Exhibit 10.17
UNCONDITIONAL GUARANTY
December 22, 1998
EVERCEL, INC.
0 XXXXX XXXXXXX XXXX
XXXXXXX, XX 00000
(Individually and collectively "Borrower")
ENERGY RESEARCH CORPORATION
0 XXXXX XXXXXXX XX
XXXXXXX, XX 00000
(Individually and collectively "Guarantor")
FIRST UNION NATIONAL BANK
000 XXXX XXXXXX
XXXXXXXX, XXXXXXXXXXX 00000
(Hereinafter referred to as the "Bank")
To induce Bank to make, extend or renew loans, advances, credit, or other
financial accommodations to or for the benefit of the Borrower, and in
consideration of loans, advances, credit, or other financial accommodations
made, extended or renewed to or for the benefit of the Borrower, Guarantor
hereby absolutely, irrevocably and unconditionally guarantees to Bank and its
successors, assigns and affiliates the timely payment and performances of all
liabilities and obligations of Borrower to Bank and its affiliates, including,
but not limited to, all obligations under any notes, loan agreements, security
agreements, letters of credit, swap agreements (as defined in 11 U.S.C. ss.
101), instruments, accounts receivable, contracts, drafts, leases, chattel
paper, indemnities, acceptances, repurchase agreements, overdrafts, and the Loan
Documents defined below, however and whenever incurred or evidenced, whether
primary, secondary, direct, indirect, absolute, contingent, due or to become
due, now existing or hereafter contracted or acquired, and all modification,
extensions or renewals thereof, including without limitation, all amounts of
principal, interest, charges, and costs and expenses incurred thereunder
(including attorneys' fees and other costs of collection incurred, regardless of
whether suit is commenced) (collectively, the "Guaranteed Obligations").
The maximum liability of Guarantor shall be limited to the sum of (a) all
interest, charges, and costs and expenses incurred by Bank with respect to the
Guaranteed Obligations, and (b) 100.0000% of the aggregate principal amount of
the Guaranteed Obligations outstanding at the time of demand under this
Guaranty. For the purpose of determining the liability of the Guarantor, the
calculation of the aggregate principal amount of the Guaranteed Obligations
shall not be reduced by the collateral held as security for the Guaranteed
Obligations or by payments received or to be received with respect to the
Guaranteed Obligations from persons or entities other than Borrower.
Guarantor further covenants and agrees:
GUARANTOR'S LIABILITY. This Guaranty is a continuing and unconditional guaranty
of payment and performance and not of collection. The parties to this Guaranty
are jointly and severally obligated hereunder. This Guaranty does not impose any
obligation on Bank to extend or continue to extend credit or otherwise deal with
Borrower at any subsequent time. This Guaranty shall continue to be effective or
be reinstated, as the case may be, if at any time any payment of the Guaranteed
Obligations is rescinded, avoided or for any other reason must be returned by
Bank, and the returned payment shall remain payable as part of the Guaranteed
Obligations, all as though such payment had not been made. Except to the extent
the provisions of this Guaranty give the Bank additional rights, this Guaranty
shall not be deemed to supersede or replace any other guaranties given to Bank
by Guarantor, and the obligations guaranteed hereby shall be in addition to any
other obligations guaranteed by Guarantor pursuant to any other agreement of
guaranty given to Bank and other guaranties of the Guaranteed Obligations.
Page 1 of 5
TERMINATION OF GUARANTY. Guarantor may terminate this Guaranty by written notice
delivered personally to or received by certified or registered United States
Mail, by an authorized officer of the Bank at the address for notices provided
herein. Such termination shall be effective with respect to Guaranteed
Obligations arising more than 15 days after the date such written notice is
received by said Bank Officer. Guarantor may not terminate this Guaranty as to
Guaranteed Obligations (including any subsequent extensions, modifications or
compromises of the Guaranteed Obligations) then existing, or to Guaranteed
Obligations arising subsequent to receipt by Bank of said notice if such
Guaranteed Obligations are a result of Bank's obligation to make advances
pursuant to a commitment entered into prior to expiration of the 15 day notice
period, or are a result of advances which are necessary for Bank to protect its
collateral or otherwise preserve its interests. Termination of this Guaranty by
any single Guarantor will not affect the existing and continuing obligations of
any other Guarantor hereunder.
APPLICATION OF PAYMENTS, BANK LIEN AND SET-OFF. Monies received from any source
by Bank for application toward payment of the Guaranteed Obligations may be
applied to such Guaranteed Obligations in any manner or order deemed appropriate
by Bank. Except as prohibited by law, Guarantor grants Bank a security interest
in all of Guarantor's account maintained with Bank and any of its affiliates
(collectively, the "Accounts"). If a Default occurs, Bank is authorized to
exercise its right of set-off or to foreclose its lien against any obligation of
Bank to Guarantor including, without limitation, all Accounts or any other debt
of any maturity, without notice.
CONSENT TO MODIFICATIONS. Guarantor comments and agrees that Bank may from time
to time, in its sole discretion, without affecting, impairing, lessening or
releasing the obligations of the Guarantor hereunder: (a) extend or modify the
time, manner, place or terms of payment or performance and/or otherwise change
or modify the credit terms of the Guaranteed Obligations; (b) increase, renew,
or enter into a novation of the Guaranteed Obligations; (c) waive or consent
to the departure from terms of the Guaranteed Obligations; (d) permit any change
in the business or other dealings and relations of Borrower or any other
guarantor with Bank; (e) proceed against, exchange, release, realize upon or
otherwise deal with in any manner any collateral that is or may be held by Bank
in connection with the Guaranteed Obligations or any liabilities or obligations
of Guarantor; and (f) proceed against, settle, release, or compromise with the
Borrower, any insurance carrier, or any other person or entity liable as to any
part of the Guaranteed Obligations, and/or subordinate the payment of any part
of the Guaranteed Obligations to the payment of any other obligations, which may
at any time be due or owing to Bank; all in such manner and upon such terms as
Bank may deem appropriate, and without notice to or further consent from
Guarantor. No invalidity, irregularity, discharge or unenforceability of, or
action or omission by Bank relating to any part of, the Guaranteed Obligations
or any security therefor shall affect or impair this Guaranty.
WAIVER AND ACKNOWLEDGEMENTS. Guarantor waives and releases the following rights,
demands, and defenses Guarantor may have with respect to Bank and collection of
the Guaranteed Obligations: (a) promptness and diligence in collection of any of
the Guaranteed Obligations from the Borrower or any other person liable thereon,
and in foreclosure of any security interest and sale of any property serving as
collateral for the Guaranteed Obligations; (b) any law or statute that requires
that Bank make demand upon, assert claims against, or collect from Borrower or
other persons or entities, foreclose any security interest, sell collateral,
exhaust any remedies, or take any other action against Borrower or other persons
or entities prior to making demand upon, collecting from or taking action
against Guarantor with respect to the Guaranteed Obligations, including any such
rights Guarantor might otherwise have had under U.S. Code xx.xx. 49-25 and 49-26
et seq., N.C.G.S. xx.xx. 26-7 et seq., Tenn. Code [illegible] ss. 00-00-000,
O.C.G.A. ss. 10-7-24 (and any successor statute) and any other applicable law;
(c) any law or statute that requires that Borrower or any other person be joined
in, notified of or made part of any action against Guarantor; (d) that Bank
preserve, insure or perfect any security interest in collateral or sell or
dispose of collateral in a particular manner or at a particular time; (e) notice
of extensions, modifications, renewals, or novations of the Guaranteed
Obligations, of any new transactions or other relationships between Bank,
Borrower and/or any guarantor, and of changes in the financial condition of,
ownership of, or business structure of the Borrower or any other guarantor; (f)
presentment, protest, notice of dishonor, notice of default, demand for payment,
notice of intention to accelerate maturity, notice of acceleration of maturity,
notice of sale, and all other notices of any kind whatsoever, (g) the right to
assert against Bank any defense (legal or equitable), set-off, counterclaim, or
claim that Guarantor may have at any time against Borrower or any other party
liable to Bank; (h) all defenses relating to invalidity, insufficiency,
unenforceability, enforcement, release or impairments of Bank's lien on any
collateral, of the Loan Documents, or of any other guaranties held by Bank; (i)
any claim or defense that acceleration of maturity of the Guaranteed Obligations
is stayed against Guarantor because of the stay of assertion or of acceleration
of claims against any other person or entity for any reason including the
bankruptcy or insolvency of that person or entity; and (j) the benefit of any
exemption claimed by Guarantor. Guarantor acknowledges and represents that it
has relied upon its own due diligence in
Page 2 of 5
making its own independent appraisal of Borrower, Borrower's business affairs
and financial condition, and any collateral; Guarantor will continue to be
responsible for making its own independent appraisal of such matters; and
Guarantor has not relied upon and will not hereafter rely upon Bank for
information regarding the Borrower or any collateral.
FINANCIAL CONDITION. Guarantor warrants, represents and covenants to Bank that
on and after the date hereof: (a) the fair salable value of Guarantor's assets
exceeds its liabilities, Guarantor is meeting its current liabilities as they
mature, and Guarantor is and shall remain solvent; (b) all financial statements
of Guarantor furnished to Bank are correct and accurately reflect the financial
condition of Guarantor as of the respective dates thereof; (c) since the date of
such financial statements, there has not occurred a material adverse change in
the financial condition of Guarantor; (d) there are not now pending any court or
administrative proceedings or undischarged judgments against Guarantor, no
federal or state tax liens have been filed or threatened against Guarantor, and
Guarantor is not in default or claimed default under any agreement; and (e) at
such reasonable times as Bank requests, Guarantor will furnish Bank with such
other financial information as Bank may reasonably request.
INTEREST. Regardless of any other provision of this Guaranty or other Loan
Documents, if for any reason the effective interest on any of the Guaranteed
Obligations should exceed the maximum lawful interest, the effective interest
shall be deemed reduced to and shall be such maximum lawful interest, and any
sums of interest which have been collected in excess of such maximum lawful
interest shall be applied as a credit against the unpaid principal balance of
the Guaranteed Obligations.
DEFAULT. If any of the following events occur, a default ("Default") under this
Guaranty shall exist: (a) Failure of timely payment or performance of the
Guaranteed Obligations or a default under any Loan Document; (b) A breach of any
agreement or representation contained or referred to in the Guaranty, any of the
Loan Documents, or contained in any other contract or agreement of Guarantor
with Bank or its affiliates, whether now existing or hereafter arising; (c) The
death of, appointment of a guardian for, dissolution of, termination of
existence of, loss of good standing status by, appointment of a receiver for,
assignment for the benefit of creditors of, or the commencement of any
insolvency or bankruptcy proceeding by or against, Guarantor or any general
partner of or the holder(s) of the majority ownership interests of Guarantor;
and/or (d) The entry of any monetary judgment or the assessment against, the
filing of any tax lien against, or the issuance of any writ of garnishment or
attachment against any property of or debts due Guarantor.
If a Default occurs, the Guaranteed Obligations shall be due immediately and
payable without notice. Guarantor shall pay interest on the Guaranteed
Obligations from such Default at the highest rate of interest charged on any of
the Guaranteed Obligations.
ATTORNEYS' FEES AND OTHER COSTS OF COLLECTION. Guarantor shall pay all of Bank's
reasonable expenses and costs incurred to enforce or collect any of the
Guaranteed Obligations, including, without limitation, reasonable arbitration,
paralegals', attorneys' and experts' fees and expenses, whether incurred without
the commencement of a suit, in any suit, arbitration or administrative
proceeding, or in any appellate or bankruptcy proceeding.
SUBORDINATION OF OTHER DEBTS. Guarantor agrees: (a) to subordinate the
obligations now or hereafter owed by Borrower to Guarantor ("Subordinated Debt")
to any and all obligations of Borrower to Bank now or hereafter existing while
this Guaranty is in effect, provided however that Guarantor may receive
regularly scheduled principal and interest payments on the Subordinated Debt so
long as (i) all sums due and payable by Borrower to Bank have been paid in full
on or prior to such date, and (ii) no event or condition which constitutes or
which with notice or the lapse of time would constitute an event of default with
respect to the Guaranteed Obligations, shall be continuing on or as of the
payment date; (b) Guarantor will place a legend indicating such subordination on
every note, ledger page or other document evidencing any part of the
Subordinated Debt; and (c) except as permitted by this paragraph, Guarantor will
not request or accept payment of or any security for any part of the
Subordinated Debt, and any proceeds of the Subordinated Debt paid to Guarantor,
through error or otherwise, shall immediately be forwarded to Bank by Guarantor,
properly endorsed to the order of Bank to apply to the Guaranteed Obligations.
MISCELLANEOUS. (a) Assignment. This Guaranty and other Loan Documents shall
inure to the benefit of an be binding upon the parties and their respective
heirs, legal representatives, successors and assigns. Bank's interests in and
rights under this Guaranty and other Loan Documents are freely assignable, in
whole or in part, by Bank. Any assignment shall not release
Page 3 of 5
Guarantor from the Guaranteed Obligations. (b) Applicable Law; Conflict Between
Documents. This Guaranty and other Loan Documents shall be governed by and
construed under the laws of the state named in the Bank's address shown above
without regard to that state's conflict of laws principles. If the terms of this
Guaranty should conflict with the terms of any commitment letter that survives
closing, the terms of this Guaranty shall control. (c) Jurisdiction. Guarantor
irrevocably agrees to non-exclusive personal jurisdiction in the state named
Bank's address shown above. (d) Severability. If any provision of this Guaranty
or of the other Loan Documents shall be prohibited or invalid under applicable
law, such provision shall be ineffective but only to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Guaranty or other document. (e) Notices. Any
notices to Guarantor shall be sufficiently given, if in writing and mailed or
delivered to Guarantor's address shown above or such other address as provided
hereunder; and to Bank, if in writing and mailed or delivered to Bank's office
address shown above or such other address as Bank may specify in writing from
time to time. In the event that Guarantor changes Guarantor's address at any
time prior to the date the Guaranteed Obligations are paid in full, Guarantor
agrees to promptly give written notice of said change of address by registered
or certified mail, return receipt requested, all charges prepaid. (f) Plural;
Captions. All references in the Loan Documents to borrower, guarantor, person,
document or other nouns of reference mean both the singular and the plural form,
as the case may be, and the term "person" shall mean any individual, person or
entity. The captions contained in the Loan Documents are inserted for
convenience only and shall not affect the meaning or interpretation of the Loan
Documents. (g) Binding Contract. Guarantor by execution of and Bank by
acceptance of this Guaranty agree that each party is bound to all terms and
provisions of this Guaranty. (h) Amendments, Waivers and Remedies. No waivers,
amendments or modifications of this Guaranty and other Loan Documents shall be
valid unless in writing and signed by an officer of Bank. No waiver by Bank of
any Default shall operate as a waiver of any other Default or the same Default
on a future occasion. Neither the failure nor any delay on the part of Bank in
exercising any right, power, or privilege granted pursuant to this Guaranty and
other Loan Documents shall operate as waiver thereof, nor shall a single or
partial exercise thereof preclude any other or further exercise or the exercise
of any other right, power, or privilege. All remedies available to Bank with
respect to this Guaranty and other Loan Documents and remedies available at law
or in equity shall be cumulative and may be pursued concurrently or
successively. (i) Partnerships. If Guarantor is a partnership, the obligations,
liabilities and agreements on the part of the Guarantor shall remain in full
force and effect and fully applicable notwithstanding any changes in the
individuals comprising the partnership. The term "Guarantor" includes any
aborted or successive partnerships, and predecessor partnership(s) and the
partners shall not be released from any obligations or liabilities hereunder.
(j) Loan Documents. The term "Loan Documents" refers to all document executed in
connection with the Guaranteed Obligations and may include, without limitation,
commitment letters that survive closing, loan agreements, other guaranty
agreements, security agreements, instruments, financing statements, mortgages,
deeds of trust, deeds to secure debt, letters of credit, and any amendments or
supplements (excluding swap agreements as defined in 11 U.S.C. ss. 101).
PREJUDGMENT REMEDY WAIVER. EACH GUARANTOR ACKNOWLEDGES THAT THE TRANSACTIONS
GUARANTEED BY THIS GUARANTY ARE COMMERCIAL TRANSACTIONS AND HEREBY VOLUNTARILY
AND KNOWINGLY WAIVES ANY RIGHTS TO NOTICE OF AND HEARING ON PREJUDGMENT REMEDIES
UNDER CHAPTER 903a OF THE CONNECTICUT GENERAL STATUTES OR OTHER STATUTES
AFFECTING PREJUDGMENT REMEDIES, AND AUTHORIZES THE BANK'S ATTORNEY TO ISSUE A
WRIT FOR A PREJUDGMENT REMEDY WITHOUT COURT ORDER, PROVIDED THE COMPLAINT SHALL
SET FORTH A COPY OF THIS WAIVER.
FINANCIAL AND OTHER INFORMATION. Guarantor shall deliver to Bank such
information as Bank may reasonably request from time to time, including without
limitation, financial statements and information pertaining to Guarantor's
financial condition. Such information shall be true, complete, and accurate.
