1
CONSENT AND WAIVER
THIS CONSENT AND WAIVER is entered into this 18th day of March, 1996
between XXXXXX OIL AND GAS COMPANY (the "Company") and XXXX XXXXXXX MUTUAL LIFE
INSURANCE COMPANY (the "Holder"). The Company and the Holder are parties to a
Note Agreement dated as of September 30, 1994, as amended (the "1994 Note
Agreement") relating to the issuance and sale by the Company of its 13% Senior
Notes in the aggregate amount of $15 million. As of the date of this Consent
and Waiver, Holder is the holder of all of the outstanding Senior Notes issued
and sold pursuant to the Note Agreement.
The Company has entered into or intends to enter into an agreement with Shell
Offshore, Inc. ("Shell"), a draft copy of which has been delivered to Holder
(the "Sale Agreement"), to sell substantially all of its United States oil and
gas properties (the "U.S. Properties") for a total purchase price of
$35,400,000, as adjusted. Such a sale would constitute an Event of Default
under the terms of the 1994 Note Agreement. In connection therewith, the
Holder has agreed to waive certain terms of the Note Agreement and consents to
the terms of the Shell transaction based on the agreements by the Company
contained herein.
NOW, THEREFORE, the parties agree:
1. Offer of Prepayment. (A) Pursuant to the terms of the Sale
Agreement, it is anticipated that the U.S. Properties will be sold on or before
April 30, 1996, the actual date such sale is consummated referred to herein as
the "Sale Date." The Company and the Holder agree that in consideration of
Holder's waiver and consent set forth in Section 2 below, on the Sale Date, the
Company shall prepay the outstanding principal amount due under the 1994 Note
Agreement, together with interest accrued to the Sale Date and the Make Whole
Amount, as defined in the 1994 Note Agreement. If the Sale Date occurs,
failure to pay the principal amount due under with 1994 Note Agreement, with
interest and the Make Whole Amount on the Sale Date, shall constitute an Event
of Default under the 1994 Note Agreement.
(B) Section 4B of the 1994 Note Agreement requires that the Company
give Holder at least 30 days and no more than 60 days notice prior to
prepayment of the Notes. Accordingly, Holder and the Company agree that the
notice requirements of Section 4B are waived to the extent such requirements
are inconsistent with the prepayment terms described above.
(C) The Company estimates that the upon consummation of the sale of
the U.S. Properties pursuant to the Sale Agreement, the Company will prepay
$15,160,000 in principal and accrued interest on the 1994 Senior Notes and will
pay $3,420,000 for the Make Whole Amount. The Company agrees to provide to
Holder, on the date which is two Business days prior to the Sale Date, an
Officer's Certificate setting forth in detail the calculation used in
determining the outstanding principal, accrued interest and the Make Whole
Amount.
2. Consent and Waiver. Holder hereby consents to the sale of
substantially all of the Company's United States oil and gas properties under
the terms of the Sale Agreement. From and after December 31, 1995, Holder
hereby waives any Default or Event of Default relating to Negative Covenants
contained in Section 6 of the 1994 Note Agreement. Specifically, Holder
2
waives compliance with the Current Ratio covenant required by Section 6(A)1 of
the 1994 Note Agreement. The waivers described herein shall lapse and be of no
further force and effect if for any reason the Sale Date shall not occur prior
to April 30, 1996 or if the 1994 Notes shall not have been prepaid on the Sale
Date.
3. Exclusivity. This Consent and Waiver is not and shall not be
deemed to be a waiver of any other provisions of the 1994 Note Agreement except
as specifically set forth in this Consent and Waiver. Capitalized terms used
herein and not otherwise defined shall have the meanings ascribed to them in
the 1994 Note Agreement.
4. GOVERNING LAW. THIS CONSENT AND WAIVER IS TO BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED
BY, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS (WITHOUT GIVING EFFECT TO ANY
LAWS OR RULES RELATING TO CONFLICTS OF LAWS THAT WOULD CAUSE THE APPLICATION OF
THE LAWS OF ANY JURISDICTION OTHER THAN THE COMMONWEALTH OF MASSACHUSETTS).
5. Counterparts. This Consent and Waiver may be executed
simultaneously in two or more counterparts. Each of which shall be deemed an
original, and it shall not be necessary in making proof of this Waiver to
produce or account for more than one such counterpart.
This Waiver is executed under seal as of the date first above written.
XXXXXX OIL AND GAS COMPANY
By:__________________________
Title: President
XXXX XXXXXXX MUTUAL LIFE
INSURANCE COMPANY
By:__________________________
Title: Investment Officer
