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Exhibit 10.4
SUBSIDIARIES GUARANTY
GUARANTY, dated as of March 6, 1998 (as amended, modified or
supplemented from time to time, this "Guaranty"), made by each of the
undersigned (each, a "Guarantor" and, together with any other entity that
becomes a party hereto pursuant to Section 28 hereof, the "Guarantors"). Except
as otherwise defined herein, terms used herein and defined in the Credit
Agreement (as hereinafter defined) shall be used herein as therein defined.
W I T N E S S E T H :
WHEREAS, Video Update, Inc., a Delaware corporation (the
"Borrower"), various financial institutions from time to time party thereto (the
"Banks") and Banque Paribas, as Agent (the "Agent"), have entered into a Credit
Agreement, dated as of March 6, 1998 (as modified, supplemented or amended from
time to time, the "Credit Agreement"), providing for the making of Loans to the
Borrower and the issuance of, and participation in, Letters of Credit for the
account of the Borrower, all as contemplated therein (the Banks, the Agent and
the Collateral Agent being herein called the "Bank Creditors");
WHEREAS, the Borrower may from time to time enter into, or
guaranty, one or more (i) interest rate protection agreements (including,
without limitation, interest rate swaps, caps, floors, collars and similar
agreements), (ii) foreign exchange contracts, currency swap agreements or other
similar agreements or arrangements designed to protect against the fluctuations
in currency values and/or (iii) other types of hedging agreements from time to
time (collectively, the "Interest Rate Protection or Other Hedging Agreements"),
with Banque Paribas in its individual capacity, any Bank or a syndicate of
financial institutions organized by Banque Paribas or any Bank, any such
financial institution or any affiliate of any such person, even if any such
person subsequently ceases to be a Bank under the Credit Agreement for any
reason, together with such Bank's or affiliate's successors and assigns
(collectively, the "Other Creditors" and, together with the Bank Creditors, are
herein called the "Creditors");
WHEREAS, each Guarantor is a direct or indirect Subsidiary of
the Borrower;
WHEREAS, it is a condition to the making of Loans and the
issuance of, and participation in, Letters of Credit under the Credit Agreement
and to the entering into the Interest Rate Protection or Other Hedging
Agreements that each Guarantor shall have executed and delivered this Guaranty;
and
WHEREAS, each Guarantor will obtain benefits from the
incurrence of Loans by the Borrower and the issuance of, and participation in,
Letters of Credit for the account of the Borrower under the Credit Agreement and
the entering into of the Interest
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Rate Protection or Other Hedging Agreements and, accordingly, desires to execute
this Guaranty in order to satisfy the conditions described in the preceding
paragraph;
NOW, THEREFORE, in consideration of the foregoing and other
benefits accruing to each Guarantor, the receipt and sufficiency of which are
hereby acknowledged, each Guarantor hereby makes the following representations
and warranties to the Creditors and hereby covenants and agrees with each
Creditor as follows:
1. Each Guarantor irrevocably and unconditionally, and jointly
and severally, guarantees: (i) the full and prompt payment when due (whether at
the stated maturity, by acceleration or otherwise) of (x) the principal of and
interest on the Notes issued by, and Loans made to, the Borrower under the
Credit Agreement and all reimbursement obligations and Unpaid Drawings with
respect to Letters of Credit issued under the Credit Agreement, and (y) all
other obligations (including obligations which, but for the automatic stay under
Section 362(a) of the Bankruptcy Code, would become due), indebtedness and
liabilities (including, without limitation, indemnities, fees and interest
thereon) of the Borrower owing to the Bank Creditors now existing or hereafter
incurred under, arising out of or in connection with the Credit Agreement and
the other Credit Documents and the due performance and compliance by the
Borrower with the terms, conditions and agreements contained in the Credit
Documents (all such principal, interest, obligations and liabilities under this
clause (i), except to the extent consisting of obligations or liabilities with
respect to Interest Rate Protection Agreement or Other Hedging Agreements, being
herein collectively referred to as the "Credit Document Obligations") and (ii)
the full and prompt payment when due (whether at the stated maturity, by
acceleration or otherwise) of all obligations (including obligations which, but
for the automatic stay under Section 362(a) of the Bankruptcy Code, would become
due), indebtedness and liabilities (including, without limitation, indemnities,
fees and interest thereon) owing by the Borrower to the Other Creditors under
any Interest Rate Protection or Other Hedging Agreement, whether such Interest
Rate Protection or Other Hedging Agreement is now in existence or hereafter
arising, and the due performance and compliance by the Borrower with the terms,
conditions and agreements contained therein (all such obligations and
indebtedness being herein collectively called the "Other Obligations"; and
together with the Credit Document Obligations are herein collectively called the
"Guaranteed Obligations"). Subject to Section 22 of this Agreement, each
Guarantor understands, agrees and confirms that the Creditors may enforce this
Guaranty up to the full amount of the Guaranteed Obligations against such
Guarantor without proceeding against the Borrower, against any security for the
Guaranteed Obligations, against any other Guarantor, or against any other
guarantor under any other guaranty covering the Guaranteed Obligations. This
Guaranty shall constitute a guaranty of payment and not of collection. All
payments by each Guarantor under this Guaranty shall be made on the same basis
as payments by the Borrower under Sections 4.03 and 4.04 of the Credit
Agreement.
2. Additionally, each Guarantor, jointly and severally,
unconditionally and irrevocably, guarantees the payment of any and all
Guaranteed Obligations of the Borrower to the Creditors whether or not due or
payable by the Borrower upon the occurrence in respect of the Borrower of any of
the events specified in Section 10.05 of the Credit
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Agreement, and unconditionally and irrevocably, jointly and severally, promises
to pay such Guaranteed Obligations to the Creditors, or order, on demand, in
lawful money of the United States.
3. The liability of each Guarantor hereunder is exclusive and
independent of any security for or other guaranty of the indebtedness of the
Borrower whether executed by such Guarantor, any other Guarantor, any other
guarantor or by any other party, and the liability of such Guarantor hereunder
shall not be affected or impaired by: (i) any direction as to application of
payment by the Borrower; (ii) any other continuing or other guaranty,
undertaking or maximum liability of a guarantor or of any other party as to the
indebtedness of the Borrower; (iii) any payment on or in reduction of any such
other guaranty or undertaking; (iv) any dissolution, termination or increase,
decrease or change in personnel by the Borrower; or (v) any payment made to any
Creditor on the indebtedness which any Creditor repays the Borrower pursuant to
court order in any bankruptcy, reorganization, arrangement, moratorium or other
debtor relief proceeding, and each Guarantor waives any right to the deferral or
modification of its obligations hereunder by reason of any such proceeding.
4. The obligations of each Guarantor hereunder are independent
of the obligations of any other Guarantor, any other guarantor or the Borrower,
and a separate action or actions may be brought and prosecuted against each
Guarantor whether or not action is brought against any other Guarantor, any
other guarantor or the Borrower, and whether or not any other Guarantor, any
other guarantor or the Borrower be joined in any such action or actions. Each
Guarantor waives, to the fullest extent permitted by law, the benefit of any
statute of limitations affecting its liability hereunder or the enforcement
thereof. Any payment by the Borrower or other circumstance which operates to
toll any statute of limitations as to the Borrower shall operate to toll the
statute of limitations as to each Guarantor.
5. Each Guarantor hereby waives notice of acceptance of this
Guaranty and notice of any liability to which it may apply, and waives
promptness, diligence, presentment, demand of payment, protest, notice of
dishonor or nonpayment of any such liabilities, suit or taking of other action
taken by the Agent or any other Creditor against, and any other notice to, any
party liable thereon (including such Guarantor or any other Guarantor or
guarantor).
6. Any Creditor may at any time and from time to time without
the consent of, or notice to, any Guarantor, without incurring responsibility to
any Guarantor, without impairing or releasing the obligations of any Guarantor
hereunder, upon or without any terms or conditions and in whole or in part (and
each Guarantor hereby irrevocably waives any defenses it may now or hereafter
have in any way relating to any and all of the following):
(i) change the manner, place or terms of payment of, and/or
change or extend the time of payment of, renew, increase, accelerate or
alter, any of the Guaranteed Obligations, any security therefor, or any
liability incurred directly or
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indirectly in respect thereof, and the guaranty herein made shall apply
to the Guaranteed Obligations as so changed, extended, renewed or
altered;
(ii) sell, exchange, release, surrender, realize upon or
otherwise deal with in any manner and in any order any property by
whomsoever at any time pledged or mortgaged to secure, or howsoever
securing, the Guaranteed Obligations or any liabilities (including any
of those hereunder) incurred directly or indirectly in respect thereof
or hereof, and/or any offset thereagainst;
(iii) exercise or refrain from exercising any rights against
the Borrower, any Guarantor or others or otherwise act or refrain from
acting;
(iv) settle or compromise any of the Guaranteed Obligations,
any security therefor or any liability (including any of those
hereunder) incurred directly or indirectly in respect thereof or
hereof, and may subordinate the payment of all or any part thereof to
the payment of any liability (whether due or not) of the Borrower to
creditors of the Borrower;
(v) apply any sums by whomsoever paid or howsoever realized
to any liability or liabilities of the Borrower to the Creditors
regardless of what liabilities of the Borrower remain unpaid;
(vi) consent to or waive any breach of, or any act, omission
or default under, any of the Interest Rate Protection or Other Hedging
Agreements or any of the Credit Documents or any of the instruments or
agreements referred to therein, or otherwise amend, modify or
supplement any of the Interest Rate Protection or Other Hedging
Agreements or any of the Credit Documents or any of such other
instruments or agreements; and/or
(vii) act or fail to act in any manner referred to in this
Guaranty which may deprive any Guarantor of its right to subrogation
against the Borrower to recover full indemnity for any payments made
pursuant to this Guaranty.
7. No invalidity, irregularity or unenforceability of all or
any part of the Guaranteed Obligations or of any security therefor shall affect,
impair or be a defense to this Guaranty, and this Guaranty shall be primary,
absolute and unconditional notwithstanding the occurrence of any event or the
existence of any other circumstances which might constitute a legal or equitable
discharge of a surety or guarantor except payment in full of the Guaranteed
Obligations.
8. This Guaranty is a continuing one and all liabilities to
which it applies or may apply under the terms hereof shall be conclusively
presumed to have been created in reliance hereon. No failure or delay on the
part of any Creditor in exercising any right, power or privilege hereunder and
no course of dealing between any Guarantor and any Creditor shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
expressly
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specified are cumulative and not exclusive of any rights or remedies which any
Creditor would otherwise have. No notice to or demand on any Guarantor in any
case shall entitle such Guarantor to any other further notice or demand in
similar or other circumstances or constitute a waiver of the rights of any
Creditor to any other or further action in any circumstances without notice or
demand. It is not necessary for any Creditor to inquire into the capacity or
powers of the Borrower or any of its Subsidiaries or the officers, directors,
partners or agents acting or purporting to act on its behalf and any
indebtedness made or created in reliance upon the professed exercise of such
powers shall be guaranteed hereunder.
9. Any indebtedness of the Borrower now or hereafter held by
any Guarantor is hereby subordinated to the indebtedness of the Borrower to the
Creditors, and such indebtedness of the Borrower to any Guarantor, if the Agent,
after an Event of Default has occurred, so requests, shall be collected,
enforced and received by such Guarantor as trustee for the Creditors and be paid
over to the Creditors on account of the indebtedness of the Borrower to the
Creditors, but without affecting or impairing in any manner the liability of
such Guarantor under the other provisions of this Guaranty. Prior to the
transfer by any Guarantor of any note or negotiable instrument evidencing any
indebtedness of the Borrower to such Guarantor, such Guarantor shall xxxx such
note or negotiable instrument with a legend that the same is subject to this
subordination. Without limiting the generality of the foregoing, each Guarantor
hereby agrees with the Creditors that it will not exercise any right of
subrogation which it may at any time otherwise have as a result of this Guaranty
(whether contractual, under Section 509 of the Bankruptcy Code, or otherwise)
until all Guaranteed Obligations have been irrevocably paid in full in cash.
10. (a) Each Guarantor waives any right (except as shall be
required by applicable statute and cannot be waived) to require the Creditors to
(i) proceed against the Borrower, any other Guarantor, any other guarantor or
any other party, (ii) proceed against or exhaust any security held from the
Borrower, any other Guarantor, any other guarantor or any other party or (iii)
pursue any other remedy in the Creditors' power whatsoever. Each Guarantor
waives any defense based on or arising out of any defense of the Borrower, any
other Guarantor, any other guarantor or any other party other than payment in
full of the Guaranteed Obligations, including, without limitation, any defense
based on or arising out of the disability of the Borrower, any other Guarantor,
any other guarantor or any other party, or the unenforceability of the
Guaranteed Obligations or any part thereof from any cause, or the cessation from
any cause of the liability of the Borrower other than payment in full of the
Guaranteed Obligations. The Creditors may, at their election, foreclose on any
security held by the Agent, the Collateral Agent or the other Creditors by one
or more judicial or nonjudicial sales, whether or not every aspect of any such
sale is commercially reasonable (to the extent such sale is permitted by
applicable law), or exercise any other right or remedy the Creditors may have
against the Borrower or any other party, or any security, without affecting or
impairing in any way the liability of any Guarantor hereunder except to the
extent the Guaranteed Obligations have been paid in full. Each Guarantor waives
any defense arising out of any such election by the Creditors, even though such
election operates to impair any right of reimbursement or subrogation or other
right or remedy of such Guarantor against the Borrower or any other party or any
security.
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(b) Each Guarantor waives all presentments, demands for
performance, protests and notices, including, without limitation, notices of
nonperformance, notices of protest, notices of dishonor, notices of acceptance
of this Guaranty, and notices of the existence, creation or incurring of new or
additional indebtedness. Each Guarantor assumes all responsibility for being and
keeping itself informed of the Borrower's financial condition and assets, and of
all other circumstances bearing upon the risk of nonpayment of the Guaranteed
Obligations and the nature, scope and extent of the risks which such Guarantor
assumes and incurs hereunder, and agrees that the Creditors shall have no duty
to advise any Guarantor of information known to them regarding such
circumstances or risks.
11. In order to induce the Banks to make Loans to the
Borrower, and to issue, and participate in, Letters of Credit for the account of
the Borrower pursuant to the Credit Agreement and in order to induce the Other
Creditors to execute, deliver and perform the Interest Rate Protection and Other
Hedging Agreements, each Guarantor hereby represents, warrants and covenants
that:
(i) Such Guarantor and each of its Subsidiaries (x) is a duly
organized and validly existing corporation in good standing under the
laws of the jurisdiction of its incorporation, (y) has the corporate
power and authority to own its property and assets and to transact the
business in which it is engaged and presently proposes to engage and
(z) is duly qualified and is authorized to do business and is in good
standing in each jurisdiction where the ownership, leasing or operation
of property or the conduct of its business requires such qualification
except for failures to be so qualified which, in the aggregate, would
not have a material adverse effect on the performance, business,
assets, nature of assets, liabilities, operations, properties,
condition (financial or otherwise) or prospects of such Guarantor or of
such Guarantor and its Subsidiaries taken as a whole.
(ii) Such Guarantor has the corporate power and authority to
execute, deliver and perform the terms and provisions of this Guaranty
and each other Credit Document to which it is a party and has taken all
necessary corporate action to authorize the execution, delivery and
performance by it of each such Credit Document. Such Guarantor has duly
executed and delivered this Guaranty and each other Credit Document to
which it is a party, and each such Credit Document constitutes its
legal, valid and binding obligation enforceable in accordance with its
terms, except as the enforceability thereof may be limited by
bankruptcy, reorganization, moratorium or similar laws relating to or
limiting creditors' rights generally or by general equitable principles
(regardless of whether the issue of enforceability is considered in a
proceeding in equity or at law).
(iii) Neither the execution, delivery or performance by such
Guarantor of this Guaranty or any other Credit Document to which it is
a party, nor compliance by it with the terms and provisions hereof or
thereof, (x) will contravene any provision of any law, statute, rule or
regulation or any order, writ, injunction or decree of any court or
governmental instrumentality, (y) will conflict with or result in any
breach of any of the terms, covenants, conditions or provisions of, or
constitute a default under, or result in the creation or imposition of
(or the obligation to
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create or impose) any Lien (except pursuant to the Security Documents)
upon any of the property or assets of such Guarantor or any of its
Subsidiaries pursuant to the terms of any indenture, mortgage, deed of
trust, credit agreement or loan agreement, or any other agreement,
contract or instrument to which such Guarantor or any of its
Subsidiaries is a party or by which it or any of its property or assets
is bound or to which it may be subject or (z) will violate any
provision of the Certificate of Incorporation or By-Laws (or similar
organizational documents) of such Guarantor or any of its Subsidiaries.
(iv) No order, consent, approval, license, authorization or
validation of, or filing, recording or registration with (except as
have been obtained or made prior to the Initial Borrowing Date and are
in full force and effect), or exemption by, any governmental or public
body or authority, or any subdivision thereof, is required to
authorize, or is required in connection with, (x) the execution,
delivery and performance of this Guaranty or any other Credit Document
to which such Guarantor is a party or (y) the legality, validity,
binding effect or enforceability of this Guaranty or any other Credit
Document to which such Guarantor is a party.
(v) There are no actions, suits or proceedings pending or
threatened (x) with respect to this Guaranty, (y) with respect to any
Indebtedness of the Guarantor or any of its Subsidiaries or (z) that
are reasonably likely to materially and adversely affect the
performance, business, assets, nature of assets, liabilities,
operations, properties, condition (financial or otherwise) or prospects
of such Guarantor and its Subsidiaries taken as a whole.
(vi) In the event such Guarantor is a U.S. Credit Party, on
the date hereof and after giving effect to the incurrence by such
Guarantor of the Contingent Obligations evidenced by this Guaranty, (x)
the assets of such Guarantor, at a fair valuation, will exceed its
debts, (y) such Guarantor will have sufficient capital to conduct its
business and (z) such Guarantor will not have incurred debts, and does
not intend to incur debts, beyond its ability to pay such debts as they
mature. For purposes of this clause (vi), "debt" means any liability on
a claim, and "claim" means (x) right to payment, whether or not such
right is reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed, undisputed, legal, equitable,
secured, or unsecured or (y) right to an equitable remedy for breach of
performance if such breach gives rise to a payment, whether or not such
right to an equitable remedy is reduced to judgment, fixed, contingent,
matured, unmatured, disputed, undisputed, secured, or unsecured.
12. Each Guarantor covenants and agrees that on and after the
date hereof and until the Total Commitment, all Interest Rate Protection or
Other Hedging Agreements and all Letters of Credit have terminated and all
Guaranteed Obligations have been paid in full, such Guarantor shall take, or
will refrain from taking, as the case may be, all actions that are necessary to
be taken or not taken so that no violation of any provision, covenant or
agreement contained in Section 8 or 9 of the Credit Agreement, and so that no
Default or Event of Default, is caused by the actions of such Guarantor or any
of its Subsidiaries.
13. Each Guarantor hereby jointly and severally agrees to pay
all reasonable out-of-pocket costs and expenses of each Creditor in connection
with the enforcement of this
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Guaranty and the protection of such Creditor's rights hereunder, and in
connection with any amendment, waiver or consent relating hereto (including,
without limitation, the reasonable fees and disbursements of counsel (including
in-house counsel) employed by any of the Creditors).
14. This Guaranty shall be binding upon each Guarantor and its
successors and assigns and shall inure to the benefit of the Creditors and their
successors and assigns.
15. Neither this Guaranty nor any provision hereof may be
changed, waived, discharged or terminated in any manner whatsoever unless in
writing duly signed by the Agent (with the consent of (x) the Required Banks (or
to the extent required by Section 13.12 of the Credit Agreement, each of the
Banks) at all times prior to the time at which all Credit Document Obligations
have been paid in full or (y) the holders of at least a majority of the
outstanding Other Obligations at all times after the time at which all Credit
Document Obligations have been paid in full) and each Guarantor directly
affected thereby (it being understood that the release or addition of any
Guarantor hereunder shall not constitute a change or waiver affecting any
Guarantor other than the Guarantor so released or added); provided, however,
that any change, waiver, modification or variance affecting the rights and
benefits of a single Class (as defined below) of Creditors (and not all
Creditors in a like or similar manner) shall require the written consent of the
Requisite Creditors (as defined below) of such Class of Creditors. For the
purpose of this Guaranty, the term "Class" shall mean each class of Creditors,
i.e., whether (x) the Bank Creditors as holders of the Credit Document
Obligations or (y) the Other Creditors as holders of the Other Obligations. For
the purpose of this Guaranty, the term "Requisite Creditors" of any Class shall
mean each of (x) with respect to the Credit Document Obligations, the Required
Banks and (y) with respect to the Other Obligations, the holders of at least a
majority of all obligations outstanding from time to time under the Interest
Rate Protection or Other Hedging Agreements.
16. Each Guarantor acknowledges that an executed (or
conformed) copy of the Credit Agreement has been made available to its principal
executive officers and such officers are familiar with its contents.
17. In addition to any rights now or hereafter granted under
applicable law (including, without limitation, Section 151 of the New York
Debtor and Creditor Law) and not by way of limitation of any such rights, upon
the occurrence and during the continuance of an Event of Default (such term to
mean and include any "Event of Default" under, and as defined in, the Credit
Agreement or any payment default (after giving effect to any grace period
applicable thereto) under any Interest Rate Protection or Other Hedging
Agreement and shall in any event, include without limitation any payment default
on any of the Guaranteed Obligations after giving effect to any grace period
applicable thereto), each Creditor is hereby authorized at any time or from time
to time, without presentment, demand, protest or other notice of any kind to any
Guarantor or to any other Person, any such notice being hereby expressly waived,
to set off and to appropriate and apply any and all deposits (general or
special) and any other indebtedness at any time held or owing by such Creditor
(including, without limitation, by branches and agencies of such Creditor
wherever located) to or for the credit or the account of such Guarantor, against
and on account of the obligations and liabilities of such Guarantor to such
Creditor under this Guaranty, irrespective of whether or not such Creditor shall
have made any demand hereunder and although said obligations, liabilities,
deposits or claims, or any of them, shall be contingent or unmatured.
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18. All notices, requests, demands or other communications
pursuant hereto shall be deemed to have been duly given or made when delivered
to the Person to which such notice, request, demand or other communication is
required or permitted to be given or made under this Guaranty, addressed to such
party at (i) in the case of any Bank Creditor, as provided in the Credit
Agreement, (ii) in the case of any Guarantor, at its address set forth opposite
its signature below, and (iii) in the case of any Other Creditor, as provided in
the Security Agreement; or in any case at such other address as any of the
Persons listed above may hereafter notify the others in writing.
19. If claim is ever made upon any Creditor for repayment or
recovery of any amount or amounts received in payment or on account of any of
the Guaranteed Obligations and any of the aforesaid payees repays all or part of
said amount by reason of (a) any judgment, decree or order of any court or
administrative body having jurisdiction over such payee or any of its property
or (b) any settlement or compromise of any such claim effected by such payee
with any such claimant (including the Borrower), then and in such event each
Guarantor agrees that any such judgment, decree, order, settlement or compromise
shall be binding upon it, notwithstanding any revocation hereof or the
cancellation of any Note or any Interest Rate Protection or Other Hedging
Agreement or other instrument evidencing any liability of the Borrower, and such
Guarantor shall be and remain liable to the aforesaid payees hereunder for the
amount so repaid or recovered to the same extent as if such amount had never
originally been received by any such payee.
20. Any acknowledgment or new promise, whether by payment of
principal or interest or otherwise and whether by the Borrower or other Persons
liable in respect of the Guaranteed Obligations (including any Guarantor), with
respect to any of the Guaranteed Obligations shall, if the statute of
limitations in favor of any Guarantor against any Creditor shall have commenced
to run, toll the running of such statute of limitations, and if the period of
such statute of limitations shall have expired, prevent the operation of such
statute of limitations.
21. (A) THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HERETO SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF
THE STATE OF NEW YORK. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
GUARANTY OR ANY OTHER CREDIT DOCUMENT TO WHICH SUCH GUARANTOR IS A PARTY MAY BE
BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES OF
AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF
THIS GUARANTY, EACH GUARANTOR HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN
RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE EXCLUSIVE
JURISDICTION OF THE AFORESAID COURTS WITH RESPECT TO SUCH ACTIONS OR
PROCEEDINGS. EACH GUARANTOR HEREBY FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT ANY
SUCH COURTS LACK JURISDICTION OVER SUCH GUARANTOR, AND AGREES NOT TO PLEAD OR
CLAIM, IN ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS GUARANTY OR ANY
OTHER CREDIT DOCUMENT TO WHICH SUCH GUARANTOR IS A PARTY BROUGHT IN ANY OF THE
AFORESAID COURTS, THAT ANY SUCH COURT LACKS JURISDICTION OVER SUCH GUARANTOR.
EACH GUARANTOR FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY
OF THE AFOREMENTIONED COURTS IN ANY SUCH
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ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED
MAIL, POSTAGE PREPAID, TO EACH GUARANTOR AT ITS ADDRESS SET FORTH OPPOSITE ITS
SIGNATURE BELOW, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING.
EACH GUARANTOR HEREBY IRREVOCABLY WAIVES ANY OBJECTION TO SUCH SERVICE OF
PROCESS AND FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY
ACTION OR PROCEEDING COMMENCED HEREUNDER OR UNDER ANY OTHER CREDIT DOCUMENT TO
WHICH SUCH GUARANTOR IS A PARTY THAT SERVICE OF PROCESS WAS IN ANY WAY INVALID
OR INEFFECTIVE. IN ADDITION, EACH MATERIAL GUARANTOR HEREBY IRREVOCABLY
DESIGNATES, APPOINTS AND EMPOWERS CT CORPORATION SYSTEM WITH ITS OFFICES ON THE
DATE HEREOF AT 0000 XXXXXXXX, XXX XXXX, XXX XXXX 00000, AS ITS DESIGNEE,
APPOINTEE AND AGENT TO RECEIVE, ACCEPT AND ACKNOWLEDGE FOR AND ON ITS BEHALF,
AND IN RESPECT OF ITS PROPERTY, SERVICE OF ANY AND ALL LEGAL PROCESS, SUMMONS,
NOTICES AND DOCUMENTS WHICH MAY BE SERVED IN ANY SUCH ACTION OR PROCEEDING. IF
FOR ANY REASON SUCH DESIGNEE, APPOINTEE AND AGENT SHALL CEASE TO BE AVAILABLE TO
ACT AS SUCH, EACH MATERIAL GUARANTOR AGREES TO DESIGNATE A NEW DESIGNEE,
APPOINTEE AND AGENT ON THE TERMS AND FOR THE PURPOSES OF THIS PROVISION
SATISFACTORY TO THE AGENT FOR THE BANKS UNDER THIS GUARANTY. NOTHING HEREIN
SHALL AFFECT THE RIGHT OF ANY OF THE CREDITORS TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED
AGAINST ANY GUARANTOR IN ANY OTHER JURISDICTION. FOR PURPOSES OF THIS SECTION
21(a), THE TERM "MATERIAL GUARANTOR" SHALL MEAN AND INCLUDE, AT ANY TIME, (i)
MOOVIES, (ii) MOOVIES OF GEORGIA, INC., (iii) MOOVIES OF IOWA, INC., (iv)
MOOVIES OF THE CAROLINAS, INC., (v) PIC-A-FLICK OF GREENVILLE, INC., (vi) VIDEO
UPDATE CANADA AND (vii) ANY SUBSIDIARY OF THE BORROWER THAT (x) HAS ASSETS AT
SUCH TIME COMPRISING 5% OR MORE OF THE CONSOLIDATED ASSETS OF THE BORROWER AND
ITS SUBSIDIARIES OR (y) HAD NET INCOME IN THE MOST RECENTLY ENDED FISCAL YEAR OF
THE BORROWER COMPRISING 5% OR MORE OF THE CONSOLIDATED NET INCOME OF THE
BORROWER AND ITS SUBSIDIARIES FOR SUCH FISCAL YEAR.
(B) EACH GUARANTOR HEREBY IRREVOCABLY WAIVES ANY OBJECTION
WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE
AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS
GUARANTY OR ANY OTHER CREDIT DOCUMENT BROUGHT IN THE COURTS REFERRED TO IN
CLAUSE (A) ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD
OR CLAIM IN ANY SUCH COURT THAT SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH
COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
22. (a) Each Guarantor, in addition to the subrogation rights
it shall have against the Borrower under applicable law as a result of any
payment it makes hereunder, shall also have a right of contribution against all
other Guarantors in respect of any such payment pro
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rata among same based on their respective net fair value as enterprises,
provided any such right of contribution shall be subject and subordinate to the
prior payment in full of the Guaranteed Obligations (and such Guarantor's
obligations in respect thereof). It is the desire and intent of each Guarantor
and the Creditors that this Guaranty shall be enforced against each Guarantor to
the fullest extent permissible under the laws and public policies applied in
each jurisdiction in which enforcement is sought.
(b) If, however, and to the extent, that the obligations of
any Guarantor under this Guaranty would, in the absence of this sentence, be
adjudicated to be invalid or unenforceable for any reason (including, without
limitation, because of any applicable state or federal law relating to
fraudulent conveyances or transfers), then the amount of the Guaranteed
Obligations of such Guarantor (but not the Guaranteed Obligations of any other
Guarantor unless such other Guarantor or Guarantors are individually subject to
the circumstances covered by this Section 22) shall be deemed to be reduced ab
initio to that maximum amount which would be permissible under applicable law
without causing such Guarantor's obligations hereunder to be so invalidated.
23. The Creditors agree that this Guaranty may be enforced
only by the action of the Agent or the Collateral Agent, in each case acting
upon the instructions of the Required Banks and that no Creditor shall have any
right individually to seek to enforce or to enforce this Guaranty or to realize
upon the security to be granted by the Security Documents, it being understood
and agreed that such rights and remedies may be exercised by the Agent or the
Collateral Agent for the benefit of the Creditors upon the terms of this
Guaranty and the Security Documents. The Creditors further agree that this
Guaranty may not be enforced against any director, officer or employee of any
Guarantor.
24. This Guaranty may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A set of counterparts
executed by all the parties hereto shall be lodged with the Borrower and the
Agent.
25. In the event that all of the capital stock of one or more
Guarantors is sold in connection with a sale permitted by Section 9.02 of the
Credit Agreement and the proceeds of such sale or sales are applied in
accordance with the provisions of Section 4.02 of the Credit Agreement, to the
extent applicable, each Guarantor (x) all of the capital stock of which is so
sold or (y) which is a Subsidiary of a Guarantor all of the capital stock of
which is so sold, shall be released from this Guaranty and this Guaranty shall,
as to each Guarantor or Guarantors, terminate, and have no further force or
effect.
26. TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH GUARANTOR
HEREBY IRREVOCABLY WAIVES ALL RIGHTS TO A TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS GUARANTY, THE
OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
27. All payments made by any Guarantor hereunder will be made
without setoff, counterclaim or other defense.
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28. It is understood and agreed that any Subsidiary of the
Borrower that is required to execute a counterpart of this Guaranty after the
date hereof pursuant to the Credit Agreement shall automatically become a
Guarantor hereunder by executing a counterpart hereof and delivering the same to
the Agent.
29. (a) Each Guarantor's obligations hereunder and under the
other Credit Documents to make payments in Dollars shall not be discharged or
satisfied by any tender or recovery pursuant to any judgment expressed in or
converted into any currency other than Dollars, except to the extent that such
tender or recovery results in the effective receipt by the Agent, the Collateral
Agent or the respective Bank of the full amount of Dollars expressed to be
payable to the Agent, the Collateral Agent or such Bank under this Agreement or
the other Credit Documents. If for the purpose of obtaining or enforcing
judgment against any Guarantor in any court or in any jurisdiction, it becomes
necessary to convert into or from any currency other than Dollars (such other
currency being hereinafter referred to as the "Judgment Currency") an amount due
in Dollars, the conversion shall be made at the dollar equivalent thereof (as
quoted by the Agent or if the Agent does not quote a rate of exchange on such
currency, by a known dealer in such currency designated by the Agent)
determined, in each case, as of the day immediately preceding the day on which
the judgment is given (such Business Day being hereinafter referred to as the
"Judgment Currency Conversion Date").
(b) If there is a change in the rate of exchange prevailing
between the Judgment Currency Conversion Date and the date of actual payment of
the amount due, each Guarantor covenants and agrees to pay, or cause to be paid,
such additional amounts, if any (but in any event not a lesser amount) as may be
necessary to ensure that the amount paid in the Judgment Currency, when
converted at the rate of exchange prevailing on the date of payment, will
produce the amount of Dollars which could have been purchased with the amount of
Judgment Currency stipulated in the judgment or judicial award at the rate or
exchange prevailing on the Judgment Currency Conversion Date.
(c) For purposes of determining the dollar equivalent or any
other rate of exchange for this Section, such amounts shall include any premium
and costs payable in connection with the purchase of Dollars.
30. For greater certainty and notwithstanding anything
contained in this Guaranty, no Guarantor that is a Canadian Credit Party (each,
a "Canadian Guarantor") shall be liable for the obligations of any other
Guarantor which is not (i) a Subsidiary of such Canadian Guarantor or (ii) a
holding body corporate of which such Canadian Guarantor is a Wholly-Owned
Subsidiary unless there are reasonable grounds for believing that (a) such
Canadian Guarantor is or, after giving the financial assistance, would be able
to pay its liabilities as they become due, or (b) the realizable value of such
Canadian Guarantor's assets excluding the amount of any financial assistance in
the form of a loan and in the form of any secured guarantee, after giving the
financial assistance, would be greater than or equal to the aggregate of such
Canadian Guarantor's liabilities and stated capital of each class.
13
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IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to
be executed and delivered as of the date first above written.
Address: MOOVIES, INC.,
as a Guarantor
[201 Xxxxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000 By /s/ Xxxxxx X. Xxxxxx
Attention: President ------------------------------
Tel: (000) 000-0000 Name:
Fax: (000) 000-0000 Title:
Address: MOOVIES OF THE CAROLINAS, INC.,
as a Guarantor
000 Xxxxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000
Attention: President By /s/ Xxxxxx X. Xxxxxx
Tel: (000) 000-0000 ------------------------------
Fax: (000) 000-0000 Name:
Title:
Address: MOOVIES OF GEORGIA, INC.,
as a Guarantor
000 Xxxxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000 By /s/ Xxxxxx X. Xxxxxx
Attention: President -------------------------------
Tel: (000) 000-0000 Name:
Fax: (000) 000-0000 Title:
Address: MOOVIES OF IOWA, INC.,
as a Guarantor
000 Xxxxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000 By /s/ Xxxxxx X. Xxxxxx
Attention: President -------------------------------
Tel: (000) 000-0000 Name:
Fax: (000) 000-0000 Title:
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Page 14
Address: MOOVIES OF MICHIGAN, INC.,
as a Guarantor
000 Xxxxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000
Attention: President By /s/ Xxxxxx X. Xxxxxx
Tel: (000) 000-0000 ------------------------------
Fax: (000) 000-0000 Name:
Title:
Address: MOVIE WAREHOUSE FRANCHISE SYSTEMS,
INC., as a Guarantor
000 Xxxxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000 By /s/ Xxxxxx X. Xxxxxx
Attention: President -------------------------------
Tel: (000) 000-0000 Name:
Fax: (000) 000-0000 Title:
Address: E.C.6., INC.,
as a Guarantor
000 Xxxxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000 By /s/ Xxxxxx X. Xxxxxx
Attention: President ------------------------------
Tel: (000) 000-0000 Name:
Fax: (000) 000-0000 Title:
Address: SONI, INC.,
as a Guarantor
000 Xxxxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000 By /s/ Xxxxxx X. Xxxxxx
Attention: President ------------------------------
Tel: (000) 000-0000 Name:
Fax: (000) 000-0000 Title:
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Page 15
Address: PQ3, INC.,
as a Guarantor
000 Xxxxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000 By /s/ Xxxxxx X. Xxxxxx
Attention: President -------------------------------
Tel: (000) 000-0000 Name:
Fax: (000) 000-0000 Title:
Address: SNO, INC.,
as a Guarantor
000 Xxxxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000 By /s/ Xxxxxx X. Xxxxxx
Attention: President -------------------------------
Tel: (000) 000-0000 Name:
Fax: (000) 000-0000 Title:
Address: GBO, INC.,
as a Guarantor
000 Xxxxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000 By /s/ Xxxxxx X. Xxxxxx
Attention: President --------------------------------
Tel: (000) 000-0000 Name:
Fax: (000) 000-0000 Title:
Address: D-XXXXXX, INC.,
as a Guarantor
000 Xxxxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000 By /s/ Xxxxxx X. Xxxxxx
Attention: President --------------------------------
Tel: (000) 000-0000 Name:
Fax: (000) 000-0000 Title:
Address: DCO, INC.,
as a Guarantor
000 Xxxxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000 By /s/ Xxxxxx X. Xxxxxx
Attention: President --------------------------------
Tel: (000) 000-0000 Name:
Fax: (000) 000-0000 Title:
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Page 16
Address: PTO, INC.,
as a Guarantor
000 Xxxxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000 By /s/ Xxxxxx X. Xxxxxx
Attention: President ------------------------------
Tel: (000) 000-0000 Name:
Fax: (000) 000-0000 Title:
Address: THE MOVIE STORE, INC. #2,
as a Guarantor
000 Xxxxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000 By /s/ Xxxxxx X. Xxxxxx
Attention: President ------------------------------
Tel: (000) 000-0000 Name:
Fax: (000) 000-0000 Title:
Address: THE MOVIE STORE III, INC.,
as a Guarantor
000 Xxxxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000 By /s/ Xxxxxx X. Xxxxxx
Attention: President ------------------------------
Tel: (000) 000-0000 Name:
Fax: (000) 000-0000 Title:
Address: ALPHARETTA MEDIA ASSOCIATES, INC.,
as a Guarantor
000 Xxxxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000 By /s/ Xxxxxx X. Xxxxxx
Attention: President ------------------------------
Tel: (000) 000-0000 Name:
Fax: (000) 000-0000 Title:
Address: RIO MEDIA ASSOCIATES, INC.,
as a Guarantor
000 Xxxxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000 By /s/ Xxxxxx X. Xxxxxx
Attention: President ------------------------------
Tel: (000) 000-0000 Name:
Fax: (000) 000-0000 Title:
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Page 17
Address: PIC-A-FLICK OF GREENVILLE, INC.,
as a Guarantor
000 Xxxxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000 By /s/ Xxxxxx X. Xxxxxx
Attention: President ------------------------------
Tel: (000) 000-0000 Name:
Fax: (000) 000-0000] Title:
Address: TINSELTOWN VIDEO, INC.,
c/o Video Update, Inc. as a Guarantor
3100 World Trade Center
00 Xxxx Xxxxxxx Xxxxxx
Xx. Xxxx, XX 00000 By /S/ XXXXXX X. XXXXXX
------------------------
Attention: President Name:
Tel: (000) 000-0000 Title:
Fax: (000) 000-0000
Address: XXXXXXXX VIDEO, INC.,
c/o Video Update, Inc. as a Guarantor
3100 World Trade Center
00 Xxxx Xxxxxxx Xxxxxx
Xx. Xxxx, XX 00000 By /S/ XXXXXX X. XXXXXX
------------------------
Attention: President Name:
Tel: (000) 000-0000 Title:
Fax: (000) 000-0000
Address: VUI MERGER CORP.,
c/o Video Update, Inc. as a Guarantor
3100 World Trade Center
00 Xxxx Xxxxxxx Xxxxxx
Xx. Xxxx, XX 00000 By /S/ XXXXXX X. XXXXXX
------------------------
Attention: President Name:
Tel: (000) 000-0000 Title:
Fax: (000) 000-0000
Address: VIDEO UPDATE CANADA, INC.,
Unit 1393 as a Guarantor
00000 Xxxxxxxxxxx Xxxxxxx
Xxxxxxxx, Xxxxxxx Xxxxxxxx
Attention: President By /S/ XXXXXX X. XXXXXX
------------------------
Tel: (000) 000-0000 Name:
Fax: (000) 000-0000 Title:
18
Address: 24 HOUR ENTERTAINMENT GROUP
c/o Video Update Canada LTD. as a Guarantor
Inc.
Xxxx 0000
00000 Xxxxxxxxxxx Xxxxxxx
Xxxxxxxx, Xxxxxxx Xxxxxxxx
Attention: President By /S/ XXXXXX X. XXXXXX
Tel: (000) 000-0000 ------------------------
Fax: (000) 000-0000 Name:
Title:
Address: 24 HOUR ENTERTAINMENT LEASING
c/o Video Update Canada LTD. as a Guarantor
Inc.
Xxxx 0000
00000 Xxxxxxxxxxx Xxxxxxx
Xxxxxxxx, Xxxxxxx Xxxxxxxx
Attention: President By /S/ XXXXXX X. XXXXXX
Tel: (000) 000-0000 ------------------------
Fax: (000) 000-0000 Name:
Title:
Address: 1137239 ONTARIO LIMITED,
c/o Video Update Canada as a Guarantor
Inc.
Xxxx 0000
00000 Xxxxxxxxxxx Xxxxxxx
Xxxxxxxx, Xxxxxxx Xxxxxxxx
Attention: President By /S/ XXXXXX X. XXXXXX
Tel: (000) 000-0000 ------------------------
Fax: (000) 000-0000 Name:
Title:
Accepted and Agreed to:
BANQUE PARIBAS,
as Collateral Agent, as Pledgee
By /s/ X. Xxxxxx
------------------------------
Name: X. Xxxxxx
Title: M. Director
By_____________________________
Name:
Title:
