Guaranty
Exhibit 10.3
GUARANTY (this agreement, together with all amendments and restatements and all Guaranty
Supplements, this “Guaranty”), dated as of August 23, 2007, made by each of the parties listed on
the signature pages hereof and each other Person which may from time to time become a party to this
Guaranty pursuant to Section 23 (collectively, the “Additional Guarantors,” and each, an
“Additional Guarantor,” and together with each of the signatories party hereto, collectively the
“Guarantors,” and each, a “Guarantor”), in favor of Administrative Agent, for the benefit of
Guaranteed Parties.
BACKGROUND.
Citibank, N.A., as Administrative Agent, the Lenders party thereto, and PowerSecure
International, Inc., a Delaware corporation (“Borrower”), entered into the Credit Agreement dated
as of August 23, 2007 (such agreement, together with all amendments and restatements, the “Credit
Agreement”).
Borrower and each of Guarantors are members of the same consolidated group of companies and
are engaged in operations which require financing on a basis in which credit can be made available
from time to time to Borrower, and Guarantors will derive direct and indirect economic benefit from
the Loans under the Credit Agreement and Swap Contracts and Cash Management Documents.
It is a condition precedent to the obligation of Lenders to make Loans under the Credit
Agreement and to extend other financial accommodations under the Loan Documents and of Lenders and
their Affiliates to provide financial accommodations pursuant to Guarantied Swap Contracts and Cash
Management Documents that Guarantors shall have executed and delivered this Guaranty.
Lenders, Administrative Agent, any Lender or Affiliate of any Lender that is a party to any
Swap Contract (provided that such Lender was a Lender at the time such Swap Contract was entered
into) with Borrower or any Affiliate of Borrower, any Lender or Affiliate of any Lender that is
owed any Cash Management Obligation (provided that such Lender was a Lender at the time such Cash
Management Obligation arose), and the beneficiaries of each indemnification obligation undertaken
by any Loan Party under any Loan Document are herein referred to as the “Guaranteed Parties.”
AGREEMENT.
NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration
and to induce Guaranteed Parties to make (a) Loans under the Credit Agreement and extend other
credit and financial accommodations under the Loan Documents and (b) make financial accommodations
under Swap Contracts and Cash Management Documents, each Guarantor hereby agrees as follows:
SECTION 1. Guaranty. Guarantors hereby jointly and severally unconditionally and irrevocably
guarantee the full and prompt payment when due, whether at stated maturity, by acceleration or
otherwise, of, and the performance of, (a) the Obligations, whether now or hereafter existing and
whether for principal, interest, fees, expenses or otherwise, (b) all Swap
Obligations owed to any Lender or any Affiliate of a Lender (provided at the time of execution
of the Swap Contract related to such Swap Obligations such Lender is a party to the Credit
Agreement, herein called a “Guarantied Swap Contract”), (c) all Cash Management Obligations owed to
any Lender or any Affiliate of a Lender (provided that during the effectiveness of a Cash
Management Document related to such Cash Management Obligations such Lender is a party to the
Credit Agreement), (d) any and all out-of-pocket expenses (including, without limitation, expenses
and counsel fees and expenses of Administrative Agent and Lenders) incurred by any of Guaranteed
Parties in enforcing any rights under this Guaranty, and (e) all present and future amounts that
would become due but for the operation of any provision of Debtor Relief Laws, and all present and
future accrued and unpaid interest, including, without limitation, all post-petition interest if
Borrower, any Guarantor or any other Loan Party voluntarily or involuntarily becomes subject to any
Debtor Relief Laws (the items set forth in clauses (a), (b), (c),
(d) and (e) being herein referred to as the “Guarantied Obligations”). Upon
failure of Borrower to pay any of the Guarantied Obligations when due after the giving by
Administrative Agent and/or Guaranteed Parties of any notice and the expiration of any applicable
cure period in each case provided for in the Credit Agreement and other Loan Documents, any
Guarantied Swap Contract or any Cash Management Document (whether at stated maturity, by
acceleration or otherwise), Guarantors hereby further jointly and severally agree to promptly pay
the same to Administrative Agent for the benefit of Guaranteed Parties, without any other demand or
notice whatsoever, including without limitation, any notice having been given to any Guarantor of
either the acceptance by Guaranteed Parties of this Guaranty or the creation or incurrence of any
of the Guarantied Obligations. This Guaranty is an absolute guaranty of payment and performance of
the Guarantied Obligations and not a guaranty of collection, meaning that it is not necessary for
Guaranteed Parties, in order to enforce payment by Guarantors, first or contemporaneously to
accelerate payment of any of the Guarantied Obligations, to institute suit or exhaust any rights
against any Loan Party, or to enforce any rights against any Collateral. Notwithstanding anything
herein or in any other Loan Document, Guarantied Swap Contract of Cash Management Document to the
contrary, in any action or proceeding involving any state corporate Law, or any state or federal
bankruptcy, insolvency, reorganization or other Law affecting the rights of creditors generally,
if, as a result of applicable Law relating to fraudulent conveyance or fraudulent transfer,
including Section 548 of Bankruptcy Code or any applicable provisions of comparable state Law
(collectively, “Fraudulent Transfer Laws”), the obligations of any Guarantor (other than Holdings)
under this Section 1 would otherwise, after giving effect to (a) all other liabilities of
such Guarantor, contingent or otherwise, that are relevant under such Fraudulent Transfer Laws
(specifically excluding, however, any liabilities of such Guarantor in respect of intercompany
Indebtedness to Borrower to the extent that such Indebtedness would be discharged in an amount
equal to the amount paid by such Guarantor hereunder) and (b) to the value as assets of such
Guarantor (as determined under the applicable provisions of such Fraudulent Transfer Laws) of any
rights of subrogation, contribution, reimbursement, indemnity or similar rights held by such
Guarantor pursuant to (i) applicable requirements of Law, (ii) Section 10 hereof or (iii)
any other contractual obligations providing for an equitable allocation among such Guarantor and
other Loan Parties or Subsidiaries or Affiliates of Borrower of obligations arising under this
Guaranty or other guaranties of the Guarantied Obligations by such parties, be held or determined
to be void, invalid or unenforceable, or subordinated to the claims of any other creditors, on
account of the amount of its liability under this Section 1, then the amount of such
liability shall, without any further action by such Guarantor, any Guaranteed Party, Administrative
Agent or any other Person, be automatically
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limited and reduced to the highest amount that is valid and enforceable and not subordinated
to the claims of other creditors as determined in such action or proceeding.
SECTION 2. Guaranty Absolute. Each Guarantor guarantees that the Guarantied Obligations will
be paid strictly in accordance with the terms of the Credit Agreement, the Notes, the other Loan
Documents, the Guarantied Swap Contracts and the Cash Management Documents, without set-off or
counterclaim, and regardless of any Applicable Law now or hereafter in effect in any jurisdiction
affecting any of such terms or the rights of Guaranteed Parties with respect thereto. The
liability of each Guarantor under this Guaranty shall be absolute and unconditional irrespective
of:
(a) any lack of validity or enforceability of any provision of any other Loan Document,
any Guarantied Swap Contract or any Cash Management Document, any other agreement or
instrument relating to any of the foregoing or avoidance or subordination of any of the
Guarantied Obligations;
(b) any change in the time, manner or place of payment of, or in any other term of, or
any increase in the amount of, all or any of the Guarantied Obligations, or any other
amendment or waiver of any term of, or any consent to departure from any requirement of, the
Credit Agreement, the Notes or any of the other Loan Documents, the Guarantied Swap
Contracts or Cash Management Document;
(c) any exchange, release or non-perfection of any Lien on any Collateral for, or any
release of any other Loan Party or amendment or waiver of any term of any other guaranty of,
or any consent to departure from any requirement of any other guaranty of, all or any of the
Guarantied Obligations;
(d) the absence of any attempt to collect any of the Guarantied Obligations from
Borrower or from any other Loan Party or any other action to enforce the same or the
election of any remedy by any of Guaranteed Parties;
(e) any waiver, consent, extension, forbearance or granting of any indulgence by any of
Guaranteed Parties with respect to any provision of any other Loan Document, any Guarantied
Swap Contract or any Cash Management Document (except to the extent any written waiver,
consent, forbearance or indulgence executed in accordance with the Credit Agreement, such
Swap Contract or such Cash Management Document, as applicable, expressly modifies or
terminates the obligations of such Guarantor);
(f) the election by any of Guaranteed Parties in any proceeding under any Debtor Relief
Law;
(g) any borrowing or grant of a security interest by Borrower, as debtor-in-possession,
under any Debtor Relief Law; or
(h) any other circumstance which might otherwise constitute a legal or equitable
discharge or defense of Borrower, any Guarantor or any other Loan Party other than payment
or performance of the Guarantied Obligations.
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SECTION 3. Waiver.
(a) Each Guarantor hereby (i) waives (A) promptness, diligence, and, except as otherwise
provided herein, notice of acceptance and any and all other notices, including, without limitation,
notice of intent to accelerate and notice of acceleration, with respect to any of the Guarantied
Obligations or this Guaranty, (B) any requirement that any of Guaranteed Parties protect, secure,
perfect or insure any security interest in or other Lien on any property subject thereto or exhaust
any right or take any action against Borrower or any other Person or any Collateral, (C) the filing
of any claim with a court in the event of receivership or bankruptcy of Borrower or any other
Person, (D) except as otherwise provided herein, protest or notice with respect to nonpayment of
all or any of the Guarantied Obligations, (E) except as otherwise provided herein, all demands
whatsoever (and any requirement that demand be made on Borrower or any other Person as a condition
precedent to such Guarantor’s obligations hereunder), (F) all rights by which any Guarantor might
be entitled to require suit on an accrued right of action in respect of any of the Guarantied
Obligations or require suit against Borrower or any other Guarantor or Person, (G) any defense
based upon an election of remedies by any Guaranteed Party, or (H) notice of any events or
circumstances set forth in clauses (a) through (h) of Section 2; and (ii)
covenants and agrees that, except as otherwise agreed by the parties, this Guaranty will not be
discharged except by complete payment and performance of the Guarantied Obligations and any other
obligations of such Guarantor contained herein.
(b) If, in the exercise of any of its rights and remedies in accordance with the provisions of
Applicable Law, any of Guaranteed Parties shall forfeit any of its rights or remedies, including,
without limitation, its right to enter a deficiency judgment against Borrower or any other Person,
whether because of any Applicable Law pertaining to “election of remedies” or the like, each
Guarantor hereby consents to such action by such Guaranteed Party and waives any claim based upon
such action. Any election of remedies which, by reason of such election, results in the denial or
impairment of the right of such Guaranteed Party to seek a deficiency judgment against Borrower or
any other Person shall not impair the obligation of such Guarantor to pay the full amount of the
Guarantied Obligations or any other obligation of such Guarantor contained herein.
(c) In the event any of Guaranteed Parties shall bid at any foreclosure or trustee’s sale or
at any private sale permitted by Law or under any of the Loan Documents, Guarantied Swap Contracts
of Cash Management Document, to the extent not prohibited by Applicable Law, such Guaranteed Party
may bid all or less than the amount of the Guarantied Obligations and the amount of such bid, if
successful, need not be paid by such Guaranteed Party but shall be credited against the Guarantied
Obligations.
(d) Each Guarantor agrees that notwithstanding the foregoing and without limiting the
generality of the foregoing if, after the occurrence and during the continuance of an Event of
Default, Guaranteed Parties are prevented by Applicable Law from exercising their respective rights
to accelerate the maturity of the Guarantied Obligations, to collect interest on the Guarantied
Obligations, or to enforce or exercise any other right or remedy with respect to the Guarantied
Obligations, or Administrative Agent is prevented from taking any action to realize on any
Collateral, such Guarantor agrees to pay to Administrative Agent for the account of Guaranteed
Parties, upon demand therefor, for application to the Guarantied Obligations, the
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amount that would otherwise have been due and payable had such rights and remedies been
permitted to be exercised by Guaranteed Parties.
(e) Each Guarantor hereby assumes responsibility for keeping itself informed of the financial
condition of Borrower and of each other Loan Party, and of all other circumstances bearing upon the
risk of nonpayment of the Guarantied Obligations or any part thereof, that diligent inquiry would
reveal. Each Guarantor hereby agrees that Guaranteed Parties shall have no duty to advise any
Guarantor or any other Loan Party of information known to any of Guaranteed Parties regarding such
condition or any such circumstance. In the event that any of Guaranteed Parties in its sole
discretion undertakes at any time or from time to time to provide any such information to any
Guarantor or other Loan Party, such Guaranteed Party shall be under no obligation (i) to undertake
any investigation not a part of its regular business routine, (ii) to disclose any information
which, pursuant to accepted or reasonable banking or commercial finance practices, such Guaranteed
Party wishes to maintain as confidential, or (iii) to make any other or future disclosures of such
information or any other information to such Guarantor or other Loan Party.
(f) Each Guarantor consents and agrees that Guaranteed Parties shall be under no obligation to
marshal any assets in favor of any Guarantor or any other Loan Party or otherwise in connection
with obtaining payment of any or all of the Guarantied Obligations from any Person or source.
SECTION 4. Representations and Warranties.
(a) Each Guarantor hereby represents and warrants to Guaranteed Parties that the
representations and warranties set forth in Article V of the Credit Agreement as
they relate to such Guarantor or to the Loan Documents to which such Guarantor is a party
are true and correct in all material respects in the manner specified in the Credit
Agreement and Guaranteed Parties shall be entitled to rely on each of them as if they were
fully set forth herein.
(b) All representations and warranties made hereunder and in any other Loan Document or
other document delivered pursuant hereto or thereto or in connection herewith or therewith
shall survive the execution and delivery hereof and thereof. Such representations and
warranties have been or will be relied upon by the Administrative Agent and each Lender,
regardless of any investigation made by the Administrative Agent or any Lender or on their
behalf and notwithstanding that the Administrative Agent or any Lender may have had notice
or knowledge of any Default at the time of any Credit Extension, and shall continue in full
force and effect as long as any Loan or any other Obligation hereunder shall remain unpaid
or unsatisfied.
SECTION 5. Amendments, Etc. No amendment or waiver of any provision of this Guaranty, and no
consent to any departure by any Guarantor therefrom, shall be effective unless in writing signed by
Required Lenders and the applicable Loan Party, as the case may be, and acknowledged by
Administrative Agent, and each such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
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SECTION 6. Addresses for Notices. All notices and other communications provided for herein
shall be effectuated in the manner provided for in Section 10.02 of the Credit Agreement;
provided, that if a notice or communication hereunder is sent to a Guarantor, said notice shall be
addressed to such Guarantor, in care of Borrower at Borrower’s then current address (or facsimile
number) for notice under the Credit Agreement.
SECTION 7. No Waiver; Remedies.
(a) No failure on the part of any Guaranteed Party 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
Applicable Law or any of the other Loan Documents, Guarantied Swap Contracts of Cash Management
Documents.
(b) No waiver by Guaranteed Parties of any default shall operate as a waiver of any other
default or the same default on a future occasion, and no action by any of Guaranteed Parties
permitted hereunder shall in way affect or impair any of the rights of Guaranteed Parties or the
obligations of any Guarantor under this Guaranty, under any of the other Loan Documents, under any
Guarantied Swap Contract or under any Cash Management Document, except as specifically set forth in
any such waiver. Any determination by a court of competent jurisdiction of the amount of any
principal and/or interest or other amount constituting any of the Guarantied Obligations shall be
conclusive and binding on each Guarantor irrespective of whether such Guarantor was a party to the
suit or action in which such determination was made.
SECTION 8. Right of Set-off. If an Event of Default exists, each of Guaranteed Parties is
hereby authorized at any time and from time to time, to the fullest extent permitted by Applicable
Law, to set-off and apply any and all deposits (general or special (except trust and escrow
accounts), time or demand, provisional or final) at any time held and other Indebtedness at any
time owing by such Guaranteed Party to or for the credit or the account of each Guarantor against
any and all of the obligations of such Guarantor now or hereafter existing under this Guaranty,
irrespective of whether or not such Guaranteed Party shall have made any demand under this Guaranty
and although such obligations may be contingent and unmatured; provided, however, such Guaranteed
Party shall promptly notify such Guarantor and Borrower after such set-off and the application made
by such Guaranteed Party; provided, further, any failure to deliver such notice shall not
invalidate any such action. The rights of each Guaranteed Party under this Section 8 are
in addition to other rights and remedies (including, without limitation, other rights of set-off)
which such Guaranteed Party may have.
SECTION 9. Continuing Guaranty; Transfer of Notes. This Guaranty (a)(i) is a continuing
guaranty and shall remain in full force and effect until the date upon which all of the Guarantied
Obligations are finally paid in full, the Revolving Commitments and the Term Commitments are
terminated and all Guarantied Swap Contracts have expired or terminated (the “Release Date”) and
(ii) binding upon each Guarantor, its permitted successors and assigns, and (b) inures to the
benefit of and be enforceable by Guaranteed Parties and their respective successors, permitted
transferees, and permitted assigns. Without limiting the generality of the foregoing clause
(b), each of Guaranteed Parties may assign or otherwise transfer any Note held by it or the
Guarantied Obligations owed to it to any other Person, and such other Person shall
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thereupon become vested with all the rights in respect thereof granted to such Guaranteed
Party herein or otherwise with respect to such of the Notes and the Guarantied Obligations so
transferred or assigned, subject, however, to compliance with the provisions of Section
10.06 of the Credit Agreement in respect of assignments. Except as the result of the
consummation of a transaction permitted under Section 7.04 of the Credit Agreement, no
Guarantor may assign any of its obligations under this Guaranty without first obtaining the written
consent of Lenders as set forth in the Credit Agreement.
SECTION 10. Reimbursement. To the extent that any Guarantor shall be required hereunder to
pay a portion of the Guarantied Obligations exceeding the greater of (a) the amount of the economic
benefit actually received by such Guarantor from the Loans, Guarantied Swap Contracts and Cash
Management Documents and (b) the amount such Guarantor would otherwise have paid if such Guarantor
had paid the aggregate amount of the Guarantied Obligations (excluding the amount thereof repaid by
Borrower) in the same proportion as such Guarantor’s net worth at the date enforcement is sought
hereunder bears to the aggregate net worth of all Guarantors at the date enforcement is sought
hereunder, then such Guarantor shall be reimbursed by such other Guarantors for the amount of such
excess, pro rata, based on the respective net worths of such other Guarantors at the date
enforcement hereunder is sought. Notwithstanding anything to the contrary, each Guarantor agrees
that the Guarantied Obligations may at any time and from time to time exceed the amount of the
liability of such Guarantor hereunder without impairing its guaranty herein or effecting the rights
and remedies of Guaranteed Parties hereunder. This Section 10 is intended only to define
the relative rights of Guarantors, and nothing set forth in this Section 10 is intended to
or shall impair the obligations of Guarantors, jointly and severally, to pay to Guaranteed Parties
the Guarantied Obligations as and when the same shall become due and payable in accordance with the
terms hereof.
SECTION 11. Application of Payments. All amounts and property received by Administrative
Agent and Guaranteed Parties pursuant to this Guaranty (including amounts and property received or
applied pursuant to Section 8 or application of other rights of set-off) shall be applied
as provided in Section 8.03 of the Credit Agreement.
SECTION 12. Reinstatement; Termination. This Guaranty shall remain in full force and effect
and continue to be effective should any petition be filed by or against any Loan Party for
liquidation or reorganization, should any Loan Party 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 any Loan Party’s assets, and shall, to the fullest extent permitted by Applicable Law, continue
to be effective or be reinstated, as the case may be, if at any time payment and performance of the
Guarantied Obligations, or any part thereof, is, pursuant to Applicable Law, rescinded or reduced
in amount, or must otherwise be restored or returned by any obligees of the Guarantied Obligations
or such part thereof, whether as a “voidable preference,” “fraudulent transfer,” 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 Guarantied Obligations shall, to the
fullest extent permitted by Law, be reinstated and deemed reduced only by such amount paid and not
so rescinded, reduced, restored or returned. Subject to the reinstatement provisions of this
Section 12, this Guaranty shall remain in full force and effect until the date upon which
(a) all of the Guaranteed Obligations are fully, indefeasibly, absolutely and unconditionally paid
and performed, (b) the Revolving Commitments and Term Commitments are terminated, and (c) all Swap
Contracts with respect to all Swap Obligations
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have expired, been terminated or secured on terms that are reasonably acceptable to the
parties to such Swap Contract.
SECTION 13. Governing Law; Waiver of Jury Trial; Submission to Jurisdiction and Service of
Process.
(a) THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE
OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE; PROVIDED
THAT ADMINISTRATIVE AGENT AND EACH OTHER GUARANTEED PARTY SHALL RETAIN ALL RIGHTS ARISING UNDER
FEDERAL LAW.
(b) EACH GUARANTOR, ADMINISTRATIVE AGENT AND EACH GUARANTEED PARTY IRREVOCABLY AND
UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE
COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK, NEW YORK AND OF THE UNITED STATES DISTRICT
COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT THEREOF, IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY OR ANY OTHER LOAN DOCUMENT, OR FOR
RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH GUARANTOR, ADMINISTRATIVE AGENT AND EACH
GUARANTEED PARTY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH
ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH GUARANTOR, ADMINISTRATIVE AGENT
AND EACH GUARANTEED PARTY HERETO, AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING
SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY
OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS GUARANTY OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT
ANY RIGHT THAT ADMINISTRATIVE AGENT OR ANY GUARANTEED PARTY MAY OTHERWISE HAVE TO BRING ANY ACTION
OR PROCEEDING RELATING TO THIS GUARANTY OR ANY OTHER LOAN DOCUMENT AGAINST ANY GUARANTOR OR ITS
PROPERTIES IN THE COURTS OF ANY JURISDICTION.
(c) EACH GUARANTOR, ADMINISTRATIVE AGENT AND EACH GUARANTEED PARTY IRREVOCABLY AND
UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT
MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS GUARANTY OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH
(b) OF THIS SECTION. EACH GUARANTOR, ADMINISTRATIVE AGENT AND EACH GUARANTEED PARTY
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN
INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.
SECTION 14. Waiver of Right to Trial by Jury. EACH GUARANTOR, ADMINISTRATIVE AGENT AND EACH
GUARANTEED PARTY HEREBY EXPRESSLY
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WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING
UNDER THIS GUARANTY OR ANY OTHER LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR
INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO ANY LOAN DOCUMENT,
OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND
WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH GUARANTOR, ADMINISTRATIVE AGENT AND EACH
GUARANTEED PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION
SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN
ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF
THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
SECTION 15. Section Titles. The Section titles contained in this Guaranty are and shall be
without substantive meaning or content of any kind whatsoever and are not to be used in any
interpretation of this Guaranty.
SECTION 16. Definitions. Capitalized terms not otherwise defined herein have the meaning
specified in the Credit Agreement.
SECTION 17. Execution in Counterparts. This Guaranty may be executed in counterparts (and by
different parties hereto in different counterparts), each of which shall constitute an original,
all of which when taken together shall constitute a single contract.
SECTION 18. Miscellaneous. All references herein to Borrower or to any Guarantor shall
include their respective successors and assigns, including, without limitation, a receiver, trustee
or debtor-in-possession of or for Borrower or such Guarantor. All references to the singular shall
be deemed to include the plural where the context so requires.
SECTION 19. Subrogation and Subordination.
(a) Subrogation. Notwithstanding any reference to subrogation contained herein to the
contrary, until the Release Date, each Guarantor hereby irrevocably waives any claim or other
rights which it may have or hereafter acquire against Borrower that arise from the existence,
payment, performance or enforcement of such Guarantor’s obligations under this Guaranty, including,
without limitation, any right of subrogation, reimbursement, exoneration, contribution,
indemnification, any right to participate in any claim or remedy of any Guaranteed Party against
Borrower or any Collateral which any Guaranteed Party now has or hereafter acquires, whether or not
such claim, remedy or right arises in equity, or under contract, statutes or common law, including
without limitation, the right to take or receive from Borrower, directly or indirectly, in cash or
other property or by set-off or in any other manner, payment or security on account of such claim
or other rights. If any amount shall be paid to any Guarantor in violation of the preceding
sentence and the Guarantied Obligations shall not have been paid in full, such amount shall be
deemed to have been paid to such Guarantor for the benefit of, and held in trust for the benefit
of, Guaranteed Parties, and shall forthwith be paid to Administrative Agent to be credited and
applied upon the Guarantied Obligations, whether matured or unmatured, in accordance with the terms
of the Credit Agreement or other Loan Document,
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Guarantied Swap Contracts or Cash Management Documents. Each Guarantor acknowledges that it
will receive direct and indirect benefits from the financing arrangements contemplated by the
Credit Agreement and that the waiver set forth in this Section 18 is knowingly made in
contemplation of such benefits.
(b) Subordination. With respect to each Guarantor, all debt and other liabilities of each
Borrower or any other Loan Party to such Guarantor (“Loan Party Debt”) are expressly subordinate
and junior to the Guarantied Obligations and any instruments evidencing the Guarantied Obligations
to the extent provided below.
(i) Until the Release Date, each Guarantor agrees that it will not request, demand,
accept, or receive (by set-off or other manner) any payment amount, credit or reduction of
all or any part of the amounts owing under the Loan Party Debt or any security therefor,
except as specifically allowed pursuant to clause (ii);
(ii) Notwithstanding the provisions of clause (i), Borrower and each other Loan
Party may pay to such Guarantor and such Guarantor may request, demand, accept and receive
and retain from Borrower payments, credits or reductions of all or any part of the amounts
owing under the Loan Party Debt or any security therefor on the Loan Party Debt; provided,
that each Borrower’s and other Loan Party’s right to pay and such Guarantor’s right to
receive any such amount shall automatically and be immediately suspended and cease (A) upon
the occurrence and during the continuance of an Event of Default or (B) if, after taking
into account the effect of such payment, an Event of Default would occur and be continuing.
Such Guarantor’s right to receive amounts under this clause (ii) (including any
amounts which theretofore may have been suspended) shall automatically be reinstated at such
time as the Event of Default which was the basis of such suspension has been cured or waived
(provided that no subsequent Event of Default has occurred) or such earlier date, if any, as
Administrative Agent gives notice to Guarantors of reinstatement by Required Lenders, in
Required Lenders’ sole discretion;
(iii) If any Guarantor receives any payment on the Loan Party Debt in violation of this
Guaranty, such Guarantor will hold such payment in trust for Guaranteed Parties and will
promptly deliver such payment to Administrative Agent; and
(iv) In the event of the commencement or joinder of any suit, action or proceeding of
any type (judicial or otherwise) or proceeding under any Debtor Relief Law against Borrower
or any other Loan Party (an “Insolvency Proceeding”) and subject to court orders issued
pursuant to the applicable Debtor Relief Law, the Guarantied Obligations shall first be
paid, discharged and performed in full before any payment or performance is made upon the
Loan Party Debt notwithstanding any other provisions which may be made in such Insolvency
Proceeding. In the event of any Insolvency Proceeding, each Guarantor will at any time
prior to the Release Date (A) file, at the request of any Guaranteed Party, any claim, proof
of claim or similar instrument necessary to enforce Borrower’s or such other Loan Party’s
obligation to pay the Loan Party Debt, and (B) hold in trust for and pay to Administrative
Agent, for the benefit of Guaranteed Parties, any and all monies, obligations, property,
stock dividends or other assets received in any such proceeding on account of the Loan Party
Debt in order that
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Guaranteed Parties may apply such monies or the cash proceeds of such other assets to
the Guarantied Obligations.
SECTION 20. Guarantor Insolvency. Should any Guarantor voluntarily seek, consent to, or
acquiesce in the benefits of any Debtor Relief Law or become a party to or be made the subject of
any proceeding provided for by any Debtor Relief Law (other than as a creditor or claimant) that
could suspend or otherwise adversely affect the rights of any Guaranteed Party granted hereunder,
then, the obligations of such Guarantor under this Guaranty shall be, as between such Guarantor and
such Guaranteed Party, a fully-matured, due, and payable obligation of such Guarantor to such
Guaranteed Party (without regard to whether there is an Event of Default under the Credit Agreement
or whether any part of the Guarantied Obligations is then due and owing by Borrower to such
Guaranteed Party), payable in full by such Guarantor to Administrative Agent, for the benefit of
such Guaranteed Party, upon demand, which shall be the estimated amount owing in respect of the
contingent claim created hereunder.
SECTION 21. Rate Provision. It is not the intention of any Guaranteed Party to make an
agreement violative of the Laws of any applicable jurisdiction relating to usury. Regardless of
any provision in this Guaranty, no Guaranteed Party shall ever be entitled to contract, charge,
receive, collect or apply, as interest on the Guarantied Obligations, any amount in excess of the
Highest Lawful Rate. In no event shall any Guarantor be obligated to pay any amount in excess of
the Highest Lawful Rate. If from any circumstance Administrative Agent or any Guaranteed Party
shall ever receive, collect or apply anything of value deemed excess interest under Applicable Law,
an amount equal to such excess shall be applied first to the reduction of the principal amount of
outstanding Revolving Loans and Term Loans and then to the principal of any other Guarantied
Obligations, and any remainder shall be promptly refunded to the payor. In determining whether or
not interest paid or payable with respect to the Guarantied Obligations, under any specified
contingency, exceeds the Highest Lawful Rate, Guarantors and Guaranteed Parties shall, to the
maximum extent permitted by Applicable Law, (a) characterize any non-principal payment as an
expense, fee or premium rather than as interest, (b) amortize, prorate, allocate and spread the
total amount of interest throughout the full term of such Guarantied Obligations so that the
interest paid on account of such Guarantied Obligations does not exceed the Highest Lawful Rate
and/or (c) allocate interest between portions of such Guarantied Obligations; provided, that if the
Guarantied Obligations are paid and performed in full prior to the end of the full contemplated
term thereof, and if the interest received for the actual period of existence thereof exceeds the
Highest Lawful Rate, Guaranteed Parties shall refund to the payor the amount of such excess or
credit the amount of such excess against the total principal amount owing, and, in such event, no
Guaranteed Party shall be subject to any penalties provided by any laws for contracting for,
charging or receiving interest in excess of the Highest Lawful Rate.
SECTION 22. Severability. If any provision of this Guaranty is held to be illegal, invalid or
unenforceable, (a) the legality, validity and enforceability of the remaining provisions of this
Guaranty shall not be affected or impaired thereby and (b) the parties shall endeavor in good faith
negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the
economic effect of which comes as close as possible to that of the illegal, invalid or
unenforceable provisions. The invalidity of a provision in a particular jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
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SECTION 23. No Setoff or Deductions; Taxes. Each Guarantor represents and warrants that it is
incorporated or formed, and resides in, the United States of America. All payments by each
Guarantor hereunder shall be paid in full, without setoff or counterclaim (other than mandatory) or
any deduction or withholding whatsoever, including, without limitation, for any and all present and
future taxes other than Excluded Taxes. If each Guarantor must make a payment under this Guaranty,
each Guarantor represents and warrants that it will make the payment from one of its U.S. resident
offices to Administrative Agent or each other Guaranteed Party so that no withholding tax is
imposed on the payment. If notwithstanding the foregoing, each Guarantor makes a payment under
this Guaranty to which withholding tax applies, or any taxes (other than taxes on income (a)
imposed by the country or any subdivision of the country in which the principal office or actual
lending office of Administrative Agent or any other Guaranteed Party is located and (b) measured by
the United States taxable income of Administrative Agent or any other Guaranteed Party would have
received is all payments under or in respect of this Guaranty were exempt from taxes levied by such
Guarantor’s country) are at any time imposed on any payments under or in respect of this Guaranty
including, but not limited to, payments made pursuant to this Section 23, each Guarantor
shall pay all such taxes to the relevant authority in accordance with Applicable Law such that
Administrative Agent or any other Guaranteed Party receives the sum it would have received had no
such deduction or withholding been made and shall also pay to Administrative Agent or any other
Guaranteed Party, on demand, all additional amounts which Administrative Agent or any other
Guaranteed Party specifies as necessary to preserve the after-tax yield Administrative Agent or
such other Guaranteed Party would have received if such taxes had not been imposed. Each Guarantor
shall promptly provide Administrative Agent or any other Guaranteed Party with an original receipt
or certified copy issued by the relevant authority evidencing the payment of ay such amount
required to be deducted or withheld.
SECTION 24. Additional Guarantors. Upon the execution and delivery by any other Person of a
Guaranty Supplement in substantially the form of Exhibit A (each, a “Guaranty Supplement”),
such Person shall become a “Guarantor” hereunder with the same force and effect as if originally
named as a Guarantor herein. The execution and delivery of any Guaranty Supplement shall not
require the consent of any other Guarantor hereunder. The rights and obligations of each Guarantor
hereunder shall remain in full force and effect notwithstanding the addition of any new Guarantor
as a party to this Guaranty.
SECTION 25. ENTIRE AGREEMENT. THIS GUARANTY AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL
AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS. OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE
PARTIES.
The Remainder of This Page is Intentionally Left Blank.
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IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be duly executed and delivered
by its duly authorized officer on the date first above written.
| POWERSECURE, INC. POWERSERVICES, INC. ENERGYLITE, INC. UTILITYENGINEERING, INC. UTILITYDESIGN, INC. XXXXXX GAS TRANSMISSION, INC. XXXX’X TRAILER, INC. |
||||
| By: | ||||
| Xxxxxx Xxxxxx | ||||
| Chief Executive Officer for all | ||||
| SOUTHERN FLOW COMPANIES, INC. METRETEK, INCORPORATED |
||||
| By: | ||||
| Xxxx X. Xxxxxxxxxx | ||||
| Chief Financial Officer for each | ||||
Signature Page - Guaranty
EXHIBIT A to Guaranty
Guaranty Supplement No. ___
THIS GUARANTY SUPPLEMENT NO. ___(this “Guaranty Supplement”) is made as of
, to the Guaranty dated as of August 23, 2007 (such agreement, together with all
amendments and restatements, the “Guaranty”), among the initial signatories thereto and each other
Person which from time to time thereafter became a party thereto pursuant to Section 24
thereof (each, individually, a “Guarantor” and, collectively, the “Guarantors”), in favor of
Administrative Agent for the benefit of Guaranteed Parties (as defined in the Guaranty).
BACKGROUND.
Capitalized terms not otherwise defined herein have the meaning specified in the Guaranty.
The Guaranty provides that additional parties may become Guarantors under the Guaranty by execution
and delivery of this form of Guaranty Supplement. Pursuant to the provisions of Paragraph
24 of the Guaranty, the undersigned is becoming an Additional Guarantor under the Guaranty.
The undersigned desires to become a Guarantor under the Guaranty in order to induce Guaranteed
Parties to continue to make credit extensions and accommodations under the Loan Documents,
Guarantied Swap Contracts and Cash Management Documents.
AGREEMENT.
NOW, THEREFORE, the undersigned agrees with Administrative Agent and each other Guaranteed
Party as follows:
SECTION 1. In accordance with the Guaranty, the undersigned hereby becomes a Guarantor under
the Guaranty with the same force and effect as if it were an original signatory thereto as a
Guarantor and the undersigned hereby (a) agrees to all the terms and provisions of the Guaranty
applicable to it as a Guarantor thereunder and (b) represents and warrants that the representations
and warranties made by it as a Guarantor thereunder are true and correct on and as of the date
hereof. Each reference to a “Guarantor” or an “Additional Guarantor” in the Guaranty shall be
deemed to include the undersigned.
SECTION 2. Except as expressly supplemented hereby, the Guaranty shall remain in full force
and effect in accordance with its terms.
SECTION 3. THIS GUARANTY SUPPLEMENT AND THE GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED
ENTIRELY WITHIN SUCH STATE; PROVIDED, THAT ADMINISTRATIVE AGENT AND EACH OTHER GUARANTEED PARTY
SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
SECTION 4. This Guaranty Supplement hereby incorporates by reference the provisions of the
Guaranty, which provisions are deemed to be a part hereof, and this Guaranty Supplement shall be
deemed to be a part of the Guaranty.
SECTION 5. This Guaranty Supplement may be executed by the parties hereto in several
counterparts, each of which shall be deemed to be an original and all of which shall constitute
together but one and the same agreement.
The Remainder of This Page Is Intentionally Left Blank.
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EXECUTED as of the date above first written.
| ADDRESS: | [ADDITIONAL GUARANTOR] | |||||
| By: | ||||||
| Print Name: | ||||||
Attention:
|
Print Title: | |||||
ACCEPTED BY:
CITIBANK, N.A.,
as Administrative Agent
as Administrative Agent
By: |
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Print Name:
|
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Print Title:
|
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