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Exhibit 10.5
GUARANTY
GUARANTY, dated as of December 7, 1995, made by Xxxxxx X. North, an
individual resident of the State of Virginia, having a principal residence at
Narnia Farm, Xxxxx 0, Xxx 000, Xxxxxxxx, Xxxxxxxx 00000 (the "Guarantor"), in
favor of Creditanstalt Corporate Finance, Inc. having an xxxxxx xx Xxx
Xxxxxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxxxxx 00000 ("CCFI");
At the Guarantor's request, CCFI has agreed to make a revolving line of
credit (the "Loans") to Guardian Technologies International, Inc., a Virginia
corporation (the "Borrower"), under that certain Agreement dated as of December
7, 1995 among the Borrower, the Guarantor and CCFI (the "Agreement"); and
It is a condition to the making of the Loans that the Guarantor execute
and deliver this Guaranty to CCFI;
NOW, THEREFORE, in consideration of the foregoing, it is hereby agreed as
follows:
1. Agreement of Guaranty. The Guarantor hereby irrevocably and
unconditionally guarantees to CCFI the payment, when due, of all of the
obligations and liabilities of the Borrower to CCFI for principal, interest,
fees or otherwise under and in connection with the Loans, regardless of their
amounts, the Agreement, the Note referred to therein, and each of the other
documents or instruments entered into or delivered in connection therewith (the
"Documents"), and any other payment or indemnification to be made by the
Borrower pursuant to or in connection with the Loans (all of the foregoing
being hereinafter referred to as the "Guaranteed Obligations"). All such
payments with respect to all Guaranteed Obligations shall be made to CCFI at
its office at 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 or such other place as
may be notified in writing to the Guarantor by CCFI, in U.S. Dollars and in
immediately available funds.
The obligations of the Guarantor under this Guaranty are direct and
primary obligations and shall not be discharged for any reason until CCFI has
been indefeasibly paid in full. Without limiting the generality of the
foregoing, the obligations of the Guarantor shall remain in force
notwithstanding: (a) any invalidity, illegality or unenforceability of, or any
defect in, any of the Documents or any defense which the Borrower or any
successor thereof may have with respect thereto or with respect to any
collateral therefor, if any, (b) the existence or absence of any legal action
to enforce the Guaranteed Obligations or the Documents or any security thereof,
or (c) any other circumstance which might otherwise constitute a defense
available to, or discharge of, a guarantor or surety of any type.
This Guaranty is several and independent of, and may be enforced
regardless of any other obligation (direct or contingent) of the Guarantor or
any other Person (such term to include any person, partnership, corporation,
association or other legal or governmental entity, agency or instrumentality)
with respect to the Guaranteed Obligations.
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2. Subordination. If and to the extent that the Guarantor makes any
payment hereunder, any claim which the Guarantor may have by reason thereof
shall be subject and subordinate to the prior payment in full of all of the
Guaranteed Obligations. The Guarantor shall not, after a claim has been made
pursuant to this Guaranty, claim from the Borrower or any other guarantor of
the Guaranteed Obligations or with respect to any of their respective
properties, any sums which may be owing to the Guarantor or have the benefit of
any setoff, counterclaim, composition or payment by the Borrower until all
Guaranteed Obligations and all other obligations of the Guarantor hereunder
shall have been paid in full. Should any payment, distribution, security or
the benefit of proceeds thereof be received by the Guarantor upon or with
respect to amounts due to it from the Borrower or any other guarantor of the
Guaranteed Obligations after a claim has been made pursuant to this Guaranty
and prior to the payment in full of the amounts due to CCFI, the Guarantor will
forthwith deliver the same to CCFI in precisely the form received (except for
endorsement or assignment where necessary), for application in or towards
repayment of the Guaranteed Obligations to CCFI and, until so delivered, the
same shall be held in trust as the property of CCFI. In the event of the
failure of the Guarantor to make any such endorsement or assignment, CCFI or
any of its officers or employees are hereby irrevocably authorized to make the
same on behalf of the Guarantor.
3. Waivers, etc. (a) The Guarantor hereby waives notice of acceptance of
this Guaranty and notice of any liability to which it may apply, and waives
diligence, presentment, demand of payment, protest, notice of dishonor of any
such liabilities, suit or taking other action or making any demand by CCFI
against, and any other notice to, any party liable thereon (including the
Guarantor). The Guarantor agrees that CCFI may at any time and from time to
time without the consent of, or notice to, the Guarantor, without incurring
responsibility to the Guarantor, without impairing or releasing the obligations
of the Guarantor hereunder, upon or without any terms or conditions and in
whole or in part: (i) change the manner, place or terms of, and/or change or
extend the time of payment of, renew or alter, any of the Guaranteed
Obligations, any security therefor, or any liability incurred directly or
indirectly in respect thereof, and this Guaranty shall apply to the Guaranteed
Obligations so changed, extended, renewed or altered; (ii) exercise or refrain
from exercising any rights against the Borrower or any other person or entity
(including the Guarantor) or otherwise act or refrain from acting; (iii) settle
or compromise any of the Guaranteed Obligations, any security therefor or any
liability (including any of those hereunder) incurred directly or indirectly in
respect thereof or hereof, and may subordinate the payment of all or any part
thereof to the payment of any liability (whether due or not) of the Borrower to
the creditors of the Borrower (including CCFI); (iv) apply any sums by third
parties in respect of any liability or liabilities of the Borrower to CCFI
regardless of what liability or liabilities of the Borrower remain unpaid;
and/or (v) consent to or waive any breach of, or any act, omission or default
under or modify or amend any provision of, the Documents so long as the
principal amount of the Loans is not increased without the written consent of
the Guarantor. The Guarantor further acknowledges that the Guarantor has not
relied on any collateral security which may be granted to CCFI by the Borrower
in order to issue this Guaranty, and agrees that this Guaranty shall at all
times remain in effect with respect to the Guaranteed Obligations whether the
Guaranteed Obligations are secured or unsecured. Nothing herein shall be
deemed to be a modification of the terms of the Agreement.
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(b) The Guarantor hereby waives any right of subrogation which it may have
with respect to any payment it may have made to CCFI in respect of the Loans or
the Documents.
4. Agreement. Without the prior written consent of CCFI, the Guarantor
will not, until the Agreement is terminated and all Guaranteed Obligations and
all other obligations of the Guarantor hereunder are paid in full, hold
directly or indirectly less than 22% of the capital stock of the Borrower
having voting power for the election of the directors of the Borrower (other
than as a result of the private placement of such capital stock as approved by
CCFI).
5. Representation. (a) The Guarantor is an individual resident of the
State of Virginia.
(b) The Guarantor has the power to own his assets, to conduct his business
as now conducted, and to enter into and perform the provisions of this
Guaranty.
(c) The entering into and performance by the Guarantor of the Guaranty
does not contravene any existing law or any legal order applicable to, or
license or permit granted to, the Guarantor, or any agreement or instrument to
which the Guarantor is a party or to which he or any of his assets is subject.
(d) No consent or authorization by any governmental or monetary authority
in the jurisdiction where the Guarantor is conducting his business is required
in connection with the execution delivery or enforcement of this Guaranty.
(e) This Guaranty is the legal, valid and binding obligation of the
Guarantor, enforceable against the Guarantor in accordance with its terms.
(f) The Guarantor owns, directly or indirectly, no less than 22% of the
issued and outstanding capital stock of the Borrower having voting power for
the election of the members of the Board of Directors of the Borrower, and
shall continue to own at least such percentage so long as any of the Guaranteed
Obligations shall be outstanding (other than as a result of the private
placement of such capital stock as approved by CCFI).
(g) The Guarantor hereby acknowledges that the Guarantor has not relied on
any representation of CCFI with respect to the Borrower or the existence,
perfection or priority of any security interest which CCFI may now or in the
future have in any property of the Borrower, and the Guarantor agrees that its
obligations hereunder shall be independent of any such security interest, if
any.
(h) The financial statements of the Guarantor which have been furnished to
CCFI and fairly present the financial condition and the results of operations
of the Guarantor as at the end of and for the reporting period covered thereby.
There are no material liabilities or any material unrealized or anticipated
losses from unfavorable commitments which are not disclosed in such financial
statement. There has been no material adverse change in the financial
condition
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of the Guarantor from that set forth in such financial statements.
There are no legal proceedings pending or, to the knowledge of the Guarantor,
threatened against or affecting the Guarantor or his obligations hereunder, and
no defaults by the Guarantor with respect to any agreement or instrument to
which he is a party or to which he or his assets are subject, which might
result in such a material adverse change.
6. Payment of Expenses, etc. The Guarantor hereby agrees to pay for all
out-of-pocket costs and expenses of CCFI arising in connection with the
enforcement of this Guaranty (including, without limitation, the reasonable
fees and expenses of counsel for CCFI), and all stamp taxes (including interest
and penalties, if any) which may be payable in respect of this Guaranty or of
any modification or enforcement of this Guaranty. This Section 6 shall survive
the repayment of the Guaranteed Obligations and the termination of this
Guaranty.
7. Modification. This Guaranty may be modified only by an instrument in
writing signed by the parties hereto.
8. Governing Law. This Guaranty and the rights and obligations of the
parties hereunder shall be construed in accordance with, and be governed by,
the laws of the State of New York, without regard to its conflict of law
principles.
9. Notices. Communications given to any party in connection with this
Guaranty shall be effective when delivered at its address set forth immediately
below, as the same may be changed by written notice to the other party. No
other method of giving notice is hereby precluded. Written communications may
be in any form of writing howsoever transmitted.
Guardian Technologies International, Inc.
00000 Xxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Attention: Xxxxxx X. North
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Xxxxxx X. Xxxxx
Xxxxxx Xxxx, Xxxxx 0
Xxx 000
Xxxxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
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Copy to: (not constituting notice)
Xxxxxx Xxxxxxxx, Esq.
Xxxxxxxx & Xxxxxxxx
000 00xx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Creditanstalt Corporate Finance, Inc.
0 Xxxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxx X. X'Xxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000/6595
Copy to:
Creditanstalt Corporate Finance, Inc.
000 Xxxx Xxxxxx - 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
10. Waiver. CCFI's rights, powers, privileges and remedies under or in
connection with this Guaranty are cumulative and not exclusive and shall not be
waived, precluded or limited by, any failure or delay in the exercise thereof,
or by any course of dealing between the Guarantor and CCFI. No notice to or
demand on the Guarantor in any case shall entitle the Guarantor to any other or
further notice or demand in similar or other circumstances, or constitute a
waiver of the right of CCFI to any other or further action in any circumstances
without notice or demand.
11. Benefit of Guaranty. This Guaranty shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs,
successors and assigns, except that the Guarantor may not transfer or assign any
or all of his rights or obligations hereunder without the prior written consent
of CCFI.
12. Consent to Jurisdiction. The Guarantor agrees that any legal
action or proceeding against the Guarantor with respect to this Guaranty may be
brought in the courts of the State of New York or of the U.S. District Court for
the Southern District of New York, as CCFI in its sole discretion may elect, and
by execution and delivery of this Guaranty, the Guarantor accepts, for himself
and in respect of his property, generally and unconditionally, the non-exclusive
jurisdiction of the aforesaid courts.
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The Guarantor hereby irrevocably consents to the service of process in any
such suit, action or proceeding brought in New York by the mailing thereof, by
CCFI, by United States registered or certified mail, postage prepaid, to the
Guarantor at his address set forth below, such service to become effective five
days after such mailing. Nothing herein shall affect the right of CCFI to
bring legal action or proceedings in any other court of competent jurisdiction.
In addition, the Guarantor hereby irrevocably waives, to the fullest extent
permitted by law, any objection which he may now or hereafter have to the
laying of venue of any such suit, action or proceeding brought in the State of
New York or the U.S. District Court for the Southern District of New York, and
hereby further irrevocably waives any claim that any such suit, action or
proceeding brought in any such court has been brought in an inconvenient forum.
AFTER REVIEWING THIS PROVISION SPECIFICALLY WITH ITS COUNSEL THE GUARANTOR
HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVES ANY RIGHTS HE MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT
OF, UNDER, OR IN CONNECTION WITH, THIS GUARANTY OR ANY OTHER DOCUMENT DELIVERED
IN CONNECTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER VERBAL OR WRITTEN), OR ACTIONS OF CCFI, THE BORROWER OR THE GUARANTOR
RELATING HERETO. THIS PROVISION IS A MATERIAL INDUCEMENT FOR CCFI'S MAKING THE
LOAN.
IN WITNESS WHEREOF, the Guarantor has duly executed and delivered this
Guaranty as of the date first above written.
By /s/ Xxxxxx X. North
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Xxxxxx X. North
CREDITANSTALT CORPORATE FINANCE, INC.
By /s/ Xxxxxx X. X'Xxxx
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Name: Xxxxxx X. X'Xxxx
Title: Co-Chief Executive USA
By /s/ Xxxxxx Xxxxxx
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Name: Xxxxxx Xxxxxx
Title: Deputy Chief Executive USA
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