EXHIBIT 10.5
Date: March 10, 2005
CONTINUING AND UNCONDITIONAL GUARANTY
This Continuing and Unconditional Guaranty is made and entered into as
of the 8th day of March, 2005, by and between National Coal Corp., a Florida
corporation (the "GUARANTOR"), located at 000 Xxxxxxxx Xxxx, Xxxxxxxxx, XX
00000, with respect to National Coal Corporation, a Tennessee corporation also
located at 000 Xxxxxxxx Xxxx, Xxxxxxxxx, XX 00000 (the "BORROWER") which is the
wholly-owned subsidiary of the Company, and the various Purchasers parties to
that certain Note and Warrant Purchase Agreement ("PURCHASE AGREEMENT") of even
date herewith.
1. GUARANTY. FOR VALUE RECEIVED, and to induce each Purchaser
(the "Purchaser"), to make the loan contemplated by the Note (as hereinafter
defined), the undersigned ("Guarantor") hereby irrevocably and unconditionally
guarantees to the Purchaser the full and prompt payment when due, whether by
acceleration or otherwise, and the faithful, prompt and complete compliance by
Borrower of and with any and all Liabilities (as hereinafter defined) and
Obligations (as hereinafter defined) of Borrower to the Purchaser. This Guaranty
is intended to provide a continuing guarantee of the payment of Liabilities,
without limitation as to amounts guaranteed hereunder.
The undertakings of Guarantor hereunder are independent of the Liabilities and
Obligations of Borrower and a separate action or actions for payment, damages or
performance may be brought or prosecuted against Guarantor for the full amount
of the Liabilities and Obligations, regardless of whether (a) an action is
brought against Borrower or any other guarantor or to realize upon any security
for the Liabilities and/or Obligations, (b) Borrower is joined in any such
action or actions, or (c) notice is given or demand is made upon Borrower.
The Purchaser shall not be required to proceed first against any other
guarantor, Borrower, or any other person, or entity, whether primarily or
secondarily liable, or against any collateral held by it, before proceeding
against Guarantor for payment of all the Liabilities and Obligations, and
Guarantor shall not be entitled to assert as a defense to the enforceability of
the Guaranty any defense of Borrower with respect to any Liabilities or
Obligations.
2. PARAGRAPH HEADINGS, GOVERNING LAW AND BINDING EFFECT.
Guarantor agrees that the paragraph headings in this Guaranty are for
convenience only and that they will not limit any of the provisions of this
Guaranty. Guarantor further agrees that this Guaranty shall be governed by and
construed in accordance with the laws of the State of Tennessee and applicable
United States federal law. Guarantor further agrees that this Guaranty shall be
deemed to have been made in the State of Tennessee. This Guaranty is
binding upon Guarantor and Guarantor's successors and assigns, and shall inure
to the benefit of the Purchaser, its successors, endorsees or assigns.
3. DEFINITIONS.
A. "Liability" or "Liabilities" shall mean without
limitation, all liabilities, overdrafts, indebtedness, and obligations of
Borrower (and any successor entity or entities) to the Purchaser arising under
or related to the Purchase Agreement, the Note or the Security Agreement (each
as defined in the Purchase Agreement), whether direct or indirect, absolute or
contingent, joint or several, secured or unsecured, due or not due, contractual
or tortious, liquidated or unliquidated, arising by operation of law or
otherwise, now or hereafter existing, whether created directly, indirectly or
acquired by assignment or otherwise, including but not limited to all extensions
or renewals thereof, and all sums payable under or by virtue thereof, including
without limitation, all amounts of principal and interest, all reasonable
expenses (including reasonable attorney's fees and cost of collection) incurred
in the collection thereof or the enforcement of rights thereunder, whether
arising in the ordinary course of business or otherwise.
B. "Obligations" shall mean all of the obligations of
Borrower under the Note.
C. All capitalized terms used herein without definition
shall have the meaning set forth in the Purchase Agreement, the Note or the
Security Agreement, as applicable. The Purchase Agreement, the Note and the
Security Agreement are sometimes referred to herein collectively as the "Loan
Documents".
4. WAIVER BY GUARANTOR. Guarantor waives notice of acceptance of
this Guaranty, notice of any Liabilities or Obligations, presentment, demand for
payment, protest, notice of dishonor or nonpayment of any Liabilities, notice of
intent to accelerate, notice of acceleration, and notice of any suit or the
taking of other action by the Purchaser against Borrower, Guarantor or any other
person, any applicable statute of limitations and any other notice to any party
liable on any Loan Document (including Guarantor).
Guarantor also waives the benefits of any provision of law requiring that the
Purchaser exhaust any right or remedy, or take any action, against the Borrower,
any other guarantor or any other person or property prior to or simultaneously
with proceeding against Guarantor hereunder.
The Purchaser may at any time and from time to time (whether before or after
revocation or termination of this Guaranty) without notice to Guarantor (except
as required by law), without incurring responsibility to Guarantor, without
impairing, releasing or otherwise affecting the obligations of Guarantor, in
whole or in part, and without the endorsement or execution by Guarantor of any
additional consent, waiver or guaranty: (a) change the manner, place or terms of
payment, or change or extend the time of or renew, or change any interest rate
or alter any Liability or Obligation or installment thereof, or any security
therefor; (b) loan additional monies or extend additional credit to Borrower,
with or
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without security, thereby creating new Liabilities or Obligations the payment or
performance of which shall be guaranteed hereunder, and the Guaranty herein made
shall apply to the Liabilities and Obligations as so changed, extended,
surrendered, realized upon or otherwise altered; (c) subject to the terms of the
Loan Documents, sell, exchange, release, surrender, realize upon or otherwise
deal with in any manner and in any order any property at any time pledged or
mortgaged to secure the Liabilities or Obligations and offset against any such
or other property; (d) exercise or refrain from exercising any rights against
Borrower or others (including Guarantor) or act or refrain from acting in any
other manner; (e) settle or compromise any Liability or Obligation or any
security therefor and subordinate the payment of all or any part thereof to the
payment of any Liability or Obligation of any other parties primarily or
secondarily liable on any of the Liabilities or Obligations; (f) release or
compromise any liability of Guarantor hereunder or any liability or obligation
of any other parties primarily or secondarily liable on any of the Liabilities
or Obligations; or (g) apply any sums from any sources to any Liability without
regard to any Liabilities remaining unpaid.
5. SUBORDINATION. Guarantor agrees that Guarantor will not
demand, take or receive from Borrower, by set-off or in any other manner,
payment of any debt, now and at any time or times hereafter owing by Borrower to
Guarantor unless and until all the Liabilities shall have been fully paid and
the Obligations fully performed. Any security interest, liens or encumbrances
which Guarantor now has and from time to time hereafter may have upon any of the
assets of Borrower shall be made subordinate, junior and inferior and postponed
in priority, operation and effect to any security interest of the Purchaser in
such assets.
6. WAIVERS BY THE PURCHASER. No delay on the part of the
Purchaser in exercising any of its options, powers or rights, and no partial or
single exercise thereof, shall constitute a waiver thereof. No waiver of any of
its rights hereunder, and no modification or amendment of this Guaranty, shall
be deemed to be made by the Purchaser unless the same shall be in writing, duly
signed on behalf of the Purchaser; and each such waiver, if any, shall apply
only with respect to the specific instance involved, and shall in no way impair
the rights of the Purchaser or the obligations of Guarantor to the Purchaser in
any other respect at any other time.
7. PARTIAL INVALIDITY AND/OR ENFORCEABILITY OF GUARANTY. The
unenforceability or invalidity of any provision of this Guaranty shall not
affect the enforceability or validity of any other provision herein and the
invalidity or unenforceability of any provision of any Loan Document as it may
apply to any person or circumstance shall not affect the enforceability or
validity of such provision as it may apply to other persons or circumstances.
In the event the Purchaser is required to relinquish or return any payments, any
collateral securing the Obligations and the Liabilities or the proceeds thereof,
in whole or in part, which had been previously applied to or retained for
application against any Liability, by reason of a proceeding arising under any
applicable bankruptcy or insolvency law, or for any other reason, this Guaranty
shall automatically continue to be effective notwithstanding any previous
cancellation or release effected by the Purchaser.
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8. CHANGE OF STATUS. Guarantor hereby agrees that this Guaranty
shall remain the binding, legal and enforceable obligation of Guarantor,
irrespective of any change in name, status or type of entity by Borrower.
9. FINANCIAL AND OTHER INFORMATION. Guarantor has made an
independent investigation of the financial condition and affairs of Borrower
prior to entering into this Guaranty, and Guarantor will continue to make such
investigation, and in entering into this Guaranty, Guarantor has not relied upon
any representation of the Purchaser as to the financial condition, operation or
creditworthiness of Borrower. Guarantor further agrees that the Purchaser shall
have no duty or responsibility now or hereafter to make any investigation or
appraisal of Borrower on behalf of Guarantor or to provide Guarantor with any
credit or other information which may come to its attention now or hereafter.
