Document:

Unassociated Document

     

     

    O2DIESEL
CORPORATION

    O2DIESEL
FUELS, INC.

     

    SECURED
PROMISSORY NOTE

     

    
      	
              $200,000.00

            	 
      	
              Newark,
      Delaware

            
	 
      	 
      	
              June
      23, 2009

            

    

     

    FOR VALUE RECEIVED, O2Diesel
Corporation., a Delaware corporation (“O2Corp.”), and O2Diesel Fuels, Inc.,
d/b/a O2Diesel, Inc., a Delaware corporation (“O2Inc.” and together with
O2Corp., “Makers”),
unconditionally promise to pay, jointly and severally, to Energenics Holdings
Pte. Ltd. (“Payee”), in
the manner and at the place hereinafter provided, the principal amount of Two
Hundred Thousand Dollars ($200,000.00) in full on demand (the “Maturity Date”)
but in no case earlier than twelve calendar days after the initial funding of
the loan evidenced by this Note.

     

    Makers
also promise to pay, jointly and severally, interest on the unpaid principal
amount hereof from the date hereof until paid in full at the rate of 15.0% per
annum provided
that any principal amount not paid when due and, to the extent permitted by
applicable law, any interest not paid when due, in each case whether at stated
maturity, by required prepayment, declaration, acceleration, demand or otherwise
(both before as well as after judgment), shall bear interest payable upon demand
at a rate that is 5.0% per annum in excess of the rate of interest otherwise
payable under this Note.  Interest on this Note shall be payable in
arrears on the first day of each month by increasing the then aggregate
principal amount of the loan outstanding on such date; such accrued interest
shall be payable in cash upon any prepayment of this Note (to the extent accrued
on the amount being prepaid) and on the Maturity Date.  All
computations of interest shall be made by Payee on the basis of a 365 day year,
for the actual number of days elapsed in the relevant period (including the
first day but excluding the last day).  In no event shall the interest
rate payable on this Note exceed the maximum rate of interest permitted to be
charged under applicable law.

     

    1.           Disbursement
of Funds; Use of Proceeds.  The proceeds of the loan evidenced
hereby shall be applied as follows: (a) $30,000 shall have been funded by Payee
to Makers and applied by Makers to renew certain intellectual property
registrations and pay related costs; (b) $85,000 shall be paid, within one
calendar day of the funding of the funds by Payee, by Makers to Cozen O’Connor
for legal fees and costs; (c) to O’Melveny & Myers LLP for all legal fees
and costs of related to legal services payable by Makers pursuant to Section
10(b) hereof, and Makers agree to pay, jointly and severally, $40,000 of the
proceeds the loan evidenced hereby, within one calendar day of the funding of
the loan by Payee, to O’Melveny & Myers LLP in respect of such fees;
provided that this clause (c) shall in no way limit the fees payable to
O’Melveny & Myers LLP under Section 10(b) hereof to $40,000; (d) $20,000 to
Arnold & Porter LLP, to be funded from proceeds of the loan being held in a
trust account of Arnold & Porter LLP, upon the general release and discharge
by Arnold & Porter LLP of all claims against Makers on terms acceptable to
Payee in its sole discretion; (e) $8,500 for the payment of certain independent
contractors assisting with preparation of the Chapter 11 Documents, in each
case, with the prior written approval of Payee, and which shall be funded in a
manner acceptable to Payee in its sole discretion; and (f) such other expenses
of Makers (including without limitation increases in the amounts to be paid
pursuant to clauses (a) through (e) above) with the prior written approval of
Payee, and which shall be funded in a manner acceptable to Payee in its sole
discretion.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    2.           Payments.  All payments of
principal and interest in respect of this Note shall be made in lawful money of
the United States of America in same day funds at the office of Payee or at such
other place as Payee may direct.  Whenever any payment on this Note is
stated to be due on a day that is not a Business Day (capitalized terms used
herein and not otherwise defined herein shall have the meanings provided in
Section 9 below), such payment shall instead be made on the next Business
Day, and such extension of time shall be included in the computation of interest
payable on this Note.  Each payment made hereunder shall be credited
first to costs and expenses payable by Makers pursuant to Section 10(b) hereof,
second to interest then due and the remainder of such payment shall be credited
to principal, and interest shall thereupon cease to accrue upon the principal so
credited.  Each of Payee and any subsequent holder of this Note
agrees, by its acceptance hereof, that before disposing of this Note or any part
hereof it will make a notation hereon of all principal payments previously made
hereunder and of the date to which interest hereon has been paid; provided, however,
that the failure to make a notation of any payment made on this Note shall not
limit or otherwise affect the obligation of Makers hereunder with respect to
payments of principal or interest on this Note.

     

    3.           Prepayments.  Makers shall have
the right at any time and from time to time to prepay the principal of this Note
in whole or in part, without premium or penalty.  Each prepayment
hereunder shall be accompanied by interest on the principal amount of the Note
being prepaid to the date of prepayment.

     

    4.           Reference
Agreements. This
Note is secured pursuant to the provisions of the Security
Agreement.  The obligations of Makers hereunder are guarantied by
Guarantor pursuant to the terms of the Guaranty.

     

    5.           Covenants Each Maker covenants and
agrees that until this Note is paid in full it will:

     

    (a)           promptly
provide to Payee all financial and operational information with respect to
Makers as Payee may reasonably request;

     

    (b)           promptly
after the occurrence of an Event of Default or an event, act or condition that,
with notice or lapse of time or both, would constitute an Event of Default,
provide Payee with a certificate of the chief executive officer or chief
financial officer of Makers specifying the nature thereof and Makers’ proposed
response thereto;

     

    (c)           not
(i) create, assume, guaranty, incur or otherwise become or remain directly or
indirectly liable with respect to any indebtedness for borrowed money except
indebtedness outstanding on the date hereof as set forth on Schedule 1 hereto
and (ii) not pay principal and interest on other indebtedness;

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (d)           not
merge or consolidate with any other Person, or sell, lease or otherwise dispose
of all or any part of its property or assets to any other Person outside the
ordinary course of business;

     

    (e)           use
the proceeds of the loan evidenced by this Note in the manner identified in
Section 1 hereof;

     

    (f)           commence
a voluntary Chapter 11 case in the District of Delaware (the “Chapter 11 Cases”)
no later than 10 calendar days after the funding of the loan evidenced by this
Note (the “Petition Date”).  On the Petition Date, Makers shall file
(i) a motion requesting the joint administration of the Chapter 11 Cases, (ii) a
motion requesting an order setting the claims bar date, (iii) a motion or
motions requesting approval of plan solicitation procedures and Maker’s
disclosure statement, if any (the “Solicitation Motion”), (iv) a motion for an
order approving the post-petition financing on terms acceptable to Payee, (v) an
application to employ Cozen O’Conner as Makers’ chapter 11 bankruptcy counsel,
and (vi) Makers’ schedules and statement of financial affairs (each of the
foregoing, the “Chapter 11 Documents”), which Chapter 11 Documents shall be in
form and substance acceptable to Payee in its sole discretion;

     

    (g)           Pursuant
to the Solicitation Motion, Makers shall request that the hearing on plan
confirmation be scheduled approximately forty-five (45) days following the
Petition Date and shall request deadlines for plan solicitation, voting, and
objections  that allow for the confirmation hearing to be held at such
time.  The Solicitation Motion shall request a break-up fee of $20,000
plus reimbursement of all of Payee’s expenses related to the Chapter 11 Cases
(other than with respect to this Note and Makers’ post-petition financing) up to
$50,000  to be paid to Payee by Makers in the event that Makers
determine to sell or otherwise dispose of their assets other than through the
Transaction (as defined in that certain term sheet between Makers and Payee
dated as of June 22, 2009);

     

    (h)           no
later than 7 days after the Petition Date, obtain interim approval in the
Chapter 11 Cases of post-petition financing on terms acceptable to Payee in its
sole discretion; and

     

    (i)           no
later than 20 days after the Petition Date, obtain final approval in the Chapter
11 Cases of post-petition financing on terms acceptable to Payee in its sole
discretion.

     

    6.           Representations
and Warranties.  Each Maker hereby
represents and warrants to Payee that:

     

    (a)           it
is a duly organized and validly existing corporation in good standing under the
laws of the jurisdiction of its organization and has the corporate power and
authority to own and operate its properties, to transact the business in which
it is now engaged and to execute and deliver this Note;

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (b)           this
Note constitutes the duly authorized, legally valid and binding obligation of
Maker, enforceable against Maker in accordance with its terms;

     

    (c)           all
consents and grants of approval required to have been granted by any Person in
connection with the execution, delivery and performance of this Note have been
granted;

     

    (d)           the
execution, delivery and performance by Maker of this Note do not and will not
(i) violate any law, governmental rule or regulation, court order or
agreement to which it is subject or by which its properties are bound or the
charter documents or bylaws of Maker or (ii) result in the creation of any
lien or other encumbrance with respect to the property of Maker;

     

    (e)           there
is no action, suit, proceeding or governmental investigation pending or, to the
knowledge of Maker, threatened against Maker or any of its subsidiaries or any
of their respective assets which, if adversely determined, would have a material
adverse effect on the business, operations, properties, assets, condition
(financial or otherwise) or prospects of Maker and its subsidiaries, taken as a
whole, or the ability of Maker to comply with its obligations hereunder;
and

     

    (f)           in
no event shall any part of such proceeds be used by Maker to purchase or carry
any “margin stock” within the meaning of Regulation U of the Board of Governors
of the Federal Reserve System as now and from time to time hereafter in effect
or to extend credit to others for the purpose of purchasing or carrying any such
“margin stock” or to reduce or retire any indebtedness incurred for any such
purpose, and neither Makers nor any of their subsidiaries are engaged
principally or as one of their important activities in the business of extending
credit for the purpose of purchasing or carrying any such “margin
stock”.

     

    7.           Events of Default.  The occurrence of
any of the following events shall constitute an “Event of
Default”:

     

    (a)           failure
of Makers to pay any principal, interest or other amount due under this Note
when due, whether at stated maturity, by required prepayment, declaration,
acceleration, demand or otherwise; or

     

    (b)           failure
of either Maker to pay, or the default in the payment of, any amount due under
or in respect of any promissory note, indenture or other agreement or instrument
relating to any indebtedness owing by either Maker or Guarantor, to which either
Maker is a party or by which either Maker or Guarantor or any of their property
is bound beyond any grace period provided; or the occurrence of any other event
or circumstance that, with notice or lapse of time or both, would permit
acceleration of such indebtedness; or

     

    (c)           failure
of either Maker to perform or observe any other term, covenant or agreement to
be performed or observed by it pursuant to this Note; or

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (d)           any
representation or warranty made by either Maker to Payee in connection with this
Note shall prove to have been false in any material respect when made;
or

     

    (e)           any
order, judgment or decree shall be entered against either Maker or any of their
respective subsidiaries decreeing the dissolution or split-up of Maker or such
subsidiary; or

     

    (f)           suspension
of the usual business activities of either Maker any of their respective
subsidiaries or the complete or partial liquidation of either Maker’s business
or the business of any of their respective subsidiaries; or

     

    (g)           (i) except
with Payee’s prior written consent, a court having jurisdiction in the premises
shall enter a decree or order for relief in respect of either Maker, Guarantor
or any of their respective subsidiaries in an involuntary case under
Title 11 of the United States Code entitled “Bankruptcy” (as now and
hereinafter in effect, or any successor thereto, the “Bankruptcy Code”) or any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, which decree or order is not stayed; or any other similar relief shall
be granted under any applicable federal or state law; or (ii) an
involuntary case shall be commenced against either Maker, Guarantor or any of
their respective subsidiaries under any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect; or a decree or order of a court
having jurisdiction in the premises for the appointment of a receiver,
liquidator, sequestrator, trustee, custodian or other officer having similar
powers over either Maker, Guarantor or any of their respective subsidiaries or
over all or a substantial part of its property shall have been entered; or the
involuntary appointment of an interim receiver, trustee or other custodian of
either Maker, Guarantor or any of their respective subsidiaries for all or a
substantial part of its property shall have occurred; or a warrant of
attachment, execution or similar process shall have been issued against any
substantial part of the property of either Maker, Guarantor or any of their
respective subsidiaries, and, in the case of any event described in this clause
(ii), such event shall have continued for 30 days unless dismissed, bonded or
discharged; or

     

    (h)           except
with Payee’s prior written consent, an order for relief shall be entered with
respect to either Maker, Guarantor or any of their respective subsidiaries or
either Maker, Guarantor or any of their respective subsidiaries shall commence a
voluntary case under the Bankruptcy Code or any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or shall consent to
the entry of an order for relief in an involuntary case, or to the conversion of
an involuntary case to a voluntary case, under any such law, or shall consent to
the appointment of or taking possession by a receiver, trustee or other
custodian for all or a substantial part of its property; or either Maker,
Guarantor or any of their respective subsidiaries shall make an assignment for
the benefit of creditors; or either Maker, Guarantor or any of their respective
subsidiaries shall be unable or fail, or shall admit in writing its inability,
to pay its debts as such debts become due; or the Board of Directors of either
Maker, Guarantor or any of their respective subsidiaries (or any committee
thereof) shall adopt any resolution or otherwise authorize action to approve any
of the foregoing; or

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (i)           either
Maker or Guarantor shall challenge, or institute any proceedings to challenge,
the validity, binding effect or enforceability of this Note, the Security
Agreement, the Guaranty, or any endorsement of this Note or any other obligation
to Payee; or

     

    (j)           any
provision of this Note, the Guaranty or the Security Agreement or any provision
hereof or thereof shall cease to be in full force or effect or shall be declared
to be null or void or otherwise unenforceable in whole or in part; or Payee
shall not have or shall cease to have a valid and perfected first priority
security interest in the collateral described in the Security Agreement; or
Guarantor or any Person acting by or on behalf of Guarantor shall deny or
disaffirm Guarantor’s obligations under the Guaranty; or Guarantor shall default
(beyond any applicable grace period) in the due performance or observance of any
term, covenant or agreement on its part to be performed or observed pursuant to
the Guaranty.

     

    8.           Remedies.  Upon the
occurrence of any Event of Default specified in Section 7(g) or 7(h) above, the
principal amount of this Note together with accrued interest thereon shall
become immediately due and payable, without presentment, demand, notice, protest
or other requirements of any kind (all of which are hereby expressly waived by
Makers).  Upon the occurrence and during the continuance of any other
Event of Default Payee may, by written notice to Makers, declare the principal
amount of this Note together with accrued interest thereon to be due and
payable, and the principal amount of this Note together with such interest shall
thereupon immediately become due and payable without presentment, further
notice, protest or other requirements of any kind (all of which are hereby
expressly waived by Makers).  In either case Payee may, in addition to
exercising any other rights and remedies it may have, exercise those rights of
set off provided for in Section 10(c).  Demand for payment may be made
whether or not any of the foregoing events shall have occurred if the principal
amount of this Note is payable on demand.

