FORM OF SUBSIDIARY GUARANTEE
SUBSIDIARY GUARANTEE, dated as of February 9, 2007 (as the same may be
supplemented, modified, amended, restated or replaced from time to time in the
manner provided herein, (this "Guarantee"), made by each of the signatories
hereto (together with any other entity that may become a party hereto as
provided herein, (each a "Guarantor" and collectively the "Guarantors"), in
favor of the "Purchasers" signatory thereto (as such term is defined therein) to
that certain Securities Purchase Agreement, dated as of the date hereof, between
Star Energy Corporation, a Nevada corporation (the "Company") and the Purchasers
(as the same may be supplemented, modified, amended, restated or replaced from
time to time in the manner provided herein, the "Purchase Agreement"). Each of
the Guarantors and each of the Purchasers may be referred to herein as a "party"
and collectively as the "parties".
WITNESSETH:
WHEREAS, pursuant to the Purchase Agreement, the Company has agreed to
sell and issue to the Purchasers (together with their respective successors and
permitted assigns under the following Debentures, each a "Holder" and
collectively, the "Holders"), and the Purchasers have severally agreed to extend
the loans to the Company evidenced by the Company's 8% Secured Convertible
Debentures, due February __, 2010 in the original aggregate maximum principal
amount of $[_______] and severally issued by the Company to the Holders on
February __, 2007 (as the same may be supplemented, modified, amended, restated
or replaced from time to time in the manner provided herein, each a "Debenture"
and collectively, the "Debentures"), subject to the terms and conditions set
forth therein; and
WHEREAS, each Guarantor will directly benefit from the extension of credit
to the Company represented by the issuance of the Debentures; and
NOW, THEREFORE, in consideration of the premises and to induce the
Purchasers to enter into the Purchase Agreement and to carry out the
transactions contemplated thereby, each Guarantor hereby agrees with the
Purchasers as follows:
1. Definitions. Unless otherwise defined herein, capitalized terms not
otherwise defined herein shall have the meanings set forth in the Purchase
Agreement or other applicable Transaction Document (as such term is defined in
the Purchase Agreement. The words "hereof," "herein," "hereto" and "hereunder"
and words of similar import when used in this Guarantee shall refer to this
Guarantee as a whole and not to any particular provision of this Guarantee, and
Section and Schedule references are to this Guarantee unless otherwise
specified. The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms. The following
terms shall have the following meanings:
"Guarantee" shall have the meaning set forth in the first paragraph
above.
"Indebtedness" means (a) any liabilities for borrowed money or
similar amounts owed in excess of $50,000 (other than trade accounts
payable incurred in the ordinary course of business and inter-company
advances among the Company and the Guarantors), (b) all guaranties,
endorsements and other contingent obligations in respect of indebtedness
of others, whether or not the same are or should be reflected in the
Guarantors' balance sheet (or the notes thereto), except for (i)
guaranties by endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business and
(ii) guaranties of the indebtedness or other obligations of the Company or
any Guarantor or the Company; and (c) the present value of any lease
payments in excess of $50,000 due under leases required to be capitalized
in accordance with GAAP.
"Obligations" means in addition to all other costs and expenses of
collection incurred by Purchasers in enforcing any of such Obligations
and/or this Guarantee, all of the liabilities and obligations (primary,
secondary, direct, contingent, sole, joint or several) due or to become
due, or that are now or may be hereafter contracted or acquired, or owing
from any Debtor to the Secured Parties, including, without limitation, all
obligations under the Security Agreement, the Purchase Agreement, the
Debentures, this Guarantee and any other instruments, agreements or other
documents executed and/or delivered in connection herewith or therewith,
in each case, whether now or hereafter existing, voluntary or involuntary,
direct or indirect, absolute or contingent, liquidated or unliquidated,
whether or not jointly owed with others, and whether or not from time to
time decreased or extinguished and later increased, created or incurred,
and all or any portion of such obligations or liabilities that are paid,
to the extent all or any part of such payment is avoided or recovered
directly or indirectly from any of the Secured Parties as a preference,
fraudulent transfer or otherwise as such obligations may be amended,
supplemented, converted, extended or modified from time to time. Without
limiting the generality of the foregoing, the term "Obligations" shall
include, without limitation: (i) principal of, and interest on the
Debentures and the loans extended pursuant thereto; (ii) any and all other
fees, indemnities, costs, obligations and liabilities of the Debtors from
time to time under or in connection with the Security Agreement, the
Debentures, this Guarantee and any other instruments, agreements or other
documents executed and/or delivered in connection herewith or therewith;
and (iii) all amounts (including but not limited to post-petition
interest) in respect of the foregoing that would be payable but for the
fact that the obligations to pay such amounts are unenforceable or not
allowable due to the existence of a bankruptcy, reorganization or similar
proceeding involving any Debtor.
