GUARANTY
(Corporate)
New York, New York May 19, 1998
FOR VALUE RECEIVED, and in consideration of loans made or to be made or
credit otherwise extended or to be extended by Fleet Capital Corporation
("Fleet"), each of the financial institutions (collectively, "Lenders") named in
or which hereafter become a party to the Loan Agreement (as hereinafter defined)
and Fleet as agent for Lenders (in such capacity "Agent") to or for the account
of Carpet Barn, Inc. ("Borrower") from time to time and at any time and for
other good and valuable consideration and to induce Agent and Lenders, in their
discretion, to make such loans or extensions of credit and to make or grant such
renewals, extensions, releases of collateral or relinquishments of legal rights
as Agent and Lenders may deem advisable, the undersigned (and each of them if
more than one, the liability under this Guaranty being joint and several)
unconditionally guaranties to Agent for its own benefit and for the ratable
benefit of Lenders, their successors, endorsees and assigns the prompt payment
when due (whether by acceleration or otherwise) of all present and future
obligations and liabilities of any and all kinds of Borrower to Agent or Lenders
and of all instruments of any nature evidencing or relating to any such
obligations and liabilities upon which Borrower is or may become liable to Agent
or Lenders, whether incurred by Borrower as maker, endorser, drawer, acceptor,
guarantor, accommodation party or otherwise, and whether due or to become due,
secured or unsecured, absolute or contingent, joint or several, and however or
whenever acquired by Agent or Lenders, whether arising under, out of, or in
connection with that certain Loan and Security Agreement by and among Borrower,
Lenders and Agent (as amended, supplemented, modified or restated from time to
time, the "Loan Agreement") or any documents, instruments or agreements relating
to or executed in connection with the Loan Agreement or any documents,
instruments or agreements referred to therein (together with the Loan Agreement,
the "Loan Documents"), (all of which are herein collectively referred to as the
"Obligations"), and irrespective of the genuineness, validity, regularity or
enforceability of such Obligations, or of any instrument evidencing any of the
Obligations or of any collateral therefor or of the existence or extent of such
collateral, and irrespective of the allowability, allowance or disallowance of
any or all of the Obligations in any case commenced by or against Borrower under
Title 11, United States Code, including, without limitation, obligations or
indebtedness of Borrower for post-petition interest, fees, costs and charges
that would have accrued or been added to Borrower's Obligations to Agent and the
Lenders but for the commencement of such case. Terms defined in the Loan
Agreement shall have the same meanings herein, unless otherwise herein expressly
provided. In furtherance of the foregoing, the undersigned xxxxxx agrees as
follows:
1. No Impairment. Agent and Lenders may at any time and from time to
time, either before or after the maturity thereof, without notice to or further
consent of the undersigned, extend the time of payment of, exchange or surrender
any collateral for, renew or extend any of the Obligations or increase or
decrease the interest rate thereon, and may also make any agreement with
Borrower or with any other party to or person liable on any of the Obligations,
or interested therein, for the extension, renewal, payment, compromise,
discharge or release thereof, in whole or in part, or for any modification of
the terms thereof or of any agreement between or among Agent, Lenders
and Borrower or any such other party or person, or make any election of rights
Agent and Lenders may deem desirable under the United States Bankruptcy Code, as
amended, or any other federal or state bankruptcy, reorganization, moratorium or
insolvency law relating to or affecting the enforcement of creditors' rights
generally (any of the foregoing, an "Insolvency Law") without in any way
impairing or affecting this Guaranty. This instrument shall be effective
regardless of the subsequent incorporation, merger or consolidation of Borrower,
or any change in the composition, nature, personnel or location of Borrower and
shall extend to any successor entity to Borrower, including a debtor in
possession or the like under any Insolvency Law.
2. Guaranty Absolute. The undersigned guarantees that the Obligations
will be paid strictly in accordance with the terms of the Loan Agreement and/or
any other document, instrument or agreement creating or evidencing the
Obligations, regardless of any law, regulation or order now or hereafter in
effect in any jurisdiction affecting any of such terms or the rights of Borrower
with respect thereto. The undersigned hereby knowingly accepts the full range of
risk encompassed within a contract of "continuing guaranty" which risk includes
the possibility that Borrower will contract additional indebtedness for which
the undersigned may be liable hereunder after Xxxxxxxx's financial condition or
ability to pay its lawful debts when they fall due has deteriorated, whether or
not Borrower has properly authorized incurring such additional indebtedness. The
undersigned acknowledges that (i) no oral representations, including any
representations to extend credit or provide other financial accommodations to
Borrower, have been made by Agent or any Lender to induce the undersigned to
enter into this Guaranty and (ii) any extension of credit to the Borrower shall
be governed solely by the provisions of the Loan Agreement. The liability of the
undersigned under this Guaranty shall be absolute and unconditional, in
accordance with its terms, and shall remain in full force and effect without
regard to, and shall not be released, suspended, discharged, terminated or
otherwise affected by, any circumstance or occurrence whatsoever, including,
without limitation: (a) any waiver, indulgence, renewal, extension, amendment or
modification of or addition, consent or supplement to or deletion from or any
other action or inaction under or in respect of the Loan Documents or any other
instruments or agreements relating to the Obligations or any assignment or
transfer of any thereof; (b) any lack of validity or enforceability of any Loan
Document or other documents, instruments or agreements relating to the
Obligations or any assignment or transfer of any thereof; (c) any furnishing of
any additional security to Agent for the ratable benefit of the Lenders or its
assignees or any acceptance thereof or any release of any security by Agent or
its assignees; (d) any limitation on any party's liability or obligation under
the Loan Documents or any other documents, instruments or agreements relating to
the Obligations or any assignment or transfer of any thereof or any invalidity
or unenforceability, in whole or in part, of any such document, instrument or
agreement or any term thereof; (e) any bankruptcy, insolvency, reorganization,
composition, adjustment, dissolution, liquidation or other like proceeding
relating to Borrower, or any action taken with respect to this Guaranty by any
trustee or receiver, or by any court, in any such proceeding, whether or not the
undersigned shall have notice or knowledge of any of the foregoing; (f) any
exchange, release or nonperfection of any collateral, or any release, or
amendment or waiver of or consent to departure from any guaranty or security,
for all or any of the Obligations; or (g) any other circumstance which might
otherwise constitute a defense available to, or a discharge of, the undersigned.
Any amounts due from the undersigned to Agent or any Lender shall bear interest
until such amounts are paid in full at the highest rate then applicable to the
Obligations of Borrower to Lenders under the Loan Agreement. Obligations include
post-petition interest whether or not allowed or allowable.
2
3. Waivers. (a) This Guaranty is a guaranty of payment and not of
collection. Neither Agent nor any Lender shall be under any obligation to
institute suit, exercise rights or remedies or take any other action against
Borrower or any other person liable with respect to any of the Obligations or
resort to any collateral security held by it to secure any of the Obligations as
a condition precedent to the undersigned being obligated to perform as agreed
herein and the undersigned hereby waives any and all rights which it may have by
statute or otherwise which would require Agent or any Lender to do any of the
foregoing. The undersigned further consents and agrees that neither Agent nor
Xxxxxxx shall be under any obligation to marshal any assets in favor of the
undersigned, or against or in payment of any or all of the Obligations. The
undersigned hereby waives any rights to interpose any defense, counterclaim or
offset of any nature and description which it may have or which may exist
between and among Agent, Lenders, Borrower and/or the undersigned with respect
to the undersigned's obligations under this Guaranty, or which Borrower may
assert on the underlying debt, including but not limited to failure of
consideration, breach of warranty, fraud, payment (other than cash payment in
full of the Obligations), statute of frauds, bankruptcy, infancy, statute of
limitations, accord and satisfaction, and usury.
(b) The undersigned further waives (i) notice of the acceptance of this
Guaranty, of the making of any such loans or extensions of credit, and of all
notices and demands of any kind to which the undersigned may be entitled,
including, without limitation, notice of adverse change in Borrower's financial
condition or of any other fact which might materially increase the risk of the
undersigned; and (ii) presentment to or demand of payment from anyone whomsoever
liable upon any of the Obligations, protest, notices of presentment, non-payment
or protest and notice of any sale of collateral security or any default of any
sort.
