REMAINDER PAYMENT GUARANTEE
This
REMAINDER PAYMENT
GUARANTEE, dated as of December 19, 2008 (this “Guarantee”), by ▇▇▇▇▇
▇▇▇▇▇ (the “Guarantor”), in favor
of the Shareholder’s Representative as agent for the Selling Shareholders is
made between the Guarantor and the Shareholder’s Representative. Each
capitalized term used and not defined herein shall have the meaning ascribed to
it in the Merger Agreement. For the avoidance of doubt, references
herein to the “Company” or to “Zac”, after the Effective Date, shall mean the
Surviving Corporation.
1. Guarantee. To
induce Zones, Inc. to enter into that certain First Amendment to Agreement and
Plan of Merger dated as of November 17, 2008 by and between Zones, Inc., a
Washington corporation (the “Company”) and Zones Acquisition Corp., a Washington
corporation (“Zac”) which amends
the Agreement and Plan of Merger dated as of July 30, 2008 between Zac and the
Company (as so amended, and as further amended, restated, supplemented or
otherwise modified from time to time, the “Merger Agreement”),
the Guarantor hereby absolutely, irrevocably and unconditionally guarantees to
the Shareholder Representative for the ratable benefit of the Selling
Shareholders and their respective successors and assigns, the due and punctual
performance and payment of the Company’s and Zac’s obligations under Section
2.02(a) of the Merger Agreement to deposit with the Paying Agent on January 2,
2009 cash sufficient to pay the Remainder Payment (such obligations under the
Merger Agreement, the “Obligations”). This
Guarantee is a guaranty of payment and performance and not of collection
only. Guarantor’s liability under this Guarantee is primary,
absolute, direct and unconditional and may be enforced in whole or in part, from
time to time, after any nonpayment or nonperformance by the Company or Zac of
any of the Obligations, in each case without requiring the Shareholder
Representative to resort to the Company or any other person or entity, or any
other right or remedy. The Guarantor shall be regarded, and shall be
in the same position, as principal debtor with respect to the
Obligations.
2. Nature of
Guarantee. The Shareholder Representative shall not be
obligated to file any claim relating to the Obligations in the event that the
Company becomes subject to a bankruptcy, reorganization or similar proceeding,
and the failure of the Shareholder Representative to so file shall not affect
the Guarantor’s obligations hereunder. In the event that any payment to the
Paying Agent in respect of the Obligations is rescinded or must otherwise be
returned for any reason whatsoever, the Guarantor shall remain liable hereunder
with respect to the Obligations as if such payment had not been
made.
3. Changes in Obligations,
Certain Waivers. The Guarantor agrees that the Company, Zac or
the Shareholder Representative may at any time and from time to time, without
notice to or further consent of the Guarantor, extend the time of payment of any
of the Obligations, and may also make any agreement with the Company, Zac or the
Shareholder Representative for the amendment, modification, extension, renewal,
payment, compromise, discharge or release thereof, in whole or in part, without
in any way impairing or affecting any of the Guarantor’s obligations under this
Guarantee. The Guarantor agrees that its obligations hereunder shall not be
released or discharged, in whole or in part, or otherwise affected by (a) the
failure or delay on the part of the Shareholder Representative or the Selling
Shareholders to assert any claim or demand or to enforce any right or remedy
against the Company; (b) any change in the time, place or manner of payment of
any of the Obligations or any rescission, waiver, compromise, consolidation or
other amendment or modification of any of the terms or provisions of the Merger
Agreement made in accordance with the terms thereof; (c) any change in the
corporate existence, structure or ownership of the Company; (d) any insolvency,
bankruptcy, reorganization or other similar proceeding affecting the Company;
(e) the existence of any claim, set-off or other right which the Guarantor may
have at any time against Zac, the Company or the Selling Shareholders, whether
in connection with the Obligations or otherwise; or (f) the adequacy of any
other means the Shareholder Representative or the Selling Shareholders may have
of obtaining payment related to the Obligations. To the fullest extent permitted
by law, the Guarantor hereby expressly waives any and all rights or defenses
arising by reason of any Law which would otherwise require any election of
remedies by the Shareholder Representative or the Selling Shareholders. The
Guarantor hereby waives promptness, diligence, notice of the acceptance of this
Guarantee and of the Obligations, presentment, demand for payment, notice of
non-performance, default, dishonor and protest, notice of any Obligations
incurred and all other notices of any kind, all defenses which may be available
by virtue of any valuation, stay, moratorium law or other similar Law now or
hereafter in effect, any right to require the marshalling of assets of the
Company, and all suretyship defenses generally (other than fraud or willful
misconduct by the Company or any of its subsidiaries or affiliates or defenses
to the payment of the Obligations that are available to the Company under the
Merger Agreement). The Guarantor acknowledges that it will receive substantial
direct and indirect benefits from the transactions contemplated by the Merger
Agreement and that the waivers set forth in this Guarantee are knowingly made in
contemplation of such benefits.
The
Guarantor hereby expressly and unconditionally waives any rights that it may now
have or hereafter acquire against the Company or Zac that arise from the
existence, payment, performance, or enforcement of the Guarantor’s obligations
under or in respect of this Guarantee or any other agreement in connection
therewith, including, without limitation, any right of subrogation,
reimbursement, exoneration, contribution or indemnification and any right to
participate in any claim or remedy of the Shareholder Representative and the
Selling Shareholders against the Company,
whether or not such claim, remedy or right arises in equity or under contract,
statute or common law, including, without limitation, the right to take or
receive from the Company, directly or indirectly, in cash or other property or
by set-off or in any other manner, payment or security on account of such claim,
remedy or right, unless and until all of the amounts payable under this
Guarantee shall have been paid in full in immediately available funds. If any
amount shall be paid to the Guarantor in violation of the immediately preceding
sentence at any time prior to the payment in full in immediately available funds
of all amounts payable under this Guarantee, such amount shall be received and
held in trust for the benefit of the Shareholder Representative for the benefit
of the Selling Shareholders, shall be segregated from other property and funds
of the Guarantor and shall forthwith be paid or delivered to the Company in the
same form as so received (with any necessary endorsement or assignment) to be
credited and applied to the Obligations and all other amounts payable under this
Guarantee, in accordance with the terms of the Merger Agreement, whether matured
or unmatured, or to be held as collateral for any Obligations or other amounts
payable under this Guarantee thereafter arising.
4. No Waiver; Cumulative
Rights. No failure on the part of the Company to exercise, and no delay
in exercising, any right, remedy or power hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise by the Shareholder
Representative of any right, remedy or power hereunder preclude any other or
future exercise of any right, remedy or power hereunder. Each and every right,
remedy and power hereby granted to the Shareholder Representative shall be
cumulative and not exclusive of any other, and may be exercised by the
Shareholder Representative at any time or from time to time.
2
5. Representations and
Warranties of the Guarantor. The Guarantor hereby represents and warrants
that:
(a) this
Guaranty has been duly and validly executed by the Guarantor;
(b) assuming
the due authorization, execution and delivery by the Shareholder Representative,
this Guarantee constitutes a legal, valid and binding obligation of the
Guarantor enforceable against the Guarantor in accordance with its terms,
subject to (i) the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other similar Laws affecting creditors’ rights
generally, and (ii) general equitable principles (whether considered in a
proceeding in equity or at law); and
(c) the
Guarantor has the financial capacity to pay and perform its obligations under
this Guarantee, and all funds necessary for the Guarantor to fulfill its
obligations under this Guarantee shall be available to the Guarantor for so long
as this Guarantee shall remain in effect in accordance with Section 8 of this
Guarantee.
(d) Guarantor
is the sole shareholder of Zac and will be a majority shareholder of the
Surviving Corporation and has received or will receive a direct or indirect
benefit from the transactions contemplated by the Merger Agreement.
(e) The
execution and delivery of this Guarantee and the carrying out of the
transactions contemplated by this Guarantee will not conflict with, or result in
the breach of, any term of any agreement, order, legal requirement or other
matters to or by which Guarantor is bound.
6. No Assignment.
Neither the Guarantor nor the Shareholder Representative may assign or delegate
their rights, interests or obligations hereunder to any other Person without the
prior written consent of the other party hereto. This Guarantee and
all obligations of Guarantor under this Guarantee shall be binding upon the
successors and permitted assigns of Guarantor and shall, together with the
rights and remedies of Shareholder Representative for the benefit of the Selling
Shareholders hereunder, inure to the benefit of the Shareholder Representative
and the Selling Shareholders and their respective successors and permitted
assigns.
7. Notices. Except for
notices that are specifically required by the terms of this Guarantee to be
delivered orally, all notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed given if
delivered personally, telecopied (which is confirmed) or sent by overnight
courier (providing proof of delivery) to the parties at the following addresses
(or at such other address for a party as shall be specified by like
notice):
3
if to the
Shareholder Representatives to:
▇▇▇▇▇▇▇
▇▇▇▇▇▇
c/o ▇▇▇▇
▇▇▇▇▇▇ PC
▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇)
▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇
with a
copy (which shall not constitute notice) to:
DLA Piper
US LLP
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇)
▇▇▇-▇▇▇▇
Attention: ▇▇▇▇
▇▇▇▇▇
with an
additional copy (which shall not constitute notice) to:
▇▇▇▇
▇▇▇▇▇▇ PC
▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇)
▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇
if to the
Guarantor to:
▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇
▇▇▇▇
▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇)
▇▇▇-▇▇▇▇
with a
copy (which shall not constitute notice) to:
▇▇▇▇▇▇▇▇▇▇▇
& ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ LLP
▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇)
▇▇▇-▇▇▇▇
Attention: ▇▇▇▇
▇. ▇▇▇▇▇▇
8. Continuing Guarantee.
This Guarantee may not be revoked or terminated and shall remain in full force
and effect and shall be binding on the Guarantor, its successors and assigns
until satisfaction in full of the Obligations and all of the obligations payable
under this Guarantee have been paid in full.
