EXHIBIT 10.4
FIFTH AMENDMENT
TO
FIRST AMENDED AND RESTATED LOAN AGREEMENT
DATED SEPTEMBER 23, 1996
BY AND BETWEEN SABA PETROLEUM COMPANY, ET AL.
AND BANK ONE, TEXAS, N.A.
This Fifth Amendment to the First Amended and Restated Loan Agreement
dated September 23, 1996 (this "Fifth Amendment") by and among SABA PETROLEUM
COMPANY, a Delaware corporation, successor by merger to Saba Petroleum Company,
a Colorado corporation (the "Borrower") each of the undersigned Guarantors, and
BANK ONE, TEXAS, N.A., a national banking association (the "Bank"), is entered
into on this 11th day of November 1997.
W I T N E S S E T H:
Borrower and Bank have entered into a First Amended and Restated Loan
Agreement dated September 23, 1996, as amended by the First Amendment thereto
dated November 5, 1996, the Second Amendment thereto dated August 28, 1997, the
Third Amendment thereto dated September 5, 1997, and the Fourth Amendment
thereto dated September 9, 1997 (collectively, the "Loan Agreement").
Borrower has requested that Bank provide an additional loan to Borrower
in the approximate amount of $3,000,000.00, and that Bank amend certain
provisions of the Loan Agreement, and Bank has agreed to such amendments to the
extent expressly set forth herein.
NOW, THEREFORE, in consideration of the promises herein contained, and
for other good and valuable consideration, the receipt and sufficiency of which
are acknowledged by the Borrower and the Bank, and each intending to be legally
bound hereby, the parties agree as follows:
I. Specific Amendments to Loan Agreement.
Article I is hereby amended by adding or replacing, as applicable, the
following definitions:
"Amortization Factor" means four times the sum of: (a) the
Economic Half-Life of the Borrowing Base Properties, plus (b) one.
"Beaver Lake" means Beaver Lake Resources Corporation, an
Alberta, Canada corporation, formerly known as Beaver Lake Energy
Corporation.
"Economic Half-Life of the Borrowing Base Properties" means
the period, expressed in years (including any fraction thereof), within
which the Borrowing Base Properties will produce future net income
having a discounted present value that equals one-half of the total
discounted present value of future net income of the Borrowing Base
Properties, calculated in accordance with the Bank's customary lending
practices and then-current standards of determining the value, for loan
purposes, of the Borrowing Base Properties, as provided in Section
2.03.
"Fifth Amendment" means the Fifth Amendment to this Agreement
executed by Borrower and Bank on November 11, 1997.
"Guarantors" means, individually and collectively, Saba Energy
of Texas, Incorporated, a Texas corporation, Saba Petroleum, Inc., a
California corporation, Saba Petroleum of Michigan, Inc., a Michigan
corporation, M.V. Ventures, G.P., a Texas general partnership, Sabacol,
Inc., a Delaware corporation (which is a Guarantor only to the extent
provided in the Fourth Amendment and the Fifth Amendment), and ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ (who is a Guarantor only to the extent provided in the Fifth
Amendment).
"Notes" means, collectively, the Note, the Term Note and the
Mezzanine Note, and any extension, renewal, rearrangement of, or
substitute for either of such Notes. All references to the defined
term, "Note," throughout this Agreement, as it existed prior to the
Fourth Amendment, shall be construed to refer to all three of the
Notes, with the exception of the references to the term, "Note," in the
definitions of "Loan Excess" and "Note," and in Sections 2.01, 2.02,
2.04, 2.10, 2.12, 2.21, 3.01, and 3.03, all of which shall remain
singular and shall be construed to refer to the Note evidencing the
Revolving Loan.
"Mezzanine Loan" means that certain loan made or to be made by
Bank to Borrower pursuant to Section 2.26 hereof, to be evidenced by
the Mezzanine Note.
"Mezzanine Loan Maturity Date" means January 2, 1998.
"Mezzanine Loan Rate" means the Bank's Base Rate in effect
from time to time plus two percent (2%).
"Mezzanine Note" means the promissory note dated November 11,
1997, made by Borrower payable to the order of Bank, in substantially
the form attached to the Fifth Amendment as Exhibit "A," together with
all deferrals, renewals, extensions, amendments, modifications or
rearrangements thereof, which promissory note shall evidence the
advances to Borrower by Bank pursuant to Section 2.26 hereof.
Section 2.12 is hereby amended to make its original text paragraph (a)
of such Section, and to add the following new paragraph (b) thereto:
(b) As consideration for the commitment of the Bank to make the Mezzanine
Loan to the Borrower pursuant to this Agreement, the Borrower
agrees to pay to the Bank within ten (10) days of receipt of the
Bank's statement as to the period of time from the date of the Fifth
Amendment to December 31, 1997, and as to the period commencing
December 31, 1997 to and including the Mezzanine Loan Maturity Date,
a fee equal to 1/2 of 1% per annum (computed on the basis of 365 or
366 days, as the case may be) multiplied by an amount equal to the
daily average excess, if any, of Three Million Dollars
($3,000,000.00) over the aggregate principal amount outstanding on
the Mezzanine Note during the period from the date of the
Fifth Amendment or previous calculation date provided above,
whichever is later, to the relevant calculation date or the
Mezzanine Loan Maturity Date, as the case may be.
Section 2.13 is hereby amended to add the following sentence at the end
of such Section.
Upon execution of the Fifth Amendment, Borrower shall pay to Bank a fee
equal to Forty-Five Thousand Dollars ($45,000.00) as consideration for
Bank's agreement to make the Mezzanine Loan.
Article II is hereby amended to add the following new sections thereto:
2.26 Mezzanine Loan. Subject to the terms and conditions and
relying on the representations and warranties contained in this
Agreement, Bank agrees to make the Mezzanine Loan to Borrower in one or
more advances aggregating not more than $3,000,000.00 during the period
commencing November 11, 1997 and ending on the last Business Day before
the Mezzanine Loan Maturity Date.
2.27 The Mezzanine Note. The obligation of Borrower to
repay the Mezzanine Loan shall be evidenced by the Mezzanine Note.
2.28 Repayment of Mezzanine Loan. Interest on the principal
amount advanced as a Mezzanine Loan shall be calculated at the
Mezzanine Loan Rate per annum on the basis of a year of 365 or 366
days, as applicable, and for the actual number of days elapsed, and
shall be repaid by Borrower in monthly installments on the first day of
each month following the advance from Bank to Borrower pursuant to
Section 2.26, through and including the Mezzanine Loan Maturity Date,
when the entire unpaid balance of the Mezzanine Loan, inclusive of
principal and interest, shall be paid in full.
Article III is hereby amended by adding the following new Section 3.17
thereto:
3.17 Closing of Fifth Amendment. Prior to or contemporaneous
with the funding of the Mezzanine Loan pursuant to the Fifth
Amendment, in addition to Borrower satisfying the requirements
of the other applicable Sections of Article III, the Bank shall have
received:
(a) The Mezzanine Note and the Fifth Amendment, duly executed on
behalf of Borrower.
(b) A guaranty agreement duly executed by ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, in form
substantially similar to the Guaranty heretofore executed by each other
Guarantor, provided that the Indebtedness to be guaranteed by ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ shall be limited to the Indebtedness evidenced by the
Mezzanine Note.
(c) A guaranty agreement duly executed by Sabacol, in form
substantially similar to the Guaranty heretofore executed by Sabacol,
provided that the Indebtedness to be guaranteed by Sabacol shall be
limited to the Indebtedness evidenced by the Term Note and the
Mezzanine Note.
(d) Such Collateral Documents and related instruments as may reasonably
be requested by the Bank to: (1) grant to the Bank, under the laws of
the states of California and Texas, as applicable, and under the laws
of Canada and the province of Alberta, as applicable, a perfected
security interest in Borrower's entire ownership interest in the stock
of Beaver Lake and in the escrow agreement to which certain of such
stock is subject, and (2) grant to the Bank, under the laws of the
states of California and Texas, as applicable, a perfected security
interest in all of the issued and outstanding stock of Sabacol.
(e) Evidence satisfactory to the Bank, in its sole discretion, that:
(1) Borrower can effectively pledge to Bank pursuant to Section 3.17(d)
its interest in at least 11,077,991 shares of stock of Beaver Lake, (2)
Borrower can effectively pledge to Bank pursuant to Section 3.17(d) its
interest in the escrow account in which at least 3,359,331 shares of
Beaver Lake stock is held, (3) the Beaver Lake stock held in such
escrow account shall be unconditionally released not later than October
23, 1998, and that effective instructions have been given to the escrow
agent that would cause such stock to be delivered to the Bank upon
release from escrow, unless the Bank's interest therein is previously
discharged by the Bank pursuant to the terms of the Fifth Amendment.
(f) Certificates of the secretary or assistant secretary of Borrower
and Sabacol, attesting to the adoption of resolutions by Borrower
authorizing the transactions by each such party as evidenced by the
Fifth Amendment.
(g) A Compliance Certificate executed by Borrower.
(h) Such other documents and instruments as Bank may reasonably
request.
Section 5.01 is hereby amended by adding the following text at the end
of such Section:
Borrower shall use the proceeds advanced under the Mezzanine Loan
solely for the purpose of paying trade payables incurred as of the date
of the Fifth Amendment and to be incurred in Borrower's domestic
drilling activities and for paying amounts owed to the Bank under the
terms of this Agreement.
Section 5.21(a) is revised in its entirety to read as follows:
(a) A ratio of Cash Flow to Debt Service of not less than 1.25.
Compliance with this covenant shall be calculated on a rolling four
quarter basis, beginning with the four quarter period ending December
31, 1997. For purposes of calculating this ratio:
(i) "Cash Flow" shall be defined as the sum, during each
calendar quarter, of (1) net income, plus (2) interest
expense, plus (3) non-cash expenses, less (4) non-cash
revenues, less (5) "Non-Financed Capital Expenditures" (as
defined below), all of the foregoing being calculated with
respect to Borrower and its Subsidiaries on a consolidated
basis;
(ii) "Debt Service" shall be defined as the sum, during each
calendar quarter, of (1) interest expense, plus (2) scheduled
principal payments on all recourse debt (not including debt
relating to the Loans), plus (3) the outstanding principal
balance of the Loans at the end of each fiscal quarter,
divided by the Amortization Factor prior to the Conversion
Date, and thereafter divided by the actual number of calendar
quarters remaining from the effective date of such calculation
until the Termination Date, all calculated on a consolidated
basis; and
(iii) "Non-Financed Capital Expenditures" shall be defined as
the greater of (x) the sum, during each calendar quarter, of
total capital expenditures, less any net increase in
Borrower's Indebtedness as of the last day of the quarter in
question compared to the last day of the prior quarter, less
any increase in shareholders' equity as of the last day of the
quarter in question compared to the last day of the prior
quarter (excluding any such new equity that was used during
such quarter to repay any outstanding balance on the Revolving
Loan), less any unfunded availability under the Revolving
Commitment as of the last day of such quarter, all calculated
on a consolidated basis; or (y) zero.
Article V is amended to add new Sections 5.34, 5.35 and 5.36, which
read as follows:
5.34 Proceeds of New Offering. If and to the extent that
Borrower raises new funds in any placement of subordinated debt or
equity, which shall be subject to the approval of Bank, the proceeds of
such placement, net of the actual, direct costs incurred by Borrower in
connection with the placement, shall be used first, to pay and
discharge all principal and interest then outstanding on the Mezzanine
Loan, and next, all principal and interest then outstanding on the Term
Loan.
5.35 Sale of Beaver Lake Energy Corporation Stock. If and to
the extent that Borrower sells up to fifty percent (50%) of the stock
that it owns in Beaver Lake Energy Corporation, which shall be subject
to the approval of the Bank, the proceeds received by Borrower from the
sale of such stock, net of the actual, direct costs incurred by
Borrower in connection with the sale of such stock, shall be applied to
repay all interest and principal then outstanding on the Mezzanine
Loan.
5.36 Pledge of Beaver Lake Energy Corporation Stock. Within
ten (10) Business Days after the execution of the Fifth Amendment by
Bank and Borrower, Borrower shall obtain and/or execute any such
additional information and/or documentation, respectively, as Bank my
reasonably request to fully implement the provisions of Section 3.17(d)
and (e), to the extent that such provisions were not fully satisfied as
of the time of execution of the Fifth Amendment by Bank and Borrower.
Section 6.09 is amended by adding the following text at the end of such
Section:
Notwithstanding anything else is this Section or elsewhere in this
Agreement to the contrary, however, until such time as all principal
and accrued, unpaid interest on the Term Loan and the Mezzanine Loan
have been repaid, and the Bank's obligation to make advances under the
Mezzanine Note has expired, Borrower shall not make, and Borrower shall
not cause or permit any of its Subsidiaries to make, capital
expenditures exceeding Two Hundred Fifty Thousand Dollars
($250,000.00), in the aggregate, for non-oil and gas related
activities. For purposes of this Section, the phrase "non-oil and gas
related activities" means any activity that is not directly related to
the acquisition of Oil and Gas Properties by Borrower or its
Subsidiaries or to the exploration or drilling for, or the production
and marketing of, oil or gas produced or to be produced from the Oil
and Gas Properties owned by Borrower or its Subsidiaries.
II. Ratification of Guaranties. Each Guarantor hereby ratifies and confirms its
liability under the Guaranty heretofore executed by it, and, except as stated to
the contrary in this paragraph, confirms and agrees that such Guaranty continues
in full force and effect with respect to all of the Indebtedness covered by the
Loan Agreement, as the same may be restated, amended, modified, renewed, or
rearranged from time to time, including, but not limited to, the Indebtedness
evidenced by the Note, the Term Note and the Mezzanine Note; provided, however,
that the Guaranty of Sabacol relates only to the Indebtedness evidenced by the
Term Note and the Mezzanine Note, and the Guaranty of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ relates
only to the Indebtedness evidenced by the Mezzanine Note. This ratification is
given for the purpose of inducing the Bank to make the advances evidenced by the
Mezzanine Note, and each Guarantor is aware that, but for such ratification and
agreement contained herein, the Bank would not extend such additional credit to
the Borrower.
III. Reaffirmation of Representations and Warranties. To induce the Bank to
enter into this Fifth Amendment, the Borrower and each Guarantor hereby
reaffirms, as of the date hereof, its representations and warranties contained
in Article IV of the Loan Agreement and in all other documents executed pursuant
thereto, and additionally represents and warrants as follows:
A. The execution and delivery of this Fifth Amendment and the
performance by the Borrower and each Guarantor of its obligations under
this Fifth Amendment are within the Borrower's and each Guarantor's
power, have been duly authorized by all necessary corporate action,
have received all necessary governmental approval (if any shall be
required), and do not and will not contravene or conflict with any
provision of law or of the charter or by-laws of the Borrower or any
Guarantor or of any agreement binding upon the Borrower or any
Guarantor.
B. The Loan Agreement as amended by this Fifth Amendment
represents the legal, valid and binding obligations of the Borrower and
each Guarantor, enforceable against each in accordance with their
respective terms subject as to enforcement only to bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
the enforcement of creditors' rights generally.
C. No Event of Default or Unmatured Event of Default
has occurred and is continuing as of
the date hereof.
IV. Defined Terms. Except as amended hereby, terms used herein that are
defined in the Loan Agreement shall have the same meanings herein.
V. Reaffirmation of Loan Agreement. This Fifth Amendment shall be deemed to be
an amendment to the Loan Agreement, and the Loan Agreement, as further amended
hereby, is hereby ratified, approved and confirmed in each and every respect.
All references to the Loan Agreement herein and in any other document,
instrument, agreement or writing shall hereafter be deemed to refer to the Loan
Agreement as amended hereby.
VI. Entire Agreement. The Loan Agreement, as hereby further amended, embodies
the entire agreement between the Borrower, the Guarantors and the Bank and
supersedes all prior proposals, agreements and understandings relating to the
subject matter hereof. The Borrower and each Guarantor certifies that it is
relying on no representation, warranty, covenant or agreement except for those
set forth in the Loan Agreement as hereby further amended and the other
documents previously executed or executed of even date herewith.
VII. Governing Law. THIS FIFTH AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND THE APPLICABLE LAWS OF THE
UNITED STATES OF AMERICA. This Fifth Amendment has been entered into in ▇▇▇▇▇▇
County, Texas, and it shall be performable for all purposes in ▇▇▇▇▇▇ County,
Texas. Courts within the State of Texas shall have jurisdiction over any and all
disputes between the Borrower and the Bank, whether in law or equity, including,
but not limited to, any and all disputes arising out of or relating to this
Fifth Amendment or any other Loan Document; and venue in any such dispute
whether in federal or state court shall be laid in ▇▇▇▇▇▇ County, Texas.
VIII. Severability. Whenever possible each provision of this Fifth
Amendment shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Fifth Amendment shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Fifth Amendment.
IX. Execution in Counterparts. This Fifth Amendment may be executed in any
number of counterparts and by the different parties on separate counterparts,
and each such counterpart shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument, and any
signed counterpart shall be deemed delivered by the party executing such
counterpart if sent to any other party hereto by electronic facsimile
transmission.
X. Section Captions. Section captions used in this Fifth Amendment are
for convenience of reference only, and shall not affect the construction of this
Fifth Amendment.
XI. Successors and Assigns. This Fifth Amendment shall be binding upon
the Borrower, each Guarantor and the Bank and their respective successors and
assigns, and shall inure to the benefit of the Borrower, each Guarantor
and the Bank, and the respective successors and assigns of the Bank.
XII. Non-Application of Chapter 15 of Texas Credit Codes. The provisions of
Chapter 15 of the Texas Credit Code (Vernon's Texas Civil Statutes, Article
5069-15) are specifically declared by the parties hereto not to be applicable to
the Loan Agreement as hereby further amended or any of the other Loan Documents
or to the transactions contemplated hereby.
XIII. Notice. THIS FIFTH AMENDMENT TOGETHER WITH THE LOAN AGREEMENT, AND THE
OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND
MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
IN WITNESS WHEREOF, the parties hereto have caused this Fifth Amendment
to be duly executed as of the day and year first above written.
BORROWER
SABA PETROLEUM COMPANY
By:___________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Vice President and
Chief Financial Officer
BANK
BANK ONE, TEXAS, N.A.
By:___________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President
GUARANTORS:
SABA ENERGY OF TEXAS, INCORPORATED
By:________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Secretary
SABA PETROLEUM, INC.
By:________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Secretary
SABA PETROLEUM OF MICHIGAN, INC.
By:________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Secretary
MV VENTURES, G. P.
By: Saba Energy of Texas, Incorporated,
Managing Partner
By:___________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Secretary
SABACOL, INC.
By:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Secretary
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
EXHIBIT "A"
MEZZANINE NOTE
$3,000,000.00 Houston, Texas November 11, 1997
FOR VALUE RECEIVED, SABA PETROLEUM COMPANY, a Delaware
corporation, whose address is ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (herein called "Maker"), promises to pay to the order of BANK
ONE, TEXAS, NA, a national banking association (herein called "Payee," which
term shall also refer to any subsequent owner or holder of this Note), the sum
of THREE MILLION AND NO/100 DOLLARS ($3,000,000.00), or so much thereof as has
been advanced hereunder, in lawful money of the United States of America,
together with interest accruing from the date of advance on the principal amount
from time to time remaining unpaid, at the varying per annum rate from day to
day equal to the lesser of (a) the Maximum Rate (as hereinafter defined), or (b)
the Mezzanine Loan Rate (as prescribed in the Loan Agreement, hereafter
defined), calculated on a year of three hundred sixty-five (365) or three
hundred sixty-six (366) days, as applicable. All payments of both principal and
interest shall be payable to Payee at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇, or such other place as Payee may from time to time designate to
Maker in writing.
"Loan Agreement" means that certain First Amended and Restated
Loan Agreement dated September 23, 1996, by and among Payee, Maker, et al., as
heretofore amended and as the same may be hereafter amended, extended, restated,
rearranged and/or renewed from time to time.
"Maximum Rate" means the maximum rate of nonusurious interest
from time to time permitted by applicable usury laws, as more fully defined in
the Loan Agreement.
All past due principal hereof and accrued unpaid interest
thereon shall bear interest from the maturity of such principal and interest at
the lesser of (i) the Maximum Rate or (ii) the Mezzanine Loan Rate as prescribed
in the Loan Agreement, calculated on the basis of a year of three hundred
sixty-five (365) or three hundred sixty-six (366) days, as applicable.
The principal of the indebtedness evidenced hereby shall be
repaid on or before January 2, 1998.
Interest shall be paid monthly in arrears on the first day of
each calendar month commencing December 1, 1997, and continuing regularly on the
first day of each calendar month thereafter until January 2, 1998, when the
entire amount of accrued, unpaid interest, shall be due and payable.
Maker may prepay at any time in whole, or from time to time in
part, and without any premium or penalty therefor, the principal amount hereof
then remaining unpaid together with all accrued interest payable on said
principal so prepaid, all as more fully set forth in the Loan Agreement. Any
such prepayment hereunder shall be applied first to accrued but unpaid interest
on the principal so prepaid, and the balance to principal installments in the
inverse order of maturity, but no part prepayment shall, until this Note is
fully paid and satisfied, affect the obligations to continue to pay the regular
installments required hereunder until the entire indebtedness has been paid.
If any payment hereunder falls due on a Saturday, Sunday or
public holiday on which commercial banks in Houston, Texas are permitted or
required by law to be closed, the time for such payment shall be extended to the
next day on which the Payee is open for business, and such extension of time
shall be included in the calculation of interest accruing and payable hereunder.
Payment of this Note is secured by the security interests,
mortgages and liens granted by Maker to Payee pursuant to the Loan Agreement,
the terms and conditions of which, together with all amendments and supplements
thereto, are incorporated herein by reference.
Upon happening of an Event of Default (as defined in the Loan
Agreement) specified in Subsections 7.01(f) or (g) of the Loan Agreement, the
entire aggregate principal amount of the indebtedness evidenced hereby and the
interest accrued thereon shall automatically become immediately due and payable,
and during the continuation of any other Event of Default, Payee may declare the
entire aggregate principal amount of all indebtedness then outstanding hereunder
and the interest accrued thereon immediately due and payable. In either case,
the entire principal and interest shall thereupon become immediately due and
payable, without notice (including, without limitation, notice of intent to
accelerate maturity or notice of acceleration of maturity) and without
presentment, demand, protest, notice of protest or other notice of default or
dishonor of any kind, except as provided to the contrary elsewhere in the Loan
Agreement, all of which are hereby expressly waived by the Maker.
If this Note or any installment hereof is not paid when due
(whether the same becomes due by demand, acceleration or otherwise) and it is
placed in the hands of an attorney for collection, or if collected through any
legal proceedings including but not limited to suit, probate, insolvency or
bankruptcy proceedings, Maker agrees to pay reasonable attorneys' fees and costs
of collection.
It is the intention of the parties hereto to comply with
applicable usury laws; accordingly, notwithstanding any provision to the
contrary in this Note, or in any of the documents securing payment hereof or
otherwise relating hereto including without limitation the Loan Agreement, in no
event shall this Note or such documents require the payment or permit the
collection of interest in excess of the maximum amount permitted by such law. If
any such excess of interest is contracted for, charged or received under this
Note or under the terms of any of the documents securing payment hereof or
otherwise relating hereto, or in the event the maturity of the indebtedness
evidenced by this Note is accelerated in whole or in part, or in the event that
all or part of the principal or interest of this Note shall be prepaid, so that
under any of such circumstances the amount of interest contracted for, charged
or received under this Note or under any of the instruments securing payment
hereof or otherwise relating hereto, on the amount of principal actually
outstanding from time to time under this Note shall exceed the maximum amount of
interest permitted by applicable usury law, then in any such event (a) the
provisions of this paragraph shall govern and control, (b) neither Maker nor any
other person or entity now or hereafter liable for the payment hereof, shall be
obligated to pay the amount of such interest to the extent that it is in excess
of the maximum amount of interest permitted by applicable usury law, (c) any
such excess which may have been collected shall be either applied as a credit
against the then unpaid principal amount hereof or refunded to Maker, at Payee's
option, and (d) the effective rate of interest shall be automatically reduced to
the maximum lawful contract rate allowed under applicable usury law as now or
hereafter construed by the courts having jurisdiction thereof. Without limiting
the foregoing, all calculations of the rate of interest contracted for, charged
or received under this Note or under such other documents which are made for the
purpose of determining whether such rate exceeds the maximum lawful contract
rate, shall be made, to the extent permitted by law, by amortizing, prorating,
allocating and spreading in equal parts during the period of the full stated
term of the indebtedness evidenced hereby, all interest at any time contracted
for, charged or received from Maker or otherwise by Payee in connection with
such indebtedness.
Except as otherwise expressly provided to the contrary in the
Loan Agreement, Maker and any and all sureties, guarantors and endorsers of this
Note and all other parties now or hereafter liable hereon, severally waive
grace, demand, presentment for payment, notice of dishonor, notice of intent to
accelerate, notice of acceleration, protest and notice of protest, any other
notice and diligence in collecting and bringing suit against any party hereto
and agree (i) to all extensions and partial payments, with or without notice,
before or after maturity, (ii) to any substitution, exchange or release of any
security now or hereafter given for this Note, (iii) to the release of any party
primarily or secondarily liable hereon, and (iv) that it will not be necessary
for Payee, in order to enforce payment of this Note, to first institute or
exhaust Payee's remedies against Maker or any other party liable therefor or
against any security for this Note.
Any check, draft, money order or other instrument given in
payment of all or any portion hereof may be accepted by Payee and handled in
collection in the customary manner, but the same shall not constitute payment
hereunder or diminish any rights of Payee except to the extent that actual cash
proceeds of such instrument are unconditionally received by Payee.
INTERNAL LAWS OF THE STATE OF TEXAS AND THE UNITED STATES OF
AMERICA; PROVIDED, HOWEVER, THAT VERNON'S TEXAS CIVIL STATUTES, ARTICLE 5069,
CHAPTER 15 (WHICH REGULATES CERTAIN REVOLVING CREDIT LOAN ACCOUNTS AND REVOLVING
TRIPARTY ACCOUNTS) SHALL NOT APPLY TO THIS NOTE.
SABA PETROLEUM COMPANY
By:/s/Walton C. ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Vice President and
Chief Financial Officer