EXHIBIT 10.17
AMENDED AND RESTATED GUARANTY AGREEMENT
THIS AMENDED AND RESTATED GUARANTY AGREEMENT by XXXXXX
CORPORATION (hereinafter called "Guarantor"), is in favor of BANK
OF MONTREAL, as agent (the "Agent") for the lenders (the
"Lenders") that are or become parties to the Credit Agreement
defined below.
WITNESSETH:
WHEREAS, on December 17, 1997, XXXXXX PETROLEUM CORPORATION, a
Delaware corporation (hereinafter called "Borrower"), the Agent
and the Lenders entered into that certain Credit Agreement, as
amended by First Amendment to Credit Agreement dated as of June
1, 1998 and Second Amendment to Credit Agreement dated as of
September 1, 1998 (the "Prior Credit Agreement"); and
WHEREAS, one of the terms and conditions stated in the Prior
Credit Agreement for the making of the loans described therein
was the execution and delivery to the Agent for the benefit of
the Lenders of that certain Guaranty Agreement dated of even date
therewith executed by Guarantor, as amended by First Amendment to
Guaranty Agreement dated as of September 1, 1998 (the "Prior
Guaranty Agreement"); and
WHEREAS, the Borrower, the Agent and the Lenders are entering
into that certain Amended and Restated Credit Agreement dated as
of December 1, 1998 (as the same may be amended from time to
time, the "Credit Agreement") amending and restating the Prior
Credit Agreement; and
WHEREAS, in connection with the execution and delivery of the
Credit Agreement, the Agent has requested that the Guarantor
amend and restate the Prior Guaranty Agreement;
NOW, THEREFORE, (i) in order to comply with the terms and
conditions of the Credit Agreement, (ii) to induce the Lenders,
at any time or from time to time, to loan monies, with or without
security to or for the account of Borrower in accordance with the
terms of the Credit Agreement, (iii) at the special insistence
and request of the Lenders, and (iv) for other good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, Guarantor hereby agrees as follows:
ARTICLE 1
General Terms
Section 1.1 Terms Defined Above. As used in this Guaranty
Agreement, the terms "Agent", "Borrower", "Credit Agreement",
"Guarantor", "Lenders", "Prior Credit Agreement" and "Prior
Guaranty Agreement" shall have the meanings indicated above.
Section 1.2 Certain Definitions. As used in this Guaranty
Agreement, the following terms shall have the following meanings,
unless the context otherwise requires:
"Guarantor Claims" shall have the meaning indicated in Section
4.1 hereof.
"Guaranty Agreement" shall mean this Amended and Restated
Guaranty Agreement, as the same may from time to time be amended
or supplemented.
"Liabilities" shall mean (a) any and all indebtedness,
obligations and liabilities of the Borrower pursuant to the
Credit Agreement, including without limitation, the unpaid
principal of and interest on the Notes, including without
limitation, interest accruing subsequent to the filing of a
petition or other action concerning bankruptcy or other similar
proceeding; (b) payment of and performance of any and all Hedging
Agreements, if any, entered into by the Borrower with a Lender;
(c) all reimbursements and other obligations with respect to
Letters of Credit; and (d) all renewals, rearrangements,
increases, extensions for any period, amendments or supplement in
whole or in part of the Notes or any documents evidencing the
above.
"Loan Documents" shall mean the Credit Agreement, the Notes, the
Letters of Credit and the other Loan Documents.
Section 1.3 Credit Agreement Definitions. Unless otherwise
defined herein, all terms beginning with a capital letter which
are defined in the Credit Agreement shall have the same meanings
herein as therein.
ARTICLE 2
The Guaranty
Section 2.1 Liabilities Guaranteed. Guarantor hereby irrevocably
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and unconditionally guarantees the prompt payment at maturity of
the Liabilities.
Section 2.2 Nature of Guaranty. This Guaranty Agreement is an
absolute, irrevocable, completed and continuing guaranty of
payment and not a guaranty of collection, and no notice of the
Liabilities or any extension of credit already or hereafter
contracted by or extended to Borrower need be given to Guarantor.
