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EXHIBIT 10.8
SUBSIDIARY GUARANTY AGREEMENT
THIS SUBSIDIARY GUARANTY AGREEMENT (the "Guaranty Agreement" or the
"Guaranty"), dated as of August 9, 1998, is made by each of the undersigned
(each a "Guarantor" and collectively the "Guarantors") to WACHOVIA BANK, N.A., a
national banking association, as Lender (the "Lender,").
W I T N E S S E T H:
WHEREAS, the Lender has agreed to provide to CROWN CRAFTS, INC., a
Georgia corporation (the "Borrower"), a revolving credit facility pursuant to
the terms of that certain Revolving Credit Agreement dated as of August 25, 1995
between the Borrower and the Lender (as from time to time amended, modified or
supplemented, the "Credit Agreement"); and
WHEREAS, each Guarantor is a Material Subsidiary of the Borrower and is
required pursuant to Section 6.23 of the Credit Agreement to guarantee to the
Lender payment of the Borrower' s Liabilities (as hereinafter defined) in
accordance with the terms of this Agreement; and
WHEREAS, each Guarantor will materially benefit from the loans and
advances made and to be made, under the Credit Agreement, and each Guarantor is
willing to enter into this Guaranty to provide an inducement for the Lender to
make loans and advances thereunder.
NOW, THEREFORE, as required under the Credit Agreement and in order to
induce the Lender to make and continue loans and advances to the Borrower,
thereunder, each Guarantor agrees as follows:
1. Definitions. All capitalized terms not otherwise defined
herein shall have the meanings ascribed to such terms in the Credit Agreement.
2. Guaranty. Each Guarantor hereby jointly and severally,
unconditionally, absolutely, continually and irrevocably guarantees to the
Lender the payment and performance in full of the Borrower's Liabilities (as
defined below). For all purposes of this Guaranty Agreement, "Borrower's
Liabilities" means (a) the Borrower's obligation to promptly pay in full, when
due or declared due, all Obligations and all other amounts pursuant to the terms
of the Credit Agreement, the Notes, and all other Loan Documents executed in
connection with the Credit Agreement heretofore, now or at any time hereafter
owing, arising, due or payable from the Borrower to the Lender, including
without limitation principal, interest, premium or fee (including, but not
limited to, loan fees and attorneys' fees and expenses), and (b) the Borrower's
prompt, full and faithful performance, observance and discharge of each and
every agreement, undertaking, covenant and provision to be performed, observed
or discharged by the Borrower under the Credit Agreement and all other Loan
Documents executed in connection therewith. Each Guarantor's obligations to the
Lender under this Guaranty Agreement are hereinafter collectively referred to as
the "Guarantors' Obligations;" provided, however, that the liability of each
Guarantor with respect to the Guarantors' Obligations shall not exceed at any
time the
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Maximum Amount (as hereinafter defined). The "Maximum Amount" means 95% of (i)
the fair salable value of the assets of a Guarantor as of the date hereof minus
(ii) the total liabilities of such Guarantor (including contingent liabilities,
but excluding liabilities of such Guarantor under this Guaranty and any other
Loan Documents executed by such Guarantor) as of the date hereof; provided
further, however, that if the calculation of the Maximum Amount in the manner
provided above as of the date payment is required of such Guarantor pursuant to
this Guaranty would result in a greater positive number, then the Maximum Amount
shall be deemed to be such greater positive number.
Each Guarantor agrees that it is jointly and severally, directly and
primarily liable for the Borrower's Liabilities.
3. Payment. If the Borrower shall default in payment or
performance of any Borrower's Liabilities, whether principal, interest, premium,
fee (including, but not limited to, loan fees and attorneys' fees and expenses),
or otherwise, when and as the same shall become due, whether according to the
terms of the Credit Agreement, by acceleration, or otherwise, or upon the
occurrence of any other Event of Default under the Credit Agreement that has not
been cured or waived, then each Guarantor, upon demand thereof by the Lender or
its successors or assigns, will AS OF THE DATE OF THE LENDER'S DEMAND fully pay
to the Lender, subject to any restriction set forth in Section 2 hereof, an
amount equal to all Guarantor's Obligations then due and owing.
