Exhibit 99.4
SECOND AMENDMENT TO LOAN AGREEMENT
This Second Amendment to Loan Agreement (this "Amendment")
is made and entered into as of July 27, 1995 ("Amendment Date"),
by and between FOREST OIL CORPORATION, a New York corporation,
with principal offices at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Borrower"), and JOINT
ENERGY DEVELOPMENT INVESTMENTS LIMITED PARTNERSHIP, a Delaware
limited partnership, with offices at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇ (the "Lender").
WHEREAS, reference for all purposes is hereby made to that
certain Loan Agreement dated December 28, 1993, between the
Borrower and the Lender, as amended by the First Amendment to
Loan Agreement dated as of December 28, 1993 (as so amended, the
"Agreement");
WHEREAS, the Borrower and the Lender desire to amend the
Agreement as hereinafter set forth;
NOW, THEREFORE, for and in consideration of ten dollars
($10.00) and other good and valuable consideration, the Borrower
and the Lender hereby agree as follows:
1. Section 1.01 of the Agreement is amended by replacing or
inserting the following defined terms, as appropriate:
"Anschutz" shall mean The Anschutz Corporation, a
Kansas corporation.
"Anschutz Notice" shall mean the written notice
delivered from the holder of the Anschutz Option as
provided for in the Anschutz Option, which notice shall
specify (i) the number of shares of Common Stock the
holder of the Anschutz Option is electing to acquire
pursuant to the Anschutz Option, (ii) the Anschutz
Option Price, and (iii) the Gross Warrant Proceeds.
"Anschutz Option" shall mean the JEDI/Anschutz
Option dated as of the Amendment Date made by the
Lender in favor of Anschutz granting Anschutz the right
to cause the Lender to exercise the Tranche B Warrant
held by Lender and purchase the resulting shares of
Common Stock substantially in the form of Exhibit M to
the Anschutz Purchase Agreement with such changes as
may be approved by the Borrower, the Lender and
Anschutz.
"Anschutz Option Price" shall have the meaning of
the term "Option Price" as defined in the Anschutz
Option.
"Anschutz Purchase Agreement" shall mean the
Purchase Agreement dated as of May 17, 1995 by and
between Borrower and Anschutz, as the same may be
amended from time to time.
"Applicable Interest Rate" shall mean with respect
to the Tranche A Loan 12.5% per annum. The Tranche B
Loan shall be a non-interest bearing loan.
"Approved Overrun Expenses" means with respect to
any Overrun Expenses that are approved by Lender
pursuant to Section 2.18, 80% of Borrower's share of
the actual amount of Overrun Expenses, not to exceed
80% of 110% of Borrower's share of the Overrun Expenses
set forth in the Supplemental AFE.
"Assignment" shall mean an Assignment and ▇▇▇▇ of
Sale in substantially the form of Exhibit R.
"Capital Expenses" means (i) with respect to any
Scheduled Capital Operation proposed by Borrower prior
to the Conveyance Expiration Date that is approved by
Lender, 80% of the costs actually incurred by Borrower
to conduct such Scheduled Capital Operation, not to
exceed 80% of 110% of Borrower's share of the amount of
the Scheduled Capital Operation as set forth in the AFE
approved by Lender for such operation and (ii) with
respect to any Scheduled Capital Operation proposed by
Borrower after the Conveyance Expiration Date (a) if
Borrower elects not to submit an AFE for such Scheduled
Capital Operation, 80% of the costs actually incurred
by Borrower to conduct such Scheduled Capital
Operation, not to exceed 80% of 110% (80% of 115% from
and after January 1, 1998) of Borrower's share of the
amount of the Scheduled Capital Operation as set forth
on Schedule I or (b) if Borrower submits an AFE
pursuant to Section 2.02(b) and such AFE is approved by
Lender, 80% of the costs actually incurred by Borrower
to conduct such Scheduled Capital Operation, not to
exceed 80% of 110% of Borrower's share of the amount of
the Scheduled Capital Operation as set forth in the AFE
approved by Lender for such operation, (iii) with
respect to any Approved Nonscheduled Capital Operation,
80% of the costs actually incurred by Borrower to
conduct such Approved Nonscheduled Capital Operation,
not to exceed 80% of 110% of Borrower's share of the
amount of the Approved AFE, (iv) Approved Overrun
Expenses, and (v) Mandatory Capital Expenses.
Notwithstanding anything to the contrary set forth
herein, the following shall apply in determining
Capital Expenses:
(a) Capital Expenses shall not include any cost
in excess of $500,000 incurred by Borrower for any
Capital Operation unless prior to the Payment Date on
which such Capital Expense would be deducted in
computing the Monthly Payment Amount due on such
Payment Date Borrower has actually paid such Capital
Expense;
(b) Capital Expenses shall be determined in
accordance with the applicable Accounting Procedure,
and shall not include any general, administrative or
office charges or overhead, except as permitted by the
applicable Accounting Procedure;
(c) If Lender exercises its rights under Section
6.04 to suspend the deduction of Capital Expenses, none
of the costs thereafter incurred by Borrower to conduct
Capital Operations shall be considered as Capital
Expenses, except for such costs as are approved in
writing by Lender; and
(d) Capital Expenses shall not include any costs
incurred with respect to a Capital Operation that (i)
has not been properly approved by Lender (if such
approval is required hereunder), or (ii) constitutes an
Excluded Operation pursuant to Section 2.03(d). In
addition, Capital Expenses shall not include Overrun
Expenses that do not constitute Approved Overrun
Expenses.
"Common Stock" shall mean the common stock, $.10
par value per share of the Borrower (including the
associated rights).
"Conveyance Date" shall have the meaning set out
in Section 2.16(a) below.
"Conveyance Election Date" shall mean the date
that Borrower provides Lender with written notice of
its election to exercise the Conveyance Option.
"Conveyance Expiration Date" shall mean the date
occurring thirty (30) days after the Option
Commencement Date.
"Conveyance Option" shall have the meaning set out
in Section 2.16(a) below.
"▇▇▇▇▇▇▇ Lease" shall mean that certain Oil and
Gas Lease dated September 9, 1993 between ▇▇▇▇▇▇ San
▇▇▇▇▇▇, Trustee and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, et. al, as
Lessor, and ▇▇▇▇▇▇ & ▇▇▇▇▇, as Lessee, recorded at Book
489, Page 446 of the Official Records of ▇▇▇▇▇▇ County,
Texas.
"Excluded Operation" shall have the meaning set
out in Section 2.03(d).
"Excluded Operation Costs" shall have the meaning
set out in Section 2.03(d).
"Excluded Overrun Expenses" shall have the meaning
set out in Section 2.18.
"Excluded Overrun Operation" shall have the
meaning set out in Section 2.18.
"Extinguished Obligations" shall mean all unpaid
principal and interest on the Loan as of the Conveyance
Date.
"Fair Market Value of Retained Properties" shall
have the meaning set out in Section 2.16(f).
"Final Maturity Date" shall mean the following
dates with respect to the Tranche A Loan and the
Tranche B Loan:
Tranche Final Maturity Date
_______ ___________________
Tranche A Loan December 31, ▇▇▇▇
▇▇▇▇▇▇▇ ▇ Loan December 31, 2002
"Gross Warrant Proceeds" shall mean, with respect
to the proceeds from any exercise of the Tranche B
Warrant, an amount equal to the product of the Anschutz
Option Price multiplied by the number of shares of
Common Stock to be acquired by the holder of the
Anschutz Option, which number of shares shall be set
forth in the Anschutz Notice.
"Loan" shall mean the loan made pursuant to
Section 2.01, which is subdivided into the Tranche A
Loan and the Tranche B Loan, and any additions to the
principal thereof pursuant to Section 2.04.
"Loan Tranche" shall mean the Tranche A Loan or
the Tranche B Loan.
"Loan Documents" shall mean this Agreement, the
Note, the Security Instruments, the Warrants, the
Registration Rights Agreement, any amendment agreements
amending the foregoing, and all other documents,
certificates, instruments, and agreements executed and
delivered pursuant to this Agreement or in connection
herewith, as the same may be amended, supplemented,
modified, renewed, or extended from time to time.
"Mandatory Capital Expenses" shall mean 80% of
Borrower's share of the costs actually incurred in
connection with the Borrower obtaining extensions to or
new leases replacing the leases identified on Exhibit
S, which costs shall not exceed 80% of 110% of
Borrower's share of such costs as identified on Exhibit
S.
"Mortgaged Properties" shall mean (i) all Oil and
Gas Properties subject to Liens in favor of the Lender
under the Security Instruments, including, but not
limited to, the Development Properties, the ▇▇▇▇▇▇▇▇
Properties, the ▇▇▇▇▇▇ & ▇▇▇▇▇ Properties, and all
Hydrocarbon production therefrom, and (ii) any other
Oil and Gas Property and the Hydrocarbon production
therefrom that is hereafter subjected to Liens in favor
of the Lender under the Security Instruments, less and
except (iii) any portion of said Oil and Gas Properties
which have been released in writing by Lender from such
Liens.
"Net Warrant Proceeds" shall mean, with respect to
the proceeds from any exercise of the Tranche B
Warrant, an amount equal to the product of $2.00
(subject to adjustments comparable to the adjustments
to the Warrant Price as specified in the Tranche B
Warrant) multiplied by the number of shares of Common
Stock to be acquired by the holder of the Anschutz
Option, which number of shares shall be set forth in
the Anschutz Notice.
"Option Commencement Date" shall mean the first
Business Day occurring after the Initial Expiration
Date (as defined in the Tranche A Warrant as in effect
on even date herewith) or if the Tranche A Warrant is
extended pursuant to the terms of Section 3.1(b) of the
Tranche A Warrant, then the first Business Day
occurring after the Expiration Date (as defined in the
Tranche A Warrant as in effect on even date herewith).
"Overriding Royalty Reconveyance" shall mean such
documents and instruments as may be satisfactory in
form and content to Borrower and Lender and which
effect a termination or reconveyance of (i) the ▇▇▇▇▇▇
Island Block 326 Overriding Royalty, (ii) the ▇▇▇▇▇▇ &
▇▇▇▇▇ Overriding Royalty, (iii) the Production
Agreement (▇▇▇▇▇▇ Island Block 326) and (iv) the
Production Agreement (▇▇▇▇▇▇ & ▇▇▇▇▇).
"Overrun Expenses" shall mean (i) with respect to
any Capital Operation for which an AFE was previously
submitted to and approved by JEDI prior to the
commencement of work on such operation, Borrower's
share of the costs incurred in connection with such
operation that are in excess of 110% of the amount set
forth on such AFE and (ii) with respect to any
Scheduled Capital Operation proposed after the
Conveyance Expiration Date and for which no AFE was
submitted by Borrower to Lender prior to the
commencement of operations, Borrower's share of the
costs incurred in connection with such operation that
are in excess of 110% (115% from and after January 1,
1998) of Borrower's share of the amount of such
Scheduled Capital Operation as set forth on Exhibit I.
"Payment Date" shall mean August 31, 1995, and the
last Business Day of each month thereafter continuing
through and including the Final Maturity Date
applicable to the last Loan Tranche outstanding.
"Prior Capital Operations" means the operations
described on the first page of Exhibit I that is
attached to the Loan Agreement dated December 28, 1993,
between Borrower and Lender without giving effect to
the terms of this Amendment.
"Registration Rights Agreement" shall mean the
Registration Rights Agreement dated as of the Amendment
Date between the Borrower and the Lender related to the
registration of the shares of Common Stock which would
be issued in connection with the exercise of the
Tranche B Warrant substantially in the form of Exhibit
B to the Anschutz Purchase Agreement, with such changes
as may be approved by the Borrower, the Lender and
Anschutz.
"Replacement Interests" shall have the meaning set
out in Section 4.05(b).
"Required Trailing Twelve Month Cash Flow" means
as of any Semiannual Payment Date after December 31,
1995, the applicable amount set forth on Exhibit J, as
the same may be adjusted pursuant to the terms of
Section 2.17 hereof.
"Retained Properties" shall have the meaning set
out in Section 2.16(f).
"Scheduled Capital Operation" shall mean any
operation described in Exhibit I hereto other than a
Prior Capital Operation.
"Scheduled Principal Amount" shall mean as of any
Semiannual Payment Date after December 31, 1995, the
applicable amount set forth in Exhibit J, as the same
may be adjusted pursuant to the terms of Section 2.17
hereof.
"Supplemental AFE" shall have the meaning given to
such term in Section 2.18.
"Tranche A Loan" shall mean the portion of the
Loan which is designated as the Tranche A Loan pursuant
to Section 2.01(a).
"Tranche A Warrant" shall mean the Tranche A
Warrant executed on even date herewith to purchase
19,444,444 shares of the Common Stock of the Borrower.
"Tranche A Warrant Proceeds" shall mean an amount
equal to the greater of (i) the product of $2.10
(subject to any appropriate adjustment to reflect
adjustments pursuant to the anti-dilution provisions as
provided for in Section 1.3 of the Anschutz Purchase
Agreement and Section 7.1 of the Tranche A Warrant)
multiplied by the number of shares of Common Stock to
be acquired by the holder of the Tranche A Warrant
pursuant to the terms of the Tranche A Warrant or (ii)
all proceeds payable to Borrower or its designee upon
the exercise of the Tranche A Warrant. In addition to
the foregoing, if the holder of the Tranche A Warrant
receives consideration from or on behalf of the
Borrower with respect to either an exchange of the
Tranche A Warrant or an election by the holder of the
Tranche A Warrant not to exercise the rights provided
for in the Tranche A Warrant, then such additional
consideration shall be deemed Tranche A Warrant
Proceeds and Borrower shall deliver to Lender an amount
equal to the fair value of such consideration.
"Tranche B Loan" shall mean the portion of the
Loan which is designated as the Tranche B Loan pursuant
to Section 2.01(a).
"Tranche B Warrant" shall mean the Tranche B
Warrant executed on even date herewith to purchase up
to 11,250,000 shares of Common Stock issued to the
Lender.
"Warrants" shall mean the Tranche A Warrant and
the Tranche B Warrant.
"Warrant Premium" shall mean an amount equal to
the Gross Warrant Proceeds reduced by the Net Warrant
Proceeds.
"Window Period" shall have the meaning given such
term in Section 4.17.
2. Article 2 of the Agreement is amended in its entirety
to read as follows:
ARTICLE 2
_________
AMOUNT AND TERMS OF LOAN
________________________
Section 2.01 The Loan; Priority of Loan Tranches
in Liquidation.
(a) The Lender has made a loan to the Borrower
(the "Loan"), which immediately prior to the
effectiveness of this Amendment, had an outstanding
principal balance of $62,155,325.18, together with
accrued but unpaid interest thereon in the amount of
$212,860.70. As of the Amendment Date, all accrued but
unpaid interest under the Loan shall be capitalized as
principal. The Loan is subdivided into two tranches.
As of Amendment Date, the first tranche (the "Tranche A
Loan") has an outstanding principal balance of
$40,000,000. As of the Amendment Date, the second
tranche (the "Tranche B Loan") has an outstanding
principal balance of $22,368,185.88. The Loan,
including the Tranche A Loan and the Tranche B Loan, is
not revolving and amounts prepaid or repaid may not be
reborrowed. The Lender has no commitments to make
further advances on the Loan. Amounts of accrued and
unpaid interest that are added to the Tranche A Loan
pursuant to Section 2.04(b) shall not constitute
further advances on, or reborrowings under, the Loan.
The Loan made by the Lender to the Borrower pursuant to
this Agreement shall be evidenced by the Note.
(b) Notwithstanding any other provisions of the
Note or this Agreement regarding the application of
payments against the amounts due with respect to the
Loan, upon any receivership, insolvency proceeding,
bankruptcy proceeding, assignment for the benefit of
creditors, reorganization, arrangement with creditors,
sale of assets for creditors, dissolution, liquidation,
or marshalling of the assets of the Borrower (each, a
"Bankruptcy Event"), other than with respect to the
application of the proceeds of the Warrants under
Section 2.08(c), (d) and (e) hereof, which shall remain
controlled by Section 2.08(c), (d) and (e) hereof, all
amounts received for application against the Loan or
any interest, prepayment premiums, and other amounts
due with respect to the Loan, shall be applied first to
the amounts due with respect to the Tranche A Loan,
including all principal, interest and other amounts due
with respect to the Tranche A Loan, whether incurred
before or after such Bankruptcy Event, and then to any
amounts due with respect to the Tranche B Loan. This
Section shall have no impact on the application of
payments against amounts due with respect to the Loan
prior to the occurrence of any Bankruptcy Event.
Section 2.02 AFE Approval for Scheduled Capital
Operations.
(a) Prior to the Conveyance Expiration Date, AFE
approval for Scheduled Capital Operations shall be
required as provided for in Section 2.03(a). The
rights and obligations of Lender and Borrower in the
event Lender rejects or approves any such Scheduled
Capital Operation are set forth in Section 2.03(a).
(b) If after the Conveyance Expiration Date
Borrower determines that the estimated cost of
completing a Scheduled Capital Operation exceeds the
cost set out in Schedule I, then prior to commencing
such operation Borrower may, but shall not be obligated
to, submit to Lender an AFE setting forth Borrower's
best estimate of the cost of such operation. Any AFE
submitted by Borrower pursuant to the terms of this
Section 2.02(b) shall contain all of the information as
required pursuant to Section 2.03(a). Upon receipt of
any such AFE, Lender shall comply with the time
requirements set out in Section 2.03(c). If Lender
approves such AFE, then Borrower shall be obligated to
complete such operation as provided in Section 4.17 and
the cost of such operation shall be accounted for as
provided in clause (ii)(b) of the definition of Capital
Expenses. If Lender rejects or is deemed to have
rejected such AFE, then Borrower may either (i) elect
not to commence such operation and Borrower's
obligation to complete such Scheduled Capital Operation
under Section 4.17 shall be deemed waived by the Lender
or (ii) complete such operation pursuant to the
provisions set out in Section 2.03(d). If Lender
rejects or is deemed to have rejected such AFE and
Borrower has elected not to commence such operation,
then Exhibit J to this Agreement shall be revised as
provided for in Section 2.17.
(c) Borrower shall have the right to propose
commencing an operation described on Schedule I prior
to the applicable Window Period. If such earlier date
and the AFE submitted with respect to such operation
are consented to by Lender, then Borrower shall
commence such operation within 60 days after Borrower's
receipt of such consent and thereafter conduct such
operation as a reasonable and prudent operator. The
costs of any such operation shall be accounted for as
provided in clause (i) of the definition of Capital
Expenses. If Lender elects not to consent to the
proposed earlier commencement date, then Borrower shall
be prohibited from proceeding with such operation at
the earlier date and shall instead be obligated to
comply with the time requirements set forth in Section
4.17.
Section 2.03 Conducting Capital Operations.
(a) Prior to the Conveyance Expiration Date
Borrower shall not commence any Capital Operation on
the Mortgaged Properties, including Scheduled Capital
Operations and Nonscheduled Capital Operations, without
first obtaining Lender's written consent as provided in
Section 2.03(c). To obtain such consent Borrower shall
as to each operation submit to Lender an AFE setting
forth among other things the estimated commencement
date, the proposed depth, the objective zone or zones
to be tested, the surface and bottom hole locations,
applicable details regarding directional drilling, the
equipment to be used and the estimated costs of the
operation, and such other information as Lender
reasonably may request. Lender shall respond to such
AFE as provided for in Section 2.03(c) below. If
Lender consents to a Capital Operation pursuant to the
terms of this Section 2.03(a), then Borrower shall
commence such operation within 60 days after receipt of
such consent and thereafter conduct such operation as a
reasonable and prudent operator. If Lender elects not
to consent to a Scheduled Capital Operation pursuant to
the terms of this Section 2.03(a), then Borrower's
obligation to complete such Scheduled Capital Operation
shall terminate and Exhibit J to this Agreement shall
be revised as provided for in Section 2.17 below. If
prior to the Conveyance Expiration Date Lender elects
not to consent to a Capital Operation pursuant to this
Section 2.03(a), Borrower may not perform such Capital
Operation but may re-propose such Capital Operation
pursuant to Sections 2.02(b) or 2.03(b), as applicable,
after the Conveyance Expiration Date.
(b) After the Conveyance Expiration Date Borrower
shall not commence any Nonscheduled Capital Operation
on the Mortgaged Properties without first submitting
such Nonscheduled Capital Operation to Lender for its
consent pursuant to this Section 2.03(c). With respect
to each Nonscheduled Capital Operation submitted
pursuant to the preceding sentence, Borrower shall
submit to Lender an AFE complying with the requirements
set forth in Section 2.03(a). Lender shall respond to
such AFE as provided for in Section 2.03(c) below. If
Lender consents to a Nonscheduled Capital Operation
pursuant to the terms of this Section 2.03(b), then
Borrower shall commence such operation within 60 days
after receipt of such consent and thereafter conduct
such operation as a reasonable and prudent operator.
If Lender elects not to consent to such Nonscheduled
Capital Operation, then Borrower shall have the option
of either not proceeding with such operation or
completing such operation as provided for in Section
2.03(d) below.
(c) With respect to any AFEs submitted pursuant
to the terms of Sections 2.02(b), 2.02(c), 2.03(a),
2.03(b), 2.18, and 2.20, Lender shall have ten (10)
Business Days (48 hours if the rig is on location and
Borrower notifies Lender of such circumstance at the
time the AFE or Supplemental AFE is submitted for
approval, or sixty (60) Business Days if the AFE
involves the construction of a platform and/or
facilities either as a part of the well proposal or as
a separate proposal) after receipt of such AFE and all
other information requested by Lender within which to
approve the proposed AFE and the related operation.
Failure of Lender to notify Borrower in writing within
such period of time of such approval shall be deemed
disapproval of the proposed AFE and the related
operation. If, however, Lender notifies Borrower in
writing prior to the expiration of such period that it
consents to Borrower's AFE, Lender shall be deemed to
have consented to the commencement and completion by
Borrower of such operation pursuant to such AFE. In
addition, if within 60 days after Borrower's receipt
from Lender of a consent as provided for pursuant to
the terms of this Section 2.03 Borrower has not
commenced the operation covered by such consent, such
consent shall be void and Borrower shall be required to
resubmit the applicable AFE and operation to Lender for
its approval as provided for in this Section 2.03.
(d) If after the Conveyance Expiration Date
Lender elects not to consent or is deemed to have
elected not to consent to a Capital Operation and the
related AFE submitted by Borrower pursuant to Section
2.02(b) or 2.03(b), then Borrower shall have the
following options: (x) Borrower may elect not to
perform such Capital Operation, and if such Capital
Operation is a Scheduled Capital Operation, Borrower's
obligation to complete such Scheduled Capital Operation
shall terminate and Exhibit J to this Agreement shall
be revised as provided for in Section 2.17; or (y)
Borrower may complete at its sole cost and expense the
operation provided for in such AFE ("Excluded
Operation") and the costs and revenues attributable to
such Excluded Operation shall be accounted for as
follows:
(i) Borrower shall be solely responsible for
the payment of its share of all costs incurred by
Borrower to conduct the Excluded Operation ("Excluded
Operation Costs"); provided, however, notwithstanding
anything in this Agreement or the Security Instruments
to the contrary, Borrower shall be entitled to the Net
Operating Cash Flow, if any, that is attributable
solely to the Excluded Operation until such date as the
Borrower has received an amount equal to 200% of the
Excluded Operation Costs. For purposes of calculating
Net Operating Cash Flow, Net Production Revenues and
Operating Costs with respect to the Excluded Operation,
the commencement date for such calculations shall be
the completion date of the Excluded Operation.
(ii) All Net Operating Cash Flow to which
Borrower is entitled pursuant to Section 2.03(d)(i)
shall be excluded from the calculation of the Monthly
Payment Amount. At such time as Borrower has received
Net Operating Cash Flow from the Excluded Operation
equal to 200% of the Excluded Operation Costs, the Net
Operating Cash Flow related to the Excluded Operation
shall no longer be excluded from the calculation of the
Monthly Payment Amount and shall instead be included in
such calculations.
(iii) Nothing in this Section 2.03(d)
shall in any manner waive, limit or otherwise affect
the Liens granted pursuant to the Security Instruments
against the Mortgaged Properties subject to the
Excluded Operation.
Section 2.04 Interest and Additions to Principal.
(a) The aggregate outstanding principal amount of
the Tranche A Loan shall bear interest at the
Applicable Interest Rate. Past due interest, principal
(including principal on the Tranche B Loan), and other
amounts hereunder shall bear interest at the Past Due
Rate from the date due until paid. All interest
accrued hereunder shall be computed on the per annum
basis of a year of 365 or 366 days, as the case may be,
and for the actual number of days (including the first
day but excluding the last day) elapsed.
(b) Accrued but unpaid interest on the Loan shall
be paid monthly on each Payment Date in an amount equal
to the lesser of (i) the accrued but unpaid interest on
such Payment Date or (ii) the Monthly Payment Amount
computed as of the end of the second month preceding
the month in which such Payment Date falls. For
example, with respect to the Payment Date occurring on
September 29, 1995, accrued but unpaid interest shall
be paid to the extent of the Monthly Payment Amount
computed as of the end of the month of July, 1995. Any
accrued but unpaid interest remaining outstanding on
the Tranche A Loan after application of such payments
on each Payment Date shall not be considered past due
at such time, but shall be added to the principal
amount of the Tranche A Loan.
Section 2.05 Principal Repayment. All
outstanding principal, including any amounts which have
been added to principal, and all accrued but unpaid
interest on each Loan Tranche shall be due and payable
on the Final Maturity Date applicable to such Loan
Tranche.
Section 2.06 Note. To evidence the Loan made by
the Lender pursuant to this Agreement, the Borrower
will issue, execute and deliver the Note in the
principal amount of $100,000,000 dated as of the date
of this Agreement. At the time the Loan is made
hereunder or payment (including, without limitation,
prepayments) is made on the Note, the Lender is hereby
irrevocably authorized by the Borrower to make an
appropriate notation on a ledger forming a part of the
Note reflecting the amount of each Loan Tranche loaned
or paid and the date thereof; provided however, the
failure of the Lender to do so shall not relieve the
Borrower or any other liable party of its liability
hereunder or under the Note or subject the Borrower or
any other liable party to additional liability under
the Note. Furthermore, the Lender is hereby
irrevocably authorized by the Borrower to attach to and
to make a part of the Note a continuation of any such
schedule of payments, as and when required, reflecting
the amount of each Loan Tranche paid (including
payments made pursuant to Section 2.08) and the date of
such payment. The aggregate unpaid amount of each Loan
Tranche reflected by the notations by the Lender on its
records or a ledger sheet or sheets affixed to the Note
shall be deemed rebuttably presumptive evidence of the
principal amount owing on such Loan Tranche under the
Note. Interest on the Tranche A Loan shall be
calculated on the unpaid sums actually loaned and
outstanding pursuant to the terms of this Agreement
(including accrued but unpaid interest added to
principal in accordance with the terms hereof) and
interest shall accrue only for the period from the date
or dates advanced (or, in the case of accrued but
unpaid interest added to principal in accordance with
the terms hereof, from the date such interest was added
to principal) until repaid. The liability for payment
of principal evidenced by the Note shall be limited to
the principal amounts actually loaned and outstanding
or added to principal pursuant to this Agreement.
