GUARANTY AND PLEDGE AGREEMENT
This Guaranty and Pledge Agreement (the "Agreement") is made on the
21st day of July, 2000, among the persons whose names are set forth at the end
of this Agreement (collectively the "Guarantors"), and TRANSCAP TRADE FINANCE,
an Illinois general partnership (the "Contractor"), as follows:
BACKGROUND OF AGREEMENT:
A. The Contractor and MAJESCO SALES, INC., a New Jersey corporation (the
"Manufacturer"), have on this day entered into a Master Purchase Order
Assignment Agreement (the "Assignment Agreement") under the terms of
which the Manufacturer will assign customer purchase orders to the
Contractor and request the Contractor to purchase the required
materials to fulfill such purchase orders; the Contractor will retain
the Manufacturer to manufacture, process and ship ordered goods; and
fees will be paid to the Contractor and the Manufacturer for their
services thereunder.
B. Each of the Guarantors has a substantial financial stake in the
Manufacturer and will substantially benefit from the performance by
Contractor of its obligations under the Assignment Agreement.
C. The execution of this Agreement is an express condition to the
consummation of the transactions contemplated by the Assignment
Agreement and the Contractor is unwilling to enter into or perform in
accordance with the Assignment Agreement in the absence of the
execution of this Agreement.
THEREFORE, in consideration of the services to be performed, the
payments to be made, and the obligations to be assumed by the Contractor
pursuant to the Assignment Agreement, and further as an inducement to the
Contractor to enter into and perform in accordance with the Assignment
Agreement, the Guarantors hereby agree as follows:
1. DEFINITIONS. In this Agreement, the following frequently used terms
are defined as set forth in this (paragraph) 1:
(a) Any terms used in this Agreement which are defined in the
Assignment Agreement will have the same meaning herein as is ascribed to such
term in the Assignment Agreement.
(b) The "Contract Documents" are, collectively, the Assignment
Agreement, the Security Agreement and Financing Statement between the Contractor
and the Manufacturer dated this day, the Subordination Agreement between the
Contractor, the Manufacturer, and the Senior Lender dated this day, and this
Agreement.
(c) The "Obligations" mean all of the obligations of the Manufacturer
and each of the Guarantors pursuant to the Contract Documents.
(d) The term "Guarantors" means all of the undersigned, jointly and
severally; and the term "Guarantor" means each of the undersigned, individually
and collectively.
(e) The "Securities" means the securities of the Manufacturer listed on
Schedule I attached to this Agreement and made a part hereof, together with all
other or additional securities to which any of the Guarantors (without
additional consideration) now are, or hereafter may be, entitled by virtue of
such Guarantor's ownership of any of the securities as a result of any corporate
reorganization, merger or consolidation, stock split, stock dividend, or
otherwise.
(f) A "Default" means the occurrence of an event of default by the
Manufacturer pursuant to or in accordance with the provisions of any of the
Contract Documents or the failure of the Guarantors (or any of them) to perform
any covenant or agreement contained in this Agreement or if any representation
or warranty contained in this Agreement is found to have been untrue, incomplete
or misleading in any material respect when furnished.
(g) The "Collateral" means all assets, property, and interests in
assets and property in which a security interest is granted and a pledge is made
by the Guarantors (or any of them) pursuant to (paragraph) 3 below.
2. GUARANTY. The Guarantors, jointly and severally, unconditionally and
irrevocably, guaranty to Contractor the full and prompt payment and performance
when due, whether at maturity or earlier (by reason of acceleration) and at all
times thereafter, of all of the Obligations, and the undersigned further agree
to pay all costs and expenses including, without limitation, all court costs and
reasonable attorneys' fees and expenses paid or incurred by the Contractor in
endeavoring to collect all or any part of the Obligations from, or in
prosecuting any action against, Manufacturer or any of the Guarantors.
3. PLEDGE OF SECURITIES. In addition, to secure the payment and
performance of the Obligations, the Guarantors each hereby grant to Contractor a
security interest in and hereby pledge and assign to Contractor the Securities,
with stock powers attached thereto all duly endorsed in blank, herewith
delivered to Contractor, and any and all dividends, distributions and other
proceeds thereof.
4. TERMS AND CONDITIONS. (a) Subject to the provisions of the Contract
Documents, Contractor shall have the exclusive right to determine the
application of payments and credits, if any, received by Contractor from the
undersigned, the Manufacturer, the Senior Lender, and any Customer.
(b) Contractor is authorized, without notice or demand, and without
affecting the liability of any of the Guarantors, from time to time to (i)
renew, extend, accelerate or otherwise change the time for payment or
performance of, or other terms relating to, the Obligations or any of them, or
otherwise modify, amend or change the terms of the Contract Documents or any of
them, or any other agreement, document or instrument now or hereafter executed
by the Manufacturer and delivered to Contractor; (ii) accept partial payments on
or performance of the Obligations; (iii) take and hold security or collateral
for the undersigned's Obligations under this Agreement, or any other
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guaranties of, or support or security agreement relating to, the Obligations and
exchange, enforce, waive and release any such security or collateral; (iv) apply
such security or collateral and direct the order or manner of sale as in its
sole discretion it may determine; and (v) settle, release, compromise, collect
or otherwise liquidate the Obligations and any security or collateral in any
manner, without affecting or impairing the Obligations of the undersigned.
(c) At any time after a Default, Contractor may, at its discretion,
upon notice to the Guarantors and regardless of the acceptance of any security
or collateral for the payment, appropriate and apply toward the payment and
satisfaction of the Obligations (i) any indebtedness due or to become due from
Contractor to one or more of the Guarantors; and (ii) any monies, credits or
other property belonging to one or more of the Guarantors, at any time held by
Contractor on deposit or otherwise.
(d) Contractor shall not be required to take any steps to preserve any
rights against prior parties (if any) to or in any of the Collateral or
Obligations.
(e) Contractor may, but shall not be obligated to, and each of the
undersigned designates Contractor as attorney-in-fact to, contest, pay and/or
discharge all liens, encumbrances, taxes or assessments on, or claims, actions
or demands against any of the Collateral upon notice to, but without the consent
of the undersigned and to take all actions and proceedings in their name or in
the name of the Manufacturer or of any other appropriate person to remove or
contest such liens, encumbrances, claims, actions, demands, taxes or assessments
by litigation or otherwise. The undersigned agree to pay on demand all costs,
attorneys' fees, expenses, and all other stuns advanced or paid by Contractor
pursuant to this (paragraph) 4(e).
(f) Contractor may, at its discretion, file one or more financing
statements, and in that respect to serve as the attorney-in-fact for each of
the undersigned for the purpose of executing such financing statements under the
Uniform Commercial Code, naming the Guarantors as debtor and Contractor as
secured party, and describing the types or items of Collateral. Contractor may
further serve as the attorney-in-fact for the Guarantors for the purpose of
executing any additional notices, affidavits or other documents as Contractor
may deem necessary to protect its security interest. The Guarantors agree to pay
on demand the amount of any and all filing fees and expenses which Contractor
deems necessary to incur to protect its interest in the Collateral.
(g) Contractor shall exercise reasonable care in the custody and
preservation of the Collateral to the extent required by applicable statute, and
shall be deemed to have exercised reasonable care if it takes such action for
that purpose as the undersigned shall reasonably request in writing; but under
no circumstances shall any omission to comply with any such request of itself be
deemed a failure to exercise reasonable care. The undersigned agree to pay on
demand any cost or expense, including without limitation, attorneys' fees and
costs incurred by Contractor in the reasonable preservation of the Collateral.
(h) The Guarantors consent and agree that Contractor shall be under no
obligation to xxxxxxxx any assets against, or in payment of, any or all of the
Obligations. Guarantors further agree that to the extent that the Manufacturer
makes a payment(s) to Contractor, which payment(s) are
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subsequently invalidated, declared to be fraudulent or preferential, set aside
and/or required to be repaid to a trustee, receiver or any other party under any
bankruptcy act, state or federal law, common law or equitable cause, then to the
extent of such payment or repayment, the obligation intended to be satisfied
shall be renewed and continued in full force and effect as if said payment had
not been made, and the Guarantors shall, upon demand by Contractor, immediately
satisfy such obligation in full in accordance with the terms of this Agreement.
The Guarantors further agree that any and all claims of the Guarantors against
the Manufacturer or against its properties, arising by reason of any loan,
advance, investment or other payment by the undersigned to Contractor shall be
subordinate and subject in right of payment to the prior payment, in full, of
all sums due pursuant to the Obligations.
(i) Each Guarantor assumes responsibility for keeping himself, herself
or itself informed of the financial condition of the Manufacturer and of all
other circumstances bearing upon the risk of Default. Contractor shall have no
duty to advise the Guarantors of information known to Contractor regarding such
condition or circumstances.
(j) No delay on the part of Contractor in the exercise of any right or
remedy shall operate as a waiver or constitute a discharge of any of the
Guarantors' obligations under this Agreement, and no single or partial exercise
by Contractor of any right or remedy shall preclude the further exercise to any
extent; nor shall any modification or waiver of any of the provisions of this
Agreement be binding upon Contractor except as expressly set forth in a writing
duly signed and delivered by an authorized officer of Contractor. Contractor's
failure at any time to require strict performance by the Manufacturer or any
other party of any of the provisions, warranties, terms and conditions contained
in the Contract Documents shall not discharge any of the Guarantors' obligations
under this Agreement, nor shall it waive, affect or diminish any right of the
Contractor at any time to demand strict performance and such right shall not be
deemed to have been waived by any act or knowledge of Contractor unless such
waiver is contained in an instrument in writing, signed by an officer of
Contractor specifying such waiver. No waiver by Contractor of any default shall
operate as a waiver of either any other default or the same default on a future
occasion, and no action or inaction by Contractor including, without limitation,
Contractor's failure to take any steps to preserve its rights in the Collateral,
shall in any way affect or impair Contractor's rights or the obligations of the
Guarantors under this Agreement. The Guarantors agree that their obligations
under this Agreement will not be discharged except by complete performance of
all of the Obligations. Any determination by a court of competent jurisdiction
of the sums owing by the Manufacturer to Contractor shall be conclusive and
binding on the Guarantors irrespective of whether any of the Guarantors was a
party to the suit or action in which such determination was made.
5. WARRANTIES AND REPRESENTATIONS. Each of the Guarantors, jointly and
severally, hereby represent and warrant to the Contractor that:
(a) The execution, delivery, and performance by each Guarantor of this
Agreement will not violate any provision of law, any order of any court or other
agency of government, or any agreement or other instrument to which any of the
Guarantors is a party or by which any of the Guarantors is bound or be in
conflict with, result in a breach of or constitute (with due notice or lapse of
time, or both) a default under any such agreement or other instrument, or result
in the creation or
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imposition of any lien, charge, or encumbrance of any nature whatsoever upon any
of the property or assets of any Guarantor, except as contemplated by the
provisions of this Agreement;
(b) This Agreement constitutes the legal, valid and binding obligation
of each of the Guarantors and is enforceable against each of the Guarantors in
accordance with the terms hereof;
(c) As to such of the Collateral deposited with the Contractor on the
date hereof (i) the Guarantors are between them the legal and beneficial owners
of the Securities; (ii) the Securities are validly issued, fully paid and
non-assessable, and represent the percent of issued and outstanding shares of
stock of (or other interest in) the Manufacturer as set forth in Schedule I;
(iii) the securities transfer forms attached to the Certificates representing
such Collateral have been duly executed and delivered by each of the Guarantors
to Contractor; and (iv) none of the Collateral is subject to any security
interest, pledge, lien or other encumbrance or adverse claim of any nature
whatsoever.
