Borrower: PENN OCTANE CORPORATION Lender: Bay Area Bank
900 VETERANS BLVD. 900 Veterans Blvd.
SUITE 240 P.O. Box 2579
REDWOOD CITY, CA 94063 Redwood City, CA 94064
Guarantor: JEROME B. RICHTER
26280 DORI LANE
LOS ALTOS HILLS, CA 94022
AMOUNT OF GUARANTY. The amount of this Guaranty is Unlimited
CONTINUING UNLIMITED GUARANTY. For good and valuable consideration, JEROME B.
RICHTER ("Guarantor") absolutely and unconditionally guarantees and promises
to pay to Bay Area Bank ("Lender") or its order, on demand, in legal tender of
the United States of America, the Indebtedness (as that term is defined below)
of PENN OCTANE CORPORATION ("Borrower") to Lender on the terms and conditions
set forth in this Guaranty. Under this Guaranty, the liability of Guarantor
is unlimited and the obligations of Guarantor are continuing.
Borrower. The work "Borrower" means PENN OCTANE CORPORATION.
Guarantor. The word "Guarantor" means JEROME B. RICHTER.
Guaranty. The word "Guaranty" means this Guaranty made by Guarantor for
the benefit of Lender dated April 2, 1997.
Indebtedness. The word "Indebtedness" is used in its most comprehensive
sense and means and includes any and all of Borrower's liabilities,
obligations, debts, and indebtedness to Lender, now existing or hereinafter
incurred or created, including, without limitation, all loans, advances,
interest, costs, debts, overdraft indebtedness, credit card indebtedness,
lease obligations, other obligations, and liabilities or Borrower, or any of
them, and any present or future judgments against Borrower, or any of them;
and whether any such indebtedness in voluntarily or involuntarily incurred,
due or not due, absolute or contingent, liquidated or unliquidated, determined
or undetermined; whether Borrower may be liable individually or jointly with
others, or primarily or secondarily, or as guarantor or surety; whether
recovery on the indebtedness may be or may become barred or unenforceable
against Borrower for any reason whatsoever, and whether the indebtedness
arises from transactions which may be voidable on account of infancy,
insanity, ultra vires, or otherwise.
Lender. The word "Lender" means Bay Area Bank, its successors and
assigns.
Related Documents. The words "Related Documents" mean and include
without limitation all promissory notes, credit agreements, loan agreements,
environmental agreements, guarantees, security agreements, mortgages, deeds of
trust, and all other instruments, agreements and documents, whether now or
hereafter existing, executed in connection with the indebtedness.
NATURE OF GUARANTY. Guarantor's liability under this Guaranty shall be open
and continuous for so long as this Guaranty remains in force. Guarantor
intends to guarantee at all times the performance and prompt payment when due,
whether at maturity or earlier by reason of acceleration or otherwise, of all
Indebtedness. Accordingly, no payments made upon the indebtedness will
discharge or diminish the continuing liability of Guarantor in connection with
any remaining portions of the Indebtedness or any of the Indebtedness which
subsequently arises or is thereafter incurred or contracted. Any married
person who signs this Guaranty hereby expressly agrees that recourse may be
had against both his or her separate property and community property.
DURATION OF GUARANTY. The Guaranty will take effect when received by Lender
without the necessity of any acceptance by Lender, or any notice to Guarantor
or to Borrower, and will continue in full force until all indebtedness
incurred or contracted before receipt by Lender of any notice of revocation
shall have been fully and finally paid and satisfied and all other obligations
of Guarantor under this Guaranty shall have been performed in full. If
Guarantor elects to revoke this Guaranty, Guarantor may only do so in writing.