FINANCIAL REPORTS. Guarantor agrees to the following provision(s) from the date
of this Guaranty and until final payment in full of the Guaranteed Obligations,
unless Bank shall otherwise consent in writing:
NEGATIVE COVENANTS. Guarantor agrees that from the date of this Guaranty and
until final payment in full of the Guaranteed Obligations, unless Bank shall
otherwise consent in writing: Default on Other Contracts of Obligations.
Guarantor shall not default on any material contract with or obligations due to
a third party or default in the performance of any obligation to a third party
incurred for money borrowed. Judgment Entered. Guarantor shall not permit the
entry of any
Page 4 of 5
monetary judgment or the assessment against, the filing of any tax lien against,
or the issuance of any writ of garnishment or attachment against any property of
or debts due Guarantor.
SECURITY. Guarantor has granted Bank a security interest in the collateral
described in the Loan Documents, including but not limited to personal property
collateral described in that certain Pledge and Assignment of even date
herewith.
ARBITRATION. Upon demand of any party hereto, whether made before or after
institution of any judicial proceeding, any claim or controversy arising out of,
or relating to the Loan Documents between the parties hereto (a "Dispute") shall
be resolved by binding arbitration conducted under and governed by the
Commercial Financial Disputes Arbitration Rules (the "Arbitration Rules") of the
American Arbitration Association (the "AAA") and the Federal Arbitration Act.
Disputes may include, without limitation, tort claims, counterclaims, disputes
as to whether a matter is subject to arbitration, claims brought as class
actions, or claims arising from documents executed in the future. A judgment
upon this award may be entered in any court having jurisdiction. Notwithstanding
the foregoing, this arbitration provision does not apply to disputes under or
related to swap agreements.
SPECIAL RULES. All arbitration hearings shall be conducted in the city in which
the office of Bank first stated above is located. A hearing shall begin within
90 days or demand for arbitration and all hearings shall be concluded with 120
days of demand for arbitration. These time limitations may not be extended
unless a party shows cause for extension and then for no more than a total of 60
days. The expedited procedures set forth in Rule 51 et seq. of the Arbitration
Rules shall be applicable to claims of less than $1,000,000.00. Arbitrators
shall be licensed attorneys selected from the Commercial Financial Dispute
Arbitration Panel of the AAA. The parties do not waive applicable Federal or
state substantive law except as provided herein.
PRESERVATION AND LIMITATIONS OF REMEDIES. Notwithstanding the preceding binding
arbitration provisions, the parties agree to preserve, without diminution,
certain remedies that any party may exercise before or after an arbitration
proceeding is brought. The parties shall have the right to proceed in any court
of proper jurisdiction or by self-help to exercise or prosecute the following
remedies, as applicable: (i) all rights to foreclose against any real or
personal property or other security by exercising a power of sale or under
applicable law by judicial foreclosure including a proceeding to confirm the
sale; (ii) all rights of self-help including peaceful occupation of real
property and collection of rents, set-off, and peaceful possession of personal
property; (iii) obtaining provisional or ancillary remedies including injunctive
relief, sequestration, garnishment, attachment, appointment of receiver and
filing an involuntary bankruptcy proceeding; and (iv) when applicable, a
judgment by confession of judgment. Any claim or controversy with regard to any
party's entitlement to such remedies is a Dispute.
Each party agrees that it shall not have a remedy of punitive or exemplary
damages against the other in any Dispute and hereby waive any right or claim to
punitive or exemplary damages they have now or which may arise in the future in
connection with any Dispute, whether the Dispute is resolved by arbitration or
judicially.
WAIVER OF JURY TRIAL. THE PARTIES ACKNOWLEDGE THAT BY AGREEING TO BINDING
ARBITRATION THEY HAVE IRREVOCABLY WAIVED ANY RIGHT THEY MAY HAVE TO JURY TRIAL
WITH REGARD TO A DISPUTE.
IN WITNESS WHEREOF, Guarantor, on the day and year first written above, has
caused this Unconditional Guaranty to be executed under seal.
ENERGY RESEARCH CORPORATION
Corporate By: /s/ Xxxxxx X. Xxxxxx
Seal ----------------------------------------
Xxxxxx X. Xxxxxx, Chief Financial Officer
TAXPAYER IDENTIFICATION NUMBER:
ENERGY RESEARCH CORPORATION 00-0000000
CUGTY/12-16-1998/B964046/B964046/001/EVERCEL, INC.
Page 5 of 5
