Document:

a6781357ex10_1.htm

Exhibit 10.1

 

 

	 

 

J.P. Morgan

 

THIRD AMENDED AND RESTATED CREDIT AGREEMENT

 

dated as of June 30, 2011

 

among

 

FOREST OIL CORPORATION,

 

THE LENDERS PARTY HERETO,

 

BNP PARIBAS

and

WELLS FARGO BANK, N.A.,

as Co-Syndication Agents,

 

BANK OF AMERICA, N.A.,

THE BANK OF NOVA SCOTIA,

CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH,

DEUTSCHE BANK SECURITIES INC.,

and

TORONTO DOMINION (TEXAS) LLC,

as Co-Documentation Agents,

and

 

JPMORGAN CHASE BANK, N.A.,

as Administrative Agent

 

 

 

 

J.P. MORGAN SECURITIES LLC,

as Sole Lead Arranger and Bookrunner

 

 

	 

 

 

  

  

  

 

TABLE OF CONTENTS

 

	 	  	Page
	 	 	 
	
ARTICLE I. Definitions

	2 
	 	 	 
	
SECTION 1.1.

	
Defined Terms

	
2

	
SECTION 1.2.

	
Classification of Loans and Borrowings

	
25

	
SECTION 1.3.

	
Terms Generally

	
25

	
SECTION 1.4.

	
Accounting Terms; GAAP

	
25

	
SECTION 1.5.

	
Designation and Conversion of Restricted and Unrestricted Subsidiaries

	
26

	 	 	 
	
ARTICLE II The Credits

	26
	 	 	 
	
SECTION 2.1.

	
Commitments

	
26

	
SECTION 2.2.

	
Loans and Borrowings

	
27

	
SECTION 2.3.

	
Requests for Borrowings

	
27

	
SECTION 2.4.

	
Letters of Credit.

	
28

	
SECTION 2.5.

	
Funding of Borrowings

	
32

	
SECTION 2.6.

	
Interest Elections

	
33

	
SECTION 2.7.

	
Borrowing Base

	
34

	
SECTION 2.8.

	
Termination and Reduction of Commitments

	
37

	
SECTION 2.9.

	
Repayment of Loans; Evidence of Debt

	
37

	
SECTION 2.10.

	
Prepayment of Loans

	
38

	
SECTION 2.11.

	
Fees

	
40

	
SECTION 2.12.

	
Interest

	
41

	
SECTION 2.13.

	
Alternate Rate of Interest

	
41

	
SECTION 2.14.

	
Illegality

	
42

	
SECTION 2.15.

	
Increased Costs

	
43

	
SECTION 2.16.

	
Break Funding Payments

	
44

	
SECTION 2.17.

	
Taxes

	
44

	
SECTION 2.18.

	
Payments Generally; Pro Rata Treatment; Sharing of Set-offs

	
46

	
SECTION 2.19.

	
Mitigation Obligations; Replacement of Lenders

	
48

	
SECTION 2.20.

	
Addition of Lenders and Increase in Commitments

	
49

	
SECTION 2.21.

	
Defaulting Lenders

	
50

	 	 	 
	
ARTICLE III Representations and Warranties

	51 
	 	 	 
	
SECTION 3.1.

	
Organization; Powers

	
51

	
SECTION 3.2.

	
Authorization; Enforceability

	
51

	
SECTION 3.3.

	
Approvals; No Conflicts

	
52

	
SECTION 3.4.

	
Financial Condition; No Material Adverse Change

	
52

	
SECTION 3.5.

	
Properties

	
53

	
SECTION 3.6.

	
Litigation

	
53

	
SECTION 3.7.

	
Compliance with Laws and Agreements

	
53

	
SECTION 3.8.

	
Investment Company Status

	
54

	
SECTION 3.9.

	
Taxes

	
54

 

  

-i-

  

 

	
SECTION 3.10.

	
ERISA

	
54

	
SECTION 3.11.

	
Disclosure

	
54

	
SECTION 3.12.

	
Subsidiaries

	
54

	
SECTION 3.13.

	
Insurance

	
55

	
SECTION 3.14.

	
Labor Matters

	
55

	
SECTION 3.15.

	
Priority; Security Matters

	
55

	
SECTION 3.16.

	
Environmental Matters

	
55

	
SECTION 3.17.

	
Solvency

	
56

	
SECTION 3.18.

	
Use of Credit

	
57

	
SECTION 3.19.

	
Claims and Liabilities

	
57

	
SECTION 3.20.

	
OFAC

	
57

	 	 	 
	
ARTICLE IV Conditions

	57 
	 	 	 
	
SECTION 4.1.

	
Effectiveness

	
57

	
SECTION 4.2.

	
Amendment and Restatement; Initial Loan

	
58

	
SECTION 4.3.

	
Each Credit Event

	
61

	 	 	 
	
ARTICLE V Affirmative Covenants

	61 
	 	 	 
	
SECTION 5.1.

	
Financial Reporting; Notices and Other Information

	
62

	
SECTION 5.2.

	
Notice of Material Events.

	
63

	
SECTION 5.3.

	
Information Regarding Collateral

	
64

	
SECTION 5.4.

	
Existence; Conduct of Business

	
64

	
SECTION 5.5.

	
Payment of Obligations

	
65

	
SECTION 5.6.

	
Maintenance of Properties

	
65

	
SECTION 5.7.

	
Insurance

	
65

	
SECTION 5.8.

	
Casualty and Condemnation

	
65

	
SECTION 5.9.

	
Books and Records; Inspection and Audit Rights

	
65

	
SECTION 5.10.

	
Compliance with Laws

	
66

	
SECTION 5.11.

	
Use of Proceeds and Letters of Credit

	
66

	
SECTION 5.12.

	
Additional Subsidiaries

	
66

	
SECTION 5.13.

	
Unrestricted Subsidiaries

	
67

	
SECTION 5.14.

	
Environmental Matters

	
67

	
SECTION 5.15.

	
Further Assurances

	
67

	 	 	 
	
ARTICLE VI Financial Covenants

	69 
	 	 	 
	
SECTION 6.1.

	
Ratio of Total Debt to EBITDA

	
69

	 	 	 
	
ARTICLE VII Negative Covenants

	69 
	 	 	 
	
SECTION 7.1.

	
Indebtedness; Certain Equity Securities

	
69

	
SECTION 7.2.

	
Liens

	
71

	
SECTION 7.3.

	
Fundamental Changes

	
72

	
SECTION 7.4.

	
Investments, Loans, Advances, Guarantees and Acquisitions

	
73

	
SECTION 7.5.

	
Asset Sales

	
74

	
SECTION 7.6.

	
Sale and Leaseback Transactions

	
75

 

  

-ii-

  

 

	
SECTION 7.7.

	
Hedging Agreements

	
75

	
SECTION 7.8.

	
Restricted Payments; Certain Payments of Indebtedness

	
75

	
SECTION 7.9.

	
Transactions with Affiliates

	
76

	
SECTION 7.10.

	
Restrictive Agreements

	
76

	
SECTION 7.11.

	
No Action to Affect Security Documents

	
77

	 	 	 
	
ARTICLE VIII Events of Default

	77 
	 	 	 
	
SECTION 8.1.

	
Listing of Events of Default

	
77

	
SECTION 8.2.

	
Action if Bankruptcy

	
78

	
SECTION 8.3.

	
Action if Other Event of Default

	
79

	 	 	 
	
ARTICLE IX Agents

	
 

	79 
	 	 	 
	
ARTICLE X Miscellaneous

	81 
	 	 	 
	
SECTION 10.1.

	
Notices

	
81

	
SECTION 10.2.

	
Waivers; Amendments

	
83

	
SECTION 10.3.

	
Expenses; Indemnity; Damage Waiver

	
84

	
SECTION 10.4.

	
Successors and Assigns

	
85

	
SECTION 10.5.

	
Survival

	
88

	
SECTION 10.6.

	
Counterparts; Effectiveness

	
88

	
SECTION 10.7.

	
Severability

	
89

	
SECTION 10.8.

	
Right of Setoff

	
89

	
SECTION 10.9.

	
GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS

	
89

	
SECTION 10.10.

	
WAIVER OF JURY TRIAL

	
90

	
SECTION 10.11.

	
Headings

	
90

	
SECTION 10.12.

	
Confidentiality

	
90

	
SECTION 10.13.

	
Interest Rate Limitation

	
91

	
SECTION 10.14.

	
Collateral Matters; Hedging Agreements

	
92

	
SECTION 10.15.

	
Arranger; Co-Documentation Agents; Co-Syndication Agents

	
93

	
SECTION 10.16.

	
Loan Documents

	
93

	
SECTION 10.17.

	
USA PATRIOT Act Notice

	
93

	
SECTION 10.18.

	
NO ORAL AGREEMENTS

	
93

	
SECTION 10.19.

	
Flood Insurance Regulation

	
94

	
SECTION 10.20.

	
Refinancing and Replacement of Existing Credit Facility

	
94

 

  

-iii-

  

EXHIBITS AND SCHEDULES

 

EXHIBITS:

 

	
Exhibit A

	
[Reserved]

	
Exhibit B

	
Form of Lender Certificate

	
Exhibit C

	
Form of Compliance Certificate

	
Exhibit D

	
Form of Assignment and Assumption

	
Exhibit E-1

	
Form of Borrowing Request

	
Exhibit E-2

	
Form of Interest Election Request

	
Exhibit F

	
Form of Subsidiary Guaranty

	
Exhibit G

	
Form of Third Amended and Restated Pledge Agreement

	
Exhibit H

	
Form of Mortgage

	
Exhibit I-A

	
Form of Third Amendment to Mortgage (2000)

	
Exhibit I-B

	
Form of Second Amendment to Mortgage (2004)

	
Exhibit I-C

	
Form of First Amendment to Mortgage (2007)

SCHEDULES:

 

	
Schedule 2.1

	
Commitments

	
Schedule 2.4

	
Existing Letters of Credit

	
Schedule 3.4

	
Contingent Liabilities; Long-Term Commitments; Unrealized Losses

	
Schedule 3.6

	
Disclosed Matters

	
Schedule 3.9

	
Taxes

	
Schedule 3.12

	
Subsidiaries; Restricted Subsidiaries

	
Schedule 3.13

	
Insurance

	
Schedule 3.16

	
Environmental Matters

	
Schedule 7.1(a)(iv)(A)

	
Existing Guarantees of Intercompany Indebtedness

	
Schedule 7.2

	
Existing Liens

	
Schedule 7.4

	
Existing Investments

	
Schedule 7.5

	
Anticipated Asset Sales

	
Schedule 7.10

	
Existing Restrictions

	
Schedule 10.14

	
Additional Secured Hedges

 

  

-iv-

  

 

THIRD AMENDED AND RESTATED CREDIT AGREEMENT

 

THIS THIRD AMENDED AND RESTATED CREDIT AGREEMENT, dated as of June 30, 2011, is among FOREST OIL CORPORATION, a New York corporation (the “Borrower”), the LENDERS party hereto, BNP PARIBAS and WELLS FARGO BANK, N.A., as Co-Syndication Agents, BANK OF AMERICA, N.A., THE BANK OF NOVA SCOTIA, CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH, DEUTSCHE BANK SECURITIES INC., and TORONTO DOMINION (TEXAS) LLC, as Co-Documentation Agents, and JPMORGAN CHASE BANK, N.A., as Administrative Agent.

 

WITNESSETH:

 

WHEREAS, Borrower has heretofore entered into that certain Credit Agreement dated as of October 10, 2000 by and among Borrower, various financial institutions and JPMorgan Chase Bank, N.A. (f/k/a The Chase Manhattan Bank), as global administrative agent (as amended, supplemented, restated or otherwise modified prior to the Effective Date, the “Original Credit Facility”);

 

WHEREAS, Borrower has heretofore entered into that certain Amended and Restated Credit Agreement dated as of September 28, 2004 by and among Borrower, various financial institutions and JPMorgan Chase Bank, N.A. (f/k/a JPMorgan Chase Bank), as global administrative agent (as amended, supplemented, restated or otherwise modified prior to the Effective Date, the “First Amended Credit Facility”), which amended and restated the Original Credit Facility;

 

WHEREAS, Borrower has heretofore entered into that certain Second Amended and Restated Credit Agreement dated as of June 6, 2007, by and among Borrower, various financial institutions and JPMorgan Chase Bank, N.A., as global administrative agent (as amended, supplemented, restated or otherwise modified prior to the Effective Date, the “Existing Credit Facility”), which amended and restated the First Amended Credit Facility;

 

WHEREAS, certain financial institutions not previously a party to the Existing Credit Facility intend to become a party to this Agreement;

 

WHEREAS, Borrower desires to amend and restate the Existing Credit Facility in order to restructure, rearrange, renew, extend and refinance all indebtedness, including Hedging Obligations and letters of credit, evidenced by and outstanding under the Existing Credit Facility as of the Effective Date (the “Existing Indebtedness”) into obligations and commitments hereunder, and to otherwise amend and modify the Existing Credit Facility;

 

WHEREAS, any obligations and Liens outstanding under the Original Credit Facility, the First Amended Credit Facility or the Existing Credit Facility on the Effective Date shall be continued as Obligations and Liens under this Agreement; and

 

WHEREAS, the Administrative Agent, the Lenders and the Issuing Bank are willing, on the terms and subject to the conditions hereinafter set forth (including Article IV), to amend and restate the Existing Credit Facility and make Loans to Borrower (which Loans shall be used, among other things, to extend, renew and continue the Existing Indebtedness and the corresponding loans under the Existing Credit Facility), and to issue and participate in Letters of Credit for the account of Borrower or its Restricted Subsidiaries.

 

  

  

  

 

NOW, THEREFORE, in consideration of the mutual promises herein contained and for other valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree to amend and restate the Existing Credit Facility in its entirety as follows:

 

ARTICLE I.

Definitions

 

SECTION 1.1.   Defined Terms. As used in this Agreement, the following terms have the meanings specified below:

 

“ABR”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Alternate Base Rate.

 

“Adjusted LIBO Rate” means, with respect to any Eurodollar Borrowing for any Interest Period, an interest rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest Period multiplied by (b) the Statutory Reserve Rate.

 

“Administrative Agent” means JPMorgan Chase Bank, N.A., in its capacity as Administrative Agent for the Lenders, and its successors.

 

“Administrative Questionnaire” means an Administrative Questionnaire in a form supplied by the Administrative Agent.

 

“Affected Loan” is defined in Section 2.18(f).

 

“Affiliate” means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.

 

“Agents” means each of the Administrative Agent, the Co-Syndication Agents and the Co-Documentation Agents.

 

“Agreement” means this Third Amended and Restated Credit Agreement, as it may be amended, supplemented, restated or otherwise modified and in effect from time to time.

 

“Alternate Base Rate” means, for any day, a rate per annum equal to the greater of (a) the Prime Rate in effect on such day, (b) the Federal Funds Effective Rate in effect on such day plus 1⁄2 of 1%, and (c) the Adjusted LIBO Rate for a one month Interest Period on such day (or if such day is not a Business Day, the immediately preceding Business Day) plus 1%, provided that, for the avoidance of doubt, the Adjusted LIBO Rate for any day shall be based on the rate appearing on LIBOR01 of the Telerate Service (or on any successor or substitute page of such page) at approximately 11:00 a.m. London time on such day. Any change in the Alternate Base Rate due to a change in the Prime Rate, the Federal Funds Effective Rate or the Adjusted LIBO Rate shall be effective from and including the effective date of such change in the Prime Rate, the Federal Funds Effective Rate or the Adjusted LIBO Rate, respectively. If for any reason the Administrative Agent shall have determined (which determination shall be conclusive and binding, absent manifest error) that it is unable to ascertain the Federal Funds Effective Rate or the Adjusted LIBO Rate for any reason, including, without limitation, the inability or failure of the Administrative Agent to obtain sufficient bids or publications in accordance with the terms hereof, the Alternate Base Rate shall be the Prime Rate until the circumstances giving rise to such inability no longer exist.

 

  

-2-

  

 

“Applicable Lending Office” means, for each Lender and for each Type of Loan, such office of such Lender (or of an Affiliate of such Lender) as such Lender may from time to time specify in writing to the Administrative Agent and Borrower as the office by which its Loans of such Type are to be made and/or issued and maintained.

 

“Applicable Percentage” means, with respect to any Lender, the percentage of the total Commitments (disregarding any Defaulting Lender’s Commitment) represented by such Lender’s Commitment. If the Commitments have terminated or expired, the Applicable Percentages shall be determined based upon the Commitments most recently set forth in the Register, giving effect to any assignments made in accordance with Section 10.4 or any increases or decreases in Commitments made in accordance with this Agreement.

 

“Applicable Rate” means, for any day and with respect to any Eurodollar Loans, any ABR Loans or any Commitment Fees payable hereunder, as the case may be, the applicable rate per annum set forth below in basis points under the caption “Eurodollar Loans,” “ABR Loans” or “Commitment Fees,” as the case may be, based on the Borrowing Base Utilization on such date:

 

	
Borrowing Base

	 	
Eurodollar Loans

	 	
ABR Loans

	 	
Commitment

	
Utilization

	 	 	 	 	 	
Fees

	
x > 90%

	 	250	 	150	 	50.0
	
75% < x ≤ 90%

	 	225	 	125	 	50.0
	
50% < x ≤ 75%

	 	200	 	100	 	50.0
	
25% < x ≤ 50%

	 	175	 	75	 	35.0
	
x ≤ 25%

	 	150	 	50	 	35.0

 

As used in this definition, “x” means, at any time, the Borrowing Base Utilization.

 

For purposes of the foregoing, any change in the Applicable Rate will occur automatically without prior notice upon any change in the Borrowing Base Utilization. Each change in the Applicable Rate shall apply during the period commencing on the effective date of such change and ending on the date immediately preceding the effective date of the next such change.

 

“Approved Country” means the United States, or any other country determined to be an “Approved Country” by the Majority Lenders.

 

“Approved Engineer” means (a) Ryder Scott Company Petroleum Engineers, Netherland, Sewell & Associates, Inc., Collarini Engineering, Inc. or DeGolyer and MacNaughton or (b) such other firm of independent petroleum engineers expert in the matters required to be performed in connection with the preparation and delivery of an Independent Reserve Report and reasonably satisfactory to the Administrative Agent.

 

  

-3-

  

 

“Approved Sale and Leaseback” means the sale by Borrower or one or more of its Restricted Subsidiaries of drilling or workover rigs or other equipment (the “Rigs”) to any Person and the subsequent leasing of the Rigs back to Borrower or one or more of its Restricted Subsidiaries.

 

“Arranger” means J.P. Morgan Securities LLC.

 

“Assignment and Assumption” means an assignment and assumption entered into by a Lender and an assignee (with the consent of any party whose consent is required by Section 10.4), and accepted by the Administrative Agent, in substantially the form of Exhibit D or any other form approved by the Administrative Agent.

 

“Authorized Officer” means, with respect to any Person, the Chief Executive Officer, the President, any Vice President or the Treasurer of such Person or any other officer of such Person duly authorized to contractually bind such Person specified as such to the Administrative Agent in writing by any of the aforementioned officers of such Person.

 

“Availability Period” means the period from and including the Effective Date to but excluding the earlier of the Maturity Date and the date of termination of the Commitments.

 

“Board” means the Board of Governors of the Federal Reserve System of the United States of America.

 

“Borrower” is defined in the preamble.

 

“Borrowing” means Loans of the same Type, made, converted or continued on the same date and, in the case of Eurodollar Loans, as to which a single Interest Period is in effect.

 

“Borrowing Base” means the “Borrowing Base” as determined from time to time pursuant to Section 2.7.

 

“Borrowing Base Deficiency” means, at the time of determination, (i) at any time when an Unsecured Election is not in effect, the amount by which (a) the Credit Exposure of all Lenders exceeds (b) the then current Borrowing Base, and (ii) at any time when an Unsecured Election is in effect, the amount by which (a) the Credit Exposure of all Lenders exceeds (b) the then current Borrowing Base less the then current Other Borrowing Base Debt.

 

“Borrowing Base Designation Notice” is defined in Section 2.7(b).

 

“Borrowing Base Increase Required Lenders” means, at any time, both the Administrative Agent and the Lenders having in aggregate at least 92% of the aggregate total Commitments under the Loan Documents, or, if the Commitments have been terminated, Lenders holding at least 92% the aggregate Credit Exposure; provided that the Loans, LC Exposure, and unused Commitments held or deemed held by any Defaulting Lender shall be excluded for purposes of making a determination of Borrowing Base Increase Required Lenders.

 

  

-4-

  

 

“Borrowing Base Properties” means the Mortgaged Properties and those other Oil and Gas Properties owned by Borrower or its Restricted Subsidiaries located in an Approved Country that are given value in the determination of the then current Borrowing Base.

 

“Borrowing Base Required Lenders” means, at any time, both the Administrative Agent and the Lenders having in the aggregate at least 66 2/3% of the aggregate total Commitments under the Loan Documents, or, if the Commitments have been terminated, Lenders holding at least 66 2/3% of the aggregate Credit Exposure; provided that the Loans, LC Exposure, and unused Commitments held or deemed held by any Defaulting Lender shall be excluded for purposes of making a determination of Borrowing Base Required Lenders.

 

“Borrowing Base Utilization” means, at any time, the ratio (expressed as a percentage) of (i) the aggregate Credit Exposure of all Lenders to (ii) (A) the Borrowing Base then in effect at any time that an Unsecured Election is not in effect or (B) the difference of the Borrowing Base then in effect minus the then current amount of Other Borrowing Base Debt.

 

“Borrowing Request” means a request by Borrower for a Borrowing in accordance with 0, in substantially the form of Exhibit E-1 or any other form approved by the Administrative Agent.

 

“Business Day” means any day that is not a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to remain closed; provided that, when used in connection with a Eurodollar Loan, the term “Business Day” shall also exclude any day on which banks are not open for dealings in dollar deposits in the London interbank market.

 

“Canadian Forest” means Canadian Forest Oil Ltd., a corporation amalgamated under the laws of the Province of Alberta, Canada, and any successor in interest thereto.

 

“Capital Lease Obligations” means, for any Person, all obligations of such Person to pay rent or other amounts under a lease of (or other agreement conveying the right to use) Property to the extent such obligations are required to be classified and accounted for as a capital lease on a balance sheet of such Person under GAAP, and, for purposes of this Agreement, the amount of such obligations shall be the capitalized amount thereof, determined in accordance with GAAP.

 

“Casualty Event” means any loss, casualty or other insured damage to, or any taking under power of eminent domain or by condemnation or similar proceeding of, any Collateral having a fair market value in excess of $25,000,000 (or its equivalent in other currencies).

 

“CERCLA” means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. § 9601, et. seq., as amended from time to time.

 

“CERCLIS” means the Comprehensive Environmental Response and Liability Information System as provided for by 40 C.F.R. § 300.5, as amended from time to time.

 

  

-5-

  

 

“Change in Law” means (a) the adoption of any law, rule or regulation after the date of this Agreement, (b) any change in any law, rule or regulation or in the interpretation or application thereof by any Governmental Authority after the date of this Agreement or (c) compliance by any Lender or any Issuing Bank (or, for purposes of Section 2.15(b), by any Applicable Lending Office of such Lender or any Issuing Bank or by such Lender’s or any Issuing Bank’s holding company, if any) with any request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the date of this Agreement. Notwithstanding anything herein to the contrary, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines, requirements or directives thereunder or issued in connection therewith (whether or not having the force of law) or in implementation thereof, and (ii) all requests, rules, regulations, guidelines, interpretations, requirements, interpretations and directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities (whether or not having the force of law), in each case pursuant to Basel III, shall, in each case, be deemed to be a Change in Law, regardless of the date enacted, adopted, issued or implemented.

 

“Co-Documentation Agents” means Bank of America, N.A., The Bank of Nova Scotia, Credit Suisse AG, Cayman Islands Branch, Deutsche Bank Securities Inc., and Toronto Dominion (Texas) LLC, each in its capacity as co-documentation agent for the Lenders hereunder, and any successor thereto.

 

“Co-Syndication Agents” means BNP Paribas and Wells Fargo Bank, N.A., each in its capacity as co-syndication agent for the Lenders hereunder, and any successor thereto.

 

“Code” means the Internal Revenue Code of 1986, as amended from time to time.

 

“Collateral” means any and all “Mortgaged Property” and “Collateral,” as defined in all Security Documents.

 

“Commission” means the U.S. Securities and Exchange Commission, or any Governmental Authority in the United States succeeding to any or all of the functions thereof.

 

“Commitment” means, with respect to each Lender, the commitment of such Lender to make Loans and to acquire participations in Letters of Credit hereunder, expressed as an amount representing the maximum aggregate amount of such Lender’s Credit Exposure hereunder, as such commitment may be (a) reduced from time to time pursuant to Section 2.8, (b) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 10.4, (c) increased from time to time pursuant to Section 2.20, and (d) terminated pursuant to Section 8.2 or Section 8.3. The initial amount of each Lender’s Commitment is set forth on Schedule 2.1, or in the Register following any Assignment and Assumption to which such Lender is a party or the delivery of a Lender Certificate to which such Lender is a party. The initial aggregate amount of the Commitments of the Lenders is $1,500,000,000.

 

“Commitment Fee” is defined in Section 2.11(a).

 

  

-6-

  

 

“Consolidated Net Income” means for any period, the consolidated net income (or loss) of Borrower and its Restricted Subsidiaries, determined on a consolidated basis in accordance with GAAP; provided that there shall be excluded (a) the income (or deficit) of any Person accrued prior to the date it becomes a Restricted Subsidiary of Borrower or is merged into or consolidated with Borrower or any of its Restricted Subsidiaries, (b) the income (or deficit) of any Person (other than a Restricted Subsidiary of Borrower) in which Borrower or any of its Restricted Subsidiaries has an ownership interest, except to the extent that any such income is actually received by Borrower or such Restricted Subsidiary in the form of dividends or similar distributions, (c) the undistributed earnings of any Restricted Subsidiary of Borrower to the extent that the declaration or payment of dividends or similar distributions by such Restricted Subsidiary is not at the time permitted by the terms of any contractual obligation (other than under any Loan Document) or requirement of law applicable to such Restricted Subsidiary, (d) unrealized losses and gains from Hedging Agreements resulting from the application of the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 815, (e) any non-cash compensation charge or expense realized from grants of Equity Interests or other rights to officers, directors and employees and (f) any gains or losses from, or related to, currency conversions; provided further, that for the purpose of calculating “Consolidated Net Income” for the preceding four consecutive fiscal quarter period, such calculation shall include, to the extent necessary and without duplication, the historical financial information of Borrower for the fiscal quarter periods ending on or before March 31, 2011.

 

For purposes of 0, Consolidated Net Income of Borrower and its Restricted Subsidiaries on a consolidated basis shall exclude the following non-cash items (provided that the same shall be included when they become cash items): (x) any impairment of Property for accounting purposes under a ceiling test adjustment, (y) any extraordinary item or (z) any gain or loss which, at the time of recognition in the financial statements of Borrower and its Restricted Subsidiaries, is not a cash item. To the extent future cash payments are made or received with respect to a change in accounting method and such payment is not otherwise included in the computation of consolidated net income for such period, consolidated net income shall be reduced or increased by the amount of such cash payment or receipt.

 

“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. “Controlling” and “Controlled” have meanings correlative thereto.

 

“Credit Exposure” means, with respect to any Lender at any time, the sum of the outstanding principal amount of such Lender’s Loans and its LC Exposure at such time.

 

“Default” means any event or condition which constitutes an Event of Default or which upon notice, lapse of time or both would, unless cured or waived, become an Event of Default.

 

“Defaulting Lender” means, as reasonably determined by the Administrative Agent, any Lender that (a) has failed, within two (2) Business Days of the date required to be funded or paid, to (i) fund any portion of its Loans, (ii) fund any portion of its participations in Letters of Credit or (iii) pay over to the Administrative Agent, the Issuing Bank or any other Lender any other amount required to be paid by it hereunder, unless, in the case of clause (i) above, such Lender notifies the Administrative Agent in writing that such failure is the result of such Lender’s good faith determination that a condition precedent to funding (specifically identified and including the particular default, if any) has not been satisfied, (b) has notified Borrower, the Administrative Agent, the Is suing Bank or any other Lender in writing, or has made a public statement to the effect, that it does not intend or expect to comply with any of its funding obligations under this Agreement (unless such writing or public statement indicates that such position is based on such Lender’s good faith determination that a condition precedent (specifically identified and including the particular default, if any) to funding a loan under this Agreement cannot be satisfied) or generally under other agreements in which it commits to extend credit, (c) has failed, within three (3) Business Days after request by the Administrative Agent, the Issuing Bank or any other Lender, acting in good faith, to provide a certification in writing from an Authorized Officer of such Lender that it will comply with its obligations (and is financially able to meet such obligations) to fund prospective Loans and participations in then outstanding Letters of Credit under this Agreement, provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon the Administrative Agent’s, the Issuing Bank’s or such other Lender’s receipt of such certification in form and substance satisfactory to it and the Administrative Agent, or (d) has become insolvent or bankrupt; provided however that Lenders wholly or partially owned by a Governmental Authority pursuant to applicable laws shall not for this reason be deemed a Defaulting Lender.

 

  

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“Deficiency Notification Date” is defined in Section 2.7(f).

 

“Disclosed Matters” is defined in Section 3.6(a).

 

“dollars” refers to lawful money of the United States of America.

 

“EBITDA” means, for any period, the Consolidated Net Income of Borrower and its Restricted Subsidiaries for such period (excluding any extraordinary gains and losses from Consolidated Net Income) before deduction for interest expense, depreciation, depletion expense, amortization expense, federal, provincial, territorial and state income taxes and other non-cash charges and expenses incurred by Borrower and its Restricted Subsidiaries; provided, however, that any calculation of EBITDA hereunder shall be made using an EBITDA calculated on a pro forma basis (inclusive of any acquisitions and/or divestitures, if any, made during the relevant calculation period and, if any such acquisition or divestiture has a value in excess of $25,000,000, as if such acquisition or divestiture had occurred on the first day of such period); provided further, that for the purpose of calculating “EBITDA” for the preceding four consecutive fiscal quarter period, such calculation shall include, to the extent necessary and without duplication, the historical information of Borrower for the fiscal quarter period ending on or before March 31, 2011.

 

“Effective Date” means the date on which the conditions specified in Section 4.2 of this Agreement are satisfied (or waived in accordance with Section 10.2 of this Agreement).

 

“Effectiveness Notice” means a notice and certificate of Borrower properly executed by an Authorized Officer of Borrower addressed to the Lenders and delivered to the Administrative Agent whereby Borrower certifies satisfaction and/or waiver of all the conditions precedent to the effectiveness under 0 of this Agreement.

 

“Environmental Laws” means all laws, rules, regulations, codes, ordinances, orders, decrees, judgments, injunctions, legally binding notices or legally binding agreements issued, promulgated or entered into by any Governmental Authority, relating in any way to the protection of the environment, preservation or reclamation of natural resources, the management, release or threatened release of any Hazardous Material or to health and safety matters relating to the exposure of Hazardous Material.

 

  

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“Environmental Liability” means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of Borrower or any of its Subsidiaries directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials into the environment, or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.

 

“Equity Interests” means shares of the capital stock, partnership interests, membership interest in a limited liability company, beneficial interests in a trust or other equity interests in any Person or any warrants, options or other rights to acquire such interests; provided that debt securities convertible into Equity Interests shall not be “Equity Interests”.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and any successor statute of similar import, together with the rules, regulations and interpretations thereunder, in each case as in effect from time to time.

 

“ERISA Affiliate” means all members of a controlled group of corporations and all members of a controlled group of trades or businesses (whether or not incorporated) under common control which, together with Borrower, are treated as a single employer under Section 414 (b) or 414 (c) of the Code or Section 4001 of ERISA.

 

“ERISA Event” means (a) any “reportable event,” as defined in Section 4043 of ERISA or the regulations issued thereunder with respect to a Plan (other than an event for which the 30 day notice period is waived); (b) the failure of a Plan to meet the minimum funding standards under Section 412 of the Code or Section 302 of ERISA (determined without regard to Section 412(c) of the Code or Section 302(c) of ERISA); (c) the failure of a Plan to satisfy the requirements of Section 401(a)(29) of the Code, Section 436 of the Code or Section 206(g) of ERISA; (d) the incurrence by Borrower or any of its ERISA Affiliates of any liability under Title IV of ERISA with respect to the termination of any Plan; (e) the receipt by Borrower or any ERISA Affiliate from the PBGC (or any successor thereto) or a plan administrator of any notice relating to an intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f) the incurrence by Borrower or any of its ERISA Affiliates of any Withdrawal Liability; or (g) the receipt by Borrower or any ERISA Affiliate of any notice concerning the determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA.

 

“Eurodollar”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Adjusted LIBO Rate (other than clause (c) of the definition of “Alternative Base Rate”).

 

“Event of Default” has the meaning assigned to such term in Section 8.1.

 

  

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“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“Excluded Taxes” means, with respect to any Agent, any Lender, any Issuing Bank or any other recipient of any payment to be made by or on account of any obligation of Borrower hereunder, (a) income or franchise Taxes imposed on (or measured by) its net income by the United States of America, or by the jurisdiction under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its Applicable Lending Office is located, (b) any branch profits Taxes imposed by the United States of America or any similar Tax imposed by any other jurisdiction in which Borrower is located, (c) in the case of a Foreign Lender (other than an assignee pursuant to a request by Borrower under Section 2.19(b)), any withholding Tax that is imposed on amounts payable to such Foreign Lender at the time such Foreign Lender becomes a party to this Agreement (or designates a new Applicable Lending Office) or is attributable to such Foreign Lender’s failure to comply with Section 2.17(e), except to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time of designation of a new Applicable Lending Office (or assignment), to receive additional amounts from Borrower with respect to such withholding Tax pursuant to Section 2.19(a) and (d) any Taxes imposed under FATCA (or any amended or successor version of FATCA that is substantively comparable).

 

“Existing Credit Facility” is defined in the third recital.

 

“Existing Indebtedness” is defined in the fifth recital.

 

“Existing Letters of Credit” is defined in Section 2.4(j).

 

“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this Agreement, and any current or future regulations or official interpretations thereof.

 

“Federal Funds Effective Rate” means, for any day, the weighted average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average (rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for such day for such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it.

 

“Fee Letter” means that certain Fee Letter dated as of June 1, 2011, by and among Borrower, the Administrative Agent and the Arranger, as such letter may be amended, supplemented, restated or otherwise modified from time to time in accordance with the Loan Documents.

 

“Flood Insurance Regulation” means (i) the National Flood Insurance Act of 1968 as now or hereafter in effect or any successor statute thereto, (ii) the Flood Disaster Protection Act of 1972 as now or hereafter in effect or any successor statute thereto, (iii) the National Flood Insurance Reform Act of 1994 (amending 42 USC §4001, et. seq.), as the same may be amended or recodified from time to time, (iv) the Flood Insurance Reform Act of 2004 as now or hereafter in effect or any successor statute thereto and (v) an regulations promulgated under any of the foregoing statutes.

 

  

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“Foreign Lender” means any Lender that is not a U.S. Person.

 

“Foreign Subsidiary” means any Subsidiary that is organized under the laws of a jurisdiction other than the United States of America or any State thereof or the District of Columbia.

 

“Forest Oil Permian” means Forest Oil Permian Corporation, a Delaware corporation.

 

“GAAP” means generally accepted accounting principles in the United States of America.

 

“Governmental Approval” means (a) any authorization, consent, approval, license, ruling, permit, tariff, rate, certification, waiver, exemption, filing, variance, claim, order, judgment or decree of, or with, (b) any required notice to, (c) any declaration of or with, or (d) any registration by or with, any Governmental Authority.

 

“Governmental Authority” means the government of the United States of America or any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.

 

“Governmental Rule” means any statute, law, regulation, ordinance, rule, judgment, order, decree, permit, concession, grant, franchise, license, agreement, directive, requirement of, or other governmental restriction or any similar binding form of decision of or determination by, or any binding interpretation or administration of any of the foregoing by, any Governmental Authority, whether now or hereafter in effect.

 

“Guarantee” means a guarantee, an endorsement, a contingent agreement to purchase or to furnish funds for the payment or maintenance of, or otherwise to be or become contingently liable under or with respect to, the Indebtedness, net worth, working capital or earnings of any Person or any production or revenues generated by (or any capital or other expenditures incurred in connection with the acquisition and exploitation of, exploration for, development of or production from) any Hydrocarbons, or a guarantee of the payment of dividends or other distributions upon the Equity Interests of any Person, or an agreement to purchase, sell or lease (as lessee or lessor) Property, products, materials, supplies or services primarily for the purpose of enabling a debtor to make payment of such debtor’s obligations or an agreement to assure a creditor against loss, and including, without limitation, causing a bank, surety company or other financial institution or similar entity to issue a letter of credit, surety bond or other similar instrument for the benefit of another Person, but excluding endorsements for collection or deposit in the ordinary course of business. The terms “Guarantee” and “Guaranteed” used as a verb shall have a correlative meaning.

 

  

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“Guarantor” means collectively (a) Forest Oil Permian and (b) each other Restricted Subsidiary of Borrower that executes and delivers a Subsidiary Guaranty, including each Restricted Subsidiary that is required to execute a Subsidiary Guaranty pursuant to Section 5.12.

 

“Hazardous Material” means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, asbestos or asbestos containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated as harmful pursuant to any Environmental Law, and any petroleum, petroleum products or petroleum distillates and associated oil or natural gas exploration, production and development wastes that are not exempted or excluded from being defined as “hazardous substances”, “hazardous materials”, “hazardous wastes” and “toxic substances” under such Environmental Laws.

 

“Hedging Agreement” means any interest rate protection agreement, foreign currency exchange agreement, commodity price protection agreement or other interest or currency exchange rate or commodity price hedging arrangement, whether or not such agreement contemplates physical delivery of commodities or is considered “financial”, which agreement is entered into for managing, mitigating or eliminating risks relating to commodity price fluctuations, between Borrower or its Restricted Subsidiaries and any Person.

 

“Hedging Obligations” means, with respect to any Person, all liabilities (including but not limited to obligations and liabilities of such Person arising in connection with or as a result of early or premature termination of a Hedging Agreement, whether or not occurring as a result of a default thereunder) of such Person under a Hedging Agreement.

 

“Highest Lawful Rate” is defined in Section 10.13(b).

 

“Hydrocarbon Interests” means all rights, titles and interests in and to oil and gas leases, oil, gas and mineral leases, other Hydrocarbon leases, mineral interests; mineral servitudes, overriding royalty interests, royalty interests, net profits interests, production payment interests, and other similar interests.

 

“Hydrocarbons” means, collectively, oil, gas, casinghead gas, drip gasoline, natural gasoline, condensate, distillate and all other liquid or gaseous hydrocarbons and related minerals and all products therefrom, in each case whether in a natural or a processed state.

 

“Increased Commitment Amount” is defined in Section 2.20.

 

  

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“Indebtedness” of any Person means, without duplication, (a) all obligations of such Person for borrowed money or with respect to deposits or advances of any kind, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person under conditional sale or other title retention agreements relating to Property acquired by such Person, (d) all obligations of such Person in respect of the deferred purchase price of Property or services (excluding current accounts payable incurred in the ordinary course of business), (e) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the Indebtedness secured thereby has been assumed, (f) all Guarantees by such Person of Indebtedness of others, (g) all Capital Lease Obligations of such Person, (h) all obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit and letters of guaranty, (i) all obligations, contingent or otherwise, of such Person in respect of bankers’ acceptances, (j) all obligations of such Person with respect to any arrangement, directly or indirectly, whereby such Person or its Subsidiaries shall sell or transfer any material asset, and whereby such Person or any of its Subsidiaries shall then or immediately thereafter rent or lease as lessee such asset or any part thereof, (k) all recourse and support obligations of such Person or any of its Subsidiaries with respect to the sale or discount of any of its accounts receivable, and (l) all obligations of such Person with respect to Production Payments sold by such Person or any prepayments for oil and gas production or other similar agreements; provided, however, that, with respect to determining the amount of Indebtedness under clause (a) or clause (b) above, any application of Financial Accounting Standard Nos. 133, 137, 138 and 143 which would have the effect of increasing or decreasing the principal amount of any obligation for borrowed money shall be disregarded. The Indebtedness of any Person shall include the Indebtedness of any other Person (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor.

 

“Indemnified Taxes” means Taxes other than Excluded Taxes.

