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EXHIBIT 10.24
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 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 XXXXX XXXXX XXXXXXXX, Venezuelan, of legal age, an
attorney, domiciled in the city of Caracas, bearer of Identity Card NO.
3.820.795, her 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 September 11, 2000, under No. 18, Volume 4 -
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, originally 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 SIX MILLION UNITED STATES DOLLARS (US$6,000,000.00).
SECOND: The BORROWER agrees to use the monies received as an interest bearing
loan for the execution of the project "TUCUPITA TO UM 1 PIPELINE, ALTERNATE
XXXXX 00" & 00" XXXX", Xxxxx of Monagas, Bolivarian Republic of Venezuela.
THIRD: The BORROWER agrees to return the monies received as an interest bearing
loan within a term of FIVE (5) years as of the date of authentication of this
document, by paying TWENTY (20) equal and consecutive quarterly installments,
evidencing only the principal amount owed, of THREE HUNDRED THOUSAND UNITED
STATES DOLLARS (US$300,000.00) each, the first of which must be paid on June 29,
2001 and the other installments on the last bank business day at the end of each
subsequent calendar quarter until paid in full. FOURTH: The monies received as
an interest bearing loan will bear conventional interest on the outstanding
balance, under the variable rate system equivalent to LIBOR plus FIVE (5)
PERCENTAGE POINTS, which will be revised, fixed and adjusted every calendar
quarter on the date of each principal payment as set forth above, and shall be
payable at the end of each month. For the purpose of this document, LIBOR, THE
"LONDON INTERBANK OFFERED RATE", is understood to be the arithmetical average of
the interest rates offered in the interbank market in London, England, by the
principal Banks of that city, for three (3) month term deposits, determined at
11:00 a.m., London time, as published by REUTERS. On the dates and opportunities
of each adjustment or variation, the interest rate will be automatically varied
or adjusted accordingly and applied as provided for in this document without
requiring a special act, advice or notice to the BORROWER, which undertakes to
obtain information from the BANK about the interest rate applicable to the
obligations assumed through this document. The BORROWER agrees to pay the BANK
the amount of the obligations contracted herein, as well as the interest and any
other related expense, in United States dollars, exclusive of any other
currency. As of the date this document was written, that is, March 2, 2001, the
LIBOR rate is FIVE POINT ZERO EIGHT PERCENT (5.08%). FIFTH: If the BORROWER
becomes delinquent, the applicable variable interest rate will be that resulting
from adding THREE (3) PERCENTAGE POINTS to the interest rate in force during the
default period, calculated as indicated above. SIXTH: The BORROWER agrees to pay
the BANK a ONE PERCENT (1%) commission on the outstanding balance of the loan,
in a single payment. This commission is payable to the BANK on the same date as
the date of authentication of this document. SEVENTH: 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 BORROWER's
payment obligation for the amounts due up to the amount charged or debited by
the BANK either from the BANK or from the COMMERCEBANK, N.A., without it being
understood that these charges give rise to novation of its obligations. EIGHTH:
The BORROWER may make special repayments of the principal due, and the total
prepayment of the entire INTEREST BEARING LOAN referred to herein, only at the
times when quarterly principal installments must be paid 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. NINTH: The BANK may consider any and all of the obligations which have
been assumed by the BORROWER by virtue of this document due 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 principal installments or
any one (1) of the interest installments which BORROWER must pay provided that
BORROWER is given notice of the failure to pay by the BANK and is allowed to
have 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"
means a subsidiary of Xxxxxx Vinccler, C.A. or any other 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
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BORROWER fails to deliver annual Financial Statements to the BANK during the
term of the credit facility 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 Price-Waterhouse-Coopers) or its monthly Balance
Sheets within thirty (30) days after they have been requested. 5. 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, such payments arising from the Agreement mentioned in subparagraph 3 of
this same clause shall be deposited only in the account that the BORROWER
maintains with COMMERCEBANK, N.A., account number NO. 8300551706. 6. If the
BORROWER uses the monies received as an interest bearing loan for purposes other
than those established in this document. 7. If there is a judicial declaration
of suspension of payments by the BORROWER or if declared delinquent, bankrupt or
if its assets are judicially liquidated. 8. 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 such measures
are not stayed within a period of THIRTY (30) consecutive days after the date
the decision to adopt these measures was issued. 9. 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 PERCENT (51%) of the
capital stock and administrative control of the BORROWER. 10. 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. 11. 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. 12. If at any time during the
term of this interest bearing loan, it is proven that the BORROWER does not
maintain appropriate insurance for the facilities where it operates or carries
out its day-to-day commercial activities, according to the demands of the
individual or company that owns such facilities. 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. 14. 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
and 15. Default on any other obligation assumed by the BORROWER hereunder.
TENTH: The BORROWER agrees to pay the BANK a FLAT annual commission of ZERO
POINT TWO FIVE PERCENT (0.25%) for the administration of this interest bearing
loan, the first of which is payable on the date of execution of this interest
bearing loan and annually thereafter calculated on the outstanding principal
balance at the time of payment of the respective administration commission.
ELEVENTH: 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 address of the BORROWER: at 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 to 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 failure to notify
in a timely manner a 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 for 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. TWELFTH: The BORROWER expressly
declares that this interest bearing loan is guaranteed by its parent company,
XXXXXX OIL AND GAS COMPANY, 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. THIRTEENTH: For the sole
purpose of strictly complying with the provisions of Article 95 of the Law of
the Central Bank of Venezuela, SIX MILLION UNITED STATES DOLLARS (US$6,000.00)
is equivalent to FOUR BILLION TWO HUNDRED THIRTY-SIX MILLION BOLIVARS
(BS.4,236,000,000.00), THREE HUNDRED THOUSAND UNITED STATES DOLLARS
(US$300,000.00) is equivalent TO TWO HUNDRED ELEVEN MILLION EIGHT HUNDRED
THOUSAND BOLIVARS (BS. 211,800,000.00), TWELVE MILLION THREE HUNDRED THOUSAND
UNITED STATES DOLLARS (US$12,300,000.00) is equivalent to EIGHT BILLION SIX
HUNDRED EIGHTY-THREE MILLION EIGHT HUNDRED THOUSAND BOLIVARS
(BS.8,683,800,000.00), calculated at the exchange rate of SEVEN HUNDRED SIX
BOLIVARS (BS.706.00) per United States dollar, stipulated by the Central Bank of
Venezuela, for the closing of its operations on March 2, 2001. For all purposes
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Dated: March 8, 2001
Banco Mercantil, C.A. Xxxxxx-Vinccler, C.A.
/s/ Xxxxx Xxxxx Xxxxxxxx /s/ Xxxx X. Xxxxxx
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Xxxxx Xxxxx Xxxxxxxx Xxxx X. Xxxxxx
/s/ Xxxxxxxxxxx X. Xxxx
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Xxxxxxxxxxx X. Xxxx
