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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 June 16, 1995 (the "1995 Note Agreement") relating
to the issuance and sale by the Company of its 13% Senior Notes due June 30,
2007 in the aggregate amount of $20 million (the "Senior Notes"). As of the
date of this Consent and Waiver, Holder is the holder of all of the outstanding
Senior Notes.
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 1995 Note Agreement. In addition, the Company is
evaluating alternatives for the refinancing of the Senior Notes. In connection
therewith, the Holder has agreed to waive certain terms of the 1995 Note
Agreement and consents to the terms of the Sale Agreement 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 "Sale Date"). In addition, the Company expects to finalize
the terms for refinancing the Senior Notes on or before June 30, 1996, and the
actual date such financing shall occur is referred to herein as the "Financing
Date". Provided that the sale occurs on or prior to 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 Financing Date, the Company shall prepay the
outstanding principal amount due under the 1995 Note Agreement, together with
interest accrued to the Financing Date and the Make Whole Amount, as defined in
the 1995 Note Agreement. If the sale of the U.S. Properties occurs, failure to
pay the principal amount, accrued interest and Make Whole Amount on the
Financing Date shall constitute an Event of Default under the terms of the 1995
Note Agreement.
(B) Section 4B of the 1995 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 upon closing of the financing referred
to herein, the Company will prepay $20,000,000 in principal and accrued
interest on the 1995 Senior Notes and will pay $7,690,000 for the Make Whole
Amount. The Company agrees to provide to Holder, on the date which is two
Business days prior to the Financing Date, an Officer's Certificate setting
forth in detail the calculation used in determining the outstanding principal,
accrued interest and Make Whole Amount.
2. Consent and Waiver. Holder hereby consents to the sale of
substantially all of the
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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 1995 Note Agreement. Specifically, Holder waives compliance with the
Current Ratio covenant required by Section 6(A)1 of the 1995 Note Agreement.
The waivers described herein shall lapse and be of no further force and effect
if for any reason the Financing Date shall not occur prior to June 30, 1996, or
if the Senior Notes shall not have been prepaid on the Financing Date.
3. Exclusivity. This Consent and Waiver is not and shall not be
deemed to be a waiver of any other provisions of the 1995 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 1995 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
