GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT ("Guaranty") dated as of April 5, 2001, is
executed and delivered by XXXX XXXXXXX INCORPORATED ("Guarantor"), to THE CHASE
MANHATTAN BANK ("Lender"), a New York banking corporation, successor by merger
to Chase Bank of Texas, National Association.
RECITALS:
Effective as of April 8, 1998, Surrey, Inc. ("Borrower") and Lender
entered into a Loan Agreement governing the terms of certain loans from Lender
to Borrower. The Loan Agreement has previously been amended pursuant to a First
Amendment of Loan Agreement dated effective May 14, 1998, pursuant to a Second
Amendment of Loan Agreement dated effective January 25, 1999, pursuant to a
Third Amendment of Loan Agreement dated effective March 31, 1999, pursuant to a
Fourth Amendment of Loan Agreement dated effective June 17, 1999, pursuant to a
Fifth Amendment of Loan Agreement executed effective June 30, 1999, and pursuant
to a Sixth Amendment of Loan Agreement executed effective April 8, 2000. The
original Loan Agreement, as previously amended, is herein called the "Loan
Agreement."
Under the terms of the Loan Agreement, Borrower is currently indebted
to Lender under the loans evidenced by the following promissory notes: (a)
promissory note dated April 8, 2000, in the face principal sum of $3,000,000.00,
executed by Borrower, payable to the order of Lender, which note is called the
"Revolving Note" in the Loan Agreement, (b) promissory note dated April 8, 1998,
in the face principal sum of $2,300,000.00, executed by Borrower, payable to the
order of Lender, which note is called the "$2,300,000.00 Advance/Term Note" in
the Loan Agreement, (c) promissory note dated January 25, 1999, in the face
principal sum of $400,000.00, executed by Borrower, payable to the order of
Lender, which note is called the "$400,000.00 Advance/Term Note" in the Loan
Agreement, and (d) promissory note dated April 8, 2000, in the face principal
sum of $1,000,000.00, executed by Borrower, payable to the order of Lender,
which note is called the "Term Note" in the Loan Agreement.
Borrower has previously defaulted under the Loan Agreement, notice of
default has been provided to Borrower, Borrower has failed to cure such
defaults, and the maturity dates of the promissory notes referenced above have
been accelerated. As such, all amounts owed by Borrower to Lender under or
governed by the Loan Agreement are now due and payable. Despite written demand,
these amounts remain unpaid.
Borrower has entered into negotiations with Guarantor to sell
substantially all of Borrower's assets to Guarantor, subject to and in
accordance with the terms of that certain Agreement for Purchase and Sale of
Assets dated on or about the effective date hereof between Guarantor and
Borrower. Borrower and Guarantor, in acknowledgment of Lender's rights to
consent to any such sale of assets, have requested that Lender consent to the
terms of such sale, which Lender is willing to do in consideration of
Guarantor's agreements contained herein.
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AGREEMENTS:
For and in consideration of the premises and the mutual agreements
herein contained, the parties hereto agree as follows:
Definitions. As used in this Guaranty, these terms shall have these respective
meanings:
Borrower means Surrey, Inc., a Texas corporation.
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Consent Letter means the letter from Borrower and Guarantor addressed
to Lender dated concurrently herewith, to which the form of this
Guaranty is attached as Exhibit B.
Guaranteed Debt means the sum of (i) $3,000,000.00 of the outstanding
balance of the Notes, which amounts is payable under the terms of the
Consent Letter and is to be applied by Lender to the outstanding
balances of the Notes (in such order and manner of application as
Lender may elect) plus (ii) all reasonable attorneys' fees incurred by
Lender in enforcing this Guaranty or defending against any claims
asserted by Guarantor. In addition, Guarantor will be personally liable
to Lender for any of the Special Damages, if applicable, incurred by
Lender. Any voluntary or involuntary payment against or reduction in
the amounts outstanding under the Notes (other than payments of the
Guaranteed Debt made by Guarantor to Lender as provided below pursuant
to the terms of the Consent Letter) shall be applied first to the
amounts outstanding under the Notes which are not included in the
definition of "Guaranteed Debt".
Notes means, collectively, the Revolving Note, the $2,300,000.00
Advance/Term Note, the $400,000.00 Advance/Term Note and the Term Note
described in the "Recitals" section of this Guaranty, and all renewals,
extensions, modifications, increases and rearrangements of, and
substitutions for, the notes permitted by Lender or other holder of the
notes.
Special Damages means all loss Lender may incur and which may become
owing to Lender as a result of or in connection with any of the
following:
(1) Guarantor's fraud or misrepresentations;
(2) the misapplication by Guarantor of any proceeds paid under any
insurance policies by reason of damage, loss or destruction to any
portion of the property covered by the liens, assignments and
security interests of the documents executed in connection with
the Notes, but only to the full extent of such proceeds so
misapplied.
For value received, the sufficiency of which is hereby acknowledged,
and in consideration of the credit and financial accommodations extended to
Borrower by Lender and in consideration of the matters described in the
"Recitals" above, which Guarantor has determined will substantially benefit
Guarantor directly or indirectly, Guarantor hereby unconditionally guarantees
unto Lender (jointly and severally with any other guarantor, co-maker, endorser,
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surety or obligor of all or any part of the Notes) the payment when due under
the terms of the Consent Letter (whether at the stated maturity, by demand, by
acceleration or otherwise) of the Guaranteed Debt. This Guaranty is
unconditional and absolute, and if for any reason all or any portion of the
Guaranteed Debt shall not be paid when due, Guarantor will immediately pay the
same to Lender or other person or entity entitled thereto, regardless of any
defense, right of set-off or counterclaim which Borrower may have or assert, and
regardless of whether Lender or any other person or entity shall have taken any
steps to enforce any rights against Borrower or any other person or entity to
collect such sum, and regardless of any other condition of contingency.
Guarantor acknowledges that the Notes are now due and payable. Lender will
forbear from exercising its rights to pursue Guarantor under this Guaranty as
long as Borrower and Guarantor are performing in full their obligations under
the terms of the Consent Letter and pay in full, or cause to be paid in full,
the sum of $3,000,000.00 to Lender for application against the outstanding
balances of the Notes by the date 180 days from the date of this Guaranty.
Lender shall not be entitled to maintain an action against Guarantor to recover
the Guaranteed Debt unless (a) Borrower or Surrey breaches the terms of the
Consent Letter or (b) the 180-day forbearance period under the Consent Letter
expires or terminates without Lender having received payment in full of the
amounts to be paid to Lender under subparagraphs a), b) and c) of the Consent
Letter. Every dollar paid to Lender under the provisions of subparagraph a), b)
or c) of the Consent Letter shall reduce the $3,000,000.00 portion of the
Guaranteed Debt on a dollar-for-dollar basis.
Notwithstanding Lender's agreement to forbear at this time from
pursuing its rights under this Guaranty against Guarantor on account of the
existing defaults on the Notes, Lender formally reserves any and all rights and
remedies against Borrower to which Lender is entitled under the Note and the
other documents executed in connection therewith, as a result of such defaults.
Any forbearance by Lender with respect to Guarantor shall in no way be deemed to
obligate or restrict Lender in any manner with respect to its current and future
dealings with Guarantor, other than as specifically set forth herein.
