EXHIBIT 10.31
GUARANTY AGREEMENT
This Guaranty Agreement (as such agreement may be amended, restated, or
otherwise modified from time to time, this "Guaranty Agreement"), is executed
and delivered effective as of April 24, 2002, by each of the undersigned
Guarantors with respect to the indebtedness, liabilities, and obligations of the
Borrowers under the Credit Agreement defined hereinbelow, as follows:
Definitions:
The following terms shall have the following meanings where used in this
Guaranty Agreement:
"Agent" means Bank of America, National Association, in its capacity as
administrative agent for the Lenders under the Credit Agreement.
"Borrower" and "Borrowers" have the meanings specified for such terms in
the Credit Agreement; provided that as used herein with respect to each
respective Guarantor, the terms "Borrower" and "Borrowers" excludes such
Guarantor.
"Credit Agreement" means the certain Credit Agreement, dated as of April
24, 2002, among Daisytek International Corporation and each of its
Subsidiaries party thereto, the Agent, and the Lenders, as such agreement
may be amended, restated, or otherwise modified from time to time.
"Guaranteed Obligations" means all Obligations and includes all present
and future loans, advances, liabilities, obligations, covenants, duties,
and debts owing by the Borrowers, or any of them, to the Agent and/or any
Lender, arising under or pursuant to the Credit Agreement or any of the
other Loan Documents, whether or not evidenced by any note, or other
instrument or document, whether arising from an extension of credit,
opening of a letter of credit, acceptance, loan, guaranty,
indemnification, or otherwise, whether direct or indirect, absolute or
contingent, due or to become due, primary or secondary, as principal or
guarantor, and including all principal, interest, charges, expenses, fees,
attorneys' fees, filing fees, and any other sums chargeable to any
Borrower hereunder or under any of the other Loan Documents, including
without limitation, (a) all reimbursement obligations, debts, liabilities,
and other obligations now or hereafter arising from or in connection with
the Letters of Credit and Credit Support and (b) all debts, liabilities,
and obligations now or hereafter arising from or in connection with Bank
Products; provided, however, that notwithstanding the forgoing, in the
case of and with regard to or in connection with any Guarantor that is a
Newly Obligated Party, the term "Guaranteed Obligations" excludes Existing
Obligations.
"Guarantor" means (a) each of the undersigned Subsidiaries of Daisytek
International Corporation and (b) each other Person, if any, that becomes
a party to this Guaranty
GUARANTY AGREEMENT - Page 1
Agreement after the Closing Date, by joinder or otherwise, pursuant to the
terms of the Credit Agreement, and in each such case their respective
successors and assigns, and "Guarantors" means all of such Persons,
collectively.
"Lenders" means, collectively, each financial institution from time to
time party to the Credit Agreement as a "Lender" as defined therein, and
their respective successors and assigns and includes the Agent to the
extent of any Agent Advance outstanding and the Bank to the extent of any
Non-Ratable Loan outstanding.
Terms defined in the Credit Agreement, wherever used herein, unless otherwise
defined herein, shall have the same meanings in this Guaranty Agreement as are
set forth in the Credit Agreement, and each of such definitions is incorporated
herein by reference. Each Guarantor expressly acknowledges that it has read and
is familiar with all such incorporated definitions and agrees that they shall
have the same effect and enforceability in this Guaranty Agreement as though set
forth herein at length.
Recitals:
A. Concurrently herewith, Daisytek International Corporation, the
Borrowers, the Agent, and the Lenders have executed and entered into the Credit
Agreement, which provides for Revolving Loans by the Agent and the Lenders to
the Borrowers and for the issuance of Letters of Credit and Credit Support on
the terms and conditions prescribed therein.
B. This Guaranty Agreement is required by the Credit Agreement, and
each Guarantor's execution and delivery hereof is a condition (among other
conditions) to the making of the Revolving Loans and the issuance of the Letters
of Credit and Credit Support under the Credit Agreement.
C. Each Guarantor has determined that (i) it will directly and
indirectly benefit from the availability of financing to the Borrowers under the
Credit Agreement and under the other transactions evidenced by and contemplated
in the Loan Documents, (ii) it will benefit, directly and indirectly, from
executing and delivering this Guaranty Agreement, (iii) it is in such
Guarantor's best interest, and within its corporate purpose, to execute and
deliver and, if called upon to do so, to perform its obligations under this
Guaranty Agreement, and (iv) execution and delivery of this Guaranty Agreement
and the other Loan Documents to which such Guarantor is a party is necessary or
convenient to the conduct, promotion, and attainment of the business of such
Guarantor.
