EXHIBIT 10.6
GUARANTY
THIS GUARANTY (the "Guaranty") is entered into on March 18, 2005 by
American Vantage Companies, a Nevada corporation (hereinafter the "Guarantor"),
with a business address of 0000 Xxxxx Xxxxxxx Xxxxx, Xxxxx 000, Xxx Xxxxx,
Xxxxxx 00000, for the benefit of Xx Xxxxxxxxxx, an individual residing at 00
Xxxxxx Xxxxxxx, Xxxxx Xxxxx, Xxx Xxxx 00000 ("Cattabiani"), Xxx Xxxxxx, an
individual residing at 000 Xxxxx Xxxx Xxxx, Xxxxxxxxx, Xxxxxxxxxxx, 00000
("Xxxxxx"), Xxxxx Xxxxxxx Xxxxxx, an individual residing at 000 Xxxxx Xxxx Xxxx,
Xxxxxxxxx, Xxxxxxxxxxx, 00000 ("Xxxxxxx Xxxxxx"), and Xxxx Xxxxxx Xxxxxxx, an
individual residing at 000 Xxxxxxxx Xxxxx, Xxxxxx Xxxxx, Xxx Xxxx 00000
("Xxxxxxx"). Cattabiani, Miller, Xxxxxxx Xxxxxx and Xxxxxxx shall be
individually referred to as a "Seller" and collectively as the "Sellers".
WITNESSETH
WHEREAS, pursuant to the terms of a Stock Purchase Agreement dated as of
February 3, 2004 (the "Agreement"), among the Sellers and American Vantage Media
Corporation, a Nevada corporation ("Media"), a wholly owned subsidiary of the
Guarantor, the Sellers sold and Media purchased all of the issued and
outstanding capital stock of Wellspring Media, Inc., a Delaware corporation
("Wellspring"), owned by the Sellers (the "Shares"); and
WHEREAS, pursuant to the terms and conditions of the Agreement and in
furtherance of the sale and purchase of the Shares (the "Sale"), Media executed
and delivered to the applicable Seller the following promissory notes
(collectively the "Notes"): (i) a secured negotiable promissory note dated
February 3, 2004 in the principal amount of $1,076,704.00 to Cattabiani; (ii) a
secured negotiable promissory note dated February 3, 2004 in the principal
amount of $65,472.00 to Xxxxxxx; (iii) a secured negotiable promissory note
dated February 3, 2004 in the principal amount of $965,712.00 to Xxxxxxx Xxxxxx;
(iv) a secured negotiable promissory note dated February 3, 2004 in the
principal amount of $965,712.00 to Xxxxxx; and (v) a secured non-negotiable
promissory note dated February 3, 2004 in the principal amount of $200,000.00 to
Cattabiani; and
WHEREAS, in order to induce certain of the Sellers to execute and deliver
the Agreement, Wellspring guaranteed the obligations of Media under the
Agreement and the Notes by executing and delivering to the Sellers and Jefferies
& Company, Inc. ("Jefferies") a Guaranty Agreement dated February 3, 2004 (the
"Wellspring Guaranty"); and
WHEREAS, as a condition of the Sale, the Wellspring Guaranty was secured
by a Security Agreement dated February 3, 2004 from Wellspring to the Sellers
and Xxxxxxxx (the "Wellspring Security Agreement") and a pledge of the Shares
pursuant to a Stock Pledge Agreement dated February 3, 2004 from Media to the
Sellers and Jefferies (the "Pledge Agreement")"; and
WHEREAS, an Event of Default, as such term is defined in the Notes has
occurred and remains uncured, which also constitutes an Event of Default under
the Wellspring Security Agreement and the Pledge Agreement; and
WHEREAS, the Sellers have agreed to waive the Event of Default under the
Notes, the Pledge Agreement and the Wellspring Security Agreement if, and on the
condition that Guarantor guarantee all of the obligations of Media pursuant to
the Notes, the Agreement, the Pledge Agreement, the Security Agreement, and the
other documents executed pursuant thereto (the "Waiver"); and
WHEREAS, to secure performance of the obligations of the Guarantor
hereunder, the Guarantor has agreed to deposit certain sums, to be held in
escrow pursuant to the terms of an Escrow Agreement executed contemporaneously
herewith (the "Escrow Agreement");
NOW, THEREFORE, the parties hereto agree as follows:
1. Capitalized terms used but not defined herein shall have the
meanings set forth in the Agreement.
