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[NATIONSBANK LOGO] Note# Acct# PROMISSORY NOTE
NationsBank of Texas, N.A. (Single Maturity)
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Name and Address of Lender (Including County) Officer Date
NationsBank of Texas, N.A. Paul A. Squires February 4, 1998
700 Louisiana -------------------------------------
Houston, Texas 77002 Maturity Date Amount of Note
May 4, 1998 $130,000,000.00
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[ ] 1. Fixed Rate of %, or
Annual Rate [ ] 2. Lender's Business Base Rate plus %, or
of Interest (AR): [ ] 3. Lenders Prime Rate plus %, or
(Check and [X] 4. See Below*
Complete one)
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AR Computed Using
360/360 Days per Year
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Terms used in this Note shall have the meanings indicated herein and in the
boxes above. On demand, or if prior demand is not made then on Maturity Date,
Maker promises to pay to the order of Lender at Lender's address shown above
the Amount of Note plus interest on unpaid Amount of Note from Date at the AR
over the elapsed term of Note provided that the amount of interest payable
shall not exceed the maximum amount Lender lawfully may charge on this Note. If
the AR is stated in terms of Lender's Business Base Rate, Lender's Prime Rate,
or such other variable Rate described under the * below, the AR shall change
with each change in such named Rate as of the date of any such change without
notice. "Lender's Business Base Rate" shall mean the Business Base Rate charged
by Lender as announced or published by Lender from time to time. "Lender's
Prime Rate" shall mean the Prime Interest Rate charged by Lender as announced
or published by Lender from time to time. The two rates may not be related and
either may not be the lowest interest rate charged by Lender. Unpaid and past
due Amount of Note and interest shall bear interest at the highest rate Lender
lawfully may charge on this Note. Interest paid or agreed to be paid shall not
exceed the maximum amount permissible under applicable law and, in any
contingency whatsoever, if Lender shall receive anything of value deemed
interest under applicable law which would exceed the maximum amount of interest
permissible under applicable law, the excessive interest shall be applied to
the reduction of the unpaid Amount of Note or refunded to Maker.
Each Maker, guarantor, surety and endorser waives demand, presentment, notice of
dishonor, protest, notice of intent to accelerate, notice of acceleration and
diligence in collecting sums due hereunder; agrees to application of any debt of
Lender to the payment hereof; agrees that extensions and renewals without limit
as to number, acceptance of any number of partial payments, releases of any
party liable hereon, and releases or substitutions of collateral, before or
after maturity, shall not release or discharge his obligation under this Note;
and agrees to pay in addition to all other sums due hereunder reasonable
attorney's fees if this Note is placed in the hands of an attorney for
collection or if it is collected through probate, bankruptcy, or other judicial
proceeding, plus all court costs and other collection expenses incurred by
Lender. As used herein, where appropriate, the masculine gender includes the
feminine and neuter and the singular number includes the plural. All payments
hereunder shall be made in lawful tender of the United States of America. This
Note is executed in the county and state stated above.
*In accordance with the Letter Agreement between Borrower and Lender dated
February 4, 1998.
Compania Occidental de Hidrocarburos, Inc.
By: LUIS H. DERROTA
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Title: Vice President & Assistant Secretary
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Compania Occidental de Hidrocarburos, Inc.
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(Maker)
[Compania Occidental de Hidrocarburos,Inc.]
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CONFIDENTIAL
February 4, 1998
Compania Occidental de Hidrocarburos, Inc.
c/o Union Texas Petroleum Holdings, Inc.
1330 Post Oak Blvd.
P.O. Box 2120
Houston, Texas 77252-2120
Re: $130,000,000 Loan
Gentlemen:
NationsBank of Texas, N.A. ("NationsBank") has been requested to make a loan in
the amount of $130,000,000 to Compania Occidental de Hidrocarburos, Inc., a
corporation organized under the laws of California ("Borrower") in a single
advance on the date hereof. NationsBank has agreed to make the Loan upon the
following terms and conditions:
1. The Loan shall be evidenced by a Promissory Note in the form of Exhibit A
attached hereto (the "Note").
2. The Loan shall mature and, together with accrued interest, be payable in
full on May 4, 1998. The Loan shall bear interest at the Borrower's
election at (i) a rate equal to the rate (computed on the basis of a year
of 360 days for the actual number of days elapsed, including the first day
but excluding the last day) determined by NationsBank at which deposits are
offered by NationsBank in the London Interbank Eurodollar Market two
business days prior to the date of the Loan for a one-month period in an
amount substantially equal to the Loan plus 50 basis points (the "LIBOR
Rate") or (ii) for terms of 7 days or less a fixed rate of interest
mutually agreed to between the Borrower and NationsBank. If a fixed rate
is not agreed to between the Borrower and NationsBank as provided for above
and any existing interest period has lapsed, the Loan shall bear interest
at a one-month LIBOR Rate (including the 50 basis point margin) set two
business days prior to the end of such expiring one-month period.
