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
October 14, 1997.
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 the
plural and vice versa.
Borrower: Penn Octane Corporation
a __________________________corporation
(jurisdiction of incorporation)
Guarantor: Xxxxxx Xxxxxxx
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: Letter Agreeement, General Security
Agreement, Continuing Agreement for Letters of Credit and
Promissory Note, all dated October 14, 1997
2. Guaranty
2.1 Continuing Guaranty of Payment. In consideration of RZB agreeing to
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
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
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.
3. Special Agreements of Guarantor
3.1 Subordination. Subject to the next following sentence of this Section
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 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 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, 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
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
3.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.
3.6 Interest. If the Guarantor fails to pay when due any obligation
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 Lending Rate" means,
for any day, the higher of (i) the rate announced by 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
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. The Guarantor will not cease to own (directly or
indirectly), free and clear of all liens and encumbrances, the interest in the
Borrower 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
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,
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:
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 Guaranty has been duly authorized by all necessary corporate and
stockholder action or other action required by its organizational documents,
and 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
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 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
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.
5. Miscellaneous
5.1 Payment of Expenses. The Guarantor agrees to pay all out-of-pocket
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
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
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
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 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
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 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
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 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, 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 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.
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:
XXXXXX XXXXXXX
By: /s/ Xxxxxx X. Xxxxxxx
Title: President
Address of Guarantor:
00000 Xxxx Xxxx
Xxx Xxxxx Xxxxx, XX 00000
Accepted as of the date first above written:
RZB FINANCE LLC
By: Xxxxx X. Xxxxxxx
Title: Vice President
By: X. Xxxxxx Beintrexter
Title: President
