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EXHIBIT 10.3
GUARANTY AGREEMENT
WHEREAS, the execution of this Guaranty Agreement is a condition to
COMPASS BANK, a bank organized and existing under the laws of the State of
Alabama ("Lender"), agreeing to enter into that certain Settlement and
Deficiency Agreement (herein so called) dated as of March 28, 2000 which is by
and between TOTAL BUILDING SYSTEMS, INC., a Texas corporation ("Total"), JOYVER
INVESTMENTS, LLC, a Texas limited liability company ("Joyver"), XXXXXXX X.
XxXXXXX ("XxXxxxx"), MEGA WORLD, INC., a Delaware corporation ("Mega World") and
TEXAS TBS, INC., a Texas corporation ("TBS") covering certain obligations more
fully described therein. Collectively hereinafter Total, Joyver and XxXxxxx are
referred to as the "Borrower."
NOW, THEREFORE, for valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the undersigned, Mega World and TBS,
(collectively herein the "Guarantor"), hereby jointly and severally, irrevocably
and unconditionally guarantee to Lender the full and prompt payment and
performance of the Guaranteed Indebtedness (hereinafter defined), this Guaranty
Agreement being upon the following terms:
1. The term "Guaranteed Indebtedness", as used herein means all
obligations, indebtedness, and liabilities of Borrower to Lender, fully
described in the Settlement and Deficiency Agreement and all extensions,
renewals, and modifications thereof. The term "Guaranteed Indebtedness" shall
include any and all post-petition interest and expenses (including attorneys'
fees) whether or not allowed under any bankruptcy, insolvency, or other similar
law. The Guarantors acknowledge that as of the date hereof, the principal amount
owing by the Borrower is the Deficiency described in the Settlement and
Deficiency Agreement.
2. This instrument shall be an absolute, continuing, irrevocable, and
unconditional guaranty of payment and performance, and not a guaranty of
collection, and Guarantor shall remain liable on its obligations hereunder until
the payment and performance in full of the Guaranteed Indebtedness. No set-off,
counterclaim, recoupment, reduction, or diminution of any obligation, or any
defense of any kind or nature which Borrower may have against Lender or any
other party, or which Guarantor may have against Borrower, Lender, or any other
party, shall be available to, or shall be asserted by, Guarantor against Lender
or any subsequent holder of the Guaranteed Indebtedness or any part thereof or
against payment of the Guaranteed Indebtedness or any part thereof.
3. If Guarantor becomes liable for any indebtedness owing by Borrower
to Lender by endorsement or otherwise, other than under this Guaranty Agreement,
such liability shall not be in any manner impaired or affected hereby, and the
rights of Lender hereunder shall be cumulative of
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any and all other rights that Lender may ever have against Guarantor. The
exercise by Lender of any right or remedy hereunder or under any other
instrument, or at law or in equity, shall not preclude the concurrent or
subsequent exercise of any other right or remedy.
4. In the event of default by Borrower in payment or performance of the
Guaranteed Indebtedness, or any part thereof, when such Guaranteed Indebtedness
becomes due, whether by its terms, by acceleration, or otherwise, Guarantor
shall promptly pay the amount due thereon to Lender without notice or demand in
lawful money of the United States of America and it shall not be necessary for
Lender, in order to enforce such payment by Guarantor, first to institute suit
or exhaust its remedies against Borrower or others liable on such Guaranteed
Indebtedness, or to enforce any rights against any collateral which shall ever
have been given to secure such Guaranteed Indebtedness. In the event such
payment is made by Guarantor, then Guarantor shall be subrogated to the rights
then held by Lender with respect to the Guaranteed Indebtedness to the extent to
which the Guaranteed Indebtedness was discharged by Guarantor and, in addition,
upon payment by Guarantor of any sums to Lender hereunder, all rights of
Guarantor against Borrower or any collateral arising as a result therefrom by
way of right of subrogation, reimbursement, or otherwise shall in all respects
be subordinate and junior in right of payment to the prior indefeasible payment
in full of the Guaranteed Indebtedness.
5. If acceleration of the time for payment of any amount payable by
Borrower under the Guaranteed Indebtedness is stayed upon the insolvency,
bankruptcy, or reorganization of Borrower, all such amounts otherwise subject to
acceleration under the terms of the Guaranteed Indebtedness shall nonetheless be
payable by Guarantor hereunder forthwith on demand by Lender.
6. Guarantor hereby agrees that its obligations under this Guaranty
Agreement shall not be released, discharged, diminished, impaired, reduced, or
affected for any reason or by the occurrence of any event, including, without
limitation, one or more of the following events, whether or not with notice to
or the consent of Guarantor: (a) the taking or accepting of collateral as
security for any or all of the Guaranteed Indebtedness or the release,
surrender, exchange, or subordination of any collateral now or hereafter
securing any or all of the Guaranteed Indebtedness; (b) any partial release of
the liability of Guarantor hereunder, or the full or partial release of any
other guarantor from liability for any or all of the Guaranteed Indebtedness;
(c) any disability of Borrower, or the dissolution, insolvency, or bankruptcy of
Borrower, Guarantor, or any other party at any time liable for the payment of
any or all of the Guaranteed Indebtedness; (d) any renewal, extension,
modification, waiver, amendment, or rearrangement of any or all of the
Guaranteed Indebtedness or any instrument, document, or agreement evidencing,
securing, or otherwise relating to any or all of the Guaranteed Indebtedness;
(e) any adjustment, indulgence, forbearance, waiver, or compromise that may be
granted or given by Lender to Borrower, Guarantor, or any other party ever
liable for any or all of the Guaranteed Indebtedness; (f) any neglect, delay,
omission, failure, or refusal of Lender to take or prosecute any action for the
collection of any of the Guaranteed Indebtedness or to foreclose or take or
prosecute any action in connection with any instrument, document, or agreement
evidencing, securing, or otherwise relating to any or all of the Guaranteed
Indebtedness; (g) the unenforceability or invalidity of any or all of the
Guaranteed Indebtedness or of any
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instrument, document, or agreement evidencing, securing, or otherwise relating
to any or all of the Guaranteed Indebtedness; (h) any payment by Borrower or any
other party to Lender is held to constitute a preference under applicable
bankruptcy or insolvency law or if for any other reason Lender is required to
refund any payment or pay the amount thereof to someone else; (i) the settlement
or compromise of any of the Guaranteed Indebtedness; (j) the non-perfection of
any security interest or lien securing any or all of the Guaranteed
Indebtedness; (k) any impairment of any collateral securing any or all of the
Guaranteed Indebtedness; (l) the failure of Lender to sell any collateral
securing any or all of the Guaranteed Indebtedness in a commercially reasonable
manner or as otherwise required by law; (m) any change in the corporate
existence, structure, or ownership of Borrower; or (n) any other circumstance
which might otherwise constitute a defense available to, or discharge of,
Borrower or Guarantor.
7. Guarantor represents and warrants to Lender as follows:
(a) Guarantor has the power and authority and legal right to
execute, deliver, and perform its obligations under this Guaranty
Agreement and this Guaranty Agreement constitutes the legal, valid, and
binding obligation of Guarantor, enforceable against Guarantor in
accordance with its terms, except as limited by bankruptcy, insolvency,
or other laws of general application relating to the enforcement of
creditor's rights.
(b) The execution, delivery, and performance by Guarantor of
this Guaranty Agreement do not and will not violate or conflict with
any law, rule, or regulation or any order, writ, injunction, or decree
of any court, governmental authority or agency, or arbitrator and do
not and will not conflict with, result in a breach of, or constitute a
default under, or result in the imposition of any lien upon any assets
of Guarantor pursuant to the provisions of any indenture, mortgage,
deed of trust, security agreement, franchise, permit, license, or other
instrument or agreement to which Guarantor or its properties is bound.
(c) No authorization, approval, or consent of, and no filing
or registration with, any court, governmental authority, or third party
is necessary for the execution, delivery, or performance by Guarantor
of this Guaranty Agreement or the validity or enforceability thereof.
(d) The value of the consideration received and to be received
by Guarantor as a result of Lender making extensions of credit to
Borrower and Guarantor executing and delivering this Guaranty Agreement
is reasonably worth at least as much as the liability and obligation of
Guarantor hereunder, and such liability and obligation and such
extensions of credit have benefitted or may reasonably be expected to
benefit Guarantor directly or indirectly.
(e) Guarantor has, independently and without reliance upon
Lender and based upon such documents and information as Guarantor has
deemed appropriate, made its own analysis and decision to enter into
this Guaranty Agreement.
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8. Guarantor covenants and agrees that, as long as the Guaranteed
Indebtedness or any part thereof is outstanding or Lender has any commitment to
Borrower:
(a) Guarantor will furnish to Lender as soon as available, and
in any event within ninety (90) days after the end of each fiscal year
of Guarantor, beginning with the fiscal year ending December 31, 2000,
(i) a copy of the financial statements of Guarantor for such fiscal
year and (ii) a certificate of Guarantor to Lender disclosing and
certifying as to all material changes in Guarantor's debt or net worth
or otherwise certifying that there has been no material change in
Guarantor's personal debt or net worth since the previous financial
statement delivered to Lender.
(b) Guarantor will furnish promptly to Lender written notice
of the occurrence of any default under this Guaranty Agreement.
(c) Guarantor will furnish promptly to Lender such additional
information concerning Guarantor as Lender may request.
