EXHIBIT 04.04
GUARANTY
GUARANTY, dated as of May 21, 1999, by JBI, Inc., a
Massachusetts corporation (the "Guarantor"), in favor of the several persons
named in Schedule I hereto (the "Noteholders") rendered in connection with the
13% Senior Subordinated Notes due December 31, 2001, in principal amount of
$10,000,000 issued by JBI Apparel, Inc., a Massachusetts corporation and a
wholly-owned subsidiary of the Guarantor ("Apparel"), to the Noteholders (the
"Notes").
WHEREAS, pursuant to a Securities Purchase Agreement, dated as
of May 19, 1999, among X. Xxxxx, Inc., a Massachusetts corporation ("X. Xxxxx"),
Guarantor, Apparel and the Noteholders, Apparel is to sell to the Noteholders
and the Noteholders are to purchase from Apparel the Notes; and
WHEREAS, the proceeds from the Notes are to be used to
purchase the assets (the "Asset Purchase") of the XXXX divisions of Edison
Brothers Stores, Inc., a Delaware corporation, for an aggregate purchase price
of approximately $33,000,000, on the terms and subject to the conditions set
forth in the Asset Purchase Agreement by and between the Company and Edison
Brothers (the "Asset Purchase Agreement"); and
WHEREAS, Apparel has indicated that it will not consummate the
Asset Purchase unless the Noteholders purchase the Notes; and
WHEREAS, it is a condition precedent to the Noteholders'
acceptance of the Notes under the Agreement that the Guarantor execute and
deliver to the Noteholders a guaranty substantially in the form hereof; and
WHEREAS, Guarantor expects to receive substantial direct and
indirect benefits from the consummation of the Asset Purchase pursuant to the
Asset Purchase Agreement which has been made possible by the purchase of the
Notes by the Noteholders.
NOW, THEREFORE, the Guarantor hereby agrees with the
Noteholders as follows:
1. Definitions. All capitalized terms used herein
respective without definition shall have the meanings provided therefor in the
Securities Purchase Agreement.
2. Guaranty of Payment and Performance. The Guarantor hereby
guarantees to the Noteholders the full and punctual payment when due (whether at
stated maturity, by required pre-payment, by acceleration or otherwise), as well
as the performance, of all of the obligations, agreements and covenants of
Apparel contained in the Note (collectively, the "Obligations") including all
such which would become due but for the operation of the automatic stay pursuant
to ss.362(a) of the Federal Bankruptcy Code and the operation of ss.ss.502(b)
and 506(b) of the Federal Bankruptcy Code. This Guaranty is an absolute,
unconditional and continuing guaranty of the full and punctual payment and
performance of all of the Obligations and not of their collectibility only and
is in no way conditioned upon any requirement that the Noteholders first attempt
to collect any of the Obligations from Apparel or resort to any collateral
security or other means of obtaining payment. Should Apparel default in the
payment or performance of any of the Obligations, the obligations of the
Guarantor hereunder with respect to such Obligations in default shall, upon
demand by the appropriate Noteholder, become immediately due and payable to such
Noteholder, without demand or notice of any nature, all of which are expressly
waived by the Guarantor. Payments by the Guarantor hereunder may be required by
any Noteholder on any number of occasions. All payments by any Guarantor
hereunder shall be made to the appropriate Noteholder, in the manner and at the
place of payment specified therefor in the Agreement, for the account of such
Noteholder.
3. Guarantor's Agreement to Pay Enforcement Costs, Etc. The
Guarantor further agrees, as the principal obligor and not as a guarantor only,
to pay to the Noteholders, on demand, all reasonable costs and expenses
(including court costs and legal expenses) incurred or expended by the
Noteholders in connection with the Obligations, this Guaranty and the
enforcement thereof, together with interest on amounts recoverable under this
Section 3 from the time when such amounts become due until payment, whether
before or after judgment, at the rate of interest for overdue principal set
forth in the Agreement, provided that if such interest exceeds the maximum
amount permitted to be paid under applicable law, then such interest shall be
reduced to such maximum permitted amount.
