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EXECUTION COPY
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CREDIT AGREEMENT
dated as of May 30, 1996
among
BENTON OIL AND GAS COMPANY
and
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS................................................. 1
SECTION 1.01. Definitions 1
SECTION 1.02. Accounting Terms and Determinations 14
ARTICLE II
THE CREDITS.................................................. 15
SECTION 2.01. Commitments 15
SECTION 2.02. Notices 15
SECTION 2.03. Funding of Loans 16
SECTION 2.04. Note 16
SECTION 2.05. Repayment 16
SECTION 2.06. Interest Rates 17
SECTION 2.07. Fees 18
SECTION 2.08. Termination or Reduction of Commitments 19
SECTION 2.09. Prepayments 19
SECTION 2.10. General Provisions as to Payments 19
SECTION 2.11. Funding Losses 20
SECTION 2.12. Computation of Interest 20
ARTICLE III
CONDITIONS................................................... 20
SECTION 3.01. Letter of Credit 20
SECTION 3.02. Initial Loan 21
SECTION 3.03. Additional Conditions 22
ARTICLE IV
REPRESENTATIONS AND WARRANTIES........................................ 23
SECTION 4.01. Corporate Existence and Power 23
SECTION 4.02. Corporate and Governmental
Authorization; No Contravention 23
SECTION 4.03. Binding Effect 23
SECTION 4.04. Financial Information 24
SECTION 4.05. Compliance 24
SECTION 4.06. Litigation 24
SECTION 4.07. Title to Properties 24
SECTION 4.08. Affiliates and Investments in Others 25
SECTION 4.09. Tax Returns and Payments 25
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SECTION 4.10. ERISA 25
SECTION 4.11. Environmental Matters 27
SECTION 4.12. Labor Relations 28
SECTION 4.13. Status Under Certain Federal Statutes
and Regulations 28
SECTION 4.14. Full Disclosure 28
SECTION 4.15. Service Agreement 28
SECTION 4.16. Maximum Total Fee 29
ARTICLE V
COVENANTS................................................. 29
SECTION 5.01. Information 29
SECTION 5.02. Inspection of Property 33
SECTION 5.03. Corporate Existence, etc 34
SECTION 5.04. Payment of Taxes and Claims 34
SECTION 5.05. Compliance with Laws, etc 34
SECTION 5.06. Maintenance of Properties and Leases 35
SECTION 5.07. Insurance 35
SECTION 5.08. Scope of Business 35
SECTION 5.09. Use of Proceeds 35
SECTION 5.10. Environmental Compliance 36
SECTION 5.11. Maintenance of Books and Records 36
SECTION 5.12. Payment of Trade Payables 37
SECTION 5.13. Financial Covenants 37
SECTION 5.14. Compliance with ERISA 37
SECTION 5.15. Indenture 39
ARTICLE VI
DEFAULTS.................................................. 39
SECTION 6.01. Events of Default 39
ARTICLE VII
CHANGE IN CIRCUMSTANCES.......................................... 42
SECTION 7.01. Basis for Determining Interest Rate
Inadequate or Unfair 42
SECTION 7.02. Illegality 42
SECTION 7.03. Increased Cost and Reduced Return 43
SECTION 7.04. Taxes 44
ARTICLE VIII
MISCELLANEOUS................................................ 45
SECTION 8.01. Notices 45
SECTION 8.02. No Waivers 46
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SECTION 8.03. Expenses; Indemnification 46
SECTION 8.04. Amendments and Waivers 47
SECTION 8.05. Successors and Assigns 47
SECTION 8.06. Governing Law; Submission to
Jurisdiction; Etc 49
SECTION 8.07. Counterparts; Integration;
Effectiveness; Severability 50
SECTION 8.08. WAIVER OF JURY TRIAL 50
SECTION 8.09. Captions 50
Schedule I - Subsidiaries
Schedule II - Investments
Schedule III - Terminated Plans
Exhibit A - Form of Deposit Agreement
Exhibit B - Form of Letter of Credit
Exhibit C - Form of Note
Exhibit D - Form of Guarantee Agreement
Exhibit E - Form of Security Agreement
Exhibit F - Form of Consent
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CREDIT AGREEMENT
AGREEMENT dated as of May 30, 1996 between BENTON OIL AND GAS COMPANY
(together with its successors and assigns, the "Borrower") and MORGAN GUARANTY
TRUST COMPANY OF NEW YORK (together with its successors and assigns, the
"Bank").
The Borrower has requested the Bank to make available to the Borrower a
revolving credit facility in the amount of up to $20,000,000 for its general
corporate purposes, and to issue a standby letter of credit for account of the
Borrower in the face amount of $18,000,000, and the Bank is willing to make
available such facility and issue such letter of credit on and subject to the
terms and conditions of this Agreement. Accordingly, the parties agree as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. The following terms, as used
herein, have the following meanings:
"Adjusted London Interbank Offered Rate" has the meaning set
forth in Section 2.06(e).
"Affiliate" means any Person that directly or indirectly controls, or
is under common control with, or is controlled by, the Borrower and, if such
Person is an individual, any member of the immediate family (including parents,
spouse, children and siblings) of such individual and any trust whose principal
beneficiary is such individual or one or more members of such immediate family
and any Person who is controlled by any such member or trust. As used in this
definition, "control" (including, with its correlative meanings, "controlled by"
and "under common control with") means possession, directly or indirectly, of
power to direct or cause the direction of management or policies (whether
through ownership of securities or partnership or other ownership interests, by
contract or otherwise), provided that, in any event, any Person that owns
directly or indirectly securities having 5% or more of the voting power for the
election of directors or other governing body of a corporation or 5% or more of
the partnership or other ownership interests of any other Person (other than as
a limited partner of
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such other Person) will be deemed to control such corporation or other Person.
Notwithstanding the foregoing, no individual shall be an Affiliate solely by
reason of his or her being a director, officer or employee of the Borrower or
any of its Subsidiaries.
"Approved Auditor" means Deloitte & Touche, Arthur Anderson & Co.,
Coopers & Lybrand, Ernst & Young, KPMG Peat Marwick or Price Waterhouse.
"Asset Acquisition" means (i) an Investment by the Borrower or any
Restricted Subsidiary in any other Person pursuant to which such Person shall
become a Restricted Subsidiary of the Borrower or any Restricted Subsidiary or
shall be merged into or consolidated with the Borrower or any Restricted
Subsidiary or (ii) an acquisition by the Borrower or any Restricted Subsidiary
of the assets of any Person other than the Borrower or any Restricted Subsidiary
that constitute substantially all of a division or line of business of such
Person.
"Asset Disposition" means the sale or other disposition by the Borrower
or any Restricted Subsidiary (other than to the Borrower or another Restricted
Subsidiary) of (i) all or substantially all of the capital stock of any
Restricted Subsidiary or (ii) all or substantially all of the assets that
constitute a division or line of business of the Borrower or any Restricted
Subsidiary.
"Assignee" has the meaning set forth in Section 8.05(c).
"Audited Report" has the meaning set forth in Section 5.01(e).
"Base Rate" means, for any day, a rate per annum equal to the higher of
(i) the Prime Rate for such day or (ii) the sum of 1/2 of 1% per annum plus the
Federal Funds Rate for such day.
"Beneficiary" means Corporacion Venezolana del Petroleo, S.A., a
Venezuelan corporation, and its successors and permitted assigns.
"Capitalized Lease" means, as applied to any Person, any lease of any
property (whether real, personal or mixed) by such Person which would, in
accordance with GAAP, be required to be classified and accounted for as a
capitalized lease on a balance sheet of such Person, other than, in the case of
the Borrower, any such lease under which the Borrower is the lessor.
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"Capitalized Lease Obligation" means any rental obligation under a
Capitalized Lease taken at the amount thereof accounted for as indebtedness (net
of interest expense) in accordance with GAAP.
"Central Bank" means Banco Central de Venezuela.
"Closing Date" means the date of the initial Loan hereunder or, if
earlier, the date of the issuance of the Letter of Credit.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and the rules and regulations promulgated thereunder as from time to time
in effect.
"Collateral" means the Collateral as defined in the Security Agreement.
"Collateral Account" means the Collateral Account as defined in the
Security Agreement.
"Commitment Termination Date" means March 14, 1998, provided that if
such day is not a Euro-Dollar Business Day, the Commitment Termination Date
shall be the next preceding day that is a Euro-Dollar Business Day.
"Commitments" means, collectively, the Loan Commitment and the Letter
of Credit Commitment.
"Concession" means the exclusive right granted by Venezuela to Lagoven
to conduct exploitation operations for crude oil and natural gas in the area
described in Appendix A to the Service Agreement.
"Consent" means a consent and agreement executed by Lagoven in favor of
the Guarantor and the Bank, in substantially the form of Exhibit F hereto.
"Consolidated Interest Expense" means, for any period, the aggregate
amount (without duplication) of (i) interest expense in accordance with GAAP
(including, in accordance with the following sentence, interest attributable to
Capitalized Lease Obligations and the undischarged balance of production
payments) during such period in respect of all Indebtedness of the Borrower and
its Restricted Subsidiaries (including (a) amortization of original issue
discount on any Indebtedness, (b) the interest portion of all deferred payment
obligations, calculated in accordance with GAAP, and (c) all commissions,
discounts and other fees and
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charges owed with respect to bankers' acceptance financings and currency
exchange agreements, interest rate exchange agreements and commodity swap
agreements, in each case to the extent attributable to such period), and (ii)
dividend requirements of the Borrower and its Restricted Subsidiaries with
respect to Redeemable Stock and with respect to all other Preferred Stock of any
Restricted Subsidiaries (in each case whether in cash or otherwise (except
dividends payable solely in shares of capital stock of the Borrower or any
Restricted Subsidiary)) paid, declared, accrued or accumulated during such
period, in each case to the extent attributable to such period and excluding
items eliminated in consolidation. For purposes of this definition, (a) interest
with respect to a Capitalized Lease Obligation or a production payment shall be
deemed to accrue at an interest rate reasonably determined by the Borrower to be
the rate of interest implicit in such Capitalized Lease Obligation or production
payment in accordance with GAAP and (b) interest expense attributable to any
Indebtedness represented by the guarantee by the Borrower or a Restricted
Subsidiary of an obligation of another Person shall be deemed to be the interest
expense attributable to the Indebtedness guaranteed.
"Consolidated Net Income" means, for any period, the aggregate net
income (or loss) of the Borrower and its Restricted Subsidiaries for such
period, on a consolidated basis, determined in accordance with GAAP; provided
that the following items shall be excluded from Consolidated Net Income (without
duplication): (i) the net income of any Person in which the Borrower or any of
its Restricted Subsidiaries has an interest (which interest does not cause the
net income of such Person to be consolidated with the net income of the Borrower
in accordance with GAAP) except to the extent of the amount of dividends or
distributions actually paid to the Borrower or its Restricted Subsidiaries by
such Person in such period, (ii) solely for the purposes of calculating the
amount of Restricted Payments that may be made pursuant to Section 3.10 of the
Indenture as incorporated herein by reference after the Senior Note Issue Date
(and in such case, except to the extent includible pursuant to the foregoing
clause (i) above), the net income (or loss) of any Person accrued prior to the
date it becomes a Restricted Subsidiary or is merged into or consolidated with
the Borrower or any of its Restricted Subsidiaries or all or substantially all
of the property and assets of such Person are acquired by the Borrower or any of
its Restricted Subsidiaries, (iii) the net income of any Restricted Subsidiary
to the extent that the declaration or payment of dividends or similar
distributions by such Restricted Subsidiary of such net income is not at the
time permitted by the operation
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of the terms of its charter or any agreement, instrument, judgment, decree,
order, statute, rule or governmental regulation and (iv) all extraordinary and
non-recurring gains and losses or gains or losses attributable to asset sales
not in the ordinary course of business (including any sale of capital stock of a
Restricted Subsidiary). If the Consolidated Net Income for any fiscal quarter of
the Borrower includes a ceiling limitation writedown (a "Writedown Quarter") in
accordance with the full cost accounting method rules of the Securities and
Exchange Commission (such writedown, an "Actual Writedown") but such Actual
Writedown would have been less or would not have been required had such ceiling
limitation been calculated using oil and gas prices in effect on the last day of
either of the two fiscal quarters of the Borrower immediately succeeding such
Writedown Quarter (such Actual Writedown, as so recalculated, a "Hypothetical
Writedown"), then Consolidated Net Income for such Writedown Quarter, shall be
increased by the amount by which such Actual Writedown exceeds such Hypothetical
Writedown; provided that in no event shall any such increase singly, or in the
case of any such increases for both quarters immediately succeeding such
Writedown Quarter, in the aggregate, exceed the amount of such Actual
Writedown).
"Consolidated Group" means the Borrower and its Subsidiaries taken as a
whole.
"Contractor" means the "Contractor" as defined in the Service
Agreement.
"Current Ratio" means, on any date of determination, the ratio of (i)
the current assets of the Borrower and its Subsidiaries on a consolidated basis
determined in accordance with GAAP to (ii) the current liabilities of the
Borrower and its Subsidiaries on a consolidated basis determined in accordance
with GAAP (excluding from current liabilities the aggregate outstanding
principal amount of the Loans to the extent such amount is intended, and may
reasonably be expected, to be refinanced by the issuance by the Borrower of
long-term Debt).
"Debt" of any Person means at any date, without duplication, (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (iii)
all obligations of such Person to pay the deferred purchase price of property or
services, except trade accounts payable arising in the ordinary course of
business, (iv) all obligations of such Person as lessee which are capitalized in
accordance with generally accepted
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accounting principles, (v) all Debt secured by a Lien on any asset of such
Person, whether or not such Debt is otherwise an obligation of such Person, (vi)
all obligations of such Person to purchase securities (or other property) which
arise out of or in connection with the sale of the same or substantially similar
securities or property, (vii) all non-contingent obligations of such Person to
reimburse any bank or other Person in respect of amounts paid under a letter of
credit or similar instrument, (viii) all Debt of others Guaranteed by such
Person, (ix) all obligations of such Person in respect of an interest rate swap,
cap or collar agreement or similar arrangement between such Person and one or
more financial institutions providing for the transfer or mitigation of interest
risks either generally or under specific contingencies, (x) all Capitalized
Lease Obligations of such Person, (xi) any recourse obligations of such Person
in connection with a sale of receivables, (xii) all obligations of such Person
to make payment for any products, materials or supplies or for any
transportation or services regardless of the non-delivery or non-furnishing
thereof, (xiii) any outstanding Preferred Stock of a Subsidiary of such Person
(other than Preferred Stock owned beneficially and of record by such Person) and
any outstanding Redeemable Stock of such Person and (xiv) any other items
(excluding items of contingency reserves or reserves for deferred income Taxes
or other reserves to the extent such reserves do not represent an obligation and
Trade Payables other than set forth in clause (xii) of this paragraph) which in
accordance with GAAP would be shown on the liabilities side of the balance sheet
of such Person.
"Default" means any condition or event which constitutes an Event of
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
"Deposit Agreement" means a deposit pledge agreement between the
Borrower and the Bank providing cash collateral for the obligations of the
Borrower hereunder in respect of the Letter of Credit, substantially in the form
of Exhibit A hereto, as from time to time amended.
"Dollars" and "$" mean lawful money of the United States.
"Domestic Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks in New York City are authorized by law to
close.
"Domestic Taxes" means any taxes, levies, imposts, duties,
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charges or withholdings of any nature (and any interest, penalties or similar
liabilities with respect thereto) which are not Foreign Taxes.
"EBITDA" means, for any period, without duplication, Consolidated Net
Income for such period, increased (to the extent deducted in determining
Consolidated Net Income) by the sum of (i) Consolidated Interest Expense, (ii)
income taxes (other than income taxes (either positive or negative) attributable
to extraordinary and non-recurring gains or losses or gains or losses
attributable to asset sales not in the ordinary course of business), (iii)
depreciation and depletion expense, (iv) amortization expense and (v) all other
non-cash items reducing Consolidated Net Income less all non-cash items
increasing Consolidated Net Income (other than, in each case, minority interests
which shall, in all cases, be excluded from the calculation of EBITDA), all as
determined on a consolidated basis for the Borrower and its Restricted
Subsidiaries in conformity with GAAP.
"EBITDA/Interest Ratio" means the ratio of (i) EBITDA for the most
recently ended Reference Period to (ii) Consolidated Interest Expense for the
Reference Period. In making the foregoing calculation, (a) pro forma effect
shall be given to (1) any Indebtedness incurred subsequent to the end of such
Reference Period, (2) any Indebtedness incurred during such Reference Period to
the extent such Indebtedness is outstanding on the date of calculation and (3)
any Indebtedness to be incurred on such date, in each case as if such
Indebtedness had been incurred on the first day of such Reference Period and
after giving effect to the application of the proceeds thereof; (b) Consolidated
Interest Expense attributable to interest or dividends on any Indebtedness
(whether existing or being Incurred) computed on a pro forma basis and bearing a
floating interest or dividend rate shall be computed as if the rate in effect on
the date of computation (taking into account any interest rate exchange
agreement applicable to such Indebtedness if such interest rate exchange
agreement has a remaining term in excess of 12 months) had been the applicable
rate for the entire period; (c) there shall be excluded from Consolidated
Interest Expense any Consolidated Interest Expense relating to any amount of
Indebtedness that was outstanding during such Reference Period or thereafter but
that is not outstanding or is to be repaid on such date, except for Consolidated
Interest Expense accrued (as adjusted pursuant to clause (b)) during such
Reference Period under a revolving credit or similar arrangement to the extent
of the commitment thereunder (or under any successor revolving
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credit or similar arrangement) on such date; and (d) pro forma effect shall be
given to Asset Dispositions and Asset Acquisitions that occur during such
Reference Period or thereafter and on or prior to such date as if they had
occurred on the first day of such Reference Period.
"Environmental Laws" has the meaning set forth in Section 4.11.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the rules and regulations promulgated thereunder,
as from time to time in effect.
"Euro-Dollar Business Day" means any Domestic Business Day on which
commercial banks are open for international business (including dealings in
Dollar deposits) in London.
"Euro-Dollar Margin" has the meaning set forth in Section 2.06(e).
"Euro-Dollar Reserve Percentage" has the meaning set forth in Section
2.06(e).
"Event of Default" has the meaning set forth in Section 6.01.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"FASB" means the Financial Accounting Standards Board and any other
successor organization.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upward, if necessary, to the nearest 1/100th of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Domestic Business Day
next succeeding such day, provided that (i) if such day is not a Domestic
Business Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Domestic Business Day as so published on the
next succeeding Domestic Business Day, and (ii) if no such rate is so published
on such next succeeding Domestic Business Day, the Federal Funds Rate for such
day shall be the average rate quoted to the Bank on such day on such
transactions as determined by the Bank.
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"Fixed Assets" means all assets of the Borrower which are classified as
"property, plant and equipment" on its balance sheet in accordance with GAAP.
"Foreign Taxes" means any taxes, levies, imposts, duties, charges or
withholdings of any nature (and any interest, penalties or similar liabilities
with respect thereto) now or hereafter imposed by or within Venezuela or any
other jurisdiction or Governmental Authority other than the United States of
America or the State of New York.
"GAAP" means accounting principles generally accepted in the United
States applied on a consistent basis throughout the relevant periods.
"Governmental Authority" means any government or any state, department
or other political subdivision thereof, or any governmental body, agency,
authority (including without limitation any central bank or taxing authority) or
instrumentality (including without limitation any court or tribunal) exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government and any corporation, partnership or other entity
directly or indirectly owned by or subject to the control of any of the
foregoing.
"Guarantee Agreement" means the unconditional guarantee by the
Guarantor of the obligations of the Borrower under this Agreement and the Note
and the other Loan Documents substantially in the form of Exhibit D hereto, as
from time to time amended.
"Guarantor" means Benton-Vinccler, C.A., a Venezuelan corporation,
together with its successors and assigns.
