any
state thereof, or under the laws of Canada or any
province thereof, and has capital, surplus and undivided
profits aggregating at least U.S. $500,000,000 or
Cdn. $500,000,000, as the case may be, or (v) repurchase
agreements with respect to securities described in
clause (i) above entered into with an office of a bank or
trust company meeting the criteria specified in
clause (iii) above, provided in each case that such
Investment matures within one year from the date of
acquisition thereof by the Borrower or a Subsidiary.
"Termination Date" means the Quarterly Date falling in
December, 1997.
"U.S. Base Rate" means, for any day, a rate per annum
equal to the higher of (i) the variable rate of interest
(expressed as a rate per annum) which the Agent
establishes from time to time as the reference rate of
interest which it employs in order to determine the
interest rate it will charge for loans in U.S. Dollars to
its customers in Canada and which it designates as its
U.S. base rate, and (ii) the sum of 1/2 of 1% plus the
Federal Funds Rate.
"USBR Loan" means (i) a Loan which bears interest with
reference to the U.S. Base Rate or (ii) an overdue amount
which was a USBR Loan immediately before it became
overdue.
"U.S. Dollar" and "U.S. $" mean lawful money of the
United States of America.
"U.S. Equivalent" means, at any time, (i) in relation to
any amount in Canadian Dollars, the amount obtained by
converting such amount into U.S. Dollars at the Spot Rate
and, (ii) in relation to any amount in U.S. Dollars, that
amount.
"Unfunded Liabilities" means, with respect to any Plan at
any time, the amount (if any) by which (i) the present
value of all benefits under such Plan exceeds (ii) the
fair market value of all Plan assets allocable to such
benefits (excluding any accrued but unpaid
contributions), all determined as of the then most recent
valuation date for such Plan, but only to the extent that
such excess represents a potential liability of a member
of the ERISA Group to the PBGC or any other Person under
Title IV of ERISA.
"Value" means, with respect to any Engineered Property
(including, without limitation, a Mortgaged Property),
the Discounted Present Value of Future Net Revenue from
such Engineered Property as set forth in the then most
recent Engineer's Report.
"1994 Form 10-K" means the Borrower's annual report on
Form 10-K for 1994, as filed with the Securities and
Exchange Commission (United States of America) pursuant
to the Securities Exchange Act of 1934.
- 18 -
1.2 Accounting Terms and Determinations
Unless otherwise specified herein, all accounting terms
used herein shall be interpreted, all accounting determinations
hereunder shall be made, and all financial statements required to
be delivered hereunder shall be prepared in accordance with U.S.
generally accepted accounting principles as in effect from time to
time, applied on a basis consistent (except for changes concurred
in by the Borrower's independent public accountants) with the most
recent audited consolidated financial statements of the Borrower
and its Consolidated Subsidiaries delivered to the Banks; provided
that, if the Borrower notifies the Agent that the Borrower wishes
to amend any covenant in Article 5 to eliminate the effect of any
change in generally accepted accounting principles on the operation
of such covenant (or if the Agent notifies the Borrower that the
Required Banks wish to amend Article 5 for such purpose), then the
Borrower's compliance with such covenant shall be determined on the
basis of generally accepted accounting principles in effect
immediately before the relevant change in generally accepted
accounting principles became effective, until either such notice is
withdrawn or such covenant is amended in a manner satisfactory to
the Borrower and the Required Banks.
1.3 Headings and Agreement References
(a) The division of this Agreement into Articles and
Sections, the inclusion of a table of contents and the
insertion of headings is for convenience of reference
only and shall not affect the construction or
interpretation of this Agreement.
(b) The term "this Agreement", "hereof", "hereunder" and
similar expressions refer to this Agreement and not to
any particular Article, Section or other portion hereof
and includes any amendments or supplements hereto.
Unless otherwise stated, references herein to Articles
and Sections are to Articles and Sections of this
Agreement.
1.4 Number and Gender
Words importing the singular number shall include the
plural and vice versa, and words importing gender shall include the
masculine, feminine and neuter genders.
1.5 Per Annum Calculations; Currency; Time; "Including"
(a) Unless otherwise stated, interest specified as a rate
"per annum" shall be calculated using the nominal rate
method, and not the effective rate method, on the basis
of a calendar year of 365 days or 366 days, as the case
may be.
(b) Unless otherwise stated, references in this Agreement to
dollar amounts or $ shall be deemed to be references to
Canadian Dollars.
(c) Unless otherwise stated, references to time shall mean
local time in ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇.
- 19 -
(d) The word "including" shall not be construed to limit or
restrict the generality of the matter that precedes it.
1.6 Exhibits
The following are the Exhibits annexed hereto:
Exhibit A - Form of Note
Exhibit B - Opinion of U.S. counsel for the Borrower
Exhibit C - Opinion of Burnet, ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇,
▇▇▇▇▇▇▇ counsel for the Borrower
Exhibit D - Opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇, counsel for the
Agent
ARTICLE 2
THE CREDITS
2.1 Credit Facility
(a) During the Revolving Credit Period each Bank severally
agrees, on the terms and conditions set forth in this
Agreement, to continue to make available to the Borrower
a credit facility not to exceed in the aggregate at any
one time outstanding the amount of its Commitment, and
the Borrower may obtain Borrowings in Canadian Dollars by
way of Domestic Loans and Letters of Credit, and in U.S.
Dollars by way of Euro-Dollar Loans, USBR Loans and
Letters of Credit; provided that the Borrower shall not
be entitled to any Borrowing where (i) the Outstanding
Principal, after such Borrowing, would exceed the Loan
Limit, or (ii) in the event the Borrowing is a LC
Borrowing, the Canadian Equivalent of the aggregate face
amount of all outstanding Letters of Credit, after such
LC Borrowing, would exceed Cdn. $1,000,000. Each
Borrowing under this subsection (a) shall be made from
the Banks or apportioned among the Banks severally and
rateably in proportion to their respective Commitments,
and:
(i) in the case of Domestic Loans, shall be in an
aggregate principal amount of Cdn. $1,000,000 or
any larger multiple of Cdn. $100,000;
(ii) in the case of Euro-Dollar Loans or USBR Loans,
shall be in an aggregate principal amount of
U.S. $1,000,000 or any larger multiple of
U.S. $100,000; and
(iii) in the case of Letters of Credit, in any
amount.
Within the foregoing limits, the Borrower may borrow
under this subsection (a), repay, or to the extent
permitted by Section 2.9, prepay Loans and reborrow at
any time during the Revolving Credit Period under this
subsection (a). The Commitments shall terminate at the
close of business on the Termination Date and
- 20 -
the credit facility of each of the Banks under this
Section 2.1(a) shall be converted to a non-revolving term
facility, and the Banks shall thereafter have no
obligation to extend further Borrowings to the Borrower
hereunder.
(b) On or as promptly as practicable after each date on which
the Agent shall receive (i) an Engineer's Report pursuant
to Sections 5.14(a) or (c), (ii) a request by the
Borrower for a redetermination of the Borrowing Base in
conjunction with a proposed sale, lease or other transfer
of Engineered Properties in lieu of a reduction otherwise
required by the provisions of the definition of Borrowing
Base or (iii) a request by the Borrower to increase the
Borrowing Base through the addition of incremental
Engineered Properties, which request shall be accompanied
by an Engineer's Report covering the properties proposed
to be added and such other information relating thereto
as the Agent or any Bank may reasonably request, the
Agent shall determine the proposed amount of the
Borrowing Base and notify the Banks of its determination.
If each of the Banks shall approve such determination,
the Agent shall promptly after receiving such approval
notify the Borrower of the amount of the Borrowing Base
so determined whereupon the Borrowing Base shall equal
the amount so notified. If any Bank shall object to such
determination, then the Banks shall consult among
themselves to determine a mutually acceptable Borrowing
Base, and the amount so agreed upon by all Banks shall be
the Borrowing Base and the Agent shall promptly notify
the Borrower thereof. In any event, the determination of
the Borrowing Base in accordance with this Section 2.1(b)
shall be accomplished within 45 days of the delivery of
the related Engineer's Report or request for
redetermination. The determination of the amount of the
Borrowing Base shall be based on the information relating
to the Engineered Properties set forth in the Engineer's
Report but subject to the customary practices and
standards of each Bank in determining the maximum amount
that it is willing to lend to a borrower on the basis of
the future net revenues of the hydrocarbon producing
properties of such borrower. In the determination of the
Borrowing Base, the Banks will have full discretion to
determine which (if any) non-producing and undeveloped
Hydrocarbon reserves will be included. The Banks may
also make such adjustment as they deem appropriate for
the Debt of the Borrower (other than the Debt of the
Borrower hereunder) and its Subsidiaries, including
without limitation the Senior Notes.
2.2 Method of Borrowing: Direct Loans
With respect to Domestic Borrowings, USBR Borrowings and
Euro-Dollar Borrowings:
(a) the Borrower shall give the Agent notice no later than
12:00 Noon on the date of each Domestic Borrowing and
USBR Borrowing, and at least three Euro-Dollar Business
Days before each Euro-Dollar Borrowing, specifying:
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(i) the date of such Borrowing, which shall be a
Domestic Business Day in the case of a Domestic
Borrowing or USBR Borrowing, or a Euro-Dollar
Business Day in the case of a Euro-Dollar
Borrowing,
(ii) the aggregate amount of such Borrowing,
(iii) whether the Loans comprising such Borrowing
are to bear interest initially at the Prime
Rate as adjusted herein, the U.S. Base Rate as
adjusted herein or the Euro-Dollar Rate, and
(iv) in the case of a Euro-Dollar Borrowing, the
duration of the initial Interest Period applicable
thereto, subject to the provisions of the
definition of Interest Period.
(b) upon receipt of a Notice of Borrowing, the Agent shall
promptly notify each Bank of the contents thereof and of
such Bank's ratable share of such Borrowing and such
Notice of Borrowing shall not thereafter be revocable by
the Borrower;
(c) not later than 11:00 A.M. on the date of each Euro-Dollar
Borrowing and not later than 1:00 P.M. on the date of
each Domestic Borrowing and USBR Borrowing, each Bank
shall make available its ratable share of such Borrowing,
in Canadian or U.S. Dollars, as the case may be,
available in ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, to the Agent at its
address specified in or pursuant to Section 9.1. Unless
the Agent determines that any applicable condition
specified in Article 3 has not been satisfied, the Agent
will make the funds so received from the Banks available
to the Borrower at the Agent's aforesaid address;
(d) unless the Agent shall have received notice from a Bank
prior to the date of any Domestic Borrowing, USBR
Borrowing or Euro-Dollar Borrowing that such Bank will
not make available to the Agent such Bank's share of such
Borrowing, the Agent may assume that such Bank has made
such share available to the Agent on the date of such
Borrowing in accordance with subsection (c) of this
Section 2.2 and the Agent may, in reliance upon such
assumption, make available to the Borrower on such date
a corresponding amount. If and to the extent that such
Bank shall not have so made such share available to the
Agent, such Bank and the Borrower severally agree to
repay to the Agent forthwith on demand such corresponding
amount together with interest thereon, for each day from
the date such amount is made available to the Borrower
until the date such amount is repaid to the Agent, at a
rate determined by the Agent (such rate to be conclusive
and binding on such Bank or the Borrower, as the case may
be) in accordance with the Agent's usual banking practice
for advances to financial institutions of like standing
to such Bank. If such Bank shall repay to the Agent such
corresponding amount, such amount so repaid shall
constitute such Bank's Loan included in such Borrowing
for purposes of this Agreement. If the Borrower shall
repay to the Agent such corresponding amount, nothing in this
- 22 -
Section 2.2(d) shall limit or affect any rights the
Borrower may have against such Bank.
2.3 Notes
(a) The Direct Loans of each Bank shall be evidenced by a
single Note payable to the order of such Bank in an
amount equal to the aggregate unpaid principal amount of
such Bank s Direct Loans;
(b) Each Bank may, by notice to the Borrower and the Agent,
request that its Domestic Loans, USBR Loans and Euro-
Dollar Loans be evidenced by separate Notes. In
addition, each Bank may, by notice to the Borrower and
the Agent, request that an additional Note be delivered
by the Borrower to evidence any Direct Loan not otherwise
evidenced by an existing Note hereunder. Each such Note
shall be in substantially the form of Exhibit A hereto
with appropriate modifications to reflect the fact that
it evidences solely Domestic Loans, USBR Loans or Euro-
Dollar Loans, as the case may be. Each reference in this
Agreement to the Note of such Bank shall be deemed to
refer to and include either or all of such Notes, as the
context may require.
(c) Upon receipt of each Bank's Note pursuant to
Section 3.1(b), the Agent shall forward such Note to such
Bank. Each Bank shall record in its records the date,
amount and type of each Direct Loan made or deemed to
have been made by it and the date and amount of each
payment of principal made by the Borrower with respect
thereto, and may, if such Bank so elects in connection
with any transfer or enforcement of its Note, endorse on
the schedule forming a part thereof appropriate notations
to evidence the foregoing information with respect to
each such Direct Loan then outstanding; provided that the
failure of any Bank to make any such recordation or
endorsement shall not affect the obligations of the
Borrower hereunder or under the Notes. Each Bank is
hereby irrevocably authorized by the Borrower so to
endorse its Note and to attach to and make a part of its
Note a continuation of any such schedule as and when
required.
2.4 Maturity of Loans; Mandatory Prepayments
(a) Upon the expiry of the Revolving Credit Period, the Loan
Limit shall be immediately reduced to the Outstanding
Principal on the Termination Date. Thereafter on each
Principal Repayment Date the Loan Limit shall be reduced
by the greater of (a) one-eighth (1/8th) of the
Outstanding Principal at the end of the Revolving Credit
Period, and (b) 80% of the Net Proceeds from Petroleum
Operations for the calendar quarter ended immediately
prior to the Principal Repayment Date (in determining Net
Proceeds from Petroleum Operations, all currencies other
than Canadian Dollars shall be converted into Canadian
Dollars at a rate of exchange equal to the average Spot
Rate for such calendar quarter). The Borrower shall
repay an aggregate amount of the Loans on each Principal
Repayment Date such that the Outstanding Principal, after
such payment, does not
- 23 -
exceed the Loan Limit on the Principal Repayment Date; provided
that in any event the outstanding Loans shall be repaid in full
not later than the Maturity Date. Each such payment shall be
applied to such Loans as the Borrower may designate in a notice
in writing to the Agent (or, failing such designation, as
determined by the Agent), and shall be applied to repay ratably
the Loans of the Banks.
(b) If, due solely to exchange rate fluctuations, the
Outstanding Principal is, for a period of five
consecutive Domestic Business Days, in excess of the Loan
Limit by an amount which is 5% or more of the Loan Limit,
the Borrower shall, if requested by the Agent (and
approved by the Required Banks), forthwith repay on
demand the Loans to the extent of the amount by which the
Outstanding Principal is in excess of the Loan Limit
together with any accrued interest thereon to the date of
such repayment, such that the Outstanding Principal,
after such payment, is not in excess of the Loan Limit.
(c) Subject to Sections 2.4(b) and 2.10(a), if at any time
the Outstanding Principal exceeds the Loan Limit, the
Borrower shall immediately repay Loans to the extent of
such excess together with accrued interest thereon to the
date of such repayment, such that the Outstanding
Principal, after such payment, no longer exceeds the Loan
Limit.
2.5 Interest Rates
(a) Each Domestic Loan shall bear interest on the outstanding
principal amount thereof, for each day from the date such
Loan is made or deemed to have been made until it becomes
due, at a rate per annum equal to the sum of 3/4 of 1%
plus the Prime Rate for such day. Such interest shall be
payable monthly in arrears for each Interest Period on
the last day thereof and on each date a Domestic Loan is
converted to a Euro-Dollar Loan or USBR Loan, and shall
be calculated on the principal amount of each Domestic
Loan and on the basis of the actual number of days each
such Domestic Loan is outstanding in a year of 365 or 366
days, as the case may be. Changes in the Prime Rate
shall cause an immediate adjustment of the interest rate
applicable to each Domestic Loan without necessity of any
notice to the Borrower.
(b) Each USBR Loan shall bear interest on the outstanding
principal amount thereof, for each day from the date such
Loan is made or deemed to have been made until it becomes
due, at a rate per annum equal to the sum of 3/4 of 1%
plus the U.S. Base Rate for such day. Such interest
shall be payable monthly in arrears for each Interest
Period on the last day thereof and on each date a USBR
Loan is converted to a Euro-Dollar Loan or Domestic Loan,
and shall be calculated on the principal amount of each
USBR Loan and on the basis of the actual number of days
each such USBR Loan is outstanding in a year of 365 days.
Changes in the U.S. Base Rate shall cause an immediate
adjustment of the interest rate applicable to each USBR
Loan without necessity of any notice to the Borrower.
- 24 -
(c) Each Euro-Dollar Loan shall bear interest on the
outstanding principal amount thereof, for the Interest
Period applicable thereto, at a rate per annum equal to
the sum of 1 3/4% (the "Margin") plus the applicable
Adjusted London Interbank Offered Rate. Such interest
shall accrue on the principal amount of each Euro-Dollar
Loan and shall be payable in arrears for each Interest
Period on the last day thereof and, if such Interest
Period is longer than three months, at intervals of three
months after the first day thereof, and shall be
calculated on the principal amount of each Euro-Dollar
Loan and on the basis of the actual number of days each
such Euro-Dollar Loan is outstanding in a year of 360
days.
The "Adjusted London Interbank Offered Rate" applicable
to any Interest Period means a rate per annum equal to
the quotient obtained (rounded upward, if necessary, to
the next higher 1/100 of 1%) by dividing (i) the
applicable London Interbank Offered Rate by (ii) 1.00
minus the Euro-Dollar Reserve Percentage.
The "London Interbank Offered Rate" applicable to any
Interest Period means the average (rounded upward, if
necessary, to the next higher 1/16 of 1%) of the
respective rates per annum at which deposits in U.S.
Dollars are offered to each of the Reference Banks in the
London Interbank market at approximately 11:00 A.M.
(London time) two Euro-Dollar Business Days before the
first day of such Interest Period in an amount
approximately equal to the principal amount of the
Euro-Dollar Loan to be made by the Bank to which such
Interest Period is to apply and for a period of time
comparable to such Interest Period.
"Euro-Dollar Reserve Percentage" means for any day that
percentage (expressed as a decimal) which is in effect on
such day, as prescribed by the applicable regulatory body
for determining the maximum reserve requirement
(including any supplemental and emergency reserves)
applicable to the Banks in respect of Eurocurrency
funding (currently referred to as "Eurocurrency
liabilities"). The Adjusted London Interbank Offered
Rate shall be adjusted automatically on and as of the
effective date of any change in the Euro-Dollar Reserve
Percentage.
(d) The Agent shall determine each interest rate applicable
to Direct Loans hereunder. The Agent shall give prompt
notice to the Borrower and the Banks of each rate of
interest so determined, and its determination thereof
shall be conclusive in the absence of manifest error.
(e) If the Agent does not receive a timely quotation, the
Agent shall determine the relevant interest rate on the
basis of the quotation or quotations furnished by the
remaining Reference Bank or Banks or, if none of such
quotations is available on a timely basis, the provisions
of Section 8.1 shall apply.
2.6 Commitment Fee
(a) Commitment Fee. During the Revolving Credit Period, the
Borrower shall pay to the Agent for the account of
the Banks ratably in proportion to their
- 25 -
Commitments a commitment fee at the rate of 1/2 of 1% per annum
on the daily average amount by which the aggregate amount of the
Commitments exceeds the Outstanding Principal. Such commitment
fee shall accrue from and including the Effective Date to but
excluding the Termination Date and shall be calculated on the
basis of a 360 day year.
(b) Payments. Accrued commitment fees under this Section
shall be payable quarterly on each Quarterly Date, and
upon the date of termination of the Commitments in their
entirety and, if later, the date the Loans shall be
repaid in their entirety.
2.7 Optional Termination or Reduction of Commitments
During the Revolving Credit Period, the Borrower may,
upon at least three Domestic Business Days' notice to the Agent,
(i) terminate the Commitments at any time, if no Loans are
outstanding at such time or (ii) ratably reduce from time to time
by an aggregate amount of Cdn. $3,000,000 or any larger multiple
thereof, the aggregate amount of the Commitments in excess of the
Outstanding Principal.
2.8 Method of Electing Interest Rates
With respect to Direct Loans:
(a) such Loans shall bear interest initially at the type of
rate specified by the Borrower in the applicable Notice
of Borrowing. Thereafter, the Borrower may from time to
time elect to change or continue the type of interest
rate borne by each Group of Loans to another type of
Direct Loan (subject in each case to the provisions of
Article 8), provided that:
(i) if such Loans are Domestic Loans or USBR Loans, the
Borrower may elect to convert such Loans to
Euro-Dollar Loans only as of a Euro-Dollar Business
Day; or
(ii) if such Loans are Euro-Dollar Loans, the Borrower
may only elect to convert such Loans to Domestic
Loans or USBR Loans, or elect to continue such
Loans as Euro-Dollar Loans for an additional
Interest Period, effective on the last day of the
then current Interest Period applicable to such
Euro-Dollar Loans;
and provided further that if the conversion of the whole
or any part of any type of existing Direct Loan into
another type of Direct Loan involves a change in
currency, the principal amount of the new Direct Loan
shall be the Canadian Equivalent or U.S. Equivalent, as
the case may be, of the existing Direct Loan or relevant
part thereof.
- 26 -
Each such election shall be made by delivering a notice
(a "Notice of Interest Rate Election") to the Agent at
least three Euro-Dollar Business Days before the
conversion or continuation selected in such notice is to
be effective. A Notice of Interest Rate Election may, if
it so specifies, apply to only a portion of the aggregate
principal amount of the relevant Group of Loans; provided
that (i) such portion is allocated ratably among the
Direct Loans comprising such Group, (ii) the portion to
which such Notice applies is Cdn. or U.S. $1,000,000 or
any larger multiple of Cdn. or U.S. $500,000, as the case
may be, and (iii) the remaining portion to which it does
not apply, is at least Cdn. or U.S. $1,000,000, as the
case may be;
(b) each Notice of Interest Rate Election shall specify:
(i) the Group of Loans (or portion thereof) to which
such notice applies;
(ii) the date on which the conversion or continuation
selected in such notice is to be effective, which
shall comply with the applicable clause of
subsection (a) above;
(iii) if the Direct Loans comprising such Group are
to be converted, the new type of Direct Loans
and, if such new Direct Loans are Euro-Dollar
Loans, the duration of the initial Interest
Period applicable thereto; and
(iv) if Euro-Dollar Loans are to be continued as
Euro-Dollar Loans for an additional Interest
Period, the duration of such additional Interest
Period.
Each Interest Period specified in a Notice of Interest
Rate Election shall comply with the provisions of the
definition of Interest Period;
(c) upon receipt of a Notice of Interest Rate Election from
the Borrower pursuant to Section 2.8(a), the Agent shall
promptly notify each Bank of the contents thereof and
such notice shall not thereafter be revocable by the
Borrower. If the Borrower fails to deliver a timely
Notice of Interest Rate Election to the Agent for any
Group of Euro-Dollar Loans, such Loans shall be converted
to a USBR Loan on the last day of the then current
Interest Period applicable thereto.
2.9 Optional Prepayments
(a) The Borrower may, upon at least one Domestic Business
Day's notice to the Agent, prepay Domestic Loans in whole
at any time, or from time to time in part in amounts
aggregating Cdn. $1,000,000 or any larger multiple of
Cdn. $500,000, by paying the principal amount to be
prepaid together with accrued interest thereon to the
date of prepayment. Each such optional prepayment shall
be applied to prepay ratably the Domestic Loans of the
Banks.
- 27 -
(b) The Borrower may, upon at least one Domestic Business
Day s notice to the Agent, prepay USBR Loans in whole at
any time, or from time to time in part in amounts
aggregating U.S. $1,000,000 or any larger multiple of
U.S. $500,000, by paying the principal amount to be
prepaid together with accrued interest thereon to the
date of prepayment. Each such optional prepayment shall
be applied to prepay ratably the USBR Loans of the Banks.
(c) The Borrower may, upon at least three Euro-Dollar
Business Days' notice to the Agent prepay the Euro-Dollar
Loans comprising a Group of Euro-Dollar Loans on the last
day of any Interest Period applicable to such Group, in
whole at any time, or from time to time in part in
amounts aggregating U.S. $1,000,000 or any larger
multiple of U.S. $500,000, by paying the principal amount
to be prepaid together with accrued interest thereon to
the date of prepayment. Each such optional prepayment
shall be applied to prepay ratably the Euro-Dollar Loans
of the several Banks included in such Group.
(d) Upon receipt of a notice of prepayment pursuant to this
Section, the Agent shall promptly notify each Bank of the
contents thereof and of such Bank's ratable share of such
prepayment and such notice shall not thereafter be
revocable by the Borrower, and the Loan Limit shall be
reduced by an amount equal to the principal amount of
each such prepayment (or the Canadian Equivalent thereof
as of the date of prepayment) made after the Termination
Date.
2.10 Contingent Prepayments
(a) If at any time a Borrowing Base Excession exists, the
Borrower shall forthwith notify the Agent and the Banks.
On or before the date falling 90 days after the date of
inception of such Borrowing Base Excession, the Borrower
shall remedy such Borrowing Base Excession through
(i) prepaying together with any accrued interest thereon
to the date of prepayment such amount of the Loans as may
be necessary to reduce the Outstanding Principal to the
Borrowing Base at the date of prepayment, (ii) increasing
the Borrowing Base through the addition of incremental
Engineered Properties in accordance with
Section 2.1(b)(iii), or (iii) by a combination of
clauses (i) and (ii) above.
(b) If at any time the Borrower receives insurance proceeds
in a U.S. Equivalent amount greater than U.S. $500,000
pursuant to insurance effected in accordance with
Section 5.3(e), the Borrower shall forthwith notify the
Agent of such receipt. If within 15 days after receipt
the Borrower shall not have expended such proceeds or
committed to expend an amount equivalent thereto for the
restoration or replacement of the asset in respect of
which such payment was made, then the Borrower shall at
the request of the Agent (with the approval of the
Required Banks) forthwith prepay together with any
accrued interest thereon to the date of prepayment an
aggregate amount of the Loans equal to the amount of such
proceeds, and the Loan Limit shall be reduced by an
amount equal to the amount
- 28 -
of such prepayment (or the Canadian Equivalent thereof as
of the date of prepayment) made after the Termination
Date.
2.11 General Provisions as to Payments
(a) All payments to be made by the Borrower on account of the
Loans, interest thereon and of commitment fees and other
amounts payable hereunder, shall be made by the Borrower
not later than 1:00 P.M. on the date when due, in U.S.
Dollars if payable in respect of a Euro-Dollar Loan, USBR
Loan or a Letter of Credit in U.S. Dollars (or fees on
account thereof or interest thereon), or in Canadian
Dollars if payable in respect of all other amounts
hereunder, to the Agent at its address referred to in
Section 9.1 (or to the Fronting Bank's address referred
to in Section 9.1 in respect of fees and other amounts
payable to the Fronting Bank). The Agent will promptly
distribute to each Bank its proper share (if any) of each
such payment received by the Agent for the account of any
or all of the Banks. Whenever any payment of principal
of, or interest on, the Euro-Dollar Loans shall be due on
a day which is not a Euro-Dollar Business Day, the date
for payment thereof shall be extended to the next
succeeding Euro-Dollar Business Day unless such
Euro-Dollar Business Day falls in another calendar month,
in which case the date for payment thereof shall be the
next preceding Euro-Dollar Business Day. Whenever any
payment of any other amount shall be due on a day which
is not a Domestic Business Day, the date for payment
thereof shall be extended to the next succeeding Domestic
Business Day. If the date for any payment of principal
is extended by operation of law or otherwise, interest
thereon shall be payable for such extended time.
(b) Unless the Agent shall have received notice from the
Borrower prior to the date on which any payment is due to
the Banks hereunder that the Borrower will not make such
payment in full, the Agent may assume that the Borrower
has made such payment in full to the Agent on such date
and the Agent may, in reliance upon such assumption,
cause to be distributed to each Bank on such due date an
amount equal to the amount then due such Bank. If and to
the extent that the Borrower shall not have so made such
payment, each Bank shall repay to the Agent forthwith on
demand such amount distributed to such Bank together with
interest thereon, for each day from the date such amount
is distributed to such Bank until the date such Bank
repays such amount to the Agent, at a rate determined by
such Bank in accordance with its usual banking practice
in respect of deposits of amounts comparable to the
amount of such payment at the time such payment is to be
made.
(c) To the maximum extent permitted by law, the Borrower
shall make all payments required hereunder, whether by
way of principal, interest or otherwise, without regard
to any defense, counterclaim or right of set-off
available to the Borrower.