(d) Guarantor will obtain at any time and from time to time
all authorizations, licenses, consents or approvals as shall now or
hereafter be necessary or desirable under all applicable laws or
regulations or otherwise in connection with the execution, delivery and
performance of this Guaranty Agreement and will promptly furnish copies
thereof to Lender.
(e) Guarantor will at all times own directly or indirectly and
free and clear of all liens and encumbrances whatsoever at least the
same percentage of voting shares of Borrower, if any, as it owns
directly or indirectly on the date hereof.
9. Lender shall have the right to set off and apply against this
Guaranty Agreement or the Guaranteed Indebtedness or both, at any time and
without notice to Guarantor, any and all deposits (general or special, time or
demand, provisional or final) or other sums at any time credited by or owing
from Lender to Guarantor whether or not the Guaranteed Indebtedness is then due
and irrespective of whether or not Lender shall have made any demand under this
Guaranty Agreement. As security for this Guaranty Agreement and the Guaranteed
Indebtedness, Guarantor hereby grants Lender a security interest in all money,
instruments, certificates of deposit, and other property of Guarantor now or
hereafter held by Lender, including, without limitation, property held in
safekeeping. In addition to Lender's right of setoff and as further security for
this Guaranty Agreement and the Guaranteed Indebtedness, Guarantor hereby grants
Lender a security interest in all deposits (general or special, time or demand,
provisional or final) and all other accounts of Guarantor now or hereafter on
deposit with or held by Lender and all other sums at any time credited by or
owing from Lender to Guarantor. The rights and remedies of Lender hereunder are
in addition to other rights and remedies (including, without limitation, other
rights of setoff) which Lender may have.
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10. (a) Guarantor hereby agrees that the Subordinated Indebtedness
shall be subordinate and junior in right of payment to the prior payment in full
of all Guaranteed Indebtedness, and Guarantor hereby assigns the Subordinated
Indebtedness to Lender as security for the Guaranteed Indebtedness. If any sums
shall be paid to Guarantor by Borrower or any other person or entity on account
of the Subordinated Indebtedness, such sums shall be held in trust by Guarantor
for the benefit of Lender and shall forthwith be paid to Lender without
affecting the liability of Guarantor under this Guaranty Agreement and may be
applied by Lender against the Guaranteed Indebtedness in such order and manner
as Lender may determine in its sole discretion. Upon the request of Lender,
Guarantor shall execute, deliver, and endorse to Lender such documents and
instruments as Lender may request to perfect, preserve, and enforce its rights
hereunder. For purposes of this Guaranty Agreement, the term "Subordinated
Indebtedness" means all indebtedness, liabilities, and obligations of Borrower
to Guarantor, whether such indebtedness, liabilities, and obligations now exist
or are hereafter incurred or arise, or whether the obligations of Borrower
thereon are direct, indirect, contingent, primary, secondary, several, joint and
several, or otherwise, and irrespective of whether such indebtedness,
liabilities, or obligations are evidenced by a note, contract, open account, or
otherwise, and irrespective of the person or persons in whose favor such
indebtedness, obligations, or liabilities may, at their inception, have been, or
may hereafter be created, or the manner in which they have been or may hereafter
be acquired by Guarantor.
(b) Guarantor agrees that any and all liens, security interests,
judgment liens, charges, or other encumbrances upon Borrower's assets securing
payment of any Subordinated Indebtedness shall be and remain inferior and
subordinate to any and all liens, security interests, judgment liens, charges,
or other encumbrances upon Borrower's assets securing payment of the Guaranteed
Indebtedness or any part thereof, regardless of whether such encumbrances in
favor of Guarantor or Lender presently exist or are hereafter created or
attached. Without the prior written consent of Lender, Guarantor shall not (i)
file suit against Borrower or exercise or enforce any other creditor's right it
may have against Borrower, or (ii) foreclose, repossess, sequester, or otherwise
take steps or institute any action or proceedings (judicial or otherwise,
including without limitation the commencement of, or joinder in, any
liquidation, bankruptcy, rearrangement, debtor's relief or insolvency
proceeding) to enforce any liens, security interests, collateral rights,
judgments or other encumbrances held by Guarantor on assets of Borrower.
(c) In the event of any receivership, bankruptcy, reorganization,
rearrangement, debtor's relief, or other insolvency proceeding involving
Borrower as debtor, Lender shall have the right to prove and vote any claim
under the Subordinated Indebtedness and to receive directly from the receiver,
trustee or other court custodian all dividends, distributions, and payments made
in respect of the Subordinated Indebtedness. Lender may apply any such
dividends, distributions, and payments against the Guaranteed Indebtedness in
such order and manner as Lender may determine in its sole discretion.
(d) Guarantor agrees that all promissory notes, accounts
receivable, ledgers, records, or any other evidence of Subordinated Indebtedness
shall contain a specific written notice
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thereon that the indebtedness evidenced thereby is subordinated under the terms
of this Guaranty Agreement.
11. No amendment or waiver of any provision of this Guaranty Agreement
nor consent to any departure by the Guarantor therefrom shall in any event be
effective unless the same shall be in writing and signed by Lender. No failure
on the part of Lender to exercise, and no delay in exercising any right, power,
or privilege hereunder shall operate as a waiver thereof; nor shall any single
or partial exercise of any right, power, or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, power, or
privilege. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.
12. Any acknowledgment or new promise, whether by payment of principal
or interest or otherwise and whether by Borrower or others (including
Guarantor), with respect to any of the Guaranteed Indebtedness shall, if the
statute of limitations in favor of Guarantor against Lender 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.
13. This Guaranty Agreement is for the benefit of Lender and its
successors and assigns, and in the event of an assignment of the Guaranteed
Indebtedness, or any part thereof, the rights and benefits hereunder, to the
extent applicable to the indebtedness so assigned, may be transferred with such
indebtedness. This Guaranty Agreement is binding not only on Guarantor, but on
Guarantor's heirs and personal representatives.
14. Guarantor recognizes that Lender is relying upon this Guaranty
Agreement and the undertakings of Guarantor hereunder in making extensions of
credit to Borrower and further recognizes that the execution and delivery of
this Guaranty Agreement is a material inducement to Lender in making extensions
of credit to Borrower. Guarantor hereby acknowledges that there are no
conditions to the full effectiveness of this Guaranty Agreement.
15. This Guaranty Agreement is executed and delivered as an incident to
a lending transaction negotiated, consummated, and performable in Xxxxxx County,
Texas, and shall be governed by and construed in accordance with the laws of the
State of Texas. Any action or proceeding against Guarantor under or in
connection with this Guaranty Agreement may be brought in any state or federal
court in Xxxxxx County, Texas. Guarantor hereby irrevocably (i) submits to the
nonexclusive jurisdiction of such courts, and (ii) waives any objection it may
now or hereafter have as to the venue of any such action or proceeding brought
in such court or that such court is an inconvenient forum. Guarantor agrees that
service of process upon it may be made by certified or registered mail, return
receipt requested, at its address specified below. Nothing herein shall affect
the right of Lender to serve process in any other matter permitted by law or
shall limit the right of Lender to bring any action or proceeding against
Guarantor or with respect to any of Guarantor's property in courts in other
jurisdictions. Any action or proceeding by Guarantor against Lender shall be
brought only in a court located in Xxxxxx County, Texas.
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16. Guarantor shall pay on demand all attorneys' fees and all other
costs and expenses incurred by Lender in connection with the preparation,
administration, enforcement, or collection of this Guaranty Agreement.
17. Guarantor hereby waives promptness, diligence, notice of any
default under the Guaranteed Indebtedness, demand of payment, notice of
acceptance of this Guaranty Agreement, presentment, notice of protest, notice of
dishonor, notice of the incurring by Borrower of additional indebtedness, and
all other notices and demands with respect to the Guaranteed Indebtedness and
this Guaranty Agreement.
18. Guarantor hereby represents and warrants to Lender that Guarantor
has adequate means to obtain from Borrower on a continuing basis information
concerning the financial condition and assets of Borrower and that Guarantor is
not relying upon Lender to provide (and Lender shall have no duty to provide)
any such information to Guarantor either now or in the future.
19. THIS GUARANTY AGREEMENT EMBODIES THE FINAL, ENTIRE AGREEMENT OF
GUARANTOR AND LENDER WITH RESPECT TO GUARANTOR'S GUARANTY OF THE GUARANTEED
INDEBTEDNESS AND SUPERSEDES ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS,
REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE
SUBJECT MATTER HEREOF. THIS GUARANTY AGREEMENT IS INTENDED BY GUARANTOR AND
LENDER AS A FINAL AND COMPLETE EXPRESSION OF THE TERMS OF THE GUARANTY
AGREEMENT, AND NO COURSE OF DEALING BETWEEN GUARANTOR AND LENDER, NO COURSE OF
PERFORMANCE, NO TRADE PRACTICES, AND NO EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OR OTHER EXTRINSIC EVIDENCE OF ANY
NATURE SHALL BE USED TO CONTRADICT, VARY, SUPPLEMENT OR MODIFY ANY TERM OF THIS
GUARANTY AGREEMENT. THERE ARE NO ORAL AGREEMENTS BETWEEN GUARANTOR AND LENDER.
20. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, GUARANTOR HEREBY
IRREVOCABLY AND EXPRESSLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION,
PROCEEDING, OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE)
ARISING OUT OF OR RELATING TO THIS GUARANTY AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THE ACTIONS OF LENDER IN THE NEGOTIATION, ADMINISTRATION,
OR ENFORCEMENT THEREOF.
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