Exhibit 10.6
GUARANTY
Xx. Xxxxx Xxxxxx
New York, New York June 30, 2006
FOR VALUE RECEIVED, and in consideration of loans made or to be made or
credit otherwise extended or to be extended by Laurus Master Fund, L.P., a
Cayman Islands company ("Lender") to or for the account of Able Energy, Inc.
("Borrower") from time to time and at any time and for other good and valuable
consideration, and to induce Lender to make such loans or extensions of credit
and to make or grant such renewals, extensions, releases of collateral or
relinquishments of legal rights as Lender may deem advisable, the undersigned
(and each of them if more than one, the liability under this Guaranty being
joint and several) (jointly and severally referred to as "Guarantor" or "the
undersigned") unconditionally guaranties to Lender, its successors, endorsees
and assigns, the prompt payment when due (whether by acceleration or otherwise)
of all present and future obligations and liabilities of any and all kinds of
Borrower to Lender and of all instruments of any nature evidencing or relating
to any such obligations and liabilities upon which Borrower or one or more
parties and Borrower is or may become liable to Lender, whether incurred by
Borrower as maker, endorser, drawer, acceptor, guarantor, accommodation party or
otherwise, and whether due or to become due, secured or unsecured, absolute or
contingent, joint or several, and however or whenever acquired by Lender,
whether arising under, out of, or in connection with that certain Securities
Purchase Agreement (as amended, modified, restated or supplemented from time to
time, the "Purchase Agreement"), the Related Agreements (as defined in the
Purchase Agreement) or any documents, instruments or agreements relating to or
executed in connection with the Purchase Agreement or any documents, instruments
or agreements referred to therein (together with the Purchase Agreement and the
Related Agreements, as each may be amended, modified, restated or supplemented
from time to time, the "Loan Documents"), (all of which are herein collectively
referred to as the "Obligations"), and irrespective of the genuineness,
validity, regularity or enforceability of such Obligations, or of any instrument
evidencing any of the Obligations or of any collateral therefor or of the
existence or extent of such collateral, and irrespective of the allowability,
allowance or disallowance of any or all of the Obligations in any case commenced
by or against Borrower under Title 11, United States Code, including, without
limitation, obligations or indebtedness of Borrower for post-petition interest,
fees, costs and charges that would have accrued or been added to the Obligations
but for the commencement of such case. In furtherance of the foregoing, the
undersigned xxxxxx agrees as follows:
1. LIMITATION ON LIABILITY. Notwithstanding anything to the contrary
herein, Guarantor shall not be liable under this Guaranty in excess of $425,000
of the original principal amount of the Note (as such term is defined in the
Purchase Agreement), plus all costs, fees and expenses (including expenses for
legal services of every kind) relating or incidental to the enforcement or
protection of the rights of Lender.
2. NO IMPAIRMENT. Lender may at any time and from time to time, either
before or after the maturity thereof, without notice to or further consent of
the undersigned, extend the time of payment of, exchange or surrender any
collateral for, renew or extend any of the Obligations or
increase or decrease the interest rate thereon, and may also make any agreement
with Borrower or with any other party to or person liable on any of the
Obligations, or interested therein, for the extension, renewal, payment,
compromise, discharge or release thereof, in whole or in part, or for any
modification of the terms thereof or of any agreement between Lender and
Borrower or any such other party or person, or make any election of rights
Lender may deem desirable under the United States Bankruptcy Code, as amended,
or any other federal or state bankruptcy, reorganization, moratorium or
insolvency law relating to or affecting the enforcement of creditors' rights
generally (any of the foregoing, an "Insolvency Law") without in any way
impairing or affecting this Guaranty. This instrument shall be effective
regardless of the subsequent incorporation, merger or consolidation of Borrower,
or any change in the composition, nature, personnel or location of Borrower and
shall extend to any successor entity to Borrower, including a debtor in
possession or the like under any Insolvency Law.
3. GUARANTY ABSOLUTE. The undersigned guarantees that the Obligations
will be paid strictly in accordance with the terms of the Loan Documents and/or
any other document, instrument or agreement creating or evidencing the
Obligations, regardless of any law, regulation or order now or hereafter in
effect in any jurisdiction affecting any of such terms or the rights of Borrower
with respect thereto. Guarantor hereby knowingly accepts the full range of risk
encompassed within a contract of "continuing guaranty" which risk includes the
possibility that Borrower will contract additional indebtedness for which
Guarantor may be liable hereunder after Xxxxxxxx's financial condition or
ability to pay its lawful debts when they fall due has deteriorated, whether or
not Borrower has properly authorized incurring such additional indebtedness. The
undersigned acknowledges that (i) no oral representations, including any
representations to extend credit or provide other financial accommodations to
Borrower, have been made by Lender to induce the undersigned to enter into this
Guaranty and (ii) any extension of credit to the Borrower shall be governed
solely by the provisions of the Loan Documents. The liability of the undersigned
under this Guaranty shall be absolute and unconditional, in accordance with its
terms, and shall remain in full force and effect without regard to, and shall
not be released, suspended, discharged, terminated or otherwise affected by, any
circumstance or occurrence whatsoever, including, without limitation: (a) any
waiver, indulgence, renewal, extension, amendment or modification of or
addition, consent or supplement to or deletion from or any other action or
inaction under or in respect of the Loan Documents or any other instruments or
agreements relating to the Obligations or any assignment or transfer of any
thereof, (b) any lack of validity or enforceability of any Loan Document or
other documents, instruments or agreements relating to the Obligations or any
assignment or transfer of any thereof, (c) any furnishing of any additional
security to Lender or its assignees or any acceptance thereof or any release of
any security by Lender or its assignees, (d) any limitation on any party's
liability or obligation under the Loan Documents or any other documents,
instruments or agreements relating to the Obligations or any assignment or
transfer of any thereof or any invalidity or unenforceability, in whole or in
part, of any such document, instrument or agreement or any term thereof, (e) any
bankruptcy, insolvency, reorganization, composition, adjustment, dissolution,
liquidation or other like proceeding relating to Borrower, or any action taken
with respect to this Guaranty by any trustee or receiver, or by any court, in
any such proceeding, whether or not the undersigned shall have notice or
knowledge of any of the foregoing, (f) any exchange, release or nonperfection of
any collateral, or any release, or amendment or waiver of or consent to
departure from any guaranty or security, for all or any of
2
the Obligations, or (g) any other circumstance which might otherwise constitute
a defense available to, or a discharge of, the undersigned. Any amounts due from
the undersigned to Lender shall bear interest until such amounts are paid in
full at the highest rate then applicable to the Obligations. Obligations include
post-petition interest whether or not allowed or allowable.
4. WAIVERS. (a) This Guaranty is a guaranty of payment and not of
collection. Lender shall be under no obligation to institute suit, exercise
rights or remedies or take any other action against Borrower or any other person
liable with respect to any of the Obligations or resort to any collateral
security held by it to secure any of the Obligations as a condition precedent to
the undersigned being obligated to perform as agreed herein and Guarantor hereby
waives any and all rights which it may have by statute or otherwise which would
require Lender to do any of the foregoing. Guarantor further consents and agrees
that Xxxxxx shall be under no obligation to marshal any assets in favor of
Guarantor, or against or in payment of any or all of the Obligations. The
undersigned hereby waives all suretyship defenses and any rights to interpose
any defense, counterclaim or offset of any nature and description which the
undersigned may have or which may exist between and among Lender, Borrower
and/or the undersigned with respect to the undersigned's obligations under this
Guaranty, or which Borrower may assert on the underlying debt, including but not
limited to failure of consideration, breach of warranty, fraud, payment (other
than cash payment in full of the Obligations), statute of frauds, bankruptcy,
infancy, statute of limitations, accord and satisfaction, and usury.
(b) The undersigned further waives (i) notice of the acceptance of this
Guaranty, of the making of any such loans or extensions of credit, and of all
notices and demands of any kind to which the undersigned may be entitled,
including, without limitation, notice of adverse change in Borrower's financial
condition or of any other fact which might materially increase the risk of the
undersigned and (ii) presentment to or demand of payment from anyone whomsoever
liable upon any of the Obligations, protest, notices of presentment, non-payment
or protest and notice of any sale of collateral security or any default of any
sort.
(c) Notwithstanding any payment or payments made by the undersigned
hereunder, or any setoff or application of funds of the undersigned by Xxxxxx,
the undersigned shall not be entitled to be subrogated to any of the rights of
Lender against Borrower or against any collateral or guarantee or right of
offset held by Lender for the payment of the Obligations, nor shall the
undersigned seek or be entitled to seek any contribution or reimbursement from
Borrower in respect of payments made by the undersigned hereunder, until all
amounts owing to Lender by Borrower on account of the Obligations are paid in
full and the Loan Documents have been terminated. If, notwithstanding the
foregoing, any amount shall be paid to the undersigned on account of such
subrogation rights at any time when all of the Obligations shall not have been
paid in full and the Loan Documents shall not have been terminated, such amount
shall be held by the undersigned in trust for Lender, segregated from other
funds of the undersigned, and shall forthwith upon, and in any event within two
(2) business days of, receipt by the undersigned, be turned over to Lender in
the exact form received by the undersigned (duly endorsed by the undersigned to
Lender, if required), to be applied against the Obligations, whether matured or
unmatured, in such order as Lender may determine, subject to the provisions of
the Loan Documents. Any and all present and future debts and obligations of
Borrower to any of the
3
undersigned are hereby waived and postponed in favor of, and subordinated to the
full payment and performance of, all present and future debts and obligations of
Borrower to Lender.
(d) The undersigned further waives the right to renounce any
disposition or transfer of assets whether created under a will, trust agreement
or intestacy statute, with respect to any devise, bequest, distributive share,
trust account, life insurance or annuity contract, employee benefit plan
(including, without limitation, any pension, retirement, death benefit, stock
bonus or profit sharing plan, system or trust), or any other disposition or
transfer created by any testamentary or nontestamentary instrument or by
operation of law, and any of the foregoing created or increased by reason of a
renunciation made by another person.
5. SECURITY. All sums at any time to the credit of the undersigned and
any property of the undersigned in Lender's possession or in the possession of
any bank, financial institution or other entity that directly or indirectly,
through one or more intermediaries, controls or is controlled by, or is under
common control with, Lender (each such entity, an "Affiliate") shall be deemed
held by Lender or such Affiliate, as the case may be, as security for any and
all of the undersigned's obligations to Lender and to any Affiliate of Lender,
no matter how or when arising and whether under this or any other instrument,
agreement or otherwise.
6. REPRESENTATIONS AND WARRANTIES. The undersigned hereby represents
and warrants (all of which representations and warranties shall survive until
all Obligations are indefeasibly satisfied in full and the Purchase Agreement
have been irrevocably terminated), that:
(a) LEGAL CAPACITY. The undersigned has full legal capacity to execute
and deliver this Guaranty and to perform the obligations of the undersigned
under this Guaranty.
(b) LEGAL, VALID AND BINDING CHARACTER. This Guaranty constitutes the
legal, valid and binding obligation of the undersigned enforceable in accordance
with its terms, except as enforceability may be limited by applicable Insolvency
Law.
(c) VIOLATIONS. The execution, delivery and performance of this
Guaranty will not violate any requirement of law applicable to the undersigned
or any material contract, agreement or instrument to which the undersigned is a
party or by which the undersigned or any property of the undersigned is bound or
result in the creation or imposition of any mortgage, lien or other encumbrance
other than to Lender on any of the property or assets of the undersigned
pursuant to the provisions of any of the foregoing.
(d) CONSENTS OR APPROVALS. No consent of any other person or entity
(including, without limitation, any creditor of the undersigned) and no consent,
license, permit, approval or authorization of, exemption by, notice or report
to, or registration, filing or declaration with, any governmental authority is
required in connection with the execution, delivery, performance, validity or
enforceability of this Guaranty.
(e) LITIGATION. No litigation, arbitration, investigation or
administrative proceeding of or before any court, arbitrator or governmental
authority, bureau or agency is currently pending or, to the best knowledge of
the undersigned, threatened (i) with respect to this Guaranty or any of the
transactions contemplated by this Guaranty or (ii) against or affecting the
4
undersigned, or any property or assets of the undersigned, which, if adversely
determined, would have a material adverse effect on the business, operations,
assets or condition, financial or otherwise, of the undersigned.
(f) MATERIAL ADVERSE CHANGE. Since December 31, 2005, there has been no
material adverse change in the assets or condition, financial or otherwise, of
the undersigned.
(g) FINANCIAL BENEFIT. The undersigned has derived or expects to derive
a financial or other advantage from each and every loan, advance or extension of
credit made under the Loan Documents or other Obligation incurred by Borrower to
Lender.
The foregoing representations and warranties (other than that set forth
in paragraph (f) above) shall be deemed to have been made by the undersigned on
the date of each borrowing by Borrower under the Loan Documents on and as of
such date of such borrowing as though made hereunder on and as of such date.
7. ACCELERATION. (a) If any breach of any covenant or condition or
other event of default shall occur and be continuing under any agreement made by
Borrower or the undersigned to Lender, or either Borrower or the undersigned
should at any time become insolvent, or make a general assignment, or if a
proceeding in or under any Insolvency Law shall be filed or commenced by, or in
respect of, the undersigned, or if a notice of any lien, levy, or assessment is
filed of record with respect to any assets of the undersigned by the United
States of America or any department, agency, or instrumentality thereof, or if
any taxes or debts owing at any time or times hereafter to any one of them
becomes a lien or encumbrance upon any assets of the undersigned in Lender's
possession, or otherwise, in each case in an aggregate amount in excess of
$30,000, any and all Obligations shall for purposes hereof, at Lender's option,
be deemed due and payable without notice notwithstanding that any such
Obligation is not then due and payable by Borrower.
(b) The undersigned will promptly notify Lender of any default by the
undersigned in the performance or observance of any term or condition of any
agreement to which the undersigned is a party if the effect of such default is
to cause, or permit the holder of any obligation under such agreement to cause,
such obligation to become due prior to its stated maturity and, if such an event
occurs, Lender shall have the right to accelerate the undersigned's obligations
hereunder.
8. PAYMENTS FROM GUARANTOR. After applying any payment from the
undersigned or any other guarantors to any shortfall, if any, due pursuant to
the Documents, Lender, in its sole and absolute discretion, with or without
notice to the undersigned, may apply on account of the Obligations any payment
from the undersigned or any other guarantor, or amounts realized from any
security for the Obligations, or may deposit any and all such amounts realized
in a non-interest bearing cash collateral deposit account to be maintained as
security for the Obligations.
9. COSTS. The undersigned shall pay on demand, all costs, fees and
expenses (including expenses for legal services of every kind) relating or
incidental to the enforcement or protection of the rights of Lender hereunder or
under any of the Obligations.
5
10. NO TERMINATION. This is a continuing irrevocable guaranty and shall
remain in full force and effect and be binding upon the undersigned, and the
undersigned's heirs, administrators, executors, successors and assigns, until
all of the Obligations have been paid in full and the Loan Documents have been
irrevocably terminated. If any of the present or future Obligations are
guarantied by persons, partnerships or corporations in addition to the
undersigned, the death, release or discharge in whole or in part or the
bankruptcy, merger, consolidation, incorporation, liquidation or dissolution of
one or more of them shall not discharge or affect the liabilities of the
undersigned under this Guaranty. The death of the undersigned shall not effect a
termination of this Guaranty and loans and advances made by Xxxxxx and any
indebtedness incurred by Borrower from Lender subsequent to such death shall
continue to constitute Obligations guaranteed hereunder.
11. RECAPTURE. Anything in this Guaranty to the contrary
notwithstanding, if Lender receives any payment or payments on account of the
liabilities guaranteed hereby, which payment or payments or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
and/or required to be repaid to a trustee, receiver, or any other party under
any Insolvency Law, common law or equitable doctrine, then to the extent of any
sum not finally retained by Xxxxxx, the undersigned's obligations to Lender
shall be reinstated and this Guaranty shall remain in full force and effect (or
be reinstated) until payment shall have been made to Lender, which payment shall
be due on demand.
12. BOOKS AND RECORDS. The books and records of Xxxxxx showing the
account between Xxxxxx and Borrower shall be admissible in evidence in any
action or proceeding, shall be binding upon the undersigned for the purpose of
establishing the items therein set forth and shall constitute prima facie proof
thereof.
13. NO WAIVER. No failure on the part of Lender to exercise, and no
delay in exercising, any right, remedy or power hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise by Lender of any right,
remedy or power hereunder preclude any other or future exercise of any other
legal right, remedy or power. Each and every right, remedy and power hereby
granted to Lender or allowed it by law or other agreement shall be cumulative
and not exclusive of any other, and may be exercised by Lender at any time and
from time to time.
14. WAIVER OF JURY TRIAL. THE UNDERSIGNED DOES HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR
PROCEEDING BASED ON OR WITH RESPECT TO THIS GUARANTY OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREBY OR RELATING OR INCIDENTAL HERETO. THE UNDERSIGNED DOES
HEREBY CERTIFY THAT NO REPRESENTATIVE OR AGENT OF XXXXXX HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT LENDER WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THIS WAIVER OF RIGHT TO JURY TRIAL PROVISION.
15. GOVERNING LAW; JURISDICTION; AMENDMENTS. THIS INSTRUMENT CANNOT BE CHANGED
OR TERMINATED ORALLY, AND SHALL BE GOVERNED, CONSTRUED AND INTERPRETED AS TO
VALIDITY, ENFORCEMENT AND IN ALL OTHER
6
RESPECTS IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. THE UNDERSIGNED
EXPRESSLY CONSENTS TO THE JURISDICTION AND VENUE OF THE SUPREME COURT OF THE
STATE OF NEW YORK, COUNTY OF NEW YORK, AND OF THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF NEW YORK FOR ALL PURPOSES IN CONNECTION HEREWITH.
