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EXHIBIT 10.65
GUARANTY
Dated as of January 16, 1996
by
ENRON OIL & GAS COMPANY,
as Guarantor
in favor of
THE BANKS NAMED HEREIN
and
TEXAS COMMERCE BANK NATIONAL ASSOCIATION,
as Administrative Agent
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TABLE OF CONTENTS
ARTICLE I
1.1. Certain Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
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1.2. Other Defined Terms; Accounting Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
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1.3. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
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ARTICLE II
2.1. Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
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2.2. Guaranty Absolute . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
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2.3. Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
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ARTICLE III
3.1. Representations and Warranties of the Guarantor . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
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ARTICLE IV
4.1. Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
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4.2. Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
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ARTICLE V
5.1. Guarantor Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
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ARTICLE VI
6.1. Amendments, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
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6.2. Addresses for Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
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6.3. No Waiver; Cumulative Rights and Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
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6.4. Continuing Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
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6.5. Execution in Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
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6.6. Governing Law; Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
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6.7. Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
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6.8. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
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6.9. Right of Set-Off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
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6.10. Joinder; Independent Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
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6.11. Third Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
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6.12. Location of Certain Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
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6.13. Assignments to Federal Reserve Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
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6.14. Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
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Exhibit A - Negative Pledge
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GUARANTY
This Guaranty (this "Guaranty"), dated effective as of January 16, 1996,
is made by ENRON OIL & GAS COMPANY, a Delaware corporation (the "Guarantor"),
in favor of the Banks (as such term is defined herein) and the Administrative
Agent (as such term is defined herein).
PRELIMINARY STATEMENTS
A. EOG Company of Canada, an unlimited liability company
incorporated under the laws of the province of Nova Scotia (the "Borrower"),
has entered into the Credit Agreement with the Banks and the Administrative
Agent.
B. The Borrower is a direct or indirect wholly owned Subsidiary of
the Guarantor.
C. In order to induce the Banks and the Administrative Agent to
enter into the Credit Agreement and to induce the Banks to lend money to the
Borrower, the Guarantor has agreed to enter into this Guaranty.
D. The guaranties provided in this Guaranty are reasonably expected
to benefit, directly or indirectly, the Guarantor. Further, it is in the best
interest of the Guarantor to provide the guaranties set forth hereunder, and
such guaranties are necessary or convenient to the conduct, promotion or
attainment of the business of the Guarantor and are also necessary or
convenient to the conduct, promotion or attainment of the business of other
directly or indirectly wholly-owned Subsidiaries of the Guarantor.
NOW, THEREFORE, in consideration of the premises and in order to induce
the Administrative Agent and the Banks to enter into the Credit Agreement, the
Guarantor hereby agrees as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
1.1. Certain Defined Terms. As used in this Guaranty, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and the plural forms of the terms defined and
such meanings shall apply and be interpreted together when two or more of such
terms are used together):
"Consolidated" refers to the consolidation of the accounts of the
Guarantor and its Subsidiaries in accordance with GAAP.
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"Consolidated Net Worth" means at any date the Consolidated
shareholders' equity of the Guarantor and its Consolidated Subsidiaries.
"Credit Agreement" means the Credit Agreement dated of even date
herewith among the Borrower, the Administrative Agent and the Banks, as
amended, supplemented or modified from time to time in the future.
"Debt" of any Person means, at any date, without duplication, (a)
obligations for the repayment of money borrowed which (1) are evidenced by
bonds, notes, debentures, loan agreements, credit agreements or similar
instruments or agreements and (2) are or should be shown on a balance sheet as
debt in accordance with GAAP, (b) obligations as lessee under leases which, in
accordance with GAAP, are capital leases, and (c) guaranties of payment or
collection of any obligations described in clauses (a) and (b) of other
Persons, provided, that clauses (a) and (b) include, in the case of obligations
of the Borrower or any Subsidiary, only such obligations as are or should be
shown as debt or capital lease liabilities on a Consolidated balance sheet in
accordance with GAAP; provided, further, that none of the following shall
constitute Debt: (A) transfers of accounts receivable pursuant to a
receivables purchase facility considered as a sale under GAAP (and
indemnification, recourse or repurchase obligations thereunder as are
reasonable given market standards for transactions of similar type), (B) the
liability of any Person as a general partner of a partnership for Debt of such
partnership, if the partnership is not a Subsidiary of such Person, and (C)
obligations (other than borrowings, capital leases or financial guaranties by
the Borrower or any Subsidiary) related to the sale, purchase or delivery of
hydrocarbons in respect of volumetric production payments conveyed in transfers
constituting sales of real property interests for which proceeds are accounted
for as deferred revenues under GAAP.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and any successor statute of similar
import, together with the regulations thereunder, as in effect from time to
time.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) which is a member of a group of which the Guarantor is a member
and which is under common control within the meaning of the regulations under
Section 414 of the Code.
"GAAP" means generally accepted accounting principles consistent
with those applied in the preparation of the audited consolidated financial
statements referred to in Section 3.1(d).
"Guaranteed Obligations" means (a) all amounts owed by and other
obligations of the Borrower pursuant to the terms of the Loan Documents
(including but not limited to the principal of and interest accrued on all
Advances (including additional Advances under Section 2.15 of the Credit
Agreement), the fees and the costs, indemnification payments or obligations and
other amounts owed by the Borrower to the
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Administrative Agent or any other Person under the Loan Documents), (b) all
damages sustained by the Administrative Agent, any Bank or any other Person as
a consequence of the falsity of a representation or warranty of the Borrower or
the breach of a covenant of the Borrower under the Loan Documents, and (c) the
reasonable out-of-pocket costs of the Administrative Agent and the Banks
(including reasonable fees and expenses of legal counsel) incurred in
connection with the enforcement of the Loan Documents and this Guaranty and in
connection with the collection of the amounts and damages described in clauses
(a) and (b) of this definition above.
"Guarantor Default" shall have the meaning given such term in
Section 5.1 hereof.
"Guaranty" means this Guaranty, as the same may be amended,
supplemented or modified from time to time.
"Indenture" means that certain Indenture dated as of September
1, 1991 between the Guarantor and Texas Commerce Bank National Association, as
Trustee, without giving effect to any amendment, modification or discharge
thereof.
"Insufficiency" means, with respect to any Plan, the amount, if
any, by which the present value of the accrued benefits under such Plan exceeds
the fair market value of the assets of such Plan allocable to such benefits.
"Multiemployer Plan" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA to which the Guarantor or any ERISA Affiliate is
making or accruing an obligation to make contributions, or has within any of
the preceding five plan years made or accrued an obligation to make
contributions.
"Multiple Employer Plan" means an employee benefit plan, other
than a Multiemployer Plan, subject to Title IV of ERISA to which the Guarantor
or any ERISA Affiliate, and more than one employer other than the Guarantor or
an ERISA Affiliate, is making or accruing an obligation to make contributions
or, in the event that any such plan has been terminated, to which the Guarantor
or any ERISA Affiliate made or accrued an obligation to make contributions
during any of the five plan years preceding the date of termination of such
plan.
"PBGC" means the Pension Benefit Guaranty Corporation, or any
federal agency or authority of the United States from time to time succeeding
to its function.
"Plan" means an employee benefit plan (other than a Multiemployer
Plan) which is (or, in the event that any such plan has been terminated within
five years after a transaction described in Section 4069 of ERISA, was)
maintained for employees of the Guarantor or any ERISA Affiliate and covered by
Title IV of ERISA.
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"Principal Subsidiary" means at any time of determination any
Subsidiary of the Guarantor (other than the Borrower) having total assets in
excess of $100,000,000. For purposes of this definition, total assets shall be
determined based on the most recent quarterly or annual financial statements
available prior to such determination.
