GUARANTY & AGREEMENT
Guaranty and Agreement ("Guaranty") between the Guarantor named below and RZB
FINANCE LLC (together with its successors and assigns, "RZB"), dated as of
September 15, 2004.
1. SPECIAL TERMS
The following terms and provisions shall apply to this Guaranty; the
meaning of any term in this or other sections of this Guaranty expressed in
the singular shall apply, mutatis mutandis, to the same term expressed in
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the plural and vice versa.
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BORROWER: Penn Octane Corporation, a Delaware corporation
GUARANTOR : Rio Vista Operating Partnership L.P., a Delaware limited
partnership
GUARANTEED OBLIGATIONS: All indebtedness, liabilites and obligations of
the Borrower to RZB now existing or hereafter arising including, but not
limited to, those arising under the following documents (including any
modifications thereof or substitutions therefor, the "Loan Documents"):
DOCUMENTS: Amended and Restated Line Letter, dated as of September 15,
2004, (the "Line Letter"), General Security Agreement, dated October 18,
2002, Continuing Agreement for Letters of Credit, dated October 14, 1997,
Promissory Note, dated September 15, 2004
2. GUARANTY
2.1 Continuing Guaranty of Payment. In consideration of RZB agreeing to
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the Loan Documents and/or extending or continuing credit to the Borrower in
connection therewith, the Guarantor irrevocably, absolutely and
unconditionally guarantees to RZB the payment when due of all Guaranteed
Obligations, together with interest thereon and other charges related
thereto. For purposes of this Guaranty, the Guaranteed Obligations shall be
due on the earliest of:
2.a. the due date thereof (by acceleration or otherwise),
2.b. with respect to any obligation due on demand, upon demand therefor
made by RZB upon the Borrower or the Guarantor,
2.c. the giving of notice by RZB to the Borrower or Guarantor of the
occurrence of any default by the Guarantor hereunder (including any
material misrepresentation by the Guarantor herein or in connection
herewith),
2.d. the occurrence of a material adverse change in the Borrower or the
Guarantor,
2.e. the Borrower shall disaffirm or disavow any of its obligations under
the Loan Documents or the Guarantor shall disaffirm any of its
obligations hereunder,
2.f. the Borrower or the Guarantor shall admit in writing its inability to
pay its debts as they become due,
2.g. any indebtedness (direct or contingent) for borrowed money of the
Borrower or the Guarantor shall not be paid as and when the same
becomes due and payable, including any applicable grace period, or
2.h. the commencement of any bankruptcy, insolvency or similar proceeding
by or against the Borrower or the Guarantor.
This is a guaranty of payment rather than of collection; this is also a
continuing guaranty and all liabilities to which this Guaranty applies, or
may apply, under the terms hereof shall be presumed to have been created in
reliance hereon.
2.2 Nature of Obligations. The obligations of the Guarantor to make
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payments to RZB hereunder are direct and primary obligations which shall
not be discharged for any reason until RZB has been indefeasibly paid in
full. Without limiting the generality of the foregoing, the obligations of
the Guarantor hereunder shall remain in force irrespective of:
2.a. any invalidity, illegality or unenforceability of, or any defect in,
any of the Loan Documents or Guaranteed Obligations or any defense
which the Borrower may have with respect thereto,
2.b. the existence or absence of any legal action to enforce the Guaranteed
Obligations or the Loan Documents or any security therefor, the
issuance of any judgment therefor or the execution of any such
judgment, or
2.c. any other circumstance which might otherwise constitute a defense
available to or discharge of, a guarantor or surety of any type.
This guaranty is several and independent of, and may be enforced regardless
of, any other obligation (direct or contingent) of the Guarantor or any
other "Person" (such term to include any person or legal or governmental
entity, association, agency or instrumentality) with respect to the
Guaranteed Obligations.
2.3 Payments. All payments by the Guarantor hereunder shall be made to
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RZB without set-off, recoupment, deduction or counterclaim at its office
set forth below (or as RZB may otherwise direct) in lawful currency of the
United States of America and in immediately available funds. Without
limiting the foregoing, all payments hereunder shall be made free and clear
of, and without deduction for, any present or future withholding or other
taxes or duties, including stamp duties, or other charges of any nature
imposed on such payments by or on behalf of any government or any political
subdivision or agency thereof or therein. If any such taxes, duties or
charges are so levied or imposed on any such payment, the Guarantor will
make additional payments in such amounts as may be necessary so that the
net amount received by RZB, after deduction for or on account of all such
taxes, duties or charges, will be equal to the amount provided for herein.
