EXHIBIT (c)(16)
GUARANTY AND PLEDGE AGREEMENT
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THIS GUARANTY AND PLEDGE AGREEMENT (the "Agreement") is made and
entered into as of this 31st day of October, 1996, by and between The Cross
Country Group, L.L.C. ("Secured Party") and Homeowners Group, Inc. ("Pledgor").
RECITALS
WHEREAS, simultaneous with the execution and delivery of this
Agreement, Secured Party has acquired from Acceleration National Insurance
Company all its rights under that certain judgment in consolidated cases styled
Acceleration National Insurance Company v. Homeowners Marketing Services, Inc.,
et al, in the Court of Common Pleas, Franklin County, Olio, Case No. 91 CVH 1
1-9404 and 94CVHO5-3083 (the "Judgment");
WHEREAS, Secured Party, Pledgor and Homeowners Marketing Services, Inc.
("HMSI") have, contemporaneously with the execution of this Guaranty and Pledge
Agreement, entered into a Settlement Agreement with respect to the Judgment to,
among other things, extend the date by which amounts payable by HMSI must be
paid (the "Settlement Agreement");
WHEREAS, Pledgor is the owner of a stock certificate evidencing 1,000
shares of stock of HMSI (the "HMSI Stock"), representing a 100% interest in
HMSI;
WHEREAS, Pledgor is the owner of a stock certificate evidencing 500
shares of Homeowners Marketing Services International, Inc. ("HMSII) stock (the
"HMSII Stock"), representing a 100% interest in HMSII;
WHEREAS, CC Acquisition Corporation, an affiliate of the Secured Party,
has confirmed its intent to consummate the transactions described in that
certain Agreement and Plan of Merger dated as of May 14, 1996 among Pledgor, CC
Acquisition Corporation and The Cross Country Group, Inc,, as amended by
amendment of even date herewith;
WHEREAS, Secured Party has required that Pledgor enter into this
Guaranty and Pledge Agreement as a condition to the Secured Party entering into
the Settlement Agreement;
NOW THEREFORE, in consideration of the premises and the mutual
covenants contained here' and for other good and valuable consideration, the
parties hereto agree as follows:
AGREEMENT
1. Guarantee of Obligations. In consideration of Secured Party's
execution of the Settlement Agreement, Pledgor hereby absolutely and
unconditionally guarantees to Secured Party the performance of the obligations
of HMSI under the Judgment and the Settlement Agreement.
2. Pledge of Pledged Shares. As security for the guaranty set forth in
Section I above, Pledgor hereby pledges to Secured Party, and grants to Secured
Party, a first priority security interest in the HMSI Stock and the HMSII Stock
(collectively, the "Pledged Shares").
3. Delivery of Pledged Shares. The certificates representing the
Pledged Shares are hereby delivered to Secured Party, to be held by Secured
Party, in accordance with the terms of this Agreement, accompanied by duly
executed instruments of transfer.
4. Representations of Pledgor. Pledgor hereby represents and warrants
that it is the record and beneficial holder of the Pledged Shares free and clear
of any hens affecting the title thereto, except for liens created by this
Agreement. Pledgor hereby represents and warrants that it has the right to
pledge the Pledged Shares.
5. Rights of Pledgor. During such time that Secured Party holds the
Pledged Shares, and until such time as Secured Party forecloses on such Pledged
Shares pursuant to the terms of paragraph 6 hereof, Pledgor shall be the owner
of such Pledged Shares and shall have the right to vote and give consents with
respect to the Pledged Shares and to collect and receive dividends paid in
respect of the Pledged Shares, and Secured Party shall have no right to sell,
transfer, pledge, hypothecate or otherwise transfer the Pledged Shares to any
third party. Notwithstanding the foregoing, and in addition to its rights
pursuant to Section 6 hereof, in the event that there shall be and for so long
as there shall be a continuing default by Pledgor under the Judgment and/or the
Settlement Agreement, Secured Party shall have the right to vote the Pledged
Shares.
6. Defaults and Remedies. (a) In the event that HMSI shall default in
the performance of its obligations under the Judgment and/or the Settlement
Agreement, beyond any grace or cure period provided therein, and Pledgor shall
have failed within five (5) days of notice thereof from Secured Party to cure
the same, Secured Party shall have all rights with respect to the Pledged Shares
as shall be provided to Secured Party under the Uniform Commercial Code as then
in effect in the State of Florida.
(b) Pledgor agrees that any notice by the Secured Party of the proposed
disposition of the Pledged Shares or any other intended action hereunder,
whether required by the Uniform Commercial Code or otherwise, shall constitute
reasonable notice to Pledgor if the notice is sent by a recognized overnight
delivery service at least ten (10) days before the action to the Pledgor at 000
Xxxxxxxx Xxxxxxxxx Xxxxxxx, Xxxxxxx, Xxxxxxx 00000 or to any other address which
Pledgor has specified in writing to the Secured Party as the address to which
notices shall be given to Pledgor.
7. Release. Immediately upon the compliance in full with the Judgment
and/or Settlement Agreement, in accordance with the terms thereof, Secured Party
shall redeliver the Pledged Shares to Pledgor, together with all instruments of
transfer delivered herewith, free and clear of any and all hens affecting title
thereto, and Pledgor's obligations hereunder shall terminate.
8. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of, and enforced in the courts of the Commonwealth of
Massachusetts.
9. Counterpart Signatures. This Agreement may be signed in one or more
counterparts.
10. Headings. The headings are for the convenience of reference only,
and do not form a part hereof and in no way define, limit, describe, modify or
interpret the meanings of the parties, the scope of this Agreement or the intent
of any Section hereof.
11. Severability. If for any reason any provision or provisions hereof
are determined to be invalid and contrary to any existing or future law, such
invalidity shall not impair the operation or affect of those portions of this
Agreement which are valid.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
THE CROSS COUNTRY GROUP, L.L.C.
By: /s/ Xxxxxx X. Xxxx
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HOMEOWNERS GROUP, INC.
By: /s/ C. Xxxxxxx Xxxxxx
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C. Xxxxxxx Xxxxxx, Vice President,
Treasurer & Chief Financial Officer
