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EXHIBIT 10(j)
AGREEMENT AND CONSENT
This Agreement and Consent (this "Agreement") is entered into as of
April 15, 1996, by and among Alexander Energy Corporation, an Oklahoma
corporation (herein called the "Borrower"), the Lenders (as defined below), the
Agent (as defined below), and CIBC Inc., as collateral agent under certain of
the Loan documents (the "Collateral Agent"). Reference is hereby made to that
certain Credit Agreement, dated as of November 14, 1994, entered into by and
among the Borrower, the various financial institutions as are or may become
parties hereto (collectively, the "Lenders"), and Canadian Imperial Bank of
Commerce, acting through its New York Agency as agent (together with its
successors in such capacity, the "Agent") for the Lenders, which was amended
by that certain First Amendment to Credit Agreement dated as of July 14, 1995
and by that certain Second Amendment to Credit Agreement dated as of April 15,
1996 (such Credit Agreement as so amended and as hereinafter from time to time
further amended, supplemented, restated or otherwise modified herein called the
"Credit Agreement"). Unless otherwise stated herein, capitalized terms used
herein shall have the same meaning as in the Credit Agreement, unless the
context otherwise requires.
RECITALS
1. The Borrower has represented to the Agent and the Lenders that
it is the general partner of each of the following partnerships (herein
collectively the "Partnerships") and has the following interests therein:
AEJH 1985 Limited
Partnership (the "1985 Partnership") General Partner
AEJH 1987 Limited
Partnership (the "1987 Partnership") General Partner
AEJH 1989 Limited
Partnership (the "1989 Partnership") General Partner
2. The Credit Agreement and the Loan Documents contain certain
limitations and restrictions regarding the Borrower's interest in each of the
Partnerships and on the Indebtedness and Liens of such Partnerships and require
the maintenance of the existence of such Partnerships.
3. The Borrower has asked the Agent and the Lenders to consent to
the winding up of the business of the Partnerships, the dissolutions of the
Partnerships and the distributions of the Assets thereof to their respective
partners in accordance with the terms of the relevant partnership agreement.
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AGREEMENTS AND CONSENTS
For valuable consideration, the receipt and sufficiency of which are
hereby acknowledged by the parties hereto, the parties hereto agree as follows:
1. The Agent, the Lenders and the Collateral Agent hereby agree
and consent to the following matters, subject to the qualifications set forth
below and on the basis of the representations and warranties contained in this
Agreement and in the other Loan Documents:
a. The winding up of the business of the 1985
Partnership, the dissolution of the 1985 Partnership, the liquidation
of the 1985 Partnership and the distribution of the Assets thereof in
kind to the partners of the 1985 Partnership, provided that:
i. such winding up, dissolution, liquidation and
distribution shall be accomplished in accordance with
applicable law and the relevant partnership agreement, all
Indebtedness (including, without limitation, all trade debt)
of the 1985 Partnership (including Indebtedness owed to John
Hancock in its capacity as a creditor to the 1985 Partnership)
shall be paid in full in cash or otherwise fully discharged in
writing prior to the distribution of any Assets to the
partners, and the Borrower shall not assume or incur any
Indebtedness as a result of such winding up, dissolution,
liquidation or distribution; provided that the Borrower shall
obtain the Lenders' prior consent to any sale of Oil and Gas
Properties owned by the Partnership or any payment in kind;
ii. following such winding up, dissolution,
liquidation and distribution, the Borrower shall have received
Oil and Gas Properties representing the Borrower's percentage
partnership interests in such Partnership shown in the
engineering report prepared by Netherland, Sewell &
Associates, Inc. dated as of December 31, 1995, after the
payment of the above-referenced Indebtedness, free and clear
of all Liens and Indebtedness.
