GUARANTY AGREEMENT
This
Guaranty Agreement (this
“Guaranty
Agreement”
or
this
“Guaranty”),
dated
as of September 30, 2006, is made by Compliance
Systems Corporation,
a
Nevada corporation (the “Guarantor”),
in
favor of Nascap
Corp., a
New
York corporation (the “Lender”).
All
capitalized terms used but not otherwise defined herein shall have the meanings
ascribed to such terms in (i) the Promissory Note, dated September 30, 2006,
made by Call
Compliance, Inc.,
a New
York corporation, as Maker (the “Borrower”)
in
favor of Lender, as Payee, as may be amended from time to time (the
“Note”)
and
(ii) the Security Agreement dated as of September 30, 2006, by and between
Borrower and the Lender, as may be amended from time to time (the “Security
Agreement”).
WITNESSETH
:
WHEREAS,
on the date hereof Lender is simultaneously lending to Borrower the initial
principal sum of $150,000 (the “Loan”),
as
evidenced by the Note; and
WHEREAS,
the Guarantor will materially benefit directly and indirectly from the making
of
the Loan.
NOW,
THEREFORE, in order to induce the Lender to accept the Note and Security
Agreement and make the Loan, and in consideration of the mutual covenants and
agreements contained herein, the Guarantor agrees as follows:
1. GUARANTY.
The Guarantor unconditionally, absolutely, continually and irrevocably
guarantees to the Lender the payment and performance in full of the Borrower's
Liabilities (as defined below). For all purposes of this Guaranty Agreement,
“Borrower's
Liabilities”
means:
(a) the Borrower's prompt payment in full, when due or declared due, now or
at
any time or times hereafter any amount or obligation owing, arising, due or
payable from the Borrower to the Lender pursuant to the Note or the Security
Agreement, including without limitation principal, interest, premium or fee
(including, but not limited to, loan fees and attorneys' fees and expenses);
and
(b) the Borrower's prompt, full and faithful performance, observance and
discharge of each and every agreement, undertaking, covenant and provision
to be
performed, observed or discharged by the Borrower pursuant to the Note or the
Security Agreement. The Guarantor's obligations to the Lender under this
Guaranty Agreement is hereinafter collectively referred to as the “Guarantor's
Obligations”;
provided, however, that the liability of the Guarantor individually, with
respect to the Guarantor's Obligations shall be limited to an aggregate amount
equal to the largest amount that would not render its obligations hereunder
subject to avoidance under Section 548 of the United States Bankruptcy Code
or
any comparable provisions of any applicable state law.
Guarantor
agrees that it is directly and primarily liable for the Borrower's
Liabilities.
2. PAYMENT.
If the Borrower shall default in payment or performance of any Borrower's
Liabilities, whether principal, interest, premium, fee (including, but not
limited to, loan fees and attorneys' fees and expenses), or otherwise, when
and
as the same shall become due, whether according to the terms of the Note or
the
Security Agreement, by acceleration, or otherwise, or upon the occurrence of
any
Event of Default under the Note or the Security Agreement that has not been
cured or waived, then the Guarantor will, upon demand thereof by the Lender
or
its heirs, successors or assigns as of the date of the Lender’s demand, fully
pay to the Lender, subject to any restriction set forth in Section 1 hereof,
an
amount equal to all Guarantor’s Obligations then due and owing.
3. UNCONDITIONAL
OBLIGATIONS. This is a guaranty of payment and not of collection. The
Guarantor's Obligations under this Guaranty Agreement shall be absolute and
unconditional irrespective of the validity, legality or enforceability of the
Note or the Security Agreement and shall not be affected by any action taken
under the Note or the Security Agreement or any other agreement between the
Lender and the Borrower or any other party, in the exercise of any right or
power therein conferred, or by any failure or omission to enforce any right
conferred thereby, or by any waiver of any covenant or condition therein
provided, or by any acceleration of the maturity of any of the Borrower's
Liabilities, or by the release or other disposal of any security for any of
the
Borrower's Liabilities, or by the dissolution of the Borrower or the combination
or consolidation of the Borrower into or with another entity or any transfer
or
disposition of any assets of the Borrower or by any extension or renewal of
the
Note or Security Agreement, in whole or in part, or by any modification,
alteration, amendment or addition of or to the Note or the Security Agreement,
or any other agreement between the Lender and the Borrower or any other party,
or by any other circumstance whatsoever (with or without notice to or knowledge
of Guarantor) which may or might in any manner or to any extent vary the risks
of Guarantor, or might otherwise constitute a legal or equitable discharge
of a
surety or a guarantor; it being the purpose and intent of the parties hereto
that this Guaranty Agreement and the Guarantor's Obligations hereunder shall
be
absolute and unconditional under any and all circumstances and shall not be
discharged except by payment as herein provided.
