GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT ("GUARANTY") is given this 18th day of August,
1999, to the persons and entities listed on SCHEDULE 1 hereto by XXXXX X. XXXXX
("GUARANTOR") as security for the obligations of The Tracker Corporation of
America, a Delaware corporation (the "COMPANY") described below. The entities
on SCHEDULE 1 are hereinafter collectively referred to as "PURCHASERS."
BACKGROUND
Purchasers have purchased up to an aggregate $3,000,000 in principal amount
of the Company's Series 1 Bridge Notes ("BRIDGE NOTES") issued by the Company
pursuant to a Series 1 Bridge Note Purchase and Security Agreement of even date
herewith (the "PURCHASE AGREEMENT"). Guarantor is the holder of 600,000 shares
of Common Stock of the Company represented by the copied certificates attached
hereto as EXHIBIT A collectively the "PLEDGED SHARES"). Guarantor is also a
party to a Stock Option Award Agreement dated December 22, 1998, a copy of which
is attached hereto as EXHIBIT B, pursuant to which Guarantor has the right to
acquire 1,244,289 additional shares of the Company's Common Stock (the "OPTION
RIGHTS") on or after January 1, 2000 (the Pledged Shares and the OPTION RIGHTS
are sometimes collectively referred to as "PLEDGED SECURITIES"). The execution
and delivery of this Agreement was a condition precedent and a material
inducement to Purchaser to purchase the Bridge Notes guarantied hereby.
Guarantor as the Chief Executive Officer and a stockholder of the Company
receives a significant benefit from the sale to Purchasers of the Bridge Notes
issued by the Company. Guarantor acknowledges that Purchasers would not have
purchased the Bridge Notes without the execution and delivery of this Guaranty
Agreement. Guarantor acknowledges that because of the direct benefit to the
Guarantor from the proceeds of the sale of the Bridge Notes by the Company, the
Guarantor agreed to guaranty to the Purchasers the performance of the
obligations of the Company as and to the extent set forth herein.
AGREEMENT
For and in consideration of the execution and delivery of the Purchase
Agreement by Purchasers and the purchase by Purchasers of the Bridge Notes, the
Guarantor hereby covenants and agrees with the Purchaser as follows:
SECTION 1. GUARANTY OF PAYMENT.
Guarantor hereby unconditionally and irrevocably and guaranties to
Purchasers the full payment and performance, when due, by acceleration or
otherwise, of all past, present, and future indebtedness, liabilities, and
obligations of the Company to Purchasers of any kind and description arising in
connection with the Purchase Agreement, the Bridge Notes, and this Guaranty
Agreement (collectively, the "BRIDGE NOTE PURCHASE DOCUMENTS"), whether direct
or indirect, absolute or contingent, or due or to become due (collectively, the
"OBLIGATIONS"), it being understood by all the parties hereto that such guaranty
of payment is limited to the value of the Pledged Securities at such time any
action is taken with respect to the Pledged Securities pursuant to any Event of
Default hereunder. This Guaranty shall only relate to the Obligations and not
to any other obligations of the Company which now or hereafter may be held by
Purchasers and their respective successors and assigns. The guaranty of
Guarantor as set forth in this section is an absolute, continuing, primary, and
unconditional guaranty of payment and not of collection. If a claim is ever
made upon Purchasers for the repayment or recovery of any amount or amounts
received by Purchasers in payment of any of the Obligations and Purchasers repay
all or part of such amount by reason of (a) any judgment, decree, or order of
any court or administrative body having jurisdiction over Purchasers or any of
their property, or (b) any settlement or compromise of any such claim effected
by the Purchasers with any such claimant, including the Company, then in such
event each Guarantor agrees that any such judgment, decree, order, settlement,
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or compromise shall be binding upon each Guarantor as if against the Guarantor
and in favor of the Purchasers, notwithstanding any revocation hereof or the
cancellation of any promissory note or other instrument evidencing any of the
Obligations, and each Guarantor shall be and remain obligated to Purchasers
hereunder for the amount so repaid or recovered to the same extent as if such
amount had never originally been received by Purchasers, such amount to be
included in the term "Obligations."
This Guaranty may be enforced by Purchasers against each Guarantor without
the necessity at any time of Purchasers (a) resorting to or exhausting any other
security or collateral now or hereafter pledged, assigned, or granted to
Purchasers and without the necessity at any time of Purchasers' having recourse
against the Company on the Bridge Notes, or (b) exercising any other rights
available to them under the Bridge Note Purchase Documents if neither the
Company nor Guarantor timely performs the obligations of the Company thereunder.
SECTION 2. NATURE OF OBLIGATIONS.
Each Guarantor acknowledges and agrees that no change in the nature or
terms of the Obligations or the Bridge Note Purchase Documents (including any
novation), whether by operation of law or otherwise, including, without
limitation any impairment, modification, change, release, or limitation of the
liability of the Company or any co-guarantor by reason of the Company's or any
co-guarantor's bankruptcy or insolvency or any subsequent reorganization,
merger, or consolidation of the Company or any other change in its composition,
nature, personnel, or location shall discharge all or any part of the
liabilities and obligations of each Guarantor pursuant to this Guaranty. It is
the purpose and intent of each Guarantor and Purchasers that the covenants,
agreements, and all liabilities and obligations of each Guarantor hereunder are
absolute, unconditional, and irrevocable under any and all circumstances,
including, without limitation, the invalidity or unenforceability of any or all
of the Bridge Note Purchase Documents. Without limiting the generality of the
foregoing, Guarantor agrees that until each and every one of the covenants and
agreements of this Guaranty are fully performed, and all of the obligations
hereunder are paid, performed, satisfied, and discharged in full, Guarantor's
undertakings hereunder and the Pledged Securities shall not be released, in
whole or in part, by any action or thing which might, but for this paragraph of
this Guaranty, be deemed a legal or equitable discharge of a surety or
guarantor, or by reason of any waiver, omission of Purchasers, or their failure
to proceed promptly or otherwise, or by reason of any action taken or omitted by
Purchasers, whether or not such action or failure to act varies or increases the
risk of, or affects the rights or remedies of, each Guarantor, including,
without limitation, the failure of Purchasers to perfect, or to continue the
perfection of, any lien or security interest in any security or any delay by
Purchasers in perfecting any such lien or security interest, or by reason of any
further dealings between the Company and Purchasers, or any other guarantor or
surety; and each Guarantor hereby expressly waives and surrenders any defense to
its liability hereunder based upon, and shall be deemed to have consented to,
any of the foregoing acts, omissions, things, agreements, or waivers. Without
limiting the generality of the foregoing, each Guarantor hereby gives its
consent for the Purchaser to do any one or more of the following without in any
manner affecting, impairing, limiting, modifying, or releasing any of the
obligations of each Guarantor under this Agreement and without notice to or
consent of each Guarantor: (a) exchange, compromise, or surrender the whole or
any part of any security now or hereafter held for the Obligations; (b)
exchange, extend, or renew the time or place of payment of the Obligations in
whole or in part, to a time certain or otherwise whether or not longer than the
original period, or withdraw credit or time to pay; (c) extend or change the
terms of performance of any other obligations of the Company under the Bridge
Note Purchase Documents; (d) modify, amend, or waive any of the provisions of
the Bridge Note Purchase Documents; (e) release or grant indulgences to the
Company, any co-guarantor, or any party to the Bridge Note Purchase Documents;
(f) receive property or other security as collateral for the Obligations; (g)
fail to exercise due diligence or omit to enforce any right, power, or privilege
under the Bridge Note Purchase Documents; and (h) apply any payment received by
Purchasers from the Company of, or on account of, the Obligations, in any manner
Purchasers elect.
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SECTION 3. WAIVER OF RIGHTS.
Each Guarantor expressly waives: (a) notice of the execution and delivery
of the Bridge Note Purchase Documents and creation of the Obligations; (b)
notice of acceptance of this Guaranty by Purchasers and of all extensions of
credit to the Company by Purchasers; (c) presentment and demand for payment of
any of the Obligations; (d) protest and notice of dishonor or of default or
nonpayment to each Guarantor or to any other party with respect to the
Obligations or with respect to any security therefor; (e) notice of the
Purchaser's obtaining, amending, substituting for, releasing, waiving, or
modifying any security interest, liens, or encumbrances now or hereafter
securing the Obligations, or subordinating, compromising, discharging, or
releasing such security interests, liens, or encumbrances by Purchasers and any
other notices whatever; (f) demand for payment under this Guaranty; and (g) all
rights of subrogation, indemnification, contribution, and reimbursement from the
Company, all rights to enforce any remedy Purchasers may have against the
Company, and any benefit of, or right to participate in, any collateral or
security now or hereinafter held by Purchasers in respect of the Obligations,
until the Company shall have paid in full all Bridge Notes issued by the Company
pursuant to (i) the Bridge Note Purchase Agreement of even date herewith, as the
same may hereafter be amended, extended, or modified.
SECTION 4. TERM OF GUARANTY; WARRANTIES.
This Guaranty shall continue in full force and effect until the Obligations
are fully paid, performed, and discharged. Each Guarantor warrants and
represents to Purchasers that (a) each Guarantor will directly benefit from the
financial accommodations being extended to the Company by Purchasers; (b) this
Guaranty is binding upon and enforceable against each Guarantor, in accordance
with its terms; (c) the execution and delivery of this Guaranty do not violate
or constitute a breach of any agreement to which any Guarantor is a party or of
any applicable laws; and (d) there is no litigation, claim, action, or
proceeding pending, or, to the best knowledge of each Guarantor, threatened
against any Guarantor that would materially adversely affect the financial
condition of any Guarantor or its ability to fulfill its obligations hereunder.
SECTION 5. ATTORNEYS' FEES AND COSTS OF COLLECTION.
If at any time or times hereafter Purchasers employ counsel to pursue
collection, to intervene, to xxx for enforcement of, or take any other action
with respect to the terms hereof or of the Bridge Notes, then in such event, all
of the reasonable attorneys' fees and disbursements relating thereto and any
other fees and disbursements incurred by or on behalf of the Purchaser,
including costs and legal fees in any appeal due to the failure of the Company
to pay the Obligations when due and payable, shall be an additional liability of
each Guarantor to Purchasers, payable on demand.
SECTION 6. EVENTS OF DEFAULT.
The occurrence of any one or more of the following events shall constitute
an event of default (an "Event of Default") under this Guaranty: (a) the
failure of a Guarantor to perform, observe, or comply with any of the provisions
of this Guaranty, including, without limitation, the payment provisions; (b) the
occurrence and continuance of an Event of Default (as defined therein) under any
of the Bridge Note Purchase Documents; (c) the receipt by Purchasers of any
materially false, inaccurate, or misleading information contained in any
financial statement, application, schedule, report, or any other document given
by or on behalf of Guarantor in connection with this Guaranty; (d) the entry of
any order for relief under any provision of Title 11 of the United States Code
(entitled "Bankruptcy"), as amended, or under any similar federal or state
statute in any bankruptcy case filed by or against the Guarantor; or (e) the
appointment of a receiver or custodian for, the making of a general assignment
for the benefit of creditors by, or the insolvency of a Guarantor.
Upon the occurrence and during the continuance of an Event of Default under
this Guaranty, Purchasers may, at their option, declare an amount equal to any
or all of the then unpaid balance of the Obligations (whether then due or not)
to be immediately due and payable by Guarantor, and Guarantor shall on demand
pay the same to Purchasers in immediately available funds, in lawful money of
the United States of America.
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SECTION 7. GUARANTY SECURED.
The joint and several obligations of the Guarantor hereunder are secured by
a Stock Pledge Agreement among the Company, Guarantor, and Purchasers of even
date herewith, and Purchasers are entitled to all of the rights and privileges
thereof.
SECTION 8. CUMULATIVE RIGHTS.
All rights of Purchasers hereunder or otherwise arising under any of the
Bridge Note Purchase Documents are separate and cumulative and may be pursued
separately, successively, or concurrently, or not pursued, without affecting or
limiting any other right of Purchasers and without affecting or impairing the
liability of Guarantor.
SECTION 9. ASSIGNMENT.
Purchasers may, without notice to or consent of Guarantor and subject to
restrictions on transfer in the Bridge Note Purchase Agreement, sell, assign, or
transfer to any person or persons all or any part of the Obligations, and each
such person or persons shall have the right to enforce this Guaranty as fully as
Purchasers, provided that the Purchaser shall continue to have the unimpaired
right prior and superior to that of any such assignee, transferee, or holder to
enforce this Guaranty as to so much of the Obligations that it has not sold,
assigned, or transferred.
SECTION 10. SUCCESSORS AND ASSIGNS.
This Guaranty shall bind Guarantor and their respective heirs, executors,
administrators, legal representatives, successors, and assigns and shall inure
to the benefit of, and be enforceable by, Purchasers and their heirs, executors,
administrators, legal representatives, successors and assigns, including,
without limitation, each and every person who shall from time to time be or
become the holder of any of the Bridge Note Purchase Documents.
SECTION 11. NOTICES.
Notices under this Guaranty shall be given in writing and shall be deemed
served at the earlier of (a) receipt, (b) three (3) days after deposit in the
United States mail, sent certified or registered mail, return receipt requested,
postage prepaid, or (c) upon receipt by facsimile machine, and addressed to the
parties at the following addresses, or at such other addresses as the parties
shall designate in writing:
If to the Guarantor:
Xxxxx X. Xxxxx
Telephone: (__)
Facsimile: (__)
with a copy to:
Xxxxxxxx Xxxxxxxx
Gasset & Xxxxxxxx
000 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Purchasers, at the address of each Purchaser on SCHEDULE 1 hereto,
under the caption "Purchaser's name and address" with a copy to such Purchaser's
legal counsel, at the address set forth adjacent to the address of such
Purchaser on SCHEDULE 1 hereto, under the caption "Purchaser's Counsel's name
and address".
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Personal delivery to a party or to any officer, partner, agent, or employee of
such party at its address herein shall constitute receipt. Rejection or other
refusal to accept or inability to deliver because of changed address of which no
notice has been received also shall constitute receipt.
SECTION 12. AMENDMENT.
This Guaranty may be terminated, amended, supplemented, waived, released or
modified only by an instrument in writing signed by the party against whom the
enforcement of the termination, amendment, supplementation, waiver, release, or
modification is sought.
SECTION 13. USURY.
Notwithstanding any other provisions herein contained, no provision of this
Guaranty shall require or permit the collection from Guarantor of interest in
excess of the maximum rate or amount that Guarantor may be required or permitted
to pay pursuant to any applicable law.
SECTION 14. GOVERNING LAW.
This Guaranty shall be deemed to be a contract made under, and for all
purposes shall be construed and interpreted in accordance with the internal laws
of the State of -----Georgia without giving effect to the principles or rules
governing conflict of laws. The parties further agree that any arbitration
action between them shall be heard in Atlanta, Georgia, and expressly consent to
the jurisdiction and venue of the Superior Court of Xxxxxx County, Georgia, and
the United States District Court for the Northern District of Georgia for the
adjudication of any civil action arising under or by virtue of this Agreement or
the enforcement thereof.
SECTION 15. MULTIPLE COUNTERPARTS; PRONOUNS; CAPTIONS; SEVERABILITY.
This Guaranty may be executed in multiple counterparts, each of which shall
be deemed an original but all of which shall constitute but one and the same
document. Captions are for reference only and in no way limit the terms of this
Guaranty. Wherever possible, each provision of this Guaranty shall be
interpreted in such manner as to be effective and valid under applicable law,
but invalidation of any one or more of the provisions of this Guaranty shall in
no way affect any of the other provisions hereof, which shall remain in full
force and effect.
IN WITNESS WHEREOF, each Guarantor has executed this Guaranty under seal as
of the day and year first above written.
[Signatures on following pages]
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COMPANY SIGNATURE PAGE
TO
GUARANTY AGREEMENT
THE COMPANY:
THE TRACKER CORPORATION OF AMERICA
By: /s/ Xxx X. Xxxxxxxx
----------------------
Xxx X. Xxxxxxxx
[Guarantor signatures on following page]
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GUARANTOR SIGNATURE PAGE
TO
GUARANTY AGREEMENT
/s/ Xxxxx X. Xxxxx
---------------------
Xxxxx X. Xxxxx
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SCHEDULE 1
TO
GUARANTY AGREEMENT
SCHEDULE OF PURCHASERS
PURCHASER NAME AND ADDRESS PURCHASER'S COUNSEL'S PRINCIPAL AMOUNT PURCHASED
NAME AND ADDRESS
Purchaser Name Purchaser's Legal Counsel $
Address and Address and
Facsimile Number Facsimile Number
SovCap Equity Partners, Ltd. Xxxxxxx Law Group LLC $ 1,000,000
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