2. In consideration of the Waiver, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Guarantor hereby unconditionally guarantees to the Sellers, their successors and
assigns the prompt payment and performance of each and every obligation and
liability of Media to the Sellers according to the terms of the Agreement, the
Notes, the Pledge Agreement, the Security Agreement by no later than February 4,
2006 and the Escrow Agreement (collectively the "Documents"). The Guarantor
agrees that, with or without notice or demand, the Guarantor will reimburse
Sellers for all costs and expenses (including but not limited to reasonable
counsel fees) incurred by Sellers in connection with the collection, compromise
and/or enforcement of the debts or obligations of Media, Wellspring or Guarantor
pursuant to the Documents and this Guaranty.
3. The Guarantor represents and warrants that it has full corporate
power and authority to execute, deliver and perform this Guaranty.
4. This Guaranty is an absolute and unlimited guaranty of payment,
and not of collection, without regard to the regularity, validity or
enforceability of any liability or obligation of Media except with respect to
any rights of set off contained in the Note from Media to Xx Xxxxxxxxxx dated
February 3, 2004 in the amount of $200,000 and only to the extent that a claim
for setoff has been made; and the Sellers may, at their option, proceed directly
and at once, without notice, against the Guarantor to collect and recover the
full amount of the liability hereunder or any portion thereof, without
proceeding against Media or any other person, or foreclosing upon, selling, or
otherwise disposing of or collecting or applying against any of the collateral
under the Documents. The Guarantor hereby waives presentment, demand, protest,
and notice of any kind, including but not limited to notice of acceptance,
protest, non-payment, non-performance or non-observance.
5. This Guaranty may not be changed or discharged orally, but only
by an agreement in writing signed by the party against whom enforcement of any
such change or discharge is sought.
6. In such manner, on such terms, and at such times as they deem
best, and with or without notice to the Guarantor, Sellers may alter,
compromise, amend, or change the time or manner for the payment of any
indebtedness, increase or reduce the rate of interest thereon, release or add
any one or more guarantors or endorsers, accept additional or substituted
security, or release and subordinate any security. No exercise or non-exercise
by the Sellers of any right hereby given it, no dealing by Sellers with Media or
any guarantor or endorser, no change,
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impairment, or suspension of any right or remedy of Sellers shall in any way
affect any of the Guarantor's obligations hereunder or give the Guarantor any
recourse against the Sellers.
7. Guarantor further hereby agrees to deposit certain sums, to be
held in escrow pursuant to the terms of an Escrow Agreement executed
contemporaneously herewith.
8. Guarantor shall be subrogated to the rights of the Sellers for
the full amount of the indebtedness paid by Guarantor, provided however, that
until all indebtedness hereby guaranteed has been paid in full, the Guarantor
shall not assert any right of subrogation unless expressly authorized in writing
by the Sellers.
9. Guarantor's liability shall continue notwithstanding the
incapacity, death, or disability, liquidation, insolvency or bankruptcy of Media
or any other guarantor. The failure by Sellers to file or enforce a claim
against the estate (either an administration, bankruptcy, or other proceeding)
of Guarantor, any other guarantor, Media, or of any other person shall not
affect Guarantor's liability hereunder, nor shall Guarantor be released from
liability if recovery from Media, any other guarantor, or any other person
becomes barred by any statute of limitation or is otherwise prevented. Guarantor
waives and agrees not to assert or take advantage of the defense of the statute
of limitations in any action hereunder or for the collection of any credit
hereby granted.
10. In the event that any action or other proceedings shall be
brought to enforce this Guaranty or any provision hereof, the same may be
maintained by one action or joined with any action or other proceedings against
Media and/or any other guarantor of Media's obligations to the Sellers. Prior
action or suit against Media whether alone or jointly with other guarantors,
shall not be a prerequisite to Sellers' right to proceed hereunder in case of
any default by Media. The rights of Sellers are cumulative and shall not be
exhausted by exercise of any rights hereunder or otherwise against Guarantor by
any number of successive actions until and unless all indebtedness hereby
guaranteed has been paid or performed, and Guarantor's obligations hereunder
have been fully satisfied.
11. Should any one or more provisions of this guaranty be determined
to be illegal or unenforceable, all other provisions nevertheless shall remain
effective.