"Subsidiary" means, with respect to any Person, any corporation,
partnership, joint venture or other entity of which more than 50% of the
outstanding capital stock or other equity interests having ordinary voting
power (irrespective of whether or not at the time capital stock or other equity
interest of any other class or classes of such corporation, partnership, joint
venture or other entity shall or might have voting power upon the occurrence of
any contingency) is at the time directly or indirectly owned by such Person, or
one or more of such Person's Subsidiaries, or such Person and one or more of
its Subsidiaries. Unless otherwise indicated, any reference in this Guaranty
to a "Subsidiary" shall be a reference to a Subsidiary of the Guarantor;
provided, that the definition of "Subsidiary" in Exhibit A shall apply to
Section 4.2(a) hereof and only to Section 4.2(a) hereof.
"Termination Event" means (a) a "reportable event", as such term
is described in Section 4043 of ERISA (other than a "reportable event" not
subject to the provision for 30-day notice to the PBGC), or an event described
in Section 4062(e) of ERISA, or (b) the withdrawal of the Guarantor or any
ERISA Affiliate from a Multiple Employer Plan during a plan year in which it
was a "substantial employer", as such term is defined in Section 4001(a)(2) of
ERISA, or the incurrence of liability by the Guarantor or any ERISA Affiliate
under Section 4064 of ERISA upon the termination of a Multiple Employer Plan,
or (c) the distribution of a notice of intent to terminate a Plan pursuant to
Section 4041(a)(2) of ERISA or the treatment of a Plan amendment as a
termination under Section 4041 of ERISA, or (d) the institution of proceedings
to terminate a Plan by the PBGC under Section 4042 of ERISA, or (e) any other
event or condition which might constitute grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any
Plan.
"Total Capitalization" means, at any time, the sum (without
duplication) of (a) Total Debt, and (b) Consolidated Net Worth less any amount
thereof attributable to "minority interests" (as defined below). For the
purpose of this definition, "minority interests" means any investment or
interest of the Guarantor in any corporation, partnership or other entity to
the extent that the total amount thereof owned by the Guarantor (directly or
indirectly) constitutes 50% or less of all outstanding interests or investments
in such corporation, partnership or entity.
"Total Debt" means, at any time, all Consolidated Debt of the
Guarantor and its Consolidated Subsidiaries.
"Withdrawal Liability" shall have the meaning given such term
under Part I of Subtitle E of Title IV of ERISA.
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1.2. Other Defined Terms; Accounting Terms. Capitalized terms
used herein but not otherwise defined herein shall have the meaning given such
terms in the Credit Agreement. All accounting terms not specifically defined
herein shall be construed in accordance with, and certificates of compliance
with financial covenants shall be based on, GAAP; provided, however, the
financial statements and reports required pursuant to Sections 4.1(a)(1) and
(8) shall be prepared in accordance with generally accepted accounting
principles in effect at the time of application thereof except to the extent
stated therein.
1.3. Miscellaneous. The words "hereof", "herein" and
"hereunder" and words of similar import when used in this Guaranty shall refer
to this Guaranty as a whole and not to any particular provision of this
Guaranty, and Article, Section and Exhibit references are to Articles and
Sections of and Exhibits to this Guaranty, unless otherwise specified. The
term "including" shall mean "including, without limitation,".
ARTICLE II
GUARANTY
2.1. Guaranty. The Guarantor hereby unconditionally and
irrevocably guarantees to the Administrative Agent and the Banks the punctual
payment when due (following the expiration of any applicable grace period),
whether at stated maturity, by acceleration or otherwise, of the Guaranteed
Obligations; provided that all payments by the Guarantor under this Guaranty
shall be made in immediately available funds within one (1) Business Day after
the Administrative Agent's demand therefor given in writing to the Guarantor
(which demand will set forth the basis and calculation of the amount for which
demand is made); provided further, that if the Guaranteed Obligations become
due and payable by virtue of a Guarantor Default described in Section 5.1(d),
the Guaranteed Obligations shall automatically become due and payable by the
Guarantor hereunder without demand or any notice of any kind, all of which are
hereby expressly WAIVED by the Guarantor. Without limiting the generality of
the foregoing, the Guarantor's liability shall extend to all amounts which
constitute part of the Guaranteed Obligations and would be owed by the Borrower
to the Administrative Agent or any other Person under the Loan Documents but
for the fact that they are unenforceable or not allowable due to the existence
of a bankruptcy, reorganization or similar proceeding involving the Borrower.
2.2. Guaranty Absolute. The Guarantor guarantees that (subject
to the demand and payment provisions set forth in Section 2.1) the Guaranteed
Obligations will be paid strictly in accordance with the terms of the Credit
Agreement. This Guaranty is a guaranty of payment and not of collection, and
the Guarantor's obligations hereunder are primary obligations of the Guarantor
concerning which the Guarantor is the principal obligor and not a surety, and
are separate and several from the obligations of the Borrower under the Loan
Documents. The obligations of the Guarantor hereunder shall not be
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subject to, and payments by the Guarantor shall be made free and clear of any
defense of the Borrower and without deduction for, any setoff, counterclaim,
diminution, suspension or deferment that the Guarantor may have with respect to
the Borrower or any other Person. The liability of the Guarantor under this
Guaranty shall be absolute and unconditional irrespective of:
(a) any lack of validity, legality or enforceability of the
Credit Agreement, the Notes or any other Loan Document;
(b) any law, regulation or order now or hereafter in effect in
any jurisdiction affecting any of the terms of the Credit Agreement, the
Notes or any other Loan Document, or the rights of the Administrative
Agent or any Bank with respect thereto;
(c) any change in the time, manner or place of performance or
payment of, or in any other term of, the Guaranteed Obligations, or any
other amendment, extension or waiver of or any consent to departure
from, or any indulgence or compromise with respect to, or any failure,
omission, delay, neglect, refusal or lack of diligence on the part of
the Administrative Agent or any Bank to enforce, the Credit Agreement,
the Notes or any other Loan Document;
(d) the existence of, or any release or amendment or waiver of
or consent to departure from, any other guaranty, for all or any of the
Guaranteed Obligations;
(e) any assignment, mortgaging or transfer of the Guaranteed
Obligations, any Loan Document, this Guaranty or any interest therein or
any furnishing, acceptance or release of security or additional
security;
(f) any merger or consolidation of the Guarantor or the
Borrower, into or with any other Person or any sale, lease, transfer,
divestiture or other disposition of any or all of the assets of the
Borrower;
(g) any direct or indirect change in the ownership of the
Borrower;
(h) the voluntary or involuntary liquidation, dissolution,
sale of all or substantially all of the assets, marshalling of the
assets and liabilities, receivership, conservatorship, insolvency,
bankruptcy, assignment for the benefit of creditors, reorganization,
arrangement, composition or readjustment of, or other similar proceeding
with respect to the Guarantor (subject to the powers of a bankruptcy
court under the Bankruptcy Code and the equitable powers of a bankruptcy
court), the Borrower, the Administrative Agent or any Bank or any action
taken by any trustee or receiver or by any court in any such proceeding;
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(i) any withholding or diminution at the source, by reason of
any taxes, expenses, indebtedness, obligations or liabilities or any
claims, demands, charges or liens of any nature against any sums payable
under the Loan Documents or this Guaranty; or
(j) any election of remedies by the Administrative Agent or
any Bank which results in any impairment or destruction of any
subrogation rights of the Guarantor.
This Guaranty shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Guaranteed Obligations is
rescinded or must otherwise be returned by the Administrative Agent or any Bank
for any reason, including, without limitation, the insolvency, bankruptcy or
reorganization of the Guarantor (subject to the powers of a bankruptcy court
under the Bankruptcy Code and the equitable powers of a bankruptcy court) or
the Borrower or otherwise, all as though such payment had not been made, and,
in such event, the Guarantor will pay to the Administrative Agent (for
distribution to the Banks in the manner set forth in the Credit Agreement) an
amount equal to any such payment that has been rescinded or returned, and such
obligation of the Guarantor shall not be diminished, released, discharged,
impaired or otherwise adversely affected by any prior cancellation or surrender
of this Guaranty. This Guaranty shall be absolute and unconditional
notwithstanding the occurrence of any other event or the existence of any other
circumstances which might constitute a defense available to a guarantor or the
Borrower (including failure of consideration, allegations of frauds, usury,
forgery, breach of warranty, statute of fraud, statute of limitation, accord
and satisfaction and any defense based on election of remedies) or a legal or
equitable discharge of a surety or guarantor except indefeasible payment in
full of the Guaranteed Obligations. The provisions of this paragraph will
survive any release or termination of this Guaranty. It is further agreed that
it shall never be necessary for this Guaranty to be ratified or confirmed in
order for it to include among the Guaranteed Obligations any increase in the
total amount of the indebtedness outstanding under the Credit Agreement
pursuant to Section 2.15 of the Credit Agreement. No increase in the in the
total amount of the indebtedness outstanding under the Credit Agreement
pursuant to Section 2.15 of the Credit Agreement shall impair, diminish,
discharge or release the liability of the Guarantor under this Guaranty.
If and to the extent that the Guarantor makes any payment to the
Administrative Agent, any Bank or to any other Person pursuant to or in respect
of this Guaranty, any claim which the Guarantor may have against the Borrower
by reason thereof shall be subject and subordinate to the prior indefeasible
payment in full of the Guaranteed Obligations.
2.3. Waiver. Except as otherwise set forth herein, the
Guarantor hereby waives, to the fullest extent permitted by applicable law,
promptness, diligence, notice of acceptance and any other notice with respect
to any of the Guaranteed Obligations and this
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Guaranty (including notice of any sale, transfer or other disposition of any
right, title to or interest in any Loan Document or this Guaranty by the
Administrative Agent or any Bank, notice of the existence of any matter
described in Section 2.2, and notice or proof of reliance) and any requirement
that the Administrative Agent and/or the Banks protect, secure, perfect or
insure any collateral or exhaust any right or take any action against the
Borrower or any other Person or any collateral.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1. Representations and Warranties of the Guarantor. The
Guarantor represents and warrants to the Banks as follows (which
representations and warranties are deemed made by the Guarantor on the date of
each Borrowing and shall survive the execution and delivery of this Guaranty
and the Loan Documents and the making of the Advances contemplated by the
Credit Agreement):
(a) The Guarantor and each Principal Subsidiary are
corporations duly incorporated, validly existing and in good standing
under the laws of their respective jurisdictions of incorporation. The
Guarantor and each Principal Subsidiary have all corporate powers and
all material governmental licenses, authorizations, consents and
approvals required in each case to carry on its business as now
conducted.
(b) The execution, delivery and performance by the Guarantor
of this Guaranty are within the Guarantor's corporate powers, have been
duly authorized by all necessary corporate action of the Guarantor,
require, in respect of the Guarantor, no action by or in respect of, or
filing with, any governmental body, agency or official and do not
contravene, or constitute a default under, any provision of law or
regulation (including Regulation X issued by the Federal Reserve Board)
applicable to the Guarantor or Regulation U issued by the Federal
Reserve Board or the restated certificate of incorporation or by-laws of
the Guarantor or any judgment, injunction, order, decree or material
("material" for the purposes of this representation meaning creating a
liability of $50,000,000 or more) agreement binding upon the Guarantor
or result in the creation or imposition of any lien, security interest
or other charge or encumbrance on any asset of the Guarantor or any of
its Subsidiaries.
(c) This Guaranty is the legal, valid and binding obligation
of the Guarantor enforceable against the Guarantor in accordance with
its terms, except as the enforceability thereof may be limited by the
effect of any applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights generally and by
general principles of equity.
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(d) The audited consolidated balance sheet of the Guarantor
and its Subsidiaries as of December 31, 1994 and the related audited
consolidated statements of income, cash flows and changes in
shareholders' equity accounts for the fiscal year then ended and the
unaudited consolidated balance sheet of the Guarantor and its
Subsidiaries as of September 30, 1995, and the related unaudited
consolidated statements of income, cash flows and changes in
shareholders' equity accounts for the fiscal quarter then ended,
certified by the chief financial or accounting officer of the Guarantor,
copies of which have been delivered to each of the Banks, fairly
present, in conformity with GAAP except as otherwise expressly noted
therein, the consolidated financial position of the Guarantor and its
Subsidiaries as of such dates and their consolidated results of
operations and changes in financial position for such fiscal periods,
subject (in the case of the unaudited balance sheet and statements) to
changes resulting from audit and normal year-end adjustments.
(e) Since December 31, 1994, there has been no material
adverse change in the consolidated financial position or consolidated
results of operations of the Guarantor and its Subsidiaries, considered
as a whole.
(f) Except as disclosed in the Guarantor's Form 10-K for the
year ended December 31, 1994 or the Guarantor's Form 10-Q for the
quarter ended September 30, 1995, which were delivered to the Banks
prior to the date hereof, there is no action, suit or proceeding pending
against the Guarantor or any of its Subsidiaries, or to the knowledge of
the Guarantor threatened against the Guarantor or any of its
Subsidiaries, before any court or arbitrator or any governmental body,
agency or official in which there is a reasonable possibility of an
adverse decision which could materially adversely affect the
consolidated financial position or consolidated results of operations of
the Guarantor and its Subsidiaries taken as a whole or which in any
manner draws into question the validity of this Guaranty.
(g) No Termination Event has occurred or is reasonably
expected to occur with respect to any Plan for which an Insufficiency in
excess of $50,000,000 exists. Neither the Guarantor nor any ERISA
Affiliate has received any notification (or has knowledge of any reason
to expect) that any Multiemployer Plan is in reorganization or has been
terminated, within the meaning of Title IV of ERISA, for which a
Withdrawal Liability in excess of $50,000,000 exists.
(h) United States federal income tax returns of the Guarantor
and its Subsidiaries have been examined and closed through the fiscal
year ended December 31, 1987. The Guarantor and its Subsidiaries have
filed or caused to be filed all United States federal income tax returns
and all other material domestic tax returns which to the knowledge of
the Guarantor are required to be filed by them and have paid or provided
for the payment, before the same become delinquent, of all taxes due
pursuant to such returns or pursuant to any assessment received by the
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Guarantor or any Subsidiary, other than those taxes contested in good
faith by appropriate proceedings. The charges, accruals and reserves on
the books of the Guarantor and its Subsidiaries in respect of taxes are,
in the opinion of the Guarantor, adequate to the extent required by
GAAP.
(i) Neither the Guarantor nor any Subsidiary is an "investment
company" within the meaning of the Investment Company Act of 1940, as
amended.
(j) Neither the Guarantor nor any Principal Subsidiary is a
"holding company", a "subsidiary company" of a "holding company", an
"affiliate" of a "holding company", or an "affiliate" of a "subsidiary
company" of a "holding company", in each case as such terms are defined
in the Public Utility Holding Company Act of 1935, as amended.
(k) This Guaranty is made as an inducement to the Banks to
extend the Advances under the Credit Agreement, which extension of
Advances benefits the Guarantor. The value of the consideration
received and to be received by the Guarantor is, in the judgment of the
Guarantor, reasonably worth at least as much as the liability and
obligation of the Guarantor hereunder, and such liability and obligation
will result in direct financial benefits to the Guarantor.
