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EXHIBIT H
GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT is entered into on September 14, 1995 by
Watermarc Food Management Co., a Texas corporation, whose business address is
00000 Xxxxxxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000 ("Guarantor"), in favor of
Xxxxxx X. Xxxxxxxxxx, a resident of Fort Bend County, Texas whose business
address is 00000 Xxxxxxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000 (together with
any successor holders of the hereinafter defined Notes, the "Holder"). For
purposes of the application of certain provisions hereof, the "Borrower" (as
defined below) is joined as a party to this Guaranty Agreement.
WITNESSETH:
WHEREAS, Guarantor owns all of the issued and outstanding securities of
Pasta Acquisition Co., a Texas corporation ("Borrower");
WHEREAS, Borrower was organized by Guarantor to acquire The Original
Pasta Co., a Texas,Corporation ("TOPC") pursuant to a Plan and Agreement of
Merger dated September 14, 1995 (hereinafter the "Merger" and "Merger
Agreement");
WHEREAS, the Holder is the sole shareholder of TOPC and pursuant to the
Merger will receive (i) common stock of Guarantor, and (ii) two promissory
notes in the aggregate principal amount of $3,750,000.00 (the "Notes") from
Borrower, which Notes are described in Section 1.02 of the Merger Agreement;
WHEREAS, the Notes are secured by (i) a lien on certain restaurant
assets being acquired by Borrower from TOPC in the Merger pursuant to a
"Restaurant Assets Security Agreement" between Borrower, TOPC and Secured
Party; (ii) this Guaranty Agreement; and (iii) a "Security Agreement-Pledge"
between Guarantor and Secured Party and such other instruments, documents and
agreements defined as the "Security Documents" pursuant to Section 2.02 of the
Merger Agreement (the "Security Documents"); and
WHEREAS, the Holder has made it a condition precedent to the Merger
Agreement that Guarantor guarantee payment of the Notes and the related
indebtedness and obligations set forth in the Security Documents.
NOW, THEREFORE to induce the Holder to accept Notes of Borrower in
connection with and as consideration in the Merger and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Guarantor hereby agrees as follows:
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ARTICLE 1
THE INDEBTEDNESS
SECTION 1.1 THE INDEBTEDNESS. As used in this Guaranty Agreement, the
"Indebtedness" shall mean the Notes, including without limitation all principal
and all interest thereon, together with all amounts that Borrower may from time
to time become obligated to pay or reimburse to the Holder pursuant to the
Security Documents, including all attorneys' fees and costs incurred by the
Holder in enforcing the Holder's rights under the Notes or Security Documents.
ARTICLE 2
THE GUARANTY
SECTION 2.1 INDEBTEDNESS GUARANTEED. Guarantor hereby unconditionally
and irrevocably guarantees the prompt payment when due, whether at maturity or
otherwise, of all of the Indebtedness. If Borrower fails to make any payment of
any part of the Indebtedness when due after the expiration of any notice and
cure period provided in the Notes or Security Documents, if any, then said
failure shall constitute a default hereunder.
SECTION 2.2 NATURE OF GUARANTY. This is an irrevocable. absolute,
complete, and continuing guaranty of payment and performance and not a guaranty
of collection, and shall not be affected by the release or discharge of
Borrower from, or impairment or modification of, its obligations with respect
to any Indebtedness in any bankruptcy, receivership, or other insolvency
proceeding or otherwise. The fact that the Indebtedness may be rearranged,
reduced, extended for any period, and/or renewed from time to time, or paid in
full without notice to Guarantor shall not release, discharge, or reduce the
obligation of Guarantor with respect to the Indebtedness and Guarantor shall
remain fully bound hereunder. It is the intention of the Holder and Guarantor
that Guarantor's obligations hereunder shall not be discharged at any time
prior to the occurrence of payment in full of the Indebtedness. This Guaranty
Agreement may be enforced by the Holder and any subsequent holder of the
Indebtedness, and shall not be discharged by the assignment or negotiation of
all or part of the Indebtedness. This Guaranty Agreement may not be revoked by
Guarantor and shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Indebtedness is rescinded or must
otherwise be returned by the Holder under the insolvency, bankruptcy,
reorganization, receivership, or other debtor relief proceeding involving
Borrower, or after any attempted revocation by Guarantor, as if though such
payment had not been made. Except as specifically provided in Section 2.10
hereof, Guarantor hereby expressly waives presentment, demand, notice of
non-payment, protest, notice of protest and dishonor, notice of intent to
accelerate, notice of acceleration, and any other notice whatsoever on any and
all forms of such Indebtedness, and also notice of acceptance of this Guaranty
Agreement, acceptance on the part of the Holder being conclusively presumed by
its request for this Guaranty Agreement and delivery of the same to the Holder.
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SECTION 2.3 THE HOLDER'S RIGHTS. Guarantor authorizes the Holder,
without notice or demand and without affecting Guarantor's liability hereunder:
to take and hold security for the payment of this Guaranty Agreement and/or any
of the Indebtedness from Borrower or any other persons or entities, including
Guarantor, and exchange, enforce, waive, and release any such security; to
apply such security and direct the order or manner of sale thereof as the
Holder may determine; to obtain a guaranty of the Indebtedness from any one or
more persons and at any time or times; and to enforce, waive, rearrange,
modify, limit or release any of such other persons from their obligations under
such guaranties. Guarantor hereby acknowledges and agrees that the obligations
of all persons to pay and satisfy the Indebtedness pursuant to their respective
guaranties (including Guarantor's obligations under this Guaranty Agreement)
shall be joint and several. Guarantor acknowledges and agrees that the Holder
shall have complete discretion regarding whether, when and how to exercise the
foregoing rights.
SECTION 2.4 GUARANTOR'S WAIVERS. Guarantor waives any right to require
the Holder to (and it shall not be necessary for the Holder, in order to
enforce such payment by Guarantor to first) (a) proceed against Borrower or any
other person liable on the Indebtedness, (b) proceed against or exhaust any
security given to secure the Indebtedness, (c) have Borrower joined with
Guarantor in any suit arising out of this Guaranty Agreement and/or any of the
Indebtedness, (d) enforce its rights against any other guarantor of the
Indebtedness, or (e) pursue or exhaust any other remedy in the Holder's power
whatsoever. The Holder shall not be required to mitigate damages or take any
action to reduce, collect or enforce the Indebtedness. Guarantor waives any
defense or right arising by reason of any disability, lack of corporate
authority or power, impairment of recourse or of collateral under Section 3.606
of the Texas Uniform Commercial Code or otherwise, or other defense of Borrower
or any other guarantor of any of the Indebtedness, and shall remain liable
hereon regardless of whether Borrower or any other guarantor be found not
liable thereon for any reason. Guarantor shall have no right of subrogation
until such time as all of the Indebtedness has been paid in full.
SECTION 2.5 MATURITY OF INDEBTEDNESS: PAYMENT. If the maturity of any
Indebtedness is accelerated by bankruptcy or otherwise, then such maturity
shall also be deemed accelerated for the purpose of this Guaranty Agreement
without demand or notice to Guarantor. Guarantor shall, forthwith upon notice
from the Holder of the failure of Borrower to pay any Indebtedness at maturity,
pay to the Holder the amount due and unpaid by Borrower and Guaranteed hereby.
The failure of the Holder to give this notice shall not in any way release
Guarantor hereunder.
SECTION 2.6 THE HOLDER'S EXPENSES. If Guarantor fails to pay the
Indebtedness after notice from the Holder of Borrower's failure to pay any
Indebtedness at maturity, and if the Holder obtains the services of an attorney
for collection of amounts owing by Guarantor hereunder, or if suit is filed to
enforce this Guaranty Agreement, the Notes or the Security Documents, or if
proceedings are had in any bankruptcy, probate, receivership, or other judicial
proceedings for the establishment or collection of any amount owing by
Guarantor hereunder, or if any amount owing by Guarantor
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hereunder is collected through such proceedings, then Guarantor shall pay to
the Holder all court costs and the Holder's reasonable attorney's fees.
SECTION 2.7 PRIMARY LIABILITY. The liability of the Guarantor for the
payment of the Indebtedness shall be primary and not secondary.
SECTION 2.8 EVENTS AND CIRCUMSTANCES NOT REDUCING OR DISCHARGING
GUARANTOR'S OBLIGATIONS. Guarantor hereby consents and agrees to each of the
following, and agrees that Guarantor's obligations under this Guaranty
Agreement shall not be released, diminished, impaired, reduced or adversely
affected by any of the following, and waives any rights (including, without
limitation, rights to notice) which Guarantor might otherwise have as a result
of or in connection with any of the following:
(a) MODIFICATIONS, ETC. Any renewal, extension, modification,
alteration or rearrangement of all or any part of the Indebtedness, or
of the Note, or of any Security Documents, or any contract or
understanding between Borrower and the Holder or between the Holder and
Guarantor, or any other parties, pertaining to the Indebtedness or any
other matter;
(b) ADJUSTMENT, ETC. Any adjustment, indulgence, forbearance.
or compromise that might be granted or given by the Holder to Borrower,
Guarantor or any other person;
(c) CONDITION OF BORROWER OR GUARANTOR. The insolvency,
bankruptcy, arrangement, adjustment, composition, liquidation,
disability, dissolution or lack of power of Borrower or any other party
at any time liable for the payment of all or part of the Indebtedness,
or any dissolution of Borrower or Guarantor; or any sale, lease or
transfer of any or all of the assets of Borrower or Guarantor, or any
changes in the shareholders or members of Borrower or Guarantor or any
reorganization of Borrower or Guarantor;
(d) INVALIDITY OF INDEBTEDNESS. The invalidity or
unenforceability of all or any part of the Indebtedness, or any document
or agreement executed in connection with the Indebtedness, for any
reason whatsoever, including without limitation the fact that the
Indebtedness, or any part thereof, exceeds the amount permitted by law,
the act of creating the Indebtedness or any part thereof is ultra xxxxx,
the officers or representatives executing the documents or otherwise
creating the Indebtedness acted in excess of their authority, the
Indebtedness violates applicable usury laws, Borrower or any other
person, including Guarantor, has valid defenses, claims, or offsets
(whether at law, in equity, or by agreement) which render the
Indebtedness wholly or partially uncollectible from Borrower or any
other person, including Guarantor, the creation, performance, or
repayment of the
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Indebtedness (or the execution, delivery and performance of any document
or instrument representing part of the Indebtedness, or executed in
connection with the Indebtedness, or given to secure the repayment of
the Indebtedness) is illegal, uncollectible, legally impossible, or
unenforceable, or any Security Document or other documents or
instruments pertaining to the Indebtedness have been forged or otherwise
are irregular or not genuine or authentic;
(e) RELEASE OF OBLIGORS. Any full or partial release of the
liability of Borrower on the Indebtedness or any part thereof, or of any
co-guarantors, or any other person or entity now or hereafter liable,
whether directly or indirectly, jointly, severally, or jointly and
severally, to pay, perform, guarantee or assure the payment of the
Indebtedness or any part thereof, it being recognized, acknowledged and
agreed by Guarantor that Guarantor may be required to pay the
Indebtedness in full without assistance or support of any other party,
and Guarantor has not been induced to enter into this Guaranty Agreement
on the basis of a contemplation, belief, understanding or agreement that
other parties will be liable to perform the Indebtedness, or that the
Holder will look to other parties to perform the Indebtedness;
(f) OTHER SECURITY. The taking or accepting by the Holder of
any other security, collateral, guaranty, or other assurance of payment
for all or any part of the Indebtedness from any person, including
Borrower or the Guarantor;
(g) RELEASE OF COLLATERAL. Any release, surrender, exchange,
subordination, deterioration, waste, loss, or impairment (including
without limitation negligent, willful, unreasonable, or unjustifiable
impairment) of any collateral at any time securing payment of the
