EXHIBIT 2
to SCHEDULE 13D
NOTE
----
$10,000,000.00 June 10, 2002
FOR VALUE RECEIVED, the undersigned VAALCO ENERGY, INC., a Delaware
corporation ("BORROWER"), promises to pay to the order of 1818 FUND II, L.P.,
Delaware limited partnership or its permitted assigns ("LENDER") at its office
at 00 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000, or at such other place as the
holder hereof may designate, in lawful money of the United States of America and
in immediately available funds, the principal sum of Ten Million Dollars
($10,000,000.00), or such lesser amount advanced by Lender to Borrower under the
terms of the Credit Agreement (as defined below), and to pay interest thereon as
set forth herein. This Note is issued in connection with that certain
Subordinated Credit Agreement between Xxxxxx and Borrower of even date herewith
(the "CREDIT AGREEMENT"), and is secured as provided therein by the Security
Documents. All capitalized terms not otherwise defined herein are defined in the
Credit Agreement.
PROCEDURE FOR BORROWINGS:
(a) Each advance of principal hereunder shall be made upon
Xxxxxxxx's irrevocable written notice delivered to Lender (each a "BORROWING
NOTICE"); which notice must be received by Lender prior to 9:00 a.m. (Central
time) ten (10) days prior to the date of the requested advance except for the
initial advance in the amount of $5,000,000 which shall be made on the date
hereof.
(b) Each Borrowing Notice shall specify (i) the amount of
principal to be advanced, which shall be in an aggregate minimum amount of
$2,000,000 or any multiple integrals of $100,000 in excess thereof; and (ii) the
requested date principal is to be advanced which shall be a Business Day. Any
amounts repaid under this Note may not be reborrowed.
(c) Each advance or repayment shall be recorded by Xxxxxx and
endorsed on the grid attached hereto, which is part of this Note.
INTEREST:
Xxxxxxxx agrees to pay interest at Xxxxxx's address listed above on the
unpaid principal outstanding under this Note and, to the extent permitted by
law, the accrued interest in respect hereof from time to time from the date
hereof until payment in full of the principal amount hereof and accrued interest
hereon, at a rate equal to (i) ten percent (10%) per annum, compounded annually,
from the period beginning on the date hereof and ending on the earlier of nine
(9) months from the First Sale of Production (as defined in the Senior Loan
Documents as in effect on the date hereof) and eighteen (18) months following
the date hereof and (ii) fourteen percent (14%) per annum, compounded annually
for the period beginning on the date next succeeding the period referred to in
clause (i) and ending when the full principal amount hereof and accrued interest
hereon have been paid in full. Interest shall be computed on the basis of a
360-day year, actual days elapsed, unless such calculation would result in a
usurious rate, in which case interest shall be computed on the basis of a
365/366-day year, as the case may be, actual days elapsed. Interest shall be
payable in a single payment on the "MATURITY DATE" as hereinbelow defined.
Notwithstanding the foregoing provisions of this Section, but subject
to applicable law, any overdue principal of and overdue interest on this Note
shall bear interest, payable on demand in immediately available funds, for each
day from the date payment of principal or interest was due to the
date of actual payment, at the then current rate of interest plus 2.0% per
annum, and, upon and during the continuance of an Event of Default, this Note
shall bear interest, from the date of the occurrence of such Event of Default
until such Event of Default is cured or waived, payable on demand in immediately
available funds, at the then current rate of interest plus 2.0% per annum.
REPAYMENT AND PREPAYMENT:
(a) REPAYMENT. To the extent not sooner paid, the unpaid principal
balance of this Note, together with all accrued but unpaid interest and
outstanding expenses hereunder and under the Loan Documents shall be due and
payable on the earliest of (i) the Phase One Completion Date, (ii) March 31,
2005; and (iii) the date that all principal and accrued and unpaid interest
shall become due and payable pursuant to Article VI of the Credit Agreement (the
"MATURITY DATE").
(b) APPLICATION OF PAYMENTS. Each payment made on this Note shall
be credited first, to any interest then due and second, to the outstanding
principal balance hereof.
