EXECUTION COPY
SUBORDINATED GUARANTY AGREEMENT
ABASCO, INC.
THIS SUBORDINATED GUARANTY AGREEMENT, dated as of December 28, 2000
(as the same may be amended, restated, supplemented and otherwise modified from
time to time, the "GUARANTY AGREEMENT"), is made by ABASCO, INC., a Texas
corporation (the "GUARANTOR") in favor of THE PRUDENTIAL INSURANCE COMPANY OF
AMERICA and its successors and assigns ("PRUDENTIAL").
WHEREAS, Boots & Xxxxx International Well Control, Inc., a Delaware
corporation (the "COMPANY") plans to enter into a Subordinated Note
Restructuring Agreement dated of even date herewith (as the same may be amended,
modified, supplemented or restated from time to time, the "RESTRUCTURING
AGREEMENT"; capitalized terms used herein that are defined in the Restructuring
Agreement and not otherwise defined herein shall have the respective meanings
specified in the Restructuring Agreement) with Prudential under which Prudential
will accept delivery by the Company of the Company Closing Deliveries in
satisfaction of the Preexisting Obligations; and
WHEREAS, the Company owns (either directly or indirectly) all of the
issued and outstanding capital stock of the Guarantor; and
WHEREAS, pursuant to the Restructuring Agreement, it is a condition
to Prudential's obligation to accept the transfer of the Company Closing
Deliveries and to release the Company from the Preexisting Obligations at the
Closing thereunder that this Guaranty Agreement shall have been executed and
delivered by the Guarantor and shall be in full force and effect; and
WHEREAS, the board of directors of the Guarantor has determined that
the Guarantor's execution, delivery and performance of this Guaranty Agreement
may reasonably be expected to benefit the Guarantor, directly or indirectly, and
are in the best interests of the Guarantor.
NOW THEREFORE, in order to induce, and in consideration of, the
execution and delivery of the Restructuring Agreement and for other good and
valuable consideration, the sufficiency of which is acknowledged, the Guarantor
hereby covenants and agrees with, and represents and warrants to Prudential as
follows:
1. THE GUARANTY. The Guarantor hereby irrevocably and unconditionally
guarantees to Prudential the due and punctual payment in full of (i)
the principal of and interest on (including, without limitation,
interest accruing after the filing of any petition in bankruptcy, or
the commencement of any insolvency, reorganization or like
proceeding, relating to the Company, whether or not a claim for
post-filing or post-petition interest is allowed in such proceeding)
and any other amounts due under the Notes when and as the same shall
become due and payable (whether at stated maturity or by optional
prepayment or by acceleration or otherwise) and (ii) any other sums
which may become due under the terms and provisions of the
Restructuring Agreement, including the Closing Payment, Credit
Facility Payment, and under the Preferred Stock and the Warrants
issuable thereto, and the Notes (all such obligations described in
clauses (i) and (ii) above are herein called the "GUARANTEED
OBLIGATIONS"). The guaranty in the preceding sentence is an absolute,
present and continuing guaranty of payment and not of collectibility
and is in no way conditional or contingent upon any attempt to
collect from the Company or any other guarantor of the Notes or other
Guaranteed Obligations or upon any other action, occurrence or
circumstance whatsoever. In the event that the Company shall fail so
to pay any of such Guaranteed Obligations, the Guarantor agrees to
pay the same when due to Prudential without demand, presentment,
protest or notice of any kind, in lawful money of the United States
of America, at the place for payment specified in the Notes and the
Restructuring Agreement. Each default in payment of principal of or
interest on any Notes shall give rise to a separate cause of action
hereunder and separate suits may be brought hereunder as each cause
of action arises. The Guarantor hereby agrees that the Notes issued
in connection with the Restructuring Agreement may make reference to
this guaranty.
The Guarantor hereby agrees to pay and to indemnify and save
Prudential harmless from and against any damage, loss, cost or
expense (including, without limitation, attorneys' fees) which
Prudential may incur or be subject to as a consequence, direct or
indirect, of (i) any breach by the Guarantor, by the Company or by
any other Transaction Party of any warranty, covenant, term or
condition in, or the occurrence of any default under, this Guaranty
Agreement, the Notes or the Restructuring Agreement, together with
all expenses resulting from the compromise or defense of any claims
or liabilities arising as a result of any such breach or default, and
(ii) any legal action commenced to challenge the validity of this
Guaranty Agreement, the Notes or the Restructuring Agreement.
Notwithstanding the foregoing or any other provisions of this
Guaranty Agreement, it is agreed and understood that the Guarantor
shall not be required to pay hereunder at any time more than the
Maximum Guaranteed Amount (as hereinafter defined) determined as of
such time. The Guarantor agrees that the Guaranteed Obligations may
at any time exceed the sum of the Maximum Guaranteed Amount (as
hereinafter defined) plus the aggregate maximum amount of all
obligations of all other Guarantors, without affecting or impairing
the obligation of the Guarantor. "MAXIMUM GUARANTEED AMOUNT" means as
of the date of determination, the lesser of (a) the amount of the
Guaranteed Obligations outstanding on such date and (b) the maximum
amount that would not render Guarantor's liability under this
Guaranty Agreement subject to avoidance under Section 548 of the
United States Bankruptcy Code (or any successor provision) or any
comparable provision of applicable state law.
2. OBLIGATIONS ABSOLUTE. The obligations of the Guarantor hereunder
shall be primary, absolute, irrevocable and unconditional,
irrespective of the validity, regularity or enforceability of the
Notes, the Warrants, the Preferred Stock or the Restructuring
Agreement, shall not be subject to any counterclaim, set off,
deduction or defense based upon any claim the Guarantor may have
against the Company, Prudential or otherwise, and shall remain in
full force and effect without regard to, and shall not be released,
discharged or in any way affected by, any circumstance or condition
whatsoever (whether or not the Guarantor shall have any knowledge or
notice thereof), including, without limitation: (a) any amendment,
restatement or modification of or supplement to the Notes, the
Warrants, the Preferred Stock and the Restructuring Agreement, or any
other instrument referred to therein (except that the obligations of
the Guarantor hereunder shall apply to the Notes, the Warrants, the
Preferred Stock and the Restructuring Agreement, or such other
instruments as so amended, restated, modified or supplemented) or any
assignment or transfer of any thereof or of any interest therein, or
any furnishing, acceptance or release of any security for the Notes,
(b) any waiver, consent, extension, indulgence or other action or
inaction under or in respect of the Notes, the Warrants, the
Preferred Stock or the Restructuring Agreement; (c) any bankruptcy,
insolvency, readjustment, composition, liquidation or similar
proceeding with respect to the Company or its property; (d) any
merger, amalgamation or consolidation of the Guarantor or of the
Company into or with any other corporation or any sale, lease or
transfer of any or all of the assets of the Guarantor or of the
Company to any person; (e) any failure on the part of the Company for
any reason to comply with or perform any of the terms of any other
agreement with the Guarantor; or (f) any other circumstance which
might otherwise constitute a legal or equitable discharge or defense
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of a guarantor. The Guarantor covenants that its obligations
hereunder will not be discharged except by payment and performance in
full of all of the Guaranteed Obligations.
3. WAIVER. The Guarantor unconditionally waives (a) notice of acceptance
hereof, of any action taken or omitted in reliance hereon and of any
defaults by the Company in the payment of any amounts due under the
Notes, the Warrants, the Preferred Stock or the Restructuring
Agreement, and of any of the matters referred to in Section 2 hereof,
(b) all notices which may be required by statute, rule of law or
otherwise to preserve any of the rights of Prudential against the
Guarantor, including, without limitation, presentment to or demand
for payment from the Company or the Guarantor with respect to any
Notes, notice to the Company or to the Guarantor of default or
protest for nonpayment or dishonor and the filing of claims with a
court in the event of the bankruptcy of the Company, (c) any right to
the enforcement, assertion or exercise by Prudential of any right,
power or remedy conferred in this Guaranty Agreement, the Notes, the
Warrants, the Preferred Stock or the Restructuring Agreement, (d) any
requirement of diligence on the part of Prudential and (e) any other
act or omission or thing or delay to do any other act or thing which
might in any manner or to any extent vary the risk of the Guarantor
or which might otherwise operate as a discharge of the Guarantor.
4. OBLIGATIONS UNIMPAIRED. The Guarantor authorizes Prudential, without
notice or demand to the Guarantor and without affecting its
obligations hereunder, from time to time (a) to renew, compromise,
extend, accelerate or otherwise change the time for payment of, or
otherwise change the terms of, all or any part of the Notes, the
Warrants, the Preferred Stock or the Restructuring Agreement, or any
other instrument referred to therein; (b) to take and hold security
for the payment of the Notes, for the performance of this Guaranty
Agreement or otherwise for the indebtedness guaranteed hereby and to
exchange, enforce, waive and release any such security; (c) to apply
any such security and to direct the order or manner of sale thereof
as Prudential in its sole discretion may determine; (d) to obtain
additional or substitute endorsers or guarantors; (e) to exercise or
refrain from exercising any rights against the Company and others;
and (f) to apply any sums, by whomsoever paid or however realized, to
the payment of the principal of and interest on the Notes and any
other Guaranteed Obligation hereunder. The Guarantor waives any right
to require Prudential to proceed against any additional or substitute
endorsers or guarantors or to pursue or exhaust any security provided
by the Company, the Guarantor or any other person or to pursue any
other remedy available to Prudential.
5. SUBROGATION. The Guarantor will not exercise, and hereby subordinates
to the rights of Prudential, any rights which the Guarantor may have
acquired by way of subrogation under this Guaranty Agreement by any
payment made hereunder or otherwise, or accept any payment on account
of such subrogation rights, or any rights of reimbursement,
indemnity, exoneration or contribution, any right to participate in
any claim or any rights or recourse to any security for the Notes or
this Guaranty Agreement under the Notes, the Warrants, the Preferred
Stock or the Restructuring Agreement unless and until all of the
obligations, undertakings or conditions to be performed or observed
by the Company pursuant to the Notes, the Warrants, the Preferred
Stock or the Restructuring Agreement, or to be performed or observed
by any party to the Guaranty Agreements, other than the Guarantor,
pursuant to any of the other Guaranty Agreements, shall have been
performed, observed or paid in full at the time of the Guarantor's
exercise of any such right.
6. REINSTATEMENT OF GUARANTY. This Guaranty Agreement shall continue to
be effective, or be reinstated, as the case may be, if and to the
extent at any time payment, in whole or in part, of any of the sums
due to Prudential for principal or interest on the Notes or any of
the other Guaranteed Obligations is rescinded or must otherwise be
restored or returned by Prudential upon the insolvency, bankruptcy,
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dissolution, liquidation or reorganization of the Company, or upon or
as a result of the appointment of a custodian, receiver, trustee or
other officer with similar powers with respect to the Company or any
substantial part of its property, or otherwise, all as though such
payments had not been made. If an event permitting the acceleration
of the maturity of the principal amount of the Notes shall at any
time have occurred and be continuing and such acceleration shall at
such time be prevented or the right of Prudential to receive any
payment under any Notes shall at such time be delayed or otherwise
affected by reason of the pendency against the Company of a case or
proceeding under a bankruptcy or insolvency law, the Guarantor agrees
that, for purposes of this Guaranty Agreement and its obligations
hereunder, the maturity of such principal amount shall be deemed to
have been accelerated with the same effect as if Prudential had
accelerated the same in accordance with the terms of the
Restructuring Agreement, and the Guarantor shall forthwith pay such
accelerated principal amount and accrued interest thereon and any
other amounts guaranteed hereunder.
7. SUBORDINATION OF GUARANTY AGREEMENT. Anything in this Guaranty
Agreement to the contrary notwithstanding, the Guaranteed Obligations
shall be subordinate and junior to the extent set forth in
subparagraphs (a) to (e), inclusive, below, to the Senior Debt.
(a) In the event of any insolvency, bankruptcy,
liquidation, reorganization or other similar proceedings,
or any receivership proceedings in connection therewith,
relative to the Company or the Guarantor, and in the event
of any proceedings for voluntary liquidation, dissolution
or other winding up of the Company or the Guarantor,
whether or not involving insolvency or bankruptcy
proceedings, then the Senior Debt shall first be paid in
full before any payment of or on account of Guaranteed
Obligations is made by the Guarantor.
(b) In any of the proceedings referred to in
subparagraph (a) above, any payment or distribution of any
kind or character, whether in cash, property, stock or
obligations, which may be payable or deliverable by the
Guarantor in respect of the Guaranteed Obligations shall be
paid or delivered directly to the holders of Senior Debt
(or to a banking institution selected by the court or
Person making the payment or delivery or designated by any
holder of Senior Debt) for application in payment thereof
in accordance with the priorities then existing among such
holders, unless and until all Senior Debt shall have been
paid in full; provided, however, that
(i) if the payment or delivery by the Guarantor
of such cash, property, stock or obligations to
the holders of the Notes is authorized by an
order or decree giving effect, and stating in
such order or decree that effect is given, to the
subordination of the Guaranteed Obligations to
Senior Debt, and made in a reorganization
proceeding under any applicable bankruptcy or
reorganization law, no payment or delivery by the
Guarantor of such cash, property, stock or
obligations payable or deliverable with respect
to the Guaranteed Obligations shall be made to
the holders of Senior Debt; and
(ii) no such delivery shall be made to holders of
Senior Debt of stock or obligations which are
issued pursuant to reorganization proceedings if
such stock or obligations are subordinate and
junior (whether by law or agreement) at least to
the extent provided in this Section 7 to the
payment of all Senior Debt then outstanding and
to the payment of any stock or obligations which
are issued in exchange or substitution for any
Senior Debt then outstanding.
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(c) If the Company shall default in the payment
of any principal of or interest on any Senior Debt in an
amount in excess of $250,000 owing under any single
instrument when the same becomes due and payable, whether
at maturity or at a date fixed for prepayment or by
declaration of acceleration or otherwise, then, unless and
until the date on which such default shall have been
remedied by payment in full or waived in writing, no holder
of the Notes shall accept or receive any direct or indirect
payment of or on account of any indebtedness in respect of
the Guaranteed Obligations.
(d) Upon the occurrence and during the
continuance of any Default Subordination Event (other than
under circumstances when the terms of subparagraph (i)
above are applicable), no holder of the Notes shall accept
or receive any direct or indirect payment by set-off or
otherwise of or on account of any Guaranteed Obligation
during the Stand-Still Period, provided that (a) there
shall be no more than two Stand-Still Periods during the
term of the Notes and only one in any period of 365
consecutive days and (b) in the case of any payment on or
in respect of any Notes which would (in the absence of any
such Default Subordination Event) have been due and payable
on any date during such Stand-Still Period, the provisions
of this subparagraph (iv) shall not prevent such payment on
or after the date immediately following the termination of
such Stand-Still Period.
(e) If any payment or distribution of any
character, whether in cash, securities or other property,
shall be received by any holder of Notes in contravention
of any of the terms of this Section 7 and before all the
Senior Debt shall have been paid in full, such payment or
distribution shall be received in trust for the benefit of
the holders of the Senior Debt at the time outstanding and
shall forthwith be paid over or delivered and transferred
to the holders of Senior Debt.
Obligation of the Company Unconditional. The provisions of
this Section 7 are for the purpose of defining the relative rights of
the holders of Senior Debt on the one hand, and the holders of the
Notes on the other hand, against the Guarantor and its property, and
nothing herein shall impair, as between the Guarantor and the holders
of the Notes, the obligation of the Guarantor, which is unconditional
and absolute, to pay to the holders thereof the Guaranteed
Obligations in accordance with their terms and the provisions hereof,
nor shall anything herein prevent the holders of the Notes from
exercising all remedies otherwise permitted by applicable law or
hereunder upon default hereunder or under the Notes (including,
without limitation, the right to demand payment and xxx for
performance hereof and of the Notes and to accelerate the maturity
thereof as provided in Section 8.1 of the Restructuring Agreement),
subject to the rights, if any, under this Section 7 of holders of
Senior Debt to receive cash, property, stock or obligations otherwise
payable or deliverable by the Guarantor to the holders of the Notes.
Subrogation. Upon full and final payment of the Senior
Debt, the holders of the Notes shall be subrogated to the rights of
the holders of the Senior Debt to receive payments or distributions
of assets of the Guarantor made on Senior Debt until the Guaranteed
Obligations shall be paid in full, and, for the purposes of such
subrogation, no payments to the holders of Senior Debt of any cash,
property, stock or obligations to which the holders of the Notes
would be entitled shall, as between the Guarantor, its creditors
(other than the holders of the Senior Debt) and the holders of the
Notes, be deemed to be a payment by the Guarantor to or on account of
Senior Debt.
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Subordination Definitions.
-------------------------
"DEFAULT SUBORDINATION EVENT" shall mean the existence of all of the
following: (i) a Subordination Event of Default shall have occurred
and be continuing in respect of any Senior Debt, (ii) the holders of
the Notes shall have received a notice from or on behalf of any
holder of such Senior Debt identifying each Subordination Event of
Default which has occurred and is continuing and that such notice
constitutes a "DEFAULT SUBORDINATION NOTICE and (iii) no other
Default Subordination Notice shall have been delivered by any holder
of Senior Debt within the 365 day period immediately preceding the
giving of such notice; provided that no fact or circumstances of a
Subordinated Event of Default existing on the date of such Default
Subordinated Notice may be used as a basis for any subsequent Default
Subordination Notice. The "STAND-STILL PERIOD relating to any Default
Subordination Event shall be deemed to continue until the earlier of
(x) the Subordination Event of Default under the Senior Debt giving
rise thereto shall have been cured or waived, (y) a period of 90 days
shall have elapsed from the giving of the Default Subordination
Notice relating thereto and (z) the maturity of such Senior Debt
shall have been accelerated.
"SUBORDINATION EVENT OF DEFAULT" shall mean (i) any default in the
payment of any principal or interest on any Senior Debt in an amount
in excess of $250,000 or less owing under any single instrument when
the same becomes due and payable, or (ii) any event of default under
any agreement evidencing Senior Debt arising as a result of a breach
of covenants which would entitle the holders of such Senior Debt to
accelerate the obligations under such Senior Debt.
8. REPRESENTATIONS AND WARRANTIES OF THE GUARANTOR.
The Guarantor represents and warrants as follows:
(a) Incorporation, Good Standing and Location. The Guarantor is (i) a
corporation duly incorporated, validly existing and in good standing
under the laws of the state of its incorporation, (ii) duly qualified
and authorized to do business and in good standing in every other
jurisdiction where the nature of its business requires such
qualification and (iii) has all requisite corporate power and
authority, and all governmental licenses and permits, to own and
operate its properties and to carry on its businesses as presently
conducted. The Guarantor has the requisite corporate power to enter
into and perform its obligations under this Guaranty Agreement.
(b) Approval and Enforceability of Guaranty Agreement. The execution,
delivery and performance of this Guaranty Agreement have been duly
authorized by all necessary corporate action on the part of the
Guarantor. The Guaranty Agreement has been duly and validly executed
and delivered and constitutes the legal, valid and binding obligation
of the Guarantor, enforceable against it, in accordance with its
terms, subject to (i) applicable bankruptcy, insolvency, moratorium,
reorganization, receivership and similar laws affecting the rights
and remedies of creditors generally and (ii) general principles of
equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
9. NOTICES. All notices or other communications provided for hereunder
shall be in writing and sent by first class mail or nationwide
overnight delivery service (with charges prepaid) and (i) if to
Prudential, addressed to Prudential at the address specified for
communications in Section 12.9 of the Restructuring Agreement, or at
such other address as Prudential shall have specified to the
Guarantor in writing, and (ii) if to the Guarantor, addressed to it
at 000 Xxxx Xxx Xxxxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxx 00000,
Attention: Chief Financial Officer, or at such other address as the
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Guarantor shall have specified to Prudential in writing; provided,
however, that any such communication to the Guarantor may also, at
the option of Prudential, be delivered by any other means either to
the Guarantor at its address specified above or to any officer of the
Guarantor.
10. CONSTRUCTION. The section and subsection headings in this Guaranty
Agreement are for convenience of reference only and shall neither be
deemed to be a part of this Guaranty Agreement nor modify, define,
expand or limit any of the terms or provisions hereof. All references
herein to numbered sections, unless otherwise indicated, are to
sections of this Guaranty Agreement. Words and definitions in the
singular shall be read and construed as though in the plural and vice
versa, and words in the masculine, neuter or feminine gender shall be
read and construed as though in either of the other genders where the
context so requires.
11. SEVERABILITY. If any provision of this Guaranty Agreement, or the
application thereof to any person or circumstances, shall, for any
reason or to any extent, be invalid or unenforceable, such invalidity
or unenforceability shall not in any manner affect or render invalid
or unenforceable the remainder of this Guaranty Agreement, and the
application of that provision to other persons or circumstances shall
not be affected but, rather, shall be enforced to the extent
permitted by applicable law.
12. SUCCESSORS. The terms and provisions of this Guaranty Agreement shall
be binding upon and inure to the benefit of the Guarantor and
Prudential and their respective permitted successors, transferees and
assigns.
13. ENTIRE AGREEMENT; AMENDMENT. This Guaranty Agreement expresses the
entire understanding of the subject matter hereof; and all other
understandings, written or oral, are hereby merged herein and
superseded. No amendment of or supplement to this Guaranty Agreement,
or waiver or modification of, or consent under, the terms hereof
shall be effective unless in writing and signed by the party to be
bound thereby.
14. TERM OF GUARANTY AGREEMENT. The Guaranty Agreement and all
guarantees, covenants and agreements of the Guarantor contained
herein shall continue in full force and effect and shall not be
discharged until such time as all of the Guaranteed Obligations shall
be paid or otherwise discharged in full.
15. SURVIVAL. All warranties, representations and covenants made by the
Guarantor herein or in any certificate or other instrument delivered
by it or on its behalf under this Guaranty Agreement shall be
considered to have been relied upon by Prudential and shall survive
the execution and delivery of this Guaranty Agreement, regardless of
any investigation made by Prudential or on its behalf.
16. FURTHER ASSURANCES. The Guarantor hereby agrees to execute and
deliver all such instruments and take all such action as Prudential
may from time to time reasonably request in order to effectuate fully
the purposes of this Guaranty Agreement.
17. GOVERNING LAW. THIS GUARANTY AGREEMENT SHALL BE GOVERNED BY,
CONSTRUED AND ENFORCED IN ALL RESPECTS IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE
PERFORMED ENTIRELY THEREIN.
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18. WAIVER OF JURY TRIAL; CONSENT TO JURISDICTION.
(A) THE GUARANTOR HEREBY KNOWINGLY, VOLUNTARILY, AND
INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN ANY
LITIGATION OF ANY CLAIM WHICH IS BASED HEREON, OR ARISES OUT OF,
UNDER, OR IN CONNECTION WITH THIS GUARANTY AGREEMENT OR ANY
TRANSACTIONS RELATING HERETO OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN), OR ACTIONS OF THE
GUARANTOR OR PRUDENTIAL IN CONNECTION WITH THIS GUARANTY AGREEMENT,
THE RESTRUCTURING AGREEMENT. OR ANY TRANSACTIONS RELATED THERETO. THE
GUARANTOR ACKNOWLEDGES THAT THIS PROVISION IS A MATERIAL INDUCEMENT
FOR PRUDENTIAL TO ENTER INTO THE RESTRUCTURING AGREEMENT.
(B) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
GUARANTY AGREEMENT OR ANY TRANSACTIONS RELATING HERETO OR ANY COURSE
OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN),
OR ACTIONS OF THE GUARANTOR OR PRUDENTIAL MAY BE BROUGHT IN ANY
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK
AND ANY NEW YORK STATE COURT SITTING IN NEW YORK CITY, AND THE
GUARANTOR HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY,
GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE
AFORESAID COURTS. THE GUARANTOR HEREBY IRREVOCABLY WAIVES ANY
OBJECTIONS, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE
LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS,
WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION
OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty Agreement
to be duly executed and delivered as of the date and year first above written.
ABASCO, INC.
By: /s/ Xxxxx X. Xxxxxxx
------------------------------------
Xxxxx X. Xxxxxxx,
Chairman and Chief Executive Officer
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EXECUTION COPY
SUBORDINATED GUARANTY AGREEMENT
BOOTS & XXXXX SPECIAL SERVICES, INC.
THIS SUBORDINATED GUARANTY AGREEMENT, dated as of December 28, 2000
(as the same may be amended, restated, supplemented and otherwise modified from
time to time, the "GUARANTY AGREEMENT"), is made by BOOTS & XXXXX SPECIAL
SERVICES, INC., a Texas corporation (the "GUARANTOR") in favor of THE PRUDENTIAL
INSURANCE COMPANY OF AMERICA and its successors and assigns ("Prudential").
WHEREAS, Boots & Xxxxx International Well Control, Inc., a Delaware
corporation (the "COMPANY") plans to enter into a Subordinated Note
Restructuring Agreement dated of even date herewith (as the same may be amended,
modified, supplemented or restated from time to time, the "RESTRUCTURING
AGREEMENT"; capitalized terms used herein that are defined in the Restructuring
Agreement and not otherwise defined herein shall have the respective meanings
specified in the Restructuring Agreement) with Prudential under which Prudential
will accept delivery by the Company of the Company Closing Deliveries in
satisfaction of the Preexisting Obligations; and
WHEREAS, the Company owns (either directly or indirectly) all of the
issued and outstanding capital stock of the Guarantor; and
WHEREAS, pursuant to the Restructuring Agreement, it is a condition
to Prudential's obligation to accept the transfer of the Company Closing
Deliveries and to release the Company from the Preexisting Obligations at the
Closing thereunder that this Guaranty Agreement shall have been executed and
delivered by the Guarantor and shall be in full force and effect; and
WHEREAS, the board of directors of the Guarantor has determined that
the Guarantor's execution, delivery and performance of this Guaranty Agreement
may reasonably be expected to benefit the Guarantor, directly or indirectly, and
are in the best interests of the Guarantor.
NOW THEREFORE, in order to induce, and in consideration of, the
execution and delivery of the Restructuring Agreement and for other good and
valuable consideration, the sufficiency of which is acknowledged, the Guarantor
hereby covenants and agrees with, and represents and warrants to Prudential as
follows:
1. THE GUARANTY. The Guarantor hereby irrevocably and unconditionally
guarantees to Prudential the due and punctual payment in full of (i)
the principal of and interest on (including, without limitation,
interest accruing after the filing of any petition in bankruptcy, or
the commencement of any insolvency, reorganization or like
proceeding, relating to the Company, whether or not a claim for
post-filing or post-petition interest is allowed in such proceeding)
and any other amounts due under the Notes when and as the same shall
become due and payable (whether at stated maturity or by optional
prepayment or by acceleration or otherwise) and (ii) any other sums
which may become due under the terms and provisions of the
Restructuring Agreement, including the Closing Payment, Credit
Facility Payment, and under the Preferred Stock and the Warrants
issuable thereto, and the Notes (all such obligations described in
clauses (i) and (ii) above are herein called the "GUARANTEED
OBLIGATIONS"). The guaranty in the preceding sentence is an absolute,
present and continuing guaranty of payment and not of collectibility
and is in no way conditional or contingent upon any attempt to
collect from the Company or any other guarantor of the Notes or other
Guaranteed Obligations or upon any other action, occurrence or
circumstance whatsoever. In the event that the Company shall fail so
to pay any of such Guaranteed Obligations, the Guarantor agrees to
pay the same when due to Prudential without demand, presentment,
protest or notice of any kind, in lawful money of the United States
of America, at the place for payment specified in the Notes and the
Restructuring Agreement. Each default in payment of principal of or
interest on any Notes shall give rise to a separate cause of action
hereunder and separate suits may be brought hereunder as each cause
of action arises. The Guarantor hereby agrees that the Notes issued
in connection with the Restructuring Agreement may make reference to
this guaranty.
The Guarantor hereby agrees to pay and to indemnify and save
Prudential harmless from and against any damage, loss, cost or
expense (including, without limitation, attorneys' fees) which
Prudential may incur or be subject to as a consequence, direct or
indirect, of (i) any breach by the Guarantor, by the Company or by
any other Transaction Party of any warranty, covenant, term or
condition in, or the occurrence of any default under, this Guaranty
Agreement, the Notes or the Restructuring Agreement, together with
all expenses resulting from the compromise or defense of any claims
or liabilities arising as a result of any such breach or default, and
(ii) any legal action commenced to challenge the validity of this
Guaranty Agreement, the Notes or the Restructuring Agreement.
Notwithstanding the foregoing or any other provisions of this
Guaranty Agreement, it is agreed and understood that the Guarantor
shall not be required to pay hereunder at any time more than the
Maximum Guaranteed Amount (as hereinafter defined) determined as of
such time. The Guarantor agrees that the Guaranteed Obligations may
at any time exceed the sum of the Maximum Guaranteed Amount (as
hereinafter defined) plus the aggregate maximum amount of all
obligations of all other Guarantors, without affecting or impairing
the obligation of the Guarantor. "MAXIMUM GUARANTEED AMOUNT" means as
of the date of determination, the lesser of (a) the amount of the
Guaranteed Obligations outstanding on such date and (b) the maximum
amount that would not render Guarantor's liability under this
Guaranty Agreement subject to avoidance under Section 548 of the
United States Bankruptcy Code (or any successor provision) or any
comparable provision of applicable state law.
2. OBLIGATIONS ABSOLUTE. The obligations of the Guarantor hereunder
shall be primary, absolute, irrevocable and unconditional,
irrespective of the validity, regularity or enforceability of the
Notes, the Warrants, the Preferred Stock or the Restructuring
Agreement, shall not be subject to any counterclaim, set off,
deduction or defense based upon any claim the Guarantor may have
against the Company, Prudential or otherwise, and shall remain in
full force and effect without regard to, and shall not be released,
discharged or in any way affected by, any circumstance or condition
whatsoever (whether or not the Guarantor shall have any knowledge or
notice thereof), including, without limitation: (a) any amendment,
restatement or modification of or supplement to the Notes, the
Warrants, the Preferred Stock and the Restructuring Agreement, or any
other instrument referred to therein (except that the obligations of
the Guarantor hereunder shall apply to the Notes, the Warrants, the
Preferred Stock and the Restructuring Agreement, or such other
instruments as so amended, restated, modified or supplemented) or any
assignment or transfer of any thereof or of any interest therein, or
any furnishing, acceptance or release of any security for the Notes,
(b) any waiver, consent, extension, indulgence or other action or
inaction under or in respect of the Notes, the Warrants, the
Preferred Stock or the Restructuring Agreement; (c) any bankruptcy,
insolvency, readjustment, composition, liquidation or similar
proceeding with respect to the Company or its property; (d) any
merger, amalgamation or consolidation of the Guarantor or of the
Company into or with any other corporation or any sale, lease or
transfer of any or all of the assets of the Guarantor or of the
Company to any person; (e) any failure on the part of the Company for
any reason to comply with or perform any of the terms of any other
agreement with the Guarantor; or (f) any other circumstance which
might otherwise constitute a legal or equitable discharge or defense
of a guarantor. The Guarantor covenants that its obligations
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hereunder will not be discharged except by payment and performance in
full of all of the Guaranteed Obligations.
3. WAIVER. The Guarantor unconditionally waives (a) notice of acceptance
hereof, of any action taken or omitted in reliance hereon and of any
defaults by the Company in the payment of any amounts due under the
Notes, the Warrants, the Preferred Stock or the Restructuring
Agreement, and of any of the matters referred to in Section 2 hereof,
(b) all notices which may be required by statute, rule of law or
otherwise to preserve any of the rights of Prudential against the
Guarantor, including, without limitation, presentment to or demand
for payment from the Company or the Guarantor with respect to any
Notes, notice to the Company or to the Guarantor of default or
protest for nonpayment or dishonor and the filing of claims with a
court in the event of the bankruptcy of the Company, (c) any right to
the enforcement, assertion or exercise by Prudential of any right,
power or remedy conferred in this Guaranty Agreement, the Notes, the
Warrants, the Preferred Stock or the Restructuring Agreement, (d) any
requirement of diligence on the part of Prudential and (e) any other
act or omission or thing or delay to do any other act or thing which
might in any manner or to any extent vary the risk of the Guarantor
or which might otherwise operate as a discharge of the Guarantor.
4. OBLIGATIONS UNIMPAIRED. The Guarantor authorizes Prudential, without
notice or demand to the Guarantor and without affecting its
obligations hereunder, from time to time (a) to renew, compromise,
extend, accelerate or otherwise change the time for payment of, or
otherwise change the terms of, all or any part of the Notes, the
Warrants, the Preferred Stock or the Restructuring Agreement, or any
other instrument referred to therein; (b) to take and hold security
for the payment of the Notes, for the performance of this Guaranty
Agreement or otherwise for the indebtedness guaranteed hereby and to
exchange, enforce, waive and release any such security; (c) to apply
any such security and to direct the order or manner of sale thereof
as Prudential in its sole discretion may determine; (d) to obtain
additional or substitute endorsers or guarantors; (e) to exercise or
refrain from exercising any rights against the Company and others;
and (f) to apply any sums, by whomsoever paid or however realized, to
the payment of the principal of and interest on the Notes and any
other Guaranteed Obligation hereunder. The Guarantor waives any right
to require Prudential to proceed against any additional or substitute
endorsers or guarantors or to pursue or exhaust any security provided
by the Company, the Guarantor or any other person or to pursue any
other remedy available to Prudential.
5. SUBROGATION. The Guarantor will not exercise, and hereby subordinates
to the rights of Prudential, any rights which the Guarantor may have
acquired by way of subrogation under this Guaranty Agreement by any
payment made hereunder or otherwise, or accept any payment on account
of such subrogation rights, or any rights of reimbursement,
indemnity, exoneration or contribution, any right to participate in
any claim or any rights or recourse to any security for the Notes or
this Guaranty Agreement under the Notes, the Warrants, the Preferred
Stock or the Restructuring Agreement unless and until all of the
obligations, undertakings or conditions to be performed or observed
by the Company pursuant to the Notes, the Warrants, the Preferred
Stock or the Restructuring Agreement, or to be performed or observed
by any party to the Guaranty Agreements, other than the Guarantor,
pursuant to any of the other Guaranty Agreements, shall have been
performed, observed or paid in full at the time of the Guarantor's
exercise of any such right.
6. REINSTATEMENT OF GUARANTY. This Guaranty Agreement shall continue to
be effective, or be reinstated, as the case may be, if and to the
extent at any time payment, in whole or in part, of any of the sums
due to Prudential for principal or interest on the Notes or any of
the other Guaranteed Obligations is rescinded or must otherwise be
restored or returned by Prudential upon the insolvency, bankruptcy,
3
dissolution, liquidation or reorganization of the Company, or upon or
as a result of the appointment of a custodian, receiver, trustee or
other officer with similar powers with respect to the Company or any
substantial part of its property, or otherwise, all as though such
payments had not been made. If an event permitting the acceleration
of the maturity of the principal amount of the Notes shall at any
time have occurred and be continuing and such acceleration shall at
such time be prevented or the right of Prudential to receive any
payment under any Notes shall at such time be delayed or otherwise
affected by reason of the pendency against the Company of a case or
proceeding under a bankruptcy or insolvency law, the Guarantor agrees
that, for purposes of this Guaranty Agreement and its obligations
hereunder, the maturity of such principal amount shall be deemed to
have been accelerated with the same effect as if Prudential had
accelerated the same in accordance with the terms of the
Restructuring Agreement, and the Guarantor shall forthwith pay such
accelerated principal amount and accrued interest thereon and any
other amounts guaranteed hereunder.
7. SUBORDINATION OF GUARANTY AGREEMENT. Anything in this Guaranty
Agreement to the contrary notwithstanding, the Guaranteed Obligations
shall be subordinate and junior to the extent set forth in
subparagraphs (a) to (e), inclusive, below, to the Senior Debt.
(a) In the event of any insolvency, bankruptcy,
liquidation, reorganization or other similar proceedings,
or any receivership proceedings in connection therewith,
relative to the Company or the Guarantor, and in the event
of any proceedings for voluntary liquidation, dissolution
or other winding up of the Company or the Guarantor,
whether or not involving insolvency or bankruptcy
proceedings, then the Senior Debt shall first be paid in
full before any payment of or on account of Guaranteed
Obligations is made by the Guarantor.
(b) In any of the proceedings referred to in
subparagraph (a) above, any payment or distribution of any
kind or character, whether in cash, property, stock or
obligations, which may be payable or deliverable by the
Guarantor in respect of the Guaranteed Obligations shall be
paid or delivered directly to the holders of Senior Debt
(or to a banking institution selected by the court or
Person making the payment or delivery or designated by any
holder of Senior Debt) for application in payment thereof
in accordance with the priorities then existing among such
holders, unless and until all Senior Debt shall have been
paid in full; provided, however, that
(i) if the payment or delivery by the Guarantor
of such cash, property, stock or obligations to
the holders of the Notes is authorized by an
order or decree giving effect, and stating in
such order or decree that effect is given, to the
subordination of the Guaranteed Obligations to
Senior Debt, and made in a reorganization
proceeding under any applicable bankruptcy or
reorganization law, no payment or delivery by the
Guarantor of such cash, property, stock or
obligations payable or deliverable with respect
to the Guaranteed Obligations shall be made to
the holders of Senior Debt; and
(ii) no such delivery shall be made to holders of
Senior Debt of stock or obligations which are
issued pursuant to reorganization proceedings if
such stock or obligations are subordinate and
junior (whether by law or agreement) at least to
the extent provided in this Section 7 to the
payment of all Senior Debt then outstanding and
to the payment of any stock or obligations which
are issued in exchange or substitution for any
Senior Debt then outstanding.
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(c) If the Company shall default in the payment
of any principal of or interest on any Senior Debt in an
amount in excess of $250,000 owing under any single
instrument when the same becomes due and payable, whether
at maturity or at a date fixed for prepayment or by
declaration of acceleration or otherwise, then, unless and
until the date on which such default shall have been
remedied by payment in full or waived in writing, no holder
of the Notes shall accept or receive any direct or indirect
payment of or on account of any indebtedness in respect of
the Guaranteed Obligations.
(d) Upon the occurrence and during the
continuance of any Default Subordination Event (other than
under circumstances when the terms of subparagraph (i)
above are applicable), no holder of the Notes shall accept
or receive any direct or indirect payment by set-off or
otherwise of or on account of any Guaranteed Obligation
during the Stand-Still Period, provided that (a) there
shall be no more than two Stand-Still Periods during the
term of the Notes and only one in any period of 365
consecutive days and (b) in the case of any payment on or
in respect of any Notes which would (in the absence of any
such Default Subordination Event) have been due and payable
on any date during such Stand-Still Period, the provisions
of this subparagraph (iv) shall not prevent such payment on
or after the date immediately following the termination of
such Stand-Still Period.
(e) If any payment or distribution of any
character, whether in cash, securities or other property,
shall be received by any holder of Notes in contravention
of any of the terms of this Section 7 and before all the
Senior Debt shall have been paid in full, such payment or
distribution shall be received in trust for the benefit of
the holders of the Senior Debt at the time outstanding and
shall forthwith be paid over or delivered and transferred
to the holders of Senior Debt.
Obligation of the Company Unconditional. The provisions of
this Section 7 are for the purpose of defining the relative rights of
the holders of Senior Debt on the one hand, and the holders of the
Notes on the other hand, against the Guarantor and its property, and
nothing herein shall impair, as between the Guarantor and the holders
of the Notes, the obligation of the Guarantor, which is unconditional
and absolute, to pay to the holders thereof the Guaranteed
Obligations in accordance with their terms and the provisions hereof,
nor shall anything herein prevent the holders of the Notes from
exercising all remedies otherwise permitted by applicable law or
hereunder upon default hereunder or under the Notes (including,
without limitation, the right to demand payment and xxx for
performance hereof and of the Notes and to accelerate the maturity
thereof as provided in Section 8.1 of the Restructuring Agreement),
subject to the rights, if any, under this Section 7 of holders of
Senior Debt to receive cash, property, stock or obligations otherwise
payable or deliverable by the Guarantor to the holders of the Notes.
Subrogation. Upon full and final payment of the Senior
Debt, the holders of the Notes shall be subrogated to the rights of
the holders of the Senior Debt to receive payments or distributions
of assets of the Guarantor made on Senior Debt until the Guaranteed
Obligations shall be paid in full, and, for the purposes of such
subrogation, no payments to the holders of Senior Debt of any cash,
property, stock or obligations to which the holders of the Notes
would be entitled shall, as between the Guarantor, its creditors
(other than the holders of the Senior Debt) and the holders of the
Notes, be deemed to be a payment by the Guarantor to or on account of
Senior Debt.
5
Subordination Definitions.
-------------------------
"DEFAULT SUBORDINATION EVENT" shall mean the existence of all of the
following: (i) a Subordination Event of Default shall have occurred
and be continuing in respect of any Senior Debt, (ii) the holders of
the Notes shall have received a notice from or on behalf of any
holder of such Senior Debt identifying each Subordination Event of
Default which has occurred and is continuing and that such notice
constitutes a "DEFAULT SUBORDINATION NOTICE and (iii) no other
Default Subordination Notice shall have been delivered by any holder
of Senior Debt within the 365 day period immediately preceding the
giving of such notice; provided that no fact or circumstances of a
Subordinated Event of Default existing on the date of such Default
Subordinated Notice may be used as a basis for any subsequent Default
Subordination Notice. The "STAND-STILL PERIOD relating to any Default
Subordination Event shall be deemed to continue until the earlier of
(x) the Subordination Event of Default under the Senior Debt giving
rise thereto shall have been cured or waived, (y) a period of 90 days
shall have elapsed from the giving of the Default Subordination
Notice relating thereto and (z) the maturity of such Senior Debt
shall have been accelerated.
"SUBORDINATION EVENT OF DEFAULT" shall mean (i) any default in the
payment of any principal or interest on any Senior Debt in an amount
in excess of $250,000 or less owing under any single instrument when
the same becomes due and payable, or (ii) any event of default under
any agreement evidencing Senior Debt arising as a result of a breach
of covenants which would entitle the holders of such Senior Debt to
accelerate the obligations under such Senior Debt.
