Exhibit 10.2
Loan No. 030234459
GUARANTY
This Guaranty ("Guaranty"), dated as of April 21, 2004, is executed by
Knightsbridge Fine Wines, Inc., a Nevada corporation ("Guarantor") in favor of
The Travelers Insurance Company ("Lender"), with reference to the following
facts:
RECITALS
A. Lender is a making a loan (the "Loan") of $20,000,000 to Xxxxx
Xxxxxxxx, an individual, Xxxxxxxx Knightsbridge, LLC, a California limited
liability company, and Xxxxxxxx Cattle Co., a general partnership (collectively,
the "Borrower") arising under and evidenced by a Promissory Note of even date
herewith (the "Note").
B. Guarantor has an equity interest in Xxxxxxxx Knightsbridge, LLC.
Without the support of this Guaranty from Guarantor, Borrower would not have
been able to obtain the Loan in the amount and on the terms that are set forth
in the Note. Guarantor understands that Lender would not have made the loan to
Borrower without the financial support of Guarantor, that the delivery of this
Guaranty to Lender is a condition precedent to the making of the Loan, and
Lender is making the Loan in reliance upon this Guaranty.
AGREEMENT
NOW THEREFORE, for good and valuable consideration, receipt of
which is hereby acknowledged, and in order to induce Lender to make the Loan,
Guarantor agrees, for the benefit of Lender, as follows:
1. Affirmation of Recitals. The recitals set forth above are true and
correct and are incorporated herein by this reference.
2. Defined Terms. All capitalized terms that are not defined herein
shall have the meanings ascribed to such terms in the Note.
3. Certain Matters of Construction. The terms "herein", "hereof" and
"hereunder" and other words of similar impact shall refer to this Guaranty as a
whole and not to any particular section, paragraph or subdivision. Any reference
to a "Section" shall refer to the relevant Section to this Guaranty, unless
specifically indicated to the contrary. Any pronoun used shall be deemed to
cover all genders. The term "including" shall not be limiting or exclusive,
unless specifically indicated to the contrary. All references to statutes and
related regulations shall include any amendments of same and any successor
statutes and regulations.
4. Guaranty of Guaranteed Obligations. Guarantor acknowledges that it
is in Guarantor's best interests to execute this Guaranty as Guarantor will
derive substantial direct and indirect benefits from the advances provided by
Lender to Borrower under the Note. Guarantor absolutely, irrevocably and
unconditionally guarantees and promises to pay to Lender, and its successors,
endorsees, transferees and assigns, on demand in lawful money of the United
States of America, any and all obligations of Borrower to Lender arising from or
in connection with the Note and any other Loan Documents. (The obligations of
Borrower to Lender under the Note
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and the other Loan Documents are hereafter referred to as the "Obligations" and
the obligations of Guarantor to Lender hereunder are hereafter referred to as
the "Guaranteed Obligations").
5. Independent Obligations. Guarantor's obligations hereunder are
independent of the Obligations of Borrower, any other guarantor or any other
person, and Lender may enforce any of its rights hereunder independently of any
other right or remedy that Lender may at any time hold with respect to the
Guaranteed Obligations or any security or other guaranty therefor. This Guaranty
is a guaranty of payment when due and not of collection. Without limiting the
generality of the foregoing, Lender may bring a separate action against
Guarantor without first proceeding against Borrower, any other guarantor, any
other person or any security held by Lender and regardless of whether Borrower,
any other guarantor or any other person is joined in any such action.
Guarantor's liability hereunder shall at all times remain effective with respect
to the full amount of the Guaranteed Obligations, notwithstanding any
limitations on the liability of Borrower to Lender contained in the Note or
elsewhere. Lender's rights hereunder shall not be exhausted by any action taken
by Lender until all Guaranteed Obligations have been fully and finally paid and
performed.
6. Authority to Modify Guaranteed Obligations. Guarantor acknowledges
that the sum of the Guaranteed Obligations may significantly vary from time to
time. Guarantor authorizes Lender, at any time and from time to time without
notice and without affecting the liability of Guarantor hereunder, to alter the
terms of all or any part of the Guaranteed Obligations and any security and
guaranties therefor including modification of times for payment and rates of
interest.
7. Demand by Lender. If the Obligations are declared to be or otherwise
become immediately due and payable, Lender shall have the right to immediately
demand payment from Guarantor and Guarantor shall immediately pay the Guaranteed
Obligations to Lender. Payment by Guarantor shall be made to Lender to be
credited and applied upon the Obligations, in immediately available funds, to an
account designated by Lender or at any address that may be specified in writing
from time to time by Lender. Any payment received by Lender with respect to the
Obligations shall reduce the Guaranteed Obligations by the amount of such
payment. Notwithstanding the foregoing, and notwithstanding any other provision
of the this Guaranty, Lender agrees not to make demand upon Guarantor for
payment of the Guaranty Obligations until the earlier of 130 days after (a) the
date that Lender has caused a notice of default to be recorded with respect to
the trust deed delivered by Borrower to Lender, or (b) the filing of any
bankruptcy or insolvency proceeding with respect to any Borrower.
