GUARANTY AGREEMENT
GUARANTY
AGREEMENT
1. Identification.
This
Guaranty Agreement (the "Guaranty"), dated as of May ____, 2005, is entered into
by and between ___________________________, a _________ corporation,
___________________, a ____________ corporation (each referred to as “Guarantor”
herein) and Xxxxxxx Xxxxxxx, as collateral agent acting in the manner and to the
extent described in the Collateral Agent Agreement defined below (the
"Collateral Agent"), for the benefit of the parties identified on Schedule A
hereto (each a “Lender” and collectively, the "Lenders").
2. Recitals.
2.1 Guarantor
is a direct or indirect wholly-owned subsidiary of Quest Oil Corporation, a
Nevada corporation (“Quest Oil”). The Lenders have made and are making loans to
Quest Oil (the "Loans"). Guarantor will obtain substantial benefit from the
proceeds of the Loans.
2.2 The Loans
are and will be evidenced by certain convertible promissory notes (each a
“Convertible Note” and collectively, the "Convertible Notes") issued by Quest
Oil on or about the date of this Agreement pursuant to subscription agreements
(“Subscription Agreements”). The Convertible Notes are further identified on
Schedule A hereto and were and will be executed by Quest Oil as “Borrower” or
“Debtor” for the benefit of each Lender as the “Holder” or “Lender”
thereof.
2.3 In
consideration of the Loans made by Lenders to Quest Oil and for other good and
valuable consideration, and as security for the performance by Quest Oil of its
obligations under the Convertible Notes and as security for the repayment of the
Loans and all other sums due from Debtor to Lenders arising under the
Convertible Notes, Subscription Agreements, Collateral Agent Agreement and any
other agreement between or among them relating to the foregoing (collectively,
the "Obligations"), Guarantor, for good and valuable consideration, receipt of
which is acknowledged, has agreed to enter into this Agreement with the
Collateral Agent, for the benefit of the Lenders. Obligations include all future
advances by Lenders to Quest Oil made by all Lenders on substantially the same
terms and in proportion to their interests in the Obligations.
2.4 The
Lenders have appointed Xxxxxxx Xxxxxxx as Collateral Agent pursuant to that
certain Collateral Agent Agreement dated at or about May ____, 2005 (“Collateral
Agent Agreement”), among the Lenders and Collateral Agent.
3. Guaranty.
3.1 Guaranty.
Guarantors hereby unconditionally and irrevocably guarantee jointly and
severally the punctual payment, performance and observance when due, whether at
stated maturity, by acceleration or otherwise, of all of the Obligations now or
hereafter existing, whether for principal, interest (including, without
limitation, all interest that accrues after the commencement of any insolvency,
bankruptcy or reorganization of Quest Oil, whether or not constituting an
allowed claim in such proceeding), fees, commissions, expense reimbursements,
liquidated damages, indemnifications or otherwise (such obligations, to the
extent not paid by Quest Oil being the “Guaranteed
Obligations”), and
agrees to pay any and all costs, fees and expenses (including reasonable counsel
fees and expenses) incurred by Collateral Agent and the Lenders in enforcing any
rights under the guaranty set forth herein. Without limiting the generality of
the foregoing, Guarantor’s liability shall extend to all amounts that constitute
part of the Guaranteed Obligations and would be owed by Quest Oil to Collateral
Agent and the Lenders, but for the fact that they are unenforceable or not
allowable due to the existence of an insolvency, bankruptcy or reorganization
involving Quest Oil.
3.2 Guaranty
Absolute.
Guarantor guarantees that the Guaranteed Obligations will be paid strictly in
accordance with the terms of the Convertible Notes, regardless of any law,
regulation or order now or hereafter in effect in any jurisdiction affecting any
of such terms or the rights of Collateral Agent or the Lenders with respect
thereto. The obligations of Guarantor under this Agreement are independent of
the Guaranteed Obligations, and a separate action or actions may be brought and
prosecuted against Guarantor to enforce such obligations, irrespective of
whether any action is brought against Quest Oil or any other Guarantor or
whether Quest Oil or any other Guarantor is joined in any such action or
actions. The liability of Guarantor under this Agreement constitutes
a primary obligation, and not a contract of surety, and shall be irrevocable,
absolute and unconditional irrespective of, and Guarantor hereby irrevocably
waives any defenses it may now or hereafter have in any way relating to, any or
all of the following:
(a)
any lack
of validity or enforceability of the Convertible Notes or any agreement or
instrument relating thereto;
(b)
any
change in the time, manner or place of payment of, or in any other term of, all
or any of the Guaranteed Obligations, or any other amendment or waiver of or any
consent to departure from the Convertible Notes, including, without limitation,
any increase in the Guaranteed Obligations resulting from the extension of
additional credit to Quest Oil or otherwise;
(c)
any
taking, exchange, release, subordination or non-perfection of any Collateral, or
any taking, release or amendment or waiver of or consent to departure from any
other guaranty, for all or any of the Guaranteed Obligations;
(d)
any
change, restructuring or termination of the corporate, limited liability company
or partnership structure or existence of Quest Oil; or
(e)
any other
circumstance (including, without limitation, any statute of limitations) or any
existence of or reliance on any representation by Collateral Agent or the
Lenders that might otherwise constitute a defense available to, or a discharge
of, Quest Oil or any other guarantor or surety.
This
Agreement 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 is rescinded or
must otherwise be returned by Collateral Agent, the Lenders or any other entity
upon the insolvency, bankruptcy or reorganization of the Quest Oil or otherwise
(and whether as a result of any demand, settlement, litigation or otherwise),
all as though such payment had not been made.
3.3 Waiver.
Guarantor hereby waives promptness, diligence, notice of acceptance and any
other notice with respect to any of the Guaranteed Obligations and this
Agreement and any requirement that Collateral Agent or the Lenders or exhaust
any right or take any action against any Borrower or any other person or entity
or any Collateral. Guarantor acknowledges that it will receive direct and
indirect benefits from the financing arrangements contemplated herein and that
the waiver set forth in this Section 3.3 is
knowingly made in contemplation of such benefits. Guarantor hereby waives any
right to revoke this Agreement, and acknowledges that this Agreement is
continuing in nature and applies to all Guaranteed Obligations, whether existing
now or in the future.
3.4
Continuing
Guaranty; Assignments. This
Agreement is a continuing guaranty and shall (a) remain in full force and effect
until the later of the indefeasible cash payment in full of the Guaranteed
Obligations and all other amounts payable under this Agreement, the Subscription
Agreements and Convertible Notes, (b) be binding upon Guarantor, its successors
and assigns and (c) inure to the benefit of and be enforceable by Collateral
Agent and the Lenders and their successors, pledgees, transferees and assigns.
Without limiting the generality of the foregoing clause (c), the Collateral
Agent and any Lender may pledge, assign or otherwise transfer all or any portion
of its rights and obligations under this Agreement (including, without
limitation, all or any portion of its Convertible Notes owing to it) to any
other Person, and such other Person shall thereupon become vested with all the
benefits in respect thereof granted such Collateral Agent or Lender herein or
otherwise.
3.5
Subrogation. No
Guarantor will exercise any rights that it may now or hereafter acquire against
the Collateral Agent or any Lender or other Guarantor (if any) that arise from
the existence, payment, performance or enforcement of such Guarantor’s
obligations under this Agreement, including, without limitation, any right of
subrogation, reimbursement, exoneration, contribution or indemnification,
whether or not such claim, remedy or right arises in equity or under contract,
statute or common law, including, without limitation, the right to take or
receive from the Collateral Agent or any Lender or other Guarantor (if any),
directly or indirectly, in cash or other property or by set-off or in any other
manner, payment or security solely on account of such claim, remedy or right,
unless and until all of the Guaranteed Obligations and all other amounts payable
under this Agreement shall have been indefeasibly paid in full in cash. If
(i) any Guarantor shall make payment to Collateral Agent, or the Lenders of
all or any part of the Guaranteed Obligations, and (ii) of all or any of
the Guaranteed Obligations and all other amounts payable under this Agreement
such payments shall be paid in full in cash.
3.6
Maximum
Obligations.
Notwithstanding any provision herein contained to the contrary, Guarantor’s
liability with respect to the Obligations shall be limited to an amount not to
exceed, as of any date of determination, the amount that could be claimed by
Lenders from Guarantor without rendering such claim voidable or avoidable under
Section 548 of the Bankruptcy Code or under any applicable state Uniform
Fraudulent Transfer Act, Uniform Fraudulent Conveyance Act or similar statute or
common law.
4. Miscellaneous.
4.1 Expenses.
Guarantor shall pay to the Collateral Agent, on demand, the amount of any and
all reasonable expenses, including, without limitation, attorneys' fees, legal
expenses and brokers' fees, which the Collateral Agent may incur in connection
with (a) exercise or enforcement of any the rights, remedies or powers of the
Collateral Agent hereunder or with respect to any or all of the Obligations; or
(b) failure by Guarantor to perform and observe any agreements of Guarantor
contained herein which are performed by the Collateral Agent.
4.2 Waivers,
Amendment and Remedies. No
course of dealing by the Collateral Agent and no failure by the Collateral Agent
to exercise, or delay by the Collateral Agent in exercising, any right, remedy
or power hereunder shall operate as a waiver thereof, and no single or partial
exercise thereof shall preclude any other or further exercise thereof or the
exercise of any other right, remedy or power of the Collateral Agent. No
amendment, modification or waiver of any provision of this Agreement and no
consent to any departure by Guarantor therefrom, shall, in any event, be
effective unless contained in a writing signed by the Collateral Agent, and then
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given. The rights, remedies and powers of the
Collateral Agent, not only hereunder, but also under any instruments and
agreements evidencing or securing the Obligations and under applicable law are
cumulative, and may be exercised by the Collateral Agent from time to time in
such order as the Collateral Agent may elect.
4.3 Notices. All
notices or other communications given or made hereunder shall be in writing and
shall be personally delivered or deemed delivered the first business day after
being faxed (provided that a copy is delivered by first class mail) to the party
to receive the same at its address set forth below or to such other address as
either party shall hereafter give to the other by notice duly made under this
Section:
To Quest
Oil and
Guarantor,
to: Quest Oil
Corporation
0000 Xxxx
Xxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxxx,
Xxxxx 00000
Attn:
___________________
Fax:
(817) ______________
With a
copy by telecopier
only
to: The Xxxx
Law Firm
Attn:
Xxxx X. Xxxx, Esq.
Fax:
_________________
To
Lenders: To the
addresses and telecopier numbers set
forth on
Schedule A
To the
Collateral Agent: Xxxxxxx
X. Xxxxxxx
Grushko
& Xxxxxxx, P.C.
000 Xxxxx
Xxxxxx, Xxxxx 0000
Xxx Xxxx,
Xxx Xxxx 00000
Fax:
(000) 000-0000
Any party
may change its address by written notice in accordance with this
paragraph.
4.4 Term;
Binding Effect. This
Agreement shall (a) remain in full force and effect until payment and
satisfaction in full of all of the Obligations; (b) be binding upon Guarantor
and its successors and permitted assigns; and (c) inure to the benefit of the
Collateral Agent, for the benefit of the Lenders and their respective successors
and assigns. All the rights and benefits granted by Guarantor to the Collateral
Agent and Lenders hereunder and other agreements and documents delivered in
connection therewith are deemed granted to both the Collateral Agent and
Lenders. Upon the
payment in full of the Obligations, (i) this Agreement shall terminate and (ii)
Collateral Agent will, upon Guarantor's request and at Guarantor's expense,
execute and deliver to Guarantor such documents as Guarantor shall reasonably
request to evidence such termination, all without any representation, warranty
or recourse whatsoever.
4.5 Captions. The
captions of Paragraphs, Articles and Sections in this Agreement have been
included for convenience of reference only, and shall not define or limit the
provisions hereof and have no legal or other significance
whatsoever.
4.6 Governing
Law; Venue; Severability. This
Agreement shall be governed by and construed in accordance with the laws of the
State of New York without regard to principles of conflicts or choice of law,
except to the extent that the perfection of the security interest granted hereby
in respect of any item of Collateral may be governed by the law of another
jurisdiction. Any legal action or proceeding against Guarantor with respect to
this Agreement may be brought in the courts of the State of New York or of the
United States for the Southern District of New York, and, by execution and
delivery of this Agreement, Guarantor hereby irrevocably accepts for itself and
in respect of its property, generally and unconditionally, the jurisdiction of
the aforesaid courts. Guarantor hereby irrevocably waives any objection which
they may now or hereafter have to the laying of venue of any of the aforesaid
actions or proceedings arising out of or in connection with this Agreement
brought in the aforesaid courts and hereby further irrevocably waives and agrees
not to plead or claim in any such court that any such action or proceeding
brought in any such court has been brought in an inconvenient forum. If any
provision of this Agreement, or the application thereof to any person or
circumstance, is held invalid, such invalidity shall not affect any other
provisions which can be given effect without the invalid provision or
application, and to this end the provisions hereof shall be severable and the
remaining, valid provisions shall remain of full force and effect.
4.7 Satisfaction
of Obligations. For all
purposes of this Agreement, the payment in full of the Obligations shall be
conclusively deemed to have occurred when either the Obligations have been
indefeasibly paid in cash or all outstanding Convertible Notes have been
converted to common stock pursuant to the terms of the Convertible Notes and the
Subscription Agreements.
4.8 Counterparts/Execution. This
Agreement may be executed in any number of counterparts and by the different
signatories hereto on separate counterparts, each of which, when so executed,
shall be deemed an original, but all such counterparts shall constitute but one
and the same instrument. This Agreement may be executed by facsimile signature
and delivered by facsimile transmission.
IN
WITNESS WHEREOF, the
undersigned have executed and delivered this Guaranty Agreement, as of the date
first written above.
"GUARANTOR" "GUARANTOR"
By:
_____________________________________ By:__________________________________
Its:
_____________________________________ Its:___________________________________
“THE
COLLATERAL AGENT”
XXXXXXX
X. XXXXXXX
_________________________________________
APPROVED
BY “LENDERS”:
______________________________________ _______________________________________
ALPHA
CAPITAL AKTIENGESELLSCHAFT
_______________________________________ _______________________________________
This
Guaranty Agreement may be signed by facsimile signature
and
delivered
by confirmed facsimile transmission.
SCHEDULE
A TO GUARANTY
|
LENDER
|
NOTES |
|
TOTAL |
$1,000,000.00 |
