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Exhibit 10.18
GUARANTY AND SUBORDINATION
IN ORDER TO INDUCE First Community Financial Corporation, an Arizona corporation
("FCFC"), to enter into that certain Accounts Receivable Security Agreement, as
well as any Riders which may be attached thereto (the "Agreements"), all dated
June 23, 1999 with New Directions Manufacturing, Inc., an Arizona corporation
("Borrower"), and in consideration of any credit, advances or financial
accommodations now or hereafter granted to or on behalf of Borrower, and subject
to the limitations set forth in the next sentence, the undersigned and each of
them ("Guarantors") do hereby jointly and severally unconditionally guarantee
the full and prompt payment of all Obligations (as that term is defined in the
Agreements) due or to become due, whether created or incurred before or after
default, absolute or contingent, now existing or hereafter created or arising
out of said Agreements or any other agreement, now or hereafter executed between
Borrower and FCFC as and when the same become due and payable, as well as the
due performance of each and all terms, covenants and conditions contained in
said Agreements, in any other agreement now or hereafter executed between
Borrower and FCFC, or in any supplements or amendments thereto, and further
Guarantors do hereby jointly and severally indemnify FCFC and agree to hold it
harmless against all obligations, demands, losses or other liabilities and
expenses, including attorneys' fees, by whomsoever asserted, suffered, incurred
or paid by FCFC arising out of or in any way related to any transactions under
said Agreements or otherwise. In the event of any default by Borrower in the
payment of any sums or performance of any Obligations arising out of the
Agreements to FCFC, Guarantors, jointly and severally, agree to pay and perform
the same on demand.
Guarantors, and each of them, jointly and severally, agree that: (a)
this guaranty shall be continuing and absolute and shall not be affected or
impaired by any modification, extension or amendment of the Agreements or of any
agreement now or hereafter executed between Borrower and FCFC, nor by any
modification, extension of time for the payment of, forbearance, settlement,
release, surrender, exchange or discharge of any obligation herein guaranteed,
or any collateral therefor, or the extension of additional credit after default
or the release of any security after default, whether material or otherwise, nor
by the death or release of any of the Guarantors; and (b) the liability of each
Guarantor hereunder is direct and unconditional and may be enforced without
requiring FCFC first to exercise, enforce, or exhaust any right or remedy
against Borrower, any other Guarantor or collateral, and shall continue in full
force and effect until all Obligations of Borrower to FCFC shall have been fully
paid, satisfied and performed. Each Guarantor acknowledges receipt of separate
consideration for the execution of this Guaranty.
Each Guarantor hereby waives: (a) notice of acceptance hereof, notice
of extensions of credit from time to time by FCFC to Borrower, presentment for
payment, demand, protest, notice of dishonor, notice of default, notice of
nonpayment and all other notices to which the Guarantors might otherwise be
entitled, (b) any defense which the Guarantors may have by reason of any defense
which Borrower may have against FCFC other than payment and performance of all
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Obligations of Borrower to FCFC, (c) any and all right to assert against FCFC
any claims or defenses based upon any failure of FCFC to furnish to Guarantors
any information or facts relating to the ability of Borrower to pay and to
perform Borrower's Obligations under the Agreements, (d) all defenses,
counterclaims and setoffs of any kind or nature in connection with the validity
and/or enforceability of this Guaranty arising directly or indirectly from the
nonperfection, insufficiency, invalidity or nonenforceability of the Agreements,
(e) any and all right to assert against FCFC any claim or defense based upon any
election of remedies by FCFC, which in any manner impairs, affects, reduces,
releases or extinguishes Guarantors' subrogation rights or Guarantors' right to
proceed against Borrower for reimbursement or any other rights of Guarantors
against Borrower or against any other person or security, and (f) any right,
title or interest, whether by subrogation or otherwise, in any collateral
however or whenever assigned to FCFC until all Obligations of Borrower to FCFC
have been fully paid, satisfied and performed; and (g) all defenses by reason of
any extensions of time given by FCFC to Borrower, any failure of FCFC to pursue
Borrower or Borrower's property or to resort to other security, guarantees or
remedies. Guarantors agree that FCFC shall be under no obligation to xxxxxxxx
any assets in favor of Guarantors or any of them, or against or in payment of
any or all of the indebtedness of Borrower to FCFC.
If Borrowers or any of the Guarantors should at any time become
insolvent, or make as assignment of the benefit of creditors, or if a petition
in bankruptcy or any insolvency or reorganization proceedings be commenced by or
against Borrower or any of the Guarantors, all obligations of each Guarantor
shall, at the option of FCFC, forthwith become due and payable without notice.
Guarantors hereby subordinate the payment of all present and future
indebtedness of Borrower to Guarantors or any of them to the payment of any and
all Obligations of Borrower to FCFC, and Guarantors hereby subordinate in favor
of FCFC all present and future interest of Guarantors, and any of them, in and
to any and all property and assets now owned or hereafter acquired by Borrower.
