EXHIBIT 10.17
GUARANTY
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THIS GUARANTY ("Guaranty")is made as of the 10th day of July, 2000, by
Guarantor (as hereinafter defined) for the benefit of Bank (as hereinafter
defined).
1. Definitions. As used in this Guaranty, the following terms shall
have the meanings indicated below:
(a) The term "Bank" shall mean BANK ONE, TEXAS, NATIONAL
ASSOCIATION, whose address for notice purposes is the following:
Bank One, Texas, N.A.
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Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
(b) The term "Borrower" (whether one or more) shall mean the
following:
Avatar Systems, Inc., a Texas corporation
(c) The term "Guarantor" shall mean ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, whose
address for notice purposes is the following:
c/o Eland Energy, Inc.
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Telefax No.: (▇▇▇) ▇▇▇-▇▇▇▇
(d) The term "Guaranteed Indebtedness" shall mean (i) all
principal indebtedness owing by Borrower to Bank now existing or
hereafter arising under or evidenced by that certain Amended and
Restated Loan Agreement dated as of even date herewith and executed by
and between Borrower and Bank ("Loan Agreement"); (ii) all accrued but
unpaid interest on any of the indebtedness owing under the
instrument(s) or agreement(s) described in (i) above, (iii) all
obligations of Borrower to Bank under any documents evidencing,
securing, governing and/or pertaining to all or any part of the
indebtedness described in (i) and (ii) above, (iv) all costs and
expenses incurred by Bank in connection with the collection and
administration of all or any part of the indebtedness and obligations
described in (i), (ii) and (iii) above or the protection or
preservation of, or realization upon, the collateral securing all, or
any part of such indebtedness and obligations, including without
limitation all reasonable attorneys' fees, and (v) all renewals,
extensions, modifications and rearrangements of the indebtedness and
obligations described in (i), (ii), (iii) and (iv) above.
2. Obligations. As an inducement to Bank to enter into the Loan
Agreement or extend or continue to extend credit and other financial
accommodations to Borrower, Guarantor, for value received, does hereby
unconditionally and absolutely guarantee the prompt and full payment and
performance of the Guaranteed Indebtedness when due or declared to be due and at
all times thereafter.
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3. Character of Obligations.
(a) This is an absolute, continuing and unconditional Guaranty
of payment and not of collection and if at any time or from time to
time there is no outstanding Guaranteed Indebtedness, the obligations
of the Guarantor with respect to any and all Guaranteed Indebtedness of
Borrower to Bank incurred thereafter shall not be affected. This
Guaranty and the Guarantor's obligations hereunder are irrevocable and
in the event of Guarantor's death, shall be binding upon Guarantor's
estate pursuant to paragraph 10 herein. All of the Guaranteed
Indebtedness shall be conclusively presumed to have been made or
acquired in acceptance hereof. Guarantor shall be primarily liable,
jointly and severally, with Borrower and any other guarantor of all or
any part of the Guaranteed Indebtedness.
(b) Bank may, at its sole discretion and without impairing its
right hereunder, apply any payments on the Guaranteed Indebtedness that
Bank receives to that portion of the Guaranteed Indebtedness, if any,
not guaranteed hereunder.
(c) Guarantor agrees that Guarantor's obligations hereunder
shall not be released, diminished, impaired, reduced or affected by the
existence of any other guaranty or the payment by any other guarantor
of all or any part of the Guaranteed Indebtedness and, in the event
paragraph 2 above partially limits Guarantor's obligations under this
Guaranty, Guarantor's obligations hereunder shall continue until Bank
has received payment in full of the Guaranteed Indebtedness.
(d) Guarantor's obligations hereunder shall not be released,
diminished, impaired, reduced or affected by, nor shall any provision
contained herein be deemed to be a limitation upon, the amount of
credit which Bank may extend to Borrower, the number of transactions
between Bank and Borrower, payments by Borrower to Bank or Bank's
allocation of payments by Borrower.
4. Representations and Warranties. Guarantor hereby represents and
warrants the following to Bank:
(a) Guarantor is a stockholder of Borrower, and this Guaranty
may reasonably be expected to benefit, directly or indirectly,
Guarantor;
(b) Guarantor is familiar with, and has independently reviewed
the books and records regarding, the financial condition of Borrower
and is familiar with the value of any and all collateral intended to be
security for the payment of all or any part of the Guaranteed
Indebtedness; provided, however, Guarantor is not relying on such
financial condition or collateral as an inducement to enter into this
Guaranty;
(c) Guarantor has adequate means to obtain from Borrower on a
continuing basis information concerning the financial condition of
Borrower and Guarantor is not relying on Bank to provide such
information to Guarantor either now or in the future;
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(d) Guarantor has the power and authority to execute, deliver
and perform this Guaranty and any other agreements executed by
Guarantor contemporaneously herewith, and the execution, delivery and
performance of this Guaranty and any other agreements executed by
Guarantor contemporaneously herewith does not and will not violate (i)
any agreement or instrument to which Guarantor is a party or (ii) any
law, rule, regulation or order of any governmental authority to which
Guarantor is subject;
(e) Neither Bank nor any other party has made any
representation, warranty or statement to Guarantor in order to induce
Guarantor to execute this Guaranty;
(f) The financial statements and other financial information
regarding Guarantor heretofore and hereafter delivered to Bank are and
shall be true and correct in all material respects and fairly present
the financial position of Guarantor as of the dates thereof, and no
material adverse change has occurred in the financial condition of
Guarantor reflected in the financial statements and other financial
information regarding Guarantor heretofore delivered to Bank since the
date of the last statement thereof, and
(g) As of the date hereof, and after giving effect to this
Guaranty and the obligations evidenced hereby, (i) Guarantor is and
will be solvent, (ii) the fair saleable value of Guarantor's assets
exceeds and will continue to exceed Guarantor's liabilities (both fixed
and contingent), and (iii) Guarantor is and will continue to be able to
pay Guarantor's debts as they mature.
5. Covenants. Guarantor hereby covenants and agrees with Bank as
follows:
(a) Guarantor shall not, so long as Guarantor's obligations
under this Guaranty continue, transfer or pledge any material portion
of Guarantor's assets for less than full and adequate consideration;
(b) Guarantor shall promptly furnish to Bank (i) at any time
and from time to time such financial statements and other financial
information of Guarantor as the Bank may require and (ii) within ninety
(90) days after the end of each calendar year, or, if sooner, within
one year after the delivery of a prior personal financial statement
acceptable to Bank, the personal financial statement of Guarantor, each
in form and substance satisfactory to Bank;
(c) Guarantor shall comply with all terms and provisions of
the instruments and agreements evidencing, governing and securing all
or any part of the Guaranteed Indebtedness that apply to Guarantor; and
(d) Guarantor shall promptly inform Bank of (i) any litigation
or governmental investigation against Guarantor or affecting any
security for all or any part of the Guaranteed Indebtedness or this
Guaranty which, if determined adversely, might have a material adverse
effect upon the financial condition of Guarantor or upon such security
or might cause a default under any of the instruments or agreements
evidencing, governing or securing all or any part of the Guaranteed
Indebtedness, (ii) any claim or controversy which might become the
subject of such litigation or governmental investigation, and (iii) any
material adverse change in the financial condition of Guarantor.
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(e) Within ten (10) days after a request by Bank, Guarantor
shall deliver cash (or other collateral acceptable to Bank in their
sole and absolute discretion) ("Cash Collateral") to Bank to
collateralize 100% of the Guaranteed Indebtedness (a "Collateral
Call"). Bank may request one or more Collateral Calls at any time, for
any reason and regardless of the existence of a default under the Loan
Agreement or any other document. The Cash Collateral shall be held by
Bank as security for the Guaranteed Indebtedness and may. be applied
against the Guaranteed Indebtedness upon any default. Guarantor shall
execute and deliver such other documents as Bank shall request pursuant
to a Collateral Call.
6. Consent and Waiver.
(a) Guarantor waives (i) promptness, diligence and notice of
acceptance of this Guaranty and notice of the incurring of any
obligation, indebtedness or liability to which this Guaranty applies or
may apply and waives presentment for payment, notice of nonpayment,
protest, demand, notice of protest, notice of intent to accelerate,
notice of acceleration, notice of dishonor, diligence in enforcement
and indulgences of every kind, and (ii) the taking of any other action
of Bank, including without limitation giving any notice of default or
any other notice to, or making any demand on, Borrower, any other
guarantor of all or any part of the Guaranteed Indebtedness or any
other party.
(b) Guarantor waives any rights Guarantor has under, or any
requirements imposed by, Chapter 34 of the Texas Business and Commerce
Code, as in effect on the date of this Guaranty or as it may be amended
from time to time.
(c) Bank may at any time, without the consent of or notice to
Guarantor, without incurring responsibility to Guarantor and without
impairing, releasing, reducing or affecting the obligations of
Guarantor hereunder: (i) change the manner, place or terms of payment
of all or any part of the Guaranteed Indebtedness, or renew, extend,
modify, rearrange or alter all or any part of the Guaranteed
Indebtedness; (ii) sell, exchange, release, surrender, subordinate,
realize upon or otherwise deal with in any manner and in any order any
collateral for all or any part of the Guaranteed Indebtedness or this
Guaranty or setoff against all or any part of the Guaranteed
Indebtedness; (iii) neglect, delay, omit, fail or refuse to take or
prosecute any action for the collection of all or any part of the
Guaranteed Indebtedness or this Guaranty or to take or prosecute any
action in connection with any instrument or agreement evidencing,
governing or securing all or any part of the Guaranteed Indebtedness or
this Guaranty; (iv) exercise or refrain from exercising any rights
against Borrower or others, or otherwise act or refrain from acting;
(v) settle or compromise all or any part of the Guaranteed Indebtedness
and subordinate the payment of all or any part of the Guaranteed
Indebtedness to the payment of any obligations, indebtedness or
liabilities which may be due or become due to Bank or others; (vi)
apply any deposit balance, fund, payment, collections through process
of law or otherwise or other collateral of Borrower to the satisfaction
and liquidation of the indebtedness or obligations of Borrower to Bank
not guaranteed under this Guaranty; and (vii) apply any sums paid to
Bank by Guarantor, Borrower or others to the Guaranteed Indebtedness in
such order and manner as Bank, in its sole discretion, may determine.
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(d) Notwithstanding any provision in this Guaranty to the
contrary, Guarantor hereby waives and releases (i) any and all rights
of subrogation, reimbursement, indemnification or contribution which
Guarantor may have, after payment in full or in part of the Guaranteed
Indebtedness, against others liable on all or any part of the
Guaranteed Indebtedness, (ii) any and all rights to be subrogated to
the rights of Bank in any collateral or security for all or any part of
the Guaranteed Indebtedness after payment in full or in part of the
Guaranteed Indebtedness, and (iii) any and all other rights and claims
of such Guarantor against Borrower or any third party as a result of
such Guarantor's payment of all or any part of the Guaranteed
Indebtedness.
(e) Should Bank seek to enforce the obligations of Guarantor
hereunder by action in any court or otherwise. Guarantor waives any
requirement, substantive or procedural, that (i) Bank first enforce any
rights or remedies against Borrower or any other person or entity
liable to Bank for all or any part of the Guaranteed Indebtedness,
including without limitation that a judgment first be rendered against
Borrower or any other person or entity, or that Borrower or any other
person or entity should be joined in such cause, or (ii) Bank shall
first enforce rights against any collateral which shall ever have been
given to secure all or any part of the Guaranteed Indebtedness or this
Guaranty. Such waiver shall be without prejudice to Bank's right, at
its option, to proceed against Borrower or any other person or entity,
whether by separate action or by joinder.
(f) In addition to any other waivers, agreements and covenants
of Guarantor set forth herein, Guarantor hereby further waives and
releases all claims, causes of action, defenses and offsets for any act
or omission of Bank, its directors, officers, employees,
representatives or agents in connection with Bank's administration of
the Guaranteed Indebtedness, except for Bank's willful misconduct and
gross negligence.
7. Obligations Not Impaired.
(a) Guarantor agrees that Guarantor's obligations hereunder
shall not be released, diminished, impaired, reduced or affected by the
occurrence of any one or more of the following events: (i) the death,
disability or lack of corporate power of Borrower, Guarantor (except as
provided in paragraph 10 herein) or any other guarantor of all or any
part of the Guaranteed Indebtedness, (ii) any receivership, insolvency,
bankruptcy or other proceedings affecting Borrower, Guarantor or any
other guarantor of all or any part of the Guaranteed Indebtedness, or
any of their respective property; (iii) the partial or total release or
discharge of Borrower or any other guarantor of all or any part of the
Guaranteed Indebtedness, or any other person or entity from the
performance of any obligation contained in any instrument or agreement
evidencing, governing. or securing all or any part of the Guaranteed
Indebtedness, whether occurring by reason of law or otherwise; (iv) the
taking or accepting of any collateral for all or any part of the
Guaranteed Indebtedness or this Guaranty; (v) the taking or accepting
of any other guaranty for all or any part of the Guaranteed
Indebtedness; (vi) any failure by Bank to acquire, perfect or continue
any lien or security interest on collateral securing all or any part of
the Guaranteed Indebtedness or this Guaranty; (vii) the impairment of
any collateral securing all or any part of the Guaranteed Indebtedness
or this Guaranty; (viii) any failure by Bank to sell any collateral
securing all or any part of the Guaranteed Indebtedness or this
Guaranty in a commercially reasonable manner or as otherwise required
by law; (ix) any invalidity or unenforceability of or defect or
deficiency in any instrument or agreement evidencing, governing or
securing all or any part of the Guaranteed Indebtedness or this
Guaranty; or (x) any other circumstances which might otherwise
constitute a defense available to, or discharge of, Borrower or any
other guarantor of all or any part of the Guaranteed Indebtedness.
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(b) This Guaranty shall continue to be effective or be
reinstated, as the case may be, if at any time any payment of all or
any part of the Guaranteed Indebtedness is rescinded or must otherwise
be returned by Bank upon the insolvency, bankruptcy or reorganization
of Borrower, Guarantor, any other guarantor of all or any part of the
Guaranteed Indebtedness, or otherwise, all as though such payment had
not been made. (c) In the event Borrower is a corporation, joint stock
association or partnership, or is hereafter incorporated, none of the
following shall affect Guarantor's liability hereunder: (i) the
unenforceability of all or any part of the Guaranteed Indebtedness
against Borrower by reason of the fact that the Guaranteed Indebtedness
exceeds the amount permitted by law; (ii) the act of creating all or
any part of the Guaranteed Indebtedness is ultra ▇▇▇▇▇; or (iii) the
officers or partners creating all or any part of the Guaranteed
Indebtedness acted in excess of their authority. Guarantor hereby
acknowledges that withdrawal from, or termination of, any ownership
interest in Borrower now or hereafter owned or held by Guarantor shall
not alter, affect or in any way limit the obligations of Guarantor
hereunder.
8. Actions against Guarantor. In the event of a default in the payment
or performance of all or any part of the Guaranteed Indebtedness when such
Guaranteed Indebtedness becomes due, whether by its terms, by acceleration or
otherwise, Guarantor shall, without notice or demand, promptly pay the amount
due thereon to Bank, in lawful money of the United States, at Bank's address set
forth hereinabove. One or more successive or concurrent actions may be brought
against Guarantor, either in the same action in which Borrower is sued or in
separate actions, as often as Bank deems advisable. The exercise by Bank of any
right or remedy under this Guaranty or under any other agreement or instrument,
at law, in equity or otherwise, shall not preclude concurrent or subsequent
exercise of any other right or remedy. The books and records of Bank shall be
admissible in evidence in any action or proceeding involving this Guaranty and
shall be prima facie evidence of the payments made on, and the outstanding
balance of, the Guaranteed Indebtedness.
9. Payment by Guarantor. Whenever Guarantor pays any sum which is or
may become due under this Guaranty, written notice must be delivered to Bank
contemporaneously with such payment. Such notice shall be effective for purposes
of this paragraph when contemporaneously with such payment Bank receives such
notice either by: (a) personal delivery to the address and designated department
of Bank identified in subparagraph l(a) above, or (b) United States mail,
certified or registered, return receipt requested, postage prepaid, addressed to
Bank at the address shown in subparagraph 1(a) above. In the absence of such
notice to Bank by Guarantor in compliance with the provisions hereof, any sum
received by Bank on account of the Guaranteed Indebtedness shall be conclusively
deemed paid by Borrower.
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10. Death of Guarantor. In the event of the death of Guarantor, the
obligations of the deceased Guarantor under this Guaranty shall continue as an
obligation against Guarantor's estate as to (a) all of the Guaranteed
Indebtedness that is outstanding on the date of Guarantor's death, and any
renewals or extensions thereof, and (b) all loans, advances and other extensions
of credit made to or for the account of Borrower on or after the date of
Guarantor's death pursuant to an obligation of Bank under a commitment or
agreement described in subparagraph 1(d) above and made to or with Borrower
prior to the date of Guarantor's death. The terms and conditions of this
Guaranty, including without limitation the consents and waivers set forth in
paragraph 6 hereof, shall remain in effect with respect to the Guaranteed
Indebtedness described in the preceding sentence in the same manner as if
Guarantor had not died.
11. Notice of Sale. In the event that Guarantor is entitled to receive
any notice under the Uniform Commercial Code, as it exists in the state
governing any such notice, of the sale or other disposition of any collateral
securing all or any part of the Guaranteed Indebtedness or this Guaranty,
reasonable notice shall be deemed given when such notice is deposited in the
United States mail, postage prepaid, at the address for Guarantor set forth in
subparagraph 1(c) above, five (5) days prior to the date any public sale, or
after which any private sale, of any such collateral is to be held; provided,
however, that notice given in any other reasonable manner or at any other
reasonable time shall be sufficient.
12. Waiver of Bank. No delay on the part of Bank in exercising any
right hereunder or failure to exercise the same shall operate as a waiver of
such right. In no event shall any waiver of the provisions of this Guaranty be
effective unless the same be in writing and signed by an officer of Bank, and
then only in the specific instance and for the purpose given.
13. Successors and Assigns. This Guaranty is for the benefit of Bank,
its successors and assigns. This Guaranty is binding upon Guarantor's heirs,
executors, administrators, personal representatives and successors, including
without limitation any person or entity obligated by operation of law upon the
reorganization, merger, consolidation or other change in the organizational
structure of Guarantor.
14. Costs and Expenses. Guarantor shall pay on demand by Bank all costs
and expenses (including without limitation all reasonable attorneys' fees)
incurred by Bank in connection with the preparation, administration, enforcement
and/or collection of this Guaranty. This covenant shall survive the payment of
the Guaranteed Indebtedness.
15. Severability . If any provision of this Guaranty is held by a court
of competent jurisdiction to be illegal, invalid or enforceable under present or
future laws, such provision shall be fully severable, shall not impair or
invalidate the remainder of this Guaranty and the effect thereof shall be
confined to the provision held to be illegal, invalid or unenforceable.
16. No Obligation. Nothing contained herein shall be construed as an
obligation on the part of Bank to extend or continue to extend credit to
Borrower.
17. Amendment. No modification or amendment of any provision of this
Guaranty, nor consent to any departure by Guarantor therefrom, shall be
effective unless the same shall be in writing and signed by an officer of Bank,
and then shall be effective only in the specific instance and for the purpose
for which given.
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18. Cumulative Rights. All rights and remedies of Bank hereunder are
cumulative of each other and of every other right or remedy which Bank may
otherwise have at law or in equity or under any instrument or agreement, and the
exercise of one or more of such rights or remedies shall not prejudice or impair
the concurrent or subsequent exercise of any other rights or remedies.
19. Governing Law. THIS GUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND APPLICABLE FEDERAL LAWS.
20. Venue. This Guaranty has been entered into in the county in Texas
where Bank's address for notice purposes is located, and it shall be performable
for all purposes in such county. Courts within the State of Texas shall have
jurisdiction over any and all disputes arising under or pertaining to this
Guaranty and venue for any such disputes shall be in the county or judicial
district where the Bank's address for notice purposes is located.
21. Compliance with Applicable Usury Law. Notwithstanding any other
provision of this Guaranty or of any instrument or agreement evidencing,
governing or securing all or any part of the Guaranteed Indebtedness, Guarantor
and Bank by its acceptance hereof agree that Guarantor shall never be required
or obligated to pay interest in excess of the maximum nonusurious interest rate
as may be authorized by applicable law for the written contracts which
constitute the Guaranteed Indebtedness. It is the intention of Guarantor and
Bank to conform strictly to the applicable laws which limit interest rates, and
any of the aforesaid contracts for interest, if and to the extent payable by
Guarantor, shall be held to be subject to reduction to the maximum nonusurious
interest rate allowed under said law.
22. Descriptive Headings. The captions in this Guaranty are for
convenience only and shall not define or limit the provisions hereof.
23. Gender. Within this Guaranty, words of any gender shall be held and
construed to include the other gender.
24. Entire Agreement. This Guaranty contains the entire agreement
between Guarantor and Bank regarding the subject matter hereof and supersedes
all prior written and oral agreements and understandings, if any, regarding
same; provided, however, this Guaranty is in addition to and does not replace,
cancel, modify or affect any other guaranty of Guarantor now or hereafter held
by Bank that relates to Borrower or any other person or entity.
IN WITNESS WHEREOF, this Guaranty has been duly executed by Guarantor
as of the date first above written.
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