EXHIBIT 10.3
GUARANTY
THIS GUARANTY (this "Guaranty") dated as of March 25, 1997, is
from Ridge Pallets, Inc., a Florida corporation (the "Guarantor"), to Bank One,
Texas, NA (the "Lender").
W I T N E S S E T H:
A. PalEx, Inc. (the "Borrower"), a Delaware corporation, and the
Lender, have entered into that certain Credit Agreement dated as of March 25,
1997 (herein, as the same may be amended, modified, supplemented, extended,
rearranged, and/or restated from time to time, called the "Credit Agreement"),
pursuant to which, upon the terms and conditions therein set forth, the Lender
has agreed to (a) make loans to the Borrower, which loans are evidenced by a
promissory note of the Borrower dated March 25, 1997 in the original principal
amount of $35,000,000, payable the order of the Lender (herein, as amended,
extended, modified, rearranged and/or supplemented, from time to time together
with any promissory notes given in extension, replacement, rearrangement,
modification and/or substitution thereof or therefor, collectively called the
"Note") and (b) issue Letters of Credit for the account of Borrower. Capitalized
terms used herein without definition shall have the meanings assigned in the
Credit Agreement.
B. As a condition precedent to the making of the Loans and the
issuance of the Letters of Credit under the Credit Agreement, the Guarantor is
required to execute and deliver this Guaranty.
C. The Guarantor has duly authorized the execution, delivery and
performance of this Guaranty.
D. It is in the best interests of the Guarantor to execute this
Guaranty inasmuch as the Guarantor will derive substantial direct and indirect
benefits from the Loans made from time to time to the Borrower and the issuance
of Letters of Credit by the Lender pursuant to the Credit Agreement.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in order to induce the Lender
to make Loans (including the initial Loans) to the Borrower and to issue Letters
of Credit pursuant to the Credit Agreement, the Guarantor agrees, for the
benefit of the Lender, as follows:
ARTICLE I
GUARANTY
1.1 GUARANTY. For value received, and in consideration of any loan or
other financial accommodation, heretofore or hereafter at any time made or
granted to the Borrower by the
Lender, the Guarantor hereby unconditionally guarantees the full and prompt
payment when due, whether by acceleration or otherwise, and at all times
thereafter, of all obligations of the Borrower to the Lender and its successors
and assigns, howsoever created, arising or evidenced, whether direct or
indirect, primary or secondary, absolute or contingent, joint or several, or now
or hereafter existing or due or to become due, including, without limitation,
all such amounts which would become due but for the operation of the automatic
stay under Section 362(a) of the United States Bankruptcy Code, 11 U.S.C.
Section 362(a), and the operation of Sections 502(b) and 506(b) of such
Bankruptcy Code, 11 U.S.C. Section 502(b) and Section 506(b), under and in
connection with the Credit Agreement, including, without limitation under (a)
the Note, and (b) the Letters of Credit, including any Reimbursement Obligations
with respect thereto (all such obligations being hereinafter collectively called
the "Liabilities"), and the Guarantor further agrees to pay all reasonable
expenses (including reasonable attorneys' fees and legal expenses) paid or
incurred by the Lender in endeavoring to collect the Liabilities, or any part
thereof, and in enforcing this Guaranty. Anything herein contained to the
contrary notwithstanding, the amount of this Guaranty, however, shall not exceed
the greater of
(a) an amount $1.00 less than the amount which, if paid by the
Guarantor would render the Guarantor insolvent, and
(b) an amount equal to the value of all benefits received by the
Guarantor as a result of the execution, delivery, and performance
by the Borrower of the Credit Agreement and each other Credit
Document (as defined in the Credit Agreement), including all
loans, advances, and contributions, if any, made by the Borrower
to the Guarantor, and the making of Loans to, and the issuance of
Letters of Credit, if any, on behalf of, the Borrower.
The term "insolvent" as used herein, means, with respect to the
Guarantor on a particular date, that on such date
(a) the fair salable value of the property of the Guarantor is less
than the total amount of liabilities (including contingent,
subordinated, unmatured and unliquidated liabilities) of the
Guarantor;
(b) the present fair salable value of the assets of the Guarantor is
less than the amount that will be required to pay the probable
liabilities of the Guarantor as they become absolute and matured;
(c) the Guarantor is not able to realize upon its assets and pay its
debts and other liabilities, contingent obligations, and other
commitments as they mature in the normal course of business; or
(d) the Guarantor has an unreasonably small capital.
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1.2. BANKRUPTCY. The Guarantor hereby agrees that, in the event of the
dissolution or insolvency of the Borrower or the Guarantor, or the inability or
failure of the Borrower or the Guarantor to pay its debts as they become due, or
an assignment by the Borrower or the Guarantor for the benefit of creditors, or
the commencement of any case or proceeding in respect of the Borrower or the
Guarantor under any bankruptcy, insolvency or similar laws, and if such event
shall occur at a time when any of the Liabilities may not then be due and
payable, the Guarantor will pay to the Lender forthwith the full amount which
would be payable hereunder by the Guarantor as if all Liabilities were then due
and payable.
1.3. SETOFF. In addition to any rights now or hereafter granted under
applicable law and not by way of limitation of any such rights, upon the
occurrence of, and throughout the continuance of, any Event of Default under the
Credit Agreement, the Lender and each subsequent holder of the Note is hereby
authorized by the Guarantor without notice to the Borrower, the Guarantor or any
other Person, any such notice being hereby expressly waived, to set off and to
appropriate and to apply any and all deposits (general or special, including,
but not limited to, Indebtedness evidenced by certificates of deposit, whether
matured or unmatured, but not including trust accounts, and in whatever currency
denominated) and any other Indebtedness at any time held or owing by the Lender
or that subsequent holder to or for the credit or the account of the Guarantor,
whether or not matured, against and on account of the obligations and
liabilities of the Borrower or the Guarantor to the Lender or that subsequent
holder under the Credit Documents, including, but not limited to, all claims of
any nature or description arising out of or connected with the Credit Documents
irrespective of whether or not (a) the Lender or that subsequent holder shall
have made any demand hereunder, or (b) the principal of or the interest on the
Loans, the L/C Obligations or any other amounts due hereunder shall have become
due and payable and although said obligations and liabilities, or any of them,
may be contingent or unmatured.
1.4. GUARANTY ABSOLUTE, ETC. This Guaranty shall in all respects be a
continuing, absolute and unconditional Guaranty, and shall remain in full force
and effect (notwithstanding, without limitation, the dissolution of the Borrower
or the Guarantor or that at any time or from time to time all Liabilities may
have been paid in full), until all Liabilities (including any renewals,
extensions and/or rearrangements of any thereof) and all interest thereon and
all reasonable expenses (including reasonable attorneys' fees and legal
expenses) paid or incurred by the Lender in endeavoring to collect the
Liabilities and in enforcing this Guaranty shall have been finally paid in full
and the Commitment (as defined in the Credit Agreement) have been permanently
terminated.
1.5. REINSTATEMENT. The Guarantor further agrees that, if at any time
all or any part of any payment theretofore applied by the Lender to any of the
Liabilities is or must be rescinded or returned by the Lender for any reason
whatsoever (including, without limitation, the insolvency, bankruptcy or
reorganization of the Borrower), such Liabilities shall, for the purposes of
this Guaranty, to the extent that such payment is or must be rescinded or
returned, be deemed to have continued in existence, notwithstanding such
application by the Lender, and
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this Guaranty shall continue to be effective or be reinstated, as the case may
be, as to such Liabilities, all as though such application by the Lender had not
been made.
