GUARANTY
GUARANTY dated as of May 12, 1997, by Tortoni Manufacturing Corp., a
Delaware corporation (the "Guarantor"), in favor of X.X. Xxxxxxx & Associates,
Inc., as Collateral Trustee (as defined in the Plan described below) for the
benefit of the holders of Allowed General Unsecured Claims (as defined in the
Plan). Capitalized terms used herein and not otherwise defined herein shall have
the meanings attributed thereto in the Note Agreement (as defined in the Plan).
Pursuant to and in accordance with the terms of the Joint Plan of
Reorganization of Andover Togs, Inc., Debtor, Springdale Fashions, Inc., Debtor,
Tortoni Manufacturing Corp., Debtor, and Stonehenge Financial Corp., Debtor,
which was confirmed by the United States Bankruptcy Court for the Southern
District of New York on April 10, 1997 (as from time to time amended, the
"Plan"), Andover Togs, Inc. has executed and delivered in favor of the
Collateral Trustee, for the benefit of the holders of the Allowed General
Unsecured Claims, the Class 4 Note (as defined in the Plan).
Pursuant to and in accordance with the terms of the Plan, the
undersigned (the "Guarantor") has agreed to guaranty the payment when due to the
Collateral Trustee, for the benefit of the holders of the Allowed General
Unsecured Claims, of all of the Obligations (such Obligations to include,
without limitation, the due and punctual payment of (a) the obligation of the
Company to pay the principal of and interest on the Class 4 Note, when and as
due, whether at maturity, by acceleration, upon one or more dates set for
prepayment or otherwise, and (b) all other Obligations of the Company at any
time and from time to time under any of the other Class 4 Documents).
Accordingly, in consideration of the premises and in accordance with
the Plan, the Guarantor hereby agrees as follows:
Section 1. Guaranty. The Guarantor hereby irrevocably and
unconditionally guarantees the punctual payment when due, whether at stated
maturity, by acceleration or otherwise, and the punctual performance, of all
present and future Obligations of the Company and the other Collateral Grantors
(the foregoing being herein referred to as the "Guaranteed Obligations");
provided, however, that anything to the contrary notwithstanding, the maximum
liability of the Guarantor hereunder shall not exceed an amount equal to the
largest amount that would not render the Guarantor's obligations hereunder
subject to avoidance under Section 548 of the United States Bankruptcy Code or
any equivalent provision of the law of any state.
Section 2. Waiver. The Guarantor hereby absolutely, unconditionally
and irrevocably waives, to the fullest extent permitted by law, (i) promptness,
diligence, notice of acceptance and any other notice with respect to this
Guaranty, (ii) presentment, demand of payment, protest, notice of dishonor or
nonpayment and any other notice with respect to the Guaranteed Obligations,
(iii) any requirement that the Collateral Trustee protect, secure, perfect or
insure any security interest or Lien or any property subject thereto or exhaust
any right or take any action against the Company, any other Collateral Grantor,
or any other person or any Collateral, and (iv) any other action, event or
precondition to the enforcement of this Guaranty or the performance by the
Guarantor of the obligations hereunder.
Section 3. Guaranty Absolute. (a) The Guarantor guarantees that, to
the fullest extent permitted by law, the Guaranteed Obligations will be paid or
performed strictly in accordance with their terms, regardless of any law,
regulation or order now or hereafter in effect in any jurisdiction affecting any
of such terms or the rights of the Collateral Trustee with respect thereto.
(b) No invalidity, irregularity, voidability, voidness or
unenforceability of the Class 4 Note, or any other Class 4 Document or any other
agreement or instrument relating thereto, or of all or any part of the
Guaranteed Obligations or of any security therefor shall affect, impair or be a
defense to this Guaranty.
(c) This Guaranty is one of payment and performance and not collection
and the obligations of the Guarantor under this Guaranty are independent of the
Obligations of the Company and the other Collateral Grantors, and a separate
action or actions may be brought and prosecuted against the Guarantor to enforce
this Guaranty, irrespective of whether any action is brought against the Company
or any other Collateral Grantor or whether the Company or any other Collateral
Grantor is joined in any such action or actions.
(d) The liability of the Guarantor under this Guaranty shall be
absolute and unconditional irrespective of:
(i) any change in the manner, place or terms of payment or
performance, and/or any change or extension of the time of payment or
performance of, renewal or alteration of, any Obligation, any security
therefor, or any liability incurred directly or indirectly in respect
thereof, or any other amendment or waiver of or any consent to departure
from the Class 4 Note or any other Class 4 Document, including any increase
in the Guaranteed Obligations resulting from the extension of additional
credit to the Company or otherwise;
(ii) any sale, exchange, release, surrender, realization upon any
property by whomsoever at any time pledged or mortgaged to secure, or
howsoever securing, all or
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any of the Guaranteed Obligations, and/or any offset thereagainst, or
failure to perfect, or continue the perfection of, any Lien in any such
property, or delay in the perfection of any such Lien, or any amendment or
waiver of or consent to departure from any other guaranty for all or any of
the Guaranteed Obligations;
(iii) any exercise or failure to exercise any rights against the
Company, any other Collateral Grantor or others (including the Guarantor);
(iv) any settlement or compromise of any security for any
Obligation, or any liability (including any of those hereunder) incurred
directly or indirectly in respect thereof or hereof, and any subordination
of the payment of all or any part thereof to the payment of any Obligation
(whether due or not) of the Company to creditors of the Company other than
the Guarantor;
(v) any manner of application of Collateral, or proceeds thereof,
to all or any of the Guaranteed Obligations, or any manner of sale or other
disposition of any Collateral for all or any of the Guaranteed Obligations
or any other assets of the Company or any other Collateral Grantor;
(vi) any change, restructuring or termination of the existence of
the Company or any of its subsidiaries; or
(vii) any other agreements or circumstance of any nature
whatsoever which might otherwise constitute a defense available to, or a
discharge of, this Guaranty and/or obligations of the Guarantor hereunder,
or a defense to, or discharge of, the Company or any other person or party
relating to this Guaranty or the obligations of the Guarantor hereunder or
otherwise with respect to the Allowed Class 4 Claims.
(e) The Collateral Trustee may at any time and from time to time
(whether or not after revocation or termination of this Guaranty) without the
consent of, or notice (except as shall be required by applicable statute and
cannot be waived) to, the Guarantor, and without incurring responsibility to the
Guarantor or impairing or releasing the obligations of the Guarantor hereunder,
apply any sums by whomsoever paid or howsoever realized to any Guaranteed
Obligation regardless of what Guaranteed Obligations remain unpaid.
(f) This Guaranty shall continue to be effective or be reinstated, as
the case may be, if claim is ever made upon the Collateral Trustee or any holder
of an Allowed Class 4 Claim for repayment or recovery of any amount or amounts
received by the Collateral Trustee or such holder of an Allowed Class 4 Claim in
payment or on account of any of the Guaranteed Obligations and the Collateral
Trustee or such holder of an Allowed Class 4 Claim repays all or part of said
amount by reason of any judgment, decree or order of any
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court or administrative body having jurisdiction over the Collateral Trustee or
such holder of an Allowed Class 4 Claim or the respective property of each, or
any settlement or compromise of any such claim effected by the Collateral
Trustee or such holder of an Allowed Class 4 Claim with any such claimant
(including the Company), then and in such event the Guarantor agrees that any
such judgment, decree, order, settlement or compromise shall be binding upon the
Guarantor, notwithstanding any revocation hereof or the cancellation of any
Class 4 Document or other instrument evidencing any Obligation, and the
Guarantor shall be and remain liable to the Collateral Trustee and/or such
holder of an Allowed Class 4 Claim hereunder for the amount so repaid or
recovered to the same extent as if such amount had never originally been
received by the Collateral Trustee or any holder of an Allowed Class 4 Claim.
Section 4. Continuing Guaranty. This Guaranty is a continuing one and
shall (i) remain in full force and effect until the indefeasible payment and
satisfaction in full of the Guaranteed Obligations, (ii) be binding upon the
Guarantor, its successors and assigns, and (iii) inure to the benefit of, and be
enforceable by, the Collateral Trustee and its successors, transferees and
assigns. All obligations to which this Guaranty applies or may apply under the
terms hereof shall be conclusively presumed to have been created in reliance
hereon.
Section 5. Representations, Warranties and Covenants. The Guarantor
hereby represents, warrants and covenants to and with the Collateral Trustee
that:
(a) The Guarantor has the corporate power to execute and deliver this
Guaranty and to incur and perform its obligations hereunder;
(b) The Guarantor has duly taken all necessary corporate action to
authorize the execution, delivery and performance of this Guaranty and to
incur and perform its obligations hereunder;
(c) Other than the entry by the Bankruptcy Court of the Final Order
(as defined in the Plan) confirming the Plan, no consent, approval,
authorization or other action by, and no notice to or of, or declaration or
filing with, any governmental or other public body, or any other Person, is
required for the due authorization, execution, delivery and performance by
the Guarantor of this Guaranty or the consummation of the transactions
contemplated hereby;
(d) The execution, delivery and performance by the Guarantor of this
Guaranty do not and will not violate or otherwise conflict with any term or
provision of any material agreement, instrument, judgment, decree, order or
any statute, rule or governmental regulation applicable to the Guarantor or
result in the creation of any security interest in or Lien upon any of its
properties or assets pursuant thereto;
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(e) This Guaranty has been duly authorized, executed and delivered by
the Guarantor and constitutes the legal, valid and binding obligation of
the Guarantor, and is enforceable against the Guarantor in accordance with
its terms, except as enforcement thereof may be subject to the effect of
any applicable bankruptcy, insolvency, reorganization, moratorium or
similar law affecting creditors' rights generally, and general principles
of equity (regardless of whether such enforcement is sought in a proceeding
in equity or at law); and
(f) No proceeding referred to in paragraph (f) or (g) of the
definition of "Event of Default" set forth in the Class 4 Note is pending
against the Guarantor and no other event referred to in such paragraphs has
occurred and is continuing, and the property of the Guarantor is not
subject to any assignment for the benefit of creditors.
Section 6. Expenses. The Guarantor will upon demand reimburse the
Collateral Trustee for any sums, costs, and expenses which the Collateral
Trustee may reasonably pay or incur pursuant to the provisions of this Guaranty
or in negotiating, executing, perfecting, defending, protecting or enforcing
this Guaranty or in enforcing payment of the Guaranteed Obligations or otherwise
in connection with the provisions hereof, including court costs, collection
charges, travel expenses, and reasonable attorneys' fees, together with interest
thereon as specified in Section 12 hereof. The Guarantor shall not be required
to pay any such sums if such sums have been paid by the Company under the Note
Agreement.
Section 7. Terms. (a) All terms defined in the UCC and used herein
shall have the meanings as defined in the UCC, unless the context otherwise
requires.
(b) The words "include," "includes" and "including" shall be deemed to
be followed by the phrase "without limitation".
(c) All references herein to Sections and subsections shall be deemed
to be references to Sections and subsections of this Guaranty unless the context
shall otherwise require.
Section 8. Amendments and Modification. No provision hereof shall be
modified, altered or limited except by written instrument expressly referring to
this Guaranty and to such provision, and executed by the party to be charged.
Section 9. Subrogation. The Guarantor will not exercise any rights
which it may acquire by way of subrogation hereunder, by any payment made by it
hereunder or otherwise, until the Class 4 Note is paid in full and all of the
Obligations and all other expenses to be paid by the Guarantor pursuant hereto
shall have been satisfied in full. If any
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amount shall be paid to the Guarantor on account of such subrogation rights at
any time when all of the Obligations and all such other expenses shall not have
been paid in full, such amount shall be held in trust for the benefit of the
Collateral Trustee, shall be segregated from the other funds of the Guarantor
and shall forthwith be paid over to the Collateral Trustee to be applied in
whole or in part by the Collateral Trustee against the Obligations, whether
matured or unmatured, and all such other expenses in accordance with the terms
of the Note Agreement.
Section 10. Remedies Upon Default; Right of Set-Off. (a) Upon the
occurrence and during the continuance of any Event of Default, the Collateral
Trustee may, subject to the provisions of the Note Agreement, without notice to
or demand upon the Company or the Guarantor, declare any Guaranteed Obligations
immediately due and payable, and shall be entitled to enforce the obligations of
the Guarantor hereunder.
(b) Upon such declaration by the Collateral Trustee, the Collateral
Trustee is hereby authorized at any time and from time to time, to the fullest
extent permitted by law, to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by the Collateral Trustee to or for the credit or
the account of the Guarantor against any and all of the obligations of the
Guarantor now or hereafter existing under this Guaranty, whether or not the
Collateral Trustee shall have made any demand under this Guaranty and although
such obligations may be contingent and unmatured. The Collateral Trustee agrees
promptly to notify the Guarantor after any such set-off and application,
provided that the failure to give such notice shall not affect the validity of
such set-off and application. The rights of the Collateral Trustee under this
Section 10 are in addition to other rights and remedies (including other rights
of set-off) which the Collateral Trustee may have.
Section 11. Statute of Limitations. Any acknowledgment or new promise,
whether by payment of principal or interest or otherwise and whether by the
Company or others (including the Guarantor), with respect to any of the
Guaranteed Obligations shall, if the statute of limitations in favor of the
Guarantor against the Collateral Trustee or any holder of an Allowed Class 4
Claim shall have commenced to run, toll the running of such statute of
limitations and, if the period of such statute of limitations shall have
expired, prevent the operation of such statute of limitations.
Section 12. Interest. All amounts payable from time to time by the
Guarantor pursuant to Section 6 hereunder shall bear interest at the applicable
rate of interest set forth in the Class 4 Note.
Section 13. Rights and Remedies Not Waived. No act, omission or delay
by the Collateral Trustee shall constitute a waiver of its rights and remedies
hereunder or
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otherwise. No single or partial waiver by the Collateral Trustee of any default
hereunder or right or remedy which it may have shall operate as a waiver of any
other default, right or remedy or of the same default, right or remedy on a
future occasion.
Section 14. Admissibility of Guaranty. The Guarantor agrees that any
copy of this Guaranty signed by the Guarantor and transmitted by telecopier for
delivery to the Collateral Trustee shall be admissible in evidence as the
original itself in any judicial or administrative proceeding, whether or not the
original is in existence.
Section 15. Notices. All notices, requests and demands to or upon the
Collateral Trustee or the Guarantor under this Agreement shall be in writing and
given as provided in the Note Agreement.
Section 16. Counterparts. This Guaranty may be executed in any number
of counterparts and by the different parties hereto on separate counterparts,
each of which when so executed and delivered shall be an original and all of
which shall together constitute one and the same agreement.
Section 17. CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL; ETC. (a) In
any litigation in any court with respect to, in connection with, or arising out
of this Guaranty or any instrument or document delivered pursuant to this
Guaranty, or the validity, protection, interpretation, collection or enforcement
thereof, or any other claim or dispute howsoever arising, between the Guarantor
on the one hand and the Collateral Trustee or any holder of an Allowed Class 4
Claim on the other hand, the Guarantor, to the fullest extent it may effectively
do so, (i) waives the right to interpose any setoff, recoupment, counterclaim or
cross-claim in connection with any such litigation, irrespective of the nature
of such setoff, recoupment, counterclaim or cross-claim, unless such setoff,
recoupment, counterclaim or cross-claim could not, by reason of any applicable
Federal or State procedural laws, be interposed, pleaded or alleged in any other
action and (ii) WAIVES TRIAL BY JURY IN CONNECTION WITH ANY SUCH LITIGATION AND
ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY SPECIAL,
EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN
ADDITION TO, ACTUAL DAMAGES. THE GUARANTOR AGREES THAT THIS SECTION 17(a) IS A
SPECIFIC AND MATERIAL ASPECT OF THIS GUARANTY.
(b) The Guarantor hereby irrevocably consents to the non-exclusive
jurisdiction of the courts of the State of New York and of any Federal Court
located in the City of New York in connection with any action or proceeding
arising out of or relating to this Guaranty or any document or instrument
delivered pursuant to this Guaranty. In any such litigation, the Guarantor
waives, to the fullest extent it may effectively do so, personal
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service of any summons, complaint or other process and agrees that the service
thereof may be made by certified or registered mail directed to the Guarantor at
its address for notice determined in accordance with Section 15 hereof. The
Guarantor hereby waives, to the fullest extent it may effectively do so, the
defenses of forum non conveniens and improper venue.
(c) The Guarantor hereby waives presentment, notice of dishonor and
protests of all instruments included in or evidencing any of the Guaranteed
Obligations, and any and all other notices and demands whatsoever (except as
expressly provided herein).
Section 18. GOVERNING LAW. THIS GUARANTY AND THE GUARANTEED
OBLIGATIONS SHALL BE GOVERNED IN ALL RESPECTS BY THE LAWS OF THE STATE OF NEW
YORK APPLICABLE TO CONTRACTS EXECUTED AND TO BE PERFORMED IN SUCH STATE, WITHOUT
GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF.
Section 19. Captions; Separability. (a) The captions of the Sections
and subsections of this Guaranty have been inserted for convenience only and
shall not in any way affect the meaning or construction of any provision of this
Guaranty.
(b) If any term of this Guaranty shall be held to be invalid, illegal
or unenforceable, the validity of all other terms hereof shall in no way be
affected thereby.
Section 20. Acknowledgment of Receipt. The Guarantor acknowledges
receipt of a copy of this Guaranty and each of the Class 4 Documents.
IN WITNESS WHEREOF, the Guarantor has duly executed or caused this
Guaranty to be duly executed in the State of New York as of the date first above
set forth.
TORTONI MANUFACTURING CORP.
By: /s/ Xxxxxxx X. Xxxxx
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Title: President
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