EXHIBIT 10.19
XXXXXX OIL CORPORATION
0000 XXXXX XXXXXX XXXX
XXXXXXXX XXXX, XXXXXXXX 00000-0000
April 1, 1999
Mr. Xxxx Xxxxxx
Eagle Investments, Inc.
0000 Xxxxx Xxxxxx Xxxx
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Dear Gene:
As you are aware, under the Second Amendment to Credit Agreement
of even date herewith (the "Second Amendment"), by and among Xxxxxx Oil
Corporation (the "Company"), Xxxxxx Exploration Company ("MEXP"), each of
the Lenders signatory or which may become signatory to a certain Credit
Agreement, dated as of February 9, 1998, as amended by the First Amendment
to Credit Agreement dated as of June 2, 1998 (the "Credit Agreement"), and
Bank of Montreal as agent for Lenders under the Credit Agreement, the
Company is obligated to make two payments of $3,000,000 each, on May 1 and
May 31 respectively (the "May Payments"), to the Lenders, which payments
will reduce the Aggregate Maximum Credit Amounts pro rata to each Lender
based on its Percentage Share.
Because Eagle owns an interest in Xxxxxx Exploration Company, the
parent of the Company, and consequently will derive benefit from the
arrangements contemplated by the Second Amendment, we understand that Eagle
Investments, Inc. ("Eagle") is willing to agree that, to the extent, and
only to the extent, that the Company is unable to make the May Payments, it
will purchase up to six million dollars ($6,000,000) in assets of the
Company, to the extent, and only to the extent, necessary to provide the
Company with cash sufficient to make the May Payments, on the terms and
conditions set forth below.
1. As of April 1, 1999, Eagle commits to purchase up to a maximum
of six million dollars ($6,000,000) of Company leasehold, producing
properties and/or prospects (collectively, the "Assets"), and to assume any
obligations under existing joint operating agreements, participation
agreements and any other agreements relating to the Assets.
2. The Company will represent and warrant that the purchase price
of any such Assets purchased by Eagle will represent fair market value as
determined by an independent appraisal of such Assets or the actions or
inactions of one or more qualified industry participants with respect to
such Assets.
3. The Company will represent and warrant on the date of sale
that, subject to the rights of the Lenders under the Credit Agreement and
any liens arising thereunder, it has the absolute right to sell the Assets
and will defend and indemnify Eagle, its successors and assigns, with
respect to title to the same.
4. All sales of Assets will be subject to the approval of the
outside directors of MEXP, and a copy of the resolutions approving such
sales will be provided to Eagle.
5. The Company will have the absolute right to repurchase, on or
before December 31, 1999, all of the Assets purchased by Eagle in
accordance with the terms of the Credit Agreement as amended by the Second
Amendment, subject only to the consent of the Lenders to the extent such
consent is required by the Credit Agreement as amended by the Second
Amendment. The Assets cannot be repurchased individually, and must be
repurchased in their entirety excepting those Assets where drilling
operations have begun. The repurchase price for such Assets will be the
purchase price paid by Eagle plus interest at the prime rate announced from
time to time by Bank of Montreal.
6. All sales of Assets to Eagle made at any time through December
31, 1999 shall be on terms no less favorable than those offered to
unrelated third parties.
7. The Company will provide a recordable assignment of all Assets
purchased by Eagle, and a discharge of mortgage and release of lien
executed on behalf of the Lenders in a form acceptable to Eagle.
8. Eagle warrants and represents to the Company that (i) all
financial statements and other information concerning it which have been
furnished to the Company and its auditors are true and correct in all
material respects; (ii) the execution, delivery, and performance by Eagle
of its obligations under this letter agreement will not violate any law,
rule, judgment, order, agreement, or instrument binding it, nor require the
approval of any public authority or other third party; and (iii) this
letter agreement constitutes the valid and binding obligations of Eagle and
is enforceable against it in accordance with its terms, except as may be
limited by bankruptcy, insolvency, or other similar laws affecting the
enforcement of creditors' rights and by general principles of equity.
9. This letter agreement and the rights and obligations of the
parties shall be governed by and interpreted in accordance with the laws of
the State of Michigan, without giving effect to principles of conflicts of
laws.
10. This letter agreement contains the entire agreement between
the undersigned and the Company with respect to the subject matter hereof.
There are no promises, terms, conditions, or obligations other than those
contained herein.
11. This letter agreement may not be modified except by writing
signed by the party to be charged. Any notices or communications required
or permitted under this letter agreement shall be in writing and shall be
deemed given when served either personally or by certified United States
mail (postage prepaid), or by overnight express courier, addressed to Eagle
or to the Company at its address set forth on the first page of this letter
agreement, or to such other place as either party shall designate by notice
served upon the other party in accordance with this Paragraph.
12. This letter agreement shall be binding upon and shall inure to
the benefit of the Company and Eagle and their respective successors and
assigns.
13. This letter agreement may be executed in one or more
counterparts, each of which shall constitute one and the same agreement.
Facsimile signatures may be relied upon as originals.
Please indicate your agreement to the terms of this letter
agreement by signing a copy of this letter on the line provided and
returning it to the undersigned.
Very truly yours,
XXXXXX OIL CORPORATION
/S/ XXXXX X. XXXXXX
Xxxxx X. Xxxxxx, President
Agreed to and accepted as of the 1st day of April, 1999
EAGLE INVESTMENTS, INC.
/S/ X.X. XXXXXX
Name:
Title:
