OVERRUN GUARANTY
EXHIBIT 10.2
This OVERRUN GUARANTY (“Guaranty”), dated as of October 1, 2007, is entered into by and
between Xxxxxx X. Xxxxxxx and Xxxxxxx X. Xxxxxxx (each individually, a “Guarantor” and
collectively, “Guarantors”) and Renegy Holdings, Inc., a Delaware corporation (“Holdings”).
WHEREAS, Holdings, Catalytica Energy Systems, Inc., a Delaware corporation (“Catalytica”),
Snowflake Acquisition Corporation, a Delaware corporation and wholly-owned subsidiary of Holdings,
Renegy, LLC, an Arizona limited liability company (“Renegy”), Renegy Trucking, LLC, an Arizona
limited liability company (“Renegy Trucking”), Snowflake White Mountain Power, LLC, an Arizona
limited liability company (“Snowflake” and, together with Renegy and Renegy Trucking, the
“Companies”), Xxxxxx X. Xxxxxxx, Xxxxxxx X. Xxxxxxx and the Xxxxxx X. Xxxxxxx and Xxxxxxx X.
Xxxxxxx Revocable Trust (the “Worsley Trust”), have entered into that certain Contribution and
Merger Agreement dated as of May 8, 2007, as amended (the “Merger Agreement”), pursuant to which
Catalytica and the Companies shall combine and each of them shall become wholly owned subsidiaries
of Holdings upon the terms and subject to the conditions set forth therein (the “Merger”);
WHEREAS, at the Closing (such term and each other term used but not defined herein has the
meaning given to it in the Merger Agreement) and subject to the terms of the Merger Agreement, the
Worsley Trust, which is controlled by the Guarantors, in consideration of the contribution of all
of the membership interests in the Companies to Holdings, shall be entitled to receive shares of
Holdings Common Stock and warrants to purchase shares of Holdings common stock, in each case
subject to adjustment pursuant to the Merger Agreement;
WHEREAS, the Companies, CoBank, ACB, as Administrative Agent and Collateral Agent, the LC
Issuer as defined therein, and the Lenders party thereto have entered into that certain Credit
Agreement, dated as of September 1, 2006, as amended (the “Credit Agreement”), pursuant to which
the Lenders have extended credit to the Companies;
WHEREAS, Guarantors and CoBank, ACB, as Administrative Agent under the Credit Agreement
(“CoBank”) entered into that certain Sponsor Guaranty dated as of September 1, 2006 (the “Sponsor
Guaranty”), pursuant to which, among other things, Guarantors guaranteed to Administrative Agent
that Guarantors shall pay Snowflake any amounts in excess of the budgeted Project Costs of
$67,310,572 which are necessary to achieve Completion (as such terms are defined in the Credit
Agreement); and
WHEREAS, the execution and delivery of this Guaranty by Guarantors is a condition precedent to
Catalytica’s obligation to consummate the transactions contemplated by the Merger Agreement.
NOW, THEREFORE, in order to induce Catalytica to enter into the Merger Agreement and the
Collateral Agreements and in order to induce Holdings to agree to the rights and obligations of
Holdings under the Merger Agreement pursuant to the Assumption Agreement, and for each of
Catalytica and Holdings to take the actions contemplated thereby, and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, and intending to be
legally bound with knowledge that Catalytica and Holdings will rely hereon, Guarantors hereby
represent, warrant, covenant and agree as follows:
1. Guaranty. Guarantors hereby jointly and severally unconditionally, irrevocably,
continuously, and absolutely guarantee to Holdings that if the Project Costs (as defined in the
Credit Agreement) which are necessary to achieve Commercial Operation (as defined in the Credit
Agreement) exceed the sum of: (x) budgeted Project Costs of $67,310,572 and (y) $2,000,000,
Guarantors shall pay such excess amount to Holdings in sufficient time for Holdings to be able to
pay the applicable Projects Costs (the “Guaranteed Obligations”). For the avoidance of doubt, (i)
Project Costs as used in this Guaranty shall include any and all operating and other costs
(including, without limitation, the cost of, or cost to procure, feed stock, testing, payroll and
related benefits, insurance, gas, lubes, financing fees and interest costs, other soft costs, and
investment in any Renegy entities but excluding depreciation) necessary to achieve Commercial
Operation (as defined in the Credit Agreement) and offset by any revenues generated by sales of
electricity and logging activities, and (ii) Project Costs as used in this Guaranty shall not
include any such operating or other costs incurred after the date upon which Commercial Operation
(as defined in the Credit Agreement) is achieved.
