EXHIBIT 10.5
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AMENDED AND RESTATED
SUBORDINATED CREDIT AGREEMENT
Between
VAALCO ENERGY, INC., as Borrower
And
1818 FUND II, L.P., as Agent
and the Lenders from
time to time party hereto
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Dated as of August , 2002 originally
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dated as of June 10, 2002
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TABLE OF CONTENTS
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ARTICLE I CREDIT TERMS 2
1.01 Line of Credit Loan 2
1.02 Interest/Fees 3
1.03 Payments 4
1.04 Collateral 4
1.05 Subordination of Debt 5
1.06 Suspension or Cancellation by Lender 5
1.07 Taxes 6
ARTICLE II REPRESENTATIONS AND WARRANTIES 7
2.01 Legal Status 7
2.02 Capitalization 8
2.03 Authorization and Validity 9
2.04 No Violation 9
2.05 Litigation 9
2.06 Correctness of Financial Statement 10
2.07 Income Tax Returns 10
2.08 No Subordination 10
2.09 Permits, Franchises 10
2.10 ERISA 10
2.11 Other Obligations 10
2.12 Environmental Matters 11
2.13 No Consent 11
2.14 No Liens 11
2.15 Laws 11
2.16 Judgments 11
2.17 Information 12
2.18 VGEI 12
ARTICLE III CONDITIONS 12
3.01 Conditions to Initial Loan 12
3.02 Conditions of All Loans 13
3.03 Borrower's Certification 14
3.04 Conditions for Lender's Benefit 14
3.05 Conditions to the Initial Tranche B Loan 14
ARTICLE IV AFFIRMATIVE COVENANTS 15
4.01 Punctual Payments 15
4.02 Accounting Records 15
4.03 Financial Statements 15
4.04 Compliance 16
4.05 Insurance 16
4.06 Facilities 16
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4.07 Taxes and Other Liabilities 17
4.08 Litigation 17
4.09 Notice to Lender 17
4.10 Maintenance of Existence 17
ARTICLE V NEGATIVE COVENANTS 17
5.01 Use of Funds 17
5.02 Other Indebtedness 17
5.03 Merger, Consolidation, Transfer of Assets 18
5.04 Loans, Advances, Investments 18
5.05 Dividends, Distributions 18
5.06 Pledge of Assets 18
5.07 Sales and Leasebacks 18
5.08 Nature of Business 18
5.09 Transactions with Affiliates 18
5.10 Fiscal Year 19
5.11 Project 19
5.12 VGEI PSC Interest 19
5.13 Stockholders Agreement 19
ARTICLE VI EVENTS OF DEFAULT 19
6.01 Events of Default 19
6.02 Remedies 20
ARTICLE VII MISCELLANEOUS 21
7.01 No Waiver 21
7.02 Notices 21
7.03 Costs, Expenses and Attorneys' Fees 22
7.04 Assignments 22
7.05 Amendment 24
7.06 No Third Party Beneficiaries 25
7.07 Time 25
7.08 Severability of Provisions 25
7.09 Counterparts 25
7.10 Further Assurances 25
7.11 Governing Law 25
7.12 Savings Clause 27
7.13 Right of Setoff; Deposit Accounts 28
7.14 Business Purpose 28
7.15 Indemnification 28
7.16 WAIVER OF JURY TRIAL 29
7.17 NOTICE 29
7.18 Business Day 29
7.19 Sharing of Setoffs 29
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ARTICLE VIII THE AGENT 30
8.01 Agency 30
8.02 Successor Agent 31
8.03 Agent as Lender 32
8.04 Expenses of Agent 32
8.05 Independent Credit Analysis by Lenders 32
APPENDIX A
Defined Terms
EXHIBITS
A. Note
B. Warrants
C. Subordination Agreement
D. Assignment Agreement
E. Tax Certificate
SCHEDULES
I Security Documents
II Lenders' Commitments
III Form of Borrower's Certificate
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EXECUTION COPY
AMENDED AND RESTATED
SUBORDINATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED SUBORDINATED CREDIT AGREEMENT (this
"Agreement") is entered into as of August , 2002 by and among VAALCO ENERGY,
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INC., a Delaware corporation ("Borrower"), and 1818 FUND II, L.P., a Delaware
limited partnership, as Agent for itself and each other lender ("Agent") and the
1818 FUND II, L.P., a Delaware limited partnership, and NISSHO IWAI CORPORATION,
a corporation organized under the laws of Japan ("NIC"), as lenders
(collectively, with any other lending institution which becomes party hereto
pursuant to Section 7.04, the "Lenders").
RECITALS
WHEREAS, VAALCO GABON (ETAME), INC. ("VGEI") and International Finance
Corporation ("IFC") entered into that certain Loan Agreement dated April 19,
2002 (as amended, supplemented or otherwise modified from time to time, 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") originally
dated as of May 31, 2002 (as amended, supplemented or otherwise modified from
time to time, the "Sponsor Escrow Agreement") in which Borrower maintains
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 requested that 1818 Fund II, L.P. (in its capacity
as the original lender, the "Original Lender") extend it credit for the purpose
of funding the Sponsor Escrow Account and Original Lender agreed to provide such
credit to Borrower pursuant to a Subordinated Credit Agreement dated as of June
10, 2002 between Borrower and the Original Lender (the "Original Credit
Agreement");
WHEREAS, the parties hereto desire to amend and restate the Original
Credit Agreement, among other things, to allow NIC to become a Lender, to
establish an agent for the Lenders hereunder, to provide the Borrower with an
additional tranche of loans, and to permit the Borrower to transfer all the
equity interests held by it in VGEI to VAALCO INTERNATIONAL, INC., a Delaware
corporation and wholly owned subsidiary of the Borrower ("VII");
NOW, THEREFORE, for valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Lenders, the Agent and
Borrower hereby agree that the Original Credit Agreement shall be amended and
restated to read in its entirety as follows:
ARTICLE I
CREDIT TERMS
1.01 Line of Credit Loan.
(a) Tranche A Loans. Subject to the terms and conditions of this
Agreement until January 31, 2003, each Lender hereby agrees severally and not
jointly to make one or more loans (each such advance a "Tranche A Loan" and
collectively the "Tranche A Loans") to Borrower in an aggregate principal amount
not to exceed such Lender's Tranche A Commitment; provided, however, that the
maximum aggregate principal amount of all Tranche A Loans outstanding shall not
at any time exceed Ten Million Dollars ($10,000,000) (the "Aggregate Tranche A
Commitment"). The proceeds of such Tranche A Loans shall be funded directly into
and held in the Sponsor Escrow Account pursuant to the Sponsor Escrow Agreement.
After the earlier of (i) Phase One Completion Date and (ii) January 31, 2003,
the Lenders shall have no obligation to make any additional Tranche A Loans to
Borrower.
(b) Tranche B Loans. Subject to the terms and conditions of this
Agreement, from April 1, 2003 until April 30, 2003, each Lender hereby agrees
severally and not jointly to make one or more loans (each such advance a
"Tranche B Loan" and collectively the "Tranche B Loans") to Borrower in an
aggregate principal amount not to exceed such Lender's Tranche B Commitment;
provided, however, that the maximum aggregate principal amount of all Loans
outstanding shall not at any time exceed Three Million Dollars ($3,000,000) (the
"Aggregate Tranche B Commitment"). The proceeds of such Tranche B Loans shall be
funded to the order of the Borrower. After April 30, 2003, the Lenders shall
have no obligation to make any additional Tranche B Loans to Borrower.
(c) Borrower's obligation to repay the Loans shall be evidenced
by one or more promissory notes substantially in the form of Exhibit A attached
hereto (as same may be amended, renewed, assigned in whole or in part,
collectively, the "Notes"), all terms of which are incorporated herein by this
reference.
(d) Repayment. Principal and interest on the Loans shall be
repaid in accordance with the provisions of the applicable Note, the terms of
which are incorporated herein by reference.
(e) Mandatory Prepayment. Principal outstanding under the Loans
is subject to mandatory prepayment in accordance with provisions of the
applicable Note, the terms of which are incorporated herein by reference.
(f) Lender Accounts. Each Lender shall maintain in accordance
with its usual practice an account or accounts evidencing the indebtedness of
the Borrower to such Lender resulting from each Loan made by such Lender from
time to time, including the amounts of principal and interest payable and paid
to such Lender from time to time under this Agreement. The Agent shall maintain
accounts in which it
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will record (i) the amount of each Loan made hereunder, (ii) the amount of any
principal or interest due and payable or to become due and payable from the
Borrower to each Lender hereunder and (iii) the amount of any sum received by
the Agent hereunder from the Borrower or any guarantor and each Lender's share
thereof. The entries made in the accounts maintained pursuant to this Subsection
1.01(f) shall be prima facie evidence of the existence and amounts of the
obligations therein recorded, absent manifest error; provided, however, that the
failure of any Lender or the Agent to maintain such accounts or any error
therein shall not in any manner affect the obligation of the Borrower to repay
the Loans in accordance with the terms hereunder .
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) Original Lender Warrants. On June 10, 2002, in consideration
of the commitment of the Original Lender to make the loans contemplated by the
Original Credit Agreement, the Borrower issued two Warrants to the Original
Lender (each, an "Original Lender Warrant"). On May 1, 2003, the number of
shares of the Borrower's Common Stock subject to each Original Lender Warrant as
of such date shall be adjusted by multiplying such number of shares by a
fraction, (i) the numerator of which shall be the aggregate principal amount of
Loans made to the Borrower by the Original Lender hereunder during the period
commencing on June 10, 2002 and ending on April 30, 2003 and (ii) the
denominator of which shall be $10,000,000, such amount being the total
Commitment of the Original Lender under the Original Credit Agreement.
(c) Additional Warrants. If all principal, interest and other
amounts under the Tranche A Loans evidenced by the Note have not been paid in
full and each Lender's obligation to make Tranche A Loans has not been
terminated on or prior to June 10, 2004 ("Anniversary Date"), Borrower shall
issue to each Lender with an outstanding Tranche A Loan, a warrant (each, an
"Additional Warrant") to purchase its Pro Rata Percentage of the Additional
Shares. The "Additional Shares" shall equal that 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 all Tranche A Loans outstanding on such
Anniversary Date and the denominator of which shall be $10.0 million. The number
of Additional Shares or shares subject to each Additional Warrant, as
applicable, 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 Anniversary Date. The exercise price of each
Additional Warrant shall be $0.10 per share. Each Additional Warrant shall
expire seven years following the date of issuance. Each 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 each Additional
Warrant shall be reduced as set forth in Sections 5.1, 5.2, 5.3, 5.5 and 5.9 of
the warrant attached as Exhibit B-1).
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1.03 Payments.
(a) Notwithstanding anything to the contrary set forth herein or
any Loan Document, Borrower shall make all payments of principal, interest,
fees, and any other amount due to Lenders under the Loan Documents in Dollars,
in same day funds, to Agent for further credit to the Lenders, care of ▇▇▇▇▇
Brothers ▇▇▇▇▇▇▇▇ & Co., for credit to 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 Agent from time to time designates. Payments must be received in
Agent's designated account no later than 1:00 p.m. New York time. Unless the
Lender who is to receive funds as set forth herein and as a result of such
Lender's consent does not receive such funds, otherwise agrees in writing, all
payments of principal or interest made by the Borrower on the Loans shall be
allocated ratably between the then outstanding Loans, based on the respective
outstanding principal amount of such Loans. The Borrower, the Agent and each
Lender agrees to take all such actions as shall be necessary to give effect to
such requirement. Each Lender agrees that in computing such Lender's portion of
any such payment, the Agent may, in its discretion, round each Lender's
percentage of such payment to the next higher or lower whole dollar amount. The
Agent shall distribute any such payments received by it for the account of any
other person to the appropriate recipient promptly following receipt thereof.
(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) Agent actually receives funds in Dollars
in the account specified in, or pursuant to, Subsection 1.03(a).
(c) Borrower shall indemnify Agent and each 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 Agent and each Lender to receive, after conversion to
Dollars at a market rate and transfer to that account, the full amount due to
such person 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), Agent may require Borrower to pay (or reimburse Agent or any
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.
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 Agent,
as
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agent, 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 Agent shall require, all in form and
substance satisfactory to Agent (collectively the "Security Documents").
(b) Borrower hereby authorizes Agent 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 Agent as secured party. Borrower shall reimburse Agent
immediately upon demand for all reasonable costs and expenses incurred by Agent
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.
1.05 Subordination of Debt.
(a) In connection with the Notes, 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 June 10, 2002, by and
between Borrower, IFC and the Original Lender attached as Exhibit C hereto
(hereafter, as amended, supplemented or otherwise modified from time to time,
the "Subordination Agreement").
1.06 Suspension or Cancellation by Lender.
(a) Agent 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 any Event of Default has occurred and is continuing;
or
(ii) if any event or condition has occurred and is
continuing which has or can reasonably be expected to have a material
adverse effect.
(b) Agent may, by notice to Borrower, suspend the right of
Borrower to borrow and/or cancel the undisbursed portion of the Tranche A
Commitments in whole or in part:
(i) on or after December 31, 2003; or
(ii) on or after the Phase One Completion Date.
(c) Agent may, by notice to Borrower, suspend the right of
Borrower to borrow and/or cancel the undisbursed portion of the Tranche B
Commitments in whole or in part on or after April 30, 2003.
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(d) Upon the giving of any such notice, the right of Borrower to
any further Tranche A Loans or Tranche B Loans, as applicable shall be suspended
or canceled, as the case may be. The exercise by Agent of the right of
suspension shall not preclude Agent from exercising the 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(f), pay to Agent and
each Lender all fees and other amounts accrued (whether or not then due and
payable) under this Agreement up to the date of that cancellation other than
principal and interest on the Loans which shall be payable in accordance with
the Notes and the applicable provisions hereunder. A suspension shall not limit
any other provision of this Agreement.
(e) Any portion of the Commitment that is canceled under this
Section 1.06 may not be reborrowed.
(f) In the case of a partial cancellation of the Commitment
pursuant to Subsection 1.06(a), 1.06(b), or 1.06(c) interest on the amount then
outstanding of the Loans remains payable as provided in Subsection 1.02(a).
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 any 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, such
deduction and withholding shall be made and 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 each 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 Agent so requests, Borrower shall
deliver to Agent official tax receipts evidencing payment (or certified copies
of them) within thirty (30) days of the date of that request.