8. Guarantor Waivers. In addition to any other waivers provided in this
Guaranty, Guarantor hereby waives each of the following, to the fullest extent
allowed by law:
8.1 Guarantor expressly waives any right it may now or in the
future have to require Lender to, and Lender shall not have any liability to,
first pursue or enforce against Borrower, any collateral that might have been
given by Guarantor to secure this Guaranty (the "Collateral"), or any other
security, guaranty, or pledge that may now or hereafter be held by Lender for
the Obligations or for the Guaranteed Obligations, or to apply such security,
guaranty, or pledge to the Obligations or to the Guaranteed Obligations, or to
pursue any other remedy in Lender's power that Guarantor may or may not be able
to pursue itself and that may lighten Guarantor's burden, before proceeding
against the Collateral. Guarantor shall remain liable for
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the Guaranteed Obligations, notwithstanding any judgment Lender may obtain
against Borrower, any other guarantor of the Obligations, or any other person,
or any modification, extension, or renewal with respect thereto.
8.2 Guarantor has entered into this Guaranty based solely upon
its independent knowledge of Borrower's financial condition and Guarantor
assumes full responsibility for obtaining any further information with respect
to Borrower or the conduct of its business. Guarantor represents that it is now,
and during the terms of this Guaranty will be, responsible for ascertaining the
financial condition of Borrower. Guarantor hereby waives any duty on the part of
Lender to disclose to Guarantor, and agrees that it is not relying upon nor
expecting Lender to disclose to it, any fact known or hereafter known by Lender
relating to the operation or condition of Borrower or its business. Guarantor
knowingly accepts the full range of risk encompassed in a contract of guaranty,
which risk includes the possibility that Borrower may incur indebtedness after
its financial condition or its ability to pay its debts as they mature has
deteriorated.
8.3 Lender shall not be under any liability to marshal any
assets in favor of Guarantor or in payment of any or all of the Obligations or
Guaranteed Obligations.
8.4 Guarantor hereby waives: (i) presentment, demand, protest,
notice of acceleration, dishonor, non-payment, protest, or any delay related
thereto, with respect to any instruments or documents relating to the
Obligations or the Guaranteed Obligations, except as specifically provided in
Section 7; (ii) notice of any extension, modification, renewal, or amendment of
any of the terms of the Note or any other Loan Document relating to the
Obligations or the Guaranteed Obligations; (iii) notice of the occurrence of any
Event of Default with respect to the Obligations, the Guaranteed Obligations, or
the Collateral; and (iv) notice of any exercise or non-exercise by Lender of any
right, power, or remedy with respect to the Obligations, the Collateral, or the
Guaranteed Obligations.
If Lender may, under applicable law, proceed to realize its benefits
under any Loan Document giving Lender a lien upon any Collateral, either by
judicial foreclosure or by nonjudicial sale or enforcement, Lender may, at its
sole option, determine which of its remedies or rights it may pursue without
affecting any of its rights and remedies under this Guaranty. If, in the
exercise of any of its rights and remedies, Lender shall forfeit any of its
rights or remedies under any Loan Document, including obtaining a deficiency
judgment against Borrower or any other person, whether because of any applicable
laws pertaining to "election of remedies," anti-deficiency rules, or the like,
Guarantor hereby consents to such action by Lender and waives any claim based
upon such action. Any election of remedies that results in the denial or
impairment of the right of Lender to seek a deficiency judgment against Borrower
shall not impair Guarantor's obligations under this Guaranty. In the event
Lender shall bid at any foreclosure or trustee's sale or at any public or
private sale permitted by law or the Loan Documents, Lender may bid all or less
than the amount of the Obligations or the Guaranteed Obligations and the amount
of such bid need not be paid by Lender but shall be credited and applied as set
forth in Section 19. The amount of the successful bid at any such sale, whether
Lender or any other party (including Guarantor) is the successful bidder, shall
be deemed to be prima facie evidence of the fair market value of the Collateral
and the amount remaining after application of such bid amount in the manner set
forth in Section 19 shall be deemed to be prima facie evidence of the amount of
the Obligations guaranteed under this Guaranty.
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8.5 Until payment in full of the Guaranteed Obligations,
Guarantor shall have no right of subrogation, reimbursement, indemnity, or
contribution, and shall have no recourse with respect to the Collateral or any
lien held therefor, all of which Guarantor expressly waives.
8.6 Guarantor agrees and represents that the Obligations are
and shall be incurred by Borrower, and that the Guaranteed Obligations are and
shall be incurred by Guarantor, for business and commercial purposes only.
Guarantor agrees that any claim of Lender against Guarantor arising out of this
Guaranty arises out of the conduct by Guarantor of its trade, business, or
profession. Guarantor undertakes all the risks encompassed in the Note and the
other Loan Documents as they may be now or are hereafter agreed upon by Lender
and Borrower. Lender, in such manner and upon such terms and at such time as it
deems best, and with or without notice to Guarantor, may release, add,
subordinate or substitute security for the Obligations or the Guaranteed
Obligations.
8.7 Guarantor waives and agrees that it shall not at any time
insist upon, plead, or in any manner whatever claim or take the benefit or
advantage of, any appraisal, valuation, stay, extension, or redemption laws, or
exemption, whether now or at any time hereafter in force, which may delay,
prevent, or otherwise affect the performance by Guarantor of the Guaranteed
Obligations or the enforcement by Lender of this Guaranty.
8.8 A separate action or actions may be brought under this
Guaranty or any of the Loan Documents and prosecuted by Lender against Guarantor
whether or not an action is brought against Borrower, or whether Borrower are
joined in any such action or actions. Without limiting the generality of the
foregoing, Guarantor expressly waives the benefit of any statute of limitation
affecting the Obligations and expressly agrees that the running of a period of
limitation on, or Lender's delay or omission in, any action by Lender against
Borrower or for the foreclosure of any lien or the enforcement of any security
interest in the Collateral shall not exonerate or affect Guarantor's liability
to pay and perform the Guaranteed Obligations.
9. Waivers of Defenses Regarding Real Property Security.
9.1 Guarantor understands and acknowledges the following:
(a) If Borrower defaults in the payment or performance of
the Obligations and Guarantor pays to Lender all or part of the Obligations,
Guarantor would, except to the extent limited or waived pursuant to Section 8.5,
have a right to proceed against Borrower to the extent of the Obligations so
paid by Guarantor and to have the benefit of any security held by Lender for the
Obligations to the extent of the Obligations so paid by Guarantor. Such right is
commonly known as the "right of subrogation."
(b) If Lender forecloses on Borrower's real property by
means of a trustee's sale under a power of sale contained in a deed of trust or
other security instrument, applicable statutory and decisional law, including
California Code of Civil Procedure ("CCP") Section 580a and 580d, might limit or
prohibit both Lender and Guarantor from recovering any further payment from
Borrower personally on account of the Obligations or limit such recovery. This
means that Guarantor's right to proceed against Borrower for any amounts
Guarantor was required to pay under the Guaranty would then be impaired or
destroyed by Lender's election to
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complete a trustee's sale of Borrower's real property. Lender's election to
complete a trustee's sale of Borrower's real property could thus give Guarantor
a defense to its obligations under the Guaranty, in addition to any statutory or
decisional law protections against a personal judgment that benefits Guarantor
directly.
(c) If Lender forecloses on Borrower's real property by
means of a judicial foreclosure, applicable statutory and decisional law,
including CCP Section 726(b), might limit the amount that both Lender and
Guarantor could collect from Borrower personally, and thus such an action by
Lender might give Guarantor a complete or partial defense to its obligations
under the Guaranty, in addition to any statutory or decisional law protections
against a personal judgment that benefits Guarantor directly.
(d) Lender has given only a basic description above of
Guarantor's rights against Borrower, the limitation or destruction of those
rights by Lender's actions in foreclosing on Borrower's real property, and the
potential claims or defenses that Guarantor could therefore raise against
Lender's demand for payment on the Guaranty, in addition to any statutory or
decisional law protections against a personal judgment that benefits Guarantor
directly. Lender has advised Guarantor that the relationships of Borrower,
Lender, and Guarantor under applicable real property law are complex issues such
that Guarantor may wish to retain counsel to review these issues and review the
obligations that Guarantor is undertaking under the Guaranty, as well as the
waivers of rights that Guarantor will make pursuant to the provisions set forth
below.
(e) Lender desires the right to foreclose against Borrower's
real property either by trustee's sale or by judicial foreclosure, as well as to
pursue all Lender's rights and remedies against Borrower and Guarantor, without
giving rise to any claims or defenses by Guarantor under the Guaranty, including
any defense that Lender's foreclosure of Borrower's real property has limited or
destroyed Guarantor's rights against Borrower. For these reasons, Lender
requires Guarantor to waive its rights and defenses, as described basically
above, and in the form stated below.
9.2 Guarantor expressly, knowingly and intentionally waives
and relinquishes the following of its rights:
(a) all rights, defenses or benefits Guarantor might have
arising out of an election of foreclosure by Lender even though that election of
remedies, such as a nonjudicial foreclosure with respect to security for a
Guaranteed Obligation, has, by the operation of CCP section 580d or otherwise,
destroyed Guarantor's rights as against Borrower of subrogation, reimbursement,
indemnity, or contribution;
(b) all rights, defenses or benefits Guarantor might have,
whether directly or derivatively, under the following California statutes and
decisions: CCP sections 580a, 580d, 726, 726(b), or their application in case
law, including the case of Union Bank x. Xxxxxxx; and
(c) all rights, defenses or benefits Guarantor might have
directly under any applicable state statutory or decisional law limiting or
protecting Guarantor
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against a personal judgment on the Guaranty after Lender's nonjudicial
foreclosure of the Borrower's real property.
9.3 In particular, Guarantor agrees that the Guaranty will
remain effective on its terms and that:
(a) Guarantor will be required to pay in full the unpaid
amount of any Obligations to Lender even if Lender forecloses on Borrower's real
property by trustee's sale and the effect of such sale is to prevent Guarantor
from taking action against Borrower to recover amounts paid by Guarantor to
Lender under the Guaranty or otherwise limits or destroys Guarantor's rights,
including rights of subrogation;
(b) Guarantor will be required to pay in full the unpaid
amount of any Obligations to Lender even if Lender forecloses on Borrower's real
property by judicial foreclosure action and Guarantor's rights against Borrower
are thereby limited by the operation of applicable statutory and decisional law.
10. Waivers of Defenses. Guarantor waives any defense based upon or
arising by reason of: (a) any disability or other defense of Borrower or any
other person; (b) the cessation of liability or limitation from any cause
whatsoever of the Obligations or any portion thereof, other than payment in
full; (c) any lack of authority of any agent or other person acting or
purporting to act on behalf of Borrower, or any defect in the formation of
Borrower; (d) the application by Borrower of the proceeds of the Obligations or
any other obligation of Borrower or Lender for purposes other than the purposes
represented to, or intended or understood by Lender; (e) any act or omission by
Lender that directly or indirectly results in or aids the discharge of Borrower
or any portion of the Obligations or any other obligation of Borrower to Lender
by operation of law or otherwise; or (f) any modification of the Obligations or
any other obligation of Borrower to Lender in any form whatsoever, including the
renewal, extension, acceleration or other change in time for payment of the
Obligations, or other change in the terms of the Obligations or any part
thereof, including increase or decrease of the rate of interest thereon.
Without limiting the generality of the foregoing, Guarantor waives any
defenses or rights arising under California Civil Code sections 2787 through
2855, inclusive, and Sections 2899 and 3433.
11. Reasonableness and Effect of Waivers. Guarantor warrants and agrees
that each of the waivers set forth in this Guaranty is made with full knowledge
of its significance and consequences and that, under the circumstances, the
waivers are reasonable and not contrary to public policy or law. If any of such
waivers are determined to be contrary to any applicable law or public policy,
such waivers shall be effective only to the maximum extent permitted by law.
12. Continuing Guaranty. Guarantor agrees that (a) this is a continuing
guaranty, (b) the Guaranteed Obligations hereunder shall extend to each and
every extension or renewal, if any, of the Note, regardless of whether the
Guaranteed Obligations may, in successive transactions, be paid, repaid,
advanced, or renewed from time to time, and (c) this Guaranty shall remain in
full force and effect until the Guaranteed Obligations are paid in full
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and have been completely satisfied, and shall not be impaired or affected by, or
be deemed to be satisfied by, nor shall Guarantor or the Collateral be
exonerated, discharged, or released by, any of the following events:
12.1 Lender's exercise or enforcement of, or failure or delay
in exercising or enforcing, legal proceedings to collect the Obligations or any
power, right, or remedy with respect to any of the Obligations, the Collateral,
or the Guaranteed Obligations including: (i) any action or inaction of Lender to
perfect, protect, or enforce any security interest in any Collateral; (ii) any
impairment or invalidity of the Collateral or any suspension of Lender's right
to enforce against Borrower any Obligations, any Guaranteed Obligations, or any
security interest in or lien upon the Collateral; or (iii) any change in the
time, manner, or place of payment of, or in any other term of, any or all of the
Obligations or the Guaranteed Obligations, or any other amendment to or waiver
of the Note, any other Loan Document, or any other agreement or instrument
governing or evidencing any of the Obligations or the Guaranteed Obligations;
12.2 insolvency, bankruptcy, reorganization, arrangement,
adjustment, composition, assignment for the benefit of creditors, appointment of
a receiver or trustee for all or any part of Borrower's or Guarantor's assets,
liquidation, winding-up, or dissolution of Borrower or Guarantor;
12.3 any limitation, discharge, cessation, or partial
satisfaction of the Obligations, of any Guaranteed Obligations, whether by
operation of any statute, regulation, or rule of law, or otherwise, regardless
of the intervention or omission of Lender or any invalidity, voidability,
unenforceability, or irregularity, or future change to or amendment of, in whole
or in part, the Note, this Guaranty, any other Loan Document, or any other
document evidencing any Obligations;
12.4 any merger, acquisition, consolidation or change in
structure of Borrower or Guarantor; or any sale, lease, transfer, or other
disposition of any or all of the assets or shares of Borrower or Guarantor;
12.5 any assignment or other transfer, in whole or in part, of
Lender's interest in and rights under the Note or any other Loan Document,
including this Guaranty, or of Lender's interest in the Obligations, the
Guaranteed Obligations, or the Collateral;
12.6 any claim, defense, counterclaim, or set-off, other than
(i) any defense of prior performance or (ii) any defense based on any applicable
provision of the Uniform Commercial Code requiring that the Collateral be
disposed of in a commercially reasonable manner, which Borrower or Guarantor may
have or assert, including any defense of incapacity, disability, or lack of
corporate or other authority to execute any documents relating to the
Obligations, the Guaranteed Obligations, or the Collateral;
12.7 any cancellation, renunciation, or surrender of any debt
instrument evidencing the Obligations or the Guaranteed Obligations;
12.8 Lender's vote, claim, distribution, election, acceptance,
action, or inaction in any bankruptcy or reorganization case related to the
Collateral, the Obligations, or the Guaranteed Obligations;
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12.9 any other action or circumstances that might otherwise
constitute a defense available to, or a legal or equitable discharge of, any
surety, guarantor or pledgor; or
12.10 the fact that any of the Obligations or the Guaranteed
Obligations may become due or payable in connection with or by reason of any
agreement or transaction that may be illegal, invalid, or unenforceable in whole
or in part; it being agreed by Guarantor that the Guaranteed Obligations shall
not be discharged.
13. Subordination. Guarantor hereby agrees that all obligations and all
Indebtedness of Borrower to Guarantor, including any and all present and future
Indebtedness regardless of its nature or manner of origination now or hereafter
to become due and owing by Borrower to Guarantor (collectively, the
"Subordinated Indebtedness"), are hereby unconditionally and forever
subordinated and postponed and shall be inferior, in all respects, to the
Guaranteed Obligations.
13.1 In no circumstance shall any Subordinated Indebtedness be
entitled to any collateral security; provided, that in the event any such
collateral security exists, Borrower hereby agrees that any now existing or
hereafter arising lien upon or security interest in any of the assets of
Borrower in favor of Guarantor, whether created by contract, assignment,
subrogation, reimbursement, indemnity, operation of law, principles of equity or
otherwise, shall be junior and inferior to, and is hereby subordinated in
priority to any now existing or hereafter arising lien or security interest in
favor of Lender in and against the Collateral, regardless of the time, manner or
order of creation, attachment or perfection of the respective liens or security
interests. Guarantor represents and warrants to Lender that as of the date
hereof, none of the Subordinated Indebtedness to which it is a party is secured
by any assets or interests of Borrower or any other entity, and that Guarantor
will not take any security interest or lien to secure any of the Subordinated
Indebtedness without the prior written consent of Lender.
13.2 Without limiting the generality of subparagraph 13.1
above, if (1) any Event of Default under the Note or Loan Documents shall exist
and be continuing, whether or not any notice of any such Event of Default shall
have been given or Lender shall have asserted any remedy in connection
therewith, (2) the Note shall have expired but the Guaranteed Obligations shall
not have been paid and satisfied in full, (3) any insolvency, bankruptcy,
receivership, custodianship, liquidation, reorganization, assignment for the
benefit of creditors, or other similar proceeding relative to Borrower is
commenced by or against Borrower, or (4) any proceeding for the voluntary
liquidation, dissolution or other winding up of Borrower is commenced by or
against Borrower, and whether or not involving insolvency or bankruptcy
proceedings, then and in any such event Guarantor agrees as follows:
i. all Guaranteed Obligations shall first be paid in
full, and finally and indefeasibly be received by Lender,
before any payment or distribution of any character, whether
in cash, securities or other property, shall be made in
respect of the Subordinated Indebtedness; and
ii. any payment or distribution of any character,
whether in cash, securities or other property, which would
otherwise, but for the terms hereof, be payable or deliverable
in respect of the Subordinated Indebtedness, shall be paid or
delivered directly to Lender until all Guaranteed Obligations
shall have been paid in full
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to and indefeasibly received by Lender, and Guarantor, or
any other holder of the Subordinated Indebtedness,
irrevocably authorizes, empowers and directs all receivers,
trustees, liquidators, custodians, conservators, and others
having authority in the premises to effect all such payment
and deliveries.
13.3 If, notwithstanding the provisions of this Guaranty, any
payment or distribution of any character, whether in cash, securities, or other
property, or any security shall be received by Guarantor in contravention of the
terms of this Guaranty, and before all Guaranteed Obligations shall have been
paid in full, such payment, distribution or security shall not be commingled
with any asset of Guarantor, shall be held in trust for the benefit of, and
shall be immediately paid over or delivered or transferred to Lender, or its
representative, for application to the payment of all Guaranteed Obligations
remaining unpaid, until all of the Guaranteed Obligations shall have been paid
in full.
13.4 Guarantor shall not assert, collect, accept payment on or
enforce any of the Subordinated Indebtedness or take collateral or other
security to secure payment of the Subordinated Indebtedness unless and until the
Guaranteed Obligations are paid in full. Guarantor shall not demand payment of,
accelerate the maturity of, or declare a default or event of default under the
Subordinated Indebtedness unless and until the Guaranteed Obligations are paid
in full. Guarantor shall not cause or permit Borrower to make or give, and
Guarantor shall not receive or accept, payment in any form (direct or indirect,
including by transfer to an Affiliate or Subsidiary of Borrower or Guarantor) on
account of the Subordinated Indebtedness, make any transfers in respect of the
Subordinated Indebtedness without the express prior written consent of Lender
(which consent may be withheld for any reason in Lender's sole discretion), or
give any collateral security for the Subordinated Indebtedness. Any payment,
transfer, or collateral security so made or given by Borrower and received or
accepted by Guarantor, without the express prior written consent of Lender,
shall be held in trust by Guarantor for Lender, for the account of Lender, and
Guarantor shall immediately turn over, in kind, any such payment to Lender for
application in reduction of, or (in the case of property other than cash) as
security for, the Guaranteed Obligations.
13.5 Guarantor, or any other holder of the Subordinated
Indebtedness, shall execute and deliver to Lender or its representatives all
such further instruments confirming the authorization referred to in this
Guaranty, any powers of attorney specifically confirming the rights of Lender
arising hereunder, and all proofs of claim, assignments of claim, and any other
instruments, and shall take all such other actions as may be requested by Lender
in order to enable Lender to enforce all claims upon or in respect of such
Subordinated Indebtedness, including authorizing Lender or any of its agents,
nominees or designees to file and prove and vote claims in Lender's name or in
the name of Guarantor, in connection with any receivership, bankruptcy or
proceedings, under the Bankruptcy Code or otherwise.
14. Subrogation. Guarantor will not exercise any rights which it may
acquire by way of subrogation under this Guaranty, by any payment made hereunder
or otherwise, until all the Obligations shall have been paid in full. If any
amount shall be paid to Guarantor on account of such subrogation rights at any
time when all the Obligations shall not have been paid in full, such amount
shall be held in trust for the benefit of Lender, and shall forthwith be paid to
Lender to be credited and applied upon the Obligations, whether matured or
unmatured, in accordance with the terms of the Note. If (i) Guarantor shall make
payment to Lender of all or
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any part of the Obligations and (ii) all the Obligations shall be paid in full,
Lender shall, at Guarantor's request, execute and deliver to Guarantor
appropriate documents, without recourse and without representation or warranty,
necessary to evidence the transfer by subrogation to Guarantor of an interest in
the Obligations resulting from such payment by Guarantor. Nothing herein limits
any right of Guarantor to pay all Obligations in full and thereafter become
subrogated to the position of Lender.
15. Limit of Liability. The obligations of Guarantor under this
Guaranty shall be limited to an aggregate amount equal to the largest amount
that would not render its obligations under this Guaranty subject to avoidance
under Section 548 of the Bankruptcy Code or any comparable provisions of any
applicable state law.
16. Representations and Warranties. To induce Lender to make advances
under the Note, Guarantor makes the following representations and warranties,
each of which shall survive the execution and delivery of this Guaranty:
16.1 Organization. Guarantor is duly organized and validly
incorporated under the laws of the State of Nevada, and is in good standing in
all jurisdictions in which it does business or the ownership of its properties
requires such qualification, except to the extent that the failure to be so
qualified would not have a material adverse effect on the properties, business,
results of operations or financial or other conditions of Guarantor.
16.2 Relationship of Parties. (a) Guarantor has received
copies of the Note and the other Loan Documents and is familiar with and fully
understands all of their terms and conditions; (b) Lender has not made any
representations or warranties to Guarantor regarding the creditworthiness of
Borrower or the prospects of repayment from sources other than Borrower; (c)
this Guaranty is executed at the request of Borrower; (d) Guarantor has
established adequate means of obtaining from Borrower on a continuing basis
financial and other information pertaining to the business of Borrower; and (e)
Guarantor assumes full responsibility for keeping fully informed with respect to
the business, operation, condition and assets of Borrower. Guarantor hereby
agrees that Lender shall have no duty to disclose or report to Guarantor any
information now or hereafter known to Lender relating to the business,
operation, condition and assets of Borrower. Lender shall have no duty to
inquire into the authority or powers of Borrower or any officer, employee or
agent of Borrower with regard to any Guaranteed Obligations, and all Guaranteed
Obligations made or created in good faith reliance upon the professed exercise
of any such authority or powers shall be guaranteed hereunder.
16.3 Execution, Delivery and Performance of Guaranty. The
execution, delivery, and performance by Guarantor of all of its obligations
under this Guaranty have been duly authorized by all necessary action and do not
and will not:
(a) result in or require the creation or imposition of any
lien, right of others, or other encumbrance of any nature (other than under this
Guaranty and any related security documents) upon or with respect to any
property now owned or leased or hereafter acquired by Guarantor;
(b) violate any provision of any law, regulation, judgment,
decree or award presently in effect having applicability to Guarantor;
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(c) result in a breach of, constitute a default under, or
cause or permit the acceleration of any obligation owed under, any indenture,
loan agreement, lease, or any other agreement or instrument, to which Guarantor
is a party or by which Guarantor or any of its property is bound or affected,
except where such breach, default or acceleration would not have a material
adverse effect;
(d) require any consent or approval not heretofore obtained;
or
(e) violate any provision of, or require any consent under,
any agreement applicable to Guarantor.
16.4 Enforceability. This Guaranty, when executed and
delivered, shall constitute a valid and binding obligation of Guarantor which is
enforceable in accordance with its terms, except to the extent that such
enforcement may be limited by applicable bankruptcy, insolvency and other
similar laws affecting creditors rights generally or by principles of equity
pertaining to the availability of equitable remedies.
16.5 Compliance with Laws. Guarantor has complied in all
material respects with all laws, regulations and requirements applicable to its
business and has obtained all authorizations, consents, approvals, orders,
licenses, exemptions from, and has accomplished all filings or registrations or
qualifications with, any court or governmental department, public body,
authority, commission, board, bureau, agency or instrumentality, that may be
necessary for the transaction of its business, except where the failure to do so
would not have a material adverse effect.
16.6 Guarantor's Addresses. Guarantor's name and address are
accurately set forth in Section 22.9.
16.7 No Offset, Defense, or Counterclaim. Guarantor
represents, warrants, and agrees that, as of the date of this Guaranty, the
Guaranteed Obligations are not subject to any offset or defense against Lender
or Borrower of any kind, and Guarantor specifically waives its right to assert
any such defense or right of offset. Guarantor further agrees that the
Guaranteed Obligations shall not be subject to any counterclaims, offsets, or
defenses against Lender or Borrower that may arise in the future, except for (a)
any defense of prior performance or payment, (b) any defense based on any
applicable provision of the Uniform Commercial Code requiring that the
Collateral be disposed of in a commercially reasonable manner, which Borrower or
Guarantor may have or assert, or (c) applicable provisions of the laws of the
State of California governing the disposal of the Collateral upon foreclosure of
the liens created thereon by the Security Agreement dated as of the date hereof
executed by Guarantor in favor of Lender.
16.8 Pending or Threatened Litigation. There are no actions,
suits, proceedings or other litigation (including proceedings by or before any
arbitrator or governmental authority) pending, or to the knowledge of Guarantor,
threatened against Guarantor, which (a) challenge the validity or propriety of
this Guaranty or of the secured financing transactions contemplated under the
Note and the other Loan Documents, (b) could, if adversely determined, have a
material adverse effect on the properties, businesses, results of
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operations or financial or other condition of Guarantor, or (c) could materially
affect the ability of Guarantor to perform its obligations under this Guaranty.
16.9 Consultation with Legal Counsel. Guarantor acknowledges
that the waivers in Sections 8, 9 and 10 herein are a material inducement to
Lender to make the advances under the Note and that Lender is relying upon the
foregoing waivers in its future dealings with Borrower. Guarantor warrants and
represents that it has reviewed the foregoing waivers with its legal counsel and
that, after such review with its legal counsel, Guarantor has agreed to the
foregoing waivers.
17. COVENANTS
17.1 Costs and Expenses of Enforcement. Guarantor agrees to
pay to Lender, on demand, all reasonable out-of-pocket costs and expenses,
including attorneys' fees, incurred by Lender in exercising any right, power or
remedy conferred by this Guaranty, or in the enforcement of this Guaranty,
whether or not any action is filed in connection therewith. Until paid to
Lender, such amounts shall bear interest, commencing with Lender's demand
therefor, at the Default Rate set forth in the Note.
18. DEFAULTS AND REMEDIES
18.1 Events of Default. It shall be an "Event of Default"
hereunder upon the occurrence of any one or more of the following events
(regardless of the reason therefor):
(a) any Event of Default shall occur under the Note or any
other Loan Document;
(b) Guarantor shall fail or neglect to perform, keep or
observe any material provision of this Guaranty or any of the other Loan
Documents to which it is a party;
(c) any material representation or warranty of Guarantor
made under this Guaranty or in any Loan Document or in any written statement
pursuant thereto or hereto, report, financial statement, or certificate made or
delivered to Lender by Guarantor shall be untrue or incorrect, as of the date
when made or deemed made;
(d) Guarantor shall renounce or revoke, or attempt to
renounce or revoke, this Guaranty;
(e) any of the assets of Guarantor shall be attached,
seized, levied upon, or subjected to a writ or distress warrant, or come within
the possession of any receiver, trustee, custodian, or assignee for the benefit
of creditors of Guarantor and shall remain unstayed or undismissed for thirty
(30) consecutive days, (ii) any person other than Guarantor shall apply for the
appointment of a receiver, trustee or custodian for any of Guarantor's assets
and such application shall remain unstayed or undismissed for thirty (30)
consecutive days, or (iii) Guarantor shall have concealed, removed, or permitted
to be concealed or removed, any part of its property, with intent to hinder,
delay, or defraud its creditors or any of them or made or suffered a transfer of
any of its property or the incurring of an obligation which may be
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fraudulent under any bankruptcy, fraudulent conveyance or other similar law, in
each case only to the extent any of the events set forth in clauses (i), (ii) or
(iii) would, individually or in the aggregate, have a material adverse effect on
Guarantor.
(f) a case or proceeding shall have been commenced against
Guarantor in a court having competent jurisdiction seeking a decree or order (i)
under the Bankruptcy Code, or any other applicable federal, state, or foreign
bankruptcy or other similar law, (ii) appointing a custodian, receiver,
liquidator, assignee, trustee or sequestrator (or similar official) of
Guarantor, of any substantial part of its properties, or (iii) ordering the
winding-up or liquidation of the affairs of Guarantor and such case or
proceeding shall remain undismissed or unstayed for thirty (30) consecutive days
or such court shall enter a decree or order granting the relief sought in such
case or proceeding; or
(g) Guarantor shall (i) file a petition seeking relief under
the Bankruptcy Code, or any other applicable federal, state or foreign
bankruptcy or other similar law, (ii) consent to the institution of proceedings
thereunder or to the filing of any such petition or to the appointment of or
taking possession by a custodian, receiver, liquidator, assignee, trustee, or
sequestrator (or similar official) of Guarantor or of any substantial part of
its properties, (iii) fail generally to pay its debts as such debts become due,
or (iv) take any corporate or similar action in furtherance of any such action.
18.2 Remedies. Upon the occurrence of an Event of Default
hereunder and the continuation of such Event of Default after any applicable
cure period provided therefor, Lender may declare all of the Guaranteed
Obligations, immediately and without demand, notice or legal process of any
kind, to be, and such Guaranteed Obligations shall immediately become, due and
payable, and then, or at any subsequent time, Lender may exercise any or all of
its rights and remedies under this Guaranty, the Note, and any other Loan
Documents, and under applicable law, and may, in addition
(a) make demand upon Guarantor for the payment of the
Guaranteed Obligations;
(b) resort to the Collateral for payment of the Guaranteed
Obligations, without notice, declaration, or demand by Lender to the extent not
prohibited by applicable law;
provided, that upon the occurrence of an Event of Default specified in clauses
(e) or (f) of Section 18.1, the Guaranteed Obligations shall become immediately
due and payable without declaration, notice or demand by Lender.
19. APPLICATION OF PAYMENTS
Any payment made by Guarantor under this Guaranty may be applied by
Lender, in Lender's sole discretion, first, to the satisfaction of Guarantor's
indemnification liabilities pursuant to Section 20, and then, in any order that
Lender, in its sole discretion, may determine.
20. INDEMNIFICATION
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Guarantor agrees to indemnify and hold Lender harmless from and against
any liabilities, claims and damages, including reasonable costs, attorneys'
fees, and disbursements, and other expenses incurred or arising by reason of the
taking or the failure to take action by Lender, in good faith, in respect of any
transaction effected under this Guaranty, including any action to enforce
payment of the Guaranteed Obligations, or in connection with any liens upon the
Collateral. The liabilities of Guarantor under this Section 20 shall survive the
termination of this Guaranty.
21. REINSTATEMENT
This Guaranty shall remain in full force and effect and continue to be
effective, as the case may be, if at any time payment and performance of the
Obligations under the Note or the Guaranteed Obligations, or any part thereof,
is, pursuant to applicable law, avoided, rescinded or reduced in amount, or must
otherwise be restored or returned by Lender, or any obligee of the Obligations
under the Note or the Guaranteed Obligations, whether as a "voidable
preference," "fraudulent conveyance," or otherwise, all as though such payment
or performance had not been made. In the event that any payment, or any part
thereof, is avoided, rescinded, reduced, restored, or returned, the Obligations
under the Note or the Guaranteed Obligations, as the case may be, shall be
reinstated and deemed reduced only by such amount paid and not so avoided,
rescinded, reduced, restored, or returned.
22. MISCELLANEOUS
22.1 Cumulative Remedies; No Waiver. The rights, powers and
remedies of Lender hereunder are cumulative and not exclusive of any other
right, power or remedy which Lender would otherwise have. No failure or delay on
the part of Lender in exercising any such right, power or remedy may be, or may
be deemed to be, a waiver thereof; nor may any single or partial exercise of any
such right, power or remedy preclude any other or further exercise thereof or
the exercise of any other right, power or remedy hereunder or under the Note.
22.2 Binding Agreement; Assignment; Amendment. This Guaranty
and the terms, covenants and conditions hereof shall be binding upon and inure
to the benefit of Guarantor, Lender and their respective successors and assigns,
except that Guarantor shall not have power or authority to transfer, convey or
assign this Guaranty or any right or obligation hereunder without the prior
written consent of Lender (and any attempt to do so shall be void). Guarantor
consents to Agent's assignment of its interests hereunder to any person, in
accordance with the terms of the Note. Neither this Guaranty nor any provision
hereof may be amended, modified, waived, discharged or terminated except by an
instrument in writing duly signed by or on behalf of Lender.
22.3 Consent to Loan Documents. Guarantor hereby acknowledges
it has received copies of, and consents to, all of the Loan Documents.
22.4 Counterparts. This Guaranty may be executed in any number
of counterparts and any party hereto may execute any counterpart, each of which
when executed and delivered shall be deemed to be an original and all of which,
taken together, shall be deemed to be but one and the same instrument.
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22.5 Severability. In the event that any one or more of the
provisions contained in this Guaranty shall be determined to be invalid,
illegal, or unenforceable in any respect for any reason, the validity, legality,
and enforceability of any such provision or provisions in every other respect,
and the remaining provisions of this Guaranty, shall not be in any way impaired.
22.6 Section Titles. The section titles contained in this
Guaranty are and shall be without substantive meaning or context of any kind
whatsoever and are not a part of the agreement between the parties hereto.
22.7 Interpretation. No provision of this Guaranty or any of
the other Loan Documents shall be construed against or interpreted to the
disadvantage of any party hereto by any court or other governmental or judicial
authority by reason of such party's having or being deemed to have structured,
drafted or dictated such provision.
22.8 Further Assurances. Guarantor agrees that it will, at its
expense, upon the written request of Lender, from time to time, promptly execute
and deliver to Lender any additional instruments or documents reasonably
considered necessary by Lender to cause this Guaranty to be, become, or remain
valid and effective in accordance with its terms.
22.9 Notices. Whenever Guarantor or Lender shall desire or is
required to give or serve any notice, demand, request or other communication
with respect to this Guaranty, each such notice, demand, request or other
communication shall be in writing and shall be deemed to have been given, sent,
served and received, upon the following dates in the following manner: (i) in
person with receipt acknowledged on the date of receipt; or (ii) by facsimile
transmission, with receipt electronically confirmed during normal business hours
of recipient, on the date of transmission, provided that no later than one (1)
business day following such transmission, a copy of such facsimile shall be
mailed by first class mail, postage prepaid; or (iii) by overnight delivery
service on the next business day following delivery to such overnight delivery
service, in each case addressed as set forth below, or at such other address or
facsimile transmission number as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice.
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GUARANTOR:
Knightsbridge Fine Wines, Inc.
c/o Xxxx Xxxxxxx
00 Xxxxxxxxxx Xxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
LENDER:
The Travelers Insurance Company
0000 Xxxxx Xxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Re: Loan No. 030234459
22.10 Non-Waiver. None of the obligations of Guarantor, and no
right or remedy of Lender under this Guaranty, shall be deemed to have been
suspended or waived by Lender, nor shall Lender be estopped from asserting any
such right or remedy, by Lender's conduct or oral statements, but any such
suspension or waiver of any such right or remedy by Lender must be in writing
and signed by Lender. Any suspension or waiver by Lender of any of its rights or
remedies under this Guaranty shall not suspend or waive any prior or subsequent
right or remedy, whether of the same or of a different type.
22.11 Limitation of Liability. Neither Lender nor any of its
officers, directors, employees, agents, or counsel shall be liable for any
action lawfully taken or omitted to be taken by it or them hereunder or in
connection herewith, except for its or their own respective gross negligence or
willful misconduct.
22.12 Benefits of Agreement. The provision of this Guaranty
are for the benefit of Lender, and its successors, transferees, endorsees, and
assigns. In the event all or any part of the Obligations are transferred,
endorsed, or assigned by Lender to any person in accordance with the terms of
the Note, any reference to "Lender" herein shall be deemed to refer equally to
such person.
22.13 Entire Agreement. This Guaranty constitutes the entire
and final agreement between Guarantor and Lender with respect to the subject
matter hereof, and supersedes any and all representations or statements, either
written or oral, express or implied, other than those expressly set forth in
this guaranty, made to any party hereto by any person.
22.14 Guaranty Not Secured by Trust Deed. This Guaranty is not
secured by any deed of trust or any other lien upon real property.
22.15 GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN
ANY OF THE LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS GUARANTY AND THE OBLIGATIONS
ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF CALIFORNIA APPLICABLE TO CONTRACTS MADE AND
PERFORMED IN
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SUCH STATE, WITHOUT REGARD TO THE PRINCIPLES THEREOF REGARDING CONFLICT OF LAWS,
AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.
22.16 MUTUAL WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN
CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY
RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE
STATE AND FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES
DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS.
THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL
SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY
IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO ENFORCE OR DEFEND ANY RIGHTS OR
REMEDIES UNDER THIS GUARANTY OR ANY OF THE OTHER LOAN DOCUMENTS.
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IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be duly
executed to be effective as of the date first written above.
KNIGHTSBRIDGE FINE WINES, INC., a
Nevada corporation
By:
--------------------------------
Xxxx Xxxxxxx
Chief Executive Officer
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