(l) The Guarantor has had full and complete access to the Loan
Documents and all other instruments and documents executed by the
Borrower and any other Person in connection with the Guaranteed
Obligations and has reviewed those documents and is fully aware of their
contents. The Guarantor is fully informed of all circumstances which a
diligent inquiry would reveal. The Guarantor has adequate means to
obtain from the Borrower on a continuing basis information concerning
the Loan Documents and it is not depending on the Administrative Agent
or any Bank to provide such information, now or in the future. The
Guarantor agrees that neither the Administrative Agent nor any Bank
shall have any obligation to advise or notify it or to provide the
Guarantor with any data or information.
(m) Following application of the proceeds of each Borrowing,
not more than 25 percent of the value of the assets (both of the
Guarantor only and of the Guarantor and its Subsidiaries on a
consolidated basis), which are subject to any arrangement with the
Administrative Agent or any Bank (herein or otherwise) whereby the
Guarantor's or any Subsidiary's right or ability to sell, pledge or
otherwise dispose of assets is in any way restricted, will be margin
stock (within the meaning of Regulation U issued by the Federal Reserve
Board).
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ARTICLE IV
COVENANTS OF THE GUARANTOR
4.1. Affirmative Covenants. The Guarantor covenants and agrees
that so long as any Note shall remain unpaid, the Guarantor will, unless the
Majority Banks shall otherwise consent in writing:
(a) Reporting Requirements. Furnish to each Bank:
(1) (A) promptly after the sending or filing thereof, a copy
of each of the Guarantor's reports on Form 8-K (or any comparable
form), (B) promptly after the filing or sending thereof, and in
any event within 75 days after the end of each of the first three
fiscal quarters of each fiscal year of the Guarantor, a copy of
the Guarantor's report on Form 10-Q (or any comparable form) for
such quarter, which report will include the Guarantor's quarterly
unaudited consolidated financial statements as of the end of and
for such quarter, and (C) promptly after the filing or sending
thereof, and in any event within 135 days after the end of each
fiscal year of the Guarantor, a copy of the Guarantor's annual
report which it sends to its public security holders, and a copy
of the Guarantor's report on Form 10-K (or any comparable form)
for such year, which annual report will include the Guarantor's
annual audited consolidated financial statements as of the end of
and for such year;
(2) simultaneously with the delivery of each of the annual
or quarterly reports referred to in clause (1) above, a
certificate of the chief financial officer or the chief
accounting officer of the Guarantor in a form acceptable to the
Administrative Agent (x) setting forth in reasonable detail the
calculations required to establish whether the Guarantor was in
compliance with the requirements of Section 4.2(b) on the date of
the financial statements contained in such report, and (y)
stating whether there exists on the date of such certificate any
Guarantor Default or event which, with the giving of notice or
lapse of time, or both, would constitute an Guarantor Default,
and, if so, setting forth the details thereof and the action
which the Guarantor has taken and proposes to take with respect
thereto;
(3) as soon as is possible and in any event within five days
after a change in, or issuance of, any rating of any of the
Guarantor's senior unsecured long-term debt by Standard & Poor's
or Xxxxx'x which causes a change in the applicable Rating Level,
notice of such change;
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(4) as soon as possible and in any event within five days
after an executive officer of the Guarantor having obtained
knowledge thereof, notice of the occurrence of any Guarantor
Default or any event which, with the giving of notice or lapse of
time, or both, would constitute an Guarantor Default, continuing
on the date of such notice, and a statement of the chief
financial officer of the Guarantor setting forth details of such
Guarantor Default or event and the action which the Guarantor has
taken and proposes to take with respect thereto;
(5) as soon as possible and in any event (A) within 30
Business Days after the Guarantor or any ERISA Affiliate knows or
has reason to know that any Termination Event described in clause
(a) of the definition of Termination Event with respect to any
Plan for which an Insufficiency in excess of $50,000,000 exists,
has occurred and (B) within 10 Business Days after the Guarantor
or any ERISA Affiliate knows or has reason to know that any other
Termination Event with respect to any Plan for which an
Insufficiency in excess of $50,000,000 exists, has occurred or is
reasonably expected to occur, a statement of the chief financial
officer or chief accounting officer of the Guarantor describing
such Termination Event and the action, if any, which the
Guarantor or such ERISA Affiliate proposes to take with respect
thereto;
(6) promptly and in any event within five Business Days after
receipt thereof by the Guarantor or any ERISA Affiliate, copies
of each notice received by the Guarantor or any ERISA Affiliate
from the PBGC stating its intention to terminate any Plan for
which an Insufficiency in excess of $50,000,000 exists or to have
a trustee appointed to administer any Plan for which an
Insufficiency in excess of $50,000,000 exists;
(7) promptly and in any event within five Business Days after
receipt thereof by the Guarantor or any ERISA Affiliate from the
sponsor of a Multiemployer Plan, a copy of each notice received
by the Guarantor or any ERISA Affiliate indicating liability in
excess of $50,000,000 incurred or expected to be incurred by the
Guarantor or any ERISA Affiliate in connection with (A) the
imposition of a Withdrawal Liability by a Multiemployer Plan, (B)
the determination that a Multiemployer Plan is, or is expected to
be, in reorganization within the meaning of Title IV of ERISA, or
(C) the termination of a Multiemployer Plan within the meaning of
Title IV of ERISA; and
(8) such other information respecting the Consolidated
financial position or Consolidated results of operations
(including an annual report or reports on oil and gas reserves of
the
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Guarantor and its Subsidiaries), of the Guarantor that any Bank
through the Administrative Agent may from time to time reasonably
request.
(b) Compliance with Laws, Etc. Comply, and cause each of its
Subsidiaries to comply, with all applicable laws, rules, regulations and
orders to the extent noncompliance therewith would have a material
adverse effect on the Guarantor and its Subsidiaries taken as a whole,
such compliance to include, without limitation, the paying before the
same become delinquent of all taxes, assessments and governmental
charges imposed upon it or upon its property except to the extent
contested in good faith by appropriate proceedings.
(c) Visitation Rights. At any reasonable time and from time
to time, after reasonable notice, permit the Administrative Agent or any
of the Banks or any agents or representatives thereof to examine the
records and books of account of, and visit the properties of, the
Guarantor and any of the Principal Subsidiaries to discuss the affairs,
finances and accounts of the Guarantor and any of the Principal
Subsidiaries with any of the officers or directors of the Guarantor.
(d) Maintenance of Insurance. Maintain, and cause each of the
Principal Subsidiaries to maintain, insurance with responsible and
reputable insurance companies or associations in such amounts and
covering such risks as is usually carried by companies engaged in
similar businesses and owning similar properties as the Guarantor or
such Principal Subsidiary, provided, that self-insurance by the
Guarantor or any such Principal Subsidiary shall not be deemed a
violation of this covenant to the extent that companies engaged in
similar businesses and owning similar properties as the Guarantor or
such Principal Subsidiary self-insure. The Guarantor may maintain the
Principal Subsidiaries' insurance on behalf of them.
(e) Preservation of Corporate Existence, Etc. Preserve and
maintain, and cause each of the Principal Subsidiaries to preserve and
maintain, its corporate existence, rights (charter and statutory), and
franchises; provided, however, that this Section 4.1(e) shall not apply
to any transactions permitted by Section 4.2(c) or (d) and shall not
prevent the termination of existence, rights and franchises of any
Principal Subsidiary pursuant to any merger or consolidation to which
such Principal Subsidiary is a party, and provided, further, that the
Guarantor or any Principal Subsidiary shall not be required to preserve
any right or franchise if the Guarantor or such Principal Subsidiary
shall determine that the preservation thereof is no longer desirable in
the conduct of the business of the Guarantor or such Principal
Subsidiary, as the case may be, and that the loss thereof is not
disadvantageous in any material respect to the Banks.
