EXHIBIT 7
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GUARANTY
For value received and in consideration of advances made or to be made,
or credit given or to be given, or other financial accommodation afforded or to
be afforded to CRAFTS RETAIL HOLDING CORP., a Delaware corporation (hereinafter
designated as the "Borrower"), by XXXXXX TRUST AND SAVINGS BANK, Chicago,
Illinois (hereinafter called the "Bank"), from time to time, the undersigned
hereby guarantees the full and prompt payment to the Bank at maturity and at all
times thereafter of any and all indebtedness, obligations and liabilities of
every kind and nature of the Borrower to the Bank (including liabilities of
partnerships created or arising while the Borrower may have been or may be a
member thereof), howsoever evidenced, whether now existing or hereafter created
or arising, whether direct or indirect, absolute or contingent, or joint or
several, and howsoever owned, held or acquired, whether through discount,
overdraft, purchase, direct loan or as collateral, or otherwise (hereinafter all
such indebtedness, obligations and liabilities being collectively referred to as
the "Indebtedness"); and the undersigned further agrees to pay all expenses,
legal and/or otherwise (including court costs and reasonable attorneys' fees),
paid or incurred by the Bank in endeavoring to collect the Indebtedness, or any
part thereof, and in protecting, defending or enforcing this guaranty in any
litigation, bankruptcy or insolvency proceedings or otherwise collectively with
the Indebtedness, the "Guarantied Obligations"). Notwithstanding anything herein
to the contrary, the liability of the undersigned hereunder is limited to the
lesser of (x) two percent (2%) of the Guarantied Obligations for which the Bank
seeks recovery under this Guaranty and the Guaranties executed in favor of the
Bank by SUN CAPITAL PARTNERS III QP, LP relating to the Guarantied Obligations
and (y) One Hundred Sixty Thousand Dollars ($160,000) plus interest on all loans
and/or advances hereunder and all expenses hereinbefore mentioned. Payments
received on the Guarantied Obligations from any other guarantor shall not reduce
the amount otherwise recoverable hereunder.
The undersigned further acknowledges and agrees with the Bank that:
1. This guaranty is a continuing, absolute and unconditional guaranty,
and shall remain in full force and effect until written notice of its
discontinuance shall be actually received by the Bank, and also until any and
all of the Indebtedness created, existing or committed to before receipt of such
notice shall be fully paid. The death or dissolution of the undersigned shall
not terminate this guaranty until notice of such death or dissolution shall have
been actually received by the Bank, nor until all of the Indebtedness created or
existing before receipt of such notice shall be fully paid. The granting of
credit from time to time by the Bank to the Borrower in excess of the amount to
which the right of recovery under this guaranty is limited and without notice to
the undersigned, is hereby also authorized and shall in no way affect or impair
this guaranty.
2. In case of the death, incompetency, dissolution, liquidation or
insolvency (howsoever evidenced) of, or the institution of bankruptcy or
receivership proceedings against the Borrower or the undersigned, all of the
Indebtedness then existing shall, at the option of the Bank, immediately become
due or accrued and payable from the undersigned. All dividends or other payments
received from the Borrower or on account of the Indebtedness from whatsoever
source, shall be taken and applied as payment in gross, and this guaranty shall
apply to and secure any ultimate balance that shall remain owing to the Bank.
3. The liability hereunder shall in no wise be affected or impaired by
(and the Bank is hereby authorized to make from time to time, without notice to
anyone), any sale, pledge, surrender, compromise, settlement, release, renewal,
extension, indulgence, alteration, substitution, exchange, change in,
modification or other disposition of any of the Indebtedness, either express or
implied, or of any contract or contracts evidencing any of the Indebtedness, or
of any security or collateral therefor. The liability hereunder shall in no wise
be affected or impaired by any acceptance by the Bank of any security for or
other guarantors upon any of the Indebtedness, or by any failure, neglect or
omission on the part of the Bank to realize upon or protect any of the
Indebtedness, or any collateral or security therefor, or to exercise any lien
upon or right of appropriation of any moneys, credits or property of the
Borrower, possessed by the Bank, toward the liquidation of the Indebtedness, or
by any application of payments or credits thereon. The Bank shall have the
exclusive right to determine how, when and what application of payments and
credits, if any, shall be made on the Indebtedness, or any part thereof. In
order to hold the undersigned liable hereunder, there shall be no obligation on
the part of the Bank, at any time, to resort for payment to the Borrower or to
any other guaranty, or to any other persons or corporations, their properties or
estates, or resort to any collateral, security, property, liens or other rights
or remedies whatsoever, and the Bank shall have the right to enforce this
guaranty irrespective of whether or not other proceedings or steps seeking
resort to or realization upon or from any of the foregoing are pending.
4. All diligence in collection or protection, and all presentment,
demand, protest and/or notice, as to any and everyone, whether or not the
Borrower or the undersigned or others, of dishonor and of default and of
non-payment and of the creation and existence of any and all of the
Indebtedness, and of any security and collateral therefor, and of the acceptance
of this guaranty, and of any and all extensions of credit and indulgence
hereunder, are waived. No act of commission or omission of any kind, or at any
time, upon the part of the Bank in respect to any matter whatsoever, shall in
any way affect or impair this guaranty.
5. The undersigned will not exercise or enforce any right of
exoneration, contribution, reimbursement, recourse or subrogation available to
the undersigned against any person liable for payment of the Indebtedness, or as
to any security therefor, unless and until the full amount owing to the Bank on
the Indebtedness has been paid and the payment by the undersigned of any amount
pursuant to this guaranty shall not in any wise entitle the undersigned to any
right, title or interest (whether by way of subrogation or otherwise) in and to
any of the Indebtedness or any proceeds thereof or any security therefor unless
and until the full amount owing to the Bank on the Indebtedness has been paid.
