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SUBSIDIARY GUARANTEE,
dated as of December 11, 2007, made by each of the signatories
hereto
(together with any other entity that
may become a party hereto as provided herein, the “
Guarantors ”), in favor of
Sheridan Asset Management LLC (the "
Lender ") to that certain Loan Agreement, dated as of the
date hereof (the “ Loan
Agreement ”), between
Continental Fuels, Inc., a Nevada corporation (the “
Company ”), Universal Property
Development and Acquisition
Corporation, a Nevada corporation, Timothy Brink, a US citizen and
resident of the State
of Texas, and the
Lender.
WHEREAS, pursuant to
the Loan Agreement, the Lender has agreed to make a term loan to
the Company
evidenced by the Company’s Senior
Secured Term Promissory Note due December 1, 2010 (the “
Term Note ”) and a
revolving loan to the Company evidenced
by the Company’s Secured Revolving Promissory Notes due
December 11,
2010 (the “ Revolving Note
” and collectively with the Term Note, the “
Notes ”), subject to the terms and conditions
set
forth therein; and
WHEREAS, each
Guarantor will directly benefit from the extension of credit to the
Company represented by
the issuance of the Notes;
and
NOW, THEREFORE, in
consideration of the premises and to induce the Lender to enter
into the Loan
Agreement and to carry out the
transactions contemplated thereby, each Guarantor hereby agrees
with the Lender as
follows:
1. Definitions
. Unless otherwise defined herein, terms defined in the Loan
Agreement and used herein
shall have the meanings given to them
in the Loan Agreement. The words “hereof,”
“herein,” “hereto” and
“hereunder”
and words of similar import when used
in this Guarantee shall refer to this Guarantee as a whole and not
to any
particular provision of this Guarantee,
and Section and Schedule references are to this Guarantee unless
otherwise
specified. The meanings given to terms
defined herein shall be equally applicable to both the singular and
plural forms
of such terms. The following terms
shall have the following meanings:
“
Guarantee ” means this Subsidiary Guarantee, as the
same may be amended, supplemented or
otherwise modified from
time to time.
“
Obligations ” means the collective reference to all
obligations and undertakings of the Company of
whatever nature, monetary or otherwise,
under the Notes, the Loan Agreement, the Security Agreement, the
other
Transaction Documents or any other
future agreement or obligations undertaken by the Company to the
Lender,
together with all reasonable
attorneys’ fees, disbursements and all other costs and
expenses of collection incurred by
Lender in enforcing any of such
Obligations and/or this Guarantee.
2. Guarantee
.
(a)
Guarantee .
(i) The
Guarantors hereby, jointly and severally, unconditionally and
irrevocably,
guarantee to the Lender and its
respective successors, indorsees, transferees and assigns, the
prompt and complete
payment and performance by the Company
when due (whether at the stated maturity, by acceleration or
otherwise) of
the Obligations.
(ii)
Anything herein or in any other Transaction Document to the
contrary
notwithstanding, the maximum liability
of each Guarantor hereunder and under the other Transaction
Documents shall
in no event exceed the amount which can
be guaranteed by such Guarantor under applicable federal and state
laws,
including laws relating to the
insolvency of debtors, fraudulent conveyance or transfer or laws
affecting the rights of
creditors generally (after giving
effect to the right of contribution established in Section
2(b)).
(iii)
Each Guarantor agrees that the Obligations may at any time and from
time to
time exceed the amount of the liability
of such Guarantor hereunder without impairing the guarantee
contained in this
Section 2 or affecting the rights and
remedies of the Lender hereunder.
(iv)
The guarantee contained in this Section 2 shall remain in full
force and effect
until all the Obligations and the
obligations of each Guarantor under the guarantee contained in this
Section 2 shall
have been satisfied by payment in
full.
(v) No
payment made by the Company, any of the Guarantors, any other
guarantor
or any other Person or received or
collected by the Lender from the Company, any of the Guarantors,
any other
guarantor or any other Person by virtue
of any action or proceeding or any set-off or appropriation or
application at any
time or from time to time in reduction
of or in payment of the Obligations shall be deemed to modify,
reduce, release or
otherwise affect the liability of any
Guarantor hereunder which shall, notwithstanding any such payment
(other than
any payment made by such Guarantor in
respect of the Obligations or any payment received or collected
from such
Guarantor in respect of the
Obligations), remain liable for the Obligations up to the maximum
liability of such
Guarantor hereunder until the
Obligations are paid in full.
(vi)
Notwithstanding anything to the contrary in this Agreement, with
respect to any
defaulted non-monetary Obligations the
specific performance of which by the Guarantors is not reasonably
possible
(e.g., the issuance of the
Company’s Common Stock), the Guarantors shall only be liable
for making the Lender whole
on a monetary basis for the
Company’s failure to perform such Obligations in accordance
with the Transaction
Documents.
(b) Right
of Contribution . Each Guarantor hereby agrees that to the
extent that a Guarantor
shall have paid more than its
proportionate share of any payment made hereunder, such Guarantor
shall be entitled to
seek and receive contribution from and
against any other Guarantor hereunder which has not paid its
proportionate
share of such payment. Each
Guarantor’s right of contribution shall be subject to the
terms and conditions of Section
2(c). The provisions of this Section
2(b) shall in no respect limit the obligations and liabilities of
any Guarantor to the
Lender, and each Guarantor shall remain
liable to the Lender for the full amount guaranteed by such
Guarantor
hereunder.
(c) No
Subrogation . Notwithstanding any payment made by any Guarantor
hereunder or any
set-off or application of funds of any
Guarantor by the Lender, no Guarantor shall be entitled to be
subrogated to any of
the rights of the Lender against the
Company or any other Guarantor or any collateral security or
guarantee or right of
offset held by the Lender for the
payment of the Obligations, nor shall any Guarantor seek or be
entitled to seek any
contribution or reimbursement from the
Company or any other Guarantor in respect of payments made by
such
Guarantor hereunder, until all amounts
owing to the Lender by the Company on account of the Obligations
are paid in
full. If any amount shall be paid to
any Guarantor on account of such subrogation rights at any time
when all of the
Obligations shall not have been paid in
full, such amount shall be held by such Guarantor in trust for the
Lender,
segregated from other funds of such
Guarantor, and shall, forthwith upon receipt by such Guarantor, be
turned over to
the Lender in the exact form received
by such Guarantor (duly indorsed by such Guarantor to the Lender if
required), to
be applied against the Obligations,
whether matured or unmatured, in such order as the Lender may
determine.
(d)
Amendments, Etc. With Respect to the Obligations . Each
Guarantor shall remain
obligated hereunder notwithstanding
that, without any reservation of rights against any Guarantor and
without notice
to or further assent by any Guarantor,
any demand for payment of any of the Obligations made by the Lender
may be
rescinded by the Lender and any of the
Obligations continued, and the Obligations, or the liability of any
other Person
upon or for any part thereof, or any
collateral security or guarantee therefor or right of offset with
respect thereto, may,
from time to time, in whole or in part,
be renewed, extended, amended, modified, accelerated, compromised,
waived,
surrendered or released by the Lender,
and the Loan Agreement and the other Transaction Documents and any
other
documents executed and delivered in
connection therewith may be amended, modified, supplemented or
terminated, in
whole or in part, as the Lender may
deem advisable from time to time, and any collateral security,
guarantee or right of
offset at any time held by the Lender
for the payment of the Obligations may be sold, exchanged, waived,
surrendered
or released. The Lender shall have no
obligation to protect, secure, perfect or insure any Lien at any
time held by them
as security for the Obligations or for
the guarantee contained in this Section 2 or any property subject
thereto.
(e)
Guarantee Absolute and Unconditional . Each Guarantor waives
any and all notice of the
creation, renewal, extension or accrual
of any of the Obligations and notice of or proof of reliance by the
Lender upon
the guarantee contained in this Section
2 or acceptance of the guarantee contained in this Section 2; the
Obligations,
and any of them, shall conclusively be
deemed to have been created, contracted or incurred, or renewed,
extended,
amended or waived, in reliance upon the
guarantee contained in this Section 2; and all dealings between the
Company
and any of the Guarantors, on the one
hand, and the Lender, on the other hand, likewise shall be
conclusively presumed
to have been had or consummated in
reliance upon the guarantee contained in this Section 2. Each
Guarantor waives to
the extent permitted by law diligence,
presentment, protest, demand for payment and notice of default or
nonpayment
to or upon the Company or any of the
Guarantors with respect to the Obligations. Each Guarantor
understands and
agrees that the guarantee contained in
this Section 2 shall be construed as a continuing, absolute and
unconditional
guarantee of payment without regard to
(a) the validity or enforceability of the Loan Agreement or any
other
Transaction Document, any of the
Obligations or any other collateral security therefor or guarantee
or right of offset
with respect thereto at any time or
from time to time held by the Lender, (b) any defense, set-off or
counterclaim (other
than a defense of payment or
performance or fraud or misconduct by Lender) which may at any time
be available to or
be asserted by the Company or any other
Person against the Lender, or (c) any other circumstance whatsoever
(with or
without notice to or knowledge of the
Company or such Guarantor) which constitutes, or might be construed
to
constitute, an equitable or legal
discharge of the Company for the Obligations, or of such Guarantor
under the
guarantee contained in this Section 2,
in bankruptcy or in any other instance. When making any demand
hereunder or
otherwise pursuing its rights and
remedies hereunder against any Guarantor, the Lender may, but shall
be under no
obligation to, make a similar demand on
or otherwise pursue such rights and remedies as it may have against
the
Company, any other Guarantor or any
other Person or against any collateral security or guarantee for
the Obligations or
any right of offset with respect
thereto, and any failure by the Lender to make any such demand, to
pursue such other
rights or remedies or to collect any
payments from the Company, any other Guarantor or any other Person
or to realize
upon any such collateral security or
guarantee or to exercise any such right of offset, or any release
of the Company,
any other Guarantor or any other Person
or any such collateral security, guarantee or right of offset,
shall not relieve
any Guarantor of any obligation or
liability hereunder, and shall not impair or affect the rights and
remedies, whether
express, implied or available as a
matter of law, of the Lender against any Guarantor. For the
purposes hereof,
"demand" shall include the commencement
and continuance of any legal proceedings.
(f)
Reinstatement . The guarantee contained in this Section 2
shall continue to be effective, or
be reinstated, as the case may be, if
at any time payment, or any part thereof, of any of the Obligations
is rescinded or
must otherwise be restored or returned
by the Lender upon the insolvency, bankruptcy, dissolution,
liquidation or
reorganization of the Company or any
Guarantor, or upon or as a result of the appointment of a receiver,
intervenor or
conservator of, or trustee or similar
officer for, the Company or any Guarantor or any substantial part
of its property, or
otherwise, all as though such payments
had not been made.
(g)
Payments . Each Guarantor hereby guarantees that payments
hereunder will be paid to the
Lender without set-off or counterclaim
in U.S. dollars at the address set forth or referred to in the Loan
Agreement.
3. Representations
and Warranties . Each Guarantor hereby makes the following
representations and
warranties to Lender as of the date
hereof:
(a)
Organization and Qualification . Each Guarantor is a
corporation or limited liability
company, duly incorporated, validly
existing and in good standing under the laws of the applicable
jurisdiction set forth
on Schedule 1, with the requisite
corporate power and authority to own and use its properties and
assets and to carry on
its business as currently conducted.
Each Guarantor has no subsidiaries other than those identified as
such on the
Disclosure Schedules to the Loan
Agreement. Each Guarantor is duly qualified to do business and is
in good standing
as a foreign corporation in each
jurisdiction in which the nature of the business conducted or
property owned by it
makes such qualification necessary,
except where the failure to be so qualified or in good standing, as
the case may be,
could not, individually or in the
aggregate, (x) adversely aff
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