Exhibit 10-q
GUARANTY
THIS GUARANTY (this "Guaranty") is made as of March 12,
2001, by Xxxxxxxx Brands, Inc., a Delaware corporation
("Guarantor").
RECITALS
WHEREAS, Guarantor is a wholly-owned subsidiary of
Xxxxxxxx Brands International, Inc., a New Jersey corporation
(the "Company");
WHEREAS, during 2001, the Company has entered into
change of control severance agreements and other severance
agreements (each, a "CCS Agreement") with the individuals
identified on the Schedule of Executives attached hereto (each,
an "Executive" and collectively, the "Executives"), each of whom
is an employee of the Company or one of its subsidiaries;
WHEREAS, each of the Executives performs valuable
services that benefit Guarantor and/or one or more of its
subsidiaries; Guarantor benefits substantially from the
continuing services performed by the Executives and has a
substantial interest in encouraging their retention; and the
objective of retaining the Executives would be significantly
furthered if Guarantor guaranteed the Company's obligations under
the CCS Agreements;
WHEREAS, Guarantor has agreed to fully and
unconditionally guaranty the Company's payments and performance
under the CCS Agreements on the terms and conditions set forth
below.
NOW, THEREFORE, Guarantor agrees as follows:
1. Guaranty. Guarantor hereby fully, unconditionally and
irrevocably guarantees to each Executive the punctual payment and
performance when due of all obligations of the Company under such
Executive's CCS Agreement (for each Executive, the
"Obligations"). Without limitation of the foregoing, the
Obligations with respect to each Executive shall include all
costs and expenses (including reasonable attorney's fees and
expenses and reasonable compensation for the time value of money)
incurred by such Executive in collecting any amount due such
Executive under this Guaranty or in prosecuting any action
against the Company, Guarantor or any other guarantor of the
Obligations (collectively, the "Enforcement Costs"). Guarantor
agrees that this Guaranty is a present and continuing guaranty of
payment and not of collection, and that such Executive shall not
be required to prosecute collection, enforcement or other
remedies against the Company before calling on Guarantor for
payment and Guarantor shall pay such Obligations to such
Executive in full immediately upon demand. Guarantor agrees that
one or more successive actions may be brought against Guarantor,
as often as such Executive deems advisable, until all of the
Obligations are paid and performed in full.
2. Waivers. Guarantor unconditionally waives, to the extent
permitted by law:
1. all notices which may be required by statute, rule of
law or otherwise, now or hereafter in effect, to preserve intact
any rights against Guarantor, including, without limitation, any
demand, presentment and protest, proof of notice of non-payment
under any of the CCS Agreements and notice of any failure on the
part of any Executive, the Company, Guarantor or any other
guarantor of the Obligations to perform or comply with any
covenant, agreement, term or condition of any of the CCS
Agreements;
2. any right to the enforcement, assertion or exercise
against the Company, Guarantor or any other guarantor of the
Obligations of any right or remedy conferred under the CCS
Agreements;
3. any requirement of diligence on the part of any person;
4. any requirement to exhaust any remedies or to mitigate
the damages resulting from any failure on the part of the Company,
Guarantor or any other guarantor of the Obligations to perform or
comply with any covenant, agreement, term or condition of the CCS
Agreements; and
5. any notice of any sale, transfer or other disposition of
any right, title or interest of any Executive under the CCS
Agreements.
3. Reinstatement. The obligations of Guarantor
pursuant to this Guaranty shall continue to be effective or
automatically be reinstated, as the case may be, if at any time
the Obligations or payment of the Obligations are rescinded,
rejected, subordinated, stayed, offset or otherwise must be
disgorged or returned by any Executive, in whole or in part, for
any reason, including the insolvency, bankruptcy, dissolution,
liquidation or reorganization of the Company.
4. Successors and Assigns. This Guaranty shall inure
to the benefit of each Executive and his or her successors and
assigns. This Guaranty shall be binding on Guarantor, its
successors and assigns, and shall continue in full force and
effect until all of the Obligations are paid and performed in
full.
5. Subordination. In consideration of the issuance of the
Lender Waiver (as defined herein) and for other good and valuable
consideration, Guarantor, for itself and its successors, by
guaranteeing the Guaranteed Obligations, and each Executive, for
himself/herself and his/her successors and assigns, by his/her
acceptance of this Guaranty and the benefits hereof, agree that
the following subordination provisions in this Section 3 are for
the benefit of the Agent and the holders of the Senior
Obligations:
(a) The payment of the Guaranteed Obligations (as defined in
this Section 5) is and shall be subordinated, to the extent and
in the manner provided in this Section 5 to the prior Payment in
Full (as defined in this Section 5) of all the Senior Obligations
(as defined in this Section 3).
(b) Except for Permitted Payments (as defined in this Section
5), no payment or distribution of any kind shall be made by or on
behalf of Guarantor on account of any or all of the Guaranteed
Obligations, until the date on which the Senior Obligations are
Paid in Full.
(c) Notwithstanding any provision of this Section 5, if any
payment or distribution of assets or other payment by or on
behalf of Guarantor, on account of any or all of the Guaranteed
Obligations, shall be paid to, or received by, or on behalf of,
any Executive at a time when such payment or distribution was
prohibited by the provisions of this Section 5, then, unless such
payment or distribution is no longer prohibited by this Section
5, such proceeds, payment or distribution shall be received and
held in trust by such Executive for the benefit of the holders of
the Senior Obligations, and shall promptly be paid or delivered
by such Executive to the Agent or, in the event there is no
Agent, the holders of the Senior Obligations, to the extent
necessary to enable Payment in Full of all Senior Obligations,
after giving effect to all concurrent payments and distributions,
to or for the holders of such Senior Obligations.
(d) Upon any distribution of assets of Guarantor upon any
foreclosure, dissolution, winding up, total or partial
liquidation or reorganization or similar event or with respect to
Guarantor and/or any or all of its assets, whether voluntary or
involuntary, in bankruptcy, insolvency, receivership or similar
proceeding or upon assignment for the benefit of creditors:
(i) the holders of all Senior Obligations shall first be
entitled to receive Payment in Full of all Senior Obligations,
before any Executive is entitled to receive any payment or
distribution for or on account of any or all of the Guaranteed
Obligations; and
(ii) any payment or distribution of assets of Guarantor
of any kind or character, whether in cash, property or securities,
to which any Executive would be entitled except for the provisions
of this Section 5, shall be paid by the liquidating trustee or
agent or other person making such a payment or distribution,
directly to the holders of the Senior Obligations of the agent or
representative therefor to the extent necessary to make Payment
in Full of all Senior Obligations remaining unpaid after giving
effect to all concurrent payments and distributions to or for the
holders of such Senior Obligations.
(e) Except for a Permitted Modification, this Guaranty and
any other document or instrument evidencing any Guaranteed
Obligations may not be amended, restated, supplemented, extended,
refinanced or otherwise modified, without obtaining the prior
written consent of the Agent or, in the event there is no Agent,
the holders of all of the Senior Obligations.
(f) No right of any present or future holders of any Senior
Obligations to enforce subordination provisions contained in this
Section 5, and no obligation of any Executive hereunder, shall,
at any time, in any way be prejudiced or impaired by any act or
failure to act on the part of Guarantor or by any act or failure
to act, in good faith, by any such holder, or by any
noncompliance by Guarantor with the terms of this Guaranty,
regardless of any knowledge thereof which any such holder may
have or be otherwise charged with. The holders of the Senior
Obligations may extend, renew, modify, restate or amend the terms
of any of the Senior Obligations or any security therefor, in
accordance with the terms of the Senior Credit Agreement (as
defined herein), and release, sell or exchange such security and
otherwise deal freely with Guarantor.
(g) Prior to making any Guarantee Payment, the Guarantor shall
provide the Agent, or in the event there is no Agent, the holders
of all of the Senior Obligations, with at least ten (10) days
written notice of the Guarantor's intention to make such payment,
identifying the amount of the Guarantee Payment and the amount of
all previous Guarantee Payments and Other Payments made since the
date of the Senior Credit Agreement, and the recipient(s)
thereof, and a certification with supporting calculations
(calculated as of the date of such certification, but after
giving effect to the anticipated making of such payment) with
respect to the Liquidity Condition and compliance with all
financial covenants under the Senior Credit Agreement, that
following the making of such Guarantee Payment no Senior Default
will exist and all conditions in the Lender Waiver will continue
to be satisfied.
(h) As used in this Section 5, the following terms shall have
the following meanings:
(i) "Agent" shall mean the agent or representative for the
holders of the Senior Obligations, as identified in the Senior
Credit Agreement.
(ii) "Deferred Compensation Plans" shall mean the Company's
Deferred Compensation Plan and the Company's Capital Accumulation
Plan.
(iii) "Guaranteed Obligations" shall mean any obligation to
the Executive of Guarantor or CBII with respect to the Guaranty
or any CCS Agreement.
(iv) "Guarantee Payment" shall mean any payment to an
Executive with respect to the Guaranteed Obligations, including any
indirect payment made to settle or reduce any such Guaranteed
Obligation or any distributions made by Guarantor which are
earmarked for payment to the Executive with respect to the
Company's obligations to such Executive.
(v) "Lender Waiver" shall mean that certain Waiver #1
dated as of March 7, 2001 by and among the parties to the Senior
Credit Agreement which permits Guarantor to issue this Guaranty
and to make Permitted Payments hereunder and which describes the
basis for any Permitted Modification hereto.
(vi) "Liquidity Condition" shall mean, that for any given
date, after deducting the amount of any intended Guarantee Payment
and any Other Payment that is to be made simultaneously therewith,
there is at least $45 million of "Availability" (as defined in
the Senior Credit Agreement) and the total cash and Cash
Equivalents (as defined in the Senior Credit Agreement) held by
Guarantor and its "Subsidiaries" (as defined in the Senior Credit
Agreement) is $90 million.
(vii) "Other Payments" shall mean any payments made by
Guarantor under the Deferred Compensation Plans, including any
indirect payment made to settle or reduce any such Other Payment
or any distributions made by Guarantor which are earmarked for
payment to an officer or director of the Company with respect to
the Company's obligations under a Deferred Compensation Plan.
(viii) "Paid in Full" or "Payment in Full" shall mean,
with respect to any Senior Obligations, the receipt of cash in an
amount equal to the amount of all such Senior Obligations and the
termination of the financing arrangements between Guarantor or
any subsidiary or affiliate thereof and the holders of the Senior
Obligations (including the termination or cash collateralization,
if applicable, of all letters of credit issued under or pursuant
to the Senior Credit Agreement) but shall not include any payment
in connection with a refinancing, refunding or replacement of any
such Senior Obligations.
(ix) Permitted Modification shall mean any amendment,
restatement, supplement, extension, refinancing or other
modification of this Guaranty, including the addition of any
Executive to the Schedule of Executives, which is made in writing
by Guarantor in accordance with the procedures established in the
Lender Waiver.
(x) "Permitted Payments" shall mean payments of cash by
Guarantor which are made at a time when all of the following
conditions are satisfied: (A) no Senior Default has occurred and
is continuing or would occur as a result of such payment, (B) any
notice required by Section 5(g) shall have been given at least
ten (10) days prior to the making of such payment, and (C) the
Liquidity Condition shall have been satisfied on the date of such
payment as well as on the date of the Section 5(g) notice.
(xi) "Senior Credit Agreement" shall mean that certain
Credit Agreement, dated as of March 7, 2001, among Guarantor, the
Lenders (as defined therein) and Foothill Capital Corporation, as
Agent (as defined therein), as the same may be amended, restated,
modified, replaced, refinanced or supplemented from time to time.
(xii) "Senior Credit Documents" shall mean the Senior Credit
Agreement, and all other Credit Documents (under and as defined
in the Senior Credit Agreement).
(xiii) "Senior Default" shall mean an event, occurrence or
circumstance which constitutes, or with the giving of notice,
lapse of time or both would constitute, an Event of Default (as
defined in the Senior Credit Agreement).
(xiv) "Senior Obligations" shall mean all principal,
interest, fees, indemnities and other amounts owing by, and
obligations and liabilities of, Guarantor or any subsidiary or
affiliate thereof, as borrower, guarantor or otherwise, under or
pursuant to the Senior Credit Documents and all interest which
has accrued, or would have accrued, under the Senior Credit
Documents after the occurrence of an bankruptcy or insolvency
event with respect to Guarantor, whether or not such interest is
allowed as a claim against Guarantor and all other indebtedness
of Guarantor for borrowed money.
6. No Waiver of Rights. No delay or failure on the part of
any Executive to exercise any right, power or privilege under this
Guaranty or the respective CCS Agreement for any such Executive
shall operate as a waiver thereof, and no single or partial
exercise of any right, power or privilege shall preclude any
other or further exercise thereof or the exercise of any other
power or right, or be deemed to establish a custom or course of
dealing or performance between the parties hereto or thereto.
The right and remedies herein provided are cumulative and not
exclusive of any rights or remedies provided by law. No notice
to or demand on Guarantor in any case shall entitle Guarantor of
any other or further notice or demand in the same, similar or
other circumstance.
7. Joinder. Guarantor agrees that any action to enforce this
Guaranty may be brought against Guarantor without any
reimbursement or joinder of the Company or any other guarantor of
the Obligations in such action.
8. Severability. If any provision of this Guaranty is
deemed to be invalid by reason of the operation of law, or by
reason of the interpretation placed thereon by any court or other
governmental authority, this Guaranty shall be construed as not
containing such provision and the invalidity of such provision
shall not affect the validity of any other provision hereof, and
any and all other provisions hereof which otherwise are lawful
and valid shall remain in full force and effect.
9. Descriptive Headings. The descriptive headings of this
Guaranty are inserted for convenience only and do not constitute
a part of this Guaranty.
10. Governing Law. All questions concerning the construction,
validity and interpretation of this Guaranty will be governed by
the internal law of the State of Ohio (without reference to any
principles of conflicts of law).
11. Notices. All notices, demands or other communications to be
given or delivered under or by reason of the provisions of this
Guaranty will be in writing and shall be given to Guarantor at
the address indicated below:
If to Guarantor: Xxxxxxxx Brands, Inc.
000 Xxxx 0xx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: Secretary
Facsimile: (000) 000-0000
or to such other address or to the attention of such other person
as the recipient party has specified by prior written notice to
the sending party. All such notices shall be effective (a) if
given by facsimile, upon confirmation of receipt or (b) if given
by any other means, when delivered at the address specified
above.
* * * * *
IN WITNESS WHEREOF, the undersigned has executed this
Guaranty as of the date first above written.
XXXXXXXX BRANDS, INC.
By: /s/ Xxxxxx X. Xxxxxxx
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Its: Xxxxxx X. Xxxxxxx
-------------------------
President and Chief
Operating Officer
