[EXECUTION]
GUARANTY
THIS GUARANTY is made as of July 1, 1996, by CapRock Systems, Inc., a Texas
corporation ("Guarantor"), in favor of Bank One, Texas, National Association
("Lender").
RECITALS:
1. CapRock Fiber Network, Ltd., a Texas limited partnership ("Borrower")
has executed in favor of Lender that certain promissory note of even date
herewith, payable to the order of Lender in the principal amount of $10,000,000
(such promissory note, as from time to time amended, and all promissory notes
given in substitution, renewal or extension therefor or thereof, in whole or in
part, being herein collectively called the "Note").
2. The Note was executed pursuant to a Loan Agreement of even date
herewith, (herein, as from time to time amended, supplemented or restated,
called the "Loan Agreement"), by and between Borrower and Lender, pursuant to
which Lender has agreed to advance funds to Borrower under the Note.
3. It is a condition precedent to Lender's obligation to advance funds
pursuant to the Loan Agreement that Guarantor shall execute and deliver to
Lender a satisfactory guaranty of Borrower's obligations under the Note and the
Loan Agreement.
4. Guarantor owns directly, or indirectly through one or more
subsidiaries, a one percent (1%) general partnership interest in Borrower.
NOW, THEREFORE, in consideration of the premises, of the benefits which
will inure to Guarantor from Lender's advances of funds to Borrower under the
Loan Agreement, and of Ten Dollars and other good and valuable consideration,
the receipt and sufficiency of all of which are hereby acknowledged, and in
order to induce Lender to advance funds under the Loan Agreement, Guarantor
hereby agrees with Lender as follows:
AGREEMENTS
Section 1. DEFINITIONS. Reference is hereby made to the Loan Agreement
for all purposes. All terms used in this Guaranty which are defined in the
Loan Agreement and not otherwise defined herein shall have the same meanings
when used herein. All references herein to any Obligation Document, Loan
Document, or other document or instrument refer to the same as from time to
time amended, supplemented or restated. As used herein the following terms
shall have the following meanings:
"OBLIGATIONS" means collectively all of the indebtedness, obligations, and
undertakings which are guaranteed by Guarantor and described in subsections (a)
and (b) of Section 2.
"OBLIGATION DOCUMENTS" means this Guaranty, the Note, the Loan Agreement,
the Loan Documents, all other documents and instruments under, by reason of
which, or pursuant to which any or all of the Obligations are evidenced,
governed, secured, or otherwise dealt with, and all other documents,
instruments, agreements, certificates, legal opinions and other writings
heretofore or hereafter delivered in connection herewith or therewith.
"OBLIGORS" means Borrower, Guarantor and any other endorsers, guarantors or
obligors, primary or secondary, of any or all of the Obligations.
"SECURITY" means any rights, properties, or interests of Lender, under the
Obligation Documents or otherwise, which provide recourse or other benefits to
Lender in connection with the Obligations or the non-payment or non-performance
thereof, including collateral (whether real or personal, tangible or intangible)
in which Lender has rights under or pursuant to any Obligation Documents,
guaranties of the payment or performance of any Obligation, bonds, surety
agreements, keep-well agreements, letters of credit, rights of subrogation,
rights of offset; and rights pursuant to which other claims are subordinated to
the Obligations.
Section 2. GUARANTY.
(a) Guarantor hereby irrevocably, absolutely, and unconditionally
guarantees to Lender the prompt, complete, and full payment when due, and no
matter how the same shall become due, of:
(i) the Note, including all principal, all interest thereon and all
other sums payable thereunder; and
(ii) all other sums payable under the other Obligation Documents,
whether for principal, interest, fees or otherwise; and
(iii) any and all other indebtedness or liabilities which Borrower
may at any time owe to Lender, whether incurred heretofore or hereafter or
concurrently herewith, voluntarily or involuntarily, whether owed alone or
with others, whether fixed, contingent, absolute, inchoate, liquidated or
unliquidated, whether such indebtedness or liability arises by notes,
discounts, overdrafts, open account indebtedness or in any other manner
whatsoever, and including interest, attorneys' fees and collection costs as
may be provided by law or in any instrument evidencing any such
indebtedness or liability.