(c) Notwithstanding any payment or payments made by the undersigned
hereunder, or any setoff or application of funds of the undersigned by Agent or
any Lender, the undersigned shall not be entitled to be subrogated to any of the
rights of Agent or any Lender against Borrower or against any collateral or
guarantee or right of offset held by Agent or any Lender for the payment of the
Obligations, nor shall the undersigned seek or be entitled to seek any
contribution or reimbursement from Borrower in respect of payments made by the
undersigned hereunder, until all amounts owing to Agent and each Lender by
Borrower on account of the Obligations are paid in full and the Loan Agreement
has been terminated. If, notwithstanding the foregoing, any amount shall be paid
to the undersigned on account of such subrogation rights at any time when all of
the Obligations shall not have been paid in full and the Loan Agreement shall
not have been terminated, such amount shall be held by the undersigned in trust
for Agent and Lenders, segregated from other funds of the undersigned, and shall
forthwith upon, and in any event within two (2) business days of, receipt by the
undersigned, be turned over to Agent for the ratable benefit of the Lenders in
the exact form received by the undersigned (duly endorsed by the undersigned to
Agent, if required), to be applied against the Obligations, whether matured or
unmatured, in such order as Agent and Lenders may determine, subject to the
provisions of the Loan Agreement. Any and all present and future debts and
obligations of Borrower to any of the undersigned are hereby waived and
postponed in favor of, and subordinated to the full payment and performance of,
all present and future debts and obligations of Borrower to Agent and Lenders.
4. Security. All sums at any time to the credit of the undersigned and
any property of
3
the undersigned in Agent's or any Lender's possession or in the possession of
any bank, financial institution or other entity that directly or indirectly,
through one or more intermediaries, controls or is controlled by, or is under
common control with, Agent or any Lender (each such entity, an "Affiliate")
shall be deemed held by Agent, such Lender or such Affiliate, as the case may
be, as security for any and all of the undersigned's obligations to Agent and
Lenders and to any Affiliate of Agent or any Lender, no matter how or when
arising and whether under this or any other instrument, agreement or otherwise.
5. Representations and Warranties. The undersigned hereby represents
and warrants (all of which representations and warranties shall survive until
all Obligations are indefeasibly satisfied in full and there remain no
outstanding commitments under the Loan Agreement), that:
(a) Corporate Status. The undersigned is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has full power, authority and legal right to own its property and
assets and to transact the business in which it is engaged.
(b) Authority and Execution. The undersigned has full power,
authority and legal right to execute and deliver, and to perform its obligations
under, this Guaranty and has taken all necessary corporate and legal action to
authorize the execution, delivery and performance of this Guaranty.
(c) Legal, Xxxxx and Binding Character. This Guaranty
constitutes the legal, valid and binding obligation of the undersigned
enforceable in accordance with its terms, except as enforceability may be
limited by applicable Insolvency Law.
(d) Violations. The execution, delivery and performance of
this Guaranty will not violate any requirement of law applicable to the
undersigned or any material contract, agreement or instrument to which the
undersigned is a party or by which the undersigned or its property is bound or
result in the creation or imposition of any mortgage, lien or other encumbrance
other than to Agent for the ratable benefit of Lenders on any of the property or
assets of the undersigned pursuant to the provisions of any of the foregoing.
(e) Consents or Approvals. No consent of any other Person
(including, without limitation, any creditor of the undersigned) and no consent,
license, permit, approval or authorization of, exemption by, notice or report
to, or registration, filing or declaration with, any governmental authority is
required in connection with the execution, delivery, performance, validity or
enforceability of this Guaranty.
(f) Litigation. No litigation, arbitration, investigation or
administrative proceeding of or before any court, arbitrator or governmental
authority, bureau or agency is currently pending or, to the best knowledge of
the undersigned, threatened (i) with respect to this Guaranty or any of the
transactions contemplated by this Guaranty or (ii) against or affecting the
undersigned, or any of its property or assets, which, if adversely determined,
would have a material adverse effect on the business, operations, assets or
condition, financial or otherwise, of the undersigned.
4
(g) Material Adverse Change. Since December 31, 1997, there
has been no material adverse change in the assets or condition, financial or
otherwise, of the undersigned.
(h) Financial Benefit. The undersigned has derived or expects
to derive a financial or other advantage from each and every loan, advance or
extension of credit made under the Loan Agreement or other Obligation incurred
by Borrower to Agent and Lenders.
The foregoing representations and warranties (other than that set forth
in paragraphs (f)(ii) and (g) above) shall be deemed to have been made by the
undersigned on the date of each borrowing by Borrower under the Loan Agreement
on and as of such date of such borrowing as though made hereunder on and as of
such date.
6. Acceleration. (a) If any breach of any covenant or condition or
other event of default shall occur and be continuing under any agreement made by
Borrower or the undersigned to Agent and Lenders, or either Borrower or the
undersigned should at any time become insolvent, or make a general assignment,
or if a proceeding in or under any Insolvency Law shall be filed or commenced
by, or in respect of, the undersigned, or if a notice of any lien, levy, or
assessment is filed of record with respect to any assets of the undersigned by
the United States or any department, agency, or instrumentality thereof, or if
any taxes or debts owing at any time or times hereafter to any one of them
becomes a lien or encumbrance upon any assets of the undersigned in Agent's or
any Lender's possession, or otherwise, any and all Obligations shall for
purposes hereof, at Agent's or any Lender's option, be deemed due and payable
without notice notwithstanding that any such Obligation is not then due and
payable by Borrower.
(b) The undersigned will promptly notify Agent of any default by the
undersigned in the performance or observance of any term or condition of any
agreement to which the undersigned is a party if the effect of such default is
to cause, or permit the holder of any obligation under such agreement to cause,
such obligation to become due prior to its stated maturity and, if such an event
occurs, Agent shall have the right to accelerate the undersigned's obligations
hereunder.
7. Payments from Guarantor. Agent, on behalf of Lenders, in its sole
and absolute discretion, with or without notice to the undersigned, may apply on
account of the Obligations any payment from the undersigned or any other
guarantor, or amounts realized from any security for the Obligations, or may
deposit any and all such amounts realized in a non-interest bearing cash
collateral deposit account to be maintained as security for the Obligations.
8. Costs. The undersigned shall pay on demand, all fees and expenses
(including reasonable expenses for legal services of every kind) relating or
incidental to the enforcement or protection of the rights of Agent or any Lender
hereunder or under any of the Obligations.
9. No Termination. This is a continuing irrevocable guaranty and shall
remain in full force and effect and be binding upon the undersigned, and the
undersigned's successors and assigns, until all of the Obligations have been
paid in full and the Loan Agreement has been terminated. If any of the present
or future Obligations are guarantied by persons, partnerships or corporations in
addition to the undersigned, the death, release or discharge in whole or in part
or the bankruptcy, merger, consolidation, incorporation, liquidation or
dissolution of one or more of them shall not
5
discharge or affect the liabilities of the undersigned under this Guaranty.
10. Recapture. Anything in this Guaranty to the contrary
notwithstanding, if Agent or any Lender receives any payment or payments on
account of the liabilities guarantied hereby, which payment or payments or any
part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside and/or required to be repaid to a trustee, receiver, or
any other party under any Insolvency Law, common law or equitable doctrine, then
to the extent of any sum not finally retained by Agent or any such Lender, the
undersigned's obligations to Agent and Lenders shall be reinstated and this
Guaranty shall remain in full force and effect (or be reinstated) until payment
shall have been made to Lender, which payment shall be due on demand.
11. Books and Records. The books and records of Agent showing the
account among Agent, Xxxxxxx and Xxxxxxxx shall be admissible in evidence in any
action or proceeding and shall constitute prima facie proof for the purpose of
establishing the items therein set forth.
12. No Waiver. No failure on the part of Agent to exercise, and no
delay in exercising, any right, remedy or power hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise by Agent of any right,
remedy or power hereunder preclude any other or future exercise of any other
legal right, remedy or power. Each and every right, remedy and power hereby
granted to Agent or allowed it by law or other agreement shall be cumulative and
not exclusive of any other, and may be exercised by Agent at any time and from
time to time.
13. Waiver of Jury Trial. THE UNDERSIGNED DOES HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR
PROCEEDING BASED ON OR WITH RESPECT TO THIS GUARANTY OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREBY OR RELATING OR INCIDENTAL HERETO. THE UNDERSIGNED DOES
HEREBY CERTIFY THAT NO REPRESENTATIVE OR AGENT OF AGENT OR ANY LENDER HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT AGENT OR ANY LENDER WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THIS WAIVER OF RIGHT TO JURY TRIAL
PROVISION.
14. Governing Law; Jurisdiction; Amendments. THIS INSTRUMENT CANNOT BE
CHANGED OR TERMINATED ORALLY, AND SHALL BE GOVERNED, CONSTRUED AND INTERPRETED
AS TO VALIDITY, ENFORCEMENT AND IN ALL OTHER RESPECTS IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK. THE UNDERSIGNED EXPRESSLY CONSENTS TO THE
JURISDICTION AND VENUE OF THE SUPREME COURT OF THE STATE OF NEW YORK, COUNTY OF
NEW YORK, AND OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF
NEW YORK FOR ALL PURPOSES IN CONNECTION HEREWITH. ANY JUDICIAL PROCEEDING BY THE
UNDERSIGNED AGAINST AGENT AND/OR ANY LENDER INVOLVING, DIRECTLY OR INDIRECTLY
ANY MATTER OR CLAIM IN ANY WAY ARISING OUT OF, RELATED TO OR CONNECTED HEREWITH
SHALL BE BROUGHT ONLY IN THE SUPREME COURT OF THE STATE OF NEW YORK, COUNTY OF
NEW YORK OR THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW
YORK. THE UNDERSIGNED FURTHER CONSENTS THAT ANY SUMMONS, SUBPOENA OR OTHER
PROCESS OR
6
PAPERS (INCLUDING, WITHOUT LIMITATION, ANY NOTICE OR MOTION OR OTHER
APPLICATION TO EITHER OF THE AFOREMENTIONED COURTS OR A JUDGE THEREOF) OR ANY
NOTICE IN CONNECTION WITH ANY PROCEEDINGS HEREUNDER, MAY BE SERVED INSIDE OR
OUTSIDE OF THE STATE OF NEW YORK OR THE SOUTHERN DISTRICT OF NEW YORK BY
REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, OR BY PERSONAL SERVICE
PROVIDED A REASONABLE TIME FOR APPEARANCE IS PERMITTED, OR IN SUCH OTHER MANNER
AS MAY BE PERMISSIBLE UNDER THE RULES OF SAID COURTS. THE UNDERSIGNED WAIVES ANY
OBJECTION TO JURISDICTION AND VENUE OF ANY ACTION INSTITUTED HEREON AND SHALL
NOT ASSERT ANY DEFENSE BASED ON LACK OF JURISDICTION OR VENUE OR BASED UPON
FORUM NON CONVENIENS.
15. Severability. To the extent permitted by applicable law, any
provision of this Guaranty which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
16. Amendments, Waivers. No amendment or waiver of any provision of
this Guaranty nor consent to any departure by the undersigned therefrom shall in
any event be effective unless the same shall be in writing executed by the
undersigned, Agent and Xxxxxxx.
17. Notice. All notices, requests and demands to or upon the
undersigned, shall be in writing or by telecopy or telex and shall be deemed to
have been duly given or made (a) when delivered, if by hand, (b) three (3) days
after being deposited in the mail, postage prepaid, if by mail, (c) when
confirmed, if by telecopy or, (d) in the case of telex notice, when sent, answer
back receiver, in each event, to the number and address set forth beneath the
signature of the undersigned.
18. Successors. Agent or any Lender may, from time to time, without
notice to the undersigned, sell, assign, transfer or otherwise dispose of all or
any part of the Obligations and/or rights under this Guaranty. Without limiting
the generality of the foregoing, Agent or any Lender may assign, or grant
participations to, one or more banks, financial institutions or other entities
all or any part of any of the Obligations. In each such event, Agent, any
Lender, its Affiliates and each and every immediate and successive purchaser,
assignee, transferee or holder of all or any part of the Obligations shall have
the right to enforce this Guaranty, by legal action or otherwise, for its own
benefit as fully as if such purchaser, assignee, transferee or holder were
herein by name specifically given such right. Agent or any Lender shall have an
unimpaired right to enforce this Guaranty for its benefit with respect to that
portion of the Obligations which Agent or any such Lender has not disposed of,
sold, assigned, or otherwise transferred.
7
19. Release. Nothing except cash payment in full of the obligations
shall release the undersigned from liability under this Guaranty.
IN WITNESS WHEREOF, this Guaranty has been executed by the undersigned
this 19 day of May, 1998.
CARPET BARN HOLDINGS, INC.
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
STATE OF NEW YORK )
) : ss.:
COUNTY OF NEW YORK)
On the 19 day of May, 1998, before me personally came Xxxxxx X.
Xxxxxx, to me known, who being by me duly sworn, did depose and say that he is
the President of Carpet Barn, Inc., the corporation described in and which
executed the foregoing instrument; and that he was authorized to sign his name
thereto by order of the board of directors of said corporation.
----------------------------
Notary Public
8
