GUARANTY
THIS GUARANTY ("Guaranty") is made by Xxxxxx Xxxx and Xxxxx Xxxx
(individually, "Guarantor" and collectively, "Guarantors") in favor of Xxxxx
Xxxx ("Xxxx").
1. CONSIDERATION. Guarantors acknowledge that the giving of this
Guaranty is a material condition precedent to Xxxx'x execution of that certain
Consulting Agreement and Agreement for Repurchase of Stock between Xxxx and
Tag-It, Inc. ("Corporation"), copies of which are attached hereto as Exhibits
"1" and "2", respectively ("Agreements"), and that Guarantors, as the majority
shareholders of Corporation, have derived or expect to derive material financial
advantages or other benefits commensurate in value to the obligations and
liabilities being undertaken by Guarantors under the terms of this Guaranty.
2. OBLIGATIONS GUARANTEED. In consideration of the foregoing, and for
other good and valuable consideration, the receipt and adequacy of which is
hereby acknowledged, Guarantors, jointly and severally, unconditionally
guarantee and promise to pay to Xxxx, on demand, in lawful money of the United
States of America, all Obligations of Company to Xxxx, subject to the
limitations set forth in Paragraph 3 below. "Obligations" is used herein in its
most comprehensive sense and includes all debts, obligations and liabilities of
Corporation under the Agreements currently existing or now or hereafter made,
incurred or created, whether voluntary or involuntary and however arising or
evidenced, whether due or not due (subject to the grace periods provided for in
the Agreements), absolute or contingent, liquidated or unliquidated, determined
or undetermined, and whether Corporation may be liable individually or jointly
with others, or whether recovery upon such debt may be or become barred by any
statute of limitation or otherwise unenforceable. This Guaranty shall continue
to be effective or be reinstated, as the case may be, if at any time any payment
of any Obligations is rescinded or must otherwise be returned by Xxxx upon the
insolvency, bankruptcy or reorganization of Corporation, any guarantor or
otherwise, all as though such payment had not been made.
3. GUARANTORS' LIABILITY. Notwithstanding anything to the contrary
contained herein, the liability of Guarantors under this Guaranty shall only
apply to (a) the first Four Hundred Twenty Five Thousand Dollars ($425,000.00)
due under the Agreements (including the $50,000.00 payment to be made upon the
Closing of the Agreement for Repurchase of Stock) and (b) Guarantors'
obligations to pay attorneys' fees and all other costs and expenses which may be
incurred by Xxxx in the protection, preservation or enforcement of any rights of
Xxxx under this Guaranty. In any event, Xxxx may permit the Obligations to
exceed Guarantors' liability under this Guaranty. The foregoing limitation of
liability applies only to Guarantors' obligations under this Guaranty; unless
otherwise specifically agreed in writing, every other guaranty heretofore, now,
or hereafter given by Guarantors to Xxxx with respect to the Obligations shall
be deemed independent of this Guaranty and every other such guaranty, so that as
each such guaranty is enforced or collected upon in a manner that reduces the
liability of Guarantors thereunder, the liability of all guarantors on all other
such guaranties shall remain intact.
4. NATURE OF GUARANTORS' LIABILITY. The obligations and liabilities of
Guarantors under this Guaranty are joint and several and independent of the
obligations of Corporation and a separate action or actions may be brought and
prosecuted against Guarantors whether action is
1
brought against Corporation, Guarantors, or any other guarantor or Person,
whether or not any foreclosure has been or is going to be initiated with respect
to any security for the Obligations, or whether Corporation, Guarantors, or any
other guarantor or Person are joined in any such action or actions. Any
recovery realized from any other guarantor of the Obligations, or recovery from
any source other than a direct payment by Guarantors, shall be first credited
upon that portion of the Obligations which exceeds the maximum liability of
Guarantors hereunder. As used in this Guaranty, "Person" means any individual
or entity.
5. GUARANTORS' AUTHORIZATION. Guarantors authorize Xxxx, without notice,
demand or consent of any kind (except for consents that may be required under
the Agreements), and without affecting Guarantors' liability under this
Guaranty, from time to time, to (a) renew, alter, compromise, extend, accelerate
or otherwise change any of the terms of the Obligations or any part thereof,
including changing the rate of interest thereon or the time for payment thereof,
(b) accept partial payments on the Obligations, (c) extend credit to Corporation
on an unsecured basis or take security or other support for the obligations
evidenced by this Guaranty or the Obligations, and exchange, enforce, waive or
release any such security or other support or any part thereof, (d) accept new
or additional documents, instruments or agreements relative to the Obligations,
(e) apply any security or other support and direct the order or manner of sale
or other disposition of such property as Xxxx, in his sole discretion, may
determine, and (f) release or substitute any Person liable on the Obligations,
any other guarantor of the Obligations, or any other Person providing support
for the Obligations to Xxxx, this Guaranty, or any other guaranty.
6. XXXX'X REMEDIES. Guarantors waive any right to require Xxxx to (a)
proceed against Corporation, Guarantors, or any other guarantor or Person liable
for the Obligations, (b) proceed against or exhaust any security or other
support for the Obligations granted by Corporation, Guarantors, or any other
guarantor or Person, or (c) pursue any other remedy in Xxxx'x power whatsoever.
7. WAIVERS. Guarantors waive any defense arising by reason of (a) the
absence, impairment or loss of any right of reimbursement, contribution or
subrogation, or any other right or remedy of Guarantors against Corporation,
Guarantors, or any other guarantor or Person, or with respect to any security
interest or other support for the Obligations, (b) any disability or other
defense of Corporation, or the partial or complete cessation from any cause
whatsoever of the liability of Corporation for the Obligations for any reason
other than payment in full and final satisfaction, (c) any act or omission by
Xxxx which directly or indirectly results in or aids the discharge of
Corporation or any of the Obligations by operation of law or otherwise, or (d)
any exchange, release or non-perfection of any security or support for the
Obligations or any release or amendment or waiver of or consent to departure
from the terms of any security agreement, other support or any other guaranty,
for all or any of the Obligations. Guarantors shall have no right of
subrogation to, and waive to the fullest extent permitted by law, any right to
enforce any remedy which Xxxx now has or may hereafter have against Corporation,
Guarantors, or any other guarantor or Person, and waive any benefit of, any
right to participate in, and any right to direct the application of, any
security or support for the Obligations now or hereafter held by Xxxx. Xxxx may
foreclose, either by judicial foreclosure or by exercise of power of sale, any
deed of trust securing the Obligations, and, even though the foreclosure may
destroy or diminish Guarantors' rights against Corporation, Guarantors, or any
other guarantor or Person, Guarantors
2
shall be liable to Xxxx for any part of the Obligations remaining unpaid after
the foreclosure. Guarantors waive notice of acceptance of this Guaranty and of
the existence, creation or incurring of new or additional Obligations. To the
fullest extent permitted by law, Guarantors waive any requirement of Xxxx to
give notice of the terms, time and place of any public or private sale of
personal property security for the Obligations to Xxxx or to comply with any
other provisions of Section 9504 of the Uniform Commercial Code or its
equivalent, from time to time in effect in the state governing any such security
interest.
8. DILIGENT INQUIRIES. Guarantors assume the responsibility for being
and keeping informed of the financial condition of Corporation, Guarantors, and
any other guarantor or Person liable on or with respect to any of the
Obligations, and of all other circumstances bearing upon the risk of nonpayment
of the Obligations, and confirm that Xxxx shall have no duty to advise
Guarantors of any information regarding such condition or any such circumstances
whether or not materially adverse.
9. AUTHORIZATION OF CORPORATION. Xxxx shall have no duty to inquire into
the powers of Corporation or of the officers, directors, partners, trustees or
agents acting or purporting to act on Corporation's behalf, and any Obligations
made or created in reliance upon the exercise of such powers shall be covered by
this Guaranty.
