EXHIBIT 10.4
SUBORDINATED CREDIT AGREEMENT
Dated as of June 10, 2002
Between
VAALCO ENERGY, INC., as Borrower
And
1818 FUND II, L.P., as Lender
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TABLE OF CONTENTS
PAGE
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ARTICLE I. CREDIT TERMS................................................... 1
SECTION 1.01 LINE OF CREDIT LOAN...................................... 1
(a) Line of Credit Loan........................................... 1
(b) Repayment..................................................... 1
(c) Mandatory Prepayment.......................................... 1
SECTION 1.02 INTEREST/FEES............................................ 2
(a) Interest...................................................... 2
(b) Warrants...................................................... 2
(c) Additional Warrant............................................ 2
SECTION 1.03 PAYMENTS................................................. 2
SECTION 1.04 COLLATERAL............................................... 3
SECTION 1.05 SUBORDINATION OF DEBT.................................... 3
ARTICLE II. REPRESENTATIONS AND WARRANTIES................................ 4
SECTION 2.01 LEGAL STATUS............................................. 4
SECTION 2.02 CAPITALIZATION........................................... 4
SECTION 2.03 AUTHORIZATION AND VALIDITY............................... 5
SECTION 2.04 NO VIOLATION............................................. 5
SECTION 2.05 LITIGATION............................................... 6
SECTION 2.06 CORRECTNESS OF FINANCIAL STATEMENT....................... 6
SECTION 2.07 INCOME TAX RETURNS....................................... 6
SECTION 2.08 NO SUBORDINATION......................................... 6
SECTION 2.09 PERMITS, FRANCHISES...................................... 6
SECTION 2.10 ERISA.................................................... 6
SECTION 2.11 OTHER OBLIGATIONS........................................ 7
SECTION 2.12 ENVIRONMENTAL MATTERS.................................... 7
SECTION 2.13 NO CONSENT............................................... 7
SECTION 2.14 NO LIENS................................................. 7
SECTION 2.15 LAWS..................................................... 7
SECTION 2.16 JUDGMENTS................................................ 7
SECTION 2.17 INFORMATION.............................................. 8
SECTION 2.18 VGEI..................................................... 8
ARTICLE III. CONDITIONS................................................... 8
SECTION 3.01 CONDITIONS TO INITIAL LOAN............................... 8
(a) Approval Of Lender Counsel.................................... 8
(b) Documentation................................................. 8
(c) Lender Approval and Closing of Senior Loan.................... 8
(d) Financial Condition........................................... 8
(e) Insurance..................................................... 8
(f) Opinion of Investment Bank.................................... 8
(g) Opinion of Counsel............................................ 9
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SECTION 3.02 CONDITIONS OF ALL LOANS................................. 9
SECTION 3.03 BORROWER'S CERTIFICATION................................ 10
SECTION 3.04 CONDITIONS FOR LENDER'S BENEFIT......................... 10
ARTICLE IV. AFFIRMATIVE COVENANTS....................................... 10
SECTION 4.01 PUNCTUAL PAYMENTS....................................... 10
SECTION 4.02 ACCOUNTING RECORDS...................................... 10
SECTION 4.03 FINANCIAL STATEMENTS.................................... 10
(a) Annual Reports............................................... 10
(b) Quarterly Reports............................................ 11
(c) Audit Reports................................................ 11
(d) SEC and Other Reports........................................ 11
(e) VGEI Reports................................................. 11
(f) Other Information............................................ 11
SECTION 4.04 COMPLIANCE.............................................. 11
SECTION 4.05 INSURANCE............................................... 11
SECTION 4.06 FACILITIES.............................................. 12
SECTION 4.07 TAXES AND OTHER LIABILITIES............................. 12
SECTION 4.08 LITIGATION.............................................. 12
SECTION 4.09 NOTICE TO LENDER........................................ 12
SECTION 4.10 MAINTENANCE OF EXISTENCE................................ 12
ARTICLE V. NEGATIVE COVENANTS............................................ 12
SECTION 5.01 USE OF FUNDS............................................ 12
SECTION 5.02 OTHER INDEBTEDNESS...................................... 12
SECTION 5.03 MERGER, CONSOLIDATION, TRANSFER OF ASSETS............... 12
SECTION 5.04 LOANS, ADVANCES, INVESTMENTS............................ 13
SECTION 5.05 DIVIDENDS, DISTRIBUTIONS................................ 13
SECTION 5.06 PLEDGE OF ASSETS........................................ 13
SECTION 5.07 SALES AND LEASEBACKS.................................... 13
SECTION 5.08 NATURE OF BUSINESS...................................... 13
SECTION 5.09 TRANSACTIONS WITH AFFILIATES............................ 13
SECTION 5.10 FISCAL YEAR............................................. 13
SECTION 5.11 PROJECT................................................. 13
SECTION 5.12 VGEI PSC INTEREST....................................... 13
ARTICLE VI. EVENTS OF DEFAULT............................................ 13
SECTION 6.01 EVENTS OF DEFAULT....................................... 13
SECTION 6.02 REMEDIES................................................ 15
ARTICLE VII. MISCELLANEOUS............................................... 15
SECTION 7.01 NO WAIVER............................................... 15
SECTION 7.02 NOTICES................................................. 15
SECTION 7.03 COSTS, EXPENSES AND ATTORNEYS' FEES..................... 16
SECTION 7.04 ASSIGNMENTS............................................. 16
SECTION 7.05 AMENDMENT............................................... 17
SECTION 7.06 NO THIRD PARTY BENEFICIARIES............................ 17
SECTION 7.07 TIME.................................................... 17
SECTION 7.08 SEVERABILITY OF PROVISIONS.............................. 17
SECTION 7.09 COUNTERPARTS............................................ 17
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SECTION 7.10 FURTHER ASSURANCES...................................... 17
SECTION 7.11 GOVERNING LAW........................................... 17
SECTION 7.12 SAVINGS CLAUSE.......................................... 19
SECTION 7.13 RIGHT OF SETOFF; DEPOSIT ACCOUNTS....................... 19
SECTION 7.14 BUSINESS PURPOSE........................................ 20
SECTION 7.15 INDEMNIFICATION......................................... 20
SECTION 7.16 WAIVER OF JURY TRIAL.................................... 20
APPENDIX A
Defined Terms
EXHIBITS
A. Note
B. Warrants
C. Subordination Agreement
D. Assignment Agreement
SCHEDULES
I Security Documents
II Lender's Commitments
III Form of Borrower's Certificate
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SUBORDINATED CREDIT AGREEMENT
THIS SUBORDINATED CREDIT AGREEMENT (this "Agreement") is entered into as of
June 10, 2002, by and between VAALCO ENERGY, INC., a Delaware corporation
("Borrower"), and 1818 FUND II, L.P., a Delaware limited partnership, and such
other parties from time to time a Lender hereto (herein collectively "Lender").
RECITALS
WHEREAS, Vaalco Gabon (Etame), Inc. ("VGEI") and International Finance
Corporation ("IFC") entered into that certain Loan Agreement dated April 19,
2002 (the "IFC Loan Agreement"), for the purpose of financing the Project (all
capitalized terms not defined in the body of this Agreement are defined under
Appendix A hereto).
WHEREAS, as a condition precedent to funding under the IFC Loan Agreement,
IFC has required an escrow account (the "Sponsor Escrow Account") be established
pursuant to that certain Escrow Account Agreement between Borrower, IFC and
JPMorgan/Chase Bank, London Branch ("Escrow Account Bank") dated May 31, 2002
(the "Sponsor Escrow Agreement") in which Borrower shall maintain certain
required balances up to $10,000,000 as security for the obligations of Borrower
to IFC under the Guarantee Agreement dated on or about the date of the IFC Loan
Agreement between Borrower and IFC.
WHEREAS, Borrower has requested Lender extend it credit for the purpose of
funding the Sponsor Escrow Account and Lender has agreed to provide such credit
to Borrower on the terms and conditions contained herein.
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Lender and Borrower hereby agree as follows:
ARTICLE I.
CREDIT TERMS
SECTION 1.01 LINE OF CREDIT LOAN.
(a) Line of Credit Loan. Subject to the terms and conditions of this
Agreement until January 31, 2003, Lender hereby agrees to make one or more
loans (each such advance a "Loan" and collectively the "Loans") to Borrower
in an aggregate principal amount not to exceed Ten Million Dollars
($10,000,000) (the "Commitment"), the proceeds of which shall be funded
directly into and held in the Sponsor Escrow Account pursuant to the
Sponsor Escrow Agreement. Borrower's obligation to repay the Loans shall be
evidenced by a promissory note substantially in the form of Exhibit A
attached hereto (as same may be amended, renewed, assigned in whole or in
part, collectively, the "Note"), all terms of which are incorporated herein
by this reference. After the earlier of (i) Phase One Completion Date and
(ii) January 31, 2003, Lender shall have no obligation to make any
additional Loans to Borrower.
(b) Repayment. Principal and interest on the Loans shall be repaid in
accordance with the provisions of the Note, the terms of which are
incorporated herein by reference.
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(c) Mandatory Prepayment. Principal outstanding under the Loans is
subject to mandatory prepayment in accordance with provisions of the Note,
the terms of which are incorporated herein by reference.
SECTION 1.02 INTEREST/FEES.
(a) Interest. The outstanding principal balance of the Loans shall
bear interest at the rate of interest and on the dates set forth in the
Note and this Agreement.
(b) Warrants. Borrower shall sell and issue to Lender warrants to
purchase 15,000,000 shares of Borrower's Common Stock at $0.50 per share,
subject to adjustment pursuant to the terms thereof (the "Warrants") in the
forms attached hereto as Exhibits B-1 and B-2.
(c) Additional Warrant. If all principal, interest and other amounts
under the Loans and the Note have not been paid in full and Lender's
obligation to make Loans has not been terminated on or prior to the second
anniversary following the first funding hereunder, Borrower shall issue to
Lender a warrant ("Additional Warrant") to purchase a number of shares of
Borrower's Common Stock equal to 7,500,000 multiplied by a fraction, the
numerator of which shall be the principal amount of the Loans outstanding
on such second anniversary and the denominator of which shall be $10.0
million. The number of shares subject to such Additional Warrant shall be
subject to appropriate adjustment if any of the events described in
Sections 5.1, 5.2, 5.3, 5.5 and 5.9 of the Warrant attached as Exhibit B-1
occurs prior to such second anniversary. The exercise price of such
Additional Warrant shall be $0.10 per share. The Additional Warrant shall
expire seven years following the date of issuance. The Additional Warrant
shall be substantially identical to the Warrant attached as Exhibit B-1
(except that the antidilution adjustments will be appropriately modified so
as to adjust the number of shares only and the number of shares subject to
the Additional Warrant shall be reduced as set forth in Sections 5.1, 5.2,
5.3, 5.5 and 5.9 of the Warrant).
SECTION 1.03 PAYMENTS.
(a) Borrower shall make all payments of principal, interest, fees, and
any other amount due to Lender under the Loan Documents in Dollars, in same
day funds, to ▇▇▇▇▇ Brothers ▇▇▇▇▇▇▇▇ & Co., for credit to Lender's account
number 9201033231 at JPMorgan Chase & Co. (ABA #0210-00021), for further
credit to The 1818 Fund II, L.P. to account number ▇▇▇▇▇▇▇ (Reference:
VAALCO), or at such other bank or account in New York as Lender from time
to time designates. Payments must be received in Lender's designated
account no later than 1:00 p.m. New York time.
(b) The tender or payment of any amount payable under the Loan
Documents (whether or not by recovery under a judgment) in any currency
other than Dollars shall not novate, discharge or satisfy the obligation of
Borrower to pay in Dollars all amounts payable under the Loan Documents
except to the extent that (and as of the date when) Lender actually
receives funds in Dollars in the account specified in, or pursuant to,
Subsection 1.03(a).
(c) Borrower shall indemnify Lender against any losses resulting from
a payment being received or an order or judgment being given under the Loan
Documents in any currency other than Dollars or any place other than the
account specified in, or pursuant to, Subsection 1.03(a). Borrower shall,
as a separate obligation, pay such additional amount as is necessary to
enable Lender to receive, after conversion to Dollars at a market rate and
transfer to
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that account, the full amount due to Lender under the Loan Documents in
Dollars and in the account specified in, or pursuant to, Subsection
1.03(a).
(d) Notwithstanding the provisions of Subsection 1.03(a) and
Subsection 1.03(b), Lender may require Borrower to pay (or reimburse
Lender) for any Taxes and other amounts payable under Subsection 1.07(a) in
the currency in which they are payable, if other than Dollars.
SECTION 1.04 COLLATERAL.
(a) As security for the payment or performance, as applicable, of all
of Borrower's Obligations, Borrower has granted security interests to
Lender, and its successors and assigns pursuant to the security agreements
and other documents described on Schedule I hereto and any financing
statements filed in connection therewith or as Lender shall require, all in
form and substance satisfactory to Lender (collectively the "Security
Documents").
(b) Borrower hereby authorizes Lender to file one or more financing
statements, continuation statements, or other documents for the purpose of
perfecting, confirming, continuing, enforcing or protecting the security
interest granted pursuant to the Security Documents by Borrower naming
Borrower as debtor and Lender as secured party. Borrower shall reimburse
Lender immediately upon demand for all reasonable costs and expenses
incurred by Lender in connection with the Loan Documents or any of the
foregoing, including without limitation, filing and recording fees and
costs of appraisals, audits, title insurance, and attorneys' fees.
