GUARANTY
Exhibit
10.10
THIS
GUARANTY
(the
“Guaranty”)
is
executed as of September 15, 2005 by Xxxxx Xxxx, an individual resident in
Florida (the
“Guarantor”),
for
the
benefit of Pandora
Select Partners L.P.,
a
British Virgin Islands limited partnership (“Pandora”)
and
Whitebox Hedged High Yield Partners, L.P., a British Virgin Islands limited
partnership ("WHHY").
Pandora
and WHHY are referred to herein individually as a "Lender"
and
together as the "Lenders".
RECITALS:
A. Equitex,
Inc., a Delaware corporation (the “Borrower”)
and
Lenders have entered into a Purchase Agreement dated as of this date (the
“Purchase
Agreement”),
pursuant to which the Lenders are , subject to the terms and conditions thereof,
each purchasing a secured convertible promissory note (each, a "Note" and
together, the “Notes”)
and a
warrant to purchase shares of common stock of the Company (each, a "Warrant" together,
the "Warrants")
in
consideration of a collective $1,500,000 loan (the "Loan").
The
Notes are secured by collateral given by Borrower pursuant to an Amended
Security Agreement and a Stock Pledge Agreement, each of this date (together,
the “Security
Agreements”).
The
Purchase Agreement, the Notes, the Warrants and the Security Agreements are
referred to herein collectively as the “Loan
Documents”.
B. The
execution of this Guaranty is a condition precedent to the obligations of each
Lender to perform its respective obligations under the Purchase Agreement.
NOW,
THEREFORE,
in
consideration of each Lender's agreement to purchase its respective Note and
as
an inducement to each Lender to do so, Guarantor covenants and agrees with
each
Lender, for the benefit of the holder from time to time of the Notes, as
follows:
ARTICLE
ONE - REPRESENTATIONS
AND WARRANTIES
Guarantor
makes the following representations and warranties which shall be continuing
representations and warranties until this Guaranty expires in accordance with
the provisions contained herein:
1.01 Guaranty
Authorized and Binding.
The
execution, delivery and performance of this Guaranty does not require the
consent or approval of any governmental body or other regulatory authority;
is
not in contravention of, or in conflict with, any law or regulation; and this
Guaranty is a valid and legally binding obligation of Guarantor enforceable
in
accordance with its terms.
1.02 No
Conflict.
The
execution and delivery of this Guaranty is not, and the performance of this
Guaranty will not be, in contravention of, or in conflict with, any agreement,
indenture or undertaking to which Guarantor is a party or by which Guarantor
or
Guarantor's property is or may be bound or affected and do not, and will not
cause any security interest, lien or other encumbrance to be created or imposed
upon any such property.
1.03
Litigation.
There
is no action, suit or other proceeding pending or, to the knowledge of Guarantor
threatened, against or affecting Guarantor or Guarantor’s properties which, if
determined adversely against Guarantor, would have a material adverse effect
on
the financial position, properties, assets or businesses of Guarantor or which
prevents or interferes with or adversely affects Guarantor's entering into
this
Guaranty or the validity of this Guaranty or the carrying out of the terms
hereof. Guarantor is not in default with respect to any order, writ, injunction,
decree or demand of any court or other governmental or regulatory authority.
No
federal or state tax liens have been filed against Guarantor.
1.04 Solvency.
As of
the date hereof and after giving effect to the obligations being incurred
hereby, the Guarantor is and will be Solvent. For purposes of this Guaranty,
the
term "Solvent" means, with respect to any person at any time, that at such
time
(i) the sum of the debts and liabilities (excluding contingent liabilities)
of
such person is not greater than all of the assets of such person at fair
valuation, (ii) the present fair salable value of the assets of such person
is
not less than the amount that will be required to pay the probable liability
of
such person on its debts as they become absolute and matured, (iii) such person
has not incurred debts or liabilities (including, without limitation, contingent
liabilities) beyond such person's ability to pay as such debts and liabilities
mature, (iv) such person is not engaged in, and is not about to engage in,
a
business or transaction for which such person's property constitutes or would
constitute unreasonably small capital, and (v) such person is not otherwise
insolvent as defined in any law that may be applicable to such person pertaining
to bankruptcy, insolvency or creditors' rights. The Guarantor agrees to notify
the Lenders immediately of any material adverse change in the financial
condition of Guarantor.
1.05 Financial
or Other Benefit or Advantage.
Guarantor hereby acknowledges and warrants that Guarantor has derived or expects
to derive a financial or other benefit or advantage from the Notes and from
each
and every renewal, extension, release of collateral or other relinquishment
of
legal rights made or granted or to be made or granted by Lenders to Borrower
in
connection with the Notes.
ARTICLE
TWO - AGREEMENTS
2.01 Guaranty.
Guarantor hereby unconditionally and irrevocably guaranties to each Lender
the
full and punctual payment, performance and discharge of all principal and
interest and other payments due from Borrower under such Lender's respective
Notes (and all renewals, extensions, modifications and rearrangements thereof)
that is outstanding from time to time and the due and prompt performance of
all
other agreements and obligations of the Borrower under the Loan Documents
(collectively, the “Guaranteed
Obligations”) and
whether or not the Guaranteed Obligations are valid and enforceable against
the
Borrower, whenever the Guaranteed Obligations become due, whether on demand,
at
maturity or by reason of acceleration, or at the time the Borrower or the
Guarantor shall become the subject of any bankruptcy or insolvency proceeding.
This
is a
guaranty of payment and performance and not of collection only.
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2.02 Obligations
Absolute.
The
obligations of Guarantor hereunder shall remain in full force and effect without
regard to, and shall not be affected or impaired by the following, any of which
may occur or be taken without the consent of, or notice to, Guarantor, nor
shall
any of the following give Guarantor any recourse or right of action against
Lenders:
(a) Any
express or implied amendment, modification, renewal, addition, supplement,
extension (including, without limitation, extensions beyond the original term)
or acceleration of or to any of the Loan Documents;
(b) Any
exercise or non-exercise by Lender of any of its respective rights or privileges
under this Guaranty or any of the Loan Documents;
(c) Any
bankruptcy, insolvency, reorganization, composition, adjustment, dissolution,
liquidation or other like proceeding relating to Guarantor or Borrower, or
any
other guarantor (which term shall include any other party at any time directly
or contingently liable for any of the Borrower's obligations under the Loan
Documents or any affiliate of Borrower), or any action taken with respect to
this Guaranty by any trustee or receiver, or by any court, in any such
proceeding, whether or not Guarantor shall have had notice or knowledge of
any
of the foregoing;
(d) Any
release or discharge of the Borrower from its liability under any of the Loan
Documents or any release or discharge of any endorser or other guarantor or
of
any other party at any time directly or contingently liable for the Guaranteed
Obligations or any compromise or settlement by Lender of any of its claims
against any of them;
(e) Any
subordination, compromise, release (by operation of law or otherwise),
discharge, compound, collection, or liquidation of any or all of the collateral
described in any of the Loan Documents or otherwise in any manner, or any
substitution with respect thereto;
(f) Any
assignment or other transfer of this Guaranty in whole or in part or of any
of
the Loan Documents;
(g) Any
acceptance of partial performance of the Guaranteed Obligations;
(h) Any
consent to the transfer of, or actual transfer of, the collateral or any portion
thereof described in the Loan Documents or otherwise;
(i) Any
bid
or purchase at any sale of any of the collateral described in the Loan Documents
or otherwise;
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(j) Any
taking and/or acceptance of any additional guarantees, collateral or security;
and
(k) Any
failure to perfect or to continue the perfection of any security.
2.03 Waivers.
Guarantor unconditionally waives any defense to the enforcement of this
Guaranty, including, without limitation:
(a) All
presentments, demands for performance, notices of nonperformance, protests,
notices of protest, notices of dishonor, and notices of acceptance of this
Guaranty;
(b) Any
right
to require Lender to proceed against Borrower or any other guarantor at any
time
or to proceed against or exhaust any security held by Lender at any time or
to
pursue any other remedy whatsoever at any time;
(c) The
defense of any statute of limitations affecting the liability of Guarantor
hereunder, the liability of Borrower or any guarantor under the Loan Documents,
or the enforcement hereof, to the extent permitted by law;
(d) Any
defense arising by reason of any invalidity or unenforceability of any of the
Loan Documents or any disability of Borrower or any guarantor or of any manner
in which Lender has exercised its rights and remedies under the Loan Documents,
or by any cessation from any cause whatsoever of the liability of Borrower
or
any guarantor;
(e) Any
defense based upon an election of remedies by Lender, including, without
limitation, any election to proceed by judicial or nonjudicial foreclosure
of
any security, whether real property or personal property security, or by deed
in
lieu thereof, and whether or not every aspect of any foreclosure sale is
commercially reasonable, or any election of remedies, including but not limited
to remedies relating to real property or personal property security, which
destroys or otherwise impairs the subrogation rights of Guarantor or the rights
of Guarantor to proceed against Borrower or any other guarantor for
reimbursement, or both;
(f) Any
duty
of Lender to advise Guarantor of any information known to Lender regarding
the
financial condition of Borrower or any other guarantor and all other
circumstances affecting Borrower's or any other guarantor’s ability to perform
its obligations to Lender, it being agreed that Guarantor assumes the
responsibility for being and keeping informed regarding such condition or any
such circumstances; and
(g) Any
rights of subrogation, reimbursement, exoneration, contribution and indemnity,
and any rights or claims of any kind or nature against Borrower which arise
out
of or are caused by this Guaranty, and any rights to enforce any remedy which
Lender now has or may hereafter have against Borrower and any benefit of; and
any right to participate in, any security now or hereafter held by Lender,
until
all of the Guaranteed Obligations have been fully paid and
performed.
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2.04 Subrogation.
Guarantor understands that the exercise by Lenders of certain rights and
remedies may affect or eliminate Guarantor's right of subrogation against
Borrower or any other guarantor and that Guarantor may therefore incur partially
or totally nonreimbursable liability hereunder. Nevertheless, Guarantor hereby
authorizes and empowers each Lender, its successors, endorsees and/or assigns,
to exercise in its or their sole discretion, any rights and remedies, or any
combination thereof; which may then be available, it being the purpose and
intent of Guarantor that the obligations hereunder shall be absolute,
continuing, independent and unconditional under any and all
circumstances.
2.05 Additional
Waivers.
The
Guarantor shall not be released or discharged, either in whole or in part,
by
Lender's failure or delay to (i) perfect or continue the perfection of any
lien
or security interest in any collateral which secures the obligations of the
Borrower, Guarantor or any other guarantor, or (ii) protect the property covered
by such lien or security interest.
2.06 Independent
and Separate Obligations.
The
obligation of Guarantor hereunder is independent of the obligation of Borrower
and, in the event of any default hereunder, a separate action or actions may
be
brought and prosecuted against Guarantor whether or not Guarantor is the alter
ego of Borrower and whether or not Borrower is joined therein or a separate
action or actions are brought against Borrower. The rights of the Lenders
hereunder shall not be exhausted until all of the Guaranteed Obligations have
been fully paid and performed.
2.07 Bankruptcy
No Discharge: Repayments.
So long
as any of the Guaranteed Obligations guaranteed hereunder shall be owing to
Lender, Guarantor shall not, without the prior written consent of such Lender,
commence or join with any other party in commencing any bankruptcy,
reorganization or insolvency proceedings of or against Borrower. Guarantor
understands and acknowledges that by virtue of this Guaranty, Guarantor has
specifically assumed any and all risks of a bankruptcy or reorganization case
or
proceeding with respect to Borrower. As an example and not in any way of
limitation, a subsequent modification of the Guaranteed Obligations in any
reorganization case concerning Borrower shall not affect the obligation of
Guarantor to pay and perform the Guaranteed Obligations in accordance with
their
respective original terms. If claim is ever made upon Lender for repayment
of
the obligations under the Loan Documents and Lender repays all or any part
of
said amount, then, notwithstanding any revocation or termination of this
Guaranty or the cancellation of the Notes or any other instrument evidencing
the
Loan or the Loan Documents, Guarantor shall be and remain jointly and severally
liable to Lender for the amount so repaid to the same extent as if such amount
had never originally been received by Lender.
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2.08 Subordination. In
the
event any default, or event which upon the giving of notice or the lapse of
time
or both could become a default, shall exist in the performance of the Loan
Documents, any indebtedness of Borrower now or hereafter held by Guarantor
is
hereby subordinated to the obligations of Borrower under the Guaranteed
Obligations. If requested by Lender, such indebtedness shall be collected,
enforced and received by Guarantor as trustee for Lender and paid over to Lender
on account of the Loan Documents. However, no such payment shall reduce or
affect in any manner the absolute, unconditional and independent liability
of
Guarantor hereunder except to the extent such payment is applied against the
Loan.
2.09 Payments.
(a) Guarantor
agrees that to the extent Borrower makes any payment to Lender in connection
with the Guaranteed Obligations, and all or any part of such payment is
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid by Lender and to the extent actually paid over to
Guarantor or a trustee of; receiver of; or other successor to, Guarantor's
interest or estate, whether under any bankruptcy act or otherwise (any such
payment is herein referred to as “Preferential
Payment”),
then
this Guaranty shall continue to be effective or shall be reinstated, as the
case
may be, and, to the extent of such payment or repayment by Lender, the
Guaranteed Obligations or part thereof intended to be satisfied by such
Preferential Payment shall be revived and continued in full force and effect
as
if said Preferential Payment had not been made.
(b) Notwithstanding
any other provision of this Guaranty to the contrary, Guarantor hereby waives
any claim or other rights which any Guarantor may now have or hereafter acquire
against Borrower or any other guarantor of all or any of the Guaranteed
Obligations under this Guaranty or any other of the Loan Documents (all such
claims and rights are referred to as “Conditional
Rights”),
including, without limitation, any right of subrogation, reimbursement,
exoneration, contribution, or indemnification, any right to participate in
any
claim or remedy of Lender against Borrower or any collateral which Lender now
has or hereafter acquires, whether or not such claim, remedy or right arises
in
equity or under contract, statute or common law, by any payment made hereunder
or otherwise, including without limitation, the right to take or receive from
Borrower, directly or indirectly, in cash or other property or by setoff or
in
any other manner, payment or security on account of such claim or other rights.
If, notwithstanding the foregoing provisions, any amount shall be paid to
Guarantor on account of any Conditional Rights and either (i) such amount is
paid to Guarantor at any time when the Guaranteed Obligations shall not have
been paid or performed in full, or (ii) regardless of when such amount is paid
to Guarantor, any payment made by Borrower to Lender is at any time determined
to be a Preferential Payment, then such amount paid to Guarantor shall be held
in trust for the benefit of Lender and shall forthwith be paid to Lender to
be
credited and applied upon the Guaranteed Obligations, whether matured or
unmatured, in such order as Lender, in its sole and absolute discretion, shall
determine. Notwithstanding the foregoing, Guarantor may pursue any claims
Guarantor has against Borrower, provided Borrower and Guarantor are not or
shall
not come into default under the Loan Documents.
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(c) To
the
extent that any of the provisions of this Section 2.09 shall not be enforceable,
Guarantor agrees that until such time as the Guaranteed Obligations have been
paid and performed in full and the period of time has expired during which
any
payment made by Borrower or Guarantor to Lender may be determined to be a
Preferential Payment, Guarantor's Conditional Rights to the extent not validly
waived shall be subordinate to Lender's right to full payment and performance
of
the Guaranteed Obligations, and Guarantor shall not enforce Guarantor’s
Conditional Rights during such period.
2.10 Lender's
Right of Setoff.
In
addition to all liens upon and rights of setoff against the moneys, securities
or other property of Guarantor given to Lender by law, each Lender shall have,
with respect to Guarantor's obligations to such Lender under this Guaranty
and
to the extent permitted by law, a contractual possessory security interest
in
and a right of setoff against, and Guarantor hereby assigns, conveys, delivers,
pledges, and transfers to such Lender all of Guarantor's right, title and
interest in and to, all deposits, moneys, securities and other property of
Guarantor, if any, now or hereafter in the possession of or on deposit with
such
Lender, whether held in a general or special account or deposit, whether held
jointly with someone else, or whether held for safekeeping or otherwise. Every
such security interest and right of setoff may be exercised without demand
upon
or notice to Guarantor. No security interest or right of setoff shall be deemed
to have been waived by any act or conduct on the part of Lender or by any
neglect to exercise such right of setoff or to enforce such security interest
or
by any delay in so doing. Every right of setoff and security interest shall
continue in full force and effect until such right of setoff or security
interest is specifically waived or released by an instrument in writing executed
by Lender.
ARTICLE
THREE - MISCELLANEOUS
3.01 Expenses.
In
addition to the Guaranteed Obligations, Guarantor agrees to pay all costs and
expenses, including reasonable attorneys' fees, which may be incurred by each
Lender in any effort to collect or enforce any of the Loan Documents or the
obligations of Guarantor hereunder, whether or not any lawsuit is filed,
including, without limitation, all costs and attorneys' fees incurred by Lender
in any bankruptcy proceeding (including, without limitation, any action for
relief from the automatic stay of any bankruptcy proceeding, whether or not
Lender prevails therein) and in any judicial or nonjudicial foreclosure action.
Such amounts shall bear interest until paid at a rate equal to 12% per annum,
or
if less, the highest rate permitted by law.
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3.02 Amendments;
Successors.
Neither
this instrument nor any term hereof may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge or termination is
sought. All of the terms of this instrument shall be binding upon and shall
inure to the benefit of the parties hereto and their respective heirs,
executors, administrators, personal representatives, successors and assigns.
In
the event of the death of any individual person included in the term
“Guarantor,” this Guaranty shall be enforceable as a claim against that
individual's estate or otherwise against the representatives of the individual's
estate, the individual's heirs-at-law, the devisees and beneficiaries of the
individual's total estate and each of them. The term “Borrower” shall mean both
the named Borrower and any other person or entity at any time assuming or
otherwise becoming primarily liable on all or any part of the obligations set
forth in the Loan Documents. No delay or failure by Lender to exercise any
remedy against Borrower or Guarantor will be construed as a waiver of that
right
or remedy. All remedies of each Lender are cumulative and may be exercised
singly, simultaneously, consecutively and in any order. In the event that the
provisions of this Guaranty are claimed or held to be inconsistent with any
other instrument evidencing or securing the Notes, or the obligations of
Guarantor, the terms of this Guaranty shall remain fully valid and effective.
Any married person executing this Guaranty agrees that recourse may be had
against community assets and against such person's separate property for the
satisfaction of the obligations hereby guaranteed. When the context in which
the
words are used in this Guaranty indicates that such is the intent, words in
the
singular number shall include the plural and vice-versa. All references to
“Guarantor” shall be interpreted to include Guarantor. If any one or more of the
provisions of this Guaranty should be determined to be illegal or unenforceable,
all other provisions shall remain effective. Guarantor shall not have the right
to assign any of Guarantor’s rights or obligations under this
Guaranty.
3.03 Governing
Law.
This
Guaranty shall be governed by and be construed pursuant to the laws of the
State
of Minnesota applicable to contracts made and performed in the State of
Minnesota without reference to any conflict or choice of law rules that would
otherwise apply. Any suit, action or proceeding arising out of or in connection
with this Agreement may be brought in the Minnesota District Court for Hennepin
County, Minnesota, or the United States District Court for the District of
Minnesota, and the parties hereto irrevocably submit and consent to the
jurisdiction of each such court and agree that any summons, complaint, writ,
judgment or other notice or service or legal process may be sufficiently served
upon it in connection with any such suit, action or proceeding, if sent to
the
last known address of the applicable party in accordance with the provisions
of
Section
3.07
hereof.
The submission to said jurisdiction shall not (and shall not be construed so
as
to) limit the right of the Lender to take proceedings against the Guarantor,
in
whatsoever jurisdictions shall be appropriate nor shall the taking of
proceedings in any one or more jurisdictions preclude the taking of proceedings
in any other jurisdiction, whether concurrently or not.
3.04 Assignability
by Lender.
Each
Lender may, at any time and from time to time, assign, conditionally or
otherwise, all of the rights of such Lender under its respective Note and under
this Guaranty, whereupon the assignee shall succeed to all rights of such Lender
hereunder to the extent that such rights may be assigned to it. Lender, or
each
successor holder of the Note, may give written notice to Guarantor of any such
assignment, but any failure to give, or delay in giving, such notice shall
not
affect the validity or enforceability of any such assignment.
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3.05 Demands.
Each
demand by Lender for performance or payment hereunder shall be in writing and
shall be made in the manner set forth in Section 3.07 below. A dated statement
signed by an officer of Lender setting forth the amount of indebtedness at
the
time owing to Lender by Borrower under the Loan Documents shall be presumptive
evidence thereof (subject to rebuttal) as between Guarantor and Lender in any
legal proceedings against Guarantor in connection with this
Guaranty.
3.06 Term.
The
obligations of the Guarantor under this Guaranty shall continue in full force
and effect until the Guaranteed Obligations shall have been fully paid and
performed and the period of time has expired during which any payment made
by
Borrower, Guarantor or any other guarantor to Lender may be determined to be
a
Preferential Payment.
3.07 Notices.
All
notices, demands, and other communications shall be in writing and shall be
deemed to have been duly given and effective (i) when delivered if personally
delivered by hand (with written confirmation of receipt), (ii) when received
if
sent by a nationally recognized overnight courier service (receipt requested),
or (iii) when receipt is acknowledged by the receiving party if delivered via
facsimile or electronic email, at the following addresses (or at such other
addresses as shall be given by written notice by any party to the
others):
|
To
Guarantor:
|
Xxxxx
Xxxx
0000
Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx,
Xxxxxxxx 00000
Facsimile:
(000) 000-0000
Email:
xxxxx@xxxxxxx.xxx
|
||
|
To
Lenders, in care of:
|
Whitebox
Advisors, LLC
0000
Xxxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxxxxx,
Xxxxxxxxx 00000
Attention:
Xxxxxxxx Xxxx, Chief Financial Officer
Facsimile:
(000) 000-0000
Email:
xxxxx@xxxxxxxxxxxxxxxx.xxx
|
3.08 Complete
Agreement.
This
Guaranty supersedes any prior negotiations, discussions or communications
between Guarantor and each Lender and constitutes the entire agreement between
each Lender and Guarantor with respect to the Guaranteed Obligations. This
Guaranty may be executed in one or more counterparts, all of which, taken
together, shall constitute one and the same Guaranty.
[signature
page follows]
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IN
WITNESS WHEREOF,
the
undersigned Guarantor has executed this Guaranty as of the date first above
written.
| GUARANTOR: | |||
| /s/ Xxxxx Xxxx | |||
|
Xxxxx Xxxx |
|||
| Name Title More Title |
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