AMENDED AND RESTATED GUARANTY OF
HONDO MAGDALENA OIL & GAS LIMITED
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This Amended and Restated Guaranty dated as of July 2, 1997, is
made by Hondo Magdalena Oil & Gas Limited, a Jersey, Channel Islands
corporation (the "Guarantor"), and THAMESEDGE, LTD. an English
corporation (the "Lender"). This Guaranty amends and restates the
Guaranty made by Guarantor to the Lender dated as of June 28, 1996.
RECITAL
The Lender has entered into an Amended and Restated Revolving
Credit Agreement dated as of July 2, 1997, as it may hereafter be
amended or otherwise modified (the "Agreement"), with HONDO OIL & GAS
COMPANY, a corporation organized and existing under the laws of Delaware
(the "Borrower"). It is a condition precedent to the effectiveness of
the Agreement that this company, a wholly owned subsidiary of the
Borrower, shall have executed and delivered this Guaranty. Terms
defined in the Agreement and not otherwise defined herein have the same
respective meanings when used herein, and the rules of interpretation
set forth in Section 1.03 of the Agreement are incorporated herein by
reference.
SECTION 1. Guaranty. The Guarantor hereby unconditionally
guarantees the punctual payment when due, whether at stated maturity, by
acceleration or otherwise, of all obligations of the Borrower now or
hereafter existing under the Credit Documents, whether for principal,
interest, fees, expenses or otherwise (the "Obligations"), and agree to
pay any and all expenses incurred by the Lender in enforcing any rights
under this Guaranty.
SECTION 2. Guaranty Absolute. The Guarantor guarantees that
the Obligations will be paid strictly in accordance with the terms of
the Credit Document, regardless of any law, regulation or order now or
hereafter in effect in any jurisdiction affecting any of such terms or
the rights of the Lender with respect thereto. The liability of the
Guarantor under this Guaranty shall be absolute and unconditional,
irrespective of the following:
(a) any lack of validity or enforceability of, or any release or
discharge of the Borrower from liability under, the Credit Documents;
(b) any change in the time, manner or place of payment of, or in
any other term of, all or any of the Obligations or any other amendment
or waiver of, or any consent to departure from the Credit Documents;
(c) any subordination, compromise, exchange, release,
nonperfection or liquidation of any collateral, or any unenforceability,
release, amendment or waiver of, or consent to departure from, any other
guaranty, for any or all of the Obligations;
(d) any express or implied amendment, modification, renewal,
supplement, extension or acceleration of the Obligations or any of the
Credit Documents;
(e) any exercise or nonexercise by the Lender of any right or
privilege under this Guaranty or any of the other Credit Documents;
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(f) any bankruptcy, insolvency, reorganization, composition,
adjustment, dissolution, liquidation or other like proceeding relating
to either Guarantor, The Borrower or any other guarantor of the
Obligations or any action taken with respect to this Guaranty by any
trustee, receiver or court in any such proceeding, whether or not the
Guarantors shall have had notice or knowledge of any of the foregoing;
(g) any assignment or other transfer, in whole or in part, of this
Guaranty or of any of the other Credit Documents;
(h) any acceptance of partial performance of the Obligations;
(i) any consent to the transfer of, or any bid or purchase at sale
of, any collateral for the Obligations; or
(j) any other circumstance that might otherwise constitute a
defense available to, or a discharge of, the Borrower or any guarantor.
This Guaranty shall continue to be effective or be reinstated, as
the case may be, if at any time any payment of any of the Obligations is
rescinded or must otherwise be returned by the Lender upon the
insolvency, bankruptcy or reorganization of the Borrower or otherwise,
all as though such payment had not been made.
SECTION 3. Waivers. Guarantor unconditionally waives any
defense to the enforcement of this Guaranty, including the following:
(a) all presentments, demands for performance, notices of
nonperformance, protests, notices of protest, notices of dishonor and
notices of acceptance of this Guaranty;
(b) any right to require the lender to proceed against the
Borrower or any other guarantor at any time, to proceed against or
exhaust any security held by the Lender at any time or to pursue any
other remedy whatsoever at any time;
(c) the defense of any statute of limitations affecting the
liability of Guarantor hereunder, the liability of the Borrower or the
enforcement hereof, to the extent permitted by law;
(d) any defense arising by reason of any invalidity or
unenforceability of any of the Credit Documents, any disability of the
Borrower or any other guarantor, any manner in which the Lender has
exercised its rights and remedies under the Credit Documents or any
cessation from any cause whatsoever of the liability of the Borrower;
(e) any defense based upon an election of remedies by the Lender,
including any election to proceed by judicial or nonjudicial foreclosure
of any lien, whether on real property or personal property, or by deed
in lieu thereof, whether or not every aspect of any foreclosure sale is
commercially reasonable, or any election of remedies, including remedies
relating to real-property or personal-property security, that destroys
or otherwise impairs any subrogation rights of Guarantor or any rights
of Guarantor to proceed against the Borrower for reimbursement, or both;
(f) any duty of the Lender to advise Guarantor of any information
known to the Lender regarding the financial condition of the Borrower or
any other circumstance affecting the Borrower's ability to perform its
obligations to the Lender, it being agreed that such Guarantor assumes
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responsibility for being and keeping informed regarding such condition
or any such circumstance;
(g) any right of subrogation, contribution, indemnity or otherwise
against the Borrower that may arise out of or be caused by this
Guaranty, any right to enforce any remedy that the Lender now has or may
hereafter have against the Borrower and any benefit of, and any right to
participate in, any security now or hereafter held by the Lender; and
(h) without limiting the generality of the foregoing or any other
provision hereof, any rights and benefits that might otherwise by
available to such Guarantor under applicable English Law.
SECTION 4. Payments in Trust. If any amount shall be paid to
either Guarantor contrary to the provisions of Section 3(g), such amount
shall be held in trust for the benefit of the Lender and shall forthwith
be paid to the Lender to be credited and applied to the Obligations,
whether matured or unmatured, in accordance with the terms of the Credit
Agreement.
SECTION 5. Payments Free and Clear of Taxes, Etc.
(a) Any and all payments made by Guarantor hereunder shall be made
free and clear of and without deduction for any and all present or
future taxes, levies, imposts, deductions, charges or withholdings, and
all liabilities with respect thereto, excluding taxes imposed on the
income of the Lender, and franchise taxes imposed on it, by the
jurisdiction under the laws of which the Lender is organized and any
political subdivision thereof (all such nonexcluded taxes, levies,
imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "Taxes"). If Guarantor shall be required by
law to deduct any Taxes from or in respect of any sum payable hereunder
to the Lender, (i) the sum payable shall be increased as may be
necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section) the
Lender receives an amount equal to the sum it would have received had no
such deductions been made, (ii) Guarantor shall make such deductions and
(iii) Guarantor shall pay the full amount deducted to the relevant
taxation authority or other authority in accordance with applicable law.
(b) In addition, the Guarantor agrees to pay any present or future
stamp or documentary taxes or any other excise or property taxes,
charges or similar levies that arise from any payment made hereunder or
from the execution, delivery or registration of, or other with respect
to, this Guaranty (hereinafter referred to as "Other Taxes").
(c) The Guarantor will indemnify the Lender for the full amount of
Taxes and Other Taxes (including any Taxes or Other Taxes imposed by any
jurisdiction on amounts payable under this Section) paid by the Lender
and any liability (including penalties, interest and expenses) arising
therefrom or with respect thereto, whether or not such Taxes or Other
Taxes were correctly or legally asserted. This indemnification shall be
made within 30 days from the date the Lender makes written demand
therefor.
(d) Within 30 days after the date of any payment of Taxes,
Guarantor will furnish to the Lender, at its address referred to in
Section 12, the original or a certified copy of a receipt evidencing
payment thereof. If no Taxes are payable in respect of any payment
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hereunder to the Lender, Guarantor will furnish to the Lender a
certificate from each appropriate taxing authority or an opinion of
counsel acceptable to the Lender, in either case stating that such
payment is exempt from or not subject to Taxes.
(e) Without prejudice to the survival of any other agreement of
the Guarantor hereunder, the agreements and obligations of the Guarantor
contained in this Section 5 shall survive the payment in full of the
principal of and interest on the Advances.
SECTION 6. Judgment.
(a) If, for the purposes of obtaining judgment in any court, it is
necessary to convert a sum due hereunder in United States dollars into
another currency, the parties hereto agree, to the fullest extent
permitted by law, that the rate of exchange used shall be that at which
in accordance with normal banking procedures the Lender could purchase
United States dollars with such other currency on the Business Day
preceding that on which final judgment is given.
(b) The obligations of the Guarantor in respect of any sum due
from them to the Lender hereunder shall, notwithstanding any judgment in
a currency other than United States dollars, be discharged only to the
extent that, on the Business Day following receipt by the Lender of any
sum adjudged to be so due in such other currency, the Lender may in
accordance with such other currency; if the United States dollars so
purchased are less than the sum originally due to the Lender in United
States dollars, the Guarantor agrees, as a separate obligation and
notwithstanding any such judgment, to indemnify the Lender against such
loss, and, if the United States dollars so purchased exceed the sum
originally due to the Lender in United States dollars, the Lender agrees
to remit such excess to Guarantor.
SECTION 7. Consent to Jurisdiction; Waiver of Immunities.
(a) Guarantor hereby irrevocable submit 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 agree 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 irrevocable waive, 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 Charles B. McDaniel, Esq., with an office on the
date hereof at Hondo Oil & Gas Company, 10375 Richmond Avenue, Suite
900, Houston, TX 77042, telephone (713) 954-4600, telecopier (713) 954-
4601, as their agent to receive on behalf of the Guarantors and their
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 Guarantors hereby irrevocable authorize and
direct the Process Agent to accept such service on their 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 their respective
addresses specified in Section 12. 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
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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 their 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, such Guarantor hereby irrevocably waives such
immunity in respect of its obligations under this Guaranty.
SECTION 8. Representations and Warranties. Except as to items
disclosed in the Credit Documents, the Guarantor hereby represents and
warrants as follows:
(a) Organization. Guarantor is a corporation duly incorporated,
validly existing and in good standing under the laws of the applicable
jurisdiction set forth in the first paragraph of this Guaranty and is
duly licensed or qualified and in good standing as a foreign corporation
in each other jurisdiction in which failure to qualify would materially
and adversely affect the conduct of its business or the enforceability
of contractual rights of such Guarantor.
(b) Due Authorization. The execution, delivery and performance of
this Guaranty are within Guarantor's corporate powers, have been duly
authorized by all necessary corporate action, and do not contravene (i)
Guarantor's charter documents or by laws or (ii) any applicable
Governmental Rule or any contractual restriction binding on or affecting
Guarantor.
(c) Governmental Action. No Governmental Action is required for
the due execution, delivery or performance by Guarantor of this
Guaranty.
(d) Binding Effect. This Guaranty is the legal, valid and binding
obligation of Guarantor enforceable against such Guarantor in accordance
with the terms hereof.
(e) Financial Information. The audited balance sheet of Guarantor
and its subsidiaries as of December 31, 1996 and the related audited
statements of income and retained earnings of Guarantor and its
subsidiaries for the fiscal year then ended, copies of which have been
furnished to the Lender, fairly present the financial condition of
Guarantor and its subsidiaries as of such date and the results of the
operations of Guarantor and its subsidiaries for the year ended on such
date, all in accordance with GAAP, and since December 31, 1996 there has
been no material adverse change in such condition or operations.
(f) Litigation. There is no pending or (to the knowledge of
Guarantor) threatened action or proceeding affecting Guarantor or any of
its subsidiaries before any Governmental Person that may materially and
adversely affect the financial condition or operations of Guarantor or
any subsidiary thereof or the ability of Guarantor to perform its
obligations under this Guaranty, except as disclosed to the Lender in
the financial statements referred to in Section 8(e).