4. Unconditional Obligations. This is a guaranty of payment and
not of collection. The Guarantors' Obligations under this Guaranty Agreement
shall be joint and several, absolute and unconditional irrespective of the
validity, legality or enforceability of the Credit Agreement, the Notes or any
other Loan Document or any other guaranty of the Borrower's Liabilities, and
shall not be affected by any action taken under the Credit Agreement, the Notes
or any other Loan Document, any other guaranty of the Borrower's Liabilities, or
any other agreement between the Lender and the Borrower or any other person, in
the exercise of any right or power therein conferred, or by any failure or
omission to enforce any right conferred thereby, or by any waiver of any
covenant or condition therein provided, or by any acceleration of the maturity
of any of the Borrower's Liabilities, or by the release or other disposal of any
security for any of the Borrower's Liabilities, or by the dissolution of the
Borrower or the combination or consolidation of the Borrower into or with
another entity or any transfer or disposition of any assets of the Borrower, or
by any extension or renewal of, or increase of the amounts available or advanced
under, the Credit Agreement, any of the Notes or any other Loan Document, in
whole or in part, or by any modification, alteration, amendment or addition of
or to the Credit Agreement, any of the Notes or any other Loan Document, any
other guaranty of the Borrower's Liabilities, or any other agreement between the
Lender and the Borrower or any other Person, or by any other circumstance
whatsoever (with or without notice to or knowledge of any Guarantor) which may
or might in any manner or to any extent vary the obligations of any Guarantor,
or might otherwise constitute a legal or equitable discharge of a surety or
guarantor; it being the purpose and intent of the parties hereto that this
Guaranty Agreement and the Guarantors' Obligations hereunder shall be absolute
and unconditional under any and all circumstances and shall not be discharged
except by payment as herein provided.
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5. Currency and Funds of Payment. Each Guarantor hereby covenants
and agrees that the Guarantors' Obligations will be paid in full as herein
provided in lawful currency of the United States of America and in immediately
available funds, regardless of any law, regulation or decree now or hereafter in
effect that might in any manner affect the Borrower's Liabilities or the
Guarantors' Obligations, or the rights of the Lender with respect thereto as
against the Borrower or any Guarantor, or cause or permit to be invoked any
alteration in the time, amount or manner of payment by the Guarantor of any or
all of the Borrower's Liabilities or the Guarantors' Obligations.
6. Events of Default. In the event that (a) any Guarantor shall
file a petition to take advantage of any insolvency statute; (b) any Guarantor
shall commence or suffer to exist a proceeding for the appointment of a
receiver, trustee, liquidator or conservator of itself or of the whole or
substantially all of its property; (c) any Guarantor shall file a petition or
answer seeking reorganization or arrangement or similar relief under the Federal
bankruptcy laws or any other applicable law or statute of the United States of
America or any state or similar law of any other country; (d) a court of
competent jurisdiction shall enter an order, judgment or decree appointing a
custodian, receiver, trustee, liquidator or conservator of any Guarantor or of
the whole or substantially all of its properties, or approve a petition filed
against any Guarantor seeking reorganization or arrangement or similar relief
under the Federal bankruptcy laws or any other applicable law or statute of the
United States of America or any state or similar law of any other country, or
if, under the provisions of any other law for the relief or aid of debtors, a
court of competent jurisdiction shall assume custody or control of any Guarantor
or of the whole or substantially all of its properties. and such order,
judgment, decree, approval or assumption remains unstayed or undismissed for a
period of thirty (30) days; (e) there is commenced against any Guarantor any
proceeding or petition seeking reorganization, arrangement or similar relief
under the Federal bankruptcy laws or any other applicable law or statute of the
United States of America or any state, which proceeding or petition remains
unstayed or undismissed for a period of thirty (30) days; (f) there shall occur
an Event of Default under the Credit Agreement; (g) any default shall occur in
the payment of amounts due hereunder; or (h) any other default shall occur
hereunder which remains uncured or unwaived for a period of thirty (30) days
(each of the foregoing being an "Event of Default" hereunder) ; then
notwithstanding any collateral that the Lender may possess from Borrower or any
Guarantor or any other guarantor of the Borrower's Liabilities, or any other
party, at the Lender's election and without notice thereof or demand therefor,
the Guarantors' Obligations shall immediately become due and payable.