8. REPRESENTATIONS AND WARRANTIES OF THE GUARANTOR.
The Guarantor represents and warrants as follows:
(a) Incorporation, Good Standing and Location. The Guarantor is (i) a
corporation duly incorporated, validly existing and in good standing
under the laws of the state of its incorporation, (ii) duly qualified
and authorized to do business and in good standing in every other
jurisdiction where the nature of its business requires such
qualification and (iii) has all requisite corporate power and
authority, and all governmental licenses and permits, to own and
operate its properties and to carry on its businesses as presently
conducted. The Guarantor has the requisite corporate power to enter
into and perform its obligations under this Guaranty Agreement.
(b) Approval and Enforceability of Guaranty Agreement. The execution,
delivery and performance of this Guaranty Agreement have been duly
authorized by all necessary corporate action on the part of the
Guarantor. The Guaranty Agreement has been duly and validly executed
and delivered and constitutes the legal, valid and binding obligation
of the Guarantor, enforceable against it, in accordance with its
terms, subject to (i) applicable bankruptcy, insolvency, moratorium,
reorganization, receivership and similar laws affecting the rights
and remedies of creditors generally and (ii) general principles of
equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
9. NOTICES. All notices or other communications provided for hereunder
shall be in writing and sent by first class mail or nationwide
overnight delivery service (with charges prepaid) and (i) if to
Prudential, addressed to Prudential at the address specified for
communications in Section 12.9 of the Restructuring Agreement, or at
such other address as Prudential shall have specified to the
Guarantor in writing, and (ii) if to the Guarantor, addressed to it
at 000 Xxxx Xxx Xxxxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxx 00000,
Attention: Chief Financial Officer, or at such other address as the
6
Guarantor shall have specified to Prudential in writing; provided,
however, that any such communication to the Guarantor may also, at
the option of Prudential, be delivered by any other means either to
the Guarantor at its address specified above or to any officer of the
Guarantor.
10. CONSTRUCTION. The section and subsection headings in this Guaranty
Agreement are for convenience of reference only and shall neither be
deemed to be a part of this Guaranty Agreement nor modify, define,
expand or limit any of the terms or provisions hereof. All references
herein to numbered sections, unless otherwise indicated, are to
sections of this Guaranty Agreement. Words and definitions in the
singular shall be read and construed as though in the plural and vice
versa, and words in the masculine, neuter or feminine gender shall be
read and construed as though in either of the other genders where the
context so requires.
11. SEVERABILITY. If any provision of this Guaranty Agreement, or the
application thereof to any person or circumstances, shall, for any
reason or to any extent, be invalid or unenforceable, such invalidity
or unenforceability shall not in any manner affect or render invalid
or unenforceable the remainder of this Guaranty Agreement, and the
application of that provision to other persons or circumstances shall
not be affected but, rather, shall be enforced to the extent
permitted by applicable law.
12. SUCCESSORS. The terms and provisions of this Guaranty Agreement shall
be binding upon and inure to the benefit of the Guarantor and
Prudential and their respective permitted successors, transferees and
assigns.
13. ENTIRE AGREEMENT; AMENDMENT. This Guaranty Agreement expresses the
entire understanding of the subject matter hereof; and all other
understandings, written or oral, are hereby merged herein and
superseded. No amendment of or supplement to this Guaranty Agreement,
or waiver or modification of, or consent under, the terms hereof
shall be effective unless in writing and signed by the party to be
bound thereby.
14. TERM OF GUARANTY AGREEMENT. The Guaranty Agreement and all
guarantees, covenants and agreements of the Guarantor contained
herein shall continue in full force and effect and shall not be
discharged until such time as all of the Guaranteed Obligations shall
be paid or otherwise discharged in full.
15. SURVIVAL. All warranties, representations and covenants made by the
Guarantor herein or in any certificate or other instrument delivered
by it or on its behalf under this Guaranty Agreement shall be
considered to have been relied upon by Prudential and shall survive
the execution and delivery of this Guaranty Agreement, regardless of
any investigation made by Prudential or on its behalf.
16. FURTHER ASSURANCES. The Guarantor hereby agrees to execute and
deliver all such instruments and take all such action as Prudential
may from time to time reasonably request in order to effectuate fully
the purposes of this Guaranty Agreement.
17. GOVERNING LAW. THIS GUARANTY AGREEMENT SHALL BE GOVERNED BY,
CONSTRUED AND ENFORCED IN ALL RESPECTS IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE
PERFORMED ENTIRELY THEREIN.
7
18. WAIVER OF JURY TRIAL; CONSENT TO JURISDICTION.
(A) THE GUARANTOR HEREBY KNOWINGLY, VOLUNTARILY, AND
INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN ANY
LITIGATION OF ANY CLAIM WHICH IS BASED HEREON, OR ARISES OUT OF,
UNDER, OR IN CONNECTION WITH THIS GUARANTY AGREEMENT OR ANY
TRANSACTIONS RELATING HERETO OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN), OR ACTIONS OF THE
GUARANTOR OR PRUDENTIAL IN CONNECTION WITH THIS GUARANTY AGREEMENT,
THE RESTRUCTURING AGREEMENT. OR ANY TRANSACTIONS RELATED THERETO. THE
GUARANTOR ACKNOWLEDGES THAT THIS PROVISION IS A MATERIAL INDUCEMENT
FOR PRUDENTIAL TO ENTER INTO THE RESTRUCTURING AGREEMENT.
(B) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
GUARANTY AGREEMENT OR ANY TRANSACTIONS RELATING HERETO OR ANY COURSE
OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN),
OR ACTIONS OF THE GUARANTOR OR PRUDENTIAL MAY BE BROUGHT IN ANY
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK
AND ANY NEW YORK STATE COURT SITTING IN NEW YORK CITY, AND THE
GUARANTOR HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY,
GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE
AFORESAID COURTS. THE GUARANTOR HEREBY IRREVOCABLY WAIVES ANY
OBJECTIONS, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE
LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS,
WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION
OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty Agreement
to be duly executed and delivered as of the date and year first above written.
BOOTS & XXXXX SPECIAL SERVICES, INC.
By: /s/ Xxxxx X. Xxxxxxx
--------------------------------------
Xxxxx X. Xxxxxxx,
Chairman and Chief Executive Officer
8
EXECUTION COPY
SUBORDINATED GUARANTY AGREEMENT
ELMAGCO, INC.
THIS SUBORDINATED GUARANTY AGREEMENT, dated as of December 28, 2000
(as the same may be amended, restated, supplemented and otherwise modified from
time to time, the "GUARANTY AGREEMENT"), is made by ELMAGCO, INC., a Delaware
corporation (the "Guarantor") in favor of THE PRUDENTIAL INSURANCE COMPANY OF
AMERICA and its successors and assigns ("PRUDENTIAL").
WHEREAS, Boots & Xxxxx International Well Control, Inc., a Delaware
corporation (the "COMPANY") plans to enter into a Subordinated Note
Restructuring Agreement dated of even date herewith (as the same may be amended,
modified, supplemented or restated from time to time, the "RESTRUCTURING
AGREEMENT"; capitalized terms used herein that are defined in the Restructuring
Agreement and not otherwise defined herein shall have the respective meanings
specified in the Restructuring Agreement) with Prudential under which Prudential
will accept delivery by the Company of the Company Closing Deliveries in
satisfaction of the Preexisting Obligations; and
WHEREAS, the Company owns (either directly or indirectly) all of the
issued and outstanding capital stock of the Guarantor; and
WHEREAS, pursuant to the Restructuring Agreement, it is a condition
to Prudential's obligation to accept the transfer of the Company Closing
Deliveries and to release the Company from the Preexisting Obligations at the
Closing thereunder that this Guaranty Agreement shall have been executed and
delivered by the Guarantor and shall be in full force and effect; and
WHEREAS, the board of directors of the Guarantor has determined that
the Guarantor's execution, delivery and performance of this Guaranty Agreement
may reasonably be expected to benefit the Guarantor, directly or indirectly, and
are in the best interests of the Guarantor.
NOW THEREFORE, in order to induce, and in consideration of, the
execution and delivery of the Restructuring Agreement and for other good and
valuable consideration, the sufficiency of which is acknowledged, the Guarantor
hereby covenants and agrees with, and represents and warrants to Prudential as
follows:
1. THE GUARANTY. The Guarantor hereby irrevocably and unconditionally
guarantees to Prudential the due and punctual payment in full of (i)
the principal of and interest on (including, without limitation,
interest accruing after the filing of any petition in bankruptcy, or
the commencement of any insolvency, reorganization or like
proceeding, relating to the Company, whether or not a claim for
post-filing or post-petition interest is allowed in such proceeding)
and any other amounts due under the Notes when and as the same shall
become due and payable (whether at stated maturity or by optional
prepayment or by acceleration or otherwise) and (ii) any other sums
which may become due under the terms and provisions of the
Restructuring Agreement, including the Closing Payment, Credit
Facility Payment, and under the Preferred Stock and the Warrants
issuable thereto, and the Notes (all such obligations described in
clauses (i) and (ii) above are herein called the "GUARANTEED
OBLIGATIONS"). The guaranty in the preceding sentence is an absolute,
present and continuing guaranty of payment and not of collectibility
and is in no way conditional or contingent upon any attempt to
collect from the Company or any other guarantor of the Notes or other
Guaranteed Obligations or upon any other action, occurrence or
circumstance whatsoever. In the event that the Company shall fail so
to pay any of such Guaranteed Obligations, the Guarantor agrees to
pay the same when due to Prudential without demand, presentment,
protest or notice of any kind, in lawful money of the United States
of America, at the place for payment specified in the Notes and the
Restructuring Agreement. Each default in payment of principal of or
interest on any Notes shall give rise to a separate cause of action
hereunder and separate suits may be brought hereunder as each cause
of action arises. The Guarantor hereby agrees that the Notes issued
in connection with the Restructuring Agreement may make reference to
this guaranty.
The Guarantor hereby agrees to pay and to indemnify and save
Prudential harmless from and against any damage, loss, cost or
expense (including, without limitation, attorneys' fees) which
Prudential may incur or be subject to as a consequence, direct or
indirect, of (i) any breach by the Guarantor, by the Company or by
any other Transaction Party of any warranty, covenant, term or
condition in, or the occurrence of any default under, this Guaranty
Agreement, the Notes or the Restructuring Agreement, together with
all expenses resulting from the compromise or defense of any claims
or liabilities arising as a result of any such breach or default, and
(ii) any legal action commenced to challenge the validity of this
Guaranty Agreement, the Notes or the Restructuring Agreement.
Notwithstanding the foregoing or any other provisions of this
Guaranty Agreement, it is agreed and understood that the Guarantor
shall not be required to pay hereunder at any time more than the
Maximum Guaranteed Amount (as hereinafter defined) determined as of
such time. The Guarantor agrees that the Guaranteed Obligations may
at any time exceed the sum of the Maximum Guaranteed Amount (as
hereinafter defined) plus the aggregate maximum amount of all
obligations of all other Guarantors, without affecting or impairing
the obligation of the Guarantor. "MAXIMUM GUARANTEED AMOUNT" means as
of the date of determination, the lesser of (a) the amount of the
Guaranteed Obligations outstanding on such date and (b) the maximum
amount that would not render Guarantor's liability under this
Guaranty Agreement subject to avoidance under Section 548 of the
United States Bankruptcy Code (or any successor provision) or any
comparable provision of applicable state law.
2. OBLIGATIONS ABSOLUTE. The obligations of the Guarantor hereunder
shall be primary, absolute, irrevocable and unconditional,
irrespective of the validity, regularity or enforceability of the
Notes, the Warrants, the Preferred Stock or the Restructuring
Agreement, shall not be subject to any counterclaim, set off,
deduction or defense based upon any claim the Guarantor may have
against the Company, Prudential or otherwise, and shall remain in
full force and effect without regard to, and shall not be released,
discharged or in any way affected by, any circumstance or condition
whatsoever (whether or not the Guarantor shall have any knowledge or
notice thereof), including, without limitation: (a) any amendment,
restatement or modification of or supplement to the Notes, the
Warrants, the Preferred Stock and the Restructuring Agreement, or any
other instrument referred to therein (except that the obligations of
the Guarantor hereunder shall apply to the Notes, the Warrants, the
Preferred Stock and the Restructuring Agreement, or such other
instruments as so amended, restated, modified or supplemented) or any
assignment or transfer of any thereof or of any interest therein, or
any furnishing, acceptance or release of any security for the Notes,
(b) any waiver, consent, extension, indulgence or other action or
inaction under or in respect of the Notes, the Warrants, the
Preferred Stock or the Restructuring Agreement; (c) any bankruptcy,
insolvency, readjustment, composition, liquidation or similar
proceeding with respect to the Company or its property; (d) any
merger, amalgamation or consolidation of the Guarantor or of the
Company into or with any other corporation or any sale, lease or
transfer of any or all of the assets of the Guarantor or of the
Company to any person; (e) any failure on the part of the Company for
any reason to comply with or perform any of the terms of any other
agreement with the Guarantor; or (f) any other circumstance which
might otherwise constitute a legal or equitable discharge or defense
of a guarantor. The Guarantor covenants that its obligations
2
hereunder will not be discharged except by payment and performance in
full of all of the Guaranteed Obligations.
3. WAIVER. The Guarantor unconditionally waives (a) notice of acceptance
hereof, of any action taken or omitted in reliance hereon and of any
defaults by the Company in the payment of any amounts due under the
Notes, the Warrants, the Preferred Stock or the Restructuring
Agreement, and of any of the matters referred to in Section 2 hereof,
(b) all notices which may be required by statute, rule of law or
otherwise to preserve any of the rights of Prudential against the
Guarantor, including, without limitation, presentment to or demand
for payment from the Company or the Guarantor with respect to any
Notes, notice to the Company or to the Guarantor of default or
protest for nonpayment or dishonor and the filing of claims with a
court in the event of the bankruptcy of the Company, (c) any right to
the enforcement, assertion or exercise by Prudential of any right,
power or remedy conferred in this Guaranty Agreement, the Notes, the
Warrants, the Preferred Stock or the Restructuring Agreement, (d) any
requirement of diligence on the part of Prudential and (e) any other
act or omission or thing or delay to do any other act or thing which
might in any manner or to any extent vary the risk of the Guarantor
or which might otherwise operate as a discharge of the Guarantor.
4. OBLIGATIONS UNIMPAIRED. The Guarantor authorizes Prudential, without
notice or demand to the Guarantor and without affecting its
obligations hereunder, from time to time (a) to renew, compromise,
extend, accelerate or otherwise change the time for payment of, or
otherwise change the terms of, all or any part of the Notes, the
Warrants, the Preferred Stock or the Restructuring Agreement, or any
other instrument referred to therein; (b) to take and hold security
for the payment of the Notes, for the performance of this Guaranty
Agreement or otherwise for the indebtedness guaranteed hereby and to
exchange, enforce, waive and release any such security; (c) to apply
any such security and to direct the order or manner of sale thereof
as Prudential in its sole discretion may determine; (d) to obtain
additional or substitute endorsers or guarantors; (e) to exercise or
refrain from exercising any rights against the Company and others;
and (f) to apply any sums, by whomsoever paid or however realized, to
the payment of the principal of and interest on the Notes and any
other Guaranteed Obligation hereunder. The Guarantor waives any right
to require Prudential to proceed against any additional or substitute
endorsers or guarantors or to pursue or exhaust any security provided
by the Company, the Guarantor or any other person or to pursue any
other remedy available to Prudential.
5. SUBROGATION. The Guarantor will not exercise, and hereby subordinates
to the rights of Prudential, any rights which the Guarantor may have
acquired by way of subrogation under this Guaranty Agreement by any
payment made hereunder or otherwise, or accept any payment on account
of such subrogation rights, or any rights of reimbursement,
indemnity, exoneration or contribution, any right to participate in
any claim or any rights or recourse to any security for the Notes or
this Guaranty Agreement under the Notes, the Warrants, the Preferred
Stock or the Restructuring Agreement unless and until all of the
obligations, undertakings or conditions to be performed or observed
by the Company pursuant to the Notes, the Warrants, the Preferred
Stock or the Restructuring Agreement, or to be performed or observed
by any party to the Guaranty Agreements, other than the Guarantor,
pursuant to any of the other Guaranty Agreements, shall have been
performed, observed or paid in full at the time of the Guarantor's
exercise of any such right.
6. REINSTATEMENT OF GUARANTY. This Guaranty Agreement shall continue to
be effective, or be reinstated, as the case may be, if and to the
extent at any time payment, in whole or in part, of any of the sums
due to Prudential for principal or interest on the Notes or any of
the other Guaranteed Obligations is rescinded or must otherwise be
restored or returned by Prudential upon the insolvency, bankruptcy,
3
dissolution, liquidation or reorganization of the Company, or upon or
as a result of the appointment of a custodian, receiver, trustee or
other officer with similar powers with respect to the Company or any
substantial part of its property, or otherwise, all as though such
payments had not been made. If an event permitting the acceleration
of the maturity of the principal amount of the Notes shall at any
time have occurred and be continuing and such acceleration shall at
such time be prevented or the right of Prudential to receive any
payment under any Notes shall at such time be delayed or otherwise
affected by reason of the pendency against the Company of a case or
proceeding under a bankruptcy or insolvency law, the Guarantor agrees
that, for purposes of this Guaranty Agreement and its obligations
hereunder, the maturity of such principal amount shall be deemed to
have been accelerated with the same effect as if Prudential had
accelerated the same in accordance with the terms of the
Restructuring Agreement, and the Guarantor shall forthwith pay such
accelerated principal amount and accrued interest thereon and any
other amounts guaranteed hereunder.
7. SUBORDINATION OF GUARANTY AGREEMENT. Anything in this Guaranty
Agreement to the contrary notwithstanding, the Guaranteed Obligations
shall be subordinate and junior to the extent set forth in
subparagraphs (a) to (e), inclusive, below, to the Senior Debt.
(a) In the event of any insolvency, bankruptcy,
liquidation, reorganization or other similar proceedings,
or any receivership proceedings in connection therewith,
relative to the Company or the Guarantor, and in the event
of any proceedings for voluntary liquidation, dissolution
or other winding up of the Company or the Guarantor,
whether or not involving insolvency or bankruptcy
proceedings, then the Senior Debt shall first be paid in
full before any payment of or on account of Guaranteed
Obligations is made by the Guarantor.
(b) In any of the proceedings referred to in
subparagraph (a) above, any payment or distribution of any
kind or character, whether in cash, property, stock or
obligations, which may be payable or deliverable by the
Guarantor in respect of the Guaranteed Obligations shall be
paid or delivered directly to the holders of Senior Debt
(or to a banking institution selected by the court or
Person making the payment or delivery or designated by any
holder of Senior Debt) for application in payment thereof
in accordance with the priorities then existing among such
holders, unless and until all Senior Debt shall have been
paid in full; provided, however, that
(i) if the payment or delivery by the Guarantor
of such cash, property, stock or obligations to
the holders of the Notes is authorized by an
order or decree giving effect, and stating in
such order or decree that effect is given, to the
subordination of the Guaranteed Obligations to
Senior Debt, and made in a reorganization
proceeding under any applicable bankruptcy or
reorganization law, no payment or delivery by the
Guarantor of such cash, property, stock or
obligations payable or deliverable with respect
to the Guaranteed Obligations shall be made to
the holders of Senior Debt; and
(ii) no such delivery shall be made to holders of
Senior Debt of stock or obligations which are
issued pursuant to reorganization proceedings if
such stock or obligations are subordinate and
junior (whether by law or agreement) at least to
the extent provided in this Section 7 to the
payment of all Senior Debt then outstanding and
to the payment of any stock or obligations which
are issued in exchange or substitution for any
Senior Debt then outstanding.
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(c) If the Company shall default in the payment
of any principal of or interest on any Senior Debt in an
amount in excess of $250,000 owing under any single
instrument when the same becomes due and payable, whether
at maturity or at a date fixed for prepayment or by
declaration of acceleration or otherwise, then, unless and
until the date on which such default shall have been
remedied by payment in full or waived in writing, no holder
of the Notes shall accept or receive any direct or indirect
payment of or on account of any indebtedness in respect of
the Guaranteed Obligations.
(d) Upon the occurrence and during the
continuance of any Default Subordination Event (other than
under circumstances when the terms of subparagraph (i)
above are applicable), no holder of the Notes shall accept
or receive any direct or indirect payment by set-off or
otherwise of or on account of any Guaranteed Obligation
during the Stand-Still Period, provided that (a) there
shall be no more than two Stand-Still Periods during the
term of the Notes and only one in any period of 365
consecutive days and (b) in the case of any payment on or
in respect of any Notes which would (in the absence of any
such Default Subordination Event) have been due and payable
on any date during such Stand-Still Period, the provisions
of this subparagraph (iv) shall not prevent such payment on
or after the date immediately following the termination of
such Stand-Still Period.
(e) If any payment or distribution of any
character, whether in cash, securities or other property,
shall be received by any holder of Notes in contravention
of any of the terms of this Section 7 and before all the
Senior Debt shall have been paid in full, such payment or
distribution shall be received in trust for the benefit of
the holders of the Senior Debt at the time outstanding and
shall forthwith be paid over or delivered and transferred
to the holders of Senior Debt.
Obligation of the Company Unconditional. The provisions of
this Section 7 are for the purpose of defining the relative rights of
the holders of Senior Debt on the one hand, and the holders of the
Notes on the other hand, against the Guarantor and its property, and
nothing herein shall impair, as between the Guarantor and the holders
of the Notes, the obligation of the Guarantor, which is unconditional
and absolute, to pay to the holders thereof the Guaranteed
Obligations in accordance with their terms and the provisions hereof,
nor shall anything herein prevent the holders of the Notes from
exercising all remedies otherwise permitted by applicable law or
hereunder upon default hereunder or under the Notes (including,
without limitation, the right to demand payment and xxx for
performance hereof and of the Notes and to accelerate the maturity
thereof as provided in Section 8.1 of the Restructuring Agreement),
subject to the rights, if any, under this Section 7 of holders of
Senior Debt to receive cash, property, stock or obligations otherwise
payable or deliverable by the Guarantor to the holders of the Notes.
Subrogation. Upon full and final payment of the Senior
Debt, the holders of the Notes shall be subrogated to the rights of
the holders of the Senior Debt to receive payments or distributions
of assets of the Guarantor made on Senior Debt until the Guaranteed
Obligations shall be paid in full, and, for the purposes of such
subrogation, no payments to the holders of Senior Debt of any cash,
property, stock or obligations to which the holders of the Notes
would be entitled shall, as between the Guarantor, its creditors
(other than the holders of the Senior Debt) and the holders of the
Notes, be deemed to be a payment by the Guarantor to or on account of
Senior Debt.
5
Subordination Definitions.
-------------------------
"DEFAULT SUBORDINATION EVENT" shall mean the existence of all of the
following: (i) a Subordination Event of Default shall have occurred
and be continuing in respect of any Senior Debt, (ii) the holders of
the Notes shall have received a notice from or on behalf of any
holder of such Senior Debt identifying each Subordination Event of
Default which has occurred and is continuing and that such notice
constitutes a "DEFAULT SUBORDINATION NOTICE and (iii) no other
Default Subordination Notice shall have been delivered by any holder
of Senior Debt within the 365 day period immediately preceding the
giving of such notice; provided that no fact or circumstances of a
Subordinated Event of Default existing on the date of such Default
Subordinated Notice may be used as a basis for any subsequent Default
Subordination Notice. The "STAND-STILL PERIOD relating to any Default
Subordination Event shall be deemed to continue until the earlier of
(x) the Subordination Event of Default under the Senior Debt giving
rise thereto shall have been cured or waived, (y) a period of 90 days
shall have elapsed from the giving of the Default Subordination
Notice relating thereto and (z) the maturity of such Senior Debt
shall have been accelerated.
"SUBORDINATION EVENT OF DEFAULT" shall mean (i) any default in the
payment of any principal or interest on any Senior Debt in an amount
in excess of $250,000 or less owing under any single instrument when
the same becomes due and payable, or (ii) any event of default under
any agreement evidencing Senior Debt arising as a result of a breach
of covenants which would entitle the holders of such Senior Debt to
accelerate the obligations under such Senior Debt.
8. REPRESENTATIONS AND WARRANTIES OF THE GUARANTOR.
The Guarantor represents and warrants as follows:
(a) Incorporation, Good Standing and Location. The Guarantor is (i) a
corporation duly incorporated, validly existing and in good standing
under the laws of the state of its incorporation, (ii) duly qualified
and authorized to do business and in good standing in every other
jurisdiction where the nature of its business requires such
qualification and (iii) has all requisite corporate power and
authority, and all governmental licenses and permits, to own and
operate its properties and to carry on its businesses as presently
conducted. The Guarantor has the requisite corporate power to enter
into and perform its obligations under this Guaranty Agreement.
(b) Approval and Enforceability of Guaranty Agreement. The execution,
delivery and performance of this Guaranty Agreement have been duly
authorized by all necessary corporate action on the part of the
Guarantor. The Guaranty Agreement has been duly and validly executed
and delivered and constitutes the legal, valid and binding obligation
of the Guarantor, enforceable against it, in accordance with its
terms, subject to (i) applicable bankruptcy, insolvency, moratorium,
reorganization, receivership and similar laws affecting the rights
and remedies of creditors generally and (ii) general principles of
equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
9. NOTICES. All notices or other communications provided for hereunder
shall be in writing and sent by first class mail or nationwide
overnight delivery service (with charges prepaid) and (i) if to
Prudential, addressed to Prudential at the address specified for
communications in Section 12.9 of the Restructuring Agreement, or at
such other address as Prudential shall have specified to the
Guarantor in writing, and (ii) if to the Guarantor, addressed to it
at 000 Xxxx Xxx Xxxxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxx 00000,
Attention: Chief Financial Officer, or at such other address as the
6
Guarantor shall have specified to Prudential in writing; provided,
however, that any such communication to the Guarantor may also, at
the option of Prudential, be delivered by any other means either to
the Guarantor at its address specified above or to any officer of the
Guarantor.
10. CONSTRUCTION. The section and subsection headings in this Guaranty
Agreement are for convenience of reference only and shall neither be
deemed to be a part of this Guaranty Agreement nor modify, define,
expand or limit any of the terms or provisions hereof. All references
herein to numbered sections, unless otherwise indicated, are to
sections of this Guaranty Agreement. Words and definitions in the
singular shall be read and construed as though in the plural and vice
versa, and words in the masculine, neuter or feminine gender shall be
read and construed as though in either of the other genders where the
context so requires.
11. SEVERABILITY. If any provision of this Guaranty Agreement, or the
application thereof to any person or circumstances, shall, for any
reason or to any extent, be invalid or unenforceable, such invalidity
or unenforceability shall not in any manner affect or render invalid
or unenforceable the remainder of this Guaranty Agreement, and the
application of that provision to other persons or circumstances shall
not be affected but, rather, shall be enforced to the extent
permitted by applicable law.
12. SUCCESSORS. The terms and provisions of this Guaranty Agreement shall
be binding upon and inure to the benefit of the Guarantor and
Prudential and their respective permitted successors, transferees and
assigns.
13. ENTIRE AGREEMENT; AMENDMENT. This Guaranty Agreement expresses the
entire understanding of the subject matter hereof; and all other
understandings, written or oral, are hereby merged herein and
superseded. No amendment of or supplement to this Guaranty Agreement,
or waiver or modification of, or consent under, the terms hereof
shall be effective unless in writing and signed by the party to be
bound thereby.
14. TERM OF GUARANTY AGREEMENT. The Guaranty Agreement and all
guarantees, covenants and agreements of the Guarantor contained
herein shall continue in full force and effect and shall not be
discharged until such time as all of the Guaranteed Obligations shall
be paid or otherwise discharged in full.
15. SURVIVAL. All warranties, representations and covenants made by the
Guarantor herein or in any certificate or other instrument delivered
by it or on its behalf under this Guaranty Agreement shall be
considered to have been relied upon by Prudential and shall survive
the execution and delivery of this Guaranty Agreement, regardless of
any investigation made by Prudential or on its behalf.
16. FURTHER ASSURANCES. The Guarantor hereby agrees to execute and
deliver all such instruments and take all such action as Prudential
may from time to time reasonably request in order to effectuate fully
the purposes of this Guaranty Agreement.
17. GOVERNING LAW. THIS GUARANTY AGREEMENT SHALL BE GOVERNED BY,
CONSTRUED AND ENFORCED IN ALL RESPECTS IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE
PERFORMED ENTIRELY THEREIN.
7
18. WAIVER OF JURY TRIAL; CONSENT TO JURISDICTION.
(A) THE GUARANTOR HEREBY KNOWINGLY, VOLUNTARILY, AND
INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN ANY
LITIGATION OF ANY CLAIM WHICH IS BASED HEREON, OR ARISES OUT OF,
UNDER, OR IN CONNECTION WITH THIS GUARANTY AGREEMENT OR ANY
TRANSACTIONS RELATING HERETO OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN), OR ACTIONS OF THE
GUARANTOR OR PRUDENTIAL IN CONNECTION WITH THIS GUARANTY AGREEMENT,
THE RESTRUCTURING AGREEMENT. OR ANY TRANSACTIONS RELATED THERETO. THE
GUARANTOR ACKNOWLEDGES THAT THIS PROVISION IS A MATERIAL INDUCEMENT
FOR PRUDENTIAL TO ENTER INTO THE RESTRUCTURING AGREEMENT.
(B) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
GUARANTY AGREEMENT OR ANY TRANSACTIONS RELATING HERETO OR ANY COURSE
OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN),
OR ACTIONS OF THE GUARANTOR OR PRUDENTIAL MAY BE BROUGHT IN ANY
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK
AND ANY NEW YORK STATE COURT SITTING IN NEW YORK CITY, AND THE
GUARANTOR HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY,
GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE
AFORESAID COURTS. THE GUARANTOR HEREBY IRREVOCABLY WAIVES ANY
OBJECTIONS, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE
LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS,
WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION
OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty Agreement
to be duly executed and delivered as of the date and year first above written.
ELMAGCO, INC.
By: /s/ Xxxxx X. Xxxxxxx
-------------------------------------
Xxxxx X. Xxxxxxx,
Chairman and Chief Executive Officer
8
EXECUTION COPY
SUBORDINATED GUARANTY AGREEMENT
HELL FIGHTERS, INC.
THIS SUBORDINATED GUARANTY AGREEMENT, dated as of December 28, 2000
(as the same may be amended, restated, supplemented and otherwise modified from
time to time, the "GUARANTY AGREEMENT"), is made by HELL FIGHTERS, INC., a Texas
corporation (the "GUARANTOR") in favor of THE PRUDENTIAL INSURANCE COMPANY OF
AMERICA and its successors and assigns ("PRUDENTIAL").
WHEREAS, Boots & Xxxxx International Well Control, Inc., a Delaware
corporation (the "COMPANY") plans to enter into a Subordinated Note
Restructuring Agreement dated of even date herewith (as the same may be amended,
modified, supplemented or restated from time to time, the "RESTRUCTURING
AGREEMENT"; capitalized terms used herein that are defined in the Restructuring
Agreement and not otherwise defined herein shall have the respective meanings
specified in the Restructuring Agreement) with Prudential under which Prudential
will accept delivery by the Company of the Company Closing Deliveries in
satisfaction of the Preexisting Obligations; and
WHEREAS, the Company owns (either directly or indirectly) all of the
issued and outstanding capital stock of the Guarantor; and
WHEREAS, pursuant to the Restructuring Agreement, it is a condition
to Prudential's obligation to accept the transfer of the Company Closing
Deliveries and to release the Company from the Preexisting Obligations at the
Closing thereunder that this Guaranty Agreement shall have been executed and
delivered by the Guarantor and shall be in full force and effect; and
WHEREAS, the board of directors of the Guarantor has determined that
the Guarantor's execution, delivery and performance of this Guaranty Agreement
may reasonably be expected to benefit the Guarantor, directly or indirectly, and
are in the best interests of the Guarantor.
NOW THEREFORE, in order to induce, and in consideration of, the
execution and delivery of the Restructuring Agreement and for other good and
valuable consideration, the sufficiency of which is acknowledged, the Guarantor
hereby covenants and agrees with, and represents and warrants to Prudential as
follows:
1. THE GUARANTY. The Guarantor hereby irrevocably and unconditionally
guarantees to Prudential the due and punctual payment in full of (i)
the principal of and interest on (including, without limitation,
interest accruing after the filing of any petition in bankruptcy, or
the commencement of any insolvency, reorganization or like
proceeding, relating to the Company, whether or not a claim for
post-filing or post-petition interest is allowed in such proceeding)
and any other amounts due under the Notes when and as the same shall
become due and payable (whether at stated maturity or by optional
prepayment or by acceleration or otherwise) and (ii) any other sums
which may become due under the terms and provisions of the
Restructuring Agreement, including the Closing Payment, Credit
Facility Payment, and under the Preferred Stock and the Warrants
issuable thereto, and the Notes (all such obligations described in
clauses (i) and (ii) above are herein called the "GUARANTEED
OBLIGATIONS"). The guaranty in the preceding sentence is an absolute,
present and continuing guaranty of payment and not of collectibility
and is in no way conditional or contingent upon any attempt to
collect from the Company or any other guarantor of the Notes or other
Guaranteed Obligations or upon any other action, occurrence or
circumstance whatsoever. In the event that the Company shall fail so
to pay any of such Guaranteed Obligations, the Guarantor agrees to
pay the same when due to Prudential without demand, presentment,
protest or notice of any kind, in lawful money of the United States
of America, at the place for payment specified in the Notes and the
Restructuring Agreement. Each default in payment of principal of or
interest on any Notes shall give rise to a separate cause of action
hereunder and separate suits may be brought hereunder as each cause
of action arises. The Guarantor hereby agrees that the Notes issued
in connection with the Restructuring Agreement may make reference to
this guaranty.
The Guarantor hereby agrees to pay and to indemnify and save
Prudential harmless from and against any damage, loss, cost or
expense (including, without limitation, attorneys' fees) which
Prudential may incur or be subject to as a consequence, direct or
indirect, of (i) any breach by the Guarantor, by the Company or by
any other Transaction Party of any warranty, covenant, term or
condition in, or the occurrence of any default under, this Guaranty
Agreement, the Notes or the Restructuring Agreement, together with
all expenses resulting from the compromise or defense of any claims
or liabilities arising as a result of any such breach or default, and
(ii) any legal action commenced to challenge the validity of this
Guaranty Agreement, the Notes or the Restructuring Agreement.
Notwithstanding the foregoing or any other provisions of this
Guaranty Agreement, it is agreed and understood that the Guarantor
shall not be required to pay hereunder at any time more than the
Maximum Guaranteed Amount (as hereinafter defined) determined as of
such time. The Guarantor agrees that the Guaranteed Obligations may
at any time exceed the sum of the Maximum Guaranteed Amount (as
hereinafter defined) plus the aggregate maximum amount of all
obligations of all other Guarantors, without affecting or impairing
the obligation of the Guarantor. "MAXIMUM GUARANTEED AMOUNT" means as
of the date of determination, the lesser of (a) the amount of the
Guaranteed Obligations outstanding on such date and (b) the maximum
amount that would not render Guarantor's liability under this
Guaranty Agreement subject to avoidance under Section 548 of the
United States Bankruptcy Code (or any successor provision) or any
comparable provision of applicable state law.
2. OBLIGATIONS ABSOLUTE. The obligations of the Guarantor hereunder
shall be primary, absolute, irrevocable and unconditional,
irrespective of the validity, regularity or enforceability of the
Notes, the Warrants, the Preferred Stock or the Restructuring
Agreement, shall not be subject to any counterclaim, set off,
deduction or defense based upon any claim the Guarantor may have
against the Company, Prudential or otherwise, and shall remain in
full force and effect without regard to, and shall not be released,
discharged or in any way affected by, any circumstance or condition
whatsoever (whether or not the Guarantor shall have any knowledge or
notice thereof), including, without limitation: (a) any amendment,
restatement or modification of or supplement to the Notes, the
Warrants, the Preferred Stock and the Restructuring Agreement, or any
other instrument referred to therein (except that the obligations of
the Guarantor hereunder shall apply to the Notes, the Warrants, the
Preferred Stock and the Restructuring Agreement, or such other
instruments as so amended, restated, modified or supplemented) or any
assignment or transfer of any thereof or of any interest therein, or
any furnishing, acceptance or release of any security for the Notes,
(b) any waiver, consent, extension, indulgence or other action or
inaction under or in respect of the Notes, the Warrants, the
Preferred Stock or the Restructuring Agreement; (c) any bankruptcy,
insolvency, readjustment, composition, liquidation or similar
proceeding with respect to the Company or its property; (d) any
merger, amalgamation or consolidation of the Guarantor or of the
Company into or with any other corporation or any sale, lease or
transfer of any or all of the assets of the Guarantor or of the
Company to any person; (e) any failure on the part of the Company for
any reason to comply with or perform any of the terms of any other
agreement with the Guarantor; or (f) any other circumstance which
might otherwise constitute a legal or equitable discharge or defense
of a guarantor. The Guarantor covenants that its obligations
2
hereunder will not be discharged except by payment and performance in
full of all of the Guaranteed Obligations.
3. WAIVER. The Guarantor unconditionally waives (a) notice of acceptance
hereof, of any action taken or omitted in reliance hereon and of any
defaults by the Company in the payment of any amounts due under the
Notes, the Warrants, the Preferred Stock or the Restructuring
Agreement, and of any of the matters referred to in Section 2 hereof,
(b) all notices which may be required by statute, rule of law or
otherwise to preserve any of the rights of Prudential against the
Guarantor, including, without limitation, presentment to or demand
for payment from the Company or the Guarantor with respect to any
Notes, notice to the Company or to the Guarantor of default or
protest for nonpayment or dishonor and the filing of claims with a
court in the event of the bankruptcy of the Company, (c) any right to
the enforcement, assertion or exercise by Prudential of any right,
power or remedy conferred in this Guaranty Agreement, the Notes, the
Warrants, the Preferred Stock or the Restructuring Agreement, (d) any
requirement of diligence on the part of Prudential and (e) any other
act or omission or thing or delay to do any other act or thing which
might in any manner or to any extent vary the risk of the Guarantor
or which might otherwise operate as a discharge of the Guarantor.
4. OBLIGATIONS UNIMPAIRED. The Guarantor authorizes Prudential, without
notice or demand to the Guarantor and without affecting its
obligations hereunder, from time to time (a) to renew, compromise,
extend, accelerate or otherwise change the time for payment of, or
otherwise change the terms of, all or any part of the Notes, the
Warrants, the Preferred Stock or the Restructuring Agreement, or any
other instrument referred to therein; (b) to take and hold security
for the payment of the Notes, for the performance of this Guaranty
Agreement or otherwise for the indebtedness guaranteed hereby and to
exchange, enforce, waive and release any such security; (c) to apply
any such security and to direct the order or manner of sale thereof
as Prudential in its sole discretion may determine; (d) to obtain
additional or substitute endorsers or guarantors; (e) to exercise or
refrain from exercising any rights against the Company and others;
and (f) to apply any sums, by whomsoever paid or however realized, to
the payment of the principal of and interest on the Notes and any
other Guaranteed Obligation hereunder. The Guarantor waives any right
to require Prudential to proceed against any additional or substitute
endorsers or guarantors or to pursue or exhaust any security provided
by the Company, the Guarantor or any other person or to pursue any
other remedy available to Prudential.
5. SUBROGATION. The Guarantor will not exercise, and hereby subordinates
to the rights of Prudential, any rights which the Guarantor may have
acquired by way of subrogation under this Guaranty Agreement by any
payment made hereunder or otherwise, or accept any payment on account
of such subrogation rights, or any rights of reimbursement,
indemnity, exoneration or contribution, any right to participate in
any claim or any rights or recourse to any security for the Notes or
this Guaranty Agreement under the Notes, the Warrants, the Preferred
Stock or the Restructuring Agreement unless and until all of the
obligations, undertakings or conditions to be performed or observed
by the Company pursuant to the Notes, the Warrants, the Preferred
Stock or the Restructuring Agreement, or to be performed or observed
by any party to the Guaranty Agreements, other than the Guarantor,
pursuant to any of the other Guaranty Agreements, shall have been
performed, observed or paid in full at the time of the Guarantor's
exercise of any such right.
6. REINSTATEMENT OF GUARANTY. This Guaranty Agreement shall continue to
be effective, or be reinstated, as the case may be, if and to the
extent at any time payment, in whole or in part, of any of the sums
due to Prudential for principal or interest on the Notes or any of
the other Guaranteed Obligations is rescinded or must otherwise be
3
restored or returned by Prudential upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of the Company, or upon or
as a result of the appointment of a custodian, receiver, trustee or
other officer with similar powers with respect to the Company or any
substantial part of its property, or otherwise, all as though such
payments had not been made. If an event permitting the acceleration
of the maturity of the principal amount of the Notes shall at any
time have occurred and be continuing and such acceleration shall at
such time be prevented or the right of Prudential to receive any
payment under any Notes shall at such time be delayed or otherwise
affected by reason of the pendency against the Company of a case or
proceeding under a bankruptcy or insolvency law, the Guarantor agrees
that, for purposes of this Guaranty Agreement and its obligations
hereunder, the maturity of such principal amount shall be deemed to
have been accelerated with the same effect as if Prudential had
accelerated the same in accordance with the terms of the
Restructuring Agreement, and the Guarantor shall forthwith pay such
accelerated principal amount and accrued interest thereon and any
other amounts guaranteed hereunder.
7. SUBORDINATION OF GUARANTY AGREEMENT. Anything in this Guaranty
Agreement to the contrary notwithstanding, the Guaranteed Obligations
shall be subordinate and junior to the extent set forth in
subparagraphs (a) to (e), inclusive, below, to the Senior Debt.
(a) In the event of any insolvency, bankruptcy,
liquidation, reorganization or other similar proceedings,
or any receivership proceedings in connection therewith,
relative to the Company or the Guarantor, and in the event
of any proceedings for voluntary liquidation, dissolution
or other winding up of the Company or the Guarantor,
whether or not involving insolvency or bankruptcy
proceedings, then the Senior Debt shall first be paid in
full before any payment of or on account of Guaranteed
Obligations is made by the Guarantor.
(b) In any of the proceedings referred to in
subparagraph (a) above, any payment or distribution of any
kind or character, whether in cash, property, stock or
obligations, which may be payable or deliverable by the
Guarantor in respect of the Guaranteed Obligations shall be
paid or delivered directly to the holders of Senior Debt
(or to a banking institution selected by the court or
Person making the payment or delivery or designated by any
holder of Senior Debt) for application in payment thereof
in accordance with the priorities then existing among such
holders, unless and until all Senior Debt shall have been
paid in full; provided, however, that
(i) if the payment or delivery by the Guarantor
of such cash, property, stock or obligations to
the holders of the Notes is authorized by an
order or decree giving effect, and stating in
such order or decree that effect is given, to the
subordination of the Guaranteed Obligations to
Senior Debt, and made in a reorganization
proceeding under any applicable bankruptcy or
reorganization law, no payment or delivery by the
Guarantor of such cash, property, stock or
obligations payable or deliverable with respect
to the Guaranteed Obligations shall be made to
the holders of Senior Debt; and
(ii) no such delivery shall be made to holders of
Senior Debt of stock or obligations which are
issued pursuant to reorganization proceedings if
such stock or obligations are subordinate and
junior (whether by law or agreement) at least to
the extent provided in this Section 7 to the
payment of all Senior Debt then outstanding and
to the payment of any stock or obligations which
are issued in exchange or substitution for any
Senior Debt then outstanding.
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(c) If the Company shall default in the payment
of any principal of or interest on any Senior Debt in an
amount in excess of $250,000 owing under any single
instrument when the same becomes due and payable, whether
at maturity or at a date fixed for prepayment or by
declaration of acceleration or otherwise, then, unless and
until the date on which such default shall have been
remedied by payment in full or waived in writing, no holder
of the Notes shall accept or receive any direct or indirect
payment of or on account of any indebtedness in respect of
the Guaranteed Obligations.
(d) Upon the occurrence and during the
continuance of any Default Subordination Event (other than
under circumstances when the terms of subparagraph (i)
above are applicable), no holder of the Notes shall accept
or receive any direct or indirect payment by set-off or
otherwise of or on account of any Guaranteed Obligation
during the Stand-Still Period, provided that (a) there
shall be no more than two Stand-Still Periods during the
term of the Notes and only one in any period of 365
consecutive days and (b) in the case of any payment on or
in respect of any Notes which would (in the absence of any
such Default Subordination Event) have been due and payable
on any date during such Stand-Still Period, the provisions
of this subparagraph (iv) shall not prevent such payment on
or after the date immediately following the termination of
such Stand-Still Period.
(e) If any payment or distribution of any
character, whether in cash, securities or other property,
shall be received by any holder of Notes in contravention
of any of the terms of this Section 7 and before all the
Senior Debt shall have been paid in full, such payment or
distribution shall be received in trust for the benefit of
the holders of the Senior Debt at the time outstanding and
shall forthwith be paid over or delivered and transferred
to the holders of Senior Debt.
Obligation of the Company Unconditional. The provisions of
this Section 7 are for the purpose of defining the relative rights of
the holders of Senior Debt on the one hand, and the holders of the
Notes on the other hand, against the Guarantor and its property, and
nothing herein shall impair, as between the Guarantor and the holders
of the Notes, the obligation of the Guarantor, which is unconditional
and absolute, to pay to the holders thereof the Guaranteed
Obligations in accordance with their terms and the provisions hereof,
nor shall anything herein prevent the holders of the Notes from
exercising all remedies otherwise permitted by applicable law or
hereunder upon default hereunder or under the Notes (including,
without limitation, the right to demand payment and xxx for
performance hereof and of the Notes and to accelerate the maturity
thereof as provided in Section 8.1 of the Restructuring Agreement),
subject to the rights, if any, under this Section 7 of holders of
Senior Debt to receive cash, property, stock or obligations otherwise
payable or deliverable by the Guarantor to the holders of the Notes.
Subrogation. Upon full and final payment of the Senior
Debt, the holders of the Notes shall be subrogated to the rights of
the holders of the Senior Debt to receive payments or distributions
of assets of the Guarantor made on Senior Debt until the Guaranteed
Obligations shall be paid in full, and, for the purposes of such
subrogation, no payments to the holders of Senior Debt of any cash,
property, stock or obligations to which the holders of the Notes
would be entitled shall, as between the Guarantor, its creditors
(other than the holders of the Senior Debt) and the holders of the
Notes, be deemed to be a payment by the Guarantor to or on account of
Senior Debt.
5
Subordination Definitions.
-------------------------
"DEFAULT SUBORDINATION EVENT" shall mean the existence of all of the
following: (i) a Subordination Event of Default shall have occurred
and be continuing in respect of any Senior Debt, (ii) the holders of
the Notes shall have received a notice from or on behalf of any
holder of such Senior Debt identifying each Subordination Event of
Default which has occurred and is continuing and that such notice
constitutes a "DEFAULT SUBORDINATION NOTICE and (iii) no other
Default Subordination Notice shall have been delivered by any holder
of Senior Debt within the 365 day period immediately preceding the
giving of such notice; provided that no fact or circumstances of a
Subordinated Event of Default existing on the date of such Default
Subordinated Notice may be used as a basis for any subsequent Default
Subordination Notice. The "STAND-STILL PERIOD relating to any Default
Subordination Event shall be deemed to continue until the earlier of
(x) the Subordination Event of Default under the Senior Debt giving
rise thereto shall have been cured or waived, (y) a period of 90 days
shall have elapsed from the giving of the Default Subordination
Notice relating thereto and (z) the maturity of such Senior Debt
shall have been accelerated.
"SUBORDINATION EVENT OF DEFAULT" shall mean (i) any default in the
payment of any principal or interest on any Senior Debt in an amount
in excess of $250,000 or less owing under any single instrument when
the same becomes due and payable, or (ii) any event of default under
any agreement evidencing Senior Debt arising as a result of a breach
of covenants which would entitle the holders of such Senior Debt to
accelerate the obligations under such Senior Debt.
8. REPRESENTATIONS AND WARRANTIES OF THE GUARANTOR.
The Guarantor represents and warrants as follows:
(a) Incorporation, Good Standing and Location. The Guarantor is (i) a
corporation duly incorporated, validly existing and in good standing
under the laws of the state of its incorporation, (ii) duly qualified
and authorized to do business and in good standing in every other
jurisdiction where the nature of its business requires such
qualification and (iii) has all requisite corporate power and
authority, and all governmental licenses and permits, to own and
operate its properties and to carry on its businesses as presently
conducted. The Guarantor has the requisite corporate power to enter
into and perform its obligations under this Guaranty Agreement.
(b) Approval and Enforceability of Guaranty Agreement. The execution,
delivery and performance of this Guaranty Agreement have been duly
authorized by all necessary corporate action on the part of the
Guarantor. The Guaranty Agreement has been duly and validly executed
and delivered and constitutes the legal, valid and binding obligation
of the Guarantor, enforceable against it, in accordance with its
terms, subject to (i) applicable bankruptcy, insolvency, moratorium,
reorganization, receivership and similar laws affecting the rights
and remedies of creditors generally and (ii) general principles of
equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
9. NOTICES. All notices or other communications provided for hereunder
shall be in writing and sent by first class mail or nationwide
overnight delivery service (with charges prepaid) and (i) if to
Prudential, addressed to Prudential at the address specified for
communications in Section 12.9 of the Restructuring Agreement, or at
such other address as Prudential shall have specified to the
Guarantor in writing, and (ii) if to the Guarantor, addressed to it
at 000 Xxxx Xxx Xxxxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxx 00000,
Attention: Chief Financial Officer, or at such other address as the
6
Guarantor shall have specified to Prudential in writing; provided,
however, that any such communication to the Guarantor may also, at
the option of Prudential, be delivered by any other means either to
the Guarantor at its address specified above or to any officer of the
Guarantor.
10. CONSTRUCTION. The section and subsection headings in this Guaranty
Agreement are for convenience of reference only and shall neither be
deemed to be a part of this Guaranty Agreement nor modify, define,
expand or limit any of the terms or provisions hereof. All references
herein to numbered sections, unless otherwise indicated, are to
sections of this Guaranty Agreement. Words and definitions in the
singular shall be read and construed as though in the plural and vice
versa, and words in the masculine, neuter or feminine gender shall be
read and construed as though in either of the other genders where the
context so requires.
11. SEVERABILITY. If any provision of this Guaranty Agreement, or the
application thereof to any person or circumstances, shall, for any
reason or to any extent, be invalid or unenforceable, such invalidity
or unenforceability shall not in any manner affect or render invalid
or unenforceable the remainder of this Guaranty Agreement, and the
application of that provision to other persons or circumstances shall
not be affected but, rather, shall be enforced to the extent
permitted by applicable law.
12. SUCCESSORS. The terms and provisions of this Guaranty Agreement shall
be binding upon and inure to the benefit of the Guarantor and
Prudential and their respective permitted successors, transferees and
assigns.
13. ENTIRE AGREEMENT; AMENDMENT. This Guaranty Agreement expresses the
entire understanding of the subject matter hereof; and all other
understandings, written or oral, are hereby merged herein and
superseded. No amendment of or supplement to this Guaranty Agreement,
or waiver or modification of, or consent under, the terms hereof
shall be effective unless in writing and signed by the party to be
bound thereby.
14. TERM OF GUARANTY AGREEMENT. The Guaranty Agreement and all
guarantees, covenants and agreements of the Guarantor contained
herein shall continue in full force and effect and shall not be
discharged until such time as all of the Guaranteed Obligations shall
be paid or otherwise discharged in full.
15. SURVIVAL. All warranties, representations and covenants made by the
Guarantor herein or in any certificate or other instrument delivered
by it or on its behalf under this Guaranty Agreement shall be
considered to have been relied upon by Prudential and shall survive
the execution and delivery of this Guaranty Agreement, regardless of
any investigation made by Prudential or on its behalf.
16. FURTHER ASSURANCES. The Guarantor hereby agrees to execute and
deliver all such instruments and take all such action as Prudential
may from time to time reasonably request in order to effectuate fully
the purposes of this Guaranty Agreement.
17. GOVERNING LAW. THIS GUARANTY AGREEMENT SHALL BE GOVERNED BY,
CONSTRUED AND ENFORCED IN ALL RESPECTS IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE
PERFORMED ENTIRELY THEREIN.
7
18. WAIVER OF JURY TRIAL; CONSENT TO JURISDICTION.
(A) THE GUARANTOR HEREBY KNOWINGLY, VOLUNTARILY, AND
INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN ANY
LITIGATION OF ANY CLAIM WHICH IS BASED HEREON, OR ARISES OUT OF,
UNDER, OR IN CONNECTION WITH THIS GUARANTY AGREEMENT OR ANY
TRANSACTIONS RELATING HERETO OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN), OR ACTIONS OF THE
GUARANTOR OR PRUDENTIAL IN CONNECTION WITH THIS GUARANTY AGREEMENT,
THE RESTRUCTURING AGREEMENT. OR ANY TRANSACTIONS RELATED THERETO. THE
GUARANTOR ACKNOWLEDGES THAT THIS PROVISION IS A MATERIAL INDUCEMENT
FOR PRUDENTIAL TO ENTER INTO THE RESTRUCTURING AGREEMENT.
(B) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
GUARANTY AGREEMENT OR ANY TRANSACTIONS RELATING HERETO OR ANY COURSE
OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN),
OR ACTIONS OF THE GUARANTOR OR PRUDENTIAL MAY BE BROUGHT IN ANY
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK
AND ANY NEW YORK STATE COURT SITTING IN NEW YORK CITY, AND THE
GUARANTOR HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY,
GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE
AFORESAID COURTS. THE GUARANTOR HEREBY IRREVOCABLY WAIVES ANY
OBJECTIONS, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE
LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS,
WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION
OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty Agreement
to be duly executed and delivered as of the date and year first above written.
HELL FIGHTERS, INC.
By: /s/ Xxxxx X. Xxxxxxx
---------------------------------------
Xxxxx X. Xxxxxxx,
Chairman and Chief Executive Officer
8
EXECUTION COPY
SUBORDINATED GUARANTY AGREEMENT
ITS SUPPLY CORPORATION
THIS SUBORDINATED GUARANTY AGREEMENT, dated as of December 28, 2000
(as the same may be amended, restated, supplemented and otherwise modified from
time to time, the "GUARANTY AGREEMENT"), is made by ITS SUPPLY CORPORATION, a
Delaware corporation (the "GUARANTOR") in favor of THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA and its successors and assigns ("PRUDENTIAL").
WHEREAS, Boots & Xxxxx International Well Control, Inc., a Delaware
corporation (the "COMPANY") plans to enter into a Subordinated Note
Restructuring Agreement dated of even date herewith (as the same may be amended,
modified, supplemented or restated from time to time, the "RESTRUCTURING
AGREEMENT"; capitalized terms used herein that are defined in the Restructuring
Agreement and not otherwise defined herein shall have the respective meanings
specified in the Restructuring Agreement) with Prudential under which Prudential
will accept delivery by the Company of the Company Closing Deliveries in
satisfaction of the Preexisting Obligations; and
WHEREAS, the Company owns (either directly or indirectly) all of the
issued and outstanding capital stock of the Guarantor; and
WHEREAS, pursuant to the Restructuring Agreement, it is a condition
to Prudential's obligation to accept the transfer of the Company Closing
Deliveries and to release the Company from the Preexisting Obligations at the
Closing thereunder that this Guaranty Agreement shall have been executed and
delivered by the Guarantor and shall be in full force and effect; and
WHEREAS, the board of directors of the Guarantor has determined that
the Guarantor's execution, delivery and performance of this Guaranty Agreement
may reasonably be expected to benefit the Guarantor, directly or indirectly, and
are in the best interests of the Guarantor.
NOW THEREFORE, in order to induce, and in consideration of, the
execution and delivery of the Restructuring Agreement and for other good and
valuable consideration, the sufficiency of which is acknowledged, the Guarantor
hereby covenants and agrees with, and represents and warrants to Prudential as
follows:
1. THE GUARANTY. The Guarantor hereby irrevocably and unconditionally
guarantees to Prudential the due and punctual payment in full of (i)
the principal of and interest on (including, without limitation,
interest accruing after the filing of any petition in bankruptcy, or
the commencement of any insolvency, reorganization or like
proceeding, relating to the Company, whether or not a claim for
post-filing or post-petition interest is allowed in such proceeding)
and any other amounts due under the Notes when and as the same shall
become due and payable (whether at stated maturity or by optional
prepayment or by acceleration or otherwise) and (ii) any other sums
which may become due under the terms and provisions of the
Restructuring Agreement, including the Closing Payment, Credit
Facility Payment, and under the Preferred Stock and the Warrants
issuable thereto, and the Notes (all such obligations described in
clauses (i) and (ii) above are herein called the "GUARANTEED
OBLIGATIONS"). The guaranty in the preceding sentence is an absolute,
present and continuing guaranty of payment and not of collectibility
and is in no way conditional or contingent upon any attempt to
collect from the Company or any other guarantor of the Notes or other
Guaranteed Obligations or upon any other action, occurrence or
circumstance whatsoever. In the event that the Company shall fail so
to pay any of such Guaranteed Obligations, the Guarantor agrees to
pay the same when due to Prudential without demand, presentment,
protest or notice of any kind, in lawful money of the United States
of America, at the place for payment specified in the Notes and the
Restructuring Agreement. Each default in payment of principal of or
interest on any Notes shall give rise to a separate cause of action
hereunder and separate suits may be brought hereunder as each cause
of action arises. The Guarantor hereby agrees that the Notes issued
in connection with the Restructuring Agreement may make reference to
this guaranty.
The Guarantor hereby agrees to pay and to indemnify and save
Prudential harmless from and against any damage, loss, cost or
expense (including, without limitation, attorneys' fees) which
Prudential may incur or be subject to as a consequence, direct or
indirect, of (i) any breach by the Guarantor, by the Company or by
any other Transaction Party of any warranty, covenant, term or
condition in, or the occurrence of any default under, this Guaranty
Agreement, the Notes or the Restructuring Agreement, together with
all expenses resulting from the compromise or defense of any claims
or liabilities arising as a result of any such breach or default, and
(ii) any legal action commenced to challenge the validity of this
Guaranty Agreement, the Notes or the Restructuring Agreement.
Notwithstanding the foregoing or any other provisions of this
Guaranty Agreement, it is agreed and understood that the Guarantor
shall not be required to pay hereunder at any time more than the
Maximum Guaranteed Amount (as hereinafter defined) determined as of
such time. The Guarantor agrees that the Guaranteed Obligations may
at any time exceed the sum of the Maximum Guaranteed Amount (as
hereinafter defined) plus the aggregate maximum amount of all
obligations of all other Guarantors, without affecting or impairing
the obligation of the Guarantor. "MAXIMUM GUARANTEED AMOUNT" means as
of the date of determination, the lesser of (a) the amount of the
Guaranteed Obligations outstanding on such date and (b) the maximum
amount that would not render Guarantor's liability under this
Guaranty Agreement subject to avoidance under Section 548 of the
United States Bankruptcy Code (or any successor provision) or any
comparable provision of applicable state law.
2. OBLIGATIONS ABSOLUTE. The obligations of the Guarantor hereunder
shall be primary, absolute, irrevocable and unconditional,
irrespective of the validity, regularity or enforceability of the
Notes, the Warrants, the Preferred Stock or the Restructuring
Agreement, shall not be subject to any counterclaim, set off,
deduction or defense based upon any claim the Guarantor may have
against the Company, Prudential or otherwise, and shall remain in
full force and effect without regard to, and shall not be released,
discharged or in any way affected by, any circumstance or condition
whatsoever (whether or not the Guarantor shall have any knowledge or
notice thereof), including, without limitation: (a) any amendment,
restatement or modification of or supplement to the Notes, the
Warrants, the Preferred Stock and the Restructuring Agreement, or any
other instrument referred to therein (except that the obligations of
the Guarantor hereunder shall apply to the Notes, the Warrants, the
Preferred Stock and the Restructuring Agreement, or such other
instruments as so amended, restated, modified or supplemented) or any
assignment or transfer of any thereof or of any interest therein, or
any furnishing, acceptance or release of any security for the Notes,
(b) any waiver, consent, extension, indulgence or other action or
inaction under or in respect of the Notes, the Warrants, the
Preferred Stock or the Restructuring Agreement; (c) any bankruptcy,
insolvency, readjustment, composition, liquidation or similar
proceeding with respect to the Company or its property; (d) any
merger, amalgamation or consolidation of the Guarantor or of the
Company into or with any other corporation or any sale, lease or
transfer of any or all of the assets of the Guarantor or of the
Company to any person; (e) any failure on the part of the Company for
any reason to comply with or perform any of the terms of any other
agreement with the Guarantor; or (f) any other circumstance which
might otherwise constitute a legal or equitable discharge or defense
2
of a guarantor. The Guarantor covenants that its obligations
hereunder will not be discharged except by payment and performance in
full of all of the Guaranteed Obligations.
3. WAIVER. The Guarantor unconditionally waives (a) notice of acceptance
hereof, of any action taken or omitted in reliance hereon and of any
defaults by the Company in the payment of any amounts due under the
Notes, the Warrants, the Preferred Stock or the Restructuring
Agreement, and of any of the matters referred to in Section 2 hereof,
(b) all notices which may be required by statute, rule of law or
otherwise to preserve any of the rights of Prudential against the
Guarantor, including, without limitation, presentment to or demand
for payment from the Company or the Guarantor with respect to any
Notes, notice to the Company or to the Guarantor of default or
protest for nonpayment or dishonor and the filing of claims with a
court in the event of the bankruptcy of the Company, (c) any right to
the enforcement, assertion or exercise by Prudential of any right,
power or remedy conferred in this Guaranty Agreement, the Notes, the
Warrants, the Preferred Stock or the Restructuring Agreement, (d) any
requirement of diligence on the part of Prudential and (e) any other
act or omission or thing or delay to do any other act or thing which
might in any manner or to any extent vary the risk of the Guarantor
or which might otherwise operate as a discharge of the Guarantor.
4. OBLIGATIONS UNIMPAIRED. The Guarantor authorizes Prudential, without
notice or demand to the Guarantor and without affecting its
obligations hereunder, from time to time (a) to renew, compromise,
extend, accelerate or otherwise change the time for payment of, or
otherwise change the terms of, all or any part of the Notes, the
Warrants, the Preferred Stock or the Restructuring Agreement, or any
other instrument referred to therein; (b) to take and hold security
for the payment of the Notes, for the performance of this Guaranty
Agreement or otherwise for the indebtedness guaranteed hereby and to
exchange, enforce, waive and release any such security; (c) to apply
any such security and to direct the order or manner of sale thereof
as Prudential in its sole discretion may determine; (d) to obtain
additional or substitute endorsers or guarantors; (e) to exercise or
refrain from exercising any rights against the Company and others;
and (f) to apply any sums, by whomsoever paid or however realized, to
the payment of the principal of and interest on the Notes and any
other Guaranteed Obligation hereunder. The Guarantor waives any right
to require Prudential to proceed against any additional or substitute
endorsers or guarantors or to pursue or exhaust any security provided
by the Company, the Guarantor or any other person or to pursue any
other remedy available to Prudential.
5. SUBROGATION. The Guarantor will not exercise, and hereby subordinates
to the rights of Prudential, any rights which the Guarantor may have
acquired by way of subrogation under this Guaranty Agreement by any
payment made hereunder or otherwise, or accept any payment on account
of such subrogation rights, or any rights of reimbursement,
indemnity, exoneration or contribution, any right to participate in
any claim or any rights or recourse to any security for the Notes or
this Guaranty Agreement under the Notes, the Warrants, the Preferred
Stock or the Restructuring Agreement unless and until all of the
obligations, undertakings or conditions to be performed or observed
by the Company pursuant to the Notes, the Warrants, the Preferred
Stock or the Restructuring Agreement, or to be performed or observed
by any party to the Guaranty Agreements, other than the Guarantor,
pursuant to any of the other Guaranty Agreements, shall have been
performed, observed or paid in full at the time of the Guarantor's
exercise of any such right.
6. REINSTATEMENT OF GUARANTY. This Guaranty Agreement shall continue to
be effective, or be reinstated, as the case may be, if and to the
extent at any time payment, in whole or in part, of any of the sums
due to Prudential for principal or interest on the Notes or any of
the other Guaranteed Obligations is rescinded or must otherwise be
3
restored or returned by Prudential upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of the Company, or upon or
as a result of the appointment of a custodian, receiver, trustee or
other officer with similar powers with respect to the Company or any
substantial part of its property, or otherwise, all as though such
payments had not been made. If an event permitting the acceleration
of the maturity of the principal amount of the Notes shall at any
time have occurred and be continuing and such acceleration shall at
such time be prevented or the right of Prudential to receive any
payment under any Notes shall at such time be delayed or otherwise
affected by reason of the pendency against the Company of a case or
proceeding under a bankruptcy or insolvency law, the Guarantor agrees
that, for purposes of this Guaranty Agreement and its obligations
hereunder, the maturity of such principal amount shall be deemed to
have been accelerated with the same effect as if Prudential had
accelerated the same in accordance with the terms of the
Restructuring Agreement, and the Guarantor shall forthwith pay such
accelerated principal amount and accrued interest thereon and any
other amounts guaranteed hereunder.
7. SUBORDINATION OF GUARANTY AGREEMENT. Anything in this Guaranty
Agreement to the contrary notwithstanding, the Guaranteed Obligations
shall be subordinate and junior to the extent set forth in
subparagraphs (a) to (e), inclusive, below, to the Senior Debt.
(a) In the event of any insolvency, bankruptcy,
liquidation, reorganization or other similar proceedings,
or any receivership proceedings in connection therewith,
relative to the Company or the Guarantor, and in the event
of any proceedings for voluntary liquidation, dissolution
or other winding up of the Company or the Guarantor,
whether or not involving insolvency or bankruptcy
proceedings, then the Senior Debt shall first be paid in
full before any payment of or on account of Guaranteed
Obligations is made by the Guarantor.
(b) In any of the proceedings referred to in
subparagraph (a) above, any payment or distribution of any
kind or character, whether in cash, property, stock or
obligations, which may be payable or deliverable by the
Guarantor in respect of the Guaranteed Obligations shall be
paid or delivered directly to the holders of Senior Debt
(or to a banking institution selected by the court or
Person making the payment or delivery or designated by any
holder of Senior Debt) for application in payment thereof
in accordance with the priorities then existing among such
holders, unless and until all Senior Debt shall have been
paid in full; provided, however, that
(i) if the payment or delivery by the Guarantor
of such cash, property, stock or obligations to
the holders of the Notes is authorized by an
order or decree giving effect, and stating in
such order or decree that effect is given, to the
subordination of the Guaranteed Obligations to
Senior Debt, and made in a reorganization
proceeding under any applicable bankruptcy or
reorganization law, no payment or delivery by the
Guarantor of such cash, property, stock or
obligations payable or deliverable with respect
to the Guaranteed Obligations shall be made to
the holders of Senior Debt; and
(ii) no such delivery shall be made to holders of
Senior Debt of stock or obligations which are
issued pursuant to reorganization proceedings if
such stock or obligations are subordinate and
junior (whether by law or agreement) at least to
the extent provided in this Section 7 to the
payment of all Senior Debt then outstanding and
to the payment of any stock or obligations which
are issued in exchange or substitution for any
Senior Debt then outstanding.
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(c) If the Company shall default in the payment
of any principal of or interest on any Senior Debt in an
amount in excess of $250,000 owing under any single
instrument when the same becomes due and payable, whether
at maturity or at a date fixed for prepayment or by
declaration of acceleration or otherwise, then, unless and
until the date on which such default shall have been
remedied by payment in full or waived in writing, no holder
of the Notes shall accept or receive any direct or indirect
payment of or on account of any indebtedness in respect of
the Guaranteed Obligations.
(d) Upon the occurrence and during the
continuance of any Default Subordination Event (other than
under circumstances when the terms of subparagraph (i)
above are applicable), no holder of the Notes shall accept
or receive any direct or indirect payment by set-off or
otherwise of or on account of any Guaranteed Obligation
during the Stand-Still Period, provided that (a) there
shall be no more than two Stand-Still Periods during the
term of the Notes and only one in any period of 365
consecutive days and (b) in the case of any payment on or
in respect of any Notes which would (in the absence of any
such Default Subordination Event) have been due and payable
on any date during such Stand-Still Period, the provisions
of this subparagraph (iv) shall not prevent such payment on
or after the date immediately following the termination of
such Stand-Still Period.
(e) If any payment or distribution of any
character, whether in cash, securities or other property,
shall be received by any holder of Notes in contravention
of any of the terms of this Section 7 and before all the
Senior Debt shall have been paid in full, such payment or
distribution shall be received in trust for the benefit of
the holders of the Senior Debt at the time outstanding and
shall forthwith be paid over or delivered and transferred
to the holders of Senior Debt.
Obligation of the Company Unconditional. The provisions of
this Section 7 are for the purpose of defining the relative rights of
the holders of Senior Debt on the one hand, and the holders of the
Notes on the other hand, against the Guarantor and its property, and
nothing herein shall impair, as between the Guarantor and the holders
of the Notes, the obligation of the Guarantor, which is unconditional
and absolute, to pay to the holders thereof the Guaranteed
Obligations in accordance with their terms and the provisions hereof,
nor shall anything herein prevent the holders of the Notes from
exercising all remedies otherwise permitted by applicable law or
hereunder upon default hereunder or under the Notes (including,
without limitation, the right to demand payment and xxx for
performance hereof and of the Notes and to accelerate the maturity
thereof as provided in Section 8.1 of the Restructuring Agreement),
subject to the rights, if any, under this Section 7 of holders of
Senior Debt to receive cash, property, stock or obligations otherwise
payable or deliverable by the Guarantor to the holders of the Notes.
Subrogation. Upon full and final payment of the Senior
Debt, the holders of the Notes shall be subrogated to the rights of
the holders of the Senior Debt to receive payments or distributions
of assets of the Guarantor made on Senior Debt until the Guaranteed
Obligations shall be paid in full, and, for the purposes of such
subrogation, no payments to the holders of Senior Debt of any cash,
property, stock or obligations to which the holders of the Notes
would be entitled shall, as between the Guarantor, its creditors
(other than the holders of the Senior Debt) and the holders of the
Notes, be deemed to be a payment by the Guarantor to or on account of
Senior Debt.
5
Subordination Definitions.
-------------------------
"DEFAULT SUBORDINATION EVENT" shall mean the existence of all of the
following: (i) a Subordination Event of Default shall have occurred
and be continuing in respect of any Senior Debt, (ii) the holders of
the Notes shall have received a notice from or on behalf of any
holder of such Senior Debt identifying each Subordination Event of
Default which has occurred and is continuing and that such notice
constitutes a "DEFAULT SUBORDINATION NOTICE and (iii) no other
Default Subordination Notice shall have been delivered by any holder
of Senior Debt within the 365 day period immediately preceding the
giving of such notice; provided that no fact or circumstances of a
Subordinated Event of Default existing on the date of such Default
Subordinated Notice may be used as a basis for any subsequent Default
Subordination Notice. The "STAND-STILL PERIOD relating to any Default
Subordination Event shall be deemed to continue until the earlier of
(x) the Subordination Event of Default under the Senior Debt giving
rise thereto shall have been cured or waived, (y) a period of 90 days
shall have elapsed from the giving of the Default Subordination
Notice relating thereto and (z) the maturity of such Senior Debt
shall have been accelerated.
"SUBORDINATION EVENT OF DEFAULT" shall mean (i) any default in the
payment of any principal or interest on any Senior Debt in an amount
in excess of $250,000 or less owing under any single instrument when
the same becomes due and payable, or (ii) any event of default under
any agreement evidencing Senior Debt arising as a result of a breach
of covenants which would entitle the holders of such Senior Debt to
accelerate the obligations under such Senior Debt.
8. REPRESENTATIONS AND WARRANTIES OF THE GUARANTOR.
The Guarantor represents and warrants as follows:
(a) Incorporation, Good Standing and Location. The Guarantor is (i) a
corporation duly incorporated, validly existing and in good standing
under the laws of the state of its incorporation, (ii) duly qualified
and authorized to do business and in good standing in every other
jurisdiction where the nature of its business requires such
qualification and (iii) has all requisite corporate power and
authority, and all governmental licenses and permits, to own and
operate its properties and to carry on its businesses as presently
conducted. The Guarantor has the requisite corporate power to enter
into and perform its obligations under this Guaranty Agreement.
(b) Approval and Enforceability of Guaranty Agreement. The execution,
delivery and performance of this Guaranty Agreement have been duly
authorized by all necessary corporate action on the part of the
Guarantor. The Guaranty Agreement has been duly and validly executed
and delivered and constitutes the legal, valid and binding obligation
of the Guarantor, enforceable against it, in accordance with its
terms, subject to (i) applicable bankruptcy, insolvency, moratorium,
reorganization, receivership and similar laws affecting the rights
and remedies of creditors generally and (ii) general principles of
equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
9. NOTICES. All notices or other communications provided for hereunder
shall be in writing and sent by first class mail or nationwide
overnight delivery service (with charges prepaid) and (i) if to
Prudential, addressed to Prudential at the address specified for
communications in Section 12.9 of the Restructuring Agreement, or at
such other address as Prudential shall have specified to the
Guarantor in writing, and (ii) if to the Guarantor, addressed to it
at 000 Xxxx Xxx Xxxxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxx 00000,
Attention: Chief Financial Officer, or at such other address as the
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Guarantor shall have specified to Prudential in writing; provided,
however, that any such communication to the Guarantor may also, at
the option of Prudential, be delivered by any other means either to
the Guarantor at its address specified above or to any officer of the
Guarantor.
10. CONSTRUCTION. The section and subsection headings in this Guaranty
Agreement are for convenience of reference only and shall neither be
deemed to be a part of this Guaranty Agreement nor modify, define,
expand or limit any of the terms or provisions hereof. All references
herein to numbered sections, unless otherwise indicated, are to
sections of this Guaranty Agreement. Words and definitions in the
singular shall be read and construed as though in the plural and vice
versa, and words in the masculine, neuter or feminine gender shall be
read and construed as though in either of the other genders where the
context so requires.
11. SEVERABILITY. If any provision of this Guaranty Agreement, or the
application thereof to any person or circumstances, shall, for any
reason or to any extent, be invalid or unenforceable, such invalidity
or unenforceability shall not in any manner affect or render invalid
or unenforceable the remainder of this Guaranty Agreement, and the
application of that provision to other persons or circumstances shall
not be affected but, rather, shall be enforced to the extent
permitted by applicable law.
12. SUCCESSORS. The terms and provisions of this Guaranty Agreement shall
be binding upon and inure to the benefit of the Guarantor and
Prudential and their respective permitted successors, transferees and
assigns.
13. ENTIRE AGREEMENT; AMENDMENT. This Guaranty Agreement expresses the
entire understanding of the subject matter hereof; and all other
understandings, written or oral, are hereby merged herein and
superseded. No amendment of or supplement to this Guaranty Agreement,
or waiver or modification of, or consent under, the terms hereof
shall be effective unless in writing and signed by the party to be
bound thereby.
14. TERM OF GUARANTY AGREEMENT. The Guaranty Agreement and all
guarantees, covenants and agreements of the Guarantor contained
herein shall continue in full force and effect and shall not be
discharged until such time as all of the Guaranteed Obligations shall
be paid or otherwise discharged in full.
15. SURVIVAL. All warranties, representations and covenants made by the
Guarantor herein or in any certificate or other instrument delivered
by it or on its behalf under this Guaranty Agreement shall be
considered to have been relied upon by Prudential and shall survive
the execution and delivery of this Guaranty Agreement, regardless of
any investigation made by Prudential or on its behalf.
16. FURTHER ASSURANCES. The Guarantor hereby agrees to execute and
deliver all such instruments and take all such action as Prudential
may from time to time reasonably request in order to effectuate fully
the purposes of this Guaranty Agreement.
17. GOVERNING LAW. THIS GUARANTY AGREEMENT SHALL BE GOVERNED BY,
CONSTRUED AND ENFORCED IN ALL RESPECTS IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE
PERFORMED ENTIRELY THEREIN.
7
18. WAIVER OF JURY TRIAL; CONSENT TO JURISDICTION.
(A) THE GUARANTOR HEREBY KNOWINGLY, VOLUNTARILY, AND
INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN ANY
LITIGATION OF ANY CLAIM WHICH IS BASED HEREON, OR ARISES OUT OF,
UNDER, OR IN CONNECTION WITH THIS GUARANTY AGREEMENT OR ANY
TRANSACTIONS RELATING HERETO OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN), OR ACTIONS OF THE
GUARANTOR OR PRUDENTIAL IN CONNECTION WITH THIS GUARANTY AGREEMENT,
THE RESTRUCTURING AGREEMENT. OR ANY TRANSACTIONS RELATED THERETO. THE
GUARANTOR ACKNOWLEDGES THAT THIS PROVISION IS A MATERIAL INDUCEMENT
FOR PRUDENTIAL TO ENTER INTO THE RESTRUCTURING AGREEMENT.
(B) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
GUARANTY AGREEMENT OR ANY TRANSACTIONS RELATING HERETO OR ANY COURSE
OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN),
OR ACTIONS OF THE GUARANTOR OR PRUDENTIAL MAY BE BROUGHT IN ANY
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK
AND ANY NEW YORK STATE COURT SITTING IN NEW YORK CITY, AND THE
GUARANTOR HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY,
GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE
AFORESAID COURTS. THE GUARANTOR HEREBY IRREVOCABLY WAIVES ANY
OBJECTIONS, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE
LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS,
WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION
OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty Agreement
to be duly executed and delivered as of the date and year first above written.
ITS SUPPLY CORPORATION
By: /s/ Xxxxx X. Xxxxxxx
-------------------------------------
Xxxxx X. Xxxxxxx,
Chairman and Chief Executive Officer
8
EXECUTION COPY
SUBORDINATED GUARANTY AGREEMENT
IWC ENGINEERING, INC.
THIS SUBORDINATED GUARANTY AGREEMENT, dated as of December 28, 2000
(as the same may be amended, restated, supplemented and otherwise modified from
time to time, the "GUARANTY AGREEMENT"), is made by IWC ENGINEERING, INC., a
Texas corporation (the "GUARANTOR") in favor of THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA and its successors and assigns ("PRUDENTIAL").
WHEREAS, Boots & Xxxxx International Well Control, Inc., a Delaware
corporation (the "COMPANY") plans to enter into a Subordinated Note
Restructuring Agreement dated of even date herewith (as the same may be amended,
modified, supplemented or restated from time to time, the "RESTRUCTURING
AGREEMENT"; capitalized terms used herein that are defined in the Restructuring
Agreement and not otherwise defined herein shall have the respective meanings
specified in the Restructuring Agreement) with Prudential under which Prudential
will accept delivery by the Company of the Company Closing Deliveries in
satisfaction of the Preexisting Obligations; and
WHEREAS, the Company owns (either directly or indirectly) all of the
issued and outstanding capital stock of the Guarantor; and
WHEREAS, pursuant to the Restructuring Agreement, it is a condition
to Prudential's obligation to accept the transfer of the Company Closing
Deliveries and to release the Company from the Preexisting Obligations at the
Closing thereunder that this Guaranty Agreement shall have been executed and
delivered by the Guarantor and shall be in full force and effect; and
WHEREAS, the board of directors of the Guarantor has determined that
the Guarantor's execution, delivery and performance of this Guaranty Agreement
may reasonably be expected to benefit the Guarantor, directly or indirectly, and
are in the best interests of the Guarantor.
NOW THEREFORE, in order to induce, and in consideration of, the
execution and delivery of the Restructuring Agreement and for other good and
valuable consideration, the sufficiency of which is acknowledged, the Guarantor
hereby covenants and agrees with, and represents and warrants to Prudential as
follows:
1. THE GUARANTY. The Guarantor hereby irrevocably and unconditionally
guarantees to Prudential the due and punctual payment in full of (i)
the principal of and interest on (including, without limitation,
interest accruing after the filing of any petition in bankruptcy, or
the commencement of any insolvency, reorganization or like
proceeding, relating to the Company, whether or not a claim for
post-filing or post-petition interest is allowed in such proceeding)
and any other amounts due under the Notes when and as the same shall
become due and payable (whether at stated maturity or by optional
prepayment or by acceleration or otherwise) and (ii) any other sums
which may become due under the terms and provisions of the
Restructuring Agreement, including the Closing Payment, Credit
Facility Payment, and under the Preferred Stock and the Warrants
issuable thereto, and the Notes (all such obligations described in
clauses (i) and (ii) above are herein called the "GUARANTEED
OBLIGATIONS"). The guaranty in the preceding sentence is an absolute,
present and continuing guaranty of payment and not of collectibility
and is in no way conditional or contingent upon any attempt to
collect from the Company or any other guarantor of the Notes or other
Guaranteed Obligations or upon any other action, occurrence or
circumstance whatsoever. In the event that the Company shall fail so
to pay any of such Guaranteed Obligations, the Guarantor agrees to
pay the same when due to Prudential without demand, presentment,
protest or notice of any kind, in lawful money of the United States
of America, at the place for payment specified in the Notes and the
Restructuring Agreement. Each default in payment of principal of or
interest on any Notes shall give rise to a separate cause of action
hereunder and separate suits may be brought hereunder as each cause
of action arises. The Guarantor hereby agrees that the Notes issued
in connection with the Restructuring Agreement may make reference to
this guaranty.
The Guarantor hereby agrees to pay and to indemnify and save
Prudential harmless from and against any damage, loss, cost or
expense (including, without limitation, attorneys' fees) which
Prudential may incur or be subject to as a consequence, direct or
indirect, of (i) any breach by the Guarantor, by the Company or by
any other Transaction Party of any warranty, covenant, term or
condition in, or the occurrence of any default under, this Guaranty
Agreement, the Notes or the Restructuring Agreement, together with
all expenses resulting from the compromise or defense of any claims
or liabilities arising as a result of any such breach or default, and
(ii) any legal action commenced to challenge the validity of this
Guaranty Agreement, the Notes or the Restructuring Agreement.
Notwithstanding the foregoing or any other provisions of this
Guaranty Agreement, it is agreed and understood that the Guarantor
shall not be required to pay hereunder at any time more than the
Maximum Guaranteed Amount (as hereinafter defined) determined as of
such time. The Guarantor agrees that the Guaranteed Obligations may
at any time exceed the sum of the Maximum Guaranteed Amount (as
hereinafter defined) plus the aggregate maximum amount of all
obligations of all other Guarantors, without affecting or impairing
the obligation of the Guarantor. "MAXIMUM GUARANTEED AMOUNT" means as
of the date of determination, the lesser of (a) the amount of the
Guaranteed Obligations outstanding on such date and (b) the maximum
amount that would not render Guarantor's liability under this
Guaranty Agreement subject to avoidance under Section 548 of the
United States Bankruptcy Code (or any successor provision) or any
comparable provision of applicable state law.
2. OBLIGATIONS ABSOLUTE. The obligations of the Guarantor hereunder
shall be primary, absolute, irrevocable and unconditional,
irrespective of the validity, regularity or enforceability of the
Notes, the Warrants, the Preferred Stock or the Restructuring
Agreement, shall not be subject to any counterclaim, set off,
deduction or defense based upon any claim the Guarantor may have
against the Company, Prudential or otherwise, and shall remain in
full force and effect without regard to, and shall not be released,
discharged or in any way affected by, any circumstance or condition
whatsoever (whether or not the Guarantor shall have any knowledge or
notice thereof), including, without limitation: (a) any amendment,
restatement or modification of or supplement to the Notes, the
Warrants, the Preferred Stock and the Restructuring Agreement, or any
other instrument referred to therein (except that the obligations of
the Guarantor hereunder shall apply to the Notes, the Warrants, the
Preferred Stock and the Restructuring Agreement, or such other
instruments as so amended, restated, modified or supplemented) or any
assignment or transfer of any thereof or of any interest therein, or
any furnishing, acceptance or release of any security for the Notes,
(b) any waiver, consent, extension, indulgence or other action or
inaction under or in respect of the Notes, the Warrants, the
Preferred Stock or the Restructuring Agreement; (c) any bankruptcy,
insolvency, readjustment, composition, liquidation or similar
proceeding with respect to the Company or its property; (d) any
merger, amalgamation or consolidation of the Guarantor or of the
Company into or with any other corporation or any sale, lease or
transfer of any or all of the assets of the Guarantor or of the
Company to any person; (e) any failure on the part of the Company for
any reason to comply with or perform any of the terms of any other
agreement with the Guarantor; or (f) any other circumstance which
might otherwise constitute a legal or equitable discharge or defense
2
of a guarantor. The Guarantor covenants that its obligations
hereunder will not be discharged except by payment and performance in
full of all of the Guaranteed Obligations.
3. WAIVER. The Guarantor unconditionally waives (a) notice of acceptance
hereof, of any action taken or omitted in reliance hereon and of any
defaults by the Company in the payment of any amounts due under the
Notes, the Warrants, the Preferred Stock or the Restructuring
Agreement, and of any of the matters referred to in Section 2 hereof,
(b) all notices which may be required by statute, rule of law or
otherwise to preserve any of the rights of Prudential against the
Guarantor, including, without limitation, presentment to or demand
for payment from the Company or the Guarantor with respect to any
Notes, notice to the Company or to the Guarantor of default or
protest for nonpayment or dishonor and the filing of claims with a
court in the event of the bankruptcy of the Company, (c) any right to
the enforcement, assertion or exercise by Prudential of any right,
power or remedy conferred in this Guaranty Agreement, the Notes, the
Warrants, the Preferred Stock or the Restructuring Agreement, (d) any
requirement of diligence on the part of Prudential and (e) any other
act or omission or thing or delay to do any other act or thing which
might in any manner or to any extent vary the risk of the Guarantor
or which might otherwise operate as a discharge of the Guarantor.
4. OBLIGATIONS UNIMPAIRED. The Guarantor authorizes Prudential, without
notice or demand to the Guarantor and without affecting its
obligations hereunder, from time to time (a) to renew, compromise,
extend, accelerate or otherwise change the time for payment of, or
otherwise change the terms of, all or any part of the Notes, the
Warrants, the Preferred Stock or the Restructuring Agreement, or any
other instrument referred to therein; (b) to take and hold security
for the payment of the Notes, for the performance of this Guaranty
Agreement or otherwise for the indebtedness guaranteed hereby and to
exchange, enforce, waive and release any such security; (c) to apply
any such security and to direct the order or manner of sale thereof
as Prudential in its sole discretion may determine; (d) to obtain
additional or substitute endorsers or guarantors; (e) to exercise or
refrain from exercising any rights against the Company and others;
and (f) to apply any sums, by whomsoever paid or however realized, to
the payment of the principal of and interest on the Notes and any
other Guaranteed Obligation hereunder. The Guarantor waives any right
to require Prudential to proceed against any additional or substitute
endorsers or guarantors or to pursue or exhaust any security provided
by the Company, the Guarantor or any other person or to pursue any
other remedy available to Prudential.
5. SUBROGATION. The Guarantor will not exercise, and hereby subordinates
to the rights of Prudential, any rights which the Guarantor may have
acquired by way of subrogation under this Guaranty Agreement by any
payment made hereunder or otherwise, or accept any payment on account
of such subrogation rights, or any rights of reimbursement,
indemnity, exoneration or contribution, any right to participate in
any claim or any rights or recourse to any security for the Notes or
this Guaranty Agreement under the Notes, the Warrants, the Preferred
Stock or the Restructuring Agreement unless and until all of the
obligations, undertakings or conditions to be performed or observed
by the Company pursuant to the Notes, the Warrants, the Preferred
Stock or the Restructuring Agreement, or to be performed or observed
by any party to the Guaranty Agreements, other than the Guarantor,
pursuant to any of the other Guaranty Agreements, shall have been
performed, observed or paid in full at the time of the Guarantor's
exercise of any such right.
6. REINSTATEMENT OF GUARANTY. This Guaranty Agreement shall continue to
be effective, or be reinstated, as the case may be, if and to the
extent at any time payment, in whole or in part, of any of the sums
due to Prudential for principal or interest on the Notes or any of
3
the other Guaranteed Obligations is rescinded or must otherwise be
restored or returned by Prudential upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of the Company, or upon or
as a result of the appointment of a custodian, receiver, trustee or
other officer with similar powers with respect to the Company or any
substantial part of its property, or otherwise, all as though such
payments had not been made. If an event permitting the acceleration
of the maturity of the principal amount of the Notes shall at any
time have occurred and be continuing and such acceleration shall at
such time be prevented or the right of Prudential to receive any
payment under any Notes shall at such time be delayed or otherwise
affected by reason of the pendency against the Company of a case or
proceeding under a bankruptcy or insolvency law, the Guarantor agrees
that, for purposes of this Guaranty Agreement and its obligations
hereunder, the maturity of such principal amount shall be deemed to
have been accelerated with the same effect as if Prudential had
accelerated the same in accordance with the terms of the
Restructuring Agreement, and the Guarantor shall forthwith pay such
accelerated principal amount and accrued interest thereon and any
other amounts guaranteed hereunder.
7. SUBORDINATION OF GUARANTY AGREEMENT. Anything in this Guaranty
Agreement to the contrary notwithstanding, the Guaranteed Obligations
shall be subordinate and junior to the extent set forth in
subparagraphs (a) to (e), inclusive, below, to the Senior Debt.
(a) In the event of any insolvency, bankruptcy,
liquidation, reorganization or other similar proceedings,
or any receivership proceedings in connection therewith,
relative to the Company or the Guarantor, and in the event
of any proceedings for voluntary liquidation, dissolution
or other winding up of the Company or the Guarantor,
whether or not involving insolvency or bankruptcy
proceedings, then the Senior Debt shall first be paid in
full before any payment of or on account of Guaranteed
Obligations is made by the Guarantor.
(b) In any of the proceedings referred to in
subparagraph (a) above, any payment or distribution of any
kind or character, whether in cash, property, stock or
obligations, which may be payable or deliverable by the
Guarantor in respect of the Guaranteed Obligations shall be
paid or delivered directly to the holders of Senior Debt
(or to a banking institution selected by the court or
Person making the payment or delivery or designated by any
holder of Senior Debt) for application in payment thereof
in accordance with the priorities then existing among such
holders, unless and until all Senior Debt shall have been
paid in full; provided, however, that
(i) if the payment or delivery by the Guarantor
of such cash, property, stock or obligations to
the holders of the Notes is authorized by an
order or decree giving effect, and stating in
such order or decree that effect is given, to the
subordination of the Guaranteed Obligations to
Senior Debt, and made in a reorganization
proceeding under any applicable bankruptcy or
reorganization law, no payment or delivery by the
Guarantor of such cash, property, stock or
obligations payable or deliverable with respect
to the Guaranteed Obligations shall be made to
the holders of Senior Debt; and
(ii) no such delivery shall be made to holders of
Senior Debt of stock or obligations which are
issued pursuant to reorganization proceedings if
such stock or obligations are subordinate and
junior (whether by law or agreement) at least to
the extent provided in this Section 7 to the
payment of all Senior Debt then outstanding and
to the payment of any stock or obligations which
are issued in exchange or substitution for any
Senior Debt then outstanding.
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(c) If the Company shall default in the payment
of any principal of or interest on any Senior Debt in an
amount in excess of $250,000 owing under any single
instrument when the same becomes due and payable, whether
at maturity or at a date fixed for prepayment or by
declaration of acceleration or otherwise, then, unless and
until the date on which such default shall have been
remedied by payment in full or waived in writing, no holder
of the Notes shall accept or receive any direct or indirect
payment of or on account of any indebtedness in respect of
the Guaranteed Obligations.
(d) Upon the occurrence and during the
continuance of any Default Subordination Event (other than
under circumstances when the terms of subparagraph (i)
above are applicable), no holder of the Notes shall accept
or receive any direct or indirect payment by set-off or
otherwise of or on account of any Guaranteed Obligation
during the Stand-Still Period, provided that (a) there
shall be no more than two Stand-Still Periods during the
term of the Notes and only one in any period of 365
consecutive days and (b) in the case of any payment on or
in respect of any Notes which would (in the absence of any
such Default Subordination Event) have been due and payable
on any date during such Stand-Still Period, the provisions
of this subparagraph (iv) shall not prevent such payment on
or after the date immediately following the termination of
such Stand-Still Period.
(e) If any payment or distribution of any
character, whether in cash, securities or other property,
shall be received by any holder of Notes in contravention
of any of the terms of this Section 7 and before all the
Senior Debt shall have been paid in full, such payment or
distribution shall be received in trust for the benefit of
the holders of the Senior Debt at the time outstanding and
shall forthwith be paid over or delivered and transferred
to the holders of Senior Debt.
Obligation of the Company Unconditional. The provisions of
this Section 7 are for the purpose of defining the relative rights of
the holders of Senior Debt on the one hand, and the holders of the
Notes on the other hand, against the Guarantor and its property, and
nothing herein shall impair, as between the Guarantor and the holders
of the Notes, the obligation of the Guarantor, which is unconditional
and absolute, to pay to the holders thereof the Guaranteed
Obligations in accordance with their terms and the provisions hereof,
nor shall anything herein prevent the holders of the Notes from
exercising all remedies otherwise permitted by applicable law or
hereunder upon default hereunder or under the Notes (including,
without limitation, the right to demand payment and xxx for
performance hereof and of the Notes and to accelerate the maturity
thereof as provided in Section 8.1 of the Restructuring Agreement),
subject to the rights, if any, under this Section 7 of holders of
Senior Debt to receive cash, property, stock or obligations otherwise
payable or deliverable by the Guarantor to the holders of the Notes.
Subrogation. Upon full and final payment of the Senior
Debt, the holders of the Notes shall be subrogated to the rights of
the holders of the Senior Debt to receive payments or distributions
of assets of the Guarantor made on Senior Debt until the Guaranteed
Obligations shall be paid in full, and, for the purposes of such
subrogation, no payments to the holders of Senior Debt of any cash,
property, stock or obligations to which the holders of the Notes
would be entitled shall, as between the Guarantor, its creditors
(other than the holders of the Senior Debt) and the holders of the
Notes, be deemed to be a payment by the Guarantor to or on account of
Senior Debt.
5
Subordination Definitions.
-------------------------
"DEFAULT SUBORDINATION EVENT" shall mean the existence of all of the
following: (i) a Subordination Event of Default shall have occurred
and be continuing in respect of any Senior Debt, (ii) the holders of
the Notes shall have received a notice from or on behalf of any
holder of such Senior Debt identifying each Subordination Event of
Default which has occurred and is continuing and that such notice
constitutes a "DEFAULT SUBORDINATION NOTICE and (iii) no other
Default Subordination Notice shall have been delivered by any holder
of Senior Debt within the 365 day period immediately preceding the
giving of such notice; provided that no fact or circumstances of a
Subordinated Event of Default existing on the date of such Default
Subordinated Notice may be used as a basis for any subsequent Default
Subordination Notice. The "STAND-STILL PERIOD relating to any Default
Subordination Event shall be deemed to continue until the earlier of
(x) the Subordination Event of Default under the Senior Debt giving
rise thereto shall have been cured or waived, (y) a period of 90 days
shall have elapsed from the giving of the Default Subordination
Notice relating thereto and (z) the maturity of such Senior Debt
shall have been accelerated.
"SUBORDINATION EVENT OF DEFAULT" shall mean (i) any default in the
payment of any principal or interest on any Senior Debt in an amount
in excess of $250,000 or less owing under any single instrument when
the same becomes due and payable, or (ii) any event of default under
any agreement evidencing Senior Debt arising as a result of a breach
of covenants which would entitle the holders of such Senior Debt to
accelerate the obligations under such Senior Debt.
8. REPRESENTATIONS AND WARRANTIES OF THE GUARANTOR.
The Guarantor represents and warrants as follows:
(a) Incorporation, Good Standing and Location. The Guarantor is (i) a
corporation duly incorporated, validly existing and in good standing
under the laws of the state of its incorporation, (ii) duly qualified
and authorized to do business and in good standing in every other
jurisdiction where the nature of its business requires such
qualification and (iii) has all requisite corporate power and
authority, and all governmental licenses and permits, to own and
operate its properties and to carry on its businesses as presently
conducted. The Guarantor has the requisite corporate power to enter
into and perform its obligations under this Guaranty Agreement.
(b) Approval and Enforceability of Guaranty Agreement. The execution,
delivery and performance of this Guaranty Agreement have been duly
authorized by all necessary corporate action on the part of the
Guarantor. The Guaranty Agreement has been duly and validly executed
and delivered and constitutes the legal, valid and binding obligation
of the Guarantor, enforceable against it, in accordance with its
terms, subject to (i) applicable bankruptcy, insolvency, moratorium,
reorganization, receivership and similar laws affecting the rights
and remedies of creditors generally and (ii) general principles of
equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
9. NOTICES. All notices or other communications provided for hereunder
shall be in writing and sent by first class mail or nationwide
overnight delivery service (with charges prepaid) and (i) if to
Prudential, addressed to Prudential at the address specified for
communications in Section 12.9 of the Restructuring Agreement, or at
such other address as Prudential shall have specified to the
Guarantor in writing, and (ii) if to the Guarantor, addressed to it
at 000 Xxxx Xxx Xxxxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxx 00000,
Attention: Chief Financial Officer, or at such other address as the
6
Guarantor shall have specified to Prudential in writing; provided,
however, that any such communication to the Guarantor may also, at
the option of Prudential, be delivered by any other means either to
the Guarantor at its address specified above or to any officer of the
Guarantor.
10. CONSTRUCTION. The section and subsection headings in this Guaranty
Agreement are for convenience of reference only and shall neither be
deemed to be a part of this Guaranty Agreement nor modify, define,
expand or limit any of the terms or provisions hereof. All references
herein to numbered sections, unless otherwise indicated, are to
sections of this Guaranty Agreement. Words and definitions in the
singular shall be read and construed as though in the plural and vice
versa, and words in the masculine, neuter or feminine gender shall be
read and construed as though in either of the other genders where the
context so requires.
11. SEVERABILITY. If any provision of this Guaranty Agreement, or the
application thereof to any person or circumstances, shall, for any
reason or to any extent, be invalid or unenforceable, such invalidity
or unenforceability shall not in any manner affect or render invalid
or unenforceable the remainder of this Guaranty Agreement, and the
application of that provision to other persons or circumstances shall
not be affected but, rather, shall be enforced to the extent
permitted by applicable law.
12. SUCCESSORS. The terms and provisions of this Guaranty Agreement shall
be binding upon and inure to the benefit of the Guarantor and
Prudential and their respective permitted successors, transferees and
assigns.
13. ENTIRE AGREEMENT; AMENDMENT. This Guaranty Agreement expresses the
entire understanding of the subject matter hereof; and all other
understandings, written or oral, are hereby merged herein and
superseded. No amendment of or supplement to this Guaranty Agreement,
or waiver or modification of, or consent under, the terms hereof
shall be effective unless in writing and signed by the party to be
bound thereby.
14. TERM OF GUARANTY AGREEMENT. The Guaranty Agreement and all
guarantees, covenants and agreements of the Guarantor contained
herein shall continue in full force and effect and shall not be
discharged until such time as all of the Guaranteed Obligations shall
be paid or otherwise discharged in full.
15. SURVIVAL. All warranties, representations and covenants made by the
Guarantor herein or in any certificate or other instrument delivered
by it or on its behalf under this Guaranty Agreement shall be
considered to have been relied upon by Prudential and shall survive
the execution and delivery of this Guaranty Agreement, regardless of
any investigation made by Prudential or on its behalf.
16. FURTHER ASSURANCES. The Guarantor hereby agrees to execute and
deliver all such instruments and take all such action as Prudential
may from time to time reasonably request in order to effectuate fully
the purposes of this Guaranty Agreement.
17. GOVERNING LAW. THIS GUARANTY AGREEMENT SHALL BE GOVERNED BY,
CONSTRUED AND ENFORCED IN ALL RESPECTS IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE
PERFORMED ENTIRELY THEREIN.
7
18. WAIVER OF JURY TRIAL; CONSENT TO JURISDICTION.
(A) THE GUARANTOR HEREBY KNOWINGLY, VOLUNTARILY, AND
INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN ANY
LITIGATION OF ANY CLAIM WHICH IS BASED HEREON, OR ARISES OUT OF,
UNDER, OR IN CONNECTION WITH THIS GUARANTY AGREEMENT OR ANY
TRANSACTIONS RELATING HERETO OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN), OR ACTIONS OF THE
GUARANTOR OR PRUDENTIAL IN CONNECTION WITH THIS GUARANTY AGREEMENT,
THE RESTRUCTURING AGREEMENT. OR ANY TRANSACTIONS RELATED THERETO. THE
GUARANTOR ACKNOWLEDGES THAT THIS PROVISION IS A MATERIAL INDUCEMENT
FOR PRUDENTIAL TO ENTER INTO THE RESTRUCTURING AGREEMENT.
(B) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
GUARANTY AGREEMENT OR ANY TRANSACTIONS RELATING HERETO OR ANY COURSE
OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN),
OR ACTIONS OF THE GUARANTOR OR PRUDENTIAL MAY BE BROUGHT IN ANY
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK
AND ANY NEW YORK STATE COURT SITTING IN NEW YORK CITY, AND THE
GUARANTOR HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY,
GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE
AFORESAID COURTS. THE GUARANTOR HEREBY IRREVOCABLY WAIVES ANY
OBJECTIONS, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE
LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS,
WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION
OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty Agreement
to be duly executed and delivered as of the date and year first above written.
IWC ENGINEERING, INC.
By: /s/ Xxxxx X. Xxxxxxx
---------------------------------------
Xxxxx X. Xxxxxxx,
Chairman and Chief Executive Officer
8
EXECUTION COPY
SUBORDINATED GUARANTY AGREEMENT
IWC SERVICES, INC.
THIS SUBORDINATED GUARANTY AGREEMENT, dated as of December 28, 2000
(as the same may be amended, restated, supplemented and otherwise modified from
time to time, the "GUARANTY AGREEMENT"), is made by IWC SERVICES, INC., a Texas
corporation (the "GUARANTOR") in favor of THE PRUDENTIAL INSURANCE COMPANY OF
AMERICA and its successors and assigns ("PRUDENTIAL").
WHEREAS, Boots & Xxxxx International Well Control, Inc., a Delaware
corporation (the "COMPANY") plans to enter into a Subordinated Note
Restructuring Agreement dated of even date herewith (as the same may be amended,
modified, supplemented or restated from time to time, the "RESTRUCTURING
AGREEMENT"; capitalized terms used herein that are defined in the Restructuring
Agreement and not otherwise defined herein shall have the respective meanings
specified in the Restructuring Agreement) with Prudential under which Prudential
will accept delivery by the Company of the Company Closing Deliveries in
satisfaction of the Preexisting Obligations; and
WHEREAS, the Company owns (either directly or indirectly) all of the
issued and outstanding capital stock of the Guarantor; and
WHEREAS, pursuant to the Restructuring Agreement, it is a condition
to Prudential's obligation to accept the transfer of the Company Closing
Deliveries and to release the Company from the Preexisting Obligations at the
Closing thereunder that this Guaranty Agreement shall have been executed and
delivered by the Guarantor and shall be in full force and effect; and
WHEREAS, the board of directors of the Guarantor has determined that
the Guarantor's execution, delivery and performance of this Guaranty Agreement
may reasonably be expected to benefit the Guarantor, directly or indirectly, and
are in the best interests of the Guarantor.
NOW THEREFORE, in order to induce, and in consideration of, the
execution and delivery of the Restructuring Agreement and for other good and
valuable consideration, the sufficiency of which is acknowledged, the Guarantor
hereby covenants and agrees with, and represents and warrants to Prudential as
follows:
1. THE GUARANTY. The Guarantor hereby irrevocably and unconditionally
guarantees to Prudential the due and punctual payment in full of (i)
the principal of and interest on (including, without limitation,
interest accruing after the filing of any petition in bankruptcy, or
the commencement of any insolvency, reorganization or like
proceeding, relating to the Company, whether or not a claim for
post-filing or post-petition interest is allowed in such proceeding)
and any other amounts due under the Notes when and as the same shall
become due and payable (whether at stated maturity or by optional
prepayment or by acceleration or otherwise) and (ii) any other sums
which may become due under the terms and provisions of the
Restructuring Agreement, including the Closing Payment, Credit
Facility Payment, and under the Preferred Stock and the Warrants
issuable thereto, and the Notes (all such obligations described in
clauses (i) and (ii) above are herein called the "GUARANTEED
OBLIGATIONS"). The guaranty in the preceding sentence is an absolute,
present and continuing guaranty of payment and not of collectibility
and is in no way conditional or contingent upon any attempt to
collect from the Company or any other guarantor of the Notes or other
Guaranteed Obligations or upon any other action, occurrence or
circumstance whatsoever. In the event that the Company shall fail so
to pay any of such Guaranteed Obligations, the Guarantor agrees to
pay the same when due to Prudential without demand, presentment,
protest or notice of any kind, in lawful money of the United States
of America, at the place for payment specified in the Notes and the
Restructuring Agreement. Each default in payment of principal of or
interest on any Notes shall give rise to a separate cause of action
hereunder and separate suits may be brought hereunder as each cause
of action arises. The Guarantor hereby agrees that the Notes issued
in connection with the Restructuring Agreement may make reference to
this guaranty.
The Guarantor hereby agrees to pay and to indemnify and save
Prudential harmless from and against any damage, loss, cost or
expense (including, without limitation, attorneys' fees) which
Prudential may incur or be subject to as a consequence, direct or
indirect, of (i) any breach by the Guarantor, by the Company or by
any other Transaction Party of any warranty, covenant, term or
condition in, or the occurrence of any default under, this Guaranty
Agreement, the Notes or the Restructuring Agreement, together with
all expenses resulting from the compromise or defense of any claims
or liabilities arising as a result of any such breach or default, and
(ii) any legal action commenced to challenge the validity of this
Guaranty Agreement, the Notes or the Restructuring Agreement.
Notwithstanding the foregoing or any other provisions of this
Guaranty Agreement, it is agreed and understood that the Guarantor
shall not be required to pay hereunder at any time more than the
Maximum Guaranteed Amount (as hereinafter defined) determined as of
such time. The Guarantor agrees that the Guaranteed Obligations may
at any time exceed the sum of the Maximum Guaranteed Amount (as
hereinafter defined) plus the aggregate maximum amount of all
obligations of all other Guarantors, without affecting or impairing
the obligation of the Guarantor. "MAXIMUM GUARANTEED AMOUNT" means as
of the date of determination, the lesser of (a) the amount of the
Guaranteed Obligations outstanding on such date and (b) the maximum
amount that would not render Guarantor's liability under this
Guaranty Agreement subject to avoidance under Section 548 of the
United States Bankruptcy Code (or any successor provision) or any
comparable provision of applicable state law.
2. OBLIGATIONS ABSOLUTE. The obligations of the Guarantor hereunder
shall be primary, absolute, irrevocable and unconditional,
irrespective of the validity, regularity or enforceability of the
Notes, the Warrants, the Preferred Stock or the Restructuring
Agreement, shall not be subject to any counterclaim, set off,
deduction or defense based upon any claim the Guarantor may have
against the Company, Prudential or otherwise, and shall remain in
full force and effect without regard to, and shall not be released,
discharged or in any way affected by, any circumstance or condition
whatsoever (whether or not the Guarantor shall have any knowledge or
notice thereof), including, without limitation: (a) any amendment,
restatement or modification of or supplement to the Notes, the
Warrants, the Preferred Stock and the Restructuring Agreement, or any
other instrument referred to therein (except that the obligations of
the Guarantor hereunder shall apply to the Notes, the Warrants, the
Preferred Stock and the Restructuring Agreement, or such other
instruments as so amended, restated, modified or supplemented) or any
assignment or transfer of any thereof or of any interest therein, or
any furnishing, acceptance or release of any security for the Notes,
(b) any waiver, consent, extension, indulgence or other action or
inaction under or in respect of the Notes, the Warrants, the
Preferred Stock or the Restructuring Agreement; (c) any bankruptcy,
insolvency, readjustment, composition, liquidation or similar
proceeding with respect to the Company or its property; (d) any
merger, amalgamation or consolidation of the Guarantor or of the
Company into or with any other corporation or any sale, lease or
transfer of any or all of the assets of the Guarantor or of the
Company to any person; (e) any failure on the part of the Company for
any reason to comply with or perform any of the terms of any other
agreement with the Guarantor; or (f) any other circumstance which
might otherwise constitute a legal or equitable discharge or defense
2
of a guarantor. The Guarantor covenants that its obligations
hereunder will not be discharged except by payment and performance in
full of all of the Guaranteed Obligations.
3. WAIVER. The Guarantor unconditionally waives (a) notice of acceptance
hereof, of any action taken or omitted in reliance hereon and of any
defaults by the Company in the payment of any amounts due under the
Notes, the Warrants, the Preferred Stock or the Restructuring
Agreement, and of any of the matters referred to in Section 2 hereof,
(b) all notices which may be required by statute, rule of law or
otherwise to preserve any of the rights of Prudential against the
Guarantor, including, without limitation, presentment to or demand
for payment from the Company or the Guarantor with respect to any
Notes, notice to the Company or to the Guarantor of default or
protest for nonpayment or dishonor and the filing of claims with a
court in the event of the bankruptcy of the Company, (c) any right to
the enforcement, assertion or exercise by Prudential of any right,
power or remedy conferred in this Guaranty Agreement, the Notes, the
Warrants, the Preferred Stock or the Restructuring Agreement, (d) any
requirement of diligence on the part of Prudential and (e) any other
act or omission or thing or delay to do any other act or thing which
might in any manner or to any extent vary the risk of the Guarantor
or which might otherwise operate as a discharge of the Guarantor.
4. OBLIGATIONS UNIMPAIRED. The Guarantor authorizes Prudential, without
notice or demand to the Guarantor and without affecting its
obligations hereunder, from time to time (a) to renew, compromise,
extend, accelerate or otherwise change the time for payment of, or
otherwise change the terms of, all or any part of the Notes, the
Warrants, the Preferred Stock or the Restructuring Agreement, or any
other instrument referred to therein; (b) to take and hold security
for the payment of the Notes, for the performance of this Guaranty
Agreement or otherwise for the indebtedness guaranteed hereby and to
exchange, enforce, waive and release any such security; (c) to apply
any such security and to direct the order or manner of sale thereof
as Prudential in its sole discretion may determine; (d) to obtain
additional or substitute endorsers or guarantors; (e) to exercise or
refrain from exercising any rights against the Company and others;
and (f) to apply any sums, by whomsoever paid or however realized, to
the payment of the principal of and interest on the Notes and any
other Guaranteed Obligation hereunder. The Guarantor waives any right
to require Prudential to proceed against any additional or substitute
endorsers or guarantors or to pursue or exhaust any security provided
by the Company, the Guarantor or any other person or to pursue any
other remedy available to Prudential.
5. SUBROGATION. The Guarantor will not exercise, and hereby subordinates
to the rights of Prudential, any rights which the Guarantor may have
acquired by way of subrogation under this Guaranty Agreement by any
payment made hereunder or otherwise, or accept any payment on account
of such subrogation rights, or any rights of reimbursement,
indemnity, exoneration or contribution, any right to participate in
any claim or any rights or recourse to any security for the Notes or
this Guaranty Agreement under the Notes, the Warrants, the Preferred
Stock or the Restructuring Agreement unless and until all of the
obligations, undertakings or conditions to be performed or observed
by the Company pursuant to the Notes, the Warrants, the Preferred
Stock or the Restructuring Agreement, or to be performed or observed
by any party to the Guaranty Agreements, other than the Guarantor,
pursuant to any of the other Guaranty Agreements, shall have been
performed, observed or paid in full at the time of the Guarantor's
exercise of any such right.
6. REINSTATEMENT OF GUARANTY. This Guaranty Agreement shall continue to
be effective, or be reinstated, as the case may be, if and to the
extent at any time payment, in whole or in part, of any of the sums
due to Prudential for principal or interest on the Notes or any of
the other Guaranteed Obligations is rescinded or must otherwise be
restored or returned by Prudential upon the insolvency, bankruptcy,
3
dissolution, liquidation or reorganization of the Company, or upon or
as a result of the appointment of a custodian, receiver, trustee or
other officer with similar powers with respect to the Company or any
substantial part of its property, or otherwise, all as though such
payments had not been made. If an event permitting the acceleration
of the maturity of the principal amount of the Notes shall at any
time have occurred and be continuing and such acceleration shall at
such time be prevented or the right of Prudential to receive any
payment under any Notes shall at such time be delayed or otherwise
affected by reason of the pendency against the Company of a case or
proceeding under a bankruptcy or insolvency law, the Guarantor agrees
that, for purposes of this Guaranty Agreement and its obligations
hereunder, the maturity of such principal amount shall be deemed to
have been accelerated with the same effect as if Prudential had
accelerated the same in accordance with the terms of the
Restructuring Agreement, and the Guarantor shall forthwith pay such
accelerated principal amount and accrued interest thereon and any
other amounts guaranteed hereunder.
7. SUBORDINATION OF GUARANTY AGREEMENT. Anything in this Guaranty
Agreement to the contrary notwithstanding, the Guaranteed Obligations
shall be subordinate and junior to the extent set forth in
subparagraphs (a) to (e), inclusive, below, to the Senior Debt.
(a) In the event of any insolvency, bankruptcy,
liquidation, reorganization or other similar proceedings,
or any receivership proceedings in connection therewith,
relative to the Company or the Guarantor, and in the event
of any proceedings for voluntary liquidation, dissolution
or other winding up of the Company or the Guarantor,
whether or not involving insolvency or bankruptcy
proceedings, then the Senior Debt shall first be paid in
full before any payment of or on account of Guaranteed
Obligations is made by the Guarantor.
(b) In any of the proceedings referred to in
subparagraph (a) above, any payment or distribution of any
kind or character, whether in cash, property, stock or
obligations, which may be payable or deliverable by the
Guarantor in respect of the Guaranteed Obligations shall be
paid or delivered directly to the holders of Senior Debt
(or to a banking institution selected by the court or
Person making the payment or delivery or designated by any
holder of Senior Debt) for application in payment thereof
in accordance with the priorities then existing among such
holders, unless and until all Senior Debt shall have been
paid in full; provided, however, that
(i) if the payment or delivery by the Guarantor
of such cash, property, stock or obligations to
the holders of the Notes is authorized by an
order or decree giving effect, and stating in
such order or decree that effect is given, to the
subordination of the Guaranteed Obligations to
Senior Debt, and made in a reorganization
proceeding under any applicable bankruptcy or
reorganization law, no payment or delivery by the
Guarantor of such cash, property, stock or
obligations payable or deliverable with respect
to the Guaranteed Obligations shall be made to
the holders of Senior Debt; and
(ii) no such delivery shall be made to holders of
Senior Debt of stock or obligations which are
issued pursuant to reorganization proceedings if
such stock or obligations are subordinate and
junior (whether by law or agreement) at least to
the extent provided in this Section 7 to the
payment of all Senior Debt then outstanding and
to the payment of any stock or obligations which
are issued in exchange or substitution for any
Senior Debt then outstanding.
4
(c) If the Company shall default in the payment
of any principal of or interest on any Senior Debt in an
amount in excess of $250,000 owing under any single
instrument when the same becomes due and payable, whether
at maturity or at a date fixed for prepayment or by
declaration of acceleration or otherwise, then, unless and
until the date on which such default shall have been
remedied by payment in full or waived in writing, no holder
of the Notes shall accept or receive any direct or indirect
payment of or on account of any indebtedness in respect of
the Guaranteed Obligations.
(d) Upon the occurrence and during the
continuance of any Default Subordination Event (other than
under circumstances when the terms of subparagraph (i)
above are applicable), no holder of the Notes shall accept
or receive any direct or indirect payment by set-off or
otherwise of or on account of any Guaranteed Obligation
during the Stand-Still Period, provided that (a) there
shall be no more than two Stand-Still Periods during the
term of the Notes and only one in any period of 365
consecutive days and (b) in the case of any payment on or
in respect of any Notes which would (in the absence of any
such Default Subordination Event) have been due and payable
on any date during such Stand-Still Period, the provisions
of this subparagraph (iv) shall not prevent such payment on
or after the date immediately following the termination of
such Stand-Still Period.
(e) If any payment or distribution of any
character, whether in cash, securities or other property,
shall be received by any holder of Notes in contravention
of any of the terms of this Section 7 and before all the
Senior Debt shall have been paid in full, such payment or
distribution shall be received in trust for the benefit of
the holders of the Senior Debt at the time outstanding and
shall forthwith be paid over or delivered and transferred
to the holders of Senior Debt.
Obligation of the Company Unconditional. The provisions of
this Section 7 are for the purpose of defining the relative rights of
the holders of Senior Debt on the one hand, and the holders of the
Notes on the other hand, against the Guarantor and its property, and
nothing herein shall impair, as between the Guarantor and the holders
of the Notes, the obligation of the Guarantor, which is unconditional
and absolute, to pay to the holders thereof the Guaranteed
Obligations in accordance with their terms and the provisions hereof,
nor shall anything herein prevent the holders of the Notes from
exercising all remedies otherwise permitted by applicable law or
hereunder upon default hereunder or under the Notes (including,
without limitation, the right to demand payment and xxx for
performance hereof and of the Notes and to accelerate the maturity
thereof as provided in Section 8.1 of the Restructuring Agreement),
subject to the rights, if any, under this Section 7 of holders of
Senior Debt to receive cash, property, stock or obligations otherwise
payable or deliverable by the Guarantor to the holders of the Notes.
Subrogation. Upon full and final payment of the Senior
Debt, the holders of the Notes shall be subrogated to the rights of
the holders of the Senior Debt to receive payments or distributions
of assets of the Guarantor made on Senior Debt until the Guaranteed
Obligations shall be paid in full, and, for the purposes of such
subrogation, no payments to the holders of Senior Debt of any cash,
property, stock or obligations to which the holders of the Notes
would be entitled shall, as between the Guarantor, its creditors
(other than the holders of the Senior Debt) and the holders of the
Notes, be deemed to be a payment by the Guarantor to or on account of
Senior Debt.
5
Subordination Definitions.
-------------------------
"DEFAULT SUBORDINATION EVENT" shall mean the existence of all of the
following: (i) a Subordination Event of Default shall have occurred
and be continuing in respect of any Senior Debt, (ii) the holders of
the Notes shall have received a notice from or on behalf of any
holder of such Senior Debt identifying each Subordination Event of
Default which has occurred and is continuing and that such notice
constitutes a "DEFAULT SUBORDINATION NOTICE and (iii) no other
Default Subordination Notice shall have been delivered by any holder
of Senior Debt within the 365 day period immediately preceding the
giving of such notice; provided that no fact or circumstances of a
Subordinated Event of Default existing on the date of such Default
Subordinated Notice may be used as a basis for any subsequent Default
Subordination Notice. The "STAND-STILL PERIOD relating to any Default
Subordination Event shall be deemed to continue until the earlier of
(x) the Subordination Event of Default under the Senior Debt giving
rise thereto shall have been cured or waived, (y) a period of 90 days
shall have elapsed from the giving of the Default Subordination
Notice relating thereto and (z) the maturity of such Senior Debt
shall have been accelerated.
"SUBORDINATION EVENT OF DEFAULT" shall mean (i) any default in the
payment of any principal or interest on any Senior Debt in an amount
in excess of $250,000 or less owing under any single instrument when
the same becomes due and payable, or (ii) any event of default under
any agreement evidencing Senior Debt arising as a result of a breach
of covenants which would entitle the holders of such Senior Debt to
accelerate the obligations under such Senior Debt.
8. REPRESENTATIONS AND WARRANTIES OF THE GUARANTOR.
The Guarantor represents and warrants as follows:
(a) Incorporation, Good Standing and Location. The Guarantor is (i) a
corporation duly incorporated, validly existing and in good standing
under the laws of the state of its incorporation, (ii) duly qualified
and authorized to do business and in good standing in every other
jurisdiction where the nature of its business requires such
qualification and (iii) has all requisite corporate power and
authority, and all governmental licenses and permits, to own and
operate its properties and to carry on its businesses as presently
conducted. The Guarantor has the requisite corporate power to enter
into and perform its obligations under this Guaranty Agreement.
(b) Approval and Enforceability of Guaranty Agreement. The execution,
delivery and performance of this Guaranty Agreement have been duly
authorized by all necessary corporate action on the part of the
Guarantor. The Guaranty Agreement has been duly and validly executed
and delivered and constitutes the legal, valid and binding obligation
of the Guarantor, enforceable against it, in accordance with its
terms, subject to (i) applicable bankruptcy, insolvency, moratorium,
reorganization, receivership and similar laws affecting the rights
and remedies of creditors generally and (ii) general principles of
equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
9. NOTICES. All notices or other communications provided for hereunder
shall be in writing and sent by first class mail or nationwide
overnight delivery service (with charges prepaid) and (i) if to
Prudential, addressed to Prudential at the address specified for
communications in Section 12.9 of the Restructuring Agreement, or at
such other address as Prudential shall have specified to the
Guarantor in writing, and (ii) if to the Guarantor, addressed to it
at 000 Xxxx Xxx Xxxxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxx 00000,
Attention: Chief Financial Officer, or at such other address as the
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Guarantor shall have specified to Prudential in writing; provided,
however, that any such communication to the Guarantor may also, at
the option of Prudential, be delivered by any other means either to
the Guarantor at its address specified above or to any officer of the
Guarantor.
10. CONSTRUCTION. The section and subsection headings in this Guaranty
Agreement are for convenience of reference only and shall neither be
deemed to be a part of this Guaranty Agreement nor modify, define,
expand or limit any of the terms or provisions hereof. All references
herein to numbered sections, unless otherwise indicated, are to
sections of this Guaranty Agreement. Words and definitions in the
singular shall be read and construed as though in the plural and vice
versa, and words in the masculine, neuter or feminine gender shall be
read and construed as though in either of the other genders where the
context so requires.
11. SEVERABILITY. If any provision of this Guaranty Agreement, or the
application thereof to any person or circumstances, shall, for any
reason or to any extent, be invalid or unenforceable, such invalidity
or unenforceability shall not in any manner affect or render invalid
or unenforceable the remainder of this Guaranty Agreement, and the
application of that provision to other persons or circumstances shall
not be affected but, rather, shall be enforced to the extent
permitted by applicable law.
12. SUCCESSORS. The terms and provisions of this Guaranty Agreement shall
be binding upon and inure to the benefit of the Guarantor and
Prudential and their respective permitted successors, transferees and
assigns.
13. ENTIRE AGREEMENT; AMENDMENT. This Guaranty Agreement expresses the
entire understanding of the subject matter hereof; and all other
understandings, written or oral, are hereby merged herein and
superseded. No amendment of or supplement to this Guaranty Agreement,
or waiver or modification of, or consent under, the terms hereof
shall be effective unless in writing and signed by the party to be
bound thereby.
14. TERM OF GUARANTY AGREEMENT. The Guaranty Agreement and all
guarantees, covenants and agreements of the Guarantor contained
herein shall continue in full force and effect and shall not be
discharged until such time as all of the Guaranteed Obligations shall
be paid or otherwise discharged in full.
15. SURVIVAL. All warranties, representations and covenants made by the
Guarantor herein or in any certificate or other instrument delivered
by it or on its behalf under this Guaranty Agreement shall be
considered to have been relied upon by Prudential and shall survive
the execution and delivery of this Guaranty Agreement, regardless of
any investigation made by Prudential or on its behalf.
16. FURTHER ASSURANCES. The Guarantor hereby agrees to execute and
deliver all such instruments and take all such action as Prudential
may from time to time reasonably request in order to effectuate fully
the purposes of this Guaranty Agreement.
17. GOVERNING LAW. THIS GUARANTY AGREEMENT SHALL BE GOVERNED BY,
CONSTRUED AND ENFORCED IN ALL RESPECTS IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE
PERFORMED ENTIRELY THEREIN.
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18. WAIVER OF JURY TRIAL; CONSENT TO JURISDICTION.
(A) THE GUARANTOR HEREBY KNOWINGLY, VOLUNTARILY, AND
INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN ANY
LITIGATION OF ANY CLAIM WHICH IS BASED HEREON, OR ARISES OUT OF,
UNDER, OR IN CONNECTION WITH THIS GUARANTY AGREEMENT OR ANY
TRANSACTIONS RELATING HERETO OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN), OR ACTIONS OF THE
GUARANTOR OR PRUDENTIAL IN CONNECTION WITH THIS GUARANTY AGREEMENT,
THE RESTRUCTURING AGREEMENT. OR ANY TRANSACTIONS RELATED THERETO. THE
GUARANTOR ACKNOWLEDGES THAT THIS PROVISION IS A MATERIAL INDUCEMENT
FOR PRUDENTIAL TO ENTER INTO THE RESTRUCTURING AGREEMENT.
(B) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
GUARANTY AGREEMENT OR ANY TRANSACTIONS RELATING HERETO OR ANY COURSE
OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN),
OR ACTIONS OF THE GUARANTOR OR PRUDENTIAL MAY BE BROUGHT IN ANY
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK
AND ANY NEW YORK STATE COURT SITTING IN NEW YORK CITY, AND THE
GUARANTOR HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY,
GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE
AFORESAID COURTS. THE GUARANTOR HEREBY IRREVOCABLY WAIVES ANY
OBJECTIONS, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE
LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS,
WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION
OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty Agreement
to be duly executed and delivered as of the date and year first above written.
IWC SERVICES, INC.
By: /s/ Xxxxx X. Xxxxxxx
----------------------------------------
Xxxxx X. Xxxxxxx,
Chairman and Chief Executive Officer
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