SUBSIDIARY GUARANTY
New York, New
York
December 19, 2006
FOR VALUE RECEIVED,
and in consideration of note purchases from, loans made or to be
made or credit otherwise extended or to be extended by Shelter
Island Opportunity Fund, LLC (the “Lender”) to or for
the account of Host America Corp., a Colorado corporation
(“Debtor”), from time to time and at any time and for
other good and valuable consideration and to induce the Lender, in
its discretion, to purchase such notes, make such loans or
extensions of credit and to make or grant such renewals,
extensions, releases of collateral or relinquishments of legal
rights as the Lender may deem advisable, the undersigned (and each
of them if more than one, the liability under this Guaranty being
joint and several) (jointly and severally referred to as
“Guarantors” or “the undersigned”)
unconditionally guaranties to the Lender, their successors,
endorsees and assigns, the prompt payment when due (whether by
acceleration or otherwise) of all present and future obligations
and liabilities of any and all kinds of Debtor to the Lender and of
all instruments of any nature evidencing or relating to any such
obligations and liabilities upon which Debtor is or may become
liable to the Lender, whether incurred by Debtor as maker,
endorser, drawer, acceptor, guarantor, accommodation party or
otherwise, and whether due or to become due, secured or unsecured,
absolute or contingent, joint or several, and however or whenever
acquired by the Lender, whether arising under, out of, or in
connection with (i) that certain Securities Purchase Agreement
dated as of the date hereof by and between Debtor and the Lender
(the “Securities Purchase Agreement”) and (ii) each
Related Agreement referred to in the Securities Purchase Agreement,
(the Securities Purchase Agreement and each Related Agreement, as
each may be amended, modified, restated or supplemented from time
to time, are collectively referred to herein as the "Documents"),
or any documents, instruments or agreements relating to or executed
in connection with the Documents or any documents, instruments or
agreements referred to therein or otherwise, or any other
indebtedness, obligations or liabilities of Debtor to the Lender,
whether now existing or hereafter arising, direct or indirect,
liquidated or unliquidated, absolute or contingent, due or not due
and whether under, pursuant to or evidenced by a note, agreement,
guaranty, instrument or otherwise (all of which are herein
collectively referred to as the “Obligations”), or of
the existence or extent of such collateral, and irrespective of the
allowability, allowance or disallowance of any or all of the
Obligations in any case commenced by or against Debtor under Title
11, United States Code, including, without limitation, obligations
or indebtedness of Debtor for post-petition interest, fees, costs
and charges that would have accrued or been added to the
Obligations but for the commencement of such case. Terms not
otherwise defined herein shall have the meaning assigned such terms
in the Securities Purchase Agreement. In furtherance of the
foregoing, the undersigned hereby agrees as follows:
1. No
Impairment . The Lender may at any time and from time to time,
either before or after the maturity thereof, without notice to or
further consent of the undersigned, extend the time of payment of,
exchange or surrender any collateral for, renew or extend any of
the Obligations or increase or decrease the interest rate thereon,
or
enter into any other agreement with Debtor or
with any other party to or person liable on any of the Obligations,
or interested therein, for the extension, renewal, payment,
compromise, discharge or release thereof, in whole or in part, or
for any modification of the terms thereof or of any agreement
between the Lender and Debtor or any such other party or person, or
make any election of rights the Lender may deem desirable under the
United States Bankruptcy Code, as amended, or any other federal or
state bankruptcy, reorganization, moratorium or insolvency law
relating to or affecting the enforcement of creditors’ rights
generally (any of the foregoing, an “Insolvency Law”)
without in any way impairing or affecting this Guaranty. This
instrument shall be effective regardless of the subsequent
incorporation, merger or consolidation of Debtor, or any change in
the composition, nature, personnel or location of Debtor and shall
extend to any successor entity to Debtor, including a debtor in
possession or the like under any Insolvency Law.
2. Guaranty
Absolute . Each of the undersigned jointly and severally
guarantees that the Obligations will be paid strictly in accordance
with the terms of the Documents and/or any other document,
instrument or agreement creating or evidencing the Obligations,
regardless of any law, regulation or order now or hereafter in
effect in any jurisdiction affecting any of such terms or the
rights of Debtor with respect thereto. Guarantors hereby knowingly
accept the full range of risk encompassed within a contract of
“continuing guaranty” which risk includes the
possibility that Debtor will contract additional indebtedness for
which Guarantors may be liable hereunder after Debtor’s
financial condition or ability to pay its lawful debts when they
fall due has deteriorated. The undersigned acknowledge that (i) no
oral representations, including any representations to extend
credit or provide other financial accommodations to Debtor, have
been made by the Lender to induce the undersigned to enter into
this Guaranty and (ii) any extension of credit to Debtor shall be
governed solely by the provisions of the Documents. The liability
of each of the undersigned under this Guaranty shall be absolute
and unconditional, in accordance with its terms, and shall remain
in full force and effect without regard to, and shall not be
released, suspended, discharged, terminated or otherwise affected
by, any circumstance or occurrence whatsoever, including, without
limitation: (a) any waiver, indulgence, renewal, extension,
amendment or modification of or addition, consent or supplement to
or deletion from or any other action or inaction under or in
respect of the Documents, or any other instruments or agreements
relating to the Obligations or any assignment or transfer of any
thereof, (b) any lack of validity or enforceability of any
Document, or other documents, instruments or agreements relating to
the Obligations or any assignment or transfer of any thereof, (c)
any furnishing of any additional security to the Lender or their
assignees or any acceptance thereof or any release of any security
by the Lender or their assignees, (d) any limitation on any
party’s liability or obligation under the Documents, or any
other documents, instruments or agreements relating to the
Obligations or any assignment or transfer of any thereof or any
invalidity or unenforceability, in whole or in part, of any such
document, instrument or agreement or any term thereof, (e) any
bankruptcy, insolvency, reorganization, composition, adjustment,
dissolution, liquidation or other like proceeding relating to
Debtor, or any action taken with respect to this Guaranty by any
trustee or receiver, or by any court, in any such proceeding,
whether or not the undersigned shall have notice or knowledge of
any of the foregoing, (f) any exchange, release or nonperfection of
any collateral, or any release, or amendment or waiver of or
consent to departure from any
guaranty or security, for all or any of the
Obligations or (g) any other circumstance which might otherwise
constitute a defense available to, or a discharge of, the
undersigned. Any amounts due from the undersigned to the Lender
shall bear interest until such amounts are paid in full at the rate
then applicable to the Obligations as set forth in the Documents.
Obligations include post-petition interest whether or not allowed
or allowable.
(a) This
Guaranty is a guaranty of payment and not of collection. The Lender
shall be under no obligation to institute suit, exercise rights or
remedies or take any other action against Debtor or any other
person liable with respect to any of the Obligations or resort to
any collateral security held by them to secure any of the
Obligations as a condition precedent to the undersigned being
obligated to perform as agreed herein and each Guarantor hereby
waives any and all rights which it may have by statute or otherwise
which would require the Lender to do any of the foregoing. Each
Guarantor further consents and agrees that the Lender shall be
under no obligation to marshal any assets in favor of Guarantors,
or against or in payment of any or all of the Obligations. The
undersigned hereby waives all suretyship defenses and any rights to
interpose any defense, counterclaim or offset of any nature and
description which the undersigned may have or which may exist
between and among the Lender, Debtor and/or the undersigned with
respect to the undersigned’s obligations under this Guaranty,
or which Debtor may assert on the underlying debt, including but
not limited to failure of consideration, breach of warranty, fraud,
payment (other than cash payment in full of the Obligations),
statute of frauds, bankruptcy, infancy, statute of limitations,
accord and satisfaction, and usury.
(b) Each of the
undersigned further waives (i) notice of the acceptance of this
Guaranty, of the making of any such loans or extensions of credit,
and of all notices and demands of any kind to which the undersigned
may be entitled, including, without limitation, notice of adverse
change in Debtor’s financial condition or of any other fact
which might materially increase the risk of the undersigned and
(ii) presentment to or demand of payment from anyone whomsoever
liable upon any of the Obligations, protest, notices of
presentment, non-payment or protest and notice of any sale of
collateral security or any default of any sort.
(c)
Notwithstanding any payment or payments made by the undersigned
hereunder, or any setoff or application of funds of the undersigned
by the Lender, the undersigned shall not be entitled to be
subrogated to any of the rights of the Lender against Debtor or
against any collateral or guarantee or right of offset held by the
Lender for the payment of the Obligations, nor shall the
undersigned seek or be entitled to seek any contribution or
reimbursement from Debtor in respect of payments made by the
undersigned hereunder, until all amounts owing to the Lender by
Debtor on account of the Obligations are paid in full and the
Lender’s obligation to extend credit pursuant to the
Documents has been terminated. If, notwithstanding the foregoing,
any amount shall be paid to the undersigned on account of such
subrogation rights at any time when all of the Obligations shall
not have been paid in full and the Lender’s obligation to
extend credit pursuant to the Documents shall not have been
terminated, such amount shall be
held by the undersigned in trust for the
Lender, segregated from other funds of the undersigned, and shall
forthwith upon, and in any event within two (2) business days of,
receipt by the undersigned, be turned over to the Lender in the
exact form received by the undersigned (duly end
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