EXHIBIT 10.16.15
GUARANTY AND SECURITY AGREEMENT
Borrowers: Tarrant Company Limited ("TCL"), Marble Limited ("ML") and
Trade Link Holdings Limited ("TLHL"), each corporations
organized under the laws of Hong Kong (TCL, ML and TLHL may
hereinafter be referred to collectively as "BORROWERS" and
individually as "BORROWER")
WHEREAS, the undersigned, TARRANT LUXEMBOURG SARL, a company existing
under the laws of Luxembourg (the "PARENT"), has requested that UPS CAPITAL
GLOBAL TRADE FINANCE CORPORATION (herein called "LENDER") extend credit or make
certain financial accommodations to Borrowers, or renew or extend, in whole or
in part, existing indebtedness or financial accommodations of Borrowers to
Lender, and Lender has extended credit or extended or renewed existing
indebtedness or made financial accommodations and/or may in the future extend
credit or extend or renew existing indebtedness or make certain financial
accommodations by reason of such request and in reliance upon this Guaranty and
Security Agreement;
NOW, THEREFORE, in consideration of ten dollars and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged the parties hereto agree as follows:
1. GUARANTEE. The Parent hereby unconditionally guarantees to
Lender the punctual payment when due, whether by acceleration or otherwise, and
at all times thereafter, of all indebtedness and other obligations of Borrowers,
or any of them, or any other person, to Lender (herein called the "GUARANTEED
OBLIGATIONS") arising pursuant to that certain Loan Agreement relating to a
US$5,000,000 loan, dated the date hereof, among Borrowers and Lender, as it may
be modified, amended, restated, supplemented or expanded from time to time (the
"LOAN AGREEMENT"), and the other Finance Documents. References herein to
Borrowers, or any of them, shall be deemed to include, without limitation, any
successor corporations to such Borrower or Borrowers. Any other capitalized
terms used herein, but not expressly defined herein, shall have the meanings
given to such terms in the Loan Agreement; provided that references therein to
"Borrower," "Borrowers," "Obligor" or "Obligors" shall be deemed references to
the Parent for purposes hereof.
2. CONSENT OF THE PARENT. The Parent consents that, at any time,
and from time to time, either with or without consideration, the whole or any
part of any security now or hereafter held for any Guaranteed Obligations may be
substituted, exchanged, compromised, impaired, released, or surrendered with or
without consideration; the time or place of payment of any Guaranteed
Obligations or of any security thereof may be changed or extended, in whole or
in part; Borrowers, or any of them, may be granted indulgences generally; any of
the provisions of any note or other instrument evidencing any Guaranteed
Obligations or any security therefor may be modified or waived; any party liable
for the payment thereof (including but not being limited to any co-guarantor)
may be granted indulgences or released; neither the termination of existence,
bankruptcy nor lack of authority of Borrowers, or any of them, or any one or
more of the guarantors, including the Parent, shall affect the continuing
obligation of any other guarantor, including the Parent, and that no claim need
be asserted against the personal representative, guardian, custodian, trustee or
debtor in bankruptcy or receiver of any deceased, incompetent, bankrupt or
insolvent guarantor; any deposit balance to the credit of Borrowers, or any of
them, or any other party liable for the payment of the Guaranteed Obligations or
liable upon any security therefor may be released, in whole or in part, at,
before and/or after the stated, extended or accelerated maturity of any
Guaranteed Obligations; and Lender may release, discharge, compromise or enter
into any accord and satisfaction with respect to any collateral for the
Guaranteed Obligations, or the liability of Borrowers, or any of them, or the
Parent, or any liability of any other person primarily or secondarily liable on
any of the Guaranteed Obligations, all without notice to or further assent by
the Parent, who shall remain bound hereon, notwithstanding any such exchange,
compromise, surrender, extension, renewal, acceleration, modification,
indulgence, release, discharge or accord and satisfaction.
3. PAYMENT UPON DEFAULT; SECURITY FOR GUARANTEED OBLIGATIONS. The
security interest and security title granted by the Parent under this Guaranty
and Security Agreement secures the payment of all of the Guaranteed Obligations.
Without limiting any of the foregoing, upon demand by Lender, made at any time
hereafter during which an "Event of Default" (as that term is defined and
described in the Loan Agreement) has occurred and is continuing, the Parent
agrees to pay to Lender upon demand the full amount which would be payable
hereunder by the Parent if all such Guaranteed Obligations were then due and
payable and this Guaranty and Security Agreement secures the payment of all
amounts which constitute part of the Guaranteed Obligations and would be owed by
the Borrowers or the Parent to Lender but for the fact that they are
unenforceable or not allowable due to the existence of an insolvency proceeding
involving the Borrowers or the Parent.
4. GUARANTY OF PAYMENT. THIS IS A GUARANTY OF PAYMENT AND NOT OF
COLLECTION. The liability of the Parent on this Guaranty and Security Agreement
shall be continuing, direct and immediate and not conditional or contingent upon
either the pursuit of any remedies against Borrowers, or any of them, or any
other person or foreclosure of any security interests or liens available to
Lender, its successors, endorsees or assigns. Lender may accept any payment(s),
plan for adjustment of debts, plan of reorganization or liquidation, or plan of
composition or extension proposed by, or on behalf of, Borrowers, or any of
them, or any other guarantor without in any way affecting or discharging the
liability of the Parent hereunder. If the Guaranteed Obligations are partially
paid, the Parent shall remain jointly and severally liable for any balance of
such Guaranteed Obligations. This Guaranty and Security Agreement shall be
revived and reinstated in the event any payment received by Lender on any
Obligation is required to be repaid or rescinded under present or future federal
or state law or regulation relating to bankruptcy, insolvency or other relief of
debtors.
5. GRANT OF SECURITY. The Parent hereby grants, assigns and
pledges to Lender a security interest in and security title to (together with a
right of setoff) the following property of the Parent, including, without
limitation, the Parent's right, title and interest in and to the following,
whether now owned and existing or hereafter created or acquired and wherever
located, and all substitutions therefor, accessions thereto and improvements
thereon (collectively, the "COLLATERAL"), to secure prompt repayment of any and
all of the Guaranteed Obligations and to secure prompt performance by the Parent
of its covenants and duties under the Guaranty and the other Finance Documents
to which it is a party:
(a) any and all Inventory (as defined in the Uniform
Commercial Code) financed pursuant to the Facility Agreement, acquired directly
or indirectly by the Parent from one or more Borrowers (the "INVENTORY"); and
(b) proceeds and products, whether tangible or
intangible, of any of the foregoing, including proceeds of insurance covering
any or all of the foregoing, and any and all accounts, books, general
intangibles, inventory, investment property, negotiable collateral, money,
deposit accounts, or other tangible or intangible property resulting from the
sale, exchange, collection, or other disposition of any of the foregoing, or any
portion thereof or interest therein, and the proceeds thereof.
To the extent not prohibited by law, the Parent hereby grants to Lender
a security interest in and security title and hereby assigns, pledges, transfers
and conveys to Lender any balance or deposit accounts of the Parent, whether
such accounts be general or special, or individual or multiple party, and upon
all drafts, notes, or other items deposited for collection or presented for
payment by the Parent with Lender, exclusive of any such property in the
possession or control of Lender as a fiduciary other than as agent, and Lender
may at any time, without demand or notice, appropriate and apply any of such to
the payment of any of the Guaranteed Obligations, as and when due, except for
other indebtedness, obligations and liabilities owing to Lender.
6. THE PARENT REMAINS LIABLE. Anything herein to the contrary
notwithstanding, (a) the Parent shall remain liable under any contracts and
agreements relating to the Collateral to the extent set forth therein to perform
all of the duties and obligations thereunder to the same extent as if this
Guaranty and Security Agreement had not been executed, (b) the exercise by
Lender of any of the rights hereunder shall not release the Parent from any of
its duties or obligations under any contracts and agreements relating to the
Collateral, and (c) Lender shall not have any obligation or liability under any
contracts and agreements relating to the Collateral by reason of this Guaranty
and Security Agreement, nor shall Lender be obligated to perform any of the
obligations or duties of the Parent thereunder or to take any action to collect
or enforce any claim for payment assigned hereunder.
2
7. WAIVER. The Parent expressly waives: (a) notice of acceptance
of this Guaranty and Security Agreement and of all extensions or renewals of
credit or other financial accommodations to Borrowers, or any of them; (b)
presentment and demand for payment of any of the Guaranteed Obligations; (c)
protest and notice of dishonor or of default to the Parent or to any other party
with respect to any of the Guaranteed Obligations or with respect to any
security therefor; (d) any invalidity or disability in whole or in part at the
time of the acceptance of, or at any time with respect to, any security for the
Guaranteed Obligations or with respect to any party primarily or secondarily
liable for the payment of Guaranteed Obligations to Lender; (e) the fact that
any security for the Guaranteed Obligations may at any time or from time to time
be in default or be inaccurately estimated or may deteriorate in value for any
cause whatsoever; (f) any diligence in the creation or perfection of a security
interest or collection or protection of or realization upon the Guaranteed
Obligations or any security therefor, any liability hereunder, or any party
primarily or secondarily liable for the Guaranteed Obligations or any lack of
commercial reasonableness, except to the extent required by applicable law, in
dealing with any security for the Guaranteed Obligations; (g) any duty or
obligation on the part of Lender to ascertain the extent or nature of any
security for the Guaranteed Obligations, or any insurance or other rights
respecting such security, or the liability of any party primarily or secondarily
liable for the Guaranteed Obligations, or to take any steps or actions to
safeguard, protect, handle, obtain or convey information respecting, or
otherwise follow in any manner, any such security, insurance or other rights;
(h) all benefits and defenses it may have under California Civil Code Sections
2845, 2849 and 2850 or any similar laws of Georgia or any other jurisdiction
with respect to its obligations under this guaranty, including any duty or
obligation of Lender to proceed to collect the Guaranteed Obligations from, or
to commence an action against, Borrowers, or any of them, any other guarantor,
or any other person, or to resort to any security or to any balance of any
deposit account or credit on the books of Lender in favor of Borrowers, or any
of them, or any other person, or pursue any other rights or remedy for the
undersigned's benefit, despite any notice or request of the Parent to do so; (i)
any rights of the Parent pursuant to Official Code of Georgia Section 10-7-24 or
any similar or subsequent law; (j) the right to assert any of the benefits under
any statute providing appraisal or other rights which may reduce or prohibit any
deficiency judgments in any foreclosure or other action; (k) all other notices
to which the Parent might otherwise be entitled; and (l) demand for payment
under this Guaranty and Security Agreement. The Parent hereby expressly waives,
for Lender's benefit and the benefit of Borrowers, or any of them, and any other
guarantor, maker or endorser of the Guaranteed Obligations, until the
termination of this Guaranty and Security Agreement and the full payment of the
Guaranteed Obligations any and all claims or actions against Borrowers, or any
of them, any other guarantor, maker or endorser of the Guaranteed Obligations
and any and all rights of recourse against any property or assets of Borrowers,
or any of them, any other guarantor, maker or endorser of the Guaranteed
Obligations (including, without limitation, any security for the Guaranteed
Obligations) arising out of or related to any payment made by the Parent under
this Guaranty and Security Agreement, including, without limitation, any claim
of the Parent for subrogation, reimbursement, exoneration or indemnity that the
Parent may have against Borrowers, or any of them, or any other guarantor, maker
or endorser of the Guaranteed Obligations and any benefit of, and any other
right to participate in, any security for the Guaranteed Obligations or any
guaranty of the Guaranteed Obligations now or hereafter held by Lender.
8. REPRESENTATIONS, WARRANTIES AND COVENANTS. The Parent hereby
represents, warrants and covenants as follows:
(a) The exact legal name of the Parent is set forth in
the introductory paragraph of this Guaranty and Security Agreement, and the
Parent does not conduct as of the date hereof, and, during the five-year period
immediately preceding the date hereof, has not conducted, business under any
trade name or other fictitious name other than those that may be set forth on
SCHEDULE 1 attached hereto. The Internal Revenue Service taxpayer identification
number of the Parent, if any, is set forth on SCHEDULE 1.
(b) All of the Inventory of the Parent, if any, other
than Inventory in transit, is located in the United States at the places
specified in Schedule 2 attached hereto. The chief place of business and chief
executive office of the Parent is at the address set forth on SCHEDULE 2. The
offices where the Parent keeps records concerning its Collateral are located at
the addresses specified in SCHEDULE 2 attached hereto. None of the Collateral of
the Parent is evidenced by a promissory note or other instrument, other than a
note or other instrument which has been delivered to Lender. The Parent
covenants and agrees that it will not (i) maintain Collateral at any location
other than those listed on SCHEDULE 2 or in transit between such locations, (ii)
otherwise change or add to any of such locations, or (iii) change the location
of its principal place of business or chief executive office from the locations
identified as such on SCHEDULE 2, unless it gives Lender at least twenty (20)
days' prior written notice
3
thereof and executes any and all financing statements and other documents that
Lender reasonably requests in connection therewith.
(c) SCHEDULE 3 attached hereto sets forth a true,
complete and correct list of (i) all leases for real property on which Inventory
of the Parent is stored (together with the name and mailing address of each
lessor with respect thereto) and (ii) the name and address of each location at
which Inventory of the Parent is stored with a reprocessor, warehouseman or
other bailee (together with the name and address of each reprocessor,
warehouseman or bailee with respect thereto).
(d) As of the date hereof, the Parent owns no real
property.
(e) This Guaranty and Security Agreement creates a valid
security interest in the Collateral of the Parent to the extent a security
interest therein can be created under Article 9 of the Uniform Commercial Code
(the "CODE"), securing the payment of the Guaranteed Obligations, and all
filings and other actions necessary or desirable to perfect and protect such
security interest have been duly taken or will have been taken upon the filing
of Uniform Commercial Code financing statements listing the Parent, as debtor,
and Lender, as secured party, with the Recorder of Deeds of the District of
Columbia, except for any action necessary to perfect Lender's security interest
in any Collateral to the extent a security interest therein is not perfected by
the filing of a financing statement under the Code. Upon the making of such
filings, Lender shall have a perfected security interest in the Collateral of
the Parent to the extent such security interest can be perfected by the filing
of a financing statement under the Code.
(f) The parties intend that all of the Collateral shall
remain personal property regardless of the manner of its attachment or
affixation to real property.
(g) At any time upon the request of Lender, the Parent
shall execute and deliver to Lender all financing statements, continuation
financing statements, fixture filings, security agreements, pledges,
assignments, endorsements of certificates of title, applications for title,
affidavits, reports, notices, schedules of accounts, letters of authority and
all other documents that Lender reasonably may request, in form satisfactory to
Lender, to perfect and continue perfected the liens of Lender in the Collateral,
and in order to fully consummate all of the transactions contemplated by the
Loan Agreement and under the other Finance Documents.
(h) The Parent is a corporation duly incorporated or a
corporation duly organized and validly existing and in good standing under the
laws of the Grand Duchy of Luxembourg having the power and authority to own its
assets and to conduct the business and operations which it conducts or proposes
to conduct.
(i) The Parent has full power and authority to enter into
and perform this Guaranty and Security Agreement and any other document to be
entered into by it pursuant thereto and has taken all necessary corporate or
other action to authorize the execution, delivery and performance of each such
document.
(j) All actions, conditions and things required by all
applicable laws and regulations to be taken, fulfilled, obtained or done in
order (i) to enable the Parent lawfully to enter into, exercise its rights under
and perform and comply with its obligations under this Guaranty and Security
Agreement and any other document to be entered into pursuant thereto and (ii) to
ensure that those obligations are valid, legally binding and enforceable in
accordance with their respective terms.
(k) The execution by the Parent of, and the exercise by
the Parent of its rights and performance of or compliance with its obligations
under this Guaranty and Security Agreement do not and will not (i) violate (A)
any law or regulation to which it or any of its assets is subject or (B), to an
extent or in a manner which has or could have a material adverse effect on it,
any agreement to which it is a party or which is binding on it or its assets or
(ii) conflict with its organizational documents and in particular will not cause
any limit on the borrowing or other powers of the Parent or the exercise of such
powers by its board of directors to be exceeded.
(l) The obligations of the Parent under this Guaranty and
Security Agreement are legal, valid and binding and enforceable in accordance
with their respective terms;
4
(m) Except as disclosed in writing and attached hereto
and agreed by Lender prior to the date of this Guaranty and Security Agreement,
the Parent is not involved or engaged in any litigation, arbitration or
administrative proceedings (whether as plaintiff or defendant) which, if
adversely determined, would be reasonably likely to have a material adverse
effect on the Parent nor, to the best of its knowledge is any such litigation,
arbitration or administrative proceedings threatened, nor are there any
circumstances likely to give rise to any such litigation, arbitration or
proceedings.
(n) The Parent is not in breach of or default under any
agreement or arrangement or any statutory or legal requirement to an extent or
in a manner which has or could reasonably be expected to have a material adverse
effect on the Parent and no Event of Default has occurred and is continuing.
(o) No encumbrance exists over the present or future
assets of the Parent except for encumbrances permitted in Section 8(jj)(vii).
(p) The execution by the Parent of this Guaranty and
Security Agreement and the exercise by the Parent of its rights and performance
of or compliance with its obligations thereunder will not result in the
existence of or oblige the Parent to create any encumbrance over all or any of
its present or future assets except for encumbrances permitted herein.
(q) The financial statements of the Parent were prepared
in accordance with GAAP and give a true and fair view of the financial condition
of the Parent at the date as of which they were prepared and the results of the
Parent's business and operations during the financial year then ended and
disclose or reserve against all liabilities (contingent or otherwise) of the
Parent as at that date and all unrealized or anticipated losses from any
commitment entered into by each member of the Group and which existed on that
date.
(r) The Parent has no indebtedness except for
indebtedness permitted herein and indebtedness as of the date hereof disclosed
on SCHEDULE 4 hereto.
(s) The Parent is in compliance in all material respects
with applicable Environmental Laws and no condition exists or act or event has
occurred which could give rise to any material breach of, or any material
liability of any kind under, any Environmental Laws.
(t) The Parent is in possession of all Environmental
Authorizations required for the conduct of its business or operations (or any
part thereof) and the Parent has not breached any of the terms or conditions of
any such Environmental Authorization, except where any failure to possess any
such Environmental Authorization or any breach thereof could not reasonably be
expected to have a material adverse effect on the Parent.
(u) The Parent has not received any summons, complaint,
order or similar written notice that it is not in compliance with, or any public
authority is investigating its compliance with, any Environmental Laws or that
it is or may be liable to any other person as a result of a potential or actual
discharge of a Hazardous Substance; and
(v) The Parent has not received notice that its present
or past operations is the subject of any investigation by any public authority
evaluating whether any remedial action is needed to respond to a potential or
actual discharge of a Hazardous Substance.
(w) To the knowledge of the Parent, upon due inquiry, no
Hazardous Substance has at any time been used, disposed of, generated, stored,
transported, dumped, released, deposited, buried, discharged or emitted at, on,
from or under any premises owned, leased, occupied or controlled by the Parent.
(x) The Parent has not entered into any negotiations or
settlement agreements with any person (including, without limitation, any prior
owner of its property) imposing material obligations or liabilities on it with
respect to any remedial action in response to the potential or actual discharge
of a Hazardous Substance or environmentally related claim;
5
(y) The Parent has filed all tax returns and other
reports required to be filed and has paid all taxes due and payable by it (save
where the same are being contested in good faith and by appropriate proceedings
and where adequate reserves are being maintained with respect thereto) and no
material claims are being asserted with respect to taxes save for normal
assessments.
(z) There has been no material adverse change in the
financial condition of the Parent since the date to which the most recent
financial statements delivered to Lender were made up nor in the consolidated
financial condition, business, assets or operations of the Parent since that
date.
(aa) All information provided by the Parent to Lender from
time to time in connection herewith was true and correct in all material
respects as at its date or as at the date it was provided and did not at that
date omit anything material and no adverse change has occurred since such date
which renders any such information misleading in a material respect; in addition
full disclosure has been made to Lender prior to the date hereof of all other
facts in relation to the assets of the Parent as are material and ought properly
to be made known to any person proposing to advance moneys or make facilities
available to the Parent and to enable a true and correct view of such assets to
be obtained and all expressions of expectation, intention, belief and opinion
contained therein were correct in all material respects and honestly made on
reasonable grounds after due and careful enquiry.
(bb) The Parent has not done or omitted to do or suffered
anything to be done or not to be done which has or might render any policies of
insurance taken out by it void or voidable and, to the best of its knowledge,
information and belief, there are no circumstances which would or might give
rise to any material claim under any such policies of insurance.
(cc) All necessary licenses, consents and authorizations
have been obtained by the Parent for the carrying on of its business and
operations as the same are currently carried on in all material respects and are
in full force and effect and there are no circumstances which indicate that any
of such licenses, consents and authorizations are likely to be revoked in whole
or in part in the ordinary course of events the effect of which revocation would
be likely to have a material adverse effect on any Parent.
(dd) The Parent has not taken any corporate action nor
have any other steps been taken or legal proceedings been started or (to the
best of the Parent's knowledge and belief) threatened against the Parent for its
winding-up, dissolution or re-organization (other than for the purposes of a
bona fide solvent scheme of reconstruction or amalgamation previously approved
in writing by Lender) or for the appointment of a receiver, administrator,
administrative receiver, trustee or similar officer of it or of any or all of
its assets.
(ee) The Parent shall maintain, at all times, books,
records and accounts which are complete and correct in all material respects and
in relation to which timely entries are made of their transactions in accordance
with GAAP. The Parent shall, by means of appropriate entries, reflect in such
accounts and in all financial statements proper liabilities and reserves for all
taxes and proper provision for depreciation and amortization of any property or
asset and bad debts, all in accordance with GAAP.
(ff) The Parent shall without notice following the
occurrence of a Default which is continuing, or otherwise upon receiving not
less than forty-eight (48) hours' notice from Lender at any reasonable time and
by arrangement with the Parent, permit and procure that the Parent permits
Lender or any person authorized by Lender to have access to its premises and
accounting records and to make extracts from and take copies of its accounting
records and to discuss any matter with any of its personnel and officers and
make such inquiries as Lender may reasonably require from time to time, the
reasonable costs and expenses properly incurred thereby to be for the account of
the relevant Parent.
(gg) [Intentionally omitted].
(hh) The Parent shall deliver to Lender in sufficient
copies for Lender:
6
(i) as soon as the same become available, but in
any event within 100 days after the end of each Financial Year, its financial
statements for such Financial Year together with the audited accounts of the
Parent for such Financial Year;
(ii) as soon as the same become available, but in
any event within 45 days of the end of each Management Accounting Period, its
Management Accounts as at the end of and for that Management Accounting Period,
and a consolidation of those Management Accounts showing the financial position
for the Financial Year to date;
(iii) together with the delivery of the Management
Accounts, a compliance certificate duly signed by one of its directors and its
chief financial or accounting officer confirming that, at all times during the
relevant Management Accounting Period, all the financial covenants set out
herein have been fully complied with;
(iv) at the same time as sent to its shareholders
or creditors generally, any circular, document or other written information sent
to its shareholders or creditors as such; and
(v) from time to time on the request of Lender,
such information about the business, operations and financial condition of the
Parent as Lender may reasonably require.
(ii) The Parent shall ensure that:
(i) each set of financial statements delivered
by it is prepared using the same accounting principles and policies as were used
in the preparation of its original financial statements delivered to Lender and
gives a true and fair view of the financial condition of the Parent and of the
result of its business and operations during such period;
(ii) each set of financial statements delivered
by it to Lender pursuant to (gg)(i) above has been audited by its Auditors and
each set of Management Accounts delivered by it has been certified as being
correct by the Parent, acting through its chief financial or accounting officer,
subject to normal year-end adjustments.
(jj) The Parent undertakes that:
(i) it will obtain, comply with the terms of and
do all that is necessary to maintain in full force and effect all
authorizations, approvals, licenses and consents required by all applicable laws
and regulations to enable it lawfully to enter into, perform and comply with its
obligations hereunder or any document to be entered into pursuant hereto or to
ensure the legality, validity, enforceability or admissibility in evidence of
such documents and, if different, its jurisdiction of incorporation and any
jurisdiction in which any of its assets may be situated;
(ii) it will maintain policies of insurance on
and in relation to its business and assets with financially sound and reputable
insurers acceptable to Lender against such risks and to such extent as is usual
for companies carrying on a business such as that carried on by the Parent whose
practice is not to self insure;
(iii) it will comply in all material respects with
all applicable laws and regulations including, without limitation, any
applicable Environmental Laws;
(iv) it has the right to conduct its business and
operations as they are conducted in all applicable jurisdictions and will do all
things necessary (including compliance with all terms and conditions of any
licenses and consents) to obtain, preserve and keep in full force and effect all
rights, licenses and authorizations (including, without limitation, all
Environmental Authorizations) and consents as are necessary for the conduct of
such business and operations;
7
(v) it will duly and punctually pay and
discharge (A) all taxes imposed upon it or its properties (save where the same
are being contested in good faith and by appropriate proceedings and where
adequate reserves are being maintained with respect thereto) and (B) all lawful
claims which, if unpaid, would by law become encumbrances upon any of the
Collateral;
(vi) it will promptly notify Lender in writing
(in reasonable detail and setting out the action that is proposed to be taken in
relation to it) of the occurrence of any Default and, as soon as reasonably
practicable following receipt of a written request to that effect from Lender,
confirm to Lender that, save as previously notified to Lender or as notified in
such confirmation, no Default has occurred.
(vii) it will not, without the prior consent of
Lender, create, agree to create or permit to subsist any encumbrance on or over
its respective assets to secure any indebtedness of any person other than the
following:
(A) any encumbrance on or over the
assets of the Parent subsisting at the date of this Guaranty
and Security Agreement and agreed to by Lender, provided that,
except with the prior consent of Lender, the principal,
capital or nominal amount secured by any such encumbrance may
not be increased beyond the maximum amount which may be
secured by the relevant encumbrance at the date hereof;
(B) liens arising solely by operation
of law incurred in the ordinary course of business and not in
connection with the borrowing of money, for sums not yet
overdue;
(C) encumbrances arising out of title
retention provisions in a supplier's standard conditions of
supply (any such standard conditions to have been approved by
Lender) in respect of goods acquired by the relevant person in
the ordinary course of trading; and
(D) any other encumbrance created or
outstanding with the prior written consent of Lender.
(viii) without the prior consent of Lender (which
may be subject to, inter alia, the application of all proceeds of a disposal
towards prepayment of the Obligations in such manner as Lender may reasonably
require), it will not (whether by a single transaction or a number of related or
unrelated transactions and whether at one time or over a period of time), sell,
transfer, assign, lease out, lend or otherwise dispose of (whether outright, by
a sale and repurchase or sale and leaseback arrangement or otherwise) any part
of its assets (other than any sale of goods or services in the ordinary course
of its business) having an aggregate value in excess of $1,000,000 in any one
Financial Year.
(ix) it will not incur or maintain any
indebtedness other than:
(A) indebtedness guaranteed hereunder;
(B) the guarantee by the Parent of the
indebtedness under the Facility Agreement and the Facility
Documents (as defined in the Facility Agreement);
(C) suppliers' credit extended in the
ordinary course of trading and on arms' length terms;
(D) indebtedness between members of the
Group as disclosed to and permitted by Lender;
(E) loans from its major shareholders
(provided that all such loans are subordinated to the
guaranteed indebtedness hereunder;
8
(F) [Intentionally omitted]; and
(G) loans by the Parent to any other
person not in excess of $1,000,000 in the aggregate at any
given time.
(x) it will not make any loans, grant any credit
(save in the ordinary course of trading) or give any guarantee to or for the
benefit of any person or otherwise voluntarily assume any liability, whether
actual or contingent, in respect of any obligation of any other person (save as
required hereunder) in excess of US$1 million in aggregate.
(xi) it will ensure that there is no material
change in the nature of its business or operations or the business or operations
of the Group taken as a whole (whether by a single transaction or a number of
related or unrelated transactions, whether at one time or over a period of time
and whether by disposal, acquisition or otherwise).
(xii) it will not, without the prior approval of
Lender, change, and will procure that no other member of the Group changes, its
accounting reference date.
(xiii) save with Lender's prior written consent, it
will not, directly or indirectly, organize or acquire any Subsidiary (other than
those in existence as at the date hereof and which have been advised to Lender
in writing).
(xiv) save with Lender's prior written consent, it
will not make any acquisitions of a capital asset, enter into any finance lease
or any other capital asset commitment, or otherwise make any capital expenditure
involving payments in excess of $5,000,000 in the aggregate in any Financial
Year, other than any budgeted capital expenditure which has been approved by
Lender.
(xv) Unless Lender shall be satisfied in its
reasonable determination of the compliance and anticipated continued compliance
with all financial ratios set out herein, it will not pay, make or declare any
dividend or other distribution nor repay or permit to be repaid any unsecured
loan stock or other subordinated indebtedness.
(xvi) it will not make any change in its capital
structure or its jurisdiction of formation save where made with the prior
consent of Lender, not to be unreasonably withheld or delayed.
Each of the representations and warranties set forth herein will be
correct and complied with on the date hereof and will also be correct and
complied with each date on which a Letter of Credit is issued or requested to be
issued as if repeated then by reference to the then existing circumstances. The
undertakings herein shall remain in force from the date hereof and so long as
any amount is outstanding hereunder.
9. FURTHER ASSURANCES.
(a) The Parent agrees that from time to time, at its own
expense, the Parent will promptly execute and deliver all further instruments
and documents, and take all further action, that may be necessary or that Lender
may reasonably request, in order to perfect and protect any security interest
granted or purported to be granted hereby or to enable Lender to exercise and
enforce its rights and remedies hereunder with respect to any of the Collateral.
Without limiting the generality of the foregoing, the Parent shall upon Lender's
request, execute and file such financing or continuation statements, or
amendments thereto, and such other instruments or notices, as may be necessary
or as Lender may request, in order to perfect and preserve the security interest
granted or purported to be granted hereby.
(b) The Parent hereby authorizes Lender and appoints
Lender its attorney-in-fact to file one or more financing or continuation
statements, and amendments thereto, relating to all or any part of the
Collateral without its signature where permitted by law. A photocopy or other
reproduction of this Guaranty and
9
Security Agreement or any financing statement covering the Collateral or any
part thereof shall be sufficient as a financing statement where permitted by
law.
10. CONSIDERATION. The Parent expressly represents and
acknowledges that any loans or other financial accommodations by Lender to
Borrowers, or any of them, are and will be to the direct interest and advantage
of the Parent.
11. AGENT APPOINTED ATTORNEY-IN-FACT. The Parent hereby
irrevocably makes, constitutes and appoints Lender, and its successors or
assigns, as its attorney-in-fact, with full authority in the place and stead of
the Parent and in the name of the Parent or otherwise, at such time as an Event
of Default has occurred and is continuing under the Loan Agreement, to take any
action and to execute any instrument which Lender may deem necessary or
advisable to accomplish the purposes of this Guaranty and Security Agreement,
including, without limitation:
(a) to ask, demand, collect, xxx for, recover,
compromise, receive and give acquittance and receipts for moneys due and to
become due under or in connection with the Collateral of the Parent;
(b) to receive and open all mail addressed to the Parent
and to notify postal authorities to change the address for the delivery of mail
to the Parent to that of Lender;
(c) to file any claims or take any action or institute
any proceedings which Lender may deem necessary or desirable for the collection
of any of the Collateral of the Parent or otherwise to enforce the rights of
Lender with respect to any of the Collateral of the Parent;
(d) make, settle and adjust all claims under the Parent's
policies of insurance and make all determinations and decisions with respect to
such policies of insurance; and
(e) to use any labels, patents, trademarks, trade names,
URLs, domain names, industrial designs, copyrights, advertising matter or other
industrial or intellectual property rights, in advertising for sale and selling
Inventory and other Collateral of the Parent.
12. NO WAIVER BY LENDER. No delay or failure on the part of Lender
in the exercise of any right or remedy shall operate as a waiver thereof, and no
single or partial exercise by Lender of any right or remedy shall preclude other
or further exercise thereof or the exercise of any other right or remedy. For
purposes of this Guaranty and Security Agreement, the term "Guaranteed
Obligations" shall include all obligations arising under the Loan Agreement and
the other Finance Documents, notwithstanding any right or power of Borrowers, or
any of them, or anyone else to assert any claim or defense as to the invalidity
or unenforceability thereof, and no such claim or defense shall impair or affect
the obligations and liabilities of the Parent hereunder. Without limiting the
generality of the foregoing, this Guaranty and Security Agreement covers all
Guaranteed Obligations purporting to be made on behalf of such Borrowers by any
officer or agent of the same, without regard to the actual authority of such
officer or agent.
13. REMEDIES. Upon the occurrence and during the continuance of an
Event of Default:
(a) Lender may exercise in respect of the Collateral, in
addition to other rights and remedies provided for herein, in the other Finance
Documents, or otherwise available to it, all the rights and remedies of a
secured party on default under the Code in effect in the State of Georgia from
time to time or any other applicable jurisdiction. Without limiting the
generality of the foregoing, the Parent expressly agrees that in any such event
Lender without demand for performance or other demand, advertisement or notice
of any kind (except a notice specified below of time and place of public or
private sale or as expressly required by the Loan Agreement) to or upon the
Parent or any other person (all and each of which demands, advertisements and
notices are hereby expressly waived to the maximum extent permitted by the Code
and other applicable law), may take immediate possession of the Collateral and
(i) require the Parent to, and the Parent hereby agrees that it will at its own
expense and upon request of Lender forthwith, assemble all or part of the
Collateral as directed by Lender and make it available to Lender at one or more
locations where the Parent regularly maintains Inventory and (ii) without notice
except as specified below, sell the Collateral or any part thereof in one or
more parcels at public or private
10
sale, at any of Lender's offices or elsewhere, for cash, on credit or for future
delivery, and upon such other terms as Lender may deem commercially reasonable.
The Parent agrees that, to the extent notice of sale shall be required by law,
at least ten (10) calendar days' notice to the Parent of the time and place of
any public sale or the time after which any private sale is to be made shall
constitute a reasonable "authenticated notification of disposition" within the
meaning of Section 9-611 of the Uniform Commercial Code, as in effect from time
to time in any applicable jurisdiction. Lender shall not be obligated to make
any sale of Collateral regardless of notice of sale having been given. Lender
may adjourn any public or private sale from time to time by announcement at the
time and place fixed therefor, and such sale may, without further notice, be
made at the time and place to which it was so adjourned. Lender is hereby
granted a license or other right to use, without charge, the Parent's labels,
patents, copyrights, rights of use of any name, trade secrets, trade names,
trademarks, service marks and advertising matter, URLs, domain names, industrial
designs, other industrial or intellectual property or any property of a similar
nature, whether owned by the Parent or with respect to which the Parent has
rights under license, sublicense or other agreements, as it pertains to the
Collateral, in preparing for sale, advertising for sale and selling any
Collateral, and the Parent's rights under all licenses and all franchise
agreements shall inure to the benefit of Lender.
(b) Any cash held by Lender as Collateral and all cash
proceeds received by Lender in respect of any sale of, collection from, or other
realization upon all or any part of the Collateral may, in the discretion of
Lender, be held by Lender as Collateral for, and/or then or at any time
thereafter be applied in whole or in part by Lender against, all or any part of
the Guaranteed Obligations in such order as may be set forth in the Loan
Agreement. Any surplus of such cash or cash proceeds held by Lender and
remaining after payment in full of all the Guaranteed Obligations shall be
delivered to the Parent.
(c) The Parent hereby acknowledges that the Guaranteed
Obligations arose out of a commercial transaction, and agrees that if an Event
of Default shall occur and be continuing Lender shall have the right to an
immediate writ of possession without notice of a hearing. Lender shall have the
right to the appointment of a receiver for the properties and assets of the
Parent, and the Parent hereby consents to such rights and such appointment and
hereby waives any objection the Parent may have thereto or the right to have a
bond or other security posted by Lender in connection therewith.
14. REMEDIES CUMULATIVE. Each right, power, and remedy of Lender
as provided for in this Guaranty and Security Agreement or in the other Finance
Documents or now or hereafter existing at law or in equity or by statute or
otherwise shall be cumulative and concurrent and shall be in addition to every
other right, power, or remedy provided for in this Guaranty and Security
Agreement or in the other Finance Documents or now or hereafter existing at law
or in equity or by statute or otherwise, and the exercise or beginning of the
exercise by Lender of any one or more of such rights, powers or remedies shall
not preclude the simultaneous or later exercise by Lender of any or all such
other rights, powers or remedies.
15. APPLICATION OF PAYMENTS. Any amount received by Lender from
whatever source and applied by it toward the payment of the Guaranteed
Obligations shall be applied in such order of application as Lender may from
time to time elect.
16. INDEMNITY AND EXPENSES.
(a) The Parent agrees upon demand to pay to Lender the
amount of any and all reasonable expenses, including, without limitation, the
fees and expenses of its counsel incurred and of any experts and agents, which
Lender may incur in connection with (i) the administration of this Guaranty and
Security Agreement, (ii) the custody, preservation, use or operation of, or,
upon an Event of Default, the sale of, collection from, or other realization
upon, any of the Collateral in accordance with this Guaranty and Security
Agreement and the other Finance Documents, (iii) the exercise or enforcement of
any of the rights of Lender hereunder or (iv) the failure by the Parent to
perform or observe any of the provisions hereof.
(b) The Parent agrees to indemnify Lender from and
against all claims, lawsuits and liabilities (including reasonable attorneys'
fees actually incurred) growing out of or resulting from this Guaranty and
Security Agreement (including, without limitation, enforcement of this Guaranty
and Security Agreement) or any other Finance Document to which the Parent is a
party, except claims, losses or liabilities resulting from the gross
11
negligence or willful misconduct of the party seeking indemnification as
determined by a final non-appealable order of a court of competent jurisdiction.
17. POSSESSION UNTIL DEFAULT. Until an Event of Default shall
occur and be continuing, except as otherwise provided in this Guaranty and
Security Agreement, the Loan Agreement or other Finance Documents, the Parent
shall have the right to possession and enjoyment of the Collateral for the
purpose of conducting the ordinary course of its business, subject to and upon
the terms hereof and of the Loan Agreement and other Finance Documents.
18. AMENDMENTS; ETC. No waiver of any provision of this Guaranty
and Security Agreement, and no consent to any departure by the Parent herefrom,
shall in any event be effective unless the same shall be in writing and signed
by Lender, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given. No amendment of
any provision of this Guaranty and Security Agreement shall be effective unless
the same shall be in writing and signed by Lender and the Parent.
19. ADDRESSES FOR NOTICES. All notices and other communications
provided for hereunder shall be given in the form and manner prescribed for
notices in the Loan Agreement at the address for the Parent set forth on
SCHEDULE 2 hereto and at the at Lender's address specified in the Loan
Agreement, or, as to any party, at such other address as shall be designated by
such party in a written notice to the other party.
20. CONTINUING SECURITY INTEREST: ASSIGNMENTS UNDER LOAN
AGREEMENT. This Guaranty and Security Agreement shall create a continuing
security interest in the Collateral and shall (i) terminate only when the
Guaranteed Obligations (other than those Guaranteed Obligations which may
survive termination of the Loan Agreement as provided for therein) have been
paid in full and the Loan Agreement shall have been terminated, (ii) be binding
upon the Parent, its successors and assigns and (iii) inure to the benefit of,
and be enforceable by, Lender and its successors, transferees and assigns.
Without limiting the generality of the foregoing clause (iii), Lender may assign
or otherwise transfer all or any portion of its rights and obligations under the
Loan Agreement (including, without limitation, all, or any ratable part, of the
Guaranteed Obligations) and the other rights and obligations of Lender under the
Loan Agreement and the other Finance Documents to any other person, and such
other person shall thereupon become vested with all the benefits in respect
thereof granted to Lender herein or otherwise. Upon the payment in full of the
Guaranteed Obligations and all other amounts payable under this Guaranty and
Security Agreement and the expiration or termination of the Loan Agreement, the
security interest granted hereby shall terminate and all rights to the
Collateral shall revert to the Parent. No transfer or renewal, extension,
assignment or termination of this Guaranty and Security Agreement or of the Loan
Agreement, any other Finance Document or any other instrument or document
executed and delivered by the Parent to Lender nor any additional extension of
credit by Lender to the Borrowers, nor the taking of further security, nor the
retaking or re-delivery of the Collateral to the Parent by Lender, nor any other
act of Lender shall release the Parent from any obligation, except a release or
discharge executed in writing by Lender with respect to such obligation or
payment of such obligation or upon full satisfaction of all the Guaranteed
Obligations. Lender shall not by any act, delay, omission or otherwise, be
deemed to have waived any of their rights or remedies hereunder, unless such
waiver is in writing and signed by Lender and then only to the extent therein
set forth. A waiver by Lender of any right or remedy on any occasion shall not
be construed as a bar to the exercise of any such right or remedy which Lender
would otherwise have had on any other occasion.
21. SUCCESSORS AND ASSIGNS; JOINT AND SEVERAL UNDERTAKING. This
Guaranty and Security Agreement shall bind and inure to the benefit of Lender,
its successors and assigns, and likewise shall bind and inure to the benefit of
the Parent, its heirs, executors, administrators, successors and assigns. If
more than one person shall execute this Guaranty and Security Agreement or a
similar, contemporaneous guaranty, the term "undersigned" shall mean, as used
herein, all parties executing this Guaranty and Security Agreement and such
similar guaranties and all such parties shall be liable, jointly and severally,
one with the other with Borrowers, or any of them, for each of the undertakings,
agreements, obligations, covenants and liabilities provided for herein with
respect to the Parent. This Guaranty and Security Agreement contains the entire
agreement and there is no understanding that any other person shall execute this
or a similar guaranty. Furthermore, no course of dealing between the parties, no
usage of trade, and no parol or extrinsic evidence shall be used to supplement
or modify any terms of this Guaranty and Security Agreement; nor are there any
conditions to the complete effectiveness of this Guaranty and Security
Agreement.
12
22. GOVERNING LAW; SEVERABILITY. This Guaranty and Security
Agreement shall be deemed accepted by Lender in the State of Georgia in the
United States of America. The parties agree that this Guaranty and Security
Agreement shall be deemed, made, delivered, performed and accepted by Lender in
the State of Georgia and shall be governed by the laws of the State of Georgia
in the United States of America. Wherever possible each provision of this
Guaranty and Security Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this Guaranty
and Security Agreement shall be prohibited by or invalid under such law, such
provision shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this Guaranty and Security Agreement.
23. JURISDICTION. The Parent (a) submits to personal jurisdiction
in the State of New York in the United States of America, the courts thereof and
any United States District Court sitting therein, for the enforcement of this
Guaranty and Security Agreement, (b) waives any and all personal rights under
the law of any jurisdiction to object on any basis (including, without
limitation, inconvenience of forum) to jurisdiction or venue within the State of
New York in the United States of America for the purpose of litigation to
enforce this Guaranty and Security Agreement, (c) agrees that service of process
may be made upon the Parent by first class mail, postage prepaid, addressed to
the Parent at the latest address of the Parent known to Lender (or at such other
address as the Parent may specify for such purpose by notice to Lender) and (d)
to the extent permitted by law, waives trial by jury in any action or proceeding
with respect hereto. Nothing herein contained, however, shall prevent Lender
from bringing any action or exercising any rights against any security and
against Borrowers, or any of them, and against any assets of Borrower, within
any other state or jurisdiction.
24. COLLECTION COSTS. The Parent agrees, in the event that this
Guaranty and Security Agreement is enforced or collected by law or through an
attorney at law, to pay all costs of collection actually incurred by Lender,
including, without limitation, attorneys' fees actually incurred.
25. VOIDED PAYMENTS. Notwithstanding anything herein to the
contrary, to the extent that the Parent makes any payment on the Guaranteed
Obligations which, within twelve (12) months of the date of such payment, is
subsequently invalidated, declared to be fraudulent, avoidable or preferential,
set aside or is required to be repaid to a trustee, receiver, the estate of such
undersigned or any other party under any bankruptcy act, state or Federal law,
common law or equitable cause (such payment being hereinafter referred to as a
"VOIDED PAYMENT"), then to the extent of such Voided Payment that portion of the
Guaranteed Obligations which had been previously satisfied by such Voided
Payment shall be revived and continue in full force and effect as if such Voided
Payment had never been made. In the event that a Voided Payment is sought to be
recovered from Lender, an "Event of Default" under the Loan Agreement shall be
deemed to have occurred and to be continuing from the date of such recovery from
Lender of such Voided Payment until the full amount of such Voided Payment is
fully and finally restored to Lender and until such time the provisions of this
Guaranty and Security Agreement, and the guaranty provided herein, shall be in
full force and effect.
26. PAYMENTS. All payments made by the Parent hereunder will be
made without setoff, counterclaim, or other defense, except as required by
applicable law other than for Taxes (as defined below). All such payments will
be made free and clear of, and without deduction or withholding for, any present
or future taxes, levies, imposts, duties, fees, assessments or other charges of
whatever nature now or hereafter imposed by any jurisdiction (other than the
United States) or by any political subdivision or taxing authority thereof or
therein (other than of the United States) with respect to such payments and all
interest, penalties or similar liabilities with respect thereto (all such
non-excluded taxes, levies, imposts, duties, fees, assessments or other charges
being referred to collectively as "TAXES"). If any Taxes are so levied or
imposed, the Parent agrees to pay the full amount of such Taxes, and such
additional amounts as may be necessary so that every payment of all amounts due
under this Guaranty and Security Agreement or under any note, including any
amount paid pursuant to this Section 265 after withholding or deduction for or
on account of any Taxes, will not be less than the amount provided for herein;
PROVIDED, HOWEVER, that the Parent shall not be required to increase any such
amounts payable to Lender if the increase in such amount payable results from
Lender's own willful misconduct or gross negligence. The Parent will furnish to
Lender as promptly as possible after the date the payment of any Taxes is due
pursuant to applicable law certified copies of tax receipts evidencing such
payment by the Parent.
27. ADDITIONAL WAIVERS.
13
(a) WITHOUT LIMITING THE GENERALITY OF ANY OTHER WAIVER
OR OTHER PROVISION SET FORTH IN THIS GUARANTY AND SECURITY AGREEMENT, THE PARENT
HEREBY WAIVES, TO THE MAXIMUM EXTENT SUCH WAIVER IS PERMITTED BY LAW, ANY AND
ALL BENEFITS OR DEFENSES ARISING DIRECTLY OR INDIRECTLY UNDER ANY ONE OR MORE OF
CALIFORNIA CIVIL CODE SECTIONS 2787 THROUGH AND INCLUDING SECTION 2855,
CALIFORNIA CODE OF CIVIL PROCEDURE SECTIONS 580A, 580B, 580C, 580D, AND 726, AND
CHAPTER 2 OF TITLE 14 OF THE CALIFORNIA CIVIL CODE OR ANY SIMILAR LAWS OF
GEORGIA OR ANY OTHER JURISDICTION.
(b) Without waiving the generality of any other waiver or
other provision set forth in this Guaranty and Security Agreement, the Parent
also agrees to the following waivers:
(i) the Parent agrees that Lender's right to
enforce this Guaranty and Security Agreement is absolute and is not contingent
upon the genuineness, validity or enforceability of the Loan Agreement or any of
the Security Documents. The Parent waives all benefits and defenses it may have
under California Civil Code Section 2810 or any similar laws of Georgia or any
other jurisdiction and agrees that Lender's rights under this Guaranty and
Security Agreement shall be enforceable even if no Borrower had any liability at
the time of execution of the Loan Agreement or any of the other Finance
Documents or later ceases to be liable;
(ii) the Parent waives all benefits and defenses
it may have under California Civil Code Section 2809 or any similar laws of
Georgia or any other jurisdiction with respect to its obligations under this
Guaranty and Security Agreement and agrees that Lender's rights under the Loan
Agreement and the other Finance Documents will remain enforceable even if the
amount secured by the Security Documents is larger in amount and more burdensome
than that for which Borrowers are responsible; and
(iii) the Parent agrees that Lender may exercise
its rights under this Guaranty and Security Agreement without taking any action
against any Borrower, any other guarantor of any Borrower's obligations under
the Loan Agreement or any of the other Finance Documents, any pledgor of
collateral for any person's obligations to Lender or any other person in
connection with the Obligations, and without proceeding against or exhausting
any security or collateral Lender holds.
(c) The Parent waives all rights and defenses arising out
of an election of remedies by Lender, even though that election of remedies,
such as a nonjudicial foreclosure with respect to security for a guaranteed
obligation, has destroyed Lender's rights of subrogation and reimbursement
against Borrowers or the Parent, or any of them, by the operation of Section
580(d) of the California Code of Civil Procedure or otherwise. The Parent waives
all rights and defenses to the extent the Guaranteed Obligations may be secured
by real property. This means, among other things: (i) Lender may collect from
the Parent without first foreclosing on any real or personal property collateral
pledged by any other obligor; (ii) If Lender forecloses on any real property
collateral pledged by any other obligors: (A) the amount of the Guaranteed
Obligations may be reduced only by the price for which that collateral is sold
at the foreclosure sale, even if the collateral is worth more than the sale
price and (B) Lender may collect from the Parent even if Lender, by foreclosing
on the real property collateral, has destroyed any right the Parent may have to
collect from the other obligors. This is an unconditional and irrevocable waiver
of any rights and defenses the Parent may have because the Guaranteed
Obligations are secured by real property. These rights and defenses include, but
are not limited to, any rights or defenses based upon Section 580a, 580b, 580d
or 726 of the California Code of Civil Procedure.
(d) The paragraphs in this Guaranty and Security
Agreement which refer to certain sections of the California Civil Code and the
California Code of Civil Procedure are included in this Guaranty and Security
Agreement solely out of an abundance of caution and shall not be construed to
mean that any of the above-referenced provisions of California law are in any
way applicable to this Guaranty and Security Agreement.
28. LENDER'S DUTIES. The powers conferred on Lender hereunder are
solely to protect its interest in the Collateral and shall not impose any duty
upon Lender to exercise any such powers. Except for the safe custody of any
Collateral in its actual possession and the accounting for moneys actually
received by it hereunder, Lender shall have no duty as to any Collateral or as
to the taking of any necessary steps to preserve rights against prior parties or
any other rights pertaining to any Collateral. Lender shall be deemed to have
exercised
15
reasonable care in the custody and preservation of any Collateral in its actual
possession if such Collateral is accorded treatment substantially equal to that
which Lender accords its own property. If the Parent fails to perform any
agreement contained herein, Lender may itself perform, or cause performance of,
such agreement, and the reasonable expenses of Lender incurred in connection
therewith shall be payable by the Parent and the Borrowers as part of the
Guaranteed Obligations.
29. [INTENTIONALLY OMITTED]
30. LANDLORD AGREEMENTS. The Parent agrees that it shall not renew
(nor permit any automatic renewal of) any existing lease, or enter into any new
lease, for real property unless prior to executing or effecting such renewal or
proposed lease the Parent shall have delivered to Lender evidence that such
lessor shall execute and deliver to Lender a collateral access and landlord
subordination agreement in form and substance reasonably satisfactory to Lender.
31. QUARTERLY FIELD AUDITS: Lender shall be entitled to conduct a
quarterly field audit of the books and accounting records of the Parent, such
field audits to be conducted at any time within the fourteen (14) day period
following the end of each calendar quarter (namely 31st March, 30th June, 30th
September and 31st December). The Parent shall permit Lender or any person
authorized by Lender to have access to its premises and accounting records and
to make extracts from and take copies of its accounting records and to discuss
any matter with any of its personnel and officers and make such inquiries as
Lender may reasonably require from time to time, the reasonable costs and
expenses properly incurred thereby to be for the account of the Parent, provided
that such costs and expenses in respect of each quarterly field audit conducted
by Lender shall not exceed $750 per person per day plus any out-of-pocket costs
and expenses.
32. MISCELLANEOUS.
(a) This Guaranty and Security Agreement may be executed
in any number of counterparts, each of which shall be deemed to be an original,
but all such separate counterparts shall together constitute but one and the
same instrument. Delivery of an executed counterpart of this Guaranty and
Security Agreement by facsimile shall be equally as effective as delivery of an
original executed counterpart of this Guaranty and Security Agreement.
(b) The paragraph titles herein are for convenience of
reference only, and shall not affect in any way the interpretation of any of the
provisions hereof.
(c) Time is of the essence of this Guaranty and Security
Agreement.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
16
IN WITNESS WHEREOF, the Parent has executed this Guaranty and Security
Agreement under seal, as of December 31, 2004.
"GUARANTOR"
Signed and delivered TARRANT LUXEMBOURG SARL
in the presence of:
By: /S/ XXXXXXX XXXXX
--------------------------------
Name: XXXXXXX XXXXX
Title: MANAGER
Address:
Notary Public
----------------------------------
My Commission Expires:
-------------------------
[NOTARY SEAL]
Accepted and agreed:
UPS CAPITAL GLOBAL TRADE FINANCE CORPORATION
By: /S/ XXXX X. XXXXXXXX
-------------------------------------------
Name: XXXX X. XXXXXXXX
Title: DIRECTOR OF PORTFOLIO MANAGEMENT
17
SCHEDULE 1
NAME AND FEIN FOR PARENTS
NAME FEIN
----------------------------------- --------------
Tarrant Luxembourg Sarl Not applicable
(formerly known as Machrima
Luxembourg International S.a.r.l..)
18
SCHEDULE 2
CHIEF EXECUTIVE OFFICES, RECORDS LOCATIONS
CHIEF EXECUTIVE OFFICES, RECORDS LOCATION:
Tarrant Luxembourg International, Sarl
0000 X. Xxxxxxxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx
19
SCHEDULE 3
LEASES OF REAL PROPERTY; INVENTORY LOCATIONS
LEASED REAL PROPERTY:
None.
INVENTORY LOCATIONS:
None.
20
SCHEDULE 4
INDEBTEDNESS
As of December 30, 2004
To Tarrant Company Limited -- Note 1 $ 41,830,368.53
To Trade Link Holdings -- Note 1 $ 7,521,175.28
To Trade Link Holdings -- Note 2 $ 8,820,573.11
Total $ 58,172,116.92
Note 1 -- Nine (9) consecutive equal annual installments of $1,000,000 due on
each December 31, starting December 31, 2006, and the remaining principal amount
shall be payable in one lump sum on December 31, 2015.
Note 2 -- Eight (8) consecutive equal annual installments of $1,000,000 on each
December 31 starting December 31, 2006, and the remaining principal amount shall
be payable in one lump sum on December 31, 2014.
21
