1
EXHIBIT 10.3
CHAUVCO RESOURCES LTD.
As Borrower
- and -
CANADIAN IMPERIAL BANK OF COMMERCE
As Arranger, Administrative Agent, and Canadian Resident Lender
- and -
BANK OF NOVA SCOTIA
As Co-Syndication Agent and Canadian Resident Lender
- and -
ROYAL BANK OF CANADA
As Co-Syndication Agent and Canadian Resident Lender
- and -
XXX XXXXX XXXXXXXXX XXXX XX XXXXXX
As Co-Agent and Canadian Resident Lender
- and -
XXXXXX GUARANTY TRUST COMPANY OF NEW YORK
As Co-Agent and Non-resident Lender
- and -
NATIONSBANK OF TEXAS, N.A.
As Co-Agent and Non-resident Lender
- and -
THE TORONTO-DOMINION BANK
As Co-Agent and Canadian Resident Lender
- and -
FIRST UNION NATIONAL BANK
As Non-resident Lender
- and -
WACHOVIA BANK, N.A.
As Non-resident Lender
- and -
THOSE FINANCIAL INSTITUTIONS WHICH
HEREAFTER BECOME LENDERS
--------------------------------------------------------------------------------
CREDIT AGREEMENT
--------------------------------------------------------------------------------
Effective December 18, 1997
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TABLE OF CONTENTS
ARTICLE 1
INTERPRETATION
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . -2-
1.2 Headings . . . . . . . . . . . . . . . . . . . . . . -3-
1.3 Subdivisions . . . . . . . . . . . . . . . . . . . . -3-
1.4 Number . . . . . . . . . . . . . . . . . . . . . . . -3-
1.5 Statutes, Regulations and Rules . . . . . . . . . . . -3-
1.6 Monetary References . . . . . . . . . . . . . . . . . -3-
1.7 Time . . . . . . . . . . . . . . . . . . . . . . . . -3-
1.8 Governing Law . . . . . . . . . . . . . . . . . . . . -3-
1.9 Enurement . . . . . . . . . . . . . . . . . . . . . . -3-
1.10 Amendments . . . . . . . . . . . . . . . . . . . . . -3-
1.11 No Waiver . . . . . . . . . . . . . . . . . . . . . . -3-
1.12 Severability . . . . . . . . . . . . . . . . . . . . -4-
1.13 Inconsistency . . . . . . . . . . . . . . . . . . . . -4-
1.14 Accounting Terms and Principles . . . . . . . . . . . -4-
1.15 Schedules . . . . . . . . . . . . . . . . . . . . . . -4-
ARTICLE 2
DELIVERIES ON CLOSING DATE
2.1 Deliveries on Closing by Borrower . . . . . . . . . . -5-
ARTICLE 3
THE CREDIT FACILITY
3.1 The Credit Facility . . . . . . . . . . . . . . . . . -5-
3.2 Extension of Conversion Date . . . . . . . . . . . . -5-
3.3 Conversion to Term Loan . . . . . . . . . . . . . . . -7-
3.4 Non-Accepting Lender . . . . . . . . . . . . . . . . -7-
3.5 Defaulting Lender . . . . . . . . . . . . . . . . . . -8-
3.6 Outstanding Principal . . . . . . . . . . . . . . . . -8-
3.7 Maturity Date of Advances . . . . . . . . . . . . . . -8-
3.8 Repayments . . . . . . . . . . . . . . . . . . . . . -8-
(a) During Revolving Period . . . . . . . . . . -8-
(b) During Term Period . . . . . . . . . . . . . -8-
(c) Payment On Termination Date . . . . . . . . -9-
(d) General Right to Prepay And Cancel . . . . . -9-
(e) Cancellation During the Revolving Period . . -9-
(f) Prepayment During Term Period . . . . . . . -9-
3.9 Use of Proceeds . . . . . . . . . . . . . . . . . . . -9-
3.10 Types of Accommodation . . . . . . . . . . . . . . . -10-
3.11 Determination of Applicable Rating Level . . . . . . -10-
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3.12 Interest and Fees . . . . . . . . . . . . . . . . . . . . . . . -11-
(a) Interest and Fees . . . . . . . . . . . . . . . . . . -11-
(b) Increase in Rates and Fees on change of Applicable
Rating Level . . . . . . . . . . . . . . . . . . -11-
ARTICLE 4
UNSECURED CREDIT FACILITY
4.1 Unsecured Credit Facility . . . . . . . . . . . . . . . . . . . -12-
ARTICLE 5
FUNDING AND OTHER MECHANICS
5.1 Funding of Accommodations . . . . . . . . . . . . . . . . . . . -12-
5.2 Notice Provisions . . . . . . . . . . . . . . . . . . . . . . . -12-
5.3 Irrevocability . . . . . . . . . . . . . . . . . . . . . . . . -13-
5.4 Pro-Rata Availment and Payment. . . . . . . . . . . . . . . . . -13-
5.5 Rollover/Conversion of Accommodations . . . . . . . . . . . . . -14-
5.6 Agent's Obligations . . . . . . . . . . . . . . . . . . . . . . -14-
5.7 Lenders' Obligations . . . . . . . . . . . . . . . . . . . . . -15-
5.8 Exchange Rate Fluctuations . . . . . . . . . . . . . . . . . . -15-
5.9 Excess Relating to LIBOR Based Loans, Canadian Eurodollar Loans
and Bankers' Acceptances. . . . . . . . . . . . . . . . -15-
ARTICLE 6
HOSTILE ACQUISITIONS
6.1 Hostile Acquisitions . . . . . . . . . . . . . . . . . . . . . -15-
ARTICLE 7
CALCULATION OF INTEREST AND FEES
7.1 Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . -16-
7.2 Payment of Interest, Stamping Fees and Issuance Fees . . . . . -16-
(a) Interest . . . . . . . . . . . . . . . . . . . . . . . -16-
(b) Calculation of Interest and Stamping Fees . . . . . . . -17-
(c) LIBOR Based Loans and Canadian Eurodollar Loans . . . . -17-
(d) Interest Act (Canada) . . . . . . . . . . . . . . . . . -17-
7.3 Payment of Stamping Fee . . . . . . . . . . . . . . . . . . . . -17-
7.4 Maximum Rate of Return . . . . . . . . . . . . . . . . . . . . -17-
7.5 Waiver of Judgment Interest Act (Alberta) . . . . . . . . . . . -18-
7.6 Deemed Reinvestment Not Applicable . . . . . . . . . . . . . . -18-
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ARTICLE 8
GENERAL PROVISIONS RELATING TO LIBOR BASED LOANS
AND CANADIAN EURODOLLAR LOANS
8.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -18-
8.2 Early Termination of LIBOR Periods . . . . . . . . . . . . . . . . -18-
8.3 Inability to Make LIBOR Based Loans or Canadian Eurodollar Loans . -19-
ARTICLE 9
BANKERS' ACCEPTANCES
9.1 Creation of Bankers' Acceptances . . . . . . . . . . . . . . . . . -19-
9.2 Terms of Acceptance by the Canadian Resident Lenders . . . . . . . -20-
(a) Delivery and Payment . . . . . . . . . . . . . . . . . . . -20-
(b) No Liability . . . . . . . . . . . . . . . . . . . . . . . -20-
(c) Bankers' Acceptances Purchased by Lenders . . . . . . . . . -20-
(d) Marketing . . . . . . . . . . . . . . . . . . . . . . . . . -20-
(e) Power of Attorney . . . . . . . . . . . . . . . . . . . . . -20-
9.3 General Mechanics . . . . . . . . . . . . . . . . . . . . . . . . . -20-
(a) Notice . . . . . . . . . . . . . . . . . . . . . . . . . . -20-
(b) Rollovers . . . . . . . . . . . . . . . . . . . . . . . . . -21-
(c) Conversion from Canadian Dollar Accommodation . . . . . . . -21-
(d) Conversion to Canadian Dollar Accommodation . . . . . . . . -21-
(e) Conversion from or to U.S. Dollar Accommodation . . . . . . -22-
(f) Authorization . . . . . . . . . . . . . . . . . . . . . . . -22-
9.4 Execution of Bankers' Acceptances . . . . . . . . . . . . . . . . . -22-
9.5 Escrowed Funds . . . . . . . . . . . . . . . . . . . . . . . . . . -22-
ARTICLE 10
INCREASED COSTS AND WITHHOLDING TAX
10.1 Increased Costs Due to Changes in Law . . . . . . . . . . . . . . . -23-
10.2 Changes in Circumstances . . . . . . . . . . . . . . . . . . . . . -23-
10.3 Withholding Tax . . . . . . . . . . . . . . . . . . . . . . . . . . -24-
(a) Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . -24-
(b) Credits or Refunds . . . . . . . . . . . . . . . . . . . . -25-
(c) Contesting Taxes . . . . . . . . . . . . . . . . . . . . . -25-
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ARTICLE 11
FEES AND EXPENSES
11.1 Facility Fee . . . . . . . . . . . . . . . . . . . . . . . -25-
11.2 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . -26-
ARTICLE 12
CONDITIONS PRECEDENT
12.1 Conditions Precedent to Initial Drawdown . . . . . . . . . -26-
(a) Deliveries . . . . . . . . . . . . . . . . . . . . -26-
(b) Notice . . . . . . . . . . . . . . . . . . . . . . -27-
(c) Guarantee . . . . . . . . . . . . . . . . . . . . . -27-
(d) Corporate Proceedings . . . . . . . . . . . . . . . -27-
(e) Absence of Material Litigation . . . . . . . . . . -27-
(f) No Change in Applicable Law . . . . . . . . . . . . -27-
(g) No Default . . . . . . . . . . . . . . . . . . . . -27-
(h) Chauvco Acquisition . . . . . . . . . . . . . . . . -27-
(i) Absence of Litigation Enjoining Acquisition . . . . -28-
(j) Chauvco Acquisition Notices . . . . . . . . . . . . -28-
(k) No Material Adverse Change . . . . . . . . . . . . -28-
(l) Pro Forma Balance Sheet of Parent . . . . . . . . . -28-
12.2 Conditions to Subsequent Advances . . . . . . . . . . . . . -28-
(a) Notice . . . . . . . . . . . . . . . . . . . . . . -28-
(b) No Default . . . . . . . . . . . . . . . . . . . . -28-
(c) Representations and Warranties . . . . . . . . . . -28-
ARTICLE 13
REPRESENTATIONS AND WARRANTIES OF THE BORROWER
13.1 Borrower's Representations and Warranties . . . . . . . . . -29-
(a) No Default . . . . . . . . . . . . . . . . . . . . -29-
(b) Organization, Existence and Good Standing . . . . . -29-
(c) Authorization . . . . . . . . . . . . . . . . . . . -29-
(d) No Conflicts or Consents . . . . . . . . . . . . . -29-
(f) Financial Statements . . . . . . . . . . . . . . . -30-
(g) Other Obligations . . . . . . . . . . . . . . . . . -30-
(h) Full Disclosure . . . . . . . . . . . . . . . . . . -30-
(i) Litigation . . . . . . . . . . . . . . . . . . . . -31-
(j) Environmental Matters . . . . . . . . . . . . . . . -31-
(k) Title to Properties . . . . . . . . . . . . . . . . -31-
(l) Solvency . . . . . . . . . . . . . . . . . . . . . -31-
(m) Environmental Laws . . . . . . . . . . . . . . . . -31-
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(n) No Breach of Orders, Licences or Statutes . . . . . . . . -31-
(o) Approvals . . . . . . . . . . . . . . . . . . . . . . . . -32-
(p) Restricted Subsidiaries . . . . . . . . . . . . . . . . . -32-
(q) Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . -32-
13.2 Acknowledgement . . . . . . . . . . . . . . . . . . . . . . . . . -32-
ARTICLE 14
COVENANTS OF THE BORROWER
14.1 Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . -33-
(a) Payment and Performance . . . . . . . . . . . . . . . . . -33-
(b) Books, Financial Statements and Reports . . . . . . . . . -33-
(c) Other Information and Inspections . . . . . . . . . . . . -34-
(d) Notice of Material Events . . . . . . . . . . . . . . . . -35-
(e) Maintenance of Existence and Qualifications . . . . . . . -35-
(f) Payment of Taxes and Trade Debt . . . . . . . . . . . . . -35-
(g) Insurance . . . . . . . . . . . . . . . . . . . . . . . . -36-
(h) Compliance with Agreements and Law . . . . . . . . . . . -36-
(i) Maintenance of Business . . . . . . . . . . . . . . . . . -36-
(j) Operations . . . . . . . . . . . . . . . . . . . . . . . -36-
(k) Ranking of Indebtedness . . . . . . . . . . . . . . . . . -36-
(l) Ownership of Restricted Subsidiaries . . . . . . . . . . -37-
(m) Ownership of Assets . . . . . . . . . . . . . . . . . . . -37-
14.2 Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . -37-
(a) Limitation on Indebtedness . . . . . . . . . . . . . . . -37-
(b) Negative Pledge . . . . . . . . . . . . . . . . . . . . . -38-
(c) Limitation on Mergers . . . . . . . . . . . . . . . . . . -38-
(d) Limitation on Disposition of Capital Stock of Restricted
Subsidiaries . . . . . . . . . . . . . . . . . . -38-
(e) Limitation on Restricted Payments . . . . . . . . . . . . -38-
(f) Transactions with Affiliates . . . . . . . . . . . . . . -39-
(g) Limitations on Restricted Subsidiaries . . . . . . . . . -39-
(h) Limitation on Sale/Leasebacks . . . . . . . . . . . . . . -39-
(i) Conversion between Restricted Subsidiary and
Unrestricted Subsidiary . . . . . . . . . . . . -39-
(j) Disposition of Property . . . . . . . . . . . . . . . . . -40-
(k) Limitation on Distributions to Pioneer (Canada) . . . . . -40-
ARTICLE 15
INDEMNITY OF BORROWER
15.1 Indemnity of Borrower . . . . . . . . . . . . . . . . . . . . . . -41-
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ARTICLE 16
SUBSIDIARIES
16.1 Guarantees by Restricted Subsidiaries . . . . . . . . . . . . . -42-
ARTICLE 17
ADMINISTRATION OF THE CREDIT FACILITY
17.1 Authorization and Action . . . . . . . . . . . . . . . . . . . -42-
(a) Authorization and Action . . . . . . . . . . . . . . . -42-
(b) Paying Agent . . . . . . . . . . . . . . . . . . . . . -42-
(c) Lenders' Determination . . . . . . . . . . . . . . . . -43-
(d) Deemed Non-Consent . . . . . . . . . . . . . . . . . . -43-