     

    9.           Definitions.  The following
terms used in this Note shall have the following meanings (and any of such terms
may, unless the context otherwise requires, be used in the singular or the
plural depending on the reference):

     

    “Business
Day” means any day other than a Saturday, Sunday or legal holiday under
the laws of the State of Delaware or any other day on which banking institutions
located in such state are authorized or required by law or other governmental
action to close.

     

    “Event of
Default” means any of the events set forth in Section 7.

     

    “Guarantor”
means O2 Diesel Europe Plc, a company incorporated under the laws of Ireland,
and its permitted successors and assigns under the Guaranty.

     

    “Guaranty”
means the Guaranty, dated as of June 22, 2009 by Guarantor in favor of Payee, as
the same may be amended, supplemented or otherwise modified from time to
time.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    “Person”
means any individual, partnership, limited liability company, joint venture,
firm, corporation, association, bank, trust or other enterprise, whether or not
a legal entity, or any government or political subdivision or any agency,
department or instrumentality thereof.

     

    “Security
Agreement” means the Security Agreement dated as of June 22, 2009 among
Makers and Payee, as the same may be amended, supplemented or otherwise modified
from time to time.

     

    10.           Miscellaneous.

     

    (a)           Except
as otherwise expressly provided herein, all notices and other communications
provided for hereunder shall be in writing (including telefacsimile
communication) and mailed, telecopied, or delivered as follows: if to Maker, at
its address specified opposite its signature below; and if to Payee,
at

     

    Energenics
Holdings Pte Ltd.

    89
Science Park Drive

    #03-06
The Rutherford,

    Singapore
Science Park 1

    Singapore
118261

     

    with a
copy (which shall not constitute notice) to:

     

    Andrew
Parlen

    Suzzanne
Uhland

    O’Melveny
& Myers LLP

    400 South
Hope Street

    Los
Angeles, California  90071

    

    or in
each case at such other address as shall be designated by Payee or
Makers.  All such notices and communications shall, when mailed,
telecopied or sent by overnight courier, be effective when deposited in the
mails, delivered to the overnight courier, as the case may be, or sent by
telecopier.  Electronic mail may be used to distribute routine
communications; provided that no signature with respect to any notice, request,
agreement, waiver, amendment, or other documents may be sent by electronic
mail.

     

    (b)           Each
Maker agrees to pay all reasonable out-of-pocket expenses of Payee incurred in
connection with the preparation, execution, delivery, monitoring, enforcement
and administration of this Note, the documents and instruments referred to
herein and any amendments, waivers or consents relating hereto or thereto
including, without limitation, the reasonable fees and expenses of O’Melveny
& Myers LLP, counsel for Payee, incurred in connection with the Chapter 11
Cases.  In addition, each Maker agrees to pay, and to save Payee
harmless from all liability for, any stamp or other documentary taxes which may
be payable in connection with such Maker’s execution or delivery of this
Note.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (c)           In
addition to and not in limitation of any rights of set off that Payee or
any other holder of this Note may now or hereafter have under applicable law,
Payee or such other holder of this Note, upon the occurrence of any Event of
Default, is hereby authorized at any time or from time to time, without notice
of any kind to either Maker or to any other Person, any such notice being hereby
expressly waived, to set off and to appropriate and apply any and all deposits
and any other indebtedness at any time held or owing by Payee or such other
holder to or for the credit or the account of Makers against and on account of
the obligations and liabilities of Makers to Payee under this Note and all other
claims of any nature or description arising out of or connected with this Note,
irrespective of whether or not Payee shall have made any demand hereunder and
although said obligations, liabilities or claims, or any of them, shall be
contingent or unmatured.

     

    (d)           No
failure or delay on the part of Payee or any other holder of this Note to
exercise any right, power or privilege under this Note and no course of dealing
between Makers and Payee shall impair such right, power or privilege or operate
as a waiver of any default or an acquiescence therein, nor shall any single or
partial exercise of any such right, power or privilege preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege.  The rights and remedies expressly provided in this Note
are cumulative to, and not exclusive of, any rights or remedies that Payee would
otherwise have.  No notice to or demand on Makers in any case shall
entitle Makers to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the right of Payee to any other or
further action in any circumstances without notice or demand.

     

    (e)           Makers
and any endorser of this Note hereby consent to renewals and extensions of time
at or after the maturity hereof, without notice, and hereby waive diligence,
presentment, protest, demand and notice of every kind and, to the full extent
permitted by law, the right to plead any statute of limitations as a defense to
any demand hereunder.

     

    (f)           THIS NOTE AND THE RIGHTS AND
OBLIGATIONS OF MAKERS AND PAYEE HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
DELAWARE, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.

     

    (g)           ALL JUDICIAL PROCEEDINGS BROUGHT
AGAINST MAKERS ARISING OUT OF OR RELATING TO THIS NOTE MAY BE BROUGHT IN ANY
STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF DELAWARE, AND
BY EXECUTION AND DELIVERY OF THIS NOTE EACH MAKER ACCEPTS FOR ITSELF AND IN
CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE
JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON
CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY
IN CONNECTION WITH THIS NOTE.  Each Maker hereby agrees that
service of all process in any such proceeding in any such court may be made by
registered or certified mail, return receipt requested, to such Maker at its
address set forth below its signature hereto, such service being hereby
acknowledged by such Maker to be sufficient for personal jurisdiction in any
action against such Maker in any such court and to be otherwise effective and
binding service in every respect.  Nothing herein shall affect the
right to serve process in any other manner permitted by law or shall limit the
right of Payee to bring proceedings against either Maker in the courts of any
other jurisdiction.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (h)           EACH MAKER AND, BY THEIR ACCEPTANCE
OF THIS NOTE, PAYEE AND ANY SUBSEQUENT HOLDER OF THIS NOTE, HEREBY IRREVOCABLY
AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF THIS NOTE OR ANY DEALINGS BETWEEN THEM
RELATING TO THE SUBJECT MATTER OF THIS NOTE AND THE LENDER/BORROWER RELATIONSHIP
THAT IS BEING ESTABLISHED.  The scope of this waiver is
intended to be all-encompassing of any and all disputes that may be filed in any
court and that relate to the subject matter of this transaction, including
without limitation contract claims, tort claims, breach of duty claims and all
other common law and statutory claims.  Each Maker and, by their
acceptance of this Note, Payee and any subsequent holder of this Note, each
(i) acknowledges that this waiver is a material inducement to enter into a
business relationship, that each has already relied on this waiver in entering
into this relationship, and that each will continue to rely on this waiver in
their related future dealings and (ii) further warrants and represents that
each has reviewed this waiver with its legal counsel and that each knowingly and
voluntarily waives its jury trial rights following consultation with legal
counsel.  THIS WAIVER
IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING,
AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS
OR MODIFICATIONS OF THIS NOTE.  In the event of litigation,
this provision may be filed as a written consent to a trial by the
court.

     

    (i)           Each
Maker hereby waives the benefit of any statute or rule of law or judicial
decision, which would otherwise require that the provisions of this Note be
construed or interpreted most strongly against the party responsible for the
drafting thereof.

     

    (j)           The
obligations of this Note are joint and several obligations of each
Maker.

     

    IN WITNESS WHEREOF, each Maker
has caused this Note to be executed and delivered by its duly authorized officer
as of the day and year and at the place first above written.

     

    
    

     

    
      	 	      
              O2DIESEL
      CORPORATION

               

              By:
      ___________________________

              Title:
      __________________________

              Address:

            
	 	 
	 	      
              O2DIESEL
      FUELS, INC.,

              d/b/a
      O2DIESEL, INC.

               

              By:
      ___________________________

              Title:
      __________________________

              Address:Unassociated Document

    

     

    GUARANTY

     

    In order
to induce Payee to extend credit to Makers pursuant to the Secured Promissory
Note issued jointly and severally by Makers on the date hereof (the “Note”; terms defined therein
and not otherwise defined herein being used herein as therein defined), the
undersigned (“Guarantor”) hereby irrevocably
and unconditionally guaranties, as primary obligor and not merely as surety, the
due and punctual payment in full of all Obligations (as hereinafter defined)
when the same shall become due, whether at stated maturity, by acceleration,
demand or otherwise (including amounts that would become due but for the
operation of the automatic stay under Section 362(a) of the Bankruptcy
Code, 11 U.S.C. § 362(a)).

     

    The term
“Obligations” is used
herein in its most comprehensive sense and includes any and all obligations of
Makers, joint and several, now or hereafter made, incurred or created, whether
absolute or contingent, liquidated or unliquidated, whether due or not due, and
however arising under or in connection with the Note, including those arising
under successive borrowing transactions under the Note which shall either
continue such obligations of Makers or from time to time renew them after they
have been satisfied.

     

    Guarantor
acknowledges that the Obligations are being incurred for and will inure to the
benefit of Guarantor.

     

    Any
interest on any portion of the Obligations that accrues after the commencement
of any proceeding, voluntary or involuntary, involving the bankruptcy,
insolvency, receivership, reorganization, liquidation or arrangement of either
Maker (or, if interest on any portion of the Obligations ceases to accrue by
operation of law by reason of the commencement of said proceeding, such interest
as would have accrued on such portion of the Obligations if said proceeding had
not been commenced) shall be included in the Obligations because it is the
intention of Guarantor and Payee that the Obligations should be determined
without regard to any rule of law or order that may relieve such Maker of any
portion of such Obligations.

     

    In the
event that all or any portion of the Obligations is paid by either Maker, the
obligations of Guarantor hereunder shall continue and remain in full force and
effect or be reinstated, as the case may be, in the event that all or any part
of such payment(s) is rescinded or recovered directly or indirectly from Payee
as a preference, fraudulent transfer or otherwise, and any such payments that
are so rescinded or recovered shall constitute Obligations.

     

    Upon the
failure of Makers to pay any of the Obligations when and as the same shall
become due, Guarantor will upon demand pay, or cause to be paid, in cash, to
Payee an amount equal to the aggregate of the unpaid Obligations.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Guarantor
agrees that its obligations hereunder are irrevocable, absolute, independent and
unconditional and shall not be affected by any circumstance which constitutes a
legal or equitable discharge of a guarantor or surety other than payment in full
of the Obligations.  In furtherance of the foregoing and without
limiting the generality thereof, Guarantor agrees as
follows:  (a) this Guaranty is a guaranty of payment when due and
not of collectibility; (b) Payee may enforce this Guaranty upon the
occurrence of an Event of Default under the Note notwithstanding the existence
of any dispute between either Maker and Payee with respect to the existence of
such event; (c) the obligations of Guarantor hereunder are independent of the
obligations of Makers under the Note and the obligations of any other guarantor
of the obligations of Makers under the Note and a separate action or actions may
be brought and prosecuted against Guarantor whether or not any action is brought
against either Maker or any of such other guarantors and whether or not either
Maker is joined in any such action or actions; (d) Guarantor’s payment of a
portion, but not all, of the Obligations shall in no way limit, affect, modify
or abridge Guarantor’s liability for any portion of the Obligations that has not
been paid; (e) Payee may from time to time, without notice or demand and without
affecting the validity or enforceability of this Guaranty or giving rise to any
limitation, impairment or discharge of Guarantor’s liability hereunder,
(i) renew, extend, accelerate or otherwise change the time, place, manner
or terms of payment of the Obligations, (ii) settle, compromise, release or
discharge, or accept or refuse any offer of performance with respect to, or
substitutions for, the Obligations or any agreement relating thereto and/or
subordinate the payment of the same to the payment of any other obligations,
(iii) request and accept other guaranties of the Obligations and take and
hold security for the payment of this Guaranty or the Obligations,
(iv) release, exchange, compromise, subordinate or modify, with or without
consideration, any security for payment of the Obligations, any other guaranties
of the Obligations, or any other obligation of any Person with respect to the
Obligations, (v) enforce and apply any security now or hereafter held by or
for the benefit of Payee in respect of this Guaranty or the Obligations and
direct the order or manner of sale thereof, or exercise any other right or
remedy that Payee may have against any such security, as Payee in its discretion
may determine consistent with any applicable security agreement, including
foreclosure on any such security pursuant to one or more judicial or nonjudicial
sales, whether or not every aspect of any such sale is commercially reasonable,
and (vi) exercise any other rights available to it under the Note, at law
or in equity; and (f) this Guaranty and the obligations of Guarantor
hereunder shall be valid and enforceable and shall not be subject to any
limitation, impairment or discharge for any reason (other than payment in full
of the Obligations), including without limitation the occurrence of any of the
following, whether or not Guarantor shall have had notice or knowledge of any of
them:  (i) any failure to assert or enforce or agreement not to
assert or enforce, or the stay or enjoining, by order of court, by operation of
law or otherwise, of the exercise or enforcement of, any claim or demand or any
right, power or remedy with respect to the Obligations or any agreement relating
thereto, or with respect to any other guaranty of or security for the payment of
the Obligations, (ii) any waiver, amendment or modification of, or any
consent to departure from, any of the terms or provisions (including without
limitation provisions relating to events of default) of the Note or any
agreement or instrument executed pursuant thereto, or of any other guaranty or
security for the Obligations, (iii) the Obligations, or any agreement
relating thereto, at any time being found to be illegal, invalid or
unenforceable in any respect, (iv) the application of payments received
from any source to the payment of indebtedness other than the Obligations, even
though Payee might have elected to apply such payment to any part or all of the
Obligations, (v) any failure to perfect or continue perfection of a
security interest in any collateral which secures any of the Obligations,
(vi) any defenses, set-offs or counterclaims which either Maker may allege
or assert against Payee in respect of the Obligations, including but not limited
to failure of consideration, breach of warranty, payment, statute of frauds,
statute of limitations, accord and satisfaction and usury, and (vii) any
other act or thing or omission, or delay to do any other act or thing, which may
or might in any manner or to any extent vary the risk of Guarantor as an obligor
in respect of the Obligations.  This Guaranty is a continuing guaranty
and shall be binding upon Guarantor and its successors and assigns, and
Guarantor irrevocably waives any right to revoke this Guaranty as to future
transactions giving rise to any Obligations.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    Guarantor
hereby waives, for the benefit of Payee:  (a) any right to
require Payee, as a condition of payment or performance by Guarantor, to
(i) proceed against either Maker, any other guarantor of the Obligations or
any other Person, (ii) proceed against or exhaust any security held from
either Maker, any other guarantor of the Obligations or any other Person,
(iii) proceed against or have resort to any balance of any deposit account
or credit on the books of Payee in favor of either Maker or any other Person, or
(iv) pursue any other remedy in the power of Payee whatsoever; (b) any
defense arising by reason of the incapacity, lack of authority or any disability
or other defense of either Maker including, without limitation, any defense
based on or arising out of the lack of validity or the unenforceability of the
Obligations or any agreement or instrument relating thereto or by reason of the
cessation of the liability of either or both Makers from any cause other than
payment in full of the Obligations; (c) any defense based upon any statute
or rule of law which provides that the obligation of a surety must be neither
larger in amount nor in other respects more burdensome than that of the
principal; (d) any defense based upon Payee’s errors or omissions in the
administration of the Obligations, except behavior which amounts to bad faith;
(e) (i) any principles or provisions of law, statutory or otherwise,
which are or might be in conflict with the terms of this Guaranty and any legal
or equitable discharge of Guarantor’s obligations hereunder, (ii) the
benefit of any statute of limitations affecting Guarantor’s liability hereunder
or the enforcement hereof, (iii) any rights to set-offs, recoupments and
counterclaims, and (iv) promptness, diligence and any requirement that
Payee protect, secure, perfect or insure any security interest or lien or any
property subject thereto; (f) notices, demands, presentments, protests,
notices of protest, notices of dishonor and notices of any action or inaction,
including acceptance of this Guaranty, notices of default under the Note or any
agreement or instrument related thereto, notices of any renewal, extension or
modification of the Obligations or any agreement related thereto, notices of any
extension of credit to either Maker and notices of any of the matters referred
to in the preceding paragraph and any right to consent to any thereof; and
(g) to the fullest extent permitted by law, any defenses or benefits that
may be derived from or afforded by law which limit the liability of or exonerate
guarantors or sureties, or which may conflict with the terms of this
Guaranty.

