EXHIBIT 10.42
EXECUTION VERSION
GUARANTY
(SCHLOTZSKY'S FRANCHISOR, LLC)
This GUARANTY (this "Guaranty"), dated as of December 29,
2003, is executed and delivered by SCHLOTZSKY'S FRANCHISOR, LLC, a Delaware
limited liability company ("Guarantor"), in favor of NS ASSOCIATES I, LTD., a
Texas limited partnership ("Lender"), in light of the following:
RECITALS
A. DFW Restaurant Transfer Corp., a Texas corporation
("Borrower"), and the Lender entered into an Amended and Restated Option
Agreement, dated as of February 7, 2001, amended by an Amendment to Amended and
Restated Option Agreement, effective June 1, 2002 (as so amended, the "Option
Agreement"), pursuant to which the Lender granted DFW an option to acquire the
Lender's rights under that certain Amended and Restated Area Developer
Agreement, dated August 31, 1996, amended from time to time (as so amended, the
"Lender ADA"), between Schlotzsky's, Inc., a Texas corporation ("SI") and the
Lender.
B. DFW exercised its option under the Option Agreement
and in connection therewith, among other things, (i) DFW, the Lender and SI
entered into a Security Agreement, dated as of August 30, 2002 (as amended or
otherwise modified from time to time, the "Security Agreement"), (ii) DFW issued
a promissory note, dated August 30, 2002, for the benefit of the Lender in the
original principal amount of $23,268,000.00 (as amended or otherwise modified
from time to time, including as described in Recital E below, the "Note"), (iii)
SI guaranteed the payment of the Note pursuant to a Guarantee of Payment dated
as of August 30, 2002 (as amended or otherwise modified from time to time, the
"SI Guaranty").
C. The Lender required, as a condition to the acceptance
of the Note that DFW's obligations thereunder be secured by a pledge of (i) the
rights to be acquired by DFW under the Lender ADA, including without limitation,
DFW's right to receive the royalties paid to the Developer under all Unit
Franchise Agreements for Restaurants situated in the Development Area, as such
terms are defined in the Lender ADA; and (ii) all rights under certain
Assignments from SI to Lender (including Assignments dated August 27, 1999,
September 13, 2000, February 7, 2001, May 15, 2001, August 10, 2001, January 25,
2002 and April 30, 2002), pursuant to which SI assigned to the Lender its right
to receive a portion of the royalties payable pursuant to the Franchise
Agreements for the restaurants described in each of the respective Assignments
or listed in an exhibit thereto.
D. Pursuant to a Contribution Agreement, dated as of
June 7, 2003 (the "Contribution Agreement"), between SI and Guarantor, a wholly
owned subsidiary of SI, effective as of that date SI irrevocably contributed,
transferred and conveyed to Guarantor, absolutely and not as collateral
security, all of SI's right, title and interest in, to and under the Conveyed
Assets (as defined in the Contribution Agreement) (such contribution, the
"Contribution to Guarantor");
E. Concurrently herewith, Lender, Borrower, Guarantor
and SI are entering into a Restructuring Agreement (the "Restructuring
Agreement"), pursuant to which, among
other things, Lender is agreeing to modify the terms of payment of the amount
currently outstanding under the Note and Borrower is issuing an amended and
restated version of the Note.
F. Lender did not approve the Contribution to Guarantor,
and has further reserved its rights and claims relating thereto. In order to
induce Lender to (a) consent to such Contribution to Guarantor, and (b) enter
into the Restructuring Agreement or provide other financial accommodations
heretofore or hereafter extended by Lender to Borrower, Guarantor has agreed to
guaranty the Guarantied Obligations.
H. Guarantor is a Subsidiary of SI and an Affiliate of
Borrower, and will benefit by virtue of the financial accommodations from Lender
to Borrower.
I. The obligations of Guarantor hereunder are secured by
security interests granted to the Lender by the Guarantor pursuant to that
certain Security Agreement of even date herewith (the "Security Agreement"),
that certain Trademark Security Agreement of even date herewith between the
Guarantor and the Lender (the "Trademark Security Agreement"), and that certain
Pledge Agreement of even date herewith between the Guarantor and the Lender (the
"Pledge Agreement").
