LIMITED GUARANTY
THIS LIMITED GUARANTY (this "GUARANTY") is dated as of the 7th day of
March, 1997, by MERCURY MONTANA, INC., a Delaware corporation ("GUARANTOR"), in
favor of NATIONSBANK OF TEXAS, N.A. and each of the other financial institutions
listed on Schedule 1 to the Credit Agreement (as hereinafter defined) as Banks,
and each of their successors and assigns as permitted pursuant to the Credit
Agreement (NationsBank of Texas, N.A. acting as a Bank but not as Agent, each of
the other Banks listed on Schedule 1 of the Credit Agreement, and each of their
successors and assigns are collectively referred to herein as "NOTEHOLDERS").
W I T N E S S E T H:
WHEREAS, Mercury Exploration Company, a Texas corporation ("BORROWER"),
Noteholders, and NationsBank of Texas, N.A., as Agent ("AGENT") are parties to
that certain Credit Agreement (herein so called) dated as of January 31, 1997,
pursuant to which Noteholders have agreed to make a revolving credit loan and a
term loan to Borrower and issue and participate in letters of credit issued on
behalf of Borrower (unless otherwise defined herein, all terms used herein with
their initial letter capitalized shall have the meaning given such terms in the
Credit Agreement); and
WHEREAS, Noteholders have required, as a condition to the further extension
of credit under the Credit Agreement, that Guarantor execute and deliver this
Guaranty; and
WHEREAS, Guarantor has determined that valuable benefits will be derived by
it as a result of the Credit Agreement and the extension of credit made by
Noteholders thereunder; and
WHEREAS, Guarantor has further determined that the benefits accruing to it
from the Credit Agreement exceed Guarantor's anticipated liability under this
Guaranty.
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of
which are hereby acknowledged and confessed, Guarantor hereby covenants and
agrees as follows:
1. Subject to PARAGRAPHS 24 and 25 hereof, Guarantor hereby absolutely
and unconditionally guarantees the prompt, complete and full payment when due,
no matter how such shall become due, of the Obligations, and further guarantees
that Borrower will properly and timely perform the Obligations.
2. If Guarantor is or becomes liable for any indebtedness owing by
Borrower to any Noteholder by endorsement or otherwise than under this Guaranty,
such liability shall not be in any manner impaired or affected hereby, and the
rights of Noteholders hereunder shall be cumulative of any and all other rights
that Noteholders may ever have against Guarantor. The exercise by any
Noteholder of any right or remedy hereunder or under any other instrument, at
law or in equity, shall not preclude the concurrent or subsequent exercise of
any other right or remedy.
3. In the event of default by Borrower in payment of the Obligations, or
any part thereof, when such Obligations become due, either by their terms or as
the result of the exercise of any power to accelerate, Guarantor shall, on
demand, and without further notice of dishonor and without any notice having
been given to Guarantor previous to such demand of the acceptance by Noteholders
of this Guaranty, and without any notice having been given to such Guarantor
previous to such demand of the creating or incurring of such Obligations, pay
the amount due thereon to Noteholders at Agent's office as set forth in the
Credit Agreement, and it shall not be necessary for any Noteholder, in order to
enforce such payment by Guarantor, first, to institute suit or exhaust its
remedies against Borrower or others liable on such Obligations, to have Borrower
joined with Guarantor in any suit brought under this Guaranty or to enforce
their rights against any security which shall ever have been given to secure
such indebtedness; provided, however, that in the event any Noteholder elects to
enforce and/or exercise any remedies they may possess with respect to any
security for the Obligations prior to demanding payment from Guarantor,
Guarantor shall nevertheless be obligated hereunder for any and all sums still
owing to Noteholders on the Obligations and not repaid or recovered incident to
the exercise of such remedies.
4. Notice to Guarantor of the acceptance of this Guaranty and of the
making, renewing or assignment of the Obligations and each item thereof, are
hereby expressly waived by Guarantor.
5. Each payment on the Obligations shall be deemed to have been made by
Borrower unless express written notice is given to Noteholders at the time of
such payment that such payment is made by Guarantor as specified in such notice.
6. If all or any part of the Obligations at any time are secured,
Guarantor agrees that Agent and/or Noteholders may at any time and from time to
time, at their discretion and with or without valuable consideration, allow
substitution or withdrawal of collateral or other security and release
collateral or other security or compromise or settle any amount due or owing
under the Credit Agreement or amend or modify in whole or in part the Credit
Agreement or any Loan Paper executed in connection with same without impairing
or diminishing the obligations of Guarantor hereunder. Guarantor further agrees
that if Borrower executes in favor of any Noteholder any collateral agreement,
mortgage or other security instrument, the exercise by any Noteholder of any
right or remedy thereby conferred on such Noteholder shall be wholly
discretionary with such Noteholder, and that the exercise or failure to exercise
any such right or remedy shall in no way impair or diminish the obligation of
Guarantor hereunder. Guarantor further agrees that Noteholders and Agent shall
not be liable for their failure to use diligence in the collection of the
Obligations or in preserving the liability of any person liable for the
Obligations, and Guarantor hereby waives presentment for payment, notice of
nonpayment, protest and notice thereof (including, notice of acceleration), and
diligence in bringing suits against any Person liable on the Obligations, or any
part thereof.
7. Guarantor agrees that Noteholders, in their discretion, may (i) bring
suit against all guarantors (including, without limitation, Guarantor hereunder)
of the Obligations jointly and
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severally or against any one or more of them, (ii) compound or settle with any
one or more of such guarantors for such consideration as Noteholders may deem
proper, and (iii) release one or more of such guarantors from liability
hereunder, and that no such action shall impair the rights of Noteholders to
collect the Obligations (or the unpaid balance thereof) from other such
guarantors of the Obligations, or any of them, not so sued, settled with or
released. Guarantor agrees, however, that nothing contained in this paragraph,
and no action by Noteholders permitted under this paragraph, shall in any way
affect or impair the rights or obligations of such guarantors among themselves.
8. Guarantor represents and warrants to each Noteholder that (i)
Guarantor is a corporation duly organized and validly existing under the laws of
the jurisdiction of its incorporation or formation; and (ii) Guarantor possesses
all requisite authority and power to authorize, execute, deliver and comply with
the terms of this Guaranty; this Guaranty has been duly authorized and approved
by all necessary action on the part of Guarantor and constitutes a valid and
binding obligation of Guarantor enforceable in accordance with its terms, except
as the enforcement thereof may be limited by applicable Debtor Relief Laws; and
no approval or consent of any court or governmental entity is required for the
authorization, execution, delivery or compliance with this Guaranty which has
not been obtained (and copies thereof delivered to Noteholders). As used in
this PARAGRAPH 8, "DEBTOR RELIEF LAWS" means the Bankruptcy Code of the United
States of America and all other applicable liquidation, conservatorship,
bankruptcy, moratorium, rearrangement, receivership, insolvency, reorganization,
suspension of payments or similar debtor relief laws from time to time in effect
affecting the rights of creditors generally.
9. Guarantor covenants and agrees that until the Obligations are paid and
performed in full, except as otherwise provided in the Credit Agreement or
unless Noteholders give their prior written consent to any deviation therefrom,
it will (i) at all times maintain its existence and authority to transact
business in any State or jurisdiction where Guarantor has assets and operations,
(ii) promptly deliver to Noteholders and to Agent such information respecting
its business affairs, assets and liabilities as Noteholders may reasonably
request, and (iii) duly and punctually observe and perform all covenants
applicable to Guarantor under the Credit Agreement and the other Loan Papers.
The failure of Guarantor to comply with the terms of this paragraph shall be an
Event of Default under the Credit Agreement.
10. This Guaranty is for the benefit of Noteholders, their successors and
assigns, and in the event of an assignment by Noteholders (or their successors
or assigns) of the Obligations, or any part thereof, the rights and benefits
hereunder, to the extent applicable to the Obligations so assigned, may be
transferred with such Obligations. This Guaranty is binding upon Guarantor and
its successors and assigns.
11. No modification, consent, amendment or waiver of any provision of this
Guaranty, nor consent to any departure by Guarantor therefrom, shall be
effective unless the same shall be in writing and signed by each Noteholder, and
then shall be effective only in the specific instance and for the purpose for
which given. No notice to or demand on Guarantor in any case shall, of itself,
entitle Guarantor to any other or further notice or demand in similar or other
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circumstances. No delay or omission by Noteholders in exercising any power or
right hereunder shall impair any such right or power or be construed as a waiver
thereof or any acquiescence therein, nor shall any single or partial exercise of
any such power preclude other or further exercise thereof, or the exercise of
any other right or power hereunder. All rights and remedies of Noteholders
hereunder are cumulative of each other and of every other right or remedy which
Noteholders may otherwise have at law or in equity or under any other contract
or document, and the exercise of one or more rights or remedies shall not
prejudice or impair the concurrent or subsequent exercise of other rights or
remedies.
12. No provision herein or in any promissory note, instrument or any other
Loan Paper executed by Borrower or Guarantor evidencing the Obligations shall
require the payment or permit the collection of interest in excess of the
Maximum Lawful Rate. If any excess of interest in such respect is provided for
herein or in any such promissory note, instrument, or any other Loan Paper, the
provisions of this paragraph shall govern, and neither Borrower nor Guarantor
shall be obligated to pay the amount of such interest to the extent that it is
in excess of the amount permitted by law. The intention of the parties being to
conform strictly to any applicable federal or state usury laws now in force, all
promissory notes, instruments and other Loan Papers executed by Borrower or
Guarantor evidencing the Obligations shall be held subject to reduction to the
amount allowed under said usury laws as now or hereafter construed by the courts
having jurisdiction.
13. If Guarantor should breach or fail to perform any provision of this
Guaranty, Guarantor agrees to pay Noteholders all costs and expenses (including
court costs and reasonable attorneys fees) incurred by Noteholders in the
enforcement hereof.
14. (a) The liability of Guarantor under this Guaranty shall in no manner
be impaired, affected or released by the insolvency, bankruptcy, making of an
assignment for the benefit of creditors, arrangement, compensation, composition
or readjustment of Borrower, or any proceedings affecting the status, existence
or assets of Borrower or other similar proceedings instituted by or against
Borrower and affecting the assets of Borrower.
(b) Guarantor acknowledges and agrees that any interest on any
portion of the Obligations which accrues after the commencement of any
proceeding referred to in clause (a) above (or, if interest on any portion of
the Obligations ceases to accrue by operation of law by reason of the
commencement of said proceeding, such interest as would have accrued on such
portion of the Obligations if said proceedings had not been commenced) shall be
included in the Obligations because it is the intention of Guarantor, Agent and
Noteholders that the Obligations which are guaranteed by Guarantor pursuant to
this Guaranty should be determined without regard to any rule of law or order
which may relieve Borrower of any portion of such Obligations. Guarantor will
permit any trustee in bankruptcy, receiver, debtor in possession, assignee for
the benefit of creditors or similar person to pay Noteholders or Agent, or allow
the claim of Noteholders or Agent in respect of, any such interest accruing
after the date on which such proceeding is commenced.
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(c) In the event that all or any portion of the Obligations are paid
by Borrower, the obligations of Guarantor hereunder shall continue and remain in
full force and effect or be reinstated, as the case may be, in the event that
all or any part of such payment(s) are rescinded or recovered directly or
indirectly from Agent or any Noteholder as a preference, fraudulent transfer or
otherwise, and any such payments which are so rescinded or recovered shall
constitute Obligations for all purposes under this Guaranty.
15. Guarantor understands and agrees that any amounts of Guarantor on
account with any Noteholder may be offset to satisfy the obligations of
Guarantor hereunder.
16. Guarantor hereby subordinates and makes inferior any and all
indebtedness now or at any time hereafter owed by Borrower to Guarantor to the
Obligations evidenced by the Credit Agreement and agrees after the occurrence of
a Default under the Credit Agreement, or any event which with notice, lapse of
time, or both, would constitute a Default under the Credit Agreement, not to
permit Borrower to repay, or to accept payment from Borrower of, such
indebtedness or any part thereof without the prior written consent of
Noteholders.
17. During the period that Banks have any commitment to lend or
participate in Letter of Credit Exposure under the Loan Papers, or any amount
payable under any Note remains unpaid or any Letter of Credit remains
outstanding, and throughout any additional preferential period subsequent
thereto, Guarantor hereby waives any and all rights of subrogation to which
Guarantor may otherwise be entitled against Borrower, or any other guarantor of
the Obligations, as a result of any payment made by Guarantor pursuant to this
Guaranty.
18. As of the date hereof, the fair saleable value of the property of
Guarantor is greater than the total amount of liabilities (including contingent
and unliquidated liabilities) of Guarantor, and Guarantor is able to pay all of
its liabilities as such liabilities mature and Guarantor does not have
unreasonably small capital within the meaning of Xxxxxxx 000, Xxxxx 00, Xxxxxx
Xxxxxx Code, as amended. In computing the amount of contingent or liquidated
liabilities, such liabilities have been computed at the amount which, in light
of all the facts and circumstances existing as of the date hereof, represents
the amount that can reasonably be expected to become an actual or matured
liability.
19. If any provision of this Guaranty is held to be illegal, invalid, or
unenforceable, such provision shall be fully severable; this Guaranty shall be
construed and enforced as if such illegal, invalid, or unenforceable provision
had never comprised a part hereof; and the remaining provisions hereof shall
remain in full force and effect and shall not be affected by the illegal,
invalid, or unenforceable provision or by its severance herefrom. Furthermore,
in lieu of such illegal, invalid, or unenforceable provision there shall be
added automatically as a part of this Guaranty a provision as similar in terms
to such illegal, invalid, or unenforceable provision as may be possible and be
legal, valid and enforceable.
20. (a) Except to the extent required for the exercise of the remedies
provided in the other security instruments, Guarantor hereby irrevocably submits
to the nonexclusive
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jurisdiction of any Texas state or federal court over any action or proceeding
arising out of or relating to this Guaranty or any other Loan Paper, and
Guarantor hereby irrevocably agrees that all claims in respect of such action or
proceeding may be heard and determined in such Texas state or federal court.
Guarantor hereby irrevocably waives, to the fullest extent permitted by Law, any
objection which it may now or hereafter have to the laying of venue of any
Litigation arising out of or in connection with this Guaranty or any of the Loan
Papers brought in district courts of Dallas County, Texas, or in the United
States District Court for the Northern District of Texas, Dallas Division.
Guarantor hereby irrevocably waives any claim that any Litigation brought in any
such court has been brought in an inconvenient forum. Guarantor hereby
irrevocably consents to the service of process out of any of the aforementioned
courts in any such Litigation by the mailing of copies thereof by certified
mail, return receipt requested, postage prepaid, to Guarantor's office c/o
Mercury Exploration Company, 0000 Xxxxxxxxxxxx Xxxxxx, Xx. Xxxxx, Xxxxx 00000,
(000) 000-0000. Guarantor irrevocably agrees that any legal proceeding against
Noteholders shall be brought in the district courts of Dallas County, Texas, or
in the United States District Court for the Northern District of Texas, Dallas
Division. Nothing herein shall affect the right of Noteholder to commence legal
proceedings or otherwise proceed against Guarantor in any jurisdiction or to
serve process in any manner permitted by applicable law. As used herein, the
term "LITIGATION" means any proceeding, claim, lawsuit or investigation (i)
conducted or threatened by or before any court or governmental department,
commission, board, bureau, agency or instrumentality of the United States or of
any state, commonwealth, nation, territory, possession, county, parish, or
municipality, whether now or hereafter constituted or existing, or (ii) pending
before any public or private arbitration board or panel.
(b) Nothing in this PARAGRAPH 20 shall affect any right of any
Noteholder to serve legal process in any other manner permitted by law or affect
the right of any Noteholder to bring any action or proceeding against Guarantor
in the courts of any other jurisdictions.
(c) To the extent that Guarantor has or hereafter may acquire any
immunity from jurisdiction of any court or from any legal process (whether
through service or notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise) with respect to itself or its property,
Guarantor hereby irrevocably waives such immunity in respect of its obligations
under this Guaranty and the other Loan Papers.
21. THIS GUARANTY AND THE OTHER LOAN PAPERS COLLECTIVELY REPRESENT THE
FINAL AGREEMENT BY AND AMONG NOTEHOLDERS, AGENT AND GUARANTOR AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF NOTEHOLDERS, AGENT AND GUARANTOR. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS AMONG NOTEHOLDERS, AGENT AND GUARANTOR.
22. GUARANTOR, FOR ITSELF, ITS SUCCESSORS AND ASSIGNS, HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ITS RIGHT TO A JURY TRIAL, IN
ANY LITIGATION ARISING OUT OF OR IN CONNECTION WITH THIS GUARANTY OR ANY OF THE
OTHER LOAN PAPERS.
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23. THIS GUARANTY AND THE OTHER LOAN PAPERS SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS.
24. Notwithstanding anything to the contrary contained herein, Guarantor's
liability under this Guaranty for the payment of any of the Obligations shall be
limited to $4,000,000.
25. Notwithstanding anything to the contrary contained herein, upon the
Mercury Montana Release Date (as defined in the Credit Agreement), Guarantor's
liability under this Guaranty shall automatically be released without the
necessity of any further act on the part of Borrower, Guarantor, Agent and/or
Noteholders.
EXECUTED and effective as of the date first above written.
GUARANTOR:
MERCURY MONTANA, INC.
By: /s/ Xxxxx Xxxxxx
-----------------------------------------
Xxxxx Xxxxxx,
Vice President
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