Exhibit 10.1
GUARANTY
GUARANTY (the “Guaranty”), dated as of July
16, 2008, by, Valcent USA Inc., a Nevada corporation, Valcent
Manufacturing, Ltd., a Texas limited partnership, Valcent
Management LLC, a Nevada limited liability company, Vertigro Algae
Technologies LLC, a Texas limited liability company, and Valcent
Products EU Limited, a corporation organized under the laws of the
United Kingdom, each with an address of Suite 1010 - 789 West
Pender Street, Vancouver, British Columbia, Canada V6C 1H2 (each a
“Guarantor”, collectively, the
“Guarantors”), in favor of the Purchasers identified in
the Purchase Agreement (as defined below) (collectively, and
together with their respective successors, transferees and assigns,
“Secured Parties”).
WHEREAS, the Guarantors are subsidiaries or
affiliates of Valcent Products Inc. (the “Borrower”);
and
WHEREAS, in accordance with certain senior
secured convertible notes, dated as of the date hereof(the
“Notes”), executed by the Borrower, and certain related
agreements between the Borrower and the Secured Parties
(collectively, as amended, restated, or extended from time to time,
the “Loan Documents”), the Secured Parties have agreed
to loan to the Borrower up to Two Million, Two Hundred Forty
Thousand Dollars ($2,428,160) (the “Loan”);
and
WHEREAS, the Secured Parties’ willingness
to extend the loan is conditioned upon the Guarantors executing and
delivering this Guaranty; and
WHEREAS, the aforesaid Loan will be beneficial
to the Guarantors inasmuch as the proceeds of the Loan to the
Borrower will indirectly benefit the Guarantors;
NOW, THEREFORE, in order to induce the Secured
Parties to make the Loan to the Borrower pursuant to the Loan
Documents, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged by each of
the Guarantors, the Guarantors hereby agree as follows:
1. Guaranty of Payment
and Performance .
Subject to the limitations described in Paragraph 4, the Guarantors
hereby jointly and severally guarantee to the Secured Parties the
full and punctual payment when due (whether at maturity, by
acceleration or otherwise), and the performance, of all
liabilities, agreements and other obligations of the Borrower to
the Secured Parties, whether direct or indirect, absolute or
contingent, due or to become due, secured or unsecured, now
existing or hereafter arising or acquired (whether by way of
discount, letter of credit, lease, loan, overdraft or otherwise),
including without limitation all obligations under the Note
(collectively, the “Obligations”). This Guaranty is an
absolute, unconditional and continuing guaranty of the full and
punctual payment and performance of the Obligations and not of
their collectibility only and is in no way conditioned upon any
requirement that the Secured Parties first attempt to collect any
of the Obligations from the Borrower or resort to any security or
other means of obtaining their payment. Should the Borrower default
in the payment or performance of any of the Obligations, the
obligations of each Guarantor hereunder shall become immediately
due and payable to the Secured Parties, without demand or notice of
any nature, all of which are expressly
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waived by
each Guarantor. Payments by each Guarantor hereunder may be
required by the Secured Parties on any number of
occasions.
2. Guarantors’
Agreement to Pay. Each
Guarantor further agrees, as the principal obligor and not as a
guarantor only, to pay to the Secured Parties, on demand, all
reasonable costs and expenses (including court costs and reasonable
legal expenses) incurred or expended by the Secured Parties in
collection with enforcement of this Guaranty, together with
interest on amounts recoverable under this Guaranty from the time
such amounts become due under this Guaranty until payment, at the
rate per annum equal to the default rate set forth in the Note;
provided that if such interest exceeds the maximum amount permitted
to be paid under applicable law, then such interest shall be
reduced to such maximum permitted amount.
3. Unlimited Guaranty;
Covenant. Except as
described in Paragraph 4, the liability of each Guarantor hereunder
shall be unlimited to the extent of the Obligations and the other
obligations of each Guarantor hereunder (including, without
limitation, under Section 2 above). The Guarantors hereby covenant
and agree not to take or refrain from taking any action that would
constitute an Event of Default under the Notes, including, without
limitation, any distribution to members or stockholders or sales of
assets prohibited by the terms of the Notes.
4. Guaranty of Vertigro
Algae Technologies LLC. Notwithstanding any other provision of this
Guaranty or the Loan Documents, with respect to Vertigro Algae
Technologies LLC (“Vertigro”), this Guaranty only
applies to Vertigro as a guarantor to the extent of the lesser of:
(i) 130% of the Vertigro Advances (as defined below); or (ii) the
amount of the Notes outstanding. The lesser of (i) and (ii) is
defined as the “Release Payment.” If and when Vertigro
pays the Release Payment to the Secured Parties (or attempts to pay
the Release Payment and, in lieu thereof, and within ten (10) days
after the notice of such prepayment by Vertigro and prior to such
prepayment, a Secured Party converts the portion of the Note to be
prepaid), Vertigro’s obligations hereunder shall be deemed
fulfilled and Vertigro shall be released as a Debtor and Guarantor
under the Security Agreement of even date herewith. As used herein,
the “Vertigro Advances” means the aggregate principal
amount of the following: (i) any cash loans from the Borrower or
any Subsidiary (as defined in the Purchase Agreement, dated as of
the date hereof, between the Borrower and the Secured Parties) to
Vertigro, (ii) any advances or equity investments by the Borrower
or any Subsidiary to or in Vertigro occurring on or after the date
hereof, (iii) the difference between the price of any products or
services sold or provided by Vertigro to the Borrower or any
Subsidiary and the fair market value of such products or services
(but not less than zero), (iv) the difference between the price of
any products or services sold or provided by the Borrower or any
Subsidiary to Vertigro and the fair market value of such products
or services (but not less than zero), and (v) any debt forgiveness
or assumption of any liability of Vertigro by the Borrower or any
Subsidiary. Any payment of the Release Payment shall be made on a
pro rata basis among the Secured Parties, and shall be applied by a
Secured Party: first, to fees and expenses due and owing pursuant
to the Loan Documents, second, to interest (if any) due and owing
pursuant to the Loan Documents, and third, to principal outstanding
under, and redemption fees due in respect of, the Note held by such
Secured Party. Vertigro acknowledges and agrees that any redemption
effected pursuant to this Section 4 as a result of a Release
Payment shall be at 130% of the principal amount of the portion of
the Note so redeemed. On and after Vertigro is released pursuant to
this Section 4, it shall not accept or demand any Vertigro
Advances, and, if so received, it shall hold the same in trust for
the benefit of the Secured Parties.
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5.
Waivers by Guarantors; Secured Party’s Freedom to
Act. Each Guarantor
agrees that the Obligations will be paid and performed strictly in
accordance with their respective terms regardless of any law,
regulation or order now or hereafter in effect in any jurisdiction
a