SECTION 1.05 SUBORDINATION OF DEBT. In connection with the Note, VGEI is
borrowing money from and incurring obligations to IFC (the "IFC Indebtedness").
The obligation of Borrower to repay the Note and other indebtedness under the
Loan Documents and the priority of liens created under the Security Documents
are subject to the terms of that certain Subordination Agreement, dated as of
even date herewith, by and between Borrower, IFC and Lender attached as Exhibit
C hereto (hereafter, the "Subordination Agreement").
SECTION 1.06. SUSPENSION OR CANCELLATION BY LENDER.
(a) Lender may, by notice to Borrower, suspend the right of Borrower
to borrow and/or cancel the undisbursed portion of the Commitment in whole
or in part:
(i) if the first Loan has not been made by September 30, 2002 or
such earlier date agreed to by VGEI and IFC under the IFC Loan
Agreement;
(ii) if any Event of Default has occurred and is continuing;
(iii) if any event or condition has occurred and is continuing
which has or can reasonably be expected to have a material
adverse effect;
(iv) on or after December 31, 2003; or
(v) the Phase One Completion Date.
(b) Upon the giving of any such notice, the right of Borrower to any
further Loans shall be suspended or canceled, as the case may be. The
exercise by Lender of its right of
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suspension shall not preclude Lender from exercising its right of
cancellation, either for the same or any other reason specified in Section
1.06. Upon any cancellation, Borrower shall, subject to Subsection 1.06(d),
pay to Lender all fees and other amounts accrued (whether or not then due
and payable) under this Agreement up to the date of that cancellation. A
suspension shall not limit any other provision of this Agreement.
(c) Any portion of the Commitment that is canceled under this Section
1.06 may not be reborrowed.
(d) In the case of a partial cancellation of the Commitment pursuant
to Subsection 1.06(a), interest on the amount then outstanding of the Loans
remains payable as provided in Subsection 1.02(a).
SECTION 1.07 TAXES.
(a) Borrower shall pay or cause to be paid all Taxes other than taxes,
if any, payable on the overall income of Lender on or in connection with
the payment of any and all amounts due under this Agreement that are now or
in the future levied or imposed by any Authority of Gabon, the United
States of America, or the United Kingdom or by any organization of which
Gabon, the United States of America or the United Kingdom is a member or
any jurisdiction through or out of which a payment is made.
(b) All payments of principal, interest, fees and other amounts due
under this Agreement shall be made without deduction for or on account of
any Taxes.
(c) If Borrower is prevented by operation of law or otherwise from
making or causing to be made those payments without deduction, the
principal or (as the case may be) interest, fees or other amounts due under
this Agreement shall be increased to such amount as may be necessary so
that Lender receives the full amount it would have received (taking into
account any Taxes payable on amounts payable by Borrower under this
subsection) had those payments been made without that deduction.
(d) If Section 1.07 applies and Lender so requests, Borrower shall
deliver to Lender official tax receipts evidencing payment (or certified
copies of them) within thirty (30) days of the date of that request.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES
Borrower makes the following representations and warranties to Lender,
which representations and warranties shall survive the execution of this
Agreement and shall continue in full force and effect until the full and final
payment, and satisfaction and discharge, of all obligations of Borrower to
Lender subject to this Agreement.
SECTION 2.01 LEGAL STATUS. Borrower and VGEI are each corporations, duly
organized and existing and in good standing under the laws of the State of
Delaware and are qualified or licensed to do business (and are in good standing
as a foreign corporation, if applicable) in all jurisdictions in which such
qualification or licensing is required or in which the failure to so qualify or
to be so licensed could have a material adverse effect on Borrower or VGEI.
SECTION 2.02 CAPITALIZATION.
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(a) The authorized capital stock of Borrower consists solely of
100,000,000 shares of common stock, par value $.10 per share ("Common
Stock") and 500,000 shares of preferred stock, par value $25.00 per share
("Preferred Stock"). As of the date hereof: (i) 20,744,569 shares of Common
Stock were issued and outstanding, (ii) 10,000 shares of Series A Preferred
Stock ("Series A Preferred Stock") were issued and outstanding, (iii)
3,495,325 shares of Common Stock were reserved for issuance upon exercise
of outstanding options, warrants (excluding the Warrants) and other rights
to acquire Common Stock, (iv) 15,000,000 shares of Common Stock were
reserved for issuance upon exercise of the Warrants, (v) 5,395 shares of
Common Stock were held by the Company in its treasury, and (vi) 27,500,000
shares of Common Stock were reserved for issuance upon conversion of the
Series A Preferred Stock. The Warrants and the Additional Warrants are duly
authorized, and when issued to Lender after payment therefor, will be
validly issued and will be free and clear of all liens. The shares of
Common Stock issuable upon exercise of the Warrants and the Additional
Warrants, when issued in compliance with the terms thereof, will be validly
issued, fully paid and nonassessable and not subject to any preemptive
rights. Except as set forth above, as of the date hereof, no shares of
capital stock or other equity securities of Borrower were issued, reserved
for issuance or outstanding, and there are no other options, warrants or
other rights presently outstanding to purchase or otherwise acquire (i) any
authorized but unissued, unauthorized or treasury shares of the Borrower's
capital stock, or (ii) any security which by its terms is convertible or
exercisable for shares of Borrower's capital stock, and there are no
commitments to issue any of the foregoing. All outstanding shares of Common
Stock and Preferred Stock of Borrower are duly authorized, validly issued,
fully paid and nonassessable and not subject to preemptive rights.
(b) The authorized capital stock of VGEI consists solely of 1,000
shares of common stock, par value $10.00 per share ("VGEI Common Stock").
As of the date hereof 1,000 shares of VGEI Common Stock were issued and
outstanding. As of the date hereof all of the capital stock of VGEI was
owned by Borrower and no shares of capital stock or other equity securities
of VGEI were issued, reserved for issuance or outstanding, and there are no
other options, warrants or other rights presently outstanding to purchase
or otherwise acquire (i) any authorized but unissued, unauthorized or
treasury shares of VGEI's capital stock, or (ii) any security which by its
terms is convertible or exercisable for shares of VGEI's capital stock, and
there are no commitments to issue any of the foregoing. All outstanding
shares of VGEI Common Stock are duly authorized, validly issued, fully paid
and nonassessable and not subject to preemptive rights.
SECTION 2.03 AUTHORIZATION AND VALIDITY.
(a) This Agreement, the Note, the Security Documents, the Warrants,
the Additional Warrants and each contract, instrument and other document
required hereby or at any time hereafter delivered to Lender in connection
herewith (collectively, the "Loan Documents") have been duly authorized,
and upon their execution and delivery in accordance with the provisions
hereof will constitute legal, valid and binding agreements and obligations
of Borrower, enforceable in accordance with their respective terms.
(b) The IFC Loan Agreement, and the other Transaction Documents
contemplated by the IFC Loan Agreement, have been duly authorized, and upon
their execution and delivery in accordance with the provisions of the IFC
Loan Agreement will constitute legal, valid and binding agreements and
obligations of VGEI or Borrower, as the case may be, enforceable in
accordance with their respective terms.
SECTION 2.04 NO VIOLATION.
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(a) The execution, delivery and performance by Borrower of each of the
Loan Documents do not violate any provision of any law or regulation, or
contravene any provision of the Articles of Incorporation or By-Laws of
Borrower, or result in any breach of or default under any contract,
obligation, indenture or other instrument to which Borrower is a party or
by which Borrower may be bound.
(b) The execution, delivery and performance by VGEI or Borrower, as
the case may be, of the IFC Loan Agreement and each of the Transaction
Documents do not violate any provision of any law or regulation, or
contravene any provision of the Articles of Incorporation or By-Laws of
VGEI, or result in any breach of or default under any contract, obligation,
indenture or other instrument to which VGEI is a party or by which VGEI may
be bound.
SECTION 2.05 LITIGATION. There are no pending, or to the best of Borrower's
knowledge threatened, actions, claims, investigations, suits or proceedings by
or before any governmental authority, arbitrator, court or administrative agency
which could have a material adverse effect on the financial condition or
operation of Borrower or VGEI other than those disclosed by Borrower to Lender
in writing prior to the date hereof.
SECTION 2.06 CORRECTNESS OF FINANCIAL STATEMENT. The quarterly consolidated
and consolidating balance sheet dated December 31, 2001, prepared by Borrower's
chief financial officer (a) are complete and correct and present fairly the
consolidated financial condition of Borrower, (b) disclose all liabilities of
Borrower and its Subsidiaries that are required to be reflected or reserved
against under U.S. generally accepted accounting principles, whether liquidated
or unliquidated, fixed or contingent, and (c) were prepared in accordance with
U.S. generally accepted accounting principles consistently applied. Since the
date of such quarterly financial statement there has been no material adverse
change in the consolidated financial condition of Borrower, nor has Borrower or
any of its Subsidiaries mortgaged, pledged, granted a security interest in or
otherwise encumbered any of its assets or properties except in favor of Lender
or IFC or as otherwise permitted by Lender in writing.
SECTION 2.07 INCOME TAX RETURNS. All tax returns and reports of Borrower
and its Subsidiaries required by law to be filed have been duly filed and all
taxes, obligations, fees and other governmental charges upon Borrower and its
Subsidiaries, or their properties, or their income or assets, which are due and
payable or to be withheld, have been paid or withheld, other than those
currently payable without penalty or interest.
SECTION 2.08 NO SUBORDINATION. There is no agreement, indenture, contract
or instrument to which Borrower or any of its Subsidiaries is a party or by
which Borrower or any of its Subsidiaries may be bound that requires the
subordination in right of payment of any of Borrower's obligations subject to
this Agreement to any other obligation of Borrower except as provided in the
Subordination Agreement.
SECTION 2.09 PERMITS, FRANCHISES. Each of Borrower and its Subsidiaries
possess, and will hereafter possess, all permits, consents, approvals,
franchises and licenses required and rights to all trademarks, trade names,
patents, and fictitious names, if any, necessary to enable it to conduct the
business in which it is now engaged in compliance with applicable law.
SECTION 2.10 ERISA. Each of Borrower and its Subsidiaries is in compliance
in all material respects with all applicable provisions of the Employee
Retirement Income Security Act of 1974, as amended or recodified from time to
time ("ERISA"); Neither Borrower nor any of its Subsidiaries has violated any
provision of any defined employee pension benefit plan (as defined in ERISA)
maintained or contributed to by Borrower or its Subsidiaries (each, a "Plan");
no Reportable Event as defined in ERISA
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has occurred and is continuing with respect to any Plan initiated by Borrower or
its Subsidiaries; each of Borrower and its Subsidiaries has met its minimum
funding requirements under ERISA with respect to each Plan; and each Plan will
be able to fulfill its benefit obligations as they come due in accordance with
the Plan documents and under U.S. generally accepted accounting principles.
SECTION 2.11 OTHER OBLIGATIONS. Neither Borrower nor any of its
Subsidiaries is in default on any obligation for borrowed money, any purchase
money obligation or any other material lease, commitment, contract, instrument
or obligation.
SECTION 2.12 ENVIRONMENTAL MATTERS. Except as disclosed by Borrower to
Lender in writing prior to the date hereof, Borrower and each of its
Subsidiaries is in compliance with all applicable federal or state
environmental, hazardous waste, health and safety statutes, and any rules or
regulations adopted pursuant thereto, which govern or affect any of Borrower's
or its Subsidiaries' operations and/or properties, including without limitation,
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, the Superfund Amendments and Reauthorization Act of 1986, the Federal
Resource Conservation and Recovery Act of 1976, and the Federal Toxic Substances
Control Act, as any of the same may be amended, modified or supplemented from
time to time. None of the operations of Borrower or its Subsidiaries is the
subject of any federal or state investigation evaluating whether any remedial
action involving a material expenditure is needed to respond to a release of any
toxic or hazardous waste or substance into the environment. Neither Borrower nor
any of its Subsidiaries has a material contingent liability in connection with
any release of any toxic or hazardous waste or substance into the environment.
SECTION 2.13 NO CONSENT.
(a) Borrower's execution, delivery and performance of each of the Loan
Documents, including this Agreement, to which Borrower is a party do not
require the consent or approval of any other person or entity which has not
been obtained, including, without limitation, any regulatory authority or
governmental body of the United States of America or any state thereof or
any political subdivision of the United States of America or any state
thereof.
(b) VGEI's or Borrower's, as the case may be, execution, delivery and
performance of the IFC Loan Agreement and each of the Transaction
Documents, to which VGEI or Borrower, as the case may be, is a party do not
require the consent or approval of any other person or entity which has not
been obtained, including, without limitation, any regulatory authority or
governmental body of the United States of America or any state thereof or
any political subdivision of the United States of America or any state
thereof.
SECTION 2.14 NO LIENS. Neither Borrower nor any of its Subsidiaries has any
outstanding lien on any of its assets other than liens under the IFC Loan
Agreement in favor of IFC and otherwise as arising by operation of law, and no
contract or arrangements, conditional or unconditional, exist for the creation
by Borrower or any of its Subsidiaries of any lien, except for liens in favor of
IFC pursuant to the IFC Loan Agreement and Lender pursuant to the Loan
Documents.
SECTION 2.15 LAWS. To the best of Borrower's knowledge and belief after due
inquiry, neither Borrower nor any of its Subsidiaries is in violation of any
statute or regulation of any governmental authority.
SECTION 2.16 JUDGMENTS. No judgment or order has been issued which has or
may reasonably be expected to have a material adverse effect on the financial
conditions or operations of Borrower or any of its Subsidiaries.
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SECTION 2.17 INFORMATION. All information regarding Borrower and its
Subsidiaries furnished to Lender prior to or contemporaneously herewith, by or
on behalf of Borrower, was and continues to be true and accurate and does not
contain any information that is misleading in any material respect nor does it
omit any information the omission of which makes the information contained in it
misleading in any material respect, and none of the representations and
warranties in this Article II omits any matter the omission of which makes any
of such representations and warranties misleading.
SECTION 2.18 VGEI. The representations and warranties made by VGEI in
Section 4.01 of the IFC Loan Agreement are true and correct in all material
respects (except for any such representations and warranties which are qualified
by their terms by a reference to materiality or material adverse affect, which
representation as so qualified shall be true and correct in all respects).
ARTICLE III.
CONDITIONS
SECTION 3.01 CONDITIONS TO INITIAL LOAN. The obligation of Lender to make
the initial Loan under Section 1.01(a) is subject to the fulfillment to Lender's
satisfaction of all of the following conditions:
(a) Approval Of Lender Counsel. All legal matters incidental to the
extension of credit by Lender shall be satisfactory to Lender's counsel.
(b) Documentation. Lender shall have received, in form and substance
satisfactory to Lender, such documents as Lender may require including,
without limitation, this Agreement, the Note, the Warrants and each of the
documents described on Schedule I attached hereto.
(c) Lender Approval and Closing of Senior Loan. The IFC Loan
Agreement, the Transaction Documents and other related documents (the "IFC
Loan Documents") shall be satisfactory to Lender in its sole discretion,
all conditions precedent under the IFC Loan Documents will following the
occurrence of funding hereunder, be satisfied (and not waived except with
Lender's consent), and all such agreements shall close and fund within
three (3) Business Days following Closing and funding hereunder. Borrower
will deliver to Lender all documents delivered to IFC upon closing of the
IFC Loan Agreement that Lender specifically requests Borrower to deliver to
Lender.
(d) Financial Condition. There shall have been no material adverse
change, as determined by Lender, in the financial condition or business of
Borrower and its Subsidiaries, nor any material decline, as determined by
Lender, in the market value of any collateral required hereunder or a
substantial or material portion of the assets of Borrower and its
Subsidiaries.
(e) Insurance. Borrower shall have delivered to Lender evidence of
insurance coverage on all Borrower's and its Subsidiaries' property, in
form, substance, amounts, covering risks and issued by companies
satisfactory to Lender, including without limitation, policies of fire and
extended coverage insurance covering all real property collateral required
hereby, and such policies of insurance against specific hazards affecting
any such real property as may be required by governmental regulation.
(f) Opinion of Investment Bank. An opinion of an investment bank or
financial advisor acceptable to Lender that the terms of this Agreement and
the other Loan Documents are fair to Borrower from a financial point of
view.
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1818 Fund Loan Agreement
(g) Opinion of Counsel. An opinion of Borrower's counsel, addressed to
Lender in form and substance satisfactory to Lender's counsel and opinion
of Borrower's U.K. counsel, addressed to Lender, in form and substance
satisfactory to Lender's counsel, regarding the validity and enforceability
of the Charge Over Deposit Agreement.
SECTION 3.02 CONDITIONS OF ALL LOANS. The obligation of Lender to make any
Loan, including the initial Loan, on any date is also subject to the conditions
that:
(a) no Event of Default has occurred and is continuing;
(b) no event of default pursuant to Section 7.02 of the IFC Loan
Agreement ("IFC Events of Default") and no event or circumstance which
would, with notice, lapse of time, the making of a determination or any
combination thereof, become an event of default pursuant to Section 7.02 of
the IFC Loan Agreement ("IFC Potential Events of Default") has occurred and
is continuing;
(c) the proceeds of such requested Loan shall, at such date, be used
by Borrower for the sole purpose of funding the Sponsor Escrow Account as a
condition precedent to a funding in the same amount by IFC to VGEI under
the IFC Loan Agreement within three (3) Business Days thereof;
(d) since the date of this Agreement, no event has occurred which (i)
has and is continuing to have or (ii) can reasonably be expected to have a
material adverse effect on Borrower and its Subsidiaries taken as a whole;
(e) since December 31, 2001, Borrower and its Subsidiaries have not
incurred any material loss or liability (except such liabilities as may be
incurred in accordance with Article V );
(f) the representations and warranties made in Article II are true and
correct in all material respects (except for any such representations and
warranties which are qualified by their terms by a reference to materiality
or material adverse affect, which representation as so qualified shall be
true and correct in all respects) on and as of such date with the same
effect as if those representations and warranties had been made on and as
of such date;
(g) after giving effect to such Loan, neither Borrower nor its
Subsidiaries would be in violation of:
(i) its articles of incorporation and bylaws and/or such other
constitutive documents, however so called;
(ii) any provision contained in any document to which Borrower
or any of its Subsidiaries is a party (including this
Agreement) or by which Borrower or any of its Subsidiaries
is bound; or
(iii) any law, rule, regulation, authorization or agreement or
other document binding on Borrower or any of its
Subsidiaries directly or indirectly limiting or otherwise
restricting Borrower's or any of its Subsidiary's borrowing
power or authority or its ability to borrow;
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1818 Fund Loan Agreement
(h) on and as of such date, Borrower's Long-term Debt to Equity Ratio
does not exceed 70:30; and
(i) the undisbursed portion of funds available to VGEI under the IFC
Loan Agreement are sufficient to finance VGEI's share of costs projected to
be incurred up through the Phase One Completion Date.
SECTION 3.03 BORROWER'S CERTIFICATION. Lender shall not be obligated to
make any Loan until Borrower shall have delivered to Lender with respect to each
request for a Loan:
(a) certifications, in the form included in Schedule III signed by an
executive officer of Borrower, certifying the conditions specified in
Section 3.02 expressed to be effective as of such date; and
(b) such evidence as Lender may reasonably request of the proposed
utilization of the proceeds of the Loan or the utilization of the proceeds
of the corresponding loan to VGEI under the IFC Loan Agreement.
SECTION 3.04 CONDITIONS FOR LENDER'S BENEFIT. The conditions in Section
3.01 through Section 3.03 are for the benefit of Lender and may be waived only
by Lender in its sole discretion.
ARTICLE IV.
AFFIRMATIVE COVENANTS
Borrower covenants that so long as any liabilities (whether direct or
contingent, liquidated or unliquidated) of Borrower to Lender under any of the
Loan Documents remain outstanding, and until payment in full of all obligations
of Borrower subject hereto, Borrower shall (and shall cause its Subsidiaries, if
applicable), unless Lender otherwise consents in writing.
SECTION 4.01 PUNCTUAL PAYMENTS. Punctually pay all principal, interest,
fees or other liabilities due under any of the Loan Documents at the times and
place and in the manner specified therein.
SECTION 4.02 ACCOUNTING RECORDS. Maintain adequate books and records in
accordance with U.S. generally accepted accounting principles consistently
applied, and permit any representative of Lender, at any reasonable time, to
inspect, audit and examine such books and records, to make copies of the same,
and to inspect the properties of Borrower and its Subsidiaries.
SECTION 4.03 FINANCIAL STATEMENTS. Borrower will promptly furnish to Lender
from time to time upon request such information regarding the business and
affairs and financial condition of Borrower and its Subsidiaries as Lender may
reasonably request, and will furnish to Lender:
(a) Annual Reports - promptly after becoming available and in any
event within 90 days after the close of each fiscal year of Borrower, the
audited consolidated and unaudited consolidating balance sheets of Borrower
and its Subsidiaries as at the end of such year, the audited consolidated
and unaudited consolidating statements of profit and loss of Borrower and
its Subsidiaries for such year and the audited consolidated and unaudited
consolidating statements of reconciliation of capital accounts of Borrower
and its Subsidiaries for such year, setting forth in each case for fiscal
years ending after September 30, 2001, in comparative form the
corresponding figures for the preceding fiscal year, accompanied by the
related report of
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1818 Fund Loan Agreement
independent public accountants acceptable to Lender which report shall be
to the effect that such statements have been prepared in accordance with
U.S. generally accepted accounting principles consistently followed
throughout the period indicated except for such changes in such principles
with which the independent public accountants shall have concurred, showing
the calculations confirming Borrower's compliance with all financial
covenants; and
(b) Quarterly Reports - promptly after becoming available and in any
event within 45 days after the end of each of the first three quarterly
periods in each fiscal year of Borrower, the consolidated and consolidating
balance sheets of Borrower and its Subsidiaries as at the end of such
period, the consolidated and consolidating statements of profit and loss of
Borrower and its Subsidiaries for such quarter and for the period from the
beginning of the fiscal year to the close of such quarter, and the
consolidated and consolidating statement of reconciliation of capital
accounts of Borrower and its Subsidiaries for such quarter and for the
period from the beginning of the fiscal year to the close of such quarter,
setting forth in each case for fiscal years ending after September 30,
2001, in comparative form the corresponding figures for the corresponding
period of the preceding fiscal year, certified by the principal financial
officer of Borrower to have been prepared in accordance with U.S. generally
accepted accounting principles consistently followed throughout the period
indicated except to the extent stated therein, subject to normal changes
resulting from year-end adjustment;
(c) Audit Reports - promptly upon receipt thereof, one copy of each
other report submitted to Borrower or any Subsidiary by independent
accountants in connection with any annual, interim or special audit made by
them of the books of Borrower or any Subsidiary;
(d) SEC and Other Reports - promptly upon their becoming available,
one copy of each financial statement, report, notice or proxy statement
sent by Borrower to stockholders generally, and of each regular or periodic
report and any registration statement, prospectus or written communication
(other than transmittal letters) in respect thereof filed by Borrower with
or received by Borrower in connection therewith from any securities
exchange or the Securities and Exchange Commission or any successor agency;
(e) VGEI Reports - to the extent requested by Lender, all reports,
documents or other materials required to be delivered or otherwise
delivered to IFC pursuant to Section 6.03 of the IFC Loan Agreement.
(f) Other Information - from time to time such other information as
Lender may reasonably request.
SECTION 4.04 COMPLIANCE. Preserve and maintain all licenses, permits,
governmental approvals, rights, privileges and franchises necessary for the
conduct of its business and the business of its Subsidiaries; and comply with
the provisions of all documents pursuant to which Borrower and its Subsidiaries
organized and/or which govern Borrower's and its Subsidiaries' continued
existence and with the requirements of all laws, rules, regulations and orders
of any governmental authority applicable to Borrower, its Subsidiaries and/or
their business.
SECTION 4.05 INSURANCE. Maintain and keep in force insurance of the types
and in amounts customarily carried in lines of business similar to that of
Borrower, including but not limited to fire, extended coverage, public
liability, flood, property damage and workers' compensation, with all such
insurance carried with companies and in amounts satisfactory to Lender, and
deliver to Lender from time to time, at Lender's request, schedules setting
forth all insurance then in effect.
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1818 Fund Loan Agreement
SECTION 4.06 FACILITIES. Keep all properties useful or necessary to
Borrower's and its Subsidiaries' business in good repair and condition, and from
time to time make necessary repairs, renewals and replacements thereto so that
such properties shall be fully and efficiently preserved and maintained.
SECTION 4.07 TAXES AND OTHER LIABILITIES. Pay and discharge when due any
and all indebtedness, obligations, assessments and taxes, both real or personal,
including without limitation federal and state income taxes and state and local
property taxes and assessments, except such (a) as Borrower or any Subsidiary
may in good faith contest or as to which a bona fide dispute may arise, and (b)
for which Borrower or any Subsidiary has made provision, to Lender's
satisfaction, for eventual payment thereof in the event Borrower or any
Subsidiary is obligated to make such payment.
SECTION 4.08 LITIGATION. Promptly give notice in writing to Lender of all
litigation pending or threatened against Borrower or any Subsidiary with claims
in excess of $10,000.00 in the aggregate.
SECTION 4.09 NOTICE TO LENDER. Promptly give written notice to Lender in
reasonable detail of: (a) the occurrence of any Event of Default of which
Borrower is aware along with written notices or correspondence regarding same,
or any condition, event or act which with the giving of notice or the passage of
time or both would constitute an Event of Default; (b) any IFC Events of Default
or IFC Potential Events of Default along with written notices or correspondence
regarding same; (c) any change in the name or the organizational structure of
Borrower; and (d) the occurrence and nature of any Reportable Event or
Prohibited Transaction, each as defined in ERISA, or any funding deficiency with
respect to any Plan.
SECTION 4.10 MAINTENANCE OF EXISTENCE. Each of Borrower and its
Subsidiaries shall preserve and maintain in full force and effect their legal
existence, and maintain their good standing under the laws of their state or
jurisdiction of formation.
ARTICLE V.
NEGATIVE COVENANTS
Borrower further covenants that so long as Lender remains committed to
extend credit to Borrower pursuant hereto, or any liabilities (whether direct or
contingent, liquidated or unliquidated) of Borrower to Lender under any of the
Loan Documents remain outstanding, and until payment in full of all obligations
of Borrower subject hereto, Borrower will not (and shall cause its Subsidiaries
not to, if applicable) without Lender's prior written consent:
SECTION 5.01 USE OF FUNDS. Use the proceeds of Loans for purposes other
than to fund the Sponsor Escrow Account pursuant to the IFC Loan Agreement.
SECTION 5.02 OTHER INDEBTEDNESS. Create, incur, assume or permit to exist
any Debt with respect to Borrower and its Subsidiaries except (a) the
liabilities of Borrower to Lender, (b) any other liabilities of Borrower and its
Subsidiaries existing as of, and described in the Subordination Agreement, and
(c) other Long Term Debt, provided that Borrower's Long Term Debt to Equity
Ratio shall not exceed 70:30.
SECTION 5.03 MERGER, CONSOLIDATION, TRANSFER OF ASSETS. Merge into or
consolidate with any other entity; make any substantial change in the nature of
Borrower's or any Subsidiary's business as conducted as of the date hereof;
acquire all or substantially all of the assets of
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1818 Fund Loan Agreement
any other entity; nor sell, lease, transfer or otherwise dispose of all or a
substantial or material portion of Borrower's or any Subsidiary's assets except
in the ordinary course of its business.
SECTION 5.04 LOANS, ADVANCES, INVESTMENTS. Make any loans or advances to or
investments in any person or entity, except any of the foregoing to VGEI and to
the extent existing as of, and disclosed to Lender prior to, the date hereof.
SECTION 5.05 DIVIDENDS, DISTRIBUTIONS. Declare or pay any dividend or
distribution either in cash, stock or any other property on Borrower's or any
Subsidiary's (other than wholly-owned Subsidiaries) stock now or hereafter
outstanding, nor redeem, retire, repurchase or otherwise acquire any shares of
any class of Borrower's or any Subsidiary's (other than wholly-owned
Subsidiaries) stock now or hereafter outstanding except as provided in the
Warrants.
SECTION 5.06 PLEDGE OF ASSETS. Mortgage, pledge, grant or permit to exist a
security interest in, or lien upon, all or any portion of Borrower's or any
Subsidiary's assets now owned or hereafter acquired, except any of the foregoing
in favor of Lender or which is existing as of the date of, and described under,
the Subordination Agreement.
SECTION 5.07 SALES AND LEASEBACKS. Enter into any arrangement, directly or
indirectly, with any person whereby Borrower or any Subsidiary shall sell or
transfer any of its property, whether now owned or hereafter acquired, and
whereby Borrower or any Subsidiary shall then or thereafter rent or lease as
lessee such property or any part thereof or other property which Borrower or any
Subsidiary intends to use for substantially the same purpose or purposes as the
property is sold or transferred.
SECTION 5.08 NATURE OF BUSINESS. Allow any material change to be made in
the character of Borrower's or any Subsidiary's business as conducted on the
date of this Agreement.
SECTION 5.09 TRANSACTIONS WITH AFFILIATES. Enter into any transaction,
including without limitation, any purchase, sale, lease or exchange of property
or the rendering of any service, with any affiliate of Borrower or any of its
Subsidiaries unless such transactions are in the ordinary course of its business
and are upon fair and reasonable terms no less favorable to Borrower or its
Subsidiary than Borrower or its Subsidiary would obtain in a comparable
arm's-length transaction with a person not an affiliate.
SECTION 5.10 FISCAL YEAR. Change the fiscal accounting year of Borrower or
its Subsidiaries from a calendar year commencing each year on January 1 and
ending on the following December 31.
SECTION 5.11 PROJECT. Permit VGEI to change in any material way the nature
or scope of the Project or change the nature of its present or contemplated
business or operations.
SECTION 5.12 VGEI PSC INTEREST. Permit VGEI to reduce its working interest
under the PSC below 30.35% during the exploration phase and below 28.07% during
the production phase.
ARTICLE VI.
EVENTS OF DEFAULT
SECTION 6.01 EVENTS OF DEFAULT. The occurrence of any of the following
shall constitute an "Event of Default" under this Agreement:
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1818 Fund Loan Agreement
(a) Borrower shall fail to pay when due any principal, interest, fees
or other amounts payable under any of the Loan Documents.
(b) Any default in the performance of or compliance with any
obligation, agreement or other provision contained herein or in any other
Loan Document (other than those referred to in subsections 6.01(a)), and
with respect to any such default which by its nature can be cured, such
default shall continue for a period of thirty (30) days from its
occurrence.
(c) Borrower or any of its Subsidiaries fails to pay any of its Debt
(other than as provided under 6.01 (a)) or to perform any of its
obligations under any agreement pursuant to which there is outstanding any
Debt, and any such failure continues for more than any applicable period of
grace or any such Debt becomes prematurely due and payable or is placed on
demand, provided such non-payment or non-performance will not be an Event
of Default if (i) such non-payment or non-performance relates to a Debt not
exceeding one hundred fifty thousand Dollars ($150,000) and (ii) is being
contested by Borrower or such Subsidiary in good faith in a court of
competent jurisdiction for reasons other than its inability to make due and
punctual payment and for which Borrower or such Subsidiary has set aside
adequate reserves.
(d) Any of the representations and warranties of Borrower made herein
or in any other Loan Document or that is contained in any certificate,
document or financial or other statement furnished by it at any time under
or in connection with this Agreement or any such other Loan Document shall
prove to have been inaccurate, false or misleading in any material respect
on or as of the date made.
(e) The filing of a notice of judgment lien against Borrower or any of
its Subsidiaries; or the recording of any abstract of judgment against
Borrower or any of its Subsidiaries in any county in which Borrower has an
interest in real property; or the service of a notice of levy and/or of a
writ of attachment or execution, or other like process, against the assets
of Borrower or any of its Subsidiaries; or the entry of a judgment against
Borrower or any of its Subsidiaries. Notwithstanding the foregoing, there
shall not be an Event of Default upon the filing of notices of judgment
lien, the recording of abstracts of judgment, or the entries of judgment
against Borrower or any of its Subsidiaries if the aggregate amount of all
such judgments not covered by insurance is less than $1,000,000 and such
judgments are released within sixty (60) days of the filing, recording or
entry of such judgment.
(f) Borrower or any of its Subsidiaries shall become insolvent, or
shall suffer or consent to or apply for the appointment of a receiver,
trustee, custodian or liquidator of itself or any of its property, or shall
generally fail to pay its debts as they become due, or shall make a general
assignment for the benefit of creditors; Borrower or any of its
Subsidiaries shall file a voluntary petition in bankruptcy, or seeking
reorganization, in order to effect a plan or other arrangement with
creditors or any other relief under the Bankruptcy Reform Act, Title 11 of
the United States Code, as amended or recodified from time to time
("Bankruptcy Code"), or under any state or federal law granting relief to
debtors, whether now or hereafter in effect; or any involuntary petition or
proceeding pursuant to the Bankruptcy Code or any other applicable state or
federal law relating to bankruptcy, reorganization or other relief for
debtors is filed or commenced against Borrower or any of its Subsidiaries,
or Borrower or any of its Subsidiaries shall file an answer admitting the
jurisdiction of the court and the material allegations of any involuntary
petition; or Borrower or any of its Subsidiaries shall be adjudicated a
bankrupt, or an order for relief shall be entered against Borrower or any
of its Subsidiaries by any court of competent jurisdiction under the
Bankruptcy Code or any other applicable state or federal law relating to
bankruptcy, reorganization or other relief for debtors.
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1818 Fund Loan Agreement
(g) The dissolution or liquidation of Borrower or any Subsidiary, or
any of its directors or stockholders respectively, shall take action
seeking to effect the dissolution or liquidation of Borrower or any
Subsidiary.
(h) Any IFC Event of Default.
SECTION 6.02 REMEDIES. Upon (a) the occurrence of any Event of Default
under subsection 6.01(f) above, all indebtedness including principal and accrued
and unpaid interest outstanding under each of the Loan Documents shall become
automatically due and payable and (b) upon the occurrence of any other Event of
Default, all indebtedness including all principal and accrued and unpaid
interest outstanding under each of the Loan Documents, any term thereof to the
contrary notwithstanding, shall at Lender's option and without notice become
immediately due and payable; in each case without presentment, demand, or any
notices of any kind, including without limitation notice of nonperformance,
notice of protest, protest, notice of dishonor, notice of intention to
accelerate or notice of acceleration, all of which are hereby expressly waived
by Borrower. Upon acceleration of the indebtedness, Lender shall have all
rights, powers and remedies available under each of the Loan Documents, and
accorded by law, including without limitation the right to resort to any or all
security for any credit subject hereto and to exercise any or all of the rights
of a beneficiary or secured party pursuant to applicable law. All rights, powers
and remedies of Lender may be exercised at any time by Lender and from time to
time after the occurrence of an Event of Default, are cumulative and not
exclusive, and shall be in addition to any other rights, powers or remedies
provided by law or equity.
ARTICLE VII.
MISCELLANEOUS
SECTION 7.01 NO WAIVER. No delay, failure or discontinuance of Lender in
exercising any right, power or remedy under any of the Loan Documents shall
affect or operate as a waiver of such right, power or remedy; nor shall any
single or partial exercise of any such right, power or remedy preclude, waive or
otherwise affect any other or further exercise thereof or the exercise of any
other right, power or remedy. Any waiver, permit, consent or approval of any
kind by Lender of any breach of or default under any of the Loan Documents must
be in writing and shall be effective only to the extent set forth in such
writing.
SECTION 7.02 NOTICES. All notices, requests and demands which any party is
required or may desire to give to any other party under any provision of this
Agreement must be in writing delivered to each party at the following address:
BORROWER: VAALCO ENERGY, INC.
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
LENDER: 1818 FUND II, L.P.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇
15
1818 Fund Loan Agreement
or to such other address as any party may designate by written notice to all
other parties. Each such notice, request and demand shall be deemed given or
made as follows: (a) if sent by hand delivery, upon delivery; (b) if sent by
mail, upon the earlier of the date of receipt or three (3) days after deposit in
the U.S. mail, first class and postage prepaid; and (c) if sent by telecopy,
upon receipt.
SECTION 7.03 COSTS, EXPENSES AND ATTORNEYS' FEES. Borrower shall pay to
Lender immediately upon demand the full amount of all payments, advances,
charges, costs and expenses, including reasonable attorneys' fees (to include
outside counsel fees), expended or incurred by Lender in connection with (a) the
negotiation and preparation of this Agreement and the other Loan Documents,
Lender's continued administration hereof and thereof, and the preparation of any
amendments and waivers hereto and thereto, (b) the enforcement of Lender's
rights and/or the collection of any amounts which become due to Lender under any
of the Loan Documents, and (c) the prosecution or defense of any action in any
way related to any of the Loan Documents, including without limitation, any
action for declaratory relief, whether incurred at the trial or appellate level,
in an arbitration proceeding or otherwise, and including any of the foregoing
incurred in connection with any bankruptcy proceeding (including without
limitation, any adversary proceeding, contested matter or motion brought by
Lender or any other person) relating to Borrower or any other person or entity.
SECTION 7.04 ASSIGNMENTS.
(a) Borrower may not assign its rights or obligations hereunder or
under the Note without the prior consent of Lender.
(b) Lender may assign to one or more assignees all or a portion of its
rights and obligations under this Agreement pursuant to an Assignment
Agreement substantially in the form of Exhibit D (an "Assignment");
provided, however, that any such assignment shall be in the amount of at
least $1,000,000 and provided further, at no time shall there be more than
four (4) Lenders. Any such assignment will become effective upon the
execution and delivery to Borrower and all Lenders then party to this
Agreement ("Existing Lenders") of the Assignment and the consent of
Existing Lenders. Upon receipt of such executed Assignment, Borrower, will,
at its own expense, execute and deliver new Notes to the assignor and/or
assignee, as appropriate, in accordance with their respective interests as
they appear. Borrower and Lenders further agree to enter into such
modifications, assignments and amendments to the Loan Documents as
necessary to provide for multiple Lenders, including, for example,
designation of a collateral agent and administrative agent for the Lenders.
Upon the effectiveness of any assignment pursuant to this Section 7.04(b),
the assignee will become a "Lender" for all purposes of this Agreement and
obligated, subject to the terms of this Agreement and the Assignment, to
fund up to the full amount of its assigned percentage of the Commitment
(the "Percentage Share of the Commitment"). The assignor shall be relieved
of its obligations hereunder to the extent of such assignment (and if the
assigning Lender no longer holds any rights or obligations under this
Agreement, such assigning Lender shall cease to be a "Lender" hereunder).
Existing Lenders will prepare a new Schedule II giving effect to all such
assignments effected restating each Lenders' Percentage Share of the
Commitment, its pro-rata share of the Commitment and assigned share of
Loans then outstanding, and will promptly provide the same to Borrower and
each Lender.
(c) Existing Lenders may furnish any information concerning Borrower
in their possession from time to time to assignees (including prospective
assignees); provided that, such persons agree to maintain such information
confidential.
(d) Notwithstanding anything in this Section 7.04 to the contrary, any
Lender may assign and pledge its Note to any Federal Reserve Bank or any
Affiliate of such Lender for so
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1818 Fund Loan Agreement
long as such entity remains an Affiliate of Lender. No such assignment
and/or pledge shall release the assigning and/or pledging Lender from its
obligations hereunder.
(e) Notwithstanding any other provisions of this Section 7.04, no
transfer or assignment of the interests or obligations of any Lender or any
grant of participations therein shall be permitted if such transfer,
assignment or grant would require Borrower to file a registration statement
with the SEC or to qualify the Loans under the "Blue Sky" laws of any
state.
SECTION 7.05 AMENDMENT. This Agreement may be amended or modified only in
writing signed by each party hereto.
SECTION 7.06 NO THIRD PARTY BENEFICIARIES. This Agreement is made and
entered into for the sole protection and benefit of the parties hereto and their
respective permitted successors and assigns, and no other person or entity shall
be a third party beneficiary of, or have any direct or indirect cause of action
or claim in connection with, this Agreement or any other of the Loan Documents
to which it is not a party.
SECTION 7.07 TIME. Time is of the essence of each and every provision of
this Agreement and each other of the Loan Documents.
SECTION 7.08 SEVERABILITY OF PROVISIONS. If any provision of this Agreement
shall be prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity without
invalidating the remainder of such provision or any remaining provisions of this
Agreement.
SECTION 7.09 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when executed and delivered shall be deemed to be an
original, and all of which when taken together shall constitute one and the same
Agreement. Any signed counterpart shall be deemed delivered by the party signing
it if sent to the other parties hereto by electronic facsimile transmission.
SECTION 7.10 FURTHER ASSURANCES. Borrower agrees, at its own expense, to
execute, acknowledge, deliver and cause to be duly filed all such further
instruments and documents and take all such actions as the Lender may from time
to time reasonably request to preserve, protect and perfect the security
interests granted pursuant to the Security Documents and the rights and remedies
created hereby, including the payment of any fees and taxes required in
connection with the execution and delivery of this Agreement, the granting of
the security interests granted pursuant to the Security Documents and the filing
of any financing statements (including fixture filings) or other documents in
connection herewith or therewith.
SECTION 7.11 GOVERNING LAW.
(a) This Agreement is governed by and shall be construed in accordance
with the laws of the State of New York and applicable U.S. federal law.
(b) For the exclusive benefit of Lender, Borrower irrevocably agrees
that any legal action, suit or proceeding arising out of or relating to
this Agreement or any other Loan Document to which Borrower is a party may
be brought by Lender, in its discretion, in the courts of the State of New
York, the United States for the Southern District of New York, or England.
By the execution of this Agreement, Borrower irrevocably submits to the
non-exclusive
17
1818 Fund Loan Agreement
jurisdiction of such courts in any such action, suit or proceeding. Final
judgment against Borrower in any such action, suit or proceeding shall be
conclusive and may be enforced in any other jurisdiction, including Gabon,
London, New York and Delaware, by suit on the judgment, a certified or
exemplified copy of which shall be conclusive evidence of the judgment, or
in any other manner provided by law.
(c) Nothing in this Agreement shall affect the right of Lender to
commence legal proceedings or otherwise ▇▇▇ Borrower in Gabon, London, New
York, Delaware or any other appropriate jurisdiction, or concurrently in
more than one jurisdiction, or to serve process, pleadings and other papers
upon Borrower in any manner authorized by the laws of any such
jurisdiction.
(d) Borrower hereby irrevocably designates, appoints and empowers the
Chief Executive and the Head of the Litigation Group of Bird & Bird located
at ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ (reference VAAEN.0001), as its
authorized agent solely to receive for and on its behalf service of the
writ of summons or other legal process in any action, suit or proceeding
Lender may bring in the courts of England and CT Corp., as its authorized
agent solely to receive for and on its behalf service of the writ of
summons or other legal process in any action, suit or proceeding Lender may
bring in the courts of the Southern District of New York.
(e) As long as this Agreement or any other Loan Document to which
Borrower is a party remains in force, Borrower shall maintain a duly
appointed and authorized agent to receive for and on its behalf service of
the writ of summons or other legal process in any action, suit or
proceeding brought by Lender in the courts of England or in the Southern
District of New York with respect to this Agreement or such other Loan
Documents. Borrower shall keep Lender advised of the identity and location
of such agent.
(f) Borrower irrevocably waives: (i) any objection which it may have
now or in the future to the laying of the venue of any action, suit or
proceeding in any court referred to in this Section 7.11; and (ii) any
claim that any such action, suit or proceeding has been brought in an
inconvenient forum.
(g) To the extent that Borrower may be entitled in any jurisdiction to
claim for itself or its assets immunity with respect to its obligations
under this Agreement or any other Loan Document to which it is a party from
any suit, execution, attachment (whether provisional or final, in aid of
execution, before judgment or otherwise) or other legal process or to the
extent that in any jurisdiction that immunity (whether or not claimed), may
be attributed to it or its assets, Borrower irrevocably agrees not to claim
and irrevocably waives such immunity to the fullest extent now or in the
future permitted by the laws of such jurisdiction.
(h) Borrower also consents generally with respect to any proceedings
arising out of or in connection with this Agreement or any other Loan
Document to which it is a party to the giving of any relief or the issue of
any process in connection with such proceedings including, without
limitation, the making, enforcement or execution against any property
whatsoever (irrespective of its use or intended use) of any order or
judgment which may be made or given in such proceedings.
(i) To the extent that Borrower may, in any suit, action or proceeding
brought in any of the courts referred to in Subsection 7.11(b) or a court
of Gabon, London, New York, Delaware or elsewhere arising out of or in
connection with this Agreement or any other Loan Document to which Borrower
is a party, be entitled to the benefit of any provision of law requiring
Lender in
18
1818 Fund Loan Agreement
such suit, action or proceeding to post security for the costs of Borrower,
or to post a bond or to take similar action, Borrower hereby irrevocably
waives such benefit, in each case to the fullest extent now or in the
future permitted under the laws of Gabon, London, New York, Delaware or, as
the case may be, the jurisdiction in which such court is located.
(j) Borrower also irrevocably consents, if for any reason Borrower's
authorized agent for service of process of summons, complaint and other
legal process in any action, suit or proceeding is not present in New York
or England, to service of such papers being made out of those courts by
mailing copies of the papers by registered air mail, postage prepaid, to
Borrower at its address specified pursuant to Section 7.02. In such a case,
Lender shall also send by facsimile, or have sent by facsimile, a copy of
the papers to Borrower.
SECTION 7.12 SAVINGS CLAUSE. It is the intention of the parties to comply
strictly with applicable usury laws. Accordingly, notwithstanding any provision
to the contrary in the Loan Documents, in no event shall any Loan Documents
require the payment or permit the payment, taking, reserving, receiving,
collection or charging of any sums constituting interest under applicable laws
that exceed the maximum amount permitted by such laws, as the same may be
amended or modified from time to time (the "Maximum Rate"). If any such excess
interest is called for, contracted for, charged, taken, reserved or received in
connection with any Loan Documents, or in any communication by or any other
person to Borrower or any other person, or in the event that all or part of the
principal or interest hereof or thereof shall be prepaid or accelerated, so that
under any of such circumstances or under any other circumstance whatsoever the
amount of interest contracted for, charged, taken, reserved or received on the
amount of principal actually outstanding from time to time under the Loan
Documents shall exceed the Maximum Rate, then in such event it is agreed that:
(i) the provisions of this paragraph shall govern and control; (ii) neither
Borrower nor any other person or entity now or hereafter liable for the payment
of any Loan Documents shall be obligated to pay the amount of such interest to
the extent it is in excess of the Maximum Rate; (iii) any such excess interest
which is or has been received by Lender, notwithstanding this paragraph, shall
be credited against the then unpaid principal balance hereof or thereof, or if
any of the Loan Documents has been or would be paid in full by such credit,
refunded to Borrower; and (iv) the provisions of each of the Loan Documents, and
any other communication to Borrower, shall immediately be deemed reformed and
such excess interest reduced, without the necessity of executing any other
document, to the Maximum Rate. The right to accelerate the maturity of the Loan
Documents does not include the right to accelerate, collect or charge unearned
interest, but only such interest that has otherwise accrued as of the date of
acceleration. Without limiting the foregoing, all calculations of the rate of
interest contracted for, charged, taken, reserved or received in connection with
any of the Loan Documents which are made for the purpose of determining whether
such rate exceeds the Maximum Rate shall be made to the extent permitted by
applicable laws by amortizing, prorating, allocating and spreading during the
period of the full term of such Loan Documents, including all prior and
subsequent renewals and extensions hereof or thereof, all interest at any time
contracted for, charged, taken, reserved or received by Lender. The terms of
this paragraph shall be deemed to be incorporated into each of the other Loan
Documents.
To the extent that either Chapter 303 or 306, or both, of the Texas Finance
Code apply in determining the Maximum Rate, Lender hereby elects to determine
the applicable rate ceiling by using the weekly ceiling from time to time in
effect, subject to Lender's right subsequently to change such method in
accordance with applicable law, as the same may be amended or modified from time
to time.
SECTION 7.13 RIGHT OF SETOFF; DEPOSIT ACCOUNTS. Upon and after the
occurrence of an Event of Default, (a) Borrower hereby authorizes Lender, acting
on Lender's behalf, at any time and from time to time, without notice, which is
hereby expressly waived by Borrower, and whether or not Lender shall have
declared any credit subject hereto to be due and payable in accordance with the
terms
19
1818 Fund Loan Agreement
hereof, to set off against, and to appropriate and apply to the payment of,
Borrower's obligations and liabilities under the Loan Documents (whether matured
or unmatured, fixed or contingent, liquidated or unliquidated), any and all
amounts owing by Lender to Borrower (whether payable in U.S. dollars or any
other currency, whether matured or unmatured, and in the case of deposits,
whether general or special (except trust and escrow accounts), time or demand
and however evidenced), and (b) pending any such action, to the extent
necessary, to hold such amounts as collateral to secure such obligations and
liabilities. Borrower hereby grants to Lender a security interest in all
deposits and accounts maintained with Lender and with any financial institution
to secure the payment of all obligations and liabilities of Borrower to Lender
under the Loan Documents.
SECTION 7.14 BUSINESS PURPOSE. Borrower represents and warrants that each
credit subject hereto is for a business, commercial, investment, agricultural or
other similar purpose and not primarily for a personal, family or household use.
SECTION 7.15 INDEMNIFICATION. Borrower agrees to indemnify Lender, each
assignee or participant hereunder, each of their affiliates and each of their
officers, directors, partners, employees, representatives, agents, attorneys,
accountants and experts ("Indemnified Parties") from, hold each of them harmless
against and promptly upon demand pay or reimburse each of them for, the
Indemnity Matters which may be incurred by or asserted against or involve any of
them (whether or not any of them is designated a party thereto) as a result of,
arising out of or in any way related to (i) any actual or proposed use by
Borrower of the proceeds of any of the Loans, (ii) the execution, delivery and
performance of the Loan Documents and amendments to such documents, (iii) the
operations of the business of Borrower, (iv) the failure of Borrower to comply
with the terms of any Loan Documents or this Agreement and amendments to such
documents, or with any applicable law, (v) any inaccuracy of any representation
or any breach of any warranty of Borrower set forth in any of the Loan Documents
and amendments to such documents, (vi) any assertion that any Indemnified Party
was not entitled to receive the proceeds received pursuant to the Loan Documents
and amendments to such documents, (vii) the administration of this Agreement,
(viii) the custody or preservation of, or the sale of, collection from or other
realization upon any of the collateral, (ix) the exercise, enforcement or
protection of any of the rights of the Lender hereunder, or (x) any other aspect
of the Loan Documents and amendments to such documents, including, without
limitation, the reasonable fees and disbursements of counsel and all other
expenses incurred in connection with investigating, defending or preparing to
defend any such action, suit, proceeding (including any investigations,
litigation or inquiries) or claim and including all Indemnity Matters arising by
reason of the ordinary negligence of any Indemnified Party, but excluding all
Indemnity Matters arising solely by reason of claims between Lender or any
assignee or participant, or any such party's shareholders against Lender or any
assignee or participant or by reason of the gross negligence or willful
misconduct on the part of the Indemnified Party.
SECTION 7.16 WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, BORROWER HEREBY IRREVOCABLY AND EXPRESSLY WAIVES ALL RIGHT TO A
TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM (WHETHER BASED UPON
CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
OF THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY OR THE ACTIONS OF
LENDER IN THE NEGOTIATION, ADMINISTRATION OR ENFORCEMENT THEREOF.
NOTICE: THIS DOCUMENT AND ALL OTHER DOCUMENTS RELATING TO THE INDEBTEDNESS
CONSTITUTE A WRITTEN LOAN AGREEMENT WHICH REPRESENTS THE FINAL AGREEMENT BETWEEN
THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF THE
20
1818 Fund Loan Agreement
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES RELATING TO
THE INDEBTEDNESS.
1818 Fund Loan Agreement 21
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first written above.
VAALCO ENERGY, INC.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
SIGNATURE PAGE S-1 TO SUBORDINATED CREDIT AGREEMENT
S-1
1818 Fund Loan Agreement
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first written above.
1818 FUND II, L.P.
By: ,
---------------------------------
▇▇▇▇▇ Brothers ▇▇▇▇▇▇▇▇ & Co.,
its general partner
By:
--------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇
Title:
-----------------------------
SIGNATURE PAGE S-2 TO SUBORDINATED CREDIT AGREEMENT
S-2
1818 Fund Loan Agreement
APPENDIX A
DEFINED TERMS
General Definitions. Wherever used in this Agreement, the following terms have
the meanings specified or referred to below:
"Additional Warrant" has the meaning specified in Subsection 1.02(c).
"Affiliate" means, in respect of any Person, any other Person directly or
indirectly Controlling, Controlled by or under common Control with, such Person;
"Agreement" has the meaning set forth in the introductory paragraph hereto.
"Assignment" has the meaning specified in Subsection 7.04(b).
"Authority" means any national, supranational, regional or local government or
governmental, administrative, fiscal, judicial, or government-owned body,
department, commission, authority, tribunal, agency or entity, or central bank
(or any entity, whether or not government owned and howsoever constituted or
called, that exercises the functions of a central bank).
"Bankruptcy Code" has the meaning specified in Subsection 6.01(f).
"Business Day" means a day when banks are open for business in New York, New
York.
"Borrower" has the meaning set forth in the introductory paragraph hereto.
"Common Stock" has the meaning specified in Subsection 2.02(a).
"Control" means the power to direct the management or policies of a Person,
directly or indirectly, whether through the ownership of shares or other
securities, by contract or otherwise, provided that the direct or indirect
ownership of fifty-one per cent (51%) or more of the voting share capital of a
Person is deemed to constitute control of that Person, and "Controlling" and
"Controlled" have corresponding meanings;
"Current Liabilities" means, with respect to Borrower and/or its Subsidiaries,
as applicable, the aggregate of all liabilities of Borrower falling due on
demand or within one year (including the portion of Long-term Debt falling due
within one year);
"Debt" means, with respect to Borrower and/or its Subsidiaries, as applicable,
the aggregate of all obligations (whether actual or contingent) of such Person,
to pay or repay money including, without limitation: (i) all Indebtedness for
Borrowed Money; (ii) the aggregate amount then outstanding of all liabilities of
any party to the extent such Person guarantees them or otherwise directly or
indirectly obligates itself to pay them; (iii) all liabilities of such Person
(actual or contingent) under any conditional sale or a transfer with recourse or
obligation to repurchase, including, without limitation, by way of discount or
factoring of book debts or receivables; and (iv) all liabilities of such Person
(actual or contingent) under its Articles of Incorporation or Bylaws, any
resolution of its shareholders, or any agreement or other document binding on
such Person to redeem any of its shares.
1818 Fund Loan Agreement
APPENDIX A-1
"Derivative Transaction" means any swap agreement, cap agreement, collar
agreement, futures contract, forward contract or similar arrangement with
respect to interest rates, currencies or commodity prices.
"Disbursement" has the meaning ascribed to such term in the IFC Loan Agreement.
"Dollars" and "$" means the lawful currency of the United States of America.
"ERISA" has the meaning specified in Section 2.10.
"Escrow Account Bank" has the meaning set forth in the recitals hereto.
"Etame Field" means the area 45 kilometers offshore of the southern coast of
Gabon identified as the "Delimited Area" (Zone Delimitee) in the PSC, which
contains hydrocarbon accumulations, in relation to which the EEA has been
granted by GOG.
"Event of Default" has the meaning specified in Section 6.01.
"EEA" means the Exclusive Exploitation Authorization granted to Borrower with
respect to the Etame Field through an edict by the Minister in charge of
Hydrocarbons of Gabon on July 17, 2001, for a term of at least ten (10) years.
"Existing Lenders" has the meaning specified in Subsection 7.04(b).
"Gabon" means the Republic of Gabon.
"GOG" means the government of the Republic of Gabon.
"IFC" has the meaning set forth in the recitals hereto.
"IFC Indebtedness" has the meaning specified in Section 1.05.
"IFC Loan Agreement" has the meaning set forth in the recitals hereto.
"IFC Events of Default" has the meaning specified in Subsection 3.02(b).
"IFC Potential Events of Default" has the meaning specified in Subsection
3.02(b).
"IFC Loan Documents" has the meaning specified in Subsection 3.01(c).
"Indebtedness for Borrowed Money" means, with respect to Borrower and/or its
Subsidiaries, as applicable, all obligations of such Person to repay money
including, without limitation, with respect to: (i) borrowed money; (ii) the
outstanding principal amount of any bonds, debentures, notes, loan stock,
commercial paper, acceptance credits, bills or promissory notes drawn, accepted,
endorsed or issued by such Person; (iii) any credit to such Person from a
supplier of goods or services under any installment purchase or other similar
arrangement with respect to goods or services (except trade accounts that are
payable in the ordinary course of business and included in Current Liabilities);
(iv) non-contingent obligations of such Person to reimburse any other person or
entity with respect to amounts paid by such Person to that person or entity
under a letter of credit or similar instrument (excluding any letter of credit
or similar instrument issued for the benefit of such Person with respect to
trade accounts that are payable in the ordinary course of business and included
in Current Liabilities); (v) amounts raised under any other transaction
1818 Fund Loan Agreement
APPENDIX A-2
having the financial effect of a borrowing and which would be classified as a
borrowing (and not as an off-balance sheet financing) under U.S. generally
accepted accounting principles applied on a consistent basis including, without
limitation, under leases or similar arrangements entered into primarily as a
means of financing the acquisition of the asset leased; (vi) the amount of such
Person's obligations, as the case may be, pursuant to Derivative Transactions
which consist of swap, collar and cap agreements entered into in connection with
other Debt of such Person or VGEI, respectively, provided that for the avoidance
of double counting and for so long as any such swap, collar or cap agreement is
in effect, that Debt will be included in Indebtedness for Borrowed Money
pursuant to the terms of the relevant Derivative Transaction and not the terms
of the agreement providing for that Debt when it was incurred; and (vii) any
premium payable on a mandatory redemption or replacement of any of the foregoing
obligations.
"Indemnified Parties" has the meaning specified in Section 7.15.
"Indemnity Matters" means any and all actions, suits, proceedings (including any
investigations, litigation or inquiries), claims, demands and causes of action
made or threatened against a person and, in connection therewith, all losses,
liabilities, damages (including, without limitation, consequential damages) or
reasonable costs and expenses of any kind or nature whatsoever incurred by such
person (including, without limitation, expenses and fees of counsel and of any
experts and agents) whether caused by the sole or concurrent negligence of such
person seeking indemnification.
"Lender" has the meaning set forth in the introductory paragraph hereto.
"Loan" has the meaning specified in Subsection 1.01(a).
"Loan Documents" has the meaning specified in Subsection 2.03(a).
"Long Term Debt" means, with respect to Borrower, that part of the Debt of
Borrower the final maturity of which, by its terms or the terms of any agreement
relating to it, falls due more than one year after the date of its incurrence.
"Long-term Debt to Equity Ratio" means, at any calculation date, with respect to
Borrower, the result obtained by dividing Borrower's Long-term Debt by
Borrower's Shareholder Equity.
"Maximum Rate" has the meaning specified in Section 7.12.
"Note" has the meaning specified in Subsection 1.01(a).
"Obligations" means, collectively, (a) the due and punctual payment by the
Borrower of (i) the principal of and premium, if any, and interest (including
interest accruing during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding) on the Loans, when and as due, whether at
maturity, by acceleration, upon one or more dates set for prepayment or
otherwise, and (ii) all other monetary obligations, including fees, costs,
expenses and indemnities, whether primary, secondary, direct, contingent, fixed
or otherwise (including monetary obligations incurred during the pendency of any
bankruptcy, insolvency, receivership or other similar proceeding, regardless of
whether allowed or allowable in such proceeding), of the Borrower to the Lender
or any other Person under the Loan Documents and (b) the due and punctual
payment and performance of all covenants, agreements, obligations and
liabilities of the Borrower, monetary or otherwise, under or pursuant to the
Loan Documents.
1818 Fund Loan Agreement
APPENDIX A-3
"Percentage Share of the Commitment" has the meaning specified in Subsection
7.04(b).
"Person" means any natural person, corporation, partnership, company, or other
entity, whether acting in an individual, fiduciary or other capacity.
"Phase One Completion Date" has the meaning ascribed to such term in the IFC
Loan Agreement as in effect on the date hereof.
"Plan" has the meaning specified in Section 2.10.
"Preferred Stock" has the meaning specified in Subsection 2.02(a).
"PSC" means the Exploration and Production Sharing Contract dated as of July 7,
1995, between the Republic of Gabon, represented by the Minister of Mines,
Energy and Petroleum, and Borrower and PanAfrican Gabon (under its former name
VAALCO Energy (Gabon), Inc.), collectively as the Contractor, as amended October
__, 2001.
"Project" means that certain project consisting of the development of the Etame
Field in the Etame Marin block, 45 km offshore of the southern coast of Gabon
and involving the re-entering and completing of three existing ▇▇▇▇▇, the
drilling and completing of up to three additional ▇▇▇▇▇ and installing of
flowlines to connect the ▇▇▇▇▇ to a registered floating production storage and
offloading tanker facility and its mooring system capable of processing up to
30,000 barrels per day and storing up to 1.1 million barrels of oil.
"Security Documents" has the meaning specified in Section 1.04.
"Series A Preferred Stock" has the meaning specified in Subsection 2.02(a).
"Shareholders' Equity" means, with respect to Borrower, the aggregate of: (i)
the amount paid up on the share capital of Borrower; and (ii) the amount
standing to the credit of the reserves of Borrower (including, without
limitation, any share premium account, capital redemption reserve funds and any
credit balance on the accumulated profit and loss account); after deducting from
that aggregate (A) any debit balance on the profit and loss account or
impairment of the issued share capital of Borrower (except to the extent that
deduction with respect to that debit balance or impairment has already been
made), (B) amounts set aside for dividends or taxation (including deferred
taxation), and (C) amounts attributable to capitalized items such as goodwill,
trademarks, deferred charges, licenses, patents and other intangible assets.
"Sponsor Escrow Account" has the meaning set forth in the recitals hereto.
"Sponsor Escrow Agreement" has the meaning set forth in the recitals hereto.
"Subordination Agreement" has the meaning specified in Section 1.05.
"Subsidiary" means (a) any corporation in which Borrower, directly or
indirectly, owns more than fifty percent (50%) of the issued and outstanding
securities having voting power to elect a majority of the directors of such
corporation; and (b) any partnership, association, joint venture, or other
entity in which Borrower, directly or indirectly, has more than a fifty percent
(50%) equity interest at the time.
1818 Fund Loan Agreement
APPENDIX A-4
"Taxes" means any present or future taxes, withholding obligations, duties and
other charges of whatever nature levied by any Authority.
"Transaction Documents" has the meaning ascribed to such term in the IFC Loan
Agreement.
"VGEI Common Stock" has the meaning specified in Subsection 2.02(b).
"VGEI" has the meaning set forth in the recitals hereto.
"Warrants" has the meaning specified in Subsection 1.02(b).
1818 Fund Loan Agreement
APPENDIX A-5
SCHEDULE I
Unless otherwise stated, all documents are of even date herewith.
1. "Subordination Agreement" by and between Borrower, IFC and Lender.
2. "Subordinated Pledge of Shares Agreement" by and between Borrower and
Lender.
3. "Charge Over Deposit Agreement" by and between Borrower and Lender and any
notices required thereby or delivered thereto.
Schedule I
1818 Fund Loan Agreement
SCHEDULE II
1. Lender's Commitments
Lender: Percentage Share Commitment Amount
of the Commitment
1818 Fund II, L.P. 100% $10,000,000
1818 Fund Loan Agreement
SCHEDULE III
Page 1 of 2
SCHEDULE III
FORM OF BORROWER'S CERTIFICATE
[Borrower's Letterhead]
[Date]
1818 Fund II, L.P.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇
Gentlemen:
1. Please refer to the Subordinated Credit Agreement (the "Loan Agreement")
dated ___________, ___, between VAALCO Energy, Inc. (the "Borrower") and 1818
Fund II, L.P. ("Lender"). Terms defined in the Loan Agreement have their defined
meanings whenever used in this certificate.
2. The Borrower irrevocably requests the disbursement on ____________, ____
(or as soon as practicable thereafter) of the amount of ____________
(____________) in accordance with the provisions of Section 3.03 of the Loan
Agreement. You are requested to pay such amount to the Escrow Account Bank,
Account No. ____________ at [Name and Address of Bank] in London, England.
3. Borrower certifies as follows:
(a) no Event of Default has occurred and is continuing;
(b) no event of default pursuant to Section 7.02 of the IFC Loan Agreement
and no event or circumstance which would, with notice, lapse of time, the making
of a determination or any combination thereof, become an event of default
pursuant to Section 7.02 of the IFC Loan Agreement has occurred and is
continuing;
(c) the proceeds of the Loan are at the date of this certificate needed by
the Borrower to fund the Sponsor Escrow Account as a condition precedent to a
funding in the same amount to VGEI under the IFC Loan Agreement to be made
within three (3) Business Days after this Loan for the purpose of financing
costs associated with the Project;
(d) since the date of the Loan Agreement nothing has occurred which (i) has
and is continuing to have, or (ii) can reasonably be expected to have a material
adverse effect on Borrower and its Subsidiaries taken as a whole;
(e) since December 31, 2001, the Borrower and its Subsidiaries have not
incurred any material loss or liability (except such liabilities as may be
incurred by the Borrower or any of its Subsidiaries in accordance with Article
V);
1818 Fund Loan Agreement
SCHEDULE III
Page 2 of 2
(f) the representations and warranties made in Article II are true and
correct in all material respects (except for any such representations and
warranties which are qualified by their terms by a reference to materiality or
material adverse affect, which representation as so qualified shall be true and
correct in all respects) on and as of such date with the same effect as if those
representations and warranties had been made on and as of such date;
(g) after giving effect to the Loan, neither the Borrower nor any of its
Subsidiaries will be in violation of:
(i) its articles of incorporation and bylaws and/or such other
constitutive documents, howsoever called;
(ii) any provision contained in any document to which Borrower or any
of its Subsidiaries is a party (including the Loan Agreement) or
by which Borrower or any of its Subsidiaries is bound; or
(iii) any law, rule, regulation, authorization or agreement or other
document binding on the Borrower or any of its Subsidiaries
directly or indirectly, limiting or otherwise restricting the
Borrower's or any of its Subsidiaries' borrowing power or
authority or its ability to borrow;
(h) on and as of the date of this certificate, Borrower's Long-term Debt to
Equity Ratio does not exceed 70:30; and
(i) the undisbursed portion of funds available to VGEI under the IFC Loan
Agreement are sufficient to finance VGEI's share of costs projected to be
incurred up through the Phase One Completion Date.
The above certifications are effective as of the date hereof and shall
continue to be effective as of the date of the Loan. If any of these
certifications is no longer valid as of or prior to the date of the Loan, the
Borrower undertakes to immediately notify Lender.
Yours truly,
VAALCO ENERGY, INC.
By
-------------------------
Authorized Representative
1818 Fund Loan Agreement
EXHIBIT A
NOTE
$10,000,000.00 June 10, 2002
FOR VALUE RECEIVED, the undersigned VAALCO ENERGY, INC., a Delaware
corporation ("Borrower"), promises to pay to the order of 1818 FUND II, L.P.,
Delaware limited partnership or its permitted assigns ("Lender") at its office
at ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, or at such other place as the
holder hereof may designate, in lawful money of the United States of America and
in immediately available funds, the principal sum of Ten Million Dollars
($10,000,000.00), or such lesser amount advanced by Lender to Borrower under the
terms of the Credit Agreement (as defined below), and to pay interest thereon as
set forth herein. This Note is issued in connection with that certain
Subordinated Credit Agreement between Lender and Borrower of even date herewith
(the "Credit Agreement"), and is secured as provided therein by the Security
Documents. All capitalized terms not otherwise defined herein are defined in the
Credit Agreement.
PROCEDURE FOR BORROWINGS:
(a) Each advance of principal hereunder shall be made upon Borrower's
irrevocable written notice delivered to Lender (each a "Borrowing Notice");
which notice must be received by Lender prior to 9:00 a.m. (Central time) ten
(10) days prior to the date of the requested advance except for the initial
advance in the amount of $___________ which shall be made on the date hereof.
(b) Each Borrowing Notice shall specify (i) the amount of principal to be
advanced, which shall be in an aggregate minimum amount of $2,000,000 or any
multiple integrals of $100,000 in excess thereof; and (ii) the requested date
principal is to be advanced which shall be a Business Day. Any amounts repaid
under this Note may not be reborrowed.
(c) Each advance or repayment shall be recorded by Lender and endorsed on
the grid attached hereto, which is part of this Note.
INTEREST:
Borrower agrees to pay interest at Lender's address listed above on the
unpaid principal outstanding under this Note and, to the extent permitted by
law, the accrued interest in respect hereof from time to time from the date
hereof until payment in full of the principal amount hereof and accrued interest
hereon, at a rate equal to (i) ten percent (10%) per annum, compounded annually,
from the period beginning on the date hereof and ending on the earlier of nine
(9) months from the First Sale of Production (as defined in the Senior Loan
Documents as in effect on the date hereof) and eighteen (18) months following
the date hereof and (ii) fourteen percent (14%) per annum, compounded annually
for the period beginning on the date next succeeding the period referred to in
clause (i) and ending when the full principal amount hereof and accrued interest
hereon have been paid in full. Interest shall be computed on the basis of a
360-day year, actual days elapsed, unless such calculation would result in a
usurious rate, in which case interest shall be computed on the basis of a
365/366-day year, as the case may be, actual days elapsed. Interest shall be
payable in a single payment on the "Maturity Date" as hereinbelow defined.
Exhibit A-1
1818 Fund Loan Agreement
Notwithstanding the foregoing provisions of this Section, but subject to
applicable law, any overdue principal of and overdue interest on this Note shall
bear interest, payable on demand in immediately available funds, for each day
from the date payment of principal or interest was due to the date of actual
payment, at the then current rate of interest plus 2.0% per annum, and, upon and
during the continuance of an Event of Default, this Note shall bear interest,
from the date of the occurrence of such Event of Default until such Event of
Default is cured or waived, payable on demand in immediately available funds, at
the then current rate of interest plus 2.0% per annum.
REPAYMENT AND PREPAYMENT:
(a) Repayment. To the extent not sooner paid, the unpaid principal balance
of this Note, together with all accrued but unpaid interest and outstanding
expenses hereunder and under the Loan Documents shall be due and payable on the
earliest of (i) the Phase One Completion Date, (ii) March 31, 2005; and (iii)
the date that all principal and accrued and unpaid interest shall become due and
payable pursuant to Article VI of the Credit Agreement (the "Maturity Date").
(b) Application of Payments. Each payment made on this Note shall be
credited first, to any interest then due and second, to the outstanding
principal balance hereof.
(c) Prepayment. Borrower may prepay this Note plus accrued and unpaid
interest hereon provided that all terms in the Credit Agreement and herein are
complied with, at any time upon one day prior notice and in the minimum amount
of One Hundred Thousand Dollars ($100,000); provided, however, that if the
outstanding principal balance of such portion of this Note plus accrued and
unpaid interest hereon is less than said amount, the minimum prepayment amount
shall be the entire outstanding principal hereof.
(d) Mandatory Prepayment. In the event that IFC has not made a Disbursement
pursuant to the IFC Loan Agreement in an amount equal to or greater than the
Loan made hereunder within three (3) Business Days of the funding of such Loan
pursuant to Section 1.01(a) of the Credit Agreement, Borrower shall immediately
notify Lender and shall repay such loan plus interest accruing thereon to Lender
upon three Business Days written demand from Lender. Further, Borrower shall
prepay this Note in amounts equal to (i) any amounts released by IFC under the
Sponsor Escrow Account other than the amounts described under the first sentence
of this subsection (d), (ii) the net proceeds of any debt or issuance of
securities received by Borrower in excess of Ten Million Dollars ($10,000,000),
and (iii) to the extent not prohibited under the IFC Loan Agreement (as in
effect on the date hereof), ninety percent (90%) of the Free Cash Flow from the
Project. For purposes of this subsection (d), "Free Cash Flow" shall mean cash
flow from the Project net of amounts required to maintain the PSC in full force
and effect. All amounts prepaid shall first be applied to accrued and unpaid
interest and then to outstanding principal.
EVENTS OF DEFAULT:
(a) Events of Default. The occurrence of an Event of Default under the
Credit Agreement shall constitute an "Event of Default" under this Note.
(b) Remedies. Upon the occurrence of any Event of Default, Lender shall be
entitled to such remedies as set forth in the Credit Agreement.
Exhibit A-2
1818 Fund Loan Agreement
MISCELLANEOUS:
(a) Governing Law.
(i) This Note is governed by and shall be construed in accordance with
the laws of the State of New York and applicable Federal Law.
(ii) For the exclusive benefit of Lender, Borrower irrevocably agrees
that any legal action, suit or proceeding arising out of or relating to
this Note or any other Loan Document to which Borrower is a party may be
brought by Lender, in its sole discretion, in the courts of the State of
New York, the United States for the Southern District of New York, or
England. By the execution of this Note, Borrower irrevocably submits to the
non-exclusive jurisdiction of such courts in any such action, suit or
proceeding. Final judgment against Borrower in any such action, suit or
proceeding shall be conclusive and may be enforced in any other
jurisdiction, including Gabon, London, New York and Delaware, by suit on
the judgment, a certified or exemplified copy of which shall be conclusive
evidence of the judgment, or in any other manner provided by law.
(iii) Nothing in this Note shall affect the right of Lender to
commence legal proceedings or otherwise ▇▇▇ Borrower in Gabon, London, New
York, Delaware or any other appropriate jurisdiction, or concurrently in
more than one jurisdiction, or to serve process, pleadings and other papers
upon Borrower in any manner authorized by the laws of any such
jurisdiction.
(iv) Borrower hereby irrevocably designates, appoints and empowers the
Chief Executive and the Head of the Litigation Group of Bird & Bird located
at ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ (reference VAAEN.0001), as its
authorized agent solely to receive for and on its behalf service of the
writ of summons or other legal process in any action, suit or proceeding
Lender may bring in the courts of England and CT Corp., as its authorized
agent solely to receive for and on its behalf service of the writ of
summons or other legal process in any action, suit or proceeding Lender may
bring in the courts of the Southern District of New York.
(v) As long as this Note or any other Loan Document to which Borrower
is a party remains in force, Borrower shall maintain a duly appointed and
authorized agent to receive for and on its behalf service of the writ of
summons or other legal process in any action, suit or proceeding brought by
Lender in the courts of England or in the Southern District of New York
with respect to this Note or such other Loan Documents. Borrower shall keep
Lender advised of the identity and location of such agent.
(vi) Borrower irrevocably waives: (x) any objection which it may have
now or in the future to the laying of the venue of any action, suit or
proceeding in any court referred to in this Section; and (y) any claim that
any such action, suit or proceeding has been brought in an inconvenient
forum.
(vii) To the extent that Borrower may be entitled in any jurisdiction
to claim for itself or its assets immunity with respect to its obligations
under this Note or any other Loan Document to which it is a party from any
suit, execution, attachment (whether provisional or final, in aid of
execution, before judgment or otherwise) or other legal process or to the
extent that in any jurisdiction that immunity (whether or not claimed), may
be attributed to it or its assets, Borrower
Exhibit A-3
1818 Fund Loan Agreement
irrevocably agrees not to claim and irrevocably waives such immunity to the
fullest extent now or in the future permitted by the laws of such
jurisdiction.
(viii) Borrower also consents generally with respect to any
proceedings arising out of or in connection with this Note or any other
Loan Document to which it is a party to the giving of any relief or the
issue of any process in connection with such proceedings including, without
limitation, the making, enforcement or execution against any property
whatsoever (irrespective of its use or intended use) of any order or
judgment which may be made or given in such proceedings.
(ix) To the extent that Borrower may, in any suit, action or
proceeding brought in any of the courts referred to in Subsection (ii) or a
court of Gabon, London, New York, Delaware or elsewhere arising out of or
in connection with this Note or any other Loan Document to which Borrower
is a party, be entitled to the benefit of any provision of law requiring
Lender in such suit, action or proceeding to post security for the costs of
Borrower, or to post a bond or to take similar action, Borrower hereby
irrevocably waives such benefit, in each case to the fullest extent now or
in the future permitted under the laws of Gabon, London, New York, Delaware
or, as the case may be, the jurisdiction in which such court is located.
(x) Borrower also irrevocably consents, if for any reason Borrower's
authorized agent for service of process of summons, complaint and other
legal process in any action, suit or proceeding is not present in New York
or England, to service of such papers being made out of those courts by
mailing copies of the papers by registered air mail, postage prepaid, to
Borrower at its address specified pursuant to Section 7.02 of the Credit
Agreement. In such a case, Lender shall also send by facsimile, or have
sent by facsimile, a copy of the papers to Borrower.
(b) Savings Clause. It is the intention of the parties to comply strictly
with applicable usury laws. Accordingly, notwithstanding any provision to the
contrary in this Note, the Credit Agreement, or in any other Loan Document, in
no event shall this Note or any Loan Document require the payment or permit the
payment, taking, reserving, receiving, collection or charging of any sums
constituting interest under applicable laws that exceed the maximum amount
permitted by such laws, as the same may be amended or modified from time to time
(the "Maximum Rate"). If any such excess interest is called for, contracted for,
charged, taken, reserved or received in connection with this Note or any Loan
Document, or in any communication by Lender or any other person to Borrower or
any other person, or in the event that all or part of the principal or interest
hereof or thereof shall be prepaid or accelerated, so that under any of such
circumstances or under any other circumstance whatsoever the amount of interest
contracted for, charged, taken, reserved or received on the amount of principal
actually outstanding from time to time under this Note shall exceed the Maximum
Rate, then in such event it is agreed that: (i) the provisions of this paragraph
shall govern and control; (ii) neither Borrower nor any other person or entity
now or hereafter liable for the payment of this Note or any Loan Document shall
be obligated to pay the amount of such interest to the extent it is in excess of
the Maximum Rate; (iii) any such excess interest which is or has been received
by Lender, notwithstanding this paragraph, shall be credited against the then
unpaid principal balance hereof or thereof, or if this Note or any Loan Document
has been or would be paid in full by such credit, refunded to Borrower; and (iv)
the provisions of this Note and each Loan Document, and any other communication
to Borrower, shall immediately be deemed reformed and such excess interest
reduced, without the necessity of executing any other document, to the Maximum
Rate. The right to accelerate the maturity of this Note or any Loan Document
does not include the right to accelerate, collect or charge unearned interest,
but only such interest that has otherwise accrued as of the date of
acceleration. Without limiting the foregoing, all calculations of the rate of
interest contracted for, charged, taken, reserved or received in connection with
this Note and any Loan Document which are
Exhibit A-4
1818 Fund Loan Agreement
made for the purpose of determining whether such rate exceeds the Maximum Rate
shall be made to the extent permitted by applicable laws by amortizing,
prorating, allocating and spreading during the period of the full term of this
Note or such Loan Document, including all prior and subsequent renewals and
extensions hereof or thereof, all interest at any time contracted for, charged,
taken, reserved or received by Lender. The terms of this paragraph shall be
deemed to be incorporated into each Loan Document.
To the extent that either Chapter 303 or 306, or both, of the Texas Finance
Code apply in determining the Maximum Rate, Lender hereby elects to determine
the applicable rate ceiling by using the weekly ceiling from time to time in
effect, subject to Lender's right subsequently to change such method in
accordance with applicable law, as the same may be amended or modified from time
to time.
(c) Right of Setoff; Deposit Accounts. Upon and after the occurrence of an
Event of Default, (i) Borrower hereby authorizes Lender, at any time and from
time to time, without notice, which is hereby expressly waived by Borrower, and
whether or not Lender shall have declared this Note to be due and payable in
accordance with the terms hereof, to set off against, and to appropriate and
apply to the payment of, Borrower's obligations and liabilities under this Note
(whether matured or unmatured, fixed or contingent, liquidated or unliquidated),
any and all amounts owing by Lender to Borrower (whether payable in U.S. dollars
or any other currency, whether matured or unmatured, and in the case of
deposits, whether general or special (except trust and escrow accounts), time or
demand and however evidenced), and (ii) pending any such action, to the extent
necessary, to hold such amounts as collateral to secure such obligations and
liabilities. Borrower hereby grants to Lender a security interest in all
deposits and accounts maintained with Lender and with any financial institution
to secure the payment of all obligations and liabilities of Borrower to Lender
under this Note.
(d) Subordination. Payment of this Note is subject to the terms of the
Subordination Agreement of even date herewith between Borrower, Lender and IFC.
(e) Assignment. Lender may assign this Note pursuant to the terms of the
Credit Agreement. Borrower may not assign its rights or obligations under this
Note without the prior consent of Lender.
(f) Amendment. This Note may be amended or modified only in writing signed
by Borrower and Lender.
NOTICE: THIS NOTE AND ALL OTHER DOCUMENTS RELATING TO THE INDEBTEDNESS EVIDENCED
HEREBY CONSTITUTE A WRITTEN LOAN AGREEMENT WHICH REPRESENTS THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES RELATING TO THIS NOTE AND THE
INDEBTEDNESS EVIDENCED HEREBY.
[The remainder of this page intentionally blank. Signature page to follow.]
Exhibit A-5
1818 Fund Loan Agreement
IN WITNESS WHEREOF, the undersigned has executed this Note as of the date
first written above.
VAALCO ENERGY, INC.
By:
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Name:
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Title:
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Exhibit A-6
1818 Fund Loan Agreement
LOANS AND PRINCIPAL PAYMENTS
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AMOUNT OF AMOUNT OF UNPAID
LOAN PRINCIPAL PRINCIPAL NOTATION
DATE MADE REPAID BALANCE TOTAL MADE BY
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Exhibit A-7
1818 Fund Loan Agreement
EXHIBIT D
FORM OF ASSIGNMENT AGREEMENT
ASSIGNMENT AGREEMENT ("Agreement") dated as of ____________, 200__ between:
_______________________ (the "Assignor") and ____________________ (the
"Assignee").
RECITALS
A. The Assignor is a party to the Credit Agreement dated as of ___________,
2002 (as amended and supplemented and in effect from time to time, the "Credit
Agreement") among VAALCO Energy, Inc., a Delaware corporation (the "Borrower"),
1818 Fund II, L.P., a Delaware limited partnership, and each of Lenders that is
or becomes a party thereto as provided in Section 7.04 of the Credit Agreement
(individually, together with its successors and assigns, a "Lender", and
collectively, together with their successors and assigns, the "Lenders").
B. The Assignor proposes to sell, assign and transfer to the Assignee, and
the Assignee proposes to purchase and assume from the Assignor, [all] [a
portion] of the Assignor's Percentage Share of the Commitment and outstanding
Loans, all on the terms and conditions of this Agreement.
C. In consideration of the foregoing and the mutual agreements contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
Section 1.01 Definitions. All capitalized terms used but not defined herein
have the respective meanings given to such terms in the Credit Agreement.
Section 1.02 Other Definitions. As used herein, the following terms have
the following respective meanings:
"Assigned Interest" shall mean [all] [stated percentage] of Assignor's (in its
capacity as a "Lender") Percentage Share of the Commitment including its
pro rata rights and obligations under the Credit Agreement and the other
Security Documents and the obligation to make Loans and any right to
receive payments for the Loans outstanding under the Credit Agreement equal
to the Percentage Share of the Commitment specified on Schedule I hereto
for Assignee, plus the interest and fees which will accrue from and after
the Assignment Date.
"Assignment Date" shall mean____________________, 200__.
ARTICLE II
SALE AND ASSIGNMENT
Section 2.01 Sale and Assignment. On the terms and conditions set forth
herein, effective on and as of the Assignment Date, the Assignor hereby sells,
assigns and transfers to the Assignee, and the Assignee hereby purchases and
assumes from the Assignor, all of the right, title and interest of the Assignor
1818 Fund Loan Agreement
Exhibit D - 1
in and to, and all of the obligations of the Assignor in respect of, the
Assigned Interest. Such sale, assignment and transfer is without recourse and,
except as expressly provided in this Agreement, without representation or
warranty.
Section 2.02 Assumption of Obligations. The Assignee agrees with the
Assignor (for the express benefit of the Assignor and Borrower) that the
Assignee will, from and after the Assignment Date, perform all of the
obligations of the Assignor in respect of the Assigned Interest. From and after
the Assignment Date: (a) the Assignor shall be released from the Assignor's
obligations in respect of the Assigned Interest, and (b) the Assignee shall be
entitled to all of the Assignor's rights, powers and privileges under the Credit
Agreement and the other Security Documents in respect of the Assigned Interest.
Section 2.03 Consent by Existing Lenders. By executing this Agreement as
provided below, in accordance with Section 7.04(b) of the Credit Agreement, the
Existing Lenders hereby acknowledge notice of the transactions contemplated by
this Agreement and consent to such transactions.
ARTICLE III
PAYMENTS
Section 3.01 Payments. As consideration for the sale, assignment and
transfer contemplated by Section 2.01 hereof, the Assignee shall, on the
Assignment Date, assume Assignor's obligations in respect of the Assigned
Interest and pay to the Assignor an amount equal to the Assignee's Share of
Loans outstanding, as set forth on Schedule I hereto, if any. An amount equal to
all accrued and unpaid interest and fees attributable to the Assigned Interest
shall be paid to the Assignor as provided in Section 3.02(i) and (iii) below.
Except as otherwise provided in this Agreement, all payments hereunder shall be
made in United States Dollars and in immediately available funds, without
setoff, deduction or counterclaim.
Section 3.02 Allocation of Payments. The Assignor and the Assignee agree
that (i) the Assignor shall be entitled to any payments of principal with
respect to the Assigned Interest made prior to the Assignment Date, together
with any interest and fees with respect to the Assigned Interest accrued prior
to the Assignment Date, (ii) the Assignee shall be entitled to any payments of
principal with respect to the Assigned Interest made from and after the
Assignment Date, together with any and all interest and fees with respect to the
Assigned Interest accruing from and after the Assignment Date, and (iii)
Borrower is instructed to allocate payments due under the Credit Agreement pro
rata between Assignor and the Assignee as provided in the foregoing clauses.
Each party hereto agrees that it will hold any interest, fees or other amounts
that it may receive to which the other party hereto shall be entitled pursuant
to the preceding sentence for account of such other party and pay, in like money
and funds, any such amounts that it may receive to such other party promptly
upon receipt.
Section 3.03 Delivery of Notes. Promptly following the receipt by the
Assignor of the consideration required to be paid under Section 3.01 hereof, the
Assignor shall, in the manner contemplated by Section 7.04(b) of the Credit
Agreement, (i) deliver to the Existing Lenders (or their counsel) the Note(s)
held by the Assignor and (ii) notify Borrower to execute and deliver new Notes
to the Assignor, if Assignor continues to be a Lender, and the Assignee, dated
the date of this Agreement in respective principal amounts equal to the
respective Maximum Loan Amounts of the Assignor (if any) and the Assignee as set
forth on Schedule I hereto after giving effect to the sale, assignment and
transfer contemplated hereby.
Section 3.04 Further Assurances. The Assignor and the Assignee hereby agree
to execute and deliver such other instruments, and take such other actions, as
either party may reasonably request in connection with the transactions
contemplated by this Agreement.
1818 Fund Loan Agreement
Exhibit D - 2
ARTICLE IV
CONDITIONS PRECEDENT
Section 4.01 Conditions Precedent. The effectiveness of the sale,
assignment and transfer contemplated hereby is subject to the satisfaction of
each of the following conditions precedent:
(a) the execution and delivery of this Agreement by the Assignor and
the Assignee;
(b) the receipt by the Assignor of the payment required to be made by
the Assignee under Section 3.01 hereof; and
(c) the acknowledgment and consent by the Existing Lenders
contemplated by Section 2.03 hereof.
ARTICLE V
REPRESENTATIONS AND WARRANTIES.
Section 5.01 Representations and Warranties of the Assignor. The Assignor
represents and warrants to the Assignee as follows:
(a) it has all requisite power and authority, and has taken all action
necessary to execute and deliver this Agreement and to fulfill its
obligations under, and consummate the transactions contemplated by, this
Agreement;
(b) the execution, delivery and compliance with the terms hereof by
Assignor and the delivery of all instruments required to be delivered by it
hereunder do not and will not violate any provision of any law or
regulation of any Authority applicable to it;
(c) this Agreement has been duly executed and delivered by it and
constitutes the legal, valid and binding obligation of the Assignor,
enforceable against it in accordance with its terms;
(d) all approvals and authorizations of, all filings with and all
actions by any Authority necessary for the validity or enforceability of
its obligations under this Agreement have been obtained; and
(e) the Assignor has good title to, and is the sole legal and
beneficial owner of, the Assigned Interest, free and clear of all liens,
claims, participations or other charges of any nature whatsoever.
Section 5.02 Disclaimer. Except as expressly provided in Section 5.01
hereof, the Assignor does not make any representation or warranty, nor shall it
have any responsibility to the Assignee, with respect to the accuracy of any
recitals, statements, representations or warranties contained in the Credit
Agreement or in any certificate or other document referred to or provided for
in, or received by any Lender under, the Credit Agreement, or for the value,
validity, effectiveness, genuineness, execution, effectiveness, legality,
enforceability or sufficiency of the Credit Agreement, the Note(s) or any other
document referred to or provided for therein or for any failure by Borrower or
any other person (other than Assignor) to perform any of its obligations
thereunder prior hereto or for the existence, value, perfection or priority of
any collateral security or the financial or other condition of Borrower or the
Subsidiaries or any other obligor or guarantor,
1818 Fund Loan Agreement
Exhibit D - 3
or any other matter relating to the Credit Agreement or any other Security
Documents or any extension of credit thereunder.
Section 5.03 Representations and Warranties of the Assignee. The Assignee
represents and warrants to the Assignor as follows:
(a) it has all requisite power and authority, and has taken all action
necessary to execute and deliver this Agreement and to fulfill its
obligations under, and consummate the transactions contemplated by, this
Agreement;
(b) the execution, delivery and compliance with the terms hereof by
Assignee and the delivery of all instruments required to be delivered by it
hereunder do not and will not violate any provision of any law or
regulation of any Authority applicable to it;
(c) this Agreement has been duly executed and delivered by it and
constitutes the legal, valid and binding obligation of the Assignee,
enforceable against it in accordance with its terms;
(d) all approvals and authorizations of, all filings with and all
actions by any Authority necessary for the validity or enforceability of
its obligations under this Agreement have been obtained; and
(e) the Assignee has fully reviewed the terms of the Credit Agreement
and the other Security Documents and has independently and without reliance
upon the Assignor, and based on such information as the Assignee has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement.
ARTICLE VI
MISCELLANEOUS.
Section 6.01 Notices. All notices and other communications provided for
herein (including, without limitation, any modifications of, or waivers,
requests or consents under, this Agreement) shall be given or made in writing
(including, without limitation, by telex or telecopy) to the intended recipient
at its "Address for Notices" specified below 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.
Section 6.02 Amendment, Modification or Waiver. No provision of this
Agreement may be amended, modified or waived except by an instrument in writing
signed by the Assignor and the Assignee, and consented to by the Existing
Lenders.
Section 6.03 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns. The representations and warranties made herein by the
Assignee are also made for the benefit of the Existing Lenders and Borrower, and
the Assignee agrees that the Existing Lenders and Borrower are entitled to rely
upon such representations and warranties.
Section 6.04 Assignments. Neither party hereto may assign any of its rights
or obligations hereunder except in accordance with the terms of the Credit
Agreement.
1818 Fund Loan Agreement
Exhibit D - 4
Section 6.05 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.
Section 6.06 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be identical and all of which, taken together,
shall constitute one and the same instrument, and each of the parties hereto may
execute this Agreement by signing any such counterpart.
Section 6.07 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the law of the State of New York.
Section 6.08 Expenses. To the extent not paid by Borrower pursuant to the
terms of the Credit Agreement, each party hereto shall bear its own expenses in
connection with the execution, delivery and performance of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment
Agreement to be executed and delivered as of the date first above written.
ASSIGNOR:
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By:
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Name:
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Title:
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Address for Notices:
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Telecopier No.:
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Telephone No.:
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Attention:
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ASSIGNEE:
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By:
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Name:
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Title:
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1818 Fund Loan Agreement
Exhibit D - 5
Address for Notices:
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Telecopier No.:
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Telephone No.:
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Attention:
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ACKNOWLEDGED AND CONSENTED TO:
[Existing Lenders, if applicable]
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By:
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Name:
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Title:
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1818 Fund Loan Agreement
Exhibit D - 6
SCHEDULE I
TO ASSIGNMENT AGREEMENT
Assignor Assignee
(Retained Interest) (Assigned Interest)
a. Percentage Share of the Commitment ________% _______%
b. Maximum Loan Amount $__________ $________
c. Share of Loans Outstanding $__________ $________
1818 Fund Loan Agreement
Exhibit D - 7