17.2 Procedure for Making Advances . . . . . . . . . . . . . . . . . -43-
(a) Pro Rata Advances . . . . . . . . . . . . . . . . . . . -43-
(b) Instructions from Borrower . . . . . . . . . . . . . . -43-
(c) Assumption Respecting Availability . . . . . . . . . . -44-
17.3 Remittance of Payments . . . . . . . . . . . . . . . . . . . . -44-
17.4 Redistribution of Payment . . . . . . . . . . . . . . . . . . . -45-
17.5 Duties and Obligations . . . . . . . . . . . . . . . . . . . . -46-
17.6 Prompt Notice to the Lenders . . . . . . . . . . . . . . . . . -47-
17.7 Agent and Agent Authority . . . . . . . . . . . . . . . . . . . -47-
17.8 Lenders' Credit Decisions . . . . . . . . . . . . . . . . . . . -47-
17.9 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . -47-
17.10 Resignation and Removal . . . . . . . . . . . . . . . . . . . . -48-
17.11 Taking and Enforcement of Remedies . . . . . . . . . . . . . . -48-
17.12 Agent May Perform Covenants . . . . . . . . . . . . . . . . . . -49-
17.13 No Liability of Agent . . . . . . . . . . . . . . . . . . . . . -49-
17.14 Nature of Obligations under this Agreement . . . . . . . . . . -49-
(a) Obligations Separate . . . . . . . . . . . . . . . . . -49-
(b) No Liability for Failure by other Lenders . . . . . . . -49-
17.15 Consent or Waiver by Lenders . . . . . . . . . . . . . . . . . -49-
(a) Unanimity . . . . . . . . . . . . . . . . . . . . . . . -49-
(c) Majority Consent . . . . . . . . . . . . . . . . . . . -50-
ARTICLE 18
EVENTS OF DEFAULT
18.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . -50-
(a) Failure to Pay . . . . . . . . . . . . . . . . . . . . -50-
(b) Breach of Certain Covenants . . . . . . . . . . . . . . -50-
(c) Breach of Covenants . . . . . . . . . . . . . . . . . . -50-
(d) Failure to Execute Support Guarantee . . . . . . . . . -51-
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(e) False Representation or Warranty . . . . . . . . . . . -51-
(f) Failure to Pay Other Indebtedness . . . . . . . . . . . -51-
(g) Bankruptcy . . . . . . . . . . . . . . . . . . . . . . -51-
(h) Default by Parent . . . . . . . . . . . . . . . . . . . -52-
(i) Other Defaults . . . . . . . . . . . . . . . . . . . . -52-
(j) Invalidity of Documents . . . . . . . . . . . . . . . . -53-
(k) Change of Control . . . . . . . . . . . . . . . . . . . -53-
18.2 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . -53-
18.3 Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . -53-
ARTICLE 19
CONFIDENTIALITY
19.1 Non-Disclosure . . . . . . . . . . . . . . . . . . . . . . . . -53-
19.2 Exceptions . . . . . . . . . . . . . . . . . . . . . . . . . . -53-
19.3 Permitted Disclosures by the Agent and Each Lender . . . . . . -54-
19.4 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . -54-
ARTICLE 20
ASSIGNMENT
20.1 Assignment by Borrower . . . . . . . . . . . . . . . . . . . . -54-
20.2 Assignment by the Lenders . . . . . . . . . . . . . . . . . . . -54-
ARTICLE 21
MISCELLANEOUS
21.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . -55-
21.2 Telephone Instructions . . . . . . . . . . . . . . . . . . . . -56-
21.3 No Partnership, Joint Venture or Agency . . . . . . . . . . . . -56-
21.4 Judgment Currency . . . . . . . . . . . . . . . . . . . . . . . -57-
(a) Deficiency . . . . . . . . . . . . . . . . . . . . . . -57-
(b) Excess . . . . . . . . . . . . . . . . . . . . . . . . -57-
21.5 Further Assurances . . . . . . . . . . . . . . . . . . . . . . -57-
21.6 Waiver of Laws . . . . . . . . . . . . . . . . . . . . . . . . -57-
21.7 Attornment and Waiver of Jury Trial . . . . . . . . . . . . . . -58-
21.8 Interest on Payments in Arrears . . . . . . . . . . . . . . . . -58-
21.9 Payments Due on Banking Day . . . . . . . . . . . . . . . . . . -59-
21.10 Application of Proceeds . . . . . . . . . . . . . . . . . . . . -59-
21.11 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . -59-
21.12 Whole Agreement . . . . . . . . . . . . . . . . . . . . . . . . -60-
9
CREDIT AGREEMENT
THIS AGREEMENT made effective the 18th day of December, 1997
BETWEEN
CHAUVCO RESOURCES LTD.
As Borrower
- and -
CANADIAN IMPERIAL BANK OF COMMERCE
As Arranger, Administrative Agent, and Canadian Resident Lender
- and -
BANK OF NOVA SCOTIA
As Co-Syndication Agent and Canadian Resident Lender
- and -
ROYAL BANK OF CANADA
As Co-Syndication Agent and Canadian Resident Lender
- and -
XXX XXXXX XXXXXXXXX XXXX XX XXXXXX
As Co-Agent and Canadian Resident Lender
- and -
XXXXXX GUARANTY TRUST COMPANY OF NEW YORK
As Co-Agent and Non-resident Lender
- and -
NATIONSBANK OF TEXAS, N.A.
As Co-Agent and Non-resident Lender
- and -
10
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THE TORONTO-DOMINION BANK
As Co-Agent and Canadian Resident Lender
- and -
FIRST UNION NATIONAL BANK
As Non-resident Lender
- and -
WACHOVIA BANK, N.A.
As Non-resident Lender
- and -
THOSE FINANCIAL INSTITUTIONS WHICH
HEREAFTER BECOME LENDERS
PREAMBLE
1. The Borrower has requested and the Lenders have agreed to
establish a senior, unsecured, unsubordinated credit facility on the terms and
conditions set forth below.
2. CIBC has agreed to act as Agent for the Lenders under the
Credit Facility.
AGREEMENT
In consideration of the covenants and agreements between the
Parties contained in this Agreement and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Parties agree
as follows:
ARTICLE 1
INTERPRETATION
1.1 DEFINITIONS. Capitalized words and phrases used in the
Documents and in all notices and communications expressed to be made pursuant
to this Agreement shall have the meanings set out in Schedule A, unless the
context otherwise requires or is otherwise defined in any of the Documents.
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1.2 HEADINGS. Headings, subheadings and the table of contents
contained in any of the Documents are inserted for convenience of reference
only and shall not affect the construction or interpretation of any of the
Documents.
1.3 SUBDIVISIONS. Unless otherwise stated, reference herein to a
Schedule or to an Article, Section, paragraph or other subdivision is a
reference to such Schedule to this Agreement or such Article, Section,
paragraph or other subdivision of this Agreement. Reference in Schedule A to a
Schedule or to an Article, Section, paragraph or other subdivision of "the
Agreement" is a reference to such Schedule or Article, Section, paragraph or
other subdivision of this Agreement.
1.4 NUMBER. Wherever the context in any of the Documents so
requires, a term used herein importing the singular shall also include the
plural and vice versa.
1.5 STATUTES, REGULATIONS AND RULES. Any reference in any of the
Documents to all or any section or paragraph or any other subdivision of any
Law shall, unless otherwise expressly stated, be a reference to that Law or the
relevant section or paragraph or other subdivision thereof, as amended,
substituted, replaced or re-enacted from time to time.
1.6 MONETARY REFERENCES. Whenever an amount of money is referred
to in any of the Documents, such amount shall, unless otherwise expressly
stated, be in U.S. Dollars.
1.7 TIME. Time shall be of the essence of the Documents.
1.8 GOVERNING LAW. The Documents shall be governed by and
construed in accordance with the Laws in force in the Province of Alberta from
time to time.
1.9 ENUREMENT. The Documents shall be binding upon and shall
enure to the benefit of the Parties and their respective successors and
permitted assigns.
1.10 AMENDMENTS. No Document may be amended orally and, subject to
Section 21.1(e), any amendment may only be made by way of an instrument in
writing signed by the Parties.
1.11 NO WAIVER.
(a) Subject to Section 1.11(c), no waiver by a Party of any
provision or of the breach of any provision of any of the
Documents shall be effective unless it is contained in a
written instrument duly executed by an authorized officer or
representative of such Party. Such written waiver shall
affect only the matter specifically identified in the
instrument granting the waiver and shall not extend to any
other matter, provision or breach.
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(b) The failure of a Party to take any steps in exercising any
right in respect of the breach or nonfulfillment of any
provision of any of the Documents shall not operate as a
waiver of that right, breach or provision, nor shall any
single or partial exercise of any right preclude any other or
future exercise of that right or the exercise of any other
right, whether in Law or otherwise.
