GUARANTY
THIS GUARANTY (this "Guaranty"), dated as of December 1, 2002, made
by COMPLIANCE SYSTEMS CORPORATION and CALL XXXXXXXXXX.XXX, INC., EACH a company
organized under the laws of Delaware (the "Guarantors"), in favor of Phonetel
New Corp. (the "Lender"; Lender and any subsequent holder(s) of the Note (as
defined below) are hereinafter referred to collectively as "Lender").
WITNESSETH
WHEREAS, in December 2001, Lender made a loan ("Loan") in the
principal amount of $300,000 to Call Compliance, Inc., a New York company
("Debtor"), as obligor; and
WHEREAS, in December 2002, the Lender agreed to restructure and
amend the terms of the Loan ("Restructured Loan"), as reflected in the
Promissory Note annexed hereto as Exhibit "A"; and
WHEREAS, ONE OF THE terms of the Restructured Loan was that the
Guarantors guarantee the repayment thereof;
WHEREAS, THE Guarantors have a direct interest in the financial
affairs and wellbeing of the Debtor, and will directly benefit from the
Restructured Loan; and
WHEREAS, THE Guarantors have agreed to provide the Guaranty set
forth herein in substitution of the guaranty provided by the Original
Guarantors, which shall be terminated; and
NOW, THEREFORE, IN CONSIDERATION OF THE FOREGOING AND FOR OTHER GOOD
AND valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Guarantors hereby agrees as follows:
SECTION 1. GUARANTY.
(a) The Guarantors jointly and severally hereby
unconditionally and irrevocably (i) guarantee to the Lender the
prompt and complete payment when due (whether at stated maturity, by
acceleration or otherwise) of all payments of Debtor to Lender
pursuant to the Note (the "Obligations"), and (ii) agree to pay any
and all expenses (including counsel fees and expenses) incurred by
the Lender in obtaining advice of counsel in respect of this
Guaranty and incurred by the Lender in enforcing any rights with
respect to, or collecting against the Guarantors under, this
Guaranty.
GUARANTY
order now or hereafter in effect in any jurisdiction affecting any of such terms
or the rights of the Lender with respect thereto. The liability of the
Guarantors under this Guaranty shall be absolute and unconditional irrespective
of:
(a) any lack of validity, regularity or enforceability of the
Note or any other agreement or instrument relating thereto;
(b) any lack of validity, regularity or enforceability of this
Guaranty or any other agreement or instrument relating hereto;
(c) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Obligations, or any other
amendment or waiver of or any consent to departure from the Note;
(d) any exchange, release or non-perfection of any collateral,
or any release or amendment or waiver of or consent to departure
from any other guaranty, for all or any of the Obligations;
(e) any failure on the part of the Lender to exercise, or any
delay in exercising, any right under the Note or any other document;
or
(f) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, the Debtor, the Guarantors
or any other guarantor of all or a portion of the Obligations
(including, without limitation, all defenses based on suretyship or
impairment of collateral, and all defenses that the Debtor may
assert to the repayment of the Obligations, including, without
limitation, failure of consideration, breach of warranty, payment,
statute of frauds, bankruptcy, lack of legal capacity, statute of
limitations, lender liability, accord and satisfaction, and usury),
this Guaranty and the Obligations of the Guarantors under this
Guaranty.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE GUARANTORS. Each
Guarantor represents and warrants as follows:
(a) Enforceability. This Guaranty is the legal, valid and
binding obligation of each Guarantor, enforceable in accordance with
its terms, except as such enforceability may be limited by (i)
bankruptcy, insolvency or similar laws affecting creditors' rights
generally and (ii) general principles of equity.
AND ENFORCEMENT OF THIS GUARANTY AND ANY DISPUTE ARISING OUT OF OR IN CONNECTION
WITH THIS GUARANTY, WHETHER SOUNDING IN CONTRACT, TORT, EQUITY OR OTHERWISE,
SHALL BE GOVERNED BY THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICTS OF LAW
PROVISIONS OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW)
AND DECISIONS OF THE STATE OF NEW YORK.
SECTION 6. JURISDICTION AND SERVICE OF PROCESS. THE GUARANTORS
HEREBY CONSENT TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND
THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF NEW YORK IN
CONNECTION WITH ANY AND ALL ACTIONS COMMENCED WiTH RESPECT TO THIS GUARANTY AND
FURTHER CONSENT THAT ANY NOTICES, PROCESSES OR NOTICE OF MOTION OR OTHER
APPLICATION TO EiTHER OF SAID COURTS MAY BE SERVED IN OR OUT OF THE STATE OF NEW
YORK BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, OR BY PERSONAL SERVICE
PROVIDED A REASONABLE TIME FOR APPEARANCE IS ALLOWED OR SUCH OTHER MANNER AS IS
ALLOWED BY LAW.
SECTION 7. JURY TRIAL. THE GUARANTORS AND, BY ITS RECEIPT HEREOF,
THE LENDER, EACH HEREBY WAWES TO THE FULLEST EXTENT PERMITTED BY LAW ANY RIGHT
TO A TRIAL BY JURY.
SECTION 8. NO WAIVER; REMEDIES; NO MARSHA1LIN~, APPLICATION OF
PAYMENTS. NO FAILURE ON THE part of the Lender 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 Guarantors hereby waive
any right to require the Lender to marshal any security or collateral or
otherwise compel the Lender to seek recourse against or satisfaction of the
Obligations and all other amounts payable pursuant to Section 1(a)(ii) from one
source before seeking recourse or satisfaction from another source. The
Guarantors acknowledge and agrees that the Lender shall be entitled to apply all
payments received from the Guarantors pursuant to the terms hereof to such
portion of the Obligations as the Lender may elect.
SECTION 9. RI2HT OF Setoff. In addition to and not in limitation of
all rights of offset that the Lender or its Affiliates may have under applicable
law, and whether or not the Lender has made any demand or the Obligations of the
Guarantors have matured, the Lender shall have the right to appropriate and
apply to the payment of the Obligations of the Guarantors all
SECTION 10. AMENDMENTS AND WAIVERS. NO AMENDMENT OR WAIVER OF ANY
provision of this Guaranty shall be effective unless in writing and signed by
the Lender and the Guarantors and any such amendment or waiver shall be
effective only to the extent set forth therein. SECTION 11. Telecopied
Si2nature. This Guaranty, and any notices to be given pursuant to this Guaranty,
may be executed and delivered by telecopier or other facsimile transmission all
with the same force and effect as if the same was a fully executed and delivered
original.
SECTION 12. Severability. In case any provision in or obligation
under this Guaranty shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
IN WITNESS WhEREOF, the Guarantors have executed this Guaranty as of
the date first set forth above.
COMPLIANCE SYSTEMS
CORPORATION
By: [Illegible]
-------------------------------------
CALL XXXXXXXXXX.XXX, INC.
By: [Illegible]
-------------------------------------
NON-NEGOTIABLE
PROMISSORY NOTE
$363,000.00 December 1, 2002
FOR VALUE RECEIVED, the undersigned, CALL COMPLIANCE, INC., a New York
corporation ("Maker"), promises to pay to the order of PHONETEL NEW CORP., a New
York corporation ("Payee"), at its office, Suite A, 000 Xxx Xxxx Xxxxxx,
Xxxxxxxxxx, Xxx Xxxx 00000, or at such other place as Payee may designate to
Maker in writing from time to time, the principal amount of Three Hundred Sixty
Three Thousand Dollars ($363,000.00), consisting of Three Hundred Thousand
Dollars ($300,000.00) of principal indebtedness ("Base Principal") and Sixty
Three Thousand Dollars ($63,000.00) reflecting deferred interest on the Base
Principal during the period December 2001 through November 2002 ("Deferred
Interest"), together with interest on the Base Principal from the date hereof as
follows.
This Note shall reflect the amended terms of indebtedness extended to the Maker
by the Payee in December 2001 in the principal amount of Three Hundred Thousand
Dollars ($300,000.00).
Interest on the Base Principal shall be at the rate of 21.0% per annum ("Initial
Interest Rate") from the date hereof through May 31, 2003 ("Initial Interest
Period"). Commencing June 1, 2003 through May 31, 2008 ("Second Interest
Period"), interest on the Base Principal shall be at the rate of 18.0% per annum
("Second Interest Rate").
During the five-year term commencing June 1, 2003 this Note is due and payable
in equal and self liquidating monthly installments of Nine Thousand One Hundred
Ninety-Three Dollars and 04/100 ($9,193.04) consisting of amortization of (i)
Deferred Interest, (ii) interest on the Base Principal at the Initial Interest
Rate during the Initial Interest Period, (iii) Base Principal and (iv) interest
on the Base Principal at the Second Interest Rate during the Second Interest
Period. The Maker agrees to make all payments under this Note on the last day of
each month ("Payment Date"). If any payment shall be insufficient, any unpaid
amounts shall be added to the Base Principal and shall be treated in all
respects as additional principal.
The entire outstanding balance of the Base Principal, Deferred Interest and all
accrued but unpaid interest and late charges, if any, shall be become due and
payable at the option of Payee immediately upon the happening of any of the
following events ("Event of Default"):
a. a default in payment of any amount due pursuant to this Note
continuing beyond ten (10) business days after written notice of such
default is given by the Payee to the Maker; or
b. the filing of a petition in voluntary or involuntary bankruptcy
by or against Maker, the general assignment for the benefit of creditors
of Maker, or the appointment of a receiver or trustee of any assets of
Maker.
4
EXHIBIT A
without premium or penalty. Each partial prepayment shall be applied first to
Deferred Interest and thereafter to accrued interest, and then to installments
of current interest and Base Principal, in that order, in the inverse order of
their maturity.
A late charge on any payments due made more than five (5) days after the Payment
Date thereof shall be paid at the rate of one-half of one percent (.5%) per
month or portion thereof that said payment remains unpaid.
It is not intended hereby to charge interest at a rate in excess of the maximum
rate of interest permitted to be charged to Maker hereof under applicable law,
but if, notwithstanding, interest in excess of such maximum legal rate shall be
paid hereunder, the excess shall be retained by Payee as cash collateral for the
payment of the outstanding principal amount and may be applied to pay same.
Maker hereby waives presentment for payment, demand, of non-payment and
dishonor, protest, of protest and any other that may be required under the law
in connection with enforcement of this Note.
If Maker fails to make timely the payments required hereby, Maker shall pay all
costs of collection when incurred, including, without limitation, reasonable
attorney's fees and expenses and court costs. Such costs will be added to the
balance due hereunder.
This Note may not be modified or the face hereof canceled except in a writing,
signed by Maker and by Payee. This Note shall be interpreted and enforced in
accordance with the laws of the State of New York without regard to any
principles of conflicts of law. The parties hereto hereby consent to the
jurisdiction of the Courts of the State of New York and of the United States
District Court for the Eastern District of New York in connection with any and
all actions commenced with respect to this Note and further consent that any
notice, process or notice of motion or other application to either of said
courts or judges thereof may be served in or out of the State of New York by
certified or registered mail return receipt requested, or by personal service,
provided a reasonable time for appearance is allowed, or in such other manner as
may be permitted by either of said courts.
As used herein, the terms "Maker" and "Payee" shall be deemed to include their
respective successors, legal representatives and assigns, whether by voluntary
action of the parties or by operation of law.
CALL COMPLIANCE, INC.
By:
Name:
Title:
