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Exhibit
10.2
GUARANTY
This Guaranty Agreement (this
“Guaranty”) dated effective as of June 30, 2007,
is entered into by Avista Capital, Inc. (“Guarantor”),
a Washington corporation, in favor of Coral Energy Holding, L.P., a
Delaware limited partnership, Coral Energy Resources, L.P., a
Delaware limited partnership, Coral Power, L.L.C., a Delaware
limited liability company and Coral Energy Canada Inc., an Alberta
corporation (each being a “Coral Entity” and
collectively, the “Coral Entities”).
Recitals:
A. Guarantor desires that the
Coral Entities enter into the contracts and agreements listed on
Attachment A hereto with affiliates of Guarantor including Avista
Energy, Inc., Avista Energy Canada, Ltd. and Avista Turbine Power,
Inc. (each being a “Guaranteed Party” and collectively,
the “Guaranteed Parties”), as such contracts and
agreements listed on Attachment A may be amended, supplemented,
renewed, or extended, collectively, from time to time, the
“Contracts”; and
B. The Guaranteed Parties are
subsidiaries or affiliates of Guarantor and Guarantor will directly
or indirectly benefit from the Contracts to be entered into between
one or more of the Coral Entities and one or more of the Guaranteed
Parties; and
C. The Guaranteed Parties and
the Coral Entities are parties to an Indemnification Agreement of
even date herewith with respect to certain obligations between such
parties in respect of the Contracts (the “Indemnification
Agreement”).
NOW, THEREFORE, in
consideration of the Coral Entities entering into the Contracts
with Guaranteed Parties, Guarantor hereby covenants and agrees as
follows:
1. Guaranty . Subject to
the terms and conditions hereof, Guarantor hereby irrevocably and
unconditionally guarantees the timely performance and payment when
due of the obligations of Guaranteed Parties (the
“Obligations”) to the Coral Entities, as applicable,
under the Indemnification Agreement with respect to the Contracts.
To the extent that a Guaranteed Party shall fail to perform or pay
any Obligation, Guarantor shall promptly cause the performance or
pay to the applicable Coral Entity the amount due in accordance
with the terms, conditions and limitations contained in the
Indemnification Agreement. This Guaranty shall constitute a
guarantee of payment and not of collection. Guarantor shall also be
liable for the reasonable attorneys’ fees and expenses of
such Coral Entity’s external counsel incurred in any
successful effort to collect or enforce any of the obligations
under this Guaranty.
2. Limitations .
Guarantor’s performance hereunder shall be limited to
monetary payments arising out of the Obligations (even if such
payments are deemed to be damages) and in no event shall Guarantor
be subject hereunder to consequential, exemplary, equitable, loss
of profits, punitive, or any other damages, except to the extent
specifically provided in the Indemnification Agreement to be due
from a Guaranteed Party. Guarantor waives any and all defenses,
rights and benefits Guarantor might assert to avoid or limit
liability on Guarantor’s obligations arising from the
bankruptcy, insolvency, dissolution, or liquidation of Guaranteed
Party. The aggregate amount of Guarantor’s liability under or
in respect of this Guaranty shall in no event exceed Thirty Million
Dollars (U.S.$30,000,000), in the aggregate, plus attorney’s
fees and other expenses specified under Section 1 hereto and
shall be calculated by including any amounts paid by any Guaranteed
Party under the Indemnification Agreement, or collected on any
collateral securing Guarantor’s obligations under this
Guaranty, against such Thirty Million Dollar cap on
Guarantor’s liability.
3. Termination . This
Guaranty shall remain in full force and effect until April 30,
2011. No termination shall affect, release or discharge
Guarantor’s liability with respect to any Obligations
existing or arising prior to the effective date of
termination.
4. Nature of Guaranty .
The Guarantor’s obligations hereunder with respect to any
Obligation shall not be affected by the existence, validity,
enforceability, perfection, release, or impairment of value of any
collateral for such Obligations. The Coral Entities shall not be
obligated to file any claim relating to the Obligations owing to it
in the event that a Guaranteed Party becomes subject to a
bankruptcy, reorganization, or similar proceeding, and the failure
of a Coral Entity to so file shall not affect the Guarantor’s
obligations hereunder. In the event that any payment to a Coral
Entity in respect of any Obligations is rescinded or must otherwise
be returned in the event that a Guaranteed Party bec
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