EXHIBIT 10.2
To: Madison Energy France S.C.S.
(formerly Madison/Chart Energy S.C.S.) ("MEF")
(the "BORROWERS' AGENT")
To: Madison Oil Company Europe ("MOCE")
Madison Oil France S.A. ("MOF")
Madison Energy France S.C.S.
(the "BORROWERS")
To: Madison Oil Company ("MOC")
Madison Petroleum Inc. ("MPI")
Madison Oil Company Europe
Madison Oil France X.X.
Xxxxxxx Energy France S.C.S.
Madison (Turkey) Inc ("MADISON TURKEY")
Madison Oil Turkey Inc ("MOTI")
(the "GUARANTORS")
To: Toreador Resources Corporation
("TOREADOR")
19th May 2003
WAIVER AND CONSENT - VARIOUS ISSUES
We refer to the Revolving Credit Facility Agreement dated 30th March, 2001
between the Borrowers, the Guarantors, Barclays Capital as Arranger, the Banks
(as defined therein) and Barclays Bank PLC as Facility Agent, Technical Agent,
Ancillary Bank and US Security Trustee as amended (the "CREDIT AGREEMENT"). We
also refer to a waiver and consent letter dated 8th November, 2001 relating to
the merger of MOC with Toreador (the "MERGER WAIVER LETTER"), to a waiver and
consent letter dated 21st March, 2002 relating to various issues (the "MARCH
WAIVER LETTER"), a waiver and consent letter dated 31st December, 2002 relating
to various issues (the "DECEMBER WAIVER LETTER") and a waiver and consent letter
dated 11th April, 2003 relating to various issues (the "APRIL WAIVER LETTER").
All of the Banks, the Ancillary Bank and the Hedging Bank, have authorised the
Facility Agent to enter into this letter on their behalf.
1. INTERPRETATION
1.1 INTERPRETATION
In this letter, unless otherwise defined or the context otherwise
requires:
(a) terms defined or used in the Credit Agreement have the same
meaning in this letter;
(b) references to specific numbered clauses are clauses of the
Credit Agreement; and
(c) references to paragraphs are, unless stated otherwise,
references to paragraphs of this letter.
1.2 DEFINITIONS
In this Agreement:
"BANK OF TEXAS LOAN AGREEMENT" means the loan agreement dated 16th
February, 2001 between Toreador Resources Corporation, Toreador
Exploration and Production Inc, Toreador Acquisition Corporation,
Tormin Inc and the Bank of Texas National Association, as amended from
time to time.
"BEST ENDEAVOURS" means, promptly at the written request of the
Facility Agent, Toreador shall make a written request of the Bank of
Texas N.A.;
"EQUITY ISSUE PROCEEDS" means the proceeds (whether in cash or in kind)
of any equity or capital issue (to include, without limitation, share
placement, the issue of preferred stock or subordinated loan stock or
any other similar instrument) (the "EQUITY ISSUE");
"FIRST WARRANT LETTER" means the warrant letter dated 21st March, 2002
between Toreador and the Arranger, as amended;
"MANAGEMENT AND WORK FEES LETTER" means the letter dated on or about
the date of this agreement relating to management and work fees;
"MERGER AGREEMENT" means the merger agreement dated as of 3rd October,
2001 between MOC, Toreador and MOC Acquisition Corporation (a
wholly-owned subsidiary of Toreador) pursuant to which, subject to the
satisfaction of certain conditions, MOC and MOC Acquisition Corporation
will merge and MOC shall be the surviving corporation;
"MILESTONE DATE" means each date as detailed in Schedule 3 in relation
to the progress of the Proposed Financing;
"MOC GROUP" means MOC and all of its subsidiaries;
"PROPOSED FINANCING" means the proposed refinancing of the Toreador
Group as described in the update to the Strategic Plan dated 15th May,
2003;
"SECOND WARRANT LETTER" means the warrant letter dated 25th March, 2003
between Toreador and the Arranger.
"STRATEGIC PLAN" means the strategic plan submitted to the Facility
Agent by Toreador on 12th December, 2002;
"SUBORDINATION AGREEMENT" means the Subordination Agreement dated 30th
March, 2001 between members of the Madison Group as debtors, the
Facility Agent and MOF, MOC, MOCE and MPI.
"SUBORDINATION AND SUPPORT AGREEMENT" means the subordination and
support agreement between Toreador, MOC and the Facility Agent dated
November, 2001 entered into in connection with the Merger Waiver
Letter;
"SURPLUS SALE PROCEEDS" means, in relation to any US asset of the
Toreador Group, the net sale proceeds paid to or to the order of any
member of the Toreador Group from the sale of
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that asset which Bank of Texas, N.A., in its sole and absolute
discretion, permits to be paid to the Facility Agent;
"SETTLEMENT FEE LETTER" means the letter dated on or about the date of
this Agreement relating to settlement, arrangement, technical and
supplemental fees;
"TOREADOR GROUP" means, at any time Toreador and all of its
Subsidiaries for the time being;
"TOREADOR GUARANTEE" means a Toreador subordinated guarantee of all of
the obligations of the Obligors under the Finance Documents;
"TOREADOR SUBORDINATED REVOLVING CREDIT AGREEMENT" means the
subordinated revolving credit agreement dated as of 3rd October, 2001
between MOC and Toreador pursuant to which Toreador agrees to advance
by way of loan certain monies to MOC;
"TOREADOR SUBORDINATED REVOLVING CREDIT NOTE" means the subordinated
revolving credit note dated as of 3rd October, 2001 between MOC and
Toreador;
"TRINIDADIAN ASSETS" means:
(i) all of the shares in Trans Dominion Holdings Limited;
(ii) all of Trans Dominion Holdings Limited's present and future
shares in Trinidad Exploration and Development Ltd; and
(iii) any present and future interest of Trans Dominion Holdings
Limited in the Bonasse oil field in Trinidad and Tobago and
the related Southwest Cedros Peninsular Exploration Licence;
"TRINIDADIAN REVENUE" means all monies arising, received from and in
relation to the Trinidadian Assets to be applied in accordance with
paragraph 7.4, except for monies received from the sale of all, or part
of the Trinidadian Assets, which shall be applied in accordance with
paragraph 4.5.
"TRINIDADIAN REVENUE ACCOUNTS" means the revenue accounts to be opened
with the Account Bank in London and maintained by Trans Dominion
Holdings Limited, which shall be maintained in accordance with the
directions of the Facility Agent;
"TURKISH ASSET" means:
(A) the Cendere oil field in Turkey;
(B) the Zeynel oil field in Turkey;
(C) the Boyabet oil field in Turkey; and
(D) the Thrace Basin in Turkey;
"TURKISH CAPITAL REPATRIATION" means any amounts paid to Toreador or
any Obligor in relation to the repatriation of the registered capital
of any member of the Toreador Group in Turkey;
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"TURKISH INTEREST" means: all of the Obligors' present and future
interest in a Turkish Asset and all agreements, facilities or
insurances relative to that Turkish Asset or to Turkish Petroleum;
"TURKISH PERMITTED PAYMENTS" means:
(i) the costs referred to in paragraphs (a)(i) and (a)(ii) of the
definition of "Permitted Payment" in the Credit Agreement
except that reference to Borrower Borrowing Asset, Borrowing
Base Petroleum or Borrowing Base Interest in that definition
shall be construed as a reference to Turkish Interest, Turkish
Petroleum and Turkish Asset);
(ii) any taxes payable by MOTI and Madison Turkey;
(iii) any:
(a) exploration and appraisal expenditure;
(b) general and administrative expenditure; or
(c) capital expenditure not falling within paragraph (i)
above,
payable by MOTI and Madison Turkey, as applicable, to the
extent the Majority Banks expressly agree or require in
writing (but not further or otherwise); and
(iv) any other expenditure that the Majority Banks agree may be a
Turkish Permitted Payment;
"TURKISH PETROLEUM" means in respect of a Turkish Asset, all petroleum
won and saved from that Turkish Asset that accrues to the Turkish
Interest in that Turkish Asset (including, without limitation, any such
petroleum that is royalty petroleum);
"TURKISH REVENUE" means:
(i) the gross proceeds (without any deductions
whatsoever) of any disposal of Turkish Petroleum;
(ii) any sales tax payable on the amount referred to in
paragraph (i) above;
(iii) any other amount payable to MOTI, Madison Turkey and
MOC in respect of any Turkish Petroleum, Turkish
Interest or Turkish Asset.
"TURKISH REVENUE ACCOUNTS" means all revenue and operating accounts
maintained by Madison Turkey and MOTI with Yapi ve Bankasi A.S. as
listed below:
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BANK BRANCH MADISON ENTITY ACCOUNT NO.
----------------------------------------------------------------------------------
Yapi ve Bankasi A.S. Ankara, Turkey Madison Turkey 1001151-0
----------------------------------------------------------------------------------
Yapi ve Bankasi A.S. Ankara, Turkey MOTI 0000-0000000-0
----------------------------------------------------------------------------------
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"VOTING AGREEMENT" means the voting agreement dated as of 3rd October,
2001 between Toreador, Xxxxxxx X. Xxxxxx, Xxxxx X. Xxxxxx and PHD
Partners, LP;
"WARRANT" means the warrants issued or to be issued pursuant to the
Warrant Letters;
"WARRANT BUYBACK LETTER" means the letter dated on or about the date of
this letter relating to the repurchase of the Warrants; and
"WARRANT LETTER" means the First Warrant Letter or the Second Warrant
Letter.
2. WAIVERS AND CONSENTS
2.1 WAIVER OF BREACHES OF FINANCE DOCUMENTS
Subject to the terms and conditions of this letter, Barclays Bank PLC,
as Facility Agent confirms that the Banks have agreed to waive the
following breaches of the Finance Documents:
(a) all currently outstanding breaches of Clause 6.1 (Repayment),
as amended by the April Waiver Letter;
(b) failure by the Obligors to comply with their obligations under
paragraph 5 of the April Waiver Letter;
(c) any breach of Clause 20.14 (Cover Ratios) as a consequence of
the Forecast re-determination dated 30th January, 2003;
(d) failure by Toreador and the Obligors to procure that, by 30th
April, 2003, all of the Toreador Group's shares in Trinidad
Exploration and Development Limited and Trans Dominion
Holdings Limited are pledged to the Facility Agent in
accordance with paragraph 7.5 of the April Waiver Letter;
(e) failure by the Borrowers' Agent to provide the independent
engineer's report in accordance with Clause 19.3(e);
(f) failure by Toreador to provide the Turkish translation and
account reconciliations in accordance with paragraph 7.1(d) of
the April Waiver Letter; and
(g) failure by the Borrowers' Agent to provide the information
required in accordance with paragraph 7.4(e) of the April
Waiver Letter.
2.2 MERGER WAIVER AND CONSENT
Barclays Bank PLC, as Facility Agent, consents to the merger of
Toreador and MOC and confirms that the Banks have agreed to waive the
following Events of Default:
(a) under Clauses 19.12(a) (Mergers and acquisitions) and 20.3
(Breach of other obligations) and Clause 20.20(d) (Change of
control) constituted by MOC entering into and performing the
Merger Agreement and the Voting Agreement and by the
occurrence of the Effective Time (as that term is defined in
the Merger Agreement);
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(b) under Clauses 19.13 (Other Financial Indebtedness) and 20.3
(Breach of other obligations) constituted by MOC incurring any
of the indebtedness referred to in paragraph 8
(Characterisation of Toreador Payments) below;
(c) under Clauses 19.14 (Loans) and 20.3 (Breach of other
obligations) constituted by MOC making loans to the Borrower
referred to in paragraph 8 (Characterisation of Toreador
Payments) below; and
(d) under Clauses 19.13 (Other Financial Indebtedness) and 20.3
(Breach of other obligations) constituted by the Borrowers
being deemed to have borrowed from MOC as referred to in
paragraph 8 (Characterisation of Toreador Payments) below.
3. CONSOLIDATION OF WAIVER LETTERS
Subject to the terms and conditions of this letter, Barclays Bank PLC,
as Facility Agent, confirms that the Banks have agreed to permanently
waive any and all Events of Default that have arisen under the Merger
Waiver Letter, the March Waiver Letter, the December Waiver Letter and
the April Waiver Letter and all the parties to this letter agree that
the Merger Waiver Letter, the March Waiver Letter, the December Waiver
Letter and the April Waiver Letter shall be terminated and of no
further effect (save in relation to the waivers granted under those
letters).
