EXHIBIT 10.5
GUARANTY
BY
HOWELL PIPELINE TEXAS, INC.
IN FAVOR OF
BANK ONE, TEXAS, NATIONAL ASSOCIATION, AS AGENT
Dated as of March 31, 1995
CREDIT FACILITY TO HOWELL CRUDE OIL COMPANY
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS AND INTERPRETATION 1
1.1 Terms Defined Above 1
1.2 Terms Defined in Credit Agreement 1
1.3 Additional Defined Term 1
1.4 Undefined Financial Accounting Terms 2
1.5 References. 2
1.6 Articles and Sections 2
1.7 Number and Gender 2
ARTICLE II GUARANTY 2
2.1 Guaranty 2
2.2 Absolute, Complete, and Continuing Guaranty 2
2.3 Liability Not Impaired 3
2.4 Primary Liability 3
2.5 Security; Additional Guarantees 3
2.6 Waivers 3
2.7 Pursuit of Remedies 4
2.8 Status of Borrower 4
2.9 Independent Review; Solvency 4
2.10 Enforcement Costs 4
ARTICLE III REPRESENTATIONS AND WARRANTIES 5
3.1 Due Authorization 5
3.2 Corporate Existence; Capitalization 5
3.3 Valid and Binding Obligations 5
ARTICLE IV AFFIRMATIVE COVENANTS 5
4.1 Maintenance and Access to Records 5
4.2 Notices of Certain Events 6
4.3 Additional Information 7
4.4 Maintenance of Corporate Existence and Good
Standing 7
4.5 Compliance with Laws 7
4.6 Payment of Assessments and Charges 7
4.7 Indemnification 7
4.8 Operation of Pipeline Properties 9
4.9 Maintenance and Inspection of Properties 9
4.10 Maintenance of Insurance 9
4.11 Further Assurances 9
ARTICLE V NEGATIVE COVENANTS 9
5.1 Indebtedness 9
5.2 Contingent Obligations 10
5.3 Liens 10
5.4 Sales of Assets 10
5.5 Loans or Advances 10
5.6 Investments 10
5.7 Issuance of Stock; Changes in Corporate
Structure 11
5.8 Transactions with Affiliates 11
5.9 Lines of Business 11
5.10 Rental or Lease Agreements 11
5.11 ERISA Compliance 11
5.12 Futures Contracts 12
ARTICLE VI MISCELLANEOUS 12
6.1 Survival of Representations, Warranties, and
Covenants 12
6.2 Notices and Other Communications 12
6.3 Parties in Interest 13
6.4 Rights of Third Parties 13
6.5 No Waiver; Rights Cumulative 13
6.6 Survival Upon Unenforceability 13
6.7 Amendments; Waivers 13
6.8 Review of Guaranty 13
6.9 Payments 13
6.10 GOVERNING LAW 13
6.11 JURISDICTION AND VENUE 14
6.12 WAIVER OF RIGHTS TO JURY TRIAL 14
6.13 ENTIRE AGREEMENT 14
GUARANTY
This GUARANTY dated as of March 31, 1995, is by HOWELL PIPELINE TEXAS,
INC., 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 Crude Oil Company, 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, as a wholly-owned subsidiary of the Borrower,
will derive substantial direct and indirect benefits from the extension of
credit to the Borrower pursuant to the Credit Agreement; and
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 as follows:
ARTICLE 1
DEFINITIONS AND INTERPRETATION
1.1 Terms Defined Above. As used in this Guaranty, each of the terms "Agent,"
"Bank One," "Borrower," "Credit Agreement," "Guarantor," and "Lenders" 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 Term. As used in this Guaranty, the term "Guaranteed
Indebtedness" shall mean the Indebtedness and other obligations as to which
payment is guaranteed by the Guarantor hereunder pursuant to Section 2.1.
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 and thereunder 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; Capitalization. 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 the State of Texas and all other 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. On or before the Closing Date, the Guarantor has received capital
contributions of not less than $4,000,000.
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 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 litigation, investigation, or proceeding between the
Guarantor 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 as a defendant or
in which any Property of the Guarantor 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 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 from, affecting, or related to any Property of
the Guarantor, 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 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 from,
affecting, or related to any Property of the Guarantor 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
communication is sent by the Guarantor to its stockholders (in their capacity as
stockholders) or filed by the Guarantor 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 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.
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
BORROWER OR THE GUARANTOR, WHETHER PRIOR TO OR DURING THE TERM HEREOF, (B) ANY
ACTIVITY CARRIED ON OR UNDERTAKEN ON OR OFF THE PROPERTY OF THE BORROWER OR THE
GUARANTOR, WHETHER PRIOR TO OR DURING THE TERM HEREOF, AND WHETHER BY THE
BORROWER OR THE GUARANTOR, OR ANY PREDECESSOR IN TITLE, EMPLOYEE, AGENT,
CONTRACTOR, OR SUBCONTRACTOR OF THE BORROWER OR THE GUARANTOR, 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 BORROWER OR THE
GUARANTOR, (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 BORROWER OR THE GUARANTOR, OR ANY
EMPLOYEE, AGENT, CONTRACTOR, OR SUBCONTRACTOR OF THE BORROWER OR THE GUARANTOR
WHILE SUCH PERSONS ARE ACTING WITHIN THE SCOPE OF THEIR RELATIONSHIP WITH THE
BORROWER OR THE GUARANTOR, 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 Operation of Pipeline Properties. Maintain and operate its Pipeline
Properties in a prudent and workmanlike manner in accordance with industry
standards.