(c) Acceptance of payment by a Party after a breach or
nonfulfillment of any provision of any of the Documents
requiring a payment by the other Party to such Party shall
constitute a waiver of such provision if cured by such
payment, but shall not constitute a waiver or cure of any
other provision of any of the Documents.
1.12 SEVERABILITY. If any portion of a Document or the application
thereof to any circumstance shall be held invalid or unenforceable to an extent
that does not affect in a fundamental way, the operation of the Document in
question, the remainder of the provision in question, or its application to any
circumstance other than that to which it has been held invalid or
unenforceable, and the remainder of the Document in question, shall not be
affected thereby and shall be valid and enforceable to the fullest extent
permitted by Law.
1.13 INCONSISTENCY. To the extent that there is any inconsistency
or ambiguity between the provisions of this Agreement and any other Document
(which for purposes of this Section 1.13 only shall also include any Schedule
to this Agreement), the provisions of this Agreement shall govern to the extent
necessary to eliminate such inconsistency or ambiguity.
1.14 ACCOUNTING TERMS AND PRINCIPLES. Except as otherwise
expressly provided, all accounting terms, principles, calculations and the
financial tests applicable to the Credit Facility shall be interpreted, applied
and calculated, as the case may be, in accordance with U.S. GAAP and all
financial statements required to be provided to the Agent or the Lenders
hereunder shall be prepared in accordance with U.S. GAAP. The basis of
accounting and all calculations set out in this Agreement shall be applied and
made on a consistent basis and shall not be changed for the purposes of this
Agreement unless agreed to by the Agent in writing, such agreement not to be
unreasonably withheld. It shall be reasonable for the Agent to withhold its
consent if a proposed change could adversely affect the obligations of the
Borrower or the rights and benefits of the Lenders hereunder.
1.15 Schedules. The following are the Schedules which form part of this Agreement:
SCHEDULE A: Definitions
SCHEDULE B: Form of Closing Certificate
SCHEDULE C: Form of Notice of Borrowing
SCHEDULE D: Form of Notice of Rollover/Conversion
SCHEDULE E: Form of Financial Certificate
SCHEDULE F: List of Restricted Subsidiaries
SCHEDULE G: Request for an Offer of Extension
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SCHEDULE H: Form of Support Guarantee and Parent Guarantee
SCHEDULE I: Power of Attorney (BAs)
SCHEDULE J: Form of Notice of Subsidiary Conversion
SCHEDULE K: Form of Release of Restricted Subsidiary
SCHEDULE L: Disclosure Schedule
ARTICLE 2
DELIVERIES ON CLOSING DATE
2.1 DELIVERIES ON CLOSING BY BORROWER. On the Closing Date, the
Borrower shall deliver or cause to be delivered the Closing Certificate to the
Agent for the benefit of the Lenders.
ARTICLE 3
THE CREDIT FACILITY
3.1 THE CREDIT FACILITY. Subject to the terms and conditions
hereof and effective on the Closing Date:
(a) The Lenders hereby establish the Credit Facility in favour of
the Borrower to be funded through the following tranches:
(i) Tranche A: Advances by the Canadian Resident
Lenders; and
(ii) Tranche B: Advances by the Non-resident
Lenders.
(b) The Credit Facility is available during the Revolving Period
to a maximum aggregate principal amount under Tranche A and
Tranche B of $290,000,000.
3.2 EXTENSION OF CONVERSION DATE.
(a) In this Section 3.2:
"REQUEST FOR AN OFFER OF EXTENSION" means a written request
made by the Borrower to the Lenders (in substantially the form
of Schedule G) to have the Lenders issue an offer to the
Borrower extending the Revolving Period for a further 364
days; and
"OFFER OF EXTENSION" means a written offer by the Agent, for
and on behalf of Lenders representing more than 50% of the
Commitment Amount, to the Borrower to extend the Revolving
Period to a date 364 days from acceptance by the Borrower
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of such offer, and setting forth, if applicable, the terms and
conditions on which such extension is offered by the Lenders
and as may be accepted by the Borrower.
(b) The Borrower may, at its option and from time to time, request
an offer to extend the Revolving Period by delivering to the
Agent a Request for an Offer of Extension not less than 60
days and not more than 90 days prior to the then current
Conversion Date. The Agent shall forthwith provide a copy of
the Request for an Offer of Extension to each of the Lenders
who has not previously become a Non-Accepting Lender. Upon
receipt by the Agent from the Borrower of an executed Request
for an Offer of Extension, each Lender shall, after
discussions among the Lenders to ascertain, if possible, a
common position, within 30 days after the date the Agent
receives such request from the Borrower, either:
(i) notify the Agent of its acceptance of the Request for
an Offer of Extension, and the terms and conditions,
if any, upon which such Lender is prepared to extend
the Conversion Date; or
(ii) notify the Agent that the request for the issuance of
an Offer of Extension has been denied, such notice to
forthwith be forwarded by the Agent to the Borrower
to allow the Borrower to make its election under
Section 3.4.
The failure of a Lender to deliver an Offer of Extension
within such 30 day period shall be deemed to be notification
by such Lender to the Borrower that such Lender has denied the
Borrower's Request for an Offer of Extension.
(c) Provided that Lenders representing more than 50% of the
Commitment Amount provide notice to the Agent under Section
3.2(b)(i) that they accept the Request for an Offer of
Extension, such acceptance having common terms and conditions
in respect of, as applicable, Tranche A or Tranche B, the
Agent shall deliver to the Borrower an Offer of Extension
incorporating the said terms and conditions, such offer shall
be open for acceptance by the Borrower until the Banking Day
immediately preceding the then current Conversion Date. Upon
written notice by the Borrower to the Agent accepting an
outstanding Offer of Extension and agreeing to the terms and
conditions, if any, specified therein (the date of such notice
of acceptance being the "Extension Date"), the Conversion Date
shall be extended to the date 364 days from the Extension Date
and the terms and conditions specified in such Offer of
Extension shall be immediately effective.
(d) The Borrower understands that the consideration of any Request
for an Offer of Extension constitutes an independent credit
decision where each Lender retains the absolute and unfettered
discretion to make and that no commitment in this regard is
hereby given by a Lender and that any offer to extend the
Conversion Date may
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be on such terms and conditions in addition to those set out
herein as the extending Lenders stipulate.
3.3 CONVERSION TO TERM LOAN. Subject to an extension of the
Revolving Period in accordance with Section 3.2 and for each Non-Accepting
Lender under Section 3.4(a)(i), effective at 11:59 p.m. Calgary, Alberta time
on the day immediately preceding the Conversion Date, and provided that no
Event of Default shall have occurred and be continuing, (i) each Lender's
Revolving Commitment shall be automatically cancelled, (ii) the Outstandings
attributable to each Lender shall become a Term Loan having a term to maturity
as set forth in Section 3.8(b), and (iii) each Lender shall thereupon be deemed
to have provided such Lender's Term Commitment in favour of the Borrower.
3.4 NON-ACCEPTING LENDER. Provided that Lenders representing more
than 50% but less than 100% of the Commitment Amount provide notice to the
Agent under Section 3.2(b)(i) that they accept the Request for an Offer of
Extension, on notice of the Borrower to the Agent, the Borrower shall be
entitled to choose any of the following in respect of each Lender who does not
accept a Request for an Offer of Extension (each a "Non-Accepting Lender")
prior to the expiration of the Revolving Period, provided that if the Borrower
does not make an election prior to the expiration of the Revolving Period, the
Borrower shall be deemed to have irrevocably elected to exercise the provisions
of Section 3.4(a)(i):
(a) the Non-Accepting Lender's Commitment shall be cancelled as of
the Extension Date, the Revolving Commitment shall be reduced
by such cancellation, and all Obligations then outstanding to
the Non- Accepting Lender shall, at the option of the
Borrower, either (i) become a Term Loan pursuant to Section
3.3 or (ii) on or prior to the Extension Date, be repaid in
full;
(b) the Borrower shall replace the Non-Accepting Lender by
reaching satisfactory arrangements with one or more Lenders or
new Canadian Resident Lenders or new Non-resident Lenders,
having regard to the identity of the Non-Accepting Lender, for
the purchase of the Revolving Commitment of such Non-
Accepting Lender and such Non-Accepting Lender shall be
obligated to sell its Revolving Commitment in accordance with
such satisfactory arrangements; or
(c) the Borrower may elect to revoke and cancel the Request for an
Offer of Extension by giving notice of such revocation and
cancellation to the Agent (which shall promptly notify the
Lenders thereof), and concurrently therewith, shall have the
option to (i) cancel the total Commitment Amount and, subject
to the notice requirements set forth in Section 5.2 and to the
provisions of Sections 8.2 and 9.5, repay in full all
Obligations under the Documents, or (ii) have the Outstandings
on the Conversion Date become a Term Loan pursuant to Section
3.3.
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3.5 DEFAULTING LENDER. By notice of the Borrower to the Agent, the
Borrower shall be entitled to choose an option as set forth in Section 3.4(a)
or (b) in respect of any Lender who, as reasonably determined by the Borrower
in consultation with the Agent:
(a) defaults in funding Advances (including the acceptance or
purchase of Bankers' Acceptances) as required hereunder;
(b) requires the Borrower to pay additional amounts with respect
to Withholding Taxes pursuant to Section 10.3(a);
(c) requests Additional Compensation pursuant to Section 10.1(a);
(d) is unable to make a LIBOR Based Loan or Canadian Eurodollar
Loan pursuant to a determination under Section 8.3; or
(e) is unable to maintain or continue to offer any Accommodation
pursuant to a determination under Section 10.2.
