Stand-Still Letter Agreement
This is a one hundred and fifty (150) day Stand-Still Agreement among
Hondo Oil & Gas Company ("Hondo") (Hondo together with all of its direct
and indirect subsidiaries, which include without limitation, Hondo
Xxxxxxxxx Oil and Gas Limited ("Xxxxxxxxx"), Newhall Refining Company,
Inc., and Via Verde Development Company, are collectively referred to
herein as "Hondo"), Lonrho PLC., Thamesedge, Ltd., London Australian &
General Property Company Limited (collectively, together with any of
their respective affiliates, parent corporations and direct and indirect
subsidiaries that assert claims against Hondo, "Lonrho"), and Amoco
Colombia Petroleum Company ("Amoco").
Amoco, Hondo and Lonrho agree to enter into a one hundred and fifty
(150) day Stand-Still Period from May 15, 1998 until October 15, 1998
(the "Stand-Still Period") for the benefit of Hondo and all of their
creditors in consideration of the following;
(1) Hondo hereby assigns to Amoco, as Operator of the Opon field: (I)
100% of all reimbursements due to Hondo by Ecopetrol for the Opon
Tier I Project well facilities and pipeline expenditures that will
be received during the Stand-Still Period, and; (II) The following
gas and liquids sale proceeds and tariff revenues attributable to
natural gas and liquids sold to Ecopetrol and/or Termo Santander,
S.C.A., E.S.P. during the months of April, May, June, July, and
August, 1998, independently of when they are received: (a) 100% of
Hondo's proceeds from the sales of natural gas and liquids to
Ecopetrol, (b) 100% of Hondo's proceeds from the sales of natural
gas to Termo Santander, S.C.A., E.S.P., and (c) 100% of Hondo's
tariff revenues from the Opon Tier 1 Pipeline; (all of the above
hereinafter the "Assigned Revenues").
Amoco shall remit to Hondo within five (5) days of receipt of the
Assigned Revenues the lesser of an amount equal to Hondo's share of
Ecopetrol's Tier 1 Pipeline operating expenses and El Centro gas
processing fee, or the Assigned Revenues. Any remaining Assigned
Revenues will be applied to cover Hondo's share of all current
operating expenses under the New Operating Agreement ("JOA") dated
August 9, 1993, in order to continue the normal operations of the
Opon Block in the Republic of Colombia during the term of this
Agreement, and thereafter, to any other amounts owed by Hondo with
respect to prior operating expenses incurred by Amoco under the
JOA. In the event that there are any amounts of the Assigned
Revenues left, after all amounts due by Hondo under the JOA are
paid, such amounts shall be remitted to Hondo immediately. For
purposes of this Agreement, the tariff shall be deemed to be US
$0.25 per MCF.
It is understood and agreed that Hondo shall continue paying its
share of Ecopetrol's Tier 1 Pipeline operating expenses and El
Centro gas processing fee during the Stand-Still Period.
Hondo shall immediately notify Ecopetrol and Termo Santander,
S.C.A., E.S.P. in writing in a form satisfactory to Amoco of the
assignment of funds to Amoco. If any of the Assigned Revenues are
received by Hondo, Hondo will within five (5) days of receipt of
said Assigned Revenues pay same to Amoco;
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(2) Hondo shall cast its affirmative vote to approve pursuant to the
JOA all prior years' operating budgets presented by Amoco as
Operator of the Opon Block, included but not limited to the 1993,
1994, 1995, 1996 and 1997 budgets, in their entirety (as originally
presented) during the next Operating Committee Meeting called for
such purpose;
(3) Hondo represents and warrants hereby that Lonrho is the largest and
most significant creditor of Hondo and that Hondo owes $112,518,068
to Lonrho as of March 31, 1998;
(4) Lonrho hereby agrees to a one hundred and fifty (150) day Stand-
Still Agreement with respect to the foregoing amount owed by Hondo,
and agrees to be bound by the terms of this Agreement. Lonrho
further agrees, represents and warrants that it will not do
anything, directly or indirectly, in detriment of Hondo or that
would cause Hondo to file bankruptcy under the United States
Bankruptcy Code or the bankruptcy laws of any other jurisdiction or
to contest the validity and enforceability of the provisions
contained herein and shall be estopped from so doing. Amoco shall
have a claim and remedies under this Agreement against Lonrho if a
bankruptcy petition under the Bankruptcy Code is filed within the
one hundred and fifty (150) day Stand-Still Period, as a result of
Lonrho's breach of its undertaking under this paragraph. Without
limiting the generality of the foregoing, in the event of a breach
of this undertaking, Amoco shall be entitled to obtain seek money
damages, void agreements, avoid transfers or seek any other remedy
provided under the law;
(5) In consideration of the above Amoco agrees that during the Stand-
Still Period Amoco will:
(a) defer its right to cash call or invoice Hondo; and
(b) defer its right to exercise its default provisions under
the terms of the New Operating Agreement dated August 9, 1993.