Guarantor agrees that, if at any time all or any part of any payment
applied by Lender to the Guaranteed Debt is or must be returned by Lender--or
recovered from Lender--for any reason (including the order of any bankruptcy
court), this Guaranty shall automatically be reinstated to the same effect as if
the prior application had not been made, any liens, security interests or
collateral assignments released in connection with such prior payment shall be
reinstated, and, in addition, Guarantor hereby agrees to indemnify Lender
against, and to save and hold Lender harmless from any required return by
Lender--or recovery from Lender--of any such payment because of its being deemed
preferential under applicable bankruptcy, receivership or insolvency laws, or
for any other reason; provided, however, that to the extent any payment required
to be returned by Lender was generated from or proceeds of collateral purported
to secure the Notes, and if it is determined by final judgment of a court of
competent jurisdiction that Lender did not in fact have a first-priority
perfected lien, security interest or collateral assignment, as the case may be,
on the collateral generating the proceeds used for such payment (or portion
thereof), the provisions of this paragraph, solely as between Guarantor and
Lender, shall be inapplicable as to such payment (or portion thereof).
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This is a continuing guaranty and shall be irrevocable, and all
extensions of credit and financial accommodations made by Lender to Borrower
shall be conclusively presumed to have been made in acceptance hereof.
Guarantor waives marshalling of assets and liabilities, sale in inverse
order of alienation, notice of acceptance of this Guaranty and of any liability
to which it applies or may apply, notice of intent to accelerate, notice of
acceleration, notice of default or other notice to, or demand on, any party, and
waives presentment, collection, suit, or the taking of any other action by
Lender. Payment by Guarantor is to be made at the main office of Lender in
Xxxxxx, Xxxxxx County, Texas.
The obligations of Guarantor under this Guaranty shall not be affected
by (a) any invalidity of or defect or deficiency in any of the Notes or any
instrument securing payment thereof or (b) failure to perfect or to maintain
perfection of any lien on or security interest in any security securing payment
of any of the Notes.
This is a guaranty of payment and not of collection, and Guarantor
waives any right to require that any action be brought against Borrower or any
other person or entity. Should Lender seek to enforce the obligations of
Guarantor hereunder by action in any court, Guarantor waives any necessity,
substantive or procedural, that (a) a judgment previously be rendered against
Borrower or any other person or entity, including without limitation, any other
guarantor or other surety, or that Borrower or any other person or entity,
including without limitation, any other guarantor or other surety, should be
joined in such cause and (b) Lender exercise any or all of its other remedies
under any of the Notes or any other documents executed in connection therewith,
including without limitation, foreclosure of any lien or security interest
securing payment of any of the Notes. The obligations of Guarantor hereunder are
joint and several from those of Borrower or any other person or entity,
including without limitation, any other guarantor or other surety, and are
primary obligations concerning which Guarantor is the principal obligor. All
waivers herein shall be without prejudice to Lender at its option to proceed
against Borrower or any other person or entity, whether by separate action or by
joinder. By execution hereof, Guarantor expressly waives each and every right to
which he may be entitled by virtue of the suretyship laws of the State of Texas,
including, without limitation, any rights Guarantor may have pursuant to Rule
31, Texas Rules of Civil Procedure, Section 17.001 of the Texas Civil Practice
and Remedies Code and Chapter 34 of the Texas Business and Commerce Code.
Guarantor agrees that this Guaranty shall not be discharged except upon the
earlier of (a) payment in full of the Guaranteed Debt or (b) payment in full of
the Notes and complete performance of the obligations of Borrower to Lender in
connection with the Notes, subject in all cases to the automatic reinstatement
provisions hereof. Guarantor further agrees that the obligations of Guarantor
hereunder shall not be affected in any way by receivership, insolvency,
bankruptcy or other similar proceedings affecting Borrower or any of its assets,
or the release, waiver, or discharge of Borrower or any other person or entity,
including without limitation, any other guarantor or other surety, from the
performance or observance of any obligation contained in any of the Notes or any
instrument securing payment thereof, by operation of law or otherwise, or any
other cause, whether similar or dissimilar to the foregoing.
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Lender may, at any time without the consent of, or notice to Guarantor,
without incurring responsibility to Guarantor, without impairing or releasing
the obligations of Guarantor, upon or without any terms or conditions and in
whole or in part, (a) change the manner, place or terms of payment or change or
extend the time of payment of, renew, or alter any liability hereby guaranteed,
or any liabilities incurred directly or indirectly hereunder, and the guaranty
herein made shall apply to said liabilities as so changed, extended, renewed or
altered in any manner, (b) sell, exchange, release, surrender, realize upon or
otherwise deal with in any manner and in any order any property at any time
pledged or mortgaged to secure or securing the liabilities hereby guaranteed or
any liabilities incurred directly or indirectly hereunder or any offset against
any of said liabilities, (c) exercise or refrain from exercising any rights
against Borrower or others, or otherwise act or refrain from acting, (d) settle
or compromise any liabilities hereby guaranteed or hereby incurred.
No delay on the part of Lender in exercising any right hereunder or
failure to exercise the same shall operate as a waiver of such right; nor in any
event shall any waiver of the provisions of this Guaranty be effective unless in
writing; nor shall any such waiver be applicable except in the specific instance
for which given. Notwithstanding any payment or payments made by Guarantor
hereunder or any set-off or application of funds of Guarantor by Lender,
Guarantor shall not be entitled to be subrogated to any of the rights of Lender
against Borrower or any collateral security or rights of offset held by Lender
for the payment of any of the Notes until (a) all amounts owing to Lender by
Borrower for or on account of the Notes are paid in full, and (b) all
obligations of Borrower to Lender in connection with the Notes have been
performed.
Any settlement, release or compromise of Borrower's obligations on all
or any part of any of the Notes, any release of any security or collateral
securing payment of all or any part of any of the Notes, and any settlement,
release or compromise of any agreement, obligation or guaranty of any co-maker,
endorser, guarantor, surety or other obligor of all or any part of any of the
Notes shall not act as a release of any of Guarantor's obligations under this
Guaranty.
Guarantor represents and warrants to Lender that: (a) Guarantor's
execution, delivery and performance of this Guaranty do not and will not require
(i) any consent of any other person or entity or (ii) any consent, license,
permit, authorization or other approval (including foreign exchange approvals)
of any court, arbitrator, administrative agency or other governmental authority,
or any notice to, exemption by, any registration, declaration or filing with or
the taking of any other action in respect of, any such court, arbitrator,
administrative agency or other governmental authority; (b) neither execution or
delivery of this Guaranty, nor the fulfillment of or compliance with its terms
and provisions will (i) violate any constitutional provision, law or rule, or
any regulation, order or decree of any governmental authority or the basic
organizational documents of Guarantor or (ii) conflict with or result in a
breach of the terms, conditions or provisions of, or cause a default under, any
agreement, instrument, franchise, license or concession to which Guarantor is a
party or bound; (c) Guarantor has duly and validly executed, issued and
delivered this Guaranty, it is in proper legal form for prompt enforcement and
it is Guarantor's valid and legally binding obligation, enforceable in
accordance with its terms; (d) Guarantor is now solvent, and no bankruptcy or
insolvency proceedings are pending or contemplated by or--to the best of
Guarantor's knowledge--against Guarantor; and (e) Guarantor's liabilities and
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obligations under this Guaranty do not and will not render Guarantor insolvent,
cause Guarantor's liabilities to exceed Guarantor's assets or leave Guarantor
with too little capital to properly conduct all of its business as now conducted
or contemplated to be conducted.
Guarantor further certifies to Lender that: (a) the value of the
consideration received and to be received by Guarantor is reasonably worth at
least as much as the liability and obligation of Guarantor incurred or arising
under this Guaranty and all related papers and arrangements; and (b) Guarantor
has determined that such liability and obligation may reasonably be expected to
substantially benefit Guarantor directly or indirectly (or if Guarantor is not a
natural person, Guarantor's board of directors, general partners or other
governors have made that determination).
Any notice, request or other communication required or permitted to be
given hereunder shall be given in writing by delivering it against receipt for
it, by depositing it with an overnight delivery service or by depositing it in a
receptacle maintained by the United States Postal Service, postage prepaid,
registered or certified mail, return receipt requested, addressed to the
respective parties as follows (and if so given, shall be deemed given when
mailed):
If to Guarantor: If to the Lender:
Xxxx Xxxxxxx Incorporated The Chase Manhattan Bank
00000 00xx Xxxxxx X.X. Xxx 0000
Xxxxxxx, Xxxxxxxxxx 00000 Xxxxxxx, Xxxxx 00000-0000
Attention: President Attention: Xxxxx X. Shilcutt
Each party's address for notice may be changed at any time and from time to
time, but only after ten (10) days' advance written notice to the other party.
Actual notice, however and from whomever given or received, shall always be
effective when received.
Notwithstanding any provision to the contrary contained in any of the
Notes or in any other documents related thereto, it is expressly provided that
in no case or event shall the aggregate of any amounts accrued or paid pursuant
to this Guaranty which under applicable laws are or may be deemed to constitute
interest ever exceed the maximum nonusurious interest rate permitted by
applicable Texas or federal laws, whichever permit the higher rate. In this
connection, Guarantor and Lender stipulate and agree that it is their common and
overriding intent to contract in strict compliance with applicable usury laws.
In furtherance thereof, none of the terms of this Guaranty shall ever be
construed to create a contract to pay, as consideration for the use, forbearance
or detention of money, interest at a rate in excess of the maximum rate
permitted by applicable laws. Guarantor shall never be liable for interest in
excess of the maximum rate permitted by applicable laws. If, for any reason
whatever, such interest paid or received during the full term of the applicable
indebtedness produces a rate which exceeds the maximum rate permitted by
applicable laws, Lender shall credit against the principal of such indebtedness
(or, if such indebtedness shall have been paid in full, shall refund to the
payor of such interest) such portion of said interest as shall be necessary to
cause the interest paid to produce a rate equal to the maximum rate permitted by
applicable laws. All sums paid or agreed to be paid to Lender for the use,
forbearance or detention of money shall, to the extent permitted by applicable
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law, be amortized, prorated, allocated and spread in equal parts throughout the
full term of the applicable indebtedness, so that the interest rate is uniform
throughout the full term of such indebtedness. The provisions of this Section
shall control all agreements, whether now or hereafter existing and whether
written or oral, between Guarantor and Lender.
The benefits, rights and remedies of Lender provided for in this
Guaranty are in addition to all of the benefits, rights and remedies of Lender
provided for in all other guaranties now or hereafter executed by any other
person or entity, and payment or performance under any such guaranties shall not
reduce the obligations of Guarantor hereunder.
This Guaranty is entered into under and shall be governed by and
interpreted in accordance with the laws of the State of Texas. Guarantor hereby
irrevocably agrees that any legal proceeding against Lender arising out of or in
connection with this Guaranty, the Notes or any writings executed in connection
herewith shall be brought in the district courts of Xxxxxx County, Texas, or in
the United States District Court for the Western District of Texas, Austin
Division.
This Guaranty may be executed in any number of counterparts, each of
which shall constitute an original and shall be binding upon the person or
entity signing it and his, her or its heirs, legal representatives, successors
and assigns, whether or not the same or any other counterpart of this Guaranty
is executed by any other person or entity.
This Guaranty constitutes the entire agreement of Guarantor and Lender,
supersedes any prior understandings or written or oral agreement between
Guarantor and Lender with regards to the Notes, and can be modified or varied
only by a written instrument subscribed to by Guarantor and Lender.
THIS GUARANTY is executed as of the date first above written.
NOTICE PURSUANT TO TEX. BUS. & COMM. CODEss.26.02
THIS GUARANTY CONSTITUTES A WRITTEN LOAN AGREEMENT AND REPRESENTS THE
FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE
NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
LENDER: GUARANTOR:
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THE CHASE MANHATTAN BANK XXXX XXXXXXX INCORPORATED
By: By:
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Name: Name:
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Title: Title:
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