[LETTERHEAD OF HONDO OIL & GAS COMPANY APPEARS HERE]
December 18, 1997
London Australian & General Property Company Limited
0 Xxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxx XX0X 0XX
Dear Sirs:
This Agreement is entered into by and among Hondo Oil & Gas
Company, a Delaware corporation ("Hondo"), and its wholly-owned
subsidiaries, Via Verde Development Company, a California corporation
("Via Verde"), and Newhall Refining Co., Inc., a Delaware corporation
("Newhall"), and London Australian & General Property Company Limited
("LAGP"), with reference to:
a) Note Purchase Agreement dated November 28, 1988, between Xxxxxx
Petroleum Inc. (now Hondo) and Thamesedge, Ltd. ("Thamesedge"), as
amended (the "Thamesedge Note Purchase Agreement"), and Note dated
November 30, 1988, for $75,000,000 from Xxxxxx Petroleum Inc. to
Thamesedge (the "Thamesedge Note");
b) Letter agreements dated November 28, 1988 and December 18,
1992, between Hondo and Thamesedge referring to and amending the
Thamesedge Note Purchase Agreement and the Thamesedge Note;
c) Net Profits Share Agreement dated December 18, 1992, by and
among Hondo, Lonrho Plc ("Lonrho") and Thamesedge (the "Net Profits
Share Agreement");
d) Amended and Restated Letter Agreement dated December 20, 1991,
between Hondo and Lonrho (the "Lonrho Loan Agreement") and Notes
dated September 1, 1991, for $10,000,000, dated November 1, 1991,
for $9,000,000, and dated December 20, 1991, for $13,000,000, from
Hondo to Lonrho (the "Lonrho Notes");
e) Letter Agreement dated December 18, 1992, between Hondo and
Lonrho referring to and amending the Lonrho Loan Agreement and the
Lonrho Notes;
f) Note dated April 30, 1993, for $3,000,000 from Via Verde to
Lonrho (the "Via Verde Note"), secured by Deed of Trust dated
recorded as Instrument No. 93-840817 in the Real Property Records
of Los Angeles County, California, (the "Via Verde Mortgage"),
guaranteed by Hondo in Guaranty dated April 30, 1993 (the "Hondo
Guaranty"), and subject to a letter agreement dated April 30, 1993;
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g) Note dated June 25, 1993, for $4,000,000 from Hondo to Lonrho
(the "Valley Gateway Note"), secured by Deed of Trust dated August
30, 1993, granted by Hondo and Newhall, recorded as Instrument No.
00-0000000 in the Real Property Records of Los Angeles County,
California, (the "Valley Gateway Mortgage");
h) Letter Agreement dated December 17, 1993, between Hondo, Via
Verde, Newhall, and Lonrho and Thamesedge, restructuring the above-
described indebtedness and amending the Thamesedge Note, the Lonrho
Notes, the Via Verde Note and the Valley Gateway Note;
i) Letter Agreement dated November 10, 1994, between Hondo, Via
Verde, Newhall, and Lonrho and Thamesedge, restructuring the above-
described indebtedness and amending the Thamesedge Note, the Lonrho
Notes, the Via Verde Note and the Valley Gateway Note, and creating
a new $5,000,000 loan facility and a Note therefor dated October
31, 1994 (the "Facility Note");
j) Letter Agreement dated December 22, 1995, between Hondo, Via
Verde, Newhall, and Lonrho and Thamesedge, restructuring the above-
described indebtedness and amending the Thamesedge Note, the Lonrho
Notes, the Via Verde Note, the Valley Gateway Note and the Facility
Note; and
k) Letter Agreement dated December 13, 1996, between Hondo, Via
Verde, Newhall, and Lonrho and Thamesedge, restructuring the above-
described indebtedness and amending the Thamesedge Note, the Lonrho
Notes, the Via Verde Note, the Valley Gateway Note and the Facility
Note.
On March 29, 1996, Lonrho assigned to Thamesedge all of its
interest in the above-described agreements and notes. On August 29,
1997, Thamesedge assigned to LAGP all of its interest in the above-
described agreements and notes. The Thamesedge Note, the Lonrho Notes,
the Via Verde Note, the Valley Gateway Note, and the Facility Note, each
as amended, are collectively referred to herein as the "Indebtedness".
Hondo and LAGP have agreed to extend the date of repayment for the
Indebtedness (i) by changing the mandatory redemption date on the
Thamesedge Note from January 1, 1998 to January 15, 1999; and (ii) by
extending the principal repayment date of each of the Lonrho Notes, the
Via Verde Note, the Valley Gateway Note, and the Facility Note from
January 1, 1998 to January 15, 1999.
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Hondo, Via Verde and Newhall, and Lonrho and LAGP hereby agree, as
follows:
1. This Agreement shall be effective for all purposes on
September 30, 1997.
2. Amendment of Notes. The Thamesedge Note, the Lonrho Notes
(collectively), the Via Verde Note, the Valley Gateway Note,
and the Facility Note, each will be amended as provided,
respectively, in Exhibits A, B, C, D, and E to this Agreement.
Hondo and Via Verde, as applicable, will execute the note
amendments, LAGP will execute them to acknowledge consent
thereto, and the note amendments will be attached to the
original notes held by LAGP.
3. Event of Default. If the borrower does not furnish to the
lender by October 1, 1998 a Netherland, Xxxxxx & Associates
proved reserve report that shows a minimum of 13,000,000 mcf
(25%) increase in the 1997 proved reserve figure of 52,475,554
mcf then the lender has the right to declare all the loans in
default and demand payment.
4. Cross-default Provision. Each of the notes will have a cross-
default provision whereby a default in any other note will
trigger a default in the note in question whereby the effect
will be that all notes of the lender to the borrower will be
in default and the payments of principal and interest will be
accelerated and immediately due and payable.
5. Effect on Other Agreements. Except as amended by the note
amendments, the terms and provisions of the above-described
agreements relating to the Lonrho Indebtedness shall remain in
full force and effect, including, without limiting the
generality of the foregoing, the Letter Agreements dated
December 17, 1993, November 10, 1994, December 22, 1995 and
December 13, 1996. The parties agree to execute such other
and further documents as may be necessary to effect the
understandings of this letter agreement. Nothing in this
letter agreement shall be construed as an agreement on the
part of LAGP to provide extensions of the maturity or other
restructuring of the Indebtedness in the future.
3
Please confirm that the foregoing correctly sets forth the
agreement between us.
Very truly yours,
HONDO OIL & GAS COMPANY
By: /s/ Xxxx X. Xxxx
-----------------
Xxxx X. Xxxx, President
VIA VERDE DEVELOPMENT COMPANY
By: /s/ Xxxx X. Xxxx
-----------------
Xxxx X. Xxxx, President
NEWHALL REFINING CO., INC.
By: /s/ Xxxx X. Xxxx
-----------------
Xxxx X. Xxxx, President
Confirmed and accepted as of the date of first above written:
LONDON AUSTRALIAN & GENERAL PROPERTY COMPANY LIMITED
By: /s/ R.E. Xxxxxxx
----------------
R.E. Xxxxxxx, Director
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Exhibit A
Thamesedge Note
This Note Amendment dated September 30, 1997 amends that certain
13/% Senior Subordinated Note due 1998 dated November 28, 1988 in the
original principal amount of US$75,000,000, from Xxxxxx Petroleum Inc.
(now Hondo Oil & Gas Company), to Thamesedge, Ltd., as amended by Note
Amendments dated September 30, 1993, September 30, 1994, September 30,
1995 and September 30, 1996 (the "Original Note"), and is attached to
the Original Note. On August 29, 1997, Thamesedge, Ltd. assigned to
London Australian & General Property Company Limited all of its interest
in the Original Note. Effective on September 30, 1997, the Original
Note is amended as follows:
1. Principal Amount. As of September 30, 1997, the principal amount
of the Original Note owing is US$38,576,110.98, and interest
accrued thereon is US$1,157,283.30.
2. Principal Repayment. The mandatory Redemption dates on the
Original Note are amended to January 15, 1999, with the aggregate
principal of the Original Note then outstanding, plus accrued
interest, being payable on such date.
3. Event of Default. If the borrower does not furnish to the lender
by October 1, 1998 a Netherland, Xxxxxx & Associates proved
reserve report that shows a minimum of 13,000,000 mcf (25%)
increase in the 1997 proved reserve figure of 52,475,554 mcf then
the lender has the right to declare all the loans in default and
demand payment.
4. Cross-default Provision. Each of the notes will have a cross-
default provision whereby a default in any other note will
trigger a default in the note in question whereby the effect will
be that all notes of the lender to the borrower will be in
default and the payments of principal and interest will be
accelerated and immediately due and payable.
5. Letter Agreement. This Note Amendment is issued and delivered
under that certain letter agreement dated December 18, 1997 by
and among Hondo Oil & Gas Company, Via Verde Development Company,
and Newhall Refining Co., Inc., and London Australian & General
Property Company Limited.
HONDO OIL & GAS COMPANY
By:
----------------
Xxxx X. Xxxx, President
The undersigned hereby acknowledges and consents to this Note Amendment.
LONDON AUSTRALIAN & GENERAL PROPERTY COMPANY LIMITED
By:
----------------
Name:
----------------
Title:
----------------
5
Exhibit B
Lonrho Notes
This Note Amendment dated September 30, 1997 amends those certain
Promissory Notes dated September 1, 1991, in the original principal
amount of US$10,000,000, dated November 1, 1991, in the original
principal amount of US$9,000,000, and dated December 20, 1991, in the
original principal amount of US$13,000,000, each from Hondo Oil & Gas
Company, to Lonrho Plc, as amended by Note Amendments dated September
30, 1993, September 30, 1994, September 30, 1995 and September 30, 1996
(the "Original Notes"), and is attached to the Original Notes. On March
29, 1996, Lonrho Plc assigned to Thamesedge, Ltd. all of its interest in
the Original Notes. On August 29, 1997, Thamesedge, Ltd. assigned to
London Australian & General Property Company Limited all of its interest
in the Original Notes. Effective on September 30, 1997, the Original
Notes are amended as follows:
1. Principal Amount. As of September 30, 1997, the principal amount
of the Original Notes owing is US$33,126,684.98, and interest
accrued thereon is US$1,010,363.88.
2. Principal Repayment. The principal of the Original Notes,
together with all accrued interest to such date, is payable on
January 15, 1999.
3. Event of Default. If the borrower does not furnish to the lender
by October 1, 1998 a Netherland, Xxxxxx & Associates proved
reserve report that shows a minimum of 13,000,000 mcf (25%)
increase in the 1997 proved reserve figure of 52,475,554 mcf then
the lender has the right to declare all the loans in default and
demand payment.
4. Cross-default Provision. Each of the notes will have a cross-
default provision whereby a default in any other note will
trigger a default in the note in question whereby the effect will
be that all notes of the lender to the borrower will be in
default and the payments of principal and interest will be
accelerated and immediately due and payable.
5. Letter Agreement. This Note Amendment is issued and delivered
under that certain letter agreement dated December 18, 1997 by
and among Hondo Oil & Gas Company, Via Verde Development Company,
and Newhall Refining Co., Inc., and London Australian & General
Property Company Limited.
HONDO OIL & GAS COMPANY
By:
----------------
Xxxx X. Xxxx, President
The undersigned hereby acknowledges and consents to this Note Amendment.
LONDON AUSTRALIAN & GENERAL PROPERTY COMPANY LIMITED
By:
----------------
Name:
----------------
Title:
----------------
6
Exhibit C
Via Verde Note
This Note Amendment dated September 30, 1997 amends that certain
Promissory Note dated April 30, 1993, in the original principal amount
of US$3,000,000, from Hondo Oil & Gas Company to Lonrho Plc, as amended
by Note Amendments dated September 30, 1993, September 30, 1994,
September 30, 1995 and September 30, 1996 (the "Original Note"), and is
attached to the Original Note. On March 29, 1996, Lonrho Plc assigned
to Thamesedge, Ltd. all of its interest in the Original Note. On August
29, 1997, Thamesedge, Ltd. assigned to London Australian & General
Property Company Limited all of its interest in the Original Note.
Effective on September 30, 1997, the Original Note is amended as
follows:
1. Principal Amount. As of September 30, 1997, the principal amount
of the Original Note owing is US$3,479,554.45, and interest
accrued thereon is US$106,126.41.
2. Principal Repayment. The principal of this note is payable on
the earlier of (i) the sale of the property securing the loan or
(ii) in ten (10) semi-annual installments, commencing on January
15, 1999.
3. Event of Default. If the borrower does not furnish to the lender
by October 1, 1998 a Netherland, Xxxxxx & Associates proved
reserve report that shows a minimum of 13,000,000 mcf (25%)
increase in the 1997 proved reserve figure of 52,475,554 mcf then
the lender has the right to declare all the loans in default and
demand payment.
4. Cross-default Provision. Each of the notes will have a cross-
default provision whereby a default in any other note will
trigger a default in the note in question whereby the effect will
be that all notes of the lender to the borrower will be in
default and the payments of principal and interest will be
accelerated and immediately due and payable.
5. Letter Agreement. This Note Amendment is issued and delivered
under that certain letter agreement dated December 18, 1997 by
and among Hondo Oil & Gas Company, Via Verde Development Company,
and Newhall Refining Co., Inc., and London Australian & General
Property Company Limited.
VIA VERDE DEVELOPMENT COMPANY
By:
----------------
Xxxx X. Xxxx, President
The undersigned hereby acknowledges and consents to this Note Amendment.
LONDON AUSTRALIAN & GENERAL PROPERTY COMPANY LIMITED
By:
----------------
Name:
----------------
Title:
----------------
0
Xxxxxxx X
Xxxxxx Xxxxxxx Note
This Note Amendment dated September 30, 1997 amends that certain
Promissory Note dated June 25, 1993, in the original principal amount of
US$4,000,000, from Hondo Oil & Gas Company to Lonrho Plc, as amended by
Note Amendments dated September 30, 1993, September 30, 1994, September
30, 1995 and September 30, 1996 (the "Original Note"), and is attached
to the Original Note. On March 29, 1996, Lonrho Plc assigned to
Thamesedge, Ltd. all of its interest in the Original Note. On August
29, 1997, Thamesedge, Ltd. assigned to London Australian & General
Property Company Limited all of its interest in the Original Note.
Effective on September 30, 1997, the Original Note is amended as
follows:
1. Principal Amount. As of September 30, 1997, the principal amount
of the Original Note owing is US$4,534,554.22, and interest
accrued thereon is US$138,303.90.
2. Principal Repayment. The principal of this note is payable on
the earlier of (i) the sale of the property securing the loan or
(ii) in ten (10) semi-annual installments, commencing on January
15, 1999.
3. Event of Default. If the borrower does not furnish to the lender
by October 1, 1998 a Netherland, Xxxxxx & Associates proved
reserve report that shows a minimum of 13,000,000 mcf (25%)
increase in the 1997 proved reserve figure of 52,475,554 mcf then
the lender has the right to declare all the loans in default and
demand payment.
4. Cross-default Provision. Each of the notes will have a cross-
default provision whereby a default in any other note will
trigger a default in the note in question whereby the effect will
be that all notes of the lender to the borrower will be in
default and the payments of principal and interest will be
accelerated and immediately due and payable.
5. Letter Agreement. This Note Amendment is issued and delivered
under that certain letter agreement dated December 18, 1997 by
and among Hondo Oil & Gas Company, Via Verde Development Company,
and Newhall Refining Co., Inc., and London Australian & General
Property Company Limited.
HONDO OIL & GAS COMPANY
By:
----------------
Xxxx X. Xxxx, President
The undersigned hereby acknowledges and consents to this Note Amendment.
LONDON AUSTRALIAN & GENERAL PROPERTY COMPANY LIMITED
By:
----------------
Name:
----------------
Title:
----------------
8
Exhibit E
Facility Note
This Note Amendment dated September 30, 1997 amends that certain
Promissory Note dated October 31, 1994, in the original principal amount
of US$5,000,000, from Hondo Oil & Gas Company to Lonrho Plc, as amended
by Note Amendment dated September 30, 1995 and September 30, 1996 (the
"Original Note"), and is attached to the Original Note. On March 29,
1996, Lonrho Plc assigned to Thamesedge, Ltd. all of its interest in the
Original Note. On August 29, 1997, Thamesedge, Ltd. assigned to London
Australian & General Property Company Limited all of its interest in the
Original Note. Effective on September 30, 1997, the Original Note is
amended as follows:
1. Principal Amount. As of September 30, 1997, the principal amount
of the Original Note owing is US$5,294,075.89, and interest
accrued thereon is US$161,469.33.
2. Principal Repayment. The principal of the Original Note is
payable on January 15, 1999.
3. Event of Default. If the borrower does not furnish to the lender
by October 1, 1998 a Netherland, Xxxxxx & Associates proved
reserve report that shows a minimum of 13,000,000 mcf (25%)
increase in the 1997 proved reserve figure of 52,475,554 mcf then
the lender has the right to declare all the loans in default and
demand payment.
4. Cross-default Provision. Each of the notes will have a cross-
default provision whereby a default in any other note will
trigger a default in the note in question whereby the effect will
be that all notes of the lender to the borrower will be in
default and the payments of principal and interest will be
accelerated and immediately due and payable.
5. Letter Agreement. This Note Amendment is issued and delivered
under that certain letter agreement dated December 18, 1997 by
and among Hondo Oil & Gas Company, Via Verde Development Company,
and Newhall Refining Co., Inc., and London Australian & General
Property Company Limited.
HONDO OIL & GAS COMPANY
By:
----------------
Xxxx X. Xxxx, President
The undersigned hereby acknowledges and consents to this Note Amendment.
LONDON AUSTRALIAN & GENERAL PROPERTY COMPANY LIMITED
By:
----------------
Name:
----------------
Title:
----------------
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