Document:

exv10w17

 

Exhibit 10.17

          This
CONSENT AND AGREEMENT, dated as of September 1, 2006 (this
“Consent”), is entered into
by and among SALT RIVER PROJECT AGRICULTURAL IMPROVEMENT AND POWER
DISTRICT (“SRP”), an Arizona
agricultural improvement district (together with its permitted successors and assigns), COBANK,
ACB, as lender (in its capacity as Administrative Agent under the Credit Agreement described
below), (“Lender”), and SNOWFLAKE WHITE MOUNTAIN POWER, LLC, an Arizona limited liability
company (“Borrower”), SRP, Lender and Borrower may be referred to individually as “Party”
and collectively as “Parties.”

RECITALS

          A. In order to partially finance the development, construction, installation, financing,
operation and maintenance of a power plant located in Snowflake, Arizona (the “Project”)
and the acquisition of certain other assets related thereto, Snowflake White Mountain Power, LLC
(the “Borrower”), Renegy Trucking, LLC, as co-borrower and Renegy, LLC, as co-borrower,
have entered into a Credit Agreement with Lender (the “Credit Agreement”). Borrower and
Lender have also entered into a security agreement (the “Security Agreement”), under which
Borrower has agreed to assign its interest under the Assigned Agreement (as defined below) to
Lender as collateral for the loan under the Credit Agreement.

          B. SRP and Borrower have entered into that certain Second Amended and Restated Renewable
Energy Purchase and Sale Agreement, dated as of August 18, 2006 (as amended, amended and restated,
supplemented or otherwise modified from time to time in accordance with the terms thereof and
hereof, the “Assigned Agreement”).

          C. Pursuant to the Personal Guarantee Agreement, dated as of August 21, 2006 (“Personal
Guarantee Agreement”), SRP and Robert M. Worsley and Christi M. Worsley, whom are providing a
personal guarantee under the Assigned Agreement (the “Personal Guarantors”), have agreed
that the Personal Guarantors shall maintain a net worth of as least $35 million during the term of
the Personal Guarantee Agreement.

AGREEMENT

          NOW, THEREFORE, in consideration of the foregoing, and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, and intending to be
legally bound, the parties hereto hereby agree, notwithstanding anything in the Assigned Agreement
to the contrary, as follows:

     1. Assignment and Agreement.

          1.1 Consent to Assignment. SRP consents to the collateral assignment under the
Security Agreement of all of Borrower’s right, title and interest in, to and under the Assigned
Agreement, including, without limitation, all of Borrower’s rights to receive payment and all
payments due and to become due to Borrower under or with respect to the Assigned Agreement
(collectively, the “Assigned Interests”) and acknowledges the right of Lender, in
exercising its remedies, to exercise all rights of Borrower under the Assigned Agreement.

          1.2 Substitution. SRP agrees that, if Lender notifies SRP in writing that, pursuant to
the Security Agreement, it has succeeded Borrower as the “Seller” under the Assigned Agreement,
then Lender shall be substituted for Borrower under the Assigned Agreement. If Lender proposes a
transfer of its interest in the Assigned Agreement to a prospective purchaser of the Project, such
transfer shall only be made to a Qualified Purchaser. For purposes of this Section 1.2,
“Qualified Purchaser” means an entity that at the time of the transfer (a) has the
financial means to operate and maintain the Project and perform its obligations under the Assigned
Agreement, (b) has, or has entered into contracts for operation of the Project with a person that
has, substantial experience in owning or operating power generation facilities, and (c) has met all
applicable requirements for operating the Project in a manner consistent with all operating
agreements, the requirements of

 

 

the Western Electricity Coordinating Council and any other regulatory schemes that may be in
effect at the time of the transfer. Lender will provide to SRP information as to the
qualifications of potential Qualified
Purchasers, and SRP agrees to respond promptly as to whether it agrees that a particular
such person is a Qualified Purchaser (with the understanding that contracts described in
clause (b) above may not yet have been entered into if a potential purchaser is merely
conducting due diligence, but the nature of the contracts would be described to SRP, and
the further understanding that in such an instance, SRP’s agreement shall be subject to
the provision of evidence satisfactory to SRP that final contracts for operation of the
project have been executed).

     At the time of the transfer the Qualified Purchaser shall have, or shall have
provided a guaranty in form and substance reasonably acceptable to SRP, from a person or
entity (the “Credit Support Provider”) which has (1) a rating of BB- or higher by
S&P and Ba3 or higher by Moody’s for its long term unsecured debt obligations and shall
have provided its (or, as applicable, the Credit Support Provider’s) current audited
annual and most recent unaudited quarterly financial statements to SRP showing a minimum
net worth of $35 million or (2) provided an irrevocable, transferable, standby letter of
credit, in a form acceptable to SRP, from a bank or trust company with a combined capital
and surplus of at least $ 1 billion and whose long-term unsecured senior debt is rated at
least “A-” by S&P and “A3” by Moody’s or (3) such other collateral or security as SRP may
require. The Qualified Purchaser’s obligation under clause (2) above shall be limited to
providing a letter of credit or other collateral or security in an amount equal to the
lesser of (i) a reasonable estimate of the damages that SRP would be entitled to recover
in accordance with Article 8(c) of the Assigned Agreement or (ii) $35 million. Upon the
transfer the Qualified Purchaser shall assume all the rights and obligations of the Seller
under the Assigned Agreement, including but not limited to the Creditworthiness
requirements in Article 15 (j)(ii) and (iii). Upon request of SRP, the Qualified Purchaser
or, as applicable, the Credit Support Provider, shall provide to SRP its annual audited
and quarterly unaudited financial statements showing a minimum net worth of $35 million.

          1.3 Consent to Letter of Credit. SRP agrees that, should the net worth of the
Personal Guarantors fall below $35 million during the term of the Personal Guarantee
Agreement, it shall (i) provide
written notice to Borrower and Lender when such threshold has been breached and (ii) provide
authority for

Lender to cure such breach with a letter of credit issued by or confirmed by an
institution meeting the requirements set forth in
Section 15(j)(i)(1) of the Assigned
Agreement, in a stated amount equal to the difference, at the time of assessment, between
$35 million and the Personal Guarantors’ then current net worth. The assessment of the
amount of the letter of credit adjustment shall, upon request of either SRP or Lender, be
made quarterly, based on the financial information supplied by Borrower to SRP, or if
Borrower has failed to provide such information in a timely manner, any other information
available to or assumptions reasonably made by SRP.

          1.4 Right to Cure. If Borrower defaults in the performance of any of its
obligations under the Assigned Agreement, or upon the occurrence or non-occurrence of any
event or condition under the Assigned Agreement which would immediately or with the
passage of any applicable grace period or the giving of notice, or both, enable SRP to
terminate or suspend its performance under the Assigned Agreement (each hereinafter an
“Event of Default”), SRP shall not terminate or suspend its performance under the Assigned
Agreement until it first gives written notice of such default to Lender and affords Lender
a period of 30 days from receipt of such notice to cure such default. If possession of
the Project is necessary for Lender to cure Borrower’s Event of Default and Lender
commences foreclosure proceedings against Borrower within thirty (30) days of receiving
notice of such Event of Default from SRP, Lender shall be allowed a reasonable additional
period to complete such foreclosure proceedings, such period not to exceed ninety (90)
days. In the event Lender or a Qualified Purchaser succeeds to Borrower’s interest in the
Project, Lender shall cure, or cause Qualified Purchaser to cure, any and all Events of
Default of the Borrower in existence under the Assigned Agreement at the time which are
capable of being cured and which are not personal to the Borrower. If deliveries of
electric power and energy and associated environmental attributes are interrupted during
any of the aforesaid cure periods, Lender shall compensate SRP for the cost of
replacement power as follows. If the amount delivered to SRP from the Project during any
month (or prorated portion thereof) while Lender’s cure rights are being exercised is
less than one twelth (1/12) of the Tier One Minimum Contract Quantity and, if

2

 

applicable, the Tier Two Minimum Contract Quantity, Lender shall promptly reimburse SRP for costs
incurred by SRP to purchase replacement power, including environmental attributes, transaction
costs and fees and any transmission charges imposed on SRP under open access transmission or
similar tariffs, to the extent such costs exceed the applicable purchase price(s) under the
Assigned Agreement.

