SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Schedule 13D
Under the Securities Exchange Act of 1934
(Amendment No. _)
HONDO OIL & GAS COMPANY
(Name of Issuer)
Common Stock, $1 par value
(Title of class of securities)
438138-10-9
(CUSIP Number)
Rudolph H. Funke, Secretary
Lonrho, Inc.
805 Third Avenue
New York, New York 10022
(Person Authorized to Receive Notices and Communications)
October 3, 1994
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on
Schedule 13G to report the acquisition which is the subject of
this Schedule 13D, and is filing this schedule because of Rule
13d-1(b)(3) or (4), check the following box [ ]
Check the following box if a fee is being paid with the
statement [X]. A fee is not required only if the reporting
person: (1) has a previous statement on file reporting
beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment
subsequent thereto reporting beneficial ownership of five
percent or less of such class. (See Rule 13d-7.)
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CUSIP No. 438138-10-9
CONTROL GROUP MEMBER I
Response to Question 1: Lonrho Plc
Response to Question 2: (b)
Response to Question 3: SEC USE ONLY
Response to Question 4: BK
Response to Question 5: N/A
Response to Question 6: Great Britain
Response to Question 7: 10,150,200 (As a result of rights
under a Pledge
Agreement; otherwise
such power would be
deemed shared)
Response to Question 8: 0
Response to Question 9: 10,150,200 (As a result of rights
under a Pledge
Agreement; otherwise
such power would be
deemed shared)
Response to Question 10: 0
Response to Question 11: 10,150,200
Response to Question 12: N/A
Response to Question 13: 78.0%
Response to Question 14: CO
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CUSIP No. 438138-10-9
CONTROL GROUP MEMBER II
Response to Question 1: Lonrho, Inc.
Response to Question 2: (b)
Response to Question 3: SEC USE ONLY
Response to Question 4: AF, WC
Response to Question 5: N/A
Response to Question 6: Delaware
Response to Question 7: 0
Response to Question 8: 10,150,200
Response to Question 9: 0
Response to Question 10: 10,150,200
Response to Question 11: 10,150,200
Response to Question 12: N/A
Response to Question 13: 78.0%
Response to Question 14: CO
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CUSIP No. 438138-10-9
CONTROL GROUP MEMBER III
Response to Question 1: Scottsdale Princess, Inc.
Response to Question 2: (b)
Response to Question 3: SEC USE ONLY
Response to Question 4: WC
Response to Question 5: N/A
Response to Question 6: Delaware
Response to Question 7: 0
Response to Question 8: 10,150,200
Response to Question 9: 0
Response to Question 10: 10,150,200
Response to Question 11: 10,150,200
Response to Question 12: N/A
Response to Question 13: 78.0%
Response to Question 14: CO
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INTRODUCTION
This statement is being filed jointly by Lonrho Plc,
Lonrho, Inc. and Scottsdale Princess, Inc. (collectively, the
"Reporting Persons") with respect to their beneficial ownership
of shares of Common Stock of Hondo Oil & Gas Company to which
this statement pertains. Lonrho Plc is the parent of each of
Lonrho, Inc. and Scottsdale Princess, Inc.
Lonrho Plc and Lonrho, Inc. have heretofore filed a joint
statement (and amendments thereto) on Schedule 13D with The
Hondo Company and Mr. Robert O. Anderson. The Reporting Persons
have determined to report separately from, in lieu of filing
jointly with, The Hondo Company and Mr. Anderson. The
information contained herein with respect to The Hondo Company
and Mr. Anderson and members of his family are to the best
knowledge and belief of the Reporting Persons. Reference should
be made to the separate filings on Schedule 13D made or which
may be made by The Hondo Company and Mr. Anderson (including any
amendments thereto filed or which they may file) for information
concerning them.
Item 1. Security and Issuer.
This statement relates to the Common Stock, par value $1
per share (the "Common Stock"), of Hondo Oil & Gas Company, a
Delaware corporation (the "Issuer"). The principal executive
offices of the Issuer are located at 401 East College Boulevard,
Roswell, New Mexico 88201.
Item 2. Identity and Background.
This statement is being filed by (a) Lonrho Plc, a
corporation organized under the laws of England, the principal
business office of which is located at Cheapside House, 138
Cheapside, London, England EC2V 6BL, (b) Lonrho, Inc., a
Delaware corporation, the principal business office of which is
located at 805 Third Avenue, New York, New York 10022 and (c)
Scottsdale Princess, Inc., a Delaware corporation, the principal
business office of which is located at 7575 East Princess Drive,
Scottsdale, Arizona 85255 ("Scottsdale"). Lonrho Plc, Lonrho,
Inc. and Scottsdale are referred to herein collectively as the
"Reporting Persons."
Lonrho Plc is a public company registered in England and
listed on the London and Johannesburg stock exchanges. Lonrho
Plc and its subsidiaries are engaged in a variety of activities,
including mining, agriculture, motor vehicle and agricultural
equipment distribution, manufacturing, freight forwarding and
warehousing, printing and publishing and the ownership and
management of property and hotels.
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Lonrho, Inc., an indirect, wholly-owned subsidiary of
Lonrho Plc, is a holding company for the shares of Hondo
Company.
Scottsdale, an indirect, wholly-owned subsidiary of Lonrho
Plc, is a holding company for a hotel interest.
The beneficial ownership of the Reporting Persons of shares
of Common Stock of the Issuer is derived from the ownership by
Lonrho, Inc. of certain, and an option held by Scottsdale to
acquire additional, outstanding shares of The Hondo Company
("Hondo Company"), the record owner of the shares of the
Issuer's Common Stock which is the subject of this statement, as
well as the acquisition of a pledge of such shares of the
Issuer.
As a result of a Shareholders' Agreement dated October 17,
1986 by and among Lonrho, Inc., Hondo Company and Robert O.
Anderson, Robert B. Anderson, W. Phelps Anderson, the remaining
shareholders of Hondo Company (collectively, the "Anderson
Family) dealing with the disposition and voting of shares of
capital stock of Hondo Company, the Reporting Persons, Hondo
Company and the Anderson Family may be deemed to be a "group"
under Rule 13d-5(b)(1) promulgated under the Securities Exchange
Act of 1934 (the "Exchange Act"), although the Reporting Persons
disclaim the existence of such a group.
Information contained in this statement with respect to
Hondo Company and the Anderson Family is provided in the event
such group is deemed to exist and is to the best knowledge and
belief of the Reporting Persons.
Hondo Company is a New Mexico corporation, whose principal
business office is located at 410 East College Boulevard,
Roswell, New Mexico 88201. The principal business of Hondo
Company is a holding company for the shares of the Issuer.
The name, business address, present principal occupation or
employment, and the name, principal business and address of any
corporation or other organization in which such employment is
conducted, of each executive officer and director of the
Reporting Persons and, to the best knowledge and belief of the
Reporting Persons, each executive officer and director of Hondo
Company and each member of the Anderson Family, are set forth in
Appendix A hereto, and incorporated herein by reference.
During the last five years, none of the Reporting Persons
nor, to the best knowledge of the Reporting Persons, any person
named in Appendix A hereto has been convicted in a criminal
proceeding (excluding traffic violations or similar
misdemeanors) or has been a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction and as
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a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state
securities laws or finding any violation with respect to such
laws.
To the best knowledge and belief of the Reporting Persons,
the citizenship of each person named in Appendix A is set forth
in Appendix A hereto, and is incorporated herein by reference.
Item 3. Source and Amount of Funds or other Consideration.
(a) The shares of Common Stock in which the Reporting
Persons are deemed to have beneficial ownership are owned of
record by Hondo Company, having been acquired by Hondo Company
as follows:
(i) Pursuant to an Exchange Agreement dated as of
October 28, 1987 among Hondo Company, Hondo Oil & Gas (a wholly-
owned subsidiary of Hondo Company) and the Issuer (then known as
Pauley Petroleum Inc.), on January 19, 1988, the Issuer issued
10,000,000 shares of Common Stock to Hondo Company in exchange
for Hondo Company's transfer to the Issuer of all of the
outstanding stock of Hondo Oil & Gas.
(ii) In addition, on January 19, 1988, Hondo Company
purchased 350,000 shares of Common Stock at $20.00 per share (or
an aggregate of $7,000,000) from William R. Pagen under a Stock
Purchase and Option Agreement dated as of December 14, 1987
executed by Mr. Pagen on January 19, 1988. The Stock Purchase
and Option Agreement also granted Hondo Company an option to
purchase up to an additional 120,000 shares of Common Stock from
Mr. Pagen, which option expired unexercised on January 19, 1988.
(iii) During the period from December 21, 1987
through January 8, 1988, Hondo Company purchased an aggregate of
121,000 shares of Common Stock in open market transactions at
prices ranging from $14.50 to $18.00 (or an aggregate of
approximately $2,083,000).
Since September 14, 1992, Hondo Company has sold an
aggregate of 320,800 shares of the Issuer's Common Stock under
Rule 144 promulgated under the Securities Act of 1933, as
amended, and under a Registration Statement filed under such Act
by the Issuer on behalf of Hondo Company.
Funds used by Hondo Company for the purchases of the
Issuer's Common Stock from Mr. Pagen and on the open market were
borrowed from Union Bank under a Revolving Credit Agreement
dated January 12, 1988 (which, as amended to date, is
hereinafter referred to as the "Revolving Credit Agreement").
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(b) On October 3, 1994, Lonrho Plc purchased from Union
Bank for $40,000,000, and received an assignment of, all of
Union Bank's rights and obligations under the Revolving Credit
Agreement, the related Promissory Note issued by Hondo Company
thereunder (the "Note"), the Pledge Agreement dated July 24,
1990 between Hondo Company and the Bank (the "Pledge Agreement")
and the guarantees of Lonrho Plc and Mr. Anderson of Hondo
Company's obligations under the Revolving Credit Agreement, the
Note and the Pledge Agreement. The Pledge Agreement secured
Hondo Company's obligations under the Revolving Credit Agreement
by a pledge of all shares of Common Stock of the Issuer then or
thereafter owned by Hondo Company, the Note and the Pledge
Agreement. Lonrho Plc obtained the funds used to consummate the
purchase from borrowings under available lines of credit from
Lloyd's Bank.
The Revolving Credit Agreement entitled Hondo Company to
borrow up to $55,000,000 but required it to limit the aggregate
unpaid principal amount of loans to be outstanding from October
1, 1992 until September 30, 1993 to $50,000,000 and thereafter
until September 30, 1994 to $40,000,000, at which time the
remaining unpaid principal balance was to be repaid in full.
The Revolving Credit Agreement provides for interest at Union
Bank's "Reference Rate" plus 1-1/4% through March 31, 1991,
1-3/4% thereafter through September 30, 1993 and 3% thereafter
through September 30, 1994. During any period that the loans
are not paid when due, the outstanding principal balance under
the Revolving Credit Agreement bears interest at Union's Bank's
Reference Rate plus 5-1/4% per annum.
Under the Revolving Credit Agreement Lonrho Plc will be
entitled to, among other things, declare all or a portion of the
outstanding loans and other amounts payable thereunder to become
due and payable.
Lonrho Plc reserves the right to declare an "Event of
Default" and to exercise its rights and remedies provided under
the Pledge Agreement, including selling the pledged shares from
time to time and applying proceeds received therefrom to the
payment of all obligations of Hondo Company under the Revolving
Credit Agreement, Note and Pledge Agreement, inclusive of
principal, interest, fees and expenses. Any surplus cash
proceeds and any shares not sold after the repayment of such
amounts will revert to Hondo Company. In this regard, Lonrho
Plc intends to request the Issuer to file a registration
statement (or amend or supplement the registration statement
heretofore filed on behalf of Hondo Company which covered
certain of the pledged shares) under the Securities Act of 1933,
as amended, to enable Lonrho Plc. to sell pledged shares. The
effect of any such sale will be to reduce the number of shares
of Common Stock owned directly by Hondo Company and, through
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Hondo Company, indirectly by the Reporting Persons and the
Anderson Family.
Item 4. Purpose of Transaction.
The purpose of the acquisition of the shares of Common
Stock by Hondo Company in 1988 was to acquire control of the
Issuer.
No Reporting Person has any present plans or proposals
which relate to or would result in: (a) the acquisition of
additional securities of the Issuer (although the Reporting
Persons retain the right, which they may exercise at any time or
from time to time, in their discretion, to acquire directly
shares of Common Stock, including the acquisition by Lonrho Plc
of shares in satisfaction of some or all of Hondo Company's
obligations under the Revolving Credit Agreement and additional
shares of Common Stock from the Issuer in payment of interest on
certain obligations of the Issuer to Lonrho Plc as described in
the Item 6) or the disposition of securities of the Issuer
(except that, as discussed in Item 3, Lonrho Plc reserves the
right to sell shares pledged to it under the Pledge Agreement in
order to cause the obligations of Hondo Company to it under the
Revolving Credit Agreement, Note and Pledge Agreement to be
reduced or paid in full, and possible dispositions by Hondo
Company under a Registation Statement filed under the Securities
Act of 1933, as amended, by the Issuer covering sales of certain
of such shares), (b) an extraordinary corporate transaction,
such as a merger, reorganization or liquidation, (c) a sale or
transfer of a material amount of assets of the Issuer or any of
its subsidiaries (although Lonrho Plc reserves the right to
enforce the rights granted to it by the Issuer under certain
mortgages securing certain loans discussed in Item 6), (d) any
change in the present board of directors or management of the
Issuer, including any plans or proposals to change the number or
term of directors or to fill any existing vacancies on the
board, (e) any material change in the present capitalization or
dividend policy of the Issuer, (f) any other material change in
the Issuer's business or corporate structure, (g) any changes in
the Issuer's charter, by-laws or instruments corresponding
thereto or other actions which may impede the acquisition of
control of the Issuer by any person, (h) causing a class of
securities of the Issuer to be delisted from a national
securities exchange or cease to be authorized to be quoted in an
inter-dealer quotation system of a registered national
securities association, (i) causing a class of equity securities
of the Issuer to become eligible for termination of registration
pursuant to Section 12(g)(4) of the Securities Exchange Act of
1934 or (j) any action similar to any of those enumerated
above."
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Item 5. Interest in Securities of the Issuer.
Each of the Reporting Persons may be deemed to be the
beneficial owner, within the meaning of Rule 13d-3 under the
Securities Exchange Act of 1934, of 10,150,200 shares of Common
Stock of the Issuer (the "Shares") representing, based on the
13,006,892 shares of Common Stock which were issued and
outstanding on August 9, 1994 as reflected in the Issuer's
Quarterly Report on Form 10-Q for the quarter ended June 30,
1994, approximately 78.0% of the outstanding shares of the
Issuer's Common Stock.
As a default exists under the Revolving Credit Agreement,
the Pledge Agreement affords Lonrho Plc, as pledgee of the
Shares, the sole power to vote the Shares (and apply any
dividends received on the Shares to the obligations owed by
Hondo Company under the Revolving Credit Agreement, the Note and
the Pledge Agreement) and, if the outstanding loans under the
Revolving Credit Agreement are not paid, the sole right to
dispose or direct the disposition of such number of the Shares
as is necessary to pay all amounts due it under the Revolving
Credit Agreement, the Note and the Pledge Agreement.
Lonrho, Inc., by virtue of its ownership interest in Hondo
Company and the Shareholders' Agreement to which the
shareholders of Hondo Company are a party (and Scottsdale by
virtue of the Option Agreement discussed below), may be deemed
to share the right to direct the voting and share the right to
direct the disposition of the Shares with the Anderson Family
and Hondo Company (subject to the rights of Lonrho Plc under the
Pledge Agreement).
The shareholders of Hondo Company and their approximate
respective percentages of Hondo Company as of September 30, 1994
are set forth below:
Percentage of
Hondo Company
Hondo Company Shareholders Common Stock
Robert O. Anderson 40%
Robert B. Anderson 5%
W. Phelps Anderson 5%
Lonrho, Inc. 50%
Lonrho, Inc., the Anderson Family and Hondo Company are
parties to a Shareholders' Agreement dated October 17, 1986 (the
"Shareholders' Agreement") covering all of the outstanding
shares of capital stock of Hondo Company relating to the rights
of the shareholders of Hondo Company to vote and dispose of the
shares of Hondo Company owned by them. The Shareholders'
Agreement does not directly relate to the Shares. Among other
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things, the Shareholders' Agreement provides that the Anderson
Family, on the one hand, and Lonrho, Inc., on the other hand,
shall each vote for an equal number of designees of the other to
serve as the Board of Directors of Hondo Company. Since the
management of Hondo Company is vested in its Board of Directors
(which may make determinations with respect to the voting,
including with respect to the election of directors of the
Issuer, and disposition of the Shares which Hondo Company may
have the right to vote and dispose of), the ability of the
parties to the Shareholders' Agreement to elect the management
of Hondo Company gives them effective control over the voting
and disposition of the Shares.
Pursuant to an Option Agreement dated July 6, 1993 (the
"Option Agreement"), between Robert O. Anderson and Scottsdale,
Mr. Anderson granted to Scottsdale an option to purchase at any
time, or from time to time, on or before July 5, 1996
approximately 25% of the issued and outstanding shares of Common
Stock of Hondo Company owned by Mr. Anderson. Mr. Anderson has
advised Scottsdale of commitments and pledges to lenders made by
him with respect to the shares of Hondo Company subject to the
Option Agreement. Such commitments may take priority over the
option granted to Scottsdale. If exercised in full, Lonrho,
Inc. and Scottsdale would own directly (and Lonrho Plc would own
indirectly) an aggregate of approximately 75% of the outstanding
shares of Hondo Company.
Item 6. Contracts, Arrangements, Understandings or Relationships
with Respect to Securities of the Issuer.
(a) Reference is made to Item 3 above for information with
respect to the Pledge Agreement relating to the Shares between
Hondo Company and Union Bank which was assigned by Union Bank to
Lonrho Plc.
(b) Reference is made to Item 5 above for information with
respect to the Shareholders' Agreement and the Option Agreement
which, while not directly covering the Shares, may (through their
affect on the governance of Hondo Company, the record owner of
the Shares) indirectly affect the voting and disposition of, and
division of profits and losses from, the Shares.
(c) On November 30, 1988, Thamesedge Ltd., a wholly-owned
subsidiary of Lonrho Plc purchased a $75,000,000 13.5% Senior
Note, due in 1998, from the Issuer in a private placement. At
September 30, 1993, the outstanding principal balance of this
Note was $34,274,000.
Lonrho Plc entered into loan agreements with the Issuer
pursuant to which, as amended to date, the Issuer borrowed an
aggregate of $32,000,000 from Lonrho Plc. At the time the loans
were made the interest rate was similar to that in the Issuer's
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former working capital loan with a bank for its refining and
marketing operations.
On April 30, 1993, Lonrho Plc loaned to the Issuer an
additional $3,000,000 and, as security, the Issuer granted to
Lonrho Plc a mortgage on certain real property. On June 25,
1993, Lonrho Plc agreed to loan the Issuer an additional
$4,000,000 (all of which has been advanced) and, as security, the
Issuer granted to Lonrho Plc a mortgage on certain other real
property.
