LIMITED GUARANTY
(SECONDARY FRANCHISEE)
"EFFECTIVE DATE:" ______________ __, 1999
"INVESTOR:" _____________________,
a _________ __________
"BORROWER:" _____________________
"OTHER GUARANTORS:" _____________________
"PRINCIPAL AMOUNT:" $ _____________________
"LOAN DATE:" ______________ __, ____
"APPLICABLE STATE:" _____________________
THIS LIMITED GUARANTY ("Limited Guaranty") is made as of the Effective Date
by XXXXXXXXXX'S, INC., a Texas corporation (hereinafter "Guarantor") in favor of
Investor.
R E C I T A L S:
A. Investor has agreed to purchase from Xxxxxxxxxx's Real Estate, Inc., a
Texas corporation (hereinafter "SREI") a loan made by SREI to Borrower in the
Principal Amount (the "Loan"), evidenced by a promissory note dated the Loan
Date (the "Note"), secured by a mortgage or deed of trust (the "Mortgage") and
other security instruments of even date therewith, and guaranteed by the Other
Guarantors by a Guaranty (the "Guaranty") of even date therewith (the Note, the
Mortgage, the Guaranty and all other documents executed by Borrower in
connection with the Loan including, without limitation, a certain Certificate
and Indemnity Agreement Regarding Hazardous Substances, are collectively called
the "Loan Documents").
B. As a condition precedent to purchasing the Loan, Investor requires the
execution of this Limited Guaranty by Guarantor and Investor will be relying on
this Limited Guaranty in purchasing the Loan.
In consideration of Investor's purchasing the Loan, and as an inducement to
Investor to do so, Guarantor hereby agrees, warrants and covenants as follows:
1. Guarantor hereby unconditionally, irrevocably and absolutely
guarantees without demand by Investor the full and prompt payment when due,
whether by acceleration or otherwise, of the entire amount of principal and
accrued interest on the Note (other than any prepayment premium or penalty);
provided, however, that (a) Guarantor's liability hereunder shall not exceed the
amount of the Guaranty Limit (as defined in Section 16 hereof), and (b)
Guarantor shall have no further obligations hereunder and this Limited Guaranty
shall terminate as provided in Section 16 hereof. It is expressly understood
that this Limited Guaranty covers (without limitation, but subject to the
Guaranty Limit) all interest and default interest that would
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have accrued under the Note but for the commencement of a case under the
Federal Bankruptcy Code or any other similar federal or state law. All of
the indebtedness, obligations and liabilities described in this paragraph are
referred to herein, subject to the Guaranty Limit, as the "Guaranteed
Obligations." This Limited Guaranty is a guaranty of payment and not merely
of collection, and Guarantor hereby waives all rights which Guarantor may
have, if any, to require that any action be brought against Borrower (or any
other person or entity) or to require that resort be first made against any
security provided under the Loan Documents prior to demanding and/or
enforcing payment or performance hereunder.
2. This Limited Guaranty shall take effect when received by Investor
without the necessity of any acceptance by Investor or of any notice to
Guarantor or to Borrower, shall be continuing and irrevocable, and shall remain
in full force and effect (unless earlier terminated as provided in Section 1
above) until the Guaranteed Obligations are fully and finally paid. If payment
is made by Borrower, whether voluntarily or otherwise, or by any third party, on
the Guaranteed Obligations and thereafter Investor is forced to remit, rescind
or restore the amount of that payment under any federal or state bankruptcy law
or law for the relief of debtors, or for any other reason, (a) the amount of
such payment shall be considered to have been unpaid at all times for the
purposes of enforcement of this Limited Guaranty, (b) the obligations of
Borrower guarantied herein shall be automatically reinstated to the extent of
such payment, and (c) Guarantor will, on demand, indemnify Investor and hold
Investor harmless from all losses and all reasonable costs and expenses,
including legal fees, incurred by Investor in connection with such remission,
rescission or restoration up to (but not exceeding) an amount equal to the
difference between the Guaranty Limit and all amounts paid under this Limited
Guaranty by Guarantor.
3. The obligations of Guarantor hereunder are separate and independent of
the obligations of Xxxxxxxx. This Limited Guaranty shall be fully enforceable
against Guarantor notwithstanding any determination that the Loan Documents, or
any part thereof, are not enforceable against Borrower for any reason.
Guarantor expressly agrees that a separate action may be brought against
Guarantor on this Limited Guaranty whether or not Borrower is joined in such
action.
4. Guarantor represents, warrants, and covenants to Investor
that Guarantor has derived or expects to derive financial and other advantages
and benefits, directly or indirectly, from the making of this Limited Guaranty;
(b) Investor shall have no obligation to disclose to Guarantor any information
or documents (financial or otherwise) heretofore or hereafter acquired by
Investor in the course of its relationship with Borrower; and (c) this Limited
Guaranty constitutes the entire agreement between Investor and Guarantor
regarding the Guaranteed Obligations.
5. Guarantor hereby agrees that Investor may without further consent or
disclosure and without affecting or releasing the obligations of Guarantor
hereunder: (a) surrender, exchange, release, assign, or sell any collateral or
waive, release, assign, sell, or subordinate any security interest, in whole or
in part; (b) waive, delay the exercise of, release, compromise, or grant
indulgences in respect of any rights or remedies of Investor against Borrower or
any surety or guarantor (including, without limitation, rights or remedies of
Investor against Guarantor under this Limited Guaranty); (c) waive or delay the
exercise of any rights or remedies of Investor in respect of any collateral or
security interest now or hereafter held; (d) renew, extend, waive, extend,
accelerate, or modify the terms of any Guaranteed Obligation or the obligations
of any surety or guarantor, including, without limitation, changes
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to the rate of interest, or any instrument or agreement (including, without
limitation, the Loan Documents) evidencing or relating to the same; (e)
realize on any security interest, judicially or nonjudicially, with or
without preservation of a deficiency judgment; or (f) adjust, compromise or
receive less than the amount due upon any collateral or the Guaranteed
Obligations, and enter into any accord and satisfaction or novation agreement
with respect to the same as Investor shall deem advisable.
6. Guarantor waives notice of (a) Investor's acceptance of this Limited
Guaranty and its intention to act or its actions in reliance hereon; (b) the
present existence or future incurring of any Guaranteed Obligations or any terms
or amounts thereof or any change therein; (c) any default by Borrower or any
surety or guarantor; (d) the obtaining of any guaranty or surety agreement (in
addition to this Limited Guaranty); (e) the obtaining of any pledge, assignment
or other security for any Guaranteed Obligations; (f) the release of Borrower or
any surety or guarantor; (g) the release of any collateral; (h) any change in
Borrower's business or financial condition; (i) any renewal, extension or
modification of the term of any Guaranteed Obligation or of the obligations or
liabilities of any surety or guarantor or of any instruments or agreements
evidencing the same; (j) any acts or omissions of Investor consented to in
Section 5 hereof; and (k) any other demands or notices whatsoever with respect
to the Guaranteed Obligations or this Limited Guaranty. Guarantor further
waives notice of presentment, demand, protest, notice of nonpayment, notice of
intent to accelerate, and notice of protest in relation to any instrument or
agreement evidencing any Guaranteed Obligation.