4. Waivers by Guarantor. The Guarantor agrees that the
Obligations will be paid and performed strictly in accordance with their
respective terms, regardless of any law, regulation or order now or hereafter in
effect in any jurisdiction affecting any of such terms or the rights of the
Noteholders with respect thereto. The Guarantor waives promptness, diligences,
presentment, demand, protest, notice of acceptance, notice of any Obligations
incurred and all other notices of any kind, all defenses which may be available
by virtue of any valuation, stay, moratorium law or other similar law now or
hereafter in effect, any right to require the marshaling of assets of Apparel or
any other entity or other person primarily or secondarily liable with respect to
any of the Obligations, and all suretyship defenses generally. Without limiting
the generality of the foregoing, the Guarantor agrees to the provisions of any
instrument evidencing, securing or otherwise executed in connection with any
Obligation and discharged, in whole or in part, or otherwise affected by (a) the
failure of the Noteholders to assert any claim or demand or to enforce any right
or remedy against Apparel or any other entity or other person primarily or
secondarily liable with respect to any of the Obligations; (b) any extensions,
compromise, refinancing, consolidation or renewals of any Obligation; (c) any
change in the time, place or manner of payment of any of the Obligations or any
rescissions, waivers, compromise, refinancing, consolidation or other amendments
or modifications of any of the terms of provisions of the Securities Purchase
Agreement, the Notes, or any other agreement evidencing, securing or otherwise
executed in connection with any of the Obligations; (d) the addition,
substitution or release of any entity or other person primarily or secondarily
liable for any Obligation; (e) the adequacy of any rights which the Noteholders
may have against any collateral security or other means of obtaining repayment
of any of the Obligations; (f) the impairment of any collateral (other than
accounts receivable) securing any of the Obligations, including without
limitation the failure to perfect or preserve any rights which the Noteholders
might have in such collateral security or the substitution, exchange, surrender,
release, loss or destruction of any such collateral security; or (g) any other
act or omission which might in any manner or to any extent vary the risk of the
Guarantor or otherwise operate as a release or discharge of any Guarantor, all
of which may be done without notice to the Guarantor. To the fullest extent
permitted by law, the Guarantor hereby expressly waives any and all rights or
defenses arising by reason of (i) any "one action" or "anti-deficiency" law
which would otherwise prevent either Noteholder from bringing any action,
including any claim for a deficiency, or exercising any other right or remedy
(including any right of set-off), against the Guarantor before or after such
Noteholder's commencement or completion of any foreclosure action, whether
judicially, by exercise of power of sale or otherwise, or (ii) any other law
which in any other way would otherwise require any election of remedies by the
Noteholders.
5. Unenforceability of Obligations Against Apparel. If for any
reason Apparel has no legal existence or is under no legal obligation to
discharge any of the Obligations, or if any of the Obligations have become
irrecoverable from Apparel by reason of Apparel's insolvency, bankruptcy or
reorganization or by other operation of law or for any other reason, this
Guaranty shall nevertheless be binding on the Guarantor to the same extent as if
the Guarantor at all times had been the principal obligor on all such
Obligations. In the event that acceleration of the time for payment of any of
the Obligations is stayed upon the insolvency, bankruptcy or reorganization of
Apparel, or for any other reason, all such amounts otherwise subject to
acceleration under the terms of the Notes, or any other agreement evidencing,
securing or otherwise executed in connection with any Obligation shall be
immediately due and payable by the Guarantor.
6. Subrogation; Subordination.
6.1 Waiver of Rights Against Apparel. Until the final payment
and performance in full of all of the Obligations, the Guarantor shall
not exercise, and the Guarantor hereby waives, any rights against
Apparel arising as a result of payment by the Guarantor hereunder, by
way of subrogation, reimbursement, restitution, contribution or
otherwise, and will not prove any claim in competition with the
Noteholders in respect of any payment hereunder in any bankruptcy,
insolvency or reorganization case or proceedings of any nature; the
Guarantor will not claim any setoff, recoupment or counterclaim against
Apparel in respect of any liability of the Guarantor to Apparel; and
the Guarantor waives any benefit of and any right to participate in any
collateral security which may be held by the Noteholders.
6.2 Subordination with Respect to Apparel. The payment of any
amounts due with respect to any indebtedness of Apparel for money
borrowed or credit received now or hereafter owed to the Guarantor
(other than with respect to the sale of any accounts receivable or the
leasing of any equipment in the ordinary course of business) is hereby
subordinated to the prior payment in full of all of the Obligations.
The Guarantor agrees that, after the occurrence of any default in the
payment or performance of any of the Obligations, the Guarantor will
not demand, xxx for or otherwise attempt to collect any such
indebtedness of Apparel to such Guarantor until all of the Obligations
shall have been paid in full if, notwithstanding the foregoing
sentence, the Guarantor shall collect, enforce or receive any amounts
in respect of such indebtedness while any Obligations are still
outstanding, such amounts shall be collected, enforced and received by
the Guarantor as trustee for the Noteholders and be paid over to the
Noteholders, on account of the Obligations without affecting in any
manner the liability of the Guarantor under the other provisions of
this Guaranty.
6.3 General Subordination. (a) Anything contained in this
Guaranty to the contrary notwithstanding, the obligations of the
Guarantor hereunder shall be subordinate and junior, to the extent set
forth in the following paragraphs (A), (B), (C) and (D), to all Senior
Indebtedness of the Guarantor. "Senior Indebtedness" shall mean the
principal of, premium, if any, and interest (including any interest
accruing subsequent to the filing of a petition of bankruptcy at the
rate provided for in the documentation with respect thereto, whether or
not such interest is an allowed claim under applicable law) on, and all
reasonable fees, reimbursement and indemnity obligations, and all other
obligations arising in connection with, any indebtedness for borrowed
money of the Guarantor, contingent or otherwise, now outstanding or
created, incurred, issued, assumed or guaranteed in the future, for
which, in the case of any particular indebtedness, the instrument
creating or evidencing the same or pursuant to which the same is
outstanding expressly provides that such indebtedness shall not be
subordinate in right of payment to any other indebtedness of the
Guarantor. Without limiting the generality of the foregoing, Senior
Indebtedness shall include all Obligations (under and as defined in the
Credit Agreement); notwithstanding the foregoing, Senior Indebtedness
shall include only such Obligations until such time as the same are
paid in full in cash and all obligations to provide financial
accommodations under the Credit Agreement have terminated. For purposes
of this Guaranty, "Credit Agreement" shall mean the Loan and Agreement,
dated as of May 30, 1997, as amended, by and among the Guarantor, JBI
Holding Company, Inc., Xxxxx Shoe, Inc., GBFC, Inc., Fleet National
Bank and the financial institutions party thereto as Lenders, together
with any agreement entered into in connection with the restatement,
renewal, extension, restructuring, refunding or refinancing of the
Liabilities (under and as defined in the Credit Agreement) together
with any agreement entered into with any person which provides
revolving or term credit to replace or supplement the "Revolving
Credit" and the "Term Loan" within the meaning of the Credit
Agreement..