b. The winding up of the business of the 1987 Partnership, the
dissolution of the 1987 Partnership, the liquidation of the 1987
Partnership and the distribution of the Assets thereof in kind to the
partners of the 1987 Partnership to the extent such Assets are not
required to repay the Indebtedness of the 1987 Partnership (including
Indebtedness owed to John Hancock in its capacity as a
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creditor to the 1987 Partnership), it being understood that the
Borrower may not receive any distribution of Assets from the 1987
Partnership as a result of such repayment, provided that such winding
up, dissolution, liquidation and distribution shall be accomplished in
accordance with applicable law, the relevant partnership agreement,
and all Indebtedness of the 1987 Partnership shall be paid in full in
cash or otherwise fully discharged in writing prior to the
distribution of any Assets to the partners; and provided that the
Borrower shall obtain the Lenders' prior consent to any sale of Oil
and Gas Properties owned by the Partnership or any payment in kind.
C. The winding up of the business of the 1989 Partnership, the
dissolution of the 1989 Partnership, the liquidation of the 1989
Partnership and the distribution of the Assets thereof in kind to the
partners of the 1989 Partnership, provided that such winding up,
dissolution, liquidation and distribution shall be accomplished in
accordance with applicable law and the relevant partnership agreement
and all Indebtedness (including, without limitation, trade debt) of the
1989 Partnership shall be paid in full in cash or otherwise fully
discharged in writing prior to the distribution of any assets to the
partners, provided that following such winding up, dissolution,
liquidation and distribution, the Borrower shall have received Oil and
Gas Properties representing the Borrower's percentage partnership
interests in such Partnership shown in the engineering report prepared
by Netherland, Sewell & Associates, Inc. dated as of December 31,
1995, after the payment of the above-referenced Indebtedness, free and
clear of all Liens and Indebtedness other than Liens securing
non-recourse Indebtedness not exceeding as to its principal amount the
lesser of $890,000 and 50% of the unpaid 1989 Partnership's
Indebtedness immediately prior to the distribution of Assets to the
Partners (the "Existing Liens") and other than such hereinabove
described Indebtedness, it being understood that such Indebtedness
shall be recourse only to the Oil and Gas Properties of the 1989
Partnership which are so distributed in kind to the Borrower as a
result of the dissolution of the 1989 Partnership; and provided
further that the Secured Parties shall have a second Lien on such Oil
and Gas Properties; it being understood that the Borrower shall
receive such properties subject to existing liens securing 50% of the
above described non-recourse Indebtedness which may include
Indebtedness owing to John Hancock; and provided that the Borrower
shall obtain the Lenders' prior consent to any sale of Oil and Gas
Properties owned by the Partnership or any payment in kind.
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d. Each of the foregoing consents is hereby further
conditioned on the following:
i. It is understood and agreed that the Secured
Parties have and shall continue to have a Lien in and to any
and all distributions, dividends and proceeds resulting from
the Borrower's rights, interests and titles in and to the
Partnerships including any Oil and Gas Properties distributed
to the Borrower as a result of any dissolution or liquidation
of any of the Partnerships subject only to Permitted Liens and
the Liens specifically described in clause (c) above, and the
Borrower hereby agrees that it will, at its own expense,
promptly execute and deliver all further instruments and
documents, and take all further action, that may be necessary
or desirable, or that the Agent, the Secured Parties or the
Collateral Agent may request, in order to perfect and protect
the assignment and security interest granted or purported to
be granted under the Security Agreement or the Lien
hereinabove described or to enable the Agent, the Secured
Parties or the Collateral Agent to exercise and enforce their
respective rights and remedies hereunder or under any Loan
Documents with respect to any Collateral and in order to cause
all such Liens to be first priority Liens in favor of the
Secured Parties except that the Liens on the oil and Gas
Properties received by the Borrower from the dissolution of
the 1989 Partnership may be junior to the Existing Liens
thereon;
ii. As a condition precedent to the effectiveness
of this Agreement, the Borrower shall have received the
consent of John Hancock Mutual Life Insurance Company and
Barnett & Co. (collectively, "John Hancock") as Secured
Parties under the Security Agreement to the foregoing
agreements;
iii. The Borrower hereby represents and warrants
that (a) the terms to which the Lenders, the Agent and the
Collateral Agent are consenting hereby do not permit the other
partners of the Partnerships nor the creditors thereof to
receive payments which they were not otherwise entitled to
receive, (b) it has not taken any action or omitted to take
any action as general partner of the Partnerships or otherwise
in connection with the Partnerships which could give rise to a
claim in tort, contract or otherwise by any other partner to
any of the Partnerships, and (c) the Partnerships have no
Indebtedness other than, (1) trade debt incurred in the
ordinary course of business, and (2) the Indebtedness owing by
the 1987 Partnership and the 1989 Partnership to
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John Hancock described in the most recent financial statements
for each such Partnership; and
iv. Nothing herein contained shall preclude the
Lenders from effectuating Borrowing Base redeterminations and
requiring payments of any Borrowing Base Deficiency pursuant
to the terms of the Credit Agreement.
2. Each of the Agent, the Collateral Agent and the Lenders agrees
that the dissolution, liquidation, and winding up of the business of the
Partnerships in accordance with the terms set forth herein shall not constitute
a Default or Event of Default under the Credit Agreement or any other Loan
Document. Further, each of the Agent, the Collateral Agent and the Lenders
agrees that, upon the dissolution, liquidation and winding up of the business
of the Partnerships in accordance with the terms set forth herein, (a) the
Borrower shall no longer be obligated to maintain the agreements of limited
partnership relating to each Partnership in full force and effect pursuant to
Section 4.1.1 of the Security Agreement; and (b) Section 4.1.6 of the Security
Agreement shall cease to be applicable to the Partnerships. Except as
specifically provided above, nothing herein contained shall be construed to
waive any breach of or Default or Event of Default under the Credit Agreement
or any other Loan Document or to waive any other provision of the Credit
Agreement or any other Loan Document or to require any similar or dissimilar
waiver, approval or extension to be granted hereafter, or to amend or modify
the Credit Agreement or any other Loan Document except as specifically set
forth herein. The Credit Agreement and the other Loan Documents as amended
hereby are hereby reaffirmed and ratified in all respects. It is understood and
agreed that the partners to each of the Partnerships can determine who will act
as a liquidator for each of the Partnerships.
3. This letter agreement may be executed in several counterparts,
each of which shall constitute an original but all of which together shall
comprise but one and the same agreement.
4. This letter agreement shall be governed by the internal laws
of the State of New York. This letter agreement together with the Credit
Agreement constitutes the entire understanding of the parties hereto with
respect to the subject matter hereof and supersedes any prior agreements,
written or oral, with respect thereto.
5. This Agreement shall be of no force or effect unless the Agent
shall have received a counterpart hereof duly executed by the Borrower prior to
May 15, 1996.
6. Each of the Borrower, the Lenders, the Agent, and the
Collateral Agent acknowledges and agrees that John Hancock (and its successors
and assigns) shall be entitled to rely upon the waivers
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and consents set forth in Sections 1 and 2 of this Agreement; provided that
neither John Hancock nor its successors or assigns shall be third party
beneficiaries to any representation or warranty herein contained.
Dated as of April 15, 1996.
AGENT:
CANADIAN IMPERIAL BANK OF COMMERCE,
acting through its New York Agency,
as Agent
By: /s/ MARYBETH ROSS
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Name: Marybeth Ross
Title: Authorized Signatory
COLLATERAL AGENT AND LENDER:
CIBC INC., as Collateral Agent
and Lender
By: /s/ MARYBETH ROSS
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Name: Marybeth Ross
Title: Authorized Signatory
BORROWER:
ALEXANDER ENERGY CORPORATION
By: /s/ DAVID E. GROSE
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Name: David E. Grose
Title: Chief Financial Officer/
Vice President