7. Guarantor expressly waives any and all rights and defenses arising by
reason of (a) any "one-action" or "anti-deficiency" law or any other law which
may prevent Investor from bringing any action, including a claim for deficiency
against Guarantor, before or after Investor's commencement or completion of any
foreclosure action, either judicially or by exercise of a power of sale; (b) any
election of remedies by Investor which destroys or otherwise adversely affects
the subrogation rights of Guarantor or the rights of Guarantor to proceed
against Borrower for reimbursement, including without limitation any loss of
rights Guarantor may suffer by reason of any law limiting, qualifying, or
discharging the Guaranteed Obligations; (c) any disability or defense of
Borrower, of any other guarantor, or of any other person, or by reason of the
cessation of Borrower's liability from any cause whatsoever, other than full and
final payment in legal tender of the Guaranteed Obligations; or (d) any right to
claim discharge of the Guaranteed Obligations on the basis of unjustified
impairment of any collateral for the Guaranteed Obligations. Guarantor further
waives (x) any right to cause a marshalling of Borrower's assets, (y) all rights
of set-off and counterclaims. Xxxxxxxxx agrees that Investor may proceed
against any collateral securing the Guaranteed Obligations by way of either
judicial or nonjudicial foreclosure. Guarantor understands that a nonjudicial
foreclosure of any deed of trust securing the Guaranteed Obligations could
impair or eliminate any subrogation or reimbursement rights Guarantor may have
against Xxxxxxxx, nevertheless Guarantor hereby waives and relinquishes any
defense based upon the loss of any such reimbursement or subrogation rights or
any other defense which may otherwise arise therefrom and any defense that may
arise out of election of remedies, discharge or satisfaction of the Guaranteed
Obligations. In the event any such deed of trust is foreclosed judicially or
nonjudicially, the liability of Guarantor under this Limited Guaranty shall be
that portion of the Guaranteed Obligations (not to exceed the Guaranty Limit)
representing a deficiency resulting from a judicial or nonjudicial sale, i.e.,
the difference between the amount due and owing on the Guaranteed Obligations on
the day of the foreclosure sale and the amount of the successful bid at any such
judicial or nonjudicial foreclosure sale. Guarantor hereby waives the right to
object to the amount which may be bid by Investor at such foreclosure sale.
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8. No act or omission of any kind or at any time on the part of Investor
with respect to any matter whatsoever shall in any way affect or impair this
Limited Guaranty, it being the intention hereof that Guarantor shall remain
liable as principal on the Guaranteed Obligations (not to exceed the Guaranty
Limit) notwithstanding any act, omission or event which might, but for the
provisions hereof, otherwise operate as a legal or equitable discharge of
Guarantor. Guarantor hereby waives all defenses of a surety to which they may
be entitled by statute or otherwise.
9. Guarantor acknowledges that Investor may obtain other guaranties and
collateral to secure the repayment of the Guaranteed Obligations. Guarantor
represents and warrants to Investor, however, that in making this Limited
Guaranty it is not relying upon Investor's obtaining any guaranty agreements
(other than the Guaranty) or any collateral pledged or assigned to secure
repayment of the Guaranteed Obligations. Guarantor specifically acknowledges
that Investor's obtaining any such guaranty agreements (other than the Guaranty)
or collateral is not a condition to the enforcement of this Limited Guaranty.
If Investor should simultaneously or hereafter elect to attempt to take
additional guaranty agreements or collateral to secure repayment of the
Guaranteed Obligations and if its efforts to do so should fail in any respect
including, without limitation, a determination that the agreement purporting to
provide such additional guaranty or security interest is invalid or
unenforceable for any reason, this Limited Guaranty shall, nonetheless, remain
in full force and effect.
10. This Limited Guaranty shall inure to the benefit of Investor, and
Xxxxxxxx's successors and assigns, and shall be binding upon Guarantor and its
successors and assigns. Investor may, with written notice to Guarantor, sell,
assign or transfer the Note, with or without any security therefor, and in that
event each and every immediate and successive assignee, transferee or holder of
all or any part of the Loan and the Note shall have the right to enforce this
Limited Guaranty, by suit or otherwise, for the benefit of such assignee,
transferee or holder as though such parties were herein by name specifically
given those rights, powers and benefits.
11. Guarantor agrees to pay all costs and expenses which may be incurred
by Investor in the enforcement of this Limited Guaranty, including reasonable
attorneys' fees and including all costs and reasonable attorneys' fees incurred
in any bankruptcy or insolvency proceeding involving Guarantor or on appeal to
one or more appellate courts.
12. This Limited Guaranty shall be governed by and construed and enforced
under the laws of the Applicable State.
13. No delay on the part of Investor in exercising any right, power or
privilege under this Limited Guaranty shall operate as a waiver of any such
right, power or privilege, nor shall any exercise or waiver of any privilege or
right preclude any other or further exercise of such privilege or right or the
exercise of any other right, power or privilege. All of Investor's rights and
remedies shall be cumulative. In the event Investor in its sole discretion
elects to give notice of any action with respect to the sale of collateral, if
any, securing the Guaranteed Obligations or any part thereof, Guarantor agrees
that ten (10) days prior written notice shall be deemed reasonable notice of any
matters contained in such notice.
14. If any provision of this Limited Guaranty or any portion of any
provision of this Limited Guaranty shall be deemed to be invalid, illegal or
unenforceable, such invalidity,
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illegality or unenforceability shall not alter the remaining portion of such
provision, or any other provision hereof, as each provision of this Limited
Guaranty shall be deemed severable from all other provisions hereof.
15. All agreements between Guarantor and Investor, whether now existing or
hereafter arising and whether written or oral, are hereby limited so that in no
contingency, whether by reason of demand or acceleration of the final maturity
of the Loan or otherwise, shall the interest contracted for, charged, received,
paid or agreed to be paid to Investor under or in connection with the Loan
exceed the maximum amount permissible under applicable law. All interest paid
or agreed to be paid to Investor shall, to the extent permitted by applicable
law, be amortized, prorated, allocated, and spread throughout the full period
(including any renewal or extension) until payment in full of the principal
balance of the Loan so that the interest hereon for such full period shall not
exceed the maximum amount permissible under applicable law. Investor expressly
disavows any intent to contract for, charge or receive interest in an amount
which exceeds the maximum amount permissible under applicable law. This
paragraph shall control all agreements between Guarantor and Investor.
16. The term "Guaranty Limit," as used herein, shall mean an amount
determined in accordance with the following provisions. The obligations of
Guarantor hereunder shall not exceed an amount equal to twenty-five percent
(25%) of the Principal Amount. At the end of three (3) years from the Effective
Date, a Debt Service Coverage test shall be performed by Investor with respect
to Borrower. If the Borrower's Debt Service Coverage for the twelve (12) month
period immediately preceding the expiration of such three (3) year period is 1.2
or greater, then this Limited Guaranty shall thereupon automatically terminate
and Guarantor shall have no further obligations hereunder. If, however, the
Borrower's Debt Service Coverage for such period is less than 1.2, then this
Limited Guaranty shall continue for an additional twelve (12) month period;
provided further however, that the Guaranty Limit for such additional period
shall not exceed an amount equal to fifteen percent (15%) of the Principal
Amount. At the end of such twelve month period, the Borrower's Debt Service
Coverage will again be tested as described above. If the result is 1.2 or
greater, this Limited Guaranty shall thereupon automatically terminate and
Guarantor shall have no further obligations hereunder; otherwise this Limited
Guaranty shall continue for a fifth (5th) year and the Guaranty Limit shall
continue to be an amount no greater than fifteen percent (15%) of the Principal
Amount. At the end of the fifth (5th) year, this Limited Guaranty shall
automatically terminate and Guarantor shall have no further obligations
hereunder regardless of the then Debt Service Coverage, hereof, unless an Event
of Default (as defined in the Note) exists on the date which is the end of such
fifth (5th) year and is not cured is not waived by Investor. For purposes of
the above, "Debt Service Coverage" shall be defined as "Cash Flow" divided by
"Debt Service." "Cash Flow" shall be defined as net income plus depreciation
plus interest expense plus or minus extraordinary non-cash expenses or income
minus the salary for Borrower's owner minus such owner's draws or distributions.
"Debt Service" shall be defined as regularly scheduled debt payments of the
Borrower, including principal and interest. The provisions of this Section 16
shall govern any contrary or inconsistent provisions of this Limited Guaranty.
IN WITNESS WHEREOF, Xxxxxxxxx has executed this Guaranty as of the
Effective Date.
GUARANTOR:
XXXXXXXXXX'S, INC.
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By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
ADDRESS:
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxx 00000
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