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EXHIBIT 10.2
EXECUTION COPY
GUARANTEE AND SUBORDINATION AGREEMENT (this
"Agreement") dated as of March 31, 1998, among UNION
PACIFIC RESOURCES GROUP INC., a Utah corporation (the
"Guarantor"), UNION PACIFIC RESOURCES INC., a
Canadian corporation (the "UPR Subsidiary"), and THE
TORONTO-DOMINION BANK (the "Lender").
Reference is made to (a) the Amended and Restated Extendable
Revolving Term Credit Facility (the "Facility") provided pursuant to the
agreement dated May 29, 1997 (as amended from time to time, the "Facility
Agreement") between the Lender and Norcen Energy Resources Limited (the
"Borrower") and (b) the Standby Letter of Credit #G691429 in favor of Corpoven
S.A. for U.S. $11,500,000 issued by the Lender in connection with certain
obligations owed to Norcen Energia Venezuela S.A. and Xxxxxxxxx Energy Company
pursuant to that certain Operating Services Agreement for the West Guarico Unit
dated January 15, 1995 (as amended, extended, restated, renewed or replaced,
the "Letter of Credit"). The Guarantor has acquired ownership of the Borrower
and, for good and valuable consideration the receipt and sufficiency of which
is hereby acknowledged, and in order to induce the Lender to continue to make
the Facility available to the Borrower, the Guarantor and the UPR Subsidiary
have agreed to enter into this Agreement. Accordingly, the parties hereto
agree as follows:
Article I
GUARANTEE
SECTION 1.1. The Guarantor unconditionally and irrevocably
guarantees, as a primary obligor and not merely as a surety, (a) the due and
punctual payment by the Borrower of (i) the principal of and interest on all
loans made by the Lender to the Borrower pursuant to the Facility, when and as
due, whether at maturity, by acceleration, upon one or more dates set for
prepayment or otherwise and (ii) all other monetary obligations of the Borrower
to the Lender under the Facility Agreement, when and as due, (b) the due and
punctual performance, when and as due, of all other present and future
obligations of the Borrower under the Facility Agreement and (c) all
obligations to the Lender arising under the Letter of Credit (all the foregoing
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indebtedness and obligations being collectively called the "Obligations"). The
Guarantor further agrees that the Obligations may be amended, extended,
increased or renewed, in whole or in part, without notice to or further assent
from it, and that it will remain bound upon its guarantee notwithstanding any
amendment, extension, increase or renewal of any Obligation.
SECTION 1.2. The Guarantor waives presentment to, demand of
payment from and protest to the Borrower of any of the Obligations, and also
waives notice of acceptance of this guarantee and notice of protest for
nonpayment. The obligations of the Guarantor hereunder shall not be affected
by (a) the failure of the Lender to assert any claim or demand or to enforce
any right or remedy against the Borrower under the Facility Agreement or
otherwise; (b) any rescission, waiver, amendment or modification of, or any
release from any of the terms or provisions of, the Facility Agreement or any
other agreement; (c) the release of any security held by the Lender for the
Obligations or any of them; or (d) the failure of the Lender to exercise any
right or remedy against any other guarantor of the Obligations.
SECTION 1.3. The Guarantor further agrees that its guarantee
hereunder constitutes a guarantee of payment when due and not of collection,
and waives any right to require that resort be had by the Lender to any
security held for payment of the Obligations or to any balance of any deposit
account or credit on the books of the Lender in favor of the Borrower or any
other person.
SECTION 1.4. The obligations of the Guarantor hereunder shall
not be subject to any reduction, limitation, impairment or termination for any
reason, including, without limitation, any claim of waiver, release, surrender,
alteration or compromise, and shall not be subject to any defense or setoff,
counterclaim, recoupment or termination whatsoever by reason of the invalidity,
illegality or unenforceability of any of the Obligations or otherwise. Without
limiting the generality of the foregoing, the obligations of the Guarantor
hereunder shall not be discharged or impaired or otherwise affected by the
failure of the Lender to assert any claim or demand or to enforce any remedy
under the Facility Agreement or any other agreement, by any waiver or
modification of the Facility Agreement or any other agreement, by any default,
failure or delay, willful or otherwise, in the performance of any of
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the Obligations, or by any other act or omission which may or might in any
manner or to any extent vary the risk of the Guarantor or otherwise operate as
a discharge of the Guarantor as a matter of law or equity (other than the
indefeasible payment and performance in full of all the Obligations).
SECTION 1.5. The Guarantor further agrees that its guarantee
shall continue to be effective or be reinstated, as the case may be, if at any
time payment, or any part thereof, of any Obligation is rescinded or must
otherwise be restored by the Lender upon the bankruptcy or reorganization of
the Borrower or otherwise.
SECTION 1.6. In furtherance of the foregoing and not in
limitation of any other right which the Lender has at law or in equity against
the Guarantor by virtue hereof, the Guarantor hereby promises to and will, upon
receipt of a written demand by the Lender, forthwith pay, or cause to be paid,
to the Lender in cash the amount of any unpaid Obligation. The Lender may
demand payment or performance by the Guarantor hereunder with or without first
demanding payment or performance of the Obligations by the Borrower, and the
Guarantor agrees to and will honor such demand regardless of whether any demand
has been or is being made upon the Borrower and regardless of whether at the
time the Borrower may be capable or incapable of payment or performance or is
bankrupt or insolvent. In the event of any payment of the Obligations by the
Guarantor hereunder, the Guarantor shall be subrogated to the rights of the
Lender against the Borrower in respect of which such payment is made; provided
that such right of subrogation shall be subordinated to any remaining
Obligations owed to the Lender, and the Guarantor shall not seek or be entitled
to seek any contribution or reimbursement from the Borrower in respect of
payments made by the Guarantor hereunder unless all amounts at the time due and
payable to the Lender by the Borrower on account of the Obligations have been
indefeasibly paid in full.
SECTION 1.7. The guarantee made hereunder shall survive and
be in full force and effect so long as any Obligation is outstanding and has
not been indefeasibly paid, and shall be reinstated to the extent provided in
Section 1.5.
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SECTION 1.8. All payments by the Guarantor hereunder shall be
made free and clear of and without deduction for any present or future income,
excise, stamp, or franchise taxes and other taxes, fees, duties, withholdings
or other charges of any nature whatsoever imposed by any taxing authority, but
excluding franchise taxes and taxes imposed on or measured by the Lender's net
income or receipts (such non-excluded items being called "Taxes"). In the
event that any withholding or deduction from any payment to be made hereunder
is required in respect of any Taxes pursuant to any applicable law, rule or
regulation, then, subject to the provisions of Section 1.9, the Guarantor
shall:
(a) pay directly to the relevant authority the full amount
required to be so withheld or deducted;
(b) promptly forward to the Lender an official receipt or
other documentation satisfactory to the Lender evidencing such payment to such
authority; and
(c) pay to the Lender such additional amount(s) as is
necessary to ensure that the net amount actually received by the Lender will
equal the full amount the Lender would have received had no such withholding or
deduction been required and the Guarantor hereby acknowledges that it is not
entitled to and will not seek recovery or restitution of any amount due to the
Lender and paid by it pursuant to this paragraph (c) or pursuant to the next
sentence.
If any Taxes are directly asserted against the Lender with
respect to any payment received by the Lender hereunder, the Lender may pay
such Taxes and, if paid in good faith after inquiry to the Borrower or the
Guarantor, the Guarantor shall promptly pay such additional amounts to the
Lender (including any penalties, interest or expenses) as are necessary in
order that the net amount received by the Lender after the payment of such
Taxes (including any taxes on such additional amount) shall equal the amount
the Lender would have received had no such Taxes been asserted, subject to the
provisions of Section 1.9.
If the Guarantor fails to pay any Taxes when due to the
appropriate taxing authority, or fails to remit to the Lender the required
receipts or other required documentary evidence, the Guarantor shall indemnify
the Lender for any Taxes, interest or penalties that may become
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payable by the Lender as a result of any such failure, subject to the
provisions of Section 1.9.
SECTION 1.9. The Lender's claims for reimbursements,
payments, indemnities or otherwise under Section 1.8 and the Guarantor's
obligations with respect thereto, shall be limited and qualified by and subject
to the following:
(a) the Guarantor's obligation to pay, satisfy or recognize
such claim shall be limited to costs or losses incurred within one (1) year
immediately prior to any demand or request therefor upon the Guarantor;
(b) the Lender's demand for reimbursement, payment or
indemnity must be limited to that which is being generally applied at the time
by the Lender for comparable guarantors and guaranties subject to similar
provisions;
(c) the Lender shall provide evidence regarding the basis of
such claim and the calculation and application thereof in reasonable detail
and, in determining such amount, the Lender may use reasonable methods of
attribution and averaging; and
(d) the Lender shall, if so requested by the Guarantor, use
reasonable efforts (subject to the overall policy considerations of the Lender)
to designate a different lending office hereunder if to do so will avoid the
need for, or reduce the amount of, any such payment, indemnity or
reimbursement; provided that, the Lender would, in its sole but reasonable
determination, suffer no material economic, legal or regulatory disadvantage or
burden.
Article II
SUBORDINATION
SECTION 2.1. For purposes of this Article II, the following
terms shall have the following meanings: (a) "Senior Creditor" means the
Lender, (b) "Senior Obligations" means the Obligations, (c) "Subordinated
Creditors" means the Guarantor and the UPR Subsidiary and (d) "Subordinated
Obligations" means all indebtedness of the Borrower or any subsidiary thereof
owed to the Guarantor and the UPR Subsidiary.
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SECTION 2.2. Each Subordinated Creditor hereby agrees that
all the Subordinated Obligations are hereby expressly and unconditionally
subordinated, to the greatest extent permitted by law and in the manner set
forth in this Article II, to the indefeasible prior payment in full in cash of
all Senior Obligations in accordance with the terms thereof.
SECTION 2.3. Upon the occurrence and continuation of an Event
of Default (as defined in the Facility Agreement), or upon any distribution of
the assets of the Borrower, or upon any dissolution, winding up, liquidation or
reorganization of the Borrower, whether in bankruptcy, insolvency,
reorganization, arrangement or receivership proceedings or otherwise, or upon
the assignment for the benefit of creditors or any other marshalling of the
assets of the Borrower, or otherwise:
(a) the Senior Creditor shall first be entitled to receive
payment in full in cash of the Senior Obligations in accordance with the terms
of such Senior Obligations before any Subordinated Creditor shall be entitled
to receive any payment on account of the Subordinated Obligations, whether as
principal, interest or otherwise;
(b) any payment by, or distribution of the assets of, the
Borrower of any kind or character, whether in cash, property or securities, to
which any Subordinated Creditor would be entitled except for the provisions of
this Agreement shall be paid or delivered by the person making such payment or
distribution (whether a trustee in bankruptcy, a receiver, custodian or
liquidating trustee or otherwise) directly to the Senior Creditor to the extent
necessary to make payment in full in cash of all Senior Obligations remaining
unpaid, after giving effect to any concurrent payment or distribution to the
Senior Creditor in respect of the Senior Obligations; and
(c) any payment or distribution of the assets of the Borrower
received by any of the Subordinated Creditors which by virtue of this Agreement
should have been made to the Senior Creditor shall be held by the said
Subordinated Creditor, as bare trustee only, in trust for, and shall be
forthwith paid or distributed to, the Senior Creditor to be applied against the
Senior Obligations.
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SECTION 2.4. Subrogation. Subject to the prior indefeasible
payment in full in cash of the Senior Obligations, the Subordinated Creditors
shall be subrogated to the rights of the Senior Creditor to receive payments or
distributions in cash, property or securities applicable to such Senior
Obligations until all amounts owing on the Subordinated Obligations shall be
paid in full, and as between and among the Borrower, its creditors (other than
the Senior Creditor) and the Subordinated Creditors, no such payment or
distribution made to the Senior Creditor of by virtue of this Agreement that
otherwise would have been made to the Subordinated Creditors shall be deemed to
be a payment by the Borrower on account of its Subordinated Obligations, it
being understood that the provisions of this Agreement are intended solely for
the purpose of defining the relative rights of the Subordinated Creditors, on
the one hand, and the Senior Creditor, on the other hand.
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Article III
MISCELLANEOUS
SECTION 3.1. The Guarantor shall forthwith pay to the Lender
on demand all out-of-pocket costs incurred by the Lender, including but not
limited to all reasonable legal costs, in enforcing any of its rights and
remedies arising under this Agreement.
SECTION 3.2. The Guarantor shall forthwith notify the Lender
upon any of its subsidiaries, other than a subsidiary which at the time is a
party to this Agreement or an agreement similar in substance to this Agreement,
acquiring or being the beneficiary of any Subordinated Obligations and
thereupon the Guarantor shall cause such subsidiary to forthwith provide a
subordination in favor of the Lender upon similar terms as herein provided,
together with such legal opinions in respect thereof similar in substance to
those legal opinions already provided to the Lender in respect of prior similar
subordinations the UPR Subsidiary and other subsidiaries of the Guarantor.
SECTION 3.3. The Guarantor shall provide to the Lender as
soon as reasonably practicable, but no later than 90 days following each fiscal
quarter, its consolidated, unaudited, quarterly financial statements and, no
later than 120 days following each fiscal year-end, its consolidated, audited,
annual financial statements.
SECTION 3.4. This Agreement and the terms, covenants and
conditions hereof shall be binding upon the Guarantor and the UPR Subsidiary
and their respective successors and shall inure to the benefit of the Lender
and its successors and permitted assigns. The Guarantor and the UPR Subsidiary
shall not be permitted to assign or transfer any of their rights or obligations
under this Agreement.
SECTION 3.5. No failure on the part of the Lender to
exercise, and no delay in exercising, any right, power or remedy hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right, power or remedy by the Lender preclude any other or further
exercise thereof or the exercise of any other right, power or remedy. All
remedies hereunder and under the Facility
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Agreement are cumulative and are not exclusive of any other remedies provided
by law. The Lender shall not be deemed to have waived any rights hereunder
unless such waiver shall be in writing and signed by the Lender.
SECTION 3.6. This Guarantee shall be deemed a contract and
instrument made under the laws of the State of New York and shall be construed
and enforced in accordance with and governed by the laws of the State of New
York and the laws of the United States of America applicable therein, without
regard to principles of conflicts of law. This Agreement constitutes the
entire understanding among the parties hereto with respect to the subject
matter hereof and supersedes any prior agreements, written or oral, with
respect thereto.
SECTION 3.7. All communications and notices hereunder shall
be in writing and sent to the applicable party at its address set forth beneath
its signature hereto.
SECTION 3.8. In case any one or more of the provisions
contained in this Agreement should be held invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected or impaired.
SECTION 3.9. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which,
when taken together, shall constitute but one instrument.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
UNION PACIFIC RESOURCES GROUP
INC.
by
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Name:
Title:
Address:
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UNION PACIFIC RESOURCES INC.
by
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Name:
Title:
Address:
THE TORONTO-DOMINION BANK
by
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Name:
Title:
by
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Name:
Title:
Address:
