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EXHIBIT 10.17
GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT (this "Guaranty") dated November 30, 1998, but
effective as of November 1, 1998 (the "Effective Date"), is by DUKE ENERGY
NATURAL GAS CORPORATION, a Delaware corporation (the "Guarantor"), for the
benefit of TEPPCO PARTNERS, L.P., a Delaware limited partnership ("TEPPCO" and,
together with the Guarantor, the "Parties").
W I T N E S S E T H:
WHEREAS, Duke Energy Transport and Trading Company, a Colorado
corporation ("Duke"), is a direct, wholly owned subsidiary of the Guarantor;
WHEREAS, Duke owns all of the issued and outstanding limited liability
company membership interests of DETTCO, LLC, a Delaware limited liability
company (the "Company");
WHEREAS, pursuant to a Contribution Agreement, dated October 15, 1998,
by and between Duke and TEPPCO (the "Contribution Agreement" and, together with
the agreements listed on Schedule 1 hereto, the "Transaction Agreements"), Duke
will convey, and TEPPCO will acquire, all of the Membership Interests of the
Company (capitalized terms not otherwise defined herein having the meanings
ascribed to them in the Contribution Agreement);
WHEREAS, the Guarantor, as the parent of Duke, will derive a
substantial benefit from the acquisition of the Company by TEPPCO from Duke;
WHEREAS, to induce TEPPCO to enter into the Contribution Agreement, and
in consideration of TEPPCO entering into the Contribution Agreement, the
Guarantor desires to guarantee (i) the obligations of Duke under the
Contribution Agreement upon the terms and conditions set forth herein, and (ii)
the obligations under the other Transaction Agreements of Duke and those
Affiliates of Duke who are parties to such agreements (such Affiliates, together
with Duke, are sometimes herein collectively referred to as the "Guaranty
Parties"); and
WHEREAS, pursuant to Section 7.1(o) of the Contribution Agreement, it
is a condition to the obligation of TEPPCO to acquire the Membership Interests
of the Company that the Guarantor enter into and deliver this Guaranty to
TEPPCO;
NOW, THEREFORE, in consideration of premises, the terms and conditions
set forth herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Guarantor covenants and agrees
with TEPPCO as follows:
1. Subject to the terms and conditions of this Guaranty, the Guarantor
hereby irrevocably and unconditionally guarantees to TEPPCO and TEPPCO's
Affiliates the performance of all of the Guaranty Parties' obligations under the
Transaction Agreements and any and all documents and agreements now or hereafter
executed and/or delivered by any of the Guaranty Parties pursuant to
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the terms of any of the Transaction Agreements, including the performance of the
Guaranty Parties' respective covenants thereunder, whether for the payment of
money or the giving of indemnification or otherwise.
2. The Guarantor represents and warrants to TEPPCO that the following
are true and correct as of the Effective Date and as of the date hereof:
(a) The Guarantor is duly organized, validly existing, and in
good standing under the laws of the State of Delaware.
(b) The Guarantor has full power and authority (including full
corporate power and authority and all necessary board approvals) to
execute and deliver this Guaranty and to perform its obligations
hereunder. This Guaranty constitutes the valid and legally binding
obligation of the Guarantor, enforceable against the Guarantor in
accordance with its terms and conditions, except as such enforceability
may be limited by or subject to (i) any bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to creditors'
rights generally and (ii) general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or
at law). The Guarantor need not give any notice to, make any filing
with, or obtain any authorization, consent, or approval of, any
government or governmental agency or any other person or entity to
perform its obligations under this Guaranty.
(c) Neither the execution and the delivery of this Guaranty,
nor the performance by the Guarantor of its obligations hereunder, will
in any material respect violate any statute, regulation, rule,
injunction, judgment, order, decree or ruling of any government,
governmental agency, or court to which the Guarantor is subject, or any
provision of its charter or bylaws or any material agreement or
instrument to which the Guarantor is a party.
3. The obligations of the Guarantor hereunder shall remain in full
force and effect without regard to, and shall not be affected or impaired by,
any of the following, any of which may be taken without the consent of, or
notice to, the Guarantor, nor shall any of the following give the Guarantor any
recourse or right of action against TEPPCO:
(a) Any amendment, modification, addition, supplement,
extension or acceleration of or to any part of any of the Transaction
Agreements or any document or agreement now or hereafter executed
and/or delivered by any of the Guaranty Parties pursuant to the terms
of any of the Transaction Agreements;
(b) Any exercise or non-exercise by TEPPCO of any right or
privilege under any of the Transaction Agreements or any document or
agreement now or hereafter executed and/or delivered by any of the
Guaranty Parties pursuant to the terms of any of the Transaction
Agreements;
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(c) Any bankruptcy, insolvency, reorganization, composition,
adjustment, dissolution, liquidation or other like proceeding relating
to Duke, the Company, or any Affiliate of Duke or the Guarantor,
whether or not the Guarantor shall have disclosed any of the foregoing;
it being expressly agreed that if and to the extent any payment or
other obligation by or on behalf of any of the Guaranty Parties
pursuant to any of the Transaction Agreements or any document or
agreement now or hereafter executed and/or delivered by any of the
Guaranty Parties pursuant to the terms of any of the Transaction
Agreements is rescinded or is otherwise restored by TEPPCO as a result
of any bankruptcy or other proceedings referred to above, such payment
shall not be deemed to have been made for purposes of this Guaranty;
and
(d) The existence of any facts or circumstances which cause
(or result in) any of the representations and warranties of Duke in
Article V of the Contribution Agreement to be (or being) inaccurate.
4. The Guarantor's obligations hereunder shall be no more nor any less
extensive than those required of the Guaranty Parties under the Transaction
Agreements and any document and agreement now or hereafter executed and/or
delivered by any of the Guaranty Parties pursuant to the terms of any of the
Transaction Agreements, as applicable, and the Guarantor shall be entitled to
assert with respect to any claim under this Guaranty, any and all defenses,
set-offs, counterclaims and other rights or remedies available to the Guaranty
Parties under the applicable Transaction Agreements and any document and
agreement now or hereafter executed and/or delivered by any of the Guaranty
Parties pursuant to the terms of any of the Transaction Agreements, as
applicable, or otherwise at law or equity, excluding those matters herein set
forth in Section 3 and Section 6 hereof.
5. The obligations of the Guarantor hereunder are independent of the
obligations of the Guaranty Parties and, in the event of any default hereunder,
a separate action or actions may be brought and prosecuted against the Guarantor
whether or not the Guarantor is the alter ego of any of the Guaranty Parties and
whether or not any of the Guaranty Parties is joined therein or a separate
action or actions are brought against any of the Guaranty Parties. Subject to
the terms and provisions of this Guaranty, TEPPCO's rights hereunder shall not
be exhausted until all obligations required of the Guaranty Parties under the
Transaction Agreements and any and all documents and agreements now or hereafter
executed and/or delivered by any of the Guaranty Parties pursuant to the terms
of any of the Transaction Agreements have been performed. All remedies of TEPPCO
are cumulative.
6. The Guarantor unconditionally waives:
(a) Presentments, demands, protests or notices as the same
pertain to the Guaranty Parties; provided, that the foregoing shall not
waive or release any obligation of TEPPCO to provide notice to the
respective Guaranty Parties or their respective successors or permitted
assigns in accordance with and to the extent required by the terms of
any of the Transaction Agreements or any document or agreement now or
hereafter executed and/or delivered by any of the Guaranty Parties
pursuant to the terms of any of the Transaction Agreements, as
applicable;
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(b) Any right to require TEPPCO to proceed against the
Guaranty Parties or to exhaust any security held by TEPPCO or to pursue
any other remedy;
(c) Any defense based upon an election of remedies by TEPPCO,
unless the same would excuse performance by the Guaranty Parties under
the Transaction Agreements or any document or agreement now or
hereafter executed and/or delivered by any of the Guaranty Parties
pursuant to the terms of any of the Transaction Agreements, as
applicable; and
(d) Any duty of TEPPCO to advise the Guarantor of any
information known to TEPPCO regarding any of the Guaranty Parties or
their ability to perform pursuant to any of the Transaction Agreements
or any document or agreement now or hereafter executed and/or delivered
by any of the Guaranty Parties pursuant to the terms of any of the
Transaction Agreements, as applicable.
7. Subject to the terms and provisions of this Guaranty, the Guarantor
agrees to pay all costs and expenses, including reasonable attorneys' fees, that
may be incurred by TEPPCO in any legal proceeding resolved in favor of TEPPCO to
enforce the obligations of the Guarantor hereunder.
8. This is a continuing guaranty and, subject to the terms and
provisions of this Guaranty, the obligations of the Guarantor under this
Guaranty shall continue in full force and effect until the Guaranty Parties'
obligations under the Transaction Agreements and any and all documents and
agreements now or hereafter executed and/or delivered by any of the Guaranty
Parties pursuant to the terms of any of the Transaction Agreements shall have
been fully paid and performed or excused under any such Transaction Agreement,
any such document or agreement, or at law or equity, at which time this Guaranty
and all of the Guarantor's obligations hereunder shall terminate and expire.
9. This Guaranty shall not confer any rights or remedies upon any
Person other than the Parties and their respective Affiliates, successors and
permitted assigns and other Persons, if any, given rights of indemnification
under the Transaction Agreements.
10. This Guaranty constitutes the entire agreement among the Parties
regarding the guaranty by Guarantor with respect to the transactions
contemplated by the Transaction Agreements and supersedes any prior
understandings, agreements, or representations by or among the Parties, written
or oral, to the extent they relate in any way to the subject matter hereof.
11. This Guaranty shall be binding upon and inure to the benefit of the
Parties and their respective successors and permitted assigns. Neither Party may
assign either this Guaranty or any of its rights, interests or obligations
hereunder without the prior written approval of the other. Any such assignment
consented to by TEPPCO shall not relieve the Guarantor of its obligations
hereunder, and the Guarantor's assignee or successor shall provide TEPPCO with a
written acknowledgment of the assumption of the Guarantor's obligations
hereunder by such assignee or successor. If the Guarantor intends to consolidate
with, merge into, or sell or otherwise transfer all or substantially all of its
assets to another Person, the Guarantor shall give TEPPCO 30 days prior written
notice of such consolidation, merger or transfer, and the surviving or
purchasing Person, as the case may be, shall
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be deemed to have assumed the Guarantor's obligations hereunder, and shall
acknowledge to TEPPCO such assumption in writing.
12. This Guaranty may be executed in one or more counterparts, each of
which shall be deemed an original but all of which together will constitute one
and the same instrument.
13. All notices, requests, demands and other communications required or
permitted to be given under this Agreement shall be deemed to have been duly
given if in writing and delivered personally or sent via first-class, postage
prepaid, registered or certified mail (return receipt requested), or by
overnight delivery service or facsimile transmission addressed as follows:
If to the Guarantor, to:
Duke Energy Natural Gas Corporation
000 - 00xx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: President
With a copy to:
Duke Energy Natural Gas Corporation
000 - 00xx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: General Counsel
If to TEPPCO, to:
TEPPCO Partners, L.P.
c/o Texas Eastern Products Pipeline Company
0000 Xxxxx Xxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: President
With a copy to:
Texas Eastern Products Pipeline Company
0000 Xxxxx Xxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: General Counsel
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Any Party may send any notice, request, demand, claim or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
Party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Party
notice in the manner herein set forth.
14. This Guaranty shall be governed by and construed in accordance with
the domestic laws of the State of Texas without giving effect to any choice or
conflict of law provision or rule (whether of the State of Texas or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of Texas.
15. This Guaranty may not be effectively amended, changed, modified,
altered or terminated, except as provided herein, without the written consent of
the Parties and such consent shall be effective only in the specific instance
and for the specific purpose for which it is given.
