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EXHIBIT 10.4
GUARANTY
FOR VALUABLE CONSIDERATION, and to induce NORWEST BANK TEXAS, NATIONAL
ASSOCIATION, a national banking association (the "Bank"), to enter into that
certain Credit Agreement dated December 9, 1997 (the "Credit Agreement"),with
▇▇▇▇▇▇▇▇▇ ENERGY, INC., a Delaware corporation (the "Borrower"), ▇▇▇▇▇▇▇▇▇
DRILLING COMPANY, a Delaware corporation, ▇▇▇▇▇▇▇▇▇ PETROLEUM, INC., a Texas
corporation, and ▇▇▇▇▇▇▇▇▇ PETROLEUM TRADING COMPANY, INC., a Texas corporation
(each a "Guarantor" and collectively the "Guarantors"), jointly and severally
give this guaranty (the "Guaranty") and jointly and severally, absolutely, and
unconditionally guarantee to the Bank the full and prompt payment of any and
all indebtedness of every kind and nature whatsoever which the Borrower may now
or at any time hereafter owe the Bank, including but not limited to each and
every Obligation (as defined in the Credit Agreement) arising under the Credit
Agreement, (collectively the "Indebtedness"). This Guaranty is an absolute,
unconditional, and continuing guaranty of payment of the Indebtedness and shall
continue to be binding upon the Guarantors until the Indebtedness is paid in
full.
The liability of the Guarantors under this Guaranty shall include
accrued interest and all reasonable attorneys' fees, collection costs, and
enforcement expenses incurred by the Bank in collecting on and enforcing its
rights under the Indebtedness, and all such costs and expenses incurred by the
Bank in connection with the protection, defense, or enforcement of this
Guaranty in any litigation or bankruptcy proceedings. The Bank may apply in
reduction of the Indebtedness any sums received by or available to the Bank on
account of the Indebtedness from the Borrower or any other person, or from the
Borrower's or other such persons' properties or any collateral security or
other source of payment, and such application of proceeds or receipts shall not
reduce or impair the liability of the Guarantors under this Guaranty.
The Indebtedness may be created and continued in any amount without
reducing or impairing the liability of the Guarantors under this Guaranty. Any
payment made by the Guarantors under this Guaranty shall be effective to reduce
or discharge the Guarantors' liability only if accompanied by a written
transmittal document, received by the Bank and advising it that payment is made
under this Guaranty for that purpose.
Each Guarantor further acknowledges and agrees with the Bank that:
1. No act or event need occur to establish the liability of any
Guarantor under this Guaranty, and no act or event, except full payment and
discharge of all Indebtedness, shall exonerate and discharge the liability of
the Guarantors under this Guaranty.
2. If any Guarantor is dissolved or changes its legal form of
organization without the prior written consent of the Bank or becomes insolvent
(however defined), then the Bank may declare immediately due and payable the
obligations of that Guarantor under this Guaranty, and that Guarantor shall
immediately pay to the Bank the full amount of all Indebtedness, whether due
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and payable or unmatured. If any Guarantor voluntarily commences or there is
commenced involuntarily against any Guarantor a case under the United States
Bankruptcy Code, and any receiver, trustee, examiner, liquidator, or similar
official is appointed for any Guarantor in connection therewith and the
appointment continues undischarged or the proceeding continues undismissed or
unstayed for 60 consecutive days, the obligations of any Guarantor under this
Guaranty shall immediately be due and payable without the necessity of demand
or notice.
3. No Guarantor will exercise or enforce any right of contribution,
reimbursement, recourse, or subrogation available to the Guarantor against the
Borrower or any person liable for payment of the Indebtedness, or as to any
collateral securing the Indebtedness, unless all Indebtedness has first been
fully paid and discharged.
4. The Bank may in its discretion enter into transactions resulting
in the creation or continuance of Indebtedness, without notice to or the
consent or approval of any Guarantor, regardless of whether any existing
relationship between the Borrower and the Guarantor has been revoked and
regardless of whether this Guaranty has been revoked.
5. The liability of any Guarantor shall not be reduced or impaired
by any of the following acts or events (which the Bank is expressly authorized
to do, omit, or suffer from time to time, both before and after revocation of
this Guaranty, without notice to or the consent or approval of any Guarantor):
(I) any acceptance of collateral security, guarantors, accommodation parties,
or sureties for any or all of the Indebtedness; (ii) any one or more extensions
or renewals of Indebtedness (including a period longer than the original
period) or any modification of the interest rate, maturity, or other
contractual terms applicable to all or part of the Indebtedness; (iii) any
waiver or indulgence granted to the Borrower, any delay or lack of diligence in
the enforcement of the Indebtedness, or any failure to institute proceedings,
file a claim, give required notices, or otherwise protect any of the
Indebtedness; (iv) any full or partial release of, settlement with, or
agreement not to ▇▇▇ the Borrower or any other Guarantor or other person liable
for any of the Indebtedness; (v) any discharge of any evidence of Indebtedness
or the acceptance of any instrument renewing or refinancing the Indebtedness;
(vi) any failure to obtain collateral security (including rights of setoff) for
the Indebtedness, or to assure its proper or sufficient creation, perfection,
or priority, or to protect, insure, or enforce any collateral security, or any
modification, substitution, discharge, impairment, or loss of the collateral
security; (vii) any foreclosure or enforcement of any collateral security by
the Bank or any other creditor of the Borrower with a security interest in the
collateral security; (viii) any assignment or transfer of any Indebtedness or
documentation evidencing the Indebtedness; (ix) any order of application of any
payments or credits upon the Indebtedness from the Borrower, the Guarantors, or
any other person; and (x) any election by the Bank under Section 1111(b)(2) of
the United States Bankruptcy Code.
