GUARANTY AND SECURITY AGREEMENT
This GUARANTY AND SECURITY AGREEMENT (as amended, supplemented, restated or
otherwise modified from time to time, this "Guaranty and Security Agreement")
dated as of January 7, 2002 is made by Xxxxxxx-RS, LLC, a New York limited
liability company (the "Guarantor"), in favor of Xxxxx Fargo Retail Finance, LLC
("WFRF" or the "Secured Party").
W I T N E S S E T H :
WHEREAS, The Right Start, Inc., a California corporation ("Parent"), and
Toy Soldier, Inc., a Delaware corporation ("TS" and, collectively with Parent,
the "Borrowers"), and WFRF, as successor in interest to Paragon Capital LLC, are
parties to a Loan and Security Agreement dated as of January 23, 2001, as
amended by (i) the First Amendment to Loan and Security Agreement dated as of
September 5, 2001, (ii) the Second Amendment to Loan and Security Agreement
dated as of December 14, 2001 and (iii) the Third Amendment to Loan and Security
Agreement (the "Third Amendment") dated as of the date hereof (as so amended and
as may be further amended, restated, supplemented, and/or otherwise modified
from time to time, the "Loan Agreement") pursuant to which WFRF has agreed,
subject to the terms and conditions set forth therein, to make revolving credit
loans, term loans and other financial accommodations to the Borrowers
(collectively, the "Loans");
WHEREAS, Parent owns one hundred percent of the issued and outstanding
capital stock of each of TS and the Guarantor;
WHEREAS, as the wholly-owned subsidiary of Parent and the sister
corporation of TS, the Guarantor will derive substantial direct and indirect
benefits from the revolving advances and other financial accommodations provided
to the Borrowers under the Loan Agreement; and
WHEREAS, it is a condition to the effectiveness of the Third Amendment that
the Guarantor and the Secured Party execute and deliver this Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Guarantor agrees, for the
benefit of the Secured Party, as follows:
ARTICLE I
DEFINITIONS
1.1. Loan Agreement Definitions. Unless otherwise defined herein or the
context otherwise requires, capitalized terms used in this Guaranty and Security
Agreement, including its preamble and recitals, have the meanings provided in
the Loan Agreement.
1.2. UCC Definitions. Unless otherwise defined herein or in the Loan
Agreement or the context otherwise requires, terms for which meanings are
provided in the UCC are used in this Guaranty and Security Agreement, including
its preamble and recitals, with such meanings, as such meanings may be amended
from time to time.
ARTICLE II
SECURITY INTEREST
2.1. Grant of Security Interest. The Guarantor hereby grants to the Secured
Party a continuing security interest in and to all of the Guarantor's currently
existing and hereafter acquired or arising tangible and intangible assets
(collectively, the "Collateral"), including, without limitation, all of the
Guarantor's right, title and interest in and to Accounts, Books, Chattel Paper,
DDAs, Documents, General Intangibles, Inventory, Equipment, all other Goods,
Instruments, Investment Property, Letter of Credit Rights, Real Property, money
or other assets of the Guarantor that now or hereafter come into the possession,
custody, or control of the Secured Party, and all proceeds and supporting
obligations of the foregoing.
2.2. Security for Obligations. This Guaranty and Security Agreement and the
Collateral in which the Secured Party is granted a security interest in and to
hereunder secures the Borrowers' prompt, punctual and faithful repayment of the
Liabilities (including, without limitation, any and all obligations created
under the Parent Guaranty) in accordance with the terms and conditions of the
Loan Documents and the Borrowers' prompt performance of each of their respective
covenants and duties under the Loan Documents (collectively, the "Guaranteed
Obligations").
2.3. Guarantor Remain Liable. Anything herein to the contrary
notwithstanding,
(a) the Guarantor will remain liable under the contracts and agreements
included in the Collateral to the extent set forth therein and will perform all
of its duties and obligations under such contracts and agreements to the same
extent as if this Guaranty and Security Agreement had not been executed;
(b) the exercise by the Secured Party of any of its rights hereunder will
not release the Guarantor from any of its duties or obligations under any such
contracts or agreements included in the Collateral; and
(c) the Secured Party will not be obligated or liable under any contracts
or agreements included in the Collateral by reason of this Guaranty and Security
Agreement, nor will the Secured Party be obligated to perform any of the
obligations or duties of the Guarantor thereunder or to take any action to
collect or enforce any claim for payment assigned hereunder.
2.4. Continuing Security Interest. This Guaranty and Security Agreement
shall create a continuing security interest in the Collateral and shall:
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(a) remain in full force and effect until the date (the "Maturity Date") on
which the Guaranteed Obligations shall have been finally, indefeasibly and fully
paid and performed and WFRF's obligation to make the Loans under the Loan
Agreement shall have been terminated;
(b) be binding upon the Guarantor, its successors, transferees and assigns;
and
(c) inure, together with the rights and remedies of the Secured Party
hereunder, to the benefit of the Secured Party.
ARTICLE III
GUARANTY PROVISIONS
3.1. Guaranty. The Guarantor hereby absolutely, unconditionally and
irrevocably:
(a) guarantees the full and punctual payment when due, whether at stated
maturity, by required prepayment, declaration, acceleration, demand or
otherwise, of all Guaranteed Obligations of the Borrower now or hereafter
existing, whether for principal, interest (including interest accruing at the
then applicable rate provided in the Loan Agreement after the occurrence of any
Default set forth in the Loan Agreement, whether or not a claim for post-filing
or post-petition interest is allowed under applicable law following the
institution of a proceeding under bankruptcy, insolvency or similar laws), fees,
expenses or otherwise (including all such amounts which would become due but for
the operation of the automatic stay under Section 362(a) of the United States
Bankruptcy Code, 11 U.S.C. ss.362(a), and the operation of Sections 502(b) and
506(b) of the United States Bankruptcy Code, 11 U.S.C. ss.502(b) and ss.506(b));
and
(b) indemnifies and holds harmless the Secured Party for any and all costs
and expenses (including reasonable attorneys' fees and expenses) incurred by the
Secured Party in enforcing any rights under this Guaranty;
provided, however, that the Guarantor shall only be liable under this Guaranty
and Security Agreement for the maximum amount of such liability that can be
hereby incurred without rendering this Guaranty, as it relates to the Guarantor,
voidable under applicable law relating to fraudulent conveyance or fraudulent
transfer, and not for any greater amount. This Guaranty and Security Agreement
constitutes a guaranty of payment when due and not of collection, and the
Guarantor specifically agrees that it shall not be necessary or required that
the Secured Party exercise any right, assert any claim or demand or enforce any
remedy whatsoever against any Loan Party or any other Person before or as a
condition to the obligations of the Guarantor hereunder.
3.2. Reinstatement, etc. The Guarantor hereby agrees that this Guaranty and
Security Agreement shall continue to be effective or be reinstated, as the case
may be, if at any time any payment (in whole or in part) of any of the
Guaranteed Obligations is invalidated, declared to be fraudulent or
preferential, set aside, rescinded or must otherwise be restored by the Secured
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Party, including upon the occurrence of any Default or Event of Default or
otherwise, all as though such payment had not been made.
3.3. Guaranty Absolute, etc. This Guaranty and Security Agreement shall in
all respects be a continuing, absolute, unconditional and irrevocable guaranty
of payment, and shall remain in full force and effect until the Maturity Date.