10. NOTICES. Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be in writing
and shall be deemed given and effective on the earliest of (a) the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number set forth on the signature pages attached hereto prior to 5:30
p.m. (New York City time) on a business day, (b) the next business day after the
date of transmission, if such notice or communication is delivered via facsimile
at the facsimile number set forth on the signature pages attached hereto on a
day that is not a business day or later than 5:30 p.m. (New York City time) on
any business day, (c) the second business day following the date of mailing, if
sent by U.S. nationally recognized overnight courier service, or (d) upon actual
receipt by the party to whom such notice is required to be given. The address
for such notices and communications shall be as set forth in the Purchase
Agreement.
11. GUARANTOR DUTIES. Guarantor shall upon notice or demand by the
Purchaser promptly and with due diligence pay all Liabilities when due and
perform and satisfy all Obligations in accordance with the Loan Documents for
the benefit of the Purchaser.
12. REMEDIES. Upon the failure of Guarantor to fulfill Guarantor's
duty to pay all Liabilities and perform and satisfy all Obligations as required
hereunder, the Purchaser shall have available all of the remedies of a creditor
of Guarantor and of a secured party under all applicable law, and without
limiting the generality of the foregoing, the Purchaser may, at its option and
without notice or demand: (a) declare any Liability or Obligation to be
immediately due and payable, at which point such Liability and Obligation shall
become immediately due and payable; and (b) set-off against any or all
liabilities of Guarantor all money owed by the Purchaser or any of its agents or
affiliates in any capacity to Guarantor whether or not due, and also set-off
against all other Liabilities of Guarantor to the Purchaser all money owed by
the Purchaser in any capacity to Guarantor, and if exercised by the Purchaser,
the Purchaser shall be deemed to have exercised such right of set-off and to
have made a charge against any such money immediately upon the occurrence of
such default although made or entered on the books subsequent thereto.
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13. ATTORNEY FEES, COST AND EXPENSES. Guarantor shall pay all
costs of collection and reasonable attorney's fees, including reasonable
attorney's fees in connection with any suit, mediation or arbitration
proceeding, out of court payment agreement, trial, appeal, Bankruptcy
proceedings or otherwise, incurred or paid by the Purchaser in enforcing the
payment of any Liability or the enforcement of any Obligation.
14. REPRESENTATIONS AND WARRANTIES. Guarantor represents and
warrants to the Purchaser that (i) Guarantor has full corporate power and
capacity to execute and deliver this Guaranty and each other Loan Document to
which Guarantor is a party and to incur and perform the obligations and
undertakings provided herein and therein; (ii) no consent or approval of any
governmental authority or any third party is or will be required as a condition
to the enforceability of this Guaranty and each other Loan Document to which
Guarantor is a party; (iii) this Guaranty and each other Loan Document to which
Guarantor is a party has been duly executed and delivered by the Guarantor and
is enforceable against the Guarantor in accordance with the terms hereof and
thereof; (iv) there is no litigation or proceeding involving the Guarantor
pending or, to the knowledge of the Guarantor, threatened before any court,
tribunal or governmental authority, which may in any way materially adversely
affect the financial condition or property of the Guarantor, except as
previously disclosed in writing to the Purchaser; (v) there is no law, rule,
regulation or order pertaining to the Guarantor and no provision of any
agreement, mortgage or contract binding on the Guarantor or affecting
Guarantor's property, which could conflict with, be breached by, be in default
or in any way prevent, the execution, delivery or carrying out of the terms of
this Guaranty and each other Loan Document to which Guarantor is a party; and
(vi) Guarantor is the sole shareholder of Borrower and is receiving immediate,
direct and substantial benefit from the transactions contemplated by the Loan
Documents.
15. CONTROLLING DOCUMENT. To the extent that this Guaranty
conflicts with or is in any way incompatible with any provision of any other
Loan Document, the terms of the Note shall govern over any issue addressed
therein, and issues not addressed in the Note shall be governed by the terms of
the Loan Document that most specifically addresses such issues.
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16. NOTICE OF FINAL AGREEMENT. THIS WRITTEN GUARANTY REPRESENTS
THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE
OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENTIAL AGREEMENTS OF THE PARTIES. THERE ARE
NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
IN WITNESS WHEREOF, the undersigned has caused this Guaranty
to be executed as of the date written above.
GUARANTOR:
NATIONAL COAL CORP.,
a Florida corporation
By:
/S/ XXX X. XXX
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Xxx Xxx
Title: Chief Executive Officer
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