It is accepted, agreed and understood that the foregoing Amoco's
obligations shall automatically terminate in the event of any
breach by any Party (other than Amoco) of any of their obligations
under this Agreement;
(6) It is not the intention of the Parties nor shall this Agreement be
construed as modifying, changing or superseding any of the
provisions contained in all prior agreements entered into by Amoco
and Hondo related to the Opon block in Colombia. In particular,
this Agreement does not modify, change or supersede any of the
provisions of the Farmout and new Operating Agreements dated August
9, 1993, and the Funding Agreement dated May 5, 1995;
(7) The Parties below represent and warrant that they have authority to
enter into this Agreement on behalf of the Parties for which they
sign;
(8) This Agreement constitutes the entire agreement of the Parties
concerning the matters addressed herein and supersedes any prior
discussions or communications whether written or oral related to
the subject matter hereof. This Agreement may only be amended or
modified in a writing that is signed by all the Parties hereto;
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(9) This Agreement may be signed in counterparts, which together shall
constitute one and the same agreement. Counterparts may be
communicated by facsimile transmission and facsimiles and copies of
such counterparts shall be enforceable and admissible as evidence
of this Agreement;
(10) This Agreement shall be interpreted according to the laws of the
United States and the laws of the State of Texas, without
consideration of conflicts of law principles. Any disputes
hereunder shall be resolved in accordance with the following.:
(a) All disputes between two or more of the Parties in
connection with this Agreement whether arising during its term
or thereafter, shall be finally settled by arbitration under
the auspices and rules of the American Arbitration Association
to be held, unless otherwise agreed by the Parties, at
Houston, Texas, U.S.A. The arbitration shall be initiated by
any Party giving notice to the named respondent, with copies
to the other Parties, that it elects to refer the dispute to
arbitration, and that such Party (hereinafter referred to as
the "First Party") has so notified the American Arbitration
Association with the request that a panel of three arbitrators
be appointed in accordance with Rule 13 to hear the dispute.
Any Party not named in the notice who wishes to participate
shall promptly so notify the American Arbitration Association
and the other Parties so that it may participate in the
procedure provided for in Rule 13 if it wishes.
(b) Judgment on the award rendered may be entered in any
court having jurisdiction or application may be made for a
judicial acceptance of the award and an order for enforcement,
as the case may be. Neither the dispute nor any award may be
referred to courts of law for further adjudication on the
merits of the dispute.
(c) For the foregoing purposes, the Parties hereby consent to
the jurisdiction of the American Arbitration Association and
of the aforesaid tribunal, and agree that this Agreement may
be furnished to the Association to confirm the agreement of
the Parties.
IN WITNESS HEREOF, this Agreement has been executed by the duly
authorized representatives of the Parties as of this 8th 15th day of
May, 1998.
Amoco Colombia Petroleum Company
By: /s/ Xxxx Xxxxxxxx
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Hondo Oil & Gas Company
By: /s/ Xxxx X. Xxxx
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Hondo Xxxxxxxxx Oil & Gas Limited
By: /s/ Xxxx X. Xxxx
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Lonrho PLC.
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By: /s/ Xxxxxxxx X. Xxxxxxx
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Thamesedge, Ltd.
By: /s/ Xxxxxxxx X. Xxxxxxx
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London Australian & General Property Company Limited
By: /s/ Xxxxxxxx X. Xxxxxxx
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