3. The Loan shall not be subject to optional prepayment by Borrower.
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Compania Occidental de Hidrocarburos, Inc.
February 4, 1998
Page 2
4. It shall be an Event of Default under this letter agreement and the Note in
the event Borrower fails to pay the principal of or accrued interest on the
Loan when due or upon the occurrence of an Event of Default as defined in
that certain Second Amended and Restated Credit Agreement dated as of March
29, 1996 (as heretofore amended or modified, the "Credit Agreement") among
the Guarantor, the lenders party thereto, NationsBank, as Agent, and Bank
of America National Trust and Savings Association and Union Bank of
Switzerland, Houston Agency, as Co-Agents.
5. Borrower hereby represents and warrants to NationsBank as follows
i. The Borrower is a corporation duly organized, validly
existing, and in good standing under the laws of the State of California.
The Borrower is duly qualified and authorized to do business and is in good
standing in California.
ii. The Borrower has all corporate power, permits and other
authorizations required to own and operate its properties and to carry on
its business as now conducted by it.
iii. The execution and delivery of this Agreement and the Note,
the consummation of the transactions and the execution and delivery of the
instruments contemplated hereby, and the fulfillment of the terms and
compliance with the provisions hereof and thereof will not result in any
violation or breach of any provisions of, or constitute a default under,
the Borrower's Certificate of Incorporation or bylaws.
6. As a condition precedent to NationsBank agreeing to make the Loan to
Borrower, Union Texas Petroleum Holdings, Inc. shall agree to guaranty the
Loan and shall cause its duly authorized representatives to execute a
Guaranty Agreement in substantially the form of Exhibit B attached hereto
to NationsBank, together with such authorizing resolutions and certificates
of incumbency and specimen signatures of the signing officers as
NationsBank may reasonably request.
7. THE WRITTEN LOAN AGREEMENT AND THE NOTE REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR
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Compania Occidental de Hidrocarburos, Inc.
February 4, 1998
Page 3
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
Very truly yours,
NATIONSBANK OF TEXAS, N.A.
By: /s/ PAUL SQUIRES
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Title: Senior Vice President
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Compania Occidental de Hidrocarburos, Inc.
February 4, 1998
Page 4
ACCEPTED AND AGREED TO:
COMPANIA OCCIDENTAL DE HIDROCARBUROS, INC.
By: /s/ LUIS H. DERROTA
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Title: Vice President and
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Assistant Secretary
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Exhibit B
GUARANTY AGREEMENT
GUARANTY dated as of February 4, 1998 ("Agreement") between Union Texas
Petroleum Holdings, Inc. (the "Guarantor") and NationsBank of Texas, N.A. (the
"Lender").
WITNESSETH:
WHEREAS, pursuant to a letter agreement dated as of February 4, 1998 (the
"Letter Agreement") between Compania Occidental de Hidrocarburos, Inc. (the
"Company") and the Lender, the Company is entitled, subject to certain
conditions, to borrow up to $130,000,000;
WHEREAS, as a condition to borrowing under the Letter Agreement and the
Note referred to therein (the "Note"), the Guarantor is required to execute and
deliver this Agreement whereby the Guarantor shall guarantee the payment when
due of the principal of and interest on the loan evidenced by the Note and all
other amounts payable at any time by the Company or the Guarantor under the
Letter Agreement, the Note or this Agreement (collectively, the "Interim
Financing Documents") including, without limitation, interest which accrues
during a proceeding which occurs under the U.S. Bankruptcy Code or which would
otherwise accrue on such amount under the terms of the Letter Agreement and the
Note, but for a proceeding under the U.S. Bankruptcy Code (such principal,
interest and other amounts being herein called the "Guaranteed Amount");
WHEREAS, in consideration of such financial and other support as the
Company may in the future provide, to the Guarantor and in order to induce the
Lender to enter into the Letter Agreement and to make the loan contemplated
thereby, the Guarantor is willing to guarantee the Guaranteed Amounts;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions. Terms defined in the Letter Agreement and not
otherwise defined herein are used as therein defined.
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ARTICLE II
GUARANTEES
SECTION 2.01. The Guaranty. The Guarantor hereby unconditionally and
irrevocably guarantees to the Lender the full and punctual payment of all
present and future Guaranteed Amounts as and when the same shall become due and
payable, whether at maturity, by declaration or otherwise, according to the
terms thereof. In case of failure by the Company punctually to pay any
Guaranteed Amount, the Guarantor agrees upon demand by the Lender, to make
payment thereof to the Lender at the place and in the manner specified in the
Letter Agreement.
SECTION 2.02. Guaranty Unconditional. The obligations of the Guarantor
under this Article II shall be unconditional and absolute and, without limiting
the generality of the foregoing, shall not be released, discharged or otherwise
affected by:
(a) any extension, renewal, settlement, compromise, waiver or
release in respect of any obligation of the Company under any Interim Financing
Document or any Guaranteed Amount;
(b) any modification or amendment of or supplement to (i) this
Agreement insofar as the same does not purport to modify the rights or
obligations of the Guarantor hereunder or (ii) any other Interim Financing
Document;
(c) any change in the corporate existence, structure or ownership of
the Company or the Guarantor, or any insolvency, bankruptcy, reorganization or
other similar proceeding affecting the Company or the Guarantor or their
respective assets;
(d) the existence of any claim, set-off or other rights which the
Guarantor may have at any time against the Company, the Lender or any other
person or entity, whether or not arising in connection with any Interim
Financing Document or any Guaranteed Amount, provided that nothing herein shall
prevent the assertion of any such claim by separate suit or compulsory
counterclaim;
(e) any invalidity or unenforceability relating to or against the
Company or the Guarantor for any reason of any Interim Financing Document or
any Guaranteed Amount, or any provision of applicable law or regulation
purporting to prohibit the payment by the Company or the Guarantor of any
Guaranteed Amount; or
(f) any other act or omission to act or delay of any kind by the
Company or the Guarantor, the Lender or any other person or entity or any other
circumstances whatsoever that
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might, but for the provisions of this paragraph, constitute a legal or equitable
discharge of the obligations of the Guarantor under this Article II.
SECTION 2.03. Discharge Reinstatement in Certain Circumstances. The
Guarantor's obligations under this Article II shall remain in full force and
effect until all of the Guaranteed Amounts shall have been paid in full. If at
any time any payment of or any amount payable by the Company or the Guarantor in
respect of any Guaranteed Amount is rescinded or must be otherwise restored or
returned upon the insolvency, bankruptcy or reorganization of such Person or
otherwise, the Guarantor's obligations under this Article II with respect to
such payment shall be reinstated at such time as thought such payment had become
due but had not been made at such time.
SECTION 2.04. Waiver. The Guarantor irrevocably waives acceptance hereof,
presentment, demand, protest and any notice not provided for herein, as well as
any requirement that at any time any action be taken by any person or entity
against the Company or the Guarantor or any other person or entity. The
Guarantor hereby irrevocably waives each and every right to which it may be
entitled by virtue of the suretyship laws of the State of Texas, including,
without limitation, any and all rights it may have pursuant to Rule 31 or Rule
32, Texas Rules of Civil Procedure, Section 17.001 of the Texas Civil Practice
and Remedies Code and Chapter 34 of the Texas Business and Commerce Code.
SECTION 2.05. Subrogation and Contribution. The Guarantor irrevocably
waives any and all rights to which it may be entitled, by operation of law or
otherwise, upon making any payment hereunder (i) to be subrogated to the rights
of the payee against the Company with respect to such payment or otherwise to be
reimbursed, indemnified or exonerated by the Company in respect thereof or (ii)
to receive any payment, in the nature of contribution or for any other reason,
from any other person with respect to such payment, in each case until such time
as all of the Guaranteed Amounts shall have been paid in full.
SECTION 2.06. Stay of Acceleration. If acceleration of the time for
payment of any amount payable by the Company in respect of any Guaranteed Amount
is stayed upon the insolvency, bankruptcy or reorganization of such entity, all
such amounts otherwise subject to acceleration under the terms of the Interim
Financing Documents or any other agreement or instrument evidencing such
Guaranteed Amount shall nonetheless be payable by the Guarantor hereunder
forthwith on demand by the Lender.
SECTION 2.07. Existing Credit Agreement. Guarantor will maintain borrowing
availability under that certain Second Amended and Restated Credit Agreement
dated as of March 29, 1996 (as heretofore amended or modified, the "Credit
Agreement") among the Guarantor, the lenders party thereto, NationsBank, as
agent, Bank of America National Trust and Savings and Union Bank of
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Switzerland, Houston Agency, as Co-Agents in an amount not less than the
principal balance of the Guaranteed Amount.
SECTION 2.08. Representations and Warranties. The Guarantor represents and
warrants that as of the date hereof, and after giving effect to this Agreement
and the contingent obligations evidenced hereby (i) it is and will be solvent,
and has and will have assets which, fairly valued, exceed its obligations,
liabilities and debts, and has and will have property and assets sufficient to
satisfy and repay its obligations, liabilities and debts when the same become
due and (ii) the representations and warranties set forth in the Credit
Agreement are true on the date hereof as if made on the date hereof.