This Guaranty Agreement may not be revoked by Guarantor and shall
continue to be effective with respect to debt under the
Liabilities arising or created after any attempted revocation by
Guarantor and shall remain in full force and effect until the
Liabilities are paid in full and the Commitments are terminated,
notwithstanding that from time to time prior thereto no
Liabilities may be outstanding. Borrower and the Lenders may
modify, alter, rearrange, extend for any period and/or renew from
time to time, the Liabilities, and the Lenders may waive any
Default or Events of Default without notice to the Guarantor and
in such event Guarantor will remain fully bound hereunder on the
Liabilities. This Guaranty Agreement shall continue to be
effective or be reinstated, as the case may be, if at any time
any payment of the Liabilities is rescinded or must otherwise be
returned by any of the Lenders upon the insolvency, bankruptcy or
reorganization of Borrower or otherwise, all as though such
payment had not been made. This Guaranty Agreement may be
enforced by the Agent and any subsequent holder of any of the
Liabilities and shall not be discharged by the assignment or
negotiation of all or part of the Liabilities. Guarantor hereby
expressly waives presentment, demand, notice of non-payment,
protest and notice of protest and dishonor, notice of Default or
Event of Default, notice of intent to accelerate the maturity and
notice
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of acceleration of the maturity and any other notice in
connection with the Liabilities, and also notice of acceptance of
this Guaranty Agreement, acceptance on the part of the Lenders
being conclusively presumed by the Lenders' request for this
Guaranty Agreement and delivery of the same to the Agent.
Section 2.3 Agent's Rights. Guarantor authorizes the Agent,
without notice or demand and without affecting Guarantor's
liability hereunder, to take and hold security for the payment of
this Guaranty Agreement and/or the Liabilities, and exchange,
enforce, waive and release any such security; and to apply such
security and direct the order or manner of sale thereof as the
Agent in its discretion may determine; and to obtain a guaranty
of the Liabilities from anyone or more Persons and at any time or
times to enforce, waive, rearrange, modify, limit or release any
of such other Persons from their obligations under such
guaranties.
Section 2.4 Guarantor's Waivers.
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(a) General. Guarantor waives any right to require any of the
Lenders to (i) proceed against Borrower or any other person
liable on the Liabilities, (ii) enforce any of their rights
against any other guarantor of the Liabilities (iii) proceed or
enforce any of their rights against or exhaust any security given
to secure the Liabilities (iv) have Borrower joined with
Guarantor in any suit arising out of this Guaranty Agreement
and/or the Liabilities, or (v) pursue any other remedy in the
Lenders' powers whatsoever. The Lenders shall not be required to
mitigate damages or take any action to reduce, collect or enforce
the Liabilities. Guarantor waives any defense arising by reason
of any disability, lack of corporate authority or power, or other
defense of Borrower or any other guarantor of the Liabilities,
and shall remain liable hereon regardless of whether Borrower or
any other guarantor be found not liable thereon for any reason.
Whether and when to exercise any of the remedies of the Lenders
under any of the Loan Documents shall be in the sole and absolute
discretion of the Agent, and no delay by the Agent in enforcing
any remedy, including delay in conducting a foreclosure sale,
shall be a defense to the Guarantor's liability under this
Guaranty Agreement.
(b) Subrogation. Until the Liabilities have been paid in full,
the Guarantor waives all rights of subrogation or reimbursement
against the Borrower, whether arising by contract or operation of
law (including, without limitation, any such right arising under
any federal or state bankruptcy or insolvency laws) and waives
any right to enforce any remedy which the Lenders now have or may
hereafter have against the Borrower, and waives any benefit or
any right to participate in any security now or hereafter held by
the Agent or any Lender.
Section 2.5 Maturity of Liabilities; Payment. Guarantor agrees
that if the maturity of any of the Liabilities is accelerated by
bankruptcy or otherwise, such maturity shall also be deemed
accelerated for the purpose of this Guaranty Agreement without
demand or notice to Guarantor. Guarantor will, forthwith upon
notice from the Agent, pay to the Agent the amount due and unpaid
by Borrower and guaranteed hereby. The failure of the Agent to
give this notice shall not in any way release Guarantor
hereunder.
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Section 2.6 Agent's Expenses. If Guarantor fails to pay the
Liabilities after notice from the Agent of Borrower's failure to
pay any Liabilities at maturity, and if the Agent obtains the
services of an attorney for collection of amounts owing by
Guarantor hereunder, or obtains advice of counsel in respect of
any of their rights under this Guaranty Agreement, or if suit is
filed to enforce this Guaranty Agreement, or if proceedings are
had in any bankruptcy, probate, receivership or other judicial
proceedings for the establishment or collection of any amount
owing by Guarantor hereunder, or if any amount owing by Guarantor
hereunder is collected through such proceedings, Guarantor agrees
to pay to the Agent the Agent's reasonable attorneys' fees.
Section 2.7 Liability. It is expressly agreed that the liability
of the Guarantor for the payment of the Liabilities guaranteed
hereby shall be primary and not secondary.
Section 2.8 Events and Circumstances Not Reducing or Discharging
Guarantor's Obligations. Guarantor hereby consents and agrees to
each of the following to the fullest extent permitted by law, and
agrees that Guarantor's obligations under this Guaranty Agreement
shall not be released, diminished, impaired, reduced or adversely
affected by any of the following, and waives any rights
(including without limitation rights to notice) which Guarantor
might otherwise have as a result of or in connection with any of
the following:
(a) Modifications, etc. Any renewal, extension, modification,
increase, decrease, alteration or rearrangement of all or any
part of the Liabilities, or of the Notes, or the Credit Agreement
or any instrument executed in connection therewith, or any
contract or understanding between Borrower and any of the
Lenders, or any other Person, pertaining to the Liabilities;
(b) Adjustment, etc. Any adjustment, indulgence, forbearance or
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compromise that might be granted or given by any of the Lenders
to Borrower or Guarantor or any Person liable on the Liabilities;
(c) Condition of Borrower or Guarantor. The insolvency,
bankruptcy arrangement, adjustment, composition, liquidation,
disability, dissolution, death or lack of power of Borrower or
Guarantor or any other Person at any time liable for the payment
of all or part of the Liabilities; or any dissolution of Borrower
or Guarantor, or any sale, lease or transfer of any or all of the
assets of Borrower or Guarantor, or any changes in the
shareholders, partners, or members of Borrower or Guarantor; or
any reorganization of Borrower or Guarantor;
(d) Invalidity of Liabilities. The invalidity, illegality or
unenforceability of all or any part of the Liabilities, or any
document or agreement executed in connection with the
Liabilities, for any reason whatsoever, including without
limitation the fact that the Liabilities, or any part thereof,
exceed the amount permitted by law, the act of creating the
Liabilities or any part thereof is ultra xxxxx, the officers or
representatives executing the documents or otherwise creating the
Liabilities acted in excess of their authority, the Liabilities
violate applicable usury laws, the Borrower has valid defenses,
claims or offsets (whether at law, inequity or by agreement)
which render the Liabilities wholly or partially uncollectible
from
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Borrower, the creation, performance or repayment of the
Liabilities (or the execution, delivery and performance of any
document or instrument representing part of the Liabilities or
executed in connection with the Liabilities, or given to secure
the repayment of the Liabilities) is illegal, uncollectible,
legally impossible or unenforceable, or the Credit Agreement or
other documents or instruments pertaining to the Liabilities have
been forged or otherwise are irregular or not genuine or
authentic;
(e) Release of Obligors. Any full or partial release of the
liability of Borrower on the Liabilities or any part thereof, of
any co-guarantors, or any other Person now or hereafter liable,
whether directly or indirectly, jointly, severally, or jointly
and severally, to pay, perform, guarantee or assure the payment
of the Liabilities or any part thereof, it being recognized,
acknowledged and agreed by Guarantor that Guarantor may be
required to pay the Liabilities in full without assistance or
support of any other Person, and Guarantor has not been induced
to enter into this Guaranty Agreement on the basis of a
contemplation, belief, understanding or agreement that other
parties other than the Borrower will be liable to perform the
Liabilities, or the Lenders will look to other parties to perform
the Liabilities.
(f) Other Security. The taking or accepting of any other
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security, collateral or guaranty, or other assurance of payment,
for all or any part of the Liabilities;
(g) Release of Collateral, etc. Any release, surrender, exchange,
subordination, deterioration, waste, loss or impairment
(including without limitation negligent, willful, unreasonable or
unjustifiable impairment) of any collateral, property or
security, at any time existing in connection with, or assuring or
securing payment of, all or any part of the Liabilities;
(h) Care and Diligence. The failure of the Lenders or any other
Person to exercise diligence or reasonable care in the
preservation, protection, enforcement, sale or other handling or
treatment of all or any part of such collateral, property or
security;
(i) Status of Liens. The fact that any collateral, security,
security interest or lien contemplated or intended to be given,
created or granted as security for the repayment of the
Liabilities shall not be properly perfected or created, or shall
prove to be unenforceable or subordinate to any other security
interest or lien, it being recognized and agreed by Guarantor
that Guarantor is not entering into this Guaranty Agreement in
reliance on, or in contemplation of the benefits of, the
validity, enforceability, collectibility or value of any of the
collateral for the Liabilities;
G) Payments Rescinded. Any payment by Borrower to the Lenders is
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held to constitute a preference under the bankruptcy laws, or for
any reason the
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Lenders are required to refund such payment or pay such amount to
Borrower or someone else; or
(k) Other Actions Taken or Omitted. Any other action taken or
omitted to be taken with respect to the Credit Agreement, the
Liabilities, or the security and collateral therefor, whether or
not such action or omission prejudices Guarantor or increases the
likelihood that Guarantor will be required to pay the Liabilities
pursuant to the terms hereof; it being the unambiguous and
unequivocal intention of Guarantor that Guarantor shall be
obligated to pay the Liabilities when due, notwithstanding any
occurrence, circumstance, event, action, or omission whatsoever,
whether contemplated or uncontemplated, and whether or not
otherwise or particularly described herein, except for the full
and final payment and satisfaction of the Liabilities.
ARTICLE 3
Representations and Warranties
Section 3.1 By Guarantor. In order to induce the Lenders to
accept this Guaranty Agreement, Guarantor represents and warrants
to the Lenders (which representations and warranties will survive
the creation of the Liabilities and any extension of credit
thereunder) that:
(a) Benefit to Guarantor. Guarantor's guaranty pursuant to this
Guaranty Agreement reasonably may be expected to benefit,
directly or indirectly, Guarantor.
(b) Corporate Existence. Guarantor is a corporation duly
organized, legally existing and in good standing under the laws
of the State of Delaware and is duly qualified all jurisdictions
wherein the failure to be so organized, existing and in good
standing would have a Material Adverse Effect.
(c) Corporate Power and Authorization. Guarantor is duly
authorized and empowered to execute, deliver and perform this
Guaranty Agreement and all corporate action on Guarantor's part
requisite for the due execution, delivery and performance of this
Guaranty Agreement has been duly and effectively taken.
(d) Binding Obligations. This Guaranty Agreement constitutes
valid and binding obligations of Guarantor, enforceable in
accordance with its terms (except that enforcement may be subject
to any applicable bankruptcy, insolvency or similar laws
generally affecting the enforcement of creditors' rights).
(e) No Legal Bar or Resultant Lien. This Guaranty Agreement will
not violate any provisions of Guarantor's articles or certificate
of incorporation, bylaws, or any contract, agreement, law,
regulation, order, injunction, judgment, decree or writ to which
Guarantor is subject, or result in the creation or imposition of
any Lien upon any Properties of Guarantor.
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(f) No Consent. Guarantor's execution, delivery and performance
of this Guaranty Agreement does not require the consent or
approval of any other Person, including without limitation any
regulatory authority or governmental body of the United States or
any state thereof or any political subdivision of the United
States or any state thereof.
(g) Solvency. The Guarantor hereby represents that (i) it is not
insolvent as of the date hereof and will not be rendered
insolvent as a result of this Guaranty Agreement, (ii) it is not
engaged in business or a transaction, or about to engage in a
business or a transaction, for which any property or assets
remaining with such Guarantor is unreasonably small capital, and
(iii) it does not intend to incur, or believe it will incur,
debts that will be beyond its ability to pay as such debts
mature.
(h) Financial Condition. The audited consolidated balance sheet
of the Guarantor and its Consolidated Subsidiaries as at December
31, 1997 and the related consolidated statement of income,
stockholders' equity and cash flow of the Guarantor and its
Consolidated Subsidiaries for the fiscal year ended on said date,
with the opinion thereon of Deloitte & Touche LLP heretofore
furnished to each of the Lenders and the unaudited consolidated
balance sheet of the Guarantor and its Consolidated Subsidiaries
as at September 30, 1998 and their related consolidated
statements of income, stockholders' equity and cash flow of the
Guarantor and its Consolidated Subsidiaries for the ninth month
period ended on such date heretofore furnished to the Agent, are
complete and correct and fairly present the consolidated
financial condition of the Guarantor and its Consolidated
Subsidiaries as at said dates and the results of its operations
for the fiscal year and the ninth month period on said dates, all
in accordance with GAAP, as applied on a consistent basis
(subject, in the case of the interim financial statements, to
normal year-end adjustments). Neither the Guarantor nor any of
its Subsidiaries has on the Closing Date any material Debt,
material contingent liabilities, material liabilities for taxes,
material unusual forward or long- term commitments or material
unrealized or anticipated losses from any unfavorable
commitments, except as referred to or reflected or provided for
in the Financial Statements or in Schedule 7.02 of the Credit
Agreement. Since December 31, 1997, there has been no change or
event having a Material Adverse Effect. Since the date of the
Financial Statements, neither the business nor the Properties of
the Guarantor or any of its material Subsidiaries have been
materially and adversely affected as a result of any fire,
explosion, earthquake, flood, drought, windstorm, accident,
strike or other labor disturbance, embargo, requisition or taking
of Property or cancellation of contracts, permits or concessions
by any Governmental Authority, riot, activities of armed forces
or acts of God or of any public enemy.
(i) Litigation. Except as disclosed to the Lenders in Schedule
7.03 of the Credit Agreement, at the Closing Date there is no
material litigation, legal, administrative or arbitral
proceeding, investigation or other action of any nature pending
or, to the knowledge of the Guarantor threatened against or
affecting the Guarantor or any of Its Subsidiaries which involves
the reasonable possibility of any judgment or liability against
the Guarantor or any of its Subsidiaries not fully covered by
insurance (except for normal deductibles).
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(j) No Breach. Neither the execution and delivery of this
Guaranty Agreement or any other Loan Documents, nor compliance
with the terms and provisions hereof or thereof will conflict
with or result in a breach of, or require any consent which has
not been obtained as of the Closing Date under, the respective
charter or by-laws of the Guarantor or any of its Subsidiaries,
or any Governmental Requirement or any agreement or instrument to
which the Guarantor or any of its Subsidiaries is a party or by
which it is bound or to which it or its Properties are subject,
or constitute a default under any such agreement or instrument,
or result in the creation or imposition of any Lien upon any of
the revenues or assets of the Guarantor or any of its
Subsidiaries pursuant to the terms of any such agreement or
instrument other than the Liens created by the Loan Documents.
(k) ERISA.
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(1) No act, omission or transaction has occurred with respect to
any Plan which would have a Material Adverse Effect.
(2) No Plan (other than a defined contribution plan) or any trust
created under any such Plan has been terminated since September
2, 1974. No liability to the PBGC (other than for the payment of
current premiums which are not past due) by the Guarantor, any of
its Subsidiaries or any ERISA Affiliate has been or is expected
by the Guarantor, any of its Subsidiaries or any ERISA Affiliate
to be incurred with respect to any Plan. No ERISA Event with
respect to any Plan has occurred that would have a Material
Adverse Effect.
(3) Full payment when due has been made of all amounts which the
Guarantor, any of its Subsidiaries or any ERISA Affiliate is
required under the terms of each Plan or applicable law to have
paid as contributions to such Plan, and no accumulated funding
deficiency (as defined in section 302 of ERISA and section 412 of
the Code), whether or not waived, exists with respect to any
Plan.
(4) The actuarial present value of the benefit liabilities under
each Plan which is subject to Title IV of ERISA does not, as of
the end of the Guarantor's most recently ended fiscal year,
exceed the current value of the assets (computed on a plan
termination basis in accordance with Title IV of ERISA) of such
Plan allocable to such benefit liabilities. The term "actuarial
present value of the benefit liabilities" shall have the meaning
specified in section 4041 of ERISA.
(5) None of the Guarantor, any of its Subsidiaries or any ERISA
Affiliate sponsors, maintains, or contributes to an employee
welfare benefit plan, as defined in section 3(1) of ERISA,
including, without limitation, any such plan maintained to
provide benefits to former employees of such entities, that may
not be terminated by the Guarantor, a Subsidiary or any ERISA
Affiliate in its sole discretion at any time without any material
liability.
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(6) None of the Guarantor, any of its Subsidiaries or any ERISA
Affiliate sponsors, maintains or contributes to, or has at any
time in the preceding six calendar years, sponsored, maintained
or contributed to, any Multiemployer Plan.
(7) None of the Guarantor, any of its Subsidiaries or any ERISA
Affiliate is required to provide security under section
401(a)(29) of the Code due to a Plan amendment that results in an
increase in current liability for the Plan.
(l) Taxes. Except as set out in Schedule 7.09 of the Credit
Agreement, each of the Guarantor and its Subsidiaries has filed
all United States Federal income tax returns and all other
material tax returns which are required to be filed by them and
have paid all material taxes due pursuant to such returns or
pursuant to any assessment received by the Guarantor or any of
its Subsidiaries. The charges, accruals and reserves on the books
of the Guarantor and its Subsidiaries in respect of taxes and
other governmental charges are, in the opinion of the Guarantor,
adequate. No material tax lien (other than any Excepted Lien) has
been filed and, to the knowledge of the Guarantor, no material
claim is being asserted with respect to any such tax, fee or
other charge.
(m) Title to Capital Stock of Borrower. The Guarantor has good
----------------------------------
and unencumbered title to all of the capital stock of the
Borrower.
(n) Investment Company Act. Neither the Guarantor nor any of its
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Subsidiaries is an "investment company" or a company "controlled"
by an "investment company," within the meaning of the Investment
Company Act of 1940, as amended.
(0) Public Utility: Holding Company Act. Neither the Guarantor
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nor any of its Subsidiaries is a "holding company," or a
"subsidiary company" of a "holding company," or an "affiliate" of
a "holding company" or of a "subsidiary company" of a "holding
company," or a "public utility" within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
(P) Subsidiaries. Except as set forth on Schedule 1 hereto, the
Guarantor has no Subsidiaries other than the Borrower.
(q) Compliance with the Law. Neither the Guarantor nor any of its
Subsidiaries has violated any Governmental Requirement or failed
to obtain any license, permit, franchise or other governmental
authorization necessary for the ownership of any of its
Properties or the conduct of its business, which violation or
failure would have (in the event such violation or failure were
asserted by any Person through appropriate action) a Material
Adverse Effect.
Section 3.2 No Representation by Lenders. Neither the Lenders nor
any other Person has made any representation, warranty or
statement to the Guarantor in order to induce the Guarantor to
execute this Guaranty Agreement.
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ARTICLE 4
Subordination of Indebtedness
Section 4.1 Subordination of All Guarantor Claims. As used
herein, the term "Guarantor Claims" shall mean all debts and
liabilities of Borrower to Guarantor, whether such debts and
liabilities now exist or are hereafter incurred or arise, or
whether the obligation of Borrower thereon be direct, contingent,
primary, secondary, several, joint and several, or otherwise, and
irrespective of whether such debts or liabilities be evidenced by
note, contract, open account, or otherwise, and irrespective of
the person or persons in whose favor such debts or liabilities
may, at their inception, have been, or may hereafter be created,
or the manner in which they have been or may hereafter be
acquired by Guarantor. The Guarantor Claims shall include without
limitation all rights and claims of Guarantor against Borrower
arising as a result of subrogation or otherwise as a result of
Guarantor's payment of all or a portion of the Liabilities. It is
understood that the Guarantor Claims are expressly made
subordinate and junior in right of payment to the prior payment
and performance of the Liabilities and accordingly no payment or
prepayment of any principal, interest or other amount on account
of the Guarantor Claims shall be made, if at the time of such
payment or prepayment or immediately after giving affect thereto
(a) there shall exist a default in the payment or prepayment with
respect to any of the Liabilities or (b) there shall have
occurred an Event of Default and such Event of Default shall not
have been cured or waived; and further, until the Liabilities
shall be paid and satisfied in full and no Commitments remain
outstanding under the Credit Agreement, no payment or prepayment
of any principal, interest or other amount on account of that
certain indebtedness the principal amount of $53,021,715.00 owing
by the Borrower to Guarantor shall be received or collected,
directly or indirectly except as permitted by Section 9.20 of the
Credit Agreement.
Section 4.2 Claims in Bankruptcy. In the event of receivership,
bankruptcy, reorganization, arrangement, debtor's relief, or
other insolvency proceedings involving Borrower, as debtor, the
Lenders shall have the right to prove their claim in any
proceeding, so as to establish its rights hereunder and receive
directly from the receiver, trustee or other court custodian,
dividends and payments which would otherwise be payable upon
Guarantor Claims. Guarantor hereby assigns such dividends and
payments to the Lenders. Should the Agent or any Lender receive,
for application upon the Liabilities, any such dividend or
payment which is otherwise payable to Guarantor, and which, as
between Borrower and Guarantor, shall constitute a credit upon
the Guarantor Claims, then upon payment in full of the
Liabilities, Guarantor shall become subrogated to the rights of
the Lenders to the extent that such payments to the Lenders on
the Guarantor Claims have contributed toward the liquidation of
the Liabilities, and such subrogation shall be with respect to
that proportion of the Liabilities which would have been unpaid
if the Agent or a Lender had not received dividends or payments
upon the Guarantor Claims.
Section 4.3 Payments Held in Trust. In the event that
notwithstanding Sections 4.1 and 4.2 above, Guarantor should
receive any funds, payments, claims or distributions which is
prohibited by such Sections, Guarantor agrees to hold in trust
for the Lenders an amount equal to the amount of all funds,
payments, claims or distributions so received, and agrees that it
shall have absolutely no dominion over the amount of such funds,
payments, claims or distributions except to pay them promptly to
the Agent, and Guarantor covenants promptly to pay the same to
the Agent.
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Section 4.4 Liens Subordinate. Guarantor agrees that any liens,
security interests judgment liens, charges or other encumbrances
upon Borrower's assets securing payment of the Guarantor Claims
shall be and remain inferior and subordinate to any liens,
security interests, judgment liens, charges or other encumbrances
upon Borrower's assets securing payment of the Liabilities,
regardless of whether such encumbrances in favor of Guarantor,
the Agent or the Lenders presently exist or are hereafter created
or attach. Without the prior written consent of the Lenders,
Guarantor shall not (a) exercise or enforce any creditor's right
it may have against the Borrower, or (b) foreclose, repossess,
sequester or otherwise take steps or institute any action or
proceeding (judicial or otherwise, including without limitation
the commencement of or joinder in any liquidation, bankruptcy,
rearrangement, debtor's relief or insolvency proceeding) to
enforce any lien, mortgages, deeds of trust, security interest,
collateral rights, judgments or other encumbrances on assets of
Borrower held by Guarantor.
Section 4.5 Notation of Records. All promissory notes, accounts
receivable ledgers or other evidence of the Guarantor Claims
accepted by or held by Guarantor shall contain a specific written
notice thereon that the indebtedness evidenced thereby is
subordinated under the terms of this Guaranty Agreement.
ARTICLE 5
Certain Additional Covenants
Section 5.1 Capital Stock of Borrower. The Guarantor will not
permit any of the capital stock of the Borrower to be owned or
controlled (other than through stock ownership of the Guarantor)
by any Person other than the Guarantor.
Section 5.2 Liens. The Guarantor will not create, incur, assume
or permit to exist any Lien on any of the capital stock of the
Borrower other than Excepted Liens.
Section 5.3 Tangible Net Worth. The Guarantor's Tangible Net
Worth shall not at any time be less than $20,000,000, plus 75% of
the proceeds received by the Guarantor from equity capital
offerings after the Closing Date, plus 75% of the Guarantor's
consolidated net income for each fiscal year for which net income
is positive beginning with the fiscal year ending December 31,
1998. Such test shall be measured at the end of each fiscal
quarter and at fiscal year end.
Section 5.4 Current Ratio. The Guarantor's ratio of (i)
consolidated current assets plus availability under Facility A to
(ii) consolidated current liabilities (excluding current
maturities of the Notes) shall not at any time be less than 1.0
to 1.0.
Section 5.5 Applicable Interest Coverage Ratio Requirement. The
Guarantor will not permit its Applicable Interest Coverage Ratio
for the relevant periods set forth below (calculated quarterly at
the end of each calendar quarter) to be less than the following
ratios:
(i) through June 30, 1999, not less than 1.5 to 1.0 on a rolling
four quarter basis; and
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(ii) beginning in the third quarter of the 1999 fiscal year and
thereafter, the ratio will not be less than 1.5 to 1.0 at the end
of any fiscal quarter.
For purposes of this Section 5.5, the Applicable Interest
Coverage Ratio shall mean, for any period, the ratio of EBITDA
for such period to Interest Expense for such period.
If, for any calendar quarter commencing with the first quarter of
the 1999 fiscal year of the Guarantor, the Average Hydrocarbon
Price is at levels set forth in the table below ("Trigger
Quarter") the Applicable Interest Coverage Ratio shall increase
beginning the later of the third quarter of the 1999 fiscal year
or the fiscal quarter following the Trigger Quarter to the
corresponding ratio opposite the Average Hydrocarbon Price,
provided, however, the Applicable Interest Coverage Ratio
requirement may only increase as the price of oil increases and
shall not thereafter decrease if the Average Hydrocarbon Price
decreases.
Average Hydrocarbon Price (bbl) Applicable Interest
Coverage Ratio
>$16 1.75 to 1.00
>$17 2.00 to 1.00
>$18 2.25 to 1.00
>$19 2.50 to 1.00
ARTICLE 6
Miscellaneous
Section 6.1 Successors and Assigns. This Guaranty Agreement is
and shall be in every particular available to the successors and
assigns of the Lenders and is and shall always be fully binding
upon the legal representatives, successors and assigns of
Guarantor, notwithstanding that some or all of the monies, the
repayment of which this Guaranty Agreement applies, may be
actually advanced after any bankruptcy, receivership,
reorganization or other event affecting Guarantor.
Section 6.2 Notices. Any notice or demand to Guarantor under or
in connection with this Guaranty Agreement may be given and shall
conclusively be deemed and considered to have been given and
received in accordance with Section 12.02 of the Credit
Agreement, addressed to Guarantor at the address on the signature
page hereof or at such other address provided to the Agent in
writing.
Section 6.3 Business and Financial Information. The Guarantor
will promptly furnish to the Agent and the Lenders from time to
time upon request such information regarding the business and
affairs and financial condition of the Guarantor and its
subsidiaries as the Agent and the Lenders may reasonably request.
Section 6.4 Construction. This Guaranty Agreement is a contract
made under and shall be construed in accordance with and governed
by the laws of the State of Texas.
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Section 6.5 Invalidity. In the event that anyone or more of the
provisions contained in this Guaranty Agreement shall, for any
reason, be held invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect
any other provision of this Guaranty Agreement.
Section 6.6 ENTIRE AGREEMENT. THIS WRITTEN GUARANTY AGREEMENT
EMBODIES THE ENTIRE AGREEMENT AND UNDERSTANDING BETWEEN THE
LENDERS AND THE GUARANTOR AND SUPERSEDES ALL OTHER AGREEMENTS AND
UNDERSTANDINGS BETWEEN SUCH PARTIES RELATING TO THE SUBJECT
MATTER HEREOF AND THEREOF. THIS WRITTEN GUARANTY AGREEMENT
REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
WITNESS THE EXECUTION HEREOF, as of December 1, 1998.
XXXXXX CORPORATION
By: /s/ XXXX X XXXXXXXX
-------------------
Name: Xxxx X. Xxxxxxxx
Title: Vice President
1500 Xxxxxx Building
0000 Xxxxxx
Xxxxxxx, Xxxxx 00000-0000
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attention:
---------------
STATE OF TEXAS
COUNTY OF XXXXXX
THIS INSTRUMENT was acknowledged before me on December 31, 1998
by Xxxx X. Xxxxxxxx, Xx., Vice President of Xxxxxx Corporation, a
Delaware corporation, on behalf of such corporation.
/s/ XXXXX X. XXXXXX
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Xxxxx X. Xxxxxx
Notary Public in and for the State of Texas
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