EXHIBIT 6
UNCONDITIONAL GUARANTY AND SUBORDINATION AGREEMENT
THIS UNCONDITIONAL GUARANTY, dated as of March 1, 1996 (the
"Guaranty"), is given jointly and severally by Xxxx Enterprises,
Inc., Convertible Enterprises, Inc., Bright Star Enterprises, Inc.
and Xxxxxxxx Advertising, Inc. (collectively referred to as the
"Guarantors") and extended to and in favor of Klaussner Furniture
Industries, Inc. ("Lender") for the benefit of Xxxxxxxx
Warehousing, Inc. (the "Debtor").
WHEREAS, the Debtor is a wholly owned subsidiary of Xxxx
Enterprises, Inc. ("Xxxx") and an affiliate of Convertible
Enterprises, Inc., Bright Star Enterprises, Inc., and Xxxxxxxx
Advertising, Inc.; and
WHEREAS, Lender has made a loan in the principal amount of
$1,440,000 (the "Loan") to Debtor as evidenced by a Promissory Note
dated March 1, 1996 (the "Note") executed by Debtor in favor of
Lender; and
WHEREAS, without this Guaranty, Lender would be unwilling to
make the Loan to the Debtor; and
WHEREAS, because of the benefit to the Guarantors from the
Loan, Guarantors have agreed to guaranty to Lender the obligations
of the Debtor to Lender under the Note.
NOW THEREFORE, in consideration of the premises and other good
and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged by the Guarantors, each Guarantor, as to
itself, agrees as follows:
1. Each Guarantor, jointly and severally, absolutely and
unconditionally
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guarantees the payment when due, upon maturity, acceleration or
otherwise, of any and all indebtedness of the Debtor to the Lender
due under the Note and all renewals and extensions thereof (the
"Indebtedness"). If the Indebtedness becomes due and payable, the
Guarantors absolutely and unconditionally promise to pay such
Indebtedness to the Lender, or order, on demand, in lawful money of
the United States. Each Guarantor further jointly and severally
agrees to pay any and all reasonable expenses which may be incurred
or paid by Lender in collecting any and all of the Indebtedness
and/or enforcing its rights under this Guaranty, including all
reasonable attorneys' fees, which expenses shall be deemed part of
the Indebtedness. This Guaranty (and any security interest
securing this Guaranty) shall continue to be effective or shall be
reinstated, as the case may be, if at any time any payment, or any
part thereof, of the Indebtedness is rescinded or must otherwise be
restored by Lender upon the bankruptcy or reorganization of Debtor
or otherwise.
2. The Guarantors absolutely and unconditionally guaranty the
payment of the Indebtedness, and unconditionally promise to pay the
Indebtedness to the Lender, or order, on demand, in lawful money of
the United States, whether or not then due or payable by the
Debtor, upon (a) the dissolution, insolvency, or business failure
of, or any assignment for benefit of creditors by, or commencement
of any bankruptcy, reorganization, arrangement, moratorium or other
debtor relief proceedings by or against the Debtor, any of the
Guarantors or Xxxx X. Love ("Love"), or (b) the appointment of a
receiver for, or the attachment, restraint of, or making or levying
of any order of court or legal process affecting, a substantial
portion of the property of the Debtor or any of the Guarantors or
Love.
3. This Guaranty may be terminated by any party hereto (a
"Terminating
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Guarantor") as to future transactions only upon written notice of
termination hereof to the Lender [such notice to be given and
delivered as provided in the Stock Pledge Agreement between
Guarantors and Lender of even date herewith (the "Stock Pledge
Agreement")], and such notice shall be deemed to be effective as of
noon of the next succeeding business day following receipt thereof
by the Lender. No such notice shall release the Terminating
Guarantor from any liability as to the Indebtedness for which the
Terminating Guarantor or Debtor may be obligated at the time of
receipt by lender of such notice, or from extensions and renewals
thereof. Any termination of this Guaranty by a Terminating
Guarantor shall not be deemed a termination of this Guaranty as to
any other Guarantor that is a party hereto.
4. The liability of the Guarantors hereunder is exclusive and
independent of any security for or other guaranty of the
Indebtedness of the Debtor, whether executed by the Guarantors or
by any other party, and the liability of the Guarantors hereunder
is not affected or impaired by (a) any direction of application of
payment by the Debtor or by any other party, (b) any other
continuing or other guaranty or undertaking of the Guarantors or of
any other party as to the Indebtedness, (c) any payment on or in
reduction of any such other guaranty or undertaking, (d) any
notice of termination hereof as to future transactions given by the
Guarantors or any of Love, Xxxxxx X. Xxxxxxxxxx and Xxxxxx X.
Xxxxxxx (the "Personal Guarantors"), or (e) any payment made to the
Lender on the Indebtedness which the Lender repays to the Debtor
pursuant to court order in any bankruptcy, reorganization,
arrangement, moratorium, or other debtor relief proceeding, and the
Guarantors waive any right to the deferral or modification of their
obligations hereunder by reason of any such proceedings.
5. The obligations of the Guarantors hereunder are joint and
several, and
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independent of the obligations of the Debtor, and a separate action
may be brought and prosecuted against the Guarantors whether or not
action is brought against the Debtor and whether or not the Debtor
be joined in any such action.
6. The Guarantors each represent that the only members of the
Xxxx Group (as hereinafter defined) that own the stock of Xxxxxxxx
Convertibles, Inc. ("JCI") are the Guarantors and the Personal
Guarantors. The term "Xxxx Group" shall have the same meaning
given such term in the Note.
7. The Guarantors agree that the Lender may (whether or not
after revocation or termination of this Guaranty), without notice
or demand (except as shall be required by applicable statue and
cannot be waived), and without affecting or impairing their
liability hereunder, from time to time to (a) renew, compromise,
extend, accelerate, or otherwise change the time for payment of, or
otherwise change the terms of the Indebtedness or any part thereof,
including an increase or decrease of the rate of interest thereon,
(b) take and hold security for the payment of this Guaranty or the
Indebtedness and exchange, enforce, waive, and release any such
security, (c) apply such security and direct the order or manner of
sale thereof as the Lender in its discretion may determine, and (d)
release or substitute any one or more endorsers, guarantors,
borrowers, or other obligors.
8. It is not necessary for the Lender to inquire into the
capacity or powers of the Debtor or the officers, directors,
partners, or agents acting or purporting to act on its behalf, and
any Indebtedness made or created in reliance by the Lender upon the
professed exercise of such powers shall be guaranteed hereunder.
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9. Any indebtedness of the Debtor and/or the Personal
Guarantors to the Guarantors is hereby subordinated to the payment
of the Indebtedness, and all such indebtedness owed to the
Guarantors, if the Lender so requests, shall be collected,
enforced, and received by the Guarantors as trustee for the Lender
and be paid over to the Lender on account of the Indebtedness of
the Debtor, but without affecting or impairing in any manner the
liability of the Guarantors under the other provisions of this
Guaranty. Any instruments now or hereafter evidencing any
indebtedness of the Debtor and/or the Personal Guarantors to the
Guarantors shall be marked with a legend that the same are subject
to this Guaranty and, if the Lender so requests, shall be delivered
to the Lender.
10. The Guarantors waive any right to require the Lender to
(a) proceed against the Debtor or any other party, (b) proceed
against or exhaust any security held from the Debtor, or (c) pursue
any other remedy in the Lender's power whatsoever. The Guarantors
expressly waive any right conferred upon the Guarantors under N.C.
Gen. Stat. 26-7, et seq. The Guarantors waive any defense based
on or arising out of any defense of the Debtor other than payment
in full of the Indebtedness, including without limitation any
defense based on or arising out of the unenforceability of the
Indebtedness, or any part thereof, from any cause, the impairment
of any collateral held as security for this Guaranty or the
cessation from any cause of the liability of the Debtor other than
payment in full of the Indebtedness. The Lender may, at its
election, foreclose on any security held by the Lender by one or
more judicial or nonjudicial sales or exercise any other right or
remedy the Lender may have against the Debtor, or any security,
without affecting or impairing in any way the liability of the
Guarantors hereunder except to the extent the Indebtedness has been
paid. The Guarantors waive any defense arising out of any such
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election by the Lender, even though such election operates to
impair or extinguish any right of reimbursement or subrogation or
other right or remedy of the Guarantors against the Debtor or any
security. The Guarantors shall have no right of subrogation,
reimbursement, contribution, exoneration or indemnity whatsoever
against the Debtor and waive any right to enforce any remedy which
the Lender now has or may hereafter have against the Debtor, and
waive any benefit of, and any right to participate in any security
now or hereafter held by the Lender. This waiver is expressly
intended to prevent the existence of any claim (as defined in the
Bankruptcy Code) in respect of such rights by the Guarantors
against the estate of the Debtor and to prevent the Guarantors from
being a creditor of the Debtor due to such rights. Each Guarantor
waives all presentments, demands for performance, protests and
notices, including without limitation notices of nonperformance,
notices of protest, notices of dishonor, notices of acceptance of
this Guaranty, and notices of the existence, creation or incurring
of new or additional Indebtedness. Each Guarantor agrees that it
has sole responsibility for obtaining such information concerning
the Debtor's financial condition and assets, and of all other
circumstances bearing upon the risk of nonpayment of the
Indebtedness and the nature, scope and extent of the risks which
the Guarantors assume and incur hereunder, and agrees that the
Lender shall have no duty to advise the Guarantors of information
known to it regarding such circumstances or risks.
11. This Guaranty and the liability and obligations of the
Guarantors hereunder are binding upon the Guarantors and their
respective heirs, executors, administrators, successors, and
assigns, and inures to the benefit of and is enforceable by the
Lender and its successors, transferees, and assigns.
12. No right or power of the Lender hereunder shall be deemed
to have been
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waived by any act or conduct on the part of the Lender, or by any
neglect to exercise such right or power, or by any delay in so
doing; and every right or power shall continue in full force and
effect until specifically waived or released by an instrument in
writing executed by the Lender.
13. This Guaranty shall be deemed to be made under and shall
be governed by the internal laws of the State of North Carolina in
all respects, including matters of construction, validity, and
performance, without regard to conflict of laws principles. The
terms and provisions hereof may not be waived, altered, modified,
or amended except in writing duly signed by an officer of the
Lender and by the Guarantors. This Guaranty and the Stock Pledge
Agreement securing the Guarantors' obligations hereunder constitute
the entire agreement of the Guarantors with respect to the subject
matter hereof, and there are no other agreements or understandings,
oral or written, with respect thereto. The Guarantors and the
Lender agree that any legal action or proceeding arising out of
this Guaranty shall be subject to the jurisdiction of both the
state and federal courts in North Carolina. For that purpose the
Guarantors hereby submit to the jurisdiction of the state and
federal courts in North Carolina. The Guarantors further agree to
accept service of process in any such legal action or proceeding by
registered or certified mail, postage prepaid, addressed to the
Guarantors. The Guarantors agree that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in any
jurisdiction by suit on the judgment or in any other manner
provided by law. The Guarantors waive any objection to venue in
any state or federal court in North Carolina or based on the
grounds of forum non conveniens. The Guarantors further agree that
any action or proceeding brought against the Lender shall be
brought only in a state or federal court in North Carolina, but
nothing herein
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shall affect the right of the Lender to serve legal process in any
other manner permitted by law or affect the right of the Lender to
bring any action or proceeding against the Guarantors or its
property in the courts of any other jurisdiction. The Guarantors
waive trial by jury in any such action or proceeding.
14. If any of the provisions of this Guaranty shall
contravene or be held invalid under the laws of the State of North
Carolina, this Guaranty shall be construed as if not containing
those provisions and the rights and obligations of the parties
hereto shall be construed and enforced accordingly.
15. This Guaranty may be executed in any number of
counterparts, each of which when executed and delivered shall be
deemed to be an original and all of which counterparts shall
together constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned Guarantors have executed
this Guaranty under seal as of the date first above written.
XXXX ENTERPRISES, INC.
By:/S/ Xxxx X. Love
Title: President
Address: 000 Xxxxx Xxxxxx
Xxxxxx, Xxx Xxxx
Telecopier No.: 000-000-0000
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CONVERTIBLE ENTERPRISES, INC.
By: /S/Xxxx X. Love
Title: President
Address:____________________
____________________________
Telecopier No.: ____________
BRIGHT STAR ENTERPRISES, INC.
By: /S/Xxxx X. Love
Title: President
Address:____________________
____________________________
Telecopier No.:_____________
XXXXXXXX ADVERTISING, INC.
By: /S/Xxxx X. Love
Title: President
Address:____________________
____________________________
Telecopier No.:_____________
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STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 1st day of March, 1996 before me personally came Xxxx
X. Love, to me known, and who stated to me that he is the President
of XXXX ENTERPRISES, INC., the corporation described in and which
executed the foregoing instrument; and (s)he signed (her) his name
thereto by order of the Board of Directors of said corporation, and
duly acknowledges that (s)he executed the same.
/S/Xxxxxx Xxxxxx
Notary Public
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STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 1st day of March, 1996 before me personally came Xxxx
X. Love, to me known, and who stated to me that he is the President
of CONVERTIBLE ENTERPRISES, INC., the corporation described in and
which executed the foregoing instrument; and (s)he signed (her) his
name thereto by order of the Board of Directors of said
corporation, and duly acknowledges that (s)he executed the same.
/S/Xxxxxx Xxxxxx
Notary Public
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STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 1st day of March, 1996 before me personally came Xxxx
X. Love, to me known, and who stated to me that he is the President
of BRIGHT STAR ENTERPRISES, INC., the corporation described in and
which executed the foregoing instrument; and (s)he signed (her) his
name thereto by order of the Board of Directors of said
corporation, and duly acknowledges that (s)he executed the same.
/S/Xxxxxx Xxxxxx
Notary Public
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STATE OF NEW YORK )
)ss.:
COUNTY OF NEW YORK )
On the 1st day of March, 1996 before me personally came Xxxx
X. Love, to me known, and who stated to me that he is the President
of XXXXXXXX ADVERTISING, INC., the corporation described in and
which executed the foregoing instrument; and (s)he signed (her) his
name thereto by order of the Board of Directors of said
corporation, and duly acknowledges that (s)he executed the same.
/S/Xxxxxx Xxxxxx
Notary Public
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