NOW, THEREFORE, in consideration of the foregoing, Guarantor
hereby agrees in favor Lender, as follows:
1. Definitions and Construction.
(a) Definitions. Capitalized terms used herein and not
otherwise defined herein shall have the meanings
ascribed to them in the Restructuring Agreement. The
following terms, as used in this Guaranty, shall have
the following meanings:
"Bankruptcy Code" means title 11 of the United States
Code, as in effect from time to time.
"Borrower" has the meaning set forth in the recitals
to this Guaranty.
"Guarantied Obligations" means, with respect to
Guarantor: the due and punctual payment of all present or future
principal of, and interest (including, any and all interest which, but
for the application of the provisions of the Bankruptcy Code, would
have accrued on such amounts irrespective of whether a claim therefor
is allowed) on, any and all premium on, and any and all fees, costs,
indemnities and expenses incurred in connection with or on, the
Indebtedness owed by Borrower to Lender pursuant to the terms of the
Note and the other Note Documents.
"Guarantor" has the meaning set forth in the preamble
to this Guaranty.
"Guaranty" has the meaning set forth in the preamble
to this Guaranty.
"Indebtedness" means any and all obligations
(including the Obligations), indebtedness, or liabilities of any kind
or character owed by Borrower and arising directly or indirectly out of
or in connection with the Note or the other Note Documents, including
all such obligations, indebtedness, or liabilities, whether for
principal, interest
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(including any and all interest which, but for the application
of the provisions of the Bankruptcy Code, would have accrued
on such amounts irrespective of whether a claim therefor is
allowed), premium, reimbursement obligations, fees, costs,
expenses (including reasonable attorneys fees), or indemnity
obligations, whether heretofore, now, or hereafter made,
incurred, or created, whether voluntarily or involuntarily
made, incurred, or created, whether secured or unsecured (and
if secured, regardless of the nature or extent of the
security), whether absolute or contingent, liquidated or
unliquidated, or determined or indeterminate, whether Borrower
is liable individually or jointly with others.
"Lender" has the meaning set forth in the preamble to
this Guaranty.
"Note" has the meaning set forth in the recitals to
this Guaranty.
"Note Documents" means the Note, the Restructuring
Agreement, the Security Agreement and any other agreement now
existing or hereafter entered into by Borrower or any other SI
Party (as defined in the Restructuring Agreement) and the
Lender in connection with the Note.
"Person" means natural persons, corporations, limited
liability companies, limited partnerships, general
partnerships, limited liability partnerships, joint ventures,
trusts, land trusts, business trusts, or other organizations,
irrespective of whether they are legal entities, and
governments and agencies and political subdivisions thereof.
"Restructuring Agreement" has the meaning set forth
in the recitals to this Guaranty.
"Solvent" means, with respect to any Person on a
particular date, that, at fair valuations, the sum of such
Person's assets is greater than all of such Person's debts.
"Voidable Transfer" has the meaning set forth in
Section 9 of this Guaranty.
(b) Construction. Unless the context of this Guaranty
clearly requires otherwise, references to the plural
include the singular, references to the singular
include the plural, the terms "include" and
"including" are not limiting, and the term "or" has,
except where otherwise indicated, the inclusive
meaning represented by the phrase "and/or." The words
"hereof," "herein," "hereby," "hereunder," and other
similar terms in this Guaranty refer to this Guaranty
as a whole and not to any particular provision of
this Guaranty. Section, subsection, clause, schedule
and exhibit references herein are to this Guaranty
unless otherwise specified. All of the exhibits or
schedules attached to this Guaranty shall be deemed
incorporated herein by reference. Any reference in
this Guaranty to any of the following documents
includes any and all alterations, amendments,
changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and
supplements thereto or thereof, as applicable
(subject to any restrictions on such alterations,
amendments, changes, extensions, modifications,
renewals, replacements, substitutions, joinders, and
supplements set forth therein): the Note; the
Restructuring Agreement; this Guaranty; and the other
Note Documents. Neither this Guaranty nor any
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uncertainty or ambiguity herein shall be construed or
resolved against Lender or Guarantor, whether under
any rule of construction or otherwise. On the
contrary, this Guaranty has been reviewed by
Guarantor, Lender, and their respective counsel, and
shall be construed and interpreted according to the
ordinary meaning of the words used so as to fairly
accomplish the purposes and intentions of Lender and
Guarantor. Any reference herein to the payment in
full of the Guarantied Obligations shall mean the
payment in full in cash of all Guarantied
Obligations. Any reference herein to any Person shall
be construed to include such Person's successors and
assigns. Any requirement of a writing contained
herein shall be satisfied by the transmission of a
Record and any Record transmitted shall constitute a
representation and warranty as to the accuracy and
completeness of the information contained therein.
The captions and headings are for convenience of
reference only and shall not affect the construction
of this Guaranty.
2. Guarantied Obligations. Guarantor, jointly and severally with
each other guarantor with respect to the Obligations
(including SI), hereby irrevocably and unconditionally
guaranties to Lender, as and for its own debt, until payment
in full thereof has been made, (a) the payment of the
Guarantied Obligations, in each case when and as the same
shall become due and payable, whether at maturity, pursuant to
a mandatory prepayment requirement, by acceleration, or
otherwise; it being the intent of Guarantor that the guaranty
set forth herein shall be a guaranty of payment and not a
guaranty of collection; and (b) the punctual and faithful
performance, keeping, observance, and fulfillment by Borrower
of all of the agreements, conditions, covenants, and
obligations of Borrower contained in the Note and under each
of the other Note Documents.
3. Continuing Guaranty. This Guaranty includes Guarantied
Obligations arising under successive transactions continuing,
compromising, extending, increasing, modifying, releasing, or
renewing the Guarantied Obligations, changing the interest
rate, payment terms, or other terms and conditions thereof, or
creating new or additional Guarantied Obligations after prior
Guarantied Obligations have been satisfied in whole or in
part. To the maximum extent permitted by law, Guarantor hereby
waives any right to revoke this Guaranty as to future
Indebtedness. If such a revocation is effective
notwithstanding the foregoing waiver, Guarantor acknowledges
and agrees that (a) no such revocation shall be effective
until written notice thereof has been received by Lender, (b)
no such revocation shall apply to any Guarantied Obligations
in existence on such date (including any subsequent
continuation, extension, or renewal thereof, or change in the
interest rate, payment terms, or other terms and conditions
thereof), (c) no such revocation shall apply to any Guarantied
Obligations made or created after such date to the extent made
or created pursuant to a legally binding commitment of Lender
in existence on the date of such revocation, (d) no payment by
Guarantor, Borrower, or from any other source, prior to the
date of such revocation shall reduce the maximum obligation of
Guarantor hereunder, and (e) any payment by Borrower or from
any source other than Guarantor subsequent to the date of such
revocation shall first be applied to that portion of the
Guarantied Obligations as to which the revocation is effective
and which are not, therefore, guarantied hereunder, and to the
extent so applied shall not reduce the maximum obligation of
Guarantor hereunder.
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4. Performance Under this Guaranty. In the event that Borrower
fails to make any payment of any Guarantied Obligations, on or
before the due date thereof, or if Borrower shall fail to
perform, keep, observe, or fulfill any other obligation under
the Note or any other Note Document in the manner provided
therein, as applicable, Guarantor immediately shall cause such
payment to be made or each of such obligations to be
performed, kept, observed, or fulfilled.
5. Primary Obligations. This Guaranty is a primary and original
obligation of Guarantor, is not merely the creation of a
surety relationship, and is an absolute, unconditional, and
continuing guaranty of payment and performance which shall
remain in full force and effect without respect to future
changes in conditions. Guarantor hereby agrees that it is
directly, jointly and severally with any other guarantor of
the Guarantied Obligations, liable to Lender, that the
obligations of Guarantor hereunder are independent of the
obligations of Borrower or any other guarantor, and that a
separate action may be brought against Guarantor, whether such
action is brought against Borrower or any other guarantor or
whether Borrower or any other guarantor is joined in such
action. Guarantor hereby agrees that its liability hereunder
shall be immediate and shall not be contingent upon the
exercise or enforcement by Lender of whatever remedies they
may have against Borrower or any other guarantor, or the
enforcement of any lien or realization upon any security
Lender may at any time possess. Guarantor hereby agrees that
any release which may be given by Lender to Borrower or any
other guarantor shall not release Guarantor. Guarantor
consents and agrees that Lender shall be under no obligation
to marshal any property or assets of Borrower or any other
guarantor in favor of Guarantor, or against or in payment of
any or all of the Guarantied Obligations.
6. Waivers.
(a) To the fullest extent permitted by applicable law,
Guarantor hereby waives: (i) notice of acceptance
hereof; (ii) notice of any loans or other financial
accommodations made or extended under the Note, or
the creation or existence of any Guarantied
Obligations; (iii) notice of the amount of the
Guarantied Obligations, subject, however, to
Guarantor's right to make inquiry of Lender to
ascertain the amount of the Guarantied Obligations at
any reasonable time; (iv) notice of any adverse
change in the financial condition of Borrower or of
any other fact that might increase Guarantor's risk
hereunder; (v) notice of presentment for payment,
demand, protest, and notice thereof as to any
instrument among the Note Documents; (vi) notice of
any Event of Default under the Note or any other Note
Document; and (vii) all other notices (except if such
notice is specifically required to be given to
Guarantor under this Guaranty or any other Note
Documents to which Guarantor is a party) and demands
to which Guarantor might otherwise be entitled.
(b) To the fullest extent permitted by applicable law,
Guarantor hereby waives the right by statute or
otherwise to require Lender, to institute suit
against Borrower or to exhaust any rights and
remedies which Lender has or may have against
Borrower. In this regard, Guarantor agrees that it is
bound to the payment of each and all Guarantied
Obligations, whether now existing or hereafter
arising, as fully as if the Guarantied Obligations
were directly owing
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to Lender, or its Affiliates, as applicable, by
Guarantor. Guarantor further waives any defense
arising by reason of any disability or other defense
(other than the defense that the Guarantied
Obligations shall have been performed and paid in
full) of Borrower or by reason of the cessation from
any cause whatsoever of the liability of Borrower in
respect thereof.
(c) To the fullest extent permitted by applicable law,
Guarantor hereby waives: (i) any rights to assert
against Lender, any defense (legal or equitable),
set-off, counterclaim, or claim which Guarantor may
now or at any time hereafter have against Borrower or
any other party liable to Lender; (ii) any defense,
set-off, counterclaim, or claim, of any kind or
nature, arising directly or indirectly from the
present or future lack of perfection, sufficiency,
validity, or enforceability of the Guarantied
Obligations or any security therefor; (iii) any
defense arising by reason of any claim or defense
based upon an election of remedies by Lender; (iv)
the benefit of any statute of limitations affecting
Guarantor's liability hereunder or the enforcement
thereof, and any act which shall defer or delay the
operation of any statute of limitations applicable to
the Guarantied Obligations shall similarly operate to
defer or delay the operation of such statute of
limitations applicable to Guarantor's liability
hereunder.
(d) Until such time as all of the Guarantied Obligations
have been paid in full: (i) Guarantor hereby waives
and postpones any right of subrogation Guarantor has
or may have as against Borrower with respect to the
Guarantied Obligations; (ii) in addition, Guarantor
hereby waives and postpones any right to proceed
against Borrower or any other Person, now or
hereafter, for contribution, indemnity,
reimbursement, or any other suretyship rights and
claims (irrespective of whether direct or indirect,
liquidated or contingent), with respect to the
Guarantied Obligations; and (iii) in addition,
Guarantor also hereby waives and postpones any right
to proceed or to seek recourse against or with
respect to any property or asset of Borrower.
(e) WITHOUT LIMITING THE GENERALITY OF ANY OTHER WAIVER
OR OTHER PROVISION SET FORTH IN THIS GUARANTY,
GUARANTOR WAIVES ALL RIGHTS AND DEFENSES ARISING OUT
OF AN ELECTION OF REMEDIES BY LENDER, EVEN THOUGH
THAT ELECTION OF REMEDIES, SUCH AS A NONJUDICIAL
FORECLOSURE WITH RESPECT TO SECURITY FOR A GUARANTIED
OBLIGATION, HAS DESTROYED GUARANTOR'S RIGHTS OF
SUBROGATION AND REIMBURSEMENT AGAINST BORROWER.
(f) Without affecting the generality of this Section,
Guarantor hereby also agrees to the following
waivers:
(1) Guarantor agrees that the Lender's
right to enforce this Guaranty is absolute and is not
contingent upon the genuineness, validity or enforceability of
any of the Note Documents. Guarantor agrees that Lender's
rights under this Guaranty shall be enforceable even if
Borrower had no liability at the time of execution of the Note
Documents or later ceases to be liable.
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(2) Guarantor agrees that Lender's
rights under the Note Documents will remain enforceable even
if the amount secured by the Note Documents is larger in
amount and more burdensome than that for which Borrower is
responsible. The enforceability of this Guaranty against
Guarantor shall continue until all sums due under the Note
Documents have been paid in full and shall not be limited or
affected in any way by any impairment or any diminution or
loss of value of any security or collateral for Borrower's
obligations under the Note Documents, from whatever cause, the
failure of any security interest in any such security or
collateral or any disability or other defense of Borrower, any
other guarantor of Borrower's obligations under the Note
Documents, any pledgor of collateral for any person's
obligations to Lender or any other person in connection with
the Note Documents.
(3) Guarantor waives all benefits and
defenses it may have under any applicable law which would
otherwise require Lender to (A) proceed against Borrower, any
guarantor of Borrower's obligations under the Note Documents,
any other pledgor of collateral for any person's obligations
to Lender or any other person in connection with the
Guarantied Obligations, (B) proceed against or exhaust any
other security or collateral Lender may hold, or (C) pursue
any other right or remedy for Guarantor's benefit, and agrees
that Lender may exercise its right under this Guaranty without
taking any action against Borrower, any other guarantor of
Borrower's obligations under the Note Documents, any pledgor
of collateral for any person's obligations to Lender or any
other person in connection with the Guarantied Obligations,
and without proceeding against or exhausting any security or
collateral Lender holds.
7. Releases. Guarantor consents and agrees that, without notice
to or by Guarantor and without affecting or impairing the
obligations of Guarantor hereunder, Lender may, by action or
inaction, compromise or settle, extend the period of duration
or the time for the payment, or discharge the performance of,
or may refuse to, or otherwise not enforce, or may, by action
or inaction, release all or any one or more parties to, any
one or more of the terms and provisions of the Note or any of
the other Note Documents or may grant other indulgences to
Borrower in respect thereof, or may amend or modify in any
manner and at any time (or from time to time) any one or more
of the Note or any of the other Note Documents, or may, by
action or inaction, release or substitute any other guarantor,
if any, of the Guarantied Obligations, or may enforce,
exchange, release, or waive, by action or inaction, any
security for the Guarantied Obligations or any other guaranty
of the Guarantied Obligations, or any portion thereof.
8. No Election. Lender shall have the right to seek recourse
against Guarantor to the fullest extent provided for herein
and no election by Lender to proceed in one form of action or
proceeding, or against any party, or on any obligation, shall
constitute a waiver of Lender's right to proceed in any other
form of action or proceeding or against other parties unless
Lender has expressly waived such right in writing.
Specifically, but without limiting the generality of the
foregoing, no action or proceeding by Lender under any
document or instrument evidencing the Guarantied Obligations
shall serve to diminish the liability of Guarantor under this
Guaranty
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except to the extent that Lender finally and unconditionally
shall have realized payment in full of the Guarantied
Obligations by such action or proceeding.
9. Revival and Reinstatement. Guarantor hereby represents and
warrants to Lender that, both before and after giving effect
to this Guaranty and to the execution and delivery by
Guarantor of each Note Document to which it is a party, (a)
each of Guarantor and each of its subsidiaries is Solvent, and
(b) no transfer of property is being made by Guarantor or its
subsidiaries and no obligation is being incurred by Guarantor
or its subsidiaries in connection with the transactions
contemplated by this Guaranty or the other Note Documents with
the intent to hinder, delay, or defraud either present or
future creditors of Guarantor or its subsidiaries. If the
incurrence or payment of the Guarantied Obligations or the
obligations of Guarantor under this Guaranty by Guarantor or
the transfer by Guarantor to Lender of any property of
Guarantor should for any reason subsequently be declared to be
void or voidable under any state or federal law relating to
creditors' rights, including provisions of the Bankruptcy Code
relating to fraudulent conveyances, preferences, and other
voidable or recoverable payments of money or transfers of
property (collectively, a "Voidable Transfer"), and if Lender
is required to repay or restore, in whole or in part, any such
Voidable Transfer, or elects to do so upon the reasonable
advice of its counsel, then, as to any such Voidable Transfer,
or the amount thereof that Lender is required or elects to
repay or restore, and as to all reasonable costs, expenses,
and attorneys' fees of Lender related thereto, the liability
of Guarantor automatically shall be revived, reinstated, and
restored and shall exist as though such Voidable Transfer had
never been made.