The Guarantor guarantees that the Guaranteed Obligations will be paid strictly
in accordance with the terms of each Loan Document under which they arise,
regardless of any law, regulation or order now or hereafter in effect in any
jurisdiction affecting any of such terms or the rights of the Secured Party with
respect thereto. The liability of the Guarantor under this Guaranty and Security
Agreement shall be absolute, unconditional and irrevocable irrespective of:
(a) any lack of validity, legality or enforceability of any other Loan
Document;
(b) the failure of the Secured Party
(i) to assert any claim or demand or to enforce any right or
remedy against any party to the Loan Agreement or any other
Person (including any other guarantor) under the provisions of
any Loan Document or otherwise, or
(ii) to exercise any right or remedy against any other
guarantor (including the Guarantor) of, or collateral securing,
any Guaranteed Obligations;
(c) any change in the time, manner or place of payment of, or in any other
term of, all or any part of the Guaranteed Obligations, or any other extension,
compromise or renewal of any Guaranteed Obligation;
(d) any reduction, limitation, impairment or termination of any Guaranteed
Obligations for any reason, including any claim of waiver, release, surrender,
alteration or compromise, and shall not be subject to (and the Guarantor hereby
waives any right to or claim of) any defense (other than payment) or setoff,
counterclaim, recoupment or termination whatsoever by reason of the invalidity,
illegality, nongenuineness, irregularity, compromise, unenforceability of, any
Guaranteed Obligations (other than the payment and performance in full of the
Guaranteed Obligations) or otherwise;
(e) any amendment to, rescission, waiver, or other modification of, or any
consent to or departure from, any of the terms of any Loan Document;
(f) any addition, exchange or release of any collateral or of the Guarantor
of the Guaranteed Obligations, or any surrender or non-perfection of any
collateral, or any amendment to or waiver or release or addition to, or consent
to or departure from, any other guaranty held by the Secured Party securing any
of the Guaranteed Obligations; or
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(g) any other circumstance (other than payment) which might otherwise
constitute a defense available to, or a legal or equitable discharge of, any
party to the Loan Agreement, any surety or any guarantor.
3.4. Setoff. The Guarantor hereby irrevocably authorizes the Secured Party,
without the requirement that any notice be given to the Guarantor (such notice
being expressly waived by the Guarantor), upon the occurrence and during the
continuance of any Event of Default to set-off and appropriate and apply to the
payment of the Guaranteed Obligations (whether or not then due, and whether or
not the Secured Party has made any demand for payment of the Guaranteed
Obligations), any and all balances, claims, credits, deposits (general or
special, time or demand, provisional or final), accounts or money of the
Guarantor then or thereafter maintained with the Secured Party and apply the
same pursuant to the Loan Agreement. The Secured Party agrees to notify the
Guarantor and the Secured Party after any such setoff and application made by
the Secured Party; provided, that the failure to give such notice shall not
affect the validity of such setoff and application. The rights of the Secured
Party under this Section are in addition to other rights and remedies (including
other rights of setoff under applicable law or otherwise) which the Secured
Party may have.
3.5. Waiver, etc. Except as otherwise set forth herein, Guarantor hereby
waives promptness, diligence, notice of acceptance and any other notice with
respect to any of the Guaranteed Obligations and this Guaranty and any
requirement that the Secured Party protect, secure, perfect or insure any Lien,
or any property subject thereto, or exhaust any right or take any action against
any party to the Loan Agreement or any other Person (including any other
guarantor) or entity or any collateral securing the Guaranteed Obligations, as
the case may be. Without limiting the generality of the foregoing, the Guarantor
waives (i) all rights and benefits of any applicable law (including, without
limitation, Section 2809 of the California Civil Code) purporting to reduce a
guarantor's obligations in proportion to the obligation of the principal or
providing that the obligation of a surety or guarantor must neither be larger
nor in any other respects more burdensome than that of the principal; (ii) the
benefit of any statute of limitations affecting the Guaranteed Obligations or
the Guarantor's liabilities hereunder or under Section 359.5 of the California
Code of Civil Procedure or any other law now or hereafter applicable hereto;
(iii) any protection afforded pursuant to the antideficiency or other laws of
the State of California or any other state limiting or discharging a Borrower's
indebtedness, including, but not limited to, Section 580a of the California Code
of Civil Procedure, purporting to limit the amount of any deficiency judgment;
and (iv) all rights and benefits under California Civil Code Sections 2810,
2819, 2839, 2845, 2848, 2849, 2850, 2899, and 3433.
3.6. Subordination of Claims of Guarantor; Waiver of Subrogation and
Certain Other Rights. Any claims against the Borrowers to which the Guarantor
may be or become entitled (including, without limitation, claims by subrogation
or otherwise by reason of any payment or performance by the Guarantor in
satisfaction and discharge, in whole or in part, of his obligations under this
Guaranty and Security Agreement) shall be and hereby are made subject and
subordinate to the prior payment in full in cash or performance in full of the
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Guaranteed Obligations. WITHOUT LIMITING THE FOREGOING, THE GUARANTOR WAIVES ANY
AND ALL RIGHTS OF SUBROGATION, INDEMNITY, CONTRIBUTION OR REIMBURSEMENT, AND ANY
AND ALL BENEFITS OF AND RIGHT TO ENFORCE ANY POWER, RIGHT OR REMEDY THAT THE
SECURED PARTY MAY NOW OR HEREAFTER HAVE IN RESPECT OF THE GUARANTEED OBLIGATIONS
AGAINST THE BORROWERS, THE GUARANTOR OR ANY OTHER OBLIGOR, ANY AND ALL BENEFITS
OF AND RIGHTS TO PARTICIPATE IN ANY COLLATERAL, NOW OR HEREAFTER HELD BY THE
SECURED PARTY, AND ANY AND ALL OTHER RIGHTS AND CLAIMS (AS DEFINED IN THE
BANKRUPTCY CODE) THE GUARANTOR MAY HAVE AGAINST THE SECURED PARTY OR THE
BORROWERS OR ANY OTHER OBLIGOR, UNDER APPLICABLE LAW OR OTHERWISE, AT LAW OR IN
EQUITY, BY REASON OF ANY PAYMENT HEREUNDER OR OTHERWISE, UNLESS AND UNTIL THE
GUARANTEED OBLIGATIONS SHALL HAVE BEEN PAID IN FULL IN CASH. Without limitation,
the Guarantor shall exercise no voting rights, shall file no claim, shall waive
any election pursuant to Section 1111(b) of the Bankruptcy Code and shall not
participate or appear in any bankruptcy or insolvency case involving the
Borrower with respect to the Guaranteed Obligations unless and until all the
Guaranteed Obligations shall have been paid in full in cash. If, notwithstanding
the foregoing, any amount shall be paid to the Guarantor on account of any such
rights at any time, such amount shall be held in trust for the benefit of the
Secured Party and shall forthwith be paid to the Secured Party to be held as
collateral for or credited and applied in reduction of the Obligations in
accordance with the terms of the Loan Agreement.
3.7. Payments; Application. The Guarantor hereby agrees with the Secured
Party that (a) all payments made hereunder shall be applied upon receipt as set
forth in Section 1-7 of the Loan Agreement and (b) all payments made by the
Guarantor hereunder will be made in Dollars to the Secured Party, without
set-off, counterclaim or other defense (other than payment) and in accordance
with the Loan Agreement, free and clear of and without deduction for any taxes
owed by the Guarantor, the Guarantor hereby agreeing to comply with and be bound
by the provisions of the Loan Agreement in respect of all payments made by it
hereunder and the provisions of which Sections are hereby incorporated into and
made a part of this Guaranty and Security Agreement by this reference as if set
forth herein; provided, that references to the "Borrowers" in such Sections
shall be deemed to be references to the Guarantor, and references to "this
Agreement" in such Sections shall be deemed to be references to this Guaranty
and Security Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
In order to induce the Secured Party to enter into the Loan Agreement
and make Loans thereunder, the Guarantor represents and warrants to the Secured
Party as set forth below.
4.1. Validity, etc. This Guaranty and Security Agreement creates a valid
security interest in the Collateral securing the payment of the Guaranteed
Obligations. The Guarantor acknowledges that the Secured Party intends to or has
filed or caused to be filed all statements in the appropriate offices therefor
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and has taken all of the actions necessary to create perfected first-priority
security interests in any Collateral in which a security interest may be
perfected by the filing of a financing statement. This Guaranty and Security
Agreement constitutes the legal, valid and binding obligations of Guarantor,
enforceable against Guarantor in accordance with its terms, except as may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforceability of creditors' rights generally.
4.2. Financial Statements. The financial statements that have heretofore
been submitted by the Guarantor to the Secured Party in connection herewith
fairly present the financial condition of the Guarantor for the dates and
periods covered thereby. Since the date of each such financial statement there
has occurred no event or condition which could reasonably be expected to have a
"Material Adverse Effect" on the Guarantor's financial condition. As used
herein, Material Adverse Effect shall mean any event, matter or condition which
could reasonably be expected to have a material adverse effect on (x) the
financial condition or assets of the Guarantor or (y) the Guarantor's ability to
pay and perform its obligations under this Guaranty and Security Agreement in
accordance with the terms thereof.
4.3. Litigation; Compliance with Laws. There are no actions or proceedings
pending by or against Guarantor before any court or administrative agency and
Guarantor does not have knowledge or belief of any threatened or imminent
litigation, governmental investigations, or claims, complaints, actions, or
prosecutions involving Guarantor. Guarantor is not in default under any
applicable law or any material contractual obligation to which Guarantor is a
party or by which its properties are bound. The Guarantor is in material
compliance with the requirements of all applicable laws, rules and regulations,
the non-compliance with any of which could reasonably be expected to materially
adversely affect the value of the Collateral.
4.4. Taxes. The Guarantor has filed all federal and state income tax
returns and all other tax returns required to be filed by it and has paid all
taxes shown to be due on the returns so filed as well as all other taxes,
assessments and governmental charges that have become due. The Guarantor does
not know of any proposed, asserted or assessed tax deficiency against it.
4.5. Ownership, No Liens, etc. The Guarantor owns its Collateral free and
clear of any Lien. No effective financing statement or other filing similar in
effect covering any Collateral is on file in any recording office, except those
filed in favor of the Secured Party relating to this Guaranty and Security
Agreement. The Guarantor has good title to, or valid and subsisting leasehold
interests in, all of the property, whether real or personal, reflected in its
financial statements.
4.6. Indebetedness. Except as set forth herein, the Guarantor has not
guarantied any liabilities or Indebtedness of the Borrowers or of any other
Person, and covenants that it will not, after the date hereof, execute any such
guaranty.
4.7. Authorization, Approval, etc. Except as have been obtained or made and
are in full force and effect, no authorization, approval or other action by, and
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no notice to or filing with, any governmental authority or regulatory body
(other than in connection with the perfection of the Liens hereof) is required
either
(a) for the grant by the Guarantor of the security interest
granted hereby, the pledge by the Guarantor of any Collateral
pursuant hereto or for the execution, delivery and performance of
this Guaranty and Security Agreement by the Guarantor; or
(b) for the exercise by the Secured Party of the voting or
other rights provided for in this Guaranty and Security
Agreement.
4.8. Best Interests. It is in the best interests of the Guarantor to
execute this Guaranty and Security Agreement inasmuch as the Guarantor will, as
a result of having one hundred percent (100%) of its membership interests owned
by Parent, derive substantial direct and indirect benefits from the Loans made
from time to time to Parent and the Guarantor's sister corporation, TS, by the
Secured Party. The Guarantor agrees that the Secured Party is relying on this
representation in agreeing to make Loans to the Borrowers.
4.9. Review of Loan Documents. The Guarantor hereby acknowledges that it
has reviewed and caused its counsel to review copies of, and is fully familiar
with, this Guaranty and Security Agreement, the Loan Agreement and each of the
other Loan Documents executed and delivered by the Borrowers or the Guarantor.
The Guarantor warrants and agrees that each representation, warranty and waiver
set forth in this Guaranty is made with the Guarantor having full knowledge of
its significance and consequences and after having consulted with counsel of its
own choosing and that, under the circumstances, each such waiver is in the best
interest of the Guarantor in furtherance of its business plan and is reasonable.
4.10. Loan Agreement Event of Default. The Guarantor acknowledges and
agrees that any material breach of any representation, warranty or covenant of
the Guarantor in this Guaranty and Security Agreement shall constitute an Event
of Default under the Loan Agreement and under each of the other Loan Documents.
ARTICLE V
COVENANTS
The Guarantor covenants and agrees that, from the date hereof until the
Maturity Date, the Guarantor will perform, comply with and be bound by the
obligations set forth below.
5.1. Further Assurances, etc. Guarantor, from time to time and at its own
expense, will promptly execute and deliver all further documents and
instruments, and take all further action, that may be necessary to protect,
preserve and perfect any security interest granted or purported to be granted
hereby. Without limiting the generality of the foregoing, Guarantor will:
(a) enter into control agreements, and otherwise cause the
Secured Party to obtain control over such items of Collateral as
the Secured Party may reasonably request in writing;
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(b) furnish to the Secured Party, from time to time at the
Secured Party's request, statements and schedules further
identifying and describing the Collateral and such other reports
in connection with the Collateral as the Secured Party may
reasonably request in writing, all in reasonable detail.
5.2. Authorization to File. With respect to the foregoing and the grant of
the security interest hereunder, the Guarantor hereby authorizes the Secured
Party to file one or more financing or continuation statements, and amendments
thereto, relative to all or any part of the Collateral without the signature of
the Guarantor where permitted by law to perfect the Secured Party's security
interest therein.
ARTICLE VI
THE SECURED PARTY
6.1. Secured Party Appointed Attorney-in-Fact. The Guarantor hereby
irrevocably appoints the Secured Party its attorney-in-fact, with full authority
in the place and stead of the Guarantor and in the name of the Guarantor or
otherwise, from time to time in the Secured Party's discretion, following the
occurrence and during the continuance of an Event of Default, to take any action
and to execute any instrument which the Secured Party may deem necessary or
advisable to accomplish the purposes of this Guaranty and Security Agreement,
including:
(a) to ask, demand, collect, xxx for, recover, compromise,
receive and give acquittance and receipts for moneys due and to
become due under or in respect of any of the Collateral;
(b) to receive, endorse, and collect any drafts or other
instruments, documents and chattel paper, in connection with
clause (a) above;
(c) to file any claims or take any action or institute any proceedings
which the Secured Party may deem necessary or desirable for the collection of
any of the Collateral or otherwise to enforce the rights of the Secured Party
with respect to any of the Collateral; and
(d) to perform the affirmative obligations of the Guarantor hereunder
(including all obligations of the Guarantor pursuant to Section 5.6).
The Guarantor hereby acknowledges, consents and agrees that the power of
attorney granted pursuant to this Section is irrevocable and coupled with an
interest.
6.2. Secured Party May Perform. If the Guarantor fails to perform any
agreement contained herein, the Secured Party may itself perform, or cause
performance of, such agreement, and the expenses of the Secured Party incurred
in connection therewith shall be payable by the Guarantor pursuant to Section
7.4.
6.3. Secured Party Has No Duty. The powers conferred on the Secured Party
hereunder are solely to protect its interest in the Collateral and shall not
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impose any duty on it to exercise any such powers. Except for reasonable care of
any Collateral in its possession and the accounting for moneys actually received
by it hereunder, the Secured Party shall have no duty as to any Collateral or
responsibility for
(a) ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters
relative to any investment property, whether or not the Secured
Party has or is deemed to have knowledge of such matters, or
(b) making any necessary steps to preserve rights against prior parties or
any other rights pertaining to any Collateral.
6.4. Reasonable Care. The Secured Party is required to exercise reasonable
care in the custody and preservation of any of the Collateral in its possession;
provided, however, that the Secured Party shall be deemed to have exercised
reasonable care in the custody and preservation of any of the Collateral, if it
takes such action for that purpose as it takes with its own similar property or
as the Guarantor reasonably requests in writing at times other than upon the
occurrence and during the continuance of any Event of Default, but failure of
the Secured Party to comply with any such request at any time shall not in
itself be deemed a failure to exercise reasonable care.
ARTICLE VII
REMEDIES
7.1. Certain Remedies. If any Event of Default shall have occurred and be
continuing:
(a) the Secured Party may exercise in respect of the
Collateral, in addition to other rights and remedies provided for
herein or otherwise available to it, all the rights and remedies
of a secured party on default under the UCC (whether or not the
Code applies to the affected Collateral) and also may
(i) require the Guarantor to, and the Guarantor hereby
agrees that it will, at its expense and upon the written request
of the Secured Party forthwith, assemble all or part of the
Collateral as directed by the Secured Party and make it available
to the Secured Party at a place to be designated by the Secured
Party which is reasonably convenient to both parties, and
(ii) without notice except as specified below, sell the
Collateral or any part thereof in one or more parcels at public
or private sale, at any of the Secured Party's offices or
elsewhere, for cash, on credit or for future delivery, and upon
such other terms as the Secured Party may deem commercially
reasonable. The Secured Party will give the Guarantor at least
ten (10) days' prior written notice at the address of the
Guarantor specified in Section 8.4 hereof of the time and place
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of any public sale thereof or of the time after which any private
sale or any other intended disposition thereof is to be made. Any
such notice shall be deemed to meet any requirement hereunder or
under any applicable law (including the UCC) that reasonable
notification be given of the time and place of such sale or other
disposition. All such sales shall be conducted in a commercially
reasonable manner and shall be at such commercially reasonable
price or prices as the Secured Party shall deem best and either
for cash or on credit or for future delivery (without assuming
any responsibility for credit risk). The Secured Party shall not
be obligated to make any sale of Collateral regardless of notice
of sale having been given. The Secured Party may adjourn any
public or private sale from time to time by announcement at the
time and place fixed therefor, and such sale may, without further
notice, be made at the time and place to which it was so
adjourned.
(iii) all cash proceeds received by the Secured Party in
respect of any sale of, collection from, or other realization
upon, all or any part of the Collateral shall be applied by the
Secured Party against all or any part of the Guaranteed
Obligations as set forth in Section 3.7.
(b) the Secured Party may
(i) transfer all or any part of the Collateral into the name
of the Secured Party or its nominee, with or without disclosing
that such Collateral is subject to the Lien hereunder,
(ii) notify the parties obligated on any of the Collateral
to make payment to the Secured Party of any amount due or to
become due thereunder,
(iii) enforce collection of any of the Collateral by suit or
otherwise, and surrender, release or exchange all or any part
thereof, or compromise or extend or renew for any period (whether
or not longer than the original period) any obligations of any
nature of any party with respect thereto,
(iv) endorse any checks, drafts, or other writings in the
Guarantor's name to allow collection of the Collateral,
(v) take control of any proceeds of the Collateral, and
(vi) execute (in the name, place and stead of the Guarantor)
endorsements, assignments, stock powers and other instruments of
conveyance or transfer with respect to all or any of the
Collateral.
7.2. Waiver. The Guarantor agrees, to the full extent that it may lawfully
so agree, that neither it nor anyone claiming through or under it will set up,
claim or seek to take advantage of any appraisement, valuation, stay, extension
or redemption law now or hereafter in force in any locality where any property
subject to the Lien hereof may be situated, in order to prevent, hinder or delay
the enforcement or foreclosure of this Agreement, or the absolute sale of the
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Collateral or any part thereof, or the final and absolute putting into
possession thereof, immediately after such sale, of the purchaser thereof and
the Guarantor, for itself and all who may at any time claim through or under it,
hereby waives, to the full extent that it may be lawful so to do, the benefit of
all such laws, and any and all right to have any of the properties or assets
comprising the Collateral marshaled upon any such sale, and agrees that, subject
to the terms of this Agreement, the Secured Party, or any court having
jurisdiction to foreclose the Lien hereof, may sell the Collateral as an
entirety or in such parcels as it may determine.
7.3. Compliance with Restrictions. The Guarantor agrees that
(a) in any sale of any of the Collateral whenever an Event
of Default shall have occurred and be continuing, the Secured
Party is hereby authorized to comply with any limitation or
restriction in connection with such sale as it may be advised by
counsel is necessary in order to
(i) avoid any violation of applicable law (including
compliance with such procedures as may restrict the number of
prospective bidders and purchasers, require that such prospective
bidders and purchasers have certain qualifications, and restrict
such prospective bidders and purchasers to Persons who will
represent and agree that they are purchasing for their own
account for investment and not with a view to the distribution or
resale of such Collateral), or
(ii) obtain any required approval of the sale or of the
purchaser by any Governmental Authority or official, and
(b) such compliance shall not result in such sale being
considered or deemed not to have been made in a commercially
reasonable manner, nor shall the Secured Party be liable nor
accountable to the Guarantor for any discount allowed by the
reason of the fact that such Collateral is sold in compliance
with any such limitation or restriction.
7.4. Protection of Collateral. The Secured Party may from time to time, at
its option, perform any act which the Guarantor fails to perform after being
requested in writing so to perform (it being understood that no such request
need be given after the occurrence and during the continuance of an Event of
Default) and the Secured Party may from time to time take any other action which
the Secured Party reasonably deems necessary for the maintenance, preservation
or protection of any of the Collateral or of its security interest therein.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
8.1. Loan Document. This Guaranty and Security Agreement is a Loan Document
executed pursuant to the Loan Agreement and shall (unless otherwise expressly
indicated herein) be construed, administered and applied in accordance with the
terms and provisions thereof.
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8.2. Binding on Successors, Transferees and Assigns; Assignment. This
Guaranty and Security Agreement shall remain in full force and effect until the
Maturity Date has occurred, shall be binding upon the Guarantor and its
successors, transferees and assigns and shall inure to the benefit of and be
enforceable by the Secured Party and its successors, transferees and assigns, in
each case as permitted by the Loan Agreement; provided, however, that the
Guarantor may not assign any of its obligations hereunder without the prior
written consent of the Secured Party.
8.3. Amendments, etc. No amendment to or waiver of any provision of this
Guaranty and Security Agreement, nor consent to any departure by the Guarantor
from its obligations under this Guaranty and Security Agreement, shall in any
event be effective unless the same shall be in writing and signed by the Secured
Party and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
8.4. Notices. All notices and other communications to the Guarantor or to
the Secured Party shall be in writing and shall be personally delivered or
mailed by telegraphic, telex or facsimile transmission, reputable overnight
courier or first class mail, postage prepaid, as follows:
If to the Guarantor: XXXXXXX-RS, LLC
00000 Xxxxxx Xxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Legal
Fax: (000) 000-0000
with copies to: FULBRIGHT & XXXXXXXX L.L.P.
000 Xxxxx Xxxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx Xxx, Esq.
Fax No.: (000) 000-0000
If to the
Secured Party: XXXXX FARGO RETAIL FINANCE, LLC
Xxx Xxxxxx Xxxxx, 00xx Xxxxx
Xxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx
Fax No. (000) 000-0000
with copies to: XXXXXX, HALL & XXXXXXX
Exchange Place
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxxx, P.C.
Fax No. (000) 000-0000
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8.5. Release of Liens. On the Maturity Date, the security interests granted
herein shall automatically terminate with respect to all Collateral. At such
time, the Secured Party will, at the Guarantor's expense, deliver to the
Guarantor, without any representations, warranties or recourse of any kind
whatsoever, all Collateral held by the Secured Party hereunder, and execute and
deliver to the Guarantor such documents as the Guarantor shall reasonably
request to evidence such termination.
8.6. No Waiver; Remedies. No failure on the part of the Secured Party to
exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.
8.7. Section Captions. Section captions used in this Guaranty and Security
Agreement are for convenience of reference only, and shall not affect the
construction of this Guaranty and Security Agreement.
8.8. Severability. Wherever possible each provision of this Guaranty and
Security Agreement shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Guaranty and Security
Agreement shall be prohibited by or invalid under such law, such provision shall
be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Guaranty and Security Agreement.
8.9. Governing Law, Entire Agreement, etc. THIS GUARANTY AND SECURITY
AGREEMENT WILL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE LAWS OF
THE COMMONWEALTH OF MASSACHUSETTS, EXCEPT TO THE EXTENT THAT THE VALIDITY OR
PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT
OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER
THAN THE COMMONWEALTH OF MASSACHUSETTS. This Guaranty and Security Agreement and
the other Loan Documents constitute the entire understanding among the parties
hereto with respect to the subject matter hereof and thereof and supersede any
prior agreements, written or oral, with respect thereto.
8.10. Counterparts. This Guaranty and Security Agreement may be executed by
the parties hereto in several counterparts, each of which shall be deemed to be
an original and all of which shall constitute together but one and the same
agreement.
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IN WITNESS WHEREOF, each of the parties hereto has caused this Guaranty
and Security Agreement to be duly executed and delivered by its officer
thereunto duly authorized as a document under seal as of the date first above
written.
XXXXXXX-RS, LLC
By: The Right Start, Inc., its managing member
By: /s/ Xxxxxxx X. Xxxxxxxx
Xxxxxxx X. Xxxxxxxx
Executive Vice President
XXXXX FARGO RETAIL FINANCE, LLC
By: /s/ Xxxxxx Xxxxxx
Xxxxxx Xxxxxx,
Senior Vice President