On December 18, 1992, Thamesedge Ltd. and Lonrho Plc agreed
to defer interest and certain principal payments. On December
18, 1993, Thamesedge Ltd. and Lonrho Plc agreed to add accrued
interest at September 30, 1993 to principal and reduce the
interest rate on each of the foregoing loans to 6% per annum
effective September 30, 1993 and defer principal payments on the
loans described above. As consideration for the deferral of
interest and principal payments, on December 18, 1992, the Issuer
granted Lonrho Plc a 5% share of the Issuer's net profits, as
defined, under the Opon Association Contract pursuant to which a
wholly-owned subsidiary of the Issuer is participating in the
exploration and development of oil and gas in the Middle
Magdalena Basin, about 125 miles north of Bogota, Columbia.
Following the final payment of the foregoing indebtedness, Lonrho
Plc's share of such net profits will be decreased by one-half.
Lonrho Plc and the Issuer have agreed that, if the Issuer
does not have sufficient cash resources to pay interest on any of
the foregoing indebtedness when due, then the Issuer may offer to
pay such interest in shares of its Common Stock valued at their
market price on the day the interest is due. Thereupon Lonrho
Plc may either accept such offer or add the amount of interest
then due to the remaining outstanding principal balance of the
applicable obligation.
Item 7. Material to be filed as Exhibits.
1. Agreement, dated October 7, 1994, between the Reporting
Persons with respect to their joint filing of this
statement.
2. Power of Attorney dated October 6, 1994 executed by Lonrho
Plc in favor of John F. Price and Rudolph H. Funke with
respect to the execution of this statement.
3. Assignment Agreement dated as of October 3, 1994 between
Union Bank and Lonrho Plc.
4. Second Amended and Restated Revolving Credit Agreement
between The Hondo Company and Union Bank, including as
exhibits thereto the forms of the Note, the Pledge
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Agreement and the Guarantees of Lonrho Plc and Robert O.
Anderson.
5. Shareholders' Agreement dated October 17, 1986 by and among
Robert O. Anderson, Robert B. Anderson, W. Phelps Anderson,
Lonrho, Inc. and The Hondo Company (then known as The
Diamond A Cattle Company).
6. Option Agreement dated as of July 6, 1993 between Robert O.
Anderson and Scottsdale Princess, Inc.
7. Net Profits Share Agreement dated December 18, 1992, among
the Company, Lonrho Plc and Thamesedge, Ltd.
8. Letter Agreement dated December 17, 1993, by and among the
Company, Via Verde Development Company, Newhall Refining
Co., Inc., Lonrho Plc and Thamesedge, Ltd.
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Signatures
After reasonable inquiry and to the best of the knowledge
and belief of the undersigned, the undersigned certify that the
information set forth in this Statement is true, complete and
correct.
Dated: October 7, 1994
Lonrho Plc
By: /s/ John F. Price________
John F. Price
Under Power of Attorney
dated October 6, 1994
Lonrho, Inc.
By: /s/ John F. Price________
John F. Price, President
Scottsdale Princess Inc.
By: /s/ John F. Price________
John F. Price, President
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APPENDIX A
I. Lonrho Plc.
Set forth below are the name, present principal occupation
or employment, business address and citizenship of each director
and executive officer of Lonrho Plc.
Name and Principal
Position held Occupation
with Lonrho Plc. or Employment Business Address Citizenship
M.J.J.R. Leclezio* Chairman Cheapside House Mauritius
Chairman Lonrho Plc 138 Cheapside
London, England
EC2V 6BL
R.W. Rowland Joint Managing Cheapside House United Kingdom
Joint Managing Director and Joint 138 Cheapside
Director and Joint Chief Executive London, England
Chief Executive Lonrho Plc EC2V 6BL
D. Bock Joint Managing Cheapside House Germany
Joint Managing Director and Joint 138 Cheapside
Director and Joint Chief Executive London, England
Chief Executive Lonrho Plc EC2V 6BL
J.A. Hewlett Director Cheapside House United Kingdom
Director Lonrho Plc 138 Cheapside
London, England
EC2V 6BL
S.E. Jonah Director Cheapside House Ghana
Director Lonrho Plc 138 Cheapside
London, England
EC2V 6BL
N.J. Morrell Director Cheapside House United Kingdom
Director Lonrho Plc 138 Cheapside
London, England
EC2V 6BL
J.L. Platts-Mills Director Cheapside House United Kingdom
Director Lonrho Plc 138 Cheapside
London, England
EC2V 6BL
P.M. Tarsh Director Cheapside House United Kingdom
Director Lonrho Plc 138 Cheapside
London, England
EC2V 6BL
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Name and Principal
Position held Occupation
with Lonrho Plc.or Employment Business Address Citizenship
R.E. Whitten Director Cheapside House United Kingdom
Director Lonrho Plc 138 Cheapside
London, England
EC2V 6BL
Terence Wilkinson Director Cheapside House South Africa
Director Lonrho Plc 138 Cheapside
London, England
EC2V 6BL
M.J. Pearce Company Secretary Cheapside House United Kingdom
Company Secretary Lonrho Plc 138 Cheapside
London,England
EC2V 6BL
Peter Harper Director- Cheapside House United Kingdom
Non-Executive Parliamentary 138 Cheapside
Independent Director Affairs London,England
Hanson Plc EC2V 6BL
Sir John Leahy,* Retired Member Cheapside House United Kingdom
K.C.M.G. Diplomatic 138 Cheapside
Non-Executive Services London, England
Vice Chairman EC2V 6BL
Independent Director
Stephen Walls Chairman Cheapside House United Kingdom
Non-Executive Albert Fisher 138 Cheapside
Independent Director Group Plc. London, England
EC2V 6BL
* On October 31, 1994, Sir John Leahy, K.C.M.G., will replace
M.J.J.R. Leclezio (who is retiring) as Chairman of Lonrho
Plc.
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II. Lonrho Inc.
Set forth below are the name, present principal occupation
or employment, business address and citizenship of each director
and executive officer of Lonrho, Inc.
Name and Principal
Position held Occupation
with Lonrho Inc. or Employment Business Address Citizenship
John F. Price President 805 Third Avenue United Kingdom
President and Princess Hotels New York, New York
Director International, Inc. 10022
James Evans Vice President- 805 Third Avenue United States
Controller Finance New York, New York
Princess Hotels 10022
International, Inc.
Rudolph H. Funke General Counsel 805 Third Avenue United States
Secretary Princess Hotels New York, New York
International, Inc. 10022
R.W. Rowland Joint Managing Cheapside House United Kingdom
Director Director and 138 Cheapside
Chief Executive London, England
Lonrho Plc. EC2V 6BL
R.E. Whitten Director Cheapside House United Kingdom
Director Lonrho Plc 138 Cheapside
London, England
EC2V 6BL
III. Scottsdale.
Set forth below are the names, present principal occupation
or employment, business address and citizenship of each director
and executive officer of Scottsdale.
Name and Principal
Position held Occupation
with Scottsdale or Employment Business Address Citizenship
John F. Price President 805 Third Avenue United Kingdom
President and Princess Hotels New York, New York
Director 10022
James Evans Vice President- 805 Third Avenue United States
Controller Finance New York, New York
Princess Hotels 10022
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Rudolph H. Funke General Counsel 805 Third Avenue United States
Secretary Princess Hotels New York, New York
10022
R.W. Rowland Joint Managing Cheapside House United Kingdom
Director Director and 138 Cheapside
Chief Executive London, England
Lonrho Plc. EC2V 6BL
R.E. Whitten Director Cheapside House United Kingdom
Director Lonrho Plc 138 Cheapside
London, England
EC2V 6BL
P.M. Tarsh Director Cheapside House United Kingdom
Director Lonrho Plc 138 Cheapside
London, England
EC2V 6BL
IV. Hondo Company
Set forth below are the names, present principal occupation
or employment, business address and citizenship of each director
and executive officer of Hondo Company.
Name and Principal
Position held Occupation
with Hondo Company or Employment Business Address Citizenship
Robert O. Anderson Chairman 410 East College Blvd. United States
Co-Chairman, Director Issuer Roswell, New Mexico
President
Robert B. Anderson Consultant 410 East College Blvd. United States
Director, Vice Roswell, New Mexico
President
W. Phelps Anderson Vice President 410 East College Blvd. United States
Director, Vice Hondo Company Roswell, New Mexico
President
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R.W. Rowland Joint Managing Cheapside House United Kingdom
Co-Chairman, Director Director and 138 Cheapside
Joint Chief London, England
Executive EC2V 6BL
Lonrho Plc
John F. Price President 805 Third Avenue United Kingdom
Director Princess Hotels New York, New York
10022
EC2V 6BL
R.E. Whitten Director Cheapside House United Kingdom
Director Lonrho Plc 138 Cheapside
London, England
EC2V 6BL
Richard W. Reese Vice President 410 East College Blvd. United States
Vice President Hondo Company Roswell, New Mexico
Ian Brownlow Vice President 410 East College Blvd. United States
Vice President and and Treasurer Roswell, New Mexico
Treasurer Hondo Company
S.H. Cavin Counsel 410 East College Blvd. United States
Secretary Hondo Company Roswell, New Mexico
V. The Anderson Family
Reference is made to the foregoing information regarding
Hondo Company for information regarding the Anderson Family.
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EXHIBIT 1
The undersigned agree that the statement on Schedule 13D to
which this Agreement is attached is filed on behalf of each of
them.
Dated: October 7, 1994
Lonrho Plc
By: /s/ John F. Price________
John F. Price
Under Power of Attorney
dated October 6, 1994
Lonrho, Inc.
By: /s/ John F. Price________
John F. Price, President
Scottsdale Princess Inc.
By: /s/ John F. Price________
John F. Price, President
EXHIBIT 2
POWER OF ATTORNEY
For Executing Schedule 13D and Amendments
Re: Lonrho PLC
Know all by these presents, that the undersigned
hereby constitutes and appoints each of John F. Price and
Rudolph H. Funke, signing singly, the undersigned's true and
lawful attorney-in-fact to execute and file on behalf of the
undersigned a Schedule 13D and all amendments thereto that the
undersigned may be required to file with the United States Secu-
rities and Exchange Commission pursuant to Section 13(d) of the
Securities Exchange Act of 1934 and the rules and regulations
thereunder with respect to the undersigned's beneficial owner-
ship of securities in Lonrho Oil & Gas Company and take any
other action of any type whatsoever in connection with the fore-
going which, in the opinion of such attorneys-in-fact, or either
of them, may be of benefit to, in the best interest of, or
legally required of, the undersigned, it being understood that
the documents executed by such attorney-in-fact on behalf of the
undersigned pursuant to this Power of Attorney shall be in such
form and shall contain such terms and conditions as such
attorney-in-fact may approve in his discretion.
The undersigned hereby grants to each such attorney-
in-fact full power and authority to do and perform all and every
act and thing whatsoever requisite, necessary and proper to be
done in the exercise of any of the rights and powers herein
granted, as fully to all intents and purposes as such attorney-
in-fact might or could do personally, with full power of substi-
tution, hereby ratifying and confirming all that such attorney-
in-fact, or his substitute or substitutes, shall lawfully do or
cause to be done by virtue of this power of attorney and the
rights and powers herein granted.
The undersigned acknowledges that the foregoing
attorneys-in-fact, in serving in such capacity at the request of
the undersigned, are not assuming any of the undersigned's
responsibilities to comply with Section 13(d) of the Securities
Exchange Act of 1934.
The authority granted by this power of attorney shall con-
tinue until the undersigned is no longer required to file a
Schedule 13D (or amendments thereto) with respect to the under-
signed's beneficial ownership of securities in Hondo Oil & Gas
Company, unless earlier revoked in writing.
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this
Power of Attorney to be executed as of the 6th day of October,
1994.
Lonrho Plc
By: /s/ R.E. Whitten_________
Name: R.E. Whitten
Title: Director
EXHIBIT 3
ASSIGNMENT AGREEMENT
This Agreement is entered into as of October 3, 1994 by
UNION BANK, a California banking corporation (the "Assignor"),
and LONRHO PLC, a United Kingdom corporation (the "Assignee").
Recitals
A. Reference is made to the Second Amended and Restated
Revolving Credit Agreement dated as of July 24, 1990 (the
"Credit Agreement") between The Hondo Company, a New Mexico
corporation (the "Borrower"), and the Assignor, as lender.
Terms defined in the Credit Agreement are used herein with the
same meaning.
B. The Assignor wishes to sell and assign, and the
Assignee, as guarantor of the obligations of the Borrower to the
Assignor under the Credit Agreement, wishes to purchase and
accept the assignment of, all the Assignor's rights and
obligations with respect to the Credit Agreement, the Note, the
Pledge Agreement, the Lonrho Guaranty and the Anderson Guaranty
(the "Assigned Documents"). Accordingly, the Assignor and the
Assignee agree as set forth below.
Section 1. Assignment. For the sum of Forty Million and
00/100 Dollars ($40,000,000.00), which represents the aggregate
principal of all outstanding Advances, with interest accrued
thereon to the date hereof, the Assignor hereby sells and
assigns to the Assignee, and the Assignee hereby purchases and
accepts the assignment of, all of the Assignor's rights and
obligations under the Assigned Documents, including, without
limitation, all of the Assignor's right, title and interest in
and to the Advances, interest accrued thereon and the Pledged
Shares held by the Assignor as pledges. The foregoing
assignment shall become effective when (a) the Assignor and the
Assignee have executed and delivered this Agreement; (b) the
Assignee has paid to the Assignor by wire transfer (i) the
amount specified above and (ii) the costs and expenses of the
Assignor, including those of its legal counsel, with respect to
such assignment; and (c) the Assignor has delivered to the
Assignee (i) executed UCC assignments for filing in the States
of California and New Mexico and (ii) the Pledged Shares; and
(d) the Borrower has paid to the Assignor accrued and unpaid
interest on the Advances to the date hereof.
Section 2. Disclaimers of Assignor. The Assignor makes no
representation or warranty, and assumes no responsibility, with
respect to (a) any statements, warranties or representations
<PAGE>
made in or in connection with any of the Assigned Documents or
the execution, legality, validity, enforceability, genuineness,
sufficiency or value of any of the Assigned Documents or any
other instrument or document furnished pursuant thereto; or (b)
the financial condition of the Borrower or the performance or
observance by the Borrower or any other Person of any of its
obligations under any of the Assigned Documents or any other
instrument or document furnished pursuant thereto.
Section 3. Confirmation of Assignee. The Assignee
confirms that it has received copies of the Assigned Documents
and of such other documents and information, including, without
limitation, financial information, as it has deemed appropriate
to make its own credit analysis and decision to enter into this
Agreement.
Section 4. Governing Law. This Agreement shall be
governed by, and construed in accordance with, the laws of the
State of California applicable to contracts made and performed
in the State of California.
UNION BANK LONRHO PLC
By:_/s/_Carl Stutzman_____ By:_/s/_R.E. Whitten___
Name:___Carl Stutzman_____ Name:___R.E. Whitten___
Title:__Vice President____ Title:__Director_______
By:_/s/_Michael Tregoning_ By:_/s/_D. Bock________
Name:___Michael Tregoning_ Name:___D. Bock _______
Title:__SVP and Manager __ Title:__Director_______
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EXHIBIT 4
SECOND AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT
Between
THE HONDO COMPANY
and
UNION BANK
Dated as of July 24, 1990
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.01 Definitions.....................................1
SECTION 1.02 Accounting Terms................................4
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
SECTION 2.01 The Advances....................................4
SECTION 2.02 Making the Advances.............................5
SECTION 2.03 Commitment Fee..................................5
SECTION 2.04 Mandatory Reductions of Commitment..............5
SECTION 2.05 Optional and Mandatory Prepayments
of Advances....................................5
SECTION 2.06 Principal and Interest..........................6
SECTION 2.07 Payments and Computations.......................6
SECTION 2.08 Payment on Non-Business Days....................6
ARTICLE III
CONDITIONS OF LENDING
SECTION 3.01 Conditions Precedent to Effectiveness...........6
SECTION 3.02 Conditions Precedent to All Advances............8
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01 Representations and Warranties of
the Borrower...................................9
ARTICLE V
COVENANTS OF THE BORROWER
SECTION 5.01 Covenants of the Borrower......................11
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<PAGE>
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01 Events of Default..............................16
ARTICLE VII
MISCELLANEOUS
SECTION 7.01 Amendments, Etc................................18
SECTION 7.02 Notices, Etc...................................18
SECTION 7.03 No Waiver; Remedies............................19
SECTION 7.04 Costs, Expenses and Taxes......................19
SECTION 7.05 Right of Setoff................................19
SECTION 7.06 Binding Effect; Governing Law..................20
SECTION 7.07 Counterparts...................................20
SCHEDULE 1 Schedule of Liens
EXHIBIT A Second Amended and Restated Promissory Note
EXHIBIT B Pledge Agreement
EXHIBIT C Second Amended and Restated Guaranty of
Lonrho Plc and Lonrho, Inc.
EXHIBIT D Second Amended and Restated Guaranty of
Robert O. Anderson
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<PAGE>
SECOND AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT
This Agreement is made as of July 24, 1990 between THE
HONDO COMPANY, a New Mexico corporation (the "Borrower"), and
UNION BANK, a California banking corporation (the 'Bank").
Recitals
A. Pursuant to the Amended and Restated Revolving
Credit Agreement dated as of March 21, 1990 between the Borrower
and the Bank (the "First Restatement"), the Bank agreed to make
revolving advances to the Borrower from time to time in an
aggregate amount not to exceed $40,000,000 at any time
outstanding.
B. The Borrower and the Bank now wish to amend and
restate the First Restatement to, among other things, increase
the Bank's commitment under the First Restatement by
$15,000,000, to a total of $55,000,000.
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.01 Definitions. The following terms, as
used herein, shall have the following respective meanings:
"Advances" has the meaning set forth in Section 2.01.
"Anderson Guaranty" means the Second Amended and
Restated Guaranty of Robert O. Anderson substantially in the
form of Exhibit D.
"Business Day" means any day of the year on which
banks are not required or authorized to close in Los Angeles.
"Closing Date" has the meaning set forth in Section
3.01.
"Code" means the Internal Revenue Code of 1986.
"Commitment" has the meaning set forth in Section
2.01.
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<PAGE>
"Commitment Fee" has the meaning set forth in Section
2.03.
"Controlled Group" has the meaning set forth in
Section 4.01(j).
"Credit Documents" means this Agreement, the Note, the
Pledge Agreement, the Lonrho Guaranty and the Anderson Guaranty.
"Debt" means, as to any Person, all (a) indebtedness
for borrowed money, (b) obligations evidenced by bonds,
debentures, notes or other similar instruments, (c) obligations
to pay the deferred purchase price of property or services, (d)
obligations as lessee under leases that have been or should be,
in accordance with generally accepted accounting principles,
recorded as capital leases, (e) obligations under direct or
indirect guaranties in respect of, and obligations (contingent
or otherwise) to purchase or otherwise acquire, or otherwise to
assure a creditor against loss in respect of, indebtedness or
obligations of others of the kinds referred to in clauses (a)
through (d) above, and (f) liabilities in respect of unfunded
vested benefits under plans covered by Title IV of ERISA.