 

“Indemnitee” is defined in Section 10.3(b).

 

“Independent Reserve Report” is defined in Section 5.1(e).

 

“Information” is defined in Section 10.12.

 

“Initial Reserve Report” means the Reserve Report prepared by Borrower with respect to the Oil and Gas Properties of Borrower and its Restricted Subsidiaries as of March 31, 2011, a true and correct copy of which has been delivered to the Administrative Agent and the Lenders.

 

“Interest Election Request” means a request by Borrower to convert or continue a Borrowing in accordance with Section 2.6, in substantially the form of Exhibit E-2 or any other form approved by the Administrative Agent.

 

“Interest Payment Date” means (a) with respect to any ABR Loan, the last day of each March, June, September and December, and (b) with respect to any Eurodollar Loan, the last day of the Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a Eurodollar Borrowing with an Interest Period of more than three (3) months’ duration, each day prior to the last day of such Interest Period that occurs at intervals of three (3) months’ duration after the first day of such Interest Period.

 

“Interest Period” means with respect to any Eurodollar Borrowing, the period commencing on the date of such Borrowing and ending on the numerically corresponding day, or, with the consent of the Administrative Agent, such other day, in the calendar month that is one, two, three or six months (or, with the consent of each Lender, nine or twelve months) thereafter, as Borrower may elect; provided, that (a) if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day, (b) any Interest Period pertaining to a Eurodollar Borrowing that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month of such Interest Period, and (c) no Interest Period may end later than the last day of the Availability Period. For purposes hereof, the date of a Borrowing initially shall be the date on which such Borrowing is made and thereafter shall be the effective date of the most recent conversion or continuation of such Borrowing.

 

  

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“Internal Reserve Report” is defined in Section 5.1(e).

 

“Investment” means, for any Person: (a) the acquisition (whether for cash, Property, services or securities or otherwise) of Equity Interests of any other Person or any agreement to make any such acquisition (including, without limitation, any “short sale” or any sale of any securities at a time when such securities are not owned by the Person entering into such short sale), (b) the making of any deposit with, or advance, loan or other extension of credit to, any other Person (including the purchase of Property from another Person subject to an understanding or agreement, contingent or otherwise, to resell such Property to such Person, but excluding any such advance, loan or extension of credit having a term not exceeding 90 days representing the purchase price of inventory or supplies sold by such Person in the ordinary course of business) or (c) the entering into of any Guarantee of Indebtedness or other liability of any other Person and (without duplication) any amount committed to be advanced, lent or extended to such Person.

 

“Issuer Rating” means, on the date of determination, the issuer/family ratings by S&P and Moody’s of Borrower. For purposes of the foregoing, if the Issuer Ratings established or deemed to have been established by Moody’s and S&P shall be changed (other than as a result of a change in the rating system of Moody’s or S&P), such change shall be effective as of the date on which it is first announced by the applicable rating agency, irrespective of when notice of such change shall have been furnished by Borrower to the Agents and the Lenders pursuant to Section 5.2(a)(ii) hereof or otherwise. If the rating system of Moody’s or S&P shall change, or if any such rating agency shall cease to be in the business of rating corporate debt obligations, Borrower and the Lenders shall negotiate in good faith to amend this definition to reflect such changed rating system or the unavailability of ratings from such rating agency and, pending the effectiveness of any such amendment, the Issuer Rating shall be determined by reference to the rating most recently in effect prior to such change or cessation.

 

“Issuing Bank” means any Lender in its capacity as the issuer of Letters of Credit hereunder, provided that, upon written notice to the Administrative Agent and Borrower, any Lender (other than JPMorgan Chase Bank, N.A.) may decline to act in the capacity of an Issuing Bank under this Agreement. Any Issuing Bank may, in its discretion, arrange for one or more Letters of Credit to be issued by Affiliates of such Issuing Bank, in which case the term “Issuing Bank” shall include any such Affiliate with respect to Letters of Credit issued by such Affiliate.

 

“LC Disbursement” means a payment made by any Issuing Bank pursuant to a Letter of Credit.

 

  

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“LC Exposure” means, at any time, the sum of (a) the aggregate undrawn amount of all outstanding Letters of Credit at such time plus (b) the aggregate amount of all LC Disbursements that have not yet been reimbursed by or on behalf of Borrower at such time. The LC Exposure of any Lender at any time shall be its Applicable Percentage of the total LC Exposure at such time.

 

“Lender Affiliate” means, with respect to any Lender, (a) an Affiliate of such Lender or (b) any entity (whether a corporation, partnership, trust or otherwise) that is engaged in making, purchasing, holding or otherwise investing in bank loans and similar extensions of credit in the ordinary course of its business and is administered or managed by a Lender or an Affiliate of such Lender and with respect to any Lender that is a fund which invests in bank loans and similar extensions of credit, any other fund that invests in bank loans and similar extensions of credit and is managed by the same investment advisor as such Lender or by an Affiliate of such investment advisor.

 

“Lender Certificate” is defined in Section 2.20.

 

“Lenders” means the Persons listed on Schedule 2.1 and any other Person that shall have become a party hereto pursuant to an Assignment and Assumption or pursuant to Section 2.20, other than any such Person that ceases to be a party hereto pursuant to an Assignment and Assumption.

 

“Letter of Credit” means any letter of credit issued pursuant to this Agreement.

 

“LIBO Rate” means, with respect to any Eurodollar Borrowing for any Interest Period, the rate appearing on LIBOR01 of the Telerate Service (or on any successor or substitute page of such Service, or any successor to or substitute for such Service, providing rate quotations comparable to those currently provided on such page of such Service, as determined by the Administrative Agent from time to time for purposes of providing quotations of interest rates applicable to dollar deposits in the London interbank market) at approximately 11:00 a.m., New York City time, two Business Days prior to the commencement of such Interest Period, as the rate for dollar deposits with a maturity comparable to such Interest Period. In the event that such rate is not available at such time for any reason, then the “LIBO Rate” with respect to such Eurodollar Borrowing for such Interest Period shall be the rate at which dollar deposits of $5,000,000 and for a maturity comparable to such Interest Period are offered by the principal London office of the Administrative Agent in immediately available funds in the London interbank market at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period.

 

“Lien” means, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, hypothecation, encumbrance, charge, collateral assignment or security interest in, on or of such asset, including, without limitation, encumbrances created by the posting of a Letter of Credit, and (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset; provided, however, that, with respect to any prohibitions of Liens on Property, the following transactions shall not be deemed to create a Lien to secure Indebtedness: (i) Production Payments and (ii) liens required by statute and created in favor of any Governmental Authority to secure partial, progress, advance, or other payments intended to be used primarily in connection with air or water pollution control.

 

  

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“Loan Document” means (a) this Agreement, the Security Documents, the Fee Letter, the Subsidiary Guaranties, the Hedging Agreements between Borrower or any of its Restricted Subsidiaries and any Lender or any Affiliate of a Lender, any Borrowing Request, any Interest Election Request, any election notice, any agreement with respect to fees described in Section 2.11, and (b) each other agreement, document or instrument delivered by Borrower or any other Loan Party in connection with this Agreement, the Original Credit Facility, the First Amended Credit Facility and the Existing Credit Facility, all as amended, supplemented, restated or otherwise modified from time to time.

 

“Loan Parties” means Borrower and Forest Oil Permian and, after the date of this Agreement, any other Affiliate or Restricted Subsidiary of Borrower that executes a Loan Document, for so long as such Loan Document is in effect.

 

“Loan Value” means the percentage of the Borrowing Base attributable to a particular Borrowing Base Property as determined by the Administrative Agent in its calculation of the Borrowing Base and set forth in the Borrowing Base.

 

“Loans” means the loans made by the Lenders to Borrower pursuant to this Agreement.

 

“Lone Pine” means Lone Pine Resources Inc., a Delaware corporation.

 

“Lone Pine Credit Agreement” means that certain Credit Agreement, dated as of March 18, 2011, by and among Lone Pine, as parent, Canadian Forest, as borrower, JPMorgan Chase Bank, N.A., Toronto Branch, as administrative agent, and certain other agents and lenders party thereto, as it may be amended, supplemented, restated or otherwise modified and in effect from time to time.

 

“Majority Lenders” means Lenders having greater than 50% of the aggregate Commitments, or, if the Commitments have been terminated, Lenders holding greater than 50% of the aggregate Credit Exposure; provided that the Loans, LC Exposure, and unused Commitments held or deemed held by any Defaulting Lender shall be excluded for purposes of making a determination of Majority Lenders.

 

“Margin Stock” means “margin stock” within the meaning of Regulation U.

 

“Material Adverse Effect” means a material adverse effect on (a) the business, Properties, operations or financial condition of Borrower and its Subsidiaries taken as a whole, (b) the ability of the Loan Parties to perform any of their respective obligations under the Loan Documents or (c) the rights of or benefits available to the Lenders under any of the Loan Documents, as the case may be.

 

“Maturity Date” means June 30, 2016.

 

“Moody’s” means Moody’s Investors Service, Inc.

 

  

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“Mortgage” means any Mortgage, Line of Credit Mortgage, Deed of Trust, Assignment, Security Agreement, Financing Statement and Fixture Filing (a) delivered heretofore pursuant to the Existing Credit Facility, the First Amended Credit Facility or the Original Credit Facility, (b) dated as of the Effective Date or (c) otherwise delivered pursuant to the Loan Documents, in substantially the form of Exhibit H, executed and delivered by Borrower or any other Loan Party (other than Foreign Subsidiaries), as the case may be, as amended, supplemented, restated or otherwise modified from time to time in accordance with the terms of this Agreement and the other Loan Documents. The term “Mortgage” shall include each mortgage supplement after execution and delivery of such mortgage supplement. The term “Mortgages” shall include each and every Mortgage executed and delivered by each of Borrower and its Restricted Subsidiaries pursuant to the Existing Credit Facility, the First Amended Credit Facility, the Original Credit Facility and hereunder.

 

“Mortgage Amendment” means (i) each Third Amendment to Mortgage, Deed of Trust, Assignment, Security Agreement, Financing Statement and Fixture Filing (2000) dated as of the Effective Date, in substantially the form of Exhibit I-A, (ii) each Second Amendment to Mortgage, Line of Credit Mortgage, Deed of Trust, Assignment, Security Agreement, Financing Statement and Fixture Filing (2004) dated as of the Effective Date, in substantially the form of Exhibit I-B, (iii) each First Amendment to Mortgage, Line of Credit Mortgage, Deed of Trust, Assignment, Security Agreement, Financing Statement and Fixture Filing (2007) dated as of the Effective Date, in substantially the form of Exhibit I-C, and (iv) each other amendment, supplement or other modification delivered in connection with this Agreement, each executed and delivered by Borrower or any other Loan Party, as amended, supplemented, restated or otherwise modified from time to time in accordance with the terms of this Agreement and the other Loan Documents.

 

“Mortgaged Property” means, initially, each Oil and Gas Property on which a Lien has been granted pursuant to a Mortgage under the Original Credit Facility, the First Amended Credit Facility or the Existing Credit Facility or pursuant to Section 4.2(f), and includes each other Oil and Gas Property with respect to which a Mortgage is granted pursuant to Section 5.12 or Section 5.15. The term “Mortgaged Property” shall not include an Oil and Gas Property with respect to which a Lien has been released and not re-granted pursuant to the provisions of Section 5.15(a).

 

“Multiemployer Plan” means a "multiemployer plan" as such term is defined in Section 4001(a)(3) of ERISA, which is subject to the provisions of Title IV of ERISA, Section 412 of the Code or Section 302 of ERISA, and in respect of which Borrower or any ERISA Affiliate is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.

 

“Multiple Employer Plan” means a Plan described in Section 210 of ERISA with respect to which Borrower or any ERISA Affiliate was a substantial employer during the immediately preceding 5-year period.

 

“Net Proceeds” means, with respect to any event, (a) the cash proceeds received by Borrower and its Restricted Subsidiaries in respect of such event including (i) any cash received in respect of any non cash proceeds, but only as and when received and (ii) in the case of a Casualty Event, insurance proceeds, condemnation awards and similar payments, net of (b) the sum of (i) all reasonable fees and out-of-pocket expenses paid by Borrower and its Restricted Subsidiaries to third parties (other than Affiliates) in connection with such event, (ii) in the case of a sale, transfer or other disposition of an asset (including pursuant to a sale and leaseback transaction or a Casualty Event), the amount of all payments required to be made by Borrower and its Restricted Subsidiaries as a result of such event to repay Indebtedness (other than Loans) secured by such asset or otherwise subject to mandatory prepayment as a result of such event, (iii) the amount of all taxes paid (or reasonably estimated to be payable) by Borrower and its Restricted Subsidiaries, and (iv) the amount of any reserves established by Borrower and its Restricted Subsidiaries to fund contingent liabilities reasonably estimated to be payable, in each case during the year that such event occurred or the next succeeding year and that are directly attributable to such event (as determined reasonably and in good faith by the chief financial officer of Borrower).

 

  

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“New York City” means New York, New York.

 

 “Non-Defaulting Lender” is defined in Section 2.18(f).

 

“Non-Recourse Debt” means any Indebtedness of any Unrestricted Subsidiary, in each case in respect of which the holder or holders thereof (a) shall have recourse only to, and shall have the right to require the obligations of such Unrestricted Subsidiary to be performed, satisfied, and paid only out of, the assets and Property of such Unrestricted Subsidiary and/or one or more of its Subsidiaries and/or any other Person (other than Borrower and/or any Restricted Subsidiary), and (b) shall have no direct or indirect recourse (including by way of guaranty or indemnity) to Borrower or any Restricted Subsidiary or to any of the assets or Property of Borrower or any Restricted Subsidiary, whether for principal, interest, fees, expenses or otherwise.

 

“Obligations” means, at any time, the sum of (a) the aggregate Credit Exposure of the Lenders under the Loan Documents plus (b) all accrued and unpaid interest and fees owing to the Lenders under the Loan Documents plus (c) all Hedging Obligations as set forth in Section 10.14 plus (d) all other obligations (monetary or otherwise) of Borrower or any Restricted Subsidiary to any Lender or any Agent, whether or not contingent, arising under or in connection with any of the Loan Documents.

 

“OFAC” is defined in Section 3.20.

 

“Oil and Gas Properties” means the Hydrocarbon Interests; any Property now or hereafter pooled or unitized with Hydrocarbon Interests; all presently existing or future unitization, pooling agreements and declarations of pooled units and the units created thereby (including without limitation all units created under orders, regulations and rules of any Governmental Authority having jurisdiction) which may affect all or any portion of the Hydrocarbon Interests; all operating agreements, joint venture agreements, contracts and other agreements which relate to any of the Hydrocarbon Interests or the production, sale, purchase, exchange or processing of Hydrocarbons from or attributable to such Hydrocarbon Interests; all Hydrocarbons in and under and which may be produced and saved or attributable to the Hydrocarbon Interests, the lands covered thereby and all oil in tanks and all rents, issues, profits, proceeds, products, revenues and other incomes from or attributable to the Hydrocarbon Interests; all tenements, profits á prendre, hereditaments, appurtenances and any Property in anywise appertaining, belonging, affixed or incidental to the Hydrocarbon Interests, Property, rights, titles, interests and estates described or referred to above, including any and all Property, real or personal, now owned or hereinafter acquired and situated upon, used, held for use or useful in connection with the operating, working or development of any of such Hydrocarbon Interests or Property (excluding drilling rigs, automotive equipment or other personal Property which may be on such premises for the purpose of drilling a well or for other similar temporary uses) and including any and all oil wells, gas wells, water wells, injection wells or other wells, structures, fuel 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 together with all additions, substitutions, replacements, accessions and attachments to any and all of the foregoing.

 

  

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“Organic Documents” means, relative to any Person, its articles of organization, formation or incorporation (or comparable document), its by-laws or operating agreement and all partnership agreements, limited liability company or operating agreements and similar arrangements applicable to ownership.

 

“Original Credit Facility” is defined in the first recital.

 

“Other Borrowing Base Debt” means, at any time of determination while an Unsecured Election is in effect, the sum of all Indebtedness of the Borrower and its Restricted Subsidiaries (other than the aggregate Credit Exposure of the Lenders).

 

“Other Taxes” means any and all present or future stamp or documentary taxes or any other similar excise or property taxes, charges or similar levies arising from any payment made under any Loan Document or from the execution, delivery or enforcement of, or otherwise with respect to, any Loan Document.

 

“Participant” is defined in Section 10.4(e).

 

“Participant Register” is defined in Section 10.4(e).

 

“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA and any successor entity performing similar functions.

 

“Permitted Encumbrances” means:

 

(a)   Liens imposed by any Governmental Rule for Taxes that are not yet due or are being contested in compliance with Section 5.5;

 

(b)   landlord’s or lessor’s, carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s and other like Liens imposed by law or arising in the ordinary course of business and in each case, securing obligations that are not overdue by more than 45 days or are being contested in compliance with Section 5.5;

 

  

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(c)   deposits to secure the performance of bids, trade contracts, leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature, in each case in the ordinary course of business;

 

(d)   pledges or deposits under worker’s compensation, unemployment insurance and other social security or similar legislation made in the ordinary course of business;

 

(e)   judgment Liens in respect of judgments that do not constitute an Event of Default under Section 8.1(h);

 

(f)   easements, deed or zoning restrictions, permitting and operating restrictions, rights-of-way and similar encumbrances on real property imposed by any Governmental Rule or arising in the ordinary course of business that do not secure any Indebtedness and do not materially detract from the value of the affected property or interfere with the ordinary conduct of business of Borrower or any of its Restricted Subsidiaries; and

 

(g)   Liens permitted by any of the Loan Documents;

 

provided that the term “Permitted Encumbrances” shall not include any Lien securing (i) any Indebtedness for borrowed money or (ii) any Hedging Obligation.

 

“Permitted Investments” means:

 

(a)   direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America or any province thereof (or by any agency thereof to the extent such obligations are backed by the full faith and credit of the United States of America), in each case maturing within 90 days from the date of acquisition thereof;

 

(b)   Investments in commercial paper (i) rated A-1, P-1, R-1 low or A-1 or better by S&P or Moody’s, respectively, maturing not more than 90 days from the date of acquisition thereof or (ii) rated A-2 or better (but less than A-1) or P-2 or better (but less than P-1) by S&P or Moody’s, respectively, maturing not more than 30 days from the date of acquisition thereof; and

 

(c)   Investments in certificates of deposit, bankers’ acceptances and time deposits maturing within 90 days from the date of acquisition thereof issued or guaranteed by or placed with, and money market deposit accounts issued or offered by, any domestic office of any commercial bank organized under the laws of the United States of America or any State thereof which has a combined capital and surplus and undivided profits of not less than $500,000,000.

 

“Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.

 

  

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“Plan” means any “employee pension benefit plan,” as such term is defined in Section 3(2) of ERISA (other than a Multiemployer Plan but including a Multiple Employer Plan), which is subject to the provisions of Title IV of ERISA, Section 412 of the Code or Section 302 of ERISA, and in respect of which Borrower or any ERISA Affiliate is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.

 

“Pledge Agreement” means a Pledge Agreement, dated as of the Effective Date or otherwise delivered pursuant to the Loan Documents, substantially in the form of Exhibit G, as amended, supplemented, restated or otherwise modified from time to time in accordance with the Loan Documents. The term “Pledge Agreements” shall include each and every Pledge Agreement executed and delivered pursuant to the Loan Documents.

 

“Preferred Equity Interest” means any Equity Interest that, by its terms (or the terms of any security into which it is convertible or for which it is exchangeable) or upon the happening of any event or circumstance either (a) matures, (b) is redeemable (whether mandatorily or otherwise) at the option of the holder thereof for any consideration other than shares of common stock or (c) is convertible or exchangeable for Indebtedness or other Preferred Equity Interests, in each case, in whole or in part, prior to the date which is 91 days after the earlier of (i) the Maturity Date or (ii) the date on which the Obligations have been paid in full and the Commitments have terminated and all Letters of Credit have expired or terminated.

 

“Present Value” means, at any time, the calculation of the present value of future cash flows based upon the then-effective Reserve Report for Proven Reserves from Oil and Gas Properties located within an Approved Country, utilizing the customary discount rates and price deck of the Administrative Agent.

 

“Prime Rate” means the rate of interest per annum publicly announced from time to time by the Administrative Agent as its prime rate in effect at its principal office in New York City. Without notice to Borrower or any other Person, the Prime Rate shall change automatically from time to time as and in the amount by which such prime rate shall fluctuate. The Prime Rate is a reference rate and does not necessarily represent the lowest or best rate actually charged to any customer. The Administrative Agent may make commercial loans and other loans at rates of interest at, above or below the Prime Rate. For purposes of this Agreement, any change in the Alternate Base Rate due to a change in the Prime Rate shall be effective on the date such change in the Prime Rate is announced.

 

“Proceeds” means, with respect to any event, the cash proceeds received in respect of such event including any cash received in respect of any non cash proceeds, but only as and when received.

 

“Production Payment” means a production payment obligation (whether volumetric or dollar denominated) of Borrower or any of its Restricted Subsidiaries which are payable from a specified share of proceeds received from production from specified Oil and Gas Properties, together with all undertakings and obligations in connection therewith.

 

  

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“Property” means any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible.

 

“Proven Reserves” means collectively, “proved oil and gas reserves,” “proved developed producing oil and gas reserves,” “proved developed non-producing oil and gas reserves” (consisting of proved developed shut-in oil and gas reserves and proved developed behind pipe oil and gas reserves), and “proved undeveloped oil and gas reserves,” as such terms are defined by the Commission in its standards and guidelines.

 

“Register” has the meaning set forth in Section 10.4(c).

 

“Regulation U” means any of Regulations T, U or X of the Board from time to time in effect and shall include any successor or other regulations or official interpretations of the Board or any successor Person relating to the extension of credit for the purpose of purchasing or carrying Margin Stock and which is applicable to member banks of the Federal Reserve System or any successor Person.

 

“Related Parties” means, with respect to any specified Person, such Person’s Affiliates and the respective directors, officers, employees, agents and advisors of such Person and such Person’s Affiliates.

 

“Release” means a “release,” as such term is defined in CERCLA.

 

“Reserve Report” means the Initial Reserve Report and any other Independent Reserve Report or Internal Reserve Report delivered pursuant to Section 2.7 or Section 5.1(e), in form and substance reasonably satisfactory to the Administrative Agent, prepared at the sole cost and expense of Borrower (a) by Borrower’s internal petroleum engineers or (b) by Borrower’s internal petroleum engineers and audited by an Approved Engineer, as the case may be, which shall evaluate the Proven Reserves attributable to the Oil and Gas Properties owned directly by Borrower and/or its Restricted Subsidiaries, as of the immediately preceding January 1 or July 1. Each Reserve Report shall set forth volumes, projections of the future rate of production, Hydrocarbons prices, escalation rates, discount rate assumptions, and net proceeds of production, Present Value, operating expenses and capital expenditures, in each case based upon updated economic assumptions reasonably acceptable to the Administrative Agent.

 

“Restricted Payment” means any dividend or other distribution (whether in cash, securities or other Property, real, personal or mixed) with respect to any Equity Interests in Borrower or any Restricted Subsidiary, or any payment (whether in cash, securities or other Property, real, personal or mixed), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any Equity Interests in Borrower or any Restricted Subsidiary or any option, warrant or other right to acquire any such Equity Interests in Borrower or any Restricted Subsidiary.

 

“Restricted Subsidiary” means any Subsidiary of Borrower that is not an Unrestricted Subsidiary.

 

“Rigs” is defined in the definition of “Approved Sale and Leaseback” contained in Section 1.1.

 

  

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“S&P” means Standard & Poor’s and any successor thereto that is a nationally-recognized rating agency.

 

“Security Documents” means each Subsidiary Guaranty, each Mortgage, each Mortgage Amendment, each Pledge Agreement, and each other instrument or document executed and delivered pursuant to Section 5.12 or Section 5.15 or pursuant to the Loan Documents to secure any of the Obligations.

 

“Senior Notes” means any unsecured Indebtedness of Borrower, and any Guarantees thereof which has terms (including interest, amortization, covenants and events of default), not more onerous to Borrower and its Subsidiaries than those contained in the Loan Documents.

 

“Senior Notes Document” means the indentures or other agreements under which any Senior Notes are issued and all other instruments, agreements and other documents evidencing or governing such Senior Notes or providing for any Guarantee or other right in respect thereof.

 

“Solvent” means, with respect to any Person at any time, a condition under which (a) the fair saleable value of such Person’s assets is, on the date of determination, greater than the total amount of such Person’s liabilities (including contingent and unliquidated liabilities) at such time; and (b) such Person is able to pay all of its liabilities as such liabilities mature. For purposes of this definition (i) the amount of a Person’s contingent or unliquidated liabilities at any time shall be that amount which, in light of all the facts and circumstances then existing, represents the amount which can reasonably be expected to become an actual or matured liability, (ii) the “fair saleable value” of an asset shall be the amount which may be realized within a reasonable time either through collection or sale of such asset at its regular market value, and (iii) the “regular market value” of an asset shall be the amount which a capable and diligent business person could obtain for such asset from an interested buyer who is willing to purchase such asset under ordinary selling conditions.

 

“Spin-Off Date” means the earlier of (i) March 31, 2012 or the date upon which Borrower no longer holds direct or indirect ownership of the Equity Interests of either Canadian Forest or Lone Pine.

 

“Statutory Reserve Rate” means a fraction (expressed as a decimal), the numerator of which is the number one and the denominator of which is the number one minus the aggregate of the applicable maximum reserve percentages (including any basic, marginal, special, emergency or supplemental reserves) expressed as a decimal established by the Board to which the Administrative Agent is subject with respect to the Adjusted LIBO Rate, for eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of the Board). Such reserve percentages shall include those imposed pursuant to such Regulation D. Eurodollar Loans shall be deemed to constitute eurocurrency fundings and to be subject to such reserve requirements without benefit of or credit for proration, exemptions or offsets that may be available from time to time to any Lender under such Regulation D or any comparable regulation. The Statutory Reserve Rate shall be adjusted automatically on and as of the effective date of any change in any reserve percentage.

 

  

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“Subsidiary” means, as to any Person, a corporation, partnership, limited liability company or other entity of which Equity Interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation, partnership or other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly through one or more intermediaries, or both, by such Person. Unless otherwise qualified, all references to a “Subsidiary” or to “Subsidiaries” in this Agreement shall refer to a Subsidiary or Subsidiaries of Borrower, as the context requires.

 

“Subsidiary Guaranty” means a guaranty dated as of the Effective Date or otherwise delivered pursuant to the Loan Documents, made by a Restricted Subsidiary (other than a Foreign Subsidiary) of Borrower in favor of the Administrative Agent, substantially in the form of Exhibit F, as amended, supplemented, restated or otherwise modified from time to time in accordance with the terms of this Agreement and the other Loan Documents. The term “Subsidiary Guaranties” shall include each and every Subsidiary Guaranty executed and delivered by a Restricted Subsidiary (other than a Foreign Subsidiary) hereunder.

 

“Taxes” means any and all present or future taxes, levies, imposts, duties, deductions, charges or withholdings imposed by any Governmental Authority.

 

“Total Debt” means all Indebtedness of Borrower and its Restricted Subsidiaries on a consolidated basis described under clauses (a), (b), (d), (e), (f), (g), (h), (i), (k) and (l) of the definition thereof, but excluding (i) any attributable Indebtedness amount with an Approved Sale and Leaseback and (ii) all obligations of such Person with respect to volumetric Production Payments sold by such Person which in the aggregate are in an amount less than $125,000,000.

 

“Transactions” means the execution, delivery and performance by each Loan Party of the Loan Documents to which it is to be a party, the borrowing of Loans, the use of the proceeds thereof and the issuance of Letters of Credit hereunder.

 

“Type”, when used in reference to any Loan or Borrowing, refers to whether the rate of interest on such Loan, or on the Loans comprising such Borrowing, is determined by reference to the Adjusted LIBO Rate or the Alternate Base Rate.

 

“UCC Searches” means central and local current financing statement searches from each state in which any Collateral or a Borrowing Base Property is located, and such other jurisdictions as the Administrative Agent may request, covering each Loan Party, together with copies of all financing statements listed in such searches.

 

“United States” or “U.S.” means the United States of America, its fifty states and the District of Columbia.

 

“Unrestricted Subsidiary” means Lone Pine and any of its Subsidiaries and any Subsidiary of Borrower that is not a Restricted Subsidiary or which Borrower has designated in writing to the Administrative Agent to be an Unrestricted Subsidiary pursuant to Section 1.5 and all Subsidiaries of such Person. As of the date of this Agreement, the Unrestricted Subsidiaries are designated on Schedule 3.12 as such.

 

  

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“Unsecured Election” is defined in Section 5.15(a).

 

“Unutilized Commitment” means, at the time of determination, the amount by which (a) the lesser of (i) the amount of the Borrowing Base as then in effect at such time or (ii) the amount of the aggregate Commitments at such time, exceeds (b) the aggregate Credit Exposure of the Lenders at such time.

 

“Upfront Fee” is defined in Section 2.11(c).

 

“U.S. Person” means a “United States person” within the meaning of Section 7701(a)(30) of the Code.

 

“Withdrawal Liability” means liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.

 

SECTION 1.2.   Classification of Loans and Borrowings. For purposes of this Agreement, Loans and Borrowings may be classified and referred to by Type (e.g., a “Eurodollar Loan” or “Eurodollar Borrowing”).

 

SECTION 1.3.   Terms Generally. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”. The word “will” shall be construed to have the same meaning and effect as the word “shall”. Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person’s successors and assigns, provided such successors and assigns are permitted by the Loan Documents, (c) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, and (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement.

 

SECTION 1.4.   Accounting Terms; GAAP. Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time to time; provided that, if Borrower notifies the Administrative Agent that Borrower requests an amendment to any provision hereof to eliminate the effect of any change occurring after the date of this Agreement in GAAP or in the application thereof on the operation of such provision (or if the Administrative Agent notifies Borrower that the Majority Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith. Notwithstanding anything to the contrary herein, any obligations of a Person under a lease (whether existing now or entered into in the future) that is not (or would not be) required to be classified and accounted for as a capital lease on a balance sheet of such Person under GAAP as in effect on the Effective Date shall not be treated as capital lease solely as a result (x) the adoption of changes in or (y) changes in the application of GAAP after the Effective Date.

 

  

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SECTION 1.5.   Designation and Conversion of Restricted and Unrestricted Subsidiaries.

 

(a)   Unless designated as an Unrestricted Subsidiary on Schedule 3.12 as of the date of this Agreement or thereafter in writing to the Administrative Agent, any Person that becomes a Subsidiary of Borrower or any of its Restricted Subsidiaries shall be classified as a Restricted Subsidiary.

 

(b)   Borrower may designate any Subsidiary (including a newly formed or newly acquired Subsidiary) as an Unrestricted Subsidiary if (i) after giving effect to such designation, no Default would exist as a result of a breach of Section 5.13 and (ii) such designation is deemed to be an Investment in an Unrestricted Subsidiary in an amount equal to the fair market value of Borrower’s direct and indirect ownership interest in such Subsidiary and such Investment would be permitted to be made at the time of such designation under Section 7.4(h). Except as provided in this Section 1.5(b), no Restricted Subsidiary may be redesignated as an Unrestricted Subsidiary.

 

(c)   Borrower may designate any Unrestricted Subsidiary to be a Restricted Subsidiary if after giving effect to such designation, (i) the representations and warranties of Borrower and its Restricted Subsidiaries contained in each of the Loan Documents are true and correct on and as of such date as if made on and as of the date of such redesignation (or, if stated to have been made expressly as of an earlier date, were true and correct as of such date), (ii) no Default would exist, and (iii) Borrower complies with the requirements of Section 5.12 and Section 5.15. Any such designation shall be treated as a cash dividend in an amount equal to the fair market value of Borrower’s direct and indirect ownership interest in such Subsidiary for purposes of the limitation on Investments under Section 7.4(h).

 

(d)   If, during any period, a Subsidiary is redesignated as either “Restricted” or “Unrestricted,” then for purposes of the calculation of EBITDA for such period, such Subsidiary shall be deemed to have been redesignated as of the first day of the relevant period.

 

ARTICLE II.

 The Credits

 

SECTION 2.1.   Commitments. Subject to the terms and conditions set forth herein, each Lender agrees to make Loans in dollars to Borrower from time to time during the Availability Period in an aggregate principal amount that will not result in (a) the Credit Exposure of any Lender exceeding the Commitment of such Lender, or (b) the aggregate amount of the Credit Exposure of all Lenders exceeding the lesser of (i) the aggregate amount of (A) the Borrowing Base then in effect at any time that an Unsecured Election is not in effect or (B) the difference of the Borrowing Base then in effect minus the then current amount of Other Borrowing Base Debt, and (ii) the aggregate amount of the Commitments of the Lenders. Within the foregoing limits and subject to the terms and conditions set forth herein, Borrower may borrow, prepay and reborrow Loans.

 

  

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SECTION 2.2.   Loans and Borrowings.

 

(a)   Each Loan shall be made as part of a Borrowing consisting of Loans made by the Lenders ratably in accordance with their respective Applicable Percentages. The failure of any Lender to make any Loan required to be made by it shall not relieve any other Lender of its obligations hereunder; provided that the Commitments of the Lenders are several and no Lender shall be responsible for any other Lender’s failure to make Loans as required.

 

(b)   Subject to Section 2.13 and Section 2.14, each Borrowing shall be comprised entirely of ABR Loans or Eurodollar Loans as Borrower may request in accordance herewith. Each Lender at its option may make any Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan; provided that any exercise of such option shall not affect the obligation of Borrower to repay such Loan in accordance with the terms of this Agreement.

 

(c)   At the commencement of each Interest Period for any Eurodollar Borrowing, such Borrowing shall be in an aggregate amount that is an integral multiple of $1,000,000 and not less than $1,000,000 (including any continuation or conversion of existing Loans made in connection therewith). At the time that each ABR Borrowing is made, such Borrowing shall be in an aggregate amount that is an integral multiple of $1,000,000 and not less than $1,000,000 (including any continuation or conversion of existing Loans made in connection therewith); provided that an ABR Borrowing may be in an aggregate amount that is equal to the entire Unutilized Commitment, if less. Borrowings of more than one Type may be outstanding at the same time; provided that there shall not at any time be more than a total of ten (10) Eurodollar Borrowings outstanding.

 

(d)   Notwithstanding any other provision of this Agreement, Borrower shall not be entitled to request, or to elect to convert or continue, any Eurodollar Borrowing if the Interest Period requested with respect thereto would end after the Maturity Date.

 

SECTION 2.3.   Requests for Borrowings. To request a Borrowing, Borrower shall notify the Administrative Agent of such request by telephone (a) in the case of a Eurodollar Borrowing, not later than 1:00 p.m., New York City time, three Business Days before the date of the proposed Borrowing or (b) in the case of an ABR Borrowing, not later than 11:00 a.m., New York City time, on the date of the proposed Borrowing. Each such telephonic Borrowing Request shall be irrevocable and shall be confirmed promptly by hand delivery or telecopy to the Administrative Agent of a written Borrowing Request executed by an Authorized Officer of Borrower, substantially in the form of Exhibit E-1 or otherwise in a form approved by the Administrative Agent. Each such telephonic and written Borrowing Request shall specify the following information in compliance with Section 2.2:

 

(i)   the aggregate amount of the requested Borrowing;

 

  

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(ii)   the date of such Borrowing, which shall be a Business Day;

 

(iii)   whether such Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing; and

 

(iv)    in the case of a Eurodollar Borrowing, the initial Interest Period to be applicable thereto, which shall be a period contemplated by the definition of the term “Interest Period”.

 

If no election as to the Type of Borrowing is specified, then the requested Borrowing shall be an ABR Borrowing. If no Interest Period is specified with respect to any requested Eurodollar Borrowing, then Borrower shall be deemed to have selected an Interest Period of one month’s duration. Promptly following receipt of a Borrowing Request in accordance with this Section, the Administrative Agent shall advise each Lender of the details thereof and of the amount of such Lender’s Loan to be made as part of the requested Borrowing.

 

SECTION 2.4.   Letters of Credit.

 

(a)   General. Subject to the terms and conditions set forth herein, Borrower may request the issuance of Letters of Credit for its own account or the account of any Restricted Subsidiary, in a form reasonably acceptable to the Administrative Agent and the Issuing Bank, at any time and from time to time during the Availability Period. In the event of any inconsistency between the terms and conditions of this Agreement and the terms and conditions of any form of letter of credit application or other agreement submitted by Borrower to, or entered into by Borrower with, the Issuing Bank relating to any Letter of Credit, the terms and conditions of this Agreement shall control.

 

(b)   Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions. To request the issuance of a Letter of Credit (or the amendment, renewal or extension of an outstanding Letter of Credit), Borrower shall, prior to 12:00 p.m., New York time, at least three (3) Business Days prior to the proposed date of issuance or modification, hand-deliver or telecopy (or transmit by electronic communication, if arrangements for doing so have been approved by the Issuing Bank) to an Issuing Bank and the Administrative Agent (reasonably in advance of the requested date of issuance, amendment, renewal or extension) a notice requesting the issuance of a Letter of Credit, or identifying the Letter of Credit to be amended, renewed or extended, and specifying the date of issuance, amendment, renewal or extension (which shall be a Business Day), the date on which such Letter of Credit is to expire (which shall comply with Section 2.4(c)), the amount of such Letter of Credit, the name and address of the beneficiary thereof and such other information as shall be necessary to prepare, amend, renew or extend such Letter of Credit. If requested by the Issuing Bank, Borrower also shall submit a letter of credit application on the Issuing Bank’s standard form in connection with any request for a Letter of Credit. A Letter of Credit shall be issued, amended, renewed or extended only if (and upon issuance, amendment, renewal or extension of each Letter of Credit Borrower shall be deemed to represent and warrant that), after giving effect to such issuance, amendment, renewal or extension (i) the LC Exposure shall not exceed the least of (A) the aggregate Commitments hereunder; (B) (i) the Borrowing Base then in effect at any time that an Unsecured Election is not in effect or (ii) the difference of the Borrowing Base then in effect minus the then current amount of Other Borrowing Base Debt, and (C) $100,000,000; and (ii) the aggregate Credit Exposure of the Lenders shall not exceed the lesser of (x) the aggregate Commitments of the Lenders or (y) (i) the Borrowing Base then in effect at any time that an Unsecured Election is not in effect or (ii) the difference of the Borrowing Base then in effect minus the then current amount of Other Borrowing Base Debt. The Administrative Agent shall use reasonable efforts to provide notice to the Lenders on a quarterly basis with respect to the issuance, amendment, renewal or extension of Letters of Credit hereunder for such quarter.

 

  

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(c)   Expiration Date. Each Letter of Credit shall expire at or prior to the close of business on the earlier of (i) the date one year after the date of the issuance of such Letter of Credit (or, in the case of any renewal or extension thereof, one year after such renewal or extension) and (ii) five (5) Business Days prior to the Maturity Date.

 

(d)   Participations. By the issuance of a Letter of Credit (or an amendment to a Letter of Credit increasing the amount thereof) and without any further action on the part of the Is suing Bank or the Lenders, the Issuing Bank hereby grants to each Lender, and each Lender hereby acquires from the Issuing Bank, a participation in such Letter of Credit equal to such Lender’s Applicable Percentage of the aggregate amount available to be drawn under such Letter of Credit. In consideration and in furtherance of the foregoing, each Lender hereby absolutely and unconditionally agrees to pay to the Administrative Agent, for the account of the Is suing Bank, such Lender’s Applicable Percentage of each LC Disbursement made by such Issuing Bank and not reimbursed by Borrower on the date due as provided in Section 2.4(e), or of any reimbursement payment required to be refunded to Borrower for any reason; provided that such amounts shall never exceed such Lender’s Commitment. Each Lender acknowledges and agrees that its obligation to acquire participations pursuant to this paragraph in respect of Letters of Credit is absolute and unconditional and shall not be affected by any circumstance whatsoever, including any amendment, renewal or extension of any Letter of Credit or the occurrence and continuance of a Default or reduction or termination of the Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever.