     

    Until the
Obligations shall have been paid in full, Guarantor shall withhold exercise of
(a) any claim, right or remedy, direct or indirect, that Guarantor now has
or may hereafter have against either Maker or any of its assets in connection
with this Guaranty or the performance by Guarantor of its obligations hereunder,
in each case whether such claim, right or remedy arises in equity, under
contract, by statute, under common law or otherwise and including without
limitation (i) any right of subrogation, reimbursement or indemnification
that Guarantor now has or may hereafter have against either Maker, (ii) any
right to enforce, or to participate in, any claim, right or remedy that Payee
now has or may hereafter have against either Maker, and (iii) any benefit
of, and any right to participate in, any collateral or security now or hereafter
held by Payee, and (b) any right of contribution Guarantor now has or may
hereafter have against any other guarantor of any of the
Obligations.  Guarantor further agrees that, to the extent the
agreement to withhold the exercise of its rights of subrogation, reimbursement,
indemnification and contribution as set forth herein is found by a court of
competent jurisdiction to be void or voidable for any reason, any rights of
subrogation, reimbursement or indemnification Guarantor may have against either
Maker or against any collateral or security, and any rights of contribution
Guarantor may have against any such other guarantor, shall be junior and
subordinate to any rights Payee may have against either Maker, to all right,
title and interest Payee may have in any such collateral or security, and to any
right Payee may have against such other guarantor.

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    Any
indebtedness of either Maker now or hereafter held by Guarantor is hereby
subordinated in right of payment to the Obligations, and any such indebtedness
of such Maker to Guarantor collected or received by Guarantor after an Event of
Default has occurred and is continuing shall be held in trust for Payee and
shall forthwith be paid over to Payee to be credited and applied against the
Obligations.

     

    Guarantor
agrees to pay, or cause to be paid, on demand, and to save Payee harmless
against liability for, any and all costs and expenses (including fees and
disbursements of counsel) incurred or expended by Payee in connection with the
enforcement of or preservation of any rights under this Guaranty.

     

    It is not
necessary for Payee to inquire into the capacity or powers of Guarantor or
either Maker or the officers, directors or any agents acting or purporting to
act on behalf of any of them.

     

    Payee
shall have no obligation to disclose or discuss with Guarantor its assessment,
or Guarantor’s assessment, of the financial condition of
Maker.  Guarantor has adequate means to obtain information from each
Maker on a continuing basis concerning the financial condition of such Maker and
its ability to perform its obligations under the Note, and Guarantor assumes the
responsibility for being and keeping informed of the financial condition of each
Maker and of all circumstances bearing upon the risk of nonpayment of the
Obligations.  Guarantor hereby waives and relinquishes any duty on the
part of Payee to disclose any matter, fact or thing relating to the business,
operations or conditions of either Maker now known or hereafter known by
Payee.

     

    The
rights, powers and remedies given to Payee by this Guaranty are cumulative and
shall be in addition to and independent of all rights, powers and remedies given
to Payee by virtue of any statute or rule of law or in the Note or any agreement
between Guarantor and Payee or between either Maker and Payee.  Any
forbearance or failure to exercise, and any delay by Payee in exercising, any
right, power or remedy hereunder shall not impair any such right, power or
remedy or be construed to be a waiver thereof, nor shall it preclude the further
exercise of any such right, power or remedy.

     

    Guarantor
hereby represents and warrants to Payee that:  (a) Guarantor is
duly organized, validly existing and in good standing under the laws of Ireland;
(b) Guarantor has the corporate power, authority and legal right to
execute, deliver and perform this Guaranty and has taken all necessary corporate
action to authorize its execution, delivery and performance of this Guaranty;
(c) this Guaranty has been duly executed and delivered by a duly authorized
officer of Guarantor, and this Guaranty constitutes the legally valid and
binding obligation of Guarantor, enforceable against Guarantor in accordance
with its terms, except as enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws or equitable
principles relating to or limiting creditors’ rights generally; and (d) the
execution, delivery and performance of this Guaranty will not violate any
provision of any existing law or regulation binding on Guarantor, or any order,
judgment, award or decree of any court, arbitrator or governmental authority
binding on Guarantor, or the certificate of incorporation or bylaws of Guarantor
or any securities issued by Guarantor, or any mortgage, indenture, lease,
contract or other agreement, instrument or undertaking to which Guarantor is a
party or by which Guarantor or any of its assets may be bound, the violation of
which would have a material adverse effect on the business, operations, assets
or financial condition of Guarantor and will not result in, or require, the
creation or imposition of any lien on any of its property, assets or revenues
pursuant to the provisions of any such mortgage, indenture, lease, contract or
other agreement, instrument or undertaking.

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    This
Guaranty shall inure to the benefit of Payee and its successors and
assigns.  In case any provision in or obligation under this Guaranty
shall be invalid, illegal or unenforceable in any jurisdiction, the validity,
legality and enforceability of the remaining provisions or obligations, or of
such provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.

     

    THIS
GUARANTY AND THE RIGHTS AND OBLIGATIONS OF GUARANTOR AND PAYEE HEREUNDER SHALL
BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES.

     

    ALL JUDICIAL PROCEEDINGS BROUGHT
AGAINST GUARANTOR ARISING OUT OF OR RELATING TO THIS GUARANTY MAY BE BROUGHT IN
ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF DELAWARE,
AND BY EXECUTION AND DELIVERY OF THIS GUARANTY GUARANTOR ACCEPTS FOR ITSELF AND
IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE
NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF
FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED
THEREBY IN CONNECTION WITH THIS GUARANTY.  Guarantor hereby
agrees that service of all process in any such proceeding in any such court may
be made by registered or certified mail, return receipt requested, to Guarantor
at its address set forth below its signature hereto, such service being hereby
acknowledged by Guarantor to be sufficient for personal jurisdiction in any
action against Guarantor in any such court and to be otherwise effective and
binding service in every respect.  Nothing herein shall affect the
right to serve process in any other manner permitted by law or shall limit the
right of Payee to bring proceedings against Guarantor in the courts of any other
jurisdiction.

     

    GUARANTOR AND, BY THEIR ACCEPTANCE OF
THE BENEFITS OF THIS GUARANTY, PAYEE AND ANY SUBSEQUENT HOLDER OF THE NOTE,
HEREBY IRREVOCABLY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS GUARANTY OR ANY
DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS GUARANTY AND THE
GUARANTOR/BENEFICIARY RELATIONSHIP THAT IS BEING
ESTABLISHED.  The scope of this waiver is intended to be
all-encompassing of any and all disputes that may be filed in any court and that
relate to the subject matter of this transaction, including without limitation
contract claims, tort claims, breach of duty claims and all other common law and
statutory claims.  Guarantor and, by their acceptance of the benefits
of this Guaranty, Payee and any subsequent holder of the Note, each
(i) acknowledges that this waiver is a material inducement to enter into a
business relationship, that each has already relied on this waiver in entering
into this Guaranty or making the loan evidenced by the Note, as the case may be,
and that each will continue to rely on this waiver in their related future
dealings, and (ii) further warrants and represents that each has reviewed
this waiver with its legal counsel and that each knowingly and voluntarily
waives its jury trial rights following consultation with legal
counsel.  THIS WAIVER
IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING,
AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS
OR MODIFICATIONS OF THIS GUARANTY.  In the event of litigation,
this provision may be filed as a written consent to a trial by the
court.

     

    This
Guaranty shall become effective as to Guarantor upon the execution hereof by
Guarantor and receipt by Payee of written or telephonic notification of such
execution and authorization of delivery thereof.

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    IN WITNESS WHEREOF, Guarantor
has caused this Guaranty to be executed by its duly authorized officer as of the
date set forth below.

     

    
      	 
      	
              O2
      DIESEL EUROPE PLC

              By:
      ________________________________

              Title:
      _______________________________

              Date:
      _______________________________

              Address:____________________________

              ____________________________

              ____________________________

              Date:
      _______________________________

            

    

    

    

    
      
         

      

      
        6

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