12. The Guarantor further agrees that the validity of this Guaranty
and the obligations of the Guarantor hereunder shall in no way be terminated,
affected or impaired: (a) by reason of the assertion by Media of any rights or
remedies which it may have under or with respect to any of the Documents,
against any person obligated thereunder, except with respect to any rights of
set off contained in the Note from Media to Xx Xxxxxxxxxx dated February 3, 2004
in the amount of $200,000 and only to the extent that a claim for setoff has
been made; or (b) by reason of any failure to file or record any of such
instruments or to take or perfect any security intended to be provided thereby;
or (c) by reason of the release or exchange of any property covered by the
Documents or other collateral; or (d) by reason of Sellers' failure to exercise,
or delay in exercising, any such right or remedy or any right or remedy Sellers
may have hereunder or in respect to this Guaranty; or (e) by reason of the
commencement of a case under the Bankruptcy Code by or against Media, the
Guarantor or any person or entity obligated under the Documents, or liquidation
of the Guarantor; or (f) by reason of any payment made on the obligations
arising out of the Documents, whether made by Media or any Guarantor or any
other person, which is required to be refunded pursuant to any bankruptcy or
insolvency law; it being understood that no payment so refunded shall be
considered as a payment of any portion of the
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obligations under the Documents, nor shall it have the effect of reducing the
liability of the Guarantor hereunder. It is further understood, that if Media
shall have taken advantage of, or be subject to the protection of any provision
in the Bankruptcy Code, the effect of which is to prevent or delay Sellers from
taking any remedial action against Media, including the exercise of any option
Sellers have to declare the sums or obligations under the Documents due and
payable on the happening of any default or event by which under the terms of the
Documents, any such sums or obligations shall become due and payable, Sellers
may, as against Guarantor, nevertheless, declare such sums or obligations due
and payable and enforce any or all of its rights and remedies against Guarantor
provided for herein.
13. The Guarantor further covenants that this Guaranty shall remain
and continue in full force and effect as to any modification, extension or
renewal of any of the Documents, that Sellers shall not be under a duty to
protect, secure or insure any security or lien provided by the Documents, and
that other indulgences or forbearance may be granted under any or all of the
Documents, all of which may be made, done or suffered without notice to, or
further consent of, the Guarantor.
14. As a further inducement to the Sellers to enter into the Escrow
Agreement and the Waiver,, and in consideration thereof, the Guarantor further
covenants and agrees: (a) that in any action or proceeding brought by Sellers
against the Guarantor pursuant to this Guaranty, the Guarantor shall and does
hereby waive trial by jury; (b) Guarantor irrevocably consents to service of
process by registered or certified mail, postage prepaid, to it at its address
given in or pursuant to the first paragraph hereof, or such other address as
Guarantor shall give to Sellers by certified mail, postage prepaid, at the
addresses given for the Sellers in the first paragraph hereof, the Guarantor
hereby waiving personal service thereof; (c) that within thirty (30) days after
such mailing, the Guarantor so served shall appear or answer to any summons and
complaint or other process and should the Guarantor so served fail to appear or
answer within said thirty-day period, said Guarantor shall be deemed in default
and judgment may be entered by Sellers against the said party for the amount as
demanded in any summons and complaint or other process so served; (d) with
respect to any claim or action arising hereunder, the Guarantor: (1) irrevocably
submits to the jurisdiction of the courts of the State of New York and the
United States District Court located in New York County; and (2) irrevocably
waives any objection which it may have at any time to the laying on venue of any
suit, action or proceeding arising out of or relating to the Documents brought
in any such court, irrevocably waives any claim that any such suit, action or
proceeding brought in any such court has been brought in an inconvenient forum;
and (e) nothing in this Guaranty will be deemed to preclude Sellers from
bringing an action or proceeding with respect hereto in any other jurisdiction.
15. All reasonable fees, costs and expenses, of any nature, arising
or incurred in connection with the negotiation and preparation of this Guaranty
shall be paid by Guarantor, promptly upon presentment of invoices therefor.
16. This Guaranty shall inure to the benefit of the Sellers, their
successors and/or assigns and shall bind Guarantor's and its successors and
assigns.
17. This Guaranty is and shall be deemed to be a contract entered
into, under, and pursuant to the laws of the State of New York and shall be in
all respects governed, construed, applied, and enforced in accordance with the
laws of the State of New York; and no defense given or allowed by the laws of
any other state or country shall be interposed in any action hereon unless such
defense is also given or allowed by the laws of the State of New York.
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IN WITNESS WHEREOF, the Guarantor has hereunto signed this guaranty as of
the day and year first above written.
AMERICAN VANTAGE COMPANIES, GUARANTOR
By: /s/ Xxxxxx X. Xxxxxxxxx, CEO
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ACKNOWLEDGMENT IN LAS VEGAS
STATE OF NEVADA, COUNTY OF XXXXX XX.:
On March 18th 2005 before me, the undersigned, personally appeared Xxxxxx
X. Xxxxxxxxx personally known to me or proved to me on the basis of satisfactory
evidence to be the individual(s) whose name(s) is (are) subscribed to the within
instrument and acknowledged to me that he/she/they executed the same in
his/her/their capacity(ies), and that by his/her/their signature(s) on the
instrument, the individual(s), or the person upon behalf of which the
individual(s) acted, executed the instrument.
/s/ Joung Mi Jin
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(signature and office of individual
taking acknowledgment)
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