EXHIBIT (b)(3)
SUBORDINATED GUARANTY
THIS SUBORDINATED GUARANTY (the "Guaranty"), dated as of _________, 2001,
is made and given by XXXX X. XXXXX, an individual residing in Dubuque, Iowa, and
XXXXXX XXXXX, an individual residing in Dubuque, Iowa (each, a "Guarantor"), in
favor of [XXXXXX X. XXXX] [XXXXXX X. XXXXXX], an individual residing in Dubuque,
Iowa (the "Lender").
WHEREAS, the Lender has extended credit accommodations to Eagle Point
Software Corporation, a Delaware corporation (the "Borrower");
WHEREAS, in connection with those credit accommodations the Lender has
required that this Guaranty be executed and delivered by the Guarantors; and
WHEREAS, the Guarantors have an economic interest in the Borrower and
expect to derive substantial benefits from the extension of credit
accommodations to the Borrower by the Lender and find it advantageous, desirable
and in their best interests to execute and deliver this Guaranty to the Lender.
NOW, THEREFORE, in consideration of the credit accommodations to be
extended to the Borrower and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the Guarantors hereby
covenant and agree with the Lender as follows:
Section 1. Definitions. As used in this Guaranty, the following terms
-----------
shall have the meaning indicated:
"Obligations" shall mean all principal of, interest on, and all
-----------
expenses of Lender (including reasonable attorneys fees) associated with
collecting upon that certain subordinated promissory note of the Borrower
to the Lender, dated ________, 2001, in the principal amount of $[500,000]
[250,000].
"Person" shall mean any individual, corporation, partnership,
------
limited partnership, limited liability partnership, limited liability
company, joint venture, firm, association, trust, unincorporated
organization, government or governmental agency or political subdivision or
any other entity, whether acting in an individual, fiduciary or other
capacity.
Section 2. Guaranty. Subject always to the following Section 3, the
--------
Guarantors, jointly and severally, hereby absolutely and unconditionally
guarantee to the Lender, as primary obligors and not merely as sureties, the
prompt and punctual payment in full when due (whether at stated maturity, by
acceleration or otherwise) and performance of the Obligations. This is a
guaranty of payment and performance and not of collection only. Lender, without
authorization from or notice to Guarantors and without impairing, modifying,
changing, releasing, limiting or affecting the liability of Guarantors under
this Guaranty, may from time to time at Lender's discretion and with or without
valuable
1
consideration, alter, compromise, accelerate, renew, extend or change the time
or manner for the payment of any or all of the Obligations, increase or reduce
the rate of interest thereon, take and surrender security, exchange security by
way of substitution, or in any way it deems necessary take, accept, withdraw,
subordinate, alter, amend, modify or eliminate security, add or release or
discharge endorsers, guarantors, or other obligors, make changes of any sort
whatever in the terms of payment of the Obligations or in the manner of doing
business with Borrower, or settle or compromise with Borrower or any other
person or persons liable on the Obligations on such terms as it may see fit, and
may apply all moneys received from the Borrower or others, or from any security
held (whether held under a security instrument or not), in such manner upon the
Obligations (whether then due or not) as it may determine to be in its best
interest, without in any way being required to marshal securities or assets or
to apply all or any part of such moneys upon any particular part of the
Obligations. It is specifically agreed that Lender is not required to retain,
hold, protect, exercise due care with respect thereto, perfect security
interests in or otherwise assure or safeguard any security for the Obligations;
no failure by Lender to do any of the foregoing and no exercise or nonexercise
by Lender of any other right or remedy of Lender shall in any way affect any of
Guarantor's obligations hereunder or any security furnished by Guarantors or
give Guarantors any recourse against Lender.
Section 3. Subordination of Guaranty. The obligation of each Guarantor on
-------------------------
this Guaranty is and shall remain subordinate in right of payment to all and any
guarantees by each Guarantor on all Senior Debt to the extent and in the manner
hereinafter set forth. "Senior Debt" shall mean the principal of and unpaid
accrued interest on: (a) all indebtedness of the Borrower for borrowed money
(other than the Obligations and the indebtedness evidenced by that certain
subordinated promissory note of the Borrower, dated ___________, 2001, payable
to [Xxxxxx X. Xxxx in the principal amount of $500,000] [Xxxxxx X. Xxxxxx in the
principal amount of $250,000]) from Dubuque Bank and Trust and ______________ in
an amount not to exceed in the aggregate $12,000,000, whether created, incurred
or assumed before or after the date hereof, and renewals, extensions and
refundings of any such indebtedness and (b) any such indebtedness or any
debentures, notes or other evidence of indebtedness issued in exchange for or to
refinance such Senior Debt, except that Senior Debt shall not include or mean
debentures, notes or other evidence of indebtedness issued to any Guarantor.
The subordination provisions contained in this Guaranty are expressly and only
for the benefit of third party senior creditors of the Borrower and shall in no
way limit the rights or remedies of Lender against each Guarantor, including
without limitation the time at which or the method with which Lender may proceed
against the Guarantors for any amount owing hereunder. Upon any distribution
of assets of the Borrower, upon dissolution, winding up, liquidation or
reorganization of the Borrower, whether in bankruptcy, insolvency or
receivership proceedings, or upon an assignment for the benefit of creditors, or
any other marshalling of the assets and liabilities of the Borrower, or
otherwise, all guarantees by each Guarantor of Senior Debt shall first be paid
in full, or provision made for such payment in cash, before any payment is made
on any amount hereunder. In the event of such payment in full, Lender shall be
subrogated ratably to all rights of such senior lenders to receive payments or
distributions of the assets of the Guarantors applicable to such Senior Debt
until the Obligations shall be paid in full. All payments under this Guaranty
shall be suspended during any period of time that payments are suspended
pursuant to a Payment Blockage Notice under the terms of the Obligations.
2
Section 4. Absolute Guaranty. This Guaranty is an absolute, irrevocable,
-----------------
unconditional and continuing guaranty of payment and performance of the
Obligations, irrespective of the genuineness, validity, regularity or
enforceability of the Obligations or any other instrument executed and delivered
in connection therewith, or any substitution, release or exchange of any other
guarantee of or security for any of the Obligations, and, to the fullest extent
permitted by applicable law, irrespective of any other circumstance whatsoever
which might otherwise constitute a legal or equitable discharge or defense of a
surety or guarantor, it being the intent of the parties that the obligations of
the Guarantors hereunder shall be absolute and unconditional under any and all
circumstances.. Without limiting the generality of the foregoing, it is agreed
that the liability of the Guarantors shall not be modified, limited, released,
impaired or affected in any manner whatsoever by:(a) repayments by the Borrower
or the allocation by the Lender of repayments by the Borrower, it being the
understanding of each Guarantor that such Guarantor's liability shall continue
hereunder so long as there are any Obligations outstanding; (b) Lender obtaining
collateral to secure payment of the Obligations; (c) the assumption of liability
by any other person (whether as a guarantor or otherwise) for payment or
performance of the Obligations (unless Guarantors are unconditionally released
in writing by Lender); (d) the subordination, relinquishment or discharge of
Lender's rights under the Obligations; (e) a release, surrender, exchange, loss,
termination, waiver or discharge of any collateral securing performance of the
Obligations; (f) the incapacity, death, insolvency, bankruptcy, reorganization,
assignment for the benefit of creditors, receivership, disability,
conservatorship, discharge, waiver or other exoneration of the Lender, Borrower
or Guarantors (or any other person now or hereafter liable for performance of
the Obligations); (g) the assignment by Lender, renewal, extension, modification
or amendment of the Obligations; (h) failure, delay, waiver or refusal by the
Lender to exercise any right or remedy held by the Lender under law or the
Obligations; (i) any change in ownership or control of the Borrower; (j) the
invalidity, unenforceability or insufficiency of any one or more of the terms of
the agreements or instruments creating the Obligations or any collateral
securing payment or performance thereunder; (k) the failure by Lender to file or
enforce a claim against the estate (either in administration, bankruptcy or
other proceeding) of Borrower or any other person or entity; (l) recovery from
Borrower or any other person or entity becomes barred by any statute of
limitations or is otherwise prevented; (m) any modifications, extensions,
amendments, consents, releases or waivers with respect to the Obligations, or
any other instrument now or hereafter securing the payment of the Obligations or
this Guaranty; (n) Guarantor is or becomes liable for any Obligations owing by
Borrower to Lender other than under this Guaranty; (o) any impairment,
modification, change, release, limitation or equitable subordination of the
liability of, or stay of actions or lien enforcement proceedings against,
Borrower, its property, or its estate in bankruptcy, or occurring as the result
of an assignment for the benefit of creditors, receivership, dissolution,
arrangement, composition or similar proceedings federal or state law, or from
the decision of any court, or (k) the failure of a Guarantor to receive notice
of any one or more of the foregoing actions or events.
Section 5. Waivers by Guarantors. Each Guarantor hereby expressly waives
---------------------
(a) demand of payment, presentment, protest, notice of dishonor, nonpayment or
nonperformance on any and all forms of the Obligations, notice of intention to
accelerate the maturity of the Obligations or any part thereof, notice of
acceleration of the maturity of the Obligations or any part thereof, notice of
disposition of collateral, diligence in
3
collecting, and the bringing of suit against any other party, (b) notice of
acceptance of this Guaranty and notice of any liability to which it may apply,
and (c) all defenses given to sureties or guarantors at law or in equity other
than the actual payment and performance of the Obligations and all defenses
based upon questions as to the validity, legality or enforceability of the
Obligations. Each Guarantor hereby further waives any and all requirements that
the Lender institute any action or proceeding at law or in equity, or obtain any
judgment, against the Borrower or any other Person, or with respect to any
collateral security for the Obligations, as a condition precedent to making
demand on or bringing an action or obtaining and/or enforcing a judgment
against, such Guarantor upon this Guaranty. Any remedy or right hereby granted
which shall be found to be unenforceable as to any Person or under any
circumstance, for any reason, shall in no way limit or prevent the enforcement
of such remedy or right as to any other Person or circumstance, nor shall such
unenforceability limit or prevent enforcement of any other remedy or right
hereby granted.
Section 6. Reinstatement. The obligations of the Guarantors under this
-------------
Guaranty shall be automatically reinstated if and to the extent that for any
reason any payment by or on behalf of the Borrower is rescinded or must be
otherwise restored by any holder of any of the Obligations, whether as a result
of any proceedings in bankruptcy or reorganization or otherwise and the
Guarantors, jointly and severally, agree that they or each one of them will
indemnify Lender on demand for all reasonable costs and expenses (including,
without limitation, attorney fees) incurred by Lender in connection with such
rescission or restoration.
Section 7. Representations and Warranties of Guarantors. Each of the
--------------------------------------------
Guarantors hereby represents and warrants to Lender as follows: (a) Guarantor
is solvent, is not bankrupt and has no outstanding liens, garnishments,
bankruptcies or court actions which could render guarantor insolvent or
bankrupt, and there has not been filed by or against Guarantor a petition in
bankruptcy or a petition or answer seeking an assignment for the benefit of
creditors, the appointment of a receiver, trustee, custodian or liquidator with
respect to Guarantor or any substantial portion of Guarantor's property,
reorganization, arrangement, rearrangement, composition, extension, liquidation
or dissolution or similar relief under the Bankruptcy Code or any state law; (b)
Guarantor is not subject to a conservatorship, guardianship or any other
proceeding or disability affecting Guarantor's competency to contract; (c) the
execution, delivery and performance of this Guaranty do not contravene, result
in the breach of or constitute a default under any mortgage, deed of trust,
lease, promissory note, loan agreement or other contract or agreement to which
Guarantor is a party or by which Guarantor or any of its properties may be bound
or affected and do not violate or contravene any law, order, decree, rule or
regulation to which Guarantor is subject; (d) there are no judicial or
administrative actions, suits or proceedings pending or, to the best of
Guarantor's knowledge, threatened against or affecting Guarantor or involving
the validity, enforceability or priority of this Guaranty; and (e) this Guaranty
constitutes the legal, valid and binding obligation of Guarantor enforceable in
accordance with its terms.
Section 8. [Reserved]
Section 9. Remedies Cumulative. All remedies afforded to the Lender by
-------------------
reason of
4
this Guaranty are separate and cumulative remedies and it is agreed that no one
of such remedies, whether or not exercised by the Lender, shall be deemed to be
in exclusion of any of the other remedies available to the Lender and no one of
such remedies shall in any way limit or prejudice any other.
Section 10. Waiver/Amendment. This Guaranty can be waived, modified,
----------------
amended, terminated or discharged only explicitly in a writing signed by the
Lender.
Section 11. Binding Effect. This Guaranty will be binding upon each
--------------
Guarantor and their respective heirs, personal representatives, successors and
assigns, and will inure to the benefit of Lender and all heirs, personal
representatives, successors and assigns of Lender. Each Guarantor hereby
expressly consents to the assignment of the rights of Lender hereunder in
connection with any assignment of the rights of Lender to the Obligations
(whether voluntarily or by operation of law). Neither Guarantor may assign their
obligations pursuant to this Guaranty without the advance written consent of
Lender.
Section 12. Notices. Any notice or other communication to any party in
-------
connection with this Guaranty shall be in writing and shall be sent by manual
delivery, facsimile transmission (with confirmation of receipt thereof),
overnight courier or United States mail (postage prepaid) addressed to such
party at the address specified on the signature page hereof, or at such other
address as such party shall have specified to the other party hereto in writing.
All periods of notice shall be measured from the date of delivery thereof if
manually delivered, from the date of sending thereof if sent by facsimile
transmission, from the first business day after the date of sending if sent by
overnight courier, or from four days after the date of mailing if mailed.
Section 13. Expenses of Enforcement. The Guarantors, jointly and
-----------------------
severally, hereby agree to pay any and all costs, attorneys' fees and expenses
incurred or expended by Lender in enforcing its rights under this Guaranty.
Section 14. Governing Law. THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY
-------------
OF THIS GUARANTY SHALL BE GOVERNED BY THE LAWS OF THE STATE OF IOWA, WITHOUT
REGARD TO CHOICE OF LAWS PRINCIPLES.
Section 15. Severability. A determination that any provision of this
------------
Guaranty is unenforceable or invalid shall not affect the enforceability or
validity of any other provision and any determination that the application of
any provision of this Guaranty to any Person or circumstance is illegal or
unenforceable shall not affect the enforceability or validity of such provision
as it may apply to any other persons or circumstances.
Section 16. Counterparts. This Guaranty may be executed in any number of
------------
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument.
Section 17. Section Headings. The section headings contained in this
----------------
Guaranty are for purposes of convenience and shall not be interpreted to effect
the substantive meaning of any provision of this Guaranty.
5
IN WITNESS WHEREOF, the Guarantors have executed this Guaranty as of the
date first above written.
GUARANTOR:
____________________________________
Xxxx X. Xxxxx
Address:
GUARANTOR:
____________________________________
Xxxxxx Xxxxx
Address:
Address for the Lender:
6