Indebtedness;
(h) CARE AND DILIGENCE. The failure of the Holder the Holder
or any other person to exercise diligence or reasonable care in, or the
negligence of the Holder regarding, the preservation, protection,
enforcement, sale, or other handling or treatment of all or any part of
such collateral, including without limitation the failure of the Holder
to foreclose on any collateral mortgaged or pledged under the Security
Documents or the delay by the Holder in instituting or prosecuting any
right or remedy under the Security Documents, including without
limitation the right to foreclose on collateral by nonjudicial
foreclosure sale or otherwise;
(i) STATUS OF LIENS. The fact that any collateral, security
interest, or lien contemplated or intended to be given, created, or
granted as security for the repayment of the Indebtedness has not been
properly perfected or created, or proves to be unenforceable or
subordinate to any other security interest or lien, it being recognized
and agreed by Guarantor that Guarantor
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is not entering into this Guaranty Agreement in reliance on, or in
contemplation of the benefits of, the validity, enforceability,
collectabilty, or value of any of the collateral for the Indebtedness;
(j) SURETYSHIP DEFENSES. Any and all suretyship defenses of
material alteration of any agreement between Borrower and the Holder or
the Holder and any other party, including Guarantor;
(k) PREFERENCE. Any payment by Borrower to the Holder is held
to constitute a preference under bankruptcy laws, or for any reason the
Holder is required to refund such payment or pay such amount to Borrower
or any other person; or
(l) OTHER ACTS TAKEN OR OMITTED. Any other action taken or
omitted to be taken with respect to any Security Documents, the
Indebtedness, or the security and collateral therefor, whether or not
such action or omission prejudices Guarantor or increases the likelihood
that Guarantor will be required to pay the Indebtedness pursuant to the
terms hereof.
it being the unambiguous and unequivocal intention of Guarantor that Guarantor
shall be obligated to pay the Indebtedness when due, notwithstanding any
occurrence, circumstance, action or omission whatsoever, whether contemplated
or not contemplated, and whether or not otherwise or particularly described
herein, except for the full and final payment and satisfaction of the
Indebtedness.
SECTION 2.9 RELATIONSHIP OF PARTIES GUARANTOR ACKNOWLEDGES THAT THE
HOLDER IS A PRINCIPAL STOCKHOLDER AND A DIRECTOR OF GUARANTOR AND IS ITS CHIEF
EXECUTIVE OFFICER. THE HOLDER MAY ALSO FROM TIME TO TIME SERVE AS AN OFFICER OR
DIRECTOR OF BORROWER. NOTWITHSTANDING THE FOREGOING, GUARANTOR AND BORROWER
ACKNOWLEDGE AND AGREE THAT THE HOLDER MAY EXERCISE AND ENFORCE HIS RIGHTS UNDER
THE NOTES, THE SECURITY DOCUMENTS AND THIS GUARANTY AGREEMENT ACCORDING TO THE
TERMS AND PROVISIONS THEREOF AND HEREOF. BORROWER AND GUARANTOR EXPRESSLY
ACKNOWLEDGE THAT THEY WERE REPRESENTED AND ADVISED BY SEPARATE, INDEPENDENT
LEGAL COUNSEL AS TO THE MERGER, THE MERGER AGREEMENT, THE NOTES, THE SECURITY
DOCUMENTS AND ANY RELATED DOCUMENTS, INCLUDING THE RELATIVE LEGAL RIGHTS OF THE
PARTIES IN THE TRANSACTIONS REPRESENTED THEREBY AND HEREBY.
SECTION 2.10 NO DUTY TO MITIGATE. Without limiting any other provision
in this Guaranty Agreement, the Holder shall have no duty to mitigate the
amounts payable by Guarantor to the Holder hereunder. The Holder agrees to
comply with the notice and cure provisions contained in the Notes and Security
Documents and any notices required thereunder to be given by the Holder to
Borrower or Guarantor shall be given.
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 BY GUARANTOR. In order to induce the Holder to accept the
Notes, Guarantor represents and warrants to the Holder (which representations
and warranties will survive the creation of the Indebtedness and any extension
of credit thereunder) that:
(a) Benefit to Guarantor. Guarantor's guaranty pursuant to
this Guaranty Agreement reasonably has benefitted or may be expected to
benefit, directly or indirectly, Guarantor, including the acquisition by
Borrower of TOPC.
(b) FAMILIARITY AND RELIANCE. Guarantor is familiar with, and
has independently reviewed books and records regarding, the financial
condition of Borrower and is familiar with the value of any and all
collateral intended to be created as security for the payment of the
Notes and other Indebtedness; however, Guarantor is not relying on such
financial condition or the collateral as an inducement to enter into
this Guaranty Agreement.
(c) NO REPRESENTATION. Neither the Holder nor any other
person, corporation, or entity has made any representation, warranty, or
statement to Guarantor with regard to Borrower or its financial
condition in order to induce Guarantor to execute this Guaranty
Agreement.
ARTICLE 4
MISCELLANEOUS
SECTION 4.1 SUCCESSORS AND ASSIGNS. This Guaranty Agreement is for and
shall inure to the benefit of the successors and assigns of the Holder and is
and shall be fully binding upon the legal representatives, successors, and
assigns of Guarantor.
SECTION 4.2 NOTICES. All notices provided for are permitted to be given
or served by depositing the same in the United States mail, addressed to the
person to be notified. postage prepaid, and registered or certified with return
receipt requested, or by Federal Express or other overnight delivery, or by
facsimile machine, or by delivering such notice by courier or by hand to such
person and shall be effective when received by the intended recipient. For
purposes of this Guaranty Agreement, Guarantor's address shall be the address
set forth on the first page of this Guaranty Agreement or any other mailing
address of which Guarantor notifies the Holder in writing.
SECTION 4.3 GOVERNING LAW. This Guaranty Agreement is a contract made
under and shall be construed in accordance with and governed by the laws of the
State of Texas.
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SECTION 4.4 EXERCISE OF RIGHTS. The rights, powers and remedies of the
Holder hereunder shall be in addition to all rights, powers and remedies given
by statute or rule of law and are cumulative. Time shall be of the essence for
the performance of any act under this Guaranty Agreement by the Guarantor.
Neither the Holder's acceptance of partial or delinquent performance by
Borrower or Guarantor nor any forbearance, failure, or delay by the Holder in
exercising any right, power or remedy shall be deemed a waiver of any
obligation of the Borrower or Guarantor or any other party liable for the
Indebtedness or of any right, power or remedy of the Holder or preclude any
other or further exercise thereof; and no single or partial exercise of any
right, power or remedy shall preclude any other or further exercise thereof, or
the exercise of any other right, power or remedy.
SECTION 4.5 NON-JUDICIAL REMEDIES. Holder may enforce his rights
hereunder without prior judicial process or judicial hearing, and the Borrower
and Guarantor expressly waive, renounce and knowingly relinquish any and all
legal rights which might otherwise require the Holder to enforce his rights by
judicial process. In so providing for non-judicial remedies, the Borrower and
Guarantor recognize and concede that such remedies are consistent with the
usage of the trade, are responsive to commercial necessity, and are the result
of bargain at arm's length. Nothing herein is intended to prevent the Holder
or the Borrower or Guarantor from resorting to judicial process at such party's
option.
SECTION 4.6 BORROWER. The terms "Borrower" and "Guarantor", as used
throughout this Agreement shall, subject to the limitations of the Security
Documents, include the respective successors, legal representatives, heirs and
assigns of the Borrower and Guarantor.
SECTION 4.7 AMENDMENT AND WAIVER. This Guaranty Agreement may not be
amended (or may any of its terms be waived) except in writing duly signed by
the Holder and the Guarantor.
SECTION 4.8 INVALIDITY. In the event that any one or more of the
provisions contained in this Guaranty Agreement shall. for any reason, be held
invalid, illegal or unenforceable in any respect, such invalidity, illegality
or unenforceability will not affect any other provision of this Guaranty
Agreement, or any other instrument executed in connection herewith.
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IN WITNESS WHEREOF, the undersigned has executed this Guaranty Agreement
as of the date first above written.
HOLDER GUARANTOR:
WATERMARC FOOD MANAGEMENT CO.
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XXXXXX X. XXXXXXXXXX By: XXXXXX XXXXXXX, President
BORROWER:
PASTA ACQUISITION CO.
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By: XXXXXX XXXXXXX, President
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