10. GENERAL PROVISIONS.
10.1 NOTICES. Any notice given by any party under this Guaranty shall
be in writing and personally delivered or sent by certified or registered United
States mail, postage prepaid and addressed as follows:
TO GUARANTORS:
Xxxxxx Xxxx
c/o Tag-It, Inc.
0000 Xxxxx Xxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Xxxxx Xxxx
c/o Tag-lt, Inc.
0000 Xxxxx Xxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
TO XXXX:
Xxxxx Xxxx
0000 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
All notices, requests and other communications shall be deemed given on the
date of the earlier of actual receipt or delivery as evidenced by written
receipt, acknowledgement or other evidence of actual receipt or delivery or
three (3) days after deposited in the United States Mail
3
as provided for above. Guarantors and Xxxx may change the place to which
notices, requests, and other communications are to be sent by giving written
notice of such change to the other.
10.2 BINDING EFFECT. This Guaranty shall be binding upon Guarantors,
their permitted successors, representatives and assigns, and shall inure to the
benefit of Xxxx and his successors and assigns; provided, however, that
Guarantors may not assign or transfer their obligations under this Guaranty.
10.3 NO WAIVER. Any waiver, consent or approval of any kind by Xxxx
must be in writing and shall be effective only to the extent set forth in such
writing. No failure or delay on the part of Xxxx in exercising any power, right
or privilege under this Guaranty shall operate as a waiver thereof, and no
single or partial exercise of any such power, right or privilege shall preclude
any further exercise thereof, or the exercise of any other power, right or
privilege.
10.4 RIGHTS CUMULATIVE. All rights and remedies existing under this
Guaranty are cumulative to, and not exclusive of, any other rights or remedies
under contract or applicable law.
10.5 UNENFORCEABLE PROVISIONS. Any provision of this Guaranty which
is prohibited or unenforceable in any jurisdiction shall be so only as to such
jurisdiction and only to the extent of such prohibition or unenforceability, but
all the remaining provisions of this Guaranty shall remain valid and
enforceable.
10.6 GOVERNING LAW/WAIVERS. This Guaranty shall be governed by and
construed in accordance with the laws of the State of California. To the
fullest extent permitted by law, Guarantors hereby waive presentment, demand,
protest, notice of dishonor and all other notices and demands, as well as any
applicable statute of limitations.
10.7 INDEMNIFICATION. Guarantors shall indemnify Xxxx against, and
hold Xxxx harmless from, all claims, actions, losses, and expenses, including
attorneys' fees and costs incurred by Xxxx, arising in connection with any
action challenging any aspect of or the enforceability of this Guaranty. This
indemnification shall survive the repayment of all principal, interest and fees
payable in connection with the Obligations.
10.8 REIMBURSEMENT. Guarantors shall reimburse Xxxx for all costs and
expenses, including reasonable attorneys' fees expended or incurred by Xxxx in
any arbitration, judicial reference, legal action or otherwise in connection
with (a) the enforcement of this Guaranty, including without limitation during
any workout or attempted workout of the Obligations, and/or in connection with
the rendering of legal advice as to Xxxx'x rights, remedies and obligations
under this Guaranty, (b) collecting any sum which becomes due Xxxx under this
Guaranty, (c) any proceeding for declaratory relief, any counterclaim to any
proceeding, or any appeal, or (d) the protection, preservation or enforcement of
any rights of Xxxx.
10.9 ENTIRE AGREEMENT. This Guaranty is intended by Guarantor and
Xxxx as the final expression of Guarantors' obligations and liabilities to Xxxx
described herein and supersedes all prior understandings or agreements
concerning the subject matter hereof. This Guaranty may be amended only by a
writing signed by Guarantors and agreed to by Xxxx.
4
IN WITNESS WHEREOF, Guarantors have executed this Guaranty this 31st day of
October, 1994.
GUARANTORS
/s/ Xxxxxx Xxxx
--------------------------
XXXXXX XXXX
/s/ Xxxxx Xxxx
--------------------------
XXXXX XXXX
5
