GUARANTY AGREEMENT
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This GUARANTY AGREEMENT (the "Guaranty") dated October 29, 1998 from the
undersigned, SBM INDUSTRIES, INC., a Connecticut corporation, with an address at
c/o Star Struck, Inc., 8 Xxxxxxx X. Xxxxxx Xxxxxx, X.X. Xxx 000, Xxxxxx,
Xxxxxxxxxxx 00000-0000 (the "Guarantor"), to PEOPLE'S BANK, a Connecticut
banking corporation with a place of business at 000 Xxxx Xxxxxx, Xxxxxxxxxx,
Xxxxxxxxxxx 00000-0000 ("Lender").
In consideration of and as a material inducement for the Lender having
extended or in the future extending loans, advances or otherwise giving credit
to STAR STRUCK, INC. (the "Borrower"), including, but not limited to, a
revolving loan in the principal amount of Two Million Dollars ($2,000,000.00)
(the "Loan") as evidenced by a Revolving Promissory Note of even date herewith
(the "Note"), the Guarantor does hereby represent, warrant, covenant and agree
as follows:
ARTICLE I
COVENANTS AND AGREEMENTS
Section I.I The Guaranty. The Guarantor hereby absolutely and
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unconditionally guarantees to the Lender the full and prompt payment and
performance of all liabilities of the Borrower to the Lender arising in
connection with the Loan. As used herein, "liabilities" means any and all
indebtedness, liabilities and obligations of the Borrower to the Lender of every
kind and description, whether direct or indirect, primary or secondary, absolute
or contingent, due or to become due, now existing or hereafter arising,
including without limitation, those obligations arising under the Note, and all
extensions, renewals and substitutions therefor, and further including without
limitation, all reasonable costs, expenses and attorneys' and other
professionals' fees incurred in the collection of said liabilities and in any
litigation arising from any of the liabilities or this Guaranty or in the
defense, protection, preservation, realization or enforcement of any rights,
hens or remedies against the Borrower in connection with the Loan or in the
defense, protection, preservation, realization and enforcement of any rights,
liens or remedies against the Guarantor under this Guaranty. All payments by the
Guarantor shall be paid in lawful money of the United States of America. Each
and every payment obligation or liability guaranteed hereunder shall give rise
to a separate cause of action, and separate suits may but need not be brought
hereunder as each cause of action arises.
Section 1.2 Unconditional Nature of Guaranty.
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A. The obligations of the Guarantor under this Guaranty shall be
absolute and unconditional and shall remain in full force and effect until every
payment, obligation or liability guaranteed hereunder shall have been fully and
finally paid and performed. The Guarantor further guarantees that all payments
made by the Borrower with respect to any liabilities hereby guaranteed will,
when made, be final and agrees that if any such payment is recovered from or
repaid by the
Lender in whole or in part in any bankruptcy, insolvency or similar proceeding
instituted by or against the Borrower, this Guaranty shall continue to be fully
applicable to such liabilities to the same extent as though the payment so
recovered or repaid had never been originally made on such liabilities. The
obligations of the Guarantor shall not be affected, modified, released,
discharged or impaired, in whole or in part, upon the happening from time to
time of any event, including without limitation, any of the following, whether
or not with notice to, or consent of, the Guarantor:
(1) The compromise, settlement, release, change or modification
(whether material or otherwise) or termination of any or all of the liabilities;
(2) The failure to give notice to the Guarantor of the occurrence
of a default or an event of default (howsoever defined), or of the occurrence or
existence of an event or condition which would constitute a default or event of
default but for the giving of notice or passage of time, or both, under the
terms and provisions of this Guaranty, the Note, or any other instruments,
agreements or documents evidencing, securing or otherwise relating to any of the
liabilities or securing or otherwise relating to this Guaranty (collectively,
including the Note, and this Guaranty, the "Loan Agreements");
(3) The modification, amendment, rescission or waiver by the
Lender of the payment, performance or observance by the Borrower or the
Guarantor of any of their respective obligations, conditions, covenants or
agreements contained in any of the Loan Agreements;
(4) The extension of time for payment of any principal, interest
or any other amount due and owing under any of the Loan Agreements, or of the
time for performance of any other obligations, covenants or agreements under or
arising out of any of the Loan Agreements, or the extension or the renewal of
any thereof or the Lender's continuing to make advances under the provisions of
the Loan Agreements to the Borrower after default and/or after there is a
material adverse change in the Borrower's financial condition;
(5) The modification or amendment (whether material or otherwise)
of any duty, obligation, covenant or agreement set forth in any of the Loan
Agreements;
(6) The taking or the failure to take any of the actions referred
to in any of the Loan Agreements;
(7) Any failure, omission, delay or lack on the part of the
Lender to enforce, assert or exercise any right, power or remedy conferred on
the Lender in any of the Loan Agreements;
(8) The full or partial discharge of the Borrower or of any of
the Other Guarantors (as defined below), if any, in bankruptcy or similar
proceeding or otherwise;
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(9) The release or discharge, in whole or in part, or the death,
bankruptcy, liquidation or dissolution of any other person or entity other than
the Guarantor which is primarily or secondarily liable with respect to the
liabilities, including without limitation, any of the Other Guarantors (as
defined below);
(10) The addition, exchange, release or surrender of all or any of
the collateral held by the Lender as security for the liabilities and/or the
Guarantor's liabilities hereunder; or
(11) The default or failure of the Guarantor fully to perform any
of the Guarantor's obligations set forth in this Guaranty.
B. The Guarantor agrees that no delay, act of commission or omission
of any kind or at any time upon the part of the Lender or its successors and
assigns with respect to any matter whatsoever shall in any way impair the right
of the Lender to enforce any right, power or benefit under this Guaranty or
under any of the other Loan Agreements to which the Guarantor is a party or be
construed to be a waiver thereof. Any such right may be exercised from time to
time and as often as may be deemed expedient. No set-off, counterclaim,
reduction, or diminution of any obligation, or any defense of any kind or nature
which the Guarantor has or may have against the Lender, or any assignee or
successor thereof shall be available hereunder to the Guarantor against the
Lender or its successors and assigns.
Section 1.3 Right of the Lender to Proceed Against Guarantor.
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A. Upon any failure in the payment or performance of any of the
liabilities or of any of the obligations of the Guarantor under this Guaranty,
the liability of the Guarantor shall be effective immediately without notice or
demand and shall be payable or performable on demand without any suit or action
against the Borrower.
B. The Lender, in its sole discretion, shall have the right to proceed
first and directly against the Guarantor under this Guaranty without proceeding
against or exhausting any other remedies which it may have against the Borrower
or any other person primarily or secondarily liable for any of the liabilities,
including without limitation, any of the Other Guarantors (as defined below), if
any, and without resorting to any security held by the Lender.
C. This Guaranty is entered into by the Guarantor for the benefit of
the Lender and its successors and assigns, all of whom shall be entitled to
enforce performance and observance of this Guaranty.
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Section 1.4 Waivers, Payment of Costs and Other Agreements.
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A. THE GUARANTOR ACKNOWLEDGES THAT THE TRANSACTION OF WHICH THIS
GUARANTY IS A PART IS A COMMERCIAL TRANSACTION, AND HEREBY WAIVES THE
GUARANTOR'S RIGHTS TO: (1) NOTICE AND HEARING UNDER CHAPTER 903a OF THE
CONNECTICUT GENERAL STATUTES OR AS OTHERWISE ALLOWED BY ANY STATE OR FEDERAL LAW
WITH RESPECT TO ANY PREJUDGMENT REMEDY WHICH THE LENDER MAY DESIRE TO USE, AND
(2) REQUEST THAT THE LENDER POST A BOND, WITH OR WITHOUT SURETY, TO PROTECT THE
GUARANTOR OR THE BORROWER AGAINST DAMAGES THAT MAY BE CAUSED BY ANY PREJUDGMENT
REMEDY SOUGHT OR OBTAINED BY THE LENDER BY VIRTUE OF ANY DEFAULT OR PROVISION OF
THIS GUARANTY OR ANY SECURITY AGREEMENT OR MORTGAGE SECURING THIS GUARANTY. THE
GUARANTOR HEREBY FURTHER EXPRESSLY WAIVES DILIGENCE, DEMAND, PRESENTMENT,
PROTEST, NOTICE OF NONPAYMENT OR PROTEST, NOTICE OF THE ACCEPTANCE OF THIS
GUARANTY, NOTICE OF ANY RENEWALS OR EXTENSIONS OF THE REVOLVING LOAN NOTE AND OF
ANY LOANS MADE OR EXTENSIONS OR OTHER FINANCIAL ACCOMMODATIONS GRANTED TO THE
BORROWER OR OTHER ACTION TAKEN IN RELIANCE HEREON AND ALL OTHER DEMANDS AND
NOTICES OF ANY DESCRIPTION IN CONNECTION WITH THIS GUARANTY, ANY OF THE
LIABILITIES OR OTHERWISE.
B. THE GUARANTOR HEREBY WAIVES TRIAL BY JURY IN ANY COURT AND IN ANY
SUIT, ACTION OR PROCEEDING ON ANY MATTER ARISING IN CONNECTION WITH OR IN ANY
WAY RELATED TO THE FINANCING TRANSACTIONS OF WHICH THIS GUARANTY IS A PART
AND/OR THE ENFORCEMENT OF ANY OF THE LENDER'S RIGHTS AND THIS REMEDIES,
INCLUDING WITHOUT LIMITATION, TORT CLAIMS.
C. THE GUARANTOR EXPRESSLY WAIVES ALL DEFENSES BASED UPON SURETYSHIP
OR IMPAIRMENT OF COLLATERAL.
D. The Guarantor hereby fully subordinates to the liabilities owed to
the Lender any right of subrogation that the Guarantor may have against the
Borrower, including without limitation, any right of subrogation by virtue of
the Guarantor's making payments hereunder, (the "Subordinated Claims"). The
Guarantor will not accept any payment upon any of the Subordinated Claims, and
will not have the right to take action to collect any of the Subordinated
Claims, until the liabilities have been fully and finally paid. The Guarantor
will not claim any set-off or counterclaim against the Borrower with respect to
any liability of the Guarantor to the Borrower. The Guarantor waives any benefit
of and any right to participate in any collateral which may be held by the
Lender.
E. THE GUARANTOR ACKNOWLEDGES THAT THE GUARANTOR MAKES THE WAIVERS
SET FORTH IN SUBSECTIONS (A), (B), (C) AND (D) ABOVE KNOWINGLY, VOLUNTARILY AND
WITHOUT DURESS AND ONLY AFTER CONSIDERATION OF THE RAMIFICATIONS OF THOSE
WAIVERS WITH THE
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GUARANTOR'S ATTORNEYS.. THE GUARANTOR FURTHER ACKNOWLEDGES THAT THE LENDER HAS
NOT AGREED WITH OR REPRESENTED TO THE GUARANTOR OR ANY OTHER PARTY HERETO THAT
THE PROVISIONS OF SUBSECTIONS (A), (B), (C) AND (D) ABOVE WILL NOT BE FULLY
ENFORCED IN ALL INSTANCES.
F. The Guarantor agrees to pay all reasonable costs and expenses,
including attorneys fees, arising out of or with respect to the validity,
enforcement, realization, protection or preservation of this Guaranty or any of
the liabilities.
