EXHIBIT 10.11
GUARANTY AND SUBORDINATION
--------------------------
(Term Loan)
This GUARANTY AND SUBORDINATION ("Guaranty") is made as of the 29th
day of December, 1994, by CPS SYSTEMS, INC., a Texas Corporation ("Guarantor"),
in favor of GREYHOUND FINANCIAL CORPORATION, a Delaware corporation ("Lender").
R E C I T A L S:
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A. Lender has to made to CPS Acquisition Corp., a Georgia corporation
("Borrower"), pursuant to a Term Loan Agreement of even date herewith (as from
time to time renewed, amended, restated or replaced, the "Term Loan Agreement")
a term loan in a principal amount of One Million Five Hundred Thousand Dollars
($1,500,000) ("Term Loan"). The Term Loan will be evidenced by a promissory note
in the original face amount up to One Million Five Hundred Thousand Dollars
($1,500,000) (as from time to time renewed, amended, restated or replaced, "Term
Loan Note").
B. The Term Loan Agreement, the Term Loan Note, and all other
documents now or hereafter executed in connection with the Term Loan are
hereinafter referred to as the "Term Loan Documents".
C. In order to induce Lender to make the Term Loan, Guarantor has
agreed to execute and deliver this Guaranty. Lender has agreed to make the Term
Loan only if the Guaranty is executed by Guarantor and delivered to Lender.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Guarantor hereby unconditionally
covenants and agrees as follows:
ARTICLE 1
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GUARANTY
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1.1 Guarantor absolutely, unconditionally, irrevocably, and jointly
and severally guarantees the full, prompt, complete and faithful performance,
payment, observance and fulfillment by Borrower of all the obligations,
covenants and conditions of the Term Loan Documents (collectively
"Obligations"), including, but not limited to, the payment when due of any and
all sums that may become due to Lender from Borrower under the Term Loan
Documents. Guarantor further agrees to pay all expenses (including reasonable
attorneys' fees and legal expenses) incurred by Lender in endeavoring to collect
or secure performance of all or any part of the Obligations or in enforcing this
Guaranty.
1.2 Guarantor hereby covenants and agrees unconditionally that within
(a) five (5) days of the receipt of written notice from or on behalf of Lender
to the effect that there exists a breach or default of the Obligations which
Borrower has failed to pay or perform or (b) such unexpired grace period, if
any, as Borrower may then have under the Term Loan Documents to cure the breach
or default before it becomes an Event of Default (as defined in the Term Loan
Documents), which ever period is longer, Guarantor will pay the entire unpaid
amount thereof to Lender at its offices at Dial Corporate Center, Dial Tower,
Phoenix, Arizona 85077 or such other address as Lender may by notice direct or
will provide Lender with evidence of the performance of the Obligations which
Borrower has failed to perform. If Guarantor fails to pay any sums properly due
Lender hereunder within the period applicable pursuant to terms of the preceding
sentence, then, as to Guarantor, such sums shall bear interest at the Default
Rate (as defined in the Term Loan Agreement), in lieu of the interest rate
otherwise applicable thereunder. Further, if Guarantor shall fail to pay any
amount or perform any obligations due Lender hereunder, Lender may institute and
pursue any action or proceeding to judgment or final decree and may enforce any
such judgment or final decree against Guarantor and collect in the manner
provided by law out of its property, wherever situated, the monies adjudged or
decreed to be payable.
ARTICLE 2
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GENERAL COVENANTS AND WAIVERS OF
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GUARANTOR; REMEDIES AND RIGHTS OF LENDER
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2.1 Neither failure to give, nor defect in, any notice to the Borrower
or Guarantor and/or any other guarantor or surety of the Obligations ("Obligor")
concerning a default in the performance of the Obligations, an Event of Default
or any event which might mature into an Event of Default shall extinguish or in
any way affect the obligations of Guarantor hereunder. Neither demand on, nor
the pursuit of any remedies against, Borrower or any other Guarantor shall be
required as a condition precedent to, and neither the pendency nor the prior
termination of any action, suit or proceeding against Borrower or any other
Obligor (whether for the same or a different remedy) shall bear on or prejudice
the making of a demand on Guarantor by Lender and commencement against Guarantor
after such demand, of any action, suit or proceeding, at law or in equity, for
the specific performance of any covenant or agreement contained herein or for
the enforcement of any other appropriate legal or equitable remedy.
2.2 Guarantor's liability hereunder is primary, direct, immediate, and
joint and several with that of Borrower and each and every other Obligor.
