EXHIBIT 10.5
GUARANTY
(TRUSTEE)
THIS GUARANTY ("GUARANTY") is made as of the 15th day of June, 1998, by
Guarantor (as hereinafter defined) for the benefit of Lender (as hereinafter
defined).
1. DEFINITIONS. As used in this Guaranty, the following terms shall
have the meanings indicated below:
(a) The term "LENDER" shall mean Canmax Telecom, Inc., a Texas
corporation, whose address for notice purposes is the following:
c/o Canmax Inc.
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
(b) The term "BORROWER" shall mean USCommunication Services, Inc., a
Delaware corporation.
(c) The term "GUARANTEED INDEBTEDNESS" shall mean (i) all
indebtedness, obligations and liabilities of Borrower to Lender arising
under any of the Loan Documents whether joint, several or joint and
several, and (ii) all accrued but unpaid interest on any of the
indebtedness described in (i) above, (iii) all costs and expenses incurred
by Lender in connection with the collection and administration of all or
any part of the indebtedness and obligations described in (i) and (ii)
above or the protection or preservation of, or realization upon, the
collateral securing all or any part of such indebtedness and obligations,
including without limitation all reasonable attorneys' fees, and (iv) all
renewals, extensions, modifications and rearrangements of the indebtedness
and obligations described in (i), (ii) and (iii) above.
(d) The term "GUARANTOR" shall mean ▇▇▇▇ ▇▇▇▇▇▇▇▇, trustee of the
voting trust created under agreement dated May 1, 1997 and amended on
December 1, 1997 and January 30, 1998, whose address for notice purposes is
the following:
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(e) The term "LOAN DOCUMENTS" shall mean (i) that certain Restated
Promissory Note of even date herewith executed by Borrower payable to the
order of Lender in the original principal amount of $724,660 bearing
interest and payable as provided therein, (ii) that certain Restated
Security Agreement of even date herewith executed by Borrower for the
benefit of Lender securing, among other items, the repayment of the
Promissory Note, (iii) the Rescission Agreement, (iv) the Pledge Agreement
executed by Guarantor to secure the obligations hereunder, and (v) all
other obligations of Borrower to Lender under any other documents
evidencing, securing and/or pertaining to the Guaranteed Indebtedness.
(f) The term "RESCISSION AGREEMENT" shall mean that certain
Rescission Agreement of even date herewith among Canmax, Inc., Borrower,
Lender, Guarantor, ▇▇▇▇▇ ▇'▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇.
2. OBLIGATIONS. As an inducement to Lender to consummate the
rescission of the transactions described in the Rescission Agreement,
Guarantor, for value received, does hereby unconditionally and absolutely
guarantee on a non-recourse basis the prompt and full payment and performance
of the Guaranteed Indebtedness when due or declared to be due and at all
times thereafter.
3. CHARACTER OF OBLIGATIONS. This is an absolute, continuing and
unconditional guaranty of payment on a non-recourse basis and not of
collection. All Guaranteed Indebtedness heretofore or concurrently herewith
made by Lender to Borrower shall be conclusively presumed to have been made
or acquired in acceptance hereof.
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Guarantor shall be liable, jointly and severally, with Borrower and any other
guarantor of all or any part of the Guaranteed Indebtedness.