(c) PREPAYMENT. Borrower may prepay this Note plus accrued and
unpaid interest hereon provided that all terms in the Credit Agreement and
herein are complied with, at any time upon one day prior notice and in the
minimum amount of One Hundred Thousand Dollars ($100,000); PROVIDED, HOWEVER,
that if the outstanding principal balance of such portion of this Note plus
accrued and unpaid interest hereon is less than said amount, the minimum
prepayment amount shall be the entire outstanding principal hereof.
(d) MANDATORY PREPAYMENT. In the event that IFC has not made a
Disbursement pursuant to the IFC Loan Agreement in an amount equal to or greater
than the Loan made hereunder within three (3) Business Days of the funding of
such Loan pursuant to Section 1.01(a) of the Credit Agreement, Borrower shall
immediately notify Lender and shall repay such loan plus interest accruing
thereon to Lender upon three Business Days written demand from Lender. Further,
Borrower shall prepay this Note in amounts equal to (i) any amounts released by
IFC under the Sponsor Escrow Account other than the amounts described under the
first sentence of this SUBSECTION (D), (ii) the net proceeds of any debt or
issuance of securities received by Borrower in excess of Ten Million Dollars
($10,000,000), and (iii) to the extent not prohibited under the IFC Loan
Agreement (as in effect on the date hereof), ninety percent (90%) of the Free
Cash Flow from the Project. For purposes of this SUBSECTION (D), "FREE CASH
FLOW" shall mean cash flow from the Project net of amounts required to maintain
the PSC in full force and effect. All amounts prepaid shall first be applied to
accrued and unpaid interest and then to outstanding principal.
EVENTS OF DEFAULT:
(a) EVENTS OF DEFAULT. The occurrence of an Event of Default under
the Credit Agreement shall constitute an "EVENT OF DEFAULT" under this Note.
(b) REMEDIES. Upon the occurrence of any Event of Default, Lender
shall be entitled to such remedies as set forth in the Credit Agreement.
MISCELLANEOUS:
(a) GOVERNING LAW.
(i) This Note is governed by and shall be construed in
accordance with the laws of the State of New York and applicable
Federal Law.
(ii) For the exclusive benefit of Xxxxxx, Xxxxxxxx
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 Xxxxxx, 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, Xxxxxxxx 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 sue 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 00 Xxxxxx Xxxxx, Xxxxxx XX0X 0XX (reference
VAAEN.0001), as its authorized agent solely to receive for and on its
behalf service of the writ of summons or other legal process in any
action, suit or proceeding Lender may bring in the courts of England
and CT Corp., as its authorized agent solely to receive for and on its
behalf service of the writ of summons or other legal process in any
action, suit or proceeding Lender may bring in the courts of the
Southern District of New York.
(v) As long as this Note or any other Loan Document to
which Xxxxxxxx is a party remains in force, Xxxxxxxx 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 Xxxxxx 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 Xxxxxx 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 agrees not to claim and irrevocably waives such
immunity to the fullest extent now or in the future permitted by the
laws of such jurisdiction.
(viii) Borrower also consents generally with respect to any
proceedings arising out of or in connection with this Note or any other
Loan Document to which it is a party to the giving of any relief or the
issue of any process in connection with such proceedings including,
without limitation, the making, enforcement or execution against any
property whatsoever (irrespective of
its use or intended use) of any order or judgment which may be made or
given in such proceedings.
(ix) To the extent that Borrower may, in any suit, action
or proceeding brought in any of the courts referred to in Subsection
(ii) or a court of Gabon, London, New York, Delaware or elsewhere
arising out of or in connection with this Note or any other Loan
Document to which Borrower is a party, be entitled to the benefit of
any provision of law requiring Lender in such suit, action or
proceeding to post security for the costs of Borrower, or to post a
bond or to take similar action, Borrower hereby irrevocably waives such
benefit, in each case to the fullest extent now or in the future
permitted under the laws of Gabon, London, New York, Delaware or, as
the case may be, the jurisdiction in which such court is located.