10. Excess Funding. The Guarantor hereby agrees that if any other
guarantor of Borrower shall become an Excess Funding Guarantor
(as defined below) by reason of the payment by such other
guarantor of any Guarantied Obligations, the Guarantor shall,
on demand of such Excess Funding Guarantor (but subject to the
next sentence), pay to such Excess Funding Guarantor an amount
equal to the Guarantor's Pro Rata Share (as defined below and
determined, for this purpose, without reference to the
properties, debts and liabilities of such Excess Funding
Guarantor) of the Excess Payment (as defined below) in respect
of such Guarantied Obligations. The payment obligation of the
Guarantor to any Excess Funding Guarantor under this Section
10 shall be subordinate and subject in right of payment to the
prior payment in full of the obligations of the Guarantor
under the other provisions of this Guaranty, and such Excess
Funding Guarantor shall not have the right hereunder to
exercise any right or remedy with respect to such excess until
payment and satisfaction in full of all such obligations. To
the extent that Guarantor should have any similar rights
against any other guarantor, such rights to receive payment
from such other guarantor shall be subordinate and subject in
right of payment to the prior payment in full of the
obligations of such other guarantor under the other provisions
of its respective guaranty in favor of Lender, and Guarantor
shall not exercise any right or remedy with respect to such
rights to payment until payment and satisfaction in full of
all such obligations. For purposes of this Section 10, (i)
"Excess Funding Guarantor" shall mean, in respect of any
Guarantied Obligations, a guarantor of Borrower that has paid
an amount in excess of its Pro Rata Share of such
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Guarantied Obligations, (ii) "Excess Payment" shall mean, in
respect of any Guarantied Obligations, the amount paid by an
Excess Funding Guarantor in excess of its Pro Rata Share of
such Guarantied Obligations and (iii) "Pro Rata Share" shall
mean, for any guarantor of Borrower, the ratio (expressed as a
percentage) of (x) the amount by which the aggregate present
fair saleable value of all properties of such guarantor
(excluding any shares of stock of any other guarantor) exceeds
the amount of all the debts and liabilities of such guarantor
(including contingent, subordinated, unmatured and
unliquidated liabilities, but excluding the obligations of
such guarantor hereunder and any obligations of any other
guarantor that have been guaranteed by such guarantor) to (y)
the amount by which the aggregate fair saleable value of all
properties of the Borrower and all of the properties of
Borrower's guarantors exceeds the amount of all the debts and
liabilities (including contingent, subordinated, unmatured and
unliquidated liabilities, but excluding the obligations of the
Borrower and the Guarantor hereunder) of the Borrower and all
of the Borrower's guarantors.
11. Financial Condition of Borrower. Guarantor represents and
warrants to Lender and that it is currently informed of the
financial condition of Borrower and of all other circumstances
which a diligent inquiry would reveal and which bear upon the
risk of nonpayment of the Guarantied Obligations. Guarantor
further represents and warrants to Lender that it has read and
understands the terms and conditions of the Note and the other
Note Documents. Guarantor hereby covenants that it will
continue to keep itself informed of Borrower's financial
condition, the financial condition of other guarantors, if
any, and of all other circumstances which bear upon the risk
of nonpayment or nonperformance of the Guarantied Obligations.
12. Payments; Application. All payments to be made hereunder by
Guarantor shall be made in lawful money of the United States
of America at the time of payment, shall be made in
immediately available funds, and shall be made without
deduction (whether for taxes or otherwise) or offset. All
payments made by Guarantor hereunder shall be applied as
follows: first, to all reasonable costs and expenses
(including reasonable attorneys fees) incurred by Lender in
enforcing this Guaranty or in collecting the Guarantied
Obligations; second, to all accrued and unpaid interest,
premium, if any, and fees owing to Lender constituting
Guarantied Obligations; and third, to the balance of the
Guarantied Obligations.
13. Attorneys Fees and Costs. Guarantor agrees to pay, on demand,
all reasonable attorneys fees and all other reasonable costs
and expenses which may be incurred by Lender in the
enforcement of this Guaranty or in any way arising out of, or
consequential to, the protection, assertion, or enforcement of
the Guarantied Obligations (or any security therefor),
irrespective of whether suit is brought.
14. Notices. All notices and other communications hereunder shall
be in writing and shall be mailed, sent or delivered in
accordance with the Restructuring Agreement.
15. Cumulative Remedies. No remedy under this Guaranty, under the
Note, or any other Note Document is intended to be exclusive
of any other remedy, but each and every remedy shall be
cumulative and in addition to any and every other remedy given
under this Guaranty, under the Note, or any other Note
Document, and those provided by law. No delay or omission by
Lender to exercise any right under this Guaranty shall impair
any such right nor be construed to be a waiver thereof. No
failure on the part of Lender to exercise, and no delay in
exercising, any right under this Guaranty
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shall operate as a waiver thereof; nor shall any single or
partial exercise of any right under this Guaranty preclude any
other or further exercise thereof or the exercise of any other
right.
16. Severability of Provisions. Any provision of this Guaranty
which is prohibited or unenforceable under applicable law
shall be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions
hereof.
17. Entire Agreement; Amendments. This Guaranty constitutes the
entire agreement between Guarantor and Lender pertaining to
the subject matter contained herein. This Guaranty may not be
altered, amended, or modified, nor may any provision hereof be
waived or noncompliance therewith consented to, except by
means of a writing executed by Guarantor and Lender. Any such
alteration, amendment, modification, waiver, or consent shall
be effective only to the extent specified therein and for the
specific purpose for which given. No course of dealing and no
delay or waiver of any right or default under this Guaranty
shall be deemed a waiver of any other, similar or dissimilar,
right or default or otherwise prejudice the rights and
remedies hereunder.
18. Successors and Assigns. This Guaranty shall be binding upon
Guarantor and its successors and assigns and shall inure to
the benefit of the successors and assigns of Lender; provided,
however, Guarantor shall not assign this Guaranty or delegate
any of its duties hereunder without Lender's prior written
consent and any unconsented to assignment shall be absolutely
void. In the event of any assignment or other transfer of
rights by Lender, the rights and benefits herein conferred
upon Lender shall automatically extend to and be vested in
such assignee or other transferee.
19. No Third Party Beneficiary. This Guaranty is solely for the
benefit of Lender and each of its successors and assigns and
may not be relied on by any other Person.
20. CHOICE OF LAW; JURY TRIAL WAIVER
THE VALIDITY OF THIS GUARANTY, ITS CONSTRUCTION,
INTERPRETATION, AND ENFORCEMENT, AND THE RIGHTS OF THE PARTIES HERETO WITH
RESPECT TO ALL MATTERS ARISING HEREUNDER OR RELATED HERETO SHALL BE DETERMINED
UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
TEXAS
GUARANTOR AND LENDER EACH HEREBY WAIVE THEIR RESPECTIVE RIGHTS
TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF
THIS GUARANTY OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN, INCLUDING CONTRACT
CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS. GUARANTOR AND LENDER REPRESENT THAT EACH SUCH PARTY HAS
REVIEWED THIS WAIVER AND EACH SUCH PARTY KNOWINGLY AND VOLUNTARILY WAIVES ITS
JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF
LITIGATION, A COPY OF THIS GUARANTY MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL
BY THE COURT.
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21. Agreement to be Bound. Guarantor hereby agrees to be bound by
each and all of the terms and provisions of the Restructuring
Agreement. Without limiting the generality of the foregoing,
by its execution and delivery of this Guaranty, Guarantor
hereby: (a) makes to Lender each of the representations and
warranties set forth in the Restructuring Agreement applicable
to Guarantor, and such representations and warranties are
incorporated herein by this reference, mutatis mutandis; and
(b) agrees and covenants for the benefit of Lender (i) to do,
or cause to be done, each of the things set forth in the
Restructuring Agreement that it is obligated to do thereunder
(or that Borrower or SI agrees and covenants to cause it or
its Subsidiaries to do), and (ii) to not do each of the things
set forth in the Restructuring Agreement that it covenants to
not do or permit its Subsidiaries to do (or that Borrower or
SI agrees and covenants to cause it or its Subsidiaries not to
do), and in each case and such agreements and covenants are
incorporated herein by this reference, mutatis mutandis.
[Signature page to follow]
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IN WITNESS WHEREOF, the undersigned has executed and delivered
this Guaranty as of the date first written above.
SCHLOTZSKY'S FRANCHISOR, LLC,
a Delaware limited liability company
By: /s/ XXXXXXX X. XXXXXX
---------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Senior Vice President
[SIGNATURE PAGE TO GUARANTY]
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