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, each Guarantor jointly and severally
hereby agrees as follows:
1. Guaranty of Guaranteed Obligations. This Guaranty Agreement is
executed by each Guarantor pursuant to the Credit Agreement and is for the
benefit of the Agent and the Lenders. As an inducement to the Agent and the
Lenders to make the Revolving Loans and extend and continue to extend credit and
other financial accommodations to the Borrowers (in the case of any Guarantor
that is a Borrower, other than to such Guarantor) under the Loan Documents and
to cause the Letter of Credit Issuer to provide Letters of Credit and Credit
GUARANTY AGREEMENT - Page 2
Support as provided by the Credit Agreement, each Guarantor, for value received,
does hereby jointly and severally, unconditionally, irrevocably, and absolutely
guarantee the prompt and full payment and performance of the Guaranteed
Obligations when due and at all times thereafter; provided, however, that each
Guarantor's liability under this Guaranty Agreement (excluding Daisytek,
Incorporated) shall be limited to a maximum aggregate amount equal to the
largest amount that would not render its obligations hereunder subject to
avoidance as a fraudulent transfer or conveyance under any Requirement of Law,
in each case after giving effect to all other liabilities of such Guarantor,
contingent or otherwise, that are relevant under such laws, and after giving
effect to the value, as assets (as determined under the applicable provisions of
such laws) of any rights of such Guarantor to contribution, indemnity, and/or
subrogation from any Borrower or other Person pursuant to any Requirement of Law
or any agreement providing for an equitable allocation among such Guarantor, any
Borrower, and any such other Person of their respective obligations thereunder
2. Nature of Guaranty. This Guaranty Agreement is and shall be an
absolute, unconditional, irrevocable, and continuing unlimited guaranty of
payment, and not solely of collection. Each Guarantor guarantees that the
Guaranteed Obligations will be paid strictly in accordance with the terms of the
Credit Agreement and the other Loan Documents, without setoff or counterclaim,
and regardless of any Requirement of Law now or hereafter in effect in any
jurisdiction affecting any of such terms or the rights of the Agent and the
Lenders with respect thereto. The Guaranteed Obligations may be increased,
reduced, or paid in full at any time and from time to time without affecting the
liability or obligation of any Guarantor under this Guaranty Agreement with
respect to all Guaranteed Obligations, whenever incurred or arising. All
Guaranteed Obligations now or hereafter arising shall be conclusively presumed
to have been made or acquired in acceptance hereof. Each Guarantor shall be
liable, jointly and severally, with the Borrowers and any other Person now or
hereafter obligated in respect of the Guaranteed Obligations, or any portion
thereof. It is the intention of each Guarantor and the Agent and the Lenders
that such Guarantor's indebtedness, liabilities, and obligations hereunder shall
not be discharged except by such Guarantor's full and complete payment and
performance of such indebtedness, liabilities, and obligations and then only to
the extent of such payment and performance (to the extent not otherwise
satisfied by the Borrowers or any other Person now or hereafter obligated in
respect of the Guaranteed Obligations).
3. Representations and Warranties. Each of the representations and
warranties in the Credit Agreement relating to each Guarantor is incorporated by
reference and restated herein. In addition, each Guarantor hereby represents and
warrants to the Agent and the Lenders as follows:
(a) Such Guarantor has received and will receive a direct and
indirect material benefit from the transactions evidenced by and
contemplated in the Credit Agreement and the other Loan Documents. This
Guaranty Agreement is given by such Guarantor in furtherance of the direct
and indirect business interests and corporate purposes of such Guarantor,
and is necessary to the conduct, promotion, and attainment of the
businesses of the Borrowers and such Guarantor. The value of the
consideration received and to be received by such Guarantor is reasonably
worth at least as much as the liability and obligation of such Guarantor
hereunder.
GUARANTY AGREEMENT - Page 3
(b) Such Guarantor is currently informed of the financial
condition of each Borrower and any and all other Persons obligated in
respect of the Guaranteed Obligations and of all other circumstances which
a diligent inquiry would reveal and which bear upon the risk of nonpayment
of the Guaranteed Obligations. Such Guarantor has read and understands the
terms and conditions of the Loan Documents. Such Guarantor is familiar
with, and has had an opportunity to review the books and records
regarding, the financial condition of each Borrower and is familiar with
the value of any and all property intended to be security for the payment
of all or any part of the Guaranteed Obligations; provided, however, such
Guarantor is not relying on such financial condition or the existence or
value of any such security as an inducement to enter into this Guaranty
Agreement. Such Guarantor has adequate means to obtain, on a continuing
basis, information concerning the financial condition of each Borrower.
Such Guarantor has not been induced to enter into this Guaranty Agreement
on the basis of a contemplation, belief, understanding, or agreement that
any Person other than such Guarantor will be liable to pay the Guaranteed
Obligations. Neither the Agent nor any Lender has made any representation,
warranty, or statement to such Guarantor in order to induce such Guarantor
to execute this Guaranty Agreement.
4. Covenants. Each Guarantor agrees that, for so long as any of the
Guaranteed Obligations or any part thereof is outstanding or any Lender has any
Commitment under the Credit Agreement, such Guarantor will comply with all
covenants set forth in the Credit Agreement which are applicable to such
Guarantor.
5. Obligations Not Impaired. Each Guarantor agrees that its obligations
hereunder shall not be released, diminished, impaired, reduced, or affected by
the occurrence of any one or more of the following events: (a) lack of
organizational authority of any Borrower; (b) any receivership, insolvency,
bankruptcy, or other proceedings affecting any Borrower or its property; (c)
partial or total release or discharge of any Borrower or other Person from the
performance of any obligation contained in any instrument or agreement
evidencing, governing, or securing all or any part of the Guaranteed
Obligations, whether occurring pursuant to any Requirement of Law or otherwise;
(d) any change in the time, manner, or place of payment of, or in any other term
of, or any increase in the amount of, all the Guaranteed Obligations, or any
portion thereof, or any other amendment or waiver of any term of, or any consent
to departure from any requirement of, any of the Loan Documents; (e) the taking
or accepting of any collateral security for all or any part of the Guaranteed
Obligations, this Guaranty Agreement, or any other Guaranty; (f) the taking or
accepting of any other Guaranty for all or any part of the Guaranteed
Obligations; (g) any failure to acquire, perfect, or continue any Lien on
Collateral securing all or any part of the Guaranteed Obligations or on any
other property securing this Guaranty Agreement; (h) any exchange, release, or
subordination of any Lien on any Collateral, or any release, amendment, waiver,
or subordination of any term of any guaranty of the Guaranteed Obligations or
any other impairment of any collateral security or guaranty now or hereafter
securing all or any part of the Guaranteed Obligations; (i) any failure to
dispose of any collateral security at any time securing all or any part of the
Guaranteed Obligations or this Guaranty Agreement in a commercially reasonable
manner or as otherwise may be required by any Requirement of Law; (j) any
merger, reorganization, consolidation, or dissolution of any Borrower, the
Guarantor, or any other guarantor of the Obligations, any sale, lease, or
transfer of any or all of the assets of any Borrower, the Guarantor, or any
other guarantor of the Obligations,
GUARANTY AGREEMENT - Page 4
or any change in name, business, organization, location, composition, structure,
or organization of any Borrower, the Guarantor, or any other guarantor of the
Obligations; (k) any Change of Control or any other change in the shareholders
of any Borrower, the Guarantor, or any other guarantor of the Obligations; (l)
any invalidity or unenforceability of or defect or deficiency in any of the Loan
Documents; (m) avoidance or subordination of the Guaranteed Obligations, or any
portion thereof, (n) the unenforceability of all or any part of the Guaranteed
Obligations against any Borrower because any interest contracted for, charged,
or received in respect of the Guaranteed Obligations exceeds the amount
permitted by any Requirement of Law; (o) any waiver, consent, extension,
forbearance, or granting of any indulgence by the Agent or the Lenders with
respect to the Guaranteed Obligations or any provision of any of the Loan
Documents; (p) any delay in or lack of enforcement of any remedies under the
Loan Documents; (q) the act of creating all or any part of the Guaranteed
Obligations is ultra xxxxx, or the officers or other representatives creating
all or any part of the Guaranteed Obligations acted in excess of their
authority; (r) any election of remedies by the Agent or any of the Lenders; (s)
any of the Loan Documents were forged; (t) the election by the Agent or any of
the Lenders in any proceeding under the Bankruptcy Code of the application of
Section 1111(b)(2) thereof; (u) any borrowing or grant of a security interest by
any Borrower, as debtor-in-possession, under Section 364 of the Bankruptcy Code;
(v) the disallowance in bankruptcy of all or any portion of the claims of the
Agent or any of the Lenders for payment of any of the Guaranteed Obligations; or
(w) any other circumstance which might otherwise constitute a legal or equitable
discharge or defense available to any Borrower or any Guarantor (other than that
the Guaranteed Obligations shall have been indefeasibly paid and performed in
full).
6. Consent and Waiver.
(a) Each Guarantor hereby waives: (i) notice of acceptance of this
Guaranty Agreement; (ii) notice of any Revolving Loans, Letters of Credit,
Credit Support, or other financial accommodations made or extended under
the Loan Documents or the creation or existence of any Guaranteed
Obligations; (iii) notice of the amount of the Guaranteed Obligations,
subject, however, to such Guarantor's right to make inquiry of the Agent
to ascertain the amount thereof at any reasonable time; (iv) notice of any
adverse change in the financial condition of any Borrower or any other
Person or of any other fact that might increase or otherwise change such
Guarantor's risk with respect to the Guaranteed Obligations, any Borrower,
or any other Person under this Guaranty Agreement; (v) notice of
presentment for payment, demand, protest and notice thereof, notice of
intent to accelerate, notice of acceleration, notice of dishonor,
diligence or promptness in enforcement, and indulgences of every kind as
to any promissory notes or other instruments among the Loan Documents;
(vi) notice of any of the events or circumstances enumerated in paragraph
5 hereof, and all other notices and demands to which such Guarantor might
otherwise be entitled (except if such notice is specifically required to
be given to such Guarantor hereunder or under any of the Loan Documents to
which such Guarantor is a party); (vii) any requirement that the Agent or
any of the Lenders protect, secure, perfect, or insure the Agent's Lien or
any other Lien on any Collateral or other property as security for the
Guaranteed Obligations or exhaust any right or take any action against any
Borrower or any other Person or any Collateral or any other property
subject to a Lien; (viii) the benefit of any statute of limitation
applicable to enforcement of the Guaranteed Obligations, or any portion
thereof, or any Liens in the
GUARANTY AGREEMENT - Page 5
Collateral or other property as security for the Guaranteed Obligations or
this Guaranty Agreement; (ix) all rights by which such Guarantor might be
entitled to require suit on an accrued right of action in respect of any
of the Guaranteed Obligations or require suit against any Borrower or any
other Person, whether arising pursuant to Section 34.02 of the Texas
Business and Commerce Code, as amended, Section 17.001 of the Texas Civil
Practice and Remedies Code, as amended, Rule 31 of the Texas Rules of
Civil Procedure, as amended, or otherwise; or (x) any other defense of any
Borrower or any other Person (other than that the Guaranteed Obligations
shall have been indefeasibly paid and performed in full).
(b) Each Guarantor hereby waives and agrees not to assert against
the Agent or any Lender, to the extent allowed by any Requirement of Law:
(i) any defense, setoff, counterclaim, or claim of any kind or nature
available to any Borrower or any other Person against the Agent or any
Lender, arising directly or indirectly from the present or future lack of
perfection, sufficiency, validity, or enforceability of the Guaranteed
Obligations or any Lien in the Collateral or any other property as
security for the Guaranteed Obligations; or (ii) any right or defense
arising by reason of any claim or defense based upon an election of
remedies by the Agent or any Lender under any Requirement of Law.
(c) The Agent shall have the right to seek recourse against each
Guarantor to the fullest extent provided for herein, and no election by
the Agent to proceed in one form of action or proceeding, or against any
party, or on any obligation, shall constitute a waiver of the Agent's
right to proceed in any other form of action or proceeding or against
other parties unless the Agent has expressly waived such right in writing.
Without limiting the foregoing, no action or proceeding by the Agent or
any Lender under any document or instrument evidencing the Guaranteed
Obligations shall serve to diminish the liability of any Guarantor under
this Guaranty Agreement except to the extent that the Agent and the
Lenders finally and unconditionally shall have realized indefeasible
payment in full of the Guaranteed Obligations.