9. Recourse.
Notwithstanding anything that may be expressed or implied in this Guarantee, the
Merger Agreement or any document or instrument delivered in connection
therewith, by its acceptance of the benefits of this Guarantee, the Shareholder
Representative covenants, agrees and acknowledges that no Person other than the
Guarantor (both individually and their marital community) has any obligations
under this Guarantee.
4
10. Governing Law;
Jurisdiction. This Guarantee shall be governed by, and construed in
accordance with, the laws of the State of Washington, without giving effect to
the conflict of law principles that would require the application of the law of
another jurisdiction. Each of the parties hereto irrevocably (a) consents to
submit itself to the personal jurisdiction of any state or federal court sitting
in the State of Washington in the event any dispute arises out of this Guarantee
or any of the transactions contemplated by this Guarantee, and (b) agrees that
it will not bring any action relating to this letter, the Agreement or the
transactions contemplated by the Agreement in any court other than any state or
federal court sitting in the State of Washington. Notwithstanding the
foregoing, any judgment from any such court described above may be enforced by
any party in any other court in any other jurisdiction.
11. WAIVER OF JURY TRIAL.
EACH OF THE PARTIES HERETO HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS LIMITED GUARANTEE.
12. Counterparts. This
Guarantee may be executed in any number of counterparts (including by facsimile
or electronic transmission), each such counterpart when executed being deemed to
be an original instrument, and all such counterparts shall together constitute
one and the same agreement.
13. No Third Party
Beneficiaries. Except for the Selling Shareholders who are hereby
expressly made third party beneficiaries of this Guarantee, the parties hereby
agree that their respective representations, warranties and covenants set forth
herein are solely for the benefit of the other party hereto, in accordance with
and subject to the terms of this Guarantee, and this Guarantee is not intended
to, and does not, confer upon any Person other than the parties hereto any
rights or remedies hereunder, including, the right to rely upon the
representations and warranties set forth herein.
14. Miscellaneous.
(a) This
Guarantee contains the entire agreement between the parties relative to the
subject matter hereof and supercedes all prior agreements and undertakings
between the parties with respect to the subject matter hereof. For the avoidance
of doubt, the Limited Guarantee Agreement dated November 17, 2008 between
Guarantor and the Company remains in full force and effect. No
modification or waiver of any provision hereof shall be enforceable unless
approved by the Shareholder Representative and the Guarantor in
writing.
(b) Any
term or provision hereof that is prohibited or unenforceable in any jurisdiction
shall be, as to such jurisdiction, ineffective solely to the extent of such
prohibition or unenforceability without invalidating the remaining provisions
hereof, and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other
jurisdiction.
5
(c) The
descriptive headings herein are inserted for convenience of reference only and
are not intended to be part of or to affect the meaning or interpretation of
this Guarantee.
(d) The
Guarantor will pay or reimburse the Shareholder Representative for all costs,
expenses and attorneys’ fees paid or incurred by the Shareholder Representative
in endeavoring to enforce this Guarantee, including, without limitation, fees
and costs incurred in a bankruptcy proceeding.
(e) Guarantor
acknowledges that: ORAL
AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FORBEAR FROM
ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON
LAW.
[Remainder
of page intentionally left blank]
6
IN
WITNESS WHEREOF, Guarantor and Company have executed, or caused to be executed
by a duly authorized officer, as applicable, this Guarantee as of the date first
written above.
|
GUARANTOR:
|
SHAREHOLDER
REPRESENTATIVE
|
||
|
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
|
By:
|
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
|
|
|
▇▇▇▇▇
▇▇▇▇▇
|
Its:
|
Chair, Special Committee of the Zones,
Inc.
|
|
|
Board of Directors and a duly
appointed
|
|||
|
Shareholder
Representative
|
|||
SPOUSE’S
CONSENT:
I
acknowledge that I have read the foregoing Guarantee and understand and consent
to the contents thereof.
|
/s/ ▇▇▇▇▇ ▇▇▇▇▇
|
|
|
▇▇▇▇▇
▇▇▇▇▇
|
▇