4. REPAYMENT
4.1 REPAYMENT
Clause 6.1 (Repayment) shall be suspended in accordance with paragraph
4.2 (Term of Suspension) below and, during the term of suspension,
shall be replaced with the following provisions:
The Borrowers shall, on the last Business Day of each of month until
(and including) March 2004, repay an amount of the Loans equal to the
aggregate of:
(i) French Revenue, less any Permitted Payments; and
(ii) Turkish Revenue, less Turkish Permitted Payments, and
Trinidadian Revenue as determined in accordance with the terms
of this Waiver Letter.
4.2 TERM OF SUSPENSION
Clause 6.1 (Repayment) shall be suspended until the earlier of:
(a) the first Business Day of April, 2004; or
(b) such time as (i) the ratio of the Relevant NPV derived from
the Forecast prepared as of 15th August, 2003 in accordance
with paragraph 5 (Forecasts) of this letter to Total
Indebtedness is not less than 1.5:1; and (ii) the outstanding
Loans do not exceed the Total Commitments.
4.3 TURKISH CAPITAL REPATRIATION PREPAYMENT
If, during the suspension of Clause 6.1 (Repayment) in accordance with
paragraph 4.2 (Term of Suspension) above, either of Madison Turkey,
MOTI or any other Obligor receives any
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Turkish Capital Repatriation (the relevant company that receives such
monies being referred to in this paragraph 4.3 as the "recipient"):
(i) the recipient shall immediately notify the Facility Agent of
all amounts of Turkish Capital Repatriation received;
(ii) the recipient shall ensure that no money received as Turkish
Capital Repatriation is transferred to any other member of the
Toreador Group; and
(iii) on demand by the Facility Agent the recipient shall
immediately pay to the Facility Agent the balance of the
Turkish Capital Repatriation (less any amount thereof that is
reinvested in Turkey solely for the purposes of maximising
future Turkish Capital Repatriations as detailed in the
Strategic Plan) in performance of the prepayment obligation
(if the recipient is a Borrower) or in performance of that
Guarantor's guarantee of the prepayment obligation (if the
recipient is a Guarantor) (and Clause 7.7(b) (Miscellaneous
provisions) shall apply to any such prepayment).
4.4 ASSET SALE PROCEEDS PREPAYMENT
Subject to paragraph 7.8(a)(iii) (Restrictions under Bank of Texas Loan
Agreement), if, during the suspension of Clause 6.1 of the Credit
Agreement in accordance with paragraph 4.2 (Term of Suspension) above,
any member of the Toreador Group sells any of its US assets, Toreador
agrees to pay to the Facility Agent an amount equal to the Surplus Sale
Proceeds, but only if Bank of Texas N.A. expressly consents, in its
sole and absolute discretion, and such payment shall be deemed to be a
prepayment of Loans by the Borrowers in an aggregate principal amount
equal to the Surplus Sale Proceeds (and Clause 7.7(b) (Miscellaneous
provisions) shall apply to any such prepayment).
4.5 TRINIDADIAN ASSET SALES PREPAYMENT
(a) Subject to sub paragraph (b) below and subject to any relevant
consents required under Trinidadian laws and (if required) the
consent of the Trinidad Exploration and Development Ltd.
Shareholders (which consents the Obligors undertake to use
their best endeavours to obtain), if MOC or any Obligor sells
or transfers any of its interest in the Trinidadian Assets
(either directly or indirectly, including by way of share
sale) (the relevant company that receives such monies being
referred to in this paragraph 4.5 as the "recipient"):
(i) the recipient shall immediately notify the Facility
Agent of all amounts realised from such sale or
transfer;
(ii) the recipient shall ensure that no money received
from such sale or transfer is transferred to any
other member of the Toreador Group; and
(iii) on demand by the Facility Agent, the recipient shall
immediately pay to the Facility Agent the net sale
proceeds of such sale in performance of the
prepayment obligation (if the recipient is a
Borrower) or in performance of that Guarantor's
guarantee of the prepayment obligation (if the
recipient is a Guarantor) (and Clause 7.7(b)
(Miscellaneous provisions) shall apply to any such
prepayment).
(b) No member of the MOC Group will sell or transfer (either
directly or indirectly, including by way of share sale or
intra group transfer) any of its interest in the
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Trinidadian Assets without the prior written consent of the
Facility Agent, except in the event of dilution pursuant to
the Shareholders Agreement between Anglo-African Energy, Inc.
and Trans-Dominion Holdings Limited.
4.6 MISCELLANEOUS
(a) The following amendments to the Credit Agreement effected by
paragraph 4 of the Merger Waiver Letter and paragraph 13 of
the March Waiver Letter remain effective and are restated as
follows:
(i) if the Borrowers repay or prepay any outstanding
Loan, then the Total Commitments shall, immediately
upon that repayment or prepayment being made,
automatically be reduced by an amount equal to the
principal so repaid or prepaid;
(ii) Clause 6.2 shall be amended so the words "Tranche A"
is inserted before "Tranche B" and the words ", but
any amount repaid under Tranche A may subsequently be
re-borrowed on and subject to the provisions of the
Agreement" are deleted; and
(iii) Clause 7.7(c) shall be amended so that the words "Any
amount prepaid under Tranche A may subsequently be
re-borrowed on and subject to the terms of this
Agreement but" are deleted and the words "Tranche A,"
are inserted before "Tranche B".
(b) The Borrowers shall ensure that the last day of an Interest
Period for one or more Loans coincides with the date
repayments or prepayments are to be made under this letter,
and shall select Interest Periods accordingly and for this
purpose (but not otherwise) the Borrowers may select an
Interest Period of less than one month.
(c) Amounts prepaid in accordance with paragraphs 4.3 (Turkish
Capital Repatriation Prepayment) to 4.5 (Trinidadian Asset
Sales Prepayment) shall not be applied against or reduce the
repayment obligations under paragraph 4.1 (Repayment).
5. FORECASTS
The calculation of the Relevant NPV on each Calculation Date in
accordance with Clause 16.1(d)(i) (General) shall be suspended for the
duration of the suspension of Clause 6.1 (Repayment) in accordance with
paragraph 4 (Repayment) above, except that the Relevant NPV shall be
calculated as of a 15th August, 2003 Calculation Date in accordance
with the provisions of Clause 16 (Forecasts), subject to the following
revisions:
(i) references to 45 days in Clause 16.2(a) shall be to 16 days;
(ii) references to 28 days in Clause 16.2(b) shall be to 9 days;
(iii) references to 7 days in Clause 16.2(c) shall be to 5 days.
6. INFORMATION COVENANTS
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6.1 STRATEGIC PLAN
(a) On 15th May, 2003 and on the 15th and 30th of each
month thereafter, Toreador shall provide to the
Facility Agent an update of the Strategic Plan
incorporating the following information in reasonable
detail:
(i) details of the progress achieved in relation
to each of the options, including the
Proposed Financing, outlined in the
Strategic Plan and the updates thereto;
(ii) Toreador's assessment of the likelihood of
each option referred to above coming to
fruition by 15th August, 2003; and
(iii) details of any other option being pursued by
Toreador with a view to restoring the
January 2003 NPV to Total Indebtedness to
not less than 1.5:1 by 15th August, 2003.
(b) Toreador shall immediately notify the Facility Agent if it
becomes aware that any of the options outlined in the
Strategic Plan is no longer being pursued by Toreador or the
proposed counterparty or, as a result of any other event or
circumstance, is unlikely to come to fruition by 15th August,
2003, providing reasonable detail of the particular event or
circumstances.
(c) Toreador shall immediately notify the Facility Agent of any
adverse developments in relation to the Proposed Financing.
6.2 CASHFLOW FORECASTS
(a) Toreador shall, by 22nd May, 2003, provide an update to the
5th January, 2003 cashflow forecast to the Facility Agent.
(b) Toreador shall immediately notify the Facility Agent of any
events or circumstances that are likely to cause an adverse
deviation from the cashflow forecast provided by Toreador to
the Facility Agent on 22nd May, 2003, providing details of the
particular events or circumstances and a revised forecast.
(c) Toreador shall provide to the Facility Agent, on the 15th and
30th of each month, a certificate signed by the Chief
Financial Officer of Toreador certifying that each member of
the Toreador Group has sufficient working capital to continue
trading and that the Toreador Group's cashflow situation is
manageable.
6.3 OTHER INFORMATION
Toreador shall promptly notify the Facility Agent:
(a) of the receipt by any member of the Toreador Group of any
Surplus Sale Proceeds; and
(b) if any creditor of any member of the Toreador Group takes any
enforcement action, or notifies any member of the Toreador
Group of its intention to take enforcement action, in relation
to any amounts owing to it.
7. COVENANTS
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7.1 CAPITAL EXPENDITURE RESTRICTIONS
(a) The Obligors shall procure that no Obligor (excluding Toreador
and any other borrower under the Bank of Texas Loan Agreement)
shall make, nor incur any obligation or liability for or in
respect of any capital expenditure except for any capital
expenditure that a prudent operator would expend to maintain
(rather than develop) the relevant assets.
(b) Toreador shall within fifteen days of the end of each month
provide to the Facility Agent a cashflow reconciliation for
that month for all of the members of the Toreador Group (in
the form of the Schedule 1 to this letter), reconciling the
sources of funds and uses of funds and including details of
that month's capital expenditures.
(c) Paragraph (i) of Clause 19.22 (Capital expenditure), shall not
apply.
(d) Toreador shall, within fifteen days of the end of each month,
provide to the Facility Agent
(i) a translation and cashflow reconciliation of the
account statements for that month in relation to the
Turkish Assets with full details of all income and
expenditure items; and
(ii) a copy of each monthly invoice received in relation
to the sale of Turkish Petroleum.
7.2 TURKISH CAPITAL REPATRIATION
Toreador and the Obligors shall use best endeavours to maximise Turkish
Capital Repatriation proceeds in accordance with paragraph 4.3 within
as short a time frame as is reasonably practicable.
7.3 TOREADOR EQUITY ISSUES
(a) Toreador shall use best endeavours to maximise Equity Issue
Proceeds in the period to 15th August, 2003 and shall pay such
portion of such Equity Issue Proceeds to the Facility Agent to
the extent consented to by Bank of Texas, N.A. in its sole and
absolute discretion.
(b) Toreador undertakes to and shall procure that its subsidiaries
shall, in connection with any Equity Issue, make full and
proper disclosure in accordance with all applicable laws
and/or requirements of any regulatory authority.
7.4 TURKISH AND TRINIDADIAN CASHFLOW
(a) Without prejudice to the Obligors' obligations under the
Credit Agreement and subject to the following provisions of
this paragraph 7.4 (Turkish and Trinidadian Cashflow), MOTI
and Madison Turkey and MOC shall pay, and MOC shall procure
that MOTI and Madison Turkey pay all Turkish Revenue (to the
extent permitted by Turkish law), less Turkish Permitted
Payments, and all Trinidadian Revenue directly to MOC, unless
any such amount is received in another currency, in which case
(where applicable) MOTI, Madison Turkey and MOC shall, and MOC
shall procure that MOTI and Madison Turkey shall, immediately
upon receipt convert that amount to Dollars and pay them
directly to MOC, in both cases to be applied in repayment of
the Loans and in performance of that Guarantor's guarantee of
the repayment
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obligation as contemplated in Clause 15.1(a)(ii). MOC
undertakes, upon receipt of any of the amounts referred to
above, to pay such amounts directly to the Facility Agent in
performance of MOC's guarantee of the repayment obligation as
contemplated in Clause 15.1(a)(ii).
(b) Subject in each case with regard to the Turkish Revenue
Accounts to the extent permitted by Turkish law:
(i) MOC shall procure that, from the Effective Date, all
Turkish Revenue is paid into the Turkish Revenue
Accounts.
(ii) MOTI and Madison Turkey shall be permitted to make
such Turkish Permitted Payments from the Turkish
Revenue Accounts as approved in writing by the
Facility Agent.
(c) To the extent permitted by Turkish law, MOTI and Madison
Turkey will provide, and MOC shall procure that MOTI and
Madison Turkey will provide, by no later than 15th August,
2003:
(i) that the Facility Agent is granted a Security
Interest over the Turkish Revenue Accounts by way of
agreements in form and substance satisfactory to the
Facility Agent (the "TURKISH REVENUE ACCOUNTS
SECURITY DOCUMENTS"); and
(ii) a legal opinion from a reputable law firm in respect
of all relevant jurisdictions, in a form and
substance satisfactory to the Facility Agent, is
delivered to the Facility Agent in relation to the
Turkish Revenue Accounts Security Documents.