"Default" means any event or condition that would,
with the giving of any requisite notice and/or the passage of
any requisite period of time, constitute an Event of Default.
"ERISA" means the Employee Retirement Income Security
Act of 1974.
"Event of Default" has the meaning set forth in
Section 6.01.
"First Restatement" has the meaning set forth in
Recital A.
"GAAP" means generally accepted accounting principles.
"Governmental Action" means any authorization,
approval, consent, waiver, exception, license, filing,
registration, permit, notarization, special lease or other
requirement of any Governmental Person.
"Governmental Person" means, whether domestic or
foreign, any national, federal, state or local government, any
political subdivision thereof or any governmental,
quasi-governmental, judicial, public, statutory or regulatory
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<PAGE>
instrumentality, authority, body, bureau or entity, including
any central bank and any comparable authority.
"Governmental Rule" means any treaty, law, rule,
regulation, ordinance, order, code, interpretation, judgment,
writ, injunction, decree, directive, guideline, policy or
similar form of decision of any Governmental Person.
"Guaranties" means, collectively, the Lonrho Guaranty
and the Anderson Guaranty.
"Guarantors" means, collectively, Lonrho Plc, Lonrho,
Inc. and Robert O. Anderson.
"HOGC" means Hondo Oil & Gas Company, a Delaware
corporation.
"Lien" means, with respect to any asset, (a) any lien,
charge, claim, mortgage, security interest, pledge or other
encumbrance of any kind in respect of such asset or (b) the
interest of a vendor or lessor under any conditional sale
agreement, capital lease or other title-retention agreement
relating to such asset.
"Lonrho Guaranty" means the Second Amended and Restate
Guaranty of Lonrho Plc and Lonrho, Inc. substantially in the
form of Exhibit C.
"Note" means the Second Amended and Restated
Promissory Note of the Borrower substantially in the form of
Exhibit A.
"Person" means an individual, partnership, corporation
(including a business trust), joint stock company, trust,
unincorporated association, joint venture or other entity, or
any Governmental Person.
"Plan" has the meaning set forth in Section 4.01(j).
"Pledge Agreement" means the Pledge Agreement between
the Borrower and the Bank substantially in the form of Exhibit
B.
Pledged Shares" has the meaning set forth in Recital A
of the Pledge Agreement.
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<PAGE>
"Termination Date" means September 30, 1994 or the
earlier date of termination of the Commitment pursuant to
Section 6.01.
SECTION 1.02 Accounting Terms. All accounting terms
not specifically defined herein shall be construed in accordance
with GAAP on a basis consistent with that used in the
preparation of the financial statements referred to in Section
4.01(g).
SECTION 1.03 Interpretation. In this Agreement the
singular includes the plural and the plural the singular; words
importing any gender include the other genders; references to
statutes are to be construed as including all statutory
provisions consolidating, amending or replacing the statute
referred to; references to "writing" include printing, typing,
lithography and other means of reproducing words in a tangible
visible form; the words "including," "includes" and "include"
shall be deemed to be followed by the words "without
limitation"; references to articles, sections (or subdivisions
of sections), exhibits, annexes or schedules are to those of
this Agreement unless otherwise indicated; references to
agreements and other contractual instruments shall be deemed to
include all subsequent amendments and other modifications to
such instruments, but only to the extent such amendments and
other modifications are not prohibited by the terms of this
Agreement; and references to Persons include their respective
permitted successors and assigns.
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
SECTION 2.01 The Advances. The Bank agrees, on the
terms and conditions hereinafter set forth, to make working
capital advances (the "Advances") to the Borrower from time to
time during the period from the date hereof until the
Termination Date in an aggregate amount not to exceed at any
time outstanding $55,000,000, as such amount is reduced from
time to time pursuant to Section 2.04 (the "Commitment"). Each
Advance shall be in an amount not less than $250,000. Within
the limits of the Commitment, the Borrower may borrow, prepay
pursuant to Section 2.05(a) and reborrow under this Section
2.01. As of the date hereof, advances in the aggregate principal
amount of $40,000,000 are outstanding under the First
Restatement, all of which advances are hereby deemed to be
Advances outstanding under this Agreement.
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<PAGE>
SECTION 2.02 Making the Advances. Each Advance shall
be made on at least 1 Business Day's notice from the Borrower to
the Bank specifying the date and amount thereof. Not later than
10:00 a.m., Los Angeles time, on the date of such Advance and
upon fulfillment of the applicable conditions set forth in
Article III, the Bank will make such Advance available to the
Borrower in immediately available funds at the Bank's address
referred to in Section 7.02.
SECTION 2.03 Commitment Fee. The Borrower agrees to
pay to the Bank a commitment fee of $56,250 (the "Commitment
Fee") on or before the Closing Date.
SECTION 2.04 Mandatory Reductions of Commitment.
(a) Without any notice to the Borrower or any other
action by any Person, the Commitment shall be automatically and
permanently reduced (if it has not already been reduced to the
required level or less pursuant to Section 2.04(b)) to (i)
$50,000,000 as of the Bank's close of business on September 30,
1992 and (ii) $40,000,000 as of the Bank's close of business on
September 30, 1993.
(b) Without any notice to the Borrower or any other
action by any Person, the Commitment shall also be automatically
and permanently reduced by an amount equal to the aggregate
principal amount of the Advances repaid pursuant to Section
2.05(c)(ii).
SECTION 2.05 Optional and Mandatory Prepayments of
Advances.
(a) The Borrower may, upon at least 1 Business Day's
notice to the Bank stating the proposed date and amount of the
prepayment, prepay the Advances in whole or in part with accrued
interest to the date of such prepayment on the amount prepaid,
provided that each partial prepayment shall be in a principal
amount not less than $250,000.
(b) The Borrower shall immediately repay to the Bank,
and there shall become due and payable by the Borrower
(including on the dates on which the Commitment is reduced
pursuant to Section 2.04(a)), an amount equal to the amount by
which the aggregate amount of the Advances outstanding exceeds
the Commitment at any time.
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<PAGE>
(c) The Borrower shall immediately repay to the Bank,
and there shall become due and payable by the Borrower, an
amount equal to the amount of (i) any dividends or other
distributions received by the Borrower from time to time with
respect to the Pledged Shares and (ii) the proceeds of any sale
of the Pledged Shares; provided, however, that for purposes of
this Section 2.05(c)(ii), any transfer of the Pledged Shares
pursuant to subsection (B) of the proviso to Section 7(a) of the
Pledge Agreement shall be deemed not to be a sale.
SECTION 2.06 Principal and Interest. The Borrower
shall repay the unpaid principal amount of each Advance, and
shall pay interest on each Advance, in accordance with the terms
of the Note.
SECTION 2.07 Payments and Computations.
(a) The Borrower shall make each payment hereunder
and under the Note not later than 12:00 noon, Los Angeles time,
on the day when due in lawful money of the United States of
America to the Bank at its address referred to in Section 7.02,
in immediately available funds. The Borrower hereby authorizes
the Bank, if and to the extent payment is not made when due
hereunder or under the Note, to charge from time to time against
the Borrower's account with the Bank any amount so due. All
computations of interest under the Note shall be made by the
Bank on the basis of a year of 360 days and the actual number of
days (including the first day but excluding the last day)
occurring in the period for which such interest is payable.
(b) Any amount payable under this Agreement or the
Note not paid when due shall bear interest until paid at the
rate specified in the Note for late payments.
SECTION 2.08 Payment on Non-Business Days. Whenever
any payment to be made hereunder or under the Note shall be
stated to be due on a day other than a Business Day, such
payment shall be made on the next succeeding Business Day, and
such extension of time shall in such case be included in the
computation of payment of interest.
ARTICLE III
CONDITIONS OF LENDING
SECTION 3.01 Conditions Precedent to Effectiveness.
This Agreement shall become effective on the day (the "Closing
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<PAGE>
Date") when the Bank shall have received the Commitment Fee and
all of the following, each dated the Closing Date (unless
otherwise stated below) and otherwise in form and substance
satisfactory to the Bank:
(a) the Note and the Pledge Agreement executed by the
Borrower;
(b) copies of the resolutions of the Board of
Directors of the Borrower approving this Agreement, the Pledge
Agreement and the Note and the transactions contemplated hereby
and thereby, certified by the Secretary or an Assistant
Secretary of the Borrower, and all documents evidencing other
necessary corporate action and governmental approvals, if any,
with respect to this Agreement, the Pledge Agreement and the
Note;
(c) a certificate of the Secretary or an Assistant
Secretary of the Borrower certifying (i) the names and true
signatures of the officers of the Borrower authorized to sign
this Agreement, the Pledge Agreement and the Note and the other
documents to be delivered hereunder; and (ii) that the charter
documents and bylaws of the Borrower have not been amended since
March 20, 1990 and March 21, 1990, respectively, and remain in
full force and effect;
(d) the Lonrho Guaranty executed by Lonrho Plc and
Lonrho, Inc. and the Anderson Guaranty executed by Robert O.
Anderson;
(e) copies of resolutions of the Board of Directors
of each of Lonrho Plc and Lonrho, Inc. approving the Lonrho
Guaranty, together with all other documents evidencing other
necessary corporate action and governmental approvals, if any,
with respect to the Lonrho Guaranty, certified by the Secretary
or Assistant Secretary of such Guarantor to be in full force and
effect;
(f) a certificate of the Secretary or Assistant
Secretary of each of Lonrho Plc and Lonrho, Inc. certifying (i)
the names and true signatures of the officers of such Guarantor
authorized to sign the Lonrho Guaranty; (ii) that the Memorandum
and Articles of Association of such Guarantor have not been
amended since March 21, 1990, in the case of Lonrho Plc; and
(iii) that the charter documents and bylaws of such Guarantor
have not been amended since March 12, 1990 and March 21, 1990,
respectively, in the case of Lonrho, Inc.;
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<PAGE>
(g) certificates of good standing of each of the
Borrower and Lonrho, Inc., dated as of a recent date, from
appropriate officials of the state of incorporation of such
company;
(h) favorable opinions of (i) S. H. Cavin, Esq.,
counsel for the Borrower and Robert O. Anderson; (ii) Cameron
Markby, counsel for Lonrho Plc; and (iii) Rudolph H. Funke,
Esq., counsel for Lonrho, Inc.;
(i) evidence satisfactory to the Bank that Lonrho Plc
directly or indirectly owns not less than 49% of the issued and
outstanding capital stock of the Borrower;
(j) a letter from the "Process Agent" (as defined in
the Lonrho Guaranty) pursuant to which the Process Agent agrees
to act as process agent for Lonrho Plc and Lonrho, Inc. and to
forward forthwith to Lonrho Plc and Lonrho, Inc. all process
received by the Process Agent;
(k) certificates representing the Pledged Shares,
together with undated stock powers for such certificates
executed in blank;
(l) one or more UCC-1 Financing Statements with
respect to the Pledged Shares; and
(m) Federal Reserve Form U-1, as provided for in
Regulation U issued by the Board of Governors of the Federal
Reserve System, completed and executed by the Borrower.
SECTION 3.02 Conditions Precedent to All Advances.
The obligation of the Bank to make each Advance shall be subject
to the further conditions precedent that on the date of such
Advance:
(a) the following statements shall be true, and the
Bank shall have received a certificate signed by a duly
authorized officer of the Borrower, dated the date of such
Advance, stating that:
(i) the representations and warranties contained
in Section 4.01 are correct on and as of the date of such
Advance as though made on and as of such date; and
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<PAGE>
(ii) no event has occurred and is continuing, or
would result from such Advance, that constitutes a Default or an
Event of Default; and
(b) the Bank shall have received such other
approvals, opinions and documents as the Bank may reasonably
request.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01 Representations and Warranties of the
Borrower. The Borrower represents and warrants as follows:
(a) The Borrower is a corporation duly organized,
validly existing and in good standing under the laws of New
Mexico and is duly qualified, in good standing and authorized to
do business in all other jurisdictions within the United States
wherein the character of the properties owned or held by it or
the nature of the business transacted by it makes such
qualification necessary. The Borrower has taken all actions and
procedures customarily taken in order to enter, for the purpose
of conducting business or owning property, each jurisdiction
outside the United States wherein the character of the
properties owned or held by it or the nature of the business
transacted by it makes such actions and procedures desirable.
(b) The execution, delivery and performance by the
Borrower of this Agreement, the Pledge Agreement and the Note,
and the consummation of the transactions contemplated hereby and
thereby, are within the Borrower's corporate powers, have been
duly authorized by all necessary corporate action and do not
contravene (i) the Borrower's charter documents or bylaws or
(ii) any applicable Governmental Rule or any contractual
restriction binding on or affecting the Borrower.
(c) No Governmental Action is required for the due
execution, delivery and performance by the Borrower of this
Agreement, the Pledge Agreement or the Note or the consummation
of the transactions contemplated hereby and thereby.
(d) This Agreement is, and the Note and the Pledge
Agreement when delivered hereunder will be, legal, valid and
binding obligations of the Borrower enforceable against the
Borrower in accordance with their respective terms.
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<PAGE>
(e) No proceeds of any Advance will be used to
acquire any equity security of a class that is registered
pursuant to Section 12 of the Securities Exchange Act of 1934.
(f) The Borrower is not engaged in the business of
extending credit for the purpose of purchasing or carrying
"margin stock" (within the meaning of Regulation U issued by the
Board of Governors of the Federal Reserve System), and no
proceeds of any Advance will be used to purchase or carry any
margin stock or to extend credit to others for the purpose of
purchasing or carrying any margin stock.
(g) The balance sheets of the Borrower and its
subsidiaries as of September 30, 1989 and March 31, 1990 and the
related statements of income, changes in stockholders' equity
and cash flows of the Borrower for the fiscal periods then
ended, audited (in the case of the September 30, 1989 financial
statements only) by Peat Marwick Main & Co. and copies of which
have been delivered to the Bank, fairly present in conformity
with generally accepted accounting principles the financial
position of the Borrower and its subsidiaries as of such dates
and the results of operations for such periods. No material
adverse change has occurred in the financial position, results
of operations or business of the Borrower since March 31, 1990.
(h) There is no fact that the Borrower has not
disclosed in writing to the Bank that has or will have a
material adverse effect on the financial condition of the
Borrower or the ability of the Borrower to perform any of its
obligations under this Agreement, the Pledge Agreement or the
Note.
(i) There are no actions, suits or proceedings
pending against or, to the knowledge of the Borrower, threatened
against or affecting the Borrower or any subsidiary of the
Borrower before or by any Governmental Person or arbitrator that
could materially and adversely affect the financial condition or
operations of the Borrower or any such subsidiary or the ability
of the Borrower to perform its obligations under this Agreement,
the Pledge Agreement or the Note, except as previously disclosed
to the Bank in the financial statements referred to in Section
4.01(g).
(j) The Borrower and each member of the Controlled
Group (defined as all members of a controlled group of
corporations and all trades or businesses (whether or not
incorporated) under common control that, together with the
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<PAGE>
Borrower, are treated as a single employer under Section 414(b)
or 414(c) of the Code) have fulfilled their obligations under
the minimum funding standards of ERISA and the Code with respect
to each Plan (defined as an employee pension benefit plan
covered by Title IV of ERISA or subject to the minimum funding
standards under Section 412 of the Code or Part 3 of Subtitle B
of Title I of ERISA) (i) as to which the Borrower or any member
of the Controlled Group is a Contributing Sponsor (as that term
is defined in Section 4001(a)(13) of ERISA) or (ii) that is
maintained pursuant to a collective-bargaining agreement or any
other arrangement under which more than one employer makes
contributions and to which the Borrower or any member of such
Controlled Group is or has been within the preceding 5 plan
years been a Contributing Sponsor (or, with respect to each Plan
that is a multi-employer plan as defined in Section 4001(a)(3)
of ERISA, have made all required contributions), are in
compliance in all material respects with the currently
applicable provisions of ERISA and the Code relating to each
Plan, have not incurred any liability to the Pension Benefit
Guaranty Corporation or a Plan under Title IV of ERISA and have
taken no actions that would result in the occurrence of a
Default or an Event of Default.
(k) The Borrower is not an "investment company" or
controlled by an "investment company" within the meaning of the
Investment Company Act of 1940.
(l) The obligations of the Borrower under this
Agreement will rank at least pari passu with all claims of other
senior creditors of the Borrower.
(m) The Borrower and each of its subsidiaries have
good title to their respective assets, and the same are not
subject to any Liens other than as permitted by Section 5.01(h).
ARTICLE V
COVENANTS OF THE BORROWER
SECTION 5.01 Covenants of the Borrower. So long as
any amount due hereunder or under the Note shall remain unpaid
or the Bank shall have any Commitment hereunder, the Borrower
will, unless the Bank shall otherwise consent in writing, comply
in all respects with the following:
(a) The Borrower will at all times maintain full and
accurate books of account and records. The Borrower will
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maintain a standard system of accounting and will furnish the
following statements and reports to the Bank at the Borrower's
expense:
(i) as soon as available and in any event within
120 days after the end of each fiscal year of the Borrower,
complete consolidated financial statements of the Borrower,
together with all notes thereto, prepared in reasonable detail
in accordance with GAAP, together with an opinion, based on an
audit using generally accepted auditing standards by Peat
Marwick Main & Co. or other independent certified public
accountants selected by the Borrower and acceptable to the Bank,
stating without exception or qualification that such financial
statements have been so prepared, such financial statements to
contain a balance sheet as of the end of such fiscal year and
statements of earnings, stockholders' equity and cash flows for
such fiscal year, each setting forth in comparative form the
corresponding figures for the preceding fiscal year;
(ii) as soon as available and in any event within
120 days after the end of each fiscal year of Lonrho Plc,
complete consolidated financial statements of Lonrho Plc,
together with all notes thereto, prepared in reasonable detail
in accordance with generally accepted accounting principles in
the United Kingdom, together with an opinion, based on an audit
using generally accepted auditing standards by Peat Marwick Main
& Co. or other independent certified public accountants selected
by Lonrho Plc and acceptable to the Bank, stating without
exception or qualification that such financial statements have
been so prepared, such financial statements to contain a balance
sheet as of the end of such fiscal year, a consolidated profit
and loss account for such fiscal year and a statement of source
and application of funds for such fiscal year, each setting
forth in comparative form the corresponding figures for the
preceding fiscal year;
(iii) as soon as available, and in any event
within 120 days after the end of each fiscal year of Robert O.
Anderson, complete unaudited financial statements of Robert O.
Anderson and Barbara Phelps Anderson, together with all notes
thereto, prepared in reasonable detail in accordance with GAAP,
except for necessary changes from GAAP relating to the cash
basis on which such financial statements were prepared;
(iv) as soon as available, and in any event
within 45 days after the end of each fiscal quarter of the
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Borrower, the Borrower's balance sheet as of the end of such
fiscal quarter and statements of the Borrower's earnings,
stockholders' equity and cash flows for the period from the
beginning of the then current fiscal year to the end of such
fiscal quarter, all in reasonable detail and prepared in
accordance with GAAP, subject to changes resulting from normal
year-end adjustments; and, together with each such set of
financial statements and each set of financial statements
furnished under subsection (i) of this section, a certificate
signed by the chief financial officer of the Borrower stating
that such financial statements are accurate and complete,
stating that he has reviewed this Agreement and that no Default
or Event of Default exists at the time of such certificate or,
if he concludes that a Default or Event of Default exists,
specifying its nature and the action being taken or proposed to
be taken with respect thereto;
(v) forthwith upon the occurrence of any Default
or Event of Default, a certificate of the chief financial
officer of the Borrower setting forth the details thereof and
the action that the Borrower is taking or proposes to take with
respect thereto;
(vi) promptly upon the mailing thereof to the
shareholders of the Borrower, copies of all financial
statements, reports and proxy statements so mailed;
(vii) promptly after the Borrower has become aware
of the same, notice of all pending or threatened litigation,
arbitration proceedings and proceedings before any Governmental
Person that could materially and adversely affect the financial
condition or operations of the Borrower or any Guarantor;
(viii) promptly after the Borrower has become aware
of the same, written notice of the occurrence of any "reportable
event," as such term is defined in Section 4043 of ERISA, or
"prohibited transaction" as such term is defined in Section 4975
of the Code, in connection with any Plan or trust created
thereunder, together with a statement of the plan administrator
of the Borrower specifying the nature thereof, what action the
Borrower is taking or proposes to take with respect thereto,
and, when known, any action taken by the Internal Revenue
Service with respect thereto;
(ix) promptly upon any such occurrence, written
notice to the Bank of any sale of assets by the Borrower in
excess of $150,000; and
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(x) from time to time such additional
information regarding the financial position or business of the
Borrower or any Guarantor as the Bank may reasonably request.
(b) The Borrower will preserve and maintain its
corporate existence and all of its rights, privileges and
franchises necessary or desirable in the normal conduct of its
business and will conduct its business in a regular manner. The
Borrower will notify the Bank 30 days in advance of any change
in the location of its principal place of business, of the
establishment or discontinuance of its principal place of
business or of a change in the corporate name, trade names or
articles of incorporation or bylaws of the Borrower.
(c) The Borrower will keep all of its properties
necessary, in the judgment of its Board of Directors, in its
business in good working order and condition, ordinary wear and
tear excepted, and will permit representatives of the Bank to
inspect such properties and to examine and make extracts from
the books and records of the Borrower during normal business
hours.
(d) The Borrower will comply with the requirements of
all applicable Governmental Rules a breach of which could have a
material adverse effect on the consolidated financial condition
or the business taken as a whole of the Borrower, except where
contested in good faith and by proper proceedings.
(e) The Borrower will keep proper books of records
and accounts in which full, true and correct entries in
conformity with GAAP shall be made of all dealings and
transactions in relation to its and its subsidiaries' business
and activities. The Borrower will permit representatives of the
Bank to visit and inspect any of its and its subsidiaries'
properties to the extent permitted by applicable law and
applicable safety and security policies of the Borrower and its
subsidiaries (and to the extent such visitation and inspection
shall not interfere with the normal operations of the Borrower
and its subsidiaries) and to examine, subject to proprietary and
confidentiality policies and agreements of or binding upon the
Borrower and its subsidiaries, any of its books and records and
to discuss its affairs, finances and accounts with its officers
and employees, subject to proprietary and confidentiality
policies and agreements of or binding upon the Borrower and its
subsidiaries, all at such reasonable times and as often as may
reasonably be desired.
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(f) The Borrower will pay and discharge all taxes,
assessments, governmental charges and levies imposed on it, on
its income or profits or on any of its property prior to the
date on which penalties attach thereto, except that the Borrower
will not be required hereby to pay any such tax, assessment,
charge or levy the payment of which is being contested in good
faith and by proper proceedings and against which it is
maintaining adequate reserves.
(g) The Borrower will maintain insurance in
responsible companies in such amounts and against such risks as
is usually carried by owners of similar businesses and
properties in the same general areas in which the Borrower
operates.
(h) The Borrower will not create or suffer to exist
any Lien upon or with respect to any of its properties, whether
now owned or hereafter acquired, or assign any right to receive
income, in each case to secure any debt of any person or entity,
except as set forth on Schedule 1.
(i) The Borrower will not (A) consolidate with or
merge into any other Person or (B) sell, lease or otherwise
transfer all or any substantial part of its assets to any other
Person.
(j) The Borrower and each member of the Controlled
Group will fund all Plans in accordance with not less than the
minimum funding standards of ERISA, will make all required
contributions to any Plan that is a multi-employer plan and will
otherwise comply with the terms of all Plans.
(k) The Borrower will not directly or indirectly
apply any part of the proceeds of the Advances to the purchasing
or carrying of any 'margin stock" within the meaning of
Regulation U of the Board of Governors of the Federal Reserve
System or any regulations, interpretations or rulings
thereunder.
(l) The Borrower will not take any action that would
result in the Borrower's obligations to the Bank under this
Agreement and the Note not ranking at least pari passu in right
of payment with all senior obligations of the Borrower to other
creditors.
(m) If the Bank in its sole discretion determines
that sale of all or a portion of the Pledged Shares is necessary
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to enable the Borrower to repay the principal of the Advances in
accordance with the terms of this Agreement and the Note, the
Borrower will, at its own expense, upon the request of the Bank
at any time and from time to time within the 6-month period
before each of September 30, 1992, September 30, 1993 and
September 30, 1994:
(i) execute and deliver, and cause HOGC and the
directors and officers thereof to execute and deliver, all such
instruments and documents, and do or cause to be done all such
other acts and things, as may be necessary or, in the opinion of
the Bank, advisable to register such Pledged Shares under the
provisions of the Securities Act of 1933 (the "Securities Act"),
to cause the registration statement relating thereto to become
effective and to remain effective for such period as
prospectuses are required by law to be furnished and to make all
amendments and supplements thereto and to the related prospectus
that, in the opinion of the Bank, are necessary or advisable,
all in conformity with the requirements of the Securities Act
and the rules and regulations of the Securities and Exchange
Commission applicable thereto;
(ii) use its best efforts to qualify such Pledged
Shares under the state securities or "blue sky" laws and to
obtain all necessary Governmental Action for the sale of the
Pledged Shares, as requested by the Bank;
(iii) cause HOGC to make available to its security
holders, as soon as practicable, an earnings statement that will
satisfy the provisions of Section 11(a) of the Securities Act;
and
(iv) do or cause to be done all such other acts
and things as may be necessary to make such sale of the Pledged
Shares or any part thereof valid and binding and in compliance
with applicable law.
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01 Events of Default. If any of the
following events (each an "Event of Default") shall occur and be
continuing:
(a) the Borrower shall fail to pay any installment of
principal of, or interest on, the Advances or any fees or other
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amounts payable under this Agreement when due and such failure
shall remain unremedied for 10 days;
(b) any representation or warranty made by the
Borrower or any Guarantor (or any of its officers) in or in
connection with any Credit Document shall prove to have been
incorrect in any material respect when made;
(c) the Borrower or any Guarantor shall fail to
perform or observe any other term, covenant or agreement
contained in any Credit Document on its part to be performed or
observed and any such failure shall remain unremedied for 10
days after written notice thereof shall have been given to the
Borrower or such Guarantor (as the case may be) by the Bank;
(d) the Borrower, any Guarantor or any of their
respective subsidiaries shall (i) fail to pay any Debt (but
excluding indebtedness evidenced by the Note) of the Borrower,
such Guarantor or such subsidiary (as the case may be), or any
interest or premium thereon, when due (whether upon scheduled
maturity, required prepayment, acceleration, demand or
otherwise) and such failure shall continue after the applicable
grace period, if any, specified in the agreement or instrument
relating to such Debt or (ii) fail to perform or observe any
term, covenant or condition on its part to be performed or
observed under any agreement or instrument relating to any such
Debt, when required to be performed or observed, and such
failure shall continue after the applicable grace period, if
any, specified in such agreement or instrument, if the effect of
such failure to perform or observe is to accelerate, or to
permit the acceleration of, the maturity of such Debt; or any
such Debt shall be declared to be due and payable, or required
to be prepaid (other than by a regularly scheduled required
prepayment), prior to the stated maturity thereof;
(e) the Borrower, any Guarantor or any of their
respective subsidiaries shall generally not pay its debts as
they become due, shall admit in writing its inability to pay its
debts or shall make a general assignment for the benefit of
creditors; or any proceeding shall be instituted by or against
the Borrower, any Guarantor or any of their respective
subsidiaries seeking to adjudicate it a bankrupt or insolvent,
or seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief, or composition of it or its
Debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an
order for relief or the appointment of a receiver, trustee, or
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other similar official for it or for any substantial part of its
property; or the Borrower, any Guarantor or any of their
respective subsidiaries shall take any corporate or other action
to authorize any of the actions set forth above in this
subsection (e);
(f) (i) a final judgment or order for the payment of
money in excess of $75,000 shall be rendered against the
Borrower or any of its subsidiaries or (ii) a final judgment or
order for the payment of money in excess of $7,500,000 shall be
rendered against any Guarantor, and in either case any such
judgment or order shall continue unsatisfied and in effect for a
period of 60 consecutive days;
(g) either Guaranty shall be terminated, repudiated
or contested in any respect, any material provision of either
Guaranty shall for any reason cease to be valid and binding on
the Guarantor(s) party thereto, any Guarantor shall breach any
obligation set forth in its respective Guaranty or there shall
be a material adverse change in the financial condition of any
Guarantor affecting the ability of such Guarantor to perform its
obligations under its respective Guaranty;
(h) the Pledge Agreement shall for any reason, except
to the extent permitted by the terms thereof, cease to create a
valid and perfected first-priority security interest in any of
the collateral purported to be covered thereby;
(i) an "Event of Default" shall occur and be
continuing under (i) the Second Amended and Restated Revolving
Credit and Letter of Credit Agreement dated as of April 30, 1990
between HOGC and Fletcher Oil and Refining Company, as
borrowers, and the Bank, as lender, (ii) the Second Amended and
Restated Term Credit Agreement dated as of January 18, 1990
among HOGC, the Bank and Standard Chartered Bank or (iii) the
Amended and Restated Revolving Credit Agreement dated as of May
31, 1990 between HOGC and the Bank; or
(j) Lonrho Plc shall fail to own directly or
indirectly at least 49% of the issued and outstanding capital
stock of the Borrower;
then, and in any such event, the Bank may, by notice to the
Borrower, (i) declare its obligation to make Advances to be
terminated, whereupon the same shall forthwith terminate, and
(ii) declare the Advances, all interest thereon and all other
amounts payable under this Agreement to be forthwith due and
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payable, whereupon the Advances, all such interest and all such
amounts shall become and be forthwith due and payable, without
presentment, demand, protest or further notice of any kind, all
of which are hereby expressly waived by the Borrower.
ARTICLE VII
MISCELLANEOUS
SECTION 7.01 Amendments, Etc. No amendment or waiver
of any provision of this Agreement or the Note, or consent to
any departure by the Borrower therefrom, shall in any event be
effective unless the same shall be in writing and signed by the
Bank, and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which
given.
SECTION 7.02 Notices, Etc. All notices and other
communications provided for hereunder shall be in writing
(including telecopier) or by telephone (confirmed in writing
within 24 hours) and mailed, telecopied or delivered, if to the
Borrower, to it at 410 East College Boulevard (P.O. Box 1000),
Roswell, New Mexico 88201, telephone (505) 625-8701, telecopier
(505) 625-6876, Attention: Mr. Robert B. Anderson; if to the
Bank, to it at 445 South Figueroa Street, Los Angeles,
California 90071, telephone (213) 236-5811, telecopier (213)
236-4096, Attention: Energy Capital Services; 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 party. All such
notices and communications shall, when mailed or telecopied, be
effective when deposited in the mails or when received,
respectively, addressed as aforesaid, except that notices to the
Bank pursuant to the provisions of Article II shall not be
effective until received by the Bank.
SECTION 7.03 No Waiver; Remedies. No failure on the
part of the Bank to exercise, and no delay in exercising, any
right hereunder or under the Note shall operate as a waiver
thereof, nor shall any single or partial exercise of any right
hereunder or under the Note preclude any other or further
exercise thereof or the exercise of any other right. The
remedies herein provided are cumulative and not exclusive of any
remedies provided by law.
SECTION 7.04 Costs, Expenses and Taxes. The Borrower
agrees to pay on demand all out-of-pocket costs and expenses in
connection with the preparation, execution, delivery,
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administration and amendment of this Agreement, the Note and the
other documents to be delivered hereunder, including the
reasonable fees and out-of-pocket expenses of counsel for the
Bank with respect thereto and with respect to advising the Bank
as to its rights and responsibilities under this Agreement, and
all costs and expenses, if any (including reasonable fees and
expenses of counsel), in connection with the enforcement of this
Agreement, the Note and the other documents to be delivered
hereunder. In addition, the Borrower shall pay any and all
stamp and other taxes payable or determined to be payable in
connection with the execution and delivery of this Agreement,
the Note and the other documents to be delivered hereunder, and
agrees to save the Bank harmless from and against any and all
liabilities with respect to or resulting from any delay in
paying or omission to pay such taxes.
SECTION 7.05 Right of Setoff. Upon the occurrence
and during the continuance of any Event of Default, the Bank is
hereby authorized at any time and from time to time, without
notice to the Borrower (any such notice being expressly waived
by the Borrower), to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at
any time held and other indebtedness at any time owing by the
Bank to or for the credit or the account of the Borrower against
any and all of the obligations of the Borrower now or hereafter
existing under this Agreement and the Note, irrespective of
whether or not the Bank shall have made any demand under this
Agreement or the Note and although such obligations may be
unnatural. The Bank agrees to notify the Borrower promptly
after any such setoff and application, provided that the failure
to give such notice shall not affect the validity of such setoff
and application. The rights of the Bank under this Section are
in addition to other rights and remedies (including other rights
of setoff) that the Bank may have.
SECTION 7.06 Binding Effect; Governing Law. This
Agreement shall be binding upon and inure to the benefit of the
Borrower and the Bank and their respective successors and
assigns, except that the Borrower shall not have the right to
assign its rights hereunder or any interest herein without the
prior written consent of the Bank. This Agreement and the Note
shall be governed by, and construed in accordance with, the laws
of the State of California without reference to the
choice-of-law principles thereof.
SECTION 7.07 Counterparts. This Agreement may be
executed in any number of counterparts, and all such
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counterparts taken together shall be deemed to constitute one
and the same instrument.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be executed by their respective officers
thereunto duly authorized, as of the date first above written.
THE HONDO COMPANY
By:__________________________
Robert B. Anderson
Vice President
UNION BANK
By:__________________________
Name:________________________
Title:_______________________
By:__________________________
Name:________________________
Title:_______________________
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be executed by their respective officers
thereunto duly authorized, as of the date first above written.
THE HONDO COMPANY
By:__________________________
Robert B. Anderson
Vice President
UNION BANK
By:__________________________
Name:________________________
Title:_______________________
By:__________________________
Name:________________________
Title:_______________________
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SCHEDULE I
SCHEDULE OF LIENS
(a) LIENS ON REAL PROPERTY SECURED BY MORTGAGE OR DEED OF TRUST:
Commerce Savings - Tasajillo Ranch, Atascosa County, Texas
B.F. Crawford - Sleepy Valley Farm, Chaves County, New Mexico
David Kuykendall - Butterfield Farm (Kuykendall), Otero County,
New Mexico
Helen Langenegger - Bramblett & Hanson Farms, Chaves County, New
Mexico
Dean L. Lindquist & L. C. Barker - Butterfield Farm
(Kuykendall), (Otero County, New Mexico)
Northranch Company, Inc. - North Ranch, Lincoln County, New
Mexico
Pecos Valley Artesian Conservancy District - Hanson Farm, Chaves
County, New Mexico
Pecos Valley Artesian Conservancy District - Blue J Farm, Chaves
County, New Mexico
Prices Producers, Inc. - Butterfield Farm (Templeton), Otero
County, New Mexico
Small Business Administration - Butterfield Farm (Kuykendall),
Otero County, New Mexico
Robert N. & Barbara Jean Templeton - Butterfield Farm
(Templeton), Hudspeth County, Texas
Travelers - Hueco Ranch, Hudspeth & El Paso Counties, Texas
Valley Federal Savings - Buffalo Valley Farm, Chaves County, New
Mexico
Valley Federal Savings - South Spring Farm, Chaves County, New
Mexico
Valley National Bank of Arizona - Squaw Canyon Ranch, Chaves
County, New Mexico
<PAGE>
J. Phelps White III - Diamond A Ranch, Lincoln County, New
Mexico
(b) LIENS ON PERSONAL PROPERTY SECURED BY FINANCING STATEMENT
OR OTHER SECURITY AGREEMENT:
T.H. Boswell, et ux, purchase money obligation secured by
collateral assignment of State of New Mexico Agricultural
Lease #GT-1716
The CIT Group - approximately $702,713, Learjet and other items
of personal property
United New Mexico Bank at Roswell, pickups and farm equipment
Valley National Bank of Arizona - all farm products including
livestock, crops now growing or to be grown and all such
products after they have been harvested and removed; all
supplies including hay, grain and other feeds; all farm
equipment; hedging accounts, receivables and general
intangibles arising out of ownership or sale of livestock or
feed.
Various purchase money obligations for registered livestock
<PAGE>
EXHIBIT A
SECOND AMENDED AND RESTATED PROMISSORY NOTE
$55,000,000 July 24, 1990
FOR VALUE RECEIVED, the undersigned, THE HONDO
COMPANY, a New Mexico corporation (the "Borrower"), hereby
promises to pay to the order of UNION BANK, a California banking
corporation (the "Bank"), the principal sum of $55,000,000 or,
if less, the aggregate unpaid principal amount of all Advances
(as defined below) made by the Bank to the Borrower pursuant to
the Credit Agreement (as defined below), in the following three
installments: (1) on September 30, 1992 in such amount, if any,
as necessary so that the aggregate unpaid principal amount of
the Advances outstanding on that date shall be $50,000,000 or
less; (2) on September 30, 1993 in such amount, if any, as
necessary so that the aggregate unpaid principal amount of the
Advances outstanding on that date shall be $40,000,000 or less;
and (3) on September 30, 1994 in such amount, if any, as
necessary so that the aggregate unpaid principal amount of the
Advances shall be repaid in full on that date.
The Borrower promises to pay interest on the unpaid
principal amount of each Advance from the date of such Advance
until such principal amount is paid in full, at the rate per
annum equal at all times to (1) from and including the date
hereof to and including March 31, 1991, the Reference Rate (as
defined below) plus 1-1/4% per annum, (2) from and including
April 1, 1991 to and including September 30, 1993, the Reference
Rate plus 1-3/4% per annum and (3) from and including October 1,
1993 to but excluding September 30, 1994, the Reference Rate
plus 3% per annum, in each case payable monthly in arrears on
the last day of each month, commencing on July 31, 1990;
provided, however, that any amount of principal of the Advances
that is not paid when due (whether at stated maturity, by
acceleration or otherwise) shall bear interest from the date on
which such amount is due until such amount is paid in full,
payable on demand, at a rate per annum equal at all times to the
sum of the Reference Rate plus 5-1/4% per annum (or the maximum
interest rate permitted by law, whichever is less).
