EXHIBIT 10.20
CHART HOUSE GUARANTY AGREEMENT
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This CHART HOUSE GUARANTY AGREEMENT (this "AGREEMENT"), dated as of
December 10, 1997, is between CHART HOUSE ENTERPRISES, INC., a Delaware
corporation ("GUARANTOR"), and FINOVA CAPITAL CORPORATION, a Delaware
corporation ("FINOVA"). All capitalized terms used but not elsewhere defined in
this Guaranty shall have the respective meanings ascribed to such terms in the
Loan Agreement described below.
PRELIMINARY STATEMENT:
A. Islands California/Arizona LP, a Delaware limited partnership
("BORROWER"), and FINOVA have entered into a Loan Agreement of even date
herewith (as the same may be amended, supplemented, modified or restated from
time to time, the "LOAN AGREEMENT") pursuant to which FINOVA has agreed to make
the Loan to Borrower, subject to the terms and conditions set forth in the Loan
Agreement.
B. On the Closing Date Borrower will use the proceeds of the Loan,
together with Borrower's cash on hand, among other things to distribute to
Borrower's general partner, Islands CA/AZ Holdings LP, a Delaware limited
partnership ("GENERAL PARTNER"), an amount which shall be used by General
Partner to repay in full all currently existing outstanding indebtedness of
General Partner to Guarantor or Guarantor's wholly owned subsidiary, Big Wave,
Inc., in an outstanding principal amount of $16,500,000. Accordingly, Guarantor
has a direct financial interest in inducing FINOVA to make the Loan.
C. One of the conditions precedent to the obligation of FINOVA to enter
into the Loan Agreement is the execution and delivery by Guarantor of this
Agreement and the performance by Guarantor of its obligations hereunder.
NOW, THEREFORE, in order to induce FINOVA to enter into the Loan Agreement,
and for other good and valuable consideration, the receipt and sufficiency of
which hereby are acknowledged, the parties hereto hereby agree as follows:
1. GUARANTY OF PAYMENT. Subject to the terms and conditions of this
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Agreement, including, without limitation, the provisions of SECTION 2 and
SECTION 5 below, Guarantor hereby unconditionally and irrevocably guarantees to
FINOVA the punctual payment and performance when due, whether at stated maturity
or by acceleration or otherwise, of Borrower's Obligations. Guarantor agrees
that this Agreement is a present and continuing guaranty of payment and not of
collectibility, and that FINOVA shall not be required to prosecute collection,
enforcement or other remedies against Borrower or any other Person, or to
enforce or resort to any of the Collateral or other rights or remedies
pertaining thereto, before calling Guarantor for payment.
2. LIMITATION OF GUARANTORS' OBLIGATIONS. Notwithstanding anything in
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this Agreement to the contrary, the obligations of Guarantor hereunder
("GUARANTOR'S OBLIGATIONS")
shall be limited to the sum of $4,000,000.00 plus all costs and expenses
incurred by FINOVA under Section 12 hereof. This Agreement automatically shall
terminate, and Guarantor's Obligations shall be deemed to be released and
satisfied in full, as of the second Business Day of January, 2004, or the second
Business Day of any January thereafter, if both of the following conditions are
satisfied as of such day: (i) no Event of Default then exists under the Loan
Instruments, and (ii) the ratio of Operating Cash Flow for the twelve month
period ending on the last day of the preceding calendar year to Fixed Charges
for such period is greater than 1.25.