(A) In the event of any insolvency, bankruptcy,
liquidation, reorganization or other similar proceedings, or
any receivership proceedings in connection therewith, relative
to the Guarantor or its creditors or its property, and in the
event of any proceedings for voluntary liquidation,
dissolution or other winding up of the Guarantor, whether or
not involving insolvency or bankruptcy proceedings, then all
Senior Indebtedness shall first be paid in full in cash,
before any payment, whether on account of principal, interest
or otherwise with respect to the Notes, is made upon this
Guaranty.
(B) In any of the proceedings referred to in
paragraph (A) above, any payment or distribution of any kind
or character, whether in cash, property, stock or obligations
which may be payable or deliverable in respect of this
Guaranty shall be paid or delivered directly to the holders of
Senior Indebtedness for application in payment thereof, unless
and until all Senior Indebtedness shall have been paid in full
in cash.
(C) No payment shall be made, directly or indirectly,
on account of this Guaranty (i) upon maturity of any Senior
Indebtedness obligation, by lapse of time, acceleration
(unless waived), or otherwise, unless and until all principal
thereof and interest thereon and all other obligations in
respect thereof shall first be paid in full in cash and all
obligations to provide financial accommodations under the
Credit Agreement have terminated, or (ii) upon the happening
of any default in payment of any principal of, premium, if
any, or interest on or any other amounts payable in respect of
Senior Indebtedness when the same becomes due and payable
whether at maturity or at a date fixed for prepayment or by
declaration or otherwise (a "Senior Payment Default"), unless
and until such Senior Payment Default shall have been cured or
waived or shall have ceased to exist.
(D) Upon the happening of an event of default or any
event or circumstance with respect to any Senior Indebtedness
permitting (after notice or lapse of time or both if required,
otherwise immediately) one or more holders of such Senior
Indebtedness (or, in the case of the Credit Agreement, the
Agent or any other person having the power to do so) to
declare such Senior Indebtedness due and payable prior to the
date on which it is otherwise due and payable or to suspend
the providing of credit to the Company pursuant to the Credit
Agreement (a "Nonmonetary Default"), upon the occurrence of
(i) receipt by the Noteholders of written notice from the
holders of said Senior Indebtedness (or, in the case of the
Credit Agreement, the Agent) of a Nonmonetary Default (any
such notice, a "Blockage Notice"), or (ii) if such Nonmonetary
Default results from the acceleration of the Notes, the date
of such acceleration; then (x) the Guarantor shall not make,
directly or indirectly, to the Noteholders any payment of any
kind of or on account of all or any part of this Guaranty; (y)
the Noteholders shall not accept from the Guarantor any
payment of any kind of or on account of all or any
part of this Guaranty and (z) the Noteholders may not take,
demand, receive, xxx for, accelerate or commence any remedial
proceedings with respect to any amount payable under this
Guaranty, unless and until in each case described in clauses
(x), (y) and (z) all such Senior Indebtedness shall have been
paid in full in cash; provided, however, that if such
Nonmonetary Default shall have occurred and be continuing for
a period (a "Blockage Period") commencing on the earlier of
the date of receipt of such Blockage Notice or the date of the
acceleration of the Notes and ending 179 days thereafter (it
being understood that not more than one Blockage Period may be
commenced with respect to the Notes during any period of 90
consecutive days), and during such Blockage Period (i) such
Nonmonetary Default shall not have been cured or waived, (ii)
the holder of such Senior Indebtedness (or, in the case of the
Credit Agreement, the Agent) shall not have made a demand for
payment and commenced an action, suit or other proceeding
against the Guarantor and (iii) none of the events described
in subsection (A) above shall have occurred, then (to the
extent not otherwise prohibited by subsections (A), (B) or (C)
above) the Guarantor may, not less than 10 days after receipt
by the holders of such Senior Indebtedness or the Agent, as
the case may be, of written notice to such effect from the
Noteholders, make and the Noteholders may accept from the
Guarantor all past due and current payments of any kind of or
on account of this Guaranty, and such holder may demand,
receive, retain, xxx for or otherwise seek enforcement or
collection of all amounts payable on account of principal of
or interest on the Notes. Any such payments made by the
Company upon lifting of the Blockage Period shall cure any
payment default under the Notes.
(b) Subject to the payment in full in cash of all Senior
Indebtedness as aforesaid, the Noteholders shall be subrogated to the
rights of the holders of Senior Indebtedness to receive payments or
distributions of any kind or character, whether in cash, property,
stock or obligations, which may be payable or deliverable to the
holders of Senior Indebtedness, until the principal of, and interest
on, the Notes shall be paid in full in cash, and, as between the
Guarantor, its creditors other than the holders of Senior Indebtedness,
and the Noteholders, no such payment or distribution made to the
holders of Senior Indebtedness by virtue of this Section 6.3 which
otherwise would have been made to the Noteholder shall be deemed a
payment by the Guarantor on account of the Senior Indebtedness, it
being understood that the provisions of this Section 6.3 are and are
intended solely for the purposes of defining the relative rights of the
Noteholders, on the one hand, and the holder of the Senior
Indebtedness, on the other hand. Subject to the rights, if any, under
this Section 6.3 of holders of Senior Indebtedness to receive cash,
property, stock or obligations otherwise payable or deliverable to the
Noteholders, nothing herein shall either impair, as between the
Guarantor and the Noteholders, the obligation of the Guarantor, which
is unconditional and absolute, to pay to the holder thereof the
principal thereof and interest thereon in accordance with the terms
hereof or prevent (except as otherwise specified therein) the
Noteholders from exercising all remedies otherwise permitted by
applicable law or hereunder upon default hereunder.
(c) If any payment or distribution of any character or any
security, whether in cash, securities or other property, shall be
received by any Noteholders in contravention of any of the terms hereof
or before all the Senior Indebtedness obligations have been paid in
full in cash and all obligations to provide financial accommodations
under the Credit Agreement have terminated, such payment or
distribution or security shall be received in trust for the benefit of,
and shall be paid over or delivered and transferred to, the holders of
the Senior Indebtedness at the time outstanding in accordance with the
priorities then existing among such holders for application to the
payment of all Senior Indebtedness remaining unpaid, to the extent
necessary to pay all such Senior Indebtedness in full in cash. In the
event of the failure of any such holder to endorse or assign any such
payment, distribution or security, each holder of any Senior
Indebtedness is hereby irrevocably authorized to endorse or assign the
name.
(d) The rights under these subordination provisions of the
holders of any Senior Indebtedness as against any Noteholders shall
remain in full force and effect without regard to, and shall not be
impaired or affected by:
i) any act or failure to act on the part of the
Guarantor; or
ii) any extension or indulgence in respect of any
payment or prepayment of any Senior Indebtedness or any part
thereof or in respect of any other amount payable to any
holder of any Senior Indebtedness; or
iii) any amendment, modification or waiver of, or
addition or supplement to, or deletion from, or compromise,
release, consent or other action in respect of, any of the
terms of any Senior Indebtedness or any other agreement which
may be made relating to any Senior Indebtedness; or
iv) any exercise or non-exercise by the holder of any
Senior Indebtedness of any right, power, privilege or remedy
under or in respect of such Senior Indebtedness or these
subordination provisions or any waiver of any such right,
power, privilege or remedy or of any default in respect of
such Senior Indebtedness or these subordination provisions or
any receipt by the holder of any Senior Indebtedness of any
security, or any failure by such holder to perfect a security
interest in, or any release by such holder of, any security
for the payment of such Senior Indebtedness; or
v) any merger or consolidation of the Guarantor or
any of its subsidiaries into or with any other person, or any
sale, lease or transfer of any or all of the assets of the
Guarantor or any of its subsidiaries to any other person; or
vi) absence of any notice to, or knowledge by, any
holder of any claim hereunder of the existence or occurrence
of any of the matters or events set forth in the foregoing
clauses (i) through (v); or
vii) any other circumstance.
(e) The Noteholders unconditionally waive (i) notice of any of
the matters referred to in Section 6.3(d); (ii) all notices which may
be required, whether by statute, rule of law or otherwise, to preserve
intact any rights of any holder of any Senior Indebtedness, including,
without limitation, any demand, presentment and protest, proof of
notice of nonpayment under any Senior Indebtedness or the Credit
Agreement, and notice of any failure on the part of the Guarantor to
perform and comply with any covenant, agreement, term or condition of
any Senior Indebtedness, (iii) any right to the enforcement, assertion
or exercise by any holder of any Senior Indebtedness of any right,
power, privilege or remedy conferred in such Senior Indebtedness or
otherwise, (iv) any requirements of diligence on the part of any holder
of any of the Senior Indebtedness, (v) any requirement on the part of
any holder of any Senior Indebtedness to mitigate damages resulting
from any default under such Senior Indebtedness and (vi) any notice of
any sale, transfer or other disposition of any Senior Indebtedness by
any holder thereof.
(f) The obligations of the holder under these subordination
provisions shall continue to be effective, or be reinstated, as the
case may be, if at any time any payment in respect of any Senior
Indebtedness, or any other payment to any holder of any Senior
Indebtedness in its capacity as such, is rescinded or must otherwise be
restored or returned by the holder of such Senior Indebtedness upon the
occurrence of any proceeding referred to in paragraph 6.3(a)(A) or upon
or as a result of the appoint of a receiver, intervenor or conservator
of, or trustee or similar officer for, the Guarantor or any substantial
part of its property or otherwise, all as though such payment had not
been made.
(g) Notwithstanding anything to the contrary herein, the
Guarantor shall not at any time offer (and the holder hereof shall not
at any time accept) (i) any pledge of collateral or (ii) any guaranty
by any parent or subsidiary of the Guarantor, in each case with respect
to the obligations of the Guarantor under this Guaranty.
6.4 Provisions Supplemental. The provisions of this ss.6 shall
be supplemental to and not in derogation of any rights and remedies of
the Noteholders under any separate subordination agreement which the
any Noteholder may at any time and from time to time enter into with
the Guarantor for the benefit of the Noteholders.
7. Representations and Warranties of Guarantor. The
the Guarantor represents and warrants to Noteholders as follows:
(a) The execution, delivery and performance of this Agreement
by the Guarantor have been duly authorized by all requisite corporate
action and will not violate any provision of law, any order of any
court or other agency of government, the Articles of Organization or
Bylaws of the Guarantor, or any provision of any indenture, agreement
or other instrument to which it or any of its properties or assets is
bound, or conflict with, result in a breach of or constitute (with due
notice or lapse of time or both) a default under any such indenture,
agreement or other instrument, or result in the creation or imposition
of any lien, charge or encumbrance of any nature whatsoever upon any of
the properties or assets of the Guarantor.
(b) This Agreement has been duly executed and delivered by the
Guarantor and constitutes the legal, valid and binding obligation of
the Guarantor, enforceable in accordance with its terms, subject to
considerations of public policy in the case of the indemnification
provisions hereof.
8. Covenants Relating to the Note. The Guarantor covenants and
agrees that so long as any of the Notes shall be outstanding and, in the case of
paragraphs (f) through (k) below, so long as one million dollars ($1,000,000) of
aggregate principal amount of the Notes is outstanding:
(a) Maintenance of Office. The Guarantor will maintain an
office or agency in such place in the United States of America as the Guarantor
may designate in writing to the registered holder of the Notes, where notices
and demands to or upon the Guarantor in respect of this Guaranty may be served
and where this Guaranty may be presented for payment. Until the Guarantor
otherwise notifies the holder hereof, said office shall be the principal office
of the Guarantor located at 00 Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000.
(b) Corporate Existence. The Guarantor will do or cause to be
done all things necessary and lawful to preserve and keep in full force and
effect (i) its corporate existence and the corporate existence of each of its
subsidiaries and (ii) the material rights and franchises of the Guarantor and
each of its subsidiaries under the laws of the United States or any state
thereof, or, in the case of subsidiaries organized and existing outside the
United States, under the laws of the applicable jurisdiction; provided, however,
that nothing in this paragraph (c) shall prevent the abandonment or termination
of any rights or franchises of the Guarantor, or the liquidation or dissolution
of, or a sale, transfer or disposition (whether through merger, consolidation,
sale or otherwise) of all or any substantial part of the property and assets of,
any subsidiary or the abandonment or termination of the corporate existence,
rights and franchises of any subsidiary if such abandonment, termination,
liquidation, dissolution, sale, transfer or disposition is, in the good faith
business judgment of the Guarantor, in the best interests of the Guarantor and
not disadvantageous to the Noteholders.
(c) Transactions with Affiliates. The Guarantor shall not
enter into, or permit any of its subsidiaries to enter into, any transaction
with any of its or any subsidiary's officers, directors, employees or any person
related by blood or marriage to any such person or any entity in which any such
person owns any beneficial interest, except for (i) normal employment
arrangements, benefit programs and employee incentive option programs on
reasonable terms, (ii) any transaction approved by the Board of Directors of the
Guarantor, (iii) customer transactions in the ordinary course of business and on
arm's length terms and (iv) the transactions contemplated by the Purchase
Agreement.
(d) Payment of Principal and Interest on the Note. The
Guarantor will use its best efforts, subject to the provisions of applicable
credit arrangements (including the Credit Agreement), contractual obligations of
the Guarantor and/or its subsidiaries and any applicable law restricting the
same, to provide funds from its subsidiaries to the Guarantor, by dividend,
advance or otherwise, sufficient to permit performance by the Guarantor of its
obligations hereunder. Subject to any applicable provisions in the Credit
Agreement and documents executed and delivered in connection therewith, the
Guarantor will not, and will not permit any subsidiary to, directly or
indirectly create or otherwise cause to exist any encumbrance or restriction on
the ability of any subsidiary to pay dividends or make any other distributions
to the Guarantor or any wholly-owned subsidiary of the Guarantor in respect of
its capital stock.
(e) Consolidation, Merger and Sale. The Guarantor will not
consolidate or merge with or into, or sell or otherwise dispose of all or
substantially all of its property in one or more related transactions to, any
other corporation or other entity, unless:
(i) the Guarantor is the surviving corporation or the entity
formed by or surviving any such consolidation or merger (if other than
the Guarantor) or to which such sale or other disposition shall have
been made is a corporation organized or existing under the laws of the
United States of any state thereof or the District of Columbia;
(ii) the surviving corporation or other entity (if other than
the Guarantor) shall expressly and effectively assume in writing the
obligations, covenants and agreements of the Guarantor hereunder to be
performed or observed by the Guarantor to the same extent as if such
surviving corporation had been the original maker of this Guaranty;
(iii) the Guarantor or such other corporation or other entity
shall not otherwise be in default in the performance or observance of
any covenant, agreement or condition of this Guaranty or the Purchase
Agreement; and
(iv) the Noteholders shall have received, in connection
therewith, an opinion of counsel for the Guarantor (or other counsel
satisfactory to the holder), in form and substance satisfactory to the
holder, to the effect that any such consolidation, merger, sale or
conveyance and any such assumption complies with the provisions of
clauses (i) and (ii) of this paragraph (e).
Notwithstanding anything to the contrary herein, in no event shall a foreclosure
on any collateral pledged by the Guarantor in respect of obligations arising
under or in connection with the Credit Agreement be deemed to constitute a
violation of the Guarantor's obligations pursuant to this paragraph (e).
(f) Limitation on Indebtedness and Disqualified Stock. The
Guarantor will not, and will not permit any of its subsidiaries to, (i) incur or
permit to remain outstanding any indebtedness for money borrowed
("Indebtedness"), except (A) Senior Indebtedness, (B) Indebtedness existing on
the date of original issuance of the Notes, (C) Indebtedness permitted to be
incurred under the Credit Agreement as in effect from time to time after the
original issuance of the Notes (other than Indebtedness that is subordinate or
junior in right of payment (to any extent) to any Senior Indebtedness and senior
or pari passu in right of payment (to any extent) to the Notes), or (D) in the
event that the Credit Agreement has terminated, Indebtedness permitted to be
incurred under any successor credit agreement of the Guarantor with respect to
Senior Indebtedness, or if there exists no such credit agreement, such
Indebtedness as may be mutually agreed upon by the Guarantor and the holders of
a majority of the aggregate principal amount of the Notes then outstanding, or
(ii) issue any capital stock ("Disqualified Stock") of the Guarantor or any of
its subsidiaries which by its terms (or by the terms of any security into which
it is convertible or for which it is exchangeable), or upon the happening of any
event, matures, or is mandatorily redeemable, whether pursuant to a sinking fund
obligation or otherwise, or redeemable at the option of the holder thereof, in
whole or in part, on or prior to March 31, 2002.
(g) Restricted Payments. The Guarantor will not, and will not
permit any of its subsidiaries to: (i) declare or pay any dividends on, or make
any other distribution or payment on account of, or redeem, retire, purchase or
otherwise acquire, directly or indirectly, any shares of any class of stock of
the Guarantor, whether now or hereafter outstanding, or make any other
distribution in respect thereof, either directly or indirectly, whether in cash,
property or in obligations of the Guarantor or any of its subsidiaries, except
for (X) distributions of shares of the same class or of a different class of
stock pro rata to all holders of shares of a class of stock, or (Y) dividends,
distributions or payments by any subsidiary to the Guarantor or to any
wholly-owned subsidiary of the Guarantor, or (ii), except for payments and
distributions permitted under the Credit Agreement or any successor to such
Credit Agreement (such declarations, payments, purchases, redemptions,
retirements, acquisitions or distributions being herein called "Restricted
Payments").
(h) Limitation on Liens. The Guarantor shall not, and shall
not permit any of its subsidiaries to, directly or indirectly, create, incur,
assume or otherwise cause or suffer to exist any lien, pledge , charge, security
interest or encumbrance (collectively, "Liens") on any asset now owned or
hereafter acquired, or on any income or profits therefrom or assign or convey
any right to receive income therefrom, except for (i) Liens permitted under the
Credit Agreement or securing any Senior Indebtedness, (ii) liens for current
taxes not yet due, (iii) landlord's liens, (iv) purchase money liens and (v)
xxxxxxx'x, materialman's, warehouseman's and similar liens arising by law or
statute.
(i) Limitation on Dividend and Other Payment Restrictions
Affecting Subsidiaries. The Guarantor shall not, and will not permit any of its
subsidiaries to, directly or indirectly, create, assume or suffer to exist any
consensual encumbrance or restriction on the ability of any subsidiary of the
Guarantor to pay dividends or make other distributions on the capital stock of
any subsidiary of the Guarantor or pay or satisfy any obligation to the
Guarantor or any of its subsidiaries or otherwise transfer assets or make or pay
loans or advances to the Guarantor or any of its subsidiaries, except
encumbrances and restrictions existing under (i) any applicable law or any
governmental or administrative regulation or order; (ii) restrictions with
respect solely to a subsidiary of the Guarantor imposed pursuant to a binding
agreement which has been entered into for the sale or disposition of all or
substantially all of the capital stock or assets of such subsidiary, provided
that such restrictions apply solely to the capital stock or assets being sold of
such subsidiary; (iii) restrictions contained in any agreement relating to a
person or real or tangible personal property acquired after the date hereof
which are not applicable to any person or property, other than the person or
property so acquired and which were not put in place in connection with, or in
contemplation of, such acquisition; (iv) any agreement (other than those
referred to in clause (iii)) of a person acquired by the Guarantor or a
subsidiary of the Guarantor, which restrictions existed at the time of
acquisition; (v) contractual encumbrances or restrictions in effect on the date
hereof and customary encumbrances and restrictions contained in the security
agreements related to the Credit Agreement and encumbrances and restrictions
contained in the Credit Agreement on the date hereof as such encumbrances or
restrictions may be amended, provided that such encumbrances or restrictions as
amended are no more restrictive in the aggregate than those contained in the
security agreements and the Credit Agreement in effect on the date hereof; (vi)
the Credit Agreement and the Notes; (vii) indebtedness otherwise permitted to be
incurred pursuant to Sections 8(k) and 8(m) hereof; (viii) restrictions on cash
or other deposits or net worth imposed by customers under contracts entered into
in the ordinary course of business; or (ix) customary provisions restricting
subletting or assignment of any lease entered into the ordinary course of
business.
(j) Limitation on Asset Sales and Issuance of Shares of
Subsidiaries. The Guarantor shall not, and shall not permit any of its
subsidiaries to, in one or a series of related transactions, convey, sell,
transfer, assign or otherwise dispose of, directly or indirectly, any of its
property, businesses or assets, including by merger or consolidation or sale and
leaseback transaction, and including any sale or other transfer or issuance of
any capital stock of any subsidiary of the Guarantor, whether by the Guarantor
or its subsidiary (an "Asset Sale"), unless (1)(a) within one year after the
date of such Asset Sale, an amount equal to the net cash proceeds therefrom (the
"Asset Sale Offer Amount") are applied to the optional redemption of the Notes
in accordance with the terms thereof to make an offer to purchase or to redeem
the Notes with the proceeds from asset sales, pro rata in proportion to the
respective principal amounts (or accreted values in the case of indebtedness
issued with an original issue discount) of the Notes or to the repurchase of the
Notes pursuant to an irrevocable, unconditional offer (an "Asset Sale Offer"),
or (b) within one year of such Asset Sale, the Asset Sale Offer Amount is used
to permanently retire Senior Indebtedness of the Guarantor or indebtedness of
any subsidiary of the Guarantor, and (2) the Board of Directors of the Guarantor
determines in good faith that the Guarantor or such subsidiary, as applicable,
would receive fair market value in consideration of such Asset Sale.
Notwithstanding the foregoing provisions of the prior paragraph:
(i) the Guarantor and its subsidiaries may, in the ordinary
course of business, convey, sell, lease, transfer, assign or otherwise
dispose of assets acquired and held for resale in the ordinary course
of business;
(ii) the Guarantor and its subsidiaries may convey, sell,
lease, transfer, assign or otherwise dispose of assets pursuant to and
in accordance with Section 8(j) hereof;
(iii) the Guarantor and its subsidiaries may sell or dispose
of damaged, worn out or other obsolete property in the ordinary course
of business so long as such property is no longer necessary for the
proper conduct of the business of the Guarantor or such subsidiary, as
applicable; and
(iv) the Guarantor and its subsidiaries may convey, sell,
lease, transfer, assign or otherwise dispose of assets to the Guarantor
or any of its wholly-owned subsidiaries in accordance with the terms
hereof.
Restricted Payments that are made in compliance with Section 8(l)
hereof' shall not be deemed to be Asset Sales.
Any Asset Sale Offer shall be made in compliance with all applicable
laws, rules, and regulations, including, if applicable, Regulation 14E of the
Exchange Act and the rules and regulations thereunder and all other applicable
Federal and state securities laws.
(k) Limitation on Subsidiary Guarantees. The Guarantor shall
not cause or permit any of its subsidiaries, directly or indirectly, to
guarantee, assume or in any other manner become liable with respect to any
indebtedness of the Guarantor or any of its subsidiaries (other than under the
Credit Agreement).
9. Further Assurances. The Guarantor agrees that it will from
time to time, at the request of the Noteholders, do all such things and execute
all such documents as the Noteholders may consider reasonably necessary or
desirable to give full effect to this Guaranty and to perfect and preserve the
rights and powers of the Noteholders hereunder. The Guarantor acknowledges and
confirms that the Guarantor itself has established its own adequate means of
obtaining from Apparel on a continuing basis all information desired by the
Guarantor concerning the financial condition of Apparel and that the Guarantor
will look to Apparel and not to the Noteholders in order for the Guarantor to
keep adequately informed of changes in Apparel's financial condition.
10. Termination; Reinstatement. This Guaranty shall remain in
full force and effect against each individual Guarantor until all Obligations
have been paid in full to the Noteholders at which time this Guaranty shall,
subject to the following sentence, terminate. This Guaranty shall be reinstated,
if at any time any payment made or value received with respect to any obligation
is rescinded or must otherwise be returned by the Noteholders upon the
insolvency, bankruptcy or reorganization of Apparel or otherwise, all as though
such payment had not been made or value received.
11. Successors and Assigns. This Guaranty shall be binding
upon the Guarantor, any successors and assigns, and shall inure to the benefit
of the Noteholders, and their respective successors, transferees and assigns.
Without limiting the generality of the foregoing sentence, any Noteholder may
assign or otherwise transfer the Notes or any other agreement or note held by it
evidencing, securing or otherwise executed in connection with the Obligations,
or sell participations in any interest therein, to any other entity or other
person, and such other entity or other person shall thereupon become vested, to
the extent set forth in the agreement evidencing such assignment, transfer or
participation, with all the rights in respect thereof granted to such Noteholder
herein. The Guarantor may not assign any of its obligations hereunder.
12. Amendments and Waivers. No amendment or waiver of any
provision of this Guaranty nor consent to any departure by the Guarantor
therefrom shall be effective unless the same shall be in writing and signed by
the Noteholders. No failure on the part of the Noteholders to exercise, and no
delay in exercising, any right hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any right hereunder preclude any other
or further exercise thereof or the exercise of any other right.
13. Notices. All notices and other communications called for
hereunder shall be made in writing and, unless otherwise specifically provided
herein, shall be deemed to have been duly made or given when delivered by hand
or mailed first class, postage prepaid, or, in the case of telegraphic or
telexed notice, when transmitted, answer back received, addressed as follows:
if to the Guarantor:
JBI, Inc.
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Telecopy Number: (000) 000-0000
Attention: Chief Financial Officer
with a copy to:
Xxxxxxx, Procter & Xxxx XXX
Xxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Telecopy Number: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx, P.C.
if to any Noteholder at the address of such Noteholder
appearing on Schedule 1 hereto with a copy to:
Reboul, MacMurray, Xxxxxx, Xxxxxxx & Kristol
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy Number: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx
or at such other address as the parties may designate in writing.
14. Governing Law; Consent to Jurisdiction. THIS GUARANTY IS
INTENDED TO TAKE EFFECT AS A SEALED INSTRUMENT AND SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. The Guarantor
agrees that any suit for the enforcement of this Guaranty may be brought in the
courts of the State of New York or any federal court sitting therein and
consents to the nonexclusive jurisdiction of such court and to service of
process in any such suit being made upon the Guarantor by mail at the address
specified in Section 13. The Guarantor hereby waives any obligation that it may
now or hereafter have to the venue of any such suite or any such court or that
such suit was brought in an inconvenient court.
15. Waiver of Jury Trial. The Guarantor HEREBY WAIVES ITS
RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY
DISPUTE IN CONNECTION WITH THIS GUARANTY, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR
THE PERFORMANCE OF ANY OF SUCH RIGHTS OR OBLIGATIONS. Except as prohibited by
law, the Guarantor hereby waives any right which it may have to claim or recover
in any litigation referred to in the preceding sentence any special, exemplary,
punitive or consequential damages or any damages other than, or in addition to,
actual damages. The Guarantor (a) certifies that neither the Noteholders nor any
representative, agent or attorney of the Noteholders has represented, expressly
or otherwise, that the Noteholders would not, in the event of litigation, seek
to enforce the foregoing waivers and (b) acknowledges that, in entering into the
Agreement to which the Noteholders are a party, the Noteholders are relying
upon, among other things, the waivers and certifications continued in this
Section 15.
16. Miscellaneous. This Guaranty constitutes the entire
agreement of the Guarantor with respect to the matters set forth herein. The
rights and remedies herein provided are cumulative and not exclusive of any
remedies provided by law or any other agreement, and this Guaranty shall be in
addition to any other guaranty of or collateral security for any of the
Obligations. The invalidity or unenforceability of any one or more sections of
this Guaranty shall not affect the validity or enforceability of its remaining
provisions. Captions are for the ease of reference only and shall not affect the
meaning of the relevant provisions. The meanings of all defined terms used in
this Guaranty shall be equally applicable to the singular and plural forms of
the terms defined.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to
be executed and delivered as of the date first above written.
JBI, INC.
By:/s/Xxxxxx Xxxxxxxxx
Name: Xxxxxx Xxxxxxxxx
Title: Executive Vice President
SCHEDULE I
Noteholders
-----------
Name and Address
of Noteholder
-------------
DLJ Fund Investment Partners II, L.P.,
DLJ Private Equity Employees Fund, L.P. and
DLJ Private Equity Partners Fund, L.P.,
Xxxxxx Xxxxxxxxx,
Xxxxxxxxx Xxxx,
Xxxx Xxxxxxxxxx,
Xxxxxx X. Xxxxxxxxxx,
Xxxxx Xxxxxxxxx, and
Xxxxxxx Xxxx at
Xxxxxxxxx, Lufkin & Xxxxxxxx
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy Number: (212)
Attention: Xxxxx Xxxxxx
Cornerstone Capital, Inc.
00 Xxxxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Telecopy Number: (000) 000-0000
Attention: Xxxxx Xxxxxx
GB Investment, LLC
00 Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, XX 00000
Telecopy Number: (000) 000-0000
Attention: Xxxxxxx Xxxx
XX Xxxxxxx Pilot Fish Opportunity Fund, L.P.
000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy Number: (000) 000-0000
Attention: Xxx Xxxxxxxxx