As used herein, "Reference Rate" means the variable
rate of interest per annum announced by the Bank from time to
time as its "reference rate." Such rate is set by the Bank as a
A-1
<PAGE>
general reference rate of interest, taking into account such
factors the Bank may deem appropriate, it being understood that
many of the commercial or other loans of the Bank are priced in
relation to such rate, that it is not necessarily the lowest or
best rate actually charged to any customer and that the Bank may
make various commercial or other loans at rates of interest
having no relationship to such rate. For purposes of this Note,
each change in the Reference Rate shall be effective as of the
opening of business on the date announced as the effective date
of any change in such "reference rate." As used herein,
"Business Day" means any day of the year on which banks are not
required or authorized to close in Los Angeles. All
computations of interest shall be made by the Bank on the basis
of a year of 360 days and the actual number of days occurring in
the period for which such interest is payable. Whenever any
payment hereunder shall be stated to be due on a day other than
a Business Day, such payment shall be made on the next
succeeding Business Day, and such extension of time shall in
such case be included in the computation of payment of interest.
Both principal and interest are payable in lawful
money of the United States of America to the Bank at 445 South
Figueroa Street, Los Angeles, California 90071, in immediately
available funds. Each Advance made by the Bank to the Borrower
pursuant to the Credit Agreement, and all payments made on
account of principal thereof, shall be recorded by the Bank and,
prior to any transfer hereof, endorsed on the grid attached
hereto, which is part of this Note.
This Note is the "Note" referred to in, and is
entitled to the benefits of, the Second Amended and Restated
Revolving Credit Agreement between the Borrower and the Bank
dated as of July 24, 1990 (the "Credit Agreement"). The Credit
Agreement, among other things, (1) provides for the making of
advances (the "Advances") by the Bank to the Borrower from time
to time in an aggregate amount not to exceed at any time
outstanding (a) from and including the date hereof to and
including September 30, 1992, $55,000,000, (b) from and
including October 1, 1992 to and including September 30, 1993,
$50,000,000 and (c) from and including October 1, 1993 to and
including September 30, 1994, $40,000,000; and (2) contains
provisions for acceleration of the maturity hereof upon the
happening of certain stated events and also for prepayments on
account of principal hereof prior to the maturity hereof upon
the terms and conditions specified therein.
This Note is guaranteed by the Second Amended and
Restated Guaranty of Lonrho Plc and Lonrho, Inc. dated as of
A-2
<PAGE>
July 24, 1990 and the Second Amended and Restated Guaranty of
Robert O. Anderson dated as of July 24, 1990 and is secured by
the Pledge Agreement between the Borrower and the Bank dated as
of June 29, 1990.
This Note shall be governed by, and construed in
accordance with, the laws of the State of California without
reference to the choice-of-law principles thereof.
THE HONDO COMPANY
By:__________________________
Robert B. Anderson
Vice President
A-3
<PAGE>
SCHEDULE TO NOTE
Amount of Principal Principal Notation
Date Advance Paid Outstanding Made By
A-4
<PAGE>
EXHIBIT B
PLEDGE AGREEMENT
This Agreement, dated as of July 24, 1990, is made by
and between THE HONDO COMPANY, a New Mexico corporation (the
"Pledgor"), and UNION BANK, a California banking corporation
(the "Bank").
Recitals
A. The Pledgor is the owner of 10,471,000 shares of
common stock (the "Pledged Shares") of Hondo Oil & Gas Company
("HOGC").
B. The Pledgor and the Bank have entered into a
Second Amended and Restated Revolving Credit Agreement dated as
of July 24, 1990 (said Agreement, as it may hereafter be amended
or otherwise modified from time to time, being called the
"Credit Agreement"). It is a condition precedent to the
effectiveness of the Credit Agreement that the Pledgor shall
have made the pledge contemplated by this Agreement.
C. Terms defined in the Credit 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 Credit Agreement are incorporated herein by
reference.
SECTION 1. Pledge. The Pledgor hereby pledges to the
Bank, and grants to the Bank a security interest in, the
following (the "Pledged Collateral"):
(a) the Pledged Shares and the certificates
representing the Pledged Shares, and all dividends, cash,
instruments and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange
for any or all of the Pledged Shares, including the right to
receive all such dividends, cash, instruments and other
property; and
(b) all additional shares of stock of HOGC from time
to time acquired by the Pledgor in any manner, and the
certificates representing such additional shares, and all
dividends, cash, instruments and other property from time to
time received, receivable or otherwise distributed in respect of
or in exchange for any or all of such shares, including the
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right to receive all such dividends, cash, instruments and other
property.
SECTION 2. Security for Obligations. This Agreement
secures the payment of all obligations of the Pledgor now or
hereafter existing under the Credit Agreement and the Note,
whether for principal, interest, fees, expenses or otherwise,
and all obligations of the Pledgor now or hereafter existing
under this Agreement (all such obligations of the Pledgor being
called the "Obligations").
SECTION 3. Delivery of Pledged Collateral. All
certificates or instruments representing or evidencing the
Pledged Collateral shall be delivered to and held by or on
behalf of the Bank pursuant hereto and shall be in suitable form
for transfer by delivery or shall be accompanied by duly
executed instruments of transfer or assignment in blank, all in
form and substance satisfactory to the Bank. If any Event of
Default shall have occurred and be continuing, the Bank shall
have the right in its discretion and without notice to the
Pledgor, to transfer to or to register in the name of the Bank
or any of its nominees any or all of the Pledged Collateral,
subject to the rights of the Pledgor and its shareholders set
forth in Section 11(a). In addition, the Bank shall have the
right at any time to exchange certificates or instruments
representing or evidencing Pledged Collateral for certificates
or instruments of smaller or larger denominations.
SECTION 4. Representations and Warranties. The
Pledgor represents and warrants as follows:
(a) The Pledged Shares have been duly authorized and
validly issued and are fully paid and nonassessable.
(b) The Pledgor is the legal and beneficial owner of
the Pledged Collateral, free and clear of any Lien except for
the security interest created by this Agreement.
(c) The pledge of the Pledged Shares pursuant to this
Agreement creates a valid and perfected first-priority security
interest in the Pledged Collateral, securing the payment of the
Obligations.
(d) No Governmental Action is required either (i) for
the pledge by the Pledgor of the Pledged Collateral pursuant to
this Agreement or for the execution, delivery or performance of
this Agreement by the Pledgor or (ii) for the exercise by the
Bank of the voting or other rights provided for in this
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Agreement or the remedies in respect of the Pledged Collateral
pursuant to this Agreement (except as may be required in
connection with such disposition by laws affecting the offering
and sale of securities generally).
(e) The Pledged Shares constitute 81% of the issued
and outstanding shares of stock of HOGC.
SECTION 5. Further Assurances. The Pledgor agrees
that at any time and from time to time, at the expense of the
Pledgor, the Pledgor will promptly execute and deliver all
further instruments and documents, and take all further action,
that may be necessary or desirable, or that the Bank may
request, in order to perfect and protect any security interest
granted or purported to be granted hereby or to enable the Bank
to exercise and enforce its rights and remedies hereunder with
respect to any Pledged Collateral.
SECTION 6. Voting Rights, Dividends, Etc.
(a) So long as no Default or Event of Default has
occurred and is continuing:
(i) The Pledgor shall be entitled to exercise
any and all voting and other consensual rights pertaining to the
Pledged Collateral or any part thereof for any purpose not
inconsistent with the terms of this Agreement and the other
Credit Documents; provided, however, that the Pledgor shall not
knowingly exercise or refrain from exercising any such right if
such action would have a material adverse effect on the value of
the Pledged Collateral or any part thereof.
(ii) The Pledgor shall be entitled to receive and
retain any and all dividends and interest paid in respect of the
Pledged Collateral; provided, however, that any and all
(A) dividends and interest paid or payable
other than in cash in respect of, and instruments and other
property received, receivable or otherwise distributed in
respect of or in exchange for, any Pledged Collateral,
(B) dividends and other distributions paid
or payable in cash in respect of any Pledged Collateral in
connection with a partial or total liquidation or dissolution or
in connection with a reduction of capital, capital surplus or
paid-in surplus and
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(C) cash paid, payable or otherwise
distributed in redemption of or in exchange for any Pledged
Collateral shall be, and shall be forthwith delivered to the
Bank to hold as, Pledged Collateral
and shall, if received by the Pledgor, be received in trust for
the benefit of the Bank, be segregated from the other property
or funds of the Pledgor and be forthwith delivered to the Bank
as Pledged Collateral in the same form as so received (with any
necessary endorsement).
(iii) The Bank shall execute and deliver (or
cause to be executed and delivered) to the Pledgor all such
proxies and other instruments as the Pledgor may reasonably
request for the purpose of enabling the Pledgor to exercise the
voting and other rights that it is entitled to exercise pursuant
to paragraph (i) above and to receive the dividends or interest
that it is authorized to receive and retain pursuant to
paragraph (ii) above.
(b) Upon the occurrence and during the continuance of
any Default or Event of Default:
(i) All rights of the Pledgor to exercise the
voting and other consensual rights that it would otherwise be
entitled to exercise pursuant to Section 6(a)(i) and to receive
the dividends and interest that it would otherwise be authorized
to receive and retain pursuant to Section 6(a)(ii) shall cease,
and all such rights shall thereupon become vested in the Bank,
which shall thereupon have the sole right to exercise such
voting and other consensual rights and to receive and hold as
Pledged Collateral such dividends and interest.
(ii) All dividends and interest that are received
by the Pledgor contrary to the provisions of paragraph (i) of
this Section 6(b) shall be received in trust for the benefit of
the Bank, shall be segregated from other funds of the Pledgor
and shall be forthwith paid over to the Bank as Pledged
Collateral in the same form as so received (with any necessary
endorsement).
SECTION 7. Transfers and Other Liens; Additional
Shares.
(a) The Pledgor agrees that it will not (i) sell,
assign (by operation of law or otherwise) or otherwise dispose
of, or grant any option with respect to, any of the Pledged
Collateral or (ii) create or permit to exist any Lien upon or
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with respect to any of the Pledged Collateral, except for the
security interest created by this Agreement; provided, however,
that, so long as no Event of Default has occurred and is
continuing, the Pledgor shall be permitted (A) to sell all or a
portion of the Pledged Shares at their fair market value (and
the Bank shall release the certificates for such Pledged Shares)
to the extent, and only to the extent, that all of the proceeds
from such sale are used to repay principal of the outstanding
Advances and (B) not later than September 30, 1990, to transfer
a portion of the Pledged Shares (and the Bank shall release the
certificates for such Pledged Shares) to any of the Pledgor's
shareholders for the purpose of satisfying any indebtedness
outstanding on the date hereof that is owed by the Pledgor to
any such shareholder, provided that the value of the Pledged
Shares transferred does not exceed the amount of such
indebtedness and that, in the judgment of the Bank, such
transfer does not have any adverse tax effect on the financial
condition of the Pledgor.
(b) The Pledgor agrees that it will (i) cause HOGC
not to issue any stock or other securities in addition to or in
substitution for the Pledged Shares, except to the Pledgor, and
(ii) pledge hereunder, immediately upon its acquisition
(directly or indirectly) thereof, any and all additional shares
of stock or other securities of HOGC.
SECTION 8. Bank Appointed Attorney-in-Fact. The
Pledgor hereby appoints the Bank the Pledgor's attorney-infact,
with full authority in the place and stead of the Pledgor and in
the name of the Pledgor or otherwise, from time to time in the
Bank's discretion to take any action and to execute any
instrument that the Bank may deem necessary or advisable to
accomplish the purposes of this Agreement, including to receive,
endorse and collect all instruments made payable to the Pledgor
representing any dividend, interest or other distribution in
respect of the Pledged Collateral or any part thereof and to
give full discharge for the same.
SECTION 9. Bank May Perform. If the Pledgor fails to
perform any agreement contained herein, the Bank may itself
perform or cause performance of such agreement, and the expenses
of the Bank incurred in connection therewith shall be payable by
the Pledgor under Section 13.
SECTION 10. Bank's Duties. The powers conferred on
the Bank hereunder are solely to protect its interest in the
Pledged Collateral and shall not impose any duty upon it to
exercise any such powers. Except for the safe custody of any
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Pledged Collateral in its possession and the accounting for
moneys actually received by it hereunder, the Bank shall have no
duty as to any Pledged Collateral, as to ascertaining or taking
action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relative to any Pledged
Collateral, whether or not the Bank has or is deemed to have
knowledge of such matters, or as to the taking of any necessary
steps to preserve rights against any Persons or any other rights
pertaining to any Pledged Collateral. The Bank shall be deemed
to have exercised reasonable care in the custody and
preservation of any Pledged Collateral in its possession if such
Pledged Collateral is accorded treatment substantially equal to
that that the Bank accords its own property.
SECTION 11. Remedies upon Default. If any Event of
Default shall have occurred and be continuing:
(a) Subject to the right of first refusal reserved
below, the Bank may exercise in respect of the Pledged
Collateral., in addition to other rights and remedies provided
for herein or otherwise available to it, all the rights and
remedies of a secured party on default under the Uniform
Commercial Code in effect in the State of California (the
"Code") at that time (whether or not the Code applies to the
Pledged Collateral affected), and the Bank may also, without
notice except as specified below, sell the Pledged Collateral or
any part thereof in one or more parcels at public or private
sale, at any of the Bank's offices or elsewhere, for cash, on
credit or for future delivery, and at such price or prices and
upon such other terms as the Bank may deem commercially
reasonable. In the event,the Bank has received a bona fide
offer from a prospective purchaser ready, able and willing to
purchase all or any part of the Pledged Collateral, which the
Bank desires to accept, the Bank will notify Lonrho Inc. and
Lonrho, Plc at their address set out in the Lonrho Guaranty and
Robert O. Anderson, Robert B. Anderson and Phelps Anderson at
Robert O. Anderson's address set out in the Anderson Guaranty;
such notice shall set forth the name of the party making such
offer, the price and all other material terms and conditions of
the offer; the Pledgor's stockholders named above shall have a
period of 10 days after delivery of such notice to the addresses
specified above to purchase the Pledged Collateral or portion
thereof at the price and upon the terms and conditions of such
offer. The Pledgor agrees that, to the extent notice of sale
shall be required by law, at least 10 days' notice to the
Pledgor of the time and place of any public sale or the time
after which any private sale is to be made shall constitute
reasonable notification. The Bank shall not be obligated to
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make any sale of Pledged Collateral regardless of notice of sale
having been given. The Bank may adjourn any public or private
sale from time to time by announcement at the time and place
fixed therefor, and such sale may, without further notice, be
made at the time and place to which it was so adjourned.
(b) Any cash held by the Bank as Pledged Collateral
and all cash proceeds received by the Bank in respect of any
sale of, collection from or other realization upon all or any
part of the Pledged Collateral may, in the discretion of the
Bank, be held by the Bank as collateral for, and/or then or at
any time thereafter applied (after payment of any amounts
payable to the Bank pursuant to Section 13) in whole or in part
by the Bank against, all or any part of the obligations in such
order as the Bank shall elect. Any surplus of such cash or cash
proceeds held by the Bank and remaining after payment in full of
the Obligations shall be paid over to the Pledgor or to whoever
may be lawfully entitled to receive such surplus.
SECTION 12. Registration Rights. If the Bank shall
determine to exercise its right to sell all or any of the
Pledged Collateral pursuant to Section 11, the Pledgor agrees
that, upon request of the Bank, the Pledgor will, at its own
expense:
(a) execute and deliver, and cause HOGC and the
directors and officers thereof to execute and deliver, all such
instruments and documents, and do or cause to be done all such
other acts and things, as may be necessary or, in the opinion of
the Bank, advisable to register such Pledged Collateral under
the provisions of the Securities Act of 1933 (the "Securities
Act"), to cause the registration statement relating thereto to
become effective and to remain effective for such period as
prospectuses are required by law to be furnished and to make all
amendments and supplements thereto and to the related prospectus
that, in the opinion of the Bank, are necessary or advisable,
all in conformity with the requirements of the Securities Act
and the rules and regulations of the Securities and Exchange
Commission applicable thereto;
(b) use its best efforts to qualify the Pledged
Collateral under the state securities or "blue sky" laws and to
obtain all necessary Governmental Action for the sale of the
Pledged Collateral, as requested by the Bank;
(c) cause HOGC to make available to its security
holders, as soon as practicable, an earnings statement that will
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satisfy the provisions of Section 11(a) of the Securities Act;
and
(d) do or cause to be done all such other acts and
things as may be necessary to make such sale of the Pledged
Collateral or any part thereof valid and binding and in
compliance with applicable law.
SECTION 13. Indemnity and Expenses.
(a) The Pledgor agrees to indemnify the Bank from and
against any and all claims, losses and liabilities growing out
of or resulting from this Agreement (including enforcement of
this Agreement), except claims, losses or liabilities resulting
from the Bank's gross negligence or willful misconduct.
(b) The Pledgor will upon demand pay to the Bank the
amount of any and all reasonable expenses, including the
reasonable fees and disbursements of its counsel and of any
experts and agents, that the Bank may incur in connection with
(i) the administration of this Agreement, (ii) the custody or
preservation of, or the sale of, collection from or other
realization upon, any of the Pledged Collateral, (iii) the
exercise or enforcement of any of the rights of the Bank
hereunder and (iv) the failure by the Pledgor to perform or
observe any of the provisions hereof.
SECTION 14. Amendments,.Waivers, Etc.
(a) No amendment or waiver of any provision of this
Agreement or consent to any departure by the Pledgor herefrom
shall in any event be effective unless the same shall be in
writing and signed by the Bank, and then such waiver or consent
shall be effective only in the specific instance and for the
specific purpose for which given.
(b) The waiver (whether expressed or implied) by the
Bank of any breach of the terms or conditions of this Agreement
shall not prejudice any remedy of the Bank in respect of any
continuing or other breach of the terms and conditions hereof
and shall not be construed as a bar to any right or remedy that
the Bank would otherwise have on any future occasion under this
Agreement.
(c) No failure to exercise or delay in exercising, on
the part of the Bank, any right, power or privilege under this
Agreement shall operate as a waiver thereof or the exercise of
any other right, power or privilege.
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SECTION 15. 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 to the Pledgor or the Bank,
as applicable, at the address therefor specified in the Credit
Agreement or at such other address as shall be designated by
such party in a written notice to the other party complying as
to delivery with the terms of this Section. 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.
SECTION 16. Continuing Security Interest; Transfer of
Rights and Obligations. This Agreement shall create a
continuing security interest in the Pledged Collateral and shall
(a) remain in full force and effect until payment in full of the
Obligations and expiration of the Commitment, (b) be binding
upon the Pledgor, its successors and assigns and (c) inure,
together with the rights and remedies of the Bank hereunder, to
the benefit of the Bank and its successors, transferees and
assigns. Without limiting the generality of the foregoing
clause (c), the Bank may assign or otherwise transfer all or any
portion of its rights and obligations under the Credit Documents
(including all or any portion of the Commitment and the
Advances) to any other Person, and such other Person shall
thereupon become vested with all the benefits in respect thereof
granted to the Bank herein or otherwise. Upon the payment in
full of the Obligations and expiration of the Commitment, the
Pledgor shall be entitled to the return, upon its request and at
its expense, of such of the Pledged Collateral as shall not have
been sold or otherwise applied pursuant to the terms hereof.