3. CONTINUING GUARANTY. Subject to the terms and conditions of SECTION 5
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below, Guarantor agrees that Guarantor's Obligations shall be primary
obligations of Guarantor, shall not be subject to any counterclaim, set-off,
abatement, deferment or defense based upon any claim that Guarantor may have
against FINOVA, Borrower or any other Person, and shall remain in full force and
effect without regard to, and shall not be released, discharged, limited or
affected in any way by any circumstance or condition (whether or not Guarantor
shall have any knowledge thereof), including, without limitation:
(a) any lack of validity or enforceability of any of the Loan
Instruments;
(b) any termination, restatement, amendment, modification or other
change in any of the Loan Instruments;
(c) any furnishing, exchange, substitution or release of any
Collateral, or any failure to perfect any Lien in any Collateral;
(d) any failure, omission or delay on the part of Borrower or FINOVA
to conform or comply with any term of any of the Loan Instruments or any
failure of FINOVA to give notice of any Incipient Default or any Event of
Default;
(e) any waiver, compromise, release, settlement or extension of time
of payment or performance or observance of any of the obligations or
agreements contained in any of the Loan Instruments;
(f) any action or inaction by FINOVA under or in respect of any of
the Loan Instruments, any failure, lack of diligence, omission or delay on
the part of FINOVA to enforce, assert or exercise any right, power or
remedy conferred on FINOVA in any of the Loan Instruments, or any other
action or inaction on the part of FINOVA;
(g) any voluntary or involuntary bankruptcy, insolvency,
reorganization, arrangement, readjustment, assignment for the benefit of
creditors, composition, receivership, liquidation, marshaling of assets
and. liabilities or similar events or proceedings with respect to Guarantor
or Borrower or any of their respective Property or creditors, or any action
taken by any trustee or receiver or by any court in any such proceeding;
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(h) any merger or consolidation of Guarantor or Borrower into or with
any Person, or any sale, lease or transfer of any of the assets of
Guarantor or Borrower to any other Person;
(i) any change in the relationship between. Guarantor, Borrower or
any other Person, or any termination of any such relationship;
(j) to the extent permitted by law, any release or discharge by
operation of law of Guarantor or Borrower from any obligation or agreement
contained in any of the Loan Instruments; or
(k) to the extent permitted by law, any other occurrence,
circumstance, happening or event, whether similar or dissimilar to the
foregoing and whether foreseen or unforeseen, which otherwise might
constitute a legal or equitable defense or discharge of the liabilities of
a guarantor or surety or which otherwise might limit recourse against
Guarantor or Borrower.
4. WAIVERS. Subject to the terms and conditions of SECTION 5 below,
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Guarantor unconditionally waives, to the extent not prohibited by law, (i)
notice of any of the matters referred to in SECTION 3 above, (ii) all notices
which may be required by statute, rule of law or otherwise, now or hereafter in
effect, to preserve intact any rights against Guarantor, including, without
limitation, any demand, presentment and protest, proof of notice of non-payment
under any of the Loan Instruments or any failure on the part of Guarantor or the
Borrower to perform or comply with any covenant, agreement, term or condition of
any of the Loan Instruments, (iii) any right to the enforcement, assertion or
exercise against Guarantor or the Borrower of any right or remedy conferred
under any of the Loan Instruments, (iv) any requirement of diligence on the part
of any Person, (v) any requirement to exhaust any remedies or to mitigate the
damages resulting from any default under any of the Loan Instruments, (vi) any
notice of any sale, transfer or other disposition of any right, title or
interest of FINOVA under any of the Loan Instruments and (vii) any rights of
Guarantor pursuant to Sections 12-1641 of the Arizona Civil Code or Rule 17(f)
of the Arizona Rules of Civil Procedure.
5. AGREEMENTS OF FINOVA. In consideration of Guarantor's execution and
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delivery of this Agreement, FINOVA hereby agrees as follows:
5.1 NOTICE AND OPPORTUNITY TO CURE. Before calling on Guarantor for
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payment under this Agreement, FINOVA first shall provide written notice to
Guarantor of the occurrence of an Event of Default. Such notice shall
contain a description of the claimed Event of Default, including, without
limitation, the provisions of the Loan Instruments which have been
violated. Guarantor, at its option but without any obligation to do so,
(i) within 10 days after receipt by Guarantor of such notice, may cure any
Event of Default arising due to the failure of Borrower to pay all or any
portion of Borrower's Obligations when the same become due and (ii) within
the same number of days after receipt by Guarantor of such notice as
Borrower is granted under the Loan Agreement to
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cure any other Event of Default, may cure such other Event of Default.
Guarantor shall not be obligated to make any payment in respect of
Borrower's Obligations unless Guarantor has been given notice of the
applicable Event of Default and the opportunity to cure same as described
in this SECTION 5.1.
5.2 RESTRICTIONS ON AMENDMENTS. Without the prior written consent of
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Guarantor, FINOVA shall not agree to any amendment or modification of, or
supplement to, the Loan Instruments as in effect on the date hereof, the
effect of which is to (i) increase the rate of interest on or fees payable
by Borrower thereunder, (ii) alter the dates fixed for payment of interest
and principal thereunder, (iii) shorten the final maturity date of
Borrower's Obligations, (iv) if the effect of all such amendments,
modifications or supplements would increase the Principal Balance by an
amount in excess of 20% of the Principal Balance outstanding as of the
Closing Date or (v) make the covenants and Events of Default contained in
the Loan Instruments materially more restrictive.
5.3 RELEASES OF COLLATERAL. Without the prior written consent of
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Guarantor, FINOVA shall not release any Liens on the Collateral except in
connection with the sale, transfer or other disposition in an arm's length
transaction to a third party which is not an Affiliate of Borrower or
FINOVA of Collateral having a fair value (as conclusively determined by the
purchase price payable by the buyer in such sale, transfer or other
disposition) not in excess of 20% of the Principal Balance outstanding as
of the Closing Date for all such sales, transfers or other dispositions,
provided the gross cash proceeds of each such sale, transfer or other
disposition, after deduction of all reasonable, customary and documented
costs and expenses of such sale, transfer or other disposition, are applied
in permanent reduction of the Principal Balance.
5.4 SUBROGATION AND OTHER RIGHTS. Guarantor does not waive, and
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hereby retains, all rights of subrogation, reimbursement, restitution,
contribution and similar rights Guarantor may have as a result of any
amounts Guarantor may pay to FINOVA under or with respect to this Guaranty.
6. SUBORDINATION. Guarantor agrees that any and all present and future
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debts and obligations of the Borrower to Guarantor hereby are subordinated to
the claims of FINOVA. Until Borrower's Obligations are paid and performed in
full, Guarantor shall not take any action or exercise any remedies available to
Guarantor, either at law or in equity, to (i) collect any such debts and
obligations or (ii) enforce any rights of subrogation, reimbursement,
contribution, restitution or payment with respect to any amounts Guarantor may
pay to FINOVA under or with respect to this Guaranty.
7. REINSTATEMENT. Subject to the limitations described herein,
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Guarantor's Obligations shall continue to be effective or automatically be
reinstated, as the case may be, if at any time payment of any of Borrower's
Obligations is rescinded or otherwise must be restored or returned by FINOVA
upon the insolvency, bankruptcy, dissolution, liquidation or reorganization
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of Guarantor or the Borrower or for any other reason, all as though such payment
had not been made.
8. REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants to
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FINOVA as follows:
8.1 BINDING AGREEMENTS. This Agreement constitutes the valid and
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legally binding obligations of Guarantor, enforceable against Guarantor in
accordance with its respective terms, except as such enforceability may be
limited by (i) applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws now or hereafter in effect affecting the
enforcement of creditors' rights generally, and (ii) equitable principles
(whether or not any action to enforce such document is brought at law or in
equity).
8.2 DEFAULTS IN OTHER AGREEMENTS; CONSENTS; CONFLICTING AGREEMENTS.
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Guarantor is not in default under any agreement to which Guarantor is a
party or by which Guarantor or any of Guarantor's Property is bound, the
effect of which default could reasonably be expected to materially impair
the ability of FINOVA to collect Guarantor's Obligations. No
authorization, consent, approval or other action by, and no notice to or
filing with, any Governmental Body or any other Person which has not
already been obtained, taken or filed, as applicable, is required (i) for
the due execution, delivery or performance by Guarantor of this Agreement
or (ii) as a condition to the validity or enforceability of this Agreement.
No provision of any mortgage, indenture, contract, agreement, statute,
role, regulation, judgment, decree or order binding on Guarantor or
affecting the Property of Guarantor conflicts with, or requires any consent
which has not already been obtained under, or would in any way prevent the
execution, delivery or performance of the terms of this Agreement. The
execution, delivery and performance of the terms of this Agreement will not
constitute a default under, or result in the creation or imposition of, or
obligation to create, any Lien upon the Property of Guarantor pursuant to
the terms of any such mortgage, indenture, contract or agreement.
8.3 TAXES. Guarantor has filed all tax returns required to be filed,
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and has paid, or made adequate provision for the payment of, all taxes
shown to be due and payable on such returns or in any assessments made
against Guarantor, and no tax Liens have been filed and no claims are being
asserted in respect of such taxes. None of the tax returns of Guarantor
are under audit.
8.4 COMPLIANCE WITH APPLICABLE LAWS. Guarantor is not in default in
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respect of any judgment, order, writ, injunction, decree or decision of any
Governmental Body, the effect of which default could reasonably be expected
to materially impair the ability of FINOVA to collect Guarantor's
Obligations.
8.5 NO MISREPRESENTATION. Neither this Agreement nor any other Loan
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Instrument furnished by or on behalf of Guarantor to FINOVA in connection
with any of the transactions contemplated hereby or thereby, contains or
will contain a misstatement
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of material fact, or omits or will omit to state a material fact required
to be stated in order to make the statements contained herein or therein,
taken as a whole, not misleading in the light of the circumstances under
which such statements were made.
8.6 LITIGATION. There are no actions, arbitration proceedings or
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claims pending or, to the best knowledge of Guarantor, threatened against
Guarantor or maintained by Guarantor at law or in equity or before any
Governmental Body, which, if adversely determined, could reasonably be
expected to impair the ability of FINOVA to collect Guarantor's
Obligations.
9. REMEDIES ON DEFAULT. If any Event of Default occurs and is
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continuing, (i) Guarantor shall, subject to the terms and conditions of this
Agreement, including, without limitation, SECTION 2 and SECTION 5, pay
Borrower's Obligations to FINOVA in full, immediately upon demand and (ii)
FINOVA, at its option, may enforce its rights and remedies under this Agreement
in accordance with its terms and enforce any other rights or remedies accorded
to FINOVA at equity or law, by virtue of statute or otherwise.
10. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of
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FINOVA and its successors and assigns permitted under the Loan Agreement. This
Agreement shall be binding on Guarantor and its successors and assigns and shall
continue in full force and effect until all of Borrower's Obligations are paid
and performed in full, subject to the limitations described above.
11. NO WAIVER OF RIGHTS. Neither any delay in exercising, nor any failure
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on the part of FINOVA to exercise any right, power or privilege under this
Agreement, any of the other Loan Instruments shall operate as a waiver thereof,
and no single or partial exercise of any right, power or privilege shall
preclude any other or further exercise thereof or the exercise of any other
power or right, or be deemed to establish a custom or course of dealing or
performance among the parties hereto. The rights and remedies herein provided
are cumulative and not exclusive of any rights or remedies provided by law. No
notice to or demand on Guarantor in any case shall entitle Guarantor to any
other or further notice or demand in the same, similar or any other
circumstance.
12. MODIFICATION. The terms of this Agreement may be waived, discharged
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or terminated only by an instrument in writing signed by the party against which
enforcement of the change, waiver, discharge or termination is sought. No
amendment, modification, waiver or other change of any of the terms of this
Agreement shall be effective without the prior written consent of FINOVA.
13. COSTS AND EXPENSES. Guarantor agrees to pay on demand all reasonable
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costs and expenses incurred by or on behalf of FINOVA (including, without
limitation, reasonable attorneys' fees and expenses) in enforcing Guarantor's
Obligations.
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14. JURISDICTION. GUARANTOR HEREBY AGREES THAT ALL ACTIONS OR PROCEEDINGS
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ARISING DIRECTLY OR INDIRECTLY OUT OF THIS AGREEMENT, ANY OR ALL OF THE OTHER
LOAN INSTRUMENTS SHALL BE LITIGATED IN THE SUPERIOR COURT OF ARIZONA, MARICOPA
COUNTY, OR THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA OR, IF
FINOVA INITIATES SUCH ACTION, IN ADDITION TO THE FOREGOING COURTS, ANY OTHER
COURT IN WHICH FINOVA SHALL INITIATE OR TO WHICH FINOVA SHALL REMOVE SUCH
ACTION, TO THE EXTENT SUCH COURT HAS JURISDICTION. GUARANTOR HEREBY EXPRESSLY
SUBMITS AND CONSENTS IN ADVANCE TO JURISDICTION IN ANY ACTION OR PROCEEDING
COMMENCED IN OR REMOVED BY FINOVA IN ANY OF SUCH COURTS, AND HEREBY WAIVES
PERSONAL SERVICE OF THE SUMMONS AND COMPLAINT, OR OTHER PROCESS OR PAPERS ISSUED
THEREIN, AND AGREES THAT SERVICE OF SUCH SUMMONS AND COMPLAINT OR OTHER PROCESS
OR PAPERS MAY BE MAILED, POSTAGE PREPAID, EITHER BY REGISTERED OR CERTIFIED
MAIL, RETURN RECEIPT REQUESTED, OR BY OVERNIGHT EXPRESS CARRIER, ADDRESSED TO
GUARANTOR AT THE ADDRESS SET FORTH BELOW IT SIGNATURE ON THIS AGREEMENT.
GUARANTOR WAIVES ANY CLAIM THAT PHOENIX, ARIZONA OR THE DISTRICT OF ARIZONA IS
AN INCONVENIENT FORUM OR AN IMPROPER FORUM BASED ON LACK OF VENUE. SHOULD
GUARANTOR, AFTER BEING SO SERVED, FAIL TO APPEAR OR ANSWER TO ANY SUMMONS,
COMPLAINT, PROCESS OR PAPERS SO SERVED WITHIN THE PERIOD OF TIME PRESCRIBED BY
LAW AFTER THE MAILING THEREOF, GUARANTOR SHALL BE DEEMED IN DEFAULT AND AN ORDER
AND/OR JUDGMENT MAY BE ENTERED BY FINOVA OR FINOVA AGAINST GUARANTOR AS DEMANDED
OR PRAYED FOR IN SUCH SUMMONS, COMPLAINT, PROCESS OR PAPERS. THE EXCLUSIVE
CHOICE OF FORUM FOR GUARANTOR SET FORTH IN THIS SECTION SHALL NOT BE DEEMED TO
PRECLUDE THE ENFORCEMENT BY FINOVA OF ANY JUDGMENT OBTAINED IN ANY OTHER FORUM
OR THE TAKING BY FINOVA OF ANY ACTION TO ENFORCE THE SAME IN ANY OTHER
APPROPRIATE JURISDICTION.
15. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED AS TO VALIDITY,
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INTERPRETATION, EFFECT AND IN ALL OTHER RESPECTS BY LAWS AND DECISIONS OF THE
STATE OF ARIZONA. FOR PURPOSES OF THIS SECTION 16, THIS AGREEMENT SHALL BE
DEEMED TO BE PERFORMED AND MADE IN THE STATE OF ARIZONA.
16. WAIVER OF RIGHT TO JURY TRIAL. FINOVA AND GUARANTOR ACKNOWLEDGE AND
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AGREE THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT, ANY OF THE
OTHER LOAN INSTRUMENTS, OR WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED
THEREBY, WOULD BE BASED UPON DIFFICULT AND COMPLEX ISSUES AND THEREFORE, FINOVA
AND GUARANTOR AGREE THAT ANY COURT PROCEEDING ARISING OUT OF
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ANY SUCH CONTROVERSY WILL BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A
JUDGE SITTING WITHOUT A JURY.
17. TIME OF ESSENCE. Time is of the essence in the performance by
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Guarantor of the obligations under this Agreement.
18. NO JOINDER. Guarantor agrees that any action to enforce this
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Agreement may be brought against Guarantor without any reimbursement or joinder
of any Borrower in such action.
19. SEVERABILITY. If any provision of this Agreement is deemed to be
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invalid by reason of the operation of any law, or by reason of the
interpretation placed thereon by any court or other Governmental Body, this
Agreement shall be construed as not containing such provision and the invalidity
of such provision shall not affect the validity of any other provision hereof,
and any and all other provisions hereof which otherwise are lawful and valid
shall remain in full force and effect.
20. NOTICES. All notices given under the terms of this Agreement shall be
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in writing and shall be given and deemed received in the manner set forth in
Section 12.1 of the Loan Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
CHART HOUSE ENTERPRISES, INC., a Delaware
corporation
By: /s/ XXXXXXX X. XXXXXX
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Name: Xxxxxxx X. Xxxxxx
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Title: Vice President - Legal Affairs
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FINOVA CAPITAL CORPORATION,
a Delaware corporation
By: /s/ XXXXXXX X. XXXX
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Name: Xxxxxxx X. Xxxx
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Title: Vice President Contract Adm
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