Exhibit 10.8
GUARANTY
This Guaranty, dated as of January 31, 1997, made by Xxxxxx Xxxxxx, an
individual (the "GUARANTOR");
WITNESSETH:
WHEREAS, Platinum Entertainment, Inc., a Delaware corporation (the
"BORROWER"), Bank of Montreal, individually and as Agent (said Bank of Montreal
acting as such agent and any successor or successors to said Bank in such
capacity being hereinafter referred to as the "AGENT") and certain lenders (such
lenders which are now or which from time to time hereafter become party to the
Credit Agreement being hereinafter referred to collectively as the "BANKS" and
individually as a "BANK") have entered into a Credit Agreement dated as of even
date herewith (such Credit Agreement as the same may from time to time be
modified or amended being hereinafter referred to as the "CREDIT AGREEMENT")
pursuant to which the Banks have extended credit and other financial
accommodations to the Borrower (the Agent, the Banks and any security trustee or
agent under the Collateral Documents being hereinafter referred to collectively
as the "GUARANTEED CREDITORS" and individually as a "GUARANTEED CREDITOR"); and
WHEREAS, Guarantor is a shareholder, chairman of the board of directors and
chief executive officer of the Borrower; and
WHEREAS, it is a condition precedent to the extension of credit by the
Banks under the Credit Agreement that the Guarantor shall have executed and
delivered this Guaranty and the Guarantor desires to enter into this Guaranty in
order to satisfy said condition; and
NOW, THEREFORE, in consideration of the foregoing and other benefits
accruing to the Guarantor, the receipt and sufficiency of which are hereby
acknowledged, the Guarantor hereby makes the following representations and
warranties to the Guaranteed Creditors and hereby covenants and agrees with the
Guaranteed Creditors as follows:
NOW, THEREFORE, for and in consideration of the execution and delivery by
the Banks of the Credit Agreement, and other good and valuable consideration,
receipt whereof is hereby acknowledged, the parties hereto hereby agree as
follows:
1. The Guarantor hereby irrevocably, absolutely and unconditionally
guarantees as primary obligor and not merely as surety to the Guaranteed
Creditors the full and prompt payment to the Banks at maturity (whether by lapse
of time, acceleration or otherwise) and at all times thereafter of the principal
of and interest and premium on the Term Credit Notes issued by the Borrower
under the Credit Agreement and any and all notes issued in extension
or renewal thereof or in substitution or replacement therefor (the "GUARANTEED
OBLIGATIONS"). Notwithstanding anything herein to the contrary, no demand may
be made on the Guarantor to honor his obligations under this Guaranty unless and
until a Payment Default (as hereinafter defined) has occurred and is continuing
on July 31, 1997. The payment by the Guarantor of any amount or amounts due the
Guaranteed Creditors hereunder shall be made in the same currency and funds in
which the underlying Guaranteed Obligations are payable. The Guarantor further
agrees to pay all reasonable expenses, legal or otherwise (including court costs
and legal counsel's fees), paid or incurred by any of the Guaranteed Creditors
in endeavoring to collect the Guaranteed Obligations or in preserving,
protecting or realizing on the collateral security therefor or in endeavoring to
enforce or protect their rights under this Guaranty. NOTWITHSTANDING ANYTHING
IN THIS GUARANTY TO THE CONTRARY, THE LIABILITY OF THE GUARANTOR HEREUNDER IS
LIMITED TO THE RECOVERY AMOUNT (AS HEREINAFTER DEFINED) PLUS ALL EXPENSES
HEREINBEFORE MENTIONED. THE TERM "RECOVERY AMOUNT" SHALL MEAN $12,500,000;
PROVIDED, HOWEVER, THAT NOTWITHSTANDING THE FOREGOING, (i) UNLESS AND UNTIL ANY
DEFAULT IN THE PAYMENT WHEN DUE (WHETHER BY LAPSE OF TIME, ACCELERATION OF
OTHERWISE) OF ANY OF THE GUARANTEED OBLIGATIONS HAS OCCURRED AND IS CONTINUING
IN WHOLE OR IN PART (A "PAYMENT DEFAULT") ON JULY 31, 1997, THE RECOVERY AMOUNT
SHALL BE PERMANENTLY REDUCED, DOLLAR FOR DOLLAR, BY THE SUM OF (X) THE AGGREGATE
PRINCIPAL AMOUNT OF ACCEPTABLE TAKE-OUT SECURITIES THERETOFORE ACTUALLY
PURCHASED AND (Y) THE AGGREGATE PRINCIPAL AMOUNT OF ACCEPTABLE TAKE-OUT
SECURITIES TO BE PURCHASED PURSUANT TO ACCEPTABLE COMMITMENTS THERETOFORE
PROVIDED (IT BEING UNDERSTOOD NO FURTHER SUCH REDUCTION SHALL OCCUR 150 DAYS
AFTER THE DATE OF ANY SUCH DEFAULT IN PAYMENT) AND (ii) IF THE RECOVERY AMOUNT
IS REDUCED TO $0 AS A RESULT OF THE FOREGOING, THIS GUARANTY SHALL AUTOMATICALLY
BE RELEASED AND OF NO FURTHER FORCE OR EFFECT. The term "ACCEPTABLE TAKE-OUT
SECURITIES" shall mean any debt or equity securities to be issued by the Company
via a public offering or private placement, in each case to the extent the
Company provides the Agent and Required Banks assurances reasonably satisfactory
to them that the proceeds of such issuance will be applied in reduction of the
Guaranteed Obligations. The term "ACCEPTABLE COMMITMENT" shall mean a written
firm commitment from a person, firm or corporation (which may be an affiliate of
the Borrower) to purchase some or all of the Acceptable Take-Out Securities,
provided (i) such purchaser is reasonably acceptable to the Agent and the
Required Banks (which acceptance shall not be unreasonably withheld or delayed)
and (ii) such commitment (A) constitutes a binding contract enforceable against
such purchaser, (B) is subject to no contingencies other than a material
disruption of the financial markets which impacts pricing or availability of
securities in a material way and (C) is otherwise reasonably acceptable to the
Agent and Required Banks as to form and substance (which acceptance shall not be
unreasonably withheld or delayed).
2. The Guarantor understands, agrees and confirms that this is a guaranty
of payment when due and not of collection and that this Guaranty may be enforced
up to the full amount of the Guaranteed Obligations (subject to Section 1
hereof) without proceeding against the
-2-
Borrower, against any security for the Guaranteed Obligations, against any other
guarantor or any other party or under any other guaranty covering the Guaranteed
Obligations.
3. The Guarantor hereby waives notice of acceptance of this Guaranty and
notice of any liability to which it may apply, and waives presentment, demand of
payment, protest, notice of dishonor or nonpayment of any such liability, suit
or taking of other action by the Agent or the Guaranteed Creditors against, and
any other notice to, any party liable thereon (including the Guarantor or any
other guarantor).
4. The Guaranteed Creditors, or any of them as appropriate, may at any
time and from time to time without the consent of, or notice to, the Guarantor,
without incurring responsibility to the Guarantor, and without impairing or
releasing the obligations of the Guarantor hereunder, upon or without any terms
or conditions and in whole or in part:
(a) change the manner, place or terms of payment of, change or extend
the time of payment of or renew or alter, any of the Guaranteed
Obligations, any security therefor, or any liability incurred directly or
indirectly in respect thereof, and the guaranty herein made shall apply to
the Guaranteed Obligations as so changed, extended, renewed or altered;
(b) sell, exchange, release, surrender, realize upon, fail to perfect
with respect to or otherwise deal with in any manner and in any order any
property by whomsoever at any time pledged or mortgaged to secure, or
howsoever securing, the Guaranteed Obligations or any liabilities
(including any of those hereunder) incurred directly or indirectly in
respect thereof or hereof, or any offset against such property;
(c) release or fail to assert any claim or demand or exercise or
refrain from exercising any rights against the Borrower, any other
guarantor or others or otherwise act or refrain from acting;
(d) settle or compromise any of the Guaranteed Obligations, any
security therefor or any liability (including any of those hereunder)
incurred directly or indirectly in respect thereof or hereof (including any
liability of any other guarantor of any such), and may subordinate the
payment of all or any part of the Guaranteed Obligations to the payment of
any liability (whether due or not) of the Borrower;
(e) apply any sums by whomsoever paid or howsoever realized to any
liability or liabilities of the Borrower to the Guaranteed Creditors
regardless of what liability or liabilities of the Borrower remain unpaid;
or
(f) consent to or waive any breach of, or any act, omission or
default under, the Credit Agreement, the Collateral Documents or any other
instrument or document
-3-
related thereto (collectively, the "LOAN DOCUMENTS") or otherwise amend,
modify or supplement any of the Loan Documents.
