EXHIBIT 10.8
PAGE 288
GUARANTY AND SURETYSHIP AGREEMENT
This GUARANTY AND SURETYSHIP AGREEMENT is made as of the 1st day
of August, 1995, by BURLINGTON COAT FACTORY WAREHOUSE CORPORATION, a
Delaware corporation (the "Guarantor") in favor of FIRST FIDELITY BANK, NATIONAL
ASSOCIATION, a national banking association (the "Bank").
WHEREAS, the New Jersey Economic Development Authority Act,
constituting Chapter 80 of the Pamphlet Laws of 1974 of the State of New Jersey,
approved on August 7,1974, as amended and supplemented (the "Act"), declares
it to be in the public interest and to be the policy of the State of New
Jersey (the "State") to xxxxxx and promote the economy of the State, increase
opportunities for gainful employment and improve living assist in the economic
development or redevelopment of political subdivisions State, and otherwise
contribute to the prosperity, health and general welfare its inhabitants by
inducing manufacturing, industrial, commercial, recreation and other
employment promoting enterprises to locate, remain or expand within the State
by making available financial assistance; and
WHEREAS, the New Jersey Economic Development Authority (the
"Authority"), a public body corporate and politic constituting an
instrumentality of the State of New Jersey was created to aid in remedying
the aforesaid conditions and to implement the purposes of the Act, and the
Legislature has determined that the authority and powers conferred upon the
Authority under the Act and the expenditure of moneys pursuant thereto
constitute a serving of a valid public purpose and that the enactment of the
provisions set forth in the Act is in the public interest and for the public
benefit and good and has been so declared to be as a matter of express
legislative determination; and
WHEREAS, the Authority, to accomplish the purposes of the Act, is
empowered to extend credit to such employment promoting enterprises in the
name of the Authority on such terms and conditions and in such manner as it
may deem proper for such consideration and upon such terms and conditions as
the Authority may determine to be reasonable; and
WHEREAS, Burlington Coat Factory Warehouse of New Jersey, Inc. (the
"Company"), a wholly owned subsidiary of the Guarantor, submitted an
application (the "Original Application") to the Authority for financial
assistance in the principal amount of $10,000,000 for financing a portion of
the costs of a project (the "1985 Project") consisting of the acquisition of
46.779 acres of land in the Township of Burlington, Burlington County, New
Jersey, the construction of an approximately 500,000 square foot building
situate thereon for use as a national distribution center for the Company's
products (which building currently contains 75,000 square feet of office
space), the equipping of such building with conveyor systems, rolling racks
and automated machinery and the construction of a parking adjacent to such
building, and the Authority, by resolution duly adopted July 3, 1985 in
accordance with the Act, accepted the application of the Company for
assistance in financing the 1985 Project; and
WHEREAS, the Authority, by resolution duly adopted September 4,
1985 in accordance with the Act, authorized the issuance of not to exceed
$10,000,000 aggregate principal amount of its Economic Development Bonds
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(Burlington Coat Factory Warehouse of New Jersey, Inc. - 1985 Project) for
the purpose of making a loan to the Company to finance the 1985 Project
(the "Original Loan"); and
WHEREAS, on September 20, 1985 the Authority issued $10,000,000 of
its Economic Development Bonds dated September 1, 1985 to finance the 1985
Project (the "Prior Bonds"); and
WHEREAS, those Prior Bonds maturing on or after September 1, 1996
are subject to redemption prior to maturity, at the option of the Company, on
any interest payment date on or after September 1, 1995; and
WHEREAS, the Company desires to redeem $10,000,000 aggregate
principal amount of the Prior Bonds maturing on or after September 1, 1996
(the "Refunded Bonds") on September 1, 1995; and
WHEREAS, the Company, by letter dated May 10, 1995, notified the
Authority of its intent to redeem the Refunded Bonds on September 1, 1995 and
has requested the Authority's assistance in the issuance of not to exceed
$10,000,000 aggregate principal amount of bonds to refinance the 1985 Project
and to redeem the Refunded Bonds; and
WHEREAS, on July 11, 1995, the Authority, by resolution duly
adopted (the "Resolution"), authorized the issuance of its Economic
Development Refunding Bonds (Burlington Coat Factory Warehouse of New Jersey,
Inc. - 1995 Project) (the "Refunding Bonds" or the "Bonds") for the purpose
of providing funds for the Company to refinance the 1985 Project and to
redeem the Refunded Bonds (the "Project"); and
WHEREAS, the Authority has determined to issue the Bonds concurrently
herewith pursuant to the Act, the Resolution and the Indenture (as
hereinafter defined); and
WHEREAS, the Authority, contemporaneously with the execution and
delivery of this Agreement, has entered into a Loan Agreement with the
Company, and an Indenture of Trust dated as of August 1, 1995 (the
"Indenture") wherein the Authority has assigned certain of its rights under
the Loan Agreement to the Trustee for the benefit of the Holders from time
to time of the Bonds; and
WHEREAS, to facilitate the issuance and sale of the Bonds and to
enhance the marketability of the Bonds, the Company has requested the Bank to
issue an irrevocable direct pay letter of credit substantially in the form of
Annex A attached hereto, in an amount up to an aggregate amount of
$10,357,293.00 (as reduced and reinstated from time to time in accordance with
the provisions hereof and of the Letter of Credit), of $10,000,000 shall be
available to pay the principal amount of the Bonds either (whether at the
stated maturity date or by acceleration) or upon redemption the remainder
shall be available to pay up to 210 days' interest on the on the Outstanding
Bonds computed at the rate of six and one hundred twenty-five thousandths
percent (6.125%) per annum accrued on the outstanding Bonds, as such
interest becomes due; and
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WHEREAS, as a condition, among others, to its issuance of the
Letter of Credit, the Bank has required that (a) the Company and the Bank
enter into a certain Letter of Credit Reimbursement Agreement dated of even
date herewith (as amended from time to time, the "Reimbursement Agreement")
and (b) the Guarantor execute and deliver to the Bank this Guaranty;
NOW, THEREFORE, for and in consideration of the premises and of the
mutual representations, covenants and agreements herein set forth (each of
which is incorporated herein by reference), intending to be legally bound
hereby, and in order to induce the Bank to issue the Letter of Credit, and to
secure the observance, payment and performance of the Liabilities (as defined
below), and with full knowledge that Bank would not make the said loans,
extensions of credit or financial accommodations without this Guaranty
and Suretyship Agreement (together with any amendments or modifications
hereto in effect from time to time, the "Guaranty"), which shall be construed
as an agreement of suretyship, the Guarantor hereby unconditionally agrees
as follows:
Section 1. LIABILITIES GUARANTEED.
