Exhibit 10.9
AMENDED AND RESTATED GUARANTY
AGREEMENT
This Amended and Restated Guaranty
Agreement dated as of December 17, 2008 (this “
Guaranty ”) is executed by each of the undersigned
(individually a “ Guarantor ” and collectively,
the “ Guarantors ”), in favor of Union Bank of
California, N.A, as Administrative Agent for the ratable benefit of
itself, the Lenders (as defined below) and as Issuing Lender (as
defined below), and the Swap Counterparties (as defined in the
Credit Agreement referred to below) (together with the
Administrative Agent, the Issuing Lender, and the Lenders,
individually a “ Beneficiary ”, and
collectively, the “ Beneficiaries ”).
INTRODUCTION
A.
Cano Petroleum, Inc. a Delaware
corporation (the “ Borrower ”) has previously
entered in that certain Credit Agreement dated as of
November 29, 2005 (as it has been amended, supplemented,
restated or otherwise modified from time to time, the “
Existing Credit Agreement ”), among Borrower, the
Lenders, the Administrative Agent and the Issuing
Lender.
B.
In order to guarantee the full and
punctual payment and performance of the obligations under the
Existing Credit Agreement and the other Loan Documents (as defined
in the Existing Credit Agreement), the Guarantors executed and
delivered to the Administrative Agent that certain Guaranty
Agreement dated as of November 29, 2005 (as heretofore
amended, restated, supplemented or otherwise modified, the “
Existing Guaranty ”).
C.
The parties to the Existing Credit
Agreement have agreed to amend and restate the Existing Credit
Agreement in its entirely pursuant to that certain Amended and
Restated Credit Agreement dated as of December 17, 2008 (as
further amended, supplemented or otherwise modified from time to
time, the “ Credit Agreement ”), among the
Borrower, the lenders party thereto from time to time
(individually, a “ Lender ” and collectively,
the “ Lenders ”), and Union Bank of California,
N.A., as administrative agent (in such capacity, the “
Administrative Agent ”) and as issuing lender (in such
capacity, the “ Issuing Lender ”).
D.
It is a requirement under the Credit
Agreement that the Guarantors shall continue to guarantee the due
payment and performance of all Obligations (as defined in the
Credit Agreement) by amending and restating in its entirety the
Existing Guaranty as set forth herein.
E.
Each Guarantor is a subsidiary of
the Borrower and will derive substantial direct and indirect
benefit from (i) the transactions contemplated by the Credit
Agreement and the other Loan Documents (as defined in the Credit
Agreement) and (ii) the Hedge Contracts (as defined in the
Credit Agreement) entered into by the Borrower or any of its other
subsidiaries with a Swap Counterparty.
F.
Each Guarantor is executing and
delivering this Guaranty (i) to induce the Lenders to provide
and to continue to provide Advances under the Credit Agreement,
(ii) to induce the Issuing Lender to provide and continue to
provide Letters of Credit under the Credit Agreement, and
(iii) intending it to be a legal, valid, binding, enforceable
and continuing obligation of such Guarantor, whether or not such
Guarantor derives any benefit from the Credit Agreement or from any
other Loan Document.
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NOW, THEREFORE, in consideration of
the premises, each Guarantor hereby agrees as follows:
Section 1.
Definitions.
All capitalized terms not
otherwise defined in this Guaranty that are defined in the Credit
Agreement shall have the meanings assigned to such terms by the
Credit Agreement.
Section 2.
Guaranty .
(a)
Each Guarantor hereby absolutely,
unconditionally and irrevocably guarantees the punctual payment and
performance, when due, whether at stated maturity, by acceleration
or otherwise, of all Obligations, whether absolute or contingent
and whether for principal, interest (including, without limitation,
interest that but for the existence of a bankruptcy, reorganization
or similar proceeding would accrue), fees, amounts owing in respect
of Letter of Credit Obligations, amounts required to be provided as
collateral, indemnities, expenses or otherwise (collectively, the
“ Guaranteed Obligations ”). Without
limiting the generality of the foregoing, each Guarantor’s
liability shall extend to all amounts that constitute part of the
Guaranteed Obligations and would be owed by the Borrower to the
Administrative Agent, the Issuing Lender or any Lender under the
Loan Documents and by the Borrower or any of its Subsidiaries to
the Swap Counterparty but for the fact that they are unenforceable
or not allowable due to insolvency or the existence of a
bankruptcy, reorganization or similar proceeding involving the
Borrower or such other Subsidiary.