7. Suits. Each Guarantor from time to time shall pay to the
Lender, on demand, at the Lender's place of business set forth in the Credit
Agreement, the Guarantors' Obligations as they become or are declared due, and
in the event such payment is not made when due, the Lender may proceed to suit
against any one or more or all of the Guarantors. At the lender's election, one
or more and successive or concurrent suits may be brought hereon by the Lender
against any one or more or all of the Guarantors, whether or not suit has been
commenced against the Borrower, any other guarantor of the Borrower's
Liabilities, or any other Person and whether or not the Lender has taken or
failed to take any other action to collect all or any portion of the Borrower's
Liabilities.
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8. Set-Off and Waiver. Each Guarantor waives any right to assert
against the Lender as a defense, counterclaim, set-off or cross claim, any
defense (legal or equitable) or other claim which such Guarantor may now or at
any time hereafter have against the Borrower, the Lender, without waiving any
additional defenses, setoffs, counterclaims or other claims otherwise available
to such Guarantor. If at any time hereafter the Lender employs counsel for
advice or other representation to enforce the Guarantors' Obligations that arise
out of an Event of Default, then, in any of the foregoing events, all of the
attorneys' fees arising from such services and all expenses, costs and charges
in any way or respect arising in connection therewith or relating thereto shall
be paid by the Guarantors to the Lender on demand and shall constitute part of
the Guarantors' Obligations hereunder.
9. Waiver; Subrogation.
(a) Each Guarantor hereby waives notice of the following events or
occurrences: (i) the Lender's acceptance of this Guaranty Agreement; (ii) the
Lender's heretofore, now or from time to time hereafter loaning monies or giving
or extending credit to or for the benefit of the Borrower, whether pursuant to
the Credit Agreement or the Notes or any amendments, modifications, or
supplements thereto, or replacements or extensions thereof; (iii) the Lender or
the Borrower heretofore, now or at any time hereafter, obtaining, amending,
substituting for, releasing, waiving or modifying the Credit Agreement, the
Notes or any other Loan Documents; (iv) presentment, demand, notices of default,
nonpayment, partial payment and protest; (v) the Lender heretofore, now or at
any time hereafter granting to the Borrower (or any other party liable to the
Lender on account of the Borrower's Liabilities) any indulgence or extensions of
time of payment of the Borrower's Liabilities; and (vi) the Lender heretofore,
now or at any time hereafter accepting from the Borrower or any other person,
any partial payment or payments on account of the Borrower's Liabilities or any
collateral securing the payment thereof or the Agent settling, subordinating,
compromising, discharging or releasing the same. Each Guarantor agrees that the
Lender may heretofore, now or at any time hereafter do any or all of the
foregoing in such manner, upon such terms and at such times as the Lender, in
its sole and absolute discretion, deems advisable, without in any way or respect
impairing, affecting, reducing or releasing such Guarantor from the Guarantors'
Obligations, and each Guarantor hereby consents to each and all of the foregoing
events or occurrences.
(b) Each Guarantor hereby agrees that payment or performance by
such Guarantor of the Guarantors' Obligations under this Guaranty Agreement may
be enforced by the Lender upon demand by the Lender to such Guarantor without
the Lender being required, each Guarantor expressly waiving any right it may
have to require the Lender, to (i) prosecute collection or seek to enforce or
resort to any remedies against the Borrower or any other Guarantor or any other
guarantor of the Borrower's Liabilities, IT BEING EXPRESSLY UNDERSTOOD,
ACKNOWLEDGED AND AGREED TO BY EACH GUARANTOR THAT DEMAND UNDER THIS GUARANTY
AGREEMENT MAY BE MADE BY THE LENDER, AND THE PROVISIONS HEREOF ENFORCED BY THE
LENDER, EFFECTIVE AS OF THE FIRST DATE ANY EVENT OF DEFAULT OCCURS AND IS
CONTINUING UNDER THE CREDIT AGREEMENT, or (ii) seek to enforce or resort to any
remedies with respect to any security interests, Liens or encumbrances granted
to the Lender by the Borrower or any other Person on account of the Borrower's
Liabilities or any guaranty thereof. The Lender
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shall not have any obligation to protect, secure or insure any of the foregoing
security interests, Liens or encumbrances on the properties or interests in
properties subject thereto. The Guarantors' Obligations shall in no way be
impaired, affected, reduced, or released by reason of the Lender's failure or
delay to do or take any of the acts, actions or things described in this
Guaranty Agreement including, without limiting the generality of the foregoing,
those acts, actions and things described in this Section 9.
(c) Each Guarantor further agrees that to the extent the ruling in
Xxxxx x. Xxxxxxxxx Xxxx Financial Corp. (In re V.N. Xxxxxxxx Construction Co.),
874 F.2d 1186 (7th Cir. 1989), is found applicable by a court of competent
jurisdiction to the transactions contemplated by the Loan Documents or any
payments thereunder, no Guarantor shall have any right of subrogation,
reimbursement or indemnity, nor any right of recourse to security for the
Borrower's Liabilities. This waiver is expressly intended to prevent the
existence of any claim in respect to such reimbursement by the Guarantor against
the estate of Borrower within the meaning of Section 101 of the Bankruptcy Code,
and to prevent the Guarantor from constituting a creditor of Borrower in respect
of such reimbursement within the meaning of Section 547(b) of the Bankruptcy
Code in the event of a subsequent case involving the Borrower.
10. Effectiveness; Enforceability. This Guaranty Agreement shall
be effective as of the date of the initial Advance under the Credit Agreement
and shall continue in full force and effect until the Borrower's Obligations are
fully paid and the Credit Agreement has terminated. The Lender shall give each
Guarantor written notice of such termination at each Guarantor's address set
forth in the Credit Agreement. This Guaranty Agreement shall be binding upon and
inure to the benefit of each Guarantor, the Lender and their respective
successors and assigns. Notwithstanding the foregoing, no Guarantor may, without
the prior written consent of the Lender, assign any rights, powers, duties or
obligations hereunder. Any claim or claims that the Lender may at any time
hereafter have against any Guarantor under this Guaranty Agreement may be
asserted by the Lender by written notice directed to any one or more or all of
the Guarantors at the address specified in the Credit Agreement.
11. Representations and Warranties. Each Guarantor represents and
warrants to the Lender that it is duly authorized to execute, deliver and
perform this Guaranty Agreement, that this Guaranty Agreement is legal, valid,
binding and enforceable against such Guarantor in accordance with its terms
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles; and that such
Guarantor's execution, delivery and performance of this Guaranty Agreement do
not violate or constitute a breach of its certificate of incorporation or other
documents of corporate governance or any agreement to which such Guarantor is a
party, or any applicable laws.
12. Expenses. Each Guarantor agrees to be liable for the payment
of all reasonable fees and expenses, including attorney's fees, incurred by the
Lender in connection with the enforcement of this Guaranty Agreement.
13. Reinstatement. Each Guarantor agrees that this Guaranty
Agreement shall continue to be effective or be reinstated, as the case may be,
at any time payment received by the
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Lender under the Credit Agreement or this Guaranty Agreement is rescinded or
must be restored for any reason.
14. Counterparts. This Guaranty Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original as
against any party whose signature appears thereon, and all of which shall
constitute one and the same instrument.
15. Reliance. Each Guarantor represents and warrants to the Lender
that (a) such Guarantor has adequate means to obtain from Borrower, on a
continuing basis, information concerning Borrower and Borrower's financial
condition and affairs and has full and complete access to Borrower's books and
records, (b) such Guarantor is not, nor in the future will it be, relying on the
Lender, or its employees, agents or other representatives, to provide such
information, (c) such Guarantor is executing this Guaranty Agreement freely and
deliberately, and understands the obligations and financial risk undertaken by
providing this Guaranty, (d) such Guarantor has relied solely on the Guarantor's
own independent investigation, appraisal and analysis of Borrower and Borrower's
financial condition and affairs in deciding to provide this Guaranty and is
fully aware of the same, and (e) such Guarantor has not depended or relied on
the Lender, its employees, agents or representatives, for any information
whatsoever concerning Borrower or Borrower's financial condition and affairs or
other matters material to such Guarantor's decision to provide this Guaranty or
for any counseling, guidance, or special consideration or any promise therefor
with respect to such decision. Each Guarantor agrees that the Lender has no duty
or responsibility whatsoever, now or in the future, to provide to any Guarantor
any information concerning Borrower or Borrower's financial condition and
affairs, and that, if such Guarantor receives any such information from the
Lender or its employees, agents or other representatives, such Guarantor will
independently verify the information and will not rely on the Lender or its
employees, agents or other representatives, with respect to such information.
16. Termination. This Guaranty Agreement and all obligations of
the Guarantors hereunder shall terminate without delivery of any instrument or
performance of any act by any party on the date when all of the Obligations have
been fully paid and the Credit Agreement has terminated.
17. Governing Law; Waivers of Trial by Jury, Etc.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF GEORGIA APPLICABLE TO
CONTRACTS EXECUTED, AND TO BE FULLY PERFORMED, IN SUCH STATE.
(b) EACH PARTY HEREBY EXPRESSLY AND IRREVOCABLY AGREES
AND CONSENTS THAT ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREIN MAY
BE INSTITUTED IN ANY STATE OR FEDERAL COURT SITTING IN THE STATE OF
GEORGIA, UNITED STATES OF AMERICA AND, BY THE EXECUTION AND DELIVERY OF
THIS
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AGREEMENT, EXPRESSLY WAIVES ANY OBJECTION THAT IT MAY HAVE NOW OR
HEREAFTER TO THE LAYING OF THE VENUE OR TO THE JURISDICTION OF ANY SUCH
SUIT, ACTION OR PROCEEDING, AND IRREVOCABLY SUBMITS GENERALLY AND
UNCONDITIONALLY TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUCH SUIT,
ACTION OR PROCEEDING.
(c) EACH PARTY AGREES THAT SERVICE OF PROCESS MAY BE MADE
BY PERSONAL SERVICE OF A COPY OF THE SUMMONS AND COMPLAINT OR OTHER
LEGAL PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING, OR BY REGISTERED
OR CERTIFIED MAIL (POSTAGE PREPAID) TO THE ADDRESS OF SUCH PARTY
PROVIDED IN SECTION 9.2 OF THE CREDIT AGREEMENT OR BY ANY OTHER METHOD
OF SERVICE PROVIDED FOR UNDER THE APPLICABLE LAWS IN EFFECT IN THE
STATE OF GEORGIA.
(d) NOTHING CONTAINED IN SUBSECTIONS (b) OR (c) HEREOF
SHALL PRECLUDE ANY PARTY FROM BRINGING ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER LOAN
DOCUMENTS IN THE COURTS OF ANY PLACE WHERE ANY OTHER PARTY OR ANY OF
SUCH PARTY'S PROPERTY OR ASSETS MAY BE FOUND OR LOCATED. TO THE EXTENT
PERMITTED BY THE APPLICABLE LAWS OF ANY SUCH JURISDICTION, EACH PARTY
HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT AND
EXPRESSLY WAIVES, IN RESPECT OF ANY SUCH SUIT, ACTION OR PROCEEDING,
THE JURISDICTION OF ANY OTHER COURT OR COURTS WHICH NOW OR HEREAFTER,
BY REASON OF ITS PRESENT OR FUTURE DOMICILE, OR OTHERWISE, MAY BE
AVAILABLE TO IT.
(e) IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY
RIGHTS OR REMEDIES UNDER OR RELATED TO THIS AGREEMENT OR ANY AMENDMENT,
INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR THAT MAY IN THE FUTURE
BE DELIVERED IN CONNECTION WITH THE FOREGOING, EACH PARTY HEREBY
AGREES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, THAT ANY SUCH ACTION
OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY AND
EACH PARTY HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW,
ANY OBJECTION THAT IT MAY HAVE THAT EACH ACTION OR PROCEEDING HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM.
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IN WITNESS WHEREOF, the parties have duly executed this Agreement on
the day and year first written above.
GUARANTORS:
HAMCO, INC.
By: /s/ Xxxxx X. Xxxxxxx
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Name: Xxxxx X. Xxxxxxx
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Title: Vice President
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