Exhibit No. 10.24
GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT (this "Guaranty") dated as of August 1, 1997,
is made by CROWN ENERGY CORPORATION, a Utah corporation ("Guarantor"), in favor
of MCNIC PIPELINE & PROCESSING COMPANY, a Michigan corporation, and its
respective successors and assigns (the "Beneficiary").
RECITALS
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A. Crown Asphalt Corporation, a Utah corporation ("Crown Asphalt"), a
wholly owned subsidiary of Guarantor, and the Beneficiary are Members of Crown
Asphalt Ridge, L.L.C., a Utah limited liability company ("Crown LLC"), which was
formed pursuant to that certain Operating Agreement for Crown Asphalt Ridge
L.L.C. dated as of the date hereof (the "Operating Agreement") between the
Beneficiary and Crown Asphalt.
B. Crown LLC and Crown Asphalt are parties to that certain Operating
and Management Agreement dated as of the date hereof (the "Management
Agreement").
C. As a condition the execution of the Operating Agreement and to the
making of capital contributions to Crown LLC by the Beneficiary, the Beneficiary
has required Guarantor to enter into this Guaranty.
C. The Board of Directors of the Guarantor has determined that the
Guarantor's execution, delivery and performance of this Guaranty may reasonably
be expected to be of substantial benefit to the Guarantor, directly and
indirectly, and to be in the best interests of the Guarantor.
AGREEMENT
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NOW, THEREFORE, in order to comply with the terms and conditions of the
Operating Agreement, (ii) to induce the Beneficiary to enter into and make
capital contributions to Crown LLC under the Operating Agreement and (iii) for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Guarantor hereby covenants and agrees with, and represents
and warrants to, the Beneficiary as follows:
1 Defined Terms. The following terms shall have the following meanings
and capitalized terms used herein but not defined herein shall have the meanings
ascribed thereto in the Operating Agreement:
"Affiliate" shall mean (a) any Person directly or indirectly owning,
controlling or holding with power to vote 50% or more of the outstanding voting
securities, membership interests or partnership interests of the Member, (b) any
Person 50% or more of whose outstanding voting securities, membership interests
or partnership interests are directly or indirectly owned, controlled or held
with power to vote by the Member or a Person or group described in "(a)", and
(c) any officer, director, member, manager or partner of the Member or any
Person described in subsections (a) or (b) of this paragraph.
"Beneficiary" shall have the meaning set forth in the preamble to this
Guaranty.
"Capital Contribution" shall have the meaning set forth in the
Operating Agreement.
"Crown Asphalt" shall have the meaning set forth in Recital A.
"Crown LLC" shall have the meaning set forth in Recital A.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Existing Data" shall have the meaning set forth in the Operating
Agreement.
"Financial Statements" shall mean the financial statements attached as
Schedule 4.6(m) to the Operating Agreement.
"Guaranteed Obligations" shall have the meaning set forth in Section 2.
"Guarantor" shall have the meaning set forth in the preamble to this
Guaranty.
"Management Agreement" shall have the meaning set forth in Recital B.
"Material Adverse Effect" shall mean, with respect to any Person, a
material adverse effect on (i) the condition (financial or otherwise), business,
assets and results of operations of that Person and its Affiliates, taken as a
whole, or (ii) the ability of that Person to perform its obligations under this
Agreement.
"Operating Agreement" shall have the meaning set forth in Recital A.
"Person" shall mean an individual, natural person, corporation, joint
venture, partnership, limited partnership, limited liability company, trust,
estate, business trust, association, governmental authority or any other entity.
"Proxy Statement" shall have the meaning set forth in Section 6(e).
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Stockholders Meeting" shall have the meaning set forth in Section
6(e).
2. The Guaranty. Guarantor hereby irrevocably and unconditionally
guarantees to the Beneficiary Crown Asphalt's full and timely performance,
payment and discharge of all of the obligations, of whatever type, that Crown
Asphalt is required to perform, pay or discharge on or before August 1, 1999
under the Operating Agreement and under the Management Agreement (the
"Guaranteed Obligations") and hereby agrees that if Crown Asphalt shall fail to
pay any amount when and as the same shall be due and payable by Crown Asphalt or
timely to perform and discharge in full any Guaranteed Obligation, Guarantor
will forthwith pay to the Beneficiary an amount equal to any such amount or
perform and discharge, or cause to be performed or discharged, any such
Guaranteed Obligation, as the case may be, as such payment or performance is
required pursuant to the terms of the Operating Agreement or the Management
Agreement to be made or done by Crown Asphalt, and all reasonable expenses,
including reasonable attorneys' fees, that may be incurred by the Beneficiary in
enforcing such Guaranteed Obligations and enforcing the covenants and agreements
of Guarantor herein, provided, however, that Guarantor shall not be required to
perform any Guaranteed Obligation until the third Business Day after Guarantor
has been notified under this Guaranty that payment of such Guaranteed Obligation
is then required by the terms of the Operating Agreement or Management
Agreement, as applicable. The guaranty in the preceding sentence is an absolute,
present and continuing guaranty of payment and of performance of the Guaranteed
Obligations and is in no way conditional or contingent upon any attempt to
collect from Crown Asphalt or upon any other action, occurrence or circumstance
whatsoever other than notice as set forth in the preceding sentence. It shall
not be necessary for the Beneficiary, in order to enforce such payment by
Guarantor, first to institute suit or exhaust its remedies against Crown Asphalt
or any other Person liable with respect to the Guaranteed Obligations.
3. Obligations Absolute. The obligation of Guarantor hereunder shall be
primary, absolute, irrevocable and unconditional, irrespective of the validity,
regularity or enforceability of the Operating Agreement or the Management
Agreement (except any invalidity or unenforceability caused by an action or
omission of the Beneficiary), and shall not be subject to any counterclaim,
setoff, deduction or defense based upon any claim Guarantor may have against
Crown Asphalt or the Beneficiary or otherwise. To the fullest extent permitted
by law, the obligations of Guarantor hereunder 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 Guarantor
shall have any knowledge or notice thereof), including, without limitation:
(A) any amendment, modification of or supplement to the
Operating Agreement, the Management Agreement, or any other instrument referred
to therein or any assignment or transfer of any rights or obligations
thereunder;
(B) any release or waiver, by operation of law or
otherwise, of the performance or observance by Crown Asphalt or any other Person
of any express or implied agreement, covenant, term, obligation or condition
under the Operating Agreement or the Management Agreement, except that
Guarantor shall be released with respect to the portion of the Guaranteed
Obligations attributable to Crown Asphalt pro tanto to the extent the
Beneficiary releases in writing Crown Asphalt from liability with respect to the
Guaranteed Obligations;
(C) any extension of the time for the payment of all or
any portion of any sums payable under the Operating Agreement or the Management
Agreement, or the extension of time for the performance of any obligation under,
arising out of, or in connection with the Operating Agreement or the Management
Agreement;
(D) any failure, omission, delay or lack of diligence on
the part of the Beneficiary, or any other Person, to enforce, assert or
exercise, or any waiver of, any right, privilege, power or remedy conferred on
the Beneficiary or any other Person by the Operating Agreement or the Management
Agreement, or any action on the part of the Beneficiary or such other Person
granting indulgence or extension of any kind;
(E) the taking (or subsequent release thereof) of
additional security for the obligations of Crown Asphalt under the Operating
Agreement or the Management Agreement;
(F) any bankruptcy, insolvency, readjustment, composition,
liquidation, dissolution or similar proceeding with respect to Crown Asphalt or
its property;
(G) any merger, amalgamation or consolidation of Guarantor
or of Crown Asphalt into or with any other corporation, limited liability
company or partnership or any sale, lease or transfer of any or all of the
assets of Guarantor or of Crown Asphalt to any Person;
(H) any failure on the part of Crown Asphalt for any
reason to comply with or perform any of the terms of any agreement with
Guarantor;
(G) any failure to perfect or maintain the perfection of
any lien on or security interest in any collateral securing, at any time,
performance of Crown Asphalt's obligations under the Operating Agreement or the
Management Agreement; or
(J) any other circumstance that might otherwise constitute
a legal or equitable discharge or defense of a guarantor.
4. Waiver. Guarantor unconditionally waives, to the fullest extent
permitted by law: (a) notice of acceptance hereof, of any action taken or
omitted in reliance hereon and of any defaults by Crown Asphalt in the payment
or performance of any Guaranteed Obligations, and of any of the matters referred
to in paragraph 3 hereof; (b) all notices that may otherwise be required by
statute, rule of law or otherwise to preserve any of the rights of the
Beneficiary against Guarantor, including, without limitation, presentment to or
demand for payment from Crown Asphalt or Guarantor, notice to Crown Asphalt or
to Guarantor of default or protest for nonpayment or dishonor, and the filing of
claims with a court in the event of the bankruptcy of Crown Asphalt; (c) any
right to the enforcement, assertion or exercise by the Beneficiary of any right,
power or remedy conferred in this Guaranty, the Operating Agreement or the
Management Agreement; (d) any requirement or diligence on the part of the
Beneficiary; and (e) any other act or omission (including any delay by the
Beneficiary or any other Person in the taking of any action) that might in any
manner or to any extent vary the risk of Guarantor or that might otherwise
operate as a discharge of Guarantor. Guarantor waives any right to require the
Beneficiary to proceed against any additional or substitute endorsers or
guarantors or to pursue or exhaust any security provided by Crown Asphalt,
Guarantor or any other Person or to pursue any other remedy available to the
Beneficiary.
5. Reinstatement of Guaranty. This Guaranty shall continue to be
effective or be reinstated, as the case may be, if and to the extent at any time
any payments, in whole or in part, made by Crown Asphalt or Guarantor to the
Beneficiary in respect of the Guaranteed Obligations are required to be
rescinded by a court of competent jurisdiction or must otherwise be restored or
returned by the Beneficiary upon the insolvency, bankruptcy, dissolution,
liquidation or reorganization of Crown Asphalt, or upon or as a result of the
appointment of a custodian, receiver, trustee or other officer with similar
powers with respect to Crown Asphalt or any substantial part of its property, or
otherwise, all as though such payments had not been made.
6. Representations, Covenants and Warranties of Guarantor.
Guarantor represents, covenants and warrants as follows:
(A) Organization and Good Standing. Guarantor is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Utah, and Guarantor has the requisite power to enter into and
perform its obligations under this Guaranty.
(B) Approval and Enforceability of Guaranty. (i) The
execution, delivery and performance of this Guaranty have been duly authorized
by all necessary corporate action on the part of Guarantor.
(ii) This Guaranty has been duly and validly executed and
delivered and constitutes the legal, valid and binding obligation of Guarantor,
enforceable against it in accordance with its terms, subject to applicable
bankruptcy, insolvency, moratorium, reorganization, dissolution, receivership
and similar laws affecting the rights and remedies of creditors generally, and
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(iii) Neither the execution or delivery of this Guaranty,
nor the fulfillment or compliance with the terms and provisions hereof (x)
requires any authorization, consent, approval, exemption or other action by or
notice to or filing with any court or administrative or governmental or
regulatory body, or (y) will conflict with, or result in a breach of the terms,
conditions or provisions of, or constitute a default under, or result in any
violation of, or result in the creation of any lien or encumbrance upon any of
the properties or assets of Guarantor pursuant to its organization documents,
any award of any arbitrator or any agreement (including any agreement with
shareholders), instrument, order, judgment, decree, statue, law, rule or
regulation to which Guarantor or its assets and properties is subject.
(C) Financial Statements. The Financial Statements present
fairly in all material respects, and in accordance with generally accepted
accounting principles applied on a consistent basis, Guarantor's and Crown
Asphalt's financial position at the date thereof and the results of Guarantor's
and Crown Asphalt's operations and cash flows for the period covered thereby.
Guarantor is not aware of any material error in, or omission from the Financial
Statements. The Form 10-K filed by Guarantor for the fiscal year ended December
31, 1996 and the Form 10-Q filed by Guarantor for the fiscal quarter ended June
30, 1997 are true and correct in all respects. Since June 30, 1997, there has
been no Material Adverse Effect with respect to Guarantor.
(D) Total Assets and Net Sales. As of the date of this
Guaranty, the "total assets" and "net sales" of Guarantor and Crown Asphalt, as
such terms are used in 16 C.F.R. 801.40(b) (1997), are each less than
$10,000,000.
(E) Stockholders Meeting and Proxy Statement. Guarantor
shall, promptly after the date of this Guaranty, (i) take all actions necessary
in accordance with Utah Law and its charter and bylaws to convene a special
meeting of Guarantor's stockholders to act on the Operating Agreement and the
transactions contemplated thereby (the "Stockholders Meeting"); (ii) prepare and
file with the SEC a proxy statement (the "Proxy Statement") that complies with
the applicable requirements of the Securities Act and the rules and regulations
thereunder and the Exchange Act and the rules and regulations thereunder for
stockholders of Guarantor in connection with the Operating Agreement and the
transactions contemplated thereby, and supplement the Proxy Statement from time
to time if necessary or appropriate under applicable law; and (iii) shall take
any action required to be taken under any applicable federal or state securities
laws in connection with the Operating Agreement and the transactions
contemplated thereby. Guarantor shall use its best efforts to solicit from
stockholders of Guarantor proxies in favor of the approval and adoption of the
Operating Agreement and the transactions contemplated thereby, and to secure the
vote of stockholders required by Utah Law and its charter and bylaws to approve
and adopt the Operating Agreement and the transactions contemplated thereby
(including, without limitation, including in the Proxy Statement the
recommendation of the Guarantor's board of directors in favor of the approval
and adoption of the Operating Agreement and the transactions contemplated
thereby). All documents (including, without limitation, the Proxy Statement and
any supplements thereto) that Guarantor is responsible for filing with the SEC
in connection with the Operating Agreement and the transactions contemplated
thereby will comply as to form in all material respects with the applicable
requirements of the Securities Act and the rules and regulations thereunder and
the Exchange Act and the rules and regulations thereunder. Guarantor shall
afford MCNIC the opportunity to review and comment on any proposed filings with
the SEC or other governmental agency and any disclosures to Guarantor's
stockholders or other third Persons reasonably in advance thereof.
7. Notices. Unless otherwise specifically provided herein, all notices,
consents, directions, approvals, instructions, requests and other communications
required or permitted by the terms hereon shall be in writing, and any such
communication shall become effective when received, addressed in the following
manner:
(A) if to Guarantor, to:
Crown Energy Corporation
000 Xxxxx Xxxxx, Xxxxx 000
Xxxx Xxxx Xxxx, Xxxx 00000
Attention: Xx. Xxx Xxxxxx
Facsimile: (000) 000-0000
(B) if to the Beneficiary, to:
MCNIC Pipeline & Processing Company
000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
with a copy to:
MCN Energy Group
000 Xxxxxxxx
00xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
Facsimile: (000) 000-0000
provided, however, that Guarantor or the Beneficiary may change its address for
communications by notice given as aforesaid to the other parties hereto.
8. Construction. The section and subsection headings in this Guaranty
are for convenience of reference only and shall neither be deemed to be a part
of this Guaranty 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. 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.
9. Severability. If any provision of this Guaranty, or the
application thereof to any Person or circumstances, shall, for any reason or to
any extent, be invalid orunenforceable, such invalidity or unenforceability
shall not in any manner affect or render invalid or unenforceable the remainder
of this Guaranty, 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.
10. Successors. The terms and provisions of this Guaranty shall be
binding upon and inure to the benefit of Guarantor and the Beneficiary and,
subject to the restrictions on transfer in the Operating Agreement and the
Management Agreement, their respective successors, transferees and assigns
provided, however, (i) no assignment or other transfer by, through or under the
Beneficiary shall operate to increase Guarantor's obligations hereunder and (ii)
Guarantor shall be fully protected in making and shall receive full credit for
any payments or other performance made by it to the Beneficiary or its
successors, transferees and assigns with respect to the Guaranteed Obligations
prior to the time Guarantor receives written notice of such succession, transfer
or assignment, subject to Section 5 hereof
11. Entire Agreement; Amendment. This Guaranty 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, 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.
12. Certain Limitations. Except as expressly contemplated by this
Guaranty and the Operating Agreement, each of Guarantor and the Beneficiary
hereby waives all rights to recover consequential or indirect damages from the
other in connection with this Guaranty. If and to the extent any payment
required to be made pursuant to this Guaranty is deemed to constitute liquidated
damages, the parties acknowledge and agree that damages are difficult or
impossible to determine and that such payment constitutes a reasonable
approximation of the amount of such damages and not a penalty.
13. Term of Guaranty. This Guaranty and all guarantees, covenants and
agreements of Guarantor contained herein shall continue in full force and effect
until August 1, 1999. Notwithstanding the foregoing, this Guaranty and all
guarantees, covenants and agreements of Guarantor contained herein shall
continue in full force and effect with respect to all Guaranteed Obligations
arising or accruing prior to August 1, 1999 until such time as all of such
Guaranteed Obligations shall be paid or otherwise performed and discharged in
full, regardless of whether such payment, performance or discharge occurs before
or after August 1, 1999.
14. Further Assurances. Guarantor hereby agrees to execute and deliver
all such instruments and take all such action as the Beneficiary may from time
to time reasonably request in order to effectuate fully the purposes of this
Guaranty.
15. Survival of Representations and Warranties. All representations and
warranties contained herein or made in writing or on behalf of Guarantor in
connection herewith shall survive the execution and delivery of this Guaranty.
16. GOVERNING LAW. THIS GUARANTY SHALL BE GOVERNED BY, CONSTRUED AND
ENFORCED IN ALL RESPECTS IN ACCORDANCE WITH THE LAWS OF THE STATE OF UTAH
APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELY THEREIN, WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.
IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be duly
executed and delivered as of the date and year first above written.
CROWN ENERGY CORPORATION,
a Utah corporation
By:
Name:
Title:
