Exhibit 10.5.1(a)
EXECUTION COPY
GUARANTY
This GUARANTY (this "Guaranty"), dated as of January 26, 2005, by and
between R. Xxxxxxx Xxxxxxx ("Guarantor") and XxxXxxxxx Xxxxxxxxx Xxxxxx, Inc., a
California corporation ("MPF"). Capitalized terms not otherwise defined herein
shall have the meanings assigned to them in the Put Agreement (the "Put
Agreement") by and between Xxxxxx Holding Company ("Xxxxxx") and MPF dated as of
the date hereof.
W I T N E S S E T H:
WHEREAS, pursuant to that certain Purchase Agreement (the "Purchase
Agreement" and, together with this Guaranty, the Certificate of Designations,
Preferences and Rights of Series A Convertible Preferred Stock of Xxxxxx Holding
Company, Inc., a Delaware Corporation and the Put Agreement, the "Series A
Documents") dated as of the date hereof by and between MPF and Xxxxxx, MPF has
agreed to purchase and Xxxxxx has agreed to sell certain shares (the "Shares")
of Series A Preferred Stock, par value $0.0001 per share;
WHEREAS, Guarantor (i) owns certain shares of Common Stock, par value
$0.0001 per share of Xxxxxx and (ii) is an officer of Xxxxxx, and as such will
derive direct and indirect economic benefits from the purchase of the Shares by
MPF;
WHEREAS, pursuant to the Put Agreement, MPF may exercise the Put and
sell all of its Shares to Xxxxxx at the Put Price;
WHEREAS, in order to induce MPF to purchase the Shares as provided for
in the Purchase Agreement, Guarantor has agreed to guarantee the Guaranteed
Obligations (as defined below); and
WHEREAS, Guarantor, Xxxxxx Xxxxx and Xxxxxxx Xxxxx (together with
Xxxxxx Xxxxx and Guarantor, the "Individual Guarantors") each severally but not
jointly guarantee Xxxxxx'x obligations to MPF upon MPF's exercise of the Put and
the receipt by each Individual Guarantor of a Guaranty Drawdown Notice (as
defined below).
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, and to induce MPF to purchase the Shares, it is agreed as
follows:
1. DEFINITIONS.
"Diversified Risk" means FLF, Inc. (d/b/a Diversified Risk Insurance
Brokers), a California corporation.
"DR Sale Proceeds" means (i) if Diversified Risk is sold by MPF, the
proceeds received by MPF from the Sale of Diversified Risk and (ii) if
Diversified Risk is sold by Xxxxxx, the proceeds received by MPF as a result of
a Default Sale.
"Guaranty Drawdown Notice" means a notice, executed by a duly appointed
officer of MPF on behalf of MPF, certifying that: (i) (x) if MPF has received
the shares of Diversified Risk pursuant to the Put Agreement, that MPF has
completed the Sale of Diversified Risk or (y) if Xxxxxx has sold the shares of
Diversified Risk pursuant to the Put Agreement, that MPF has received the
proceeds from the Default Sale, (ii) the DR Sale Proceeds were less than the Put
Price and (iii) if a Market Price report has been requested, that MPF received
the Market Price for the shares of Diversified Risk. If the sale of the
Diversified Risk shares by MPF shall have occurred later than six months
following the Put Closing, MPF shall not be required to make any representations
regarding Market Price.
"Market Price" means the fair market value of Diversified Risk's entire
common equity determined on a going concern basis as between a willing buyer and
a willing seller and taking into account all relevant factors determinative of
value. If requested by any party this agreement, Market Price shall be
determined by an investment banking firm reasonably acceptable to MPF and the
Individual Guarantors, which firm shall submit to MPF a written report setting
forth such determination. The expenses of the engagement of such firm shall be
borne by the party requesting the report.
"Sale of Diversified Risk" means the sale by MPF of Diversified Risk to
a third party or group of third parties pursuant to which such party or parties
acquire (i) all of the capital stock of Diversified Risk (whether by merger,
consolidation or sale or transfer of the Diversified Risk `s capital stock) or
(ii) all of the Diversified Risk's assets determined on a consolidated basis.
2. THE GUARANTY.
2.1 Guaranty of Guaranteed Obligations of Borrower. Guarantor hereby guarantees
to MPF, the payment within 30 days of Guarantor's receipt of a Guaranty Drawdown
Notice, of an amount that is equal to the lesser of (a) one-third of the
difference between the Put Price and the DR Sale Proceeds and (b) $200,000 (such
guarantee obligations, the "Guaranteed Obligations"). Guarantor agrees that this
Guaranty is a guaranty of payment and performance and not of collection, and
that his obligations under this Guaranty shall be primary, absolute and
unconditional, irrespective of, and unaffected by:
(a) the genuineness, validity, regularity, enforceability or any
future amendment of, or change in this Guaranty, or any other
Series A Documents;
(b) the absence of any action to enforce this Guaranty or any
other Series A Document or the waiver or consent by MPF with
respect to any of the provisions thereof;
(c) the insolvency of Xxxxxx; or
(d) any other action or circumstances which might otherwise
constitute a legal or equitable discharge or defense of a
surety or guarantor,
it being agreed by Guarantor that his obligations under this Guaranty shall not
be discharged until the earlier of: the redemption, conversion or sale of all of
the Shares. Guarantor shall be regarded, and shall be in the same position, as
2
Xxxxxx with respect to the Guaranteed Obligations. Guarantor agrees that any
notice or directive given at any time to MPF which is inconsistent with the
waiver in the immediately preceding sentence shall be null and void and may be
ignored by MPF, and, in addition, may not be pleaded or introduced as evidence
in any litigation relating to this Guaranty for the reason that such pleading or
introduction would be at variance with the written terms of this Guaranty,
unless MPF has specifically agreed otherwise in writing. It is agreed among
Guarantor and MPF that the foregoing waivers are of the essence of the
transaction contemplated by the Series A Documents and that, but for this
Guaranty and such waivers, MPF would decline to enter into the Purchase
Agreement.
2.2 Waiver. In addition to the waivers contained in Section 1.1 hereof, and
except for Guarantor's rights under Sections 3 and 4.2, Guarantor waives and
agrees that he shall not at any time insist upon, plead or in any manner
whatever claim or take the benefit or advantage of, any appraisal, valuation,
stay, extension, marshaling of assets or redemption laws, or exemption, whether
now or at any time hereafter in force, which may delay, prevent or otherwise
affect the performance by Guarantor of the Guaranteed Obligations under, or the
enforcement by MPF of, this Guaranty. Guarantor hereby waives diligence,
presentment and demand (whether for non-payment or protest or of acceptance,
maturity, extension of time, change in nature or form of the Guaranteed
Obligations, or the terms of the Guaranteed Obligations, notice of adverse
change in Xxxxxx'x financial condition or any other fact which might increase
the risk to Guarantor) with respect to any of the Guaranteed Obligations or all
other demands whatsoever and waives the benefit of all provisions of law which
are or might be in conflict with the terms of this Guaranty. Guarantor
represents, warrants and agrees that, as of the date of this Guaranty, those
obligations under this Guaranty are not subject to any offsets or defenses
against MPF of any kind, except for Guarantor's rights under Sections 3 and 4.2.
2.3 Benefit of Guaranty. The provisions of this Guaranty are for the benefit of
MPF and nothing herein contained shall impair, as between Xxxxxx and MPF, the
obligations of Xxxxxx under the Series A Documents or the Put Agreement.
3. CONDUCT OF SALE PROCESS.
3.1 MPF shall conduct the Sale of Diversified Risk in a reasonable manner and in
good faith and shall at all times use its best efforts to obtain the Market
Price for Diversified Risk.
4. OTHER TERMS.
4.1 Assignability. Except as expressly as set forth herein, neither this
Guaranty nor any right, remedy, obligation or liability arising hereunder or by
reason hereof shall be assignable by either Guarantor or MPF without the prior
written consent of the other party.
4.2 Termination. This Guaranty is a continuing guaranty and shall remain in full
force and effect until the earlier of the redemption, conversion or sale to a
third party of all of the Shares; provided, that this Guaranty shall terminate
immediately and Guarantor shall have no further obligations hereunder if MPF:
(i) materially breaches its obligations hereunder, (ii) does not initiate the
Sale of Diversified Risk on or prior to the second anniversary of the Put
Closing or (iii) does not consummate the Sale of Diversified Risk on or prior to
3
the third anniversary of the Put Closing. Upon payment and performance in full
of the Guaranteed Obligations, MPF shall deliver to Guarantor such documents as
Guarantor may reasonably request to evidence such termination.
4.3 Notices. All notices, demands or other communications to be given or
delivered under or by reason of the provisions of this Guaranty will be in
writing and will be deemed to have been given when delivered if delivered
personally, sent via a nationally recognized overnight courier, or sent via
facsimile to the recipient, or if sent by certified or registered mail, return
receipt requested, will be deemed to have been given two business days
thereafter. Such notices, demands and other communications will be sent to the
address indicated below:
To Guarantor:
c/x Xxxxxx Holding Company, Inc.
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
with a copy (which shall not constitute notice to the Company)
to:
Xxxxxxxx & Xxxxx LLP
Citigroup Center
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx Xxxx, Esq.
Facsimile: (000) 000-0000
To MPF:
c/o XxxXxxxxx Xxxxxxxxx Xxxxxx, Inc.
Attn: Xxxx Xxxxxxxxx, Vice President & General
Counsel
0000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
or such other address, telecopy number or to the attention of such other Person
as the recipient party shall have specified by prior written notice to the
sending party.
4.4 Remedies. Any Person having rights under any provision of this Guaranty will
be entitled to enforce such rights specifically, to recover damages and costs
(including reasonable attorneys' fees) caused by reason of any breach of any
provision of this Guaranty and to exercise all other rights granted by law. The
parties hereto agree and acknowledge that money damages may not be an adequate
remedy for any breach of the provisions of this Guaranty and that any party may
in its sole discretion apply to any court of law or equity of competent
jurisdiction (without posting any bond or other security) for specific
performance and for other injunctive relief in order to enforce or prevent
violation of the provisions of this Guaranty.
4.5 Amendments and Waivers. No modification, amendment or waiver of any
provision of this Guaranty shall be effective against Guarantor or MPF unless
4
such modification, amendment or waiver is approved in writing by Guarantor and
MPF. The failure of any party to enforce any of the provisions of this Guaranty
shall in no way be construed as a waiver of such provisions and shall not affect
the right of such party thereafter to enforce each and every provision of this
Guaranty in accordance with its terms.
4.6 Severability. Whenever possible, each provision of this Guaranty will be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Guaranty is held to be prohibited by or invalid
under applicable law, such provision will be ineffective only to the extent of
such prohibition or invalidity, without invalidating the remainder of this
Guaranty.
4.7 Counterparts. This Guaranty may be executed simultaneously in two or more
counterparts, any one of which need not contain the signatures of more than one
party, but all such counterparts taken together will constitute one and the same
Agreement.
4.8 Descriptive Headings. The descriptive headings of this Guaranty are inserted
for convenience only and do not constitute a part of this Guaranty.
4.9 Governing Law. This Guaranty shall be governed by and construed in
accordance with the laws of the State of California, without giving effect to
any choice of law or conflict of law provision or rule (whether of the State of
California or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of California.
4.10 Waiver of Jury Trial. The parties to this Guaranty each hereby waives, to
the fullest extent permitted by law, any right to trial by jury of any claim,
demand, action, or cause of action (i) arising under this Guaranty or (ii) in
any way connected with or related or incidental to the dealings of the parties
hereto in respect of this Guaranty or any of the transactions related hereto, in
each case whether now existing or hereafter arising, and whether in contract,
tort, equity, or otherwise. The parties to this Guaranty each hereby agrees and
consents that any such claim, demand, action, or cause of action shall be
decided by court trial without a jury and that the parties to this Guaranty may
file an original counterpart of a copy of this Guaranty with any court as
written evidence of the consent of the parties hereto to the waiver of their
right to trial by jury.
4.11 Jurisdiction. Each of the parties hereto submits to the jurisdiction of any
state or federal court sitting in San Francisco, California, in any action or
proceeding arising out of or relating to this Guaranty and agrees that all
claims in respect of the action or proceeding may be heard and determined in any
such court and hereby expressly submits to the personal jurisdiction and venue
of such court for the purposes hereof and expressly waives any claim of improper
venue and any claim that such courts are an inconvenient forum. Each of the
parties hereby irrevocably consent to the service of process of any of the
aforementioned courts in any such suit, action or proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid, to its address
set forth in Section 4.3, such service to become effective 10 days after such
mailing.
5
4.12 No Strict Construction. The parties hereto have participated jointly in the
negotiation and drafting of this Guaranty. In the event an ambiguity or question
of intent or interpretation arises, this Guaranty shall be construed as if
drafted jointly by the parties hereto, and no presumption or burden of proof
shall arise favoring or disfavoring any party hereto by virtue of the authorship
of any of the provisions of this Guaranty.
4.13 Entire Agreement. This Guaranty contains the entire agreement and
understanding among the parties hereto with respect to the subject matter hereof
and supersede all prior agreements and understandings, whether written or oral,
relating to such subject matter in any way.
6
IN WITNESS WHEREOF, the parties hereto have executed and delivered this Guaranty
as of the date first above written.
R. XXXXXXX XXXXXXX
/s/ R. XXXXXXX XXXXXXX
---------------------------
XXXXXXXXX XXXXXXXXX XXXXXX, INC.
By: /s/ XXXX X. XXXXXX
---------------------------
Name: Xxxx X. Xxxxxx
Title: Senior Vice President
