FIRST AMENDMENT
TO
AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT
Introduction
This FIRST AMENDMENT TO AMENDED AND RESTATED REVOLVING CREDIT
AGREEMENT (this "Amendment"), is dated as of December 18, 1997 and is
entered into by and between HONDO OIL & GAS COMPANY, a Delaware
corporation (the "Borrower"), and LONDON AUSTRALIAN & GENERAL PROPERTY
COMPANY LIMITED, a United Kingdom corporation (the "Lender"), as
assignee of Thamesedge, Ltd.
Recitals
The Borrower and the Lender (as assignee of Thamesedge Ltd.)
are parties to a Revolving Credit Agreement dated as of June 28, 1996,
as same has been amended and restated pursuant to an Amended and
Restated Revolving Credit Agreement dated as of July 2, 1997 (the
"Existing Loan Agreement"), pursuant to which there has been established
a $20,500,000 revolving credit facility in favor of the Borrower.
Capitalized terms used and not otherwise defined or amended in this
Amendment shall have the meanings respectively assigned to them in the
Existing Loan Agreement.
The Borrower has requested that the Lender increase the
Lender's Commitment to $27,500,000 and $7,500,000 to cover potential
interest that may be added to principal pursuant to Section 2.05 of the
Existing Loan Agreement. The Lender is willing to so increase the
Commitment based on the Borrower's representation that, by October 1,
1998, the Lender shall have received a report that Borrower's proved
reserves will have increased to a minimum of 65,475,554 mcf and the
Borrower's agreement that if its proved reserves fail to reach such
level, an Event of Default will occur.
The Borrower has requested that the Lender enter into this
Amendment in order to reflect the foregoing and certain other amendments
to the Existing Loan Agreement, and the Lender has agreed to do so, all
upon the terms and provisions and subject to the conditions hereinafter
set forth.
Agreement
In consideration of the foregoing and the mutual covenants and
agreements hereinafter set forth, the parties hereto hereby agree as
follows:
Section 1. Amendment to Existing Loan Agreement. The
Existing Loan Agreement is hereby amended as of the date first written
above as follows:
(A) The definition of the terms "Agreement" , "this
Agreement" and "Lender" in the introductory paragraph are hereby amended
to read as follows:
"Agreement" and "this Agreement" shall mean the Amended and
Restated Revolving Credit Agreement, together with all schedules
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and exhibits thereto, as amended by the First Loan Amendment, and
as the same may be supplemented, modified, amended or restated from
time to time.
"Lender" shall mean London Australian & General Property
Company Limited, a United Kingdom corporation.
(B) In Section 1.01 of the Existing Loan Agreement, the
definitions of "Credit Documents" , "Guaranty" and "Note" are hereby
deleted in their entirety, and the following new definitions are hereby
inserted in their respective places:
"Credit Documents" means the Agreement, the Note, the Guaranty
and the Security Agreement.
"Guaranty" shall mean the Guaranty from the Guarantor to the
Original Lender dated as of July 2, 1997, as assigned by the
Original Lender to the Lender, as amended by the First Guaranty
Amendment and as the same may be supplemented, modified, amended or
restated from time to time.
"Note" shall mean the Amended and Restated Promissory Note of
the Borrower substantially in the form of Exhibit A to the First
Loan Amendment.
(C) In Section 1.01 of the Existing Loan Agreement, the
following new definitions of "First Guaranty Amendment", "First Loan
Amendment", "First Security Agreement Amendment", "Interest Advance",
"Original Lender" and "Security Agreement" are hereby inserted in their
respective proper alphabetical positions without the deletion or
modification of any other material:
"First Guaranty Amendment" shall mean the First Amendment
dated as of December 18, 1997 to the Guaranty in substantially the
form of Exhibit B to the First Loan Amendment.
"First Loan Amendment" shall mean the First Amendment dated as
of December 18, 1997 to Amended and Restated Revolving Credit
Agreement between the Borrower and the Lender.
"First Security Agreement Amendment" shall mean the First
Amendment dated December 18, 1997 to the Security Agreement in
substantially the form of Exhibit C to the First Loan Amendment.
"Interest Advances" has the meaning set forth in Section 2.01.
"Original Lender" shall mean Thamesedge Ltd.
"Security Agreement" shall mean the Security Interest
Agreement dated May 13, 1997 between the Original Lender (and
assigned to Lender), the Borrower, Folio Trust Company Limited, a
Jersey company, and Folio Nominees Limited, a British Virgin
Islands company, as mended by the First Security Agreement
Amendment and as the same may be supplemented, modified, amended or
restated from time to time.
(D) Section 2.01 of the Existing Loan Agreement is hereby
deleted in its entirety, and the following new section is hereby
inserted in its place:
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"SECTION 2.01 The Advances. The Lender agrees, on and
subject to the terms and conditions hereinafter set forth and
provided no Event of Default has occurred and is continuing,
to make advances (the "Advances") to the Borrower from time to
time during the period from the date hereof until the
Termination Date in an aggregate amount not to exceed at any
time outstanding $35,000,000, as such amount is reduced from
time to time pursuant to Section 2.03 (the "Commitment");
provided, however, that $7,500,000 of the Commitment may only
be used to fund interest added to principal of the note
pursuant to Section 2.05 (the "Interest Advances"). Each
Advance shall be in an amount not less than $100,000. Within
the limits of the Commitment, the Borrower may borrow, prepay
pursuant to Section 2.04(a) and reborrow under this Section
2.01."
(E) Section 2.02 of the Existing Loan Agreement is hereby
deleted in its entirety, and the following new section is hereby
inserted in its place:
"SECTION 2.02 Making the Advances. Each Advance (other
than an Interest Advance which shall be made by book entry)
shall be made on at least three Business Days notice from the
Borrower to the Lender specifying the date and amount thereof.
Not later than 10:00 a.m., London time, on the date of such
Advance and upon fulfillment of the applicable conditions set
forth in Article III, the Lender will make such Advance
available to the Borrower in immediately available funds at
such account and location as Borrower may designate in
writing."
(F) Section 2.03 of the Existing Loan Agreement is hereby
deleted in its entirety, and the following new section is hereby
inserted in its place:
"SECTION 2.03 Optional and Mandatory Reductions of
Commitment. Without any notice to the Borrower or any other
action by an Person, the Commitment shall be automatically and
permanently reduced (i) by an amount equal to the aggregate
principal amount of the Advances repaid (or due but not
repaid) pursuant to Section 2.04(c); and (ii) in accordance
with Section 6.01."
(G) At the conclusion of Section 6.01(g) of the Existing
Loan Agreement, the following is hereby inserted:
"; and"
(H) In Section 6.01 of the Existing Loan Agreement, the
following new subsection (h) is hereby inserted at the end thereof
without deletion or (except as provided in clause (E) above)
modification of any other material:
"(h) the Borrower shall have failed to furnish to Lender, by
October 1, 1998, a proved gas reserve report of Netherland,
Xxxxxx & Associates that shows that a minimum of 13,000,000
mcf (25%) of proved gas reserve exists, which are subject to
the Opon Association Contract in which Hondo Xxxxxxxxx then
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participates, above the proved gas reserve of 52,475,554 mcf
at September 30, 1997."
(I) In Section 7.02 of the Existing Loan Agreement, the
address of the Lender is amended by deleting the present address and
inserting the following:
"if to the Lender, to it at London Australian & General
Property Company Limited, 0 Xxxxxxxxx Xxxxx, Xxxxxx, XX0X 0XX,
Xxxxxxx, telephone 000-00-000-000-000, telecopier 011-44-171-
201-6100, Attention Xxxxx Xxxxxxx with a copy to Xxxxxxx X.
Xxxxx, Esq. at 000 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, XX
00000, telephone 000-000-0000, telecopy 000-000-0000;"
(J) Exhibit A to the Existing Loan Agreement is hereby
deleted in its entirety, and Exhibit A to this Amendment is hereby
inserted in its place.
Section 2. Acknowledgment of Outstanding Loans. The
Borrower hereby acknowledges, certifies and agrees that: (a) pursuant
to the Existing Loan Agreement, the Lender has made loans to the
Borrower that are outstanding as of the date of this Amendment in the
aggregate principal amount of $18,866,026.56 (including interest of
$1,166,026.56 that has been added to principal in accordance with
Section 2.05 of the Agreement); and (b) the obligations of the Borrower
to repay those loans (with interest) to the Lender and to perform or
otherwise satisfy its other obligations, as well as the security
interests in the Collateral (as defined in the Security Agreement)
granted by the Borrower to the Lender in the Security Agreement and the
obligations of the Guarantor in the Guaranty: (i) each remain and shall
continue in full force and effect, both before and after giving effect
to this Amendment, (ii) are not subject to any defense, counterclaim,
setoff, right of recoupment, abatement, reduction or other claim or
determination, and (iii) are and shall continue to be governed by the
terms and provisions of the Existing Loan Agreement and other Credit
Documents as supplemented, modified and amended by this Amendment.