4. CURRENCY
AND FUNDS OF PAYMENT. Guarantor hereby guarantees that the Guarantor's
Obligations will be paid in lawful currency of the United States of America
and
in immediately available funds, regardless of any law, regulation or decree
now
or hereafter in effect that might in any manner affect the Borrower's
Liabilities, or the rights of the Lender with respect thereto as against the
Borrower, or cause or permit to be invoked any alteration in the time, amount
or
manner of payment by the Borrower of any or all of the Borrower's
Liabilities.
5. EVENTS
OF
DEFAULT.
In
the
event that (a) if, pursuant to or within the meaning of the United States
Bankruptcy Code or any other federal or state law relating to insolvency or
relief of debtors (a “Bankruptcy
Law”),
Guarantor, or any of its respective shareholders shall (i) commence a voluntary
case or proceeding; (ii) consent to the entry of an order for relief against
it
in an involuntary case; (iii) consent to the appointment of a trustee, receiver,
assignee, liquidator or similar official; (iv) make an assignment for the
benefit of its creditors; or (v) admit in writing its inability to pay its
debts
as they become due; (b) if a court of competent jurisdiction enters an order
or
decree under any Bankruptcy Law that (i) is for relief against Guarantor or
any
of its respective shareholders in an involuntary case, (ii) appoints a trustee,
receiver, assignee, liquidator or similar official for Guarantor or
substantially all of its respective properties, or (iii) orders the liquidation
of Guarantor and in each case the order or decree is not dismissed within sixty
(60) days; (c) any money judgment, writ or warrant of attachment, or similar
process in excess of Fifty Thousand Dollars ($50,000) in the aggregate shall
be
entered or filed against the Guarantor or any of its assets and/or properties
which remains unpaid, unvacated, unbonded or unstayed for a period of thirty
(30) or more days; (d) if Guarantor (i) is merged or consolidated with another
entity without the prior written consent of the Lender (ii) is dissolved or
ceases to exist as a corporation or (iii) whether in one or a series of
transactions, sells or otherwise transfers more than fifty percent (50%) of
its
assets (other than inventory in the ordinary course of business), or in each
of
cases (i), (ii) or (iii) enters into an agreement to take such actions; (e)
the
Guarantor shall assert the invalidity or unenforceability of this Guaranty
Agreement; (f) any representation or warranty made by the Guarantor in this
Guaranty Agreement shall prove to have been false in any material respect when
made; (g) there shall occur an Event of Default under the Note; (h) any default
shall occur in the payment of amounts due hereunder; or (i) any covenant or
agreement made by the Guarantor in this Guaranty Agreement (and not covered
by
(a)-(h) above) is breached, violated, or not complied with and not cured within
ten (10) Business Days upon written notice to Guarantor (each of the foregoing
an “Event
of Default”
hereunder); then notwithstanding any collateral that the Lender may possess
from
Borrower, at the Lender's election and without notice thereof or demand
therefor, so long as such Event of Default shall be continuing, the Guarantor's
Obligations shall immediately become due and payable.
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6. SUITS.
The Guarantor from time to time shall pay to the Lender, on demand, at the
Lender's address set forth in Section 16 hereof, the Guarantor's Obligations
as
they become or are declared due, and in the event such payment is not made
forthwith, the Lender may proceed to suit against Guarantor. At the Lender's
election, one or more and successive or concurrent suits may be brought hereon
by the Lender against any Guarantor, whether or not suit has been commenced
against the Borrower, any other Guarantor or any other guarantor of the
Borrower's Liabilities, or any other Person and whether or not the Lender or
any
Lender has taken or failed to take any other action to collect all or any
portion of the Borrower's Liabilities.
7. SET-OFF
AND WAIVER. Guarantor waives any right to assert against the Lender as a
defense, counterclaim, set-off or cross claim, any defense (legal or equitable)
or other claim which Guarantor may now or at any time hereafter have against
the
Borrower or the Lender, without waiving any additional defenses, set-offs,
counterclaims or other claims otherwise available to Guarantor. If at any time
hereafter the Lender employs counsel for advice or other representation to
enforce the Guarantor's Obligations that arise out of an Event of Default,
then,
in any of the foregoing events, all of the reasonable attorneys' fees arising
from such services and all expenses, costs and charges in any way or respect
arising in connection therewith or relating thereto shall be paid by Guarantor
to the Lender on demand.
8. WAIVER;
SUBROGATION.
(a) Guarantor
hereby waives notice of the following events or occurrences: (i) the Lender's
acceptance of this Guaranty Agreement; (ii) the Lender's heretofore, now or
from
time to time hereafter loaning monies or giving or extending credit to or for
the benefit of the Borrower, whether pursuant to the Note or any amendments,
modifications, or supplements thereto, or replacements or extensions thereof;
(iii) the Lender, or the Borrower heretofore, now or at any time hereafter,
obtaining, amending, substituting for, releasing, waiving or modifying the
Note
or the Security Agreement; (iv) presentment, demand, default, non-payment,
partial payment and protest; (v) the Lender heretofore, now or at any time
hereafter granting to the Borrower (or any other party liable to the Lender
on
account of the Borrower's Liabilities) any indulgence or extensions of time
of
payment of the Borrower's Liabilities; and (vi) the Lender heretofore, now
or at
any time hereafter accepting from the Borrower, any other Guarantor, any other
guarantor of the Borrower's Liabilities or any other Person, any partial payment
or payments on account of the Borrower's Liabilities or any collateral securing
the payment thereof or the Lender settling, subordinating, compromising,
discharging or releasing the same. Guarantor agrees that the Lender may
heretofore, now or at any time hereafter do any or all of the foregoing in
such
manner, upon such terms and at such times as the Lender, in its sole and
absolute discretion, deems advisable, without in any way or respect impairing,
affecting, reducing or releasing Guarantor from the Guarantor's Obligations,
and
Guarantor hereby consents to each and all of the foregoing events or
occurrences.
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(b) Guarantor
hereby agrees that payment or performance by Guarantor of the Guarantor's
Obligations under this Guaranty Agreement may be enforced by the Lender on
behalf of the Lender upon demand by the Lender to Guarantor without the Lender
being required, Guarantor expressly waiving any right it may have to require
the
Lender, to (i) prosecute collection or seek to enforce or resort to any remedies
against the Borrower or any other guarantor of the Borrower's Liabilities,
IT
BEING EXPRESSLY UNDERSTOOD, ACKNOWLEDGED AND AGREED TO BY GUARANTOR THAT DEMAND
UNDER THIS GUARANTY AGREEMENT MAY BE MADE BY THE LENDER, AND THE PROVISIONS
HEREOF ENFORCED BY THE LENDER, EFFECTIVE AS OF THE FIRST DATE ANY EVENT OF
DEFAULT OCCURS AND IS CONTINUING UNDER THE NOTE OR THE SECURITY AGREEMENT,
or
(ii) seek to enforce or resort to any remedies with respect to any security
interests, liens or encumbrances granted to the Lender by the Borrower, or
any
other Person on account of the Borrower's Liabilities or any guaranty thereof.
The Lender shall not have any obligation to protect, secure or insure any of
the
foregoing security interests, liens or encumbrances on the properties or
interests in properties subject thereto. The Guarantor’s Obligations shall in no
way be impaired, affected, reduced, or released by reason of the Lender's
failure or delay to do or take any of the acts, actions or things described
in
this Guaranty including, without limiting the generality of the foregoing,
those
acts, actions and things described in this Section 8.
(c) Guarantor
further agrees with respect to this Guaranty that Guarantor shall have no right
of subrogation, reimbursement or indemnity, nor any right of recourse to
security for the Borrower's Liabilities until all of Guarantor’s Obligations and
Borrower’s Obligations are paid and satisfied in full.
9. EFFECTIVENESS;
ENFORCEABILITY. This Guaranty Agreement shall be effective as of the date hereof
and shall continue in full force and effect until all of Guarantor’s Obligations
and Borrower’s Obligations are paid and satisfied in full. This Guaranty
Agreement shall be binding upon and inure to the benefit of Guarantor, the
Lender and their respective heirs, successors and assigns. Notwithstanding
the
foregoing, Guarantor may not, without the prior written consent of the Lender,
assign any rights, powers, duties or obligations hereunder. Any claim or claims
that the Lender may at any time hereafter have against Guarantor under this
Guaranty Agreement may be asserted by the Lender by written notice directed
to
Guarantor.
4
10. REPRESENTATIONS
AND WARRANTIES
(a) Due
Authorization; Effect of Transaction. Except
as
would not have an adverse affect on Lender’s rights under this Guaranty
Agreement,
no
provision of Guarantor’s Certificate of Incorporation or By-Laws, or of any
agreement, instrument, or any applicable law to which it is a named party or
by
which any it is bound has been, or will be violated by, (a) the execution by
Guarantor this Note Agreement, or (b) the performance or satisfaction of any
agreement or condition herein or therein contained upon its part to be performed
or satisfied. All requisite corporate and other authorizations for such
execution, delivery, performance, and satisfaction have been duly obtained.
Upon
execution and delivery by all of the parties thereto, this Guaranty Agreement
will be a legal, valid, and binding obligation of Guarantor, enforceable in
accordance with its terms, subject to laws of general application relating
to
bankruptcy, insolvency and the relief of debtors and rules of law governing
specific performance, injunctive relief or other equitable remedies. Guarantor
is not in default in the performance, observance, or fulfillment of any of
the
terms or conditions of its Certificate of Incorporation or By-Laws. No consent,
authorization, waiver by or filing with any governmental agency, administrative
body or other third party is required in connection with the execution, delivery
or performance of this Guaranty Agreement by Guarantor.
(b) Solvency.
Guarantor is not now insolvent nor will it be rendered insolvent by complying
with the provisions contemplated by this Guaranty Agreement. As used in this
section, “insolvent” means that the sum of the debts and other probable
liabilities of Guarantor exceeds the present fair saleable value of its assets
on a consolidated basis.
(c) Organization
and Corporate Power.
Guarantor
is a corporation duly organized, validly existing, and in good standing under
the laws of Delaware and is duly qualified and in good standing as a foreign
corporation in each other jurisdiction in which it owns or leases properties,
conducts operations, maintains a stock of goods, or is otherwise required to
be
qualified, except where the failure to so qualify and be in good standing would
not have a material adverse effect on its financial condition, business,
operations, properties, or assets. Guarantor has the requisite power and
authority to (a) own or lease and operate its properties and (b) conduct its
business as presently conducted.
(d) Litigation
and Claims.
Guarantor represents and warrants that there are no actions, suits, proceedings
or investigations pending or, to the knowledge of Guarantor, threatened against
or affecting the Guarantor before any court, governmental agency or arbitrator,
which involve forfeiture of any assets of the Maker or which may materially
adversely affect the financial condition, stockholders’ equity, contingent
liabilities, prospects, material agreements, results of operations, properties,
assets or business of the Guarantor, taken as a whole or the ability of the
Guarantor to perform its obligations under this Guaranty Agreement.
11. EXPENSES.
Guarantor agrees to be liable for the payment of all reasonable fees and
expenses, including attorney's fees, incurred by the Lender in connection with
the enforcement of this Guaranty Agreement.
12. REINSTATEMENT.
Guarantor agrees that this Guaranty Agreement shall continue to be effective
or
be reinstated, as the case may be, at any time payment received by the Lender
under the Note or this Guaranty Agreement is rescinded or must be restored
for
any reason.
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13. COUNTERPARTS.
This Guaranty Agreement may be executed in any number of counterparts, each
of
which shall be deemed to be an original as against any party whose signature
appears thereon, and all of which shall constitute one and the same
instrument.
14. RELIANCE.
Guarantor represents and warrants to the Lender that: (a) Guarantor has adequate
means to obtain from Borrower, on a continuing basis, information concerning
Borrower and Borrower's financial condition and affairs and has full and
complete access to Borrower's books and records; (b) Guarantor is not relying
on
the Lender or any Lender, its or their employees, Lender or other
representatives, to provide such information, now or in the future; (c)
Guarantor is executing this Guaranty Agreement freely and deliberately, and
understands the obligations and financial risk undertaken by providing this
Guaranty; (d) Guarantor has relied solely on the Guarantor's own independent
investigation, appraisal and analysis of Borrower and Borrower's financial
condition and affairs in deciding to provide this Guaranty and is fully aware
of
the same; and (e) Guarantor has not depended or relied on the Lender or any
Lender, its or their employees, agent or representatives, for any information
whatsoever concerning Borrower or Borrower's financial condition and affairs
or
other matters material to Guarantor's decision to provide this Guaranty or
for
any counselling, guidance, or special consideration or any promise therefor
with
respect to such decision. Guarantor agrees that the Lender has no duty or
responsibility whatsoever, now or in the future, to provide to Guarantor any
information concerning Borrower or Borrower's financial condition and affairs,
other than as expressly provided herein, and that, if Guarantor receives any
such information from the Lender, or its employees, agents or other
representatives, Guarantor will independently verify the information and will
not rely on the Lender, or its employees, agents or other representatives,
with
respect to such information.
15. TERMINATION.
This Guaranty Agreement and all obligations of the Guarantor hereunder shall
terminate when all of Guarantor’s Obligations and Borrower’s Obligations are
paid and satisfied in full.
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16. NOTICE.
Any notice, demand, claim or other communication under this Guaranty Agreement
shall be in writing and shall be sent by certified mail, return receipt
requested, postage prepaid; telegraph; facsimile transmission (with proof of
sending); or overnight courier to the following addresses (or to such other
address as a party to receive such notice shall specify to the other parties
hereto in accordance with the provisions of this section):
If
to
Lender:
Nascap
Corp.
0
Xxxxxx
Xxxx
Xxxx
Xxxx, Xxx Xxxx 00000
If
to
Guarantor:
Compliance
Systems corporation
00
Xxxxx
Xxxx
Xxxx
Xxxx, Xxx Xxxx 00000
All
such
notices and communications shall be deemed effective as follows: if mailed,
on
the third Business Day following deposit in the mail, or if by overnight
courier, on the day following delivery to the courier; provided, that if such
day is not a Business Day, such notice or communication shall be deemed
effective on the next succeeding Business Day.
17. APPLICABLE
LAW; JURISDICTION; WAIVER OF JURY TRIAL
THIS
GUARANTY AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED UNDER THE LAWS OF THE
STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED THEREIN,
WITHOUT GIVING EFFECT TO THE PRINCIPLES OF CONFLICTS OF LAW. GUARANTOR HEREBY
IRREVOCABLY CONSENTS THAT ANY LEGAL ACTION OR PROCEEDING AGAINST GUARANTOR
ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS GUARANTY AGREEMENT MAY BE
INSTITUTED IN ANY STATE COURT OF GENERAL JURISDICTION LOCATED IN THE XXXXX
XXX
XXXXXX XX XXX XXXX XX XXX XXXXXX XXXXXX FEDERAL COURT FOR THE SOUTHERN DISTRICT
OF NEW YORK AND GUARANTOR HEREBY SUBMITS TO THE JURISDICTION AND VENUE OF SUCH
COURTS. MAKER FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS ARISING
OUT
OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE
MAILING OF COPIES THEREOF BY POSTAGE PREPAID CERTIFIED OR REGISTERED FIRST-CLASS
MAIL, RETURN RECEIPT REQUESTED, TO GUARANTOR. THE FOREGOING, HOWEVER, SHALL
NOT
LIMIT THE RIGHT OF LENDER TO SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED
BY
LAW OR TO COMMENCE ANY LEGAL ACTION OR PROCEEDING OR TO OBTAIN EXECUTION OF
JUDGMENT IN ANY APPROPRIATE JURISDICTION. IN THE EVENT OF LITIGATION BETWEEN
ANY
PARTY OVER ANY MATTER CONNECTED WITH THIS AGREEMENT, THE RIGHT TO A TRIAL BY
JURY IS HEREBY WAIVED BY SUCH PARTIES.
[SIGNATURE
PAGE FOLLOWS]
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IN
WITNESS WHEREOF, the parties have duly executed this Guaranty Agreement on
the
day and year first written above.
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GUARANTOR:
COMPLIANCE
SYSTEMS CORPORATION
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| Name: |
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| Title: | ||
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LENDER:
NASCORP
CORP.
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| By | ||
| Name: |
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| Title: | ||