Guarantor's written notice of revocation must be mailed to Lender, by
certified mail, at the address of Lender listed above or such other place as
Lender may designate in writing. Written revocation of the Guaranty will
apply only to advances or new Indebtedness created after actual receipt by
Lender of Guarantor's written revocation. For this purpose and without
limitation, the term "new Indebtedness" does not include Indebtedness which at
the time of notice of revocation is contingent, unliquidated, undetermined or
not due and which later becomes absolute, liquidated, determined or due. This
Guaranty will continue to bind Guarantor for all Indebtedness incurred by
Borrower or committed by Lender prior to receipt of Guarantor's written
notice of revocation, including any extensions, renewals, substitutions or
modifications of the Indebtedness. All renewals, extensions, substitutions,
and modifications of the Indebtedness granted after Guarantor's revocation are
contemplated under this Guaranty and, specifically will not be considered to
be new Indebtedness. This Guaranty shall bind the estate of Guarantor as to
Indebtedness created both before and after the death or incapacity of
Guarantor, regardless of Lender's actual notice of Guarantor's death. Subject
to the foregoing, Guarantor's executor or administrator or other legal
representative may terminate this Guaranty in the same manner in which the
Guarantor might have terminated it and with the same effect. Release of any
other guarantor or termination of any other Guarantors shall not affect the
liability of any remaining Guarantors under this Guaranty. The obligations of
Guarantor under this Guaranty shall be in addition to any obligations of
Guarantor , or any of them, under any other guaranties of the Indebtedness of
Borrower or any other person heretofor or hereafter given to Lender unless
such other guaranties are modified or revoked in writing; and this Guaranty
shall not, unless herein provided, affect, invalidate, or supersede any such
other guaranties are modified or revoked in writing; and this Guaranty shall
not, unless herein provided, affect, invalidate, or supersede any such other
guaranty. it is anticipated that fluctuations may occur in the aggregate
amount of indebtedness covered by this Guaranty, and it is specifically
acknowledged and agreed by Guarantor that reductions in the amount of
Indebtedness, even to zero dollars($0.00), prior to written revocation of this
Guaranty by Guarantor shall not constitute a termination of this Guaranty.
This Guaranty is binding upon Guarantor and Guarantor's heirs, successors and
assigns so long as any of the guaranteed Indebtedness remains unpaid and even
though the Indebtedness guaranteed may from time to time be zero dollars
($0.00).
GUARANTOR'S AUTHORIZATION TO LENDER. Guarantor authorizes Lender, either
before or after any revocation hereof, without notice or demand and without
lessening Guarantor's liability under this Guaranty, from time to time: (a)
prior to revocation as set forth above, to make one or more additional secured
or unsecured loans to Borrower, to lease equipment or other goods to Borrower,
or otherwise to extend additional credit to Borrower; (b) to alter,
compromise, renew, extend, accelerate, or otherwise change one or more times
the time for payment or other terms of the Indebtedness or any part of the
Indebtedness, including increases and decreases of the rate of interest on the
Indebtedness; extensions may be repeated and may be for longer than the
original loan term; (c) to take and hold security for the payment of this
Guaranty or the Indebtedness and exchange, enforce, waive, subordinate, fail
or decide not to perfect, and release any such security, with or without the
substitution of new collateral; (d) to release, substitute, agree not to sue,
or deal with any one or more of Borrower's sureties, endorsers, or other
guarantors on any terms or in any manner Lender may choose; (e) to determine
how, when and what application of payments and credits shall be made on the
Indebtedness; (f) to apply such security and direct the order or manner of
sale thereof, including without limitation, any nonjudicial sale permitted by
the terms of the controlling security agreement or deed of trust, as Lender in
its discretion may determine; (g) to sell, transfer, assign, or grant
participations in all or any part of the Indebtedness; and (h) to assign or
transfer this Guaranty in whole or in part.
GUARANTOR'S REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants
to Lender that (a) no representations or agreements of any kind have been made
to Guarantor which would limit or qualify in any way the terms of this
Guaranty; (b) this Guaranty is executed at Borrower's request and not at the
request of Lender; (c) Guarantor has full power, right and authority to enter
into this Guaranty; (d) the provisions of this Guaranty do not conflict with
or result in a default under any agreement or other instrument binding upon
Guarantor and do not result in a violation of any law, regulation, court
decree or order applicable to Guarantor; (e) Guarantor has not and will not,
without the prior written consent of Lender, sell, lease, assign, encumber,
hypothecate, transfer, or otherwise dispose of all or substantially all of
Guarantor's assets or any interest therein; (f) upon Lender's request,
Guarantor will provide to Lender financial and credit information in form
acceptable to Lender, and all such financial information which currently has
been, and all future financial information which will be provided to Lender is
and will be true and correct in all material respects and which currently has
been, and all future financial information which will be provided to Lender is
and will be true and correct in all material respects and fairly present the
financial condition of Guarantor as of the dates the financial information is
provided; (g) no material adverse change has occurred in Guarantor's financial
condition since the date of the most recent financial statements provided to
Lender and no event has occurred which may materially adversely affect
Guarantor's financial condition; (h) no litigation, claim, investigation,
administrative proceeding or similar action (including those for unpaid taxes)
against Guarantor is pending or threatened; (i) Lender has made no
representation to Guarantor as to the creditworthiness of Borrower; and (j)
Guarantor has established adequate means of obtaining From Borrower on a
continuing basis information regarding Borrower's financial condition.
