AMENDED AND RESTATED GUARANTY AGREEMENTGuarantee Agreement |
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Castlerigg Master Investments Ltd | Cornell Capital, LP | Cranshire Capital LP | Earth Biofuels, Inc | Evolution Master Fund Ltd | Kings Road Investments Ltd | Radcliffe SPC, Ltd | Radcliffe, Castlerigg, CVI, YA Global Investments, LP | RGC Management Company, LLC | Sandell Asset Management Corp | Yorkville Advisors, LLC. RealDealDocs™ contains millions of easily searchable legal documents and clauses from top law firms. Search for free - click here. |
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AMENDED AND RESTATED GUARANTY AGREEMENT
THIS
AMENDED AND RESTATED GUARANTY AGREEMENT (the " Guaranty
") is executed as of June 26, 2008, by the subsidiaries of
Earth Biofuels, Inc., a Delaware corporation (the "
Company
") listed on the SCHEDULE OF EBOF
SUBSIDIARIES attached hereto as Exhibit A
(each, a " Guarantor
," and collectively, the " Guarantors
"), for the ratable benefit of the lenders listed that are
signatories hereto (collectively, the " Lenders
").
W I T N E S S E T H
:
WHEREAS,
Radcliffe SPC, Ltd. for and on behalf of the Class A
Convertible Crossover Segregated Portfolio (" Radcliffe
"), Castlerigg Master Investments Ltd. (" Castlerigg
"), and Capital Ventures International (" CVI ";
collectively, the " Initial Bridge
Lenders ") are parties to a Securities Purchase
Agreement, dated as of June 7, 2006 (the " Initial Bridge
Securities
Purchase
Agreement ") with Earth Biofuels, Inc. (" EBOF "),
pursuant to which EBOF issued, among other things, warrants to
purchase 1,500,000 shares of common stock, $0.001 par value
(the " Common
Stock "), of EBOF at the exercise price of $2.93 (the "
Initial Bridge
Warrants ") and in connection with the Initial Bridge
Securities Purchase Agreement, EBOF executed a Registration
Rights Agreement (the " Initial Bridge
Registration Rights Agreement ," collectively with the
Initial Bridge Securities Purchase Agreement and the Initial
Bridge Warrants, the " Initial Bridge
Transaction Documents ") under which it agreed to
cooperate in the registration of the securities under the
Initial Bridge Securities Purchase Agreement;
WHEREAS,
Castlerigg (the " Second Bridge
Lender ") is a party to a Securities Purchase
Agreement, dated as of July 10, 2006 (the " Second Bridge
Securities
Purchase
Agreement ") with EBOF, pursuant to which EBOF issued,
among other things, warrants to purchase 1,500,000 shares of
Common Stock at the exercise price of $2.50 (the " Second Bridge
Warrants ") and in connection with the Second Bridge
Securities Purchase Agreement, EBOF executed a Registration
Rights Agreement (the " Second Bridge
Registration Rights Agreement ," collectively with the
Second Bridge Securities Purchase Agreement, Second Bridge
Warrants, the " Second Bridge
Transaction Documents ") under which it agreed to
cooperate in the registration of the securities under the
Second Bridge Securities Purchase Agreement;
WHEREAS,
Radcliffe, Castlerigg, CVI, YA Global Investments, L.P.
(formerly known as Cornell Capital, L.P. (" Yorkville
")), Cranshire Capital L.P. (" Cranshire
"), Portside Growth and Opportunity Fund (" Portside
"), Evolution Master Fund Ltd. SPC, Segregated Portfolio M ("
Evolution
"), and Kings Road Investments Ltd. (" Kings
Road "; collectively, the " Noteholders
") are parties to a Securities Purchase Agreement, dated as of
July 24, 2006 (the " Securities
Purchase
Agreement ") with EBOF, pursuant to which EBOF issued
(i) 8% Senior Convertible Notes (collectively, the "
Existing
Notes ") in the aggregate principal amount of $52.5
million, which were unsecured and convertible into shares of
Common Stock at $2.90 per share, and (ii) warrants to purchase
in excess of 9,000,000 shares of common stock of EBOF at the
exercise price of $2.90 (the " Existing
Warrants ") and in connection with the Securities
Purchase Agreement, EBOF executed a Registration Rights
Agreement (the " Registration
Rights Agreement ," collectively with the Initial
Bridge Transaction Documents, the Second Bridge Transaction
Documents, the Securities Purchase Agreement, Notes, and
Warrants, the
"
Transaction
Documents ") under which it agreed to cooperate in the
registration of the securities under the Securities Purchase
Agreement;
WHEREAS,
Dennis Mclaughlin and certain Buyers (as defined in the
Exchange Agreement, as defined below) are parties to an
Interim Restructuring Agreement, dated as of November 13, 2007
(the " Restructuring
Agreement ") with EBOF, pursuant to which, among other
things, EBOF granted to each Noteholder a perfected security
interest in certain assets of EBOF and the stock, equity
interests and assets of certain of EBOF's subsidiaries as
evidenced by (i) a Pledge and Security Agreement, dated as of
December 20, 2007 (the " Existing
Security Agreement ") and (ii)a certain Guaranty
Agreement, dated as of November 13, 2007, of EBOF's
subsidiaries (the " Existing
Guaranties ");
WHEREAS,
EBOF has authorized a new series of senior subordinated
secured convertible exchangeable notes of EBOF, in the form
attached as Exhibit A to the Exchange Agreement (as defined
below) (the " Series B
Notes "), which Series B Notes shall be convertible
into EBOF's Common Stock (as converted, the " Series B
Conversion Shares ") and exchangeable into PNG Shares
(as defined in the Exchange Agreement, as defined below), in
accordance with the terms of the Series B Notes;
WHEREAS,
Castlerigg desires to enter into an Amendment and Exchange
Agreement (the " Exchange
Agreement "), with EBOF, pursuant to which, among other
things, (i) EBOF and Castlerigg shall amend and restate all of
Castlerigg's Existing Notes into a senior secured convertible
exchangeable note in the form attached as Exhibit B to the
Exchange Agreement (the " Amended and
Restated Notes ", and together with the Series B Notes,
the " 2008 Amendment
Notes "), which shall be convertible into Common Stock
(as converted, the " Amended and
Restated Conversion Shares ", and together with the
Series B Conversion Shares, the " 2008 Amendment
Conversion Shares ") and exchangeable into PNG Shares
(as defined in the Exchange Agreement), in accordance with the
terms thereof and which principal amount of Amended and
Restated Notes to be issued to the Investors (as defined
below), in the aggregate, shall equal $65,000,000; and (ii)
EBOF and Castlerigg shall amend and restate (w) all of
Castlerigg's Initial Bridge Warrants, if any, for warrants in
the form attached as Exhibit C-1 to the Exchange Agreement
(the " Amended and
Restated Initial Bridge Warrants "), which shall be
exercisable into Common Stock (as exercised, the " Amended and
Restated Initial Bridge Warrant Shares ") in accordance
with the terms thereof, (x) all of Castlerigg's Second Bridge
Warrants, if any, for warrants in the form attached as Exhibit
C-2 to the Exchange Agreement (the " Amended and
Restated Second Bridge Warrants "), which shall be
exercisable into Common Stock (as exercised, the " Amended and
Restated Second Bridge Warrant Shares ") in accordance
with the terms thereof, (y) all of Castlerigg's Existing
Warrants for warrants in the forms attached as Exhibit C-3 (in
the case of the Existing Primary Series A Warrants, as defined
in the Exchange Agreement) and Exhibit C-4 (in the case of the
Existing Primary Series B Warrants, as defined in the Exchange
Agreement) to the Exchange Agreement (the " Amended and
Restated Existing Warrants ", and together with the
Amended and Restated Initial Bridge Warrants and the Amended
and Restated Second Bridge Warrants, the " 2008 Amendment
Warrants ") which shall be exercisable into Common
Stock (as exercised, the " Amended and
Restated Existing Warrant Shares ", and together with
the Amended and Restated Initial Bridge Warrant Shares and the
Amended and Restated Second Bridge Warrant Shares, the "
2008
Amendment Warrant Shares ") in accordance with the
terms thereof, and (iii) as additional
consideration
for the transaction contemplated in the Exchange Agreement,
immediately prior to the Share Exchange Date (as defined in
the Exchange Agreement) the Company shall transfer a portion
of the EBOF Note (as defined in the Exchange Agreement) to
Castlerigg, which is convertible into shares of PNG Common
Stock (as defined in the Exchange Agreement) (the "Investor
PNG Note") pursuant to an acknowledgement and transfer
agreement in the form attached as Exhibit J to the Exchange
Agreement (the "Investor PNG Note Transfer Agreement"), and
(iv) as reimbursement of legal fees and expenses of Castlerigg
(the " Investor Legal
Fee Amount "), EBOF shall issue to Castlerigg, upon the
terms and conditions stated in the Exchange Agreement, a
Series B Note in an aggregate principal amount equal to the
Investor Legal Fee Amount;
WHEREAS,
the Series B Notes will rank junior to the Amended and
Restated Notes and the Series B Notes will rank senior to all
outstanding and future indebtedness of EBOF, other than
Permitted Senior Indebtedness (as defined in the Amended and
Restated Notes), and will be secured by a perfected security
interest in all of the assets of EBOF and the stock, equity
interests and assets of certain of EBOF's subsidiaries and the
PNG Shares (as defined in the Exchange Agreement), as
evidenced by (i) an amended and restated pledge and security
agreement, in the form attached as Exhibit D to the Exchange
Agreement (as amended or modified from time to time in
accordance with its terms, the " Amended and
Restated Security Agreement "), and (ii) this Guaranty
(as amended or modified from time to time in accordance with
their terms, the " Amended and
Restated Guaranties " and, together the Amended and
Restated Security Agreement and any ancillary documents
related thereto, collectively the " Security
Documents "), which amends and restates the Existing
Guaranties;
WHEREAS,
as a closing condition to the transactions contemplated in the
Exchange Agreement, each of the other holders of Existing
Notes (the " Other
Investors ", and together with Castlerigg, the "
Investors
") are executing agreements identical to the Exchange
Agreement (the " Other
Agreements ", and together with the Exchange Agreement,
the " Amendments
") (other than proportional changes in the numbers reflecting
the (i) different principal amount of such Other Investor's
Existing Notes , (ii) different number of Existing Primary
Series A Warrant Shares (as defined in the Exchange Agreement)
underlying such Other Investor's Existing Primary Series A
Warrants (as defined in the Exchange Agreement), (iii)
different number of Existing Primary Series B Warrant Shares
(as defined in the Exchange Agreement) underlying such Other
Investor's Existing Primary Series B Warrants (as defined in
the Exchange Agreement) (iv) different number of Existing
Initial Bridge Warrant Shares (as defined in the Exchange
Agreement) underlying such Other Investor's Initial Bridge
Warrants, if any, (v) different number of Existing Second
Bridge Warrant Shares (as defined in the Exchange Agreement)
underlying such Other Investor's Second Bridge Warrants, if
any, and (vi) different principal amount of such Other
Investor's Series B Notes, if any, in each case, being issued
in such 2008 Amendment Note or 2008 Amendment Warrant, as
applicable, to such Other Investor (" Proportionate
Changes "));
WHEREAS, each of the
Lenders have agreed to release certain of the Company's
subsidiaries from their respective obligations under the
Existing Guaranty and the Existing Security Agreement,
pursuant to separate Release, Consent and Waivers (each a
"Release Agreement", and collectively, the "Release
Agreements") by and among each Lender, the Company, Earth
LNG, Inc., Arizona LNG, L.L.C., Fleet Star, Inc., Earth
Leasing, Inc. f/k/a
Alternative
Dual Fuels, Inc. and Applied LNG Technologies USA, L.L.C,
effective upon the closing of the transactions contemplated by
the Exchange Agreement;
WHEREAS,
the Guarantors have agreed to guarantee (i) the full,
aggregate amount of the outstanding amount due and owing by
EBOF to the Lenders (in their respective capacity or
capacities as Investors, Initial Bridge Lenders, Second Bridge
Lender, Noteholders or otherwise), plus fees, costs and
expenses, such amount being payable to the Lenders without
setoff, counterclaim, deduction offset or defense and (ii) all
obligations of EBOF arising under the 2008 Amendment Notes,
the other Transaction Documents, the Security Documents, the
Restructuring Agreement, the Exchange Agreement, the Investor
PNG Note Transfer Agreement, and the Other Agreements
(collectively, and as the same may be amended, restated,
modified, supplemented, or replaced, the " Documents
") for the ratable benefit of the Lenders (all obligations
under the Documents are, collectively, the " Guaranteed
Obligations "); and
WHEREAS,
each of the parties hereto desires to amend the Existing
Guaranties in order to reflect the creation of Series B Notes
and the amendment and restatement of the terms and provisions
of the Existing Notes as set forth in the Exchange
Agreement.
NOW,
THEREFORE, as an inducement to the Lenders to enter into the
Exchange Agreement, and for other good and valuable
consideration, the receipt and legal sufficiency of which are
hereby acknowledged, the parties do hereby agree as
follows:
ARTICLE
I
NATURE
AND SCOPE OF GUARANTY
Section
1.1
Guaranty of
Debt . Each Guarantor hereby irrevocably,
unconditionally, and jointly and severally guarantees for the
ratable benefit 1 of each
Lender the prompt payment of each such Lender's Pro Rata Share
of the Guaranteed Obligations, which shall be immediately due
and payable upon demand after the occurrence of any default or
event of default under any of the Documents.
Section
1.2
Nature of
Guaranty . This Guaranty is an irrevocable,
absolute, continuing guaranty of payment and performance and
not a guaranty of collection. The obligations of
each Guarantor to the Lenders under this Guaranty shall be
joint and several. This Guaranty shall not be
discharged by the assignment or negotiation of all or part of
the Notes.
Section
1.3
Guaranteed
Obligations Not Reduced by Offset . The
Guaranty and obligations of the Guarantors to the Lenders
shall not be reduced, discharged or released because or by
reason of any existing or future offset, claim or defense of
EBOF or any of its Subsidiaries, or any other party, against
the Lenders.
1
The
ratable benefit will be determined by calculating the Lender's pro
rata share (" Pro Rata Share
"), which means the ratio determined by dividing (x) the face
amount of the Notes then held by such Lender by (y) the face amount
of Notes then held by all Lenders.
Section
1.4
Payment By
Guarantor . If all or any part of the
obligations under this Guaranty shall not be punctually paid
when due, the Guarantors shall, immediately upon demand by the
Lenders pay in lawful money of the United States of America,
the amounts due to the Lenders at the addresses as set forth
herein for the Lenders. Such demand shall be deemed
made, given and received in accordance with the notice
provisions hereof.
Section
1.5
No
Duty To Pursue Others . It shall not be
necessary for the Lenders (and the Guarantors hereby waive any
rights that the Guarant
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