ANY JUDICIAL PROCEEDING BY THE UNDERSIGNED AGAINST LENDER INVOLVING, DIRECTLY OR
INDIRECTLY ANY MATTER OR CLAIM IN ANY WAY ARISING OUT OF, RELATED TO OR
CONNECTED HEREWITH SHALL BE BROUGHT ONLY IN THE SUPREME COURT OF THE STATE OF
NEW YORK, COUNTY OF NEW YORK OR THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK. THE UNDERSIGNED FURTHER CONSENTS THAT ANY
SUMMONS, SUBPOENA OR OTHER PROCESS OR PAPERS (INCLUDING, WITHOUT LIMITATION, ANY
NOTICE OR MOTION OR OTHER APPLICATION TO EITHER OF THE AFOREMENTIONED COURTS OR
A JUDGE THEREOF) OR ANY NOTICE IN CONNECTION WITH ANY PROCEEDINGS HEREUNDER, MAY
BE SERVED INSIDE OR OUTSIDE OF THE STATE OF NEW YORK OR THE SOUTHERN DISTRICT OF
NEW YORK BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, OR BY
PERSONAL SERVICE PROVIDED A REASONABLE TIME FOR APPEARANCE IS PERMITTED, OR IN
SUCH OTHER MANNER AS MAY BE PERMISSIBLE UNDER THE RULES OF SAID COURTS. THE
UNDERSIGNED WAIVES ANY OBJECTION TO JURISDICTION AND VENUE OF ANY ACTION
INSTITUTED HEREON AND SHALL NOT ASSERT ANY DEFENSE BASED ON LACK OF JURISDICTION
OR VENUE OR BASED UPON FORUM NON CONVENIENS.
16. SEVERABILITY. To the extent permitted by applicable law, any
provision of this Guaranty which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
17. AMENDMENTS, WAIVERS. No amendment or waiver of any provision of
this Guaranty nor consent to any departure by the undersigned therefrom shall in
any event be effective unless the same shall be in writing executed by the
undersigned and Xxxxxx.
18. NOTICE. All notices, requests and demands to or upon the
undersigned, shall be in writing and shall be deemed to have been duly given or
made (a) when delivered, if by hand, (b) three (3) days after being sent,
postage prepaid, if by registered or certified mail, (c) when confirmed
electronically, if by facsimile, or (d) when delivered, if by a recognized
overnight delivery service in each event, to the numbers and/or address set
forth beneath the signature of the undersigned.
19. SUCCESSORS. Lender may, from time to time, without notice to the
undersigned, sell, assign, transfer or otherwise dispose of all or any part of
the Obligations and/or rights under this Guaranty. Without limiting the
generality of the foregoing, Lender may assign, or grant participations to, one
or more banks, financial institutions or other entities all or any part of any
of the Obligations. In each such event, Lender, its Affiliates and each and
every immediate and successive purchaser, assignee, transferee or holder of all
or any part of the Obligations shall
7
have the right to enforce this Guaranty, by legal action or otherwise, for its
own benefit as fully as if such purchaser, assignee, transferee or holder were
herein by name specifically given such right.
20. RELEASE. Nothing except cash payment in full of the Obligations
shall release the undersigned from liability under this Guaranty.
IN WITNESS WHEREOF, this Guaranty has been executed by the undersigned
this 30th day of June, 2006.
s/Xxxxx Xxxxxx
--------------
XX. XXXXX XXXXXX
Address: 00 Xxxxxx Xxxx Xx
Xxxxxxx, XX 00000______________
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
8
STATE OF NEW YORK )
): ss.:
COUNTY OF NEW YORK )
On the 30th day of June, 2006, before me personally came Xxxxx Xxxxxx
to me known, who being by me duly sworn, did depose and say that s/he resides at
00 Xxxxxx Xxxx Xx., Xxxxxxx, XX, that s/he has read the foregoing instrument and
is fully familiar with the contents thereof; that s/he signed her/his name
thereto of her/his own free will and volition.
s/Xxxxxxx X. Xxxxxx
-------------------
Notary Public
STATE OF NEW YORK )
): ss.:
COUNTY OF NEW YORK )
On the ____ day of ___________, 200_, before me personally came
_______________________ to me known, who being by me duly sworn, did depose and
say that s/he resides at ___________________, that s/he has read the foregoing
instrument and is fully familiar with the contents thereof; that s/he signed
her/his name thereto of her/his own free will and volition.
---------------------------
Notary Public