Neither (a) the exercise or the failure to exercise by Lender of any rights or
remedies conferred on it under the Term Loan Documents, hereunder or existing at
law or otherwise,
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or against any security for performance of the Obligations, (b) the commencement
of an action at law or the recovery of a judgment at law against Borrower or any
other Obligor and the enforcement thereof through levy or execution or
otherwise, (c) the taking or institution or any other action or proceeding
against Borrower or any other Obligor nor (d) any delay in taking, pursuing or
exercising any of the foregoing actions, rights, powers or remedies (even though
requested by Guarantor) by Lender or anyone acting for Lender, shall extinguish
or affect the obligations of Guarantor hereunder. Subject to the provisions of
paragraph 4.6, Guarantor shall be and remain liable for all the Obligations
until fully paid and performed and for one year and one day after such payment
and performance of all the Obligations (and without limiting Guarantor's
obligations under paragraph 2.8), notwithstanding the previous discharge (total
or partial) from further liability of Borrower or any other Obligor.
2.3 Guarantor hereby expressly waives: (a) notice of acceptance by
Lender of this Guaranty; (b) notice of the existence, creation or non-payment
of all or any of the Obligations, except as provided in paragraph 1.2; (c)
presentment, protest, demand, dishonor, notice of dishonor, protest and all
notices whatsoever; (d) all diligence in collection or protection of or
realization on the Obligations or any part thereof, any obligation hereunder, or
any security for or guarantee of any of the foregoing; (e) any defense based
upon an election of remedies by Lender or marshalling of assets; (f) any defense
arising because of Lender's election under Section 1111(b) (2) of the United
States Bankruptcy Code ("Bankruptcy Code") in any proceeding instituted under
the Bankruptcy Code; (g) any defense based on post-petition borrowing or the
grant of a security interest by Borrower under Section 364 of the Bankruptcy
Code; (h) any duty on the part of Lender to disclose to Guarantor any facts
Lender may now or hereafter know about Borrower, regardless of whether Lender
has reason to believe that any such facts materially increase the risk beyond
that which Guarantor intends to assume or has reason to believe that such facts
are known to Guarantor or has a reasonable opportunity to communicate such facts
to Guarantor, because Guarantor represents and warrants that it is fully
responsible for being and keeping informed of the financial condition of
Borrower and of all circumstances bearing on the risk of non-payment of any
obligation guaranteed hereby; and (i) any and all suretyship defenses and
defenses in the nature thereof under Arizona and/or any other applicable law,
including, without limitation, the benefits of the provisions of Sections
12-1641 through 12-1646, of the Arizona Revised Statutes, Sections 17 and 21,
A.R.C.P., and all other laws of similar import.
2.4 Without limiting the generality of the foregoing, Guarantor will
not assert against Lender any defense of waiver, release, discharge in
bankruptcy, statute of limitations, res judicata, statute of frauds,
anti-deficiency statute, fraud, usury,
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illegality or unenforceability which may be available to Borrower with respect
to the Term Loan Documents (or the Term Loan), or any setoff available to
Borrower against Lender, whether or not on account of a related transaction.
2.5 The benefits, remedies and rights provided or intended to be
provided hereby for Lender are in addition to and without prejudice to any
rights, benefits, remedies or security to which Lender might otherwise be
entitled.
2.6 Anything else contained herein to the contrary notwithstanding,
Lender, from time to time, without notice to Guarantor, may take all or any of
the following actions without in any manner affecting or impairing the
obligations of Guarantor hereunder: (a) obtain a lien on or a security interest
in any property to secure any of the Obligations; (b) retain or obtain the
primary or secondary liability of any party or parties, in addition to
Guarantor, with respect to any of the Obligations; (c) renew, extend or
otherwise change the time for payment or performance of any of the Obligations
for any period; (d) release or compromise any liability of Guarantor hereunder
or any liability of any nature of any other party or parties with respect to the
Obligations; (e) exchange, enforce, waive, release and apply any security for
the performance of the Obligations and direct the order or manner of sale
thereof as Lender may in Lender's discretion determine; (f) resort to Guarantor
for payment of any of the Obligations, whether or not Lender shall proceed
against any other party primarily or secondarily liable on any of the
Obligations; (g) agree to any amendment (including, without limitation, any
amendment which changes the amount of interest to be paid under the Term Loan
Documents or extends the period of time during which Borrower may obtain an
advance of the Term Loan), any alteration of the Term Loan Documents or any
waiver of any provisions of the Term Loan Documents and/or exercise Lender's
rights to consent to any action or non-action of Lender which may violate the
covenants and agreements contained in the Term Loan Documents with or without
consideration, on such terms and conditions as may be acceptable to Lender in
Lender's sole and absolute discretion; or (h) exercise any of Lender's rights
conferred by the Term Loan Documents or by law.