          Delivery of Notices. SRP shall deliver to Lender any notices required to be given by
SRP to a known Financier pursuant to Section 15(1) of the Assigned Agreement.

     2. Payments under the Assigned Agreement. Borrower has requested and hereby
authorizes and directs and SRP agrees to pay all amounts (if any) payable by it under the Assigned
Agreement in the manner and as and when required by the Assigned Agreement directly into the
account specified from time to time by Lender to SRP in writing. Such payments by SRP shall
satisfy the corresponding payment obligations of SRP to Borrower under the Assigned Agreement. To
the extent that SRP has made payment into the account designated by Lender as provided herein,
Borrower shall indemnify and hold harmless SRP for, from and against any and all claims, demands,
expenses or liabilities for, or associated with, such payments to Borrower under the Assigned
Agreement.

     3. Representations and Warranties. SRP reaffirms as of the date hereof the
representations and warranties made by it in the Assigned Agreement. SRP acknowledges receiving
the letter of Borrower, dated September 6, 2006, wherein Borrower waives the conditions set forth
in Article 1(a) of the PPA, as contemplated by Article 1(b) of the PPA, and that therefore the
termination right described in such Article 1(b) shall not apply.

     4. Miscellaneous.

          4.1 Notices. Any communications between the parties hereto or notices provided herein
to be given may be given to the following addresses:

If to
SRP:

Salt River Project Agricultural Improvement and Power District

Mail Station ISB 669

P.O. Box 52025

Phoenix, Arizona 85072-2025

1600 North Priest Drive

Tempe, Arizona 85281-8100

Facsimile: (602) 236-5469

Telephone: (602) 236-6992

Attention: Manager Resource Planning & Development

If to Lender:

CoBank, ACB

5500 South Quebec Street

Englewood, CO 80111

Facsimile: (303) 224-2590

Telephone: (303) 740-4000

Attention: Dave Willis

     All notices or other communications required or permitted to be given hereunder shall be in
writing and shall be considered as properly given (a) if delivered in person, (b) if sent by
overnight delivery service (including Federal Express, UPS, DHL and other similar overnight
delivery services), (c) in the event overnight delivery services are not readily available, if
mailed by first class United States Mail, postage prepaid, registered

3

 

or certified with return receipt requested, (d) if sent by prepaid telegram or by facsimile or
(e) if sent by other electronic means (including electronic mail) confirmed by facsimile or
telephone. Any party may change its
address for notice hereunder by giving of thirty (30) days’ notice to the other parties in
the manner set forth hereinabove.

          4.2 Counterparts. This Consent may be executed in any number of counterparts
and by the different parties hereto on separate counterparts, each of which when so
executed and delivered shall be an original, but all of which shall together constitute
one and the same instrument.

          4.3 Amendment, Waiver. Neither this Consent nor any of the terms hereof may
be terminated, amended, supplemented, waived or modified except by an instrument in
writing signed by SRP and Lender, which may be effected without Borrower’s consent.

          4.4 Successors and Assigns. This Consent shall bind SRP, Lender, and their
respective successors and assigns and shall bind Borrower and its successors and assigns.
Neither SRP nor Lender may assign its rights or delegate its obligations hereunder without
the consent of Lender or SRP, respectively, such consent not to be unreasonably withheld
or delayed.

          4.5 Governing Law and Venue. THIS CONSENT AND THE RIGHTS AND DUTIES OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED, ENFORCED AND PERFORMED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF ARIZONA WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.
Any legal action brought by any party against any other party pertaining to this Consent
shall be commenced and prosecuted in a state or federal court of proper jurisdiction
located in Maricopa County, Arizona. All parties irrevocably consent to the jurisdiction
of any such court.

          4.6 Waiver of Jury Trial. Each party hereby irrevocably waives any and all rights to
trial by jury with respect to any legal proceeding arising out of or relating to this Consent.

          4.7 Billing and Payment. Any payment required by Lender to SRP hereunder or
under the Assigned Agreement shall be invoiced by SRP and paid by Lender in the same
manner and time provided for billing by Seller and payment by SRP under Article 6 of the
Assigned Agreement.

4

 

          IN WITNESS WHEREOF, the parties hereto, by their officers duly authorized, intending to be
legally bound, have caused this Consent to be duly executed and delivered as of the date first
above written.

	 	 	 	 	 
	 	SNOWFLAKE WHITE MOUNTAIN POWER, LLC,

an Arizona limited liability company,

as Borrower

 	 
	 	By:  	/s/ Robert M. Worsley
 	 
	 	 	Name:  	Robert M. Worsley 	 
	 	 	Title:  	Owner Manager	 
	 	 	Date: 	9/7/06	 
	 
	 	SALT RIVER PROJECT AGRICULTURAL IMPROVEMENT.

AND POWER DISTRICT,

an Arizona agricultural improvement district,

 	 
	 	By:	/s/ Mark B. Bonsall
 	 
	 	 	Name:  	Mark B. Bonsall  	 
	 	 	Title:  	Associate General Manager

	 
	 	 	Date: 	9/7/06	 
	 
	 	COBANK, ACB, as Lender

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  		 
	 	 	Date:<PAGE>
                                                                   Exhibit 10.18

                           PERSONAL GUARANTY AGREEMENT

This Guaranty Agreement (the "Guaranty") is made by Robert M. Worsley and
Christi M. Worsley, husband and wife (collectively "Guarantor"), jointly and
severally, in favor of Salt River Project Agricultural Improvement and Power
District ("Creditor").

     WHEREAS, concurrently with the execution and delivery of this Guaranty,
Snow Flake White Mountain Power, LLC ("Debtor"), and Creditor are entering into
a Second Amended and Restated Renewable Energy Purchase and Sale Agreement dated
August 18, 2006 for the purchase of electric power (the "Transaction"); and

     WHEREAS, Guarantor is principal of Debtor, and Guarantor expect to benefit
as a result of Creditor entering into the Transaction; and

     WHEREAS, Guarantor is entering into this Guaranty as an inducement to
Creditor to enter into the Transaction, with knowledge that Creditor will rely
hereon.

     NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the adequacy, receipt and sufficiency of which are
hereby acknowledged, Guarantor hereby agree as follows:

     1. GUARANTY. Guarantor hereby unconditionally, irrevocably, continuously,
and absolutely guarantees the following (collectively, the "Guaranteed
Obligations"): the punctual payment when due of all sums of money (including any
damages) owed by Debtor to Creditor pursuant to the Transaction and, except to
the extent specifically provided herein or in the Transaction, in no event shall
Guarantor be subject hereunder to any other damages, including, without
limitation, consequential, exemplary, equitable, punitive and tort damages,
costs and expenses or loss of profits.

     2. GUARANTY ABSOLUTE. The liability of Guarantor under this Guaranty shall
be absolute, continuous, and unconditional irrespective of:

          (a)  any lack of validity or enforceability of or defect or deficiency
               in the Transaction or any other documents executed in connection
               with the Transaction;

          (b)  any modification, extension or waiver of any of the terms of the
               Transaction;

          (c)  any change in the time, manner, terms or place of payment of or
               in any other term of, all or any of the Guaranteed Obligations,
               or any other amendment or waiver of or any consent to departure
               from any agreement or instrument executed in connection
               therewith;

          (d)  any sale, exchange, release or non-perfection of any property
               standing as security for the liabilities hereby guaranteed or any
               liabilities incurred directly or indirectly hereunder or any
               setoff against any of said liabilities,

<PAGE>

               or any release or amendment or waiver of or consent to departure
               from any other guaranty, for all or any of the Guaranteed
               Obligations;

          (e)  except as to applicable statutes of limitation, failure,
               omission, delay, waiver or refusal by Creditor to exercise, in
               whole or in part, any right or remedy held by Creditor with
               respect to the Transaction;

          (f)  any change in the existence, structure or ownership of Debtor, or
               any insolvency, bankruptcy, reorganization or other similar
               proceeding affecting Debtor or its assets; or

          (g)  any other circumstance that might otherwise constitute a defense
               available to, or a discharge of, Debtor or any other individual,
               partnership, joint venture, corporation, association, trust or
               other enterprise that is a party to any agreement or instrument
               (including any guarantor) in respect of the Guaranteed
               Obligations, other than payment in full of the Guaranteed
               Obligations.

     3. OBLIGATIONS SEVERAL. This is a guaranty of payment and not of
collection. The obligations of the Guarantor hereunder are several from the
Debtor or any other person, and are primary obligations concerning which the
Guarantor is the principal obligors. There are no conditions precedent to the
enforcement of this Guaranty, except as expressly contained herein, It shall not
be necessary for Creditor, in order to enforce payment by Guarantor under this
Guaranty, to show any proof of Debtor's default, to exhaust its remedies against
Debtor, any other guarantor, or any other person liable for the payment or
performance of the Guaranteed Obligations. Creditor shall not be required to
mitigate damages or take any other action to reduce, collect, or enforce the
Guaranteed Obligations other than under Section 9 hereof.

     4. OBLIGATIONS CONTINUING. This Guaranty shall continue to be effective or
be reinstated, as the case may be, if at any time any payment of any of the
Guaranteed Obligations are annulled, set aside, invalidated, declared to be
fraudulent or preferential, rescinded or must otherwise be returned, refunded or
repaid by Creditor upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of Debtor or any other guarantor, or upon or as a result of the
appointment of a receiver, intervener or conservator of, or trustee or similar
officer for, Debtor or any other guarantor or any substantial part of its
property or otherwise, all as though such payment or payments had not been made.

     5. WAIVER. Guarantor hereby waives:

          (a)  A.R.S. 12-1641 et seq

          (b)  notice of acceptance of this Guaranty, of the creation or
               existence of any of the Guaranteed Obligations and of any action
               by Creditor in reliance hereon or in connection herewith;

          (c)  except as expressly set forth herein, presentment, demand for
               payment, notice of dishonor or nonpayment, protest and notice of
               protest with respect to the Guaranteed Obligations; and

<PAGE>

          (d)  any requirement that suit be brought against, or any other action
               by Creditor be taken against, or any notice of default or other
               notice be given to, or any demand be made on, Debtor or any other
               person, or that any other action be taken or not taken as a
               condition to Guarantor's liability for the Guaranteed Obligations
               under this Guaranty or as a condition to the enforcement of this
               Guaranty against Guarantors.

     6. EXPENSES. Notwithstanding and in addition to the limit on Guarantor's
liability hereunder set forth in Section 1, Guarantor agrees to pay on demand
any and all costs, including reasonable legal fees, and other expenses incurred
by Creditor in enforcing Guarantor's obligations under this Guaranty; provided
that the Guarantor shall not be liable for any expenses of Creditor if no
payment under this Guaranty is due.

     7. SUBROGATION. Guarantor shall be subrogated to all rights of Creditor
against Debtor in respect of any amounts paid by Guarantor pursuant to the
Guaranty, provided that Guarantor waives any rights they may acquire by way of
subrogation under this Guaranty, by any payment made hereunder or otherwise,
until all of the Guaranteed Obligations shall have been irrevocably paid to
Creditor in full. If any amount shall be paid to the Guarantor on account of
such subrogation rights at any time when all the Guaranteed Obligations shall
not have been paid in full, such amount shall be held in trust for the benefit
of Creditor and shall forthwith be paid to Creditor to be applied to the
Guaranteed Obligations. If (a) the Guarantor shall perform and shall make
payment to Creditor of all or any part of the Guaranteed Obligations and (b) all
the Guaranteed Obligations shall have been paid in full, Creditor shall, at the
Guarantor's request, execute and deliver to the Guarantor appropriate documents
necessary to evidence the transfer by subrogation to the Guarantor of any
interest in the Guaranteed Obligations resulting from such payment by Guarantor.

     8. NOTICES. All demands, notices and other communications provided for
hereunder shall, unless otherwise specifically provided herein, (a) be in
writing addressed to the party receiving the notice at the address set forth
below or at such other address as may be designated by written notice, from time
to time, to the other party, and (b) be effective upon delivery, when mailed by
U.S. mail, registered or certified, return receipt requested, postage prepaid,
or personally delivered. Notices shall be sent to the following addresses:

          If to Creditor:

          Physical Address: 1600 N. Priest, Tempe, Arizona 85281-8100
          Mailing Address: P.O. Box 52025, Phoenix, AZ 85072-2025
          Attention: MS ISB252, Energy Risk Management Department
          Facsimile No.: (602) 236-4580
          Telephone No.: (602) 236-2329

<PAGE>

          With a copy to:

          Physical Address: 1521 N. Project Drive, Tempe, Arizona 85281
          Mailing Address: P.O. Box 52025, Phoenix, AZ 85072-2025
          Attention: Corporate Secretary
          Facsimile No.: (602) 236-2188
          Telephone No.: (602) 236-5505

          If to Guarantor:

          Robert M. Worsley
          Christi M. Worsley
          [on file with company]
          Attention: Robert M. Worsley
          Telephone: [on file with company]
          Facsimile:[on file with company]

          If to Debtor:

          Snowflake White Mountain Power, LLC 3514
          [on file with company]
          Attention: Robert M. Worsley
          Telephone: [on file with company]
          Facsimile: [on file with company]

     9. DEMAND AND PAYMENT. Any demand by Creditor for payment hereunder shall
be in writing, signed by a duly authorized officer of Creditor and delivered to
the Guarantor pursuant to Section 9 hereof, and shall, if applicable, (a)
reference this Guaranty, (b) specifically identify the Debtor, the Guaranteed
Obligations to be paid or performed and the amount of such Guaranteed
Obligations and (c) set forth payment instructions. There are no other
requirements of notice, presentment or demand. Guarantor shall payor perform, or
cause to be paid or performed, such Guaranteed Obligations within three (3)
business days of receipt of such demand.

     10. REPORTING. Guarantor shall furnish to Creditor's Energy Risk Management
Department the following:

          (a)  Within ninety (90) days after the end of each Fiscal Year during
               the term of this Guaranty, a signed, independent report prepared
               by a licensed certified public accountant verifying the
               reasonableness of the methods used to calculate the values
               represented in personal financial statements of Guarantor as of
               the end of the immediately preceding Fiscal Year along with
               copies of supporting documents (bank statements, property tax

<PAGE>

               records, lease agreements, etc.) used in the calculation of the
               values reflected in such financial statements.

          (b)  Within sixty (60) days after the end of the first, second and
               third Fiscal Quarters of each Fiscal Year during the term of this
               Guaranty, a copy of the personal financial statement of Guarantor
               as of the end of the immediately preceding Fiscal Quarter.

          The term "Fiscal Quarter" as used in this Section 10 shall mean each
          of the three- month periods ending on March 31, June 30, September 30
          and December 31 of each year.

          The term "Fiscal Year" as used in this Section 10 shall mean the
          twelve-month period beginning on January 1 and ending on December 31
          of each year.

     11. CREDITWORTHINESS. For purposes of Section 15(j)(ii) of the Transaction,
the term "Minimum Net Worth Amount" shall mean $35,000,000. In addition to the
reporting requirements in Section 10 above, with regard to monitoring
Guarantor's "Minimum Net Worth Amount", Creditor may, based on reasonably
exercised discretion, require Guarantor to provide a signed, independent report
prepared by a licensed certified public accountant verifying the reasonableness
of the methods used to calculate the values reflected in the Fiscal Quarter
personal financial statements along with copies of supporting documents (bank
statements, property tax records, lease agreements, etc.) used in the
calculation of the values reflected in such financial statements. The signed,
independent report is due to Creditor within 30 days after request.

