EXHIBIT 10.2
GUARANTEE
GUARANTEE (this "Guarantee") dated as of April 16, 2003 by Tweeter Home
Entertainment Group, Inc., a Delaware corporation, and Tweeter Home
Entertainment Group Financing Company Trust, a Massachusetts business trust
(each such Person, individually, a "Facility Guarantor" and, collectively, the
"Facility Guarantors"), in favor of (a) Fleet National Bank, a national banking
association, and Fleet Retail Finance Inc., a Delaware corporation, as
collateral agents (in such capacity, the "Collateral Agents") for the Secured
Parties (as defined in the Credit Agreement referred to below), (b) Fleet
National Bank, as administrative agent (in such capacity, the "Administrative
Agent") for the Secured Parties and as Issuing Bank (as defined in the Credit
Agreement), and (c) the Lenders (as defined in the Credit Agreement), parties to
the Credit Agreement.
W I T N E S S E T H
Reference is made to the Credit Agreement dated as of April 16, 2003
(as such may be amended, modified, supplemented or restated hereafter, the
"Credit Agreement"), among (i) the Borrowers named therein, (ii) the Facility
Guarantors, (iii) the Lenders named therein, (iv) Fleet National Bank, as
Administrative Agent for the Lenders and as Issuing Bank, and (v) Fleet National
Bank and Fleet Retail Finance Inc., as Collateral Agents for the Lenders.
Capitalized terms used herein and not defined herein shall have the meanings
assigned to such terms in the Credit Agreement.
The Lenders have agreed to make Loans to the Borrowers, and the Issuing
Bank has agreed to issue Letters of Credit for the account of the Borrowers,
pursuant to, and upon the terms and subject to the conditions specified in, the
Credit Agreement. The Facility Guarantors acknowledge that they will derive
substantial benefit from the making of the Loans by the Lenders and the issuance
of the Letters of Credit by the Issuing Bank. The obligations of the Lenders to
make Loans and of the Issuing Bank to issue Letters of Credit are each
conditioned upon, among other things, the execution and delivery by the Facility
Guarantors of a guarantee in the form hereof. As consideration therefor and in
order to induce the Lenders to make Loans and the Issuing Bank to issue Letters
of Credit, the Facility Guarantors are willing to execute this Guarantee.
Accordingly, the Facility Guarantors hereby agree as follows:
SECTION 1. Guarantee. Each Facility Guarantor irrevocably and
unconditionally guarantees, jointly with the other Facility Guarantors and
severally, as a primary obligor and not merely as a surety, the due and punctual
payment and performance (whether at the stated maturity, by acceleration or
otherwise) by the Borrowers of all Obligations. Each Facility Guarantor further
agrees that the Obligations may be extended or renewed, in whole or in part,
without notice to or further assent from it, and that it will remain bound upon
the Guarantee notwithstanding any extension or renewal of any Obligation.
SECTION 2. Obligations Not Affected. To the fullest extent
permitted by Applicable Law, each Facility Guarantor waives presentment to,
demand of payment from, and protest to, any Borrower of any of the Obligations,
and also waives notice of acceptance of the Guarantee and notice of protest for
nonpayment. To the fullest extent permitted by Applicable Law, the obligations
of each Facility Guarantor hereunder shall not be affected by (a) the failure of
any Agent or any other Secured Party to assert any claim or demand or to enforce
or exercise any right or remedy against any Borrower under the provisions of the
Credit Agreement, any other Loan Document or otherwise, (b) any rescission,
waiver, amendment or modification of, or any release from any of the terms or
provisions of, this Guarantee, any other Loan Document or any other agreement,
including with respect to any particular Borrower under the Credit Agreement, or
(c) the failure to perfect any
security interest in, or the release of, any of the Collateral held by or on
behalf of the Collateral Agents or any other Secured Party.
SECTION 3. Security. Each of the Facility Guarantors authorizes
the Collateral Agents and each of the other Secured Parties to (a) take and hold
security pursuant to the terms of the Security Agreement for the payment of the
Guarantee and the Obligations and exchange, enforce, waive and release any such
security, (b) apply such security and direct the order or manner of sale thereof
pursuant to the terms of the Security Agreement and (c) release or substitute
any one or more endorsees or other obligors.