6. The Bank may, without any notice whatsoever to any one, sell, assign
or transfer all of the Indebtedness, or any part thereof, or grant
participations therein, and in that event each and every immediate and
successive assignee, transferee, or holder of or participant in all or any part
of the Indebtedness, shall have the right to enforce this guaranty, by suit or
otherwise, for the benefit of such assignee, transferee, holder or participant,
as fully as if such assignee, transferee, holder or participant were herein by
name specifically given such rights, powers and benefits; but
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the Bank shall have an unimpaired right to enforce this guaranty for the benefit
of the Bank or any such participant, as to so much of the Indebtedness that it
has not sold, assigned or transferred.
7. The undersigned waives any and all defenses, claims and discharges
of the Borrower, or any other obligor, pertaining to the Indebtedness, except
the defense of discharge by payment in full. Without limiting the generality of
the foregoing, the undersigned will not assert, plead or enforce against the
Bank any defense of waiver, release, discharge in bankruptcy, statute of
limitations, res judicata, statute of frauds, anti-deficiency statute, fraud,
incapacity, minority, usury, illegality or unenforceability which may be
available to the Borrower or any other person liable in respect of any of the
Indebtedness, or any setoff available against the Bank to the Borrower or any
such other person, whether or not on account of a related transaction. The
undersigned agrees that the undersigned shall be and remain liable for any
deficiency remaining after foreclosure of any mortgage or security interest
securing the Indebtedness, whether or not the liability of the Borrower or any
other obligor for such deficiency is discharged pursuant to statute or judicial
decision.
8. If any payment applied by the Bank to the Indebtedness is thereafter
set aside, recovered, rescinded or required to be returned for any reason
(including, without limitation, the bankruptcy, insolvency or reorganization of
the Borrower or any other obligor), the Indebtedness to which such payment was
applied shall for the purposes of this guaranty be deemed to have continued in
existence, notwithstanding such application, and this guaranty shall be
enforceable as to such of the Indebtedness as fully as if such application had
never been made.
9. The liability of the undersigned under this guaranty is in addition
to and shall be cumulative with all other liabilities of the undersigned to the
Bank as guarantor of the Indebtedness, without any limitation as to amount,
unless the instrument or agreement evidencing or creating such other liability
specifically provides to the contrary.
10. Any invalidity or unenforceability of any provision or application
of this guaranty shall not affect other lawful provisions and applications
hereof, and to this end the provisions of this guaranty are declared to be
severable. This guaranty shall be construed according to the law of the State of
Illinois, in which State it shall be performed by the undersigned and may not be
waived, amended, released or otherwise changed except by a writing signed by the
Bank.
11. This guaranty and every part thereof shall be effective upon
delivery to the Bank, without further act, condition or acceptance by the Bank,
shall be binding upon the undersigned, and upon the heirs, legal
representatives, successors and assigns of the undersigned, and shall inure to
the benefit of the Bank, its successors, legal representatives and assigns. The
undersigned waives notice of the Bank's acceptance hereof.
12. Guarantor hereby represents and warrants to the Bank that there is
no pending or threatened action or proceeding affecting the Guarantor before any
court, governmental agency or arbitrator, which may materially adversely affect
the Guarantor's financial condition or operations or which purports to affect
the legality, validity, or enforceability of this Guaranty.
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SIGNED AND DELIVERED by the undersigned, at Chicago, Illinois, this
13th day of September, 2004. THE UNDERSIGNED ACKNOWLEDGES RECEIPT OF A COMPLETED
COPY OF THIS GUARANTY AS OF THE TIME OF EXECUTION.
SUN CAPITAL PARTNERS III, LP
By:Sun Capital Advisors III, LP
Its: General Partner
By: Sun Capital Partners III, LLC
Its: General Partner
By: /s/ Xxxxxx X. Xxxxxx
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Name: Xxxxxx X. Xxxxxx
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Its: Co-CEO
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IMPORTANT NOTICE TO GUARANTORS
YOU ARE BEING ASKED TO GUARANTEE THIS DEBT, AS WELL AS ALL FUTURE DEBTS
OF THE BORROWER ENTERED INTO WITH THE BANK. THINK CAREFULLY BEFORE YOU DO. IF
THE BORROWER DOESN'T PAY THE DEBT, YOU WILL HAVE TO. BE SURE YOU CAN AFFORD TO
PAY IF YOU HAVE TO, AND THAT YOU WANT TO ACCEPT THIS RESPONSIBILITY.
YOU MAY HAVE TO PAY UP TO THE FULL AMOUNT OF THE DEBT IF THE BORROWER
DOES NOT PAY. YOU MAY ALSO HAVE TO PAY LATE FEES OR COLLECTION COSTS, WHICH
INCREASE THIS AMOUNT.
THE BANK CAN COLLECT THIS DEBT FROM YOU WITHOUT FIRST TRYING TO COLLECT
FROM THE BORROWER. THE BANK CAN USE THE SAME COLLECTION METHODS AGAINST YOU THAT
CAN BE USED AGAINST THE BORROWER, SUCH AS SUING YOU, GARNISHING YOUR WAGES, ETC.
IF THIS DEBT IS EVER IN DEFAULT, THAT FACT MAY BECOME PART OF YOUR CREDIT
RECORD.
THIS NOTICE IS NOT THE CONTRACT THAT MAKES YOU LIABLE FOR THE DEBT.
