GUARANTY
Exhibit 10.2
EXECUTION VERSION
GUARANTY, dated as of October 28, 2010 (this “Guaranty”), by Harvest US Holdings,
Inc., a Delaware corporation (“Harvest US Holdings”), Harvest Natural Resources, Inc. (UK),
a Delaware corporation (“HNR UK”), and Harvest Offshore China Company, a Colorado
corporation (“Harvest Offshore”, and together with Harvest US Holdings and HNR UK, each
individually, a “Guarantor”, and collectively, the “Guarantors”), in favor of MSD
Energy Investments Private II, LLC, a Delaware limited liability company (the “Lender”).
WHEREAS, Harvest Natural Resources, Inc., a Delaware corporation (the “Borrower”), has
entered into that certain Credit Agreement dated as of the date hereof (as amended and in effect
from time to time, the “Credit Agreement”), with the Lender, pursuant to which the Lender,
subject to the terms and conditions contained therein, is to provide the Borrower with the term
loan facility as provided for therein;
WHEREAS, the Borrower and the Guarantors are members of a group of related entities, the
success of any one of which is dependent in part on the success of the other members of such group;
WHEREAS, the Guarantors expect to receive substantial direct and indirect benefits from the
extensions of credit to the Borrower by the Lender pursuant to the Credit Agreement (which benefits
are hereby acknowledged);
WHEREAS, it is a condition precedent to the Lender’s making any loan or otherwise extending
credit to the Borrower under the Credit Agreement that the Guarantors execute and deliver to the
Lender a guaranty substantially in the form hereof; and
WHEREAS, the Guarantors wish to guaranty the Borrower’s obligations to the Lender under or in
respect of the Credit Agreement as provided herein.
NOW, THEREFORE, each Guarantor hereby agrees with the Lender as follows:
1. Definitions. The term “Obligations” and all other capitalized terms used herein
without definition shall have the respective meanings provided therefor in the Credit Agreement.
2. Guaranty of Payment and Performance. Each Guarantor hereby jointly and severally
guarantees to the Lender the full and punctual payment when due (whether at stated maturity, by
required pre-payment, by acceleration or otherwise), as well as the performance, of all of the
Obligations including all such Obligations which would become due but for the operation of the
automatic stay pursuant to §362(a) of the Federal Bankruptcy Code and the operation of §§502(b) and
506(b) of the Federal Bankruptcy Code. This Guaranty is an absolute, unconditional and continuing
guaranty of the full and punctual payment and performance of all of the Obligations and not of
their collectibility only and is in no way conditioned upon any requirement that the Lender first
attempt to collect any of the Obligations from the Borrower or any other guarantor or resort to any
collateral security, guarantee of the Obligations or other means of obtaining payment. Should the
Borrower default in the payment or performance of any of the Obligations, the obligations of each
Guarantor hereunder with respect to such Obligations in default shall become immediately due and
payable to the Lender, without demand or notice of any nature, all of which are expressly waived by
each Guarantor. Payments by the Guarantors hereunder may be required by the Lender on any number
of occasions. All payments by the
Guarantors hereunder shall be made to the Lender, in the manner and at the place of payment
specified therefor in the Credit Agreement.
3. Guarantors’ Agreement to Pay Enforcement Costs, etc. Each Guarantor further
agrees, as the principal obligor and not as a guarantor only, to pay to the Lender, on demand, all
costs and expenses (including court costs, legal expenses and costs and expenses incurred during
any workout, litigation, restructuring or negotiations in respect of the Obligations) incurred or
expended by the Lender and its Affiliates (including the reasonable fees, charges and disbursements
of counsel for the Lender) in connection with the Obligations, this Guaranty and the enforcement
thereof, together with interest on amounts recoverable under this §3 from the time when such
amounts become due until payment, whether before or after judgment, at the rate of interest for
overdue principal set forth in the Credit Agreement, provided that if such interest exceeds
the maximum amount permitted to be paid under applicable law, then such interest shall be reduced
to such maximum permitted amount.
4. Waivers by Guarantor; Lender’s Freedom to Act. Each Guarantor agrees that the
Obligations will be paid and performed strictly in accordance with their respective terms,
regardless of any law, regulation or order now or hereafter in effect in any jurisdiction affecting
any of such terms or the rights of the Lender with respect thereto. Each Guarantor waives
promptness, diligence, presentment, demand, protest, notice of acceptance, notice of any
Obligations incurred and all other notices of any kind, all defenses which may be available by
virtue of any valuation, stay, moratorium law or other similar law now or hereafter in effect, any
right to require the marshalling of assets of the Borrower or any other entity or other person
primarily or secondarily liable with respect to any of the Obligations, and all suretyship defenses
generally. Without limiting the generality of the foregoing, each Guarantor agrees to the
provisions of any instrument evidencing, securing or otherwise executed in connection with any
Obligation and agrees that the obligations of such Guarantor hereunder shall not be released or
discharged, in whole or in part, or otherwise affected by (i) the failure of the Lender to assert
any claim or demand or to enforce any right or remedy against the Borrower or any other entity or
other person primarily or secondarily liable with respect to any of the Obligations; (ii) any
extensions, compromise, refinancing, consolidation or renewals of any Obligation; (iii) any change
in the time, place or manner of payment of any of the Obligations or any rescissions, waivers,
compromise, refinancing, consolidation, amendments or modifications of any of the terms or
provisions of the Credit Agreement, the Notes, the other Loan Documents or any other agreement
evidencing, securing or otherwise executed in connection with any of the Obligations; (iv) the
addition, substitution or release of any entity or other person primarily or secondarily liable for
any Obligation, (v) the adequacy of any rights which the Lender may have against any collateral
security or other means of obtaining repayment of any of the Obligations; (vi) the impairment of
any collateral securing any of the Obligations, including without limitation the failure to perfect
or preserve any rights which the Lender might have in such collateral security or the substitution,
exchange, surrender, release, loss or destruction of any such collateral security; or (vii) any
other act or omission which might in any manner or to any extent vary the risk of any Guarantor or
otherwise operate as a release or discharge of such Guarantor, all of which may be done without
notice to the Guarantors. To the fullest extent permitted by law, each Guarantor hereby expressly
waives any and all rights or defenses arising by reason of (A) any “one action” or
“anti-deficiency” law which would otherwise prevent the Lender from bringing any action, including
any claim for a deficiency, or exercising any other right or remedy (including any right of
set-off), against such Guarantor before or after the Lender’s commencement or completion of any
foreclosure action, whether judicially, by exercise of power
of sale or otherwise, or (B) any other law which in any other way would otherwise require any
election of remedies by the Lender. To the extent that it lawfully may, each Guarantor hereby
agrees that it will not invoke any law (other than the applicable statute of limitations) which
might cause delay in or impede the enforcement of the rights and remedies of the Lender under this
Guaranty, and to the fullest extent it lawfully may, such Guarantor hereby irrevocably waives the
benefits of all such laws. In addition, and notwithstanding anything to the contrary contained
herein, the Lender shall have the right, at any time, to name any Guarantor as a party defendant in
any foreclosure action(s) it or its assignee may commence to foreclose upon any and all collateral
of the Borrower or any other guarantor which secures the Obligations.
5. Unenforceability of Obligations Against Borrower or Other Guarantors. If for any
reason the Borrower or any other guarantor has no legal existence or is under no legal obligation
to discharge any of the Obligations, or if any of the Obligations have become irrecoverable from
the Borrower or any other guarantor by reason of the Borrower’s or such other guarantor’s
insolvency, bankruptcy or reorganization or by other operation of law or for any other reason, this
Guaranty shall nevertheless be binding on each Guarantor, to the same extent as if such Guarantor
at all times had been the principal obligor on all such Obligations. In the event that
acceleration of the time for payment of any of the Obligations is stayed upon the insolvency,
bankruptcy or reorganization of the Borrower, or for any other reason, all such amounts otherwise
subject to acceleration under the terms of the Credit Agreement, the Notes, the other Loan
Documents or any other agreement evidencing, securing or otherwise executed in connection with any
Obligation shall be immediately due and payable by the Guarantor.
6. Subrogation; Subordination.
6.1. Waiver of Rights Against Borrower. Until the final payment and
performance in full of all of the Obligations and any and all other obligations of the
Borrower to the Lender or any affiliate of the Lender, no Guarantor shall exercise any
rights against the Borrower or any other guarantor of the Obligations arising as a result of
payment by any Guarantor hereunder (or any other guarantor), by way of subrogation,
reimbursement, restitution, contribution or otherwise, and no Guarantor will prove any claim
in competition with the Lender or such affiliate in respect of any payment hereunder in any
bankruptcy, insolvency or reorganization case or proceedings of any nature; no Guarantor
will claim any setoff, recoupment or counterclaim against the Borrower in respect of any
liability of any Guarantor to the Borrower; and each Guarantor waives any benefit of and any
right to participate in any collateral security which may be held by the Lender or such
affiliate.
6.2. Subordination to Lender. The payment of any amounts due with respect to
any indebtedness of the Borrower or any other guarantor of the Obligations now or hereafter
owed to the Guarantor is hereby subordinated to the prior payment in full of all of the
Obligations and any and all other obligations of the Borrower or any other guarantor of the
Obligations to the Lender or any affiliate of the Lender. Each Guarantor agrees that, after
the occurrence of any default in the payment or performance of any of the Obligations, such
Guarantor will not demand, xxx for or otherwise attempt to collect any such indebtedness of
the Borrower or any other guarantor of the Obligations to such Guarantor until all of the
Obligations shall have been paid in full. If, notwithstanding the foregoing sentence, the
Guarantor shall collect, enforce or receive any amounts in respect of such indebtedness,
such amounts shall be collected, enforced and received by such
Guarantor as trustee for the Lender and be paid over to the Lender on account of the
Obligations without affecting in any manner the liability of such Guarantor under the other
provisions of this Guaranty.
6.3. Subordination of Obligations. Each Guarantor covenants and agrees, and
the Lender, by its acceptance of this Guaranty likewise covenants and agrees, that payment
of the Obligations by any of the Guarantors arising under this Guaranty shall be
subordinated to the Indebtedness of Subsidiaries permitted under Section 7.02(j) and
Section 7.02(n) of the Credit Agreement, such subordination arrangements to be on
terms and conditions reasonably satisfactory to the Lender.
6.4. Provisions Supplemental. The provisions of this §6 shall be supplemental
to and not in derogation of any rights and remedies of the Lender or any affiliate of the
Lender under any separate subordination agreement which the Lender or such affiliate may at
any time and from time to time enter into with any Guarantor.
7. Security; Setoff. Each Guarantor grants to the Lender, as security for the full
and punctual payment and performance of all of such Guarantor’s obligations hereunder, a continuing
lien on and security interest in all securities or other property belonging to such Guarantor now
or hereafter held by the Lender and in all deposits (general or special, time or demand,
provisional or final) and other sums credited by or due from the Lender to such Guarantor or
subject to withdrawal by such Guarantor. Regardless of the adequacy of any collateral security or
other means of obtaining payment of any of the Obligations, the Lender is hereby authorized at any
time and from time to time, without notice to such Guarantor (any such notice being expressly
waived by such Guarantor) and to the fullest extent permitted by law, to set off and apply such
deposits and other sums against the obligations of such Guarantor under this Guaranty, whether or
not the Lender shall have made any demand under this Guaranty and although such obligations may be
contingent or unmatured.
8. Further Assurances. Each Guarantor agrees that it will from time to time, at the
request of the Lender, provide to the Lender such Guarantor’s most recent audited and unaudited
balance sheets and related statements of income and changes in financial condition and such other
information relating to the business and affairs of such Guarantor as the Lender may reasonably
request. Each Guarantor also agrees to do all such things and execute all such documents as the
Lender may consider necessary or desirable to give full effect to this Guaranty and to perfect and
preserve the rights and powers of the Lender hereunder. Each Guarantor acknowledges and confirms
that such Guarantor itself has established its own adequate means of obtaining from the Borrower on
a continuing basis all information desired by such Guarantor concerning the financial condition of
the Borrower and that such Guarantor will look to the Borrower and not to the Lender in order for
such Guarantor to keep adequately informed of changes in the Borrower’s financial condition.
9. Termination; Reinstatement. Upon final payment and performance in full in cash of
the Obligations (other than inchoate indemnification liabilities arising under the Loan Documents)
and termination of all lending and other credit commitments of the Lender and its affiliates in
respect thereof, this Guaranty shall terminate. Such termination shall not affect any rights of
the Lender or of any affiliate of the Lender hereunder (including without limitation the rights set
forth in §§4 and 6) with respect to any Obligations incurred or accrued prior to the receipt of
such notice or any Obligations incurred or accrued pursuant to any contract or
commitment in existence prior to such receipt. Notwithstanding the foregoing, this Guaranty
shall continue to be effective or be reinstated if at any time any payment made or value received
with respect to any Obligation is rescinded or must otherwise be returned by the Lender upon the
insolvency, bankruptcy or reorganization of the Borrower, or otherwise, all as though such payment
had not been made or value received.
10. Successors and Assigns. This Guaranty shall be binding upon each Guarantor, its
successors and assigns, and shall inure to the benefit of and be enforceable by the Lender and its
successors, transferees and assigns. Without limiting the generality of the foregoing sentence,
the Lender may assign or otherwise transfer the Credit Agreement, the Notes, the other Loan
Documents or any other agreement or note held by it evidencing, securing or otherwise executed in
connection with the Obligations, or sell participations in any interest therein, to any other
entity or other person, and such other entity or other person shall thereupon become vested, to the
extent set forth in the agreement evidencing such assignment, transfer or participation, with all
the rights in respect thereof granted to the Lender herein. No Guarantor may assign its rights
hereunder.
11. Amendments and Waivers. No amendment or waiver of any provision of this Guaranty
nor consent to any departure by any Guarantor therefrom shall be effective unless the same shall be
in writing and signed by the Lender. No failure on the part of the Lender to exercise, and no delay
in exercising, 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.
12. Notices.
12.1. Notices Generally. All notices and other communications provided for
herein shall be in writing and shall be delivered by hand or overnight courier service,
mailed by certified or registered mail or sent by telecopier as follows: if to any
Guarantor, at the address or telecopier number set forth beneath its signature hereto, and
if to the Lender, at the address for notices to the Lender set forth in Schedule
9.02 of the Credit Agreement.
Notices and other communications sent by hand or overnight courier service, or mailed
by certified or registered mail, shall be deemed to have been given when received; notices
and other communications sent by telecopier shall be deemed to have been given when sent
(except that, if not given during normal business hours for the recipient, shall be deemed
to have been given at the opening of business on the next business day for the recipient).
12.2. Change of Address. Each Guarantor and the Lender may change its address
or telecopier number for notices and other communications hereunder by notice to the other
parties hereto.
12.3. Reliance by Lender. The Lender shall be entitled to rely and act upon
any notices purportedly given by or on behalf of any Guarantor even if (i) such notices were
not made in a manner specified herein, were incomplete or were not preceded or followed by
any other form of notice specified herein, or (ii) the terms thereof, as understood by the
recipient, varied from any confirmation thereof. Each Guarantor shall
indemnify the Lender and the Related Parties (as defined in the Credit Agreement) of
each of them from all losses, costs, expenses and liabilities resulting from the reliance by
such Person on each notice purportedly given by or on behalf of such Guarantor.
13. Governing Law. THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NEW YORK.
14. Submission to Jurisdiction. EACH GUARANTOR IRREVOCABLY AND UNCONDITIONALLY
SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE
OF NEW YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN, THE CITY OF NEW YORK, AND ANY
APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
GUARANTY OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH
GUARANTOR IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH GUARANTOR AGREES THAT A FINAL JUDGMENT IN
ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY
SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS GUARANTY OR IN ANY
OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT THE LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION
OR PROCEEDING RELATING TO THIS GUARANTY OR ANY OTHER LOAN DOCUMENT AGAINST ANY GUARANTOR OR ANY
OTHER LOAN PARTY (AS DEFINED IN THE CREDIT AGREEMENT) OR ITS PROPERTIES IN THE COURTS OF ANY
JURISDICTION.
15. Waiver of Venue. EACH GUARANTOR IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY OR ANY
OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN §14. EACH GUARANTOR HEREBY IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE
MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.
16. Service of Process. EACH GUARANTOR IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN
THE MANNER PROVIDED FOR NOTICES IN §12. NOTHING IN THIS GUARANTY WILL AFFECT THE RIGHT OF THE
LENDER OR ANY GUARANTOR TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.
17. Waiver of Jury Trial. EACH GUARANTOR HEREBY IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL
PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS GUARANTY OR ANY OTHER LOAN
DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EXCEPT AS PROHIBITED BY LAW,
EACH GUARANTOR HEREBY WAIVES ANY RIGHT WHICH IT MAY HAVE TO CLAIM OR RECOVER IN ANY LITIGATION ANY
SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO,
ACTUAL DAMAGES. EACH GUARANTOR (I) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE
LENDER OR ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE LENDER OR SUCH OTHER
PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (II)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS GUARANTY AND
THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE WAIVERS AND CERTIFICATIONS IN THIS §17.
18. Joint and Several Nature of Guaranty. Notwithstanding any term contained herein
to the contrary, each of the obligations and liabilities of each of the Guarantors hereunder are
expressly agreed to be joint and several.
19. Contribution. To the extent any Guarantor makes a payment hereunder in excess of
the aggregate amount of the benefit received by such Guarantor in respect of the extensions of
credit under the Credit Agreement (the “Benefit Amount”), then such Guarantor, after the payment in
full, in cash, of all of the Obligations, shall be entitled to recover from each other guarantor of
the Obligations such excess payment, pro rata, in accordance with the ratio of the Benefit Amount
received by each such other guarantor to the total Benefit Amount received by all guarantors of the
Obligations, and the right to such recovery shall be deemed to be an asset and property of such
Guarantor so funding; provided, that all such rights to recovery shall be subordinated and junior
in right of payment to the final and undefeasible payment in full in cash of all of the
Obligations.
20. Miscellaneous. This Guaranty constitutes the entire agreement of each Guarantor
with respect to the matters set forth herein. The rights and remedies herein provided are
cumulative and not exclusive of any remedies provided by law or any other agreement, and this
Guaranty shall be in addition to any other guaranty of or collateral security for any of the
Obligations. The invalidity or unenforceability of any one or more sections of this Guaranty shall
not affect the validity or enforceability of its remaining provisions. Captions are for the ease
of reference only and shall not affect the meaning of the relevant provisions. The meanings of all
defined terms used in this Guaranty shall be equally applicable to the singular and plural forms of
the terms defined.
[Remainder of page intentionally left blank.]
IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be executed and delivered as of
the date first above written.
| HARVEST (US) HOLDINGS, INC. |
||||
| By: | /s/ Xxxxxxx X. Xxxxxx | |||
| Name: | Xxxxxxx X. Xxxxxx | |||
| Title: | Vice President and Chief Financial Officer | |||
| Address: |
0000 Xxxxxxx Xxxxxxx, Xxxxx 000 Xxxxxxx, XX 00000 |
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| HARVEST NATURAL RESOURCES, INC. (UK) |
||||
| By: | /s/ Xxxxxxx X. Xxxxxx | |||
| Name: | Xxxxxxx X. Xxxxxx | |||
| Title: | Vice President and Chief Financial Officer | |||
| Address: |
First Floor, Talbot House 17 Church Street Rickmansworth Hertfordshire WD3 1DE United Kingdom |
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| HARVEST OFFSHORE CHINA COMPANY |
||||
| By: | /s/ Xxxxxxx X. Xxxxxx | |||
| Name: | Xxxxxxx X. Xxxxxx | |||
| Title: | Vice President and Chief Financial Officer | |||
| Address: | 0000 Xxxxxxx Xxxxxxx, Xxxxx 000 Xxxxxxx, XX 00000 |
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