EXHIBIT 10.1
GUARANTY
This GUARANTY, made as of October 1, 2003, by Xxx X. Xxxxx ("Guarantor"),
who resides at 0000 Xxxxxxx Xxxx, Xxxxxxx, Xxxxxxxxxx 00000 in favor of Phoenix
Footwear Group, Inc., a Delaware corporation (the "Buyer") and the Buyer
Indemnitees (as defined in the Stock Purchase Agreement referred to below)
(collectively with Buyer, the "Obligees"). Capitalized terms used herein and not
otherwise defined shall have the meaning given thereto in the Stock Purchase
Agreement referred to below.
WHEREAS, Xxx X. Xxxxx and Xxxxxx X. Xxxxx, as trustees of the Xxx X. and
Xxxxxx X. Xxxxx 1997 Family Trust and Xxxxxxx Xxxxx, as trustee of the Xxxxxx X.
Xxxxx Trust and the Xxxxxx X. Xxxxx Trust (each, a "Seller" and, collectively,
the "Sellers"), Royal Xxxxxxx, Inc., a California corporation (the "Target"),
and Xxx X. Xxxxx as Sellers' Agent, and the Buyer have entered, or
contemporaneously with the execution of this Agreement are entering, into a
Stock Purchase Agreement (such agreement, together with any and all agreements
and instruments to be executed and delivered pursuant thereto and all schedules
and exhibits thereto, all as the same may be amended, supplemented or modified
from time to time, the "Stock Purchase Agreement"), under which the Sellers have
agreed to sell to Buyer and Buyer has agreed to purchase from Seller all of the
issued and outstanding shares of capital stock of Target, and Sellers have
agreed to perform certain other obligations, including, but not limited to,
indemnifying the Obligees in certain circumstances;
WHEREAS, Guarantor is the sole grantor of each Seller and is an officer
and director of Target and a significant beneficiary of one of the Sellers and
he will significantly benefit from the transactions contemplated by the Stock
Purchase Agreement; and
WHEREAS, in consideration of and to induce Buyer to enter into the Stock
Purchase Agreement, Guarantor is willing to execute and deliver this Guaranty to
guaranty on the terms and conditions herein the performance, when due, of all of
the Sellers' obligations to Obligees, including those arising under, out of,
related to or by reason of the Stock Purchase Agreement;
NOW, THEREFORE, in consideration of the above recitals, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and as an essential inducement to Buyer to execute and deliver the
Stock Purchase Agreement and perform its obligations thereunder the, Guarantor
hereby agrees as follows:
1. Guaranty.
(a) Guarantor hereby absolutely and, subject only to Section 1(b) of
this Guaranty, unconditionally guarantees, and promises to and for the benefit
of Obligees, the full, prompt and complete performance by each Seller, as and
when due, of every duty, undertaking, obligation and covenant of each Seller to
any Obligees whether now or hereafter arising under, out of, related to or by
reason of Sections 2, 5, 9 and 12 of the Stock Purchase Agreement and any other
provision of the Stock Purchase Agreement related to the enforcement of the
obligations under those provisions, subject in all cases to such limitations (if
any) to those obligations as are provided in the Stock Purchase Agreement
(collectively, the "Guaranteed Obligations").
(b) Notwithstanding the foregoing, Buyer shall not seek to enforce
this Guaranty (i) with respect to Guaranteed Obligations arising out of a
Seller's failure to make payments due for indemnification claims made prior to
June 30, 2004 under Section 9(b)(i) of the Stock Purchase Agreement unless and
until the aggregate amount of all such claims are in excess of Buyer's right
under Section 9(d) of the Stock Purchase Agreement to offset against the
Additional Consideration payment that is due and payable under Section 2(c) of
the Stock Purchase Agreement as of June 30, 2004 (if any) and (ii) with respect
to Guaranteed Obligations arising out of a Seller's failure to make payments due
for indemnification claims made after June 30, 2004, but prior to June 30, 2005
under Section 9(b)(i) of the Stock Purchase Agreement unless and until the
aggregate amount of all such claims are in excess of Buyer's right under Section
9(d) of the Stock Purchase Agreement to offset against the Additional
Consideration payment that is due and payable under Section 2(c) of the Stock
Purchase Agreement as of June 30, 2005 (if any). For purposes of the foregoing
only, Buyer shall not be deemed to have a right of offset against any amount of
Additional Consideration that is in dispute. Buyer may not enforce this Guaranty
with respect to Guaranteed Obligations that consist of indemnification claims
made on or prior to June 30, 2004 under Section 9(b)(i) of the Stock Purchase
Agreement until after June 30, 2004. Buyer may not enforce this Guaranty with
respect to Guaranteed Obligations of indemnification claims made on or prior to
June 30, 2005 under Section 9(b)(i) of the Stock Purchase Agreement until after
June 30, 2005.
2. Nature of Guaranty. This Guaranty is a continuing guaranty of the full
and punctual payment and performance by the Seller of the Guaranteed Obligations
(subject only to Section 1(b) above) and not of their collectibility only and is
in no way conditioned upon any requirement that the Seller first attempt to
collect any of the Guaranteed Obligations from the Sellers or resort to any
security or other means of obtaining payment of any of the Guaranty Obligations
which the Buyer now has or may acquire after the date hereof (except as provided
in Section 1(b) above and Section 9(d) of the Stock Purchase Agreement), or upon
any other contingency whatsoever. This Guaranty is an original and independent
obligation of Guarantor, separate and distinct from the Guaranteed Obligations.
A separate action may be brought or prosecuted against Guarantor, regardless
whether such an action is brought or prosecuted against a Seller or Target and
regardless of whether each other Seller and/or Target is joined in the action.
Except for the Buyer's exercise of its right of offset under Section 9(d)(ii) of
the Stock Purchase Agreement, Guarantor hereby waives any and all rights or
legal requirements that any Obligee institute any action or proceeding, or
exhaust any remedies, against any Seller, Target or anyone else in respect of
the Guaranteed Obligations, as a condition precedent to bringing an action
against Guarantor pursuant to this Guaranty. This Guaranty may not be terminated
under any circumstances, provided, however, that it shall automatically
terminate concurrently with any termination of the Stock Purchase Agreement that
occurs prior to the Closing Date. Any such termination shall not terminate or
discharge the Guarantor from Guaranteed Obligations existing as of the time of
the termination. Nothing shall otherwise discharge or satisfy the liability of
Guarantor hereunder except the full payment and performance of all of the
Guaranteed Obligations.
3. No Discharge Upon Bankruptcy, Revocation of Trust, Etc. Notwithstanding
anything to the contrary herein contained, this Guaranty shall continue to be
effective or shall be reinstated, as the case may be, (a) if at any time
performance of all or any part of the Guaranteed Obligations is rescinded, or
must otherwise be restored or returned by Obligees, upon the insolvency,
bankruptcy or reorganization of a Seller or otherwise, all as though such
performance had not been made or (b) upon the revocation of a Seller as a trust.
Notwithstanding any modification, discharge or extension of the Guaranteed
Obligations or any amendment, modification, stay or cure of an Obligee's rights
which may occur in any bankruptcy or reorganization case or proceeding
concerning a Seller, whether permanent or temporary, and whether or not assented
to by Obligees, Guarantor shall be obligated hereunder to perform the Guaranteed
Obligations and this Guaranty as they were in effect on the date hereof.
4. Waiver of Defenses. Guarantor hereby waives any defense arising by
reason of any disability of a Seller or any other defense that may be available
at law or otherwise that under principles of suretyship would operate to impair
or diminish the liability of Guarantor hereunder. Guarantor shall be liable and
remain liable for the performance of the Guaranteed Obligations to the full
extent provided herein notwithstanding (a) any previous discharge (partial or
total) of a Seller from any further liability; (b) any bar (temporary, partial
or total) to the pursuit by Guarantor of any right or claim for indemnification
from a Seller or Target or any other agreement between Guarantor and Buyer; (c)
loss of any right or claim by Guarantor to be subrogated to the rights or claims
of Obligees against a Seller or Target; (d) any action or inaction or delay in
acting by Obligees (except as provided under Section 9 of the Stock Purchase
Agreement); or (e) any Obligee's failure to enforce, or delay in enforcing, any
of its right under the Stock Purchase Agreement or otherwise except as may be
pleaded by a Seller under Section 9 of the Stock Purchase Agreement.
5. Amendments to Documents. Guarantor authorizes Obligees, without notice,
demand or consideration and without affecting Guarantor's liability hereunder,
from time to time, to (a) amend, change, release or cancel any of the provisions
of the Stock Purchase Agreement or any related agreement or instrument, by
further written agreement among Buyer, Sellers and Target at any time, or by
course of conduct, or by operation of law, or otherwise, without the consent of
or notice to Guarantor, and (b) release any other Person liable for the
Guaranteed Obligations.
6. Waiver of Contribution, Reimbursement and Subrogation Rights. To the
fullest extent permitted by law, Guarantor hereby releases and waives all common
law and statutory rights of contribution, reimbursement, indemnification and
exoneration against each Seller and/or Target arising from this Guaranty, and
all common law and statutory rights of subrogation to the rights or collateral
of Obligees against each Seller and/or Target. Guarantor waives the right to
enforce any remedies that any Obligee now has, or may later have, against a
Seller or Target, except and to the extent provided in Section 1(a) above and in
Section 9 of the Stock Purchase Agreement.
7. Waiver of Acceptance, Presentments and Notices. Guarantor waives notice
of acceptance of this Guaranty, and Guarantor waives all notices of the
creation, existence, or incurring of new or additional obligations by a Seller.
8. Attorneys Fees. Guarantor agrees to pay all expenses, including,
without limitation, reasonable attorney fees and costs, paid or incurred by
Obligees in any successful action to enforce, interpret or defend this Guaranty,
whether or not any lawsuit is filed, and, if one is, both at trial and on
appeal.
9. Rights and Remedies Cumulative. All of Obligees' rights and remedies
herein specified are intended to be cumulative and not in substitution for any
right or remedy otherwise available to Obligees.
10. Acknowledgements, Representations and Warranties of Guarantor.
(a) The Guarantor acknowledges that the giving of this Guaranty is a
material condition precedent to Buyer executing, delivering and performing its
obligations under the Stock Purchase Agreement, and that Guarantor has derived
or expects to derive material financial advantages or other benefits
commensurate in value to the obligations and liabilities being undertaken by
Guarantor under the terms of this Guaranty.
(b) The Guarantor hereby covenants, represents and warrants to the
Obligees that: he has duly executed this Guaranty and this Guaranty constitutes
a valid and binding obligation of the Guarantor, enforceable against the
Guarantor in accordance with its terms; and there is no litigation, arbitration
proceeding, governmental investigation, citation or action of any kind pending
or, to the knowledge of the Guarantor, proposed or threatened against the
Guarantor or relating to the business, assets or properties of the Guarantor
which, if adversely determined, would materially and adversely affect the
ability of the Guarantor to perform its obligations hereunder.
11. Miscellaneous Provisions.
(a) This Guaranty shall be binding upon the Guarantor and his
successors and heirs. This Guaranty is intended for and shall inure to the
benefit of Obligees and their respective successors and permitted assigns with
respect to the Guaranteed Obligations. No Party may assign either this Agreement
or any of its rights, interest or obligations hereunder without the prior
written approval of the other Party, provided, however, that the Buyer may
assign any or all of its rights and interest hereunder in whole, (i) to one or
more of its Affiliates or (ii) to anyone who acquires the Target's stock, assets
or business.
(b) This Guaranty constitutes the entire agreement of Guarantor in
favor of the Obligees with respect to the matters addressed herein, and it may
not be amended or modified except by a written instrument executed by Guarantor
and Buyer.
(c) This Guaranty shall be governed by, and construed and enforced
in accordance with, the laws of the State of Delaware without reference to
conflict principles.
(d) On or before the Closing, Guarantor shall cause 5.11, Inc. to
take all actions necessary to satisfy all of Buyer's conditions to closing under
the Stock Purchase Agreement that involve 5.11, including those set forth in
Sections 7(a)(xxi), (xxii), (xxiii) and (xxiv) of the Stock Purchase Agreement.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the Guarantor has executed and unconditionally
delivered this Guaranty as of the date first written above.
/s/ Xxx X. Xxxxx
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Xxx X. Xxxxx
STATE OF CALIFORNIA )
COUNTY OF STANISLAUS ) ss:
On October 1, 2003, before me, Xxxxxxx Xxxxxx, Notary Public, personally
appeared Xxx Xxxxx, personally known to me to be the person whose name is
subscribed to the within instrument and acknowledged to me that he executed the
same in his authorized capacity, and that by his signature on the instrument the
person, or the entity upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal.
/s/ Xxxxxxx Xxxxxx
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Xxxxxxx Xxxxxx
Commission No. 1345097
Notary Public - California
Stanislaus County
My Comm. Expires Mar 2, 2006
