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EXHIBIT 10(h)
April 29, 1996
Alexander Energy Corporation
701 Cedar Lake Boulevard
Oklahoma City, Oklahoma 73114
Re: Disposition of Hydrocarbons Assigned by Means of certain
Mortgages, Deeds of Trust, Assignments, Security Agreements
and Financing Statements
Gentlemen:
We refer to:
(i) Credit Agreement dated as of November 14, 1994 among Alexander
Energy Corporation (herein called the "Borrower"), various
financial institutions which are or may hereafter be parties
thereto (the "Lenders"), and Canadian Imperial Bank of
Commerce, New York Agency as agent (the "Agent") for the
Lenders as amended by a First Amendment to Credit Agreement
dated as of July 14, 1995 and a Second Amendment to Credit
Agreement dated as of April 15, 1996 (as so amended, herein
called the "Credit Agreement");
(ii) Note Agreement dated as of June 1, 1988, by and between the
Borrower and John Hancock Mutual Life Insurance Company, a
Massachusetts corporation (as amended, supplemented, restated,
replaced or otherwise modified and in effect from time to
time, the "John Hancock Note Agreement");
(iii) A Note of the Borrower dated November 14, 1994 (herein called
the "Note") payable to the order of CIBC Inc. as Lender in the
principal amount of $52,000,000;
(iv) Notes of the Borrower dated June 1, 1988 (herein called the
"John Hancock Notes") issued pursuant to the John Hancock Note
Agreement in the aggregate original principal amount of
$5,000,000;
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Alexander Energy Corporation
April 29, 1996
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(v) Mortgage, Deed of Trust, Assignment, Security Agreement and
Financing Statement [Texas] dated as of April 26, 1996 (the
"Texas Mortgage") from the Borrower to CIBC Inc. as collateral
agent (the "Collateral Agent") for the Secured Parties, as
defined therein, and the Trustees for the Collateral Agent;
(vi) Mortgage, Deed of Trust, Assignment, Security Agreement and
Financing Statement [Oklahoma] dated as of April 26, 1996
(the "Oklahoma Mortgage ") from the Borrower to the Collateral
Agent and the Trustees for the Collateral Agent; and
(vii) Mortgage, Deed of Trust, Assignment, Security Agreement and
Financing Statement [Arkansas] dated as of April 26, 1996 (the
"Arkansas Mortgage") from the Borrower to the Collateral Agent
and the Trustees for the Collateral Agent.
The Texas Mortgage, Oklahoma Mortgage and Arkansas Mortgage are
hereinafter collectively referred to as the "Mortgage."
Pursuant to Article III of the Mortgage, the Borrower has assigned to
the Collateral Agent all Hydrocarbons (as defined in the Mortgage) which are
produced from and would accrue to the Mortgaged Property (as defined in the
Mortgage) commencing on April 26, 1996, together with all proceeds therefrom.
This letter is to inform you that, until the Collateral Agent shall at
any time by written notice direct otherwise, the Borrower may continue to
receive, retain and use all Hydrocarbons and proceeds therefrom. Upon the
giving of any such notice (which notice may be given by the Collateral Agent at
any time in the exercise of its sole discretion, after the occurrence and
during the continuance of any Default or Event of Default pursuant to the
Credit Agreement, any default or Event of Default pursuant to the John Hancock
Note Agreement or any default or event of default pursuant to a Mortgage), you
agree that you will no longer collect, receive, retain or use any such
Hydrocarbons or proceeds therefrom, and any such items which are received by
you shall not be commingled with any other of your own funds or property and
shall be held by you in express trust for the Collateral Agent, until delivered
to the Collateral Agent, and you agree to promptly deliver any and all such
items to the Collateral Agent.
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Alexander Energy Corporation
April 29, 196
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Nothing herein contained shall be deemed to prejudice the exercise by
the Collateral Agent or any other Secured Party of any or all of its rights and
remedies under the Credit Agreement, the John Hancock Note Agreement, the Note,
the John Hancock Notes, the Mortgage, or any other instrument obtained or to be
obtained in connection with any of the foregoing, including, without
limitation, any and all acceptances thereof.
Sincerely,
CIBC INC., as Collateral Agent
By: /s/ ILLEGIBLE
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Name:
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Title: AUTHORIZED SIGNATORY
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AGREED TO AND ACCEPTED:
ALEXANDER ENERGY CORPORATION
By: /s/ DAVID E. GROSE
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Name: David E. Grose
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Title: Chief Financial Officer
and Vice President
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