4.2. Negative Covenants. So long as any Note shall remain
unpaid, the Guarantor will not at any time, without the written consent of the
Majority Banks:
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(a) Negative Pledge. Fail to perform and observe any term,
covenant or agreement contained in Section 1007 of the Indenture (as
modified for purposes hereof as set forth in this Section 4.2). For
purposes of this Section 4.2(a), Section 1007 and the definitions of all
terms defined in the Indenture and used in or otherwise applicable to
such Section 1007 are set forth on Exhibit A and are hereby incorporated
in this Guaranty by reference as if such provisions and definitions were
set forth in full herein; provided, however, that solely for purposes of
this Section 4.2, the word "Securities" used in the Indenture shall mean
the Notes, the word "Company" used therein shall mean the Guarantor, the
phrase "Section 1007" used therein shall mean this Section 4.2(a), the
word "Trustee" as used therein shall mean the Administrative Agent, the
phrase "Board of Directors" used in the Indenture shall mean the
management of the Guarantor, Section 301 of the Indenture shall not
apply to any Note, and the phrase "So long as any of the Securities are
outstanding" used therein shall mean so long as any Note shall remain
unpaid or any Bank shall have any Commitment under the Credit Agreement.
(b) Total Debt to Capitalization. Have a ratio of (i) Total
Debt to (ii) Total Capitalization greater than 50%.
(c) Disposition of Assets. Lease, sell, transfer or otherwise
dispose of, voluntarily or involuntarily, all or substantially all of
its assets.
(d) Mergers, Etc. Merge or consolidate with or into, any
Person, unless (1) the Guarantor is the survivor or (2) the surviving
Person, if not the Guarantor, is organized under the laws of the United
States or a state thereof and assumes all obligations of the Guarantor
under this Guaranty; provided, in each case that both immediately before
and after giving effect to such proposed transaction, no Guarantor
Default or event which, with the giving of notice or the lapse of time,
or both, would constitute an Guarantor Default exists, or would exist or
result.
(e) Compliance with ERISA. (1) Terminate, or permit any ERISA
Affiliate to terminate, any Plan so as to result in any liability in
excess of $50,000,000 of the Guarantor or any ERISA Affiliate to the
PBGC, or (2) permit circumstances which give rise to a Termination Event
described in clauses (b), (d) or (e) of the definition of Termination
Event with respect to a Plan so as to result in any liability in excess
of $50,000,000 of the Guarantor or any ERISA Affiliate to the PBGC.
(f) Ownership of the Borrower. Own, directly or indirectly,
less than fifty percent (50%) (other than directors' qualifying shares)
of the issued and outstanding shares of the capital stock of the
Borrower.
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ARTICLE V
GUARANTOR DEFAULT
5.1. Guarantor Defaults. If any of the following events (each
a "Guarantor Default") shall occur and be continuing:
(a) Any representation or warranty made or deemed made by the
Guarantor (or any of its officers) hereunder shall prove to have been
incorrect in any material respect when made or deemed made and such
materiality is continuing; or
(b) The Guarantor shall fail to perform or observe any term,
covenant or agreement contained in Section 4.2 or shall fail to perform
or observe any other term, covenant or agreement contained in this
Guaranty on its part to be performed or observed if, in the case of such
other term, covenant or agreement, such failure shall remain unremedied
for 30 days after written notice thereof shall have been given to the
Guarantor by the Administrative Agent at the request of any Bank; or
(c) The Guarantor or any Principal Subsidiary shall (1) fail
to pay any principal of or premium or interest on any Debt (other than
Debt described in clause (c) of the definition of Debt) which is
outstanding in the principal amount of at least $50,000,000 in the
aggregate, of the Guarantor or such Principal Subsidiary (as the case
may be), when the same becomes due and payable (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise), and
such failure shall continue after the applicable grace period, if any,
specified in the agreement or instrument relating to such Debt; or any
other event shall occur or condition shall exist under any agreement or
instrument relating to any such Debt and shall continue after the
applicable grace period, if any, specified in such agreement or
instrument, if the effect of such event or condition is to accelerate
the maturity of such Debt; or any such Debt shall be declared to be due
and payable, or required to be prepaid (other than by a regularly
scheduled required prepayment or as a result of the giving of notice of
a voluntary prepayment), prior to the stated maturity thereof, or (2)
with respect to Debt described in clause (c) of the definition of Debt,
fail to pay any such Debt which is outstanding in the principal amount
of at least $50,000,000 in the aggregate, of the Guarantor or such
Principal Subsidiary (as the case may be), when the same becomes due and
payable, and such failure shall continue after the applicable grace
period, if any, specified in the agreement or instrument relating to
such Debt; or
(d) The Guarantor or any Principal Subsidiary shall generally
not pay its debts as such debts become due, or shall admit in writing
its inability to pay its debts generally, or shall make a general
assignment for the benefit of creditors; or any proceeding shall be
instituted by or against the Guarantor or any Principal Subsidiary
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seeking to adjudicate it as bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of an order for relief or the appointment
of a receiver, trustee or other similar official for it or for any
substantial part of its property and, in the case of any such proceeding
instituted against it (but not instituted by it), shall remain
undismissed or unstayed for a period of 60 days; or the Guarantor or any
Principal Subsidiary shall take any corporate action to authorize any of
the actions set forth above in this subsection (d); or
(e) Any judgment, decree or order for the payment of money in
excess of $50,000,000 shall be rendered against the Guarantor or any
Principal Subsidiary and shall remain unsatisfied and either (1)
enforcement proceedings shall have been commenced by any creditor upon
such judgment, decree or order or (2) there shall be any period longer
than (i) 30 consecutive days or (ii) such longer period as allowed by
applicable law during which a stay of enforcement of such judgment,
decree or order, by reason of a pending appeal or otherwise, shall not
be in effect; or
(f) Any Termination Event as defined in clauses (b), (d) or
(e) of the definition thereof with respect to a Plan shall have occurred
and, 30 days after notice thereof shall have been given to the Guarantor
by the Administrative Agent, (1) such Termination Event shall still
exist and (2) the sum (determined as of the date of occurrence of such
Termination Event) of the liabilities to the PBGC resulting from all
such Termination Events is equal to or greater than $100,000,000; or
(g) The Guarantor or any ERISA Affiliate shall have been
notified by the sponsor of a Multiemployer Plan that it has incurred
Withdrawal Liability to such Multiemployer Plan in an amount which, when
aggregated with all other amounts required to be paid to Multiemployer
Plans in connection with Withdrawal Liabilities (determined as of the
date of such notification), exceeds $100,000,000 or requires payments
exceeding $50,000,000 in any year; or
(h) The Guarantor or any ERISA Affiliate shall have been
notified by the sponsor of a Multiemployer Plan that such Multiemployer
Plan is in reorganization or is being terminated, within the meaning of
Title IV of ERISA, if as a result of such reorganization or termination
the aggregate annual contributions of the Guarantor and its ERISA
Affiliates to all Multiemployer Plans which are then in reorganization
or being terminated have been or will be increased over the amounts
contributed to such Multiemployer Plans for the respective plan years
which include the date hereof by an amount exceeding $50,000,000 in the
aggregate;
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then, and in such event, the Banks and the Administrative Agent shall have (a)
all rights and remedies provided for in this Guaranty and in any Loan Document
following a Guarantor Default, and (b) all rights and remedies at law or in
equity following a Guarantor Default.
ARTICLE VI
MISCELLANEOUS
6.1. Amendments, Etc. No amendment or waiver of any provision
of this Guaranty, nor consent to any departure by the Guarantor therefrom,
shall in any event be effective unless the same shall be in writing and signed
by the Majority Banks, and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given;
provided, however, that no amendment, waiver or consent shall, unless in
writing and signed by all the Banks, do any of the following: (a) take any
action which requires the consent of all the Banks pursuant to the terms of
this Guaranty, (b) change the percentage of the Commitments or of the aggregate
unpaid principal amount of the Notes which shall be required for the Banks or
any of them to take any action under this Guaranty, (c) amend this Section 6.1,
or (d) release the Guarantor from its obligations under this Guaranty; and
provided, further, that no amendment, waiver or consent shall, unless in
writing and signed by the Administrative Agent in addition to the Banks
required above to take such action, affect the rights or duties of the
Administrative Agent under this Guaranty.
6.2. Addresses for Notices. All notices and other
communications provided for hereunder shall be in writing (including telecopier
communication) and mailed, telecopied or delivered, if to the Guarantor, at its
address or telecopier number set forth below:
Enron Oil & Gas Company
0000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Attention: Senior Vice President and Chief Financial
Officer
Telecopier No.: 000-000-0000
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if to any Bank, at its Domestic Lending Office specified in the Credit
Agreement; if to the Administrative Agent, at its address or telecopier number
set forth below:
Texas Commerce Bank National Association
000 Xxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Attention: Manager
Energy Group
Telecopier No.: 000-000-0000
or, as to the Guarantor or the Administrative Agent, at such other address as
shall be designated by such party in a written notice to the other parties and,
as to each other party, at such other address as shall be designated by such
party in a written notice to the Guarantor and the Administrative Agent. All
such notices and communications shall be effective, if delivered, upon such
delivery; if mailed, three (3) Business Days after deposit in the mails; if
sent by overnight courier, one (1) Business Day after delivery to the courier
company; and if sent by telecopier, when received by the receiving telecopier
equipment, respectively; provided, however, that (a) notices and communications
to the Administrative Agent shall not be effective until received by the
Administrative Agent and (b) telecopied notices received by any party after its
normal business hours (or on a day other than a Business Day) shall be
effective on the next Business Day.
6.3. No Waiver; Cumulative Rights and Remedies. No failure on
the part of the Administrative Agent to exercise, and no delay in exercising,
and no course of dealing with respect to, any right hereunder shall operate as
a waiver thereof; nor shall any single or partial exercise of any right
hereunder preclude any other or further exercise thereof or the exercise of any
other right. Each of the rights and remedies herein provided are cumulative
and not exclusive of any rights and remedies provided by law or in any other
documents or in equity.
6.4. Continuing Guaranty. The obligations of the Guarantor
under this Guaranty shall be continuing and (i) remain in full force and effect
until termination of the Credit Agreement pursuant to Section 8.11 thereof,
(ii) be binding upon the Guarantor, its successors and assigns, and (iii) inure
to the benefit of and be enforceable by the Administrative Agent, the Banks and
their respective successors, transferees and assigns; provided that the
obligations of the Guarantor under Sections 4.1 and 4.2 hereof shall remain in
effect only until the time specified in Sections 4.1 and 4.2.
6.5. Execution in Counterparts. This Guaranty may be executed
in any number of counterparts, each of which when so executed shall be deemed
to be an original and all of which taken together shall constitute one and the
same agreement.
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6.6. Governing Law; Entire Agreement. THIS GUARANTY SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS.
THIS GUARANTY CONSTITUTES THE ENTIRE UNDERSTANDING AMONG THE GUARANTOR, THE
ADMINISTRATIVE AGENT AND THE BANKS WITH RESPECT TO THE SUBJECT MATTER HEREOF
AND SUPERSEDES ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT THERETO.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
6.7. Captions. Captions and section headings appearing herein
are included solely for convenience of reference and are not intended to affect
the interpretation of any provision of this Guaranty.
6.8. Severability. Whenever possible, each provision of this
Guaranty shall be interpreted in such manner as to be effective and valid under
applicable law. If any provision of this Guaranty shall be invalid, illegal or
unenforceable in any respect under any applicable law, the validity, legality
and enforceability of the remaining provisions of this Guaranty shall not be
affected or impaired thereby.
6.9. Right of Set-Off. If the Guarantor fails to pay any
Guaranteed Obligation at the time the Guarantor is required to make payment
thereof pursuant to Section 2.1 hereof, each Bank is hereby authorized at any
time and from time to time, to the fullest extent permitted by law, to set off
and apply any and all deposits (general or special, time or demand, provisional
or final) at any time held and other indebtedness at any time owing by such
Bank to or for the credit or the account of the Guarantor against any and all
of the obligations of the Guarantor now or hereafter existing under this
Guaranty. Each Bank agrees promptly to notify the Guarantor after any such
set-off and application made by such Bank; provided that the failure to give
such notice shall not affect the validity of such set- off and application.
The rights of each Bank under this Section 6.9 are in addition to other rights
and remedies (including, without limitation, other rights of set-off) which
such Bank may have.
6.10. Joinder; Independent Action. At the option of the
Administrative Agent, the Guarantor may be joined in any action or proceeding
in connection with or based on any of the Loan Documents, and recovery may be
had against the Guarantor in such action or proceeding or in any independent
action or proceeding against the Guarantor, without any requirement that the
Administrative Agent or any Bank first assert, prosecute or exhaust any remedy
or claim against the Borrower or any other Person.
6.11. Third Party Beneficiaries. There are no third-party
beneficiaries to this Guaranty.
6.12. Location of Certain Actions. The Guarantor acknowledges
that (a) it has conducted all negotiations with the Administrative Agent and
the Banks which are not residents of Canada and which are parties to the Credit
Agreement on the date hereof, outside of Canada, and (b) it has executed this
Guaranty outside of Canada.
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6.13. Assignments to Federal Reserve Board. In addition to the
assignments and participations permitted under Section 8.6 of the Credit
Agreement, any Bank may assign, as collateral or otherwise, any of its rights
under this Guaranty to any Federal Reserve Bank without notice to or consent of
the Borrower, the Guarantor or the Administrative Agent; provided, that no such
assignment under this Section 6.13 shall release the assigning Bank from its
obligations under the Credit Agreement or under this Guaranty.
6.14. Interest. The parties to this Guaranty intend to strictly
comply with all applicable laws, including applicable usury laws. Accordingly,
the provisions of this Section 6.14 shall govern and control over every other
provision of any Loan Document or this Guaranty which conflicts or is
inconsistent with this Section 6.14, even if such other provision declares that
it controls. As used in this Section 6.14, the term "interest" includes the
aggregate of all charges, fees, benefits or other compensation which constitute
interest under applicable law; provided that, to the maximum extent permitted
by applicable law, (a) any non-principal payment shall be characterized as an
expense or as compensation for something other than the use, forbearance or
detention of money, and not as interest and (b) all interest at any time
contracted for, taken, reserved, charged or received shall be amortized,
prorated, allocated and spread during the full term of the Advances and the
Commitments. In no event shall the Guarantor, the Borrower or any other Person
be obligated to pay, or the Administrative Agent or any Bank have any right or
privilege to reserve, receive or retain, (x) any interest in excess of the
maximum amount of nonusurious interest permitted under the laws of the State of
Texas or the applicable laws (if any) of the United States, the Government of
Canada or of any other state or province thereof or (y) total interest in
excess of the amount which the Administrative Agent or such Bank could lawfully
have contracted for, taken, reserved, received, retained or charged had the
interest been calculated for the full term of the Advances at the Highest
Lawful Rate. On each day, if any, that the interest rate (the "Stated Rate")
called for under any Loan Document exceeds the Highest Lawful Rate, the rate at
which interest shall accrue shall automatically be fixed by operation of this
sentence at the Highest Lawful Rate for that day, and shall remain fixed at the
Highest Lawful Rate for each day thereafter until the total amount of interest
accrued equals the total amount of interest which would have accrued if there
were no such ceiling rate as is imposed by this sentence. Thereafter, interest
shall accrue at the Stated Rate unless and until the Stated Rate again exceeds
the Highest Lawful Rate when the provisions of the immediately preceding
sentence shall again automatically operate to limit the interest accrual rate.
