EXHIBIT 10.3
December 31, 1997
Saba Petroleum Company
0000 Xxxxxxx Xxxxx, Xxxxx 000
Xxxxx Xxxxx, Xxxxxxxxxx 00000
Attn: Xx. Xxxxxx X. Xxxxx
RE: Amendment of First Amended and Restated Loan
Agreement dated September 23, 1996, as
amended, among Saba Petroleum Company et al. and
Bank One, Texas, N.A. (the "Loan
Agreement")
Dear Xx. Xxxxx:
Saba Petroleum Company ("Saba") has asked that Bank One,
Texas, N.A. ("Bank One") consent to the Preferred Stock Sale transaction (herein
called the "Transaction") that is outlined on the Final Summary of Offering
dated December 15, 1997 (the "Summary of Offering"), which is attached as
Exhibit "A" to the form of consent letter that is attached hereto as Schedule 1
(the "Consent Letter"), and extend the maturity dates of the Term Note and the
Mezzanine Note. Bank One is willing to do so, subject to the following terms and
conditions.
1. Consent. Upon satisfaction of the conditions set
forth in paragraph 2 hereof, Bank One shall contemporaneously execute and
deliver the Consent Letter to Saba.
2. Conditions to Consent.
a. Closing of the Transaction. The Consent
Letter and the amendments set forth herein are effective and conditioned upon
the contemporaneous closing of the Transaction.
b. Transaction Documents. Bank One's
execution and delivery of the Consent
Letter is further conditioned on Saba's representation, and Saba does hereby
represent, that: (i) the Summary of Offering substantially describes the terms
of the Transaction insofar as it relates to dividends payable with respect to
the Preference Shares (as defined in the Summary of Offering) and the redemption
of the Preference Shares, and (ii) there are no variances between the terms of
the definitive documentation to be executed by Saba to implement the Transaction
and those set forth in the Summary of Offering that would materially, adversely
affect either Saba's Obligations to Bank One, Bank One's rights with respect to
Saba, or Bank One's remedies upon the occurrence of an Event of Default or an
Unmatured Event of Default.
c. Application of Proceeds. Contemporaneously
with Saba's consummation of the
Transaction, Saba shall pay to Bank One the principal sum of $7,000,000.00, to
be credited to the outstanding principal balance of the Term Loan evidenced by
the Term Note, together with a fee in the amount of $113,755.38 (being 2% of the
principal balance remaining under the Term Note and the Mezzanine Note
subsequent to the effective date of this Amendment), as consideration for the
consents, waivers and amendments agreed to herein by Bank One, and the remaining
proceeds, net of direct costs associated with this transaction, are to be
applied within thirty (30) days to trade payables incurred in connection with
Borrower's operation and development of its oil and gas properties
x. Xxxxxx Lake Resources. Saba agrees that
the pledge of its interest in the
Beaver Lake stock, the escrow agreement relating thereto, and the Sabacol stock,
as provided in the Fifth Amendment, shall, within ten (10) Business Days from
the date hereof, be fully perfected and implemented as set forth in Section
3.17(d) and (e) and Section 5.36 of the Loan Agreement, as added by the Fifth
Amendment.
3. Amendment of Maturity Dates. Saba and Bank One hereby agree
that the Mezzanine Loan Maturity Date is amended from January 2, 1998, to become
April 30, 1998, and that the Term Loan Maturity Date is amended from December
31, 1997, to become April 30, 1998.
4. Article V shall be amended by adding the following
new Section 5.37:
5.37 Special Principal Payments. The Borrower shall reduce the
outstanding principal balance of the Term Loan and the
Mezzanine Loan by a total of $3,000,000 on or before April 1,
1998 and, on or before June 1, 1998, shall reduce the
outstanding principal balance of the remaining Indebtedness
owed to Bank One by an additional amount equal to the greater
of: (a) $3,000,000; or (b) an amount sufficient to reduce the
balance of Borrower's outstanding Indebtedness to Bank One
plus the unfunded Revolving Commitment to such an amount that
can be fully repaid by the net cash flow projected by Bank One
to be received by Borrower from the sale of oil and gas
produced from the Borrowing Base Properties within the
Economic Half Life of the Borrowing Base Properties as
determined by Bank One, in its sole discretion, using its
then-prevailing credit criteria, exclusive of the required
reductions of the Borrowing Base described in Section 2.03.
5. Other Amendments to Loan Documents. Saba agrees that it
shall cooperate and negotiate in good faith with Bank One subsequent to the
execution of this Agreement in order to reach agreement, and enter into
documentation in form and substance satisfactory to Bank One, regarding
additional amendments to the following provisions of the Loan Agreement:
a. Section 5.34 shall be amended to take into
account the payment credited to the
Term Loan pursuant to this Amendment, and to adjust the obligations with respect
to the application of future funds raised by Saba as between the Mezzanine Loan
and the Term Loan.