Section 3. Bringdown of Representations, Etc. As of the
date of this Amendment, both before and after giving effect to the terms
and provisions of this Amendment, and both prior to and after giving
effect to any requested Advance: (a) the representations and warranties
of the Borrower set forth in the Existing Loan Agreement and in the
Security Agreement and of the Guarantor set forth in the Guaranty are
true and correct in all material respects with the same effect as though
those representations and warranties had been made on and as of the date
hereof; (b) no Event of Default or Default has occurred and is
continuing; (c) the Board of Directors of the Borrower has duly
authorized the execution and delivery by the Borrower of the Existing
Loan Agreement, the First Loan Amendment and the First Security
Agreement Amendment by the Borrower; (d) the Board of Directors of the
Guarantor and the Borrower, as sole shareholder of the Guarantor (with
authorization by the Board of Directors of the Borrower), has authorized
the execution and delivery by the Guarantor of the Guaranty and the
First Guaranty Amendment; and (e) there are no actions, suits or
proceedings pending or, to the best knowledge of the undersigned,
threatened or contemplated by any person for the liquidation,
dissolution or bankruptcy of the Borrower or the Guarantor or otherwise
threatening their respective existences or challenging or calling into
question the power or authority of the Borrower or the Guarantor to
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execute or deliver any Credit Document to which it is or will be a party
or to perform any of its obligations thereunder.
Section 4. Counterparts. This Amendment may be signed in
two or more counterpart copies of the entire document or of signature
pages to the document, each of which may be executed by one or more of
the parties hereto, but all of which, when taken together, shall
constitute a single agreement binding upon all of the parties hereto.
Section 5. Governing Law, Etc. Sections 7.06 ("Binding
Effect"; Governing Law") and 7.09 ("Jurisdiction") of the Existing Loan
Agreement are incorporated herein by reference and shall pertain
separately to this First Loan Amendment as well as the Existing Loan
Agreement and the Agreement.
Section 6. Agreement to Continue as Amended. The Existing
Loan Agreement, as supplemented, modified and amended by this Amend-
ment, and the other Credit Documents, as amended pursuant to the
amendments and/or restatements thereto being entered into
contemporaneously herewith, shall remain and continue in full force and
effect after the date hereof.
Section 7. Entire Agreement. This Amendment contains the
entire agreement of the parties and supersedes all other repre-
sentations, warranties, agreements and understandings, oral or
otherwise, among the parties with respect to the matters contained in
this Amendment.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed and delivered by their respective officers
thereunto duly authorized. as of the date first above written.
HONDO OIL &GAS COMPANY
By: /s/ Xxxx X. Xxxx
-------------------------------
Xxxx X. Xxxx; President
LONDON AUSTRALIAN & GENERAL
PROPERTY COMPANY LIMITED
By: /s/ R. E. Xxxxxxx
-------------------------------
R. E. Xxxxxxx; Director
[END OF PAGE]
EXHIBIT A
AMENDED AND RESTATED PROMISSORY NOTE
As of December 18, 1997 $35,000,000
FOR VALUE RECEIVED, the undersigned, HONDO OIL & GAS COMPANY, a
Delaware corporation (the "Borrower"), hereby promises to pay to the
order of LONDON AUSTRALIAN & GENERAL PROPERTY COMPANY LIMITED, a United
Kingdom corporation (the "Lender"), on January 1, 1999 the principal sum
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of $35,000,000 or, if less than $35,000,000, the aggregate unpaid
principal amount of all Advances (as defined below) made by the Lender
to the Borrower pursuant to the Agreement (as defined below), together
with all accrued but unpaid interest and all interest added to the
principal of this Note (as such has been and may be supplemented,
modified, amended or restated from time to time, "this Note").
The Borrower promises to pay interest on the unpaid principal
amount of each Advance from the date of such Advance until such
principal amount is paid in full, at the rate per annum equal at all
times to 13% (or the maximum interest rate permitted by law, whichever
is less) on each October 1 and April 1 until maturity; provided,
however, that any amount of principal on Advances that are not paid when
due (whether at stated maturity, by acceleration or otherwise) shall
bear interest from the date on which such amount is due until such
amount is paid in full, payable on demand, at a rate per annum equal at
all time to 18% (or the maximum interest rate permitted by law,
whichever is less).
As used herein, "Business Day" means any day of the year on which
banks are not required or authorized to close in London or Houston,
Texas. All computations of interest shall be made by the Lender on the
basis of a year of 360 days and the actual number of days occurring in
the period from which such interest is payable. Whenever any payment
hereunder shall be due on a day other than a Business Day, such payment
shall be made on the next succeeding Business Day, and such extension of
time shall in such case be included in the computation of payment of
interest.
Both principal and interest are payable not later than 12:00 noon
London time on the day when due in lawful money of the United States of
America to the Lender at such account and place as Lender shall
designate in immediately available funds. Each Advance made by the
Lender to the Borrower pursuant to the Agreement, and all payments made
on account of principal thereof, may, but need not be recorded by the
Lender on its books and records on the grid attached hereto and such
books and records shall be conclusive as to the existence and amounts
thereof absent manifest error. Failure to make any such entry or
endorsement shall not effect the actual principal amount outstanding or
the enforceability of this Note.
This Amended and Restated Note (i) has been issued by Borrower to
renew, extend, amend, restate and replace the Note dated July 2, 1997
issued by Borrower in the principal amount of $20,500,000 (the "Prior
Note"), (ii) is the "Note" referred to in, and is entitled to the
benefits of, the Amended and Restated Revolving Credit Agreement between
the Borrower and the Lender dated as of July 2, 1997 (as same has been
and may be supplemented, modified, amended or restated from time to
time, the "Agreement"), (iii) evidences all indebtedness and other
amounts outstanding from time to time under the Agreement and (iv)
although issued in substitution for and restatement of the Prior Note,
this Note shall not be deemed to have been issued in payment,
satisfaction, cancellation or novation of the Prior Note. The
Agreement, among other things: (1) provides for the making of advances
(the "Advances") by the Lender to the Borrower and (2) contains
provisions for acceleration of the maturity hereof upon the happening of
certain stated events and also for prepayments an account of principal
hereof prior to the maturity hereof upon the terms and conditions
specified therein.
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This Note is a renewal and replacement of that certain other note
in the amount of $20,500,000 from Borrower to Lender dated as of July 2,
1997 which, in turn, replaced a note in the amount of $13,500,000 from
Borrower to Lender dated June 28, 1996.
This Note is guaranteed by the Amended and Restated Guaranty of
Hondo Xxxxxxxxx Oil & Gas Limited dated July 2, 1997 (as the same has
been and may be supplemented, modified, amended or restated from time to
time, the "Guaranty").
Payment of this note is secured pursuant to the Security Agreement
dated May 13, 1997 between the Lender, the Borrower, Folio Trust Company
Limited, a Jersey company, and Folio Nominees Limited, a British Virgin
Islands company (as the same has been and may be supplemented, modified,
amended or restated from time to time, the "Security Agreement").
This Note shall be governed by, and construed in accordance with,
the laws of the State of New York (other than those that would defer to
the substantive laws of another jurisdiction). Without in any way
limiting the preceding choice of law, the parties intend (among other
things) to thereby avail themselves of the benefit of Section 5-1401 of
the General Obligations Law of the State of New York.
The Borrower hereby irrevocably submits to the jurisdiction of any
New York State or United States Federal court sitting in New York City
over any action or proceeding arising out of or relating to this Note or
the Agreement, and hereby irrevocably agrees that all claims in respect
of such action or proceeding may be heard and determined in such New
York State or Federal court. The Borrower irrevocably consents to the
service of any and all process in any such action or proceeding by
sending copies of such process to it at its address and in the manner
determined under Section 7.02 of the Agreement. The Borrower agrees
that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. The Borrower further
waives any objections to venue in such State and any objection to an
action or proceeding in such State on the basis of forum non conveniens.
The Borrower further agrees that any action or proceeding brought by it
against the Lender shall be brought only in New York State or United
States Federal court sitting in New York County, New York. The Borrower
and the Lender waive any right it may have to jury trial.
Nothing herein shall affect the right of the Lender to serve legal
process in any other manner permitted by law or affect the right of the
Lender to bring any action or proceeding against the Borrower or any of
its properties in the courts of any other jurisdictions.
To the extent that the Borrower has or hereafter may acquire any
immunity from jurisdiction of any court or from any legal process
(whether from service or notice, attachment prior to judgment,
attachment in aid of execution, execution or otherwise) with respect to
itself or its property, the Borrower hereby irrevocable waives such
immunity in respect of its obligations under the Credit this Note, the
Agreement and the Guaranty.