The daily interest rates to be used in calculating interest at the Highest
Lawful Rate shall be determined by dividing the applicable Highest Lawful Rate
per annum by the number of days in the calendar year for which such calculation
is being made. None of the terms and provisions contained in this Guaranty or
any Loan Document which directly or indirectly relate to interest shall ever be
construed without reference to this Section 6.14, or be construed to create a
contract to pay for the use, forbearance or detention of money at an interest
rate in excess of the Highest Lawful Rate. If the term of any of the Notes is
shortened by reason of acceleration of maturity or by reason of any required or
permitted prepayment, and if for that (or any other) reason the Administrative
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Agent or any Bank at any time, including the stated maturity, is owed or
receives (and/or has received) interest in excess of interest calculated at the
Highest Lawful Rate, then and in any such event all of any such excess interest
shall be cancelled automatically as of the date of such acceleration,
prepayment or other event which produces the excess, and, if such excess
interest has been paid to the Administrative Agent or such Bank, it shall be
credited pro tanto against the then outstanding principal balance of the
Borrower's (or the Guarantor's, as appropriate) obligations to the
Administrative Agent or such Bank, effective as of the date or dates when the
event occurs which causes it to be excess interest, until such excess is
exhausted or all of such principal has been fully paid and satisfied, whichever
occurs first, and any remaining balance of such excess shall be promptly
refunded to its payor.
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IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
ENRON OIL & GAS COMPANY
By: /s/ Xxx X. Xxxx
-----------------------------------
Xxx X. Xxxx
Vice President and Controller
THIS GUARANTY CONSTITUTES THE ENTIRE UNDERSTANDING AMONG THE GUARANTOR,
THE ADMINISTRATIVE AGENT AND THE BANKS WITH RESPECT TO THE SUBJECT
MATTER HEREOF AND SUPERSEDES ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH
RESPECT THERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE
PARTIES.
ENRON OIL & GAS COMPANY
By: /s/ Xxx X. Xxxx
-----------------------------------
Xxx X. Xxxx
Vice President and Controller
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, as Administrative Agent for
the Banks
By: /s/ Xxxxx Xxxxxxxxxx
-----------------------------------
Name: Xxxxx Xxxxxxxxxx
Title: Vice President
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Section 1007. Negative Pledge and Exceptions Thereto.
Except as otherwise specified as contemplated by Section 301 for
Securities of any series, so long as any of the Securities are outstanding, the
Company will not create or suffer to exist, or permit any of its Subsidiaries
to create or suffer to exist, except in favor of the Company or any Subsidiary,
any Lien upon any Principal Property at any time owned by it, to secure any
Funded Debt of the Company or any Subsidiary, without making effective
provisions whereby the Securities shall be equally and ratably secured with any
and all such Funded Debt and with any other indebtedness similarly entitled to
be equally and ratably secured; provided, however, that this restriction shall
not apply to or prevent the creation or existence of any:
(a) Acquisition Lien or Permitted Encumbrance; or
(b) Lien created or assumed by the Company or any Subsidiary in
connection with the issuance of debt securities the interest on which is
excludable from gross income of the holder of such security pursuant to the
Internal Revenue Code of 1986, as amended, for the purpose of financing, in
whole or in part, the acquisition or construction of property or assets to be
used by the Company or a Subsidiary.
In case the Company or any Subsidiary shall propose to create or permit
to exist a Lien on any Principal Property at any time owned by it to secure any
Funded Debt of the Company or any Subsidiary, other than Funded Debt permitted
to be secured under clauses (a) or (b) of this Section 1007, the Company will
prior thereto give written notice thereof to the Trustee, and the Company will,
or will cause such Subsidiary to, prior to or simultaneously with such creation
or permission to exist, by supplemental indenture executed to the Trustee (or
to the extent legally necessary to another trustee or additional or separate
trustee), in form satisfactory to the Trustee, effectively secure all the
Securities equally and ratably with such Funded Debt and any other indebtedness
entitled to be equally and ratably secured.
Notwithstanding the foregoing provisions of this Section 1007, the
Company or a Subsidiary may issue, assume or guarantee Funded Debt secured by
Liens which would otherwise be subject to the foregoing restrictions in an
aggregate amount which, together with all other Funded Debt of the Company or a
Subsidiary secured by Liens which (if originally issued, assumed or guaranteed
at such time) would otherwise be subject to the foregoing restrictions (not
including Funded Debt permitted to be secured under clauses (a) or (b) above)
does not at the time exceed 10% of the Consolidated Net Tangible Assets of the
Company, as shown on the audited consolidated financial statements of the
Company as of the end of the fiscal year preceding the date of determination.
Page 1 of 6 Pages
EXHIBIT A
26
"Acquisition Lien" means any (i) Lien upon any property heretofore or
hereafter acquired, created at the time of acquisition or within one year
thereafter to secure all or a portion of the purchase price thereof, or
existing thereon at the date of acquisition, whether or not assumed by the
Company or any Subsidiary, provided that any such Lien shall apply only to the
property so acquired and fixed improvements thereon, (ii) Lien upon any
property heretofore or hereafter acquired by any corporation that is or becomes
a Subsidiary after the date hereof ("Acquired Entity"), provided that any such
Lien (I) shall either (A) exist prior to the time the Acquired Entity becomes a
Subsidiary or (B) be created at the time the Acquired Entity becomes a
Subsidiary or within one year thereafter to secure all or a portion of the
acquisition price thereof and (2) shall only apply to those properties owned by
the Acquired Entity at the time it becomes a Subsidiary or thereafter acquired
by it from sources other than the Company or any other Subsidiary, and (iii)
any extension, renewal or refunding, in whole or in part, of any Lien permitted
by clause (i) or (ii) above, if limited to the same property or any portion
thereof subject to, and securing not more than the amount secured by, the Lien
extended, renewed or refunded.
"Consolidated Net Tangible Assets" means total assets less (a) total
current liabilities (excluding indebtedness due within 12 months) and (b)
goodwill, patents and trademarks, all as reflected in the Company's audited
consolidated balance sheet preceding the date of a determination under the last
paragraph of Section 1007.
"Funded Debt" as applied to the Company or any Subsidiary means all
indebtedness incurred, created, assumed or guaranteed by the Company or any
Subsidiary, or upon which such corporation customarily pays interest charges,
which matures, or is renewable by the Company or any Subsidiary to a date, more
than one year after the date as of which Funded Debt is being determined.
"Indebtedness", as applied to the Company or any Subsidiary, shall mean
bonds, debentures, notes and other instruments representing obligations created
or assumed by any such corporation for the repayment of money borrowed (other
than unamortized debt discount or premium). All indebtedness secured by a Lien
upon property owned by the Company or any Subsidiary and upon which
indebtedness any such corporation customarily pays interest, although any such
corporation has not assumed or become liable for the payment of such
indebtedness, shall for all purposes hereof be deemed to be indebtedness of any
such corporation. All indebtedness for money borrowed incurred by other
persons which is directly guaranteed as to payment of principal by the Company
or any Subsidiary shall for all purposes hereof be deemed to be indebtedness of
any such corporation, but no other contingent obligation of any such
corporation in respect of indebtedness incurred by other persons shall for any
purpose be deemed indebtedness of such corporation. Indebtedness of the
Company or any Subsidiary shall not include (i) any amount representing
capitalized lease obligations; (ii) indirect guarantees or other contingent
obligations in connection with the indebtedness of others, including
agreements, contingent
Page 2 of 6 Pages
EXHIBIT A
27
or otherwise, with such other persons or with third persons with respect to, or
to permit or ensure the payment of, obligations of such other persons,
including, without limitation, agreements to purchase or repurchase obligations
of such other persons, agreements to advance or supply funds to or to invest in
such other persons or agreements to pay for property, products, or services of
such other persons (whether or not conferred, delivered or rendered), and any
demand charge, throughput, take-or-pay, keep-well, make-whole, cash deficiency,
maintenance of working capital or earnings or similar agreements; and (iii) any
guarantees with respect to lease or other similar periodic payments to be made
by other persons.
"Lien" means any mortgage, pledge, lien, security interest or similar
charge or encumbrance.
"Permitted Encumbrances" means any
(a) undetermined or inchoate Lien incidental to construction,
maintenance, development or operation of any property;
(b) Lien for any tax or assessment for the then current year;
(c) Lien for any tax or assessment not at the time delinquent;
(d) Lien for specified tax or assessment which is delinquent
but the validity of which is being contested at the time by the Company
or any Subsidiary in good faith;
(e) Lien reserved in any oil, gas or other mineral lease for
rent, royalty or delay rental under such lease and for compliance with
the terms of such lease;
(f) Lien for any judgments or attachments in an aggregate
amount not in excess of $10,000,000, or for any judgment or attachment
the execution or enforcement of which has been stayed or which has been
appealed and secured, if necessary, by the filing of appeal bond;
(g) mechanics' or materialmen's Lien, any Lien or charge
arising by reason of any pledge or deposit to secure payment of
workmen's compensation or other insurance, good faith deposit in
connection with any tender, lease of real estate, bid or contract (other
than any contract for the payment of indebtedness), deposit to secure
any duty or public or statutory obligation, deposit to secure, or in
lieu of, surety, stay or appeal bond, and deposit as security for the
payment of any tax or assessment or similar charge;
Page 3 of 6 Pages
EXHIBIT A
28
(h) Lien arising by reason of any deposit with, or the giving
of any form of security to, any governmental agency or any body created
or approved by law for any purpose at any time in connection with the
financing of the acquisition or construction of property to be used in
the business of the Company or Subsidiary or as required by law as a
condition to the transaction of any business or the exercise of any
privilege or license, or to enable the Company or a Subsidiary to
maintain self-insurance or to participate in any fund established to
cover any insurance risk or in connection with workmen's compensation,
unemployment insurance, old age pension or other social security, or to
share in the privileges or benefits required for companies participating
in such arrangements;
(i) easement, servitude, right-of-way or other right,
exception, reservation, condition, limitation, covenant or other
restriction or imperfection in title which does not materially detract
from or interfere with the operation, value or use of the properties
affected thereby;
(j) preferential right to purchase entered into the ordinary
course of business;
(k) conventional provision contained in any contract or
agreement affecting properties under which the Company or a Subsidiary
is required immediately before the expiration, termination or
abandonment of a particular property to reassign to the Company's or a
Subsidiary's predecessor in title all or a portion of the Company's or a
Subsidiary's rights, titles and interest in and to all or a portion of
such property;
(l) sale or other transfer of crude oil, condensate, natural
gas, natural gas liquids or other similar hydrocarbon substances in
place, or the future production thereof, for a period of time until, or
in an amount such that, the transferee will realize therefrom a
specified amount (however determined) of money or a specified amount of
such crude oil, condensate, natural gas, natural gas liquids or other
similar hydrocarbon substances or any sale or other transfer of any
other interest in property of the character commonly referred to as a
"production payment," "overriding royalty," "net profits interest,"
"royalty" or similar burden on any oil and gas property or mineral
interest owned by the Company or any Subsidiary;
(m) Lien consisting of or reserved in any (i) grant or
conveyance in the nature of a farm-out or conditional assignment to the
Company or any of its Subsidiaries entered into the ordinary course of
business to secure undertakings of the Company or any Subsidiary in such
grant or conveyance, (ii) interest of an assignee of any proved
undeveloped lease or proved undeveloped portion of any producing
property transferred to such assignee for the purpose of the development
Page 4 of 6 Pages
EXHIBIT A
29
of such lease or property, (iii) unitization or pooling agreement or
declaration, (v) contract for the sale, purchase, exchange or processing
of production, or (v) operating agreement, area of mutual interest
agreement or other agreement which is customary in the oil and gas
business and which agreement does not materially detract from the value,
or materially impair the use of, the property affected thereby;
(n) Lien consisting of any (i) statutory landlord's lien under
any lease to which the Company or any Subsidiary is a party or any other
Lien on leased property reserved in any lease thereof for rent or for
compliance with the terms of such lease, (ii) right reserved to or
vested in any municipality or governmental, statutory or public
authority to control or regulate any property of the Company or any
Subsidiary or to use such property in any manner which does not
materially impair the use of such property for the purpose for which it
is held by the Company or any such Subsidiary, (iii) obligation or duty
to any municipality or public authority with respect to any franchise,
grant, license, lease or permit and the rights reserved or vested in any
governmental authority or public utility to terminate any such
franchise, grant, license, lease or permit or to condemn or expropriate
any property, or (iv) zoning law, ordinance or municipal regulation;
(o) Lien arising out of any forward contract, futures
contract, swap agreement or other commodities contract entered into by
the Company or any Subsidiary;
(p) Lien on oil and gas property of the Company or any
Subsidiary thereof, or on production therefrom, to secure any liability
of the Company or such Subsidiary for all or part of the Development
Cost for such property under any joint operating, drilling or similar
agreement for exploration, drilling or development of such property, or
any renewal or extension of any such Lien (as used in this subclause,
"Development Cost" means, for any oil and gas property, the cost of
exploration, drilling or development of such property or of altering or
repairing equipment used in connection with such exploration, drilling
or development, or in the case of property which is substantially
unimproved for the use intended by the Company or such Subsidiary, the
cost of construction of improvements directly related to such
exploration, drilling or development of such property);
(q) Lien on any property of the Company or any Subsidiary
thereof in favor of the government of the United States of America or of
any State, or any political subdivision of either thereof, or any
department, agency or instrumentality of either thereof (collectively,
"Governments"), in order to permit the Company or such Subsidiary to
perform any contract or subcontract made with or at the request of such
Government, securing any partial, progress, advance or other payment by
such Government to the Company or such Subsidiary under such contract or
Page 5 of 6 Pages
EXHIBIT A
30
subcontract, to the extent such Lien is required by such contract or
subcontract or by any law relating thereto; and
(r) Lien to secure any indebtedness incurred in connection
with the construction, installation or financing of any pollution
control or abatement facility or other form of industrial revenue bond
financing issued or guaranteed by the United States, any State or any
department, agency or instrumentality of either.
"Principal Property" means any property interest in oil and gas reserves
located in the United States or offshore the United States owned by the Company
or any Subsidiary and which is capable of producing crude oil, condensate,
natural gas, natural gas liquids or other similar hydrocarbon substances in
paying quantities, the net book value of which property interest or interests
exceeds two (2) percent of Consolidated Net Tangible Assets, except any such
property interest or interests that in the opinion of the Board of Directors is
not of material importance to the total business conducted by the Company and
its Subsidiaries as a whole. Without limitation, the term "Principal Property"
shall not include (i) accounts receivable and other obligations of any obligor
under a contract for the sale, exploration, production, drilling, development,
processing or transportation of crude oil, condensate, natural gas, natural gas
liquids or other similar hydrocarbon substances by the Company or any of its
Subsidiaries, and all related rights of the Company or any of is Subsidiaries,
and all guarantees, insurance, letters of credit and other agreements or
arrangements of whatever character supporting or securing payment of such
receivables or obligations, or (ii) the production or any proceeds from
production of crude oil, condensate, natural gas, natural gas liquids or other
similar hydrocarbon substances.
"Subsidiary" means a corporation more than 50% of the outstanding voting
stock of which is owned, directly or indirectly, by the Company or by one or
more other Subsidiaries, or by the Company and one or more other Subsidiaries.
For the purposes of this definition, "voting stock" means stock which
ordinarily has voting power for the election of directors, whether at all times
or only so long as no senior class of stock has such voting power by reason of
any contingency.
Page 6 of 6 Pages
EXHIBIT A