6. VOTING RIGHTS. Unless and until a Default hereunder shall have
occurred, each of the Guarantors shall be entitled to exercise all voting powers
pertaining to the portion of the Securities owned by such Guarantor for any
purposes not inconsistent with, or in violation of, the provisions of this
Agreement in all corporate matters except (unless Contractor consents thereto)
those related to any merger or consolidation of the Manufacturer, reorganization
of the Manufacturer, or mortgage, hypothecation, sale, or any other disposition
whatsoever by the Manufacturer of any of its material assets if such sale or
disposition shall decrease the net worth of the Manufacturer.
7. DEFAULT. (a) Upon and during the continuance of any Default,
Contractor may, at its sole election: (i) proceed directly and at once, without
notice, against one or more of the Guarantors to collect and recover the full
amount or any portion of the Obligations, without first proceeding against the
Manufacturer or any other Guarantor, any collateral or any other party or any
other person, firm or corporation; (ii) with or without notice, transfer to or
register in the name of itself or its nominee any of the Securities, and whether
or not so transferred or registered, receive the income and dividends, including
stock dividends and rights to subscribe, and hold the same as a part of the
Collateral to secure the performance and payment of the Obligations, and/or
apply the same as provided in this Agreement; (iii) exchange any of the
Securities for other property upon the reorganization, recapitalization, or
other readjustment of the Manufacturer; and (iv) vote the Securities and
exercise or cause its nominee to exercise all or any powers with the same force
and effect as an absolute owner. All of the above rights and powers may be
exercised by Contractor without liability, except the obligation to account for
property actually received.
(b) In addition to any other rights given by law and under this
Agreement, Contractor shall have the rights and remedies with respect to the
Collateral of a secured party under the Illinois Uniform Commercial Code
(whether or not that Code is in effect in the jurisdiction where the rights and
remedies are asserted) all of which remedies shall be cumulative, and none
exclusive, to the extent permitted by law. Contractor may sell or cause to be
sold, in one or more sales or parcels, at such price or prices as Contractor may
deem best, and for cash or on credit or for future delivery, without assumption
of any credit risk, all or any of the Collateral, at public or private sale,
without demand of performance but with notice to the undersigned, and the
purchaser of any or all of the
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Collateral so sold shall then hold the same absolutely, free from any claim or
right of any kind including (but not limited to) any equity of redemption of any
Guarantor. Any requirements of reasonable notice shall be met if such notice is
mailed, postage prepaid, to the Guarantors at the addresses set forth below at
least ten (10) days before the time of the sale or disposition. Any other
requirement of notice, demand or advertisement for sale is waived. Contractor
may, in its own name, or in the name of its designee, buy at any public or, if
permitted by law, any private sale, and, in lieu of the actual payment of the
purchase price, Contractor may set off the amount of such price against each
Guarantor's obligations hereunder. The undersigned, jointly and severally, will
pay to Contractor all expenses (including attorney's fees) of, or incident to,
the enforcement of any of the provisions of this Agreement.
(c) Any right to set-off exercised by Contractor shall be deemed to
have been exercised immediately on the occurrence of a Default, even though such
set-off is made or entered on the books of Contractor at any subsequent time.
(d) In view of the fact that federal and state securities laws may
impose certain restrictions on the method by which a sale of the Securities may
be effected, it is agreed that in the event of a Default, Contractor may from
time to lime attempt to sell all or any part of the Collateral by means of a
private placement, restricting the bidders and prospective purchasers to those
who will represent and agree that they are purchasing for investment only and
not for distribution. The undersigned agrees that acceptance by Contractor of
the highest offer after soliciting offers from two or more potential buyers
would be commercially reasonable.
(e) Contractor, at any time and at its option, may apply all or any net
cash receipts from the sale of Collateral to the payment of the Obligations,
applying or reapplying, or distributing or allocating the same as it shall
elect, whether or not then due. In case of any sale by Contractor of any of the
Collateral on credit or for future delivery, the property sold may be retained
by Contractor until the selling price is paid by the purchaser, but Contractor
shall incur no liability in case of failure of the purchaser to take and pay for
the property so sold. In case of any such failure, the property so sold may be
again similarly sold.
8. INDEMNIFICATION. The Guarantors will at all times, now and
hereafter, jointly and severally, indemnify and hold Contractor harmless from
and against all loss or damage arising in connection with this Agreement and
against all claims, liability, demands, actions or suits, and all liabilities,
payments, costs, charges and expenses including, but not limited to, attorneys'
fees and costs incurred by Contractor on account of or in connection with the
Agreement or the transactions or assertions of rights contemplated or permitted
hereunder.
9. MISCELLANEOUS. (a) This Agreement shall be binding upon the
undersigned and upon the heirs, executors, successors and assigns of the
undersigned and shall inure to the benefit of Contractor's successors and
assigns; all references to the Manufacturer and to the undersigned shall be
deemed to include their respective successors, assigns, participants, receivers
or trustees (as the case may be).
(b) This Agreement embodies the entire understanding of the parties
pertaining to the subject matter hereof, and shall constitute a continuing
agreement applicable to future as well as existing transactions between the
Contractor and the Manufacturer.
(c) THIS AGREEMENT HAS BEEN DELIVERED AT AND SHALL BE DEEMED TO HAVE
BEEN MADE IN CHICAGO, ILLINOIS, AND SHALL BE INTERPRETED, AND THE RIGHTS AND
LIABILITIES OF THE PARTIES DETERMINED, IN ACCORDANCE WITH THE LAWS OF THE STATE
OF ILLINOIS, AND AS PART OF THE CONSIDERATION FOR CONTRACTOR'S PERFORMANCE
PURSUANT TO THE CONTRACT DOCUMENTS, THE UNDERSIGNED CONSENT TO THE JURISDICTION
OF ANY LOCAL, STATE OR FEDERAL COURT LOCATED WITHIN THE STATE OF ILLINOIS, AND
FURTHER CONSENT THAT ALL SUCH SERVICE OF PROCESS BE MADE BY CERTIFIED OR
REGISTERED MAIL, AND BY FEDERAL EXPRESS OR OTHER REPUTABLE OVERNIGHT COURIER,
DIRECTED TO THE UNDERSIGNED AT THE ADDRESS STATED HEREIN AND SERVICE SO MADE
SHALL BE DEEMED TO BE COMPLETED TWO (2) DAYS AFTER THE SAME SHALL HAVE BEEN
POSTED.
(d) The headings used in this Agreement are for the convenience of the
reader only; such headings constitute no part whatsoever of the Agreement
between the parties.
(e) No invalidity, irregularity or unenforceability of the Obligations
(or any of them) hereby secured shall affect, impair or be a defense to any
provision contained in this Agreement. If any term, condition or provision of
this Agreement is determined to be invalid or unenforceable, such determination
shall not affect the validity or enforceability of any other term, condition or
provision of this Agreement.
(f) If this Agreement shall differ or conflict in terms with any of the
Contract Documents, the Agreement which gives Contractor the greater right, as
determined by Contractor, shall prevail.
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GUARANTORS:
XXXXX XXXXXX
/s/ Xxxxx Xxxxxx
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Address:
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XXX XXXXXX
/s/ Xxx Xxxxxx
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Address:
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Xxxxxx Xxxxxx
/s/ Xxxxxx Xxxxxx
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Address:
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GUARANTORS:
XXXX XXXXXX
/s/ Xxxx Xxxxxx
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Address:
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SCHEDULE I
SECURITIES OF THE MANUFACTURER