2.7 No delay on the part of Lender in the exercise of any right or
remedy under this Guaranty shall operate as a waiver thereof, and no single or
partial exercise by Lender of any right or remedy shall preclude other or
further exercise thereof or the exercise of any other right or remedy; nor shall
any modification or waiver of any of the provisions of this Guaranty be binding
on Lender except as expressly set forth in writing, duly signed and delivered on
behalf of Lender. No action of Lender permitted hereunder shall in any way
affect or impair the rights of Lender or the obligations of Guarantor under this
Guaranty.
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2.8 If at any time all or any part of any payment theretofore applied
by Lender to any of the Obligations is or must be rescinded or returned by
Lender for any reason whatsoever (including, without limitation, the insolvency,
bankruptcy or reorganization of Borrower), such Obligations, for purposes of
this Guaranty, to the extent that such payment is or must be rescinded or
returned, shall be deemed to have never been paid; and this Guaranty shall
continue to be effective or be reinstated, as the case may be, as to such
Obligations, all as though such application by Lender had not been made.
2.9 Guarantor shall have no right of subrogation with respect to the
Obligations or any right of indemnification, reimbursement or contribution from
Borrower or from any other Obligor with respect to the Obligations regardless of
any payment made by Guarantor pursuant to the provisions of this Guaranty until
the Obligations have been paid and performed in full, and Guarantor hereby
unconditionally waives any and all rights of subrogation, indemnification,
reimbursement or contribution.
2.10 It is not necessary for Lender to inquire into the powers of
Borrower or Borrower's officers, directors, partners or agents purporting to act
on its behalf and the Obligations are hereby guaranteed notwithstanding the lack
of power or authority on the part of Borrower or anyone acting on the Borrower's
behalf to incur the Obligations.
2.11 If Guarantor shall (a) generally not be paying its debts as they
become due, (b) file, or consent by answer or otherwise to the filing against it
of a petition for relief or reorganization, arrangement or any other petition in
bankruptcy or insolvency under the laws of any jurisdiction, (c) make an
assignment for the benefit of its creditors, (d) consent to the appointment of a
custodian, receiver, trustee or other officer with similar powers for itself or
any substantial part of its property, (e) be adjudicated insolvent (f) dissolve
or commence to wind-up its affairs, or (g) take any action for purposes of the
foregoing, Guarantor will pay to Lender forthwith the whole then unpaid amount
of the Term Loan Note (which amount, together with any other sums due under the
Term Loan Documents is herein called the "Unpaid Amount") as if such Unpaid
Amount were then due and payable; and in any such event Lender, irrespective of
whether any demand shall have been made on Guarantor, Borrower or any Obligor by
intervention in or initiation of judicial proceedings relative to Guarantor, its
creditors or its property, may file and prove a claim or claims for the whole or
any portion of the Unpaid Amount or any portion thereof and file such other
papers or documents as may be necessary or advisable in order to have such claim
allowed in such judicial proceedings and to collect and receive any monies or
other property payable or deliverable on any such claim, and to distribute the
same; and any receiver, assignee or trustee in
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bankruptcy or reorganization is hereby authorized to make such payments to
Lender.
ARTICLE 3
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SUBORDINATION
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3.1 Guarantor subordinates to the Obligations all present and future
indebtedness of Borrower to Guarantor ("Subordinated Obligations") and all
liens, security interests, claims and right of any kind that Guarantor may now
have or hereafter acquire against Borrower and/or the property of Borrower
("Borrower's Property") which secure, result from Borrower's or otherwise
pertain to present and future indebtedness to the Subordinated Obligations.
Guarantor agrees that all liens, security interests, claims and rights of any
kind that Guarantor may now have or hereafter acquire against Borrower and
Borrower's Property which secure, result from or otherwise pertain to the
Subordinated Obligations shall be subordinate, inferior and subject to the
liens, security interests, claims and rights of Lender against Borrower and/or
Borrower's Property under the terms of any of the Term Loan Documents or at law,
whether direct or contingent or whether now or hereafter created, including but
not limited to, any renewals, extensions or modifications thereof. Guarantor
agrees that Guarantor may not accept payments on the Subordinated Obligations.
Any payment received by Guarantor shall be deemed received in trust for Lender
and shall be immediately remitted to Lender. Lender shall be entitled to receive
full payment and performance of the Obligations before the holder(s) thereof
is/are entitled to receive any payment of the Subordinated Obligations.