HONDO OIL & GAS COMPANY
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By:
-------------------------------
Xxxx X. Xxxx; President
[END OF PAGE]
SCHEDULE TO NOTE
Amount of Principal Principal Notation
Date Advance Paid Outstanding Made By
---- --------- --------- ----------- --------
Carryover
12/18/97 from Prior -- $18,866,026.56
Note
[END OF PAGE]
EXHIBIT B
FIRST GUARANTY AMENDMENT
As of December 18, 1997
Hondo Xxxxxxxxx Oil & Gas Limited
c/o Hondo Oil & Gas Company
00000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Re: Guaranty
Gentlemen:
As you know, London Australian & General Property Company Limited is
in the process of amending its existing Amended and Restated Revolving
Credit Agreement, dated as of July 2, 1997 (as currently in effect, the
"Existing Loan Agreement"), with Hondo Oil & Gas Company (the
"Borrower"), which you guarantied pursuant to your Guaranty executed and
delivered as of July 2, 1997 (as currently in effect, the "Existing
Guaranty") in our favor (as assignee of Thamesedge Ltd., the "Original
Lender"). Under the proposed amendment, among other things (a) the
Commitment and, accordingly, the principal amount subject to the
Guaranty, is being increased to $35,000,000 (including $7,500,000 that
may represent interest added to principal), (b) an Event of Default is
being added to the Existing Loan Agreement to the effect that it shall
be an Event of Default if the Borrower shall have failed to furnish to
Lender, by October 1, 1998, a proved gas reserve report of Netherland,
Xxxxxx & Associates that shows that a minimum of 13,000,000 mcf (25%) of
proved gas reserve exists, which are subject to the Opon Association
Contract in which Hondo Xxxxxxxxx then participates, above the proved
gas reserve of 52,475,554 mcf at September 30, 1997 and (c) the
definition of the term "Credit Documents" is being amended to include
that certain Security Agreement dated May 13, 1997, as amended as of the
date hereof (as same may be supplemented, modified, amended or restated
from time to time).
We understand that you have reviewed a copy of the final version of
the proposed First Amendment to the Existing Loan Agreement, including,
without limitation, the proposed Amended and Restated Promissory Note
relating thereto and the Security Agreement (collectively, the "Loan
Agreement Amendments"). Capitalized terms used but not defined in this
letter are used as they are defined in the Existing Guaranty. For all
8
purposes, "Guaranty" means the Existing Guaranty, as modified by this
letter, and as the same may be further supplemented, modified, amended
and restated from time to time in the manner provided therein.
Please execute this letter to acknowledge your agreement to the Loan
Agreement Amendments and that your guarantee and other obligations under
the Guaranty remain and continue in full force and effect both before
and after giving effect to the Loan Agreement Amendments and related
documentation (including, without limitation, the matters set forth in
this letter). Our request to you in this instance does not obligate us
to notify you or seek your consent in the future as to any amendment or
other matter where (pursuant to your Guaranty, or otherwise) such notice
or consent is not required.
Your signature, where indicated below, also will constitute your
acknowledgment of and agreement to the following modifications to the
Existing Guaranty (without limiting the prior paragraph of this letter):
i. London Australian & General Property Company Limited has
become the "Lender" for purposes of the Existing Loan
Agreement, as amended by the Loan Agreement Amendments, the
Guaranty and the other Credit Documents;
ii. The Guaranty now covers, among other things, all amounts
borrowed and to be borrowed (and interest thereon) under the
Existing Loan Agreement, as amended by the Loan Agreement
Amendments;
iii. You represent and warrant that your representations and
warranties set forth in the Existing Guaranty are true and
correct in all material respects on and as of the date of
this letter, after giving effect hereto, with the same
effect as though those representations and warranties had
been made on and as of the date hereof; and
iv. Section 7 of the Existing Guaranty is amended to read as
follows:
"SECTION 7. Consent to Jurisdiction; Waiver of Immunities.
(a) Guarantor hereby irrevocably submits to the jurisdiction
of any New York or federal court sitting in New York in any
action or proceeding arising out of or relating to this Guaranty,
and the Guarantor hereby irrevocably agrees that all claims in
respect of such action or proceeding may be heard and determined
in such New York or federal court. The Guarantor hereby
irrevocably waives, to the fullest extent they may effectively do
so, the defense of an inconvenient forum to the maintenance of
such action or proceeding. The Guarantor hereby irrevocably
appoints Xxxx X. Xxxx (the "Process Agent"), with an office on
the date hereof at Hondo Oil & Gas Company, 00000 Xxxxxxxx
Xxxxxx, Xxxxx 000, Xxxxxxx, XX 00000, telephone (000) 000-0000,
telecopier (000) 000-0000, as its agent to receive, on behalf of
the Guarantor and its property, service of copies of the summons
and complaint and any other process that may be served in any
such action or proceeding. Such service may be made by mailing
or delivering a copy of such process to the Guarantor in care of
the Process Agent at the Process Agent's address above, and the
Guarantor hereby irrevocably authorizes and directs the Process
9
Agent to accept such service on its behalf. As an alternative
method of service, Guarantor also irrevocably consents to the
service of any and all process in any such action or proceeding
by the mailing of copies of such process to Guarantor at its
address specified in Section 11. Guarantor agrees that a final
judgment in any such action or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law.
(b) Nothing in this Section shall affect the right of the
Lender to serve legal process in any other manner permitted by
law or affect the right of the Lender to bring any action or
proceeding against Guarantor or its property in the courts of any
other jurisdictions.
(c) To the extent that Guarantor has or hereafter may acquire
any immunity from jurisdiction of any court or from any legal
process (whether through service of notice, attachment prior to
judgment, attachment in aid of execution, execution or otherwise)
with respect to Guarantor or its property, Guarantor hereby
irrevocably waives such immunity in respect of its obligations
under this Guaranty."
v. Notices, requests and demands to the Lender, as set forth in
Section 11 of the Existing Guaranty, shall be in writing and
shall be effective when delivered to the Lender at London
Australia & General Property Company, Four Xxxxxxxxx Xxxxx,
Xxxxxx, XX0X 0XX, Xxxxxxx, telephone 000-00-000-000-0000,
telecopier 011-44-171-201-6100, Attention: R. E. Xxxxxxx,
with a copy to Xxxxxxx X. Xxxxx, Esq. at 000 Xxxxx Xxxxxx,
00xx Xxxxx, Xxx Xxxx, XX 00000, telephone 000-000-0000,
telecopier 000-000-0000.
vi. This Guaranty shall be governed by the laws of the State
of New York (other than those that would defer to the
substantive laws of another jurisdiction). Without in any way
limiting the preceding choice of law, the parties intend
(among other things) to thereby avail themselves of the
benefit of Section 5-1401 of the General Obligations Law of
the State of New York.
Your signature, where indicated below, also will constitute your
acknowledgment of and agreement and certification that: (a) pursuant to
the Existing Loan Agreement, the Lender has made Advances (as defined)
to the Borrower that are outstanding as of the date of this letter in
the aggregate principal amount of $18,866,026.56 (including
$1,166,026.56 of interest added to principal); (b) the obligations of
the Borrower to repay all Advances (including those to be made pursuant
to the Loan Agreement Amendments) with interest, to the Lender and to
perform or otherwise satisfy all other obligations, as well as the
security interests in the Collateral (as defined in the Security
Agreement) granted by the Borrower to the Lender, (i) each remain and
shall continue in full force and effect, both before and after giving
effect to the transactions contemplated by this letter, (ii) are not
subject to any defense, counterclaim, setoff, right of recoupment,
abatement, reduction or other claim or determination, and (iii) are and
shall continue to be governed by the terms and provisions of the
Existing Loan Agreement and other Credit Documents, as amended by the
Loan Agreement Amendments and as same may be supplemented, modified,
10
amended or restated in the future; (e) your absolute, unconditional and
irrevocable guarantee to the Lender of the full and punctual payment and
satisfaction of the foregoing and any and all other obligations the
Borrower (i) remains and shall continue in full force and effect, both
before and after giving effect to the transactions contemplated by this
letter, (ii) is not subject to any defense, counterclaim, setoff, right
of recoupment, abatement, reduction or other claim or determination, and
(iii) is and shall continue to be governed by the terms and provisions
of the Existing Guaranty and other Credit Documents as supplemented,
modified and amended.
Very truly yours,
LONDON AUSTRALIAN & GENERAL
PROPERTY COMPANY LIMITED
By:
-------------------------------
ACKNOWLEDGED AND AGREED:
HONDO XXXXXXXXX OIL & GAS LIMITED
----------------------------------
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