(e) Each Lender that is organized in a jurisdiction other than
the United States, a State thereof or the District of Columbia hereby agrees
that: (i) it shall, no later than the date hereof (or, in the case of a Lender
which becomes a party hereto pursuant to Section 7.04 hereof after the date
hereof, the date upon which such
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Lender becomes a party hereto) deliver to the Borrower and the Agent: (A) two
accurate, complete and signed originals of U.S. Internal Revenue Service Form
W-8ECI or successor form, or two accurate, complete and signed originals of U.S.
Internal Revenue Service Form W-8BEN or successor form, in each case, indicating
that such Lender is on the date of delivery thereof entitled to receive payments
of principal, interest and fees for the account of its lending office under this
Agreement free from, or subject to a reduced rate of, withholding of United
States Federal income tax and (B) two accurate, complete and signed originals of
the certificate attached hereto as Exhibit E; and (ii) if at any time such
Lender changes its lending office or offices or selects an additional lending
office for purposes of this Agreement, it shall, at the same time or reasonably
promptly thereafter, deliver to the Borrower and the Agent the appropriate forms
as described in clause (i) above in replacement for, or in addition to, the
forms previously delivered by it hereunder.
(f) Notwithstanding anything to the contrary set forth herein,
with respect to any Lender, the Borrower's obligations under this Section 1.07
shall be suspended (i) for so long as, and for any period for which such Lender
fails to comply with subsection 7.01(e) and (ii) to the extent such obligations
relate to Taxes that (x) are withholding taxes imposed on amounts payable to
such Lender at the time such Lender becomes a party to this Agreement, except to
the extent that such Lender's assignor (if any) was entitled, at the time of
assignment, to receive additional amounts from the Borrower with respect to such
Taxes pursuant to this Section 1.07, or (y) are imposed as a result of any event
occurring after such Lender becomes a Lender other than a change in law or
regulation or the introduction of any law or regulation or a change in
interpretation or administration of any law.
(g) The agreements in this Section 1.07 shall survive the
termination of this Agreement and the payment of the Loans and all other amounts
payable hereunder.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Borrower makes the following representations and warranties to each
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 each
Lender subject to this Agreement.
2.01 Legal Status. Borrower, VII 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, VII or VGEI.
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2.02 Capitalization.
(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 each 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 after giving effect to the transactions contemplated by
the consent of IFC dated as of the date hereof (the "Consent") all of the
capital stock of VGEI was owned by VII 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.
(c) The authorized capital stock of VII consists solely of 10,000
shares of common stock, par value $0.001 per share ("VII Common Stock"). As of
the date hereof 10,000 shares of VII Common Stock were issued and outstanding.
As of the date hereof and after giving effect to the transactions contemplated
by the Consent all of the capital stock of VII was owned by Borrower and NIC and
other than as set forth in the Stockholders' Agreement, no shares of capital
stock or other equity securities of
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VII 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
VII's capital stock, or (ii) any security which by its terms is convertible or
exercisable for shares of VII's capital stock, and there are no commitments to
issue any of the foregoing. All outstanding shares of VII Common Stock are duly
authorized, validly issued, fully paid and nonassessable and not subject to
preemptive rights.
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 Agent or any
Lender in connection herewith (as amended, supplemented, or otherwise modified
from time to time, 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 or VII, as applicable, 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.
2.04 No Violation.
(a) The execution, delivery and performance by Borrower or VII 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 VII, or result in any breach of or default under any
contract, obligation, indenture or other instrument to which Borrower or VII is
a party or by which Borrower or VII may be bound.
(b) The execution, delivery and performance by VGEI, VII 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,
VII or the Borrower 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
VII, the Borrower or VGEI may be bound.
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, VII or VGEI other than those disclosed by Borrower to
Agent in writing prior to the date hereof.
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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 Agent or
IFC or as otherwise permitted by the Required Lenders in writing.
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.
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.
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.
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 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.
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.
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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.
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, VII'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, VII 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.
2.14 No Liens. Neither Borrower nor any of its Subsidiaries has any
outstanding lien on any of its assets other than liens in connection with 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 in connection with the IFC Loan Agreement and Agent pursuant to the
Loan Documents.
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.
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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2.17 Information. All information regarding Borrower and its
Subsidiaries furnished to Agent or the Lenders 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.
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
3.01 Conditions to Initial Loan. The obligation of each Lender to make
the initial Loan pursuant to Section 1.01 under this amended and restated
agreement is subject to the fulfillment to the Lenders' satisfaction of all of
the following conditions:
(a) Approval Of Lender Counsel. All legal matters incidental to
the extension of credit by such Lender shall be satisfactory to such Lender's
counsel.
(b) Documentation. Each Lender shall have received, in form and
substance satisfactory to such Lender, such documents as such Lender may require
including, without limitation, this Agreement, the Notes, 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 (as amended,
supplemented or otherwise modified from time to time, the "IFC Loan Documents")
shall be satisfactory to such 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 Lenders' consent). Borrower
will deliver to each Lender all documents delivered to IFC upon closing of the
IFC Loan Agreement that such Lender specifically requests Borrower to deliver to
such Lender.
(d) Financial Condition. There shall have been no material
adverse change, as determined by each Lender, in the financial condition or
business of Borrower and its Subsidiaries, nor any material decline, as
determined by each 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 Agent evidence of
insurance coverage on all Borrower's and its Subsidiaries' property, in form,
12
substance, amounts, covering risks and issued by companies satisfactory to
Agent, 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.
3.02 Conditions of All Loans. The obligation of any 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) in the case of Tranche A Loans, only the proceeds of such
requested Tranche A 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
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(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;
(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.
3.03 Borrower's Certification. Each Lender shall not be obligated to
make any Loan until Borrower shall have delivered to Agent and each 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 and Section 3.05, as applicable, expressed to be effective as of
such date; and
(b) such evidence as each Lender may reasonably request of the
proposed utilization of the proceeds of the Loan or in the case of Tranche A
Loans only, the utilization of the proceeds of the corresponding loan to VGEI
under the IFC Loan Agreement.
3.04 Conditions for Lender's Benefit. The conditions in Section 3.01
through Section 3.03 and Section 3.05 are for the benefit of each Lender and may
be waived only by the Required Lenders in their sole discretion in accordance
with Section 7.05.
3.05 Conditions to the Initial Tranche B Loan. The obligation of each
Lender to make the initial Loan pursuant to Section 1.01(b) under this amended
and restated agreement is subject to the fulfillment to the Lenders'
satisfaction of all of the following conditions:
(a) Phase One Completion Date. The Phase One Completion Date
shall have occurred on or prior to March 31, 2003;
(b) Tranche A Loans. Each Lender shall have received, payment in
full in cash in respect of all amounts outstanding under the Notes in respect of
all Tranche A Loans; and
(c) Reserves. The Borrower shall have delivered to the Agent and
each Lender a reserve report issued by an independent petroleum engineer or
other independent authority satisfactory to the Agent in its sole discretion
stating that the proved, developed crude oil reserves in the Etame Field are not
less than 60,000,000 barrels.
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ARTICLE IV
AFFIRMATIVE COVENANTS
Borrower covenants that so long as any liabilities (whether direct or
contingent, liquidated or unliquidated) of Borrower to any Lender or Agent 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).
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.
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 Agent and each 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.
4.03 Financial Statements. Borrower will promptly furnish to Agent and
each Lender from time to time upon request such information regarding the
business and affairs and financial condition of Borrower and its Subsidiaries as
they may reasonably request, and will furnish to Agent and each 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 independent
public accountants acceptable to Agent 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
15
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 Agent and each
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 Agent or any Lender may reasonably request.
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.
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 Agent, and deliver to Agent from time
to time, at Agent's request, schedules setting forth all insurance then in
effect.
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
16
necessary repairs, renewals and replacements thereto so that such properties
shall be fully and efficiently preserved and maintained.
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 Agent's
satisfaction, for eventual payment thereof in the event Borrower or any
Subsidiary is obligated to make such payment.
4.08 Litigation. Promptly give notice in writing to Agent of all
litigation pending or threatened against Borrower or any Subsidiary with claims
in excess of $10,000.00 in the aggregate.
4.09 Notice to Lender. Promptly give written notice to Agent and each
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.
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 any Lender remains
committed to extend credit to Borrower pursuant hereto, or any liabilities
(whether direct or contingent, liquidated or unliquidated) of Borrower to the
Agent or any 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):
5.01 Use of Funds. Use the proceeds of the Tranche A Loans for
purposes other than to fund the Sponsor Escrow Account pursuant to the IFC Loan
Agreement.
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 or a Subsidiary to Agent, a Lender or an Affiliate of a Lender or
Agent, (b) the liabilities
17
of VII contemplated by the Stockholders' Agreement in effect on the date hereof,
(c) any other liabilities of Borrower and its Subsidiaries existing as of, and
described in the Subordination Agreement, and (d) other Long Term Debt, provided
that Borrower's Long Term Debt to Equity Ratio shall not exceed 70:30.
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 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 and except in each case for the transfer of all of the outstanding VGEI
Common Stock by the Borrower to VII.
5.04 Loans, Advances, Investments. Make any loans or advances to or
investments in any person or entity, except any of the foregoing to, or in, VII
or VGEI or to the extent existing as of, and disclosed to Lender prior to June
10, 2002.
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; provided, that, each of VGEI and VII may pay dividends or make
distributions to its shareholders.
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 (a) the Agent, or a stockholder of VII, or (b) which is existing as
of the date hereof, and described under, the Subordination Agreement.
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.
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 June 10,
2002 or in the case of VII, as of the date hereof.
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
18
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.
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.
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.
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.
5.13 Stockholders Agreement. Amend, modify, supplement or waive any
provision of the Stockholders' Agreement as in effect on the date hereof,
without the express written consent of the Required Lenders, which consent shall
be granted in the sole discretion of each such Lender.
ARTICLE VI
EVENTS OF DEFAULT
6.01 Events of Default. The occurrence of any of the following shall
constitute an "Event of Default" under this 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.
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(d) Any of the representations and warranties of Borrower made
herein or by the Borrower or a Subsidiary 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.
(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.
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
20
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 Agent'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, Lenders and Agent 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 any Lender or the Agent may be exercised at any time by any Lender
or the Agent 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
7.01 No Waiver. No delay, failure or discontinuance of Agent or any
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 Agent or any 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 (i)
set forth in such writing, or (ii) such waiver, permit, consent or approval is
made in accordance with Section 7.05 below.
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: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
AGENT: 1818 FUND II, L.P.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇
LENDERS: at its address set forth on Schedule II or the
applicable Assignment;
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
21
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.
7.03 Costs, Expenses and Attorneys' Fees. Borrower shall pay to Agent
and each 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 Agent or such Lender in
connection with (a) Agent's costs and expenses related to the negotiation and
preparation of this Agreement and the other Loan Documents, Agent's continued
administration hereof and thereof, and the preparation of any amendments and
waivers hereto and thereto, (b) the enforcement of Agent's or any Lender's
rights and/or the collection of any amounts which become due to Agent or any
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 Agent or any Lender or any other person) relating to Borrower or any other
person or entity.
7.04 Assignments.
(a) Borrower may not assign its rights or obligations hereunder
or under the Notes.
(b) Each 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")
and any tax forms required by the Internal Revenue Service or hereunder, if
applicable; 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, Agent and all Lenders then party to this Agreement
("Existing Lenders") of the Assignment and such tax forms and, except in the
case of an assignment to another Lender or an Affiliate of a Lender, for so long
as such Affiliate remains an Affiliate of such Lender, the consent of the
Required 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, Agent and each Lender 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 Aggregate 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
22
cease to be a "Lender" hereunder). The Agent will prepare a new Schedule II
giving effect to all such assignments effected and restating each Lenders'
Commitments, its Pro Rata Percentage 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 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.
(f) Whenever in this Agreement any of the parties hereto is
referred to, such reference shall be deemed to include the permitted successors
and assigns of such party.
(g) Upon acceptance and recording pursuant to Subsection 7.04(i),
from and after the Assignment Date specified in each Assignment, the assignee
thereunder shall be a party hereto and, to the extent of the interest assigned
by such Assignment, have the rights and obligations of a Lender under this
Agreement and the assigning Lender thereunder shall, to the extent of the
interest assigned by such Assignment, be released from its obligations under
this Agreement.
(h) By executing and delivering an Assignment, the assignee
thereunder shall be deemed to confirm to and agree with each other and the other
parties hereto as follows: that it has received a copy of this Agreement, and
such other documents and information as it has deemed appropriate to make its
own credit analysis and decision to enter into such Assignment; that such
assignee will independently and without reliance upon the Agent, such assigning
Lender or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement; such assignee appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement as are delegated to the Agent by the terms
hereof, together with such powers as are reasonably incidental thereto; and such
assignee agrees that it will perform in accordance with their terms all the
obligations which by the terms of this Agreement are required to be performed by
it as a Lender.
23
(i) The Agent shall maintain at one of its offices in the City of
New York a copy of each Assignment delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitments of,
and principal amount of the Loans owing to, each Lender pursuant to the terms
hereof from time to time (the "Register"). The entries in the Register shall be
conclusive and the Borrower, the Agent, and the Lenders may treat each person
whose name is recorded in the Register pursuant to the terms hereof as a Lender
hereunder for all purposes of this Agreement, notwithstanding notice to the
contrary. The Register and any Assignments delivered to the Agent pursuant to
this Section shall be available for inspection by the Borrower, and any Lender,
at any reasonable time and from time to time upon reasonable prior notice. No
assignment shall be effective unless it has been recorded in the Register as
provided in this paragraph (i).