 

(e)   Reimbursement. If an Issuing Bank shall make any LC Disbursement in respect of a Letter of Credit, Borrower shall reimburse such LC Disbursement by paying to the Administrative Agent an amount equal to such LC Disbursement not later than 12:00 noon, New York City time, on the date that such LC Disbursement is made, if Borrower shall have received notice of such LC Disbursement prior to 10:00 a.m., New York City time, on such date; or, if such notice has not been received by Borrower prior to such time on such date, then not later than 12:00 noon, New York City time, on the Business Day immediately following the day that Borrower receives such notice; provided that, unless such LC Disbursement is less than $1,000,000, Borrower may, subject to the conditions to Borrowing set forth herein, request in accordance with Section 2.3 that such payment be financed with a Borrowing in an equivalent amount and, to the extent so financed, Borrower’s obligation to make such payment shall be discharged and replaced by the resulting Borrowing. If Borrower fails to make such payment when due (or fails to request an ABR Loan Borrowing as provided herein), the Administrative Agent shall notify each Lender of the applicable LC Disbursement, the payment then due from Borrower in respect thereof and such Lender’s Applicable Percentage thereof. Promptly following receipt of such notice, each Lender shall pay to the Administrative Agent its Applicable Percentage of the payment then due from Borrower, in the same manner as provided in Section 2.5 with respect to Loans made by such Lender (and Section 2.5 shall apply, mutatis mutandis, to the payment obligations of the Lenders), and the Administrative Agent shall promptly pay to the Is suing Bank the amounts so received by it from the Lenders. Promptly following receipt by the Administrative Agent of any payment from Borrower pursuant to this paragraph (or promptly following the Administrative Agent’s receipt from the Lenders of proceeds from a requested Borrowing), the Administrative Agent shall distribute such payment to the Issuing Bank or, to the extent that Lenders have made payments pursuant to this paragraph to reimburse the Issuing Bank, then to such Lenders and the Issuing Bank as their interests may appear. Any payment made by a Lender pursuant to this paragraph to reimburse the Issuing Bank for any LC Disbursement (other than the funding of ABR Loans as contemplated above) shall not constitute a Loan and shall not relieve Borrower of its obligation to reimburse such LC Disbursement.

 

  

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(f)   Obligations Absolute. Borrower’s obligation to reimburse LC Disbursements as provided in Section 2.4(e) shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement under any and all circumstances whatsoever and irrespective of (i) any lack of validity or enforceability of any Letter of Credit or this Agreement or any other Loan Document, or any term or provision herein or therein, (ii) any draft or other document presented under a Letter of Credit proving to be forged, fraudulent or invalid in any respect or any statement therein proving to be untrue or inaccurate in any respect, (iii) payment by an Issuing Bank under a Letter of Credit against presentation of a draft or other document that does not comply with the terms of such Letter of Credit, or (iv) any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section, constitute a legal or equitable discharge of, or provide a right of setoff against, Borrower’s obligations hereunder. Neither the Agents, the Lenders or any Is suing Bank nor any of their Related Parties shall have any liability or responsibility by reason of or in connection with the issuance or transfer of any Letter of Credit or any payment or failure to make any payment thereunder (irrespective of any of the circumstances referred to in the preceding sentence), or any error, omission, interruption, loss or delay in transmission or delivery of any draft, notice or other communication under or relating to any Letter of Credit (including any document required to make a drawing thereunder), any error in interpretation of technical terms or any consequence arising from causes beyond the control of such Issuing Bank; provided that the foregoing shall not be construed to excuse such Issuing Bank from liability to Borrower to the extent of any direct or actual damages (as opposed to special, indirect, consequential or punitive damages, claims in respect of which are hereby waived by Borrower to the extent permitted by applicable law) suffered by Borrower that are caused by such Issuing Bank’s failure to exercise care when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof. The parties hereto expressly agree that, in the absence of gross negligence or willful misconduct on the part of the Issuing Bank (as finally determined by a court of competent jurisdiction), the Issuing Bank shall be deemed to have exercised care in each such determination. In furtherance of the foregoing and without limiting the generality thereof, the parties agree that, with respect to documents presented which appear on their face to be in substantial compliance with the terms of a Letter of Credit, the Issuing Bank may, in its sole discretion, either accept and make payment upon such documents without responsibility for further investigation, regardless of any notice or information to the contrary, or refuse to accept and make payment upon such documents if such documents are not in strict compliance with the terms of such Letter of Credit.

 

  

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(g)   Disbursement Procedures. An Issuing Bank shall, promptly following its receipt thereof, examine all documents purporting to represent a demand for payment under a Letter of Credit. Such Is suing Bank shall promptly notify the Administrative Agent and Borrower by telephone (confirmed by telecopy) of such demand for payment and whether such Issuing Bank has made or will make an LC Disbursement thereunder; provided that any failure to give or delay in giving such notice shall not relieve Borrower of its obligation to reimburse such Issuing Bank and the Lenders with respect to any such LC Disbursement.

 

(h)   Interim Interest. If an Issuing Bank shall make any LC Disbursement, then, unless Borrower shall reimburse such LC Disbursement in full on the date such LC Disbursement is made, the unpaid amount thereof shall bear interest, for each day from and including the date such LC Disbursement is made to but excluding the date that Borrower reimburses such LC Disbursement, at the rate per annum then applicable to ABR Loans; provided that, if Borrower fails to reimburse such LC Disbursement within two (2) Business Days after such reimbursement is due pursuant to Section 2.4(e), then Section 2.12(c) shall apply. Interest accrued pursuant to this paragraph shall be for the account of the Issuing Bank, except that interest accrued on and after the date of payment by any Lender pursuant to Section 2.4(e) to reimburse the Issuing Bank shall be for the account of such Lender to the extent of such payment.

 

(i)   Cash Collateralization. If (a) any Event of Default shall occur and be continuing, on the Business Day that Borrower receives notice from the Administrative Agent or the Majority Lenders (or, if the maturity of the Loans has been accelerated, Lenders with LC Exposure representing greater than 50% of the total LC Exposure) demanding the deposit of cash collateral pursuant to this paragraph, or (b) Borrower is required to cash collateralize pursuant to Section 2.21 as a result of a Defaulting Lender, Borrower shall deposit in an account with the Administrative Agent, in the name of the Administrative Agent and for the benefit of the Lenders, an amount in cash equal to the LC Exposure as of such date plus any accrued and unpaid interest thereon; provided that the obligation to deposit such cash collateral shall become effective immediately, and such deposit shall become immediately due and payable, without demand or other notice of any kind, upon the occurrence of any Event of Default with respect to Borrower described in Section 8.1(g). Borrower also shall deposit cash collateral pursuant to this paragraph as and to the extent required by Section 2.10, and any such cash collateral so deposited and held by the Administrative Agent hereunder shall constitute part of the Borrowing Base for purposes of determining compliance with Section 2.10. Each such deposit shall be held by the Administrative Agent as collateral for the payment and performance of the obligations of Borrower under this Agreement. The Borrower hereby grants to the Administrative Agent, for the benefit of the Issuing Bank and the Lenders, an exclusive first priority and continuing perfected security interest in and Lien on such account and all cash, checks, drafts, certificates and instruments, if any, from time to time deposited or held in such account, all deposits or wire transfers made thereto, any and all investments purchased with funds deposited in such account, all interest, dividends, cash, instruments, financial assets and other Property from time to time received, receivable or otherwise payable in respect of, or in exchange for, any or all of the foregoing, and all proceeds, products, accessions, rents, profits, income and benefits therefrom, and any substitutions and replacements therefor. The Administrative Agent shall have exclusive dominion and control, including the exclusive right of withdrawal, over such account. Other than any interest earned on the investment of such deposits, which investments shall be made at the option and sole discretion of the Administrative Agent and at Borrower’s risk and expense, such deposits shall not bear interest. Interest or profits, if any, on such investments shall accumulate in such account. Moneys in such account shall be applied by the Administrative Agent to reimburse the Issuing Bank for LC Disbursements for which it has not been reimbursed and, to the extent not so applied, shall be held for the satisfaction of the reimbursement obligations of Borrower for the LC Exposure at such time or, if the maturity of the Loans has been accelerated (but subject to the consent of Lenders with LC Exposure representing greater than 50% of the total LC Exposure), be applied to satisfy other obligations of Borrower under this Agreement. If Borrower is required to provide an amount of cash collateral hereunder as a result of the occurrence of an Event of Default, or pursuant to Section 2.21 as a result of there being a Defaulting Lender, such amount (to the extent not applied as aforesaid) shall be returned to Borrower within three (3) Business Days after all Events of Default have been cured or waived. If Borrower is required to provide an amount of cash collateral hereunder pursuant to Section 2.10, such amount (to the extent not applied as aforesaid) shall be returned to Borrower as and to the extent that, after giving effect to such return, Borrower would remain in compliance with Section 2.10 and no Default shall have occurred and be continuing.

 

  

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(j)   Existing Letters of Credit. Each Letter of Credit (as defined in the Existing Credit Facility) issued for the Borrower's own account that is outstanding as of the Effective Date and is specified on Schedule 2.4 (each an “Existing Letter of Credit”) is hereby deemed to be a Letter of Credit issued and outstanding under this Agreement as of the Effective Date and the issuer thereof is hereby deemed to be an Issuing Bank hereunder.

 

SECTION 2.5.   Funding of Borrowings.

 

(a)   Each Lender shall make each Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds by 1:00 p.m., New York City time, to the account of the Administrative Agent most recently designated by it for such purpose by notice to the Lenders. The Administrative Agent will make such Loans available to Borrower by promptly crediting the amounts so received, in like funds, to an account of Borrower maintained with the Administrative Agent in New York City; provided that ABR Loans made to finance the reimbursement of an LC Disbursement as provided in Section 2.4(e) shall be remitted by the Administrative Agent to the applicable Issuing Bank.

 

(b)   Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Borrowing that such Lender will not make available to the Administrative Agent such Lender’s share of such Borrowing, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with Section 2.5(a) and may, in reliance upon such assumption, make available to Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable Borrowing available to the Administrative Agent, then the applicable Lender and Borrower severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount with interest thereon, for each day from and including the date such amount is made available to Borrower to but excluding the date of payment to the Administrative Agent, at (i) in the case of such Lender, the greater of (A) the Federal Funds Effective Rate or (B) a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation or (ii) in the case of Borrower, the interest rate applicable to Loans made in such Borrowing. If such Lender pays such amount to the Administrative Agent, then such amount shall constitute such Lender’s Loan included in such Borrowing.

 

  

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SECTION 2.6.   Interest Elections.

 

(a)   Borrower may elect to convert a Borrowing to a different Type or to continue such Borrowing and, in the case of a Eurodollar Borrowing, may elect Interest Periods therefor, all as provided in this Section. Borrower may, subject to the requirements of Section 2.2(c), elect different options with respect to different portions of the affected Borrowing, in which case each such portion shall be allocated ratably among the Lenders holding the Loans comprising such Borrowing, and the Loans comprising each such portion shall be considered a separate Borrowing.

 

(b)   To make an election pursuant to this Section, Borrower shall notify the Administrative Agent of such election by telephone by the time that a Borrowing Request would be required under Section 2.3 if Borrower were requesting a Borrowing of the Type resulting from such election to be made on the effective date of such election. Each such telephonic Interest Election Request shall be irrevocable and shall be confirmed promptly by hand delivery or telecopy to the Administrative Agent of a written Interest Election Request executed by an Authorized Officer of Borrower, substantially in the form of Exhibit E-2 or otherwise in a form approved by the Administrative Agent.

 

(c)   Each telephonic and written Interest Election Request shall specify the following information in compliance with Section 2.2:

 

(i)   the Borrowing to which such Interest Election Request applies and, if different options are being elected with respect to different portions thereof, the portions thereof to be allocated to each resulting Borrowing (in which case the information to be specified pursuant to Sections 2.6(c)(iii) and 2.6(c)(iv) below shall be specified for each resulting Borrowing);

 

(ii)   the effective date of the election made pursuant to such Interest Election Request, which shall be a Business Day;

 

(iii)   whether the resulting Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing; and

 

(iv)   if the resulting Borrowing is a Eurodollar Borrowing, the Interest Period to be applicable thereto after giving effect to such election, which shall be a period contemplated by the definition of the term “Interest Period”.

 

If any such Interest Election Request requests a Eurodollar Borrowing but does not specify an Interest Period, then Borrower shall be deemed to have selected an Interest Period of one month’s duration.

 

(d)   Promptly following receipt of an Interest Election Request, the Administrative Agent shall advise each Lender of the details thereof and of such Lender’s portion of each resulting Borrowing.

 

  

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(e)   If Borrower fails to deliver a timely Interest Election Request with respect to a Eurodollar Borrowing prior to the end of the Interest Period applicable thereto, then, unless such Borrowing is repaid as provided herein, at the end of such Interest Period such Borrowing shall be converted to an ABR Borrowing. Notwithstanding any contrary provision hereof, if an Event of Default has occurred and is continuing and the Administrative Agent, at the request of the Majority Lenders, so notifies Borrower, then, so long as such Event of Default is continuing, (i) no outstanding Borrowing may be converted to or continued as a Eurodollar Borrowing and (ii) unless the Indebtedness has been accelerated pursuant to Section 8.3, each Eurodollar Borrowing shall be converted to an ABR Borrowing at the end of the Interest Period applicable thereto.

 

SECTION 2.7.   Borrowing Base. This Section shall be applicable at all times.

 

(a)   Initial Borrowing Base. Subject to Section 2.7(g), during the period from the date hereof to the date of the first redetermination of the Borrowing Base pursuant to the provisions of this Section (subsection 2.70, as of July 1, 2011) the initial amount of the Borrowing Base has been determined by the Administrative Agent and acknowledged by Borrower and its Restricted Subsidiaries and agreed to by the Lenders to be $1,250,000,000. The Loan Value of the Borrowing Base Properties has been determined by the Administrative Agent and acknowledged by Borrower and its Restricted Subsidiaries and agreed to by the Lenders.

 

(b)   Annual Scheduled Determinations of the Borrowing Base. Promptly after January 1 of each calendar year (commencing January 1, 2012), and in any event prior to March 15 of each calendar year, Borrower shall furnish to the Administrative Agent and the Lenders a report in form and substance reasonably satisfactory to the Administrative Agent, prepared by Borrower’s internal petroleum engineers and audited by an Approved Engineer, which report shall evaluate as of January 1 of such calendar year the Proven Reserves attributable to the Oil and Gas Properties which Borrower wishes to include in the Borrowing Base and a projection of the rate of production and net operating income with respect thereto, as of such date, together with additional data concerning pricing, hedging, operating costs and quantities of production, and other information and engineering and geological data as the Administrative Agent or any Lender may reasonably request. Within 30 days after receipt of such report and information, the Administrative Agent shall make an initial determination of the amount of credit to be made available to Borrower hereunder on or about May 1st of such calendar year, and upon such initial determination shall promptly notify the Lenders in writing of the Administrative Agent’s initial determination of the Borrowing Base and the Loan Value of the Borrowing Base Properties. The Administrative Agent shall make such determination in accordance with its customary practices and standards for oil and gas loans and in the exercise of its sole discretion. Within 15 days following their receipt of the proposed amount for the redetermined Borrowing Base and the Loan Value of the Borrowing Base Properties, (i) for any increase to the redetermined Borrowing Base, the Borrowing Base Increase Required Lenders shall approve the Administrative Agent’s initial determination of the Borrowing Base and (ii) for no change or any decrease to the redetermined Borrowing Base, the Administrative Agent and Borrowing Base Required Lenders shall approve the Administrative Agent’s initial determination of the Borrowing Base, by written notice to the Administrative Agent; provided, however, that failure by any Lender to reject in writing the Administrative Agent’s determination of the Borrowing Base within such 15-day period shall be deemed an acceptance of such determination by such Lender. If the Borrowing Base Increase Required Lenders or the Borrowing Base Required Lenders fail to approve any such determination of the Borrowing Base made by the Administrative Agent hereunder, then the Administrative Agent shall poll the Lenders and the Borrowing Base shall be set at the highest amount on which the Borrowing Base Increase Required Lenders or the Borrowing Base Required Lenders can agree, it being understood that a Lender is deemed to have agreed to any and all amounts that are lower than the amount actually determined by such Lender to be the appropriate value of the Borrowing Base and the Loan Value of the Borrowing Base Properties. Upon approval or deemed approval by the Borrowing Base Increase Required Lenders or the Borrowing Base Required Lenders of the Borrowing Base, the Administrative Agent upon notice thereof shall, by written notice to Borrower, the Agents and the Lenders, designate the new Borrowing Base available to Borrower and the Loan Value of the Borrowing Base Properties on or about May 1st of such calendar year (each such notice in this Section 2.7(b) or Section 2.7(c) below, herein a “Borrowing Base Designation Notice”).

 

  

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(c)   Semi-Annual Scheduled Determination of the Borrowing Base. In addition, promptly after July 1 of each calendar year (commencing July 1, 2011), and in any event prior to September 15th of each calendar year, Borrower will make available for review by the Administrative Agent a report in form and substance reasonably satisfactory to the Administrative Agent, prepared by Borrower’s internal petroleum engineers, which report shall evaluate as of July 1 of such calendar year the Proven Reserves attributable to the Oil and Gas Properties which Borrower wishes to include in the Borrowing Base and a projection of the rate of production and net operating income with respect thereto, as of such date, together with additional data concerning pricing, hedging, operating costs, and quantities of production, and other information and engineering and geological data as the Administrative Agent or any Lender may reasonably request. The Administrative Agent and the Borrowing Base Increase Required Lenders or the Borrowing Base Required Lenders shall approve and designate the new Borrowing Base and the Loan Value of the Borrowing Base Properties on or about November 1st of such calendar year in accordance with the procedures and standards described in Section 2.7(b).

 

(d)   Determination of the Borrowing Base Post-Unsecured Election. Notwithstanding anything to the contrary herein, in the event of an Unsecured Election pursuant to Section 5.15(a), the Borrowing Base will be determined once, on an annual basis, in accordance with the mechanism and procedures established for the annual May 1st Borrowing Base determination process as described in Section 2.7(b) above.

 

(e)   Discretionary Determination of the Borrowing Base. Each of Borrower and the Administrative Agent, at the request of the Borrowing Base Required Lenders, shall have the right to redetermine the Borrowing Base in their sole discretion at any time and from time to time but not more often than one (1) time during any calendar year. If either Borrower or the Borrowing Base Required Lenders shall elect to make a discretionary redetermination of the Borrowing Base pursuant to the provisions of this Section 2.7(e), Borrower shall, within 30 days of receipt of a request therefor from the Administrative Agent, deliver to the Administrative Agent such updated engineering, production, operating and other data as the Administrative Agent or any Lender may reasonably request. The Administrative Agent and the Borrowing Base Required Lenders shall approve and designate the new Borrowing Base in accordance with the procedures and standards described in Section 2.7(b).

 

  

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(f)   General Provisions With Respect to the Borrowing Base. The determination of the Borrowing Base shall be made by the Administrative Agent and the Borrowing Base Required Lenders or the Borrowing Base Increase Required Lenders, as applicable, taking into consideration the estimated value of the Oil and Gas Properties owned by Borrower and its Restricted Subsidiaries as reflected in the most recent Reserve Report delivered hereunder and any other relevant information obtained by or delivered to the Administrative Agent or any Lender, all in accordance with the other provisions of this Section 2.7 in accordance with their customary practices for oil and gas loans as in effect from time to time. It is understood by the parties hereto that the Lenders shall have no commitment or obligation whatsoever to increase the Borrowing Base to any amount in excess of $1,500,000,000, and nothing herein contained shall be construed to be a commitment by the Lenders to so increase the Borrowing Base. The Borrowing Base may be redetermined pursuant to Section 2.7(b) (annual), Section 2.7(c) (semi-annual) and Section 2.7(e)(discretionary) and may be adjusted from time to time to give effect to issuances of Senior Notes under Section 2.7(g), the occurrence of Casualty Events under Section 2.7(h), and asset dispositions under Section 2.7(i). In connection with any redetermination or adjustment pursuant to any of the foregoing, if the Administrative Agent determines that a Borrowing Base Deficiency exists, the Administrative Agent shall give written notice thereof to Borrower and the date such notice is received shall be the “Deficiency Notification Date”.

 

(g)   Adjustment Upon Issuance of Senior Notes. If prior to an Unsecured Election, in the event that Borrower or any of its Restricted Subsidiaries issues any Senior Notes, then the then effective Borrowing Base shall be reduced immediately by an amount equal to 25% of the stated principal amount of such issued Senior Notes; provided, however, that, notwithstanding the foregoing, the Borrowing Base shall not be reduced to the extent that the proceeds from the issuance of such Senior Notes are used to refinance the principal amount of existing unsecured Indebtedness of Borrower which constitutes Senior Notes.

 

(h)   Adjustment Following Casualty Events. In the event that a Casualty Event has occurred related to any Borrowing Base Property, to the extent that the Net Proceeds received by Borrower or any of its Restricted Subsidiaries with respect to such Casualty Event have not been applied or budgeted to be applied to repair, restore or replace the Property affected by such Casualty Event within 30 days after the receipt thereof, the Administrative Agent, at the request of the Borrowing Base Required Lenders, shall have the right to reduce the Borrowing Base in its sole discretion based on its review of such Casualty Event; provided that the Borrowing Base shall not be reduced by an amount greater than 100% of such Net Proceeds. The Administrative Agent shall provide notice to Borrower and the Lenders of the reduction in the Borrowing Base resulting from such Casualty Event, which reduction shall be effective as of the date of such notice.

 

(i)   Adjustment Following Asset Dispositions. In the event that Borrower sells, transfers or otherwise disposes in one or more transactions any Property pursuant to Section 7.5(g) if the aggregate fair market value of all such Property so sold, transferred or otherwise disposed of plus the economic loss of unwinding any related Hedging Agreement during the period since the most recent redetermination of the Borrowing Base shall exceed 10% of the amount of the then current Borrowing Base, then the Borrowing Base shall be reduced by an amount equal to the Loan Value assigned to such Property in the most recently prepared Reserve Report (or if no such Loan Value was assigned, by an amount to be agreed upon by Borrower and the Borrowing Base Required Lenders, all acting reasonably). The Administrative Agent shall provide notice to Borrower and the Lenders of the reduction in the Borrowing Base resulting from such disposition, which reduction shall be effective as of the date of such notice.

 

  

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SECTION 2.8.   Termination and Reduction of Commitments.

 

(a)   Unless previously terminated, the Commitments shall terminate on the Maturity Date.

 

(b)   Borrower may at any time terminate, or from time to time reduce, the Commitments; provided that (i) each reduction of the Commitments shall be in an amount that is an integral multiple of $1,000,000 and not less than $5,000,000 and (ii) Borrower shall not terminate or reduce the Commitments if, after giving effect to any concurrent prepayment of the Loans in accordance with Section 2.10, the aggregate Credit Exposure of the Lenders would exceed the aggregate Commitments of the Lenders.

 

(c)   Borrower shall notify the Administrative Agent of any election to terminate or reduce the Commitments under Section 2.8(b) at least two (2) Business Days prior to the effective date of such termination or reduction, specifying such election and the effective date thereof. Promptly following receipt of any notice, the Administrative Agent shall advise the Lenders of the contents thereof. Each notice delivered by Borrower pursuant to this Section shall be irrevocable; provided that a notice of termination of the Commitments delivered by Borrower may state that such notice is conditioned upon the effectiveness of other credit facilities, in which case such notice may be revoked by Borrower (by notice to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied. Subject to the rights of Borrower under Section 2.20, any termination or reduction of the Commitments shall be permanent. Each reduction of the Commitments shall be made ratably among each of the Lenders in accordance with each such Lender’s Applicable Percentage.

 

SECTION 2.9.   Repayment of Loans; Evidence of Debt.

 

(a)   Borrower hereby unconditionally promises to pay to the Administrative Agent for the account of each Lender the then unpaid principal amount of each Loan and Borrowing of such Lender on the Maturity Date.

 

(b)   Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of Borrower to such Lender resulting from each Loan made by such Lender, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder.

 

(c)   The Administrative Agent shall maintain accounts in which it shall record (i) the amount of each Loan made hereunder, the Type thereof and the Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from Borrower to each Lender hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder for the account of the Lenders and each Lender’s share thereof.

 

  

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(d)   The entries made in the accounts maintained pursuant to Section 2.9(b) or Section 2.9(c) shall be prima facie evidence of the existence and amounts of the obligations recorded therein; provided that the failure of any Lender or the Administrative Agent to maintain such accounts or any error therein shall not in any manner affect the obligation of Borrower to repay the Loans in accordance with the terms of this Agreement.

 

(e)    Any Lender may request that Loans made by it be evidenced by one or more promissory notes. In such event, Borrower shall prepare, execute and deliver to such Lender promissory notes payable to the order of such Lender (or, if requested by such Lender, to such Lender and its registered assigns and in a form approved by the Administrative Agent). Thereafter, the Loans evidenced by such promissory notes and interest thereon shall at all times (including after assignment pursuant to Section 10.4) be represented by one or more promissory notes in such form payable to the order of the payee named therein (or, if any such promissory note is a registered note, to such payee and its registered assigns).

 

SECTION 2.10.   Prepayment of Loans.

 

(a)   Borrower shall have the right at any time and from time to time to prepay any Borrowing in whole or in part, subject to the requirements of this Section.

 

(b)   If, (i) the Borrowing Base is (A) redetermined under Section 2.7, (B) reduced as the result of an issuance of Senior Notes under Section 2.7(g), (C) reduced as the result of a Casualty Event under Section 2.7(h), (D) reduced as the result of an asset disposition under Section 2.7(i), or (E) reduced pursuant to any other provision of this Agreement, and (ii) as a result thereof, a Borrowing Base Deficiency occurs, then Borrower shall take the following actions:

 

	
     (1)

	
in the case of a Borrowing Base Deficiency resulting from a redetermination or reduction of the Borrowing Base, prepay, or cause to be prepaid, Loans in an aggregate principal amount equal to such deficiency, together with interest on the principal amount paid accrued to the date of such prepayment and, if after prepaying all of the Loans a Borrowing Base Deficiency remains as a result of an LC Exposure, pay to the Administrative Agent an amount equal to such remaining Borrowing Base Deficiency to be held as cash collateral as provided in Section 2.4(i); provided that Borrower shall be obligated to make (or cause to be made) such prepayment and/or deposit of cash collateral within 180 days following the Deficiency Notification Date with respect to such deficiency; and provided further that within 90 days following the Deficiency Notification Date, Borrower shall have prepaid (or caused to be prepaid), or deposited cash in an amount equal to, at least one-half of such Borrowing Base Deficiency;

 

	
     (2)

	

[intentionally omitted];

 

 

	
     (3)

	

in the case of a Borrowing Base Deficiency resulting from an incurrence of Senior Notes pursuant to Section 2.7(g), utilize the proceeds of such Senior Notes to take the action required under Section 2.10(b)(1) above; provided that if a prepayment or deposit is required under this Section 2.10(b)(3), then Borrower shall be obligated to make (or cause to be made) such prepayment and/or deposit of cash collateral on the Business Day immediately following receipt by Borrower or any Restricted Subsidiary of any Net Proceeds from the incurrence of such Senior Notes;

 

  

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     (4)

	
in the case of a Borrowing Base Deficiency resulting from a Casualty Event pursuant to Section 2.7(h), utilize the Net Proceeds of such Casualty Event to take the action described under Section 2.10(b)(1) above; provided that if a prepayment or deposit is required under this Section 2.10(b)(4), then Borrower shall be obligated to make (or cause to be made) such prepayment and/or deposit of cash collateral on the Business Day immediately following receipt by Borrower or any Restricted Subsidiary of the notice from the Administrative Agent pursuant to Section 2.7(h) related to such Casualty Event; and

 

	
     (5)

	
in the case of a Borrowing Base Deficiency resulting from an asset disposition pursuant to Section 2.7(i), utilize the Net Proceeds of such asset disposition to take the action described under Section 2.10(b)(1) above; provided that if a prepayment or deposit is required under this Section 2.10(b)(5), then Borrower shall be obligated to make (or cause to be made) such prepayment and/or deposit of cash collateral on the Business Day immediately following the receipt by Borrower or a Restricted Subsidiary of any Net Proceeds from such asset disposition.

 

(c)    Borrower shall notify the Administrative Agent by telephone (confirmed by telecopy) of any prepayment hereunder (i) in the case of prepayment of a Eurodollar Borrowing, not later than 1:00 p.m., New York City time, two Business Days before the date of prepayment or (ii) in the case of prepayment of an ABR Borrowing, not later than 11:00 a.m., New York City time, on the date of prepayment. Each such notice shall be irrevocable and shall specify the prepayment date and the principal amount of each Borrowing or portion thereof to be prepaid (which amount shall be in a minimum principal amount of $1,000,000 (or the aggregate amount of the Obligations hereunder at such time, if a lesser amount) and in $1,000,000 increments in excess thereof (or such other lesser amount in excess thereof in the event that prepayment is with respect to all Obligations hereunder); provided that, if a notice of prepayment is given in connection with a conditional notice of termination of the Commitments as contemplated by Section 2.8, then such notice of prepayment may be revoked if such notice of termination is revoked in accordance with Section 2.8. Promptly following receipt of any such notice relating to a Borrowing, the Administrative Agent shall advise the Lenders of the contents thereof. Each partial prepayment of any Borrowing shall be in an amount that would be permitted in the case of an advance of a Borrowing of the same Type as provided in Section 2.2. Each prepayment of a Borrowing shall be applied ratably to the Loans included in the prepaid Borrowing. Prepayments shall be accompanied by accrued interest to the extent required by Section 2.12 and by any other amounts then due under this Agreement (including all amounts due under Section 2.16).

 

  

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SECTION 2.11.   Fees.

 

(a)    Borrower agrees to pay to the Administrative Agent for the account of each Lender a commitment fee (the “Commitment Fee”), which shall accrue at the Applicable Rate for Commitment Fees on the daily amount equal to the Applicable Percentage of such Lender of the Unutilized Commitment during the period from and including the Effective Date to but excluding the date on which the Commitments terminate. Accrued Commitment Fees shall be payable in arrears on the last day of March, June, September and December of each year and on the date on which the Commitments terminate, commencing on the first such date to occur after the date of this Agreement; provided that any Commitment Fees accruing after the date on which the Commitments terminate shall be payable on demand. All Commitment Fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day).

 

(b)   Borrower agrees to pay (i) to the Administrative Agent for the account of each Lender a participation fee with respect to its participations in Letters of Credit, which shall accrue at the same Applicable Rate as interest on Eurodollar Loans on the average daily amount of such Lender’s Applicable Percentage of the LC Exposure (excluding any portion thereof attributable to unreimbursed LC Disbursements) during the period from and including the date of this Agreement to but excluding the later of the date on which the Commitments terminate and the date on which the Lenders cease to have any LC Exposure, and (ii) to the Issuing Bank a fronting fee in the amounts and at the times separately agreed upon in the Fee Letter. Participation fees and fronting fees shall be payable in arrears on the last day of each March, June, September and December of each year, commencing on the first such date to occur after the date of this Agreement; provided that all such fees shall be payable on the date on which the Commitments terminate and any such fees accruing after the date on which the Commitments terminate shall be payable on demand. Any other fees payable to the Is suing Bank pursuant to this paragraph shall be payable within ten (10) days after demand. All participation fees and fronting fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day).

 

(c)   Borrower agrees to pay to the Administrative Agent and/or the Arranger, for its own account and for the account of each Lender, as applicable, fees, including, without limitation, an upfront fee (the “Upfront Fee”), in the amounts and at the times separately agreed upon between Borrower, the Administrative Agent and the Arranger, including, without limitation, the amounts agreed upon among Borrower, the Administrative Agent and the Arranger in the Fee Letter.

 

(d)   All fees payable hereunder shall be paid on the dates due, in immediately available funds, to the Administrative Agent (or the Issuing Bank, in the case of fees payable to it, or the Arranger, in the case of the Upfront Fee) for distribution, in the case of Commitment Fees and participation fees, to the Lenders entitled thereto. Fees paid shall not be refundable under any circumstances.

 

  

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SECTION 2.12.   Interest.

 

(a)   Subject to Section 10.13, the Loans comprising each ABR Borrowing shall bear interest at the Alternate Base Rate plus the Applicable Rate for ABR Loans.

 

(b)   Subject to Section 10.13, the Loans comprising each Eurodollar Borrowing shall bear interest at the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing plus the Applicable Rate for Eurodollar Loans.

 

(c)   Notwithstanding the foregoing, but subject to Section 10.13, if any principal of or interest on any Loan or any fee or other amount payable by Borrower hereunder is not paid when due, whether at stated maturity, upon acceleration or otherwise, such overdue amount shall bear interest, after as well as before judgment, at a rate per annum equal to (i) in the case of overdue principal of any Loan, 2% plus the rate otherwise applicable to such Loan as provided in the preceding paragraphs of this Section or (ii) in the case of any other amount, 2% plus the rate applicable to ABR Loans as provided Section 2.12(a).

 

(d)   Subject to Section 10.13, accrued interest on each Loan shall be payable in arrears on each Interest Payment Date for such Loan and upon termination of the Commitments; provided that (i) interest accrued pursuant to Section 2.12(c) shall be payable on demand of the Administrative Agent or the Majority Lenders (through the Administrative Agent), (ii) in the event of any repayment or prepayment of any Loan, accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment and (iii) in the event of any conversion of any Eurodollar Loan prior to the end of the current Interest Period therefor, accrued interest on such Loan shall be payable on the effective date of such conversion.

 

(e)   Subject to Section 10.13, all interest hereunder shall be computed on the basis of a year of 360 days, except that interest computed by reference to the Alternate Base Rate at times when the Alternate Base Rate is based on the Prime Rate, shall be computed on the basis of a year of 365 days (or 366 days in a leap year), and in each case shall be payable for the actual number of days elapsed (including the first day but excluding the last day). The applicable Alternate Base Rate, Adjusted LIBO Rate or LIBO Rate shall be determined by the Administrative Agent, and such determination shall be conclusive absent manifest error.

 

SECTION 2.13.   Alternate Rate of Interest. If prior to the commencement of any Interest Period for a Eurodollar Borrowing:

 

(a)   the Administrative Agent determines (which determination shall be conclusive absent manifest error) that adequate and reasonable means do not exist for ascertaining the Adjusted LIBO Rate or the LIBO Rate, as applicable, for such Interest Period;

 

(b)   the Administrative Agent is advised by the Majority Lenders that the Adjusted LIBO Rate for such Interest Period will not adequately and fairly reflect the cost to such Lenders of making or maintaining their Loans included in such Borrowing for such Interest Period; or

 

(c)   the Administrative Agent determines in good faith (which determination shall be conclusive) that by reason of circumstances affecting the interbank dollar market generally, deposits in dollars in the London interbank dollar market are not being offered for the applicable Interest Period and in an amount equal to the amount of the Eurodollar Loan requested by Borrower,

 

  

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then the Administrative Agent shall give notice thereof to Borrower and the Lenders by telephone or telecopy as promptly as practicable thereafter and, until the Administrative Agent notifies Borrower and the Lenders that the circumstances giving rise to such notice no longer exist, (i) any Interest Election Request that requests the conversion of any Borrowing to, or continuation of any Borrowing as, a Eurodollar Borrowing for the affected Interest Period shall be ineffective, and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such Borrowing shall be made as a Eurodollar Loan having the shortest Interest Period which is not unavailable under Sections 2.13(a) through 2.13(c), and if no Interest Period is available, as an ABR Borrowing.

 

SECTION 2.14.   Illegality.

 

(a)    Notwithstanding any other provision of this Agreement to the contrary, if (i) by reason of the adoption of any applicable Governmental Rule or any change in any applicable Governmental Rule or in the interpretation or administration thereof by any Governmental Authority or compliance by any Lender with any request or directive (whether or not having the force of law) of any central bank or other Governmental Authority or (ii) circumstances affecting the London interbank dollar market or the position of a Lender therein shall at any time make it unlawful or impracticable in the sole discretion of a Lender exercised in good faith for such Lender or its Applicable Lending Office to (A) honor its obligation to make Eurodollar Loans either generally or for a particular Interest Period provided for hereunder, or (B) maintain Eurodollar Loans either generally or for a particular Interest Period provided for hereunder, then such Lender shall promptly notify Borrower thereof through Administrative Agent and such Lender’s obligation to make or maintain Eurodollar Loans having an affected Interest Period hereunder shall be suspended until such time as such Lender may again make and maintain Eurodollar Loans having an affected Interest Period (in which case the provisions of Section 2.14(b) hereof shall be applicable). Before giving such notice pursuant to this Section 2.14, such Lender will designate a different available Applicable Lending Office for the affected Eurodollar Loans of such Lender or take such other action as Borrower may request if such designation or action will avoid the need to suspend such Lender’s obligation to make Eurodollar Loans hereunder and will not, in the sole opinion of such Lender exercised in good faith, be disadvantageous to such Lender (provided, that such Lender shall have no obligation so to designate an Applicable Lending Office for Eurodollar Loans located in the United States of America).

 

(b)    If the obligation of any Lender to make or maintain any Eurodollar Loans shall be suspended pursuant to Section 2.14(a) hereof, all Loans having an affected Interest Period which would otherwise be made by such Lender as Eurodollar Loans shall be made instead as ABR Loans (and, if such Lender so requests by notice to Borrower with a copy to the Administrative Agent, each Eurodollar Loan having an affected Interest Period of such Lender then outstanding shall be automatically converted into an ABR Loan on the last day of the Interest Period for such Eurodollar Loans unless earlier conversion is required by applicable law) and, to the extent that Eurodollar Loans are so made as (or converted into) ABR Loans, all payments of principal which would otherwise be applied to such Eurodollar Loans shall be applied instead to such ABR Loans.

 

  

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SECTION 2.15.   Increased Costs.

 

(a)    If any Change in Law shall:

 

(i)   impose, modify or deem applicable any reserve, special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Lender (except any such reserve requirement reflected in the Adjusted LIBO Rate) or any Issuing Bank; or

 

(ii)   impose on any Lender or any Issuing Bank or the London interbank market any other condition affecting this Agreement or Eurodollar Loans made by such Lender or any Letter of Credit or participation therein;

 

and the result of any of the foregoing shall be to increase the cost to such Lender of making or maintaining any Eurodollar Loan (or of maintaining its obligation to make any such Loan) or to increase the cost to such Lender or such Issuing Bank of participating in, issuing or maintaining any Letter of Credit or to reduce the amount of any sum received or receivable by such Lender or such Issuing Bank hereunder (whether of principal, interest or otherwise), then Borrower will pay to such Lender or such Issuing Bank such additional amount or amounts as will compensate such Lender or such Issuing Bank, as the case may be, for such additional costs incurred or reduction suffered.

 

(b)   If any Lender or any Issuing Bank determines that any Change in Law regarding capital requirements has or would have the directly attributable effect of reducing the rate of return on such Lender’s or such Issuing Bank’s capital or on the capital of such Lender’s or such Issuing Bank’s holding company, if any, as a consequence of this Agreement or the Loans made by, or participations in Letters of Credit held by, such Lender, or the Letters of Credit issued by such Issuing Bank, to a level below that which such Lender or such Issuing Bank or such Lender’s or such Issuing Bank’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s or such Issuing Bank’s policies and the policies of such Lender’s or such Issuing Bank’s holding company with respect to capital adequacy), then Borrower will pay to such Lender or such Issuing Bank, as the case may be, such additional amount or amounts as will compensate such Lender or such Issuing Bank or such Lender’s or such Issuing Bank’s holding company for any such reduction suffered.

 

(c)   A certificate of a Lender or an Issuing Bank setting forth the amount or amounts necessary to compensate such Lender or such Issuing Bank or such Lender’s or such Issuing Bank’s holding company, as the case may be, as specified in Sections 2.15(a) or 2.15(b) of this Section shall be delivered to Borrower and shall be conclusive absent manifest error. Borrower shall pay such Lender or such Issuing Bank, as the case may be, the amount shown as due on any such certificate within ten (10) days after receipt thereof.

 

(d)   Failure or delay on the part of any Lender or any Issuing Bank to demand compensation pursuant to this Section shall not constitute a waiver of such Lender’s or such Issuing Bank’s right to demand such compensation; provided that Borrower shall not be required to compensate a Lender or an Issuing Bank pursuant to this Section for any increased costs or reductions incurred more than 270 days prior to the date that such Lender or such Issuing Bank, as the case may be, notifies Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s or such Issuing Bank’s intention to claim compensation therefor; provided further that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 270-day period referred to above shall be extended to include the period of retroactive effect thereof.

 

  

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SECTION 2.16.   Break Funding Payments. In the event of (a) the payment (including prepayment) of any principal of any Eurodollar Loan other than on the last day of an Interest Period applicable thereto (including as a result of an Event of Default), (b) the conversion of any Eurodollar Loan other than on the last day of the Interest Period applicable thereto, (c) the failure to borrow, convert, continue or prepay any Loan on the date specified in any notice delivered pursuant hereto (regardless of whether such notice may be revoked under Section 2.10(b) and is revoked in accordance therewith), or (d) the assignment of any Eurodollar Loan other than on the last day of the Interest Period applicable thereto as a result of a request by Borrower pursuant to Section 2.19 then, in any such event, Borrower shall compensate each Lender for the loss, cost and expense attributable to such event. In the case of a Eurodollar Loan, such loss, cost or expense to any Lender shall be deemed to include an amount determined by such Lender to be the excess, if any, of (i) the amount of interest which would have accrued on the principal amount of such Loan had such event not occurred, at the Adjusted LIBO Rate that would have been applicable to such Loan, for the period from the date of such event to the last day of the then current Interest Period therefor (or, in the case of a failure to borrow, convert or continue, for the period that would have been the Interest Period for such Loan), over (ii) the amount of interest which would accrue on such principal amount for such period at the interest rate which such Lender would bid were it to bid, at the commencement of such period, for dollar deposits of a comparable amount and period from other banks in the London interbank market. A certificate of any Lender setting forth any amount or amounts that such Lender is entitled to receive pursuant to this Section shall be delivered to Borrower and the Administrative Agent and shall be conclusive absent manifest error. Borrower shall pay such Lender the amount shown as due on any such certificate within ten (10) days after receipt thereof.

 

SECTION 2.17.   Taxes.

 

(a)   Any and all payments by or on account of any obligation of Borrower hereunder or under any other Loan Document shall be made free and clear of and without deduction for any Indemnified Taxes or Other Taxes, except as required by Law; provided that if Borrower shall be required to deduct any Indemnified Taxes or Other Taxes from such payments, then (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section), the Administrative Agent, each Lender or the Issuing Bank (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) Borrower shall make such deductions and (iii) Borrower shall pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law; provided that if a Lender is in breach of its representations and warranties under Section 2.17(e), then Borrower shall only be obligated to comply with clauses (ii) and (iii) of this Section 2.17(a) with respect to payments to be made to or for the benefit of such Lender.

 

(b)   In addition, Borrower shall pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law.

 

  

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(c)   Borrower shall indemnify the Administrative Agent, each Lender and each Issuing Bank, within ten (10) days after written demand therefor, for the full amount of any Indemnified Taxes or Other Taxes paid by the Administrative Agent, such Lender or such Issuing Bank, as the case may be, on or with respect to any payment by or on account of any obligation of Borrower hereunder or under any other Loan Document (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section) and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority; provided that if a Lender is in breach of its representations and warranties under Section 2.17(e), then Borrower shall have no obligations under this Section 2.17(c) with respect to any payments or liabilities described herein made or owed by such Lender. A certificate as to the amount of such payment or liability delivered to Borrower by a Lender or an Issuing Bank, or by the Administrative Agent on its own behalf or on behalf of a Lender or an Issuing Bank, shall be conclusive absent manifest error.

 

(d)    As soon as practicable after any payment of Indemnified Taxes or Other Taxes by Borrower to a Governmental Authority, if available, Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.

 

(e)   Each Lender that is a U.S. Person shall deliver to Borrower and the Administrative Agent on or before the date on which it becomes a party to this Agreement two (2) duly completed copies of United States Internal Revenue Service Form W-9 (or any successor form) certifying that such Lender is exempt from U.S. federal withholding tax. Each Foreign Lender agrees that such Lender will deliver to Borrower and the Administrative Agent (or, in the case of a Participant, to the Lender from which the related participation shall have been purchased) two (2) duly completed copies of United States Internal Revenue Service Form W-8 BEN, W-8 ECI or W-8 IMY (together with any applicable underlying Internal Revenue Service forms) certifying in each case that such Lender is entitled to receive payments from the Loan Parties under the Loan Documents without deduction or withholding of any United States federal income taxes. Such forms shall be delivered by each Foreign Lender on or before the date it becomes a party to this Agreement (or, in the case of any Participant, on or before the date such Participant purchases the related participation) and from time to time thereafter upon the request of Borrower or the Administrative Agent. Each Lender which so delivers a Form W-8 BEN, W-8 ECI or W-8 IMY further undertakes to deliver to Borrower and the Administrative Agent two (2) additional copies of such form (or a successor form) on or before such form expires or becomes obsolete or after the occurrence of any event requiring a change in the most recent form so delivered by it and such amendments thereto or extensions or renewals thereof as may be reasonably requested by Borrower or the Administrative Agent, in each case, certifying that such Lender is entitled to receive payments from Borrower under the Loan Documents without deduction or withholding of any United States federal income taxes, unless (i) an event (including without limitation any change in treaty, law or regulation) has occurred prior to the date on which any such delivery would otherwise be required which renders all such forms inapplicable or which would prevent such Lender from duly completing and delivering any such form with respect to it and (ii) such Lender advises Borrower and the Administrative Agent that it is not capable of receiving such payments without any deduction or withholding of United States federal income tax. Any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of Borrower or the Administrative Agent), executed originals of any other form prescribed by applicable law as a basis for claiming exemption from or a reduction in United States federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by applicable law to permit Borrower or the Administrative Agent to determine the withholding or deduction required to be made. If a payment made to a Lender under any Loan Document would be subject to United States federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 147 1(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to Borrower and the Administrative Agent at the time or times prescribed by law and at such time or times reasonably requested by Borrower or the Administrative Agent such documentation prescribed by applicable law (including as prescribed by Section 147 1(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by Borrower or the Administrative Agent as may be necessary for Borrower and the Administrative Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this Section 2.17(e), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.

 

  

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(f)    If Borrower at any time pays an amount under Section 2.17(a), Section 2.17(b) or Section 2.17(c) to any Lender, the Administrative Agent or any Is suing Bank, and such payee receives a refund of or credit for any part of any Indemnified Taxes or Other Taxes which such payee determines in its good faith judgment is made with respect to such amount paid by Borrower, such Lender, the Administrative Agent or any Issuing Bank, as the case may be, shall pay to Borrower the amount of such refund or credit (up to a maximum amount of the original indemnified amount paid by Borrower pursuant to this Section) promptly, and in any event within 60 days, following the receipt of such refund or credit by such payee. Nothing in this Section shall require any Lender, the Administrative Agent or any Issuing Bank to make available its tax returns or any other information relating to its taxes that such Person deems confidential.

 

SECTION 2.18.   Payments Generally; Pro Rata Treatment; Sharing of Set-offs.

 

(a)   Borrower shall make each payment required to be made by it hereunder or under any other Loan Document (whether of principal, interest, fees or reimbursement of LC Disbursements, or of amounts payable under Section 2.15, Section 2.16 or Section 2.17, or otherwise) prior to the time expressly required hereunder or under such other Loan Document for such payment (or, if no such time is expressly required, prior to 12:00 noon, New York City time), on the date when due, in immediately available funds, without set-off or counterclaim. Any amounts received after such time on any date may, in the discretion of the Administrative Agent, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon. All such payments shall be made to the Administrative Agent c/o JPMorgan Chase Bank, N.A., 10 South Dearborn, Floor 07, Chicago, IL 60603-2003, Attention: Margaret Seweryn, Telephone: 312-732-7976, Fax: 888-292-9533, with a copy to JPMorgan Chase Bank, N.A., Oil & Gas Corporate Banking, 2200 Ross Street, 3rd Floor, Dallas TX 75201, Attention: Cathy Johann, Telephone: 214-965-3233, Fax: 214-965-3280, except payments to be made directly to an Issuing Bank as expressly provided herein and payments pursuant to Section 2.15, Section 2.16, Section 2.17(a), Section 2.17(c) and Section 10.3 shall be made directly to the Persons entitled thereto and payments pursuant to other Loan Documents shall be made to the Persons specified therein. The Administrative Agent shall distribute any such payments received by it for the account of any other Person to the appropriate recipient promptly following receipt thereof. Except as set forth in clause (a) of the definition of “Interest Period”, if any payment under any Loan Document shall be due on a day that is not a Business Day, the date for payment shall be extended to the next succeeding Business Day, and, in the case of any payment accruing interest, interest thereon shall be payable for the period of such extension. All payments under each Loan Document shall be made in dollars.

 

  

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(b)   If at any time insufficient funds are received by and available to the Administrative Agent to pay fully all amounts of principal, unreimbursed LC Disbursements, interest and fees then due hereunder, such funds shall be applied (i) first, towards payment of interest and fees then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest and fees then due to such parties, and (ii) second, towards payment of principal and unreimbursed LC Disbursements then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal and unreimbursed LC Disbursements then due to such parties.

 

(c)   If any Lender shall, by exercising any right of set-off or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its Loans or participations in LC Disbursements resulting in such Lender receiving payment of a greater proportion of the aggregate amount of its Loans and participations in LC Disbursements and accrued interest thereon than the proportion received by any other Lender, then the Lender receiving such greater proportion shall purchase (for cash at face value) participations in the Loans and participations in LC Disbursements of other Lenders to the extent necessary so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Loans and participations in LC Disbursements; provided that (i) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest, and (ii) the provisions of this paragraph shall not be construed to apply to any payment made by Borrower pursuant to and in accordance with the express terms of this Agreement or any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans or participations in LC Disbursements to any assignee or participant, other than to Borrower or any Subsidiary or Affiliate thereof (as to which the provisions of this paragraph shall apply). Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against Borrower rights of set-off and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of Borrower in the amount of such participation.

 

(d)   Unless the Administrative Agent shall have received notice from Borrower prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders or an Issuing Bank hereunder that Borrower will not make such payment, the Administrative Agent may assume that Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders or an Issuing Bank, as the case may be, the amount due. In such event, if Borrower has not in fact made such payment, then each of the Lenders or each of the Issuing Banks, as the case may be, severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender or such Issuing Bank with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation.

 

  

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(e)   If any Lender shall fail to make any payment required to be made by it pursuant to Section 2.4(d) or Section 2.4(e), Section 2.5(b), Section 2.18(d) or Section 10.3(c) then the Administrative Agent may, in its discretion (notwithstanding any contrary provision hereof), apply any amounts thereafter received by the Administrative Agent for the account of such Lender to satisfy such Lender’s obligations under such Sections until all such unsatisfied obligations are fully paid.

 

(f)    Notwithstanding the foregoing or anything to the contrary contained herein, (i) if any Defaulting Lender shall have failed to fund all or any portion of any Loan (each such Loan, an “Affected Loan”), each prepayment of a Loan by Borrower under Section 2.10 shall be applied first to such Affected Loan and the principal amount and interest with respect to such payment shall be distributed (x) to each Lender that is not a Defaulting Lender (each, a “Non-Defaulting Lender”) pro rata based on the outstanding principal amount of Affected Loans owing to all Non-Defaulting Lenders, until the principal amount of all Affected Loans has been repaid in full and (y) to the extent of any remaining amount of such prepayment, to each Lender pro rata in accordance with such Lender’s Applicable Percentage, and (ii) each payment made by Borrower on account of the interest on any Affected Loans shall be distributed to each Non-Defaulting Lender pro rata based on the outstanding principal amount of Affected Loans owing to all Non-Defaulting Lenders.

 

SECTION 2.19.   Mitigation Obligations; Replacement of Lenders.

 

(a)   If any Lender requests compensation under Section 2.15, or if Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.17, then such Lender shall use reasonable efforts to designate a different Applicable Lending Office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or Affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 2.15 or Section 2.17, as the case may be, in the future and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.

 

  

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(b)   If (i) any Lender asserts that events have occurred suspending its obligation to make or maintain Eurodollar Loans under Section 2.14 when substantially all other Lenders have not also done so, (ii) any Lender requests compensation under Section 2.15, (iii) Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.17, (iv) any Lender defaults in its obligation to fund Loans hereunder or otherwise becomes a Defaulting Lender, (v) any Lender fails to approve a Borrowing Base which has been approved by 80% or more of the outstanding Lender Commitments, or (vi) any Lender fails to approve an amendment or waiver request which has been approved by 80% or more of the outstanding Lender Commitments, then Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the terms of Section 10.4), all its interests, rights and obligations under this Agreement to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that (1) Borrower shall have received the prior written consent of the Administrative Agent, which consent shall not unreasonably be withheld or delayed, (2) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans and participations in LC Disbursements, accrued interest thereon, accrued fees and all other amounts payable to it hereunder, from the assignee (to the extent of such outstanding principal and accrued interest and fees) or Borrower (in the case of all other amounts), (3) the assignee and assignor shall have entered into an Assignment and Assumption, and (4) in the case of any such assignment resulting from a claim for compensation under 0 or payments required to be made pursuant to Section 2.17, such assignment will result in a reduction in such compensation or payments.

 

SECTION 2.20.   Addition of Lenders and Increase in Commitments. It is agreed by the parties hereto that one or more financial institutions acceptable to Borrower and the Administrative Agent may become a Lender under this Agreement, with the consent of the Administrative Agent, which consent is not to be unreasonably withheld or delayed, (as to the identity of the institution), or a Lender may increase its Commitment by executing and delivering to Borrower and the Administrative Agent a certificate substantially in the form of Exhibit B hereto (a “LenderCertificate”). Each Lender shall have the option, but no Lender shall have any obligation, to increase its Commitment hereunder in connection with any increase in Commitments pursuant to this Section. Upon receipt and agreement by Borrower and the Administrative Agent (as to the identity of the institution) of any such Lender Certificate, (a) the aggregate amount of the Commitments of the Lenders (including any Person that becomes a Lender by delivery of such a Lender Certificate) automatically without further action by Borrower, the Administrative Agent or any Lender shall be increased by the amount indicated in such Lender Certificate (but not in excess of $1,800,000,000 in the aggregate for all such increases pursuant to this Section) on the effective date set forth in such Lender Certificate (such increased amount herein the “IncreasedCommitment Amount”), (b) the Register shall be amended to add such Commitment of such additional Lender or to reflect the increase in the Commitment of an existing Lender, and the Applicable Percentages of the Lenders shall be adjusted accordingly to reflect the additional Lender or the increase in the Commitment of an existing Lender, (c) any such additional Lender shall be deemed to be a party in all respects to this Agreement and any other Loan Documents to which the Lenders are a party, and (d) upon the effective date set forth in such Lender Certificate, any such Lender party to the Lender Certificate shall purchase a pro rata portion of the Credit Exposure of each of the current Lenders such that the Lenders (including any additional Lender, if applicable) shall have the appropriate portion of the aggregate Credit Exposure of the Lenders (based in each case of such Lender’s Applicable Percentage, as revised pursuant to this Section).

 

  

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SECTION 2.21.   Defaulting Lenders. Notwithstanding any provision of this Agreement to the contrary, if any Lender becomes a Defaulting Lender, then the following provisions shall apply for so long as such Lender is a Defaulting Lender:

 

(a)   fees shall cease to accrue on the Commitment of such Defaulting Lender pursuant to Section 2.11;

 

(b)   the Commitment of such Defaulting Lender shall not be included in determining whether all Lenders, the Majority Lenders, the Borrowing Base Required Lenders or the Borrowing Base Increase Required Lenders have taken or may take any action hereunder (including any consent to any amendment, waiver or other modification pursuant to Section 10.2);

 

(c)   if any LC Exposure exists at the time such Lender becomes a Defaulting Lender then:

 

(i)    all or any part of the LC Exposure of such Defaulting Lender shall be reallocated among the non-Defaulting Lenders in accordance with their respective Applicable Percentages but only to the extent the sum of all non-Defaulting Lenders’ Credit Exposure plus such Defaulting Lender’s LC Exposure does not exceed the lesser of (A) the aggregate amount of the Commitments of all non-Defaulting Lenders and (B) the aggregate amount of the Borrowing Base then in effect.

 

(ii)   if the reallocation described in clause (i) above cannot, or can only partially, be effected, Borrower shall within one (1) Business Day following notice by the Administrative Agent, cash collateralize for the benefit of the Is suing Bank only Borrower’s obligations corresponding to such Defaulting Lender’s LC Exposure (after giving effect to any partial reallocation pursuant to clause (i) above) in accordance with the procedures set forth in Section 2.4(i) for so long as such LC Exposure is outstanding;

 

(iii)   if Borrower cash collateralizes any portion of such Defaulting Lender’s LC Exposure pursuant to clause (ii) above, Borrower shall not be required to pay any fees to such Defaulting Lender pursuant to Section 2.11(a) with respect to such Defaulting Lender’s LC Exposure during the period such Defaulting Lender’s LC Exposure is cash collateralized;

 

(iv)   if the LC Exposure of the non-Defaulting Lenders is reallocated pursuant to clause (i) above, then the fees payable to the Lenders pursuant to Section 2.11 shall be adjusted in accordance with such non-Defaulting Lenders’ Applicable Percentages; and

 

(v)   if all or any portion of such Defaulting Lender’s LC Exposure is neither reallocated nor cash collateralized pursuant to clause (i) or (ii) above, then, without prejudice to any rights or remedies of an Issuing Bank or any other Lender hereunder, all letter of credit fees payable under Section 2.11 with respect to such Defaulting Lender’s LC Exposure shall be payable to such Issuing Bank until and to the extent that such LC Exposure is reallocated and/or cash collateralized; and

 

  

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(d)    so long as such Lender is a Defaulting Lender, an Issuing Bank shall not be required to issue, amend or increase any Letter of Credit, unless it is satisfied that the related exposure and the Defaulting Lender’s then outstanding LC Exposure will be 100% covered by the Commitments of the non-Defaulting Lenders and/or cash collateral will be provided by Borrower in accordance with Section 2.21(c), and participating interests in any newly issued or increased Letter of Credit shall be allocated among non-Defaulting Lenders in a manner consistent with Section 2.21(c) (and such Defaulting Lender shall not participate therein).

 

If (i) ultimate parent of any Lender shall become bankrupt or insolvent pursuant to Section 8.1(g) following the date hereof and for so long as such event shall continue or (ii) the Issuing Bank has a good faith belief that any Lender has defaulted in fulfilling its obligations under one or more other agreements in which such Lender commits to extend credit, the Issuing Bank shall not be required to issue, amend or increase any Letter of Credit, unless the Issuing Bank shall have entered into arrangements with Borrower or such Lender, satisfactory to the Issuing Bank to defease any risk to it in respect of such Lender hereunder. The occurrence of any event set out in this paragraph shall not result in a Lender being deemed to be a Defaulting Lender.

 

In the event that the Administrative Agent, Borrower and each Issuing Bank each agrees that a Defaulting Lender has adequately remedied all matters that caused such Lender to be a Defaulting Lender, then the LC Exposure of the Lenders shall be readjusted to reflect the inclusion of such Lender’s Commitment and on such date such Lender shall purchase at par such of the Loans of the other Lenders as the Administrative Agent shall determine may be necessary in order for such Lender to hold such Loans in accordance with its Applicable Percentage. Once the conditions in the immediately preceding sentence have been satisfied, as determined by the Administrative Agent, such Lender shall no longer be deemed a Defaulting Lender.

 

ARTICLE III.

Representations and Warranties

 

In order to induce the Administrative Agent, the other Agents, any Issuing Bank and the Lenders to enter into this Agreement and to make Loans and issue or participate in any Letters of Credit hereunder, Borrower represents and warrants to the Administrative Agent, the other Agents, any Issuing Bank and the Lenders as set forth in this Article.

 

SECTION 3.1.   Organization; Powers. Each of Borrower and its Restricted Subsidiaries is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, has all requisite power and authority to carry on its business as now conducted and, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, is qualified to do business in, and is in good standing in, every jurisdiction where such qualification is required.

 

SECTION 3.2.   Authorization; Enforceability. The execution, delivery and performance by Borrower of this Agreement and each other Loan Document executed or to be executed by it, and the execution, delivery and performance by each other Loan Party of each Loan Document executed or to be executed by it, are within Borrower’s and each such other Loan Party’s corporate, limited liability company and/or partnership powers, and have been duly authorized by all necessary corporate, limited liability company and/or partnership action, and if required, stockholder, member and/or partner action. This Agreement and each other Loan Document executed or to be executed by it has been duly executed and delivered by Borrower and constitutes, and each other Loan Document executed or to be executed by any other Loan Party, when executed and delivered by such other Loan Party, will constitute, a legal, valid and binding obligation of Borrower or such Loan Party (as the case may be), enforceable in accordance with their respective terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.

 

  

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SECTION 3.3.   Approvals; No Conflicts. The execution, delivery and performance by Borrower of this Agreement and each other Loan Document executed or to be executed by it, and the execution, delivery and performance by each other Loan Party of each Loan Document executed or to be executed by such other Loan Party, (a) do not require any Governmental Approval or third party approvals, except such as have been obtained or made and are in full force and effect and except filings necessary to perfect Liens created under the Loan Documents, (b) will not violate any applicable Governmental Rule or the Organic Documents of Borrower or any such other Loan Party or any order of any Governmental Authority, (c) will not violate or result in a default under any indenture, agreement or other instrument binding upon Borrower or any such other Loan Party or its assets, or give rise to a right thereunder to require any payment to be made by Borrower or any such other Loan Party, and (d) will not result in the creation or imposition of any Lien on any asset of Borrower or any such other Loan Party, except Liens created under the Loan Documents.

 

SECTION 3.4.   Financial Condition; No Material Adverse Change.

 

(a)   Borrower has heretofore furnished to the Lenders and the Administrative Agent copies of its consolidated balance sheet and statements of income, stockholders equity and cash flows (i) as of and for the fiscal year ended December 31, 2010, audited by Ernst & Young LLP, independent public accountants, and (ii) if available, as of and for the fiscal quarter and the portions of the fiscal year ended March 31, 2011, certified by its chief financial officer. Such financial statements present fairly, in all material respects, the financial position and results of operations and cash flows of Borrower and its consolidated Subsidiaries as of such dates and for such periods in accordance with GAAP consistently applied, subject to year end audit adjustments in the case of the statements referred to in clause (ii) above.

 

(b)   [intentionally omitted].

 

(c)   Borrower has heretofore furnished to the Lenders and the Administrative Agent copies of its pro forma consolidated balance sheet as of March 31, 2011, prepared giving pro forma effect to the initial public offering of the Equity Interests of Lone Pine and the repayment of certain intercompany Indebtedness as if such transactions had occurred on such date. Such pro forma combined balance sheet (i) has been prepared in good faith in accordance with GAAP, (ii) is based on assumptions believed to be reasonable, and (iii) presents fairly, in all material respects, the pro forma consolidated balance sheet of Borrower and its consolidated Subsidiaries as of March 31, 2011 (or in the event that the Effective Date occurs after June 30, 2011, such later date as reasonably requested by the Administrative Agent).

 

  

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(d)   Except as set forth in Schedule 3.4 or reflected in the financial statements referred to in Section 3.4(a), neither Borrower nor any of its Restricted Subsidiaries has any contingent liabilities, unusual long-term commitments or unrealized losses.

 

(e)   Since March 31, 2011, there has been no material adverse change in the consolidated financial condition, operations or business taken as a whole of Borrower and its consolidated Restricted Subsidiaries.

 

SECTION 3.5.   Properties.

 

(a)   Each of Borrower and its Restricted Subsidiaries owns its Properties free and clear of all Liens (other than Liens permitted by Section 7.2).

 

(b)   After giving full effect to all Liens permitted under Section 7.2, Borrower and its Restricted Subsidiaries own the net interests in Hydrocarbons produced from the Oil and Gas Properties as reflected in the most recent Reserve Report, and neither Borrower nor any of its Restricted Subsidiaries is obligated to bear costs or expenses in respect of the Oil and Gas Properties in excess of its working interest percentage as reflected in the most recent Reserve Report.

 

SECTION 3.6.   Litigation.

 

(a)   Except for such actions, suits or proceedings set forth in Schedule 3.6 hereto and any other actions, suits or proceedings from time to time disclosed in writing by Borrower or its Restricted Subsidiaries to the Administrative Agent after the date of this Agreement (collectively, the “Disclosed Matters”), there are no actions, suits or proceedings by or before any arbitrator or Governmental Authority pending against or, to the knowledge of Borrower, threatened against or affecting Borrower or any of its Restricted Subsidiaries or any of their respective Properties, businesses, assets or revenues, (i) as to which there is a reasonable possibility of an adverse determination and that, if adversely determined, could reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect or (ii) that question the validity or enforceability of any of the Loan Documents or seek to enjoin or prevent the Transactions.

 

(b)   Since the date of this Agreement, there has been no change in the status of the Disclosed Matters that, individually or in the aggregate, has resulted in, or materially increased the likelihood of, a Material Adverse Effect.

 

SECTION 3.7.   Compliance with Laws and Agreements. Each of Borrower and its Restricted Subsidiaries is in compliance with all Governmental Rules applicable to such Person or its Property and all indentures, agreements and other instruments binding upon it or its Property, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. No Default has occurred and is continuing.

 

  

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SECTION 3.8.   Investment Company Status. Neither Borrower nor any of its Subsidiaries is an “investment company” as defined in, or subject to regulation under, the Investment Company Act of 1940, as amended.

 

SECTION 3.9.   Taxes. Except as set forth in Schedule 3.9, each of Borrower, its Restricted Subsidiaries and each of its Subsidiaries which is a member of Borrower’s consolidated U.S. federal income tax group has timely filed or caused to be filed all Tax returns and reports required to have been filed and has paid or caused to be paid all Taxes required to have been paid by it, except (a) Taxes that are being contested in good faith by appropriate proceedings and for which Borrower or such Subsidiary, as applicable, has set aside on its books adequate reserves or (b) to the extent that the failure to do so could not reasonably be expected to result in a Material Adverse Effect.

 

SECTION 3.10.   ERISA. No ERISA Event has occurred or is reasonably expected to occur that, when taken together with all other such ERISA Events for which liability is reasonably expected to occur, could reasonably be expected to result in a Material Adverse Effect. The present value of all accumulated benefit obligations under each Plan (in each case determined based on the assumptions used for purposes of Accounting Standards Codification No. 715: Compensation-Retirement Benefits) as of the date of the most recent financial statements reflecting such amounts, does not exceed the fair market value of the assets of such Plan (as of the date of determination of such benefit obligation amount) by an amount which, if it constituted a direct liability of Borrower, could reasonably be expected to have a Material Adverse Effect.

 

SECTION 3.11.   Disclosure. Borrower has disclosed to the Lenders and the Administrative Agent all agreements, court orders, judgments, instruments and corporate or other restrictions to which Borrower or any of its Subsidiaries is subject, and all other matters known to any of them relating to any of the foregoing, which agreements, court orders, judgments, instruments, restrictions and other matters individually or in aggregate could reasonably be expected to result in a Material Adverse Effect. None of the documents, reports, financial statements, certificates or other information furnished by or on behalf of Borrower or any of its Subsidiaries to the Administrative Agent or any Lender in connection with the negotiation of this Agreement or any other Loan Document or delivered hereunder or thereunder (as modified or supplemented by other information so furnished) contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that, with respect to projected financial information, Borrower represents only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time.

 

SECTION 3.12.   Subsidiaries. Schedule 3.12 sets forth the name, the identity or corporate structure, the ownership interest, the chief executive office, principal places of business, and, if applicable, the Federal Taxpayer Identification Number, of each direct or indirect Subsidiary of Borrower as of the Effective Date. Schedule 3.12 also sets forth the name of each Restricted Subsidiary and Unrestricted Subsidiary of Borrower as of the Effective Date. As of the Effective Date, Borrower does not have any Subsidiaries other than the Subsidiaries identified in Schedule 3.12.

 

  

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SECTION 3.13.   Insurance. Schedule 3.13 sets forth a description of all insurance maintained by or on behalf of Borrower and its Restricted Subsidiaries as of the date of this Agreement. As of the date of this Agreement, all premiums in respect of such insurance then due have been paid.

 

SECTION 3.14.   Labor Matters. As of the Effective Date, there are no material strikes, lockouts or slowdowns against Borrower or any of its Restricted Subsidiaries pending or, to the knowledge of Borrower, threatened. The hours worked by and payments made to employees of Borrower and its Restricted Subsidiaries have not been in material violation of the Fair Labor Standards Act or any other applicable Federal, state, provincial, local, territorial or foreign law dealing with such matters. All material payments due from Borrower or any of its Restricted Subsidiaries, or for which any claim may be made against Borrower or any of its Restricted Subsidiaries, on account of wages and employee health and welfare insurance and other benefits, have been paid or accrued as a liability on the books of Borrower or any such Restricted Subsidiary. The consummation of the Transactions will not give rise to any right of termination or right of renegotiation on the part of any union under any collective bargaining agreement to which Borrower or any of its Restricted Subsidiaries is bound except where the same could not reasonably be expected to have a Material Adverse Effect.

 

SECTION 3.15.   Priority; Security Matters. The Obligations are and shall be at all times secured by Liens in all Collateral (other than any Collateral owned by Lone Pine or any of its Subsidiaries) to the extent perfection has occurred, or would occur, by filing of a UCC financing statement in the states in which each Grantor is located, filing a mortgage, and a UCC-1 affecting as-extracted collateral or a fixture filing in the real property or other appropriate records of the parish or county in which such real property or fixtures are located (or adjacent in the case of properties located on the Outer Continental Shelf), or by possession, and, except for Liens permitted by Section 7.2, all such Liens shall be first priority Liens.

 

SECTION 3.16.   Environmental Matters. Except as set forth in Schedule 3.16 or, after the date of this Agreement, otherwise disclosed in writing by Borrower to the Administrative Agent:

 

(a)   All facilities and Property owned or leased by Borrower or any of its Restricted Subsidiaries have been, and continue to be, owned or leased by Borrower or any of its Restricted Subsidiaries in compliance with all applicable Environmental Laws except where the failure to comply could not reasonably be expected to have a Material Adverse Effect;

 

(b)   There are no pending or, to the knowledge of Borrower, threatened (i) claims, complaints, notices or requests for information received by Borrower or any of its Restricted Subsidiaries with respect to any alleged violation of any applicable Environmental Law, or (ii) complaints or notices to Borrower or any of its Restricted Subsidiaries regarding instances which could give rise to an Environmental Liability for Borrower or any of its Restricted Subsidiaries, which in either case could reasonably be expected to have a Material Adverse Effect;

 

(c)   There have been no Releases of Hazardous Materials at, on or under any Property now or previously owned or leased by Borrower or any of its Restricted Subsidiaries which could give rise to an Environmental Liability which could reasonably be expected to have a Material Adverse Effect;

 

  

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(d)   Borrower and its Restricted Subsidiaries have been issued and are in material compliance with all permits, certificates, approvals, licenses and other authorizations required by applicable Environmental Laws except where the failure to have issued or complied could not reasonably be expected to have a Material Adverse Effect;

 

(e)   No Property now or previously owned or leased by Borrower or any of its Restricted Subsidiaries is listed or proposed for listing (with respect to owned Property only) on the National Priorities List pursuant to CERCLA, on the CERCLIS or on any analogous state list of sites requiring investigation or clean-up which listing could result in the imposition of an Environmental Liability on either Borrower or any of its Restricted Subsidiaries which could reasonably be expected to have a Material Adverse Effect;

 

(f)   There are no underground storage tanks, active or abandoned, including petroleum storage tanks, on or under any Property now or previously owned or leased by Borrower or any of its Restricted Subsidiaries which have been operated in non-compliance with applicable Environmental Laws which could give rise to an Environmental Liability which could reasonably be expected to have a Material Adverse Effect;

 

(g)   Neither Borrower nor any Restricted Subsidiary of Borrower has directly transported or directly arranged for the transportation of any Hazardous Material to any site which is listed or proposed for listing on the National Priorities List pursuant to CERCLA, on the CERCLIS or on any analogous state, provincial or territorial list or which is to the knowledge of Borrower the subject of federal, state, provincial, territorial or local enforcement actions or other investigations which could give rise to an Environmental Liability which could reasonably be expected to have a Material Adverse Effect;

 

(h)   There are no polychlorinated biphenyls or friable asbestos present at any Property now or to the knowledge of Borrower previously owned or leased by Borrower or any of its Restricted Subsidiaries which ownership or use of could result in the imposition of an Environmental Liability which could reasonably be expected to have a Material Adverse Effect; and

 

(i)   Borrower has adopted and implemented procedures and guidelines as Borrower has determined are reasonably appropriate to comply in all material respects with applicable Environmental Laws and to identify and evaluate events or conditions that would result in any material Environmental Liability.

 

SECTION 3.17.   Solvency. Immediately after the consummation of the Transactions to occur on the Effective Date, (a) no Loan Party will have unreasonably small capital with which to conduct the business in which such Loan Party is engaged as such business is now conducted and is proposed to be conducted following the Effective Date; and (b) Borrower, each other Loan Party and Borrower and its Restricted Subsidiaries, on a consolidated basis, will be Solvent.

 

  

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SECTION 3.18.   Use of Credit. Neither Borrower nor any of its Subsidiaries is engaged principally, or as one of its important activities, in the business of extending credit for the purpose, whether immediate, incidental or ultimate, of buying or carrying Margin Stock, and no part of the proceeds of any extension of credit hereunder will be used to buy or carry any Margin Stock.

 

SECTION 3.19.   Claims and Liabilities. Neither Borrower nor any of its Restricted Subsidiaries has accrued any liabilities under gas purchase contracts for gas not taken, but for which it is liable to pay if not made up and which, if not paid, could reasonably be expected to have a Material Adverse Effect. No claims exist against Borrower or any of its Restricted Subsidiaries for gas imbalances which claims if adversely determined could reasonably be expected to have a Material Adverse Effect. No purchaser of product supplied by Borrower or any of its Restricted Subsidiaries has any claim against Borrower or any of its Restricted Subsidiaries for product paid for, but for which delivery was not taken as and when paid for, which claim if adversely determined could reasonably be expected to have a Material Adverse Effect.

 

SECTION 3.20.   OFAC. Neither Borrower, any of its Subsidiaries nor any of their respective employees, officers or directors is a Person with whom U.S. Persons are restricted from doing business under regulations of the Office of Foreign Asset Control (“OFAC”) of the Department of the Treasury (including those named on OFAC’s Specially Designated and Blocked Persons List) or under any statute, executive order (including September 24, 2001, Executive Order Blocking Property and Prohibiting Transactions with Persons who Commit, Threaten to Commit, or Support Terrorism), or other Governmental Rule.

 

ARTICLE IV.

Conditions

 

SECTION 4.1.   Effectiveness. This Agreement shall become effective on the date on which each of the following conditions is satisfied (or waived in accordance with Section 10.2):

 

(a)   Certain Loan Documents. The Administrative Agent (or its counsel) shall have received from each party thereto either a counterpart of each of the following documents duly executed on behalf of such party or written evidence satisfactory to the Administrative Agent (which may include telecopy transmission of a signed signature page of such document) that each such party has duly executed for delivery to the Administrative Agent a counterpart of each of the following documents which documents must be acceptable to the Administrative Agent in its sole and absolute discretion: this Agreement.

 

(b)   Fees and Expenses. The Administrative Agent, the Arranger and the Lenders shall have received all fees, including the Upfront Fee, and other amounts due and payable pursuant to this Agreement or any other Loan Document on or prior to the date hereof, including, to the extent invoiced, reimbursement or payment of all out-of-pocket expenses (including reasonable fees, charges and disbursements of counsel) required to be reimbursed or paid by any Loan Party hereunder or under any other Loan Document.

 

  

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SECTION 4.2.   Amendment and Restatement; Initial Loan. The obligations of (a) the Lenders to (i) amend and restate the Existing Credit Facility and (ii) make Loans or (b) any Issuing Bank to issue Letters of Credit hereunder shall not become effective until the date on which each of the following conditions is satisfied (or waived in accordance with Section 10.2):

 

(a)   Certain Loan Documents. The Administrative Agent (or its counsel) shall have received from each party thereto either a counterpart of each of the following documents duly executed on behalf of such party or written evidence satisfactory to the Administrative Agent (which may include telecopy transmission of a signed signature page of such document) that each such party has duly executed for delivery to the Administrative Agent a counterpart of each of the following documents: a Subsidiary Guaranty from Forest Oil Permian, the Fee Letter, the Pledge Agreement required by Section 4.2(e), the Mortgage Amendments, executed by Borrower or Forest Oil Permian as required by Section 4.2(f)(i), the Mortgage executed by Borrower as required by Section 4.2(f)(ii), and all related financing statements and other filings.

 

(b)    [Intentionally omitted]

 

(c)   Opinions of Counsel. The Administrative Agent shall have received opinions dated the Effective Date, addressed to the Administrative Agent, the other Agents and all Lenders, from (i) Simpson Thacher & Bartlett LLP, counsel to Borrower, in form and substance reasonably satisfactory to the Administrative Agent, and (ii) local counsel in the States of Texas, Louisiana, Oklahoma and Wyoming, each in form and substance reasonably satisfactory to the Administrative Agent.

 

(d)   Organizational Documents. The Administrative Agent shall have received a certificate of an Authorized Officer of each Loan Party dated as of the Effective Date, certifying:

 

(i)    that attached to each such certificate are (A) a true and complete copy of the Organic Documents of such Loan Party, as the case may be, as in effect on the Effective Date, (B) a true and complete copy of a certificate from the Governmental Authority of the state of such entity’s organization certifying that such entity is duly organized and validly existing in such state, and (C) a true and complete copy of a certificate from the appropriate Governmental Authority of each state (without duplication) certifying that such entity is duly qualified and in good standing (including with respect to the payment of franchise taxes, if any) to transact business in such state as a foreign corporation or other entity, if the failure to be so qualified or in good standing could reasonably be expected to have a Material Adverse Effect;

 

(ii)   that attached to such certificate is a true and complete copy of resolutions duly adopted by the board of directors or management committee of such Loan Party, as applicable, authorizing the execution, delivery and performance of such of the Loan Documents to which such Loan Party is or is intended to be a party; and

 

(iii)   as to the incumbency and specimen signature of each officer of such Loan Party executing such of the Loan Documents to which such Loan Party is or is intended to be a party.

 

  

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(e)   Pledge Agreement. The Administrative Agent shall have received counterparts of a Pledge Agreement, dated as of the Effective Date, duly executed and delivered by Borrower, together with the following:

 

(i)   stock certificates representing all the outstanding Equity Interests of each Restricted Subsidiary owned by or on behalf of Borrower as of the Effective Date after giving effect to the Transactions (except that Equity Interests of a Restricted Subsidiary that is a Foreign Subsidiary shall be limited to 65% of the total combined voting power of all classes of voting Equity Interests of such Foreign Subsidiary), and stock powers and instruments of transfer, endorsed in blank, with respect to such stock certificates, or, if any securities pledged pursuant to the Pledge Agreement are uncertificated securities, confirmation and evidence satisfactory to the Administrative Agent that the security interest in such uncertificated securities has been transferred to and perfected by the Administrative Agent in accordance with the Uniform Commercial Code, as in effect in the State of New York;

 

(ii)   all documents and instruments, including Uniform Commercial Code Financing Statements (Form UCC-1), required by law or reasonably requested by the Administrative Agent to be filed, registered or recorded to create or perfect the Liens intended to be created under any Pledge Agreement.

 

(f)   Mortgage Amendments; Mortgages. The Administrative Agent shall have received counterparts of:

 

(i)   duly-executed amendments to Mortgages, including the Mortgage Amendments, from each of Borrower and Forest Oil Permian;

 

(ii)   duly-executed Mortgages from Borrower encumbering various Oil and Gas Properties which, along with the Oil and Gas Properties encumbered by the other Security Documents, constitute at least 75% of the Loan Value of the Borrowing Base Properties, from Borrower and its Restricted Subsidiaries; and

 

(iii)    executed copies of proper Uniform Commercial Code Form UCC-3 termination statements necessary to release all Liens and other rights of any Person previously granted by any Person in any Collateral described in the Mortgages (except Liens permitted pursuant to Section 7.2), together with such other Uniform Commercial Code Form UCC-3 termination statements as the Administrative Agent may reasonably request.

 

(g)   UCC Searches. The Administrative Agent shall have received (i) the UCC Searches, all dated reasonably close to the Effective Date, in the discretion of the Administrative Agent and in form and substance satisfactory to the Administrative Agent, and (ii) evidence reasonably satisfactory to the Administrative Agent that the Liens indicated by the financing statements (or similar documents) in such UCC Searches are permitted by Section 7.2 or have been released.

 

(h)   Priority; Security Interest. The Collateral and Borrowing Base Properties shall be free and clear of all Liens, except Liens permitted by Section 7.2. All filings, notices, recordings and other action necessary to perfect the Liens in the Collateral shall have been made, given or accomplished or arrangements for the completion thereof satisfactory to the Administrative Agent and its counsel shall have been made and all filing fees and other expenses related to such actions either have been paid in full or arrangements have been made for their payment in full which are satisfactory to the Administrative Agent.

 

  

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(i)   Approvals and Consents. The Administrative Agent shall have received a certificate of an Authorized Officer of Borrower that there are no Governmental Approvals and third party consents and approvals necessary or advisable in connection with the Transactions.

 

(j)   Insurance. The Administrative Agent and the Lenders shall have received certificates from Borrower’s insurers certifying (i) compliance with all of the insurance required by Section 5.7 and by the Security Documents and (ii) that such insurance is in full force and effect as of the Effective Date.

 

(k)   Reserve Report. The Administrative Agent and the Lenders shall have received and shall be satisfied with the contents, results and scope of the Reserve Report with an effective date of March 31, 2011 prepared by Borrower.

 

(l)   Hedging Agreements. The Administrative Agent shall have received a list of any Hedging Agreements currently in existence with respect to Borrower or any of its Restricted Subsidiaries.

 

(m)   Financial Statements. The Administrative Agent shall have received or been provided access via filings with the Commission on EDGAR to the financial statements described in Section 3.4 hereof.

 

(n)   Effectiveness Notice. The Administrative Agent shall have received the Effectiveness Notice.

 

(o)   No Material Adverse Effect; Litigation. The Administrative Agent shall have received a certificate, signed by an Authorized Officer of Borrower, stating that (i) no event or condition has occurred since December 31, 2010, which could reasonably be expected to have a Material Adverse Effect on the Transactions and (ii) no litigation, arbitration, governmental proceeding, dispute or administrative or other proceeding shall be pending or, to the knowledge of Borrower, threatened against Borrower or any of its respective Subsidiaries which could reasonably be expected to have a Material Adverse Effect or which purports to affect the legality, validity or enforceability of this Agreement or any other Loan Document, except as previously disclosed to Lenders.

 

(p)   Other Documents. The Administrative Agent shall have received such other legal opinions, information, approvals, instruments and documents as the Administrative Agent or its counsel may have reasonably requested.

 

(q)   Satisfactory Legal Form. All documents executed or submitted pursuant hereto by and on behalf of Borrower or any other Loan Party shall be in form and substance reasonably satisfactory to the Administrative Agent and its counsel. The Administrative Agent shall notify Borrower, the other Agents and the Lenders of the Effective Date, and such notice shall be conclusive and binding. Notwithstanding the foregoing, the obligations of (a) the Lenders to (i) amend and restate the Existing Credit Facility and (ii) make Loans and (b) any Issuing Bank to issue Letters of Credit hereunder shall not become effective unless each of the foregoing conditions is satisfied (or waived pursuant to 0) at or prior to 3:00 p.m., New York City time, on July 15, 2011 (and, in the event such conditions are not so satisfied or waived, the Commitments shall terminate at such time).

 

  

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SECTION 4.3.   Each Credit Event. The obligation of each Lender to make a Loan on the occasion of any Borrowing, and of the Is suing Banks to issue, amend, renew or extend any Letter of Credit, is subject to receipt of the request therefor in accordance herewith and to the satisfaction of the following conditions:

 

(a)   Representations and Warranties. At the time of and immediately after giving effect to such Borrowing or the issuance, amendment, renewal or extension of such Letter of Credit, as applicable, the representations and warranties of each Loan Party set forth in the Loan Documents to which it is a party shall be true and correct on and as of such date after giving effect to such funding and to the intended use thereof in all material respects as if made on and as of such date (or, if stated to have been made expressly as of an earlier date, were true and correct in all material respects as of such date).

 

(b)   No Defaults. At the time of and immediately after giving effect to such Borrowing or the issuance, amendment, renewal or extension of such Letter of Credit, as applicable, no Default shall have occurred and be continuing and Borrower shall be in compliance with the financial covenants set forth in Article VI.

 

(c)   No Material Adverse Effect. At the time of and immediately after giving effect to such Borrowing or the issuance, amendment, renewal or extension of such Letter of Credit, no event or events shall have occurred which individually or in the aggregate could reasonably be expected to have a Material Adverse Effect.

 

(d)   Borrowing Request. The Administrative Agent shall have received a Borrowing Request for any Borrowing. Each Borrowing and each issuance, amendment, renewal or extension of a Letter of Credit shall be deemed to constitute a representation and warranty by Borrower on the date thereof as to the matters specified in Sections 4.3(a) and 4.3(b) of this Section.

 

ARTICLE V.

Affirmative Covenants

 

Borrower agrees with the Administrative Agent, the other Agents, any Issuing Bank and each Lender that, until the Commitments have expired or been terminated and Obligations shall have been paid and performed in full and all Letters of Credit shall have expired or terminated and all LC Disbursements shall have been reimbursed, Borrower will perform the obligations set forth in this Article.

 

  

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SECTION 5.1.   Financial Reporting; Notices and Other Information. Borrower will furnish, or will cause to be furnished, to each Lender and the Administrative Agent the following financial statements, reports, and information:

 

(a)   Within 20 days after such financials are initially required to be filed with the Commission, a copy of Borrower’s audited annual report for the applicable fiscal year, including therein a consolidated balance sheet and related statements of operations, stockholders’ equity and cash flows as of the end of and for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all reported on by Ernst & Young LLP or other independent public accountants of recognized national standing (without a “going concern” or like qualification or exception and without any qualification or exception as to the scope of such audit) to the effect that such consolidated financial statements present fairly in all material respects the financial condition and results of operations of Borrower and its consolidated Restricted Subsidiaries on a consolidated basis in accordance with GAAP consistently applied;

 

(b)   Within 20 days after such financials are initially required to be filed with the Commission, commencing with the fiscal quarter ending September 30, 2011, Borrower’s consolidated balance sheet and related statements of operations, stockholders’ equity and cash flows as of the end of and for the applicable fiscal quarter and the then-elapsed portion of the fiscal year, setting forth in each case in comparative form the figures for the corresponding period or periods of (or, in the case of the balance sheet, as of the end of) the previous fiscal year, all certified by an Authorized Officer of Borrower as presenting fairly in all material respects the financial condition and results of operations of Borrower and its consolidated Restricted Subsidiaries on a consolidated basis in accordance with GAAP consistently applied, subject to normal year-end audit adjustments and the absence of footnotes;

 

(c)   Concurrently with any delivery of financial statements under Section 5.1(a) or Section 5.1(b) above, a compliance certificate, in substantially the form of Exhibit C or any other form approved by the Administrative Agent, executed by an Authorized Officer of Borrower (i) certifying as to whether a Default has occurred and, if a Default has occurred, specifying the details thereof and any action taken or proposed to be taken with respect thereto, (ii) setting forth reasonably detailed calculations demonstrating compliance with Article VI, and (iii) stating whether any change in GAAP or in the application thereof has occurred since the date of the audited financial statements referred to in Section 3.4 and, if any such change has occurred, specifying the effect of such change on the financial statements accompanying such certificate;

 

(d)   Promptly after the sending or filing thereof, copies of all material public filings, reports and communications from Borrower, and all reports, proxy statements and registration statements which Borrower or any of its Subsidiaries files with the Commission or any national securities exchange;

 

(e)   By March 15th of each year, a Reserve Report prepared by an Approved Engineer or by Borrower and audited by an Approved Engineer (the “Independent Reserve Report”), and by September 15th of each year, a Reserve Report prepared by Borrower (subject to the proviso contained in the first sentence of Section 2.7(c)), utilizing the customary discount rates and price deck of the Administrative Agent and in form and substance acceptable to the Administrative Agent (the “Internal Reserve Report”);

 

  

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(f)   [Intentionally omitted];

 

(g)   Within thirty (30) days after the end of each calendar quarter, a certificate specifying any sales, transfer, assignments or other dispositions of Property of Borrower or any of its Restricted Subsidiaries governed by Sections 7.5(d), 7.5(e), 7.5(f) or 7.5(g) occurring during such calendar quarter, executed on behalf of Borrower by an Authorized Officer; and

 

(h)   Promptly following any request therefor, such other information regarding the operations, business affairs and financial condition of Borrower or any Restricted Subsidiary, including, without limitation, any requested Internal Reserve Report, or compliance with the terms of this Agreement, as the Administrative Agent or any Lender may reasonably request.

 

(i)   Documents required to be delivered pursuant to this Section 5.1 may be delivered electronically and shall be deemed to have been so delivered on the date (i) on which Borrower posts such documents, or provides a link thereto, on its website (located on the date hereof at www.forestoil.com) or (ii) on which such documents are posted on Borrower’s behalf on the website of the United States Securities and Exchange Commission or on IntraLinks or another relevant website, if any, to which each Lender and the Administrative Agent have access (whether a commercial third-party website or whether sponsored by the Administrative Agent); provided that, Borrower shall notify the Administrative Agent of the posting of any such documents and the Administrative Agent shall in turn give the Lenders notice of such posting; and provided further that, if requested by the Administrative Agent, the Compliance Certificate to be delivered under Section 5.1(c) shall also be delivered in a tangible, physical version or in .pdf format.

 

SECTION 5.2.   Notice of Material Events.

 

(a)    Promptly, and in any event within three (3) Business Days of Borrower or any of its Restricted Subsidiaries becoming aware of the following events, Borrower will furnish to the Administrative Agent and each Lender written notice of the following:

 

(i)   the occurrence of any Default;

 

(ii)   an announcement by Moody’s or S&P of a change in (A) the Issuer Rating or (B) any other rating of Borrower or any of its Subsidiaries;

 

(iii)   the issuance, or any proposed issuance, of Senior Notes by Borrower or any of its Restricted Subsidiaries; and

 

(iv)   any sales, transfer, assignments or other dispositions of Property of Borrower or any of its Restricted Subsidiaries governed by Sections 7.5(d), 7.5(e), 7.5(f) (but only if such transaction involves the sale of assets plus the economic loss of unwinding any related Hedging Agreement have a cumulative value in excess of five percent (5%) of the lesser of (A) the Borrowing Base, if in effect, and (B) the Commitments) or Section 7.5(g);

 

  

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(b)    Promptly, and in any event within thirty (30) days of Borrower or any of its Restricted Subsidiaries becoming aware of the following events, Borrower will furnish to the Administrative Agent and each Lender written notice of the following:

 

(i)   (A) the filing or commencement of any action, suit or proceeding by or before any arbitrator or Governmental Authority against or affecting Borrower or any of its Restricted Subsidiaries thereof or (B) the occurrence of any adverse development with respect to any action, suit or proceeding previously disclosed to the Administrative Agent or the Lenders pursuant to this Agreement, in each case if such action, suit, proceeding or development could reasonably be expected to result in a Material Adverse Effect;

 

(ii)   the occurrence of any ERISA Event that, alone or together with any other ERISA Events that have occurred for which liability remains outstanding, could reasonably be expected to result in liability of Borrower and its Restricted Subsidiaries in an aggregate amount which could reasonably be expected to have a Material Adverse Effect;

 

(iii)   any and all enforcement, cleanup, removal or other governmental or regulatory actions instituted, completed or threatened or other environmental claims against Borrower or any of their Restricted Subsidiaries or any of their Properties pursuant to any applicable Environmental Laws which, if adversely determined, could reasonably be expected to have a Material Adverse Effect;

 

(iv)   any default under one or more Hedging Agreements which results in an obligation of Borrower or any of its Restricted Subsidiaries to make one or more payments in an aggregate amount in excess of $25,000,000; and

 

(v)   any other development that results in, or could reasonably be expected to result in, a Material Adverse Effect.

 

(c)    Each notice delivered under this Section shall be accompanied by a statement of an Authorized Officer of Borrower setting forth the details of the event or development requiring such notice and any action taken or proposed to be taken with respect thereto.

 

SECTION 5.3.   Information Regarding Collateral. Borrower will furnish to the Administrative Agent promptly, and in any event within thirty (30) days upon becoming aware of the following changes, written notice of any change (a) in Borrower’s or any Restricted Subsidiary’s corporate name or in any trade name used to identify Borrower or such Restricted Subsidiary in the conduct of its business or in the ownership of any of its Properties, (b) in the location of Borrower’s or any Restricted Subsidiary’s chief executive office or its principal place of business, (c) in Borrower’s or any Restricted Subsidiary’s state of incorporation or formation, (d) in Borrower’s or any Restricted Subsidiary’s identity or corporate structure, and (e) in any Loan Party’s organizational identification number or any other such similar number identifying such Loan Party.

 

SECTION 5.4.   Existence; Conduct of Business. Borrower will, and will cause each of its Restricted Subsidiaries to, do or cause to be done all things necessary to preserve, renew and keep in full force and effect (a) its legal existence and (b) the rights, licenses, permits, privileges, franchises, patents, copyrights, trademarks and trade names material to the conduct of its business, except where the failure to so preserve, renew or keep in full force and effect such rights, licenses, permits, privileges, franchises, patents, copyrights, trademarks or trade names could not reasonably be expected to result in a Material Adverse Effect.

 

  

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SECTION 5.5.   Payment of Obligations. Borrower will, and will cause each of its Restricted Subsidiaries to, pay its obligations, including liabilities for Taxes, before the same shall become delinquent or in default, except where (a) the validity or amount thereof is being contested in good faith by appropriate proceedings, (b) Borrower or such Restricted Subsidiary has set aside on its books adequate reserves with respect thereto in accordance with GAAP, (c) such contest effectively suspends collection of the contested obligation and the enforcement of any Lien securing such obligation, and (d) the failure to make payment pending such contest could not reasonably be expected to result in a Material Adverse Effect.

 

SECTION 5.6.   Maintenance of Properties. Borrower will, and will cause each of its Restricted Subsidiaries to, keep, preserve, protect and maintain all Properties material to the conduct of its business in good repair, working order and condition, and make necessary and proper repairs, renewals and replacements so that its business, and the respective businesses of its Restricted Subsidiaries, carried on in connection therewith may be properly conducted at all times in accordance with standard industry practices unless the (i) Borrower or the respective Restricted Subsidiary determines in good faith that the continued maintenance of any of its Properties is no longer economically desirable or (ii) the failure to so keep, preserve, protect and maintain such Properties or the failure to make such repairs, renewals or replacements could not reasonably be expected to result in a Material Adverse Effect. In particular, Borrower will, and will cause each of its Restricted Subsidiaries to, operate or cause to be operated its Oil and Gas Properties as a reasonable and prudent operator.

 

SECTION 5.7.   Insurance. Borrower will, and will cause each of its Restricted Subsidiaries to, maintain, with financially sound and reputable insurance companies insurance in such amounts and against such risks as are customarily maintained by companies of established repute engaged in the same or similar businesses operating in the same or similar locations. The Administrative Agent, on behalf of the Lenders, will be named as sole loss payee and additional insured, as appropriate, with respect to such insurance. Borrower will furnish to the Lenders, upon request of the Administrative Agent, information in reasonable detail as to the insurance so maintained.

 

SECTION 5.8.   Casualty and Condemnation. Borrower (a) will furnish to the Administrative Agent and the Lenders written notice promptly, and in any event within three (3) Business Days of the occurrence, of any Casualty Event to any Collateral or the commencement of any action or proceeding for the taking of any material portion of the Collateral or any part thereof or interest therein under power of eminent domain or by condemnation or similar proceeding and (b) will ensure that the Net Proceeds of any such event (whether in the form of insurance proceeds, condemnation awards or otherwise) are collected and applied in accordance with the applicable provisions of the Loan Documents.

 

  

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SECTION 5.9.   Books and Records; Inspection and Audit Rights. Borrower will, and will cause each of its Subsidiaries to, keep proper books of record and account in which full, true and correct entries are made of all dealings and transactions in relation to its business and activities. Borrower will, and will cause each of its Restricted Subsidiaries to, permit any representatives or agents designated by the Administrative Agent or any Lender (including any consultants, accountants, lawyers and appraisers), upon reasonable prior notice and at the reasonable cost and expense of Borrower, to visit and inspect its Properties, including, without limitation, the Oil and Gas Properties, to examine and make extracts from its books and records, and to discuss its affairs, finances and condition with its officers and independent accountants, all at such reasonable times and as often as reasonably requested.

 

SECTION 5.10.   Compliance with Laws. Borrower will, and will cause each of its Subsidiaries to, comply with all Governmental Rules applicable to it or its property, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

 

SECTION 5.11.   Use of Proceeds and Letters of Credit. Borrower will, and will cause each Subsidiary to, use the proceeds of the Loans for Borrower’s and its Subsidiaries’ general corporate purposes in the ordinary course of business, including without limitation for working capital, non-hostile acquisitions and development of Oil and Gas Properties. No part of the proceeds of any Loan will be used, whether directly or indirectly, for any purpose that entails a violation of any of the regulations of the Board, including Regulation U. Letters of Credit will be issued only to support normal and customary oil and gas operations undertaken by Borrower or any of its Subsidiaries in the ordinary course of its business.

 

SECTION 5.12.   Additional Subsidiaries. If any additional Subsidiary of Borrower is formed or acquired after the Effective Date, Borrower will notify the Administrative Agent and the Lenders thereof and whether such Subsidiary is an Unrestricted Subsidiary or a Restricted Subsidiary. If any Restricted Subsidiary as of the date of its formation, its acquisition or at any time thereafter has a total asset value in excess of $35,000,000 (or its equivalent in other currencies) and has incurred Indebtedness or Guaranteed Indebtedness in excess of $5,000,000 (or its equivalent in other currencies) in favor of any Person other than a Loan Party, then Borrower will notify the Administrative Agent and the Lenders thereof and cause such Subsidiary (unless such Subsidiary is a Foreign Subsidiary) to (a) execute a Subsidiary Guaranty within 30 days after such Subsidiary is formed or acquired or it is determined to have the requisite total asset value and Indebtedness owed to third parties and (b) if the Issuer Rating of Borrower issued by both S&P and Moody’s is equal to or lower than “BB+” or “Ba1,” respectively, (i) execute a Mortgage (to the extent necessary to comply with Section 5.15) for the ratable benefit of each Lender (other than any such Lender having notified the Administrative Agent that it may not legally benefit from same) and promptly take such actions to create and perfect Liens on such Subsidiary’s assets to secure the Obligations as the Administrative Agent shall reasonably request, (ii) pledge or cause to be pledged all Equity Interests in such Restricted Subsidiary pursuant to a Pledge Agreement within 30 days after such Subsidiary is formed or acquired (except that, if such Subsidiary is a Foreign Subsidiary, Equity Interests of such Subsidiary to be pledged pursuant to such Pledge Agreement may be limited to 65% of the total combined voting power of all classes of voting Equity Interests of such Subsidiary) and (iii) cause any and all such Persons (except Borrower) pledging such Equity Interests pursuant to a Pledge Agreement to execute a Subsidiary Guaranty but only if such Person has not heretofore executed a Subsidiary Guaranty.

 

  

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SECTION 5.13.   Unrestricted Subsidiaries. Borrower:

 

(a)   will cause the management, business and affairs of each of Borrower and its Restricted Subsidiaries to be conducted in such a manner (including, without limitation, by keeping separate books of account, furnishing separate financial statements of Unrestricted Subsidiaries to creditors and potential creditors thereof and by not permitting any Property of Borrower and its respective Subsidiaries to be commingled) so that each Unrestricted Subsidiary that is a corporation will be treated as a corporate entity separate and distinct from Borrower and the Restricted Subsidiaries;

 

(b)   except as permitted by Section 7.1(a)(iv), will not, and will not permit any of the Restricted Subsidiaries to, incur, assume, Guarantee or be or become liable for any Indebtedness of any of the Unrestricted Subsidiaries; and

 

(c)   will not permit any Unrestricted Subsidiary to hold any Equity Interest in, or any Indebtedness of, any Restricted Subsidiary.

 

SECTION 5.14.   Environmental Matters.

 

(a)   Borrower will, and will cause each of its Restricted Subsidiaries to, comply in all material respects with all Environmental Laws now or hereafter applicable to Borrower or its Restricted Subsidiaries, and shall obtain, at or prior to the time required by applicable Environmental Laws, all environmental, health and safety permits, licenses and other authorizations necessary for its operations and maintain such authorizations in full force and effect, except to the extent failure to comply with Environmental Laws or have, maintain or comply with any such permit, license or authorization could not reasonably be expected to have a Material Adverse Effect.

 

(b)   Borrower will, and will cause each of its Restricted Subsidiaries to, promptly furnish to the Administrative Agent all requests for information, notices of claim, demand letters, and other notifications, received by Borrower or its Restricted Subsidiaries, to the effect that, in connection with its ownership or use of its Properties or the conduct of its business, it may be potentially responsible with respect to any investigation or clean-up of Hazardous Material at any location, except to the extent any such investigation or clean-up could not reasonably be expected to have a Material Adverse Effect.

 

SECTION 5.15.   Further Assurances.

 

(a)    Borrower will, and will cause each other Loan Party to, execute any and all further documents, financing statements, agreements and instruments, and take all such further actions (including the filing and recording of financing statements, fixture filings, mortgages, deeds of trust and other documents), which may be required under any applicable law, or which the Administrative Agent or the Majority Lenders may reasonably request, to effect the transactions contemplated by the Loan Documents or to grant, preserve, protect or perfect the Liens created or intended to be created by the Security Documents or the validity or priority of any such Lien, all at the expense of the Loan Parties. Borrower also agrees to provide to the Administrative Agent, from time to time upon reasonable request of the Administrative Agent, information which is in the possession of Borrower or its Restricted Subsidiaries or otherwise reasonably obtainable by any of them, reasonably satisfactory to the Administrative Agent as to the perfection and priority of the Liens created or intended to be created by the Security Documents. The Security Documents shall remain in effect at all times unless otherwise released pursuant to the terms of this Agreement; provided, however, that if at any time (i) Borrower’s Issuer Rating issued by either S&P or Moody’s is “BBB-” or “Baa3,” respectively, or higher (provided that there is not at such time a difference between such ratings of more than one (1) ratings level) and (ii) Borrower is in compliance on a pro forma basis with loan availability, the financial covenants set forth in Article VI herein and all other terms and provisions of this Agreement and the other Loan Documents and no pro forma Borrowing Base Deficiency shall exist, then upon written request of Borrower to the Administrative Agent (the “UnsecuredElection”), the Administrative Agent shall use reasonable efforts to promptly (A) release all of the Collateral from the Liens of the Security Documents and (B) release each Loan Party from its Subsidiary Guaranty and its Guaranty; provided, further, that after such release of any or all Loan Parties under the Security Documents, (x) the Borrowing Base shall be redetermined as of such time in accordance with Section 2.7(d), and (y) if Borrower’s Is suer Rating subsequently falls such that the Issuer Rating issued by both S&P and Moody’s is “BB+” and “Ba1,” respectively, or lower, then Borrower will, and will cause each other Loan Party to, re-execute and re-deliver to the Administrative Agent any and all Security Documents that are required to be delivered pursuant to the terms and provisions of this Agreement.

 

  

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(b)   Borrower hereby authorizes the Administrative Agent and the Lenders to file one or more financing or continuation statements, and amendments thereto, relative to all or any part of the Collateral without the signature of Borrower or any other Loan Party where permitted by law. A carbon, photographic or other reproduction of the Security Documents or any financing statement covering the Collateral or any part thereof shall be sufficient as a financing statement where permitted by law. The Administrative Agent will promptly send Borrower any financing or continuation statements or amendments thereto it files without the signature of Borrower or any other Loan Party and the Administrative Agent will promptly send Borrower the filing or recordation information with respect thereto.

 

(c)   If at any time the Administrative Agent shall have received currently effective, duly executed Loan Documents encumbering Oil and Gas Properties of Borrower and its Restricted Subsidiaries constituting less than 75% of the Present Value of Oil and Gas Properties of Borrower and its Restricted Subsidiaries, then Borrower will notify the Administrative Agent and the Lenders thereof and will, and/or will cause its Restricted Subsidiaries to, execute and deliver to the Administrative Agent for the ratable benefit of each Lender (other than any such Lender having notified the Administrative Agent that it may not legally benefit from a given Mortgage) supplemental or additional Security Documents, in form and substance reasonably satisfactory to the Administrative Agent and its counsel (including, but not limited to, (A) in the case of Restricted Subsidiaries whose Oil and Gas Properties are to be mortgaged pursuant to this Section 5.15(c), (1) a Subsidiary Guaranty, (2) a pledge of all Equity Interests in such Restricted Subsidiary pursuant to a Pledge Agreement and (3) a Mortgage and (B) in the case of Borrower, a Mortgage), covering additional Oil and Gas Properties of Borrower and its Restricted Subsidiaries not then encumbered by any Loan Documents such that the Administrative Agent shall have received currently effective duly-executed Security Documents encumbering Oil and Gas Properties of Borrower and its Restricted Subsidiaries constituting 75% or more of the Present Value of Oil and Gas Properties of Borrower and its Restricted Subsidiaries; provided, however, that in the event of a failure to comply with the terms and provisions of this 0, Borrower will, and/or will cause its Restricted Subsidiaries to, cure such default within 90 days following the occurrence thereof.

 

  

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ARTICLE VI.

Financial Covenants

 

Borrower agrees with the Administrative Agent, the other Agents, any Issuing Bank, and each Lender that, until the Commitments have expired or been terminated and Obligations shall have been paid and performed in full and all Letters of Credit shall have expired or terminated and all LC Disbursements shall have been reimbursed, Borrower will perform the obligations set forth in this Article.

 

SECTION 6.1.   Ratio of Total Debt to EBITDA. Borrower will not permit its ratio of Total Debt outstanding to EBITDA (calculated for the preceding four consecutive fiscal quarter period then most recently ended for which financial statements are available) to be greater than 4.50 to 1.0 at any time.

 

ARTICLE VII.

Negative Covenants

 

Borrower agrees with the Administrative Agent, the other Agents, any Issuing Bank, and each Lender that, until the Commitments have expired or been terminated and Obligations shall have been paid and performed in full and all Letters of Credit shall have expired or terminated and all LC Disbursements shall have been reimbursed, Borrower will perform the obligations set forth in this Article.

 

SECTION 7.1.   Indebtedness; Certain Equity Securities.

 

(a)    Borrower will not, and will not permit any Restricted Subsidiary to, create, incur, assume or permit to exist any Indebtedness, except:

 

(i)   Indebtedness created under the Loan Documents;

 

(ii)   Senior Notes in an aggregate principal amount not to exceed, after giving effect to any repayment of Indebtedness which occurs concurrently with the issuance of such Senior Notes, at any one time $2,500,000,000;

 

(iii)   Indebtedness of Borrower to any Restricted Subsidiary and of any Restricted Subsidiary to Borrower or any other Restricted Subsidiary that is subordinated to the Obligations (other than Hedging Obligations) in form and substance reasonably satisfactory to the Administrative Agent;

 

(iv)   Guarantees by Borrower of Indebtedness of any Subsidiary and by any Subsidiary of Indebtedness of Borrower or any other Subsidiary, in each case existing as of the date hereof and set forth in Schedule 7.1 (a)(iv)(A); and (B) other Guarantees by Borrower of Indebtedness of any Subsidiary and by any Subsidiary of Indebtedness of Borrower or any other Subsidiary; provided that with respect to clause (B), the Guarantees by Borrower or any other Loan Party of Indebtedness of any Unrestricted Subsidiary shall not exceed at any time $35,000,000 in the aggregate and shall be subject to Section 7.4;

 

  

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(v)   Indebtedness of any Person that becomes a Restricted Subsidiary after the Effective Date; provided that (A) such Indebtedness exists at the time such Person becomes a Restricted Subsidiary and is not created in contemplation of or in connection with such Person becoming a Restricted Subsidiary and (B) the aggregate principal amount of Indebtedness permitted by this Section 7.1(a)(v) and Section 7.1(a)(xi) shall not exceed $100,000,000 at any time outstanding;

 

(vi)   Indebtedness of Borrower and its Restricted Subsidiaries secured by Liens permitted by Section 7.2(e) up to but not exceeding $35,000,000 at any one time outstanding;

 

(vii)   Capital Lease Obligations and Indebtedness relating to Approved Sale and Leaseback transactions of Borrower and its Restricted Subsidiaries up to but not exceeding $165,000,000 at any one time outstanding;

 

(viii)   [intentionally omitted];

 

(ix)   Indebtedness consisting of performance, bid and customs bonds, letters of credit, statutory obligations, surety and appeal bonds and other obligations of a like nature incurred in the ordinary course of businesses in connection with new, renewed or extended charter or leases of rigs entered into after the Effective Date, and (ii) Indebtedness incurred in the ordinary course of business with respect to insurance premium financing for insurance being acquired by Borrower or any Subsidiary under customary terms and conditions;

 

(x)   until the Spin-Off Date, any Indebtedness, including a Guarantee by Borrower, relating to the Lone Pine Credit Agreement; and

 

(xi)   other Indebtedness of Borrower and its Restricted Subsidiaries in an aggregate principal amount not exceeding $100,000,000 at any time outstanding.

 

(b)   Borrower will not, and will not permit any Restricted Subsidiary to, issue any Preferred Equity Interest.

 

(c)   Borrower will not permit any of the Unrestricted Subsidiaries to create, incur or suffer to exist any Indebtedness except:

 

(i)   Non-Recourse Debt in an aggregate principal amount not to exceed $500,000,000 at any time outstanding;

 

(ii)   letter of credit or bank guarantee reimbursement obligations of such Unrestricted Subsidiary in an amount not to exceed $35,000,000 in the aggregate at any one time outstanding, provided that stated principal amount of all such reimbursement obligations so Guaranteed shall be considered Investments and be subject to the aggregate limitation on Investments in Unrestricted Subsidiaries imposed under Section 7.4(h); and

 

  

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(iii)   until the Spin-Off Date, any Indebtedness relating to the Lone Pine Credit Agreement.

 

SECTION 7.2.   Liens. Borrower will not, and will not permit any Restricted Subsidiary to, create, incur, assume or permit to exist any Lien on any Property or asset now owned or hereafter acquired by it, or assign or sell any income or revenues (including accounts receivable) or rights in respect of any thereof, except:

 

(a)   Liens created under the Loan Documents;

 

(b)   Permitted Encumbrances;

 

(c)   any Lien on any Property or asset of Borrower or any Restricted Subsidiary existing on the Effective Date and set forth in Schedule 7.2; provided that (i) such Lien shall not apply to any other Property or asset of Borrower or any Restricted Subsidiary and (ii) such Lien shall secure only those obligations which it secures on the Effective Date;

 

(d)   any Lien existing on any Property or asset prior to the acquisition thereof by Borrower or any Restricted Subsidiary or existing on any Property or asset of any Person that becomes a Restricted Subsidiary after the Effective Date prior to the time such Person becomes a Restricted Subsidiary; provided that (i) such Lien is not created in contemplation of or in connection with such acquisition or such Person becoming a Restricted Subsidiary, as the case may be, (ii) such Lien shall not apply to any other Property or assets of Borrower or any Restricted Subsidiary, and (iii) such Lien shall secure only those obligations which it secures on the date of such acquisition or the date such Person becomes a Restricted Subsidiary, as the case may be;

 

(e)   any Liens on assets acquired, constructed or improved by Borrower or any Restricted Subsidiary; provided that (i) such Liens secure Indebtedness permitted by Section 7.1(a)(v) or Section 7.1(a)(vi), (ii) such Liens and the Indebtedness secured thereby are incurred prior to or within 90 days after such acquisition or the completion of such construction or improvement, (iii) the Indebtedness secured thereby does not exceed 80% of the cost of acquiring, constructing or improving such fixed or capital assets, and (iv) such Liens shall not apply to any other Property of Borrower or any of its Restricted Subsidiaries;

 

(f)   any Liens for or arising under farm-in, farm-out, joint operating, pooling or unitization agreements, area of mutual interest agreements, processing agreements or agreements entered into by Borrower and its Restricted Subsidiaries in the ordinary course of business and which Borrower or such Restricted Subsidiary determines in good faith to be necessary for or advantageous to the economic development of their Properties;

 

(g)   additional Liens upon real and/or personal Property created after the date hereof, provided that the aggregate Indebtedness secured thereby and incurred on and after the date hereof shall not exceed $35,000,000 in the aggregate at any one time outstanding;

 

  

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(h)   any Liens created pursuant to any Hedging Agreement (i) with any Lender or any Affiliate of such Lender, or (ii) with any other Person, provided that the aggregate value of the obligation secured by all such Liens permitted by this clause (ii) shall not exceed $50,000,000 in the aggregate at any one time outstanding and no such Liens shall extend to any Hydrocarbon Interests;

 

(i)   Liens to secure Capital Lease Obligations or Approved Sale and Leaseback permitted under Section 7.1(a)(vii); provided that such Liens attach only to Property subject of such Capital Lease Obligation or sale and leaseback transaction and the proceeds of such Property;

 

(j)   Liens securing obligations of a Subsidiary of Borrower to Borrower;

 

(k)   [intentionally omitted];

 

(l)   any extension, renewal or replacement of the foregoing, provided that the Liens permitted hereunder shall not be spread to cover any additional Indebtedness or Property (other than a substitution of like Property); and

 

(m)   until the Spin-Off Date, Liens securing the Lone Pine Credit Agreement permitted under Section 7.1(a)(x).

 

SECTION 7.3.    Fundamental Changes.

 

(a)    Borrower will not, and will not permit any Restricted Subsidiary to, merge into or consolidate or amalgamate with any other Person, or permit any other Person to merge into or consolidate or amalgamate with it, or liquidate or dissolve, except that, if at the time thereof and immediately after giving effect thereto no Default shall have occurred and be continuing (i) any Restricted Subsidiary may merge into Borrower in a transaction in which Borrower is the surviving corporation, (ii) any Restricted Subsidiary may merge into any Restricted Subsidiary in a transaction in which the surviving entity is a Restricted Subsidiary and (if any party to such merger is a Loan Party) is a Loan Party, (iii) any Restricted Subsidiary (other than a Loan Party) may liquidate or dissolve if Borrower determines in good faith that such liquidation or dissolution is in the best interests of Borrower and is not materially disadvantageous to the Lenders, and (iv) Borrower or any Restricted Subsidiary may merge or consolidate with any other Person if in the case of a merger or consolidation of Borrower, Borrower is the surviving corporation, and, in any other case, the surviving corporation is a wholly-owned Restricted Subsidiary and such Restricted Subsidiary (x) has complied with the requirements of Section 5.12 and (y) shall have assumed and ratified all obligations of any Restricted Subsidiary involved in such merger pursuant to documentation in form and substance satisfactory to the Administrative Agent.

 

(b)    Borrower will not, and will not permit any of its Subsidiaries to, engage to any material extent in any business other than businesses of the type conducted by Borrower and its Subsidiaries on the date of execution of this Agreement and businesses reasonably related thereto.

 

  

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SECTION 7.4.   Investments, Loans, Advances, Guarantees and Acquisitions. Borrower will not, and will not permit any Restricted Subsidiary to, purchase, hold or acquire (including pursuant to any merger with any Person that was not a Restricted Subsidiary prior to such merger) any Equity Interests in or evidences of Indebtedness or other securities (including any option, warrant or other right to acquire any of the foregoing) of, make or permit to exist any loans or advances to, Guarantee any Indebtedness of, or make or permit to exist any Investment or any other interest in, any other Person, or purchase or otherwise acquire (in one transaction or a series of transactions) any assets of any other Person constituting a business unit, except:

 

(a)   Permitted Investments;

 

(b)   Investments existing on the date of this Agreement and set forth on Schedule 7.4;

 

(c)   Investments by Borrower and its Restricted Subsidiaries in Equity Interests in Restricted Subsidiaries and Indebtedness of Borrower or a Restricted Subsidiary permitted by Section 7.1(a)(iii); provided that (i) the aggregate amount of Investments by Restricted Subsidiaries in and Guarantees by Restricted Subsidiaries of Indebtedness of, Foreign Subsidiaries and other Restricted Subsidiaries relating to Oil and Gas Properties not located within the geographic boundaries of the United States of America (including all Investments existing on the Effective Date) shall not exceed $200,000,000 at any time outstanding, and (ii) any Foreign Subsidiary or any other Restricted Subsidiary owning Oil and Gas Properties not located within the geographic boundaries of the United States of America may make Investments in any of its wholly-owned direct or indirect Restricted Subsidiaries to the extent of the net income of such Foreign Subsidiary or the net income attributable to such Oil and Gas Properties;

 

(d)   one or more substantially contemporaneous Investments in Equity Interests of any Person owning Oil and Gas Properties which, after giving effect to such Investments, will be a Restricted Subsidiary or will be merged into or with a Restricted Subsidiary; provided that (i) as a result of such Investments, such Person becomes a wholly-owned Restricted Subsidiary and has complied with the requirements of Section 5.12, and (ii) no Default would result from such Person becoming a Restricted Subsidiary;

 

(e)   Guarantees constituting Indebtedness permitted by Section 7.1; provided that (i) a Restricted Subsidiary shall not Guarantee any other Indebtedness unless such Restricted Subsidiary also has Guaranteed the Obligations pursuant to a Subsidiary Guaranty delivered pursuant to Article IV on the Effective Date or pursuant to Section 5.12, and (ii) the aggregate principal amount of Indebtedness of Foreign Subsidiaries that is Guaranteed by any Restricted Subsidiary shall be subject to the limitation set forth in Section 7.4(c) above;

 

(f)   Investments received in connection with the bankruptcy or reorganization of, or settlement of delinquent accounts and disputes with, customers and suppliers, in each case in the ordinary course of business;

 

(g)   Investments in Oil and Gas Properties;

 

(h)   (i) Investments in Unrestricted Subsidiaries existing as of the date hereof and set forth in Schedule 7.4, and (ii) other Investments made after the Effective Date in Unrestricted Subsidiaries (including Investments in the form of Guarantees of letters of credit or bank guarantee reimbursement obligations of an Unrestricted Subsidiary in an amount not to exceed $25,000,000 at any one time outstanding) up to but not exceeding $150,000,000 (or the equivalent in other currencies) cumulatively in the aggregate during the term of this Agreement plus the net cash proceeds of any issuance of Equity Interests which is applied simultaneously or substantially simultaneously for an Investment, including, without limitation, Investments in Unrestricted Subsidiaries; provided that any cash dividends received by Borrower or any Restricted Subsidiary from an Unrestricted Subsidiary, up to the amount of the Investments in such Unrestricted Subsidiary, shall reduce pro tanto the aggregate amount of the Investments in such Unrestricted Subsidiary for purposes of calculating compliance with such $150,000,000 limitation;

 

  

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(i)   prior to the Spin-Off Date, Investments made after the Effective Date in Lone Pine in an amount not to exceed $100,000,000; and

 

(j)   additional Investments in an aggregate principal amount not to exceed $50,000,000 at any one time outstanding.

 

SECTION 7.5.   Asset Sales. Borrower will not, and will not permit any Restricted Subsidiary to, sell, transfer, lease or otherwise dispose of any Property or asset, including any Equity Interest owned by it, nor will Borrower permit any of it Restricted Subsidiaries to issue any additional Equity Interest in such Restricted Subsidiary, except:

 

(a)   sales or other dispositions of inventory, used or surplus equipment and Permitted Investments in the ordinary course of business;

 

(b)   sales, transfers and dispositions of Property to Borrower or a Restricted Subsidiary (including the transfer of Oil and Gas Properties into newly created general or limited partnerships or limited liability companies, all of the Equity Interests of which are directly or indirectly owned by Borrower and/or its other Restricted Subsidiaries) or the issuance of any Equity Interest in Borrower or any Restricted Subsidiary to Borrower or any Restricted Subsidiary;

 

(c)   any Hydrocarbons produced or sold in the ordinary course of business;

 

(d)   the sale, transfer or other disposition in one or more transactions of the Properties listed on Schedule 7.5;

 

(e)   the sale, transfer or other disposition of Equity Interests in Unrestricted Subsidiaries;

 

(f)   the sale, transfer or other disposition in one or more transactions of Property (other than Equity Interests in Restricted Subsidiaries) not constituting Borrowing Base Properties; provided that the aggregate value of such Property so sold, transferred or disposed of during any six (6) month period does not exceed $100,000,000;

 

(g)   the sale, transfer or other disposition in one or more transactions of Property constituting either Equity Interests in Restricted Subsidiaries or any Oil and Gas Properties that are given value in the calculation of Present Value or the Borrowing Base, as applicable, including, without limitation, the sale of any Production Payments; provided that if the aggregate fair market value of (i) such Oil and Gas Property so sold, transferred or disposed of plus (ii) the economic loss of unwinding any related Hedging Agreement during the period since the most recent redetermination of the Borrowing Base shall exceed 10% of the amount of the then current Borrowing Base, then the Borrowing Base shall be reduced by an amount equal to Loan Value assigned such Oil and Gas Property in the most recently prepared Reserve Reports (or if no such Loan Value was assigned, by an amount to be agreed upon by Borrower and the Borrowing Base Required Lenders, all acting reasonably); and

 

  

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(h)   the sale of the Rigs pursuant to any Approved Sale and Leaseback permitted by Section 7.1(a)(vii).