(b)
It is the intention of the
Guarantors and each Beneficiary that the amount of the Guaranteed
Obligations guaranteed by each Guarantor shall be in, but not in
excess of, the maximum amount permitted by fraudulent conveyance,
fraudulent transfer or similar Legal Requirements applicable to
such Guarantor. Accordingly, notwithstanding anything to the
contrary contained in this Guaranty or in any other agreement or
instrument executed in connection with the payment of any of the
Guaranteed Obligations, the amount of the Guaranteed Obligations
guaranteed by a Guarantor under this Guaranty shall be limited to
an aggregate amount equal to the largest amount that would not
render such Guarantor’s obligations hereunder subject to
avoidance under Section 548 of the United States Bankruptcy
Code or any comparable provision of any other applicable
law.
Section 3.
Guaranty Absolute
. Each Guarantor guarantees
that the Guaranteed Obligations will be paid strictly in accordance
with the terms of the Loan Documents, regardless of any law,
regulation or order now or hereafter in effect in any jurisdiction
affecting any of such terms or the rights of the Administrative
Agent, the Issuing Lender, any Lender or any Swap Counterparty with
respect thereto but subject to Section 2(b) above.
The obligations of each Guarantor under this Guaranty are
independent of the Guaranteed Obligations or any other obligations
of any other Person under the Loan Documents or in connection with
any Hedge Contract, and a separate action or actions may be brought
and prosecuted against any Guarantor to enforce this Guaranty,
irrespective of whether any action is brought against the Borrower,
any other Guarantor or any other Person or whether the Borrower,
any other Guarantor or any other Person is joined in any such
action or actions. The liability of each Guarantor under this
Guaranty shall be irrevocable, absolute and unconditional
irrespective of, and each Guarantor
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hereby irrevocably waives any defenses it may
now or hereafter have in any way relating to, any or all of the
following:
(a)
any lack of validity or
enforceability of any Loan Document or any agreement or instrument
relating thereto or any part of the Guaranteed Obligations being
irrecoverable;
(b)
any change in the time, manner or
place of payment of, or in any other term of, all or any of the
Guaranteed Obligations or any other obligations of any Person under
the Loan Documents or any agreement or instrument relating to any
Hedge Contract with a Swap Counterparty, or any other amendment or
waiver of or any consent to departure from any Loan Document or any
agreement or instrument relating to any Hedge Contract with a Swap
Counterparty, including, without limitation, any increase in the
Guaranteed Obligations resulting from the extension of additional
credit to the Borrower or otherwise;
(c)
any taking, exchange, release or
non-perfection of any collateral, or any taking, release or
amendment or waiver of or consent to departure from any other
guaranty, for all or any of the Guaranteed Obligations;
(d)
any manner of application of
collateral, or proceeds thereof, to all or any of the Guaranteed
Obligations, or any manner of sale or other disposition of any
collateral for all or any of the Guaranteed Obligations or any
other obligations of any other Person under the Loan Documents or
any other assets of the Borrower or any of its
Subsidiaries;
(e)
any change, restructuring or
termination of the corporate structure or existence of the Borrower
or any of its Subsidiaries;
(f)
any failure of any Lender, the
Administrative Agent, the Issuing Lender or any other Beneficiary
to disclose to the Borrower or any Guarantor any information
relating to the business, condition (financial or otherwise),
operations, properties or prospects of any Person now or in the
future known to the Administrative Agent, the Issuing Lender, any
Lender or any other Beneficiary (and each Guarantor hereby
irrevocably waives any duty on the part of any Beneficiary to
disclose such information);
(g)
any signature of any officer of the
Borrower or any other Person being mechanically reproduced in
facsimile or otherwise; or
(h)
any other circumstance or any
existence of or reliance on any representation by any Beneficiary
that might otherwise constitute a defense available to, or a
discharge of, the Borrower, any Guarantor or any other guarantor,
surety or other Person.
Section 4.
Continuation and Reinstatement,
Etc. Each
Guarantor agrees that, to the extent that payments of any of the
Guaranteed Obligations are made, or any Lender, the Administrative
Agent, the Issuing Lender or any Swap Counterparty receives any
proceeds of collateral, and such payments or proceeds or any part
thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside, or otherwise required to be repaid, then
to the extent of such repayment the Guaranteed Obligations shall be
reinstated and continued in full force and effect as of the date
such initial payment or collection of proceeds occurred.
EACH
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GUARANTOR SHALL DEFEND AND INDEMNIFY EACH
BENEFICIARY FROM AND AGAINST ANY CLAIM, DAMAGE, LOSS, LIABILITY,
COST OR EXPENSE UNDER THIS SECTION 4 (INCLUDING REASONABLE
ATTORNEYS’ FEES AND EXPENSES) IN THE DEFENSE OF ANY SUCH
ACTION OR SUIT INCLUDING SUCH CLAIM, DAMAGE, LOSS, LIABILITY, COST,
OR EXPENSE ARISING AS A RESULT OF THE INDEMNIFIED
BENEFICIARY’S OWN NEGLIGENCE BUT EXCLUDING SUCH CLAIM,
DAMAGE, LOSS, LIABILITY, COST, OR EXPENSE THAT IS FOUND IN A FINAL,
NON-APPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO
HAVE RESULTED FROM SUCH INDEMNIFIED BENEFICIARY’S GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT.
Section 5.
Waivers and
Acknowledgments .
(a)
Each Guarantor hereby waives
promptness, diligence, presentment, notice of acceptance and any
other notice with respect to any of the Guaranteed Obligations and
this Guaranty and any requirement that any Beneficiary protect,
secure, perfect or insure any Lien or any Property or exhaust any
right or take any action against the Borrower or any other Person
or any collateral.
(b)
Each Guarantor hereby irrevocably
waives any right to revoke this Guaranty, and acknowledges that
this Guaranty is continuing in nature and applies to all Guaranteed
Obligations, whether existing now or in the future.
(c)
Each Guarantor acknowledges that it
will receive substantial direct and indirect benefits from the
financing arrangements involving the Borrower and its Subsidiaries
contemplated by the Loan Documents and the Hedge Contracts with a
Swap Counterparty and that the waivers set forth in this Guaranty
are knowingly made in contemplation of such benefits.
Section 6.
Subrogation
. No Guarantor will exercise any
rights that it may now have or hereafter acquire against the
Borrower or any other Person to the extent that such rights arise
from the existence, payment, performance or enforcement of such
Guarantor’s obligations under this Guaranty or any other Loan
Document, including, without limitation, any right of subrogation,
reimbursement, exoneration, contribution or indemnification and any
right to participate in any claim or remedy of any Beneficiary
against the Borrower or any other Person, whether or not such
claim, remedy or right arises in equity or under contract, statute
or common law, including, without limitation, the right to take or
receive from the Borrower or any other Person, directly or
indirectly, in cash or other property or by set-off or in any other
manner, payment or security on account of such claim, remedy or
right, unless and until all of the Guaranteed Obligations and any
and all other amounts payable by the Guarantors under this Guaranty
shall have been paid in full in cash, all Letters of Credit have
terminated or expired and no Letter of Credit Obligations shall
remain outstanding, and all Commitments shall have expired or
terminated. If any amount shall be paid to a Guarantor in
violation of the preceding sentence at any time prior to
(a) the payment in full in cash of the Guaranteed Obligations
and any and all other amounts payable by the Guarantors under this
Guaranty, (b) the satisfaction of all Letter of Credit
Obligations and the termination of all obligations of the Issuing
Lender and the Lenders in respect of Letters of Credit, (c)
the termination of the Hedge Contracts with the Beneficiaries, and
(d) the termination of the Commitments, such amount shall be
held in trust for
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the benefit of the Beneficiaries and shall
forthwith be paid to the Administrative Agent to be credited and
applied to the Guaranteed Obligations and any and all other amounts
payable by the Guarantors under this Guaranty, whether matured or
unmatured, in accordance with the terms of the Loan
Documents.
Section 7.
Representations and
Warranties. Each
Guarantor hereby represents and warrants as follows:
(a)
There are no conditions precedent to
the effectiveness of this Guaranty. Such Guarantor benefits
from executing this Guaranty.
(b)
Such Guarantor has, independently
and without reliance upon the Administrative Agent, the Issuing
Lender or any Lender and based on such documents and information as
it has deemed appropriate, made its own credit analysis and
decision to enter into this Guaranty, and such Guarantor has
established adequate means of obtaining from the Borrower and each
other relevant Person on a continuing basis information pertaining
to, and is now and on a continuing basis will be completely
familiar with, the business, condition (financial and otherwise),
operations, properties and prospects of the Borrower and each other
relevant Person.
(c)
The obligations of such Guarantor
under this Guaranty are the valid, binding and legally enforceable
obligations of such Guarantor, and the execution and delivery of
this