(d) MOC shall no later than 15th August, 2003:
(i) procure that the Facility Agent is granted a Security
Interest over the Trinidadian Revenue Accounts by way
of agreements in form and substance satisfactory to
the Facility Agent (the "TRINIDADIAN REVENUE ACCOUNTS
SECURITY DOCUMENTS"); and
(ii) deliver a legal opinion from a reputable law firm in
respect of all relevant jurisdictions in a form and
substance satisfactory to the Facility Agent in
relation to the Trinidadian Revenue Accounts Security
Documents.
(e) Without limiting the Facility Agent's rights under Clause
19.3(d) (Borrowing Base Asset and similar information), the
Borrower's Agent shall supply to the Facility Agent (in
sufficient copies for all of the Banks unless the Facility
Agent agrees otherwise) the information described in Clause
19.3(a)(i), (ii) and (iii) (Borrowing Base Asset and similar
information), provided that the wording of that Clause shall
be deemed amended for these purposes such that each reference
to "Borrowing Base Asset" shall be deemed to be a reference to
Turkish Asset.
(f) Toreador undertakes to deliver promptly to the Facility Agent
such information and evidence as it may from time to time
require in order to check and verify the amount of any Turkish
Revenue, Trinidadian Revenue, or Turkish Permitted Payment.
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(g) Each Obligor shall do all things required by the Facility
Agent for the granting, perfecting or protecting of any
security intended to be granted under the Turkish Revenue
Accounts Security Document and the Trinidadian Revenue
Accounts Security Document.
7.5 TRANS DOMINION HOLDINGS LIMITED
Subject to obtaining any relevant consents under Trinidadian laws and
(if required) the consent of the Trinidad Exploration and Development
Ltd. Shareholders, and (if required) the consent of Petroleum Company
of Trinidad and Tobago Limited (which consents MOC and the Obligors
agree to use best endeavours to obtain):
(a) to procure that, by 15th August, 2003, (i) all of the MOC
Group's shares in Trans Dominion Holdings Limited and (ii) all
of Trans Dominion Holdings Limited's shares in Trinidad
Exploration and Development Ltd. are pledged to the Facility
Agent on behalf of the Finance Parties by way of a security
agreement in form and substance satisfactory to the Facility
Agent and that by the same date legal opinions relating
thereto are delivered to the Facility Agent from reputable law
firms in all relevant jurisdictions in each case in form and
substance satisfactory to the Facility Agent; and
(b) to procure that Trans Dominion Holdings Limited:
(i) promptly notifies the Facility Agent when Trans
Dominion Holdings Limited enters into any agreement
relating to the Trinidadian Assets ("RELEVANT
AGREEMENT");
(ii) after notice by the Facility Agent to the Borrower's
Agent that the Facility Agent requires security to be
granted to it for the benefit of the Finance Parties,
enters into an agreement granting a Security Interest
over that Relevant Agreement above in form and
substance satisfactory to the Facility Agent
("SECURITY DOCUMENT"); and
(iii) delivers a legal opinion from a reputable law firm in
respect of all relevant jurisdictions in a form and
substance satisfactory to the Facility Agent in
relation to each of the Security Documents,
and each Obligor shall do all things reasonably required by
the Facility Agent for the granting, perfecting or protecting
of any security intended to be granted under a Security
Document.
7.6 THE MERGER AGREEMENT
(a) MOC undertakes not to agree to any waiver, amendment,
termination or cancellation of, or of any term of, the Merger
Agreement or the Voting Agreement.
(b) Toreador agrees to waive any default, event of default or
breach of representation or warranty under the Merger
Agreement, the Voting Agreement, the Toreador Subordinated
Revolving Credit Agreement and the Toreador Subordinated
Revolving Credit Note constituted by MOC issuing shares to
Barclays Nominees (Branches) Limited, and the Obligors
undertaking to deliver shares, in accordance with paragraph
3(a)(ii) of the Merger Waiver Letter.
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7.7 TURKEY
Toreador and MOCE undertake to procure that, by no later than
forty-five days after Madison Turkey has received all Turkish Capital
Repatriations that it is entitled to:
(a) Madison Turkey shall have transferred all of its assets,
liabilities, business and undertakings to MOTI and shall be
wound up and dissolved; and
(b) that MOTI shall have discharged in full all of the
consideration for that transfer.
7.8 RESTRICTIONS UNDER BANK OF TEXAS LOAN AGREEMENT
(a) Toreador undertakes to use Best Endeavours to obtain any
necessary waiver of or amendment (if any) to the provisions of
the Bank of Texas Loan Agreement so as to enable:
(i) Toreador and the other borrowers under the Bank of
Texas Loan Agreement to provide financial support to
the MOC Group as set out in Schedule 2;
(ii) Toreador to enter into the Toreador Guarantee; and
(iii) Toreador to make any payments to the Facility Agent
that may arise in accordance with paragraph 4.4
(Asset Sales Proceeds Prepayment).
and in the absence of such express amendment, waiver or
consent of Bank of Texas, N.A., neither Toreador nor any
member of the Toreador Group shall take any of these actions.
(b) On obtaining such waiver to, or amendment of, the provisions
of the Bank of Texas Loan Agreement as is required to enable
Toreador and the other borrowers under that agreement to
provide financial support to the MOC Group in accordance with
paragraph 7.8(a)(i) above, Toreador shall use its best
endeavours to procure that the Outstanding Target Repayments
of the Loans, as defined and set out in Schedule 2 to this
letter, are promptly paid to the Facility Agent.
(c) On obtaining such waivers to, or amendments of, the provisions
of the Bank of Texas Loan Agreement as are required to enable
Toreador to enter into the Toreador Guarantee in accordance
with paragraph 7.8(a)(ii) above, Toreador shall immediately:
(i) enter into the Toreador Guarantee; and
(ii) deliver a legal opinion from a reputable law firm in
respect of all relevant jurisdictions in a form and
substance satisfactory to the Facility Agent in
relation to its entry into the Toreador Guarantee.