SECTION 4. Guarantee of Payment. Each of the Facility Guarantors
further agrees that this Guarantee constitutes a guarantee of payment when due
and not of collection, and waives any right to require that any resort be had by
the Collateral Agents or any other Secured Party to any of the Collateral or
other security held for payment of the Obligations or to any balance of any
deposit account or credit on the books of the Collateral Agents or any other
Secured Party in favor of any Borrower or any other Person or to any other
guarantor of all or part of the Obligations.
SECTION 5. Indemnification. Without limiting any of their
indemnification obligations under the Credit Agreement or the other Loan
Documents, the Facility Guarantors jointly and severally shall indemnify the
Agents, the Issuing Bank and each Lender, and each Related Party of any of the
foregoing Persons (each such Person being called an "Indemnitee") against, and
hold each Indemnitee harmless from, any and all losses, claims, damages,
liabilities and related expenses, including the reasonable and documented fees,
charges and disbursements of any counsel for any Indemnitee (to the extent such
counsel is provided for in Section 9.03 of the Credit Agreement), incurred by or
asserted against any Indemnitee arising out of, in connection with, or as a
result of, (i) the execution or delivery of this Guarantee or any other Loan
Document, the performance by the Facility Guarantors of their obligations under
this Guarantee or any other Loan Document, or the consummation of the
transactions contemplated by the Loan Documents or any other transactions
contemplated hereby, or (ii) any actual claim, litigation, investigation or
proceeding relating to any of the foregoing, whether based on contract, tort or
any other theory and regardless of whether any Indemnitee is a party thereto;
provided that such indemnity shall not, as to any Indemnitee, be available to
the extent that such losses, claims, damages, liabilities or related expenses
resulted from the gross negligence or willful misconduct of such Indemnitee or
any Affiliate of such Indemnitee (or of any officer, director, employee, advisor
or agent of such Indemnitee or any such Indemnitee's Affiliates).
SECTION 6. No Discharge or Diminishment of Guarantee. The
obligations of each Facility Guarantor hereunder shall not be subject to any
reduction, limitation, impairment or termination for any reason (other than the
payment in full in cash of the Obligations, subject to the terms of Section
11(b) of this Guarantee), including any claim of waiver, release, surrender,
alteration or compromise of any of the Obligations, and shall not be subject to
any defense or set-off, counterclaim, recoupment or termination whatsoever by
reason of the invalidity, illegality or unenforceability of the Obligations or
otherwise. Without limiting the generality of the foregoing, the obligations of
each Facility Guarantor hereunder shall not be discharged or impaired or
otherwise affected by the failure of any Agent or any other Secured Party to
assert any claim or demand or to enforce any remedy under this Guarantee, the
Credit Agreement, any other Loan Document or any other agreement, by any waiver
or modification of any provision of any thereof, by any default, failure or
delay, willful or otherwise, in the performance of the Obligations, or by any
other act or omission that may or might in any manner or to any extent vary the
risk of any Facility Guarantor or that would otherwise operate as a discharge of
any Facility Guarantor as a matter of law or equity (other than the payment in
full in cash of all the Obligations, subject to the terms of Section 11(b) of
this Guarantee).
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SECTION 7. Defenses of Borrowers Waived. To the fullest extent
permitted by Applicable Law, each of the Facility Guarantors waives any defense
based on or arising out of any defense of any Borrower or the unenforceability
of the Obligations or any part thereof from any cause, or the cessation from any
cause of the liability of any Borrower, other than the payment in full in cash
of all the Obligations (subject to the terms of Section 11(b) of this
Guarantee). The Collateral Agents and the other Secured Parties may, at their
election, foreclose on any security held by one or more of them by one or more
judicial or nonjudicial sales, accept an assignment of any such security in lieu
of foreclosure, compromise or adjust any part of the Obligations, make any other
accommodation with any Borrower or any other Facility Guarantor, or exercise any
other right or remedy available to them against any Borrower or any other
Facility Guarantor, without affecting or impairing in any way the liability of
any Facility Guarantor hereunder except to the extent that all the Obligations
have been paid in full in cash (subject to the terms of Section 11(b) of this
Guarantee). Pursuant to, and to the extent permitted by, Applicable Law, each of
the Facility Guarantors waives any defense arising out of any such election even
though such election operates, pursuant to Applicable Law, to impair or to
extinguish any right of reimbursement or subrogation or other right or remedy of
such Facility Guarantor against any Borrower or any other Facility Guarantor, as
the case may be, or any security.
SECTION 8. Agreement to Pay; Subordination. In furtherance of
the foregoing and not in limitation of any other right that the Agents or any
other Secured Party has at law or in equity against any Facility Guarantor by
virtue hereof, upon the failure of any Borrower or any other Loan Party to pay
any Obligation when and as the same shall become due, whether at maturity, by
acceleration, after notice of prepayment or otherwise, each of the Facility
Guarantors hereby promises to and will forthwith pay, or cause to be paid, to
the Agents or such other Secured Party as designated thereby in cash the amount
of such unpaid Obligations. Upon payment by any Facility Guarantor of any sums
to any Agent or any other Secured Party as provided above, all rights of such
Facility Guarantor against any Borrower or any other Loan Party arising as a
result thereof by way of right of subrogation, contribution, reimbursement,
indemnity or otherwise shall in all respects be subordinate and junior in right
of payment to the prior payment in full in cash of all the Obligations (subject
to the terms of Section 11(b) of this Guarantee). In addition, any indebtedness
of any Borrower or any other Loan Party now or hereafter held by any Facility
Guarantor is hereby subordinated in right of payment to the prior payment in
full in cash of all of the Obligations (subject to the terms of Section 11(b) of
this Guarantee). None of the Facility Guarantors will demand, xxx for, or
otherwise attempt to collect any such indebtedness until payment in full in cash
of all of the Obligations (subject to the terms of Section 11(b) of this
Guarantee), termination of the Lenders' obligations to make Loans and
termination of the Issuing Bank's obligation to issue Letters of Credit under
the Credit Agreement. If any amount shall erroneously be paid to any Facility
Guarantor on account of (a) such subrogation, contribution, reimbursement,
indemnity or similar right or (b) any such indebtedness of any Borrower or any
other Loan Party, such amount shall be held in trust for the benefit of the
Secured Parties and shall forthwith be paid to the Administrative Agent to be
credited against the payment of the Obligations, whether matured or unmatured,
in accordance with the terms of the Loan Documents.
SECTION 9. Information. Each of the Facility Guarantors assumes
all responsibility for being and keeping itself informed of each Borrower's
financial condition and assets, and of all other circumstances bearing upon the
risk of nonpayment of the Obligations and the nature, scope and extent of the
risks that such Facility Guarantor assumes and incurs hereunder, and agrees that
none of the Agents or the other Secured Parties will have any duty to advise any
of the Facility Guarantors of information known to it or any of them regarding
such circumstances or risks.
SECTION 10. Representations, Warranties and Covenants. Each of
the Facility Guarantors represents and warrants as to itself that all
representations, warranties and covenants relating to it contained in the Credit
Agreement are true and correct as of the date hereof and shall remain true and
correct in all material respects as set forth in the Credit Agreement.
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SECTION 11. Termination. This Guarantee (a) shall terminate when
all the Obligations have been indefeasibly paid in full in cash, the Lenders
have no further commitment to lend under the Credit Agreement, the Letter of
Credit Outstandings have been reduced to zero or fully cash collateralized in a
manner satisfactory to the Issuing Bank and the Administrative Agent, and the
Issuing Bank has no further obligation to issue Letters of Credit under the
Credit Agreement, and (b) shall continue to be effective or be reinstated, as
the case may be, if at any time payment, or any part thereof, of any Obligation
is rescinded or must otherwise be restored by any Secured Party or any Facility
Guarantor upon the bankruptcy or reorganization of any Borrower or any other
Loan Party, any Facility Guarantor or otherwise.
SECTION 12. Costs of Enforcement. The Facility Guarantors will
pay on demand (i) all reasonable out-of-pocket expenses incurred by the Agents
and their Affiliates, including the reasonable fees, charges and disbursements
of counsel for the Agents and any outside consultants for the Agents, in
connection with the preparation and administration of this Guarantee or any
amendments, modifications or waivers of the provisions hereof (whether or not
the transactions contemplated hereby shall be consummated), and (ii) all
reasonable out-of-pocket expenses incurred by the Agents, the Issuing Bank or
any Lender, including the reasonable fees, charges and disbursements of any
counsel and any outside consultants for the Agents, the Issuing Bank or any
Lender, in connection with the enforcement or protection of the rights of the
Agents, the Issuing Bank or any Lender in connection with the Loan Documents,
including their rights under this Guarantee; provided that the Lenders who are
not the Agents shall be entitled to reimbursement for no more than one counsel
representing all such Lenders (absent a conflict of interest in which case the
Lenders may engage and be reimbursed for additional counsel) and the Agents
shall be entitled to one counsel representing all Agents.
SECTION 13. Binding Effect; Several Agreement; Assignments.
Whenever in this Guarantee any of the parties hereto is referred to, such
reference shall be deemed to include the successors and assigns of such party,
and all covenants, promises and agreements by or on behalf of the Facility
Guarantors that are contained in this Guarantee shall bind and inure to the
benefit of each of the Facility Guarantors and its respective successors and
assigns. This Guarantee shall be binding upon each of the Facility Guarantors,
the Administrative Agent and the Collateral Agents and their respective
permitted successors and assigns, and shall inure to the benefit of each of the
Facility Guarantors, the Administrative Agent, the Collateral Agents and the
other Secured Parties, and their respective permitted successors and assigns,
except that no Facility Guarantor shall have the right to assign or transfer its
rights or obligations hereunder or any interest herein (and any such attempted
assignment or transfer shall be void), except as expressly permitted by this
Guarantee or the Credit Agreement.
SECTION 14. Waivers; Amendment.
(a) The rights, remedies, powers, privileges, and
discretions of the Agents hereunder and under Applicable Law (herein, the
"Agents' Rights and Remedies") shall be cumulative and not exclusive of any
rights or remedies which it would otherwise have. No delay or omission by the
Agents in exercising or enforcing any of the Agents' Rights and Remedies shall
operate as, or constitute, a waiver thereof. No waiver by the Agents of any
Event of Default or of any default under any other agreement shall operate as a
waiver of any other default hereunder or under any other agreement. No single or
partial exercise of any of the Agents' Rights or Remedies, and no express or
implied agreement or transaction of whatever nature entered into between the
Agents and any Person, at any time, shall preclude the other or further exercise
of the Agents' Rights and Remedies. No waiver by the Agents of any of the
Agents' Rights and Remedies on any one occasion shall be deemed a waiver on any
subsequent occasion, nor shall it be deemed a continuing waiver. The Agents'
Rights and Remedies may be exercised at such time or times and in such order of
preference as the Agents may determine. The Agents' Rights and Remedies may be
exercised without resort or regard to any other source of satisfaction of the
Obligations. No waiver of any
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provisions of this Guarantee or any other Loan Document or consent to any
departure by any Facility Guarantor therefrom shall in any event be effective
unless the same shall be permitted by paragraph (b) below, and then such waiver
or consent shall be effective only in the specific instance and for the purpose
for which given. No notice to or demand on any Facility Guarantor in any case
shall entitle such Facility Guarantor or any other Facility Guarantor to any
other or further notice or demand in similar or other circumstances.
(b) Neither this Guarantee nor any provision hereof may
be waived, amended or modified except pursuant to a written agreement entered
into between the Agents and the Facility Guarantor or Facility Guarantors with
respect to whom such waiver, amendment or modification is to apply, subject to
any consent required in accordance with Section 9.02 of the Credit Agreement.