Guarantor hereby guarantees and becomes surety to Bank for the full,
prompt and unconditional payment of the Liabilities (as defined below), when
and as the same shall become due, whether at the stated maturity date, by
acceleration or otherwise, and the full, prompt and unconditional performance
of each and every term and condition of every transaction to be kept and
performed by the Company under the Reimbursement Agreement and the other Loan
Documents (as defined below). This Guaranty is a primary obligation of
Guarantor and shall be a continuing Guaranty. Bank may require Guarantor to
pay and perform its liabilities and obligations under this Guaranty and may
proceed immediately against Guarantor without being required to bring any
proceeding or take any action against the Company, any collateral, security
for the Company's obligations under the Reimbursement Agreement and the other
Loan Documents, any other guarantor or any otherperson, entity or property
prior thereto, the liability of Guarantor hereunder being joint and several,
and independent of and separate from the liability of the Company,
guarantor or person and the availability of such collateral.
Section 2. DEFINITIONS.
2.1. "Affiliate" means First Fidelity Bancorporation and any
of its direct and indirect affiliates and subsidiaries.
2.2. "Liabilities" means, collectively: (i) the repayment of
all sums due under the Reimbursement Agreement (as the same may be amended
from time to time) and the other Loan Documents; (ii) the performance of all
terms, conditions and covenants set forth in the Reimbursement Agreement and
the other Loan Documents; and (iii) all obligations and indebtedness of every
kind and description of the Company to Bank or to any Affiliate, whether
primary or secondary, absolute or contingent, direct or indirect, sole, joint,
several, secured or unsecured, due or to become due, contractual or tortious,
arising by operation of law or otherwise, or now or hereafter existing, and
whether incurred by the Company as principal, surety, endorser, guarantor,
accommodation party or otherwise, including without
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limitation, principal, interest, fees, late charges and expenses, including
attorney's fees and/or allocated fees of Bank's in-house legal counsel.
2.3. "Loan Documents" means, collectively, the Reimbursement
Agreement, that certain Mortgage and Security Agreement of even date herewith
from the Company to Bank (the "Mortgage"), that certain Assignment of Leases
and Rents of even date herewith from the Company to Bank (the "Assignment of
Leases"), UCC-1 financing statements, this Guaranty and any other guaranty,
document, certificate or instrument executed by the Company, Guarantor or any
other obligated party in connection with the Letter of Credit and the Bonds,
together with all amendments, modifications, renewals or extensions thereof.
The Loan Documents are hereby made a part of this Guaranty to the same extent
and with the same effect as if fully set forth herein.
2.4. Capitalized terms not otherwise defined herein shall have
the same meanings as are given to such terms in the Reimbursement Agreement
and the other Loan Documents.
Section 3. REPRESENTATIONS AND WARRANTIES.
Guarantor represents and warrants as of the date hereof and, unless
otherwise indicated, at all times hereafter until the Liabilities are fully
paid and performed, as follows:
3.1. Organization, Powers. Guarantor: (i) is a corporation,
duly organized, validly existing and in good standing under the laws of the
State of Delaware, and is authorized to do business in each other jurisdiction
wherein its ownership of property or conduct of business legally requires
such authorization and in which such qualification is material to the conduct
of its business; (ii) has the power and authority to own its properties
and assets and to carry on its business as now being conducted and as now
contemplated; and (iii) has the power and authority to execute, deliver and
perform all of its obligations under this Guaranty and any other Loan
Document to which it is a party.
3.2. Execution of Guaranty. This Guaranty and all other Loan
Documents to which Guarantor is a party have been duly executed and delivered by
Guarantor. Execution, delivery and performance of this Guaranty and each
other Loan Document to which Guarantor is a party will not: (i) violate any
of its organizational documents, provision of law, order of any court, agency
or other instrumentality of government, or any provision of any indenture,
agreement or other instrument to which it is a party (including without
limitation the Loan Documents) or by which it or any of its properties is
bound; (ii) result in the creation or imposition of any lien, charge or
encumbrance of any nature, other than the liens created by the Loan
Documents; and (iii) require any authorization, consent, approval, license,
exemption of, or filing or registration with, any court or governmental
authority.
3.3. Obligations of Guarantor. This Guaranty and each other
Loan Document to which Guarantor is a party are the legal, valid and binding
obligations of Guarantor, enforceable against it in accordance with their
terms, except as the same may be limited by bankruptcy, insolvency,
reorganization or other laws or equitable principles relating to or affecting
the enforcement of creditors' rights generally. The loans or credit
accommodations made by Bank to the Company and the assumption by Guarantor
of its obligations hereunder
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and under any other Loan Document to which Guarantor is a party will result
in material benefits to Guarantor. This Guaranty was entered into by
Guarantor for commercial purposes.
3.4. Litigation; Compliance with Laws. Except as set forth on
Schedule A attached hereto, there is no action, suit or proceeding at law or
in equity or by or before any governmental authority, agency or other
instrumentality now pending or, to the knowledge of Guarantor, threatened
against or affecting Guarantor or any of its properties or rights which, if
adversely determined, would materially impair or affect: collateral securing
the Liabilities; (ii) Guarantor's right to carry on its now conducted (and as
now contemplated); (iii) its financial condition; or (iv) its capacity to
consummate and perform its obligations under this Guaranty or any other Loan
Document to which Guarantor is a party. Guarantor is in compliance in all
material respects with all laws, ordinances, rules, regulations and
requirements which affect Guarantor, its assets or the operation of its
business, and is not in violation of or in default with respect to any order,
writ, injunction, decree or demand of any court or governmental authority.
3.5. Payment of Taxes. Guarantor has filed or caused to be
filed all federal, state and local tax returns which are required to be filed,
and has paid or caused to be paid all taxes as shown on said returns or on
any assessment received by it, to the extent that such taxes or assessments
have become due, except such that are contested in good faith by Guarantor by
appropriate proceedings and for which adequate reserves have been
established. Guarantor is not aware of any material unasserted claims for
prior taxes against it for which adequate reserves have not been established.
3.6. No Defaults. Guarantor is not (a) in default in the
performance, observance or fulfillment of any of the obligations, covenants
or conditions contained herein or (b) in default in any material respect in
the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any material agreement or to which it is
a party or by which it or any of its properties is bound.
3.7. Financial Statements. All financial statements delivered by
Guarantor to Bank are true, correct and complete in all material respects,
fairly represent Guarantor's financial condition as of the date hereof and
thereof, and no information has been omitted which would make the information
previously furnished misleading or incorrect in any material respect.
3.8. No Material Adverse Change. As of the date hereof, there
has been no material adverse change in the financial condition, operations,
affairs, prospects or business of Guarantor from the date of the most recent
financial statements provided by Guarantor to Bank.
3.9. No Untrue Statements. No Loan Document or other document,
certificate or statement furnished to Bank by or on behalf of Guarantor
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained herein and therein
not misleading. It is specifically understood by Guarantor that all such
statements, representations and warranties shall be deemed to have been relied
upon by Bank as an inducement to make the Loan to the Company.
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3.10. Title to Property. Guarantor has good and
marketable title to all of its properties and assets listed in the most
recent financial statements delivered to Bankon or prior to the date hereof,
except as otherwise expressly described in said financial statements, and
except those properties and assets disposed of since the date of said
financial statements.
Section 4. NO LIMITATION OF LIABILITY.
4.1. Without incurring responsibility to Guarantor, without
impairing or releasing the obligations of Guarantor to Bank, and without
reducing the amount due under the terms of this Guaranty (except to the
extent of amounts actually paid to and legally retained by Bank), Bank may at
any time and from time to time, without the consent of notice to Guarantor,
upon any terms or conditions, and in whole or in part:
4.1.1. Change the manner, place or terms of payment of
(including, without limitation, the interest rate and monthly payment amount),
and/or change or extend the time for payment of, or renew or modify, any of
the Liabilities, any security therefor, or any of the Loan Documents
evidencing same, and the Guaranty herein made shall apply to the Liabilities
and the Loan Documents as so changed, extended, renewed or modified;
4.1.2. Sell, exchange, release, surrender, realize
upon or otherwise deal with in any manner and in any order, any property at
any time pledged, mortgaged or in which a security interest is given to
secure, or however securing, the Liabilities;
4.1.3. Exercise or refrain from exercising any rights
against the Company or others (including Guarantor) or against any security
for the Liabilities or otherwise act or refrain from acting;
4.1.4. Settle or compromise any Liabilities, whether in a
proceeding or not, and whether voluntarily or involuntarily, dispose of any
security therefor (with or without consideration) or settle or compromise any
liability incurred directly or indirectly in respect thereof or hereof, and
subordinate the payment of all or any part thereof to the payment of any
Liabilities, whether or not due, to creditors of the Company other than
Bank and Guarantor;
4.1.5. Apply any sums it receives, by whomever paid or
however realized, to any of the Liabilities;
4.1.6. Add, release, settle, modify or discharge the
obligation of any maker, endorser, guarantor, surety, obligor or any other
party who is in any way obligated for any of the Liabilities;
4.1.7. Accept any additional security for the
Liabilities; and/or
4.1.8. Take any other action which might constitute a
defense available to, or a discharge of, the Company or any other obligated
party (including Guarantor) in respect of the Liabilities.
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4.2. The invalidity, irregularity or unenforceability of all
or any part of the Liabilities or any Loan Document, or the impairment or
loss of any security therefor, whether caused by any action or inaction of
Bank or any Affiliate, or otherwise, shall not affect, impair or be a defense
to Guarantor's obligations under this Guaranty.
Section 5. WAIVERS AND SUBORDINATION.
5.1. Subordination of Subrogation. Guarantor irrevocably
subordinates to the full and indefeasible payment of all of the Liabilities,
any present or future claim, right or remedy to which Guarantor is now or may
hereafter become entitled which arises on account of this Guaranty and/or
from the performance by Guarantor of its obligations hereunder to be
subrogated to Bank's rights against the Company or any other obligated party
and/or any present or future claim, remedy or right to seek contribution
reimbursement, indemnification, exoneration, payment or the like, or
participation in any claim, right or remedy of Bank against the Company or
any security which Bank now has or hereafter acquires, whether or not such
claim, right or remedy arises under contract, in equity, by statute, under
common law or otherwise. If, notwithstanding such subordination, any funds or
property shall be paid or transferred to Guarantor on account of such
subrogation, contribution, reimbursement, exoneration or indemnification at
any time when all of the Liabilities have not been paid in full, Guarantor
shall hold such funds or property in trust for Bank and shall segregate such
funds from other funds of Guarantor and shall forthwith pay over to Bank such
funds and/or property to be applied by Bank to the Liabilities, whether
matured or unmatured, in accordance with the terms of the Reimbursement
Agreement and the Loan Documents.
5.2. Waiver of Remedies. To the extent permitted by law,
Guarantor waives the right of inquisition on any real estate levied on,
voluntarily condemns the same, authorizes the prothonotary or clerk to enter
upon the writ of execution this voluntary condemnation and agrees that such
real estate may be sold on a writ of execution; and also waives any relief
from any appraisement, stay or exemption law of any state now in force or
hereafter enacted. In addition, Guarantor waives the right to marshalling of
the Company's assets and any other protection granted by law to guarantors,
now or hereafter in effect with respect to any action or proceeding brought
by Bank against it. The parties hereto acknowledge and agree, however, that
notwithstanding the waivers set forth in this Section 5.2, in the event the
Guarantor provides to the Bank cash collateral in the amounts and
otherwise as required pursuant to Section 7.2(c) of the Reimbursement
Agreement, the Bank agrees to refrain from exercising any such rights against
the Guarantor's non-cash collateral.
5.3. Waiver of Defenses. Guarantor irrevocably waives all
claims of waiver, release, surrender, alteration or compromise and all
defenses, set-offs,counterclaims, recoupments, reductions, limitations or
impairments other than (a) payment in full of the Liabilities, and (b) such
defenses as are assertable by the Company and not otherwise specifically
waived pursuant to any other provision of this Guaranty.
5.4. Waiver of Notice. Guarantor waives notice of acceptance
of this Guaranty and notice of the Liabilities and waives notice of default,
non-payment, partial payment, presentment, demand, protest, notice of protest
or dishonor, and all other notices to which Guarantor might otherwise be
entitled or which might be required by law to be given by Bank.
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Section 6. COVENANTS.
6.1. Merger, Restructure. Guarantor shall not merge into,
consolidate with or into, or sell, assign, lease or otherwise dispose of
(whether in one transaction or a series of transactions) all or substantially
all of its assets (now owned or hereafter acquired) to any person or entity,
without the prior written consent of Bank.
6.2. Maintenance of Business. Guarantor shall: (i) continue to
remain in and operate substantially the same type of business presently engaged
in by it; (ii) not suspend transaction of its usual business; (iii) conduct
its business in an orderly, efficient and customary manner; (iv) comply with
all laws, ordinances, rules, regulations and requirements and shall maintain
its business, properties and assets necessary to conduct business in
compliance with all applicable governmental laws, ordinances, approvals, rules,
regulations and requirements, including without limitation, zoning, sanitary,
pollution, building, environmental and safety laws and ordinances, and the
rules and regulations promulgated thereunder; and (v) not remove, demolish,
materially alter, discontinue the use of, sell, transfer, assign, hypothecate,
pledge or otherwise dispose of any part of its properties or assets necessary
for the continuance of its business, as presently conducted and as presently
contemplated, other than (1) in the normal course of its business and (2) in
connection with additional financing in relation to real property (other than
the Mortgaged Premises, as defined in the Mortgage) from time to time owned
by the Guarantors; provided, however, that the foregoing limitations shall
not prohibit the Guarantor from engaging in additional activities related to
its present corporate activities. To the extent that Guarantor controls the
Company, Guarantor will not take or cause to be taken any inaction which
will violate or cause a default or Event of Default under any of the Documents.
6.3. Books and Records. Guarantor shall keep and maintain
complete and accurate books and records in accordance with generally accepted
accounting principles consistently applied, reflecting all of the financial
affairs of Guarantor. Guarantor shall permit representatives of Bank to
examine and audit Guarantor's (and its parent's and its subsidiaries') books
and records, to inspect Guarantor's facilities and properties, and to
discuss Guarantor's financial condition and the contents of Guarantor's
financial statements with Guarantor's accountants.
6.4. Financial Statements; Compliance Certificate.
6.4.1. Guarantor shall furnish to Bank the following
financial information, in each instance prepared in accordance with generally
accepted accounting principles consistently applied:
(a) Annual Report: as soon as available and in any
event within 105 days after the end of each fiscal year, an annual audited
consolidated financial statement for the Guarantor and its Consolidated
Subsidiaries (including the Company) to the Trustee and to the Bank during
the term of the Letter of Credit [including therein the balance sheet of the
Guarantor and its Consolidated Subsidiaries as of the end of such fiscal year
and the statements of operations of the Guarantor and Subsidiaries for such
fiscal year, setting forth in comparative form the corresponding figures for
the preceding fiscal year,]
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prepared in accordance with GAAP consistentlly applied, all in reasonable
detail and in each case duly certified by independent certified public
accountants of recognized standing acceptable to the Bank, and by the chief
financial or chief accounting officer of the Guarantor, together with a
certificate of said accounting firm stating that, in the statements of the
Guarantor and its consolidated subsidiaries (including the Company) for
such fiscal year, it did not discover that an Event of Default (or an event
which, with notice of the lapse of time or both, would constitute an Event of
Default) had occurred at any time during such fiscal year, or, if an Event of
Default (or such other event) did occur, the nature thereof.
(b) Quarterly Report: as soon as available and in
any event within sixty (60) days after the end of each of the first three (3)
quarters of each fiscal year of the Guarantor and its consolidated
subsidiaries (including the Company), during the term of the Letter of Credit,
management prepared consolidated financial statements, including a balance
sheet, income statement and cash flow statement prepared in accordance with
GAAP, in form and substance satisfactory to the Bank for the period
commencing at the end of the previous fiscal year and ending with the end of
such quarter, to the Trustee and to the Bank during the term of the Letter of
Credit.
(c) Management Letters: the Guarantor will submit
annual management letters, if any, for the Guarantor, from the independent
certified public accountants for the Guarantor.
(d) SEC Reports. Promptly after sending or filing,
copies of all proxy statements, financial statements and other notices and
reports to the Trustee and the Bank when the Guarantor sends to its
shareholders as well as copies of all regular, annual, periodic and special
reports and all Registration Statements filed with the Securities and Exchange
Commission or similar government authority or with any security exchange
succeeding to the functions of the Securities and Exchange Commission
(other than those on Form S-8), including, without limitation, Forms 10Q and
10K.
6.4.2. Guarantor shall furnish to Bank, with each set
of financial statements described in Section 6.4.1(a)-(c) above, a compliance
certificate signed by Guarantor's chief financial or chief accounting officer
(a) certifying that: (i) all representations and warranties of Guarantor set
forth in this Guaranty or any other Loan Document remain true and correct;
(ii) none of the covenants of Guarantor contained in this or any other
Loan Document has been breached; and (iii) to its knowledge, no event occurred
which, with the giving of notice or the passage of time, or both, would
constitute an Event of Default under this Guaranty or any other Loan
Document. In addition, Guarantor shall promptly notify Bank of the occurrence
of any default, Event of Default, adverse litigation or material adverse
change in its financial condition; and (b) showing the calculations and
financial covenants set forth in Section 6.8 hereof.
6.5. Taxes and Other Charges. Guarantor shall prepare and timely
file all federal, state and local tax returns required to be filed by Guarantor
and promptly pay and discharge all taxes, assessments, water and sewer rents,
and other governmental charges imposed upon Guarantor or on any of Guarantor's
property when due, but in no event after interest or penalties commence to
accrue thereon or become a lien upon such property, except for those taxes,
assessments, water and sewer rents, and other governmental charges then
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being contested in good faith by Guarantor by appropriate proceedings and for
which Guarantor established on its books, a reserve for the payment thereof
in accordance with GAAP, and so long as such contest: (i) operates to prevent
collection, stay any proceedings which may be instituted to enforce payment
of such item, and prevent a sale of Guarantor's property to pay such item;
(ii) is maintained and prosecuted with due diligence; and (iii) shall not have
been terminated or discontinued adversely to Guarantor. Guarantor shall submit
to Bank, upon request, an affidavit signed by Guarantor certifying that all
federal, state and local income tax returns have been filed to date and all
real property taxes, assessments and other governmental charges with respect to
Guarantor's properties have been paid to date.
6.6. Security Interest in Property of Guarantor. Guarantor
hereby grants to Bank a lien upon and continuing security interest in all
property of Guarantor, now or hereafter in the possession of Bank or any
Affiliate in any capacity whatsoever, including, without limitation, any
balance or share of any deposit, trust or agency account (whether general or
special, time or demand, matured or unmatured, fixed or unliquidated), and all
property and assets of Guarantor now or hereafter subject to a security
agreement, pledge, mortgage, assignment or other document or agreement granting
any Affiliate a security interest therein or lien or encumbrance thereon
("Guarantor's Property"), as security for the performance of this Guaranty and
the payment of the Liabilities, which security interest shall be enforceable
and subject to all the provisions of this Guaranty, as if Guarantor's Property
were specifically pledged hereunder, and the proceeds of Guarantor's Property
may be applied to payment of the Liabilities at any time following the
occurrence of a default or Event of Default under the Reimbursement Agreement,
this Guaranty or any other Loan Document.
6.7. Indemnification.
6.7.1. Guarantor hereby indemnifies and agrees to
protect, defend and hold harmless Bank, any entity which "controls" Bank within
the meaning of Section 15 of the Securities Act of 1933, as amended, or is
under common control with Bank, and any member, officer, director, official,
agent, employee or attorney of Bank, and their respective heirs,
administrators, executors, successors and assigns (collectively, the
"Indemnified Parties"), from and against any and all losses, damages,
expenses or liabilities of any kind or nature and from any suits, claims or
demands, including reasonable attorneys' fees incurred in investigating or
defending such claim, suffered by any of them and caused by, relating to,
arising out of, resulting from, or in any way connected with the Loan
Documents or the transactions contemplated therein (unless determined by a
final judgment of a court of competent jurisdiction to have been caused
solely by the gross negligence or willful misconduct of the Indemnified
Parties) including, without limitation: (i) disputes with any architect,
general contractor, subcontractor, materialman or supplier, or on account of
any act or omission to act by Bank in connection with the Mortgaged Premises;
losses, damages (including consequential damages), expenses or liabilities
sustained by Bank in connection with any environmental inspection, monitoring,
sampling or cleanup of the Mortgaged Premises required or mandated by any
applicable environmental law; (iii) any untrue statement of a material fact
contained in information submitted to Bank by Guarantor or the omission of any
material fact necessary to be stated therein in order to make such
statement not misleading or incomplete; (iv) the failure of Guarantor
to perform any obligations herein required to be performed by
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Guarantor; and (v) the ownership, construction, occupancy, operation, use or
maintenance of the Mortgaged Premises.