The Guarantor acknowledges that except to the extent (if any) that the Credit
Agreement expressly requires otherwise, the Guaranteed Creditors shall have the
exclusive right to determine how, when and what application of payments and
credits, if any, shall be made on the Guaranteed Obligations (or any part
thereof) and the Guarantor's liability hereunder as aforesaid, whether or not
any one or more other guarantors of all or any portion of the Guaranteed
Obligations shall then or thereafter pay any amount whatsoever by reason of
their obligations on any other such guarantees. Without limiting the generality
of the foregoing, except to the extent (if any) that the Credit Agreement
expressly requires otherwise, the Guaranteed Creditors shall in no event have
any obligation whatsoever to apply any payments and credits or marshal any
collateral first to the Guaranteed Obligations and then to the indebtedness,
obligations and liabilities of the Borrower under the Credit Agreement.
5. No invalidity, irregularity or unenforceability of all or part of the
Guaranteed Obligations or of any security therefor or any guaranty thereof shall
affect, impair or be a defense to this Guaranty, and this Guaranty shall be
primary, absolute and unconditional notwithstanding the occurrence of any event
or the existence of any other circumstances which might constitute a legal or
equitable discharge of a surety or guarantor except payment in full of the
Guaranteed Obligations.
6. The Guarantor will not exercise or enforce any right of exoneration,
contribution, reimbursement, recourse or subrogation available to the Guarantor
against any person liable for payment of the Guaranteed Obligations, or as to
any security therefor, unless and until the full amount owing to the Guaranteed
Creditors on the Guaranteed Obligations has been paid and the Guarantor
acknowledges that any payment by it of any amount pursuant to this Guaranty
shall not in any wise entitle the Guarantor to any right, title or interest
(whether by way of subrogation or otherwise) in and to any of the Guaranteed
Obligations or any proceeds thereof or any security therefor unless and until
the full amount owing to the Guaranteed Creditors on the Guaranteed Obligations
has been paid and any commitment of the Banks to extend credit to the Borrower
under the Credit Agreement shall have terminated.
7. This Guaranty may be enforced by the Agent on behalf of the Guaranteed
Creditors, or it may be enforced by the Guaranteed Creditors acting jointly.
This Guaranty shall be binding upon the Guarantor and its successors and assigns
and shall inure to the benefit of the Guaranteed Creditors and their successors
and assigns. Any Guaranteed Creditor may, to the extent permitted by the Credit
Agreement, sell, transfer or assign its rights in the Guaranteed Obligations
held by it, or any part thereof, or grant participations therein; and in that
event, each and every immediate and successive assignee or transferee of, or
holder or participant in, all or any part of the Guaranteed Obligations, 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
or transferee, holder or participant were herein by name specifically
-4-
given such rights, powers and benefits; but each Guaranteed Creditor shall have
an unimpaired right to enforce this Guaranty for its own benefit or for the
benefit of any such participant as to so much of the Guaranteed Obligations that
it has not sold, assigned or transferred.
8. Neither this Guaranty nor any provision hereof may be changed, waived,
discharged or terminated, except with the written consent of the Required Banks;
provided, however, that no such agreement which releases the Guarantor from its
liability hereunder for any of the Guaranteed Obligations shall be effective
unless the same is embodied in a written instrument signed by all the Guaranteed
Creditors.
9. The Guarantor acknowledges that executed (or conformed) copies of the
Credit Agreement have been made available to its principal executive officers
and such officers are familiar with the contents thereof.
