EXHIBIT 10.2
GUARANTY
BY
HOWELL CORPORATION
IN FAVOR OF
BANK ONE, TEXAS, NATIONAL ASSOCIATION, AS AGENT
Dated as of March 31, 1995
CREDIT FACILITY TO HOWELL PETROLEUM CORPORATION
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS AND INTERPRETATION 1
1.1 Terms Defined Above 1
1.2 Terms Defined in Credit Agreement 2
1.3 Additional Defined Terms 2
1.4 Undefined Financial Accounting Terms 3
1.5 References. 3
1.6 Articles and Sections 3
1.7 Number and Gender 3
ARTICLE II GUARANTY 4
2.1 Guaranty 4
2.2 Absolute, Complete, and Continuing Guaranty 4
2.3 Liability Not Impaired 4
2.4 Primary Liability 5
2.5 Security; Additional Guarantees 5
2.6 Waivers 5
2.7 Pursuit of Remedies 5
2.8 Status of Borrower 5
2.9 Independent Review; Solvency 6
2.10 Enforcement Costs 6
ARTICLE III REPRESENTATIONS AND WARRANTIES 6
3.1 Due Authorization 6
3.2 Corporate Existence 6
3.3 Valid and Binding Obligations 7
ARTICLE IV AFFIRMATIVE COVENANTS 7
4.1 Maintenance and Access to Records 7
4.2 Notices of Certain Events 7
4.3 Additional Information 8
4.4 Maintenance of Corporate Existence and
Good Standing 8
4.5 Compliance with Laws 9
4.6 Payment of Assessments and Charges 9
4.7 Indemnification 9
4.8 Further Assurances 10
ARTICLE V NEGATIVE COVENANTS 10
5.1 Indebtedness 11
5.2 Contingent Obligations 11
5.3 Liens 11
5.4 Sales of Assets 11
5.5 Loans or Advances 12
5.6 Investments 12
5.7 Dividends and Distributions 12
5.8 Capital Expenditures 12
5.9 Issuance of Stock; Changes in Corporate Structure 13
5.10 Transactions with Affiliates 13
5.11 Rental or Lease Agreements 13
5.12 Tangible Net Worth 13
5.13 Current Ratio 13
5.14 Total Debt to Capitalization Ratio 13
5.15 Cash Flow Coverage 13
ARTICLE VI MISCELLANEOUS 14
6.1 Survival of Representations, Warranties, and
Covenants 14
6.2 Notices and Other Communications 14
6.3 Parties in Interest 14
6.4 Rights of Third Parties 15
6.5 No Waiver; Rights Cumulative 15
6.6 Survival Upon Unenforceability 15
6.7 Amendments; Waivers 15
6.8 Review of Guaranty 15
6.9 Payments 15
6.10 GOVERNING LAW 15
6.11 JURISDICTION AND VENUE 16
6.12 WAIVER OF RIGHTS TO JURY TRIAL 16
6.13 ENTIRE AGREEMENT 16
GUARANTY
This GUARANTY (this "Guaranty") dated as of March 31, 1995, is by
HOWELL CORPORATION, a Delaware corporation (the "Guarantor"), in favor of the
Lenders signatory to the Credit Agreement (as such term is defined below) from
time to time (together with their respective successors and assigns, the
"Lenders"), and BANK ONE, TEXAS, NATIONAL ASSOCIATION, a national banking
association ("Bank One"), as Agent for the Lenders pursuant to the Credit
Agreement (in such capacity, together with its successors in such capacity
pursuant to the terms of the Credit Agreement, the "Agent").
W I T N E S S E T H :
WHEREAS, pursuant to the terms and conditions of the Credit Agreement
dated of even date herewith by and among Howell Petroleum Corporation, a
Delaware corporation (the "Borrower"), the Agent, and the Lenders (as such
agreement may be amended, restated, or supplemented from time to time, the
"Credit Agreement"), the Lenders have agreed to extend credit to or for the
benefit of the Borrower;
WHEREAS, the Guarantor has heretofore executed that certain Guaranty
dated December 31, 1992, in favor Bank One (as heretofore amended or
supplemented from time to time, the "Prior Guaranty"), guaranteeing all
Indebtedness of the Borrower to Bank One under the Existing Credit Agreement (as
such term is defined in the Credit Agreement);
WHEREAS, the Guarantor, as the sole shareholder of the Borrower, will
derive substantial direct and indirect benefits from the extension of credit to
the Borrower pursuant to the Credit Agreement;
WHEREAS, pursuant to the Credit Agreement and as an inducement to the
Lenders to extend credit to the Borrower pursuant to the Credit Agreement, the
Guarantor has agreed to execute this Guaranty in favor of the Agent for the
benefit of the Lenders;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree that the Prior Guaranty is
hereby amended and restated in its entirety to read as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
1.1 Terms Defined Above. As used in this Guaranty, each of the terms
"Agent," "Bank One," "Borrower," "Credit Agreement," "Guarantor," "Guaranty,"
"Lenders," and "Prior Guaranty" shall have the meaning assigned to such term
hereinabove.
1.2 Terms Defined in Credit Agreement. Each capitalized term used
but not defined herein shall have the meaning assigned to such term in the
Credit Agreement.
1.3 Additional Defined Terms. As used in this Guaranty, each of the
following terms shall have the meaning assigned thereto in this Section, unless
the context otherwise requires:
"Consolidated Cash Flow" shall mean, for any period, (a) the sum of
Consolidated Net Income for such period, Consolidated Interest Expense for such
period, and consolidated depreciation, amortization, and other non-cash expenses
for the Guarantor and the Subsidiaries for such period deducted in the
determination of Consolidated Net Income for such period, minus (b) cash
dividends paid by the Guarantor and non-cash revenues of the Guarantor and the
Subsidiaries during such period.
"Consolidated Debt Service" shall mean, for any period, an amount
equal to the sum of Consolidated Interest Expense for such period plus
Consolidated Principal Payments for such period.
