UNCONDITIONAL GUARANTY OF LEASE
AND CREDIT ENHANCEMENT AGREEMENT
This Unconditional Guaranty of Lease and Credit Enhancement Agreement
is entered into as of the 30th day of December, 1999, by the undersigned, ISA
INTERNATIONALE, INC., a Delaware corporation, ("Guarantor").
RECITALS
WHEREAS, Internationale Shopping Alliance, Inc. (doing business as
XxxxxxxxxxxxXX.xxx), a Minnesota corporation ("Tenant") desires to enter into a
certain Lease with Duke-Weeks Realty Limited Partnership, an Indiana limited
partnership ("Landlord"), for certain space described therein and more commonly
known as Apollo Industrial Center II, 000 Xxxxxx Xxxx, Xxxxx, Xxxxxxxxx 00000
(the "Lease"); and
WHEREAS, Landlord is willing to enter into the Lease only if it
receives a credit enhancement and guaranty of obligations thereunder from the
undersigned upon the terms and conditions set forth below; and
WHEREAS, in order to induce Landlord to enter into the Lease, Guarantor
is willing and agrees to enter into this Unconditional Guaranty of Lease and
Credit Enhancement upon the following terms and conditions; and
WHEREAS, Guarantor is a shareholder of Tenant and will be benefited by
the Lease;
NOW, THEREFORE, in consideration of the foregoing recitals and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Guarantor agrees as follows:
1. Guarantor hereby becomes surety for and unconditionally guarantees
(i) the prompt payment of all rents, additional rents and other sums to be paid
by Tenant under the terms of the Lease; and (ii) the performance by Tenant of
the covenants, conditions and terms of the Lease (such payment and performance
to be referred to collectively as "Obligations"). In the event Tenant defaults
in the performance of the Obligations during the term of the Lease, Guarantor
hereby promises and agrees to pay to Landlord all rents and any arrearages
thereof and any other amounts that may be or become due and to fully satisfy all
conditions and covenants of the Lease to be kept and performed by Tenant.
2. Upon execution of the Lease, Tenant shall provide to Landlord an
irrevocable, unconditional letter of credit in accordance with the provisions of
Section 16.12 of the Lease. No later than February 1, 2000, Tenant shall provide
to Landlord an additional irrevocable, unconditional letter of credit, also in
accordance with the provisions of Section 16.12 of the Lease.
Landlord shall have the right to draw upon the Letters only upon the
occurrence of a default by Tenant under the terms of the Lease or otherwise as
specifically provided herein.
On or before the Commencement Date of the Lease, Guarantor shall
provide Landlord with warrants for one hundred thousand (100,000) shares of
Guarantor at an exercise price of One Dollar ($1.00) per share so long as the
then-current trading price is not less than One Dollar ($1.00) per share. If the
then-current share trading price on the Commencement Date is less than $1.00 per
share, Guarantor shall provide Landlord with the number of warrants equal to One
Hundred Thousand Dollars ($100,000.00) divided by the then-current share trading
price.
Provided that (i) Guarantor remains a publicly traded stock company
whose shares are traded on a recognized national exchange or the NASDAQ system,
and (ii) Guarantor's stock reaches the price of Four Dollars ($4.00) per share
and maintains a price of at least Four Dollars ($4.00) per share for a period of
at least two (2) consecutive months, and (iii) the warrants held by Landlord may
be executed without restriction and the shares obtained thereby may be
immediately sold in the public market without restriction under federal or state
laws or otherwise, then Landlord shall release the Letters to the Tenant and
shall rely solely on the shares obtained pursuant to its exercise of the stock
warrants for the credit enhancement provided hereunder but the guaranty
otherwise provided under this agreement shall remain in full force and effect.
For the purposes of this Agreement, warrants providing for a cashless exercise
shall be acceptable, so long as the conditions set forth in clauses (i) through
(iii) above are satisfied; provided, however, that if the Landlord exercises the
warrants in any manner other than a cashless exercise, the Landlord shall be
deemed to have made a cashless exercise for purposes of determining if and when
the condition set forth in clause (iii) above is satisfied. For the purposes of
this Agreement, a cashless exercise shall mean the method by which a
warrant-holder may convert warrant(s) (without payment of a cash exercise price)
into a number of shares equal to (a) the number of warrants exercised, less (b)
a number of shares having an aggregate fair market value equal to the aggregate
exercise price for the number of warrants exercised. Landlord shall be entitled
to exercise its right to purchase Guarantor's stock at an exercise price of
$1.00 per share pursuant to the warrants. Guarantor warrants that it shall not
do any act or fail to do any act which would in accordance with any applicable
laws, rules, regulations or orders of any government entity including but not
limited to the Securities and Exchange commission, result in regulatory
restrictions being imposed upon Landlord's ability to exercise the warrants or
freely trade the shares acquired thereby which regulatory restrictions cannot be
or are not removed or rendered inapplicable to Landlord's ability to exercise
the warrants or freely trade the share acquired thereby. In the event Guarantor
breaches its warranty hereunder, Landlord shall be entitled to retain the
Letters of Credit provided to it by Tenant. Such right shall survive the
expiration or earlier termination of the Lease and in no circumstances shall
Landlord be required to return such warrants or make any payment to Guarantor
from the proceeds of Landlord's transactions with the warrants or the shares
acquired thereby.
3. As conditions of liability pursuant to this Guaranty, Guarantor
hereby unconditionally waives (a) any notice of default by Tenant in the payment
of rent or any other amount or any other term, covenant or condition of the
Lease; (b) any requirement that Landlord exercise or exhaust its rights and
remedies against Tenant or against any person, firm or
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corporation prior to enforcing its rights against Guarantor, and (c) any and
all rights of reimbursement, indemnity, subrogation or otherwise which, upon
payment under this Guaranty, Guarantor may have against Tenant.
4. Landlord may, without notice to Guarantor, and Guarantor hereby
consents thereto, (a) modify or otherwise change or alter the terms and
conditions of the Lease; and (b) waive any of its rights under the Lease or
forbear to take steps to enforce the payment of rent or any other term or
condition of the Lease against Tenant.
5. Guarantor hereby agrees, upon the requests of Landlord, to execute,
acknowledge and deliver to Landlord a statement in writing certifying, if this
be the fact, that this Guaranty of the referenced Lease is unmodified, in full
force and effect, and there are no defenses or offsets thereto; certifying that
the referenced Lease is unmodified, in full force and effect, and there are no
defenses or offsets to such Lease (or if modified, that the Lease is in full
force and effect as modified and that this Guaranty extends to and fully covers
such Lease, as modified); and certifying the dates to which Minimum Annual Rent,
Annual Rental Adjustment, if any, and any other additional rentals have been
paid.
6. In the event Tenant fails during the term of this Lease to pay any
rent, additional rent or other payments when due or fails to comply with any
other term, covenant or condition of the Lease Landlord shall be entitled to
exercise its rights under Section 1 of this guaranty or to draw upon the Letters
or exercise its rights pursuant to the warrants as provided in Section 2 hereof,
as if such payments covenant constituted the direct and primary obligations of
Guarantor, and such obligations of Guarantor shall be due with attorneys' fees
and all costs of litigation and without relief from valuation or appraisement
laws.
7. The rights and obligations created by this Guaranty shall inure to
the benefit of and be binding upon the successors, assigns and legal
representatives of Guarantor and Landlord.
8. Anything herein or in the Lease to the contrary notwithstanding,
Guarantor hereby acknowledges and agrees that any security deposit or other
credit in favor of the Tenant may be applied to cure any Tenant default or
offset any damages incurred by Landlord under the Lease, as Landlord determines
in its sole and absolute discretion, and Landlord shall not be obligated to
apply any such deposit or credit to any such default or damages before bringing
any action or pursuing any remedy available to Landlord against Guarantor.
Guarantor further acknowledges that its liability under this Guaranty shall not
be affected in any manner by such deposit or credit, or Landlord's application
thereof.
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IN WITNESS WHEREOF, Guarantor has executed this Unconditional Guaranty
of Lease as of the date set forth above.
"GUARANTOR"
ISA INTERNATIONAL, INC.,a
Delaware corporation
By:_______________________
Printed: Xxxxxx X. Xxxxxx
Title: President
Address:
Federal Identification
No.: 00-0000000
STATE OF MINNESOTA )
) SS.
COUNTY OF DAKOTA )
Before me, a Notary Public in and for said County and State, personally
appeared Xxxxxx X. Xxxxxx, by me known and by me known to be the President of
ISA Internationale, Inc., a Delaware corporation, who acknowledged the execution
of the above and foregoing "Unconditional Guaranty of Lease" on behalf of said
corporation.
WITNESS my hand and Notarial Seal this 30th day of December, 1999.
---------------------------
Notary Public
---------------------------
(Printed)
My Count of Residence_________________
My Commission Expires_________________
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