(d) Except for such further consent as is required in paragraphs
4.4, 7.3 and 7.8(a), Toreador expressly confirms that the
performance of its obligations under this letter does not
require the consent of Bank of Texas, N.A. or, if required,
such consent has been obtained.
7.9 BANK OF TEXAS LOAN AGREEMENT
(a) Subject to sub-paragraph (b) below, in the event that the Bank
of Texas Loan Agreement is repaid, immediately prior to such
repayment Toreador agrees to notify
13
the Facility Agent and immediately after such repayment,
Toreador agrees to provide such guarantees, financial support
and other payment requirements under the Finance Documents as
required by the Facility Agent.
(b) Sub-paragraph (a) above will not apply in the event that Bank
of Texas N.A. transfers or novates any of its interest in the
Bank of Texas Loan Agreement to another entity.
8. CHARACTERISATION OF TOREADOR PAYMENTS
(a) Toreador agrees that any payment made or deemed made to MOC by
Toreador pursuant to this letter, the April Waiver Letter, the
December Waiver Letter, the March Waiver Letter or the Merger
Waiver letter shall be "Junior Debt" for the purposes of the
Subordination and Support Agreement. MOC agrees that any
payment made or deemed made by MOC to any of the Borrowers
pursuant to this letter, the December Waiver Letter, the March
Waiver Letter or the Merger Waiver Letter shall be "Junior
Debt" for the purposes of the Subordination Agreement.
(b) An amount equal to each payment made by Toreador to the
Facility Agent in accordance with this letter, the December
Waiver Letter or the April Waiver Letter and for the avoidance
of doubt, any amounts previously paid by Toreador under
paragraph 7(b) of the Merger Waiver Letter or 12(b) of the
March Waiver Letter shall be deemed to be:
(i) a non-interest bearing loan made by Toreador to MOC
repayable (subject to the Subordination and Support
Agreement on demand (or a loan on such other terms as
are agreed by MOC and Toreador (in any case subject
to the Subordination and Support Agreement)); and
(ii) a non-interest bearing loan made by MOC to the
Borrowers repayable (subject to the Subordination
Agreement on demand (or a loan on such other terms as
are agreed by MOC and the Borrowers (in any case
subject to the Subordination Agreement)).
9. AMENDMENT TO THE CREDIT AGREEMENT
The amendments to the Credit Agreement effected by paragraph 4 of the
Merger Waiver Letter and paragraph 13 of the March Waiver Letter remain
effective and are restated as follows:
(a) paragraph (d) in the definition of "Permitted Payment" in
Clause 1.1 (Definitions) shall be deleted and shall be
replaced with:
"(d) [Not used];";
(b) Clause 19.25(a)(iii) (Turkish business) shall be deleted and
shall be replaced with:
"(iii) in any event, does not make any payment to any other
member of the Toreador Group except for payment of
the kind contemplated by paragraph (ii)(B) above;";
(c) for the purposes of 20.3 (Breach of other obligations), 20.4
(Misrepresentation), 20.12 (Unlawfulness), 20.13
(Effectiveness of Security), 20.22 (U.S. Bankruptcy Laws) and
20.23 (ERISA) the word "Obligor" shall be deemed to include
Toreador;
14
(d) for the purposes of Clauses 20.5 (Cross-default), 20.6
(Insolvency), 20.7 (Insolvency proceedings), 20.8 (Appointment
of receivers and managers), 20.9 (Creditor's processes), 20.10
(Analogous proceedings), 20.11 (Cessation of business) and
20.17 (Litigation) the phrase "member of the Group" shall be
deemed to include Toreador;
(e) Clause 20.20(d) (Change of Control) shall be deleted and shall
be replaced with:
"(d) MOC is not, or ceases to be, a wholly-owned
subsidiary of Toreador Resources Corporation; or";
and
(f) a new Clause 20.20(e) (Change of Control) of the Credit
Agreement shall be inserted as follows:
"(e) any single person, or group of persons acting in
consort (as defined in the City Code on Takeovers and
Mergers) acquires control (as defined in Section 416
of the Income and Corporation Taxes Act 1998) of
Toreador Resources Corporation.".
10. CONFIRMATIONS
10.1 GUARANTEES
Each Guarantor agrees, and represents and warrants to each Finance
Party as at the date it executes this letter:
(a) that the arrangements contemplated by this letter, the Merger
Agreement and the Voting Agreement and the entry into and
performance of the Merger Agreement and the occurrence of the
Effective Time (as defined in the Merger Agreement) do not in
any way affect the guarantee and undertakings given by it
under Clause 15 (Guarantee); and
(b) that the guarantee given by it under Clause 15 (Guarantee) is
a continuing guarantee, in full force and effect, and will
extend to the ultimate balance of all sums payable by the
Obligors under the Finance Documents, regardless of the
arrangements contemplated by this letter, the entry into and
performance of the Merger Agreement and the occurrence of the
Effective Time (as defined in the Merger Agreement) and any
intermediate payments or discharge in whole or in part
(including, without limitation, the prepayments contemplated
by this letter).
10.2 MOC
MOC agrees, and represents and warrants to each Finance Party
as at the date it executes this letter:
(a) that the arrangements contemplated by this letter and the
entry into and performance of the Merger Agreement and the
occurrence of the Effective Time (as defined in the Merger
Agreement) do not in any way affect any of the Finance
Documents; and
(b) that its obligations under the Finance Documents are in full
force and effect and are binding on, and enforceable against,
MOC regardless of the arrangements contemplated by this letter
or the entry into and performance of the Merger
15
Agreement and the occurrence of the Effective Time (as defined
in the Merger Agreement)).
11. REPRESENTATIONS AND WARRANTIES
(a) Toreador and each Obligor makes the following representations
and warranties to each Finance Party in respect of those of
this letter, the Merger Agreement and the Voting Agreement to
which it is a party:
(i) that it has the power to enter into and perform this
letter, the Merger Agreement and the Voting Agreement
and it has taken all necessary action to authorise
the entry into, performance and delivery of this
letter, the Merger Agreement and the Voting
Agreement; and
(ii) that this letter, the Merger Agreement and the Voting
Agreement constitutes its legal, valid and binding
obligation enforceable in accordance with its terms.
(b) Toreador represents and warrants as at the date it executes
this letter that:
(i) it has the power to enter into and perform this
letter, the Settlement Letter and the Warrant Buyback
Letter; and
(ii) this letter, the Settlement Fee Letter and the
Warrant Buyback Letter will, when issued, constitute
its legal, valid and binding obligation enforceable
in accordance with their terms.
(c) Toreador and each Obligor represents and warrants that
Trans-Dominion Holdings Limited, Madison (Turkey) Inc. and
Madison Oil Turkey Inc. are the legal and beneficial owners of
the Trinidadian Assets and the Turkish Assets respectively.
(d) Each Obligor represents and warrants as at the date it
executes this letter that:
(i) it has the power to enter into and perform the
Management and Work Fees Letter; and
(ii) the Management and Work Fees Letter will, when
issued, constitute its legal, valid and binding
obligation enforceable in accordance with their
terms.
12. LEGAL FEES
(a) For the avoidance of doubt, Toreador and each Obligor
acknowledges and agrees that the Facility Agent's costs and
expenses incurred in connection with this letter, the
Management and Work Fees Letter, the Settlement Letter and the
Warrant Buyback Letter, the review of any proposal outlined in
the Strategic Plan and any other arrangement, new agreement or
document contemplated by this letter fall within Clause 23.1
(Initial and special costs), and as such, MEF shall
immediately on demand pay those costs and expenses.
(b) The Facility Agent confirms that the payment of the legal fees
of Xxxxx & Xxxxx (the Facility Agent's legal adviser) incurred
in relation to this letter, the Management and Work Fees
Letter, the Settlement Letter and the Warrant Buyback Letter,
the review of any proposal outlined in the Strategic Plan and
any other arrangement, new
16
agreement or document contemplated by this letter shall
constitute a Permitted Payment.
(c) The Obligors shall pay the Permitted Payment referred to in
paragraph (b) above as soon as possible after execution of
this letter from Gross Revenues to the extent any such amount
is available after the payment of any other Permitted Payments
(other than any referred to in paragraph (c)(i) of the
definition of Permitted Payment in Clause 1.1 (Definitions)).
13. EVENT OF DEFAULT
If:
(a) any of the provisions of this letter are not complied with;
(b) any shares are not issued in accordance with the Warrants
issued and delivered in accordance with the Warrant Letters;
(c) the Merger Agreement or the Toreador Subordinated Revolving
Credit Agreement is terminated;
(d) the Voting Agreement is breached;
(e) the Forecast prepared as of 15th August, 2003 in accordance
with paragraph 5 (Forecasts) of this letter indicates that the
ratio of Relevant NPV to Total Indebtedness is less than
1.5:1;
(f) any representation and warranty in this letter is incorrect
when made or repeated; or
(g) there is any breach of the repayment schedule in paragraph 4
(Repayment) of this letter;
(i) there is any indication that the Proposed Financing will not
go ahead and, in the absolute discretion of the Facility
Agent, there is no acceptable alternative option proposed by
Toreador under the Strategic Plan or otherwise;
(j) any of the actions to be taken in accordance with the relevant
Milestone Date as detailed in Schedule 3 are not met; or
(k) there is any breach of the Management and Work Fees Letter,
the Settlement Fee Letter and the Warrant Buyback Letter; or
then that event shall constitute an Event of Default under Clause 20
(Default) and the Finance Parties may thereafter exercise all of their
rights in respect thereof under the Finance Documents.
14. DESIGNATION OF FINANCE DOCUMENTS
Each of this letter, the Subordination and Support Agreement, each of
the Warrants, the Warrant Letters, the Management and Work Fees Letter,
the Settlement Fee Letter, the Warrant Buyback Letter and, if entered
into in accordance with paragraph 7.8(c), the
17
Toreador Guarantee, is a Finance Document (and each is hereby
designated as such by the Facility Agent and the Borrowers' Agent).
15. CONDITIONS PRECEDENT
(a) The letter and the waivers set out herein shall only take
effect on the date on which the Agent has received an original
of this letter and the Second Warrant Letter duly executed by
all parties and has received (or waived receipt of):
(i) board resolutions of each of the Obligors and
Toreador authorising the transactions contemplated by
and execution of this letter, the Management and Work
Fees Letter, the Settlement Fee Letter and the
Warrant Buyback Letter;
(ii) specimen signatures of the persons authorised to sign
this letter, the Management and Work Fees Letter, the
Settlement Fee Letter and the Warrant Buyback Letter
and any other documents connected to the Finance
Documents on behalf of the Obligors;
(iii) a signed letter from an authorised signatory of the
provider of the Proposed Financing indicating that
they are considering a refinancing of the Toreador
Group;
(iv) a letter signed by the CEO of Toreador providing
details of Toreador's understanding following
discussions with the provider of the Proposed
Financing of:
(A) the timetable for the proposed refinancing
detailing the Milestone Dates; and
(B) the current position of the refinancing in
relation to the Milestone Dates in the
timetable referred to in (A) above.
(v) signed copies of the Management and Work Fees Letter,
the Settlement Fee Letter and the Warrant Buyback
Letter.
(all in form and substance satisfactory to the Facility Agent)
(such date being the "EFFECTIVE DATE").
(b) Toreador and each Obligor represents and warrants as at the
Effective Date that there is no Default outstanding.
16. OTHER PROVISIONS
(a) Nothing in this letter shall affect any right of any Finance
Party, or any obligation of any Obligor, except as expressly
stated above, and each Obligor expressly confirms that all
such rights and obligations shall continue in full force and
effect except to the extent so stated.
(b) This letter does not create any right under the Contracts
(Rights of Third Parties) Xxx 0000 which is enforceable by any
person who is not a party to this letter.
18
(c) The Facility Agent acknowledges that Bank of Texas, N.A. has
the right to withhold any consents or approvals requested of
it by Toreador in its sole discretion for any or no reason and
on any or no grounds and that there is no third party
beneficiary relationship between the Facility Agent and Bank
of Texas, N.A.
(d) Toreador acknowledges and agrees to the provisions of Clause
28.3(b) (Changes to the Parties) - Procedures for Novations)
and irrevocably authorises the Facility Agent to execute any
duly completed Novation Certificate on its behalf.
(e) If a provision of this letter is or becomes illegal, invalid
or unenforceable in any jurisdiction, that shall not affect:
(i) the legality, validity or enforceability in that
jurisdiction of any other provision of this letter;
or
(ii) the legality, validity or enforceability, in other
jurisdictions of that or any other provision of this
letter.
(f) Clauses 1.2 (Construction), 28.1 (Transfers by Obligors) and
32-37 (inclusive) shall apply to this letter as though set out
in full in this letter, except that:
(i) references in those Clauses to the Credit Agreement
are to be construed as references to this letter;
(ii) each reference to "Obligor" in Clauses 1.2
(Construction), 28.1 (Transfers by Obligors), 35
(Jurisdiction) and 37 (Waiver of Jury Trial) shall be
deemed to include Toreador; and
(iii) the reference to "the Guarantor" in Clause 35.2(f)
(Service of Process) shall be deemed to include
Toreador.
19
Please countersign this letter (or a copy of it) where marked below to confirm
your agreement to its terms.
Yours faithfully,
/s/ XXXXXX XXXXXXX
----------------------------------------------------------
ON BEHALF OF BARCLAYS BANK PLC
AS FACILITY AGENT
We agree with the above.
BORROWERS' AGENT
/s/ XXXXXXX X. XXXX
----------------------------------------------------------
ON BEHALF OF MADISON ENERGY FRANCE S.C.S.
Date: May 19, 2003
BORROWERS
/s/ XXXXXXX X. XXXX
----------------------------------------------------------
ON BEHALF OF MADISON OIL COMPANY EUROPE
Date: May 19, 2003
/s/ XXXXXXX X. XXXX
----------------------------------------------------------
ON BEHALF OF MADISON OIL FRANCE S.A.
Date: May 19, 2003
/s/ XXXXXXX X. XXXX
----------------------------------------------------------
ON BEHALF OF MADISON ENERGY FRANCE S.C.S.
Date: May 19, 2003
GUARANTORS
/s/ XXXXXXX X. XXXX
----------------------------------------------------------
ON BEHALF OF MADISON OIL COMPANY
Date: May 19, 2003
/s/ XXXXXXX X. XXXX
----------------------------------------------------------
ON BEHALF OF MADISON PETROLEUM INC
Date: May 19, 2003
/s/ XXXXXXX X. XXXX
----------------------------------------------------------
ON BEHALF OF MADISON OIL COMPANY EUROPE
Date: May 19, 2003
20
/s/ XXXXXXX X. XXXX
------------------------------------------
ON BEHALF OF MADISON OIL FRANCE S.A.
Date: May 19, 2003
/s/ XXXXXXX X. XXXX
------------------------------------------
ON BEHALF OF MADISON ENERGY FRANCE S.C.S.
Date: May 19, 2003
/s/ XXXXXXX X. XXXX
------------------------------------------
ON BEHALF OF MADISON (TURKEY) INC
Date: May 19, 2003
/s/ XXXXXXX X. XXXX
------------------------------------------
ON BEHALF OF MADISON OIL TURKEY INC
Date: May 19, 2003
TOREADOR
/s/ XXXXXXX X. XXXX
------------------------------------------
ON BEHALF OF TOREADOR RESOURCES CORPORATION
Date: May 19, 2003
21
SCHEDULE 1 - FORM OF CASHFLOW RECONCILIATION
SOURCES OF FUNDS DESCRIPTION
French Operations
Turkish Operations
Trinidadian Operations
US (Toreador) Operations
Other
Total
USES OF FUNDS
FRENCH OPEX
CAPEX
G&A
Madison Loan
Other
TOTAL FRANCE
TURKISH OPEX
CAPEX
G&A
Madison Loan
Other
TOTAL TURKEY
TRINIDADIAN OPEX
CAPEX
G&A
Madison Loan
Other
TOTAL TRINIDAD
US OPEX
CAPEX
G&A
Madison Loan
Other
Total US (Toreador)
TOTAL USES OF FUNDS
22
SCHEDULE 2
OUTSTANDING TARGET REPAYMENTS
-----------------------------------------------------------------------------------
OUTSTANDING TARGET
MONTH TARGET REPAYMENT (USD) ACTUAL REPAYMENT (USD) REPAYMENTS (USD)
-----------------------------------------------------------------------------------
November 2002 450,000 300,000 50,000
-----------------------------------------------------------------------------------
December 2002 450,000 150,000 300,000
-----------------------------------------------------------------------------------
January 2003 400,000 150,000 250,000
-----------------------------------------------------------------------------------
February 2003 500,000 400,000 100,000
-----------------------------------------------------------------------------------
23
SCHEDULE 3
MILESTONE DATES
---------------------------------------------------------------------------------------------------------
MILESTONE DATE ACTION
---------------------------------------------------------------------------------------------------------
a Toreador to provide a letter:
(i) detailing that an Equity Partner has been appointed by the Provider;
(ii) detailing that such Equity Partner has agreed in writing to
consider the Proposed Financing; and
(iii) attaching the correspondence received from the Equity Partner.
---------------------------------------------------------------------------------------------------------
a + 28 days Toreador to provide a letter:
(i) detailing that the Equity Partner has indicated in writing that it
has completed its due diligence process;
(ii) confirming that the Equity Partner and Provider have commenced
drafting of the preliminary term sheet and commitment letter; and
(iii) attaching the correspondence referred to in (i) above.
--------------------------------------------------------------------------------------------------------
a + 35 days Toreador to provide a letter:
(i) detailing that a preliminary term sheet and draft commitment letter
has been received by the Provider and the Equity Partner; and
(ii) attaching the preliminary term sheet and draft commitment letter
received from the Provider and the Equity Partner.
---------------------------------------------------------------------------------------------------------
a + 42 days Toreador to provide a letter:
(i) confirming that they have received a formal commitment letter and
term sheet from the Provider and the Equity Partner in relation to
the Proposed Financing, approved by the Provider and Equity
Partner's authorisation committees; and
(ii) attaching the formal commitment letter and term sheet.
---------------------------------------------------------------------------------------------------------
DEFINITIONS
a = the earlier of: (i) the actual date on which the action is completed; or
(ii) 16th June 2003.
PROVIDER = the provider of the Proposed Financing as detailed in the update to
the Strategic Plan dated 15th May 2003
EQUITY PARTNER = any partner required to participate in the Proposed Financing
by the Provider
24