10. In addition to any rights now or hereafter granted under applicable
law and not by way of limitation of any such rights, upon the occurrence of an
Event of Default, each Guaranteed Creditor is hereby authorized at any time or
from time to time, without notice to the Guarantor or to any other party, any
such notice being expressly waived, to set off and to appropriate and apply any
and all deposits (general or special) and any other indebtedness at any time
held or owing by such Guaranteed Creditor to or for the credit or the account of
the Guarantor, against and on account of the obligations and liabilities of the
Guarantor under this Guaranty, irrespective of whether or not such Guaranteed
Creditor shall have made any demand hereunder and although said obligations,
liabilities, deposits or claims, or any of them, shall be contingent or
unmatured.
11. All notices, requests, demands or other communications pursuant hereto
shall be deemed to have been duly given or made when delivered to the party to
which such notice, request, demand or other communication is required or
permitted to be given or made under this Guaranty, addressed, if to the
Guarantor at 0000 Xxxxxxxxxxx Xxxx, Xxxxx 0000, Xxxxxxx Xxxxx, Xxxxxxxx 00000
and if to the Agent or any Bank, as provided in the Credit Agreement.
12. If claim is ever made upon any Guaranteed Creditor for repayment or
recovery of any amount or amounts received in payment or on account of any
Guaranteed Obligations and such Guaranteed Creditor repays all or part of said
amount by reason of (a) any judgment, decree or order of any court or
administrative body having jurisdiction over such Guaranteed Creditor or any of
its property or (b) any settlement or compromise of any such claim effected by
such Guaranteed Creditor with any such claimant (including the Borrower) but not
by reason of the gross negligence or willful misconduct of such Guaranteed
Creditor, then and in such event the Guarantor agrees that any such judgment,
decree, order, settlement or compromise shall be binding upon it provided the
Guarantor has notice thereof, notwithstanding any revocation, return or
destruction of this Guaranty or the Credit Agreement or any instrument
evidencing any liability of the Borrower, and the Guarantor shall be and remain
liable to such Guaranteed Creditor hereunder for the amount so repaid or
recovered to
-5-
the same extent as if such amount had never originally been received by the
Guaranteed Creditor.
13. Any acknowledgment or new promise, whether by payment of principal or
interest or otherwise and whether by the Borrower, or others (including the
Guarantor), with respect to any of the Guaranteed Obligations shall, if the
statute of limitations in favor of the Guarantor against the Guaranteed
Creditors shall have commenced to run, toll the running of such statute of
limitations, and if the period of such statute of limitations shall have
expired, prevent the operation of such statute of limitations.
14. The Guarantor hereby postpones, in the event of any enforcement
hereof, all debts and liabilities of the Borrower to the Guarantor, both present
and future, to the prior payment of the Guaranteed Obligations, and all moneys
received by the Guarantor thereon shall be received in trust for the Agent and
the Banks and shall be paid over to the Agent.
15. The records of the Agent and each Bank as to the unpaid balance of the
Guaranteed Obligations at any time and from time to time shall be prima facie
evidence thereof without further or other proof for all purposes, including the
enforcement of this Guaranty and any collateral therefor.
16. THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF
ILLINOIS, IN WHICH STATE IT SHALL BE PERFORMED BY THE GUARANTOR.
17. The Guarantor shall at all times and from time to time do, execute,
acknowledge and deliver or cause to be done, executed, acknowledged and
delivered all and singular every such further act, deed, transfer, assignment,
assurance, document and instrument as the Agent or any Bank may reasonably
require for the better accomplishing and effectuating of this Guaranty and the
provisions contained herein, and every officer of the Agent and the Banks and
each of them are irrevocably appointed attorneys or attorney to execute in the
name and on behalf of the Guarantor any document or instrument for the said
purpose.
18. In acting under or by virtue of this Guaranty, the Agent shall be
entitled to all rights, authority, privileges and immunities provided in
Section 10 of the Credit Agreement, all of which provisions of said Section 10
are incorporated by reference herein with the same force and effect as if set
forth herein.
19. Except as otherwise defined herein, terms used herein and defined in
the Credit Agreement shall be used herein as so defined.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be executed
and delivered as of the date first above written.
-6-
/s/ Xxxxxx Xxxxxx
--------------------------
Xxxxxx Xxxxxx
-7-