The Guarantor shall furnish promptly to RZB official receipts evidencing
the payment of any such taxes, duties or charges paid by the Guarantor.
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3. SPECIAL AGREEMENTS OF GUARANTOR
3.1 Subordination. Subject to the next following sentence of this Section
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3.1:
3.a. all claims of the Guarantor against the Borrower shall be subject and
subordinate to the prior payment to RZB of all Guaranteed Obligations
and all obligations of the Guarantor hereunder, and
3.b. the Guarantor shall not be entitled to receive any payment or exercise
any set-off in respect of any such claim and, to the extent any such
payment is received (whether directly, by way of dividend in
bankruptcy, set-off or otherwise), the Guarantor will forthwith
deliver the same (or the value thereof) to RZB in precisely the form
received (except for endorsement or assignment where necessary), for
application to the Guaranteed Obligations and, until so delivered, the
same shall be held in trust as the property of RZB.
Notwithstanding the foregoing, except as provided in Section 3.2, until the
occurrence of any default or event of default under the Loan Documents or
this Guaranty, or any demand for payment of any of the Guaranteed
Obligations, the Guarantor may receive and retain payment in respect of any
obligation owed to it by the Borrower. If the Guarantor fails to make any
necessary endorsement or assignment of any instrument of payment to which
RZB is entitled, RZB and any of its officers or employees are hereby
irrevocably authorized to make the same on behalf of the Guarantor.
3.2 No Subrogation. The Guarantor hereby waives any right of subrogation
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that it may have with respect to any payment that it may have made to RZB
hereunder.
3.3 No Contribution. The Guarantor agrees that it shall have no legal or
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equitable right or claim (by way of indemnification, contribution or
otherwise) against any subsidiary or affiliate of RZB which has issued a
guaranty to RZB in respect of the Guaranteed Obligations.
3.4 Waivers. Except to the extent required by law which cannot be waived,
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the Guarantor waives notice of acceptance of this Guaranty and notice of
any liability to which it may apply, and waives diligence, presentment,
demand for payment, protest, notice of dishonor or nonpayment of any such
liabilities, suit or taking other action or making any demand by RZB
against, and any other notice to, any party liable thereon (including the
Guarantor). The Guarantor agrees that RZB may at any time and from time to
time, upon or without any terms or conditions and in whole or in part:
3.a. change the manner, place or terms of, and/or change or extend the time
of payments of, renew or alter, any of the Guaranteed Obligations, any
security therefor, or any liability incurred directly or indirectly in
respect thereof, and this Guaranty shall apply to the Guaranteed
Obligations so changed, extended, renewed or altered,
3.b. fail to record, perfect or protect, or sell, exchange, release,
surrender, realize upon or otherwise deal with in any manner and in
any order, any property or Person whatsoever at any time securing or
guaranteeing the Guaranteed Obligations or any liabilities (including
any of those hereunder) incurred directly or indirectly in respect
thereof or hereof, and/or any offset thereagainst,
3.c. exercise or refrain from exercising any rights against the Borrower or
any other Person (including any guarantor) or otherwise act or refrain
from acting,
3.x. xxxxxx, release or compromise any of the Guaranteed Obligations, any
security therefor or any liability (including any of those hereunder)
incurred directly or indirectly in respect thereof or hereof, and may
subordinate the payment of all or any part of the Guaranteed
Obligations to the payment of any other liability (whether due or not)
of the Borrower to the creditors of the Borrower (including RZB),
3.e. apply any sums by whomsoever paid or howsoever realized to any
liability or liabilities of the Borrower to RZB regardless of what
liability or liabilities of the Borrower remain unpaid, provided that
payments by the Guarantor pursuant to this Guaranty shall be applied
to its obligations hereunder, but in such order as RZB may determine,
3.f. consent to or waive any breach of or act, omission or default under,
or modify or amend any provision of, the Loan Documents, and/or
3.g. increase the amount of indebtedness of the Borrower to RZB, whether
under the Loan Documents or otherwise.
It is understood and agreed that RZB may take any such action without the
consent of, or notice to, the Guarantor, without incurring responsibility
to the Guarantor, and without impairing or releasing the obligations of the
Guarantor hereunder.
3.5 Amounts Reclaimed. If claim is made upon RZB for repayment or
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recovery of any amount received on account of any of the Guaranteed
Obligations and RZB repays all or part of said amount by reason of:
3.a. any judgment, decree or order of any court, administrative body or
trustee in bankruptcy (or other Person acting on behalf of the
Borrower or its estate) or,
3.b. any settlement or compromise of any such claim effected by RZB with
any such claimant (including the Borrower), or
c. any other reason,
then, and in any such event, the Guarantor agrees that any such repayment
(by reason of any such judgment, decree, order, settlement or compromise or
otherwise) shall be binding upon the Guarantor, notwithstanding any
cancellation of the Loan Documents or this Guaranty, and the Guarantor
shall be and remain liable to RZB hereunder for the amount so repaid or
recovered to the same extent as if such amount had never been received by
RZB.
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3.6 Interest. If the Guarantor fails to pay when due any obligation
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hereunder, then, to the extent permitted by law, such obligation shall bear
interest, payable on demand, from the due date thereof until paid at a
fluctuating rate per annum equal to 2% in excess of the Base Lending Rate
(as hereinafter defined); provided that no such additional interest shall
be payable in respect of any such obligation on which interest is
simultaneously accruing pursuant to the Loan Documents. The term "Base
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Lending Rate" means, for any day, the higher of (i) the rate announced by
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The Chase Manhattan Bank (the "Bank") from time to time at its principal
office in New York, New York as its prime rate for domestic (United States)
commercial loans in effect on such day and (ii) the Federal Funds Rate (as
hereinafter defined) in effect on such day plus 1/2%. (Such Base Lending
Rate is not necessarily intended to be the lowest rate of interest charged
by the Bank in connection with extensions of credit.) Each change in the
Base Lending Rate shall result in a corresponding change in the interest
rate and such change shall be effective on the effective date of such
change in the Base Lending Rate.
The term "Federal Funds Rate" means, for any day, the overnight federal
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funds rate in New York City, as published for such day (or, if such day is
not a New York Business Day, for the next preceding New York Business Day)
in the Federal Reserve Statistical Release H.15 (519) or any successor
publication, or if such rate is not so published for any day which is a New
York Business Day, the average of the quotations for such day on overnight
federal funds transactions in New York City received by RZB or the Bank
from three federal funds brokers of recognized standing selected by RZB or
the Bank.
3.7 The Borrower, etc. The Guarantor will not cease to own (directly or
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indirectly), free and clear of all liens and encumbrances, the interest in
the Borrower or any other Loan Party (as defined in the Line Letter) which
it presently owns (if any) and will not agree to sell or subject to any
lien, encumbrance or any other security device such interest at any future
time, until the Loan Documents are terminated and all Guaranteed
Obligations and all obligations of the Guarantor hereunder are paid in
full.
3.8 Information. The Guarantor will promptly furnish to RZB such
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information regarding its and the Borrower's business, affairs and
financial condition as RZB may from time to time reasonably request.
3.9 Secured Obligations. The Guarantor shall not grant, create, assume,
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incur or suffer to exist a security interest in or lien or encumbrance upon
any of its property for the purpose of securing the obligations of the
Borrower and/or itself to any other Person unless such Person shall have
entered into an intercreditor agreement with RZB in form and substance
satisfactory to RZB.
4. REPRESENTATIONS, WARRANTIES AND AGREEMENTS
In order to induce RZB to agree to the Loan Documents, to extend or
continue the credit provided thereby and to accept this Guaranty, the
Guarantor makes the following representations, warranties and agreements
which shall survive the execution and delivery of this Guaranty:
4.1 Organizational Status and Power. The Guarantor:
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4.a. is, and will continue to be, duly organized and validly existing under
the law of the jurisdiction of its organization, as indicated in
Section 1, and
4.b. has the power to own its assets, to conduct its business as now
conducted and to enter into and perform the provisions of this
Guaranty.
4.2 Legality. The entering into and performance by the Guarantor of this
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Guaranty:
4.a. have been duly authorized by all necessary corporate and stockholder
action or other action required by its organizational documents, and
4.b. do not contravene any existing law or any legal order applicable to,
or license or permit granted to, the Guarantor, or any agreement or
instrument to which the Guarantor is a party or to which it or any of
its assets is subject or any provision of the Guarantor's
organizational documents.
This Guaranty is the legal, valid and binding obligation of the Guarantor,
enforceable in accordance with its terms.
4.3 Governmental Approvals. Neither any action by or with any
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governmental or public body or authority (including, without limitation,
any exchange control or monetary authority), or any subdivision thereof,
nor any other legal formality is required in connection with the entering
into, performance or enforcement of this Guaranty (collectively,
"Governmental Approvals"), except such as has been obtained or taken and
with respect to which a copy or other satisfactory evidence thereof has
been furnished to RZB. The Guarantor will maintain all requisite
Governmental Approvals until the Loan Documents are terminated and the
Guaranteed Obligations and all of its obligations hereunder are paid in
full.
4.4 Financial Condition. The most recent year-end financial statements of
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the Guarantor furnished to RZB prior to the date hereof have been prepared
in accordance with generally accepted accounting principles consistently
applied and fairly present the financial condition and the results of
operations of the Guarantor as at the end of and for the reporting period
covered thereby. There are no material liabilities or any material
unrealized or anticipated losses from unfavorable commitments which are not
disclosed in such financial statements. There has been no material adverse
change in the operations, business or financial condition of the Guarantor
from that set forth in such financial statements; and there are no legal
proceedings pending or, to the knowledge of the Guarantor threatened,
against or affecting the Guarantor which might (individually or in the
aggregate) result in such a material adverse change.
4.5 Investment Company Act. The Guarantor is not required to register
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under the Investment Company Act of 1940, as amended (the "Act"), and the
entering into of this Guaranty and the performance thereof do not violate
any provision of the Act.
On each anniversary of the date of this Agreement, the Guarantor shall
deliver to RZB a certificate of an authorized officer of the Guarantor
wherein the Guarantor shall reaffirm to RZB the continuing truth and
validity of the representations and warranties set forth in the foregoing
Section 4. The failure of the Guarantor to deliver and/or RZB to demand
such delivery of the foregoing certificate shall in no way affect or
invalidate the continuing nature of the representations and warranties set
forth in the foregoing Section 4.
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5. MISCELLANEOUS
5.1 Payment of Expenses. The Guarantor agrees to pay all out-of-pocket
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costs and expenses of RZB arising in connection with its administration and
enforcement of, or preservation of its rights under, this Guaranty
(including, without limitation, the reasonable fees and expenses of counsel
for RZB), and all stamp taxes (including interest and penalties, if any)
which may be payable in respect of this Guaranty or of any modification of
this Guaranty.
5.2 Modification. This Guaranty may be modified or waived only by an
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instrument in writing signed by the party against whom enforcement of the
modification or waiver is sought.
5.3 THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEW YORK (WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW).
5.4 Notices. Communications given to any party in connection with this
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Guaranty shall be in English and in writing and shall be effective when
delivered at its address set forth herein, as the same may be changed by
written notice to the other party. Written communications may be in any
form of writing howsoever transmitted.
5.5 Waiver. RZB's rights, powers, privileges and remedies under this
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Guaranty or applicable law are cumulative and not exclusive and shall not
be waived, precluded or limited by any failure or delay in the exercise
thereof or by RZB's exercise, or partial exercise, of any thereof or by any
course of dealing between the Guarantor and RZB. No notice to or demand on
the Guarantor in any case shall entitle the Guarantor to any other or
further notice or demand in similar or other circumstances or constitute a
waiver of the right of RZB to any other or further action in any
circumstance without notice or demand.
5.6 Descriptive Headings. The descriptive headings used in this Guaranty
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are for convenience only and shall not be deemed to affect the meaning or
construction of any provision hereof.
5.7 Benefit of Guaranty. This Guaranty shall be binding upon the
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Guarantor and its successors and assigns and shall inure to the benefit of,
and be enforceable by, RZB and its successors and assigns and, in
particular, any holder or assignee from time to time of the Loan Documents;
provided that the Guarantor may not assign any of its rights or obligations
hereunder without the prior written consent of RZB.
5.8 Set-Off. RZB is authorized at any time and from time to time, without
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notice to the Guarantor or to any other Person, any such notice being
hereby expressly waived, to set off and apply any and all deposits (general
or special) and any other indebtedness at any time held or owing by RZB to
or for the credit or the account of the Guarantor against and on account of
the obligations of the Guarantor under this Guaranty, irrespective of
whether or not RZB shall have made any demand hereunder or any demand for
payment of any Guaranteed Obligation and although said obligations,
liabilities or claims, or any of them, shall be contingent or unmatured,
and the Guarantor hereby grants to RZB a security interest in all such
deposits and indebtedness.
5.9 Jurisdiction and Immunity. The Guarantor represents and agrees that
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it is not entitled to, and to the extent it hereafter becomes so entitled
hereby waives, any immunity, sovereign or otherwise, with respect to itself
and its property from jurisdiction, service, attachment (both before and
after judgment) and execution in legal proceedings wherever commenced to
enforce or collect upon this Guaranty.
5.10 Survival. The provisions of Sections 3.5, 5.1 and 5.11 shall survive
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the termination and cancellation of this Guaranty and, after cancellation
and return to the Guarantor, a photocopy hereof may be submitted as
evidence of such surviving obligations. Nothing herein shall preclude RZB
from establishing such obligations by other means.
5.11 WAIVER OF JURY TRIAL. EACH OF THE GUARANTOR AND RZB HEREBY KNOWINGLY,
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VOLUNTARY AND INTENTIONALLY WAIVES ANY AND ALL RIGHTS IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON, OR ARISING OUT OF,
UNDER, OR IN CONNECTION WITH THIS GUARANTY OR ANY OTHER DOCUMENT OR
AGREEMENT EXECUTED IN CONNECTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE
OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), OR ACTIONS OF THE
GUARANTOR, THE BORROWER OR RZB. THIS PROVISION IS A MATERIAL INDUCEMENT FOR
RZB'S EXTENDING TO THE BORROWER THE CREDIT FACILITY TO WHICH THIS GUARANTY
RELATES.
5.12 Consent to Jurisdiction. The Guarantor hereby agrees that ANY LEGAL
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ACTION OR PROCEEDING AGAINST THE GUARANTOR WITH RESPECT TO THIS GUARANTY OR
ANY LOAN DOCUMENT MAY BE BROUGHT IN XXX XXXXXX XX XXX XXXXX XX XXX XXXX IN
THE CITY OF NEW YORK OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN
DISTRICT OF NEW YORK, as RZB may elect, and, by execution and delivery
hereof, the Guarantor accepts and consents to, for itself and in respect of
its property, generally and unconditionally, the jurisdiction of the
aforesaid courts and agrees that such jurisdiction shall be exclusive,
unless waived by RZB in writing, with respect to any action or proceeding
brought by it against RZB and any question relating to usury. Nothing
herein shall limit the right of RZB to bring proceedings against the
Guarantor in the courts of any other jurisdiction. Service of process out
of any such courts may be made by mailing copies thereof by registered or
certified mail, postage prepaid, to the Guarantor at its address for
notices as specified herein and will become effective 30 days after such
mailing. The Guarantor agrees that Sections 5-1401 and 5-1402 of the
General Obligations Law of the State of New York shall apply to this
Guaranty and the Loan Documents and, to the maximum extent permitted by
law, waives any right to any defense of, or to dismiss any action or
proceeding brought before said court on the basis of, forum non conveniens.
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IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be executed and
delivered by its duly authorized officer(s) as of the date first above written.
NAME OF GUARANTOR:
RIO VISTA OPERATING PARTNERSHIP L.P.
By: RIO VISTA OPERATING GP LLC, general partner
By: /s/ Xxxxxxx Xxxxx, Jr.
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Name: Xxxxxxx Xxxxx, Jr.
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Title: President
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ADDRESS OF GUARANTOR:
Rio Vista Operating Partnership L.P.
000 Xxxxxxx Xxxx
Xxxxxxx, XX 00000
ACCEPTED AS OF THE DATE FIRST ABOVE WRITTEN:
RZB FINANCE LLC
By: /s/ Xxxxx Xxxxxxx
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Xxxxx Xxxxxxx
Title: First Vice President
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By: /s/ Xxxxxxxx Xxxxxx
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Xxxxxxxx Xxxxxx
Title: Vice President
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