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EXHIBIT 10.4
GUARANTY AGREEMENT
THIS CONTINUING GUARANTY AGREEMENT (this "Guaranty") by ____________
____________________, a Delaware corporation ("Guarantor"), is in favor of the
Banks (as hereinafter defined) from time to time parties to the Credit
Agreement (as hereinafter defined), including without limitation the Issuing
Bank (as defined in the Loan Agreement) and ▇▇▇▇▇ FARGO BANK (TEXAS), NATIONAL
ASSOCIATION, a national banking association, as agent (the "Agent") for the
banks (the "Banks") from time to time party to that certain Third Amended and
Restated Loan Agreement (as the same may be amended, modified or restated, the
"Loan Agreement"), dated as of June 20, 1997, among ▇▇▇▇▇▇ Petroleum Services
Corp., a Delaware corporation (formerly known as ▇▇▇▇▇▇ Corporation, a Delaware
corporation, successor by merger to ▇▇▇▇▇▇ Petroleum Services Corp., a Delaware
corporation) ("Borrower"), the Agent and the Banks. Capitalized terms used but
not defined herein have the meanings ascribed to them in the Loan Agreement.
W I T N E S S E T H:
WHEREAS, the Agent and the Banks have extended and will extend credit
and financial accommodations to Borrower, whose address is ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇; and
WHEREAS, Guarantor, as a Subsidiary of Borrower, has determined that
it will derive material direct and indirect economic benefits as a result of
said extensions of credit;
NOW, THEREFORE, (i) to induce the Agent and the Banks, at any time and
from time to time, to loan monies, with or without security, to or for the
account of Borrower, (ii) at the special insistence and request of the Agent
and the Banks, and (iii) for other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, Guarantor hereby agrees as
follows:
1. Guarantor hereby absolutely and unconditionally guarantees the
prompt and punctual payment and performance when due (whether at its maturity,
by lapse of time, by acceleration or otherwise) of the Guaranteed Obligations
(hereinafter defined). This is a continuing guaranty applicable to and
guaranteeing any and all indebtedness, obligations, and liabilities of every
kind and character of Borrower to the Agent and the Banks, whether now existing
or hereafter arising, whether due and owing or to become due and owing,
howsoever created or arising or evidenced, whether joint or several, or joint
and several, whether absolute or contingent, as created and evidenced by, and
arising under, the Loan Agreement, the Notes and/or the other Loan documents,
and all renewals, extensions, increases, and rearrangements of such
indebtedness, obligations or liabilities, including any and all amounts owing
or which may hereafter become owing thereon or in connection therewith,
including, without limitation, any and all amounts of principal, interest,
attorneys' fees, costs of collection and other amounts owing thereunder
(hereinafter called the "Guaranteed Obligations").
2. Guarantor hereby waives marshalling of assets and liabilities,
sale in inverse order of alienation, notice of acceptance of this Guaranty and
of any indebtedness,
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obligation or liability to which it applies or may apply, and waives
presentment and demand for payment thereof, notice of dishonor or nonpayment
thereof, notice of intention to accelerate, notice of acceleration, protest,
and notice thereof and all other notices and demands, collection or instigation
of suit or any other action by the Agent or the Banks in collection thereof,
including any notice of default in payment thereof or other notice to, or
demand of payment therefor on, any party. Further, Guarantor expressly waives
each and every right to which it may be entitled by virtue of the suretyship
law of the State of Texas including without limitation, any rights it may have
pursuant to Rule 31, Texas Rules of Civil Procedure, Section 17.001, Civil
Practice and Remedies Code, and Chapter 34 of the Texas Business and Commerce
Code.
3. Guarantor agrees to pay to each of the Agent or the Banks its
reasonable collection costs, including any additional amount for attorneys'
fees, but in no event to exceed the maximum amount permitted by law, if the
Guaranteed Obligations are not paid by Guarantor upon demand when due as
required herein or if this Guaranty is enforced by suit or through probate or
bankruptcy court or through any judicial proceedings whatsoever, and should it
be necessary to reduce Banks' or the Agent's or any one or more of their claims
to judgment, such judgment shall bear interest at the lesser of (i) the Default
Rate and (ii) the Maximum Rate.