4. REPRESENTATIONS AND WARRANTIES. Guarantor hereby represents and
warrants the following to Lender:
(a) Guarantor is a shareholder of Borrower and as such, this Guaranty
may reasonably be expected to benefit, directly or indirectly, Guarantor;
and
(b) Guarantor is familiar with, and has independently reviewed the
books and records regarding, the financial condition of Borrower and is
familiar with the value of any and all collateral intended to be security
for the payment of all or any part of the Guaranteed Indebtedness;
provided, however, Guarantor is not relying on such financial condition or
collateral as an inducement to enter into this Guaranty; and
(c) Guarantor has adequate means to obtain from Borrower on a
continuing basis information concerning the financial condition of Borrower
and Guarantor is not relying on Lender to provide such information to
Guarantor either now or in the future; and
(d) Guarantor has the power and authority to execute, deliver and
perform this Guaranty and any other agreements executed by Guarantor
contemporaneously herewith, and the execution, delivery and performance of
this Guaranty and any other agreements executed by Guarantor
contemporaneously herewith do not and will not violate (i) any agreement or
instrument to which Guarantor is a party, (ii) any law, rule, regulation or
order of any governmental authority to which Guarantor is subject, or
(iii) its articles or certificate of incorporation or bylaws, if Guarantor
is a corporation, or its partnership agreement, if Guarantor is a
partnership; and
(e) Neither Lender nor any other party has made any representation,
warranty or statement to Guarantor in order to induce Guarantor to execute
this Guaranty; and
(f) The financial statements and other financial information
regarding Guarantor heretofore and hereafter delivered to Lender are and
shall be true and correct in all material respects and fairly present the
financial position of Guarantor as of the dates thereof, and no material
adverse change has occurred in the financial condition of Guarantor
reflected in the financial statements and other financial information
regarding Guarantor heretofore delivered to Lender since the date of the
last statement thereof; and
(g) As of the date hereof, and after giving effect to this Guaranty
and the obligations evidenced hereby, (i) Guarantor is and will be solvent,
(ii) the fair saleable value of Guarantor's assets exceeds and will
continue to exceed its liabilities (both fixed and contingent), (iii)
Guarantor is and will continue to be able to pay its debts as they mature,
and (iv) if Guarantor is not an individual, Guarantor has and will continue
to have sufficient capital to carry on its business and all businesses in
which it is about to engage.
5. COVENANTS. Guarantor hereby covenants and agrees with Lender as
follows:
(a) Guarantor shall not, so long as its obligations under this
Guaranty continue, transfer or pledge any material portion of its assets
for less than full and adequate consideration; and
(b) Guarantor shall promptly furnish to Lender at any time and from
time to time such financial statements and other financial information of
Guarantor as the Lender may require, in form and substance satisfactory to
Lender; and
(c) Guarantor shall comply with all terms and provisions of the Loan
Documents that apply to Guarantor; and
(d) Guarantor shall promptly inform Lender of (i) any litigation or
governmental investigation against Guarantor or affecting any security for
all or any part of the Guaranteed Indebtedness
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or this Guaranty which, if determined adversely, might have a material
adverse effect upon the financial condition of Guarantor or upon such
security or might cause a default under any of the Loan Documents, (ii) any
claim or controversy which might become the subject of such litigation or
governmental investigation, and (iii) any material adverse change in the
financial condition of Guarantor.
6. CONSENT AND WAIVER.
(a) Guarantor waives (i) promptness, diligence and notice of
acceptance of this Guaranty and notice of the incurring of any obligation,
indebtedness or liability to which this Guaranty applies or may apply and
waives presentment for payment, notice of nonpayment, protest, demand,
notice of protest, notice of intent to accelerate, notice of acceleration,
notice of dishonor, diligence in enforcement and indulgences of every kind,
and (ii) the taking of any other action by Lender, including without
limitation, giving any notice of default or any other notice to, or making
any demand on, Borrower, any other guarantor of all or any part of the
Guaranteed Indebtedness or any other party.
(b) Guarantor waives any rights Guarantor has under, or any
requirements imposed by, Chapter 34 of the Texas Business and Commerce
Code, as in effect on the date of this Guaranty or as it may be amended
from time to time.
(c) Lender may at any time, without the consent of or notice to
Guarantor, without incurring responsibility to Guarantor and without
impairing, releasing, reducing or affecting the obligations of Guarantor
hereunder: (i) change the manner, place or terms of payment of all or any
part of the Guaranteed Indebtedness, or renew, extend, modify, rearrange or
alter all or any part of the Guaranteed Indebtedness; (ii) change the
interest rate accruing on any of the Guaranteed Indebtedness (including,
without limitation, any periodic change in such interest rate that occurs
because such Guaranteed Indebtedness accrues interest at a variable rate
which may fluctuate from time to time); (iii) sell, exchange, release,
surrender, subordinate, realize upon or otherwise deal with in any manner
and in any order any collateral for all or any part of the Guaranteed
Indebtedness or this Guaranty or setoff against all or any part of the
Guaranteed Indebtedness; (iv) neglect, delay, omit, fail or refuse to take
or prosecute any action for the collection of all or any part of the
Guaranteed Indebtedness or this Guaranty or to take or prosecute any action
in connection with any of the Loan Documents; (v) exercise or refrain from
exercising any rights against Borrower or others, or otherwise act or
refrain from acting; (vi) settle or compromise all or any part of the
Guaranteed Indebtedness and subordinate the payment of all or any part of
the Guaranteed Indebtedness to the payment of any obligations, indebtedness
or liabilities which may be due or become due to Lender or others;
(vii) apply any deposit balance, fund, payment, collections through process
of law or otherwise or other collateral of Borrower to the satisfaction and
liquidation of the indebtedness or obligations of Borrower to Lender, if
any, not guaranteed under this Guaranty pursuant to Section 10 herein; and
(viii) apply any sums paid to Lender by Guarantor, Borrower or others to
the Guaranteed Indebtedness in such order and manner as Lender, in its sole
discretion, may determine.