SECTION 17. Governing Law; Terms. This Agreement
shall be governed by and construed in accordance with the laws
of the State of California, except to the extent that the
validity or perfection of any security interest hereunder, or
any remedy hereunder, in respect of any particular Pledged
Collateral is governed by the laws of a jurisdiction other than
the State of California. Unless otherwise defined herein or in
the Credit Agreement, terms defined in Article 9 of the Code are
used herein as therein defined.
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IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be executed by their respective officers
hereunto duly authorized, as of the date first above written.
THE HONDO COMPANY
By:__________________________
Robert B. Anderson
Vice President
UNION BANK
By:__________________________
Michael E. Tregoning
Vice President
By:__________________________
Carl A. Stutzman
Vice President
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EXHIBIT C
SECOND AMENDED AND RESTATED GUARANTY OF
LONRHO PLC AND LONRHO, INC.
This Guaranty, dated as of July 24, 1990, is made
jointly and severally by LONRHO PLC, an English corporation, and
LONRHO, INC., a Delaware corporation (collectively, the
"Guarantors'), in favor of UNION BANK, a California banking
corporation (the "Bank").
Recital
The Bank has entered into a Second Amended and
Restated Revolving Credit Agreement dated as of July 24, 1990
(said Agreement, as it may hereafter be amended or otherwise
modified from time to time, being called the "Credit Agreement")
with The Hondo Company, a corporation organized and existing
under the laws of New Mexico (the "Borrower"). It is a
condition precedent to the effectiveness of the Credit Agreement
that Lonrho Plc, as owner of 100% of the outstanding capital
stock of Lonrho, Inc., and Lonrho ' Inc., as owner of 49% of the
outstanding capital stock of the Borrower, shall have executed
and delivered this Guaranty. Terms defined in the Credit
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 Credit Agreement
are incorporated herein by reference.
SECTION 1. Guaranty. The Guarantors, jointly and
severally, hereby unconditionally guarantee 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 Agreement, the Pledge Agreement and
the Note, whether for principal, interest, fees, expenses or
otherwise (the "Obligations"), and agree to pay any and all
expenses incurred by the Bank in enforcing any rights under this
Guaranty. The obligations and liabilities of the Guarantors
under this Guaranty are also joint and several with the
obligations and liabilities of Robert O. Anderson under the
Second Amended and Restated Guaranty of Robert O. Anderson dated
the date hereof.
SECTION 2. Guaranty Absolute. The Guarantors
guarantee that the Obligations will be paid strictly in
accordance with the terms of the Credit Agreement, the Pledge
Agreement and the Note, regardless of any law, regulation or
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order now or hereafter in effect in any jurisdiction affecting
any of such terms or the rights of the Bank with respect
thereto. The liability of the Guarantors under this Guaranty
shall be a solute 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 Agreement, the Pledge Agreement or the Note;
(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 Agreement or any other Credit
Document;
(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 Bank of any
right or privilege under this Guaranty or any of the other
Credit Documents;
(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
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(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
Bank upon the insolvency, bankruptcy or reorganization of the
Borrower or otherwise, all as though such payment had not been
made.
SECTION 3. Waivers. Each 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 Bank to proceed against
the Borrower or any other guarantor at any time, to proceed
against or exhaust any security held by the Bank 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 such Guarantor hereunder, the
liability of the Borrower or any other guarantor 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 Bank has exercised its rights and remedies under the
Credit Documents or any cessation from any cause whatsoever of
the liability of the Borrower or any other guarantor;
(e) any defense based upon an election of remedies by
the Bank, 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 such Guarantor or
any rights of such Guarantor to proceed against the Borrower or
any other guarantor for reimbursement, or both (including
California Code of Civil Procedure Sections 580a, 580b, 580d and
726);
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(f) any duty of the Bank to advise such Guarantor of
any information known to the Bank regarding the financial
condition of the Borrower or any other circumstance affecting
the Borrower's ability to perform its obligations to the Bank,
it being agreed that such Guarantor assumes 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 Bank 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 Bank; 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 California
Civil Code Sections 2809, 2810, 2819, 2839, 2845, 2848, 2849,
2850, 2899 and 3433.
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
Bank and shall forthwith be paid to the Bank 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 either 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
Bank, and franchise taxes imposed on it, by the jurisdiction
under the laws of which the Bank 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 either Guarantor shall
be required by law to deduct any Taxes from or in respect of any
sum payable hereunder to the Bank, (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 Bank receives an amount equal to
the sum it would have received had no such deductions been made,
(ii) such Guarantor shall make such deductions and (iii) such
Guarantor shall pay the full amount deducted to the relevant
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taxation authority or other authority in accordance with
applicable law.
(b) In addition, the Guarantors agree 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 otherwise with respect to, this Guaranty
(hereinafter referred to as "Other Taxes").
(c) The Guarantors will indemnify the Bank 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 Bank 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 Bank makes written demand
therefor.
(d) Within 30 days after the date of any payment of
Taxes, each affected Guarantor will furnish to the Bank, 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 hereunder to the Bank, such
Guarantor will furnish to the Bank a certificate from each
appropriate taxing authority or an opinion of counsel acceptable
to the Bank, 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 Guarantors hereunder, the agreements and
obligations of the Guarantors 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 Bank could purchase United States dollars
with such other currency on the Business Day preceding that on
which final judgment is given.
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(b) The obligations of the Guarantors in respect of
any sum due from them to the Bank 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 Bank of any sum adjudged
to be so due in such other currency, the Bank may in accordance
with normal banking procedures purchase United States dollars
with such other currency; if the United States dollars so
purchased are less than the sum originally due to the Bank in
United States dollars, the Guarantors agree, as a separate
obligation and notwithstanding any such judgment, to indemnify
the Bank against such loss, and, if the United States dollars so
purchased exceed the sum originally due to the Bank in United
States dollars, the Bank agrees to remit such excess to the
appropriate Guarantor.
SECTION 7. Consent to Jurisdiction; Waiver of
Immunities.
(a) The Guarantors hereby irrevocably submit to the
jurisdiction of any California or federal court sitting in Los
Angeles in any action or proceeding arising out of or relating
to this Guaranty, and the Guarantors hereby irrevocably agree
that all claims in respect of such action or proceeding may be
heard and determined in such California or federal court. The
Guarantors hereby irrevocably 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 Guarantors
hereby irrevocably appoint C T Corporation System (the "Process
Agent"), with an office on the date hereof at 818 West Seventh
Street, Los Angeles, California, U.S.A., 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 Guarantors in care of the Process Agent at the
Process Agent's address above, and the Guarantors hereby
irrevocably authorize and direct the Process Agent to accept
such service on their behalf. As an alternative method of
service, the Guarantors also irrevocably consent to the service
of any and all process in any such action or proceeding by the
mailing of copies of such process to the Guarantors at their
respective addresses specified in Section 12. The Guarantors
agree 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 manner provided by law.
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(b) Nothing in this Section shall affect the right of
the Bank to serve legal process in any other manner permitted by
law or affect the right of the Bank to bring any action or
proceeding against the Guarantors or their property in the
courts of any other jurisdictions.
(c) To the extent that either 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 such
Guarantor or its property, such Guarantor hereby irrevocably
waives such immunity in respect of its obligations under this
Guaranty.
SECTION 8. Representations and Warranties. Each
Guarantor hereby represents and warrants as follows:
(a) Organization. Such 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 such Guarantor's
corporate powers, have been duly authorized by all necessary
corporate action, and do not contravene (i) such Guarantor's
charter documents or bylaws or (ii) any applicable Governmental
Rule or any contractual restriction binding on or affecting such
Guarantor.
(c) Governmental Action. No Governmental Action is
required for the due execution, delivery or performance by such
Guarantor of this Guaranty.
(d) Binding Effect. This Guaranty is the legal,
valid and binding obligation of such Guarantor enforceable
against such Guarantor in accordance with the terms hereof.
(e) Financial Information.
(i) The audited balance sheet of Lonrho Plc and
its subsidiaries as of September 30, 1989 and the related
audited statements of income and retained earnings of Lonrho Plc
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and its subsidiaries for the fiscal year then ended, copies of
which have been furnished to the Bank, fairly present the
financial condition of Lonrho Plc and its subsidiaries as of
such date and the results of the operations of Lonrho Plc and
its subsidiaries for the year ended on such date, all in
accordance with U.K. accounting practice, and since September
30, 1989 there has been no material adverse change in such
condition or operations.
(ii) The balance sheet of Lonrho, Inc. and its
subsidiaries as of September 30, 1989 and the related statements
of income and retained earnings of Lonrho, Inc. and its
subsidiaries for the fiscal year then ended, copies of which
have been furnished to the Bank, fairly present the financial
condition of Lonrho, Inc. and its subsidiaries for the year
ended on such date, all in accordance with generally accepted
accounting principles consistently applied.
(f) Litigation. There is no pending or (to the
knowledge of such Guarantor) threatened action or proceeding
affecting such Guarantor or any of its subsidiaries before any
Governmental Person that may materially and adversely affect the
financial condition or operations of such Guarantor or any
subsidiary thereof or the ability of such Guarantor to perform
its obligations under this Guaranty, except as disclosed to the
Bank in the financial statements referred to in Section 8(e).
(g) Ownership of Lonrho, Inc. and Borrower. Lonrho
Plc owns 100% of the outstanding capital stock of Lonrho, Inc.,
and Lonrho, Inc. owns 49% of the outstanding capital stock of
the Borrower.
SECTION 9. Affirmative Covenants. Each Guarantor
covenants and agrees that, so long as any part of the
obligations shall remain unpaid or the Bank shall have any
Commitment, such Guarantor will, unless the Bank shall otherwise
consent in writing, comply with the following covenants:
(a) Compliance with Laws, Etc. Such 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. Such Guarantor will
preserve and maintain its corporate existence and all of its
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rights, privileges and franchises necessary and desirable in the
normal conduct of its business in a regular manner.
(c) Reporting Requirements. Such Guarantor will
furnish to the Bank (i) in the case of Lonrho Plc and when
circulated to shareholders of Lonrho Plc, a copy of the annual
accounts of Lonrho Plc and its subsidiaries containing financial
statements for each fiscal year, certified by its auditors in
accordance with U.K. accounting practice, (ii) in the case of
Lonrho, Inc. and as soon as available, but in any event within
150 days after the end of each fiscal year of Lonrho, Inc., a
copy of the annual report for such year of Lonrho, Inc. and its
subsidiaries containing financial statements for such year
certified in a manner acceptable to the Bank by Peat Marwick
Main & Co. or other independent public accountants acceptable to
the Bank and (iii) such other information respecting the
condition of operations, financial or otherwise, of such
Guarantor or any of its subsidiaries as the Bank may from time
to time reasonably request.
(d) Notice of Proceedings. Such Guarantor will
promptly give notice in writing to the Bank 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. Negative Covenant. Lonrho Plc covenants
and agrees that, so long as any part of the Obligations shall
remain unpaid or the Bank shall have any Commitment, it will not
permit its direct or indirect ownership of the Borrower's
outstanding capital stock to fall below 49%.
SECTION 11. 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 Bank, and then
such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
SECTION 12. 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 Lonrho Plc, to it at
Cheapside House, 138 Cheapside, London EC2V 6BL, England,
telecopier 011-44-1-606-2285, Attention: Mr. Robin Whitten; if
to Lonrho, Inc., to it at 805 Third Avenue, New York, New York
10022, telecopier (212) 759-4285, Attention: Mr. John F. Price;
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if to the Bank, to it at the address or telecopier number of the
Bank specified in the Credit Agreement; 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.
SECTION 13. No Waiver; Remedies. No failure on the
part of the Bank 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 14. Right of Setoff. Upon the occurrence and
during the continuance of any Event of Default, the Bank is
hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set off and apply any and
all deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing
by the Bank to or for the credit or the accounts of either
Guarantor against any and all of the obligations of such
Guarantor now or hereafter existing under this Guaranty,
irrespective of whether or not the Bank shall have made any
demand under this Guaranty and although such obligations may be
con tingent and unmatured. The Bank agrees to notify the
affected Guarantor promptly after any such setoff and
application; provided, however, that the failure to give such
notice shall not affect the validity of such setoff and
application. The rights of the Bank under this Section are in
addition to other rights and remedies (including other rights of
setoff) that the Bank may have.
SECTION 15. 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 Guarantors and their
respective successors and assigns and (c) inure to the benefit
of and be enforceable by the Bank and its successors,
transferees and assigns. Without limiting the generality of the
foregoing clause (c), the Bank 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 Bank herein or
otherwise.
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SECTION 16. Governing Law. This Guaranty shall be
governed by, and construed in accordance with, the laws of the
State of California, U.S.A.
LONRHO PLC
By:__________________________
Name:________________________
Title:_______________________
By:__________________________
Name:________________________
Title:_______________________
LONRHO, INC.
By:__________________________
Name:________________________
Title:_______________________
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EXHIBIT D
SECOND AMENDED AND RESTATED GUARANTY OF ROBERT 0. ANDERSON
This Guaranty, dated as of July 24, 1990, is made by
ROBERT 0. ANDERSON, an individual (the "Guarantor"), in favor of
UNION BANK, a California banking corporation (the "Bank").
Recital
The Bank has entered into a Second Amended and
Restated Revolving Credit Agreement dated as of July 24, 1990
(said Agreement, as it may hereafter be amended or otherwise
modified from time to time, being called the 'Credit Agree
ment") with The Hondo Company, a corporation organized and
existing under the laws of New Mexico (the "Borrower"). It is a
condition precedent to the effectiveness of the Credit Agreement
that the Guarantor, as owner of 40% of the outstanding capital
stock of the Borrower, shall have executed and delivered this
Guaranty. Terms defined in the Credit 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 Credit 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 Agreement, the Pledge Agreement and the Note, whether for
principal, interest, fees, expenses or otherwise (the
"Obligations"), and agrees to pay any and all expenses incurred
by the Bank in enforcing any rights under this Guaranty. The
obligations and liabilities of the Guarantor under this Guaranty
are joint and several with the obligations and liabilities of
Lonrho Plc and Lonrho, Inc. under the Second Amended and
Restated Guaranty of Lonrho Plc and Lonrho, Inc. dated the date
hereof.
SECTION 2. Guaranty Absolute. The Guarantor
guarantees that the Obligations will be paid strictly in
accordance with the terms of the Credit Agreement, the Pledge
Agreement and the Note, 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 Bank with respect
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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 Agreement, the Pledge Agreement or the Note;
(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 Agreement or any other Credit
Document;
(c) any subordination, compromise, exchange, release,
non-perfection 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 non-exercise by the Bank of any
right or privilege under this Guaranty or any of the other
Credit Documents;
(f) any bankruptcy, insolvency, reorganization,
composition, adjustment, dissolution, liquidation or other like
proceeding relating to the 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 Guarantor 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.
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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
Bank upon the insolvency, bankruptcy or reorganization of the
Borrower or otherwise, all as though such payment had not been
made.
SECTION 3. Waivers. The 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 Bank to proceed against
the Borrower or any other guarantor at any time, to proceed
against or exhaust any security held by the Bank 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 the Guarantor hereunder, the
liability of the Borrower or any other guarantor 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 Bank has exercised its rights and remedies under the
Credit Documents or any cessation from any cause whatsoever of
the liability of the Borrower or any other guarantor;
(e) any defense based upon an election of remedies by
the Bank, 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 the Guarantor or any
rights of the Guarantor to proceed against the Borrower or any
other guarantor for reimbursement, or both (including California
Code of Civil Procedure Sections 580a, 580b, 580d and 726);
(f) any duty of the Bank to advise the Guarantor of
any information known to the Bank regarding the financial
condition of the Borrower or any other circumstance affecting
the Borrower's ability to perform its obligations to the Bank,
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<PAGE>
it being agreed that the Guarantor assumes 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 Bank 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 Bank; and
(h) without limiting the generality of the foregoing
or any other provision hereof, any rights and benefits that
might otherwise by available to the Guarantor under California
Civil Code Sections 2809, 2810, 2819, 2839, 2845, 2848, 2849,
2850, 2899 and 3433.
SECTION 4. Payments in Trust. If any amount shall be
paid to the Guarantor contrary to the provisions of Section
3(g), such amount shall be held in trust for the benefit of the
Bank and shall forthwith be paid to the Bank to be credited and
applied to the Obligations, whether matured or unmatured, in
accordance with the terms of the Credit Agreement.
SECTION 5. Representations and Warranties. The
Guarantor hereby represents and warrants as follows:
(a) Capacity. The Guarantor has the legal capacity
to execute, deliver and perform this Guaranty.
(b) No Conflict. The execution, delivery and
performance by the Guarantor of this Guaranty do not contravene
any applicable Governmental Rule or any contractual restriction
binding on or affecting the Guarantor and do not result in or
require the creation of any lien, security interest or other
charge or encumbrance upon or with respect to any of the
Guarantor's properties.
(c) Binding Effect. This Guaranty is the legal,
valid and binding obligation of the Guarantor enforceable
against the Guarantor in accordance with its terms.
(d) Litigation. There is no pending or (to the
knowledge of the Guarantor) threatened action or proceeding
affecting the Guarantor before any Governmental Person that may
materially and adversely affect the financial condition of the
Guarantor or the ability of the Guarantor to perform his
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obligations under this Guaranty, except as disclosed to the Bank
in the financial statements referred to in Section 5(e).
(e) Financial Statements. The financial statements
of the Guarantor for the fiscal year ended October 31, 1989,
copies of which have been furnished to the Bank, fairly present
the financial condition of the Guarantor as of such date, and
since October 31, 1989 there has been no material adverse change
in such condition.
(f) Governmental Action. No Governmental Action is
required for the due execution, delivery or performance by the
Guarantor of this Guaranty.
(g) Ownership of Borrower. The Guarantor owns 40% of
the Borrower's outstanding capital stock.
SECTION 6. Covenants. The Guarantor covenants and
agrees that, so long as any part of the Obligations shall remain
unpaid or the Bank shall have any Commitment, the Guarantor
will, unless the Bank shall otherwise consent in writing, comply
with the following covenants:
(a) Compliance with Laws, Etc. The Guarantor will
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 him or upon his property, except to the extent
contested in good faith and by appropriate proceedings.
(b) Reporting Requirements. The Guarantor will
furnish to the Bank (i) as soon as available and in any event
within 120 days after the end of each fiscal year ending October
31, a copy of the financial statements of the Guarantor and his
spouse for such year and (ii) such other information respecting
the financial condition of the Guarantor as the Bank may from
time to time reasonably request.
(c) Notice of Proceedings. The Guarantor will
promptly give notice in writing to the Bank of all litigation,
arbitration proceedings and regulatory proceedings affecting the
Guarantor or the properties of the Guarantor, except litigation
or proceedings that, if adversely determined, could not
materially and adversely affect the financial condition of the
Guarantor.
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<PAGE>
(d) Ownership of Borrower. The Guarantor will not
reduce, or permit to be reduced, his 40% ownership of the
outstanding capital stock of the Borrower.
SECTION 7. 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 Bank, and then
such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
SECTION 8. 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 the Guarantor, to him
at 410 East College Boulevard (P.O. Box 1000), Roswell, New
Mexico 88201, telecopier (505) 625-8701; if to the Bank, to it
at the address or telecopier number of the Bank specified in the
Credit Agreement; or, as to each party, to him or it at such
other address as shall be designated by such party in a written
notice to the other party. 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.
SECTION 9. No Waiver; Remedies. No failure on the
part of the Bank 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 10. Right of Setoff. Upon the occurrence and
during the continuance of any Event of Default, the Bank is
hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set off and apply any and
all deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing
by the Bank to or for the credit or the account of the Guarantor
against any and all of the obligations of the Guarantor now or
hereafter existing under this Guaranty, irrespective of whether
or not the Bank shall have made any demand under this Guaranty
and although such obligations may be contingent and unmatured.
The Bank agrees to notify the Guarantor promptly after any such
setoff and application; provided, however, that the failure to
give such notice shall not affect the validity of such setoff
and application. The rights of the Bank under this Section are
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<PAGE>
in addition to other rights and remedies (including other rights
of setoff) that the Bank may have.
SECTION 11. 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 his
successors and assigns and (c) inure to the benefit of and be
enforceable by the Bank and its successors, transferees and
assigns. Without limiting the generality of the foregoing
clause (c), the Bank 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 Bank herein or
otherwise.
SECTION 12. Governing Law. This Guaranty shall be
governed by, and construed in accordance with, the laws of the
State of California.
D-7
EXHIBIT 5
SHAREHOLDERS' AGREEMENT
This Agreement is entered into this 17th day of
October, 1986 by and among Robert O. Anderson (a "Shareholder"),
Robert B. Anderson (a "Shareholder"), W. Phelps Anderson (a
"Shareholder") and Lonrho, Inc., a Delaware corporation
("Lonrho" or a "Shareholder") and The Diamond A Cattle Company,
a New Mexico corporation ("Diamond A").
RECITALS
A. Robert O. Anderson is the owner of 3,307 shares
of common stock of Diamond A. Robert B. Anderson and W. Phelps
Anderson are each the owners of 414 shares of common stock of
Diamond A.
B. Lonrho has purchased 4135 shares of Diamond A
pursuant to the terms of the Purchase Agreement dated
October 17th, 1986 ("Purchase Agreement") by and among Diamond A
and Lonrho.
C. The Shareholders desire to enter into this
Agreement to establish restrictions and rights with respect to
their shares of capital stock of Diamond A and to establish each
Shareholder's rights with respect to election of directors of
Diamond A.
<PAGE>
NOW, THEREFORE, in consideration of the covenants and
agreements of the parties set forth below, the Shareholders and
Diamond A agree as follows:
1. Applicability. This Agreement shall be applicable
to all shares of capital stock of Diamond A now owned or
hereafter acquired by the Shareholders (the "Diamond A Shares").
This Agreement shall supersede all prior agreements among
Shareholders relating to their Diamond A Shares.
2. Restrictions on Transfer. Except as expressly
provided in this Agreement, no Shareholder may sell or otherwise
transfer, pledge, hypothecate or encumber any of his Diamond A
Shares or contract to sell or otherwise transfer, pledge,
hypothecate or encumber his Diamond A Shares without the prior
written consent of the other Shareholders.
3. Permitted Transfers. Each Shareholder may sell
or otherwise transfer his Diamond A Shares to any entity
controlled by the transferring Shareholder or any entity under
common control by or with the transferring Shareholder. An
individual Shareholder may sell or otherwise transfer his
Diamond A shares to any member of his immediate family. Upon
the death of an individual Shareholder, the deceased
Shareholder's Diamond A Shares may be transferred as provided by
his will or, in the absence of a will, by the laws of descent
and distribution. Any transfer by a Shareholder of Diamond A
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<PAGE>
Shares permitted under this paragraph shall be subject to the
condition that the transferee shall agree to be fully bound by
all the terms and conditions of this Agreement.
4. Right of First Refusal. Any Shareholder (the
"Transferor") may transfer all, but not some only, of its shares
in the Company to a person (the "Outside Transferee") which is
not associated with the Transferor Provided Always that -
(a) within the period of sixty (60) days
immediately preceding the transfer to the Outside
Transferee, the Transferor shall have made an
unconditional offer in writing to the other
Shareholder(s) to sell all such shares to the other
Shareholder(s) for a price in U.S. dollars and on the
terms therein stated, such offer to be open for
acceptance for at least thirty (30) days from the date
of being communicated to the other Shareholder(s);
(b) if there shall be more than one other
Shareholder the said offer Shall be such that
(i) it shall be capable of acceptance by
all of them jointly, or
(ii) (failing a joint acceptance) they may
accept the same in respect of parts of the
Transferors' shares pro rata (as nearly as may
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<PAGE>
be) to their holdings (the Directors resolving
any question of apportionment between them)
(iii) if one or more of the other
Shareholders shall fail to accept the same, the
remaining Shareholder(s) may accept the same pro
rata to their holding(s)
(iv) in the event of its not being accepted
(whether in accordance with (i), (ii) or (iii)
above) in respect of all the Transferor's shares
it shall lapse.
(c) such offer shall not have been duly accepted
by the other Shareholder(s)
(d) the transfer to the Outside Transferee shall
be a transfer by way of sale at a price payable not
lower than the price at which and under terms not more
favorable than the price at which and the terms on
which the shares were last previously offered to the
other Shareholder(s)
(e) the Outside Transferee shall have executed
(and the Transferor shall have caused to be delivered
to the other Shareholder(s)) a deed or other
instrument effectively obligating and binding the
Outside Transferee to observe and perform the
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<PAGE>
provisions or the Shareholder's Agreement and of the
Bylaws
(f) any Shareholder may transfer any of his
shares in the Company with the sanction of all of the
Shareholders
(g) the Directors shall register any transfer
which complies with the above. They shall not
register any other transfer. The Director may require
evidence of such compliance before affecting
registration
(h) notwithstanding compliance with all of the
foregoing transfer provisions, Robert O. Anderson,
Robert B. Anderson and W. Phelps Anderson may not
transfer any shares or any interest in any shares to
any person or entity if that transfer could result in
the loss of any gaming licences held by any affiliate
of Lonrho and evidence thereof is furnished to
Robert O. Anderson, Robert B. Anderson or W. Phelps
Anderson as soon as reasonably possible, but no later
than the expiration of the sixty (60) day period in
(a) above.
-5-
<PAGE>
5. Election of Directors.
(a) The bylaws of Diamond A provide for the
election of three but not more than ten directors.
The Shareholders agree that Robert O. Anderson,
Robert B. Anderson and W. Phelps Anderson shall
collectively be entitled to name five directors, and
that Lonrho shall be entitled to name five directors.
Each Shareholder agrees to vote for the directors
designated by the other Shareholders and agrees that
the directors designated by a Shareholder cannot be
removed without the consent of such Shareholder. Each
Shareholder agrees to vote for the removal of a
director designated by a Shareholder upon the request
of the Shareholder who designated the director.
(b) Each Director may at any time appoint an
individual as his alternate to attend meetings of the
Directors in his absence and to vote thereat in his
stead and may at any time remove such alternate from
office. Every such appointment or removal shall be by
instrument in writing under the hand of the appointor
left at the registered office. Upon his appointor
vacating office or dying or being removed from office,
the appointment of an alternate shall ipso facto
terminate. Subject to the limitations stated in the
-6-
<PAGE>
foregoing sentence a person may act in the capacity as
alternate for more than one Director and both in his
own right and as an alternate for another Director or
Directors.
(c) At least one director representing Lonrho
and at least one director representing all of the
other shareholders shall be required for a quorum for
the transaction of business at all meetings of the
board of directors. The act of a majority of the
directors present or represented at any meeting at
which a quorum is present or represented shall be the
act of the board of directors, except as otherwise
specifically required by law and except with respect
to the following matters which shall require the
affirmative approval of all of the directors present
or represented:
(i) any alteration of, or amendment,
addition or modification to, or any variation in
-
(a) the Articles of Incorporation
(b) the Bylaws or
(c) the name of the corporation
(ii) any reduction or increase in the share
capital of the corporation;
-7-
<PAGE>
(iii) any alteration in the classification of
the shares of the corporation or the rights
pertaining to such shares;
(iv) any sale, lease, transfer, mortgage,
pledge or other disposition of all or a
substantial part of the business or assets of the
corporation;
(v) the merger, consolidation or
amalgamation of the corporation with or into any
other legal entity into the corporation;
(vi) any loans by or to the corporation or
any affiliate of the corporation in excess of
$1,000,000;
(vii) the acquisition of any business,
properties or assets for a consideration in
excess of $1,000,000 by the corporation or any
affiliate of the corporation;
(viii) the entering into of any contract or
arrangement between the corporation and any
shareholder of the corporation or affiliate of
any shareholder;
(ix) the declaration of any dividend or
other distribution with respect to the shares of
the corporation;
-8-
<PAGE>
(x) any contracts over $1,000,000; and
(xi) the repayment of any shareholder loans.
After the closing the party shall take such steps as may be
necessary to amend the Certificate of Incorporation and the
Bylaws to implement the foregoing.
6. Remedies for Breach. In the event of any claim
being successfully made by Lonrho for the breach of the
representations and warranties set forth in section 3 of the
Purchase Agreement, in that event Anderson, at the option of
Lonrho, shall either:
(a) Pay Diamond A the full amount of the breach,
or
(b) Pay Lonrho half of the full amount of the
breach, and any costs or expenses incurred in
connection therewith, including legal fees.
7. Legend. Each certificate representing Diamond A
Shares shall have the following legend:
THE SHARES OF STOCK REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO ALL THE TERMS OF
AN AGREEMENT DATED AS OF OCTOBER 17th, 1986
BETWEEN THE COMPANY AND ALL OF ITS
SHAREHOLDERS, A COPY OF WHICH IS ON FILE AT
THE OFFICE OF THE COMPANY. SUCH AGREEMENT,
AMONG OTHER THINGS, RESTRICTS THE SALE,
PLEDGE, HYPOTHECATION OR OTHER ENCUMBRANCE OF
THE SHARES REPRESENTED HEREBY.
8. Notices. All notices under the provisions of this
agreement shall be in writing and shall be deemed given when
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<PAGE>
personally delivered or two days after the same are mailed by
certified mail, return receipt requested and with postage
prepaid to the parties at the following addresses:
The Diamond A Cattle Company
P.O. Box 1000
Roswell, New Mexico 88201
Robert O. Anderson
P.O. Box 1000
Roswell, New Mexico 88201
Robert B. Anderson
6404 Zapateco, Northwest
Albuquerque, New Mexico 87107
W. Phelps Anderson
612 North Kentucky
Roswell, New Mexico 88201
Lonrho, Inc.
805 Third Avenue
New York, New York 10022
Any party may change the address specified above by written
notice to the other parties in the manner set forth above.
9. Governing Law. This agreement and the
performance hereof shall be governed by the laws of the State of
New Mexico.
10. Binding Effect. Except as provided herein, this
agreement shall extend to and be binding upon the successors,
assigns, heirs and legal representatives of the parties hereto.
11. Enforceability. The rights and obligations of the
parties under this agreement, including the rights under
paragraph 3 shall be specifically enforceable.
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<PAGE>
12. Counterparts. This Agreement may be executed in
any number of counterparts, each of which shall be an original,
but all such counterparts shall constitute one and the same
instrument.
13. Entire of Agreement. This Shareholders'
Agreement represents a complete understanding between the
parties with regard to this matter and may not be changed
orally.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed
this agreement.
THE DIAMOND A CATTLE COMPANY
By: /s/ Phelps Anderson__________
PHELPS ANDERSON, President
/s/ Robert O. Anderson____________
ROBERT O. ANDERSON
/s/ Robert B. Anderson____________
ROBERT B. ANDERSON
/s/ W. Phelps Anderson____________
W. PHELPS ANDERSON
LONRHO, INC.
By: /s/ R.W. Rowland_____________
R.W. ROWLAND, Director
-12-
EXHIBIT 6
ANDERSON/SCOTTSDALE OPTION AGREEMENT
This Option Agreement entered into as of this 6th day
of July, 1993 (the "Agreement"), by and between MR. ROBERT O.
ANDERSON having an address at 410 East College Boulevard,
Roswell, New Mexico 88201 ("Anderson") and SCOTTSDALE PRINCESS,
INC. having an address at 7575 East Princess Drive, Scottsdale,
Arizona 85255 ("Scottsdale").
WHEREAS, Anderson owns 3,309 shares of The Hondo
Company ("Hondo"), being approximate 40% of the currently issued
and outstanding shares of Hondo;
WHEREAS, Anderson has agreed to grant Scottsdale an
option to acquire 2,069 shares of his shares of Hondo.
NOW, THEREFORE, in consideration of the terms and
conditions hereafter set forth, the parties hereto agree an
follows:
1. BASIC UNDERSTANDING. Anderson represents and
warrants that he has good and valid ownership of 3,309 shares of
Hondo. In consideration of the payment by Scottsdale to
Anderson of the sum of One and 00/100 Dollar ($1.00), Anderson
hereby grants to Scottsdale an option (the "Option") to acquire
up to 2,069 shares of Hondo now owned by Anderson (the "Option
Shares").
<PAGE>
A. Number of Hondo Shares Outstanding After
Scottsdale Exercise. If Scottsdale elects to acquire all of the
Option Shares, as of the date of said exercise the issued and
outstanding shares of Hondo would be owned as follows:
Shareholder Shares Percentages
Scottsdale
Princess, Inc. 2,069 shares 25.0
Lonrho, Inc. 4,135 shares 50.0
Robert O. Anderson 1,240 shares 15.0
Robert B. Anderson 414 shares 5.0
W. Phelps Anderson __414 shares 5.0
Total 8,272 shares 100.0
B. Time of Essence. The Option may be
exercised by Scottsdale in its sole discretion at any time or
times on or before July 5, 1996 and is not subject to defeasance
by Anderson for any reason whatsoever.
C. Multiple Exercise Possible. The Option may
be exercised by Scottsdale in its sole discretion either on a
one time basis for all of the option Shares or from time to time
for a portion of the Option Shares to the maximum of 2,069
shares.
D. No Liability for Failure to Exercise.
Should Scottsdale not exercise this option for any reason
-2-
<PAGE>
whatsoever, Scottsdale shall have no liability whatever to Hondo
as a result thereof.
E. Method of Exercise. The method for exercise
of the Option shall be by written notice from Scottsdale to
Hondo specifying the amount of the option Shares which
Scottsdale wishes to acquire up to the maximum permitted in 1.A.
above. Notice shall be effective if sent by Scottsdale via fax
with a confirmation copy sent by mail to the address first above
written.
F. Compliance with Shareholder Agreement. If
Scottsdale exercises the option, the parties agree for
themselves and for the benefit of their heirs, successors and
assigns that the transfer of the option shares when made shall
have been made in full compliance with the transfer provisions
of the Shareholder Agreement between Anderson and the other
parties thereto dated October 17, 1986 (the "Shareholders
Agreement"). Further, to the extent that approval is required
by the shareholders of Hondo for either the grant of this option
to be effective or for a closing to be held hereunder, Anderson
agrees to cause Robert B. Anderson and W. Phelps Anderson to
consent thereto.
G. Right of Assignment. Scottsdale may
transfer some or all of its rights and obligations hereunder to
any affiliate it may designate, but to none other.
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<PAGE>
H. No Other-Agreements. Pending the exercise
of the option, Anderson shall not enter into any agreement
containing any terms and conditions in contravention of this
Agreement or dealing in any way with the Option Shares without
the prior written consent of Scottsdale. Further, Anderson
shall take such steps as Scottsdale may reasonably request to
reflect the terms of this Agreement of record or otherwise
apprise third parties of its existence.
2. CLOSING.
A. The total consideration payable at Closing
for the exercise of the option shall be the following:
(i) One and 00/100 Dollar ($1.00) per Option
Share payable by Scottsdale to Anderson,
(ii) Scottsdale shall cause the release of all
guarantees given by Anderson through the
date hereof with respect to Hondo
indebtedness in favor of Lonrho Plc or
Lonrho, Inc., and
(iii) Scottsdale and/or its affiliates Lonrho Plc
and Lonrho, Inc. shall request that Union
Bank release Anderson from its guaranties.
B. After exercise of the Option, a Closing
shall be held to effectuate the transfer of the Option Shares at
such time and place as Scottsdale shall determine.
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<PAGE>
3. CONDITION PRECEDENT. Scottsdale acknowledges it
has been advised by Anderson of commitments and pledges made
prior to the date hereof with respect to the shares owned by
Anderson in Hondo having been made by Anderson to Citibank, N.A.
and Bank of America, N.A. (hereafter "Citibank/Bank of
America"). It is specifically provided that the commitments
previously made by Anderson to the extent inconsistent with this
Agreement, in favor of Citibank/Bank of America take priority
over the rights conveyed by Anderson to Scottsdale pursuant to
this Agreement.
4. CONSENTS. Notwithstanding anything to the
contrary in this Agreement, there shall be no Closing until such
time as any necessary government filings have been made and, in
the case of Hart-Scott-Rodino the thirty (30) day waiting period
has expired without any requests for further information
("consents").
Both parties agree to cooperate in all respects to
obtain such approvals and to promptly file all such
documentation and respond to any further requests as may be
required to obtain such consents. Hondo shall pay the filing
fees and all legal expenses incurred in connection with
obtaining the consents for this transaction.
5. SHAREHOLDERS AGREEMENT. Upon Closing, Anderson
will himself vote and shall cause Robert B. Anderson and W.
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<PAGE>
Phelps Anderson to vote in favor of such changes as are
necessary to the Shareholders Agreement and to the Articles of
Incorporation and the By-Laws of Hondo so that thereafter all
Directors of Hondo shall be elected by majority vote and that
all actions taken by the Board of Directors of Hondo shall be by
majority action of said Board of Directors.
6. MISCELLANEOUS.
A. Notices. Any notice, request or other
communication between Anderson and Scottsdale required, provided
for, or permitted hereunder shall be in writing and shall be
delivered personally or shall be sent by facsimile, telex, cable
or overnight courier (e.g., Federal Express, DHL or similar
service) as set forth below, or to such other address as either
party may hereafter designate by notice to the other party.
Communications under this Agreement dealing with its amendment
or termination, default or service of process must be confirmed
by certified/registered mail (with receipt requested) sent as
follows:
(i) If to Anderson:
410 East College Boulevard
Roswell, New Mexico 88201
Attn: S. R. Cavin, Esq.
Fax: (505) 625-6829
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<PAGE>
(ii) If to Scottsdale:
Scottsdale Princess, Inc.
7575 East Princess Drive
Scottsdale, Arizona 85255
Attn: R. H. Funke, Esq.
General counsel
Fax: (212) 838-8141
B. No Modification. Neither this Agreement,
nor any of the terms hereof, may be terminated, amended, waived
or modified except by a writing signed by Scottsdale and
Anderson.
C. No Broker. No broker has been engaged nor
is anyone entitled to a finders fee with respect to this
transaction.
D. Entirety of Agreement. This Agreement,
including any and all Attachments thereto, constitutes the
entire agreement between the parties hereto in respect of the
matters covered hereby and supersedes, any and all prior
agreements, understandings and communications either oral or
written, between the parties hereto in respect thereof.
E. No Waiver. The failure of any party at any
time to require the performance by the other of any of the terms
or provisions herein shall in no way affect the right of that
party thereafter to enforce the same; nor shall the waiver by
any party of any breach of any of the terms or provisions herein
be taken or held to be a waiver of any preceding breach of any
-7-
<PAGE>
such term or provisions, or as a waiver of the term or provision
itself.
F. Successors and Assigns. This Agreement
shall be binding upon, and shall inure to the benefit of the
parties hereto and their respective successors and permitted
assigns. It is further agreed that Scottsdale may assign all of
its rights and obligations hereunder to any affiliate, but none
other.
G. Independent Contractor. This Agreement
shall not be construed to create between the parties hereto
relationship of employer and employee, master and servant,
principal and agent, joint venturers, co-partners, or any
similar relationship, the existence of any of which is hereby
expressly denied by Scottsdale and Anderson.
H. Headings. The headings of this Agreement
are inserted for convenience only and are not intended to affect
the meaning of any of the provisions hereof.
I. Counterparts. This Agreement may be
executed in several counterparts, each of which shall be an
original, but all of which shall constitute but one and the same
instrument. This Agreement may be delivered by fax with hard
copies to follow.
J. Authority. The authority of the person
executing this Agreement to bind the party to this Agreement on
-8-
<PAGE>
behalf of the entity on whose behalf the Agreement is executed
shall be evidenced by his signature.
K. Governing Law. This Agreement shall be
construed, interpreted and all disputes determined in accordance
with, and shall be governed by, the laws of the State of New
Mexico.
L. Construction. All parties participated in
the drafting of this Agreement so that the usual rule that all
drafts are to be construed adversely to the party drafting same
shall not apply.
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first above written.
ROBERT O. ANDERSON
By: /s/ Robert O. Anderson___
SCOTTSDALE PRINCESS, INC.
By: /s/ John F. Price________
John F. Price
President
-9-
EXHIBIT 7
NET PROFITS SHARE AGREEMENT
This Agreement is made as of the 18th day of December
1992, by and among Hondo Oil & Gas Company, a Delaware
corporation ("Hondo"), Lonrho Plc, an English corporation
("Lonrho"), and Thamesedge, Ltd., an English corporation
("Thamesedge").
Definitions
The following terms shall have the meanings given
below in this Agreement.
(a) "Association Contract" means the Opon
Association Contract dated July 15,
1987, between Empresa Colombiana de
Petroleos ("Ecopetrol") and Opon
Development Company.
(b) "Deferral Agreements" means those two
certain agreements between Hondo and
Lonrho, and between Hondo and
Thamesedge, of even date herewith, which
defer interest payments and certain
principal repayments due under the
Thamesedge Loan and the Lonrho Loan.
(c) "Lonrho Loan" means the Letter Agreement
dated December 20, 1991, by and between
Hondo and Lonrho for three notes in the
aggregate principal amount of $32
million dated September 1, 1991 ($10
million), November 1, 1991 ($9 million),
and December 20, 1991 ($13 million), as
amended.
(d) "Net Profits" means that amount of
Hondo's net income attributable to Hondo
Magdalena Oil & Gas Limited ("Hondo
Magdalena"), reported each year in
accordance with generally accepted
accounting principles in use in the U.S.
and international petroleum industry,
<PAGE>
applied consistently, to the extent
remitted to Hondo by Hondo Magdalena in
the United States, after deduction of
all expenses incurred by Hondo or Hondo
Magdalena in each respective year, which
are directly related to the operations
of Hondo Magdalena in Colombia
including, but not limited to: (i) Hondo
Magdalena's share of royalty and other
financial obligations due to the
government of Colombia; (ii) Hondo
Magdalena's share of operating expenses
under operating agreements and the
Association Contract; (iii) overhead and
general and administrative expenses
attributable to operating agreements and
the Association Contract; (iv)
remittance and income taxes; and (v)
depreciation, depletion and amortization
expenses.
(e) "Thamesedge Loan" means the Note
Purchase Agreement and Letter Agreement,
each date November 28, 1988, by and
between Hondo, formerly Pauley Petroleum
Inc., and Thamesedge for a $75 million
13-1/2% Senior Subordinated Note due
1998, as amended.
Recitals
Lonrho and Thamesedge have each agreed to enter into
the Deferral Agreements relating to the Lonrho Loan and
Thamesedge Loan. Hondo Magdalena is a wholly owned subsidiary
of Hondo and is an associate party under the Association
Contract. As consideration for the Deferral Agreements, Hondo
has agreed to assign to Lonrho and Thamesedge an interest in the
profits from the Association Contract.
Hondo Magdalena now owns a 49.99% interest in the
Association Contract and, has the right to increase its share to
80%. Upon Ecopetrol's approval of commerciality under the
Association Contract, Hondo Magdalena's share would be reduced
to one-half of its then interest in the Association Contract.
After approval of commerciality, the Association Contract
continues for a maximum term of 22 years.
-2-
<PAGE>
Agreement
The parties agree as follows:
1. Assignment of Share of Net Profits.
Hondo hereby assigns to Lonrho and
Thamesedge, jointly, as their interests
may appear, five per cent (5%) of Net
Profits until final payment of the
indebtedness under the Lonrho Loan, the
Thamesedge Loan and the New Loans under
the Deferral Agreements, respectively at
which time the respective share of Net
Profits will be decreased by one-half.
Hondo will pay the amounts due to Lonrho
and Thamesedge annually on or before
December 31, for prior fiscal year ended
September 30.
2. Limitation on Net Profits. Net Profits
will be not greater than the cash
actually remitted by Hondo Magdalena to
Hondo for Hondo's account in the U.S.
Hondo agrees that it will cause Hondo
Magdalena to remit to Hondo all amounts
available to be so remitted under then
existing laws and regulations, unless
otherwise agreed in writing by Lonrho
and Thamesedge.
3. Joinder of Hondo Magdalena. Hondo
Magdalena joins this Agreement solely to
acknowledge the existence thereof and
agrees not to take any action which
would materially and adversely affect
the rights of Lonrho and Thamesedge
under this Agreement and will make best
efforts to preserve and protect the
rights of Lonrho and Thamesedge.
4. No Assignment; Benefit. A party to this
Agreement may not assign its rights or
obligations hereunder without the
express written consent of the other
parties, which consent shall not be
unreasonably withheld. Subject to such
consent, the benefits and obligations of
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<PAGE>
this Agreement shall inure to the
respective parties, their successors and
assigns.
5. Governing Laws. This Agreement shall be
governed by, and construed in accordance
with, the laws of the State of
California, without reference to that
portion of those laws relating to
conflicts and choice of law.
The parties have executed this Agreement to be
effective on the date first above written.
HONDO OIL AND GAS COMPANY
By: /s/ Robert O. Anderson_______
Robert O. Anderson
Chairman of the Board,
President and Chief Executive
Officer
HONDO MAGDALENA OIL & GAS LIMITED
By: /s/ Robert O. Anderson_______
Robert O. Anderson
Chairman of the Board
LONRHO PLC
By: /s/ PGB Spicer_______________
Name:____PGB Spicer_______________
Title:___Director_________________
-4-
<PAGE>
By: /s/ P.M. Tarsh_______________
Name:____P.M. Tarsh_______________
Title:___Director_________________
THAMESEDGE, LTD.
By: /s/ R.E. Whitten_____________
Name: R.E. Whitten_____________
Title:___Director_________________
By: /s/ R.U. Badger______________
Name:____R.U. Badger______________
Title:___Director_________________
-5-
EXHIBIT 8
PIK LETTER AGREEMENT
Hondo Oil & Gas Company
Post Office Box 2208
Roswell, New Mexico 88202-2208
(506) 625-8700
Facsimile (505) 625-6876
[LOGO]
December 17, 1993
Lonrho Plc
Thamesedge Ltd.
Cheapside House
138 Cheapside
London, England EC2V 6BL
Dear Sirs:
This Agreement is entered into by and among HONDO OIL & GAS
COMPANY, a Delaware corporation ("Hondo"), and its wholly-owned
subsidiaries, VIA VERDE DEVELOPMENT COMPANY, a California
corporation ("Via Verde"), and NEWHALL REFINING CO., INC., a
Delaware corporation ("Newhall"), LONRHO PLC ("Lonrho") and
THAMESEDGE LTD. ("Thamesedge"), with reference to:
(a) Note Purchase Agreement dated November 28, 1988,
between Pauley Petroleum Inc. (now Hondo) and Thamesedge,
as amended (the "Thamesedge Note Purchase Agreement"), and
Note dated November 30, 1988, for $75,000,000 from Pauley
Petroleum Inc. to Thamesedge (the "Thamesedge Note");
(b) Letter agreements dated November 28, 1988 and
December 18, 1992 between Hondo and Thamesedge referring to
and amending the Thamesedge Note Purchase Agreement and the
Thamesedge Note;
(c) Net Profits Share Agreement dated December 18,
1992, by and among Hondo, Lonrho and Thamesedge (the "Net
Profits Share Agreement");
<PAGE>
(d) Amended and Restated Letter Agreement dated
December 20, 1991, between the Company and Lonrho (the
"Lonrho Loan Agreement") and Notes dated September 1, 1991,
for $10 million, November 1, 1991, for $9,000,000, and
December 20, 1991, for $13,000,000, from Hondo to Lonrho
(the "Lonrho Notes");
(e) Letter agreement dated December 18, 1992 between
Hondo and Lonrho referring to and amending the Lonrho Loan
Agreement and the Lonrho Notes;
(f) Amended and Restated Guaranty of Robert O.
Anderson dated June 20, 1991, and Amendment to Amended and
Restated Guaranty of Robert O. Anderson dated December 20,
1991, guaranteeing the payment of the Lonrho Notes
described in paragraph (d), above (the "Anderson
Guaranty");
(g) Note dated April 30, 1993, for $3,000,000 from
Via Verde to Lonrho (the "Via Verde Note"), secured by Deed
of Trust dated recorded as Instrument No. 93-840817 in the
Real Property Records of Los Angeles County, California,
(the "Via Verde Mortgage"), guaranteed by Hondo in Guaranty
dated April 30, 1993 (the "Hondo Guaranty"), and subject to
a letter agreement dated April 30, 1993; and
(h) Note dated June 25, 1993, for $4,000,000 from
Hondo to Lonrho (the "Valley Gateway Note"), secured by
Deed of Trust dated August 30, 1993, granted by Hondo and
Newhall, recorded as Instrument No. 93-2006475 in the Real
Property Records of Los Angeles County, California, (the
"Valley Gateway Mortgage").
The Thamesedge Note, the Lonrho Notes, the Via Verde Note
and the Valley Gateway Note are collectively referred to herein
as the "Lonrho Indebtedness".
Hondo, Lonrho and Thamesedge have agreed to restructure the
Lonrho Indebtedness, and the agreements related thereto, by
(i) reducing the interest rate on each note to 6%,
(ii) capitalizing the interest accrued to September 30, 1993,
into the respective notes, (iii) providing an alternate method
of repayment of interest, and (iv) subordinating the Lonrho
Notes to Hondo's existing indebtedness.
Hondo, Via Verde and Newhall and Lonrho and Thamesedge
hereby agree as follows:
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<PAGE>
1. Effective Date. This Agreement shall be effective for
all purposes on September 30, 1993.
2. Amendment of Notes. The Thamesedge Note, the Lonrho
Notes (collectively), the Via Verde Note and the Valley Gateway
Note each will be amended as provided, respectively, in Exhibits
A, B, C and D to this Agreement. Hondo and Via Verde, as
applicable, will execute the note amendments, Lonrho and
Thamesedge, as applicable, will execute them to acknowledge
consent thereto, and the note amendments will be attached to the
original notes held by Lonrho or Thamesedge.
3. Payment of Interest.
(a) Payment in Kind. If, in the opinion of its board
of directors, Hondo does not have sufficient cash resources
to pay interest on any of the Lonrho Indebtedness when due,
then Hondo may offer to Lonrho or Thamesedge, as
applicable, a payment of the interest in shares of Hondo's
common stock, valued at the closing price on the American
Stock Exchange on the day the interest is due (or if the
American Stock Exchange is closed on the interest due date,
then the closing price on the day first preceding the
interest due date on which the Exchange is open). In
making this determination, the Hondo board of directors
will not, without the consent of Lonrho or Thamesedge, as
applicable, allocate cash resources to new capital
projects. Lonrho or Thamesedge, as applicable, will then
notify Hondo whether it will either (i) accept the payment
of interest in kind, or (ii) add the amount of interest due
to the principal of the applicable note. If Lonrho or
Thamesedge accept the payment of interest in kind, Hondo
will issue the requisite number of shares to Lonrho or
Thamesedge within ten business days after Hondo receives
notice of acceptance from Lonrho or Thamesedge.
(b) Unregistered Shares. Lonrho and Thamesedge each
represent that it recognizes that any shares of Hondo's
common stock that it may acquire by the payment of interest
in kind will not have been registered under the Securities
Act of 1933 and may not be sold in the absence of an
effective registration under said Act or an exemption from
the registration requirements of said Act.
(c) Registration Rights. If Lonrho or Thamesedge so
request at any time more than six months after the date
shares of Hondo's common stock are issued to Lonrho or
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<PAGE>
Thamesedge pursuant to this Agreement, Hondo will use its
best efforts to Lonrho or Thamesedge pursuant to this
Agreement, Hondo will use its best efforts to effect
registration under the Securities Act of 1933 of the shares
so issued. Hondo shall have no further obligation under
this paragraph after two registrations have been effected.
4. Net Profits Share Agreement. The Net Profits Share
Agreement will remain in place, provided, however, that
paragraph 1 of that agreement is amended to read, in its
entirety as follows:
"Assignment of Share of Net Profits. Hondo hereby
assign to Lonrho and Thamesedge, jointly, as their
interests may appear, five percent (5%) of Net
Profits until final payment of the indebtedness
under the Thamesedge Note, the Lonrho Notes, the
Via Verde Note and the Valley Gateway Note, as
defined in a letter agreement dated December 17,
1993, by and among Hondo, Via Verde Development
Company and Newhall Refining Co., Inc. and Lonrho
and Thamesedge, respectively, at which time the
respective share of Net Profits will be decreased
by one-half. Hondo will pay the amounts due
Lonrho and Thamesedge annually on or before
December 31, for the prior fiscal year ended
September 30."
5. Guaranties.
(a) Hondo Guaranty. Hondo hereby consents, as
guarantor under the Hondo Guaranty, to the amendments made
in this Agreement with respect to the Via Verde Note and
hereby confirms and agrees that the Hondo Guaranty is and
shall continue to be in full force and effect and is hereby
ratified and confirmed in all respects as to the
obligations of Hondo with respect to the Via Verde Note, as
amended by this Agreement.
(b) Anderson Guaranty. Hondo shall provide the
consent of Robert O. Anderson, as guarantor under the
Anderson Guaranty, to the amendments made in this Agreement
to the Lonrho Notes.
6. Mortgages. The Via Verde Mortgage and the Valley
Gateway Mortgage will remain in effect to secure the Via Verde
Note and the Valley Gateway Note, the Thamesedge Note and the
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Lonrho Notes (each as amended by this Agreement), respectively.
Upon sale of the properties described in the Via Verde Mortgage
or the Valley Gateway Mortgage, the net proceeds, after payment
of expenses of sale and liens or encumbrances having priority
senior to the applicable mortgage, will be applied to the notes
secured thereby.
7. Subordination. Thamesedge and Lonrho agree that the
Thamesedge Note and the Lonrho Notes, as amended herein, are
subordinated in right of payment to the prior payment in full of
(i) the Via Verde Note and the Valley Gateway Note,
(ii) indebtedness under the 1978 Newhall Industrial Development
and Pollution Control Re venue Bonds, and (iii) indebtedness
under the note dated June 12, 1987, from Via Verde to L-J San
Dimas No. 1.
8. Asset Sales and Other Agreements. Under the terms of
letter agreements dated November 28, 1988 and December 18, 1992
between Hondo and Thamesedge, fifty percent of the proceeds of
the sales of certain assets of Hondo are to be applied to the
Thamesedge Note (subject to deferral under the December 18, 1992
letter agreement). Under the terms of the Lonrho Loan Agreement
and a letter agreement dated December 18, 1992 between Hondo and
Lonrho, the proceeds of the sales of certain assets of Hondo are
to be applied to the Lonrho Notes (subject to repayments
required to be made to Thamesedge and deferral under the
December 18, 1992 letter agreement). Thamesedge and Lonrho each
waive and release any repayments due upon the Thamesedge Note
and the Lonrho Notes, respectively, on account of the agreements
described in this paragraph and asset sales made by Hondo prior
to September 30, 1993, to the extent that such payments have not
been received by Thamesedge or Lonrho before September 30, 1993.
Thamesedge and Lonrho each further waive and release any right
to repayments due upon the Thamesedge Note and the Lonrho Note,
respectively, on account of the agreements described in this
paragraph and the receipt by Hondo of (i) proceeds related to
the sale of Fletcher Oil and Refining Company, and (ii) $5
million from Amoco Columbia Petroleum Company under the terms of
the Farmout Agreement dated August 9, 1993, among Amoco Colombia
Petroleum Company, Opon Development Company and Hondo Magdalena
Oil & Gas Limited. Except as specifically waived or released,
Thamesedge and Lonrho retain rights to net proceeds of sales of
assets under the agreements described in this paragraph,
including, without limitation, any sale made after the effective
date of this Agreement of a part of the interest of Hondo
Magdalena Oil & Gas Limited in the Opon Association Contract
dated July 15, 1987.
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Lonrho waives, and releases Hondo from the obligation to
prepay the [L-J San Dimas Note] as required under the letter
agreement dated April 30, 1993, relating to the Via Verde Note
and Via Verde Mortgage.
9. Miscellaneous.
(a) Governing Law. The laws of the State of
California shall govern this Agreement.
(b) Assignment of Lonrho Indebtedness: Thamesedge
and Lonrho each may assign its interest in the notes and
agreements, including this Agreement, to an affiliate of
Lonrho at any time upon notice to Hondo.
(c) Amendment; Controlling Effect. This Agreement
will act as an amendment to the Thamesedge Note Purchase
Agreement, the Lonrho Loan Agreement and the letter
agreements related thereto. In case of conflict in the
terms of this Agreement and any other agreements among
Thamesedge, Lonrho and/or Hondo, this Agreement will
control. Except as amended hereby, the terms of the Lonrho
Indebtedness, and the agreements related thereto, are herby
confirmed, and remain in force and effect.
Please confirm that the foregoing correctly sets forth the
agreement between us.
Very truly yours,
HONDO OIL & GAS COMPANY
By: /s/ John J. Hoey__________
John J. Hoey, President
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