4. This is an absolute and unconditional guaranty of payment and
not of collection, by Guarantor, jointly and severally with any guarantor of
the Guaranteed Obligations in each and every particular, and Guarantor waives
any right to require that (a) any action be brought against Borrower or any
other person or entity, (b) the Agent or any Bank enforce its rights against
any other guarantor of the Guaranteed Obligations, (c) the Agent or any Bank
proceed or enforce its rights against or exhaust any security given to secure
the Guaranteed Obligations, (d) the Agent or any Bank have Borrower joined with
Guarantor or any other guarantor of all or part of the Guaranteed Obligations
in any suit arising out of this Guaranty and/or the Guaranteed Obligations, or
(e) the Agent or any Bank pursue any other remedy in Bank's powers whatsoever.
Neither the Agent nor any Bank shall be required to mitigate damages or take
any action to reduce, collect or enforce the Guaranteed Obligations. Guarantor
waives any defense arising by reason of any disability, lack of corporate
authority or power, or other defense of Borrower or any other guarantor of the
Guaranteed Obligations, and shall remain liable hereon regardless of whether
Borrower or any other guarantor be found not liable thereon for any reason.
Should the Agent or any Bank seek to enforce the obligations of Guarantor by
action in any court, Guarantor waives any necessity, substantive or procedural,
that a judgment previously be rendered against Borrower or any other person or
entity or that Borrower or any other person or entity be joined in such cause
or that a separate action be brought against Borrower or any other person or
entity. The obligations of Guarantor hereunder are several from those of
Borrower or any other person or entity (including without limitation any other
surety for Borrower), and are primary obligations concerning which Guarantor is
the principal obligor. All waivers herein contained shall be without prejudice
to the Agent or any Bank at its option to proceed against Borrower or any other
person or entity, whether by separate action or by joinder.
5. Guarantor agrees that suit may be brought against Guarantor
and any other guarantors of the Guaranteed Obligations, jointly and severally,
and against one or more of them, less than all, without impairing the rights of
the Agent and the Banks, or any one or more of them, against the other
guarantors; nor shall the Agent or any Bank be required
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to join Borrower or any other guarantor or liable party in a suit against a
particular guarantor; and the Agent and the Banks may release Borrower and/or
one or more guarantor(s) or settle with such persons or entities as the Agent
and the Banks deem fit without releasing or impairing the rights of the Agent
and the Banks, or any one or more of them, to demand and collect the balance of
such indebtedness from the other remaining guarantors not so released.
6. Guarantor hereby consents and agrees to each of the following
to the fullest extent permitted by law, and agrees that the Guarantor's
obligations under this Guaranty shall not be released, diminished, impaired,
reduced or adversely affected by any of the following, and waives any rights
(including without limitation rights to notice) which Guarantor might otherwise
have as a result of or in connection with any of the following:
(a) Any renewal, extension, modification, increase,
decrease, alteration or rearrangement of all or any part of the Guaranteed
Obligations or any instrument executed in connection therewith, or any contract
or understanding between Borrower and the Agent and/or the Banks, or any other
person or entity, pertaining to the Guaranteed Obligations;
(b) Any adjustment, indulgence, forbearance or compromise
that might be granted or given by the Agent and/or the Banks, or any one or
more of them, to Borrower or Guarantor or any person or entity liable on the
Guaranteed Obligations;
(c) The insolvency, bankruptcy arrangement, adjustment,
composition, liquidation, disability, dissolution, death or lack of power of
Borrower or Guarantor or any other person or entity at any time liable for the
payment of all or part of the Guaranteed Obligations; or any dissolution of
Borrower or Guarantor, or any sale, lease or transfer of any or all of the
assets of Borrower or Guarantor, or any changes in the shareholders, partners,
or members of Borrower or Guarantor; or any reorganization of Borrower or
Guarantor;
(d) The invalidity, illegality or unenforceability of all
or any part of the Guaranteed Obligations, or any document or agreement
executed in connection with the Guaranteed Obligations, for any reason
whatsoever, including without limitation the fact that the Guaranteed
Obligations, or any part thereof, exceed the amount permitted by law, the act
of creating the Guaranteed Obligations or any part thereof is ultra ▇▇▇▇▇, the
officers or representatives executing the documents or otherwise creating the
Guaranteed Obligations acted in excess of their authority, the Guaranteed
Obligations violate applicable usury laws, Borrower has valid defenses, claims
or offsets (whether at law, in equity or by agreement) which render the
Guaranteed Obligations wholly or partially uncollectible from Borrower, the
creation, performance or repayment of the Guaranteed Obligations (or the
execution, delivery and performance of any document or instrument representing
part of the Guaranteed Obligations or executed in connection with the
Guaranteed Obligations, or given to secure the repayment of the Guaranteed
Obligations) is illegal, uncollectible, legally impossible or unenforceable, or
the documents or instruments pertaining to the Guaranteed Obligations have been
forged or otherwise are irregular or not genuine or authentic;
(e) Any full or partial release of the liability of
Borrower on the Guaranteed Obligations or any part thereof, of any co-
guarantors, or any other person or
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entity now or hereafter liable, whether directly or indirectly, jointly,
severally, or jointly and severally, to pay, perform, guarantee or assure the
payment of the Guaranteed Obligations or any part thereof, it being recognized,
acknowledged and agreed by Guarantor that Guarantor may be required to pay the
Guaranteed Obligations in full without assistance or support of any other
person or entity, and Guarantor has not been induced to enter into this
Guaranty on the basis of a contemplation, belief, understanding or agreement
that other parties other than Borrower will be liable to perform the Guaranteed
Obligations, or Bank will look to other parties to perform the Guaranteed
Obligations;
(f) The taking or accepting of any other security,
collateral or guaranty, or other assurance of payment, for all or any part of
the Guaranteed Obligations;
(g) Any release, surrender, exchange, subordination,
deterioration, waste, loss or impairment (including without limitation
negligent, willful, unreasonable or unjustifiable impairment) of any
collateral, property or security, at any time existing in connection with, or
assuring or securing payment of, all or any part of the Guaranteed Obligations;
(h) The failure of the Agent and/or the Banks, or any one
or more of them, or any other person or entity to exercise diligence or
reasonable care in the preservation, protection, enforcement, sale or other
handling or treatment of all or any part of such collateral, property or
security;
(i) The fact that any collateral, security, security
interest or lien contemplated or intended to be given, created or granted as
security for the repayment of the Guaranteed Obligations shall not be properly
perfected or created, or shall prove to be unenforceable or subordinate to any
other security interest or lien, it being recognized and agreed by Guarantor
that Guarantor is not entering into this Guaranty in reliance on, or in
contemplation of the benefits of, the validity, enforceability, collectibility
or value of any of the collateral for the Guaranteed Obligations;
(j) Any payment by Borrower to the Agent (whether for
sums owing to the Agent or to the Agent for the benefit of the Banks, or any
one or more of them) or any Bank is held to constitute a preference under the
bankruptcy laws, or for any reason Bank is required to refund such payment or
pay such amount to Borrower or someone else;
(k) Any other action taken or omitted to be taken with
respect to the Guaranteed Obligations, or the security and collateral therefor,
whether or not such action or omission prejudices Guarantor or increases the
likelihood that Guarantor will be required to pay the Guaranteed Obligations
pursuant to the terms hereof; it being the unambiguous and unequivocal
intention of Guarantor that Guarantor shall be obligated to pay the Guaranteed
Obligations when due, notwithstanding any occurrence, circumstance, event,
action, or omission whatsoever, whether contemplated or uncontemplated, and
whether or not otherwise or particularly described herein, except for the full
and final payment and satisfaction of the Guaranteed Obligations; or
(l) The fact that all or any of the Guaranteed
Obligations cease to exist by operation of law, including without limitation by
way of a discharge, limitation or tolling thereof under applicable bankruptcy
laws.
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7. In the event any payment by Borrower or any other guarantor of
all or part of the Guaranteed Obligations to the Agent (whether for sums owing
to the Agent or to the Agent for the benefit of the Banks, or any one or more
of them) or any Bank is held to be a preference under the bankruptcy laws, or
if for any other reason the Agent or any Bank is required to refund such
payment or pay the amount thereof to any other party, such payment by Borrower
or by such guarantor to the Agent or any Bank shall not constitute a release of
Guarantor from any liability respecting payment of the Guaranteed Obligations,
and Guarantor agrees to pay such amount to Bank upon demand.
8. The usury savings clause set forth in Section 11.6 of the Loan
Agreement is hereby incorporated by reference into this Guaranty and is made a
part hereof for all purposes; it being agreed that all rights and remedies of
the Agent and the Banks, or any one or more of them, hereunder are subject to
the usury savings clause.
9. This Guaranty is for the benefit of the Agent and the Banks,
and for such other persons and entities as may from time to time become or be
the holders of any Guaranteed Obligations; and this Guaranty shall be
transferable and negotiable, with the same force and effect and to the same
extent as the Guaranteed Obligations may be transferable, it being understood
that upon the assignment or transfer by the Agent or the Banks, or any one or
more of them, of any Guaranteed Obligations, the legal holder of such
Guaranteed Obligations shall have all of the rights granted to the Agent and
the Banks under this Guaranty.
10. Payment of all amounts hereunder shall be made at the offices
of the Agent.
11. [Intentionally Omitted]
12. Any notice, request or other communication required or
permitted to be given hereunder shall be given as provided in the Loan
Agreement. Guarantor will comply with and perform all affirmative and negative
covenants and agreements made by Borrower in the Loan Agreement with respect to
the Guarantor. All representations and warranties made by Borrower in the Loan
Agreement with respect to the Guarantor are true and correct as of the date
hereof. The Agent and the Banks shall be entitled to rely on all of the
representations and warranties made by Borrower in the Loan Agreement with
respect to the Guarantor with the same force and effect as though they were
incorporated in this Guaranty and made by the Guarantor for the Agent and the
Banks herein.
13. This Guaranty shall not be wholly or partially satisfied or
extinguished by Guarantor's payment of any amount hereunder, including payment
of all amounts due as of any specified date, but shall continue in full force
and effect as against Guarantor for the full amount, except as otherwise
specified herein, as to all Guaranteed Obligations created, incurred or arising
prior to the time when notice of termination is given by the Guarantor to the
Agent and the Banks as specified herein, or which thereafter may be incurred
for which the Agent and/or the Banks have, prior to the effective date of such
notice, committed to lend to Borrower, and until payment in full thereof. Any
and all extensions of credit and financial accommodations concurrently herewith
or hereafter made by the Agent and/or the Banks to Borrower shall be
conclusively presumed to have been made in acceptance hereof.
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14. This Guaranty shall be binding upon Guarantor, its successors
and assigns and shall inure to the benefit of, and be enforceable by, the Agent
and the Banks and their respective successors and permitted assigns and each
and every other person who shall, pursuant and subject to the provisions of the
Loan Agreement from time to time be or become the owner or holder of any of the
Guaranteed Obligations, and each and every reference herein to the "Agent" or
the "Banks" shall also include each and every such successor, assign, owner or
holder. Guarantor shall not assign or delegate its obligations hereunder
without the prior written consent of the Agent.
15. The release by the Agent or the Banks of Borrower or one or
more other guarantors of all or part of the Guaranteed Obligations shall not
affect the Guarantor, who shall remain fully liable in accordance with the
terms of this Guaranty.
16. This Guaranty shall be in addition to and cumulative of, and
not in substitution, novation or discharge of, any and all prior or
contemporaneous guaranty agreements by Guarantor or other persons or entities,
in favor of the Agent and/or the Banks or assigned to the Agent and/or the
Banks by others.
17. The undersigned guaranteeing corporation does hereby
acknowledge that it has investigated fully the benefits and advantages which
will be derived by the undersigned from execution of this Guaranty, and the
Board of Directors of the undersigned corporation has decided that, and the
undersigned corporation does hereby acknowledge, warrant and represent that, a
direct or an indirect benefit will accrue to the undersigned by reason of
execution of this Guaranty.
18. Guarantor represents and warrants that (i) this Guaranty is
not given with actual intent to hinder, delay or defraud any entity to which
Guarantor is or will become, on or after the date hereof, indebted; (ii)
Guarantor has received at least a reasonably equivalent value in exchange for
the giving of this Guaranty; (iii) Guarantor is not insolvent on the date
hereof and will not become insolvent as a result of the giving of this
Guaranty; (iv) Guarantor is not engaged in a business of transaction, nor is
about to engage in a business or transaction, for which any property remaining
with Guarantor constitutes an unreasonably small amount of capital; or (v)
Guarantor does not intend to incur debts that will be beyond the Guarantor's
ability to pay as such debts mature. For the purposes of making the
representations set forth in Paragraph 18(iii) above, Guarantor has taken into
account its right of contribution as set forth in Paragraph 28 below and its
value as a going concern.
19. Guarantor shall furnish to the Agent all such financial
statements and other information relating to the financial condition,
properties and affairs of Guarantor as the Agent or the Banks may from time to
time request.
20. Guarantor will not change its address, name or identity
without notifying the Agent of such change in writing at least thirty (30) days
prior to the effective date of such change.
21. No delay on the part of the Agent or the Banks in exercising
any right hereunder or failure to exercise the same shall operate as a waiver
of such right, nor shall any single or partial exercise of any right, power or
privilege bar any further or subsequent exercise of the same or any other
right, power or privilege.
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22. This Guaranty shall not be changed orally, but shall be
changed only by agreement in writing signed by the person against whom
enforcement of such change is sought.
23. The masculine and neuter genders used herein shall each
include the masculine, feminine and neuter genders and the singular number used
herein shall include the plural number. The words "person" and "entity" shall
include without limitation individuals, corporations, partnerships, joint
ventures, associations, joint stock companies, trusts, unincorporated
organizations, and governments and any agency or political subdivision thereof.
24. This Guaranty may be executed in multiple counterparts, and
each counterpart executed by any party shall be deemed an original and shall be
binding upon the person or entity executing the same, irrespective of whether
any other Guarantor has executed this or any other counterpart of this
Guaranty. Production of any counterpart other than the one to be enforced
shall not be required.
25. If any provision of this Guaranty is determined to be invalid
by any court of competent jurisdiction or to be in violation of any applicable
law, such invalidity or violation shall have no effect on any other provisions
of this Guaranty (which shall remain valid and binding and in full force and
effect) or in any other jurisdiction, and to that end the provisions of this
Guaranty shall be considered severable.
26. Guarantor expressly waives any and all rights to exercise any
right of subrogation, reimbursement and contribution (contractual, statutory or
otherwise) against the Agent and the Banks, individually and collectively,
including without limitation, any claim or right of subrogation under the
Bankruptcy Code (Title 11 of the U.S. Code) or any successor statute, arising
from the existence or performance of this Guaranty and the Guarantor
irrevocably waives any right to enforce any remedy which the Agent and the
Banks, or any one or more of them, now have or may hereafter have against the
Borrower and waives its enforcement of any benefit of, and any right to
participate in, any security now or hereafter held by the Agent and the Banks,
or any one or more of them, until the Guaranteed Obligations have been paid in
full and until all commitments of the Agent and the Banks, individually and
collectively, to extend credit to the Borrower under the Loan Agreement and the
other Loan Documents have terminated.
27. Guarantor hereby expressly covenants and agrees for the
benefit of the Agent and the Banks that all obligations and liabilities of the
Borrower and the Other Guarantors (as that term is defined hereinafter), or any
one or more of them, to the Guarantor of whatsoever description (including,
without limitation, all intercompany receivables of the Guarantor from the
Borrower) shall be subordinated and junior in right of payment to the
Guaranteed Obligations. Following the occurrence of an Event of Default and
thereafter, so long as it continues, any indebtedness of the Borrower to the
Guarantor shall, if the Agent shall so request, be collected and received by
the Guarantor as trustee for the Agent and the Banks and paid over to the Agent
and the Banks, or any one or more of them, as the case may be, on account of
the Guaranteed Obligations, but without reducing or affecting in any manner the
liability of the Guarantor under this Guaranty.
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28. Guarantor acknowledges that other Subsidiaries of the Borrower
have guaranteed the payment and performance of the Guaranteed Obligations
(collectively, the "Other Guarantors") and to the extent Guarantor is required
to satisfy all or any part of the Guaranteed Obligations pursuant to the terms
of this Guaranty, Guarantor shall have and be entitled to rights of
contribution against the Other Guarantors and to the extent any Other Guarantor
is required to satisfy all or any part of the Guaranteed Obligations, Guarantor
agrees that such Other Guarantor shall be entitled to rights of contribution
against the Guarantor; provided, however, this sentence is intended only to
define the relative rights of the Guarantor and all Other Guarantors, and
nothing set forth in this sentence is intended to or shall impair the
obligations of the Guarantor and Other Guarantors, jointly and severally, to
pay to the Agent and the Banks, or any one or more of them, as the case may be,
the Guaranteed Obligations as and when the same shall become due and payable in
accordance with the terms of this Guaranty.
29. (a) THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS, EXCEPT TO THE EXTENT PROVIDED
IN PARAGRAPH 29(b) BELOW AND TO THE EXTENT THAT THE FEDERAL LAWS OF THE UNITED
STATES OF AMERICA MAY OTHERWISE APPLY.
(b) NOTWITHSTANDING ANYTHING IN PARAGRAPH 29(a) ABOVE TO
THE CONTRARY, NOTHING IN THIS GUARANTY SHALL BE DEEMED TO CONSTITUTE A WAIVER
OF ANY RIGHTS WHICH THE AGENT OR ANY OF THE BANKS MAY HAVE UNDER THE NATIONAL
BANK ACT OR OTHER APPLICABLE FEDERAL LAW.
30. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS GUARANTY
MAY BE BROUGHT IN THE COURTS OF THE STATE OF TEXAS OR OF THE UNITED STATES OF
AMERICA FOR THE SOUTHERN DISTRICT OF TEXAS, AND BY EXECUTION AND DELIVERY OF
THIS GUARANTY, GUARANTOR HEREBY CONSENTS, FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS. GUARANTOR
HEREBY IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING
OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION
IN RESPECT OF THIS GUARANTY OR ANY DOCUMENT RELATED HERETO. GUARANTOR HEREBY
WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY
BE MADE BY ANY OTHER MEANS PERMITTED BY TEXAS LAW. Guarantor has irrevocably
designated, appointed and empowered CT Corporation System, ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇, as its duly authorized registered agent (together with any
successor agent, the "Authorized Agent") to receive, accept and acknowledge for
and on its behalf and on behalf of its property service of any and all legal
process, summons, notices, and documents which may be served in any proceeding,
which service may be made on such designee, appointee and agent in accordance
with legal procedures prescribed for such courts. Such appointment shall be
irrevocable so long as any Guaranteed Obligations remain outstanding or until
the appointment, similarly irrevocable, of such successor Authorized Agent and
such successor's acceptance of such appointment. Guarantor agrees to take any
and all action necessary to continue such designation in full force and effect
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and to advise the Agent of any change of address of such Authorized Agent; and
should such Authorized Agent become unavailable for this purpose for any
reason, Guarantor shall promptly irrevocably designate a successor Authorized
Agent within Houston, Texas, which shall agree to act as such, with the powers
and for the purposes specified in this subsection. If Guarantor does not so
appoint a successor agent within 5 Business Days of such unavailability, the
Required Holders may appoint a successor Authorized Agent without further act
by Guarantor. Guarantor further irrevocably consents and agrees to the service
of any and all legal process, summons, notices and documents out of any of the
aforesaid courts in any such Proceeding by hand delivery, to it at its address
set forth under its signature line below or to any other address of which it
shall have given notice to its then Authorized Agent. Guarantor agrees that
service upon it or any such Authorized Agent as provided for herein shall, to
the fullest extent permitted by law, constitute valid and effective personal
service upon its, as the case may be, and that the failure of any such
Authorized Agent to give any notice of such service to it shall not impair or
affect in any way the validity of such service or any judgment rendered in any
action or proceeding based thereon.
31. ARBITRATION.
(a) Arbitration. Upon the demand of any party, any
Dispute shall be resolved by binding arbitration (except as set forth in (e)
below) in accordance with the terms of this Guaranty. A "Dispute" shall mean
any action, dispute, claim or controversy of any kind, whether in contract or
tort, statutory or common law, legal or equitable, now existing or hereafter
arising under or in connection with, or in any way pertaining to, any of the
Loan Documents, or any past, present or future extensions of credit and other
activities, transactions or obligations of any kind related directly or
indirectly to any of the Loan Documents, including without limitation, any of
the foregoing arising in connection with the exercise of any self-help,
ancillary or other remedies pursuant to any of the Loan Documents. Any party
may by summary proceedings bring an action in court to compel arbitration of a
Dispute. Any party who fails or refuses to submit to arbitration following a
lawful demand by any other party shall bear all costs and expenses incurred by
such other party in compelling arbitration of any Dispute.
(b) Governing Rules. Arbitration proceedings shall be
administered by the American Arbitration Association ("AAA") or such other
administrator as the parties shall mutually agree upon in accordance with the
AAA Commercial Arbitration Rules. All Disputes submitted to arbitration shall
be resolved in accordance with the Federal Arbitration Act (Title 9 of the
United States Code), notwithstanding any conflicting choice of law provision in
any of the Loan Documents. The arbitration shall be conducted at a location in
Texas selected by the AAA or other administrator. If there is any
inconsistency between the terms hereof and any such rules, the terms and
procedures set forth herein shall control. All statutes of limitation
applicable to any Dispute shall apply to any arbitration proceeding. All
discovery activities shall be expressly limited to matters directly relevant to
the Dispute being arbitrated. Judgment upon any award rendered in an
arbitration may be entered in any court having jurisdiction; provided however,
that nothing contained herein shall be deemed to be a waiver by any party that
is a bank of the protections afforded to it under 12 U.S.C. Section 91 or any
similar applicable state law.
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(c) No Waiver; Provisional Remedies, Self-Help and
Foreclosure. No provision hereof shall limit the right of any party to
exercise self-help remedies such as setoff, foreclosure against or sale of any
real or personal property collateral or security, or to obtain provisional or
ancillary remedies, including without limitation injunctive relief,
sequestration, attachment, garnishment or the appointment of a receiver, from a
court of competent jurisdiction before, after or during the pendency of any
arbitration or other proceeding. The exercise of any such remedy shall not
waive the right of any party to compel arbitration hereunder.
(d) Arbitrator Qualifications and Powers; Awards.
Arbitrators must be active members of the Texas State Bar with expertise in the
substantive laws applicable to the subject matter of the Dispute. Arbitrators
are empowered to resolve Disputes by summary rulings in response to motions
filed prior to the final arbitration hearing. Arbitrators (i) shall resolve
all Disputes in accordance with the substantive law of the state of Texas, (ii)
may grant any remedy or relief that a court of the state of Texas could order
or grant within the scope hereof and such ancillary relief as is necessary to
make effective any award, and (iii) shall have the power to award recovery of
all costs and fees, to impose sanctions and to take such other actions as they
deem necessary to the same extent a judge could pursuant to the Federal Rules
of Civil Procedure, the Texas Rules of Civil Procedure or other applicable law.
Any Dispute in which the amount in controversy is $5,000,000 or less shall be
decided by a single arbitrator who shall not render an award of greater than
$5,000,000 (including damages, costs, fees and expenses). By submission to a
single arbitrator, each party expressly waives any right or claim to recover
more than $5,000,000. Any Dispute in which the amount in controversy exceeds
$5,000,000 shall be decided by majority vote of a panel of three arbitrators;
provided however, that all three arbitrators must actively participate in all
hearings and deliberations.
(e) Judicial Review. Notwithstanding anything herein to
the contrary, in any arbitration in which the amount in controversy exceeds
$25,000,000, the arbitrators shall be required to make specific, written
findings of fact and conclusions of law. In such arbitrations (i) the
arbitrators shall not have the power to make any award which is not supported
by substantial evidence or which is based on legal error, (ii) an award shall
not be binding upon the parties unless the findings of fact are supported by
substantial evidence and the conclusions of law are not erroneous under the
substantive law of the state of Texas, and (iii) the parties shall have in
addition to the grounds referred to in the Federal Arbitration Act for
vacating, modifying or correcting an award the right to judicial review of (A)
whether the findings of fact rendered by the arbitrators are supported by
substantial evidence, and (B) whether the conclusions of law are erroneous
under the substantive law of the state of Texas. Judgment confirming an award
in such a proceeding may be entered only if a court determines the award is
supported by substantial evidence and not based on legal error under the
substantive law of the state of Texas.
(f) Miscellaneous. To the maximum extent practicable,
the AAA, the arbitrators and the parties shall take all action required to
conclude any arbitration proceeding within 180 days of the filing of the
Dispute with the AAA. No arbitrator or other party to an arbitration
proceeding may disclose the existence, content or results thereof, except for
disclosures of information by a party required in the ordinary course of its
business, by applicable law or regulation, or to the extent necessary to
exercise any judicial review rights set forth herein. If more than one
agreement for arbitration by or between the parties potentially applies to a
Dispute, the arbitration provision most directly
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related to the Loan Documents or the subject matter of the Dispute shall
control. This arbitration provision shall survive termination, amendment or
expiration of any of the Loan Documents or any relationship between the
parties.
[Remainder of This Page Intentionally Left Blank.]
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THIS GUARANTY, THE LOAN AGREEMENT, THE NOTES, THE SECURITY
INSTRUMENTS, AND THE INSTRUMENTS AND DOCUMENTS EXECUTED IN CONNECTION HEREWITH,
REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED
BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
EXECUTED this 20th day of June 1997.
______________________________
By:
----------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇
Vice President
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