3.6 OUTSTANDING PRINCIPAL. Subject to Section 5.8, the Borrower
shall at no time permit the Outstandings under the Revolver to exceed the
aggregate of all Revolving Commitments or permit the Outstandings under the
Term Loan to exceed the aggregate of all Term Commitments.
3.7 MATURITY DATE OF ADVANCES. Each Advance by way of Bankers'
Acceptance, Canadian Eurodollar Loan or LIBOR Based Loan shall have a Maturity
Date which:
(a) expires on or prior to the Termination Date; and
(b) shall enable the Borrower to make the Scheduled Reductions as
the same become due.
3.8 REPAYMENTS.
(a) DURING REVOLVING PERIOD. During the Revolving Period the
Borrower may repay and re-borrow any amount up to all of the
Lenders' then subsisting Revolving Commitments.
(b) DURING TERM PERIOD. During the Term Period the Borrower
shall, as a Principal Repayment, pay to each Lender providing
a Term Loan, in 10 equal semi-annual installments beginning on
the first Banking Day of the seventh Month following the
Conversion Date (the "First Instalment Date"), an amount equal
to 2 1/2% of the Outstandings to such Non-Accepting Lender on
the Conversion Date. Each of the
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above referred to semi-annual principal instalments are herein
called a "Scheduled Reduction".
(c) PAYMENT ON TERMINATION DATE. The Term Commitment of a Lender,
if any, remaining on the Termination Date applicable to such
Lender, shall be automatically reduced to zero and the
Borrower shall pay to such Lender all Obligations outstanding
to such Lender on such date.
(d) GENERAL RIGHT TO PREPAY AND CANCEL. Subject to Sections 8.2
and 9.5, and upon the Borrower giving the Agent not less than
3 Banking Days notice, the Borrower may at any time prepay,
based on each Lender's Pro Rata Share, without premium, bonus
or penalty, any or all Outstandings under the Term
Commitments, except that a Bankers' Acceptance shall not be
paid prior to its Maturity Date. The Borrower may also at any
time, upon the Borrower giving the Agent not less than 3
Banking Days prior notice, cancel in whole or in part, based
on each Lender's Pro Rata Share, any undrawn portion of the
Commitment Amount of the Lenders, including any undrawn
portion resulting from a prepayment. Any prepayment of
Outstandings under the Term Commitment as provided above,
other than the making of a Scheduled Reduction or the
repayment in full of a Non-Accepting Lender pursuant to
Section 3.4(a), shall automatically cause a reduction in the
Revolving Commitment of a Lender, provided a Revolving Period
is still subsisting, equal to an amount of such prepayment
multiplied by a fraction, the numerator being the Revolving
Commitment of such Lender, and the denominator being the
aggregate of all Revolving Commitments then subsisting.
(e) CANCELLATION DURING THE REVOLVING PERIOD. During the
Revolving Period, any optional cancellation pursuant to
Section 3.8(d) above shall result in a permanent reduction,
based on each Lender's Pro Rata Share, of the Revolving
Commitments of the Lenders.
(f) PREPAYMENT DURING TERM PERIOD. Any permanent prepayment made
by the Borrower pursuant to Section 3.8(d) during the Term
Period shall reduce the amount of each then remaining
Scheduled Reduction pro rata.
3.9 USE OF PROCEEDS. Except with respect to the initial Drawdown
and to the extent required under the Combination Agreement, the Borrower shall
use the proceeds of the Credit Facility to discharge all outstanding debt
obligations of Chauvco (other than trade payables) and shall be entitled to use
the remaining proceeds for general purposes (including, without limitation,
acquisitions), subject to the provisions of this Agreement dealing with Hostile
Acquisitions.
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3.10 TYPES OF ACCOMMODATION. The Borrower may from time to time
obtain under the Credit Facility all or one or more of the following types of
Accommodation:
(a) under Tranche A:
(i) Canadian Prime Rate Loans;
(ii) U.S. Base Rate Loans;
(iii) LIBOR Based Loans;
(iv) Bankers' Acceptances; and
(b) under Tranche B:
(i) Alternate Base Rate Loans;
(ii) LIBOR Based Loans; and
(iii) Canadian Eurodollar Loans.
3.11 DETERMINATION OF APPLICABLE RATING LEVEL
(a) The Applicable Rating Level shall be based on the Rating
Agencies senior unsecured long-term debt rating of the Parent
as follows:
------------------------------------------------------
APPLICABLE RATING LEVEL XXXXX'X S & P
------------------------------------------------------
I >Baa1 >BBB+
------------------------------------------------------
II Baa1 BBB+
------------------------------------------------------
III Baa2 BBB
------------------------------------------------------
IV Baa3 BBB-
------------------------------------------------------
V
