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EXHIBIT 10.25
Note Payable Agreement
Between BANCO MERCANTIL, C.A. (BANCO UNIVERSAL), domiciled in Caracas,
originally registered with the Commercial Registry kept by the former Commercial
Court of the Federal District, on April 3, 1925, under No. 123, the Articles of
Incorporation/Bylaws of which were amended and merged into one single text as
evidenced by the entry made in the First Commercial Registry of the Judicial
Circuit of the Capital District and State of Miranda on December 15, 2000, under
No. 17, Volume 228-A First, referred to as the "BANK", represented in this
proceeding by its Attorney-in-fact XXXX XXXXXX XXXXX XXXXX, Venezuelan, of legal
age, married, an attorney, domiciled in the city of Caracas, bearer of Identity
Card NO. 9.120.426, his capacity being evidenced by a power of attorney
registered with the Subaltern Office of the First Public Registry Circuit of
Baruta Municipality, State of Miranda, on February 19, 1999, under No. 18,
Volume 2 - Third Protocol, sufficiently authorized to execute this document, as
party of the first part; and, as party of the second part, XXXXXX-VINCCLER,
C.A., a corporation domiciled in Caracas, registered with the Second Commercial
Registry of the Judicial Circuit of the Federal District and State of Miranda,
on June 29, 1993, under No. 13, Volume 146-A Second, referred to as the
"BORROWER", represented herein by XXXXXXXXXXX X. XXXX, a United States citizen,
of legal age, domiciled in Caracas, bearer of Identity Card NO. E-80.089.430 and
XXXX X. XXXXXX, Venezuelan, of legal age, domiciled in Caracas, bearer of
Identity Card No. V-3.019.127, sufficiently authorized by the Special
Shareholders' Meeting of their principal held on March 1, 2001, the minutes of
which were registered with the Second Commercial Registry of the Judicial
Circuit of the Capital District and State of Miranda, on March 5, 2001, under
No. 50, Volume 38-A Second, it has been agreed to enter into this agreement to
be governed by the following clauses: FIRST: The BANK grants the BORROWER an
interest bearing loan of FOUR BILLION FOUR HUNDRED THIRTY-FIVE MILLION TWO
HUNDRED THOUSAND BOLIVARS (BS.4,435,200,000.00), that the BORROWER declares to
have received to its full satisfaction. The BORROWER shall use the funds
received as an INTEREST BEARING LOAN in operations of legitimate commercial
character; SECOND: The BORROWER agrees to return the money received as an
INTEREST BEARING LOAN within a term of FIVE (5) YEARS as of the date of
authentication of this document, by paying NINETEEN (19) quarterly installments
solely to amortize the owed capital, as follows: The first EIGHTEEN (18)
quarterly installments of TWO HUNDRED THIRTY-THREE MILLION FOUR HUNDRED
THIRTY-ONE THOUSAND FIVE HUNDRED SEVENTY-EIGHT BOLIVARS AND NINETY-FIVE CENTIMOS
(BS.233,431,578.95) each, and ONE (1) final quarterly installment of TWO HUNDRED
THIRTY-THREE MILLION FOUR HUNDRED THIRTY-ONE THOUSAND FIVE HUNDRED SEVENTY-EIGHT
BOLIVARS AND NINETY CENTIMOS (BS.233,431,578.90), the first of which must be
paid on September 28, 2001 and the other installments shall be paid on the last
Business Day ("Business day" is understood as any day on which the banks are
open for business in the Bolivarian Republic of Venezuela) at the end of each
subsequent calendar quarter until paid in full; THIRD: The amount of monies
received as an INTEREST BEARING LOAN by the BORROWER will bear conventional
interest on the outstanding balance according to a floating rate system,
calculated at the beginning of each NINETY (90) consecutive day period, at the
interest rate mutually agreed upon by the BANK and the BORROWER TWO (2) BUSINESS
DAYS prior to the beginning of each of the TWENTY (20) periods of NINETY (90)
consecutive days which form the term indicated in this clause. It is understood
that if the parties do not reach an agreement on this matter, the applicable
interest rate will be the weighted average lending rate of the SIX (6) principal
commercial and universal banks in the country with the greatest volume of
deposits, excluding agricultural portfolios, as published by the Central Bank of
Venezuela for the TWO (2) Business Days prior to each of the TWENTY (20) periods
of NINETY (90) consecutive days. The BORROWER will pay the interest thus
calculated on the last Business Day of each month. For the first NINETY (90)
CONSECUTIVE DAY period, the applicable interest rate as of the date of
authentication of this document shall be sixteen point five percentage points
(16.5%) per annum. FOURTH: If the BORROWER defaults on the payment of any of the
obligations established in this document, the applicable interest rate during
the default term will be that resulting from adding THREE (3) PERCENTAGE POINTS
to the interest rate calculated in the Third Clause. FIFTH: The BORROWER
expressly and irrevocably authorizes the BANK to charge or debit any account or
deposit it maintains with that Banking Institution or the BORROWER's account
with COMMERCEBANK, N.A., identified as NO. 8300551706, all matured amounts owed
in relation to the granting of this INTEREST BEARING LOAN, extinguishing the
BORROWER's payment obligation for the amounts due up to the amount charged or
debited by the BANK either from the BANK or the COMMERCEBANK, N.A., without it
being understood that these charges give rise to novation of its obligations;
furthermore it is expressly understood that for the purpose of debiting accounts
in United States Dollars, the BANK shall convert the amounts due by the BORROWER
in legal tender of the Bolivarian Republic of Venezuela into United States
Dollars at the referential exchange rate for purchasing foreign currency
effective on the date of the corresponding debit, as published by the Central
Bank of Venezuela. SIXTH: The BORROWER may make special repayments of the
principal due, and total prepayment of the entire interest bearing loan referred
to herein, only at the times it must pay quarterly principal installments and
provided it gives notice thereof to the BANK at least THIRTY (30) CONSECUTIVE
DAYS in advance of the date on which such repayment or total prepayment referred
to above is to be made. SEVENTH: Any and all of the obligations assumed by the
BORROWER will be considered due by virtue of this document and, therefore,
payment in full shall be forthwith due and payable in any of the following
events: 1. Failure to pay when due any ONE (1) of the quarterly principal
installments or any ONE (1) of the monthly interest installments which BORROWER
must pay, provided that BANK notifies the BORROWER of the failure to pay and
grants the BORROWER three (3) Business Days upon receipt of the notice to remedy
the default by making payment of the amount due to the BANK. 2. If the BORROWER
assigns or delegates the rights or obligations assumed under this agreement to
any individual or company. 3. If the BORROWER assigns or delegates to any
individual or company, except the assignment or delegation to an Affiliate
("Affiliate" being defined as a subsidiary of Xxxxxx Vinccler, C.A. or any other
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company in which Xxxxxx Oil and Gas Company holds at least 51% of the capital
stock and administrative control of the company), the Unidad Monagas Sur
Operating Services Agreement (for Uracoa, Bombal, Tucupita), entered into
between Lagoven, S.A., a Subsidiary of Petroleos de Venezuela (currently PDVSA),
Xxxxxx Oil and Gas Company and Venezolana de Inversiones y Construcciones
Xxxxxxx, C.A. (VINCCLER, C.A.), on July 31, 1992 or the credit rights derived
from said Agreement. 4. If the BORROWER revokes the instructions given to PDVSA
EXPLORACION Y PRODUCCION, C.A., evidenced by a document authenticated before the
Seventh Notary Public of Chacao Municipality, State of Miranda, Caracas
Metropolitan District, on October 11, 2000, under No. 35, Volume 48 of the Books
of Authentication kept by that Notary Public, in order for the payments arising
from the Agreement mentioned in subparagraph 3 of this same clause to be
deposited or credited only in the account that the BORROWER maintains with
COMMERCEBANK, N.A., account number NO. 8300551706. 5. If precautionary or
executive measures prohibiting the sale or encumbrance, attachment, seizure or
other type of measure are declared on the assets owned by the BORROWER and these
measures are not stayed within a period of THIRTY (30) consecutive days after
the date the decision to adopt these measures was issued. 6. If the BORROWER is
declared by a Court of Law to be in moratorium, bankruptcy or if its assets are
judicially liquidated or suspension of payments is judicially declared. 7. If
the BORROWER fails to deliver annual Financial Statements to the BANK during the
term of the interest bearing loan within FOUR (4) MONTHS of the end of the
relevant fiscal year, duly certified by a firm of Independent Auditors approved
by the BANK (the BANK hereby approves the BORROWER's current audit firm
Xxxxxxxxx, Xxxxxxx y Asociados - member of PriceWaterhouse Coopers) or its
monthly Balance Sheets within THIRTY (30) consecutive days after they have been
requested. 8. If substantial changes are made to the current shareholding
structure of the BORROWER that results in XXXXXX OIL AND GAS COMPANY having less
than FIFTY ONE (51%) of the capital stock and administrative control of the
BORROWER. 9. If the BORROWER declares cash dividends to be distributed among its
shareholders while there is a principal installment or interest payment due and
not paid under this document. 10. If during the term of this INTEREST BEARING
LOAN, the BORROWER or the GUARANTOR identified below, incurs a patent default on
monetary obligations assumed vis-a-vis any third party or any other type of
obligation that results in the accelerated maturity of the obligations set forth
in the contracts governing its relationships with such parties. 11. If at any
time during the term of this interest bearing loan, it is proven that the
BORROWER does not maintain due insurance for the facilities in which it operates
or carries out its day-to-day commercial activities, according to the demands of
the individual or company that owns such facilities. 12. If the GUARANTOR
identified below incurs any of the events of default set forth in the indenture
dated November 3, 1997 signed with First Trust of New York, National
Association, Trustee. On the other hand, if the GUARANTOR should prepay all the
financing referred to in such indenture dated November 3, 1997, the BORROWER
undertakes to renegotiate with the BANK the terms and conditions that will
govern this interest bearing loan from then on. If the BORROWER and the BANK
fail to reach an agreement on this matter within a maximum term of THIRTY (30)
consecutive days after the occurrence of such event, the INTEREST BEARING LOAN
shall be deemed due and payable and therefore the BANK may demand full and
immediate payment of all monies owed by virtue of this agreement. 13.- If during
the term of this INTEREST BEARING LOAN, the BORROWER suspends the production
(extraction) of oil that is its corporate purpose for a term of more than THIRTY
(30) CONSECUTIVE DAYS and 14.- Default on any other obligation assumed by the
BORROWER hereunder. EIGHTH: The BORROWER expressly declares that this interest
bearing loan is guaranteed by its parent company XXXXXX OIL AND GAS COMPANY, a
corporation organized and existing under the laws of the State of Delaware,
United States of America, referred to herein as the "GUARANTOR", for up to
TWELVE MILLION THREE HUNDRED THOUSAND UNITED STATES DOLLARS (US$12,300,000.00)
or its equivalent in local currency, that is, bolivars. NINTH: For the sole
purpose of strictly complying with the provisions of Article 95 of the Law of
the Central Bank of Venezuela, the amount expressed in UNITED STATES DOLLARS is
equivalent to EIGHT BILLION SIX HUNDRED FIFTY-NINE MILLION TWO HUNDRED THOUSAND
BOLIVARS (BS.8,659,200,000.00). This calculation was based on the exchange rate
for the sale of UNITED STATES DOLLARS in force on the free foreign exchange
market on February 28, 2001 of SEVEN HUNDRED FOUR BOLIVARS (BS.704.00) per
UNITED STATES DOLLAR; TENTH: The BANK will send all account statements as well
as any other type of correspondence or notice regarding this agreement by mail
or by any other written means to the following address of the BORROWER: Centro
Comercial Fiorca, Piso 2, Oficina 00-0, Xxxxxxx Xxxxxxxxxx, Xxxxxxx, Xxxxxx
Monagas. The BORROWER undertakes to give written notice or any other type of
notice agreed upon by the BANK and the BORROWER of any change of address that
the BORROWER may have in the future. Notices or communications will be
considered duly made FIVE (5) consecutive days after the BANK sends the notice
or communication to the BORROWER'S address. If the notice, communication,
account statement or any other kind of correspondence is sent by fax or e-mail,
this period will be reduced to ONE (1) day. The BORROWER expressly releases the
BANK from any liability, directly or indirectly derived from any notice or
communication sent to an address that is not the current address, when this is
due to the failure to make timely notice of change of address referred to in
this clause. The BORROWER undertakes to examine each statement or communication
that the BANK sends, and to send written notice to the BANK of any disagreement
or objection, within FIVE (5) days of the periods indicated above, except if
otherwise provided by Law. The BORROWER expressly accepts that failure to notify
its disagreement or objection, within such periods, implies acceptance by the
BORROWER of the contents of the pertinent statement, notice or communication.
All communications or notices that the BORROWER must send to the BANK may be
sent by certified mail with acknowledgement of receipt, telex or fax, and be
sent to the following address: Final Avenida Xxxxxx Xxxxx xxxxx con Xxxxxxx Xx
Xxxx, Xxxxxxxx Xxxxxxxxx Xx. 0, Xxx Xxxxxxxxxx, Caracas; ELEVENTH: For the
purpose of this agreement, its derivatives and consequences, the BANK and the
BORROWER elect the city of Caracas as special domicile and expressly declare
that they will submit themselves to the jurisdiction of its courts, without
prejudice that the BANK may approach any other Court the Law deems competent.
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of this agreement, the city of Caracas is elected as special and exclusive
domicile, and the parties declare their willingness to be subject to the
jurisdiction of its courts.
Dated: March 8, 2001
Banco Mercantil, C.A. Xxxxxx-Vinccler, C.A.
/s/ Xxxx Xxxxxx Xxxxx Xxxxx /s/ Xxxx X. Xxxxxx
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Xxxx Xxxxxx Xxxxx Xxxxx Xxxx X. Xxxxxx
/s/ Xxxxxxxxxxx X. Xxxx
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Xxxxxxxxxxx X. Xxxx
