EXHIBIT 10.19
GUARANTY AND SUBORDINATION
--------------------------
(Revolver Loan)
This GUARANTY AND SUBORDINATION ("Guaranty") is made as of the 29th day of
December, 1994, by CPS ACQUISITION CORP., a Georgia 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 Systems, Inc., a Texas corporation
("Borrower"), pursuant to a Revolver Loan Agreement of even date herewith (as
from time to time renewed, amended, restated or replaced, the "Revolver Loan
Agreement") a loan in the form of a revolving line of credit in a principal
amount not to exceed One Million Dollars ($1,000,000) ("Revolver Loan"). The
Revolver Loan will be evidenced by a promissory note in the original face amount
up to One Million Dollars ($1,000,000) (as from time to time renewed, amended,
restated or replaced, "Revolver Loan Note").
B. The Revolver Loan Agreement, the Revolver Loan Note, and all other
documents now or hereafter executed in connection with the Revolver Loan are
hereinafter referred to as the "Revolver Loan Documents".
C. In order to induce Lender to make the Revolver Loan, Guarantor has
agreed to execute and deliver this Guaranty. Lender has agreed to make the
Revolver 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 Revolver 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 Revolver 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 Revolver Loan Documents to cure the
breach or default before it becomes an Event of Default (as defined in the
Revolver 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 Revolver 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
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the Revolver Loan Documents, hereunder or existing at law or otherwise, 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
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judicata, statute of frauds, anti-deficiency statute, fraud, usury, illegality
or unenforceability which may be available to Borrower with respect to the
Revolver Loan Documents (or the Revolver 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 Revolver
Loan Documents or extends the period of time during which Borrower may obtain an
advance of the Revolver Loan), any alteration of the Revolver Loan Documents or
any waiver of any provisions of the Revolver 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 Revolver 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 Revolver 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 Revolver Loan Note (which amount, together with any other sums due under
the Revolver 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 Revolver 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 Acquisition Corp. 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 Revolver 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.
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If to Lender: Greyhound Financial Corporation
(two copies) Dial Tower
Dial Corporate Center
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Attn: Vice President - Law
Telecopy: (000) 000-0000
and
Greyhound Financial Corporation
000 Xx. Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: Portfolio Manager
Telecopy: (000) 000-0000
If to Guarantor: CPS Acquisition Corp.
0000 Xxxxxxxx Xx., Xxxxx 000
Xxxxxx, Xxxxx 00000
Attn: Xxxx X. Xxxx
Telecopy: (000) 000-0000
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 require to close.
4.3 Terms used and not otherwise defined herein shall have the same
meanings given thereto in the Revolver 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
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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 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 REVOLVER LOAN TO BORROWER.
[INITIALS APPEAR HERE] GUARANTOR's Initials
----------------------
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 Guarantor into Borrower.
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.
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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.
IN WITNESS WHEREOF, this Guaranty is executed to be effective as of that
date first appearing above.
GUARANTOR:
CPS ACQUISITION CORP.,
a Georgia corporation
By: /s/ Xxxx X. Xxxx
-----------------------------
Xxxx X. Xxxx, President
STATE OF ARIZONA )
) ss.
County of Maricopa )
This instrument was acknowledged before me this 30th day of December, 1994,
by Xxxx X. Xxxx, the President of CPS ACQUISITION CORP., a Georgia corporation,
on behalf of such corporation.
/s/ Xxxxx X. Xxxxx
--------------------------------
Type/Print Name: Xxxxx X. Xxxxx
----------------
Notary Public, State of Arizona
[SEAL OF XXXXX X. XXXXX APPEARS HERE]
My commission expires:
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[SEAL OF XXXXX X. XXXXX APPEARS HERE]
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Lender hereby accepts this Guaranty and Subordination.
LENDER: GREYHOUND FINANCIAL CORPORATION,
a Delaware corporation
BY: /s/ Xxxxxxxx Xxxxxx
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Its: Vice President
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Schedule 1
NONE
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