2. Guaranty Absolute. The liability of Guarantors under this Guaranty shall be
absolute, unconditional, present and continuing until all of the Guaranteed Obligations have been
indefeasibly paid in full or performed, as applicable, irrespective of:
(a) any assignment or other transfer, in whole or in part, of Holdings’ interests in and
rights under this Guaranty, the Merger Agreement and/or the Collateral Agreements, including,
without limitation, Holdings’ right to receive payment and require performance of the Guaranteed
Obligations;
(b) any amendment, waiver, renewal, extension or release of or any consent to or departure
from or other action or inaction related to the Merger Agreement, the Credit Agreement and the
other Credit Documents (as defined in the Credit Agreement), or any other agreement or instrument
relating to the Guaranteed Obligations;
(c) any lack of validity or enforceability of or defect or deficiency in this Guaranty or any
other documents to which Holdings, the Companies and/or either Guarantor is or may become a party;
(d) any modification, extension or waiver of any of the terms of this Guaranty;
(e) except as to applicable statutes of limitation, failure, omission, delay, waiver or
refusal by Holdings to exercise, in whole or in part, any right or remedy held by Holdings with
respect to this Guaranty;
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(f) insolvency, bankruptcy, reorganization, arrangement, adjustment, composition, assignment
for the benefit of creditors, death, liquidation, winding up, dissolution or other similar
proceeding of Holdings, the Companies, one or both of the Guarantors or any other guarantor of the
Guaranteed Obligations or other similar proceeding; and
(g) any other circumstance that might otherwise constitute a defense available to, or a
discharge of, Guarantors in respect of the Guaranteed Obligations, other than payment in full of
the Guaranteed Obligations.
3. Obligations Several. This is a guaranty of payment and performance and not of
collection. The obligations of Guarantors hereunder are several from the Companies or any other
person (including with respect to one Guarantor, the other Guarantor), and are primary obligations
concerning which Guarantors are the principal obligors. There are no conditions precedent to the
enforcement of this Guaranty, except as expressly contained herein. It shall not be necessary for
Holdings, in order to enforce payment and performance by Guarantors under this Guaranty, to exhaust
its remedies against the Companies or Guarantors, any other guarantor, or any other person liable
for the payment or performance of the Guaranteed Obligations. Holdings shall not be required to
mitigate damages or take any other action to reduce, collect, or enforce the Guaranteed
Obligations.
4. Obligations Continuing. This Guaranty shall continue to be effective or be
reinstated, as the case may be, if at any time any payment of any of the Guaranteed Obligations are
annulled, set aside, invalidated, declared to be fraudulent or preferential, rescinded or must
otherwise be returned, refunded or repaid by Holdings, or by Snowflake respecting the Sponsor
Guaranty, upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of either
Guarantor, any of the Companies or any other guarantor, or upon or as a result of the appointment
of a receiver, intervener or conservator of, or trustee or similar officer for, either Guarantor,
any of the Companies or any other guarantor or any substantial part of their property or otherwise,
all as though such payment or payments had not been made.
5. Enforcement of Guaranty. The Special Committee of Holdings, acting on behalf of
Holdings, shall have the power to enforce this Guaranty against Guarantors and each of them to the
full extent of Guarantors’ obligations under this Guaranty. In no event shall Holdings have any
obligation (although it is entitled, at its option) to proceed against the Companies before seeking
satisfaction from Guarantors, and Holdings may proceed, prior or subsequent to, or simultaneously
with, the enforcement of Holding’s rights hereunder, to exercise any right or remedy which it may
have under this Guaranty and the Merger Agreement.
6. Waiver. Guarantors hereby waive:
(a) notice of acceptance of this Guaranty, of the creation or existence of any of the
Guaranteed Obligations and of any action by Holdings in reliance hereon or in connection herewith;
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(b) except as expressly set forth herein, promptness, diligence, all setoffs, presentment,
demand for payment or performance, notice of dishonor, nonpayment or nonperformance, protest and
notice of protest with respect to the Guaranteed Obligations;
(c) any requirement for Holdings, the Companies or any other person to protect, secure,
perfect or insure any security interest or lien or any property subject thereto or exhaust any
right or take any action against Guarantors or either of them, any other entity or any collateral;
(d) any provision of any statute or judicial decision otherwise applicable hereto which
restricts or in any way limits the rights of any obligee against a guarantor or surety following a
default or failure of performance by an obligor with respect to whose obligations the guarantee or
surety is provided;
(e) any requirement that suit be brought against, or any other action by Holdings be taken
against, or any notice of default or other notice be given to, or any demand be made on,
Guarantors, the Companies or any other person, or that any other action be taken or not taken as a
condition to Guarantors’ liability for the Guaranteed Obligations under this Guaranty or as a
condition to the enforcement of this Guaranty against Guarantors; and
(f) any defense of the Companies or the cessation, from any cause whatsoever, of the liability
of the Companies.
7. Expenses. Guarantors agree to pay on demand any and all costs, including
reasonable legal fees, and other expenses incurred by Holdings in enforcing Guarantors’ obligations
under this Guaranty. Guarantors hereby unconditionally, absolutely and irrevocably agree to hold
Holdings and its successors and assigns harmless and to indemnify Holdings and its successors and
assigns from, for and against any and all costs and expenses, including reasonable attorneys’ fees,
arising out of or relating to any failure by Guarantors to carry out, observe and perform in
accordance with this Guaranty any of the Guaranteed Obligations contained in or arising from this
Guaranty.
8. Benefit of Guaranty. The provisions of this Guaranty are for the benefit of
Holdings and its successors, transferees, endorsees and assigns.
9. Subrogation. Guarantors hereby waive any right of subrogation they otherwise might
have had against the Companies.
10. Reinstatement. This Guaranty shall remain in full force and effect and continue
to be effective should any petition be filed by or against the Companies or either one or both of
Guarantors for liquidation or reorganization, should the Companies or either one or both of
Guarantors become insolvent or make an assignment for the benefit of creditors or should a receiver
or trustee be appointed for all or any significant part of the Companies’ or one or both of
Guarantors’ assets, and shall continue to be effective or be reinstated, as the case may be, if at
any time payment and performance of the Guaranteed Obligations, or any part thereof, is, pursuant
to applicable law, rescinded or reduced in amount, or otherwise must be restored or returned by
Holdings, or by Snowflake respecting the Sponsor Guaranty, whether as a “voidable preference”,
“fraudulent
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conveyance”, or otherwise, all as though such payment or performance had not been made. In
the event that any payment, or any part thereof, is rescinded, reduced, restored or returned, the
Guaranteed Obligations shall be reinstated and deemed reduced only by such amount paid and not so
rescinded, reduced, restored or returned.
11. Continuing Guaranty. This Guaranty is a continuing guaranty and shall remain in
effect until the Guaranteed Obligations have been paid in full. Any other guarantors of all or any
part of the Guaranteed Obligations may be released without affecting the liability of Guarantors
hereunder.
12. Adjustment to Merger Agreement Contribution Consideration. Any payments made to
Holdings by Guarantors pursuant to this Guaranty shall constitute a reduction in the Contribution
Consideration pursuant to the Merger Agreement.
13. Notices. All demands, notices and other communications provided for hereunder
shall, unless otherwise specifically provided herein, (a) be in writing addressed to the party
receiving the notice at the address set forth below or at such other address as may be designated
by written notice, from time to time, to the other party, and (b) be effective upon delivery, when
mailed by U.S. mail, registered or certified, return receipt requested, postage prepaid, or
personally delivered. Notices shall be sent to the following addresses:
If to Holdings:
|
Renegy Holdings, Inc. | |
| To Holdings’ Chief Financial Officer at the address of Holdings’ principal office as set forth in the last filing by Holdings with the Securities and Exchange Commission | ||
| Attn: Special Committee of the Board of Directors | ||
| Telephone: (000) 000-0000 | ||
| Facsimile: (000) 000-0000 | ||
| With a copy to (which shall not constitute notice): | ||
| Xxxxx X. Xxxxxxxxx, Esq. | ||
| Xxxxxxx X. Xxxxxxxxxxx, Esq. | ||
| Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx | ||
| Professional Corporation | ||
| 000 Xxxx Xxxx Xxxx | ||
| Xxxx Xxxx, Xxxxxxxxxx 00000 | ||
| Telephone: (000) 000-0000 | ||
| Facsimile: (000) 000-0000 |
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If to Guarantors:
|
Xxxxxx X. Xxxxxxx and Xxxxxxx X. Xxxxxxx | |
| 0000 X.Xxx Xxxxx Xxxxx | ||
| Xxxx, XX 00000 | ||
| Telephone: (000) 000-0000 | ||
| Facsimile: (000) 000-0000 | ||
| With a copy to (which shall not constitute notice): | ||
| Xxxxxxxxxxx X. Xxxxxxx, Esq. | ||
| Squire, Xxxxxxx & Xxxxxxx L.L.P. | ||
| 00 Xxxxx Xxxxxxx Xxx., Xxxxx 0000 | ||
| Xxxxxxx, Xxxxxxx 00000 | ||
| Telephone: (000) 000-0000 | ||
| Facsimile: (000) 000-0000 |
14. No Waiver; Remedies. Except as to applicable statutes of limitation, no failure
on the part of Holdings to exercise, and no delay in exercising, any right hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of any right hereunder preclude any
other or further exercise thereof or the exercise of any other right. The remedies herein provided
are cumulative and not exclusive of any remedies provided by law.
15. Term; Termination. This Guaranty shall continue in full force and effect until
payment in full of the Guaranteed Obligations; provided, however, that the obligations and
liabilities of Guarantors hereunder shall continue in full force and effect with respect to any
breach of Guarantors’ obligations hereunder or of the Guaranteed Obligations, in each case
occurring prior to such termination. Notwithstanding anything to the contrary herein, in no event
shall this Guaranty or the obligations hereunder expire or terminate prior to Commercial Operation
(as defined in the Credit Agreement).
16. Successors and Assigns. This Guaranty shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, successors, assigns, and legal
representatives, and Holdings may assign any of its rights and benefits hereunder without notice to
Guarantors, but Guarantors shall not have the right to assign their obligations hereunder or any
interest herein without the prior written consent of the Special Committee of Holdings. Any such
purported assignment by Guarantors shall be void.
17. Amendments, Etc. No amendment of this Guaranty shall be effective unless in
writing and signed by Guarantor and the Special Committee of Holdings. No waiver of any provision
of this Guaranty or consent to any departure by Guarantors therefrom shall in any event be
effective unless such waiver shall be in writing and signed by the Special Committee of Holdings.
Any such waiver shall be effective only in the specific instance and for the specific purpose for
which it was given.
18. Captions. The captions in this Guaranty have been inserted for convenience only
and shall be given no substantive meaning or significance whatsoever in construing the terms and
provisions of this Guaranty.
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19. Representation and Warranties. Guarantors represent and warrant that this
Guaranty constitutes the legal, valid and binding obligation of Guarantors enforceable against
Guarantors in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency and
other laws of general applicability relating to or affecting the rights of creditors and to general
equity principles.
20. Limitation by Law. All rights, remedies and powers provided in this Guaranty may
be exercised only to the extent that the exercise thereof does not violate any applicable provision
of law, and all the provisions of this Guaranty are intended to be subject to all applicable
mandatory provisions of law that may be controlling and to be limited to the extent necessary so
that they will not render this Guaranty invalid, unenforceable, in whole or in part, or not
entitled to be recorded, registered or filed under the provisions of any applicable law. In the
event that any provision of this Guaranty is held to be invalid or unenforceable in whole or in
part by any court of competent jurisdiction, the remainder hereof shall continue in full force and
effect, and the affected provision shall be enforced to the extent permitted by law.
21. GOVERNING LAW. THIS GUARANTY IS MADE UNDER AND SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, EXCLUSIVE OF ANY CONFLICT OF LAWS PRINCIPLES
AND PROVISIONS THAT WOULD APPLY THE LAWS OF ANOTHER JURISDICTION.
22. Jurisdiction and Venue. Guarantors irrevocably submit to the jurisdiction of the
federal and state courts in the state of Delaware and agree that the venue of any action or
proceeding brought by either or both of Guarantors shall be in such courts.
23. WAIVER OF JURY TRIAL. EACH PARTY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY SUIT, ACTION, CLAIM OR
PROCEEDING RELATING TO THIS AGREEMENT.
24. Entire Agreement. This Guaranty and the Merger Agreement and the agreements
contemplated thereby constitute the entire agreement among the parties and supersedes all prior and
contemporaneous agreements and understandings of the parties with respect to the subject matter
hereof.
25. Guarantor Acknowledgments. Guarantors acknowledge that (i) they have read and
understand this Guaranty and enter into this Guaranty voluntarily, (ii) they have been advised by
counsel in the negotiation, execution, and delivery of this Guaranty, and (iii) Holdings has no
fiduciary relationship to either one of Guarantors.
26. Effectiveness of Guaranty. This Guaranty shall be effective at the Effective Time
of the Merger. Holdings shall not have any rights hereunder, express or implied, nor shall
Guarantors have any obligations hereunder, express or implied, until the Effective Time.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, Guarantors have caused this Overrun Guaranty to be duly executed and
delivered as of the date first written above.
| /s/ Xxxxxx X. Xxxxxxx | ||||
| Xxxxxx X. Xxxxxxx | ||||
| /s/ Xxxxxxx X. Xxxxxxx | ||||
| Xxxxxxx X. Xxxxxxx | ||||
[Signature Page to Overrun Guaranty]