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(g) Ownership of Guarantor and Borrower. Borrower owns 100% of
the outstanding capital stock of Guarantor.
SECTION 9. Affirmative Covenants. Guarantor covenants and
agrees that, so long as any part of the Obligations shall remain unpaid
or the Lender shall have any Commitment, Guarantor will, unless the
Lender shall otherwise consent in writing, comply with the following
covenants:
(a) Compliance with Laws, Etc. Guarantor will comply and cause
each of its subsidiaries to comply in all material respects with all
applicable Governmental Rules, such compliance to include paying before
the same become delinquent all taxes, assessments and governmental
charges imposed upon it or upon its property, except to the extent
contested in good faith and by appropriate proceedings.
(b) Maintenance of Existence. Guarantor will preserve and
maintain its corporate existence and all of its rights, privileges and
franchises necessary and desirable in the normal conduct of its business
in a regular manner.
(c) Reporting Requirements. Guarantor will furnish to the Lender
a copy of the annual accounts of Guarantor containing financial
statements for each fiscal year, certified by its auditors in accordance
with GAAP practice, and such other information respecting the condition
of operations, financial or otherwise, of such Guarantor or any of its
subsidiaries as the Lender may from time to time reasonably request.
(d) Notice of Proceedings. Guarantor will promptly give notice in
writing to the Lender of all litigation, arbitration proceedings and
regulatory proceedings affecting such Guarantor, except litigation or
proceedings that, if adversely determined, could not materially and
adversely affect the financial condition of such Guarantor.
SECTION 10. Amendments, Etc. No amendment or waiver of any
provision of this Guaranty or consent to any departure by the Guarantor
therefrom shall in any event be effective unless the same shall be in
writing and signed by the Lender, and then such waiver or consent shall
be effective only in the specific instance and for the specific purpose
for which given.
SECTION 11. Addresses for Notices. All notices and other
communications provided for hereunder shall be in writing and mailed
(certified mail, return-receipt requested), telecopied or delivered
personally, if to Guarantor, c/o Hondo Oil & Gas Company, 10375 Richmond
Avenue, Suite 900, Houston, TX 77042, telephone (713) 954-4600,
telecopier (713) 954-4601, Attention: Charles B. McDaniel, Esq.; if to
Lender at Thamesedge, Ltd., 4 Grosvenor Place, London, SW1X 7DL
England, telephone 011-44-171-201-6000, telecopier 011-44-171-201-6100,
Attention: Robin Whitten with a copy to Rudolph H. Funke, Esq. at 805
Third Avenue, 18th Floor, New York, NY 10022, telephone 212-715-7001,
telecopier 212-838-8141; or, as to each party, to it at such other
address as shall be designated by such party in a written notice to the
other parties. All such notices and other communications shall be
effective, if mailed, 72 hours after being deposited in the mails, or if
telecopied or delivered personally, when received.
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SECTION 12. No Waiver; Remedies. No failure on the part of the
Lender to exercise, and no delay in exercising, any right hereunder
shall operate as a waiver thereof, and no single or partial exercise of
any right hereunder shall preclude any other or further exercise thereof
or the exercise of any other right. The remedies provided herein are
cumulative and not exclusive of any remedies provided by law.
SECTION 13. Continuing Guaranty; Transfer of Note. This
Guaranty is a continuing guaranty and shall (a) remain in full force and
effect until payment in full of the Obligations and all other amounts
payable under this Guaranty and expiration of the Commitment, (b) be
binding upon the Guarantor and their respective successors and assigns
and (c) inure to the benefit of and be enforceable by the Lender and its
successors, transferees and assigns. Without limiting the generality of
the foregoing clause (c), the Lender may assign or otherwise transfer
the Note and the Advances to any other person or entity, and such other
person or entity shall thereupon become vested with all the rights in
respect thereof granted to the Lender herein or otherwise.
HONDO MAGDELENA OIL & GAS LIMITED
By: /s/ John J. Hoey
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John J. Hoey
Managing Director
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