6.7.2. In case any action shall be brought against
Bank or any other Indemnified Party in respect to which indemnity may be sought
against Guarantor, Bank or such other Indemnified Party shall promptly notify
Guarantor and Guarantor shall assume the defense thereof, including the
employment of counsel selected by Guarantor and satisfactory to Bank, the
payment of all costs and expenses and the right to negotiate and consent to
settlement. The failure of Bank to so notify Guarantor shall of any liability
which it may have under the foregoing indemnification provisions or from any
liability which it may otherwise have to Bank or any of the other Indemnified
Parties. Bank shall have the right, at its sole option, to employ separate
counsel in any such action and to participate in the defense thereof, all at
Guarantor's sole cost and expense. Guarantor shall not be liable for any
settlement of any such action effected without its consent, but if settled
with Guarantor's consent, or if there be a final judgment for the claimant in
any such action, Guarantor agrees to indemnify and save harmless Bank from
and against any loss or liability by reason of such settlement or judgment.
6.7.3. The provisions of this Section 6.7. shall
survive the repayment or other satisfaction of the Liabilities.
6.8. Financial Covenants. Guarantor shall comply with the
financial covenants, if any, hereinafter provided.
6.8.1. Current Assets and Liabilities. The Guarantor
and its Consolidated Subsidiaries will maintain Current Assets in an amount
which is not less than one hundred twenty percent (120%) of Current Liabilities.
6.8.2. Tangible Net Worth. The Guarantor and its
Consolidated Subsidiaries' Consolidated Tangible Net Worth as at the end of
any of its fiscal years during the term of this Agreement shall be equal to
not less than (a) One Hundred Forty Million Dollars ($140,000,000) plus (b) Six
Million Dollars ($6,000,000) multiplied by the number of full fiscal years
which have elapsed since the end of the 1994 fiscal year. If the Guarantor
changes its fiscal year, the minimum Tangible Net Worth as at the end of the
new fiscal year end shall be equal to the minimum Tangible Net Worth which
would have been required had the fiscal year end not been changed, plus Six
Million Dollars ($6,000,000) multiplied by a fraction the numerator of which is
the number of months between the previous fiscal year end and the new fiscal
year end and the denominator of which is twelve (12).
6.8.3. Total Indebtedness. The Guarantor and its
Consolidated Subsidiaries will not permit total indebtedness of the Guarantor
and its Consolidated Subsidiaries in the aggregate to exceed one hundred eighty
percent (180%) of such Consolidated group's Tangible Net Worth.
6.8.4. Long-Term Liabilities. The Guarantor and its
Consolidated Subsidiaries will not permit Long-Term Liabilities to exceed sixty
percent (60%) of the Capitalization.
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6.8.5. Indebtedness for Borrowed Money. Neither the
Guarantor nor the Company will borrow any funds except pursuant to the
following types of borrowings: (a) borrowings to finance the acquisition of
real or personal property (including capital leases) secured by a security
interest encumbering such personal property, provided that the amount of any
such encumbrance does not exceed the greater of the purchase price or fair
market value of such property, (b) borrowings from Bank hereunder, and (c)
the indebtedness described on Schedule B attached hereto. The foregoing
exceptions, in the aggregate, are subject, however, to the provisions of
Sections 6.8.2 and 6.8.3 hereof. Nothing herein contained shall be deemed in
any way to limit the right and ability of the Guarantor and the Company to post
letters of credit or to incur trade indebtedness in the ordinary course of
their respective businesses, to the extent such activities are otherwise
permitted under this Agreement.
Section 7. EVENTS OF DEFAULT.
Each of the following shall constitute a default (each, an
"Event of Default") hereunder:
7.1. Non-payment when due of any sum required to be paid to Bank
by the Company or the Guarantor under any of the Loan Documents;
7.2. A breach of any covenant contained in Section 6.8 hereof;
7.3. A breach by Guarantor of any other term, covenant,
condition, obligation or agreement under this Guaranty, and the continuance
of such breach for a period of thirty (30) days after written notice thereof
shall have been given to Guarantor;
7.4. Any representation or warranty made by Guarantor in this
Guaranty shall prove to be false, incorrect or misleading in any material
respect as of the date when made; or
7.5. An Event of Default under any of the other Loan Documents.
Section 8. REMEDIES.
Upon an Event of Default, all liabilities of Guarantor hereunder
shall become immediately due and payable without demand or notice and, in
addition to any other remedies provided by law, Bank may:
8.1. Enforce the obligations of Guarantor under this Guaranty.
8.2. To the extent permitted by law, and regardless of the
adequacy of any collateral or other means of obtaining repayment of the
Liabilities, Bank shall have the right immediately and without notice or
other act, and is specifically authorized hereby, to setoff against any of
the Liabilities any sum owed by Bank or any Affiliate in any capacity to
Guarantor whether due or not, or any of Guarantor's Property, even if
effecting such setoff results in a loss or reduction of interest to Guarantor
or the imposition of a penalty applicable to the early withdrawal of time
deposits. If such setoff creates an overdraft in any account held by
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Bank or any Affiliate, Bank may charge Guarantor an administrative fee in an
amount established from time to time by Bank. Bank shall be deemed to have
exercised such right of setoff and to have made a charge against Guarantor's
Property immediately upon the occurrence of the Event of Default, even though
the actual book entries may be made at some time subsequent.
8.3. Perform any covenant or agreement of Guarantor in default
hereunder (but without obligation to do so) and in that regard pay such money
as may be required or as Bank may reasonably deem expedient. Any costs,
expenses or fees, including reasonable attorneys' fees and costs, incurred by
Bank in connection with the foregoing shall be included in the Liabilities
guaranteed hereby and secured by the other Loan Documents, and shall be due
and payable on demand, together with interest at three percent (3%) per
annum above the rate of interest then in effect under the Reimbursement
Agreement, such interest to be calculated from the date of such advance to the
date of repayment thereof. Any such action by Bank shall not be deemed to be a
waiver or release of Guarantor hereunder and shall be without prejudice to
any other right or remedy of Bank.
8.4. From time to time and without advertisement or demand upon
or notice to the Company or Guarantor of right of redemption, to sell, re-sell,
assign, transfer and deliver all or part of Guarantor's Property, at any
brokers' board or exchange or at public or private sale, for cash or on credit
or for future delivery, and in connection therewith may grant options and may
impose reasonable conditions such as requiring any purchaser of any
security so held to represent that such security is purchased for investment
purposes only. Upon each such sale, Bank may purchase all or any part of
Guarantor's Property being sold, free from and discharged of all trusts,
claims, rights of redemption and equities of Guarantor. In case of each such
sale, or of any proceeding to collect any of the Liabilities, Guarantor
shall pay all costs and expenses of every kind for collection, sale or
delivery, including reasonable attorneys' fees, and after deducting such costs
and expenses from the proceeds of sale or collection, Bank may apply any
residue to the Liabilities and Guarantor shall continue to be liable for any
deficiency, with interest.
Section 9. CONTINUING ENFORCEMENT OF GUARANTY
9.1. If, after receipt of any payment of all or any part of the
Liabilities, Bank is compelled or agrees, for settlement purposes, to
surrender such payment to any person or entity for any reason (including,
without limitation, a determination that such payment is void or voidable as
a preference or fraudulent conveyance, an impermissible setoff, or a
diversion of trust funds), then this Guaranty and the other Loan Documents
shall continue in full force and effect or be reinstated, as the case may be,
and Guarantor shall be liable for, and shall indemnify, defend and hold
harmless Bank with respect to the full amount so surrendered. The provisions
of this Section shall survive the termination of this Guaranty and the other
Loan Documents and shall remain effective notwithstanding the payment of the
Liabilities, the termination of the Reimbursement Agreement, the cancellation
of the Letter of Credit, this Guaranty or any other Loan Document, the release
of any security interest, lien or encumbrance securing the Liabilities or any
other action which Bank may have taken in reliance upon its receipt of such
payment. Any cancellation, release or other such action shall be deemed to
have been conditioned upon any payment of the Liabilities become final and
irrevocable.
-13- 301
9.2. Settlement of any claim by Bank against the Company,
whether in any proceeding or not, and whether voluntary or involuntary, shall
not reduce the amount due under the terms of this Guaranty except to the
extent of the amount actually paid by the Company or any other obligated
party and legally retained by Bank in connection with the settlement.
Section 10. MISCELLANEOUS.
10.1. Disclosure of Financial Information. Bank is hereby
authorized to disclose any financial or other information about Guarantor to
any regulatory body or agency having jurisdiction over Bank or to any present,
future or prospective participant or successor in interest in any loan or other
financial accommodation made by Bank to the Company or Guarantor. The
information provided may include, without limitation, amounts, terms,
balances, payment history, return item history and any financial or other
information about Guarantor. Guarantor agrees to indemnify, defend, release
Bank, and hold Bank harmless, at Guarantor's cost and expense, from and against
any and all lawsuits, claims, actions, proceedings or suits against Bank or
against Guarantor and Bank, arising out of or relating to Bank's reporting or
disclosure of such information. Such indemnity shall survive the repayment
or other satisfaction of the Liabilities.
10.2. Remedies Cumulative. The rights and remedies of
Bank, as provided herein and in any other Loan Document, and all warrants of
attorney contained herein and therein, shall be cumulative and concurrent,
may be pursued separately, successively or together, may be exercised as
often as occasion therefor shall arise, and shall be in addition to any other
rights or remedies conferred upon Bank at law or in equity. The failure, at
any one or more times, of Bank to exercise any such right or remedy shall in no
no event be construed as a waiver or release thereof. Bank shall have the
right to take any action it deems appropriate without the necessity of
resorting to any collateral securing this Guaranty.
10.3. Integration. This Guaranty and the other Loan Documents
constitute the sole agreement of the parties with respect to the transaction
contemplated hereby and supersede all oral negotiations and prior writings with
respect thereto.
10.4. Attorney's Fees and Expenses. If Bank retains the
services of counsel by reason of a claim of a default or an Event of Default
hereunder or under any of the other Loan Documents, or on account of any matter
involving this Guaranty, or for examination of matters subject to Bank's
approval under the Loan Documents, all costs of suit and all reasonable
attorneys' fees (and/or allocated fees of Bank's in-house legal counsel) and
such other reasonable expenses so incurred by Bank shall demand, become due
and payable and shall be secured hereby.
10.5. No Implied Waiver. Bank shall not be deemed to have
modified or waived any of its rights or remedies hereunder unless such
modification or waiver is in writing and signed by Bank, and then only to the
extent specifically set forth therein. A waiver in one event shall not be
construed as continuing or as a waiver of or bar to such right or remedy on a
subsequent event.
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10.6. No Third Party Beneficiary. Guarantor and Bank do not
intend the benefits of this Guaranty to inure to any third party and
notwithstanding any term, condition or provision hereof or of any other Loan
Document to the contrary, no third party (including the Company) shall have any
status, right or entitlement under this Guaranty.
10.7. Partial Invalidity. The invalidity or
unenforceability of any one or more provisions of this Guaranty shall not
render any other provision invalid or unenforceable. In lieu of any invalid
or unenforceable provision, there shall be added automatically a valid and
enforceable provision as similar in terms to such invalid or unenforceable
provision as may be possible.
10.8. Binding Effect. The covenants, conditions, waivers,
releases and agreements contained in this Guaranty shall bind, and the benefits
thereof shall inure to, the parties hereto and their respective heirs,
executors, administrators, successors and assigns; provided, however, that this
Guaranty cannot be assigned by Guarantor without the prior written consent of
Bank, and any such assignment or attempted assignment by Guarantor shall be
void and of no effect with respect to Bank.
10.9. Modifications. This Guaranty may not be supplemented,
extended, modified or terminated except by an agreement in writing and signed
by Guarantor and Bank.
10.10. Sales or Participations. Bank may from time to time
sell or assign, in whole or in part, or grant participations in the Letter of
Credit or the Reimbursement Agreement, and/or the obligations evidenced
thereby. The holder of any such sale, assignment or participation, if the
applicable agreement between Bank and such holder so provides, shall be:
(a) entitled to all of the rights, obligations and benefits of Bank
and (b) deemed to hold and may exercise the rights of setoff or banker's lien
with respect to any and all obligations of such holder to Guarantor, in each
case as fully as though Guarantor were directly indebted to such holder. Bank
may in its discretion give notice to Guarantor of such sale, assignment or
participation; however, the failure to give such notice shall not affect any
of Bank's or such holder's rights hereunder.
10.11. Jurisdiction. Guarantor irrevocably appoints each and
every owner, partner and/or officer of Guarantor as its attorneys upon whom
may be served, by regular or certified mail at the address set forth below, any
notice, process or pleading in any action or proceeding against it arising out
of or in connection with this Guaranty or any other Loan Document; and
Guarantor hereby consents that any action or proceeding against it be
commenced and maintained in any court within the State of New Jersey or in the
United States District Court for any District of New Jersey by service of
process on any such owner, partner and/or officer; and Guarantor agrees that the
courts of the State of New Jersey and the United States District Court for any
District of New Jersey shall have jurisdiction with respect to the subject
matter hereof and the person of Guarantor and all collateral securing the
obligations of Guarantor. Guarantor agrees not to assert proceeding initiated
by Bank based upon improper venue or inconvenient forum. Guarantor agrees
that any action brought by Guarantor shall be commenced and maintained only in
a court in the federal judicial district or county in which Bank has its
principal place of business in New Jersey.
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10.12. Notices. All notices and communications under this
Guaranty shall be in writing and shall be given by either (a) hand delivery,
(b) first class mail (postage prepaid), or (c) reliable overnight commercial
courier (charges prepaid) to the addresses listed in this Guaranty. Notice
shall be deemed to have been given and received: (i) if by hand delivery,
upon delivery; (ii) if by mail, three (3) calendar days after the date first
deposited in the United States mail; and (iii) if by overnight courier, on
the date scheduled for delivery. A party may change its address by giving
written notice to the other party as specified herein.
10.13. Governing Law. This Guaranty shall be governed by and
construed in accordance with the substantive laws of the State of New Jersey
without reference to conflict of laws principles.
10.14. Joint and Several Liability. If Guarantor consists of
more than one person or entity, the word "Guarantor" shall mean each of them
and their liability shall be joint and several.
10.15. Waiver of Jury Trial. GUARANTOR AND BANK AGREE THAT
ANY SUIT, ACTION OR PROCEEDING, WHETHER CLAIM OR COUNTERCLAIM,
BROUGHT BY BANK OR GUARANTOR, ON OR WITH RESPECT TO THIS GUARANTY OR
ANY OTHER LOAN DOCUMENT OR THE DEALINGS OF THE PARTIES WITH RESPECT
HERETO OR THERETO, SHALL BE TRIED ONLY BY A COURT AND NOT BY A JURY.
BANK AND GUARANTOR EACH HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY SUCH SUIT, ACTION
OR PROCEEDING. FURTHER, GUARANTOR WAIVES ANY RIGHT IT MAY HAVE TO
CLAIM OR RECOVER, IN ANY SUCH SUIT, ACTION OR PROCEEDING, ANY SPECIAL,
EXEMPLARY, PUNITIVE, CONSEQUENTIAL OR OTHER DAMAGES OTHER THAN, OR IN
ADDITION TO, ACTUAL DAMAGES. GUARANTOR ACKNOWLEDGES AND AGREES
THAT THIS SECTION IS A SPECIFIC AND MATERIAL ASPECT OF THIS GUARANTY AND
THAT BANK WOULD NOT EXTEND CREDIT TO THE COMPANY IF THE WAIVERS SET
FORTH IN THIS SECTION WERE NOT A PART OF THIS GUARANTY.
IN WITNESS WHEREOF, Guarantor, intending to be legally bound, has duly
executed and delivered this Guaranty and Suretyship Agreement as of the day
and year first above written.
ATTEST: BURLINGTON COAT FACTORY WAREHOUSE
CORPORATION
By:______________________________ By:_____________________________________
Name: Xxxxxx X. XxXxxxx, Xx. Name: Xxxx X. Xxxxx
Title: Assistant Secretary Title: Vice President
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