(d) Should Lender seek to enforce the obligations of Guarantor
hereunder by action in any court or otherwise, Guarantor waives any
requirement, substantive or procedural, that (i) Lender first enforce any
rights or remedies against Borrower or any other person or entity liable to
Lender for all or any part of the Guaranteed Indebtedness, including
without limitation that a judgment first be rendered against Borrower or
any other person or entity, or that Borrower or any other person or entity
should be joined in such cause, or (ii) Lender shall first enforce rights
against any collateral which shall ever have been given to secure all or
any part of the Guaranteed Indebtedness or this Guaranty. Such waiver
shall be without prejudice to Lender's right, at its option, to proceed
against Borrower or any other person or entity, whether by separate action
or by joinder.
(e) In addition to any other waivers, agreements and covenants of
Guarantor set forth herein, Guarantor hereby further waives and releases
all claims, causes of action, defenses and offsets for any act or omission
of Lender, its directors, officers, employees, representatives or agents in
connection with Lender's administration of the Guaranteed Indebtedness,
except for Lender's willful misconduct and gross negligence.
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7. OBLIGATIONS NOT IMPAIRED.
(a) Guarantor agrees that its obligations hereunder shall not be
released, diminished, impaired, reduced or affected by the occurrence of
any one or more of the following events: (i) the death, disability or lack
of corporate power of Borrower, Guarantor (except as provided in paragraph
11 herein) or any other guarantor of all or any part of the Guaranteed
Indebtedness, (ii) any receivership, insolvency, bankruptcy or other
proceedings affecting Borrower, Guarantor or any other guarantor of all or
any part of the Guaranteed Indebtedness, or any of their respective
property; (iii) the partial or total release or discharge of Borrower or
any other guarantor of all or any part of the Guaranteed Indebtedness, or
any other person or entity from the performance of any obligation contained
in any instrument or agreement evidencing, governing or securing all or any
part of the Guaranteed Indebtedness, whether occurring by reason of law or
otherwise; (iv) the taking or accepting of any collateral for all or any
part of the Guaranteed Indebtedness or this Guaranty; (v) the taking or
accepting of any other guaranty for all or any part of the Guaranteed
Indebtedness; (vi) any failure by Lender to acquire, perfect or continue
any lien or security interest on collateral securing all or any part of the
Guaranteed Indebtedness or this Guaranty; (vii) the impairment of any
collateral securing all or any part of the Guaranteed Indebtedness or this
Guaranty; (viii) any failure by Lender to sell any collateral securing all
or any part of the Guaranteed Indebtedness or this Guaranty in a
commercially reasonable manner or as otherwise required by law; (ix) any
invalidity or unenforceability of or defect or deficiency in any of the
Loan Documents; or (x) any other circumstance which might otherwise
constitute a defense available to, or discharge of, Borrower or any other
guarantor of all or any part of the Guaranteed Indebtedness.
(b) This Guaranty shall continue to be effective or be reinstated, as
the case may be, if at any time any payment of all or any part of the
Guaranteed Indebtedness is rescinded or must otherwise be returned by
Lender upon the insolvency, bankruptcy or reorganization of Borrower,
Guarantor, any other guarantor of all or any part of the Guaranteed
Indebtedness, or otherwise, all as though such payment had not been made.
(c) In the event Borrower is a corporation, joint stock association
or partnership, or is hereafter incorporated, none of the following shall
affect Guarantor's liability hereunder: (i) the unenforceability of all or
any part of the Guaranteed Indebtedness against Borrower by reason of the
fact that the Guaranteed Indebtedness exceeds the amount permitted by law;
(ii) the act of creating all or any part of the Guaranteed Indebtedness is
ultra ▇▇▇▇▇; or (iii) the officers or partners creating all or any part of
the Guaranteed Indebtedness acted in excess of their authority. Guarantor
hereby acknowledges that withdrawal from, or termination of, any ownership
interest in Borrower now or hereafter owned or held by Guarantor shall not
alter, affect or in any way limit the obligations of Guarantor hereunder.
8. ACTIONS AGAINST GUARANTOR. In the event of a default in the
payment or performance of all or any part of the Guaranteed Indebtedness when
such Guaranteed Indebtedness becomes due, whether by its terms, by
acceleration or otherwise, Guarantor shall, without notice or demand,
promptly pay the amount due thereon to Lender, in lawful money of the United
States, at Lender's address set forth in subparagraph 1(a) above, subject to
the non-recourse limitations set forth in Section 25 hereof. One or more
successive or concurrent actions may be brought against Guarantor, either in
the same action in which Borrower is sued or in separate actions, as often as
Lender deems advisable. The exercise by Lender of any right or remedy under
this Guaranty or under any other agreement or instrument, at law, in equity
or otherwise, shall not preclude concurrent or subsequent exercise of any
other right or remedy. The books and records of Lender shall be admissible
in evidence in any action or proceeding involving this Guaranty and shall be
PRIMA FACIE evidence of the payments made on, and the outstanding balance of,
the Guaranteed Indebtedness.
9. PAYMENT BY GUARANTOR. Whenever Guarantor pays any sum which is or
may become due under this Guaranty, written notice must be delivered to
Lender contemporaneously with such payment. Such notice shall be effective
for purposes of this paragraph when contemporaneously with such payment
Lender receives such notice either by: (a) personal delivery to the address
and designated department of Lender identified in subparagraph 1(a) above, or
(b) United States mail, certified or registered, return receipt requested,
postage prepaid, addressed to Lender at the address shown in subparagraph
1(a) above. In the absence of such notice to Lender by Guarantor in
compliance with the provisions hereof, any sum received by Lender on account
of the Guaranteed Indebtedness shall be conclusively deemed paid by Borrower.
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10. DEATH OF GUARANTOR. In the event of the death of Guarantor, any
duly authorized representative of the estate of Guarantor may revoke
Guarantor's future obligations under this Guaranty by giving Lender written
notice of Guarantor's death and that the estate of Guarantor shall not be
liable hereunder for any indebtedness or obligations of Borrower incurred on
or after the effective date of such revocation. Such revocation shall be
deemed to be effective on the day following the day Lender receives such
notice delivered either by: (a) personal delivery to the address and
designated department of Lender identified in subparagraph 1(a) above, or (b)
United States mail, registered or certified, return receipt requested,
postage prepaid, addressed to Lender at the address shown in subparagraph
1(a) above. Notwithstanding such revocation, the obligations of the deceased
Guarantor shall continue as an obligation against his estate as to (x) all of
the Guaranteed Indebtedness that is outstanding on the effective date of such
revocation, and any renewals or extensions thereof, and (y) all loans,
advances and other extensions of credit made to or for the account of
Borrower on or after the effective date of such revocation pursuant to an
obligation of Lender under a commitment or agreement made to or with Borrower
prior to the effective date of such revocation. The terms and conditions of
this Guaranty, including without limitation the consents and waivers set
forth in Section 6 hereof, shall remain in effect with respect to the
Guaranteed Indebtedness described in the preceding sentence in the same
manner as if such revocation had not been made.
11. NOTICE OF SALE. In the event that Guarantor is entitled to receive
any notice under the Uniform Commercial Code, as it exists in the state
governing any such notice, of the sale or other disposition of any collateral
securing all or any part of the Guaranteed Indebtedness or this Guaranty,
reasonable notice shall be deemed given when such notice is deposited in the
United States mail, postage prepaid, at the address for Guarantor set forth
in subparagraph 1(d) above, five (5) days prior to the date any public sale,
or after which any private sale, of any such collateral is to be held;
PROVIDED, HOWEVER, that notice given in any other reasonable manner or at any
other reasonable time shall be sufficient.
12. WAIVER BY LENDER. No delay on the part of Lender in exercising any
right hereunder or failure to exercise the same shall operate as a waiver of
such right. In no event shall any waiver of the provisions of this Guaranty
be effective unless the same be in writing and signed by an officer of
Lender, and then only in the specific instance and for the purpose given.