4.9 Maintenance and Inspection of Properties. Maintain all of its tangible
Properties in good repair and condition, ordinary wear and tear excepted; make
all necessary replacements thereof and operate such Properties in a good and
workmanlike manner unless the failure to do so would not have a Material Adverse
Effect; and permit any authorized representative of the Agent or any Lender to
visit and inspect, at the expense of the Borrower, any tangible Property of the
Guarantor.
4.10 Maintenance of Insurance. Maintain insurance with respect to its
Properties and businesses against such liabilities, casualties, risks, and
contingencies as is customary in the relevant industry and sufficient to prevent
a Material Adverse Effect, all such insurance to be in amounts and from insurers
acceptable to the Agent and within 60 days of the Closing Date for property
damage insurance covering Collateral and business interruption insurance, if
any, maintained by the Guarantor, naming the Agent as loss payee, and, upon any
renewal of any such insurance and at other times upon request by the Agent,
furnish to the Agent evidence, satisfactory to the Agent, of the maintenance of
such insurance. The Agent shall have the right to collect, and the Guarantor
hereby assigns to the Agent, any and all monies that may become payable under
any policies of insurance relating to business interruption or by reason of
damage, loss, or destruction of any of the Collateral. In the event of any
damage, loss, or destruction for which insurance proceeds relating to business
interruption or Collateral exceed $250,000, the Agent may, at its option, apply
all such sums or any part thereof received by it toward the payment of the
Obligations, whether matured or unmatured, application to be made first to
interest and then to principal, and shall deliver to the Guarantor the balance,
if any, after such application has been made. In the event of any such damage,
loss, or destruction for which insurance proceeds are $250,000 or less, provided
that no Default or Event of Default has occurred and is continuing, the Agent
shall deliver any such proceeds received by it to the Guarantor. In the event
the Agent receives insurance proceeds not attributable to Collateral or business
interruption, the Agent shall deliver any such proceeds to the Guarantor.
4.11 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) with the prior
written consent of the Lenders, 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, or (e) obligations (other than
Indebtedness for borrowed money or capitalized leases) secured by Permitted
Liens to the extent constituting Indebtedness.
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 and performance surety or other bonds
provided in the ordinary course of business, (b) indemnity obligations under or
pursuant to the Purchase and Sale Agreement, (c) indemnity obligations incurred
in the ordinary course of business so long as such obligations do not cover the
primary obligation of any Affiliate of the Guarantor, (d) trade credit incurred
or operating leases entered into in the ordinary course of business, if
permitted pursuant to the other terms of this Guaranty, (e) Contingent
Obligations (other than with respect to Indebtedness for borrowed money or
capitalized leases) secured by Permitted Liens, or (f) the Obligations.
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;
provided, however, the foregoing restrictions shall not apply to Permitted
Liens.
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; provided, however, the foregoing
restrictions shall not apply to (a) the sale of assets the aggregate book value
of which for the Borrower and the Pipeline Subsidiaries does not exceed in the
aggregate $1,000,000, (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 to deliver hydrocarbons at some future date without
receiving full payment therefor within 90 days of delivery, (c) the sale 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 Borrower or the
Guarantor.
5.5 Loans or Advances. Make or agree to make any 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 in the ordinary course of business to the
Borrower, the other Pipeline Subsidiary, or Howell Corporation.
5.6 Investments. Acquire Investments in, or purchase or otherwise acquire all
or substantially all of the assets of, any Person; provided, however, the
foregoing restriction shall not apply to the purchase or acquisition of (a) the
Pipeline Properties, (b) 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, (c) other short-term Investments similar in nature and degree of
risk to those described in clause (b) of this Section, or (d) money-market
funds.
5.7 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).
5.8 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.
5.9 Lines of Business. Expand, on its own or through any Affiliate, into any
line of business other than those in which it is engaged as of the date hereof
or as of the date of the acquisition of its Pipeline Properties and terminaling
activities.
5.10 Rental or Lease Agreements. Enter into any contract to rent or lease as
lessee any Properties, real or personal; provided, however, the foregoing
restriction 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) leases 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 (c) 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 Borrower, the Guarantor, and all Subsidiaries of Howell
Corporation.
5.11 ERISA Compliance. Permit any Plan maintained by it or any Commonly
Controlled Entity to (a) engage in any Prohibited Transaction, (b) incur any
"accumulated funding deficiency," as such term is defined in Section 302 of
ERISA, or (c) terminate in a manner which could result in the imposition of a
Lien on any Property of the Guarantor pursuant to Section 4068 of ERISA; or
assume an obligation to contribute to any Multiemployer Plan; or acquire any
Person or the assets of any Person which has now or has had at any time an
obligation to contribute to any Multiemployer Plan.
5.12 Futures Contracts. Enter into or permit to exist any fixed price
contracts, the obligations of the Guarantor under which are not covered by
hedging agreements; provided, however, the foregoing restriction shall not apply
to fixed price contracts under which the maximum aggregate liability of the
Borrower and the Pipeline Subsidiaries at any time outstanding does not exceed
$2,000,000.
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:
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
if to the Guarantor, to:
Howell Pipeline Texas, Inc.
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 the 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, THE AGENT, AND EACH LENDER
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 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. 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 PIPELINE TEXAS, INC.
By: /s/ Allen R. Stanley
--------------------
Allen R. Stanley
President
BANK ONE, TEXAS, NATIONAL
ASSOCIATION, AS AGENT
By: /s/ Stephen M. Smith
--------------------
Stephen M. Smith
Vice President