SECTION 15. Copies and Facsimiles. This instrument and all
documents which have been or may be hereinafter furnished by the Facility
Guarantors to any of the Agents may be reproduced by the Agents by any
photographic, microfilm, xerographic, digital imaging, or other process. Any
such reproduction shall be admissible in evidence as the original itself in any
judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made in the regular course of
business). Any facsimile which bears proof of transmission shall be binding on
the party which or on whose behalf such transmission was initiated and likewise
so admissible in evidence as if the original of such facsimile had been
delivered to the party which or on whose behalf such transmission was received.
SECTION 16. Governing Law. THIS GUARANTEE SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS.
SECTION 17. Notices. All communications and notices hereunder
shall (except as otherwise expressly permitted herein) be in writing and given
as provided in Section 9.01 of the Credit Agreement.
SECTION 18. Survival of Agreement; Severability.
(a) All covenants, agreements, representations and
warranties made by the Facility Guarantors herein and in the certificates or
other instruments delivered in connection with or pursuant to this Guarantee or
any other Loan Document shall be considered to have been relied upon by the
Agents and the other Secured Parties and shall survive the execution and
delivery of this Guarantee and the other Loan Documents and the making of any
Loans and the issuance of any Letters of Credit, and shall continue in full
force and effect as long as the Obligations are outstanding and unpaid or the
Letter of Credit Outstandings do not equal zero, or are not fully cash
collateralized in a manner satisfactory to the Issuing Bank and the
Administrative Agent, and as long as the Commitments have not expired or
terminated.
(b) In the event any one or more of the provisions
contained in this Guarantee should be held invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected or impaired thereby
(it being understood that the invalidity of a particular provision in a
particular jurisdiction shall not in and of itself affect the validity of such
provision in any other jurisdiction).
SECTION 19. Counterparts. This Guarantee may be executed in two
or more counterparts, each of which shall constitute an original but all of
which, when taken together, shall constitute a single contract (subject to
Section 13). Delivery of an executed counterpart of a signature page to this
Guarantee by facsimile transmission shall be as effective as delivery of a
manually executed counterpart hereof.
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SECTION 20. Rules of Interpretation. The rules of
interpretation specified in Section 1.02 of the Credit Agreement shall be
applicable to this Guarantee.
SECTION 21. Jurisdiction; Consent to Service of Process.
(a) Each of the Facility Guarantors agrees that any suit
for the enforcement of this Guarantee or any other Loan Document may be brought
in the courts of the Commonwealth of Massachusetts or any federal court sitting
therein and consent to the non-exclusive jurisdiction of such courts. Each of
the Facility Guarantors hereby waives any objection which it may now or
hereafter have to the venue of any such suit or any such court or that such suit
is brought in an inconvenient forum.
(b) Each party to this Guarantee irrevocably consents to
service of process in the manner provided for notices in Section 17. Nothing in
this Guarantee or any other Loan Document will affect the right of any party to
this Agreement to serve process in any other manner permitted by law.
SECTION 22. Waiver of Jury Trial. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF
OR RELATING TO THIS GUARANTEE, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS GUARANTEE BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 22.
SECTION 23. Right of Set-off. If an Event of Default shall have
occurred and be continuing, each Lender and each of its Affiliates is hereby
authorized at any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other obligations at any time
owing by such Lender or Affiliate to or for the credit or the account of any
Facility Guarantor against any or all the obligations of such Facility Guarantor
now or hereafter existing under this Guarantee and the other Loan Documents held
by such Lender, irrespective of whether or not such Lender shall have made any
demand under this Guarantee or any other Loan Document and although such
obligations may be unmatured. The rights of each Lender under this Section 23
are in addition to other rights and remedies (including other rights of set-off)
that such Lender may have.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Facility Guarantors have duly executed this
Guarantee under seal as of the day and year first above written.
FACILITY GUARANTORS: TWEETER HOME ENTERTAINMENT
GROUP, INC.
By: /s/ Xxxxxx XxXxxxx
-------------------------------------------------
Name: Xxxxxx XxXxxxx
Title: Vice President and Chief Financial Officer
TWEETER HOME ENTERTAINMENT GROUP
FINANCING COMPANY TRUST
By: /s/ Xxxxxx XxXxxxx
-------------------------------------------------
Name: Xxxxxx XxXxxxx
Title: Vice President and Chief Financial Officer
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