If requested by Bank One, Saba shall, and Saba shall cause
each of its Subsidiaries that are parties to the Loan Agreement to, authorize,
approve and enter into, on or before January 31, 1998, a more definitive
amendment document and any implementing documentation contemplated thereby, in
order to more fully set forth and/or implement the provisions of this Amendment.
6. 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 Xxxxx Xxxxxxxxx relates only to the Indebtedness evidenced by the
Mezzanine Note and the Term Note. This ratification is given for the purpose of
inducing Bank One to enter into this Amendment and each Guarantor is aware that,
but for such ratification and agreement contained herein, Bank One would not
enter into this Amendment.
7. Reaffirmation of Representations and Warranties. To induce
Bank One to enter into this Amendment, Saba 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
Amendment and the performance by Saba and
each Guarantor of its obligations under this Amendment are within Saba'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 Saba or any Guarantor or of any agreement
binding upon Saba or any Guarantor.
b. The Loan Agreement as amended by this
Amendment and each Guaranty,
respectively, as ratified hereby, represent the respective legal, valid and
binding obligations of Saba and each respective 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.
8. Defined Terms. Except as amended hereby, terms
used herein that are defined in the Loan Agreement shall have the same
meanings herein.
9. Reaffirmation of Loan Agreement. This 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.
10. Entire Agreement. The Loan Agreement, as hereby further
amended, and the respective Guaranty of each Guarantor, embody the entire
agreement between Saba, the Guarantors and Bank One and supersedes all prior
proposals, agreements and understandings relating to the subject matter hereof.
Saba 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.
11. Governing Law. THIS 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 Amendment has been entered into in
Xxxxxx County, Texas, and it shall be performable for all purposes in Xxxxxx
County, Texas. Courts within the State of Texas shall have jurisdiction over any
and all disputes between Saba and Bank One, whether in law or equity, including,
but not limited to, any and all disputes arising out of or relating to this
Amendment or any other Loan Document; and venue in any such dispute whether in
federal or state court shall be laid in Xxxxxx County, Texas.
12. Severability. Whenever possible each provision of this
Amendment shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this 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 Amendment.
13. Execution in Counterparts. This 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.
14. Section Captions. Section captions used in this
Amendment are for convenience of reference only, and shall not affect the
construction of this Amendment.
15. Successors and Assigns. This Amendment shall be binding
upon Saba, each Guarantor and Bank One and their respective successors and
assigns, and shall inure to the benefit of Saba, each Guarantor and Bank One,
and the respective successors and assigns of Bank One.
16. 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.
17. Notice. In connection with the Loans, Saba, Bank One and
the Guarantors have executed and delivered certain agreements, instruments and
documents (collectively hereinafter referred to as the "Written Loan
Agreement"). It is the intention of Saba, Bank One and the Guarantors that this
provision be incorporated by reference into each of the written agreements,
instruments and documents comprising the Written Loan Agreement. Saba, Bank One
and the Guarantors each warrant and represent that the entire agreement made and
existing by or among Saba, Bank One and the Guarantors with respect to the Loans
is contained within the Written Loan Agreement, as amended and supplemented
hereby, and that no agreements or promises have been made by, or exist by or
among, Saba, Bank One and Guarantors that are not reflected in the Written Loan
Agreement. THE WRITTEN LOAN AGREEMENT REPRESENTS 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.
18. Event of Default. It shall constitute an Event of
Default under the Loan Agreement if
Saba shall fail to perform any of its obligation set forth in this Agreement.
BANK ONE TEXAS, N.A.
By:/s/Xxxxxx X. Meilburger
Xxxxxx X. Xxxxxxxxx,
Senior Vice President
ACCEPTED AND AGREED TO THIS
30TH DAY OF DECEMBER, 1997:
SABA PETROLEUM COMPANY
By:/s/Walton C. Xxxxx
XXXXXX X. XXXXX,
Secretary
SABA ENERGY OF TEXAS, SABA PETROLEUM OF MICHIGAN, INC.
INCORPORATED
By:/s/Xxxxxx X. Xxxxx By:/s/Walton C. Xxxxx
XXXXXX X. XXXXX, XXXXXX X. XXXXX
Secretary Secretary
SABA PETROLEUM, INC. MV VENTURES, G.P.
By: Saba Energy of Texas,
Incorporated,
Managing Partner
By:/s/Walton C. Xxxxx
XXXXXX X. XXXXX,
Secretary By:/s/Walton C. Xxxxx
XXXXXX X. XXXXX,
Secretary
SABACOL, INC.
/s/Xxxxx Xxxxxxxxx
By:/s/Xxxxxx X. Xxxxx XXXXX XXXXXXXXX
XXXXXX X. XXXXX,
Secretary