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. "Permitted Indebtedness" means (a) the Indebtedness existing on
the date hereof and set forth on Schedule 3.1(aa) attached to the Purchase
Agreement, (b) capital lease obligations, construction or improvement
financing and purchase money indebtedness incurred in connection with the
acquisition, construction or improvement of capital assets and capital
lease obligations with respect to newly acquired, improved or leased
assets (provided, that immediately following any such transaction, the pro
forma consolidated total Indebtedness of the Company and its subsidiaries
to their consolidated Total Asset ratio is not more than 0.75 to 1); (c)
up to $[___________ of additional Indebtedness, in the aggregate, incurred
by the Company and the Guarantors in connection with raising capital for
the acquisition of another entity which is, itself or through its
subsidiaries, an operating company in a business synergistic with the
business of the Company (by merger, consolidation, the acquisition of all
or substantially of the assets of such entity or similar transaction)
provided that any Indebtedness incurred under this clause (c) is expressly
subordinate to the Debentures pursuant to a written subordination
agreement with the Holders that is acceptable to each Holder; (d) the
Indebtedness evidenced by other Debentures, provided that the aggregate
original principal amount of all Debentures (whenever issued) shall not
exceed $___________; (e) up to $ _________ of additional senior
Indebtedness, in the aggregate, incurred by the Guarantors from a
strategic commercial lender pursuant to a strategic commercial agreement;
or (f) any continuation, extension, renewal, modification, refinancing or
replacement of any such Permitted Indebtedness on overall terms that are
generally no less favorable than those applicable to the existing
Permitted Indebtedness.
"Permitted Lien" means the individual and collective reference to
the following: (a) Liens (as defined in the Purchase Agreement) for taxes,
assessments and other governmental charges or levies not yet due or Liens
for taxes, assessments and other governmental charges or levies being
contested in good faith and by appropriate proceedings for which adequate
reserves (in the good faith judgment of the management of the applicable
Guarantor) have been established in accordance with GAAP; (b) Liens
imposed by law and incurred in the ordinary course of the applicable
Guarantor's business, such as carriers', warehousemen's and mechanics'
Liens, statutory landlords' Liens, Liens consisting of easements,
right-of-way, restrictions, covenants or other agreements of record or
similar charges or encumbrances, and other similar Liens arising in the
ordinary course of the applicable Guarantor's business, and which (x) do
not individually or in the aggregate materially detract from the value of
such property or assets or materially impair the use thereof in the
operation of the business of such Guarantor and its consolidated
Subsidiaries or (y) are being contested in good faith by appropriate
proceedings, which proceedings have the effect of preventing for the
foreseeable future the forfeiture or sale of the property or asset subject
to such Lien; and (c) Liens incurred in connection with Permitted
Indebtedness under clause (b) thereunder, provided that such Liens are not
secured by assets of the any of the Guarantors other than the assets so
acquired, constructed, improved or leased (and the products and proceeds
thereof, insurance therefor and warranty and other contract rights related
thereto); (d) Liens incurred in respect of judgments and awards discharged
within 30 days from the making thereof; (e) any cash deposits made or
bonds or letters of credit posted in the ordinary course to secure
performance under any contract or applicable law; (f) in the case of any
account, intangible, instrument, lease, agreement or document, any
contractual right, power, privilege, remedy, interest, defect,
restriction, covenant, claim, counterclaim, right of recoupment,
abatement, reduction or setoff, or defense of any account debtor or other
party thereto, whether now existing or hereafter arising, and whether
pursuant to the applicable contractual provisions or applicable law; (g)
Liens existing on the Original Issue Date and set forth on Schedule 3.1(n)
attached to the Purchase Agreement; or (h) any renewal, continuation,
extension or replacement of any such Permitted Lien, provided that the
scope of the assets encumbered thereby shall not be thereby increased.
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"Security Agreement" shall mean that certain Security Agreement,
dated as of February __, 2007, by and among the Company, the Guarantors,
the Holders, and the Agent (as defined therein) as the same may be
supplemented, modified, amended, restated or replaced from time to time in
the manner provided herein.
"Secured Party" and "Secured Parties" shall mean each of the Holders
and the Agent (as defined in the Security Agreement).
2. Guarantee.
(a) Guarantee.
(i) The Guarantors hereby, jointly and severally,
unconditionally and irrevocably, guarantee to the
Purchasers and their respective successors, indorsees,
transferees and assigns, the prompt and complete payment
and performance by the Company when due (whether at the
stated maturity, by acceleration or otherwise) of the
Obligations.
(ii) The Purchasers in their sole and absolute discretion
shall be entitled to demand payment of the Obligations
(in whole at any time, or in part from time to time)
from the Guarantors (or any of them) under this
Guarantee upon the occurrence and continuation of any
Event of Default that is not waived by the Holder or
cured by the Company. If the Purchasers make such a
demand: (a) any and all principal, interest and other
Obligations outstanding or accrued under any Debenture
and/or any other Transaction Document shall be deemed to
be immediately due and payable in full (or for the
item(s) in the amount(s) demanded if a partial demand
was made), all without presentment, protest, demand or
notice of any kind, all of which are hereby absolutely,
unconditionally, irrevocably and expressly waived
forever by each Guarantor (and in the case of a partial
demand, without in any way affecting any of the
Guarantors' Obligations with respect to the balance of
the Obligations not demanded); and (b) each Guarantor
(on a joint and several basis with the other Guarantors)
shall immediately pay to the Lender the amount demanded
in full.
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(iii) Anything herein or in any other Transaction Document to
the contrary notwithstanding, the maximum liability of
each Guarantor hereunder and under the other Transaction
Documents shall in no event exceed the amount which can
be guaranteed by such Guarantor under applicable federal
and state laws, including laws relating to the
insolvency of debtors, fraudulent conveyance or transfer
or laws affecting the rights of creditors generally
(after giving effect to the right of contribution
established in Section 2(b)).
(iv) Each Guarantor agrees that the Obligations may at any
time and from time to time exceed the amount of the
liability of such Guarantor hereunder without impairing
the guarantee contained in this Section 2 or affecting
the rights and remedies of the Purchasers hereunder.
(v) The guarantee contained in this Section 2 shall remain
in full force and effect until all the Obligations and
the obligations of each Guarantor under the guarantee
contained in this Section 2 shall have been satisfied by
payment in full.
(vi) No payment made by the Company, any of the Guarantors,
any other guarantor or any other Person or received or
collected by the Purchasers from the Company, any of the
Guarantors, any other guarantor or any other Person by
virtue of any action or proceeding or any set-off or
appropriation or application at any time or from time to
time in reduction of or in payment of the Obligations
shall be deemed to modify, reduce, release or otherwise
affect the liability of any Guarantor hereunder which
shall, notwithstanding any such payment (other than any
payment made by such Guarantor in respect of the
Obligations or any payment received or collected from
such Guarantor in respect of the Obligations), remain
liable for the Obligations up to the maximum liability
of such Guarantor hereunder until the Obligations are
paid in full.
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(vii) Notwithstanding anything to the contrary in Guarantee,
with respect to any defaulted non-monetary Obligations
the specific performance of which by the Guarantors is
not reasonably possible (e.g. the issuance of the
Company's Common Stock), the Guarantors shall only be
liable for making the Purchasers whole on a monetary
basis for the Company's failure to perform such
Obligations in accordance with the Transaction
Documents.
(b) Right of Contribution. Each Guarantor hereby agrees that to the
extent that a Guarantor shall have paid more than its proportionate share
of any payment made hereunder, such Guarantor shall be entitled to seek
and receive contribution from and against any other Guarantor hereunder
which has not paid its proportionate share of such payment. Each
Guarantor's right of contribution shall be subject to the terms and
conditions of Section 2(c). The provisions of this Section 2(b) shall in
no respect limit the obligations and liabilities of any Guarantor to the
Purchasers, and each Guarantor shall remain liable to the Purchasers for
the full amount guaranteed by such Guarantor hereunder.
(c) Subordination of Subrogation Rights. Notwithstanding any payment
made by any Guarantor hereunder or any set-off or application of funds of
any Guarantor by the Purchasers, no Guarantor shall be entitled to
exercise or enforce any rights of subrogation against the Company or any
other Guarantor or any collateral security or guarantee or right of offset
held by the Purchasers for the payment of the Obligations, nor shall any
Guarantor seek or be entitled to seek any contribution or reimbursement
from the Company or any other Guarantor in respect of payments made by
such Guarantor hereunder, until all amounts owing to the Purchasers by the
Company on account of the Obligations are paid in full. If any amount
shall be paid to any Guarantor on account of such subrogation rights at
any time when all of the Obligations shall not have been paid in full,
such amount shall be held by such Guarantor in trust for the Purchasers,
segregated from other funds of such Guarantor, and shall, forthwith upon
receipt by such Guarantor, be turned over to the Purchasers in the exact
form received by such Guarantor (duly indorsed by such Guarantor to the
Purchasers, if required), to be applied against the Obligations, whether
matured or unmatured, in such order as the Purchasers may determine.
(d) Amendments, Etc. With Respect to the Obligations. Each Guarantor
shall remain obligated hereunder notwithstanding that, without any
reservation of rights against any Guarantor and without notice to or
further assent by any Guarantor, any demand for payment of any of the
Obligations made by the Purchasers may be rescinded by the Purchasers and
any of the Obligations continued, and the Obligations, or the liability of
any other Person upon or for any part thereof, or any collateral security
or guarantee therefor or right of offset with respect thereto, may, from
time to time, in whole or in part, be renewed, extended, amended,
modified, accelerated, compromised, waived, surrendered or released by the
Purchasers, and the Purchase Agreement and the other Transaction Documents
and any other documents executed and delivered in connection therewith may
be amended, modified, supplemented or terminated, in whole or in part, as
the Purchasers may deem advisable from time to time, and any collateral
security, guarantee or right of offset at any time held by the Purchasers
for the payment of the Obligations may be sold, exchanged, waived,
surrendered or released. The Purchasers shall have no obligation to
protect, secure, perfect or insure any Lien at any time held by them as
security for the Obligations or for the guarantee contained in this
Section 2 or any property subject thereto.
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(e) Guarantee Absolute and Unconditional. Each Guarantor waives any
and all notice of (i) the creation, renewal, extension or accrual of any
of the Obligations, (ii) the execution and delivery of this Guarantee or
any Transaction Document, (iii) the performance or non-performance of the
Obligations under any Transaction Document, (iv) any change in or making,
repayment or remaking or remaking of any loan, advance or other extension
of credit at any time under this Guarantee or any other Transaction
Document, (v) any Material Adverse Effect with respect to the Company, any
Obligor or any Collateral, (vi) any extension, stay, moratorium or statute
of limitations or similar time constraint under any applicable law, (vii)
any investigation, analysis or evaluation by the Purchasers or their
respective designees of the assets, business, cash flow, expenses, income,
liabilities, operations, properties, prospects, reputation or condition
(financial or otherwise) of the Company or any Guarantor or any other
person, (viii) any application to the Obligations of any payments from any
person not specifically designated for application to the Obligations or
any proceeds of collateral from such person other than from the
Collateral, (ix) any sale, conveyance, assignment, participation or other
transfer by the Purchasers (in whole or in part) to any other person of
any one or more of this Guarantee or any of the Transaction Documents, or
any one ore more of the rights, powers, privileges, remedies or interests
of the Purchasers herein or therein, (x) notice of or proof of reliance by
the Purchasers upon the guarantee contained in this Section 2 or
acceptance of the guarantee contained in this Section 2, and (xi) any
other proof, notice or demand of any kind whatsoever with respect to any
or all of the Obligations or promptness in making any claim or demand
under this Guarantee or any other Transaction Document. The Obligations,
and any of them, shall conclusively be deemed to have been created,
contracted or incurred, or renewed, extended, amended or waived, in
reliance upon the guarantee contained in this Section 2; and all dealings
between the Company and any of the Guarantors, on the one hand, and the
Purchasers, on the other hand, likewise shall be conclusively presumed to
have been had or consummated in reliance upon the guarantee contained in
this Section 2. Each Guarantor waives to the extent permitted by law
acceptance, diligence, presentment, protest, demand for payment, dishonor
and notice of default or nonpayment to or upon the Company or any of the
Guarantors with respect to the Obligations and notice of any of the
foregoing. Each Guarantor understands and agrees that the guarantee
contained in this Section 2 shall be construed as a continuing, absolute
and unconditional guarantee of payment without regard to (a) the validity,
legality, non-binding effect or enforceability of the Purchase Agreement
or any other Transaction Document, any of the Obligations or any other
collateral security therefor or guarantee or right of offset with respect
thereto at any time or from time to time held by the Purchasers, (b) any
defense, set-off or counterclaim (other than a defense of payment or
performance or fraud or misconduct by Purchasers) which may at any time be
available to or be asserted by the Company or any other Person against the
Purchasers, or (c) any other circumstance whatsoever (with or without
notice to or knowledge of the Company or such Guarantor) which
constitutes, or might be construed to constitute, an equitable or legal
discharge of the Company for the Obligations, or of such Guarantor under
the guarantee contained in this Section 2, in bankruptcy or in any other
instance. When making any demand hereunder or otherwise pursuing its
rights and remedies hereunder against any Guarantor, the Purchasers may,
but shall be under no obligation to, make a similar demand on or otherwise
pursue such rights and remedies as they may have against the Company, any
other Guarantor or any other Person or against any collateral security or
guarantee for the Obligations or any right of offset with respect thereto,
and any failure by the Purchasers to make any such demand, to pursue such
other rights or remedies or to collect any payments from the Company, any
other Guarantor or any other Person or to realize upon any such collateral
security or guarantee or to exercise any such right of offset, or any
release of the Company, any other Guarantor or any other Person or any
such collateral security, guarantee or right of offset, shall not relieve
any Guarantor of any obligation or liability hereunder, and shall not
impair or affect the rights and remedies, whether express, implied or
available as a matter of law, of the Purchasers against any Guarantor. For
the purposes hereof, "demand" shall include the commencement and
continuance of any legal proceedings.
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(f) Reinstatement. The guarantee contained in this Section 2 shall
continue to be effective, or be reinstated, as the case may be, if at any
time payment, or any part thereof, of any of the Obligations is rescinded
or must otherwise be restored or returned by the Purchasers upon the
insolvency, bankruptcy, dissolution, liquidation or reorganization of the
Company or any Guarantor, or upon or as a result of the appointment of a
receiver, intervenor or conservator of, or trustee or similar officer for,
the Company or any Guarantor or any substantial part of its property, or
otherwise, all as though such payments had not been made, provided that
the Guarantor's rights of contribution pursuant to Section 2(b) above
shall similarly continue to be effective or be reinstated, as the case may
be.
(g) Payments. Each Guarantor hereby guarantees that payments
hereunder will be paid to the Purchasers without set-off or counterclaim
in U.S. dollars at the address set forth or referred to in the Purchase
Agreement.
3. Representations and Warranties. Each Guarantor hereby makes the
following representations and warranties to Purchasers as of the date hereof:
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(a) Organization and Qualification. The Guarantor is a corporation,
limited liability company, or limited liability society, duly incorporated
or organized, validly existing and in good standing under the laws of the
applicable jurisdiction set forth on Schedule 1, with the requisite
corporate or other entity power and authority to own and use its
properties and assets and to carry on its business as currently conducted.
The Guarantor has no subsidiaries other than those identified as such on
the Disclosure Schedules to the Purchase Agreement. The Guarantor is duly
qualified to do business and is in good standing as a foreign corporation
in each jurisdiction in which the nature of the business conducted or
property owned by it makes such qualification necessary, except where the
failure to be so qualified or in good standing, as the case may be, could
not, individually or in the aggregate, (x) adversely affect the legality,
validity or enforceability of any of this Guaranty in any material
respect, (y) have a material adverse effect on the results of operations,
assets, or financial condition of the Company and the Guarantors taken as
a whole or (z) adversely impair in any material respect the Guarantor's
ability to perform fully on a timely basis its obligations under this
Guaranty (a "Material Adverse Effect").
(b) Authorization; Enforcement. The Guarantor has the requisite
corporate or other entity power and authority to enter into and to
consummate the transactions contemplated by this Guaranty, and otherwise
to carry out its obligations hereunder. The execution and delivery of this
Guaranty by the Guarantor and the consummation by it of the transactions
contemplated hereby have been duly authorized by all requisite corporate
action on the part of the Guarantor. This Guaranty has been duly executed
and delivered by the Guarantor and constitutes the valid and binding
obligation of the Guarantor enforceable against the Guarantor in
accordance with its terms, except (i) as may be limited by general
equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium, affecting enforcement of, creditors' rights
generally, (ii) as limited by laws relating to the availability of
specific performance, injunctive relief or other equitable remedies, (iii)
insofar as indemnification and contribution provisions may be limited by
applicable law, and (iv) insofar as certain elections, waivers and
agreements to vary statutory provisions may be impermissible under the UCC
(as defined in the Security Agreement) and other applicable law (clauses
(i) through (iv) may be referred to collectively as the "Enforceability
Limits").
(c) No Conflicts. The execution, delivery and performance of this
Guaranty by the Guarantor and the consummation by the Guarantor of the
transactions contemplated thereby do not and will not (i) violate any
provision of its Organizational Documents (as defined in the Security
Agreement) or (ii) constitute a default (or an event which with notice or
lapse of time or both would become a default) in any material respect
under, or give to others any commercially reasonable right of termination,
material amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which the Guarantor is a party, or (iii) result
in a violation of any law, rule, regulation, order, judgment, injunction,
decree or other restriction of any court or governmental authority to
which the Guarantor is subject (including Federal and state securities
laws and regulations), or by which any material property or asset of the
Guarantor is bound or affected, except in the case of each of clauses (ii)
and (iii), such conflicts, defaults, terminations, amendments,
accelerations, cancellations and violations as could not, individually or
in the aggregate, have or result in a Material Adverse Effect. The
business of the Guarantor is not being conducted in violation of any law,
ordinance or regulation of any governmental authority, except for
violations which, individually or in the aggregate, do not have a Material
Adverse Effect.
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(d) Consents and Approvals. The Guarantor is not required to obtain
any authorization, approval or other action by, and no notice to or filing
with, any governmental authority or regulatory body is required, no
consent of any other third parties is required, and no other action on the
party of the Guarantor is required in connection with the execution,
delivery and performance by the Guarantor of this Guaranty.
(e) Purchase Agreement. The representations and warranties of the
Company set forth in the Purchase Agreement as they relate to such
Guarantor, each of which is hereby incorporated herein by reference, are
true and correct as of each time such representations are deemed to be
made pursuant to such Purchase Agreement, and the Purchasers shall be
entitled to rely on each of them as if they were fully set forth herein,
provided, that each reference in each such representation and warranty to
the Company's knowledge shall, for the purposes of this Section 3, be
deemed to be a reference to such Guarantor's knowledge.
4. Covenants.
(a) Each Guarantor covenants and agrees with the Purchasers that,
from and after the date of this Guarantee until the Obligations shall have
been paid in full, such Guarantor shall take, and/or shall refrain from
taking, as the case may be, each commercially reasonable action that is
necessary to be taken or not taken, as the case may be, so that no Event
of Default is caused by the failure to take such action or to refrain from
taking such action by such Guarantor.
(b) So long as any of the Obligations are outstanding, unless
Purchasers holding at least 51% of the aggregate principal amount of the
then outstanding Debentures, shall otherwise consent in writing, and
except as any such action or non action may be permitted by the Purchase
Agreement, Debenture, or Security Agreement, each Guarantor will not
directly or indirectly on or after the date of this Guarantee:
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i. enter into, create, incur, assume or suffer to exist any
Indebtedness other than Permitted Indebtedness;
ii. enter into, create, incur, assume or suffer to exist any
liens other than Permitted Liens;
iii. amend its Organizational Documents so as to adversely
affect any rights of the Holders hereunder; or
iv. repay, repurchase or offer to repay, repurchase or
otherwise acquire more than a de minimis number of shares of its
securities or debt obligations;
v. pay cash dividends on any equity securities of the Company;
vi. enter into any transaction with any Affiliate of the
Guarantor which would be required to be disclosed in any public
filing of the Company with the Commission, unless such transaction
is made on an arm's-length basis and expressly approved by a
majority of the disinterested directors of the Company (even if less
than a quorum otherwise required for board approval); or
vii. enter into any agreement with respect to any of the
foregoing.
5. Miscellaneous.
(a) Amendments in Writing. This Guarantee may not be supplemented,
modified, amended, restated, waived, extended, discharged or terminated
orally. This Agreement may only be (i) supplemented, modified, amended or
restated in a writing signed by the Guarantors and Purchasers (or
consented to in a separate writing by the Purchasers if they elect not to
sign such document) and (ii) waived, extended, discharged or terminated in
a writing signed by the party or parties against whom such waiver,
extension, discharge or termination would have to be enforced. By
accepting this Agreement, whether or not a signatory hereto, each
Purchaser acknowledges and agrees that the Purchaser is a "party" and one
of the "parties" for the purposes of this Guarantee and (A) is
contractually bound by the provisions hereof applicable to it as such a
party or one of the parties. .
(b) Notices. All notices, requests and demands to or upon the
Purchasers or any Guarantor hereunder shall be effected in the manner
provided for in the Purchase Agreement, provided that any such notice,
request or demand to or upon any Guarantor shall be addressed to such
Guarantor at its notice address set forth on Schedule 5(b).
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(c) No Waiver By Course Of Conduct; Cumulative Remedies. The
Purchasers shall not by any act (except by a written instrument pursuant
to Section 5(a)), delay, indulgence, omission or otherwise be deemed to
have waived any right or remedy hereunder or to have acquiesced in any
default under the Transaction Documents or Event of Default. No failure to
exercise, nor any delay in exercising, on the part of any of the parties,
any right, power or privilege hereunder shall operate as a waiver thereof.
No single or partial exercise of any right, power or privilege hereunder
shall preclude any other or further exercise thereof or the exercise of
any other right, power or privilege. A waiver by the Purchasers of any
right or remedy hereunder on any one occasion shall not be construed as a
bar to any right or remedy which the Purchasers would otherwise have on
any future occasion. The rights and remedies of the parties herein
provided are cumulative and not alternatives, may be exercised singly or
concurrently and are not exclusive of any other rights or remedies
provided by law.
(d) Enforcement Expenses; Indemnification.
(i) Each Guarantor agrees to pay, or reimburse the
Purchasers for, all its costs and expenses incurred in
collecting against such Guarantor under the guarantee
contained in Section 2 hereof or otherwise enforcing or
preserving any rights under this Guarantee and the other
Transaction Documents to which such Guarantor is a
party, including, without limitation, the reasonable
fees and disbursements of counsel to the Purchasers.
(ii) Each Guarantor agrees to pay, and to save the Purchasers
harmless from, any and all liabilities with respect to,
or resulting from any delay in paying, any and all
stamp, excise, sales or other taxes which may be payable
or determined to be payable in connection with any of
the transactions contemplated by this Guarantee.
(iii) Each Guarantor agrees to pay, and to save the Purchasers
harmless from, any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature
whatsoever with respect to the execution, delivery,
enforcement, performance and administration of this
Guarantee to the extent the Company would be required to
do so pursuant to the Purchase Agreement, except to the
extent any such losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements
result from any act, omission or other conduct by any
Purchaser or its representatives that constitute fraud,
gross negligence, willful misconduct or malfeasance as
determined by a final, non appealable decision of a
court of competent jurisdiction. Claims for
indemnification and defense by each Purchaser shall be
made as provided in the Purchase Agreement.
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(iv) The agreements in this Section shall survive, in
accordance with their respective terms, the repayment of
the Obligations and all other amounts payable under the
Purchase Agreement and the other Transaction Documents.
(e) Successor and Assigns. This Guarantee shall be binding upon and
inure to the benefit of the Purchasers and their respective successors and
assigns; provided that no Guarantor may assign, transfer or delegate any
of its rights or obligations under this Guarantee without the prior
written consent of the Purchasers (other than by merger or joinder of an
additional Guarantor as contemplated herein). Any Purchaser may assign any
or all of its rights under this Guarantee to any Person to whom such
Purchaser also assigns or transfers any Debentures in accordance with the
terms thereof and of the Purchase Agreement, provided such transferee
agrees in writing to be bound, with respect to the transferred Debentures
and corresponding interests in the other Transaction Documents, by the
provisions of this Guarantee, the Debentures, the Security Agreement and
the Purchase Agreement that apply to the "Purchasers", "Secured Parties"
and the "Holders" hereunder and thereunder.
(f) Set-Off. Each Guarantor hereby irrevocably authorizes the
Purchasers at any time and from time to time while an Event of Default
under any of the Transaction Documents shall have occurred and is
continuing without being waived by the Holder or cured by the Company,
without notice to such Guarantor or any other Guarantor, any such notice
being expressly waived by each Guarantor, to set-off and appropriate and
apply any and all deposits, credits, indebtedness or claims, in any
currency, in each case whether direct or indirect, absolute or contingent,
matured or unmatured, at any time held or owing by the Purchasers to or
for the credit or the account of such Guarantor, or any part thereof in
such amounts as the Purchasers may elect, against and on account of the
obligations and liabilities of such Guarantor to the Purchasers hereunder
and claims of every nature and description of the Purchasers against such
Guarantor, in any currency, whether arising hereunder, under the Purchase
Agreement, any other Transaction Document or otherwise, as the Purchasers
may elect, whether or not the Purchasers have made any demand for payment
and although such obligations, liabilities and claims may be contingent or
unmatured. The Purchasers shall notify such Guarantor promptly of any such
set-off and the application made by the Purchasers of the proceeds
thereof, provided that the failure to give such notice shall not affect
the validity of such set-off and application. The rights of the Purchasers
under this Section are in addition to other rights and remedies(including,
without limitation, other rights of set-off) which the Purchasers may
have.
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(g) Counterparts. This Guarantee may be executed in one or more
counterparts of the entire document or of the signature pages hereto, any
of which may be delivered by telecopy, email or other electronic means,
and each of which when so executed shall be deemed to be an original, and
all which when taken together shall constitute one and the same Guarantee.
In the event that any signature is delivered by facsimile transmission,
e-mail, .pdf or similar format data file or other electronic means, such
signature shall create a valid binding obligation of the party executing
(or on whose behalf such signature is executed) the same with the same
force and effect as if such facsimile, ".pdf" or electronically
transmitted signature page were an original thereof.
(h) Severability. If any term, provision, covenant or restriction of
this Guarantee is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, in each
case unless the absence of the invalid, illegal, void or unenforceable
term, provision, covenant or restriction would impair the practical
realization of the applicable party's principal rights and benefits
hereunder, and the parties hereto shall use their commercially reasonable
efforts to find and employ an alternative means to achieve the same or
substantially the same result as that contemplated by such term,
provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions without including
any of such that may be hereafter declared invalid, illegal, void or
unenforceable, in each case unless it absence of the invalid, illegal,
void or unenforceable term, provision, covenant or restriction would
impair the practical realization of the applicable party's principal
rights and benefits hereunder.
(i) Section Headings. The Section headings used in this Guarantee
are for convenience, only, do not constitute part of this Guarantee, and
shall not be deemed to limit or affect any of the provisions hereof.
(j) Integration. This Guarantee is the Guarantee referred to in the
Purchase Agreement and other Transaction Documents. All of the applicable
provisions of the Purchase Agreement and other Transaction Documents. All
of the applicable provisions of the Purchase Agreement, including (without
limitation) any provision for limiting the maximum rate of interest
payable hereunder, are incorporated herein by reference and made a part
hereof. In the event that any specific provision of this Guarantee
conflicts or is inconsistent with any specific term or provision contained
in the Purchase Agreement shall control and be given effect. However, this
Guarantee contains provisions that are in addition to those contained in
the Purchase Agreement, which each are cumulative with and not
alternatives to each other, and which shall not be deemed or constructed
to be in conflict or inconsistent with the Purchase Agreement because they
are not contained in it.
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(k) Entire Understanding. No party has (directly or indirectly)
offered, made, accepted or acknowledged any representation, warranty,
promise, assurance or other agreement or understanding (whether written,
oral, express, implied or otherwise) to, with or for the benefit of any
other party any of their respective Affiliates or representatives
respecting any of the matters contained in this Guarantee except for those
expressly set forth in this Guarantee. This Guarantee, together with the
exhibits and schedules hereto, contain the entire understanding of the
parties with respect to the subject matter hereof and supersede all prior
representations, warranties, promises, assurances and other agreements and
understandings (whether written, oral, express, implied or otherwise) with
respect to such matters, which the parties acknowledge have been merged
into this Agreement and its exhibits and schedules.
(l) Governing Law. THIS GUARANTEE SHALL BE, TO THE GREATEST EXTENT
PERMITTED BY APPLICABLE LAW, BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, AND THE
FEDERAL LAWS OF THE UNITED STATES OF AMERICA, WITHOUT REGARD TO ANY
PRINCIPLES OF CONFLICTS OF LAW THEROF THAT WOULD DEFER TO THE SUBSTANTIVE
LAWS OF ANY OTHER JURISDICTION..
(m) Submission to Jurisdictional; Waiver. Each party hereby
irrevocably and unconditionally:
(i) agrees that all proceedings concerning the
interpretations, enforcement and defense of the
transactions contemplated by this Guarantee and the
Debentures (whether brought against a party hereto or
its respective affiliates, directors, officers,
shareholders, partners, members, employees or agents)
shall be commenced exclusively in the state and federal
courts sitting in the City of New York, Borough of
Manhattan. Each Debtor hereby irrevocably submits to the
exclusive jurisdiction of the state and federal courts
sitting in the City of New York, Borough of Manhattan
for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated
hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any proceeding, any
claim that it is not personally subject to the
jurisdiction of any such court, that such proceeding is
improper.;
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(ii) consents that any such action or proceeding may be
brought in such courts and waives any objection that it
may now or hereafter have to the venue of any such
action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient
court and agrees not to plead or claim the same;
(iii) irrevocably waives personal service of process and
consents to process being served in any such proceeding
by mailing a copy thereof via registered or certified
mail or overnight delivery (with evidence of delivery)
to such party at the address in effect for notices to it
under this Guarantee and agrees that such service shall
constitute good and sufficient service of process and
notice thereof; and
(iv) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted
by law or shall limit the right to xxx in any other
jurisdiction;
(v) waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal
action or proceeding referred to in this Section any
special, exemplary, punitive or consequential damages.
The preceding consents to New York governing law and jurisdiction and venue in
New York State's Supreme Court have been made by the Parties in reliance (at
least in part) on Sections 5-1401 and 5-1402 of the General Obligations Law of
the State of New York, as amended (as and to the extent applicable), and other
applicable law.
(n) Acknowledgements. Each Guarantor hereby acknowledges that:
(i) it has been advised by counsel in the negotiation,
execution and delivery of this Guarantee and the other
Transaction Documents to which it is a party;
(ii) the Purchasers have no fiduciary relationship with or
duty to any Guarantor arising out of or in connection
with this Guarantee or any of the other Transaction
Documents, and the relationship between the Guarantors,
on the one hand, and the Purchasers, on the other hand,
in connection herewith or therewith is solely that of
debtor and creditor; and
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(iii) no joint venture is created hereby or by the other
Transaction Documents or otherwise exists by virtue of
the transactions contemplated hereby among the
Guarantors and the Purchasers.
(o) Additional Guarantors. The Company (pursuant to the terms of the
Purchase Agreement and the other Transaction Documents) shall cause each
of its subsidiaries formed or acquired on or subsequent to the date hereof
to become a Guarantor for all purposes of this Guarantee by executing and
delivering an Assumption Agreement in the form of Annex 1 hereto.
(p) Release of Guarantors. Subject to Section 2(f), each Guarantor
will be released from all liability hereunder concurrently with the
repayment in full of all amounts owed under the Purchase Agreement, the
Debentures and the other Transaction Documents.
(q) Seniority. The Obligations of each of the Guarantors hereunder
rank senior in priority to any other Indebtedness (as defined in the
Purchase Agreement) of such Guarantor.
(r) Waiver of Jury Trial. IN ANY ACTION, SUIT OR PROCEEDING IN ANY
JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, EACH GUARANTOR
AND, BY ACCEPTANCE OF THE BENEFITS HEREOF, THE PURCHASERS, HEREBY
ABSOLUTELY, IRREVOCABLY, UNCONDITIONALLY AND EXPRESSLY WAIVE FOREVER TRIAL
BY JURY.
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IN WITNESS WHEREOF, each of the undersigned has caused this Guarantee to
be duly executed and delivered as of the date first above written.
[SUBSIDIARY]
By:__________________
Name:
Title:
18
SCHEDULE 1
GUARANTORS
The following are the names, notice addresses and jurisdiction of
organization of each Guarantor.
COMPANY
JURISDICTION OF OWNED BY
INCORPORATION PERCENTAGE
------------- ----------
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Annex 1 to
SUBSIDIARY GUARANTEE
ASSUMPTION AGREEMENT, dated as of ____ __, ______ made by
______________________________, a ______________ corporation (the "Additional
Guarantor"), in favor of the Purchasers pursuant to the Purchase Agreement
referred to below. All capitalized terms not defined herein shall have the
meaning ascribed to them in such Purchase Agreement.
WITNESSETH:
WHEREAS, Star Energy Corporation, a Nevada corporation (the "Company") and
the Purchasers have entered into a Securities Purchase Agreement, dated as of
January ___, 2007 (as amended, supplemented or otherwise modified from time to
time, the "Purchase Agreement");
WHEREAS, in connection with the Purchase Agreement, the Company and its
Subsidiaries (other than the Additional Guarantor) have entered into the
Subsidiary Guarantee, dated as of February ____, 2007 (as the same may have been
hereafter may be, supplemented, modified, amended, restated or replaced from
time to time, in the manner provided herein, the "Guarantee") in favor of the
Purchasers;
WHEREAS, the Purchase Agreement requires the Additional Guarantor to
become a party to the Guarantee; and
WHEREAS, the Additional Guarantor has agreed to execute and deliver this
Assumption Agreement in order to become a party to the Guarantee;
NOW, THEREFORE, IT IS AGREED:
1. Guarantee. By executing and delivering this Assumption Agreement, the
Additional Guarantor, as provided in Section 5(n) of the Guarantee, hereby
becomes a party to the Guarantee as a Guarantor thereunder with the same force
and effect as if originally named therein as a Guarantor and, without limiting
the generality of the foregoing, hereby expressly assumes all obligations and
liabilities of a Guarantor thereunder. The information set forth in Annex 1-A
hereto is hereby added to the information set forth in Schedule 1 to the
Guarantee. The Additional Guarantor hereby represents and warrants that each of
the representations and warranties contained in Section 3 of the Guarantee is
true and correct on and as the date hereof as to such Additional Guarantor
(after giving effect to this Assumption Agreement) as if made on and as of such
date.
2. Governing Law. THIS ASSUMPTION AGREEMENT SHALL BE, TO THE GREATEST
EXTENT PERMITTED BY APPLICABLE LAW, BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AND THE FEDERAL LAWS OF THE
UNITED STATES OF AMERICA, WITHOUT REGARD TO ANY PRINCIPLES OF CONFLICTS OF LAW
THEREOF THAT WOULD DEFER TO THE SUBSTANTIVE LAWS OF ANY OTHER JURISDICTION.
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IN WITNESS WHEREOF, the undersigned has caused this Assumption Agreement
to be duly executed and delivered as of the date first above written.
[ADDITIONALGUARANTOR]
By:__________________
Name:
Title:
21