1.6 RIGHTS OF THE LENDER. The Lender may, from time to time, at its sole
discretion and without notice to the Guarantor, take any or all of the following
actions:
(a) retain or obtain a lien upon or a security interest in any
property to secure any of the Liabilities or any obligation hereunder;
(b) retain or obtain the primary or secondary obligation of any
obligor or obligors, in addition to the Guarantor, with respect to any
of the Liabilities;
(c) extend or renew for one or more periods (whether or not
longer than the original period), alter or exchange any of the
Liabilities, or release or compromise any obligation of the Guarantor
hereunder or any obligation of any nature of any other obligor with
respect to any of the Liabilities;
(d) extend or renew for one or more periods (whether or not
longer than the original period) or release, compromise, alter or
exchange any obligations of any nature of any obligor with respect to
any such property securing any of the Liabilities; or
(e) resort to the Guarantor for payment of any of the
Liabilities, whether or not the Lender shall have proceeded against any
other obligor primarily or secondarily obligated with respect to any of
the Liabilities (all of the actions referred to in this clause being
hereby expressly waived by the Guarantor).
1.7. APPLICATION OF PAYMENTS. Any amounts received by the Lender from
whatsoever source on account of the Liabilities may be applied by it toward the
payment of such of the Liabilities, and in such order of application, as the
Lender may from time to time elect.
1.8. WAIVER. (a) The Guarantor hereby expressly waives:
(i) notice of the acceptance by the Lender of this
Guaranty;
(ii) notice of the existence or creation or non-payment
of all or any of the Liabilities;
(iii) presentment for payment, demand, protest, notice
of intent to accelerate, notice of acceleration, notice of
dishonor and all other notices whatsoever; and
(iv) all diligence in collection or protection of or
realization upon the Liabilities or any thereof, any
obligation hereunder, or any security for or guaranty of any
of the foregoing.
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(b) No delay on the part of the Lender in the exercise of any
right or remedy shall operate as a waiver thereof, and no single or
partial exercise by the Lender of any right or remedy shall preclude
other or further exercise thereof or the exercise of any other right or
remedy; nor shall any modification or waiver of any of the provisions of
this Guaranty be binding upon the Lender except as expressly set forth
in a writing duly signed and delivered on behalf of the Lender. No
action of the Lender permitted hereunder shall in any way affect or
impair the rights of the Lender and the obligations of the Guarantor
under this Guaranty. The obligations of the Guarantor under this
Guaranty shall be absolute and unconditional irrespective of any
circumstance whatsoever which might constitute a legal or equitable
discharge or defense of the Guarantor. The Guarantor hereby acknowledges
that there are no conditions to the effectiveness of this Guaranty.
1.9. SUBROGATION. No payment made by or for the account of the Guarantor
pursuant to this Guaranty shall entitle the Guarantor by subrogation or
otherwise to demand or receive any payments by the Borrower or from or out of
any properties of the Borrower until the Liabilities shall have been paid in
full. The Guarantor shall not exercise any right or remedy against the Borrower
or any properties of the Borrower by reason of any performance by the Guarantor
of this Guaranty until the Liabilities shall have been paid in full.
1.10. EXCESS LIABILITIES. The creation or existence from time to time of
Liabilities in excess of the amount to which the right of recovery under this
Guaranty is limited, if any, is hereby authorized, without notice to the
Guarantor, and shall in no way affect or impair the rights of the Lender and the
obligation of the Guarantor under this Guaranty.
1.11. SUCCESSORS, TRANSFEREES AND ASSIGNS. The Lender may, from time to
time, without notice to the Guarantor, assign or transfer any or all of the
Liabilities or any interest therein in accordance with the terms of the Credit
Agreement; and, notwithstanding any such assignment or transfer or any
subsequent assignment or transfer thereof, such Liabilities shall be and remain
Liabilities for the purposes of this Guaranty, and each and every immediate and
successive assignee or transferee of any of the Liabilities or of any interest
therein shall, to the extent of the interest of such assignee or transferee in
the Liabilities, be entitled to the benefits of this Guaranty to the same extent
as if such assignee or transferee were the transferring Lender; provided,
however, that, unless the transferring Lender shall otherwise consent in
writing, the transferring Lender shall have an unimpaired right, prior and
superior to that of any such assignee or transferee, to enforce this Guaranty,
for the benefit of the transferring Lender as to those of the Liabilities which
the transferring Lender has not assigned or transferred.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 INDEPENDENT MEANS OF OBTAINING INFORMATION. The Guarantor hereby
represents and warrants to the Lender that it now has and will continue to have
independent means of
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obtaining information concerning the affairs, operations, financial condition,
business and prospects of the Borrower.
2.2 AUTHORIZATION; NO CONFLICT. The Guarantor hereby further represents and
warrants to the Lender that
(a) the execution and delivery of this Guaranty, and the
performance by the Guarantor of its obligations hereunder, are within
the Guarantor's corporate powers and have been duly authorized by all
necessary corporate action on the part of the Guarantor; and
(b) this Guaranty has been duly executed and delivered on behalf
of the Guarantor and is the legal, valid and binding obligation of the
Guarantor, enforceable in accordance with its terms subject as to
enforcement only to bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting the enforcement of creditors' rights
generally and equitable principles relating to or limiting creditors'
rights generally, the making and performance of which do not and will
not contravene or conflict with the articles of incorporation and
by-laws or other corporate governance documents of the Guarantor or
violate or constitute a default under any law, any presently existing
requirement or restriction imposed by any judicial, arbitral or
governmental instrumentality or any agreement, instrument or indenture
by which the Guarantor is bound.
2.3 VALIDITY AND BINDING NATURE. This Guaranty shall be binding upon the
Guarantor, and upon the successors and assigns of the Guarantor, and shall
include any successor or successors, whether immediate or remote, to such
corporation; provided, however, that the Guarantor may not assign any of its
obligations hereunder without the prior written consent of the Lender except as
may be provided in the Credit Agreement.
ARTICLE III
MISCELLANEOUS PROVISIONS
3.1 GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL.
This Guaranty, and the rights and duties of the parties hereto, shall be
construed in accordance with and governed by the internal laws of the State of
Texas. Each party hereto hereby submits to the nonexclusive jurisdiction of the
United States District Court for the Southern District of Texas and of any Texas
state court sitting in Houston, Texas for purposes of all legal proceedings
arising out of or relating to this Guaranty or the transactions contemplated
hereby. Each party hereto irrevocably waives, to the fullest extent permitted by
law, any objection it may now or hereafter have to the laying of the venue of
any such proceeding brought in such a court and any claim that any such
proceeding brought in such a court has been brought in an inconvenient forum.
EACH PARTY TO THIS GUARANTY HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR
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COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS GUARANTY OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
3.2. SEVERABILITY. Wherever possible, each provision of this Guaranty
shall be interpreted in such manner as to be effective and valid under
applicable laws, but if any provision of this Guaranty shall be prohibited by or
invalid under such laws, such provision shall be ineffective to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Guaranty.
3.3 NOTICES. Except as otherwise specified herein, all notices under
this Guaranty shall be in writing (including cable, telecopy or telex) and shall
be given to the Guarantor at its address, telecopier number or telex number set
forth on the signature page hereof or such other address, telecopier number or
telex number as the Guarantor may hereafter specify by notice to the Agent,
given by courier, by United States certified or registered mail, by telegram or
by other telecommunication device capable of creating a written record of such
notice and its receipt. Each such notice, request or other communication shall
be effective (i) if given by telecopier, when such telecopy is transmitted to
the telecopier number specified in this Section on the signature pages hereof
and a confirmation of receipt of such telecopy has been received by the sender,
(ii) if given by telex, when such telex is transmitted to the telex number
specified on the signature pages hereof and the answerback is received by
sender, (iii) if given by courier, when delivered, (iv) if given by mail, five
(5) days after such communication is deposited in the mail, certified or
registered with return receipt requested, or (v) if given by any other means,
when delivered at the addresses specified on the signature page hereof.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly
executed and delivered by its duly authorized officer as of the date first above
written.
RIDGE PALLETS, INC.
Address: By: /s/ X. X. XXXXXXX, XX.
0000 Xxx. 00 X. Name: X. X. Xxxxxxx, Xx.
Xxxxxx, Xx 00000 Title: President
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