6. Each Guarantor waives any and all defenses, claims, and
discharges of the Borrower, or any other obligor, pertaining to the
Indebtedness, except the defense of discharge by payment in full. Without
limiting the generality of the preceding sentence, no Guarantor will assert,
plead, or enforce against the Bank any defense of waiver, release, discharge in
bankruptcy,
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statute of limitations, res judicata, statute of frauds, anti-deficiency
statute, misrepresentation, fraud, incapacity, minority, usury, illegality, or
unenforceability which may be available to the Borrower or any other party
liable for payment of any of the Indebtedness, or any setoff available against
the Bank to the Borrower or any other person, whether or not on account of a
related transaction. Each Guarantor shall be liable for any deficiency
remaining after foreclosure of any mortgage, deed of trust, or security
interest securing the Indebtedness, whether or not the liability of the
Borrower or any other obligor for such deficiency is discharged pursuant to
statute or judicial decision.
7. The Bank may in its sole discretion demand that any Guarantor
discharge its obligations under this Guaranty at any time, either at the
scheduled or accelerated maturity of the Indebtedness or at any earlier or
later time, and regardless of whether there has been a default with respect to
the Indebtedness. The Bank shall not be required to first resort for payment
of the Indebtedness to the Borrower or to any other person or their properties,
or first to enforce, realize upon, or exhaust any collateral security given to
secure the Indebtedness before enforcing this Guaranty. Each Guarantor waives
presentment, demand for payment, notice of dishonor or nonpayment, and protest
of any instrument evidencing part or all of the Indebtedness.
8. If any payment applied by the Bank to the Indebtedness is later
set aside, recovered, rescinded, or returned for any reason (including, without
limitation, the bankruptcy, insolvency, or reorganization of the Borrower or
any other obligor), the Indebtedness to which the payment was applied shall
under this Guaranty be deemed to have continued in existence, notwithstanding
that application, and this Guaranty shall be enforceable for the Indebtedness
as fully as if the application had never been made.
9. The liability of each Guarantor under this Guaranty is in
addition to and cumulative with all other liabilities of each Guarantor to the
Bank as a guarantor or otherwise, without limitation as to amount, unless the
instrument or agreement evidencing or creating the other liability specifically
provides to the contrary.
10. This Guaranty shall be enforceable regardless of the failure of
other persons to sign other guaranties of the Indebtedness. This Guaranty
shall be effective upon delivery to the Bank, without further act, condition,
or acceptance by the Bank, and shall be binding upon each Guarantor and the
representatives, successors, and assigns of each Guarantor for the benefit of
the Bank and its participants, successors, and assigns. Any invalidity or
unenforceability of any provision or application shall not affect other lawful
provisions and applications of this Guaranty, which is severable. Before the
payment in full of the Indebtedness, this Guaranty may not be waived, modified,
amended, terminated, released, or otherwise changed except by a writing signed
by each Guarantor and the Bank. This Guaranty is issued in and shall be
governed by the laws of Texas.
11. Each Guarantor represents and warrants to the Bank that (I) it is
a corporation duly organized and existing in good standing and has full power
and authority to make and deliver this
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Guaranty; (ii) its execution, delivery, and performance of this Guaranty has
been duly authorized by all necessary action of its directors and shareholders
and does not and will not violate the provisions of, or constitute a default
under, any presently applicable law or its certificate or articles of
incorporation or bylaws or any agreement presently binding on it; (iii) this
Guaranty has been duly executed and delivered by its authorized officers and
constitutes its lawful, binding, and legally enforceable obligation (subject to
the United States Bankruptcy Code and other similar laws generally affecting
the enforcement of creditors' rights); and (iv) the authorization, execution,
delivery, and performance of this Guaranty do not require notification to,
registration with, or consent or approval by any federal, state, or local
regulatory body or administrative agency.
IN WITNESS WHEREOF, this Guaranty has been duly executed on December
9,1997, by the Guarantors.
▇▇▇▇▇▇▇▇▇ DRILLING COMPANY
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By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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Its: C.F.O.
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▇▇▇▇▇▇▇▇▇ PETROLEUM, INC.
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By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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Its: C.F.O.
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▇▇▇▇▇▇▇▇▇ PETROLEUM TRADING COMPANY, INC.
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By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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Its: C.F.O.
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