Guarantor agrees to keep adequately informed from such means of any facts,
events or circumstances which might in any way affect Guarantor's risks under
this Guaranty, and Guarantor further agrees that, absent a request for
information, Lender shall have no obligation to disclose to Guarantor any
information or documents acquired by Lender in the course of its relationship
with Borrower.
GUARANTOR'S WAIVERS. Except as prohibited by applicable law, Guarantor waives
any right to require Lender to (a) make any presentment, protest, demand, or
notice of any kind, including notice of change of any terms of repayment of
the indebtedness, default by Borrower or any other guarantor or surety, any
action or nonaction taken by Borrower, Lender, or any other guarantor or
surety of Borrower, or the creation of new or additional indebtedness; (b)
proceed against any person, including Borrower, before proceeding against
Guarantor, (c) proceed against any collateral for the Indebtedness, including
Borrower's collateral, before proceeding against Guarantor; (d) apply any
payments or proceeds received against the Indebtedness in any order; (e) give
notice of the terms, time and place of any sale of the collateral pursuant to
the Uniform Commercial Code or any other law governing such sale; (f) disclose
any information about the indebtedness, the Borrower, the collateral, or any
other guarantor or surety, or about any action or nonaction of Lender; or (g)
pursue any remedy or course of action in Lender's power whatsoever.
Guarantor also waives any and all rights or defenses arising by reason of (h)
any disability or other defense of Borrower any other guarantor or surety or
any other person; (i) the cessation from any cause whatsoever, other than
payment in full, of the Indebtedness; (j) the application of proceeds of the
Indebtedness by Borrower for purposes other than the purposes understood and
intended by Guarantor and Lender; (k) any act of omission or commission by
Lender which directly or indirectly results in or contributes to the discharge
of Borrower or any other guarantor or surety, or the Indebtedness, or the loss
or release of any collateral by operation of law or otherwise; (l) any statute
of limitations in any action under this Guaranty or on the Indebtedness; or
(m) any modification or change in terms of the Indebtedness, whatsoever,
including without limitation, the renewal, extension, acceleration, or other
change in the time payment of the Indebtedness is due and any change int he
interest rate, and including any such modification or change in terms after
revocation of this Guaranty on Indebtedness incurred prior to such revocation.
Until all indebtedness is paid in full, Guarantor waives all rights and any
defenses Guarantor may have arising out of an election of remedies by Lender
even tough that election of remedies, such as a nonjudicial foreclosure with
respect to security for a guaranteed obligation, has destroyed Guarantor's
rights of subrogation and reimbursement against Borrower or any other
guarantor or surety by operation of Section 580a, 580b, 580d and 726 of the
California Code of Civil Procedure or otherwise. This waiver includes,
without limitation, any loss of rights Guarantor may suffer by reason of any
rights or protections of Borrower in connection with any anti-deficiency laws
or other laws limiting or discharging the Indebtedness or Borrower's
obligations (including, without limitation, Sections 726, 580a, 580b, and 580d
of the California Code of Civil Procedure). Guarantor waives all rights and
protections of any kind which Guarantor may have for any reason, which would
affect or limit the amount of any recovery by Lender from Guarantor following
a nonjudicial sale or judicial foreclosure of any real or personal property
security for the Indebtedness including, but not limited to, the right to any
fair market value hearing pursuant to California Code of Civil Procedure
Section 580a. Guarantor understands and agrees that the foregoing waivers are
waivers of substantive rights and defenses to which Guarantor might otherwise
be entitled under state and federal law. The rights and defenses waived
include, without limitation, those provided by California laws of suretyship
and guaranty, anti-deficiency laws, and the Uniform Commercial Code.
Guarantor acknowledges that Guarantor has provided these waivers of rights and
defenses with the intention that they be fully relied upon by Lender. Until
all indebtedness is paid in full, Guarantor waives any right to enforce any
remedy Lender may have against Borrower or any other guarantor, surety, or
other person, and further, Guarantor waives any right to participate in any
collateral for the Indebtedness now or hereafter held by Lender.