Guarantor grants to Lender a security interest in the Subordinated Obligations
as security for performance of Guarantor's obligations under this Guaranty, and
Guarantor shall remain liable for any deficiency following any foreclosure of
such security interest.
3.2 Guarantor does not have and will not take or accept any lien upon
security interest in, assignment of or other charge upon Borrower's Property as
security for the Subordinated Indebtedness. Guarantor will not take any action
which will either (a) force the sale of Borrower's Property in order to satisfy
the Subordinated Obligations or (b) affect in any manner any and all of Lender's
liens, security interests, claims or rights of any kind that Lender may now have
or hereafter acquire against Borrower and/or Borrower's Property. Guarantor will
refrain from taking any action which is in any way inconsistent with or in
derogation of this subordination or of the rights of Lender hereunder and
covenants to perform such further acts as necessary or appropriate to giving
effect to this subordination. Without limiting the generality of the foregoing,
Guarantor will not assign any portion of the Subordinated Obligations, except
expressly subject to the terms of this Guaranty; and Guarantor will cause all
evidence of the
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Subordinated Obligations to set forth the provisions hereof and shall cause any
instrument representing the Subordinated Obligations to be endorsed with the
following legend: "The indebtedness evidenced by this instrument is
subordinated, pursuant to a Guaranty and Subordination ("Guaranty") dated as of
December ____, 1994, by CPS Systems, Inc. in favor of Greyhound Financial
Corporation, to the prior payment in full of the Obligations (as defined in the
Guaranty)."
ARTICLE 4
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MISCELLANEOUS PROVISIONS
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4.1 All the covenants, stipulations, promises and agreements contained
in this Guaranty by or on behalf of Guarantor are for the benefit of Lender, its
successors or assigns and shall bind Guarantor, and Guarantor's heirs,
executors, personal representatives, successors and assigns. Lender, without
notice of any kind, may sell, assign or transfer the Term Loan Documents, and in
such event each and every immediate and successive assignee or transferee
thereof may be given the right by Lender to enforce this Guaranty in full, by
suit or otherwise, for Lender's own benefit. Guarantor agrees for the benefit of
any such assignee or transferee that Guarantor's obligations hereunder shall not
be subject to any reduction, abatement, defense, setoff, counterclaim or
recoupment for any reason whatsoever.
4.2 All notices, requests or demands required or permitted to be given
hereunder shall be in writing, and shall be deemed effective (a) upon hand
delivery, if hand delivered; (b) one (1) Business Day after such are deposited
for delivery via Federal Express or other nationally recognized overnight
courier service; or (c) three (3) Business Days after such are deposited in the
United States mails, certified or registered mail, all with delivery charges
and/or postage prepaid, and addressed as shown below, or to such other address
as either party may, from time to time, designate in writing. Written notice may
be given by telecopy to the telecopier number shown below as either party may
designate, from time to time, in writing, provided that such notice shall not be
deemed effective unless it is confirmed within 24 hours by hand delivery,
courier delivery or mailing of a copy of such notice in accordance with the
requirements set forth above.
If to Lender: Greyhound Financial Corporation
(two copies) Dial Tower
Dial Corporate Center
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: Vice President - Law
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
and
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Greyhound Financial Corporation
▇▇▇ ▇▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Portfolio Manager
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Guarantor: CPS Systems, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
As used herein the term "Business Day" means any day other than a Saturday,
Sunday or other day on which banks in Los Angeles, California or New York, New
York are required to close.
4.3 Terms used and not otherwise defined herein shall have the same
meanings given thereto in the Term Loan Documents. The recitals set forth above
are incorporated herein by this reference.
4.4 CHOICE OF LAW: JURISDICTION: VENUE: AND WAIVER OF JURY TRIAL.
------------------------------------------------------------
(a) THIS GUARANTY AND THE RIGHTS, DUTIES AND OBLIGATIONS OF THE
PARTIES THERETO SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS OF THE STATE OF ARIZONA AND TO THE EXTENT THEY PREEMPT THE LAWS OF
SUCH STATE, THE LAWS OF THE UNITED STATES.
(b) GUARANTOR: (A) HEREBY IRREVOCABLY SUBMITS ITSELF TO THE PROCESS,
JURISDICTION AND VENUE OF THE COURTS OF THE STATE OF ARIZONA, MARICOPA COUNTY,
AND TO THE PROCESS, JURISDICTION, AND VENUE OF THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ARIZONA, FOR THE PURPOSES OF SUIT, ACTION OR OTHER
PROCEEDINGS ARISING OUT OF OR RELATING TO THIS GUARANTY OR THE SUBJECT MATTER
HEREOF, OR, IF LENDER INITIATES SUCH ACTION, ANY COURT IN WHICH LENDER SHALL
INITIATE SUCH ACTION AND THE CHOICE OF SUCH VENUE SHALL IN ALL INSTANCES BE AT
LENDER'S ELECTION; AND (B) WITHOUT LIMITING THE GENERALITY OF THE FOREGOING,
HEREBY WAIVES AND AGREES NOT TO ASSERT BY WAY OF MOTION, DEFENSE OR OTHERWISE IN
ANY SUCH SUIT, ACTION OR PROCEEDING ANY CLAIM THAT GUARANTOR IS NOT PERSONALLY
SUBJECT TO THE JURISDICTION OF THE ABOVE-NAMED COURTS, THAT SUCH SUIT, ACTION OR
PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM OR THAT THE VENUE OF SUCH SUIT,
ACTION OR PROCEEDING IS IMPROPER. GUARANTOR HEREBY WAIVES THE RIGHT TO
COLLATERALLY ATTACK ANY JUDGMENT OR ACTION IN ANY OTHER FORUM.
(c) LENDER AND GUARANTOR ACKNOWLEDGE AND AGREE THAT ANY CONTROVERSY
WHICH MAY ARISE UNDER THIS GUARANTY WOULD BE BASED UPON DIFFICULT AND COMPLEX
ISSUES AND THEREFORE, THE PARTIES AGREE THAT ANY LAWSUIT ARISING OUT OF ANY SUCH
CONTROVERSY SHALL BE TRIED BY
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A JUDGE SITTING WITHOUT A JURY, AND GUARANTOR HEREBY KNOWINGLY AND VOLUNTARILY
WAIVES TRIAL BY JURY IN ANY SUCH PROCEEDING.
(d) ALL OF THE PROVISIONS SET FORTH IN THIS PARAGRAPH ARE A MATERIAL
INDUCEMENT FOR LENDER'S MAKING THE TERM LOAN TO BORROWER.
(INITIALS
APPEAR GUARANTOR's Initials
HERE)
----
4.5 Any provision of this Guaranty which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and no such prohibition or unenforceability shall
invalidate or render unenforceable such provision in any other jurisdiction.
4.6 Notwithstanding anything herein to the contrary, this Guarantee
shall terminate upon the merger of Borrower into Guarantor.
4.7 Guarantor, at its sole cost and expense, agrees to deliver and
supply Lender with a favorable opinion of its independent legal counsel, which
counsel must be acceptable to Lender, confirming and substantiating, to the best
of such counsel's knowledge, the truth and accuracy of all its warranties and
representations.
4.8 In the event litigation or any other type of proceeding is
commenced to enforce or interpret this Guaranty, to recover damages for breach
of this Guaranty, to obtain declaratory relief in connection with this Guaranty,
or otherwise to obtain judicial relief in connection herewith, the prevailing
party shall be entitled to recover reasonable attorneys' fees as set by the
court sitting without a jury and all of the reasonable costs of that litigation
or proceeding, and any and all appeals therefrom, including, but not limited to,
taxable and nontaxable costs, together with interest on those attorneys' fees
and costs at the Default Rate.
4.9 This Guaranty may be executed in any number of counterparts. Each
such counterpart shall be deemed to be an original instrument but all such
counterparts together shall constitute but one Guaranty.
4.10 This Guaranty sets forth the entire agreement of Guarantor and
Lender with respect to the subject matter hereof and supersedes all prior oral
and written agreements and representations by Lender to Guarantor. No
modification or waiver of any provision of this Guaranty or any right of Lender
hereunder and no release of Guarantor from any obligation hereunder shall be
effective unless in a writing executed by an authorized officer of Lender.
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IN WITNESS WHEREOF, this Guaranty is executed to be effective as of
that date first appearing above.
GUARANTOR:
CPS SYSTEMS, INC.
a Texas corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇
-------------------------------
▇▇▇▇ ▇. ▇▇▇▇, President
STATE OF ARIZONA )
) ss.
County of Maricopa )
This instrument was acknowledged before me this 30th day of December,
1994, by ▇▇▇▇ ▇. ▇▇▇▇ the President of CPS SYSTEMS, INC., a Texas corporation,
on behalf of such corporation.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------
Type/Print Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------
Notary Public, State of Arizona
My commission expires:
[OFFICIAL SEAL OF
▇▇▇▇▇ ▇. ▇▇▇▇▇
APPEARS HERE]
Lender hereby accepts this Guaranty and Subordination.
LENDER:
GREYHOUND FINANCIAL CORPORATION,
a Delaware corporation
By /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------
Its: Vice President
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Schedule 1
NONE
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