 

SECTION 7.6.   Sale and Leaseback Transactions. Except to the extent permitted by Section 7.1 and Section 7.2, Borrower will not, and will not permit any Loan Party to, enter into any arrangement, directly or indirectly, whereby it shall sell or transfer any Property, real or personal, used or useful in its business, whether now owned or hereinafter acquired, and thereafter rent or lease such Property or other Property that it intends to use for substantially the same purpose or purposes as the Property sold or transferred.

 

SECTION 7.7.   Hedging Agreements.

 

(a)   At no time shall Borrower and its Restricted Subsidiaries have (i) Hedging Agreements rolling on a five-year basis relating to crude oil or natural gas liquids in place with respect to more than (i) 75% during the first three years, (ii) 65% during the fourth year, and (iii) 60% during the fifth year, of such rolling five-year basis, of reasonably anticipated (as of the date when entered into) crude oil or natural gas liquids Hydrocarbon production net of royalties from the “total proved oil and gas reserves” (as defined in the standards and guidelines of the Commission) or (ii) Hedging Agreements rolling on a five-year basis relating to natural gas in place with respect to more than (i) 75% during the first three years, (ii) 65% during the fourth year, and (iii) 60% during the fifth year, of such rolling five-year basis, of reasonably anticipated (as of the date when entered into) natural gas Hydrocarbon production net of royalties from the “total proved oil and gas reserves” (as defined in the standards and guidelines of the Commission), in either case which are attributable to the Hydrocarbon Interests of Borrower and its Restricted Subsidiaries as set forth in the most recently delivered Reserve Report.

 

(b)   Borrower will not, and will not permit any Loan Party to, enter into any Hedging Agreement, other than Hedging Agreements entered into in the ordinary course of business to hedge or mitigate risks to which Borrower or any Restricted Subsidiary is exposed in the conduct of its business or the management of its liabilities.

 

SECTION 7.8.   Restricted Payments; Certain Payments of Indebtedness. Borrower will not, and will not permit any Restricted Subsidiary to, declare or make, or agree to pay or make, directly or indirectly, any Restricted Payment, or incur any obligation (contingent or otherwise) to do so, except that:

 

(a)   any Restricted Subsidiary may pay dividends to Borrower or any Restricted Subsidiary; and

 

  

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(b)   Borrower may make Restricted Payments provided that (A) such Restricted Payments are in shares of common stock or other Equity Interests of Borrower or (B) if such Restricted Payments are in cash or of Property not constituting Equity Interests, then the aggregate amount of all such dividends shall not exceed (in cash or fair market value of Property) an amount equal to the sum of (1) $50,000,000, plus (2) 50% of the Consolidated Net Income of Borrower and its Restricted Subsidiaries on a consolidated basis for the period commencing December 31, 2010 to and including the last day of the most recently ended fiscal quarter for which financial statements have been delivered under Section 5.1 taken as a single accounting period (provided that in no event shall the amount under this clause (2) be less than $0.00), plus (3) 50% of the net cash proceeds received by Borrower from any sale of Equity Interests after December 31, 2010 (including 50% of the net cash proceeds from the initial public offering of Equity Interests of Lone Pine); and

 

(c)   Borrower may make one or more Restricted Payments of the Equity Interests in Lone Pine.

 

SECTION 7.9.   Transactions with Affiliates. Borrower will not, and will not permit any Restricted Subsidiary to, sell, lease or otherwise transfer any Property or assets to, or purchase, lease or otherwise acquire any Property or assets from, or otherwise engage in any other transactions with, any of its Affiliates, except (a) transactions in the ordinary course of business and that are at prices and on terms and conditions not less favorable to Borrower or such Restricted Subsidiary than could be obtained on an arm’s-length basis from unrelated third parties, (b) transactions between or among Borrower and the Loan Parties not involving any other Affiliate, (c) any Restricted Payment permitted by Section 7.8, (d) any Investment permitted by Section 7.4, and (e) transactions with Lone Pine and its Subsidiaries.

 

SECTION 7.10.   Restrictive Agreements. Borrower will not, and will not permit any Restricted Subsidiary to, directly or indirectly, enter into, incur or permit to exist any agreement or other arrangement that prohibits or restricts (a) the ability of Borrower or any Restricted Subsidiary to create, incur or permit to exist any Lien in favor of the Administrative Agent for the benefit of the Lenders upon any of its Property, or (b) the ability of any Restricted Subsidiary to make Restricted Payments to Borrower or any other Restricted Subsidiary or to Guarantee Indebtedness of Borrower or any other Restricted Subsidiary; provided that (i) the foregoing shall not apply to restrictions and conditions imposed by law or by any Loan Document or any Senior Notes Document, (ii) the foregoing shall not apply to restrictions and conditions existing on the date of this Agreement identified on Schedule 7.10 (but shall apply to any extension or renewal of, or any amendment or modification expanding the scope of, any such restriction or condition), (iii) the foregoing shall not apply to customary restrictions and conditions contained in agreements relating to the sale of a Restricted Subsidiary pending such sale, provided such restrictions and conditions apply only to the Restricted Subsidiary that is to be sold and such sale is permitted hereunder, (iv) clause (a) of the foregoing shall not apply to restrictions or conditions imposed by any agreement relating to secured Indebtedness or other obligations permitted by this Agreement if such restrictions or conditions apply only to the Property or assets securing such Indebtedness or other obligation, and (v) clause (a) of the foregoing shall not apply to customary provisions in leases or other agreements restricting the assignment thereof.

 

  

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SECTION 7.11.   No Action to Affect Security Documents. Except for transactions expressly permitted hereby, Borrower shall not, and shall not permit any of its Subsidiaries to, do anything to adversely affect the priority of the Liens created by the Security Documents given or to be given in respect of the Obligations.

 

ARTICLE VIII.

Events of Default

 

SECTION 8.1.   Listing of Events of Default. Each of the following events or occurrences described in this 0 shall constitute an “Event of Default”:

 

(a)   Non-Payment of Obligations. Any Loan Party shall default in the payment or prepayment when due of any principal of any Loan or of any reimbursement obligation with respect to any Letter of Credit; or Borrower shall default in the payment when due of any interest, fee or of any other obligation hereunder or under any other Loan Document and such default continues for a period of three (3) Business Days.

 

(b)   Breach of Warranty. Any representation or warranty of any Loan Party made or deemed to be made hereunder or in any other Loan Document or any other writing or certificate furnished by or on behalf of any Loan Party to the Administrative Agent, any other Agent or any Lender for purposes of or in connection with this Agreement or any such other Loan Document is or shall be false or misleading when made in any material respect.

 

(c)   Non-Performance of Covenants and Obligations. Any Loan Party shall default in the due performance and observance of any of its obligations under Section 5.2, Section 5.11 or Section 5.15, or under Article VI  or Article VII.

 

(d)   Non-Performance of Other Covenants and Obligations. Any Loan Party shall default in the due performance and observance of any other agreement contained herein or in any other Loan Document, and such default shall continue unremedied for a period of 30 days after notice thereof shall have been given to Borrower by the Administrative Agent or the Majority Lenders.

 

(e)   Default on Other Indebtedness. Any Loan Party shall default in the payment when due of any principal of or interest on any of its other Indebtedness aggregating $50,000,000 or more, or in the payment when due of $50,000,000 or more in the aggregate under one or more Hedging Agreements; or any event specified in any note, agreement, indenture or other document evidencing or relating to any such Indebtedness shall occur if the effect of such event is to cause, or (with the giving of any notice or the lapse of time or both) to permit the holder or holders of such Indebtedness (or a trustee or agent on behalf of such holder or holders) to cause, such Indebtedness to become due, or to be prepaid in full (whether by redemption, purchase, offer to purchase or otherwise), prior to its stated maturity.

 

(f)   Plans. Any of the following events shall occur with respect to any Plan: (i) the institution of any steps by Borrower, any ERISA Affiliate or any other Person to terminate a Plan if, as a result of such termination, Borrower or any ERISA Affiliate could reasonably expect to incur a liability or obligation to such Plan which could reasonably be expected to have a Material Adverse Effect; or (ii) a contribution failure occurs with respect to any Plan sufficient to give rise to a Lien under Section 302(f) of ERISA, to the extent such action could reasonably be expected to have a Material Adverse Effect.

 

  

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(g)   Bankruptcy and Insolvency. Any Loan Party shall (i) generally fail to pay, or admit in writing its inability or unwillingness to generally pay, debts as they become due; (ii) apply for, consent to, or acquiesce in, the appointment of a trustee, receiver, receiver and manager, sequestrator or other custodian for any Loan Party, or any substantial part of the property of any thereof, or make a general assignment for the benefit of creditors; (iii) in the absence of such application, consent or acquiescence, permit or suffer to exist the appointment of a trustee, receiver, receiver and manager, sequestrator or other custodian for any Loan Party, or for a substantial part of the property of any thereof, and such trustee, receiver, receiver and manager, sequestrator or other custodian shall not be discharged or stayed within 60 days, provided that each Loan Party hereby expressly authorizes the Administrative Agent to appear in any court conducting any relevant proceeding during such 60-day period to preserve, protect and defend the rights of the Lenders under the Loan Documents; (iv) permit or suffer to exist the commencement of any bankruptcy, reorganization, debt arrangement or other case or proceeding under any bankruptcy or insolvency law, or any dissolution, winding up or liquidation proceeding, in respect of any Loan Party, and, if any such case or proceeding is not commenced by such Loan Party, such case or proceeding shall be consented to or acquiesced in by such Loan Party or shall result in the entry of an order for relief or shall remain for 60 days undismissed or unstayed, provided that each Loan Party hereby expressly authorizes the Administrative Agent to appear in any court conducting any such case or proceeding during such 60-day period to preserve, protect and defend the rights of the Lenders under the Loan Documents; or (v) take any corporate or partnership action authorizing any of the foregoing.

 

(h)   Judgments. One or more judgments or orders for the payment of money in excess of $50,000,000 in the aggregate (exclusive of amounts fully covered by valid and collectible insurance in respect thereof subject to customary deductibles or fully covered by an indemnity with respect thereto reasonably acceptable to the Majority Lenders) shall be rendered against any Loan Party and either (i) enforcement proceedings shall have been commenced by any creditor upon such judgment or order, or (ii) such judgment shall have become final and non-appealable and shall have remained outstanding for a period of 60 consecutive days.

 

(i)   Change in Control. Any Person or group of Persons (within the meaning of Section 13 or 14 of the Exchange Act) shall acquire beneficial ownership (within the meaning of Rule 1 3d-3 promulgated pursuant to the Exchange Act) of 33-1/3% or more of the outstanding shares of common stock of Borrower.

 

(j)   Failure of Liens. The Liens created by the Security Documents shall at any time not constitute valid and perfected Liens on the collateral intended to be covered thereby (to the extent perfection by filing, registration, recordation or possession is required) in favor of the Administrative Agent or, except for expiration in accordance with its terms and as set forth in Section 5.15(a), any of the Security Documents shall for whatever reason be terminated or cease to be in full force and effect, or the enforceability thereof shall be contested by any Loan Party.

 

SECTION 8.2.   Action if Bankruptcy. If any Event of Default described in Section 8.1(g) shall occur, the Commitments (if not theretofore terminated) shall automatically terminate and the outstanding principal amount of all outstanding Loans and all other Obligations hereunder shall automatically be and become immediately due and payable, without demand, protest or presentment or notice of any kind, all of which are hereby expressly waived by Borrower and its Subsidiaries. Without limiting the foregoing, the Agents and the Lenders shall be entitled to exercise any and all other remedies available to them under the Loan Documents and applicable law.

 

  

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SECTION 8.3.   Action if Other Event of Default. If any Event of Default (other than any Event of Default described in Section 8.1(g)) shall occur for any reason, whether voluntary or involuntary, and be continuing, the Majority Lenders, may, by notice to Borrower declare (a) the Commitments (if not theretofore terminated) to be terminated and/or (b) all of the outstanding principal amount of the Loans and all other Obligations hereunder to be due and payable, whereupon the Commitments shall terminate and the full unpaid amount of such Loans and other Obligations shall be and become immediately due and payable, without demand, protest or presentment or notice of any kind, all of which are hereby waived by Borrower and its Subsidiaries. Without limiting the foregoing, the Agents and the Lenders shall be entitled to exercise any and all other remedies available to them under the Loan Documents and applicable law.

 

ARTICLE IX.

Agents

 

Each of the Lenders, the Is suing Banks and the other Agents hereby irrevocably appoints JPMorgan Chase Bank, N.A. as the Administrative Agent, BNP Paribas and Wells Fargo Bank, N.A., as the Co-Syndication Agents, and Bank of America, N.A., The Bank of Nova Scotia, Credit Suisse AG, Cayman Islands Branch, Deutsche Bank Securities Inc., and Toronto Dominion (Texas) LLC, as the Co-Documentation Agents, and authorizes each such Agent to take such actions on its behalf and to exercise such powers as are delegated to such Agent by the terms of the Loan Documents, together with such actions and powers as are reasonably incidental thereto; provided, however, that none of the Co-Syndication Agents or Co-Documentation Agents shall have or be deemed to have any liability hereunder or any duties or obligations under the Loan Documents.

 

Any bank serving as an Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not an Agent, and such bank and its Affiliates may accept deposits from, lend money to and generally engage in any kind of business with Borrower or any Subsidiary or other Affiliate thereof as if it were not an Agent hereunder.

 

None of the Agents shall have any duties or obligations except those expressly set forth in the Loan Documents. Without limiting the generality of the foregoing, (a) the Agents shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing, (b) each Agent shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated by the Loan Documents that such Agent is required to exercise following its receipt of written instructions from the Majority Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 10.2), and (c) except as expressly set forth in the Loan Documents, the Agents shall not have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to Borrower or any of its Subsidiaries that is communicated to or obtained by the bank serving as such Agent or any of its Related Parties in any capacity. Each Agent shall not be liable for any action taken or not taken by it with the consent or at the request of the Majority Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 10.2) or in the absence of its own gross negligence or willful misconduct; PROVIDED, HOWEVER, THAT IT IS THE INTENTION OF THE PARTIES HERETO THAT EACH OF THE AGENTS BE INDEMNIFIED IN THE CASE OF ITS OWN NEGLIGENCE (OTHER THAN GROSS NEGLIGENCE), REGARDLESS OF WHETHER SUCH NEGLIGENCE IS SOLE OR CONTRIBUTORY, ACTIVE OR PASSIVE, IMPUTED, JOINT OR TECHNICAL. Each Agent shall be deemed not to have knowledge of any Default unless and until written notice thereof is given to such Agent by Borrower or a Lender, and such Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with any Loan Document, (ii) the contents of any certificate, report or other document delivered thereunder or in connection therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth in any Loan Document, (iv) the validity, enforceability, effectiveness or genuineness of any Loan Document or any other agreement, instrument or document, or (v) the satisfaction of any condition set forth in Article IV or elsewhere in any Loan Document, other than to confirm receipt of items expressly required to be delivered to such Agent.

 

  

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The Administrative Agent and the other Agents shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing believed by it to be genuine and to have been signed or sent by the proper Person. The Administrative Agent and the other Agents also may rely upon any statement made to it orally or by telephone and believed by it to be made by the proper Person, and shall not incur any liability for relying thereon. The Administrative Agent and the other Agents may consult with legal counsel (who may be counsel for Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.

 

Any Agent may perform any and all of its duties and exercise its rights and powers by or through any one or more sub-agents appointed by such Agent. Any Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers through their respective Related Parties. The exculpatory provisions of the preceding paragraphs shall apply to any such sub-agent and to the Related Parties of such Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as an Agent.

 

Subject to the appointment and acceptance of a successor Administrative Agent as provided in this paragraph, the Administrative Agent may resign at any time by notifying the Lenders and Borrower. Upon any such resignation, the Majority Lenders shall have the right, in consultation with Borrower, to appoint a successor. If no successor shall have been so appointed by the Majority Lenders and shall have accepted such appointment within 30 days after the retiring Administrative Agent gives notice of its resignation, then the retiring Administrative Agent may, on behalf of the Lenders and the Is suing Banks, appoint a successor Administrative Agent which shall be a bank with an office in New York, New York, or an Affiliate of any such bank. Upon the acceptance of its appointment as Administrative Agent hereunder by a successor, such successor shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent, and the retiring Administrative Agent shall be discharged from its duties and obligations hereunder (other than its obligations under Section 10.17). The fees payable by Borrower to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between Borrower and such successor. After the Administrative Agent’s resignation hereunder, the provisions of this Article and Section 10.3 shall continue in effect for the benefit of such retiring Administrative Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while it was acting as Administrative Agent.

 

  

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Each Lender acknowledges that it has, independently and without reliance upon any Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon any Agent or any other Lender and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder.

 

ARTICLE X.

Miscellaneous

 

SECTION 10.1.   Notices. Except in the case of notices and other communications expressly permitted to be given by telephone, all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopy, as follows:

 

(a)    if to Borrower, to:

 

Forest Oil Corporation

707 17th Street, Suite 3600

Denver, Colorado 80202

Attention: Treasurer

Telephone: 303-812-1432

Facsimile: 303-812-1510

 

with a copy to:

 

Forest Oil Corporation

707 17th Street, Suite 3600

Denver, Colorado 80202

Attention: General Counsel

Telephone: 303-812-1701

Facsimile: 303-812-1510

 

  

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(b)   if to the Administrative Agent, to:

 

JPMorgan Chase Bank, N.A.

10 South Dearborn, Floor 07

Chicago, IL 60603 -2003

Attention: Margaret Seweryn

Telephone: 312-732-7976

Facsimile: 888-292-9533

 

with a copy to:

 

JPMorgan Chase Bank, N.A.

Oil & Gas Corporate Banking

2200 Ross Avenue, 3rd Floor

Dallas, TX 75201

Attention: Cathy Johann

Telephone: 214-965-3233

Facsimile: 214-965-3280

 

and, with respect to non-Borrowing related matters, with a copy to:

 

JPMorgan Chase Bank, N.A.

712 Main Street, 12th Floor

Houston, TX 77002

Attention: Ryan Fuessel

Telephone: 713-216-6291

Facsimile: 713-216- 7794

 

(c)   if to either Co-Syndication Agent, either Co-Documentation Agent or any other Lender, to it at its address (or telecopy number) provided to the Administrative Agent and Borrower or as set forth in its Administrative Questionnaire.

 

(d)   if to any Lender, to it at its address (or telecopy number) provided to the Administrative Agent and Borrower or as set forth in its “Administrative Questionnaire” as defined in this Agreement.

 

  

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Any party hereto may change its address or telecopy number for notices and other communications hereunder by notice to the other parties hereto. All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given on the date of receipt.

 

SECTION 10.2.   Waivers; Amendments.

 

(a)    No failure or delay by the Administrative Agent, any Issuing Bank or any Lender in exercising any right or power hereunder or under any other Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Administrative Agent, the Is suing Banks and the Lenders hereunder and under the other Loan Documents are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of any Loan Document or consent to any departure by any Loan Party therefrom shall in any event be effective unless the same shall be permitted by Section 10.2(b), and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of a Loan or issuance of a Letter of Credit shall not be construed as a waiver of any Default, regardless of whether the Administrative Agent, any Lender or any Issuing Bank may have had notice or knowledge of such Default at the time.

 

(b)    Neither this Agreement nor any of the Loan Documents nor any provision hereof or thereof may be waived, amended or modified except, in the case of this Agreement, pursuant to an agreement or agreements in writing entered into by Borrower and the Majority Lenders or by Borrower and the Administrative Agent with the consent of the Majority Lenders, provided that no such agreement shall (i) increase the Commitment of any Lender without the written consent of such Lender, (ii) reduce, or otherwise release Borrower from its obligation to pay, the principal amount of any Loan or LC Disbursement or reduce the rate of interest thereon, or reduce any fees payable hereunder, without the written consent of each Lender affected thereby, (iii) postpone the scheduled date of payment of the principal amount of any Loan or LC Disbursement, or any interest thereon, or any fees payable hereunder, or reduce the amount of, waive or excuse any such payment, or postpone the scheduled date of expiration of any Commitment, without the written consent of each Lender adversely affected thereby, (iv) change Section 2.18(b) or Section 2.18(c) in a manner that would alter the pro rata sharing of payments required thereby, without the written consent of each Lender adversely affected thereby, (v) change any of the provisions of this Section 10.2, Section 2.7 (unless a lesser vote is otherwise required pursuant to this Section 10.2), Section 2.10 (unless a lesser vote is otherwise required pursuant to this Section 10.2), or the definitions of “Majority Lenders” or “Borrowing Base Required Lenders” or “Borrowing Base Increase Required Lenders” or any other provision of any Loan Document specifying the number or percentage of Lenders required to determine or redetermine the Borrowing Base, or required to waive, amend or modify any rights thereunder or make any determination or grant any consent thereunder, without the written consent of each Lender, or (vi) except as expressly provided herein or in the Security Documents, release all or any part of the Collateral from the Liens of the Security Documents or change the requirements regarding the delivery of Collateral, without the written consent of each Lender; provided, further, that no such agreement shall (1) change any provision regarding when determinations of the Borrowing Base are required pursuant to Section 2.7, (2) postpone or defer scheduled Borrowing Base redeterminations pursuant to Section 2.7, or (3) change any provision regarding remedies for a Borrowing Base Deficiency pursuant to Section 2.10, without the written consent of the Borrowing Base Required Lenders; provided further that no such agreement shall amend, waive, modify or otherwise affect the rights or duties of any Agent or any Is suing Bank without the prior written consent of such Agent or any Issuing Bank, as the case may be; provided further that the Administrative Agent shall have the right to execute and deliver any release of Lien (or other similar instrument) without the consent of any Lender, any Affiliate of a Lender which is a party to a Hedging Agreement or any Person listed on Schedule 10.14 to the extent such release is required to permit Borrower or a Restricted Subsidiary to consummate a transaction permitted by this Agreement or the other Loan Documents; provided further that any Lender or Affiliate of any Lender which is a party to a Hedging Agreement or any Person listed on Schedule 10.14 shall have the right to execute and deliver any amendments, modifications or replacements to such Hedging Agreement to which it is a party without the consent of any Loan Party, any Lender, any Affiliate of a Lender or any Agent.

 

  

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SECTION 10.3.   Expenses; Indemnity; Damage Waiver.

 

(a)   Borrower shall pay (i) all legal, printing, recording, syndication, travel, advertising and other reasonable out-of-pocket expenses incurred by the Agents, the Arranger and their Affiliates, including the reasonable fees, charges and disbursements of counsel for the Agents and the Arranger, in connection with the syndication of the credit facilities provided for herein, the preparation, execution, delivery and administration of this Agreement, the Loan Documents and each other document or instrument relevant to this Agreement or the Loan Documents and any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), (ii) all reasonable out-of-pocket expenses incurred by an Issuing Bank in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder, (iii) the filing, recording, refiling or rerecording of the Mortgages, the Pledge Agreement and the other Security Documents and/or any Uniform Commercial Code financing statements relating thereto and all amendments, supplements and modifications to, and all releases and terminations of, any thereof and any and all other documents or instruments of further assurance required to be filed or recorded or refiled or rerecorded by the terms hereof or of the Mortgages, the Pledge Agreement and the other Security Documents, and (iv) all out-of-pocket expenses incurred by the Agents, any Issuing Bank or any Lender, including the fees, charges and disbursements of any counsel for the Agents, any Issuing Bank or any Lender, in connection with the enforcement or protection of its rights in connection with the Loan Documents, including its rights under this Section, or in connection with the Loans made or Letters of Credit issued hereunder, including all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans or Letters of Credit.

 

(b)   Borrower shall indemnify the Agents, each Issuing Bank, the Arranger and each Lender, and each Related Party of any of the foregoing Persons (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses, including the reasonable out-of-pocket fees, charges and disbursements of any counsel for any Indemnitee, incurred by or asserted against any Indemnitee arising out of, in connection with, or as a result of (i) the execution or delivery of any Loan Document or any other agreement or instrument contemplated hereby, the performance by the parties to the Loan Documents of their respective obligations thereunder or the consummation of the Transactions or any other transactions contemplated hereby, (ii) any Loan or Letter of Credit or the use of the proceeds therefrom (including any refusal by an Is suing Bank to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), (iii) any actual or alleged presence or Release of Hazardous Materials on or from any Mortgaged Property or any other property currently, or to the extent relating to any Borrower or any of its Subsidiaries, formerly, owned or operated by Borrower or any of its Subsidiaries, or any Environmental Liability to the extent related in any way to Borrower or any of its Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory and regardless of whether any Indemnitee is a party thereto; provided that such indemnity and release shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee (IT BEING UNDERSTOOD THAT IT IS THE INTENTION OF THE PARTIES HERETO THAT EACH OF THE INDEMNITEES BE INDEMNIFIED IN THE CASE OF ITS OWN NEGLIGENCE (OTHER THAN GROSS NEGLIGENCE), REGARDLESS OF WHETHER SUCH NEGLIGENCE IS SOLE OR CONTRIBUTORY, ACTIVE OR PASSIVE, IMPUTED, JOINT OR TECHNICAL).

 

  

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(c)   To the extent that Borrower fails to pay any amount required to be paid by Borrower to the Administrative Agent or an Issuing Bank under Section 10.3(a) or Section 10.3(b) of this Section, each Lender severally agrees to pay to the Administrative Agent or such Is suing Bank, as the case may be, such Lender’s Applicable Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount; provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent or such Is suing Bank in its capacity as such.

 

(d)   To the extent permitted by applicable law, Borrower shall not assert, and hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement or any agreement or instrument contemplated hereby, the Transactions, any Loan or Letter of Credit or the use of the proceeds thereof.

 

(e)   All amounts due under this Section shall be payable not later than thirty (30) days after written demand therefor.

 

SECTION 10.4.   Successors and Assigns.

 

(a)   The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby (including any Affiliate of an Issuing Bank that issues any Letter of Credit), except that Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Administrative Agent, each Issuing Bank and each Lender (and any attempted assignment or transfer by Borrower without such consent shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby (including any Affiliate of an Issuing Bank that issues any Letter of Credit) and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent, the Issuing Banks and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

 

  

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(b)   Any Lender may assign to one or more assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it) to any Person who is not a Foreign Lender, is not the Borrower or one of its affiliates or is a natural person; provided that (i) except in the case of an assignment to a Lender or a Lender Affiliate, each of Borrower (unless an Event of Default has occurred and is continuing) and the Administrative Agent (and, in the case of an assignment of all or a portion of a Commitment or any Lender’s obligations in respect of its LC Exposure, the Issuing Banks) must give their prior written consent to such assignment (which consent shall not be unreasonably withheld), (ii) except in the case of an assignment to a Lender or a Lender Affiliate or an assignment of the entire remaining amount of the assigning Lender’s Commitment or Loans, the amount of the Commitment or Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent) shall be in increments of $1,000,000 and not less than $5,000,000 unless each of Borrower (unless an Event of Default has occurred and is continuing) and the Administrative Agent otherwise consent, (iii) each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement, (iv) the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee of $3,500, (v) the assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire, and (vi) after giving effect to any assignment hereunder, the assigning Lender shall have a Commitment of at least $5,000,000 unless each of Borrower and the Administrative Agent otherwise consents; and provided further that any consent of Borrower otherwise required under this paragraph shall not be required if an Event of Default under Section 8.1 has occurred and is continuing. Subject to acceptance and recording thereof pursuant to Section 10.4(d) of this Section, from and after the effective date specified in each Assignment and Assumption, the assignee thereunder shall be a party hereto and to the other Loan Documents and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement and the other Loan Documents (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Section 2.15, Section 2.16, Section 2.17, Section 2.18 and Section 10.3 and be subject to the terms of Section 10.12). Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this paragraph shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with Section 10.4(e). An assignee shall not be entitled to receive any greater payment under Section 2.15, Section 2.16 or Section 2.17 than the applicable Lender would have been entitled to receive with respect to the assignment sold to such assignee, unless the entitlement to a greater payment resulted from a change in any Applicable Law after the assignee became an assignee or the sale of the assignment to such assignee is made with Borrowers’ prior written consent.

 

  

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(c)    The Administrative Agent, acting for this purpose as an agent of Borrower, shall maintain at one of its offices in The City of New York a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitment of, and principal amount of the Loans and LC Disbursements owing to, each Lender pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive, and Borrower, the Administrative Agent, the Is suing Banks and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement and the other Loan Documents, notwithstanding notice to the contrary. The Register shall be available for inspection by Borrower, any Is suing Bank and any Lender, at any reasonable time and from time to time upon reasonable prior notice.

 

(d)   Upon its receipt of a duly completed Assignment and Assumption executed by an assigning Lender and an assignee, the assignee’s completed Administrative Questionnaire (unless the assignee shall already be a Lender hereunder), the processing and recordation fee referred to in Section 10.4(b) and any written consent to such assignment required by Section 10.4(b), the Administrative Agent shall accept such Assignment and Assumption and record the information contained therein in the Register and will provide prompt written notice to Borrower of the effectiveness of such assignment. No assignment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this paragraph.

 

(e)   Any Lender may, without the consent of Borrower, the Administrative Agent or any Issuing Bank, sell participations to one or more banks or other entities (a “Participant”) in all or a portion of such Lender’s rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans owing to it); provided that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, and (iii) Borrower, the Administrative Agent, the Issuing Banks and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce the Loan Documents and to approve any amendment, modification or waiver of any provision of the Loan Documents; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver described in the second proviso to Section 10.2(b) that affects such Participant. Subject to Section 10.4(f), Borrower agrees that each Participant shall be entitled to the benefits (and limitations) of Section 2.15, Section 2.16 and Section 2.17 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to Section 10.4(b). To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 10.8 and Section 10.12 as though it were a Lender, provided such Participant agrees to be subject to Section 2.18(c) as though it were a Lender. Each Lender that sells a participation, acting solely for this purpose as an non-fiduciary agent of Borrower, shall maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant’s interest in the Loans or other obligations under this Agreement (the “Participant Register”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register to any Person (including the identity of any Participant or any information relating to a Participant’s interest in any Commitments, Loans, Letters of Credit or its other obligations under any Loan Document) except to the extent that such disclosure is necessary to establish that such Commitment, Loan, Letter of Credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant Register shall be conclusive, and such Lender, each Loan Party and the Administrative Agent shall treat each person whose name is recorded in the Participant Register pursuant to the terms hereof as the owner of such participation for all purposes of this Agreement, notwithstanding notice to the contrary.

 

  

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(f)   A Participant shall not be entitled to receive any greater payment under Section 2.15, Section 2.16 or Section 2.17 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant. A Participant shall not be entitled to the benefits of Section 2.17 unless Borrower is notified of the participation sold to such Participant and such Participant agrees, for the benefit of Borrower, to comply with Section 2.17(e) as though it were a Lender.

 

(g)    Any Lender may at any time pledge or assign a Lien in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank or, in the case of a Lender organized in a jurisdiction outside of the United States, a comparable Person, and this Section shall not apply to any such pledge or assignment of a security interest; provided that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

 

SECTION 10.5.   Survival. All covenants, agreements, representations and warranties made by the Loan Parties in the Loan Documents and in the certificates or other instruments delivered in connection with or pursuant to this Agreement or any other Loan Document shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of the Loan Documents and the making of any Loans and issuance of any Letters of Credit, regardless of any investigation made by any such other party or on its behalf and notwithstanding that any Agent, any Issuing Bank, the Arranger or any Lender may have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any fee or any other amount payable under this Agreement is outstanding and unpaid or any Letter of Credit is outstanding and so long as the Commitments have not expired or terminated. The provisions of Section 2.15, Section 2.16, Section 2.17, Section 2.18, Section 10.3 and Section 10.12 and Article IX shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment of the Loans, the expiration or termination of the Letters of Credit and the Commitments or the termination of this Agreement or any provision hereof.

 

SECTION 10.6.   Counterparts; Effectiveness. This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. Except as provided in Section 4.1, this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof which, when taken together, bear the signatures of each of the other parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. Delivery of an executed counterpart of a signature page of this Agreement by telecopy shall be effective as delivery of a manually executed counterpart of this Agreement.

 

  

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SECTION 10.7.   Severability. Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.

 

SECTION 10.8.   Right of Setoff. If an Event of Default shall have occurred and be continuing, each of the Agents, the Issuing Banks, the Lenders and their Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other obligations at any time owing by such Lender or Affiliate to or for the credit or the account of Borrower or any of its Restricted Subsidiaries against any and all the obligations of Borrower now or hereafter existing under this Agreement held by such Lender, irrespective of whether or not such Lender shall have made any demand under this Agreement and although such obligations may be unmatured; provided, however, that any such set off and application shall be subject to the provisions of Section 2.18.

 

SECTION 10.9.   GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS.

 

(a)   THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING A CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

 

(b)   BORROWER HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THE SUPREME COURT OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT SHALL AFFECT ANY RIGHT THAT THE AGENTS OR ANY LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AGAINST BORROWER OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.

 

  

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(c)   BORROWER HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT IN ANY COURT REFERRED TO IN SECTION 10.9(B). EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

 

(d)   EACH PARTY TO THIS AGREEMENT IRREVOCABLY CONSENTS TO SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY TO THIS AGREEMENT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.

 

SECTION 10.10.   WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

SECTION 10.11.   Headings. Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.

 

SECTION 10.12.   Confidentiality. Each of the Agents, the Issuing Banks, and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its and its Affiliates’ directors, officers, employees and agents, including accountants, legal counsel, other advisors or to any credit insurance provider relating to the Borrower and the Obligations (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any regulatory or self-regulatory authority, (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other party to this Agreement, (e) in connection with the exercise of any remedies hereunder or any suit, action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement or (ii) any actual or prospective counterparty (or its advisors) to any Hedging Agreement, (g) with the consent of Borrower or (h) to the extent such Information (i) becomes publicly available other than as a result of a breach of this Section by any Person or (ii) becomes available to any Agent, any Issuing Bank or any Lender on a nonconfidential basis from a source other than the Loan Parties. For purposes of this Section, “Information” means all information received from the Loan Parties relating to such Loan Parties or their business, other than any such information that is available to any Agent, any Issuing Bank or any Lender on a nonconfidential basis prior to disclosure by Borrower or any of its Affiliates; provided that, in the case of information received from Borrower after the date of this Agreement, such information is clearly identified at the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.

 

  

-90-

  

 

SECTION 10.13.   Interest Rate Limitation. It is the intention of the parties hereto to conform strictly to applicable interest, usury and criminal laws and, anything herein to the contrary notwithstanding, the obligations of Borrower and the Guarantors to a Lender, any Is suing Bank or any Agent under this Agreement or any Loan Document shall be subject to the limitation that payments of interest shall not be required to the extent that receipt thereof would be contrary to provisions of law applicable to such Lender, such Issuing Bank or Agent limiting rates of interest which may be charged or collected by such Lender, such Issuing Bank or Agent. Accordingly, if the transactions contemplated hereby or thereby would be illegal, unenforceable, usurious or criminal under laws applicable to a Lender, any Issuing Bank or any Agent (including the laws of any jurisdiction whose laws may be mandatorily applicable to such Lender or Agent notwithstanding anything to the contrary in this Agreement or any other Loan Document then, in that event, notwithstanding anything to the contrary in this Agreement or any other Loan Document, it is agreed as follows:

 

(a)   the provisions of this Section shall govern and control;

 

(b)   the aggregate of all consideration which constitutes interest under applicable law that is contracted for, taken, reserved, charged or received under this Agreement or any Loan Document or otherwise in connection with this Agreement or any Loan Document by such Lender, such Issuing Bank or such Agent shall under no circumstances exceed the maximum amount of interest allowed by applicable law (such maximum lawful interest rate, if any, with respect to each Lender, each Issuing Bank and the Agents herein called the “Highest LawfulRate”), and any excess shall be cancelled automatically and if theretofore paid shall be credited to Borrower by such Lender, such Issuing Bank or such Agent (or, if such consideration shall have been paid in full, such excess refunded to Borrower);

 

(c)   all sums paid, or agreed to be paid, to such Lender, such Issuing Bank or such Agent for the use, forbearance and detention of the indebtedness of Borrower to such Lender, such Is suing Bank or such Agent hereunder or under any Loan Document shall, to the extent permitted by laws applicable to such Lender, such Issuing Bank or such Agent, as the case may be, be amortized, prorated, allocated and spread throughout the full term of such indebtedness until payment in full so that the actual rate of interest is uniform throughout the full term thereof;

 

  

-91-

  

 

(d)   if at any time the interest provided pursuant to this Section or any other clause of this Agreement or any other Loan Document, together with any other fees or compensation payable pursuant to this Agreement or any other Loan Document and deemed interest under laws applicable to such Lender, such Issuing Bank or such Agent, exceeds that amount which would have accrued at the Highest Lawful Rate, the amount of interest and any such fees or compensation to accrue to such Lender, such Issuing Bank or such Agent pursuant to this Agreement or such other Loan Document shall be limited, notwithstanding anything to the contrary in this Agreement or any other Loan Document, to that amount which would have accrued at the Highest Lawful Rate, but any subsequent reductions, as applicable, shall not reduce the interest to accrue to such Lender, such Issuing Bank or such Agent pursuant to this Agreement or such other Loan Document below the Highest Lawful Rate until the total amount of interest accrued pursuant to this Agreement or such other Loan Document, as the case may be, and such fees or compensation deemed to be interest equals the amount of interest which would have accrued to such Lender or Agent if a varying rate per annum equal to the interest provided pursuant to any other relevant Section hereof (other than this Section) or thereof, as applicable, had at all times been in effect, plus the amount of fees which would have been received but for the effect of this Section; and

 

(e)    with the intent that the rate of interest herein shall at all times be lawful, and if the receipt of any funds owing hereunder or under any other agreement related hereto (including any of the other Loan Documents) by such Lender, such Issuing Bank or such Agent would cause such Lender to charge Borrower a criminal rate of interest, the Lenders, the Issuing Banks and the Agents agree that they will not require the payment or receipt thereof or a portion thereof which would cause a criminal rate of interest to be charged by such Lender, such Issuing Bank or such Agent, as applicable, and if received such affected Lender, such Issuing Bank or Agent will return such funds to Borrower so that the rate of interest paid by Borrower shall not exceed a criminal rate of interest from the date this Agreement was entered into.

 

SECTION 10.14.   Collateral Matters; Hedging Agreements. The benefit of the Security Documents and of the provisions of this Agreement relating to the Collateral shall also extend to and be available to those “Lenders” (under, and as defined in, the Existing Credit Facility), Lenders or their Affiliates which are counterparties to the Hedging Agreements and the other Persons described on Schedule 10.14 on a pro rata basis in respect of any Hedging Obligations of Borrower or any of its Restricted Subsidiaries (“Hedge Providers”) that are in effect on the Effective Date or are entered into while such Person or its Affiliate is a Lender, irrespective of whether such Person or its Affiliate thereafter is or remains a Lender hereunder; provided that it is the intention of the Lenders that receipt of payment in respect of Hedging Obligations of Borrower and its Restricted Subsidiaries under any Hedging Agreement with a Lender, any Affiliate of a Lender or a Person listed on Schedule 10.14 from realization of any Collateral, shall be subject to the terms of the Security Documents; provided, further, notwithstanding that the Hedge Providers have an interest in the Collateral, such Hedge Providers have no vote in such capacity with respect to exercise of remedies or other matters relating to or impacting the Collateral. Any Person which is not a signatory to this Agreement which is seeking to benefit from this Section 10.14, Section 10.16 or any of the Security Documents acknowledges and agrees that the Administrative Agent has entered into the Security Documents on behalf of such Person, the Agents, Lenders and Affiliates thereof and the other Persons listed on Schedule 10.14 that are parties to a Hedging Agreement, and by their acceptance of the benefits of the Security Documents hereby agrees to be bound by the terms of this Agreement, such Security Documents, acknowledges receipt of copies of the Security Documents and consents to the rights, powers, remedies, indemnities and exculpations given to the Administrative Agent thereunder.

 

  

-92-

  

 

SECTION 10.15.   Arranger; Co-Documentation Agents; Co-Syndication Agents. None of the Persons identified on the facing page or the signature pages of this Agreement as the “Sole Lead Arranger and Bookrunner” or a “Co-Documentation Agent” or a “Co-Syndication Agent” shall have any right, power, obligation, liability, responsibility or duty under this Agreement or any other Loan Document other than, except in the case of the Arranger, those applicable to all Lenders as such. Without limiting the foregoing, none of the Arranger, any Co Documentation Agent or any Co-Syndication Agent shall have or be deemed to have any fiduciary relationship with any Lender or Borrower or any of its Subsidiaries. Borrower and each Lender acknowledges that it has not relied, and will not rely, on any of the Arranger, any Co-Documentation Agent or any Co-Syndication Agent in deciding to enter into this Agreement or in taking or not taking any action hereunder or under the Loan Documents.

 

SECTION 10.16.   Loan Documents. (i) Each Lender on behalf of itself and any Affiliate which is a counterparty to a Hedging Agreement and (ii) any Person listed on Schedule 10.14 which is seeking to benefit from the Security Documents acknowledges and agrees that the Administrative Agent has entered into the Security Documents on behalf of itself, the other Agents, Lenders and Affiliates thereof and the other Persons listed on Schedule 10.14 that are parties to a Hedging Agreement, and each of them (by their signature hereto or acceptance of the benefits of the Security Documents) hereby agrees to be bound by the terms of such Security Documents, acknowledge receipt of copies of such Security Documents and consents to the rights, powers, remedies, indemnities and exculpations given to the Administrative Agent thereunder.

 

SECTION 10.17.   USA PATRIOT Act Notice. Each Lender hereby notifies the Loan Parties that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”), it is required to obtain, verify and record information that identifies the Loan Parties, which information includes the name and address of the Loan Parties and other information that will allow such Lender to identify the Loan Parties in accordance with the Act.

 

SECTION 10.18.   NO ORAL AGREEMENTS. THIS WRITTEN AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF AND THEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.

 

  

-93-

  

 

SECTION 10.19.   Flood Insurance Regulation. Notwithstanding any provision in any Mortgage to the contrary, in no event is any Building (as defined in the applicable Flood Insurance Regulation) or Manufactured (Mobile) Home (as defined in the applicable Flood Insurance Regulation) located in a special flood hazard area included in the definition of “Mortgaged Property” in any Security Document and no such Building or Manufactured (Mobile) Home shall be encumbered by any such Security Document.

 

SECTION 10.20.   Refinancing and Replacement of Existing Credit Facility. This Agreement and the obligations and indebtedness incurred by Borrower hereunder are, and are intended to be, a replacement and refinancing, but not a novation, of the obligations and indebtedness of Borrower under the Existing Credit Facility.

 

[SIGNATURES BEGIN ON FOLLOWING PAGE]

 

 

 

 

 

  

-94-

  

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective Authorized Officers as of the day and year first above written.

 

 

	  	
FOREST OIL CORPORATION

	  	  	  	  
	  	
By:

	  	
/s/ Michael N. Kennedy

	  	  	  	
Michael N. Kennedy,

	  	  	  	
Executive Vice President and Chief

	  	  	  	
Financial Officer

 

 

[SIGNATURE PAGE TO CREDIT AGREEMENT]

S-1

  

 

 

	  	

JPMORGAN CHASE BANK, N.A., as

	 	Administrative Agent and as a Lender
	 	 	 	 
	  	  	  	  
	  	
By:

	  	
/s/ Ryan A. Fuessel

	  	  	  	

Ryan A. Fuessel,

	  	  	  	
Executive Director

 

 

[SIGNATURE PAGE TO CREDIT AGREEMENT]

S-2

  

 

 

	  	

BNP PARIBAS, as a Co-Syndication Agent and as

	 	a Lender
	 	 	 	 
	  	  	  	  
	  	
By:

	  	

/s/ Courtney Kubesch

	  	Name:  	  	

Courtney Kubesch

	  	Title:  	  	
Vice President

	 	 	 	 
	 	By:	 	/s/ Edward Pak
	 	Name: 	 	Edward Pak
	 	Title: 	 	Director

 

 

[SIGNATURE PAGE TO CREDIT AGREEMENT]

S-3

  

 

 

	  	

WELLS FARGO BANK, N.A., as a Co-

	 	
Syndication Agent and as a Lender

	 	 	 	 
	  	  	  	  
	  	
By:

	  	
/s/ Joseph Rottinghaus

	  	  	  	

Joseph Rottinghaus,

	  	  	  	
Assistant Vice President

 

 

[SIGNATURE PAGE TO CREDIT AGREEMENT]

S-4

  

 

 

	  	

BANK OF AMERICA, N.A., as a Co-

	 	

Documentation Agent and as a Lender

	 	 	 	 
	  	  	  	  
	  	
By:

	  	
/s/ Ronald E. McKaig

	  	Name:	  	

Ronald E. McKaig

	  	Title:  	  	
Managing Director

 

 

[SIGNATURE PAGE TO CREDIT AGREEMENT]

S-5

  

 

 

	  	

THE BANK OF NOVA SCOTIA, as a Co-

	 	

Documentation Agent and as a Lender

	 	 	 	 
	  	  	  	  
	  	
By:

	  	
/s/ John Frazell

	  	Name:	  	

John Frazell

	  	Title:  	  	
Director

 

 

[SIGNATURE PAGE TO CREDIT AGREEMENT]

S-6

  

 

 

	  	

CREDIT SUISSE AG, CAYMAN ISLANDS

	 	
BRANCH, as a Co-Documentation Agent and as a

	 	Lender
	 	 	 	 
	  	  	  	  
	  	
By:

	  	

/s/ Nupur Kumar

	  	Name:  	  	

Nupur Kumar

	  	Title:  	  	
Vice President

	 	 	 	 
	 	By:	 	/s/ Kevin Buddhew
	 	Name: 	 	
Kevin Buddhew

	 	Title: 	 	Associate

 

 

[SIGNATURE PAGE TO CREDIT AGREEMENT]

S-7

  

 

 

	  	

DEUTSCHE BANK SECURITIES INC., as a

	 	

Co-Documentation Agent

	 	 	 	 
	  	  	  	  
	  	
By:

	  	

/s/ Michael Getz

	  	Name:  	  	

Michael Getz

	  	Title:  	  	
Vice President

	 	 	 	 
	 	By:	 	/s/ Valerie Shapiro
	 	Name: 	 	

Valerie Shapiro

	 	Title: 	 	Director
	 	 	 	 
	 	DEUTSCHE BANK AG NEW YORK
	 	
BRANCH, as a Lender

	 	 	 	 
	 	By:	 	/s/ Marcus M. Tarkington
	 	Name: 	 	Marcus M. Tarkington
	 	Title: 	 	Director
	 	 	 	 
	 	By:	 	/s/ Evelyn Thierry
	 	Name: 	 	Evelyn Thierry
	 	Title:	 	Director

 

 

[SIGNATURE PAGE TO CREDIT AGREEMENT]

S-8

  

 

 

	  	

TORONTO DOMINION (TEXAS) LLC, as a

	 	

Co-Documentation Agent and as a Lender

	 	 	 	 
	  	  	  	  
	  	
By:

	  	
/s/ Debbi L. Brito

	  	Name:	  	

Debbi L. Brito

	  	Title:  	  	
Authorized Signatory

 

 

[SIGNATURE PAGE TO CREDIT AGREEMENT]

S-9

  

 

 

	  	

COMPASS BANK, as a Lender

	 	 	 	 
	  	  	  	  
	  	
By:

	  	
/s/ Greg Determann

	  	 	  	

Greg Determann,

	  	 	  	
Senior Vice President

 

 

[SIGNATURE PAGE TO CREDIT AGREEMENT]

S-10

  

 

 

	  	

BMO HARRIS FINANCING, INC.,

	 	

as a Lender

	 	 	 	 
	  	  	  	  
	  	
By:

	  	
/s/ James V. Ducote

	  	Name:	  	

James V. Ducote

	  	Title:  	  	
Director

 

 

[SIGNATURE PAGE TO CREDIT AGREEMENT]

S-11

  

 

 

	  	

CITIBANK, N.A., as a Lender

	 	 	 	 
	  	  	  	  
	  	
By:

	  	
/s/ Yasantha Gunaratna

	  	Name:	  	

Yasantha Gunaratna

	  	Title:  	  	
Vice President

 

 

[SIGNATURE PAGE TO CREDIT AGREEMENT]

S-12

  

 

 

	  	

U.S. BANK NATIONAL ASSOCIATION,as a

	 	Lender
	 	 	 	 
	  	  	  	  
	  	
By:

	  	
/s/ Daria Mahoney

	  	Name:	  	

Daria Mahoney

	  	Title:  	  	
Vice President

 

 

[SIGNATURE PAGE TO CREDIT AGREEMENT]

S-13

  

 

 

	  	

BARCLAYS BANK PLC,as a Lender

	 	 	 	 
	  	  	  	  
	  	
By:

	  	
/s/ Michael Mozer

	  	Name:	  	

Michael Mozer

	  	Title:  	  	
Vice President

 

 

[SIGNATURE PAGE TO CREDIT AGREEMENT]

S-14

  

 

 

	  	

BRANCH BANKING AND TRUST

	 	COMPANY, as a Lender
	 	 	 	 
	  	  	  	  
	  	
By:

	  	
/s/ David W. Phillips

	  	Name:	  	

David W. Phillips

	  	Title:  	  	
Senior Vice President

 

 

[SIGNATURE PAGE TO CREDIT AGREEMENT]

S-15

  

 

 

	  	

CIBC INC., as a Lender

	 	 	 	 
	  	  	  	  
	  	
By:

	  	

/s/ Trudy W. Nelson

	  	  	  	

Trudy W. Nelson

	  	  	  	
Authorized Signatory

	 	 	 	 
	 	By:	 	/s/ Richard Antl
	 	 	 	

Richard Antl

	 	 	 	
Authorized Signatory

 

 

[SIGNATURE PAGE TO CREDIT AGREEMENT]

S-16

  

 

 

	  	

CRÉDIT AGRICOLE CORPORATION AND

	 	INVESTMENT BANK, as a Lender
	 	 	 	 
	  	  	  	  
	  	
By:

	  	

/s/ Darrell Stanley

	  	Name:	  	

Darrell Stanley

	  	Title:  	  	
Managing Director

	 	 	 	 
	 	By:	 	/s/ Sharada Manne
	 	Name:	 	

Sharada Manne

	 	Title:	 	
Director

 

 

[SIGNATURE PAGE TO CREDIT AGREEMENT]

S-17

  

 

 

	  	

EXPORT DEVELOPMENT CANADA,

	 	as a Lender
	 	 	 	 
	  	  	  	  
	  	
By:

	  	

/s/ Ranya Gabriel

	  	Name:	  	

Ranya Gabriel

	  	Title:  	  	
Senior Associate

	 	 	 	 
	 	By:	 	/s/ Christine De Billy
	 	Name:	 	

Christine De Billy

	 	Title:	 	
Financing Manager

 

 

[SIGNATURE PAGE TO CREDIT AGREEMENT]

S-18

  

 

 

	  	

BANK OF SCOTLAND plc, as a Lender

	 	 	 	 
	  	  	  	  
	  	
By:

	  	
/s/ Julia R. Franklin

	  	 	  	

Julia R. Franklin,

	  	 	  	
Assistant Vice President

 

 

[SIGNATURE PAGE TO CREDIT AGREEMENT]

S-19

  

 

 

	  	

MIZUHO CORPORATE BANK, LTD., as a

	 	Lender
	 	 	 	 
	  	  	  	  
	  	
By:

	  	
/s/ Leon Mo

	  	 	  	

Leon Mo

	  	 	  	
Authorized Signatory

 

 

[SIGNATURE PAGE TO CREDIT AGREEMENT]

S-20

 

 

	  	

ROYAL BANK OF CANADA, as a Lender

	 	 	 	 
	  	  	  	  
	  	
By:

	  	
/s/ Jay Sartain

	  	Name:	  	

Jay Sartain

	  	Title:  	  	
Authorized Signatory

 

 

[SIGNATURE PAGE TO CREDIT AGREEMENT]

S-21

  

 

 

	  	

UNION BANK, as a Lender

	 	 	 	 
	  	  	  	  
	  	
By:

	  	
/s/ Alison White

	  	Name:	  	

Alison White

	  	Title:  	  	
Vice President

 

 

[SIGNATURE PAGE TO CREDIT AGREEMENT]

S-22

  

 

 

	  	

BOKF, NA DBA BANK OF OKLAHOMA, as a

	 	Lender
	 	 	 	 
	  	  	  	  
	  	
By:

	  	
/s/ Benjamin H. Adler

	  	 	  	

Benjamin H. Adler

	  	 	  	
Account Officer

 

 

[SIGNATURE PAGE TO CREDIT AGREEMENT]

S-23

 

EXHIBIT A

 

[Reserved]

 

 

 

 

  

Exhibit A - Page 1

  

 

EXHIBIT B

 

FORM OF LENDER CERTIFICATE

 

________, 201____

 

 

To:          JPMORGAN CHASE BANK, N.A.,

as Administrative Agent

 

10 South Dearborn, Floor 07

Chicago, IL 60603-2003

Attention:  Margaret Seweryn

Facsimile:  888-292-9533

JPMorgan Chase Bank, N.A.

2200 Ross Avenue, 3rd Floor

Dallas, Texas 75201

Attention:        Cathy Johann

Facsimile:         214-965-3280

Borrower, the Administrative Agent and the other Agents and certain Lenders have heretofore entered into a Third Amended and Restated Credit Agreement dated as of June 30, 2011, as amended from time to time (the “Credit Agreement”).  Capitalized terms herein used having the meaning specified in the Credit Agreement.

 

[Language for Existing Lender]

 

[           Please be advised that the undersigned has agreed to increase its Commitment under the Credit Agreement effective __________, 201___ from $________________ to $____________ and (b) that it shall continue to be a party in all respect to the Credit Agreement and the other Loan Documents.]

 

[Language for New Lender]

 

[           Please be advised that the undersigned has agreed (a) to become a Lender under the Credit Agreement effective __________, 201___ with a Commitment of $____________ and (b) that it shall be deemed to be a party in all respect to the Credit Agreement and the other Loan Documents.]

 

	 	Very truly yours,
	 	 
	 	 
	 	By:	 
	 	Name: 	 
	 	Title:	 

 

  

Exhibit B - Page 1

  

Accepted and Agreed:

 

	JPMORGAN CHASE BANK, N.A.,	 
	as Administrative Agent	 
	 	 	 
	By:	 	 
	Name: 	 	 
	Title:	 	 
	 	 	 
	Accepted and Agreed:	 
	 	 	 
	FOREST OIL CORPORATION	 
	 	 	 
	By:	 	 
	Name: 	 	 
	Title:	 	 

 

 

  

Exhibit B - Page 2

  

 

EXHIBIT C

 

FOREST OIL CORPORATION

 

COMPLIANCE CERTIFICATE

 

In connection with that certain Third Amended and Restated Credit Agreement dated as of June 30, 2011 (together with all amendments, if any, from time to time made thereto, the “Credit Agreement”), among Forest Oil Corporation, a New York corporation (the “Borrower”), JPMorgan Chase Bank, N.A., as Administrative Agent (the “Administrative Agent”), and the Lenders and other agents party thereto, the undersigned, the [title of Authorized Officer] of Borrower, does hereby certify, pursuant to Section 5.1(c) of the Credit Agreement, as follows on behalf of Borrower (capitalized terms hereinafter used having the meaning specified in the Credit Agreement):

 

1.           In accordance with Section 5.1(a) or Section 5.1(a) of the Credit Agreement, the consolidated financial statements of Borrower and its consolidated Restricted Subsidiaries as of ________________, 201___, sent to you under separate cover, present fairly in all material respects in accordance with GAAP their financial position and earnings at such date.

 

2.           No condition or event which constitutes a Default or an Event of Default has occurred and is continuing.

 

3.           No change in GAAP or in the application thereof has occurred since the date of the audited financials most recently delivered pursuant to Section 5.1(a) and Section 5.1(a) of the Credit Agreement.

 

4.           Schedule I attached hereto sets forth financial data and computations evidencing Borrower’s compliance with the covenants set forth in Article VI of the Credit Agreement, all of which data and computations are true, complete and correct.  ***[ATTACH SCHEDULE AS TO FINANCIAL COVENANTS]***

 

IN WITNESS WHEREOF, I have hereunto set my hand as of this ______ day of _________________, 201___.

 

 

	 	FOREST OIL CORPORATION
	 	 	 
	 	 	 
	 	By:	 
	 	 	[Authorized Officer of Borrower]

 

 

  

Exhibit C - Page 1

  

 

EXHIBIT D

 

FORM OF ASSIGNMENT AND ASSUMPTION

 

Reference is made to that certain Third Amended and Restated Credit Agreement dated as of June 30, 2011 (together with all amendments, if any, from time to time made thereto, the “Credit Agreement”), among Forest Oil Corporation, a New York corporation (the “Borrower”), JPMorgan Chase Bank, N.A., as Administrative Agent (the “Administrative Agent”), and the Lenders and other agents party thereto.  Terms defined in the Credit Agreement are used herein with the same meanings, receipt of which is acknowledged by the Assignee.  The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Assumption as if set forth herein in full.

 

For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor, subject to and in accordance with the Standard Terms and Conditions contained in Annex 1 hereto and the terms and conditions of Section 10.4 of the Credit Agreement, as of the Effective Date inserted by the Administrative Agent as contemplated below (a) all of the Assignor’s rights and obligations in its capacity as a Lender under the Credit Agreement and every other Loan Document to the extent related to the amount and percentage interest identified below of all of such outstanding rights and obligations of the Assignor under the respective facilities identified below (including, without limitation, any Letters of Credit included in such facilities) and (b) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of the Assignor (in its capacity as a Lender) against any Person, whether known or unknown, arising under or in connection with the Credit Agreement, any other Loan Document and the Transactions, or in any way based on or related to any of the foregoing, including, but not limited to, contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and assigned pursuant to clause (a) above (the rights and obligations sold and assigned pursuant to clauses (a) and (b), collectively, the “Assigned Interest”). Such sale and assignment is without recourse to the Assignor and, except as expressly provided in this Assignment and Assumption, without representation or warranty by the Assignor.

 

THIS ASSIGNMENT AND ASSUMPTION SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

 

  

Exhibit D - Page 1

  

 

 

	Legal Name of Assignor:	 	 	 
	 	 	 	 
	Legal Name of Assignee:	 	 	 
	 	 	[and is a Lender/Lender Affiliate of [identify Lender]]1	 
	 	 	 	 
	Assignee’s Address for Notices:	 	 	 
	 	 	 	 
	Borrower:	 	Forest Oil Corporation, a New York corporation	 

 

Assigned Interest:

 

	
Facility

Assigned2

	
Aggregate Amount of

Commitment/Loans for

all Lenders

	
Principal Amount of

Commitment/Loans

Assigned

	
Percentage Assigned of

Commitment/Loans3

	  	
$

	
$

	
%

	  	
$

	
$

	
%

	  	
$

	
$

	
%

 

 

 

Schedule 10.14 - Page ii

 

1           Select as applicable.

  

2           Fill in the appropriate terminology for the types of facilities under the Credit Agreement that are being assigned under this Assignment (e.g. “Revolving Credit Commitment,” “Term Loan Commitment,” etc.)

  

3           Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans of all Lenders thereunder.

  

Exhibit D - Page 2

  

 

Effective Date: _____________ ___, 201____ [TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]

 

The terms set forth in this Assignment and Assumption are hereby agreed to:

 

 

	 	ASSIGNOR
	 	 
	 	[NAME OF ASSIGNOR]
	 	 	 
	 	By:	 
	 	Name:	 
	 	Title:	 
	 	 	 
	 	ASSIGNEE
	 	 
	 	[NAME OF ASSIGNEE]
	 	 	 
	 	By:	 
	 	Name:	 
	 	Title:	 

 

Consented to and Accepted:

 

	JPMORGAN CHASE BANK, N.A., as	 
	Administrative Agent [and as Issuing Bank]4	 
	 	 	 
	By:	 	 
	Name: 	 	 
	Title:	 	 
	 	 	 
	Consented to:	 
	 	 	 
	FOREST OIL CORPORATION	 
	 	 	 
	By:	 	 
	Name: 	 	 
	Title:	 	 

 

 

 

Schedule 10.14 - Page iii

 

4           Include Issuing Bank’s consent to the extent required by Section 10.4(b)(i) of the Credit Agreement.

  

Exhibit D - Page 3

  

ANNEX 1 to Assignment and Assumption

 

STANDARD TERMS AND CONDITIONS FOR

ASSIGNMENT AND ASSUMPTION

 

1.           Representations and Warranties.

 

1.1           Assignor. The Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any lien, encumbrance or other adverse claim and (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Credit Agreement or any other Loan Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Documents or any Collateral, (iii) the financial condition of Borrower or any of its Subsidiaries or Affiliates, or any other Person obligated with respect to the Credit Agreement or any other Loan Document or (iv) the performance or observance by Borrower or any of its Subsidiaries or Affiliates, or any other Person of any of their respective obligations under the Credit Agreement or any other Loan Document.

 

1.2           Assignee. The Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement, (ii) it meets all requirements under the Credit Agreement with respect to the transactions contemplated hereby (subject to receipt of such consents as may be required under the Credit Agreement), (iii) subject to acceptance and recording hereof pursuant to Section 10.4(d) of the Credit Agreement, from and after the Effective Date, it shall be party to the Credit Agreement and to the other Loan Documents and be bound by the provisions of the Credit Agreement as a Lender thereunder and to the other Loan Documents and, to the extent of the Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it has received a copy of the Credit Agreement, together with copies of the most recent financial statements delivered pursuant to Section 5.1(a) and Section 5.1(a)) thereof, as applicable, and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption and to purchase the Assigned Interest on the basis of which it has made such analysis and decision independently and without reliance on the Administrative Agent or any other Lender, and (v) if it is a Foreign Lender, attached to the Assignment and Assumption is any documentation required to be delivered by it pursuant to the terms of the Credit Agreement, duly completed and executed by the Assignee; and (b) agrees that (i) it will, independently and without reliance on the Administrative Agent, the Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents, and (ii) it will perform in accordance with their terms all of the obligations that by the terms of the Credit Agreement and the other Loan Documents are required to be performed by it as a Lender.

 

2.           Payments. From and after the Effective Date, the Administrative Agent shall make all payments in respect of the Assigned Interest (including payments of principal, interest, fees and other amounts) to the Assignor for amounts that have accrued to but excluding the Effective Date and to the Assignee for amounts that have accrued from and after the Effective Date.

 

Annex 1 to Exhibit D

Page 1

  

 

3.           General Provisions. This Assignment and Assumption shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and permitted assigns.  This Assignment and Assumption may be executed in any number of counterparts, which together shall constitute one instrument.  Delivery of an executed counterpart of a signature page of this Assignment and Assumption by telecopy shall be effective as delivery of a manually executed counterpart of this Assignment and Assumption.

 

 

 

 

Annex 1 to Exhibit D

Page 2

  

 

EXHIBIT E-1

 

FORM OF BORROWING REQUEST

 

 

___________, 201___

 

JPMorgan Chase Bank, N.A.,

  as Administrative Agent

  for the Lenders referred to below

c/o JPMorgan Chase Bank, N.A.

Oil & Gas Corporate Banking

2200 Ross Avenue, 3rd Floor

Dallas, TX 75201

Attention: Cathy Johann

Facsimile:  214-965-3280

 

JPMorgan Chase Bank, N.A.

  as Administrative Agent

  for the Lenders referred to below

c/o JPMorgan Chase Bank, N.A.

10 South Dearborn, Floor  07

Chicago, IL 60603-2003

Attention:       Margaret Seweryn

Telephone:     312-732-7976

Facsimile:        888-292-9533

 

	
  

	
Re:

	
Credit Agreement (hereinafter defined)

 

Dear Sirs:

 

Reference is made to that certain Third Amended and Restated Credit Agreement dated as of June 30, 2011 (together with all amendments, if any, from time to time made thereto, the “Credit Agreement”), among Forest Oil Corporation, a New York corporation (the “Borrower”), JPMorgan Chase Bank, N.A., as Administrative Agent (the “Administrative Agent”), and the Lenders and other agents party thereto.  Terms defined in the Credit Agreement are used herein with the same meanings.  This notice constitutes a Borrowing Request and Borrower hereby requests a Borrowing under the Credit Agreement, and in that connection Borrower specifies the following information with respect to the Borrowing requested hereby:

 

	 	(A)	Principal amount of Borrowing1:	 	 
	 	 	 	 	 
	 	(B) 	Type of Borrowing2:	 	 

 

Schedule 10.14 - Page i

 

1           Not less than $1,000,000 and an integral multiple of $1,000,000 (or aggregate unused balance of the Commitments in the case of an ABR Borrowing).

 

2           Eurodollar Borrowing or ABR Borrowing.

  

Exhibit E-1 - Page 1

  

 

	 	(C)	Effective date (which is a Business Day):	 	 
	 	 	 	 	 
	 	(D) 	Date of maturity (which is a Business Day):	 	 
	 	 	 	 	 
	 	(E)	Interest Period3:	 	 

 

If the Borrowing results in an increase in the aggregate outstanding principal amount of the Loans, Borrower hereby represents and warrants that the conditions specified in Section 4.3(a) and Section 4.3(b) of the Credit Agreement are satisfied.

 

Borrower has caused this Borrowing Request to be executed and delivered by its Authorized Officer this ______ day of ____________________, 201____.

 

	 	Very truly yours,
	 	 
	 	FOREST OIL CORPORATION
	 	 	 
	 	 	 
	 	By:	 
	 	Name:	 
	 	Title: 	 

 

 

 

 

3           If applicable, selected period must comply with the definition of “Interest Period” and end not later than the Maturity Date.

  

Exhibit E-1 - Page 2

  

 

EXHIBIT E-2

 

FORM OF INTEREST ELECTION REQUEST

 

 

________________, 201___

 

JPMorgan Chase Bank, N.A.,

  as Administrative Agent

  for the Lenders referred to below

c/o JPMorgan Chase Bank, N.A.

Oil & Gas Corporate Banking

2200 Ross Avenue, 3rd Floor

Dallas, TX 75201

Attention: Cathy Johann

Facsimile:  214-965-3280

 

JPMorgan Chase Bank, N.A.,

  as Administrative Agent

  for the Lenders referred to below

c/o JPMorgan Chase Bank, N.A.

10 South Dearborn, Floor  07

Chicago, IL 60603-2003

Attention:        Margaret Seweryn

Telephone:      312-732-7976

Facsimile:         888-292-9533

 

	
  

	
Re:

	
Credit Agreement (hereinafter defined)

 

Dear Sirs:

 

Reference is made to that certain Third Amended and Restated Credit Agreement dated as of June 30, 2011 (together with all amendments, if any, from time to time made thereto, the “Credit Agreement”), among Forest Oil Corporation, a New York corporation (the “Borrower”), JPMorgan Chase Bank, N.A., as Administrative Agent (the “Administrative Agent”), and the Lenders and other agents party thereto.  Terms defined in the Credit Agreement are used herein with the same meanings.  This notice constitutes an Interest Election Request and Borrower hereby requests the conversion or continuation of a Borrowing under the Credit Agreement, and in that connection Borrower specifies the following information with respect to the Borrowing to be converted or continued as requested hereby:

 

	 	(A)	Borrowing to which this request applies1:	 	 
	 	 	 	 	 
	 	(B) 	Principal amount of Borrowing to be converted/continued2:	 	 

 

Schedule 10.14 - Page i

 

1           Specify existing Type and last day of current Interest Period.

 

2           Not less than $1,000,000 or an integral multiple of $1,000,000.

  

Exhibit E-2 - Page 1

  

 

	 	(C)	Effective date of election (which is a Business Day):	 	 
	 	 	 	 	 
	 	(D) 	Interest rate basis of resulting Borrowing3:	 	 
	 	 	 	 	 
	 	(E)	Interest Period of resulting Borrowing4:	 	 

 

	 	Very truly yours,
	 	 
	 	FOREST OIL CORPORATION
	 	 	 
	 	 	 
	 	By:	 
	 	Name:	 
	 	Title: 	 

 

 

  

 

3           Eurodollar Borrowing or ABR Borrowing.

 

4           Which must comply with the definition of “Interest Period” and end not later than the Maturity Date.

  

Exhibit E-2 - Page 2

  

 

EXHIBIT F

 

FORM OF SUBSIDIARY GUARANTY

 

[SEE ATTACHED]

 

 

 

 

  

Exhibit F - Page 1

  

 

EXHIBIT G

 

FORM OF AMENDED AND RESTATED PLEDGE AGREEMENT

 

[SEE ATTACHED]

 

 

 

 

  

Exhibit G - Page 1

  

 

EXHIBIT H

 

FORM OF MORTGAGE

 

[SEE ATTACHED]

 

 

 

 

  

Exhibit H - Page 1

  

 

EXHIBIT I - A

 

FORM OF THIRD AMENDMENT TO MORTGAGE (2000)

 

[SEE ATTACHED]

 

 

 

 

  

Exhibit I - A - Page 1

  

EXHIBIT I - B

 

FORM OF SECOND AMENDMENT TO MORTGAGE (2004)

 

[SEE ATTACHED]

 

 

 

 

  

Exhibit I - B - Page 1

  

 

EXHIBIT I - C

 

FORM OF FIRST AMENDMENT TO MORTGAGE (2007)

 

[SEE ATTACHED]

 

 

 

 

  

Exhibit I - C - Page 1

  

 

SCHEDULE 2.1

 

COMMITMENTS

 

	
Lender

	
Commitments

	
Applicable

Percentage

	 	 	 
	
JPMorgan Chase Bank, N.A.

	
$85,000,000

	
5.6667%

	
Bank of America, N.A.

	
$85,000,000

	
5.6667%

	
BNP Paribas

	
$85,000,000

	
5.6667%

	
Credit Suisse AG, Cayman Islands Branch

	
$85,000,000

	
5.6667%

	
Deutsche Bank AG New York Branch

	
$85,000,000

	
5.6667%

	
The Bank of Nova Scotia

	
$85,000,000

	
5.6667%

	
Toronto Dominion (Texas) LLC

	
$85,000,000

	
5.6667%

	
Wells Fargo Bank, N.A.

	
$85,000,000

	
5.6667%

	
Compass Bank

	
$85,000,000

	
5.6667%

	
BMO Harris Financing, Inc.

	
$85,000,000

	
5.6667%

	
Citibank, N.A.

	
$85,000,000

	
5.6667%

	
U.S. Bank National Association

	
$85,000,000

	
5.6667%

	
Barclays Bank PLC

	
$50,000,000

	
3.3333%

	
Branch Banking and Trust

	
$50,000,000

	
3.3333%

	
CIBC Inc.

	
$50,000,000

	
3.3333%

	
Crédit Agricole Corporation and Investment Bank

	
$50,000,000

	
3.3333%

	
Export Development Canada

	
$50,000,000

	
3.3333%

	
Bank of Scotland plc

	
$50,000,000

	
3.3333%

	
Mizuho Corporate Bank, Ltd.

	
$50,000,000

	
3.3333%

	
Royal Bank of Canada

	
$50,000,000

	
3.3333%

	
Union Bank

	
$50,000,000

	
3.3333%

	
BOKF N.A. dba Bank of Oklahoma

	
$30,000,000

	
2.0000%

	  	  	  
	
TOTAL:

	
$1,500,000,000

	
100%

 

 

  

Schedule 2.1 - Page 1

  

 

SCHEDULE 2.4

 

EXISTING LETTERS OF CREDIT

 

 

	  	 	
Expiry

	  	  
	
Amount

	 	
Date

	
ID

	
Beneficiary

	  	 	  	  	  
	
$233,333

	 	
2/3/2012

	
P-353994

	
Chevron U.S.A. Inc.

	
$1,285,000

	 	
6/30/2012

	
5-242012

	
Zurich American Insurance Company

	
$610,579

	 	
3/21/2012

	
L5LS-317324

	
National Union Fire Insurance Co.

	
$2,128,912

	 	  	  	  

The Issuing Bank for all Letters of Credit referenced above is JPMorgan Bank Chase Bank, N.A.

 

  

Schedule 2.4 - Page 1

  

 

SCHEDULE 3.4

 

CONTINGENT LIABILITIES; LONG-TERM COMMITMENTS; UNREALIZED LOSSES

 

 

NONE

 

 

 

 

  

Schedule 3.4 - Page 1

  

 

SCHEDULE 3.6

 

DISCLOSED MATTERS

 

 

NONE

 

 

 

 

  

Schedule 3.6 - Page 1

  

 

SCHEDULE 3.9

 

TAXES

 

 

NONE

 

 

 

 

  

Schedule 3.9 - Page 1

  

 

SCHEDULE 3.12

 

FOREST OIL CORPORATION

RESTRICTED AND UNRESTRICTED SUBSIDIARIES

 

(as of June 30, 2011)

 

 

Restricted Subsidiaries

 

	
 

 

 

Name

	
 

 

Holder of

Ownership Interest

	
 

Percentage

of

Ownership

	
 

Date

Acq’d or

Created

	
 

Chief

Executive

Office

	
 

State/

Country of Incorporation

	
 

Principal

Place of

Business

	
 

Tax ID#/

Canadian

Business

Number

	 	 	 	 	 	 	 	 
	
Forest Oil Permian Corporation

	
Forest Oil Corporation

	
100%

	
12/31/2003

	
Denver

	
Delaware, USA

	
USA

	
75-1362284

	  	  	  	  	  	  	  	  
	
Lantern Drilling Company

	
Forest Oil Permian Corporation

	
100%

	
8/4/2005

	
Denver

	
Delaware, USA

	
USA

	
20-3276156

	  	  	  	  	  	  	  	  
	
Epoch Land Ventures, LLC

	
Forest Oil Corporation

	
100%

	
2/17/2011

	
Denver

	
Delaware, USA

	
USA

	
27-5101817

	  	  	  	  	  	  	  	  
	
Epoch Southwest, LLC

	
Forest Oil Corporation

	
100%

	
3/9/2011

	
Denver

	
Delaware, USA

	
USA

	
27-5459477

 

Continued on next page....

 

  

Schedule 3.12 -- Page 1

  

 

Unrestricted Subsidiaries

 

	
 

 

 

Name

	
 

 

Holder of

Ownership Interest

	
 

Percentage

of

Ownership

	
 

Date

Acq’d or

Created

	
 

Chief

Executive

Office

	
 

State/

Country of

Incorporation

	
 

Principal

Place of

Business

	
 

Tax ID#/

Canadian

Business

Number

 

	
Lone Pine Resources Inc.

	
Forest Oil Corporation

Public

	
82.3%

17.7%

	
9/30/2010

	
Calgary

	
Delaware, USA

	
Calgary

	
27-3779606

	  	  	  	  	  	  	  	  
	
Wiser Oil Delaware, LLC

	
Lone Pine Resources Inc.

	
100%

	
6/30/2004

	
Denver

	
Delaware, USA

	
USA

	
75-2699737

	  	  	  	  	  	  	  	  
	
Wiser Delaware LLC

	
Lone Pine Resources Inc.

Wiser Oil Delaware, LLC

	
99%

1%

	
6/30/2004

	
Denver

	
Delaware, USA

	
USA

	
75-2707365

	  	  	  	  	  	  	  	  
	
Canadian Forest Oil Ltd

	
Lone Pine Resources Inc.

Wiser Oil Delaware, LLC

Wiser Delaware LLC

	
86.56%

11.97%

1.47%

	
1/31/1996

	
Calgary

	
Alberta, Canada

	
Canada

	
88-7429165

	  	  	  	  	  	  	  	  
	
Forest Oil Energy Corporation

	
Canadian Forest Oil Ltd.

	
100%

	
12/8/2008

	
Calgary

	
Alberta, Canada

	
Canada

	
2014415679

	  	  	  	  	  	  	  	  
	
Forcenergy Resources Inc.

	
Forest Oil Corporation

	
100%

	
12/7/2000

	
Denver

	
Texas, USA

	
USA

	
33-0053103

	  	  	  	  	  	  	  	  
	
Forcenergy Onshore Inc.

	
Forcenergy Resources Inc.

	
100%

	
12/7/2000

	
Denver

	
Delaware, USA

	
USA

	
84-0775580

	  	  	  	  	  	  	  	  
	
Forest Oil Netherlands B.V.

	
Forest Oil Corporation

	
100%

	
12/7/2000

	
Netherlands

	
Netherlands

	
Netherlands

	
None

	  	  	  	  	  	  	  	  
	
Forest – CMI S.p.A.

	
Forest Oil Netherlands B.V.

	
100%

	
6/29/1998

	
Denver

	
Italy

	
Italy

	
None

	  	  	  	  	  	  	  	  
	
Forest Oil Mediterranean S.r.l.*

	
Forest – CMI S.p.A.

	
100%

	
2/10/05

	
Denver

	
Italy

	
Italy

	
None

	  	  	  	  	  	  	  	  
	
Green River Electric Power Company

	
Forest Oil Netherlands B.V.

	
100%

	
12/8/2010

	
Cape Town

	
Cape Town,

South Africa

	
South Africa

	
None

 

	
Forest Texas Gathering

Company

	
Forest Oil Corporation

	
100%

	
9/1/2006

	
Denver

	
Delaware, USA

	
USA

	
20-5497895

 

  

Schedule 3.12 -- 2

  

 

	
 

 

 

Name

	
 

 

Holder of

Ownership Interest

	
 

Percentage

of

Ownership

	
 

Date

Acq’d or

Created

	
 

Chief

Executive

Office

	
 

State/

Country of Incorporation

	
 

Principal

Place of

Business

	
 

Tax ID#/

Canadian

Business

Number

 

	
Forest Oil Holdings, LLC

	
Forest Oil Corporation

	
100%

	
5/30/2002

	
Denver

	
Colorado, USA

	
USA

	
48-1266889

	  	  	  	  	  	  	  	  
	
Forest Alaska Holding LLC

	
Forest Oil Corporation

	
100%

	
9/1/2006

	
Denver

	
Delaware, USA

	
USA

	
20-5265729

	  	  	  	  	  	  	  	  
	
Forest Oil International (Thailand) Ltd.

	
Forest Oil Corporation

	
100%

	
12/1/1998

	
Denver

	
Bangkok, Thailand

	
Thailand

	
None

	  	  	  	  	  	  	  	  
	
Forest Exploration International (South Africa) (Proprietary) Limited

	
Forest Oil Corporation

	
100%

	
6/29/1998

	
Cape Town

	
Cape Town,

South Africa

	
South Africa

	
None

 

*In the process of dissolution

 

  

Schedule 3.12 -- 3

  

 

SCHEDULE 3.13

 

INSURANCE

 

 

 

FOREST OIL CORPORATION INSURANCE COVERAGE SUMMARY

	
Policy Period

	
Policy No.

	
Coverage

	
Limits/Amounts

	
Carrier/Premiums

	
3/1/11 – 3/1/12

	
BOG 938 289 8-02

	
General Liability

	
$          750,000              Each Occurrence Limit

$          750,000              Fire Damage Limit (any one Fire)

$          750,000              Personal & Advertising Injury Limit

$            10,000              Medical Expense Limit (any one person)

$         2,000,000            General Aggregate Limit (other than

       Products/Completed Operations)

$         2,000,000            Products/Completed Operations

       Aggregate

 

Deductible/Self-Insured Retention

	
100% Steadfast Insurance

Company

$     176,830.00             Term Premium

$        5,304.90              Colorado

      Surplus Lines

      Tax @ 3%

	
$          250,000              Per Occurrence

	  	  	  	  	  
	
3/1/11 – 3/1/12

	
BAP 938 289 7-02

	
Automobile

Liability

	
$        1,000,000             Combined Single Limit

       Coverage Symbol “1”

Deductible

	
100% Zurich American Insurance

Company

 

$      81,934.00              Term Premium

$         118.00                Assessments

	
$             NIL                 Guaranteed Cost

	  	  	  	  	  
	
3/1/11 – 3/1/12

	
WC 938 289 9-02

	
Worker’s

Compensation /

Employer’s Liability

	
Worker’s Compensation

 

	
100% American Zurich Insurance

Company

 

$     460,355.00             Term Premium

	
$     Statutory

 

Employer’s Liability

	
$               1,000,000Bodily Injury by Accident, each Accident

$               1,000,000Bodily Injury by Disease, each Employee

$               1,000,000Bodily Injury by Disease, Policy Limit

 

Maritime Employer’s Liability

	
$               1,000,000Bodily Injury by Accident, each Accident

$               1,000,000Bodily Injury by Disease, Aggregate

 

Foreign Voluntary Compensation & Employer’s Liability

	
Limits of Liability for Repatriation Expense

 

$             50,000             Each Employee

$           100,000             Each Accident

 

Limits of Liability – Employer’s Liability

$               1,000,000Bodily Injury by Accident, each Accident

$               1,000,000Bodily Injury by Disease, each Employee

$               1,000,000Bodily Injury by Disease, Policy Limit

(NY limit can go no higher for repatriation than $15,000 each

employee/$50,000 each accident.

 

Deductible

	
$          250,000              Each Accident

 

  

Schedule 3.13 -- Page 1

  

 

	
Policy Period

	
Policy No.

	
Coverage

	
Limits/Amounts

	
Carrier/Premiums

	
3/1/11 – 3/1/12

	
GEP 938 299 5-02

	
Foreign Package

	
Section I – International Commercial General Liability

	
100% Zurich American Insurance

Company

 

$     20,500.00                Annual Premium

	
$        1,000,000             Each Occurrence Limit

$        2,000,000             General Aggregate Limit

$        2,000,000             Products/Completed Operations Aggregate

$        1,000,000             Personal & Advertising Injury Limit

$          100,000              Property Damage to Rented or Occupied

       Premises Limit

$           10,000               Medical Expense Limit (any one Person)

 

Section II – Employee Benefits Liability Coverage

$        1,000,000             Each Act, Error or Omission Limit

$        1,000,000             Annual Aggregate Limit

 

Section III – International Automobile Excess/DIC Liability

$        1,000,000             Bodily Injury & Property Damage per Accident

$           10,000               Medical Expense per Accident

 

	  	  	  	
Section IV – Foreign Voluntary Worker’s Compensation & Employer’s

	  
	
Liability

$        1,000,000             Bodily Injury by Accident, each Accident

$        1,000,000             Bodily Injury by Disease, each Employee

$        1,000,000             Bodily Injury by Disease, Policy Limit

$          300,000              Repatriation Expense – Policy Limit

$           50,000               Repatriation Expense – Each Employee Limit

 

Section VII – Property Coverage – Italy

	  	  	  	
$           25,000               Sum Insured – Business Personal Property

 

Deductible

	  
	
$            5,000                Property – All Risk

	  	  	  	  	  
	
3/1/11 – 3/1/12

	
NAN 400 54 66

	
Non-Owned

Aviation Liability

	
$       25,000,000            Combined Bodily Injury & Property Damage

       (including Passengers) per Occurrence

$           10,000               Medical Payments – each passenger

	
100% Catlin Insurance Company,

Inc.

 

$      11,475.00                Annual Premium

	  	  	  	  	  
	
12/1/10 – 12/1/11

	
JHB2M0100074

	
Energy Package

	
Section I

$       15,000,000            (100%) any one Occurrence Combined Single

   Limit in respect of producing, etc. wells insured

   and drilling, deepening, sidetrack, etc. and

   workover wells insured with projected dry hole

   costs and workover, etc. costs (100%) not

   exceeding $3,000,000;

	
100% Lloyds and Certain London

Companies

$1,212,609.00 - Prem. Excl. Can.

$     36,378.27 - Colorado Surplus

	
$       25,000,000            (100%) any one Occurrence Combined Single

       Limit in respect of drilling, deepening, sidetrack, etc.

       and workover wells insured with projected dry hole

       costs and workover, etc. costs (100%) greater than

       $3,000,000 and not exceeding $5,000,000.

 

	
Lines Tax @ 3% on $1,212,609

 

$ 1,248,987.27 Term Premium

 

  

Schedule 3.13 -- Page 2

  

 

	
Policy Period

	
Policy No.

	
Coverage

	
Limits/Amounts

	
Carrier/Premiums

	
Energy Package Continued....

	  	
$        50,000,000           (100%) any one Occurrence Combined Single

       Limit in respect of drilling, deepening, sidetrack,

       etc. and workover wells insured with projected

       dry hole costs and workover, etc. costs (100%)

       greater than $5,000,000.

$         5,000,000            (100%) any one Occurrence in respect of Care,

       Custody and Control.

 

Section II

	  
	
$As per schedule.       Net Values at Inception US$104,634,638.

       Plus 25% in addition for Removal of Debris.

 

Section III

	
$As per schedule.       Net Values at Inception US$96,610,000.

 

Notwithstanding the above limits/values/sums insured, all Sections to

be subject to a Combined Single Limit of US$5,000,000 (for Assured’s

Interest) any one Occurrence and in the aggregate in respect of Named

Windstorms

 

Deductible

	
Section I

US$         2,500,000       (100%) any one Occurrence

US$          Included      above (100%) any one Occurrence in respect of

    Care, Custody and Control.

 

Section II

US$         2,500,000       (100%) any one Occurrence

 

Section III

US$           500,000        (100%) any one Occurrence

 

Notwithstanding any one occurrence retentions above and Highest Applicable Retention Endorsement in General Conditions, Sections I, II and III are subject to an additional US$1,250,000 any one occurrence for Assured’s interest retention in respect of Named Windstorms.

 

  

Schedule 3.13 -- Page 3

  

 

	
Policy Period

	
Policy No.

	
Coverage

	
Limits/Amounts

	
Carrier/Premiums

	
3/1/11 – 3/1/12

	
MAR 584 364 0

	
Marine Program

$5,000,000 Primary

	
Section I – Protection & Indemnity – Excluding Crew

	
100% Zurich North America

 

$62,938.00                     Term Premium

	
$        5,000,000             Any One Accident or Occurrence

 

Section II – Marine Operator’s/Charterer’s Legal Liability

	
$        5,000,000             Any One Accident or Occurrence

 

Deductibles

	
Section I - $250,000 any one accident or occurrence

Section II - $100,000 any one occurrence

	
3/1/11 – 3/1/12

	
UMB-9382952-02

	
Primary $25M

Umbrella

	
$       25,000,000            Per Occurrence

$       25,000,000            General Aggregate

$       25,000,000            Products/Completed Operations Aggregate

 

Deductibles

	
100% Steadfast Insurance

Company

$268,000.00                   Term Premium

$      8,040.00                 Colorado

                                       Surplus Lines

           Tax @ 3%

	
$           10,000               Self-Insured Retention

	
3/1/11 – 3/1/12

	
E111735

	
Umbrella

1st Excess

$75M x $25M

	
$       75,000,000            in respect of Each Loss and in the Aggregate

       EXCESS OF:

$       25,000,000            Each Occurrence

$       25,000,000            General Aggregate

$       25,000,000            Products/Completed Operations Aggregate

$       25,000,000            Each Occurrence in respect of Non-Owned Aviation

       Liability

	
100% Lloyds Syndicates thru

R.K. Harrison London

$ 275,000.00                  Annual Premium

$     8,250.00                  Colorado

           Surplus Lines

           Tax @ 3%

	  	  	  	  	  
	
3/1/11 – 3/1/12

	
E111733

	
Umbrella

2nd Excess

$75M x $100M

	
$       75,000,000            in respect of Each Loss and in the Aggregate

       EXCESS OF:

$       75,000,000            Each Loss and in the annual aggregate

       WHICH IN TURN EXCESS OF:

$       25,000,000            Each Occurrence

$       25,000,000            General Aggregate

$       25,000,000            Products/Completed Operations Aggregate

$       25,000,000            Each Occurrence in respect of Non-Owned Aviation

       Liability

	
100% Lloyds Syndicates thru

R.K. Harrison London

$ 184,537.50                  Annual Premium

$     5,536.13                  Colorado

           Surplus Lines

           Tax @ 3%

	  	  	  	  	  
	
8/7/10 – 8/7/11

	
DOP0034907-01

	
Directors &

Officers (Primary)

	
$       15,000,000            Aggregate Limit of Liability

       EXCESS OF

$        2,000,000             Per Loss Retention

	
100% Arch Insurance Company

$268,000.00                   Annual Premium

	  	  	  	  	  
	
8/7/10 – 8/7/11

	
68012956

	
XS Directors &

Officers

($15M x $15M)

	
$       15,000,000            Aggregate Limit of Liability

       EXCESS OF:

$       15,000,000            Underlying Insurance

	
100% Federal Insurance

Company

$    196,000.00               Annual Premium

	  	  	  	  	  
	
8/7/10 – 8/7/11

	
03-766-66-38

	
XS Directors &

Officers

($5M x $30M)

	
$        5,000,000             Limit of Liability Each Loss

       EXCESS OF:

$       30,000,000            Total Underlying Limit of Liability

	
100% Illinois National Insurance

Company

$    144,000.00               Annual Premium

 

  

Schedule 3.13 -- Page 4

  

 

	
Policy Period

	
Policy No.

	
Coverage

	
Limits/Amounts

	
Carrier/Premiums

	
8/7/10 - 8/7/11

	

719401

	

XS Directors &

Officers

($15M x $45M)

	    $        15,000,000          Aggregate Each Policy Period (including Defense	

100% AXIS Insurance Company

$       122,076.00        Annual Premium

	
                                      Expense)

                                      EXCESS OF:

$        45,000,000          Aggregate Limit of Liability

	
 

 

	
 

	
8/7/10 - 8/7/11

	

34MGU10A22014

	

XS Directors &

Officers

($15M x $60M)

	
 $        15,000,000         Aggregate Each Policy Period (including Defense

                                      Expense)

                                      EXCESS OF:

$            60,00,.00         Aggregate Limit of Liability

  

 

	

100% HCC

$       105,000.00         Annual Premium

	
 

	
8/7/10 - 8/7/11

	

ELU106394-10

	

XS Directors &

Officers

($25M x $75M)

	
$       25,000,000           Aggregate Each Policy Period (including Defense

                                      Expense)

      EXCESS OF:

$       75,000,000           Aggregate Limit of Liability

	

100% XL Specialty Insurance

Company

$       190,000.00         Annual Premium

	  	  	  	  	  
	
1/10/10 - 1/10/11

	

FID5869897-05

	

Commercial Crime

	
$       5,000,000             Per Occurrence

 

Deductibles

$                   NIL           Employee Benefits

$               50,000           Per Occurrence

 

	

100% Zurich American

Insurance Company

$         13,150.00         Annual Premium

	  	  	  	  	  
	
6/21/08 - 6/21/11

	

ON51688CR

	

Special Crime

	
$          5,000,000          Per Occurrence

	

100% Special Contingency Risks

$              11,051        Term Premium

	  	  	  	  	  
	
3/1/10 - 5/15/11

	

00GT0229933 10

	

Employment

Practices Liability

	
$         5,000,000           In the Aggregate for the Policy Period

 

Deductibles

$            200,000           Per Loss Retention

	

100% Twin City Fire Insurance

Company

$         58,123.00         Annual Premium

	  	  	  	  	  
	
8/7/10 - 8/7/11

	

68012963

	

Fiduciary Liability

	
$       10,000,000            Aggregate Limit of Liability

 

Deductibles

$                   NIL           for Non-Indemnifiable claims against individual

                                       fiduciary

$             100,000          Per claim for all other claims Indemnificable by

                                      Insured 

	
    100% Federal Insurance

    Company

    $          49,000.00        Annual Premium

 

  

Schedule 3.13 -- Page 5

  

 

SCHEDULE 3.16

 

ENVIRONMENTAL MATTERS

 

 

 

NONE

 

  

Schedule 3.16 -- Page 1

  

 

SCHEDULE 7.1(a)(iv)(A)

 

EXISTING INTERCOMPANY GUARANTEES OF INDEBTEDNESS

 

(as of June 30, 2011)

 

Forest Oil Corporation guarantees Canadian Forest Oil obligations to:

 

Nova Gas Transmission Ltd. for C$3,000,000 (Forest intends to terminate this guaranty in connection with the spin-off of Lone Pine)

Forest Oil Corporation guarantees Forest – CMI S.p.A. obligations to:

Assimico S.p.A. for an aggregate of €984,026

Bamag Italia S.p.A. for an aggregate amount of €300,000

 

  

Schedule 7.1(a)(iv)(A) - Page 1

  

 

SCHEDULE 7.2

 

EXISTING LIENS

 

	
 

Debtor

	
 

Secured Party

	
Filing

Office

	
 

Filing Nos.

	
 

Collateral

	 	 	 	 	 
	
Forest Oil Corporation

	
Union Oil of California

	
New York

	
200407290781399

200907178249089

	
Borrower’s working interest

related to Trading Bay Joint

Operating Agreement

	  	  	  	  	  
	
Forest Oil Corporation

	
US Bancorp

	
New York

	
200606155591091

	
Copiers/Office Equipment

	  	  	  	  	  
	
Forest Oil Corporation

	
Herc Exchange, LLC

	
New York

	
200607275744980

	
Compressor and pump

	  	  	  	  	  
	
Forest Oil Corporation

	
US Bancorp

	
New York

	
200702085143712

	
Copiers/Office Equipment

	  	  	  	  	  
	
Forest Oil Corporation

	
US Bancorp

	
New York

	
201004135334113

	
Copiers/Office Equipment

	  	  	  	  	  
	
Forest Oil Corporation

	
US Bancorp

	
New York

	
201007025644846

	
Copiers/Office Equipment

 

  

Schedule 7.2 -- Page 1

  

 

SCHEDULE 7.4

 

EXISTING INVESTMENTS

 

1.           As of April 30, 2011, Borrower had the following investment in Unrestricted Subsidiaries:

	
Forest Texas Gathering Company

	
$46,714,850.44

	
Forest Oil Holdings, LLC

	
$518,435.86

	
Wiser Oil Delaware, LLC*

	
$35,135,369.99

	
Wiser Delaware LLC*

	
$4,315,511.17

	
Forcenergy International Inc.

	
$(100.00)

	
Forcenergy Resources Inc.

	
$(8,427,151.04)

	
Forcenergy Onshore Inc.

	
$60,466,648.39

	
Forest Oil Netherlands B.V.

	
$(14,506,689.35)

	
Forest Oil International (Thailand) Ltd.

	
$5,527,710.21

	
Forest Oil Germany GmbH+

	
$2,038,682.21

	
Forest-CMI S.p.A.

	
$48,624,221.36

	
Forest Exploration International (South Africa)

	
$56,029,216.71

	
Forest Romania Corporation+

	
$5,834,911.46

	
Forest Oil Mediterranean S.r.L.**

	
$1,315,259.60

	
Canadian Forest Oil Ltd.*

	
$613,268,478.99

	
Lone Pine Resources Inc.*

	
$6,523,769.16

	
Green River Electric Power Company

	
$0

	
Forest Alaska Holding, LLC

	
$0

*Lone Pine Resources Inc. (“Lone Pine”) is now the parent entity of Canadian Forest Oil Ltd., Wiser Oil Delaware, LLC and Wiser Delaware, LLC.  Lone Pine recently completed an initial public offering of 15,000,000 shares of Lone Pine common stock.  Borrower holds an additional 70,000,000 shares of Lone Pine common stock that Borrower currently intends to distribute to its shareholders.  The aggregate amount of Investments in these entities by Borrower is not subject to the limitations set forth in Section 7.4(i).

+Entity has been dissolved

**In the process of dissolution

2.           See Schedule 7.1(a)(iv)(A) for a list of Borrower guarantees of Unrestricted Subsidiaries as of June 30, 2011.

 

  

Schedule 7.4 -- Page 1

  

SCHEDULE 7.5

 

Anticipated Asset Sales

 

(as of June 30, 2011)

 

Borrower or one or more of its Subsidiaries may sell all or a portion of the Equity Interests of Forest Texas Gathering Company, Forest – CMI S.p.A., and Forest Exploration International (South Africa) (Proprietary) Limited.

 

  

Schedule 7.5 -- Page 1

  

 

SCHEDULE 7.10

 

EXISTING RESTRICTIONS

 

NONE

 

  

Schedule 7.10 -- Page 1

  

 

SCHEDULE 10.14

 

ADDITIONAL SECURED HEDGES

 

 

NONE

 

 

Schedule 10.14 -- Page 1Exhibit 10.1
    

    

    

    
      SEPARATION AGREEMENT AND MUTUAL RELEASE
    

    

    

    
      Preamble:
    

    
                The purpose of this Separation Agreement and Mutual Release
      (the "Agreement") is to set forth the terms and conditions under which
      R. Terry Phillips (“Executive”) is to receive certain benefits (the
      "Benefits" in paragraph 2. A.) in connection with the termination or
      modification of existing contracts, and his separation from employment
      and all other business relationships with United Security BancShares,
      Inc., a Delaware corporation (“USBI”); First United Security Bank, an
      Alabama banking corporation (“FUSB”) (collectively including and
      referred to herein, together with their respective officers, directors,
      shareholders, members, employees, attorneys, general partners, limited
      partners and affiliated entities, as "the Company"). In exchange for the
      mutual consideration expressed herein, Executive and the Company hereby
      agree as follows:
    

    
      Separation Date:
    

    
                1.        Executive will resign voluntarily from employment
      with the Company on June 30, 2011 and, except as specifically provided
      herein below, will have no more rights, contracts, authority or duties
      as President, Chief Executive Officer and/or Director of USBI, FUSB or
      the Company except for the Benefits provided to him pursuant to this
      Agreement.  The primary purposes of the Agreement are to provide
      consideration for binding promises and to effect complete and final
      separation of Executive and the Company.  Executive and the Company will
      each bear responsibility for his or its own attorneys’ fees and expenses
      incurred in connection with the matters leading to the
      Agreement.  Executive will have the opportunity to review and comment on
      the Company’s proxy statement and press release about his departure.
    

    

    

    

    

    	
           
        	
          
            /s/ RTP
          

        	
          
            /s/ HBK
          

        
	

        	
          Executive
        	
          Company
        

    

    
      
        

        

      

      
        
          1
        

        
          

        

      

      
        

        

      

    

    
      Separation Benefits and other Consideration:
    

    
                2.        The good and valuable consideration and benefits to
      and from the parties, the receipt and sufficiency of which are hereby
      mutually acknowledged and agreed, are as follows:
    

    
                A.        Separation Benefits (“Benefits”) provided to
      Executive within seven (7) days after the Effective Date of the
      Agreement: i) the Company shall pay Executive a lump sum amount equal to
      his current regular base salary for nine months ($236,250.00), and his
      accrued unused vacation ($45,000.00), subject to legally-required
      withholdings; ii) the Company shall transfer title to and all
      responsibility for his current Company vehicle, the Chevrolet Tahoe, to
      Executive; iii) the Company shall allow Executive to pay COBRA premiums
      and continue as a participant in the Company’s group health insurance
      plan at his current coverage levels and categories for a period from
      July 1, 2011 through June 30, 2014 or until Executive obtains comparable
      health insurance benefits in subsequent employment, whichever comes
      sooner; the Company shall pay Executive a lump sum of eighteen thousand
      dollars ($18,000.00) to compensate Executive for the COBRA premium for
      the first eighteen months of the continuation period; iv) the Company
      shall, subject to the terms and conditions of the applicable term life
      insurance policy, transfer the policy to Executive or convert the policy
      to an individual term life policy; and v) the Company shall amend the
      Salary Continuation Agreement dated September 20, 2002 (“SCA”) pursuant
      to which the Executive or his designated beneficiary shall receive
      future payments in the amount of seventy-five thousand dollars
      ($75,000.00) per year in accordance with the SCA. Executive shall retain
      all rights to his vested benefits in the Company’s 401(k)
      Plan.  Executive retains his rights as a shareholder to the extent he is
      a shareholder. Other than the Benefits specifically provided in this
      Agreement, the parties agree that the Company shall not owe, pay or
      provide anything else of any value, kind or amount to Executive. The
      Company agrees that, if a prospective employer is directed to the
      Company’s CEO for a reference about Executive, the response provided
      will be limited to confirmation of position and dates of employment.
    

    

    

    	
           
        	
          
            /s/ RTP
          

        	
          
            /s/ HBK
          

        
	

        	
          Executive
        	
          Company
        

    

    
      
        

        

      

      
        
          2
        

        
          

        

      

      
        

        

      

    

    
      B.        The noncompetition provisions of the Employment Agreement
      dated January 1, 2000 (the “Non-Compete”) are incorporated herein to
      their fullest extent, including but not limited to the restrictive
      covenants and remedies for breach thereof, except that the duration of
      the restrictive covenants shall be nine (9) months instead of twelve
      (12) months and the geographic restriction shall be all locations within
      a fifty (50) mile radius of each and all of the Company’s current
      offices (not including Acceptance Loan Company offices).  Executive
      agrees that he shall honor and abide by all of the Company’s rights and
      remedies provided for in the Non-Compete (as modified herein); and
      Executive shall cooperate fully with the Company and its attorneys in
      any future legal or business matter that relates to the period during
      which Executive was employed by the Company, including but not limited
      to meeting at reasonable times, providing truthful testimony and making
      court appearances.  
    

    
      Executive’s General Release:
    

    
                For and in consideration of the foregoing Benefits (paragraph
      2. A. and its subparts above), I, Executive, for myself and for each and
      all of my heirs, legatees, estate, family, spouse, executors,
      administrators, successors, attorneys, agents, and assigns, do hereby
      agree and covenant to each and all of the following terms and conditions:
    

    
                3.        I understand and agree that this Agreement
      constitutes a complete release with respect to each and all of the
      following:
    

    
                          (a)       the Company, USBI and FUSB;
    

    

    

    

    

    	
           
        	
          
            /s/ RTP
          

        	
          
            /s/ HBK
          

        
	

        	
          Executive
        	
          Company
        

    

    
      
        

        

      

      
        
          3
        

        
          

        

      

      
        

        

      

    

    
             (b)       Any and all predecessor, successor, affiliated, parent,
      partner and subsidiary entities, divisions, and facilities of the
      Company as defined in the Preamble paragraph above (including, but not
      limited to, its affiliated entities);
    

    
                          (c)       Each and all of the past, present, and
      future stockholders, members, partners, directors, trustees, officers,
      managers, supervisors, agents, attorneys, employees, and representatives
      of each of the entities and facilities named in sub-paragraphs (a) and
      (b) of this Paragraph 3, collectively and separately and severally, and
      in their official or representative capacities, and their personal or
      individual capacities; and
    

    
                          (d)       The heirs, legatees, estates, families,
      spouses, executors, administrators, successors, attorneys, agents, and
      assigns of each of the persons referred to in sub-paragraph (c) of this
      paragraph 3.
    

    
                          (e)       The term "the Releasees" as used in this
      Agreement shall be deemed to have reference collectively and separately
      and severally to each and all of the entities and persons referred to in
      Paragraph 3 and its sub-parts.
    

    
                4.        With the sole exception of the Benefits described in
      Paragraph 2. A., above, I hereby release and forever discharge each and
      all of the Releasees, separately and severally and collectively, from
      any and all liability, claims, allegations, and causes of action, known
      or unknown, for any and all legal and equitable remedies, relief and
      results, including, but not limited to, back pay, vacation pay,
      liquidated damages, punitive damages, compensatory damages, nominal
      damages, interest, attorneys' fees and expenses, costs, declaratory
      judgment, and injunctive remedies, with respect to each and all of the
      following:
    

    
                          (a)       Claims and causes of action which I have
      or might have available to be asserted in any lawsuit in any Federal or
      State Court or in any charge or complaint filed with any government
      agency (Executive is not hereby prohibited from meeting with or filing a
      charge with the EEOC, but damages and remedies for any such claims are
      hereby released nevertheless);
    

    

    

    

    

    	
           
        	
          
            /s/ RTP
          

        	
          
            /s/ HBK
          

        
	

        	
          Executive
        	
          Company
        

    

    
      
        

        

      

      
        
          4
        

        
          

        

      

      
        

        

      

    

    
             (b)       Claims and causes of action which I have or might have
      arising out of my employment with the Company or arising out of the
      Employment Agreement dated January 1, 2000, as amended (“EA”), and the
      SCA.  The EA is hereby terminated by mutual agreement, and the SCA is
      modified in accordance with the attached amendment (Exh. 1);
    

    
                          (c)       Claims and causes of action which I have
      or might have arising out of or relating to my separation from
      employment with the Company, including, but not limited to, the reasons
      for such separation and the procedures followed in connection with such
      separation; and
    

    
                          (d)       Claims and causes of action which I have
      or might have under any Federal or State law, including, but not limited
      to, (i) the Age Discrimination in Employment Act, as amended, 29 U.S.C.
      § 621 et seq. (ADEA); (ii) the Alabama Age Discrimination
      Act, ALA. Code § 25-1-20, et seq., (iii) the Americans with
      Disabilities Act U.S.C. § 12101 et seq. (ADA); (iv) Title
      VII of the Civil Rights Act of 1964, as amended 42 U.S.C. § 2000e et
      seq. (Title VII); (v) the Equal Pay Act, 29 U.S.C. § 206, et
      seq.; (vi) the Civil Rights Act of 1991, including, but not limited
      to, 42 U.S.C. § 1981a; (vii) the Civil Rights Act of 1866, as amended,
      42 U.S.C. § 1981; (viii) 42 U.S.C. §§ 1981-1988, including, but not
      limited to, 42 U.S.C. § 1983; (ix) The Fair Labor Standards Act, as
      amended, 29 U.S.C. § 201, et seq.; (x) the Constitution of
      the United States and of any and all States, including, but not limited
      to, the State of Alabama; (xi) any State or Federal whistleblower
      statute or regulation; (xii) any claims arising under Alabama common
      law; (xiii) any claims arising under an exception, if any there be, to
      the employment at will doctrine in Alabama; (xiv) any and all Federal,
      State, or local statutes, laws, orders, ordinances, or regulations
      relating to employment discrimination, harassment, retaliation, equal
      employment opportunity, and/or civil rights; (xv) the Securities Act of
      1933, as amended; (xvi) the Securities Exchange Act of 1934, as amended;
      and (xvii) any State law, theory, or cause of action, based on contract,
      tort, or any other source.
    

    

    

    

    

    

    

    	
           
        	
          
            /s/ RTP
          

        	
          
            /s/ HBK
          

        
	

        	
          Executive
        	
          Company
        

    

    
      
        

        

      

      
        
          5
        

        
          

        

      

      
        

        

      

    

    
      Executive Covenants
    

    
                5.        I represent, confirm, acknowledge, and agree that I
      have not and will not file or initiate, or cause to be filed or
      initiated, any complaint or other proceeding against the Company or any
      of the Releasees arising out of or relating in any way to those claims
      and causes of action made the subject of the release set forth in
      paragraphs 3 and 4 above.
    

    
                6.        As further and integral consideration for the
      Benefits, I acknowledge and agree that this Agreement, except for the
      Benefits described in Paragraph 2. A.  above, constitutes a permanent
      and final separation of any and all association or relationship of any
      nature between myself and any and all of the Releasees, including, but
      not limited to, future employment.  I understand and agree that I have
      waived any future employment and that the denial of any such future
      employment will not violate any rights I have and shall not be
      actionable on my part.
    

    
                7.        I acknowledge and agree that the provisions in the
      Agreement of which this release is a part reflect and carry out the
      mutual desire of the parties to resolve and conclude amicably any and
      all disputes and contentions between us and constitutes an arms-length
      and good faith resolution of any and all differences and disputes and
      claims and defenses between any and all of the Releasees and myself.  I
      further understand that the Releasees have agreed to the Benefits
      without any admission of wrongdoing and that this Agreement is in no way
      an implication, inference or admission of any wrongdoing by myself or
      any of the Releasees.
    

    

    

    	
           
        	
          
            /s/ RTP
          

        	
          
            /s/ HBK
          

        
	

        	
          Executive
        	
          Company
        

    

    
      
        

        

      

      
        
          6
        

        
          

        

      

      
        

        

      

    

    
                8.        Executive has returned or will before the Effective
      Date return to the Company all Company property and information
      including but not limited to records, documents, disks, keys, computers,
      laptops, files, software, phones and credit cards that Executive
      received in connection with his employment.  More particularly, by
      signing this Agreement, Executive verifies that he has by the Effective
      Date returned all Company business information and all copies or images
      thereof to the exclusive possession of the Company.
    

    
                9.        (a)       Executive acknowledges that during the
      course of his employment with the Company, he had access to and was
      entrusted with confidential and proprietary information including, but
      not limited to, information concerning some or all of the following:
      methods of marketing and business development; personnel policies,
      practices and procedures; employee agreements and negotiations; employee
      arbitrations, employee investigations of various personnel disputes and
      other matters; sales processes and procedures; costs; general business
      procedures; policies and operations; sales and/or profits; legal and
      financial matters; audit results; litigation defense and strategies;
      communications with attorneys; merchandising; sales strategies and
      techniques; expansion plans; methods of doing business or servicing
      customers; methods of pricing or charging for services; business forms
      developed by or for the Company; the form and content of proposals;
      reports and analyses; the names of suppliers, personnel, customers and
      potential customers; advertising sources and potential advertising
      sources; bids; contracts; software programs (however embodied); and
      information about or belonging to customers, potential customers,
      suppliers or others (collectively, the "Confidential Business
      Information").
    

    
                          (b)       Executive agrees that any negotiations
      leading up to this Agreement are strictly confidential.  Executive will
      not disclose the terms hereof, and represents that he has not disclosed
      the terms hereof prior to signing, to any person, except to his
      attorneys, his spouse or professional tax or financial advisors or as
      required by law or legal process.
    

    

    

    

    

    	
           
        	
          
            /s/ RTP
          

        	
          
            /s/ HBK
          

        
	

        	
          Executive
        	
          Company
        

    

    
      
        

        

      

      
        
          7
        

        
          

        

      

      
        

        

      

    

    
                          (c)       Without the prior written consent of the
      Company, Executive specifically agrees that he will never disclose,
      discuss or reveal any Confidential Business Information or the content
      of the negotiations leading to this Agreement in the absence of a
      subpoena, summons, or court order.  Executive further agrees that, if he
      receives any subpoena, summons or court order requiring him to testify
      in a proceeding involving the Company, he will so inform the Company
      within five (5) calendar days of receipt of such request or demand, or
      at least three (3) days before the date requested for such testimony,
      whichever is earlier.  In the event a subpoena, summons or court order
      is served on Executive requiring him to testify without at least three
      (3) days’ notice, Executive agrees to either (i) object to the subpoena,
      summons or court order in a timely manner, or (ii) provide actual notice
      to the Company, through its Chairman of the Board or legal counsel, with
      sufficiently reasonable time to allow the Company to object, and
      Executive shall cooperate reasonably in any proceeding relating to the
      objection.  In either case, Executive may respond if either a lawful
      court order compelling a response is entered after the Company has
      objected to the subpoena, summons, or court order (and such order is not
      appealed) or the Company fails to object after receipt of a reasonable
      and timely notice.
    

    
            (d)       Nothing in this section 9 or its subparagraphs is
      intended to prevent Executive from complying with any applicable laws
      and cooperating fully in any investigation by any governmental agency or
      providing any information to any governmental agency or governmental
      investigation acting in an official capacity; provided however, that
      unless authorized in writing by the Company or required to do so by an
      order of a court or judge of competent, lawful jurisdiction, Executive
      shall not disclose any attorney-client communications or attorney work
      product information to which the Company has a good faith claim of
      privilege.
    

    

    

    

    

    	
           
        	
          
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          8
        

        
          

        

      

      
        

        

      

    

    
      Company Release of Executive
    

    
                10.       The Company, as defined collectively herein, hereby
      forever releases and discharges Executive of and from any and all
      liability, claims, and causes of action for any and all legal and
      equitable remedies and relief of any nature whatsoever that arise out of
      Executive’s employment relationship and the performance of his assigned
      duties as President, CEO and Director prior to the Effective
      Date.  Executive retains any rights to legal defense and/or
      indemnification that he would have in matters brought by third parties
      pursuant to the Company’s By-Laws, Charter and insurance policies and
      such rights, if any there be, are not terminated or voided by the terms
      of this Agreement.
    

    
      Consultation and Assistance; Legal Representation.  
    

    
                11.       (a)       Executive
      agrees that for the next three years, he will remain reasonably
      accessible and available to Company for consultation as Company may
      request or desire from time to time, and provide all reasonable
      assistance to Company and its counsel regarding any business, legal or
      other matters (including but not limited to litigation, arbitration,
      investigations or governmental proceedings) in which Executive’s
      participation and/or involvement is necessary or desirable, all in a
      timely fashion and at such times as may be mutually agreeable to the
      parties concerned. As part of this Agreement, Company agrees to pay or
      reimburse Executive for the payment of any reasonable, pre-authorized
      out-of-pocket costs or expenses which Executive spends in assisting
      Company in the investigation, prosecution or defense of any action,
      suit, proceeding or investigation against or involving Company.  Such
      assistance shall include appearing from time to time at the office of
      Company or its counsel for conferences and interviews and, in general,
      providing Company and its counsel with the full benefit of Executive’s
      knowledge, in a complete, candid, and truthful manner, with respect to
      any matter involving or arising out of his employment with Company, and
      shall include the obligation to testify truthfully in connection with
      any such matter.  For its part, Company agrees to make every reasonable
      effort to arrange for any conference, meeting, deposition, interview,
      hearing, or other legal proceeding involving Executive to be held at a
      time and place which will minimize, to the extent practicable,
      interference with or disruption of any future employment relationship of
      Executive.
    

    

    

    	
           
        	
          
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                          (b)       If Executive becomes a party to or subject
      of, or faces the reasonable possibility of becoming a party to or
      subject of a civil suit or governmental investigation as a result of the
      performance of his official duties as an Executive of the Company, then
      Executive shall promptly give notice to Company.  In the event of a
      lawsuit or investigation, Executive will fully cooperate with the
      Company in any joint defense, including coordination of selection of
      counsel, the preparation of the defense, and resolution or trial of any
      claims.  Nothing in this section 11 is intended to prevent Executive
      from complying with any applicable laws and cooperating fully in any
      investigation by any governmental agency or providing any information to
      any governmental agency or governmental investigation acting in an
      official capacity; provided however, that unless authorized in writing
      by the Company or required to do so by an order of a court or judge of
      competent jurisdiction Executive shall not disclose any attorney-client
      communications or attorney work product information to which the Company
      has a good faith claim of privilege.
    

    
                12.       This Agreement will be governed by the laws of the
      State of Alabama and any case or controversy arising hereunder shall be
      brought in Clarke County, Alabama.  In the event any term or provision
      of this Agreement is determined to be invalid or void or unenforceable,
      each and all of the remaining terms and provisions herein shall remain
      in full force and effect.
    

    

    

    

    

    	
           
        	
          
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          10
        

        
          

        

      

      
        

        

      

    

    
                13.       This Agreement encompasses the entire agreement
      between the parties and supersedes all previous agreements, if any,
      between the parties, verbal or otherwise.  Executive represents,
      acknowledges and agrees that, in executing this Agreement, he does not
      rely and has not relied upon any representation or statement set forth
      hereby made by the Company with regard to the subject matter, basis or
      effect of this Agreement or otherwise and Executive further represents,
      acknowledges and agrees that there have been no such representations,
      promises or statements made by the Company, except as specifically set
      forth in this Agreement.
    

    
                14.       Executive agrees that he will not make any
      disparaging statements to current, former or prospective Company
      customers, contractors, vendors or employees, to any media or to any
      other person about the Company, its affiliates, partners, parent, and
      their respective employees, officers, members, partners, managers, or
      directors.  The Company’s current Board members and the next CEO,
      assuming he/she becomes a member of the Board, agree not to disparage
      Executive to any third parties relating to the facts or circumstances
      surrounding his separation from employment or this Agreement.  A
      "disparaging statement" is any communication, oral or written, which
      would cause or tend to cause the recipient of the communication to
      question the business condition, integrity, competence, fairness or good
      character of the person or entity to whom the communication relates.
    

    

    

    

    

    	
           
        	
          
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                15.       In the event of Executive’s breach or violation of,
      or failure to completely and timely perform any of the provisions of
      this Agreement, the Company's obligation to provide further Benefits
      and/or perform any of its remaining obligations hereunder, including the
      obligation to continue any payments, defense or other Benefits under any
      provision of Paragraph 2. A., above, shall immediately terminate;
      provided, however, that the Executive’s general release set forth above
      and all of Executive's other obligations shall remain in full force and
      effect. In addition, in the event Executive breaches, or threatens to
      breach, any of the provisions of this Agreement, the Company shall have
      the right and remedy to have the provisions of this Agreement
      specifically enforced by any court having equity jurisdiction, it being
      acknowledged and agreed that any such breach or threatened breach will
      cause irreparable injury to the Company and that money damages will not
      provide the Company with an adequate remedy.  Such rights and remedies
      shall be in addition to, and not in lieu of, any other rights and
      remedies available to the Company under law or in equity.  Executive
      recognizes and agrees that the Company's remedy at law for breach of
      this Agreement would be inadequate, and further agrees that, for
      Executive’s breach of such provisions, the Company shall be entitled to
      injunctive relief and to enforce its rights by an action for specific
      performance, and shall be entitled to recover its reasonable attorneys'
      fees and expenses incurred in any such action if it prevails on any of
      its claims.  The Executive shall have the same rights as the Company
      pursuant to this paragraph 15 in the event the Company breaches this
      Agreement.
    

    
      Compliance with Section 409A.
    

    
                16.       To the extent applicable, the Company and Executive
      intend that the provisions in this Agreement meet an exemption from and
      otherwise comply with Section 409A of the Internal Revenue Code and all
      Regulations, guidance, or other interpretative authority thereunder
      (“Section 409A”).  The Company and Executive also agree that in no event
      shall any payment required to be made pursuant to this Agreement that is
      considered deferred compensation within the meaning of Section 409A be
      accelerated or delayed in violation of Section 409A.
    

    

    

    

    

    	
           
        	
          
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      Consultation with Attorney and Revocation Period.
    

    
               17.       Executive represents and agrees that he fully
      understands all provisions and aspects of this Agreement and that he has
      been advised to consult an attorney of his own choice before signing
      this Agreement and has availed himself of this right.  Executive further
      represents and agrees that he has carefully read and fully understands
      all the provisions of this Agreement and that he is voluntarily entering
      into this Agreement.  Executive further acknowledges and agrees that the
      severance benefits and compensation he is receiving or will receive
      under this Agreement are sufficient consideration for the binding
      promises herein.  Executive acknowledges and agrees that he has been
      given twenty-one (21) days within which to consider this Agreement and
      that he may accept and execute this Agreement at any time up to, and
      including, close of business July 21, 2011.  Executive has elected
      voluntarily and with advice of legal counsel to execute the Agreement in
      less than twenty-one (21) days.  Executive further acknowledges,
      understands and agrees that for a period of seven (7) days following the
      execution of this Agreement, he may revoke this Agreement in
      writing.  Executive understands that he will neither receive nor be
      entitled to payments and compensation set forth in this Agreement unless
      he accepts and executes this Agreement by July 21, 2011, and until seven
      (7) days revocation period has passed and this Agreement is final and
      otherwise non-revocable.  The day after the end of the revocation period
      is the “Effective Date” of the Agreement.
    

    
                18.       I, R. Terry Phillips, have read and fully understand
      the terms, provisions, and conditions of this Agreement.  I accept each
      and all of the terms, provisions and conditions of the Agreement, and I
      do so voluntarily, having had the advice of an attorney, and with full
      knowledge and understanding of the contents, nature, and effect of each
      and all of the terms, provisions, and conditions of the Agreement.
    

    

    

    

    

    	
           
        	
          
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                 EXECUTED on this the 30th day of June, 2011.
    

    

    

    

    

    	
          Executive:
        
	
           
        
	
           
        
	
          
            /s/ R. Terry Phillips
          

        
	
          R. Terry Phillips
        
	
           
        
	
           
        
	
           
        
	
          
            /s/ Ronald Snider 6-30-11
          

        
	
          Ronald Snider, as attorney for R. Terry Phillips
        
	
           
        
	
           
        
	
           
        
	
          USBI and FUSB:
        
	
           
        
	
           
        
	
          
            /s/ Hardie B. Kimbrough
          

        
	
          By: Hardie B. Kimbrough
        
	
          Its: Chairman of the Board
        
	
           
        
	
           
        
	
          
             
          

        
	
          
            /s/ David M. Smith 6/30/11
          

        
	
          David M. Smith, as attorney for The Company
        

    

    

    

    

    

    

    

    	
           
        	
          
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      14

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