(x) Borrower also irrevocably consents, if for any reason
Xxxxxxxx'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,
Xxxxxx shall also send by facsimile, or have sent by facsimile, a copy
of the papers to Borrower.
(b) SAVINGS CLAUSE. It is the intention of the parties to comply
strictly with applicable usury laws. Accordingly, notwithstanding any provision
to the contrary in this Note, the Credit Agreement, or in any other Loan
Document, in no event shall this Note or any Loan Document require the payment
or permit the payment, taking, reserving, receiving, collection or charging of
any sums constituting interest under applicable laws that exceed the maximum
amount permitted by such laws, as the same may be amended or modified from time
to time (the "MAXIMUM RATE"). If any such excess interest is called for,
contracted for, charged, taken, reserved or received in connection with this
Note or any Loan Document, or in any communication by Lender or any other person
to Borrower or any other person, or in the event that all or part of the
principal or interest hereof or thereof shall be prepaid or accelerated, so that
under any of such circumstances or under any other circumstance whatsoever the
amount of interest contracted for, charged, taken, reserved or received on the
amount of principal actually outstanding from time to time under this Note shall
exceed the Maximum Rate, then in such event it is agreed that: (i) the
provisions of this paragraph shall govern and control; (ii) neither Borrower nor
any other person or entity now or hereafter liable for the payment of this Note
or any Loan Document shall be obligated to pay the amount of such interest to
the extent it is in excess of the Maximum Rate; (iii) any such excess interest
which is or has been received by Xxxxxx, 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
Lender. The terms of this paragraph shall be deemed to be incorporated into each
Loan Document.
To the extent that either Chapter 303 or 306, or both, of the Texas
Finance Code apply in determining the Maximum Rate, Lender hereby elects to
determine the applicable rate ceiling by using
the weekly ceiling from time to time in effect, subject to Xxxxxx's right
subsequently to change such method in accordance with applicable law, as the
same may be amended or modified from time to time.
(c) RIGHT OF SETOFF; DEPOSIT ACCOUNTS. Upon and after the
occurrence of an Event of Default, (i) Borrower hereby authorizes Lender, at any
time and from time to time, without notice, which is hereby expressly waived by
Borrower, and whether or not Lender shall have declared this Note to be due and
payable in accordance with the terms hereof, to set off against, and to
appropriate and apply to the payment of, Borrower's obligations and liabilities
under this Note (whether matured or unmatured, fixed or contingent, liquidated
or unliquidated), any and all amounts owing by Lender to Borrower (whether
payable in U.S. dollars or any other currency, whether matured or unmatured, and
in the case of deposits, whether general or special (except trust and escrow
accounts), time or demand and however evidenced), and (ii) pending any such
action, to the extent necessary, to hold such amounts as collateral to secure
such obligations and liabilities. Borrower hereby grants to Lender a security
interest in all deposits and accounts maintained with Lender and with any
financial institution to secure the payment of all obligations and liabilities
of Borrower to Lender under this Note.
(d) SUBORDINATION. Payment of this Note is subject to the terms of
the Subordination Agreement of even date herewith between Borrower, Lender and
IFC.
(e) ASSIGNMENT. Lender may assign this Note pursuant to the terms
of the Credit Agreement. Borrower may not assign its rights or obligations under
this Note without the prior consent of Lender.
(f) AMENDMENT. This Note may be amended or modified only in
writing signed by Xxxxxxxx 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.]
IN WITNESS WHEREOF, the undersigned has executed this Note as of the
date first written above.
VAALCO ENERGY, INC.
By: /s/ X. Xxxxxxx Xxxxxxxxx
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Name: X. XXXXXXX XXXXXXXXX
Title: PRESIDENT
LOANS AND PRINCIPAL PAYMENTS
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AMOUNT OF AMOUNT OF UNPAID
LOAN PRINCIPAL PRINCIPAL NOTATION
DATE MADE REPAID BALANCE TOTAL MADE BY
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