"Guaranty", as applied to any Person, means any direct or indirect
liability, contingent or otherwise, of such Person with respect to any
indebtedness, lease, dividend or other obligation of another, including, without
limitation, any such obligation directly or indirectly guaranteed, endorsed
(otherwise than for collection or deposit in the ordinary course of business) or
discounted or sold with recourse by such Person, or in respect of which such
Person is otherwise directly or indirectly liable, including, without
limitation, any such obligation in effect guaranteed by such Person through any
agreement (contingent or otherwise) to purchase, repurchase or otherwise acquire
such obligation or any security therefor, or to advance to or provide funds for
the payment or discharge of such obligation (whether in
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the form of loans, advances, stock purchases, capital contributions or
otherwise), or to maintain the working capital, equity capital, net worth,
solvency or any balance sheet or other financial condition of the obligor of
such obligation, or to make payment for any securities, products, materials or
supplies or for any transportation or services regardless of the non-delivery or
nonfurnishing thereof, in any such case if the purpose or intent of such
agreement is to provide assurance that such obligation will be paid or
discharged, or that any agreements relating thereto will be complied with, or
that the holders of such obligation will be protected against loss in respect
thereof. The amount of any Guaranty shall be equal to the amount of the
obligation guaranteed. The term "Guarantee" used as a verb has a corresponding
meaning.
"Indemnitee" has the meaning set forth in Section 8.03(b).
"Indenture" means the Indenture dated as of May 2, 1996 between the
Borrower and First Trust of New York, National Association, as Trustee, relating
to the Senior Notes.
"Interest Payment Date" means the last day of each Interest Period,
provided, that if any such day is not a Euro-Dollar Business Day, the relevant
Interest Payment Date shall be the immediately preceding Euro-Dollar Business
Day.
"Interest Period" means the period commencing on the date of the
initial Loan and ending on the date one, two or three months thereafter, as the
Borrower may select as provided below, and thereafter each period commencing on
the last day of the next preceding Interest Period and ending on the date one,
two or three months thereafter as the Borrower may select as provided below;
provided that any Interest Period which begins before the Commitment Termination
Date and would otherwise end after the Commitment Termination Date shall end on
the Commitment Termination Date.
"John Hancock Notes" means the notes issued under the Note Agreement.
"Lagoven" means Lagoven, S.A., a Venezuelan corporation, and its
successors and assigns.
"L/C Payment" has the meaning specified in Section 2.05(c).
"L/C Payment Date" has the meaning specified in Section 2.05(c).
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"Lending Office" means the branch of the Bank located at its address
set forth on the signature pages hereto or such other office, branch or
affiliate of the Bank as it may hereafter designate as its Lending Office by
notice to the Borrower.
"Letter of Credit" means an irrevocable standby letter of credit issued
by the Bank hereunder in substantially the form of Exhibit B hereto, as from
time to time amended.
"Letter of Credit Commitment" means the obligation of the Bank to issue
the Letter of Credit pursuant to Section 2.01(b) on and subject to the terms and
conditions of this Agreement.
"Letter of Credit Documents" means, collectively, the Letter of Credit
and any application therefor or other agreement relating thereto.
"Lien" means any interest in property securing an obligation owed to,
or a claim by, a Person other than the owner of the property, whether such
interest is based on the common law, statute, court decision or contract, and
including, without limitation, any mortgage, pledge, security interest,
encumbrance, lien, purchase option, call or right, or charge of any kind
(including any agreement to give or permit any of the foregoing), any
conditional sale or other title retention agreement, any Capitalized Lease, and
the filing of or agreement to give or permit the filing on its behalf of any
financing statement under the Uniform Commercial Code or personal property
security legislation of any jurisdiction.
"Loan" has the meaning set forth in Section 2.01.
"Loan Commitment" means the obligation of the Bank to make Loans
pursuant to Section 2.01(a) on and subject to the terms and conditions of this
Agreement in an aggregate principal amount at any one time outstanding up to
$20,000,000, as reduced pursuant to Section 2.05(b) or Section 2.08.
"Loan Documents" means, collectively, this Agreement, the Note, the
Guarantee Agreement, the Security Agreement, the Deposit Agreement, the Letter
of Credit Documents and the Consent.
"London Interbank Offered Rate" has the meaning set forth in Section
2.06(e).
"Material Adverse Effect" means, (i) any material adverse
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effect on the Borrower's business, assets, liabilities, financial condition,
results of operations or business prospects, (ii) any material adverse effect on
the Consolidated Group's business, assets, liabilities, financial condition,
results of operations or business prospects on, where appropriate, a
consolidated basis in accordance with GAAP, and (iii) any adverse effect,
whether or not material, on the binding nature, validity or enforceability of
this Agreement or any other Loan Document as obligations of the Borrower or any
material adverse effect on the ability of the Borrower to perform its
obligations under this Agreement or any other Loan Document.
"Multiemployer Plan" means any plan which is a "multiemployer plan" as
such term is defined in section 4001(a)(3) of ERISA.
"Net Worth" means, as of the date which it is to be determined, the
total stockholders' equity of the Borrower determined in accordance with GAAP.
"Note" means a promissory note of the Borrower, substantially in the
form of Exhibit C hereto, evidencing the obligation of the Borrower to repay the
Loans.
"Note Agreement" means the Note Agreement dated as of September 30,
1994 between the Guarantor and John Hancock Mutual Life Insurance Company, and
amended.
"Notice of Borrowing" has the meaning set forth in Section 2.02(a).
"Notice of Letter of Credit" has the meaning set forth in Section
2.02(b).
"Officers' Certificate" means a certificate signed in the name of the
Borrower by any two Senior Officers of the Borrower.
"Oil and Gas Business" means the exploration for and the development,
acquisition, production, processing, marketing, storage and transportation of
hydrocarbons and other related energy and natural resources businesses and any
activity necessary, appropriate or incidental to the foregoing.
"Operating Agreement" means any contractual arrangement between the
Borrower or any Subsidiary and one or more third parties pursuant to which the
Borrower or such Subsidiary and such third party or parties agree to share the
costs and benefits
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of exploring and developing oil and gas properties.
"Operator" has the meaning set forth in Section 5.10.
"Other Taxes" means any present or future stamp, court or documentary
taxes and any other excise or property taxes, and charges or similar levies
imposed by any Governmental Authority which arise from any payment made
hereunder or under the Note or any other Loan Document, or otherwise with
respect to this Agreement or the Note or any other Loan Document.
"Parent" means any Person controlling the Bank.
"Participant" has the meaning set forth in Section 8.05(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any other
governmental authority succeeding to any of its functions.
"Performance Letter of Credit" means, with respect to any Person, a
letter of credit or bond to secure the performance in any country of any
obligations of such Person under any contract entered into in the ordinary
course of such Person's Oil and Gas Business; provided, that the provision of
any such letter of credit or bond is required by local law or, in the case of
any such letter of credit or bond securing the performance of obligations
outside the United States, is customarily required in connection with contracts
relating to the Oil and Gas Business in such country and, in either case, such
letter of credit or bond requires that any payment thereunder by the issuer
thereof be immediately repaid by such Person.
"Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a government
or political subdivision or an agency, instrumentality or Governmental Authority
thereof.
"Plan" means an "employee pension benefit plan" (as defined in section
3(2) of ERISA) which is or has been established or maintained, or to which
contributions are or have been made, by the Borrower or any of its Related
Persons (as defined in Section 5.14).
"Post-Default Rate" has the meaning ascribed thereto in Section
2.06(b).
"Preferred Stock" means, with respect to any Person, capital stock or
Redeemable Stock of such Person of any class or classes
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(however designated), whether now outstanding or issued after the date hereof,
that ranks prior, as to the payment of dividends or as to the distribution of
assets upon any voluntary or involuntary liquidation of such Person, to any
other class of capital stock of such Person and includes, without limitation,
all classes and series of preferred or preference stock.
"Prime Rate" means the rate of interest publicly announced by the Bank
in New York City from time to time as its Prime Rate.
"Redeemable Stock" means, with respect to any Person, any and all
shares, interests, participations, rights or other equivalents (however
designated) of such Person's capital stock or partnership interests whether now
outstanding or issued after the date hereof that by their terms or otherwise are
or may be required to be redeemed prior to the Commitment Termination Date or
are redeemable at the option of the holder thereof (including, without
limitation, upon the happening of any specified event or with the passage of
time) at any time prior to the Commitment Termination Date.
"Reference Period" means, with respect to the determination of the
EBITDA/Interest Ratio, the period of four full fiscal quarters for which
financial information is available immediately preceding the date of
determination.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System, as in effect from time to time (or any successor
thereto).
"Reimbursement Obligations" means the obligations of the Borrower under
Section 2.05(c) of this Agreement to reimburse to the Bank for each amount paid
by the Bank under the Letter of Credit.
"Restricted Subsidiary" means any Subsidiary of the Borrower
(including, in any event, the Guarantor); provided that any Subsidiary (other
than the Guarantor) that the Borrower certifies to the Bank has been designated
as an "Unrestricted Subsidiary" pursuant to the Indenture shall not be deemed to
be a Restricted Subsidiary.
"Security Agreement" means a security agreement between the Guarantor
and the Bank in which the Guarantor grants to the Bank a security interest in
(among other things) any and all payments under the Service Agreement as
security for the obligations of the Guarantor under Guarantee Agreement,
substantially in the
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form of Exhibit E hereto, as from time to time amended.
"Senior Notes" means the 11 5/8% Senior Notes due 2003 of the Borrower.
"Senior Officer" means the President, Chief Executive Officer, any Vice
President, Chief Financial Officer, Treasurer, principal Accounting Officer,
Controller of the Borrower or any other Person, whether or not an officer, who
performs similar functions, on behalf of the Borrower.
"Service Agreement" means the Operating Service Agreement dated July
31, 1992 among the Guarantor, Venezolana de Inversiones y Construcciones
Clerico, C.A., the Contractor and Lagoven, as from time to time amended (without
prejudice to Section 4.10 of the Guarantee Agreement).
"Service Agreement Assignment" means the assignment to the Guarantor
dated March 8, 1994, by the Borrower, Venezolana de Inversiones y Construcciones
Clerico, C.A. and the Contractor of their rights under the Service Agreement.
"SPE" means the Society of Petroleum Engineers and any successor
organization.
"Subsidiary" means, as to any Person, any corporation or other entity
of which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions are at the time directly or indirectly owned by such Person.
"Taxes" means Domestic Taxes, Foreign Taxes and Other Taxes.
"Trade Payables" means amounts payable by the Borrower or any of its
Subsidiaries to suppliers (not Affiliates) of goods and services incurred in the
ordinary course of business.
"United States" means the United States of America, including the
States and the District of Columbia, but excluding its territories and
possessions.
"Venezuela" means the Republic of Venezuela.
SECTION 1.02. Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial statements
required to be
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delivered hereunder shall be prepared in accordance with generally accepted
United States accounting principles as in effect on the date hereof, applied on
a basis consistent (except for changes concurred in by the Borrower's
independent public accountants) with the most recent audited financial
statements of the Borrower delivered to the Bank.
ARTICLE II
THE CREDITS
SECTION 2.01. Commitments.
(a) The Bank agrees, on and subject to the terms and conditions set
forth in this Agreement, to make loans (each, a "Loan" and, collectively, the
"Loans") to the Borrower in Dollars on any Euro-Dollar Business Day on or before
the Commitment Termination Date in an aggregate principal amount at any one time
outstanding up to but not exceeding the amount of the Loan Commitment.
(b) The Bank agrees, on and subject to the terms and conditions set
forth in this Agreement, to issue the Letter of Credit for account of the
Borrower in the face amount of $18,000,000 on a Domestic Business Day on or
before July 31, 1996.
SECTION 2.02. Notices.
(a) The Borrower shall give the Bank prior written notice of each Loan
(a "Notice of Borrowing"), which shall be irrevocable, not later than 10:00 a.m.
(New York City time) on the third Euro-Dollar Business Day before the date of
such Loan, specifying:
(i) the date of such Loan, which shall be a Euro-
Dollar Business Day,
(ii) the amount of such Loan and
(iii) the duration of the initial Interest Period for
such Loan.
Not later than 10:00 a.m. (New York City time) on the fifth Euro-Dollar Business
Day before the last day of any Interest Period with respect to a Loan, the
Borrower shall give the Bank notice
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of the duration of the next succeeding Interest Period, which notice shall be
irrevocable. In the event that the Borrower fails to select the duration of any
Interest Period as provided herein, such Interest Period shall (subject to the
provisions of the definition of Interest Period) be of one month's duration
commencing on the last day of the immediately preceding Interest Period.
(b) The Borrower shall give the Bank at least three Euro-Dollar
Business Days' prior written notice of the issuance of the Letter of Credit (the
"Notice of Letter of Credit"), which shall be irrevocable, specifying the
issuance date, which shall be a Domestic Business Day.
SECTION 2.03. Funding of Loans. Not later than 2:00 p.m. (New York City
time) on the date of each Loan, the Bank will remit the proceeds of such Loan in
such manner as may be agreed between the Bank and the Borrower.
SECTION 2.04. Note. The Loans shall be evidenced by the
Note, dated the date of the initial Loan and in a principal amount equal to
the amount of the Loan Commitment.
SECTION 2.05. Repayment.
(a) Subject to Section 2.05(b), the Borrower agrees to repay the full
principal amount of each Loan on the Commitment Termination Date.
(b) Upon receipt from the Beneficiary of any drawing request under the
Letter of Credit, the Bank shall promptly notify the Borrower of the amount to
be paid by the Bank pursuant to such drawing request and the date (an "L/C
Payment Date") on which payment is to be made by the Bank (an "L/C Payment").
The Borrower hereby unconditionally agrees to pay to the Bank on such L/C
Payment Date an amount equal to the amount of such L/C Payment, without
presentment, demand, protest or other formalities of any kind.
(c) It is understood and agreed that (i) the Bank shall have no
obligation to investigate the correctness of any certificate presented under the
Letter of Credit or to make any other factual determination in connection
therewith, and (ii) the Bank shall have no responsibility in respect of, and the
obligations of the Bank under the Letter of Credit shall not be affected by, any
term of any agreement at variance with any term or provision hereof of the
Letter of Credit or any other Loan
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Document. The Bank may honor, as complying with the terms of the Letter of
Credit, instruments or documents otherwise in order signed or issued by an
administrator, trustee in bankruptcy or other legal representative of the
Beneficiary. It is also understood and agreed that (a) the Beneficiary shall not
be deemed to be the agent of the Bank; (b) the Bank shall not be responsible for
any error or delay in transmission, dispatch or delivery by any other party of
any notice of advice in connection with the Letter of Credit or delay in giving
or failure to give any notice; and (c) the occurrence of one or more of the
contingencies specified in the Uniform Customs and Practice referred to below,
or in the preceding clauses of this paragraph, shall not affect or impair any of
the Bank's rights or powers hereunder or the Borrower's Reimbursement
Obligations. Any action or omission on the part of the Bank under or in
connection with the Letter of Credit or any instruments or documents relating
thereto, if in good faith and in conformity with the such foreign or domestic
laws, regulations or customs as the Bank may deem to be applicable, shall be
binding on the Borrower and shall not place the Bank under any liability to the
Borrower. The Borrower agrees that the Uniform Customs and Practice for
Documentary Credits (1994 Revision), International Chamber of Commerce
Publication No. 500, shall be binding on the Borrower in respect of the Letter
of Credit, except as otherwise expressly agreed. The Borrower agrees to
indemnify the Bank and hold the Bank harmless against any and all claims,
losses, liabilities or damages (including, without limitation, legal fees and
disbursements of counsel) howsoever arising from or in connection with the
Letter of Credit.
SECTION 2.06. Interest Rates.
(a) The Borrower agrees to pay interest on the outstanding principal
amount of each Loan, for each Interest Period relating thereto, at a rate per
annum equal to the sum of the Euro-Dollar Margin plus the Adjusted London
Interbank Offered Rate for such Interest Period. Such interest shall be payable
on the last day of each Interest Period in respect of such Loan and upon each
payment or prepayment of principal of such Loan.
(b) Any overdue principal of or interest on any Loan shall bear
interest, payable on demand, for each day from and including the date payment
thereof was due to but excluding the date of actual payment, at a rate per annum
(the "Post-Default Rate") equal to the sum of 2% per annum plus the higher of
(i) the sum of the Euro-Dollar Margin plus the Adjusted London Interbank Offered
Rate applicable to such Loan and (ii) the sum of the
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Euro-Dollar Margin plus the quotient obtained (rounded upward, if necessary, to
the next higher 1/100 of 1%) by dividing (x) the average (rounded upward, if
necessary, to the next higher 1/16 of 1%) of the rates per annum at which one
day (or, if such amount due remains unpaid more than three Euro-Dollar Business
Days, then for such other period of time not longer than three months as the
Bank may select) deposits in Dollars in an amount approximately equal to such
overdue payment are offered to the Bank in the London interbank market for the
applicable period determined as provided above by (y) 1.00 minus the Euro-Dollar
Reserve Percentage (or, if the circumstances described in clause (a) or (b) of
Section 7.01 shall exist, at a rate per annum equal to the sum of 2% per annum
plus the Euro-Dollar Margin plus the Base Rate for such day).
(c) Any Reimbursement Obligation that is not paid in full when due
shall bear interest, payable on demand, for each day from and including the date
payment thereof was due to but excluding the date of actual payment, at a rate
per annum equal to the sum of 2% per annum plus the percentage specified in
clause (ii) of Section 2.06(b).
(d) The Adjusted London Interbank Offered Rate shall be adjusted
automatically on and as of the effective date of any change in the Euro-Dollar
Reserve Percentage.
(e) As used in this Section 2.06, the following terms shall have the
following meanings:
"Euro-Dollar Margin" means (i) during the period from the date of this
Agreement to but not including September 14, 1997, 3.00% per annum and (ii)
thereafter, 3.75% per annum.
The "Adjusted London Interbank Offered Rate" applicable to any Interest
Period means a rate per annum equal to the quotient obtained (rounded upward, if
necessary, to the next higher 1/100 of 1%) by dividing (i) the applicable London
Interbank Offered Rate by (ii) 1.00 minus the Euro-Dollar Reserve Percentage.
The "London Interbank Offered Rate" applicable to any Interest Period
for each Loan means the rate per annum (rounded upward, if necessary, to the
next higher 1/16 of 1%) determined by the Bank to be the rate at which deposits
in Dollars are offered by the Bank to leading banks in the London interbank
market at approximately 11:00 a.m. (London time) two Euro-Dollar Business Days
before the first day of such Interest Period in an amount approximately equal to
the principal amount of such Loan
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and for a period of time comparable to such Interest Period.
"Euro-Dollar Reserve Percentage" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor), for
determining the maximum reserve requirement for a member bank of the Federal
Reserve System in New York City with deposits exceeding five billion dollars in
respect of "Eurocurrency liabilities" (or in respect of any other category of
liabilities which includes deposits by reference to which the interest rate on
the Loans is determined or any category of extensions of credit or other assets
which includes loans by a non-United States office of the Bank to United States
residents).
SECTION 2.07. Fees.
(a) In consideration of the Bank's entering into this Agreement, the
Borrower shall pay to the Bank a non-refundable fee on the Closing Date in the
amount of $1,000,000.
(b) In consideration of the Bank's issuance of the Letter
of Credit, the Borrower shall pay to the Bank a letter of credit
fee at the rate of .25% per annum computed on the daily average maximum
available amount of the Letter of Credit (as reduced from time to time pursuant
to the terms thereof), such fee to be payable quarterly in arrears on each
quarterly anniversary of the date hereof and upon the termination or full
utilization of the Letter of Credit.
SECTION 2.08. Termination or Reduction of Commitments.
(a) The Loan Commitment shall terminate on the Commitment Termination
Date and the Letter of Credit Commitment shall terminate on July 31, 1996.
(b) The Borrower shall have the option to terminate or reduce the Loan
Commitment upon five Domestic Business Days' notice to the Bank, each reduction
to be in a minimum amount of $1,000,000.
(c) The Commitments, once terminated, may not be reinstated.
SECTION 2.09. Prepayments. The Borrower may, upon at least three
Euro-Dollar Business Days' notice to the Bank, prepay the Loans in whole, or
from time to time in part, in the amount of
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$1,000,000 or any integral multiple thereof, by paying the principal amount to
be prepaid together with accrued interest thereon to the date of prepayment,
provided that the Loans may be prepaid only on the last day of an Interest
Period.
SECTION 2.10. General Provisions as to Payments.
(a) The Borrower shall make each payment of principal of, and interest
on, the Loans and the Reimbursement Obligations and of arrangement fee and
letter of credit fee and all other amounts payable hereunder not later than
12:00 Noon (New York City time) on the date when due, in Federal or other funds
immediately available in New York City, to the Bank at its address referred to
in Section 8.01.