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Without limiting the generality of the foregoing, Guarantor hereby agrees that
its liability hereunder shall extend to and include all post-petition interest,
expenses, and other duties and liabilities of Borrower described above in this
subsection (a), or below in the following subsection (b), which would be owed by
Borrower but for the fact that they are unenforceable or not allowable due to
the existence of a bankruptcy, reorganization, or similar proceeding involving
Borrower.
(b) Guarantor hereby irrevocably, absolutely, and unconditionally
guarantees to Lender the prompt, complete and full performance, when due, and no
matter how the same shall become due, of all obligations and undertakings of
Borrower to Lender under, by reason of, or pursuant to any of the Obligation
Documents.
(c) If Borrower shall for any reason fail to pay any Obligation, as and
when such Obligation shall become due and payable, whether at its stated
maturity, as a result of the exercise of any power to accelerate, or otherwise,
Guarantor will, forthwith upon demand by Lender, pay such Obligation in full to
Lender. If Borrower shall for any reason fail to perform promptly any
Obligation, Guarantor will, forthwith upon-demand by Lender, cause such
Obligation to be performed or, if specified by Lender, provide sufficient funds,
in such amount and manner as Lender shall in good faith determine, for the
prompt, full and faithful performance of such Obligation by Lender or such other
Person as Lender shall designate.
(d) If either Borrower or Guarantor fails to pay or perform any Obligation
as described in the immediately preceding subsections (a), (b), or (c) Guarantor
will incur the additional obligation to pay to Lender, and Guarantor will
forthwith upon demand by Lender pay to Lender, the amount of any and all
expenses, including fees and disbursements of Lender's counsel and of any
experts or agents retained by Lender, which Lender may incur as a result of such
failure.
(e) As between Guarantor and Lender, this Guaranty shall be considered a
primary and liquidated liability of Guarantor.
Section 3. UNCONDITIONAL GUARANTY.
(a) No action which Lender may take or omit to take in connection with any
of the Obligation Documents, any of the Obligations (or any other indebtedness
owing by Borrower to Lender), or any Security, and no course of dealing of
Lender with any Obligor or any other Person, shall release or diminish
Guarantor's obligations, liabilities, agreements or duties hereunder, affect
this Guaranty in any way, or afford Guarantor any recourse against Lender,
regardless of whether any such action or inaction may increase any risks to or
liabilities of Lender or any Obligor or increase any risk to or diminish any
safeguard of any Security. Without limiting the foregoing, Guarantor hereby
expressly agrees that Lender may, from time to
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time, without notice to or the consent of Guarantor, do any or all of the
following:
(i) Amend, change or modify, in whole or in part, any one or more
of the Obligation Documents and give or refuse to give any waivers or other
indulgences with respect thereto.
(ii) Neglect, delay, fail, or refuse to take or prosecute any action
for the collection or enforcement of any of the Obligations, to foreclose
or take or prosecute any action in connection with any Security or
Obligation Document, to bring suit against any Obligor or any other Person,
or to take any other action concerning the Obligations or the Obligation
Documents.
(iii) Accelerate, change, rearrange, extend, or renew the time, rate,
terms, or manner for payment or performance of any one or more of the
Obligations (whether for principal, interest, fees, expenses,
indemnifications, affirmative or negative covenants, or otherwise).
(iv) Compromise or settle any unpaid or unperformed Obligation or
any other obligation or amount due or owing, or claimed to be due or owing,
under any one or more of the Obligation Documents.
(v) Take, exchange, amend, eliminate, surrender, release, or
subordinate any or all Security for any or all of the Obligations, accept
additional or substituted Security therefor, and perfect or fail to perfect
Lender's rights in any or all Security.
(vi) Discharge, release, substitute or add Obligors.
