GUARANTY
The undersigned Stonepath Group, Inc, a Delaware corporation
("Guarantor"), hereby requests and authorizes Hong Kong League Central Credit
Union, a Hong Kong corporation ("Lender"), to extend credit pursuant to that
certain Term Credit Agreement dated as of October 27, 2004 among Lender,
Stonepath Holdings (Hong Kong) Limited ("Debtor") and SBI Advisors LLC as agent
for Lender ("Agent") and in consideration of the granting of such credit by
Lender to Debtor and at the instance and request of Debtor, a wholly owned
subsidiary of Guarantor, Guarantor hereby agrees with Xxxxxx as follows:
1. (a) Guarantor hereby guarantees and promises to pay to
Lender or its order and to perform for the benefit of Lender, in each case
without any deduction whatsoever for counterclaim, offset or otherwise and
within ten (10) days after written demand therefor from Lender after a
Guarantied Obligation (as that term is hereafter defined) is due, all
indebtedness and obligations of Debtor to Lender, including, without limitation,
all principal, interest, fees, damages (whether direct, indirect, consequential,
punitive or otherwise), reimbursement obligations, indemnities, costs, expenses
and other amounts (the "Guarantied Obligations") evidenced by or arising under
(i) all Term Notes made by Debtor to the order of Lender, including without
limitation, all accrued but unpaid interest thereon issued by Debtor pursuant to
the Credit Agreement (the "Notes"); (ii) the Credit Agreement; (iii) those
certain Security Agreement, between Lender and certain subsidiaries of Debtor;
(iv) any and all agreements and instruments executed and delivered by Debtor
pursuant to any of the foregoing, all as the same may be amended, extended
and/or restated from time to time hereafter (collectively, the "Credit
Documents"). The Guarantied Obligations shall include any interest that accrues
after the commencement of any bankruptcy or insolvency proceeding by or against
Debtor. With respect to any of the Guarantied Obligations, Lender need not
inquire into the powers of Debtor or the officers, directors, partners,
employees or agents acting or purporting to act on Debtor's behalf, and all
Guarantied Obligations made or created in good faith reliance upon the professed
exercise of such powers shall be guaranteed hereby. Payment shall be made in any
coin or currency which at the time of payment is legal tender in the United
States of America for public and private debts. The obligation of Guarantor
hereunder is absolute, unconditional, irrevocable, present and continuing. This
Guaranty is a guaranty of prompt and punctual payment and performance and is not
merely a guaranty of collection.
(b) Without limiting the circumstances in which the
Guarantied Obligations shall be immediately due and payable by Guarantor
hereunder, the Guarantied Obligations shall be immediately due and payable by
Guarantor hereunder upon the occurrence of any "Event of Default" referred to in
the Credit Agreement or the Notes (whether or not the acceleration of the
Guarantied Obligations provided for upon such "Event of Default" is ineffective
as a matter of law), and Guarantor shall, within ten (10) days after written
demand therefor from Agent after a Guarantied Obligation is due, perform the
Guarantied Obligations for the benefit of Lender and/or pay to Lender the amount
of the Guarantied Obligations (to the extent of all principal, interest and
other amounts owing under the Guarantied Obligations and without regard to
whether such sums are due and payable at such time) together with all interest,
fees, expenses and other amounts referred to herein.
(c) Guarantor agrees that all payments by Guarantor
hereunder shall be free and clear of, and without deduction for, any taxes of
any nature now or hereafter imposed by the State of New York or any other
political jurisdiction or taxing authority to which Guarantor is subject, other
than taxes imposed upon Lender by its jurisdiction of incorporation or any other
taxing authority to which it would be subject irrespective of the issuance of
this Guaranty or any payments hereon. Should any such payment be made subject to
any such tax (other than taxes imposed upon Lender by its jurisdiction of
incorporation or any other taxing authority to which it would be subject
irrespective of the issuance of this Guaranty or any payments hereon), Guarantor
shall pay to Lender such additional amount as may be necessary to enable Lender
to receive a net amount equal to the full amount payable hereunder.
(d) In the event the Guarantied Obligations are paid in
whole or in part by Debtor, by Guarantor or by any other guarantor or person,
Guarantor's liability hereunder shall continue and remain in full force and
effect in the event that all or any part of any such payment is recovered from
Lender by any person for any reason, including as a part of any judgment, order,
settlement or compromise with respect to any claim against Lender for the
recovery thereof as a preference, fraudulent transfer or similar payment under
any bankruptcy, insolvency or similar law. In addition, Guarantor acknowledges
and agrees that by virtue of this Guaranty, it has specifically assumed any and
all risks of a bankruptcy or reorganization case or proceeding with respect to
Debtor, and that any modification of the Guarantied Obligations in any
bankruptcy or reorganization case concerning Debtor shall not affect the
obligation of Guarantor to pay and perform the Guarantied Obligations in
accordance with their respective original terms as though no such bankruptcy or
reorganization case had occurred.
2. Guarantor acknowledges that the obligations of Guarantor
undertaken herein involve the guaranty of obligations of persons other than
Guarantor and, in full recognition of that fact, Guarantor consents and agrees
that Lender may, at any time and from time to time, in Xxxxxx's sole and
absolute discretion, without notice or demand, and without affecting the
enforceability or continuing effectiveness hereof: (a) supplement, modify,
amend, extend (including extensions beyond the original term thereof), renew,
accelerate, waive, discharge or otherwise change the time for payment or the
terms of the Guarantied Obligations or any part thereof or any additional
security or guaranties now or hereafter held therefor; (b) enter into or give
any agreement, approval or consent with respect to the Guarantied Obligations or
any part thereof or any additional security or guaranties now or hereafter held
therefor; (c) accept new or additional instruments, documents or agreements in
exchange for or relative to the Guarantied Obligations or any part thereof;
(d) accept partial payments on the Guarantied Obligations; (e) receive and hold
additional security or guaranties for the Guarantied Obligations or any part
thereof; (f) settle, release (by operation of law or otherwise), liquidate
and/or fail to enforce any Guarantied Obligation; (g) release (by operation of
law or otherwise), reconvey, terminate, waive, abandon, fail to perfect,
subordinate, transfer and/or fail to enforce any other security or guaranties
now or hereafter held for the Guarantied Obligations or any part thereof;
(h) substitute, exchange, amend or alter any other security or guaranty now or
hereafter held for the Guarantied Obligations or any part thereof, whether or
not the security or guaranty received upon the exercise of such power is of a
character or value the same as the character or value of
2
the item of security or guaranty so affected; (i) release (by operation of law
or otherwise) any person from any personal liability with respect to the
Guarantied Obligations or any part thereof; (j) consent to the transfer of any
such other security and bid and credit the same at any sale thereof; and/or
(k) consent to any merger, change or other restructuring or termination of the
corporate existence of Debtor or any other person, and correspondingly
restructure the Guarantied Obligations.
3. Upon the occurrence and during the continuance of any event of
default under the Guarantied Obligations, Lender may enforce this Guaranty
independently as to Guarantor and independently of any other remedy or security
which Lender may at any time have in connection with the Guarantied Obligations.
Guarantor expressly waives any right to require Lender to proceed against
Debtor, any other guarantor or any collateral provided by any other person and
agrees that Xxxxxx may proceed against Guarantor and/or any collateral in such
order as it shall determine in its sole and absolute discretion. Guarantor
expressly waives trial by jury in any action to enforce this Guaranty and waives
the benefit of any statute(s) of limitations affecting Guarantor's liability
hereunder or the enforcement of the Guarantied Obligations or any other rights
of Xxxxxx created or granted herein. The rights of Lender created or granted
herein and the enforceability of this Guaranty at all times shall remain
effective to guaranty the full amount of all the Guarantied Obligations even
though the Guarantied Obligations, including any part thereof or any other
security or guaranty therefor, may be or may hereafter become invalid or
otherwise unenforceable as against Debtor or any other guarantor and whether or
not Debtor or any other guarantor shall have any liability with respect thereto.
Guarantor expressly waives any and all defenses now or hereafter arising or
asserted by reason of (a) any lack of authority, death, disability or other
incapacity of any of Debtor, any other guarantor or any other person with
respect to the Guarantied Obligations or any part thereof; (b) the
unenforceability or invalidity of any security or other guaranties for the
Guarantied Obligations or the lack of perfection or continuing perfection or
failure of priority of any security for the Guarantied Obligations or any part
thereof; (c) the cessation for any cause whatsoever of the liability of any of
Debtor or any other guarantor (other than by reason of the full payment and
performance of all Guarantied Obligations); (d) any failure of Lender to marshal
assets in favor of Guarantor or any other guarantor or any other person; (e) any
bankruptcy, insolvency, reorganization, arrangement, readjustment of debt,
liquidation or dissolution proceeding commenced by or against any person,
including any discharge of, or bar or stay against collecting, all or any of the
Guarantied Obligations in or as a result of any such proceeding; (f) any action
taken by Lender that is authorized by this Paragraph 3 or any other provision of
this Guaranty; (g) any election of remedies by Xxxxxx, including without
limitation an election to proceed by nonjudicial rather than judicial
foreclosure, which destroys or otherwise impairs the subrogation rights of
Guarantor or the right of Guarantor to proceed against Debtor for reimbursement,
or both, or (h) any other principle or provision of law, statutory or otherwise,
which is or might be in conflict with the terms hereof. Guarantor expressly
waives all setoffs and counterclaims and all presentments, demands for payment
or performance, notices of nonpayment or nonperformance, protests, notices of
protest, notices of dishonor and all other notices or demands of any kind or
nature whatsoever with respect to the Guarantied Obligations (other than those
expressly provided for in this Agreement), and all notices of acceptance of this
Guaranty or of the existence, creation or incurring of new or additional
Guarantied Obligations. If Xxxxxx has exculpated Debtor from personal liability
in whole or in part and/or agreed to look solely to the property covered by any
security documents for the satisfaction by Debtor of the Guarantied
3
Obligations, said exculpation and agreement shall not affect the obligations of
Guarantor hereunder, it being understood that Guarantor's obligations hereunder
are independent of the obligations of Debtor and are to be construed as if no
such exculpation or agreement had been given to Debtor by Xxxxxx. It is further
understood and agreed that if any such exculpation or agreement has been given
to Debtor, Xxxxxx has done so in reliance upon the agreements of Guarantor
expressed herein.
4. Guarantor hereby agrees not to exercise any and all rights of
subrogation, reimbursement, exoneration, contribution or setoff, any and all
rights to participate in any claim or remedy of Lender against Debtor or any
collateral, and any and all other rights that could accrue to a surety against a
principal, to a guarantor against a maker or obligor, to an accommodation party
against the party accommodated or to a holder or transferee against a maker, and
which Guarantor may have or hereafter acquire against Debtor or any such other
person by contract, at law or in equity in connection with or as a result of
Guarantor's execution, delivery and/or performance of this Guaranty or any other
Credit Document, in each case until the Guarantied Obligations have been paid in
full.
5. Guarantor represents and warrants to Lender that Guarantor has
established adequate means of obtaining from Debtor, on a continuing basis,
financial and other information pertaining to the business, operations and
condition (financial and otherwise) of Debtor, its affiliates and its and their
properties, and Guarantor now is and hereafter will be completely familiar with
the business, operations and condition (financial and otherwise) of Debtor, its
affiliates and its and their properties. Guarantor hereby expressly waives and
relinquishes any duty on the part of Lender (should any such duty exist) to
disclose to Guarantor any matter, fact or thing related to the business,
operations or condition (financial or otherwise) of Debtor, its affiliates and
its and their properties, whether now known or hereafter known by Lender during
the life of this Guaranty. With respect to any of the Guarantied Obligations,
Lender need not inquire into the powers of Debtor or the officers or employees
acting or purporting to act on Debtor's behalf, and all Guarantied Obligations
made or created in good faith reliance upon the professed exercise of such
powers shall be guaranteed hereby.
6. Guarantor warrants and agrees that each of the waivers and
consents set forth herein is made after consultation with legal counsel and with
full knowledge of its significance and consequences, with the understanding that
events giving rise to any defense or right waived may diminish, destroy or
otherwise adversely affect rights which Guarantor otherwise may have against
Debtor, Lender or others, or against collateral, and that, under the
circumstances, each waiver and consent herein given is reasonable and not
contrary to public policy or law. If any waiver or consent herein is determined
to be contrary to any applicable law or public policy, then such waiver or
consent shall be effective to the maximum extent permitted by law.
7. All existing and future indebtedness of Debtor to Guarantor or
to any person owned in whole or in part by Guarantor and, if Debtor is a
partnership or corporation, the right of Guarantor to withdraw, or to cause or
permit any person owned in whole or in part by Guarantor to withdraw, any
capital invested by such person in Debtor or to receive from Debtor any
distribution of cash or other property by way of dividend, liquidating
distribution or otherwise, is
4
hereby subordinated to the prior payment in full of the Guarantied Obligations
to Lender and, at any time after an Event of Default (as that term is defined in
the Credit Agreement) has occurred (but only for so long as it is continuing)
without the prior written consent of Lender, no such subordinated indebtedness
or distribution shall be paid or withdrawn in whole or in part nor will
Guarantor cause or permit any person owned in whole or in part by Guarantor to
accept any payment of or on account of any such indebtedness or distribution or
as a withdrawal of capital while this Guaranty is in effect. At Lender's request
at any time after an Event of Default (as that term is defined in the Credit
Agreement) has occurred (but only for so long as it is continuing), Guarantor
shall cause Debtor to pay to Lender, instead of to Guarantor or any person owned
in whole or in part by Guarantor, all or any part of any such subordinated
indebtedness and distributions and any capital which Guarantor or any such
person owned in whole or in part by Guarantor is otherwise entitled to withdraw.
Each payment by Debtor in violation of this Paragraph 9 shall be received by the
person to whom paid in trust for Xxxxxx, and Guarantor shall cause the same to
be paid over to Lender immediately on account of the Guarantied Obligations.
8. So long as any Guarantied Obligations shall be owing to Lender,
Guarantor shall not, without the prior consent of Lender, commence or join with
any other Person in commencing any bankruptcy, reorganization or insolvency
proceedings of or against Debtor or its Subsidiaries. Lender shall have the sole
right to accept or reject any plan proposed in such proceeding and to take any
other action which a party filing a claim is entitled to take. Guarantor
acknowledges and agrees that any interest on the Guarantied Obligations which
accrues after the commencement of any such proceeding (or, if interest on any
portion of the Guarantied Obligations ceases to accrue by operation of law by
reason of the commencement of said proceeding, such interest as would have
accrued on any such portion of the Guarantied Obligations if said proceedings
had not been commenced) shall be included in the Guarantied Obligations because
it is the intention of the parties that the Guarantied Obligations which are
guarantied by Guarantor pursuant to this Guaranty should be determined without
regard to any rule of law or other which may relieve Debtor of any portion of
such indebtedness. Guarantor will permit any trustee in bankruptcy, receiver,
debtor in possession, assignee for the benefit of creditors or similar person to
pay Lender, or allow the claim of Lender in respect of, any such interest
accruing after the date on which such proceeding is commenced.
9. Intentionally Deleted.
10. With or without notice to Guarantor, Lender, in Xxxxxx's sole
discretion, at any time and from time to time and in such manner and upon such
terms as Lender deems fit, may (a) apply any or all payments or recoveries which
may be received from Debtor or from any other guarantor or endorser under any
other instrument or which may be realized from any security, to any indebtedness
of Debtor to Lender, in such manner and order of priority as Lender may
determine, whether or not such indebtedness is guaranteed hereby or is otherwise
secured or is due at the time of such application; and (b) refund to Debtor any
payment received by Lender upon the Guarantied Obligations, whereupon payment of
the amount refunded shall remain fully guaranteed hereby. Any recovery realized
from any other guarantor under any other instrument may first be credited
against that portion (if any) of the indebtedness of Debtor to Lender that is
not guaranteed hereby.
5
11. The amount of Guarantor's liability and all rights, powers and
remedies of Lender hereunder and under any other agreement now or hereafter in
force between Lender and Guarantor, including any other guaranty executed by
Guarantor relating to any indebtedness of Debtor to Lender, shall be cumulative
and not alternative, and such rights, powers and remedies shall be in addition
to all rights, powers and remedies given to Lender by law. This Guaranty is in
addition to and exclusive of the guaranty of any other guarantor of any
indebtedness of Debtor to Lender.
12. The obligations of Guarantor hereunder are independent of the
obligations of Debtor and, in the event of any default hereunder, a separate
action or actions may be brought and prosecuted against Guarantor whether or not
Debtor is joined therein or a separate action or actions are brought against
Debtor. Lender may maintain successive actions for other defaults. Xxxxxx's
rights hereunder shall not be exhausted by its exercise of any of its rights or
remedies or by any such action or by any number of successive actions until and
unless all sums owing to Lender in connection with the Guarantied Obligations
have been paid in full and all other obligations hereby guaranteed have been
fully performed.
13. To the extent that any underlying Guarantied Obligation is not
bearing interest, payments not made when due hereunder by Guarantor to Lender on
account of such Guarantied Obligation shall bear interest from the due date
hereunder until paid to Lender at a rate equal to the lesser of (i) 15% per
annum or (ii) the maximum rate otherwise permitted under applicable law.
Guarantor shall also, upon demand, indemnify Lender against and pay to
Lender (l) any and all losses, damages (direct, indirect, consequential,
punitive or otherwise), costs and expenses incurred by Xxxxxx as a result of any
breach by Debtor of any of its representations, warranties or covenants
contained in the Credit Documents or otherwise arising under or out of the
Credit Documents, (2) any and all reasonable attorneys' fees, costs and other
expenses (including allocated costs of internal counsel) that Lender actually
expends or incurs in collecting or compromising the Guarantied Obligations or in
enforcing this Guaranty against Guarantor, whether or not suit is filed,
including, without limitation, all costs, attorneys' fees and expenses actually
expended or incurred by Lender in connection with, or in defense of, any
insolvency, bankruptcy, reorganization, arrangement or other similar proceeding
involving Guarantor, Debtor or any other person that in any way affects the
exercise by Lender of its rights and remedies hereunder and (3) any and all
amounts which Lender at any time returns to Debtor or to Debtor's trustee in
bankruptcy, whether voluntarily or involuntarily and whether or not suit is
filed, in response to any claim that Xxxxxx had theretofore received
preferential payments or transfers in fraud of creditors within the meaning of
any bankruptcy, insolvency or other similar law, now or hereafter existing.
14. This Guaranty shall inure to the benefit of Lender, its
successors, endorsees and assigns, including the successors, endorsees and
assignees of any Guarantied Obligations, and shall bind the heirs, executors,
administrators, successors and assigns of Guarantor. This Guaranty may be
assigned by Lender with respect to all or any portion of the Guarantied
Obligations, and when so assigned Guarantor shall be liable under this Guaranty
to the assignee(s) of the portion(s) of the Guarantied Obligations so assigned
without in any manner
6
affecting the liability of Guarantor hereunder to Lender with respect to any
portion of the Guarantied Obligations retained by Xxxxxx.
15. Should any one or more of the provisions of this Guaranty be
determined to be illegal or unenforceable, all other provisions shall
nevertheless be effective to the fullest extent permitted by law.
16. Subject to the provisions of Paragraph 1(d) hereof, upon the
payment in full to Lender of all sums owing to Lender in connection with the
Guarantied Obligations, the full performance of all other obligations of Debtor
to Lender hereby guaranteed and the full payment or performance by Guarantor of
all indebtedness and obligations arising hereunder in favor of Xxxxxx, this
Guaranty shall be of no further force or effect.
17. No provisions of this Guaranty or right of Lender hereunder can
be waived nor can Guarantor be released from any of Guarantor's obligations
hereunder except by a writing duly executed by an authorized officer of Lender.
18. When the context and construction so require, all words used in
the singular herein shall be deemed to have been used in the plural and the
masculine shall include the feminine and neuter and vice versa. The word
"person" as used herein shall include any individual, company, firm,
association, partnership, corporation, trust or other legal entity of any kind
whatsoever.
19. If two (2) or more persons are signing this Guaranty as
Guarantor, then all such persons shall be jointly and severally (not
proportionately) liable for the obligations of Guarantor hereunder.
20. This Guaranty shall be governed by and construed in accordance
with the laws of the State of New York. Except as provided in any other written
agreement now or at any time hereafter in force between Lender and Guarantor,
this Guaranty shall constitute the entire agreement of Guarantor with Lender
with respect to the subject matter hereof, and no representation, understanding,
promise or condition concerning the subject matter hereof shall be binding upon
Lender unless expressed herein. Guarantor and Xxxxxx and their respective
counsel have cooperated in the drafting and preparation of this Guaranty such
that it shall be deemed to be their joint work product and may not be construed
against either thereof by reason of its preparation.
21. TRIAL BY JURY. GUARANTOR HEREBY WAIVES, AND COVENANTS THAT ITS
WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE), ANY RIGHT TO
TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE, CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION, ARISING OUT OF OR BASED UPON THIS GUARANTY, THE SUBJECT MATTER
HEREOF OR ANY CREDIT DOCUMENT OR ANY GUARANTIED OBLIGATION, IN EACH CASE WHETHER
NOW EXISTING OR HEREAFTER ARISING OR WHETHER IN CONTRACT OR IN TORT OR
OTHERWISE.
22. Except as otherwise expressly provided herein, any notice herein
required or permitted to be given shall be in writing and shall be deemed
effective when personally
7
delivered, mailed, telecopied (with a confirming copy sent by mail) or delivered
by telex to the appropriate party at the address set forth below (or at such
other address as may be designated by either party in a written notice sent in
accordance with this Section):
If to Guarantor: Stonepath Group, Inc.
0000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxxx, XX 00000
Telecopy No: 000-000-0000
If to Lender: Hong Kong League Central Credit Union
Party Room 1-2 G/F Xxx Xxx House
Xxxx Xxxx Estate
Kowloon, Hong Kong
Telecopy No: 852 3101 0332
with a copy to: SBI Advisors, LLC
0000 Xxxxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
Telecopy No.: 000-000-0000
If to Agent: SBI Advisors, LLC
0000 Xxxxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
Telecopy No.: 000-000-0000
EXECUTED as of this 27th day of October, 2004.
"Guarantor"
STONEPATH GROUP, INC.
By: /s/ Xxxxx Xxxxx
-----------------------------------
8