(d) In the event that the Agent receives any payment from the
Borrower pursuant hereto (including pursuant to Section
6.1) which or any part of which cannot be
- 29 -
forthwith applied to Direct Loans outstanding to the
Banks, the Agent with the consent of the Required Banks
shall be entitled to deposit and retain such payment or
any part thereof in a Cash Collateral Account bearing
interest for the Borrower's account (at the rates of the
Agent as may be applicable in respect of similar
deposits). Such payment may be maintained in the Cash
Collateral Account by the Agent for so long as such
payment may be required to satisfy any contingent or
unmatured obligations or liabilities of the Borrower
under the Financing Documents or any of them, and such
funds may be applied to payment of Outstandings at such
times and in such manner as the Agent may determine.
2.12 Funding Losses
If the Borrower makes any payment of principal with
respect to any Euro-Dollar Loan or any Euro-Dollar Loan is
converted to a USBR Loan (pursuant to Article 6 or 8 or otherwise)
on any day other than the last day of the Interest Period
applicable thereto, or if the Borrower fails to borrow or prepay
any Euro-Dollar Loans after notice has been given to any Bank in
accordance with Section 2.2(b) or 2.9(d), the Borrower shall
reimburse each Bank within 15 days after demand for any resulting
loss or expense incurred by it (or by an existing or prospective
Participant in the related Loan), including (without limitation)
any loss incurred in obtaining, liquidating or employing deposits
from third parties, but excluding loss of Margin for the period
after any such payment or failure to borrow, provided that such
Bank shall have delivered to the Borrower a certificate as to the
amount of such loss or expense, which certificate shall be
conclusive in the absence of manifest error.
2.13 General Provisions as to Interest; Overdue Interest; and
Fees
(a) Whenever interest is to be calculated on the basis of a
year of 360 or 365 days, the yearly rate of interest to
which the rate determined pursuant to such calculation is
equivalent is the rate so determined multiplied by the
actual number of days in the twelve month period
commencing on the first day of the period for which such
calculation is made and divided by 360 or 365, as
applicable.
(b) Notwithstanding any other provision hereof, in the event
that any amount due hereunder (including, without
limitation, any interest payment) is not paid when due
(whether by acceleration or otherwise), the Borrower
shall and hereby agrees to pay interest on such unpaid
amount (including, without limitation, interest on
interest), if and to the fullest extent permitted by law,
from the date that such amount is due until the date that
such amount is paid in full (but excluding the date of
such payment if the payment is made before 1:00 P.M. at
the place of payment on the date of such payment), and
such interest shall accrue daily, be calculated and
compounded on the last Domestic Business Day of each
calendar month and be payable in the currency of the
relevant Loan or other amount on demand, after as well as
before maturity, default and judgment, at a rate per
annum that is equal to:
- 30 -
(i) if such amount relates to a Domestic Loan, the
interest rate applicable to Domestic Loans from
time to time;
(ii) if such amount relates to a USBR Loan, the interest
applicable to USBR Loans from time to time;
(iii) if such amount relates to a Euro-Dollar Loan
and the relevant time is,
(1) during the Interest Period of the Euro-Dollar
Loan, the interest rate applicable to such
Euro-Dollar Loan during such Interest Period;
and
(2) after the Interest Period of the Euro-Dollar
Loan, the interest rate applicable to a USBR
Loan; and
(iv) in all other cases, (A) for amounts in Canadian
Dollars the interest rate applicable to Domestic
Loans, and (B) for amounts in U.S. Dollars the
interest rate applicable to USBR Loans.
(c) All interest, fees and other amounts payable by the
Borrower hereunder shall accrue daily, be computed as
described herein, and be payable both before and after
demand, maturity, default and judgement.
(d) In no event shall any interest, fees or other amounts
payable hereunder exceed the maximum rate permitted by
law. In the event any such interest, fee or other amount
exceeds such maximum rate, such interest, fee or other
amount shall be reduced to the maximum rate recoverable
under law assuming the parties had agreed to such amount
by contract.
2.14 Letters of Credit
With respect to Letters of Credit:
(a) the Borrower may give the Agent notice requesting that a
Letter of Credit be issued by the Fronting Bank as an LC
Borrowing hereunder, such notice to be no later than
12:00 Noon at least three Domestic Business Days before
the date of issuance of the Letter of Credit, specifying:
(i) the date the Letter of Credit is to be issued,
which shall be a Domestic Business Day,
(ii) the face amount and currency of the Letter of
Credit,
(iii) the expiry date of the Letter of Credit, which
shall be on or before the Maturity Date, and
- 31 -
(iv) that the Borrower is contemporaneously delivering
to the Fronting Bank the completed application,
indemnity and other documents, together with the
required fronting fee, referred to in
Section 2.14(d) of this Agreement;
(b) in respect of each Letter of Credit issued by the
Fronting Bank hereunder, the Borrower shall pay to the
Fronting Bank a non-refundable fronting fee in the
currency in which the Letter of Credit is to be issued at
a rate per annum equal to 1/8 of 1%. Such fee shall be
payable in advance of the issue date for such Letter of
Credit calculated on the basis of the stated maximum
amount of such Letter of Credit for the period from and
including its date of issuance to and including the
expiry date thereof, on the basis of the actual number of
days in such period on the basis of a year of 365 days;
provided, however, if such fee would be less then Cdn.
$500 for a Letter of Credit in Canadian Dollars, or
U.S. $500 for a Letter of Credit in U.S. Dollars, then
the fronting fee payable by the Borrower pursuant to
this section shall be Cdn. $500 or U.S. $500, as
applicable. Such fee shall be in addition to the
issuance fee receivable by the Fronting Bank in its
capacity as a Bank under Section 2.14(c);
(c) in respect of each Letter of Credit the Borrower shall
also pay to the Agent for the account of the Banks a non-
refundable issuance fee in the currency in which the
Letter of Credit is to be issued, payable in full upon
the issuance of such Letter of Credit, at a rate per
annum equal to 1 3/4% calculated on the basis of the
stated maximum amount of such Letter of Credit for the
period from and including its date of issuance to and
including the expiry date thereof, on the basis of the
actual number of days in such period on the basis of a
year of 365 days;
(d) the Fronting Bank shall have no obligation to issue a
Letter of Credit until the Borrower has executed and
delivered to the Fronting Bank such ancillary documents,
including applications and indemnities, as the Fronting
Bank normally stipulates for like transactions, together
with the fronting fee contemplated by Section 2.14(b).
The Fronting Bank shall notify the Agent of the issuance
of the Letter of Credit forthwith upon such issuance;
(e) in the event that the Fronting Bank makes a payment to
any person pursuant to a Letter of Credit, then unless
the Borrower fully reimburses the Fronting Bank for such
payment on or before the date it is made, such payment
shall be deemed as and from the date of such payment to
be (i) a Domestic Loan hereunder to the Borrower by the
Banks rateably in proportion to their respective shares
of the Letter of Credit on the drawing thereof in the
amount of such payment if such payment was made in
Canadian Dollars, or (ii) a USBR Loan hereunder to the
Borrower by the Banks rateably in proportion to their
respective shares of the Letter of Credit on the drawing
thereof if such payment was made in U.S. Dollars, with
the proceeds of such Loan being applied against the
Borrower's obligations to reimburse the Fronting Bank for
the payment made by the Fronting Bank pursuant to the
Letter of Credit, and Section 2.14(h) shall apply. The
Agent shall forthwith notify the other Banks of such
deemed Loan,
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and the provisions hereof relating to such Loans (including
interest to be calculated thereon) shall apply thereto;
(f) at or before 12:00 Noon at least three Domestic Business
Days prior to the expiration of a Letter of Credit, the
Borrower may deliver a notice to the Agent selecting a
new expiry date for the Letter of Credit or part thereof
being extended. Such extension of a Letter of Credit may
only be effected by the Fronting Bank extending the
expiry date of an existing Letter of Credit, either by
the issuance of a new Letter of Credit containing the new
expiry date or by an amendment to the existing one, and
with or without a reduction in the amount payable
thereunder; provided that the issuance of a Letter of
Credit to a new party, an increase in the amount payable
under a Letter of Credit or any other change in its terms
may only be effected by way of a Borrowing by the
Borrower by delivering a Notice of Borrowing pursuant to
Section 2.14(a). Letter of Credit fees shall be payable
in respect of extended Letters of Credit pursuant to
Sections 2.14(b) and 2.14(c), computed in respect of the
period of the extension; provided that the minimum fee
set forth in Section 2.14(b) shall be Cdn. $100 or U.S.
$100, as applicable;
(g) Letters of Credit shall be issued by the Fronting Bank
for the full face amount requested in the applicable
notice and shall be made available to the Borrower at the
Applicable Lending Office of the Fronting Bank (or as the
Borrower may direct) at or before 2:00 P.M. on the issue
date thereof;
(h) (i) if the Fronting Bank makes payment under any Letter
of Credit and the Borrower does not fully reimburse
the Fronting Bank on or before the date of payment,
each Bank shall, on request by the Fronting Bank,
immediately pay to the Fronting Bank an amount
equal to such Bank's rateable share of the amount
paid by the Fronting Bank;
(ii) each Bank shall immediately on demand indemnify the
Fronting Bank to the extent of such Bank's rateable
share of any amount paid or liability incurred by
the Fronting Bank under each Letter of Credit
issued by it to the extent that the Borrower does
not fully reimburse the Fronting Bank therefor; and
(iii) for certainty, the obligations in this
Section 2.14(h) shall continue as obligations
of the persons who were Banks at the time each
such Letter of Credit was issued
notwithstanding that such Bank may assign its
rights and obligations hereunder, unless the
Fronting Bank specifically releases such Bank
from such obligations in writing;
(i) the Borrower hereby indemnifies the Fronting Bank, the
Agent and each of the Banks and holds them harmless from
and against all losses, costs, expenses, liabilities,
claims, causes of action or damages of any and every kind
incurred by them or any of them in respect of or as a
consequence of the issuance of a Letter
- 33 -
of Credit hereunder or any payments made by the Fronting Bank
pursuant thereto, notwithstanding that such Bank may assign its
rights and obligations hereunder.
ARTICLE 3
CONDITIONS AND SECURITY
3.1 Effectiveness
This Amended Agreement shall become effective as of the
Effective Date upon the satisfaction of the following conditions:
(a) receipt by the Agent of counterparts hereof signed by
each of the parties hereto (or, in the case of any party
as to which an executed counterpart shall not have been
received, receipt by the Agent in form satisfactory to it
of telegraphic, telex or other written confirmation from
such party of execution of a counterpart hereof by such
party);
(b) receipt by the Agent for the account of each Bank of a
duly executed Note dated on or before the Effective Date
complying with the provisions of Section 2.3;
(c) receipt by the Agent of an opinion of U.S. counsel for
the Borrower, substantially in the form of Exhibit B
hereto and covering such additional matters relating to
the transactions contemplated hereby as the Required
Banks may reasonably request;
(d) receipt by the Agent of an opinion of Burnet, ▇▇▇▇▇▇▇▇▇
& ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ counsel for the Borrower, substantially
in the form of Exhibit C hereto and covering such
additional matters relating to the transactions
contemplated hereby as the Required Banks may reasonably
request;
(e) receipt by the Agent of an opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇,
counsel for the Agent, substantially in the form of
Exhibit D hereto and covering such additional matters
relating to the transactions contemplated hereby as the
Required Banks may reasonably request; and
(f) receipt by the Agent of all documents or opinions it may
reasonably request relating to the existence of the
Borrower, the corporate authority for and the validity of
the Financing Documents, the Borrower's title to the
Mortgaged Properties, and any other matters relevant
hereto, including any amendments to the Existing Security
Documents, all in form and substance satisfactory to the
Agent.
Upon this Amended Agreement becoming effective, the
"Note" delivered to each Bank under the Original Credit Agreement
shall be replaced and the Notes delivered under this Amended
Agreement shall be given in substitution therefor; each Bank shall
deliver to the Agent
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the "Note" delivered to it under the Original Credit Agreement, which the
Agent shall ▇▇▇▇ "Renewed" and shall hold as additional evidence of the
indebtedness of the Borrower hereunder.
3.2 Amendment and Restatement
On and after the Effective Date:
(a) the Original Credit Agreement shall be deemed to be
amended and restated in the form of this Amended
Agreement;
(b) the parties hereto shall have no further rights or
obligations to each other under the Original Credit
Agreement as the same existed immediately prior to the
said amendment and restatement except to the extent the
same are continued hereunder;
(c) all Loans and other Outstandings (as those terms are
defined in the Original Credit Agreement) under the
Original Credit Agreement immediately prior to the
Effective Date shall continue to be outstanding under
this Agreement and shall be deemed to be Loans and other
Outstandings owing by the Borrower to the Banks under
this Agreement;
(d) the Existing Security Documents and the Subsidiary
Security Documents are and shall continue to be
outstanding and are and shall continue to constitute
security for all Outstandings under this Agreement, and
all references contained therein to the Original Credit
Agreement shall be deemed to be references to this
Agreement;
(e) the Consent and Waiver shall continue to exist as a
consent and waiver by the Banks with respect to the
transactions described therein in the manner and scope
set forth therein, and the Borrower is and continues to
be bound by all its covenants and agreements contained in
the Consent and Waiver; and
(f) that certain letter of credit no. PBCTGTY2732 issued by
Paribas at the request of the Borrower prior to the date
hereof, in favour of TransCanada Pipe Lines Limited, in
a face amount of Cdn. $118,484 and expiring October 31,
1996, shall be deemed to be an LC Borrowing hereunder
issued by Paribas as the Fronting Bank in the face amount
of such letter of credit; Paribas, the Fronting Bank and
the Banks shall reach a mutually acceptable sharing of
the issuance fee paid by the Borrower in respect of such
letter of credit, and the Borrower shall be deemed to
have complied with its obligations under sections 2.14(b)
and 2.14(c).
Notwithstanding the foregoing or any other term hereof,
all of the covenants, representations and warranties on the part of
the Borrower under the Original Credit Agreement and all of the
Banks' claims and causes of action arising in connection therewith,
in respect of all matters, events, circumstances and obligations
arising or existing prior to the Effective Date
- 35 -
shall continue, survive and shall not be merged in the execution of this
document or any other Financing Documents or any Borrowings hereunder.