If now or hereafter (a) Borrower shall be or become insolvent, and (b) the
Indebtedness shall not at all times until paid be fully secured by collateral
pledged by Borrower, Guarantor hereby forever waives and relinquishes in favor
of Lender and Borrower, and their respective successors, any claim or right to
payment Guarantor may now have or hereafter have or acquire against Borrower,
by subrogation or otherwise, so that at no time shall Guarantor be or become a
"creditor" of Borrower within the meaning of 11 U.S.C. section 547(b), or any
successor provision of the Federal bankruptcy laws.
GUARANTOR'S UNDERSTANDING WITH RESPECT TO WAIVERS. Guarantor warrants and
agrees that each of the waivers set forth above is made with full knowledge of
its significance and consequences and that, under the circumstances, the
waivers are reasonable and not contrary to public policy or law. If any such
waiver is determined to be contrary to any applicable law or public policy,
such waiver shall be effective only to the extent permitted by law or public
policy.
SUBORDINATION OF BORROWER'S DEBTS TO GUARANTOR. Guarantor agrees that the
Indebtedness of Borrower to Lender, whether now existing or hereafter created,
shall be prior to any claim that Guarantor may now have or hereafter acquire
against Borrower, whether or not Borrower becomes insolvent. Guarantor hereby
expressly subordinates any claim Guarantor may have against Borrower, upon any
account whatsoever, to any claim that Lender may now or hereafter have against
Borrower. In the event of insolvency and consequent liquidation of the assets
of Borrower, through bankruptcy by an assignment for the benefit of creditors,
by voluntary liquidation, or otherwise, the assets of Borrower applicable to
the payment of the claims of both Lender and Guarantor shall be paid to Lender
and shall be first applied by Lender to the Indebtedness of Borrower to
Lender. Guarantor does hereby assign to Lender all claims which it may have
or acquire against Borrower or against any assignee or trustee in bankruptcy
of Borrower; provided however, that such assignment shall be effective only
for the purpose of assuring to Lender full payment in legal tender of the
Indebtedness. If Lender so requests, any notes or credit agreements now or
hereafter evidencing any debts or obligations of Borrower to Guarantor shall
be marked with a legend that the same are subject to this Guaranty and shall
be delivered to Lender. Guarantor agrees, and Lender hereby is authorized, in
the name of Guarantor, from time to time to execute and file financing
statements and continuation statements and to execute such other documents and
to take such other actions as Lender deems necessary or appropriate to
perfect, preserve and enforce its rights under this Guaranty.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part
of this Guaranty:
Integration Amendment> Guarantor warrants, represents and agrees that
this Guaranty, together with any exhibits or schedules incorporated herein,
fully incorporates the agreements and understandings of Guarantor with Lender
with respect to the subject matter hereof and all prior negotiations,
drafts,and other extrinsic communications between Guarantor and Lender shall
have no evidentiary effect whatsoever. Guarantor further agrees that
Guarantor has read and fully understands the terms of this Guaranty; Guarantor
has had the opportunity to be advised by Guarantor's attorney with respect to
this Guaranty; the Guaranty fully reflects Guarantor's intentions and parol
evidence is not required to interpret the terms of this Guaranty. Guarantor
hereby indemnifies and holds Lender harmless from all losses, claims, damages,
and costs (including Lender's attorney's fees) suffered or incurred by Lender
as a result of any breach by Guarantor of the warranties, representations and
agreements of this paragraph. No alteration or amendment to this Guaranty
shall be effective unless given in writing and signed by the parties sought to
be charged or bound by the alteration or amendment.
Applicable Law. This Guaranty has been delivered to Lender and accepted
by Lender in the State of California. If there is a lawsuit, Guarantor agrees
upon Lender's request to submit to the jurisdiction of the courts of San Mateo
County, State of California. This Guaranty shall be governed by and construed
in accordance with the laws of the State of California.
Attorneys' Fees; Expenses. Guarantor agrees to pay upon demand all of
Lender's costs and expenses, including attorneys' fees and Lender's legal
expenses incurred in connection with the enforcement of this Guaranty. Lender
may pay someone else to help enforce this Guaranty, and Guarantor shall pay
the costs and expenses of such enforcement. Costs and expenses include
Lender's attorneys' fees and legal expenses whether or not there is a lawsuit,
including attorneys' fees and legal expenses for bankruptcy proceedings (and
including efforts to modify or vacate any automatic stay or injunction),
appeals, and any anticipated post-judgment collection services. Guarantor
also shall pay all court costs and such additional fees as may be directed by
the court.
Notices. All notices required to be given by either party to the other
under this Guaranty shall be in writing, may be sent by telefacsimile,and,
except for revocation notices by Guarantor, shall be effective when actually
delivered or when deposited with a nationally recognized overnight courier, or
when deposited in the United States mail, first class postage prepaid,
addressed to the party to whom the notice is to be given at the address shown
above or to such other addresses as either party may designate to the other in
writing. All revocation notices by Guarantor shall be in writing and shall be
effective only upon delivery to Lender as provided above in the section titled
"DURATION OF GUARANTY." If there is more than one Guarantor, notice to any
Guarantor will constitute notice to all Guarantors. For notice purposes,
Guarantor agrees to keep Lender informed at all times of Guarantor's current
address.
Interpretation. In all cases where there is more than one Borrower or
Guarantor, then all words used in this Guaranty in the singular shall be
deemed to have been used int he plural where the context and construction so
require; and where there is more than one Borrower named in this Guaranty or
when this Guaranty is executed by more than one Guarantor, the words
"Borrower" and "Guarantor" respectively shall mean all and any one or more of
them. The words "Guarantor," "Borrower," and "Lender" include the heirs,
successors, assigns, and transferees of each of them. caption headings in
this Guaranty are for convenience purposes only and are not to be used to
interpret or define the provisions of this Guaranty. If a court of competent
jurisdiction finds any provision of this Guaranty to be invalid or
unenforceable as to any person or circumstance, such finding shall not render
that provision invalid or unenforceable as to any other persons or
circumstances, and all provisions of this Guaranty in all other respects shall
remain valid and enforceable. In any one or more of Borrower or Guarantor are
corporations or partnerships, it is not necessary for Lender to inquire into
the powers of Borrower or Guarantor or of the officers, directors, partners,
or agents acting or purporting to act on their behalf, and any Indebtedness
made or created in reliance upon the professed exercise of such powers shall
be guaranteed under this Guaranty.
Waiver. Lender shall not be deemed to have waived any rights under this
Guaranty unless such waiver is given in writing and signed by Lender. No
delay or omission on the part of Lender in exercising any right shall operate
as a waiver of such right or any other right. A waiver by Lender of a
provision of this Guaranty shall not prejudice or constitute a waiver of
Lender's right otherwise to demand strict compliance with that provision or
any other provision of this Guaranty. No prior waiver by Lender, nor any
course of dealing between Lender and Guarantor, shall constitute a waiver of
any of Lender's rights or of any of Guarantor's obligations as to any future
transactions. Whenever the consent of Lender is required under this Guaranty,
the granting of such consent by Lender in any instance shall not constitute
continuing consent to subsequent instances where consent is required and in
all cases such consent may be granted or withheld in the sold discretion of
Lander.
ADDITIONAL PROVISIONS - GUARANTOR. AS AN INDUCEMENT TO LENDER TO EXTEND OR
CONTINUE CREDIT TO BORROWER, THE UNDERSIGNED AGREE(S) NOT TO FURTHER PLEDGE,
ENCUMBER OR SELL THE REAL PROPERTY LOCATED AT 26280 DORI LANE, LOS ALTOS
HILLS, CA. IN ADDITION, IN THE EVENT OF BORROWER'S DEFAULT UNDER THE TERMS OF
ANY NOTE OR SECURITY AGREEMENT EXECUTED IN FAVOR OF LENDER, THE UNDERSIGNED
AGREE(S) TO EXECUTE A DEED OF TRUST IN FAVOR OF LENDER COVERING THE ASSETS
LISTED ABOVE.
EACH UNDERSIGNED GUARANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS
GUARANTY AND AGREES TO ITS TERMS. IN ADDITION, EACH GUARANTOR UNDERSTANDS
THAT THIS GUARANTY IS EFFECTIVE UPON GUARANTOR'S EXECUTION AND DELIVERY OF
THIS GUARANTY TO LENDER AND THAT THE GUARANTY WILL CONTINUE UNTIL TERMINATED
IN THE MANNER SET FORTH IN THE SECTION TITLED "DURATION OF GUARANTY." NO
FORMAL ACCEPTANCE BY LENDER IS NECESSARY TO MAKE THIS GUARANTY EFFECTIVE.
THIS GUARANTY IS DATED APRIL 2, 1997.
/s/ JEROME B. RICHTER