ARTICLE III
MISCELLANEOUS
SECTION 3.01. Notices. All notices, requests and other communications to
any party hereunder shall be in writing (including telecopy, telex, facsimile
transmission or similar writing) and (i) in the case of the Guarantor, shall be
given to the Guarantor at Union Texas Petroleum Holdings, Inc., 1330 Post Oak
Boulevard, Houston, Texas 77056 (telex number: 762255) and (ii) in the case of
the Company or the Lender, at its address specified in the Letter Agreement or
in any case at such other address or telex number as such party may hereafter
specify for the purpose by notice to the Lender and the Company. Each such
notice, request or other communication shall be effective (i) if given by
telex, when such telex is transmitted to the telex number specified in this
Section and the appropriate answer is received, (ii) if given by mail, 72 hours
after such communication is deposited in the mails with first class postage
prepaid, addressed as aforesaid or (iii) if given by any other means, when
delivered at the address specified in this Section.
SECTION 3.02. No Waiver; Exercise of Remedies. No failure or delay by the
Lender in exercising any right, power or privilege hereunder shall operate as a
waiver thereof nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided shall be cumulative and not
exclusive of any rights or remedies provided by law.
SECTION 3.03. Amendments and Waivers. Any provision of this Agreement may
be amended or waived, and the Guarantor may be released from any of its
obligations hereunder, if and only if, such amendment, waiver or release is in
writing and is signed by the Lender.
SECTION 3.04. Texas Law. This Agreement shall be construed in accordance
with and governed by the law of the state of Texas.
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SECTION 3.05. CONSENT TO JURISDICTION. THE GUARANTOR HEREBY IRREVOCABLY
CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF TEXAS
AND OF ANY FEDERAL COURT LOCATED IN SUCH STATE OVER EACH OF THEM IN CONNECTION
WITH ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY INTERIM
FINANCING DOCUMENT AND, TO THE FULLEST EXTENT PERMITTED BY LAW, FURTHER AGREES
(AND SHALL NOT CONTEST) THAT THE PROPER VENUE FOR FILING AND MAINTAINING ANY
SUCH ACTION OR PROCEEDING SHALL BE IN THE STATE OF TEXAS. IN ANY SUCH ACTION OR
PROCEEDING, THE GUARANTOR WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR
OTHER PROCESS OR NOTICE AND AGREES THAT SERVICE BY FIRST CLASS MAIL, RETURN
RECEIPT REQUESTED, TO THE GUARANTOR AT ITS ADDRESS FOR NOTICES HEREUNDER, OR
ANY OTHER FORM OF SERVICE PROVIDED FOR IN THE TEXAS CIVIL PRACTICE LAW AND RULES
THEN IN EFFECT SHALL CONSTITUTE GOOD AND SUFFICIENT SERVICE UPON THE GUARANTOR.
SECTION 3.06. WAIVER OF JURY TRIAL. THE GUARANTOR HEREBY IRREVOCABLY
WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 3.07. WAIVER OF SOVEREIGN IMMUNITY. TO THE EXTENT THAT THE
GUARANTOR HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY
COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT
PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION, EXECUTION OR OTHERWISE) WITH
RESPECT TO ITSELF OR ITS PROPERTY, THE GUARANTOR HEREBY IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT IT MAY LEGALLY DO SO, SUCH IMMUNITY IN RESPECT OF ITS
OBLIGATIONS UNDER THIS AGREEMENT AND, WITHOUT LIMITING THE GENERALITY OF THE
FOREGOING, AGREES, TO THE FULLEST EXTENT IT MAY LEGALLY DO SO, THAT THE WAIVERS
SET FORTH IN THIS SECTION 3.07 SHALL HAVE THE FULLEST SCOPE PERMITTED UNDER THE
FOREIGN SOVEREIGN IMMUNITIES ACT OF 1976 OF THE UNITED STATES AND ARE INTENDED
TO BE IRREVOCABLE FOR PURPOSES OF SUCH ACT.
SECTION 3.08. Successors and Assigns. All of the provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, except that the Guarantor may not
assign or transfer any of its rights or obligations under this Agreement.
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SECTION 3.09 Counterparts. This Agreement may be signed in any number
of counterparts, each of which shall be an original, and all of which taken
together shall constitute a single instrument, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the date first
above written.
GUARANTOR:
UNION TEXAS PETROLEUM HOLDINGS, INC.
By: /s/ M. N. Markowitz
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Title: Vice President and
Treasurer
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LENDER:
NATIONSBANK OF TEXAS, N.A.
By: /s/ PAUL SQUIRES
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TITLE: Senior Vice President
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