16. Any term or provision of this Guaranty that is invalid or
unenforceable in any situation in any jurisdiction shall not affect the validity
or enforceability of the remaining terms and provisions hereof or the validity
or enforceability of the offending term or provision in any other situation or
in any other jurisdiction.
17. The word "including" shall mean including, without limitation. If
the date specified in this Guaranty for giving any notice or taking any action
is not a business day (or if the period during which any notice is required to
be given or any action taken expires on a date which is not a business day),
then the date for giving such notice or taking such action (and the expiration
date of such period during which notice is required to be given or action taken)
shall be the next day which is a business day.
18. Arbitration.
(a) In the event of any claims, counterclaims, demands, causes
of action, disputes, controversies, and other matters in question
arising out of or relating to this Agreement, any provision hereof, the
alleged breach thereof, or in any way relating to the subject matter of
this Agreement or the relationship between the Parties created by this
Agreement, involving the Parties and/or their respective
representatives and/or Affiliates, including, without limitation,
arising out of the Other Agreements or the Guaranty Agreement (all of
which are referred to herein as "Disputes"), the Parties shall promptly
seek to resolve any such Dispute by negotiations between senior
executives of the Parties who have authority to settle the Dispute.
When a Party believes there is a Dispute under this Agreement, that
Party will give the other Party written notice of the Dispute. Within
thirty (30) days after receipt of such notice, the receiving Party
shall submit to the other a written response. Both the notice and
response shall include (i) a statement of each Party's position and a
summary of the
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evidence and arguments supporting its position, and (ii) the name,
title, fax number, and telephone number of the executive who will
represent that Party. In the event the Dispute involves a claim arising
out of the actions of any Person or entity not a signatory to this
Agreement, the receiving Party shall have such additional time as
necessary, not to exceed an additional thirty (30) days, to investigate
the Dispute before submitting a written response. The executives shall
meet at a mutually acceptable time and place within fifteen (15) days
after the date of the response and thereafter as often as they
reasonably deem necessary to exchange relevant information and to
attempt to resolve the Dispute. If one of the executives is an attorney
or intends to be accompanied at a meeting by an attorney, the other
executive shall be given at least five (5) days' notice of such
intention and may also be accompanied by an attorney. All negotiations
and communications pursuant to this Section 18 shall be treated and
maintained by the Parties as confidential information and shall be
treated as compromise and settlement negotiations for the purposes of
the Federal and State Rules of Evidence.
(b) If the Dispute has not been resolved within sixty (60)
days after the date of the response given pursuant to Section 18(a)
above, or such additional time, if any, that the Parties mutually agree
to in writing, or if the Party receiving such notice denies the
applicability of the provisions of Section 18(a) or otherwise refuses
to participate under the provisions of Section 18(a), either Party may
initiate binding arbitration pursuant to the provisions of Section
18(c) below.
(c) Any Disputes not settled pursuant to the foregoing
provisions shall be submitted to binding arbitration in accordance with
the following provisions. Arbitration shall be the sole and exclusive
manner in which to resolve any Disputes hereunder.
(i) The Party desiring to initiate arbitration in
connection with any Dispute shall send, via certified mail,
written notice of demand of arbitration to the other Party and
the name of the arbitrator appointed by the Party demanding
arbitration together with a statement of the matter in
controversy.
(ii) Within fifteen (15) days after receipt of such
demand, the receiving Party shall name its arbitrator. If the
receiving Party fails or refuses to name its arbitrator within
such 15-day period, the second arbitrator shall be appointed,
upon request of the Party demanding arbitration, by the Chief
U.S. District Court Judge for the Southern District of Texas
or such other person designated by such judge. The two
arbitrators so selected shall within fifteen (15) days after
their designation select a third arbitrator; provided,
however, that if the two arbitrators are not able to agree on
a third arbitrator within such 15-day period, either Party may
request the Chief U.S. District Court Judge for the Southern
District of Texas or such other person designated by such
judge to select the third arbitrator as soon as possible. In
the event the Judge declines to appoint an arbitrator,
appointment shall be made, upon application of either Party,
pursuant to the Commercial Arbitration Rules of
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the American Arbitration Association. If any arbitrator
refuses or fails to fulfill his or her duties hereunder, such
arbitrator shall be replaced by the Party which selected such
arbitrator (or if such arbitrator was selected by another
Person, through the procedure which such arbitrator was
selected) pursuant to the foregoing provisions.