G. If, for an reason, the Borrower has no legal existence or is under
no legal obligation to discharge any liabilities or if any liabilities have
become irrecoverable from the Borrower by operation of law or for any other
reason, this Guaranty shall nevertheless be binding on the Guarantor to the same
extent as if the Guarantor at all times had been the principal obligor on all
such liabilities. In the event that acceleration of the time for payment of any
liabilities is stayed upon the insolvency, bankruptcy or reorganization of the
Borrower, or for any other reason, all such amounts otherwise subject to
acceleration under the terms of the Revolving Loan Note, the Loan Agreement or
any of the other Loan Documents shall be immediately due and payable by the
Guarantor, without notice or demand.
Section 1.5 Set-off. The Guarantor hereby gives the Lender a lien and right
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of set-off for all the Guarantor's liabilities to the Lender upon and against
all the Guarantor's deposits, credits, collateral and property now or hereafter
in the possession or control of the Lender or in transit to it. The Lender may,
at any time, without notice to the Guarantor, apply or set-off the same, or any
part thereof, to any liability of the Guarantor to the Lender, whether or not
the Lender shall have made demand under this Guaranty and although such
obligations may be contingent or unmatured.
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 2.1 Guarantor Representations, Warranties and Covenants. The
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Guarantor hereby represents, warrants and further covenants that:
A. The Guarantor is a corporation duly organized under the laws of its
state of incorporation and has the requisite power to enter into and perform the
obligations under this Guaranty and has taken all of the necessary actions to
authorize the execution, delivery and performance of this Guaranty.
B. Neither the execution and delivery of this Guaranty and the other
Loan Agreements to which the Guarantor is a party, the consummation of the
transactions contemplated hereby nor the fulfillment of or compliance with the
terms and conditions of this Guaranty is prevented or limited by or conflicts
with or results in a breach of the terms, conditions or provisions
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of any contractual or other restriction on the Guarantor or any agreement or
instrument of whatever nature to which the Guarantor is now a party or by which
the Guarantor or the Guarantor's property is bound or constitutes a default
under any of the foregoing.
C. The Guarantor has received and will receive a direct and material
financial benefit from the accommodations extended by the Lender to the
Borrower.
D. All authorizations, consents and approvals of governmental bodies
or agencies required in connection with the execution and delivery of this
Guaranty and the other Loan Agreements to which the Guarantor is a party, or in
connection with the performance of the Guarantor's obligations hereunder or
thereunder have been obtained as required hereunder or by law.
E. This Guaranty constitutes a valid and legally binding obligation
of the Guarantor, enforceable in accordance with its terms.
F. There is no action or proceeding pending or threatened against the
Guarantor before any court or administrative agency that might adversely affect
the ability of the Guarantor to perform the Guarantor's obligations under this
Guaranty.
G. Failure of the Guarantor to comply with any of the covenants herein
or under any of the other Loan Agreements to which the Guarantor is a party
shall constitute a default of the liabilities, entitling the Lender to exercise
all rights and remedies set forth in any of the Loan Agreements.
H. The Guarantor will provide to the Lender the items Guarantor is
required to provide in Section 5.5 of a certain Loan Agreement dated as of
December 20, 1996 by and between Lender and Guarantor.
ARTICLE III
NOTICE AND SERVICE OF PROCESS,
PLEADINGS AND OTHER PAPERS
Section 3.1 Designation of Agent for Service of Process. Guarantor
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represents, warrants and covenants that the Guarantor is subject to service of
process in the State of Connecticut and that Guarantor will remain so subject so
long as any liabilities are outstanding. If for any reason Guarantor should not
be so subject, the Guarantor hereby designates and appoints, without power of
revocation, the Secretary of State of the State of Connecticut as the
Guarantor's agent upon whom may be served all process, pleadings, notices or
other papers which may be served upon the Guarantor as a result of any of the
Guarantor's obligations under this Guaranty.
Section 3.2 Consent to Service of Process. The Guarantor irrevocably (a)
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agrees that any suit, action or other legal proceeding arising out of this
Guaranty may be brought in the courts of
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record of the State of Connecticut or the courts of the United States located in
such state; (b) consents to the jurisdiction of each such court in any such
suit, action or proceeding; and (c) waives any objection which the Guarantor may
have to the laying of venue of any such suit, action or proceeding in any of
such courts. For such time as any of the liabilities is outstanding, the
Guarantor's agent designated in Section 3.1 hereof shall accept and acknowledge
on the Guarantor's behalf services of any and all process in any such suit,
action or proceeding brought in any such court. The Guarantor agrees and
consents that any such services of process upon such agent and written notice of
such service to the Guarantor by registered mail shall be taken and held to be
valid personal service upon the Guarantor and that any such service of process
shall be of the same force and validity as if services were made upon the
Guarantor according to the laws governing the validity and requirements of such
service in such state, and waives all claim of error by reason of any such
service.
Section 3.3 Notices. All notices or other communications required or
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permitted to be given hereunder shall be considered effective and properly given
if sent by a nationally recognized overnight messenger service or mailed first
class United States mail, postage prepaid, registered or certified mail, with
return receipt requested, or by delivery of same to the address beneath the
Guarantor's signature below by prepaid messenger or telegram, whether or not
receipt thereof is acknowledged or is refused by the addressee or any person at
such address, or at such other place as any party hereto may be notified in
writing as a place for service or notice hereunder.
ARTICLE IV
GENERAL
Section 4.1 No Remedy Exclusive; Effect of Waiver. No remedy herein
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conferred upon or reserved to the Lender is intended to be exclusive of any
other available remedy or remedies, but each and every such remedy shall be
cumulative and shall be in addition to every other remedy given under this
Guaranty or now or hereafter existing at law or in equity. In order to entitle
the Lender to exercise any remedy reserved to it in this Guaranty, it shall not
be necessary to give any notice, other than such notice as may be herein
expressly required. No waiver, amendment, release or modification of this
Guaranty shall be established by conduct, custom or course of dealing, but
solely by an instrument in writing duly executed by the parties thereunto duly
authorized. A waiver on one occasion shall not be a bar to or waiver of any
right of any other occasion. The Guarantor acknowledges that this Guaranty
supersedes all prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter hereof and is intended as
a final expression and a complete and exclusive statement of the terms of this
Guaranty.
Section 4.2 Severability. The invalidity or unenforceability of any one or
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more phrases, sentences, clauses or Sections contained in this Guaranty shall
not affect the validity or enforceability of the remaining portions of this
Guaranty, or any part thereof.
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Section 4.3 Connecticut Law. This Guaranty shall be governed by the laws of
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the State of Connecticut (but not its conflicts of law provisions).
Section 4.4 Other Guarantors. The Guarantor acknowledges that other
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individuals or entities have or may also from time to time guaranty the
liabilities of the Borrower (including each other guarantor, the "Other
Guarantors") and that the Guarantor is unconditionally delivering this Guaranty
to the Lender. The Guarantor further acknowledges that the failure of any of the
Other Guarantors, if any, to execute and deliver their respective guarantees or
the discharge of any of such Other Guarantors and their respective guarantied
obligations shall not discharge the liability of the Guarantor.
Section 4.5 Cross Default. The occurrence of a default or event of default
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(howsoever defined) under any instrument, agreement or document evidencing,
governing, securing or relating to any other indebtedness, obligation or
liability of the Guarantor to the Lender (the "Other Indebtedness") shall
constitute an event of default hereunder and a default hereunder shall
constitute a default under any of the Other Indebtedness.
IN WITNESS WHEREOF, the Guarantor has executed this Guaranty on the date
first above written.
SBM INDUSTRIES, INC.
By: /s/ Xxxxxxx Xxxxxx
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Xxxxxxx Xxxxxx
Its Vice President
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