7.05 Amendment. None of this Agreement or any other Loan Document
(including any Note) or any provision hereof or thereof may be waived, amended
or modified except pursuant to an agreement or agreements in writing entered
into by the Borrower and the Required Lenders (and, in the case of any other
Loan Document, any other person whose consent is required thereunder); provided,
however, that no such agreement shall: (a) (i) decrease the principal amount of
any Loan or decrease the rate of interest on any Loan, (ii) extend the maturity
of any Loan, any scheduled principal payment date or date for the payment of any
interest on any Loan or any fees by, in each case, a period of more than six
months or excuse any such payment or any part thereof, in each case for an
aggregate period of more than six months, or (iii) amend or modify the
provisions of Sections 1.03(a), 1.04(b), 7.03, or 7.19, in each case without the
prior written consent of each Lender affected thereby, (b) change or extend the
Commitment of any Lender without the prior written consent of such Lender, (c)
amend or modify the provisions of this Section, Sections 1.02(c), 1.06(b),
1.06(c), 3.05, 5.01 or the definition of the term "Required Lenders" or release
any guarantors (other than guarantors permitted to be sold or otherwise disposed
of by the Borrower pursuant to the Loan Documents), without the prior written
consent of each Lender, (d) amend or modify Section 1.01(a), or the definition
of the terms "Aggregate Tranche A Commitment", "Pro Rata Percentage", "Tranche A
Commitment", and "Tranche A Loans" without the prior written consent of the
Lenders holding a majority of the aggregate outstanding principal amount of the
Tranche A Loans and unused Tranche A Commitments, or (e) amend or modify
Sections 1.01(b) or 1.02(b), or the definition of the terms "Aggregate Tranche B
Commitment", "Tranche B Commitment", "Tranche B Loans" and "Original Lender
Warrant" without the prior written consent of the Lenders holding a majority of
the aggregate outstanding principal amount of the Tranche B Loans and unused
Tranche B Commitments; provided further that (x) no such agreement shall amend,
modify or otherwise affect the rights or duties of the Agent, hereunder or under
any other Loan Document without the prior written consent of the Agent, and (y)
no such agreement that by its terms adversely affects the rights of the Lenders
holding a majority of the aggregate outstanding principal amount of the Tranche
A Loans and unused Tranche A Commitments or the Lenders holding a majority of
the aggregate outstanding principal amount of the Tranche B Loans and unused
Tranche B Commitments in a manner different from its effect on the other classes
of Lenders shall become effective unless approved by a majority in interest of
each class of Lenders so adversely affected.
24
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.
7.07 Time. Time is of the essence of each and every provision of this
Agreement and each other of the Loan Documents.
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.
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.
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 Agent or any 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.
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 Agent and the Lenders, 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 the Agent or a 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 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.
25
(c) Nothing in this Agreement shall affect the right of the Agent
or a 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 Agent or a 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 Agent or a 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
Agent or a 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 Agent and each 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
26
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 Agent or a 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.
(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, Agent or the
applicable Lender shall also send by facsimile, or have sent by facsimile, a
copy of the papers to Borrower.
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 Agent for itself or on behalf of a Lender or 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
27
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 Agent for itself or on behalf of a Lender or 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, each of the Agent and each
Lender hereby elects to determine the applicable rate ceiling by using the
weekly ceiling from time to time in effect, subject to such person's right
subsequently to change such method in accordance with applicable law, as the
same may be amended or modified from time to time.
7.13 Right of Setoff; Deposit Accounts. Upon and after the occurrence
of an Event of Default, (a) Borrower hereby authorizes Agent and each Lender,
acting on its behalf or on behalf of any Lender, at any time and from time to
time, without notice, which is hereby expressly waived by Borrower, and whether
or not Agent or any Lender shall have declared any credit subject hereto 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 the Loan Documents (whether matured or unmatured, fixed or contingent,
liquidated or unliquidated), any and all amounts owing by Agent or any 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
Agent and each Lender a security interest in all deposits and accounts
maintained with Agent or any Lender and with any financial institution to secure
the payment of all obligations and liabilities of Borrower to Agent and each
Lender under the Loan Documents.
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.
7.15 Indemnification. Borrower agrees to indemnify Agent and each
Lender, each assignee or participant hereunder, each of their affiliates and
each of their officers, directors, partners, members, managers, 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
28
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 Agent or any 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.
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
THE AGENT OR A LENDER IN THE NEGOTIATION, ADMINISTRATION OR ENFORCEMENT THEREOF.
7.17 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 PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES RELATING TO THE INDEBTEDNESS.
7.18 Business Day. Whenever any payment hereunder or under any other
Loan Document shall become due, or otherwise would occur, on a day that is not a
Business Day, such payment may be made on the next succeeding Business Day, and
such extension of time shall in such case be included in the computation of
interest, if applicable.
7.19 Sharing of Setoffs. Each Lender agrees that if it shall, through
the exercise of a right of banker's lien, setoff or counterclaim against the
Borrower, or pursuant to a secured claim under Section 506 of Title 11 of the
United States Code or other security or interest arising from, or in lieu of,
such secured claim, received by such Lender under any applicable bankruptcy,
insolvency or other similar law, or by any other means, obtain payment,
voluntary or involuntary, in respect of any Loan, it shall be deemed
simultaneously to have purchased from such other Lender at face value, and shall
promptly pay to such other Lender the purchase price for, a participation in the
Loan or Loans, as the case may be, of such other Lender, so that the benefit of
all such payments
29
shall be shared by the Lenders ratably in accordance with the aggregate unpaid
principal amount of all outstanding Loans; provided, however, that if any such
participations are purchased pursuant to this Section and the payment giving
rise thereto shall thereafter be recovered, such participations shall be
rescinded to the extent of such recovery and the purchase price restored without
interest. The Borrower expressly consents to the foregoing arrangements and
agrees that any Lender holding a participation in a Loan deemed to have been so
purchased may exercise any and all rights of banker's lien, setoff or
counterclaim with respect to any and all moneys owing by the Borrower to such
Lender by reason of such participation as fully as if such Lender had made a
Loan directly to the Borrower in the amount of such participation.
ARTICLE VIII
THE AGENT
8.01 Agency.
(a) In order to expedite the transactions contemplated by this
Agreement, the Agent is hereby appointed to act as Agent on behalf of the
Lenders. Each of the Lenders, each assignee of any such Lender hereby
irrevocably authorizes the Agent to take such actions on behalf of such Lender
or assignee and to exercise such powers as are specifically delegated to the
Agent by the terms and provisions hereof and of the other Loan Documents,
together with such actions and powers as are reasonably incidental thereto. The
Agent is hereby expressly authorized by the Lenders, without hereby limiting any
implied authority, (i) to receive on behalf of the Lenders all payments of
principal of and interest on the Loans, and all other amounts due to the Lenders
hereunder, and promptly to distribute to each Lender its proper share of each
payment so received; (ii) to give notice on behalf of each of the Lenders to the
Borrower of any Event of Default specified in this Agreement of which the Agent
has actual knowledge acquired in connection with its agency hereunder; and (iii)
to distribute to each Lender copies of all notices, financial statements and
other materials delivered by the Borrower or its Subsidiaries pursuant to this
Agreement or the other Loan Documents as received by the Agent. Without limiting
the generality of the foregoing, the Agent is hereby expressly authorized to
release any security interest in any collateral, in the event that such
collateral, shall be sold, transferred or otherwise disposed of in a transaction
permitted hereunder or contemplated by the Subordination Agreement, and to
execute any and all documents (including releases) with respect to the
collateral and the rights of the secured parties with respect thereto, in each
case as contemplated by and in accordance with the provisions of this Agreement,
the Subordination Agreement and the other Loan Documents.
(b) None of the Agent or any of its respective partners, members,
managers, directors, officers, employees or agents shall be liable as such for
any action taken or omitted by any of them except for its own gross negligence
or willful misconduct, or be responsible for any statement, warranty or
representation herein or the contents of any document delivered in connection
herewith, or be required to ascertain or to make any inquiry concerning the
performance or observance by the Borrower or any
30
other Person of any of the terms, conditions, covenants or agreements contained
in any Loan Document. The Agent shall not be responsible to the Lenders for the
due execution, genuineness, validity, enforceability or effectiveness of this
Agreement or any other Loan Documents, instruments or agreements. The Agent
shall in all cases be fully protected in acting, or refraining from acting, in
accordance with written instructions signed by the Required Lenders and, except
as otherwise specifically provided herein, such instructions and any action or
inaction pursuant thereto shall be binding on all the Lenders. The Agent shall,
in the absence of knowledge to the contrary, be entitled to rely on any
instrument or document believed by it in good faith to be genuine and correct
and to have been signed or sent by the proper person or persons. None of the
Agent or any of its respective partners, members, managers, directors, officers,
employees or agents shall have any responsibility to the Borrower or any other
Person on account of the failure of or delay in performance or breach by any
Lender of any of its obligations hereunder or to any Lender on account of the
failure of or delay in performance or breach by any other Lender or the Borrower
or any guarantor of any of their respective obligations hereunder or under any
other Loan Document or in connection herewith or therewith. The Agent may
execute any and all duties hereunder by or through agents or employees and shall
be entitled to rely upon the advice of legal counsel selected by it with respect
to all matters arising hereunder and shall not be liable for any action taken or
suffered in good faith by it in accordance with the advice of such counsel.
(c) The Lenders hereby acknowledge that the Agent shall not be
under any duty to take any discretionary action permitted to be taken by it
pursuant to the provisions of this Agreement unless it shall be requested in
writing to do so by the Required Lenders.
8.02 Successor Agent.
(a) Subject to the appointment and acceptance of a successor
Agent as provided below, any Agent may resign at any time by notifying the
Lenders and the Borrower in writing. Upon any such resignation, the Required
Lenders shall have the right to appoint a successor. If no successor shall have
been so appointed by the Required Lenders and shall have accepted such
appointment within 30 days after the retiring Agent gives notice of its
resignation, then the retiring Agent may, on behalf of the Lenders, appoint a
successor Agent which shall be a bank with an office in New York, New York,
having a combined capital and surplus of at least $10,000,000 or an Affiliate of
any such bank. Upon the acceptance of any appointment as Agent hereunder by a
successor bank, such successor shall succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent and the retiring
Agent shall be discharged from its duties and obligations hereunder. After the
Agent's resignation hereunder, the provisions of this Article and Sections
1.04(b) and 7.03 shall continue in effect for its benefit in respect of any
actions taken or omitted to be taken by it while it was acting as Agent.
31
8.03 Agent as Lender.
(a) With respect to the Loans made by it hereunder, the Agent in
its individual capacity and not as Agent shall have the same rights and powers
as any other Lender and may exercise the same as though it were not an Agent,
and the Agent and its Affiliates may hold the capital stock of, lend money to
and generally engage in any kind of business with the Borrower or any of the
Subsidiaries or Affiliate thereof as if it were not an Agent.
8.04 Expenses of Agent.
(a) Each Lender agrees (i) to reimburse the Agent, on demand, in
the amount of, if the Tranche A Loans are outstanding, its Pro Rata Percentage
of, and if the Tranche B Loans are outstanding, its pro rata share (based on the
amount of its Tranche B Loans and available Tranche B Commitments hereunder) of,
any expenses incurred after the date hereof, for the benefit of the Tranche B
Lenders by the Agent, including counsel fees and compensation of agents and
employees paid for services rendered on behalf of the Lenders, that shall not
have been reimbursed by the Borrower and (ii) to indemnify and hold harmless the
Agent and any of its partners, members, managers, directors, officers, employees
or agents, on demand, in the amount of such pro rata share, from and against any
and all liabilities, taxes, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever that may be imposed on, incurred by or asserted against it in its
capacity as Agent or any of them in any way relating to or arising out of this
Agreement or any other Loan Document or action taken or omitted by it or any of
them under this Agreement or any other Loan Document, to the extent the same
shall not have been reimbursed by the Borrower; provided that no Lender shall be
liable to an Agent or any such other indemnified person for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements that are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the gross
negligence or willful misconduct of such Agent or any of its partners, members,
managers directors, officers, employees or agents.
8.05 Independent Credit Analysis by Lenders.
(a) Each Lender acknowledges that it has, independently and
without reliance upon the Agent or any other Lender and based on such documents
and information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon the Agent or any other Lender and
based on such documents and information as it shall from time to time deem
appropriate, continue to make its own decisions in taking or not taking action
under or based upon this Agreement or any other Loan Document, any related
agreement or any document furnished hereunder or thereunder.
32
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., as Agent
By: ▇▇▇▇▇ Brothers ▇▇▇▇▇▇▇▇ & Co.,
its general partner
By:
--------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title:
1818 FUND II, L.P., as Lender
By: ▇▇▇▇▇ Brothers ▇▇▇▇▇▇▇▇ & Co.,
its general partner
By:
--------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title:
NISSHO IWAI CORPORATION, as Lender
By:
------------------------------
Name:
Title:
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:
APPENDIX A
DEFINED TERMS
General Definitions. Wherever used in this Agreement, the following
terms have the meanings specified or referred to below:
"Additional Shares" has the meaning specified in Subsection 1.02(c).
"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;
"Agent" has the meaning specified in the preamble;
"Aggregate Commitment" means, collectively, the Aggregate Tranche A
Commitments and the Aggregate Tranche B Commitments;
"Aggregate Tranche A Commitment" has the meaning set forth in
Subsection 1.01(a).
"Aggregate Tranche B Commitment" has the meaning set forth in
Subsection 1.01(b).
"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.
"Commitment" means with respect to each Lender, collectively the
amount set forth on Schedule II as such Lender's Tranche A Commitment, and such
Lender's Tranche B Commitment, in each case as in effect from time to time.
APPENDIX A-1
"Common Stock" has the meaning specified in Subsection 2.02(a).
"Consent" has the meaning specified in Subsection 2.02(b).
"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.
"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.
APPENDIX A-2
"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 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
APPENDIX A-3
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.
"Lenders" has the meaning set forth in the preamble.
"Loans" mean, collectively the outstanding Tranche A Loans and the
Tranche B Loans.
"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(c).
"Obligations" means, collectively, (a) the due and punctual payment by
the Borrower or VII, as applicable, 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 Agent
or a 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 or VII, as applicable, monetary or otherwise, under
or pursuant to the Loan Documents.
APPENDIX A-4
"Original Credit Agreement" has the meaning specified in the preamble.
"Original Lender Warrant" has the meaning specified in Subsection
1.02(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.
"Pro Rata Percentage" of any Lender at any time shall mean the
percentage of the Aggregate Tranche A Commitment represented by such Lender's
Tranche A Commitment. In the event the Tranche A Commitments shall have been
terminated, the Pro Rata Percentages of the Lenders shall be determined by
reference to the Tranche A Loans outstanding (giving effect to any assignments
pursuant to Section 7.04).
"Required Lenders" shall mean, at any time, Lenders having Loans and
unused Commitments representing a majority of the sum of all Loans outstanding
and unused Commitments.
"Register" shall have the meaning specified in Subsection 7.04(i).
"Security Documents" has the meaning specified in Section 1.04.
"Series A Preferred Stock" has the meaning specified in Subsection
2.02(a).
APPENDIX A-5
"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.
"Stockholders' Agreement" means the Stockholders' Agreement, dated as
of August , 2002 by and among VII, Borrower and NIC, as amended, supplemented
--
or otherwise modified from time to time.
"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.
"Taxes" means any present or future taxes, withholding obligations,
duties and other charges of whatever nature levied by any Authority.
"Tranche A Commitment" means with respect to each Lender, the amount
set forth on Schedule II as such Lender's Tranche A Commitment, as in effect
from time to time.
"Tranche A Loan" has the meaning specified in Subsection 1.01(a).
"Tranche B Commitment" means with respect to each Lender, the amount
set forth on Schedule II as such Lender's Tranche B Commitment, as in effect
from time to time.
"Tranche B Loan" has the meaning specified in Subsection 1.01(b)
"Transaction Documents" has the meaning ascribed to such term in the
IFC Loan Agreement, as the same may be, amended, supplemented or otherwise
modified from time to time.
"VGEI" has the meaning set forth in the recitals hereto.
APPENDIX A-6
"VGEI Common Stock" has the meaning specified in Subsection 2.02(b).
"VII" has the meaning set forth in the recitals.
"VII Common Stock" has the meaning specified in Subsection 2.02(c).
"Warrants" means the warrants exercisable for Common Stock issued by
the Borrower to the Lenders, dated, in the case of warrants issued to 1818 Fund
L.P., as of June 10, 2002, and in the case of warrants issued to NIC, as of the
date hereof, as such warrants may be amended, supplemented or otherwise modified
from time to time.
APPENDIX A-7
SCHEDULE I
Unless otherwise stated, all documents are of even date herewith.
1. "Subordination Agreement" by and between Borrower, IFC, VII and
Lenders.
2. "Subordinated Pledge of Shares Agreement" by and between Borrower,
VII and Agent.
3. "Charge Over Deposit Agreement" by and between Borrower and Agent
and any notices required thereby or delivered thereto.
SCHEDULE-I-1
SCHEDULE II
LENDERS' COMMITMENTS
Tranche A Commitment
Contact Person, and
Lender Address for Notice Pro Rata Percentage Commitment
----------------------- ------------------------------- ------------------- ----------
1818 Fund II, L.P. ▇▇ ▇▇▇▇ ▇▇▇▇▇▇ 70% $7,000,000
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇
Nissho Iwai Corporation 3-1 Daiba 2-chome 30% $3,000,000
▇▇▇▇▇▇-▇▇, ▇▇▇▇▇
▇▇▇-▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
General Manager
Energy Project Department
Tranche B Commitment
Contact Person, and
Lender Address for Notice Pro Rata Percentage Commitment
----------------------- ------------------------------- ------------------- ----------
1818 Fund II, L.P. ▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇/▇ $3,000,000
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇
SCHEDULE II-1
SCHEDULE III
FORM OF BORROWER'S CERTIFICATE
[Borrower's Letterhead]
[Date]
1818 Fund II, L.P., as Agent
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇
[Each Lender]
Gentlemen:
1. Please refer to the Amended and Restated Subordinated Credit
Agreement (the "Loan Agreement") dated , , between VAALCO Energy,
----------- ---
Inc. (the "Borrower"), 1818 Fund II, L.P. ("Agent") and the lenders from time to
time party thereto. Terms defined in the Loan Agreement have their defined
meanings whenever used in this certificate.
2. The Borrower irrevocably requests the disbursement of a Tranche
[__] Loan 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.]/1/ [____________________]/2/
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
----------
/1/ Tranche A Loans only.
/2/ Tranche B Loans only.
SCHEDULE III-1
three (3) Business Days after this Loan for the purpose of financing costs
associated with the Project];/1/ [____________________]/2/
(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);
(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;
[(j) the Phase One Completion Date occurred on or prior to March
31, 2003;
(k) the Tranche A Loans have been repaid in full in cash on or
prior to April 1, 2003; and
(l) the Borrower has delivered to the Agent and each Lender a
reserve report issued by an independent petroleum engineer or other independent
SCHEDULE III-2
authority satisfactory to the Agent in its sole discretion stating that the
Etame Field [contains] at least 60,000,000 barrels of proven developed oil
reserves./3/
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 Agent and each Lender.
Yours truly,
VAALCO ENERGY, INC.
By:
--------------------------------------
Authorized Representative
----------
/3/ Tranche B Loans only.
SCHEDULE III-3
EXHIBIT A
NOTE
$__,000,000.00 June 10, 2002/1/
FOR VALUE RECEIVED, the undersigned VAALCO ENERGY, INC., a Delaware
corporation ("Borrower"), promises to pay to the order of
or its permitted assigns
---------------------------------------------
("Lender") at its office at , or at such
----------------------------------------
other place as the holder hereof may designate, in lawful money of the United
States of America and in immediately available funds, the principal sum of
($__,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 on the outstanding principal amount thereof and such other amounts owed
to the Lender from time to time as set forth herein or in the Loan Documents.
This Note is issued in connection with that certain Subordinated Credit
Agreement between 1818 Fund II, L.P., as Lender and Borrower of even date
herewith (as amended, supplemented or otherwise modified, 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 Agent and 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 Agent and
as consented to by Lender.
(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; provided, however, that if the
outstanding Tranche A Commitment or Tranche B Commitment, as applicable, is less
than said amount, the minimum principal amount to be advanced shall equal the
balance of the unused Tranche A Commitment or Tranche B Commitment, as
applicable; (ii) whether the amount to be advanced is to be a Tranche A Loan or
a Tranche B Loan and (iii) the requested date principal is to be advanced which
shall be a Business Day. Any amounts repaid under this Note may not be
reborrowed.
----------
/1/ Notes issued to Original Lender only.
EXHIBIT A-1
INTEREST:
Borrower agrees to pay interest to the Agent at the address listed in
the Credit Agreement 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 respect of the Tranche A Loans, in a
single payment on the "Tranche A Maturity Date" as hereinbelow defined and in
respect of the Tranche B Loans, in a single payment on the "Tranche B Maturity
Date" as hereinbelow defined.
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 of Tranche A Loans. To the extent not sooner paid, the
unpaid principal balance of the Tranche A Loans outstanding under this Note,
together with all accrued but unpaid interest on such Tranche A Loans 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
"Tranche A Maturity Date").
(b) Repayment of Tranche B Loans. To the extent not sooner paid, the
unpaid principal balance of the Tranche B Loans evidenced by this Note, together
with all accrued but unpaid interest on such Tranche B Loans and outstanding
expenses hereunder and under the Loan Documents shall be due and payable on the
earliest of (i) the first anniversary of the date the initial Tranche B Loan is
made to the Borrower and (ii) the date that all principal and accrued and unpaid
interest shall become due and payable pursuant to Article VI of the Credit
Agreement (the "Tranche B Maturity Date").
EXHIBIT A-2
(c) 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.
(d) 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.
(e) 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 a Tranche A Loan made hereunder within three (3) Business Days of the
funding of such Tranche A Loan pursuant to Section 1.01(a) of the Credit
Agreement, Borrower shall immediately notify Agent and Lender and shall repay
such loan plus interest accruing thereon to Agent for the benefit of Lender upon
three Business Days written demand from Lender. Further, (i) Borrower shall
prepay all outstanding Tranche A Loans on a pro rata basis, in amounts equal to
any amounts released by IFC under the Sponsor Escrow Account other than the
amounts described under the first sentence of this subsection (e) and (ii)
Borrower shall prepay all outstanding Loans on a pro rata basis with (x) the net
proceeds of any debt or issuance of securities received by Borrower in excess of
Thirteen Million Dollars ($13,000,000), and (y) to the extent not prohibited
under the IFC Loan Agreement (as in effect on the date hereof) or the
Stockholders' Agreement, ninety percent (90%) of the Free Cash Flow from the
Project. For purposes of this subsection (e), "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, the Agent
and the Lender shall be entitled to such remedies as set forth in the Credit
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.
EXHIBIT A-3
(ii) For the exclusive benefit of the Agent and the 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 the Agent or the 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 Agent or 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
Agent or 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
Agent and 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 irrevocably
EXHIBIT A-4
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 Agent or
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, Agent or 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 Agent or 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 Agent for the benefit of Lender
or Lender,
EXHIBIT A-5
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 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 Agent for the benefit of Lender or
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, Agent and Lender hereby
elects to determine the applicable rate ceiling by using the weekly ceiling from
time to time in effect, subject to such Person'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 Agent and Lender, at any
time and from time to time, without notice, which is hereby expressly waived by
Borrower, and whether or not Agent or 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 Agent or 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 Agent and
Lender a security interest in all deposits and accounts maintained with Agent or
Lender and with any financial institution to secure the payment of all
obligations and liabilities of Borrower to Agent or Lender under this Note.
(d) Subordination. Payment of this Note is subject to the terms of the
Subordination Agreement.
(e) [Renewal;] Assignment. [This note is in renewal and modification
but not discharge or novation of that promissory note dated June 10, 2002, from
EXHIBIT A-6
Borrower to 1818 Fund II, L.P. in the original principal amount of
$10,000,000.]/2/ 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 Agent and Lender.
(f) Amendment. This Note may be amended or modified only in writing
signed by Borrower, Agent 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.]
----------
/2/ Include in Note issued to Original Lender only.
EXHIBIT A-7
IN WITNESS WHEREOF, the undersigned has executed this Note as of the
date first written above.
VAALCO ENERGY, INC.
By:
--------------------------------------
Name:
Title:
EXHIBIT A-8
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 Amended and Restated Credit
Agreement dated as of , 2002 (as amended, modified or otherwise
-----------
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, as Agent (the "Agent"), 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 [Tranche A] [Tranche B] 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") [Tranche A] [Tranche B] Commitment including its
pro rata rights and obligations under the Credit Agreement and the other
Security Documents and the obligation to make [Tranche A] [Tranche B] Loans and
any right to receive payments for the [Tranche A] [Tranche B] Loans outstanding
under the Credit Agreement equal to the percentage share of the Aggregate
[Tranche A] [Tranche B] Commitment specified on Schedule I hereto for Assignee,
plus the interest and fees which will accrue from and after the Assignment Date.
EXHIBIT D-1
"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 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 Agent and Required Lenders. By executing this
Agreement as provided below, in accordance with Section 7.04(b) of the Credit
Agreement, each of the Agent and the Required 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 outstanding
Loans to the extent assigned to such transferee as set forth on Schedule I
hereto. 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
EXHIBIT D-2
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 and Agent are 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 of the Credit
Agreement, (i) deliver to the Borrower (or its 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, in respective
principal amounts equal to the respective Commitments 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.
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 Agent and Required
Lenders contemplated by Section 2.03 hereof.
EXHIBIT D-3
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 the Agent or 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, 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:
EXHIBIT D-4
(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 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 Agent and the
Required 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 Agent and Existing Lenders
and Borrower, and the Assignee agrees that the Agent and the Existing Lenders
and Borrower are entitled to rely upon such representations and warranties.
EXHIBIT D-5
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.
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:
-----------------------------------------
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
Address for Notices:
-----------------------------------------
-----------------------------------------
-----------------------------------------
Telephone No.:
---------------------------
Attention:
-------------------------------
EXHIBIT D-6
ASSIGNEE:
-----------------------------------------
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
Address for Notices:
-----------------------------------------
-----------------------------------------
-----------------------------------------
Telephone No.:
---------------------------
Attention:
-------------------------------
ACKNOWLEDGED AND CONSENTED TO:
[Agent, if applicable]
---------------------------------------
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
[Required Lenders, if applicable]
EXHIBIT D-7
SCHEDULE I
TO ASSIGNMENT AGREEMENT
Assignor Assignee
Retained Interest (Assigned Interest)
----------------- -------------------
a. Tranche A Commitment $______ $______
b. Tranche A Loans Outstanding $______ $______
c. Tranche B Commitment $______ $______
d. Tranche B Loans Outstanding $______ $______
EXHIBIT D-8
EXHIBIT E
FORM OF
U.S. TAX COMPLIANCE CERTIFICATE
Reference is made to the Amended and Restated Subordinated Credit
Agreement (the "Credit Agreement"; unless otherwise defined herein, terms
defined in the Credit Agreement and used herein shall have the meanings given to
them in the Credit Agreement), dated as of , 2002, among VAALCO
-------- --
ENERGY, INC. (the "Borrower"), the financial institutions from time to time
parties thereto (the "Lenders"), and 1818 Fund II, L.P., as agent (in such
capacity, the "Agent") for the Lenders.
The undersigned hereby certifies to the Agent and to the Borrower
that:
(1) The undersigned is the beneficial owner of the Note registered in
its name;
(2) The undersigned is not a bank (as such term is used in Section
881(c)(3)(A) of the Internal Revenue Code of 1986, as amended (the "Code"));
(3) The undersigned is not a "10-percent shareholder" (as such term is
used in Section 881(c)(3)(B) of the Code);
(4) The income from the Note held by the undersigned is not
effectively connected with the conduct of a trade or business within the United
States;
(5) The undersigned is not a controlled foreign corporation related
(within the meaning of Section 864(d)(4) of the Code) to the Borrower;
(6) The undersigned is a person other than (i) a citizen or resident
of the United States of America, its territories and possessions (including the
Commonwealth of Puerto Rico and all other areas subject to its jurisdiction)
(for purposes of this clause (6), the "United States"), (ii) a corporation,
partnership or other entity created or organized under the laws of the United
States or any political subdivision thereof or therein or (iii) an estate or
trust that is subject to United States federal income taxation regardless of the
source of its income; and
(7) The undersigned is not a natural person.
EXHIBIT E-1
We have furnished you with a certificate of our non-U.S. person status
on Internal Revenue Service Form W-8 BEN. By executing this certificate, the
undersigned agrees that (a) if the information provided on this certificate
changes, the undersigned shall so inform the Borrower in writing within thirty
days of such change and (b) the undersigned shall furnish the Borrower a
properly completed and currently effective certificate in either the calendar
year in which payment is to be made by the Borrower to the undersigned, or in
either of the two calendar years preceding such payment.
[NAME OF LENDER]
By:
------------------------------------
Title:
[ADDRESS]
Dated: , 200 .
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EXHIBIT E-2