(iii) Each arbitrator selected by the Parties shall
be a certified public accountant or licensed attorney with at
least fifteen (15) years of oil and gas experience as a
certified public accountant and/or practicing attorney. The
arbitrators selected by the Parties are not required to be
neutral, but the third arbitrator shall be neutral and shall
be a retired judge.
(iv) The Parties hereby request and consent to the
three (3) arbitrators conducting a hearing in Houston, Texas
no later than sixty (60) days following their selection or
thirty (30) days after all prehearing discovery has been
completed, whichever is later, at which the Parties shall
present such evidence and witnesses as they may choose, with
or without counsel.
(v) Arbitration shall be conducted in accordance with
the Commercial Arbitration Rules and procedures of the
American Arbitration Association.
(vi) The Federal Rules of Civil Procedure, as
modified or supplemented by the local rules of civil procedure
for the U.S. District Court for the Southern District of
Texas, shall apply in the arbitration. The Parties shall make
their witnesses available in a timely manner for discovery
pursuant to such rules. If a Party fails to comply with this
discovery agreement within the time established by the
arbitrators, after resolving any discovery disputes, the
arbitrators may take such failure to comply into consideration
in reaching their decision. All discovery disputes shall be
resolved by the arbitrators pursuant to the procedures set
forth in the Federal Rules of Civil Procedure.
(vii) Adherence to formal rules of evidence shall not
be required. The arbitrators shall consider any evidence and
testimony that they determine to be relevant.
(viii) The Parties hereby request that the
arbitrators render their decision within thirty (30) calendar
days following conclusion of the hearing.
(ix) Any decision by a majority of the arbitration
panel shall be final, binding and non-appealable. Any such
decision may be filed in any court of competent jurisdiction
and may be enforced by either Party as a final judgment in
such court. There shall be no grounds for appeal of any
arbitration award hereunder.
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(x) The defenses of statute of limitations and laches
shall be tolled from and after the date a Party gives the
other Party written notice of a Dispute as provided in Section
18(a) above until such time as the Dispute has been resolved
pursuant to Section 18(a), or an arbitration award has been
entered pursuant to this Section 18(c).
(d) In the event arbitration (or, despite the Parties'
agreement to resolve the Disputes through binding arbitration,
litigation) arising out of this Agreement is initiated by either Party,
the prevailing Party, after the entry of a final non-appealable order,
shall be entitled to recover from the other Party, as a part of said
order, all court costs, fees and expenses of such arbitration (or
litigation), including, without limitation, reasonable attorneys' fees.
(e) If, despite the Parties' agreement to submit any Disputes
to binding arbitration, there are any court proceedings arising out of
or relating to this Agreement or the transactions contemplated hereby,
such proceedings shall be brought and tried in the federal or state
courts situated in the City of Houston, Texas.
(f) THE PARTIES HEREBY WAIVE ANY AND ALL RIGHTS TO DEMAND A
TRIAL BY JURY.
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IN WITNESS WHEREOF, the Parties have executed this Guaranty to be
effective as of the Effective Date.
GUARANTOR:
DUKE ENERGY NATURAL GAS CORPORATION
By: /s/ X.X. Xxxx
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Name: X.X. Xxxx
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Title: Executive Vice President
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TEPPCO:
TEPPCO PARTNERS, L.P.
By: Texas Eastern Products Pipeline Company,
its General Partner
By: /s/ X.X. Xxxxxxx
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Name: X.X. Xxxxxxx
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Title: Chairman of the Board, President
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and Chief Executive Officer
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