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
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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 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 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
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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
011-44-171-201-6000, 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,
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
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(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: /s/ R. E. Xxxxxxx
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ACKNOWLEDGED AND AGREED:
HONDO XXXXXXXXX OIL & GAS LIMITED
/s/ Xxxx X. Xxxx
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