(b) Whenever any payment of principal of, or interest on, the Loans or
the Reimbursement Obligations shall be due on a day which is not a Euro-Dollar
Business Day, the date for payment thereof shall be extended to the next
succeeding Euro-Dollar Business Day unless such Euro-Dollar Business Day falls
in another calendar month, in which case the date for payment thereof shall be
the next preceding Euro-Dollar Business Day. If the date for any payment of
principal is extended by operation of law or otherwise, interest thereon shall
be payable for such extended time.
(c) It is anticipated that the Bank will, and the Bank is hereby
irrevocably authorized to, effect payment of principal of and interest on the
Loans and the Reimbursement Obligations and any other amounts falling due under
this Agreement and the Note by debiting the Collateral Account and/or the
Deposit, as defined in the Deposit Agreement, up to the collected credit balance
thereof, in an amount equal to the aggregate amount so falling due; provided,
that nothing in this Section 2.10(c) or in any other provision of this Agreement
or any of the other Loan Documents shall limit the recourse of the Bank to the
Collateral Account or the Collateral or the collateral provided in the Deposit
Agreement or any other property, assets or revenues.
SECTION 2.11. Funding Losses. If the Borrower makes any payment of
principal with respect to any Loan (pursuant to Article VI or VII or otherwise)
on any day other than the last day of an Interest Period, or if the Borrower
fails to borrow a Loan after notice has been given to the Bank in accordance
with Section 2.02, the Borrower shall reimburse the Bank within 3 days after
demand for any resulting loss or expense incurred by it (or by an existing or
prospective Participant in such Loan),
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including (without limitation) any loss incurred in obtaining, liquidating or
employing deposits from third parties, but excluding loss of margin for the
period after any such payment or failure to borrow, provided that the Bank shall
have delivered to the Borrower a certificate as to the amount of such loss or
expense, which certificate shall be conclusive in the absence of manifest error.
SECTION 2.12. Computation of Interest. Interest and letter of credit
fee hereunder shall be computed on the basis of a year of 360 days and paid for
the actual number of days elapsed (including the first day but excluding the
last day).
ARTICLE III
CONDITIONS
SECTION 3.01. Letter of Credit. The obligation of the Bank to issue the
Letter of Credit shall be subject to the condition precedent that the Bank shall
have received the following documents, each dated the date of such issuance,
unless otherwise indicated, and each in form and substance satisfactory to the
Bank:
(a) the Deposit Agreement, duly executed and delivered by the Borrower
and the Bank, together with evidence of the establishment of the Deposit as
defined therein;
(b) an opinion of Emens, Kegler, Brown, Hill & Ritter, counsel to the
Borrower, covering such matters relating to this Agreement and the Deposit
Agreement, and in such form, as the Bank may require in its sole discretion;
(c) an opinion of Milbank, Tweed, Hadley & McCloy, special New York
counsel to the Bank, covering such matters relating to this Agreement and the
Deposit Agreement, and in such form, as the Bank may require in its sole
discretion;
(d) certified copies of the charter and by-laws of the Borrower and
evidence of the taking by it of all necessary corporate action required for the
making and performance by it of this Agreement and the Deposit Agreement; and
(e) such other documents relating to this Agreement and the Deposit
Agreement and the transactions contemplated hereby and thereby as the Bank may
reasonably request.
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SECTION 3.02. Initial Loan. The obligation of the Bank to make the
initial Loan shall be subject to the condition precedent that the Bank shall
have received the following documents, each in form and substance satisfactory
to the Bank:
(a) the Note, in a principal amount equal to the initial amount of the
Loan Commitment and dated the date of the initial Loan, duly executed by the
Borrower;
(b) the Guarantee Agreement, duly executed and delivered by the
Guarantor and the Bank;
(c) the Security Agreement, duly executed and delivered by the
Guarantor and the Bank;
(d) the Consent, duly executed and delivered by Lagoven;
(e) a certified copy of the Service Agreement and the Service Agreement
Assignment together with evidence that the Assigners, as defined therein, have
validly assigned to the Guarantor all of their right, title and interest in, to
and under the Service Agreement, and that the Guarantor has the sole and
exclusive right to receive any and all payments thereunder and to enforce the
same;
(f) an opinion of Baker & McKenzie, special Venezuelan counsel to the
Guarantor, covering such matters relating to the Guarantee Agreement and the
Security Agreement, and in such form, as the Bank may require in its sole
discretion;
(g) an opinion of Mendoza, Palacios, Acedo, Borjas, Paez Pumar y Cia.,
special Venezuelan counsel to the Bank, covering such matters relating to the
Guarantee Agreement and the Security Agreement, and in such form, as the Bank
may require in its sole discretion;
(h) an opinion of Milbank, Tweed, Hadley & McCloy, special New York
counsel to the Bank, covering such matters relating to the Guarantee Agreement
and the Security Agreement, and in such form, as the Bank may require in its
sole discretion;
(i) the documents referred to in Section 3.01(d) and certified copies
of the charter and by-laws of the Guarantor and evidence of the taking by it of
all necessary corporate action required for the making and performance by it of
the Guarantee Agreement and the Security Agreement, together with such evidence
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as the Bank may require as to the due authorization, execution and delivery by
Lagoven of the Consent;
(j) evidence that the Service Agreement is in full force and effect and
constitutes the legal, valid and binding obligation of the parties thereto,
enforceable in accordance with their respective terms, and that the Guarantor is
in compliance with the terms of the Service Agreement and is not in default
thereunder;
(k) evidence that each of the Guarantor and Lagoven has procured all
licenses, consents and approvals (including, without limitation, all foreign
exchange approvals), and made all registrations and filings, from or with any
Governmental Authority required for it to make and perform the Security
Agreement and the Consent, including without limitation confirmation that
Lagoven is entitled to make payments under the Service Agreement from funds in
accounts outside Venezuela without remittance to the Central Bank; and
(l) such other documents relating to this Agreement and the
transactions contemplated hereby as the Bank may reasonably request.
SECTION 3.03. Additional Conditions. The obligation of the Bank to make
any Loan (including without limitation the initial Loan) or issue the Letter of
Credit is subject to the satisfaction of the following additional conditions:
(a) receipt by the Bank of the relevant Notice of Borrowing
or Notice of Letter of Credit, as the case may be, required by
Section 2.02;
(b) the fact that, immediately before and after the making of such Loan
or the issuance of the Letter of Credit, as the case may be, no Default shall
have occurred and be continuing; and
(c) the fact that the representations and warranties of the Borrower
contained in this Agreement and (in the case of any Loan) of the Guarantor
contained in the Guarantee Agreement and the Security Agreement and of Lagoven
in the Consent shall be true on and as of the date of such Loan and the date of
issuance of the Letter of Credit as if made on and as of such respective dates.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Bank that:
SECTION 4.01. Corporate Existence and Power. The Borrower is a
corporation duly incorporated, validly existing and in good standing under the
laws of Delaware, and has all necessary corporate power and all material
governmental licenses, authorizations, consents and approvals required to carry
on its business as now conducted. Schedule I sets forth a complete list of the
Borrower's Subsidiaries, and their respective jurisdictions of incorporation, as
of the date of this Agreement and each of such Subsidiaries is duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation.
SECTION 4.02. Corporate and Governmental Authorization; No
Contravention. The making and performance by the Borrower of this Agreement, the
Note and the other Loan Documents to which it is a party are within the
corporate powers of the Borrower, have been duly authorized by all necessary
corporate action, and do not and will not contravene, or constitute a default
under, any provision of applicable law or regulation or of the certificate of
incorporation or by-laws of the Borrower or of any agreement, judgment,
injunction, order, decree or other instrument binding upon the Borrower or
result in the creation or imposition of any Lien on any asset of the Borrower.
The Borrower has procured all licenses, consents and approvals (including
without limitation all foreign exchange approvals), and made all registrations
and filings, from or with any Governmental Authority required for the Borrower
to make and perform this Agreement and each other Loan Document to which it is a
party. The John Hancock Notes have been paid in full.
SECTION 4.03. Binding Effect. This Agreement constitutes, and each of
the other Loan Documents to which it is a party when duly executed and delivered
for value will constitute, legal, valid and binding obligations of the Borrower,
enforceable in accordance with their respective terms.
SECTION 4.04. Financial Information. The balance sheet of the Borrower
as of December 31, 1995, and the related statement of operations for the fiscal
year then ended, each reported on by Deloitte & Touche, and copies of which have
been delivered to the Bank, fairly present, in conformity with generally
accepted
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United States accounting principles, the financial position of the
Borrower as of such date and the results of its operations for such fiscal year;
and except as heretofore disclosed to the Bank in writing, since December 31,
1995, there has been no material adverse change in the business, financial
position, results of operations or prospects of the Borrower from that set forth
in said financial statements.
SECTION 4.05. Compliance. The Borrower is in compliance in all material
respects with (a) all material obligations, agreements and covenants under any
indenture, mortgage, deed of trust, bank loan or credit agreement or other
material agreement or instrument to which the Borrower or any of its properties
is bound, (b) all laws, statutes, rules and regulations of any Governmental
Authority applicable to the Borrower and (c) all orders, decrees, judgments or
other determinations of any arbitrator or Governmental Authority applicable to
the Borrower. The Borrower has heretofore furnished to the Bank a true and
complete copy of the Indenture.
SECTION 4.06. Litigation. Except as disclosed in the financial
statements of the Borrower as of December 31, 1995, there is no action, suit or
proceeding pending against, or to the knowledge of the Borrower threatened
against or affecting, the Borrower before any arbitrator or Governmental
Authority, agency or official in which there is a reasonable possibility of an
adverse decision which could materially adversely affect the business, financial
position or results of operations of the Borrower, or which in any manner draws
into question the validity of this Agreement or any of the other Loan Documents.
SECTION 4.07. Title to Properties. Each of Borrower and its
Subsidiaries has good and marketable title to its real properties (other than
properties which it leases) and good title to all of its other properties and
assets, including the properties and assets reflected in the audited
consolidated balance sheet of the Borrower and its Subsidiaries as of December
31, 1995 (other than properties and assets disposed of since such date in the
ordinary course of business), subject to no Lien of any kind except Liens
permitted by Section 5.15. The Borrower enjoys peaceful and undisturbed
possession under all leases necessary in any material respect for the conduct of
the businesses of the Borrower as now conducted and each of its Subsidiaries,
and all such leases are valid and subsisting and are in full force and effect.
The Borrower and each of its Subsidiaries owns or has the right to use (under
agreements or licenses which are in full force and effect) all patents,
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copyrights, trademarks, trade names, service marks or other intellectual or
industrial property rights necessary for the Borrower or such Subsidiary to
conduct its business without any known conflict with the rights of others.
SECTION 4.08. Affiliates and Investments in Others. Except as set forth
on Schedule II, the Borrower and its Subsidiaries have no Affiliates and do not
own any stock or securities or have any beneficial or equity interest in any
Person other than ownership of stock or securities of a Person of a class
publicly traded on a national securities exchange representing not more than 5%
of the total combined voting power of all classes of voting stock of such Person
or more than 5% of beneficial or equity interest in such Person.
SECTION 4.09. Tax Returns and Payments. Each of the Borrower and its
Subsidiaries has filed all Federal, State, local and foreign income tax returns,
franchise tax returns, real and personal property tax returns and other tax
returns required by law to be filed by or on its behalf with respect to its
properties or assets, and all Taxes, assessments and other governmental charges
imposed upon the Borrower and any of its properties, assets, income or
franchises which are due and payable have been paid, other than those presently
payable without penalty or interest and those presently being contested in good
faith by appropriate proceedings diligently conducted and for which such
reserves or other appropriate provisions, if any, as may be required by GAAP
have been made. The changes, accruals and reserves on the books of the Borrower
and its Subsidiaries in respect of any Taxes for all periods are adequate, and
the Borrower knows of no unpaid assessment for additional Taxes for any period
or any basis for any such assessment for which adequate provision has not been
made in its accounts. No charges or Taxes will be imposed by the State of Texas
or any other Governmental Authority on the execution, delivery or enforcement of
this Agreement and the other Loan Documents.
SECTION 4.10. ERISA.
(a) To its knowledge, neither the Borrower nor any Related Person has
breached any of the fiduciary rules of ERISA or engaged in any prohibited
transaction in connection with which the Borrower or any Related Person could be
subjected to (in the case of any such breach) a suit for damages or (in the case
of any such prohibited transaction), either a civil penalty assessed pursuant to
section 502(i) of ERISA, a tax imposed under section 4975 of the Code or a lien
imposed under section 412(n) of the
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Code, in any such case which would have a Material Adverse Effect.
(b) No Plan subject to Title IV of ERISA or any trust created under any
such Plan has been terminated since September 2, 1974 other than those set forth
in Schedule III. Neither the Borrower nor any Related Person has within the past
six years contributed, or had any obligation to contribute, to a single employer
plan that has at least two contributing sponsors not under common control or
ceased operations at a facility under circumstances which could result in
liability under the Code or ERISA. No liability to the PBGC has been or is
expected by the Borrower or any Related Person to be incurred with respect to
any Plan by the Borrower or any Related Person which is or would be materially
adverse to the Borrower and the Subsidiaries taken as a whole. There has been no
reportable event (within the meaning of section 4043(b) of ERISA) or any other
event or condition with respect to any Plan which presents a risk of termination
of any such Plan by the PBGC under circumstances which in any case could result
in liability to the Borrower or a Related Person.
(c) Full payment has been made (or will be made within the period
described in section 412 of the Code) of all amounts which the Borrower or any
Related Person is required under the terms of each Plan to have paid as
contributions to such Plan as of the last day of the most recent fiscal year of
such Plan ended prior to the date hereof (or will be made within the period
described in section 404 of the Code), and no accumulated funding deficiency (as
defined in section 302 of ERISA and section 412 of the Code), whether or not
waived, exists with respect to any Plan. Each Plan satisfies the minimum funding
standard of section 412 of the Code.
(d) If the Borrower or any Related Person terminates its defined
benefit pension plan (which is intended to qualify under section 401(a) and
section 501(a) of the Code), it shall fund such plan as of the termination date
so that the benefit liabilities thereunder do not exceed the then current assets
of such plan.
(e) (i) Neither the Borrower nor any Related Person has been obligated
to contribute to any Multiemployer Plan, (ii) neither the Borrower nor any
Related Person has incurred, or is reasonably expected to incur, any withdrawal
liability to any Multiemployer Plan, and (iii) neither the Borrower nor any
Related Person has been notified by the sponsor of a Multiemployer Plan to which
the Borrower or any Related Person is
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obligated or has been obligated to contribute that such Multiemployer Plan has
been terminated or is in reorganization and no Multiemployer Plan is reasonably
expected to be in reorganization or to be terminated.
(f) Neither the Borrower nor any Related Person has, or is expected to
incur, any liability for post-retirement benefits under any and all welfare
benefit plans (as defined in section 3(1) of ERISA), whether written or
unwritten, which are or have been established or maintained, or to which
contributions are or have been made, by the Borrower or any Related Person.
(g) If the Borrower and any Related Persons withdraw from any or all
Multiemployer Plans to which they or any of them are or have been or become
obligated to contribute under Title IV of ERISA, there would be no withdrawal
liability as the date of such withdrawal.
(h) Neither the Borrower nor any Related Person has engaged in any
transaction that could result in the incurrence of any liabilities under section
4069 or section 4212 of ERISA.
SECTION 4.11. Environmental Matters. Each of the Borrower and its
Subsidiaries has obtained all material authorizations that are required and is
in compliance with all terms and conditions of all permits, licenses, and other
authorizations required to be obtained by it under all environmental laws,
including any and all laws, statutes, ordinances, rules, regulations, orders,
decrees, permits, concessions, grants, franchises, licenses or governmental
restrictions or determinations of any Governmental Authority relating to
emissions, discharges, releases, or threatened release of contaminants into the
environment (including, without limitation, ambient air, surface water, ground
water, or land) or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
contaminants, fuels, chemicals or waste materials, including, without
limitation, to the extent applicable, the Clean Air Act, the Clean Water Act,
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42
U.S.C. Section9601 et seq., the Occupational Safety and Health Act, RCRA, the
Safe Drinking Water Act and the Toxic Substances Control Act, all as amended
(collectively "Environmental Laws"), and is also in compliance with all other
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in those Environmental Laws or
in any
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regulation, ordinance, code, plan, order, decree, judgment, injunction, notice
or demand letter issued, entered, promulgated, or approved thereunder, except to
the extent that failure so to comply does not have a Material Adverse Effect.
The Borrower is not aware of any event, condition, or activity which may
interfere with or prevent continued compliance by the Borrower and its
Subsidiaries with all Environmental Laws, except to the extent that failure so
to continue to comply would not have a Material Adverse Effect.
SECTION 4.12. Labor Relations. There is not now pending, or to the
knowledge of the Borrower, threatened, any strike, work stoppage, work slow
down, material grievance or other material dispute between the Borrower or any
of its Subsidiaries and any bargaining unit or significant number of its
respective employees. The Borrower is not aware of any existing or imminent
labor disturbance by the employees of any of the principal suppliers,
contractors or customers of the Borrower or any of its Subsidiaries that would
result, individually or in the aggregate, in a Material Adverse Effect.
SECTION 4.13. Status Under Certain Federal Statutes and Regulations.
The Borrower is not (a) an "investment company" or a company "controlled" by an
"investment company" or an "open-end investment company" or a "unit investment
trust" or a "face-amount certificate company," within the meaning of the
Investment Company Act of 1940, as amended, (b) a "holding company" or a
"subsidiary company" of a "holding company", or an "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding company," as such terms are
defined in the Public Utility Holding Company Act of 1935, as amended, or (c) a
"carrier," as defined in section 11,301(a)(1) of Title 49 of the United States
Code and subject to the provisions of such Title. None of the 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 any "margin stock"
within the meaning of Regulation U and none of the proceeds of any Loan will be
used for any such purpose.
SECTION 4.14. Full Disclosure. All information heretofore furnished by
the Borrower to the Bank for purposes of or in connection with this Agreement
is, and all such information hereafter furnished by the Borrower to the Bank
will be, true and accurate in all material respects on the date as of which such
information is stated or certified. The Borrower has disclosed to the Bank in
writing any and all facts which materially and
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adversely affect or may affect (to the extent the Borrower can now reasonably
foresee) the business, operations or financial condition or prospects of the
Borrower or the Borrower and its Subsidiaries taken as a whole or the ability of
the Borrower to perform its obligations under this Agreement.
SECTION 4.15. Service Agreement. The Assigners (as defined
in the Service Agreement Assignment) have validly assigned to the
Guarantor all of their right, title and interest in, to and under
the Service Agreement, and the Guarantor has the sole and
exclusive right to receive any and all payments thereunder and to enforce the
same. The Borrower has heretofore furnished to the Bank a true and complete copy
of the Service Agreement, as in effect on the date of this Agreement; the
Service Agreement is in full force and effect and constitutes a legal, valid and
binding obligation of each of the parties thereto, enforceable in accordance
with its terms; and the Guarantor is in compliance with its obligations under
the Service Agreement.
SECTION 4.16. Maximum Total Fee. So long as the Loan Commitment or the
Letter of Credit Commitment remains in effect, or the Letter of Credit remains
outstanding, and until the payment in full of the principal of and interest on
the Loans and the Note and all Reimbursement Obligations and all other amounts
payable under this Agreement, the Guarantor will, in each calendar quarter, be
entitled to receive, as remuneration under the Service Agreement, an amount
equal to the prevailing adjusted Maximum Total Fee (as defined in Part S13 of
the Service Agreement).
ARTICLE V
COVENANTS
The Borrower agrees that, so long as the Loan Commitment or the Letter
of Credit Commitment remains in effect, or the Letter of Credit remains
outstanding, or any amount payable hereunder or under any other Loan Document
remains unpaid:
SECTION 5.01. Information. The Borrower will deliver to the Bank:
(a) as soon as practicable and in any event not more than 46 days after
the end of each quarterly period in each fiscal year of the Borrower (except the
fourth quarter), the consolidated (and, upon the request of the Bank,
consolidating)
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balance sheet of the Borrower and its Subsidiaries as at the end of such
quarterly period and (except in the case of the first quarter) for the fiscal
year to date and the related consolidated (and, upon, the request of the Bank,
consolidating) statements of income and retained earnings and of cash flows of
the Borrower and its Subsidiaries for such period(s) setting forth, in each case
in comparative form, figures for the corresponding period(s) in the preceding
fiscal year of the Borrower, all in reasonable detail and in accordance with
GAAP and certified by the chief accounting officer or chief financial officer of
the Borrower as fairly presenting the financial condition of the Borrower and
its Subsidiaries as at the dates indicated and the results of their operations
and cash flows, in each case for the periods indicated, in conformity with GAAP
(except as disclosed in the certificate of such chief accounting officer or
chief financial officer with any changes in accounting policies discussed in
reasonable detail), subject to changes resulting from year-end adjustments not
material in scope or amount;
(b) as soon as practicable and in any event not more than 91 days after
the end of each fiscal year of the Borrower, a balance sheet of the Borrower and
its Subsidiaries as of the end of such year and the related consolidated and
consolidating statements of income and retained earnings and of cash flows of
the Borrower and its Subsidiaries for such year, and setting forth in each case,
in comparative form, corresponding figures for the preceding fiscal year of the
Borrower, all in reasonable detail and in accordance with GAAP and (i) in the
case of such consolidated financial statements, accompanied by a report thereon
of Deloitte & Touche or another Approved Auditor, which report shall be without
limitations as to the scope of the audit and shall state that such financial
statements present fairly the financial condition of the Borrower and its
Subsidiaries as at the dates indicated and the results of their operations and
cash flows for the periods indicated in conformity with GAAP (except as
otherwise specified in such report) and that the audit by such accountants in
connection with such financial statements has been made in accordance with
generally accepted auditing standards and (ii) in the case of such consolidating
financial statements, certified by the chief accounting officer or chief
financial officer of the Borrower as presenting fairly the information contained
therein in accordance with GAAP;
(c) together with each delivery of financial statements of the Borrower
and its Subsidiaries pursuant to clauses (a) and (b) of this Section 5.01, a
certificate of the chief financial officer of the Borrower (i) stating that the
signer has reviewed
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the terms of this Agreement and the other Loan Documents and has made, or caused
to be made under the signer's supervision, a review in reasonable detail of the
transactions and condition of the Borrower and its Subsidiaries during the
fiscal period covered by such financial statements and that such review has not
disclosed the existence during or at the end of such fiscal period, and that
after reasonable investigation the signer has no knowledge of the existence as
at the date of such certificate, of any condition or event which constitutes a
Default or Event of Default or, if any such condition or event existed or
exists, specifying the nature and period of existence thereof and what action
the Borrower has taken or is taking or proposes to take with respect thereto,
(ii) demonstrating (with computations in reasonable detail) compliance by the
Borrower and its Subsidiaries with the provisions of Section 5.13, (iii)
analyzing the principal changes in the results of operations of the Borrower and
its Subsidiaries for such fiscal year or fiscal quarter from the results of
operations of the Borrower and its Subsidiaries for the immediately preceding
fiscal year or fiscal quarter and (iv) specifying the aggregate amount of
interest paid or accrued by the Borrower and its Subsidiaries and the aggregate
amount of depreciation, depletion and amortization charged on the books of the
Borrower and its Subsidiaries (except in the case of the Officers' Certificate
delivered with the financial statements being delivered pursuant to clauses (a)
and (b) of this Section 5.01, only if not specified in such financial
statements);
(d) together with each delivery of financial statements pursuant to
Section 5.01(b), a certificate of the Borrower's Approved Auditor stating (i)
that its audit examination has included a review of the terms of this Agreement
and the other Loan Documents as they relate to accounting matters and that such
review is sufficient to enable it to make the statement referred to in clause
(iii) of this Section 5.01(d), (ii) whether, in the course of their audit
examination, there has been disclosed the existence during the fiscal year
covered by such financial statements (and whether it has knowledge of the
existence as of the date of such accountants' certificate) of any condition or
event which constitutes a Default or Event of Default under Section 5.13, and if
during its audit examination there has been disclosed (or if it has knowledge
of) such a condition or event, specifying the nature and period of existence
thereof (it being understood, however, that the Approved Auditor shall not be
liable to any Person by reason of its failure to obtain knowledge of any Default
or Event of Default which would not be disclosed in the course of an audit
conducted in accordance with generally
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accepted auditing standards), and (iii) that based on its annual examination
nothing came to its attention which causes it to believe that the information
contained in the certificate of the Borrower's chief financial officer delivered
therewith pursuant to Section 5.01(c) is not correct or that the matters set
forth in such certificate are not stated in accordance with the terms of this
Agreement;
(e) as soon as practicable and in any event not more than 91 days after
the end of each fiscal year of the Borrower, a report as to the estimated
discounted future net revenues attributable to proved oil and gas reserves of
the Borrower and its Subsidiaries calculated in accordance with all applicable
SEC, FASB and SPE requirements, standards and guidelines (before any state or
federal income taxes) as of the end of such year audited by Independent
Petroleum Engineers (the "Audited Report");
(f) promptly after receipt thereof by the Borrower, copies of all
material reports submitted to the Borrower by independent public accountants and
consultants in connection with each annual, interim or special audit of the
books of the Borrower or any of its Subsidiaries;
(g) promptly after any Senior Officer of the Borrower obtains knowledge
(i) that a condition or event exists that constitutes a Default or Event of
Default, (ii) that the Bank has given notice or taken any other action with
respect to a claimed Default or Event of Default under this Agreement, (iii) of
any condition or event peculiar to the Borrower or any of its Subsidiaries which
could reasonably be expected to have a Material Adverse Effect, (iv) that any
Person has given any notice to the Borrower or any of its Subsidiaries or taken
any other action with respect to a claimed default or event or condition of the
type referred to in Section 6.01, (v) of the institution of any litigation
involving claims against the Borrower or any of its Subsidiaries equal to or
greater than $100,000 with respect to any single cause of action or $500,000 in
the aggregate, (vi) of the assertion by any Person of a claim for breach or
violation of any Environmental Law or for damages resulting from such breach or
violation against the Borrower which in the reasonable opinion of the Borrower
is material, (vii) of the assertion of any claim by any Person seeking
injunctive relief against the Borrower or any of its Subsidiaries which would
have a Material Adverse Effect or (viii) of the occurrence of any default or
event of default under any other agreement, instrument or note evidencing or
pursuant to which any
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Debt (other than that represented by this Agreement and the other Loan
Documents) the outstanding principal amount of which exceeds $1,000,000 has been
issued by the Borrower or any Subsidiary, an Officers' Certificate specifying
the nature and period of existence of any such condition or event, or specifying
the notice given or action taken by the Bank or other Person and the nature of
such claimed Default, Event of Default, event or condition, and what action the
Borrower has taken, is taking or proposes to take in connection therewith
(provided that nothing in this Section 5.01(g) shall require the Borrower to
disclose in such Officers' Certificate any information not otherwise known or
discoverable by an opposing party in the event litigation or another proceeding
has been or is instituted against the Borrower or a Subsidiary in connection
with any such event, condition or claimed Default if discovery of such
information by such opposing party could materially prejudice any rights or
defenses of the Borrower or such Subsidiary with respect thereto);
(h) promptly after any officer of the Borrower obtains knowledge of the
occurrence of any (i) "reportable event", as such term is defined in section
4043 of ERISA, (ii) "prohibited transaction" as such term is defined in section
4975 of the Code, in connection with any Plan or any trust created thereunder
which is not otherwise exempt under a statutory, class or administrative
exemption, (iii) event described in Section 5.23, (iv) reorganization or
termination of any Multiemployer Plan to which the Borrower or any Related
Person is obligated or has been obligated to contribute, (v) termination of any
Plan, or proceedings to terminate any Plan which are pending or threatened or
(vi) liability to or on account of any Plan under sections 4062, 4063 or 4064 of
ERISA which will or may be incurred by the Borrower or a Related Person, a
written notice specifying the nature thereof, what action the Borrower or any
Related Person has taken, is taking and proposes to take with respect thereto,
and, when known, any action taken or threatened by the Internal Revenue Service
of the PBGC with respect thereto;
(i) promptly after transmission thereof, copies of all such financial
statements, proxy statements, notices and reports as it shall send or make
available to public debt holders or stockholders and copies of all registrations
statements (without exhibits) and all reports which it files with the SEC or any
stock exchange;
(j) promptly after transmission thereof, copies of all such financial
statements, notices, certificates and reports as it shall send to any other
lender or group of lenders if the
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aggregate amount of Debt outstanding by the Borrower and its Subsidiaries to
such lenders or group of lenders exceeds $5,000,000;
(k) promptly after receipt thereof, copies of any reports, statements
and notices it may receive in accordance with Section 13(d) or 14(d) of the
Exchange Act and the rules and regulations promulgated thereunder by the SEC;
and
(l) with reasonable promptness, such other information and data with
respect to the Borrower and its Subsidiaries as from time to time may be
reasonably requested by the Bank.
SECTION 5.02. Inspection of Property. Each of the Borrower and its
Subsidiaries will permit the Bank and any Person designated by the Bank, at the
Bank's expense (unless such inspection shall be made during the continuance of a
Default or after the occurrence of an Event of Default, in which event the
reasonable expense of such inspection shall be borne by the Borrower), to visit
and inspect any of the properties, real, personal or mixed, of the Borrower or
its Subsidiaries, to examine the corporate books and financial records of the
Borrower and its Subsidiaries and make copies thereof or extracts therefrom and
to discuss their affairs, finances and accounts with the principal officers of
the Borrower or any its Subsidiaries and (prior to the occurrence an continuance
of a Default or Event of Default, upon consent of the Borrower (which consent
shall not be unreasonably withheld), and during the continuance of a Default or
after the occurrence of an Event of Default without the consent of the Borrower)
its independent public accountants (and by this provision the Borrower
authorizes such accountants to discuss with any Person so designated its
affairs, finances and accounts), and, with respect to the corporate records, any
counsel generally representing the Borrower or such Subsidiary in respect of
such matters, all at such reasonable times and as often as the Bank may
reasonably request.
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SECTION 5.03. Corporate Existence, etc. The Borrower will, and will
cause each of its Subsidiaries to, at all times (i) preserve and keep in full
force and effect its corporate existence, and all of its rights and franchises
material to its business, and (ii) qualify and maintain its qualification to do
business and good standing in any jurisdiction where the failure to do so
individually or in the aggregate would have a Material Adverse Effect.
SECTION 5.04. Payment of Taxes and Claims.
(a) The Borrower will, and will cause each of its Subsidiaries to, pay
all Taxes imposed upon them or upon any of their properties or assets or in
respect of any of their franchises, business, income, sales and services, or
profits when the same become due and payable, but in any event before any
penalty or interest accrues thereon, and all claims (including, without
limitation, claims for labor, services, materials and supplies) for sums which
have become due and payable and which by law have or might become a Lien upon
any of their properties or assets, provided that no such Tax or claim need be
paid if (i) it is being contested in good faith by appropriate proceedings
promptly initiated and diligently conducted and if such reserves or other
appropriate provision, if any, as shall be required by GAAP shall have been made
therefor and (ii) the failure to pay such Tax or claim would not, if such
contest were adversely determined, have a Material Adverse Effect.
(b) The Borrower will not consent to or permit the filing of or be a
party to any consolidated income tax return on behalf of itself or any of its
Subsidiaries with any Person (other than a consolidated return that includes
solely the Borrower and its Subsidiaries); provided that the Guarantor may
obtain the benefit of tax losses incurred by third parties against its
Venezuelan income if such arrangement (i) is in accordance with applicable law
and customary practice in Venezuela and (ii) does not cause the Guarantor to
become directly or indirectly liable on or for any Debt of or tax imposed on
such third party.
SECTION 5.05. Compliance with Laws, etc. The Borrower will, and will
cause each of its Subsidiaries to, comply with the requirements of all
applicable laws, rules, regulations and orders of any Governmental Authority
(including, without limitation, the Occupational Safety and Health Act of 1970,
as amended, ERISA and all Environmental Laws), the violation of which would
either individually or in the aggregate have a Material Adverse Effect, and will
obtain and maintain in effect
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all licenses, certificates, permits, franchises and other governmental
authorizations necessary to the ownership of their respective properties or to
the conduct of their respective businesses, in each case to the extent necessary
to ensure that non-compliance with such laws, ordinances or governmental rules
or regulations or failure to obtain or maintain in effect such licenses,
certificates, permits, franchises and other governmental authorizations would
not, individually or in the aggregate, have a Material Adverse Effect.
SECTION 5.06. Maintenance of Properties and Leases. The Borrower will,
and will cause each of its Subsidiaries to, maintain, in good repair and working
order and condition, all properties used or useful in their respective
businesses, and from time to time make or cause to be made all appropriate
repairs, renewals, replacements, additions and improvements thereto or thereof
as needed and comply in all material respects with the provisions of all leases
or licenses under which it leases or licenses any such properties.
SECTION 5.07. Insurance. The Borrower will, and will cause each of its
Subsidiaries to, maintain, with financially sound and reputable insurers, being
Lloyds of London or insurers rated at least A or A+ by A.M. Best, insurance with
respect to its properties and business in such forms and amounts and against
such risks as is reasonable and prudent in the circumstances and in any event as
are customarily insured against by Persons of like size and reputation engaged
in the same business and similarly situated.
SECTION 5.08. Scope of Business. The Borrower will, and will cause its
Subsidiaries to, engage only in the Oil and Gas Business.
SECTION 5.09. Use of Proceeds. The proceeds of the Loans will be used
by the Borrower solely for its general corporate purposes in compliance with all
applicable legal and regulatory requirements, and none of such proceeds will be
used, directly or indirectly, for the purpose, whether immediate, incidental or
ultimate, of buying or carrying any "margin stock" within the meaning of
Regulation U; provided that the Bank shall have no responsibility as to the use
of any of such proceeds. The Letter of Credit shall be for the purpose of
guaranteeing the expenditure commitment of the Borrower with respect to the
Delta Centro exploration block in Venezuela.
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SECTION 5.10. Environmental Compliance. The Borrower will, and will
cause each of its Subsidiaries to, (a) obtain and maintain all permits, licenses
and other authorizations that are required under all Environmental Laws, (b)
comply with all terms and conditions of all such permits, licenses and
authorizations and with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules and timetables
contained in all Environmental Laws or in any regulation, ordinance, code, plan,
order, decree, judgment, injunction, notice or demand letter issued, entered,
promulgated or approved thereunder, except to the extent that failure so to do
does not have a Material Adverse Effect and (c) operate all property owned or
leased by each of them such that no claim or obligation, including a clean-up
obligation, which would have a Material Adverse Effect, shall arise under any
Environmental Law, and if any claim is made against the Borrower or any of its
Subsidiaries or any such obligation shall arise (regardless of whether such
claim or obligation would have a Material Adverse Effect) under any
Environmental Law, the Borrower or such Subsidiary shall, at its own cost and
expense, timely satisfy such claim or obligation; provided that to the extent
the Borrower or a Subsidiary has, pursuant to an Operating Agreement, delegated
the operation of oil and gas properties to a third party (an "Operator"), the
Borrower shall be required with respect to such properties directly to take only
such actions to ensure compliance with this Section 5.10 as are permitted to it
by such Operating Agreement but shall otherwise use its best efforts to ensure
that the Operator takes all such actions necessary to ensure compliance with
this Section 5.10.
SECTION 5.11. Maintenance of Books and Records. The Borrower will, and
will cause each of its Subsidiaries to, do the following: (i) keep proper
records and books of account with respect to its business activities in which
proper entries are made in the ordinary course of all dealings or transactions
of or in relation to its business and affairs; (ii) set up on its books adequate
reserves with respect to all Taxes, assessments, charges, levies and claims; and
(iii) set up on its books reserves against doubtful accounts receivable,
advances and all other proper reserves (including reserves for depreciation,
obsolescence or amortization of its property). All determinations pursuant to
this Section 5.11 shall be made in accordance with, or as required by, GAAP
reflecting all of the Borrower's and its Subsidiaries' financial transactions.
Notwithstanding the foregoing, the Borrower and its Subsidiaries may make
adjustments and changes in the manner in which their books and records are kept;
provided, that:
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(a) all such adjustments and changes shall be required
or permitted by GAAP but need not conform with the prior
accounting practice of the Borrower, such Subsidiary or any
predecessor of the Borrower;
(b) the Bank shall be given written notice of all such changes
or adjustments with the financial statements required by Section
5.01(a) for the quarter in which such change occurred and a year-end
listing and description of all such changes and adjustments and the
effect thereof by the Approved Auditor which provided the financial
statements required by Section 5.01(b); and
(c) the financial covenants and ratios set forth in Section
5.13 shall continue to be calculated without regard to such adjustments
or changes unless and until the Bank has consented thereto.
SECTION 5.12. Payment of Trade Payables. The Borrower will, and will
cause each of its Subsidiaries to, pay all Trade Payables promptly in accordance
with their terms.
SECTION 5.13. Financial Covenants. The Borrower will not:
(a) Current Ratio. Permit its Current Ratio, calculated as of the last
day of each fiscal quarter, to be less than 1.1 to 1.0.
(b) EBITDA/Interest Ratio. Permit the EBITDA/Interest Ratio for any
Reference Period to be less than 3.0 to 1.0.
(c) Minimum Net Worth. Permit its Net Worth to be less than
$100,000,000, calculated as of the last day of each fiscal quarter. For purposes
of this Section 5.13(c), Net Worth shall exclude the cost of treasury shares and
the book value of all assets that should be classified as intangibles (without
duplication of deductions in respect of items already deducted in arriving at
surplus and retained earnings) including, without limitation, goodwill, minority
interests, research and development costs, trademarks, trade names, copyrights,
patents and franchises, unamortized debt discount and expense, all reserves and
any write-up in the book value of assets resulting from a revaluation thereof
subsequent to December 31, 1995.
SECTION 5.14. Compliance with ERISA. The Borrower will not, and will
not permit any Related Person to:
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(a) engage in any transaction in connection with which the
Borrower or any Related Person could be subject to either a civil
penalty assessed pursuant to section 502(i) of ERISA or a tax imposed
by section 4975 of the Code, terminate or withdraw from any Plan (other
than a Multiemployer Plan) in a manner, or take any other action
with respect to any such Plan (including, without limitation, a
substantial cessation of business operations or an amendment of a Plan
within the meaning of section 4041(e) of ERISA), which could result in
any liability of the Borrower or any Related Person to the PBGC, to a
Plan, to a Plan participant, to the Department of Labor or to a trustee
appointed under section 4042(b) or (c) of ERISA), incur any liability
to the PBGC or a Plan on account of a withdrawal from or a termination
of a Plan under section 4063 or 4064 of ERISA, incur any liability for
post-retirement benefits under any and all welfare benefit plans (as
defined in section 3(1) of ERISA), fail to make full payment when due
of all amounts which, under the provisions of any Plan or applicable
law, the Borrower or any Related Person is required to pay as
contributions thereto, or permit to exist any accumulated funding
deficiency, whether or not waived, with respect to any Plan (other than
a Multiemployer Plan);
(b) at any time permit the termination of any defined benefit
pension plan intended to be qualified under Section 401(a) and Section
501(a) of the Code unless such plan is funded so that the value of all
benefit liabilities upon the termination date does not exceed the then
current value of all assets in such plan; or
(c) if the Borrower or any Related Person becomes obligated
under a Multiemployer Plan, permit the aggregate complete or partial
withdrawal liability under Title IV of ERISA with respect to
Multiemployer Plans incurred by the Borrower or any Related Person or
the aggregate liability under Title IV of ERISA incurred by the
Borrower or any Related Person to exceed any amount the payment of
which would have a Material Adverse Effect.
For the purposes of Section 5.14(c), the amount of the withdrawal liability of
the Borrower and the Related Persons at any date shall be the aggregate present
value of the amount claimed to have been incurred less any portion thereof as to
which the Borrower reasonably believes, after appropriate consideration of
possible adjustments arising under subtitle E of Title IV
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of ERISA, that it and its Related Persons will have no liability, provided that
the Borrower shall obtain promptly written advice from independent actuarial
consultants supporting such determination. The Borrower agrees that it will (y)
once in each calendar year, beginning in 1996, request and obtain a current
statement of withdrawal liability from each Multiemployer Plan to which the
Borrower or any Related Person is or has been obligated to contribute and (z)
transmit a copy of such statement to the Bank, within 15 days after the Borrower
receives the same. As used in this Section 5.14, the term "accumulated funding
deficiency" has the meaning specified in section 302 of ERISA and section 412 of
the Code, the terms "present value" and "current value" have the meanings
specified in section 3 of ERISA, the term "benefit liabilities" has the meaning
specified in section 4001(a)(16) of ERISA and the term "amount of unfunded
liabilities" has the meaning specified in section 4001(18) of ERISA. The term
"Related Person" means any trade or business, whether or not incorporated, which
is under common control with the Borrower as defined in Section 414(b), (c), (m)
or (o) of the Code.
SECTION 5.15. Indenture. The Borrower agrees to perform and comply with
its obligations under Sections 3.8, 3.9, 3.10, 3.11, 3.13, 3.15 and 3.16 of the
Indenture, and said Sections and all related definitions and ancillary
provisions are hereby incorporated herein by reference mutatis mutandis, and
shall be deemed to continue in effect for the benefit of the Bank irrespective
of whether the Indenture is amended or remains in effect and irrespective of any
waiver thereunder or any repayment of the Senior Notes.
ARTICLE VI
DEFAULTS
SECTION 6.01. Events of Default. If one or more of the
following events ("Events of Default") shall have occurred and be
continuing:
(a) the Borrower shall fail to pay when due any principal of or
interest on any Loan or any Reimbursement Obligation, or any fee or any other
amount whatsoever payable under this Agreement or any other Loan Document;
(b) the Borrower shall fail to observe or perform any covenant or
agreement contained in this Agreement (other than as
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covered by clause (a) above) or any of the other Loan Documents, or, from and
after the date of the initial Loan, the Guarantor shall fail to observe or
perform any covenant or agreement contained in the Guarantee Agreement;
(c) any representation, warranty, certification or statement made by
the Borrower in this Agreement or any of the other Loan Documents or any
certificate, financial statement or other document delivered by the Borrower
pursuant to or in connection with this Agreement, or, from and after the date of
the initial Loan, any representation, warranty, certification or statement made
by the Guarantor in the Guarantee Agreement or by Lagoven in the Consent, or by
the Guarantor or Lagoven in any certificate, financial statement or other
document delivered by them pursuant to or in connection with this Agreement,
shall prove to have been incorrect in any material respect when made or deemed
made;
(d) the Borrower, the Guarantor or any of their respective Subsidiaries
shall fail to make any payment in respect of any principal of or interest on
other Debt when due or within any applicable grace period, or any event or
condition shall occur which results in the acceleration of the maturity of any
such Debt or enables (or, with the giving of notice or lapse of time or both,
would enable) the holder or holders of such Debt or any Person acting on its or
their behalf to accelerate the maturity thereof;
(e) the Borrower, the Guarantor or any of their respective Subsidiaries
shall commence a voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to itself or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of its property, or shall consent
to any such relief or to the appointment of or taking possession by any such
official in an involuntary case or other proceeding commenced against it, or
shall make a general assignment for the benefit of creditors, or shall fail
generally to pay its debts as they become due, or shall take any corporate
action to authorize any of the foregoing;
(f) an involuntary case or other proceeding shall be commenced against
the Borrower, the Guarantor or any of their respective Subsidiaries seeking
liquidation, reorganization or other relief with respect to it or its debts
under any bankruptcy, insolvency or other similar law now or hereafter in
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effect or seeking the appointment of a trustee, receiver, liquidator, custodian
or other similar official of it or any substantial part of its property, and
such involuntary case or other proceeding shall remain undismissed and unstayed
for a period of 60 days; or an order for relief shall be entered against the
Borrower, the Guarantor or any of their respective Subsidiaries under applicable
bankruptcy laws as now or hereafter in effect;
(g) a judgment or order for the payment of money in excess of
$1,000,000 (or the equivalent in another currency) shall be rendered against the
Borrower or the Guarantor or any of their respective Subsidiaries and such
judgment or order shall continue unsatisfied and unstayed for a period of 30
days;
(h) from and after the making of the initial Loan, the Bank shall cease
to have a valid and perfected first priority security interest in the Collateral
or Lagoven shall default for three days in the performance of its obligations
under the Consent;
(i) any person or group of persons (within the meaning of Section 13 or
14 of the Securities Exchange Act of 1934, as amended) shall have acquired
beneficial ownership (within the meaning of Rule 13d-3 promulgated by the
Securities and Exchange Commission under said Act) of 25% or more of the
outstanding voting shares of the Borrower; or, during any period of 15
consecutive calendar months, individuals who were directors of the Borrower on
the first day of such period shall cease to constitute a majority of the board
of directors of the Borrower (including a new Director(s) whose election by the
Board or nomination for election by the Borrower's stockholders was approved by
a vote of at least two-thirds (2/3) of the Directors then still in office who
either were Directors at the first day of such period or whose election or
nomination for election was previously so approved); or the Borrower shall cease
to own, beneficially and of record, at least 51% of the outstanding voting
shares of the Guarantor or shall otherwise cease to control the Guarantor;
(j) from and after the making of the initial Loan, (i) the Guarantee
Agreement, the Security Agreement, the Consent or the Service Agreement shall be
terminated or shall for any reason cease to be in full force and effect, or (ii)
the Concession is revoked, invalidated or otherwise ceases to be in effect; or
(k) from and after the making of the initial Loan, a moratorium shall
be declared or shall take effect or exchange
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control regulations shall be implemented that prohibit or materially restrict
payments of Dollars by Venezuelan companies including the Guarantor or Lagoven
(unless such moratorium or regulations exempt payments by the Guarantor and
Lagoven in connection with the transactions contemplated hereby);
then, and in every such event, the Bank may, by notice to the Borrower,
terminate the Commitments and they shall thereupon terminate, and/or (ii) by
notice to the Borrower declare the Loans and the Note (together with accrued
interest thereon) to be, and the Loans and the Note shall thereupon become,
immediately due and payable without presentment, demand, protest or other notice
of any kind, all of which are hereby waived by the Borrower; provided that in
the case of any of the Events of Default specified in clause (e) or (f) above
with respect to the Borrower, without any notice to the Borrower or any other
act by the Bank, the Commitments shall thereupon automatically terminate and the
Loans and the Note (together with accrued interest thereon) shall automatically
become immediately due and payable without presentment, demand, protest or other
notice of any kind, all of which are hereby waived by the Borrower.
In addition, upon the occurrence and during the continuance of any
Event of Default, the Borrower agrees that it shall, if requested by the Bank
(and, in the case of any Event of Default specified in clause (e) or (f) above
with respect to the Borrower, forthwith without any demand or the taking of any
other action by the Bank), provide cover for the Letter of Credit by paying to
the Bank, in Dollars and immediately available funds, an amount equal to the
then undrawn face amount of the Letter of Credit, which funds shall be held by
the Bank in the Collateral Account as collateral security for the obligations of
the Borrower under this Agreement and the other Loan Documents and shall be
subject to withdrawal only as provided in the Security Agreement.
ARTICLE VII
CHANGE IN CIRCUMSTANCES
SECTION 7.01. Basis for Determining Interest Rate Inadequate or Unfair.
If on or prior to the first day of any Interest Period:
(a) the Bank determines that deposits in Dollars (in the applicable
amounts) are not being offered to the Bank in the
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London interbank market for such Interest Period, or
(b) the Bank determines that the Adjusted London Interbank Offered Rate
will not adequately and fairly reflect the cost to the Bank of funding any of
the Loans for such Interest Period, the Bank shall forthwith give notice thereof
to the Borrower, and until the Bank notifies the Borrower that the circumstances
giving rise to such suspension no longer exist, the obligation of the Bank to
make Loans shall be suspended and, as to outstanding Loans, from and after the
end of the then current Interest Period with respect to such Loans, such Loans
shall bear interest at a rate per annum equal to the Base Rate from time to time
plus the Euro-Dollar Margin (or, if applicable pursuant to Section 2.06(b), the
Post-Default Rate).
SECTION 7.02. Illegality. If, on or after the date of this Agreement,
the adoption of any applicable law, rule or regulation, or any change in any
applicable law, rule or regulation, or any change in the interpretation or
administration thereof by any Governmental Authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by the Bank (or its Lending Office) with any request or directive (whether or
not having the force of law) of any such authority, central bank or comparable
agency shall make it unlawful or impossible for the Bank (or its Lending Office)
to make, maintain or fund the Loans or to issue the Letter of Credit and the
Bank shall so notify the Borrower, then until the Bank notifies the Borrower
that the circumstances giving rise to such suspension no longer exist, the
obligation of the Bank to make Loans or issue the Letter of Credit shall be
suspended. Before giving any notice to the Borrower pursuant to this Section,
the Bank shall designate a different Lending Office if such designation will
avoid the need for giving such notice and will not, in the judgment of the Bank,
be otherwise disadvantageous to the Bank. If the Bank shall determine that it
may not lawfully continue to maintain and fund the Loans to maturity and shall
so specify in such notice, the Borrower shall on the last day(s) of the then
current Interest Period prepay the Loans together with accrued interest thereon
to the date of prepayment and all other amounts payable under this Agreement and
the other Loan Documents.
SECTION 7.03. Increased Cost and Reduced Return.
(a) If, on or after the date hereof, the adoption of any applicable
law, rule or regulation, or any change in any
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applicable law, rule or regulation, or any change in the interpretation or
administration thereof by any Governmental Authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by the Bank (or its Lending Office) with any request or directive (whether or
not having the force of law) of any such authority, central bank or comparable
agency shall impose, modify or deem applicable any reserve (including, without
limitation, any such requirement imposed by the Board of Governors of the
Federal Reserve System (but excluding any such requirement reflected in an
applicable Euro-Dollar Reserve Percentage)), special deposit, insurance
assessment or similar requirement against assets of, deposits with or for the
account of, or credit extended by, the Bank (or its Lending Office) or shall
impose on the Bank (or its Lending Office) or on the London interbank market any
other condition affecting the Loans, the Note or the Loan Commitment or the
Letter of Credit Commitment and the result of any of the foregoing is to
increase the cost to the Bank (or its Lending Office) of making or maintaining
the Loans, or of issuing or having outstanding the Letter of Credit, or to
reduce the amount of any sum received or receivable by the Bank (or its Lending
Office) under this Agreement or under the Note, by an amount deemed by the Bank
to be material, then, within 15 days after demand by the Bank, the Borrower
shall pay to the Bank such additional amount or amounts as will compensate the
Bank for such increased cost or reduction.
(b) If the Bank shall have determined that, after the date hereof, the
adoption of any applicable law, rule or regulation regarding capital adequacy,
or any change in any such law, rule or regulation, or any change in the
interpretation or administration thereof by any Governmental Authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or any request or directive regarding capital adequacy (whether or not
having the force of law) of any such authority, central bank or comparable
agency, has or would have the effect of reducing the rate of return on capital
of the Bank (or its Parent) as a consequence of the Bank's obligations hereunder
to a level below that which the Bank (or its Parent) could have achieved but for
such adoption, change, request or directive (taking into consideration its
policies with respect to capital adequacy) by an amount deemed by the Bank to be
material, then from time to time, within 15 days after demand by the Bank, the
Borrower shall pay to the Bank such additional amount or amounts as will
compensate the Bank (or its Parent) for such reduction.
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(c) The Bank will promptly notify the Borrower of any event of which it
has knowledge, occurring after the date hereof, which will entitle the Bank to
compensation pursuant to this Section and will designate a different Lending
Office if such designation will avoid the need for, or reduce the amount of,
such compensation and will not, in the judgment of the Bank, be otherwise
disadvantageous to the Bank. A certificate of the Bank claiming compensation
under this Section and setting forth the additional amount or amounts to be paid
to it hereunder shall be conclusive in the absence of manifest error. In
determining such amount, the Bank may use any reasonable averaging and
attribution methods.
SECTION 7.04. Taxes.
(a) The Borrower agrees to pay to any holder of a Loan or any
Reimbursement Obligation or any portion thereof (if such holder is not a U.S.
Person) such additional amounts as are necessary in order that the net payment
of any amount due to such holder hereunder after deduction for or withholding in
respect of any U.S. Tax imposed with respect to such payment (or in lieu
thereof, payment of such U.S. Tax by such holder) will not be less than the
amount stated under this Agreement, the Note or any other Loan Document to be
then due and payable, provided that the foregoing obligation to pay such
additional amounts shall not apply:
(i) to any payment to any such holder under this Agreement,
the Note or any other Loan Document unless such holder is, on the date
hereof (or if later on the date it becomes a party hereto as provided
in Section 8.05(b) hereof), entitled to submit Form 1001 (entitling
such holder to a complete exemption from withholding on all interest to
be received by it hereunder in respect of the Loans) or Form 4224
(relating to all interest to be received by it hereunder), or
(ii) to any U.S. Tax imposed solely by reason of the failure
by such holder to comply with applicable certification, information,
documentation or other reporting requirements concerning the
nationality, residence, identity or connections with the United States
of America of such holder if such compliance is required by statute or
regulation of the United States of America as a precondition to relief
or exemption from such U.S. Tax.
For purposes of this Section 7.04(a), (w) "Form 1001" shall mean
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Form 1001 (Ownership, Exemption , or Reduced Rate Certificate) of the Department
of the Treasury of the United States of America, (x) "Form 4224" shall mean Form
4224 (Exemption from Withholding of Tax on Income Effectively Connected with the
Conduct of a Trade or Business in the United States) of the Department of the
Treasury of the United States of America (or in relation to either such Form
such successor and related forms as may from time to time be adopted by the
relevant taxing authorities of the United States of America to document a claim
to which such Form relates), (y) "U.S. Person" shall mean a citizen, national or
resident of the United States of America, a corporation, partnership or other
entity created or organized in or under any laws of the United States of
America, or any estate or trust that is subject to Federal income taxation
regardless of the source of its income and (z) "U.S. Taxes" shall mean any
present or future tax, assessment or other charge or levy imposed by or on
behalf of the United States of America or any taxing authority thereof or
therein.
(b) Within 30 days after paying any amount to the Bank from which it is
required by law to make any deduction or withholding, and within 30 days after
it is required by law to remit such deduction or withholding to any relevant
taxing or other authority, the Borrower shall deliver to the relevant holder
evidence satisfactory to it of such deduction, withholding or payment (as the
case may be).
(c) The provisions of this Section 7.04 shall survive the payment in
full of the Loans, the Note and the Reimbursement Obligations and the
termination of the Commitments.
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ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Notices. All notices, requests and other communications
to any party hereunder shall be in writing (including bank wire, telex,
facsimile transmission or similar writing) and shall be given to such party, at
its address or telex number set forth on the signature pages hereof or such
other address or telex number as such party may hereafter specify for the
purpose by notice to the other party. 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
answerback 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; provided, that notices to the Bank under Article II
or Article VII shall not be effective until received.
SECTION 8.02. No Waivers. No failure or delay by the Bank in
exercising, and no course of dealing with respect to, any right, power or
privilege hereunder or under the Note 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 8.03. Expenses; Indemnification.
(a) The Borrower shall pay (i) all out-of-pocket expenses of the Bank,
including the reasonable fees and disbursements of special United States counsel
and special Venezuelan counsel for the Bank, in connection with the preparation,
negotiation, execution and delivery (subject to such limitation as has
heretofore been agreed between the Bank and the Borrower) and administration of
this Agreement, the Note and the other Loan Documents, any waiver or consent
hereunder or thereunder or any amendment hereof or thereof or any Default or
alleged Default hereunder and (ii) if an Event of Default occurs, all
out-of-pocket expenses incurred by the Bank, including fees and disbursements of
counsel, in connection with such Event of Default and collection, bankruptcy,
insolvency and other enforcement proceedings resulting therefrom.
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(b) The Borrower agrees to indemnify the Bank and its affiliates and
the respective directors, officers, agents and employees of the foregoing (each
an "Indemnitee") and hold each Indemnitee harmless from and against any and all
liabilities, losses, damages, costs and expenses of any kind, including, without
limitation, the reasonable fees and disbursements of counsel, which may be
incurred by such Indemnitee in connection with any investigative, administrative
or judicial proceeding (whether or not such Indemnitee shall be designated a
party thereto) brought or threatened relating to or arising out of this
Agreement or any Loan Document or any actual or proposed use of the proceeds of
any Loan hereunder; provided that no Indemnitee shall have the right to be
indemnified hereunder for such Indemnitee's own gross negligence or willful
misconduct as determined by a court of competent jurisdiction.
(c) Without limiting the foregoing, the Borrower hereby indemnifies and
holds harmless the Bank from and against any and all claims and damages, losses
(excluding loss of anticipated profits), liabilities, costs or expenses which
such Bank may incur (or which may be claimed against the Bank by any Person
whatsoever) by reason of or in connection with the issuance or transfer of or
payment or refusal to pay by the Bank under the Letter of Credit; provided that
the Borrower shall not be required to indemnify the Bank for any claims,
damages, losses, liabilities, costs or expenses to the extent, but only to the
extent, caused by the willful misconduct or gross negligence of the Bank in
determining whether documents presented under the Letter of Credit appear on
their face to comply with the terms of the Letter of Credit.
SECTION 8.04. Amendments and Waivers. Any provision of this Agreement
or the Note may be amended or waived if, but only if, such amendment or waiver
is in writing and is signed by the Borrower and the Bank. This Agreement and the
other Loan Documents constitute the entire agreement among the parties with
respect to the subject matter hereof.
SECTION 8.05. Successors and Assigns.
(a) This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns, except that the
Borrower may not assign or otherwise transfer any of its rights under this
Agreement without the prior written consent of the Bank. The Bank may at any
time change its Lending Office.
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(b) The Bank may at any time grant to one or more banks or other
institutions (each a "Participant") participating interests in the Commitments
or the Loans or the Reimbursement Obligations. In the event of any such grant by
the Bank of a participating interest to a Participant, whether or not upon
notice to the Borrower, the Bank shall remain responsible for the performance of
its obligations hereunder, and the Borrower shall continue to deal solely and
directly with the Bank in connection with the Bank's rights and obligations
under this Agreement. Any agreement pursuant to which the Bank grants such a
participating interest shall provide that the Bank retains the sole right to
enforce the obligations of the Borrower under this Agreement and the Note and
the sole right to approve any amendment, modification or waiver of any provision
of this Agreement or the Note; provided that such agreement may provide that the
Bank will not without the prior written consent of the participant (1) amend or
modify this Agreement or the Note in such a manner as to (i) increase the Loan
Commitment or the Letter of Credit Commitment, (ii) reduce the principal of or
rate of interest on the Loans or the Note or any Reimbursement Obligation, (iii)
postpone the date fixed for any payment of principal of or interest on the Loans
or the Note or any Reimbursement Obligation or (iv) alter the amount of the fee
payable in connection herewith, or (2) release the Collateral or any thereof or
the Guarantee Agreement. The Borrower agrees that each Participant shall, to the
extent provided in its participation agreement, be entitled to the benefits of
Article VII with respect to its participating interest.
(c) The Bank may at any time, with the prior written consent of the
Borrower, assign to one or more banks or other institutions (each an "Assignee")
all or part of its rights and obligations under this Agreement and the Note, and
such Assignee shall assume such rights and obligations, pursuant to an
assignment and assumption agreement in form and substance satisfactory to the
Bank; provided that (i) any such partial assignment shall be in an amount at
least equal to $1,000,000 and (ii) if an Assignee is an affiliate of the Bank,
or if the assignment is made pursuant to Section 8.05(d), no such consent shall
be required. Upon execution and delivery of such instrument and payment by such
Assignee to the Bank of an amount equal to the purchase price agreed between the
Bank and such Assignee, such Assignee shall be a party to this Agreement and
shall have all the rights and obligations of the Bank with a Loan Commitment and
other obligations as set forth in such instrument of assumption, and the Bank
shall be released from its obligations hereunder to a corresponding extent, and
no further
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consent or action by any party shall be required. Upon the consummation of any
assignment pursuant to this subsection (c), the Bank and the Borrower shall make
appropriate arrangements so that, if required, a new Note is issued to the
Assignee.
(d) The Bank may at any time assign all or any portion of its rights
under this Agreement and the Note to a Federal Reserve Bank. No such assignment
shall release the Bank from its obligations hereunder.
(e) The Bank may provide to any actual or prospective assignee or
participant such information concerning the Borrower or any other party to any
Loan Document as the Bank may deem appropriate.
SECTION 8.06. Governing Law; Submission to Jurisdiction; Etc.
(a) This Agreement and the Note shall be governed by and construed in
accordance with the law of the State of New York. The Borrower hereby submits to
the nonexclusive jurisdiction of the United States District Court for the
Southern District of New York and of any New York State court sitting in New
York City with respect to actions brought against it as a defendant, for
purposes of all legal proceedings arising out of or relating to this Agreement
or any of the other Loan Documents or the transactions contemplated hereby or
thereby, provided that nothing herein shall be deemed to limit the ability of
the Bank to bring suit against the Borrower in any other jurisdiction. The
Borrower irrevocably waives, to the fullest extent permitted by applicable law,
any objection which it may now or hereafter have to the laying of the venue of
any such proceeding brought in such a court, any claim that any such proceeding
brought in such a court has been brought in an inconvenient forum and any
objection based on place of residence or domicile.
(b) The Borrower appoints CT Corporation System, with offices at the
date of this Agreement at 1633 Broadway, New York, New York 10019, United
States, as its authorized agent on which any and all legal process may be served
in any such action, suit or proceeding brought in the United States District
Court for the Southern District of New York or any New York State court sitting
in New York City. The Borrower agrees that service of process in respect of it
upon such agent, together with written notice of such service given to it in the
manner provided in Section 8.01, shall be deemed to be effective service of
process upon it any such action, suit or proceeding. The Borrower agrees that
the
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failure of such agent to give notice to it of any such service shall not impair
or affect the validity of such service or any judgment rendered in any action,
suit or proceeding based thereon. If for any reason such agent shall cease to be
available to act as such, the Borrower agrees to designate a new agent in New
York City, on the terms and for the purposes of this Section 8.06. Nothing
herein shall in any way be deemed to limit the ability of the Bank to serve any
such legal process in any other manner permitted by applicable law or to obtain
jurisdiction over the Borrower or bring actions, suits or proceedings against it
in such other jurisdictions, and in such manner, as may be permitted by
applicable law.
(c) The Borrower irrevocably waives, to the fullest extent permitted by
applicable law, any claim that any action or proceeding commenced by the Bank
relating in any way to this Agreement should be dismissed or stayed by reason,
or pending the resolution, of any action or proceeding commenced by the Borrower
relating in any way to this Agreement or any of the other Loan Documents whether
or not commenced earlier. To the fullest extent permitted by applicable law, the
Borrower shall take all measures necessary for any such action or proceeding
commenced by the Bank to proceed to judgment prior to the entry of judgment in
any such action or proceeding commenced by the Borrower.
SECTION 8.07. Counterparts; Integration; Effectiveness; Severability.
This Agreement may be signed in any number of counterparts, each of which shall
be an original, with the same effect as if the signatures thereto and hereto
were upon the same instrument. This Agreement constitutes the entire agreement
and understanding among the parties hereto and supersedes any and all prior
agreements and understandings, oral or written, relating to the subject matter
hereof. If any provision hereof is invalid and unenforceable in any
jurisdiction, then, to the fullest extent permitted by applicable law, (i) the
other provisions hereof shall remain in full force and effect in such
jurisdiction and shall be liberally construed in favor of the Bank in order to
carry out the intentions of the parties hereto as nearly as may be possible and
(ii) the invalidity or unenforceability of any provision hereof in any
jurisdiction shall not affect the validity or enforceability of such provisions
in any other jurisdiction.
SECTION 8.08. WAIVER OF JURY TRIAL. THE BORROWER AND THE
BANK HEREBY IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY
IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS
Credit Agreement
59
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CONTEMPLATED HEREBY OR THEREBY.
SECTION 8.09. Captions. The captions and section headings
appearing herein are included solely for convenience of reference
and are not intended to affect the interpretation of any
provision of this Agreement.
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.
BENTON OIL AND GAS COMPANY
By_________________________________________
Name:
Title:
Address:
1145 Eugenia Place
Carpinteria, California 93103
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By_____________________________
Title:
Address for Notices:
60 Wall Street
New York, New York 10260-0060
Attention: Latin America Credit
Telex no.: 233417
Lending Office:
International Banking Facility
c/o Morgan Christiana Center
500 Stanton Christiana Road
Newark, Delaware 19713
Attention: IBF Syndications
Telex no.: 177615
Telecopy No.: (302) 992-1852
Credit Agreement
60
EXHIBIT C
NOTE
$20,000,000 New York, New York
__________, 1996
For value received, BENTON OIL AND GAS COMPANY, a Delaware corporation
(the "Borrower"), promises to pay to the order of MORGAN GUARANTY TRUST COMPANY
OF NEW YORK (the "Lender"), for the account of its Lending Office, on March 14,
1998 (or, if such day is not a Euro-Dollar Business Day as defined in the Credit
Agreement referred to below, the next preceding Euro-Dollar Business Day), the
principal amount of $20,000,000 (Twenty Million Dollars) or, if less, the full
principal amount of the Loans made by the Lender to the Borrower pursuant to the
Credit Agreement referred to below and outstanding. The Borrower promises to pay
interest on the unpaid principal amount of the Loans on the dates and at the
rates provided for in the Credit Agreement. All such payments of principal and
interest shall be made in lawful money of the United States in Federal or other
immediately available funds at the office of the Lender at 60 Wall Street, New
York, New York.
This note is one of the Notes referred to in the Credit Agreement dated
as of May 30, 1996 between the Borrower and the Lender (as the same may be
amended from time to time, the "Credit Agreement"). Terms defined in the Credit
Agreement are used herein with the same meanings. Reference is made to the
Credit Agreement for provisions for the prepayment hereof and the acceleration
of the maturity hereof.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAW OF THE STATE OF NEW YORK.
BENTON OIL AND GAS COMPANY
By: ______________________
Title:
Credit Agreement
61
EXHIBIT D
GUARANTEE
GUARANTEE dated as of ____________ __, 199_ among
BENTON-VINCCLER, C.A., a Venezuelan corporation (together with its successors
and assigns, the "Guarantor"), and MORGAN GUARANTY TRUST COMPANY OF NEW YORK
(together with its successors and assigns, the "Bank").
Benton Oil and Gas Company (the "Borrower"), a Delaware
corporation and the parent of the Guarantor, and the Bank are parties to a
Credit Agreement dated as of May 30, 1996 (as from time to time modified or
amended, the "Credit Agreement"), providing, subject to the terms and conditions
thereof, for the making of loans by the Bank to the Borrower in an aggregate
principal amount at any one time outstanding of up to $20,000,000 and for the
issuance by the Bank of a standby letter of credit in the face amount of
$18,000,000.
To induce the Bank to enter into the Credit Agreement and to
extend credit thereunder, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Guarantor has
agreed to guarantee the Guaranteed Obligations (as hereinafter defined).
Accordingly, the parties hereto agree as follows:
Section 1. Definitions. Terms defined in the Credit Agreement
are used herein as defined therein. In addition:
"Revenue Coverage Ratio" means, as at the last day of any fiscal
quarter of the Guarantor, the ratio of (i) the aggregate amount of revenue
projected to be received by the Guarantor under the Service Agreement during the
immediately ensuing period of four consecutive fiscal quarters of the Guarantor,
net of taxes, to (ii) the sum of (a) the then aggregate outstanding principal
amount of the Loans, and (b) the aggregate outstanding principal amount of all
other Debt of the Guarantor.
Section 2. The Guarantee.
2.01 The Guarantee. The Guarantor hereby guarantees to the
Bank the prompt payment in full when due (whether at stated maturity, by
acceleration or otherwise) of the principal of and interest on the Loans and the
Note and the Reimbursement
Guarantee
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Obligations and all other amounts whatsoever from time to time payable by the
Borrower under the Credit Agreement, the Note and the other Loan Documents, in
each case strictly in accordance with the terms thereof (such obligations being
herein collectively called the "Guaranteed Obligations"). The Guarantor hereby
further agrees that if the Borrower shall fail to pay in full when due (whether
at stated maturity, by acceleration or otherwise) any of the Guaranteed
Obligations, the Guarantor will promptly pay the same upon receipt from the Bank
of a written demand for payment thereof, without any other demand or notice
whatsoever, and that in the case of any extension of time of payment or renewal
of any of the Guaranteed Obligations, the same will be promptly paid in full
when due (whether at extended maturity, by acceleration or otherwise) in
accordance with the terms of such extension or renewal. This Guarantee is a
continuing guaranty and is a guaranty of due and punctual payment and is not
merely a guaranty of collection.
2.02 Acknowledgments, Waivers and Consents. The Guarantor
agrees that the obligations of the Guarantor under Section 2.01 hereof shall, to
the fullest extent permitted by applicable law, be absolute, irrevocable and
unconditional under any and all circumstances. Without limiting the foregoing,
the Guarantor agrees that:
(a) The occurrence of any one or more of the following shall
not affect the enforceability or effectiveness of this Guarantee in accordance
with its terms or affect, limit, reduce, discharge or terminate the liability of
the Guarantor, or the rights, remedies, powers and privileges of the Bank under
this Guarantee:
(i) any modification or amendment (including without
limitation by way of amendment, extension, renewal or waiver), or
acceleration or other change in the time for payment or performance or
the terms of all or any part of the Guaranteed Obligations or any Loan
Document, the Service Agreement or any other agreement or instrument
whatsoever relating thereto, or any extension of the Commitment
Termination Date or any modification of the Loan Commitment or the
Letter of Credit Commitment;
(ii) any release, reconveyance, termination, waiver, abandonment,
lapse or expiration, failure to perfect, subordination, exchange,
substitution, transfer, foreclosure upon or enforcement of any
collateral for or any other guarantee of all or any part of the
Guaranteed Obligations;
(iii) any application of any collateral or the proceeds
Guarantee
63
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of any collateral or any other guarantee (including without limitation
any letter of credit or the obligations of any other guarantor of all
or any part of the Guaranteed Obligations) to all or any part of the
Guaranteed Obligations in any such manner and to such extent as the
Bank may in its discretion determine;
(iv) any release of any Person (including without limitation any
other guarantor of all or any part of the Guaranteed Obligations or any
other Person providing collateral for all or any part of the Guaranteed
Obligations) from any personal liability with respect to all or any
part of the Guaranteed Obligations;
(v) any settlement, compromise, release, liquidation or
enforcement, upon such terms and in such manner as the Bank may
determine or as applicable law may dictate, of all or any part of the
Guaranteed Obligations or any collateral for or any other guarantee of
(including without limitation any letter of credit issued with respect
to) all or any part of the Guaranteed Obligations;
(vi) the giving of any consent to the merger or consolidation of,
the sale of substantial assets by, or other restructuring or
termination of the corporate existence of the Borrower or any other
Person;
(vii) any proceeding against the Borrower or any other guarantor of
(including without limitation any issuer of any letter of credit issued
with respect to) all or any part of the Guaranteed Obligations or any
collateral provided by any other Person or the exercise of any rights,
remedies, powers and privileges of the Bank under the Loan Documents or
otherwise in such order and such manner as the Bank may, in its
discretion, determine, regardless of whether the Bank shall have
proceeded against or exhausted any collateral, right, remedy, power or
privilege before proceeding to call upon or otherwise enforce this
Guarantee;
(viii) the entering into such other transactions or business dealings
with the Borrower, any Subsidiary or Affiliate of the Borrower or any
other guarantor of all or any part of the Guaranteed Obligations as the
Bank may desire; or
(ix) all or any combination of any of the actions set
forth in this Section 2.02(a).
(b) The enforceability and effectiveness of this
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64
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Guarantee and the liability of the Guarantor, and the rights, remedies, powers
and privileges of the Bank under this Guarantee shall not be affected, limited,
reduced, discharged or terminated, and the Guarantor hereby expressly waives to
the fullest extent permitted by law any defense now or in the future arising, by
reason of:
(i) the illegality, invalidity or unenforceability of all or
any part of the Guaranteed Obligations, any Loan Document, the Service
Agreement or any other agreement or instrument whatsoever relating to
all or any part of the Guaranteed Obligations;
(ii) any disability or other defense with respect to all or any part of
the Guaranteed Obligations, including the effect of any statute of
limitations that may bar the enforcement of all or any part of the
Guaranteed Obligations or the obligations of any such other guarantor;
(iii) the illegality, invalidity or unenforceability of any security or
other guarantee (including without limitation any letter of credit) for
all or any part of the Guaranteed Obligations or the lack of perfection
or continuing perfection or failure of the priority of any Lien on any
collateral for all or any part of the Guaranteed Obligations;
(iv) the cessation, for any cause whatsoever, of the liability of the
Borrower or any other guarantor of all or any part of the Guaranteed
Obligations (other than, subject to Section 2.03 hereof, by reason of
the full payment of all Guaranteed Obligations);
(v) any failure of the Bank to marshal assets in favor of the
Borrower or any other Person (including any other guarantor of all or
any part of the Guaranteed Obligations), to exhaust any collateral for
all or any part of the Guaranteed Obligations, to pursue or exhaust any
right, remedy, power or privilege it may have against the Borrower or
any other guarantor of all or any part of the Guaranteed Obligations
(including any issuer of any letter of credit) or any other Person or
to take any action whatsoever to mitigate or reduce such or any other
Person's liability under this Guarantee, the Bank being under no
obligation to take any such action notwithstanding the fact that all or
any part of the Guaranteed Obligations may be due and payable and that
the Borrower may be in default of its obligations under any Loan
Document;
Guarantee
65
-5-
(vi) any failure of the Bank to give notice of sale or other
disposition of any collateral (including any notice of any judicial or
nonjudicial foreclosure or sale of any interest in real property
serving as collateral for all or any part of the Guaranteed
Obligations) for all or any part of the Guaranteed Obligations to the
Borrower, any other guarantor of all or any part of the Guaranteed
Obligations or any other Person or any defect in, or any failure by the
Guarantor or any other guarantor of all or any part of the Guaranteed
Obligations or any other Person to receive, any notice that may be
given in connection with any sale or disposition of any collateral;
(vii) any failure of the Bank to comply with
applicable laws in connection with the sale or other
disposition of any collateral for all or any part of the
Guaranteed Obligations;
(viii) any counterclaim, set-off or other claim which the Borrower or
any other guarantor of all or any part of the Guaranteed Obligations
has or claims with respect to all or any part of the Guaranteed
Obligations;
(ix) any failure of the Bank or any other Person to file
or enforce a claim in any bankruptcy or other proceeding
with respect to any Person;
(x) any bankruptcy, insolvency, reorganization, arrangement,
readjustment of debt, liquidation or dissolution proceeding commenced
by or against any Person, including any discharge of, or bar or stay
against collecting, all or any part of the Guaranteed Obligations (or
any interest on all or any part of the Guaranteed Obligations) in or as
a result of any such proceeding;
(xi) any action taken by the Bank that is authorized by this Section
2.02 or otherwise in this Guarantee or by any other provision of any
Loan Document or any omission to take any such action; or
(xii) any other circumstance whatsoever that might
otherwise constitute a legal or equitable discharge or
defense of a surety or guarantor.
(c) To the fullest extent permitted by law, the Guarantor
expressly waives, for the benefit of the Bank, all set-offs and counterclaims
and all diligence, presentment, demand for payment or performance, notices of
nonpayment or nonperformance, protest, notices of protest, notices of dishonor
and all other
Guarantee
66
-6-
notices or demands of any kind or nature whatsoever (other than the written
demand for payment pursuant to Section 2.01 hereof), and any requirement that
the Bank exhaust any right, power or remedy or proceed against the Borrower
under the Credit Agreement, any Note or any other Loan Document or other
agreement or instrument referred to herein or therein, or against any other
Person under any other guarantee of, or security for, any of the Guaranteed
Obligations, and all notices of acceptance of this Guarantee or of the
existence, creation, incurring or assumption of new or additional Guaranteed
Obligations. The Guarantor further expressly waives the benefit of any and all
statutes of limitation, to the fullest extent permitted by applicable law.
2.03 Reinstatement. The obligations of the Guarantor under
this Section 2 shall be automatically reinstated if and to the extent that for
any reason any payment by or on behalf of the Borrower in respect of the
Guaranteed Obligations is rescinded or must otherwise be restored by any holder
of any of the Guaranteed Obligations, whether as a result of any proceedings in
bankruptcy or reorganization or otherwise, and the Guarantor agrees that it will
indemnify the Bank on demand for all reasonable costs and expenses (including,
without limitation, reasonable fees of counsel) incurred by it in connection
with such rescission or restoration, including any such costs and expenses
incurred in defending against any claim alleging that such payment constituted a
preference, fraudulent transfer or the like under any bankruptcy, insolvency or
similar law.
2.04 Subrogation. The Guarantor hereby agrees that, until the
final payment in full of all Guaranteed Obligations and the expiration or
termination of the Commitments under the Credit Agreement, it shall not exercise
any right or remedy arising by reason of any performance by it of its guarantee
in Section 2.01 hereof, whether by subrogation or otherwise, against the
Borrower or any other guarantor of any of the Guaranteed Obligations or any
security for any of the Guaranteed Obligations.
2.05 Remedies. The Guarantor agrees that, as between the
Guarantor and the Bank, the obligations of the Borrower under the Credit
Agreement, the Note or the other Loan Documents may be declared to be forthwith
due and payable as provided in Section 6.01 of the Credit Agreement (and shall
be deemed to have become automatically due and payable in the circumstances
provided in said Section 6.01) for purposes of Section 2.01 hereof
notwithstanding any stay, injunction or other prohibition preventing such
declaration (or such obligations from becoming automatically due and payable) as
against the Borrower and that, in the event of such declaration (or such
obligations being deemed to have become automatically due and payable), such
Guarantee
67
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obligations (whether or not due and payable by the Borrower) shall forthwith
become due and payable by the Guarantor for purposes of said Section 2.01.
2.06 Post-Default Interest. The Guarantor hereby agrees that
in the event it shall fail to pay in full any amount owing by it hereunder on
the date upon which the same shall become due (whether upon demand or
otherwise), it shall be obligated to pay interest at the Post-Default Rate in
respect of such amount for each day during the period from and including the due
date thereof to but excluding the date the same shall be paid in full, such
interest to be payable upon demand of the Bank.
2.07 Payments. All payments by the Guarantor under this
Agreement shall be made in Dollars at the place for payment specified in the
Credit Agreement, without deduction, set-off or counterclaim.
2.08 Foreign Taxes.
(a) Each payment by the Guarantor hereunder (a "Payment") to
or for the account of the Bank shall be made free and clear of and without
deduction or withholding for any Foreign Taxes; provided that if the Guarantor
shall be required by law to make any such deduction or withholding from any
Payment, the Guarantor will:
(i) increase the amount of such Payment as may be necessary so
that the amount received by the Bank, after all such deductions and
withholdings, will be equal to the full amount provided for hereunder
or under the Credit Agreement or the Note or other Loan Document;
(ii) pay the full amount deducted or withheld to the relevant
taxation or other authorities within the time allowed under applicable
law; and
(iii) furnish within 30 days thereafter to the Bank the
official receipt or receipts (or certified copies thereof) from the
relevant taxation or other authorities for the full amount so deducted
or withheld.
(b) The Guarantor will pay (i) all Foreign Taxes relating to
any Payment imposed (other than by deduction or withholding) on the Bank,
excluding from this Section 2.08(b) taxes on or measured by the net income of
the Bank and (ii) all Domestic Taxes imposed on the Bank (calculated based on a
hypothetical tax rate equal to the maximum applicable rate) to the extent any
such Domestic Taxes result from Foreign Taxes or
Guarantee
68
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Domestic Taxes that are payable pursuant to this Section 2.08.
(c) In addition, the Guarantor agrees to pay any Other
Taxes.
(d) If any Taxes to be paid by the Guarantor pursuant to this
Section 2.08 are imposed on and paid by the Bank, the Guarantor shall, upon
request of the Bank, and whether or not such Taxes shall have been correctly or
legally imposed, reimburse the Bank therefor, together with any interest,
penalties or expenses in connection therewith, plus interest thereon for each
day from (and including) the day of delivery to the Guarantor of a request for
such payment to (but excluding) the date of such reimbursement at a rate per
annum equal to the interest rate then applicable to the Loans. The Bank hereby
agrees to furnish the Guarantor as promptly as practicable a copy of the
official receipt (or other reasonably satisfactory evidence as may be available)
for any Foreign Taxes or Other Taxes for which reimbursement is requested by the
Bank.
(e) If the Guarantor is required to pay additional amounts to
or for the account of the Bank pursuant to this Section 2.08, then the Bank will
change the jurisdiction of its Lending Office so as to eliminate or reduce any
such additional payment which may thereafter accrue if such change, in the
judgment of the Bank, is not otherwise disadvantageous to the Bank.
Section 3. Representations and Warranties. The
Guarantor represents and warrants to the Bank that:
3.01 Corporate Existence. The Guarantor (a) is a corporation
duly organized and validly existing under the laws of Venezuela; (b) has all
requisite corporate power, and has all material governmental licenses,
authorizations, consents and approvals necessary to own its assets and carry on
its business as now being or as proposed to be conducted, the failure to obtain
which, in the aggregate, would have a material adverse effect on the
consolidated business, consolidated financial condition, operations or prospects
of the Guarantor; and (c) is qualified to do business in all jurisdictions in
which the nature of the business conducted by it makes such qualification
necessary and where failure so to qualify would (either individually or in the
aggregate) have a material adverse effect on the consolidated financial
condition, operations, business or prospects of the Guarantor.
Guarantee
69
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3.02 Financial Condition. The balance sheet of the Guarantor
as of December 31, 1995, and the related statement of operations for the fiscal
year then ended, each reported on by Krygier, Montilla y Associados, and copies
of which have been delivered to the Bank, fairly present, in conformity with
generally accepted United States accounting principles, the financial position
of the Guarantor as of such date and the results of its operations for such
fiscal year; and except as heretofore disclosed to the Bank in writing, since
December 31, 1995, there has been no material adverse change in the business,
financial position, results of operations or prospects of the Guarantor from
that set forth in said financial statements.
3.03 Litigation. Except as heretofore disclosed to the Bank in
writing, there are no actions, suits, investigations or proceedings pending or,
to the knowledge of the Guarantor, threatened, against the Guarantor or any of
its Subsidiaries, or any properties or rights of the Guarantor or any of its
Subsidiaries, by or before any court, arbitrator or administrative or
governmental body other than those which individually and in the aggregate do
not and will not in the future have a material adverse effect on the Guarantor's
financial condition or business.
3.04 No Breach. None of the execution and delivery of this
Agreement, the consummation of the transactions herein contemplated or
compliance with the terms and provisions hereof will conflict with or result in
a breach of, or require any consent under, the charter or by-laws or Estatutos
of the Guarantor, or any applicable law or regulation, or any order, writ,
injunction or decree of any court or governmental authority or agency, or any
agreement or instrument to which the Guarantor or any of its Subsidiaries is a
party or by which any of them is bound or to which any of them is subject, or
constitute a default under any such agreement or instrument, or result in the
creation or imposition of any Lien upon any of the revenues or assets of the
Guarantor or any of its Subsidiaries pursuant to the terms of any such agreement
or instrument.
3.05 Corporate Action. The Guarantor has all necessary
corporate power and authority to make and perform its obligations under this
Agreement; the making and performance by the Guarantor of this Agreement have
been duly authorized by all necessary corporate action on its part; and this
Agreement has been duly and validly executed and delivered by the Guarantor and
constitutes its legal, valid and binding obligation, enforceable in accordance
with its terms, except as such enforceability may be limited by (a) bankruptcy,
insolvency, reorganization,
Guarantee
70
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moratorium or similar laws of general applicability affecting the enforcement of
creditors' rights and (b) the application of general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
3.06 Approvals. No authorizations, licenses, approvals or
consents (including without limitation foreign exchange approvals) of, and no
filings or registrations with, any governmental or regulatory authority or
agency or securities exchange are necessary for the making or performance by the
Guarantor of this Agreement or for the legality, validity or enforceability
hereof, including without limitation (if required under applicable Venezuelan
law and regulation in the opinion of the Bank or its counsel) appropriate
authorization from the Central Bank of the making of all payments in Dollars
when due hereunder or under any other Loan Document.
3.07 Ownership. The Borrower owns, beneficially and of record,
directly or indirectly, more than 51% of the issued and outstanding shares of
capital stock of the Guarantor.
3.08 Financial Benefit. The Guarantor hereby acknowledges that
it will receive financial and other benefits from the making of the Loans by the
Bank to the Borrower and the Letter of Credit being issued by the Bank for the
account of the Borrower.
3.09 Environmental Matters. The Guarantor has obtained all
environmental, health and safety permits, licenses and other authorizations
required under applicable Environmental Laws to carry on its business as now
being or proposed to be conducted, except to the extent failure to have any such
permit, license or authorization would not have a material adverse effect on the
business, financial position, results of operations or prospects of the
Guarantor, and each of such permits, licenses and authorizations is in full
force and effect and the Guarantor is in compliance therewith and with all
applicable Environmental Laws in all material respects.
3.10 Taxes. (a) The Guarantor and its Subsidiaries have filed
all income tax returns and all other material tax returns which are required to
be filed by them in any jurisdiction and have paid all taxes due pursuant to
such returns or pursuant to any assessment received by the Guarantor or any
Subsidiary, except those contested in good faith by appropriate proceedings and
as to which the Guarantor or such Subsidiary maintains appropriate reserves. The
charges, accruals and reserves on the books of the Guarantor and its
Subsidiaries in
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71
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respect of taxes or other governmental charges are, in the opinion of the
Guarantor, adequate.
(b) There is no tax, levy, impost, deduction, charge or
withholding imposed by Venezuela or any Governmental Authority therein (i) on or
by virtue of the execution, delivery, performance, enforcement or admissibility
into evidence of this Agreement, the Credit Agreement, the Note or any of the
other Loan Documents or (ii) on any payment to be made by the Guarantor pursuant
to this Agreement, the Credit Agreement, the Note or any of the other Loan
Documents.
3.11 Not an Investment Company; Regulation U. The Guarantor is
not an "investment company" within the meaning of the Investment Company Act of
1940, as amended. None of the Guarantor 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 any "margin stock" within the meaning of Regulation U.
3.12 Full Disclosure. All information heretofore furnished by
the Guarantor to the Bank for purposes of or in connection with this Agreement
is, and all such information hereafter furnished by the Guarantor to the Bank
will be, true and accurate in all material respects on the date as of which such
information is stated or certified. The Guarantor has disclosed to the Bank in
writing any and all facts which materially and adversely affect or may affect
(to the extent the Guarantor can now reasonably foresee) the business,
operations or financial condition or prospects of the Guarantor or the Guarantor
and its Subsidiaries taken as a whole or the ability of the Guarantor to perform
its obligations under this Agreement.
3.13 Service Agreement. The Assigners (as defined in the
Service Agreement Assignment) have validly assigned to the Guarantor all of
their right, title and interest in, to and under the Service Agreement, and the
Guarantor has the sole and exclusive right to receive any and all payments
thereunder and to enforce the same. The Guarantor has heretofore furnished to
the Bank a true and complete copy of the Service Agreement, as in effect on the
date of this Agreement; the Service Agreement is in full force and effect and
constitutes a legal, valid and binding obligation of each of the parties
thereto, enforceable in accordance with its terms; and the Guarantor is in
compliance with its obligations under the Service Agreement.
Section 4. Covenants.
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4.01 Information. The Guarantor will deliver to the Bank:
(a) as soon as available and in any event within 91 days after
the end of each fiscal year of the Guarantor, a balance sheet of the Guarantor
as of the end of such fiscal year and the related statement of operations for
such fiscal year, setting forth in each case in comparative form the figures for
the previous fiscal year, each reported on by Deloitte & Touche, or other
independent public accountants of internationally recognized standing;
(b) as soon as available and in any event within 46 days after
the end of each of the first three quarters of each fiscal year of the
Guarantor, a balance sheet of the Guarantor as of the end of such quarter and
the related statement of operations for such quarter and for the portion of such
fiscal year ended at the end of such quarter, setting forth in comparative form
the figures for the corresponding quarter and the corresponding portion of the
previous fiscal year, all certified (subject to normal year-end adjustments) as
to fairness of presentation, generally accepted United States accounting
principles and consistency by the chief financial officer or the chief
accounting officer of the Borrower;
(c) on the last day of each fiscal quarter of the Guarantor, a
projection of revenues and cash flow under the Service Agreement for the ensuing
period of four fiscal quarters, which projection shall be approved by and
satisfactory to the Bank;
(d) simultaneously with the delivery of each set of financial
statements of the Guarantor referred to in clauses (a) and (b) above, a
certificate of the chief financial officer or the chief accounting officer of
the Borrower stating whether any Default exists on the date of such certificate
and, if any Default then exists, setting forth the details thereof and the
action which the Guarantor is taking or proposes to take with respect thereto;
(e) promptly upon the occurrence of (i) any Default, a
certificate of the chief financial officer or the chief accounting officer of
the Borrower setting forth the details thereof and the action which the
Guarantor is taking or proposes to take with respect thereto and (ii) any
material default by any party under the Service Agreement, notice thereof
describing such default in reasonable detail; and
(f) from time to time such additional information
Guarantee
73
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regarding the financial position or business of the Guarantor and its
Subsidiaries as the Bank may reasonably request.
4.02 Payment of Obligations. The Guarantor will pay and
discharge, and will cause each Subsidiary to pay and discharge, at or before
maturity, all their respective material obligations and liabilities, including,
without limitation, tax liabilities, except where the same may be contested in
good faith by appropriate proceedings, and will maintain, and will cause each
Subsidiary to maintain, in accordance with generally accepted accounting
principles, appropriate reserves for the accrual of any of the same.
4.03 Maintenance of Property; Insurance.
(a) The Guarantor will keep, and will cause each Subsidiary to
keep, all of its property useful and necessary in its business in good working
order and condition, ordinary wear and tear excepted.
(b) The Guarantor will maintain, and will cause each
Subsidiary to maintain, (i) physical damage insurance on all real and personal
property on an all risks basis, covering the repair and replacement cost of all
such property, (ii) public liability insurance (including products/completed
operations liability coverage) in an amount not less than $5,000,000, and (iii)
such other insurance coverage in such amounts and with respect to such risks as
the Bank may reasonably request. All such insurance shall be provided by
insurers approved by the Bank in writing. The Guarantor will deliver to the Bank
(i) prior to the date of the initial Loan or of the issuance of the Letter of
Credit, a certificate dated such date showing the amount of coverage as of such
date, (ii) upon request of the Bank from time to time full information as to the
insurance carried, (iii) within five days of receipt of notice from any insurer
a copy of any notice of cancellation or material change in coverage from that
existing on the date of this Agreement and (iv) forthwith upon any cancellation
or nonrenewal of coverage, notice thereof.
4.04 Conduct of Business and Maintenance of Existence. The
Guarantor will (i) preserve and maintain its corporate existence, (ii) continue
to engage in business of the same general type as now conducted by the Guarantor
and its Subsidiaries, and (iii) preserve, renew and keep in full force and
effect, and cause each Subsidiary to preserve, renew and keep in full force and
effect, their respective corporate existence and their respective rights,
privileges and franchises necessary or desirable in the normal conduct of
business.
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4.05 Compliance with Laws. The Guarantor will comply, and
cause each Subsidiary to comply, in all material respects with all applicable
laws, ordinances, rules, regulations, and requirements of Governmental
Authorities (including, without limitation, Environmental Laws applicable to the
Guarantor and its Subsidiaries, laws relating to social security and laws
relating to retirement and pension funds and the rules and regulations
thereunder) except where the necessity of compliance therewith is contested in
good faith by appropriate proceedings.
4.06 Inspection of Property, Books and Records. The Guarantor
will keep, and will cause each Subsidiary to keep, proper books of record and
account in which full, true and correct entries shall be made of all dealings
and transactions in relation to its business and activities; and will permit,
and will cause each Subsidiary to permit, representatives of the Bank at the
Bank's expense to visit and inspect any of their respective properties, to
examine and make abstracts from any of their respective books and records and to
discuss their respective affairs, finances and accounts with their respective
officers, employees and independent public accountants, all at such reasonable
times and as often as may reasonably be desired by the Bank.
4.07 Negative Pledge. The Guarantor will not, and will not
permit any Subsidiary to, create, assume or suffer to exist any Lien on any of
its property, assets or revenues (collectively, "assets") (including without
limitation any shares of capital stock of any Subsidiary) now owned or hereafter
acquired by it, except:
(a) Liens existing on the date of this Guarantee and
heretofore disclosed to the Bank in writing;
(b) any Lien existing on any asset of any corporation at the
time such corporation becomes a Subsidiary and not created in contemplation of
such event;
(c) any Lien on any asset securing Debt incurred or assumed
for the purpose of financing all or any part of the cost of acquiring such
asset, provided that such Lien attaches to such asset concurrently with or
within 10 days after the acquisition thereof and secures only the purchase price
of such asset or Debt incurred solely to pay such purchase price;
(d) any Lien on any asset of any corporation existing at the
time such corporation is merged or consolidated with or into the Guarantor or a
Subsidiary and not created in contemplation of such event;
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(e) any Lien existing on any asset prior to the acquisition
thereof by the Guarantor or a Subsidiary and not created in contemplation of
such acquisition;
(f) any Lien arising by operation of law and not securing Debt
for borrowed money, provided that such Lien is discharged within 60 days; and
(g) any Lien arising out of the refinancing, extension,
renewal or refunding of any Debt secured by any Lien permitted by any of the
foregoing clauses of this Section, provided that such Debt is not increased and
is not secured by any additional assets.
4.08 Consolidations, Mergers and Sales of Assets. The
Guarantor will not, and will not permit any Subsidiary to, (i) consolidate or
merge with or into any other Person, or (ii) sell, lease or otherwise transfer,
directly or indirectly, all or any substantial part of its assets to any other
Person (other than sales of inventory in the ordinary course of business);
provided that any Subsidiary of the Guarantor may consolidate or merge with any
other Subsidiary of the Guarantor or with the Guarantor if immediately after
giving effect thereto no Default shall have occurred and be continuing (provided
that in the case of a consolidation or merger with the Guarantor, the Guarantor
shall be the surviving entity).
4.09 Transactions with Affiliates. The Guarantor will not, and
will not permit any Subsidiary to, directly or indirectly, pay any funds to or
for the account of, make any investment in, lease, sell, transfer or otherwise
dispose of any assets, tangible or intangible, to, or participate in, or effect
any transaction in connection with any joint enterprise or other joint
arrangement with, any Affiliate; provided, however, that the foregoing
provisions of this Section shall not prohibit the Guarantor from entering into
leasing, rental, service, transfer and tax joint venture agreements in the
ordinary course of business with any Affiliate where such arrangement is, in the
reasonable opinion of the Guarantor, beneficial to the Guarantor and/or the
Borrower.
4.10 Service Agreement. The Guarantor (a) will perform and
comply with all of its obligations under the Service Agreement and (b) will not
modify or amend, or waive any of its material rights under, the Service
Agreement if such modification, amendment or waiver would have a material
adverse effect on the amount or amounts to which the Guarantor is entitled under
the Service Agreement or the rights of the Guarantor thereto.
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4.11 Revenue Coverage. The Guarantor will assure that the
Revenue Coverage Ratio as at the last day of each fiscal quarter of the
Guarantor shall be greater than 2.0 to 1.0.
4.12 Monthly Cash Flow. The Guarantor will assure that its
monthly cash flow from operations will be greater than $3,500,000 in each
calendar month.
4.13 Debt. The Guarantor will not, and will not permit its
Subsidiaries to, create, incur, assume or otherwise become or remain directly or
indirectly liable with respect to any Debt (other than Debt of a Subsidiary of
the Guarantor to the Guarantor) in an aggregate principal amount exceeding
$85,000,000.
Section 5. Miscellaneous.
5.01 No Waiver. No failure or delay by the Bank in exercising,
and no course of dealing with respect to, 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.
5.02 Notices. All notices, requests, consents and demands
hereunder shall be in writing and telecopied or delivered to the intended
recipient at the "Address for Notices" specified beneath its name on the
signature pages hereof or, as to either party, at such other address as shall be
designated by such party in a notice to the other party. Except as otherwise
provided in this Agreement, all such communications shall be deemed to have been
duly given when transmitted by telecopier or personally delivered or, in the
case of a mailed notice, upon receipt, in each case given or addressed as
aforesaid.
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5.03 Expenses. The Guarantor agrees to reimburse the Bank on
demand for all reasonable costs and expenses of the Bank (including, without
limitation, the reasonable fees and expenses of legal counsel) in connection
with (i) any enforcement or collection proceeding in respect of this Agreement,
including, without limitation, participation in or other involvement with
bankruptcy, insolvency, receivership, foreclosure, winding up or liquidation
proceedings (including reasonable fees and expenses of legal counsel incurred
thereby), judicial or regulatory proceedings (including reasonable fees and
expenses of legal counsel incurred thereby) and workout, restructuring or other
negotiations or proceedings (including reasonable fees and expenses of legal
counsel incurred thereby) (whether or not the workout, restructuring or
transaction contemplated thereby is consummated) and (ii) the enforcement of
this Section 5.03.
5.04 Amendments, Etc. Any provision of this Agreement may be
amended or waived if, but only if, such amendment or waiver is in writing and is
signed by the Borrower and the Bank. Any such amendment or waiver shall be
binding upon the Bank, each holder of any of the Guaranteed Obligations and the
Guarantor. This Agreement constitutes the entire agreement of the parties with
respect to the subject matter hereof.
5.05 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and each holder of any of
the Guaranteed Obligations and their respective successors and assigns, except
that the Guarantor may not assign or otherwise transfer any of its rights under
this Agreement without the prior written consent of the Bank.
5.06 Captions. The captions and section headings appearing
herein are included solely for convenience of reference and are not intended to
affect the interpretation of any provision of this Agreement.
5.07 Counterparts. This Agreement may be signed in any number
of counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument.
5.08 GOVERNING LAW; SUBMISSION TO JURISDICTION. (a) THIS
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEW YORK. THE GUARANTOR HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION
OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF
THE SUPREME COURT OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY (INCLUDING
ITS APPELLATE DIVISION), AND OF ANY OTHER APPELLATE COURT IN THE STATE OF NEW
YORK, AND OF THE COURTS OF VENEZUELA,
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FOR THE PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY AND
THEREBY, PROVIDED, THAT NOTHING HEREIN SHALL BE DEEMED TO LIMIT THE ABILITY OF
THE BANK TO BRING SUIT AGAINST THE GUARANTOR IN ANY OTHER JURISDICTION. THE
GUARANTOR IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF
ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT, ANY CLAIM THAT ANY SUCH PROCEEDING
BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM AND ANY
OBJECTION BASED ON PLACE OF RESIDENCE OR DOMICILE.
(b) The Guarantor appoints CT Corporation System, with offices
at the date of this Agreement at 1633 Broadway, New York, New York 10019, United
States, as its authorized agent on which any and all legal process may be served
in any such action, suit or proceeding brought in the United States District
Court for the Southern District of New York or any New York State court sitting
in New York City. The Guarantor agrees that service of process in respect of it
upon such agent, together with written notice of such service given to it in the
manner provided in Section 5.02, shall be deemed to be effective service of
process upon it any such action, suit or proceeding. The Guarantor agrees that
the failure of such agent to give notice to it of any such service shall not
impair or affect the validity of such service or any judgment rendered in any
action, suit or proceeding based thereon. If for any reason such agent shall
cease to be available to act as such, the Guarantor agrees to designate a new
agent in New York City, on the terms and for the purposes of this Section 5.08.
Nothing herein shall in any way be deemed to limit the ability of the Bank to
serve any such legal process in any other manner permitted by applicable law or
to obtain jurisdiction over the Guarantor or bring actions, suits or proceedings
against it in such other jurisdictions, and in such manner, as may be permitted
by applicable law.
(c) 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 of notice, attachment prior to judgment, attachment in
aid of execution, execution, sovereign immunity or otherwise) with respect to
itself or its property, it hereby irrevocably waives, to the fullest extent
permitted by applicable law, such immunity in respect of any of its obligations
under this Agreement and the other Loan Documents.
(d) The Guarantor irrevocably waives, to the fullest extent
permitted by applicable law, any claim that any action or
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proceeding commenced by the Bank relating in any way to this Agreement should be
dismissed or stayed by reason, or pending the resolution, of any action or
proceeding commenced by the Guarantor relating in any way to this Agreement or
any of the other Loan Documents whether or not commenced earlier. To the fullest
extent permitted by applicable law, the Guarantor shall take all measures
necessary for any such action or proceeding commenced by the Bank to proceed to
judgment prior to the entry of judgment in any such action or proceeding
commenced by the Guarantor.