     12. NO WAIVER; REMEDIES. Except as to applicable statutes of limitation, no
failure on the part of Creditor to exercise, and no delay in exercising, any
right hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any right hereunder preclude any other or further exercise
thereof or the exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.

     13. TERM: TERMINATION. This Guaranty shall continue in full force and
effect until the Termination Date (as defined in the Transaction); provided,
however, that the obligations and liabilities of Guarantor hereunder shall
continue in full force and effect with respect to any breach of its obligations
hereunder or of the Guaranteed Obligations, in each case occurring prior to the
Termination Date. Creditor agrees that if Seller has fulfilled its obligations
under the Transaction for a period of two (2) years following the commercial
operation date of the Project (as defined in the Transaction) Creditor will, as
soon as reasonably practicable following such two (2) year anniversary, engage
in good faith negotiations with Guarantor regarding determination of the amount
and! or need for this Guaranty.

     14. SUCCESSORS AND ASSIGNS. This Guaranty shall be binding upon and inure
to the benefit of the parties hereto and their respective heirs, successors,
assigns, and legal representatives.

<PAGE>

     15. AMENDMENTS, ETC. No amendment of this Guaranty shall be effective
unless in writing and signed by Guarantor and Creditor. No waiver of any
provision of this Guaranty nor I consent to any departure by Guarantor therefrom
shall in any event be effective unless such waiver shall be in writing and
signed by Creditor. Any such waiver shall be effective only in the specific
instance and for the specific purpose for which it was given.

     16. CAPTIONS. The captions in this Guaranty have been inserted for
convenience only and shall be given no substantive meaning or significance
whatsoever in construing the terms and provisions of this Guaranty.

     17. REPRESENTATION AND WARRANTIES. The Guarantor represents and warrants
that this Guaranty constitutes the legal, valid and binding obligation of the
Guarantor enforceable against Guarantor in accordance with its terms, subject,
as to enforcement, to bankruptcy, insolvency and other laws of general
applicability relating to or affecting the rights of creditors and to general
equity principles.

     18. LIMITATION BY LAW. All rights, remedies and powers provided in this
Guaranty may be exercised only to the extent that the exercise thereof does not
violate any applicable provision of law, and all the provisions of this Guaranty
are intended to be subject to all applicable mandatory provisions of law that
may be controlling and to be limited to the extent necessary so that they will
not render this Guaranty invalid, unenforceable, in whole or in part, or not
entitled to be recorded, registered or filed under the provisions of any
applicable law. In the event that any provision of this Guaranty is held to be
invalid or unenforceable in whole or in part by any court of competent
jurisdiction, the remainder hereof shall continue in full force and effect, and
the affected provision shall be enforced to the extent permitted by law.

     19. GOVERNING LAW. THIS GUARANTY IS MADE UNDER AND SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ARIZONA, EXCLUSIVE OF ANY
CONFLICT OF LAWS AND PROVISIONS THAT WOULD APPLY TO THE LAWS OF ANOTHER
JURISDICTION.

     20. WAIVER OF JURY TRIAL. EACH PARTY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY SUIT, ACTION, CLAIM OR PROCEEDING RELATING TO THIS AGREEMENT.

     21. Entire Agreement. This Guaranty constitutes the entire agreement among
the parties and supersedes all prior and contemporaneous agreements and
understandings of the parties with respect to the subject matter hereof.

     22. Guarantor Acknowledgments. Guarantor acknowledges that (i) they have
been advised by counsel in the negotiations, execution, and delivery of this
Guaranty, and (ii) Creditor has no fiduciary relationship to Guarantor, the
relationship being solely that of Debtor and Creditor.

<PAGE>

IN WITNESS WHEREOF, Guarantor have caused this Guaranty to be duly executed and
delivered by its duly authorized officer effective as of this 21st day of
August, 2006.

By: /s/ Robert M. Worsley
    ---------------------------------
    Robert M. Worsley

By: /s/ Christi M. Worsley
    ---------------------------------
    Christi M. Worsley

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00132-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00132-of-00352.parquet"}]]