3.3 Borrowings
The obligation of any Bank to make a Loan on the occasion
of any Borrowing is subject to the satisfaction of the following
conditions:
(a) such Borrowing shall occur during the Revolving Credit
Period and the Commitments shall not have terminated;
(b) receipt by the Agent of a Notice of Borrowing as required
by Section 2.2(a) or 2.14(a);
(c) the fact that, immediately after such Borrowing, the
Outstanding Principal will not exceed the Loan Limit, and
in the case of an LC Borrowing, immediately after such
Borrowing, the Canadian Equivalent of the aggregate face
amount of all outstanding Letters of Credit will not
exceed Cdn. $1,000,000;
(d) the fact that with respect to each Bank, immediately
after such Borrowing, the Outstanding Principal owing to
such Bank will not exceed its Commitment;
(e) the fact that, immediately before and after such
Borrowing, no Default shall have occurred and be
continuing; and
(f) the fact that the representations and warranties of the
Borrower contained in the Financing Documents shall be
true on and as of the date of such Borrowing.
Each Borrowing hereunder shall be deemed to be a
representation and warranty by the Borrower on the date of such
Borrowing as to the facts specified in clauses (c), (d), (e) and
(f) of this Section.
3.4 General Security Provisions
(a) Each of the Security Documents has been or shall be
registered or perfected in all such jurisdictions as may
be required, in the reasonable opinion of the Agent or
its counsel, to preserve and protect the priority of the
Security Documents.
(b) Forthwith upon request of the Agent or any Bank, the
Borrower shall promptly provide all such documents and
information and perform all such acts as the Agent or any
Bank or its counsel may reasonably request in order to
establish or maintain the validity, perfection or
priority of the Security Documents including the creation
of further fixed charge security over any Mortgaged
Properties hereafter acquired or not specifically
described in the Security Documents or misdescribed in
the Security Documents.
- 36 -
(c) Each of the Security Documents shall for all purposes be
treated as a separate and continuing collateral security
for all Outstandings hereunder and shall be deemed to
have been given in addition to and not in place of any
other Security Document or any other Liens now or
hereafter acquired by the Agent or any Bank.
(d) Subject to Article 7, the Agent may grant extensions of
time or other indulgences, acquire and release the
Security Documents, accept compromises, grant releases
and discharges and otherwise deal with the Borrower and
other Persons and with the Security Documents as the
Agent may see fit, without prejudice to any other rights
or recourse the Agent may have under this Agreement or
any of the Security Documents against the Borrower.
(e) The Security Documents shall be effective, and the
undertakings as to the Security Documents herein or in
any document hereunder shall be continuing, whether the
monies hereby or thereby secured or any part thereof
shall be advanced before or after or at the same time as
the creation of any such Security Documents or before or
after or upon the date of execution of any amendments to
or restatements of this Agreement, and shall not be
affected by any payments or by any indebtedness
fluctuating from time to time.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
The Borrower hereby represents and warrants that:
4.1 Corporate Existence and Power
The Borrower is a corporation duly incorporated, validly
existing and in good standing under the laws of its jurisdiction of
incorporation, and is duly registered to carry on business in each
jurisdiction in which it owns property or carries on business, and
the Borrower has all corporate powers and all material governmental
licenses, authorizations, consents and approvals required to carry
on its business as now conducted.
4.2 Corporate and Governmental Authorization; No
Contravention
The execution, delivery and performance by the Borrower and its
Subsidiaries of this Agreement, the Security Documents and the Notes to
which each of them is a party are within the Borrower's and its
Subsidiaries' powers (corporate or otherwise), have been duly authorized by
all necessary action (corporate or otherwise), require no action by or in
respect of, or filing with, any governmental body, agency or official
(except such filings as may be necessary to perfect the Liens of the
Security Documents) and do not contravene, or constitute a default under,
any provision of applicable law or regulation or of the certificate of
incorporation or by-laws or other constating documents of the Borrower or
any Subsidiary or of any agreement, judgment, injunction, order, decree or
other instrument binding upon it or any
- 37 -
Subsidiary, or result in the creation or imposition of any Lien on
any asset of the Borrower or any of its Subsidiaries (other than
the Liens created by the Security Documents).
4.3 Binding Effect
This Agreement, the Security Documents and the Notes
constitute or, when executed and delivered in accordance with this
Agreement will constitute, valid and binding obligations of each of
the Borrower and its Subsidiaries, as applicable, in each case
enforceable against it in accordance with their respective terms
except (i) as the enforceability thereof may be limited by
bankruptcy, insolvency or similar laws affecting creditors' rights
generally, (ii) as rights of acceleration and the availability of
equitable remedies may be limited by equitable principles of
general applicability, (iii) that certain of the remedial
provisions of the Security Documents may be limited by applicable
law, although such limitations do not in the opinion of the
Borrower make the remedies provided for therein (taken as a whole)
inadequate for the practical realization of the benefits intended
to be afforded thereby.
4.4 Financial Information
(a) The consolidated financial statements of the Borrower and
its Consolidated Subsidiaries as of December 31, 1994
which shall include the related consolidated statements
of income, shareholders' equity and cash flows for the
fiscal year then ended, reported on by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ &
Co. and set forth in the Borrower's 1994 Form 10-K, a
copy of which has been delivered to each of the Banks,
fairly present, in conformity with generally accepted
accounting principles, the consolidated financial
position of the Borrower and its Consolidated
Subsidiaries as of such date and their consolidated
results of operations and cash flows for such fiscal
year.
(b) Since December 31, 1994 there has been no material
adverse change in the business, financial position,
results of operations or prospects of the Borrower and
its Consolidated Subsidiaries, considered as a whole.
4.5 Litigation
There is no action, suit or proceeding pending against,
or to the knowledge of the Borrower threatened against or
affecting, the Borrower or any of its Subsidiaries before any court
or arbitrator or any governmental body, agency or official in which
there is a reasonable possibility of an adverse decision which
could materially adversely affect the business, consolidated
financial position or consolidated results of operations of the
Borrower and its Consolidated Subsidiaries or which in any manner
draws into question the validity of any of the Financing Documents.
4.6 Compliance with ERISA
Each member of the ERISA Group has fulfilled its
obligations under the minimum funding standards of ERISA and the
U.S. Internal Revenue Code with respect to each Plan and
- 38 -
is in compliance in all material respects with the presently applicable
provisions of ERISA and the U.S. Internal Revenue Code with respect to each
Plan. No member of the ERISA Group has (i) sought a waiver of the minimum
funding standard under Section 412 of the U.S. Internal Revenue Code in
respect of any Plan, (ii) failed to make any contribution or payment to any
Plan or Multiemployer Plan or in respect of any Benefit Arrangement, or
made any amendment to any Plan or Benefit Arrangement, which has resulted
or could result in the imposition of a Lien or the posting of a bond or
other security under ERISA or the U.S. Internal Revenue Code or (iii)
incurred any liability under Title IV of ERISA other than a liability to
the PBGC for premiums under Section 4007 of ERISA.
4.7 Environmental Matters
In the ordinary course of its business, the Borrower
conducts an ongoing review of the effect of Environmental Laws on
the business, operations and properties of the Borrower and its
Subsidiaries, in the course of which it identifies and evaluates
associated liabilities and costs (including, without limitation,
any capital or operating expenditures required for clean-up or
closure of properties presently or previously owned, any capital or
operating expenditures required to achieve or maintain compliance
with environmental protection standards imposed by law or as a
condition of any license, permit or contract, any related
constraints on operating activities, including any periodic or
permanent shutdown of any facility or reduction in the level of or
change in the nature of operations conducted thereat, any costs or
liabilities in connection with off-site disposal of wastes or
Hazardous Substances, and any actual or potential liabilities to
third parties, including employees, and any related costs and
expenses). On the basis of this review, the Borrower has
reasonably concluded that such associated liabilities and costs,
including the costs of compliance with Environmental Laws, are
unlikely to have a material adverse effect on the business,
financial condition, results of operations or prospects of the
Borrower and its Consolidated Subsidiaries, considered as a whole.
4.8 Taxes
The Borrower and its Subsidiaries have filed all Canadian
federal and provincial, U.S. federal and state and all other income
tax returns and all other material tax returns which are required
to be filed by them and have paid all taxes due pursuant to such
returns or pursuant to any assessment received by the Borrower or
any Subsidiary. The charges, accruals and reserves on the books of
the Borrower and its Subsidiaries in respect of taxes or other
governmental charges are, in the opinion of the Borrower, adequate.
4.9 Subsidiaries
Each of the Borrower's Subsidiaries is a corporation or
other entity duly incorporated or formed, as the case may be,
validly existing and in good standing under the laws of its
jurisdiction of incorporation or formation, and has all corporate
or other powers and all material governmental licenses,
authorizations, consents and approvals required to carry on its
business as now conducted.
- 39 -
4.10 Regulation
The Borrower is not subject to regulation under the U.S.
Public Utility Holding Company Act of 1935, as amended, the U.S.
Investment Company Act of 1940, as amended, or any other federal,
state or provincial law or regulation that limits the incurrence by
the Borrower or any Subsidiary of Debt, including, without
limitation, laws relating to common or contract carriers or the
sale of electricity, gas, steam or other public utility services.
4.11 Full Disclosure
All information heretofore furnished by the Borrower to
the Agent or any Bank for purposes of or in connection with this
Agreement or any transaction contemplated hereby is, and all such
information hereafter furnished by the Borrower to the Agent or any
Bank will be, true and accurate in all material respects on the
date as of which such information is stated or certified. The
Borrower has disclosed to the Banks in writing any and all facts
which materially and adversely affect or may affect (to the extent
the Borrower can now reasonably foresee), the business, operations
or financial condition of the Borrower and its Consolidated
Subsidiaries, taken as a whole, or the ability of the Borrower to
perform its obligations under any of the Financing Documents.
4.12 Mortgaged Properties
The Borrower has good and marketable title to all
Mortgaged Properties subject to no prior or equal Liens except
Liens permitted under Section 5.10.
4.13 Liens of the Security Documents
The Security Documents create valid Liens against the
Mortgaged Properties and other property and assets purported to be
subjected thereto securing the payment of the obligations of the
Borrower under the Financing Documents and all other obligations
purported to be secured thereby subject to no prior or equal Liens
except Liens permitted under Section 5.10.
4.14 Reserve Data and Projections
The statements and conclusions as to oil and gas reserves
and forecast results included in the Initial Engineer's Reports
are, and all such information included in any future Engineer's
Report will be, based upon the best information available to the
Borrower at the time such statements were or are made and take or
will take into consideration all information which, in the
reasonable judgment of the Borrower, was or is believed to be
material at the time (determined in accordance with standards
customarily applicable to professionals in the oil and gas
industry), it being understood that such statements and conclusions
are necessarily based upon professional opinions, estimates and
projections, and the Borrower does not warrant that such opinions,
estimates and projections will ultimately prove to have been
accurate.
- 40 -
4.15 Production Penalties
Except as considered in the Engineer's Report, none of
the ▇▇▇▇▇ on the Engineered Properties are subject to a production
penalty of any nature, and it has received no notice of, and is not
otherwise aware of, any impending change in statutorily imposed or
sanctioned production allowables currently applicable to any of the
▇▇▇▇▇, and (except as advised by the Borrower with respect to the
Engineer's Report prior to the Banks' determination of the
Borrowing Base with reference thereto and other than pursuant to
the Prepaid Gas Contract) neither it nor any of its Subsidiaries
nor any party acting on their or its behalf is obligated to deliver
petroleum or natural gas allocable to the Engineered Properties to
any party having a value in excess of U.S. $500,000 in aggregate
without in due course thereafter receiving and being entitled to
retain full payment at current market prices therefore.
4.16 Conversion
Except as considered in the Engineer's Report, none of
the interests of the Borrower in the Engineered Properties are
subject to reduction by virtue of the conversion or other
alteration of any third party interest relating thereto.
4.17 Operations
The Mortgaged Property has been and will at all times be
operated in accordance with good oil and gas industry practice and
in accordance with all applicable laws and regulations, and in
accordance with the terms and conditions of all material agreements
relating thereto; all ▇▇▇▇▇ on the lands which should, in
accordance with good oil and gas industry practice or applicable
laws, have been abandoned, have been properly plugged and abandoned
in accordance with good industry practices and all applicable laws.
ARTICLE 5
COVENANTS
The Borrower hereby covenants and agrees:
5.1 Information
The Borrower will deliver to each of the Banks:
(a) as soon as available and in any event within 90 days
after the end of each fiscal year, consolidated financial
statements of the Borrower and its Consolidated
Subsidiaries as of the end of such fiscal year prepared
in accordance with generally accepted accounting
principles which shall include the related consolidated
statements of income, shareholders' equity and cash flows
for such fiscal year, setting forth in each case in
comparative form the figures for the previous fiscal
year, such consolidated financial statements of the
Borrower shall be audited by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co. or
other independent public accountants of
- 41 -
nationally recognized standing and such consolidated financial
statements of the Borrower shall be certified as to fairness of
presentation, generally accepted accounting principles and
consistency by the chief financial officer or the chief
accounting officer of the Borrower;
(b) as soon as available and in any event within 45 days
after the end of each of the first three quarters of each
fiscal year, consolidated financial statements of the
Borrower and its Consolidated Subsidiaries as of the end
of such quarter prepared in accordance with generally
accepted accounting principles which shall include the
related consolidated statements of income and cash flows
for such quarter and for the portion of the fiscal year
ended at the end of such quarter, setting forth in each
case in comparative form the figures for the
corresponding quarter and the corresponding portion of
the previous fiscal year, all certified (subject to
normal year-end adjustments) as to fairness of
presentation, generally accepted accounting principles
and consistency by the chief financial officer or the
chief accounting officer of the Borrower;
(c) simultaneously with the delivery of each set of financial
statements referred to in Sections 5.1(a) and (b) above,
a certificate of the chief financial officer or the chief
accounting officer of the Borrower (i) setting forth in
reasonable detail the calculations required to establish
whether the Borrower was in compliance with the
requirements of Sections 5.13, 5.17, 5.18 and 5.19 on the
date of such financial statements, and (ii) stating
whether any Default exists on the date of such
certificate and, if any Default then exists, setting
forth the details thereof and the action which it is
taking or proposes to take with respect thereto;
(d) simultaneously with the delivery of the Borrower's
financial statements referred to in Section 5.1(a) above,
a statement of the firm of independent public accountants
which reported on such statements (i) as to whether
anything has come to their attention to cause them to
believe that any Default existed on the date of such
statements and (ii) confirming the calculations set forth
in the officer's certificate delivered simultaneously
therewith pursuant to clause (c) above, except with
respect to Section 5.17;
(e) within five days after any officer of the Borrower
obtains knowledge of any Default, if such Default is then
continuing, a certificate of the chief financial officer
or the chief accounting officer of the Borrower setting
forth the details thereof and the action which it is
taking or proposes to take with respect thereto;
(f) promptly upon the mailing thereof to the shareholders of
the Borrower generally, copies of all financial
statements, reports and proxy statements so mailed;
(g) promptly upon filing or receipt thereof, each regular or
periodic report and any registration statement,
prospectus or written communication (other than
transmittal letters) in respect thereof filed or
received by the Borrower with or from any
- 42 -
securities exchange or the Securities and Exchange Commission
(United States of America) or any successor agency;
(h) if and when any member of the ERISA Group (i) gives or is
required to give notice to the PBGC of any "reportable
event" (as defined in Section 4043 of ERISA) with respect
to any Plan which might constitute grounds for a
termination of such Plan under Title IV of ERISA, or
knows that the plan administrator of any Plan has given
or is required to give notice of any such reportable
event, a copy of the notice of such reportable event
given or required to be given to the PBGC; (ii) receives
notice of complete or partial withdrawal liability under
Title IV of ERISA or notice that any Multiemployer Plan
is in reorganization, is insolvent or has been
terminated, a copy of such notice; (iii) receives notice
from the PBGC under Title IV of ERISA of an intent to
terminate, impose liability (other than for premiums
under Section 4007 of ERISA) in respect of, or appoint a
trustee to administer any Plan, a copy of such notice;
(iv) applies for a waiver of the minimum funding standard
under Section 412 of the U.S. Internal Revenue Code, a
copy of such application; (v) gives notice of intent to
terminate any Plan under Section 4041(c) of ERISA, a copy
of such notice and other information filed with the PBGC;
(vi) gives notice of withdrawal from any Plan pursuant to
Section 4063 of ERISA, a copy of such notice; or
(vii) fails to make any payment or contribution to any
Plan or Multiemployer Plan or in respect of any Benefit
Arrangement or makes any amendment to any Plan or Benefit
Arrangement which has resulted or could result in the
imposition of a Lien or the posting of a bond or other
security, a certificate of the chief financial officer or
the chief accounting officer of the Borrower setting
forth details as to such occurrence and action, if any,
which Borrower or applicable member of the ERISA Group is
required or proposes to take;
(i) simultaneously with each delivery of an Engineer's Report
pursuant to Section 5.14(a), but no more than once a
year, a forecast of general and administrative expenses
and FHI EBITDA and such other information as the Agent
may require in order to confirm the Borrower's
calculation of Projected Cash Flow Available for Fixed
Charges pursuant to Section 5.17(c); and
(j) from time to time such additional information regarding
the financial position or business of the Borrower and
its Subsidiaries as the Agent, at the request of any
Bank, may reasonably request.
5.2 Payment of Obligations
The Borrower will pay and discharge, and will cause each
Subsidiary to pay and discharge, at or before maturity, all their
respective material obligations and liabilities, including, without
limitation, tax liabilities, except where the same may be contested
in good faith by appropriate proceedings, and will maintain, and
will cause each Subsidiary to maintain, in accordance with
generally accepted accounting principles, appropriate reserves for
the accrual of any of the same.
- 43 -
5.3 Maintenance and Development of Borrower Engineered
Properties and Other Property; Insurance
(a) The Borrower will, and will cause each Subsidiary to,
maintain the Engineered Properties operated by such
Person and related facilities and equipment in good
repair and condition, and from time to time make all
necessary and proper repairs, replacements and renewals;
and operate the same in accordance with good oil field
practice; and take all necessary and advisable action to
maintain, protect and defend all the rights, titles and
interests of the Borrower or such Subsidiary to the
Engineered Properties.
(b) The Borrower will, and will cause each Subsidiary to,
take all actions available to such Person with respect to
any of the Engineered Properties which are operated by
operators other than the Borrower or any Subsidiary,
under applicable operating agreements or arrangements or
otherwise, which are reasonably necessary to cause such
operators to operate prudently in accordance with good
oil field practice and to perform any such undertakings
required to be performed by such operators; and perform
its obligations (including, without limitation, payment
of its share of all operating expenses) with respect
thereto.
(c) The Borrower will keep, and will cause each Subsidiary to
keep, all property otherwise not subject to
Section 5.3(a) useful and necessary in its business in
good working order and condition, ordinary wear and tear
excepted.
(d) The Borrower will, and will cause each of its
Subsidiaries to, use all necessary and reasonable efforts
to cause each Engineered Property to be developed in such
manner, and will devote such funds to such purpose, as
would a reasonably prudent Person similarly situated and
(subject to the foregoing) on a basis consistent with the
most recent Engineer's Report covering such Engineered
Property.
(e) The Borrower will, and will cause each of its
Subsidiaries to, maintain (either in the name of the
Borrower or in such Subsidiary's own name) with
financially sound and responsible insurance companies,
insurance on all their respective properties in at least
such amounts and against at least such risks (and with
such risk retention) as are usually insured against by
companies of established repute engaged in the same or a
similar business in the jurisdiction in which the
Borrower or any Subsidiary operates, including property
insurance, public liability insurance for bodily injury
and property damage, well-control coverage, automobile
liability insurance, worker's compensation coverage as
required by law and insurance against loss or damage by
employee dishonesty, theft, fire, lightning, hail,
windstorm, explosion, hazards, casualties and other
contingencies; and will furnish to the Banks, upon
request from the Agent, information presented in
reasonable detail as to the insurance so carried.
- 44 -
5.4 Conduct of Business and Maintenance of Existence
The Borrower will continue, and will cause each
Subsidiary to continue, to engage in business of the same general
type as now conducted by the Borrower and its Subsidiaries, and
will preserve, renew and keep in full force and effect, and will
cause each Subsidiary to preserve, renew and keep in full force and
effect their respective corporate existence and their respective
rights, privileges and franchises necessary or desirable in the
normal conduct of business; provided that nothing in this
Section 5.4 shall prohibit (i) the merger of a Subsidiary with or
into another Person (other than the Borrower) if the corporation
surviving such consolidation or merger is a Subsidiary and if, in
each case, after giving effect thereto, no Default shall have
occurred and be continuing or (ii) the termination of the corporate
existence of any Subsidiary if the Borrower in good faith
determines that such termination is in the best interest of the
Borrower and is not materially disadvantageous to the Banks.
5.5 Compliance with Laws
The Borrower will comply, and cause each Subsidiary to
comply, in all material respects with all applicable laws,
ordinances, rules, regulations, and requirements of governmental
authorities (including, without limitation, Environmental Laws and
ERISA and the rules and regulations thereunder) except where the
necessity of compliance therewith is contested in good faith by
appropriate proceedings.
5.6 Inspection of Property, Books and Records
The Borrower will keep, and will cause each Subsidiary to
keep, proper books of record and account in which full, true and
correct entries shall be made of all dealings and transactions in
relation to its business and activities; and will permit, and will
cause each Subsidiary to permit, representatives of any Bank at
such Bank's expense to visit and inspect any of their respective
properties, to examine and make abstracts from any of their
respective books and records and to discuss their respective
affairs, finances and accounts with their respective officers,
employees and independent public accountants, all at such
reasonable times and as often as may reasonably be desired.
5.7 Debt
Neither the Borrower nor any Subsidiary will, after the
date hereof, create, incur or assume any Debt other than (i) under
the Financing Documents, (ii) in the case of FHI and FHI
Subsidiaries, Debt not to exceed U.S. $50,000,000 under the FHI
Credit Agreement, (iii) in the case of the Borrower, loans or
advances by any Person (not being a Subsidiary) to it for working
capital purposes in an aggregate amount (or the U.S. Equivalent
thereof) not exceeding U.S. $2,500,000 at any one time, (iv) loans
or advances by the Borrower to a Subsidiary or by a Subsidiary to
the Borrower, (v) in the case of the Borrower, not to exceed
U.S. $100,000,000 under the Senior Notes, (vi) in the case of the
Borrower, not to exceed U.S. $46,000,000 under the Convertible
Debentures, and (vii) in the case of the Borrower, not to exceed
U.S. $7,500,000 under the Subordinated Debentures.
- 45 -
5.8 Restricted Payments
Neither the Borrower nor any Subsidiary will declare or
make any Restricted Payment other than, in the case of the
Borrower, any interest or sinking fund payment on or in respect of
the Convertible Debentures.
5.9 Investments
Neither the Borrower nor any Consolidated Subsidiary will
make or acquire any Investment in any Person other than:
(a) present and future Investments in existing Subsidiaries
on the date hereof; or
(b) Temporary Cash Investments.
5.10 Negative Pledge
Neither the Borrower nor any Subsidiary will create,
assume or suffer to exist any Lien on the Mortgaged Properties or
any other property and assets now owned or hereafter acquired by
it, except:
(a) any Lien arising pursuant to the Security Documents;
(b) any Lien on any asset of FHI or any FHI Subsidiary
securing Debt of FHI or an FHI Subsidiary;
(c) Liens for taxes not yet due or the validity of which is
being contested in good faith by the Borrower; provided
that if so requested by the Agent with the consent of the
Required Banks, there shall have been deposited with the
Agent, a court or the assessing authority security
satisfactory to the Agent and the Required Banks for the
payment of such amount;
(d) Liens arising in the ordinary course of its business
which (i) do not secure Debt or Derivatives Obligations,
(ii) do not secure any payment obligation in an amount
(or the U.S. Equivalent thereof) exceeding
U.S. $1,000,000 and (iii) do not in the aggregate
materially detract from the value of its assets or
materially impair the use thereof in the operation of its
business; and
(e) Liens on cash and cash equivalents securing Derivatives
Obligations, provided that the aggregate amount (or the
U.S. Equivalent thereof) of cash and cash equivalents
subject to such Liens may at no time exceed U.S. $3,000,000.
- 46 -
5.11 Consolidations, Mergers and Sales of Assets
The Borrower will not (i) consolidate or merge with or
into any other Person or (ii) sell, lease or otherwise transfer,
directly or indirectly, all or any substantial part of the assets
of the Borrower and its Subsidiaries, taken as a whole, to any
other Person.
5.12 Use of Proceeds
The proceeds of the Loans made under this Agreement will
be used by the Borrower for its general corporate purposes. None
of such proceeds will be used, directly or indirectly, for the
purpose, whether immediate, incidental or ultimate, of buying or
carrying any "margin stock" within the meaning of Regulation X.
5.13 Value of Mortgaged Properties
If the aggregate Value of the Mortgaged Properties at any
time is less than 80% of the aggregate Value of the Engineered
Properties, the Borrower shall forthwith notify the Agent. On or
before the date falling 30 days after the date on which the
Borrower receives from the Independent Petroleum Engineers the
Engineer's Report indicating the aggregate Value of the Mortgaged
Properties has fallen below 80% of the aggregate Value of the
Engineered Properties, the Borrower shall execute such further
security, mortgages or charges as are necessary to ensure that the
aggregate Value of the Mortgaged Properties at all times is greater
than or equal to 80% of the aggregate Value of the Engineered
Properties.
5.14 Engineer's Reports
(a) Within 60 days after the end of each fiscal year of the
Borrower, the Borrower shall deliver to the Agent and
each of the Banks an Engineer's Report for all Engineered
Properties (separately identifying each Engineered
Property) prepared by the Independent Petroleum
Engineers, and setting forth, with respect to each
property covered, as of the last date of such fiscal
year:
(i) the projected gross and net volumes of Hydrocarbons
reasonably expected to be produced from such
Engineered Property, by years, for each succeeding
year during the expected period of production from
such Engineered Property,
(ii) the Future Net Revenue and the Discounted Present
Value of Future Net Revenue from such Engineered
Property, by years, for each succeeding year during
the expected period of production from such
Engineered Property, and
(iii) the aggregate amounts covered in items (i) and
(ii) above for all Engineered Properties,
- 47 -
in each case showing in reasonable detail all
computations in connection therewith.
(b) At least 30 days before the end of each fiscal year of
the Borrower, the Agent will specify to the Borrower the
assumptions to be made by the Independent Petroleum
Engineers in preparing the Engineer's Report with respect
to such fiscal year. Each such Engineer's Report should
be based upon (i) such specified assumptions, and
(ii) such other assumptions, not inconsistent with the
assumptions specified by the Agent, proposed by the
Borrower to the Banks within 30 days before the end of
such fiscal year and not disapproved by the Required
Banks within 15 days after the end of such fiscal year.
(c) As promptly as practicable, and in any event, within 90
days, after a request therefor by Banks having 45% or
more of the aggregate amount of all Commitments or (if
the Commitments shall have terminated) having an interest
in 45% or more of the aggregate amount of all outstanding
Loans (which request shall be made not more than twice
during any fiscal year), the Borrower shall deliver to
the Agent and each of the Banks a Engineer's Report for
all Engineered Properties, prepared by the Independent
Petroleum Engineers, and setting forth, with respect to
the properties covered, as of the last day preceding such
request, the information described in items (i) through
(iii) of Section 5.14(a) above. At the time of any
request by the Required Banks under this Section 5.14(c),
the Agent will specify to the Borrower the assumptions to
be made by the Independent Petroleum Engineers in
preparing such Engineer's Report.
5.15 Disposition of Borrower Engineered Properties
(a) The Borrower will not sell, lease or otherwise transfer
any of the Engineered Properties unless (i) such
transaction is on an arm's length basis and for fair
market value, (ii) such transaction is permitted under
Section 5.11, (iii) after such transaction, no Default
shall have occurred and be continuing and (iv) such
transaction and any resulting reduction in the Borrowing
Base shall neither cause a Borrowing Base Excession to
exist nor increase the amount of an existing Borrowing
Base Excession.
(b) If the Borrower shall deliver to the Agent a certificate
certifying that any Mortgaged Property has been sold or
transferred in accordance with Section 5.15(a), the Agent
shall execute and deliver all instruments reasonably
requested by the Borrower to effect and record a release
of such Mortgaged Property; provided that no such release
shall affect the Lien of any Security Document on any
other Mortgaged Property or the rights and obligations of
the parties with respect thereto.
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5.16 Transactions with Affiliates
The Borrower will not, and will not permit any Subsidiary
to, directly or indirectly, pay any funds to or for the account of,
make any investment (whether by acquisition of stock or
indebtedness, by loan, advance, transfer of property, guarantee or
other agreement to pay, purchase or service, directly or
indirectly, any Debt, or otherwise) in, lease, sell, transfer or
otherwise dispose of any assets, tangible or intangible, to, or
participate in, or effect any transaction in connection with any
joint enterprise or other joint arrangement with, any Affiliate;
provided, however, that the foregoing provisions of this Section
shall not prohibit (a) the Borrower from declaring or paying any
lawful dividend so long as, after giving effect thereto, no Default
shall have occurred and be continuing, (b) the Borrower or any
Subsidiary from making sales to or purchases from any Affiliate
and, in connection therewith, extending credit or making payments,
or from making payments for services rendered by any Affiliate, if
such sales or purchases are made or such services are rendered in
the ordinary course of business and on terms and conditions at
least as favourable to the Borrower or such Subsidiary as the terms
and conditions which would apply in a similar transaction with a
Person not an Affiliate, (c) the Borrower or any Subsidiary from
making payments of principal, interest and premium on any Debt of
the Borrower or any Subsidiary held by an Affiliate if the terms of
such Debt are substantially as favourable to the Borrower or such
Subsidiary as the terms which could have been obtained at the time
of the creation of such Debt from a lender which was not an
Affiliate, (d) the Borrower or any Subsidiary from participating
in, or effecting any transaction in connection with, any joint
enterprise or other joint arrangement with any Affiliate if the
Borrower or such Subsidiary participates in the ordinary course of
its business and on a basis no less advantageous than the basis on
which such Affiliate participates and (e) any creation, incurrence
of assumption of Debt permitted under subsection (vi) of
Section 5.7.
5.17 Minimum Fixed Charge Coverage
(a) As at the end of each fiscal quarter during each fiscal
year of the Borrower, the Projected Cash Flow Available
for Fixed Charges for such current fiscal year and the
next succeeding fiscal year will be greater than 150% of
the related Fixed Charges for each such fiscal year.
(b) Within 15 days after delivery of a notice from the Agent
pursuant to Section 5.17(c), and simultaneously with the
delivery of each set of financial statements referred to
in Section 5.1(b), the Borrower will deliver to each of
the Banks a certificate of the chief financial officer or
the chief accounting officer of the Borrower setting
forth in reasonable detail the calculations required to
establish whether the Borrower was in compliance with the
requirements of Section 5.17(a) at the date of delivery
of such certificate. Such certificate shall set forth a
calculation of Fixed Charges for the then current fiscal
year and the next succeeding fiscal year determined as of
the last day of the then most recent ended fiscal year of
the Borrower, in the case of the first such certificate
delivered during any fiscal year, and as of the then most
recently ended fiscal quarter, in the case of each
subsequent certificate delivered during any fiscal year,
and shall be based upon the Projected Cash Flow Available
for Fixed
- 49 -
Charges as determined pursuant to Section 5.17(c), adjusted in
the case of such subsequently delivered certificates to reflect
FHI EBITDA for the eight consecutive fiscal quarters then most
recently ended and, if either the Borrower or the Agent so elects
by notice to the other, to reflect changes in currency exchange
rates since the end of the most recently ended fiscal year.
(c) On or as promptly as practicable after each date on which
the Agent shall receive an Engineer's Report pursuant to
Section 5.14(a) and the information called for by
Section 5.1(h), the Borrower shall determine the
Projected Cash Flow Available for Fixed Charges for the
then current fiscal year and the next succeeding fiscal
year and notify the Agent and the Banks of its
determination. The determination by the Borrower of the
Projected Cash Flow Available for Fixed Charges for each
fiscal year shall be based on the information relating to
the Engineered Properties set forth in the applicable
Engineer's Report, but subject to the factors referred to
in Section 2.1(b).
(d) In determining Fixed Charges and Projected Cash Flow
Available for Fixed Charges, all currencies other than
U.S. Dollars shall be converted into U.S. Dollars at a
rate of exchange equal to the average Spot Rate for the
calendar month ending on the date as of which such
determination is being made. Therefore, in accordance
with Section 5.17(b), the applicable currency conversion
rate for purposes of determining Fixed Charges will be
recalculated quarterly while the applicable currency
conversion rate for purposes of determining Projected
Cash Flow Available for Fixed Charges will be
recalculated annually and, if the Borrower shall so
elect, as of any quarter.
5.18 Minimum Consolidated Net Worth
Consolidated Tangible Net Worth will at no time be less
than U.S. $30,000,000.
5.19 Interest Coverage Ratio
Consolidated EBITDA shall:
(a) for any four fiscal quarters within each period of five
consecutive fiscal quarters ending on December 31, 1995
and March 31, 1996, be greater than or equal to 145% of
the consolidated interest expense of the Borrower and its
Consolidated Subsidiaries for such four fiscal quarters;
and
(b) for any four fiscal quarters within all periods of five
consecutive fiscal quarters ending after March 31, 1996,
be greater than or equal to 150% of the consolidated
interest expense of the Borrower and its Consolidated
Subsidiaries for such four fiscal quarters.
- 50 -
5.20 Amendments to Other Agreements
If the FHI Credit Agreement is proposed to be amended in
any manner that may affect the Banks in relation to this Agreement,
the Borrower will consult with the Banks on the proposed amendment
and negotiate in good faith with the Banks to agree, prior to the
effectiveness of any such proposed amendment, to such amendments to
the Financing Documents as may be requested by the Banks in
consideration of such proposed amendment.
ARTICLE 6
DEFAULTS
6.1 Events of Default
If one or more of the following events ("Events of
Default") shall have occurred and be continuing:
(a) the Borrower shall fail to pay when due all or any part
of any Loan, or shall fail to pay within five days after
the due date thereof any interest on any Loan, any fees
or any other amount payable hereunder;
(b) the Borrower shall fail to observe or perform any
covenant contained in Sections 5.7 to 5.13, inclusive,
and 5.15 to 5.20, inclusive, or the Borrower shall fail
to observe or perform any of its covenants and agreements
contained in the Consent and Waiver;
(c) the Borrower or any Subsidiary shall fail to observe or
perform any covenant or agreement contained (i) in this
Agreement (other than those covered by clause (a) or (b)
above) for 30 days after written notice thereof has been
given to it by the Agent at the request of any Bank, or
(ii) in any Security Document for 10 days after written
notice thereof has been given to it by the Agent at the
request of any Bank;
(d) any representation, warranty, certification or statement
made by the Borrower or any Subsidiary in any Financing
Document or in any certificate, financial statement or
other document delivered pursuant to any Financing
Document shall prove to have been incorrect in any
material respect when made (or deemed made);
(e) the Borrower or any Subsidiary shall fail to make any
payment in respect of any Material Financial Obligations
when due or within any applicable grace period;
(f) any event or condition shall occur which results in the
acceleration of the maturity of any Material Debt or
enables (or, with the giving of notice or lapse of time
or both, would enable) the holder of such Material Debt
or any Person acting on such holder's behalf to
accelerate the maturity thereof;
- 51 -
(g) the Borrower or any Subsidiary shall commence a voluntary
case or other proceeding in any jurisdiction seeking
liquidation, reorganization or other relief with respect
to itself or its debts under any bankruptcy, insolvency
or other similar law in any jurisdiction now or hereafter
in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official
of it or any substantial part of its property, or shall
consent to any such relief or to the appointment of or
taking possession by any such official in an involuntary
case or other proceeding commenced against it, or shall
make a general assignment for the benefit of creditors,
or shall fail generally to pay its debts as they become
due, or shall take any corporate action to authorize any
of the foregoing;
(h) an involuntary case or other proceeding shall be
commenced in any jurisdiction against the Borrower or any
Subsidiary seeking liquidation, reorganization or other
relief with respect to it or its debts under any
bankruptcy, insolvency or other similar law in any
jurisdiction now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian
or other similar official of it or any substantial part
of its property, and such involuntary case or other
proceeding shall remain undismissed and unstayed for a
period of 60 days; or an order for relief shall be
entered against the Borrower or any Subsidiary under any
bankruptcy laws as now or hereafter in effect in any
jurisdiction;
(i) any member of the ERISA Group shall fail to pay when due
an amount or amounts aggregating in excess of
U.S. $1,000,000 which it shall have become liable to pay
under Title IV of ERISA; or notice of intent to terminate
a Material Plan shall be filed under Title IV of ERISA by
any member of the ERISA Group, any plan administrator or
any combination of the foregoing; or the PBGC shall
institute proceedings under Title IV of ERISA to
terminate, to impose liability (other than for premiums
under Section 4007 of ERISA) in respect of, or to cause
a trustee to be appointed to administer any Material
Plan; or a condition shall exist by reason of which the
PBGC would be entitled to obtain a decree adjudicating
that any Material Plan must be terminated; or there shall
occur a complete or partial withdrawal from, or a
default, within the meaning of Section 4219(c)(5) of
ERISA, with respect to, one or more Multiemployer Plans
which could cause one or more members of the ERISA Group
to incur a current payment obligation in excess of
U.S. $5,000,000;
(j) the U.S. Equivalent of a judgment or order for the
payment of money in excess of U.S. $1,000,000 shall be
rendered against the Borrower or any Subsidiary and such
judgment or order shall continue unsatisfied and unstayed
for a period of 10 days;
(k) any person or group of persons (within the meaning of
Section 13 or 14 of the U.S. Securities Exchange Act of
1934, as amended) shall have acquired beneficial
ownership (within the meaning of Rule 13d-3 promulgated
by the Securities and Exchange Commission (United States
of America) under said Act) of 50% or
- 52 -
more of the outstanding shares of common stock of the Borrower;
or, during any period of 12 consecutive calendar months,
individuals who were directors of the borrower on the first day
of such period shall cease to constitute a majority of the board
of directors of the Borrower; or
(l) any Liens held by the Banks or by the Agent for the
benefit of the Banks on the Mortgaged Properties or any
property and assets of any Subsidiary shall at any time
not constitute valid Liens subject to no prior or equal
Liens (other than Liens permitted under Section 5.10) for
any reason whatsoever, including as a result of the non-
perfection or loss of perfection of the Lien of the
Security Documents;
then, and in every such event, the Agent shall (a) unless the
Commitments have previously terminated hereunder and if requested
by Banks having 45% or more in aggregate amount of the Commitments,
by notice to the Borrower terminate the Commitments and they shall
thereupon terminate, and (b) if requested by Banks having an
interest in 45% or more of the aggregate amount of all outstanding
Loans, by notice to the Borrower,
(i) declare all Direct Loans outstanding hereunder, and
all accrued interest, fees and other Outstandings
due under the Financing Documents, to be
immediately due and payable whereupon such amounts
shall become immediately due and payable without
presentment, demand, protest or other notice of any
kind, all of which are hereby waived by the
Borrower, and
(ii) declare an amount sufficient to pay all potential
indebtedness, liabilities and obligations of the
Borrower hereunder in respect of unmatured Letters
of Credit which are outstanding to be immediately
due and payable, whereupon such amounts shall
become immediately due and payable without
presentment, demand, protest or other notice of any
kind, all of which are hereby waived by the
Borrower,
whereupon all Security Documents shall become immediately
enforceable and the Banks shall be entitled to all rights and
remedies set forth herein and therein; provided that in the case of
any of the Events of Default specified in clause (g) or (h) above
with respect to the Borrower, without any notice to the Borrower or
any other act by the Agent or the Banks, the Commitments shall
thereupon terminate and the Loans, interest, fees and other
Outstandings and amounts set forth in paragraphs (i) and (ii) above
shall become immediately due and payable without presentment,
demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower, and all Security Documents shall
become immediately enforceable and the Banks shall be entitled to
all rights and remedies set forth herein and therein.
6.2 Notice of Default
The Agent shall give notice to the Borrower under
Section 6.1(c) promptly upon being requested to do so by any Bank
and shall thereupon notify all the Banks thereof.
- 53 -
6.3 Conversions to USBR Loans
At any time after the occurrence of an Event of Default,
the Agent may with the consent of the Required Banks convert any
amount outstanding hereunder as a Euro-Dollar Loan, together with
any accrued and unpaid interest thereon, to a USBR Loan in respect
of which interest shall accrue and be payable by the Borrower at
the rate herein provided in respect of USBR Loans.
ARTICLE 7
THE AGENT
7.1 Appointment Authorization
Subject to the following, each Bank irrevocably appoints
and authorizes the Agent to take such action as agent on its behalf
and to exercise such powers under the Financing Documents as are
delegated to the Agent by the terms thereof, together with all such
powers as are reasonably incidental thereto:
(a) except as otherwise provided for in this Agreement or in
paragraph (b) below, where the terms of the Financing
Documents refer to any action to be taken thereunder
which is not delegated to the Agent by the terms thereof
or to any such action that requires the consent,
approval, satisfaction, agreement or other determination
of the Banks, the action taken by and the consent,
approval, satisfaction, agreement or other determination
given or made by the Required Banks shall constitute the
action or consent, approval, agreement or other
determination of all the Banks herein or therein referred
to; and
(b) the following actions and matters shall require the
approval of all the Banks:
(i) any amendment to the Financing Documents or any of
them;
(ii) any waiver or extension which relates to the rate
or dates of payment of interest payable hereunder,
the amount or dates of payment of fees payable
hereunder, the dates and amounts of repayment of
principal required hereunder or the conditions
precedent contained herein;
(iii) except as contemplated in Section 5.15(b), the
release, discharge or compromise of any of the
Security Documents or the Lien thereof;
(iv) the taking of any steps in relation to the
enforcement of, or realization with respect to, the
Security Documents; and
(v) any assignment or transfer by the Borrower of any
of its rights and obligations under this Agreement.
- 54 -
7.2 Agent and Affiliates
▇.▇. ▇▇▇▇▇▇ Canada shall have the same rights and powers
under the Financing Documents as any other Bank and may exercise or
refrain from exercising the same as though it were not the Agent,
and ▇.▇. ▇▇▇▇▇▇ Canada and its affiliates may accept deposits from,
lend money to, and generally engage in any kind of business with
the Borrower, or any Subsidiary or Affiliate as if it were not the
Agent under the Financing Documents.
7.3 Action by Agent
The obligations of the Agent under the Financing
Documents are only those expressly set forth therein. Without
limiting the generality of the foregoing, the Agent shall not be
required to take any action with respect to any Default, except as
expressly provided in the Financing Documents.
7.4 Consultation with Experts
The Agent may consult with legal counsel (who may be
counsel for the Borrower), independent public accountants and other
experts selected by it and shall not be liable for any action taken
or omitted to be taken by it in good faith in accordance with the
advice of such counsel, accountants or experts.
7.5 Liability of Agent
Neither the Agent nor any of its affiliates nor any of
their respective directors, officers, agents or employees shall be
liable for any action taken or not taken by it in connection with
the Financing Documents (i) with the consent or at the request of
the Required Banks or (ii) in the absence of its own gross
negligence or wilful misconduct. Neither the Agent nor any of its
affiliates nor any of their respective directors, officers, agents
or employees shall be responsible for or have any duty to
ascertain, inquire into or verify (i) any statement, warranty or
representation made in connection with the Financing Documents or
any borrowing hereunder; (ii) the performance or observance of any
of the covenants or agreements of the Borrower; (iii) the
satisfaction of any condition specified in Article 3, except
receipt of items required to be delivered to the Agent; or (iv) the
validity, effectiveness or genuineness of the Financing Documents
or any other instrument or writing furnished in connection
therewith. The Agent shall not incur any liability by acting in
reliance upon any notice, consent, certificate, statement, or other
writing (which may be a bank wire, telex, telecopy or similar
writing) believed by it to be genuine or to be signed by the proper
party or parties.
7.6 Indemnification
Each Bank shall, ratably based on the Commitments of the
Banks or the interests of the Banks in the Loans (if the
Commitments shall have terminated), indemnify the Agent, its
affiliates and their respective directors, officers, agents and
employees (to the extent not reimbursed by the Borrower) against
any cost, expense (including counsel fees and disbursements),
claim, demand, action, loss or liability (except such as result
from such
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indemnitee's gross negligence or wilful misconduct) that such
indemnitee may suffer or incur in connection with any of the
Financing Documents or any action taken or omitted by such
indemnitee thereunder.
7.7 Credit Decision
Each Bank acknowledges that it has, independently and
without reliance upon the Agent or any other Bank, and based on
such documents and information as it has deemed appropriate, made
its own credit analysis and decision to enter into this Agreement.
Each Bank also acknowledges that it will, independently and without
reliance upon the Agent or any other Bank, and based on such
documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking
any action under this Agreement or any other Financing Document.
7.8 Successor Agent
The Agent may resign at any time by giving notice thereof
to the Banks and the Borrower. Upon any such resignation, the
Required Banks shall have the right to appoint a successor Agent.
If no successor Agent shall have been so appointed by the Required
Banks, and shall have accepted such appointment, within 30 days
after the retiring Agent gives notice of resignation, then the
retiring Agent may, on behalf of the Banks, appoint a successor
Agent, which shall be a Canadian chartered bank under the Bank Act
(Canada) and having a combined capital and surplus of at least
Cdn. $50,000,000. Upon the acceptance of its appointment as Agent
under the Financing Documents by a successor Agent, such successor
Agent shall thereupon succeed to and become vested with all the
rights and duties of the retiring Agent, and the retiring Agent
shall be discharged from its duties and obligations under the
Financing Documents. After any retiring Agent's resignation under
the Financing Documents as Agent, the provisions of this Article
shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent.
7.9 Agent's Fees
The Borrower shall pay to the Agent for its own account
arrangement, agency and engineering fees in the amounts and at the
times previously agreed upon between the Borrower and the Agent.
ARTICLE 8
CHANGE IN CIRCUMSTANCES
8.1 Basis for Determining Interest Rate Inadequate or Unfair
If on or prior to the first day of any Interest Period
for any Euro-Dollar Borrowing:
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(a) the Agent is advised by the Reference Banks that deposits
in dollars (in the applicable amounts) are not being
offered to the Reference Banks in the relevant market for
such Interest Period, or
(b) Banks having 45% or more of the aggregate amount of all
Commitments or having an interest in 45% or more of the
aggregate amount of all outstanding Loans (if the
Commitments shall have terminated) advise the Agent that
the Adjusted London Interbank Offered Rate as determined
by the Agent will not adequately and fairly reflect the
cost to such Banks of funding their Euro-Dollar Loans for
such Interest Period,
the Agent shall forthwith give notice thereof to the Borrower and
the Banks, whereupon until the Agent notifies the Borrower that the
circumstances giving rise to such suspension no longer exist,
(i) the obligations of the Banks to make Euro-Dollar Loans or to
convert outstanding Domestic Loans and USBR Loans into Euro-Dollar
Loans shall be suspended and (ii) each outstanding Euro-Dollar Loan
shall be converted into a USBR Loan on the last day of the then
current Interest Period applicable thereto. Unless the Borrower
notifies the Agent at least two Domestic Business Days before the
date of any Euro-Dollar Borrowing for which a Notice of Borrowing
has previously been given that it elects not to borrow on such
date, such Borrowing shall instead be made as a USBR Borrowing.
8.2 Illegality
If on or after the date of this Agreement, the adoption
of any applicable law, rule or regulation, or any change therein,
or any change in the interpretation or administration thereof by
any governmental authority, central bank or comparable agency
charged with the interpretation or administration thereof, or
compliance by any Bank (or its Euro-Dollar Lending Office) with any
request or directive (whether or not having the force of law) of
any such authority, central bank or comparable agency shall make it
unlawful or impossible for any Bank (or its Euro-Dollar Lending
Office) to make, maintain or fund its Euro-Dollar Loans and such
Bank shall so notify the Agent, the Agent shall forthwith give
notice thereof to the other Banks and the Borrower, whereupon until
such Bank notifies the Borrower and the Agent that the
circumstances giving rise to such suspension no longer exist, the
obligation of such Bank to make Euro-Dollar Loans, or to convert
outstanding Domestic Loans and USBR Loans into Euro-Dollar Loans,
shall be suspended. Before giving any notice to the Agent pursuant
to this Section, such Bank shall designate a different Euro-Dollar
Lending Office if such designation will avoid the need for giving
such notice and will not, in the judgment of such Bank, be
otherwise disadvantageous to such Bank. If such notice is given,
each Euro-Dollar Loan of such Bank then outstanding shall be
converted to a USBR Loan either (a) on the last day of the then
current Interest Period applicable to such Euro-Dollar Loan if such
Bank may lawfully continue to maintain and fund such Loan to such
day or (b) immediately if such Bank shall determine that it may not
lawfully continue to maintain and fund such Loan to such day.
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8.3 Increased Cost and Reduced Return
(a) If on or after the date hereof, the adoption of any
applicable law, rule or regulation, or any change in any
applicable law, rule or regulation, or any change in the
interpretation or administration thereof by any
governmental authority, central bank or comparable agency
charged with the interpretation or administration
thereof, or compliance by any Bank (or its Applicable
Lending Office) with any request or directive (whether or
not having the force of law) of any such authority,
central bank or comparable agency shall impose, modify or
deem applicable any reserve, special deposit, insurance
assessment or similar requirement against assets of,
deposits with or for the account of, or credit extended
by, any Bank (or its Applicable Lending Office) or shall
impose on any Bank (or its Applicable Lending Office) or
on the London Interbank market any other condition
affecting its Euro-Dollar Loans, its Note or its
obligation to make Euro-Dollar Loans and the result of
any of the foregoing is to increase the cost to such Bank
(or its Applicable Lending Office) of making or
maintaining any Euro-Dollar Loan, or to reduce the amount
of any sum received or receivable by such Bank (or its
Applicable Lending Office) under this Agreement or under
its Note with respect thereto, by an amount deemed by
such Bank to be material, then, within 15 days after
demand by such Bank (with a copy to the Agent), the
Borrower shall pay to such Bank such additional amount or
amounts as will compensate such Bank for such increased
cost or reduction.
(b) If any Bank shall have determined that, after the date
hereof, the adoption of any applicable law, rule or
regulation regarding capital adequacy, or any change in
any such law, rule or regulation, or any change in the
interpretation or administration thereof by any
governmental authority, central bank or comparable agency
charged with the interpretation or administration
thereof, or any request or directive regarding capital
adequacy (whether or not having the force of law) of any
such authority, central bank or comparable agency, has or
would have the effect of reducing the rate of return on
capital of such Bank (or its Parent) as a consequence of
such Bank's obligations hereunder to a level below that
which such Bank (or its Parent) could have achieved but
for such adoption, change, request or directive (taking
into consideration its policies with respect to capital
adequacy) by an amount deemed by such Bank to be
material, then from time to time, within 15 days after
demand by such Bank (with a copy to the Agent), the
Borrower shall pay to such Bank such additional amount or
amounts as will compensate such Bank (or its Parent) for
such reduction.
(c) Each Bank will promptly notify the Borrower and the Agent
of any event of which it has knowledge, occurring after
the date hereof, which will entitle such Bank to
compensation pursuant to this Section and will designate
a different Applicable Lending Office if such designation
will avoid the need for, or reduce the amount of, such
compensation and will not, in the judgment of such Bank,
be otherwise disadvantageous to such Bank. A certificate
of any Bank claiming compensation under this Section and
setting forth the additional amount or
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amounts to be paid to it hereunder shall be conclusive in the
absence of manifest error. In determining such amount, such Bank
may use any reasonable averaging and attribution methods.
8.4 Taxes
(a) For purposes of this Section 8.4, the following terms
have the following meanings:
"Taxes" means any and all present or future taxes,
duties, levies, imposts, deductions, charges or
withholdings with respect to any payment by the Borrower
pursuant to this Agreement or under any Note, and all
liabilities with respect thereto, excluding in the case
of each Bank and the Agent, taxes imposed on its income,
and franchise or similar taxes (including penalties and
interest) imposed on it, by a jurisdiction under the laws
of which such Bank or the Agent (as the case may be) is
organized or in which its principal executive office is
located or, in the case of each Bank, in which its
Applicable Lending Office is located.
"Other Taxes" means any present or future stamp or
documentary taxes and any other excise or property taxes,
or similar charges or levies, which arise from any
payment made pursuant to this Agreement or under any Note
or from the execution or delivery of, or otherwise with
respect to, this Agreement or any Note.
(b) Any and all payments by the Borrower to or for the
account of any Bank or the Agent hereunder or under any
Note shall be made without deduction for any Taxes or
Other Taxes; provided that, if the Borrower shall be
required by law to deduct any Taxes or Other Taxes from
any such payments, (i) the sum payable shall be increased
as necessary so that after making all required deductions
(including deductions applicable to additional sums
payable under this Section 8.4) such Bank or the Agent
(as the case may be) receives an amount equal to the sum
it would have received had no such deductions been made,
(ii) the Borrower shall make such deductions, (iii) the
Borrower shall pay the full amount deducted to the
relevant taxation authority or other authority in
accordance with applicable law and (iv) the Borrower
shall furnish to the Agent, at its address referred to in
Section 9.1, the original or a certified copy of a
receipt evidencing payment thereof.
(c) The Borrower agrees to indemnify each Bank and the Agent
for the full amount of Taxes or Other Taxes (including,
without limitation, any Taxes or Other Taxes imposed or
asserted by any jurisdiction on amounts payable under
this Section 8.4) paid by such Bank or the Agent (as the
case may be) and any liability (including penalties,
interest and expenses) arising therefrom or with respect
thereto. This indemnification shall be paid within 30
days after such Bank or the Agent (as the case may be)
makes written demand therefor.
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If a Bank or the Agent shall become aware that it is
entitled to receive a refund in respect of Taxes or Other
Taxes, it shall promptly notify the Borrower of the
availability of such refund and shall, within 30 days
thereafter, apply for such refund at the Borrower's
expense. If any Bank or the Agent receives a refund in
respect of any Taxes or Other Taxes for which such Bank
or the Agent has received payment from the Borrower
hereunder, it shall promptly notify the Borrower of such
refund and shall, within 30 days after receipt of such
refund, repay such refund to the Borrower with interest
if any interest is received thereon by such Bank or the
Agent.
(d) Each Bank on or prior to the date of its execution and
delivery of this Agreement in the case of each Bank
listed on the signature pages hereof and on or prior to
the date on which it becomes a Bank pursuant to
Section 9.6 in the case of each other Bank, and from time
to time thereafter if requested in writing by the
Borrower (but only so long as such Bank remains lawfully
able to do so), shall provide the Borrower evidence that
it is not a non-resident of Canada for the purposes of
The Income Tax Act (Canada) and provide the Agent with
U.S. Internal Revenue Service form W-8 or any successor
form certifying that such Bank is not a U.S. citizen or
resident.
(e) For any period in respect of which a Bank is a non-
resident of Canada for the purposes of The Income Tax Act
(Canada) (unless as a result of a change in law or
regulation occurring subsequent to the date on which
evidence of residency was provided by such Bank as
specified by and in accordance with Section 8.4(d)), such
Bank shall not be entitled to indemnification under
Section 8.4(b) or (c) with respect to Taxes imposed by
Canada; provided that if a Bank, which is otherwise
exempt from or subject to a reduced rate of withholding
tax, becomes subject to Taxes because of its failure to
deliver a form required hereunder, the Borrower shall
take such steps as such Bank shall reasonably request to
assist such Bank to recover such Taxes.
(f) If the Borrower is required to pay additional amounts to
or for the account of any Bank pursuant to this
Section 8.4, then such Bank will change the jurisdiction
of its Applicable Lending Office if, in the judgment of
such Bank, such change (i) will eliminate or reduce any
such additional payment which may thereafter accrue and
(ii) is not otherwise disadvantageous to such Bank.
(g) In the event that the Borrower shall be required to pay
to any Bank material amounts pursuant to this
Section 8.4, the Borrower may give notice to such Bank
(with copies to the Agent) that it wishes to seek one or
more assignees (which may be one or more of the Banks) to
assume the Commitment of such Bank (if the Commitment of
such Bank has not terminated) and to purchase its
outstanding Loans and Note and the Agent will use its
best efforts to assist the Borrower in obtaining an
assignee(s). If an assignee(s) cannot be obtained for
such affected Bank(s) and provided that no Default shall
have occurred and be continuing, the Borrower may, with
the consent of each other Bank, prepay immediately all
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Direct Loans of such affected Bank and terminate such
affected Bank's entire Commitment hereunder (if such
Bank s Commitment has not terminated). The other Banks
shall assume all liability of the affected Bank for any
outstanding Letters of Credit and the Borrower shall pay
to the Agent an adjusted fee with respect to each such
Letter of Credit for the account of such Banks pursuant
to Section 2.14(c), based on the increased exposure of
such Banks for the period each such Letter of Credit will
remain outstanding. Any Bank selling its Commitment
and/or its Loans, Note and interest in this Agreement to
any assignee(s) will do so in accordance with Section 9.6
for an amount equal to the sum of the aggregate principal
amount of its Direct Loans plus all other fees and
amounts (including, without limitation, any compensation
claimed by such Bank under Section 2.12 or this
Section 8.4) due such Bank hereunder calculated, in each
case, to the date such Commitment and/or such Loans, Note
and interest are purchased, and such assignee(s) shall
assume such Bank's liability for any outstanding Letters
of Credit. Upon such sale or prepayment, said Bank shall
have no further Commitment and/or other obligation to the
Borrower hereunder or under any Note.
8.5 USBR Loans Substituted for Affected Euro-Dollar Loans
If (i) the obligation of any Bank to make or maintain
Euro-Dollar Loans has been suspended pursuant to Section 8.2 or
(ii) any Bank has demanded compensation under Section 8.3(a) or 8.4
with respect to its Euro-Dollar Loans and the Borrower shall, by at
least five Euro-Dollar Business Days prior notice to such Bank
through the Agent, have elected that the provisions of this Section
shall apply to such Bank, then, unless and until such Bank notifies
the Borrower that the circumstances giving rise to such suspension
or demand for compensation no longer apply:
(a) all Loans which would otherwise be made by such Bank as
(or continued or converted into) Euro-Dollar Loans shall
be made instead as USBR Loans (on which interest and
principal shall be payable contemporaneously with the
related Euro-Dollar Loans of the other Banks), and
(b) after each of its Euro-Dollar Loans has been repaid (or
converted to a USBR Loan), all payments of principal
which would otherwise be applied to repay such
Euro-Dollar Loans shall be applied to repay its USBR
Loans instead.
If such Bank notifies the Borrower that the circumstances giving
rise to such notice no longer apply, the principal amount of each
such USBR Loan shall be converted into a Euro-Dollar Loan on the
first day of the next succeeding Interest Period applicable to the
related Euro-Dollar Loans of the other Banks.
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ARTICLE 9
MISCELLANEOUS
9.1 Notices
All notices, requests and other communications to any
party hereunder shall be in writing (including bank wire, telex,
telecopy or similar writing) and shall be given to such party:
(x) in the case of the Borrower, the Agent or the Fronting Bank at
its address, telex or telecopy number set forth on the signature
pages hereof, (y) in the case of any Bank, at its address, telex or
telecopy number set forth in its Administrative Questionnaire or
(z) in the case of any party, such other address or telex or
telecopy number as such party may hereafter specify for the purpose
by notice to the Agent and the Borrower. Each such notice, request
or other communication shall be effective (i) if given by telex,
when such telex is transmitted to the telex number specified in
this Section and the appropriate answerback is received, (ii) if
given by telecopy, when such telecopy is transmitted to the
telecopy number specified in this Section and telephonic
confirmation of receipt thereof is received, or (iii) if given by
any other means, when delivered at the address specified in this
Section; provided that notices to the Agent under Article 2 or
Article 8 shall not be effective until received.
9.2 No Waivers
No failure or delay by the Agent or any Bank in
exercising any right, power or privilege under any Financing
Document shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege.
The rights and remedies herein provided shall be cumulative and not
exclusive of any rights or remedies provided by law.
9.3 Expenses; Indemnification
(a) The Borrower shall pay (i) all reasonable out-of-pocket
expenses of the Agent, including fees and disbursements
of special counsel for the Agent, in connection with the
preparation of the Financing Documents, any waiver or
consent thereunder or any amendment thereof or any
Default or alleged Default thereunder or any release
pursuant to Section 5.15(b) and (ii) if an Event of
Default occurs, all reasonable out-of-pocket expenses
incurred by the Agent and each Bank, including fees and
disbursements of counsel, in connection with such Event
of Default and collection, bankruptcy, insolvency and
other enforcement proceedings resulting therefrom.
(b) The Borrower agrees to indemnify the Agent, the Fronting
Bank and each Bank and their respective affiliates and
the respective directors, officers, agents and employees
of the foregoing (each an "Indemnitee") and hold each
Indemnitee harmless from and against any and all
liabilities, losses, damages, costs and expenses of any
kind, including, without limitation, the reasonable fees
and disbursements of counsel, which may be incurred by
such Indemnitee in connection with any investigative,
administrative or judicial proceeding (whether
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or not such Indemnitee shall be designated a party thereto)
relating to or arising out of (i) any actual or proposed use of
proceeds of Loans hereunder, (ii) the breach by the Borrower of
any covenant in this Agreement or the untruth or inaccuracy of
any representation or warranty made by the Borrower in this
Agreement or (iii) a transaction which is (or may be) subject to
the provisions of Section 6.1(k); provided that no Indemnitee
shall have the right to be indemnified hereunder for its own
gross negligence or wilful misconduct as determined by a court of
competent jurisdiction.
(c) Any payment made to or for the account of the Agent, the
Fronting Bank or any Bank in respect of any amount
payable by the Borrower in a currency (the "Tendered
Currency") other than the currency in which such payment
is due (the "Required Currency"), whether pursuant to any
judgment or order of a court or tribunal or otherwise,
shall constitute a discharge of the Borrower only to the
extent of the amount of the Required Currency which may
be purchased with such Tendered Currency at the time of
payment at the Spot Rate at such time. The Borrower
covenants and agrees to and in favour of the Agent, the
Fronting Bank and each Bank that it shall, as a separate
and independent obligation which shall not be merged in
any such judgment or order, pay or cause to be paid the
amount not so discharged in accordance with the foregoing
and indemnify and hold harmless the Agent, the Fronting
Bank and each Bank against any loss or damage arising as
a result of any such amount being paid in such Tendered
Currency. A certificate of the Agent, the Fronting Bank
or any Bank, as applicable, as to any such loss or damage
shall be conclusive evidence of the amount thereof in the
absence of manifest error.
9.4 Sharing of Set-Offs
Each Bank agrees that if it shall, by exercising any
right of set-off or counterclaim or otherwise, receive a payment on
account of Loans or interest or fees accruing thereon (other than
the fee payable to the Fronting Bank pursuant to Section 2.14(b))
of a proportion which is greater than the proportion received by
any other Bank based on the Commitments of the Banks or the
interests of the Banks in the outstanding Loans (if the Commitments
shall have terminated), the Bank receiving such proportionately
greater payment shall purchase such participations in the Loans or
in the Notes held by the other Banks, and such other adjustments
shall be made, as may be required so that all such payments shall
be shared by the Banks pro rata; provided that nothing in this
Section shall impair the right of any Bank to exercise any right of
set-off or counterclaim it may have and to apply the amount subject
to such exercise to the payment of indebtedness of the Borrower
other than its indebtedness hereunder and under the Notes. The
Borrower agrees, to the fullest extent it may effectively do so
under applicable law, that any holder of a participation in a Loan
or in a Note, whether or not acquired pursuant to the foregoing
arrangements, may exercise rights of set-off or counterclaim and
other rights with respect to such participation as fully as if such
holder of a participation were a direct creditor of the Borrower in
the amount of such participation.
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9.5 Amendments and Waivers
Any provision of the Financing Documents may be amended
or waived if, but only if, such amendment or waiver is in writing
and is signed by the Borrower and the Agent with the consent of the
Banks or any of them as required pursuant to Section 7.1.
9.6 Successors and Assigns
(a) The provisions of this Agreement shall be binding upon
and inure to the benefit of the parties hereto and their
respective successors and assigns, except that the
Borrower may not assign or otherwise transfer any of its
rights under this Agreement without the prior written
consent of all Banks.
(b) Any Bank may at any time grant to one or more banks or
other institutions (each a "Participant") participating
interests in its Commitment (if such Bank s Commitment
has not terminated) or any or all of its Loans. In the
event of any such grant by a Bank of a participating
interest to a Participant, whether or not upon notice to
the Borrower and the Agent, such Bank shall remain
responsible for the performance of its obligations
hereunder, and the Borrower and the Agent shall continue
to deal solely and directly with such Bank in connection
with such Bank's rights and obligations under this
Agreement. Any agreement pursuant to which any Bank may
grant such a participating interest shall provide that
such Bank shall retain the sole right and responsibility
to enforce the obligations of the Borrower hereunder
including, without limitation, the right to approve any
amendment, modification or waiver of any provision of
this Agreement; provided that such participation
agreement may provide that such Bank will not agree to
any modification, amendment or waiver of this Agreement
or any other action described in Section 7.1 without the
consent of the Participant. The Borrower agrees that
each Participant shall, to the extent provided in its
participation agreement, be entitled to the benefits of
Article 8 and Sections 2.12, 2.14(i) and 9.3 with respect
to its participating interest as if directly a party
hereto, provided that if such a Participant is a non-
resident of Canada for the purposes of The Income Tax Act
(Canada) then such Participant shall not be entitled to
the benefit of the indemnities contained in Section 8.4
for any amount greater than that which the Bank from
which such Participant acquired its participation would
have been entitled to be indemnified for under
Section 8.4. An assignment or other transfer which is
not permitted by subsection (c) or (d) below shall be
given effect for purposes of this Agreement only to the
extent of a participating interest granted in accordance
with this subsection (b).
(c) Any Bank may at any time assign, with notice to the Agent
and the Borrower, to an affiliate of such transferor Bank
or another Bank which is not a non-resident of Canada for
the purposes of The Income Tax Act (Canada) (each an
"Assignee") all of its rights and obligations under this
Agreement and the Notes in respect of all or any portion
of its Commitment (if such Bank s Commitment has not
terminated) and its outstanding Loans, provided that the
Outstanding Principal in
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respect thereof is not less than Cdn. $5,000,000, and such
Assignee shall assume such rights and obligations. Upon execution
and delivery of an instrument of assignment and payment by such
Assignee to such transferor Bank of an amount equal to the
purchase price agreed between such transferor Bank and such
Assignee, such Assignee shall be a Bank party to this Agreement
and shall have all the rights and obligations of a Bank with a
Commitment (if the Commitments have not terminated) as set forth
in such instrument of assignment, and, subject to Section
2.14(h), the transferor Bank shall be released from its
obligations hereunder to a corresponding extent, and no further
consent or action by any party shall be required. Upon the
consummation of any assignment pursuant to this subsection (c),
the transferor Bank, the Agent and the Borrower shall make
appropriate arrangements so that, if required, a new Note is
issued to the Assignee. In connection with any such assignment,
the transferor Bank shall pay to the Agent an administrative fee
for processing such assignment in the amount of Cdn. $2,000. The
Assignee shall, prior to the first date on which interest or fees
are payable hereunder for its account, deliver to the Borrower
and the Agent the forms and evidence regarding residency
specified by and in accordance with Section 8.4.
(d) Subject to the Section 9.6(b), except for any assignment
of all or any portion of its rights under this Agreement
and its Note to a Canadian chartered bank under the Bank
Act (Canada), a Bank shall not be entitled to assign all
or any portion of its rights under this Agreement and its
Note without the consent of the Borrower not to be
unreasonably withheld.
(e) No Assignee, Participant or other transferee of any
Bank's rights shall be entitled to receive any greater
payment under Section 8.3 than such Bank would have been
entitled to receive with respect to the rights
transferred, unless such transfer is made with the
Borrower's prior written consent or by reason of the
provisions of Section 8.2 or 8.3 requiring such Bank to
designate a different Applicable Lending Office under
certain circumstances or at a time when the circumstances
giving rise to such greater payment did not exist.
9.7 Collateral
Each of the Banks represents to the Agent and each of the
other Banks that it in good faith is not relying upon any "margin
stock" (as defined in Regulation X) as collateral in the extension
or maintenance of the credit provided for in this Agreement.
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9.8 Further Assurances
Each party hereto shall, at the request of the other (but
at the expense of the Borrower), perform all such further acts and
execute and deliver all such further documents as may, in the
reasonable opinion of the other, be necessary or desirable in order
to fully perform and carry out the purpose and intent of the
Financing Documents.
9.9 Conflicting Provisions
In the event of (but to the extent only of) a conflict or
inconsistency between the terms of this Agreement and any of the
other Financing Documents, the terms of this Agreement shall
govern.
9.10 Section 426 Waiver
Without restriction upon the rights, remedies, powers and
authorities available to the Banks in relation to security granted
to it under Section 426 of the Bank Act (Canada), the Borrower does
hereby waive all rights, benefits and protections available to the
Borrower pursuant to Subsection 426(6) of the Bank Act (Canada).
The Borrower does hereby acknowledge and agree that the Banks may,
notwithstanding the provisions of Subsection 426(6) of the Bank Act
(Canada), without advertisement or public notice of sale or
intention to sell, and without any other formality whatsoever,
conduct and complete any sale of all or any of the assets assigned
to the Banks pursuant to such Section 426 security, at such times,
in such manner and upon such terms, including without limitation
terms regarding the form, amount and time for payment of sale
proceeds, as the Banks may in their sole and absolute discretion
deem fit.
9.11 Governing Law
THIS AGREEMENT AND EACH NOTE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE PROVINCE OF ALBERTA
AND THE LAWS OF CANADA APPLICABLE THEREIN AND SHALL BE TREATED AS
ALBERTA CONTRACTS.
9.12 Submission to Jurisdiction
The Borrower hereby submits to the nonexclusive
jurisdiction of the Courts of Alberta for purposes of all legal
proceedings arising out of or relating to this Agreement and each
Note or the transactions contemplated hereby. The Borrower
irrevocably waives, to the fullest extent permitted by law, any
objection which it may now or hereafter have to the laying of the
venue of any such proceeding brought in such a court and any claim
that any such proceeding brought in such a court has been brought
in an inconvenient forum.
9.13 Counterparts; Integration
This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same
- 66 -
instrument. This Agreement constitutes the entire agreement and
understanding among the parties hereto and supersedes any and all
prior agreements and understandings, oral or written, relating to
the subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized
officers as of the day and year first above written.
WAINOCO OIL CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Title: Senior Vice President - Finance &
Chief Financial Officer
On or prior to March 29, 1996:
2100 Citicorp Center
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopy number: (▇▇▇) ▇▇▇-▇▇▇▇
After March 29, 1996:
600, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopy number: (▇▇▇) ▇▇▇-▇▇▇▇
▇.▇. ▇▇▇▇▇▇ CANADA, as Agent
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
____________________________________
Title: President
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇ ▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Telecopy number: (▇▇▇) ▇▇▇-▇▇▇▇
This is page 66 to the Amended and Restated Credit Agreement dated January
30, 1996 among Wainoco Oil Corporation, as Borrower, ▇.▇. ▇▇▇▇▇▇ Canada, as
Agent and as a Bank, and Paribas Bank of Canada, as Fronting Bank and as a
Bank.
- 67 -
PARIBAS BANK OF CANADA, as
Fronting Bank
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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Title: Assistant Vice President
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
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Title: Group Vice President
Royal Trust Tower
4100 Toronto ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Telecopy number: (▇▇▇) ▇▇▇-▇▇▇▇
Commitments Banks
Cdn. $9,750,000 ▇.▇. ▇▇▇▇▇▇ CANADA
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------------
Title: President
Cdn. $8,250,000 PARIBAS BANK OF CANADA
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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Title: Assistant Vice President
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------
Title: Group Vice President
This is page 67 to the Amended and Restated Credit Agreement dated January
30, 1996 among Wainoco Oil Corporation, as Borrower, ▇.▇. ▇▇▇▇▇▇ Canada, as
Agent and as a Bank, and Paribas Bank of Canada, as Fronting Bank and as a
Bank.