(d) Each Guarantor waives, and agrees that its liability hereunder
shall not be affected by, any neglect, delay, omission, failure, or
refusal of the Agent or any Lender to (i) exercise or properly or
diligently exercise any right or remedy with respect to any or all of the
Guaranteed Obligations or the collection thereof or the Agent's Liens or
any Collateral or other security for or Guaranty of the Guaranteed
Obligations, or any portion thereof, (ii) take or prosecute, or properly
or diligently take or prosecute, any action for the collection of any or
all of the Guaranteed Obligations against any Borrower, such Guarantor or
any other Person in respect of any or all of the Guaranteed Obligations,
(iii) foreclose or prosecute, or properly or diligently foreclose or
prosecute, any action in connection with any agreement, document or
instrument or arrangement evidencing, securing, or otherwise affecting all
or any part of the Guaranteed Obligations, or (iv) mitigate damages or
take any other action to reduce, collect, or enforce the Guaranteed
Obligations;
(e) The Agent may at any time, without the consent of or notice to
any Guarantor (but otherwise subject to any requirement for consent of any
or all of the
GUARANTY AGREEMENT - Page 6
Lenders as may be required by the Credit Agreement), without incurring
responsibility to any Guarantor and without impairing, releasing,
reducing, or affecting the obligations of any Guarantor hereunder: (i)
change the manner, place, or terms of payment of all or any part of the
Guaranteed Obligations, or renew, extend, modify, rearrange, refinance,
refund, or alter all or any part of the Guaranteed Obligations; (ii) sell,
exchange, release, surrender, subordinate, realize upon, or otherwise deal
with in any manner and in any order any Collateral and any Lien securing
all or any part of the Guaranteed Obligations or this Guaranty Agreement
or setoff against all or any part of the Guaranteed Obligations; (iii)
neglect, delay, omit, fail, or refuse to take or prosecute any action for
the collection of all or any part of the Guaranteed Obligations or this
Guaranty Agreement or to take or prosecute any action in connection with
any of the Loan Documents; (iv) exercise or refrain from exercising any
rights against any Borrower or other Person, or otherwise act or refrain
from acting; (v) settle or compromise all or any part of the Guaranteed
Obligations and subordinate the payment of all or any part of the
Guaranteed Obligations to the payment of any indebtedness, liabilities, or
obligations which may be due or become due to the Agent or the Lenders or
others; (vi) apply any deposit balance, fund, payment, collections through
process of law or otherwise or other property of any Borrower to the
satisfaction and liquidation of indebtedness or obligations of any of the
Borrowers to the Agent or the Lenders, if any, not guaranteed under this
Guaranty Agreement; (vii) release all or any one or more parties to any
one or more of the Loan Documents or grant other indulgences to any
Borrower or any other Person in respect thereof; (viii) amend or modify in
any manner and at any time (or from time to time) any of the Loan
Documents; (ix) partially or fully release or substitute any guarantor, or
enforce, exchange, release, or waive any security for the Guaranteed
Obligations, or any portion thereof; (x) bring suit against any and all
Persons liable or obligated in respect of the Guaranteed Obligations,
collectively together, jointly and severally or separately, and apply any
amounts obtained by the Agent in such manner as the Agent may elect,
subject to the Loan Documents; and (xi) apply any sums paid to the Agent
or the Lenders by any Guarantor, any Borrower, or any other Person to the
Guaranteed Obligations as provided by the Loan Documents.
(f) Should the Agent or any Lender seek to enforce the obligations
hereunder by action in any court or otherwise, each Guarantor waives any
requirement, substantive or procedural, that (i) rights or remedies be
enforced first against any Borrower or any other Person liable for all or
any part of the Guaranteed Obligations, including, without limitation,
that a judgment first be rendered against any such Person, or that any
Borrower or any other such Person should be joined in such cause or (ii)
enforcement shall first be made against any Collateral or other property
which shall ever have been given to secure all or any part of the
Guaranteed Obligations or this Guaranty Agreement. Such waiver shall be
without prejudice to the Agent's right, at its option, to proceed against
any Borrower or any other Person, whether by separate action or by
joinder.
(g) If, in connection with the exercise of any of its rights and
remedies, the Agent or any Lender shall forfeit any of its rights or
remedies, including, without limitation, its right to a deficiency
judgment in respect of the Guaranteed Obligations, whether because of any
Requirement of Law pertaining to "election of remedies," disposition of
collateral, or the like, each Guarantor hereby consents to such action by
the
GUARANTY AGREEMENT - Page 7
Agent or such Lender and waives any claim based upon such action. Any
action which results in the denial or impairment of any such right to seek
a deficiency judgment against any Borrower or any other Person shall not
impair the obligation of such Guarantor to pay the full amount of the
Guaranteed Obligations or any other obligation of such Guarantor contained
herein.
(h) Each Guarantor agrees that, during the existence of a Default
or Event of Default, if the Agent, for the benefit of the Agent and the
Lenders, is prevented by any Requirement of Law from exercising its right
to accelerate the maturity of all or any portion of the Guaranteed
Obligations, to collect interest thereon or to enforce or exercise any
other right or remedy with respect thereto, or the Agent is prevented from
taking any action to enforce the Agent's Liens or any other Lien in the
Collateral or any other property as security for the Guaranteed
Obligations or realize on the Collateral, such Guarantor shall pay to the
Agent, for the account of the Agent and the Lenders, upon demand therefor,
the amount that would otherwise have been due and payable had such rights
and remedies been permitted to be exercised by the Agent and the Lenders,
as the case may be.
(i) Each Guarantor hereby assumes sole responsibility for keeping
itself informed of the financial condition of the Borrowers and any other
Person liable for all or any part of the Guaranteed Obligations, and of
all other circumstances bearing upon the risk of nonpayment of the
Guaranteed Obligations or any part thereof. Each Guarantor hereby agrees
that neither the Agent nor any Lender shall have any obligation or duty to
advise such Guarantor of information known to any of them regarding such
condition or any such circumstance.
(j) Each Guarantor consents and agrees that neither the Agent nor
any of the Lenders shall be under any obligation to marshal any assets in
favor of such Guarantor or otherwise in connection with obtaining payment
of any or all of the Guaranteed Obligations from any Person or source.
(k) Each Guarantor agrees that to the extent permitted under the
Loan Documents and any Requirement of Law the Agent may, at any time and
from time to time in its discretion and with or without valuable
consideration, allow substitution or withdrawal of Collateral or other
security and release Collateral or other security without impairing or
diminishing the indebtedness, liabilities, or obligations of such
Guarantor hereunder.
(l) Each Guarantor agrees that neither the Agent nor any Lender
shall be liable for any failure to use diligence or care in the collection
of the Guaranteed Obligations, in the creation or perfection of any lien,
security interest or assignment intended as security, or in preserving the
liability of any Person liable or obligated on the Guaranteed Obligations.
7. Default. During the existence of a Default or an Event of Default,
each Guarantor, jointly and severally, agrees to pay to the Agent, for the
benefit of the Agent and the Lenders, at the Agent's office located in Dallas
County, Texas or at such other place as the
GUARANTY AGREEMENT - Page 8
Agent may specify to such Guarantor in writing, on demand by the Agent and
without further notice of dishonor and without notice of any kind to any
Borrower, such Guarantor, or any other Person, the full unpaid amount of the
Guaranteed Obligations, in immediately available funds, or such lesser amount,
if any, as may then be due and payable and demanded by the Agent from time to
time. If acceleration of the time for payment of any amount payable by any
Borrower under or with respect to any of the Guaranteed Obligations is stayed or
otherwise delayed upon the insolvency, bankruptcy, or reorganization of any
Borrower, all such amounts otherwise subject to acceleration under the terms of
the Guaranteed Obligations shall nonetheless be payable by each Guarantor
hereunder promptly on demand by the Agent, and each Guarantor, jointly and
severally, expressly and unconditionally agrees to make such payment in full.
8. Taxes.
(a) Any and all payments by each Guarantor to the Agent or any
Lender under this Guaranty Agreement and any other Loan Document shall be
made free and clear of, and without deduction or withholding for, any
Taxes. In addition, the Guarantors shall pay all Other Taxes.
(b) Each Guarantor agrees to indemnify and hold harmless the Agent
and each Lender for the full amount of Taxes or Other Taxes (including any
Taxes or Other Taxes imposed by any Governmental Authority on amounts
payable under this Guaranty Agreement) incurred or paid by the Agent or
any Lender and any liability (including penalties, interest, additions to
tax, and expenses) arising therefrom or with respect thereto, whether or
not such Taxes or Other Taxes were correctly or legally asserted. Payment
under this indemnification shall be made within thirty (30) days after the
date the Agent or any Lender makes written demand therefor.
(c) If any Guarantor shall be required by law to deduct or
withhold any Taxes or Other Taxes from or in respect of any sum payable
hereunder to the Agent or any Lender, then:
(i) the sum payable shall be increased as necessary so that
after making all required deductions and withholdings (including,
without limitation, deductions and withholdings applicable to
additional sums payable under this Guaranty Agreement) the Agent or
such Lender, as the case may be, receives an amount equal to the sum
it would have received had no such deductions or withholdings been
made;
(ii) such Guarantor shall make such deductions and
withholdings;
(iii) such Guarantor shall pay the full amount deducted or
withheld to the relevant taxing authority or other authority in
accordance with any applicable Requirement of Law; and
(iv) such Guarantor shall also pay to the Agent, for the
account of each Lender, or each Lender at the time any payment
hereunder is paid, all additional amounts which the respective
Lender specifies as necessary to preserve the after-
GUARANTY AGREEMENT - Page 9
tax yield such Lender would have received if such Taxes or Other
Taxes had not been imposed.
(d) Within thirty (30) days after the date of any payment by each
Guarantor of Taxes or Other Taxes, the Guarantor shall furnish the Agent
the original or a certified copy of a receipt evidencing payment thereof,
or other evidence of payment satisfactory to the Agent.
9. No Waiver, Remedies.
(a) No failure on the part of the Agent to exercise, and no delay
or omission by the Agent in exercising, any right or remedy hereunder
shall impair such right or remedy or operate or be construed as a waiver
thereof or any acquiescence therein, nor shall any single or partial
exercise of any right or remedy hereunder preclude any other or further
exercise thereof or the exercise of any other right or remedy hereunder.
In no event shall any waiver of the provisions of this Guaranty Agreement
be effective unless the same be in writing and signed by an officer of the
Agent, and then only in the specific instance and for the purpose given.
The remedies herein provided are cumulative and not exclusive of any
remedies provided by any Requirement of Law or any of the other Loan
Documents.
(b) Failure by the Agent or any Lender at any time or times
hereafter to require strict performance by any Borrower, or by any
Guarantor or any other Person, of any of the requirements contained in any
of the Loan Documents now or at any time, from time to time, hereafter
executed and delivered by any Borrower, any Guarantor, or any such other
Person shall not waive, affect, or diminish the right to demand strict
performance thereof, and such right shall not be deemed to have been
modified or waived by any course of conduct or knowledge of the Agent or
any Lender, or any agent, officer, or employee thereof, respectively.
(c) No waiver of any Default or Event of Default or any other
breach, default, or requirement shall operate as a waiver of any other
Default or Event of Default or the same Default or Event of Default on a
future occasion, and no action permitted hereunder shall in any way affect
or impair any of the rights of the Agent or the Lenders or the obligations
of any Guarantor under this Guaranty Agreement or under any of the other
Loan Documents. Any determination by a court of competent jurisdiction of
the amount of any principal and/or interest or other amount constituting
any of the Guaranteed Obligations shall be conclusive and binding on each
Guarantor irrespective of whether such Guarantor was a party to the suit
or action in which such determination was made.
10. Notice of Sale. In the event that any Guarantor is entitled to
receive any notice under the UCC, as it exists in the state governing any such
notice, of the sale or other disposition of any Collateral or other property
securing all or any part of the Guaranteed Obligations or this Guaranty
Agreement, it is agreed that at least ten (10) days notice to such Guarantor of
the time and place of any public sale, or the time after which any private sale
or other disposition may be made of any such Collateral or other property, shall
be deemed to be reasonable notice in
GUARANTY AGREEMENT - Page 10
conformity with such requirements; provided, however, that notice given to a
Guarantor in any other reasonable manner or at any other reasonable time shall
be sufficient.
11. Payment by a Guarantor. Whenever any Guarantor pays any sum which is
or may become due under this Guaranty Agreement, written notice must be
delivered to the Agent contemporaneously with such payment. Such notice shall be
effective for purposes of this paragraph when contemporaneously with such
payment the Agent receives such notice in the manner otherwise prescribed for
notices hereunder. For purposes of this Guaranty Agreement, in the absence of
such notice in compliance with the provisions hereof, any sum received by the
Agent or any Lender on account of the Guaranteed Obligations shall be
conclusively deemed paid by the Borrowers.
12. The Agent. The Agent shall have all of the rights, powers, and
benefits, for itself and on behalf of the Lenders, as are prescribed by the Loan
Documents. Each Guarantor's performance of this Guaranty Agreement is for the
benefit of the Agent and the Lenders according to their respective interests as
provided in the Credit Agreement.
13. Cumulative Remedies; No Election. If any Guarantor is or becomes
liable or obligated for the Guaranteed Obligations, by endorsement or otherwise,
other than under this Guaranty Agreement, such liability or obligation shall not
be in any manner impaired or affected hereby, and the rights and remedies of the
Agent hereunder shall be cumulative of any and all other rights and remedies
that the Agent or any Lender may ever have against such Guarantor. All rights
and remedies of the Agent hereunder are cumulative of each other and of every
other right or remedy which the Agent or any Lender may otherwise have at law or
in equity or under any other contract or document, and the exercise of one or
more rights or remedies shall not prejudice or impair the concurrent or
subsequent exercise of other rights or remedies. The exercise by the Agent or
any Lender of any right or remedy hereunder or under any other agreement,
document, or instrument, or at law or in equity, shall not preclude the
concurrent or subsequent exercise of any other right or remedy. This Guaranty
Agreement may be enforced from time to time as often as occasion for enforcement
may arise as may be determined by the Agent, and it is agreed and understood
that it shall not be necessary for the Agent, in order to enforce payment by any
Guarantor, first to exercise any rights or remedies against any Borrower, the
Collateral, or any other Person under the Loan Documents or any Requirement of
Law.
14. Binding Effect. This Guaranty Agreement is for the benefit of the
Agent (for the benefit of the Agent and the Lenders) and its successors and
assigns, and in the event of an assignment by the Agent or any Lender, or their
respective successors or assigns, of the Guaranteed Obligations, or any part
thereof, the rights and benefits hereunder, to the extent applicable to the
indebtedness, liabilities, and obligations so assigned, shall be deemed
transferred with such indebtedness, liabilities, and obligations without
necessity of further express action. This Guaranty Agreement is binding upon
each Guarantor, and its successors and assigns.
15. Contribution and Indemnification . To the extent that any Guarantor
shall repay any of the Guaranteed Obligations (any such payment hereinafter
being called an "Accommodation Payment") then the Guarantor making such
Accommodation Payment shall be entitled to contribution and indemnification
from, and be reimbursed by, each of the other
GUARANTY AGREEMENT - Page 11
Guarantors hereunder in an amount, for each of such other Guarantors, equal to a
fraction of such Accommodation Payment, the numerator of which fraction is such
other Guarantor's Allocable Amount (as defined below) and the denominator of
which is the sum of the Allocable Amounts of all of the Guarantors. As of any
date of determination, the "Allocable Amount" of each Guarantor shall be equal
to the maximum amount of liability for Accommodation Payments which could be
asserted against such Guarantor hereunder without (a) rendering such Guarantor
"insolvent" within the meaning of Section 101 (31) of the Bankruptcy Code,
Section 2 of the Uniform Fraudulent Transfer Act ("UFTA") or Section 2 of the
Uniform Fraudulent Conveyance Act ("UFCA"), (b) leaving such Guarantor with
unreasonably small capital or assets, within the meaning of Section 548 of the
Bankruptcy Code, Section 4 of the UFTA, or Section 5 of the UFCA, or (c) leaving
such Guarantor unable to pay its debts as they become due within the meaning of
Section 548 of the Bankruptcy Code or Section 4 of the UFTA, or Section 5 of the
UFCA. All rights and claims of contribution, indemnification, and reimbursement
under this paragraph shall be subordinate in right of payment to the prior
payment in full of the Guaranteed Obligations. The provisions of this paragraph
shall, to the extent expressly inconsistent with any provision in any Loan
Document, supersede such inconsistent provision.
16. Subordination of Indebtedness and Liens. The payment of any and all
principal of and interest on all indebtedness of any Borrower, whether direct,
indirect, fixed, contingent, liquidated, unliquidated, joint, several, or joint
and several, now or hereafter existing, due or to become due to each Guarantor
in respect of any payment by such Guarantor under this Guaranty Agreement
(herein called the "Subordinated Debt"), shall in all respects be subordinate
and junior in right of payment and enforcement to the prior payment and
enforcement in full of the Guaranteed Obligations as provided in this paragraph.
Except as may be expressly permitted by the Credit Agreement, no payment shall
be made on or with respect to the Subordinated Debt unless and until the
Guaranteed Obligations shall have been paid and performed in full. In the event
that any Guarantor shall receive any payment on account of the Subordinated Debt
in violation of this paragraph, such Guarantor will hold, or cause to be held
(as the case may be), any amount so received in trust for the benefit of the
Agent, for the benefit of the Agent and the Lenders, and will forthwith deliver,
or cause to be delivered (as the case may be), such payment to the Agent, in the
form received, to be applied to the Guaranteed Obligations. All Liens, if any,
at any time securing payment of all or any part of the Subordinated Debt (herein
called the "Subordinated Liens") shall be and remain inferior and subordinate to
the Liens securing payment of all or any part of the Guaranteed Obligations,
regardless of whether such Subordinated Liens presently exist or are hereafter
created or when such Subordinated Liens were created, perfected, filed, or
recorded (provided that the foregoing shall not be interpreted or deemed to
allow the existence of any such Liens to the extent otherwise prohibited by the
Loan Documents). Each Guarantor shall not exercise or enforce any creditors'
rights or remedies that it may have against any Borrower, or foreclose,
repossess, sequester, or otherwise institute any action or proceeding (whether
judicial or otherwise, including, without limitation, the commencement of, or
joinder in, any bankruptcy, insolvency, reorganization, liquidation,
receivership, or other debtor relief law) to enforce the Subordinated Debt or
any Subordinated Lien on any assets of any Borrower unless and until the
Guaranteed Obligations shall have been paid and performed in full. The terms and
provisions of this paragraph are given by each Guarantor as additional rights
and benefits to any and all other subordination agreements heretofore,
concurrently herewith, or hereafter executed by such Guarantor to or in favor of
the Agent or any Lender, and nothing in this Guaranty Agreement shall be deemed
to in any way
GUARANTY AGREEMENT - Page 12
negate or replace any other such previous, concurrent, or subsequent
subordination agreements. All promissory notes, ledgers, and other evidences of
the Subordinated Debt, and all mortgages, deed of trusts, security agreements,
assignments, and other security documents, if any, at any time evidencing the
Subordinated Liens, shall contain a specific written notice that the
indebtedness and Liens evidenced thereby are subordinated as provided in this
paragraph.
17. Right of Setoff. Each Guarantor hereby grants to the Agent and each
Lender a right of setoff upon any and all monies, securities, or other property
of such Guarantor, and the proceeds therefrom, now or hereafter held or received
by or in transit to the Agent or any such Lender from or for the account of such
Guarantor, whether for safekeeping, custody, pledge, transmission, collection,
or otherwise, and also upon any and all general or special deposits (to the
extent not prohibited by any Requirement of Law) and credits of such Guarantor,
and any and all claims of such Guarantor against the Agent or any such Lender at
any time existing. The right of setoff granted pursuant to this paragraph shall
be cumulative of and in addition to the Agent's or any such Lender's common law
right of setoff.
18. Further Assurances. Upon the request of the Agent, each Guarantor
will, at any time and from time to time, duly execute and deliver to the Agent
any and all such further agreements, documents, and instruments, and supply such
additional information, as may be necessary or advisable, in the opinion of the
Agent, to obtain the full benefits of this Guaranty Agreement.
19. Invalid Provisions. If any provision of this Guaranty Agreement is
held to be illegal, invalid, or unenforceable under present or future laws
effective during the term hereof, such provision shall be fully severable, this
Guaranty Agreement shall be construed and enforced as if such illegal, invalid,
or unenforceable provision had never comprised a part hereof, and the remaining
provisions hereof shall remain in full force and effect and shall not be
affected by the illegal, invalid, or unenforceable provision or by its severance
herefrom. Furthermore, in lieu of such illegal, invalid, or unenforceable
provision there shall be added automatically as a part of this Guaranty
Agreement a provision as similar in terms to such illegal, invalid, or
unenforceable provision as may be possible and be legal, valid, and enforceable.
Notwithstanding any language to the contrary contained herein, no provision
herein or in any other Loan Document evidencing the Guaranteed Obligations shall
require the payment or permit the collection of interest in excess of the
maximum permitted by any Requirement of Law.
20. Modification in Writing. No modification, consent, amendment, or
waiver of any provision of this Guaranty Agreement, and no consent to any
departure by any Guarantor herefrom, shall be effective unless the same shall be
in writing and signed by a duly authorized officer of the Agent and, as to any
modification or amendment, the Guarantors, and then shall be effective only in
the specific instance and for the specific purpose for which given.
21. Notices, Etc. No notice to or demand on, or consent by, any
Guarantor in any case shall, of itself, entitle any Guarantor to any other or
further notice or demand, or right to grant or refuse consent, in similar or
other circumstances. No delay or omission by the Agent in exercising any right
or remedy hereunder shall impair any such right or remedy or be construed as a
waiver thereof or any acquiescence therein, and no single or partial exercise of
any such
GUARANTY AGREEMENT - Page 13
right or remedy shall preclude other or further exercise thereof or the exercise
of any other right or remedy hereunder.
22. Cumulative Rights. All rights and remedies of the Agent hereunder
are cumulative of each other and of every other right or remedy which the Agent
or any Lender may otherwise have under Requirements of Law or under any other
contract or document and the exercise of one or more rights or remedies shall
not prejudice or impair the concurrent or subsequent exercise of other rights or
remedies.
23. Expenses. Each Guarantor jointly and severally agrees to pay on
demand by the Agent all reasonable costs and expenses incurred by the Agent in
connection with the negotiation, preparation, execution, and performance of the
terms and provisions of this Guaranty Agreement and any and all amendments,
modifications, renewals, restatements, and/or supplements hereto from time to
time, including, without limitation, Attorney Costs to the Agent. If any
Guarantor should breach or fail to perform any provision of this Guaranty
Agreement, such Guarantor agrees to pay to the Agent all costs and expenses
incurred by the Agent in the enforcement of this Guaranty Agreement from time to
time, including, without limitation, the Attorney Costs incurred by the Agent.
24. Governing Law; Choice of Forum; Service of Process.
(a) GUARANTY AGREEMENT SHALL BE INTERPRETED AND THE RIGHTS AND
LIABILITIES OF THE GUARANTORS, THE AGENT, AND THE LENDERS SHALL BE
DETERMINED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO THE
CONFLICT OF LAWS PROVISIONS) OF THE STATE OF TEXAS; PROVIDED THAT THE
GUARANTORS, THE AGENT, AND THE LENDERS SHALL RETAIN ALL RIGHTS ARISING
UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS GUARANTY
AGREEMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF TEXAS OR OF THE
U.S. LOCATED IN DALLAS COUNTY, TEXAS, AND BY EXECUTION AND DELIVERY OF
THIS GUARANTY AGREEMENT, EACH GUARANTOR CONSENTS, FOR ITSELF AND IN
RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE
COURTS. EACH GUARANTOR IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY
OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY
ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS GUARANTY
AGREEMENT OR ANY OTHER AGREEMENT, DOCUMENT, OR INSTRUMENT RELATED HERETO.
NOTWITHSTANDING THE FOREGOING, (i) THE AGENT AND THE LENDERS SHALL HAVE
THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST ANY GUARANTOR OR ITS
PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION THE AGENT OR THE LENDERS
DEEM NECESSARY OR APPROPRIATE IN ORDER TO ENFORCE THEIR RIGHTS HEREUNDER
AND (ii) EACH GUARANTOR ACKNOWLEDGES THAT ANY APPEALS FROM THE COURTS
DESCRIBED IN THE IMMEDIATELY
GUARANTY AGREEMENT - Page 14
PRECEDING SENTENCE MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE THOSE
JURISDICTIONS.
(c) TO THE MAXIMUM EXTENT ALLOWED BY ANY APPLICABLE REQUIREMENT OF
LAW, EACH GUARANTOR HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS
UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY
REGISTERED MAIL (RETURN RECEIPT REQUESTED) DIRECTED TO SUCH GUARANTOR AT
ITS ADDRESS SET FORTH IN THE CREDIT AGREEMENT AND SERVICE SO MADE SHALL BE
DEEMED TO BE COMPLETED FIVE (5) DAYS AFTER THE SAME SHALL HAVE BEEN SO
DEPOSITED IN THE U.S. MAILS POSTAGE PREPAID. NOTHING CONTAINED HEREIN
SHALL AFFECT THE RIGHT OF THE AGENT OR THE LENDERS TO SERVE LEGAL PROCESS
BY ANY OTHER MANNER PERMITTED BY LAW.
25. No Oral Agreements. THIS GUARANTY AGREEMENT REPRESENTS THE FINAL
AGREEMENT BETWEEN EACH GUARANTOR AND THE AGENT RELATING TO THE SUBJECT MATTER OF
THIS GUARANTY AGREEMENT AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF SUCH PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN ANY GUARANTOR AND THE AGENT. THIS GUARANTY
AGREEMENT SUPERSEDES ALL PRIOR (IF ANY) ORAL AGREEMENTS, ARRANGEMENTS, OR
UNDERSTANDINGS RELATING TO THE SUBJECT MATTER OF THIS GUARANTY AGREEMENT.
26. Notices. Unless otherwise specifically provided in this Guaranty
Agreement, all notices or other communications required or permitted to be given
under this Guaranty Agreement shall be given, if to the Agent, as specified in
the Credit Agreement, or if to a Guarantor, as specified for such Guarantor in
the Credit Agreement.
27. Survival. All representations, warranties, covenants, and agreements
of each Guarantor in this Guaranty Agreement shall survive the execution of this
Guaranty Agreement.
28. Counterparts. This Guaranty Agreement may be executed in any number
of counterparts, each of which shall constitute an original, but all of which
when taken together shall constitute one and the same Guaranty Agreement. A
telecopy of any such executed counterpart shall be deemed valid as an original.
29. Litigation; Waiver of Trial by Jury. EACH GUARANTOR WAIVES ITS RIGHT
TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF
OR RELATED TO THIS GUARANTY AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING, OR OTHER
LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES TO ANY LOAN DOCUMENT
AGAINST ANY OTHER PARTY TO ANY LOAN DOCUMENT OR ANY AGENT-RELATED PERSON,
PARTICIPANT, OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS,
OR OTHERWISE. EACH GUARANTOR AGREES THAT ANY SUCH
GUARANTY AGREEMENT - Page 15
CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT
LIMITING THE FOREGOING, EACH GUARANTOR FURTHER AGREES THAT ITS RIGHT TO A TRIAL
BY JURY IS WAIVED BY OPERATION OF THIS PARAGRAPH AS TO ANY ACTION, COUNTERCLAIM,
OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY
OR ENFORCEABILITY OF THIS GUARANTY AGREEMENT OR ANY PROVISION HEREOF. THIS
WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS, OR
MODIFICATIONS TO THIS GUARANTY AGREEMENT.
30. Irrevocable Nature of Guaranty. This Guaranty Agreement shall be
irrevocable. Each Guarantor acknowledges that any purported or attempted
revocation shall constitute an Event of Default.
31. Headings. The paragraph headings in this Guaranty Agreement are for
convenience of identification only and do not limit any of the provisions
hereof.
32. Consideration. Each Guarantor acknowledges and expressly agrees with
the Agent and each Lender that the execution and delivery of this Guaranty
Agreement by such Guarantor is required solely as a condition to, and is given
solely as inducement for and in consideration of, credit or accommodations
extended or to be extended under the Loan Documents to any or all of the
Borrowers and is not required or given as a condition of any extensions of
credit to such Guarantor.
[Remainder of page intentionally left blank]
GUARANTY AGREEMENT - Page 16
IN WITNESS WHEREOF, the undersigned have executed this Guaranty Agreement
as of the effective date specified in the introductory paragraph hereinabove.
THE GUARANTORS:
DAISYTEK, INCORPORATED
ARLINGTON INDUSTRIES, INC.
X.X. XXXXX COMPANY
DAISYTEK LATIN AMERICA, INC.
DIGITAL STORAGE, INC.
XXXXXXXXXXXX.XXX, INC.
THE TAPE COMPANY
VIRTUAL DEMAND, INC.
By: ________________________________
Xxxxx Xxxxxxxx
Executive Vice President, Chief
Financial Officer, and Treasurer
GUARANTY AGREEMENT - Page 17