Guarantors agree that they shall not demand, xxx for, take, receive payment of,
conveyance of or any transfer of (including the grant of a security or security
interest) money, property or assets of Borrower, without the prior written
consent of FCFC. Guarantors agree that in the event of any distribution,
division or application, partial or complete, voluntary or involuntary, by
operation of law or otherwise, of all or any part of the assets of Borrower
among its creditors, or upon any indebtedness of Borrower, accruing by reason of
the liquidation, dissolution or other winding up of Borrower, or by reason of
any foreclosure or execution sale, or receivership, insolvency or bankruptcy
proceedings, or proceedings for reorganization or readjustment of Borrower or
its properties, or otherwise, then in any such event, FCFC shall be preferred in
the payment of its claims over any claims of any Guarantors against Borrower or
any of its assets or properties, and the Obligations owing to FCFC shall be
first paid and satisfied in full before any payment or distribution of any kind
or character, whether in cash, property or securities, shall be made to
Guarantors or any of them. Guarantors represent that no indebtedness of Borrower
to Guarantors is or shall be evidenced by negotiable instruments unless any
existing negotiable instrument has been endorsed and delivered to FCFC and
unless any future negotiable instrument shall be endorsed and delivered to FCFC
forthwith upon execution thereof. As security for this
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guaranty, Guarantors do hereby assign, transfer and set over to FCFC all
indebtedness of Borrower to Guarantors with full power of attorney to make,
present, file and vote proofs of claims and to receive and collect any and all
dividends or other payments incident to any liquidation, bankruptcy,
receivership or assignment for the benefit of creditors of Borrower. This power,
being coupled with an interest, is irrevocable until all Obligations of Borrower
to FCFC are paid in full. Nothing herein shall be construed as an undertaking on
the part of FCFC to make any loan to Borrower.
Guarantors hereby represent that they were not induced to give this
Guaranty by the fact that there are or may be other guarantors either under this
instrument or otherwise. FCFC shall have the right to seek recourse against
Guarantors to the full extent provided for herein and in any other document or
instrument evidencing obligations of Guarantors to FCFC, and against Borrower,
to the full extent provided for in any agreement between FCFC and Borrower. No
election to proceed in one form of action or proceeding, or against any party,
or on any obligation, shall constitute a waiver of FCFC's right to proceed in
any other form of action or proceeding or against other parties, unless FCFC has
expressly waived such right in writing. Specifically, but without limiting the
generality of the foregoing, no action or proceeding by FCFC against Borrower
under any document or instrument evidencing or securing the Obligations of
Borrower to FCFC shall serve to diminish the liability of Guarantors except to
the extent FCFC realizes payment from such action or proceeding, notwithstanding
the effect of any such action or proceeding upon Guarantors' right of
subrogation against Borrower. Guarantors are fully aware of the financial
condition of the Borrower. Guarantors deliver this Guaranty and Subordination
based solely upon their own independent investigation and in no part upon any
representation or statement of FCFC with respect thereto. Guarantors are in a
position to and hereby assume full responsibility for obtaining any additional
information concerning Borrower's financial condition as Guarantors may deem
material to their obligations hereunder and Guarantors are not relying upon, nor
expecting FCFC to furnish them any information in FCFC's possession concerning
Borrower's financial condition. By acceptance hereof, FCFC and Guarantors agree
that Guarantors hereby knowingly accept the full range of risk encompassed
within a contract of "continuing guaranty" which risk includes, but without
limitation, the possibility that Borrower will contract additional indebtedness
for which Guarantors may be liable hereunder after Borrower's financial
condition or ability to pay its lawful debts when they fall due has deteriorated
and Guarantors understand that the amount of the Obligations may be increased or
decreased and the ratios of the Obligations to collateral may be changed
adversely to Guarantors at the sole discretion of FCFC.
This Guaranty may be terminated as to any Guarantor only as of the
anniversary of the effective date of said Agreement by giving FCFC sixty (60)
days prior written notice by registered or certified mail; such termination
shall be applicable only to transactions having their inception after the
effective date of said termination and shall not affect the rights and
obligations arising out of transactions having their inception prior to such
date. Neither the death, incompetency, bankruptcy, receivership, release of, or
revocation by any Guarantor shall affect the continuing liability of any of the
Guarantors remaining hereunder.
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This is a guarantee by the parent corporation of the obligations of the
subsidiary corporation and is not a personal guarantee by any officer, director
or other individual.
The Guarantors agree to pay all expenses incurred by FCFC in connection
with the enforcement of its right under this Guaranty, including, but not
limited to, court costs, collection charges and attorneys' fees.
The separate property of each Guarantor shall be liable for the payment
of all Obligations herein guaranteed. Guarantor represents and warrants that
Guarantor is married.
This Guaranty shall be binding upon the respective heirs,
representatives, successors and assigns of each Guarantor and shall inure to
FCFC its successors, assigns and affiliates.
This Guaranty is delivered and made in and shall be construed pursuant
to the laws of the State of Arizona.
IN WITNESS WHEREOF, the undersigned do hereby jointly and severally execute
this Guaranty and Subordination this 23rd day of June, 1999.
Guarantor
New Directions Manufacturing, Inc.,
a Nevada corporation
By: /s/ Xxxxxx X. Xxxxx
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Xxxxxx X. Xxxxx
Its: President
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By: /s/ Xxxx X. Xxx
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Xxxx X. Xxx
Its: Chairman of the Board
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