"Consolidated Interest Expense" shall mean, for any period, the total
interest expense (including, without limitation, interest expense attributable
to capitalized leases) of the Guarantor and the Subsidiaries, on a consolidated
basis, for such period, determined in accordance with GAAP.
"Consolidated Net Income" shall mean, for any period, the net income
(or loss) of the Guarantor and the Subsidiaries, on a consolidated basis, for
such period, determined in accordance with GAAP.
"Consolidated Principal Payments" shall mean, for any period, the
total amount of all mandatory payments of principal with respect to Indebtedness
of the Guarantor and the Subsidiaries, on a consolidated basis, for such period,
but excluding any principal payments by the Borrower with respect to the
Obligations prior to the Commitment Termination Date.
"Current Assets" shall mean the sum of all assets which would, in
accordance with GAAP, be included as current assets on a consolidated balance
sheet of the Guarantor and the Subsidiaries as of the date of calculation plus
an amount equal to the Available Commitment as of such date.
"Current Liabilities" shall mean all liabilities which would, in
accordance with GAAP, be included as current liabilities on a consolidated
balance sheet of the Guarantor and the Subsidiaries as of the date of
calculation other than current liabilities with respect to the Obligations and
the Obligations (as defined in the Howell Crude Oil Credit Agreement).
"Guaranteed Indebtedness" shall mean the Indebtedness and other
obligations as to which payment is guaranteed by the Guarantor hereunder
pursuant to Section 2.1.
"Howell Crude Oil Credit Agreement" shall mean the Credit Agreement
dated as of March 31, 1995, by and among Howell Crude Oil Company, Bank One, as
Agent, and the lenders signatory thereto, as amended, restated, or supplemented
from time to time.
"Howell Crude Oil Related Parties" shall mean Howell Crude Oil
Company, Howell Pipeline Texas, Inc., and Howell Pipeline USA, Inc.
"Subsidiaries" shall mean all Subsidiaries (as defined in the Credit
Agreement) of the Guarantor.
"Tangible Net Worth" shall mean (a) total assets, as would, in
accordance with GAAP, be reflected on a consolidated balance sheet of the
Guarantor and the Subsidiaries, exclusive of Intellectual Property, experimental
or organization expenses, franchises, licenses, permits, and other intangible
assets, treasury stock, unamortized underwriters' debt discount and expenses,
and goodwill minus (b) total liabilities, as would, in accordance with GAAP, be
reflected on a consolidated balance sheet of the Guarantor and the Subsidiaries.
1.4 Undefined Financial Accounting Terms. Undefined financial
accounting terms used in this Guaranty shall have the meanings assigned to such
terms according to GAAP.
1.5 References. The words "hereby," "herein," "hereinabove,"
"hereinafter," "hereinbelow," "hereof," "hereunder," and words of similar import
when used in this Guaranty shall refer to this Guaranty as a whole and not to
any particular Article, Section, or provision of this Guaranty. References in
this Guaranty to Article or Section numbers are to such Articles or Sections of
this Guaranty unless otherwise specified.
1.6 Articles and Sections. This Guaranty, for convenience only, has
been divided into Articles and Sections; and it is understood that the rights
and other legal relations of the parties hereto shall be determined from this
instrument as an entirety and without regard to the aforesaid division into
Articles and Sections and without regard to headings prefixed to such Articles
or Sections.
1.7 Number and Gender. Whenever the context requires, reference
herein made to the single number shall be understood to include the plural; and
likewise, the plural shall be understood to include the singular. Words
denoting sex shall be construed to include the masculine, feminine and neuter,
when such construction is appropriate; and specific enumeration shall not
exclude the general but shall be construed as cumulative. Definitions of terms
defined in the singular or plural shall be equally applicable to the plural or
singular, as the case may be, unless otherwise indicated.
ARTICLE II
GUARANTY
2.1 Guaranty. The Guarantor unconditionally guarantees to the Agent
and the Lenders the prompt payment and performance when due (whether at stated
maturity, by acceleration, or otherwise) of the Obligations.
2.2 Absolute, Complete, and Continuing Guaranty. This is an
absolute, complete, and continuing Guaranty; and no notice of the Obligations,
the making of any Loans, the issuance of any Letter of Credit, the making of any
Letter of Credit Payment, or any extension of credit now or hereafter contracted
by or extended to the Borrower need be given to the Guarantor. The grant of any
Liens by the Guarantor shall not in anyway limit or be construed as limiting the
Agent to collect payment of any liability of the Guarantor incurred hereby from
the Collateral, but it is expressly understood and provided that the liability
of the Guarantor hereunder shall constitute the absolute and unconditional
obligation of the Guarantor. The Borrower and the Lenders may, in accordance
with the terms of the Credit Agreement, rearrange, extend, and/or renew all or
any portion of the Obligations without notice to the Guarantor; and in such
event, the Guarantor shall remain fully bound hereunder for payment of the
Guaranteed Indebtedness. The obligations of the Guarantor hereunder shall not
be released, impaired, or diminished by any amendment, modification, or
alteration of any Loan Document, except as may be expressly provided in any such
amendment, modification, or alteration. The Guarantor shall remain liable under
this Guaranty regardless of whether the Borrower or any other guarantor be found
not liable on all or any part of the Obligations for any reason, including,
without limitation, insanity, minority, disability, bankruptcy, insolvency,
death, liquidation, or dissolution, even though rendering all or any part of the
Obligations void, unenforceable, or uncollectible as against the Borrower or any
other guarantor. This Guaranty shall continue to be effective or shall be
reinstated, as the case may be, if at any time any payment of any of the
Guaranteed Indebtedness is rescinded or must otherwise be returned by the Agent
or any Lender upon the insolvency, bankruptcy, or reorganization of the Borrower
or otherwise, all as though such payment had not been made and will, thereupon,
guarantee payment of such amount as to which refund or restitution has been
made, together with interest accruing thereon subsequent to the date of refund
or restitution at the applicable rate under the Credit Agreement and collection
costs and fees (including, without limitation, attorneys' fees) applicable
thereto.
2.3 Liability Not Impaired. The liabilities and obligations of the
Guarantor hereunder shall not be affected or impaired by (a) the failure of the
Agent or any other Person to exercise diligence or reasonable care in the
preservation, protection, or other handling or treatment of all or any part of
the Collateral, (b) the failure of any Lien intended to be granted or created to
secure all or any part of the Obligations to be properly perfected or created or
the unenforceability of any Lien for any other reason, or (c) the subordination
of any such Lien to any other Lien.
2.4 Primary Liability. The liability of the Guarantor for the
payment of the Guaranteed Indebtedness shall be primary and not secondary.
2.5 Security; Additional Guarantees. The Guarantor authorizes the
Agent and the Lenders, without notice to or demand upon the Guarantor and
without affecting the liability of the Guarantor hereunder, (a) to take and hold
security voluntarily provided by any Person as security for the payment of all
or any portion of the Guaranteed Indebtedness and the other Obligations, and to
exchange, enforce, waive, and/or release any such security; (b) to apply such
security and direct the order or manner of sale thereof as the Agent or the
Lenders in their discretion may determine; and (c) to obtain a guaranty of all
or any portion of the Guaranteed Indebtedness and the other Obligations from any
one or more other Persons and to enforce, waive, rearrange, modify, limit, or
release at any time or times such other Persons from their obligations under
such guaranties, whether with or without consideration.
2.6 Waivers. The Guarantor waives any right to require the Agent or
any Lender to (a) proceed against the Borrower or make any effort at the
collection of the Guaranteed Indebtedness from the Borrower or any other
guarantor or Person liable for all or any part of the Guaranteed Indebtedness,
(b) proceed against or exhaust any collateral securing the Guaranteed
Indebtedness, or (c) pursue any other remedy in the power of the Agent or any
Lender. The Guarantor further waives any and all rights and remedies of
suretyship, including, without limitation, those it may have or be able to
assert by reason of the provisions of Chapter 34 of the Texas Business and
Commerce Code. The Guarantor waives any defense arising by reason of any
disability, lack of corporate authority or power, or other defense of the
Borrower or any other guarantor of all or any part of the Obligations. The
Guarantor expressly waives all notices of any kind, presentment for payment,
demand for payment, protest, notice of protest, notice of intent to accelerate
maturity, notice of acceleration of maturity, dishonor, diligence, notice of any
amendment of any Loan Document, notice of any adverse change in the financial
condition of the Borrower, notice of any adjustment, indulgence, forbearance, or
compromise that might be granted or given by the Agent or any Lender to the
Borrower, and notice of acceptance of this Guaranty, acceptance on the part of
the Agent being conclusively presumed by its request for this Guaranty and the
delivery of this Guaranty to the Agent. The liability and obligations of the
Guarantor hereunder shall not be affected or impaired by any action or inaction
by the Agent or any Lender in regard to any matter waived or notice of which is
waived by the Guarantor in this Guaranty.
2.7 Pursuit of Remedies. The Agent and the Lenders may pursue any
remedy without altering the obligations of the Guarantor hereunder and without
liability to the Guarantor, even though the pursuit of such remedy may result in
the loss by the Guarantor of rights of subrogation or to proceed against others
for reimbursement or contribution or any other right.
2.8 Status of Borrower. Should the status of the Borrower change in
any way, as a result of reorganization or dissolution, any sale, lease, or
transfer of any or all of the assets of the Borrower, any change in the
shareholders, partners, or members of the Borrower or otherwise, this Guaranty
shall continue and shall cover the Guaranteed Indebtedness under the new status.
This Section shall not, however, be construed to authorize any action by the
Borrower otherwise prohibited under the Credit Agreement or any other Loan
Document.
2.9 Independent Review; Solvency. The Guarantor is familiar with and
has independently reviewed the books and records regarding the financial
condition of the Borrower and is familiar with the value of any and all property
intended as Collateral; however, the Guarantor is not relying on such financial
condition or such Collateral as an inducement to enter into this Guaranty. The
Guarantor acknowledges that it is not relying on any representations (oral or
otherwise) of the Agent, any Lender or any other Person except as may be
expressly described in this Guaranty. As of the date hereof, and after giving
effect to this Guaranty and the contingent obligations evidenced hereby, the
Guarantor is and will be solvent, and has and will have Property which, valued
fairly, exceed the obligations, debts, and liabilities of the Guarantor, and has
and will have Property in the State of Texas sufficient to satisfy, repay, and
discharge the same. In the event of the insolvency of the Guarantor, the Agent
shall have the option to declare the Guaranteed Indebtedness immediately due and
payable from the Guarantor.
2.10 Enforcement Costs. If the Guaranteed Indebtedness is not paid by
the Guarantor when due, as required herein, and this Guaranty is placed in the
hands of an attorney for collection or is enforced by suit or through probate or
bankruptcy court or through any other judicial proceedings, the Guarantor shall
pay to the Agent an amount equal to the reasonable attorneys' fees and
collection costs incurred by the Agent or any Lender in the collection of the
Guaranteed Indebtedness.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
To induce the Agent and the Lenders to enter into the Credit Agreement
and to make Loans to or for the benefit of and to issue Letters of Credit for
the account of the Borrower, the Guarantor represents and warrants to the Agent
(which representations and warranties shall survive the delivery of this
Guaranty and the other Loan Documents) that:
3.1 Due Authorization. The execution and delivery by the Guarantor
of this Guaranty and each other Loan Document to which the Guarantor is a party
and the performance of all obligations of the Guarantor hereunder are within the
power of the Guarantor, have been duly authorized by all necessary corporate
action, and do not and will not (a) require the consent of any Governmental
Authority, (b) contravene or conflict with any Requirement of Law, (c)
contravene or conflict with any indenture, instrument, or other agreement to
which the Guarantor is a party or by which any Property of the Guarantor may be
presently bound or encumbered, or (d) result in or require the creation or
imposition of any Lien upon any Property of the Guarantor other than as
contemplated by the Loan Documents.
3.2 Corporate Existence. The Guarantor is a corporation duly
organized, legally existing, and in good standing under the laws of the State of
Delaware and is duly qualified as a foreign corporation and is in good standing
in all jurisdictions wherein the ownership of Property or the operation of its
business necessitates same, other than those jurisdictions wherein the failure
to so qualify will not have a Material Adverse Effect.
3.3 Valid and Binding Obligations. This Guaranty and each other Loan
Document to which the Guarantor is a party, when duly executed and delivered by
the Guarantor, will be the legal, valid, and binding obligation of the
Guarantor, enforceable against the Guarantor in accordance with its terms.
ARTICLE IV
AFFIRMATIVE COVENANTS
Unless agreed in writing by the Agent to the contrary, the Guarantor
covenants, so long as any Obligation remains outstanding or unpaid or any
Commitment exists, to:
4.1 Maintenance and Access to Records. Keep adequate records, in
accordance with GAAP, of all its transactions so that at any time, and from time
to time, its true and complete financial condition may be readily determined,
and promptly following the reasonable request of the Agent or any Lender, make
such records available for inspection by the Agent or any Lender and, at the
expense of the Guarantor, allow the Agent or any Lender to make and take away
copies thereof.
4.2 Notices of Certain Events. Deliver to the Agent and each Lender,
promptly upon having knowledge thereof, a written statement with respect to the
occurrence of any of the following events or circumstances, signed by a
Responsible Officer of the Guarantor and setting forth the relevant event or
circumstance and the steps being taken by the Guarantor or any Subsidiary with
respect to such event or circumstance:
(a) any Default or Event of Default;
(b) any default or event of default under any contractual obligation
of the Guarantor or any Subsidiary, or any litigation, investigation, or
proceeding between the Guarantor or any Subsidiary and any Governmental
Authority which, in either case, if not cured or if adversely determined, as the
case may be, could reasonably be expected to have a Material Adverse Effect;
(c) any litigation or proceeding involving the Guarantor or any
Subsidiary as a defendant or in which any Property of the Guarantor or any
Subsidiary is subject to a claim and in which the amount involved is $1,000,000
or more and which is not covered by insurance or in which injunctive or similar
relief is sought;
(d) the receipt by the Guarantor or any Subsidiary of any
Environmental Complaint or any formal request from any Governmental Authority
for information (other than requirements for compliance reports) regarding any
Release of Hazardous Substances by the Guarantor or any Subsidiary or from,
affecting, or related to any Property of the Guarantor or any Subsidiary, the
effect of which could reasonably be expected to have a Material Adverse Effect;
(e) any actual, proposed, or threatened testing or other
investigation by any Governmental Authority or other Person concerning the
environmental condition of, or relating to, any Property of the Guarantor or any
Subsidiary following any allegation of a violation of any Requirement of Law,
the effect of which could reasonably be expected to have a Material Adverse
Effect;
(f) any Release of Hazardous Substances by the Guarantor or any
Subsidiary or from, affecting, or related to any Property of the Guarantor or
any Subsidiary or the violation of any Environmental Law, or the revocation,
suspension, or forfeiture of or failure to renew, any permit, license,
registration, approval, or authorization which could reasonably be expected to
have a Material Adverse Effect;
(g) any Reportable Event or imminently expected Reportable Event with
respect to any Plan or any withdrawal from, or the termination, Reorganization,
or Insolvency of, any Multiemployer Plan, or the institution of proceedings or
the taking of any other action by PBGC, the Guarantor, or any Commonly
Controlled Entity or Multiemployer Plan with respect to the withdrawal from or
the termination, Reorganization, or Insolvency of, any Single Employer Plan or
Multiemployer Plan; or any Prohibited Transaction in connection with any Plan or
any trust created thereunder, the effect of which could reasonably be expected
to have a Material Adverse Effect, and the action being taken by the Internal
Revenue Service with respect thereto; and
(h) any other event or condition which could reasonably be expected
to cause a Material Adverse Effect.
4.3 Additional Information. Furnish to the Agent and each Lender,
within five days after any material report (other than financial statements) or
other material communication is sent by the Guarantor or any Subsidiary to its
stockholders (in their capacity as stockholders) or filed by the Guarantor or
any Subsidiary with the Securities and Exchange Commission or any successor or
analogous Governmental Authority or with the Federal Energy Regulatory
Commission or the Texas Railroad Commission, copies of such report or
communication promptly upon the request of the Agent or any Lender, such
additional financial or other information concerning the assets, liabilities,
operations, and transactions of the Guarantor and the Subsidiaries as the Agent
or any Lender may from time to time request.
4.4 Maintenance of Corporate Existence and Good Standing. Maintain
its corporate existence or qualification and good standing in its jurisdiction
of incorporation and in all jurisdictions wherein the Property now owned or
hereafter acquired or business now or hereafter conducted necessitates same
except to the extent failure to do so would not have a Material Adverse Effect.
4.5 Compliance with Laws. Except to the extent the failure to comply
or cause compliance would not have a Material Adverse Effect, (a) comply with
all applicable Requirements of Law, including, without limitation, (i) the
Natural Gas Policy Act of 1978, as amended, (ii) ERISA, (iii) Environmental
Laws, and (iv) all permits, licenses, registrations, approvals, and
authorizations (A) related to any natural or environmental resource or media
located on, above, within, in the vicinity of, related to or affected by any
Property of the Guarantor, (B) required for the performance of the operations of
the Guarantor, or (C) applicable to the use, generation, handling, storage,
treatment, transport, or disposal of any Hazardous Substances; and (b) cause all
employees, crew members, agents, contractors, subcontractors, and future lessees
(pursuant to appropriate lease provisions) of the Guarantor, while such Persons
are acting within the scope of their relationship with the Guarantor, to comply
with all such Requirements of Law as may be necessary or appropriate to enable
the Guarantor to so comply.
4.6 Payment of Assessments and Charges. Pay all taxes, assessments,
governmental charges, rent, and other Indebtedness which, if unpaid, might
become a Lien against the Property of the Guarantor, except any of the foregoing
being contested in good faith and as to which adequate reserve in accordance
with GAAP has been established or unless failure to pay would not have a
Material Adverse Effect; and provide evidence satisfactory to the Agent of the
payment by the Guarantor of its obligations to the Department of Energy promptly
after the making of each such payment by the Guarantor.
4.7 Indemnification. INDEMNIFY AND HOLD THE AGENT AND EACH LENDER
AND THEIR RESPECTIVE SHAREHOLDERS, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS,
ATTORNEY-IN-FACT, AND AFFILIATES AND EACH TRUSTEE FOR THE BENEFIT OF THE AGENT
OR THE LENDERS UNDER ANY SECURITY INSTRUMENT HARMLESS FROM AND AGAINST ANY AND
ALL CLAIMS, LOSSES, DAMAGES, LIABILITIES, FINES, PENALTIES, CHARGES,
ADMINISTRATIVE AND JUDICIAL PROCEEDINGS AND ORDERS, JUDGMENTS, REMEDIAL ACTIONS,
REQUIREMENTS AND ENFORCEMENT ACTIONS OF ANY KIND, AND ALL COSTS AND EXPENSES
INCURRED IN CONNECTION THEREWITH (INCLUDING, WITHOUT LIMITATION, ATTORNEYS' FEES
AND EXPENSES), ARISING DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, FROM (A) THE
PRESENCE OF ANY HAZARDOUS SUBSTANCES ON, UNDER, OR FROM THE PROPERTY OF THE
GUARANTOR OR ANY SUBSIDIARY, WHETHER PRIOR TO OR DURING THE TERM HEREOF, (B) ANY
ACTIVITY CARRIED ON OR UNDERTAKEN ON OR OFF THE PROPERTY OF THE GUARANTOR OR ANY
SUBSIDIARY, WHETHER PRIOR TO OR DURING THE TERM HEREOF, AND WHETHER BY THE
GUARANTOR OR ANY SUBSIDIARY OR ANY PREDECESSOR IN TITLE, EMPLOYEE, AGENT,
CONTRACTOR, OR SUBCONTRACTOR OF THE GUARANTOR OR ANY SUBSIDIARY OR ANY
PREDECESSOR IN TITLE, OR ANY OTHER PERSON AT ANY TIME OCCUPYING OR PRESENT ON
SUCH PROPERTY, IN CONNECTION WITH THE HANDLING, TREATMENT, REMOVAL, STORAGE,
DECONTAMINATION, CLEANUP, TRANSPORTATION, OR DISPOSAL OF ANY HAZARDOUS
SUBSTANCES AT ANY TIME LOCATED OR PRESENT ON OR UNDER SUCH PROPERTY, (C) ANY
RESIDUAL CONTAMINATION ON OR UNDER THE PROPERTY OF THE GUARANTOR OR ANY
SUBSIDIARY, (D) ANY CONTAMINATION OF ANY PROPERTY OR NATURAL RESOURCES ARISING
IN CONNECTION WITH THE GENERATION, USE, HANDLING, STORAGE, TRANSPORTATION, OR
DISPOSAL OF ANY HAZARDOUS SUBSTANCES BY THE GUARANTOR OR ANY SUBSIDIARY OR ANY
EMPLOYEE, AGENT, CONTRACTOR, OR SUBCONTRACTOR OF THE GUARANTOR OR ANY SUBSIDIARY
WHILE SUCH PERSONS ARE ACTING WITHIN THE SCOPE OF THEIR RELATIONSHIP WITH THE
GUARANTOR OR ANY SUBSIDIARY, IRRESPECTIVE OF WHETHER ANY OF SUCH ACTIVITIES WERE
OR WILL BE UNDERTAKEN IN ACCORDANCE WITH APPLICABLE REQUIREMENTS OF LAW, OR (E)
THE PERFORMANCE AND ENFORCEMENT OF ANY LOAN DOCUMENT, ANY ALLEGATION BY ANY
BENEFICIARY OF A LETTER OF CREDIT OF A WRONGFUL DISHONOR BY THE AGENT OF A CLAIM
OR DRAFT PRESENTED THEREUNDER, OR ANY OTHER ACT OR OMISSION IN CONNECTION WITH
OR RELATED TO ANY LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY,
INCLUDING, WITHOUT LIMITATION, ANY OF THE FOREGOING ARISING FROM NEGLIGENCE,
WHETHER SOLE OR CONCURRENT, ON THE PART OF THE AGENT OR ANY LENDER OR ANY OF
THEIR RESPECTIVE SHAREHOLDERS, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS,
ATTORNEYS-IN-FACT, OR AFFILIATES OR ANY TRUSTEE FOR THE BENEFIT OF THE AGENT OR
THE LENDERS UNDER ANY SECURITY INSTRUMENT, BUT EXCLUDING ANY OF THE FOREGOING IN
THIS SECTION ARISING FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE
AGENT OR ANY LENDER; WITH THE FOREGOING INDEMNITY SURVIVING SATISFACTION OF ALL
OBLIGATIONS OF THE GUARANTOR HEREUNDER AND ALL OTHER OBLIGATIONS AND THE
TERMINATION OF THIS AGREEMENT AND THE CREDIT AGREEMENT.
4.8 Further Assurances. Promptly cure any defects in the execution
and delivery of any of the Loan Documents executed by the Guarantor and execute,
acknowledge, and deliver such other assurances and instruments as shall, in the
opinion of the Agent, be necessary to fulfill the terms of the Loan Documents
executed by the Guarantor.
ARTICLE V
NEGATIVE COVENANTS
Unless agreed in writing by the Agent to the contrary, so long as any
Obligation remains outstanding or unpaid or any Commitment exists, the Guarantor
will not:
5.1 Indebtedness. Create, incur, assume, or suffer to exist any
Indebtedness, whether by way of loan or otherwise; provided, however, the
foregoing restriction shall not apply to (a) the Obligations, (b) accounts
payable incurred in the ordinary course of business, which are not unpaid in
excess of 120 days beyond invoice date or are being contested in good faith and
as to which such reserve as is required by GAAP has been made, (c) Subordinated
Debt, (d) crude oil, natural gas, or other hydrocarbon swap agreements, in form
and substance and with a Person acceptable to the Required Lenders, provided
that each commitment issued under any approved crude oil, natural gas, or other
hydrocarbons swap agreement must also be approved by the Required Lenders, (e)
interest rate swap or other financial hedging agreements, in form and substance
and with a Person acceptable to the Required Lenders, (f) obligations (other
than Indebtedness for borrowed money or capitalized leases and obligations to
the Department of Energy) secured by Permitted Liens, (g) currently existing
Indebtedness of the Guarantor to the Department of Energy not exceeding the
principal amount of $9,387,000, or (h) Indebtedness of the Guarantor to Paul N.
Howell not exceeding $2,250,000.
5.2 Contingent Obligations. Create, incur, assume, or suffer to
exist any Contingent Obligation; provided, however, the foregoing restriction
shall not apply to (a) performance guarantees, performance surety or other bonds
provided in the ordinary course of business, (b) Contingent Obligations with
respect to indemnity obligations of the Howell Crude Oil Related Parties under
or pursuant to the Purchase and Sale Agreement (as defined in the Howell Crude
Oil Credit Agreement), (c) trade credit incurred or operating leases entered
into in the ordinary course of business, if permitted pursuant to the other
terms of this Guaranty, (d) the Obligations (as defined in the Howell Crude Oil
Credit Agreement), (e) the Guaranteed Indebtedness, (f) Contingent Obligations
(other than with respect to Indebtedness for borrowed money or capitalized
leases and obligations to the Department of Energy) secured by Permitted Liens,
or (g) the guaranty of the obligations of Howell Transportation Services, Inc.
owing to Associates Leasing, Inc. in an amount not exceeding $170,000.
5.3 Liens. Create, incur, assume, or suffer to exist any Lien on any
of its Properties, whether now owned or hereafter acquired, or its capital
stock, or permit any Subsidiary to do so; provided, however, the foregoing
restrictions shall not apply to (a) Permitted Liens, (b) Permitted Liens as such
term is defined in the Howell Crude Oil Credit Agreement, (c) Liens on Property
acquired by the Guarantor or any Subsidiary after the Closing Date and in effect
at the time of such acquisition, or (d) Liens securing the purchase price of
Property acquired by the Guarantor or any Subsidiary in the ordinary course of
business provided that such Liens cover only the acquired Property.
5.4 Sales of Assets. Without the prior written consent of the
Required Lenders, sell, transfer, or otherwise dispose of, in one or any series
of transactions in any 12-month period, assets, whether now owned or hereafter
acquired, or enter into any agreement to do so, or permit any Subsidiary to do
any of the foregoing in this Section; provided, however, the foregoing
restrictions shall not apply to (a) the sale of assets the aggregate book value
of which for the Guarantor and the Subsidiaries does not exceed in the aggregate
five percent (5%) of the net worth of the Guarantor, (b) the sale of
hydrocarbons or inventory in the ordinary course of business provided that no
contract for the sale of hydrocarbons shall obligate the Guarantor or any
Subsidiary to deliver hydrocarbons at some future date without receiving full
payment therefor within 90 days of delivery, (c) the sale by the Howell Crude
Oil Related Parties of crude oil pursuant to forward sales agreements, or (d)
the sale or other disposition of Property destroyed, lost, worn out, damaged, or
having only salvage value or no longer used or useful in the business of the
Guarantor or any Subsidiary.
5.5 Loans or Advances. Make or agree to make loans or advances to
any Person; provided, however, the foregoing restrictions shall not apply to
(a) advances or extensions of credit in the form of accounts receivable incurred
in the ordinary course of business and upon terms common in the industry for
such accounts receivable, (b) advances to employees for the payment of expenses
in the ordinary course of business, or (c) so long as no Default or Event of
Default exists, loans or advances to any Subsidiary.
5.6 Investments. Acquire Investments in, or purchase or otherwise
acquire all or substantially all of the assets of, any Person, or permit any
Subsidiary to do so; provided, however, the foregoing restriction shall not
apply to the purchase or acquisition of (a) Oil and Gas Properties, (b) the
Pipeline Properties (as defined in the Howell Crude Oil Credit Agreement), (c)
Investments in the form of (i) debt securities issued or directly and fully
guaranteed or insured by the United States Government or any agency or
instrumentality thereof, with maturities of no more than one year, (ii)
commercial paper of a domestic issuer rated at the date of acquisition at least
P-2 by Moody's Investor Service, Inc. or A-2 by Standard & Poor's Corporation
and with maturities of no more than one year from the date of acquisition, or
(iii) repurchase agreements covering debt securities or commercial paper of the
type permitted in this Section, certificates of deposit, demand deposits,
eurodollar time deposits, overnight bank deposits, and bankers' acceptances,
with maturities of no more than one year from the date of acquisition, issued by
or acquired from or through the Agent, any Lender, or any bank or trust company
organized under the laws of the United States or any state thereof and having
capital surplus and undivided profits aggregating at least $100,000,000, (d)
other short-term Investments similar in nature and degree of risk to those
described in clause (c) of this Section, (e) money-market funds, or (f) capital
expenditures for Howell Hydrocarbons & Chemicals, Inc. permitted by Section 5.8.
5.7 Dividends and Distributions. Declare, pay, or make, whether in
cash or other Property, any dividend or distribution on, or purchase, redeem, or
otherwise acquire for value, any share of any class of its capital stock at any
time that a Default or Event of Default exists or will occur as the result of
the payment of such dividend or distribution.
5.8 Capital Expenditures. Make expenditures in any fiscal year on
behalf of Howell Hydrocarbons & Chemicals, Inc. ("Howell Hydrocarbons"), or
permit Howell Hydrocarbons to do so, in excess of (a) the net income (exclusive
of any non-cash income) of Howell Hydrocarbons for such fiscal year as
determined in accordance with GAAP plus (b) depreciation, amortization, and
other non-cash expenses for such period deducted in the determination of net
income for such period.
5.9 Issuance of Stock; Changes in Corporate Structure. Issue or
agree to issue additional shares of capital stock, in one or any series of
transactions for any consideration other than cash; enter into any transaction
of consolidation, merger, or amalgamation; or liquidate, wind up, or dissolve
(or suffer any liquidation or dissolution); or permit any Subsidiary to do any
of the foregoing in this Section.
5.10 Transactions with Affiliates. Directly or indirectly, enter into
any material transaction (including the sale, lease, or exchange of Property or
the rendering of service) with any of its Affiliates, other than upon fair and
reasonable terms no less favorable than could be obtained in an arm's length
transaction with a Person which was not an Affiliate, or permit any Subsidiary
to do so.
5.11 Rental or Lease Agreements. Enter into any contract to rent or
lease as lessee any Properties, real or personal, or permit any Subsidiary to do
so; provided, however, the foregoing restrictions shall not apply to (a) leases
in effect as of the Closing Date and renewals and extensions thereof under terms
and conditions not materially different from those in effect as of the Closing
Date, (b) oil, gas, and mineral leases, (c) leases by the Howell Crude Oil
Related Parties of operating tankage at Webster, Texas, from Exxon Pipeline
Company (or its affiliate), the rental or lease payments for which in any
calendar or fiscal year do not exceed $237,600, or (d) other operating leases
the rental and lease payments under which in any calendar or fiscal year do not
exceed $500,000 in the aggregate for all such leases of the Guarantor and the
Subsidiaries.
5.12 Tangible Net Worth. Permit Tangible Net Worth to be less than
$65,250,000 plus (a) 50% of positive Consolidated Net Income for all fiscal
quarters ending subsequent to December 31, 1994, and (b) 70% of any increase in
net worth of the Guarantor resulting from the sale or issuance of capital stock
after December 31, 1994; provided, however, in the event the Borrower is
required by GAAP to write down the carrying value of its Oil and Gas Properties
as a result of lower prices for hydrocarbons, the required level of Tangible Net
Worth shall be reduced by the amount of such write down but not more than
$5,000,000 in the aggregate for all such write downs.
5.13 Current Ratio. Permit the ratio of Current Assets to Current
Liabilities to be less than 1.0 to 1.0 at any time.
5.14 Total Debt to Capitalization Ratio. Permit the ratio of Total
Debt to Capitalization to be greater than .65 to 1.0 at any time prior to
December 31, 1995, or greater than .6 to 1.0 on or subsequent to December 31,
1995.
5.15 Cash Flow Coverage. Permit, as of the close of any fiscal
quarter, the ratio of (a) Consolidated Cash Flow for the preceding four fiscal
quarters to (b) Consolidated Debt Service for such quarters to be less than 1.75
to 1.0.
ARTICLE VI
MISCELLANEOUS
6.1 Survival of Representations, Warranties, and Covenants. All
representations and warranties of the Guarantor and all covenants and agreements
herein made shall survive the making of the Loans and the issuance of the
Letters of Credit and shall remain in force and effect so long as any Obligation
is outstanding or any Commitment exists.
6.2 Notices and Other Communications. Except as to verbal notices
expressly authorized herein, which verbal notices shall be confirmed in writing,
all notices, requests, and communications hereunder shall be in writing
(including by telecopy). Unless otherwise expressly provided herein, any such
notice, request, demand, or other communication shall be deemed to have been
duly given or made when delivered by hand, or, in the case of delivery by mail,
two Business Days after deposited in the mail, certified mail, return receipt
requested, postage prepaid, or, in the case of telecopy notice, when receipt
thereof is acknowledged orally or by written confirmation report, addressed as
follows:
(a) if to the Agent or any Lender, to:
Bank One, Texas, National Association
910 Travis
Houston, Texas 77002
Attention: Energy Group
(or for notice by mail, to:
P. O. Box 2629
Houston, Texas 77252-2629
Attention: Energy Group)
Telecopy: (713) 751-3544
(b) if to the Guarantor, to:
Howell Corporation
1111 Fannin, Suite 1500
Houston, Texas 77002
Attention: Allyn Skelton
Telecopy: (713) 658-4007
Any party may, by proper written notice hereunder to the others,
change the individuals or addresses to which such notices to it shall thereafter
be sent.
6.3 Parties in Interest. Subject to any applicable restrictions
contained herein, all covenants and agreements herein contained by or on behalf
of the Guarantor or the Agent shall be binding upon and inure to the benefit of
the Guarantor, the Agent, or the Lenders, as the case may be, and their
respective legal representatives, successors, and assigns.
6.4 Rights of Third Parties. All provisions herein are imposed
solely and exclusively for the benefit of the Guarantor, the Agent, and the
Lenders and their successors and assigns. No other Person shall have any right,
benefit, priority, or interest hereunder or as a result hereof or have standing
to require satisfaction of provisions hereof in accordance with their terms.
6.5 No Waiver; Rights Cumulative. No course of dealing on the part
of the Agent or any Lender, their officers or employees, nor any failure or
delay by the Agent or any Lender with respect to exercising any of its rights
under any Loan Document shall operate as a waiver thereof. The rights of the
Agent and the Lenders under the Loan Documents shall be cumulative and the
exercise or partial exercise of any such right shall not preclude the exercise
of any other right.
6.6 Survival Upon Unenforceability. In the event any one or more of
the provisions contained in any of the Loan Documents or in any other instrument
referred to herein or executed in connection with the Guaranteed Indebtedness or
the Obligations shall, for any reason, be held to be invalid, illegal, or
unenforceable in any respect, such invalidity, illegality, or unenforceability
shall not affect any other provision of any Loan Document or of any other
instrument referred to herein or executed in connection with such Guaranteed
Indebtedness or the Obligations.
6.7 Amendments; Waivers. Neither this Guaranty nor any provision
hereof may be amended, waived, discharged, or terminated orally, but only by an
instrument in writing signed by the party against whom enforcement of the
amendment, waiver, discharge, or termination is sought.
6.8 Review of Guaranty. This Guaranty was reviewed by the Guarantor,
and the Guarantor acknowledges and agrees that it understands fully all of the
terms of this Guaranty and the consequences and implications of its execution of
this Guaranty and has been afforded an opportunity to have this Guaranty
reviewed by an attorney and such other Persons as desired and to discuss the
terms, consequences, and implications of this Guaranty with such attorney and
other Persons.
6.9 Payments. All amounts becoming payable by the Guarantor under
this Guaranty shall be payable to the Agent at the address of the Agent set
forth hereinabove.
6.10 GOVERNING LAW. THIS GUARANTY SHALL BE DEEMED TO BE A CONTRACT
MADE UNDER AND SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF
THE STATE OF TEXAS WITHOUT GIVING EFFECT TO PRINCIPLES THEREOF RELATING TO
CONFLICTS OF LAW, PROVIDED, HOWEVER, THAT VERNON'S TEXAS CIVIL STATUTES,
ARTICLE 5069, CHAPTER 15 (WHICH REGULATES CERTAIN REVOLVING CREDIT LOAN ACCOUNTS
AND REVOLVING TRI-PARTY ACCOUNTS) SHALL NOT APPLY.
6.11 JURISDICTION AND VENUE. ALL ACTIONS OR PROCEEDINGS WITH RESPECT
TO, ARISING DIRECTLY OR INDIRECTLY IN CONNECTION WITH, OUT OF, RELATED TO, OR
FROM THIS GUARANTY OR ANY OTHER LOAN DOCUMENT TO WHICH THE GUARANTOR IS A PARTY
MAY BE LITIGATED, AT THE SOLE DISCRETION AND ELECTION OF THE AGENT, IN COURTS
HAVING SITUS IN HOUSTON, HARRIS COUNTY, TEXAS. THE GUARANTOR HEREBY SUBMITS TO
THE JURISDICTION OF ANY LOCAL, STATE, OR FEDERAL COURT LOCATED IN HOUSTON,
HARRIS COUNTY, TEXAS, AND HEREBY WAIVES ANY RIGHTS IT MAY HAVE TO TRANSFER OR
CHANGE THE JURISDICTION OR VENUE OF ANY LITIGATION BROUGHT AGAINST IT BY THE
AGENT OR ANY LENDER IN ACCORDANCE WITH THIS SECTION.
6.12 WAIVER OF RIGHTS TO JURY TRIAL. THE GUARANTOR AND THE AGENT
HEREBY KNOWINGLY, VOLUNTARILY, INTENTIONALLY, IRREVOCABLY, AND UNCONDITIONALLY
WAIVE ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT, PROCEEDING, COUNTERCLAIM,
OR OTHER LITIGATION THAT RELATES TO OR ARISES OUT OF ANY OF THIS GUARANTY OR ANY
OTHER LOAN DOCUMENT OR THE ACTS OR OMISSIONS OF THE AGENT OR ANY LENDER IN THE
ENFORCEMENT OF ANY OF THE TERMS OR PROVISIONS OF THIS GUARANTY OR ANY OTHER LOAN
DOCUMENT OR OTHERWISE WITH RESPECT THERETO. THE PROVISIONS OF THIS SECTION ARE
A MATERIAL INDUCEMENT FOR THE AGENT AND THE LENDERS ENTERING INTO THE CREDIT
AGREEMENT.
6.13 ENTIRE AGREEMENT. THIS GUARANTY AMENDS, RESTATES AND REPLACES
THE PRIOR GUARANTY AND CONSTITUTES THE ENTIRE AGREEMENT BETWEEN THE PARTIES
HERETO WITH RESPECT TO THE SUBJECT HEREOF AND SHALL SUPERSEDE ANY PRIOR
AGREEMENTS, WHETHER WRITTEN OR ORAL, BETWEEN THE PARTIES HERETO RELATING TO THE
SUBJECT HEREOF, INCLUDING, WITHOUT LIMITATION, THE PRIOR GUARANTY AND THE
CORRESPONDENCE DATED FEBRUARY 9, 1995, FROM BANK ONE TO THE GUARANTOR AND THE
TERM SHEET ENCLOSED THEREWITH. FURTHERMORE, IN THIS REGARD, THIS GUARANTY AND
THE OTHER WRITTEN LOAN DOCUMENTS REPRESENT, COLLECTIVELY, THE FINAL AGREEMENT
AMONG THE PARTIES THERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF SUCH PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS AMONG SUCH PARTIES.
IN WITNESS WHEREOF, this Guaranty is executed as of the date first
above written.
HOWELL CORPORATION
By: /s/ Paul W. Funkhouser
----------------------
Paul W. Funkhouser
President
BANK ONE, TEXAS, NATIONAL
ASSOCIATION, AS AGENT
By: /s/ Stephen M. Smith
--------------------
Stephen M. Smith
Vice President