Section 2.07 Voluntary Prepayments. The Borrower
may at its option prepay the outstanding principal
amount of the Loan, in whole or from time to time in
part (but no partial prepayment shall be less than
$1,000,000), upon giving the Lender at least five
Business Days' prior notice of the aggregate principal
amount to be prepaid, and in the event of any such
notice being given, the amount so notified shall be due
and payable on the day so notified, together with
accrued but unpaid interest on the outstanding
principal amount of each Loan Tranche being prepaid to
the date of prepayment. All prepayments made under
this paragraph shall be applied first to the
outstanding principal balance of the Tranche A Loan and
then to the outstanding principal balance of the
Tranche B Loan.
Section 2.08 Mandatory Prepayments.
(a) On each Payment Date, the Borrower shall
prepay the principal amount of the Loan outstanding
hereunder in an amount equal to the amount by which the
Monthly Payment Amount computed as of the end of the
second month preceding the month in which such Payment
Date falls exceeds the interest due on the Loan on such
Payment Date. In addition, on any Payment Date on
which the outstanding principal amount of the Loan
exceeds, or would pursuant to any of the provisions
hereof exceed, the Maximum Principal Amount, the
Borrower will prepay the outstanding principal amount
of the Loan by an amount sufficient to reduce the
outstanding principal amount on such Payment Date to
the Maximum Principal Amount. Borrower will give the
Lender at least five Business Days prior notice of the
aggregate principal amount to be prepaid on each
Payment Date pursuant to this paragraph. Prepayments
of principal under this paragraph shall be without
premium or penalty. All prepayments due under this
paragraph shall be applied first to the payment of all
accrued but unpaid interest on the Tranche A Loan, then
to the principal due on the Tranche A Loan, then to the
principal due on the Tranche B Loan.
(b) If on any Semiannual Payment Date (i) the
aggregate outstanding principal amount of the Loan
exceeds, or would pursuant to any of the provisions
hereof exceed, the Scheduled Principal Amount for such
date and (ii) the corresponding Trailing Twelve Month
Cash Flow for the twelve month period ending at the end
of the second preceding month is less than the Required
Trailing Twelve Month Cash Flow for such Semiannual
Payment Date, the Borrower shall on such Payment Date
prepay the outstanding principal amount of the Loan by
the amount necessary to reduce the outstanding
principal balance of the Loan to the Scheduled
Principal Amount applicable to such Semiannual Payment
Date. Borrower will give the Lender at least five
Business Days' prior notice of the aggregate principal
amount to be prepaid on the Loan on each Semiannual
Payment Date pursuant to this paragraph. Prepayments
of principal under this paragraph shall be without
premium or penalty, and shall be made together with
payment of all accrued but unpaid interest on the
outstanding principal amount of the Loan to the date of
prepayment. All prepayments due under this paragraph
shall be applied first to the payment of all accrued
but unpaid interest on the Tranche A Loan, then to the
principal due on the Tranche A Loan, then to the
principal due on the Tranche B Loan.
(c) If any Indebtedness is outstanding, Borrower
shall cause Lender to receive all of the Tranche A
Warrant Proceeds. Any Tranche A Warrant Proceeds
received by Lender shall be applied to the outstanding
Indebtedness in the following order: First to the
payment of all accrued but unpaid interest on the
Tranche A Loan, then to the principal due on the
Tranche A Loan, then to the principal due on the
Tranche B Loan, and finally to any other fixed, agreed
upon or liquidated amount of the outstanding
Indebtedness. Any surplus shall be paid to the
Borrower within 3 Business Days after Lender's receipt
of such proceeds.
(d) If the Anschutz Option is exercised, Lender
shall be entitled to receive from Anschutz the Gross
Warrant Proceeds in accordance with the terms of the
Anschutz Option. All Net Warrant Proceeds received by
Lender in connection with the exercise of the Anschutz
Option shall be applied to the outstanding Indebtedness
in the following order: First to the principal due on
the Tranche B Loan, then to the payment of all accrued
but unpaid interest on the Tranche A Loan, then to the
principal due on the Tranche A Loan, and finally to any
other fixed, agreed upon or liquidated amount of the
outstanding Indebtedness. Any surplus shall be paid to
the Borrower within 3 Business Days after Lender's
receipt of such proceeds.
(e) If after the expiration of the Anschutz
Option the Tranche B Warrant is transferred by Lender
and any Indebtedness is outstanding, any proceeds
payable to Borrower as payment of the exercise price of
the Tranche B Warrant shall be paid to Lender and
applied to the outstanding Indebtedness in the
following order: First to the principal due on the
Tranche B Loan, then to the payment of all accrued but
unpaid interest on the Tranche A Loan, then to the
principal due on the Tranche A Loan, and finally to any
other fixed, agreed upon or liquidated amount of the
outstanding Indebtedness. Any surplus shall be paid to
the Borrower within 3 Business Days after Lender's
receipt of such proceeds.
(f) If the Lender exercises any of the Tranche B
Warrant, the Lender may offset the exercise price owed
by the Lender to the Borrower in connection with such
exercise against the outstanding principal balance of
the Loan, all accrued but unpaid interest thereon, and
any other fixed, agreed upon or liquidated amount of
the Indebtedness and such offset shall be applied in
the order set forth in Paragraph (e) above.
(g) If prior to the satisfaction of the
Indebtedness Borrower issues Common Stock pursuant to
the exercise of any of the Warrants and Lender fails to
receive the full payment it is entitled to from the
party exercising such Warrants, then Borrower shall
immediately pay to Lender an amount sufficient to cover
the shortfall. If at any time prior to the
satisfaction of the Indebtedness Borrower receives any
proceeds in connection with the exercise of any of the
Warrants, Borrower shall immediately deliver such
proceeds to Lender. Any payment made by Borrower
pursuant to the preceding two sentences shall be
applied against the Loan in the order provided for in
the applicable paragraph of this Section 2.08 based on
the Warrant that was exercised.
Section 2.09 Payment Procedure. All payments and
prepayments made by the Borrower under the Note or this
Agreement shall be made by wire transfer in immediately
available funds before 1:00 p.m. Mountain Time on the
date such payment is required to be made to the
Lender's Account. Any payment received and accepted by
the Lender after such time shall be considered for all
purposes (including the calculation of interest, to the
extent permitted by law) as having been made on the
Lender's next following Business Day. Except as
otherwise expressly required under this Agreement, all
payments and prepayments received by the Lender for
application against the Indebtedness shall be applied
to the required principal payments due under the Loan,
to the accrued but unpaid interest on the Loan, and to
the other amounts due which are Indebtedness in the
order determined by the Lender.
Section 2.10 Business Days. If the date for any
Loan payment or prepayment falls on a day which is not
a Business Day, then for all purposes of the Note and
this Agreement the same shall be deemed to have fallen
on the next following Business Day, and such extension
of time shall in such case be included in the
computation of payments of interest.
Section 2.11 Collateral. To secure full and
complete payment and performance of the Indebtedness,
the Borrower, as applicable, shall execute and deliver
or cause to be executed and delivered the Security
Instruments creating first and prior liens and security
interests in the Collateral. Borrower, as applicable,
shall execute and deliver or cause to be executed and
delivered such further documents and instruments,
including, without limitation, Uniform Commercial Code
financing statements, as Lender, in its sole
discretion, deems necessary or desirable to evidence
and perfect its Liens in the Collateral.
Section 2.12 Set Off. Lender shall have the
right to set off and apply against the Indebtedness in
such manner as Lender may determine at any time and
without notice to Borrower, the Borrower's interest in
any and all amounts at any time owing from Lender (or
any Affiliate of Lender), to Borrower in connection
with the Mortgaged Properties, including without
limitation, any production proceeds payable by any
Affiliate of Lender to Borrower from any Mortgaged
Property, upon the occurrence and continuance of an
Event of Default, whether or not the Indebtedness is
then due. In addition to Lender's right of set off and
as further security for the Indebtedness, Borrower
hereby grants to Lender a security interest in all
amounts at any time credited by or owing from Lender
(or any Affiliate of Lender) to Borrower in connection
with the Mortgaged Properties. The rights and remedies
of Lender hereunder are in addition to other rights and
remedies (including, without limitation, other rights
of set off) which Lender may have.
Section 2.13 Production Proceeds. From and after
the occurrence of a Suspension Event, Borrower at the
request of Lender shall direct and cause all purchasers
of Hydrocarbons produced from the Mortgaged Properties
to deposit all payments of any nature whatsoever due
and owing by such Persons to Borrower directly into the
Lender's Account. In this connection the Lender shall
be authorized upon the occurrence of a Suspension Event
to complete and deliver to such purchasers the Transfer
Orders. Funds deposited in the Lender's Account in
accordance with the terms hereof shall be credited when
collected to the payment of the Indebtedness in
accordance with the other provisions of this Agreement.
Section 2.14 Intentionally Deleted.
Section 2.15 Intentionally Deleted.
Section 2.16 Borrower's Right to Convey.
(a) Subject to the satisfaction of the conditions
precedent specified in paragraph (c) below, commencing
on the Option Commencement Date and ending on the
Conveyance Expiration Date, the Borrower shall have a
one-time option to elect to convey the Mortgaged
Properties and the Option Agreement to the Lender (the
"Conveyance Option") in satisfaction of the
Extinguished Obligations by giving the Lender written
notice of the Borrower's intent to exercise the
Conveyance Option. Such written notice must be
delivered on or after the Option Commencement Date but
prior to the occurrence of the Conveyance Expiration
Date. The Conveyance Option shall expire if Borrower
fails to provide such written notice prior to the
occurrence of the Conveyance Expiration Date. If the
Borrower exercises the Conveyance Option in accordance
with this Section 2.16, then within twenty (20) days
after receipt of the Borrower's notification of the
Borrower's election to exercise the Conveyance Option
the Lender shall designate in writing to the Borrower
the closing date for the conveyance (the "Conveyance
Date"), which Conveyance Date shall be a Business Day
not less than (60) days but not more than one hundred
and twenty (120) days after the date the Lender
provides such designation to the Borrower. Lender's
designation of a Conveyance Date shall not be deemed a
waiver of any of its rights under this Section 2.16
including, without limitation, the right to elect not
to accept the conveyance of any or all of the Mortgaged
Properties pursuant to Section 2.16(d). The closing
shall be held at the offices of Lender in Denver,
Colorado.
(b) Borrower and Lender shall each file on their
own behalf, if required, such notifications and reports
as are necessary to comply with the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Antitrust Improvements Act of 1976 ("HSR Act").
(c) The Borrower's right to exercise the
Conveyance Option in accordance with subsection (a)
above is subject to Borrower's satisfaction of the
following conditions precedent on the Conveyance Date:
(i) no Default shall have occurred and be
continuing, other than a Default based on Borrower's
failure to comply with the terms of Section 2.08(b);
(ii) all of the representations and
warranties of the Borrower contained in Sections 3.08,
3.09, 3.11, 3.13 and 3.21 through 3.26 of this
Agreement and, to the extent representations and
warranties are in the Assignment, in the Assignment
shall be true and correct in all material respects on
and as of the Conveyance Date;
(iii) the Mortgaged Properties shall not be
subject to (A) any Liens other than the Excepted Liens
or (B) except to the extent same do not have a material
adverse effect on the value of the Mortgaged
Properties, any burdensome restriction, restraint or
hazard not customary in the oil and gas industry
pursuant to any contract entered into after the
Amendment Date;
(iv) no suit, action, or other proceeding
shall be pending or threatened before any court or
governmental agency (A) in which it is sought to
restrain or prohibit the performance of or to obtain
substantial damages or other relief in connection with
the consummation of the transactions contemplated by
the Assignment or (B) against or affecting Borrower or
any Subsidiary that involves the possibility of any
judgment or liability not fully covered by insurance,
and which would have a material and adverse effect on
the value of the Mortgaged Properties taken as a whole;
and
(v) the Tranche A Warrant shall have expired
or been fully exercised.
(d) Notwithstanding Borrower's right to convey
the Mortgaged Properties pursuant to paragraph (a)
above, the Lender shall have the right, provided that
Lender notifies Borrower of its exercise of such right
at least three (3) days prior to the closing as
provided for in Section 2.16(h), to elect not to accept
the conveyance of any or all of the Mortgaged
Properties and any election of the Lender to reject the
conveyance of any or all of the Mortgaged Properties
shall not impair the extinguishment of the Extinguished
Obligations as provided below.
(e) Notwithstanding anything in this Agreement to
the contrary, from and after the Conveyance Election
Date, Borrower shall comply with the following:
(i) Borrower shall not be permitted to
propose or commence any additional Capital Operations,
and the obligations of Borrower with respect to
Scheduled Capital Operations that would otherwise be
required to be completed during the period from the
Conveyance Election Date through the Conveyance Date,
together with any related breaches of this Agreement
resulting from such prohibition, shall be waived.
(ii) Borrower shall immediately provide or
make available to Lender copies of all AFE's, notices
and other information received by Borrower and relating
to the ownership or operation of the Mortgaged
Properties.
(iii) Borrower shall not (A) operate or
in any manner deal with, incur obligations with respect
to, or undertake any transactions relating to, the
Mortgaged Properties other than transactions (1) in the
normal, usual and customary manner, (2) of a nature and
in an amount consistent with prior practice, and (3) in
the ordinary and regular course of business of owning
and operating the Mortgaged Properties; or (B) waive,
compromise or settle any right or claim that would
adversely affect the ownership, operation or value of
any of the Mortgaged Properties; and
(iv) Borrower shall make or give all
notifications, filings, consents or approvals, from, to
or with all governmental authorities, and take all
other actions reasonably requested by Lender, necessary
for, and cooperate prior to and after the Conveyance
Date with Lender in obtaining, the issuance, assignment
or transfer, as the case may be, by each such authority
of such permits as may be necessary for Lender to own
and operate the Mortgaged Properties following the
consummation of the transactions contemplated in this
Section 2.16.
(f) If Borrower properly exercises its right to
exercise the Conveyance Option, then prior to the
Conveyance Date Borrower shall cause the following to
occur:
(i) all filings and notifications required
to be made or given by Borrower for the conveyance of
the Mortgaged Properties to Lender shall have been
made, except for filings and notifications that are
customarily made subsequent to the conveyance of oil
and gas properties such as the Mortgaged Properties;
(ii) the waiting period under the HSR Act
applicable to the transactions contemplated in this
Section 2.16 shall have expired or been terminated; and
(iii) Within 30 days after Borrower's
delivery of written notice of its election to exercise
the Conveyance Option, Borrower shall deliver to Lender
a true and correct list of all (i) operating and other
agreements and documents which contain options, rights
of first refusal, preferential purchase rights or
similar rights respecting the Mortgaged Properties
("Preferential Purchase Rights") and (ii) any consents
or approvals that must be obtained from third parties
prior to the assignment to Borrower of any of the
Mortgaged Properties ("Required Consents").
Thereafter, Borrower shall do the following:
(A) On or before the Conveyance Date,
Borrower shall use reasonable efforts to obtain all
Required Consents. At least three days prior to the
Conveyance Date Borrower shall provide Lender with
written notice specifying any Mortgaged Properties
("Retained Properties") for which such Required
Consents have not obtained. The Retained Properties
shall be excluded from the Assignment and shall be
retained by Borrower. Contemporaneously with the
closing provided for in Section 2.16(h), Borrower shall
deliver to Lender in immediately available funds an
amount equal to the Fair Market Value of the Retained
Properties. Notwithstanding anything herein to the
contrary, if the Fair Market Value of the Retained
Properties equals or exceeds 25% of the Extinguished
Obligations, then Lender shall have the right prior to
the Conveyance Date to terminate the Conveyance Option,
whereupon Borrower shall retain title to all of the
Mortgaged Properties and the terms and conditions of
this Agreement other than this Section 2.16 shall
remain in full force and effect. The value of the
Retained Properties ("Fair Market Value of the Retained
Properties") shall be determined as follows: Within 20
days after receipt of Borrower's notice delivered
pursuant to the terms of Section 2.16(f)(iii) above,
Borrower and Lender shall attempt to agree upon the
fair market value of the Mortgaged Properties subject
to Required Consents. The fair market value of such
properties shall take into account the proved
producing, proved non-producing, probable and possible
oil and gas reserves attributable to such properties.
If Borrower and Lender are unable to agree on the fair
market value of such properties within such 20-day
period, then Borrower shall engage the engineering firm
that prepared the most recent Reserve Report pursuant
to Section 4.01. Such engineering firm shall determine
the fair market value of the proved producing, proved
non-producing, probable and possible oil and gas
reserves attributable to such properties based on such
assumptions as such engineering firm may deem
appropriate utilizing customary industry practices.
(B) Promptly after Lender's receipt of
Borrower's notice specifying the Mortgaged Properties
that are subject to Preferential Purchase Rights,
Lender shall notify Borrower of the dollar amount of
the Extinguished Obligations that Lender in its
reasonable judgment is attributing to such properties.
Thereafter, Borrower shall use reasonable efforts to
obtain prior to the Conveyance Date the waiver of all
Preferential Purchase Rights affecting any of the
Mortgaged Properties. If a third party who has been
offered an interest pursuant to a Preferential Purchase
Right elects prior to the Conveyance Date to purchase
the properties subject to such Preferential Purchase
Right ("Preferential Properties"), then the
Preferential Properties will be excluded from the
Assignment and the Preferential Properties shall be
conveyed by Borrower to the party exercising the
Preferential Purchase Right. The conveyance of the
Preferential Properties shall be consummated on the
Conveyance Date and the party exercising such
Preferential Purchase Right shall contemporaneously
with the delivery of an assignment from Borrower
deliver the purchase price, which shall be the value
designated by Lender, in immediately available funds
directly to the Lender.
(g) On the Conveyance Date the following shall
occur:
(i) Borrower shall deliver the following to
the Lender and, where applicable, such instruments
should be dated as of the Conveyance Date, properly
executed by authorized officers and, where appropriate,
acknowledged: (A) counterparts of the Assignment and
such other instruments as are necessary to effectuate
the conveyance of the Mortgaged Properties and the
Option Agreement to Lender (it being agreed that Lender
shall be responsible for securing any consents required
to effect an assignment by Borrower of the Option
Agreement to Lender); (B) letters in lieu of division
orders addressed to each purchaser of the Hydrocarbons;
(C) all of the Data (as defined in the Assignment) to
Lender's offices and shall deliver to Lender possession
of the Mortgaged Properties; (D) with respect to any
▇▇▇▇▇ that Borrower is designated as the operator under
the applicable operating or other similar agreement,
letters to all working interest owners in which
Borrower resigns as the operator and recommends Lender
or an affiliate of Lender as the successor operator;
and (E) such other documents and instruments as may be
reasonably necessary to give full effect to the
transactions contemplated by this Section 2.16.
(ii) Lender shall deliver the following to
Borrower and, where applicable, such instruments shall
be dated as of the Conveyance Date, properly executed
by authorized parties and, where appropriate,
acknowledged: (A) the Note, marked "cancelled,"
together with such other instruments as may be
reasonably necessary to evidence the extinguishment of
the Extinguished Obligations; (B) such documents or
instruments as may be necessary to cause the property
subject to the Security Instruments and any related
Collateral, to the extent that such property is either
rejected by Lender as provided in clause (d) above or
is a Retained Property, to be released from the Liens
created by the Security Instruments; and (C)
counterparts of the Assignment and such other documents
and instruments as may be reasonably necessary to give
full effect to the transactions contemplated by this
Section 2.16.
(h) Provided that the conditions set forth in
clauses (c) and (f) have been satisfied or waived by
Lender and provided further that Borrower has complied
in all material respects with the covenants required to
be performed by it prior to the Conveyance Date, then
on the Conveyance Date (and contemporaneously with
Borrower's and Lender's execution of the Assignment, if
applicable), the Extinguished Obligations shall be
deemed fully paid and extinguished. In addition, on
the Conveyance Date all Excluded Operation Costs and
Excluded Overrun Expenses attributable to the Mortgaged
Properties shall be deemed paid in full and Borrower
shall not be entitled to any additional payments of Net
Operating Cash Flow. Notwithstanding the execution of
the Assignment and the extinguishment of the
Extinguished Obligations, Borrower shall remain
responsible for all other Indebtedness including,
without limitation, the obligations with respect to
which Borrower is fully liable as provided in Section
6.03 below.
(i) As used in this Section 2.16, the term
"Mortgaged Properties" (A) shall not, from and after
the date of an election by Lender pursuant to Section
2.16(d) to exclude properties from the Assignment,
include any Mortgaged Properties with respect to which
Lender has exercised such right and (B) shall not
include any Retained Properties.
(j) Contemporaneously with the closing provided
for in Section 2.16(h), Borrower and Lender shall enter
into a termination agreement reasonably acceptable to
Borrower and Lender terminating the Swap Agreement.
Such termination agreement shall also provide for a
cash payment to be made by Borrower to Lender or by
Lender to Borrower, as the case may be, which payment
shall equal the monthly settlement amount due under the
Swap Agreement prorated through the Conveyance Date and
such payment shall not include an early termination
payment.
Section 2.17 Modification of Exhibits I and J.
(a) If Lender does not consent to an AFE with
respect to a Scheduled Capital Operation and Borrower
either (i) is not permitted to perform such Scheduled
Capital Operation as provided in Section 2.03(a) or
(ii) elects not to commence such Scheduled Capital
Operation pursuant to Section 2.03(d), or if an
adjustment to Exhibit J is required pursuant to
Sections 2.18 or 2.20, then in any such case Borrower
and Lender shall attempt to mutually agree on an
appropriate adjustment to the Scheduled Principal
Amount and the Required Trailing Twelve Month Cash
Flow. If Borrower and Lender are unable to agree on an
appropriate adjustment to such amounts, then the
Scheduled Principal Amount and the Required Trailing
Twelve Month Cash Flow shall instead be adjusted as
provided for on Attachment 1 to Exhibit J.
(b) Commencing on August 1, 1996 and on each
August 1 thereafter, Borrower shall have the right on
such date to propose to Lender revised Exhibits I and J
to this Agreement. If Borrower and Lender mutually
agree to the form and substance of such revised
Exhibits, then Borrower and Lender shall enter into an
acceptable amendment to this Agreement incorporating
such revised Exhibits. Nothing herein shall obligate
the Lender to agree at any time to any revision to
Exhibits I and/or J.
Section 2.18 Cost Overruns.
If Borrower anticipates incurring Overrun Expenses
in connection with any Capital Operation, Borrower
shall have the right to submit a Supplemental AFE
("Supplemental AFE') to Lender, which Supplemental AFE
shall set forth the estimated amount of the Overrun
Expenses, a copy of the original AFE for such
operation, the status of the work on the operation
including the depth drilled, any objective zone or
zones that have been tested, the expenses incurred, the
work remaining to be completed, the estimated costs
necessary to complete such work and such other
information as Lender may reasonably request. Lender
shall respond to any such Supplemental AFE within the
time period provided for in Section 2.03(c). If Lender
approves such Supplemental AFE then the costs set forth
in the Supplemental AFE shall be the only Overrun
Expenses approved with respect to such operation and
such costs shall be used in calculating the Approved
Overrun Expenses. If Lender elects not to consent to
the Supplemental AFE or is deemed to have elected not
to consent to the Supplemental AFE, Borrower shall have
the right to either (i) terminate its participation in
the operation covered by the Supplemental AFE or (ii)
continue its participation in such operation. If
Borrower elects the option set forth in clause (i)
above, then Borrower's obligation to complete such
operation shall terminate and Exhibit J attached hereto
shall be revised as provided for in Section 2.17. If
Borrower elects to continue with its participation as
provided for in clause (ii), then Borrower shall be
solely responsible for its share of the Overrun
Expenses ("Excluded Overrun Expenses") related to the
operation subject to the Excluded Overrun Expenses
("Excluded Overrun Operations"); provided, however,
notwithstanding anything in this Agreement or the
Security Instruments to the contrary, Borrower shall be
entitled to the Net Operating Cash Flow, if any, that
is attributable solely to the Excluded Overrun
Operation until such date as the Borrower has received
an amount equal to 200% of the Excluded Overrun
Expenses. For purposes of calculating Net Operating
Cash Flow, Net Production Revenues and Operating Costs
with respect to the Excluded Overrun Operation, the
commencement date for such calculations shall be the
completion date of the operations that caused the
Overrun Expenses. Borrower shall not have the right to
propose a Supplemental AFE with respect to Overrun
Expenses incurred in connection with any Scheduled
Capital Operation if Borrower's share of the initial
AFE submitted to the working interest owners prior to
the commencement of such Scheduled Capital Operation
was more than 110% (115% after January 1, 1998), of the
Schedule I amount for such operation and such initial
AFE was not submitted to Lender prior to the
commencement of such operation pursuant to the terms of
Section 2.02(b).
The Net Operating Cash Flow to which Borrower is
entitled pursuant to the immediately preceding
paragraph shall be excluded from the calculation of the
Monthly Payment Amount. At such time as Borrower has
received Net Operating Cash Flow from the Excluded
Overrun Operation equal to 200% of the Excluded Overrun
Expenses, the Net Operating Cash Flow related to the
Excluded Overrun Operation shall no longer be excluded
from the calculation of the Monthly Payment Amount and
shall instead be included in such calculations.
Nothing in this Section 2.18 shall in any manner waive,
limit or otherwise affect the Liens granted pursuant to
the Security Instruments against the Mortgaged
Properties subject to the Excluded Overrun Operation.
Section 2.19 Use of Proceeds. The Borrower
agrees to use the proceeds of the Loan made hereunder
only for the following purposes:
(a) Up to $5,800,000 to be used to reimburse the
Borrower for 80% of the costs of the Prior Capital
Operations.
(b) Up to $15,000,000 to be used to fund a
portion of the purchase price of the ▇▇▇▇▇▇▇▇
Properties.
(c) Up to $38,000,000 to be used to fund a
portion of the purchase price of the ▇▇▇▇▇▇ & ▇▇▇▇▇
Properties.
Section 2.20 Mandatory Capital Expenses. From
and after the Amendment Date and subject to the terms
of this Section 2.20, Borrower shall maintain the
leases described on Exhibit S attached hereto in full
force and effect. If Borrower determines at any time
that in order to maintain any lease described on
Exhibit S it anticipates incurring expenses in excess
of 110% of the amount set forth on Exhibit S as the
projected cost of extending or renewing such lease for
the time period specified on Exhibit S, then Borrower
shall have the right to submit an request for approval
(a "Lease Extension AFE") to Lender setting forth the
amount of such excess. Borrower's Lease Extension AFE
shall include information relating to the consideration
being requested by the lessor and such other
information as Lender may reasonably request. Lender
shall respond to any such request within the time
period provided for in Section 2.03(c) with respect to
AFEs. If Lender consents to Borrower's Lease Extension
AFE, then Exhibit S shall be deemed modified to
increase the applicable amount set forth on Exhibit S
by the excess amount approved by Lender. If Lender
elects not to consent to Borrower's request or is
deemed to have elected not to consent to such request,
Borrower shall have the right to either (i) allow the
lease in question to terminate or (ii) make the
payments provided for in its request. If Borrower
elects the option set forth in clause (i) above, then
Borrower's obligation with respect to any Scheduled
Capital Operations attributable to the lease in
question shall terminate and Exhibit J attached hereto
shall be revised as provided for in Section 2.17. If
Borrower elects to extend the lease in question as
provided for in clause (ii), then Borrower shall be
solely responsible for its share of all costs
("Excluded Leasehold Expenses") thereafter incurred to
extend the lease in question and develop the leasehold
properties ("Excluded Leasehold Properties"); provided,
however, notwithstanding anything in this Agreement or
the Security Instruments to the contrary, Borrower
shall be entitled to the Net Operating Cash Flow, if
any, that is attributable solely to the Excluded
Leasehold Properties until such date as the Borrower
has received an amount equal to 300% of the Excluded
Leasehold Expenses. For purposes of calculating Net
Operating Cash Flow, Net Production Revenues and
Operating Costs with respect to the Excluded Leasehold
Properties, the commencement date for such calculation
shall be the date Borrower makes the lease extension
payment that was the subject of the request that Lender
rejected. With respect to any Excluded Leasehold
Properties, Borrower shall not be permitted to commence
the drilling of any well with respect to such property
until after the Conveyance Expiration Date.
3. Section 3.06 of the Agreement is amended in its
entirety to read as follows:
Section 3.06 Financial Condition. The audited
consolidated balance sheet of the Borrower as at
December 31, 1994, and the related consolidated
statement of income, changes in shareholders' equity
and cash flow of the Borrower for the period ended as
of said date heretofore furnished to Lender and the
unaudited consolidated interim financial statements of
the Borrower dated as of March 31, 1995, heretofore
furnished to Lender have been prepared in accordance
with GAAP and present fairly the financial condition
and changes in financial position of the Borrower as at
the date or dates and for the period or periods stated.
Except as disclosed in the SEC Documents (as defined in
the Anschutz Purchase Agreement), since December 31,
1994, no change, either in any case or in the
aggregate, has since occurred in the condition,
financial or otherwise, of the Borrower which would
have a Material Adverse Effect.
4. Section 4.01 of the Agreement is amended by inserting
the following subsection:
(j) Accountant's Compliance Certificate.
Contemporaneously with the delivery of the financial
statements required pursuant to subsection 4.01(a)
above, Borrower shall cause its independent public
accountants delivering the financial statements to
state that in making the examination and reporting on
the financial statements described in Section 4.01(a)
above, nothing came to their attention to cause them to
believe that Borrower has failed to comply in any
material respect with the financial and accounting
provisions of this Agreement, or if they do conclude
that Borrower so failed, specifying the nature and
period of existence of such failure.
5. Section 4.05(b) of this Agreement is amended by
inserting the following at the end of such Section:
Notwithstanding anything herein to the contrary, Lender
acknowledges and agrees that Borrower may allow
Hydrocarbon Interests to expire according to their
terms if such Hydrocarbon Interests are no longer
capable of producing Hydrocarbons in economically
reasonable amounts. Lender acknowledges that the
▇▇▇▇▇▇▇ Lease has been determined not to be capable of
producing Hydrocarbons in economically reasonable
amounts.
If subsequent to the expiration of Hydrocarbon
Interests pursuant to the preceding provision Borrower
obtains new Hydrocarbon Interests (such new Hydrocarbon
Interests, to the extent same cover lands and depths
covered by the expired Hydrocarbon Interests, being
herein referred to as "Replacement Interests") covering
some or all of the lands and depths covered by the
expired Hydrocarbon Interests, Borrower shall provide
Lender with the opportunity to include the Replacement
Interests as part of the Collateral. On or prior to
the date Borrower obtains the Replacement Interests,
Borrower shall provide Lender with a written notice
describing the Replacement Interests, the consideration
paid or to be paid to obtain the Replacement Interests
and such other information as Lender may reasonably
request. If available, a copy of the document creating
the Hydrocarbon Interests shall be attached to such
notice. Lender shall respond to such notice within ten
(10) Business Days following receipt thereof. Failure
of Lender to notify Borrower in writing within such
period of time of its election to include such
Replacement Interests as a part of the Collateral shall
be deemed to constitute an election by Lender not to do
so. If Lender timely elects to include the Replacement
Interests as part of the Collateral, then the
acquisition of the Replacement Interests shall be
deemed an Approved Nonscheduled Capital Operation.
Within ten (10) Business Days after Lender's election
to include Replacement Interests as part of the
Collateral (or if Borrower has not executed the
document or documents creating such Replacement
Interests by such time, within ten (10) Business Days
following such execution), Borrower shall execute and
deliver to the Lender instruments sufficient to subject
the Replacement Interests and the lands covered thereby
to Liens for the benefit of the Lender, which
instruments shall include amendments to the Security
Instruments. In addition, with respect to any
Replacement Interests Borrower shall take such further
actions as may be required pursuant to Section 4.06
hereof. Once the Replacement Interests become subject
to the Security Instruments, Borrower may propose
operations with respect to the acreage included within
the Replacement Interests in accordance with the terms
of Section 2.03. If Lender elects or is deemed to have
elected not to include the Replacement Interests as
part of the Collateral, then Borrower shall have the
right to acquire such Replacement Interests and
thereafter develop the acreage subject to the
Replacement Interests without any further involvement
of Lender.
6. Section 4.09 of this Agreement is amended by inserting
the following at the end of such Section:
Notwithstanding the foregoing, the Borrower's right to
receive the proceeds of insurance as payment for the
restoration of the Mortgaged Properties shall, if such
proceeds are in an amount greater than $100,000, be
subject to approval as a Nonscheduled Capital Operation
under Section 2.03. Any such proceeds shall be
delivered to and retained by Lender until Borrower
proposes a subsequent operation with respect to such
proceeds. If the Lender does not approve the
subsequent operation proposed by Borrower, then (i) the
related proceeds shall be retained by Lender and
applied in the order provided for in Section 2.08(c)
above and (ii) Borrower and Lender shall attempt in
good faith to mutually agree on an adjustment to
Exhibit J to this Agreement to reflect an appropriate
reduction in the Monthly Payment Amount resulting from
such casualty loss. Any such adjustment shall be based
on the adjustment provisions and principles provided
for in Section 2.17. Neither Borrower nor Lender shall
have any liability if after the exercise of good faith
the parties are unable to agree to an acceptable
modification to Exhibit J pursuant to the terms of this
Section 4.09.
7. Section 4.17 of this Agreement is amended in its
entirety to read as follows:
Section 4.17 Capital Expenditures. Subject to
the terms of this Section 4.17 and to Lender's approval
rights as set forth in Section 2.02 and 2.03(a),
Borrower agrees to make the capital expenditures
involved in and to drill, complete, and equip for
production, or recomplete and rework, as the case may
be, each of the ▇▇▇▇▇ and to conduct each of the other
Scheduled Capital Operations and Prior Capital
Operations described or referred to on Exhibit I
hereto. Borrower shall commence each Scheduled Capital
Operation no earlier than six (6) months prior to the
first day of, and no later than six (6) months after
the last day of, the month specified on Exhibit I with
respect to such Scheduled Capital Operation (such time
period, with respect to a particular Scheduled
Operation, being herein referred to as the "Window
Period") and shall thereafter conduct such operation as
a reasonable and prudent operator. For purposes of all
Scheduled Capital Operations providing for the drilling
of a well, such operation shall be deemed to have
commenced on the date the well is spudded.
Notwithstanding the foregoing or any other provision
within this Agreement to the contrary, Borrower shall
not be required to commence a Scheduled Capital
Operation with respect to which (i) Borrower submits an
AFE pursuant to Section 2.02(b) and Lender rejects such
AFE; (ii) Lender refuses to consent to such operation
pursuant to Section 2.03(a); (iii) Lender elects not to
consent to a Supplemental AFE with respect to such
operation pursuant to Section 2.18 and Borrower elects
the option set forth in clause (i) thereof; or (iv)
Borrower provides evidence satisfactory to the Lender
that such operation is not reasonably necessary and
Lender has consented in writing to delay or elimination
thereof.
8. Article 4 of the Agreement is amended by adding the
following new Sections:
Section 4.19 Warrant Proceeds. Borrower
hereby acknowledges that so long as any Indebtedness is
outstanding Lender will be entitled to receive all
proceeds from the exercise of the Warrants. All
proceeds received by Lender as a result of the exercise
of the Warrants shall be applied as provided for in
Sections 2.08(c), (d) and (e), as applicable. Borrower
shall from time-to-time issue to the holders of the
Warrants (other than Lender) such notices as are
required to ensure that for so long as any Indebtedness
is outstanding all payments required to be made in
connection with the exercise of the Warrants shall be
paid from the holder of the Warrants directly to the
Lender. In addition, Borrower hereby acknowledges that
if the Anschutz Option is exercised, Lender will be
entitled to receive the Warrant Premium, which Warrant
Premium shall be retained by Lender and will not be
applied to the Indebtedness.
Section 4.20 Curative Issues. On or before
Decmeber 31, 1995, the Borrower shall (a) (i) obtain, on
terms no less favorable to the Borrower in any material
respects than those contained in the ▇▇▇▇ Lease dated April
18, 1988 (as amended, "▇▇▇▇ Lease"), oil and gas leasehold
interests ("Replacement Leases") covering the acreage and
depths which were previously covered by the ▇▇▇▇ Lease and
pledged to the Lender pursuant to the Security Instruments
but that, as of July 27, 1995, are no longer subject to (A)
the ▇▇▇▇ Lease or (B) leasehold interests constituting
Mortgaged Properties and (ii) execute and deliver to the
Lender such Security Instruments that are necessary or that
are reasonably requested by the Lender to grant the Lender a
first priority perfected lien in the Replacement Leases,
subject only to the Permitted Encumbrances described in
Exhibit A to the Deed of Trust, Assignment of Production,
Security Agreement and Financing Statement dated as of
December 28, 1993; or (b) prepay the principal amount of the
Loan outstanding hereunder in an amount equal to $100,000.
Any prepayment made under this Section 4.20 shall be applied
first to the outstanding principal balance of the Tranche A
Loan and then to the outstanding principal balance of the
Tranche B Loan. In connection with any prepayment made
under this Section 4.20, the Borrower shall also pay the
accrued but unpaid interest on the outstanding principal
amount of each Loan Tranche being prepaid to the date of
prepayment.
9. Section 5.01 of the Agreement is amended in its entirety
to read as follows:
Section 5.01 Liens. The Borrower will not
create, incur, assume, or permit to exist any Lien on
any of the Mortgaged Properties except (a) Liens
securing the payment of any Indebtedness and (b)
Excepted Liens. Notwithstanding anything in this
Agreement to the contrary, the term "Excepted Liens"
shall not include the ▇▇▇▇▇ ▇▇▇▇.
10. Section 5.03 of the Agreement is amended in its
entirety to read as follows:
Section 5.03 Sale of Assets, Etc. The
Borrower will not sell, assign, lease, or otherwise
dispose of (whether in one transaction or in a series
of transactions) all or substantially all of its
Properties (exclusive of the Mortgaged Properties),
whether now owned or hereafter acquired, to any Person
unless in connection with any such transaction the
assignee (i) acquires the Mortgaged Properties and (ii)
expressly assumes in writing the due and punctual
performance and observance of all of Borrower's
obligations under this Agreement and the Price
Protection Agreements. Contemporaneously with the
closing of any such transaction, Borrower shall provide
Lender with an original signed counterpart of the
assumption agreement.
11. Section 5.06 of the Agreement is amended in its
entirety to read as follows:
Section 5.06 Sale of Properties. Except
as permitted pursuant to Sections 2.16 and 5.03, the
Borrower will not sell or otherwise transfer any
Mortgaged Property other than the sale of Hydrocarbons
after they have been produced in the ordinary course of
business.
12. The Agreement is amended by adding the following
Sections:
Section 5.13 Warrants. The Borrower will not
create, incur, assume, or permit to exist any agreement
of the Borrower which could prohibit the payment of the
proceeds from the exercise of any of the Warrants to
the Lender for application in accordance with the
provisions of Sections 2.08(c) and (d). Borrower
hereby represents to Lender that no agreement currently
exists which (i) could prohibit the payment to the
Lender of the proceeds from the exercise of any of the
Warrants or (ii) the application of such proceeds in
accordance with the provisions of Sections 2.08(c) and
(d). The Borrower will not amend, supplement, replace
or otherwise modify the terms of the Tranche A Warrant
to permit the exercise of the Tranche A Warrant on a
date occurring after the Expiration Date (as defined in
the Tranche A Warrant as in effect on even date
herewith).
13. Section 6.01(l) of the Agreement is amended in its
entirety to read as follows:
(l) The Borrower shall default in performance of
any of its obligations under the Swap Agreement, Option
Agreement, any other Price Protection Agreement, the
Warrants, or the Registration Rights Agreement; or
14. Section 8.07 of the Agreement is amended in its
entirety to read as follows:
Section 8.07 Successors and Assigns. All
covenants and agreements contained by or on behalf of
the Borrower under this Agreement and any other Loan
Document shall bind its successors and assigns and
shall inure to the benefit of the Lender and its
successors and assigns. The Borrower shall not,
however, have the right to assign its rights under this
Agreement or any interest herein, without the prior
written consent of the Lender. The Lender may, without
the consent of Borrower, (i) prior to the expiration of
the Anschutz Option, sell, assign, transfer, pledge or
grant a security interest in all, but not less than
all, of its interests in the Tranche B Loan, the
Tranche B Warrant and related interests in this
Agreement and the other Loan Documents, (ii) prior to
the expiration of the Anschutz Option, sell, assign,
transfer, pledge or grant a security interest in all or
any portion of its interests in the Tranche A Loan and
related interests in this Agreement and the other Loan
Documents, (iii) after the expiration of the Anschutz
Option, sell, assign, transfer, pledge or grant a
security interest in all or any portion of its
interests under this Agreement and the other Loan
Documents, or (iv) at any time grant participations in
all or a portion of this Agreement and the other Loan
Documents except that in any case any assignment of
Lender's interests under this Agreement to an entity
that is not an Affiliate of Enron Corp. or managed by
Enron Corp. or one of its Affiliates or for which
neither Enron Corp. nor its Affiliates serve as
administrative agent shall be subject to Borrower's
prior written consent which shall not be unreasonably
withheld. In the event that the Lender grants
participations in the Note or other Indebtedness of the
Borrower incurred or to be incurred pursuant to this
Agreement, to other lenders, each of such other lenders
shall have the rights of set off against such
Indebtedness and similar rights or Liens to the same
extent as may be available to the Lender. In the event
Lender's interest hereunder is assigned to more than
one assignee, Borrower shall not be required to pay
fees or expenses of more than one law firm, accounting
firm or consultant to represent the interests of all
Lenders hereunder with respect to the same issue.
15. Exhibits D, I, J and P to the Agreement are replaced in
their entirety with the corresponding attached Exhibits to this
Amendment. The Agreement is amended by inserting Exhibits R and
S in the form of the corresponding Exhibits attached to this
Agreement.
16. The Borrower represents and warrants to the Lender that
as of the date of this Amendment:
(a) Except as provided in Exhibit D attached
hereto, each of the representations and warranties
contained in (i) Section 3.06 and the first and last
sentences of Section 3.07 of the Agreement, as amended
by this Amendment; (ii) the Security Instruments
referenced in Sections 7.01(g)(i) (excluding Article
III(a) thereof), 7.01(g)(ii) (excluding Article III(a)
thereof) and 7.01(g)(iii) (excluding Sections 3.02,
3.04 and 3.06 thereof); and (iii) in the Price
Protection Agreements are true and correct in all
material respects;
(b) After giving effect to the amendments
hereunder and the waiver provided in Section 5.7 of
that certain Restructure Agreement dated as of May 17,
1995 by and between Borrower and Lender, there exists
no Default or Event of Default; and
(c) the Agreements described in Sections 3.18(a)
and 3.18(b) (other than the gas purchase agreement
referenced in Section 3.18(a)) have not been modified,
terminated, assigned or pledged by Borrower, are in
full force and effect and Borrower, and to the best of
Borrower's knowledge, no other party, is in default in
the performance of its obligations thereunder.
17. Except as amended and modified hereby, the Agreement,
including, without limitation, the terms and provisions of
Section 6.03 thereof, shall remain in full force and effect and
the Borrower and the Lender hereby ratify, adopt, and confirm the
Agreement as hereby amended. The amendments to the Agreement
effected under this Amendment shall be effective as of the date
of this Amendment. Subject to Section 16(b), the execution of
this Amendment shall not waive, modify, release or limit any of
Lender's existing rights, claims or remedies.
18. Contemporaneously with the execution of this Amendment,
the Lender shall execute and deliver to Borrower the Overriding
Royalty Reconveyance.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be duly executed as of the date first above
written.
Borrower: FOREST OIL CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Vice President
Lender: JOINT ENERGY DEVELOPMENT
INVESTMENTS LIMITED PARTNERSHIP
By: Enron Capital Corp.,
its general partner
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Attorney-in-Fact
EXHIBIT D
Disclosure Statement
(Amended and Restated)
1. Reference is made to all matters described in Exhibit D (the original
Exhibit) to the Agreement.
2. Reference is made to the items described in the Company's written
disclosure to JEDI provided pursuant to Section 4.1 of the Restructure
Agreement, as updated pursuant to the certificate delivered by the
Company to JEDI pursuant to Section 2.4.15(2) of the Restructure
Agreement.
3. Reference is made to the matters referenced on Exhibit F to the
Restructure Agreement.
EXHIBIT I
SCHEDULED CAPITAL OPERATIONS
RESERVE NET INVESTMENT
PROPERTY CATEGORY ACTIVITY ($000s)' YEAR COMMENTS
Loma Vieja Proved ▇. ▇▇▇▇▇ #1, install compressor. 7 Jun-95
Loma Vieja Proved FOC Peyote 1 S/T ▇. ▇▇▇▇▇▇▇, dry hole cost. 227 Apr-95 219 spent prior
to 4/1/95
Loma Vieja Proved Salt water disposal. 84 Nov-95
SUBTOTAL: 318
Loma Vieja Proved Recomplete Loma Vieja #1 to add R & S Sands 234 May-96
Loma Vieja Proved Recomplete El Peyote #4 in S Sand. 211 Jan-96
Loma Vieja Proved Upgrade facilities. 88 Jan-96
Verm. 101 Proved Recomplete B1A Well to 10300'. 504 Apr-96
Verm. 255 Proved Wireline selective #6 (H-2) (K-4 Sand). 4 Sep-96
Verm. 255 Proved Wireline selective #5 (H-1) (K-3 Sand). 4 Sep-96
EI 53 Proved Recomplete #8 to ▇▇▇▇ K2 and ▇▇▇▇ ▇. 618 May-96*
EI 53 Proved Recomplete #9 to ▇▇▇▇ K1 & Tex L. Set up wireline
▇▇▇▇ K 1L, Disc 12.2. 560 Jan-96*
SUBTOTAL: 2223
* EA has investments for recompletion in subsequent years.
Page 1
RESERVE NET INVESTMENT
PROPERTY CATEGORY ACTIVITY ($000's) YEAR COMMENTS
Loma Vieja PUD Drill & comp. well #7 (TX13077) R & S Sand 1135 Jul-97
Loma Vieja Prob. Drill & comp. well #1 (TX13078) T6-T10 Sands. 1024 Apr & Jun 1997
Loma Vieja Prob. Drill & comp. Queen City Unit #10 (QC Prospect). 60 May-97
Loma Vieja Prob. Drill & comp. Queen City Unit #12 (QC Prospect). 60 Aug-97
Loma Vieja Prob. Drill & comp. Queen City #9 (Queen City Prospect). 60 Mar-97
Loma Vieja Prob. Drill & comp. Queen City #11 (QC Prospect). 60 Jun-97
Loma Vieja Prob. Drill & comp. Queen City #13 (QC Prospect). 60 Oct-97
Loma Vieja Prob. Drill & comp. Queen City Unit #2 (QC Prospect). 60 Jan-97
Loma Vieja Prob. Drill & comp. Queen City Unit #3 (QC Prospect). 60 Mar-97
Loma Vieja Prob. Drill & comp. Queen City #5 (QC Prospect). 60 Jul-97
Loma Vieja Prob. Drill & comp. Queen City #8 (QC Prospect). 60 Mar-97
Loma Vieja Prob. Drill & comp. Queen City #6 (QC Prospect). 60 Jan-97
Loma Vieja Prob. Drill & comp. Queen City #4 (QC Prospect). 58 May,Jun 1997
Loma Vieja Prob. Drill & comp. Queen City #7 (QC Prospect). 60 Jan-97
Loma Vieja Proved Recomplete El Peyote #3 - S Sand. 218 Apr-97
Loma Vieja PUD Drill & comp. Well #11 in R&S Sands (TX13078). 1021 Apr-97
VM 101/102 PUD Drill #5 S/T 2 in ▇▇▇▇▇ ▇▇▇, ▇&▇ ▇▇▇▇▇. ▇▇▇▇ ▇▇▇-▇▇
▇▇ ▇▇▇/▇▇▇ ▇▇▇ Drill A-2 Well in Block 102 produce E & M1 Sands 2978 Jan,Feb,Mar 97*
(H, J and F behind pipe).
VM 255 Proved Recomplete H-1 to I-1 Sand & I-3 Sand. 172 Nov-97
VM 255 Proved Recomplete ▇-▇( ▇-▇ , ▇-▇, ▇-▇ sands) 228 Nov-97
VM 255 Proved Wireline H-2 K-2 Sand. 4 Jun-97
VM 255 Proved Wireline H-1 K-0 Sand. 4 Apr-97
EI 53 Proved Wireline selective #9 ▇▇▇▇ K1L. 17 Sep-97
EI 53 Proved Wireline selective #9 Well to Disc 12.2. 17 Oct-97
SUBTOTAL: 9291
* EA has investment for recompletion in subsequent years.
Page 2
RESERVE NET INVESTMENT
PROPERTY CATEGORY ACTIVITY ($000's) YEAR COMMENTS
Loma Vieja Poss Drill & comp. #10 (Fandango) (1). 1197 Jul-98
Loma Vieja Prob. Drill & comp. well #2 (TX 13079) T6-T10. 1037 Jul-98 Contingent on
successful
#1 well.
Loma Vieja Prob. Drill & comp. #6 (NE ▇▇▇▇▇▇▇) (1). 389 Oct-98 Farmout 2/3 for
1/2.
Loma Vieja Poss Drill & comp. #1 (U Sand Prospect) (1). 1470 Oct-98
Loma Vieja Prob. Drill & comp. Queen City Unit #14 (QC Prospect). 62 Feb-98
Loma Vieja Prob. Drill & comp. Queen City Unit #16 (QC Prospect). 62 Jun-98
Loma Vieja Prob. Drill & comp. Queen City Unit #18 (QC Prospect). 62 Oct-98
Loma Vieja Prob. Drill & comp. Queen City Unit #15 (QC Prospect). 62 Apr-98
Loma Vieja Prob. Drill & comp. Queen City Unit #17 (QC Prospect). 62 Aug-98
Loma Vieja Prob. Drill well 5 to R Sand. 1119 Feb-98
VM 101/102 Proved W/O A1A well to F Sand. 523 Jan-98
VM 101/102 Proved Recomplete A-2 well (J Sand). 35 Aug-98
VM 101/102* Proved Abandon VM 102 B platform. 453 Nov-98
VM 101 Prob. Drill & comp. B-2 9300' SD (1). ▇▇▇▇ ▇▇▇-▇▇
▇▇ ▇▇▇ #▇* Proved Abandon well. 81 Dec-98
SUBTOTAL: 8212
*Abandonment timing is based on proved reserves only and may be delayed due to
success in probable and possible activities.
(1) Not withstanding the terms of Section 4.17 and Lender's right to commence
operations with respect to Scheduled Capital Operations,
Borrower will be required to submit to Lender AFE's for such ▇▇▇▇▇ as
provided for in Section 2.02(b) even after the occurrence of the
Conveyance Expiration Date.
Page 3
RESERVE NET INVESTMENT
PROPERTY CATEGORY ACTIVITY ($000's) YEAR COMMENTS
Loma Vieja Prob. Drill & comp. Queen City Unit #19 (QC Prospect). 64 Feb-99
Loma Vieja Prob. Drill & comp. Queen City Unit #21 (QC Prospect). 64 Jun-99
Loma Vieja Prob. Drill & comp. Queen City Unit #20 (QC Prospect). 64 Apr-99
Loma Vieja Prob. Drill & comp. Queen City Unit #22 (QC Prospect). 64 Aug-99
Loma Vieja Prob. Drill & comp. well #3 (TX13079) T8-T10. 977 Jun-99 Contingent on
successful
#1 well.
Loma Vieja Poss Drill & comp. #2 (U Sand Prospect). 1189 Mar-99 Contingent on
well #1.
Loma Vieja Poss Drill & comp. #3 (U Sand Project). 1189 Nov-99 Contingent on
well #1.
Loma Vieja Poss Drill & comp. #12 (Fandango). 1485 Mar-99 Contingent on
well #10.
VM 101/102 Prob. Recomplete A-2 to H Sand. 36 Feb-99
WC 44* Proved Abandon platform. 402 Nov-99
SUBTOTAL: 5534
VM 102 Prob. Wireline selective A-2 F Sand Seg. B. 37 Apr-00
Loma Vieja Proved Recomplete Loma Vieja #4A to ▇▇▇▇▇▇▇. 40 Jan-00
VM 255 Proved Wireline H-3 in #2 well. 4 Mar-00
SUBTOTAL: 81
VM 102* Proved Abandon 102 A platform. 704 Nov-01
VM 101/102* Proved Abandon Verm. 101 B platform. 233 Nov-01
VM 255 Proved Rig workover #5 (H1). Dual ▇-▇, ▇-▇ ▇▇▇▇▇. 217 Jul-01
SUBTOTAL: 1154
EI 53* Proved Abandon. 138 Nov-02
SUBTOTAL: 138
VM 255* Proved Abandonment. 117 Jul-03
SUBTOTAL: 117
TOTAL: 27068
*Abandonment timing is based on proved reserves only and may be delayed due to
success in probable and possible activities.
Page 4
EXHIBIT J
Scheduled Principal Amount and
Required Trailing Twelve Month Cash Flow
Semiannual Scheduled Principal Required Trailing Twelve
Payment Date Amount ($MM) Month Cash Flow ($MM)
----------- ------------------- -------------------------
Each payment date prior to $70.00
February 29, 1996
February 29, 1996 65.00 4.0
August 31, 1996 64.50 4.0
February 28, 1997 64.00 5.5
August 31, 1997 63.00 5.0
February 28, 1998 62.00 4.5
August 31, 1998 59.00 8.0
February 28, 1999 55.00 10.0
August 31, 1999 51.50 10.5
February 29, 2000 48.00 10.5
August 31, 2000 44.00 11.0
December 31, 2000 22.10 10.5
August 31, 2001 20.00 9.0
February 28, 2002 17.00 6.0
August 31, 2002 15.00 5.0
December 31, 2002 0.00 5.0
Attachment 1 to Exhibit J
If pursuant to the provisions of Section 2.17 of the Agreement Borrower and
Lender are unable to agree on an adjustment to either the Required Trailing
Twelve Month Cash Flow or the Scheduled Principal Amount, the disputed item or
items, as the case may be, shall be determined as follows:
A. REQUIRED TRAILING TWELVE MONTH CASH FLOWS - The Required Trailing Twelve
Month Cash Flow set forth on Exhibit J for each future Semiannual Payment Date
shall be reduced by an amount equal to the future net revenue attributable to
the Scheduled Capital Operation that triggered the need for an adjustment
pursuant to Section 2.17 (the "Subject Operation"), as such future net revenue
is set forth on the economic evaluation for such operation included as a part of
this Attachment 1. for the twelve month period ending on the date two months
prior to such Semiannual Payment Date. In addition, with respect to the first
Semiannual Payment Date following the occurrence of the event that triggered the
need for an adjustment pursuant to Section 2.17, the Required Trailing Twelve
Month Cash Flow for such Semiannual Payment Date shall be reduced by the amount
of any capital costs actually incurred by Borrower with respect to the Subject
Operation that were approved by Lender pursuant to the terms of the Agreement
and incurred by ▇▇▇▇▇ prior to the date Borrower elected not to commence, or to
discontinue, such operation. If with respect to any Mandatory Capital Expense,
Borrower allows a Lease to lapse and Borrower does not spend the entire amount
referenced on Exhibit S, then with respect to the first Semiannual Payment Date
following the lapse of such Lease the required Trailing Twelve Month Cash Flow
for such Semiannual Payment Date shall be increased by the amount of the unused
funds. Notwithstanding anything herein to the contrary, with respect to the
Semiannual Payment Date occurring on December 31, 2000, the twelve month period
referenced in the first sentence of this Section A shall be the period ending on
December 31, 2000 and not two months prior to such date.
B. SCHEDULED PRINCIPAL AMOUNTS - The Scheduled Principal Amount set forth on
Exhibit J for each future Semiannual Payment Date shall be increased by an
amount equal to (i) 90% of the cumulative sum of the operating revenues
attributable to the Subject Operation, as such operating revenues are set forth
on the economic evaluation for such operation included as part of this
Attachment 1, through the date which is two months prior to such Semiannual
Payment Date and reduced by an amount equal to (ii) 80% of the net total
investment set forth on the same economic evaluation to be spent prior to the
date which is two months prior to such Semiannual Payment Date. In addition,
with respect to the first Semiannual Payment Date, following the occurrence of
the event that triggered the need for an adjustment pursuant to Section 2.17,
the Scheduled Principal Amount for such Semiannual Payment Date shall be
increased by the Capital Expenses actually incurred by Borrower with respect to
the Subject Operation prior to the date Borrower elected not to commence, or to
discontinue, such operation.
If with respect to any Mandatory Capital Expense, Borrower allows a Lease to
lapse and Borrower does not spend the entire amount referenced on Exhibit S,
then with respect to the first Semiannual Payment Date following the lapse of
such Lease the required Scheduled Principal Amount for such Semiannual Payment
Date shall be reduced by the unspent portion of such Mandatory Capital Expense.
For any Subject Operation originally scheduled on Exhibit I to be performed
prior to December 31, 2000, with respect to each Semiannual Payment Date, the
cumulative adjustment described in the previous three sentences of this Section
B shall be
increased by an amount equal to the cumulative accrued interest at 12.5% per
annum compounded monthly on the cash flow stream through the date two months
prior to such Semiannual Payment Date. Notwithstanding anything herein to the
contrary, with respect to the Semiannual Payment Date occurring on December 31,
2000, the twelve month period referenced in clauses (i) and (ii) above shall be
the period ending on December 31, 2000 and not two months prior to such date.
EXHIBIT P
Form of AFE
A two page form of AFE is attached hereto.
WORK AUTHORIZATION 5/12/95
FOREST OIL CORPORATION TEST
WELL COST ESTIMATE
AFE NUMBER . : 95-7777 - 0
AFE TYPE . . : 20 DEVELOPMENT DRILL & COMPLETE
G/L ACCT.. . : 223
APPROVAL TYPE: Dry Hole Budget Approved
DIVISION: Onshore Division PROPERTY: ONSHORE GENERAL
PROSPECT: COUNTY: ST:
FIELD: PTD:
PROPOSED SPUD DATE: DAYS TO TD:
OBJECTIVE:
-------------------------------------------------------------------------
DESCRIPTION DRY HOLE COMPLETION TOTAL
-------------------------------------------------------------------------
O11 ROADS & LOCATION 1 1 1 3
TOTAL INTANGIBLE DRILLING 1 1 1 3
TOTAL COST 1 1 1 3
EXHIBIT R
ASSIGNMENT AND ▇▇▇▇ OF SALE
This Assignment and ▇▇▇▇ of Sale ("Assignment"), is executed and delivered
as of the date hereinafter stated, by Forest Oil Corporation, a New York
corporation ("Assignor"), to Joint Energy Development Investments Limited
Partnership, a Delaware limited partnership ("Assignee").
WHEREAS, reference for all purposes is hereby made to that certain Loan
Agreement dated December 28, 1993, between Assignor and Assignee, as amended by
the First Amendment to Loan Agreement dated as of December 28, 1993 and the
Second Amendment to Loan Agreement dated as of (as so amended and as may be
subsequently amended or restated, the "Loan Agreement");
WHEREAS, pursuant to and in compliance with the terms of the Loan Agreement
Assignor has elected to convey its interest in the Properties (as defined below)
to Assignee in satisfaction of the unpaid principal and interest due on the Loan
(as defined in the Loan Agreement);
I. ASSIGNMENT.
NOW, THEREFORE, Assignor, for valuable considerations, the receipt and
sufficiency of which are hereby acknowledged, by these presents GRANTS,
BARGAINS, SELLS, CONVEYS, ASSIGNS, TRANSFERS and DELIVERS unto Assignee
effective as of_______________________________ [insert date of closing], at 7:00
a.m. Houston time ("Effective Time") the following real and personal properties
(the "Properties"):
A. The undivided interests in and to the oil and gas leases and/or oil,
gas and other mineral leases and other interests and estates (such interests
collectively called the "Leases") which are described on Exhibit A [to be
completed and attached at the time of the conveyance based on the description of
Mortgaged Properties less and except those properties not accepted pursuant to
Section 2.16(d) of the Loan Agreement] attached hereto or which Leases are
otherwise referred to herein.
B. All rights, titles, interests and estates now owned or hereafter
acquired by Assignor in and to (i) the properties now or hereafter pooled or
unitized with the Leases; (ii) all presently existing or future unitization,
communitization, pooling agreements and declarations of pooled units and the
units created thereby (including, without limitation, all units created under
orders, regulations, rules or other official acts of any Federal, State or other
governmental body or agency having jurisdiction and any units created solely
among working interest owners pursuant to operating agreements or otherwise)
which may affect all or any portion of the Leases including, without limitation,
those units which may be described or referred to on attached Exhibit A; (iii)
all operating agreements, production sales or other contracts, farmout
agreements, farm-in agreements, area of mutual interest agreements, equipment
leases and other agreements described or referred to in this Assignment or which
relate to any of the Leases or interests in the Leases described or referred to
herein or on attached Exhibit A or to the production, sale, purchase, exchange,
processing, transporting or marketing of
the Hydrocarbons (hereinafter defined) from or attributable to such Leases or
interests (collectively, the items described in Section B.(iii) are the
"Contracts"); and (iv) in each case to the extent some are assignable without
violating applicable law or contract restrictions as of even date herewith, all
abstracts, title opinions, title reports, title policies, lease and land files,
surveys, analyses, compilations, correspondence, filings with regulatory
agencies, other documents and instruments, geophysical, geological, engineering,
exploration, production and other technical data, books, records, files and
magnetic tapes containing financial, title or other information, in each case
that are in the possession or control of Assignor and relate to the Properties
(collectively, the items described in section B.(iv), are the "Data") (it being
agreed that Assignor shall have the right, at its own cost and expense, to
retain a copy of any of the Data).
C. All rights, titles, interests and estates now owned by Assignor in and
to all oil, gas, casinghead gas, condensate, distillate, liquid hydrocarbons,
gaseous hydrocarbons and all products refined therefrom, in each case to the
extent attributable to production from and after the Effective Time, and all
other minerals (collectively called the "Hydrocarbons") in and under and which
may be produced and saved after the Effective Time from or attributable to the
Leases, the lands covered thereby and Assignor's interests therein, including
all oil in tanks and all rents, issues, profits, proceeds, products, revenues
and other income from or attributable to the Leases, the lands covered thereby
and Assignor's interests therein, in each case to the extent attributable to
production from and after the Effective Time, and including specifically but
without limitation all liens and security interests in such Hydrocarbons
securing payment of proceeds resulting from the sale of Hydrocarbons.
D. All tenements, hereditaments, appurtenances and properties in anywise
appertaining, belonging, affixed or incidental to the rights, titles, interests
and estates described or referred to in paragraphs A, B and C above, now owned
by Assignor, including, without limitation, any and all property, real or
personal situated upon, used, held for use, or useful in connection with the
operating, working or development of any of such Leases (excluding drilling
rigs, trucks, automotive equipment or other personal property which may be taken
to the premises for the purpose of drilling a well or for other similar
temporary uses) and including any and all oil ▇▇▇▇▇, gas ▇▇▇▇▇, injection ▇▇▇▇▇
or other ▇▇▇▇▇, buildings, structures, field separators, liquid extraction
plants, plant compressors, pumps, pumping units, field gathering systems, tanks
and tank batteries, fixtures, valves, fittings, machinery and parts, engines,
boilers, meters, apparatus, equipment, appliances, tools, implements, cables,
wires, towers, casing, tubing and rods, surface leases, rights-of-way, easements
and servitudes and licenses together with all additions, substitutions,
replacements, accessions and attachments to any and all of the foregoing
properties.
E. All of the rights, titles and interests of every nature whatsoever of
Assignor in and to the Leases and every part and parcel thereof, including,
without limitation, all rights, titles, interests or estates in and to the
Leases as the same may be enlarged by the discharge of any payments out of
production or by the removal of any charges or Liens (as defined in the Loan
Agreement) to which any of the Leases are subject, or otherwise, less and except
any overriding royalty interests of Assignor in and to the Leases that were
acquired on or after December 29, 1993.
-2-
F. All accounts, contract rights, inventory and general intangibles
constituting a part of, relating to or arising out of those portions of the
Properties which are described in paragraphs A through E above and all proceeds
and products of all such portions of the Properties.
G. All right, title and interest to the Option Agreements (Contact Nos.
▇▇▇▇▇.▇▇, ▇▇▇▇▇.▇▇, ▇▇▇▇▇.▇▇, ▇▇▇▇▇.▇▇ and ▇▇▇▇▇.▇▇) dated as of December 29,
1993 between Assignor and Enron Risk Management Services Corp., as the same may
have been modified, amended or restated (the "Option Agreements").
TO HAVE AND TO HOLD all and singular the Properties, together with all
rights, titles, interests, estates, remedies, powers and privileges thereunto
appertaining unto Assignee and its successors, legal representatives and assigns
forever. Subject to the Excepted Liens (as defined in the Loan Agreement),
Assignor hereby binds itself, its successors, legal representatives and
assigns, to warrant and forever defend title to the Properties, subject as
aforesaid, unto Assignee, its successors, legal representatives and assigns,
against every person whomsoever lawfully claiming or to claim the same or any
part thereof, by, through or under Assignor, but not otherwise.
II. PROCEEDS, EXPENSES, ACCOUNTING AND TAXES.
A. PROCEEDS, EXPENSES AND TAXES.
1. DIVISION OF PROCEEDS. From and after the date of execution of
this Assignment (the "Closing Date"), all Hydrocarbons produced from the
Properties on or after the Effective Time shall be owned by Assignee. In
addition, subject to and in accordance with the terms and provisions of the Loan
Agreement (and without in any way expanding or affecting the limited recourse of
Assignor for the Indebtedness pursuant to Section 6.03 of the Loan Agreement)
Assignor shall make to Assignee all payments due under the Loan Agreement
through the Effective Time and the amount, if any, by which (i) 90% of the Net
Operating Cash Flow (as defined in Loan Agreement) through the Effective Time
but including all Net Operating Cash Flow resulting from the Hydrocarbons in
tanks on the Effective Time, less (ii) cumulative Capital Expenses (as defined
in the Loan Agreement) through the Effective Time, exceeds (iii) the sum of all
Monthly Payment Amounts (as defined in the Loan Agreement) paid to Assignee
pursuant to the terms of the Loan Agreement for all prior months.
2. RECEIPTS AND CREDITS. All monies, proceeds, receipts, credits
and income attributable to the Properties (a) for all periods of time subsequent
to the Effective Time, shall be the sole property and entitlement of Assignee,
and, to the extent received by Assignor, Assignor shall fully disclose, account
for and transmit same to Assignee promptly and (b) for all periods of time prior
to the Effective Time (including without limitation, proceeds from the sale of
Hydrocarbons produced prior to the Effective Time that are received after the
Effective Time), shall be the sole property and entitlement of Assignor and, to
the extent received by Assignee, Assignee shall fully disclose, account for and
transmit same to Assignor promptly. All costs, expenses, disbursements,
obligations and liabilities attributable to the Properties (i) for periods of
time prior to the Effective Time, regardless of when due or payable, shall be
the sole obligation of Assignor, and Assignor shall promptly pay, or if properly
paid by
-3-
Assignee, promptly reimburse Assignee for and hold Assignee harmless from and
against same and (ii) for periods of time subsequent to the Effective Time,
regardless of when due or payable, shall be the sole obligation of Assignee, and
Assignee shall promptly pay, or if properly paid by Assignor, promptly reimburse
Assignor for and hold Assignor harmless from and against same. All Operation
Costs and Net Production Revenues attributable to the period prior to the
Effective time shall be taken into account in connection with the determination
of any Monthly Payment Amounts payable under the Loan Agreement through the
Effective Time. Nothing in the foregoing shall limit or modify the payment
obligations provided for in Section II.A.1.
3. APPORTIONMENT OF AD VALOREM AND PROPERTY TAXES. All ad valorem
taxes, real property taxes, personal property taxes and similar obligations
("Property Taxes") attributable to the Properties shall be apportioned as of the
Effective Time between Assignor and Assignee. The owner of record on the
assessment date shall file or cause to be filed all required reports and returns
incident to the Property Taxes and shall pay or cause to be paid to the taxing
authorities all Property Taxes relating to the tax periods during which the
Effective Time occurs. If Assignor is the owner of record on the assessment
date, then Assignee shall pay to Assignor Assignee's pro rata portion, if any,
of such Property Taxes within 15 days from the date such taxes are required to
be paid to the taxing authorities and after receipt of Assignor's invoice
therefor. If Assignee is the owner of record as of the assessment date then
Assignor shall pay to Assignee Assignor's pro rata portion of such Property
Taxes, if any, within 15 days from the date such taxes are required to be paid
to the taxes authorities and after receipt of Assignee's invoice therefor.
B. ACCOUNTING.
As soon as practical and, in any event, no later than ninety calendar
days after the Closing Date, Assignor shall prepare and deliver to Assignee a
statement (the "Final Statement") setting forth a net amount that Assignor or
the Assignee owes to the other as a result of the application of the provisions
of Section 2 above. If Assignor and Assignee cannot agree upon the Final
Statement, the Houston Office of the firm of _____________________________ is
designated to act as an arbitrator and to decide all points of disagreement with
respect to the Final Statement, such decision to be binding on both parties. If
such firm is unwilling or unable to serve in such capacity, Assignor and
Assignee shall attempt to, in good faith, designate another acceptable person as
the sole arbitrator under this Section. If the parties are unable to agree upon
the designation of a person as substitute arbitrator, then Assignor or Assignee,
or both of them, may in writing request the Judge of the United States District
Court for the Southern District of Texas senior in term of service to appoint
the substitute arbitrator. The arbitration shall be conducted under the Texas
General Arbitration Act and the rules of the American Arbitration Association to
the extent such rules do not conflict with the terms of such Act and the terms
hereof. The costs and expenses of the arbitrator, whether the firm designated
above, or a third party appointed pursuant to the preceding sentence shall be
shared equally by Assignor and Assignee.
Within five business days after the agreement of Assignor and Assignee
on the Final Statement or after the decision of the arbitrator, Assignee or
Assignor, as the case may be, shall promptly make a cash payment to the other
equal to the sums as may be found to be due in the Final Statement.
-4-
III. INDEMNIFICATION.
A. To the extent permitted by law, Assignor shall defend, indemnify and
hold Assignee harmless from and against any and all damage, loss, cost, expense,
obligation, claim or liability, including reasonable counsel fees and reasonable
expenses of investigating, defending and prosecuting litigation (collectively,
"Liabilities"), suffered by Assignee that are attributable to (i) the ownership
or operation by Assignor of the Properties prior to the Effective Time or (ii)
the inaccuracy of any representation or warranty of Assignor set forth in this
Assignment.
B. To the extent permitted by law, Assignee shall defend, indemnify and
hold Assignor harmless from and against any and all Liabilities, suffered by
Assignor that are attributable to (i) the ownership or operation by Assignor of
the Properties after the Effective Time, except to the extent resulting from
Assignor's failure to comply with the terms of this Assignment or the terms of
the Loan Agreement for which the Assignor is liable pursuant to Section 6.03 of
the Loan Agreement or (ii) the inaccuracy of any representation or warranty of
Assignee set forth in this Assignment.
IV. FURTHER ASSURANCES.
After the Closing, Assignor and Assignee shall execute, acknowledge and
deliver or cause to be executed, acknowledged and delivered such instruments and
take such other action as may be necessary or advisable to carry out their
obligations under this Assignment and under any exhibit, document, certificate
or other instrument delivered pursuant hereto. As soon as practicable but in no
event later than 10 days following the Effective Time, Assignor shall deliver to
Assignee the Data at a place to be designated by Assignee.
V. REPRESENTATIONS AND WARRANTIES.
ASSIGNOR REPRESENTATIONS AND WARRANTIES. Assignor represents and warrants
to Assignee as follows, which representations and warranties shall survive the
execution and delivery of this Assignment by Assignor:
1. ORGANIZATION. Assignor is a corporation duly organized, validly
existing and in good standing under the laws of the State of New York and is
qualified to do business in and is in good standing under the laws of each other
state in which the Properties are located.
2. AUTHORITY AND CONFLICTS. Assignor has full power and authority to
carry on its business as presently conducted, to enter into this Assignment and
to perform its obligations under this Assignment. The execution and delivery of
this Assignment by Assignor does not, and the consummation of the transactions
contemplated by this Assignment shall not, (a) violate or be in conflict with,
or require the consent of any person or entity under, any provision of
Assignor's governing documents, (b) conflict with, result in a breach of,
constitute a default (or an event that with the lapse of time or notice, or both
would constitute a default) under, or require any consent, authorization or
approval under any agreement or instrument to which Assignor is a party or to
which any of the Properties or Assignor is bound (other than
-5-
the Loan Agreement and excluding any such consents, authorizations or approvals
that have been obtained or waived), (c) violate any provision of or require any
consent, authorization or approval under any judgment, decree, judicial or
administrative order, award, writ, injunction, statute, rule or regulation
applicable to Assignor, or (d) result in the creation of any lien, charge or
encumbrance on any of the Properties.
3. AUTHORIZATION. The execution and delivery of this Assignment have
been, and the performance of this Assignment and the transactions contemplated
hereby shall be at the time required to be performed hereunder, duly and validly
authorized by all requisite action on the part of Assignor.
4. ENFORCEABILITY. This Assignment has been duly executed and
delivered on behalf of Assignor and constitutes the legal, valid and binding
obligation of Assignor enforceable in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, reorganization or
moratorium statutes, equitable principles or other similar laws affecting the
rights of creditors generally ("Equitable Limitations"). At the Closing all
documents and instruments required hereunder to be executed and delivered by
Assignor shall be duly executed and delivered and shall constitute legal, valid
and binding obligations of Assignor enforceable in accordance with their terms,
except as enforceability may be limited by Equitable Limitations.
5. CONDITION OF THE PROPERTIES. All of the representations and
warranties of Assignor contained in Sections 3.08, 3.09, 3.11, 3.13 and 3.21
through 3.26 of the Loan Agreement are true and correct in all material respects
on and as of the Effective Time. Further, except to the extent same do not have
a material adverse effect on the value of the Property, the Properties are not
subject to any burdensome restriction, restraint or hazard not customary in the
oil and gas industry based on a contract entered into by Assignor after [the
Amendment Date].
6. OPTION AGREEMENTS. Assignor is the legal and beneficial owner of
the Option Agreements free and clear of any adverse claim, lien, security
interest, option or other charge or encumbrance except for the security
interests in favor of Assignee.
VI. REPRESENTATIONS AND WARRANTIES.
ASSIGNEE REPRESENTATIONS AND WARRANTIES. Assignee represents and warrants
to Assignor as follows, which representations and warranties shall survive the
execution and delivery of this Assignment by Assignee:
1. ORGANIZATION. Assignee is a limited partnership duly formed,
validly existing and in good standing under the laws of the State of Delaware.
2. AUTHORITY AND CONFLICTS. Assignee has full power and authority to
carry on its business as presently conducted, to enter into this Assignment and
to perform its obligations under this Assignment. The execution and delivery of
this Assignment by Assignee does not, and the consummation of the transactions
contemplated by this Assignment shall not, (a) violate or be in conflict with,
or require the consent of any person or entity under, any provision of
Assignee's governing documents, (b) conflict with, result in a breach of,
constitute a default (or an event that
-6-
with the lapse of time or notice, or both would constitute a default) under, or
require any consent, authorization or approval under any agreement or instrument
to which Assignee is a party, or (c) violate any provision of or require any
consent, authorization or approval under any judgment, decree, judicial or
administrative order, award, writ, injunction, statute, rule or regulation
applicable to Assignee.
3. AUTHORIZATION. The execution and delivery of this Assignment have
been, and the performance of this Assignment and the transactions contemplated
hereby shall be at the time required to be performed hereunder, duly and validly
authorized by all requisite action on the part of Assignee.
4. ENFORCEABILITY. This Assignment has been duly executed and
delivered on behalf of Assignee and constitutes the legal, valid and binding
obligation of Assignee enforceable in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, reorganization or
moratorium statutes, equitable principles or other similar laws affecting the
rights of creditors generally ("Equitable Limitations"). At the Closing all
documents and instruments required hereunder to be executed and delivered by
Assignee shall be duly executed and delivered and shall constitute legal, valid
and binding obligations of Assignee enforceable in accordance with their terms,
except as enforceability may be limited by Equitable Limitations.
VII. ADDITIONAL OBLIGATIONS.
Assignor acknowledges that notwithstanding anything herein to the
contrary, this Assignment shall not effect the release of Assignor from any
obligations and liabilities for which it is liable pursuant to Section 6.03 of
the Loan Agreement entitled "Limited Recourse".
VIII. GOVERNING LAW.
The validity, effect and construction of this Assignment shall be governed
by the laws of the state of Colorado except to the extent mandatorily governed
by the law of any jurisdiction in which the Properties are located.
IX. MISCELLANEOUS.
This Assignment may be executed in any number of counterparts and each of
such counterparts shall for all purposes be deemed to be an original, and all
such counterparts shall together constitute but one and the same Assignment.
EXCEPT AS PROVIDED IN THE SPECIAL WARRANTY SET FORTH ABOVE, THE
ASSIGNMENTS AND CONVEYANCES MADE BY THIS ASSIGNMENT ARE MADE WITHOUT WARRANTY OF
TITLE, EXPRESS, IMPLIED, OR STATUTORY, AND WITHOUT RECOURSE, EVEN AS TO THE
RETURN OF THE PURCHASE PRICE OR OTHER CONSIDERATION, but with full substitution
and subrogation of Assignee, and all persons claiming by, through and under
Assignee, to the extent assignable, in and to all covenants and warranties of
Assignor's predecessors in title and with full subrogation of all rights
accruing under the applicable statutes of limitation or prescription under the
laws of the state where the Properties are located and all rights of actions or
warranty against all former owners of the Properties. ANY
-7-
COVENANTS OR WARRANTIES IMPLIED BY STATUTE OR LAW BY THE USE OF THE WORDS
"TRANSFER," "CONVEY," "BARGAIN" OR "ASSIGN" OR OTHER SIMILAR WORDS USED IN THIS
ASSIGNMENT ARE HEREBY EXPRESSLY DISCLAIMED, WAIVED AND NEGATED.
Except as otherwise provided herein and without limiting Assignee's rights
against Assignor pursuant to any separate written agreement between Assignor and
Assignee, the Properties are assigned to Assignee without recourse (even as to
the return of the purchase price or other consideration) covenant or warranty of
any kind, express, implied or statutory. Without limiting the express provisions
hereof, Assignee specifically agrees that Assignor is conveying the Properties
on an "AS-IN, WHERE-IN, WITH ALL FAULTS" BASIS AND WITHOUT REPRESENTATION OR
WARRANTY, EITHER EXPRESS, IMPLIED AT COMMON LAW, BY STATUTE OR OTHERWISE (ALL OF
WHICH ASSIGNEE HEREBY DISCLAIMS), RELATING TO (i) TITLE, (ii) TRANSFERABILITY,
(iii) FITNESS FOR ANY PARTICULAR PURPOSE, MERCHANTABILITY, DESIGN OR QUALITY,
(iv) COMPLIANCE WITH SPECIFICATIONS OR CONDITIONS REGARDING OPERATION, (v)
FREEDOM FROM PATENT OR TRADEMARK INFRINGEMENT, (vi) ABSENCE OF LATENT DEFECTS,
OR (vii) ANY OTHER MATTER WHATSOEVER.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment to be
duly executed as of he date set out in the attached acknowledgments but is
effective as of the Effective Time.
ASSIGNOR:
FOREST OIL CORPORATION
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
ASSIGNEE:
JOINT ENERGY DEVELOPMENT
INVESTMENTS LIMITED
PARTNERSHIP
By: Enron Capital Corp., its general partner
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
-8-
THE STATE OF______________________Section
Section
COUNTY OF ________________________Section
BE IT REMEMBERED, that the undersigned, a Notary Public, duly qualified,
sworn and acting in and for the State of ______________, hereby certify that on
this ______ day of _______________, there appeared before me, _________________,
___________________ of FOREST OIL CORPORATION.
The foregoing instrument was acknowledged before me on this date by the
aforementioned person as the designated officer of such corporation, on behalf
of such corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal in the
County of________________ and State of _________________, this _________ day of
_________________.
---------------------------------
Notary Public in and for the
State of ________________________
-9-
THE STATE OF______________________Section
Section
COUNTY OF ________________________Section
BE IT REMEMBERED, that the undersigned, a Notary Public, duly qualified,
sworn and acting in and for the State of ___________________, hereby certify
that on this ______ day of __________________, there appeared before me
_______________, ________________ of Enron Capital Corp., the general partner of
Joint Energy Development Investments Limited Partnership.
The foregoing instrument was acknowledged before me on this date by the
aforementioned person as the designated officer of such corporation, on behalf
of such corporation in its capacity as general partner of Joint Energy
Development Investments Limited Partnership.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal in the
County of _______________ and State of ________________, this ______ day of
______________.
---------------------------------
Notary Public in and for the
State of ________________________
-10-
EXHIBIT A
Properties
[To be determined at the time of conveyance]
-11-
EXHIBIT S
MANDATORY CAPITAL EXPENSES
ESTIMATED LEASE EXPIRATION LEASE EXTENSION
AREA BONUS ($000'S) DATE PERIOD(1) COMMENTS
▇▇▇▇▇▇ 31 Sep-96 2 years U Sand/Fandango; 430.11 acres
@ $200/acre; FOC WI dedicated
to JEDI (35.643%).
Peyote "Deep" 46 May-97 2 years 640/acre @ $200/acre; FOC WI
dedicated to JEDI (35.643%).
Survey 84 & Frost 166 Jan-97 2 years U Sand; U Sand 832 net acres
@ $200/acre; FOC WI dedicated
to JEDI (100%).
NE ▇▇▇▇▇▇▇ 50 Mar-97 2 years FOC WI dedicated to JEDI (100%).
▇▇▇▇▇▇ 27 Apr-98 2 years FOC WI dedicated to JEDI (35.643%).
TOTAL: 320
(1) The Lease Extension Period obtained for each particular Lease must be at
least as long as the period specified below.
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