5.09 WAIVER OF JURY TRIAL. EACH OF THE GUARANTOR AND THE BANK
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
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.
5.10 Severability. If any provision hereof is invalid or
unenforceable in any jurisdiction, then, to the fullest extent permitted by
applicable law, (i) the other provisions hereof shall remain in full force and
effect in such jurisdiction and shall be liberally construed in favor of the
Bank in order to carry out the intentions of the parties hereto as nearly as may
be possible and (ii) the invalidity or unenforceability of any provision hereof
in any jurisdiction shall not affect the validity or enforceability of such
provisions in any other jurisdiction.
5.11 Judgment Currency. This is an international guarantee in
which the specification of Dollars and payment in the place specified pursuant
to this Agreement and the Credit Agreement (the "specified place of payment"),
is of the essence, and Dollars shall be the currency of account in all events.
The payment obligations of the Guarantor under this Agreement stated to be
payable in Dollars shall not be discharged by an amount paid in another currency
or in another place, whether pursuant to a judgment or otherwise, to the extent
that the amount so paid on conversion to Dollars and transferred to the
specified place of payment under normal banking procedures does not yield the
amount of Dollars in the specified place of payment due under this Agreement. If
for the purpose of obtaining judgment in any court it is necessary to convert a
sum due hereunder in Dollars into another currency (in this Section 5.11 called
the "second currency"), the rate of exchange which shall be applied shall be
that at which in accordance with normal banking procedures the Bank could
purchase Dollars with the second currency on the Domestic Business Day next
preceding that on which judgment is rendered. The obligation of the Guarantor in
respect of any such sum due from it to the Bank hereunder shall, notwithstanding
the
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rate of exchange actually applied in rendering such judgment, be discharged only
to the extent that on the Domestic Business Day following receipt by the Bank of
any sum adjudged to be due hereunder in the second currency the Bank may in
accordance with normal banking procedures purchase and transfer to the specified
place of payment Dollars with the amount of the second currency so adjudged to
be due; and the Guarantor hereby, as a separate obligation and notwithstanding
any such judgment, agrees to indemnify the Bank against, and to pay the Bank on
demand, in Dollars, any difference between the sum originally due to the Bank in
Dollars and the amount of Dollars so purchased and transferred.
5.12 Use of English Language. Any translation of this
Agreement or the Credit Agreement or any other Loan Document into another
language shall have no interpretive effect. All documents or notices to be
delivered pursuant to or in connection with this Agreement shall be in the
English language or, if any such document or notice is not in the English
language, accompanied by an English translation thereof, and the English
language version of any such document or notice shall control for purposes
hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this
Guarantee to be duly executed and delivered as of the day and year first above
written.
BENTON-VINCCLER, C.A.
By ________________________
Title:
Address for Notices:
Centro Ciudad Comercial
Tamanaco (CCCT)
Torre B, Piso 11, Oficina 1103
Chuao, Caracas 1064-A, Venezuela
Telecopier No.: 011-582-959-6581
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK
By ________________________
Title:
Address for Notices:
60 Wall Street
New York, New York 10260-0060
Attention: Latin America Credit
Telex No.: 233417
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EXHIBIT E
SECURITY AGREEMENT
SECURITY AGREEMENT dated as of ____________ __, 199_ among
BENTON-VINCCLER, C.A., a Venezuelan corporation (together with its successors
and assigns, the "Guarantor"), and MORGAN GUARANTY TRUST COMPANY OF NEW YORK
(together with its successors and assigns, the "Bank").
Benton Oil and Gas Company and the Bank are parties to a
Credit Agreement dated as of the date hereof (as from time to time amended, the
"Credit Agreement"), providing, subject to the terms and conditions thereof, for
the making of loans by the Bank to the Borrower in an aggregate principal amount
at any one time outstanding not exceeding U.S. $20,000,000 and the issuance by
the Bank of a letter of credit in the face amount of $18,000,000.
The Guarantor and the Bank are parties to a Guarantee dated as
of the date hereof (as from time to time amended, the "Guarantee") pursuant to
which the Guarantor has agreed to guaranty any and all obligations of the
Borrower to the Bank under the Credit Agreement, the Notes and other Loan
Documents ( as defined in the Credit Agreement).
Benton Oil and Gas Company and Venezolana de Inversiones y
Construcciones Clerico, C.A. (Vinccler, C.A.) (collectively, the "Contractor")
have entered into an Operating Service Agreement with Lagoven, S.A. dated July
31, 1992 (as from time to time amended, the "Service Agreement") pursuant to
which the Contractor agrees to perform certain services and becomes entitled to
certain payments, and pursuant to the Service Agreement Assignment, dated March
8, 1994, the Contractor or the Assigners (as defined in the Service Agreement
Assignment) has validly assigned to the Guarantor all of its right, title and
interest in, to and under the Service Agreement, and the Guarantor has the sole
and exclusive right to receive any and all payments thereunder and to enforce
the same.
To induce the Bank to enter into the Credit Agreement and to
make said loans and issue said letter of credit thereunder, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Guarantor has agreed to pledge and grant a security interest
in the Collateral (as hereinafter defined) as security for the Secured
Obligations (as so defined). Accordingly, the parties hereto agree as follows:
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Section 1. Definitions. Terms defined in the Credit Agreement
are used herein as defined therein. In addition, as used herein:
"Collateral" has the meaning attributed thereto in Section 3
hereof.
"Secured Obligations" means, collectively, all present and
future obligations of the Guarantor to the Bank under the Guarantee and all
present and future obligations of the Borrower to the Bank under the Credit
Agreement, the Note and the other Loan Documents in the amounts specified above.
"Uniform Commercial Code" means the Uniform Commercial Code as
in effect from time to time in the State of New York.
Section 2. Representations and Warranties. The Guarantor
represents and warrants to the Bank that:
(a) The security interest created hereby constitutes a valid
first lien on and prior perfected security interest in the Collateral, subject
to no other Lien.
(b) The Guarantor is located (within the meaning of Section
9-103 of the Uniform Commercial Code) in Venezuela and has no office or place of
business in the United States.
Section 3. Collateral. As collateral security for the prompt
payment in full when due (whether at stated maturity, by acceleration or
otherwise) of the Secured Obligations, whether now existing or from time to time
hereafter arising, incurred or accruing, the Guarantor hereby pledges and grants
to the Bank a security interest in all of the Guarantor's right, title and
interest in, to and under the following property, in each case whether now owned
by the Guarantor or hereafter acquired and whether now existing or hereafter
coming into existence (all being collectively referred to herein as
"Collateral"), it being understood that the following property shall constitute
part of the Collateral:
(a) any and all moneys to which the Guarantor is entitled
under the Service Agreement, including without limitation
all fees, reimbursement payments, interest payments and
any other remuneration or other payments thereunder,
including without limitation payments referred to
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in Sections B(a), I1, I2 and I3 of the Service Agreement
in accordance with Sections S9 to S15 (both inclusive)
thereof (collectively, the "Service Agreement Payments");
(b) any and all instruments, documents, chattel paper, and
letters of credit (each as defined in the Uniform
Commercial Code) arising out of, evidencing, securing or
relating to the Service Agreement Payments (collectively,
"Instruments");
(c) the proceeds of any and all arbitral awards or similar
awards rendered in favor of the Guarantor or the Bank, as
the case may be, under or in connection with the Service
Agreement and any and all payments received by the
Guarantor in the nature of damages or the like arising
out of any breach of covenant or warranty under the
Service Agreement;
(d) the Collateral Account, including without limitation the
balance thereof from time to time and any and all rights
to withdraw the same; and
(e) any and all proceeds of any of the foregoing.
Section 4. Collateral Account.
4.01 Collateral Account. There is hereby established with the
Bank at _______________ a cash collateral account (the "Collateral Account") in
the name of the Bank and under the exclusive possession and control of the Bank
(without prejudice to Section 4.03 hereof) into which there shall be deposited
from time to time any and all payments by Lagoven under the Service Agreement
and any and all other proceeds of the Collateral. The balance from time to time
in the Collateral Account shall constitute part of the Collateral hereunder and
shall not constitute payment of the Secured Obligations until applied as
hereinafter provided. The Bank shall have sole and exclusive dominion and
control over the Collateral Account, without prejudice however to the provisions
of Section 4.03 hereof.
4.02 Payments to Collateral Account. The Guarantor has
instructed Lagoven, and will promptly instruct any other Person directly or
indirectly liable in respect of the Service Agreement Payments, to make all
payments under or in connection with the Service Agreement directly to the
Collateral Account. The Guarantor further agrees that if cash proceeds of any
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Collateral or any such cash payments are received by it, the Guarantor shall
promptly deposit the same into the Collateral Account, and until so deposited
such proceeds or payments shall be held in trust by the Guarantor for and as the
property of the Bank and shall not be commingled with any other funds or
property of the Guarantor.
4.03 Release of Funds. So long as no Default has occurred and
is continuing, the Bank shall, within two Business Days after each Interest
Payment Date, remit to the Guarantor (in such manner as the Bank and the
Guarantor may agree) the collected credit balance of the Collateral Account.
Section 5. Further Assurances; Remedies. In furtherance of the
grant of the security interest pursuant to Section 3 hereof, the Guarantor
hereby agrees with the Bank as follows:
5.01 Delivery and Other Perfection. The Guarantor shall:
(a) give, execute, deliver, file and/or record any financing
statement, notice, instrument, document, agreement or other papers that
may be necessary or desirable (in the reasonable judgment of the Bank)
to create, preserve, perfect, or validate the security interest granted
pursuant hereto or to enable the Bank to exercise and enforce its
rights hereunder with respect to such security interest;
(b) deliver and pledge to the Bank any and all Instruments,
endorsed and/or accompanied by such instruments of assignment and
transfer in such form and substance as the Bank may reasonably request;
and
(c) keep full and accurate books and records relating to the
Collateral, and stamp or otherwise mark such books and records in such
manner as the Bank may reasonably require in order to reflect the
security interest granted by this Agreement.
5.02 Other Financing Statements and Liens. The Guarantor shall
not create or suffer to exist any security interest in or other Lien on any of
the Collateral except under this Agreement or file or suffer to be on file, or
authorize or permit to be filed or to be on file, in any jurisdiction, any
financing statement or like instrument with respect to the Collateral in which
the Bank is not named as the sole secured party.
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5.03 Preservations of Rights. The Bank shall not be required
to take steps necessary to preserve any rights against prior parties (if any) to
any of the Collateral.
5.04 Events of Default, Etc. Without in any way limiting any
other provision of this Agreement or the Credit Agreement, during the period
during which an Event of Default shall have occurred and be continuing:
(a) the Bank may make any reasonable compromise or settlement
deemed desirable with respect to any of the Service Agreement Rights
and the Instruments and may extend the time of payment, arrange for
payment in installments, or otherwise modify the terms, of any of the
Collateral;
(b) the Bank shall have all of the rights and remedies with
respect to the Collateral of a secured party under the Uniform
Commercial Code (whether or not said Code is in effect in the
jurisdiction where the rights and remedies are asserted) and such
additional rights and remedies to which a secured party is entitled
under the laws in effect in any jurisdiction where any rights and
remedies hereunder may be asserted, including, without limitation, the
right, to the maximum extent permitted by law, to exercise all voting,
consensual and other powers of ownership pertaining to the Collateral
as if the Bank were the sole and absolute owner thereof (and the
Guarantor agrees to take all such action as may be appropriate to give
effect to such right); and
(c) the Bank in its discretion may, in its name or in the name
of the Guarantor or otherwise, demand, sue for, collect or receive any
money or property at any time payable or receivable on account of or in
exchange for any of the Collateral, but shall be under no obligation to
do so.
5.05 Deficiency. If the proceeds of sale, collection or other
realization of or upon the Collateral pursuant to Section 5.04 hereof are
insufficient to cover the costs and expenses of such realization and the payment
in full of the Secured Obligations, the Guarantor shall remain liable for any
deficiency.
5.06 Removals, Etc. Unless appropriate filings and other
arrangements have been properly made or effected continuing the perfection and
priority of the Liens granted to the Bank and the Bank has received notice of
such arrangements in writing, the Guarantor shall not without at least 30 days'
prior written notice to the Bank (i) change its location (within the meaning of
Section 9-103 of the Uniform Commercial Code) or establish an
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87
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office or place of business in the United States, or (ii) change its name, or
the name under which it does business, from the name shown on the signature
pages hereto.
5.07 Private Sale. The Bank shall not incur any liability as a
result of the sale of the Collateral, or any part thereof, at any private sale
pursuant to Section 5.04 hereof conducted in a commercially reasonable manner.
Without prejudice to the obligations of a secured party under Section 9-504 of
the Uniform Commercial Code, the Guarantor hereby waives any claims against the
Bank arising by reason of the fact that the price at which the Collateral may
have been sold at such a private sale was less than the price which might have
been obtained at a public sale or was less than the aggregate amount of the
Secured Obligations, even if the Bank accepts the first offer received and does
not offer the Collateral to more than one offeree.
5.08 Application of Proceeds. The proceeds of any collection,
sale or other realization of all or any part of the Collateral pursuant hereto,
and any other cash at the time held by the Bank under Section 4 hereof or this
Section 5, shall be applied by the Bank to reimburse the Bank for all costs and
expenses incurred in connection with such collection, sale or other realization
and, thereafter, shall be applied in accordance with the terms of the Credit
Agreement. As used in this Agreement, "proceeds" of the Collateral shall include
cash, securities and other property realized in respect of, and distributions in
kind of, Collateral, including any thereof received under any reorganization,
liquidation or adjustment of debt of the Guarantor or any issuer of or obligor
on any of the Collateral.
5.09 Attorney-in-Fact. Without limiting any rights or powers
granted by this Agreement to the Bank while no Event of Default has occurred and
is continuing, upon the occurrence and during the continuance of any Event of
Default the Bank is hereby appointed the attorney-in-fact of the Guarantor for
the purpose of carrying out the provisions of this Section 5 and taking any
action and executing any instruments which the Bank may deem necessary or
advisable to accomplish the purposes hereof, which appointment as
attorney-in-fact is irrevocable and coupled with an interest. Without limiting
the generality of the foregoing, so long as the Bank shall be entitled under
this Section 5 to make collections in respect of the Collateral, the Bank shall
have the right and power to receive, endorse and collect all checks made payable
to the order of the Guarantor representing any payment or other distribution in
respect of the Collateral or any part thereof and to give full discharge for the
same.
Security Agreement
88
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5.10 Perfection. Prior to or concurrently with the execution
and delivery of this Agreement, the Guarantor shall file such financing
statements and other documents in such offices as the Bank may reasonably
request to perfect the security interests granted by Section 3 of this
Agreement.
5.11 Termination. When all Secured Obligations shall have been
finally paid in full and the Loan Commitment and Letter of Credit Commitment
shall have expired or been terminated, this Agreement shall terminate, and the
Bank shall cause to be assigned, transferred and delivered, against receipt but
without any recourse, warranty or representation whatsoever, any remaining
Collateral, money and other property received in respect thereof, to or on the
order of the Guarantor.
5.12 Expenses. The Guarantor agrees to pay to the Bank all
reasonable out-of-pocket expenses (including without limitation reasonable fees
and expenses of legal counsel) incurred by it in connection herewith, including
without limitation all such expenses of, or incident to, the enforcement of any
of the provisions of this Section 5, or performance by the Bank of any
obligations of the Guarantor in respect of the Collateral which the Guarantor
has failed or refused to perform, or any actual or attempted sale, or any
exchange, enforcement, collection, compromise or settlement in respect of any of
the Collateral, and for the care of the Collateral and defending or asserting
rights and claims of the Bank in respect thereof, by litigation or otherwise,
including expenses of insurance, and all such expenses shall be Secured
Obligations.
5.13 Further Assurances. The Guarantor agrees that, from time
to time upon the written request of the Bank, the Guarantor will execute and
deliver such further documents and do such other acts and things as the Bank may
reasonably request in order fully to effect the purposes of this Agreement.
Section 6. Miscellaneous.
6.01 No Waiver. No failure or delay by the Bank in exercising,
and no course of dealing with respect to, 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.
6.02 Governing Law. This Agreement shall be governed
by, and construed in accordance with, the law of the State of New
Security Agreement
89
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York.
6.03 Notices. All notices, requests, consents and demands
hereunder shall be in writing and telexed, telecopied or delivered to the
intended recipient at its "Address for Notices" specified below.
6.04 Amendments, Etc. Any provision of this Agreement
may be amended or waived if, but only if, such amendment or
waiver is in writing and is signed by the Guarantor and the Bank.
6.05 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and each holder of any of
the Secured Obligations and their respective successors and assigns, except that
the Guarantor may not assign or otherwise transfer any of its rights under this
Agreement without the prior written consent of the Bank.
6.06 Counterparts. This Agreement may be signed in any number
of counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument.
6.07 Severability. If any provision hereof is invalid and
unenforceable in any jurisdiction, then, to the fullest extent permitted by
applicable law, (i) the other provisions hereof shall remain in full force and
effect in such jurisdiction and shall be liberally construed in favor of the
Bank in order to carry out the intentions of the parties hereto as nearly as may
be possible and (ii) the invalidity or unenforceability of any provision hereof
in any jurisdiction shall not affect the validity or enforceability of such
provisions in any other jurisdiction.
Security Agreement
90
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6.08 Captions. The captions and section headings appearing
herein are included solely for convenience of reference and are not intended to
affect the interpretation of any provision of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Security Agreement to be duly executed and delivered as of the day and year
first above written.
BENTON-VINCCLER, C.A.
By
- --------------------------
Title:
Address for Notices:
Centro Ciudad Comercial
Tamanaco (CCCT)
Torre B, Piso 11, Oficina
1103
Chuao, Caracas 1064-A,
Venezuela Telecopier No.: 011-582-
959-6581
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK
By
- ---------------------------
Title:
Address for Notices:
60 Wall Street
New York, New York 10260-
0060 Attention: Latin America
Credit
Telex no.: 233417
Security Agreement
91
EXHIBIT F
CONSENT
__________________, 1996
TO
Benton-Vinccler, C.A.
("Benton-Vinccler")
Morgan Guaranty Trust Company
of New York (the "Bank")
Reference is made to (1) the Operating Service Agreement dated
July 31, 1992 among Benton Oil and Gas Company, Venezolana de Inversiones y
Construcciones Clerico, C.A., Consorcio Benton-Vinccler and the undersigned (as
from time to time amended, the "Service Agreement") and (2) the assignment dated
March 8, 1994 by the Assigners, as defined therein, to Benton-Vinccler of the
rights of the Assigners under the Service Agreement (as from time to time
amended, the "Service Agreement Assignment").
We understand that Benton-Vinccler has agreed with the Bank to
provide as security to the Bank for certain extensions of credit
Benton-Vinccler's rights to receive payments from the undersigned pursuant to
the Service Agreement. The undersigned irrevocably agrees as follows:
(1) The undersigned (i) confirms that the Assigners (as
defined in the Service Agreement Assignment) have,
pursuant to the Service Agreement Assignment, assigned to
Benton-Vinccler all of their right, title and interest in
their rights to receive any and all payments thereunder
and to enforce the same, and (ii) agrees that any and all
payments pursuant to the Service Agreement will be made
in Dollars directly to such collateral account maintained
at the Bank, in the name and under the exclusive control
of the Bank, as the Bank may notify to the undersigned in
writing, until the undersigned has received written
directions from Benton-Vinccler and Bank to the
Consent
92
-2-
contrary.
(2) The undersigned consents to the grant by Benton-Vinccler
to the Bank of a security interest in any and all
payments by the undersigned under the Service Agreement
and related rights.
(3) The undersigned represents and warrants to Benton-
Vinccler and the Bank that the Service Agreement is in
full force and effect and as of the date hereof
Benton-Vinccler is not in default in the performance of
any of its obligations thereunder and this Consent is
valid and binding.
(4) This Consent shall be governed by and construed in
accordance with the law of the State of New York,
provided, that nothing herein shall be deemed to subject
the undersigned to the jurisdiction of the courts of or
in New York or to service of process in New York.
IN WITNESS WHEREOF, the undersigned has caused this Consent to
be signed as of the date first above written.
LAGOVEN, S.A.
By_______________________
Title:
Address for Notices:
ACCEPTED:
BENTON-VINCCLER, C.A.
By______________________
Title:
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By______________________
Title:
Consent