(vii) Apply all monies received from Obligors or others, or from any
Security for any of the Obligations, as Lender may determine to be in its
best interest, without in any way being required to xxxxxxxx Security or
assets or to apply all or any part of such monies upon any particular
Obligations.
(b) No action or inaction of any Obligor or any other Person, and no
change of law or circumstances, shall release or diminish Guarantor's
obligations, liabilities, agreements, or duties hereunder, affect this Guaranty
in any way, or afford Guarantor any recourse against Lender. Without limiting
the foregoing, the obligations, liabilities, agreements, and duties of Guarantor
under this Guaranty shall not be released, diminished, impaired, reduced, or
affected by the occurrence of any or all of the following from time to time,
even if occurring without notice to or without the consent of Guarantor:
(i) Any voluntary or involuntary liquidation, dissolution, sale of
all or substantially all assets,
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marshalling of assets or liabilities, receivership, conservatorship,
assignment for the benefit of creditors, insolvency, bankruptcy,
reorganization, arrangement, or composition of any Obligor or any other
proceedings involving any Obligor or any of the assets of any Obligor
under laws for the protection of debtors, or any discharge, impairment,
modification, release, or limitation of the liability of, or stay of
actions or lien enforcement proceedings against, any Obligor, any
properties of any Obligor, or the estate in bankruptcy of any Obligor in
the course of or resulting from any such proceedings.
(ii) The failure by Lender to file or enforce a claim in any
proceeding described in the immediately preceding subsection (i) or to take
any other action in any proceeding to which any Obligor is a party.
(iii) The release by operation of law of any Obligor from any of the
Obligations or any other obligations to Lender.
(iv) The invalidity, deficiency, illegality, or unenforceability of
any of the Obligations or the Obligation Documents, in whole or in part,
any bar by any statute of limitations or other law of recovery on any of
the Obligations, or any defense or excuse for failure to perform on account
of force majeure, act of God, casualty, impossibility, impracticability, or
other defense or excuse whatsoever.
(v) The failure of any Obligor or any other Person to sign any
guaranty or other instrument or agreement within the contemplation of any
Obligor or Lender.
(vi) The fact that Guarantor may have incurred directly part of the
Obligations or is otherwise primarily liable therefor.
(vii) Without limiting any of the foregoing, any fact or event
(whether or not similar to any of the foregoing) which in the absence of
this provision would or might constitute or afford a legal or equitable
discharge or release of or defense to a guarantor or surety other than the
actual payment and performance by Guarantor under this Guaranty.
(c) Lender may invoke the benefits of this Guaranty before pursuing any
remedies against any Obligor or any other Person and before proceeding against
any Security now or hereafter existing for the payment or performance of any of
the Obligations. Lender may maintain an action against Guarantor on this
Guaranty without joining any other Obligor therein and without bringing a
separate action against any other Obligor.
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(d) If any payment to Lender by any Obligor is held to constitute a
preference or a voidable transfer under applicable state or federal laws, or if
for any other reason Lender is required to refund such payment to the payor
thereof or to pay the amount thereof to any other Person, such payment to Lender
shall not constitute a release of Guarantor from any liability hereunder, and
Guarantor agrees to pay such amount to Lender on demand and agrees and
acknowledges that this Guaranty shall continue to be effective or shall be
reinstated, as the case may be, to the extent of any such payment or payments.
Any transfer by subrogation which is made as contemplated in Section 6 prior to
any such payment or payments shall (regardless of the terms of such transfer) be
automatically voided upon the making of any such payment or payments, and all
rights so transferred shall thereupon revert to and be vested in Lender.
(e) This is a continuing guaranty and shall apply to and cover all
Obligations and renewals and extensions thereof and substitutions therefor from
time to time.
Section 4. WAIVER. Guarantor hereby waives, with respect to the
Obligations, this Guaranty, and the other Obligation Documents:
(a) notice of the incurrence of any Obligation by Borrower, and notice of
any kind concerning the assets, liabilities, financial condition,
creditworthiness, businesses, prospects, or other affairs of Borrower (it being
understood and agreed that: (i) Guarantor shall take full responsibility for
informing itself of such matters, (ii) Lender shall have no responsibility of
any kind to inform Guarantor of such matters, and (iii) Lender is hereby
authorized to assume that Guarantor, by virtue of its relationships with
Borrower which are independent of this Guaranty, has full and complete knowledge
of such matters at each time when Lender extends credit to Borrower or takes any
other action which may change or increase Guarantor's liabilities or losses
hereunder).
(b) notice that Lender, any Obligor, or any other Person has taken or
omitted to take any action under any Obligation Document or any other agreement
or instrument relating thereto or relating to any Obligation.
(c) notice of acceptance of this Guaranty and all rights of Guarantor
under Section 34.02 of the Texas Business and Commerce Code.
(d) demand, presentment for payment, and notice of demand, dishonor,
nonpayment, or nonperformance.
(e) notice of intention to accelerate, notice of acceleration, protest,
notice of protest, notice of any exercise of remedies (as described in the
following Section 5 or otherwise), and all other notices of any kind whatsoever.
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Section 5. EXERCISE OF REMEDIES. Lender shall have the right to enforce,
from time to time, in any order and at Lender's sole discretion, any rights,
powers and remedies which Lender may have under the Obligation Documents or
otherwise, including judicial foreclosure, the exercise of rights of power of
sale, the taking of a deed or assignment in lieu of foreclosure, the appointment
of a receiver to collect rents, issues and profits, the exercise of remedies
against personal property, or the enforcement of any assignment of leases,
rentals, oil or gas production, or other properties or rights, whether real or
personal, tangible or intangible; and Guarantor shall be liable to Lender
hereunder for any deficiency resulting from the exercise by Lender of any such
right or remedy even though any rights which Guarantor may have against Borrower
or others may be destroyed or diminished by exercise of any such right or
remedy. No failure on the part of Lender to exercise, and no delay in
exercising, any right hereunder or under any other Obligation Document shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right preclude any other or further exercise thereof or the exercise of any
other right. The rights, powers and remedies of Lender provided herein and in
the other Obligation Documents are cumulative and are in addition to, and not
exclusive of, any other rights, powers or remedies provided by law or in equity.
The rights of Lender hereunder are not conditional or contingent on any attempt
by Lender to exercise any of its rights under any other Obligation Document
against any Obligor or any other Person.
Section 6. LIMITED SUBROGATION. Until all of the Obligations have been
paid and performed in full Guarantor shall have no right to exercise any right
of subrogation, reimbursement, indemnity, exoneration, contribution or any other
claim which it may now or hereafter have against or to any Obligor or any
Security in connection with this Guaranty (including any right of subrogation
under Section 34.04 of the Texas Business and Commerce Code), and Guarantor
hereby defers any rights to enforce any remedy which Guarantor may have against
Borrower and any right to participate in any Security until such time. The
foregoing shall not be deemed to prohibit real locations of partnership
interests among the partners of Borrower in accordance with the terms of the
limited partnership agreement of Borrower. If any amount shall be paid to
Guarantor on account of any such subrogation or other rights, any such other
remedy, or any Security at any time when all of the Obligations and all other
expenses guaranteed pursuant hereto shall not have been paid in full, such
amount shall be held in trust for the benefit of Lender, shall be segregated
from the other funds of Guarantor and shall forthwith be paid over to Lender to
be held by Lender as collateral for, or then or at any time thereafter applied
in whole or in part by Lender against, all or any portion of the Obligations,
whether matured or unmatured, in such order as Lender shall elect. If Guarantor
shall make payment to Lender of all or any portion of the Obligations and if
all of the Obligations shall be finally paid in full, Lender will, at
Guarantor's request and expense, execute
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and deliver to Guarantor (without recourse, representation or warranty)
appropriate documents necessary to evidence the transfer by subrogation to
Guarantor of an interest in the Obligations resulting from such payment by
Guarantor; provided that such transfer shall be subject to Section 3(d) above
and that without the consent of Lender (which Lender may withhold in its
discretion) Guarantor shall not have the right to be subrogated to any claim
or right against any Obligor which has become owned by Lender.
Section 7. SUCCESSORS AND ASSIGNS. Guarantor's rights or obligations
hereunder may not be assigned or delegated, but this Guaranty and such
obligations shall pass to and be fully binding upon the successors of Guarantor,
as well as Guarantor. This Guaranty shall apply to and inure to the benefit of
Lender and its successors or assigns. Without limiting the generality of the
immediately preceding sentence, Lender, subject to the provisions of the Loan
Agreement, may assign, grant a participation in, or otherwise transfer any
Obligation held by it or any portion thereof, and Lender may assign or
otherwise transfer its rights or any portion thereof under any Obligation
Document, to any other Person, and such other Person shall thereupon become
vested with all of the benefits in respect thereof granted to Lender hereunder
unless otherwise expressly provided by Lender in connection with such assignment
or transfer.
Section 8. SUBORDINATION AND OFFSET. Guarantor hereby subordinates and
makes inferior to the Obligations any and all indebtedness now or at any time
hereafter owed by Borrower to Guarantor. Prior to the date the Obligations are
paid in cash and satisfied in full, and such payment is not subject to
rescission, Guarantor shall not accept, receive or collect (by set-off or other
manner) any payment or distribution on account of, or ask for, demand or
accelerate, directly or indirectly, any payment on such indebtedness except as
permitted under the Loan Agreement. Guarantor agrees that after the occurrence
of any Default or Event of Default it will neither permit Borrower to repay such
indebtedness or any part thereof nor accept payment from Borrower of such
indebtedness or any part thereof without the prior written consent of Lender.
If Guarantor receives any such payment without the prior written consent of
Lender, the amount so paid shall be held in trust for the benefit of Lender,
shall be segregated from the other funds of Guarantor, and shall forthwith be
paid over to Lender to be held by Lender as collateral for, or then or at any
time thereafter applied in whole or in part by Lender against, all or any
portions of the Obligations, whether matured or unmatured, in such order as
Lender shall elect.
Guarantor hereby grants to Lender a right of offset to secure the payment
of the Obligations and Guarantor's obligations and liabilities hereunder, which
right of offset shall be upon any and all monies, securities and other property
(and the proceeds therefrom) of Guarantor now or hereafter held or
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received by or in transit to Lender from or for the account of Guarantor,
whether for safekeeping, custody, pledge, transmission, collection or
otherwise, and also upon any and all deposits (general or special), credits
and claims of Guarantor at any time existing against Lender. Upon the
occurrence of any Default or Event of Default Lender is hereby authorized at
any time and from time to time, without notice to Guarantor, to offset,
appropriate and apply any and all items hereinabove referred to against the
Obligations and Guarantor's obligations and liabilities hereunder irrespective
of whether or not Lender shall have made any demand under this Guaranty and
although such obligations and liabilities may be contingent or unmatured.
Lender agrees promptly to notify Guarantor after any such offset and
application made by Lender, provided that the failure to give such notice
shall not affect the validity of such offset and application. The rights of
Lender under this section are in addition to, and shall not be limited by, any
other rights and remedies (including other rights of offset) which Lender may
have.
Section 9. REPRESENTATIONS AND WARRANTIES. Guarantor hereby represents
and warrants to Lender as follows:
(a) The Recitals at the beginning of this Guaranty are true and correct in
all respects.
(b) Guarantor is a corporation duly organized, validly existing and in
good standing under the laws of the state of its incorporation as set forth in
the Recitals to this Guaranty; and Guarantor has all requisite power and
authority to execute, deliver and perform this Guaranty.
(c) The execution, delivery and performance by Guarantor of this Guaranty
have been duly authorized by all necessary corporate action and do not and will
not contravene its certificate or articles of incorporation or bylaws.
(d) The execution, delivery and performance by Guarantor of this Guaranty
do not and will not contravene any law or governmental regulation or any
contractual restriction binding on or affecting Guarantor or any of its
affiliates or properties, and do not and will not result in or require the
creation of any lien, security interest or other charge or encumbrance upon or
with respect to any of its properties.
(e) No authorization or approval or other action by, and no notice to or
filing with, any governmental authority or other regulatory body or third party
is required for the due execution, delivery and performance by Guarantor of this
Guaranty.
(f) This Guaranty is a legal, valid and binding obligation of Guarantor,
enforceable against Guarantor in accordance with its terms except as limited by
bankruptcy, insolvency or similar laws of general application relating to the
enforcement of creditors' rights.
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(g) There is no action, suit or proceeding pending or, to the knowledge of
Guarantor, threatened against or otherwise affecting Guarantor before any court,
arbitrator or governmental department, commission, board, bureau, agency or
instrumentality which may reasonably be expected to materially and adversely
affect Guarantor's financial condition or its ability to perform its obligations
hereunder.
(h) The direct or indirect value of the consideration received and to be
received by Guarantor in connection herewith is reasonably worth at least as
much as the liability and obligations of Guarantor hereunder, and the incurrence
of such liability and obligations in return for such consideration may
reasonably be expected to benefit Guarantor, directly or indirectly.
(i) Guarantor is not "insolvent" on the date hereof (that is, the sum of
Guarantor's absolute and contingent liabilities, including the Obligations, does
not exceed the fair market value of Guarantor's assets). Guarantor's capital is
adequate for the businesses in which Guarantor is engaged and intends to be
engaged. Guarantor has not incurred (whether hereby or otherwise), nor does
Guarantor intend to incur or believe that it will incur, debts which will be
beyond its ability to pay as such debts mature.
(j) All balance sheets, earning statements, financial data and other
information concerning Guarantor which have been furnished to Lender to induce
it to accept this Guaranty (or otherwise furnished to Lender in connection with
the transactions contemplated hereby or associated herewith) fairly represent
the financial condition of Guarantor as of the dates and the results of
Guarantor's operations for the periods for which the same are furnished. None
of such balance sheets, earnings and cash flow statements, financial data and
other information contains any untrue statement of a material fact or omits to
state any material fact which is necessary to make any statements contained
therein not misleading.
Section 10. NO ORAL CHANGE. No amendment of any provision of this
Guaranty shall be effective unless it is in writing and signed by Guarantor and
Lender, and no waiver of any provision of this Guaranty, and no consent to any
departure by Guarantor there from, shall be effective unless it is in writing
and signed by Lender, and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.
Section 11. INVALIDITY OF PARTICULAR PROVISIONS. If any term or provision
of this Guaranty shall be determined to be illegal or unenforceable all other
terms and provisions hereof shall nevertheless remain effective and shall be
enforced to the fullest extent permitted by applicable law.
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Section 12. HEADINGS AND REFERENCES. The headings used herein are for
purposes of convenience only and shall not be used in construing the provisions
hereof. The words "this Guaranty," "this instrument," "herein," "hereof,"
"hereby" and words of similar import refer to this Guaranty as a whole and not
to any particular subdivision unless expressly so limited. The phrases "this
section" and "this subsection" and similar phrases refer only to the
subdivisions hereof in which such phrases occur. The word "or" is not
exclusive, and the word "including" (in its various forms) means "including
without limitation". Pronouns in masculine, feminine and neuter genders shall
be construed to include any other gender, and words in the singular form shall
be construed to include the plural and vice versa, unless the context otherwise
requires.
Section 13. TERM. This Guaranty shall be irrevocable until all of the
Obligations have been completely and finally paid and performed, Lender has no
obligation to make any loans or other advances to Borrower, and all obligations
and undertakings of Borrower under, by reason of, or pursuant to the Obligation
Documents have been completely performed, and this Guaranty is thereafter
subject to reinstatement as provided in Section 3(d). All extensions of credit
and financial accommodations heretofore or hereafter made by Lender to Borrower
shall be conclusively presumed to have been made in acceptance hereof and in
reliance hereon.
Section 14. NOTICES. Any notice or communication required or permitted
hereunder shall be given in writing, sent by personal delivery, by telecopy, by
delivery service with proof of delivery, or by registered or certified United
States mail, postage prepaid, addressed to the appropriate party as follows:
To Guarantor: CapRock Systems, Inc.
Two Galleria Tower
00000 Xxxx Xxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000-0000
Attn: Xxxx X. Xxxxxxxx, Xx.
Fax No.:_______________
To Lender: Bank One, Texas, N.A.
0000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Attn: Xxxx Xxxxxx
Fax No.: (000) 000-0000
or to such other address or to the attention of such other individual as
hereafter shall be designated in writing by the applicable party sent in
accordance herewith. Any such notice or communication shall be deemed to have
been given (a) in the case of personal delivery or delivery service, as of the
date of first attempted delivery at the address or in the manner provided
herein, (b) in the case of telecopy, upon receipt, or (b) in the
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case of registered or certified United States mail, three days after deposit
in the mail.
Section 15. LIMITATION ON INTEREST. Lender and Guarantor intend to
contract in strict compliance with applicable usury law from time to time in
effect. Notwithstanding anything to the contrary herein or in any of the
Obligation Documents, this Guaranty shall never be construed as a contract
obligating Guarantor to pay interest in excess of the maximum amount of interest
permitted by applicable law from time to time in effect, and Guarantor shall
have no liability hereunder to pay interest in excess of such maximum amount.
Lender expressly disavows any intention to charge or collect excessive unearned
interest or finance charges in the event the maturity of any Obligation is
accelerated. If Lender shall collect monies which are deemed to constitute
interest which would otherwise increase the amount of interest paid by Guarantor
to an amount in excess of that permitted by applicable law in effect at the
relevant times, all such sums deemed to constitute interest in excess of such
legal limit shall be immediately returned to Guarantor upon such determination.
In determining whether or not the interest paid or payable by Guarantor, under
any specific circumstance exceeds the maximum interest permitted under
applicable law, Lender and Guarantor shall, to the greatest extent permitted by
applicable law: (a) characterize any non-principal payment as an expense, fee or
premium rather than as interest, (b) exclude voluntary payments and the effects
thereof, and (c) amortize, prorate, allocate, and spread the total amount of
interest throughout the entire contemplated term of the Obligation Documents
evidencing the Obligations in accordance with the maximum amounts outstanding
from time to time thereunder and the maximum legal rates of interest from time
to time in effect under applicable law in order to lawfully charge the maximum
amount of interest permitted under applicable law. If applicable law provides
for an interest ceiling under Texas Revised Civil Statutes Annotated article
5069-1.04 (and if no other ceiling has been established for the Obligation in
question), that ceiling shall be the indicated rate ceiling. As used in this
section the term "applicable law" means the laws of the state of Texas or the
laws of the United States of America, whichever laws allow the greater interest,
as such laws now exist or may be changed or amended or come into effect in the
future.
Section 16. LOAN DOCUMENT. This Guaranty is a Loan Document, as defined in
the Loan Agreement, and is subject to the provisions of the Loan Agreement
governing Loan Documents.
Section 17. COUNTERPARTS. This Guaranty may be executed in any number of
counterparts, each of which when so executed shall be deemed to constitute one
and the same Guaranty.
SECTION 18. GOVERNING LAW. THIS GUARANTY IS TO BE PERFORMED IN THE
STATE OF TEXAS AND SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE
WITH ThE LAWS OF SUCH STATE WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
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IN WITNESS WHEREOF, Guarantor has executed and delivered this Guaranty as
of the date first written above.
CAPROCK SYSTEMS, INC.
By: /s/ Xxxx X. Xxxxxxxx, Xx.
---------------------------------
Xxxx X. Xxxxxxxx, Xx.
President
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