13. SUCCESSORS AND ASSIGNS. This Guaranty is for the benefit of
Lender, its successors and assigns. This Guaranty is binding upon Guarantor
and Guarantor's heirs, executors, administrators, personal representatives
and successors, including without limitation any person or entity obligated
by operation of law upon the reorganization, merger, consolidation or other
change in the organizational structure of Guarantor.
14. COSTS AND EXPENSES. Guarantor shall pay on demand by Lender all
costs and expenses, including without limitation, all reasonable attorneys'
fees incurred by Lender in connection with the preparation, administration,
enforcement and/or collection of this Guaranty. This covenant shall survive
the payment of the Guaranteed Indebtedness.
15. SEVERABILITY. If any provision of this Guaranty is held by a court
of competent jurisdiction to be illegal, invalid or unenforceable under
present or future laws, such provision shall be fully severable, shall not
impair or invalidate the remainder of this Guaranty and the effect thereof
shall be confined to the provision held to be illegal, invalid or
unenforceable.
16. NO OBLIGATION. Nothing contained herein shall be construed as an
obligation on the part of Lender to extend or continue to extend credit to
Borrower.
17. AMENDMENT. No modification or amendment of any provision of this
Guaranty, nor consent to any departure by Guarantor therefrom, shall be
effective unless the same shall be in writing and signed by an officer of
Lender, and then shall be effective only in the specific instance and for the
purpose for which given.
18. CUMULATIVE RIGHTS. All rights and remedies of Lender hereunder are
cumulative of each other and of every other right or remedy which Lender may
otherwise have at law or in equity or under any instrument or agreement, and
the exercise of one or more of such rights or remedies shall not prejudice or
impair the concurrent or subsequent exercise of any other rights or remedies.
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19. GOVERNING LAW. THIS GUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND APPLICABLE FEDERAL LAWS.
20. VENUE. This Guaranty has been entered into in the county in Texas
where Lender's address for notice purposes is located, and it shall be
performable for all purposes in such county. Courts within the State of
Texas shall have jurisdiction over any and all disputes arising under or
pertaining to this Guaranty and venue for any such disputes shall be in the
county or judicial district where the Lender's address for notice purposes is
located.
21. COMPLIANCE WITH APPLICABLE USURY LAWS. Notwithstanding any other
provision of this Guaranty or of any instrument or agreement evidencing,
governing or securing all or any part of the Guaranteed Indebtedness,
Guarantor and Lender by its acceptance hereof agree that Guarantor shall
never be required or obligated to pay interest in excess of the maximum
nonusurious interest rate as may be authorized by applicable law for the
written contracts which constitute the Guaranteed Indebtedness. It is the
intention of Guarantor and Lender to conform strictly to the applicable laws
which limit interest rates, and any of the aforesaid contracts for interest,
if and to the extent payable by Guarantor, shall be held to be subject to
reduction to the maximum nonusurious interest rate allowed under said law.
22. DESCRIPTIVE HEADINGS. The headings in this Guaranty are for
convenience only and shall not define or limit the provisions hereof.
23. GENDER. Within this Guaranty, words of any gender shall be held
and construed to include the other gender.
24. ENTIRE AGREEMENT. This Guaranty contains the entire agreement
between Guarantor and Lender regarding the subject matter hereof and
supersedes all prior written and oral agreements and understandings, if any,
regarding same; provided, however, this Guaranty is in addition to and does
not replace, cancel, modify or affect any other guaranty of Guarantor now or
hereafter held by Lender that relates to Borrower or any other person or
entity.
25. NON-RECOURSE LIMITATIONS. Notwithstanding anything to the contrary
contained herein, Lender acknowledges and agrees that its sole recourse
against Guarantor for the non-payment or non-performance of any of the
Guaranteed Indebtedness shall be limited to the collateral pledged Lender
pursuant to the terms of the Pledge Agreement, and that Guarantor's
obligations hereunder may be fully discharged upon Guarantor's delivery of
such collateral to Lender.
EXECUTED as of the date first above written.
GUARANTOR:
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
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▇▇▇▇ ▇▇▇▇▇▇▇▇, Trustee of the voting
trust created under agreement dated
May 1, 1997 and amended December 1, 1997
and January 30, 1998
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