Exhibit 10.2

 

PROMISSORY NOTE

 

$200,000,000.00

                      , 2005

 

FOR VALUE RECEIVED, the undersigned, PATINA OIL & GAS CORPORATION, a Delaware
corporation (“Maker”), hereby promises to pay to the order of JPMORGAN CHASE
BANK, N.A. (“Payee”), at its office at 131 South Dearborn, Mail Code IL-0010,
Chicago, Illinois 60603 (or at such other place as Payee may designate from time
to time), in lawful money of the United States of America and in immediately
available funds, the principal amount of Two Hundred Million Dollars
($200,000,000.00) or such lesser amount as shall equal the aggregate unpaid
principal amount of the advances (the “Loans”) made by Payee to Maker under this
Promissory Note (this “Note”), and to pay interest on the unpaid principal
amount of each such Loan at the rates per annum and on the dates specified
below.

 

Each Loan hereunder shall be at the sole discretion of Payee. Each Loan shall
bear interest at the rate per annum equal to the lesser of (a) the Adjusted Base
Rate (as hereinafter defined), or (b) the Maximum Lawful Rate (as hereinafter
defined). Each Loan, and accrued and unpaid interest thereon, shall be due and
payable on February 1, 2007 (or such earlier date as provided hereinbelow).
Payee may, if and to the extent any payment is not made when due hereunder,
charge from time to time against any or all of Maker’s accounts with Payee any
amount so due.

 

The entire outstanding principal balance of this Note, and all accrued but
unpaid interest, shall be immediately due and payable in full, without demand,
upon the termination of all commitments and the payment in full of all
indebtedness due and owing under Maker’s existing secured credit facility with
JPMorgan Chase Bank, N.A. and certain other financial institutions.

 

Maker may prepay any Loan in whole or in part at any time without premium or
penalty.

 

Interest shall be computed on the basis of a year of 365 days and the actual
days elapsed (including the first day but excluding the last day). Overdue
principal and, to the extent permitted by applicable law, interest shall bear
interest, payable upon demand, for each day from and including the due date to
but excluding the date of actual payment at a rate per annum equal to the sum of
2% plus the greater of (a) the floating rate of interest established from time
to time by Payee as its prime rate of interest, which rate is not the lowest
rate of interest which Payee charges, or (b) the sum of (i) the Federal Funds
Rate (as hereinafter defined) in effect on such day, plus (ii) one-half of one
percent (.5%) (such amount being referred to herein as the “Adjusted Base
Rate”), each change in the Adjusted Base Rate to become effective without notice
to Maker on the effective date of each such change. As used herein, the term
“Federal Funds Rate” means, for any day, the rate per annum (rounded upwards, if
necessary, to the nearest 1/16 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 business day next succeeding such day,
provided that (1) if the day for which such rate is to be determined is not a
business day, the Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding business day as so

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published on the next succeeding business day, and (2) if such rate is not so
published on such next succeeding business day, the Federal Funds Rate for any
day shall be the average rate charged to Payee on such day on such transactions
as determined by Payee. Whenever any payment under this Note is due on a day
that is not a day Payee is open to conduct substantially all of its business,
such payment shall be made on the next succeeding day on which Payee is open to
conduct substantially all of its business, and such extension of time shall in
such case be included in the computation of the payment of interest.

 

Notwithstanding anything to the contrary contained herein, if a petition shall
be filed by or against Maker under any law relating to bankruptcy,
reorganization, or insolvency, then the outstanding principal and accrued and
unpaid interest on this Note shall become immediately due and payable.

 

Maker hereby waives presentment, protest, demand, or other notice of any kind in
connection with this Note.

 

The request of Maker for any Loan and the receipt by Maker of the proceeds
thereof shall be deemed a representation by Maker as of the date of each such
request or receipt that Maker is duly authorized to incur such indebtedness
hereunder.

 

No failure or delay by Payee 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 of any right, power, or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, power, or privilege. The rights and remedies of
Payee provided herein shall be cumulative and not exclusive of any other rights
or remedies provided by law. If any provision of this Note shall be held invalid
or unenforceable in whole or in part, such invalidity or unenforceability shall
not affect the remaining provisions hereof. No provision of this Note may be
modified or waived except by a written instrument signed by Payee and Maker.

 

Payee shall incur no liability to Maker in acting upon any telephone, telex, or
other communication that Payee in good faith believes has been given by an
authorized representative of Maker.

 

Payee may assign to one or more banks or other entities all or any part of, or
may grant participations to one or more banks or other entities in or to all or
any part of, this Note or any Loan or Loans hereunder.

 

Maker shall pay on demand all costs and expenses (including reasonable
attorneys’ fees and the allocated costs of internal counsel) incurred by Payee
in connection with the enforcement or attempted enforcement of this Note.

 

Notwithstanding anything to the contrary contained herein, the interest paid or
agreed to be paid hereunder shall not exceed the maximum rate of non-usurious
interest permitted by applicable law (the “Maximum Lawful Rate”). If Payee shall
receive interest in an amount that exceeds the Maximum Rate, the excessive
interest shall be applied to the principal of this Note or, if it

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exceeds the unpaid principal, refunded to Maker. In determining whether the
interest contracted for, charged, or received by Payee exceeds the Maximum Rate,
Payee may, to the extent permitted by applicable law, (a) characterize any
payment that is not principal as an expense, fee, or premium rather than
interest, (b) exclude voluntary prepayments and the effects thereof, and (c)
amortize, prorate, allocate, and spread in equal or unequal parts the total
amount of interest throughout the stated term of this Note.

 

This Note shall be governed by and construed in accordance with the laws of the
State of Texas and the applicable laws of the United States of America. Maker
hereby submits to the jurisdiction of any Texas State or Federal court sitting
in the Northern District of Texas for the purposes of all legal proceedings
arising out of or relating to this Note. Maker irrevocably waives, to the
fullest extent permitted by law, any objection that it may now or hereafter have
to the laying of venue of any such proceeding brought in such a court and any
claim that any such proceeding brought in such a court has been brought in an
inconvenient forum. Maker and Payee by acceptance of this Note hereby
irrevocably waive any and all right to trial by jury in any legal proceeding
arising out of or relating to this Note.

 

This Note is unsecured. Maker hereby represents, warrants and covenants that the
proceeds of this Note will not be used for any purpose other than to terminate
and unwind certain oil and gas hedge transactions and to satisfy the obligations
of Maker (and/or its subsidiaries) in connection therewith.

 

THIS NOTE AND ANY OTHER DOCUMENTS EXECUTED IN CONNECTION HEREWITH REPRESENT THE
FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE
NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

 

PATINA OIL & GAS CORPORATION, a Delaware corporation By  

 

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    David J. Kornder, Executive Vice President and Chief Financial Officer